Truckin’ …

Does automation have a cost?

A recent op-ed in the Wall Street Journal asked, “Daddy, what’s a truck driver?” The article cited advancements in computer software and processing power to posit a future where truck drivers would be curiosities of the past, akin to rotary phones and CB radios. It describes a remote mine in Australia today, where six automated heavy-duty mining trucks sporting engines with 2600 horsepower and 25 million lines of software code run 24/7 using advanced guidance systems and monitored by personnel in a control room miles away.

This kind of innovation has been going on for decades. Farms need far fewer people today to grow corn, wheat, and other products than they needed 20 or 30 years ago. Bioengineered crops and GPS-equipped tractors have made the industry much more productive. Relative food prices have fallen dramatically.

The result is an economy where the natural trend of most prices is downwards, with a few exceptions: labor-intensive industries where consumption is aided by widely-available credit, such as higher education. But there’s no free lunch: over-indebted college graduates who can’t find work are now moving back in with their parents and defaulting on their student loans. Who pays for this?

Douglas R. Tengdin, CFA

Chief Investment Officer

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