Google CEO: "Massive deflation", "collapsing home prices" coming

[Eric L.]

http://www.ft.com/intl/cms/s/2/3173f19e-5fbc-11e4-8c27-00144feabdc0.html

A perennial optimist when it comes to technology, he argues that all that will change. Rapid improvements in artificial intelligence, for instance, will make computers and robots adept at most jobs. Given the chance to give up work, nine out of 10 people “wouldn’t want to be doing what they’re doing today”.

What of people who might regret losing their work? Once jobs have been rendered obsolete by technology, there is no point wasting time hankering after them, says Page. “The idea that everyone should slavishly work so they do something inefficiently so they keep their job – that just doesn’t make any sense to me. That can’t be the right answer.”

He sees another boon in the effect that technology will have on the prices of many everyday goods and services. A massive deflation is coming: “Even if there’s going to be a disruption on people’s jobs, in the short term that’s likely to be made up by the decreasing cost of things we need, which I think is really important and not being talked about.”

New technologies will make businesses not 10 per cent, but 10 times more efficient, he says. Provided that flows through into lower prices: “I think the things you want to live a comfortable life could get much, much, much cheaper.”

Collapsing house prices could be another part of this equation. Even more than technology, he puts this down to policy changes needed to make land more readily available for construction. Rather than exceeding $1m, there’s no reason why the median home in Palo Alto, in the heart of Silicon Valley, shouldn’t cost $50,000, he says.

For many, the thought of upheavals like this in their personal economics might seem pie in the sky – not to mention highly disturbing. The prospect of millions of jobs being rendered obsolete, private-home values collapsing and the prices of everyday goods going into a deflationary spiral hardly sounds like a recipe for nirvana. But in a capitalist system, he suggests, the elimination of inefficiency through technology has to be pursued to its logical conclusion.

“You can’t wish away these things from happening, they are going to happen,” says Page. “You’re going to have some very amazing capabilities in the economy. When we have computers that can do more and more jobs, it’s going to change how we think about work. There’s no way around that. You can’t wish it away.”

[Eric L.]

Originally posted by @Vince Beusan:

"Eric, CEO of Google, has renounced his American Citizenship for tax purposes. He's a hypocrite that speaks with other elites that see the big picture."

Do you often create fake slander on the Internet or is this a first time for you? Let's touch on three points.

1) He's created a company with 55,000 employees. That company was voted this year as the best to work for in America.

2) He has a project in the works to stop the #1 killer of Americans age 4-34 with his driverless car project.

3) He's created a nanobot project that with the goal to cure cancer within the next 10 years.

Originally posted by @Bobby Narinov:

"Obviously he is so far off base because he has never seen his property tax bill. If he ever bothered to open it he would have noticed that this $1M house is taxed as $700k LAND and $300k improvements(i.e. buildings). So even if the price of building a house in Palo Alto drops to ZERO (due to process improvements) the price of the land is not going to be affected. Not unless the machines are able to produce more land. This can only be possible in one of two ways: somehow the machines become GOD and/or they figure out how to fit more space into the same space (Dr. Who's TARDIS). Knowing Google, someone inside already have a billion dollars budget on that."

Good points. Let's talk about that. How would you define technology? To me, technology is simply figuring out ways to do more with less. We've seen a lot of technology with data and bits, but we haven't seen a lot of technology with atoms in the last 50 years. We now have all of the worlds information in our pockets, but not a whole lot else has changed.

The Federal Reserve has done everything it can to try to create 2% inflation per year and it has failed. Why? Technology is just now starting to focus on atoms instead of bits. Things like Uber and AirB&B are just starting to make things more efficient.

How are we going to do more with less in housing? Obviously we can't produce more land, so we're going to have to use land more efficiently. The first way we'll do that is with driverless cars. 50% of the land in LA is dedicated to the car. This is highways, parking lots, driveways, garages, and streets. Half of that, 25%, can be re purposed with the driverless taxi as we won't need parking lots, driveways, or garages. In addition to this, any house within 100 miles of a major city will be within the daily commute. Twice as much housing available in LA suddenly means house prices are cut by at least half.

So now we're in a spot where the driverless taxi has reduced our #2 expense, transportation, to a few cents per mile in a driverless car. It has also reduced our housing costs by half, but we still haven't come close to Larry's projection.

In addition to being able to use more land, we'll have to build up. The #1 reason that we don't currently build up in major cities are cost and zoning restrictions.

Zoning restrictions are in place to keep density down. The main reason for this is traffic and congestion. In a world where a driverless taxi can drive inches behind the car in front of it and never be distracted, traffic jams don't exist. Zoning restrictions fade.

Let's talk about cost. It is currently extremely expensive to build up. Over half the cost of the structure of a home is labor. Today, if you want to add a level to your home it will take about a year for the loads to be calculated and for the labor to be completed. What if automated bull dozers could have the home knocked down and picked up in a single day? What if a driverless semi then pulled up with a modular home that could be stacked like shipping containers? What if it had a 3d printer that could print a home out of cheap concrete?

These things might seem like science fiction, but I think that we can all agree that framing a home with wood and raising the framing is 1800's technology that could be much more efficient.  There are a lot of way we could do more with less here.

Google has bought almost every robotics company out there. They are very clear that their goal is to replace human labor within 10 years. That was last year.

This affects each and every one of us a real estate investor. We all agree that technology is moving faster. We all agree that housing is the #1 expense of Americans. In fact, it's almost twice as expensive as the nearest expense. We can see companies like Google moving from bits to atoms. If technology is doing more with less, it's very clear that housing will ground zero for technology innovation in the coming decade.