UPDATE: This is now the topic of my South by Southwest proposal. Please go vote for and comment on it here.
We’re not going to have a jobless recovery. We’re going to have a jobless future.
Holding out blind hope for the magical appearance of new jobs and the reappearance of growth in the economy is a fool’s faith. Politicians who think that merely chanting the incantation “jobs, jobs, jobs” will bring them and the economy back are fooling us if not themselves. When at least a tenth of Americans are out of work, for Wall Street to get momentarily giddy at the creation of 117k jobs is cognitive dissonance at its best. No one can make jobs out of thin air. Jobs will not come back. A few new jobs reappearing won’t fix anything.
Our new economy is shrinking because technology leads to efficiency over growth. That is the notion I want to explore now.
Pick an industry: newspapers, say. Untold thousands of jobs have been destroyed and they will not come back. Yes, new jobs will be created by entrepreneurs — that is precisely why I teach entrepreneurial journalism. But in the net, the news industry — make that the news ecosystem — will employ fewer people in companies. There will still be news but it will be far more efficient, thanks to the internet.
Take retail. Borders. Circuit City. Sharper Image. KB Toys. CompUSA. Dead. Every main street and every mall has empty stores that are not going to be filled. Buying things locally for immediate gratification will be a premium service because it is far more efficient — in terms of inventory cost, real estate, staffing — to consolidate and fulfill merchandise at a distance. Wal-Mart isn’t killing retailing. Amazon is. Transparent pricing online will reduce prices and profitability yet more. Retail will be more efficient.
The housing market has imploded and is not likely to reinflate for a long time to come. So the market for new homes will not recover and construction jobs will not come back.
I can and will keep going, but later. Technology and related trends, including globalization, lead to efficiency in companies and sectors. Transparent markets lead to lower prices. Digital abundance leads to both.
All this has profound implications on both business strategy and policy, but we’re not facing these issues as, instead, our leaders keep trying to resuscitate old markets and old ways. Bailing out banks only transferred debt from them to governments (read: citizens), leading to Europe’s mess. Bailing out GM gave life support to an industry that deserves disruption. Fighting over debt in Congress — and reducing the markets’ faith in the markets, leading to this week’s mess — isn’t the issue. The question is, what should government be doing — where it should be investing — to improve our lot in the future as the size of government with the taxes available will inevitably shrink with the economy.
Don’t fill potholes — or rather. don’t think that will fix the economy. Instead, we should be investing in the entrepreneurs who will create jobs — if fewer — and wealth — greater, thanks to platforms and efficiencies. Invest in education of our youth and our unemployed. Invest in efficiency — energy efficiency, for example.
As I say, these are ideas I want to explore now and I hope you’ll help me by sharing yours.
: MORE DISCUSSION: There is an amazing discussion going on not only in the comments here but also at Google+ here.
Paul Graham of Y Combinator led off another amazing debate at HackerNews here.
I crossposted to HuffingtonPost here.
Henry Blodget just crossposted it at Business Insider here.
Thanks to all this amazing discussion, I just substituted my South by Southwest talk from publicness to this topic. Thank you all for the inspiration and for pushing the ideas here.
This is the next topic I want to work on, as I said. So this discussion is invaluable to me as I explore these notions. Again, thank you.
: Here is the text I resubmitted to SXSW under the title, “Honey, we shrunk the economy.”
: Jason Calacanis riffs on the idea of creating a retraining program that would give people the opportunity to move to new jobs.
: Eric Reasons, who really kept me going on this topic when I first raised it on my blog a few years ago, answers the questions in my SXSW talk proposal.