The economic crisis of 2007/2008 is universally blamed for the recession of 2009/2010. Today, when describing our current economic conditions, pundits and politicians alike cite job creation as the only way back. The unemployment rate is exceptionally high, but it fails to reflect an unfortunate reality: Yes, the average ~9.7 percent unemployment number is much higher than it should be, but — this is not a homogenously distributed statistic. In some areas, unemployment is tipping the scales above 40 percent. And, to make matters worse (as if that were possible) underemployment, which cannot truly be calculated, is at an all time high.
It is easy to understand how we are affected by underemployment. You can use yourself as a focus group of one. Are you making more money now than you were in 2007? Are you spending your money the same way you spent it in 2005? Doubtful on both counts.
When you add in the effect of the thrift paradox (where people hoard cash and save to help themselves, but ultimately destroy the economy that empowers their livelihood) we find ourselves in a troublesome place with opportunistic politicians (and pundits) offering sound bite solutions to a hugely complex problem.
Here’s the thing. I keep hearing people talk about jobs. But I don’t hear anyone talking about the root cause of our economic issues. And, as we all know, if you ask the wrong questions, you are guaranteed to get the wrong answers.
Circa 1880 over 80 percent of Americans were deriving most of their income directly or indirectly through agribusiness. By 1920 over 80 percent of Americans were deriving most of their income directly or indirectly through industry. That 40-year period was the transition from the Agrarian Age to the Industrial Age. It was painful in the extreme. But for World War 1, the economy would not have fared much better than we are faring now.
It is pretty easy to argue that circa 1990 over 80 percent of Americans were deriving most of their income directly or indirectly through industry and it is just as easy to posit that by 2030 over 80 percent of Americans will be deriving most of their income directly or indirectly from Information technology. We are in the middle of the transition from the Industrial Age to the Information Age — and the transition is not going well.
Wealth comes in many forms: natural resources, scarce materials, unique talent, accumulated real property, etc. But the creation of wealth almost always requires the production of something. Food production was first, but we have evolved to produce other goods and services that we translate into wealth in various ways.
If the solutions to America's economic problems were as simple as regaining a competitive edge in the production of physical goods, the problems would already be solved. We could simply create the most technologically sophisticated production lines in the world and we could, with a little hard work and political will, become the most efficient production economy on Earth. We won’t, but we could. I’ve heard dozens of learned people from every discipline espouse the virtues of a manufacturing or industrial economy of the good-old-days. You know … when we made stuff! Poetic and nostalgic as it may be, it is not a probable future for America.
America must evolve into an efficient Information Age super-power. That probably means relying on a remarkably high percentage of service businesses to drive the economy. Can it be done? Certainly not with the workforce we currently have in America. The statistics are overwhelmingly negative. There are more honors students in China and India than there are total students in the United States. Let that statistic sink in for a minute.
We send kids to school to learn reading, writing and arithmetic. The curriculum and teaching methodologies are virtually unchanged since my great grandparents attended school. It is unacceptable to have analog teachers and digital students … unacceptable to have analog parents and digital kids … unacceptable to have analog managers and digital workers and, absolutely unacceptable to have an analog aristocracy and a digital proletariat.
I hear our political leaders talk about job creation as if we are going to open factories and start building cars or consumer electronics or durable goods. Not likely. Our publicly traded corporations are not fiscally governed to allow manufacturing to be done in the United States. Energy prices will have to rise to a point where trans-Pacific shipping is so expensive that local production becomes cost-effective for the United States to truly return to its industrial roots. Again, not likely any time soon.
The problem is exacerbated by the self-hypnotic, completely delusional idea of what it means to be a productive employee. For example: If a person, who has been employed for 15 years as an administrative assistant, is downsized because the company now uses voicemail, email, templated business correspondence and webcams, keycards and automated door locks for security … what job is that worker really trained to do? Did they ever add-value to the organization? Voicemail has been around (in one form or another) for 30 years. Email for 20 … what was that person doing to increase shareholder value during that time? I know why they had a job, but I’m asking a more macro question: What value does / did that job add in the 21st century economy? The answer: 0. For the cynical, it is easy to argue that a person who was being paid to sit in a receptionist’s chair for 15 years was on corporate welfare.
Is a non-digitally-savvy 49+ year-old middle manager or bureaucrat employable in 2010? With an average life-expectancy of 83+ years, that person is still a minimum of 15-20 years from retirement. What are they supposed to do? The answer is, as always, education — not school — education.
What we need to do is to retrain and educate our workforce for the time in which we live — the Information Age. This also requires hard work and political will, but it requires something else — personal responsibility. We, you and I, have to take responsibility for our education. Workforce development starts at home.
Everyone cannot be a rocket scientist. We all perform according to our gifts, but — and it’s a big but — we can take a realistic view of our personal skills and use the available tools to create wealth. The tools are everywhere and they are practically free.
Can America actually remain an economic super-power in the Information Age? Can a service economy create as much real, sustainable wealth as an industrial economy? I’ll leave it to you and the economic experts and pundits to argue that point. But I will offer the following suggestion: To fix our economy we need to acknowledge that we are in the middle of a massive transition from a nation of industrial wealth-creators to a nation of information and service wealth-creators. We need people to be willing to retrain themselves — outside the formal system. Everyone does not need to go to college. Harsh, but true. Tradespersons and artisans don’t need college; they need occupational training. I’m not talking about plumbers and mechanics — I’m talking about web designers, photoshop artists, music producers, videographers, the people who rack and stack servers and tend to the storage clouds — none of these jobs require any knowledge of the Socratic method, biology, the history of European thought or any other liberal arts education.
I don’t need an MBA with a JD to apply for the job I have open for a production assistant or my admin or even to be my biz dev person. I need someone with mad digital skills and a cultural understanding of how the analog and digital worlds intersect — which, I promise you is not taught in any school on Earth.
If the future of the American economy is based upon SMBs (small to medium sized businesses) and every politician and pundit says it is, then we need to educate a workforce that can fill the jobs that an Information Age SMB is likely to need.
I consider myself a lifelong student. But there is a profound difference between education for its own sake (which certainly has a place) and workforce development. And, as we can all agree … if people have good, well-paying jobs, everything else will take care of itself.