3/1/12

Are We Going To Roll Up Our Sleeves Or Limp On?





It has become a huge concern to me that in regards to all the current discourse among our country's politicians about American Exceptionalism, innovation, our rich manufacturing history, the American businesses leading the way into the future of technology, social media and all things digital, as the real question of how all this produces jobs in our current consumer based economy is ignored. Despite the annual profits or stock prices of American companies in the technology industry, this success does not translate into growth of the American labor force by any means or the fantasy that these record profit margins will somehow equate to shared prosperity for all. Ha! Not in a free market global economy.

Come March 9th at 8:30 am, I do predict a further drop in the unemployment rate. In post financial crisis years, as companies have been very bearish about operating costs and sitting on huge cash piles as they squeeze out everything they can with a bare bones workforce. But in recent months as the economy has grown steadily across the board, aka more people working, more people with a paycheck in their pockets to spend, consumer spending goes up, and thus the whole economic cycle is turned up a couple dials. However, as the economy gains speed and demand steadily grows, the current labor force companies have no longer can keep up, and they have to hire new workers, which is great for economy, but bad for companies because that means higher operating costs and lower profits, which was evident in 4th quarter reports.

Taking a step back it's important to compare the current unemployment rate against the labor participation rate (see Bureau of Labor Statistics graphs below). Comparing these numbers will tell the real story about the unemployment numbers, because while it may look good with 8% unemployment (my prediction on March 9th) and as those numbers will eventually continue to go down, so will the participation rate. A large part of what we are seeing is the beginning phases of the mass baby boomer exit from the labor force. This is of concern in terms of government revenue and the battle over deficits, as the decline in tax revenue is coupled with bigger Medicare and Social Security costs...a double edged sword.

Anyway back to my point here. We must not obsess and focus on the past. Whether it's a GOP desire to replicate Reagan era tax policies, while ignoring the inconvenient parts like Reagan raised taxes 11 times or the economic circumstances of 30 years ago which are entirely different today. Or the Democratic notion of a "built to last" economy replicating the manufacturing base of the 50s, 60s and early 70s, completely ignoring this big thing called China and free-market capitalism which allows big American businesses to take the jobs from its country and give them to workers in another country where they operate without regulation, work endless shifts and receive pennies in return. Wake the fuck up! None of that is going to happen. The world has so drastically changed in the past 40 years, the point of no return was passed years ago as we flew by in the EZ-Pass express lane and didnt even slow down to take notice of the potential risks and repercussions. Instead we just patted ourselves on the back, the economy was strong, the dollars signs looked pretty and we ignored every single red flag, and, well, now, it's too late. It is intellectual midgetry to think we can replicate the past. The dominos have fallen and there is no way to pick them back up and put them in place with out knocking them over in the process.

Technology by definition is based on computers and machines doing the work, not humans. Computers and machines do not flex their biceps, sweat or have an aching back after a 16 hour day assembling cars. Facebook does not require a factory line of hundreds of American workers, working 3 shifts in a non stop 24 hour cycle. No, it has a handful of programers to write script and code and devise ways in which the computer can do all that work simultaneously and with perfect accuracy and productivity not dependent on a lunch break. If you can think it and write a code for it, a computer or machine can perform it. Humans are rapidly becoming the outdated, ineffective obsolete model. In fact it seems humans only seem to get in the way and make businesses slower as they are prone to things like mistakes and errors that are a natural characteristic of our species and held accountable for other human traits such as greed and cheating, which often lead to fraud and other scandals potentially destroying business.

So as the human labor force becomes the bulky 3 megapixel camera and heavy cell phone that only makes and receives calls of yesterday, we as a nation need to unite together, not by whether one pulls a red or blue lever in the voting booth, but as politicians, business leaders, economists, labor leaders, scientists, workers, consumers, innovators, etc and think about our future as one. If we are going to see our way out of this jobs crisis, we need to have a jobs plan for tomorrow which ensures that everyone benefits. Contrary to what those on top may want you to believe, our consumer economy is not a triangle with a powerful few on top and powerless many on the bottom. No, our economy is a circle, a well greased gear if you will, in which every tooth on that gear is just as important as the next in terms of overall function and health of the gear, because if one tooth breaks, the entire gear is rendered useless. As a nation, we need to the face the facts and hard truths that define our reality and the road of the future that we will go down together. The consumer buying groceries and gas every week is just as important as the Fortune 100 CEO.

We are at the crossroads and there is only one narrow road forward in which we must figure out a way to all fit together in one car without leaving anyone behind. We are running behind schedule so for the time being we just all have to make sacrifices for the benefit of our country. Someone is going to get to drive, someone is going to get shotgun and hold the map, and someone is going to get stuck in the back seat of the Prius sandwiched between two Chris Christies. At the next rest stop we can all get out, fill the tank with gas, buy a Slim Jim and Slurpee and then argue all over again about the seating arrangements come the new election cycle. But for the time being if we dont all figure out a way to get everyone in the car now and go, we are going to be left behind as a nation as we stand on the side of the road arguing and fighting as the cars and buses of other countries and nations honk and wave as they pass us on the road to the future.