Fix the economy! Bring back the jobs! Create jobs! We need more jobs! All these old and familiar cries use a language that belongs to yesterday's economy not to tomorrow's. It's time to change the conversation.
We have built an economy that is no longer about jobs. (See Growth, Jobs and Consumption.) We have offshored our production jobs and imported labor (legally and illegally) for domestically based lower income jobs. We have taught low cost-producing nations most of what we know about manufacturing and a lot of what we know about innovation. As consumers, for many years we have all -- including the jobless and those of us occupying Wall Street -- benefitted from the low cost of imported consumer goods. We have not engaged in any ambitious infrastructural projects for years.
Most important, we have become increasingly efficient by building production and service processes that need fewer and fewer people to operate them. See Steve Lohr's excellent NYT article, More Jobs Predicted for machines, not People. The result has been the simultaneous growth of corporate profits and unemployment.
1. Unemployment is at the highest level since the Great Depression (with the exception of a brief blip in the early 1980s).
Fig. 2. At the same time, corporate profits are at an all-time high, both in absolute dollars and as a share of the economy.
All of us, who through the good years owned shares in public companies whether directly or indirectly, pressured corporations to grow their revenues quarter on quarter irrespective of how they achieved this. And they did grow their profits and have continued to do so. They sought countless ways to take inefficiencies out of the system including people who were doing things that machines could do faster or that workers in developing countries could do cheaper. These people have been taken out of the system together with other inefficiencies. We have seen the results, but we need to own a part of the cause.
It is true that as Daniel Akerson, CEO of GM and Jeffery Immelt, CEO of GE both said in a recent CNN interview, the pendulum is turning. Using technology, American employees can now be up to three times more productive than cheaper employees in developing countries. With the high costs of transporting manufactured goods back to the markets in the US, it has again become attractive to bring production home. What they didn't point out though, is that the reason production here is more efficient is because machines are doing the producing, not people. There are jobs for the scientists, engineers and skilled workers who design, make and operate manufacturing robots and technology. However many of the old jobs for the blue-collar worker may never come back to our economy again.
So what is this new economy, or neo-economy? What can we know about it for sure? What does it mean for me and what can I do to prepare for it?
We can futurize about the neo-economy. There are some things we can be pretty sure about as we do. I hope to explore some thoughts in the next few Lead By Greatness Blogs, and hope you will join the conversation. Please share your thoughts. Let me know what you agree with, where you think I am wrong and why, and what thoughts you have that add to mine or differ from them.