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Subject:  Re: OT: Man in the White Suit Date:  2/14/2009  8:10 PM
Author:  Goofyhoofy Number:  25974 of 36384

Let's take a real world example. 15 years ago, it took considerable clerical staff work to put together a university course syllabus, process book orders for courses, etc. Now most faculty do this themselves and post the syllabus on line. So (ignoring the union), the need for clerical staff has been reduced by about 75%. Now, it does turn out that there is a need for IT support, which is new (but as computing has become more self-sufficient, we need fewer IT staff than a few years ago). So for every 3 clerical staff no longer needed, we maybe need 1 IT person.

But that one IT person has to buy cables and plugs and all kinds of things which didn't exist previously. And the companies which sell those things need people to answer the phones and send out bills and all the rest. The IT people buy computers from Dell, and that means more jobs for people stuffing boxes, and UPS deliveries, and a host of other things up and down the food chain.

People have been complaining about this for centuries, literally, since the beginning of the Industrial Revolution. "Oh No! It only takes 1 man to farm what 10 used to! What will the other 9 do?" Well, they'll go to the city to factories and make things.

"Oh no! Those assembly lines let 10 people do what 100 used to! What will the other 90 do?" Well, they'll get jobs building shopping malls or theaters or they'll manage fast food restaurants or something.

The quest for "efficiency" means making more stuff for cheaper. That means more people can afford them, which makes even the poorer segment of our society vastly richer than the well-to-do were just a few generations ago. Seriously, our "poor" have cars and color TV's and (sometimes) iPods and microwave ovens.

As has been demonstrated by the most obscenely rich, you can (apparently) never have "enough", and that goes for every segment of society. So I'm not worried that commerce will grind to a halt because everybody says "OK, I have everything I want", because people always want more.


That doesn't mean that the market is kind, or that the process is smooth, or that some people don't get hurt, sometimes badly, along the way. It's one of the reasons I (and others) argue for a safety net. Frankly, it's also one of the reasons I argue for policies which produce a wider middle class. Raising the tent pole extremely high in the center doesn't produce much ground coverage at all. Raise a lot of lower poles around the circumference and you suddenly have a tent under which you can fit great crowds and where everybody benefits - including the guy with the tallest pole.

Once quality medical record and billing programs are really available (the current ones are overpriced and suck), much medical clerical staff will be unnecessary. As people become more comfortable shopping on line, as we saw this Christmas, local shops will disappear (and shipping jobs will not pick up the slack).

And cars now last 150,000 miles and you don't need to buy new tires at 20,000 miles and washing machines last longer, but that hasn't been the end of tire makers or washing machine manufacture or even of car makers. They've moved to different locales, now, but then that's nothing new; we used to import granite from England rather than quarry it in Vermont in Thomas Jefferson's time. With cheaper transport comes "more efficiency" and jobs move. The Erie Canal dropped the price of a loaf of bread by 90% in New York City, and that was bad for upstate New York farmers, because Ohio wheat became just as cheap and crashed wheat prices. The railroads killed dozens of businesses when it became "more efficient" to produce things in one big place rather than a dozen smaller places somewhere else. Coal to steel mills, steel to everywhere, a lot better by railroad than in small smelters scattered hither and yon.

Along the way those displaced workers find jobs in whole new industries, from radio & TV to the internet and movie theaters, from real estate offices to computer repair shops. And with spare time somebody (not necessarily the same people) invent whole new businesses our grandparents would never have thought of. Home burglar security systems. People who show up in a truck and fertilize your lawn. Satellite TV. Cell Phones. Stores that sell only batteries. Shops that only frame pictures. Fast food restaurants, endless varieties of fast food restaurants. And so on.

We're in a tough spot. We may be down for several years, possibly for a decade. But none of that is due to the fact that everybody has their iPod and doesn't need another one or that these laid off workers will never be able to find another job doing something. When you take a bullet to the gut, it takes a while to recover. We have, by dint of calamitous economic circumstance, guilt shared by government and private industry alike, taken a bullet to the gut. It'll be a while, but we'll find a way out. We always do.

(That said, it's often lumpy. Climbing out of 1929 was notoriously difficult because so much of the financial infrastructure and confidence was knocked away. JP Morgan's response in 1907 was one worth noting. The Nifty Fifty debacle came at an inauspicious time. The (necessary) Volker recession of 1981 and the OPEC embargo took a while to work off. The dot-com and telecom bubble a decade ago, for the most recent.)

Where will the growth come from? I have no idea, but I do know that about every 10-15 years there is a significant revolution somewhere in the economy, and it invariably produces some sort of economic growth in that industry, plus associated jobs in supporting sectors. And that gooses the economy and people spend in entirely unrelated sectors. Honestly, there's been no "revolution" in clothing in 50 years, but the malls are chock full of stores which sell nothing but, largely (I suspect) because of the "wealth" people have felt these past 30 years, real or not. Tip: expect fewer clothing stores, temporarily. I bet the malls aren't vacant 10 years from now.

You want revolutions? Microchips. Internet. Google. Go back a half century, it's rampant consumerism (washing machines, color TV's, suburban houses.) In the 1920's it was the chimera of financial engineering (rinse, repeat.) In the 40's it was war materiel production. And most important, in the 70's we had disco and lots of groovy niteclubs. ;)

So long as we don't see spiraling collapse (which is what I believe the government is trying to stave off) we should be OK after a period of retrenchment, winnowing, attitude and horizon adjustment, and (equally important) appropriate regulation of the now-obvious holes coupled with smarter government policies to forestall a repeat. Not that any of that will be forever, since it never is, but generally speaking after such a period things get well again, the patient lives, goes out, lives it up, and twenty years later gets shot again by some other method: OPEC or greedy bankers or stupid government or something. Such is how it has always been. I don't know why it should be any different this time.

Until somebody can say what the new jobs are going to be with believable numbers, not wishful thinking, economic "laws," or hype, I won't believe in them.

Nobody knows. Nobody ever knows. This is a complaint that could be made during any recession, depression, or moment of economic uncertainty during the past 200 years. And after a period of self-flagellation (and other necessary economic retrenchment) we pick ourselves up and go forward. When? Where? Really, it's a total mystery. But it's not going to stop forever because you don't need to upgrade your computer as often.

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