“That Used To Be Us” – “The Great Stagnation” – Still, We Keep Asking, Where Will the Jobs Be?

We’re going to be hearing a lot about jobs in the coming days.  We should have been hearing about it more, a whole lot more, but there have been too many fires to put out.  And the bad news is they are not out.  They are not contained.

(I intend this metaphorically, but at this precise moment, here in Texas, there are literally too many fires to put out).

I have already put the new Tom Freidman and Michael Mandelbaum book, That Used to Be Us: How America Fell Behind in the World It Invented and How We Can Come Back, into my schedule for the First Friday Book Synopsis.  It is about a lot, but especially about “where will the jobs be?” — beginning with:  “where have the jobs gone?”  (Listen to in interview with Freidman, just under 8 minutes, with transcript provided, here.)

And just last night I presented my synopsis of The Great Stagnation:  How America Ate All the Low-Hanging Fruit of Modern History, Got Sick, And Will (Eventually) Feel Better by Tyler Cowen.  A short, brilliant book, Cowen asserts that:

All of these problems have a single little-noticed root cause:  We have been living off low-hanging fruit for at least three hundred years.  We have built social and economic institutions on the expectation of a lot of low-hanging fruit, but that fruit is mostly gone.
Low-hanging fruit since at least the seventeenth century:  free land, lots of immigrant labor, powerful new technologies…  Yet during the last forty years, that low-hanging fruit started disappearing, and we started pretending it was still there.  We have failed to recognize that we are at a technological plateau and the trees are more bare than we would like to think.
That’s it. That is what has gone wrong.  (emphasis added).
In other words, we’ve been riding off the past…

And in the book, he deals with the “problem” of the internet – a brilliant “invention,” yet one that may not ever create enough jobs.  Some more highlights from the book:

The internet is wonderful, but it’s not saving the revenue-generating sector of the economy. 
More and more, “production’ – that word my fellow economists have been using for generations – has become interior to the human mind rather than set on a factory floor…  In other words, the new low-hanging fruit is in our minds and in our laptops and not so much in the revenue-generating sector of the economy.
…the big technological gains are coming in revenue-deficient sectors.  “To put it simply, only after 500 million members, and in very recent times, did the debate stop over whether Facebook can make a lot of money.”
            • Contrast:
                        • the arrival of the automobile = millions of jobs
                        • Facebook = users do the work; a relative miniscule number of jobs created
Online Industry Employment Levels
Google – 20,000
Facebook – 1,700+
eBay – 16,400
Twitter – 300

At the gathering last night, where I presented my synopsis of The Great Stagnation, a very sharp, very successful gentleman, walked up afterwords, and said this (paraphrased, from memory):  “I have looked and looked at this, and I simply do not see an answer.”  Of all the issues I have written about on our blog through our few brief years, the question that has kept me up at night more often than any other is this:  where will the jobs be?

Here’s Friedman’s answer (from the interview):

There’s kind of a hankering today, when is Ford going to put in that 50,000-worker factory in my city again? When is Intel going to come, Paul Otellini? Folks, it’s not going to happen because those factories now are all incredibly roboticized(ph), automated, and they are capital-intensive, not labor-intensive. We’re not going to have a 50,000-person factory in your town. What we need are 50,000 people, a thousand of whom are starting jobs for 10 people, 50 of whom for 100, 100 of whom for 30 – that everybody needs to be starting something.

Yes, of course, he is right.  We need to start a lot, a whole lot, of new start-ups…  But, look at Facebook – a pretty successful “start-up.”  And, look at how many people Facebook employs.  Not.that.many!

And, besides, it takes a special kind of person to start something that is successful enough to employ others over a long haul.  This is not all that easy!

But, we may have no other choice.  Because, where else will the jobs be? 

That question has not gone away – it only keeps getting louder, more urgent…

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