Jobs: When will they come back?

If you think of your job as just what you do to earn a paycheck, the answer is NEVER.

Do you (or did you, if you got laid off) do useful work? If you think flipping hamburgers at McDonalds so that some frazzled mother doesn't have to counts as useful work, think again. Minding the front desk of a tanning salon isn't going to count either. And as long as you think those are real jobs, you are going to have a hard time with this economy as well as the future economy.

Today it was reported that the unemployment rate climbed again, edging toward 10% (see; HuffingtonPost article: "Unemployment Rate Rises To 9.8 Percent; U.S. Economy Shed 263,000 Jobs In September"). And Paul Krugman, in The New York Times ("Mission Not Accomplished") rightly points out that not only is this unacceptably high, but the projections for very slow jobs growth and employment recovery (still 7.7% in 2012) mean protracted suffering for millions of families.

He then goes on to whistle the same neoclassical tune of "growth is the answer" and that the government should be doing even more in the way of stimulus to get the US economy back on the growth curve. That, in the limited imaginations of neoclassical economists, is the only solution to creating jobs and providing people with access to incomes. I'm still flabbergasted at how myopic even Nobel Prize winners can be. Yes Krugman is right that what the government is doing is wrong, which right now is holding the line on further stimulus, especially since it can't account for billions that it doled out to the financial institutions to keep them afloat. But he is dead wrong about the remedy.

Let me be clear. He is right that IF growth in GDP were somehow stimulated (and it would need to be rather healthy growth in the range of 4 - 5% per year) that new jobs would be created. Employers would see demand for their goods and services, presumably, and need to produce more. Hence they would be hiring again. Another NYT columnist, Tom Friedman, further has suggested that new kinds of high paying jobs in the 'green' sector, whatever that is, would be created. So we'd be well on the road to economic prosperity AND magically solve our greenhouse gas and energy independence problem all in one fell swoop.

But there is a basic fallacy with this classical economics/technology corucopianism view of things. The conventional wisdom is still conventional, but no longer wise. Growth is not the answer any more.

There are actually a couple of problems with both what Krugman wants to do and with the whole notion that jobs recovery will occur, albeit slowly, once the financial system is stable, the Geithner-Bernanke-Sumers plan. Krugman wants more stimulus, more government spending in true Keynesian economic style, arguing that it really won't hurt that much in the long run (he doesn't actually provide numbers to back up his claim but maybe we're to take the word of a Nobel Prize winner for granted). Many other economists worry about the fact that more government spending now will just put the federal government deeper in hock, and we are already up to our eyeballs in debt. They (rightly) argue that the government can't go on 'printing' money to spend without risking inflation. Monetary and fiscal policies have to be balanced just right in order to 'manage' a recovery without runaway inflation eating us alive. Krugman disagrees. They all want the same thing though; economic recovery to an annual GDP growth as a measure of a healthy economy. They only disagree on how the monetary/fiscal balance is best achieved.

The second problem has to do with the actual possibility of job recovery by whatever means. The fact is that the US has become a major consumer-oriented and service-dominated economy. The GDP ostensibly captures all transactions where someone buys a hamburger at McDonalds (for example) and those kinds of transactions actually represent a substantial fraction of total GDP. Now if the economic recovery depends on people buying and consuming stuff and those same people are not working, receiving an income, then with what will they buy? But if they don't buy, then there won't be those service jobs, and so on. It's circular causality. Consumers can't consume unless they are working and they can't work if people aren't consuming.

Krugman's solution (inferred from past writings) would be more government spending on infrastructure projects to pump money into the economy. Both Krugman and Friedman want the government to invest in green infrastructure, and Friedman, in particular, wants more R&D in green technology to spur entrepreneurism. He assumes that magical energy producing technology will pop out and make lots of people rich (he calls it the ET revolution!) The government should be spending lots of money that it doesn't actually have (remember all those unemployed people and lowered profit corporations don't pay as much in taxes!) to generate jobs. Those newly hired workers (making really great wages in the new green economy) in turn will then become dutiful consumers and boost the service sector (which, for my purposes includes merchandise distribution and retailing). Thus our economy recovers, GDP goes upward again, taxes are collected so the government can get its fiscal house in order and life is generally back to 'normal'.

I've written plenty about the technology cornucopian fallacy, including the prior blog about why the scaling up problem will defeat alternative energy production from powering the kind of economy we have today. There are increasing numbers of studies and reports that back up the fact that belief in technology (in energy, such as ET) is delusional or at best wishful thinking. And with peak oil looming, to be followed by peak energy period, the net energy needed to do economic work is going to fall. No amount of wishing by Krugman, Friedman, Geithner, etc. will change the basic fact that an economy based on growth and consumption is DOA.

So where will jobs come from? More cogently, how will people have an income sufficient to pay for their necessities? If I am right about the fact that all of the current economic plans are doomed to failure in the not-so-long run, then how will people support themselves?

The answer, in part, depends on a complete change in perceptions about what we are in terms of economic entities. As long as we think of ourselves as 'consumers' and let the powers treat us as consumers we are going to remain hostages of this growth/consume (and hence borrowing) mind set. Each of us has to think of ourselves as a producer of goods or services first.

But there is a hitch, sort of. What we produce cannot just be mindless stuff that others consume without a useful benefit. Our products and services have to be useful to those who buy them. Think about all those outdoor and farmer's markets that are springing up everywhere (the city of Portland, OR has a weekend market that has grown quite the spectacle). They tend to be dominated by 'artisans' who pump out an endless stream of trinkets and paintings and sculptures and yard art and... Don't get me wrong. I am not saying art has no worth. But I find it difficult to believe that most of these 'products' are not just more useless stuff that people have accumulated more for its novelty (a short-lived phenomenon) as opposed to its continuing benefits. On the other hand, the farmers that sell actual food (as opposed to the food stalls that sell greasy junk foods like at a carnival!), especially the locally grown food, are selling real, useful products. People who build useful tools and bring them to such markets are selling useful products. People who craft artful clothing, like knitted sweaters, but not the tie-died T-shirts, are selling useful products.

Those of us who develop a sense of themselves as a producer of useful goods or services can have gainful employment right now. It won't be a mind-numbing job flipping hamburgers or waiting on customers in a jewelry store. It won't even necessarily involve a paycheck. It will involve true entrepreneurialism (not quite the kind Tom Friedman thinks about) to be sure. It might even involve barter — my service for your product. The key is that you have to produce something that someone else is willing to give up their labor to have. And they will be much more attuned to the value of their own labor than has been the case in the past. So you won't be able to produce junk jewelry or pulp paintings and expect that to provide food on the table.

In fact the transition to this kind of economy is already happening in local settings all across the country. It is born out of necessity since there are so many people out of work. When someone's unemployment benefits run out, they just disappear from the statistic radar screen. Where do they go? I have now seen many examples of people who are resilient and have coped with this situation by rethinking their own status. The first step is to simplify one's life, reduce the 'needs' one has for money and then think about what they can produce that others will find useful.

Is this going back to an earlier kind of economy? You bet it is. And that is exactly what we will all have to do eventually. Every able bodied man and woman is capable of physical labor and had better get used to the idea. Older people can run education (actually I think retired people make the best grade school teachers!). Physically challenged people can handle bookkeeping (always a needed service!) or other 'desk' work in support of the physical work. Crafts persons can repair or build needed tools, such as treadle powered sewing machines or looms. Every adult human being can find some way to do useful work, to add value to society in a way that is truly valuable. But rather than doing it for 'the man', they will need to learn to do it for the customer and how to barter and trade effectively. [As an aside there is a growing interest in local currencies to alleviate the classical problems with barter. But the underlying theme here is that people will actually know how to value the things they want to get in terms of their own labors and what they are worth. Those can be translated to worth and fractionalized in any local currency.]

We are not going to hell in a hand basket, even if it has to seem that way to the millions of people who find themselves unemployed through no fault of their own. We are going toward simplicity in terms of our own needs and in terms of our relations with the economy. Humans have never just been consumers. We have always been, primarily, producers who need to consume some basics in order to fulfill our primary mission. We have been fooled into believing we had become something different, a consumer first, who had to do some kind of work in order to get a paycheck so as to fulfill his or her responsibility to consume junk. We fooled ourselves. It happened because we had discovered so much cheap energy that allowed us to turn a lot of the production work over to machines. And that allowed us, for a short time, to think of ourselves as consumers first. But it was a temporary condition only. Now, as jobs disappear, it is time to reawaken our realization about what we really are. Producers first, consumers by necessity.

And, by the way, it isn't the case that we have to produce more than we consume in order to grow. Humanity already has overshot its natural population size based on the carrying capacity of the planet for our species. No, the need for production in excess of consumption is for two very fundamental reasons. The first is we are constantly fighting the Second Law of Thermodynamics, its entropy form. We are forever in need of repairing the degradation that just comes with time. That takes real work. And that also includes replacing ourselves (rearing children). Second, we need to produce an excess of usable wealth (like tools and storable food) against the times when things aren't going so well. There will be disasters. We need stored excess in order to repair the damage or sustain ourselves in droughts. We need insurance and hedges against the inevitable bad times. We need savings of real wealth. And we only borrow from those savings when there is an actual need.

As the energy flow diminishes, we will need to adapt our economics to the situation. That means more human (and animal) labor directed at things that truly matter to survival with reasonable esthetics. We can transition to that kind of economy only when people start thinking of themselves differently than the economists and politicians would like. You don't need a job. You need to be a producer. That also means you need to be a problem solver (which I suspect is why we evolved bigger brains!) Let go of the dream of a bigger house, or a motorboat. Focus on your skills and talents and what you can produce that others will need (not just want). And if you play your abilities right, learn to trade and learn to value things realistically, you will find a sustainable life.

Comments

[Physics Rules]

Question of the day:
What do Coca-Cola, McDonalds, Wal-Mart and Walt Disney have in common?
Answer: These are four of the 30 stocks included in the Dow Jones Industrial Average. Industrial?

Final comment: Don't despair about real jobs disappearing. Within the last week I read that in the first 9 months of the year the federal payroll has grown by 25,000. Can't help but think that we'd be better off if they were making trinkets for the farmers markets.

[Thomas Key]

Nice blog and a timely post. I could not agree more with your conclusions (and recommendations) regarding how to survive the current economic crisis. I saw the light about 10 years ago and have successfully transitioned my family into farm life where we actually produce, sell, and barter useful goods and services. Every year we have diversified and improved our craft to the point that we can now make a decent living from the farm. You are correct in stating that many communities are transitioning back to an earlier economy. I see it happening where I live and am proud to be part of it.

[Air Jordans]

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