THE CRISIS IN JOB CREATION
AND
WHAT YOU CAN DO ABOUT IT
The first major economic downturn in decades has hit at a time when we are experiencing
a paradigm shift in the way business is conducted and will be conducted from now on.
Many of the private sector jobs that have been lost will not be replaced because of the
new technologies in communication, robotization and the impact of globalization. It is
very sad that this President and the incompetent gang of 535 in Congress have wasted the
past 18 months not focusing like a laser on this gigantic problem. Instead they have spent
countless hours working on the health and energy programs, both of which the people
have emphatically told them that we do not want at this time. The polls are perfectly clear
that we want them to focus on Jobs, Jobs, Jobs. Moreover, we believe that the high cost
of the healthcare and the energy plans will exacerbate the jobs crisis.
During the past 18 months we have seen jobs disappear so that unemployment has
reached about 10%, and it’s more like 17% when the underemployed are taken into
account. What we are not being told is that many of these jobs are lost forever.
Meantime, the so called stimulus program has saved or created government jobs
primarily at the State and Federal level, thus increasing the size of government at the
expense of private jobs.
Here are some actions the Administration has taken that virtually assure the stagnation of
private investment.
· Took control of General Motors essentially to protect the union jobs that, in large
part, have caused the non-competitiveness of GM and the American automobile
industry in general.
· Enacted health care legislation which will put government in control of about
17% of the US economy, expanding the bureaucracy and government intervention
into private business, including having the IRS fine those who do not comply with
the new requirements and regulations embedded in this massive law.
· Introduced legislation to control green house gas emissions having the
consequence of substantially increasing the price of energy for businesses and
private citizens
· Promised to enact higher taxes on businesses and individuals making above
$250k
· Promoted the card check plan which raises the fear that businesses could and
probably would become unionized.
· Instituted government regulation of all parts of the business including having a
Pay Czar determine what salaries and bonuses can be paid.
· Slammed bankers especially those who accepted the “bail out” funds for making
too much money despite the fact that most of the bail out funds have been repaid
with interest.
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Small business owners, the ones that generate the new jobs, can not get the loans that
they need. Many banks are in a position to make loans, but they want to be assured that
the risk is acceptable so that they can expect to recover their loan plus interest in a timely
manner. Moreover, the bankers are more cautious than ever with the government
regulators looking over their shoulders. Since the private sector entrepreneur cannot
provide the bankers the guarantees they feel they require, the loan does not happen, and
the businessman does not undertake the venture. What we have is stagnation in the
private sector of the economy the only segment that produces money making jobs that
provide the taxes to make government viable.
Business can only survive and thrive in a climate of faith where the rules are set and will
remain set. No one will invest in an expansion of a business or invest in a new business
where the present rules are not only deliberately being changed, but the new ones are
mostly in the negative direction as regards increasing the risk of an entrepreneurial
venture. Uncertainty of tax structures and the degree of new government regulation of
business is anathema to the investor. Worse still is the fact that investment overseas is
more attractive, often less risky with lower taxes than that in the United States. The
investor will sit on his capital until things straighten out. Has anyone noticed the interest
in gold?
Many citizens believe that the stalemated condition of our economy is a deliberate plan of
the current President and his colleagues. The President campaigned and is governing
under the flag of “Transforming America”, and we recall his discussion with Joe the
Plumber about “Spreading the Wealth”. Many believe that the Administration’s plan is to
spread the wealth by taxing the wealthy with the principal focus on private industry. It is
believed that the Administration does not care that this will bankrupt the country, and
will destroy the very base that has made the United States so successful and the envy of
the world. Still others believe that the members of the Administration are so
inexperienced that they are inept (Obama’s administration has less than 8% of its
members who have private enterprise experience). Yet, there are some who feel that the
Administration is on the right track and is just trying to correct some of the inequalities in
our system such as providing health insurance to about 30 million citizens who do not
have it now, and preventing man-made global warming
Regardless of what the Administration’s motive is, we are going in the wrong direction!
We must get back to supporting the capitalistic system that has given us the best life style
of any country on the planet.
Getting us on the right track will take all the skill and focus we can muster, because the
world is going to be significantly different than the world prior to the recession. Let’s
examine a few factors.
· Communication Technology:
The rapid change in communication technologies is staggering. When I was a
teenager in the forties we had a total of eight means of communication. These
included one dial up land line phone, one radio, one newspaper, snail mail, access
to movies, books, magazines, and there was an encyclopedia in the school.
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Today’s teenager has about 27 means of communication. Many such as I-Pod, IPad,
texting by cell phone, Facebook and Twitter only came into being within the
past few years. This new technology is being adopted worldwide at an astonishing
rate.
· Robotization:
For decades we have been replacing humans with robots, and this will continue to
accelerate in this new world due to the ever improving microchip. Every day a
human being is replaced by a robot. Even such everyday things as when you call a
business or agency and get a recorded set of messages to tell you to push one for
this, two for that, and so forth. That device is a robot.
· Globalization:
World wide competition for the businesses and services our country supplies is
huge and accelerating. This may shock you, but during the past 30 years, while
our grandchildren have been growing to adulthood, the middle class has doubled
on our planet. Globalization, keyed to the aforementioned communication
technology, is the principal reason for this change. It is the unprecedented rate of
change that is so remarkable. In China people are moving from the farming
regions to cities to enter manufacturing businesses in droves. Shenzhen, China,
for example, did not exist thirty years ago. Today, it is a huge and growing city of
nine million residents. By the way, the favorite car of the middle class Chinese is
the Buick. Sort of reminds you of America in the 1950’s. In addition to China, we
have India, South Korea and Brazil, to name just a few countries that are rapidly
contributing to the growing middle class.
Impact on Jobs:
When my generation and my children’s generation entered the workforce, we could
largely count on being employed by the same firm, and often at the same location, for our
entire career. For our grandchildren entering the workforce today, that is a very unlikely
scenario. It is highly probable that the job one starts with will not even be in existence at
one’s retirement. In his book entitled, “Sonic Boom: Globalization at Mach Speed”,
George Easterbrook says that while globalization causes all goods and services to be in
ample supply, global competition will make jobs less secure. Workers will be constantly
looking for their next job. Economists call this “Job Churn”, the unending turnover of
new hires and displaced workers. Eastman claims that while this is good for the economy,
it leaves everybody stressed out, and that even those with good jobs feel insecure.
Then there is the rapid commercialization of new digital technology. Have you heard of
Kindle and most recently the I-Pad? These are digital electronic devices created by
Amazon and Apple, respectively that permit one to download a book from the Internet.
You can read the material just as one would read a paper book. A logical application of
this technology will be to replace the textbook. Not only are these devices capable of
holding all of a student’s text books, but each book can be kept up to date on a
continuous basis.
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Imagine the impact the application of this new technology will have on jobs. If schools
adopt this technology to replace tradiditional text books with this 1.5 pound device, the
kids will not need knapsacks, so knapsack maker jobs will be lost. There will be no need
for a paper textbook; so book binders, ink producers, paper makers, pulp producers and
tree harvesters will not be required. We are talking of thousands of jobs from one simple
and economic application of this new digital technology. We are experiencing a change
in the way business is conducted that dwarfs the industrial revolution of a century ago
To provide some incentive for each of us to get up off our couches and act, let’s consider
the impact the Administration’s failure to promote and motivate the formation and
utilization of private ventures is having on our young folk, the grandchildren of my
generation, if you will. These young adults are at the peak of their skill level in terms of
their education. But there are no jobs, and it is not clear where the jobs will be for their
specific skills. Communication technology-wise these young folk are better equipped
than any generation before. They are better than their parents. And they will be better
than their bosses which makes this the first time in history that the apprentice will know
more about the tools of the trade than does the master. But the job market is not there
because entrepreneurs cannot figure out what to do. Newspapers, magazines and books
are falling to the new digital technologies. All businesses are determining how and where
the new technologies will fit to reduce the need for personnel.
These young persons have no visible way to make money and may have debt from
student loans etc. So, they will have to take odd low-skill or even non-paying jobs and
live with their parents where they will probably just atrophy. An article in the March
2010 issue of the Atlantic spells it out chapter and verse. According to the article, Krysia
Mossakowski, a socialologist at the University of Miami found that long bout of
unemployment in young adults provokes long lasting changes in behavior and mental
health.
In conclusion, during the past 18 months, our present Congress and Administration has
done everything, said everything and planned everything to thwart and discourage private
enterprise. Nothing they can say or do now will make the private enterprise believe, have
confidence in or trust this Congress or Administration. Only a new Congress and new
Administration can resurrect the faith of private investors, and only with that faith will
they create the jobs needed to make our country viable and whole again!
This issue is urgent!! Nothing is more important! We must do everything that we as
individuals can to replace everyone in Congress this November 2010 and to replace the
President in 2012. WE THE PEOPLE can do this! But we must stand up and participate,
regardless of party affiliation, democrat, republican or independent. What the individual
citizen can do is to be heard in every way you can and to vote for the candidates who will
urgently strive to get this country back on track…on the capitalist track!!
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