Tag Archives: teh real ecohomy vs. the fantasy economy

David Brooks (and Tyler Cowen) add more to the Discussion — Where Will the Jobs Be?

I have posted often on a couple of themes:  where will the jobs be?, and what kind of economy will we have – a real economy, or a fantasy economy? (Traders vs. Builders, to use Richard Florida’s terminology.  Read especially this earlier post:  “Traders” vs. “Builders – the “Fantasy Economy” vs. the “Real Economy”).

These themes are closely connected, and today in the New York Times, David Brooks adds greatly to this conversation.  He quotes from the popular e-book by Tyler Cowen, The Great Stagnation (which I have not read, but is now on my list).

The comments responding to this article reveal the great political divide in this country.  Conversation – intelligent conversation – seems increasingly endangered.

But this was not a political column.  And many of those who left comments miss the underlying problem, in my opinion.  I have bolded what I think is the most important section below.  Brooks’ entire column, The Experience Economy, is worth reading.  But note especially these excerpts:

Cowen’s core point is that up until sometime around 1974, the American economy was able to experience awesome growth by harvesting low-hanging fruit. There was cheap land to be exploited. There was the tremendous increase in education levels during the postwar world. There were technological revolutions occasioned by the spread of electricity, plastics and the car.

But that low-hanging fruit is exhausted, Cowen continues, and since 1974, the United States has experienced slower growth, slower increases in median income, slower job creation, slower productivity gains, slower life-expectancy improvements and slower rates of technological change.

Cowen’s data on these slowdowns are compelling and have withstood the scrutiny of the online reviewers. He argues that our society, for the moment, has hit a technological plateau…

As Cowen notes in his book, the automobile industry produced millions of jobs, but Facebook employs about 2,000, Twitter 300 and eBay about 17,000. It takes only 14,000 employees to make and sell iPods, but that device also eliminates jobs for those people who make and distribute CDs, potentially leading to net job losses.

In other words, as Cowen makes clear, many of this era’s technological breakthroughs produce enormous happiness gains, but surprisingly little additional economic activity.

This column is a great example of “this is what the problem is, but I don’t know the solution” thinking.  I don’t fault Brooks, or Cowen – I don’t know the solution either.

But I think that all the blame, aimed at President Obama, or Congress, or the Republicans, or the Democrats, is misplaced.  I think the technological discoveries and innovations of the era really have created an economy which provides fewer jobs.  A lot fewer jobs! — especially for the “physical workers” among us – a number which is not going down.  The national average is that 25% of those entering high school do not finish high school.  What jobs will be available for these people, and the others who do not finish college?  Through the years, the United States has always had jobs for such people.  Those kinds of jobs are increasingly rare.

In the term used by those who discuss these ideas, we are in the midst of a structural realignment, not just a cyclical problem.  But, if there is a realignment, it implies that there is a working/workable other side.  It would be nice to know what that will be…soon.