It's Not About Jobs- It's About Dreams, Businesses & Careers

As someone who left corporate life in 1996 to adapt what I'd learned concerning corporate strategy and performance into quantitative consulting products and an equity management process, I'm familiar with the concept of building a business.

Thus it strikes me as foolish and naive to hear federal politicians of both parties ceaselessly natter on about "jobs," as if that's all people want. Some sort of economic unit of income delivery.

That's not what people want.

The people who inadvertently create jobs want to monetize their dreams. They have what they believe to be either unique, or uniquely competitive business concepts, the successful implementation of which they believe will bring them fulfillment, satisfaction and wealth.

Some of those people who start businesses, as they in fact succeed, may create employment for others. It's likely been this way for homo sapiens since we hunted mastodons while living in caves hundreds of thousands of years, and longer, ago. There were, in each group, probably one or two superior hunters with whom others hoped to join, in order to get a share of the food he would lead them to and kill. Perhaps a loose confederation of a superior tracker and the best spear-thrower of the group.

Call them chiefs, kings, what have you, human social groups have probably always had, in the hunter-gatherer era before settled communities, rainmakers. Those who organized and led the efforts to secure food.

Today, we buy food, water, shelter and clothing. Those basics about which I learned in a simple 7th grade economics unit taught in Social Studies by, I believe, the current secretary of Transportation, Ray LaHood. So rather than join other humans in hunting game or gathering edible plants, we hope to earn sufficient income to buy those goods and services which we once procured directly by our own efforts.

Most people want more than a job. A job suggests a temporal source of money which necessarily results in reduced spending and a large sense of uncertainty about which of your life's aspirations will be attainable. Even those who labor at manual tasks ideally seek situations which make their own sense of economic and financial vulnerability to forces outside their control somewhat less.

I think what those who don't create businesses want is to be useful and valuable to, employed by someone with a passion for building their successful business. So that they can look forward to some security in their ability to rely on the income they earn in that business.

They want careers, not jobs. But both business creators and their employees ultimately desire, though it's hard to attain, long term involvement in a business which brings them income security based on the continued success of their efforts in creating value in the enterprise.




If you've ever worked for a large company, as I have- AT&T, Chase Manhattan Bank and Andersen Consulting (now Accenture), you know that, in the post-1970s era of downsizing and LBOs, you were only as secure as your connection to your upper management, if then. More likely, as happened to me at all three companies, large-scale reorganizations could affect your job, and, thus, your career,

In the era of my late father's corporate career, working for a large firm typically meant security, as things moved slowly. Not so in the era that followed. The era for those of us in the middle and late boomer cohort.

My experience after corporate life, in a smaller consultancy (Oliver Wyman & Co.), working as a consultant to a wealthy would-be hedge fund operator, and in association with various hedge fund and private investment partnerships, provided the expected trade-offs of anonymity with direct risks of interpersonal quirks and individual unreliability. A most personal form of counterparty risk, if you will.

Working in small organizations, with or for entrepreneurs, affords no less risk than working in a large firm- simply a different sort. You know the person who will dismiss you for purely personal reasons, or in a direct contravention of agreements. Your partner loses his financial backer, whimsically decides to pursue other businesses and exit the effort on which he's asked you to work, or simply comes up missing with promised capital, as my last partner did. Or, as in the case of the last consulting firm for which I worked, decides your success on agreed-upon objectives are now too expensive, and reneges on original employment terms.

My point is, earning income is never as simple as just having a "job" for anyone with a college degree and hopes of more than mindless manual labor. Every employment or business creation effort involves risks. You hope you wisely manage those risks, but they never just vanish.

To fix a nation's hopes on public spending to employ road and building construction workers misses the point of returning our nation to a situation in which educated people can imagine, construct and manage their careers.

The sort of personal income streams creation that will return America to the type of society it had in recent decades will only be achieved by the ability of those who want to create businesses to do so, and perhaps employ others in their impassioned drive to build those enterprises.

Those will be careers, not just jobs seen by politicians as temporary or unenumerated income production units.

The involvement of humans in US society to earn income transcends simply putting in a day's work for a current paycheck. And, thus, transcends seeing such effort as just a job.

That is why temporary measures, including more federal borrowing to build roads and schools (a/k/a Stimulus II) and/or suspension of payroll taxes, won't deliver what people want. Those measure might create temporary jobs, but they won't provide opportunities for the business creation and expansion which provides careers.

To do that, government needs to lower taxes, reduce cumbersome regulation, and provide a more certain, reliable climate in which more businesses may be formed, and existing ones expanded. That comes from real demand from the private sector for what those businesses provide, not the faux-demand of temporary government fiscal policies.

Stiglitz On Patents- How To Choke Innovation

Friday's Wall Street Journal carried an editorial co-authored by Nobel Laureate economist Joseph Stiglitz of Columbia University regarding patents for genes.

Stiglitz and his colleague used most of their piece to advance the usual arguments on this topic against awarding patents for those who identify or create genes.

However, near the end of their piece, the authors tipped their hand regarding their bias against individual property rights when they wrote,

"Had Alan Turing's mathematical insights been patented, the development of the modern computer might have been greatly delayed."

So what? Maybe it wouldn't have been delayed at all. Maybe Turing would have been approached to license his patents to the Institute for Advanced Studies, the University of Pennsylvania, or Sperry, for the design and production of one of the early digital computers.

The thrust of Stiglitz' argument is clearly that individuals shouldn't be allowed to have property rights protecting their inventions.

For the record, it's quite likely that part, if not all, of Turing's "mathematical insights" were funded by either wartime government spending, or some academic institution. So the Turing example is probably not even relevant.

But it does indicate that this debate is not apolitical.

Large companies, finding a small firm has bought a patent which they need, attempt to argue that use of patents ought to trump mere ownership without the means of production. I recall this argument coming up recently, perhaps in the case of RIM.

To me, it seems that Stiglitz, and others, merely want to set some artificially high tests for whether or not an inventor, or purchaser, of a patent should enjoy the rights of that patent.

Just because society may have waited a bit longer for the computer, or the developing company may have had to pay royalties or license fees to the proper owner of needed patents, is no reason to simply turn against assigning patents to discoverers of knowledge which qualifies as patentable according to our laws.

Even some economists, it appears, are subject to using stealthy arguments to cloak their inherent preference for state or oligopolistic rights to inventions, instead of those who actually created them.

The Evolution of the US Economy 1980-2010

Back in late July, I wrote this post contrasting the economic punditry and outlooks of several well-known observers, i.e., Alan Blinder, Dick Hoey and Mortimer Zuckerman. My own conclusion was expressed as follows,

"Who's right?

Personally, I'd put my money on Zuckerman. Leaving aside that Dick Hoey was a fixed income manager back in the day, and his BONY/Mellon/Dreyfus bio doesn't exactly laud him as an economic Nobel Laureate, I don't think Hoey is sufficiently observant of the real differences in the effects of the recent recession on the US labor force from those of recessions prior to 1992."

I continued with this observation,

"That so-called 'jobless recovery' may well have marked a turning point for the US economy which has not yet been captured in various models and adequately observed by pundits-cum-economists like Hoey. Or even Alan Blinder.

Prior to the 1991-92 recession and recovery, you are looking back to 1982-83, the early Reagan years, now very nearly thirty years ago. For perspective, was the 1960 economy different from that of 1930? Very much so. And the 1980 economy was so radically different from that of 1950, thanks to electronics and technological advances in communications as to make forecasting the former with models of the latter seem laughable.

I suspect that's what is happening now. Those analysts and economists harking back to the early 1980s and using conventional models with estimates of consumer spending and labor growth have missed some important transformations in the US economy of 2009."

These passages were what I was referring to in this post of last Friday, when I wrote,

"I personally believe, as I've written in a prior post, that many economists are using inappropriate models and assumptions from over 25 years ago. Models and assumptions which are tied to a different type of economy and workforce than we now have. As such, I don't think they are correctly accounting for today's business IT allowing for previously-unimagined control of overheads and inventories.

If economic recovery is based upon expectations of inventory rebuilds, I just think that's overly optimistic for the next few quarters."

Apparently I thought about this topic a great deal more than wrote about it. Thus, this post.

Though not an economist, as a trained marketing professional, I have been involved with quantitative behavioral modeling and analysis for decades. And, thanks to my business degrees, I've had more economics than most business students, in addition to which, I continually stay abreast of economic thought and opinion in the major business media.

Currently, I believe that what macroeconomic modelling still exists, after the approach lost so much credibility in its early applications forty years ago, remains out of step with our modern US economy.

For starters, the SIC codes were, and are, the underpinnings of most sector-based forecasting. These are now hopelessly outdated.

Employment statistics are warped, thanks to the rise of subchapter-S and LLC entities. This has also served to obscure incomes, as business income for many entrepreneurs now appears on 1040s, rather than corporate returns.

Finally, the entire nature of business operations, being now so heavily dependent upon, and benefiting from computer-based management tools, has changed from 30 years ago.

As an observer who understands economics and business, I find myself wondering just how we can accept economists' references to the jobless recovery from the 1991-92 recession, without explanations as to how this phenomenon has been incorporated into current models.

It's important to know whether economists consider the 1991-92 recession an aberration, or a new paradigm.

A reader commented on my post of last Friday, taking a shorter term, more narrow view of individual recent IT spending by companies. What I meant by my comments in that post was that business has been improving operational information availability for nearly 30 years, with the arrival of the personal computer in 1980. When I was with Andersen Consulting in the mid-1990s, client/server projects were booming, and a sort of internal internet, LotusNotes, was being applied at individual firms.

It's safe to say that business communications and information movement has changed more dramatically and functionally from 1980-2010 than from 1930-1960, or from 1960-1990.

Specifically, the recent period has smoothed supply chain management between companies, so that the holy grail of goods-producing companies, inventory management that is as synchronous with retail sales as possible, has come a lot closer to reality.

Now add to this the rise of outsourcing, both onshore and offshore, and you have corporate employment becoming less sensitive to production volumes. Employment at suppliers becomes more volatile, but those jobs tend to be lower-compensated than the ones they replaced at the larger corporations.

Now add to this mix the public consuming business and markets information via free cable networks, such as CNBC or CNN. Today's consumer can view the reaction of institutional investment managers to some obscure report, previously unknown to consumers, such as durable goods orders, or employment reports, in real time.

Thus, consumer spending and confidence are able to be affected nearly immediately by financial market reactions, which affect the wealth of consumers via asset prices in their various investment accounts.

We probably have a tighter-, faster-linked series of economic phenomena which affect each other as inputs and outputs of information, goods and money flow, than ever before. Certainly far more than thirty years ago.

Is it any wonder that you see employment levels less responsive to economic recoveries in recent decades? Or spending and saving rates affected by generally-available unemployment information?

It is simply stunning to me to read yesterday's Wall Street Journal piece wherein a number of financial pundits were opining on how fast and robust the deep "V-shaped" recovery is going to be.

How do they account for the lack of re-employment of so many recently-unemployed? The defaulting and delinquent home loans? The coming commercial mortgage loan delinquencies and defaults?

Yes, any, or even several of these, in moderation, can be accommodated by a vibrant, recovering economy. But this last recession was, is, different. The scale and breadth of its effects have left conventional financing sources weak and unable to profitably lend at current rates.

There is so much about this recent economic recession, in concert with a financial collapse, that is different from anything the US has experienced in the past 30 years that it's simply difficult for me to trust pundits who rely on conventional econometric models to forecast that the 'usual' recovery has begun, and will surprise us all.

Perspectives On Economic Opportunities, Skills, and Jobs

I had a discussion with a business colleague recently on the topic of how "jobs" are perceived by many non-business people, most often state and federal governmental officials.

For example, we often hear of governors or presidents taking credit for "creating jobs." Or state officials will talk about how many "jobs" are in their state, or leaving their state.

If you think about the references to "jobs" abstractly, these politicians talk as if the term refers to a stock of tangible items to be apportioned out to people.

But that's not what a "job" is at all. I contend these linguistic uses belie a totally incorrect viewpoint and understanding of what a "job" really is.

Here's how I view the context and meaning of a "job."

In a society, people have various skills. Some people also have ideas for developing products and services to sell to other people.

While we all want to have an economy that creates sufficient jobs for the people in our society, jobs are a function of business and economic activity, not the other way around.

For example, long ago, farming and various industrial activities required some number of workers. As time went by and technological advances occurred, the number of "jobs" required to produce a ton of steel, or an acre of wheat, fell. But new "jobs" arose to build the machine tools and farming equipment that saved labor in the older, once labor-intensive sectors.

Economic growth via new businesses and expansion of older ones leads to a need for more workers, thus creating "jobs."

Anything a government does to either stifle business growth, or move it elsewhere, causes "jobs" to move and, thus, be lost to the geography over which that government presides as society's political entity.

If the people in an area don't have the skills to do the work required by a new or expanded existing business, there won't be any new "jobs" there. There might be a need for more workers, but without qualified people, the jobs will appear elsewhere.

Thus the growth of technology firms around Boston in the 1980s, and in Silicon Valley for several decades. Until taxes and other expenses drove firms to add new "jobs" in Oregon, Washington, New Mexico, and even overseas.

Jobs are not a fixed or necessarily growing economic good, able to be traded, 'created' or 'saved' by government.

And economic development and business advancement can cause some 'jobs,' or, really skills, to be no longer necessary. Jobs aren't a static concept or body of things to be simply taxed and relied upon by governments.

They are the by-products of business processes and expansion. Treat business badly, cause it to contract or die, and you remove the production needs which lead to "jobs."

Perhaps my colleague best illustrated the point when he engaged in light discussion with a doctor recently.

His doctor asked what my colleague did for a living and, on hearing he is self-employed with several ventures, observed that "at least you can't be laid off."

"No," my colleague replied, "but I can go bankrupt and lose my businesses."

Jobs aren't just things which you "get" and "keep." They stem from a business' need for work to be done and skills involved in doing that work. If there's a fit with local people, at a price both can afford, then a "job" may be created for that work at that time at that price.

But speaking of jobs in some totally abstract manner, as if they are a constant stock of income-yielding positions to which all Americans, in the aggregate, are entitled, is simply a gross misunderstanding of how business works.