We Can All Become Job Creators
nytimes.com
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For existing small businesses, though, I'm wondering to what extent easier access to credit is really the answer. Are there that many small businesses out there right now saying "ohhh, we could be making so much more money if we hired someone, but we need to borrow money in order to hire them"? Some, surely, but many?
The main reason businesses aren't hiring is that they're not convinced that putting extra people on staff will actually be profitable.
I'm totally open to the idea that the supposition above may be ludicrous, but would like to see how we will create the wealth you describe.
Other methods include government intervention, revolution of the (ex-)workers, consumer boycotts (off the grid communities) and benevolent corporates. None of them are as effective, and very few of them can be worked on in the short term.
http://www.guardian.co.uk/politics/2011/oct/03/george-osborn...
I believe it is deeper than that.
If we look to agriculture, there is a short expiration date on the job. If you don't get the crop off in a timely manner, you are quickly going to be out of business. I hear farmers constantly complaining how difficult it is to find good people, but they are left hiring just about anyone out of necessity.
Manufacturing is similar. You have to keep the products going out the door to stay in business. As such, manufacturers also need to hire someone, anyone, to get the job done. Like the farmers, manufacturers will spend the time to make them better employees.
However, in our technology based economy time does not matter. If you make a product and don't make any changes to it in several years, people will continue to buy your products anyway. You can afford to wait to hire who you feel is the very best, even if it takes years to find them. Once you are established, the only way you can lose revenue is if the competition does something significantly better; but they too are waiting on the best.
That is the problem that I see. There is no need to hire poor employees. You can wait to hire the best of the best. If they are busy right now, you can hire them later.
What proportion of jobs in the United States are in agriculture, manufacturing, or things analogous to agriculture and manufacturing?
I think you may be suffering from short-sightedness, and assuming that the whole world looks a lot more like your corner of it than it does.
For every job lost in agriculture and manufacturing, there is a new job in the tech industry. However, unless you are highly skilled, nobody will be interested in you. That is the problem. Farmers desperately want skilled people too, but they will hire anyone if they absolutely have to, simply because the job has to be done. In tech, if you can't find that perfect programmer, it doesn't matter all that much if it takes an additional six months to start the product.
Google claims they have approximately 2,000 open positions at all times. If those jobs had to be filled at all cost, they would have no trouble finding people. There are more than 2,000 unemployed people in the USA. The point is that they aren't really in need of filling those roles, it is more of a "nice to have" thing. They are waiting for great people.
My corner is agriculture and technology, so I get to see the vast differences in how people are hired.
I argue that there is a percentage in the agriculture, call center, and manufacturing industry, if given the six years of math and programming, could be top programmers. These same people would be motivated to do so, but have families to feed and mortgages to pay.
We have potential supply. We have demand. How do we get from A to B?
I'm not certain there is any solution that can come from the top. However, hungry people always find a way. I do feel we'll eventually see some big shifts in the employment structure to deal with the problem, started from the bottom. It is not going to happen overnight though.
However, right now, that is not a role the average American wants to take on, even if they have the skills. Much of our society is based around the idea of a stable income from being employed by others. People of HN are typically outliers in that regard.
Or rather, they sell drugs and rob houses. Or take those two minimum wage jobs and tell yourself "someday."
I have seen very few people pull themselves up by their bootstraps, so to speak. And this isn't an easy gap to fulfill.
PS: That's not to say increased efficiency is bad, but it requires someone to spend that new wealth on something before a new job shows up. I have personally destroyed over 100 jobs and while in theory they are going to pop up at some other place in the economy they can just as easily pop up on the other side of the world.
Tell that to Microsoft. They sat stagnant on WinMo 6.x for nearly 5 years before rewriting and releasing Windows Phone 7. Their marketshare eroded to dust while iOS and Android (and, by that point, even Blackberry OS, Symbian, and WebOS) ran circles around it.
So, yes, there is a shelf-life. Not because of spoilage, but because of cutthroat competition and a consumer that doesn't have the patience to wait for you.
"You can wait to hire the best of the best. If they are busy right now, you can hire them later."
The reason why programmers make upwards of 200k/yr. (depending on region and specialization) is because there's not enough of them and too many competing companies that need them, not because programming is akin to neurosurgery that you have to wait for that one-in-a-million shot to hire the most gifted hands.
That's why starting salaries out of college are now 60-70k in the West Coast and not 40k as was traditional for a CS grad.
That highlights my point. Until the competition arrived, there was no real force driving them to continue working on it. The money was rolling in regardless of what they were doing to it. Microsoft could have went down to the unemployment line and set all of those people to work on the product, but unlike in other industries, there was no reason for that to happen.
The reason why programmers make upwards of 200k/yr. (depending on region and specialization) is because there's not enough of them
Again highlighting my point. Farmers have to hire anyone, not because farming is easy, but because you can't wait to find a great farmhand. The job has to be done now. Tech companies can wait for the best of the best. Why aren't those software companies hiring that guy who lost his manufacturing job for $9/hr instead? It is because they don't need to. They can wait for the one who is great at the job.
That's not true at all.
A crappy farm hand might harvest at 1/2 or 1/3 the rate of a great one.
A crappy developer will actively damage a project.
It is simply not possible to increase software development productivity by hiring lots of people who don't know what they're doing.
A bad farmhand will damage equipment worth far more than most pieces of software, destroy crops and animals, the list goes on and on. I can say from experience in both that farming is significantly more challenging than programming.
Even a small farmer will have several millions of dollars worth of equipment that is easily broken in the wrong hands. Like good programmers, good farmhands can be paid quite well because they bring a lot of value to the business.
If a bad programmer gets into your codebase, it is trivial to revert their work. It is much less trivial to replace a $500,000 combine because of an minor operator mistake.
It's pretty easy to evaluate the work product of a fruit picker in a field, compared to a "knowledge worker".
erm.. end rant
That said, I'm all for attempts to invest as best we can in this environment, and I'm in favor of this program.
We talk about jobs as the most important things, but in reality it is maximising production that is the most important thing. If every farm maximised production, then food becomes more plentiful. If every factory maxmises production, then goods become more plentiful.
The fascination with GDP (as a monetary figure) and Jobs, to me, is looking at the wrong metrics.
There is plenty of capital around. A lot more would come out from the shadows if it found productive uses. But trying to force capital out by lowering the price you can get on it (ie,lowering interest rates) is a bizarre way of going about things.
The key has to be on increasing productivity. This includes not wasting human and monetary capital on pointless schemes (ie, make work schemes and losing investments). The rest will fall into place once this is done.
"Job" has a variety of meanings. It can mean a great opportunity, or it can mean devalued wage slavery. Usually it means filling a role as an economic input in the profit machine someone is constructing.
The killer development that would create a bunch of jobs at a stroke would be
a tool
that lets companies profit
by hiring uneducated people.
Also, there are some scenarios where something doesn't create jobs per se, but certainly allows people to make wealth. The rise of the OSS stack was one, and 3d printing might become another.
Programs like this that leverage your dollars effectively are pretty useful - there are lot of people out there who want to start small businesses or hire someone seasonally etc that are just in a cash crunch... You have to hire someone before you get paid for their efforts, and you can't offer them equity.
What they're doing (in my understanding) is eliminating the default risk for lenders, so they are able to leverage the dollars 1 to 7. This is also common in the microfinance field. It makes a lot of sense. Also, SBUX is the best place I can think of to market this. I'm in line paying $5 for a coffee... can I give a dollar for small business? hell yeah. A question arises in my mind though, shouldn't I just pay $4 for a coffee at an actual small business?
We made an infographic on small business lending... it isn't our best, but it does have some useful stats (TL;DR - credit is a big problem for small businesses and loans are really hard to get): http://feefighters.com/blog/ff_infographic/the-truth-about-s...
The problem is, regulators can be very unfriendly to mobile vendors.
This guy ( http://www.expopyme.com.mx/vpabellon.php?cat=4&cid=33373... ) started selling ice cream in a bike like this ( http://www.yesh.com/blog/wp-content/uploads/2010/05/t-370.jp... ).
He sold to the local University for about 10 years, until he got money to rent a very small place in front of a hospital.
From there he continued growing and growing and now I know they have 3 good size shops in different parts of the city.
I know because my mother has been teaching in the local Univ. for 25 years and met this guy in the beginning.
>The problem is, regulators can be very unfriendly to mobile vendors.
I think at the end this is what matter the most. In my home town (well... in all Mexico in general), cycling ice-cream makers do not need to comply with a lot of laws (as long as nobody dies because of the ice cream...)
Sure, assuming you actually prefer the coffee from the small business. Lots of people prefer Starbucks coffee.
The idea of big businesses funding local competition does seem absurd from a competitive standpoint-- but I think it could actually work out really well. If Starbucks still has the better coffee they will still get more business, meanwhile a healthier local economy will mean a bigger market for Starbucks. Especially vs. Dunkin Donuts or McDonalds, which currently beat Starbucks in lower-income markets.
Or customers.
My plan will create at least an order of magnitude more jobs, jobs for those with no education, jobs for the illiterate, the literate etc.
It is simple to. Nothing needs to be broken.
All you have to do is to outlaw electricity, gasoline and diesel as well as any other method of generating power except by human or animals.
It will easily end the current unemployment mess not to mention cut the CO2 emission to almost nothing, create a community spirit, end the surveillance programs (both the one run by the CIA and the one run by Facebook and Google) bring the troops home (although it will take a while as they will have to walk) put an end to money in politics reduce the income difference between the 1% and the rest and solve plenty of other problems as well.
It is often argued that the 'breaking windows' scenario is a fallacy because the capital redirected to fix the window would be used for something more productive, which is only true assuming a company or individual is utilizing this excess capital. So, you have to break windows where people are holding capital, ie: the owner of the window is wealthy. If you break a window at the local pizza joint that is barely breaking even, you probably get a negative return (unless the new window is somehow superior to the old window...).
People who are wealthy or think they are going to be wealthy don't really like this approach, obviously, but unlike an individual who benefits from holding assets, the economy requires a constant, sometimes increasing, flow of economic activity (you get paid, you pay for goods and services, your money keep circulating, etc.).
Most people think the fallacy is just a statement about destroying things in order to create jobs.
While this is true, the deeper meaning of the fallacy is that every action has a consequence, both negative and positive. But the problem most economists and politicians have is that they only look upon the easily measured and obvious outcome (the work for the glazier). They fail to consider the non-obvious outcome, which is the tailor who sells one suit less, because the bakers money was diverted to the glazier instead.
The broken window fallacy is a tool to help us analyse all of the consequences of an action, rather than just the obvious ones. So, whenever a make-work government program is announced, all we hear about is the x,000 jobs it will create. What we don't hear about is the x,000 jobs that must not be created in order for those to happen. We don't hear about it because it's likely to be 1 job across x,000 industries, rather than x,000 jobs in 1 industry. The money for make-work programs must come from taxes, or from borrowings, which is just future taxes brought forwards. Thus, when people pay more tax, they must therefore spend less elsewhere.
This is not a request for a zero-tax environment, it is just a call to recognise the entirety of economic actions, not just the obvious ones. That is the broken window fallacy.
As you say, if they weren't guaranteed to hoard the money then the window would cancel out a suit, or some other economic activity.
It's more than wealth creation, though. People must also be paid fairly for the wealth created. Wealth creation is happening, the problem is that the rewards for it are all being skimmed away and those in the middle are being squeezed-- squeezed out of their homes, out of their cars, and out of their educations.
The housing boom of the last decade resulted in a great deal of wealth creation. That wasn't the problem. The problem is who ultimately winds up owning that wealth and how much it's worth on the market.
It's true you can't just wave your magic jobs wand and "create jobs," it's true that people gloss over the need to create wealth and eventually be profitable. That doesn't mean improving the number and quality of jobs (or work) available isn't an important focus.
Those whose compensation is unfair usually run for another employer (that another employer sometimes being themselves). Money is simply a proxy for the value of the goods/services they produce for the society.
This doesn't happen efficiently, however. Moving upwards is risky and the consequences of a downward-adjustment (getting layed off) often include bankruptcy and financial ruin.
If that's true, explain drug money.
I'm being serious.
Money is a decent proxy, but not perfect. It's important to remember that. It's good at measuring quantity, not quality.
<devil's advocate> Drug dealers/producers produce products that provide the user with exotic and novel experiences and which may increase the user's sociability. Similar to the travel industry and a personal life coach in a small form factor, drugs are good/service that many people seem to want. </devil's advocate>
I have a modest sum of money in various forms. The central bank in the US is basically said to me, "stop saving!" because interest rates are so low and inflation is likely to be high in the future -- there's no point. Saving is out. (You think we would have learned something...)
So, let's look at possible investments. Real-estate? Maybe, but investment requirements for real-estate have gone up dramatically. In fact, I was recently told that if you're self-employed (aka creating jobs) for less than several years and looking for an investment property mortgage that you'll need to put down 50% to invest in property. So, I could find property to buy outright, but it seems that wouldn't being taking advantage of any real leverage.
Stocks? Sure, I have some stocks, but I'm not going to put all of my eggs in that basket after seeing 15 years of market swings and no real growth. (Sorry John Bogle, you may be wrong after all.)
So, I would like to put this money to work in some small way, but I have yet to see a way to actually do that (other than by starting a business, which is exactly what I did, but I'd like some diversity obviously). It makes you realize why more arcane investments like gold and bitcoin and startups are all very volatile, people are looking for something anything to invest in.
Fixing this stalemate is hard, but the government needs to find a way if they want money to come out from under the mattress and become productive again.
Why are you looking for leverage? Isn't 50% quite a lot of leverage?
The problem is that artificial manipulation of the price of money (interest rates) gives a false signal for people to invest in an asset class, like real estate, because it artificially inflates returns. Real Estate investing contains many risks (the largest is lack of liquidity), so it doesn't make sense to invest large sums for a small return.
"We cannot bail or tax-cut our way to prosperity. We can only, as Jobs understood, invent our way there."
Measuring GDP, inflation, deflation, the unemployment rate, all of these numbers are not a reflection of quality of life. Prosperity is a quality of life issue which is solely improved (or destroyed) through technological advancement.
Invention is not a necessary or sufficient condition for prosperity. You can arrive there via many paths (thriftiness or wise investment, service provision, etc.).
I don't know who feeds him his ideas, but he lacks experience, judgment, and wisdom to fully evaluate them himself, and is at best an unskilled popularizer of spurious memes. The few times he says something not totally sophomoric, it's almost certainly due to random chance alone. Broken clock is right twice a day.
If you're going to listen to any one person on this issue, Andy Grove is the one:
http://www.gsb.stanford.edu/news/bmag/sbsm1106/manufacturing...
http://www.businessweek.com/magazine/content/10_28/b41860483...
I wish I could vote for Grove for President. I just might write him in.
/rant
Somehow we've ended up in a situation where everyone focuses on job creation at the expense of everything else.
Right now most families need two parents working in order to provide. I think many would be happier with one less parent working if they could maintain the same standard of living. That would be possible if one of the parents doubled their productivity. Yes, it's a crude example but shows that focusing on jobs, and jobs only is looking at the wrong metric.
Counting jobs is as foolish as counting lines of code developed rather than the output of the code. But because each job is attached to a person, we've all become blinkered to it, like a PHB counting lines of code and assuming progress is being made.
Wealth creation is simply the process of creating a better life through a combination of hard work and technology. When you live better you're more wealthy.
Unfortunately, just about every initiative I have seen from any government for the last 10 years has been about job creation, when wealth creation isn't even considered, or, if it is, in a distasteful manner, usually coupled with some reference to greed and profit. But the only way to create real jobs is to create wealth that people will willingly exchange their own labor for.
Furthermore, in most families the main reason for needing dual incomes is to pay for housing. Increasing productivity does nothing for affordable housing. Real estate prices tend to rise right along with average incomes.
The one-parent-quitting description is to show that the same amount of output/production/work can happen with half the people if they are twice as productive. This is to show that increased productivity (more product, same amount of work) is more important than jobs.
Increased productivity gives more of everything for everyone. We all know this to be true - if you spend all day napping in the sun, you get nothing achieved. If you spend all day working, you can get many things achieved.
Someone is going to profit handsomely from this, unless all the proceeds are reinvested into other loans.
On the other hand, lending isn't a sure thing. We might be talking about people getting their $0 back from their $1 investment if the borrower defaults.
I much prefer "employer."
Thus, we have our scenario: corporate profitability increasing in tandem with structural unemployment. Consolidation of capital to a few major winners, and debt and unemployment for the losers.
There are few ways out of this mess, and none of them can occur with "business as usual" policies.
People have been predicting the end of work ever since the first mechanized... whatever. In the past 150 years, we've managed to mechanize the hell out of agriculture and manufacturing and we've hugely increased labour force participation by encouraging women to work. And yet, at every point along the road, unemployment rates always seem to stabilize at about 5% in good times, and shoot up to 10% in bad times (Great Depression excepted, but that was due to some zany government interference).
Getting people to invest in micro-amounts at a large scale could unlock a lot of credit for small businesses that could use it to grow. I don't necessarily think that it is going to turn the economy around, but thanks to Howard Schultz for making a concerted effort to do what he can to help.
Would still like to see a government regulation help as well: e.g. perhaps companies with more employees per profit would have a tax incentive and companies with fewer employees per profit would have a penalty. This way you essentially pass on 'unemployment' payments to companies rather than giving handouts from the government. Presumably companies would thus at least try to use the labor they were being required to hire. I know this sounds a bit like central planning, but doggonit' as we approach an era where we can survive with few in work due to machine help, we may need to regulate in a form of wealth redistribution. Quite frankly I'd rather see it done through companies than through the government directly. Of course the fact that I don't think the government today can manage a new deal type program is probably also a sign that the government won't be able to pass anything like this to begin with.
That would be terrible. You'd be penalizing the Googles and Apples of the world, who create good jobs, and rewarding the Walmarts, who create shitty ones.
I mean are you really going to buy less meat because it went up 5%?
http://www.cbc.ca/news/health/story/2011/10/02/denmark-fat-t...
And, seriously, why the downvotes on the grandparent comment?
On a ketogenic diet, I've lost 40 lbs of fat in 18 months, and my wife has lost ~100 lbs during the same time period. Eating fat doesn't make you fat.