22 years of job creation wiped out in a day
avc.com
avc.com
That, I wholeheartedly agree with. Unfortunately, it seems that it will take a while for housing prices to deflate enough and for people's wage expectation to decrease enough that utilizing American workers becomes cost effective again. Will there be enough capital around to finance the shift of production back home? Will other countries continue to underbid domestic goods? Are we in fact heading to a more "normal" level of unemployment (we have usually had a comparatively low rate, globally speaking) ?
* Multiple cars per family and doing heavy commuting.
* Huge houses with high bills and maintenance.
* Consumerism based on filling those houses and cars with non-essential disposable items.
Now apply that to venture and you get what doesn't work. PG is on this problem often. Perhaps a bit too Socratic-style for my taste. (http://en.wikipedia.org/wiki/Socratic_method)
I never understood how the economy worked in the US with so much waste. Now with this crisis I get it, it never did. US needs a culture shock urgently. (A bailout is more of the same, IMHO.)
You're summing up 50 years of post WWII history into the last 10 years? Good luck with that. The economy works just fine with hat you call "waste." Nothing humans do will ever be close to 100% efficient for any length of time. We're messy that way! The bottom line is that most people the world over will generally live just within their means (or just over if there is sufficient credit) and you may as well get used to that. Living "efficiently" is normally done only by those who have little in the way of resources (in which case they're normally living barely within their means), or by the handwringing worriers who have plenty but feel guilty about it.
http://en.wikipedia.org/wiki/Debt-to-income_ratio
What we are seeing is the unraveling of that process -- since the 30 year fixed mortgage was widely available from the FHA and the VA, the amount of debt we've been willing to shoulder has increased over time.
With increased living expenses (college costs, et cetera) and flat wages, how have americans maintained their standard of living?? Home Equity lines of credit... MORE DEBT! Living on less isn't just for "handwringing worriers who have plenty but feel guilty about it", it is the prudent thing to do.
Then again, prudence isn't hot or hip.
A mine is not a permanent use of land. Greater demand for mined materials does not imply greater numbers of mines. Existing mines might simply be made deeper. http://en.wikipedia.org/wiki/Bingham_Canyon_Mine And the minerals in greater demand might also be substituted (e.g. copper for telecommunication wires by silicon for fiber optics).
Regarding the potential for being paved over by suburbia: http://www.juliansimon.com/writings/Ultimate_Resource/TCHAR0...
of the 2.3 billion acres in the U.S. as of 1987, all the land taken up by cities, highways, non-agricultural roads, railroads, and airports amounts to only 82 million acres - just 3.6 percent of the total. Clearly there is very little competition between agriculture on the one side, and cities and roads on the other.
Concerning the trends: from 1920 to 1987, land in urban and transportation uses rose from 29 million acres to 82 million acres - a change of 2.3 percent of the total area of the U.S. During those fifty-seven years, population increased from 106 million to 243 million people. Even if this trend were to continue (population growth has slowed down), there would be an almost unnoticeable impact on U.S. agriculture, just as in past decades (see figure 9-2).
Concerning the notion that the U.S. is being "paved over," as of 1974 the U.S. Department of Agriculture's official view was that "we are in no danger of running out of farmland."
Cities grow usually on fertile land, and large suburbs make this problem several times bigger.
In the last couple of years there were thousands of protests around the globe because of food prices. You might not notice it as it's probably only a fraction of your costs, but for many (most?) people in the world it is their main expense. And most of the food gets sent to the best payer automagically. The quota system to cope with hunger is gone:
http://www.newyorker.com/talk/financial/2008/11/24/081124ta_...
Fertile arable land is made out of rock. The earth is made out of rock. If the earth - as you imply - is running out of itself, where do you suppose it - rock - might be going? Does rock get used up by farming in it, and thereby disappear?
Normally, when something is becoming scare ("running out"), people 1) make more of it, 2) use it more efficiently, and 3) substitute other things for it. In the case of arable land, we have observed people 1) making fresh arable land out of rock, 2) reclaiming arable land from wetlands/lakes/oceans/hillsides/mountainsides, and 3) substituting in the forms of vertical and soil-free agriculture and other forms.
As I noted previously, "A mine is not a permanent use of land." http://www.juliansimon.com/writings/Ultimate_Resource/TCHAR0...
Both ignorance and mysticism enter importantly into conventional thinking about farmland. For example, one hears that "once it's paved over, it's gone for good." Not so. Consider the situation in Germany, where entire towns are moved off the land for enormous stripmining operations. After the mining is done, farmland is replaced, and the topsoil that is put down is so well enriched and fertilized that "reconstituted farmland now sells for more than the original land." Furthermore, by all measures the area is more attractive and environmentally pure than before.
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that is a very shallow investigation. [...] Cities grow usually on fertile land
Did you read it? Here is the link again: http://www.juliansimon.com/writings/Ultimate_Resource/TCHAR0...
But what about the fertility of the land used for human habitation and transportation? Even if the total quantity of land used by additional urban people is small, perhaps the new urban land has special agricultural quality. One often hears this charge, as made in my then-home town in the 1977 City Council election. The mayor "is opposed to urban sprawl because 'it eats up prime agricultural land.'"
New cropland is created, and some old cropland goes out of use, as we have seen. The overall effect, in the judgment of the U.S. Department of Agriculture, is that between 1967 and 1975 "the quality of cropland has been improved by shifts in land use ... better land makes up a higher proportion of the remaining cropland."
The idea that cities devour "prime land" is a particularly clear example of the failure to grasp economic principles. Let's take the concrete (asphalt?) case of a new shopping mall on the outskirts of Champaign-Urbana, Illinois. The key economic idea is that the mall land has greater value to the economy as a shopping center than it does as a farm, wonderful though this Illinois land is for growing corn and soybeans. That's why the mall investors could pay the farmer enough to make it worthwhile for him or her to sell. [...]
The person who objects to the shopping mall says, "Why not put the mall on inferior wasteland that cannot be used for corn and soybeans?" The mall owners would love to find and buy such land - as long as it would be equally convenient for shoppers. But there is no such wasteland close to town. And "wasteland" far away from Champaign-Urbana is like land that will not raise whornseat - because of its remoteness it will not raise a good "crop" of shoppers (or whornseat or corn). The same reasoning explains why all of us put our lawns in front of our homes instead of raising corn out front and putting the lawn miles away on "inferior" land.
> You conveniently skipped the outsourced bit (China.)
U.S. urban sprawl is outsourced to China? If so, how so?
Progressively less over time. http://www.juliansimon.com/writings/Ultimate_Resource/TCHAR2...
If Americans, engaged in their current lifestyles, constituted the entire 6.7 billion head population of the world, less land would be required than is required today.
No, it is all of the required space. Most of the linked page regards farming space. Did you read it?
Also US has a gigantic human capital with well educated population. It is a bit hard, but IMHO the change has to start with media. Perhaps applying existing laws against the advertisement cartel. But this is the French-style of freedom. I don't know.
I am coming to the conclusion that you hit a breaking point if this becomes to big an issue. Sure it's ok to handle it one way or another if the above party is at <5%. But once they near the 50% mark, it's game over. You cannot defend democracy or freedom without compromising it.
Same goes in this case. When it's a once a year case, that's one thing. But if you have a large number voluntarily relinquishing freedoms, it is no longer a free state.
Otherwise, it isn't really freedom in the libertarian sense, since people should be free to do what they want as long as it doesn't harm others. Plus, what makes a person feel free can vary from person to person, so if "freedom" is being mandated as in France, then it can actually become totalitarian in the name of "freedom."
If you allow these to run, you get a theocracy. If you disallow it, you no longer have a democracy. As long as they're small you can suppress them in the name of defending democracy. But defending democracy against the demos really ends democracy if it is in any way substantial.
Look, someone who doesn't have a job will lower his/her price until he/she gets a job. If you are really on the verge of starvation you will become willing to work for $1, and someone will probably become willing to hire you for that little. Just like any other market, price will fluctuate and equilibrate supply and demand, clearing the market. It's just that in the short run there is price inflexibility, so the market temporarily goes out of whack. In the long-run wage is only determined by worker productivity (which is function of amount of capital and technology level), and anyone who wants a job can have one, though it may not be as high paying as she wants.
Don't count on it. There is something about government that attracts and concentrates stupidity. They discount reality, blank out unintended consequences, operate with stolen wealth, and shift blame AND cost for its failure onto its victims. In that environment its almost impossible not to be terminally stupid.
A separate issue is that people can't lower their wage demands to any level. To get a job you must have a home, a means of commuting and the basic necessities of life. There are also costs associated with employing someone, so even if someone worked for free, the employer could not necessarily justify the cost of employing them.
These are theoretical issues though. The existence of unemployment benefit means that the only people who will reach these depths are the homeless.
I seriously doubt that more peripheral jobs are created per startup than those destroyed per manufacturing. But hey maybe I'm biased I did grow up right outside of Detroit.
So I suspect that your suspicion is wrong.
In fact, I'm certain Wufoo has helped create jobs, in the sense that I've filled out job applications built on Wufoo forms. The fact that Wufoo was chosen over other solutions means that, in at least some cases, the existence of Wufoo will lead to job applications being created that otherwise would not have been.
This is the point PG was making. He didn't talk about how Viaweb created lots of jobs because they bought a bunch of servers and had to pay their rent; he's talking about how they let other people cheaply start stores that otherwise wouldn't have started, connect to customers they otherwise wouldn't have found, sell products that otherwise would have sat on a shelf, and make wealth that otherwise would not have existed.
Wufoo, on the other hand, is just one of about 20-30 choices for online forms. Including, of course, paying a lackey on elance $15 to do it. (Now elance, they haven't created jobs, but they did do a lot to move labor around.)
I think job creation/destruction should be looked at independently from innovation.
The VC industry is at the heart of creative destruction. And the job creation that results goes well beyond the jobs created in the VC companies themselves. There is a trickle down effect.
Companies which consume these products or services save money. As a result they can offer their products/services more competitively, which results in hiring (or at the very least fewer layoffs).
The bottom line is that innovation acts as a stimulus in times of recession. During times of expansion (when the economy is at full employment) it simply results in increased standards of living. I agree with barbie17 that the unemployment rate is more or less constant in the long term.
Been there when I was in school in the late 70's and early 80's. it sucks but it didn't last forever (that time anyway).