Sunday, February 21, 2010

Big Ideas to help counter structural unemployment

In January, Martin Ford's blog Future Technology and Economics carried a post called Jobless Recovery and the Jobless Future.  A very interesting post with links to other very interesting posts.  Ford says
In the past two decades, information technology has advanced dramatically and is increasingly being employed to eliminate jobs of all types. Job automation technology, together with globalization, has been the primary force behind the stagnant wages and diminished opportunities for less educated workers we've seen in recent years.
Ford is right about the last two decades, but this trend actually began as far back as the beginning of the 20th Century, when the first telephone switchboards came on line. Every major economic downturn since then has been followed by a technology wave that caused permanent job losses. Amy Bix talked about this in her 2000 book Inventing Ourselves Out of Jobs?: America's Debate over Technological Unemployment, 1929--1981.

Since the late 1960s, every veteran information systems professional - including me - has witnessed company after company invest in new technology in order to either not add jobs or to cut them. Wage stagnation and diminished opportunities also go back a lot further than two decades, and helped cost Jimmy Carter his second term.

Don Peck's essay How a New Jobless Era Will Transform America, in the March issue of the Atlantic monthly, and Peter Goodman's The New Poor - Millions of Unemployed Face Years Without Jobs in this Sunday's New York Times only add to what we already know - our familiar economic model, based on continuous consumption and consumer debt, no longer works as an engine of good jobs.

If we want those jobs to start growing again, or to at least mitigate the effects of increasing structural unemployment, we will need a new model, based on sustainable principles, including people-intensive R&D, production, distribution, and servicing.

Here are some big ideas that could jump start a Sustainable American Economy. I believe they could, if  nothing else, turn structural unemployment from a deadly threat to America's future into a manageable condition:
A National Sustainable Infrastructure Project. Felix Rohatyn's 2009 book Bold Endeavors: How Our Government Built America and Why It Must Rebuild Now (New York: Simon and Schuster, 2009) describes how ten National Projects transformed and renewed the US economy, and created millions of private-sector jobs. Rohatyn's list includes
      1. The Louisiana Purchase
      2. The Erie Canal
      3. The Transcontinental Railroad
      4. Land-Grant Colleges
      5. The Homestead Act
      6. The Panama Canal
      7. The Rural Electrification Commission
      8. The Reconstruction Finance Corporation
      9. The GI Bill
      10. The Interstate Highway System
    Even if we add the Apollo Project and the Internet, it's obvious that the United States has not had a National Project in over three decades.  And the last one on his list arguably contributed more than any other factor to our national dependency on fuel-inefficient cars, the decline of passenger railroads, suburban sprawl, and the economic destruction of urban centers.

    But the others had the collective effect of turning the US into- until recently - the greatest economic power in history.  Every dollar invested in the Land Grant Colleges, for example, has resulted in many times that amount in local jobs and tax revenues, new companies, and advances in technology.

    The deterioration of our national infrastructure threatens to undo even the possibility of an American economic renaissance.  We could expand Rohatyn's basic concept to create a new and sustainable national infrastructure, funded by a National Infrastructure Bank. Such a new National Project would not only secure a place for the US in the new global economy, but would likely create millions of new jobs from the day it begins.

    Property Assessed Clean Energy (PACE) Bonds. Affordable energy conservation and efficiency loans advocated by PACE Now, and attached to the home rather than the homeowner would make these investments almost "an offer you cannot refuse".  Homeowners would see a quick and permanent drop in their energy costs, usually exceeding the cost of paying back the loan.  PACE-secured loans would create major opportunities for sustainable home renovations that would dramatically reduce energy consumption.

    A National Industrial Strategy.  An aversion to anything that smacks of national planning runs deep in American culture.  But crises create opportunities to force people to rethink.  A national industrial investment strategy built around sustainable technologies and local economies may be essential if the US is to once again become competitive with rising economies around the world.

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