David Gergen at the 2008 World Economic Forum, via Wikipedia
Not withstanding a recent and maligned attempt at humor on my part, the impasse between Conservatives and Liberals on the fiscal crisis grows ever more serious. Now, my favorite moderate, David Gergen, has chimed in to wax pessimistic over the possibility of any kind of deal. Gergen is a serious and pragmatic man. If he thinks it’s serious, then I believe it is. This is truly unprecedented in my lifetime.
According to Gergen, and this is backed up by everything else I’ve read about it, the GOP has firmly locked themselves into a monolithic no-compromise position on any raise in taxes. This intransigence has angered the more extreme Democrats, who are likewise resisting any attempts at entitlement reform. And in the background looms an economy mired in stubborn unemployment.
If the economy could only recover, we wouldn’t be in this mess. Tax revenues would be higher and businesses wouldn’t be scared to hire. The newly employed would be earning and buying, further sparking the economy. So why isn’t this recovery like past ones, where businesses and industry yield to the need to hire? Well, I have posted before about what I think the “root causes” are, and by that I mainly mean “inefficiencies”. But I suggest there is another very important factor: in a word, it is productivity.
An article in USA Today explains how a GM plant, under pressure of reorganization, rediscovered a long-known secret to productivity, i.e., cross-training. That means training people to do more than one job. This pays enormous benefits. First of all, there is someone to fill in for unexpected absences. It makes for happier, and less-bored employees. They are more-fulfilled and more likely to take ownership of their jobs and pride in the product.
Gehl Skid Loader
I believe that businesses all across the country have discovered productivity in similar ways under the pressure of the Great Recession. They have learned to do more with less. And what is it that American businesses do, anyway? 76.9% of it is the service economy – that means running restaurants and fast-food shops, hospitals, schools, banks, insurance companies, newspapers, tourism, utilities, and the like. 76.9% of us are waiting upon each other’s daily and routine needs, and many have learned, with the help of automated equipment like computers and Bobcats, to do it more efficiently. (When’s the last time you saw a guy wielding a shovel?)
What makes up the rest of the economy? Industry accounts for 21.9%, and that would include making cars, heavy equipment, airplanes, tanks, bombs and submarines. You might think things like farming are an important source of employment, but you would be wrong. While farming relies heavily on unskilled labor for harvesting, it is seasonal and not the kind of labor that results in benefits-costs. Farming is highly automated and efficient, but as far as its permanent workforce goes, it is tiny. Almost unbelievably, according to Wikipedia, if you combine its labor force with those of fishing and forestry, it is still only 0.7% of the total! A typical price list of farm equipment is revealing of its dependence on automation. A new tractor: $220,000 (GPS included, no doubt). New grain bin: $60,000. New sprayer: $30,000. New farm hand: $0 (no thanks, don’t need any). So, if you are counting on farming and the global economy’s increasing hunger for farm products to boost employment, you had better think again.
I read a science fiction story in my youth, title and author now lost to memory. It predicted a future when all the work would be done by robots and automated factories. Mankind would be freed to spend all its time at leisure and would actually compete for a tiny number of meaningful jobs, jobs in the arts and a few in science and politics. Well, it turns out that utopia isn’t all that pretty after all, is it? The world has changed, and David Gergen knows it.
Still Skeptical After All These Years 
I can personally vouch for both the cross-training and the lack of farm jobs. Several mid-size employers (mostly restaurants or food service), including my wife’s work, are re-training workers rather than hire. The few new personnel are very young, some not even out of high school, and all are hired as part-time to avoid having to pay benefits. On the farm front, there are fewer farmers working more fields. The main drag through our (admittedly tiny) town has become a main thoroughfare for tractors, fertiliser spreaders, and (in a few more months) combines and harvesters. A number of farmers working small plots have sold them off, and as a result, fewer jobs are produced for the same amount of land. Add in the spreading Amish population entering into non-traditional jobs (and filling the slots with underpaid, or unpaid, family members), and small town America ain’t looking too good. Throw in the same cross-training and part-time-hire concepts in larger towns and cities – no wonder this is a “jobless recovery”.
And I, for one, enjoyed your humourous attempt. But I’m weird – just ask any of my blogging acquaintances! 😀
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Thanks, John. As always, it’s good to have real-life feedback. – Jim
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Jim,
You indicate that Gergen and you (and I) have some agreement on the scope and complexity of our current economic problem. But I did not read Gergen’s suggestions for “fixing” the problem. For sure as productivity increases in America (and eventually in “Vietnam” or “overseas” as well) fewer and fewer “workers” will be needed to “work” at manual or unskilled labor. There is your “flat world” staring us all in the face.
Imagine your world of “robots” but with a continuing population growth of current dimensions. What are all of those “new” people, a growing number of “new” people, going to “do”. You seem to think they will “wait on each other” in some form of leisure or entertainment capacity. Why for example does a movie star or pro football player “make” $10 million per movie or a 4 month “season” (plus playoffs)? Should we cut their salaries for more “stage hands or water boys”?
I don’t think the current NFL impasse is over what water boys are being paid, do you? There is a classic “rich vs rich” labor dispute, is it not. And listen to the outrage when the season does not start on time or a season ticket to a “game” costs $10K per season.
It seems to me that government is in a continuing horse race to take care of those left behind, those that no longer “qualify” for good jobs based on skill levels. And those unskilled are overwhelming the ones that develop the skills to meet the challenges of a flat, might I say an inevitably flat, world. Europe chose that path begining right after WWII and Democrats seem to want to continue to go that way.
To me it is the wrong race to try to compete. There is not enought money to do so. And given the money, I would not buy a pro football team or a movie studio, either. I would develop “efficent” or or “green” energy, if I was smart enough. And guess whom I would hire to perform that task? It sure as hell would NOT be a WILL NOT. (see my blog, John for such a definition).
anson
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Anson,
You said,
Let me make it clear that by citing that old sci-fi story I was not advocating that I thought the world would turn out that way, merely that such an outcome was possible and that the way things are trending are much less desirable. As for people “waiting on each other”, that is pretty much what is happening in a 76% service economy, like it or not. “My world of robots” is your world too.
There will always be competition and high salaries for movie stars and pro football players, but that is missing the point. The point is the continuing improvement in productivity is pushing more and more jobs into the service sector, now fully three quarters of all jobs.
Look, you seem to think I am against productivity. I’m not. (I’m not against capitalism either, which you seem to imply.) By this post I am simply saying that productivity is a major reason for the intractable unemployment problem. And you are right that Gergen didn’t say what to do about the crisis. I’m not surprised at that because both sides are firmly entrenched in their stands, which are polar opposites. “No new taxes of any kind” and “no touching entitlements”. I don’t think Gergen or anyone else sees a good way out of this. In my opinion they will have a short-term fix that will merely kick the can down the road a year or so. Meantime, burger-flipping will thrive.
Jim
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Jim,
Might I suggest that the “tone” (at least as I read it) of your blog is to say too many are being left behind (to flip burgers) as productivity increases. And if that is true (in terms of your belief) you call for more money from the productive to take care of those left behind.
To some degree that is fine with me, more money to help those left behind. But our money is running out, actually has run out. And we have been borrowing money to keep up with both defense of our way of life AND helping those left behind. Just to PROVE that we don’t have enough money of our own to do as we want to do we have been borrowing money for now at least 70 or 80 years (with one very short 4 year hiatus from such borrowning).
You and the EC crowd think there is still plenty of money to do as we so choose. Fine, go find it, balance the budget (and keep it that way) and do as you like to help those left behind and defend ourselves.
But even in the short term, when you find that money in the hands of the rich and take it from them through the power of government, consider the consequences. In my view even more people will then be left behind and we will measure it by the unemployment rate.
Remember just two short years ago government spent around $1 Trillion to reduce the unemployment rate. That money has now run out and look what happened. The unemployment rate is back where it started two years ago. And now at least the EC and his followers want to spend yet again even more money by government to take care of those continuing to be left behind, will not or cannot “catch up” making no difference.
I on the other hand call for sorting out the will not’s and simply telling them to catch up now on their own while still helping those that cannot.
What is wrong with that approach where we no longer have the money to help those that will not help themselves? I have even suggested that if we do so, stop giving money to “will not’s” we might even balance our budget. But you must be tough in deciding who the will not’s really might be and the only way you can really tell is to “sit and watch” them spend the money given to them by government.
Now see my blog on “Government Benefits”. You and I (and probably Duane considering his postal service retirement) receive most of our monthly income from the federal government today (at least I KNOW that I do but not sure about you). Are we will not’s (now both in our 70’s) or cannot’s? That may be debatable for you and me. But it sure as the devil is NOT debatable for our kids if we give them time to plan accordingly for their later years. And THAT money is what Ryan is TRYING to modify, not for us but for our kids.
Anson
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Anson- While I agree there are people “on the dole” with no intention of finding work, I would question exactly how you would determine who the “would nots” are. Technically, I would fall under the “would not” category. I am not OFFICIALLY disabled (I haven’t bothered to obtain the paperwork and get my doctor’s signatures) because migraines, or cluster headaches as the doctor calls them, are not considered a disability – yet I can neither work a full day nor a regular schedule because my level of pain varies from hour to hour and day to day. Were I to go through the paperwork, I could get some money from either the state of Ohio or the Fed, but that money would only last for a certain period of time, after which I would fall under the definition of a “would not”. As well, my wife could run into problems under the “would not” definition because she can’t take additional schooling to obtain more than her GED for a number of factors, the major ones being her desire to care for me as well as a fairly serious case of dyslexia. She is basically stuck in the part-time “burger flipper” category because of these factors.
I’m not arguing that there should be reviews of aid recipients’ qualifications – I’m just concerned at the massive amount of bureaucracy that would be required to handle “special cases” like myself – or the even more objectionable results from attempting to classify people with the current (and rather lacking) system.
Just my two cents’ worth of thoughts.
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John,
Your’s is a tough case and I could not ever make a decision (assuming I was responsible for such a decision) based on what you just wrote.
But I would say this, very clearly. SOMEONE in the vast federal or state bureaucracy MUST be the decision maker for your and your wife. And his decision should be TRANSPERANT to all concerned. And a DECISION amounting to a straight YES or NO and the amount of money involved MUST be made with compassion, logic and in compliance with any laws that are applicable.
If the LAW makes a NO decision by legal mandate, then you have a (poor) option(s). Challenge the decision based on the law and let the courts decide or try to change the law. For sure if a NO decision by the bureaucracy leaves you “in the streets” then I suspect private charity will “keep you and your wife out of the streets”. If not there are homeless shelters and food to at least keep you alive.
What I would HOPE would happen, based on what you said above, is to provide, at public expense the money needed for sustenance, but not any extravagance. If you receive public funds, no booze, no cigarettes, no flashy cars (or perhaps even a car), etc. That falls into the “sit and watch” how you spend the money provided, publicly.
And I would go so far as to call for a public audit of your bank account each month as part of the “watching”. If “I” or “we” in fact give you money you must be open and responsible enought to allow “us” to “watch” how you spend it.
Now listen to civil libertarians respond to such “intrustion” into your personal affairs. Well when you take “my” money, you as an individual are “intruding” into my personal affairs as well and “I or we” deserve to know how your are using “my or our” money.
Tough call, yes. But is it “fair”?
And just to avoid a lame rebutal from some liberal, NO, I do not call for such audits for SS, Medicare (unless fraud is being legally investigated) or my military retirement pay (as long as I am not a convicted felon). Why that would be the case would requrie too long an argument for this comment.
But I would suggest that SS DISABILITY payments (before you reach the age for SS) might well be part of such an audit program. Same for any state DISABILITY payments as well.
Anson
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Anson – I won’t argue with the need for oversight. I will, however, question the level of public availability of data if someone were auditing my bank account (in our example). Absolutely, no “sins” (alcohol, cigarettes, country clubs, etc.). Limits on cars, yes – I would completely accept allowance of a car, especially out here in the sticks, though I would indeed want some guard against luxury cars, big cars, gas guzzlers, etc. I would question, though, how to judge some of the other “near-luxury” items. Do I need the Internet? Need to live, heck no. Need to have to keep my sanity, dang straight. Others might view it as a luxury, though, and want to take it away. Ditto my satellite TV – I don’t NEED the BBC or The Military Channel or STARZ, but they keep me from whittling the nearest human being into a totem pole. (KIDDING!) And again, while some of this oversight infrastructure might exist today, it would concern me that the politicians would latch onto this concept as an excuse to build up their own little empires. Despite the supposed Republican plank of reduced government, it’s been my first-hand experience that politicians of all stripes like to build their own little dominions, regardless of party promises.
I guess the point of my rant would be, bearing in mind the original topic I’ve steered us from, that as our economy shifts more towards service, there will probably be more of a divide between the various economic classes, and that as we increase taxes (or remove tax loopholes and exemptions), we also need to overhaul the safety net in some way that allows us to (as much as I hate the phrase) “do more with less”. HOW we do that more with less could be it’s own post – and one on which I’d love to see the debate! 🙂
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Anson, you said,
(emphasis supplied)
Now where in my post did I say I wanted to solve the productivity problem by taking money from anyone? If you bother to look you will see that I didn’t. You are flogging a straw man here. All I was trying to do in this post was bring attention to an aspect of the unemployment problem that I hadn’t seen addressed in the various blogs. Yes, productivity is part of the problem, but it would be nonsensical to want businesses to be less productive.
Just to put it in stark terms and given that only seven tenths of one percent of the population can now feed everyone, the problem as I see it is to find something valuable and constructive for people to do besides flipping burgers. How about some constructive ideas from you instead of unfounded assumptions about my intentions?
It bothers me, Anson, that you want to put words in my mouth. You seem to count me a liberal lately, but I still consider myself a moderate. Could it be that you have moved so far to the right that your perspective has changed?
Jim
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Jim,
I am right where I have always been, to the conservative side of center as opposed to the liberal side of same. You struggle to remain as close to the center as possible it seems to me which is fine, but I reserve the right to interpret what you suggest (like critcizing me for my lack of care for the pregnant illegal) and counter as I deem appropriate.
If or when I misquote or misunderstand your views, correct me all you like and I will respond accordingly.
Responding, again to your last paragraph above, the PROBLEM has gotten so HUGE just in the last year alone that HUGE (and unpopular) solutions are required. I am still right of center but not yet a Tea Party member, nor even a Republican Party member. I am simply a deeply concerned conservation individual.
Anson
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