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03/04/2009

We're not making "stuff"

There was a scary new article in the New York Times this morning about the type of impact the recession has had across the country.

The scariest part for me is the following quote:

Unlike the last two recessions — earlier this decade and in the early 1990s — this one is causing much more job loss among the less educated than among college graduates. Those earlier recessions introduced the country to the concept of mass white-collar layoffs. The brunt of the layoffs in this recession is falling on construction workers, hotel workers, retail workers and others without a four-year degree.


1913_assembly_line What I find frightening is that some of the people hardest hit (so far) are people who produce "stuff." Unlike a business or technology consultant who produces advice on how to streamline customer service or how to implement the latest SAP software, a construction worker builds houses where people live, an automobile worker produces cars that people drive.

We have so many jobs that produce "intangible" products built upon an ever dwindling base of jobs that produce "tangible" products, but it seems like that base is crumbling with the current recession.

Of course jobs that produce "stuff" have been out of vogue for awhile. Just ask anyone living in the rust belt or some old steel work from Pittsburgh or an old stockyard employee from Philadelphia. We exported our jobs overseas and as a country we largely don't' produce "stuff." We refine the "stuff," cleverly package the "stuff," we've got brilliant ad agencies that sell the "stuff," and, until recently, most of our economy was built upon that people would buy the "stuff."

Of course this last element in the process has fallen to shambles. People aren't buying "stuff" anymore because they can't afford it. I realize the fall in consumer spending is only one factor in our spiraling economy.

Thomas Friedman, in his self-gratified way, puts it better than I do in his op-ed today:

We are coming off a 20-year credit binge. As a country, too many of us stopped making money by making “stuff” and started making money from money — consumers making money out of rising home prices and using the profits to buy flat-screen TVs from China on their credit cards, and bankers making money by creating complex securities and leverage so more and more consumers could get in on the credit game.

When this huge bubble exploded, it created a crater so deep that we can’t see the bottom — because that hole is the product of two inter-related excesses. Some banks are in trouble because of the subprime mortgage securities they have on their books that are now worth only 20 cents on the dollar because of widespread defaults.


And, on a final note, one thing that bothers me about some of the rhetoric surrounding Obama's stimulus package is the repetition of the phrase "job creation." We've got to create more jobs, they say, people need jobs to get a paycheck to let's focus on job creation!

I agree that people need jobs (I am thankful that I still have a job) but what products are these jobs going to produce? Focusing more on creating jobs instead on what product they were making, in my opinion, caused the big three automakers to fall behind their Japanese counterparts. The unions, such as the UAW, were all about jobs and people keeping jobs, whereas a company like Honda was concentrated on creating and producing a reliable product. Which company is doing better? (I know that both aren't doing great, I said better).

Of course there are green jobs. We've heard Obama talk about this at length. How the creation of "green energy" will not only save the planet but it will create jobs. But Michael Levi at Slate bring up a valid point:

Every unit of energy generated from alternative sources displaces a similar amount generated by traditional means, so forgoing those other energy sources means giving up whatever jobs they were providing. This doesn't mean that greening the economy will have no net impact on jobs, but it muddies the math considerably.


I think the creation of alternative or "green energy" is a valuable, and indeed mandatory, pursuit on our part, but let's not look to it as the saving grace of both our planet and the economy.

Though I do like the line of thinking. Let's think of "stuff" we can make and then find people to make it.

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C'mon, man! It's been what, 5 days?? Don't leave us hangin'!!! Get posting!

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Austin Diaz

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