Innovation, economics, and messy, complex truths

layoffs firing cost cutting

Andy Kessler, whose take on things I generally like, recently wrote a piece for The Wall Street Journal called, “Robots, 3-D Printers and Other Looming Innovations.”

In it he posed the question of whether the internet and other disruptive trends have destroyed more jobs than they’ve created. Could innovation actually be fueling the stubborn unemployment that has persisted in much of the country?

But Kessler was merely tossing some rhetorical “chum” into the waters to bait naysaying Luddites. Sure, people are hurting now, Kessler noted, and probably more jobs have been destroyed than created, but eventually things will more than even out, so suck it up!

Kessler then delivered his list of future job creating “game changers” with the certitude of a preacher sermonizing to his flock (it’s WSJ, after all).

But, Kessler’s truth ignores a messy paradox; namely, that while the innovations of tomorrow are most certainly worth working toward, that doesn’t obviate the parallel truth that the depth and duration of pain being experienced throughout much of the country is chronic, systemic, and arguably, must also be dealt with.

Reassessing the calculus of ‘value’

There is a Koan that is running through my head. Maybe you can help me suss it out.

In an era where cheap, commoditized and free are celebrated as democratizing virtues of plenty, when does a shirt for $6.99 cease being an asset, and when does it become a liability?

One answer is that price is absolute, and that the consumer always wins when the price is lower.

But another, more nuanced take is that it depends on how much of that $6.99 actually stays in the community where that shirt was actually purchased, and to what extent that price contributes to the makers of that shirt being able to earn a living wage.

Let me put a bow around this idea. Kessler asserted (and I agree) that in the near term, low paying jobs will get squeezed or go away, but in the long run, new technologies and new industries will create far more high-paying jobs than they destroy. After all, this cycle has played out repeatedly in history, so it seems like a reasoned take.

Kessler even presents a George Gilder-esque proclamation about the importance of seeding and harvesting new systems that can grow into economic game-changers and job-creators by creating surplus where scarcity once existed:

“The trick is to lower the cost of new machines and inventions that can do things never before possible, making them available for wide use.”

But, again, this easy truth belies a more complex and “messy” truth; the sheer efficiency of such systems so fully pancakes entire categories of jobs (or downscales them into lower paying ones) that the net effect is to drive a stake into the heart of many local economies. What to do?

Presenting false dichotomies

In Kessler’s view, we can either stop trying to “do something” about the wobbly nature of jobs, jobs creation and economic mobility, and just let things run their course.

Or, government can “get in the way” by being paternalistic and bureaucratic, thereby screwing everything up.

This type of Either-Or narrative is a classic false dichotomy. How so? Let’s say, for example, that innovations like the Internet economy, digitization, globalization and offshoring are currently destroying more U.S. jobs than they are creating.

And let’s also say that in the long run that these innovations will catalyze the next great job creation engine.

But, let’s also acknowledge that this transition could take another decade to play out. What then? What happens in the intervening period? What does that scenario look like?

Broadband, after all, began to materially kick in around 2000, and 13 years later these trends are in the fuzzy midstream of playing out. Nobody really knows how long it will take to get to the other side from a net job growth perspective.

Given this backdrop, what is the right answer for the portions of the country getting absolutely creamed – with no end in site? I am talking places like Youngstown, Ohio, Central California, Muncie, Indiana, New Bedford, Massachusetts and Memphis, Tennessee.

Forget for a moment whether you are a Democrat, a Republican, left leaning or far right, and riddle me this:

  • Should we do nothing?
  • Should we revisit our current approach to policy and enforcement?
  • Should we create tax free zones and assume that business has all the answers?
  • Should we create public-private industry hybrids in the same way that local government jointly funds redevelopment plans with real estate developers?
  • Should we focus on addressing the skills gap by funding “applied” education?
  • How do you help those at the bottom who truly aspire to be upwardly mobile?

Do we need an uber strategy for this type of cyclicality? Would you feel differently if the creative destruction were a natural disaster instead of an economic one?

I guess my point is that (like Kessler) we all like easy-to-digest, black and white truths.

But increasingly, we live in a world of messy, complex truths.

What’s your take?

Mark Sigal is an eight-time entrepreneur, whose ventures have sold to Apple, IBM and Intel. He is chief product officer at Unicorn Labs, an eBooks and eLearning platform provider.

Photo courtesy of Shutterstock user kaarsten

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