Archive for the ‘Thinking’ Category
Tower Private Advisors
This is the story of my day and, thus, this blog posting…
No, that’s not a tractor idled for lack of work. It’s what’s behind the picture above it…sorta.
In early December the Weekly Recap included a deeper-than-usual look into the U.S. employment picture, including a discussion of the Labor Force Participation Rate, which had reached its lowest level since 1984. There are a number of factors behind that and others
indicative of a jobs problem we have here. I think the single-biggest culprit behind the job disappearing act is increased productivity. For example, at the main office of the Allen County Public Library, it’s now possible to walk in, find and check out books and videos, renew one’s library card, and validate a parking ticket–all without talking to anyone, something of which I’m especially fond. I mentioned the library’s culpability in our employment crisis to a staffer there, and, according to her, indeed, by means of attrition, those jobs will be vaporized.
‘Need more anecdotal evidence? We recently met with the Williams Inference Service folks and, amongst other–as-usual–intriguing articles, they featured one from the WSJ titled, “Teaching Drones to Farm.” The first sentence was this: “[m]akers of agriculture equipment are exploring a new frontier: farming without the farmer.”
All emphasis that follows is mine.
Kinze, with the help of Massachusetts-based Jaybridge Robotics, is developing two products aimed at easing the time and labor crunch farmers can face. The drone technologies can seem like ghost-like as a tractor crosses a field with no one in the cab.
Kinze’s autonomous planter would determine the most efficient route to plant a field and the do the sowing without a driver. A system of sensors ensures the tractor doesn’t run into any unexpected obstacles such as a fence post or stray farm animal. The technology has become feasible to incorporate into agriculture because of its growing use in automobiles where it has driven down costs.
As for the harvest, a farmer still would need to operate a combine, but a cart positioned next to the combine to receive grain would be autonomous. The cart would keep pace with the combine, and once full, proceed to a waiting truck at the edge of th
e field being harvested. Ultimately the farmer would need two people, rather than three, to harvest the grain.
You can shake your head as you [gotta] watch the video below. At first it appears to be a rural version of one of the Speed movies–just to prove they could be worse–until the tractor carefully turns around.
And Williams Inference popped back into me mind as I read a blog post on “For The Win; Random musings on venture capital, among other things.” The chap that keeps up the blog claims that we worked for Mitt Romney (“I started my investing career doing leveraged buy-out deals at Bain Capital, working directly for Mitt Romney”). In his post, Job Creationism–once you get past the lurid picture of Adam and God that adorns the Sistine Chapel–he provides an interesting perspective on job creation–from the viewpoint of one who was creating jobs:
“For the first 3 years of my venture career, until the spring of 2000, I did indeed “create jobs” right, left and center. All of my companies were hiring anyone who had a pulse. Fortunately, I was lucky enough to exit many of those investments before the music stopped, but by the summer of 2000, it was clear that all of us in the venture industry had created a few too many jobs, frankly.
He later cites some statistics supportive of my contention, above, and certainly the contention of the article that follows, below.
Let’s look at the newspaper industry (just in case I haven’t depressed you enough already.) In 1990, the industry employed 460,000 people. Today it employs 250,000, and is projected to shrink to 180,000. The two companies who sucked all of the profits out of that business, Google and Craigslist, collectively employ about 25,000 people (Craigslist makes up 30 of that number. Not a typo.) So, did the heroes who founded and funded Google and Craigslist create 25,000 jobs, or did they destroy a quarter million jobs?
In a recent meeting with the Williams Inference service, their folder titled “Ghost in the Machine,” featured an article, which I highly recommend, from the McKinsey Quarterly (‘The Second Economy; Free registration required) After walking through the modern airport flight process equivalent of my library example, the author posits that there is a second economy that is unseen, lurking behind the scenes. He calls it digitization, and he estimates that if–based on what seem like reasonable assumptions–it continues to grow as it has since 1995, it’ll overtake the size of the 1995 physical economy by 2025. He likens this second economy to what is unseen below an acre of Aspen trees.
If I were to look for adjectives to describe the second economy, I’d say it is vast, silent, connected, unseen, and autonomous (meaning that human beings may design it but are not directly involved in running it). It is remotely executing and global, always on, and endlessly configurable. It is concurrent–a great computer expression–which means that everything happens in parallel. It is self-configuring, meaning it constantly reorganizes itself on the fly, and increasingly it is also self-organizing, self-architecting, and self-healing.
These last descriptors sound biological–and they are. In fact, I’m beginning to think of this second economy, which is under the surfae of the physical economy, as a huge interconnected root system, very much like the root system for aspen trees. For every acre of aspen trees above the ground, there’s about ten miles of roots underneath, all interconnected with one another, “communicating” with each other.
Skipping ahead by several pages…
Physical jobs are disappearing into the second economy, and I believe this effect is dwarfing the much more publicized effect of jobs disappearing to places like India and China.
There are parallels with what has happened before. In the early 20th century, farm jobs became mechanized and there was less need for farm labor [GPS: and now we can digitize the mechanization!], and some decades later manufacturing jobs became mechanized and there was less need for factory labor. Now business processes–many in the service sector–are becoming “mechanized” and fewer people are needed, and this is exerting systematic downward pressure on jobs. We don’t have paralegals in the numbers we used to. Or draftsmen, telephone operators, typists, or bookkeeping people. A lot of that work is now done digitally. We do have police and teachers and doctors; where there’s a need for human judgment and human interaction, we still have that. But the primary cause of all the downsizing we’ve had since the mid-1990s is that a lot of human jobs are disappearing into the second economy. Not to reappear.
All the soundbytes and voter-pandering press conferences aside, that’s going to make the job of one of these cats very difficult when it comes to “creating jobs.”