Book Review - The Great Stagnation

Actually the full title is: The Great Stagnation: How America Ate All the Low-Hanging Fruit of Modern History, Got Sick, and Will (Eventually) Feel Better, by Tyler Cowen and published by Dutton Adult, 2011.

For the d-n-d, read Chuck Crane's review on Amazon (no sense in restating it all here). Chuck does a more than adequate job of outlining as you'll see.

My interest in the book is self serving of course as the idea's presented sync with mine nicely. I heard Mr. Cowen interviewed on NPR and what he said not only made sense, but also added perspective to my own similar ideas. I have his most recent book Average Is Over on order.

Listed below are 5 key points from the book as outlined by Chuck Crane in his review.

• The economic low hanging fruit that has historically propelled growth and prosperity in the US, is drying up. Examples include: free land, technological breakthroughs (big ones - electricity, motor vehicles, radio, telephone, computers, etc.), public education, cheap fossil fuels, and so on.
• Other countries are experiencing "catch-up growth" including India and China, where technological innovations in the West have been leveraged and leap-frogged, resulting in a sudden flattening of the playing field.
• Median income growth has slowed since the early '70s, something I have written about frequently. I am amazed how little scrutiny this gets in the media. I guess the slow boiled frog analogy fits here.
• The rate of technical innovation has slowed, since 1873 and most notably since 1955.
• Recent and current innovation is geared more to private goods than to public goods, leading to an increase in economic inequality.

Books like this naturally interest other economists. But what about those noodling social issues? Furthermore, what about those in the greater workforce field, from high school guidance counselors to headhunters and WIA implementers? And yet, as big as the workforce field is, it's not big enough. What about lawmakers and real social policy movers-n-shakers?

If Tyler Cowen is correct and the US has hit a plateau (and stagnation will continue) what are we doing about it? From my perspective, next to nothing. I hate to say it as much as I hate to see it.

The current super-gridlock in Washington DC is proof in the pudding. For the time being (and it may be a very long time being at that) government is shackled. As Cowen notes, one party can't come up with a real plan to address the budget deficit (driven in no small part by Social Security and Medicare) and the other party can't stop pounding the tom tom that tax cuts (the apparent answer to everything) will increase revenue and pull us out of the muck.

Cowen's ideas add to my contention that this is the era of the Free Agent worker. And again, by worker I mean nearly everyone other than those not needing to generate income (those enjoying inheritances, the truly retired, and passive owners). That leaves 90%+ of the population as WORKERS in one form or another.

When it comes to finding a job, advancing in a job, moving to a better job, being a Free Agent means it's all about you - not I hope in a narcissistic and selfish manner, but rather in a heads-up way. In order to achieve your career and life objectives, you must see things as they actually are - that you are a Free Agent. And the younger you are, the more important the acceptance of this concept becomes.

Tyler Cowen knows this and I hope he makes it a point to pass it along to his students at George Mason.

The question is, do you know it?

Travel well.
John Jeffrey Lundell

Feeling Stuck In Your Job - Part II

Stuck

I realize the first post on this subject was very much the "down-n-dirty." It was meant to be. If you are stuck and seeking a way to begin crawling out - AND you read the post and thought, "okay fine, but what should I do, where should I start?"

I suggest you aren't ready to do anything. Why? Probably because you want someone else to do it for you. You want someone to explain how and why. You want someone to hold your hand and guide you through the process. THIS IS YOUR PROBLEM, not that you are stuck somewhere. Getting unstuck and out isn't nearly as hard as it's cracked up to be. What's hard is shifting something within you from the OFF to ON position.

Back to the first post. If you had flipped the switch, the simple suggestions would have appeared to you as a road map. You'd buy into the fact that you have to plot it out, deciding on your next move (read that your next job). However, if your switch remains OFF (I refer to this as being asleep, unaware, and unconscious) then you likely dismissed it as just more blather, useless and not applicable to you. Why? Because there was no guaranteed 5 easy steps to FOLLOW or better yet, no one to feed it to you, spoonful by spoonful.

Before adding more d-n-d suggestions, here's more on why you need to wake up NOW. The concept of the Free Agent Worker (which I write about frequently) is real and here to stay. Take for example jobless recoveries and stagnant real wages. Our labor pool in the US (using a longer term point of view) is declining. Given the law of supply and demand this should be a plus for workers. But no. The number of jobs paying REAL living income and above are NOT increasing. The reason is automation and computerization. Digits. How can this not continue?

Such a joy, so refreshing...

Going forward, supply and demand principles will be applied category by category and not across the board. The d-n-d on this is that you'd better be talented and/or in possession of unique skills and attributes or you'll be swimming in the shallow end of the median income pool where the supply will far outstrip demand. Those splashing around will be hard pressed to save anything, resulting in little or no wealth creation. And the shallow end will get crowded.

Look, there's no silver bullet here. Even if you wake up and get a move on, there's no assurance all will turn out well. And if you stay asleep, doing nothing while waiting for someone to do it for you? Well then be prepared to drift into the shallow end with hoards of others floundering about looking for ways to cover the nut.

Okay, add this to the first post.

• Get training that will enhance your marketability (and don't overlook short term, free, certification courses in niche areas).
• When networking, tell people honestly what it is you are trying to accomplish. Be straight-up and forthright. Don't let your ego take over - no blowing smoke, exaggerating, or embellishing. Just lay it out in your 30 second intro. "Hi, I'm Bob. I'm ________ and I'm looking to move to ________ in order to ________ in 4 or 5 years. I've taken ______ and I am enrolled to be certified as _________. Are you looking for someone that can get the job done?" *
• Until your next move comes about, know that you are still working for your current employer - AND this continues until you are not. Keep doing the do because that's why you are there and anyway, it's in your best interest to keep it so until the the last minute. Again, doing this is in YOUR best interest.

So there, no rocket science just a connecting of dots.

Yah I know, what about the Kardashians, the Duck Dynasty Boys, or the Honey Boo Boo? They're raking it in. They're able to transend the hard knocks and cold reality of a shrinking middle-class and flat wage growth, right?

True. And what's that got to do with you? Anyway, examples like this make my point. I'm not sure about talent or skill sets, but I am sure about uniqueness and marketing machines.

Anyway, is anyone knocking on your door to film a reality show about you trying to keep yourself from drifting into the shallow end? Hummm, I met a guy, that knows a guy, that knows a guy doing something in reality TV...

Wake up. Take charge. It's your ONLY hope.

* Sounds old school and corny, right? No one does that anymore, right? Well, if no one else is doing it, you might just stand out - imagine that.

Travel well.
John Jeffrey Lundell

Feeling Stuck In Your Job?

Let's assume that you are working but not completely satisfied with what you are doing or where you are doing it. You feel undervalued and you know you are underpaid. And yet, you have a job. You are making the best of it even though, all things considered, you really aren't making ends meet.

So off to work you go - again - another day of feeling like a marginal swimmer treading water in the deep end of the pool. You are frustrated and beaten down just enough to make actual swimming seem impossible.

You HAVE TO do something - but aren't. You are stuck and really sick of feeling stuck.

What to do?

First of all, are you prepared to do something about your current situation? Sure you're frustrated and "talking" about it, but are you going to take action? If not, do yourself a favor and stop being frustrated - seriously, save the energy. Just get on with it and enjoy the ride. No sense getting in a sweat if you aren't going to take action.

Oh, you are ready? But not sure where to start?

If so, here's the down-n-dirty -

• Write down what you want to be doing in 5 years.
• Add where you'd like to do it.
• Write down what you are doing now and where you are doing it.
• Look at what you've written and give it a reality check.
• If unrealistic, start over, scaling back as needed.
• If realistic, sketch out (in reverse order) a route from where you'd like to be, back to where you are now.
• Look at what you've written.
• What's the next most likely job that puts you on that route?
• Write out everything you are doing on your current job that could be applicable to the (next) one you've just identified.
• You now have the raw material from which to define your Job Search Objective, rebuild your resume, and map out a networking game plan.

It's basic but it will get you moving in the right direction if you are indeed ready make a move.

Good luck!

Travel well.
John Jeffrey Lundell

Everything Measured - Jobs Of The Future

As unappealing as the situation in the picture suggests it might be preferable to what's coming according to economist and author Tyler Cowen.

Recently Mr. Cowen was interviewed on NPR concerning his latest book "Average Is Over."

Predictions are never perfectly drawn so of course there will be twists, turns, and surprises along the way. But getting it exactly right is not the point. The digit and the computer have unleashed powerful forces impacting how we are living our lives. Cowen links two themes near and dear; the plight of the middle-class and the continuing upheaval because of all things digital.

Summarized below are a few key points from the interview and Cowen's take on the future.

• Take the concept of middle-class and come up with something else more akin to lower middle-class in terms of income and savings, but more bohemian-esque in terms of lifestyle and perhaps satisfaction
• Everything gets measured, graded, rated, monitored, recorded, tracked, and categorized - ruthlessly
• The HAVES will increase as a percentage of the population from 1% to maybe 15% 
• The determining factors in who gets what will be talent and ratings - think Yelp and credit scores
• A new meritocracy will emerge driven by undiscovered individuals suddenly getting a shot - think India
• Inequality levels will increase - and stay there

Cowen counsels not to expect many chances to get it together. In this decidedly non-warm-n-fuzzy future, graders and raters will in turn be graded and rated. This is inevitable and underway now. As Yogi Berra said "you can see a lot just by look'n around" if only we were. Cowen's point that the old category of middle-class will give way to new categories - is right on the mark.

As for employment in the future if you have (even a few) bumps or blemishes in your background, work history, credit score, or heaven only knows how many other types of measures there will be in the years to come, you will need to find another way to get on in the world. Frankly, taken to extreme lengths, there will be lots and lots of folks in this situation which will give rise to the new categories as noted above.

So, meet the model for your new performance review, one with real sticking potential.

This paradym shift will take years to play out. In the meantime, Mr. Cowen represents another thoughtful and educated voice weighing in on Free Agency. The top tier growth he anticipates from 1% to 15% will come from free agents coming into their own. They'll possess the right mix of talent and entrepreneurial spirit to elevate themselves from the masses.

However I don't see this process in all or nothing terms and I doubt Mr. Cowen does either. What is now considered middle-class will surely evolve but not into a zero sum proposition. There will be lots of room under the Free Agent tent - however, the price of admission will be awakening.

Stay asleep and you'll have to watch the show from the outside - wake up and you'll get a ticket to go inside.

Travel well.
John Jeffrey Lundell

Jobs, Wages, Spending - It Doesn't Add Up

Personal Consumption Expenditures / GDP

Let me start by mentioning just how important consumer spending is to the US economy. To be specific, its 71% important. The total spent by consumers on durable goods, non durable goods, and services amounts to 71% the nation's economy. That leaves 29% for everything else - making consumer spending in the US is a really big deal.

Needless to say consumer spending dropped sharply in response to the Great Recession that began in late 2008. Suddenly people were poorer as the real estate and stock markets tanked and unemployment spiked. Those leveraged way too far, were consumed by their own consumption. Those that came through it have seen their assets re-appreciate to some extent however its fair to say many if not most remain cautious. This situation is in part evidenced by a reduction in overall consumer debt over the last 5 years.

And yet, as bad as the Recession was/is, it will likely be seen as an isolated event, similar to the dot com bust in 1999/2000 or the S&L scandal in the 80s. These greed induced train wrecks are like giant icebergs. They show up on the horizon, growing larger as they drift closer, pushing aside or sinking whatever they come into contact with. They move on, growing smaller and less significant only to be replaced by another potential crisis-berg popping up in the distance. Only 10% of each iceberg is actually visible - the damage is done by the 90% unseen below the surface.

Something similar is happening to our economy. However instead of  huge metaphoric chunks of ice causing problems the culprits in this case come in the billions. If they could be easily measured they'd be super tiny, but they are essentially intangible and invisible. They are digits, the little 0s and 1s that make up the digital revolution. Far more significant than the crisis-bergs afloat on the surface these digits are at the heart of a real paradigm shift taking place below - in a word, automation.

I write about this subject often because it is the social and economic game-changer event of our lives. Wage stagnation, unemployment, and under-employment are all tied to what's going on under the surface. According to The Tofflers this story began in earnest in the 50s. They and others have tried to place the pieces together in order to shine a light on where we are headed. But there is no single path, the route has subdivided and there are many unexpected consequences - not the least of which is what to do about the changing world of work.

Amercians' Sources of Income

Most citizens rely on work to keep their boat afloat. With stagnant wages, a shifting of benefit expenses from employers to employees, and here-to-stay higher costs in critical areas (gas, education, and out of pocket medical expenses to name a few), you tell me how consumer spending will continue to advance (other than more debt)?

So far the forces of innovation, profit, and greed have taken the day and will continue to do so until we hit the wall hard enough or often enough for the blasphemous subject of social engineering to surface. Well ... expect it to be called something different but that's exactly what it will be.

The iceberg-esque crisis events will continue. The Marketplace will be unaffected, after all it has no feelings, its just the field where the game is played. Those sharp enough will profit as will those at the top (see income chart). But these two groups account for only a fraction of the big nut of consumer spending. The consumption driven US economy needs a healthy, prosperous, and growing middle-class - but the dots aren't quite connecting on this one.

Once again I'm back on the subject of Free Agency. If you are NOT at the top (take another look at the chart) you ARE a Free Agent - regardless of how and to whom you sell your services.

Travel well.
John Jeffrey Lundell