I have posted often on a couple of themes: where will the jobs be?, and what kind of economy will we have – a real economy, or a fantasy economy? (Traders vs. Builders, to use Richard Florida’s terminology. Read especially this earlier post: “Traders” vs. “Builders – the “Fantasy Economy” vs. the “Real Economy”).
These themes are closely connected, and today in the New York Times, David Brooks adds greatly to this conversation. He quotes from the popular e-book by Tyler Cowen, The Great Stagnation (which I have not read, but is now on my list).
The comments responding to this article reveal the great political divide in this country. Conversation – intelligent conversation – seems increasingly endangered.
But this was not a political column. And many of those who left comments miss the underlying problem, in my opinion. I have bolded what I think is the most important section below. Brooks’ entire column, The Experience Economy, is worth reading. But note especially these excerpts:
Cowen’s core point is that up until sometime around 1974, the American economy was able to experience awesome growth by harvesting low-hanging fruit. There was cheap land to be exploited. There was the tremendous increase in education levels during the postwar world. There were technological revolutions occasioned by the spread of electricity, plastics and the car.
But that low-hanging fruit is exhausted, Cowen continues, and since 1974, the United States has experienced slower growth, slower increases in median income, slower job creation, slower productivity gains, slower life-expectancy improvements and slower rates of technological change.
Cowen’s data on these slowdowns are compelling and have withstood the scrutiny of the online reviewers. He argues that our society, for the moment, has hit a technological plateau…
As Cowen notes in his book, the automobile industry produced millions of jobs, but Facebook employs about 2,000, Twitter 300 and eBay about 17,000. It takes only 14,000 employees to make and sell iPods, but that device also eliminates jobs for those people who make and distribute CDs, potentially leading to net job losses.
In other words, as Cowen makes clear, many of this era’s technological breakthroughs produce enormous happiness gains, but surprisingly little additional economic activity.
This column is a great example of “this is what the problem is, but I don’t know the solution” thinking. I don’t fault Brooks, or Cowen – I don’t know the solution either.
But I think that all the blame, aimed at President Obama, or Congress, or the Republicans, or the Democrats, is misplaced. I think the technological discoveries and innovations of the era really have created an economy which provides fewer jobs. A lot fewer jobs! — especially for the “physical workers” among us – a number which is not going down. The national average is that 25% of those entering high school do not finish high school. What jobs will be available for these people, and the others who do not finish college? Through the years, the United States has always had jobs for such people. Those kinds of jobs are increasingly rare.
In the term used by those who discuss these ideas, we are in the midst of a structural realignment, not just a cyclical problem. But, if there is a realignment, it implies that there is a working/workable other side. It would be nice to know what that will be…soon.
Before we post foreclosure signs outside of book retailers such as Barnes & Noble, Borders, Half-Price Books, and others, because everyone purchases books and downloads them on devices such as Kindle, let’s talk about what these retailers really are.
Yes, they sell books. But, any cursory glance at a visit to these stores will tell you that customers are there for many reasons. They are there for an experience. Last night, at a prominent store of this type, I walked in and found it packed. Patrons filled cafe tables, drinking, eating and chatting. People were on sofas chatting. As I kept walking, I found people listening to CD’s in the music section, conducting business near the magazine section, browsing through gift items near the cash registers, listening to stories in the children’s section, and of course, perusing book aisles.
Any trip to these stores will confirm the notion that these are places that offer experiences, not sell books. Predictions were wrong that Amazon.com would put these stores out of business. It didn’t happen. Predictions will be wrong that devices such as Kindle will do the same.
The reason is very simple. These stores have amply diversified beyond any one product type or line. There is much more to them than books. In fact, they are much less of “bookstores” than Starbucks is a “coffee shop.” As Joseph Pine and James Gilmore argued in The Experience Economy, they have evolved into places where people can go for a fulfilling experience.
While sales have slipped, a CNN Money report indicates that they have done so less than expected, and in fact, no more so than other types of retailers who have felt the brunt of a shaky economy.
Don’t think for a minute that people do not like to get out and relish in experiences. If that is the case, then we would have lost every retail mall once online shopping became available. There are plenty of people who will download books to devices such as Kindle, and among them, many who will curl up in their recliner and read their books that way. But, there are also many of them who will do that and also find their way into retail outlets that stock and sell books.
Perhaps if a retailer only sells books, it will be in trouble. But, not in any more trouble than any other kind of retailer who puts total emphasis upon one product type. That is not what these retailers are doing. They sell books, but offer experiences. And that is why an electronic device will not shut them down.
Do you disagree? Let’s talk about it.