Don't be worried, be excited.

Sunday, April 23, 2006

The U.S. manufacturing industry is not in decline. In fact, it produces more things than it ever has before. But manufacturing employment in this country is in decline - both as a percentage of population and, since the turn of the century, in absolute terms. Those factory workers who haven't been replaced by robots (productivity gains) have been replaced by Chinese people (offshoring). And this trend is probably far from over.

Just look at what happened to agriculture. Now, less than 1% of Americans work on farms, but just a century ago it was more than half. American farms still feed the world, but it's mostly machines that do the work - the American farmer is gone forever. Manufacturing will follow the same course.

So what are we to do? The traditional answer given by economists is that our country has to "climb up the value chain" - start doing more high-value-added work. Instead of working in factories, we manage the firms that create computer applications to allow factory workers to manage factory robots. This requires a world-class higher educational system - which, thankfully, we have.

But no matter what we do, someone else can learn to do it. Even the mighty high-tech industry has been shaken by the recent wave of outsourcing to India - although so far it's been beneficial to the US IT industry, outsourcing has reduced wages for many US tech workers.

Economists tell us plenty of reasons not to worry about these changes. They tell us that the gains from trade benefit everyone, and that productivity gains benefit all citizens. They tell us that the total number of jobs in the world is not fixed - that as quick as old industries are moved overseas or made obsolete, new ones will pop up to take their place, financed by all the money we save from making things more efficiently. This is called "creative destruction," and the evidence seems to show that it's working. Despite accelerating offshoring, U.S. unemployment is low.

But this means we're going to have to job-hop faster and faster as industries change and churn. We may even be forced to change careers - once, twice, three times. The idea of working for a single company your whole life is dead; the idea of doing one kind of work for your whole life may not be far behind.

I don't think the age of job-hopping is necessarily a bad thing. I always found that people who only did one thing in their entire life tend to get slightly boring after a few decades. I certainly don't intend to be in one industry forever. And I like a society that rewards intelligence, adaptability, creativity, and all that good stuff, while saving hardship for the jerks who drive around with "My kid beat up your honor student" bumper stickers.

But I believe that our government should do something to ease the burdens of economic dislocation. Grease the wheels, keep the machine humming. We need a "social safety trampoline" that helps people bounce back from adversity quickly, so that they don't drop out of the labor market when they need to change jobs. A Java programmer who loses her job to Indian outsourcing shouldn't be forced to waste her talent mowing lawns because she lost her job right when a big mortgage payment came due and her kid had to have surgery. A "social safety trampoline" can help people bounce back to doing what they do best, as fast as possible.

Government vouchers for continuing-education retraining are one possible way to help people whose industries got destroyed by outsourcing or productivity improvements to get back on their feet. Also, unemployment and wage insurance and a portable pension and health care system (a Tom Friedman idea) would help people from falling off the map. Innovative policies like a free government resume database are also needed. Efforts like these should be at the core of progressive economic policy.

But today I had an idea that I've never seen put forward. If we keep climbing up and up the "value chain," will we get to the top? What is the highest possible value-added job that people can do? And can we make our living doing whatever that is?

One single job is the occupation of everyone at the top of the "richest people in the world" list. That job is entrepreneur. People who conceive of and implement new ways of organizing the economy add the most possible value to the economy, because they change the direction in which everybody moves. America is the world's richest large country in large part because of our entrepreneurial spirit, and our system that encourages it.

If we're to stay rich, if we're to stay on top of that "value chain," entrepreneurship has to stay a big part of our system, and even grow in importance. I forsee a future of Americans running software businesses in India from their home computers, of the granddaughters of steel workers overseeing robotic steel mills in Indonesia while they chat with their friends in internet cafes, of 16-year-olds managing supply chains and setting up distribution networks for their self-created online retail businesses. This, I predict, is the omega point of economy, the ultimate level to which productivity rises - where our workers master a kaleidescope of skills, maintain vast knowledge bases and interpersonal networks, and spend all their time and effort creating new ways to do everything.

To this end, I propose that we teach entrepreneurial skills in public schools. Finance, management, risk, etc. This will prepare us for the next step in the evolution of the global economy. Instead of teaching kids to worry that their job will be lost, teach them to be positive and excited about carving their own niche out of the limitless potential of the market. That way, instead of feeling worried by uncertainty, we'll be excited by it. A nation of adventurers.

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