Blog: “Kill Switch & The Winter of Our Discontent”
The Heavy Lifting Behind Bringing & Keeping Well-Paying Jobs in N/A
In part 1 of “Kill Switch & The Winter of Our Discontent” I spoke about safety and security prerequisites to implementing sound economic policies. Assuming governments take care of above prerequisites — Part 2 recommends specific interventions to deliver and maintain well-paying jobs.
By the end of 2016, the writing was on the wall: The American Dream is turning into hallucination. And when dreams of wealth are turning into nightmares of poverty — The Party is, pretty much, over. Unless, of course, you count yourself among the proverbial 1% of Wall Street / Silicon Valley crowds believing in: “life is good, thank you very much” mantra.
Also, never before, so much has been said and written in US about Universal Basic Income (UBI) experiments across the globe. Ongoing and future UBI trials in Finland, Holland, Scotland, Switzerland & Canada — are featured almost daily in social media, and passionately debated on major TV networks.
The reason for such “socialistic awakening” is quite simple: the jobs are scarce and disappearing at an alarming rate. Moreover, there is an entire cottage industry of prognosticators and fortune tellers on hand — fueling the fear of unknown, and profiteering from predicting “inevitable” job losses.
Initially, disappearing jobs were mostly associated with factory automation. Then, online commerce dawned upon us, and the rate of issuing pink slips, mercilessly intensified. And when 20 years of globalization showed its ugly head — Ross Perot’s “giant sucking sound” proved to be as damaging to employment levels — as originally predicted.
But wait, dumb robots are not much of a threat…. until “smart” robots replace them. Welcome to the brave new world of Artificial Intelligence!
I wrote about recent hype of AI before. Based on my 30 years of hands-on AI experience, I was particularly annoyed by empty promises of Autonomous Driving. You can find my practitioners’ take on “imagine the future” hand-waving in:
What’s new however, is the propensity of articles describing future job losses — solely attributed to AI 2.0. Just look at: Yes, Robots Really Are Going To Take Your Job And End The American Dream and you will get a proper sense of this psychosis.
We heard it all before. We also did hear academic voices such as in: How to Share the Benefits of Technology explaining job-shifting ad nauseam. The conclusion: “Technology is not evil”; and that “In the long run, it may be the case that technological progress affects the types of jobs, not the number of jobs.”
Well, “in the long run” — we all end up dead, anyway. So, what are we to do without the jobs, while still breathing and walking the earth?
As Kara Swisher brilliantly pointed out in Hell is Silicon Valley (SV) people who won’t grow up, Silicon Valley VC industry for years, promoted “disrupting everything that can be disrupted.” At the same time, SV ignored the consequences of that disruption.
So, with enormous Silicon Valley wealth and the economic unrest it helped creating — do SV’s tycoons have any constructive thoughts on how to address job crisis? Of course, they do: UBI is going to solve all the problems! Just let us keep experimenting with all the unproven, half-baked business models — unabated. And if manufacturing, transportation, retail, hospitality, media, healthcare, banking, insurance, and entire service industry can’t catch-up fast enough — UBI is the answer!
· Silicon Valley Jobs
Expecting SV to take job devastation sentiment to heart — is not going to happen. However, it’s time for the governments to realize that SV is a huge business, and that it can be easily mandated to create more jobs through regulatory compliance. And biotech industry is a good example of FDA regulations that work.
Even small biotech players comply with Level 1, 2 and 3 of mandatory testing — which can’t be done without employing significant amounts of people. So, what prevents us, for example, from introducing Self Driving, or Anti Money Laundering standard tests — administered by governments? All innovative solutions passing the tests would adhere to industry standards — and consumers will benefit from a level playing field.
More importantly, however, not one but two additional job-creation streams will materialize. On the one hand, employment at government agencies mandated with designing, developing, deploying, and administering standardized tests — will significantly expand. On the other hand, VC backed, or pre-IPO companies in need of product certification — will hire not only programmers, but also additional administration staff.
In her latest post: The Ugly Unethical Underside of Silicon Valley, Erin Griffith points out that as SV grows, so does their list of serious scandals. Worse, “fake it till you make it” mentality of lies, half-truths and outright deceptions — becomes more of a norm, than exception.
And with $100B invested in startups by VC industry in 2018 — even SEC is increasingly concerned with bursting SV bubble. BTW, the bubble is almost twice as big as during dotcom era. Hence, more oversight is a good thing — unless the prospects of SV-induced recession are shrugged-off, the same way realistic business models, revenues, and profits, are missing.
Wall Street Jobs
The end-game of every VC fund is: profitable exit. In some cases, it’s done through acquisition by a bigger player. In others — through an IPO.
However, if the average lifespan of S&P 500 company is now down to 18 years, from an average of 60 years back in 1960 (See: CB Insights below) — so is the number of jobs large public companies maintain.
I wrote about some of the alarming practices involving shorting stocks by deep pocketed hedge funds, before. Although my post related to a single company, Sun Edison — short selling, and naked short selling, is wide-spread. In addition to what I described in: SunEdison — were they lead to, or pushed off the cliff? — public companies engage in more questionable practices, that are not focused on sustainable growth and innovation. Hence, the disappearing jobs!
In How to Stop Short-Term Thinking at America’s Companies, Alana Semuels vividly describes in The Atlantic, how large corporations in America stopped investing in their workers and new technologies. Instead, CEOs and BODs are mostly concerned with short-term profits, and returns to shareholders.
In light of above, American Prosperity Project, an initiative spearheaded by the Aspen Institute, deserves special recognition. Their latest report encourages government to “make it easier for companies to think in the long-term by investing in infrastructure and changing both the tax code and corporate governance laws.”
Their pragmatic framework focuses on 3 objectives:
“1. Focus government investment on recognized drivers of long-term productivity growth and global competitiveness — namely, infrastructure, basic science research, private R&D, and skills training — in order to close the decades-long investment shortfall in America’s future. Building this foundation will support good jobs and new business formation, support workers affected by globalization and technology, and better position America to address the national debt through long-term economic growth.
2. Unlock business investment by modernizing our corporate tax systemto achieve one that is simpler, fair to businesses across the spectrum of size and industry, and supportive of both productivity growth and job creation. Changes to the corporate tax system could reduce the federal corporate statutory tax rate (at 35%, the highest in the world), broaden the base of corporate tax payers, bring offshore capital back to the US, and reward long-term investment, and help provide revenues to assure that America’s long-term goals can be met.
3. Align public policy and corporate governance protocols to facilitate companies’ and investors’ focus on long-term investment. Complex layers of market pressures, governance regulations, and business norms encourage short-term thinking in business and finance. The goal is a better environment for long-term investing by business leaders and investors, and to provide better outcomes for society.”
· Social Media & Digital Transformation Jobs
Without government intervention, we will see many alarming situations — from puzzling valuations, to anemic employment figures, such as:
– Apple, sitting on a pile of cash (Cash Reserve) — that is 1.5 larger than IBM’s entire Market Cap
– Facebook, reaching $500B Market Cap and employing only 30,000 people — while General Electric, with Market Cap of $278B, employs 330,000 people, worldwide
– Tesla, with Market Cap of $40B and 48,000 employees — while GM is valued at $58B and employing 215,000 people
Recently, serious alarms have been raised, about publishing “fake news” on social media. Imagine, would fake news, or fake advertising, be tolerated on front page of The New York Times? In addition to backlash from subscribers, one can also imagine numerous lawsuits to follow!
My question: Why it should be any different regarding Facebook? Perhaps, if social media was legislated to demonstrate RESPONSIBILITY and ACCOUNTABILITY, the same way newspapers are — we wouldn’t have faced such calamity!
Better, yet, perhaps Facebook would have employed 150,000 people, instead of 30,000? More jobs for editors, proof readers, investigative journalists, support staff, and thousands of other non-techies would open up, too!
· Universal Employment Guarantee vs. Universal Income Guarantee
So, if we are serious about guaranteeing citizens’ well-being and keeping ALL INHABITANTS above poverty line — why not providing employment guarantee instead of UIGs?
Guaranteed jobs are far more than meeting financial necessities and putting food on a table. Jobs offer dignity and hope — while at the same time, benefiting society at large. Well-paying infrastructure jobs, healthcare jobs, education jobs, finance jobs, manufacturing jobs, etc. — are far more beneficial to any society, than dispensing cash, or shoving unpaid internship jobs to recent graduates.
Imagine, all the additional help to sick and elderly — and not only by volunteers! Help to our kids in schools and kindergartens, municipalities, law enforcement, etc.
So, suddenly, instead of proverbial “give man a fish, and you feed him for a day” we can say: “pay man to fish, and he will never go hungry.” Chances are …..the whole village will not go hungry, either.
BTW, not all such jobs need to come from government agencies. With proper policies and legislative frameworks in place — private sector will rise to the challenge, too!
Suddenly, it seems so real what JFK said, 56 years ago. At his inauguration, as 35th President of the United States, on January 20, 1961, he said:
“And so, my fellow Americans: ask not what your country can do for you; ask what you can do for your country”
THE BOTTOM LINE
As an alternative to playing catch-up with disruptive technologies, governments can start leading economic developments, instead of following. It’s time to harness North American factor endowment and channel vast financial resources for the betterment of 99% left behind! Enough with excuses, or governments will soon look like incompetent officials in a famous play by Nikolai Gogol — “The Government_Inspector”
Walter Isaacson is right, when he says: The Internet Is Broken. Here’s How To Fix It After 40 years of excuses, it’s time to fix what’s broken, so that we can start balancing individual vs. societal good, helping law enforcement fighting terrorism, and deflating social media’s anonymity balloon.
What’s the alternative? Keep listening to ”Nothing Left To Do” by Leonard Cohen for another 40 years?
Oleg Feldgajer is President & CEO of Canada Green ESCO Inc. Oleg is positioning the company to become a leader in financing AI enhanced green energy projects and ventures. CGE’s mission is to guide DISRUPTIVE businesses in ENERGY & TRANSPORTATION toward profitable business models. Oleg is passionate about such mission, and firmly believes that without AI based innovation, we will all prematurely choke on polluted air and dirty water. CGE delivers 100% financing (levered and unlevered) to its clients — and utilizes large equity pools, and non-recourse debt. Oleg offers creative, fresh ideas to open-minded businesses — that embrace both: logic AND opportunistic intuition. CGE stands against mediocrity & its modus operandi is quite simple: If CGE is not invited to join your BOD, or Advisory Board — we failed!