Armchair Economists, Unite!

[FaustWolf]

Rrrrr! This could go in the Frustration Thread for the amount of anger it gives me, but also important here:

"Job listings say the unemployed need not apply."

This is not how a healthily functioning economy works. This is how a structurally maladjusted economy works.


But here's what really gets me. You'd think our politicians would want to solve the unemployment problem, which practically requires a national industrial plan at this point, right? Instead, they're attacking the want ads:

The practice is common enough that New Jersey recently passed a law outlawing job ads that bar unemployed workers from applying. New York and Michigan are considering the idea, and similar legislation has been introduced in Congress. The National Employment Law Project, a nonprofit organization that studies the labor market and helps the unemployed apply for benefits, has been reviewing the issue, and last week issued a report that has nudged more politicians to condemn these ads.

I mean, is government seriously so underpowered that all it can do is try to sweep the problem right under the rug while a significant portion of our human capital languishes and erodes? Getting rid of the ads will do nothing for the fact that our economy is now structurally focused on stomping out wide swaths of talent rather than putting it to use. This is the result of rational hiring decisions in a closed system. There's no solution unless you open that system up and introduce something new.

I see only two ways forward. One is a guiding national economic program that assesses the character of our nation's skillset (make it community-by-community if you like, States' Rights Advocates), and seeds compatible industries.

The other is to let citizens explore new areas and construct those niches privately -- something that should, in theory, be much more palatable to those of a conservative or liberterian strain of thought. The crux is, new markets can only be created after struggles and competition of the severest kind, and someone needs to step in and support the standard of living of those who work in areas that have yet to be monetized.

[FaustWolf]

Oooh, one article leads to another. Here's a New York Times article on the success of retraining programs...

...or, rather, the lack thereof.  


Job Retraining May Fall Short of High Hopes.

The moral of the story is, if you're going to retrain people, it'd kinda help if you retrained them in the sort of skills the economy is actually demanding. I'm curious as to why there wouldn't be more communication between government and Chambers of Commerce when designing these programs. Maybe it all goes back to 6-P rule: Proper Prior Planning Prevents Poor Performance...?

But I think that's still giving our system a bit too much credit. Ergo, the need to seed entirely new industries, and support ones that are underexplored for current lack of monetization. Part of the problem as exposed in that article is the complete lack of predictive power on the part of government economic analysts when designing re-training programs. But if you seize some power to shape the future, then you have some power of prediction as well!

[FaustWolf]

OH FFFFUUUUUUU
http://www.reuters.com/article/2011/08/06/us-usa-debt-downgrade-idUSTRE7746VF20110806

This could get ugly.

EDIT: Obama Administration fighting it, citing "serious and amateur errors."


Also of note today was the latest US jobs report. Think it's good news?

Not so fast. This is one of the great problems of our times; I'd still like to double-check where CNBC is getting its numbers on this phenomenon though.

[tushantin]

Something worth reading.

http://www.reuters.com/article/2011/08/06/crisis-idUSLDE77504R20110806
http://www.cnn.com/2011/BUSINESS/08/06/global.economy.reaction/index.html?eref=rss_topstories&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+rss%2Fcnn_topstories+%28RSS%3A+Top+Stories%29

[FaustWolf]

Sometimes, things just don't add up.

First, read this. Note that the first employer citing a lack of qualified applicants is headquartered in Rockville, Maryland.

Now, check this out.

See what I'm getting at?

I must admit I count myself among the cynics with regard to big businesses citing "eroding skillsets" as a justification for not filling their ranks; this sudden lack of  confidence in on-the-job training is far beyond bizarre. I.e., I always figured our educational institutions are supposed to give us the general goo that can be quickly molded into the specialist niches particular businesses occupy. An unemplyed COBOL programmer could be turned on to PHP, I imagine? Campaign management experience likewise makes excellent fodder for the kind of skills that entrepreneur in Rockville, MD is looking for. And, hoo-boy, are there a ton of young folks in Washington, D.C., who have that at least. Many of them probably working class folk who volunteered on the Obama Campaign as neighborhood team leaders.

But if we can get past the class-fueled angst that engenders this kind of cynicism, let's step back and look at a wider structural problem that could be developing in the US economy. My experience suggests to me that our nation's colleges are probably doing a rather poor job of maintaining close contact with local Chambers of Commerce, developing curricula that's relevant to the specific skillsets businesses project they'll need in the next two to four years. Maybe this kind of contact and cooperation isn't happening at all; I'd love to get feedback on this subject from anyone who's worked in education. Otherwise that entrepreneur in Rockland should already have a list of students to seek out for the positions going unfilled at his business. And I think the city would do well to provide him a list of unemployed citizens who have compatible skillsets. For the conservatives out there, the Chamber of Commerce could serve this function equally well in my opinion.

Consider that the entrepreneur's presumably already visited these campuses at job fairs and still come up empty-handed. And if he hasn't even done that, then we can presume he is not a rational actor, and shouldn't have been chosen to represent the wider mood of the business community -- but I give Bloomberg a little more credit than that.

[Thought]

Having worked in education, I can say that I never heard of such cooperation. However, I am curious as to what skills businesses are looking for that potential employees actually lack. By any chance are you aware of a few example? I suspect that the problem is coming more from the asinine way in which companies limit and sort through applications, but being a job hunter myself, I am bias.

[FaustWolf]

I suspect that the problem is coming more from the asinine way in which companies limit and sort through applications, but being a job hunter myself, I am bias.

Hah, you can say that again! I only wish fewer of us could identify.

I've seen some telling conversations on the Economics subreddit of Reddit (a phrase that makes sense only within Reddit-dom I suppose). There've been several members who say they work in human resources and sift through all these applications first-hand, failing to find the skills their company is asking for -- and meanwhile they get incredibly bullied by all the other redditors who are jobless or hopelessly underemployed. The situation would be hilarious if it all weren't so sad.

Given the nature of Reddit, the fields represented seem skewed toward IT. Usually there's a very specific combination of programming languages businesses are asking for (.NET, .php, C++, etc), plus a certain amount of experience. The HR folks sit there wondering at all the IT folk who don't have the correct alphabet soup for their needs, and this is insane considering that universities can offer all the necessary classes. Judging from conversations like this, students just aren't coming out with the right combinations of skills, which reinforces the idea that there needs to be a stronger dialogue between the skill producers (universities) and the skill consumers (businesses). This is probably easiest to address in the math-heavy sciences; I still have no clue what to do with the social sciences.

In the end, "skills mismatch" could be a convenient excuse for companies to save costs while looking like they're eager to hire. On the other hand, best to remove as many of these convenient excuses as possible. When a big company like Microsoft goes before Congress to explain that it needs to import workers because home-grown grads don't have the right skillsets, this explanation catches on quickly and grows ever more popular in the business community.

[Thought]

Ah, I suppose having the wrong programming languages would make a bit more sense, although from the computery people I know personally, it seems that once you know about 4 or so languages, picking up another is a trifle. This is a bit of an expansion of my original sentiment. That is, instead of looking for programmers who are good at learning languages and are versatile in the ones they do know, in your example companies are looking for boxes to check off. Since any long-term programming position would require its holder to continue learning, what one knows now is actually not very important when compared to one's proven ability to enhance one's abilities. That is, of course, the intended purpose of colleges and universities: to teach people the general abilities that allow for versatility.

[FaustWolf]

Yeah, that's the way I've always thought about education as well. It's like, somewhere along the way, there's been a big shift in business culture and how HR interprets a worker's skills and history. I'm just fretting over how fast it's catching on (again, using the IT field as a frame of reference at least). The fact that businesses are discouraging the hiring of the unemployed at the same time suggests the "skills mismatch" issue is yet another behavioral oddity tied to the recession. But the longer this all goes on, the more worried I am that there's a crappy sea change afoot, I guess.

[FaustWolf]

Hell. Yeah. That's with respect to the first article anyway; haven't read the second in this two-fer.

I hope Alan Krueger's reading that.

My concern is that it simply isn't enough. If the aid is only $10,000 per entrepreneur, you're looking at about three to five months' worth of living expenses pending local cost-of-living and any children who may be in the picture. Three to five months before having to call it quits does not a successful business make. A new business is a long-tail proposition more often than not -- and I mean L-O-N-G. And forget purchasing startup capital or the time of skilled employees that the program might not fund. There has to be some progress criteria (measured in market penetration, rise in sales, etc) for determining whether the State should continue funding the venture, or whether traditional employment would be a better fit for the recipient. Not a time limit.


Also, here's a little more fuel for those who are just a little worried about plutocracy. Silly Joe the Machinist, thinking he'll be able to make enough to get his kids through college someday. Only the kids of Joe the CEO must deserve that kind of opportunity. Funny, how that works!

[ZeaLitY]

Ugh, 3-5 months is absolutely nothing. Even Richard Branson doesn't stop headlining ventures until the employee count is 150-300ish, at which point he's doing more manager work than entrepreneur work. There are slow industries, too (like restaurants, which conventional knowledge dictates requires 5 years before its success is assured), and things that require long R&D cycles or a lot of tinkering. Sigh... I'm always a little sad when I hear about inventors maxing out multiple credit cards just to try and get the big break.

The patent system is also fucked. It reads as if technology patents have become one giant jerkass arena where the business with the deepest pockets and biggest legal team win. "Patent trolling."

[Lord J Esq]

On one hand, it's quite true that business investments can take years to recoup. On the other hand, there's all kinds of private and public money being thrown away on business ventures with unworkable profit models. The public financing of entrepreneurship ought rightly be held to a higher standard of scrutiny than essential needs such as food and education.

As for the article, the opening paragraph doesn't make sense. You can't start all but the most bare-bones brick-and-mortar business on $10,000. That's not 26 weeks of income. That's money long spent before you ever open your doors to the first customer. A bit of deduction suggests to me that what the article meant to say is that, after the entrepreneur covers their own startup costs, the assistance program helps to offset early operational losses once the business actually opens. Even then, $10,000 is nothing if you have so much as 1 other employee.

(For businesses without large startup costs, this does not apply, of course.)

[FaustWolf]

Been trying to dig up more info on this to see if we can drum up extra detail. So far I've just found this widely circulated article and the program's actual name: the Oregon Self Employment Assistance Program (OSEAP). Now, just to find the appropriate web page at the -- aha! Here it is.

Looking at the article, yeah, I'm getting the impression it is indeed six months tops. And I'm still not clear on how capital purchases and worker recruitment would be handled either. While it seems much too limited, I think it's a huge step in the right direction. More importantly, the concept should be politically viable as a form of stimulus. What Tea Partier in their right mind would vote against a program that encourages private entrepreneurship?

Wait. I actually don't want an answer to that question; I don't think I could stomach it.

Anyway, in addition to more generous provisions, it seems there would need to be a massive surge in child-care and other nursing services to accompany it. Even when you're entrepreneuring remotely and can stay at home to care for kids or parents, it's near impossible to make that balance work without going freaking insane.

ZeaLitY, is there any info or articles you can point me to on Richard Branson's "headlining" activities? I'm curious about this now. Mwahaha, isn't he the CEO who conducts press conferences in drag from time to time? What a  badass he must be.

[ZeaLitY]

ZeaLitY, is there any info or articles you can point me to on Richard Branson's "headlining" activities? I'm curious about this now. Mwahaha, isn't he the CEO who conducts press conferences in drag from time to time? What a  badass he must be.

He goes over this in his recent second autobiography, Business Stripped Bare. Branson talks about his specialty (or Virgin's core business) being startups and entrepreneurship. His first autobiography's cool too, but it's more of a personality and history study. Branson is a beautifully insane dreamer in the springtime of youth who moves too fast to have fears or doubts. He's totally, beautifully over the top. He passionately believes in certain causes; a few years ago he pledged all of Virgin's profits to stop global warming, and has fought very hard for the Virgin AIDS initiative in Africa. He really, really believes that capitalism can be compassionate, kind of like Andrew Carnegie; it would be nice if it actually worked. If he were at the helm of every company, it might, but few people take his magnanimous, inspired lead.

Quick couple of other notes: many people view the privatization of Britain's public services (like the trains) as a disaster and another brick in the worldwide wall (think Quantum of Solace; one of the IMF's aid conditions has historically been some degree of privatization, in addition to austerity). Branson and Virgin bought some train lines when Britain privatized, and Branson set up long-term plans for true and safe service. He had Virgin requisition deluxe, state-of-the-art carriages that were nigh-indestructible in many situations that would cause fatalities. When an accident did happen, what should have been a massacre merely claimed one life, an elderly Scottish lady. No other company's taken such care to actually craft such a good service. Another note about Branson is that among customers, shareholders, and employees, he puts employees first. Virgin employees are made subject to many socialization company parties and encouraged to explore different careers within the company, so that work never becomes dull, routine, or uninteresting. This philosophy of employees first has helped Virgin retain a lot of expertise and experience that other companies would have bled out long ago.

He's really a showy badass, too, and it gets him in trouble sometimes, as he plays upon popular stereotypes. He's not politically correct, I guess. His bravado and humanism are wonders to love and cherish. He took on Coca-Cola and might have claimed a permanent share of the market if the old soda giants hadn't abused their oligarchical powers and bullied supermarkets/suppliers into blocking Virgin Cola. He threw up his philosophical middle finger to cell phone companies with Virgin Mobile, hoping to offer an alternative to obfuscation marketing. He's a whirlwind.

[FaustWolf]

Thanks, I'll track down that book when I'm on my next reading kick.