Saturday, March 7, 2009

How similar are things now to 1981?

A NY Times article discusses how the pattern of layoffs occurring around the country hint at a major restructuring of the economy.

This seems very familiar to me. Some enterprising reporter needs to go back and read news articles from 1981, after Pres Reagan began his plan to fix the American economy. Things got a lot worse, homelessness emerged due to the federal budget cuts, unemployment increased and increased. President Reagan's response to the growing critics was "stay the course."

I was just entering grad school at the time, I recall some of my profs predicting that the Reagan plan would "work" but would grow inequality in the country, which eventually would have its own repercussions....I think we are seeing them now.

The challenge for US seems to me to be this: our labor costs are just too high to be a manufacturing economy any more. Even the green tech that Pres Obama speaks of, already the manufacture of those turbines and blades are heading toward China and other places. Cars will still be manufactured in the US, only because of the costs of transporting them and "good will." There are some things which cannot be shipped over seas, medical care (although an MRI can be taken in the US and read in India) and certain surgeries are going to be done, increasingly in places like India, China, etc, just becuase of labor costs....surgeons there are cheaper than surgeons here.

Financial services is what grew from the reorganization of the manufacturing economy in the 80s. Financial services has run much of its course now. There is a course for the US, and that would be to achieve the visions involved with a seriously well educated populace. If we could become the R&D capital of the world, with manufacturing and other stuff done off shore, the US could become cleaner environmentally (though that would not address global warming) and raise the quality of life for our people. The problem is that it means we have to raise the average educational ad science ability of our populace...something we struggle with right now.

Countries like China and India can do both, their populations are so large, but to compete at the top, in science, technology, etc, we have to improve our education from top to bottom. That, however, is not some simplistic idea like charter schools or new national standards. It means families are going to have to expend as much energy on education as they do on sports, dance, and other co-curricular activities. Schools also have to change, but the schools need the broader culture to change to push those changes along.

My prediction (guess really) is that GM, Chrysler, and other big manufacturers are going to go away. That doesn't mean that cars won't still be made here, but under new (and better) management. Our economy is going to respond to demand....and that demand is going to involve an agining population and one that is going to have to be dealt with (and assuming the economy recovers) have quite a bit of money. Making money on those needs will be local, it won't easily be sent offshore in search of cheaper labor. Much of these jobs will be governmental, paid for by our tax monies, some of which will be related to health care....the others due to the needs of local communities. Some of these will employ older folks and not be greatly paid, but as the bureaucracy expands, there will be a growth in managers, supervisors, etc.

Transportation is ripe for change and in change there is opportunity. Again, the government is going to be involved. A decision is going to be made about the future of cars. Electric cars make a lot of sense, but it is still going to require a lot of infrastructure for recharging. And, there is going to be a need for interstate transportation. The time might return for the car-train, an idea that started and then went away in the 70s. Put your car on a train, go from Chicago to Florida, and then drive the car in have replaced this now, but rail transport between my home and indy (with my electric car) would work....hope the train, then get off do my shopping, get back on the train to go home. OR, if we maintain the idea of liquid fuel, fuel cells are going to need a reasonable infrastructure which I doubt would have been developed without massive federal help.

Agriculture and agricultural methods will continue to be a major area of our economy.

The situation with "old media" suggests a transformation in one area, but "content" is still going to be needed. I'm not sure how making money from "the press" is going to work out....I hope it doesn't become one based on just advertising. The digital revolution will continue and as the generation that has grown up on computers, the envelope will continue to be stretched. Making money from it all, America is still the consummate land of hucksters and they will find a way to make money on it.

Lastly, education is going to become a life long endeavor. More and more areas are going to require recertification, etc....."higher ed" is going to grow and transform into "life long ed." More teachers, administrators, and continuing students. This area may be the basis for the new middle class.

No comments:

Blog Directory - Blogged The Steiger Counter at Blogged