How do we create and share value in a jobless economy?

Jeff Jarvis sparked my thinking on this recently with his post on The Jobless Future. As Jeff so bluntly stated:

“We’re not going to have a jobless recovery. We’re going to have a jobless future.

Holding out blind hope for the magical appearance of new jobs and the reappearance of growth in the economy is a fool’s faith.”

If that is the case in the US, and we have riots on the streets in the UK, Spain, Greece, north Africa and the middle east, then things are not looking good in large portions of the world. There will likely be flow on economic and social effects around the world, especially since Richard Florida is pondering if riots could come to Canada too.

Nouriel Roubini may be right in his assertion that “Karl Marx had it right. At some point, Capitalism can destroy itself.”

The inherent instability of markets in the US and Europe mean that jobs are going to be harder to come by, especially for the less educated and the less skilled.

All of this got me thinking about what skills are really useful in this new world that is developing before our eyes? What kinds of businesses and communities will be more resilient in the face of changing economic verities? How do we need to recast our expectations and aspirations for this new world that is unfolding?

That kind of thinking led me over to John Robb’s blog and one of his recent posts, Entrepreneurs and Open Source Hardware. Perhaps we are all about to become open source entrepreneurs?

The kind of economic environment that is emerging is one where sustainable and ethical business models can come into their own. Not large scale, top-down, industrial operations. Rather there is an opportunity to develop peer-to-peer and networked organisations. Social innovation, social enterprise and ideas like collaborative consumption become significant, and a return to older ways of organising businesses – like co-operatives and mutual associations – become critical.

We also need to find ways to create and exchange value in an environment where traditional mechanisms might no longer be available to us. This means creation of new means of value exchange, or even new kinds of currencies. Reverting to gold is not really feasible, after all it’s rather heavy to tote around. Thus virtual currencies might even come to replace some of the existing ones

If you consider it unbelievable that major currencies can fail then it’s time to go read some history. Just to put it in perspective there’s a great visual post by Jeff Clark over at The Daily Reckoning that illustrates the risk rather neatly: A Thousand Pictures Is Worth One Word.

Business, boring jobs and social good

Over the past 150 years businesses have dealt with the challenges of increased scale by optimizing processes, resource allocation and expenditure. However, there is a limit to how much one can optimize a business and not damage the society within which that business exists.

I have spent a goodly part of my career working on optimizing large scale businesses and increasing productivity.

The main way to achieve that is by automating routine and repetitive tasks or outsourcing them to lower cost regions, thus making low paid jobs redundant. That process generally takes bottom line cost out of the business and increases productivity as a by-product. Where it does create new jobs they are rarely suitable for the workforce that has been displaced through this process.

Many older workers have been pushed out of the workforce due to the disappearance of these types of jobs. For them it seems too late to re-train, and many face ageism from employers who are unwilling to give them a chance at different roles.

Thus we are wasting the talents, energy and skills of many older workers who now languish unhappily on welfare payments.

But it is also interesting to consider this: if the many young unemployed people across the western world had been born twenty years earlier they would be doing those repetitive jobs and earning an income. Those jobs have disappeared. And they have disappeared either due to optimization and productivity improvements.

So what do we do with all of the people who used to do those old jobs? In most western countries (except the USA) we pay them some kind of social welfare benefit. That allows them to subsist. But what do they do with their time while subsisting? Are they included somehow in the community? Do they have a role, apart from being passive recipients of welfare, that make them feel part of society?

A boring repetitive job is boring for many young people. But it does provide some benefits: they earn an income; they learn real-world work skills; it gets them out of the house; it gives them some kind of purpose outside of themselves; and it is really a good way to get them thinking about what else they can do with their life.

My first job was utterly dull and boring. It gave me the impetus to get back into study and work out ways to never have a job that dull again. It also gave me a perspective on how business works, and it is a perspective that I could not have achieved from outside.

But now most of those entry level (boring) jobs have gone. And many young people do not want to take them even if available. That is a bit sad.

We seem to have mostly banished boredom in our society, and that might not be an entirely good thing. The social benefit provided by those lost jobs has not been replaced.

Riots, desire, consumerism, community and values.

Want is a funny word. It can mean different things, such as:

“absence or deficiency of something desirable or requisite” or
“to be lacking or absent, as a part or thing necessary to completeness”, or
“to feel a need or a desire for; wish for”, or
“to wish, need, crave, demand, or desire”
(Source Dictionary.com)

The scenes in the UK of rioters and looting were awful on many levels. But one scene that was repeated that was especially revelatory was the looters trying on goods in the stores before they stole them.

That behaviour spoke to me of want.

In the past, usually riots were because people lacked some necessity – food, freedom, the right to vote. That is, the rioters acted in response to want in the sense of absence or lack of something. This is the kind of rioting we have seen in the middle east in recent times, places like Egypt and Syria.

But in the UK we saw rioters, unfocused on anything except inflicting damage on property and helping themselves to goods for which they had a desire. That is, acting in response to want in the sense of desire for something. And that something wanted was material goods rather than aspiration to freedom or truth.

This is different. It is about people who have learned to desire those things for the acquisition of which they do not have sufficient economic resources. And yet, they do have the means – through a collective act of will – to achieve access to the goods they desire.

The looters have achieved their want, they now have the material goods that they sought. However, in achieving those goods they have destroyed the community facilities upon which they and many others rely. They have reinforced their other-ness. They have achieved a short term goal while simultaneously creating the platform for increased levels of dissatisfaction.

I suspect that material goods will not really fulfil the wants of the rioters and looters in the UK. Their anomie will remain. And they will recall the power of their collective action. They will also recall the powerlessness of the authorities in the face of that collective action.

It might be as Winston Churchill once said (in slightly different circumstances):

“Now this is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning.”

Source: Sir Winston Churchill, speech at Lord Mayor’s Luncheon, Mansion House, London, November 10, 1942

The jobless future and social innovation

I have argued previously that capitalism is broken and that we need to find new approaches that are good for people, animals and the planet.  Further I asked if social innovation might be part of that new approach.

The world is facing an unprecedented financial crisis that is creating a future in which traditional jobs are being destroyed.  Jeff Jarvis outlines this future well in his post The jobless future. Before our eyes entire industries that thrived during the nineteenth and twentieth centuries are disappearing.

The consumer driven economy of the late twentieth century is teetering due to:

  • the demise of the debt fuelled growth to support consumer spending, and
  • a lack of jobs to provide the income for consumers to continue acquisition of goods and services.

In the period 2008-2010 the car industry is a good example.  A confluence of high fuel prices, a global financial crisis (GFC),  tightening of credit markets, and job losses across Europe and North America meant that demand for new vehicles dropped to historic lows. This in turn drove job losses in the car industry around the world.

But the car industry has for many years produced more new cars than the world really needs to replace old or damaged ones.  Driven by consumer leasing arrangements that saw people acquiring a new car every few years, debt was fuelling an artificial demand.  And when that debt fuelled demand dropped away during the GFC, demand levels for new cars fell back to more ‘real’ levels. With demand down, jobs will go in this industry.  It is unlikely that the lost jobs will return.

This is a strange situation.  Motor vehicles are a great social good.  They have enabled us to achieve mobility to move people and goods in ways that our ancestors could not even imagine.  But even a social good, when inflated by debt driven acquisition, might not be good for us.

Faced with the kind of jobless recovery and jobless future that the US is so kindly modelling for us we need to consider what means of value creation and exchange need to be created to replace the old models. In some places we are even seeing tent cities arise for those who have lost access to traditional housing and jobs.

One response is a top down Keynesian approach, with centralisation and extensive government intervention.   However, the scale of the economic crisis facing us today means that governments simply do not have the resources for continued intervention.  After a variety of interventions in the US and Europe the first world governments cannot afford to keep spending.

But another response is a grass roots and bottom up response that finds different, diverse and sustainable ways to re-create an economy.

It is here that the notion of social innovation comes into its own. It is the notion that we can create innovative businesses and business models that generate value for us from both a social and economic perspective.

Just repeating the same old models will not get us out of this situation.  It is time to broaden our perspective and look to each other, to our local communities for sustainable and ethical ways to generate value.

An interesting place to start thinking about this is the work that is being done about resilient communities:

Changing the world, ideas, action, rethinking reality & the rabble-rousing ways of @umairh

One of the people who is vocal in his calls for change in how we do things in our westernised societies is Umair Haque. His work is worth reading whether or not you agree with his perspective.

Some of his recent provocative tweets include:

Yes, really. You have the power to change the world. Consumerism, mass-made junk, greed? The fantasies you’re sold–so you never use it.
Source: @umairh

History may have been ruled by crooks and sociopaths. But, thanks to those who came before us, today doesn’t have to be.
Source: @umairh

We can debate endlessly whether every leader in history has been a crook or a sociopath, or not. The bigger point might be…
Source: @umairh

Our forebears fought for generations to give us a gift: to create a future better, wealthier, stronger than theirs.
Source: @umairh

They fought to create things like democracy, markets, justice, opportunity, reason, equality, liberty.
Source: @umairh

I’d say these are among the greatest achievements in human history. The fundamental institutions–the building blocks–of prosperity.
Source: @umairh

Today, we use them to “consume” mocha-venti-lattes, Jersey Shore, and fast fashion. Instead of bettering them–we’re squandering them.
Source: @umairh

I think that Umair is right. If we want to change the world it will be necessary to stop doing some things that we do now, to stop thinking the way we think now, and shift our attention and activity towards different things.

That’s one of the reasons I’ve been focusing on Social Innovation Sydney and our combination of BarCamps and StartupCamps. The plan is turning new ideas into action and creating real life social networks to enable it.

What are you doing to change the world?

Interesting perspective on war, innovation, skills and strategy from Col. John Boyd

This rare video of US Air Force Colonel John Boyd shows his 1991 House Armed Services Committee Testimony and is worth watching. Many consider him to be one of the best strategic thinkers of the twentieth century and his ideas have influenced many of today’s leading strategists.

Of particular interest is his focus on the essential inputs for winning victories in war, especially given the longstanding involvement in Afghanistan and Iraq. They key elements he identifies are people, strategy and tactics, and military hardware.

Also there is considerable insight into the kind of roadblocks that institutions might throw up against innovators.

This video of the U.S. hearings into Military Reform After Operation Desert Storm (APRIL 30, 1991) is not short, but it provides some great food for thought.

Democracy in action, civil society and political change

Yesterday in New South Wales there was a major shift in the state’s political landscape. We saw a significant shift in voting with enormous swings against the ALP across the state and especially in traditional heartland seats.

The Liberals won seats in which they’d never imagined a serious contest. As election guru Antony Green noted:

“It’s very hard to believe it when you see a 30 per cent swing in a seat, which is what we saw in several seats.

They are astonishing figures; I mean there wouldn’t have been swings of that size since the Great Depression, since the defeat of Scullin, they are mammoth swings and that’s a very difficult thing to really get on top of on the night.”
Source: ABC’s election analyst ‘astonished’ by swing

What is of particular interest is that all of this change happened without any bloodshed. In fact, the leaders of each side – Kristina Kenneally for the ALP and Barry O’Farrell for the Liberal-National Coalition – maintained a civil demeanour towards each other throughout the campaign.

Apart from the odd bit of local bastardry – such as defacing posters – there were no reports of shots fired, no reports of fisticuffs, and no emotionally tinged polemics.

Instead, Barry O’Farrell (who has performed the miracle of unifying the Liberal-National Coalition) in his victory speech noted that his opponent, Kenneally, was a “skilled communicator and gutsy performer“.

While Kenneally noted in her concession speech:

“Tonight we acknowledge and accept the decision of the people of NSW,” she said speaking from the Randwick Labor Club. “And we accept their decision with humility and good grace.

“The people of NSW always get it right and so tonight I congratulate Mr O’Farrell and I wish him, and the government that he will form all the best.

This is a great place to live and to be free to exercise our democratic rights in peace. Unlike Ivory Coast where elections saw fifty-two people killed only a few days ago.

Complain about the political system in Australia if you like, but we are really a lucky country.

A real concern is the rise of divisive and un-civil behaviour in Australian federal politics. We need to fight against this rise of invective driven politics where personal attacks are the norm. It’s time to keep our traditions of a good fair fight that lets the people decide at the ballot box and which follows the rules of engagement set down in legislation.

Well played to both Barry O’Farrell and Kristina Kenneally. Good to see a change of government in NSW – sixteen years was a tad too long for any one party to rule.

Twitter turns 5: will it rule? via @stilgherrian

I had a chat with Stilgherrian (@stilgherrian) on ZDNet’s Patch Monday along with Open-source software advocate and developer Jeff Waugh (@jdub) and James Purser (@purserj) from Collaborynth, a consultancy that develops collaboration tools for business, government and not-for-profits.

You can listen to our discussion on this nifty embedded player:

http://www.zdnet.com.au/blogs/podcast/embed/22540003/

Australia and the secret sauce of western civilisation?

Historian Niall Ferguson, in his Civilization: The West and the Rest, notes that:

“For 500 years the West patented six killer applications that set it apart. The first to download them was Japan. Over the last century, one Asian country after another has downloaded these killer apps — competition, modern science, the rule of law and private property rights, modern medicine, the consumer society and the work ethic. Those six things are the secret sauce of Western civilization.”

In the light of this it is interesting to consider how Australia fares in relation to these key elements.

1) Competition
The competitive landscape in Australia is challenging. Due to the small market size we tend towards duopolies; but regulated appropriately that can provide sufficient competition. Also it is difficult to get sufficient scale for wholesale competition. While competition at the retail end of the market is much easier to encourage. Issues around cartels and price fixing remain problematic, with our regulators unable to address this effectively through the courts.

Australia is doing better at competition than it used to in the bad old days of the 1970s and 1980s but we still have a way to go. The banking industry is probably the poster child for how much more there is to do regarding effective competition.

2) Modern Science
Australia has always ‘punched above its weight’ in science as well as in sport. But with funding cuts and dearth of opportunities for career scientists we are in serious danger of losing this critical advantage.

Also recent research shows that Australian universities are not performing well in relation to international research rankings:

“…few [Australian] universities performed above the international benchmark – only 12 in total which average in the top three ratings at world standard, above world standard or well above world standard.

Behind that is a very long tail, with 29 institutions averaging below or well below world standard.”

Source: Uni research report a blow to big-noters 31 Jan 2011

The other side to modern science is how our society treats science and scientists. Do we still believe in science? Do we still trust what scientists say?

Regarding vaccines – one of the genuine life saving scientific discoveries – we have many well educated people within Australia rejecting them. The anti-vaccine movement seems to be gaining momentum and we are in danger of losing the benefits of herd immunity that earlier vaccination programs gave us.

And then there is the area of climate change. With significant proportions of the Australian population (led by Tony Abbott) believing that nothing has changed and that there is no reason to make any changes to our collective lifestyles or economic choices as a result of climate change.

Also the number of well educated people who are privileging scientifically untested remedies and treatments over scientifically tested ones is increasing. This was discussed well recently by Tanveer Ahmed in Alternative medicine, superstition of our age.

However, I think that, at present, the people who believe in scientific ideas, approaches and solutions still prevail in Australia (for the time being).

3) Rule of Law and Private Property Rights
On this front, thanks to our common law heritage and continued independent judiciary, Australia continues to do well. Our legislative environment is relatively stable and decisions tend to give businesses and private individuals certainty. The rule of law seems safe in Australia for the time being.

I’ve often joked that private property is one of the sacred truths to which we hold dear in Australia. And, apart from the odd geological survey or government resumption of land, private property seems safe here.

Of course Australia does not have any constitutional guarantees of basic human rights nor do we have a nationally legislated Bill of Rights, although some states have legislated independently. But we do have the Australian Human Rights Commission, but even when this body expresses “grave concern” over an issue that does not mean that the Government will necessarily act.

However, there are some concerns regarding the growth in powers sought and granted by government to its agencies to spy on citizens – for example this piece on the Telecommunications (Interception and Access) Amendment Act 2010.

4) Modern Medicine
Australia is lucky that a former government introduced universal basic medical care – Medicare – unlike some other countries where many people are unable to afford such care. Due to the availability of good quality food and water together with access to basic medical care (including government funded vaccination programs) our population is healthy. This in spite of increasing obesity and related diseases such as type 2 diabetes.

Medical research continues – with foundations such as the National Health and Medical Research Council and many other private research groups – and Australia remains strong in this area.

With our education of medical professionals Australia remains strong, in spite of some concerns regarding the number of doctors and nurses.

5) The Consumer Society
There are two elements to the consumer society – the consumer mindset and consumer behaviour. Australia seems to be retaining a strong consumer mindset and this is occupying all facets of our relations with retailers and service providers (even in non retail contexts).

However, consumer behaviour seems to have shifted since the GFC with retail sales slipping. And since Christmas we have seen the panic from local retailers led by the venerable and somewhat cranky Gerry Harvey based on worries that consumers are turning to online retail over going to a local store.

Our society has become consumerist in its thinking. This means that the consumer mindset is transferred to areas of life that were once not seen as consumer transactions. For example, we now see ourselves as consumers of health services not as patients. Or we see ourselves as consumers of local government services, not as ratepayers.

This change also flows on to our expectations of those “service providers”, generally increasing our expectations. When one is a mere ratepayer one might take whatever the council deigns to offer, but as a consumer one can and will demand better service.

I’m not sure that we have really come to understand this powerful change in the shift to a consumer mindset across so many areas of modern life. It also means that the notion of service in return is a dying idea. As a consumer I receive services, not give them.

6) The Work Ethic
Adults have bemoaned the decline in the work ethic of subsequent generations since the days of Socrates. Australia is no exception. For example this recent article: Gen Y too lazy and unfocused to hire – bosses.

In the past Australians worked hard at a single job, saved up until they could afford things and waited patiently until middle age to get a housing loan. But now, we children of the ‘me‘ generation who have been brought up as consumers first have a different relationship work and credit.

We have seen an erosion of the ability to stay in a single job, where you show loyalty to the employer and they return that loyalty. The recession of the 1990s saw many of us watch people we know turfed out with nothing after years of loyal service. We watched the wave of downsizing and the lionisation of people like Al “Chainsaw Al” Dunlap by business leaders.

The Gen Xs who came out of university during the late 1980s and early 1990s found it hard to get work and learned to be suspicious of employers and their promises. This generation watched many traditional jobs, such as manufacturing, head offshore and service jobs replace them.

The old stoic Australian world view, the one where we just took whatever came at us without asking why, seems to be dead. We have been brought up to know that we have rights, even if they are simply moral rights. Rights as consumers, rights as taxpayers, rights as citizens, rights as students, rights as employees.

All of this changes our approach to work. We are still capable of hard work, many of us do not shy away from hard work. And for that hard work we expect reward. Yet some amongst us do not think that we have a right to demand that they too work. Some think that immediately upon starting work they deserve the rewards that accrue to long term achievement. And I suspect that this attitude is tied up with our consumer mindset and the way that so much in modern life does not appear to call for mastery or apprenticeship.

What’s it all mean?
As an Australian I tend to think ‘she’ll be right mate‘. We are a good country, and the preponderance of our people are good people. We are governed under a democracy that works. We have a free judiciary and our people are not oppressed. We have a tradition of a ‘fair go’ for all and we have a long history of helping the underdog.

As long as we refuse to buy into the politics of fear I suspect we’ll be alright.