Told you so: Immigrants v Productivity

A couple of posts ago, I discussed what I believe is a huge, and damaging disparity in the Western world – one of our making, short term beliefs, and political ambitions. It is the hiding of money away from the vast majority of workers by business, Government, and administrative branch hierarchy. This ensures that as the World finds it easier and faster to make a buck, that dollar isn’t being shared around, and hasn’t been for over a quarter of a Century.

Thinking back o my youth, I remember what a debilitating downturn in the economy can do, and had to suffer the embarrassment of my First world, Western Nation begging the IMF Bank Manager for a loan.

As this has happened for the first time since the 70’s, this time to Iceland, we are going to hear the same reasons over and over again. Basically, this is the last chance of the current political regime to make good on this disaster, and a much more business-friendly administration is poised to take over. At that point, the people themselves will get the blame. What used to be the ‘British Disease’ of no work being attempted for months, and protracted all-out industrial action at the drop of a hat, was always the root cause of everything. Basically: “Times were good once, Mr. working man, when you didn’t have the ‘rights’ you have now. As soon as you get these benefits, you use them and it bankrupts the nation.”

I can see that things haven’t changed, except that we have used the last 30 years of expansion to simply download those problems onto a cheaper workforce – Immigrants. These have been allowed into our country because of their talents, then haven’t been allowed to use those talents = basically, they have become a slave class, and we now blame them for a lack of productivity among our manufacturing and industrial base.

If you listen to certain sections of business, you will be told over and over again that we are not producing enough. The reason for this is always the ‘shop floor’, not the ‘upstairs office’, and always hampers everyone’s capacity for expansion, and real money making. As we all start to age, and take early employment (OK, not everyone), this lack of far-sighted economic system is beginning to show glaringly what we are doing to ourselves.

Of course Productivity is at the heart of income growth, and it is true that that there are more emerging countries that can do more with less than we can, but by ensuring that the best available labour is not matched by the best available position, we only have ourselves to blame. The healthier and wealthier everyone’s community is, the more productive it can be. Surely this is not a vast oversimplification, it is a basic building block of economics. The more opportunity everyone has to receive and retain a position, the better off we all will be. Sadly, between 20 and 34% of all immigrants that have settled over here for more than 10 years live below the poverty line. While cultural differences, language barriers and foreign credentials are problems to be solved, by blaming these solely is racism at it worse. Why would you invite someone into your house, then not allow him to take his shoes off?

We need less taxation, not obvious cuts to those that spend the most (or earn it), and a transfer of money to areas that require infrastructure and are generally slow growth. Target specific areas of the world where immigrants are welcome, to do the jobs that they can do, add to our knowledge pool, and not just give them the jobs that no-one else wants. The longer we wait, the more likely it is that these talented individuals will give up on us, face the uncertainty of life in their own country, and grow that place’s productivity solution. Watch as these countries overtake our stagnating economies, just be case we thing that we are so clever, we don’t need anyone.

As if to re-infoirce my thought processes, a recent report has shown that while productivity in North America has grown by over 30% since 1980, salaries for most of us have only risen 10%. There is  a price to pay for even better productivity, but we already have the answers. I hope that President Obama has the nerve to look for long-term solutions for everyone, not just the usual suspects.

From Bricks to Clicks

I am a little worried that we are going to make a huge mistake trying to solve this global economic slide, and we are going to do it out of the best intentions.

It’s easy to look at the past to learn lessons and, in most cases preferable, but just because the World dug itself out of this ditch 70 years ago, doesn’t mean that we can do it again by using the same tools. The World is in a far different place than it was in the Depression of the 1930’s, we earn our money in a different way, and we didn’t come out of a global war in 1996: A warning, too, that the remedy for the cure then didn’t sit well with everyone on Earth, then. This time we can identify ahead of time the countries that will feel slight6ed by any kind of first world recovery. It is important to get as many nations onside as we can, because if we get another Germany or Italy in a decade, desperate to expand its lands in order to a perceived threat of some nationalistic kind, we could all be back at war, again. From the height of the depression to the outbreak of World War 2 was only seven years. 2017 could be a very bad year! But let’s stay close to home to start with.

The whole ‘New Deal;’ was based on home ownership. Although the quest for this in the US was most of the problem that got us in here in the first place, it shouldn’t be the focus of any recovery plans. We are more like the mid 19^th century as an agrarian economy began to blossom into an industrial one

Hardly anyone travelled to start new careers, or left their home state because somewhere else had more and better careers. Communication in the 1930’s was still by word of mouth or by written correspondence – look how we communicate today. We are in a much more fluid society today that virtually requires people to move toward ‘centers of Excellence’ around the world – cities that have proven that they are the places that people want to live, and have cashed in the most on the technology boom of the last 20 years. In fact, taking a wider historic view, perhaps individual home ownership is a tried and failed experiment, that started growing in the late 1940’s, and has now proved itself to be outmoded, old fashioned, and useless.

This is a bold idea, obviously but let’s look toward a future when everyone takes a job for 5 years, and enjoys 4 careers in a lifetime. For anyone under the age of 35, this is a reality, not a ‘what if.’ If we as the largest two generations are looking toward retirement (which we are), there will have to be a new model on the way up, and it has started, believe me.

Education will also have to change – away from a one-size fits-all model where everyone is shoe horned into the same small array of boxes. After all, if you don’t know what career you are going to go into, what’s the point of preparing a child for a future they may not be able to get – we have already realized that this system is broken. A massive commitment to early-childhood development is required, and then into a multi-streamed program of learning that readies people for the realities of life as well as working-time.

 

If we know that everyone wil be moving around, and the only homes left on a permanent ownership basis will be for this soon dwindling generation or two, whole areas of foreclosed properties could be cleared for low cost rental units (based on neighborhoods, not tower blocks. Something else that we have learned), that are ready for this transient future. These neighborhoods would also attract creative businesses, because they know that a new generation would be moving in. Cars wouldn’t be required, so we would also be helping the environment. The retail and other support services required would create a market for the old Mom and Pop store to return – although in a new guise. The banking industry should be looking ahead to this new model (or something like it.). Now is the time since JP Morgan is the largest depository institution, and Wells Fargo reported a $1.6 Billion 3^rd quarter.

In those three paragraphs we have re-designed the future, corrected the education system, softened Man’s impact on his planet, and readied ourselves for the next generation, while solving the economic crisis, and showing the developing world the next step forward. If the phrase:”You shouldn’t waste a good crisis”, voiced by the President-Elect’s financial guru recently upset some, then this plan is bound to, but that phrase is correct. It’s about time we moved away from a brick-based economy to a click-based one – and haven’t we been saying that for a few years, now?