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What are we gonna do?  If you read those of us who kvetch constantly about not just what’s wrong but exactly what’s wrong you probably get a kind of fatigue after a while.  That’s understandable.  I strongly believe that if you are in the business of pointing out the bad stuff you have an obligation to produce a credible way that it can be fixed – or else it’s just whining.  While I’ve done my best to produce a framework for understanding how things can go wrong that includes ways to understand fixing the world, it requires a lot of working through the abstraction – and brain ache.

This is where I get specific.  This is my platform.

It starts by reiterating that without Restructuring there is no Recovery – we have to do something different.  That’s not whining, that’s shown over and over throughout history.  I can’t say just what the new economy will look like, but I can look at the barriers that prevent the accumulated wisdom of 300 million people from breaking through to the other side. Matt Miller tells us in “The Tyranny of Dead Ideas” (and on every gab show where he plugs the book) we are in a period of rapid and transformational change, and I agree with that.  That’s the first assumption that goes into this.

The second assumption is that while we’ve put trillions of dollars into the top end of our financial system to stabilize it, the meat of the economy comes from people who spend every dime they get, when they get it.  That’s where high unemployment hits hardest in the short term, so my main focus is on jobs.  We’ve lost 6 million jobs in the last year, and replacing them has to be the top priority.

I also assume that we don’t want people to starve or die otherwise horrible deaths.  Argue with this assumption if you want.  Ready?

Barriers to Entry
Job creation is hampered by the overhead per employee that businesses have to pay, which is the employment-based cost that does not go directly into salary.  These include benefits, taxes, regulations and training.  I propose a national conference to determine all the sources of employee overhead and set a goal of cutting them at least in half.  According to surveys from the Bureau of Labor Statistics, the cost of benefits and taxes alone is nearly half what workers take home in pay. Cutting this in half would save manufacturers about 6% of their total costs – not counting a wide range of overhead costs I haven’t even considered – which is about the percent of all jobs lost.  (This was worked out with Bruce’s help in the comments of an earlier post.)

Moving a substantial amount of basic health care coverage from a kind of employment tax to a general tax on income will be a big help, but it will take more than that.

The Obama administration will front $5,000 towards hitting a community college for retraining, which is a nice start.  If we’re going to give people unemployment extensions for the next few years, the least we can do is give them the tools to break out of the problem as well.  The problem is a simple one – what skills are the most important?  Somewhere, guidance based on where you are likely to find a job is the key to making this work.  Over the long haul, programs like this are probably going to be necessary to keep people up to date on their skills as we move away from employer based training, too.

Sustainable Energy
The Apollo Program cost about 150B$ in today’s money.  I can’t see that anything less is desirable when it comes to the future of energy, currently running about 11% of our economy.  While the Obama administration has a bill pending with a grab bag of policies and incentives, none of them will advance the technology as rapidly as a focused  effort.  I propose that we be willing to spend up to 300B$, if necessary, on a series of challenge grants that pay out as goals are reached.  The first step is to write concise requirements, such as a safe and practical car that consumes 20% of the energy that a current one does and has a range of 300 miles before refueling or a crop that can replace all imported oil on the cropland we leave fallow without environmental damage.

Any college or corporation that wants to compete for these grants will be seeded with money up to their own match, with a cap.  They would keep any intellectual property they develop.  Interim goals being met would trigger a payout of enough money to continue research as a reward, and they would all be competing for a defined prize of some insanely large amount of money to be the first to reach the overall goal.  A lot of engineers would be employed in the process, which is to say not collecting unemployment.

The Recovery Act authorized 111B$ for infrastructure, which is expected to create or stabilize 400k jobs.  It sounds great, but it’s no WPA.  There are many reasons to invest a lot more than this in infrastructure, not the least of which is the potential payout if we can overhaul our rail systems at the same time.  A lot of people have criticized the Obama administration for being a bit timid on infrastructure investments, so I’ll join the chorus – we can do a lot more for this.

I can see where we could spend up to 600B$, less than a tenth of what has been spent on the finance industry, to set up our economy to be completely transformed on its own terms.  We know that things like health care and energy are major sources of inefficiency even if we can’t be sure just what the system will look like.  I happen to believe that we know enough to know what’s preventing the economy from transforming itself, and that’s good enough.  Let’s start there.

13 thoughts on “Platform

  1. Longtime reader, firsttime commenter. 🙂

    I don’t see how this connects (no pun intended) to the work on connections. You had me buying into that, but it looks like you abandoned it all for a fairly typical laundry list of things that need to be done. I like the list, but I don’t see how it follows.

  2. Welcome, Ron! You have a good point – I should have explained more.

    Retraining is all about getting people to make new connections to the world, starting from their own skills and working outward.

    The Barriers to Entry problem is something that comes from understanding that the way we connect to our economy has changed – the system we have grew up when people in the industrialized North connected to the economy primarily through the company they worked for (“I owe my soul to the company store”), which has changed – requiring new connections to be made.

    The Apollo of Energy would almost certainly require a number of technologies to come together in new ways, such as turbine powered hybrid cars (I should explain that more later). Creating an environment that encourages that is the key to making this work.

    Infrastructure? Hopelessly old fashioned, I admit. But if we look at high speed rail nationwide, I can promise new links will form.

    You’re right, a lot of this doesn’t obviously follow. But the main point is to create an environment where people can form the connections necessary to make the world that’s coming possible now that the old connections are breaking down.

    I didn’t push it because it seemed a bit tenuous, but I should build more on my old work.

  3. I give! I didn’t explain myself very well. Try the post Specialists.

    The “optimal” structure when we’re fat & happy is a series of connections we start to rely on. Some of the new connections we need for the economy of tomorrow aren’t made because they don’t look necessary. But they are – or will be.

    I’m trying to look at the barriers to making new connections in the economy and how we can lift those to get us a lot closer to the ideal of a free market, as discussed in the post Marketism.

    Does that explain it? I guess I did gloss over too much getting to today’s post. Sorry ’bout that.

  4. LOL, I get what you mean now. For all your talk of being a half-step back, you’re really two steps ahead. Just wait up for us slowpokes, OK? 🙂

  5. Congratulations Eric you’re hatching something new. I totally agree with you on the barriers to entry, payroll burdens etc.(both u & I could go into detail here). For over a week I’ve been saying to myself internally ask Eric to write a manifesto well you’re were a step ahead and I thank you. I’ve been studying some off beat manifestos lately some even have video platforms.
    Anyways get to work on the white roof solution and make it work for Minnesota we got ice yer know. Also while you’re at it work on a hybrid lawnmower there’s gotta be something better. The germans or some group came out with an updated version of the old fashioned vertical rotary but it had higher costs and was only suitable for small thin lawns. Seward hardware (Wellna) sold them. I change the oil on mine mid season, check filter and blade but I still outlast the shortlived engines. I mow 3 lawns a week mostly for fun, exercise and neighborliness.
    In all seriousness though (and I think this is above my brain) are there new ways of financing these ideas besides Wall Street and Govt. I know there are third fourth and probably fifth ways but a essay here (please keep it somewhat elemental would be helpful) I dunno a risk sharing that acts as a hedge I mean this in a good way.

  6. More good news! Sometime you gotta check out, the automobile repair shop bazaar that is about 2/3 of a mile east and just north of University ave from the new gopher football stadium. Behind a giant coffee cup coffee shop. In my rather limited mind there is more life there than at the empty stadium. I’ve had a couple of minor repairs done there but was unable to get a more major one done. Get something like that going on small engines and one could rule over the green lands.

  7. Dan, there are other ways of financing, but I’ve never really thunk that one out. I can tell you this – when the Amish need money, such as when a young couple needs a farm, they have a way of raising big wads of bills among them and keeping track of it all that borders on magic. They have some way that I don’t know about. But I’ve never thought it through, to be honest.

    Hope someone comes along with some new ideas on that front, ‘cuz it’s a good one.

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