Tuesday, April 06, 2010

A Lesson About Manufacturing Jobs from Farming

There is a lot hand-wringing about the loss of manufacturing jobs. For example, a Google search for the term "loss of manufacturing jobs" shows 308,000 results. We have lost eight million factory jobs since 1979, and manufacturing employment is now at the lowest level since 1941. As a percent of the U.S. labor force, manufacturing jobs have fallen to only 8.92% of total jobs in 2010, which is about one-third of the 28% manufacturing share of all jobs as recently as the 1960s (see chart above). And yet manufacturing output is close to an all-time high.

People don't seem too concerned, at least not any more, about the loss of farming jobs. Do a Google search for "loss of farming jobs" and you'll only get about 171 results. And yet the loss of farming jobs in the U.S. economy has been much greater than the loss of manufacturing jobs, measured as a share of total jobs.

It happened over a long period of time, but farming jobs as a share of the U.S. workforce went from 90% in 1790 to only 2.6% by 1990 (see chart below, data here). Because of advances in farm technology and increases in farmer productivity, we can now produce more food than ever before with only 2.6% of our labor force working on farms. Just the single invention of the tractor eliminated something like 10 million farm jobs.

Bottom Line: The trend in manufacturing in the U.S. is following the same pattern as farming: we're able to produce more and more output in both sectors with fewer and fewer workers, due to technological advances and significant increases in worker productivity. We're much better off as a country with only 2.6% of our workforce in farming compared to having 90% of our population involved in farming, and we're also much better off as a country with only 9% of our workforce toiling in factories compared to having 20 or 30% of our workers employed in manufacturing.

60 Comments:

At 4/07/2010 12:03 AM, Anonymous sprewell said...

Agreed with the post but the problem is that the next wave of useful work doesn't always come along in time and then we have a bunch of underemployed people sitting around trying to figure out what to do next. We all know tech is next but the lack of micropayments and the economic ignorance of most techies is what holds that back. The problem is that political opportunists like Obama then use these downturns to start up class warfare again, demanding payments from the "rich" to pay for those on the bottom, lining their pockets during the transfer.

 
At 4/07/2010 1:46 AM, Anonymous Anonymous said...

I think it is ironic that you say "Google for lost manufacturing jobs", when of course all the great jobs at Google are not manufacturing ones, all those programmers are just "service McJobs", isn't that the fear mongerig way to put it?

 
At 4/07/2010 2:34 AM, Blogger sethstorm said...

The problem is that there was a smoother transition from farming to manufacturing(w/r/t skill level and willingness to retrain people).

People were very lucky that they were able to transition out from manufacturing to IT-type industries. Now that's being eaten away, you've about gotten rid of every place where a citizen can prosper.


Agreed with the post but the problem is that the next wave of useful work doesn't always come along in time and then we have a bunch of underemployed people sitting around trying to figure out what to do next.

It's not just underemployed people, it's about anyone described in the U-6 statistic at minimum.

 
At 4/07/2010 3:38 AM, Anonymous sprewell said...

seth, these transitions have never been smooth, the previous transitions all had their bumps. If anything, this current transition is nothing compared to the past ones, since we're so much richer today. As for IT being eaten anyway meaning that there's no place to prosper, now you're being ridiculous, there's still 150 million people working in this country. As for the U-6 statistic, that's a joke, as are all such statistics that try to measure something unknowable such as how much people would like to work. We're always going to have underemployed people and that's a good thing, as that's what spurs them to try and come up with new stuff, just like Steve Wozniak came up with the first Apple computer because he was obviously under-employed at Hewlett Packard.

 
At 4/07/2010 5:54 AM, Anonymous Anonymous said...

Remember Farm Aid? When celebrities got together to support farmers to keep them on the "family farm"?

Family farms are disappearing because nobody wants to work on a farm anymore, and with good reason. It's hard labor, long hours, low pay, and a money losing business model.

 
At 4/07/2010 6:34 AM, Anonymous gih said...

Here in our country, farming has really a big lose because of drought. Such a horrible season ever I've observed.

 
At 4/07/2010 8:28 AM, Anonymous morganovich said...

the great misconception here is that somehow manufacturing jobs are good jobs. for the most part, they are not. there was one period from the end of WW2 until about the 70's when the US had the only major manufacturing base left. we got to build everything to rebuild the world. this was a boom for manufacturing, but it was also always going to be transitory.

mistaking this anomalous period for "normal" leads to the erroneous view that you can generally have a one income family with a semi skilled factory worker and own your house and cars and send your kids to private colleges etc and that this was somehow the backbone of the middle class.

this just isn't so.

it was only true for a brief and unusual period. what's going on now is normal (and good).

 
At 4/07/2010 8:30 AM, Anonymous Anonymous said...

So... what are folks doing? Is there a chart showing which jobs are in the ascendant?

And, if "Service," is there a way to break that down?

I can picture health care, pharma, financial services, software... what else?

 
At 4/07/2010 8:57 AM, Blogger Jet Beagle said...

anonymous at 8:30 am: "Is there a chart showing which jobs are in the ascendant?"

Try googling "fastest growing occupations 2010". One result will be the BLS projectionThe 30 occupations with the largest employment growth".

 
At 4/07/2010 8:57 AM, Anonymous Lyle said...

Recall some scenes from the Ag transaction, the Dust Bowl, large numbers of farm forclosures, the movement of folks from the south to the north, the death of many small towns. I would not call that smooth, except in our memory.

 
At 4/07/2010 9:03 AM, Blogger Jet Beagle said...

sprewell: "We all know tech is next"

Do you mean "tech" as an industry? or "tech" as an occupation? "Tech" has a lot of meanings.

From what I've read, health care will be the absolute growth industry for the next several decades. The aging of the population is the major reason. Health care growth will include high technology medical innovations, of course. But it will also include some very basic, human-delivered care.

 
At 4/07/2010 9:19 AM, Blogger juandos said...

Thanks for that link jet beagle...

 
At 4/07/2010 10:01 AM, Anonymous Anonymous said...

There is a black market in farm jobs held by illegals that do not get reported.

Hydra

 
At 4/07/2010 10:04 AM, Anonymous gettingrational said...

The only similiarity between manufacturing and farming is process improvement increases productivity per worker.

Almost all the inputs in farming activity for the final product (crop and crop derivities) is U.S. produced.

The inputs for manufacuring are rapidly becoming mostly foreign produced. The final product is assembled at key distribution points.

U.S. manufacturing output is an artificial number because it is so much the sigma of foreign inputs.

Farming employment reduction is almost all the result of process improvements. Manufacturing employment reduction is significantly harmed by foreign production and improved by better process.

 
At 4/07/2010 10:48 AM, Anonymous gettingrational said...

morganovich states: "the great misconception is that somehow manufacturing jobs are good jobs. for the most part they are not."

morganovich is obviously very intelligent as evidenced by bis comments on this blog BUT I disagree with "m" here.

First, I think there is a class bias against people who work with their hands. Secondly, if mnaufacturing jobs are not good jobs then how did China rise to the second largest economy in the world over the last twenty years?
Look at the GDP figures for China since 1952. This massively populated country started producing things for the rest of the world.

 
At 4/07/2010 11:04 AM, Blogger Jet Beagle said...

gettingrational: "U.S. manufacturing output is an artificial number because it is so much the sigma of foreign inputs."

Are you referring to Manufacturing GDP as reported by BLS? the number reported in Mark's previous post?

BLS GDP by Industry reports the value-added by manufacturing. That means that all imported inputs are subtracted out before reporting manufacturing GDP.

If you are referring to some other measure of manufacturing output, please explain.

 
At 4/07/2010 11:11 AM, Blogger bix1951 said...

Lots of comments.
This topic excited them.
Reality sets in.
We keep getting richer. Progress is real. There will always be poor people. Character counts.We can be happy now with what we already have. We have plenty. But the wife always wants to remodel the kitchen.

 
At 4/07/2010 11:11 AM, Blogger Jet Beagle said...

gettingrational: " if mnaufacturing jobs are not good jobs then how did China rise to the second largest economy in the world over the last twenty years?"

I agree that some manufacturing jobs are great jobs - though not many of the ones which have been offshored. But I don't think "great jobs" has much to do with China's economic gains. China is, quite simply, the most populous nation on the planet - by a large margin. As it transitioned from an agriculture economy to an industrial economy, it was bound to see a huge increase in GDP. That has been true of every nation which changed from agricultural to industrial.

If the U.S. had a population of 1.3 billion, it's economic output would be staggering. Or rather, the U.S. economic output would be four times as staggering as it already is.

 
At 4/07/2010 11:25 AM, Anonymous gettingrational said...

Jet Beagle, The previous article referred to BEA (Dept of Commerce) figures and not BLS.

The BEA definiton of value-added states:"Value added by industry can also be measured as the sum of compensation of employees, taxes on production and imports less subsidies, and gross operating surplus."

I don't pretend to be an expert but this is my understanding and this is different from general perception. Imports, as a whole, are separated out for general GDP figures but not specifically in Manufacturing. Corrections are welcome.

 
At 4/07/2010 1:21 PM, Anonymous Anonymous said...

Wow: the 30 top growing jobs do not seem like wealth creators...

 
At 4/07/2010 1:24 PM, Anonymous morganovich said...

gr-

if you look back at the 1800's, manufacturing jobs were not great jobs. sure, they were better than trying to deal with a potato famine, but hours were long, the work was backbreaking, and the pay was low. this carried trough until post WW2.

in 1910, you didn't get a manufacturing job and expect to own your home and send your kids to private school.

in the 30's, such jobs paid VERY little as depression bit.

it was only the anomalous period from 1945 to the early 70's where this was not so.

arguing that manufacturing has been good for china therefore we ought to keep it misses an important fact:

china has a massive pool of subsistence level farmers. putting them to work assembling PC's or sewing shirts is a big improvement in their productivity.

the same cannot be said here.

we keep sending them all the low tech businesses where you can no longer turn a profit.

consider the PC - who makes all the money? intel and microsoft. they make 90% of profit on a PC. no other component guys make any kind of decent margin. why keep a job building PCB's (printed circuit boards) at a loss? why keep a cd/dvd drive plant?

companies like dell and compaq can make a little money, but they are marketing companies. at best they assemble things manufactured offshore, but mostly, they don't even do that.

but the reason is that it's a low (at best) margin business. giving up on crummy businesses and reallocating productive assets toward a better use is the sign of a dynamic and strong economy, not a weak one that is somehow getting cored.

moving PCB manufacture from the US to china accomplishes this for both countries. it's a bad use of our manufacturing base but a good use of their rural farmers.

both economies are made more efficient by the transfer.

this sort of trend is the norm. it is only that we think of the period from the 40's when the US faces so little competition as normal instead of anomalous that we see this as a problem.

we should be grateful that we got the good times, but they aren;t coming back.

that was never sustainable.

 
At 4/07/2010 1:25 PM, Anonymous Turin said...

I have responded to your analysis in my article, "The Decline of Farming Does Not Offer a Lesson About the Decline of Manufacturing" here http://mjperry.blogspot.com/2010/04/lesson-for-manufacturing-jobs-from.html

 
At 4/07/2010 1:28 PM, Anonymous Turin said...

Oops. Wrong link to my article in previous comment. Here is the right link: http://shroudedindoubt.typepad.com/bodyparts/2010/04/the-decline-of-farming-does-not-offer-a-lesson-about-the-decline-of-manufacturing.html

 
At 4/07/2010 1:44 PM, Blogger PeakTrader said...

Gettingrational, "taxes on production and imports less subsidies" is not imports; it's taxes.

 
At 4/07/2010 1:57 PM, Blogger PeakTrader said...

Sethstorm, you're confusing "creative destruction" and job destruction without creation.

The U.S. had a quick and massive creative-destruction process mostly from 2000-02. Yet, the 2001 recession was mild and the U.S. was back to full employment by the mid-2000s.

Recently, the U.S. had massive job destruction from the Lehman failure in Sep '08 and then from failed government policy responses in '09 and '10, which will likely continue. So, the U.S. may not be back to full employment till 2016.

I've stated before, there are good, bad, and roughly neutral government policies.

 
At 4/07/2010 2:02 PM, Blogger PeakTrader said...

The U.S. wants to destroy more imports to promote the illusion of prosperity:

"Tim Geithner, the US Treasury Secretary, is to meet with China's vice-premier on Thursday in an unexpected visit likely to advance hopes of an end to Beijing's currency peg."

 
At 4/07/2010 2:03 PM, Blogger Jet Beagle said...

gettingrational: "Imports, as a whole, are separated out for general GDP figures but not specifically in Manufacturing."

The phrase "taxes on production and imports less subsidies" refers to the total value the manufacturing firm contributes to government revenues. If you misunderstand this phrasing, then try it this way:

"taxes on production plus taxes on imports minus subsidies from all levels of government"

When deriving GDP by industry, the BEA does not include any intermediate inputs - regardless of whether the intermediate inputs are obtained domestically or imported.

From the BEA glossary:

"Gross domestic product (GDP)-by-industry accounts. An industry's contribution is measured by its value added, which is equal to its gross output minus its intermediate purchases from domestic industries or from foreign sources."

 
At 4/07/2010 2:07 PM, Blogger Jet Beagle said...

gettingrational: "The previous article referred to BEA (Dept of Commerce) figures and not BLS."

Pardon the error. I was hurriedly responding earlier to both GDP comments and to growth occupation comments. I just typed too fast and did not proofread.

 
At 4/07/2010 2:32 PM, Anonymous gettingrational said...

Jet Beagle & Peak Trader,
OK, the BEA glossary definition I cited is awkwardly worderd (for me). I still think I am correct and will try again.

From page 8 of the BEA's Primer on GDP and the National Income and Products Account:

"
Imports, which is deducted in the calculation of GDP, consists of goods and services that are sold or transferred by the rest of the world to U.S. residents. The value of imports is already included in the other expenditure components of GDP, because market transactions do not distinguish the source of the goods and services. Therefore, imports must be deducted in order to derive a measure of total domestic output. Deducting total imports purchased by all sectors from total exports, rather than deducting each sector’s imports from its total expenditures, provides an analytically useful mea-sure—net exports..."


The grand sum GDP reflects Imports minus Exports (Total Domestic Output). Market transactions do distinguish the source of Goods and Services; thus, Manufacturing Output includes Imports. A T-Square Debit Credit analysis will confirm this. Correct?

 
At 4/07/2010 2:48 PM, Blogger PeakTrader said...

Gettingrational, net exports is exports minus imports.

If exports are greater than imports, then that increases GDP. If imports are greater than exports, then that decreases GDP.

Y = C + I + G + NX

NX is net exports. It could be positive or negative.

 
At 4/07/2010 3:07 PM, Anonymous gettingrational said...

CORRECTION: My last post should have stated "market transctions do not the source of goods and services.

Peak Trader, you are correct about the formula but if you T Square then Imports have been factored in on one side. If they are subtracted on one side they are added back in on the other. On one side are all the sub sectors and the other the total national account. The subsectors do not distinguish the source of goods and services and so include imports on that side of the T. logical?

 
At 4/07/2010 3:25 PM, Blogger PeakTrader said...

Gettingrational, other components of GDP, e.g. Personal Consumption Expenditures, don't deduct imports. So, imports must be deducted to measure GDP.

 
At 4/07/2010 3:27 PM, Blogger Jet Beagle said...

gettingrational: "Market transactions do distinguish the source of Goods and Services; thus, Manufacturing Output includes Imports."

BEA includes no intermediate inputs in deriving value-added by industry. For any industry, they do not distinguish between inputs obtained from domestic sources and inputs which are imported. Neither set of inputs is included.

I don't have the time to continue explaining this to you. Perhaps PeakTrader wishes to continue this discussion, but I have other priorities.

 
At 4/07/2010 3:44 PM, Anonymous gettingrational said...

Jet Beagle, They do not distiguish inputs and that is my point. Imports are not distinguished from domestic purchases and therefore a melange resulting in U.S. manufacturing.

I will take leave also because my productivity is falling off a cliff!

 
At 4/07/2010 4:18 PM, Anonymous sprewell said...

Jet Beagle, By tech, I meant info tech and services, which is already leading us out of this recession. That's why I mentioned micropayments as a fundamental catalyst of the next boom, as it is what will monetize all those services. As for health care, it's about to be decimated by information technology, just as the information sectors of music and newspapers have already been destroyed. 99% of doctors can be replaced by medical decision software and there is no reason for your radiologist to be in the US, when we can easily send the scans abroad now. The coming changes are fundamental, and are all based on the fact that the PC and the internet fundamentally change the economics of all information businesses.

 
At 4/07/2010 4:39 PM, Blogger sethstorm said...


As for the U-6 statistic, that's a joke, as are all such statistics that try to measure something unknowable such as how much people would like to work.

The problem is that it is quite accurate at what it specifies.

If you were wanting inaccurate numbers, U-3 is a few columns above it.


As for health care, it's about to be decimated by information technology, just as the information sectors of music and newspapers have already been destroyed. 99% of doctors can be replaced by medical decision software and there is no reason for your radiologist to be in the US, when we can easily send the scans abroad now.

The problem is that the Information Technology work you are talking about does not generate US jobs (in the large amount if at all). Thank the lack of ability to enforce immigration law for that one. The same laws that should be deporting illegals en masse should also be denying H1-b body shops en masse.

As for medical reports, I'll just write "No authorization for any medical data to leave the US or to any foreign-owned entity in the US" or make that known to any doctor/medical entity that I deal with.

I wish I could believe that your message brings goodwill and prosperity. The problem is that I've seen more destruction by those policies than creation.


Sethstorm, you're confusing "creative destruction" and job destruction without creation.

The U.S. had a quick and massive creative-destruction process mostly from 2000-02. Yet, the 2001 recession was mild and the U.S. was back to full employment by the mid-2000s.

The problem is that (for the larger part) job destruction w/o net creation has happened since 2003.

 
At 4/07/2010 4:56 PM, Anonymous sprewell said...

Seth, but what does U-6 specify? It does not specify the amount of "underemployed" in the economy, because that is almost impossible to measure. What about all the people who work full-time jobs but feel underused and would like to switch to another job? They're not counted in U-6. What about all the people who work part-time and are counted as part of U-6, but who aren't really interested in developing the skills to become full-time workers? There do exist "underemployed" workers, but it's such a diffuse categorization, that's almost impossible to measure, that it's almost not worth talking about. As for IT generating US jobs, first let me say that "jobs" are a horrible way to measure economic gains. You decry the fact that there was little US job growth this decade, but it was that very trend that led to great price and technological gains that greatly benefited the average consumer. The very people who you think are so impoverished by globalization are the ones who shop regularly at Wal-Mart or buy Taiwanese electronics at low prices.

However, the coming tech boom will float all boats, so there will be plenty of work here just like elsewhere. All the same, it will be rabidly competitive, as there's nothing stopping a company from Israel or India from creating a competing website to any US website. Immigration law is irrelevant as this is a global market. You are welcome to keep your medical data in this country and pay the higher price, most won't. I am not trying to impart a message of goodwill or prosperity per se, I'm trying to accurately describe what is happening and predict what will happen, but I do believe this next tech boom will bring unprecedented gains, while destroying much of what exists today.

 
At 4/07/2010 5:21 PM, Blogger sethstorm said...


What about all the people who work full-time jobs but feel underused and would like to switch to another job? They're not counted in U-6.

There do exist "underemployed" workers, but it's such a diffuse categorization, that's almost impossible to measure, that it's almost not worth talking about.

Still, it provides the most accurate picture despite that criteria. You just want those part-timers to be permatemps(the skill excuse) or disposable contractors, and those full timers worshiping their employer.

If you think about it, those groups offset each other. While the U-6 isn't the end-all-be-all of describing lack of employment, it gets a lot closer than raw U-3.


As for IT generating US jobs, first let me say that "jobs" are a horrible way to measure economic gains. You decry the fact that there was little US job growth this decade, but it was that very trend that led to great price and technological gains that greatly benefited the average consumer.

The problem is that if you want these people doing something that has those talents, avoiding them is the worst thing you can do.


However, the coming tech boom will float all boats, so there will be plenty of work here

Read about that being said in the 1980's, heard it in the 1990's, and saw it blogged in the 2000's. Your message is one that is not new and does not describe how things really end up. That, and for those who were able to move up into IT, they're getting attacked - again!


Immigration law is irrelevant as this is a global market.

I see that you may be familiar w/ the idea of bribing our Congress to not allow a proper enforcement of the law or closing of loopholes within. If it's outside the US's regulatory control, that is what is irrelevant (as I am subject to it as a full[and not naturalized] US citizen).


You are welcome to keep your medical data in this country and pay the higher price, most won't.

Indeed, but I do not care to have adverse selection force my hand.


I'm trying to accurately describe what is happening and predict what will happen, but I do believe this next tech boom will bring unprecedented gains, while destroying much of what exists today.

Well, those whom have brought your message before you have claimed prosperity and goodwill. I remain unconvinced given the one-sided nature of the effects (destruction w/o creation).

 
At 4/07/2010 5:49 PM, Blogger PeakTrader said...

U.S. Annual Average Unemployment Rate (over three decades):

1980 7.1
1981 7.6
1982 9.7
1983 9.6
1984 7.5
1985 7.2
1986 7.0
1987 6.2
1988 5.5
1989 5.3

1990 5.6
1991 6.8
1992 7.5
1993 6.9
1994 6.1
1995 5.6
1996 5.4
1997 4.9
1998 4.5
1999 4.2

2000 4.0
2001 4.7
2002 5.8
2003 6.0
2004 5.5
2005 5.1
2006 4.6
2007 4.6
2008 5.8
2009 9.3

 
At 4/07/2010 6:05 PM, Blogger Jet Beagle said...

Sprewell: "99% of doctors can be replaced by medical decision software"

Right. Either you don't really mean this or else you know very little about what doctors do for a living.

Medical decision software is not going to:

- replace a hip;
- administer general or local anesthesia;
- deliver a baby or perform a gynecology exam;
- perform breast augmentation surgery or repair a face smashed in a motorcycle accident;
- treat mental illness through psychotherapy or psychoanalysis; or
- very much else done by this nation's physicians and surgeons.

Health care is going to change a lot over the next few decades. Anyone who knows anything at all about the industry believes it is going to employ many thousands more workers.

 
At 4/07/2010 6:21 PM, Anonymous sprewell said...

Seth, the "most accurate" picture of something that intrinsically cannot be measured is not worth the paper it's printed on. When I referred to the underemployed in my first comment, I was actually referring to the unemployed, as they are clearly underemployed. ;) As for my wanting permatemps, contractors, or full-timers grateful to their employer, yes and no, mostly no. I think the future of work is a large grabbag of disparate, telecommuting information workers, who gather together in virtual teams to get shit done. As such, the large corporation as currently conceived is largely an outmoded concept that will mostly disappear. To some extent all those information workers are not full-timers, but largely because there will be no employers! :) As for offsetting errors in the U-6 stats, you can't offset something you can't measure. :D

I'm not sure what you mean by "avoiding them is the worst thing you can do," but let me break it down for you. There are 150 million workers in this country, maybe 7 million lost their jobs in the current downturn but the remaining 143 million gained greatly from the resulting price gains. You would put that 7 million ahead of the remaining 143 million, a choice that practically nobody else would make. As for people talking about a tech boom in the past, there was a PC tech boom in the 80s, so they were right about that. The 90's had the internet boom, but there was a lot of overinvestment and it was missing a fundamental ingredient, micropayments, so it collapsed. That ongoing economic ignorance caused the 2000s to mostly consist of hardware gains, as Moore's law drove ever further down, while software lagged behind. However, that means that once micropayments are introduced, there's a bunch of pentup productivity that will explode much higher with the next tech boom.

As for IT getting "attacked," competition is the name of the game. If you're saying American workers can't compete, maybe they should go do something else, but I'm not as pessimistic about Americans as you are. If you think immigration law will provide any prophylactic for the global competition that is already happening and about to get more intense, you are seriously deluded. What does adverse selection have to do with keeping medical data in this country? You remain unconvinced of the benefits of tech because you are ignoring all the benefits it has already brought and because it is about to explode much higher in another tech boom. I can't help it if you are too short-sighted to see what is directly in front of us.

 
At 4/07/2010 6:29 PM, Anonymous sprewell said...

Jet Beagle, I meant exactly what I said, you need to look at some stats about what percentage of medical transactions actually consist of such physical operations, I think you will be surprised. Physician's assistants and the remaining doctors can easily do those occasional procedures that you list. I realize that there are a lot of ignorants who claim to "know healthcare" that make such deluded predictions of job growth, but they are wholly oblivious to how infotech is going to drastically reform the information business of medicine, just as the music and newspaper sectors were oblivious before the same happened to them.

 
At 4/07/2010 6:49 PM, Blogger Jet Beagle said...

sprewell: "you need to look at some stats about what percentage of medical transactions actually consist of such physical operations"

Spewell, I've been sleeping in the same bed with a medical practitioner for 35 years. I have a few dozen friends and relatives who work in the industry. I am also a savvy health care investor. I know a lot about the nature of health care in the U.S.

I'm also a Boomer, Sprewell. We're the ones who will be consuming the lion's share of health care over the next few decades. I also have a pretty good idea about the nature of treatment we're going to demand.

But feel free to dream. Just don't expect to be taken seriously when you make statements such as:

"99% of doctors can be replaced by medical decision software"

and

"there are a lot of ignorants who claim to "know healthcare" that make such deluded predictions of job growth"

 
At 4/07/2010 7:02 PM, Anonymous sprewell said...

Jet Beagle, I'm glad that you sleep next to or know medical practitioners, but clearly such contact is wasted when you cannot come up with a single argument against what I just said. :p I'm well aware of the large boomer cohort that is about to suck up a lot more medical resources, which is why I was going to mention in my last comment that the changes that infotech is bringing to medicine will swamp that increase in transactions. Also, boomers can demand whatever they want, but if they can't pay for it, they won't get it, as we're about to dismantle Medicare also. :)

 
At 4/07/2010 7:09 PM, Blogger PeakTrader said...

Destructive politicians attacking the creative Greenspan :)

Greenspan accepts no responsibility
Apr. 07, 2010

Alan Greenspan defended his tenure as head of the Federal Reserve before a panel investigating the roots of the financial crisis.

Greenspan said excess saving in developing nations left too much money in the system. And he said credit rating agencies undercounted the risk of mortgage investments.

Greenspan said demand from the government-backed mortgage giants Fannie Mae and Freddie Mac inflated the housing bubble. He said the government policy of encouraging homeownership pushed Fannie and Freddie to create demand for risky loans.

He would not cite any specific failures, except banks' and regulators' collective failure to anticipate that so many challenges would hit the financial system at once.

"I warned of the consequences of this situation in testimony before the Senate banking committee in 2004," he informed the commissioners. "In 2002 I expressed concern . . . that our extraordinary housing boom, financed by very large increases in mortgage debt, cannot continue indefinitely."

 
At 4/07/2010 7:14 PM, Blogger Craig said...

From what I've read, health care will be the absolute growth industry for the next several decades.

I agree that's what you've read. But I suspect the hype is simply a result of looking at the present and assuming it will continue into the future.

Health care consumes wealth -- it does not create it -- unlike manufacturing or farming. If the government's voracious appetite for our already-earned wealth doesn't decrease, we simply won't have the money to pay for all the predicted new health care workers.

And if we do, someone else will lose out somewhere.

 
At 4/07/2010 7:42 PM, Blogger PeakTrader said...

Craig said: "Health care consumes wealth -- it does not create it -- unlike manufacturing or farming."

You're confusing government with health care.

What good is wealth if most people die before 45?

All goods consume and create wealth. It doesn't seem possible to accumulate wealth without consumption.

 
At 4/07/2010 7:51 PM, Anonymous Lyle said...

Craig, is good health an addition to wealth or is just stuff wealth. I would view it that life and good health are the core elements of wealth, if you are dead who cares how much wealth you had, and if you can't enjoy it due to poor health the same. If younger if health care allows someone to work, is that creating wealth? Is medical care for a soldier so he can have a productive life an addition to wealth or should we return to civil war medicine?

 
At 4/07/2010 9:00 PM, Blogger PeakTrader said...

Also, I may add, regarding the Greenspan article above, there's a continuing effort to rewrite history, to change reality into fantasy.

 
At 4/08/2010 3:08 AM, Blogger sethstorm said...


Seth, the "most accurate" picture of something that intrinsically cannot be measured is not worth the paper it's printed on. When I referred to the underemployed in my first comment, I was actually referring to the unemployed, as they are clearly underemployed.

Ok. Then you'd be served by one of the other intermediate figures that does not include people w/ work(U-4 or U-5?). That, or perhaps the labor force participation rates might be better. While those does not have the fine-grained accuracy you're talking about, it is a case where the perfect should not be the enemy of the good.


What does adverse selection have to do with keeping medical data in this country?

Adverse selection would drive the rates up, in the effort to drive the (remaining) masses away.


You remain unconvinced of the benefits of tech because you are ignoring all the benefits it has already brought and because it is about to explode much higher in another tech boom.

No, I just want it to work in my favor, much like everyone else. I wouldn't have an interest in such a profession if I didn't see a benefit to it. What I am unconvinced of is the creative side when all I see is destruction.

 
At 4/08/2010 3:10 AM, Blogger sethstorm said...


As for my wanting permatemps, contractors, or full-timers grateful to their employer, yes and no, mostly no.

I think the future of work is a large grabbag of disparate, telecommuting information workers, who gather together in virtual teams to get shit done.

In other words, tons of contractors working on an ad-hoc basis. Not only do you have them with no real interest to work together (as they are contracted out and have no real incentive to work together) they lose a lot of the protections given to full-time workers(taxes, non-disposable nature). What freedom may exist also has its (non-monetary as well as monetary) costs.

Never mind that equipment still has to be physically maintained, by people who know what they are doing(in the United States, nonetheless).


As such, the large corporation as currently conceived is largely an outmoded concept that will mostly disappear.

The problem is that making workers disposable in that regard does not do well for them or their ability to plan for the long term. That, and the resultant job security from said firms allows for a wide margin of error to try new things.

Not everyone is completely attuned to entrepreneurial ability. Some just want to be able to do what they do well w/o having to worry about the (proverbial) paycheck coming in or if 'x' will screw them over. In other words, they do their job well enough, but bootstrappery is not in their blood. For that, medium-large sized firms fill that role.



[something about micropayments]

If you want to deal w/ micropayments, Japan would certainly be a better fit for you.

 
At 4/08/2010 4:49 AM, Anonymous sprewell said...

Seth, nah, U-3 will do, I don't need weird categorizations like "discouraged" workers either. I don't think you quite know what adverse selection means, it's not a bidding process. The reason you will pay more is that most people don't care about offshored data, while you will be one of the few paying higher local rates. Tech works in practically everyone's favor, even you. However, if you're one of the marginal tech workers who can't compete with increased international competition, all of us are better off if you switch to something else. I'm not sure why you call independent information workers "contractors" or say they have no real interest in working together. The only reason they'd assemble in virtual teams is if they are interested in working together. Yes, they would be treated differently under the law, but that's one of the great benefits in my view, as we can get rid of current onerous govt regulations this way. :) Non sequiturs about the costs of freedom and physical maintenance of equipment are too vague to elicit a response.

You call independent information workers "disposable" but who's doing the disposing if there's no corporations? Your whole mindset is baked by the current climate and you are just finding new ways to complain, using the same outdated terminology, about a completely different environment. Job security is not what leads to experimentation, it's competition and diversity, you've got the fundamentals wrong. You won't have to be an entrepreneur to be an independent information worker, as all kinds of ancillary activity like billing or strategy will be automated or outsourced away. For example, a freelancer today comes in and fulfills a specialized role, without having to be some sort of entrepreneur who is "bootstrapping" an entirely new kind of business. Hence, there is no need for medium-sized firms either. As for micropayments, I wish Japan were doing that, but unfortunately they're just as economically ignorant as everyone else. Micropayments will be the dominant form of monetization online, whether here or Europe or Asia, killing off advertising in the process. :)

 
At 4/08/2010 6:52 AM, Blogger Gregory Williams said...

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At 4/08/2010 9:12 AM, Blogger Jet Beagle said...

craig: "Wwe simply won't have the money to pay for all the predicted new health care workers. And if we do, someone else will lose out somewhere."

I agree that federal and state governments will not have enough money to pay for all the promised entitlements. I also agree that when governments continue paying for the promised retiree health benefits, someone else will lose out.

As I see it, the retiree voting block will be way too large to allow elected officials to make large cuts in general Social Security and Medicare funding. What I foresee is means testing. Those retirees who lived prudently and amassed savings will see their Medicare benefits cut. But those cuts - even if applied to 30% of retirees - will do little to change the demand for health care services. I may cut my golf and vacations in retirement, and downsize to a much smaller home. But I'm not going to stop treatment for my illnesses. If I need bypass surgery in order to live, I'm going to have it done. Health care for upper middle income and wealthy retirees may not be funded by taxpayers, but it's not going to diminish significantly.

 
At 4/08/2010 11:13 AM, Blogger sethstorm said...


Seth, nah, U-3 will do, I don't need weird categorizations like "discouraged" workers either.

Choose to be blind, then. It is a worse number in that regard. At least labor force participation numbers would have been a better measurement(as they do not appear to factor in presumed growth/decline). Just don't be surprised if you see more people out of work and U-3 drops.


You call independent information workers "disposable" but who's doing the disposing if there's no corporations?

...

For example, a freelancer today comes in and fulfills a specialized role, without having to be some sort of entrepreneur who is "bootstrapping" an entirely new kind of business.

Angered clients on power trips? "Do not work for" lists can only go so far. You would be asking people to work with less benefits of scale. That is, the benefits from the medium-large businesses won't be there.


You won't have to be an entrepreneur to be an independent information worker, as all kinds of ancillary activity like billing or strategy will be automated or outsourced away.

Not as trusting as you are with my financial information with entities beyond my regulatory grasp.

 
At 4/08/2010 3:17 PM, Anonymous EscapedWestOfTheBigMuddy said...

I really don't like the suppressed zero on the first figure: it would give a more accurate impression if it went all the way down, and this change wouldn't make the slope hard to see. This is more important given that the second figure *does* go all the way to zero...

 
At 4/08/2010 7:24 PM, Anonymous sprewell said...

Seth, I think any number that includes vague terminology like U-4 does is worse than more concrete numbers like U-3, so yeah, I'll stick to U-3. I agree that U-3 doesn't count those who drop out completely, but maybe those people dropped out to care for their kids or whatever, better to leave them out. As for angered clients disposing of information workers, what's your alternative, nobody can ever be fired? You're taking "disposable" to an illogical extreme. Aah, that favorite argument of corporatists everywhere, funny to read you use it: scale. Precisely what scale do you think information workers would benefit from? The whole reason for the coming fragmentation and death of the corporation is that there is practically no "scale" for information work. As for outsourcing away billing or strategy, that's routinely done now by everybody, whether to Paypal or consultants, and not necessarily to offshore units under a different regulatory regime, so I'm not sure how you ever avoid it.

 
At 4/08/2010 8:44 PM, Blogger sethstorm said...


Seth, I think any number that includes vague terminology like U-4 does is worse than more concrete numbers like U-3, so yeah, I'll stick to U-3.

Fine enough. The exact name of it isn't as important as the information that the statistics cover.


As for angered clients disposing of information workers, what's your alternative, nobody can ever be fired?

Not that extreme. Perhaps an accepted set of practices that allow contractors to have similar benefits as full-time employees, down to job security(and not some flippant response about skillsets). In other words, take the disposable/second-class-citizen nature of them out, while allowing flexibility.

 
At 4/09/2010 2:24 PM, Anonymous George said...

Mark, you speak like an economist, and that is fine, but my view is that generations of kids benefited by working on farms before and after school, and seven days a week. They learned the value of a dollar, to respect all forms of life, and how teamwork is critical for most human endeavor. Today we have legions of game players who respect little but their own interests. May I suggest that tax dollars should support community farms where kids can work to earn money and learn.

 
At 4/09/2010 9:56 PM, Anonymous Anonymous said...

George has the best comment of all.

 

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