4.4 million Americans have lost their jobs since the recession started in December 2007. The American economy has shed at least 650,000 jobs in each of the past three months. According to the New York Times, that’s the worst three-month decline in percentage terms since 1975.
Ouch! — there’s a whole lot o’ hurtin’ going on out there.
“These jobs aren’t coming back,” said John E. Silvia, chief economist at Wachovia in Charlotte, N.C. “A lot of production either isn’t going to happen at all, or it’s going to happen somewhere other than the United States. There are going to be fewer stores, fewer factories, fewer financial services operations. Firms are making strategic decisions that they don’t want to be in their businesses.”
Certain questions immediately spring to mind:
- Which businesses are we talking about here? Which jobs are never coming back?
- What new jobs will be created in this restructuring of the American economy?
Because new jobs will be created:
This dynamic has proved true in past recessions as well, with fading industries pushed to the brink during downturns before others emerged to create jobs when economic growth inevitably resumed.
If stagnation is bad, then restructuring is likely good. Economically speaking, we can’t keep doing the same things forever. Circumstances change, and economies must either adapt or decline.
The Times identifies two industries that may be smaller forever: automobile manufacturing and the financial sector. That may be the silver lining of this economic cloud.
photo by flickr user maistora: “a lucky couple of seconds between a heavy rain/thunderstorm and a bright sunny day.”
Most observers think the American automobile industry has been sick for some while. American-made cars simply aren’t as well built as Japanese cars. The industry has had 30 years or more to adapt to the competition, and it has failed to do so.
Meanwhile, cultivating an appetite for SUVs, mini vans, and pick-up trucks has resulted in irresponsible levels of greenhouse gas emissions. The industry has coyly played a shell game with consumers — improving mileage but building bigger, heavier vehicles — while climate change has developed into an extraordinarily serious problem.
As for the financial industry — let’s just say they have brought this catastrophe on themselves (and on the rest of us), and leave it at that. Let’s hope the CEOs of the financial industry suffer meaningfully along with everyone else.
Meantime, consumption may be lower, permanently:
Retailers are shuttering stores as the era of easy money fueled by rising house prices and abundant credit gives way to a period in which millions of households are forced to confine their spending to their paychecks.
Ooooohhh, imagine that! “Millions of households are forced to confine their spending to their paychecks”!
Capitalism is a wonderful system in many respects, but it has led to disastrous, unintended consequences. Economic growth is premised on ever-increasing consumption. And consumption is facilitated, to a very great extent, by personal and corporate debt.
Massive consumption creates jobs and wealth. That’s good.
But massive consumption also ravages Earth’s resources. It has led to climate change (among other ills). That’s bad — very bad.
I’m sympathetic to the 4.4 million Americans who have lost their jobs. At the personal level, it’s a terrible tragedy. I sincerely hope that President Obama’s stimulus package turns those unemployment levels around in the near future. (It isn’t going to happen overnight.)
But from a macro perspective, these developments are rather encouraging. Fading industries go the way of the dinosaur. New industries — industries adapted to contemporary circumstances — spring up in their place.
People begin to live within their means. Overall consumption levels drop. Greenhouse gas emissions and other contributors to climate change are reduced.
In sum: a lot of those lost jobs will come back, albeit in different industries. Combine that news with the macro-level benefits, and it seems to me that the glass is more than half full.
But there’s still a whole lot o’ hurtin’ going on out there. Silver lining, meet dark cloud.