Sarah Sheard's Thoughts and Theories

Sunday, February 15, 2009

The Economy Is Changing

Nicolae Ceausescu was the head of the Romanian government from 1965 to 1989. Near the end, his reign "was characterized by an increasingly erratic personality cult, extreme nationalism and a deterioration of the foreign relations with Western powers and also with the Soviet Union. Ultimately his downfall came with the Romanian Revolution of 1989 during which he was deposed, tried and executed." (to quote Wikipedia)

I was speaking with a man from Romania a few weeks ago. This man was born in the Ceausescu era and lived through the transition. Apparently, when the regime changed, the Romanian economy tanked. Wikipedia has a chart that looks about the same as our recent economy. This man explained that the old ways of making money didn't make sense any more, and it took a few years to figure out new ways of making money.

I think the same thing is happening to us now, but not of course due to execution of a dictator. In our case it's transition from a manufacturing and essentially national economy to, rather rapidly, a global, information-based economy with all manufacturing outsourced.

In fact what matters most now is acces to information. Some bills I now pay that I didn't pay ten years ago include $250 a month of cable internet and blackberry cell phone. My regular land line phone gets comparatively little use, and I pay no long-distance charges.

Things I don't pay as much as for now include:
Postage. I hardly send anything by mail any more, except bill payments (yes I know I should join the internet economy) and an occasional parcel to my kids or friends.
Library. No more overdue fees: I don't use the library as much, and they remind me of due dates by email.
Books. I now get them used because the internet economy allows me to find sellers of the books I want, easily. And they're bidding for my money.
Travel. It's easy to chat with people long distance, and for that matter sit at my desk and take a virtual tour of, say, Victoria Falls. I go fewer places as a resultp)
Tax preparation. Turbotax is cheaper than professionals.
Magazines. Who has time to read them? On-line you can get something targeted for your momentary whim. (I still have a newspaper subscription, but feel like one of the last holdouts.)
Advice. You can Google any kind of advice you want. I still go occasionally, but since I'm more informed, the sessons are faster.

What do all of these things have in common? The global internet-based information economy has made information easily accessible, once you pay for access to the Internet.

Here's what's harder.
1) Authorship is no longer very valued. There are still the trendy fiction books that people pay for, but so many people blog and write on line that payment for news and opinion articles has fizzled to a trickle and depends on other means like advertising rather than on payment from readers. Time magazine lamented that this means news organizations are starting to see advertisers as their customers more than readers.

2) Advice must be very personalized to be valuable.

3) The jobs that are still needed are often minimum-wage, or nearly minimum-wage, or are managing minimum-wage earners. The exceptions, those requiring much education and skill, are under increased threat from global outsourcing. (I read even Jack in the Box, a burger place, has outsourced its ordering from the drive-in ordering microphone to the stores! Can you believe that?)

4) It seems harder to be middle class, or to actually earn a significant amount of money. Those who are rich are no longer the doctors and lawyers and engineers, but the football players, movie stars and corporate executives. These jobs are not and never have been accessible to many people, by their very nature. And at least the first two are temporary careers.
There is an opinion piece on Yahoo that comes to the same conclusion.

I don't know what forms of work will evolve, but I know we are in transition now.


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