best thing I've read today

[Azazello1313]

http://esr.ibiblio.org/?p=1752#more-1752

 

Marginal Devolution

 

The recession got personal for me today, when I learned the reason a man I’ve been gaming with at my regular Friday night group hasn’t been showing up lately is because he’s broke and in a homeless shelter. I’m going to ask the Friday night gang for help for the guy — not money, but the job lead he needs much more. And it got me to thinking, about the two people I know who’ve actually been dragged under by the crappy economy.

 

You might wonder what took me so long. I knew it was getting bad out there, with the nominal unemployment rate at 10% and the actual hitting 17% and 6 applicants for every job. But my friends are mostly university-educated professionals in high-skilled tech jobs — last fired, first hired, and bright enough that if they had to change careers or found their own business they could probably hack it. Except…except for these two, who I’ll call A and B. What’s happening to them is bad. Very bad. And it illustrates a problem that’s going to get worse barring some drastic changes in the system.

 

A is the less screwed, so far. He’s in his mid-50s, white, college-educated, a tall Irish Catholic guy who looks right in a tweed cap. He’s a good bit brighter than average, probably in the 125-130 IQ range, but he’s bipolar (manic depressive) and has sleep-disorder issues. And he’s, hm, I think the best way to put it is rigid. Very capable at well-defined tasks and strategy games, but tends to get flustered and inarticulate when off his script. (No, it’s probably not mild autism, I know what that looks like; he’s actually more like OCD.) Socially awkward; few girlfriends, has never married, and tends to come off as an odd duck. He’s been underemployed all his life — clerking at a government agency, selling tract real estate, selling cars. Recently he’s working at a state-run liquor store, but that’s after two years of unemployment and an eviction fight. He’s got no cushion, nowhere to land if he loses this job.

 

B is in worse shape. About the same age. Average or a hair below-average intelligence — which, given the people he and I tend to hang with, has the consequence of almost always making him the slow guy in the room (I have to remind myself that this is a context effect when I deal with him). What I know of his job history is low-paid clerical work, the kind that requires a lot of specialized procedural knowledge that isn’t portable. A nice guy, very earnest, probably quite a hard worker. I believe he has a two-year degree from a local community college, but he shows no discernible high-value skills. Also unmarried, possibly asexual, slightly effeminate presentation. He’s black, which makes him a EEOC lawsuit risk — and if you don’t know how much that hurts his chances, you haven’t been anywhere near a small or medium-sized business in the last 30 years. Now he’s the guy in the homeless shelter.

 

What these guys have in common is that they’re only marginally employable. What borderline mental illness has done to one, mediocre skills and the unintended consequences of anti-discrimination laws have done to the other. As long as I’ve known both (and that would actually be most of my years, for both of them), they’ve worked dead-end jobs and put their passion into science fiction and wargaming. They’re decent, honest, unambitious men who have never wanted anything but steady work, a normal life, and a hobby or two. They’re not stupid and they have respectable work habits; in fact they’re probably more conscientious and safe than average. Now they don’t quite fit; too old, too geeky, too male, too quiet. The job market has discarded one and the other is hanging by a thread.

 

When I look at these guys, though, I can’t buy the explanation most people would jump for, which is that they simply fell behind in an increasingly skill-intensive job market. Thing is, they’re not uneducated; they’re not the stranded fruit-picker or construction worker that narrative would fit. Nor does offshoring explain what’s happened to these guys, because their jobs were the relatively hard-to-export kind.

 

No. What I think is: These are the people who go to the wall when the cost of employing someone gets too high. We’ve spent the last seventy years increasing the hidden overhead and downside risks associated with hiring a worker — which meant the minimum revenue-per-employee threshold below which hiring doesn’t make sense has crept up and up and up, gradually. This effect was partly masked by credit and asset bubbles, but those have now popped. Increasingly it’s not just the classic hard-core unemployables (alcoholics, criminal deviants, crazies) that can’t pull enough weight to justify a paycheck; it’s the marginal ones, the mediocre, and the mildly dysfunctional.

 

If that doesn’t scare the crap out of you, you’re not paying attention. It’s a recipe for long-term structural unemployment at European levels of 10%, 15%, and up. What’s even crazier is that the Obama administration wants to respond to this problem by…raising taxes and piling more regulatory burden on employers.

 

Yeah. That’ll work, sure. It is, in fact, the diametrical opposite of what A and B need if they’re not going to rot in homeless shelters. They need the overhead of employment to fall, not rise. Otherwise their future looks pretty damn grim. They’ve got about a decade each before they can collect Social Security, and even on the optimistic assumption that Federal entitlements won’t crash or be eaten up by a hyperinflationary episode I wouldn’t bet a lot on either one living that long.

 

I now think the increasingly jobless recoveries from the last couple of downturns were leading indicators. The end of the post-New-Deal fantasy that we could increase the friction costs of capitalism without limit, regulating and redistributing our way to prosperity, is hurtling towards us like a dark sun. A and B are two of the luckless bastards who are spiraling down its gravity well. Multiply them by ten million to see what it’s like when the contradictions of socialism on the installment plan come home to roost.

[driveby]

That was a good read.

[dmarc117]

good times

[Perchoutofwater]

They guy makes some very good points, but I can't help but think the main reason they are unemployable is they are 50 year old gamers that have a regular weekly gaming group.

[Clubfoothead]

 

I find it difficult to believe that was the best thing you read yesterday.

[Ursa Majoris]

One thing left unsaid was that a contributory factor to it all is the unrelenting need to increase profits every quarter or be punished by Wall Street. Every day you see a report about some company or other making decent profits but failing to beat "analyst's expectations" so their shares go in the tank. That pressure contributes to slow hiring and forces companies constantly to "do more with less".

 

I can see the points raised in the article as valid but there's more than just the gubment to blame - the system itself is not sustainable in it's current form.

[jetsfan]

One thing left unsaid was that a contributory factor to it all is the unrelenting need to increase profits every quarter or be punished by Wall Street. Every day you see a report about some company or other making decent profits but failing to beat "analyst's expectations" so their shares go in the tank. That pressure contributes to slow hiring and forces companies constantly to "do more with less".

 

I can see the points raised in the article as valid but there's more than just the gubment to blame - the system itself is not sustainable in it's current form.

 

+1, the most successful and best run companies I work with are privately-owned.

 

We just had one major supplier go public, and their quality and R&D went to hell overnight.

Edited February 27, 2010 by jetsfan

[Ursa Majoris]

+1, the most successful and best run companies I work with are privately-owned.

 

We just had one major supplier go public, and their quality and R&D went to hell overnight.

Great point and one I should have added. Private companies don't need to answer to the Wall Street "experts" and are able to think longer term. Public companies can't do that. Their range is no greater than three months. The most irritating thing is that they'll do really well but fail to live up to what some Wall Street turd says they should have done and get hammered for it.

Edited February 27, 2010 by Ursa Majoris

[Azazello1313]

Great point and one I should have added. Private companies don't need to answer to the Wall Street "experts" and are able to think longer term. Public companies can't do that. Their range is no greater than three months.

 

that's just not a correct statement. long term viability is something that absolutely 100% factors into a current stock price. ANY business, whether privately owned or publicly traded, that has no wider field of vision than 3 months is going to be as worthless now as it will be 3 months from now.

[Riffraff]

They guy makes some very good points, but I can't help but think the main reason they are unemployable is they are 50 year old gamers that have a regular weekly gaming group.

Thought that as well.

 

I wish states would lower the mandatory minimum wage when the economy takes a downturn. Maybe not drop the wages for those already employed, but for new hires.

[Ursa Majoris]

that's just not a correct statement. long term viability is something that absolutely 100% factors into a current stock price. ANY business, whether privately owned or publicly traded, that has no wider field of vision than 3 months is going to be as worthless now as it will be 3 months from now.

OK, how about "their ability to plan long-term is impaired by the need to please Wall Street every quarter"?

 

It's still a ridiculous system that allows a bunch of guys in New York to dictate how a company should perform and penalize it when it makes a profit lower than these people say it should.

[muck]

I thought this was going to be good news of some sort, not just an interesting read.

 

[Ursa Majoris]

that's just not a correct statement. long term viability is something that absolutely 100% factors into a current stock price. ANY business, whether privately owned or publicly traded, that has no wider field of vision than 3 months is going to be as worthless now as it will be 3 months from now.

 

 

From the WSJ - I read this today:

 

In today's volatile market, investors who don't react quickly to signs of trouble can get burned. Sticking with the buy-and-hold formulas of the past, experts say, is a recipe for trouble. That's a lesson learned by some of the smartest investors in the market, a powerful new breed of traders known as "quants."

 

Quants, short for quantitative, use math and computers to trade and price all kinds of securities. As a rule, quants don't care about a company's fundamentals, such as what it sells or who is running the show. Instead, quants comb through reams of data, such as the historical movement of a stock and how that movement relates to other stocks or the rest of the market, looking for predictable patterns.

[dmarc117]

From the WSJ - I read this today:

 

 

the markets are manipulated like a mofo. there is no real trading going on these days. all the big hi freq guys are trading back and forth making billions. the markets and stock prices no longer reflect the health of the economy. everyone is in bonds these days. watch that market for a barometer of the economy.