Friday, October 7, 2011

The Twitter Recession

Are social media sites, texting, smart phones, and things like Twitter responsible for the current recession?  I think so, in part.

I was recently at a meeting with a major Defense contractor in Suburban Virginia.  Ironically, I am a registered Defense Contractor myself, doing work in the past for Army Research Labs.  Anyway, at this meeting, the VP of the company was giving a stirring speech of his vision for the company, and I was mesmerized.  I thought, "I want to work for this guy."

The employees in the room, however, were all using their smart phones to instant message and text each other and were not paying attention to their own boss.  It was quite odd to me, as everyone had their hand in their laps, tapping away and staring down at their genital area.  It gave the appearance of group masturbation, which in a way, was appropriate.

Following up to this meeting, I tried to contact some inventors for more information.  But every time I contacted them, they were too busy to talk, and instead would send vague and short messages from their smart phones, each one with the moniker, "Sent from my Blackberry" or whatever hand-held device they had.

And it struck me that all this technological gimcrackery was backfiring in a big way.  People were texting, twittering, instant messaging, and doing all sorts of things that had the appearance of work, but actually did no real constructive work.

Instead of writing code, programmers are twittering about thinking about it.  No real work gets done.  After all, everyone has to check the status on their facebook page every five minutes, or answer another important text message or tweet or whatever.

And more and more these days, you run into these people - folks who are busy as all get out, but are getting no real work done - just generating tons and tons of short messages over time.  And these short messages, taken alone or together, do not add up to anything of value or significance.

A recession is caused when people stop working.  And yet, many people think of it the opposite way - that the recession puts people out of work.  But I think the reverse is true.  Five years ago, we all had our fat 401(k)s and the phantom equity in our homes - and unemployment was at an all-time low.  So we all thought that we didn't have to work as hard.  Hiring someone and getting a day's work out of them was a real chore in the 1990's and early 2000's.  Today, it still is pretty much the same story - which is why employers are not hiring.  Why bother?

I discovered this firsthand in the 1990's when I tried hiring people.  I made over $100,000 a year as a solo practitioner.  As I hired more and more people, my salary stayed about the same - and in fact, went down.  People were so "busy" with their cell phones and managing their "dot com" portfolios that they didn't feel work was all that serious.  So I laid everyone off and never hired anyone back.  Why bother?  I make more money and work less hard by myself.

Today, we see the same effect.  Employers don't want to hire that incremental employee, as they know that they will make less money per head, the more people they hire.  You are better off having fewer customers and fewer employees - if you are more profitable in that model.  Each additional employee has a decreasing profitability factor.  The secret is to stop hiring after a certain point.

You might think this is crazy, but consider the last major recession in 1979.  Unemployment was at 10% and inflation at 10% or more.  And the most popular song of the day?  "Take This Job and Shove It!".  Folks did not value their jobs back then, even as they were being outsourced overseas.  If they lost their job, it was someone Else's fault, not theirs.

It was only in the 1980's when people started to realize that the high-paying union jobs weren't coming back that they stopped striking and started going back to work.  And the Reagan Recovery was underway.  Firing all those striking air traffic controllers might have been mean, but it sent a message - and the message was, "Stop whining and get back to work!".  And it set the tone for the next decade or so.

Or take 1929.  By the time of Black Friday, even the local grocery clerk had a stock portfolio.  Why bother working when every man could be a Millionaire - or so Huey Long promised.  We could all get rich without working.  And of course, it all went horribly wrong.  The stock market in 1929 or the housing market in 2009 - it was the same deal.  We felt that we could be rich without labor, accumulate wealth without work.  Just take out another mortgage and feel rich for a while.  Why not?

In a recent NPR piece, an economist (with a book to sell) noted that in Ireland in the 1980's, the economy boomed, as the population was mostly of working age.   Interesting thought, given the demographics in the US.   A lot of people worked, and a lot of people made money - and Ireland, in a rare instance, prospered.  But then it horribly went wrong in a foreshadowing of America's housing crises, when the Irish started running up the price of their own Real Estate and started to figure that perhaps, they too could be rich without work, if only they invested in the right parcel of land.  And yes, it all went horribly wrong, with repercussions still being felt today.

Greece is perhaps another example where people felt they could vote themselves a pay raise or pass a law making everyone rich without work.  It didn't work, and now Greece is bankrupt - or at least its banks are - and perhaps ours as well.

When people go back to work, economies thrive.  Hard work, and not for over-inflated pay, generates prosperity - and nothing else does.  In the 1930's, it was things like the Civilian Conservation Corps, which paid little and worked men hard, building things like Skyline Drive and the Blue Ridge Parkway.  And eventually, World War II put massive numbers of people to work, all at fairly modest wages and at regulated profits.  The economy improved as productivity improved, not vice-versa.

Today, we expect the economy to miraculously improve and then people will get hired.  But that is putting the cart before the horse.  When people are willing to work hard, at reasonable wages, economies thrive.   China thrives.  The Western world tweets and twitters and protests and whines, but does not prosper.  Why is this?

When we all get back to work - doing real work, not twittering or facebooking or text-messaging or other "pretend work" tasks that are really little more than the time-honored bullshitting around the water cooler, electronified - then the economy will improve.  And not vice-versa.

But I think it will be some time before this happens.  Too many people want to be managers who text all day long, and too few want to be workers who break a sweat.  And the few willing to work, want high salaries and benefits, even today.  As a result, few of us are willing to hire them, as we cannot make any sort of profit from the venture.  Why bother hiring someone when all it will do is cause you to lose yet more money?

But, these things do turn around, and they turn around when folks realize that they have no other choice.  When unemployment runs out and welfare is cut (as it was in the boom times of the 1990's), they will bite the bullet, swallow their pride, and roll up their sleeves and be willing to do hard work.  But this will take time.  At least another year, in my estimation, before the tide turns.

And in the meantime, companies will continue to lay off people who do little else than twitter and tweet and text and IM and facebook.  Because that is not real work and has no real value whatsoever.