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How will America create 3M job in four years? March 5, 2009

Posted by Bipin Agarwal in Global Economy, IT Offshoring - Future Direction, IT offshoring and Real Estate development, Politics and economy, Quality of Living, Recession.
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Why Did America lost jobs and how the new jobs can be created. Everybody is asking.

America has lost more then  three million jobs in last two years. Everybody is worried about how many more jobs will be lost? What kind of jobs will be created by the Obama administration? Future economy will be energy economy, digital economy, or agriculture economy? Will job be created at all or it will be just political positioning? What effect the glocalization (not globalization) will have on US? Given that about fifty million jobs have been lost in the world and growing young population, is there a possibility of social unrest that will change the landscape of how world will look like in next few years?

Let us first look at  why and what kinds of jobs are being lost in America.

  1. Manufacturing Job Losses
  2. Service Job Losses
  3. Real estate construction
  4. Productivity Improvement
  5. Currency Arbitrage

Manufacturing Job Losses – Seems obivious to everybody. Low tech manufacturing jobs related to clothing, items of daily usage, applicance, what we use in kitchen, all these jobs are gone. Most of them moved to countries that have abundant labor and reasonable or good infrastructure. About a decade ago we started using high tech manufacturing, some of the R&D, etc to emerrging countries because of availability of talent in thouse countries, low cost primarily due to currency arbitrage, our concern for environment.

Service Job Losses – We started loosing service jobs about a decade ago.  It started with talent hortage such as Y2K and then expanded to broder area of Information Technology services, Call Center outsourcing, Business Process outsourcing. Key drivers for these job loss werer the availability of talent at much lower cost (currency arbitrage),  focus by business on bottom line, competition from global companies.

Real Estate Construction – Cheap credit combined with greed by business, home owners, failed regulation caused the real estate boom of unprecendent magnitude in America. Joe the Plumber, could make as much money as a college  graduate. Now that the construction has stopped, real estate (both commercial and residential)  is available for less then the cost of construction. Huge number of jobs have been lost. It will take at least five years to re-start the new construction activity at significant level unless there is dramatic change in the population, living style or some external unknown factures.

Productivity Improvement – There has been a great amount of productivity improvement as a result of technology changes that have occurred in last decade. Automation of supply chain, cell phone, IT applications have automated lot of task that were manual.  It had a big effect on corporate productivity and quality of life improved. Down side is that lot of job became redundant. Financial services company, health care company, retailer eliminated lot of jobs as a result of productivity improvement.

Currency Arbitrage – We in America enjoy the benefit of dollar as a world currency. We are able to afford more toys, electronics, cloths because they are made in the countries where currency is not strong compared to dollars. Corporation had no choice but to move these jobs offshore (read job loss) to give us the luxury.

What kind of Job American Can create? I have identified several different areas that will create the proclaimed 3M jobs in four years.

  1. Changing Family Structure
  2. Alternative Energy – production and maintenance
  3. Housing renovation – Energy efficiency
  4. Manufacturing – Next generation automobile
  5. Small business focus
  6. Real Estate & Infrastructure Development
  7. Information Highway
  8. Rural development – Agriculture economy

Changing Family structure – West pride itself into being a productive society with equal rights. What about responsibility, and duties. Is the purpose of life is just to get a job? what about family. West lot of unemployment is because both parents want a job. We all want to have a house and not home. A  family centric society will make our life experience more full filling, more time for kids, friend, and community. We will need less job.

Alternative Energy (production and maintenance) – renewable energy production based on solar and wind will not only reduce our dependence on imported oil but also create local jobs for creation and maintenance of these facilities.  This coupled with investment in energy infrastructure (smart-grid) will create significant jobs.

Housing renovation – Energy efficiency – Improvement in technology for solar energy combined with government incentives is making it feasible to install solar panel in houses and commercial buildings.  Retrofitting of existing real estate with solar panel and on-going maintenance will create jobs.

Manufacturing – Next generation automobile – Our Automobile industry that has been captive to oil industry and union is going through a much needed transformation. Since the government is investing significant money (tax dollars), we can expect that next generation automobile and associated will be produced in the country. Foreign company also realize this that is why they are setting up plants in America. After the restructuring, it should lead to new job creation.

Small Business Focus – Our capital market structure encourages big business at any cost. recent merger of Pfizer, wall mart, three big banks, are just few example.  We need to create more focus on small and medium business with local ownership. One Wall mart mega store can pretty much give you most of daily needs, is run by twenty to fifty employees earning low wages and busy making money for jet flying executives.  If each of the store is split into different departments and was locally owned with wall mart was just being the back end, that will keep more of the money at local level and create more jobs. What Wallmart has done to local store, Starbuck has done to local coffee shops, Inbev has done to local brewing, Best Buy to local electronic shops. Let America create more small and medium business that creates more local jobs and prosperity.

Real Estate & Infrastructure Development – Obama administration is allocating lot of money for highways and public transportation. People have learned that living in house where you have to pay big maintenance cost irrespective to your income, is not a great idea. We should see lot of interest in community living based on condos and apartment. This will be the next real estate boom. This will create jobs in construction industry.

Information Highway -We all appreciate the impact of highways that connected the different part of the country. People could see each other and caused a boom in travel, tourism, and movement of good. Same is true for information highway. Impact of information highway on our economy is not well understood yet. Productivity improvement, ability of people to think different is huge. Look at what Akamai and iPhone did to entertainment and publishing.  Look at what Ebay did to auction and Amazon did to books. Potential to create lot of new jobs.

Rural development – Agriculture economy – This is one of the area that has received the least attention in the 20th century.  Over crowded cities as a result of pursuing a dream of quick richness and fast lifestyle.  If you have a tractor, solar energy, access to information highway, few acres of land, few cows, opportunity to interact with friends and community. This is how large part of unemployed should be made productive. In the dream of Mahatma Gandhi, this was called village. American need to make rural area attractive and respectful. Creating a rich life using a Rural economy will be key to creating employment.

Conclusion – We need change at individual, community, business, and government level. We can create more jobs and at the same time, change our thinking and family structure so we do not  need so many jobs.  One of the significant reason that both member of the family have to work is because without that you can not pay your house mortgage, car mortgage, insurance (house, car, health care). If we align our needs based on family centric society, we will be much more happy family, community, and country. Sustainable community, sustainable business will create a lasting happiness.

If you have a question, about Global economy, Real Estate, and Politics correlation, feel free to ask

http://www.redhawkinvestments.com

Bipin Agarwal

bipin.agarwal@redhawkinvestments.com

https://twentyminutelifestyle.wordpress.com/about

Comments»

1. News about Real Estate Investments » Archive » How will America create 3M job in four years? - February 18, 2009

[…] Twenty-Minute Lifestyle created an interesting post today on How will America create 3M job in four years?Here’s a short outlineWhy Did America lost jobs and how the new jobs can be created. Everybody is asking. America has lost more then  three million jobs in last two years. Everybody is worried about how many more jobs will be lost? What kind of jobs will be created by the Obama administration? Future economy will be energy economy, digital economy, or agriculture economy? Will job be created at all or it will be just political positioning? What effect the glocalization (not globalization) will have on US? Giv […]

2. How will America create 3M job in four years? · Real-Estate-Investing.ExplainedOnline.Net - February 18, 2009

[…] Original post by Twenty-Minute Lifestyle […]

3. Topics about Health, Food and Well being » Archive » How will America create 3M job in four years? - February 18, 2009

[…] Twenty-Minute Lifestyle put an intriguing blog post on How will America create 3M job in four years?Here’s a quick excerptWhy Did America lost jobs and how the new jobs can be created. Everybody is asking. America has lost more then  three million jobs in last two years. Everybody is worried about how many more jobs will be lost? What kind of jobs will be created by the Obama administration? Future economy will be energy economy, digital economy, or agriculture economy? Will job be created at all or it will be just political positioning? What effect the glocalization (not globalization) will have on US? Giv […]

4. biswajit hota - February 19, 2009

Hi,

How abt Alternative investment field(Hedge Fund, venture capital, Pvt Equity, Wealth management) and in general the Financial services industry with their concept and process rectified after the fiasco and contributing in the 3M jobs (creation) in the next four years.

Thx

Bipin Agarwal - February 19, 2009

Thank you for your question. It is a good question.

Financial services industry in the short term (next two years) will continue to face significant turmoil and will continue to shrink in man power. in the long term (after two to three years), industry will create more jobs for basic banking (more human interaction for relationship banking, mortgage, loan). Other area such as Investment banking, alternative investment including hedge fund, private equity, etc will really not have any significant impact on the job market in US. There will be less appetite for risky investments and more for investment in government bonds, or corporate bonds backed by credible third party (Investment vehicle such as Berkshire or similar). You can expect that alternative investment industry will have to become more transparent. How many people you think work for Berkshire with a portfolio of 50 plus billion? very few.

Thank you once again.

Bipin Agarwal

5. Ivan Transportation - February 19, 2009

Latin America covers a vast and diverse area that stretches from the Rio Grande down to the Antarctic Circle. Ivan Transportation

6. Bipin Agarwal - February 22, 2009

Amazing, Bipin!

I read all the blogs you posted. Your neurons are firing in the right direction. I like your ideas and your differentiation of rights and responsibilities. I will also add Duties. In the Wedyerm world focus is on Rights- human rights, animal rights, gay rights, child rights etc. What about the Duties of the same groups? Responsibility captures some aspects of duty. However there us subtle difference. Duty is more like dharma, while responsibility is more aligned with karma.

Kamalesh Dwivedi
EVP & CIO
Netwrok Solutions

7. matt - March 29, 2009

This blog’s great!! Thanks :).


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