To understand how the next economy differs from the one we have known, consider just one statistic: analysts following small businesses see the number of "contingent" workers -- the self-employed, free-lancers, or "accidental entrepreneurs" laid off from full-time positions -- growing to 40 to 45 percent of the workforce by 2020 and becoming a majority by 2030. That trend represents an enormous change in how people will live and work, in how businesses will operate, and in what services and support we will need from government. And apart from leaders like former Secretary of Labor, Robert Reich, who has written insightfully about this, much of the political discussion in this country seems oblivious to this tectonic shift in our economy.
The Obama administration's efforts to enhance manufacturing jobs, while very much needed, seem focused on a 20th century model of large-scale, "heavy" industry. In the next economy, "manufacturing" may more-often occur at a micro scale, with free-lancers 3D printing in their back bedroom or the self-employed laser-cutting products in their garage. Meanwhile, Republicans call for incentives to spur job growth, also an important goal, but their protection of the super-rich and their dismissal of "ObamaCare" (The Patient Protection and Affordable Care Act) completely misreads the next economy. Self-employed entrepreneurs rely upon durable, high-bandwidth infrastructure in order to communicate with and ship to customers globally. They need affordable health care equivalent to what large companies provide their employees. And they tend to congregate in places with a high quality of life, where other entrepreneurs go.
This demands not only a greater amount of public investment than the Republicans seem to want, but also a different kind of public investment than what at least some Democrats seem to have in mind. So much of the infrastructure discussion in both parties, for instance, seems to extrapolate trends from the last century, based on the old economy of people commuting to work 9 to 5. In the next economy, those commuting patterns may largely disappear and we may find ourselves with too much highway capacity and bigger bridges than we need. At the same time, we may need a much more robust data infrastructure and a much more resilient electrical grid, powered by as many different sources as possible to ensure its reliability.
With the rise of the contingent workforce, people will also live and work in ways we haven't seen for a very long time. We have developed our cities based on the old economy, with residential, commercial, and industrial areas kept separate and "pure" through single-use zoning. That made sense in an economy that divided our work lives from our private lives, and that spawned large-scale noxious industries that no one wanted nearby. The next economy, though, may look more like the way in which people lived and worked prior to the industrial revolution, in which home, office, and shop co-exist in some combination of physical and digital space. This may require rethinking our zoning laws to allow for a much finer-grain mix of uses and repurposing buildings designed for single functions that will have no tenants or buyers if they remain that way.
We can already see the impact of the next economy in our retail sector, with iTunes forcing the closing of many record stores and Amazon prompting the bankruptcy of many bookstores. And that trend of digital commerce replacing activities that once occurred in bricks-and-mortar will likely continue in almost every facet of the economy. This does not mean that we won't need buildings anymore, but it does suggest that we will increasingly use buildings for what we can't get any other way, such as face-to-face conversation in the company of others. Indeed some activities, like coffee shops, may become even larger and more pervasive, as the consuming of beverage becomes more of an excuse for the self-employed to get out of their home office to be with and work among others.
While the number of people sitting for hours in the nearest Starbucks shows how much the next economy has already arrived, we seem very unprepared for it. That is true not only in policy debates in Washington, which often sound so 20th Century and largely clueless about the next economy. It is also true in our educational system, whose focus on the conveying of information and the giving of tests remains geared toward preparing graduates for an industrial or bureaucratic work world rapidly disappearing. The next economy doesn't demand employees who repeat facts and follow orders, but just the opposite: creative, entrepreneurial individuals able to see an unmet need and to provide a product or service that addresses that market, whether it exists locally or across the globe.
This post-industrial, post-Guttenberg world is not a new idea. But the growing fluidity of the global economy, the dramatic disruptions of the digital revolution, and the radical empowerment of individuals through mobile computing and micro-manufacturing have all made that idea a reality for an increasing percentage of the workforce. If this new economy is to thrive, we need the same degree of flexibility, adaptability, and creativity among those in power on both sides of the aisle. The next economy, in other words, needs the "next politics," sorely missing at the moment.
Thomas Fisher is Dean of the College of Design at the University of Minnesota.
Follow Thomas Fisher on Twitter: www.twitter.com/@MNDesignDean
http://www.sba.gov/content/fiscal-year-2012-budget-summary
To view a New York Times article about the Republican Presidential candidates' views of self-employed issues (with video links) go to: http://boss.blogs.nytimes.com/2012/01/21/a-small-business-owner-bird-dogs-the-republican-candidates/#more-56127
For a more in depth review of the issues of the self-employed and the need for Democrats to recognize the self-employed by name and need, as well as self-employed state by state numbers, go to: www.dontsubmit.org
For an idea of the importance of the self-employed in the upcoming Presidential Election, check out these statistics (based on numbers provided by the Census Bureau):
Swing States in the 2012 Presidential Election
Union Members Self-Employed
Colorado 153,000 440,000
Florida 411,000 1,647,000
Iowa 157,000 279,000
Michigan 710,000 713,000
Minnesota 362,000 435,000
Nevada 173,000 179,000
New Hampshire 67,000 104,000
New Mexico 51,000 137,000
N. Carolina 115,000 666,000
Ohio 685,000 765,000
Oregon 250,000 284,000
Pennsylvania 782,000 799,000
Virginia 166,000 531,000
Washington 574,000 425,000
Wisconsin 385,000 379,000
Mark Dunau
www.dontsubmit.org
This article gets it mostly right. but overlooks the potential for health care. The Military Industrial Complex could be replaced in part with a Medical Industrial Complex, a Medi-Plex.
A mix of Hub-and-Spoke and Distributed-Networks. Large airlines could be replaced with smaller private planes at local air-fields. Basically, Air-Taxis, employing more pilots etc. This is already happening for the rich, it will work its way down the economic chain eventually.
The part about people doing business in cafes and other eateries is also valid. If you, own a nicer restaurant you might think about putting in a business section, where people can close the doors, and taking bookings over the internet.
Nicely done.
Kai
We need to get all of the choir members on the same page. We don't and won't have a new economy or a new politics until the choir moves from gold standard-fixed exchange rate rubrics to fiat currency-flexible exchange rate rubrics.
When the President believes we can go broke, when deficit terrorists succeed in making all economists forget deficits = savings, and when even the CBO will not fess up to the fact that taxes and borrowing don't pay for anything, we will remain locked into pre-1971 monetary and fiscal policy.
Because few really understand reserve accounting our future is mired in senseless debates over deficit spending being bad, imports being worse, taxes being required to spend. All of these are, today, economic frauds.
Take a look at unadjusted income tax rates from 1913 to 2014. In 1971 rates for the top bracket dropped from 75% to 35% by 2010. For the bottom bracket they dropped from 14% to 10%. The 1% new that in a fiat currency world the Federal government didn't need tax revenue to spend. For the 99% the 1 % created the reminder on Federal Roads, "Your Tax Dollars At Work", knowing it was all BS. LMAO
For the most part, incomes were raised because governments and organized labor forced Capitalists to raise them. Without those efforts labor would still be paid, as was correctly assumed by classical economists in their day, a 'subsistence' wage.
We need to reset our definition of Capitalism by including the metric of social welfare. Negative consequences of production must be factored into the costs of production rather than ignored as though the costs don't exist.
We can no longer live in the fantasy world where such costs are ignored.
So, no, no one is talking about the 21st Century yet, but they will before the decade is out.