The New Normal

Fri, Oct 2, 2009

Economics

There is obviously a very large and growing problem with unemployment in the United States right now and by most estimates it will be at least a year before we see the percentage of unemployed (which is nearing 10%) decrease. This is a signal of a major shift in not only the economy, but in the way we will define “work” and “jobs” for a long time to come.

What is happening in America is not new. It has happened before, but we rarely spot the trend when we are in it. Instead, we look back at a period of time, and label it once it is passed. I think missed a few labels along the way in the past era which has run for the last 30-40 years.

No one denies that we transitioned from Agrarian to Industrial, and from Industrial to Service-based economies, but a lot of people would not agree with me that we then moved from Service to Debt-based.

I have two arguments to make the point about moving away from a service-based economy. I define the Debt-based economy as the residual income earned by financial institutions and others that derived from interest payments, late fees, overdraft charges and any additional monetary costs associated with financial transactions that did not involve cash only. The current economic conditions stemmed from “complicated financial instruments developed by Wall Street” and a fire sale on money (low interest rates and lax vetting of borrower credentials). This signaled the reliance of the banking and financial institutions on “bad debt”, and we all know what happened. Its been all over the news for the last 4 or 5 years.

The second element that indicates a shift from Service-based economy is that most companies quite literally do not provide “service” at all. When I use the term “service”, what I am really meaning is “customer service”. There was a time when we only discussed service when it was delivered poorly. That soon became the exception as it continued to worsen. Those of us in technology relate specifically to technical support as a benchmark of customer support, but you could find examples in almost every customer-facing aspect of a business: ignorant sales people, lying marketers, misleading advertising, rude customer service employees. These are the “people skilled” jobs that were being filled by “non-people skilled individuals” or the individuals were hamstrung by “corporate policy”. In either case, service was not delivered effectively and it truly seemed to be of no concern to the organizations that provided the services.

So, what is the next transition? The Debt-based economy has clearly collapsed of its own weight, and has become a short-lived trend that will dissipate without disappearing completely. But at the forefront of the next trend is the increasing need for people to reacquaint themselves with the concept of helping others. We are not going back to farming, or industry, or the “old-time religion”. These are part of a different time and place. The new normal is a Niche economy; mass customization. We will still need transportation, housing, food, entertainment, medical attention, light, heat, and communications, but these are commodities in our new economy. The aggregate of the niches associated with these core industries will drive the economic growth of the 21st century. In short, innovation will once again be the hallmark of economic development in the United States and, consequently, the world.

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One Response to “The New Normal”

  1. rhonda chaney Says:

    Once again, Frank. Well stated…and oh so true!


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