Month: January 2017

In my little town, I grew up believing
God keeps his eye on us all.
And he used to lean upon me as I pledged allegiance to the wall.
Lord, I recall, in my little town

Comin’ home after school, flyin’ my bike past the gates of the factories,
My mom doin’ the laundry, hangin’ out shirts in the dirty breeze.
And after it rains there’s a rainbow and all of the colors are black.

Nothin’ but the dead and dyin’ back in my little town.
Nothin’ but the dead and dyin’ back in my little town.

Simon and Garfunkel, 1975

“The Economy, Stupid.”

James Carville, 1992

My little town is located just outside of the Chicago metro area in Illinois. County population – approx. 110,000 today, and has been steady in people if not morale– it passed 100,000 in 1976, about 40 years ago and has barely grown since. Its racial composition is about the national average; it is an average small town. After this election, my thoughts went to my little town and why so many counties flipped their usual politics.

I am a graduate of this little town. I grew up as a baby-boomer in the town and I saw the post-war prosperity of the 1960’s and 1970’s. I left the town to get my education – first from the big state university, then a series of places like New York City, and Chicago. I am a solid Chicago democrat, no matter what happens. And I am a progressive. And I know why I did not even think of going back – the opportunities and population were both at an all-time low in 1985 when I got out of grad school.  But as I look back at my home town, it is not progressing as I have – and it is voting based on the economy.

My little town is one of those that flip for the economy – it voted for Bill Clinton in 1992 and 1996 (the economy was having a great run) and it voted for change for GWB in 2000. In 2008 it voted change again, this time for Barack Obama. The economy did not recover very fast in my little town – the unemployment peaked at 14.7% in January of 2010, so in 2012, it voted for change again. The percentage of votes it takes for the county to flip is around 3%, so it is very sensitive to the message of politicians. My little town is not in a straight ballot county, it is an issues county.

So what is happening in my little town? Well when I was a child, in the 60’s and 70’s there were factories – lots of factories. There were two stove factories that made lots and lots of stoves for Sears. There was a dog food factory, one that was known as a very large dog food factory. There was the processed meat factory. There was the furniture factory. There was a cereal factory. There was the AO Smith factory that made everything tall and steel from water heaters to grain silos. And speaking of grain silos – we had a lot of those. My little town was the last stop before Chicago, so a lot of crops came to my town for staging for delivery to the large Chicago agro-marketplace. We had train tracks all over town – train tracks into and out of all of those factories and grain silos. It was a busy place. With a population in the 90,000-range at the time, the factories were busy, the transportation hubs were busy. Not only were those busy, but everything you needed to support the thriving manufacturing and agricultural base was thriving too – the restaurants were thriving, the schools were having additions and more faculty were being hired, the roads were being constructed, the police and firemen/women were being hired. Everything was coming up roses – or in this county Gladiolus flowers, since they are one of the biggest crops.

As with such towns all across America, you know the story. Factories began to close. Work began to change. I think of my uncle – a proud veteran of the army reserves during the inter-war years. He found a good living working at the local stove factory – until it closed. Then he found other general work, and his final job was as a security guard. One of the last times I saw him, his eyes were sad, he was still working at the age of 70 and he said the job was OK, but it was cold outside, very, very cold in the Chicago-area winters. The deep crevices on his face and the sadness in his eyes told the story of how cold it was in my little town.

Even David Letterman tried to cheer up my little town. In 1999, it was rated the 354^th best place to live out of 354 so he donated a Gazebo to brighten up the city’s park. You can’t sink any lower than last place.

The town has recovered slightly, an insurance company brought in some desk jobs, but the local Mall is a shadow of what it once was, the downtown business district, once bustling, is almost empty, and the jobs are all in gas stations and fast food places. You can’t support a family on jobs that have degraded from good-paying manufacturing jobs to security guards standing in the cold. I know why my little town is flip-flopping for anyone with a “good story” and a promise of a slightly better life. What has it got to lose?

 

There is much talk about the loss of low level or unskilled jobs. And I certainly have a problem with many people being out of work due to the loss of available jobs. But I have an interesting early warning that will make some people uncomfortable. The top one percent is also about to start losing jobs.

The “one percent” in my state starts at about $400,000, perhaps a bit more, of income per year. That means many doctors, lawyers, financial advisors, etc. are in the one percent as well as the entrepreneurs and the other very rich. While it is hard to replace an entrepreneur because of the attributes of the job of starting a business, the rest of the one percent jobs may be more at risk.

For example, the law profession is now in the process of becoming automated. Between forms and research services, law work can be outsourced. Not only can it be outsourced internationally as now, but the continuing development of artificial intelligence means that someday “Siri” will be able to tell you how many coffee shops are near you while she gets you off of that speeding ticket. Similarly, the investment business is threatened by takeover by the automatons. Investment has been a field ripe for automation ever since John Bogle, founder of Vanguard Investing and famous for index funds, figured out that it is difficult to beat the market averages. Now there are sophisticated programs that can robotically figure out how you should invest. Betterment and others are using them to sell small investors a new way of planning their long-term well-being. Finally, doctors are now often aided by computers in diagnosing disease. How long is it before someone determines that the computer is more reliable and accurate than the human doctor?

These jobs are high-cost and high-reward and the product they produce, from health to wealth, has been deemed worthy of much investment. Researchers, engineers, and entrepreneurs have been investing billions of dollars and millions of hours in refining the algorithms that help the original practitioners – the financial person relies on complex computer algorithms that look back at market behavior over seventy years to develop financial plans for the mom and pop of today. The computer databases that do analysis of legal issues contain every case, not just the ones your lawyer remembers from law school. And the medical databases know about every disease humankind has ever seen, not just the ones your doctor read about at their last refresher course. Add to the databases the emerging artificial intelligence algorithms and these jobs, once thought to be highly skilled, and that require years of advanced education, are on the chopping block.

It is unlikely that the litigation lawyer, the bond trader, or the surgeon who does your heart operation are threatened, but much of the professions are now subject to erosion. Those particular jobs that require live action and quick reactions, like the lawyer litigating, the trader trading, and the surgeon operating are probably not in jeopardy for at least another few generations. But think about the impact if, like you now only see an ATM machine at the bank instead of a live teller, much of the routine medical work can be done by “Cortana” the doctor. And your insurance company’s computer will probably trust the diagnosis by the computerized doctor even more than it trusts the “unreliable” human doctor. If you don’t think it is possible, fine, but once upon a time I thought that cars could never drive themselves because of all of the complicated things a driver had to watch out for. I was clearly wrong and now have to re-think everything I thought I knew about labor.

The problem to society is not the natural progression of technology. It is not the natural increase of productivity with the aid of technology. Ever since Cyrus McCormick invented the farm machinery that let us be fed better, it is natural for technology to help make our lives better. What is the creeping problem is that the country is not preparing for job erosion at both ends of the spectrum. We have been in a national discussion that low skilled jobs are progressively going away. Has our attention been too concentrated on that phenomenon to pay attention to the current and future erosion of our highly-skilled jobs?

And this affects not only the one percent, but everyone who aspires to a better life? What happens if going to medical school no longer means anything? The paradigms of how to get ahead are suddenly crashed. And with our aging baby-boomer population, there is so much unmet need for health care, that doctors are either very safe in their work being protected, or perhaps very likely to see lots of high-tech assistance. So it is not likely to happen anytime soon, but like self-driving cars, we should be ready in case the progress might end up surprising us. So we need to get mentally ready for the possibility of needing entirely new types of jobs in the future and not just entry-level or low-skilled jobs, but all jobs. There are plenty of jobs today, but the application of pre-existing knowledge, even when performed by highly-skilled professionals with years of training, is likely to give way to inventing new ideas on all levels of the intellectual spectrum. How well do we teach thinking about the future?

Another important impact is that this means is a further erosion of the ability of our children to have a better life than we had. The New York Times had a recent article that children will be less well off than their parents. This has been happening with the working class for a while now, which is probably part of the change of a portion of the electorate. Parents expect their children to have a chance of a better life than they did. What if we instantly need half of the doctors, lawyers, finance people and other professionals? Then their children have no chance of advancing. And what about the proud doctor planning on watching their children follow in their footsteps to a good life? What if the path has broken?

The truth is that we need to be paying attention to all of the seismic shifts in the marketplace. We need jobs for people, all of our people. Where do they come from? What will they be doing? What do we need to do to prepare our children for the future?