Wednesday, June 2, 2010

Innovation is Irrelevant to Economic Growth

Conventional wisdom, as told by academics, urban pundits, and others who can't write a paragraph without a verb that ends in “-ize”, is that we need to innovate to grow our economy. They'll make some claims about R&D, math and science education, venture capital, foreign competition... but I can't tell you what they say after that point because by then I've already clicked over to to check baseball scores.

Still, for the limited portions of the pundits' bullsh, I mean insights, that are compatible with a normal attention span, I hear a lot of the same conventional wisdom that's been out there for 30 years that basically says science jobs are good, service jobs are bad. That somehow the only way to create a resonable wage for most Americans is through scientific breakthroughs, even though many of the breakthroughs we've had since World War 2 have led to the sort of productivity gains that has auto workers greeting shoppers at Wal-Mart, while creating new industries unimagineable 60 years ago, such as Vietnamese-owned nail salons.

One Industry Where No One Ever Complains about Foreign Competition
Personal care industries, from pedicuring (is that what you call that industry?) to nursing to social work, go unnoticed about the chattering class, because it's far more impressive to go on PBS and talk about the need for more innovation than it is to tell Gwen Ifill that the old hag who used to do those nail commericials in the 80s has been replaced by some lady who didn't speak a word of English back then, and now works 70 hours a week polishing toes.

The reason personal care industries do not get much attention is because they are done by women. And no industry dominated by women is featured in any economic development brochure, or has any urban pundit earning high fees on the lecture circuit.

Now this is not an issue of feminism, but of economic reality. Personal care jobs don't get automated or forced into a technology-inspired cycle of productivity gains. They might like to be called “technicians”, but nail care workers aren't about to go under because of new automation software, nor do they have to worry about people in New Jersey flying to Bangalore for manicures. Same goes for teachers, nurses, social workers, and other large professions dominated by people without penises.

These personal care jobs also pay fairly well, often with excellent benefits, and allow for the middle class ideal we're supposed to get by educating more people in math and science, so that they can create new technologies that will automate existing middle class jobs.

Women are the new working middle class, and you can't automate their jobs away. So what about guys? What are we supposed to do?

Corporate Finance is Still a Sausage Party
Being automated out of their middle class jobs, men are increasingly being pushed to the extremes of the economy. We're either competing with foreign day laborers for home repair and construction work, or rising to the top of finance and business.  Since 2001, I've consulted for over 100 hedge funds who were investing in technology companies, and don't think I've spoken to more than three women as part of that effort. Same goes for the marketing executives at the technology companies. Outside of public relations, maybe 10% have been women and the number doesn't seem to be rising.

In all their attempts to organize industries with mostly male workers, unions have only succeeded in advancing innovation, because they've sent manufacturing jobs to right-to-work states and foreign countries. You can't expect a business to pay people any more than a market wage, and fortunately for many women, the school systems, hopsitals, and social service agencies they work for don't qualify as “businesses”. And the hair care, nail care people generally don't have to deal with the pressures of faraway shareholders, but rather the owner who's working the cash register and has been pissing off them off lately.

In terms of national competitiveness, the answer to the “mancession” is not more innovation or creativity. What exactly is Germany or Japan working on that will compete with the iPad?

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