Wednesday, January 20, 2010

A Few Ideas to Create Jobs



So far I have not seen much original thoughts on how to create jobs in this jobless economy. Not a day goes by without several articles and editorials being published claiming the urgency of creating jobs. Yet, not a lot of pundits offer real solutions to the problem. Back in November I talked about “The Right and the Wrong Way to Create Jobs”. The really wrong way was to rely on creating government jobs with no specific purpose in mind. By opposition, the correct way was to create the right incentives for entrepreneurs to thrive and want to hire. Still, this “free market” solution is not a very concrete advice under the current circumstances. As we talked about on Monday in “What Will Happen to Entrepreneurs?”, the problem is precisely that the proper conditions needed for entrepreneurs to create jobs do not exist today. Essentially, credit markets are clogged and this situation inhibits SMEs from investing and from undertaking risky projects that are otherwise the basic ingredients to creating growth (and jobs) in our economic system.

Does that mean that we have to resort to creating useless jobs like digging useless holes in the grounds just to get the economy started? Andy Kessler (I talked about him in this blog before), a former hedge fund manager and author of “How we Got Here”, think not.

In “Put Down That Shovel!” published in the WSJ during the holidays, Mr. Kessler argues that “shovel ready” infrastructure projects are a Great Depression-era idea and that it is time to try something new. I will let you read the article. Tell me what you think and let me know if you have other great ideas.

“The House has passed a $154 billion jobs bill, and the administration has announced a plan to spend $50 billion of repaid TARP money to "create" jobs—this time its green jobs, "shovel ready" infrastructure projects ($27.5 billion for highway construction and repair) and a tax credit for small businesses.

“More infrastructure? Recycling Great Depression-era projects is lame. My advice? Put down that shovel! It's time to try something else.

“We're in a knowledge economy now; we use high-tech tools to efficiently and effectively design, make, market and sell. Building roads and bridges willy-nilly won't make us more productive; and without increases in productivity and the associated corporate profits, there can be no sustainable job creation, no increase in standards of living, and no real economic recovery.

“Given that real tax cuts are off the table and a new stimulus (even if it isn't called that) is inevitable, the best we can hope for is to use the power of the government to clear a path that private enterprise can't, via one-off projects that end and disband. Stop thinking concrete and massive construction projects. Think small—photons, electrons and proteins. Here are six ideas:

• Climb poles for wireless. Every street light in the country can be fitted with a wireless access point. Lots of companies, including Google, have tried to roll this out. But dealing with thousands of state and local governments to get access to poles and power is a nightmare. A stroke of the pen can create the Local Wireless Corps, with unfettered access to street lamps, telephone poles and utility sheds to create a massive wireless network to deliver Internet access—10 megabit, even 50 megabit speeds—to both homes and next generation mobile phones. AT&T and Verizon will complain about the competition, but so what—they're hardly hiring.

• Dig fiber ditches. Even faster wireless is too slow. If, as the Federal Communications Commission states, broadband is a priority, let's open up the right of way to a Local Fiber Corps to lay fiber-optic strands to every one of the 120 million U.S. residences (even the 10 million empty ones). The goal is gigabit speeds. It's attainable now. New applications like YouTube are bandwidth hogs. It's hard even to imagine the types of applications possible in a 100 meg or gigabit per second speed world. The only one way to find out? Build it. Then sell the fiber along with the wireless lamp posts to the highest bidders. More than one in each town will keep competition alive. And with so much bandwidth, arguments over things like network neutrality will magically disappear.

• Sequence proteins. In 1971, Richard Nixon declared a $100 million campaign to find the cure for cancer. We spend 5,000 times that much every year treating the disease. We may not be able to cure cancer, but we can find it much earlier when treatments are simple.

Scientists today shove cancer samples into mass spectrometers, in order to identify unique proteins for tens of thousands of types of cancer. The goal is that some day we can all be screened for those proteins as early warning signals. With so many college graduates among the unemployed this cycle, 100,000 of them can dust off their knowledge of biology and we could sequence every known cancer type for $50 billion. Medicare would save two to three times that much each year on cancer treatment due to early detection.

• Lighten backpacks. My son's backpack is 20 pounds. And he's only in the fourth grade. My high school son's backpack is even heavier, loaded with textbooks and cans of Red Bull to keep him attentive as his teachers drone on. A Textbook Corps can scan these books, put them on a reader like the Amazon Kindle, link them to high-tech projectors called SmartBoards that are going into many schools. We can instantly change education, not to mention saving many sprained backs.

• Scan medical records. The administration has talked about the time and money this would save, but doctors, hospitals and insurance companies don't want to go through the expense and hassle of digitizing all of our records. Only the feds, threatening to withhold Medicare payments until digitization takes place, could ram this through. Workers would knock on the door of every doctor's office, armed with scanners and Web software.

• Require TOU meters. It's funny how the "I don't work for the electric company" trick to get our kids to turn off lights has morphed into kids shaming parents into "saving the planet." Yet we still pay flat rates, though utilities need to build plants for peak periods, usually summers from 2-5 p.m.

“With price signals, households would shift electrical usage to cheaper times. The technology is starting to roll out (with some stimulus money) in the form of Time of Use (TOU) meters replacing those ugly glass bulbs with spinning disks. Coupled with wireless in-house devices that show appliance electrical usage in real time and clever software at utilities, I'd bet peak usage would drop 30% and educate a million workers on the workings of the future smart electric grid. Beats subsidies for caulking windows.

“For a $14 trillion economy, each 1% in productivity is $140 billion of additional output. Forget roads and bridges and shovels. It's a virtual infrastructure of ubiquitous bandwidth and digitized information that will require permanent workers and create a sustainable growth economy, a lot faster than shovels.”

2 comments:

  1. Luc,

    Thanks for posting this. It's such a rational antidote for my increasing frustration at our National Legislators misdirected focus. Broadening access to enabling technologies could unleash a wave of innovation. Economic activity would be the recipient of multiple benefits - manufacturing, sales, installation, education - and then once in use, perhaps greater benefit still. In the meantime we stay mired in the muck.....

    - TomOfTheNorth

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