U.S. Industries Die: And I Rejoice
[Guest post by Lee Stranahan]
The Huffington Post has an ominous headline about 10 American industries that are dying. (This shows that the ominous headline industry is doing just fine, but I digress.)
It’s a simple enough piece, but I think it demonstrates the poor thinking in politically motivated business writing that will actually help to prolong our countries economic problems. The short article starts with a paragraph that seems innocuous. It’s almost a cookie-cutter of what passes for mainstream conventional wisdom in business journalism articles.
The recession has caused the failure of some formidable companies, Lehman Brothers and Circuit City among them. Not only individual businesses have suffered, however. The economic woes of the last decade have preyed upon entire industries.
This is just fundamentally bad analysis. It’s a doom and gloom business scenario that plays into some people’s political agendas but is factually false. Let’s break down that paragraph to see how many untruths Huffington Post’s Harry Bradford was able to pack into one paragraph because it’s actually kind of impressive.
It begins by blaming the recession for the failure of Lehman Brothers and Circuit City; Lehman’s problem was being overleveraged, not "recession". Arguably, it caused the recession. Circuit City’s problem was a convoluted checkout process that made it much easier to shop at places like Best Buy or Amazon.com or any of a dozen other online high-tech retailers.
So both examples in the first sentence are wrong and that’s just the set up.
The payoff is that the entire industries are on the verge of collapse due to “economic woes.” As Count Floyd used to say, "Scary stuff, kids!" But looking at the actual list is revealing.
Of the ten "dying industries" on the list, six and a half of them are related to communications and media. The six that are directly related are video postproduction, DVD game and video rental, newspaper publishing, wired telecommunications carriers, photofinishing, and record stores. The one that is half related is the milling industry, which includes paper mills which relate to physical packaging and production of items like newspapers, photographs and CDs.
Looking at that list my first thought is “good riddance.” There’s not a single item in there that hasn’t been replaced by something that gives consumers a lot more choice, much better options and a significantly improved the vetting process.
And that’s what did these industries in – progress and competition. Not one of them was killed by economic woes. For example, take an area that I’ve worked in professionally; video postproduction. Just 10 years ago – about halfway through the digital video revolution – the process of editing video, creating titles and graphics, and adding animation was still out of reach for the average person. Today, any $500 computer is fast enough to do video editing and the software has gotten inexpensive and relatively easy to use.
Practically, that meant that 10 years ago if you wanted to get the word out about your product or service or opinion through video… you really couldn’t do it without spending a few thousand dollars and working with other people. Today… well, you know. Regular people can see an event unfold and get information or a :30 second commercial up on YouTube is available to the world in a matter of minutes.
So while the video postproduction industry is dying, more people than ever can do video postproduction.
And running down the rest of the list, you find similar leaps and bounds that caused these industries not to die exactly but to morph, change and advance into something new and better. Except in many cases what was lost was "jobs."
And jobs are an issue. The problem is that backwards economic analysis is a poor starting place to solve the job problem. Flawed thought like this implies that once the economic woes are over and recovery happens, that somehow those industries might come back from the dead and then the jobs well reappear as well.
And that’s not going to happen for the same reason the jobs in the buggy whip industry won’t be returning. Those industries I mentioned aren’t in a slowdown, they are gone forever because they’ve been replaced with something better.
So when is any politician going to start dealing with that reality?
Let me add one thing here that I didn’t put on my blog post to my own site LeeStranahan.com. Today is April 4th. the anniversary of Martin Luther King’s assassination. Across the country, it’s been commemorated with union rallies based on the battle in Wisconsin over collective bargaining rights for public service sector employees.
I’m not antiunion but I view this as a tremendous use of time energy and resources that only distracts from the actual issue about how the digital computing revolution has fundamentally changed certain industries. One of the industries that this affected most is education, where the abject failure of our educational system is on full display. I don’t believe this is just the public school system; the whole structure from kindergarten to college has fundamental structural flaws because it was designed for an entirely different economy.
Here’s another section of my interview with best-selling author Seth Godin that discusses some of these educational issues.
So when I see the hubbub about public school teachers and what percentage of their pension they should or should not be paying, I think it entirely misses the point about how that entire institutions foundation no longer make sense. It’s a loud drum circle version of rearranging deck chairs on the Titanic.
– Lee Stranahan
Circuit City’s problem was a convoluted checkout process
So it wasn’t just me.
Rodan (03e5c2) — 4/4/2011 @ 4:45 amMy last trip to Circuit City ended when I couldn’t figure out how to pay for a simple $10 item. I finally put down the item and walked out.
Circuit city is still alive online — and it’s pretty good, really. Some great deals and easier than buying at the brick and mortar extinct Circuit City.
Stranahan (708cc3) — 4/4/2011 @ 4:49 amNo offense to Lee and Seth, but those public schools of the 40’s to the 70’s turned out people who could read and write. (As for mathematics, don’t make me laugh.)
As a reference librarian (casual, part-time, on call. I want permanent but can’t get it) I supply people with information. Many of these people don’t know how to read, don’t know how to write, can’t spell,don’t know basic rules of grammar, don’t understand Call numbers,
don’t understand the basics of subject headings and keywords (and the difference between them).
If they are Hispanic and can read, I can communicate with Google translate. But many adults from South America cannot read in their own language or any other.
Many of them want access to a computer, but have no idea how to operate one, and come to me for data manipulation services. They want to send an email, want to upload a photo to facebook, want to crop a photo, want to write a resume, and have no idea that it may take them more than two minutes to complete their project. Some want to learn, but many just want what they want and get irritated when they can’t get it immediately.
The issue isn’t about “training people to be creative” and “edgy”, the issue is about basic, foundational skills, which for many are noticeably lacking.
The basics, reading, writing, and arithmetic are essential foundations which are simply not being built. And unfortunately, the entire problem lies within the public school system. I would suggest that learning the basics is best done through drill, repetition, review and testing, every day.
That, and removing kids from class who disrupt others.
Jack (f9fe53) — 4/4/2011 @ 5:29 ambumble drove Seahawk Drilling out of business already, which is a HUGE Democratic accomplishment in their war on cheap plentiful energy, but with the marvelous bonus of killing jobs jobs jobs and forcing more Americans into government dependence – and primarily red state Americans too!
happyfeet (71628d) — 4/4/2011 @ 7:36 amCase on point: Borders declares bankruptcy while Amazon reaches new highs. Of course, incompetent management helped Borders along.
BarSinister (a9e7f6) — 4/4/2011 @ 9:33 amLee Stranahan,
Are you sure you’re a liberal? It’s not my job to label people and I’m not trying to do that with you, but it’s hard to believe conservatives and liberals can’t agree on more things if most liberals are like you. Maybe you are a social liberal but, overall, you strike me as a libertarian.
DRJ (fdd243) — 4/4/2011 @ 9:59 amDRJ:
I think Lee has said he is for single-payer. Not many libertarians feel that way.
Patterico (906cfb) — 4/4/2011 @ 10:04 amOn the subject of the dead and dying industries: I agree we should accept that these industries are dead, and that we’re better off with their replacements. That said, I think it’s worth looking at how we can help the people who used to work in these industries develop new skills.
Economic growth has winners and losers. Helping the losers figure out how to become winners is a reasonable thing for the state to be doing (and certainly far, far more reasonable than trying to prevent the growth so people won’t lose).
aphrael (e0cdc9) — 4/4/2011 @ 10:13 amWith Lee’s fascinating thoughts about technology moving on, dooming whatever isn’t prepared to move on with it, I think he’s more a realist than a sheer libertarian.
For a lot of people who aren’t too caught up in partisanship, we wind up mostly arguing over what will work, rather than what ultimate goals we should have. I think the reason for this is that the American people are not nearly as divided in ideas as our political animals want (or often need) us to be.
Dustin (c16eca) — 4/4/2011 @ 10:16 amI’m sure you’re right, Patterico and Dustin, and I know it’s not important to label people. But it nevertheless seems our current problems may have re-oriented many Americans, making it more likely that we focus on fiscal/business issues than social issues.
DRJ (fdd243) — 4/4/2011 @ 10:26 amOne of the problems that the institutional left has on this issue is that big labor is concentrated disproportionately in those industries which are dying as the economy changes. (Unlike many conservatives, I don’t think those industries are dying because of big labor; I think that they are dying because globalization has changed the overall economic situation making the industries uncompetitive, or – in other cases – the internet has). The first instinct of people whose jobs are going away because their industry is dying is to try to protect what they have – change is scary, and change which means your personal economic situation is going to deteriorate is even worse. Politicians who are responsive to people who are afraid that they are going to be ground up in the economic grist mill will push for policies which serve to protect their constituents … and so a political class which is partly dependant on big labor, in a context in which big labor is disproportionately representing those whose economic futures are looking less bright due to the death of the industries in which they work, is going to be reactionary.
A better solution would be to engage with it, for workers to look at what’s coming and try to figure out how they can develop new skills that will enable them to thrive, and push policies which support them in doing that. But this is a difficult, scary thing to do; much harder than sticking your head in the sand and insisting that if someone finds and waves the right magic wand, the dying industries can be saved.
The terrible truth facing workers in dying industries is that neither party is able and willing to address their needs. Republicans, focusing on the debt, aren’t going to support government programs to help them figure out what new skills they need and develop them. Democrats, focusing on preserving current programs and the dying industries of the present, aren’t either.
aphrael (e0cdc9) — 4/4/2011 @ 10:41 amYou can say that again!
Can you imagine a GOP president making the economic moves Bush did at the end of his term? The GOP and the middle, and even the left, have shifted on economic policy. I think even Obama’s 2008 campaign saw a glimmer of this, but his administration has pushed America specifically as DRJ’s suggests, into focus on fiscal issues and business hampering.
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A lot of people fundamentally disagree with this. I guess what we currently do is guarantee student loans that never go away, which largely just drives up the cost of education. What do you have in mind, though?
I actually agree with you, if the leadership is effective. Rick Perry has been harping on Texas higher education to make a new degree affordable. If he particularly focuses on making sure a practical, applied sciences type education is particularly affordable, that seems like a great thing for a governor to be concerned with.
That’s the most core example of teaching a man to fish, rather than 12 million more Americans getting food stamps or the like.
Dustin (c16eca) — 4/4/2011 @ 10:42 amLee – Don’t forget about the fossil fuel industry, in which Obama’s policies are deliberately encouraging jobs to move overseas by restricting domestic exploration and development in favor of uneconomic green jobs initiatives which have proven to be disastrous for multiple European countries.
daleyrocks (9b57b3) — 4/4/2011 @ 1:15 pmA lot of this is blamed on the recession when in fact these “industries” were in terminal decline long before it. The recession did little but accelerate the death.
SPQR (26be8b) — 4/4/2011 @ 1:18 pm