Work creates wealth


As Democrats contemplate holding the minority position in Congress yet again, there are many ways we can handle it. We could all sit in the back and throw stuff, much as the Republicans did for the last few years. We could turn on each other and rip our own guts out in a festival of shame and blame. Or, if we’re intent on really standing up to our principles, we can use this time away from being the responsible ones and understand what it is that we, as a party really stand for.

We have a lot to offer if we can only get it together for once. But I, for one, think it’s going to take a much deeper understanding of our core values and what is really happening around us before we can make it happen.

The last three decades have produced a remarkable Republican victory in one very critical sense – it has become universally accepted that wealth is created by investment. This view is not entirely wrong, but it has created a dark shadow in our politics – a blindside which has made it impossible for us to get a handle on this Depression. The current argument about what government should do boils down to either get out of the way of naked capitalism or spend money like crazy to “prime the pump” and encourage consumption. Everyone, on both sides in both parties, is focused on the money.

Yet it is work that creates all wealth in the end. Investment is only the tool that makes it possible.

The Tech Bubble of the 1990s, which rolled forward into the Housing Bubble, is the source of this problem. Dramatic improvements in communication naturally made nearly all businesses more efficient through what are called “productivity gains.” The processes of setting up contracts, billing, paying, and all the other stuff that used to be managed entirely by people pushing paper were all automated so that they could be handled by far fewer people. Markets in distant cities could be managed from afar, and great economies of scale in distribution were realized.  What few people cared about at the time was that this meant there were fewer jobs to go around.

The “productivity gains” of the 1990s are the “unemployment” of today.

This is a historically typical response to a big leap in technology. The Industrial Revolution put many small craftsman out of work, creating a backlash against technology known as “The Followers of Ludd” or “Luddites.” Cheap internal combustion engines mechanized travel and farming in the 1920s, increasing production and distribution of nearly everything right up until the Great Depression hit. In all of these cases, sudden and dramatic increases in efficiency created genuine wealth – but also made a tremendous number of people redundant. That leaves fewer people with the scratch to take full advantage of the new economy a mere one generation later.

Every time this has gone down, the easy money made by the industrialists and investors has been dazzling enough to distract everyone away from the shadows of these great leaps. Cast into that shadow are the people whose skills are no longer needed and whose careers simply no longer exist.

Politically speaking there is only one answer, and that is a renewed emphasis on the role of work in creating sustainable, lasting wealth. A flexible workforce is essential to the restructuring that has to take place, yet labor markets are terribly inflexible for many good reasons. That is the origin of this particular kind of boom-and-bust cycle.

It’s not that we are lacking in capital, especially when the Federal Reserve can create money out of thin air if necessary. Nor are we lacking in good ideas that can be rendered into new technologies. What we lack is the ability to manage risks that threaten our ability to pay the mortgage on the roof over our heads, the health care for our families, and our ability to put food on the table for our kids.

That’s a political change because it is a cultural mindset. “Too big to fail” has become “Too big to understand,” but it has to move on to become “Too little to fail.” That’s what Democrats have to stand for in order to be successful.

A flexible workforce thinks on its feet, grounded in a solid education. It has information on tomorrow’s opportunities and the ability to change jobs without worrying about starving today. It doesn’t have to fret about what will happen if the kids get sick or how to manage small crises on a daily basis.

In a world awash with wealth and new ideas the Depression that we find ourselves in is lacking only one thing to move ahead – an emphasis on people and their work. Democrats may be about to find themselves a step back from the power and responsibility of government, and that new perspective should be put to work understanding what is missing in the Economy of People. It’s a tall order, but one that is essential to being relevant in today’s politics and economy.

Wealth isn’t created by investment alone. It takes work. It takes people, with their heart and arm and brain fully engaged. We Democrats can change the entire debate if they take some time to understand exactly what that means.

This post is, in many ways, a summary of the central perspective of Barataria. If some of the issues raised seem to demand more discussion, please follow the links provided and if that doesn’t satisfy you, leave a comment below. Thank you.