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Musings Report 2020-31 8-1-20 Will Skilled Hands-On Labor Finally Become More Valuable?
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Will Skilled Hands-On Labor Finally Become More Valuable?
On a recent visit to the welding shop where my niece's husband Mike works, I asked him if they had enough welders for their workload. His answer surprised me: "If you asked every welding shop in the country if they have enough welders, the answer would be no."
The reasons for this disparity between the economic need and the workforce's skills aren't that complicated. Many of the skilled welders are Baby Boomers who are retiring or nearing retirement, and there aren't enough younger trained welders to meet the need.
Though there appears to be an uptick in the number of young people interested in apprenticing to construction trades, the cultural zeitgeist has largely disdained hands-on, real-world skills in favor of making videos, becoming social-media influencers, joining an investment bank to make bank, working for a tech startup to score a quick million or two in stock options or if no creative way to make it big presents itself, join the cushiest bureaucracy available with lifetime security, good benefit and undemanding work, or seek out a non-profit doing some resume-building projects.
Yes, these are cliches, but the anecdotal evidence supports these generalities.
As for hands-on skills, becoming a chef certainly topped becoming a crane operator, as attaining semi-celebrity has become a core ladder of social mobility. The desirable livelihoods are creative, virtue-signaling, semi-celebrity and perhaps most importantly, clean white-collar (mostly digital) work.
On top of this cultural disdain we can overlay the general surplus of labor globally and the relative scarcity of hugely profitable skills relating to capital. As I have often mentioned, the twin drivers of wealth for the past 30 years (arguably even longer) have been financialization and globalization, both of which heavily favor capital over labor, with the exception of tech-managerial skills needed to maximize profits in financialized, globalized ventures.
Could all these trends reverse? All trends eventually reverse (the way of the Tao is reversal), and so the question can be phrased: are we reaching the tipping point?
I have argued that we've reached Peak Financialization and Globalization, and these trends are now reversing.
As for the cultural zeitgeist, historian Peter Turchin has noted that national-imperial declines are characterized by a surplus of entitled elites (what Turchin calls "overproduction of parasitic elites"), stagnation of wages and a decay in public finances.
All three are clearly visible: there simply aren't enough elite slots offering high pay, full security, recognition and status, etc. for the millions of aspirants with advanced degrees, family connections, etc.-- conditions that would have guaranteed an elite slot a generation or two ago.
Conventional wages have been stagnating or decades. Adjusted for inflation (which is understated), wages have stagnated since the 1970s, and even in the top tiers of employment, since 2000.
Public finances were precariously dependent on soaring debt before the pandemic, and now the explosion of debt is rapidly increasing the fragility of public finances globally.
Central banks can create money out of thin air, but they can't create skilled, experienced workers out of thin air. That takes years of training, experience, effort and dedication.
As longtime readers know, I have a foot solidly in both camps: I write in the digital realm, but have 47 years of experience building/repairing stuff, from a 43-unit subdivision in the mid-1980s to a hand-poured concrete slab and shelving for my own workshop a few months ago. The list of things I've fixed, repaired or built in the past few years runs to dozens of projects, from adding a tricky-to-do roof vent to swapping out a defective motherboard in our clothes dryer.
Longtime readers also know that I focus considerable attention on scarcity as the source of value and on the difference between tradable and untradable labor. Digital editing of a video can be done anywhere on the planet, so it's tradable. Welding a boat trailer or installing a roof vent must be done locally, so it's untradable.
What's tradable is unlikely to be scarce (and thus valuable) while what's untradable could well become scarce (and thus valuable)--for example, high-level welding skills.
History offers a number of examples of labor gaining value while capital lost its footing.
The Black Death killed so much of the workforce (40% or more) that the survivors were able to command a premium for their labor and break free of feudal constraints by moving to so-called "free cities" in the Netherlands and elsewhere to set up shop as independent craftspeople / entrepreneurs. This fueled the rise of the middle class and what we might call classical capitalism, as opposed to the distorted, parasitic, predatory finance capitalism that dominates the global economy today.
Another example is the hyper-inflation in pre-Nazi Germany, when owners of capital (financial wealth) complained bitterly about the soaring wages demanded by skilled craftspeople.
Think about it: a rich person needs some welding, plumbing, carpentry, etc. done as a necessity, not as a luxury. The skilled worker refuses payment in increasingly worthless "money" (currency) and demands payment in gold or silver. What can the (formerly rich) person do but pony up the gold?
The sands beneath what's scarce and what's over-abundant are shifting, and those skills that are untradable are increasingly likely to become more valuable than either tradable labor or conventional capital, which faces rapid depreciation as the wheels fall off financialization and dependence on debt to fuel over-consumption.
Highlights of the Blog
New Podcasts:
AxisOfEasy Salon #15: Toxic Tech Platforms and Disposable Social Media Stars
Charles Hugh Smith on the disconnect between the Markets and the Economy (51 min)
Posts:
Memo from Insiders: Dear Bagholders, Thanks for Buying Our Shares at the Top 7/31/20
The Next Leg Down: The Top 10% Are About to Take a Hit 7/30/20
Our Slide into Social Psychosis and Breakdown 7/29/20
The Nation Is Falling Into the Abyss Between Wall Street and Main Street 7/28/20
Why Does It Feel Like We're in "Life During Wartime"? 7/27/20
Best Thing That Happened To Me This Week
Tie between finding our first lilikoi (passion fruit) fruits on the vine and finally watching the film, "Roma," long recommended to me by my friend GFB. Whether you liked it or not, it's rare to find such an ambitious and moving film that pays homage to many of the great films of the Italian Neorealists, French New Wave and Japanese classics of the 1950s--three genres I've absorbed with enduring interest.
From Left Field
Global Boom, Pandemic, Crash: Is History Just Repeating Itself? If Peter Turchin is right, we face the end of a 300-year cycle, as did previous far-flung empires.
The Ten Best Long-Term Predictions in History-- Efficiency means you shift the problem from one place to another!
The Fed Is Going To Buy Stocks (via Adam T.)
I Got a Job at an Amazon Warehouse Without Talking to a Single Human: What the experience taught me about automating the hiring process
Why We're Giving up on the Film Industry (5:38) (via Tom D.) -- direct funding by fans...
The symptom of our disease-- excellent overview of productivity and energy
7 Revealing Ways America is Collapsing as Rome Did--overpaid sports heroes...
Defining generations: Where Millennials end and Generation Z begins
'Friendliest,' not fittest, is key to evolutionary survival, scientists argue in book
A Job Guarantee Costs Far Less Than Unemployment: The Bold Policy for Not Just Weathering the Crisis, but Coming Out Better -- agreed...
That Flour You Bought Could Be the Future of the U.S. Economy: Small grain companies may suggest a better path for American business.
America’s Looming Primary-Care Crisis--very real, very serious...
"Conversation enriches the understanding, but solitude is the school of genius." Edward Gibbon
Thanks for reading--
charles |
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