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What We Can Learn from Recession -- and How It Can Help Us Prosper
Jennifer Hill, an attorney, entrepreneurial advocate and member of our Board of Directors, offers lessons from past recessions -- including the recent Great Recession -- that will propel us to growth in the future.
Posted 6/ 22 11 at 4:00 PM | Board of Directors, Money, Leadership, Starting a Business, Legal Issues, International Business, Inventions & Innovations
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Are we headed for a double-dip recession? It's a question on a lot of people's minds these days -- and a topic my fellow members of the AOL Small Business Board of Directors recently debated.My answer? There's a distinct possibility of this occurring -- but the specific triggers and timing are unclear. With the rolloff of the economic stimulus in the United States, overheating issues in some of the BRICs [Brazil, Russia, India and China], the political uncertainty in Middle East and the euro debt crisis (to name a few) plenty of issues could trip the global and the U.S. economies. What's more interesting is that if there is double-dip recession, how will the United States rebound? How quickly? What have we learned to pull out faster and more effectively, so that our standards of living can continue, in the long run, to prosper?
1) Innovation increasingly comes from -- and can occur -- anywhere and no longer has to be located in a "Silicon"-center. Lower costs of non-traditional locales for innovation, if combined with an appropriately skilled workforce, can be a decided plus.
2) Consumer behavior is being increasingly driven by online concepts, which emphasize the distinct characteristics of the individual in the context of a network -- e.g. social, local, mobile, curated content, competition with others (gaming), and virtual rewards (points/coupons).
3) It costs less and less to start a business -- especially in the technology sector (apps being just one example). The cost of failure is correspondingly also lower, which means that companies can iterate faster. In that context, a huge amount of learning is being built up by the next generation of entrepreneurs through these very successes and failures, which will in turn yield new opportunities for jobs and wealth creation.
4) Freelance is for many the new full-time job. Lots of us want a "gig" for personal, professional and financial reasons. The new workplace is therefore more fluid, results-oriented, dynamic and competitive than ever. If there is another recession, companies may hesitate to add permanent headcount, but they are likely to access ad-hoc talented labor pools through the many great online and offline services which exist to mediate this freelancing labor pool. This could become a critical and long-lasting change for the workforce and folks' career trajectories (as well as for the flexibility of the labor market), where more people gather more unique experiences faster, learn on the job more effectively, integrate work and life where both are productive and fulfilling, and work towards optimizing the time-money trade-off at an individual level. It could also create challenges for the older generations and/or those unused or ill-equipped to gaining and maintaining employment in such a dynamic employment context.
Such change creates tremendous opportunities for new business building and "old" business revitalization. However, the benefits of such change clash with the hobbled "social infrastructure" which badly needs fixing: education, health care, energy and urban planning. (Yes, this is a controversial sociopolitical point, but recent travel makes me realize how underinvested we really are.)
This is America. We are a country born of entrepreneurs, so I am fundamentally optimistic that we will figure out a way to pull out of a double-dip recession stronger, more innovative and ultimately changing our way of life for the better. Lead on!
Comments (Page 1 of 1)
I especially think the use of temp/freelance employees is a very interesting trend that has a lot of implications. Its clearly related to the cost of benefits (i.e. healthcare) for employers and as a result I think there is very little employee loyalty, which makes the establishment of company "culture" quite challenging. I also think it limits opportunity for employees because it becomes difficult to get access to new types of work and thus career opportunities. If you're a freelance writer for example, you'll never be considered for any other type of job. If you're a staff writer and show some aptitude and enthusiasm for a different type of role, employers are more likely to consider the switch. Ultimately I think it makes the workforce more specialized but less flexible, which makes it hard to recover from recessions and market changes.
What we learned from the Recession is that Capitalism can not work unless there is the possibility of failure. The government removed that and bankers made billions. Damn everyone from Phil Gramm, to Barney Frank and every other bastard in Congress who had a part in it.
Making products SOLD in the US subject to the same constraints as products MADE in the US is the only sure way to job creation for the United States.
There is no amount of technology that can overcome $14.00 a day wages in effect for many offshore products sold in the US. Add to the unrestricted low wages, the absence of Worker Comp, Social Security and Medicare payments, Environmental restrictions and OSHA regulations, there is no way the US can generate jobs. Almost anything used in the US can be made cheaper in offshore developing countries due to lack of the same rules that inflate production costs of US producers.
There is no amount of tax reduction for US manufacturers that will make up for the above advantages of offshore products.
Many of our fiscal problems, aside from runaway entitlements, are due to the lack of domestic manufacturing with the taxes and the economic stimulus that payrolls provide.
We must level the playing field if the US is ever to create a significant number of jobs again. Many Lawmakers and Economist say that tariffs on offshore production are counterproductive. Yet these same people put tariffs on domestic US production in the form of the above mentioned constraints. They certainly are right that such tariffs are counterproductive to domestic US Production. In fact, such tariffs have just about ruined the US Economy.
If there are some US citizens that think it would be foolish to pay more for the products that can be made cheaper by offshore producers, take a look at the loss of home values and 401Ks. Add these amounts to the cheap imports you think were bargain prices.
If developing countries were subject to just the US Federal Minimum wage, it would cause the creation of a middle class in such countries. In many ways, making products SOLD in the US live by the same rules as products made in the US is a win-win situation.
Sincerely,
Edmund Avolio