Friday, February 13, 2009

A disconnect

Regarding the jobs created by the current stimulus package. . . . . . Does the government really think that 5,000 people laid off by Sun Microsystems, . . . who were software engineers, project managers, developers, etc. . . . are going to go build bridges and fix roads? Those are two very different jobs and two very different giftings. The white collar folks are probably not going to be too excited about fixing our country's highways. It seems to me that many of the jobs lost (at least in my area) were from the tech sector. I know Detroit lost many, many jobs, but I'm not even sure our car manufacturers are going to go work on bridges. It doesn't seem to add up to me.

Just a thought. . . .


Andy said...

You are correct. We have transitioned from a manufacturing economy to a service economy. There is very little that can be done to create white-collar service jobs directly, so you have to rely on indirect creation.

Foreman working on job sites, state inspectors and on-site engineers need networks and support for their 3G laptops and phones as well as direct connects back to master planners and whatnot back in the offices.

Does it fill all 5,000 jobs that Sun laid off. No. Does it create some, yes.

aaron said...

we have found our optimist!

good job keeping the hope alive, dude.

I heard some commentary last night that we'll probably need another stimulus package of the same size later this year. . . .

I don't know, I think things are really bad, I think some depression is inevitable. But, I have a hunch we're going to make things worse with this bill(s).

Ps. I hear you on the mortgage thing, but I don't think there's any stimulus that helps everyone. I feel like a larger mortage bailout/fixing of interest would help the banks, though, (since, still the large majority of home owners including yours truly are still under equity and would re-fi immediately). So, yes some folks would not be helped at all by that, but If the banks got rich, I think that would help alot of other folks.

Andy said...

Oh snap!

Call me optimistic -- or call me a fiscal conservative with an MBA that has studied and implemented operations chain management first hand. We've built two buildings on my watch on campus.

Say this stimulus only gets it 50% right. There is an echo effect all up and down the operations chain that makes it 70% or so effective. Stimulating one level stimulates other levels as an echo effect over time.

With an organization of 20 workers (be it blue collar or white), you need managers, IT staff, and no less than 15% of your annual operating budget on IT and operations systems. that turns those crews of 20 into 25 jobs because of the support needed to operate them.

Now that road crew of 20 working on one bridge is direct stimulus in this paln, and the indirect stimulus up the chain is the engineers designing the bridge on what, a drafting table? Wrong. Computers. IT support and IT infrastructure needed for them to operate their team and create or modify designs. And for a project of this scope, you need more software and software engineers.

Now, what equipment are they going to use to build these bridges? That's right, they need to order equipment from Caterpillar and so on. And those factories need machines, workers and the IT and technology to make the factory run. It's pull versus push thinking.

You may think that's optimistic, but I've watched it happen with the expansion of the stadium. $45 million spending project that had a $95 million impact on the city economy (and has managed to save atheltics about 7% a year on energy efficiency and other waste).

All that said, here is where I am terrified. We are nowhere near bottom yet. We're just starting to see the cuts and layoffs from the service side of the economy and in government and education. That news will peak next August, it will be ugly, and there is nothing anybody can do to stop it. The wealth has already been lost and the ripples from last November are a tidal wave that is unstoppable.

aaron said...

Dude, . . I meant it as a compliment. :) We need some optimism. . sorry it came across snarky.

You do know alot about this stuff, . . . we'll see if it works at the national level.


Andy said...

Dude, if I was smarter about this stuff, I wouldn't be sitting at a desk in Lincoln.

What is funny is that Japan is going through the same debate and they can't get a "tax cut" stimulus bill with virtually no spending through their government.

If governing a crisis was easy and clear cut, we wouldn't need elected officials. No matter what, its a roll of the dice and an educated guess based on past reactions to various stimulus, when it comes to econ theory.

And you don't have a snarky bone in your body. Except for that one... "Well, she was a wrestling cheerleader" is one of my favorite quotes of all time!

Falling off the Grid said...

come on, its trickle up economics