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The Coming Class Wars

The forces dividing us are overwhelming those that unite us
Friday, February 10, 2017, 9:15 PM

Income and wealth inequality are rising sharply, and capital is pulling far ahead of labor, which is creating a vast and quickly-widening divide between the social classes.

Specifically, the shrinking resource pie—of cheap energy, of cheap debt, of labors’ share of the economy, of the low-hanging fruit of globalization—is all but ensuring the future will be defined by escalating and fractious rancor among the rich, working class and poor.  » Read more

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Automating Ourselves To Unemployment

How shortsighted policies are creating a long-term crisis
Wednesday, April 27, 2016, 9:39 PM

In this current era of central planning, malincentives abound. We raced to frack as fast we could for the quick money, while leaving behind a wake of environmental destruction and creating a supply glut that has killed the economics of shale oil. Our stock exchanges sell unfairly-fast price feeds for great sums to elite Wall Street high-frequency-trading firms, and as a result have destroyed investor trust in our financial markets.  The Federal Reserve keeps interest rates historically low to encourage banks to lend money out, yet instead the banks simply lever up to buy Treasurys thereby pocketing vast amounts of riskless free profit. The list goes on and on.

One particular malincentive has been catching my attention recently, one that feels especially pernicious because it does not seem easily reversible, if at all. For US employers both large and small, it's becoming increasingly less appealing to employ human labor.  » Read more

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How The Nature of Work Is Changing

And how to (re)position your career for it
Wednesday, July 23, 2014, 11:48 AM

Executive Summary

  • The Matrix of Work & the 5 Forms of Value Creation
  • The essential elements of the future's ideal work environment
  • How mobility creates career security
  • How to start switching from "work" to "work that matters"

If you have not yet read Part I: Escaping the Rat-Race available free to all readers, please click here to read it first.

In Part 1, we reviewed the forces of structural change in the economy and the nature of work.  In Part 2, we’ll cover the matrix of work (how to create value in the age of automation) and discuss specific strategies for building a resilient career you control.

The Matrix of Work

In the traditional capital/labor model, labor is paid by the hour to perform routine work.  In the emerging economy, routine work is increasingly performed by machines or outsourced.  In this environment, the premium for human labor arises from creating value and solving problems.

The tool I use to understand this premium is the matrix of work, which is the overlay of the five forms of value creation: non-process-based work, high touch, non-tradable work, sensitivity of the output to mastery and flexibility.

Let’s start with commodification:  when goods or services can be traded interchangeably across the globe, these become commodities, as opposed to one-of-a-kind goods and services unique to one small-scale producer. A Fuji apple from Washington State is the same as a Fuji apple from overseas in terms of its tradability and retail value.

Labor can also be commoditized:  if human labor is being sold as time performing basic skills, then the time and basic skills can be bought and sold interchangeably around the world.

Work that is process-based is easily automated or commoditized, meaning that it can be performed anywhere by interchangeable laborers.  Process-based work can be broken down into tasks that take a specifiable input and yield a specifiable output.

One way to avoid being commoditized out of a job is... » Read more

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The 10 Factors Destroying our Social Health

Through better understanding, we can reverse them
Monday, February 17, 2014, 12:58 PM

Executive Summary

  • The erosion of community is due to many factors
  • Understanding these factors enables us to begin combating them
  • The 10 reasons American social capital is declining
  • What it will take for a revival in social cooperation

If you have not yet read The Erosion of Community, available free to all readers, please click here to read it first.

In Part 1, we surveyed a number of explanations for the erosion of community, starting with the landmark 1950 book, The Lonely Crowd, and found that no one theory adequately accounted for the decline of social capital in America.

Here are ten other factors that could be factors in this long-term erosion:

1.  The explosion of choices in the mass media (mentioned by Robert Putnam and Kevin K.) now offers endless opportunities to form a protective bubble around oneself: if you only want to hear views that confirm your existing biases, it's now very easy to do so, and you don’t even need to go out into the real world to do so.

Since confirming our own beliefs is safe and comfortable, our collective reaction may be to avoid people who might disagree with us. Eventually, such isolated individuals “socializing” in self-selected groups online lose the ability to function productively in diverse groups of real people in a real community.

2.  The mobility demanded of labor.  The mobility of labor in America--that workers can pull up stakes and move to better job opportunities--is often lauded as the key to the U.S. economy's flexibility and resilience. This is no doubt true, but that mobility eviscerates community: if you move every 2-3 years (as required of military personnel, Corporate America managers and many others), what's the motivation for joining and contributing to local groups?... » Read more

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Our Era’s Definitive Dynamic: Diminishing Returns

Doing more of what doesn't work
Monday, November 4, 2013, 3:37 PM

We all intuitively grasp the meaning of diminishing returns: Either it takes more effort to maintain a project’s payoff, or the payoff declines even though the effort invested remains constant.

This dynamic leads to the final phase of doing more of what has failed spectacularly. » Read more

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We're Living Through a Rare Economic Transformation

Those who understand its post-capitalist rules will prosper
Thursday, April 4, 2013, 8:47 AM

In 1993, management guru Peter Drucker published a short book entitled Post-Capitalist Society.  Despite the fact that the Internet was still in its pre-browser infancy, Drucker identified the developed-world economies as knowledge-based as opposed to from industrial economies, which were were from the agrarian societies they superseded.

Drucker used the term post-capitalist not to suggest the emergence of a new “ism” beyond the free market, but to describe a new economic order that was no longer defined by the adversarial classes of labor and the owners of capital.  Now that knowledge has trumped financial capital and labor alike, the new classes are knowledge workers and service workers. » Read more