Labor Day Wish: A Sound, Stable Economy

This week marks the one year anniversary of the acceleration of America’s latest economic meltdown.  As we debrief the (ongoing) disaster and figure out how to respond, job losses have mounted, compensation has flattened, and retirement accounts have taken a beating.  There are signs of a turnaround, or at least of a bottoming out, but as for a true jobs recovery, well…

As a visit to the bookstore, newsstand, or popular news websites will confirm, there is no shortage of books and articles analyzing what happened.  This includes thick tomes tracing the seeds of the subprime lending market for real estate, the corporate corruption, and the government’s inaction or bad actions during the looming crisis.

Especially if your reading time is limited, skip that pile and take a look at John Kenneth Galbraith’s A Short History of Financial Euphoria (1993, rev. ed.).  It’ll give you a broader historical view of boom and bust economic cycles, written with wit and insight in a little over 100 pages.

Galbraith passed away in 2006, but he would not have been shocked at the events of 2008 and beyond.  This slim volume traces some of history’s biggest market collapses, starting with the remarkable Dutch tulip mania during the 17th century (he’s not making this up), and quickly moving to America’s big crashes of the 20th century.

Galbraith identified several common denominators in “speculative episodes” that lead to market implosions.  It starts with “an element of pride in discovering what is seemingly new and greatly rewarding in the way of financial instrument or investment opportunity.”  Those advancing the idea, at least at the outset, are praised for their vision, as others join in exploiting the riches that await them.  In reality, however, there is very little innovation: “All financial innovation involves, in one form or another, the creation of debt secured in greater or lesser adequacy by real assets.”

In some instances, a few voices in the wilderness will be questioning the speculation and predicting a day of reckoning.  They will be criticized, even shouted down, by the mob rushing to cash in on the moment.

At some point, economic gravity weighs in and the inevitable crash occurs, followed by “a time of anger and recrimination and also of profoundly unsubtle introspection.”  Much of the anger will be directed towards those celebrated “for their financial imagination and acuity” during the boom period.  Some will go off to prison.  There will be much “talk of regulation and reform,” but little discussion of “the speculation itself or the aberrant optimism that lay behind it.”

Galbraith concluded his extended essay by saying that no one could predict what “the next great speculative episode” would involve, but the one certain thing is “there will be another of these episodes and yet more beyond.”

How familiar!  And how sad for all the rank-and-file workers and their families who pay a huge price for this irresponsibility.  There are a lot of things on my Labor Day wish list, but let me use this opportunity to pine for a sound, stable economy that doesn’t use workers like chips at a rigged casino game.

Study reports job insecurity more stressful than unemployment

From LiveScience.com, this piece by Robert Roy Britt on a University of Michigan study examining the impact of job insecurity:

“Based on how participants rated their own physical and mental health, we found that people who were persistently concerned about losing their jobs reported significantly worse overall health in both studies and were more depressed in one of the studies than those who had actually lost and regained their jobs recently,” said Sarah Burgard, a sociologist at the University of Michigan.

Unfortunately, this dovetails all too easily with two previous posts:

The Masochism Tango at Work, discussing how some workers are asking supervisors to pile on work in order to prove their loyalty and value (April): https://newworkplace.wordpress.com/2009/04/23/the-masochism-tango-at-work/

The Working Wounded, discussing the stress of being a survivor among others who were laid off (March): https://newworkplace.wordpress.com/2009/03/07/the-working-wounded/

Link to full LiveScience.com article: http://www.livescience.com/health/080828-job-insecurity-health.html

Transitions: Starting your own business while still employed

Here’s a more entrepreneurial followup to Monday’s post about being bullied at work and the possibility of leaving a job because of it:

For some bullying targets, and for anyone feeling stymied in a current career path or stuck in an unrewarding job, starting a new business is both a dream and a possibility.  Alexandra Levit, writing for the Wall Street Journal, reports on strategies for creating your own business while still employed, with the goal of eventually breaking free on your own:

People like to fantasize about quitting their jobs one day and starting their own businesses the next. But for most, it doesn’t happen that way. In fact, the average entrepreneur is fully employed while he takes steps to get his venture off the ground.

So, here’s a possible path to something better.  But it’s not an easy one, as many new businesses fail from lack of planning, initial capital, or proper assessment of the marketplace.  It requires risk taking, business savvy (though, fortunately, an MBA isn’t necessary!) and an entrepreneurial spirit.

That said, just as it’s easier to get a new job while you’re still in your old one, it’s easier to plant the seeds for a new business while you’re still employed.

Here’s the full article in the WSJ: http://online.wsj.com/article/SB125098393224651701.html

And check out the index to Business Forum Online for articles about start-ups and entrepreneurship: http://businessforum.com/toc.html

For an earlier post on starting a business, with some useful links: https://newworkplace.wordpress.com/2009/02/12/creating-good-jobs-start-a-business/

A possibly important legal warning:  If you believe you may be bound by a non-competition agreement with your current employer, by all means consult an attorney before embarking on a new entrepreneurial venture.  It could save you time, grief, and money.

%d bloggers like this: