The End of Work: Less Is Less and It’s Shrinking

There Is More Afoot Than Just The G-20 Pulling Back From The IMF

The times certainly are "a' changin'." And the markets are scratchting their heads this morning.

There was one somewhat dominant story this weeked. The G-20, wisely, seems to have put a hold on adding any more money to the IMF's stash to bail out Europe. That puts the burden of proof in Europe's hands, and more on the European Central Bank and Germany than on anyone else.

What the G-20 got was a promise from Europe that they will "reassess" the situation. That means more uncertainty for the markets. Meanwhile Greece and increasingly Eastern Europe are on the boil, along with the Middle East. When you combine the wild and woolly Republican primary season and what's left of the runup to the U.S. election in November, life is likely to become more interesting.

What Europe is struggling with is a huge culture clash. Germans pay their taxes and tend to follow the rules. Greeks haven't paid their taxes for decades and don't want to pay their taxes. That seems like an impasse that is unsolvable. What's amazing is how long it has taken for the rest of the G-2- to figure that out. So what's left is a conflict between two completely different cultures, one of taxpayers and the other of nontaxpayers. It won't end well.

The underlying message is that the G-20 problems are having a hard time staying afloat and that Europe's lack of convincing movement forward is no longer to be tolerated. In other words, suddenly it's every country for itself, yet another sign that further trouble lies ahead. 

The conclusion of the G-20 is that the recent spate of Greek deals aren't likely to deliver on their promises. According to The Wall Street Journal: 'Former Mexican central banker Guillermo Ortiz said Europe's short-term problems had "hijacked" longer-run concerns, and called Europe's bailout of Greece "badly conceived, badly designed and badly implemented."' Indeed, he seems to be right on the money. When the peso collapsed in the years of the Clinton administration, the U.S. put together a bailout package in a few weeks and implemented it. The Mexican economy recovered, and the U.S. was repaid. There are no signs that this is what's likely to happen in Europe at any time.

The End of Work: U.S. Less Is Less And Shrinking

The G-20 and the Eurozone have their problems. But at the center of the reluctance of the former to pony up more money are local problems.

In the U.S. people are going back to work. It's evident, at least in our neck of the woods, by the amount of morning traffic that is now unfolding. People are clearly returning to work. 

But the kind of work is not often what it once was. According to Marketwatch.com: "job quality has been eroding for years, spanning Democratic and Republican administrations." In other words, what we are seeing now is the slow and steady advancement of the premises put forth by Jeremy Rifkin in his book "The End of Work."

What makes this work remarkable is that it was originally published in the early 1990s. The premise is simple. More machines are doing the work of people. And jobs are being shipped offshore. The government, the education system, and private industries ignored the trend and failed to train the workforce for the coming decades of change. So unemployment, underemployment, and worse types of work with fewer benefits and worse paychecks are all that's left, if you're lucky. We have written about this phenomenon several times. You can find the articles here.

One of the major dynamics is how management level employees that lost their jobs are now being hired at clerical and other low level jobs such as telemarketers and insurance claims representatives. According to Marketwatch.com, many of the people that have experienced this kind of dynamic are frustrated by the changes. One 54 year old female, a "former team leader of an information-technology help desk," now handles insurance claims. She describes her job as "tedious and micromanaged," and describes the situation as one in which "They want you to be smart, but if you use your brain you will probably get into trouble." In other words, she is a human automaton for the company, another cog in the big machine whose only job is to make money by fulfilling algorithms.

It's a general trend in industry. Independent thought is a negative. Gut feelings and hunches are not allowed. Just read the script or we'll fire you. In medicine it's no longer about applying what you know, it's about the treatment guidelines. If you don't follow the guidelines, you won't get paid.

According to Marketwatch.com: "A July report from the National Employment Law Project, a New York-based advocacy group, found that while employment losses during the recession were concentrated in mid-wage occupations, gains during the early part of the recovery were greatest in lower-wage occupations. During the early recovery, there was relatively large employment growth in lower-wage jobs such as retail salespeople and office clerks, compared with losses in higher-wage occupations such as police officers and first-line supervisors and managers of construction trades and extraction workers." And the competition is intense, so wages are falling. According to Marketwatch.com: "Henry Farber, an economist at Princeton University in New Jersey, studied employment in the Great Recession, and found that job losers who found new positions earned on average 17.5% less in the new job."

The bottom line is that we should all expect to work more, earn less, and enjoy less personal and professional freedom at work. And if current political trends continue, this will extend beyond our professional lives into our personal lives.

Conclusion

The G-20 is pulling its horns back from the IMF and the Eurozone. That makes sense as the G-20 has its own problems.

The connection between the macro, the relationship between the g-20 and the IMF, is directly related to the micro, the significant infrastructural changes of the job market in the world's largest economy, the U.S.

Years of misguided policy at the government level and at the highest levels of the corporate hierarchy have put us in this predicament. At the time when we need to grow our way out of a deep hole, there are fewer who can help.

The ranks of the able have been thinned, by circumstances and by the lack of a succession plan in our education system, our corporations, and our government. There is a huge leadership vacuum and a huge self inflicted internal brain drain that are coming to a head all at once.

The erosion of common sense and traditional values has been replaced by a culture that rewards nontraditiona values and ideas that led to the success of America in the first place. And it's evident all around us.

Whether this has anything to do with the markets today is hard to predict. But, it will have repercussions somewhere in the future. You can't run a top notch operation on an empty ideological, philosophical, and intellectual tank.

When you understand the big picture, the next step is how to survive and profit from what lies ahead. That's why we recommend: "Market Timing For Dummies." and "Trading Futures For Dummies." The Trading Manuals for All Seasons. Also Available As Kindle Books.