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Sunday, January 24, 2010


Where is the economy going?

Just a few days ago I wrote about "Capitalism's future (or lack thereof)". Today, more on the same lines. First, we find Tom Friedman going on about his favorite cure for what ails the economy, "entrepreneurship." Now I'm the first to praise Google, without whom I could neither write this blog nor, frankly, do a lot of things with nearly the ease and speed with which I do them. But Google, the great success story of the last decade, employs just 10,000 people worldwide. And while plenty of them do software development and other technological things, the company makes its money from basically one thing - advertising. Which means that it is totally dependent on the rest of the economy - if there were no other companies advertising, Google would go out of business. You can't sustain an economy on advertising, any more than you can sustain it on selling things. You have to actually make things to sell in the first place (or "do" things, like be a doctor, give haircuts, etc.).

Which brings us to the second story in today's news, about the auto industry. Or, rather, what once was the auto industry. Here's the news:

Of 128 manufacturing plants in North America closed since 1980 by the Detroit Three automakers and their largest suppliers, three of every five now sit idle.

Those 128 plants had a payroll of 196,000 workers at the time they closed. Today, only 36,500 people work at those sites that have been redeveloped, and at only three of the revived plants does the number of employees match or exceed the number in their carmaking past.
In other words, to fill that net loss of jobs, it would take 16 "Googles" to fill the void. Anyone out there think that's going to happen? Tom Friedman, how about you?

So what's the solution? Go read my post "Capitalism ad absurdam" to find out.

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