JOBLESS RECOVERY
De Ja vu ! Why have we forgotten the jobless recovery of 91-92 ? We had a Bush in the White House ! We had won a stunning military victory ! But the economy was stuck in a jobless recovery, Until somehow Clinton message of "I feel your pain" , and a budget balancing somehow managed to get the mood up, and the economy grew at a rate to increase jobs.
However I think that there is more to it than partisan politics. The 91-92 jobless recovery was due to the massive improvements in productivity caused by the impact of the PC on every desktop, and corporate downsizing in reducing the layers of management. The economy grew, but with fewer people. The end of the Cold War did not help either. The "Peace Dividend" meant that most people who worked for the defense industry ended up with pink slips. In that time frame Southern California was a disaster. A huge number of Middle Aged Professions were out of jobs, their jobs eliminated forever, and the Aerospace industry migrated wholesale out of Southern California into lower cost locales like Texas. Northern California got away lightly in that recession. "NAFTA was going to be huge sound of jobs being sucked out of USA into Mexico".
However the Bush Jr recession was aggravated by the bursting of the Internet Bubble.However the Internet dramatically improved the productivity of the entire economy, and thus jobs everywhere are being squeezed out. Unfortunately India has now entered the world market as a source of cheap offshore white collar work. So the job situation is stagnant. It is ironic that when the dot com bubble burst in 2000-2001 about 70,000 H-1 Indian Software Developers lost their jobs in Silicon Valley alone, and returned to India. That huge Software pool returning to India should have been a blessing for US programmers. Not so. That pool became the nucleus for programming jobs in India, and a big chunk of Software Development is now being "exported to India".
However Software Development has not been lost forever. Software has to be heavily customized and tweaked upon User Feedback. Since a big chunk of Software Market is still in USA, local programming expertise will always be needed.
The need for new and more computer hardware is limited by Software. The PC is still not universal, since the Software has an "English bias". This excludes the huge populations of China and India.[ Even though English is spoken and understood widely in India, a big chunk of the 1 billion population is not comfortable dealing with English.] So Software will have to be customized to local needs. Micrososoft has a research centre in India to adapt the Software for the Major Indian Language, Hindi. I am sure that Software is also being developed to make it easier for Chinese to use computers as well.
The Intelligent Cell Phone is here, but the software is rudimentary. More and more processing power will be available soon, but it is useless without new software. The Cheap and Plentiful Software talent in India can help in improving the software, and thereby expand the hardware market.
I am sure that as the recovery picks up, steam, the "India effect" will be history, just as Mexico was in the early 90's. |
