Bryce Roberts reports on two related and converging trends: the slow-down of investment into non-premier early-stage VC companies, and the number of early-stage companies shopping themselves around to prominent start-ups. Early stage capital is drying up, and that means a rafter of early stage companies won’t have adequate capital to lift off.
John Cassidy via The New Yorker
To me, what is really, really alarming is this: a typical American male who works full time and still has a job is earning almost exactly the same now as his counterpart was back in 1972, when Richard Nixon was in the White House, O. J. Simpson rushed a thousand yards for the Buffalo Bills, and Don McLean topped the charts with “American Pie.”
The figures, which appear in Table A-5 at the back of the Census Bureau’s report (pdf), are these. Median earnings for full-time, year-round male workers: 2010—$47,715; 1972—$47,550. That’s not a typo. In thirty-eight years, the annual earnings of the typical male worker, adjusted to 2010 dollars, have risen by $165, or $3.17 a week.
If you do the comparison with 1973 it is even worse. The figure for median earnings of full-time male workers in that year (when O. J. rushed two thousand yards and Tony Orlando had a chart-topper with “Tie a Yellow Ribbon Round the Old Oak Tree”) was $49,065. Between now and then, Archie Bunker and Willie Loman have suffered a pay cut of more than twenty-five dollars a week.
Is it any wonder Americans are not as optimistic as they used to be?
Richard Florida’s ‘creative class’ is being savaged by the economic mess just as much as others, although they were supposed to be the answer to the future of the US.
It’s not just manufacturing and public sector jobs being empheralized in this slide into the New Depression. Media people, writers, actors, artists, musicians, and other creatives are being put out of work, and moving back in with mom:
Scott Timberg, The creative class is a lie
[…] for those who deal with ideas, culture and creativity at street level — the working- or middle-classes within the creative class — things are less cheery. Book editors, journalists, video store clerks, musicians, novelists without tenure — they’re among the many groups struggling through the dreary combination of economic slump and Internet reset. The creative class is melting, and the story is largely untold.
It’s happening at all levels, small and large. Record shops and independent bookstores close at a steady clip; newspapers and magazines announce new waves of layoffs. Tower Records crashed in 2006, costing 3,000 jobs. This summer’s bankruptcy of Borders Books — almost 700 stores closed, putting roughly 11,000 people out of work — is the most tangible and recent example. One of the last video rental shops in Los Angeles — Rocket Video — just announced that it will close at the end of the month.
On a grand scale, some 260,000 jobs have been lost in traditional publishing since 2007, according to U.S. News and World Report. In newspapers alone, the website Newspaperlayoffs.com has tracked some 40,000 job cuts since 2008.
Some of these employees are young people killing time behind a counter; it’s hard for them, but they will live to fight again. But education, talent and experience — criteria that help define Florida’s creative class, making these supposedly valued workers the equivalent of testosterone injections for cities — does not guarantee that a “knowledge worker” can make a real living these days.
“It’s sort of like job growth in Texas,” says Joe Donnelly, a former deputy editor at L.A. Weekly, laid off in 2008 and now pouring savings and the money he made from a home sale into a literary magazine. “Gov. Perry created thousands of jobs, but they’re all at McDonald’s. Now everyone has a chance to make 15 cents. People are just pecking, hunting, scratching the dirt for freelance work. Living week to week, month to month.”
The answer is complex, but hinges on what makes up a society. We need the manufacturing and engineering of things in our society, too, and having exported a great deal of that to other countries we find a critical spark — and the economics that goes with it — comes from the making of things.
The creative class — at least the largest fraction of it — needs a multi-layered society to support it. Not all of our creatives are making art that appeals to the entire world. For example, some great chefs cook in small restaurants in second-tier cities, not just in the top 100 restaurants in New York, Shanghai, or London. But if people can’t afford to have dinner out, those cooks will be back working at Olive Garden or on a food truck.
Both the UK and the global economy are facing a familiar foe at present: policy defeatism. Throughout modern economic history, whether in Western Europe in the 1920s, in the US and elsewhere in the 1930s, or in Japan in the 1990s, every major financial crisis-driven downturn has been followed by premature abandonment—if not reversal—of the macroeconomic stimulus policies that are necessary to sustained recovery. Every time, this was due to unduly influential voices claiming some combination of the destructiveness of further policy stimulus, the ineffectiveness of further policy stimulus, or the political corruption from further policy stimulus. Every time those voices were wrong on each and every count. Those voices are being heard again today, much too loudly. It is the duty of economic policymakers including central bankers to rebut these false claims head on. It is even more important that we do the right thing for the economy rather than be slowed, confused, or intimidated by such false claims.
So it has been widely reported that UK Prime Minister, David Cameron, has considered a crack down on social network tools, like Twitter and Facebook, when being used by those involved in unrest:
[W]e are working with the police, the intelligence services and industry to look at whether it would be right to stop people communicating via these websites and services when we know they are plotting violence, disorder and criminality.
A great number of people have expressed outrage or surprise. Jeff Jarvis gave well reasoned arguments that Cameron was about to cross a line onto a slippery slope:
Jeff Jarvis, A social media crackdown is the wrong response to riots
Beware, sir. If you take these steps, what separates you from the Saudi government demanding the ability to listen to and restrict its BBM networks? What separates you from Arab tyrannies cutting off social communication via Twitter or from China banning it?
This regulatory reflex further exposes the danger of British government thinking it can and should regulate media. Beware, my friends. When anyone’s speech is not free, no one’s speech is free. I refer the honourable gentleman to this . Censorship is not the path to civility. Only speech is.
It’s not that I disagree with Jarvis: far from it.
However, I don’t think that a justifiable and well-reasoned argument will work here. In the end, the forces that have conspired to create the terrible situation we find ourselves in economically, and the undue levels of austerity they have proposed, will inevitably lead to social unrest, and that social unrest will lead to escalating repression by the state.
As Jacopo Ponticelli and Hans-Joachim Voth recently reported, austerity too long or too harsh always leads to social unrest. And social unrest, as we have seen across the Arab world this year, and in France, Greece, and other European countries in recent years, leads to an escalating response by the authorities.
I lived through the Law and Order Nixon and Reagan years, where white urbanites turned against the Democrats for being soft on US rioters and demonstrators against the war. [This ultimately led to a giant rift in the Democratic party, which led to Reagan winning the White House, and the slow but inexorable shift of many formerly Democratic southern states to GOP bastions.]
Cameron will be riding the same two-headed beast, and slowly those espousing hardening the response to the rioters will gain control of the party, and those taking other viewpoints will be ruled illegitimate and soft on crime.
And if the social tools of the day are instrumental to the ability of the rioters to elude capture and plan their activities, the authorities will seek to turn them off, or to otherwise control them.
From a business perspective, the willingness of consumers to take risks means that new technologies can see profit faster here than they can elsewhere. That encourages inventors to invent, and investors to pour money into startups. (It’s no coincidence that the modern venture-capital industry got its start here.) And the speed with which successful products are taken up also allows companies to benefit from economies of scale sooner, bringing prices down and making it easier to reach even more customers. But it isn’t just a matter of speed. Venturesome consumers also provide companies with feedback that helps improve products, and often even repurpose them, in ways their inventors hadn’t imagined. In the process, the value of the innovations themselves increases. In that sense, our culture of innovation depends on consumers as much as on entrepreneurs.
That might seem to bode ill for the immediate future, given that the weak economy has made businesses and consumers save instead of spending. But the curious fact about venturesome consumption is that Americans tend to keep doing it, even in tough times. The P.C. was introduced during the recession of 1981-82. The iPod débuted when we were still recovering from the bursting of the dot-com bubble. Most striking, according to an extraordinary new book by the economic historian Alexander Field, American businesses in the heart of the Great Depression continued opening R. & D. labs and putting money into productivity-enhancing technologies, all of which laid the groundwork for the postwar boom. True, businesses did clamp down on spending in 2008, but for the past two years they’ve been investing heavily in information technology, while consumers, who have supposedly rediscovered the virtues of frugality, are snapping up smartphones and iPads. The venturesome-consumption habit, it seems, is hard to kick. And that’s good news, since they also serve who only shop and buy.
Page 1 of 2
Social anthropologist, clairvoyant, postfuturist.
My work is social tools and their impact on media, business, and society.
I am made greater by the sum of my connections, and so are my connections.
Only in my wildest dreams would I actually own one of these beauties. At a astonishing $3650, this...
Prototyping is like thinking with your hands.
Manuel Großmann and Martin Jordan,...
Expand Unconsumption’s capacity to serve as a resource for sharing stories and ideas about creative reuse and mindful consumption.
