The Next Economy

The economy is in transition.  Many of you think we’re headed straight downward, but there’s always a chance that better times lie ahead.  But what will the next economy look like?  Barataria has always taken a punt on this, stating that no one can possibly know what the Free Market™ will do.  But over time a few trends have become clear and we can be sure that a few changes are coming.

Why does this matter?  Because the sooner we can prepare for the next economy the sooner we can master it – and make the next business cycle one of prosperity for everyone.  There is work to do, but we have only started to do it.

Some of the most obvious changes were already incorporated into the Restructuring Plan laid out back in June.  But it’s time to explore the logic behind those and make the efforts we need much more clear.

Flexible Work Force  More and more companies are relying on temps and freelancers to get their work done.  This trend has accelerated during the Depression because of uncertainty – companies won’t hire workers if they think the need for them is only temporary.  But a technology driven economy is going to be a change driven economy, meaning that skills will be needed off and on to adapt to changes and set up new infrastructure in companies.  That work will always be temporary and project based.

The workplace regulations, taxation, and just about everything are not set up to handle this well and will have to be reformed to make this far more efficient.  Health care cannot continue to be tied to an employer if we are going to have a flexible work force as well.  We can see these changes coming already, but there is no reason to believe that the trends will do anything but accelerate.  That means major policy changes for governments everywhere.

Imports Our balance of trade has been terribly negative for a long time, and becoming much worse in the last decade.  That will change one way or another because wealth cannot leave any nation at this rapid clip without it gradually becoming poorer – and thus less able to afford imports.  Either the US Dollar falls in value or we will simply have less to spend.

That means that our manufacturing sector has to step up and claim a bigger share of what we consume here in the US, either because we make more or consume less.

Globalism Despite the likely decline in US imports, the rest of the world will rely more on trade as developing nations take a larger share of world product.  That means more containerized cargo and more niche opportunities for the US at the same time.  Not only could we import less in the future, there’s a reasonable chance that we might become an exporting nation once again as technology developed here starts to be made here and markets for it are increasing globally.

Our largest export, food, will continue to be a great strength for us in this world – but the more we can add value to food products rather than relying on bulk shipments the better off we’ll be.

Energy Independence  One big share of our imports is energy, and it is unlikely that we will be able to sustain ourselves if alternatives are not found.  The best way to tackle this is through challenge grants, but ultimately it will be driven by the Free Market™.

That’s not to say we might be completely energy independent, however, as oil will always be a globally traded commodity.  Our largest source of oil now is Canada, with Mexico coming in third.  Those imports within the close economies of North America will likely continue no matter what.  But to the extent we start to rely on our own sources and probably move to a methane based economy the more we can say we are not beholden to lands we do not have such a close relationship to.

Education Our school system is still very much designed to steer kids towards “careers” that require specialized skills that they learn in a tech school or college.  A truly flexible workforce will have access to constant retraining and the acquisition of new skills.  That will mean more adult education – and better ways to afford that investment in people.  It also means that kids would be better off knowing more about how they learn and acquiring critical thinking skills than to have their heads crammed with knowledge on certain topics.  When constant education becomes a necessary part of life, the most important basic skill is a curious mind.

These are a few of the changes we can see happening and accelerating around us right now.  There may be a few more.  What do you think the next economy will look like?  How can we change our policies to start mastering that economy today?