Alex Murphy

My father in law sent me a link to an article by Wayne Allyn Root.  While I understand Root’s pain, being in Nevada, I don’t think that this is symptomatic of the nation as a whole.  He is too focused on name calling and simplifies a complicated situation.  I want to focus on some data and then offer my perspective:  Take a look at this BLS chart, created using Google’s Public Data tool.

If you look at this chart, unemployment feel consistently from 1992 through to 2000.  It popped up in 2002 and then fell until 2006.  This is generally accepted as the longest expansion period in the history of the US.  Innovation has been expanding the cost has of innovation has been dropping.  Moore’s law is in full effect.

That came to an abrupt halt in 2006 as the unemployment rate started to go up as companies became wise to what was coming with the pending financial crisis.  This started with a downturn in housing that then spread to … well, everything.  Unemployment rose from the low 4% range to the high 8% range by the time Bush left.  It continued to go up through the first year of Obama’s administration and has since declined.  So, who is to blame for the current high Unemployment rate?  Obama, Bush, Clinton, Bush, Reagan … Who?  Perhaps you want to say it is Greenspan.  Or that it is the democrats who wanted to make housing less expensive for poorer Americans.  Maybe it is the illegal immigrants?  Maybe its just an every 80 year cycle, like PMS?  Maybe its you and me.  Maybe its Bin Laden … so many choice, who is it?

Well, do you want to know who is to blame?  I am going to disappoint you, but its Adam Smith.  This is simply how markets work.  People, being people, seek to maximize their utility.  We create incentives for each other to profit, then those profits get exploited, then people enter into that market and the economic profit that once was available goes away.  The counter balance is that economic losses occur.  This happens when employment is below the “natural” unemployment rate for a prolongued period of time.  Sorry, but this is just how markets work …

So, what do we do about it?  How do we get out of this mess?  Well, there is an answer.

Innovation.  Innovation is the catalyst to exit every downturn. Not incentives, not gov’t handouts.  Innovation exists in every corner of our economy from manufacurting to technology to consturction to finance.  Innovation is the key.  Be it from a start up or a Fortune 50 company.  Innovation is the necessary catalyst.  Innovation comes from and creates confidence, new products, and new jobs.  Considering the dramatic number of “job seekers” that are starting their own companies, the existence of easy to implement tools to start your own business and the introduction of lean start up methodologies, the prospects for our future are terrific.

So, where does this fit in with our President?  Simply put, the President can help stimulate or hold back the hand of the market.  He (or she) can not change the way the market is headed.  I hope that our current President will help stimulate innovation.  Part of that is ensuring that the playing field is fair for all and that we don’t have to stair at rediculous expenses along the way be it in the form of higher taxes, higher energy prices, or higher social costs for healthcare and the economy.  That is what I am hoping for!