Creative Destruction and a Girl in a French Maid Outfit

“Well, they’re wrong.  You are creative.  You are damn creative, each and every one of you.  You are so much more creative than all of the other dry, boring morons that you work with.” – The Office

Hmm, you’d think the road sign outside of the office might be a hint?

A good friend of mine works out in Silicon Valley, and related a (fairly) short story about being a hiring manager after the dotcom bust – he works in the dreaded Human Resources Department.  Somehow a gentleman with a Ph.D. in multiplexing signals on fiber optics got a job interview with him.  This particular job interview was fairly short.  My friend said, “Umm, we’re looking for a mechanical engineer.  With no experience.  Why would you be looking for a job with us?”

“I’m looking for anything.  Anything.”

“I hope you saved your money,” my friend thought.  What he said was:  “We’ll be in touch.”  That’s what recruiters say when you’re in their office and they’re really tired of the stink of failure and hope that it won’t wear off on them.  They especially don’t like getting it on their shoes.

The economy is in a constant state of change, and has been since 1800 or so.  Joseph Schumpeter, the dead economist, is credited with coming up with a name for this – Creative Destruction.  That’s an academic foul for two reasons:  First, some other dead economist else came up with the idea.  Second, yet another dead economist, a different one this time, used the name before he did.  So, like Columbus, he got credited for something someone else did.  The nice thing is that you can spend your spare time wondering what you can do with a dead economist.  I like to drag mine out at Christmas and decorate him with little graphs, sort of like Martha Stewart.

I like to add cinnamon to my economist.  Makes him smell more festive.

Whoever first used the name is unimportant.  Like I said, he’s dead.  But the idea of Creative Destruction originated with Karl Marx.  Karl came up with the idea (by observing economics in the 19^th Century) that existing production and existing productive forces were periodically destroyed by the economy.  This was a phenomenon of the Industrial Revolution.  Innovation among clever people kept changing the world.  First the loom replaced weavers.  Then the factory replaced artisans.  And finally the PEZ® dispenser replaced scores of servants that would unwrap and gently place the PEZ© in your mouth while wearing fancy-schmancy servant clothes (including white gloves!) after executing a perfect curtsy and pulling the PEZ® off the silver tray with hand-crafted PEZ™ tongs.

Ahh, the Victorian Era.

I can only afford a single PEZ®-maid.  Talk about frugality.

This change in production had the side effect of making lots of weavers, craftsman, and PEZ™-maids unemployed.  The transition was difficult, and it very much was a First World Problem.  It’s not like goat herders in Botswana become unemployed when a goat factory comes online – no.  There’s no factory for goat herding, at least not yet.  And, for the record, I have no idea if there are goats in Botswana, and I don’t care enough to Google® it, and, honestly, have only the basic knowledge that Botswana is somewhere near where people get Ebola and you can’t get decent Internet.  That’s enough knowledge about Botswana for me.

The above is an example of a First World Problem and a good example of Creative Destruction – I kept one cell phone for six years, and had museums calling me to see if they could have it. 

Even though Creative Destruction was (and is) a First World Problem, and even though this Problem has created more wealth than any other system in the history of humanity (poor people in the United States today have better nutrition and entertainment available to them than Roman Emperors did) it still sucks when the Creative Destruction Fairy picks your job to be the one that gets axed.  Marx echoed this and predicted Silicon Valley when he wrote that capitalism grows “ . . . by the conquest of new markets and the more thorough exploitation of the old ones.”  Strangely, that also describes my high school dating career.

But I digress.

Silicon Valley is built on just quote from Marx in the paragraph above.  The concept of “business disruption” is exactly what Silicon Valley does best.

Cabs?  Let’s disrupt it with Uber™.  This refinement will allow people to have cheaper cab rides.  Oh, and the money will be more concentrated, and the “cab drivers” will be paid less.  Nearly every business model out of Silicon Valley is based on this disruption – from consumer goods (Amazon®) to communication (Apple©) to “friends” (Facebook™).  If you look at the most successful companies the world has ever seen, each of them was founded on the destruction of an old economic paradigm.  The more fundamental and important the paradigm, the larger the success.

It’s like the economy is a game, and the more fundamental the rules violation, the bigger the payoff – say for example you were the only guy in the NFL® that recognized that there was no rule preventing you from using an axe however you wanted during a game.  My guess is that you’d have a pretty good pass rush if you did that – and sacking the quarterback would be permanent.

Does Creative Destruction mean what I think it means?

Marx felt that Creative Destruction, over time, would lead to people that “produce” losing all of their money to people who were merely financiers.  And, if you look at it, he’s right.  The financial sector produces less (directly) but finances all of this disruption.  If you’ve been a reader of this blog for very long, I’m certain that you won’t be surprised by my conclusion:  just because Marx was right in understanding disruption, don’t for a second think that I agree with him on his solutions.

Similar to Darwin’s theory, capitalism requires competition.  The stronger business survives.  Islands of the economy free from competition (government sponsored monopolies – like electric companies, or government sponsored businesses – like electric cars) don’t generally provide innovation.  Elon Musk must be some sort of weird innovator, because in one sense he’s disrupting the undisruptable – government monopolies on electric cars and space launch systems.

But Marx was no Musk.  Marx’s solution is simple.  Charge people what something costs to make, rather than for what value it provides – which means that every worker, for instance, makes the same wage.  Rip the production from the hands of the owners and give it to people who don’t innovate.  Free the economy from ruinous competition.  Power to the people!  Oh, and a totalitarian government to enforce it all because people don’t work the way that Marx imagines they do.

Creative Destruction is real.  But in the end, this replacement of old versus new generally increases the overall wealth in society.  I’m not speaking of the virtual importation of slave labor and environmental degradation through “free” trade agreements that are derived in secret and written on thousands and thousands of pages.  No.  But actual free trade among equals generally makes everyone wealthier. And the reality is that regardless of what controls a (fairly) free government puts in place, disruption is going to happen.

From each according to his ability, to each according to your mother.

So what can you do about it?  Get a Ph.D. in fiber optics?  Well, my friend was right.  If it pays enough that for the short time it’s extraordinarily valuable, sure.  But that’s like hitting a career lottery.  If I were to give advice to a younger person, I’d say something a bit different.  I’d suggest that you look to careers that minimize the ability of Creative Destruction to ruin your Friday.

Let’s look at bad career ideas:  number one on my list of “sounds good but it’s really stupid” is software engineer.  Any career that pits me against a billion people in India and a billion people in China is a bad career.  Remember, if you’re one in a million in China, there’s a thousand other dudes just like you.  The numbers are really bad – and they don’t even have to come to the United States to compete with you.  Heck, they can pay recent grads $5,000 a year.  So they can hire at least a dozen people to do what you do.  Those are not good odds.

So, a good quality of a Creative Destruction-resistant job would be that it has to be local, or has some sort of license requirement that prevents everyone in Shanghai from applying.  Lawyers, doctors, and engineers have gotten the licensing-thing down.  It’s been so successful that some states even apply it to nail polisher-people (whatever the term is for that).

New openings daily!  And that’s just in your skull!

Construction is has a lot of the attributes required, but it seems like Honduras has moved here to do that for us.  So that’s kinda out.  But it does point out that a job that requires actual citizenship might be a good thing.  Teaching would fall under that designation, but so much of teaching today is following a set curriculum that’s based on a set of tests that the process itself is rigged against deviation.

That may be part of the point.  Today Creative Destruction’s plan is to replace you with the lowest cost alternative, like:

• An App
• An Algorithm
• A Process
• A Batch of Cheap People Working Remotely
• Artificial Intelligence

Avoid jobs where you can be easily replaced.  I’m not going to sit here and make a huge list and rank it and put a likelihood that you’ll be a victim of Creative Destruction in the future.  I’m not that psychic, unless I’m following my strict broccoli and chocolate diet.  No.  But I’m betting you can start to come up with your own list.

Okay, I’ll give you another one:

Blogger!  Heck, the pay may be zero, but you can always work for the fame, glory and sweet, sweet PEZ®!