

Job creation: Where are the startups? - roedog
http://blogs.reuters.com/felix-salmon/2012/09/13/job-creation-where-are-the-startups/

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analyst74
The notion of "creating job" is absurd.

Think about it, you are creating work that someone has to do so they can get
paid. If that's the goal, why don't we just pay people without having to go
through the hassle of creating job?

Heck, we have so much machinery and automation that feeding the population is
no longer a problem, shelter might be slightly trickier, but in a simplistic
view, if it takes 1% of the population to create the basic
essentials(food,shelter) for everyone, why can't we just give those to
citizens and let them do things they may actually enjoy?

~~~
brc
I find it disturbing that a comment like this was actually made earnestly and
not in sarcasm, and also that it has replies in the affirmative.

In short - in order to 'give' something to someone, someone else has to pay,
whether in cash or in time. This is the mysterious free lunch that pops up
from time to time.

If - clearly arguing by absurdity - there is so much machinery and automation
that it takes 1% to feed, clothe and house the population - then one might ask
- from where does the machinery and automation come from? It must be designed,
created, maintained and operated. In order to be constructed, it has to be
financed, the risk has to be taken, potential rewards have to be postponed.

For people to enjoy 'things that they enjoy' - it means that, instead of
postponing consumption for production, it means eliminating production for
people, and having their lives focussed on consumption. While, incredibly,
nowadays most people can enjoy long breaks of consumption-only activity, if
everyone decided to start consuming and stop producing, things would go
backwards very quickly. It seems as though the 'good life' is miraculously
easy - we take a day off, food is on the shelves, power is supplied to our
hose, gas is available to be pumped. This gloss of good life covers up the
furious production, risk and activity that goes on 24/7, globally, to make it
happen.

The incredibly rich standard of living that most people reading this website
enjoy is created through a system of voluntary exchange and specialization,
whereby people create efficiencies by concentrating on a particular specialty,
and exchanging the proceeds of that with the product of others. While there
are a precious few people who have accumulated enough surplus through either
hard work, theft or inheritance, this represents a tiny percentage.

The truth is - more people get to do thing they actually enjoy precisely
because of the accumulated surplus of the increased productivity of people
over time. But rather than rest on the laurels, most, if not all, people
prefer to strive to improve their standard of living even more.

In short, what you're trying to describe is some type of utopia - a vision
which has lead to the death and suffering of millions. It's dangerous thinking
and I would urge you to become more educated in this area.

~~~
waterlesscloud
OK, that's one viewpoint on the world.

And, to be clear, one viewpoint I mostly agree with in terms of society right-
now-this-instant.

I've normally dismissed the idea of post-scarcity economics as some
unrealistic utopia. While there is an undeniable trend of a smaller and
smaller percentage of the economy devoted to basic survival necessities, it
was never clear to me that that number could get close to zero.

But when I step back and take a clear headed look at it, I think maybe it
could.

We're not there now, and we won't be tomorrow, but we will be someday. I'm
coming to believe in that conclusion.

We could get there in a decade or so if we pulled out all the stops and chased
it at damn-the-torpedoes speed. We'll likely be pretty close in a few decades
no matter what we choose (barring self-destructive paths, always possible of
course).

So then, now that I'm coming to accept the outcome, I've started thinking
about what will make it happen as quickly as possible. Why drag the transition
out? It's going to be painful, but it's better to get the pain over with. The
band-aid philosophy- rip it off all at once.

What are the obstacles to the transition? How can they be mitigated or
avoided? What can we, as engineers and entrepreneurs, do to make it happen
faster and smoother?

Even if you DON'T accept the inevitability of the post-scarcity economy, it's
worth taking some time to pretend you do, imagine what that world is like, and
how you would get there from here.

Certainly more value than in just insisting that the system we have will live
forever. Even a casual reading of history makes it clear that absolutely will
not happen.

~~~
brc
Well, I've spent a lot of time doing more than a casual reading of history,
and I certainly don't subscribe to a 'post-scarcity' view of the world.

The human desire for a better life is insatiable. By a better life - this
doesn't necessarily mean bigger houses or shinier gadgets - though that is a
feature of the current generation, and just about every one before that. By a
better life, I mean more health, better education, and a longer and happier
life for ourselves and our offspring.

Even if, using the thought experiment, we can supply the basic needs of
survival for the equivalent of the first ten minutes of our labour per day -
most peeople are not going to choose to spend the rest of the day doing
nothing.

Taking food - already in most developed places excess calories are a problem
rather than insufficient calories. But even then, when faced with more choice,
many people choose to select organic or specialty foods, which require more of
their available funds. Choosing an all-organic diet might take up 2 hours of
your working day to purchase, but that's a choice many will make.

Similarly, the ultimate human demand - a longer life with less health problems
- will never decrease. So even if the provision of basic staples as a
proportion of economic activity decreases, it will be offset by increases in
unlimited demand for specialised healthcare. Specialised treatments are the
ultimate consumable - like fine porcelain dinnerware, what was once available
only to the wealth gradually becomes more affordable to more people.

My understanding and interpretation of all the recorded human history I have
read is that the desires for a better will never be sated. Going to a world in
which there is no scarcity means arbitarily drawing a line under 'what is
necessary' - any rational observer would say that line has long since passed
in many societies - but people don't want to stop at that line. The only way
to make that happen is to coerce people to stop at a level of particular of
consumption, and that is something I want no part of.

~~~
waterlesscloud
What you're really arguing there is that there will always be a level of scare
resources.

Sure, ok, probably true. Maybe not under some distant futures, but for the
foreseeable future.

But what I'm coming to accept is that a basic survival level of resources may
not remain scarce much longer. That's going to have some fundamental impacts
on society, and it's worth thinking through what they are.

Later iterations will raise the level of what's no longer scarce. First it's
survival, then it's comfort, then it's what today is luxury.

 _Of course_ new levels of luxury will come along that will then be scarce and
yet still in high demand. That's obvious.

But that isn't all that relevant to the fundamental changes at the bottom of
the scale. And those changes are both worth pursuing and likely.

How can that be made to happen faster and easier?

~~~
kamaal
What you fail to notice is a term called law of diminishing utility. Which
philosophically means the perceived gains/value/utility from anything over
time tend to appear less and less.

People get bored. There was thread a while back on Reddit, about discussing
free ice creams and chocolates at Google. Thread bought out a very interesting
aspect of human life, some people complained about quality of some chocolates
in the fridge. So here you have a people who are getting free food,
chocolates, ice creams, massage centers, toys and what not for free. And yet
after some time they continue to have complains.

People will always have something to complain about. Besides look at the
communist set ups. They aimed to provide what you say. Yet all of it went in
the drain. When you award things uniformly for non uniform efforts. The
concept and specialty of distinction goes away. People don't feel compelled to
try a little extra or go the extra mile because there are no special rewards
for that.

~~~
waterlesscloud
I acknowledged people will always want something more.

Although I would note Google still considers these perks worthwhile to free up
folks to pursue useful work.

And I'm not talking about giving everyone the same thing.

I'm talking about basic survival needs being met at little to no cost and
advancing from there. Nothing about uniform rewards, just a solid base from
which to work.

~~~
kamaal
Lets consider that situation you mentioned. Lets assume your food, clothing,
shelter and health care to a large extent will taken care of.

Its still won't solve many problems. If you visit ghettos(I actually stay in
one, here in India) you will see the nature of problems of a different kind.
Even if you could some how solve their their problems concerning basic needs.
You really won't help they have hygiene, education, solve problems related to
crime. Their overall perspective of life still won't from its base position to
large extent.

What it is likely to do is make those people more lazy. I don't have data to
prove this, but the same old problems of poverty but of a different kind will
exist. People will complain of not having luxury in transport, posh living,
vacationing etc. It never ends..

~~~
slurgfest
India is hardly Sweden. But if it were, then there is no reason it could not
apply Sweden's policies with the same success that Sweden has had. (While I
don't think anyone thinks Sweden is perfect, it seems hard to dispute that
most Swedes are doing better than most Indians.)

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tptacek
Very important graf at the end:

 _The only thing I can think of here is that for all that we think of startups
as being largely high-tech things, in reality a huge number of them are in the
construction industry, in one way or another. In a word, subcontractors. And
no one’s starting new granite-countertop installation companies right now. But
still, startups are a decent proxy for the dynamism of an economy. And these
charts don’t bode at all well, on that front._

~~~
ChuckMcM
Was going to say the same thing. The Small Business Administration (SBA)tracks
a number of these 'new small businesses' which are job creation engines.
Construction companies and restaurants generally lead the pack in their stats.
Others have pointed out a large correlation between these companies forming
and the availability of credit. Generally there is some level of capital cost
to start and without functioning credit markets those businesses don't start.

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ig1
Note that this article uses the term startup for any small company under one
year old.

Also the underlying paper is pretty weak. The first thing the institute should
have done is look at the breakdown of new companies by industry/location and
see how that's change. Without doing that the claims blaming "outsourcing" and
"occupational licensing" are pretty unscientific.

~~~
shrikant
Yeah, the underlying paper is by the Hudson Institute, which is a right-wing
think tank. Any place with a political axe to grind will bend facts to suit
their hypothesis.

In any case, Felix Salmon makes this statement which struck me as odd:

 _> Intuitively, if people can’t find work for an existing company, they
should be more likely, not less likely, to go out and found a new company
themselves, instead._

Why is this intuitive..?

~~~
smacktoward
My guess is that he means "intuitive" in the sense that if you can't find a
job that already exists, your only alternatives are either creating a new one
for yourself or being out of work (and suffering economic deprivation)
indefinitely.

In reality, though, this is not as intuitive a leap for people to make as he
thinks. If there's no jobs available at existing companies today, that doesn't
mean that there won't be some tomorrow; and starting a new business involves
navigating a big thicket of complicated issues most people have no experience
dealing with, like forms of legal organization, raising capital, state and
local regulatory compliance, taxes and accounting, insurance, etc.

Social factors are also important: if everyone around you makes a living as an
employee, the idea that you can start your own business might never even
really occur to you, because you have no role models for that kind of
behavior. If you go ahead and do it anyway, you risk looking like the odd man
out in your social group -- constantly having to explain your decision to
people who don't really get it. And of course there's the non-trivial risk of
failure, which potentially exposes you to scorn ("I told you opening that shop
was a dumb idea, but you wouldn't listen," says your mother-in-law).

Given the choice between checking the job listings again tomorrow and taking
on a radical change in lifestyle that requires learning a whole bunch of new
skills, it's understandable that just sticking to the job listings as long as
they can is the more appealing choice for lots of people.

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ryanhuff
So it takes less people than ever to start a company, and that's supposed to
be a bad thing? They could have easily framed it as "its cheaper than ever to
operate a start-up".

A more interesting angle would be to compare the total number of people
employed in start-ups over the years, as a percentage of the labor force.

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kimmiller
I would have thought this outcome logical and heartening - yet journos have a
history of baby/bath-water syndrome.

If GDP is increasing (just, tick), large corporations are steady (fair
assumption) then productivity increases are due to SMEs increasing
productivity (ie. capital/labour ratio).

This assumed equation is qualified in commentary around VC fund size and
investments - "it's the easiest and cheapest it has ever been to start a
company."

This doesn't mean more start-ups, but if it were less, means less full-time
equivalents for young companies.

Think SAAS, lean and cloud computing. This along with a new attitude to risk
amongst investors post-GFC (no large bets), means this data makes sense yet
they've got the story completely backwards.

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jaggederest
You can't start small companies without personal wealth or available credit.

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dreamdu5t
The notion of "creating jobs" is dangerously ignorant.

Jobs are a means to an end. They aren't a problem to solve, but what you do to
solve a problem.

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InclinedPlane
So we are to believe that startups are not magically shielded from the massive
worldwide economic downturn in progress right now? Why is this news?

