I consult, write, and speak on running better technology businesses (tech firms and IT captives) and the things that make it possible: good governance behaviors (activist investing in IT), what matters most (results, not effort), how we organize (restructure from the technologically abstract to the business concrete), how we execute and manage (replacing industrial with professional), how we plan (debunking the myth of control), and how we pay the bills (capital-intensive financing and budgeting in an agile world). I am increasingly interested in robustness over optimization.

I work for ThoughtWorks, the global leader in software delivery and consulting.

Tuesday, May 31, 2016

The Times, We've No Idea How Much They're Changin', Part III

In the last post, we looked at the changing relationship between people and possessions, particularly how the perception of land has changed. But there's more to this than just changes in dwelling and mortgage finance. Land was part of a land-labor-laborer troika, a relationship that has existed since the dawn of humanity. Land could feed and protect the laborer and be a means to a better life, but not without expending labor to till the soil and construct buildings. Just as the perception of land is changing, the perception of labor is changing as well, which erodes the relevance of this troika on an individual level.

Over the course of centuries, labor evolved from a means of subsistence, to a means of income, to a means of achieving economic prosperity (through entrepreneurism and meritocracies). It also was a source of individual identity and self-worth: to be employed communicated one's ability to contribute to society. Yet labor has taken a beating in recent years. A two decade period of nearly uninterrupted growth that began in the early 1980s made labor for the real economy king by the late 1990s (peak employment and household income levels), but a couple of recessions soon thereafter meant it went from being scarce to abundant before the first decade of the new century was out. Meanwhile, real economy jobs lost favor to jobs created by ever-cheaper capital, through things like venture-capital subsidized start-ups, property flipping, and day trading. These latter jobs produced far more lottery winners (remember equity options in the 1990s?) than their real economy counterparts. Other factors, like the erosion of job stability, the replacement of pensions with 401(k)s, and more recent worry over the gig economy and robots and automation displacing real economy labor, have cast labor as transient and eroded it's perception as a cornerstone of societal durability.

Labor has gone from champ to chump in less than 20 years. It's no wonder every spring commencement speech contains the obligatory "pursue your passion" line: the not-so-subtle message is that labor on its own is no longer a thing of fulfillment.

This belies the idea that labor is a vehicle to achieving quality of life. Because real wages have been stagnant for nearly a generation, there's less perceived value to labor. If you don't feel that your lot will improve through your labor, you're less inclined to labor for anything better.

Not to mention that for many people there's less urgent need to labor. Previous generations accumulated a lot of wealth, creating familial support nets. Empty-nester parents welcome their children back to live with them in cavernous houses (compared to the small houses of their grandparents and great-grandparents where they couldn't return even if they had wanted to). The cash they accumulated through investing has become inter-generational transfer payments. Why work to meet your own subsistence needs if you don't have to?

Labor, which was once at best a key to individual freedom and at worst a denial of recreation time, is being cast as indentured servitude (we're forced to work by the system) or an emotional prison (the job isn't someone's passion, it's just the job they could find).

This points to change in the definition of what freedom is.

In the 1960s, we had a generation push back on going to war because it didn't understand why they should have to (e.g., go fight a proxy war in a far away land). Today, we have a generation pushing back on going to work because it doesn't understand why they should have to (e.g., if we have so much food and so much stuff why do we have to solve the same problems over and over again that just lead us to more food and more stuff?) Freedom is becoming independence from the need to solve basic problems long ago solved like transportation and food to pursue Maslow-like self-actualization. Freedom is no longer something each person achieves individually by "working the land", it's provided by a sophisticated, intricate system that charges rents in exchange for alleviating burdens - both cost and time - of ownership.

We started this blog series with the observation that change can be a long time coming, particularly because economic habits die hard. We'll still have household formation, individual property ownership, and most of us will have to work for a living for a long time to come. Tax receipts are substantially derived from income. And the land-labor-laborer troika has been displaced before (productivity increases during the industrial revolution de-valued labor for two generations) only to find its way back (the rise of America as an economic power in the 19th century). Yet these ideas around labor are in the ether, to a point that Switzerland will hold a referendum next month whether or not to provide a universal basic income for every citizen.

Which brings us back to where we started. The winds of change blowing today would alter fundamental economic relationships that have been around for centuries, and the technology is here now to make them practical realities. The technology exists today to change shelter, transportation and investment activity of an individual to allow them more free time to pursue personal fulfillment, but that's no guarantee that a critical mass of people will in sufficient numbers, or will do so before societal winds change direction. The times, they have a-changed, and they'll continue to do so. Change happens at a societal pace, not a technological one.