[p2p-research] Backwards Economics

[Kevin Carson]

  Sent to you by Kevin Carson via Google Reader: Backwards Economics via
Dilbert.com Blog on 3/10/10
Regular economics involves someone starting a company and then hiring
people to fill positions. That seems like a sensible model. But I
wonder if the Internet gives us a way to flip that around, at least in
times of high unemployment.

Imagine a web site in which the unemployed, and underemployed, can
register their skills and the sorts of jobs they would be willing to
do. The site then suggests the sort of business that would fit in a
particular community based on the available pool of labor.

This is suboptimal, you say, and you are right. Labor is only one of
many factors in deciding where to start a business. So let me constrain
the model further. Suppose the initial investor is the government, and
the sorts of businesses are only the types that are good for the
country: health, education, and energy.

Yes, yes, the government screws up everything it touches. But imagine
you can solve that by having each business run by qualified business
people who have a profit motive. The government would be the funding
source, set a few high level rules, and otherwise stay out of the mix.

The reason I suggest government funding is that unlike a private
investor, the government can make a huge return on a business that
simply breaks even, assuming all of the employees pay income taxes.
Plus you have the ripple effect on vendors to the company, and the
benefit of reducing unemployment. In other words, where a private
company might chase only low hanging fruit, the government can nibble
from the top of the tree and still enjoy a sizeable return on
investment.

On the health side, we know that proper exercise lowers healthcare
costs. Imagine the government setting up a virtual company in your
community that involves the formerly unemployed acting as personal
trainers and activity directors for the rest of the community. To
simplify things, sometimes all you need is a soccer ball, some space,
and a person willing to organize a game, and suddenly 22 people are
having a great time and getting healthy too. Would they all pay five
bucks per game? Probably. And one person could organize several games a
day. If the government is involved, there are no insurance issues
because a government can simply make it a law that you can't sue it.

If soccer isn't your thing, substitute a running club, boot camp
training, tai chi, basketball, biking, or whatever.

For education, imagine all of the skills that the current unemployed
possess and would be able to transfer, if only there were a company to
organize them. There's a huge demand for student tutoring. In my area,
the kids who are struggling use tutors, and the kids who are doing well
also use tutors to get an advantage for college. Tutors charge up to
$40 per hour.

Now extend the education model to adults. There is an almost unlimited
demand for adult education, ranging from reading to language to public
speaking to technology. In an era of high unemployment, there are
plenty of people with the skills to teach almost anything.

In the area of energy, the government could form businesses around
photovoltaic installations. A benefit of this model is that it requires
both blue collar and white collar workers. As long as there are roofs,
the market is unlimited. And the government could make the product free
to homeowners by fronting the cost and mandating that the local power
companies pay off the systems over ten years, keeping some of the
excess energy generated for profit. The government's return would be
huge because, again, they reap the income taxes from the people they
employ right away, while recouping all of their investment in ten years.

I'm just throwing out some ideas without thinking them through too
carefully. That's what I do in this blog. The main point is that the
government could use the Internet to organize businesses around
education, health, and energy, and make huge returns, thanks to income
taxes, and improved health and education of the citizens.

What I find most compelling about this notion is that the unemployed
presumably imagine only a few types of jobs they could fill. But almost
anyone who is employable in general could work in at least one of the
job areas I just described, and none of it is digging ditches. As the
economy improves, people can move on to careers that are more to their
liking.


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