Are you just starting out in this strange time?

The times are strange. Your university, college, or school, your parents, and those you take advice from know one world — but you live in another.

The world they know is one of relentless, unending inflation. One where racking up debt to study, then to “get on the real estate ladder”, was the right thing to do.

But you live in a world of deflation. Debt is your enemy, because money is worth more every day, and debt parts harder to repay.

So here’s the necessary steps to prosper in the world you actually live in.

First, if you owe, make it go. Every penny of debt must be retired as fast as you can. Live cheaply, plough as much as you can to take that burden off your neck.

Second, be very cautious around buying real estate. It will be illiquid when you want to sell, and the mortgage and condo fees will choke you over time. Landlords will try to churn units to raise rents (they, too, are being choked by their mortgages) so ride it out. The less you owe, the easier it’ll go.

You can buy when and if you see a period of stability for yourself — if you do, accelerate your payments and get out from under as fast as you can, and don’t pay for space you don’t need. Four child families were comfortably raised in 900 sq ft bungalows sixty years ago. That’s a lot cheaper than the 3,000+ considered “essential” for a family that large today.

Third, be employed. If the best you can get is flipping burgers or pouring coffees, accept it. some income is better than none. A year later, at least your résumé says you don’t quit.

Fourth, consider the pressure to keep going on — Master’s, Doctorates, certificates galore — with a cynical eye. These are the remaining profit centres in higher education (which hires sessional instructors now rather than tenure-track staff). What do you get out of it? For a solid answer, go. For speculation, avoid it: it’ll still be there in a few years and they’ll take you part-time to get your money when you go back (if you do).

Accept that no degree comes with a guarantee of employment. No, not even engineering, medicine, or the like. (If you’re in high school and reading this, study what motivates you, and pay cash. Seven years (study one, work the next) to do a Bachelor’s degree will become “normal”. Working until you’re 21, then going, not only let’s you go with cash, it brings you in as a mature student — one they’ll back off a lot of rules for.

This period is likely to last most of your life. You may do twenty different things before you finally stop working, as employers downsize or frat merged out of existence. Be adaptable — and always be working.

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Are You Ready for a Strange Time?

A strange time. What, on earth, is a “strange time”, and why might you have to prepare, to be ready, for it?

The past few months have given us clues, if we only bother to look for them.

So let’s look, shall we, and think about what it might all mean.

This is, after all, about doing personal due diligence. Such looking is a diligent person’s stock in trade.

A society deflating around us

Deflation is far more than just falling prices, although that is how it is often portrayed. It’s also far more than something central bankers get all panicked over, doing “whatever it takes” to fight.

Deflation is the shrinking of the economy. In particular, money increases in value. Labour is less valuable. So, too, is debt – quite a bit less valuable, in fact.

A deflating economy takes real money – cash in hand – and raises its value. Technological improvements (whether those are physical or programmed technology, or better processes, or better ideas) increase productivity. This shows up as needing less people to do the same work. That, in turn, shows up to you as job risk.

Since the 1990s at the very least – it was then that the first web sites went online, that most people started to buy computers, and that electronic communications (starting with email and text messages) became a part of our lives – technology has been wiping out jobs left, right, and centre.

This hasn’t shown up in an obvious fashion. The jobs I held in the 1970s were still there in the 1990s. They don’t exist at all today in the 2010s. But new jobs have replaced them, right?

Well, not exactly. Toronto, where I live, is a prosperous city on the surface. But it has over ten percent unemployment. Half its citizens only hold part-time jobs – often, two or three of them, none with benefits, none paying well – or are “consultants” scratching out a living from one project to the next.

50% with no security, 10% with no anything – only 40% have some degree of security. That’s not prosperous.

But, like Japan two and a half decades into a deflation, appearances differ from reality. Japan has lost its lifetime employment guarantees during these years. Only the fact that the Japanese population is falling has stopped mass unemployment from becoming a reality (the way it is in Europe in most of the countries along the Mediterranean). But many Japanese now scratch out a living from project to project or hold part-time positions without benefits, rather than the lifetime positions they used to hold.

Canada and the United States faced their last long deflation after the American Civil War and after Canadian Confederation. The 1870s, 1880s, and 1890s were decades of deflation. Look at the progress: streetcar networks in cities, electricity, the phonograph, the projector, the automobile, asphalt and macadam (to pave roads and put the mud at bay), street lighting, a web of continental railways – it’s a long list. But for a quarter century jobs were hard to find, self-employment wasn’t rewarding in most cases, people on farms (and doctors) lived near starvation most of the time.

The next few years will see this deflation – that began two decades ago – erupt into full view. The central banks will, either by choice (as with the Swiss National Bank this month, or Iceland’s central bank), or by being forced into it by the market, to give up trying to forestall this deflation.

They spent $50 trillion – yes, $50,000,000,000,000 – over the last seven years to stop this deflation. That money must still be repaid (it’s on their books as loans). But, in a deflation, debt doesn’t get cheaper – it must be repaid with ever more expensive money, as money grows in value (a dollar buys more, in other words).

The nineteenth century didn’t have central banks and spent half its time in inflation, half in deflation. That was the pattern since the fourth century in Europe. The twentieth century was one long inflation.

Dare you bet that the twenty-first, starting in deflation, won’t be a long, long run of deflation (relative to periods of inflation)? I wouldn’t.

What this means for your career is twofold. First, everything you know about assets, how they change in value, their long term value, is suspect. All that knowledge comes from inflation. None of it comes from deflations.

Second, jobs held up by inflation – especially those that aren’t critical to the work of the firm – are about to be dispensed with. Firms need plant workers and sales staff. They don’t need analysts, strategists, human resource clerks, and the like.

Look at how much of the support of the business is already outsourced. Ask what happens next.

It’s not only important that you do – it may be the difference between you having a retirement and feeding your family, or not.

If that sounds extreme, well, I’m sorry. But deflations are payback time – payback of debt, and payback of structural debts in the economy.

You and me? We just have to stay out of the way of being ground down.

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Which degree? At what cost? Why?

Due diligence is behaviour designed to protect an asset from actual, perceived or anticipated harm. Most of those assets are financial and can be measured in dollars and cents, but not always. A child is a “hyper-asset” that parents instinctively protect from the moment he or she is born. Most of what they’re protecting their child from is measured in terms of lumps, bumps, bruises and scrapes. Except for extreme cases, healing takes place within days and the child is none the worse for wear.

But as children grow up, lumps, bumps, bruises and scrapes are replaced by situations calling for decisions. Some have to be made on the spot; others can take much longer. All have consequences. Decisions about post-secondary education fall into the latter category, especially when they involve life and career objectives.

Each year of primary and secondary school is a stepping-stone to the one that follows. Grade 12 is a stepping-stone to the first year of university or community college. Parents believe that graduating from university or community college is a stepping-stone to well-paid, secure, predictable employment. There are disciplines in which that outcome is more likely than others because of labour market, economic and, increasingly, technological conditions. The trick is to know which disciplines and under what conditions, and even then, there are no guarantees, from universities or otherwise.

Research done in Alberta in 2005 showed that young people consult their parents in these matters more often than any other group and by a wide margin. But outdated ways of thinking, like old habits, die hard. Parental wishful thinking rather than fact-based understanding of labour market and technological trends is one of the greatest risks our children face. We started seeing evidence of that in the latter part of 2012 and the trend shows no sign of abating.

Choosing postsecondary education, especially in today’s job market where, to quote the Economist, “[the] rise of the on-demand economy poses difficult questions for workers, companies and politicians,” comes with a considerable risk of displacement. Due diligence is about minimizing the negative consequences of those choices by anticipating them and factoring them into the final equation. It’s about developing and costing out plans for dealing with those consequences, then determining whether implementing them will be less or more costly than the value of achieving the original objective. If less, parents and children will probably proceed: if not, they probably won’t. Either way, they’ll do what they do with their eyes wide open.

Many of today’s employers are either infatuated with technology or inextricably bound to it. To what extent will be reflected in the kinds of people they hire and under what conditions. To be sure, there’s more to life and business than technology, but it’s only prudent to know where along the technology-non-technology continuum your child plans to work when the bulk of his or her formal schooling is done. This applies to every discipline without exception.

In What is the Meaning of The Medium is the Message? Mark Federman, Chief Strategist, McLuhan Program in Culture and Technology wrote:

“Marshall McLuhan was concerned with the observation that we tend to focus on the obvious. In doing so, we largely miss the structural changes in our affairs that are introduced subtly, or over long periods of time. Whenever we create a new innovation—be it an invention or a new idea—many of its properties are fairly obvious to us. We generally know what it will nominally do, or at least what it is intended to do, and what it might replace. We often know what its advantages and disadvantages might be. But it is also often the case that, after a long period of time and experience with the new innovation, we look backward and realize that there were some effects of which we were entirely unaware at the outset. We sometimes call these effects “unintended consequences,” although “unanticipated consequences” might be a more accurate description.

“Many of the unanticipated consequences stem from the fact that there are conditions in our society and culture that we just don’t take into consideration in our planning. These range from cultural or religious issues and historical precedents, through interplay with existing conditions, to the secondary or tertiary effects in a cascade of interactions. All of these dynamic processes that are entirely non-obvious comprise our ground or context. They all work silently to influence the way in which we interact with one another, and with our society at large. In a word (or four), ground comprises everything we don’t notice.

“If one thinks about it, there are far more dynamic processes occurring in the ground than comprise the actions of the figures, or things that we do notice. But when something changes, it often becomes noticeable. And noticing change is the key.

“As McLuhan reminds us, ‘Control over change would seem to consist in moving not with it but ahead of it. Anticipation gives the power to deflect and control force.’“

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2014 in review

The WordPress.com stats helper monkeys prepared a 2014 annual report for this blog.

Here’s an excerpt:

A New York City subway train holds 1,200 people. This blog was viewed about 5,000 times in 2014. If it were a NYC subway train, it would take about 4 trips to carry that many people.

Click here to see the complete report.

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Million-dollar promises, like old habits, die hard

A university degree used to be a guarantee of higher incomes over the course of a lifetime.

Not any more, according to Maclean’s in its January 21, 2013 issue. To read the article in its entirety, please click here.

 


 

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Want to know what people are saying about student debt?

 

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A resolution to engage

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Jobs once performed by high school graduates now call for university graduates and postgraduates, not because the work demands postgraduate credentials but because, given the oversupply, they can be had for the price of undergraduate credentials—or less.

The fluidity in the labour market continues because of a spate of free trade agreements and freedom of movement across borders—for money and assets, but not people. Employers who can’t find the education they want at the price they want to pay for it in one country will happily relocate parts or all of their operations to one where the supply is cheaper and readily available.

China is moving from competing on price to competing on innovation. It landed a lunar rover on the Moon on Dec. 14th, 2013. An Indian satellite is now in orbit around Mars. It sent its first photograph of the Red Planet back to Earth on September 29th of this year, less than a week after it arrived.

The transition from high school to university has nothing in common with the transition to high school from public school. No laws oblige us to educate our children beyond secondary school. Unless postgraduate or specialized education is mandatory, where an undergraduate career ends is where the world of work begins. Employers are free to accept all comers, or none.

Institutions of higher learning aren’t required to prepare our children for that world either. We pay our money and we take our chances. But we can improve the likelihood of translating higher education into a living wage by teaching our children how to factor an understanding of demand and supply into decisions about why they’re going to university in the first place.

In his comments to the TEDxToronto Conference on October 2nd, John Cruickshank, Publisher of the Toronto Star and President of Star Media Group, spoke of the implications of young people’s not engaging with society because technology has replaced newspapers as the new distraction. To use his phrase, young people are “zoning out”. He spoke of voter apathy and how it threatens Canada’s democracy when elites fill the vacuum created by voters who are indifferent to the electoral and political processes. Another implication is the extent of our lack of knowledge about the land we live on and the extended family of which we’re a part: 35 million of us spread across 6 time zones.

As of this moment, employers have little taste for degrees in the humanities. There are many reasons to hope that that will change, but when is anybody’s guess. Our priority should be to better align higher education with what we discover by exploring and learning about what Canada needs so that our children can find employment, not unemployment, underemployment or unpaid internships.

This year has taught us a lot about what this country means to us. Cruickshank was right when he talked about engagement. A quick glance at the calendar says we’re a little over a month away from New Year’s Eve. Maybe this will be the year we resolve to learn more and care more about this place.


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