The production of too many useful things results in too many useless people.
Karl Marx from his Third Manuscript Private Property and Labor
Robert Reich is worried about WhatsApp, because Venture Capitalists (a.k.a. Facebook) paid them a lot of money, however, WhatsApp doesn’t employ a lot of people:
Whatsapp’s value doesn’t come from making anything. It doesn’t need a large organization to distribute its services or implement its strategy.
It value comes instead from two other things that require only a handful of people. First is its technology — a simple but powerful app that allows users to send and receive text, image, audio and video messages through the Internet.
The second is its network effect: The more people use it, the more other people want and need to use it in order to be connected. To that extent, it’s like Facebook — driven by connectivity.
Whatsapp’s worldwide usage has more than doubled in the past nine months, to 450 million people — and it’s growing by around a million users every day. On December 31, 2013, it handled 54 billion messages (making its service more popular than Twitter, now valued at about $30 billion.)
Robert Reich is making a straw man argument by holding up a single flashy, headline grabbing example of Venture Capitalist acquisition, and drawing the conclusion that we’re all doomed and there are no more jobs. While WhatsApp is grabbing all the headlines and getting the massive payday, there are literally thousands of other small start-up’s scrapping to become the next Facebook, Google, WhatsApp and Instagram. Some are well funded and others aren’t, but theses thousands of startups are employing tens of thousands of highly skilled people, contributing to the growth of our economy.
Of course this fact doesn’t fit the leftist narrative:
But we’re not getting more jobs.
In the emerging economy, there’s no longer any correlation between the size of a customer base and the number of employees necessary to serve them. In fact, the combination of digital technologies with huge network effects is pushing the ratio of employees to customers to new lows (WhatsApp’s 55 employees are all its 450 million customers need).
Meanwhile, the ranks of postal workers, call-center operators, telephone installers, the people who lay and service miles of cable, and the millions of other communication workers, are dwindling — just as retail workers are succumbing to Amazon, office clerks and secretaries to Microsoft, and librarians and encyclopedia editors to Google.
I know I’m beginning to sound like a broken record but I’ll say it anyway, government jobs like postal workers do not add to our economy. Reich continues:
Productivity keeps growing, as do corporate profits. But jobs and wages are not growing. Unless we figure out how to bring all of them back into line – or spread the gains more widely – our economy cannot generate enough demand to sustain itself, and our society cannot maintain enough cohesion to keep us together.
Our economy, our way of life is doomed unless we (a.k.a. the government) needs to do something.like take from one group and give it to another. Typical leftist thinking.
It’s odd that we keep hearing from Reich and his ilk that the creative destruction happening in our economy is a harbinger of doom while in the real world, employers can’t hire enough skilled trades and STEM professionals.
Again, the truth doesn’t fit the left’s narrative.