Book Review: The Coming Jobs War (Jim Clifton)

Jim Clifton is the CEO of Gallup, the polling organization that has been doing business for over 75 years.  They are respected, and they have a HUGE database of information (that I will go into some details later).  He wrote (2011) a remarkable book: The Coming Jobs War.  Please do not let the sort of bland title push you away from either the book or my comments here, Clifton is on to something...

In my opinion, this is a very important book.  It needs to be read by people who matter, who can get things done.

In Chapter One ("What 7 Billion People Want"), I will quote verbatim Jim Clifton (here and later his remarks will be color backgrounded):

More and more often, global leaders ask Gallup the same simple, yet colossal question: "Does anyone know for sure what the whole world is thinking?"


Traditional economic data record an infinite amount of human transactions, from GDP to employment to everything everyone bought throughout their lives to birth and death rates.  These data go to great lengths to indicate what man and woman are doing, but there is no ongoing, infinite, systematic account of what man and  woman are thinking.


He means that few are looking at behavioral economics, what is going on "under the hood" if you will of what people are thinking.  All of the other data is easy to collect.  So, starting in 2005, Gallup decided to start a massive project: the World Poll, and they are committed to doing it for 100 years.  (If nothing else, give them credit for thinking BIG)  This World Poll would ask questions about what people are thinking.  


They started by looking for big data sets that would help Gallup's scientists get started.  They looked in a lot of places and found very little.  So, they made up a comprehensive poll on their own.  It was a big challenge, they wanted to cover every issue in every country of the world.  Another challenge was to engineer sampling so that they properly sampled people speaking many different languages in the 150 countries.  They had to choose how to ask the questions correctly, so that the Manhattan socialite and the Masai mother would be asked the same thing in the same way in their proper contexts.  They then searched for benchmarks (poverty, law and order, healthcare, etc.).  One thing they found right away: how little is known about what is known about the hearts and minds of our 7 billion people here.


They collected a huge amount of data, and the data set and the conclusions are complex.  Except for one conclusion that has come out.  This one conclusion is not one I would have thought of as Number One.  The Number One issue in every country is the same thing.  It is NOT liberty.   It is NOT seeking love.  It is NOT war and peace.  It is NOT about corrupt government nor government spending.  It is NOT about the environment.  It is NOT even poverty.


What the world wants is a good job.


Gallup found that in every country.


And our leaders need to understand this and what it means.  Paraphrasing (summarizing) Clifton:


-- Lawmakers need to know whether mew laws will help or hurt job creation
-- The public schools need to think how their students can be ready to get a good job
-- Our top leaders need to think whether wars and occupations will help or not
-- Local leaders need to think about what they do re the context of creating good jobs


He writes that ALL leaders worldwide should be thinking along these lines, not just in America.


In Chapter Two, Clifton explores what joblessness is and its consequences.  Clifton:


...  (discusses other problems)


None of these problems matter when when compared with the likely possibility of America slowly and then suddenly going broke -- because none of these problems are so near.  Going broke is what happens when there aren't enough good jobs.


So what would going broke look like on a national scale?  Well, take a look at Detroit, and imagine that economic disaster coast to coast.  Look at California.  California can't pay its pensions, it will likely declare bankruptcy, a lot of its employees are going to be out of a job, and its bond holders won't be able to get their money.


Note he wrote that in 2011 about California.  As mentioned below in my Review of Barron's, three cities in California have declared bankruptcy.  Clifton:


And it's happening now.  You and I, our friends and relatives are going broke now now because the United States of America is going broke.


Gallup estimates unemployment at 10% and under-employment at 10% more.  Clifton:


So why is it so hard to create jobs?


Jobs are at the heart and sole of a nation, the thing that sustains everyone.  Leaders know that.  But almost nobody knows where or how jobs are created, especially those who think they know how to create jobs -- the government, academics, experts from institutions of all types.  Those people are usually the most wrong about job creation.  They tend to dig in the wrong places.


(Emphasis mine)


Now he starts heading us in the right direction, but pauses to place America into context re the rest of the world (especially China).  My personal opinion is that China will not grow as he posits, throughout history, China has always found a way to screw up when on the verge of greatness, but what do I know.


After the context, he gets back to business:


But the government doesn't have money.  People and companies have money.  And if the overwhelming majority of Americans aren't working outside of government jobs, America goes broke.

The overwhelming number of jobs are created by small and medium sized businesses.  Big businesses are often job cutters...


***


Clifton then goes to write a chapter about our biggest rival: China.


Apparently almost all respected economists think China will overtake the USA in GDP in the next 30 years.  Clifton thinks that is BAD, unless we start growing our own GDP, which is tightly correlated with employment.


But, our economic future is not set in stone.  In his next chapter he reminds us that over 30 years ago economists were saying that Japan and Germany would overtake us...  They did not.  Why not? Because no one foresaw Bill Gates, Steve Jobs or Meg Whitman...  Entrepreneurs who changed the world, who brought us the Internet.


So, we WON the Jobs War from the 1970s to 2000.  Our Baby Boomer (and Gen X) entrepreneurs won it.  Conventional economics missed all of this.  Because classical economics measures transactions, not unpredictable people such has who will become a successful entrepreneur...


***


Chapter Five brings us Clifton's discussion of Behavioral Economics, and how and why that is important.  Classical economics measures transactions, behavioral economics is the science of choice.  Each of us makes many choices every day, and even small decisions sometimes have BIG effects, he specifically mentions Mohammed Bouazizi, the Tunisian man whose vegetable cart was confiscated, he set himself on fire, then Tunisia had its revolution and then Egypt.  All because a policewoman took away Bouazizi's vegetable cart (his job).  The Tunisian cops made a local decision that continues to roil the whole Middle East.


Behavioral economics is the attempt to measure the state of mind of people, to try and figure out how people decide to do something.  So Gallup has created a "secret weapon", metrics to measure states of mind and attitudes.


Authentic job creation (NOT "shovel ready" government jobs) happens more when people have more freedom.  Not more government stimulus money.  Not more credit.  Not building bridges.  Who creates real jobs?  Entrepreneurs operating in a free environment is who.  And they must have confidence.  Confidence is a metric that Gallup measures...


And where are the jobs created?  In Chapter Six, Clifton says in cities.  It is in the cities where the bulk of jobs are created by entrepreneurs.  Washington does not create jobs or even much affect job creation, it happens (or does not happen) in the cities.


Cities do more to set a good environment for job creation than other levels of government.  He uses examples.  Think of San Francisco (Silicon Valley), Seoul and Singapore -- all cities that have had great success creating great economies and job creation.  Detroit and Havana are examples of bad decisions, with lousy economies and job creation.


And the key to getting big things done in a city are to tap what Clifton calls the "Tribal Leaders" of the city,  The tribal leaders are not the politicians or with the police and fire departments.  The tribal leaders are people who care about the city and typically include philanthropists, university presidents, hospital presidents, some business leaders, local stars, sports teams owners, wealthy & prominent families and many others who care about their city.  Every city has tribal leaders, but some cities have better leaders than others.  Clifton argues that the tribal leaders, who know where to go and how to get things done.  They have much money and influence, much more so than the Mayor and City Council...  Clifton gives us a great example: Warren Buffett in the case of Omaha.


Clifton lays out the case that it is within our cities where we succeed or fail in creating jobs.  The cities need to ATTRACT entrepreneurs and job creators.  And that it is up to the tribal leaders to make each city attractive to small businesses...


Clifton (with a clarifying comment of my own):


So if cities are the core of job-creating energy, "everything is local," and "so go the the local tribal leaders so goes the soul of the city," then it follows that the future of the United States rides on the leadership success or failure of only 10,000 highly influential Americans [Clifton uses a round number of the 100 largest cities in the country who have an average of 100 tribal leaders].  These are arguably the most important leaders in the United States because new job creation depends on them. While 10,000 tribal leaders aren't very many people, they're the ones who will largely determine whether America recharges an economic engine the whole republic is counting on.


10,000 people will determine whether our future is bright or bleak.


***


In Chapter Seven Clifton discusses entrepreneurs and innovators.  Apparently there is a LOT more innovation happening than the former.  Apparently there are LOTS on innovations just sitting on laboratory shelves because no high energy and talented businessmen there to commercialize them.  And that is the secret: commercializing those innovations.


Cities (and countries) are spending resources on less-needed innovation, and MUCH LESS on the more important entrepreneurs (and he uses the term to include key players in all organizations).  The good money and the good jobs will come from the business model and leaders, not the invention.

Clifton uses as an example of a great entrepreneur: Wayne Huizenga.  He had three humble ideas (lousy sounding ideas) ideas through his career.  He started out in the trash collection business, where there were already many players.  He turned it into Waste Management, Inc., a Fortune 500 company.  He then started a business that sounded even worse, renting movie videos, and turned that into his second Fortune 500 company (Blockbuster, Inc., OK yes now in trouble).  He then went on to sell used cars, and made Auto Nation, Inc., another Fortune 500 company.  Note that Huizenga did not innovate much...  He put together great businesses.


Another example is Ted Turner with his idea of a 24 hour news channel...  Became CNN, because of his energy and business skills.


Another dumb innovation: an Internet site to sell each other their junk to each other.  But Meg Whitman made eBay a giant...


Bet on the horse (the leader) not the cart (the idea or innovation).  Great entrepreneurs are rare, they should be mentored and attracted, they should be welcomed so they can work their job creation magic.


In Chapter Eight (High-Energy Workplaces) and Chapter Nine (Customer Science) Clifton illustrates some of Gallup's Behavioral Economics.  He asks people to rate their workplace from one to five on various subjects (Chapter Eight), here are some examples of questions based on Behavioral Economics):


Q01.  I know what is expected of me at work.
Q02.  I have the materials and equipment I need to do my work right.
Q07.  At work, my opinions seem to count.
Q10.  I have a best friend at work.
Q12.  This last year, I have had opportunities at work to learn and grow.


Chapter Nine shows more such questions (answered from one to five):


CE2.  How likely are you to continue to do business with (Company)?
CE4.  (Company) is a name I can always trust.
CE5.  (Company always delivers on what they promise.
CE6.  (Company) always treats me fairly.


The ABOVE questions are the type that Gallup now uses to study the world...  And they know more  of this than ANYBODY ELSE!


***


Clifton then goes on to discuss other specific BIG problem areas in America in Chapter Ten (the schools) and Chapter Eleven (the health care system).  


In a remarkable observation, he says that our healthcare system costs us 10 times as much as our wars...  And that about one half our health care costs are wasted.  Wasted because our leaders are digging in the wrong place (figuring out who will pay the bills -- exactly what Obamacare is doing) and NOT on prevention.  Over 50% of health care costs could be saved by prevention of expensive chronic health conditions...  And to over-simplify: that would be to encourage healthy habits and discourage unhealthy ones.  Is this dreaming or actually possible?  Yes.  Look what happened when smoking became shunned...  Clifton then names it: Obesity.  That is what causes heart disease, diabetes, hip and knee joints, most of which the TAXPAYERS pay for.


In Chapter Twelve, he lays it on the line what CITIES gave to do, in order, to attract talented and hardworking people (with an example of each, questions asked all over the world):


Step 1: Law and Order  Do you feel safe walking alone at night in the city or area where you live?


Step 2: Food and Shelter  Have there been times in the past 12 months when you did not have enough money to buy food that you or your family needed?


Step 3: Key Institutions  In the city or area where you live, are you satisfied or dissatisfied with the availbility of quality health care?


Step 4: Mobility and Communication  Does your home have access to the Internet?


Steps 5, 6 and 7 are Youth Development, Job Climate and Job Enhancement.


He then goes on to write that America should attract the best and most talented people in the world.  Look at what happened in Silicon Valley.  Some 1000 people are mostly responsible for that national treasure.  500 of those were immigrants. 300 - 400 came from India alone.


His Conclusion summarizes the book.  I summarize the book is that we must get our cities' tribal leaders to get each CITY to create an attractive environment to attract the hard working entrepreneurial types who will create good jobs and bring America back to world leadership.


***

It is difficult for me to recommend this book highly enough to anyone interested in a New Way to bring America back.