The Cycle of Structural Change

There are some chestnuts in investments that are held in great regard. "There is nothing new", "History repeats itself", "It is never "This time it's different"". This is ingrained in our belief in cycles. Things move in a constant sine wave, up and down, action and reaction, creation and destruction and recreation. Our little dialectic. So how do we look at this current world?

It is generally believed we are on the downside or bottoming out of a downside and will eventually labor back up. But there is another translation. What if we are in the middle of a new structural change?

We--our economy--are dependent upon work and production. Work and production are functions of labor, technology and capital. Capital has been in debate for centuries, technology always evolves but labor is more straightforward. The economy needs people willing to work, able to work and available to work. The "willing" and "able" is again easily confused and obscured in debate. But availability is more accessible. The working world is that large area between growing up and retirement. The growing up period seems to have lengthened; adolescence has become prolonged. The learning, student, maturing period is simply longer. Retirement has also lengthened, not just because people are living longer but they are retiring earlier. This seems to be a function of a number of factors, the failure of reward at work, the notion that there is reward in permanent leisure, the belief that this retirement leisure is deserved.

So the working period of life is shrinking but this period of work and production is what pays for adolescence and retirement. Production is being squeezed in the culture; fewer and fewer are producing for more and more.

Now technology might help a lot but that looks like a structural problem, not a cycle, unless it is the harbinger of a new, as yet unseen, cycle.