I read Paul Krugman’s post VSP Economics with amusement the other day where he critiqued a Washington Post editorial on economic policy. Paul thinks the editorialists are being inconsistent when they wring their hands over the unemployment issue but then propose economic remedies that do not help put people back to work.
It’s worse than that. I’m in the trenches and from what I can see, there is remarkable consistency between policy and desired outcomes. I got the point last week at an event put together by the local division of the American Chemical Society (ACS) and organizations affiliated with NJ biotech incubators.
I’m going to assume that the ACS organizers were well intentioned. They know that the employment situation for chemists in NJ is dire and they wanted to present some alternatives for the long term unemployed. But if the scenarios that were presented are what we have to look forward to, we might as well get used to living in poverty. In fact, living in NJ will become a fantasy for a chemist with a family and a mortgage.
What we are being encouraged to do is start our own companies. In order to do this, we will borrow money from our “friends, family and fools”. We will apply for space in an incubator program that comes with a few percs, like free internet and low rents. Then, we will work ourselves silly in the lab AND as entrepreneurs, taking care of the paperwork and the funding. At some point, we will meet with angels and venture capitalists who will put us through the wringer, demanding lots and lots of expensive data and so much of the future potential profits that a rapacious feudal lord would blush with envy. Some of these vultures won’t even talk to a scientist entrepreneur who doesn’t have an MBA. Is there a language barrier? I’m not sure having an MBA is an asset since I see plenty MBAs without any management or business acumen. In return, we will get a relatively small amount to live on and the quarterly anxiety that goes along with finding sufficient funding for the staff to keep it all going. And we will be expected to be grateful for that.
The presenters made it sound like a thrilling roller coaster ride- off the side of a cliff. One of them said he had to figure out how to pay a PhD and another labrat when the money runs out in September. The other confessed that the meeting with the venture capitalists was extremely difficult and stressful and that the legal documents prepared by big pharma were frequently long, complex and confusing. One woman proposed that turn NJ into a biotech heaven analogous to Silicon Valley where hotshot scientists constantly jump from one small company to another. This is already happening in Cambridge, Massachusetts. The presenter chimed that some people in Silicon Valley work their entire careers in unsuccessful startups and they LOVE it. Yes, we labrat types LOVE to spend our time on unsuccessful projects. It’s what we live for.
The difference between high tech Silicon Valley and biotech is that biotech can’t be done exclusively on a computer. Equipment and reagents are extremely expensive. It takes many, many trials and errors to figure out how biology works. And then there is the problem of assembling the ingredients of a pharmaceutical company, by yourself. Yep, you get to find the screeners and biologists and pharmacologists and chemists and compound collection and formulation group and ADMET people. How is one supposed to do all of this? Swap specialities? Work for free? In New Jersey? Did I mention that 80% of these companies fail?
The more they tried to spur us on to new and greater heights of entrepreneurial glory, the more the depressing details of the experience seeped out. What we are looking forward to is a very insecure future with no steady income, no health benefits, and, more importantly (but somehow overlooked), no continuity of research. If we are fortunate enough to hit upon a million dollar idea, venture capitalists will swoop down to take a huge cut. There will be endless hours in the lab using old equipment and workarounds and even more endless hours doing businessy things and dealing with people we would not normally have a beer with. Ever.
One professor of a university in the region said he is actively discouraging some of his PhD students from pursuing their doctorates. He said that there is no future in chemistry in this country and what is available requires a personality and degree of salesmanship that some of his students do not possess. We are encouraged to network, like salespeople and executives because most available jobs are never posted. You have to know somebody who knows somebody. It’s a patronage system now, not a meritocracy. This is difficult for scientists who more often than not are introverted types who live in their heads. The world needs people like that but now they are expected to be extroverted cheerleaders for themselves and brag about their accomplishments. And the layoffs just keep on coming in big pharma while the CEOs of the big companies scout around for ideas they can buy up or license in, ideas that will be produced by the insane hours spent using last generation’s broken down equipment in incubators and garage labs of the people they have let go. So, the professor is now leveling with his grad students- get out of chemistry while you’re still young.
What are we to make of this? What I see is the business and finance elite would like to turn the rest of us into contractors and the independent self-employed. They would very much like to get something for nothing, or very little. As long as laws and policies are developed that allow for it, they will continue to take advantage of an unlevel playing field. The healthcare reform bill gems nicely with the plan to unburden the employer. Soon, all contractors will carry their own health coverage. Contractors and sel-employed also have to pay all of their social security taxes and fund their own retirements. Social Security taxes will eat into any living wages we can earn so it won’t be long before we join the ranks of the other self-employed calling for more tax relief. The entrepreneurs will struggle on daily basis to meet payroll and will have to deal with their own income insecurity. One thing is for sure, very little idea generating is going to go on in the labs. The big pharma labs are full of overstressed, overworked people who can barely think straight while they’re dealing with an ever more dysfunctional management. A few Andy Hardy types in a garage lab will quickly lose their fresh optimism as they look forward to years and years of incredibly hard grunt work for a product which they will be expected to turn over to a bunch of MBAs at bargain prices.
And MBAs are in the business of making money. It’s all about the portfolios and the stock price and the shareholders. They don’t care about how hard science is. Like sharks aren’t concerned about the lives of the schools of fishes they feed upon. This is not personal. This is survival of the fittest as understood by the business major. What they seem to have forgotten is that even a good idea doesn’t thrive in an environment where it can find no sustenance. I’m one of the few people in my extended family with a degree but when I look at how well my working class and gray collar cousins are doing, I might as well have just skipped college altogether. Oh, sure, I’ve read Hume, Descartes and Kant too but my degree won’t pay the bills and now I wonder if deciphering 18th century philosophical tomes was worth the effort when I could be selling fast food franchises and buying outside cabins with balconies on my yearly cruises to the southern Caribbean.
The only thing on our side is time. That is, with the internet age, the business cycle has sped up. The present incarnation is unsustainable. There is only so much effort, money and blood that can be squeezed from working people before the system collapses. If you’re still working for a big employer and want to see what your future holds, look to the labs. It is hard to think about science when you’re constantly worried about what is going to happen three months from now. You can not have a family or house or vacations. You can’t really spend money. And when people don’t spend money, the economy can not grow, 401Ks can not grow, and companies will have no choice but to cut back even more. It’s a vicious cycle run by money addicted gamblers.
I hope we hit bottom soon.
Some Blasts from the Past:
Teresa Ghilarducci was interviewed by Terry Gross back in 2009. Ghilarducci is a specialist in the area of retirement insecurity. The interview is worth a second listen because most of us under 55’s are already dealing with some of the problems she is talking about: underfunded 401Ks, prolonged unemployment, reduced or absent defined benefit pensions.
About the same time, NPR explored whether the 401k is a good deal for American workers. As has been the trend with NPR in the past 10 or so years, the answer was mildly positive for the budding stock jockey employee. The problem is if you want make a lot of money with your 401K, you have to devote a lot of time to researching and making the right decisions about your portfolio options and most of us do not have the time or inclination. I think the fund managers are rather counting on that. The bigger problem is that an employee can no longer trust ANYONE with their retirement funds whether they are in some administrated 401K plan or pension fund that employers are now anxious to jettison. Social security looks like the best plan we have right now and even that is under constant threat.
And can we talk a moment about how Democrats are using the future of the social safety net programs as a fear tactic for next year’s election? Bloggers like Digby are wondering why the Democrats seem to be inching their way towards capitulation to the Republicans’ plans to scuttle unemployment benefits, medicare, medicaid and social security. It makes perfect sense if you consider that they need to look like the only thing between you and the Republicans’ plan to make sure you’re economically insecure. It makes them more electable. Yeah, dangle social safety net programs above a pit of snapping crocodiles and then dare voters to cut the rope. Democrats use economic insecurity as a fear tactic in a similar way that Republicans use terrorism as a threat to physical security. You can’t trust a Democrat to protect you from scary bad guys and you can’t trust Republicans to protect your ability to make a living or retire.
It’s all about getting re-elected, which suggests to me that neither party really wants to do away with these programs. They know it would be fatal. Besides, they are succeeding beyond their expectations by turning us into independent contractors. It’s political cover and election year kabuki. To them, it’s all about keeping that seat and maintaining power. And if that’s what really motivates them, then the scare tactic we the voters need to use to reassert our own power is to vote for someone else. As long as we buy into the narrative they write for us, they win.
A third party could clean up big time next year. But please, no more Ralph Naders or lefty puritans. What we need is a big, brash working class New Deal Democrat.