Donald Hicks of the University of Texas studied the half-life of the Texan businesses during a period of the last 22 years, and found that their longevity dropped by half since 1970. But Austin, the city in Texas in which new businesses have the shortest expected life spans, also has the fastest – growing number of new jobs and the highest wages. The paradox is that as the number of old jobs lost increases, the number of new jobs created is superior. More important, the spread of gained jobs over lost jobs widens over time.
Hicks told his sponsors in Texas that the vast majority of the employers and employment on which Texans will depend in the year 2026 on even 2006 do not exit. In order to produce 3 million new jobs by 2020, 15 million new jobs must be created in all due to the complex nature of this dynamic. Rather than considering jobs as a fixed sum to be protected and reserved, governmental policies should aim at encouraging economic churning and continually recreating the domestic economy. Again, the paradox emerges: only by promoting this kind of flux and dynamism can long-term stability be achieved.
The organizational and policy theory is that when flux and dynamism is inhibited, slow death takes over and by the way, between 1980 and 1995 Europe protected 12 million governmental jobs, and in the process of fostering astaticism lost 5 million jobs in the commercial sector. In the United States, fostering flux, saw a staggering 44 million old jobs disappear from the commercial sector. But 73 million new jobs were generated, for a net gain of 29 million, and in the process the U.S. kept its 12 million governmental jobs, too. The logic is that if you can stand the turmoil, flux triumphs. This has interesting and future applications for an employment or human resources management perspective: organizations will come and go, careers are patchworks of vocations, business will be indefinite groupings of fluctuating companies.
In recent years mayor insights on how this occurs have emerged from two related blocks of knowledge: the theory of chaos and self organization and the theory of complexity. The essence is as follows: Complex nonlinear systems as societies and organizations are characterized by multiple systems of interactions that are both ordered and chaotic. Because this internal complexity, random disturbances can produce unpredictable events and relationships that reverberate throughout a system, creating novel patterns of change. The amazing thing, however, is that despite all unpredictability, coherent order always emerge out of the surface of chaos.
If the system settles into harmony and equilibrium, it will eventually stagnate and die… A few economists studying the new economy (Paul Romer and Brian Arthur) have come to similar conclusions, arguing that robust growth sustains itself by poising on the edge of constant chaos. Change and messiness are natural in the economy.
Copyright 2000 QBS, Inc.