Keys for US Job Creation

Last week I was honored to be asked to advise the President's Council on Jobs and Competitiveness about what we are doing here in Houston that has led to so much job creation while the rest of the country has been so economically stagnant. The meeting was held at Rice and was an informal roundtable discussion rather than a formal, public affair - a format which I found to be much more productive for meaningful discourse. Following is a summary of my recommendations in three key areas (the three "E"s) - what do you think of them?

ENERGY - One of the Council's existing foci is to go "all in" on energy. Awesome. I can envision scenarios in the not-too-distant future when energy will be more strategic for national competitiveness than will be the strength of the military. As Rice's own Nobel laureate Dick Smalley was fond of touting, if you take the top 10 challenges facing the world today and solve energy, most of the rest of them kind of take care of themselves. Rather than make big bets on individual initiatives like Solyndra, though, I think the government's most effective role would be to create a stable energy policy that captures the *true* cost (including the cost to our environment) of energy production, transmission, storage, and use. Create a level playing field, ensure that it will be in place for a long time to encourage long-term investment, and watch innovation happen.

ENTREPRENEURSHIP - I just delivered a keynote Friday in which I showed how entrepreneurship not only creates jobs, but even more specifically it creates the right kinds of jobs. A timely article in The Economist illustrated how the US's entrepreneur-oriented culture helped it evolve from the industrial age to the information age while Europe has largely been left lagging. In short, entrepreneurship is the engine of economic Darwinism. We can't sit on our laurels, though, as Asia and even Africa are developing their own brands of entrepreneurial culture.

The difference between a job "taker" and a job "maker" is often psychological. Someone who is laid off or whose company fails might file for unemployment benefits and complain about the lack of opportunities while someone else in the exact same situation with the exact same means might start a new business, launch a consulting practice, or use the transition as a time for a major career change. What can we do to "empower" the former to feel more like the latter?

One of the greatest barriers to would-be entrepreneurs taking the plunge is not having a "secure base." As children we gain confidence to learn to walk, for example, because we have the secure base of our parents to pick us back up when we fall and this mentality stays with us for life. Secure bases for entrepreneurs can be personal finances, friends and loved-ones, or even missions/values. I proposed that the POTUS could be a secure base for potential and existent entrepreneurs alike, inciting them to take the plunge as part of a US "strategic imperative." In much the same way as JFK inspired engineers in the 60s for the Space Race, the POTUS could inspire entrepreneurs today. I have to imagine that such visible support of entrepreneurship would be embraced by both sides of the aisle.

Thomas Friedman recently posted a piece on how the US should be THE destination for people of any country who want to launch a new venture. In fact, it was after reading Friedman's book, "Hot, Flat, and Crowded," that I left a lucrative job in Switzerland to return to the US and launch my current startup. I don't believe I'm the only one with whom a message of "entrepreneurship as patriotic duty" would resonate.

EDUCATION - I also saw your recommendation to improve education to better prepare today's and tomorrow's workers for jobs. IF you believe me that entrepreneurship is critical to the future of America's economy / competitiveness, then our system of education must be updated, especially K-12. I mentioned in our meeting the difference between convergent thinking ("What are the walls of this building made of?") and divergent thinking ("How many different uses can you think of for a brick?"). The former is the focus of most education but the latter is significantly more useful in entrepreneurship (albeit perhaps harder to test with standardized exams). 

Add to that our changing world of ubiquitous information access (shifting the value from memorizing facts to efficient searching for answers and critical thinking/judgment) and the growing importance of cross-disciplinary . . . everything! Our world is too complex for people to learn in "silo'ed" environments. Reading, writing, and 'rithmetic as separate areas of learning makes no sense in the business, academic, or public sectors anymore. The rate of change is so fast that employees must be able to perform in highly uncertain environments rather than closed, predictable, just-one-right-answer fantasies. In order to develop the new heuristics, mindsets, and skillsets to compete in this new world, we need much more integrated, experiential development rather than silo'ed, academic teaching.

Green Job Creation is the Wrong Argument

A friend of mine asked for my response to an article titled The False Promise of Green Jobs. The article contends that "green" governmental policies will not result in net creation of jobs because

A. these new green jobs will be offset by job losses in the "conventional" energy sector and
B. green energy is more expensive than conventional energy so its increased costs will cut overall productivity and spending.

In response to A, all I can do is wonder if anyone really bemoans the rise of the IT sector (and IT jobs) at the expense of, say, the typewriter industry. Clinging desperately to obsolete industries may prop up employment in the short-term, but it ensures a decline in competitiveness in the long term.

In response to B, I can't disagree more with the notion that "green" energy is more expensive than "conventional" energy. We currently externalize the environmental, health, and social costs of producing energy "conventionally," such that the price the consumer sees is much lower than reality. Our governments also provide significant tax breaks and incentives to conventional energy companies, which allow them to sell energy so cheaply while still generating record-breaking profits. This is all part of an implicit contract we have that guarantees citizens access to limitless, incredibly subsidized energy. Capture the true costs of conventional energy and take away all of the big corporate incentives, and I think you will see a very different cost comparison result.

Furthermore, this author is very narrowly only considering green energy generation when making claims about costs. However, he neglects the companies making great advances in greener energy distribution, storage, and efficiency, all of which make energy - regardless of its source - much less expensive. My company, for example, reduces a business's energy costs 25%, freeing up capital that can be used for, say, employment.

The biggest fallacy of all in this article, though, is the focus on job creation. If a government is pursuing a policy in the name of creating jobs simply for the sake of creating jobs, well, that's socialism. This isn't a big surprise coming from a Scandinavian (where governments are generally relatively socialist) author. In the US, though, where we claim to be capitalists, green businesses should be supported not because they charitably create jobs, rather because they make sound economic sense, increase energy security, and help us operate as a much more robust, independent, efficient society.

My green business has created only two green jobs so far and we plan to create many more. However, policy arguments focused on green job creation alone are totally missing the point.