The End of the “Jerry” Economy
To really understand how the economy is going to change, you have to understand – Jerry and Jose.
This is Jerry.
Jerry is the stereotypical “skilled” laborer. He grew up in an upper middle-class neighborhood and graduated from college. He has bounced around tech firms working in product and then in human resources. He has no discernible skills but makes between $120 to $150k a year.
This is Jose.
Jose is the stereotypical “unskilled” worker. He is an immigrant from Latin America who never went to college. He too has bounced around professionally. He has worked as a dry wall installer and now as a line cook. He has several skills in different types of work but makes between $40,000 to $45,000 a year.
2021 was the year of peak Jerry. With a booming tech job market, everyone competed over Jerrys.
Jerry wanted to work from home on his laptop and get mental health days, companies obliged. Jerry wanted the company to adapt certain political views, they obliged again.
While Jerry was getting whatever he wanted, Jose continued to thanklessly do the essential work of the economy – building houses, delivering products, waiting tables etc. He was happy to still have a job after COVID had brought everything to a standstill.
Today, the economy finds itself with way too many Jerrys and in dire need of Jose. The latest non-farm job’s print is seeing big layoffs in tech and professional managerial jobs, and exploding demand for lower paying “unskilled” jobs.
The death of Jerry started with Elon Musk.
Elon bought Twitter and figured out that 80% of his work force were Jerrys, and so he fired them all. Lo and behold, nothing about his company’s operations changed, except now he made money. Other tech firms are following suit and realizing how profitable they can be if they just fire their Jerrys.
But this trend, which has begun, is about to go into overdrive.
ChatGPT is going to exterminate Jerry.
You see Jerry at the end of the day is essentially a chatbot. He sends and receives emails – that is 90% of his job. Perhaps some of these emails help move along things, and he is generating some productivity for his organization. Perhaps he is entirely useless. Either way, chatGPT should be able to replace this capability entirely and do his job way better than him.
The irony is that we all thought robots were coming for Jose, not Jerry.
Movies taught us that AI was going to be like the robot in the Jetsons. Robots were going to cook and clean and walk your dog and build your house and just do the things that everyone hates doing.
That is not what is happening or will happen.
It turns that it is much harder to program AI to do things that are deeper in our evolutionary past than more recently evolved capabilities.
Take calculus.
Calculus was invented in the 17th century - it is very new in our species evolutionary history. Computers picked up on calculus right away and have been crushing humans at it for decades now.
Walking on the other hand is different.
Walking was invented a few hundred million years before calculus. To this day, we still haven’t taught AI to navigate terrain seamlessly. The most advanced prototypes look like Joe Biden trying to shuffle across a stage. Turns out that something as effortless as an afternoon stroll requires trillions of calculations that are very hard to program.
The net of all this is that AI will be able to do a lot of the digital tasks that Jerry does but it will be a while before it can do any of the physical tasks that Jose does. This has been affirmed by a recent report by researchers at the University of Pennsylvania.
Information-processing roles—including public relations specialists, court reporters and blockchain engineers—are highly exposed, they found. The jobs that will be least affected by the technology include short-order cooks, motorcycle mechanics and oil-and-gas roustabouts.
Now our economy today faces an inflation problem caused by too many jobs for too few workers. The Fed’s solution is to destroy the economy with a recession.
This is stupid.
What we should be doing is forcing all the useless Jerry’s to go get a real job working at Chipotle. Then we solve inflation while keeping everyone employed.
But Jerry doesn’t want to do that.
Standing on your feet all day serving people burritos is hard - way harder than just opening up your laptop for a few hours on your back porch and sending emails. Jerry will not make that transition unless he has to and he won’t have to until he has gone through all his savings.
So, we’ll have to have a long brutal recession instead. The Fed will have to kill the value of everything Jerry owns through high interest until he is forced to go get a job where he stands up all day.
When you see Jerry with a job that requires standing, then it is safe to buy stocks.
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To be fair ChatGPT could also replace bloggers. This is how ChatGPT wrote this blog post….
Meet Jerry and Jose, two faces of our changing economy that'll make you rethink what "skilled" and "unskilled" labor truly means.
Jerry, our so-called "skilled" worker, is an upper middle-class college grad who's hopped between tech firms without any real skills. He's making a cool $120-150k a year just by sending emails and enforcing corporate politics. In 2021, the tech world was all about Jerry.
Then there's Jose, the "unskilled" laborer. Jose immigrated from Latin America without a college degree, but has mastered various trades like drywall installation and cooking. Even though he's doing the essential work that keeps our economy afloat, he's earning only $40-45k a year.
Enter Elon Musk, the Jerry-slayer. After discovering that most of his workforce was made up of Jerrys, Musk gave them the boot and watched his profits soar. Other companies are now following suit, realizing the goldmine in ditching the Jerrys.
Surprisingly, it's AI like ChatGPT that's sealing Jerry's fate. Turns out, replacing email-sending Jerrys is a piece of cake for AI. But what about Jose? Weren't robots supposed to take his job too?
Well, AI has been great at mastering skills like calculus that are relatively new to human evolution. But when it comes to deeply ingrained skills like walking (and cooking, by extension), AI still stumbles like a toddler. So, it looks like Jose's job is safe for now.
The real challenge is to convince the now-jobless Jerrys to put on an apron and start serving burritos. But until they're broke and desperate, they'll cling to their cushy, email-sending lives. So, here's a thought: let's give Jerrys a nudge toward more hands-on roles, bridging the gap between supply and demand in the job market.
When we see Jerrys embracing new opportunities and Jose's work finally getting the recognition it deserves, we'll know that the economy is truly on the mend. And that's when it'll be safe to buy stocks again.