Resource World Magazine

MINI NG JUST HIRED: economist for minimum wage MASSIVE CHANGES IN THE WAY WE DO BUSINESS ARE ALREADY HAPPENING by A. J. Deus I t almost seems that new fires are flaring up everywhere in a world already ablaze. What looks like a set of unrelated crisis is instead a fundamental shift in social, economic, and political paradigms. Despite the sluggish economic outlook, this decade may turn out to offer openings for business opportunities at an unprecedented scale. An example illustrates the undercurrents: I just hired a highly motivated and hardworking, multi-lingual economist ─ for minimum wage. With a $150,000 debt obligation, the economist represents a working class that ends up under the welfare threshold. Hence, she also works at a coffee shop that hires only college and university graduates. She is not an exception, but part of a social downward trend that is important for leaders in resource industries to recognize: Low skill workers and non-performers are being pushed into the welfare system. This will cascade through many of the 800,000 workers in the North American energy sector and the over 1 million employees in mining and mineral processing. The old way was not to hire the overqualified for fear that they would move on too soon. Now, openings are few and far in between. The economics of higher education are fairly simple: educate everyone and an oversupply of people with mismatched capabilities is certain. Hence, skilled workers need to get used to starting at the bottom and advancing through merit on the job. If leaders in resource businesses hire over-qualified staff now and provide for opportunities along the way, they will end up with high-quality teams. They will need them to help withstand the tectonic shifts ahead and to help protect their assets. The economist on minimum wage emi26 www.resourceworld.com grated from Italy where the everyday news is political paralysis under a load of debt. This, of course, is old news in Rome where governments have been re-elected just about every other year on average since WWII and where money has always been loose. However, this impasse is different from the many earlier. The central political leader, Pepe Grillo, is the world's unrecognized epitome of political dissent through social networking. He refuses to form alliances after having run on a platform of firing the old politics. Having garnished a quarter of the votes, he now seems overwhelmed in turning dissent into action. He has a point; political alliances have not only served to silence the opposition in the most undemocratic way but they also foster unfocused spending or regulation. Without alliances, politicians might be able to separate a critical path for social advancement from their wish-lists. Grillo is not an exception; he represents taxpayers who are increasingly unwilling to finance a ridiculous political drama. Grillo said what every unhappy soul across southern Europe and the Middle East already had on their minds. What is missing is a clear vision. Similarly, the German economics professor, Bernd Lucke, embodies a fresh unhappiness sprouting up in Europe, Alternative für Deutschland. He even has a glimmer of ideas, such as simplifying the tax-code, or changing energy subsidies. Grillo and Lucke seem to represent the death-knell of "governing." Optimistically, a positive approach could emerge that takes its strength through the buoyancy of the best and most important issues. For resource industries, the implication of political hyper-fragmentation is a business environment of heightened uncertainty and risk. New projects will become difficult to pass through the political process, and old projects may come under scrutiny. Rapid changes are also coming to economies through the democratization of technology. Computing, materials science, PC-based 3D development and printing, crowd-sourcing, robotics, genetics, nanotechnology, distributed manufacturing, only to name a popular few, are converging and disrupt entire industries and supply chains. The resource industry is being forced closer to markets as the middle men are getting the handshake. Centralized mass-production will make way to distributed production. For the rest of this decade, the old will have to move over for entirely new ways of doing things. Companies are going to be able to come up with designs that were simply not possible before. Product cycles will accelerate tremendously. Energy and resources will be used more efficiently for the sake of more economical products. Businesses in the energy and resource industries can shield themselves from impact by staying on top of the technological advancements. Armies of highly educated economists will be for hire – at minimum wage – and the resource industry can benefit from this opportunity in order to manage their heightened risks with high-performance teams. The new norm is managing innovation and risk in unstable environments. n A.J. Deus lives in Vancouver, BC and is an author, film-maker, economist, and entrepreneur. You will find more columns by A.J. Deus at www.ajdeus.org. His contact information is ajdeus(at)yahoo.com. This material is taken from sources believed to be reliable and is provided for information only. Any investment decision should be made only after prior consultation with investment professionals. JUNE 2013

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