Imagine if Blogger had been created with a limit of 500 blogs. By the time I had heard about Blogger, all the blogs would have been taken, and you wouldn’t be reading this today.
Of course, Blogger was not created with any such limit. That’s because, at least in terms of design, it’s not much harder to have 10 million blogs than it is to have 500. As long as you’ve gone to all the trouble it takes to make a blog engine, why not go the one extra step of making sure it will work with any number of blogs?
The importance of scalability is a given in computer system design. You want your system to keep working if your needs expand. Thirty years ago, software was created with arbitrary limitations — like a payroll system that would let you pay only 100 employees, or a gasoline pump that couldn’t charge a price higher than 99.9¢ a gallon. It didn’t take long before people started to say, “Let’s get the software that doesn’t have those limits.”
Scalability is also a part of any good business plan. You might plan a new car wash so that it covers its operating expenses with 10 customers a day. At the same time, you would plan a way to move things faster so that everything keeps working when there are 500 customers in a day, but keeping everything simple enough that it is still profitable on days when there are only 100 customers. You don’t know exactly how much business you’ll have every day, so you want to design a business that works over a pretty wide range. And most businesses are planned this way, so that the volume of business can go up and down by 5 percent or more from year to year without any huge adjustments.
This year, the U.S. economy has declined by about 2 to 5 percent, depending on what measures you look at. So why is such a small decline such a trauma for the economy? If so many parts of the economy are scalable, why can’t the economy as a whole be more scalable?
Actually, it could be. A recession isn’t such a terrible thing for most of us. It’s mainly painful for the people who lose their jobs, and those who try to enter the job market. When jobs are hard to find, we don’t have much help to offer except to say, “Keep looking. Something will turn up.”
There are institutional effects that make unemployment go up sharply in a recession. Employee health benefits are one of them. Health benefits are a good thing for those who have them, but to employers, they are an expense that occurs in proportion to the number of people they employ. This prompts employers, when money is tight, to reduce the number of employees as much as they think they can.
Unemployment benefits and various other laws about employment discourage employers from hiring in times of uncertainty. These laws make it very expensive for employers to hire workers for a short time. Employers usually won’t do much hiring in a recession unless they are really sure they need workers for the long run. This is one of the main reasons why unemployment remains high even after a recession is over. Businesses often wait a year or two to be sure the recession is really over before they start hiring again.
The government could take much of the strain off the job market by hiring workers in large numbers when large numbers of workers are available. Rules about government hiring make it impractical for the government to hire workers directly on short notice, but the government can get much of the same effect by accelerating planned construction and research projects — doing the same work it was going to do anyway, but doing it faster because more workers are available. Some of the people in Washington are trying to put together this kind of plan for the next two years.
It would be easier, of course, if the government were to save a little bit of money for this purpose. Instead, we came into this recession with the federal government already on the brink of bankruptcy as a result of an astonishing rate of deficit spending during the previous five years. The deficits were largely produced by the Republican tax cuts for the investor class. The tax cuts were supposed to make the economy grow. They did not do that, but they did help to set up the crash we are now experiencing.
The point is, a scalable economy is not an impossibility. Most areas of the economy scale just fine, and with better management of the economy, it could expand and contract with less friction and stress than what we are experiencing now. We take it for granted, because of our past experience, that a recession is a painful time, but it doesn’t have to be that way, and at some point in the future, it won’t work that way anymore.
