Monday, October 18, 2010

Skills and Making money after the Collapse.

Thanks for your blog, I check it weekly and enjoy it a great deal.  I think you offer a very valuable counterweight to the “Roadwarrior” perspective on economic collapse and subsequent survival.  You made a statement about “the head blacksmith in Bartertown” that made me chuckle:  I’m old enough to have viewed the release of that movie!

Your point is well taken, but I wanted to poke at that a little more and get your thoughts.  I took a trip recently to India and it me struck how even in the poorest neighborhoods every second or third “apartment” had a downstairs where there some useful activity going on: bicycle repair, sewing, blacksmithing, something.  This brought me to thinking about my neighborhood.  Mine is like every other middle class neighborhood in the country where you have 100 families that don’t know how to do anything at all besides “manage” or “lawyer” or “doctor”, and 1 guy like me.  I have a garage full of “primary manufacturing” tools, and I know how to use them.

The question I have for you is this:  are these skills useful in a collapse?  Once Pottery Barn and Ikea are way too expensive because of currency rates, and things are generally collapsing because of widespread poverty, do local craftsman find they have a greater ability to put a chicken in the pot than folks who don’t have these skills and tools?  Or do people simply not replace the cracked dishes and the broken chairs?

Hi Joe, Your accounts of India remind me of the poor neighborhoods here. Some of the things you come across here just blow your mind. I’ve watched a shanty town (commonly known as “Villa”) called Ingeniero Bunge, grow from day one. It started as a large, vacant lot, maybe 100 acres or more. This empty lot had been refilled with garbage and it floods with just a few drops of rain, but these people didn’t seem to care.
One day they get the political approval to take over the land, usually in exchange of political support, showing up at the president’s rallies and such.
The next day the same vacant lot is full of improvised shacks and tents, made of plastic, cardboard or old, rusted corrugated steel. Soon enough they throw power lines, stealing power from the main power cables and every one of these shacks suddenly has a 100W light bulb and a TV inside. Of course this promotes accidents due poor installations. People get electrocuted or the place catches fires. Given that most of these materials are pretty inflammable sometimes you have tragic fires like the one we saw in Villa El Carton, mainly because people there where scavengers that collect paper and cardboard.
Even in these places, eventually the shacks are replaced with brick and mortar structures. Its usually one or two rooms. Then when space starts to run out they build one room in top of the other, and the place starts to look like this.
Villa 31 in Buenos Aires
Why do this instead of looking for another land parcel? Because these “villas” are usually located within the city or in the proximity of. This means hospitals, schools and more important work for both honest people and of the other kind. This is of course an accident waiting to happen because these structures are made my people that don’t exactly know how to calculate bearing loads.

In the above picture you can see what you mention, the floor level usually has some sort of store or shop, sometimes an improvised grocery store, repairs, I even saw someone put a neon sign on top of such construction that said “Hotel” so they had these rooms for rent. This kind of organic structure is common word wide when it comes to the poor building “as is”, with no prior urban organization. You actually study these things in Architecture, its interesting to find that its not that different from insect hives. Its also a cop’s worst nightmare with all those tight quarter corridors that spread like a labyrinth.

Now, about your question. Bicycle repair, sewing, etc, are these skills useful after a collapse? Well of course they are, but the question you want to ask yourself instead, do I want to repair bicycles or sew clothes for a living after a collapse, and the answer to that is certainly no. Why? Because there’s a lot of people already doing that, because its just not well paid. Even if you think that right now people are lazy and pretty much useless, it doesn’t mean that that situation will go on afterwards. As things get worse, it wont be just you thinking about opening a small grocery or repairing bikes and mending clothes. Competition and poverty will bring the prices down and you’ll find yourself working a lot for relatively little income. I’m not saying don’t do it, I’m just saying that its going to be very competitive and even if you are good you wont be making much money out of it.
I have a guy that repairs TV and appliances in general. He’s good at that, he has clients but he’s making little money and has a tough time getting to the end of the month. It could be worse, he could have no income at all, but his situation isn’t something you’d want for yourself. And then you have this other guy who started a business selling parts for repairs. TV, washing machines, and so on, he sells the parts to the guys that do this for a living and the people that prefer to do their own repairs. Now this guy has a sweet deal. He’s not rich but he’s making more money. Why? He’s smarter about the repair business. He knows that being the one that gets the parts means he benefits from every customer the various repair guys have in the area.
You have people selling cheap clothes in fairs, cheap china imports, DVDs, you name it. But these guys aren’t making much money. Now the guy that bought the abandoned warehouse, got the security to keep it safe and is renting the space to all these people selling stuff, he has two of the latest Mercedes-Benz 500, one in silver gray and the other one in black.
You have people driving Remis, a kind of improvised taxi that boomed after the 2001 collapse, probably the worst paid job around. Most common remis offices have 4 or 5 drivers. They look awful, smell bad, overcharge and drive crappy old cars. Yet the guy that organized it into a clean looking business, offers a quality you can come to expect, with well groomed drivers, new cars, GPS installed and radio connection, he’s the guy making very good money. And he’s not even buying the cars himself. You can invest in his business by buying a car and putting it to work with him. He provides the brand and logistics and ensures the quality control. See how the approach is different? How being more entrepreneur about it means better income? One guy drives a remis for a living, or owns a crappy little agency that is always about to go bankrupt. The other one is smarter about it and offers a better service for the same price and ends up with a +70 car fleet.
Skills are important and its good to have them, but when it comes to making money out of them you have to go a step further and see how that knowledge you have can be maximized for better profiting.
Cracked dishes aren’t repaired. They are used until they break completely and then replaced with the cheapest dishes they can find. You may want to be the guy that sells those dishes (or chairs) but its even better if you’re the guy that is importing them from China. You may be the guy that starts building very inexpensive furniture and selling it to the new offices opening up because of the cheap labor offered by the new 3rd world conditions. I know a guy that did just that, sells cheap office supplies, and he’s doing very well.
Having a skill will put a chicken in the pot as you said( or a piece of it, chicken is pretty expensive these days) but being smarter about it, understanding the different niches the crisis creates and learning how to provide a service that satisfies these new needs will maximize your profits.



russell1200 said...

Even in the United States today, non-specialized labor, is not a way to wealth.

A lot of people seem to think that making pottery and useful crafts is the route to go.

But unless somebody knocks out all the factories in China, these items are and will remain mid-level luxury items.

The only type of labor that seems to be paid well is very highly specialized labor that is needed infrequently or intermittently by any one client, but whose skills are not generally found in the local economy.

So you need to be able to travel.

Example I ran into recently repairman of esoteric lab equipment. He travels all over the world. Once he repairs the equipment they are not likely to see him again. Thus there is no incentive to create a local source for this service.

Anna said...

I live in a part of the US that has been in a depression for 100 years, and yes everyone seems to think that they can make a living selling $100 dollar handwoven baskets and other ridiculousness. They don't realize that in order for normal people to buy that stuff, there has to be a lot of other "yucky" jobs like factory work etc.

It really all boils down to having "chops", the innate skill of an entrepreneur.

Pete said...

Ferfal: great post!!! I have been 'prepping' for about 8 months now and have a good supply of all essentials for about 1 year, but having the ability to generate an income after the SHTF is something I am woefully unprepared for. Is this an area where it's better to stock up on essentials and wait until after the SHTF so you can have time to see how the situation will change in your area and then try to adjust to the new 'economy'? Or is there a 'list' of things you need to do now (concerning employment) that must be done before the SHTF so you are better prepared afterwards? For instance, it would cost up to $80,000 for an Electrical Engineering degree which I could pay for over a 4 year period if I start now but after SHTF, what if there is little or no need for electrical engineers; then, I would have to start all over again. Any suggestions?