(1) Paul Krugman’s latest actually makes a few decent points:
The belief that education is becoming ever more important rests on the plausible-sounding notion that advances in technology increase job opportunities for those who work with information — loosely speaking, that computers help those who work with their minds, while hurting those who work with their hands.
Some years ago, however, the economists David Autor, Frank Levy and Richard Murnaneargued that this was the wrong way to think about it. Computers, they pointed out, excel at routine tasks, “cognitive and manual tasks that can be accomplished by following explicit rules.” Therefore, any routine task — a category that includes many white-collar, nonmanual jobs — is in the firing line. Conversely, jobs that can’t be carried out by following explicit rules — a category that includes many kinds of manual labor, from truck drivers to janitors — will tend to grow even in the face of technological progress.
And here’s the thing: Most of the manual labor still being done in our economy seems to be of the kind that’s hard to automate. Notably, with production workers in manufacturing down to about 6 percent of U.S. employment, there aren’t many assembly-line jobs left to lose. Meanwhile, quite a lot of white-collar work currently carried out by well-educated, relatively well-paid workers may soon be computerized. Roombas are cute, but robot janitors are a long way off; computerized legal research and computer-aided medical diagnosis are already here.
Krugman adds that a growing number of skilled, high-wage jobs are “offshorable,” an idea we’ve discussed here at length, and he concludes, in classic fashion, with the argument that stronger unions are the key to broad-based prosperity, a view I definitely don’t share:
In particular, the notion that putting more kids through college can restore the middle-class society we used to have is wishful thinking. It’s no longer true that having a college degree guarantees that you’ll get a good job, and it’s becoming less true with each passing decade.
So if we want a society of broadly shared prosperity, education isn’t the answer — we’ll have to go about building that society directly. We need to restore the bargaining power that labor has lost over the last 30 years, so that ordinary workers as well as superstars have the power to bargain for good wages. We need to guarantee the essentials, above all health care, to every citizen.
What we can’t do is get where we need to go just by giving workers college degrees, which may be no more than tickets to jobs that don’t exist or don’t pay middle-class wages.
(2) Matt Yglesias agrees with Krugman on bargaining power for workers, but he goes on to make a more interesting and more persuasive point:
Nothing in these trends suggests that the actual quantity of janitors is going to increase in the future. If anything, falling demand for office workers implies that the future can have fewer. So is the future a smallish number of wealthy office workers served by an “aristocracy of labor” of unionized janitors awash in a pool of unemployed people enjoying free health care? Presumably not. The people of the future will be richer than the people of today, and therefore will more closely resemble annoying yuppies. Nicer restaurants are more labor-intensive than cheap ones, and the further up the scale you go the more specialized skills (think sommelier) come into play. Annoying yuppies take yoga classes, or even hire personal trainers. Artisanal cheese is more labor-intensive to produce than industrial cheese. More people will hire interior designers and people will get their kitchens redone more often. There will be more personal shoppers and more policemen. People will get fancier haircuts.
This is where I think education does get back into the picture. Most of these are jobs that require some skills. Personal services generally exist on a spectrum between “things a person might hire someone else to do because it’s a pain in the ass” and “things a person might hire someone else to do because it’s difficult to do it well.” You hire a maid because you don’t want to clean the toilet. You go to Komi because you can’t cook as well as Johnny Monis. There’s more money and prestige to be had as you move up the maid-Monis spectrum and there’s a need for some kind of mechanism to help people move up it. That sounds like “education” to me, though not necessarily the kind of education we’re handing out.
And I’d add that yoga instructors are not the kind of workers who are easy to organize, as we’re dealing with a panoply of small firms, including many sole proprietorships, and with workers who often place a very high value on autonomy. Barriers to entry are low and the sector is very competitive. This is true of lots of work in the world of personal services.
(3) On the subject of “offshorability,” Adam Ozimek writes:
As a little antidote to all of this doom and gloom it’s worth taking a closer look at one of these “very vulnerable jobs”. The quintessential offshored job is customer service. Most of this takes place over the phone, and if you believe scare mongers, most of these jobs will be done in India in the near future, in fact most have probably been offshored already. Blinder, for example, says ”the jobs of call center operators are clearly at risk”. But according to the BLS, there are currently 2.3 million customer service representatives in the U.S. in 2008, most of which work in call centers. In addition, the number of these jobs is expected to grow faster than average, or 18 percent from 2008 to 2018.
I’ve long been an admirer of LiveOps, a virtual call center that has a large staff of home-based freelance workers. Many LiveOps workers are stay-at-home parents, for whom the flexibility of telecommuting is extremely valuable. An effective call center operator can be very valuable, and customer-centric firms will pay a premium for U.S. staff. This might not always be true, but it does suggest that the landscape is more complicated that offshoring-phobes fully appreciate. Consider that the U.S. and western Europe and industrial Asia have long been trading similar goods: we buy their software and they buy ours, etc. And remember the guys at Ignighter? Just as Indian workers can sell their services to Americans, American workers have opportunities to sell their services to Indians.
(4) Indeed, knowledge-intensive services represent a big share of the U.S. economy that is likely to become bigger. I’m not talking about the mid-skill routine information processing that Krugman rightly predicts will go the way of the dodo, but rather the kind of jobs Henry Chesbrough describes in Open Services Innovation. There is an implicit view that our affluence makes us vulnerable in a globalized world, as other countries will undercut our labor. But our affluence is a great advantage in a world that’s getting richer: we have a knack for building the platforms that will take off among newly-rich urban consumers around the world. The most successful and productive digital organizations will never employ large numbers of people, but they will throw off large amounts of money that will be spent on personal services, etc. That’s why we shouldn’t squelch innovation in this space through overregulation and overtaxation, and it’s why we should work on improving the quality of public services and other amenities that will help us attract and retain the footloose workers who create the most wealth.
(5) Tyler Cowen makes a number of excellent points, all of which I’d endorse. His last one is particularly interesting:
I have never seen it suggested that this “hollowing out” process will lead to lower output, quite the contrary. Those gains go somewhere. This is a reason to encourage the ownership of capital and on a quite broad basis. Let’s start by repealing Sarbanes-Oxley, but along these lines there is much more we could do. How about low-load mutual funds backed by claims to intellectual property or whatever else will prove the scarce input for the future? Identifying that scarce input is the key to making progress on this issue.
I’m torn about the question of whether or not we want a USA Sovereign Wealth Fund, but my model of a future American economy dominated by high-flying superstars does push us towards that solution.