Thursday, July 07, 2005

Getting educated to get poor

Does the fact that wages rise with productivity imply that a computer scientist with constant productivity will always be well paid as Henry implies below ? I'm not convinced. Krugman's point is something like "historically Marx has been wrong: capitalists don't take an increasing share of profits, wages rise with productivity." This has little to do with the wages of a computer scientist with a constant marginal product. It is perfectly possible that a constant amount of product can decline in value over time: say most foodstuff, or typists, or, well, I'm not up on good examples. Basic computer programming skills are likely to decline in value over time as they become less scarce -- thus people with vanilla computer science backgrounds are rational to shun computer science. Since we seem to be consulting the oracle that is Uncle Paul, let me point out a different essay: Getting Ahead: White Collar Turns Blue.
When something becomes abundant, it also becomes cheap. A world awash in information is one in which information has very little market value. In general, when the economy becomes extremely good at doing something, that activity becomes less, rather than more, important. Late-20th-century America was supremely efficient at growing food; that was why it had hardly any farmers. Late-21st-century America is supremely efficient at processing routine information; that is why traditional white-collar workers have virtually disappeared.

1 Comments:

Blogger Crystal said...

Right on! I work in insurance and the good skilled-labor desk jobs are disappearing at a fast rate, going over to India and places. Entire clerical & customer service & claims departments have been wiped out, and it seems in this New Economy you must either be highly educated (i.e the lawyers, doctors, actuaries etc. will probably always find employment) or willing to do extremely low level service work (i.e. retail, food industry, etc. at barely above the minimum wage ). Will the Middle Class disappear within the next 20yrs? Probably so if we continue down this path.

3:18 PM  

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