4 ms·

There are two books that cover this subject well: The Case Against Education: https://jakeseliger.com/2018/03/12/the-case-against-education-bryan-caplan/ https:

There are two books that cover this subject well: The Case Against Education: https://jakeseliger.com/2018/03/12/the-case-against-education-bryan-caplan/ https://jakeseliger.com/2018/03/12/the-case-against-educatio..., which argues that most "education" is really signaling, not human capital acquisition, and Paying for the Party: https://jakeseliger.com/2014/04/27/paying-for-the-party-elizabeth-armstrong-and-laura-hamilton/ https://jakeseliger.com/2014/04/27/paying-for-the-party-eliz..., which argues that many schools have evolved some substantive majors and some non-substantive majors. If we can move people from non-substantive majors into trades and the like, that will likely be a win for just about everyone. I also don't think we're going to see a cure-all, but it's hard for almost any intellectually honest person in the non-elite parts of the higher-education industry to look at what's going on and think it's great. I think we're simply approaching a point in economic history where fewer workers are needed to produce more value/gpd/products/whatever Then we'd see soaring productivity, which we don't see: https://twitter.com/paulkrugman/status/1140259227908411392 https://twitter.com/paulkrugman/status/1140259227908411392

wwweston 7y ago
Krugman's point is not uncontested: http://www.scottsantens.com/our-paradoxical-economy-courtesy-of-technology-and-the-lack-of-basic-income http://www.scottsantens.com/our-paradoxical-economy-courtesy... Additionally, even if we're not peering around the metrics for dynamics hiding behind them, there's the question of how much of the by-Krugman's-metric still rising (if not "soaring") productivity it would take to soften the labor market. I'd like to think he knows the answer to that question, but it isn't clear.
- JamesBarney 7y ago
  His central argument is that IT is only increasing productivity in open source software and does not cause any productivity improvements in businesses, which is a strange argument. But low demand also explains everything he talks about. When you hear hoof beats think horses not zebras.
  - asfgjkladmxvn 7y ago
    > When you hear hoof beats think horses not zebras. It depends where you are of course...
uoaei 7y ago
It behooves one to read the comment thread replying to Dr. Krugman's post. Many arguments emphasizing the disparity between real output vs. employment in manufacturing. Paul Krugman is wrong surprisingly often about these sorts of things. He cherry-picks one graph and says that this graph, combined with the opinions of cherry-picked esteemed colleagues, supports his conclusion, when ample evidence exists and is provided in near-real-time to refute it.
- fizzbuzz123 7y ago
  Oh dang guys the comment section dunked on a Nobel Winning Economist. Lol
- JamesBarney 7y ago
  Mind pointing to some of the evidence that it's a weird supply side issue that is automating jobs without making people more productive?
- icelancer 7y ago
  >> Paul Krugman is wrong surprisingly often Not that surprising if you examine his incentive structure. It is best for him to misrepresent issues like this, QE methods during the Bush/Obama administrations, etc.
fizzbuzz123 7y ago
Tell that to the Billionaire class who have taken virtually all the productivity gains of the past 50 years for themselves. Keynes was right, we should be living in luxury right now working 15 hour weeks but instead we have a handful of Uber Wealthy people gorging themselves.
TheOtherHobbes 7y ago
Using a graph that shows soaring productivity to argue that soaring productivity isn't happening seems a little counterintuitive to me. But I'm not a prize-winning economist, so perhaps I'm missing something. The US economy can't be fixed by educating more plumbers. The core problem is that the US has turned itself into a peacetime rationing economy. Essential services - healthcare, education, housing, financial support - are strictly rationed for reasons that are strictly unnecessary and economically destructive for the majority of the population. The extracted value paid by individuals to the companies that provide and finance these services is effectively a privatised form of tax. It's vastly more onerous than the official tax rate, while providing no true public benefit - and no democratic representation. More plumbers and electricians won't change this, because they'll still be working in a system where they'll have to charge unaffordably high prices to make a decent personal profit after the "corporate taxes" on health care and education (and personal housing) are paid. Ultimately it's a political choice to run a starvation economy for most workers, and that won't change unless there's a political shift. Which badly needs to happen. This is not about automation, and it's not about AI. There's a huge amount of productive work that isn't being done - new infrastructure, maintenance of old infrastructure, childcare, health care, education at all levels, housing, trade and building work, academic research and open-ended no-immediate-return blue sky R&D - because the political economy is biased against that kind of activity rather than for it.
- lkrubner 7y ago
  Productivity growth collapsed in 1973 and it has not recovered yet. There were a few good years in the 1990s, but nothing like the reliable productivity growth that the USA saw for the century before the 1970s.
  - sanderjd 7y ago
    My gut reaction to this claim is always that it seems wrong; that the metric we're using to measure productivity must be missing a big part of the story. Why is that reaction wrong?
    - 7y ago
perl4ever 7y ago
"Then we'd see soaring productivity, which we don't see" If you average everyone, sure. But that's kind of circular reasoning. If you look at the elite employees of, say, the FAANGs, the tail of the distribution, their productivity is soaring.
icelancer 7y ago
>> Then we'd see soaring productivity, which we don't see: https://twitter.com/paulkrugman/status/1140259227908411392 https://twitter.com/paulkrugman/status/1140259227908411392 This is like using a total number for "inflation" to assume that costs have not gone up. And yet... https://ritholtz.com/wp-content/uploads/2018/02/pricechanges.png https://ritholtz.com/wp-content/uploads/2018/02/pricechanges... Childcare, hospital services, college textbooks, college tuition, childcare, and medical services way overindex the average inflation. TVs, Software, Toys, Cellphone Service, New Cars, and Clothing all underindex the average inflation. What do those sectors underindexing sound like regarding productivity and purchasing power? EDIT: Also consider two other effects: We are automating productive jobs, and people are replacing those jobs with very low productivity jobs (service sector).
- jdlshore 7y ago
  That is exactly the argument of the paper the OP is promoting [1]: that the cost of education is due to the "Baumol Effect:" it is an industry dominated by the cost of human contact (the teacher's time) and human contact is not subject to productivity gains in the same way other goods are. In other words, it isn't that education isn't unusually expensive, it's that everything else is unusually cheap. From the paper's conclusion: "The Baumol effect is the best explanation for rising prices in education, healthcare, and other service sectors. In that sense, and only in that sense, is there something “wrong” with the service sector—namely, that it’s hard to increase productivity in services. Or we could equally well say that what’s right with the goods-producing sector is that it’s easier to increase productivity in goods. Whatever the explanation for this difference in productivity growth, however, it’s a difference, like the difficulty of domesticating huckleberries, that cannot be traced back to policy. We should neither ignore this difference nor make too much of it." That's the paper's perspective. I'm not promoting it myself, but I did find it to be a sensible argument. [1] https://www.mercatus.org/system/files/helland-tabarrok_why-are-the-prices-so-damn-high_v1.pdf https://www.mercatus.org/system/files/helland-tabarrok_why-a...
  - im3w1l 7y ago
    I've had the same thought. That the price of goods have decreased. But more due to cheap imports. Of course productivity improvements are also important but less so. Then as those prices go down, the central bank prints money to counteract decreasing prices. And it's because of this currency debasement that the price of everything else increases.

wwweston 7y ago

Krugman's point is not uncontested: http://www.scottsantens.com/our-paradoxical-economy-courtesy-of-technology-and-the-lack-of-basic-income http://www.scottsantens.com/our-paradoxical-economy-courtesy... Additionally, even if we're not peering around the metrics for dynamics hiding behind them, there's the question of how much of the by-Krugman's-metric still rising (if not "soaring") productivity it would take to soften the labor market. I'd like to think he knows the answer to that question, but it isn't clear.

JamesBarney 7y ago
His central argument is that IT is only increasing productivity in open source software and does not cause any productivity improvements in businesses, which is a strange argument. But low demand also explains everything he talks about. When you hear hoof beats think horses not zebras.
- asfgjkladmxvn 7y ago
  > When you hear hoof beats think horses not zebras. It depends where you are of course...

uoaei 7y ago

It behooves one to read the comment thread replying to Dr. Krugman's post. Many arguments emphasizing the disparity between real output vs. employment in manufacturing. Paul Krugman is wrong surprisingly often about these sorts of things. He cherry-picks one graph and says that this graph, combined with the opinions of cherry-picked esteemed colleagues, supports his conclusion, when ample evidence exists and is provided in near-real-time to refute it.

fizzbuzz123 7y ago
Oh dang guys the comment section dunked on a Nobel Winning Economist. Lol
JamesBarney 7y ago
Mind pointing to some of the evidence that it's a weird supply side issue that is automating jobs without making people more productive?
icelancer 7y ago
>> Paul Krugman is wrong surprisingly often Not that surprising if you examine his incentive structure. It is best for him to misrepresent issues like this, QE methods during the Bush/Obama administrations, etc.

fizzbuzz123 7y ago

Tell that to the Billionaire class who have taken virtually all the productivity gains of the past 50 years for themselves. Keynes was right, we should be living in luxury right now working 15 hour weeks but instead we have a handful of Uber Wealthy people gorging themselves.

TheOtherHobbes 7y ago

Using a graph that shows soaring productivity to argue that soaring productivity isn't happening seems a little counterintuitive to me. But I'm not a prize-winning economist, so perhaps I'm missing something. The US economy can't be fixed by educating more plumbers. The core problem is that the US has turned itself into a peacetime rationing economy. Essential services - healthcare, education, housing, financial support - are strictly rationed for reasons that are strictly unnecessary and economically destructive for the majority of the population. The extracted value paid by individuals to the companies that provide and finance these services is effectively a privatised form of tax. It's vastly more onerous than the official tax rate, while providing no true public benefit - and no democratic representation. More plumbers and electricians won't change this, because they'll still be working in a system where they'll have to charge unaffordably high prices to make a decent personal profit after the "corporate taxes" on health care and education (and personal housing) are paid. Ultimately it's a political choice to run a starvation economy for most workers, and that won't change unless there's a political shift. Which badly needs to happen. This is not about automation, and it's not about AI. There's a huge amount of productive work that isn't being done - new infrastructure, maintenance of old infrastructure, childcare, health care, education at all levels, housing, trade and building work, academic research and open-ended no-immediate-return blue sky R&D - because the political economy is biased against that kind of activity rather than for it.

lkrubner 7y ago
Productivity growth collapsed in 1973 and it has not recovered yet. There were a few good years in the 1990s, but nothing like the reliable productivity growth that the USA saw for the century before the 1970s.
- sanderjd 7y ago
  My gut reaction to this claim is always that it seems wrong; that the metric we're using to measure productivity must be missing a big part of the story. Why is that reaction wrong?
  - 7y ago

perl4ever 7y ago

"Then we'd see soaring productivity, which we don't see" If you average everyone, sure. But that's kind of circular reasoning. If you look at the elite employees of, say, the FAANGs, the tail of the distribution, their productivity is soaring.

icelancer 7y ago

>> Then we'd see soaring productivity, which we don't see: https://twitter.com/paulkrugman/status/1140259227908411392 https://twitter.com/paulkrugman/status/1140259227908411392 This is like using a total number for "inflation" to assume that costs have not gone up. And yet... https://ritholtz.com/wp-content/uploads/2018/02/pricechanges.png https://ritholtz.com/wp-content/uploads/2018/02/pricechanges... Childcare, hospital services, college textbooks, college tuition, childcare, and medical services way overindex the average inflation. TVs, Software, Toys, Cellphone Service, New Cars, and Clothing all underindex the average inflation. What do those sectors underindexing sound like regarding productivity and purchasing power? EDIT: Also consider two other effects: We are automating productive jobs, and people are replacing those jobs with very low productivity jobs (service sector).

jdlshore 7y ago
That is exactly the argument of the paper the OP is promoting [1]: that the cost of education is due to the "Baumol Effect:" it is an industry dominated by the cost of human contact (the teacher's time) and human contact is not subject to productivity gains in the same way other goods are. In other words, it isn't that education isn't unusually expensive, it's that everything else is unusually cheap. From the paper's conclusion: "The Baumol effect is the best explanation for rising prices in education, healthcare, and other service sectors. In that sense, and only in that sense, is there something “wrong” with the service sector—namely, that it’s hard to increase productivity in services. Or we could equally well say that what’s right with the goods-producing sector is that it’s easier to increase productivity in goods. Whatever the explanation for this difference in productivity growth, however, it’s a difference, like the difficulty of domesticating huckleberries, that cannot be traced back to policy. We should neither ignore this difference nor make too much of it." That's the paper's perspective. I'm not promoting it myself, but I did find it to be a sensible argument. [1] https://www.mercatus.org/system/files/helland-tabarrok_why-are-the-prices-so-damn-high_v1.pdf https://www.mercatus.org/system/files/helland-tabarrok_why-a...
- im3w1l 7y ago
  I've had the same thought. That the price of goods have decreased. But more due to cheap imports. Of course productivity improvements are also important but less so. Then as those prices go down, the central bank prints money to counteract decreasing prices. And it's because of this currency debasement that the price of everything else increases.