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This is a flagrant simplification of economics and it's unfortunate that this is often allowed to stand on HN. A sure sign someone is making something up in eco
by necubi 14y ago
This is a flagrant simplification of economics and it's unfortunate that this is often allowed to stand on HN. A sure sign someone is making something up in economics: using "QED." Economics is about the real world, and the real world is messy. Even good mathematical economic theories rarely map well to the real world, and yours is hardly that.
Shortages certainly exist in a free market, and they occur in cases where the supply is relatively inelastic. This is obviously the case in the short run for engineers, as it takes some amount of time for engineers to be trained (four years if they go the normal university route). If the demand outstrips the supply presently in the market (which appears to be the case), employers cannot magically increase the present supply.
Furthermore, humans are not perfectly rational economic actors. Not everybody will choose to become an engineer solely because that is the most economically rational thing for them to.
If employers offer higher wages (which has clearly been happening; starting salaries are above $100k these days in the valley) they can at best hope to attract employees from other employers that are offering less (although there may be non-monetary factors at work as well) but that does not change the fundamental imbalance between supply and demand.
I could go on in this vain, but seriously, pick up an economics textbook before spouting off this nonsense.
- DenisM 14y agoKindly refrain from inflammatory language.
- nradov 14y agoNot nonsense at all. The article specifically mentioned a "shortage" of engineers in San Francisco. In the USA there are an effectively unlimited number of qualified engineers who could do those jobs. Many of them are either living in other areas, or have moved on to jobs in other fields and could get back up to speed with minimal training (much less than 4 years). If employers offered significantly higher wages then plenty more supply would quickly appear to clear the market. Of course humans are irrational but they will still respond when presented with a strong enough incentive. And yes, I have read the economics textbooks.
- jseliger 14y ago>If employers offered significantly higher wages then plenty more supply would quickly appear to clear the market This is really a housing supply question as Matt Yglesias makes clear here: http://www.slate.com/articles/business/moneybox/2012/05/facebook_george_lucas_and_nimbyism_the_idiotic_rules_preventing_silicon_valley_from_building_the_houses_and_offices_we_need_to_power_american_innovation_.html http://www.slate.com/articles/business/moneybox/2012/05/face... and as others have written (see, for example, Ryan Avent's The Gated City). Housing costs in Silicon Valley are insane, which prices out lower skill workers and forces companies to pay more for highly skilled workers. Allowing to higher building heights and reduce setback requirements alone would do a lot to improve the jobs situation.
- klochner 14y agoYou're ignoring demand - at $10,000/hour there wouldn't be a shortage because demand would dry up. Please try to be more considerate, especially given that there's always a non-trivial probability that you're mistaken as well.
- eli_gottlieb 14y agoIf the demand outstrips the supply presently in the market (which appears to be the case), employers cannot magically increase the present supply. Well... at least at the low end, the companies could hire people on aptitude and contract them to stay for some years in exchange for training them.