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I'm not sure the author's suggestion that potential students be diverted to trades/coding bootcampts etc., will solve too much, and instead may simply shift the problem into those trade industries as well. Somewhere in the ballpark of 2,000,000 students earn a bachelors degree each year. Let's say 25% of students should be diverted into trade schools instead. That will mean an additional 500,000 student per year entering those fields, which will then have the impact of making those jobs ever more scarce and probably depressing wages as workforce supply outpaces demand.

That's not to say diversion of this sort wouldn't help at all, only that it is not a cure-all. I think we're simply approaching a point in economic history where fewer workers are needed to produce more value/gpd/products/whatever. I'm not sure what the solution to that problem is though.




There are two books that cover this subject well: The Case Against Education: 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-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


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.


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.


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?


Lots of people make that argument, but when asked "What are we under counting?" no one's been able to come up with a story that remains consistent when applied to multiple industries. Computers got much, much faster, but everything else stagnated.

It's fairly easy to measure how much money is produced per employee. That number grew 3% to 4% a year for most of the 20th Century, till 1973, when it collapsed. Since then it's average 1.5% a year (again, with a few good years in the 1990s, and with some up and down wobbles during the Great Recession).

The central fact is the big push towards automation in the 1930s and 1940s and 1950s simply had a bigger impact than the kind of breakthroughs we've had in the last 40 years.

The automation of the telephone systems, and the removal of all the women who worked as operators, was huge in the 1940s and 1950s (and a fantastic boost to the computer industry). The later boom in multiplexing made capital investments more profitable, but did not increase the amount of money made per employee.

The introduction of the modern combine tractors on USA farms lead to a fantastic increase in agricultural productivity in the 1930s and 1940s and 1950s and 1960s, and nothing since then has had a similar effect on agricultural productivity.

The introduction of digging robots transformed the coal industry in the 1930s and 1940s and 1950s. Mountain top clearance was another huge change in how the work was done. Nothing since the 1960s has had anything like a similar impact. In fact, the opposite is true, increased environmental protections have, if anything, decreased productivity in that sector, or at least slowed the increase.

And on and on.

The transformations in the early to mid 20th Century were huge. The more recent transformations have been small. The Great Boom gave way to the Great Stagnation.

Check out:

The Rise and Fall of American Growth: The U.S. Standard of Living since the Civil War

https://www.amazon.com/Rise-Fall-American-Growth-Princeton/d...


What's the starting time for that series? Early 1900s (say WW1), or back in the 1800s?

I've got an alternate explanation for the grandparent: the economy is undergoing a phase change from an industrial economy to an information economy, which will bring with it different assumptions about what an economy is. A future historian looking back on us from a century later will see steady growth in whatever metric they measure the economy in (likely volume of data produced) since about the 1970s. The fact that large sectors of the economy have shown negative productivity growth will drop out of the history books, because neither these non-software industries nor productivity as a concept will seem important to this historian.

I'm basing this on a thought experiment: what does the last major phase change in the economy (from largely subsistence-based agriculture to industrialization) look like now, and how do the metrics by which we judge it differ. The concept of productivity is basically nonsensical in a pre-industrial agricultural society - crop yields, of course, depend upon the wind, rain, and weather, and why would we expect them to increase in any non-random fashion? But real agricultural wages (likely a good proxy for productivity) skyrocketed between 1790 and 1810, and then declined by 20% [1, p 20] between then and 1850. To a farmer (that's most of society back then), their plight wouldn't look all that different from today's factory workers: the generation that came of age in 1850 did significantly worse than that of 1810. There was a bit of a bump when mechanized agriculture and meatpacking came out in the early 1900s, but this trend largely continued into the 1930s, at which point we basically stopped talking about small family farmers and got agribusiness instead.

But do we consider the 1800s a time of low productivity? No. We associate them now with the first and second industrial revolutions, which dramatically changed society and hugely increased productivity. "Industry" initially meant "the textile industry", because that was the first area that mass-production techniques were applied to. Over time these techniques spread until they took over the whole economy, at which point we could start measuring the economy by metrics like "productivity" that assume that innovation and capital can allow an individual worker to produce more than they could before. Former metrics like crop yields become an afterthought: as long as they're "enough", who cares?

If you start the clock at 1910 or even at 1870, you're looking only at the portion of history where the industrial economy is the economy. To get a better analogy to current conditions, you have to go back, before the Civil War, when the nascent industrial revolution is causing the collapse of plantations, slavery, seamstresses, tailors, whalers, and small farmers.

[1] http://old.econ.ucdavis.edu/faculty/gclark/papers/farm_wages...


> healthcare, education, housing, financial support - > are strictly rationed for reasons that are strictly > unnecessary and economically destructive for the > majority of the population

Does that mean you want to force more people to become doctors and for healthcare institutions to overspend?

Housing is mostly limited by usable land and the rate at which construction can happen. For cities, building something often means tearing down something else. Near cities, for the most part are expanding as fast as housing can be built. What makes you think it's artificially limited?


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.


>> 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.


Mind pointing to some of the evidence that it's a weird supply side issue that is automating jobs without making people more productive?


Krugman's point is not uncontested:

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.


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.


> When you hear hoof beats think horses not zebras.

It depends where you are of course...


>> Then we'd see soaring productivity, which we don't see: 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...

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).


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-a...


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.


"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.


We just need to reduce or eliminate government backed student loans and the problem will take care of itself. This "crisis" is almost a replay of the housing crisis we just had, government backed loans encourage lenders to lend out money to people who are not qualified for the loan. It doesn't make sense to keep loaning out tens of thousands of dollars to 18 year old kids that have no income [yet] and no real plan to make any money for the next 4 years.

Can you imagine if someone submitted a business proposal asking for a $100,000 investment or loan and the proposal was "think I'll take some classes and then figure out what I want to do with the rest of my life"? We need to end the insanity and turn the spigot off. Then the institutions will be forced to lower their prices and manage their budgets again. Maybe one day we'll get back to the point where a young person can pay for in-state tuition with a part-time job, like it was about 25 years ago.


But without the student loans, the under privileged will not be able to afford said education - I don't want to see a society where only those who can afford it go to university.


This simply isn't true. Schools offer crazy financial aid and there are junior colleges / state universities that offer 100% of aid to impoverished individuals.

The people taking malinvestment (student loans for unproductive means / negative ROI) are firmly in the middle class bracket, both lower/upper sides of it.


financial aid is such a tiny portion that it effectively doesn't exist for the vast majority of university goers.

People taking on too much loans for higher education is a multi-pronged problem. Loans have a place, and if people choose to mis-use a loan to study an "unproductive" subject, i expect that the fault lies with them.

however, when the loans to study law/medicine is in the 200k range, i find it hard to believe that the fault isn't with the university and vested interests in making money with the loans.


And who decides what constitutes malinvestment? I'm guessing there will be plenty of funds made available for tech work, what with Twitter, Ubereats and Facebook being so critical. How about the arts? How about history and culture, you know the stuff that makes living worthwhile beyond your usefulness to line the pockets of capitalists?

Or how about we just confront the problem dead on, remove the money and profit aspect entirely, and offer free college like dozens of other nations do, and have for many years, somehow without their economies imploding? Why must we sacrifice yet more of our society on the altar of profits? Fuck good investments. Fuck investors. Fuck this entire screwed up system that decides that anything that cannot be monetized is worthless.


> who decides what constitutes malinvestment?

the unemployment rate by major, assuming it wasn't already a bad investment due of the student lacking the skill or willingness to finish the studies.


> How about the arts? How about history and culture, you know the stuff that makes living worthwhile beyond your usefulness to line the pockets of capitalists?

Do you ever think about the possibility of people making art or studying history without going into tens of thousands of dollars of debt?


Considering I just said make college free, yeah I think I've considered the possibility.

Even going past that, though, if studying History can't get you a job that makes enough to pay off your debt, then why does it cost so much in the first place?


That's what free/cheap university in Europe managed to achieve.


Don't most countries in Europe offer student loans? If not to the same degree as the US. Even if tuition is free, rent and food isn't.


If I am a bank, I’m absolutely giving a loan to an underprivileged kid with good grades who wants to go to college for a useful degree.


If you are a bank, you issue loans only on things that are likely to have a positive ROI. With a mortgage, you know what the property is worth and can foreclose on it if the borrower isn't able to make the payments.

No such equivalent with a college student. 18-year olds for the most part aren't going to know for sure what they want to major in, so "a useful degree" at the time the loan is signed, might change 2 years in, when they actually have to declare a major.


We can easily conceive of loans that are contingent on the major not changing to something useless. I don’t believe flaws in the current system have to stick forever.


You get exactly the same benefit if government only backs 70% of each student loan. Then it's not profitable loan if the student cannot pay back.

But if you keep significant government backing, then the student loans would get lot lover interest rates. Which is probably good for absolutely everybody.


[flagged]


We already have that in all but name


this but you also have to have affordable education because it's the most reliable, predictable and virtuous of all class mobility mechanisms, and trade school don't provide that for the most part because those are optimized to make corporate drones, not self thinking individuals


I'm pretty sure any competent welder and machinist running a small business custom-fabricating high performance automotive parts (or a similar field, like oil pipelines) would take umbrage with your description of their profession as "corporate drones who aren't self-thinking".


exceptions exists everywhere, do I have to introduce a disclaimer for the 1% of everything or can we have a discussion of the general case without people having to nitpick every word?

heck, I even didn't use an absolute

> for the most part


Yes. Do you think 99% of people who go to college are self-thinking and not corporate drones? Why do so many of them move on to work at corporations?


> trade school [] are optimized to make corporate drones

I mean, I'm not a native English speaker but it seems pretty clear to me I was NOT talking about college output, quite the opposite actually.


You must understand that we’re talking about trade school as an alternative to college, so if you point out some stunning detractor toward trade school, you’re implying the detractor does not exist for the alternative.

Maybe I took that implication to an extreme end, but calling out trade schools for producing “corporate drones” absolutely bears the implication that you believe the alternatives are different / not as bad.


> you’re implying the detractor does not exist for the alternative.

no? what kind of crazy dichotomic logic is that? you're way overthinking it.

> Do you think 99% of people who go to college

moreover college output has a lot more variation than trade school output, so assuming that the proportions of outcome are the same is as well something that was never claimed.

> You must understand

you just dropping things I never said and argue as if I said them, how does one go and debate or understand that? it was never my point to begin with!

jesus, 6 post ago I made one point: trade school aren't providing the titles one would go get to optimize for class mobility, heck, the rest isn't even a point of discussion really, the whole idea on which trade school are based on is to bake blue collar workers.


Haha, whatever you say.


1) if it does turn out to be true that we need "fewer workers", that's great, we just move to a 30-hour work week (or 20, or whatever). We once had 6-day work weeks, or sometimes even 7, and it was productivity gains that allowed us to move to 5. We can move again.

2) But, I'm not sure it's even true. We mostly got to where we are by having all the manufacturing done in 3rd world countries for pennies. It's not that it doesn't take a lot of hours, it's just that we pay little for it. Which is great, if you're one of those who has a job, but bad in lots of other ways.

3) Regarding automation, it should be noted that the manufacturing did not, by and large, go to the countries with the best robots, or even the most reliable electricity for automation. It went to where the environmental, health, and safety laws were laxest, and the cost of labor was lowest. This suggests that there is still plenty of labor that needs doing, we just are run by an elite that doesn't want to pay for it.


I like the idea or shortening the work day, unfortunately the commonman jobs are the ones being automated out of existence. There will only be a smaller percentage of people who can actually do the majority of the jobs. Education may help some with this but only to a certain degree. The days of assembly line work are nearing an end. I don't know what will happen to the population who are unable to work, perhaps more specialization is the answer


See point #3, above. The "commonman jobs" did not, in fact, get automated out of existence, they mostly got moved to countries with LESS automation than the advanced economies, which is the opposite of what one would predict if automation were the issue.


> 1) if it does turn out to be true that we need "fewer workers", that's great, we just move to a 30-hour work week (or 20, or whatever). We once had 6-day work weeks, or sometimes even 7, and it was productivity gains that allowed us to move to 5. We can move again.

Shorten the work week and it is hourly workers getting screwed. Unless we think, for some reason, corporations will take it upon themselves to pay more for less, especially since the labor pool would be more competitive with increases in automation.


> Shorten the work week and it is hourly workers getting screwed.

Funny this is exactly one argument that was used against the 40 hour working week!


I see no reason to think that full time salaries wouldn’t also fall. If the goal is to employ more people, the first solution that will be tried is “at roughly the same total labor expense”. Exempt employees will not be exempt from this pressure on wages.


This is potentially the lump of labour fallacy. There isn't a set amount of work to be done.

If we have a mass of students learning no useful skills and divert them into useful fields, then the overall productivity of the economy will go up.

Obviously if everyone floods into a single field there's some limit: you can't productively employ 10x the plumbers without a matching increase in buildings.

But in general, better skills should lead to a better economy.


Germany has been better managing its human capital for generations with its apprenticeships, trade schools, and cheap universities. There are problems of course with switching lanes and with second tier universities, but on the whole it seems to work better.


"If we have a mass of students learning no useful skills and divert them into useful fields..."

What do we do if a significant portion of the students who already aren't learning useful skills lack the neural plasticity to become productive in other endeavors? Or in other words, how do we incorporate humans into the economy when those individuals are objectively inferior at EVERY task compared to an automated (robot, AI, etc...) alternative? Especially as we consider things like climate change and austerity, and how humans are supposedly the greatest threat to overall environmental longevity?


That's a good question in the medium term. But, the US education system presents a clear misallocation of skills that can be fixed.

It won't solve the underlying issue you address, but it will improve things, and waste less societal resources in the educational process too.


The problem is the government subsidizes loans.


That may be a problem, but it's a bit beside the point I was making. Whether or not college costs & therefore debt is increasing as a result of easy loans says nothing about the job prospects of graduates from bachelor programs. Even if we posit a world where the loans didn't exist, college costs were lower, and therefore just as accessible as it is today then we still have the same underemployment problem. If such a change instead resulted in more students learning a trade, we still have to same downward pressure on trade wages because the labor supply increases relative to demand.

With or without government subsidized loans, there is a jobs market issue.


Unless most majors generate signal instead of human capital.


It's a problem for sure but education costs have been high-inflation for a long time. See here: https://news.ycombinator.com/item?id=7866194


It is that in addition to the fact that they cannot be discharged in bankruptcy under the majority of cases (nearly all).


You can’t mandate that banks must give loans to all student applicants regardless of collateral, and at the same time permit bankruptcy of those loans. Those two things are in direct conflict. Literally every graduate would simply declare bankruptcy (Since anyone who is both a graduate and borrow would by definition be broke). You’d be a fool not to. There’s literally no downside to bankruptcy if you’re a broke 22 year old with a brand new $250k debt and a degree in anything.

Your choice are:

1. everyone can get a loan regardless of wealth, but they can’t file bankruptcy

2. Let banks only give student loans to qualified applicants (i.e. rich kids with co-signing rich parents) but permit bankruptcy.


That's why you should learn things you enjoy and find intrinsically valuable because there is never a guarantee of employability


That's a harmful attitude. Of course there's more reliable merit in studying things your community will value you and reward you for. If you do your own thing, hoping that it leads to something fabulous, you'd better take responsibility for the risk of failure.


That is not so bad to depress some of those wages, my plumber is making $2k/Day. I don't know too many people making that kind of money even in tech, let alone other disciplines!


I think your plumber has additional material and labor costs you're not seeing.


Primary cost of labor is your health. Those kind of jobs aren't done by people over 45. The human body degrades during that sort of work.


Lol tell that to my dad who is still painting houses at 63. Or his competition who is still painting at 70. that is preposterous. In fact most laborors I know are well above 45. Yeah it takes a toll on your health but most of the health issues I see in labor intensive jobs is because of alcoholism. Its good for your body by and large to get up every day and do physical work. Yes your back will hurt, and your feet and your joints. But you'll be in good health.


Think construction... welders... carpenters... plumbers... guys who smash appendages and crawl around in mud.

I know quite a few old ones and I know many many more who struggle with pain every day as they are my age and talk to me about it. ( IT being my 3rd career after welding and meatcutting ) I have many friends who are dropping out of the workforce and finding alternative jobs because they cant do the work.

Painting is hard work but its one of the less body impacting you can do. There are a few roles like that and yes, being active is a good thing.


have you heard about age discrimination in tech?


I have 50 decades of life and work in tech. You tell me ?


Look, Methusela. I doubt you were working in software in the 1500s.


LOL um... typo :)


Please don't post shallow attacks on other people because of obviously trivial misstatements. That adds noise, not signal.

https://news.ycombinator.com/newsguidelines.html


Materials sure, but what do you mean labor? He is the labor, he gets the money.


There's more to running a plumbing company that just the person who shows up at the job site. Plus, plumbing isn't a one-person job. Every plumber has helper/apprentices, etc.


How is that different from when I take on contract tech work and farm out some of the work. everyone has these types of problems when they are sole proprietors.


I believe you're confusing top-line revenues and profits available for the tradesman. As it stands, you're asserting that your plumber makes approximately 14x the average plumber in America, and 10x the average plumber in San Francisco. This is unlikely to be correct.

In a similar vein, Apple takes in over $2,000,000 of revenue per employee, but Genius Bar employees are not taking that amount home. I mention this solely because it uses the same reasoning evident in your initial claims.


I kind of agree with your point, but you really think an average licensed plumber in SF makes $200/day???


Well, I did a cursory search for data, and it seems to indicate that this is the case.

So yes... I think the average plumber in SF is making about $70k/yr. (so ~$300 per day worked, or $200 per day).




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