You Gotta Have Standards

EconTalk Extra
by Amy Willis
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James Bessen on Learning by Do... David Beckworth on Money, Mone...

When machines make workers more productive do workers wages rise? Does technology destroy jobs across the entire economy? These were two of the key questions EconTalk host Russ Roberts explored this week in his conversation with James Bessen.

As always, we'd like to continue the conversation with you...Let us know your reactions to these questions in the Comments. We love to hear from you.

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1. This week, Adidas made news by announcing it was moving production back to Germany from Asia...but using robots. What is the mechanism discussed by Bessen that could cause this to increase jobs elsewhere in the economy?

2. Bessen notes that wages during the first decades of the Industrial Revolution were largely stagnant. How does this square with the story about rising real incomes in this past Feature Article by Clark Nardinelli? Do you think workers will eventually benefit more from today's innovations than they are right now?

3. It's easy to see how standardization benefits consumers. But how does standardization elicit greater relative benefits for workers, according to Bessen?

4. When Russ asked Bessen how to avoid the sort of technological job replacement Bessen sees in the future, Bessen's answer is to teach people to be lifelong learners. But he doesn't really tell us how. So how do you think we can teach this to young people (or can we)? Explain.

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COMMENTS (6 to date)
Julien Couvreur writes:

I agree that standardization benefits workers, but is it a net benefit?
Wouldn't standardized jobs would also pay less since they are more valuable to workers (who will be able to re-use the skills they learn)?

Amy Willis writes:

@Julien, Here's what I took from Bessen...When skills are firm-specific, the worker has no mobility and commands a lower wage. When skills are standardized, they become transferable (and the employee always has the potential to build on them), so they can command a higher wage. How did you understand Bessen's argument?

Tyler Wells writes:

Fascinating episode. I find myself wishing that Russ had asked Mr. Bessen about the role in demographics and whether rapid population growth exerted downward pressure on wages in the early years of the industrial revolution. I’ve always assumed that, until people started having fewer children, improving living standards through technology or even redistribution was virtually impossible over more than a few generations.

Joshua Terry writes:

There may be another way to analyze the workers standardization phenomenon. If a job is more standardized(taught in schools, transferable to other firms) then there is more competition outside a firm for a workers job.

If you are one of a few people in a firm that knows how to do a series of specialized proprietary tasks within that firm don't you also on equal have more bargaining power in that you are not easily replaceable by the firm?

If they treat you too poorly you have less options to work outside the firm but they have less options to replace you.

On net those two things may even out.

Thoughts?

Amy Willis writes:

@Joshua, perhaps... While of course I cannot speak for Bessen, I suspect his response might focus on a particular clause in your comment- "taught in schools." A big part of his argument (and very convincing to me, anyway) is that the sort of skills we're talking about here are precisely the sort that CAN'T be taught in schools. He suggests that more often than not they are learned "on the job." Russ also suggested alternative methods for self-education (coursera classes, etc).So perhaps this UNlevels that a bit?

Krishna Mahesh writes:

1. Shoes may become cheaper leading to the ability of retailers to create jobs (shoe specialists, running stride specialists), of course there could be growth in the programmers and manufacturers of the robots themselves

2.Falling inflation (dramatic decreases in the price of cloth, for e.g.) can lead to increasing real wages despite nominal wage stagnation

3.The portability of skills (since they are standardized) from one job to another allows (1) workers to invest in skills more (2) Demand higher wages in the new job using the seniority they've built in their last job

4.We need to teach people the joy of learning. Period. We need to teach deep curiosity and not settling for canned answers.
Schools(in much of the world) need to move from rote learning and teachers who kill creativity by grading on the ability to students to vomit verbatim what's been dictated to them. We need a system that encourages and rewards children for learning more than is demanded of them.

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