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Gertrud Fremling
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I thought that Jack brought up some excellent points. Especially in the many female-dominated professions that deal with child and elder care, elementary education, psychology et.c. you need certification based on some type of formal education. No matter how much experience or informal studies, there really is no good way of demonstrating that you would make a great worker. BTW, that may well be a reason why women nowadays make up a majority of college students. Without the formal qualifications, women cannot get into the types of jobs they like. In contrast, more male-dominated areas, such as computer science, management, do not have as many strict educational restrictions, even at higher levels. We can be happy that Bill Gates was not required to have a degree in computer science and business to start a company! And, yes, it is indeed ridiculous that employers cannot administer tests for fear of being sued.
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In your world 30 years from now, why would there be so many unskilled people? Technology is making education fun and efficient and technology will also help us conquer physical and mental diseases. It seems that virtually everybody would have aquired skills either in the service or entertainment sector or become a specialist in how to develop, program or maintain the machines.
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I'd not trust a non-technical writer for non-technical Mother Jones. Real science magazines are better sources. Anyway, assume you are right about Starship Enterprises. Would that not mean that the demand for space travel would explode? Just the way air plane travel has so far. Adventurous people would like to go for space walks, dine at restaurants on on moon and spend a few years on Mars. Such activities would be a lot more fun than just watching movies about space travel. But what about more mundane services? Do you really thing many parents would find Robotic Daycare appealing? Do you think the five-star restaurants would attract customers with robot servers?
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I totally agree that lots of jobs would be eliminated. But some service sector jobs would not go away. Indeed, there would be greater demand for the type of service jobs I listed, and they would replace the jobs no longer needed due to automation. And just like today, many of those could very well be performed by relatively low-skilled workers. People with high incomes are willing to pay a lot to have personal service by friendly workers. And children or the elderly can hardly be cared for without a lot of human interaction. Extra personal attention is a luxury. Why would not the demand for service workers go up and the wages in the service sectors simply rise? Actually, that sounds like a wonderful, even possibly quite egalitarian society! The basic necessities of life will be taken care of cheaply thanks to automation and we can shift our focus to party-planning, charm courses and playing the trombone...
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I disagree with your statement:"It is difficult to imagine productive activities that cannot be automated—mining, construction, many medical services, house cleaning: the list goes on and on." Indeed it is easy to imagine many types of (now) luxury type services where demand would continue to increase. For instance the whole category of educational/athletic services, such as personal trainer, dance instructor, ski instructor. Similarly, people like to learn to improve many fun skills, such as getting group lessons in cooking, painting, ceramics, wood working, playing a musical instrument. Pets will be pampered more, increasing demand for veterinarians, dog walkers, pet psychologist. And if the cost of travel comes down due to automation, demand for air craft, tour guides et.c. would go up. Protective services, such as security guards and police would increase, too as people spend less on other areas. Just look at what the currently wealthy consume: they do not prefer robots but actual personal service.
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Ooops! My comment was meant to be posted for Posner.
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I disagree with your statement:"It is difficult to imagine productive activities that cannot be automated—mining, construction, many medical services, house cleaning: the list goes on and on." Indeed it is easy to imagine many types of (now) luxury type services where demand would continue to increase. For instance the whole category of educational/athletic services, such as personal trainer, dance instructor, ski instructor. Similarly, people like to learn to improve many fun skills, such as getting group lessons in cooking, painting, ceramics, wood working, playing a musical instrument. Pets will be pampered more, increasing demand for veterinarians, dog walkers, pet psychologist. And if the cost of travel comes down due to automation, demand for air craft, tour guides et.c. would go up. Protective services, such as security guards and police would increase, too as people spend less on other areas. Just look at what the currently wealthy consume: they do not prefer robots but actual personal service.
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The latest CDC numbers put the estimate for the US slightly lower, not over 2 but rather at 1.88. For instance, see this article: http://money.cnn.com/2013/09/06/news/economy/birth-rate-low/
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Becker writes: It is somewhat puzzling that the performance gap on achievement tests has apparently narrowed while the gap between high and low income families in their spending of time and money on their children’s human capital has apparently widened. Possible explanation: The internet improves education much more dramatically at the low-end of the cost spectrum. Take a concrete example: http://www.ixl.com/ It costs no more than 10 dollars per month and is interactive despite no teacher - just get an answer wrong and up comes the answer explained in detailed.
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I have a question of measurement. The benefits to college are calculated relative to high school graduates. But as a higher and higher percentage go on to college, the types of people in the two groups are altered. The average IQ for each group goes down as the more and more medium-smart people go on to college. This by itself could possibly affect the earning difference between the two groups. Take the extreme case where everybody except total idiots go to college. Then it would falsely appear that college had become absolutely essential for getting a job. So are there any better measurements of how the return to college has changed over time?
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There is a fundamental problem with externalities here. A potential additional child is extremely likely to (in retrospect) value life. Unless there is expected to be severe crowding or food shortages, there will not much of negative consequences to other future individuals. The producers of children however cannot fully capture the positive externalities - the "utility" that future generations will enjoy. Economic theory clearly tells us that we should get underproduction. To take a concrete example, a family might well have one or two children simply because of the joy of children. But going beyond that may be viewed as too costly. Nevertheless, potential child #3 and child #4, if born, would be willing and able to pay the parents for the privilege of being born. As it is now, future children end up financing the retirement of all old people, with the parents themselves not receiving any additional share.
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How about reforming social security to make part of your pension tied to the incomes of all your CHILDREN? People without children generally have an easy time to save up enough for retirement anyway, so such a change should not cause too much distress or inequality. And it would encourage parents not just to have more children but also raise them in such a manner as to become productive, tax-paying citizens.
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Macroeconomic policy can only do so much. Japan has a major problem of fewer and fewer people in the young cohorts. See http://www.nationmaster.com/country/ja/Age_distribution With a shrinking number of workers and consumers, who would want to invest?
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Trying to post part 2 (condensed as the website does not seem to like long comments): At the other end of the spectrum, technology makes low-skilled workers more productive. For instance, cab drivers don't need to know all that much about an area but increasingly use gps instead. Being a cashier used to require good counting skills as well as trust. However with customers swiping credit cards on their own and with security cameras following every single move at each cashier (such as whether all the items were bagged and the customer picked up the bags), very low-skilled workers can be put to use as cashiers as long as they are nice and smile at the customers. And with cellphones that can send instant pictures, a worker can rely on the knowledge of others. For instance, a roofer can send pictures of a problem roof instantly to his boss, who can give a diagnosis and tell what to do.
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Trying to post in 2 parts: I agree with the first commenter here, it does not look dismal. Prof. Becker's reasoning does not really seem to indicate exactly WHY low-skilled workers are going to face particularly bad times. Is it just a guess that past trends will continue? We should ask what particular technological forces in what sectors will occur. I could very well see the result going the other way, especially since simple demographics can tell us there will be fewer and fewer young uneducated workers flooding in from Mexico. Perhaps it is the extremely high-skilled professor or lecturer who is going to be out of a job, as only a small percentage of current academics, especially those with entertainer-type skills, will be needed to create lectures, lectures to be seen on the computer all around the globe. And more and more middle management positions seem destined to continue being eliminated by the increased use of software such as SAP. Or take highly skilled physicians, such as surgeons. Robots are starting to be used to assist in surgery. In the future, we might see technician-types, trained in using the robots take over. Computer technology also allows more outsourcing across the globe: Already today, on Saturday nights (when few people want to work in the US), scans are quickly read in Israel, where it is Sunday morning and the Sabbath is over. Not only can computers increasingly read scans but the ease of transferring scans can allow for more specializations. In other words, for both the surgeons and the specialized doctors reading scans, the very long and generalist training doctors currently go through might become less valuable.
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Is there some technical problem in posting a longer comment? I have twice tried to post a longer comment. It appears to post, but then soon disappears!
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How about cutting costs by shaving off a year or so of undergraduate education? It takes longer to become a lawyer in the United States than in many other countries. Take Sweden. Over there, high school encompasses one additional year but then you go right into studying for the law degree, which takes 9 semesters. In other words, if it were translated into the American system, it would take 5 1/2 years of college education in total, undergraduate plus graduate. So why not promoting more "combined" degrees where a student with high enough SATs etc. could get admitted not just to undergraduate studies but also be guaranteed admittance into the law program whenever he/she had fulfilled certain minimum requirements of pre-law courses? After all, it seems that there are many general undergraduate requirements, such as foreign languages and arts, that are not really crucial for becoming a lawyer. This could save a year or two of tuition as well as generate a year or two of earning income - all in all easily adding up to $100, 000 or more.
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The question could be posed a bit differently. The perception of those who have accumulated great wealth or who earn high incomes depends a lot on how they spend the money. Gates, Jobs Buffet never had any tendency to "frivolous", selfish consumption and have been frugal relative to their huge wealth. At least Gates and Buffet have set aside enormous amounts to charity. It is hard to argue that there is anything wrong with great income or wealth inequality if ultimately the money is spent well: being donated to good causes, invested well or even passed down to a large number of (poorer, deserving) grandchildren and other relatives.
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You discussed the benefits of being around others students who are smart and hard-working: I totally agree to the extent that a very specific skill is supposed to be learned. Class discussions are held at a higher level and you can learn from other students. However, there are other factors at play and I strongly believe that in some cases it is wiser to choose not the very "top" college but a bit below, where you are among the better students at that college. There are a few reasons for that: 1) At the very top schools, a student used to being a top high school student can end up being at the bottom. That can make it hard to follow the discussions in class, especially in such areas as mathematics, where one absolutely has to understand certain concepts in order to grasp the next level concepts. Suddenly being one of the "dumber" students can also be an emotional challenge. Students at high-ranking schools seldom drop out but instead switch to some easier, less rigorous major. 2) If you are one of the best students at a lower-ranking college, you are more likely to become one of the few students to stand out and interact with the professors rather than just feeling like an anonymous "number" in large classes. 3) Not having to spend almost every waking hour studying, a smart student at a lower-ranking college has more time to spend on extracurricular activities and has a better chance to get into various teams and leadership positions. For instance, a student might be able to become an editor at the school newspaper only at the lower-ranking college. 4) Being able to be one of the leaders in student organizations can be good practice for the future. After all, in many professions, top positions require motivating and teaching people "below" oneself. That goes for entrepreneurs, teaching, politics. Constantly interacting only with equally-brilliant fellow students might cause too much of a "bubble".
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You state: "As a result, the economic gains to graduates from the top schools have risen greatly during the past 40 years." How solid is the evidence for this? Are we possibly not just looking at the effects of almost all students attending prestigious colleges being super smart, ambitious, hard-working and with the right family connections? I might not be aware of the very latest research on this, but I am looking at a paper by Stacey Berg Dale and Alan B. Kreuger , "Estimating the Payoff to Attending a More Selective College: An application of Selection on Observables and Unobservables" published in the Quarterly Journal of Economics, Nov. 2002. The bottom line was that when you carefully compare students who truly are the same quality students, the return to going to the more prestigious college is very small or even none. In other words, a student who actually managed to get into a more prestigious college but then deliberately chose a less prestigious one ended up with very similar earnings to the "same" student who chose a prestigious one. Starting salaries for college graduates today seem to reveal a stronger pattern of occupational differences than the precise ranking of the college. Anyone going into technical fields in demand, such as oil engineering or mining, easily outlearns most liberal arts Ivy leaguers.
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The small Scandinavian countries should have much more homogeneous gene pools than the US. Cultural values are more homogenous, too. Hence, even in the absence of specific egalitarian policies, you should expect a much higher degree of intergenerational mobility as other factors, including sheer randomness, would play a relatively larger role. The US always looks bad in egalitarianism comparisons but part of that could be due to aggregating over many different groups of people who tend to remain in different geographic, racial or cultural niches. It would be interesting to see what happened to the US measures when looking at smaller, more homogeneous populations within the US. For instance, would Minnesota, with a largely north-European population, get a high value for intergenerational mobility?
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Note that testing as well as any granting of course credit could easily be separate from the delivery of the course itself. That would be just as with AP-tests currently given at high schools around the US, where everyone face the same national test but have taken slightly different versions of a preparatory AP-course. Various universities then choose what types of AP-courses (with what minimum score) are allowed to be counted towards a degree of theirs. The menu of AP-courses could thus simply be expanded to include more courses, e.g. intermediate microeconomics, econometrics, linear algebra. The student is free to study any MOOCs that correspond to that AP-test. Another slightly different model to follow are professional exams. An example is the various levels of actuarial exams, which are offered at different times during the year at a fee of a few hundred dollars each at designated test centers. The existing test centers offer extremely high levels of identity check and monitoring to prevent cheating. So, the American Economics Association (or any other entity) could design its own tests for various courses, including upper-level undergraduate and basic graduate courses. The student could choose freely whether to pick an MOOC from Harvard, MIT or Penn State as a preparation for the AEA test. A student could thus pass a number of exams that would be the equivalent of the requirements for an economics major at a normal university. Or the student could stop at a smaller set of courses for an AEA "certificate" or "minor". The total costs would just be a few thousand dollars - small change compared to current levels of tuition. A great benefit is that the universities with the best lecturers and best brand name would not necessarily need to get involved in the nitty-gritty work of evaluating the students.
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Nov 26, 2012