There is a select group of people who can’t take seriously any sentence with the word “skills” in it because, at an impressionable age, they were exposed to Napoleon Dynamite. ND being a film about a boy who is convinced that a range of fairly worthless skills – from the use of nunchucks to high-performance computer gaming – will impress the girls. Not being a sports fan myself, my reflexive response would be to put football (that is, for any compatriots of mine reading this, soccer) skills in this category: it can be a fun game and maybe you will impress those who you wish to impress (or maybe not), but if we’re talking about the problem of skills in our economy surely we should get serious, and talk about literacy, numeracy, and that sort of thing.
Germany wasn’t doing well in international football competition a decade ago, and to solve this problem it turned to what it does best: training. What Germany has done to improve its football skills in recent years as documented in an excellent article by Stuart Jeffries in the Guardian last May is particularly interesting because is shows how the passion for learning a skill for which the market is small and precarious – the case here is football, but similar cases could be made for many arts and sciences – can be harnessed to ensure the acquisition of general, transferable skills.
There are two reasons to treat football skills as meaningful human capital. Continue reading →
Readers of this blog (yes, you are legion … waves to crowd) will know that I think investment in skills can be risky, and that because of this the social insurance framework – how generous are short-term unemployment benefits, and who pays for retraining – has a big effect on what sort of skills people choose to acquire. See old posts for various examples.
Now, you might wonder if this can really be so, in our dynamic information economy, in the case of those bread-and-butter tech skills like programming. If you’re good at that, you should be set for life, no? If you do so wonder, then take a look at this piece by Noam Scheiber on The Brutal Ageism of Tech: highly-skilled Silicon Valley nerds in their thirties sneaking off for botox so it won’t be noticed they’re almost ready for the scrapheap.
Gravity-defying CEO pay is not a payment for talent. It’s not looting by the executives, either. It’s the outcome of principal-agent relationship in a market where new technologies combined with regulatory dereliction have created a lot of winner-take-all situations.
The next great problem is our chronic skills gap, which saw Britain plummet down the international rankings in maths, literacy and science. Labour’s arbitrary goal of getting 50 per cent of youngsters into university led to the proliferation of what one of its ministers called “Mickey Mouse” courses, which have benefited neither the students nor the economy. A 2005 Ofsted report found that almost half of those in their twenties said their education had not prepared them for their first job. Far from blaming Europe for this, Michael Gove is rightly learning from it – promoting innovative Swedish-style free schools and a more German emphasis on vocational training.
If we put aside the sniping at Labour and the currying of Gove’s favour, most of this could actually have been written by any of hundreds of politicians from any party at any time in the past thirty years: the schools aren’t delivering the goods, and we don’t do near as good a job at vocational training as the Germans. The skills gap feeds an endemic collective anxiety, the root of the county’s endless obsessive-compulsive re-engineering of its education system – because, surely, finding the right curriculum, the right way to teach, to test, or to select and motivate and cull teachers, is the key to setting this situation right. As for vocational education and apprenticeships, the on-going, multi-party failure in that area could lead one to believe that our Oxbridge-educated leaders can’t bring themselves to really care about something so far from their collective experience: true, perhaps, but like the anxiety about primary and secondary education it misses the point.
* the shares of income going to labor (wages, salaries) and to capital (profits, interest) from 1947 to present, and
* the concentration (i.e., inequality) of income within each share, from 1979 to present.
The data are for the USA. The share of income going to labor has been declining for some time – since 1970 or 1980, depending on which data series you use.
Since capital income is more highly concentrated (most working age adults have labor income, but little or no capital income), an increased capital share produces increased inequality even if nothing else changes. But, also, there’s been increased concentration (inequality) within both the labor and capital shares.
Increased inequality within the labor share is well known. It is also well known that, in the distribution of overall (labor+capital) income, the top 0.1% have seen a much larger growth of their income than the top 1%, who have in turn seen a larger growth than the top 10%; and since those top slices of total income all get large shares of capital income, increased inequality within the capital share is no surprise. It’s nice, though, to see it plotted and explained so clearly.
You might be inclined to file this under obvious – where in the world are cleaners not outsourced and underpaid? With John Lewis, though, it points to an important general problem with the viability of employee ownership of businesses (for readers not in Britain, the John Lewis Partnership is owned by its 81,000 employees; it is a successful operator of department stores and supermarkets.)
John Lewis employees at the annual bonus announcement
Since the 1950s, economists have speculated that a profitable employee-owned business would not grow as much as the same business would if it were owned by capitalists, because the incumbent workers would not want to dilute their individual shares of profits by adding new worker-owners. Continue reading →