Skills are a risky investment

[What follows was written for a UK audience, but most of it fits the USA as well.]

A shortage of skills is a source of perpetual anxiety within Britain’s political class. Here’s Tory backbencher Dominic Raab, a few months back in the Telegraph:

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 real problem, Continue reading

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Skills and the response to crisis

My paper with Andrea Filippetti is now available from Birkbeck’s Centre for Innovation Management Research. Bottom line: European countries with a combination of good short-term unemployment insurance and vocational training participation were less likely to see reductions in private sector investment in innovation in the first year of the financial crisis: having just one of these was no help, and job security, the bête noire of neo-liberalism, made no difference. Another way of putting it is that, in this particular case (investment in innovation, during the financial crisis), it is the security part of the flexicurity model that provides the benefit. This is consistent with the logic of Estevez-Abe, Iversen & Soskice’s chapter in Hall & Soskice’s Varieties of Capitalism.

Economic liberalization depends on strong states

Julia Cagé and Lucie Gadenne find that

tariff cuts lead to lower tax revenues as a share of GDP. The drop is highest in poor countries that don’t have the capacity to compensate for lost tariff revenues with domestic taxes.

This is an important point in itself, and illustrates a more general principle that many of the benefits of economic liberalization depend on strong states. Continue reading

Skills, pensions, sustainability: electoral systems have consequences

Electoral reform is back on the British political agenda, which is good. There are some very important things that the British state simply cannot do properly because of its present electoral system, and which it would stand a good chance of doing if it had a well-designed proportional representation (PR) system.
The British state is very bad at providing for a workforce adequately skilled for the twenty-first century, establishing a pension system that doesn’t take your retirement funds for a flutter at the casino-on-Thames, or facing up to big environmental problems like climate change.
For the rest of the story, see my posting at openDemocracy.net, or the longer version, with references here.)