Falling Demand for Brains?

In two recent posts - about the economics of the Arab world and the outsourcing of legal work - the underlying story is that highly educated individuals across disparate societies are finding their educational investment devalued. The revolts in Arab countries are being led not by the poorest of the poor, but by university graduates who can not find jobs. In the US and Europe, lawyers are finding their expensive degrees have been degraded by the demand for less costly alternatives. In the following NY Times essay, Paul Krugman discusses the implications. One of his conclusions is that as a global civilization, we may need to focus more on values.

"And now for something completely different.

About 15 years ago, before I became a regular columnist, the Times asked me and a bunch of other people to contribute to a special edition celebrating the 100th anniversary of the NYT magazine. The stated rule was that the pieces should be written as if submitted in 2096, looking back at the magazine’s second century.

As I recall, I was the only contributor who obeyed instructions; everyone else was too concerned about loss of dignity. Anyway, I decided to write the piece around a conceit: that information technology would end up reducing, not increasing, the demand for highly educated workers, because a lot of what highly educated workers do could actually be replaced by sophisticated information processing — indeed, replaced more easily than a lot of manual labor. Here’s the piece: I still think it’s a fun read.

So here’s the question: is it starting to happen?

Today’s Times has an interesting and, if you think about it, fairly scary report about how software is replacing the teams of lawyers who used to do document research. And then there’s Watson, of course, who — which? — can beat almost everyone except my Congressman at Jeopardy.

Getting a bit more serious, Larry Mishel wrote recently about the overselling of education, pointing out that the college wage premium, after rising sharply in the 80s and 90s, has stagnated lately. Indeed.

In my mind this raises several questions. One is whether emphasizing education — even aside from the fact that the big rise in inequality has taken place among the highly educated — is, in effect, fighting the last war. Another is how we have a decent society if and when even highly educated workers can’t command a middle-class income.

I know, it’s rushing ahead a bit; but remember, the Luddites weren’t the poorest of the poor, they were skilled artisans whose skills had suddenly been devalued by new technology.