Sunday, August 20, 2017

Want to make America Great? Go learn something new.

"Make America Great Again" is a slogan that all Americans are inevitably familiar with these days. Whether they love hearing it, or roll their eyes at it, everyone has heard it many time. While I am not opposed to the argument that America is currently great, the reality is that it doesn't feel very great for a lot of people because of the way our economy has changed. The US stock market has actually been on a very nice climb since around 2009. Nothing really special has been happening in 2017 other than perhaps we have a President who likes to claim credit for everything positive, even if he didn't have anything to do with it. The problem is that the gains from those stocks and the corporate profits that have driven them there aren't trickling down to a large fraction of the population.

Unfortunately, the "plan" from the Trump administration on how to fix things in America was largely to try to roll us back to the 1950s. He promised to bring back jobs in things like coal mining and manufacturing. Of course, those promises are all empty. You can't just roll back the clock and proclaim that the economy is going to work the way that it did decades ago. Things have changed. Technology has changed them.

There are a variety of reasons that lots of people feel left behind in the current US economy, but the one that really stands out to me is the skills gap. Technology has changed the economy, but not enough people have stayed up with technology to keep themselves relevant in the current job market. The manufacturing sector is an area often sited for people losing jobs, but the reality is that US manufacturing output is at an all time high. The thing is, the factories don't need as many workers, and the worker that they need are ones with higher level skills. This was highlighted in the article "In US, factory jobs are high-tech, but the workers are not".

As that article mentions, what US employees need is training, but US employers aren't prone to pay for it. Neither is the Republican leadership we currently have running most states as well as the federal government. There are some serious challenges with training everyone as well. A number of these were outlined in "Technology is setting us up for a training crisis".

The thing is, we really have two problems. The one we are feeling right now is that labor is losing out to capital in terms of employer spending, so money isn't trickling down, even when stock prices and company profits are really high. The other problem is that the lack of skilled people is setting up a really bad dynamic where the top companies become superstars. This problem was highlighted in the MIT Technology Review article, "It Pays to Be Smart". That article had the much more informative subtitle of , "Superstar companies are dominating the economy by exploiting a growing gap in digital competencies".

This article addresses the fact that for a number of years now, economists have worried about a stall in the growth of productivity. This is significant, productivity growth has been the key driver of economic growth and the increase in societal wealth for about as long as humans have had organized civilization. This slowing of productivity has also seemed very counter intuitive because during this time digital technology has grown by leaps and bounds and has changed our lives in many very fundamental ways. What "It Pays to Be Smart" discusses is a different analysis that looks only at the top performing companies in each segment of the economy. It turns out that the top companies still have great productivity growth. All the other companies are lagging behind though, and putting a drag on the economy. Why is that? Well, the top companies are doing a really good job of harnessing digital technology, while everyone else struggles to do so in an effective way.

Why is it that the top companies can use technology efficiently while most other companies struggle? To my mind the answer is once again the skills gap. In this case, a shortage of people with sufficient skills to really harness technology in a way that improves productivity. To put it another way, the small companies suck at technology because there are only so many people with the skills, and the big companies have the money to attract or buy out that small population of people. There are certainly other factors like the growth in the importance of data and the fact that large pools of data are worth a lot more than small pools of data (some of these are discussed by the Economist in "The world's most valuable resource is no longer oil, but data"), but it seems to me that the real challenge for small businesses that want to succeed is that they have to somehow attract and retain good people with high end skills who can bring the efficiencies of modern digital technology to bear. This would be a lot easier to do if there were more such people.

Based on this reasoning, the fundamental problem holding back our economy today isn't anything related to foreign competition or immigrants, it is a lack of people with the right skills to drive the economy forward. So if you believe that America has lost its greatness, and you want to actually do something the make America great again, go out and learn something new. Thanks to the multitude of online learning sites (see links below for some), it has never been easier or cheaper to pick up new skills. It does take effort, but if you really want to improve America, sitting around complaining about the loss of the jobs of old isn't going to do it. Putting in the effort to learn new skills yourself is the activity that I truly believe will have the greatest long term benefit, and unlike many other things, your learning is something you have control over.

Online Learning Sites

I'm listing some of the big ones here. If you think I missed one, let me know in the comments and I'll add it.

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