In many ways, the woes of Detroit are simply an extreme example of what’s happening in many advanced economies. The loss of manufacturing based jobs is creating a void that is not being filled - or is being filled differently - by new industries.
In many ways, the woes of Detroit are simply an extreme example of what’s happening in many advanced economies. The loss of manufacturing based jobs is creating a void that is not being filled - or is being filled differently - by new industries.
- I think it’s pretty clear that the opportunities for unskilled workers is on the decline.
Therefore (and this is old news), we clearly need to figure out ways to retrain existing workers and ensure that the next generation is equipped with the skills and knowledge to compete in this new world. The problem though - and this is the second piece - is that I’m not sure the new economy will require the same raw number of people.
What I mean by this is that scaling up production of an automative plant is quite different than scaling up an internet platform like Twitter or Tumblr. You just don’t need as many people, which is why the returns to being smart have grown massively for those few. And this is part of the reason we’re seeing rising income inequality across the board.
Now, I don’t know what the answer is, but I think we’ve already shown that the transition to a new economy isn’t going to be a smooth one. To that end, I’ll leave you with one last thought which came from a former professor of mine at Rotman, Walid Hejazi.
His argument is that it’s actually unethical for governments to subsidize unproductive sectors of the economy, such as a manufacturing, in order to sustain jobs. The reason being that you then have high school students telling themselves that they don’t need to go to University because they can simply go work at the local plant and make decent money. But what they don’t realize is that there’s a very real expiry date to those opportunities and, when it comes, it’ll be much harder for them to be retrained.
- I think it’s pretty clear that the opportunities for unskilled workers is on the decline.
Therefore (and this is old news), we clearly need to figure out ways to retrain existing workers and ensure that the next generation is equipped with the skills and knowledge to compete in this new world. The problem though - and this is the second piece - is that I’m not sure the new economy will require the same raw number of people.
What I mean by this is that scaling up production of an automative plant is quite different than scaling up an internet platform like Twitter or Tumblr. You just don’t need as many people, which is why the returns to being smart have grown massively for those few. And this is part of the reason we’re seeing rising income inequality across the board.
Now, I don’t know what the answer is, but I think we’ve already shown that the transition to a new economy isn’t going to be a smooth one. To that end, I’ll leave you with one last thought which came from a former professor of mine at Rotman, Walid Hejazi.
His argument is that it’s actually unethical for governments to subsidize unproductive sectors of the economy, such as a manufacturing, in order to sustain jobs. The reason being that you then have high school students telling themselves that they don’t need to go to University because they can simply go work at the local plant and make decent money. But what they don’t realize is that there’s a very real expiry date to those opportunities and, when it comes, it’ll be much harder for them to be retrained.
