The economists tell us that technology is a substitute for some forms of human capital and a complement to others. As the pace of technological advance continues to quicken, the “information age” evolves into something new, and the world economy becomes ever more integrated, the most economically valued set of human skills and a capabilities continues to shift rapidly. Tens of millions of Americans used to make, and many still do make, a good living in low- and medium-skilled assembly line jobs. However, many of these jobs can now be done at less expense by machines, or by lower-paid workers in poorer countries like China and India. At the same time, the return on investment in education continues to rise, widening the gap in pay between workers with college degrees and workers without them. What do these trends mean for the future of work in America? Are there any jobs safe from mechanization and outsourcing? If part of rising inequality is a function of the match between technology and human capital, what can be done to ensure that more people develop the right kind of capital? In a changing global economy, what is America’s comparative advantage? If you had a child tomorrow, and wanted them to get ahead, what would you want them to pick as their college major eighteen years from now?

Richard Florida, author of the bestselling Rise of the Creative Class, leads off with an essay emphasizing the importance of encouraging creativity. Replying to Florida over the following week and a half will be: George Mason economist and futurist Robin Hanson, an expert on robot economics [pdf]; UCLA economist Edward Leamer, author of a much-circulated review [pdf] of Thomas Friedman’s The World Is Flat; and MIT’s Frank Levy, co-author of The New Division of Labor: How Computers Are Creating the New Job Market.

 

June 2006 Schedule

Monday, June 5

Richard Florida

Wednesday, June 7

Robin Hanson

Friday, June 9
Edward Leamer Frank Levy

Monday, June 12
Frank Levy Edward Leamer

Wednesday, June 14 to June 21

Open blog discussion

Lead Essay

  • In this month’s lead essay, Richard Florida, bestselling author of Rise of the Creative Class, argues that the old industrial era has given way to a new creative era. Science and technology, art and design, and culture and entertainment have superceded natural resources and industrial infrastructure as the key to economic success. Talent is now the key factor of production and winners in global economic competition will be those who can best deploy and attract it. However, the creative economy is a source of increasing inequality both within and between nations. Florida argues that the key to bridging the gap between the creative and service sectors is to harness the creativity of service sector workers to make their jobs both higher-paying and more satisfying.

Response Essays

  • In his reply to Florida’s lead essay, George Mason economist Robin Hanson argues that creativity matters less for economic growth and the future of work than Florida thinks. According to Hanson, Florida’s emphasis on creativity distracts us from the prospect of a truly revolutionary change to work and economy just over the horizon: rapidly exponential growth driven by smart machines. “An economy with intelligent machines could grow very rapidly indeed,” Hanson argues, “and induce rapidly falling human wages.” Will we be prepared if we’re busy making the Creative Class comfortable?

  • MIT economist Frank Levy agrees that creativity is more important than ever in a world where computers and foreign workers can do routine work less expensively than domestic workers. This shift, Levy says, requires better education in problem-solving. But education can only do so much. The gains from rising labor productivity are going largely to the wealthy, Levy argues. Unless policies and norms are reinstated that spread those gains more widely “all of the nation’s institutions will be at risk.”

  • While agreeing with much in Florida’s essay, UCLA economist Edward Leamer suggests that the key to understanding the future of work isn’t creativity, but talent. “Is a personal computer like a forklift or a microphone?” Leamer asks. Forklifts are forces for equality, washing out individual differences in ability. Microphones, on the other hand, amplify difference in ability and talent. If training cannot create talent, but can only enhance it, the gains to training will be highest for the talented, and it will not be possible to close the talent and wage gaps by offering more training to the less talented.

Related at Cato

» Temps and the Labor Market by Brad Lips [pdf]

» Public Policy, Entrepreneurship, and Economic Freedom by Steven Kreft and Russell Sobel [pdf]

» Amateur-to-Amateur: The Rise of a New Creative Culture by F. Gregory Lastowka and Dan Hunter

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