Counterparties: The skills that pay fewer bills

June 11, 2013

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Nancy Folbre declared this week that the “golden age of human capital” behind us. As evidence, she points to the falling rate of return on a college degree, thanks to “declining state support, higher tuition and fees, increased inequality of access and the growing burden of debt.” Further, she says, technology is making many relatively well-paying jobs obsolete as complex tasks are increasingly done by computers. But maybe that’s okay, Folbre writes. Education has an intrinsic value: it’s good for society even if it isn’t making us richer.

Paul Krugman notes the “skill” involved in being a skilled worker — what we now think of as a job needing a college degree — has evolved with each epoch of technological innovation. Five centuries ago, monks were highly skilled workers who copied books line by line. (Then the printing press happened). “The role of higher education as a creator of human capital came along quite late. And maybe, as Nancy Folbre says, this role is already waning,” says Krugman.

But a lower return on investment doesn’t mean college is worthless. Adam Looney, a fellow at the Brookings Institution and the director of the Hamilton Project, came up with this graph last year showing the increasing difference in the employment rate and average incomes for those with and without college degrees:

The benefits of college even extend to those who don’t graduate. Dylan Matthews recaps Looney’s most recent study, which finds that, on average, college dropouts makes $8,000 more per year than high-school graduates who never started college. The change in the employment rate for those with some college is also flat since the start of the recession; for those with no college at all employment rates have fallen 9%, notes Josh Brown. As Felix wrote last year, “the fact is that while this economy is undoubtedly tough for recent graduates, especially those with liberal-arts degrees, it’s much, much tougher for people who don’t have any degree at all.” — Shane Ferro

On to today’s links:

Long Reads
Modern Warfare: The legal battle over the future of the billion-dollar Call of Duty franchise – Max Chafkin

EU Mess
Today he ECB’s day of reckoning in German court – Reuters
A brief is thistory of politicians and bankers declaring the worst of the euro zone crisis over – MacroScope

Yelp for Wall Street brokers is about as accurate as Yelp – Dealbook

New Normal
Goldman will now let special clients borrow against the Bordeaux in their cellar – Bloomberg

Financial Arcana
How “financialization” can hurt the economy – Bruce Bartlett

On Facebook: “When everything is a potential vessel for advertising, everyone is annoying” – Tom Scocca

Anthony Scaramucci wants to build an alternative to bars that are “not fun” and have unattractive staff – Bloomberg

We already tried libertarianism — it was called feudalism – Mike Konczal
The soaring number of $100 Bills – Timothy Taylor

Dole’s 90-year-old CEO makes unsolicited $1.5 billion offer for the company – Dealbook

A German bank employee accidentally transferred millions while napping on his keyboard – AFP

And, of course, there are many more links at Counterparties.


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