Category Archives: international

Angst for the educated

Schumpeter at The Economist has an excellent post on employment trends for university graduates.  His prognosis is dire.

It seems that the US and European job markets are undergoing a structural change that will have worrying consequences for a multitude of white collar workers.  For years, it was taken as gospel truth that a university degree was a guarantor of job security and a job-earning potential commensurate with a high quality of life.  As emphasized by the current recession, that seems to be changing.  Getting a white collar job (much less keeping it) has become a more tenuous process.  The reasons are manif0ld.

The supply of university graduates is increasing more rapidly than the rate at which they can be absorbed into the workforce.  Further, western white collar firms are under pressure from Asian professional service firms like Infosys and TCS, which have hungrier employees, willing to work harder and at a fraction of the cost and who supply a more-than-adequate product.

But these trends only exist because of technological developments.

… the demand for educated labour is being reconfigured by technology, in much the same way that the demand for agricultural labour was reconfigured in the 19th century and that for factory labour in the 20th. Computers can not only perform repetitive mental tasks much faster than human beings. They can also empower amateurs to do what professionals once did …

Also, a bigger change is under way:

… the application of the division of labour to brain-work. Just as Adam Smith’s factory managers broke the production of pins into 18 components, so companies are increasingly breaking the production of brain-work into ever tinier slices.

<SNIP>

the reconfiguration of brain-work will also make life far less cosy and predictable for the next generation of graduates.

Automation and mass production techniques are doing to white collar jobs what they have already done to blue collar jobs.

  1. The process of production is being standardized and discretized
  2. Each discrete step in the process is then made geographically separable.  Like with manufacturing, the supply chain for many knowledge products has vertically disintegrated
  3. This allows the producer to relocate based on price

Knowledge production has been democratized.  Firms have realized that expert (and expensive) labor is not needed for all steps of knowledge production.  Certain repetitive, time-consuming, lower value products can be easily outsourced.  And so we have medical transcription from US or British hospitals, or discovery for US legal cases, conducted in India.

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Megacity populations

[Population] dispersion is at least as important in the expansion of megacities as population growth itself. Population densities generally decline as urban areas add residents.

This is not counter-intuitive.  We think city growth as a process where more people squeeze into city limits, with perhaps some limited physical expansion on the margins.  In reality, city growth will be accompanied with rapid expansion of transport infrastructure, which enables commutes of a greater distance.  That sets the stage for rapid physical expansion.  Long-time residents move from the core to the suburbs in search for a better quality of life, or pushed out by gentrification and higher rents in the core.  Some suburbs will develop their own industry clusters, which will attract yet more people.  These centrifugal forces will rapidly increase geographical city size and reduce density.

More from the original article here.


The Decline and Fall of the French Language?

Usage of French has been declining alarmingly across the world.  Gary Girod discusses the trend and speculates on reason for the decline at newgeography.com.


Is China trying to “lock up” the world’s natural resources?

Got your attention didn’t I?  Here more:

The rapid emergence of China as a major industrial power poses a complex challenge for the world’s natural resources. This column argues that the Chinese government-backed investments in natural resource supplies are predominately in areas that will help expand, diversify, and improve competition in the global supplier system. But potential geopolitical consequences remain a reason for concern.

In non-jargon-speak, Chinese actions will actually benefit non-Chinese buyers of natural resources by increasing potential supply.  This is because China invests in the smaller resource extractors, who now have the capital to explore and develop virgin fields.  We need not fear or resent aggressive Chinese moves towards resource procurement.

But as always, the devil is in the details.  T.H. Moran makes his cheery prognosis only with respect to physical supply and not with respect to the attendant political machinations, where the elites in poor, but resource-rich nations jockey for a share of the spoils in an orgy of violence and corruption.  But then, one cannot single out the Chinese in this regard.  US and European resource extraction is similarly dogged by political violence and / or corruption all over Africa and Asia.  Angola, Equatorial Guinea, Nigeria and Tajikistan immediately come to mind.

The full article is here.


Man Etches Name in Sand, Visible from Space

How big an ego do you need to etch your name in letters so large that it’s visible from space?

Pretty large methinks.  Hamad Bin Hamdan Al Nahyan is a 63 year old billionaire belonging to the Abu Dhabi ruling family.  He owns the island with the inscription, Al Futaisi.

The guy has a history of grandiosity.  He once constructed a pyramid.  In a sign of our times, he did not use it to venerate relatives.  Instead, he uses it as a garage for 200 cars.

The original story is here.


Pessimism about the euro

Tyler Cowen has two insights.

I like his analogy where he compares the PIGS to leaky vessels.  As he notes, just throwing money at these countries is not going to help.  Given their high liabilities with foreign counterparties, its not clear that this mechanism will create a virtuous cycle of growth.

Second, he makes a case for a pan-European debt settlement and resolution mechanism.  The concern here is that this will eventually lead to fiscal consolidation across Eurozone economies and a concomitant loss of national sovereignty.


Somalis Starve as Shabab Militants Bar Escape From Famine

In the midst of the worst drought in the Horn of Africa in six decades, the Somali militant group al-Shabab has kicked out all western aid agencies and embargoed all food shipments into southern Somalia.  In addition to blockading all food aid, they are also preventing civilians from seeking succour in neighboring Kenya or Ethiopia.

There must be some method in this madness, but the method has to be divorced from any ethical system.  There is no ethical system that justifies willful starvation and eventual genocide of an entire population.  At the same time, it’s a cop-out to call the perpetrators ‘monsters’ or ‘inhuman.’  As is ever the case, the situation can explained by sordid power politics, callousness and a complete abdication of responsibility by the al-Shabab leadership.

Al-Shabab’s purported aim is to create an Islamic Caliphate on the Horn of Africa.  To do so, they need to get rid of the Transitional Federal Government, the nominal, but toothless government cowering behind African Union-funded bunkers in Mogadishu.  Since the TFG is nominally supported by the West, al-Shabab prevent Western activities in areas under its remit.  Food aid, in their eyes, would legitimize their enemies, the TFG and the West.  Migration, or escape, would delegitimize their rule and so, must also be stopped.

Details on the famine at the NYT.