I am genuinely astounded at the lamentation that has accompanied the United Kingdom’s referendum of yesterday. There are lots of interesting takes but I think that these remarks from Jean-Michel Paul at Bloomberg deserve consideration:
Globalization, and immigration, promote growth. But neither can benefit the majority over the longer term unless the state invests in physical infrastructure and human capital. Unfortunately this isn’t happening. Accounting rules that assimilate investment into budgetary spending ensure that investment spending is crowded out of budgets. Focused on balancing budgets and believing austerity to be an unqualified virtue, Britain failed to invest in its future and sowed the seeds of the current divisions that produced Thursday’s dramatic referendum result.
The implications reach beyond the U.K. The answer isn’t redistributive welfare policies, but investing in physical infrastructure, though large public works projects and investing in education and skills-training. The more generous the welfare system, the lower the comfort threshold for immigration.
The emphasis is mine. I’m struggling to come up with an analogy that explains why I think that advice is almost completely wrong.
Imagine a world of medieval guilds. Now imagine that the weavers’ guild is capturing an increasing percentage of the national income, frighteningly so.
Would the solution to that be to give more people the training to become master weavers? Certainly not. Not everyone has the peculiar set of skills, patience, and tenacity necessary to become master weavers. And it takes decades to become a master weaver.
No, the actual solution is the Jacquard loom. It completely displaces master weavers, renders them largely obsolete.
There is no amount of investment or training that’s going to enable ordinary people to become neurosurgeons or air traffic controllers or petroleum engineers or pharmacists. But it is possible to create systems and devices that enable people with much less training and skill to perform jobs that don’t even have names yet that come into being because neurosurgeons, air traffic controllers, petroleum engineers, and pharmacists have become obsolete.