| In a perfectly competitive market, any given good must be roughly interchangeable with any other good -- one car tire is as good as another car tire and there are many, many car tires that fit on your car.
This underlying assumption is key because if goods aren't interchangeable, the rarest, most useful goods will end up with near monopoly power.
This is why music and movies are bizarre markets. You can't legally offer a perfect substitute to Britney Spears or Radiohead. You can try -- Jessica Simpson and Coldplay. But the artists themselves (or the films) exist as their own, very potent forces in the market.
In fact, one of the best pieces of business advice is to escape the perfectly competitive markets. Perfectly competitive markets are awful places to do business, because over the long term, in a truly competitive market, economic profit goes to zero, meaning that your capital is not being effectively leveraged (at least not any better than it could be in a number of other markets).
So the trick for people seeking is to become not just another widget, to break free of the competitive market, and to become a more needed and rare resource. That's why people go to college, skill trainings, grad school, internships, etc. It's to gain that "competitive edge" that can set someone apart from a crowded field and allow them to escape the competitive marketplace.
Somehow, education as enabler of personal gain has been turned into a narrative that attempts to portray education as a panacea for all economic woes.
David Sirota has a new op-ed looking at the "Great Education Myth."
A lot of analogies compare the economy to a pie. The analogy is easy enough. We can talk about growing the overall economy as increasing the size of the pie (or making the pie higher, in the parlance of our President). We can talk about income equality as being an issue of the size of the slices. And we can even look at education differences shuffling people around in the economy as a question of who gets which slices (this can also address social mobility).
But the problem is that education, primarily, moves various slices around and doesn't actually increase the size of the pie or the size of the slices.
That's not to say education has no impact on the size of the economy. Various studies have found education to have a huge impact on productivity growth, which is driven largely by innovation and which, assumedly, relies on education.
But the biggest current threat to wages isn't a lack of productivity growth (it's clicking along strongly), it's the way we've globalized. And so simply increasing education is what we might call a bullshit response.
The pie is already growing. The slices are changing in size as workers lose their ability to leverage power and as we embrace a system that works to effectively neuter workers as agents able to negotiate with the forces of capital. And the "panacea" is a proposal that simply changes who gets which slice.
To an extent, though, it is obvious why education has emerged. It's a point of bipartisan agreement. Populists like David Sirota and elitists like Tom Friedman can both be happy that we are building a strong public education system. And the elites who drive much of the narrative benefit hugely from more education. More highly-trained and highly-skilled people means that the market for mid-managers becomes more competitive and favorable for employers.
Anyways, this is enough of a rant. Please don't take this as my "education is stupid" stance. The point is simply that education isn't enough. It's about the structure of the economy. |
