Friday, April 27, 2018

Affluent Technology, Squalid Human Capital

Technology is a multi-edged sword, or better, a mace with unpredictable effects.  One of the effects is that the technological medium has become the message. Marshall McLuhan  published his claim in 1964, the same year that the IBM 360 was first sold,  but it has become increasingly true in an era of addictive, distracting, and mind-wrenching iPhones, social networking sites, and fake news.

Attention spans deteriorate, interpersonal skills become frayed, and the ability to focus on sustained objectives wanes. Garbled, ad hoc acronyms and misspellings that would have been disgracefully illiterate a generation ago replace the English language, and they do so in a way that reduces comprehensibility. 

The deterioration in America's human resource endowment follows generations of increasing human resource investment. In 1958, more than a decade after the GI Bill was passed in 1944, John Kenneth Galbraith complained of private affluence and public squalor, but education spending as a percent of GDP had been increasing since the 1940s, and by the 1970s it had increased five- to six-fold. 

However, there does not appear to have been improvement in popular scientific, historical , English writing, reading, or mathematical ability or knowledge.

As well, interpersonal skills have not improved as public morality as measured by out-of-wedlock birth rates, which have more than doubled since 1970, has deteriorated.  

Rich technology will not compensate for the iPhone generation's lack of focus, troubled interpersonal skills, and lack of basic knowledge.  The impoverishment of human capital comes at a time when American resources are stretched.  Federal indebtedness is 105% of Gross Domestic Product, and economists Reinhart and Rogoff argue that indebtedness over 90% will result in sluggish future growth.   They write:

The relationship between government debt and real GDP growth is weak for debt/GDP ratios below a threshold of 90 percent of GDP. Above 90 percent, median growth rates fall by one percent, and average growth falls considerably more. We find that the threshold for public debt is similar in advanced and emerging economies.  Shortfalls in Social Security and public pension plans will also strain resources.  

As well, the higher education system has generated $1.3 trillion in student loan indebtedness, much of which has not created value.  Colleges have resisted measuring the extent to which skills are acquired from education, so discussion about any value that higher education creates is purely speculative. It is likely that much of it is pure waste.  Arum and Roksa find that one-half of graduates do not gain cognitive skills in college.

Strains from indebtedness come at a time when the prerequisites for successful industrial enterprise--interpersonal skills, focus, clear goals, communication skills--are weakened.  The claim that technology alone can produce growth is illusory.  Without human capital, growth is impossible, but government-funded educational institutions have failed. Spending on valueless education is like spending on drug addiction. If a drug addict inherits $5 million, he can fund his $500 per day habit for decades. Eventually, though, the addict will find his way to the streets.

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