Thursday, December 21, 2017

Lifetime Learning in Total Factor Productivity Context

There's a sort of "good news, bad news" aspect to a recent Barry Eichengreen article, "Two Myths About Automation". Here's the problem I found with (what appears to be) his conclusion: Are we reasonable in our confidence that automation won't necessary take our jobs, in part because total factor productivity remains lackluster?

After all, the bottom line regarding questionable productivity is some degree of relatively reduced output in aggregate. These difficult to identify output losses can continue, but aggregate output is still closely tied to further employment options. From the Project Syndicate article:
While many people believe that technological progress and job destruction are accelerating dramatically, there is no evidence of either trend. In reality, total factor productivity, the best summary measure of the pace of technological change, has been stagnating since 2005 in the US and across the advanced-country world.
He suggests there are two myths: that jobs are actually threatened, and that higher skill jobs in particular are at risk. After all, the reasoning goes, if productivity isn't all that great, how exactly are jobs supposed to be threatened? Nevertheless, he stresses the important of continued learning, so as to keep up with changes that automation will bring to the workplace.

Again, it helps to envision future employment potential based on potential output gains. Without measurable growth in actual output, one cannot expect additional employment capacity. Since a certain percentage of non tradable sector output is intentionally limited, existing employment presently depends on what the status quo is willing to allow. Most important for both healthcare and housing, however, are the quality requirements which most contribute to existing imbalances between aggregate input and output. The quality requirements of these sectors likely bears the most responsibility, for the conundrum that is today's productivity stagnation. Nevertheless, these sectors package their experiential product so as to make it difficult to determine - let alone measure - the aggregate output gains that would otherwise be possible.

Notice in particular, how Eichengreen's proposed response of lifetime learning to maintain employment options, ties into the productivity conundrum of non tradable sector quality product requirements. Alas, lifetime learning in a status quo context, is still part of a knowledge and skill acquisition process which continues to increase aggregate input (skill requirements) in relation to the aggregate output of total factor productivity. One might reasonably ask, given this circumstance: Might lifetime learning as a sort of human capital coping mechanism, actually reduce total factor productivity?

Presently, it depends on whether one assumes education over a lifetime as love of learning - that is, education as purely experiential product. On the other hand, might this be a strictly pragmatic purchase? Is the educational product a human capital investment, which needs a specific economic result in the form of reliable employment? If so, the pragmatic option also translates into employment as a component of knowledge and skill production, which in turn contributes to measured output in a sort of knowledge "factory" process. Basically, the pragmatic option is not "supposed" to become final product in the knowledge production cycle, hence would become an investment loss should this in fact occur.

On the other hand, treating formal education as experiential product (as I've typically done) may allow us to be satisfied with education as final product. In this instance we can be satisfied (hopefully!) with educational product as the ultimate completion of an aggregate input to output cycle. If education is sought out of love of learning, and doesn't offer economic reward, measurable output, or meaningful dialogue with others for that matter, one might assume the total factor productivity loss is relatively minimal. Yet making that assumption includes the reasoning that one's personal investments need not count, in the lives of others.

What of aggregate productivity if education is purchased not as a consumption function, but specifically for human capital investment? Potential employment risks in this instance are more obvious, both at a personal and societal level. The problem for lifetime learning at present, is the lack of economic connection between today's formal education as reliable input for knowledge based product.

Even though formal education as experiential product is important, one's personal efforts still need to be part of the larger dispersion of knowledge use in society. Fortunately, the same blockchain technology that presently contributes to digital monetary processes, has an important parallel in learning processes, in that peer to peer learning could serve as cumulative wealth connections. The cumulative factor for peer to peer learning, would allow each input of knowledge and skill to serve as a point of simultaneous output. Time arbitrage would eventually allow for substantial productivity gains, by making the measure of time based services a transparent process.

Should time based services become organized as cumulative wealth generation, lifetime learning would readily contribute to total factor productivity. Personal learning efforts would no longer pose extensive risks of one's money and time, because individual learning would translate into mutual employment potential. In all of this, the ratio of inputs to outputs is important, for how society could ultimately expect the use of knowledge to contribute to progress and long term growth.

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