Sunday, March 14, 2004

Labor market: I think I now get it?

Let me try to build the model for the society in terms of labor. Basically the society/community at any place has a variety of people with different type of built-in skills. So that some of them may be very good in social engineering, while other may be better at analytical skill or at creative skills or at performing repetive jobs. This may be apparent in varing IQ, EQ or other "scientific" scores. Nature makes sure that the entire gamut of the people with varing skills are part of society in order to ensure the survival of species overtime. So any community will over time develop statas based on the skills of the people. Sometimes this startification may be enforced by society itself without regards to person's skills like in case of Hindu caste system or at other times social structure may skew in favour of specific skill set which does not follow the natural distribution skills like in highly industrialized western nations. These divergences in natural skill sets and required skill sets would result in unrest in the labour market which may have its own political and social impacts like protectionism, xenophobia, broadening gap between haves and havenots. But over time the nature adapts to the new skill requirement by the basic strategy of survival of the fitest. I am not sure how quickly nature can adapt. We know that the human typically has long reproduction cycle (female can start reproduction only after 14-18 years). But I think this would be offset by the large population size, improved health care and better communication and transport. The larger population size would ensure that more permutation and combination of genes are possible and improved health care would ensure survival of other wise "naturally unfit" people which have the skills required by society (This is based on assumption that skills is a combination of nature and nurture where nurture should be used to hone the natural skills which may be completely wrong). Besides that the better communication and transport facility means that societies skewed skill requirements can be met by migration of people to requirement or migration of work to places with skill set (example towns, university). Obviously the world and labor market in particular is more complex than the simplistic model I talked above. But it is good enough for me to understand the concept. I am not sure about how accurate is the idea of nature and nurture with nurture helping nature in case of mordern labor market. Given that the skills required are so dynamic that they change every decade the nature can not be expected to cope with it. In such a scenario, will nurture (i.e. incentives, training) help the society in getting the required skills. I donot think so!! There is a limit to how much nurture can help. Human, I guess, has an inherent limit to learning new skills, which degrades with age. So the aging (i.e. societies that have higher % of elderly people) and/or smaller societies are at a inherent disadvantage if they want to continue to be leader in skill business. Instead these society can succeed if they already have existing skills(like political, human and financial management) and power which can be used to control and develop the younger and bigger societies as "skill pool" to be used over time. How is this going to affect the controlling society which will have its own set of people who donot have the necessary skills or can not become part of elite who controls the "skill pool". Over time the difference between haves and havenots is going to increase, resulting in other social implications and may culminate in the social/economic status of have nots reaching the levels of haves in the "skill pool" society. With regards to younger/larger societies, they will continue to be puppets in the hand of the controlling society. Wow, this seems like a real dooms day scenario! Am I that depressed!! anyway, I donot think this conspiracy theory is going to play out, but it seems worst case scenario that, I hope, I am going to laugh at 5 years from now!!

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