The importance of the knowledge economy in solving long term unemployment

Elaine Pofeldt wrote this great piece Is Your Next Great Gig in Indiain Forbes yesterday after a long discussion we had about how, in the midsts of long term dwindling exports with competition from low cost production in the East, western economies should be turning their focus to finding new sources of competitiveness.

I believe that one such source is the knowledge economy. And what underpins that in turn is our education system, the liberal arts and culture. Things which are harder to replicate overnight.

And so without realizing it i think there is a whole ‘export economy’ under our nose waiting to explode. The internet now empowers people to sell their creativity, their artistry, their numeracy  skills, research, writing skills and so much more we take for granted, to entrepreneurs and businesses out in the emerging markets where some of those skills are in short supply. Not all, but some.

I see this somewhat a nano version of the traditional hiring of management consultants like the McKinseys of this world, which much like the skills that i refer to above, are again a franchise of the US eductaion system. This is of course a gross simplification but in essence they commoditized the ‘Harvard MBA’ and exported it the world over transferring best practice of the American corporation at the top end of the food chain.

The future of that industry i think is franchising not just the Harvard MBA but the designer at Parsons or Central St Martins in London or any of these great designs schools, or language course and other liberal arts  to jump online, via sites like PeoplePerHour  and sell their skills to companies who need them across the world and who are willing to pay for them. Its good for the students (beats waiting tables as a means of covering your  tuition fees),  its good for the economy, and its good for the world as it makes it flatter.

This insourcing  versus outsourcing shift i think will be very important in countering the growth we are seeing  in structural long-term unemployment and which we will i believe carry on seeing as technological efficiency gains render more traditional job obsolete

The antidote to that I think will be the emergence of the knowledge economy.  And so to empower that we must step up investment in Education and not at the higher end but at the secondary school level. Already the level of basic skills in high school education like math and science is way higher in the easter countries.  And that’s the biggest risk we face of becoming irrelevant i the long term.

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