Does raising educational/skills of the population promise economic prosperity for individuals in a KBE?

in a word: No. 

Discourse and policy around LLL and the KBE often calls for an increase in the education/knowledge/skills of workers.  It has struck me that two different forms of “increase” are being discussed, although not always explicitly differentiated. 

Let’s consider for a minute a graphical depiction of the skills/knowledge/education of a population at any particular time.  It might have any shape, but for simplicity, let’s draw it like this for now:

 

We often hear statements like: “we need more workers with higher skills!”   Well, that could be graphically represented in two different ways.  In the diagram below, the red line shows a scenario in which all workers increase their knowledge and skills.  The green line shows one in which a larger proportion of workers have the higher skills that are suggested to be necessary for a high-tech and knowledge-based economy.  It seems to me that calls for increasing knowledge/skills of the workforce don’t usually differentiate between the two.  Indeed, the scenarios are not mutually exclusive and one gets the impression that the discourse is calling for both. 

 

Nested in the discourse is also the idea that this will lead to economic prosperity. Sometimes, but not always the “who” of economic prosperity isn’t mentioned.  It is a reasonable argument to make to say that by increasing the knowledge/skills of everyone, AND increasing the proportion of the population with exceptionally high skills will lead to national or corporate prosperity and profit.  (This assumption does not go uncontested however.  Though, this is not the argument I want to engage here.)   I would suggest that in general, this is the “who” that is being discussed in the first order.  The prosperity of nations and corporations is primarily what is being sought.  Secondarily, it is sometimes included that a prosperous nation/company will result in prosperous individuals. The prosperity of individuals is considered and is presented as an automatic outcome of the prosperity of companies and nations.  This too sounds reasonable at first glance.  But it is not an uncontested idea and it is the one that I wish to consider here.

Consider the assumption:  Workers with higher skills and knowledge earn higher wages and have better access to jobs.

One would find it easy to provide evidence of the validity of this assumption.  A larger proportion of people with low education and low skills face unemployment and low wages than do people with higher skills and education.  However, can this assumption hold in a new economy where all are more knowledgeable and more skilled and where there is a higher proportion of individuals with “high skills?” 

The green shift above does not mean that there are more high skilled jobs for the high skilled workers.  By increasing the supply of workers with high-skills, you do not create more jobs for workers with high skills.  If the number of jobs for high-skilled workers does not increase, then the increased supply will only mean increased competition for the existing jobs and a decrease in the wages that the high-skilled credentials command. 

Similarly, the red shift above means that everyone now has a greater level of knowledge and skill.  No one has changed their position relative to other individuals in terms of their intellectual capital. Furthermore, the supply of jobs in the market has not changed.  The demand for workers hasn’t changed. So, employment rates remain unchanged and wages remain unchanged. 

What I suspect is a conflation between the individual and the collective, between the nation/corporation and the individual.  If both the green and red shift occur, a company/nation can become more competitive RELATIVE TO companies and nations in which the shift has not occurred. They will not necessarily be more competitive compared to those in which there have been similar shifts.  Competitive advantage is only a comparative advantage: it relies on the relative position of the competing forces.  Similarly, the competitive advantage that an individual can gain when (s)he is increasing his/her intellectual capital through education is only realized in a relatively static competitive field.  In a green or red shift, there is no relative change and no increased competitive advantage for the individual. 

Of course, this is an over-simplification.  Economic prosperity, whether national or individual, occurs in a very complex environment of factors. Changes in political factors, for example, can instantly change everything.  However, the point that I want to make is that suggestions that increasing the knowledge/skills of workers in general will lead to economic prosperity for individuals automatically, is naïve.