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The Global Auction

This is an interesting article based on the recent book -- The Global Auction -- by Brown, Lauder, and Ashton.

... We were witnessing the creation of a global auction for high-skill, low-wage work that poses a major challenge to the middle classes in America.

The Global Auction does not examine the structure of American higher education but it does suggest that exaggerated claims about the income premium a college education will deliver have already damaged the reputation of many colleges and universities as their alumni struggle to find any job, let alone one that meets their childhood aspirations.
Follow your dreams but also do your homework. Start asking hard questions about your reasons for going to college, which college is likely to offer you a high-quality education, and what your chances are of finding a job that meets your expectations after graduation. If you’re aiming high, be prepared for a long and intense competition that doesn’t end when you enter the job market.


 

DominiConnor

Quant Headhunter
Firstly of course, the idea of Americans "doing the world's" thinking was always laughable.
America does indeed have a good % of the top universities on the planet, but the average is not great and it has the literacy and religious obseverance levels of a 3rd world country. Remove from the university stats those people whose education has a high % from other countries and you begin to wonder if the high lead levels tolerated in US water supplies is doing something to the IQ of people who live there too long.

In any developed country a candidate for any high office who scorned evolution would kill his chances stone dead, the chancellor of Germany (currently the world's most successful developed economy, where unemployment is going down and growth going up) has a PhD in physics. Spot the difference.

In China, the boegyman to mediocre white people, the prices for skilled workers are going up fast enough to cause policy makers real fear since they fear unionisation, strikes and labour mobility. Some jobs already pay rather more than their western equivalents.

Also, as any fool knows, auctions do not depress prices, they discover them. There are many well known cases where auctions actually push up prices. For the evangelicals around here, it's worth point out that I deal with the pricing of high skilled people for a living and banks really don't like being drawn into auctions for specific staff because it pushes up pay rates.
How can anyone who claims to have studied labour markets no know this ?

Only an abject fool or liar could write "global auction for high-skill, low-wage work", it's a logical nonsense, not even making the grade as a circular argument.
possibility of being able to move up the value chain while remembering that transnational companies are always looking for new locations that offer "more for less."

Note that this shallow pieces does not discriminate between different types of undergrad degree, it's hard to predict which degrees offer the best predictor/cause of future earnings but it's pretty damned clear that degrees in media studies ain't gonna do well.
 
Whatever global ranking you look at, America has more world-class universities than any other country, and we don’t see much evidence of this changing for at least a decade or two. This suggests that the reputation of America’s leading universities has, if anything, grown in recent years. But the country’s higher education system reflects the wider society in being highly stratified. The inequalities in resources, status and prospects for students are writ large in its colleges and universities. In Andrew Hacker and Claudia Dreifus’s book, How Colleges Are Wasting Our Money and Failing Our Kids, they argue that there’s a crisis of credentialism as many for-profit universities are providing degrees that are near-worthless and at great cost.

Read more: http://www.insidehighered.com/news/2010/12/21/book_challenges_view_that_more_college_produces_better_economic_outcomes#ixzz1lDoPWHi9
Inside Higher Ed​

Fair point
 
Firstly of course, the idea of Americans "doing the world's" thinking was always laughable. America does indeed have a good % of the top universities on the planet, but the average is not great and it has the literacy and religious obseverance levels of a 3rd world country. Remove from the university stats those people whose education has a high % from other countries and you begin to wonder if the high lead levels tolerated in US water supplies is doing something to the IQ of people who live there too long.

In any developed country a candidate for any high office who scorned evolution would kill his chances stone dead, the chancellor of Germany (currently the world's most successful developed economy, where unemployment is going down and growth going up) has a PhD in physics. Spot the difference.

Was this just an anti-America rant because of a book written by British professors?
 

DominiConnor

Quant Headhunter
They were indeed crap British professors, evidence for their lack of ability comes from believing nonsense like the US doing the world's thinking.
My point about evolution is to illustrate a basic flaw in their argument.
Any country where that many people actively disbelieve in evolution has severe problems with its education system, although some of the roots of that are clearly faith based, some is down to teachers unions.

Their thesis is that high level education has not defended US living standards well, my point is that since Americans are not on average well educated that is poor evidence for this idea.
They also seem to miss out on an interesting correlation which would support their argument...

If we look at growth over the last 25 years, there does rather seem to be some interesting negative correlations between education and change in GDP.

In spite (or because of) it's poor average in education, the USA's GDP has actually done pretty well and better than most other developed countries almost all of which have better averages in most measures.

Russia has one of the best education systems on the planet and is a shit heap that is getting worse.

China and India have systems that make the US one look truly wonderful yet both have had serious growth.

Japan has arguably the best outcomes from its education system and very low growth, France which contends with Japan in education leagues has had pretty mediocre growth and horrible unemployment.

Germany has no top tier universities at all, yet as in my previous post its economy is doing outsetandingly well.

Britain is second to the US in number of top unis but like France it has had mediocre growth albeit with vastly better ability to generate jobs.

What does this prove ?
I don't actually know and I don';t believe it is knowable in any precise sense anyway.

We're currently educating kids for the labour markets of 2013 to about 2080, who can tell what will be the optimum education level of the "average" person in any given region ?

To follow an argument by Woody Allen who said "dying doesn't scare me, it's staying dead".
Unemployment is only a problem if people are in that state for a sustained period, education is a way of shortening the gpas between jobs, better educated people have smaller gaps and as quants we shouldn't be looking just at average returns but variance as well.
I'd like to see stats that confirmed or denied my observation that graduates tend to have a lower chance of the sort of unemployment length that screws with your life and costs the state real money.
 
They were indeed crap British professors, evidence for their lack of ability comes from believing nonsense like the US doing the world's thinking.

If we look at growth over the last 25 years, there does rather seem to be some interesting negative correlations between education and change in GDP.

In spite (or because of) it's poor average in education, the USA's GDP has actually done pretty well and better than most other developed countries almost all of which have better averages in most measures.

Russia has one of the best education systems on the planet and is a shit heap that is getting worse.

China and India have systems that make the US one look truly wonderful yet both have had serious growth.

Japan has arguably the best outcomes from its education system and very low growth, France which contends with Japan in education leagues has had pretty mediocre growth and horrible unemployment.

Germany has no top tier universities at all, yet as in my previous post its economy is doing outsetandingly well.

Britain is second to the US in number of top unis but like France it has had mediocre growth albeit with vastly better ability to generate jobs.

I'd like to see stats that confirmed or denied my observation that graduates tend to have a lower chance of the sort of unemployment length that screws with your life and costs the state real money.


Doesnt growth in GDP have more to do with population size these days ? The two countries that are growing have billion plus people which is creating demand for everything. Now if they had half their population, would they have half their growth ?

Countries that have shrinking economy in general have declining population, for example Japan. The ones that are stagnant have a population that is stagnant ?
 
They were indeed crap British professors, evidence for their lack of ability comes from believing nonsense like the US doing the world's thinking.

They didn't say that. What they said was this is how globalisation was sold: the Americans would do the high-value-added design and marketing work and the Third-Worlders would wield the screwdrivers. Then they proceed to demolish this line of reasoning by showing how Korea, China and India have been rapidly and inexorably moving up the value-added chain and have thus effectively created a global market for conceptual and technical skills -- with the inevitable corollary that rates for such work have been going down. Thus one can hire a Java programmer in India for $8 an hour (maybe even cheaper) and this undercuts anything an American can work for. They also argue that perhaps the graduates of the best universities -- MIT, CalTech, and so on -- can compete in this global marketplace as they monopolise a niche of their own. But graduates of second-tier places have no such monopoly. Thus a two-tier graduate marketplace has evolved -- a small one where the world's leading multinationals hire, where they're willing to pay top whack for the best graduates from brand-name schools, and a much larger one for everyone else, with growing unemployment and downward pressure on pay and benefits.

Andy posted something along these lines a couple of days back -- something about 107,000 graduates applying for 1,500 internships at Barclays. The lucky few, I suspect, will have gone disproportionately to Oxbridge, LSE, Imperial, and so on, with first-class honours.
 
MIT, CalTech, and so on -- can compete in this global marketplace as they monopolise a niche of their own. But graduates of second-tier places have no such monopoly. Thus a two-tier graduate marketplace has evolved -- a small one where the world's leading multinationals hire, where they're willing to pay top whack for the best graduates from brand-name schools, and a much larger one for everyone else, with growing unemployment and downward pressure on pay and benefits.

Another important point they raised was that Indian and Chinese schools also face prestige issues when it comes to university reputation and the marketplace. Getting a great job in Indiaoften entails being an IIT, IIM, NIT, BITS graduate. Many of the second-tier universities here are not as succesful and may only be able to offer placements because of the booming economy as the authors mentioned. If anything, the American second-tier institions are actually much better than what you get in the rest of the world and are consequently more popular than UK or other European schools for Indians looking to go abroad.
 
If anything, the American second-tier institions are actually much better than what you get in the rest of the world and are consequently more popular than UK or other European schools for Indians looking to go abroad.

Yes, and/or they have more cachet than local institutions. Thus a grad degree from Swampwater University may be absolutely useless in the USA -- but will still have marketable value in India and China. Indian and Chinese students know this, and so does Swampwater University.
 
Yes, and/or they have more cachet than local institutions. Thus a grad degree from Swampwater University may be absolutely useless in the USA -- but will still have marketable value in India and China. Indian and Chinese students know this, and so does Swampwater University.

Obscure US universities have 0 (ZERO) marketability in India. Absolute zero. Although of course if you meant marriage marketability, I'd vaguely agree. Invariably Indians who make it to obscure universities in USA and are ready to spend in USDs for them, are those who don't make it to any university whatsoever in India, obscure or obscurer. Plus, most often, wealthy.
 
Curiously enough, I have mostly just known people who went to Ivy, Stanford, Berkeley or GeorgiaTech (friends from my undergrad) or, at the other end, to obscure universities like Northwood etc (friends from my neighbourhood). I have known at most 4 or 5 people from India who went to 2nd tier universities which I admit isn't a large enough sample to draw any reliable inferences from, but most of them had trouble finding jobs. A couple of them stayed back in US, assisted by "consultants" into IT jobs in the US. These jobs weren't full-time jobs but contractual jobs in 10-month-long and 15-month-long projects. (But frankly I don't know which tier exactly does University of Illinois belong to). Those who came back to India, it took them a few months to find a job. The job market for young grads/undergrads in India has a lot of mediocre jobs on offer, and very, very few good ones. Almost anybody with an engineering degree can get a job where s/he gets called "Analyst", it is another matter that most of those jobs make you do rather dumb, mechanical, clerical work. There are 2 guys I know who did MS Finance from Cranfield in UK (they tell me its a decently ranked program, I've never tried to verify) doing that kind of soul-crushingly mindless and tedious work back in India. All in all I've learned that for Indians who have saved all their lives in INRs, spending for education in USDs/GBPs is rarely worth it if not spent at a top universitry.
 
But frankly I don't know which tier exactly does University of Illinois belong to.

Second-tier.

There are 2 guys I know who did MS Finance from Cranfield in UK (they tell me its a decently ranked program, I've never tried to verify) doing that kind of soul-crushingly mindless and tedious work back in India.

Its management school is well-known and established.
 

DominiConnor

Quant Headhunter
katrina :Doesnt growth in GDP have more to do with population size these days ?

There seems to be a correlation, but in general GDP growth is measure in % so absolute size shouldn't drive that, except...

I believe their size is a cause for their growth...
Their size enabled India and Chinese leaders to ignore choices that would improve their countries, so for a long time being large meant very very badly run, the basis for high Chinese growth has been that it's people are worth less than almost any other humans on the planet because the country was run worse than if the people in charge actively hated the Chinese people. A series of racist psychopath with suitcase nuclear weapons would have killed fewer Chinese people than the average leader of China over the last 500 years.

India was run a bit better, but not all that much, ditto Brazil and several others.
They get large % growth because they've stopped doing stupid shit, in this thread part of the issue is which degrees in the USA give best returns which is a tuning issue and a bit complex and subtle, in China they get growth simply because they murder fewer people because they have degrees, the US needs to thing up smart options, China can still grow merely doing less dumb ones.
Recall that China generates less wealth per head than some African countries, like Namibia, yes Namibia, not a country anyone is impressed by.

But of course Chinese and Indian people are doing some smart things as well, so they can and will outgrow the USA, but every time they do this, or their leaders wise up a bit, they use up some of the growth potential.

There is a bifurcation coming, illustrated rater neatly by Japan and Germany. Until not that long ago Americans and European feared Japan's high tech high growth. Tom Clancy even wrote a novel where Japan attacked the USA, which now looks just silly.
Germany's growth was roughly the same with a lot of high value add manufacturing like Japan but is growing pretty well.

The lesson I take from this is that catching up with the west by following in the slipstream and ceasing to inflict wounds on your economy is relatively easy.
Overtaking is hard, it can be done, but I see China as Japan and India as Germany.
India is outward looking, has developed the rule of law and is a democracy, ironically this means lower growth at the moment because it has fewer dumb things to stop, but Germany has many companies that operate in multiple countries well, Japanese firms did that a lot less, like China.

Chinese firms could become multinationals, Foxconn might open factories in Mexico, but it takes serious time to do that.

Chinese firms are detached from their foreign customers, the millions of Apple fanbois rarely think of iPads as a Foxconn product, except when Foxconn staff kill themselves or die in horrible work accidents, hardly a golden brand and its vulnerable to Apple taking it's ball away.
Indian firms own a lot more brands, talk to their customers and have some idea what they want.
 
katrina :Doesnt growth in GDP have more to do with population size these days ?

There seems to be a correlation, but in general GDP growth is measure in % so absolute size shouldn't drive that, except...

I believe their size is a cause for their growth...
Their size enabled India and Chinese leaders to ignore choices that would improve their countries, so for a long time being large meant very very badly run, the basis for high Chinese growth has been that it's people are worth less than almost any other humans on the planet because the country was run worse than if the people in charge actively hated the Chinese people. A series of racist psychopath with suitcase nuclear weapons would have killed fewer Chinese people than the average leader of China over the last 500 years.


I know you like to make an example of China, but all third world countries have examples that define themselves. If one attended American elementary schools especially during the Soviet era, the teachers here have associated Communism with evil. If you are able to look past that, and see where China is today compared to where it was just three decades ago in terms of per capita growth, infra structure, overall size of the economy it is simply amazing to steer a country that size.

The current Chinese Premier, Wen Jiabao has literally lifted tens of million people out of poverty. Can you name ONE President, Prime Minister, Head of State, or dictator in modern history who has done that ? Just in case your wondering, NO i am not a Chinese citizen or of Chinese origin.

I grew up in UAE, in the 80's and 90's, the bedouin at that time were literally living in tents and riding camels back then. Today, Dubai is considered a world class city where people would like to visit and live in. There is still no freedom of speech, no proper judiciary, everything is behind closed doors, but the so called Sheikh of Dubai cares for his people and has made very good decisions to improve the life's of his citizens. If there was democracy in Dubai, it would have taken them 40 years to do what they did in 25 years.

To an American or so called fellow British, when one mentions communism or dictatorship the image of Hitler comes into mind. Hitler was very bad example, the Sheikh of Dubai is a good one. Not every country can handle democracy, it is more appropriate for the west or wealthy countries that can afford to make stupid decisions and wait for things to get better. Now, when i say some countries cannot handle democracies, it is based on its present state that means it may be able to handle it in the future.
 
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