{"id":4120,"date":"2016-01-20T14:57:57","date_gmt":"2016-01-20T09:27:57","guid":{"rendered":"https:\/\/teekhapan.wordpress.com\/?p=4120"},"modified":"2016-01-20T14:57:57","modified_gmt":"2016-01-20T09:27:57","slug":"some-new-lessons-on-jobs-from-an-old-economist","status":"publish","type":"post","link":"https:\/\/vivekkaul.com\/2016\/01\/20\/some-new-lessons-on-jobs-from-an-old-economist\/","title":{"rendered":"Some New Lessons on Jobs from an Old Economist"},"content":{"rendered":"

\"hyman<\/a>
\nMany economists do not write in a language which is easily understandable. While John Maynard Keynes was a terrific writer (he is possibly the only economist who actually came up with one-liners), his magnum opus The General Theory of Money, Interest and Employment, <\/em>which was published in 1936, isn\u2019t such an easy read.<\/p>\n

Believe you me! I have tried reading it several times over the years.<\/p>\n

Just because the book isn\u2019t an uneasy read, doesn\u2019t mean that the points it is trying to make are not important. As Paul Samuelson, the first American economist to win a Nobel Prize, wrote about Keynes\u2019 book, in a research paper titled Lord Keynes and the General Theory<\/em>. As he wrote: \u201cIt is a badly written book, poorly organized; any layman who, beguiled by the author\u2019s previous reputation, bought the book was cheated of his five shillings\u2026It is arrogant, bad tempered, polemical and not overly generous in its acknowledgements. It abounds in mares\u2019 nests and confusions\u2026In short, it is a work of genius<\/em>.\u201d<\/p>\n

Another economist whose work is not easy to read is the American economist Hyman Minsky, who died in 1996. The world discovered Minsky and his work in the aftermath of the financial crisis that started in September 2008 and so did I.<\/p>\n

I tried reading Minsky\u2019s magnum opus Stabilizing an Unstable Economy<\/em> but could only read it half way through. I have been lucky to have since discovered other authors and economists who have tried to explain Minsky\u2019s work in a language that I have been able to understand.<\/p>\n

Over the last few days I have been reading L Randall Wray\u2019s Why Minsky Matters\u2014An Introduction to the Work of a Maverick Economist<\/em>. Other than discussing Minsky\u2019s views on banking and the financial system in great detail, Wray also discusses what Minsky thought of unemployment. Minsky\u2019s interest in unemployment primarily came from the fact that he was brought up during The Great Depression, when the United States saw never before seen levels of unemployment and a huge contraction of the economy.<\/p>\n

And what did Minsky think of the unemployment problem? As Wray writes: \u201cHis argument [i.e. Minsky\u2019s] was that simply increasing the \u201cemployability\u201d of the poor by providing training without increasing the supply of jobs would just redistribute unemployment and poverty. For every better trained worker who got a job, a worker with less training would become unemployed. Minsky was not arguing against better education and training\u2014he was arguing that to reduce unemployment and poverty we need more jobs, too<\/em>.\u201d<\/p>\n

Minsky also argued against the idea that \u201cif the economy grows at a sufficiently robust pace, the jobs will automatically appear<\/em>.\u201d As Wray writes: \u201cThe notion that economic growth together with supply-side policies to upgrade workers and provide proper work incentives would be enough to eliminate poverty was recognized by Minsky at the time to be fallacious. Indeed, evidence suggests that economic growth mildly favours the \u201chaves\u201d over the \u201chave-nots\u201d\u2014increasing inequality\u2014and that jobs do not simply trickle down<\/em>.\u201d
\nHow do things stack up in the Indian context? First and foremost, let\u2019s look at the youth literacy number and how it has changed over the years. As per the Human Development Report, in 1990, the youth literacy rate (i.e. individuals in the age 15 and 24) was at 64.3% in 1990. This improved to 76.4% in 2003. In 2013, the youth literacy rate for men was at 88.4% and for women at 74.4%.<\/p>\n

What these data points tell us clearly is that the education level of India\u2019s youth has improved over the years. But has this led to more jobs? Answering this question is a little tricky given how bad Indian data on jobs is.<\/p>\n

Nevertheless, as the Economic Survey released in February 2015 points out: \u201cRegardless of which data source is used, it seems clear that employment growth is lagging behind growth in the labour force. For example, according to the Census, between 2001 and 2011, labour force growth was 2.23 percent (male and female combined). This is lower than most estimates of employment growth in this decade of closer to 1.4 percent<\/em>.\u201d<\/p>\n

Hence, even though the youth education has improved over the years, this hasn\u2019t led to an adequate number of jobs. This is clearly visible in all the engineers and MBAs that we produce without having the right jobs for them.<\/p>\n

As Akhilesh Tilotia writes in\u00a0The Making of India<\/em>: \u201cAn analysis of the demand-supply scenario in the higher education industry shows significant capacity addition over the last few years: 2.4 million higher education seats in 2012 from 1.1 million in 2008<\/em>.\u201d In 2016, India will produce 1.5 million engineers. This is more than the United States (0.1 million) and China (1.1 million) put together.
\nThe number of MBAs between 2012 and 2008 has also jumped to 4 lakh from the earlier 1 lakh. As Tilotia writes: \u201cIndia faces a unique situation where some institutes (IITs,IIMs, etc.) are intensely contested while a large number of the recently-opened institutes struggle to fill seats\u2026With most of the 3 million people wanting to pursue higher education now having an opportunity to do so, the big question that should\u2026be asked\u2026are all these trained personnel required? Our analysis seems to suggest that India may be over-educating its people relative to the current and at least the medium-term forecast requirement of the economy<\/em>.\u201d<\/p>\n

This explains why many engineers and MBAs cannot find the right kind of jobs and have to settle for other jobs.<\/p>\n

A major reason for the lack of enough jobs is the fact that Indian firms start small and continue to remain small. As Economist Pranab Bardhan writes in\u00a0Globalisation, Democracy and Corruption<\/em>: \u201cTake the highly labour-intensive garments industry, for example. A combined dataset [of both the formal and informal sectors] shows that about 92 per cent of garment firms in India have fewer than eight employees.\u201d
\n<\/em>
\nIt’s only when small firms start to become bigger, will jobs be created. As the Economic Survey points out: \u201cA major impediment to the pace of quality employment generation in India is the small share of manufacturing in total employment\u2026This is significant given that the National Manufacturing Policy 2011 has set a target of creating 100 million jobs by 2022. Promoting growth of micro, small, and medium enterprises (MSME) is critical from the perspective of job creation which has been recognized as a prime mover of the development agenda in India<\/em>.\u201d<\/p>\n

And this, as I keep saying, is easier said than done.<\/p>\n

The column originally appeared on the Vivek Kaul Diary <\/a>on January 20, 2016<\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

Many economists do not write in a language which is easily understandable. While John Maynard Keynes was a terrific writer (he is possibly the only economist who actually came up with one-liners), his magnum opus The General Theory of Money, Interest and Employment, which was published in 1936, isn\u2019t such an easy read. Believe you … <\/p>\n

Read more<\/a><\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"qubely_global_settings":"","qubely_interactions":"","_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[30,77],"tags":[203,1086,1633,1926,2021,2805,3703,3845,3992],"qubely_featured_image_url":null,"qubely_author":{"display_name":"Vivek Kaul","author_link":"https:\/\/vivekkaul.com\/author\/vivekkaul\/"},"qubely_comment":0,"qubely_category":"Equitymaster<\/a> Vivek Kaul's Diary<\/a>","qubely_excerpt":"Many economists do not write in a language which is easily understandable. While John Maynard Keynes was a terrific writer (he is possibly the only economist who actually came up with one-liners), his magnum opus The General Theory of Money, Interest and Employment, which was published in 1936, isn\u2019t such an easy read. Believe you…","jetpack_sharing_enabled":true,"jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/vivekkaul.com\/wp-json\/wp\/v2\/posts\/4120"}],"collection":[{"href":"https:\/\/vivekkaul.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/vivekkaul.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/vivekkaul.com\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/vivekkaul.com\/wp-json\/wp\/v2\/comments?post=4120"}],"version-history":[{"count":0,"href":"https:\/\/vivekkaul.com\/wp-json\/wp\/v2\/posts\/4120\/revisions"}],"wp:attachment":[{"href":"https:\/\/vivekkaul.com\/wp-json\/wp\/v2\/media?parent=4120"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/vivekkaul.com\/wp-json\/wp\/v2\/categories?post=4120"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/vivekkaul.com\/wp-json\/wp\/v2\/tags?post=4120"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}