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17th May 2006

Bakers available, Bakers employed, and Baker productivity

posted in economics, podcasting, politics |

I listened to a great podcast yesterday and today by UVA economist Peter Rodriguez, “The New World Economy: Development Challenges in the 21st Century” (direct mp3 link.) The presentation abstract reads:

The world economy seems to be changing faster than ever. Some of the changes, such as rapid growth in China and India and growing economic freedom are surely good changes, but what about other changes? Professor Peter Rodriguez offers his insights on some of the new challenges of growth and development in the world economy.

I really enjoyed listening to the perspectives of Dr. Rodriguez, especially as they apply to the issues raised by immigration and outsourcing. Many people have read Tom Friedman’s book “The World Is Flat: A Brief History of the Twenty-first Century” — and even more people are talking about it, but I have been concerned that many of the “SKY IS FALLING” sorts of conversations and presentation references may be a bit short on perspective. Dr. Rodriguez provides a sophisticated and well-versed “take” on these issues I think is important and needed. His presentation lasts 30 minutes, the other 30 minutes of the podcast is Q&A.

I titled this post “Bakers available, Bakers employed, and Baker productivity” because those three things are used by Dr. Rodriguez as a metaphor for the three things he views as most critical for influencing average national GDP, if we think about GDP as a metaphorical process of baking pies:

  • The number of people in a national workforce (available bakers - relative size of the labor force)
  • The number of bakers actually employed in the national economy (bakers employed - the employment rate)
  • The average productivity of each employee (baker productivity, or the average number of pies baked per baker - average worker productivity)

Dr. Rodriguez also addresses many of the tradeoffs that are involved in the international economy, and draws a picture of world GDP in 2050. Of course (like all good economists, as he acknowledges) he makes many assumptions to create that predicted picture, but the good news from the perspective of US citizens (and those listening to EdTech conference fear-mongers) is that it does not appear that the US standard of living is going to be unseated anytime soon by up and coming economies like China, India, Brazil, and Russia. His prediction is that the US economy will remain number two or three over the next four to five decades.

I found the following graph of the World Distribution of Per Capita GDP by Country from Dr. Rodriguez’s presentation very thought provoking:

World Distribution of Per Capita GDP by Country

(From Dr. Rodriguez’ PowerPoint presentation)

Population is shown on the x-axis, meaning the widest rectangles represent the most populous countries. GDP is shown on the y-axis, so the wealthiest nations are the tallest rectangles. The statistics he shared that approximately one in five people on planet earth live in China, and approximately one in four people of working age on the planet live in China, are things I have heard before but certainly bear repeating. No wonder so many of the products we use everyday are “Made in China.”

Here are some of my bottom-line takeaways from this podcast and presentation:

  • Yes, the world is flat– but the sky is not falling, so perhaps we should relax a bit.
  • Demographic national changes (the numbers of bakers available) are pretty easy to track and fairly difficult to change. The workforce in countries like China and India is HUGE and will remain HUGE in upcoming decades. This is going to have a significant and fairly predictable effect on economic growth.
  • Pressure for outsourcing and immigration is likely to remain high in upcoming decades, given demographic as well as economic trends.

I also think his perspectives reinforce the idea that we should be intentionally teaching and encouraging young people to become creative entrepreneurs in our economy! Worker productivity is a key factor, but productivity today in the 21st century is not defined in the same way it was during a more industrial era.

I am not an economist or an expert on these issues, but I as an educator and citizen I am very interested in them. Thanks to Dr. Rodriguez for sharing these ideas and UVA for podcasting them! I wouldn’t have been able to listen, view, and reflect on these ideas otherwise!

On this day..

This entry was posted on Wednesday, May 17th, 2006 at 1:33 pm and is filed under economics, podcasting, politics. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.

There are currently 2 responses to “Bakers available, Bakers employed, and Baker productivity”

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  1. 1 On May 18th, 2006, Peter Rodriguez said:

    Thanks for listening to my podcast and for sharing some of my insights via your blog. The economic pressures that result from integrating China and India into the world economy are quite substantial, but development in these giant nations won’t lead to falling wealth in the US or elsewhere. Sure, the costs are real and we should expect that the distributional effects will be notable, particularly for those without higher education. We must deal with this through policy and wise choices in education. Mostly, what I want to dispel is the use of the ‘company’ analogy to think about growth in countries. Countries are not like companies though we often use the same language to talk about them. When you use the company analogy and think about going out of business and such, country-level discussions quickly become senseless. Lastly, looking at the chart posted should reveal why the pressure for outsourcing, and particularly for immigration will remain high. It’s not really a growth issue or the lack of it in low-income nations. It’s a level issue. So long as income level differential remain high the pressure will be there. Even growing lights-out at 9%+ per year, Chinese would likely immigrate into a nations, like the US, where income levels are ten times higher if they shared a border with them. Haitians cross like mad into the Dominican Republic and it’s not because the DR is a wealthy nation. This world economy poses many challenges, but all are assailable.

  2. 2 On May 18th, 2006, Wesley Fryer said:

    These perspectives are very helpful and needed. I hear so much talk motivated by fear at educational technology conferences and elsewhere– in addition to not thinking of countries like companies, I also think people need to understand how the global economic picture is not necessarily zero-sum. People want to view issues as black and white– and some are, but I think many economic issues (as you point out) involve more tradeoffs and shades of gray rather than pedantic stances of good/bad and right/wrong.