random thoughts on income gaps and the mobility of capital

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From: ThosStew@aol.com
Date: Tue Jan 25 2000 - 06:44:26 PST


In the US more than one out of 10 IT jobs cannot be filled. Unemployment
among technical workers is approximately 1.5%- that is to say, the only
unemployed technies are simply caught in traffic in Palo Alto while moving
from one job to another. In Europe, according to the Euroepan head of
Excite.com, every 4th or 5th phone call is from a headhunter. According to
International Data Corp, Europe’s demand for skilled workers will exceed
supply by 20% within 2 years. India graduates 2x as many engineers as the
U.S. Right now, a lot of Western companies are hiring Indians; but which will
turn out to me more mobile in the long run, labor or capital? So if labor is
needed, surely capital will begin to flow to where talent is?

A cartoon in last week's New Yorker shows a grandfather standing overlooking
a harbor with his grandchildren. He says: "The country Grandpoa came from was
a stinking hellhold of unspeable poverty where everyone was very happy."

In "Angela's Ashes," we see that poverty vividly depicted; but everyone has
clean hair.

The prerequisite for a standard of living would seem to be life; that is, the
dead have a low--six feet under--standard of living. Gary Becker, Nobel
prize winner in economics, argues in this week's (I blush to admit) Business
Week that the greatest gift of the 20th century was the extension of life
expectancy. In the developed West from 45 to about 75. In India from about 20
to about 60. Mortality has fallen dramatically everywhere all century, but it
has fallen faster in poorer countries. Furthermore, evidence exists that
wealth creation is a consequence of reduced mortality, and that suggests that
the poor countries' time to play catch up is near.

New industires are less capital intensive than smokestack industries. This
should help nations that are rich in talent and poor in cash.

None of which is to say that we should be blase' or complacent or unvigilant
about income and wealth disparties. Economics is, as someone once observed,
the science that has sent men (and women) to the barricades. But it does
suggest that there are various forces working for the world's poor--indeed,
that there are various powerful forces in the world's markets that work for
the world's poor--and that with jsut a little judo--with more opening up by
fearful governments--they might do some real good.

Tom


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