There is a crucial distinction between human capital (stored in neurons), and codified information (stored in some external form, such as printed text or bits on a hard drive.)
Anything stored in neurons is a rival good.
A person’s human capital is fully excludable as long as people have legal control over their own bodies. So there are no human capital “spillovers” and no human capital “externalities.”
As the cost of copying codified information goes to zero, it becomes a pure nonrival good.
Pointer from Mark Thoma. Read the whole thing. It relates to my bumper-sticker saying: Information wants to be free, but people need to get paid.
Under family law, human capital is non-excludable.
Which makes family law a variety of slavery.
‘A person’s human capital is fully excludable as long as people have legal control over their own bodies. So there are no human capital “spillovers” and no human capital “externalities.”’
This is overstated. Once a idea is used it is copyable to some extent. I can glance over my neighbor’s fence and see how she has staked her tomatoes and figure out why and how she did it. In more practical terms reverse engineering happens all the time. Now Romer can claim to be technically correct in that an idea never has to be implemented, but then it hardly seems that the idea is a “good” in an economic sense.
“The default assumption in any growth model should therefore be that human capital is a rival good and that codified information is a distinct, partially excludable, nonrival good.”
“Technologies that lower the cost of storing and reproducing codified information are complements with the human capital for codifying and internalizing information.”
Romer could have as well claimed that we should think in terms of Hayek’s paradigm. Relevance of tacit knowledge and cognitive hurdles involved in codifying and communicating neural structures are identified and explained in the works ‘Use of Knowledge’ and ‘The Sensory Order’.
According to Hayek, utilizing dispersed information is essential for resolving the structural problem Romer identified with regards to how we can identify complementing pieces of capital and combine them in a productive manner. Essentially it’s the knowledge problem.
http://politick.me/2015/03/22/market-order-problem/
“The key element in thinking like a physicist is being willing to push simultaneously to extreme levels of abstraction and specificity. ”
Here also, Romer wants us all to be Hayekians. Layers of abstraction and attention to specifics are the common qualitative attributes of Hayek’s literature on mind, markets and law.
If, “any task that can be well-defined will be automated,” then “any human knowledge that can be reduced to digital storage in quickly and easily utilized format will have a price of zero.”
What that tells us is that the labor force will evolve in the direction of the quick elimination of all positions that derive most of their value from that kind of neuron-encoded knowledge for which we now have cheaper substitutes.
The people who continue to obtain lucrative employment on the basis of what is between their ears will have to be relying increasingly on the ‘strong-AI’ capabilities of the human brain that are hard to code and replicate. These individuals will ‘outsource’ as many of the information retention and recall functions to complementary computer systems, and so only the best ‘strong-AI’ performers, who are also excellent and highly productive at working with the latest technology and ‘tuning and tailoring’ it to suit their personal style will able to command high salaries.
But that’s not going to be the case for the vast majority of folks.