My latest essay is on a book by Torben Iversen and David Soskice that makes such a case.
With both labor and capital committed to specific locations in order to take advantage of skill clusters, there is a significant share of the population that has an interest in electing a government effective at providing public goods. In A.O. Hirschman’s terms, these citizens cannot exit their jurisdictions. They therefore have an incentive to use “voice” in a democratic system. They make up a constituency that will demand education and other public goods and that will reward politicians who enact economic policies that foster competition and growth.
I find this too much of a Pollyanna story, and so my conclusion raises doubts.
Skilled workers + democracy = good government
It might be as simple ‘good government’ as compared to what. Think of Winston Churchill’s past comments on democracy or think about other forms of government. (Strange women lying in ponds distributing swords is no basis for a system of government. Monty Python King Arthur.)
1) I figure democracy generally works because it creates the best to modify government and change leaders. Call Political Creative Destruction. Even effective leaders, say Merkel, tend to lose effectiveness after 8 or so years.
2) We forgot how often nations fell into Civil War because there was not a peaceful transfer of power.
3) In terms of skilled and educated labor, we forget how swampy US politics used to be! Huey Long and Tammany Hall were the most obvious but this stuff was very common before 1970.
4) Name a period with extremely effective government not just a good period for 8 – 10 years. We long for the 1980s or 1960s. Do you remember the 1970 – 1990 Crime Wave?
What does anyone mean by “good government”? I have my biases; government is roughly a control system and we simply want minimal error.
No, wait; that’s not what we mean by that at all, is it? See – bias.
And as to “skilled” – look at certain fora and blogs dedicated to Rationalism. Those are some seriously skilled people but they have some ( to my ear ) odd beliefs. They also tend to think if you do everything right, you’ll get what you want. They tend not to believe in the dark holes between the poles, in indeterminism, in, basically, the neural biology of humans.
I doubt we’ll reinvent being led by the best of each skill group. There’s a word for that, starts with “f” and I won’t repeat it here.
I read the Preface/Introduction of “Democracy and Prosperity” before reading Kling’s review. Although Kling sometimes strays from his blog’s “taking the most charitable view of those who disagree” tagline, he more than lives up to it in his book reviews. I would not have been as charitable and I on further reflection I think Kling’s approach is something I should aspire to. Neoliberals like Iversen and Soskine are much closer to libertarian views on free markets than most other groups. I just need to learn to bite my tongue when they talk about managing the economy.
I wonder if the Middle-Income Trap is real or whether other factors are limiting nation-states like Brazil and South Africa. I also wonder if the geographic stickiness of high-skilled workers is real. The Patrick Collison interview expressed a view that the stickiness of Silicon Valley may be at its limits and he discusses his interest in Eastern Europe (Estonia, Poland, and Romania) and Stripe’s “Remote Office” initiative. We still have sticky geographies, they just seem to be replicating globally. As Kling mentions, Amazon’s HQ2 search is an interesting case study.
Clusters move, slowly but surely.
Joanne Jacobs had a 3 posts relevant to this essay yesterday, all detailing movement away from the legacy education towards a modern system. The Mormon model discussed here: https://www.joannejacobs.com/2019/11/flipping-college-job-skills-first/ seems like it has real potential. Flipping college so that you get a meaningful job-related education before the immersion in collegiate folderol is not that hard a sell and makes great sense for numerous reasons.
I, too, “am not convinced that policy makers have a solution available to the challenge of re-integrating semiskilled workers into the advanced sectors of the economy.”
We need to change the tax policies from rewarding the accumulation of capital, to rewarding the successful creation of more jobs. Including more turnover of jobs but especially having more net jobs at the higher revenue companies.
In small 5 million Slovakia, we are proud to be the world leading country producing the most cars per capita. The skilled-labor shortage draws immigrants from Serbia & Ukraine. Clustering continues to be going on.
I wouldn’t say we have “good government” tho. Oligarchs are far too powerful, yet their main political party looks to be the highest single vote getter in the upcoming Feb. election. This despite corruption and even a few murder scandals. The economy has been getting better.