Tuesday, April 21, 2020

Increasing Chance in Economic Outcomes

In my last post, I wrote about a game of skill being replaced by a game of chance. It's important to realize, as the pace of technological development increases, that is exactly what's happening.

In an economy with no technological development, all members of the rising generation know with certainty the rewards that will be experienced in different fields. Highly-skilled people will enter high-skill fields and receive their deserved rewards. But in a world where skill acquisition is made with no knowledge of skill demand, the returns are received randomly.

What's going to be the in-demand skill in 2030? Hell, what about in 2021? No one knows. Coming out the other side of this Coronavirus shock, different fields and different skill sets will flourish, and the people who acquired those skills in 2019 and earlier will not be so much receiving earned returns as random outcomes.

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