Why I hate the "skills shortage" debate

Few econ policy debates are as fraught, or as confused, as the debate over "skills shortages" in the labor market. This debate occasionally crops up in discussions of the labor market as a whole, i.e. interpreting shifts in the Beveridge Curve. But it mostly comes up in the context of high-skilled or STEM labor.

The main problem with this discussion, as I see it, is that no one really knows what a "shortage" of skilled or STEM labor is supposed to mean. Here are some possible alternative meanings:


1. The labor market for skilled/STEM workers is not clearing, due to government policy; demand is outstripping supply. (This is the classic "econ 101" definition of "shortage").

2. There has been an increase in demand for STEM workers in the U.S. not matched by an increase in supply, causing wages in those occupations to rise.

3. A policy-engineered increase in the supply of STEM workers would raise overall U.S. GDP per capita.

4. A policy-engineered increase in the supply of STEM workers would reduce income inequality in the U.S.

5. A policy-engineered increase in the supply of STEM workers would raise the relative power of the U.S. nation-state relative to rivals like China.

6. An increase in the amount or quality of STEM education in the U.S. would raise overall U.S. GDP per capita.

7. An increase in the amount or quality of STEM education in the U.S. would reduce income inequality in the U.S.

8. An increase in the amount or quality of STEM education in the U.S. would raise the relative power of the U.S. nation-state relative to rivals like China.


I'm sure I could think of more. But in addition to these multiple definitions, there is the question of time horizon. Are we talking about what has happened since 1980? Since 2000? Or since 2010?

There is also the question of the size of the posited effects in each case. Do we think that a bit more computer science education, on the margin, would be a good thing for American schools, or do we think that we should be training our workforce en masse to be knowledge workers?

Finally, there is the question of domain size. Who is a STEM worker? Are we just talking about software engineers in Silicon Valley? Are we talking about anyone who majored in a STEM field? Are we talking about anyone who works with a computer on a daily basis?

This huge proliferation of hypotheses pretty predictably leads to a massively muddled debate. Some pieces focus on one definition of the "shortage" hypothesis to the exclusion of others. Others lump many versions together and treat them as if they're the same thing.

But despite the hopeless confusion, people get very passionate about this debate. To many on the left, emphasis on STEM education must seem like an attempt at a "third way" substitute for redistributionary policy, or an attempt by employers to make employees shoulder more of the financial burden of training. It also might seem like an attempt by anti-interventionists to substitute "structural" explanations for the Great Recession for explanations based on aggregate demand. To those on the neoliberal right, denial of the importance of STEM must seem like a minimization of the importance of productivity in national wealth, or even a refusal to focus on total national wealth at all. Supporters of high-skilled immigration (including Yours Truly!) see the denial of "STEM shortages" as the beginning of an attempt to restrict high-skilled immigration in order to boost the incomes of the upper middle class.

So there are definitely some Robertsian effects at work here. That's going to make the debate even more difficult to conduct in a reasonable, rational manner.

So is there a STEM skills shortage in the U.S.? The answer is that I don't know. I've looked into a few of these sub-hypotheses, but there are just too many. In my opinion, we should be focusing on the marginal policy effects of A) an increase in high-skilled immigration, and B) a tilting of school curricula toward math and engineering. I will search the literature for quasi-experimental evidence on these policy effects, and report back what I find. But whatever I find is unlikely to satisfy most of the people involved in this argument.

Cultural appropriation is great!

"You'll wear a Japanese kimono, babe/There'll be Italian shoes for me" - Randy Newman, Political Science


A lot of people are talking about this story from Oberlin. Apparently some kids are complaining because certain kinds of Asian-themed food served in dining halls is crappy and non-authentic, and therefore constitutes "cultural appropriation."

Now, on one hand, this is just a story about rich kids complaining about bad food. Nothing much to see here. But it gives me an opportunity to say something that has been rattling around in my head for a while: Cultural appropriation is actually a great thing!

Wikipedia defines cultural appropriation as "the adoption or use of elements of one culture by members of a different culture." This is a good thing, for several reasons.


Reason 1: Product diversity.

This is the simple, "Econ 101" reason, if you will. Suppose Japanese people open a bunch of Italian restaurants in Tokyo. The "Italian food" is not quite what you'd get in Italy, and it's made by Japanese people rather than Italians. There's mentaiko in some of the pasta dishes. This is cultural appropriation, pure and simple. But the existence of these "Italian" restaurants increases the number of dining options available in Tokyo. More dining choices = more fun city = better life for people.

In fact, pasta itself is probably the most famous example of this sort of cultural appropriation. It was originally a failed Italian attempt to copy Chinese noodles (as is Japanese ramen, actually). Aren't you glad we have pasta? Aren't you glad we have ramen? You can thank cultural appropriation.


Reason 2: Beneficial mutation.

Pasta isn't just a crappy dining-hall imitation of Chinese noodles. It's a new, wonderful dish in its own right. The same is true of ramen. If Italy and Japan had insisted on only eating real, authentic Chinese noodles, pasta and ramen wouldn't even exist! In other words, cultural appropriation creates mutations by trying and failing to copy other cultures. The good mutations survive - we still have pasta and ramen - while the bad ones mostly die out. Cultural appropriation thus leads to innovation.

This happens a LOT in music. Almost every modern genre of popular music is influenced by either blues, jazz, or hip-hop - three genres invented by black Americans. Sometimes that influence just leads to something lame (Iggy Azalea). But often, appropriators have gone in interesting new directions with the elements they take from black American music - think of the Beatles, Led Zeppelin, Sublime, or Daft Punk. And often, that mutation and experimentation travels back and affects black American music in return. A larger ecosystem of people bouncing ideas off of each other is a recipe for creativity, even if it sometimes creates boring crap.

If you don't like cultural appropriation, you shouldn't watch Star Wars. Not only does the first movie appropriate much of its plot from Kurosawa Akira's movie "Hidden Fortress" (which itself appropriated elements of Shakespeare), but many of the elements of the Star Wars universe are appropriated from Japanese culture. Lightsaber fighting is based on kendo, Yoda is a sennin, and Darth Vader wears Muromachi period armor.


Reason 3: Technological diffusion.

In the long run, diffusion of technology between cultures is one of the main forces that helps poor countries get richer. Cultural appropriation seems like it can help this process, since many technologies are invented to fill culture-specific needs.

For example, take electric kettles. You use these to make tea. They are wonderfully efficient and labor-saving. But they would not exist if the British had not appropriated tea-drinking from Asia. Another example is rice-cookers. These are just great. But you don't need a rice cooker unless you eat dishes with rice. And often the first dishes that introduce American white people to rice are sugary, fatty, crappy imitation Chinese dishes. But so be it. Now those white folks have rice cookers! And now they can make much better rice dishes.

Now, I don't know how big a factor this can be, and those are some pretty small examples. But in general, it seems like product diffusion can boost technological diffusion, and technological diffusion is usually a good thing.


OK, you say, but these are all benefits to the appropriators. What about the appropriated? Is this one of those cases where the majority benefits from free exchange at the expense of a dispossessed minority? Actually, I think it's quite the opposite. Here are some reasons cultural appropriation helps its supposed "victims":


Reason 4: Consumer Demand Spillover

Suppose that imitation Italian restaurants flood Japanese cities (as they have actually done). Many Japanese people will be content to eat only at these, but some Japanese people will go looking for more authentic fare. They will go looking for food cooked by actual Italians, which will offer job opportunities for Italian chefs. The supposed victims of appropriation - Italians - reap economic benefit.

Hip hop is another example. How many white kids in the late 90s and early 00s got into rap and hip-hop because of Eminem? I am willing to bet that many of those kids went on to listen to black rappers and hip-hop artists (especially because Eminem did his best to promote these artists). I also bet that Elvis' popularity caused some money to flow to black artists like Chuck Berry. Sure, these artists probably deserved to get popular before their white appropriators did. That would be the ideal. But since most consumers need some kind of "gateway" music, appropriators can help funnel money to more authentic artists who would otherwise be completely ignored.

In fact, cultural appropriation can be the first step toward real cultural diversity. First, American stores start serving crappy sushi. Eventually, people eat good sushi somewhere and realize that most of the stuff in their stores is crappy. They complain. Stores then make an effort to get real, good, authentic sushi. And thus true cultural diversity is achieved.


Reason 5: Immigrant Opportunity

Americans were introduced to Chinese food via crappy faux-Chinese restaurants like Panda Express. But by helping develop a general taste for "Chinese food", those culturally appropriated restaurants helped create business for Chinese restaurants owned and staffed by Chinese immigrants. Chinese restaurants are now a huge source of employment for immigrants in the U.S. If you move from China to the U.S. with poor English skills and little formal education, you can work in a Chinese restaurant. That increased opportunity for immigrants is a huge boon to the supposed "victims" of cultural appropriation.


Reason 6: Cultural Empathy

Many of the American white kids who listen to black music - or faux-black music - will never interface with, or have any sympathy for, black culture. Some will drive around in SUVs their parents bought for them, blasting rap music even as they spout racist crap and condone policies that keep black Americans disadvantaged. Seeing this kind of thing is frustrating, and the fact that these kids listen to rap can seem like adding insult to injury.

But a few of those kids will go beyond a superficial adoption of memes from black culture. They will like the hip-hop they hear, and they will go to hip-hop shows (or at least watch them on TV). They will see black people in a context other than the conservative media narrative of "welfare queens" and "black-on-black crime". Black people will start to seem like human beings to them, and they will begin to have sympathy for movements fighting for better lives for black Americans.

This seems to have happened to my own father and a number of other white kids at his school in the 1950s and 1960s. They got into rock music - cultural appropriation of black music by whites - and this led them to get into blues music. That led them to go to clubs and stores in the black part of town, and make friends with black people. That in turn led them to be sympathetic to - and even participate in - demonstrations and sit-ins staged by black students over civil rights issues. Without that cultural appropriation, they might have simply bought the conservative line that black protesters were thugs and criminals.

Another example is how anime, cosplay, and other elements of Japanese pop culture are leading Westerners to travel to Japan and discover what that country is really like - which will probably benefit cultural, economic, and even national ties between the two nations.


So there you go: Six reasons why cultural appropriation is great. Sure, this is not always true - nothing is great 100 percent of the time. Naming a football team the "Redskins" will not have any benefit for anyone, and simply mocks the victims of ethnic cleansing. There are some bad examples of cultural appropriation, and we should get rid of them. Other examples are neither harmful nor beneficial. But most cultural appropriation seems like a very good thing - a first step and gateway to a more diverse, more interesting, more empathetic world.

Macro theory vs. string theory

After reading this cool article about the debates surrounding string theory, someone on Twitter asked me to do a post comparing it to macro theory. Well, I did that a long time ago back when I was a snarky young lad, but as someone at Bloomberg once said to me, "If you know a good story, tell it from time to time," so here goes.

String theory and macro (business cycle and growth theory) have one big problem in common: They're not easily testable. They are not untestable. There's a big difference. With string theory, if you could build a really really really huge powerful particle collider, you could probe particles down to the Planck scale, and you could establish whether or not particles are shaped like tiny strings. With macro, if you could observe a whole bunch of planets with no mutual trade between them, or if you could establish a world government and get it to do random policy experiments, you could definitely test growth and business cycle theories.

The problem is, we can't do any of these things. String theory deals with ultra high-energy phenomena, and macro deals with aggregate time series, and those are just very difficult things to observe. In both cases, one big problem is the lack of experimental controls. High-energy phenomena can sometimes be indirectly observed by looking at black holes or the echoes of the Big Bang, and the effects of time-series macro phenomena can be observed every quarter. But you can't really put these things in a lab (well, not real versions of them, anyway), so you can't poke and prod them and explore counterfactuals and deduce the underlying structure, etc.

(Update: This was a little confusing. Yes, you can test theories by looking at non-controllable phenomena. If a macroeconomic theory says "There will be a huge recession next year" and there is no recession, the theory has major problems. But because you can't do controlled experiments, you often have to deal with multiple competing theories that fit the same data. Did they U.S. economy recover from the Great Recession because of easy monetary policy, or in spite of it? And so on. In physics, this is especially problematic when looking at data from the Big Bang, of which there is only one. As you might expect, there are tons of theories floating around about how the Universe began, some of which incorporate string theory.)

So that's one similarity. A second is that studying both has led to useful spinoffs. Studying macro has led to time-series techniques like GARCH models, and arguably to much of microeconomics itself. Studying string theory has led to some cool mathematics, and to some other useful modeling techniques that have been applied in other areas of physics.

Now for the big difference. String theory is not really relevant to the real world. Although string theory techniques have found real-world applications, the theory itself has not and probably never will. No one in our lifetimes or our posthuman grandchildren's lifetimes is likely to build a machine that runs on string theory. Even if the theory - in all its myriad offshoots - turns out to be total crap, it doesn't really matter whether anyone believes in it or not. You might complain that we're wasting our society's brightest minds by paying them to study an untestable theory, but you'd then have to make the same complaint about much of mathematics itself.

In that sense, string theory is "safe" for the world. Macro theory might not be. If we pick the wrong macro theories, we could enact policies that cause real human disasters for millions. In fact, this probably happens quite often.

When data don't give you a guide to policy, major policy failures are inevitable. But what if macro is not totally untestable, but just mostly untestable? What if the evidence gives us a very weak but nonzero signal about which theories are good and which are bad?

This is the danger. If macro policy is hugely important and the signal from data is very weak, then small sociological phenomena within the econ profession - conformity, political bias, etc. - might cause great harm to real people. And bad scientific techniques - ignoring data entirely while placing too much faith in plausibility - might also cause cause real-world harm.

To sum up: If string theory happens to be complete B.S., there is essentially no loss to society. If prevailing macro theory (New Keynesian models now, RBC in the 80s, etc.) is complete B.S., there might be no loss, but there might very well be a big loss. This is probably why the public gets a lot madder about macro debates than about high-energy physics debates.