Tuesday, September 30, 2008

Balance Be Not for Kagame

During class conversation today, I felt it necessary to describe the compensating wage differential (stressful/tedious jobs are paid well and relaxing/rewarding jobs are paid poorly). I then promptly forgot why I brought it up.

I now remember. I described Paul Kagame's (Rwanda's president) desire to turn his country into a sort of Switzerland of Africa, notably a sophisticated banking center. We agreed this was a long shot but it's longer than most think. It reminded me that so many developing countries (and developed countries) wish to jump into the high end sectors. Medical plazas, software companies, financial services--industries that are prestigious and clean. Societies, and thus governments, put so much value on these services, we shouldn't be surprised that they are over supplied (part of the reason the financial sectors have been taking a beating lately).

Thus the wage differential. If a job is cool, lots of people will want to do it, depressing the wages it offers. If a sector is hip, so many will jump into it and shrink its returns. I wish we'd stop treating development (and growth) as if the whole world could get a job as ice cream taste-testers.


Jenny said...

Good point. The "cool" factor of well-protected faculty jobs is so high that many new PHD flood the job market, but the market isn't really allowed to compensate because of tight controls on professors' wages, benefits, and research packages. So there just aren't enough of those jobs to go around.

Jenny said...

Wasn't this a key problem with Marx's great idea that each person could just do what he felt like doing all day and the economy would still function?

Jenna said...

Absolutely correct in terms of society as a whole, but individuals - if they have the resources - are still going to try for those ice-cream-taste-tester jobs. This is, of course, not a bad thing.

The fact that this depresses wages in those sectors is a blessing in disguise of sorts; if the pay is crap then only people who really WANT those jobs are going to go after them.