The Global Auction: The Broken Promises of Education, Jobs, and Incomes

A persuasive analysis of the training/employment mismatch leaves Roger Brown looking for answers

March 10, 2011

This is a very important book. It argues that Western societies in particular have invested in human capital development, and individuals have taken on high levels of debt, on the understanding that both society as a whole and the individuals concerned will be well rewarded. But the "opportunity bargain" has not been kept.

There has been an explosion in the supply of university-educated workers in both affluent and emerging societies. There has been a "quality-cost" revolution so that high value-added products and processes are no longer a Western preserve. Digitalisation has enabled the standardisation of many middle-level jobs. The global war for talent rewards top performers to the exclusion of nearly everyone else, a phenomenon first described by Robert Frank some 15 years ago as the "winner-takes-all society".

This process has been exploited by global - not only Western - corporations, and by those who own and lead them. This in turn has led to an "opportunity gap" as the rewards traditionally associated with middle-class status have been appropriated by a small subset, leaving the middle classes, as well as most of the rest of society, at an increasing disadvantage. The opportunity bargain has turned into the opportunity gap as university-educated workers compete for a diminishing pool of opportunities.

This has helped to cause the current economic crisis: easy credit and the rising cost of real estate became substitutes for employment-driven prosperity. Higher education has both contributed to this process - as the principal means of developing human capital - and exemplified it, with the leading Western universities behaving just like multinational companies in their search for academic "stars" to boost their position in the various rankings.

How should we respond to these developments? The authors reject renewed protectionism, not least because trade wars could lead to real wars. Instead, we should return to the idea that education is not an economic investment but is about enhancing the quality of life. This requires us to address the increasing inequalities in income and wealth in most Western societies and reduce the insecurities inherent in flexible labour markets.

The state needs to play a central role. It should identify key areas of innovation-led economic development through indigenous and inward investment, where efforts can be made to create new employment and increase the skill content of jobs. It should promote a "smarter" approach to skills utilisation. The regulatory environment for companies should be reformed so that they are encouraged to balance immediate competitive pressures to reduce costs and increase profits against medium-term needs and the interests of employees and local communities. Governments should collaborate to rule out or regulate some of the less desirable features of global capitalism, such as the exploitation of cheap labour.

Finally, we need a new approach to the valuation of talents and the distribution of rewards, where there are returns and recognition for those who indirectly contribute to the production of goods and services, such as those involved in childcare, community improvement and the welfare of the elderly.

However, the authors' proposed solutions to the "opportunity trap" are rather less persuasive than their analysis. In particular, they do not really address what they themselves see as the central flaw in the present arrangements, namely the belief that there will always be enough high value-added, knowledge-based jobs created to absorb the supply of university-educated workers. Nevertheless, their critique of the present state of global capitalism is both timely and convincing.

The Global Auction: The Broken Promises of Education, Jobs, and Incomes

By Phillip Brown, Hugh Lauder and David Ashton

Oxford University Press

224pp, £17.99

ISBN 9780199731688

Published January 2011

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