Awesome article in the New York Times Magazine last Sunday.
The article is written by University of Chicago PhD in political philosophy (Matthew Crawford) who gives up on being a so-called “knowledge worker” (that is, somebody who sits in an office and processes information all day), and instead opens a motorcycle repair shop.
The awesome economics in this article just goes on and on… So unfortunately this blog post will go on and on as well.
One great thing about the article is that it re-iterates Princeton economist Alan Blinder’s point that young people should think about future labor market competition when choosing careers. If your job can be done over the wire, then you’re likely to face competition (if not now, then in the future) from low-wage workers in other countries. Crawford recounts Blinder’s great line: “You can’t hammer a nail over the internet.” This is really useful advice for everyone who’s making human capital investments.
Another great thing about this article is how it questions why work is like it is. There’s a discussion of how fixing motorcycles is a sort of unconstrained problem-solving that requires both deep knowledge and hard thinking. It’s not the sort of job that can be done (well) by people who are simply following steps out of a rule book or owner’s manual. Crawford criticizes jobs where people are constrained by rules, steps and processes:
There probably aren’t many jobs that can be reduced to rule-following and still be done well. But in many jobs there is an attempt to do just this, and the perversity of it may go unnoticed by those who design the work process.
While I agree that rule-following has its problems, I don’t think it’s the case that managers mechanically reduce jobs to rule-following for no reason. So what’s the reason? Why is work like this?
Crawford is obviously a brilliant guy. (U of Chicago is no Stanford — neener neener — but still they don’t let just anybody get a PhD there.) Further, the mechanics that Crawford admires have spent 30+ years acquiring knowledge about how to fix bikes. Brilliance is scarce and career-long investments in knowledge acquisition are costly. As a result, not everyone can succeed in jobs that require skill at the sort of unconstrained, open-ended problem solving that Crawford likes.
So what are the economic implications of this scarcity of problem-solving skill and talent? One is that skill and talent is going to be high priced. And this means people will try to economize on skill and talent. And how do we do this? We try to reserve the skilled and talented people in our economy for solving the really hard problems. We try to give the easier problems to the less skilled and the less talented. And we give them a set of rules to follow, to try to help guide them to the right answer. If they can’t get to the answer, then problems tend to get passed up the problem-solving hierarchy, eventually landing on the desks of the most skilled and talented problem solvers. (I’m sketching a model written by Luis Garicano, formerly a professor at, yes, the U of Chicago, and now at London School of Economics.)
In other words, if everyone were as smart as Crawford, then the “rules” that Crawford dislikes so much wouldn’t be necessary, because we wouldn’t have to economize on skill and talent. But unfortunately that’s not the case.
Great thing number 3 is how Crawford points out the “moral maze” of middle management. One interpretation of this is the following: Some jobs make you feel good about yourself. Others not. (This calls to mind the awesome Billy Mays ESPN360 commercial, where a worker reports “Now my job is way less soul crushing!”) Would the world be a better place if we didn’t have a job called “middle manager”? Maybe… because fewer people would find their jobs to be soul crushing. But that’s only the “cost” of having middle managers. What’s the benefit?
One benefit is that middle managers allow firms to get big. Think about it… You really can’t have a big firm without having middle managers, and you really only get middle managers once firms reach a sufficient scale. And is scale good? It can be, because some of our modern production technologies have increasing returns to scale, which means that average costs fall with size. The benefit side is therefore this: Middle management facilitates scale, which allows society to utilize its resources more efficiently.
So there are costs and benefits.
And is there any reason to think that labor and product markets will get this cost/benefit balance right?
Actually, yes. I’m not a “market outcomes are always efficient” kind of economist, but I do think in this case there’s reason to believe that markets will push things in the right direction. If people hate being middle managers, then middle management jobs will have to pay higher wages. (There’s ample evidence that people get paid less for jobs that they enjoy, and more for jobs they dislike….) So firms will only hire middle managers if the benefit to the firm (coming from more efficient production technologies allowing the firm to produce goods and services more efficiently and meet customer needs better) exceeds the “cost” to the worker of having a crummy job.
The labor and product markets force the firm to essentially say to the prospective middle manager: “Look, we know this job will be soul-crushing. But your presence is going to make our firm so much more productive that we are willing to pay you enough to make it worth your while.”
Great thing number 4 is the discussion of his own soul-crushing job, where Crawford wrote abstracts for scientific journal articles. The article makes clear this exercise was totally absurd; none of the workers had anywhere near the expertise to write abstracts of scientific journal articles. This was completely wasted effort. How can markets be efficient if jobs like this get created?
The answer is that markets aren’t ever literally efficient, and Crawford’s tale is a great example of that. But markets do have the ability to move things in an efficient direction.
And who’s the efficient person to write an abstract for a scientific journal article? The author, of course. And how might markets make this happen? A librarian, unhappy with the cost and low quality of a journal abstracting service, might tell a journal that he has higher willingness-to-pay for a subscription to the journal if the journal requires authors to submit an abstract.