Professor Paul Davidson wrote the following reply to comments in my recent Bill Clinton Interview post regarding the the causes of the current recession. He believes that this issue has to become a focus of public attention and that the skills mismatch argument is politically-motivated.
The skills mismatch is a false argument. All one has to do is look at history.
During the second world war, the Roosevelt administration spending for defense, especially during World War II, rose sufficiently to create a full employment economy — but since many men were drafted into the military services, there was a need for riveters, and other highly skilled blue collar occupations in defense and other industries that normally were considered "man’s work". Housewives and young women had neither the skill or the strength to do these jobs it was widely believed..
But given the profit opportunities if an entrepreneur could hire more riveters, etc. what happened is that entrepreneurs hired women who had never done riveting or other skilled manufacturing work — then gave these women "on the job training" — and they became as skilled as any man riveter! This lead to the famous war time song "Rosie The Riveter"!
this on the job training type of operation continued after the war through the 1950s and1960s while the economy was at or near full employment.
Only after Milton Friedman convinced politicians and economists that high levels of unemployment was the "natural rate of unemployment", then government stopped fostering full employment growth policies (to stop wage-price inflation) did the "on the job training" phenomena disappear from American industries.
One thing about entrepreneurs — give them the scent of profit opportunities and they can either train people to do any job required or, if that is not possible, they will break down the job into smaller sections that can be done with less trained people. [Look at Chinese industries that took peasants off the farm where their families had worked for centuries and taught them quickly to be skilled factory workers!]
Please get rid of this notion of "skill mismatch" — it is just an excuse for government not to act more aggressively to create profit opportunities if private sector entrepreneurs hire more workers!
Paul
Paul Davidson is the Editor of Journal of Post Keynesian Economics affiliated with the University of Tennessee-Knoxville.