Skills Mismatch in Europe and Detroit

This NYT story really mainly focuses on Ireland, which has set itself up in policy terms to be the center of the emerging European software industry.  Generous regulatory and tax policies have made it a very attractive place to do business for corporations, who are flocking there in droves to set up their European branch offices in Dublin.  The only problem?  Not enough technical workers.  Firms are having an extremely hard time actually finding appropriately qualified people.

Incidentally, any dissatisfied American technical workers should consider a move to Ireland.  Real estate is cheap thanks to their massive housing crisis.  Technical skills are clearly at a premium, and if you have industry experience you could probably command a very nice salary.  Best of all, they speak English and the cultural transition is likely to be pretty easy.  It would be pretty amusing to see people flooding from the US to Ireland in search of opportunity.

This is my concern with policies focused on encouraging innovation and entrepreneurship.  You’ll often hear these programs touted as panaceas, with the clear implication that once you get some social-media ventures in downtown Detroit the path to prosperity is pretty much on lock.  Well, they’ve tried that in Ireland on a national scale, with the result that about half the tech industry’s workers are foreign.   It’s certainly a bright spot in the Irish economy, but this simply isn’t sufficient to take the country to full employment.

Skills mismatch might not be the driving force behind US unemployment, but there are supply constraints to an “innovation economy”.  There’s nothing wrong with incentivizing innovation, and a lot right, but it’s not a macroeconomic policy.  An open position in back-end-development does exactly diddly to help the plight of an unemployed steelworker in Flint.  These skill mismatches will only adjust over long years, not over a 6-week job skills program.

Silicon Valley hates this, but they can’t create full employment.  Congress and Ben Bernanke can, and have failed to do so.  Hopefully Janet Yellen takes her responsibility more seriously.


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