Sunday, March 29, 2009

Colonizing Education and Healthcare - Part I

Once upon a time, being a loan officer at a bank was a highly respected and prestigious profession, as these guys had total authority to accept or reject a loan application.  Then, banks discovered that computer analysts could do a better job at identifying good which people would be most likely to pay back their loan by looking at quantitative data like FICA scores and credit histories than the average loan officer.  That a few talented individuals could do even better, or that the prestige of the profession would fall, was not taken into account.  Now, these jobs are much lower in status, but it's now easier and fairer to get a loan.

As went loan officers, so has much of our economy been computerized and managed using empirical grunt-work.  For instance, see--logistics, telecommunications, airplane booking, retail, internet search (pretty much anything internet really) and so forth.  This technology boom is behind the growth in prosperity over the past decades (I don't care what the Democrats say, I'd rather live now than in the 1970s, no matter how much the top 1% make).  There is a tradeoff to be made in terms of the lost career autonomy in certain fields, but it is one that free markets make willingly, and people overall accept due to the gains in widespread prosperity, as well as the job gains in other, often more satisfying, fields (such as identifying best practices).  A common characteristic of this part of the economy is that things get cheaper over time, and take up less and less of the GDP to produce higher quality stuff with fewer people doing more skilled tasks.  

Education and healthcare are still terra incognita for this reform movement.  Tuition bills and healthcare costs have skyrocketed, but despite large gains in technology, these sectors are not vastly more productive than they were, say, fifty years ago.  The cost of these services rises in proportion to growing wages (which are going up because of the sector described above), but we really aren't seeing a corresponding improvement in quality of services.  

Of course, the labor-intensive nature of these services means that these will continue to become more expensive over time.  Yet the unwillingness to consider data-driven approaches on how to educate or deliver healthcare are also behind the relative backwardness of these parts of the economy.  It's a little strange in a way, because our teachers are smarter than ever before, our surgical equipment shinier, and our computers ever-more modern.  It's the institutions and mindset behind education and medicine which have fallen behind, that contribute to, say, the failure of inner-city schools or the impact of the rising cost of healthcare on the exploding fiscal deficit.  

This is a three part series.  Tomorrow (or when I feel like it) I'll talk about education.  

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