The Scale Mindset Is Expensive

December 25, 2022

There are two ways to add value in the economy.

  1. Do something useful.
  2. Do something that makes other people more productive.

Both of these categories are quite broad (and overlap, too). The former includes jobs in retail, manufacturing, transportation, medicine, law, hospitality, and more. The latter includes entrepreneurship, management, and research. These latter three I will collectively term "scale" methods because they depend on scale to be valuable.

Scale methods capture an increasing fraction of global wealth and talent. If a greater proportion of economic value is provided by these scale methods (that is, through technology and innovation) as opposed to labor, wealth and talent will aggregate accordingly. There are many problems (and many benefits!) which stem from this aggregation. One problem which particularly concerns me is that scale methods -- and the scale mindset -- are inaccessible and expensive.

This didn't always used to be the case. One of the most important agricultural innovations of the 19th century, manual pollination of the vanilla plant, came from a 12-year old slave. But as the world has become more advanced and the low-hanging fruit has been picked, it seems like this happens less and less. It's hard to imagine a 12-year old slave improving the instruments on the James Webb space telescope.

First, regarding scale being inaccessible: much of the cutting edge has gotten so complicated that one needs both substantial education and experience to merely understand the status quo, let alone to push it forward. In some industries, like semiconductor manufacturing, this is not terribly surprising. But even industries which were traditionally local have become largely globalized and highly competitive, requiring diverse skills and experience to be able to compete. Most of the education and experience necessary to push forward any of these industries is unavailable to the vast majority of people on the planet.

Second, regarding scale being expensive: there are two kinds of expense involved. The first is the capital investment of training. The education currently prerequisite to access scale is both tremendously expensive (less-so outside of the US, but still a great barrier) and also largely prevents the person from working for its duration. The second is that the scale mindset itself is expensive. To do excellent creative work and push forward the boundary in some area requires tremendous focus. While it need not be completely all-encompassing, as of today it must be close. As such, being able to avoid distractions such as, for example, cooking and cleaning, is of particular value if they allow you to work harder. Yet removing all the little inconveniences and distractions of life is also quite expensive, as relatively little of that labor is saved; most of it gets reallocated to other people and must be paid for by someone.

Altogether, this paints a relatively bleak picture for economic mobility. Here are a few things which seem like good ideas:

  1. It is critical that we bring down the cost of education, through technology and the cutting of fat. Both are necessary.
  2. Governments should support research into simpler ways of doing things. While this is not traditionally sexy in academic circles, it would remove moats and increase both competition and mobility.
  3. Deep specialization is necessary to push forward the boundary of knowledge in most areas, and our education system should better reflect that from an earlier age for the students who will go on to operate at scale. I suspect that by forcibly delaying the specialization of children who are passionate about an area, we are losing tremendous potential in those areas.

While only the second has any real chance of solving the increasing aggregation of wealth, all three can help increase mobility towards accessing that wealth, which is important for maintaining of a unified, democratic society.