Photo: Crocodile Dundee via YouTube
We’ve posted a few highlights from Michael Casey’s The Unfair Trade, including why Chinese sweatshops can’t lose and the smart way to default on a loan.This passage describes how the mining boom in Australia has distorted the education system:
The disparity in salaries creates distorting incentives in career preferences as workers are drawn to the resources sector. Throughout the 2000s, there was a chronic shortage of teachers in Western Australia that was only resolved after the 2008-9 financial crisis slowed the rate of resignations and after the government shipped in foreign graduates. But other sectors kept losing bodies. Western Australian manufacturers lost 17,300 jobs in two and half years ending in August 2010, while the mining industry added 16,900. Perth’s five universities are full, but largely with Asian students who will take their acquired knowledge home with them. Meanwhile, local students are drawn to fields tied to the resources boom—mining engineering, geology, surveying—while other programs of study, including medicine and science, are less popular. At some point, there will be a glut of geologists in the city. Perth is getting richer in aggregate, but it might also be getting dumber.
This phenomenon is known as the resource curse and has been seen also in oil nations and banana republics.