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Deirdre Wrote,
>And let me repeat a point I've made before about the particular instance
>of QWERTY. I am looking out at the Sears Tower in Chicago. The company
>must employ--what?--5,000 typists in that building alone. They now work
>on computers, not Remingtons. The hardware change to a new keyboard is
>trivial. The retraining cost of the workers is small--what, a week? Two?
>For a BIG gain, allegedly, in typing speed. Why hasn't Sears done it? Or
>ANY company ANYWHERE in the world? We're talking not of a centralized,
>political decision like nuclear power (point taken, Jack) but thousands
>upon thousands of opportunities for profit allegedly spurned.
Deirdre, sweety; Sears, and no other private sector firm, has paid for
training typists. Typists pay for their own training and Sears provides the
investment in typewriters. The reason for this is that this is _general
training_ and not job specific training. Typists once they are trained can
move on and if a firm must pay a competitive wage they cannot recoup their
training costs. In order for them to recoup these costs then typist trainees
must accept a lower wage during training and also be productive at the
margin. If they are not productive at the margin then their wage will be
negative. (Zero marginal productivity minus training costs). This was all
explained years ago by a man named Gary Becker in a little book titled
_Human Capital_ (University of Chicago Press:1983) pp. 19-26. The exception
to this rule is the U.S. military which because of their peculiar labor
contracts do a lot of general training. This is also probably the reason why
the Navy was the one that did an independent study on Dvorak.
> I must be missing some deep, deep point.
I'm not sure this is a deep, deep point. Well, maybe, a deep point. The
supply of typists is determined by those who are willing to forego some time
and some money to be trained as typists (or today in word processing) in the
hopes that they will be hired by a firm. The firm hires typists to work on
equipment they invest in. The decision making process entails risk if either
side has nonstandard systems. In such a situation one would expect the
market to move towards some standard system. This would generate a positive
feedback loop. The more firms use one standard the more typists will train
to that standard. The greater the pool of typists trained in that standard
the more likely firms will invest in equipment that uses that standard. In
such a situation (1) The gains in productivity would have to be very large
in order to overcome this loop because (2) A very large firm would have to
both invest in the new technology and absorb the training costs thereby
initiating a new positive feedback loop. A risky business decision in and of
itself.
Now I'm not sure this explanation is a "path dependent" one because path
dependence seems to imply some form of market failure. I don't see this as a
market failure. Markets made up of risk averse individuals will reflect
their preferences even at some cost in technological efficiency.
Cheers and a Hug,
Lawrence Boyd
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