What About Knowledge And Work?

Among the important discoveries of the Nobel laureate Michael Kremer is the theory of economic development with o-rings. It is included in the general treasury of knowledge about the fight against poverty. The sealing ring, O-ring, is a cheap rubber part, the defect of which in 1986 killed the Space Shuttle Challenger and its entire crew. So the essence of Kremer’s theory is that in economic systems, even an insignificant element can lead to collapse. That’s why everything of quality that are people and companies with high potential will tend to be a quality environment. And high-quality elements in a low-quality environment will be misplaced. Everything was created before. Today, we develop things using our technologies. The effect influences all spheres whether it will be working or gaming or studying spheres. In the case of gaming we can visit an online casino at the TonyBet app and test our luck there, in the case of working we can work distantly abut what about the necessity of it. 

Modern Model

Most modern economists agree about this model. It is the key to understanding international economic inequality. This theory, in particular reality, proves that the modernization of production in lagging countries in order to become successful must take on a complex character. Otherwise, qualified specialists from these countries will not be used. Kremer’s theory does an excellent job of explaining wage disparities across countries, regions, and industries. 

From this model, the following conclusion can be drawn. The workers performing the same task receive higher wages in a high-skilled firm than in a low-skilled firm. Where companies produce “simple” products for poor buyers, such companies do not need skilled, but that means “expensive” narrow specialists. Thus, America gathers the most energetic and promising workers from all over the world. Those left behind in a big city or a rich country will have to compete for a small salary with their own kind. That is a system requiring high specialization. 

Rich And Poor

On the one hand, the richer a country or company, the more complex and expensive products they produce, and the more productivity and quality of work they expect from its employees at all levels. Such employees are a scarce resource. Therefore they require high salaries. On the opposite side are poor companies, with low expectations, low productivity, and corresponding salaries. Moreover, low salaries solve a different problem in this case. They serve as a signal to all advanced and efficient people. You are not welcome here, you are not needed here.

The true level of attitude towards the employee and expectations from his work is the salary. The low level of the “minimum”, “median” and “average” wages is the best proof of the sad fact. We are dealing with a “simple” economy, the owners of which simply do not need skilled and smart people.

What About Genes?

It’s not just about education, economists Henrik Kronquist (University of Miami) and Stefan Siegel (University of Washington), authors of the study “The genetics of investment biases” (2014). They argued that genetic differences explain up to 45% of differences in investor behavior. Moreover, the point here is not that “correct genetics” allows you to find the possibility of some super-profitable investments, but that “genetics” allows you to avoid investment mistakes.

Back in 1976, scientists analyzed data on the “path to success” and demonstrated that heritable factors affect lifetime earnings. You study more and better. You earn more throughout your life than those who are genetically unlucky with education and talents. It seems that yes, in any case, scientists are finding more and more evidence for this theory.