Simple way of predicting a country’s future prosperity: Look at career opportunities for young people
People seem sort of shocked when countries such as Greece and Spain come crashing down to earth or when an unlikely success story such as Israel or Singapore emerges. I’m wondering if a simple study could predict a country’s economic future: Is a young person better off going to work for the government, or in a quasi-government job, or for private industry?
China stagnated for centuries and many historians have put forth as a explanation that the best and brightest young people wished to enter the civil service rather than become merchants or engineers. Israel has one of the world’s most successful economies, despite a huge range of challenges. A schoolteacher in Israel starts at about $18,000 per year (source; compare to about $51,000 in Chicago (source)), despite the fact that the cost of living in Israel is higher than in most of the U.S. (see this ranking by city; Tel Aviv is at 24 while Chicago is down at 108).
Air traffic controllers in Spain could earn more than $1 million per year (see this entry from 2010). A young person would have been foolish indeed to choose a private sector career over a government or government-affiliated job in Spain back in 2010 and in 2012 we see where the country ended up.
How about the U.S.? We certainly have some great opportunities in government. A California state prison guard, who may have no education beyond high school, earns more than an average Harvard graduate (WSJ). It is not uncommon for police and fire department workers to earn $150,000 to $250,000 per year (more if the value of defined benefit pensions are included). Health care jobs in the U.S. must be regarded as quasi-governmental due to the fact that the government pays for roughly half of health care bills. Doctors in the U.S. earn more, on average, than private-sector workers with similar amounts of education (e.g., PhD engineers). Given the regulated nature of banking, the subsidies handed out to Wall Street in 2009 and 2010, it might be argued that some financial industry jobs are really government jobs.
I wonder if we could quantify this by looking at projected 10-year earnings, including the actuarial value of pension commitments, for young workers starting out in different standard careers across a variety of countries. The ones where the government jobs are the plum jobs are the countries whose relative decline we can expect.