By Arnold Kling
In this essay, I suggest that the economy has grown more diverse over the past fifty years, making it more elastic.
One way to describe the elastic economy is that it has become more complex. Human wants continue to be relatively simple and basic. The fundamental resources, such as land and labor, are the same. However, there has been an explosion in the variety of ways of converting the fundamental resources into products and services that satisfy basic human wants. There are a large number of paths leading from resources to satisfaction, and just as with the Internet, a variety of paths diminishes the dependence on any one path, making the system as a whole more robust.
For Discussion. How has the elastic economy changed the relative value of two forms of human capital: generic human capital (skills that can be used in many different jobs); and specific human capital (skills that can be used in only a single job or industry)?