"The Dream for a Human Capital Agenda"

Ed Glaeser says education is the answer:

The dream for a human capital agenda, by Edward L. Glaeser, Commentary, Boston Globe: ...[I]n this hopeful season of presidential change, even economists need to be for something. Some of my colleagues labor to improve healthcare; others fight for tax reform. My dream is that one, or both, candidates will make human capital the centerpiece of their campaign. ...

America's future will ... depend on the skills of its citizens. In a remarkable new book,... Claudia Goldin and Lawrence Katz make a compelling case that America's 20th-century achievements owed much to our nation's once-robust investment in education, and that since the 1970s the growth in that investment has slowed dramatically.

Also since the mid-1970s, America has become much more unequal. ...[M]illions of Americans seem to have reaped, at best, modest benefits from the past 30 years of technological change.

Scrooge-like economists stress that most means of fighting inequality carry large costs. Progressive taxation reduces the incentives for entrepreneurship. Taxes on capital gains reduce investment. Allegedly redistributive regulations, like rent control, restrict the supply of things, like apartments, that should be abundant. Large welfare programs create the prospect of a permanent, government-funded underclass.

By contrast, investing in human capital offers the potential for permanent increases in earnings that encourage work. Education increases the ability to deal with innovation, so that investing in skills today will make Americans better able to weather the storms of future technological changes. ...

A national human capital agenda requires investing in all children, not just those who might be left behind... Such spending needs to be justified by more than just a desire to reduce inequality. The case for governmental investment in education reflects the fact all of us become more productive when our neighbors know more. ... As the share of adults in a metropolitan area with college degrees increases by 10 percent, the wages of a worker with a fixed education level increases by 8 percent. Area level education also seems to increase the production of innovations and speed economic growth.

American education is not just another arrow in a quiver of policy proposals, but it is the primary weapon ... to fight a host of public ills. One can make a plausible case that improving American education would ... improve health outcomes... People with more years of schooling are less obese, smoke less, and live longer. Better-educated people are also more likely to vote and to build social capital by investing in civic organizations. ...

Because education is both important and difficult, it should be at the center of the presidential political debates.

I also support education and believe a better educated workforce is one of the keys to remaining competitive in the global economy. People with more education will, in general, do better than people with less. But I'm not sure that education alone, particularly in the short-run, is enough to ensure that gains are more equitably distributed. And while I believe education can help with the problem, it's not at all clear that differences in education alone can explain the growth in inequality we have experienced since the growth is concentrated at the very top of the income distribution, and returns associated with a college education have stalled while inequality has risen.

Comments

[reason]

Not to mention the argument that a democracy needs an educated and informed population to function properly.

Glaeser is a strange mixture of views isn't here. He certainly can't be placed on a left-right spectrum easily.

[Denis Drew]

Lower wages can (do!) drop folks below the economic level at which they will aspire for the best educational level. I just read somewhere that in ghetto schools the student population doesn't what to be challenged, they just want to watch educational movies, etc.; and that teachers who try to improve the curriculum are forced out. Humans rule by consensus.

They have no real hope (up to last year a 1939 minimum wage -- now a minimum $1.50 short of 1956 -- on its way to only $.75 short next year).

As union power waned, so did easier paths to college -- while more family member were working more hours just to stay in place. David Broder says that when he came to Washington 50 years ago all the lobbyists were union.

[a]

"Also since the mid-1970s, America has become much more unequal. ..."

And since before the mid-1970s, haven't more and more Americans gone to college? (Googled quickly but didn't find any data, so apologies if that's wrong.)

The problem, IMHO, isn't with education or access to education. It's a cultural problem; too many Americans don't give a toss about education.

[Inflation is the Enemy]

Get rid of inflation. Wages will then automatically keep up with the cost of living, because the cost of living will not rise. Even retired workers will maintain their standard of living.

[Reading, Writing, and Arithmetic]

"...returns associated with a college education have stalled..."

This is partially the scaling effect. What works for a small group will not automatically work for a large group. When college degrees were scarce, they commanded a premium. Now that they are more abundant, the premium is dropping. Turning out more lawyers will just reduce the median income of lawyers in general (the super stars will always make a lot).

Of course, turning out more engineers and scientists has the potential to increase the total size of the pie, which is good. China and India attempt to do this, and have lots more engineers/scientists than we do. However, not everyone has the academic aptitude to make a good scientist. Turning out graduates in art appreciation is unlikely to significantly increase GDP, or median college graduate wages.

[bakho]

There are many different models of education. In colonial New England, families would farm out their children as apprentices in business and industry for "on the job training". The modern high school models the large factory. Maybe we need different education models?

Education is very expensive. Education is underfunded. It is easy to finger bad education as the source of the problem. It is much more difficult to propose raising taxes to make the investments that are needed.

[Ninja Zombie]

It's true, one can make a very implausible case that education will improve health outcomes (based mainly on unexplained correlations).

One can also make a much more plausible case that people with the ability to delay gratification are more likely to both educate themselves and take good physical care of themselves.

[swells]

Not just any education will do. People have to be exposed to curricula that explains how critical thinking works and have ample opportunity to engage in it. In too many cases, education is seen as a process of filling a void with predetermined facts and approaches. Instead, people need to be taught how to learn. Just as physiological development in some important ways recapitulates the evolutionary process, mental development needs to retrace our steps as well.

[Luis Enrique]

I wonder what Glaeser's views are on investment in the development of non-cognitive skills, as championed by Heckman (in his most recent Vox article). Presumably there's a case for some sort of complementarity between the two, and extra investment in education per se being far less effective if not accompanied by early-stage interventions in non-cognitive skills. Especially when the goall is the reduction of inequality.

[ken melvin]

I do so like the sound of human capital and hope it works its way into the political and economic discourse. Other that, Msr. Glaeser's gotten himself caught up in correlations. What worked in the 50s, 60s and 70s worked because of the times. These times are not those times. Like generals fighting the last war, he's no idea in hell what's going on and, consequently, why we keep losing the battle.

[reason]

Besides which, praising education is not the same thing as knowing how to do it. We need continuous, life time including on the job education. Once in a life-time won't do it anymore, the rate of change in knowledge is too great.

[Burton Leed]

You can have all the education and all the skills and still be unemployed. This happens because of offshoring, outsourcing and job destruction. In the last 6 months 44,000 tech positions were lost when 65,000 H1B visas entered the U.S.

The qualifications of the H1B Visa holder were less than those they replaced, due to differences in standards of Universities in the U.S.
and Asia. We need to take back our country while we still have a democracy away from the Corporate Elites.

[stick]

To build off of Bakho and Swells:

It is time to move beyond a factory model of schooling designed to deposit discrete packets of information into people's heads to an inquiry-based model focused on intellectual skills and creativity. Critical-innovative thinking is a pre-requisite for participation in both a democratic republic and a dynamic global economy.

Our educational failures threaten our republic and economy.

[D]

By itself, education just determines who gets the available jobs. Increase the number of college grads, and jobs that HS grads used to do start requiring college degrees. Isn't that the story of the last generation?

To reduce inequality, we need to reduce the ability of the handful at the very top to appropriate the benefits of corporate innovation -- cap CEO salaries, tax securities transactions, limit hedge fund shenanigans. And to guarantee a reasonable minimum wage -- not half of what it was a generation ago, but more.

To increase the number of good jobs, we need to support innovation, e.g., by a major governmental commitment to developing new energy sources and to building the transportation and energy infrastructure necessary to replace the ex-urbs with denser new cities that can serve as cauldrons of new economic activity.

[Alex Tolley]

And while I believe education can help with the problem, it's not at all clear that differences in education alone can explain the growth in inequality we have experienced since the growth is concentrated at the very top of the income distribution, and returns associated with a college education have stalled while inequality has risen.

This sound like academic fence-sitting. Isn't the evidence much more firmly rooted in that education isn't the cause of rising inequality. Education per se can be described as "necessary, but not sufficient" to explain the inequality. And looking at our current leaders, education may even be a handicap...

[symbalanese dancer]

we should also wave a fairy wand and shit out fairy dust to solve our problems

[stick]

"we should also wave a fairy wand and shit out fairy dust to solve our problems"

Or perhaps spew profanity into the digital ether... That's always helpful.

[Vespatian]

If you think this is contained to the US - think again.

Here is the best rant I've yet seen and it's based in the UK:

http://www.bastardoldholborn.blogspot.com/