"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.