That’s the title of this New York Times (subscriber site) op-ed, by Jeff Madrick, author of Why Economies Grow. The article leads with this contestable assertion: “To economists, higher education is like motherhood or apple pie. It will cure just about anything, from globalization and outsourcing to technological change and income inequality.”
I know a little about economics, have a few friends who are economists, and read quite a few more, and I don’t recall ever receiving from them the idea that higher education will “cure” globalization, outsourcing (*cough*), technological change, and income inequality. I know many who would say how more education in economics would show how these things, which academic socialists shriek at in what Catherine Seipp aptly termed their constant “Eek, a mouse!” tone of girlish fright, are not grave problems demanding cures at all. In fact, they’d probably show how the “social ill” of technological change generally prompts the “maladies” of globalization and outsourcing that work to cure income inequality by bringing “unequal” incomes to areas where there previously was none.
From that starting point, Madrick goes on to argue that “the data on the benefits of higher education in the United States are overwhelmingly convincing,” such that the median income of a college-educated man is much higher than the median income of someone without a college education. This being the case, he argues, “why, when international competition is such a threat, are states, which finance the bulk of higher education, cutting back significantly on their budgets?”
This being the New York Times, part of the blame belongs to “the Bush administration.” But the rest owes to the budgetary pressure affecting many states. Nevertheless, Madrick is never able to reconcile his fundamental point that higher education generally yields substantial income benefits to the individuals who have it with his observation that governments under financial pressure aren’t funding more of it.
That’s because Madrick is laboring under the same economic misconception that habitually strikes our governor, legislators and (self-appointed) “business leaders” when they argue for giving financial incentives to bring certain businesses to our state on the basis that these businesses will succeed here. That is this: If individuals ? students, business owners, &c. ? can see the likelihood of financial success in the future in undertaking a particular endeavor (attending college, relocating a business), then they will be willing to undertake the financial risk themselves because they will expect their future profits to exceed their present investment.
Put more simply, if a friend asks me to lend him $10 now, and he promises to pay me $20 next week, I won’t need my legislator to hand me $5 “from the good citizens of North Carolina” to encourage me to make the loan because it will really help me out next week. Nor would I be inclined to turn him down.
Madrick doesn’t get it. He sees that “the case for investing in higher education is stronger than ever.” But it never occurs to him that if that’s true, then individuals would be willing to invest in higher education for themselves. They are, in fact; even though tuition costs are rising, “students take longer to finish college so they can work to defray costs, and they borrow more to pay their way.” He thinks this is a problem. I think most economists would respond as I: “So?”
