Where's the bailout for human capital?
Bailouts continue as money pours in to fix our troubled financial markets. Commentator Robert Reich says that's great for now, but we need to keep our eye on the long-term ball.
Robert Reich (Robert Reich)
More on Commentaries, Commentary - Robert Reich, Robert Reich, America's Financial Crisis
TEXT OF COMMENTARY
KAI RYSSDAL: Not only is higher education in this country getting more expensive, much like Detroit it's not keeping up with foreign competition either. A study out today from the National Center for Public Policy and Higher Education says tuition's rising faster than family incomes. More kids are dropping out of high school. And the U.S. is falling behind because other countries are better at getting their young people into and through college.
Back home, meanwhile, bailouts continue as money pours in to fix our troubled financial markets. Commentator Robert Reich says that's great for now, but we need to keep our eye on the long-term ball.
ROBERT REICH: Our preoccupation with the immediate crisis of financial capital is causing us to overlook the bigger crisis in America's human capital. While we commit hundreds of billions of taxpayer dollars to Wall Street, we're slashing our outlays for public education.
Education is largely funded by state and local governments whose revenues are plummeting. As consumers cut back, state sales taxes are shrinking, and as home values decline local property taxes are taking a hit. Three-quarters of our states are facing budget crises. As a result, schools are being closed, teachers laid off, after-school programs cut, so-called "noncritical" subjects like history eliminated, and tuition hiked at state colleges.
It's absurd. We're bailing out every major bank to get financial capital flowing again. But we're squeezing the main sources of our human capital.
Yet, the future competitiveness and standard of living of America depend on our peoples' skills, their capacities to communicate and solve problems, and innovate -- not their ability to borrow money.
What's more, human capital is rooted here, while financial capital moves around the globe at the speed of an electronic blip. Right now global capital markets are frozen, but the big money -- mostly in Asia and the Middle East -- will come back here eventually, bailout or no bailout.
It's our human capital that's in short supply. And without adequate public funding, the supply will shrink further. I'm not saying funding is everything, but without it we can't attract talented people into teaching, keep classrooms small and give our kids a well-rounded curriculum, and ensure that every qualified young person can go to college.
So why are we bailing out Wall Street and not our nation's public schools and colleges? Partly because the crisis in financial capital is immediate while our human capital crisis is unfolding gradually. But maybe it's also because we don't have a central banker for America's human capital -- someone who warns us as loudly as Ben Bernanke did a few months ago of dire consequences if we don't come up with the dough.
RYSSDAL: Robert Reich is a professor of public policy at the University of California-Berkeley. His most recent book is called Supercapitalism.
Comments
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12/09/2008
Dr.Reich is on the money, as usual. But before we start throwing money at our public schools, maybe we should look at some other basic flaws, first. Like the fact they are never there. Students and teachers enjoy so much time off, the length of the school year has become a joke. And judging by the results of American public education, the laughs are increasingly on us. Maybe the kids would learn more and do better if they had to show up more often? And while we're at it, hold teachers accountable and reward the ones who seem to have a clue. Can the rest.
From Bethel, CT, 12/05/2008
I strongly agree with Robert Reich - an advanced economy needs constant innovation, developing new products and services that can sustain high margins and therefore high wages. Could we make one exception, though? Close the business schools. They played a significant role in exaggerating the importance of the financial markets vs. the 'real economy' and in fostering the creation of complex and little-understood derivatives, based on elaborate mathematics atop questionable assumptions. And since we're holding our educators responsible for outcomes, where is the evidence that MBA's are any more successful at building market share and growing solid companies than executives that came up through sales, engineering, or operations? Or, for that matter, the college dropouts and 'geeks' that built a number of our most successful computer, software and Internet firms?
From White Plains, NY, 12/05/2008
The evidence for investing in human capital is compelling in that the benefits experienced by individuals (that is higher earning potential, greater job satisfaction, etc.) is magnified in their contribution to the larger society (through taxes, consumerism, and reductions in demand for social services). In pure economic terms, the return on investment would be far greater than any stimulus or bailout currently under consideration. Unfortunately, several variables collide to make such an investment unlikely.
First, we are short-sighted. The argument to invest more to improve public education occurs in every generation. With each perceived threat to America’s dominance comes a new call for improving schools. Politicians and policymakers tinker around the edges of school reform, but real change costs real money. We are not prepared to make that investment because it directly hits our cash flow in the form of taxes and the returns take too long to materialize and are too abstract to appreciate.
Second, we pay too much for what we get. The perception that too much is already spent on public education has some merit. This is not a commentary on the wages or work conditions of educators. Instead, Schools are made up of fragmented organizations, starting with the Department of Education, the state departments of education, districts, buildings, and classrooms. While every teacher works towards the same general purpose, educating children in a safe environment, each level of organization has a say in the definition of that purpose. Federal legislation of late has tied funding dollars to testing and notions of proficiency; but, each state then defines proficiency and selects a test based on their standards, as if applied math might mean something different in Connecticut than New Mexico. As a result, costs do complete a task grow with each level within the system. From a financial perspective, this means that we are losing efficiencies that should exist in a system of this magnitude. We need a better way to unify the systems that exist without comprising the rules around local school control.
Robert Reich is absolutely on the mark about the need to invest in human capital. But if this is to be a successful cost efficient investment with the greatest potential for return, then we best be sure that there are fundamental changes in the ways in which schools operate and sufficient oversight in the ways in which the money is spent. Otherwise, all we have is another “bailout” with no end of need for capital infusion in sight. After all as an enterprise, education should be capable of demonstrating that they can be as responsible with the money as they are in caring for children—our future depends upon it.
From Flagstaff, AZ, 12/04/2008
Human Capital may need some kind of "bailed out." Perhaps workers have invested in uneconomic skills. But why should we bail out buggy whip makers or buggy whip making firms?
Perhaps the government should buy into the media somewhat like the bank buy in. The goal: ending the tacit complicity of journalists with the delusionary stories of high profits in the past few years. Investigative reporting is hard time consuming and not easily funded buy the current market. Fraud should have been detected and reported much earlier. Whoes job was that? Whose job will it be to replace the current short term ethic with a sustainable ethic?
http://mmccann1.userworld.com
From Dallas, TX, 12/04/2008
Interesting Commentary I heard on NPR
just click listen to story or read text below the button
From Dallas, TX, 12/04/2008
Please discuss single-payer health plan like that proposed by Physicians for National Heath Plan ( pnhp.org )
Also HR 676
I support single-payer and think it should be part of the economic recovery.
Why should employers have to pay a huge proportion for everyone's health care
From Olmsted Falls, OH, 12/03/2008
I find this a very timely commentary by Dr. Reich, especially since my local school district just applied for economic stimulus money through the Dept. of Treasury's Emergency Economic Stimulus program. Check out these links:
http://www.ofcs.k12.oh.us/districtNewsArticle.aspx?artID=599
http://blog.cleveland.com/metro/2008/12/olmsted_falls_schools_seek_100.html
From MA, 12/03/2008
Thank you, Mr. Reich, for your commentary. I am proud to say that I have the best of both worlds- I am a public school business teacher. However, I long to see our human capital "capitalized" on especially if we want our great nation to prosper. As for the education's "Ben Bernanke" maybe that should be Secretary Spellings' mission to promote a better use of our resources. Just a thought.
From Troy, OH, 12/03/2008
The dirty little secret is that a very large portion of classes are taught by adjunct instructors who are paid a pittance and no benefits. So where does the difference go? Who knows? Years ago, attending a manufacturing competitive conference at Cornell Univ. I heard a professor remark that colleges and universities were the last to get the message about lean processes and continuous cost reduction. I see nothing has changed. The business model of sending Jr. to a residential experience at outrageous prices is broken. Community colleges, online education and similar lean delivery methods will boon in this economy.
From Amsterdam, NY, 12/03/2008
The working people of the United States need Robert Reich as the Secretary of Labor once again. Hopefully someone will plant this flea in President elect Obama's ear. The balance between capital and the working class has been tilted in an obscene manner by Chao and 8 years of her pro business agenda.
From Madison, WI, 12/03/2008
Public education doesn't need a bailout, it needs a wake-up call. American taxpayers already spend far more per student than other industrialized countries, with far worse results. Educators are in the same boat as everyone else, and need to learn to do more with less.
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