A shortened version of Forbes contributor Louis Woodhill’s article reveals the following:
“Barack Obama hardly ever gives a speech without mentioning the need to “invest more in education”. Many so-called “conservatives” voice agreement with this notion. The unstated assumption on both sides of the aisle is that “investment in education” produces an attractive return. But is this true?
“No, it’s not. The numbers strongly suggest that, at least in economic terms, America has gotten nothing for the enormous increase in educational “investment” that we have made over the past 60 years. . .”
“The ‘investment in education’ that Obama wants more (and more, and more) of is actually “federal-government-directed investment in education.” When considering whether we really want more of this, it is important to remember that it was ‘federal-government-directed investment in energy’ that gave us Solyndra, Ener1, and Beacon Power, and that it was “federal-government-directed investment in housing” that has cost taxpayers more than $150 billion in losses (thus far) at Fannie Mae and Freddie Mac.
“So, how would we know if increased government ‘investment’ in education was producing a return? We would see a steady rise in the ratio of GDP to ‘nonresidential produced assets’ over time. Our GDP is produced by a combination of physical capital and human capital. Accordingly, if the economic value of our human capital were rising, the impact would show up in the numbers as increasing productivity of physical capital.
“Now, here is the bad news. While total real ($2010) government spending on education increased almost 13-fold from 1951 to 2009, the measured GDP return on physical capital actually declined slightly, from 47.7% to 44.1%. This could not have happened if we were getting an appreciable economic return on our huge “investment” in education. . .”
“So, it appears that our massive ‘investments’ in education have produced no measurable economic return. Should we be surprised by this? No. Average scores on standardized tests have not risen, despite the fact that we are “investing” seven times as much in real terms in each student than we did six decades ago. So, even by the measures used by the educational establishment, it is clear that the higher spending has not created any additional human capital.
“The nation and its people would be much better off today if most of the additional ‘investment’ in education that we have made over the past six decades had been used to create more nonresidential produced assets. GDP, real wages, and our standard of living would all be considerably higher. . .”
“The huge government ‘investments’ made in education over the past 50 years have produced little more than ‘Solyndras in the classroom.’ They have enriched teachers unions and other rent-seekers, but have added little or nothing to the economic prospects of students. America does not need more such ‘investment.’”
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Deborah Lambert writes the Squeaky Chalk column for Accuracy in Academia.
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