Human Capital Inflation
Written by: Chris JohnstonOver the past 200 years the average human capital has greatly increased due to the prevalence of education. Human Capital is the value of one’s skills, knowledge, and experience. This inflation of human capital has decreased the individual person’s value and has caused people to need to work to stand out within the workforce. This inflation has been an indicator of america’s progress. The government should subsidize 4-year public institutions and make college free for the people in order to maintain progress
The Bright Side
The literacy rate of the world has increased greatly in the last 200 years. This prevalence of literacy has increased communicative literacy and the AHC. As you can see in the graph below, in the past 200 years, the literacy rate has fallen below 20% and according to ourworlddata.org, the literacy rate in the US reached above 99% in 1969. People are more useful if they can read and it is a basic requirement for joining the workforce. America is the world’s symbol of freedom and equality. “We can see that two centuries ago only a small elite of the world population had the ability to read and write – the best estimate is that 12% of the world population was literate(Our World In Data).” Education helps fight against inequality, the US government should value it.
The K-12 enrolment rate has also increased. Receiving a basic education increases your human capital and increases supply because one of the determinants of supply is the availability(and usability) of technology. Education increases technology usage skills. Also, the percent of of people completing 4 years of college has increased greatly. A college education increases one’s human capital greatly. All this human capital increases one’s resource product to each potential company and when companies look for potential workers they will search for the ones who have the greatest resource product to the company. Also having a bachelor’s degree can result in one being paid $21,100 more than people with those who don't have a degree(College Board). This increases their purchasing power. The Private and Social Benefits of college are high.
The Enemy of Good Is Better
The downside of this inflation of human capital is that the average person is devalued. There are only so many good jobs and people who don’t have a 4-year college education in a relevant major are looked over for those who do. This increases the demand for higher education and when demand increases, the price of education increases. To exorberant levels. The average price to attend a 4 year University, according to College Board, can be as high as $23,890! Added to the opportunity costs of going to a 4 year university: missed salary of a potential full-time job, missed salary of a potential full-time job after attending a 2 year university. The Private and Social Benefits of College may be high but the Private Cost is high, so the government must subsidize it so it is more affordable.
It’s often necessary for people to attend a four-year college in order to live the life they want to live, therefor, many people can’t afford the life they’d like to live. People are being separated from their dreams, the government must make education affordable in order to unite people with the lives they want.
Works Cited
“120 Years of American Education: A Statistical Portrait” National Center for Education
Statistics. 2 Jan, 2018. https://nces.ed.gov/pubs93/93442.pdf
“College Costs.” College Board, 2, Jan 2018.
https://bigfuture.collegeboard.org/pay-for-college/college-costs/college-costs-faqs
Ortiz-Ospina, Estaban and Roser, Max. “Literacy.” Our World In Data, 2 Jan, 2018.
https://ourworldindata.org/literacy/
While I do think that with the current inflation of human capital, and agree with the premise that there has been the development of a relatively smaller amount of value being attributed to a four year degree in the last decade, I don't necessarily think that the US government should make attendance free and waive tuition entirely. In my view I believe that the government should heavily subsidize higher education and make it substantially cheaper than it is now, due to the obvious devaluation of an undergraduate degree, but should steer away from making it entirely free (except in the cases of low-income families physically unable to pay the amount of money) as it would in my view devalue the degree even more. I think that we should put a larger amount of money into public education to lower tuition rates, and should only make it free for those who have a complete financial incapability of paying for tuition at all (establish a threshold level of income to pay or not to pay/ possibly make it progressive based on income earned).
ReplyDeleteI think it is a very strong argument because free four year college will increase the availability of education for many who cannot afford it and boost the economy and workforce with more skilled and knowledgeable workers. Additionally, this free education will allow poverty to be lower as more workers are able to progress in the workforce and create a better and more financially stable future.
ReplyDeleteIt is very easy to analyze the benefits of college education and find dead-weight loss due to marginal social benefit being higher than marginal private benefit. However, the solution is not as simple as subsidizing college education to eliminate that loss--if it were that easy, there wouldn't be a discussions about it. The cost of subsidizing college is unrealistic due to your own statement that the price of college is exorbitant; if so many individuals are so far from being able to afford it, the government doesn't have enough money to bridge that gap or even make a dent.
ReplyDeleteThis is like a positive domino effect; by free four year college being a thing it will cause more acceptances of people who wouldn't be able to afford it. That, in return, would surge in the future the economy and employment rates. Positively, one good thing happens after another of which all benefit all.
ReplyDeleteIn a world where everyday is a fight to be successful and you have to compete just to stay average is pretty uplifting. It means our brains are increasingly getting smarter by each generation and the average bar has been raised year after year. I think it's important we have more intelligent people on this planet even if it comes with the backlash as average people might be getting blown out of the way because of the rising bar. Aswell I agree with college being a necessity into getting a good, high paying job. It's hard for lower income families to send their kids to college and get out of debt. Which turns many people off getting a degree.
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