Category Archives: Education’s Economic Impact

Education and Freedom

I recently read a book titled “Crossing the Finish Line” which describes the dire circumstances that the state of our higher education system is in. There are a lot of reasons that education is important. However, in my opinion, the single greatest reason that education is important is because it not only supports but advances freedom and justice for all.

For example, a study of the National Bureau of Economic Research tracked the percentage of the population who’s earnings are among the top 10% of income earners in 20 countries from 1910 to 2005. The study shows that in many developed countries, the percentage of the population that earns the highest income levels has almost doubled in since World War II.

Some economists believe that this is due not only to the economic policies of those countries but also the education policies. In other words, those countries that have successfully offered education opportunities to their populations have seen dramatic increases in incomes and distribution of wealth.

How does this tie into freedom and justice for all?

If education leads to higher incomes and higher incomes lead to more choice it makes sense to argue that education leads to freedom. It’s true that education can develop one’s mind to think freely and that kind of freedom in and of itself is invaluable. But in a more practical sense, the increase in income that an education brings, equips people with freedom to choose a lifestyle of their liking. For many, this freedom to choose is what makes life spectacular.

Some people will argue that educated people have committed heinous crimes and financial scandals. This is true. But those types of people would have probably figured out a way to manipulate any system that they worked under. Education did not force them to make poor choices but their character did. Margaret Thatcher once said, “I do not negotiate my principles, I negotiate from my principles”. Of course, that implies that one must have principals from which to negotiate.

The bottom line is that education helps redistribute wealth and opportunity giving people the freedom to chose a lifestyle of their liking. As Ben Bernanke, chairman of the Federal Reserve Board remarked with regard to the U.S., “the best way to improve economic opportunity and to reduce inequality is to increase the educational attainment and skills of American workers”

Education is the key to freedom. Freedom is bliss. With our education system currently in need of spectacular reform, it’s time to defend our freedom. It’s time to innovate.

Education: A Promise or a Trap?

I recently read several articles referencing default rates on community college student loans in the state of Iowa.  The article, makes makes one wonder, how many students are pursing their dream of a college education and end up snarled in a financial nightmare? The article cites a near 17 percent default rate on the student loans of community college graduates in Iowa. Several things strike me about this statement.

The first thing that is alarming is the actual percentage. Almost 1 in 5 students are defaulting on their loans in Iowa. Even if that number is high and the actual ratio is closer to 1 in 6 or 1 in 10, our society still takes a big hit with each student that defaults. Not only is the former student’s life turned upside down due to the emotional, financial and psychological effects associated with default but we as a society stand to lose a large amount of money on the default itself.

Consider this, there are about 7 million students enrolled in 2-year public colleges in the U.S. paying on average about $2,805 dollars in tuition. Even if just one percent of that population defaulted on its loans the cost adds up to about $200 million dollars.

Don’t get me wrong, I am not one in favor of babysitting adults. I agree that you reap the rewards of the seeds you sow. After all, potential students should consider the return or salary they expect to receive after graduating from a 2-year or 4-year program. But isn’t there something fishy going on here?

Our education system promises so much to so many people but does it uphold its end of the bargain of providing a quality education for those who pursue it? Or only those in the top 20 percent? You may be wondering as I am, what is a quality education? Let’s save that topic for another day (or better yet, post a comment!).

For now, I am wondering how many businesses public and private are cashing in on the honest pursuit of education and failing to uphold their end of the bargain. That is, how many organizations take money from students pursuing an education as they have been instructed to do their whole lives and fail to equip them with the skills to pay for it?

On a related note, a fantastic book called “Crossing The Finish Line” describes how about 40% of college students in the U.S. fail to graduate within 6 years. I suggest reading it if you are curious about the details of who is failing.

Bharani

In The New Year, Make A Deal To Educate Yourself Out Of Unemployment.

After reading an article in CBSNEWS that was sent to me by TIE-Pittsburgh I thought it would be important to state the obvious.  Pursuing an education (either formally or informally) in something that interests you can lead to a higher quality of life (and not so coincidentally, higher wages…surprise!) The reason it is important for you to do so is because the employment market is rapidly changing. Those who don’t reinvent themselves may find it hard to maintain employment. The link to the article can be found here.

http://www.cbsnews.com/stories/2010/01/05/eveningnews/main6059551.shtml?tag=cbsnewsTwoColUpperPromoArea

“In a recent study, 15-year-olds in the U.S. ranked 21st out of 30 countries in science scores.” However, it seems that developing countries are quickly turning to both formal and informal education strategies to rapidly develop the potential of their citizens. An effective combination of formal schooling and corporate training are providing more employment opportunities to citizens in some of the poorest nations. The result of course, is that citizens of developing countries that used to be unqualified for jobs in the U.S. seem to be gaining credentials quite rapidly.

From my personal experience working for a major corporation in the U.S., the on-the-job training is pretty much non-existent. I remember being told “This is the real world, figure it out yourself. Those who want to succeed always find a way.” I thought that it was an interesting approach but I was glad that the rest of the world was not so naive. Of course, not all industries or companies are created equally. I worked in the financial industry and we all know what happed there….

Countries that are developing their citizens using formal education and corporate training seem to be emulating what U.S. corporations did for its own employees. However, these countries have the benefit of learning from the mistakes of the U.S.

The question for the U.S. is, can it find a way to motivate it’s students to reinvent themselves (and the economy) so that we are not all competing for the same jobs? From my experience, innovation comes with a healthy dose of inspiration and education. Inspiration can come from anywhere. But education requires patience, practice and experience. What I love most about the U.S. is that you are allowed to think about whatever you want. Indeed, education is freedom. And with freedom comes innovation. But it all starts with education. Which is what I like most about our government’s latest campaign. “Educate to Innovate”

Lets do this!

Tepper Classmate’s Article

Grad school is great. You never know who is going to send you an interesting article.  Here is a link to the article by my classmate Jon Feit http://govcentral.monster.com/benefits/articles/22382-finding-opportunity-amid-the-scary-job-statistics?page=1&utm_content=artmini&utm_source=GovCentral.com

What’s interesting to me about this article (and the NY Times article he sites) is the break down of unemployed persons by education level. http://www.bls.gov/news.release/empsit.t04.htm. Supposedly the unemployment rate among college educated citizens aged 25+ is only 4.6% which is greatly lower than country’s current average unemployment rate of 10.2% or the rate of unemployment for non-degree holders, 14%. The bottom line-a college education can help one raise the standard of living for himself or herself simply by maintaining employment.  The New York Times has created a great tool that analyzes the unemployment rate by education level, sex, ethnicity and age. http://www.nytimes.com/interactive/2009/11/06/business/economy/unemployment-lines.html

Tell you neighbors, friends, children of friends to consider a college degree that matches their needs if they have not already done so.

Peace!