0.6 Investment in human capital: education and health  (Page 7/16)

Ongoing investments in education also provide the foundation for sustained economic growth over long periods of time. This is because better-educated parents are far more likely to have the income to make appropriate investments in education for the next generation, raising productivity all around. The effects are cumulative : the next generation is then enabled to make similar investments, and the next, and the next, resounding down through all later generations. On the other hand poverty also tends to resonate down through generations: children from very low-income families tend to have lower lifetime incomes.

For the United States, there is little doubt that investment in education and research generally, has been the chief engine of productivity growth over the past fifty years.

The pace and nature of economic and technological change especially in nanotechnology, biotechnology and information technology means that access to opportunity in the coming decades will be very good for those who have developed an array of skills -- cognitive , quantitative , artistic skills . These attributes will enable them to readily adapt over their lifetimes to the demands, not of multiple jobs , but of multiple careers . In turn adaptive capacity depends upon the ability to convey ideas and information effectively, orally, and in writing. It depends also upon well-honed critical faculties: the ability to differentiate between junk science and real science, between bunk and brilliance, between degrees of evil, and then to build arguments founded on logic and integrity.

Those blessed with some of these advantages may look forward to a lifetime of challenge, achievement, and comfort available to precious few in past centuries. Those lacking these skills will, at best, be eligible only for lifetimes of quiet desperation , in hopeless enclaves where opportunities for the poorly schooled and unskilled will be as slender as in any recent period in human history. A decent life may be beyond their grasp, not to mention a decent living .

Adaptive capacity flowing from investment in education also allows people to better navigate tough financial times. The years 1980-2000 were unusual , in the sense of there were few serious recessions. But worldwide, the IMF (International Monetary Fund) has counted 113 episodes of financial crisis in 17 nations since 1975. And then, of course there was the very serious “Great Recession” of 2008-2010 (see Chapter___).

The experiences of India and Ireland are very instructive as to the efficiency of investment in Human Capital. India: From 1947 until about 1988, Indian economists spoke of the: “Hindu” rate of rate, an economic growth rate barely above rate of population growth. This was the period of Soviet style central planning, and the “License Raj.” It is no exaggeration to say that the “Decision Rule: for civil servants” under the Raj “whatever is not prohibited is required.”

Indira Gandhi’s second son began to move away from the “license raj” as Prime Minister in the eighties. Then, the transition from the license raj unleashed significant growth, because a sufficiently educated populace was already in place. India was therefore poised to take advantage of reforms that finally allowed use of some private markets to allocate resources. India still has a long way to go in Human Capital formation- primary and secondary education remain deficient, and higher education very uneven in quality. But at least now nearly all Indian children attend school. Even so the literacy rate in India in 2007 was then barely above 50% for females and 78% for males, and reach____ in 2013.