Tuesday, November 13, 2012

Education and Economics

Economics is meant to play the long game; it just functions better that way. Sure, you can sell short, or flip a house and do very well, but it's very risky and not just to you. This should be one of the lessons of 2008. People ended up gambling on all of our futures, and damn near lost them because of the short game.

We talk about sustainability in the environment all the time, but economic systems need it as well. We need systems that are dynamic enough to adjust to changing times and events, but with a foundation that is solid, and well rooted to prevent collapse. 

We, the people, on the whole are not very good at long games. We like our instant gratification and are easy to panic. It's not good, but it also makes a lot of sense. Our brains really haven't caught up with civilization yet. As flexible and adjustable as our minds can be, we still have those hardwired responses and instincts that are just damned hard to override. When the market takes a down tick, people start selling, pushing it further than it would have gone without the fear response; it's what we do. 

But we need to be more clever than that. We need to be playing the long game.

Right now the U.S. has around $16 trillion in debt. That is a truly unimaginable number. We also have around a $1 trillion budget deficit. Neither of these things are good, by any stretch of the mind; we really need to do something about this.

Now, the obvious answer is to cut spending and possibly raise taxes, though that second part is certainly contended in a lot of circles. On a base level it's like balancing a household budget. Spend less and bring in more, and the deficit goes down; easy as lying.

Sadly, national economics are a bit more complicated than this. We also need to look at things like unemployment and job growth along with GDP, social security, and the social safety net in general. Things get tough very very quickly.

One of the first places we see the tightening of belts is in education. As the author of that piece explains, although real dollars spent in education is going up, its relation to the GDP is steadily dropping; we are investing a lower percentage of our income into education. We have seen it in the cutting of arts programs, music programs and now even physical education programs. We are seeing class sizes grow and school libraries shrink. And it kind of makes sense. On that basic budget model, we have to make a cut somewhere, and education is expensive.

But again, I want to talk about the long game.

There are lots (and lots and lots) of scholarly articles about the relationship between education and crime, and I'm linking you to one of the better ones that doesn't require downloading things. It's pretty simple and even logical; the better educated people are, the lower the rates of crime you see. Now, there are lots and lots of factors that can go into this, including education level of the parents and a whole host of other issues, but education is absolutely a big factor.

Education is also, for some obvious reason, a good indicator of future success. It should come as no surprise to anyone that places with higher poverty rates also have lower levels of education. Now, to some degree this is going to be a chicken and egg argument, which is actually one of the big issues with poverty; it is a cycle. Low income families don't have the same access to education, and educational activities, so the children of low income families are at a disadvantage, so they are more prone to staying poor.

It is also worth noting that low income children are more likely to miss school than their higher income counterparts.

We are also in a place where people with lower incomes, lower education levels, and who are on public assistance are having significantly more children than those who aren't in those social strata. Breaking tone for a moment, I've tried for a good chunk of time to post the link from the census data to demonstrate that, and apparently I just can't. It's a PDF that you can get at www.census.gov. If you want to fact check me, search for p20-558 and look at pages 6 and 7.

The effects on the individual are pretty clear. A lack of education increases the likelihood of dependence and future incarceration for our children. This, in and of itself, is obviously a negative, but one could make the argument that it isn't "our" problem. One could make that argument, assuming they didn't look any deeper into the social and financial effects that this has on society as a whole; we should probably do that though.

Right now, the cost of sending a child to public school from k-12 runs right around $10,000 per year per student, though there is a pretty wide variation state to state and district to district.

We, as a nation, are spending about $800 billion on welfare for about 56 million people. This comes out to around $14,300 per person.

And, at least in California, it costs around $47,000 to keep an inmate in prison for a year.

So as it stands, we are spending less on our students than we are on taking care of the consequences of a bad education.  If we could lower the incarceration rate by one person, we could double the education budget for 2.3 students. Higher levels of education also reflect a lower chance of being on welfare and a lower rate of childbirth, which means the social safety net gets less use.

As is almost always the case, prevention is less expensive than dealing with the aftermath, and we are not doing nearly enough prevention. I'm also not saying that we need to just throw money at it. It needs to be a reasoned and rational response to the issue, targeting money into places where it has the highest chance of helping and using methods with the highest returns. I'm not going to go into all that right now, if for no other reason than a hope of getting this posted soon.

I would also like to touch on the argument that all of this support should be coming from the parents, not the government. This is an absolutely fair argument, and I don't disagree. I personally went to public schools in a mediocre school district, but luckily have fantastic parents that pushed me to learn, think, and try more every day to better myself. The problem is that some parents are busy; so busy trying to support their families financially that they can't support their educations. Some parents aren't educated enough themselves to help out. And tragically, some parents just don't care enough. In none of these cases can any blame be put on the children, but it is without question the children who suffer. The "American Dream" is that everyone has a fair shake at life, but we're not actually offering that; we can, however, get closer to it.

The United States became a superpower in the world because of innovation and technology booms, along with some philosophy and political growth that changed the world. If we hope to maintain that position we are going to have to keep pushing in those fields. We need educated, intelligent, and productive people to keep driving this country forward. With innovation and creation comes growth, making the country stronger, reducing our reliance on other countries in every possible way, and strengthening our position in the world.

But regardless of that, if we tactically invest in the youth of the nation, even without all the growth that will come, we can save money and cut the deficit just by giving children the tools to get off, or stay off, welfare, and to stay out of prison.

It's not complicated, but it is a long game.


  1. Okay, great. Investment in education is critical. We should do it.

    I don't mean to sound like a dick (okay, yes, I do), but this isn't exactly controversial, new, or even insightful. Nick Kristoff, for example, reminded Occupy protesters a year ago that the most crucial investment in reducing inequality is in early childhood education, an argument seconded by Nobel economist, James Heckman

    Educational equity is often discussed as a moral issue,” wrote Heckman, “another way to think about equity is a way to promote productivity and economic efficiency...We need a capable and productive workforce that will compete successfully in the global economy. Underdeveloped human potential burdens our economy and leaves us with a workforce that is less than it could be.”

    Okay. Great. Only here in Pennsylvania, Governor Corbett's latest budget slashed $2+ billion from the 2012-3 education budget, mostly from programs that benefit poorer school districts -- like Erie. That is, the Governor and state assembly gutted twice as much funding for public education in the state's poorest districts that they did for the state's richest districts.

    Those cuts came even though revenue streams were available to maintain education funding. Instead, Corbett allowed the oil and gas industry to continue to drill the Marcellus shale tax-free, kept corporate tax loopholes on the books, and raised funding for the state prison system.

    (You can read all about Erie's school budgetary woes in a cover story I wrote for the Erie Reader.)

    Teacher salaries are not the problem: US teachers work the longest hours for the lowest pay in the industrialized world. The "free market" is not the answer: experiments in school privatization have been a disaster. (Most, if not all, decent private schools are not-for-profit and rely on huge grants, sponsorship, and alumni donations to exist.)

    So...my question is, how do you change it? How do you make investment in education a priority?

  2. So... dick ;) I don't imagine that much of what I say here is really mindblowing or new or exciting. My thing with this blog is generally trying to break down into a logical, coherent argument, discussions that I regularly see out there on the internet.

    As for what to do about it... for me, guy with very little power in the world... I try to convince people that it's important and should be a priority. Other than that, when I'm put in a position to teach, i try my best to be a good teacher. At this moment in time, I just don't have a lot I can do.

  3. I remember I had a similar reaction to your prison reform post. So, obviously my dick-i-ness has to do with my expectations, not your work. So there you go! I will adjust accordingly, tho' might still throw up comments with links and info on stuff that's going on, or other folks' spin on the same topics.

    Forgive me, B. I am all on fire! Which, by the way, is the name of a pretty f'ing awesome biography of William Lloyd Garrison, which I cannot recommend enough.

  4. Oh Jay, go ahead and be a dick. I enjoy a good banter.

    But really, I agree with a lot of what you're implying. Sadly, I don't have a lot of scope to effect real change. It's frustrating.