Education and Capitalism

I think there is a tension between libertarianism, which assumes markets work perfectly, and some strains of capitalism that assume government intervention is necessary to help increase productivity and economic growth.

Basically, I think there are plenty of avowed capitalists that believe that there are market failures - places where government needs to get involved to help the market function. A good example of this is infrastructure. It is hard to argue that our railroads, highways and energy system didn't help feed rapid growth.

But to me the best example of a government expenditure that contributed to economic growth is public education. In fact, some academics (I can't find the studies) say that our public education is the best explanation for our amazing growth over time as compared to other countries with similar natural resource wealth.

I wonder if you can see where I am going. Right now, we have a pretty good education system. I think there is room from improvement generally, but in a lot of places we are doing a good job of educating our children.

But in some places - mostly places of high poverty - we are doing a terrible job. And I fundamentally believe we need to spend more money to see real gains. Now, most of the time we talk about the need to improve these education outcomes as a fairness issue. I agree that it is that. But I think it is also an economic growth issue.

When I think about the number of youth that are denied a decent education, I think about the waste of valuable resources. So many of those youth could develop major improvements that lead to real productivity increases and a better quality of life for everyone. It could be the next Apple or maybe just the next Canon (or anything - look around you). But we won't ever see those improvements unless we give them a real education.

I compare this to the time when women were not being educated. In that situation, you had a whole class of people that were not being allowed, simply because of their gender, to contribute to society through education and self-determination.

The same thing is happening to some of our youth. Simply because of where they are born, they are deprived of a good education and are not able to contribute to society.

I truly believe that if we significantly increased education spending in those areas, we would see a meaningful return on that investment as that many more people would be available to create the next big thing and all the rest would create lots of small things - all of which will make the economy grow and our lives better.

And more importantly, their lives will be much better as well.