Higher Education Pays for itself

After the American Century

The OECD has released a report today that concludes, in part, as follows:

On average across the OECD countries, a man with a tertiary level of education will generate  $119 000 more in income taxes and social contributions over his working life than someone with just an upper secondary level of education. Unhappily, women make somewhat less, due to the continuation of wage inequality and the persistence of the glass ceiling. But women graduates nevertheless do generate more income than it costs to graduate them.

This means that  investment in post-second education more than pays for itself, generating a surplus. The report also found that university graduates have a lower unemployment rate than the population as a whole. "Unemployment rates among people with a tertiary level of education have stayed at or below 4% on average across OECD countries during the recession."

Moreover, the OECD report only tells us how much more university graduates pay in taxes than it costs to educate them. It does not calculate the value of their inventions, for example, or how much their labor contributes to better exports, more appealing tourism, more effective public service, and so forth.

  

Denmark comes out well in the report, which finds it sixth in terms of the percentage of its population getting advanced education. However, it does trail the world's leading country,  Finland, with Iceland number two. Norway, the Netherlands, and Sweden are close behind Denmark at 9, 10, and 11. 

Denmark needs to improve in the vital area of internationalization. Overall, the total number of international students in the world has doubled to 3.3 million from 1995 until 2008. Yet Denmark has a smaller cadre of foreign students than many counties, and it looks particularly weak in the all-important area of advanced degree programs. Fully 84% of Danish advanced degree students are Danes, compared to 54% in the UK, 55% in Switzerland, 60% in France,  61% in Canada or 66% in Austria. (Figures for the US and Germany were not available, but they do have large numbers of foreign students, without question.)

Danish parochialism is most pronounced in the PhD programs in the Humanities, where almost all students are Danes, plus a small number of permanent residents married to Danes. This is not a healthy or competitive situation. Things are better in the sciences and medicine, but not up to the level of nations that the Danes usually compare themselves with.

The United States lags behind in these statistics, with little more than a third of its population receiving tertiary education. Of course, it still has the world's strongest universities that regularly top the league tables, regardless of whether they are complied in Europe, Asia, or the US. Harvard remains number one, with Yale, MIT, Stanford, Berkeley, Johns Hopkins, Princeton, Columbia, and all the other great universities that have long been dominant among the top 50. However, if one looks at the population of the US as a whole, its educational level is not rising as rapidly as elsewhere, and the ability of the people as a whole to compete internationally may be expected to suffer accordingly.

Linking up with Turkey

After the American Century

I see in the news that Turkey is about to link its electrical system to Europe's, by way of Greece and Bulgaria. Such things are often regarded to be merely technical, but they are more than that. In the past such interconnections have anticipated closer political and economic ties. During the later years of the Cold War electrical links were established across the Iron Curtain years before the collapse of the Soviet system. 

Turkey is initially only joining the grid for a one year trial, but barring technical problems, one assumes it will then become permanent. Access to Turkey's hydroelectric power could provide greater balance in the grid as a whole. It could also make possible more pumped-storage projects, in which wind and solar energy are "stored"by pumping water up to a higher elevation, against the time when demand rises again, or the wind does not blow or sunshine is weak. Then the water is released and turns a turbine to make electricity that is far more valuable than the electricity from off-peak production that was used to store the water.

Norway and Holland have a pumped storage arrangement of this sort, which means that off-peak power production in Holland is stored as hydro power in Norway. They built an undersea cable to make the arrangement a direct connection. Such interconnections build trust between countries and create mutual advantages.

It is particularly significant that the old enemies, Greece and Turkey, are going to trust one another in this way. Ideally, both countries could eventually save huge sums if they stopped investing in military hardware to protect themselves from each other. The new link is also a small step toward resolving the Cyprus question.

It is not just an electrical connection, it is a move toward friendlier relations and an intelligent technical integration. Interestingly, the engineering and electrical work was done in good part by General Electric, so the profits and benefits are not limited to the Balkans and Turkey.

Pakistan: Can a Nuclear Power Still be a Victim?

After the American Century

The devastating floods in Pakistan that have affected 20 million people dominate the news. As all too often this is presented as a natural disaster in which people are simply victims who need our help. This is true enough of the peasants trapped on high ground who have lost their homes, their fields, and their livestock. But it is not true of Pakistan as a nation, which has spent billions of dollars developing a nuclear arsenal, which it should have spent instead on dams and flood control. It is hard to see a nuclear power with 170 million people as simply a victim, especially when it seems that Pakistan shared its weapons technology with North Korea.The New York Times reported last year that Pakistan employed tens of thousands of people in its nuclear program, and that it is rapidly increasing the size of its arsenal.

That money would have been much better spent on flood control, on preventing the growing population from settling on flood plains, on building hydroelectric dams, and on vast tree planting projects to help absorb water, hold soil, and slow down flooding. A great deal could have been done, but instead money was spent to build nuclear bombs.

In this moment of need, ordinary people give to flood relief, but governments should tie future aid to real change in Pakistan's priorities. Otherwise, aid donors end up building dams and levees so Pakistan can spend money on weapons of mass destruction. Pakistan is now pursuing a policy of of double devastation: floods now, nuclear war later. 

Pakistan has the resources and the talent, as well as the sheer size, needed to be a great nation. But it has not developed its educational system sufficiently. It has allowed religious fundamentalism to flourish, invested vast sums in its military, assassinated its leaders, and even persecuted its lawyers. It needs to find moderation and compromise in politics and to be better at selecting its priorities. Of course we should aid Pakistan's suffering millions. But even if I am very much a skeptic when it comes to the idea of divine intervention in human affairs, it is tempting, though wrong-headed, to see Pakistan's problems as its punishment.

No Safety Net

After the American Century

The American unemployment system does not work well if a recession lasts much more than one year. To be precise, benefits run out after 99 weeks. The first people laid off in 2008 have now reached that point, and they are losing their homes, their cars, and everything familiar in their lives. The Congress is not doing anything for them. In fact, it had trouble getting itself to extend benefits to 99 weeks.

Contrast the New Deal in 1933. President Roosevelt created work programs for the long-term unemployed. They did not pay well, but they gave people enough to live on, a sense of purpose and hope for the future. These programs also helped reforest and replant areas that had been misused, built parks and recreation areas, improved roads, and much else. The money was by no means wasted, and the human capital was not lost either.

Indeed, some important writers were given jobs preparing comprehensive guidebooks to every state in the union, and others worked as actors and directors for an arts program that was supported by the government. Today the United States seems far less able to find creative ways to deal with the crisis.

Unless the economy improves soon, the US Congress might want to learn from the successes of the New Deal.