"Educational economy" - the way to success. At least according to many politicians and economists. But is that really so? Does the "education economy" really only benefit us?
The Prime Minister takes a firm step before the journalists: "Yes, we have made a serious decision. We want to support an area that is certainly promising! Which will bring advanced industry, because we do not want to be the assembly plant of Europe! We want to support the croissant economy! ”The journalists applauded and everyone was satisfied.
Wondering what a hot economy? AND how do bread makers come to this?
A kind of "education economy" has many supporters. It is surprising how many people who sometimes report in a fiery voice about the harmfulness of state intervention are willing to fight for the state's centrally planned and subsidized education.
If the government subsidizes and supports roll makers, where will it go? There will be a lot of rolls that will not find use. And they will be so cheap (in stores) that it will cause the destruction of bun manufacturers. Now you are instead of rolls give education a instead of buns experience - and we are at the root of the problem.
The whole problem of supporting the educational economy revolves around human capital. In general, in economics, human capital pretends to be education - the study of school is investment (in the amount of the lost profit from the sacrificed job), which, however, creates capital for us - ours, the handsome, human. An educated person then next to his workforce also offers its own on the labor market capital, which theoretically increases its price.
In my opinion, this interpretation is too simplistic. I'm not saying it's bad, but it doesn't include the second - and I think very important - component of ours human capital make up. They are the second component experiences.
Imagine a person, such as a bank clerk, who has worked as a bank clerk all his life. He might have another job, maybe a better pay job, but he works as a bank clerk. He does not want to change his field. Why?
This bank official says that if he has been in the industry for so long, he will not change it. After all, he has a lot in this field experiencesso he knows how it goes there. Our bank clerk does not have a university, but he has experience - so he also has his human capital.
Suddenly, however, the state decides to support the "education economy" - education becomes free and the state begins to pump more and more public money into "education". Young people will start studying in bulk - and because the banking sector has high salaries, most people will study banking. After a few years, universities will release a huge number of potential bank officials to the labor market. What will happen?
Supply suddenly exceeds demand. This will result in falling prices - salaries of bank officials will fall. At least the bank officials who came from those schools. The bank suddenly realizes that an educated but inexperienced employee is cheaper than a less educated, but very experienced old bank clerk. They will therefore resign our experienced master and hire educated graduates for a low salary.
The bank clerk has invested his entire productive life in gaining experience in a bank - his experience is so great investment, which came to naught in the moment of support for the "educational economy". Sure, he could do the job more efficiently and avoid mistakes made by inexperienced graduates, but its price is simply too high in the labor market. Graduates with a higher education and a lower salary than what would suit our bank clerk are at a strong advantage. Their lower price on the labor market is due to their quantity. This was caused by the state, which "by supporting the educational economy" with money paid us all to those graduates of education.
As a result, we all contributed to employers' salaries for university graduates.
Supporting the educational economy is thus nothing more than redistribution of funds from older employees to companieswhich employ graduates.
Education versus experience
Education and experience are mutual substitutes, as well as a croissant and a bun. They are educated people competitors those without formal education with experience, just as roll manufacturers are competitors of roll manufacturers.
Today, states are constantly calling for the need to support the "education economy" - that is endow education at the expense of experience. We all subsidize education with our money, which is artificial we reduce its price on the market. Experience is thus at a disadvantage and is very difficult to promote on the market. After all, we hear it all around us - experienced fiftieswho lost their jobs and they can't get it work.
Do we want an educational economy?