The Spanish crisis of human capital

What about Spain? Maybe completely different than many think. What when is the epicenter of Spanish demonstrations in Spanish education?

Spanish Revolution - Image Source: onlinemakinist.blogspot.com
Spanish Revolution - Image Source: onlinemakinist.blogspot.com

Ve Spain is protesting. For a long time - true. There is talk (or there has been talk) of the "Spanish Spring" or the "Spanish Revolution." The riots were started by young people, Unemployment among people under the age of 25 is over 44%, generally over 21%. They generally want "change" - work, apartments and a better life. Thus, we can consider unemployment as the primary cause of the problems.

How is it that the "educational society" being built, full of university students with a diploma, cannot find a job?

Again, let's look at who started the protests - young people, graduates, with an unemployment rate of over 40%. Spain's problem is immediately "twofold" - firstly, it is an economy regulated by the European Union, which we already know 27. It is an economy with a hostile business environment, with a difficult opportunity to lay off and so on. The business risk in employment is artificially high and starting a business is not so advantageous.

This is the view from the "job offer". But what about the "demand" for jobs?

Young people demand work after they finish education. The vast majority of the education system in Spain is state-owned and free. And universities? 43 of them are state, 4 are church and 3 are private. Private, which are also subordinated to the Ministry of Education, so actually state.

What does it mean? That The Spanish education system is, to a greater or lesser extent, centrally planned by the state. Autonomous regions also play a role in regulating education, but they are also de facto "branches of the state".

The state of central planning is also called "economic socialism." In the field of education, let's call it "school" or "academic" socialism.

Impossibility of rational calculation

However, economic socialism of all kinds has one major problem: the absence of real, voluntarily determined market prices.

As a result, that means no one knows what to learn. Schools do not know what fields are of interest to students and what fields are of interest in the labor market. He does not know which fields are "effective", which are to "stick" and which fields are unnecessary and there is only a waste of talent.

Students do not know which field is worth studying, which fields are of interest in the labor market and which field is "right for them" - there is no system of scholarships and market (unregulated) loans with a centrally unaffected interest rate. It cannot even exist in the system of academic socialism.

Carrier of information about the preferences of many millions of cooperating individuals for those are the priceswhich do not exist in education.

Small investments in education

But what should the school give us? It is to help us build and develop our human capital - knowledge, experience and more. We then offer this capital together with our labor force (which is also a form of capital) on the labor market and we want income for its "renting" - salary.

The problem, however, is that young people spend a substantial part of their lives in the system of state-organized economic socialism. They invest precious time in capital formation, which is largely unnecessary because schools do not know what to teach their students.

The state that finances these schools then actually subsidizes the creation of capital with billions (euros or in our country crowns), which actually come to naught. The money collected in taxes is thrown out the window into the system of real anarchy - economic socialism without the possibility of any calculation.

Basically, it's a situation similar to before the mortgage bubble burst.

While in the mortgage bubble it was about building a "mortgage economy" where everyone has their own house and therefore the state pushed semi-state agencies to relax the rules for the mortgage market and the central bank to reduce interest rates (subsidized the emergence of some form of "capital"), in this education bubble it is a matter of building an "educational economy", where every young person has his or her degree and therefore the state finances the education system, he can.

The more state subsidies for education, the more state regulations, the more the central plan and the less real prices. The more central the plan, the less individual the plan of students and schools.

The more state money for education, the worse for school graduates.

The result of this whole marasmus of public education is a lot of school graduates (whether high schools or universities) who have spent a significant part of their lives learning specific field knowledge because to then waste them and devote themselves to something completely different. This is called a waste - human capital is wasted herewhich is, in general, capital like any other. We waste production factors, time, lives.

It is the ignorance of what "human capital" is required in the market that makes school graduates unable to use their own capital anywhere, and it thus becomes worthless. Yes, these are the famous "FHS graduates* in Alberta at the box office "or young Spaniards protesting for social security.

Diploma inflation

The famous "branch inflation" thus has the same effects as "monetary inflation".

We can find a parallel with Austrian business cycle theory - through state subsidies there is an "inflation" of university graduates - state subsidies and the absence of prices bring many graduates to education and tertiary education, but they invest poorly due to the lack of real price information - there will be small investments and a bubble. It will burst in time. It's about people - the bursting of the bubble will cause high unemployment of graduates ("Write-off" of bad capital).

However, one part of our "human capital" is common to all of us - it is ours working strong. When they fail investment into our own "specific" capital, we can use this less precious (and therefore less valued) capital.

Here comes the problem of job supply: if business is too bound by state regulation and it is too risky to employ, jobs are not created "for the workforce" either. He won't even open the supermarket.

And then? And then Spain comes "to us". Let's stop state funding for at least higher education while it's time. For the good of the students and all of us.

0 comments

  1. surely Wenceslas, Europe is now taking on American nonsense, I think it's deliberate, semi-literate fools are better off. However, they are unlucky, the whole monetary system will go wild and the EUSSR will follow.

  2. Stan, I fully agree with you. In the USA, education has perhaps degenerated and in Europe it is preparing to do so. Buying an education at a private school is easy for people with money and they don't have to know anything and get a diploma. College will be unavailable to people without money. Public schools should produce students who are able to study and not just go to school. The measure of education should be knowledge, not money. In practice, it turns out that people from schools do not know much. I found out at work that a young trained car mechanic with a high school diploma could not measure with a caliper. He doesn't need more words.

  3. As for the reasons for Spanish unemployment, I'm afraid the author did not understand it substantially, if at all, it is state education and university undoubtedly the last. Just to compare with the effectiveness of the US economy, producing generations of so-called, brainwashed with Keynesian and monetarist propaganda by the banking mafia, their actions, in conjunction with corrupt politics, have brought the US to the brink of bankruptcy, which is inevitably coming. Both private and public schools in the United States produce millions of semi-literate simpans at lower levels, and on the other hand, EU-funded credit funding has created a $ 1 trillion credit bubble, with two-thirds of students paying off debts while their children begin studying. The main reason for unemployment, not only in Spain, is the corrupt monetary and banking system, worldwide, and the manipulation of insults by central banks, a direct consequence of the systematic manipulation of insults downwards, is the mass outsourcing of jobs from Europe and the USA to Asia.
    http://www.nytimes.com/2011/04/12/education/12college.html?_r=3&hp

  4. Everything is related to everything, you stated that to Volunteer correctly. You can call it dialectics. Mr. Kubec, you can call chaos anarchy again. Don't get fixed. Some miss the meaning of the word anarchy and so recommend using the word chaos. The chaos in this is big enough. You want to know the prices that you think socialist education does not have. We canceled the planning and you will see for yourself that we will return to it. The company should know not only the prices. Even with the market mechanism, the company should know how much it needs hospitals, doctors, lawyers, police officers, plumbers, bakers, car mechanics, etc. for the next 10 years. The market will not solve everything. Then it looks like the market around you looks like. You come to the store and want to buy a suit or sweater. You will ask what material the suit is made of, knitted, if it is crushed, how it is washed, if it has to be ironed and the young saleswoman knows nothing, because she graduated from agricultural high school or has trained
    hairdresser or sausage maker. Maybe you come to the electro to buy a DVD and the young lady can't even unpack it from the box and turn it on, because she sees the DVD for the first time. Or you have a terrace built by the company and laid tiles. It rains and water flows into the house. You call the company, demolish the terrace and lay the paving again. It rains and you have a puddle in the middle of the terrace. You call and invite the company and ask who makes the terrace. You will find that you do not have trained bricklayers on the construction site of the terrace, but a former police officer who did not graduate from any school. You know the prices, but somehow the market mechanism doesn't work. It just doesn't work. Next time you order another company and find that you pay in advance and more, you think, it will be quality work, but the company will not start and go bankrupt at all. You go on holiday, but at the airport you find out that the travel agency did not pay for the flight to Greece and they go on strike again, so you return home and think about what virtual and rich world you live in. Of course, I'm exaggerating, it doesn't always have to go so bad. I recommend opening some newspaper at any time. From all the headlines you read, you will learn something similar, only in a different order.
    I am optimistic and I believe that one day we will start telling ourselves the truth and living a fairer life than the virtual one with a market economy that is just "like" and has nothing to do with a real market economy today. Then even those who graduate from a school and have a degree will know something and will be able to do business honestly.

  5. Where did I get by pure chance? I haven't seen so many textbooks, manipulated wisdom together for a long time. The experience of other fallen, described in the Black Chronicle, is enough for me to fall on concrete. Just fall from the 2nd floor about 6 meters and you're done. The higher the floor, the safer it is. Over 12 floors, there is no point in discussing or counting anything. I do not need to know the numbers or the law of gravity for this particular example, as one discussant wrote here. Sometimes life experiences are enough.
    I would like to add to President Husák that he was educated and had the most children born for him, they all graduated from a school for free according to their abilities, and all the children got a job. There were other problems, but there is no time to solve. I think you know very little about this gentleman and you have just succumbed to demagoguery.
    On the subject of Spanish education. I can only comment on what I have read here. I was on holiday in Spain 15 years ago. I don't know the problem. But we can compare with education in our country. We have a degree in degrees, everyone would like to study. The level of education in our country is at a lower level than under Husák, who believed in one true truth. It will be similar in Spain. Everything is studied here, and if a student is not accepted at one school, he or she will study another, and it doesn't matter what, because he / she wants to graduate from university and it doesn't matter what he / she can do. I hire young people with a bachelor's degree, a master's degree and I am quite disappointed. For practice, young people are often unused and still quite often without activity and effort to learn something. Maybe it's the inability to learn new things.
    Society is healthy when it has enough people of working age, able to feed the old and the sick, when it prospers and is able to finance itself. Since World War II, when there were not enough flats, schools, crèches, kindergartens and even enough young people, someone had to build flats, build businesses, build roads and highways, the Metro, while keeping a huge army (Cold War and the threat of conflict) and everyone had a job for this construction. We have moved forward 2 years, we are taking advantage of scientific and technological progress, but we are wasting it. Some live in distress and others sit at the PC for hours. One example for all. We drank tap water, which was and is often better than that in PET bottles. Before we get it to the supermarket per liter of water in a PET bottle, we produce half a kilo of harmful emissions, we consume 20 liters of water and 5 liter of diesel. We should start thinking more, but who should think when young people see everything ideologically bad in the past and do not know what to do with the present. Such a crisis, which the world has been experiencing since 1, has no comparison in the history of the world, not even with the crisis of the 2008s, which resulted in World War II. It's because we learned to live in a virtual world and in self-deception. The crisis came from the indebted United States, where mortgage banks and falsified businesses went bankrupt. There is nothing on television but virtual programs, games, competitions in which we see only rich and successful, beautiful, young people. But life is also about failure, about old, sick, uneducated and incompetent people. Therefore, everyone should begin to know something for themselves, to prove something, before distributing their wisdom in public.

  6. @Edmund Black Viper, Radim - you are both basically right. In a system without the possibility of calculation (without market prices), ie in a system of chaos, everything is possible. All of the above can be a specific case of a bad investment (due to the lack of real market information). All these effects are mixed - exactly, no one in the socialist education system can know.

    Just one thing - the school does not have to study only for the labor market. Rather, it depends on what we imagine under the labor market. The student does not have to want to be just an employee - new entrepreneurs (employers) are also needed. Which ones? We don't know. We have no prices.

  7. In part, the article is right, but he is wrong about something - students know well which fields are in demand in the labor market, and schools know that as well. However, many students do not follow the demands of the field on the labor market, but their personal hobbies, fashion influences (there are fashion fields that look cool, but whose graduates no one wants), and last but not least, the difficulty of studying. Fields with applications are unattractive and difficult, and therefore there is not much overhang. Schools are then not guided by the demand of the labor market, but by the demand of students. Because there is no point in opening fields that no one will want to study.

  8. It is not true that dismissing an employee is difficult. The employer dismisses who he wants, when he wants, without severance pay.
    Business (decent business) is more hindered by corruption and legal chaos than state regulation and the current level of taxes.
    If a system, such as state planning, is open and exposed to competition from other systems, it has no chance of stunting. In education, on the other hand, there is power in the market. Schools have made a living from awarding degrees and resigned themselves to quality. The state should determine that universities need to be abolished for the top 20% of students and everything else. It would save money immediately.

  9. there is another thing. In my opinion, a university degree is not as important for an employer as intelligence, dexterity, flexibility… ..
    Intelligence because a person with an IQ higher by about 20 is enough to learn the same amount of information 2 - 4 times less time. Dexterity for everyday work as the ability to adapt to whatever he encounters in his work. Flexibility as the ability to understand quickly and correctly what is needed. What to study…. Whether to accept a job or additional retraining, for example in a field other than his education, or to refuse it and to start a business or just leave Spain for work somewhere outside… ..
    The curve of intelligence and other of these qualities is given in a given society, and any university will only slightly develop them, but it will not. Thus, if a significant part of the youth population goes to subsidized universities, there are also among the graduates whose IQ and other employers' required qualities are at such a low level that they are not worth employing for employers. In addition to menial jobs, such as those of the supermarket cashier.

  10. Ad statistics: And what if it's a small investment that adds to unemployment and the misallocation of investment in human capital is that those who should study at university do not study it at all, because there is no suitable offer for them? Then the statistics showing that there is no current graduate among the young unemployed confirms my thesis.

    What with this? Which statistics will solve this problem? None. Statistics are not always the best method for confirming / refuting various economic theses. After all - this is a methodological difference, for example, between the Austrian and Chicago schools 🙂

  11. As far as I know, the state is currently mixing into education in all countries, so I really can't show you a functioning market system. In such a case, one must proceed to theory, or to history (for example, education in the USA before the introduction of public schools in the 70s and 80s of the 19th century was, as far as I know, at a very good level)

    But you need to read about it or at least listen to it, for example here:
    http://mises.org/media/1437/The-Economics-and-Politics-of-Education-An-Interview-with-Robert-Murphy

    And otherwise private schools in the Czech Republic are not an argument against a purely market system.

  12. Basket
    I'm not interested in thoughtful statements and textbook theories, but in how things work in reality. When you show me a country somewhere where only market education works well, we can continue to have fun.
    Otherwise, private education in the Czech Republic is a frightening example. I teach at one such private school, and only an idiot can call that parody an education.
    I'm not curious about dysfunctional utopias.

  13. But I wrote you counter-arguments to Allah. You haven't written anything yet…

    I don't know about you, but when someone makes a statement that I believe is wrong, I write counter-arguments.

    If you do not agree with my claim about the harmfulness of public schools, please write me why.

  14. I came to the conclusion that Allah is great after studying a lot of literature and after almost a year of hard thinking. So if I'm wrong, please correct me if you have a counter-argument.

    It's as meaningless a statement as yours.

  15. Martin B. 🙂

    Yes I have. There is no evidence that Allah exists, and even his alleged existence contradicts all real-world logic, so such a being cannot be "great."

    I came to the conclusion that public education is incredibly harmful after studying a lot of literature and after almost a year of hard thinking. So if I'm wrong, please correct me if you have a counter-argument.

  16. Martin B:

    Do you need numbers to know if you will survive a fall from 100 meters on concrete? Will you look for statistics on how they turned out before you? What was their mortality rate?

    Of course not. All you need is the right theory, that is, the theory of gravity, along with a basic knowledge of human physiology, to know that such a fall will kill you 100%.

    Would you call me an "ideological fanatic" if I told you without numbers that you would not survive this fall?

    I also tell you that public education is very harmful… Do you have a counter-argument?

  17. "I don't need numbers…"
    Yes, that's how all ideological fanatics think.
    Husak et al. they also didn't need numbers. Faith in the right truth was enough for them.

  18. to Matrin B.

    "I wonder how graduates of nationalized education are doing in Haiti." - I love these "arguments"…

    And otherwise I don't need numbers to know that if a criminal organization teaches almost all children, those children will believe in the legitimacy of that organization, and that education will be an indoctrination rather than a real education (such as teaching children how to think how to distinguish truth from lies, how to argue, etc.)

    Tom Woods used this analogy: Imagine Wal-Mart controlling and funding the whole school. Would you really be surprised if children after x years in these schools were convinced that Wal-Mart is the most moral and best chain in the world and that everyone else is bad?
    But when education is controlled by the state, few people have a problem with it… At the same time, it's exactly the same…

  19. Handsome, author, what if you used some real numbers?
    E.g. proving that unemployed graduates in Spain are the result of nationalized, regulated education, while employed graduates in Finland are the result of, .., um, the same thing.
    You just present textbook wisdom, regardless of the facts.
    I wonder how graduates of nationalized education are doing in Haiti.

  20. @Jaroslav Skopal: If a technical school brings high added value, it will probably make money on the market, and it is useless to stuff subsidies into it, nicht wahr?

  21. The state should maintain only the narrowest network, mostly technical schools, with demonstrably high added value. The others (ie at least 90% of existing universities) are mercilessly cut off from subsidies.

  22. Ad EDIT 1: Sure, that's what I meant.

    Certainly, public education is a waste of students' time, which is not disputed, that is clear. Even if I compare the concentration camps, the brainwashers that today's children go to (and execute terribly reluctantly), with a hypothetical school in a market environment that would certainly try to make teaching interesting and intellectually appealing, I could say that the vast majority of time spent in public school is not only a waste of time - so it does not bring positives, but even brings big negatives (students would be intellectually much better if they did not go to school at all).

  23. If the investment in the creation of human capital is completely wrong, it is the same (in terms of the amount of human capital), as if the person did not study college at all. And how many people decide to study college, I don't think, can affect the unemployment rate.

    So I want to say that if all labor market regulations and all taxes and fees linked to labor income were removed, then unemployment would fall to a natural rate (plus or minus some economic cycle), even in the current situation in education.

    No; I wonder one possible connection between the situation in education and employment. Graduates (not only in Spain) may not have understood that today it is simply not possible to obtain human capital at a university, so they usually have a qualification for a receptionist. If they don't understand, they'll be surprised that they can't find a job in the industry and are unemployed, swapping voluntary unemployment for involuntary unemployment (because, for example, McDonalds or Starbucks would offer them a job, but they ignore it, so they consider themselves involuntarily unemployed) .

  24. What percentage of people between the ages of 18-25 study or have studied VS (at least bakalare) in Spain? What percentage is unemployed among high school students and what are high school students? What percentage of the unemployed under the age of 25 are college students? Gentlemen, more data and less ideology.

  25. @Sonny Ortega: Sure, but I write that these effects are mixed here.

    If the investment in the creation of human capital is completely wrong, its "profitability" can be 0 = so the real wage is zero, a person is unemployed because he is unemployable. In accordance with the regulation of the labor market, we have Spain here.

    EDIT 1: Of course, the return on the specific part of our capital in which we have invested in public education, so we will be employable only in fields "below the university-professional level", where it will not be required (see Albert) - this is a sign of a small investment: its irreversibility. Absolute unemployment is then given by the regulation of labor. market. In any case, it must be frustrating to wear a cash register name tag with the title "Mgr." Třeba

    EDIT 2: At the end I write: “Let's stop state funding of at least higher education while there is time. For the good of the students and all of us. ”But in state-funded education, we don't know if we have time. 🙂

  26. "The money collected in taxes is thrown out the window into the system of real anarchy" - here I would rather use chaos instead of anarchy…

    And otherwise consent. Public education is clearly the most harmful state program… Proof of its “effectiveness” is the fact that almost no one is aware of this harmfulness…

  27. Well - as for unemployment, it is caused by the regulation of the labor market. A smaller supply of capital will be reflected in lower real wages and, in particular, in human capital, especially in the lower wage of a given worker, however, it should not affect the unemployment rate.

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