My grandfather never graduated high school. He needed to start working to help support his family. He wasn’t much different from many others in his generation. Education—even an education that would be considered basic by today’s standards—was a luxury. So because he wasn’t able to get what he wanted, it was very important to him that the following generations in his family did. His children all completed high school and several of them earned college degrees. He told me that he wanted to see all of this grandchildren graduate from college before he died. That was a lofty goal that he unfortunately did not complete, but most of his grandchildren did graduate from college and several did so with graduate degrees.
My grandfather did, however, build a decent life for himself and his family. He improved upon what his father, an immigrant from Poland who had to take whatever jobs he could, provided. But how could that be the case? How could a man with a level of education that would be illegally low today have provided a decent life for his wife and four children and one better than what he grew up with?
When we hear about the poor today and people talk about ways to lift them out of poverty, we’re often told that a good education is one of the most important things for securing a wealthy future.
While this is well-intentioned and while an education certainly isn’t a bad thing, this idea is misleading and can have harmful consequences. Most people seem to believe that the wealth of a society or community is caused by education. But while good, relevant education can have positive effects on the wealth of a person or society, education levels should be viewed as more of a trailing indicator of the wealth or success of a society. When a society is poor, satisfying the most basic human needs is the most pressing matter. What’s the good of sitting in a classroom to learn how to multiply if you’re needed on the farm to make sure your family has enough to eat for the week?
It’s the respect for private property rights and the division of labor that are the main cogs in the growth of wealth for a society. Specialization in labor helps to put resources at their most efficient uses. Only when the necessities of life are met can excess wealth be accumulated and used for more subjective purposes. These purposes can be for things such as not working during the weekend, taking vacations, purchasing nice clothes and food, buying electronics, etc. It can also include things for enhancing wealth generation like investments, such as for capital equipment and education.
When relevant and effective, education can serve to improve and develop the skills necessary for further division of labor, thereby continuing to work to optimize the efficient use of the available resources in the marketplace. But if the education is neither relevant nor effective and is furthermore artificially (i.e. by government mandate) demanded, then it is all but certain to end in the destruction of wealth.
My grandfather didn’t need my father and the rest of his children to work to support his family because he made a good enough living to do it on his own. The economy had grown to make that possible. So if education levels are a result of a successful economy as previously stated, why is the economy of today struggling? A bachelor’s degree is not something too special anymore. It should be clear that intrusions in the marketplace strip individuals of their claims to their private property and the corresponding central planning only helps to induce and worsen malinvestment. The malinvestment includes poor choices in education. This is similar to the Keynesian mistake that consumption drives the economy. It’s a mistake that can lead to terrible consequences.
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