Nobel Laureate Joseph Stiglitz reckons that US student loans are the next big western economic crisis in the making – the next sub-prime. In the UK, the numbers are not quite so scary, but we do seem to be adopting many of the worst elements of the US economy.
Meanwhile, we keep hearing about kids going to university, and coming back with degrees that are not much use to man nor beast – but they do have lots of debt.
In his book ‘Anti Fragile’, Nassim Taleb (author of ‘The Black Swan’) questioned the link between education and economic success. Taiwan had lower literacy rates than the Philippines before it embarked on its period of growth. South Korea had lower literacy levels than Argentina before its growth era, and before Argentina’s collapse.
When we look at a country’s wealth and compare it with education, we see a connection. Richer countries tend to spend more on education. But which way is the causation? Does education lead to wealth or wealth lead to education?
Taleb reckons that apprentice-type education models are more closely correlated with economic success.
Here is the snag. Higher and further education may not cause GDP to rise, but for individuals there is a link between education and wealth. Countries that offer free advanced education to all tend to see a more evenly spread distribution of income.
Besides, in the era we are set to enter, in which we will see 3D printing, and nanotechnology, many people may have to re-train several times throughout their career. Maybe a good education provides an essential foundation in a world of very rapid change.
© Investment & Business News 2013