Education, human capital, and economic growth: the Morrill Act

I posted about Robert Lucas's work on "human capital" and economic growth
the other day.  Now I've come upon the *Journal of Human Capital*, which
recently celebrated the contributions of economist Gary Becker, a major
figure in thinking about human capital, in two issues (here
<https://nam04.safelinks.protection.outlook.com/?url=https%3A%2F%2Fwww-journals-uchicago-edu.libproxy.temple.edu%2Ftoc%2Fjhc%2F2018%2F12%2F2&amp;data=02%7C01%7CCLASSICS-L%40lsv.uky.edu%7C1247c02e4295469b8ee308d6ee746d4d%7C2b30530b69b64457b818481cb53d42ae%7C0%7C0%7C636958582087350312&amp;sdata=WvHafLUjEQrCFeQEAEdLScJp%2BliCy5IqgEBKdPLWXR4%3D&amp;reserved=0> and
here <https://nam04.safelinks.protection.outlook.com/?url=https%3A%2F%2Fwww.journals.uchicago.edu%2Ftoc%2Fjhc%2Fcurrent&amp;data=02%7C01%7CCLASSICS-L%40lsv.uky.edu%7C1247c02e4295469b8ee308d6ee746d4d%7C2b30530b69b64457b818481cb53d42ae%7C0%7C0%7C636958582087350312&amp;sdata=ZtbThTQJilrEEJKLVk43bpw1NcrLPx242cg%2FP6N3T4M%3D&amp;reserved=0>).  I want to
mention one essay in particular, on the Morrill Act that helped to promote
publicly funded higher education in the USA.  (Morrill was a senator from
Vermont.  His stunning home in Strafford <https://nam04.safelinks.protection.outlook.com/?url=https%3A%2F%2Fwww.morrillhomestead.org%2F&amp;data=02%7C01%7CCLASSICS-L%40lsv.uky.edu%7C1247c02e4295469b8ee308d6ee746d4d%7C2b30530b69b64457b818481cb53d42ae%7C0%7C0%7C636958582087350312&amp;sdata=%2B1e2M88o2m%2BODTSZE7iJffMmHTi2dWFhQ9t4Ax%2F7zmI%3D&amp;reserved=0>
appears to the weary cyclist like an oasis of sorts.)

Anyhow: the title of the article (attached), by Erlich, Cook and Yin, tells
us a lot: "What Accounts for the US Ascendancy to Economic Superpower by
the Early Twentieth Century? The Morrill Act–Human Capital Hypothesis."
The abstract says:


Maddison’s international panel data show that technically it was the faster
growth rate of the US economy that led to its overtaking the United Kingdom
as economic superpower. We explore the contributing factors. Identifying
the land-grant col- lege system triggered by the 1862/1890 Morrill Acts as
a major contributor, we develop this hypothesis theoretically and test it
via difference-in-differences regression analyses viewing the Morrill Acts
as the experiment, the United States or US states as treatment groups,  and
the  United Kingdom  as the  chief control group in the country-level
comparisons. Using national and state-level data, we estimate that the
Morrill Acts produced sizeable educational and economic returns that
 catapulted the United States into its leading status.

One reason to pay attention to this line of research is that it
demonstrates the overall gain for the country from producing well-educated
students whose ability to think and create becomes part of the American
economic engine.  It's important to aspire to an America in which students
students  earned the positions for which their education qualifies them --
the attached WSJ piece laments our shortcomings in that regard -- but
overall, education and higher education contribute significantly to the
American economy.

It would be wonderful if state and federal legislatures recognized this.
Because Morrill Act institutions are public, there's currently a lot of
negativity toward them.  But as these hard-nosed economists (Hanushek is at
Hoover) show, public education is a major contributor to US growth.

I'm also attaching a related article by Hanushek et al, finding  "substantial
potential scope for state economic development through improving school
quality."  They list the high- and low- achieving states of the moment.

Comments welcome, of course.

Best,

Dan




On Sun, Jun 9, 2019 at 3:33 PM DANIEL P. Tompkins <[email protected]>
wrote:

> Here's a bit more on the term "overqualified," which means that some
> students are placed in jobs that require a less advanced skill set than
> they bring to the task.  That is not good, and needs to be rectified.  But
> I think we can say more.
> From the 1990s and earlier, Nobelist Robert Lucas and others have drawn
> attention to the importance of "human capital" in economic growth . Lucas
> summed it up in 2009  as follows (full article attached):
>
> What is it about modern capitalist economies that allows  them,  in
>  contrast  to  all earlier societies, to generate sustained growth in
> productivity and living standards? It is widely agreed that the *productivity
> growth of the industrialized economies is mainly an ongoing intellectual
> achievement*, a sustained flow of new ideas. Are these ideas the
> achievements of a few geniuses, Newton, Beethoven and a handful of others,
> viewed as external to the activities of ordinary people? Are they the
> product of a specialized research sector, engaged in the invention of
> patent-protected processes over which they have monopoly rights? Both
> images are based on important features of reality and both have inspired
> interesting growth theories, but neither seems to me central. *What is
> central, I believe, is the fact that the industrial revolution involved the
> emergence (or rapid expansion) of a class of educated  people,
>  thousands-now  many  millions-of people who spend entire careers
> exchanging ideas, solving work-related problems, generating new knowledge.*
>
>
> Lucas' formulation has been profoundly influential.  In my own field, Josh
> Ober has applied it to ancient Athens
> <https://nam04.safelinks.protection.outlook.com/?url=https%3A%2F%2Fwashingtonmonthly.com%2F2015%2F05%2F31%2Fwhat-the-ancient-greeks-can-teach-us-about-human-capital%2F&amp;data=02%7C01%7CCLASSICS-L%40lsv.uky.edu%7C1247c02e4295469b8ee308d6ee746d4d%7C2b30530b69b64457b818481cb53d42ae%7C0%7C0%7C636958582087350312&amp;sdata=l2rxbbZ1dhd5%2F%2FK5Uzj1mBNar%2FcNfrCeE0JSoJZ5zTs%3D&amp;reserved=0>.
> Goldin and Katz at Harvard, using data from Iowa, have found that American
> public schools in the 20th century played a major role in building our
> economy by increasing American human capital:
>
> The high-school movement of the 1910- 1940 era set the United States far
> ahead of other countries in the *educational attainment of its labor
> force* for much of the 20th century and laid the foundations for the
> later transition to mass higher education. The United States took the lead
> in education, in part, because of institutional and political factors: a *more
> universal franchise and decentralized decision-making*. But it also did
> so because of greater geographic mobility and technological dynamism,
> factors that were further reinforced with more education.
>
> ... The   legacy of America's educational leadership was a technological
> dynamism  that  blossomed  in  mid century, but that is a subject for a
> lengthier tract.
>
>
> One takeaway from this is that the nation profits from a widely-educated
> population, since is the "millions" of workers injecting their own thinking
> into a system add substantial value, over and above the contributions of
> geniuses.  From this point of view, there's a strong argument for
> continuing the American tradition of providing the level of education
> needed to survive today to as many as possible.  The economists quoted here
> would say that the outcomes justify that.  It's also -- with the Iowa bit
> -- reminiscent of the Orozco murals education scene.  Very much in the
> American grain, but practical as well as sentimental.
>
> Narrowing the educational base appears to mean, reducing long-term
> progress.
>
> There's more to say on this, as others have commented endlessly on Lucas
> and Goldin - Katz.  But human capital is not to be neglected.
>
> Best,
>
> Dan
>
>
>
>
> On Sat, Jun 8, 2019 at 3:55 PM
>
>> Good intentions and bad outcomes.   Several things struck me.  1)  While
>> the number of bachelors degree holders has doubled since
>> 1980, as many as 40% of degree holders are in jobs for which they are
>> overqualified  So where is the value to them and for society as a whole?
>> 2) the astronomical increase in spending on higher ed.   1375% since
>> 1978.  3) The tacit agreement among academic institutions
>> (many of which were start ups), and the various facilitators of the
>> lending programs (bank, agents, advisors, none of whom took
>> a rigorous approach to credit approval, ie “what will you accomplish with
>> thls loan?” ( a necessary ingredient for borrowers as well as lenders).
>>
>> I raise these topics with some regret, as I personally benefited from a
>> government loan under the National Defense Education Act (passed in
>> reaction to Sputnik) and have long acted on the belief that the way to
>> achieve upward mobility in our society is through education.   The missing
>> piece
>> in my belief is that “education”  doesn’t necessarily mean a college
>> degree.  Maybe the German model of Gymnasium for a few,
>> and skill training for many (along with a strong dose of traditional
>> liberal values  the right to vote, freedom of speech, knowledge
>> about how the government functions) is a better approach.
>>
>> On Jun 8, 2019, at 12:14 PM, DANIEL P. Tompkins <[email protected]>
>> wrote:
>>
>> Mitchell,  WSJ reporter, has been busy on the student loan front and has a
>> long essay out today
>> <https://nam04.safelinks.protection.outlook.com/?url=https%3A%2F%2Fwww.wsj.com%2Farticles%2Fthe-long-road-to-the-student-debt-crisis-11559923730%3FshareToken%3Dstd311cda7be704904bfa45a4934aa5db4&amp;data=02%7C01%7CCLASSICS-L%40lsv.uky.edu%7C1247c02e4295469b8ee308d6ee746d4d%7C2b30530b69b64457b818481cb53d42ae%7C0%7C0%7C636958582087350312&amp;sdata=kq%2BxwIu53wSVIbQ8jTgVYJrWbkDZjj1SQlQnoF7AEXo%3D&amp;reserved=0>,
>> ....  Worthwhile reading.  Here's one earlier piece
>> <https://nam04.safelinks.protection.outlook.com/?url=https%3A%2F%2Fwww.wsj.com%2Farticles%2Ftrump-administration-hires-mckinsey-to-evaluate-student-loan-portfolio-11556728035&amp;data=02%7C01%7CCLASSICS-L%40lsv.uky.edu%7C1247c02e4295469b8ee308d6ee746d4d%7C2b30530b69b64457b818481cb53d42ae%7C0%7C0%7C636958582087350312&amp;sdata=I24jG6sYcnS%2FUUgRfUTfHOGnP%2FZTezTyyYAIv69X1E0%3D&amp;reserved=0>
>> by Mitchell.  I attach both pdfs as well.
>> If '57s find neither version accessible, I'll be glad to send a copy.
>>
>> Best,
>>
>> Dan
>> <MItechell et al 20190501 Trump Administration Hires McKinsey to Evaluate
>> Student-Loan Portfolio - WSJ.pdf><mitchell WSJ 20190608 The Long Road to
>> the Student Debt Crisis - WSJ.pdf>
>>
>>
>>