The higher your standard of living, the bigger the investment it takes to get you there. If your portfolio is worth a million dollars, it will generate more return in the next decade than if it is worth $1,000. What is true of financial capital is also true of intellectual capital. One of the reasons doctors make more than high school dropouts is because more has been invested in them.
It took us a about a century to normalize the notion that the community should invest unprecedented amounts into launching their children’s careers if we wanted them to enjoy unprecedented levels of affluence. Big returns require big investments.
Our notion of acceptable investment in launching a career, though, is really just focused on preparing knowledge workers for success. This is a great investment but it simply isn’t enough for at least two reasons. One, there are other routes to good paying jobs that we don’t generally support in the same way that we support a kid getting an engineering degree to go on to a great career. Two, if we want our returns – our standard of living – to continue to rise like it did last century, we need to increase and expand our notion of a reasonable investment in the start of a career.
The University of California spends nearly $20,000 per year on students. Assuming five years to complete their bachelor’s, that is an investment of $100,000 per graduate. We accept that, and rightfully so.
I think we should expand that. More investment for more return.
Investment could be expanded in a variety of ways but three occur to me.
One, for kids who would rather do the work of manipulating things than manipulating the symbols of things, we could invest that same $100,000 into launching their careers. That money could be spent on trade school but as importantly, part of it could be spent on capital equipment that would make them more productive. The engineer gets a higher salary in part as a return on a public investment in their intellectual capital; the machinist could get a higher salary in part as a return on a public investment in their industrial capital.
Two, kids who don’t have any immediate academic or hands on career plans, who may - at least for now - pursue service jobs could have that $100,000 put into financial capital, something that might build over their lifetime to become a supplement to their retirement. ($100,000 invested at 20 at 4% will be worth $500,000 when that kid is 60.)
Three, this $100,000 could be pooled with a few other people to fund a startup. Convince others to help to create a successful business and you all could simultaneously create jobs and wealth.
Even better, as we realize that a big rise in investment in entrepreneurship this century is as important to a rise in salaries and standard of living now as the big rise in the investment in education was to its rise in the last century, we may simply create a new category of public investment in entrepreneurship akin to the investment we now make in education. The paltry investments in education that we made in 1830 aren’t enough to sustain our quality of life today; the paltry investments we make in entrepreneurship in 2020 aren’t enough to sustain the quality of life our grandchildren will enjoy in 2050.
In any case, I suspect that this notion of fairness in terms of the investments we make in each young adults’ career will become an important issue. It simply isn’t fair to make vastly different investments in different children and then act as if the big differences in their lifetime earnings have nothing to do with how different was the initial investment in them.
One, for kids who would rather do the work of manipulating things than manipulating the symbols of things, we could invest that same $100,000 into launching their careers. That money could be spent on trade school but as importantly, part of it could be spent on capital equipment that would make them more productive. The engineer gets a higher salary in part as a return on a public investment in their intellectual capital; the machinist could get a higher salary in part as a return on a public investment in their industrial capital.
Two, kids who don’t have any immediate academic or hands on career plans, who may - at least for now - pursue service jobs could have that $100,000 put into financial capital, something that might build over their lifetime to become a supplement to their retirement. ($100,000 invested at 20 at 4% will be worth $500,000 when that kid is 60.)
Three, this $100,000 could be pooled with a few other people to fund a startup. Convince others to help to create a successful business and you all could simultaneously create jobs and wealth.
Even better, as we realize that a big rise in investment in entrepreneurship this century is as important to a rise in salaries and standard of living now as the big rise in the investment in education was to its rise in the last century, we may simply create a new category of public investment in entrepreneurship akin to the investment we now make in education. The paltry investments in education that we made in 1830 aren’t enough to sustain our quality of life today; the paltry investments we make in entrepreneurship in 2020 aren’t enough to sustain the quality of life our grandchildren will enjoy in 2050.
In any case, I suspect that this notion of fairness in terms of the investments we make in each young adults’ career will become an important issue. It simply isn’t fair to make vastly different investments in different children and then act as if the big differences in their lifetime earnings have nothing to do with how different was the initial investment in them.
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