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Preface
- Johns Hopkins University Press
- Chapter
- Additional Information
ix preface T his book sets forth a modern human capital approach to higher education policy in the United States but also in other developed OECD member countries. It emphasizes the nature, measurement, and valuation of the private and social benefits of higher education—with special attention to the non-market private and social benefits, direct and indirect effects, and short- and long-term effects—all in relation to the total investment costs. This includes drawing on the theory and analysis of sources of endogenous development, economic efficiency, and market failure to identify current higher education policy gaps and devise solutions . With respect to the latter, the book seeks a balanced consideration of viable policy options. Unfortunately, much of current higher education policy seems to be asleep at the switch. For one thing there are massive skill deficits generated by globalization and technical change. These skill deficits explain why real income has not risen for Americans who have not gone to college since 1980. At the same time, the real income of college graduates has risen 57% since 1980. These premiums are stable or even wider during recessions. Higher education policy has not responded in significant ways to the 64% of Americans with lower skills who are socially and economically being excluded from the benefits of economic growth. Similar trends toward widening inequality and domestic skill deficits are apparent in the European Union, although access to higher education has been expanding more rapidly there. There is an obvious political backlash in the United States and the European Union in the form of protectionism and other policies that go beyond seeking a level playing field and that are not conducive to sustained growth. Higher education policy initiatives also have not responded with anything approaching a unified voice. They have not joined with K–12 to try to secure the kind of state-level education finance reform and state fund- x Preface ing needed. They have not reached across the public-private and university -community college divides to stress their complementary roles and common overall mission. The U.S. Department of Education and state boards of higher education have not articulated the value of the important private non-market benefits relevant to more efficient private investment by students and their families. Instead, they seem content to put up with the market failure. Some leaders turn to increased privatization and some writers stress that this can aid internal efficiency, while both largely ignore external efficiency. Both are necessary to achieving overall economic efficiency as well as the greater good. National commissions have focused only on the rising tuition and institutional costs, and some of their members conclude—based only on this—that there is overinvestment. The recent commissions largely ignore that the costs must be related to the returns to be able to reach such a conclusion. Others have been equally guilty of looking only at the benefits and ignoring rising costs. As globalization expands, national policies are moving toward protectionism instead of eliminating the skill deficits that would enhance the comparative advantage in human capital that is now slipping for the United States and the European Union. Some fair trade with protections for working conditions, the environment, and a level playing field are reasonable. But taking the lead with high export subsidies, increased tariffs , and tax subsidies normally supports inefficiencies and inequities, and limits growth. In this environment of pressing needs calling for a response, higher education policy is unique in being able to offer a solution that simultaneously contributes positively to growth. Other policy options tend to limit growth and eventually lower tax revenues in one way or another. The second major factor that has motivated the writing of this book is that higher education policy research tends to be very slow in incorporating recent research in modern human capital theory. Yet the new research has powerful policy implications. This is paradoxical since higher education institutions themselves take pride in being at the frontier of new knowledge. For example, there are dramatic advances in the analysis of the economic value of human time. These are crucial to separating the earnings benefits from the non-market private and social benefits of higher education without overlap, and hence to valuing the total outcomes of higher education. These distinctions are not apparent in most of the higher [3.88.60.5] Project MUSE (2024-03...