Topic 8 Education, Families, Children

For this week we turn to another issue that poses complex challenges to societies involving their choice of economic system. This is the question of education and the care of children.  This is another area where economic systems, the societal arrangements for dealing with scarcity and value production, have had to evolve as nations have developed or industrialized.

For a moment, let’s consider a very poor, un-developed nation. Some  of the poorest nations today are in central and sub-Saharan Africa, but even they are rapidly growing beyond the state I’m considering.  I’m thinking back to before the industrial revolution. Life was short – 30-40 years was generally max life expectancy. It wasn’t because nobody lived longer but rather because infant (before age 5) mortality was so high. So put yourself in the (non-existent) shoes of two adults then. You scraped out a living doing subsistence farming. Very labor intensive, but simple labor. The rational choice was to have lots of kids for two reasons. First, most of the them wouldn’t live to survive to adulthood, so it made since to up the odds by having several. Second, by the age of 6 a child could start doing labor on the farm. By 6, they could generate enough value from labor to offset the additional food cost of feeding them. More kids = more production.

The industrial revolution, and now the computer revolution, changes all that. We have machines for simple unskilled labor. To make kids valuable, we have to educate them. That takes time.  It also takes time for that investment in education to pay out. It does pay out, but only over decades. To complicate matters, the pay-out is both to the individual and to the society as a whole – what we call positive externalities.

The U.S., dating back to pre-colonial times in New England, along with England was  a leader in the world in pioneering public education. That is, education paid for by the public and required by law. People pay taxes as a society and those taxes fund the education. Since the entire society benefits, it is a good investment. It also solves the financing problem for the student (or their parent).  Older people pay taxes now to educate the young. When the young get older, they will be more productive and pay taxes to educate the next generation. It’s what’s called an “intergenerational transfer”.  By the time of WWII, nearly all kids were getting a high school education. In the post-WWII era, we expanded this approach to college by funding the GI Bill and colleges/universities directly. In the 1960’s in some states, notably California, college and university education, even at University of California Berkeley, was free to California residents.

As you’ll see in the first reading, things have changed since then. Ok, you know from your own tuition bills that college isn’t free anymore – at least not in the US.  But the free college concept as a social good is still alive in other countries such as Germany and Denmark.

To participate in this discussion, read the three required readings below and respond. As usual, you may choose to respond by writing a post on your blog and categorizing it as ECON 260, or create a new front-page post on this site, or use the reply/comment link to this post.

Topic 8- Education, Families, Children



Starting points for additional research if you are interested or your project relates to this topic: