School Choice or Best Systems_ What Improves Education_ - Margaret C. Wang [3]
International Talent Competition
Modern economies pay huge premiums for advanced, often specialized, knowledge and skills, or “high levels of human capital.”15 Such capital, which can apply to all areas of life, constitutes a vast and growing fraction of the value of modern firms and other organizations. As The Economist notes:
The value of “intangible” assets—everything from skilled workers to patents to know-how—has ballooned from 20% of the value of companies in the S&P 500 to 70% today. The proportion of American workers doing jobs that call for complex skills [has] thus grown three times as fast as employment in general. As other economies move in the same direction, the global demand is rising quickly. . . . The imminent retirement of the baby-boomers means that companies will lose large numbers of experienced workers in a short space of time. . . . By one count half the top people at America’s 500 leading companies will go in the next five years.16
As Table 1-1 shows, higher levels of human capital indicated by education levels are strongly associated with wages. Workers with advanced professional degrees, for example, earned wages more than five times those of workers who didn’t finish high school. Only those with the highest levels of education—those with master’s degrees in business administration and those with doctorates in academic scholarship, law, and medicine—averaged higher inflation-adjusted wage gains from 2001 through 2005. Unlike past generations, most workers actually lost rather than gained in real wage income.17 The growth of national and international competition, particularly from rising East and South Asia, as well as the Internet and other new media, allows more highly educated “superstars” in business, finance, law, entertainment, sports, and other fields to exercise their specialized talents more widely and remuneratively—often in organizations with worldwide reach. Their wages and other income often rise rapidly. In short, on average, the highly educated and rich get richer.
Table 1-1 AVERAGE WAGES AND INCREASES IN WAGES AMONG AMERICAN WAGE EARNERS
SOURCE: Current Population Survey. NOTES: “Some college” includes associate arts degrees that, in principle, require two years of college work. “Percent change” is inflation adjusted.
Education Average Wages, 2005 Percent Change, 2001-2005
Didn’t finish high school $ 22,274 -4.6
High school graduate 31,665 -0.2
Some college 38,009 -2.5
College graduate 56,740 -3.1
Master’s 68,302 -1.8
Ph.D. 93,593 2.9
MBA, JD, MD 119,343 10.6
Attaining high levels of education and income usually requires strong K-12 preparation.18 Those without advanced mathematics (including calculus) in high school are unlikely to succeed in the hard sciences or engineering. Those without strong verbal skills are unlikely to succeed in law. Without a solid core of basic knowledge and skills, and without the capacity and discipline for hard, focused study built up in the early years, students are unlikely to succeed in later education and in advanced careers (though, of course, there are exceptions such as Oracle’s Larry Ellison, Microsoft’s Bill Gates, and Apple’s Steve Jobs, none of whom graduated from college).
Both individuals and countries with advanced school-acquired human capital have benefited enormously, particularly in the last few decades, as free markets have taken better hold beyond North America and Western Europe. The OECD, for example, reported trends in schooling among its affluent member countries and found that education in East Asia continues rapidly to expand and improve. Two decades