“The single most important thing we can do is to make sure we’ve got a world-class education system for everybody. That is a prerequisite for prosperity.”
More education is better
The above remark was made by former president Barack Obama in a speech in 2010, and It is beyond a shadow of a doubt that education is beneficial to society. It increases innovation in a society, which inevitably leads to growth. It also decreases crime, and increases prosperity for everyone. On a more subtle note it also heightens gender equality and leads to better health.
In short, education can help remedy a lot of society’s ills, such as obesity, poverty and extreme inequality across wealth, gender and race. It leads to individuals feeling empowered, earning higher wages, which increases the tax income for a given nation, which leads to more investment in a society, and as such creates a virtuous circle.
Now consider another fact. Some people are immensely talented, but do not have the necessary resources to obtain a degree – like Alexander Hamilton for instance. This was true in the late 18th century, and it’s still true today. Thinking about the amount of talent we waste because talented people don’t receive an opportunity to educate themselves makes me sad. Happily, there is a simple solution to this phenomenon, which is especially prominent in Northern Europe – namely free education.
Skyrocketing cost of education
In the United States the cost of education has ballooned since 1980. According to the Harvard Business Review, the increase in cost – after adjusting for inflation – has been 400%. This is a ridiculous increase, and makes it the industry that has seen the highest rise in cost over that period. Add to that, that the total student debt in the U.S. passed the trillion dollar mark in 2013. That was USD 1.000.000.000.000 of student debt.
However, the accumulation of a crushing amount of student debt is not the only method with which to pay for education. In fact in some countries – such as Denmark, Sweden, Norway and Mexico education is free, because it is paid for by the society as a whole, instead of by the individual.
In order to get a grasp of what free education looks like, it makes sense to turn towards one of the countries who enforces this policy with much rigor.
In Denmark, not only is education free, but students are actually paid to go to school. Each student receives a stipend of around 800$ per month to pay for housing and various other expenses. The reason that the government provides free education for its citizens is to ensure that whoever gets educated is based on merits and academic skill, as opposed to social or economic standing.
As we all know however, there is no such thing as a free lunch and education is no exception. To pay for equal opportunity for everyone the Danes have one of the highest tax rates in the world, and can in some instances be upwards of 60%. So providing free education – and equal opportunities – means shifting the cost away from the individual and on society.
One criticism which has been raised however, is the fact that students don’t necessarily choose degrees which have the most potential earning power subsequent to university. This means that the labour market is in short supply of suitable people in the fields of STEM – a fact that might be circumvented by differentiating the study stipend so that more people obtained degrees in science, technology, engineering and mathematics.
No system is perfect however, and it’s important to keep in mind, that no matter which solution a government chooses there will be pros and cons to any solution, and this is no different.
The point is, that since education is both a private and a public good there is a good case that the government – i.e. taxpayer – should pay for it.
Up until now, we haven’t touched upon the economics of the subject – but the association of the Danish Labour Market have found that every time the government provides free education to one of its citizens, they get a net lifetime-benefit from that person of 0.5 and 1.3 million dollars. Per person. So there are really no good arguments against instituting this educational policy.
Education in a modern world
One thing we still haven’t considered is the fact that right now, a lot of very effective education is available online from Massive Online Open Courses (MOOC’s) and with very little effort the state could organize this type of education for people of limited resources, and it would be very inexpensive, due to the fact that lessons would only need to be recorded once, and then they would be available for everyone.
As it stands now there are so many resources available to choose from, and the only small leap towards true free education of the highest quality is a coordinated effort to make this type of education stand on equal terms with non-online education.
One criticism this usually receives is the fact that one loses the community of studying together, but that point is moot since we live an ultra-connected world – at least in the western part of the world – where it should be possible to find like-minded people living close by, whom one could study with.
Another point which still has yet to be made, is that because one would only need a handful of professors from each subject to teach, students would be able to get the best, or alternatively suit the ones that matched their learning style best, based on a range of different courses on the same subject.
Should education be free?
Given the arguments above, it is hard to argue against education being a public good. However, education also clearly benefits the individual. According to classic economic theory providing a subsidy – i.e. making education somewhat or completely free at the expense of the taxpayer – increases the quantity and lowers the price, which in turn provides a net benefit to the consumer – the person receiving the education (hard to argue with) – and the producer – the state (again, also hard to argue with).
It is the distinct opinion of the Hamilton Gazette, that free education is such an obvious benefit to society – as well as an easy solution to implement – that it is a wonder that this model hasn’t been adopted in a more wide-ranging manner than is currently the case.
Education is in dire need of modernization, and there are a number of low-hanging fruits which are ripe for the picking. The points outlined in this article are just a few of numerous examples one could pick of easy improvements in the education sector, and I encourage you – the reader – to contribute with ideas and thoughts in the commentary section.