Education spending that isn't smart
Education is important and necessary for a host of reasons. But there's little evidence it drives growth.

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President Barack Obama addresses reporters on the need for a balanced approach to deficit reduction in the White House Briefing Room, February, 5, 2013.

Article Highlights

  • Education is important and necessary for a host of reasons. But there's little evidence it drives growth.

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  • Growing economies spend a lot on education, but that doesn't necessarily mean that spending makes them grow.

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  • In the 20th c. in China and India, the economic boom came first while investments in education came later.

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Not long after President Obama proclaimed in his second inaugural that "an economic recovery has begun," we learned that the U.S. economy actually shrank in the last quarter. Many economists believe this is a temporary setback. This recovery may be the weakest in American history, but the economy isn't cratering either.

Still, you can bet that if the economy continues to contract, Obama will propose the same remedy he always has: more "investments" in education, infrastructure and various industries of the future. It seems that whatever the ailment, Dr. Obama always writes the same prescription.

This is hardly shocking: Building roads and schools is a big reason why God created Democrats in the first place. And identifying the Next Big Thing — and taking credit for it — is something of a vocation for many liberal policymakers.

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But are these really the drivers of economic growth?

Higher education in particular is almost universally championed as the key to "winning the future" — a buzz phrase the president borrowed from Newt Gingrich awhile back. New York Times economics columnist David Leonhardt calls education the "lifeblood of economic growth."

Often channeling such writers as Thomas Friedman, whose fondness for the Chinese economic model borders on the perverse, Obama routinely elevates education to a national security issue. "There's an educational arms race taking place around the world right now — from China to Germany, to India to South Korea," Obama said in 2010. "Cutting back on education would amount to unilateral disarmament. We can't afford to do that."

Now, obviously, education is important and necessary for a host of reasons (and nobody is calling for "disarmament," whatever that means). But there's little evidence it drives growth.

British scholar Alison Wolf writes in "Does Education Matter?": "The simple one-way relationship … — education spending in, economic growth out — simply does not exist. Moreover, the larger and more complex the education sector, the less obvious any links to productivity."

Nasim Taleb, author of "Antifragile: Things That Gain From Disorder," argues that education pays real benefits at a micro level because it allows families to lock in their economic status. An entrepreneurial father can ensure his kids will do OK by paying for them to become doctors and lawyers. But what is true at the micro level is not always true at the macro level.

Think about it this way: Growing economies spend a lot on education, but that doesn't necessarily mean that spending makes them grow. During the so-called Gilded Age, the U.S. economy roared faster and longer than ever before or since, while the illiteracy rate went down. But the rising literacy didn't cause the growth. Similarly, in the 20th century, in places like China, South Korea and India, the economic boom — and the policies that create it — always come first while the investments in education come later.

There are similar problems with claims that infrastructure spending will pay off. When I was in college, prominent experts and journalists — Lester Thurow, Robert Reich, James Fallows, Kevin Phillips et al — were insisting Japan would be the next world economic superpower. In the late 1980s, Jacques Attali, the first head of the European Bank for Reconstruction and Development, claimed that "America has become Japan's granary, like Poland was for Flanders in the 17th century." Attali did allow for the possibility that the U.S. West Coast might do OK, but only because it was "in the gravitational pull of Japanese financial power and geographic proximity."

Japan is now well into its third "lost decade." Over the years, it has poured money into "stimulative" infrastructure projects that have yet to stimulate and protected industries that have steadily lost their competitive edge. Economic growth has averaged less than 1% since 2000, while government debt is now more than twice its GDP. If a highly educated workforce, support for allegedly cutting-edge industries and lavish spending on infrastructure was the recipe for economic growth (and if debt didn't matter), Japan would be doing great.

Obama surely wants to see some real economic growth. Perhaps the problem is that he thinks investing in a much bigger cart to put before the horse will get him where he wants to go.

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    A bestselling author and columnist, Jonah Goldberg's nationally syndicated column appears regularly in scores of newspapers across the United States. He is also a columnist for the Los Angeles Times, a member of the board of contributors to USA Today, a contributor to Fox News, a contributing editor to National Review, and the founding editor of National Review Online. He was named by the Atlantic magazine as one of the top 50 political commentators in America. In 2011 he was named the Robert J. Novak Journalist of the Year at the Conservative Political Action Conference (CPAC). He has written on politics, media, and culture for a wide variety of publications and has appeared on numerous television and radio programs. Prior to joining National Review, he was a founding producer for Think Tank with Ben Wattenberg on PBS and wrote and produced several other PBS documentaries. He is the recipient of the prestigious Lowell Thomas Award. He is the author of two New York Times bestsellers, The Tyranny of Clichés (Sentinel HC, 2012) and Liberal Fascism (Doubleday, 2008).  At AEI, Mr. Goldberg writes about political and cultural issues for American.com and the Enterprise Blog.

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