Jobs are created for people with really good talent, Morton Schapiro, education economist and president, Northwestern University, Illinois, U.S., says with confidence.
“If you see the broad sweep of economic history, there might be a temporary imbalance between the higher education skills that people bring and the number of jobs available for them. It is not unusual for a country to experience, as part of a cycle, a situation where the number of people with higher education degrees greatly outstrips the type of demand for those types of skills,” he explains.
“The market usually adapts; the classic story is really in engineering in the U.S., where there was a great premium for people with engineering degrees, then people start entering the field and there is a glut and they land up in financial services.”
Talking to The Hindu on a visit here to inaugurate the new campus of the Institute for Financial Management and Research at Sri City, Prof. Schapiro says the economic rates of return are such that they will justify the creation of people in stem fields, such as engineering. However, it is indeed somewhat risky not to diversify the economy, just as it is for an individual not to diversify his or her portfolio, he adds.
Prof. Schapiro’s robust recommendation, however, is for a broad-based education. “The best preparation for a lifetime, for business success, is broad training and part of that is international experience. If there is anything that pays in the market, it is cultural literacy. The ability to not just survive but also thrive in different cultures, pays off pretty nicely,” he says. In his opinion, the best defence against off-shoring is what is called “whole brain learning” — logic and maths with aesthetic appreciation and creative thinking. Evidence suggests that if you do one and not the other, it is going to be a risky path. Cultural literacy with core knowledge is very important.
Which is why, despite the loans, and sometimes gloomy employment scenarios, “studying abroad” is a good option for a student who can afford it.
Addressing the question of reservation, the Indian equivalent of affirmative action in the U.S., he provides evidence from economic data to show why it makes sense to do so. “The rates of return of going to selective higher education institutions are considerably higher for those in low-income backgrounds. If there are some concession that you make, putting the thumb on the scale for some one who has had a disadvantaged upbringing is quite justified.” What that suggests, he says, is that from a public policy point of view, we need to save spots at the most prestigious places for people from the low-income group.
Prof. Schapiro articulates his belief that the need for subsidisation from the government is not quite what it used to be. However, because of imperfections in capital markets, where people from relatively modest backgrounds are unable to “collateralise” themselves, the government needs to step in and provide funding to those who are talented, but without access to capital markets.
But beyond funding, he is sceptical of the State’s role in regulation of the sector. What is the secret of U.S. higher education, where universities rank among the top institutions in the world? “It is because it is not run by the government,” Prof. Schapiro’s answer comes pat. “Even public institutions have tremendous autonomy even within the State. However, accreditation and standards are necessary. A light hand from the government is really the best way.”
