education and growth

[G]overnments seem convinced that the best way to [stimulate employment and growth] … is to increase the number of students pursuing degrees in the so-called “STEM” subjects (science, technology, engineering, and mathematics). Are they right?

The short answer is no. ….

[T]he case for STEM education is … fundamentally flawed, because it treats an economy as an equation. According to this logic, job creation is a matter of slotting humans into identifiable opportunities, and economic growth is a matter of increasing the stock of human or physical capital, while exploiting scientific advances. This is a dark view of modern economies, and a depressing blueprint for the future. ….

What economies need instead is a boost in dynamism. …. [E]conomies today lack the spirit of innovation. Labor markets do not need only more technical expertise; they require an increasing number of soft skills, like the ability to think imaginatively, develop creative solutions to complex challenges, and adapt to changing circumstances and new constraints. ….

A necessary first step is to restore the humanities in high school and university curricula. Exposure to literature, philosophy, and history will inspire young people to seek a life of richness – one that includes making creative, innovative contributions to society. ….

The humanities describe the ascent of the modern world. Countries worldwide can use the humanities to develop or revive the economies that drove this ascent, while helping individuals to lead more productive and fulfilling lives.

Edmund S. Phelps, “Teaching Economic Dynamism“, Project Syndicate, 2 September 2014.

Columbia University economist Edmund Phelps is a Nobel laureate and author of many books, one of which is a plea for wage subsidies: Rewarding Work: How to Restore Participation and Self-Support to Free Enterprise (Harvard University Press, 1997; second edition 2007).

Professor Phelps avoids the term “aggregate production functions”, but clearly intends to criticize them when he describes the depressing way that the economy is treated as an equation, limited to “a matter of increasing the stock of human or physical capital, while exploiting scientific advances”.


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