Comments on: Creative Capital http://www.concurringopinions.com/archives/2008/12/creative_capita.html The Law, the Universe, and Everything Sun, 21 Mar 2010 21:55:44 +0000 http://wordpress.org/?v=2.9.2 hourly 1 By: Shruti Rana http://www.concurringopinions.com/archives/2008/12/creative_capita.html/comment-page-1#comment-45547 Shruti Rana Tue, 16 Dec 2008 21:19:22 +0000 http://www.solove.org/archives/2008/12/creative-capital.html#comment-45547 I agree with your point about long-term investments vs. short-term stimulus plans. Interestingly, the Chinese government apparently also hopes to increase consumer spending in the near term by encouraging students to stay in school. The idea is that parents will have to spend money (and perhaps be motivated to spend more) to pay for their children’s educational and related expenses. Consumers in China often save 50% or more of their salaries, often with the goal of providing for their children’s educations (according to the New York Times article referenced above). So in China, promoting higher education might turn out to be an effective way to boost short-term consumer spending if it does in fact encourage parents to reach deeper into their savings on behalf of their children. I agree with your point about long-term investments vs. short-term stimulus plans. Interestingly, the Chinese government apparently also hopes to increase consumer spending in the near term by encouraging students to stay in school. The idea is that parents will have to spend money (and perhaps be motivated to spend more) to pay for their children’s educational and related expenses. Consumers in China often save 50% or more of their salaries, often with the goal of providing for their children’s educations (according to the New York Times article referenced above). So in China, promoting higher education might turn out to be an effective way to boost short-term consumer spending if it does in fact encourage parents to reach deeper into their savings on behalf of their children.

]]> By: Nate Oman http://www.concurringopinions.com/archives/2008/12/creative_capita.html/comment-page-1#comment-45546 Nate Oman Tue, 16 Dec 2008 20:38:14 +0000 http://www.solove.org/archives/2008/12/creative-capital.html#comment-45546 Shruti: I think that it would make good economic sense for the government to put more money into education. On the other hand, that kind of spending is probably not a great economic stimulus plan. Any economic benefit from better education will be felt over the long term, long after the current business cycle has played itself out. In the short term, what you want the goverment to do is spend money in ways that will increase aggregate demand. Perhaps education spending is a good way of doing this in the short term. On the other hand, it seems to me that the thing you want to do is get cash into the hands of those who are most likely to spend it, rather than those who are likely to save it or use it to retire debt. Hence, I think in the short term upping unemployment benefits and funding infastructure projects where people are already ready to put shovel to earth are probably a better bet. Shruti: I think that it would make good economic sense for the government to put more money into education. On the other hand, that kind of spending is probably not a great economic stimulus plan. Any economic benefit from better education will be felt over the long term, long after the current business cycle has played itself out. In the short term, what you want the goverment to do is spend money in ways that will increase aggregate demand. Perhaps education spending is a good way of doing this in the short term. On the other hand, it seems to me that the thing you want to do is get cash into the hands of those who are most likely to spend it, rather than those who are likely to save it or use it to retire debt. Hence, I think in the short term upping unemployment benefits and funding infastructure projects where people are already ready to put shovel to earth are probably a better bet.

]]> By: Shruti Rana http://www.concurringopinions.com/archives/2008/12/creative_capita.html/comment-page-1#comment-45545 Shruti Rana Tue, 16 Dec 2008 19:10:51 +0000 http://www.solove.org/archives/2008/12/creative-capital.html#comment-45545 I find the disconnect between the government’s educational push and the actual availability of jobs for students coming out of the Chinese education system really interesting. The educational push could easily backfire, as you suggest, and simply result in credential inflation or create a large class of underemployed lawyers or other professionals. On the other hand, increasing the quality and breadth of education could play a transformative role and stimulate innovation and the growth of new fields, products, and markets, and thereby eventually recalibrate labor market demand with the number of highly educated students entering the workforce. The potential impact of such an expansion of “creative capital” is very intriguing, and could be what the Chinese government is ultimately aiming (or merely hoping) for. The authors of the Vox article I cited above view China’s strategy of promoting university-level education, as opposed to primary or secondary education, as an unconventional and as yet unproven development strategy. I just don’t think we can afford to wait and see whether this strategy is successful before trying something similar, especially during a time of crisis when traditional methods for fostering job growth may not work, or work well enough. And I also believe that times of crisis require resilience and resourcefulness, and expanding educational opportunities is one way to help develop those skills. (My students—all law students at various levels—are primarily aiming for careers in financial or commercial areas, though I could see them successfully pursuing a wide range of future careers). I find the disconnect between the government’s educational push and the actual availability of jobs for students coming out of the Chinese education system really interesting. The educational push could easily backfire, as you suggest, and simply result in credential inflation or create a large class of underemployed lawyers or other professionals.

On the other hand, increasing the quality and breadth of education could play a transformative role and stimulate innovation and the growth of new fields, products, and markets, and thereby eventually recalibrate labor market demand with the number of highly educated students entering the workforce. The potential impact of such an expansion of “creative capital” is very intriguing, and could be what the Chinese government is ultimately aiming (or merely hoping) for.

The authors of the Vox article I cited above view China’s strategy of promoting university-level education, as opposed to primary or secondary education, as an unconventional and as yet unproven development strategy. I just don’t think we can afford to wait and see whether this strategy is successful before trying something similar, especially during a time of crisis when traditional methods for fostering job growth may not work, or work well enough. And I also believe that times of crisis require resilience and resourcefulness, and expanding educational opportunities is one way to help develop those skills. (My students—all law students at various levels—are primarily aiming for careers in financial or commercial areas, though I could see them successfully pursuing a wide range of future careers).

]]> By: A.J. Sutter http://www.concurringopinions.com/archives/2008/12/creative_capita.html/comment-page-1#comment-45544 A.J. Sutter Tue, 16 Dec 2008 15:06:35 +0000 http://www.solove.org/archives/2008/12/creative-capital.html#comment-45544 A difficulty is that even before the current financial crisis, students at top Chinese univerisities had cause to worry about jobs. I've guest lectured for the past few years to finance grad students at Renmin University, and they were already plenty anxious about what awaited them, even in the relative bubble years leading up to the Olympics. Not all of them got jobs on graduation. The same was also true at Qinghua, which has a huge undergraduate graduating class. Keeping people in school longer won't necessarily guarantee the presence of jobs, especially of jobs commensurate with the enhanced education levels. The result might just be to create a kind of inflation in the credentials needed to land a particular job. Are your Chinese students law students? What kinds of careers had they envisioned? Mainly something allied to securities/M&A/financial services? Intellectual property? A government position, say in environmental enforcement? Defending the rights of rural or urban poor? I'm curious to know. And is economic analysis of the law (à la Coase et al.) taught in Chinese universities? I agree that the US needs to beef up access to higher education, though I hope that the sciences and engineering will get first dibs -- to say nothing of improving K-12 education. I'm not sure what you mean by the "opportunity costs" of going to law school, though: do you mean something different from the direct costs? A difficulty is that even before the current financial crisis, students at top Chinese univerisities had cause to worry about jobs. I’ve guest lectured for the past few years to finance grad students at Renmin University, and they were already plenty anxious about what awaited them, even in the relative bubble years leading up to the Olympics. Not all of them got jobs on graduation. The same was also true at Qinghua, which has a huge undergraduate graduating class.

Keeping people in school longer won’t necessarily guarantee the presence of jobs, especially of jobs commensurate with the enhanced education levels. The result might just be to create a kind of inflation in the credentials needed to land a particular job.

Are your Chinese students law students? What kinds of careers had they envisioned? Mainly something allied to securities/M&A/financial services? Intellectual property? A government position, say in environmental enforcement? Defending the rights of rural or urban poor? I’m curious to know. And is economic analysis of the law (à la Coase et al.) taught in Chinese universities?

I agree that the US needs to beef up access to higher education, though I hope that the sciences and engineering will get first dibs — to say nothing of improving K-12 education. I’m not sure what you mean by the “opportunity costs” of going to law school, though: do you mean something different from the direct costs?

]]> By: Viren Rana http://www.concurringopinions.com/archives/2008/12/creative_capita.html/comment-page-1#comment-45543 Viren Rana Tue, 16 Dec 2008 08:44:58 +0000 http://www.solove.org/archives/2008/12/creative-capital.html#comment-45543 It is a good wakeup call to our government to increase the educational opportunities and the quality of education in the US if we are to stay competitive in the global market place. Also, the article provides a first hand look at the education scene in China and the effect of the current financial crisis. It will be interesting to see if the Chinese authoritarian system fares better with the stimulus vs. the free (?) American enterprise. It is a good wakeup call to our government to increase the educational opportunities and the quality of education in the US if we are to stay competitive in the global market place. Also, the article provides a first hand look at the education scene in China and the effect of the current financial crisis. It will be interesting to see if the Chinese authoritarian system fares better with the stimulus vs. the free (?) American enterprise.

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