By Jason Chen | We can all moan and groan about the cuts to education because those budget cuts directly affect us (as the ones footing the remainder of the bill) and directly affect our children because they are the ones who will lose the opportunities once offered to us when we were their age.
But what about the impact to our economy on the macro scale? Is anyone complaining about that? I’m going to, because it’s serious business.
In 2006, McKinsey & Co. was the first to attempt to tie the effects of the American achievement gap on economic output. Using an internally devised formula, they measured and calculated that closing the achievement gap between the U.S. and higher performing nations such as Finland or South Korea could affect the GDP by as much as 16 percent and closing the achievement gap between different racial groups within the U.S. could affect GDP by as much as four percent. This data essentially puts a price tag on the GDP gap, or the gap between actual GDP and potential GDP, as a function of education investment.
There is no doubt that people want to provide a good education for their children, and for their children’s children, but what does it mean to really “care” about something? Does the word really have any significance if you eventually let the budget get cut to fund something else or you instead say, “Oh well, next year”?
We all know money talks, but did you realize that it’s the only thing that we hear? We can discuss the increasing importance of education in the paradigm shift of moving from an industrial economy to a knowledge based economy for weeks, months, years or decades. We can talk about the need to train Americans for jobs that we need now, not the ones we needed in the ‘80s. I know this because I’m pretty sure we have been.
However, in the end, if we don’t start seeing dollar signs followed by numbers of a large magnitude flash before our eyes repetitively to remind us of the upcoming price tag, we will quickly become amnesiac. According to McKinsey’s report, 16 percent of GDP in 2008 was $2.3 trillion. Four percent of GDP in 2008 was $525 billion. I’d hate to bring another dramatic scare during the soap opera that is the “Fiscal Cliff,” but I’m inclined to say we really need this reality check.
We’re really good at talking. Talk talk talk talk talk. All I’m saying is, let’s put our money where our mouth is because all people understand is exactly that—how much will it cost? But I’m not talking about the cost that we pay up front. I’m talking about the cost we pay at the end.
We need to bet on education for the sake of our nation’s future economic growth, and I don’t mean playing the penny slots with our milk money. I mean we need to go out, mortgage the house, and go long on U.S. education.
Jason Chen is a Long Beach resident and MBA student at UC Irvine.