What do private equity players know that our judges do not? It is that the production of skills is immensely important, and requires the same incentives as the production of machinery. A report in this newspaper yesterday showed that private equity players are investing tens of millions of dollars in a wide range of training companies.
Examples include tuition, e-learning, education and career counselling, vocational training and English language skills. India’s GDP growth rate of 8%-9% has led to an acute shortage of human skills across the board, from software engineers and construction workers to mechanical engineers and blue-collar ITI graduates. The need of the hour is to expand education and skill creation of all sorts at a breakneck pace.
The big hurdle is that the judicial system has interpreted the law to mean that for-profit education is banned. Hence private colleges can come up only on a non-profit basis, greatly restricting the pace of expansion. The law is helpless to stop supposedly non-profit colleges that make money through under-the-table donations and other dubious means.
Yet for-profit education through legal means is banned. In another paradoxical twist, for-profit tuition and training institutions are legal. Surely, it makes no sense to allow for-profit skill creation through tuition classes and aviation academies, but not through schools and colleges. Both are ways to create human capital.
By now, the concept of human capital is so well understood that it must extend beyond economists to the judiciary. For Karl Marx, Das Kapital meant finance and machinery. But we know today that human skills are no less important than machinery or finance as inputs in production. Indeed, it takes a lot of human capital to produce machinery or financial services.
The judiciary readily accepts that the production of machinery is a for-profit activity. The same logic should apply to the production of human capital. Education is a capital goods industry, no less than Thermax or Bharat Heavy Electricals Ltd. If the judiciary insists that its hands are tied by the wording of the law, then the law itself must be changed.
FAQs
Educational capital can be utilized to produce or reproduce inequality, and it can also serve as a leveling mechanism that fosters social justice and equal opportunity.
How is education like a piece of capital? ›
Answer and Explanation: Education is a type of human capital. Education helps individuals acquire knowledge and skills that they will require to find employment or to invest. When individuals are educated, they can adapt easily to innovations and get high positions that require skills.
Is education part of capital? ›
The term human capital refers to the economic value of a worker's experience and skills. Human capital includes assets like education, training, intelligence, skills, health, and other things employers value such as loyalty and punctuality.
What is a capital good quizlet? ›
Capital goods include factories, machinery, tools, equipment, and various buildings which are used to produce other products for consumption. Capital goods, then, are products which are not produced for immediate consumption; rather, they are objects that are used to produce other goods and services.
Why is education a good investment? ›
Education allows individuals to polish their skills and talents through specialised degrees, courses, and training programs. Education is an investment that helps you strengthen your base of knowledge and skills in your area of expertise. Then, you can become better equipped to pursue your passion and goals.
What is considered a capital good? ›
Capital goods are physical assets a company uses to produce goods and services for consumers. Capital goods include fixed assets, such as buildings, machinery, equipment, vehicles, and tools. Capital goods differ from consumer goods, which are the end product of production and manufacturing.
Why is education capitalized? ›
However, the “rulebook” instructs that most subject or content areas are not capitalized, because they aren't “proper nouns.” Proper nouns are specific persons, places or things. Therefore, do not capitalize fields of study (e.g. biology, business, education, leadership, psychology, environmental science, etc.).
Does education improve human capital? ›
First, more children attending pre-primary education improve human capital, especially in countries with above-average share of disadvantaged children. This result based on macroeconomic data is in line with the microeconomic literature. Another finding is that teaching resources matter.
How does education improve society? ›
It helps people become better citizens, get a better-paid job, shows the difference between good and bad. Education shows us the importance of hard work and, at the same time, helps us grow and develop. Thus, we are able to shape a better society to live in by knowing and respecting rights, laws, and regulations.
How does education help the economy? ›
Education tends to raise productivity and creativity, as well as stimulate entrepreneurship and technological breakthroughs. All of these factors lead to greater output and economic growth.
Human capital is all about your skills, knowledge, and how productive you can be. Education and training can help you build up your human capital, so you're more valuable in the job market.
What is the human capital view of education? ›
The human capital theory posits that human beings can increase their productive capacity through greater education and skills training.
What is capital goods answers? ›
Capital goods are the assets used by businesses in the course of producing their products and services, and can include buildings, machinery, tools and equipment.
What is the best example of a capital good? ›
Capital goods include items like buildings, machinery, and tools. Examples of consumer goods include food, appliances, clothing, and automobiles.
Should education be capitalized? ›
However, the “rulebook” instructs that most subject or content areas are not capitalized, because they aren't “proper nouns.” Proper nouns are specific persons, places or things. Therefore, do not capitalize fields of study (e.g. biology, business, education, leadership, psychology, environmental science, etc.).
Is education a non-excludable good? ›
The Economic Definition
nonrival in consumption, and 2.) non-excludable. In other words, one person consuming the good will not reduce another's ability to consume the good, and those controlling the good are unable to exclude those that do not pay. Schooling fails both parts of the definition.
Is education a capital or consumer good? ›
Goods and services are divided into two categories: those from which consumers derive immediate benefit called consumption, those which are used in production to produce after a long term called investment. Education is both consumption as well as an investment. As a consumption, it accounts for national development.
Does education really pay? ›
A college education has always been a reliable way to boost earnings, and this remains true today. In fact, statistics from the U.S. Bureau of Labor Statistics (BLS) show a clear correlation between higher average earnings and levels of education.
