TAKING STOCK: Is education important? Whenever I make a presentation on how economic freedom would boost growth rates in Nepal and make its people rich, many tell me that education is more important, and that the government should concentrate on, and, spend more money on students, teachers, schools, and colleges for the country to progress. It is not only in Nepal that this myth prevails. In the US too, education experts and politicians maintain that higher spending on education drives economic growth. But as nations across the globe struggle with ever higher budget deficits, government spending decisions must be based on something more than the whims of educators who have a vested interest in grabbing more money from the government. The Goldwater Institute based in Phoenix, Arizona, in the US, released a new study on May 12, 2003, “Does spending on Higher Education Drive Economic growth? 20 years of Evidence Reviewed.” The study can be found online at www.goldwaterinstitute.org In this study Jon Sanders, a higher education policy analyst, finds little evidence that government spending on higher education results in high economic growth. Using data from all the 50 US states spanning more than two decades, and incorporating lags up to five years, Sanders’ regression analyses finds weak and inconsistent correlations between state funding of higher education and economic growth. Comparing states’ higher-education appropriations with gross state product reveals that two of the 10 fastest-growing states from 1981 to 2000, New York and Rhode Island, experienced a real decrease in per capita higher-education appropriations, while three of the 10 slowest-growing states, Mississippi, New Mexico, and North Dakota, were among the top 10 in growth of real higher-education appropriations. From 1991 to 2000, none of the top 10 states in greatest higher-education appropriations were among the top 10 in economic growth. During the same time, Arizona was 46th among the states in real higher-education appropriations per capita – actually appropriating less in 2000 than in 1991 – yet it was the 16th fastest-growing state. Sanders’ study comes at a time when lawmakers were planning to borrow $400 million to build high-tech facilities at Arizona’s universities. “But appropriation decisions should be based on fact, not fiction–no matter how noble the fiction,” he said. Sanders concedes that there may be a connection between private higher-education spending, including tuition paid by students, and economic growth. “But that is not what university spending advocates are talking about,” Sanders says. “They are talking about spending taxpayer money on university facilities.” He argues that any investment that actually offers the kind of returns promised by spending advocates will have no shortage of willing private investors. “University spending advocates want us to bet the ranch on certain high-tech initiatives,” Sanders argues, “but legislators would do better to focus on making Arizona’s business climate attractive to all forms of economic enterprise.” The study also concludes that, at least in the US, there is, “no connection between the presence of prestigious universities in a state and economic growth in that state. Over a 20-year period, some of the fastest-growing states lacked prestigious universities, while some of the slowest-growing states had them. To the extent that the presence of prestigious institutions affects a state’s economic growth, the presence of private institutions of higher learning may be a more important factor.” Governments fail when they delve into education like they fail when they run airlines, railroads, hotels, or brick factories. Should we even expect the government to educate us, when, it can’t even deliver the mail – a vastly easier task? Throwing taxpayers money at government schools – notorious for churning out illiterates – is a very poor solution to the problem of educating the masses. Spending on teachers who don’t work, and on facilities which look as if they have just withstood a Maoist bomb attack, are not going to educate our children. In Nepal, it took a government study to find out that girls do not attend its schools because they lack toilet facilities! How much longer will it take for us to find out that education and government do not go together? How much more time do we have to wait to realise that economic freedom is what matters not education by government? (The writer can be contacted at: everest@mos.com.np)