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Minyan Mailbag: Is a Good Education Enough?


Greed is good as long as we act within the strict boundaries of the law...


Prof. Katsenelson,

I read with great interest your piece on Wal-Mart (WMT). On a rational basis, your arguments will hold truth. However, we know that the world is not that simple and rational. People are not inanimate objects that follow
Newton 's laws. Supply and demand equations are far from perfect. You must also be aware of research on the "increasing returns" thesis where things do not return to equilibrium.

For example, there was a shortage of IT professionals in the 1990's, so people flocked to such advanced courses in those years. After spending years in training and significant money, most could not find a job in these sectors as the industry downturned and there was oversupply of people. Just one practical example where the theory does not work.

I wish it was so simple that a good education will equate to good jobs prospects and a wonderful life. It's just not that way. A good college education does not give you street smarts and common sense, which I believe are much more important than textbook knowledge. I have seen people from Harvard and such make stupid, impractical decisions when at the top, just because they can.

We are living in a world much more complex than before, and corporations are ruling the world and bending rules as much as they can. I just do not believe that people who run the mammoth corporations care as much about the world as they care about their Swiss and Cayman Island bank accounts. Is it a surprise that oil starts going up exactly when two oil executives take the two most powerful positions in the world?

On a theoretical basis, communism also made sense, and great philosophers flocked to that thought. What happened actually was that the principles broke down hard in a practical environment when those in power just started abusing the principles. I do believe that same fate will happen to capitalism eventually, just a matter of time. Nothing wrong in theory, it is a matter of practical implementation in real world.

If everyone at Wal-Mart starts going to college and gets a degree, starting salaries for college graduates will drop to minimum wages. It is a fact of life.

Just my three cents.

Minyan Shikhar


Sorry for a VERY late response. I was cleaning my inbox and stumbled on your e-mail. You made some great points. Capitalism is not perfect, it is rough around the edges--but it is the best system we've got. Capitalism is working, not just in theory but in practice. While communism passes the theory test, it failed miserably in practice.

Some European countries (i.e. Sweden) have tried the Capitalism-Socialism combo and so far the results are not very impressive. It seems that, so far, America's version of Capitalism is the best. I am not talking about theory, this is as real as it gets. Economics is as much about studying human behavior ("the incentives") as it is about supply and demand curves.

No matter what you do people will care about themselves first and everything else second--it is in our genes. The only thing that may supersede this is how we relate to our children; putting their interests ahead of ours, but that is as far as it goes. If I ran a Fortune 500 company, I'd care about my Swiss bank account a lot too, there is nothing wrong with that. That Swiss bank account creates an incentive for me to increase shareholder value and thus increase my wealth. Despite not running (helping to run) even a Fortune 10,000,000 company, I still care about my U.S. Bank Co. account as much as the next guy (probably a lot, I have to pay for my kid's education, house, utilities, my wife loves vacations--can you fault me for that?).

Greed is good! Gordon Gekko was right; it is the driving force behind everything (OK, almost everything we do). Greed is good as long as we act within the strict boundaries of the law--no Enron or WorldCom kind of shenanigans.

Education is not the answer for everything. There is common sense, intuition and street smarts--I cannot argue with that. But in general, education does provide a skill that opens doors to higher paying jobs. Some people don't need education to achieve great things in life, i.e. Bill Gates. But for every Bill Gates there are a million that don't have the street smarts to start their own business.


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