Blame Shakespeare

Our thoughts on the IMF earlier today raise an interesting line of inquiry—-if financial capital accumulates at a persistently higher rate than human capital in the future, then the primary bottlenecks affecting the global economy are likely to shift–for example, from credit or financial capital to labor or human capital. And while it’s easy enough to conceptualize a financial institution like the IMF as a last-resort provider of financial capital, it’s more difficult to imagine an analogous institution supporting the market for human talent in a similar way.

Education is one such institution, though it is decidedly more local and heterogenous than the IMF, and education clearly requires longer ‘production periods’ than financing agreements do. And it has occurred to us that, from the standpoint of efficiency,  primary school curriculae are outdated and in need of a makeover. Though English Lit teachers and others may damn me for saying so, primary instruction in economics and finance would do far more to advance material standards of living than reading Shakespeare. After all, people cannot enjoy fine literature, much less produce it, if they lack water, food, and shelter (see Maslow’s Hierarchy, for example). Perhaps some solace is available in the realization that productive economic activity makes it possible for cultural luminaries to produce important works of art, and for their passionate admirers to make a living teaching about them.

Taking a cursory glance at trends in charter schools, it looks like the human capital development ‘market’ agrees with us, as we’ve seen more news of ’econ and finance’ school charters than of new schools dedicated to classical literature. I certainly don’t mean to imply that literature is unimportant to the development of human capital, but traditional educational priorities do seem a bit out of step with the real world. While learning Shakespeare can be wonderful for personal refinement and professional specialization, it’s clearly more important to know how to calculate the present value of a mortgage, or other debt obligations, or future income; how to efficiently identify tradeoffs and biases in decision making; how to think in terms of assets, liabilities, and cash flows; how to turn a promising idea into a productive business; how political conditions affect economic activity; how to think strategically over multiple time horizons; and so on. In short–and I realize this statement bumps hard into prevailing cultural sensibilities–the expected social benefits of having more people understand the workings of a global financial economy far exceed the more marginal benefits that reading Shakespeare provides.