September 8, 1989
"The Decades-long Cost of School Failures"
San Jose Mercury News
By Timothy Taylor
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THE education system requires a huge investment of money, and an even bigger investment of faith.

Think about it. When the federal government spends $300 billion on defense this year, even those who are skeptical about whether that much needs to be spent can see that the money is going to tangible uses like paying soldiers and building weapons.

But when America spends $300 billion on education this year, the nation is investing in intangibles like a more-civilized citizenry and a more-skilled workforce. Judging whether those intangibles have been achieved won't be possible until decades in the future, when Dick and Jane grow up and become voters and workers.

The fact that an investment in education pays off over a lifetime is obvious enough, but it has some interesting consequences.

For example, it implies that improving the quality of education is not a short-term answer to anything. Better K-12 education and better support for college and university students are important steps toward making sure that the United States is competitive in the world economy in a decade or two or three. But in the short term, the costs of improving education surely outweigh the benefits.

A second implication is that the failings of the educational system in the 1960s and 1970s will stay with the country for decades. John H. Bishop, an economist at Cornell University, investigated this issue in an article published earlier this year in the American Economic Review.

Bishop first repeats the well-known fact that in the late 1960s, a five-decade trend of generally increasing standardized test scores came to a halt. Test scores on all standardized educational achievement tests fell from about 1968 to 1980. Even after granting that any individual test is flawed in various ways, only an ostrich could ignore this frightening trend.

Test scores started rising again in the 1980s, but the legacy of that decline continues. Bishop calculates that if the upward trend in test scores had not been reversed in the late 1960s, the average graduating senior would have been about 1.25 grade levels smarter. That lower level of basic skills percolates through the economy and echoes, year after year, in reduced productivity and slower economic growth.

According to Bishop, "The direct effects of the test score decline reduced GNP by 0.91 percent in 1980 and 1.9 percent in 1987 and are forecasted to reduce GNP by 3.6 percent in 2000 and by 4.4 percent in 2010." To give an idea of these amounts in dollars, the 1989 GNP will be about $5.2 trillion; 1.9 percent of that total is $100 billion. If GNP grows by 6 percent annually for the next two decades (counting inflationary and real growth), then 4.4 percent of the GNP in 2010 will be $778 billion.

These estimates of how much the failure of the U.S. education system in the 1970s cost the country are conservative. As Bishop points out, faster economic growth would have led to more savings and investment, and there is some evidence that greater academic achievement leads to faster growth in new technology as well. These and other side benefits are not counted in his estimates.

This lost economic growth is huge, and largely irretrievable. By comparison, the recent squabbles over the cost of the Stealth bomber or a space mission to Mars or even bailing out the savings and loan industry are fairly small potatoes.

The sheer size of Bishop's figures also emphasizes that every citizen has a stake in the performance of the education system. I am terribly impatient with older people or childless couples who say: "I don't have any children in school, so why should I pay to support the public schools?"

If you're planning on collecting salary increases during your life, or receiving interest on the money you're putting aside for retirement, or collecting Social Security, you have a stake in public education. The economy is a cooperative venture. No one succeeds on their own; even the cleverest entrepreneur needs employees and suppliers and well-to-do customers. If you think you don't have any stake in being surrounded by a highly skilled workforce, move to India or China and see what happens to your salary and your standard of living and your retirement prospects.

Educational quality is much more than a matter of empty national pride, like whether the United States can improve its medal count at the 1992 Olympics. When the size of the GNP pie is reduced, everyone suffers.

I don't have any magic formula for solving the nation's educational problems. I doubt that spreading a lot of money around will be nearly enough; after all, when test scores were falling steadily during the 1970s, spending per pupil in the schools was growing faster than inflation and faster than total growth in the economy.

The way to improve schools seems to involve the more nebulous goal of getting students, teachers, parents and administrators all to take responsibility for creating a better learning environment.

However that is to be done, the need to "save our schools" is a very real SOS for the U.S. economy.

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