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As
we roll up our sleeves and dive into the task of addressing
Indiana
's economic
shortcomings, we should keep in mind the words of the celebrated
economist and philosopher John Maynard Keynes.
"Policymakers," Sir John penned more than 80 years
ago, "are usually slaves of some defunct economist."
Or to state it another way, the brilliant solutions we devise
for the problems of today have probably all been printed on the
pages of books that have been sitting on library shelves for
decades.
That rings especially true as we grapple with the issue of
Indiana
's
"brain drain," the phrase used to describe the net exodus
of younger, educated people from our state.
Once we get past the emotional and bureaucratic obstacles to
rationally discussing the situation, we find that the words of some
"defunct" economists are surprisingly relevant.
To our leadership's credit, we have largely moved beyond the
knee-jerk reaction of denial to the consistent finding of low
educational attainment in the
Indiana
labor
force. There are simply
too many other aspects of our economic development
-- such as slower wage growth, fewer white collar jobs, and a
lower high tech presence in the economy -- that go along with having
fewer college-educated workers to pretend that it doesn't matter.
As depressing as it is to hear of our state's shortcomings in
this area, we are at least facing up to them, and this is good.
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Less
inspiring has been the rhetoric of some institutions and leaders who
feel threatened by the situation, particularly in higher education.
To a very simple -- and incorrect -- way of thinking, if so many
of our young people are graduating from college and leaving the state,
those degree-granting institutions must be doing something wrong, no?
State-supported institutions are particularly vulnerable to this
reasoning, since the tax dollars they receive are based on the
assumption that they are preparing
Indiana
's future
leaders, not those of some other state.
But here the eighteenth century writings of economist Adam Smith weigh
in. It is the process of
specialization, Smith wrote, that lies at the heart of efficiency and
prosperity. We send our
children to college to gain specialized knowledge because that is what
the labor market will reward. Should
we be surprised when they move out of state to find opportunities that
provide that reward?
Not according to the writings of economist Gary Becker.
Becker's idea that we all make investments in our intellectual,
or "human" capital, holds that returns to those investments
will only occur when we go to work for companies that make use of it.
The more specialized are the skills that we learn, the higher is
likely to be the return, but only if we widen the geography of our job
searches to find the best fit.
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Thus
the real problem associated with
Indiana
's brain drain
is not the exodus of our state's educated people to opportunities in
other states. That, by
itself, is a sign that the product of
Indiana
's higher educational institutions has value, and
that those institutions are doing their jobs well.
The problem is that the
Indiana
economy is not
able to attract an equal or greater number of college graduates from
other states to take their place.
We've made some, but not enough, progress is trying to understand that
problem as well. The life
sciences development initiatives, as well as those directed at things
like logistics, information technology and advanced manufacturing, all
add up to a recognition that our state simply has too few opportunities
for its more highly educated young people to pursue.
What it will take to make these efforts succeed is something
we're all trying to find out.
We think that universities and colleges are an important part of the
formula. Not simply in their
role as educators of young men and women, but in the complex
relationships they can develop with the innovative forces of the private
sector economy. Surely an
economist somewhere has written something on that, but that will have to
wait for another time.
Patrick M. Barkey
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