Re: human capital again

[michael perelman <michael@xxxxxxxxxxxxxxxxx>]

paul phillips wrote:

> Michael,
>
> The fact that human capital is tracked by class is not really
> rellevant.  Does one tract physical capital by class?  Does a  backhoe
> owned by a  working class person have less value than the backhoe
> owned by  GW Bush?  Only because of the social status heaped upon BW
> Bush by his birth/pedigree/wealth.  But that is a false valuation.
> The backhoe in the hands of a qualified worker is worth much more than
> a backhoe in the hands of an incompetent GWB.  So much the same with
> human capital.

Paul, you are certainly familiar with the sheepskin effect -- that what
people earn with their human capital reflects much more their
credentials than their actual knowledge.  A substantial literature
within conventional economics confirms this commonsense idea.

I do not deny that education is important, but human capital theory
seems to reinforce the notion that market forces work without power
relations.  A back hoe owned by Halliburton you surely more valuable in
terms of the market than one I would own.

> George Bush did not get a return to education (human capital) but to
> the power of priviledge -- i.e. to a monopoly of power.  What you are
> in effect saying is that GWB got where he did because he worked harder
> (i.e. his return was greater than those who had equal human capital.)
> This, I would suggest is crap.

I never meant that Bush worked harder.  It's just that he got his human
capital MBA only because of his family connections, not because of his
Yale education, which he also got because of family connections.

--

Michael Perelman
Economics Department
California State University
michael at ecst.csuchico.edu
Chico, CA 95929
530-898-5321
fax 530-898-5901