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[Tyler] Alex's office is just[br]down the hall from mine.
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He and I write a blog together
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and we've been arguing [br]for 25 years now.
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So we thought we'd do[br]some arguing for you.
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This is about education.
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Alex thinks education [br]is mostly about signaling,
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namely demonstrating to the outside world
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your underlying level of talent.
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Whereas I think education [br]is mostly about learning.
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So Alex, why don't you just tell us[br]a bit about how wrong you are?
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[Alex] All right, but let's be clear[br]first about what we're arguing about.
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It's very obvious that people [br]who go to college earn more.
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Their incomes are higher. [br]The question is, why?
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So I see there's three basic views.
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The first view is that the people[br]who go to college are just smarter,
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they have higher IQ, more ability, [br]something like that.
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And that view says that[br]if these people didn't go to college,
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they'd still be earning more [br]because of their natural abilities.
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The second view, the human capital view,
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is that people are actually[br]learning something in college
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which is increasing their productivity.
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This is the highly optimistic Tyler view.
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That's my view, yes.[br][Laughter]
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And then we get to the correct view.
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So the correct view, the signaling view, [br]is that by going to college,
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people are sending a signal [br]to the job market
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that they have higher IQ[br]or have greater ability,
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but if they didn't send that signal, [br]if they didn't go to college,
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their income would be much lower.
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So you've got to send the signal [br]to get the higher income.
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It's funny but most people [br]who believe in the signaling theory,
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they actually learned it in school.
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Well, we've got to learn [br]something in school.
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Here's the striking thing about education.
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If you put an extra person [br]through college,
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and they're earning more,[br]many, many years later.
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It's because they learned something.
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If it were just a signal, they might [br]start off with a better job,
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but then the world would see, well,[br]they really hadn't learned much
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and over time, [br]their earnings would decline.
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Well, oddly you think that the market [br]is more efficient than maybe even I do.
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Look, take a look at the peacock's tail, [br]a classic example of a signal.
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So the peacock is signaling [br]that it's macho,
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it's got lots of good genes.
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Evolution has had hundreds [br]of thousands of years
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to come up with a better way[br]of doing this.
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The peacock's tail is a big waste.
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If evolution couldn't have [br]figured out a way
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out of this signaling problem,
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then maybe the private markets [br]can't do so either.
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Peacocks can't just go up [br]and take the SATs
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or any other standardized test.
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If education were just about a signal, [br]it would be very easy to cut out
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the middle man of the college, [br]give everyone an SAT or IQ test,
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and just send them [br]to the jobs they ought to be at.
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But no, people need social context. [br]They need to learn critical thinking.
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They need to learn creativity.
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And all of that goes on[br]in higher education.
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Look, it's not just about IQ. [br]We all know smart people
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who have lots of trouble in the workforce.
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You've actually got to do[br]something hard. And it is hard.
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Most people don't like education, [br]so it's hard for them to get a degree.
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You've got to demonstrate [br]some persistence.
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So it's not easy to find a way of--[br]something which is hard.
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It's not easy for the private markets [br]to find a way of duplicating this.
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Especially when everyone [br]is doing it already.
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It looks really odd for a smart person [br]not to have a college degree today.
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We pay you a salary at George Mason
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and we pay you most of all[br]because of what you know
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and what you do, right? [br]Not because of signaling.
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Signaling may be true [br]in the short run...
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your first job, you have a fancy degree...
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but over time, the market sorts out [br]who is productive and who is not.
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Getting that credential though, [br]it's so important.
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Even to get a job[br]as a street sweeper today,
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you need a degree.
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And that's not because you learn [br]anything about street sweeping.
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It's because[br]people require this credential
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and that increases their wages.
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A lot of what you learn in education,[br]it's not just the facts or the textbooks,
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it's about social context.
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It's about dealing [br]with different personality types.
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It's about how to submit to authority.
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It's about how to be conscientious [br]in all the right ways.
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So when employers want a degree,[br]it makes a lot of sense actually.
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You're getting the workers[br]who have learned a bunch of things.
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Just getting your foot [br]in the door is a huge amount
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of your entire future career.[br]Let's imagine,
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you went to Harvard,[br]suppose you didn't go to Harvard, okay?
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I think you'd be doing pretty well.
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You have ability, high ability bias, okay?
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You'd be writing for newspapers [br]or something like that.
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But you wouldn't have been able [br]to be a professor.
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Without that credential in your hand,
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you wouldn't be teaching[br]at George Mason today.
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I think your income would be lower. [br]You'd still be famous,
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but your income would be[br]quite a bit lower.
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But look, even if you look[br]at self-employed people,
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when they're better educated [br]they learn more.
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And that's not a question [br]of getting a foot in the door.
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These are people who work for themselves.
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What you learn from school [br]is a lot about social context,
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and authority, and making connections,
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and figuring out a big picture[br]of how the world works.
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You might earn a skill, too.
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Would you want to drive [br]over a bridge built by an engineer
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who had not gone to Caltech?
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- [Tyler] Probably not.[br]- [Alex] Well, that's a very nice story to tell,
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that education teaches these social goods
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and interaction with people.
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It's kind of funny though, isn't it, [br]to say that what we're really teaching
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is stuff that we're not actually teaching?
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I don't actually teach those skills, [br]but students just get them by osmosis?
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That seems hard to believe.
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Funny but true. [br]And look, when you teach,
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you should pull [br]your students aside and say,
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"Look, here's how it really works.
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Here's what the profession [br]is really like."
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But you're communicating[br]things to them which are deeper
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than what you intend [br]at any point in time.
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- [Tyler] Yes, that's true.[br]- [Alex] I don't know.
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I'm not sure I'm doing all of that.[br]Maybe you are.
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- [Alex] Look, let me give you an example.[br]- [Tyler] Maybe we should pay you less.
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Shh. Let me give an example.[br]Sometimes when I'm teaching,
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I've got to go give a talk[br]at another university,
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or go on a trip or something like that,[br]and I tell the students,
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"Next week, class is canceled."
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And they're happy, they're pleased, okay?
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Maybe that's a little embarrassing to me,
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but it seems peculiar, right?
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If you went to the store [br]and you asked for a pair of jeans
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and they gave you less, they gave you[br]a pair of shorts instead,
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you'd be upset.[br]But when you tell the students,
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"You're going to get less education,"[br]they're not upset. Well, why not?
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They're not upset because they know[br]they're still going to get the degree,
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and that's what counts.
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Let me ask you, [br]what would you rather have?
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Would you rather have [br]a Harvard education without a degree?
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Or would you rather have [br]the Harvard degree, the piece of paper,
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without the education?
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Look, the question [br]isn't one or the other.
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When you look at the data, [br]people in Scandinavian countries,
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laws were changed, people had[br]to acquire an extra year of schooling,
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which was not in any simple way [br]visible on their resumes
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and still years later they earned more [br]because they learned more.
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Look at the economic growth miracles:[br]South Korea, Singapore, China.
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They invested in human capital,[br]developed highly talented labor forces.
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Could Singapore be a leader [br]in biomedical technology
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without good educational institutions? [br]No way.
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These countries were growing before [br]they started to invest in education.
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[Tyler] And they were able to upgrade [br]because they then educated.
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There's also a lot of countries which[br]invested huge amounts of education,
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they didn't grow at all. [br]In Africa, what happened there?
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In Africa, they invested a lot [br]in education and they haven't grown.
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This massive push [br]we have in the United States
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that everybody has to have[br]a college education,
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I think that's actually a problem.[br]Because what's really going on
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is by forcing or by pushing [br]everybody into a college education,
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we're raising their wages, yes, [br]but at the expense of people
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who don't want a college education [br]or who don't have those abilities.
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So in part there's [br]an negative externality there.
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Pushing so many people [br]to get a college education
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means that other people,[br]their wages are being lowered.
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And we need to think about [br]those other people as well.
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I agree that's often a problem, [br]but that's largely
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because our K through 12 systems [br]are sometimes junk.
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So the problem there is actually [br]not enough education at earlier levels.
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Let's look at South Korea,
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maybe the world's greatest[br]economic growth miracle ever.
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Eighty percent of South Koreans finish[br]with some kind of higher education degree.
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And you see the results in their economy.
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Sure, South Korea is great, [br]but there are a lot of countries
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which as I said, invested in education [br]and they're doing no better off.
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You need more than [br]just education, that's true.
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But the potential impact of education--
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Again the magic view:
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You need something else...[br]It's some combination...
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You need good infrastructure. [br]You need good governance, right?
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It's not only education, [br]no one never claimed that.
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But look, when you go [br]and you actually get down
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to the nitty gritty,[br]what do students remember?
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They don't even remember [br]what they learned a year ago.
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So how can what students learn today
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be increasing their productivity [br]20 years from now
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if they can't even remember [br]what they learned a year ago?
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They learned critical thinking. [br]They learned creativity.
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They learned social context.
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They carry that with them, [br]even if they don't remember
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what we taught them about [br]the elasticity of the demand curve.
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"Elastic, inelastic, which is which?[br]My goodness!"
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But that's maybe not [br]what they need to know.
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It's a way of thought, [br]a way of approaching the world.
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It's an acculturation.
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It's a way of advancing [br]into a higher socioeconomic stratum.
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And mostly it works... when it's good.
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You can learn more [br]about human capital and signaling
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