Post-secondary tuition puts the brakes on our econom

The new creative economy needs huge numbers of educated individuals

Bernie Sanders can claim a significant victory in the American election. It’s a victory that could have huge economic implications in the United States and Canada.

Sanders and his supporters have moved Hillary Clinton to adopt his plan for free college tuition. The plan is wildly popular among student voters and their parents in the United States, where Clinton is the Democratic nominee for president after defeating Sanders.

Post-secondary students in the United States and Canada borrow considerable sums to complete their education. In Canada, the average student debt is $28,000 (plus $10,000 in interest charges). The figures for the United States are similar but the total is astonishing. Total student debt in the U.S. is $1.1 trillion. The big banks pull in more than $20 billion a year in student loan profits.

Should Clinton win the November election and implement Sanders’ plan, this “very bold initiative” will radically alter the educational landscape in the United States. If history is any guide, it will dramatically impact Canada as well.

Free (and compulsory) public education has always been linked to citizenship and the American idea of liberty. The notion was first proposed after the Revolutionary War by Thomas Jefferson. He and other Founding Fathers considered an educated public the cornerstone of the republic.

Although free education was not adopted in the U.S. immediately, it soon emerged. In the early stages, free education applied only to primary schooling, which became compulsory in 1852 and universal in 1918.

North of the border, the struggle for free and compulsory education was much more difficult. To the Upper Canadian elite, the American idea of individual liberty was an anathema. The powerful and very conservative John Strachan, Anglican bishop of Toronto, opposed free education. He believed that educating the poor would only raise unwarranted expectations and could lead to social disruption.

Fortunately, on the prairies the class divisions and strict social hierarchies of Upper Canada never developed deep roots. The idea of individual freedom was much stronger in the wide open spaces, where the special circumstances of life, homesteading in particular, created a natural equality among the polyglot nationalities that populated this part of Canada. Not surprisingly, the influence that mattered most came from the American notion of free education.

At the same time, Canadians began to realize that education played a crucial role in economic development. As the economy industrialized over the 20th century, the skills necessary to operate and manage the economy needed to change.

Free and compulsory primary education was supported in the largely agricultural economy of the early 20th century. And as the economy industrialized, free and compulsory education was extended to the secondary level.

An industrial economy needed a more highly-educated workforce to operate the complicated machinery. A high school diploma became the price of entrance to this world.

The structure of our educational system dovetailed nicely with the requirements of industry. About 80 per cent of the job force worked on the shop floor, while 20 per cent made up management. That’s about the same proportion of high school grads to university graduates for most of that era.

However, we no longer live in an industrial economy. Today’s creative economy is vastly different from the industrial world. Technology, ideas and a vast array of newer intangible assets dominate the digital economy. Factory-type production makes up less than 20 per cent of Canadian gross domestic product.

The new creative economy does not need high school grads to work on shop floors. It needs huge numbers of freethinking individuals with creative ideas and capabilities.

The reality today is stunning and challenging: we need to reverse the educational proportions. A successful society needs 80 per cent of its population to be educated to the post-secondary level just to be in the game.

Sanders upped the political ante. The idea of free college tuition has become so popular among his supporters that, should Clinton win the presidential election, its incorporation in the U.S. is likely within a few years.

Post-secondary education will be an economic necessity for nations serious about competing in the human-capital-intensive economy of the future. Canada needs to similarly invest in our youth or our economy will fall dangerously behind, and our society could suffer serious long-term damage.

 

Troy Media columnist Robert McGarvey is an economic historian and former managing director of Merlin Consulting, a London, U.K.-based consulting firm.