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The value of human capital

“Laws for the liberal education of youth … are so extremely wise and useful that to a humane and generous mind, no expense for this purpose would be thought extravagant.”

— John Adams

John Adams knew what every successful business person knows. The most valuable asset, to any business or organization, is not cash on hand, equipment, inventory, receivables, or brick and mortar. It is human capital — people. That is, what their employees know about the business itself, about how to do business, and about the world in which they do business. Without that human capital no other asset of the business has any material value. Therefore, a business that plans to be around beyond the next fiscal quarter will invest carefully in the development of its human capital.

That principle of human capital holds true for Nevada. Our future success as a state is almost entirely a function of how we invest in our human capital — the students in our grade schools, middle schools, high schools, colleges and universities. What these students know and are able to contribute not only determines their individual success, it also determines whether our businesses, our churches and synagogues, our service organizations, our hospitals, our state and local government, and our institutions of learning will succeed.

Nevada’s business leaders have told us repeatedly that they need a better educated work force. Businesses (especially those businesses relying on technology) that consider relocating to Nevada have also told us repeatedly that they want to relocate to a place with an educated work force. Just as important, business leaders, as well as all of us, want an educational system that will effectively serve our children and grandchildren, and help them be successful.

Nevertheless, Nevada ranks near the bottom in virtually every performance indicator of educational success — high school graduation rates, going to college rates, and college completion rates. Every governmental leader decries these statistics, and demands better performance from our schools and colleges, often loudly and with great gusto — which they should.

And we have been progressing, slowly, to improve Nevada’s educational systems. However, the recent and anticipated budget cuts will stop, and may reverse, that progress. Then our financial support, as well as our performance indicators, will rank near the bottom in state support (per student funding) at all levels of education.

With all of that said, what are we willing to invest in our human capital?

Certainly many factors should be included in analyzing any educational system, such as parental involvement, individual student commitment, teacher effectiveness and effective administration. But those are not near enough without a committed financial investment. Without the committed financial investment needed for schools, colleges and universities, no amount of parental involvement or student commitment will be sufficient to develop the human capital we so desperately need.

Of course educational administrators and leaders have the fiduciary obligation to spend tax dollars efficiently. But it makes no sense to demand more, and spend less. In fact, instead of Adams’ eloquence, our mantra in Nevada is in danger of becoming “stack them deep and teach them cheap” — a warehousing mentality that is far short of a meaningful investment in human capital.

Our future deserves more.

Michael B. Wixom serves on the Nevada Board of Regents.

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