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Feedback, 1974, 14, 7.



By Ivar Berg

(Publisher: Penguin books).

Reviewed by John Ray (M.A.; Ph.D.)

Sociology, University of N.S.W.

This book has the potential to save all of us a lot of money. Professor Berg critically examines the by now well-known economic thesis that investment in education shows a rate of return that compares favorably with other forms of capital investment. While this is true as a statistical generalisation, what Professor Berg argues is whether it should be true. The fact that most employers have been talked into rewarding more education with higher salaries does not necessarily mean that education should be so rewarded.

In fact it is by now very well-known that education does little to provide many of its recipients with any skills, abilities or knowledge that are at all likely to be of any use in employment. Most employers accept that a graduate will be almost totally useless to them until the job itself has taught him what he needs to know. Why then do they pay more for useless qualifications? The honest answer of course is that they are buying what they see as prestige. The reason that they generally gave to Professor Berg, however, seems to have been that they regarded the education system as something of an obstacle course and the man who had survived it had shown that he had "stick-to-it-iveness" and this was the quality really sought in a good employee. Berg punctures this assertion by a whole series of studies making up the body of his book which show that in fact the employees who are actually seen as most productive and who are in fact promoted on merit generally turn out to be not the better educated ones but rather in some cases the less educated ones. Education is as often a negative predictor of a man's worth to his employer as it is a positive one. This was shown to be true for technical staff, unskilled staff and white-collar staff. It was even true of professionals. Education was quite evidently not worth the extra money it cost.

All this evidently means that society could get on quite as well with much less education than it presently pays for. This is one issue that Berg, however, steers clear of. He is addressing himself more to employers than he is to politicians. To all taxpayers, however, the political issue is important. In N.S.W., roughly 60 per cent of the State budget goes on education. This is a huge slug that we can only tolerate if it is very well justified. So expensive in fact is education that Berg's book has the potential to be a political bombshell. It is this that apparently causes Berg to play down the social policy implications of his findings. Instead he takes refuge in some well-known platitudes about the "underprivileged" and how education expenditures should be re-directed to them away from their presently largely middle class recipients. He says little about the general failure to show results of such projects in the past (e.g. the ambitious American "Headstart" program for slum children).

Along the way Berg even points out that the original calculations of the extent to which an individual's investment in education pays off in the form of higher salaries do tend to play down some of the "opportunity costs" that such investment entails. All calculations include the income that is forgone by a person who studies when he could be working but some fail to put a reasonable interest rate on what that extra income, if saved, would have earned. In fact, Berg quotes one economist's figures to show that if a quite modest interest rate of 8 per cent is used, the economic advantage of higher education to the recipient vanishes almost entirely. Quite clearly, if students had to pay the costs of education themselves instead of raiding the taxpayer for its costs, only a fraction of them would still undertake it. It is about time that the taxpayer realised that he is often going without so that the useless sacred cow of education can be fed. Some education is necessary but on Berg's findings much of it is not. We must soon have to face up to the task of sorting the wheat from the chaff.

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