Daniel Epstein wants private companies to invest in local communities in order to secure survival for its company and industry but to improve the quality of life for children developing in them:

But what if that toddler had something to offer investors? If she could sell a percentage of her future income in exchange for a coupon to receive child care and if the government offered tax credits to investors to compensate them for the decreased social cost that they finance, investors might compete to pay for her education. Millions of children would gain access to the financing that they need to reach their full potential, the government would reap significant savings and investors would profit handsomely. Furthermore, such a system would have revolutionary side effects.

Just as the stock market has allowed the invisible hand to guide funds to stocks that have promising growth potential, a human capital market would guide funds to people with promising potential to increase earnings and cut social costs. This is where the human capital market would transform society, because Heckman’s research shows that the 17 percent compound annual growth rate is restricted to the poorest members of society. Think about it in reference to the law of diminishing returns: Investments make the biggest impact on investees with the most to gain. Now add the fact that children from wealthy families wouldn’t need to issue shares, and we arrive at a solution to deficient human capital development; a solution to the problem of educational inequity.

Lots of big ideas here, although many may get the feeling Epstein is recalling indentured servants to the culture. I do fear a society as the author proposes would not be as well-rounded as our current education system provides. Say Detroit’s curriculum is limited to shop class, NYC’s to finance, or Des Moines to bio-tech.

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