What does an economist do if he is called to lecture a Paediatricians’ meeting?

Link pediatrics to economics and make himself sound useful…what else? 🙂

Recently Lorenzo Bini Smaghi was invited to talk to 66th National Pediatrics Congress at Rome. He says:

You are probably wondering what an economist is doing at a paediatricians’ meeting. To tell you the truth, I have been wondering about that too. Let me try to answer that question. In brief, this will be my line of argument, based on nine points.

  • In a society characterised by limited demographic growth, technological progress is the main engine of economic growth.
  • The main instrument for developing technology is human capital.
  •  The supply of skilled labour, which makes intensive use of human capital, is not keeping pace with the increase in demand, either in the United States or in Europe.
  •  This explains why there is a strong correlation between the level of education and the probability of getting a well-paid job. Those who do not have access to education risk being marginalised and having a relatively low income.
  •  Over the past 25 years, the supply of education has not increased in line with demand, and this has generated a worldwide “excess demand” for high-level education, increasing competition and costs. In other words, when it comes to gaining access to high-quality education, competition is now much fiercer than it was for the previous generation.
  •  In advanced societies, the new generations are not prepared for the new competitive environment. Such preparation occurs during the early years of an individual’s life (according to some, during the first seven years), when the personality and the cognitive abilities are shaped.
  •  Educational methods are largely responsible for this lag. The natural tendency to apply the methods inherited from the previous generation is insufficient in the context of excess demand for high-quality education.
  •  It is not easy to change educational methods, in respect of those we experienced ourselves, and to adapt them to the needs of a global society. It requires critical capacity and the ability to listen, powers which not many people have.
  •  But there is one important exception, to which I will return at the end of my remarks.

 I would like to develop each of these points in turn.

See how economics make sense anywhere. In the end he says:

Acquiring human capital is not just essential, it is becoming increasingly difficult and expensive. We are thus faced with the problem of how to prepare the young people of today, and future generations, for the challenges that lie ahead. In order to resolve this problem, there must be a greater understanding of learning processes. Jean Piaget, the pioneer of the constructivist theory of knowledge, explained that learning progresses through the stages of sensory and motor skills and cognitive abilities, before resulting in an ability to assimilate formal instruction. A deficiency at any one stage can result in problems in the stages thereafter. Without the appropriately developed cognitive skills, even intensive academic instruction and hours of private tuition do not succeed in making up for the gap accumulated in the previous learning stages. A child’s first years are his or her most formative ones. From birth, children are filtering stimuli and learning how to interact with their surroundings and the people they are in contact with. Parents play a critical role in laying the foundations for their child’s education. They are most often a child’s first teachers: they pass on not only the fundamentals of education, but also teach the child how to learn.

There is, however, one exception to this. Personal experience tells me that if there is someone that parents are prepared to listen to, someone in whom they place absolute faith, it is the paediatrician. I don’t want to go into why this is, but it is a fact, a fact which you paediatricians have to take on board and which gives you considerable responsibility. On the other hand, the arguments that I have put forward up to now are well-known to you, as you will have experienced them yourselves during your education. The difficulty of gaining access to higher education, the growing competition and the correlation between education and quality of life are not new to you. Whether you like it or not, your role cannot be limited to the field of medicine because your actions have an impact on the development of economic systems. Through your scientific work and your practice, you contribute every day to extending life and thus to the ageing of the population. The problem is that our advanced societies are not yet well-equipped to deal with these developments. Those who pay the highest price may well be precisely those children that you help every day, who will not be adequately prepared to face the challenges that society has dropped on them.

What, then, is the function of the paediatrician? My suggestion to you is to take advantage of the receptive ears that parents have for you, not only to give them the necessary medical advice, but also to help them to be parents in our modern society, a role which is much more important – and more difficult – than is often thought.

Apart from this linking pediatrics to economics and actually advising them what to do, the speech is a decent read on deficit on human capital. As per Smaghi, this deficit quite alarming in both Europe and US and is rising.

One can just imagine if this is the case in EU and US where education standards are a lot better. One can just imagine the situation in India. It already is a nightmare and is only going to get worse for lack of any useful action in this area. Education has become a pure business in India. I don’t mind the business bit but just like we are seeing in the case of microfinance, it is being overdone. You cannot compromise quality over business. And in India, it is not just being compromised but being abused left, right, centre. Quality of education has become limited to air-conditioned classrooms and fancy wi-fi campus. There are hardly any good quality teachers. Well there can’t be good quality teachers as they also come from the same system which does not reward teaching.  The result is we have many more number of engineering and MBA colleges, but most companies find them unemployable.

Look at Smaghi’s charts for a confirmation. India has the largest % of young population but the expenditure on R&D is lowest. We have increased public spending on education to 12.5% of government expenditure (I doubt the figures), similar to China and lower than only US. But given our problems of delivery of public services only a fraction is going to reach to public.

This is one reason I do not agree to Economist’s recent analysis of Indian economy. It highlights demographics and democracy as two strong reasons why India will grow faster than China. Demographics can only work in your favor if you get the basics right. Without it, it turns out to be a major problem actually.

One Response to “What does an economist do if he is called to lecture a Paediatricians’ meeting?”

  1. Linking Greeks, Christianity and Economics « Mostly Economics Says:

    […] had written a while back on how  Lorenzo Bini Smaghi, an economist was invited to speak at the 66th National Pediatrics […]

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