Why ever higher grades and ever more money the answer

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Unformatted text preview: o being admitted to the top universities in the world? Why ever higher grades and ever more money? The answer is twofold. First, the population of the world increased but the number of Harvards did not. Harvard cannot clone itself. To a large degree, the world has only one Harvard or Oxford (in the United Kingdom) or Indian Institute of Technology (in India). We can produce more computers, houses, and dining room chairs as the population of the world increases, but it seems much more difficult to produce more Harvards. So, what happens over time is an increasing scarcity of topnotch, one-of-a-kind educational institutions. As a result, the rationing devices for such institutions must do more work to ration, which essentially means that it will become harder and more expensive to get admitted to such places. The second reason involves globalization. One of the things that Chapter 2 Economic Systems and the Global Economy pays a high dividend in a global economy is education. “Brains” seem to matter more than “brawn,” which will increase the overall demand for a college education— not just at Harvard, but at all levels of high education. So, will the premium being placed on education in a global economy cause the demand at the most prestigious schools to rise at a faster rate than at other colleges? The likely answer is yes. With a growing world population, and with the global economy paying a high premium to those who are educated, we can expect admission to the world’s best institutions of higher learning to become even more difficult. THINK ABOUT IT Some people suggest that the competition to be the best in a world economy will be much stiffer than the competition to be the best in a national economy. Do you think this assumption is true? Explain your answer. 02 (030-053) EMC Chap 02 11/17/05 4:14 PM Page 49 Americans. This practice of hiring people in other countries is often called offshoring. (You will study offshoring and outsourcing in detail in Chapter 15). It is true that some Americans may lose their jobs to workers in other countries due to globalization. It has already happened. Over the past few years a major New York securities firm replaced its team of 800 American software engineers, who earned about $150,000 per year, with an equally competent team in India earning an average of about $20,000 a year. Additionally, the number of radiologists in the United States is expected to fall significantly because it is now possible to send the data (that U.S. radiologists analyze) over the Internet to Asian radiologists who can analyze the data at a fraction of the cost. Keep in mind, though, that offshoring is a two-way street. The United States might offshore certain jobs to, say, India or China, but foreign countries offshore jobs to the United States too. Also, while some Americans do lose jobs due to globalization, we must remember that jobs are always being lost (and found) in an economy responding to market changes. Even if the degree of offshoring in the United States were zero, peopl...
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