Oklahoma’s Human Capital: Why it is a Problem and Why it Matters

I usually write about general venture development and tech start-up topics, but this topic is really important to me, so I’m going hyper-local today.

Most of the time, I’m in Oklahoma or Texas, where my companies are based. I grew up in Oklahoma City, born from a long line of Oklahomans, and care passionately about the future of this place and its people.

But Oklahoma has a serious problem.

The evidence is mounting and it is damning: Oklahoma needs a serious policy change in order to compete effectively in the 21st century economy.

I had lunch with David Holt, the chief of staff to the mayor of Oklahoma City, awhile ago. He is currently running for the state senate and asked me what could be done to improve the state.

I gave him one simple exhortation: Do not fail to develop Oklahoma’s human capital, or we will be left in the dust as the rest of the nation and the world stampedes past us, into the 21st century’s knowledge economy.

Holt is a smart guy, having worked in the White House prior to becoming the mayor’s chief of staff. He knew what I was saying and was sympathetic, but many state leaders are not.

I had lunch with another recent state legislator, who is currently running for Congress. He shall remain nameless here, for reasons you will soon discern.

Leaving aside some of the more socially regressive aspects of his campaign platform, he expressed a strong desire that the state spend even less on education than it currently does, since “I have to justify giving those dollars to kids who leave town for Dallas with their diplomas.”

That attitude is killing Oklahoma.

Supporting world-class education in Oklahoma will inevitably result in some students taking what they’ve learned back home or someplace else. That is to be expected and promoted, since there is no better way to build the schools’ and the state’s reputation than by exporting excellence…

(If exporting higher educational excellence is a “problem,” then please sign us up. Do you think CalTech or MIT worries about where their graduates go? They want them, and their influence, spread far and wide… I digress…)

But there is a larger problem with this particular candidate’s thesis that spending less money on education is somehow a winning proposition. It will actually be difficult for Oklahoma to spend less on education than it already does: The state is currently ranked 49th in education funding. (Report: Oklahoma 49th in education funding)

There is only one lower spot we can fill. I’m sure that if we give it one last push we can easily take the 50th spot, and fall to the absolute bottom.

The results of these attitudes, and the failure to invest in education, have a real and tangible impact.

Check out the bottom of this chart:

(Source: http://www.creativeclass.com/creative_class/_wordpress/wp-content/uploads/2010/05/CollegeDegreeDensity.png)

Other real world examples of our failing and uncompetitive education system:

Why does education matter, you might ask?

For subscribers to the “Chicago School” of economics and the Lucas-Uzawa model (and the enormous body of work surrounding them), the answer is simple: 

Competitive relevance and economic prosperity in the 20th and 21st century spring from the development of human capital.

The body of work supporting this fact is massive, but here is one of my favorite tidbits: The correlation of education to local and city prosperity is so high that you don’t have to be the one receiving the education to benefit.

A 10% increase in the number of college graduates in an area has been shown to improve the income of everyone in the area by 9%, even if they weren’t the ones who got educated!

Moreover, historic school enrollment and educational achievement are highly predictive of future income levels for an area, even when controlling for that area’s historic income levels.

Education doesn’t follow wealth. Wealth comes from education.

Looking beyond simple income, the development of human capital is the most critical variable in improving the overall well-being of an area or city. In fact, it has the highest correlation (.68) to well-being when compared to unemployment, wage levels and per capita GDP:

(Incidentally, well-being and happiness are also strongly correlated with the presence of a larger “creative class” population and with a high technology economy. Source: http://www.creativeclass.com/creative_class/2010/02/19/what-makes-happy-cities-happy/)

And that means we need to prioritize education, even at the expense of other investments.

You can import your skilled and educated workforce, or you can grow it. But you can’t ignore it.

Without the human capital to develop the state’s economy and keep it strong and competitive, nothing else is going to matter, because there won’t be budget for anything else.

The time has come for Oklahoma to take education seriously.

If your representative, senator or other candidate doesn’t believe Oklahoma should be aggressively investing in education at the state and local level, ask them some serious questions:

  • How is Oklahoma going to compete in the 21st century? What will be our strengths and where will we excel?
  • How will Oklahoma attract, grow and keep the best talent without world-class education?
  • How does Oklahoma intend to compete with Iowa, Kansas or Alabama in the 21st century knowledge economy – let alone compete with China and India?
  • Where is our prosperity and economic security going to come from in the future?
  • How will Oklahoma attract investment dollars from other states without a better-educated workforce and more research and development in emerging fields like information technology and biotechnology?
  • Has what you’ve done so far – stripping dollars out of education and pushing us to the very bottom of the heap – worked? Has it led to success and competitiveness in the national and international labor and innovation markets? Is it time to try something different?
  • Based on current investment and trends, do you have any evidence that Oklahoma will be competitive in the future knowledge economy? What is your “Plan B,” if not improving education?
  • Do you expect all current economic trends to suddenly reverse, and the knowledge economy to evaporate?
  • If you won’t spend money on education, what is your plan for the state’s economic future, and the future of our children and grandchildren? What leg will we stand on?
  • If you won’t support investment in education, to bring Oklahoma back into serious competition with the rest of the US and the world, who do you really intend to represent and why?

That last question is tough, but the time has come for tough questions. If you don’t get satisfactory answers on the first 9 questions, you need to be asking the candidate, and yourself, the 10th question.

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This blog is dedicated to providing advice, tools and encouragement from one entrepreneur to another. I want to keep this practical and accessible for the new entrepreneur while also providing enough sophistication and depth to prove useful to the successful serial entrepreneur. My target rests somewhere between the garage and the board room, where the work gets done and the hockey stick emerges.

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3 thoughts on “Oklahoma’s Human Capital: Why it is a Problem and Why it Matters”

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  3. InvisibleMarketing says:

    > “I have to justify giving those dollars
    > to kids who leave town for Dallas with
    > their diplomas.”

    Whoa. That’s too crazy to have anything to do with the actual truth.

    They just aren’t getting pressure from the people and organizations financing their political campaigns to make it an issue.

    Politicians listen to (1) money, (2) money, (3) votes, (4) money, and (5) controversy (including media coverage as well as calls/emails/visits from constituents).

  4. techventuregeek says:

    I wanted to provide one quick follow-up. Oklahoma currently – 2009 – ranks 39th in relative well-being based on the Gallup-Healthways national well-being study. That is up from 43rd in 2008:

    http://www.newsok.com/article/3440082

    and

    http://www.gallup.com/poll/116497/rankings-reveal-state-strengths-weaknesses.aspx

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