Financial Capital v. Human Capital

TW: The automakers continue to be pilloried in the media. The automakers have basically been reduced to overt begging at this point. I suspect the automakers are suffering from being an easy outlet for many people to express their collective frustration with our current economic predicament. The automakers worst mistake was likely not figuring out how to get "bailout" money approved quickly before the backlash could build. The financial firms have been able to do so by basically blowing up over the course of several days (remember Bear Stearns on Wednesday was business as usual, publicly at least, by Saturday night it was burnt toast) as opposed to the relative prolonged agony experienced by the automakers.

Reich brings up another issue requiring reconciliation. One of the first public services to contract during a recession is education as local funding is derived partially from property taxes which are declining rapidly. Reich asks the simple question does it make sense to let public education spending, a good almost all regard as a crucial investment for our future, fall precipitously while billions are spent "bailing out" financial firms or even automakers.

From Robert Reich:
"Education is largely funded by state and local governments whose revenues are plummeting. As consumers cut back, state sales and income taxes are shrinking; three quarters of the states are already facing budget crises. On average, state revenues account for half of public school budgets, and most of the funding of public colleges and universities. On top of this, home values are dropping, which means local property taxes are also taking a hit. Local property taxes account for 40 percent of local school budgets.The result: Schools are being closed, teachers laid off, after-school programs cut, so-called “noncritical” subjects like history eliminated, and tuitions hiked at state colleges.It's absurd. We’re bailing out every major bank to get financial capital flowing again. But we’re squeezing the main sources of our nation's human capital. Yet America's future competitiveness and the standard of living of our people depend largely our peoples’ skills, and our capacities to communicate and solve problems and innovate – not on our ability to borrow money...

I’m not saying funding is everything when it comes to education. Obviously, accountability is important. But without adequate funding we can’t attract talented people into teaching, or keep class sizes small enough to give kids a real chance to learn, or provide them with a well-rounded curriculum, and ensure that every qualified young person can go to college.So why are we bailing out Wall Street and not our nation’s public schools and colleges? Partly because the crisis in financial capital is immediate while our human capital crisis is unfolding gradually. But maybe it's also because we don’t have a central banker for America’s human capital – someone who warns us as loudly as Ben Bernanke did a few months ago when he was talking about Wall Street's meltdown, of the dire consequences that will follow if we don’t come up with the dough."
http://robertreich.blogspot.com/2008/12/of-financial-capital-and-human-capital.html