Human capital helps GDP Grow

The Supreme Court, Starbucks and Human Capital

Oct 12, 2012 • Developing Economies, Economic Debates, Economic History, Education, Government, Households, Labor, Macroeconomic Measurement, Uncategorized • 105 Views    No Comments

Saying affirmative action was the reason she was rejected from the University of Texas, Abigail Fisher sued. The University responded that it was okay for race to be a part of their admissions process. And Starbucks, Wal-Mart and 55 other prominent US corporations agreed.

On October 10, the Supreme Court heard the arguments.

For some brief background, we can go to 2003 when the Supreme Court referred to the landmark 1978 Bakke case. Permitting race as one of many criteria for college admissions but prohibiting minority quotas, both decisions said that diversity was a valid goal.

Although the case is about education, in a “friend of the court” brief, 57 businesses said they too cared about diversity. As one law professor explained, ”They are looking at the pipeline,…And the university represents their pipeline for building out their workforce.”

In addition to colleges and corporations, the case also takes us to economic growth. Looking at how nations should assess diversity, a soon to be published paper from economists at Williams College and Brown University said there is a connection between genetic diversity and national income. Using the US as one example, their conclusion says balance rather than too much diversity or too much homogeneity is optimal.

Our bottom line: Isn’t all of this about developing the human capital that we need to fuel our GDP?

Sources and Resources: My reading about how Fisher v. University of Texas connected to the business community began with this Marketplace.org report, and then continued with the brief businesses submitted to the Supreme Court and a Washington Post summary of and quote from the case. Meanwhile, a marginalrevolution.com post, a Nature article and the 2 researchers’ paper provided a perfect summary of genetic diversity issues–a topic that is generating considerable controversy.

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