Fact, Evaluation and Interpretation

Factual Question and Answer
Human capital (page 1): Human capital is a noun that means the set of skills and competencies possessed by a person or the population and its value to an economic system. It is also defined as an economic factor of production.
Evaluative Statement
I shall consider the argument by the author that some people refer to human capital as an abhorrence given our beliefs and values as a society (Schultz, 1961: p. 2). The author posits that the association between
human capital and slavery has resulted in individuals being unable to think of themselves as capital, thus the reluctance to evaluate themselves in economic terms. The very foundation of humanity is premised on the idea that man, as a free being and occupying the highest level in the food chain. The dark history man has had with slavery, and the commoditization of persons makes it impossible to approach human capital as a factor of production.  The writings of Adam Smith in his treatise, On Wealth of Nations, seem to justify the categorization of people as factors of production.  When we consider ourselves as factors of production, we can determine the exact parameters within which we can invest in ourselves to increase our productivity. We have been afraid to quantify our contribution to economic development, something that denies our very purpose in the production chain to provide for our descendants. Evaluating ourselves as a component in the production process will result in increased investment and productivity.
Interpretive Question
At page 15, the author poses “should the returns on investment in human capital accrue to individuals in whom it is made?” the question raises a few controversies. Should people in whom the investment is made constitute the sole beneficiaries of the returns or should we also consider those who do not contribute to the creation of wealth? The issues raised by this question are challenging and difficult to answer. On the one hand, people who contribute nothing to wealth creation do not deserve to partake of the benefits accruing from it. However, when public investment is applied to human capital, we are faced with the issue of appropriation of the benefits of investment, since taxes fund the investment. These are not easy questions, and it is difficult to answer the author without considering the political nature of the distribution of public resources.










References
Schultz, T. W. (1961). Investment in human capital. The American Economic Review, 1-17.