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Morning Brief: College May Not be Everyone’s Best Investment

by Renewing America Staff
April 12, 2012

Graduating student Abel Charrow advertises to potential employers at the University of Southern California’s May 2007 commencement. (Mario Anzuoni/Courtesy Reuters) Graduating student Abel Charrow advertises to potential employers at the University of Southern California’s May 2007 commencement. (Mario Anzuoni/Courtesy Reuters)

The rising rate of college attendance is often touted as a great success story, but the 40 percent college dropout rate may support the argument that college is not for everyone (BusinessWeek). The author argues that the average value of a college education is misleading because of the considerable variation in opportunities available to graduates from different majors and schools. He suggests that high school graduates in the 2nd and 3rd quartiles consider a two-year program, and then perhaps transfer to a four-year school.

Many students who fail to graduate from college have been poorly prepared by their K-12 educational experience. The new report of the CFR Independent Task Force on U.S. Education Reform and National Security highlights the importance of the Common Core State Standards and asserts that fixing the nation’s underperforming K-12 schools is critical to economic competitiveness and national security.

Education and human capital. Read more from experts discussing ways to improve U.S. education and immigration policies.

Innovation

U.S.-China Tech Incubator Launches

InnoSpring, the first U.S.-China tech incubator (TechCrunch) launched with a seed fund backed by major U.S. and Chinese venture capital investors. InnoSpring’s goal is to support startups in both nations with hopes of spreading their business into the other. New startups can receive funding, access to investors, mentoring, office space, and advice on legal, financial and accounting matters. InnoSpring will also provide support for firms that have grown beyond the seed stage.

Justice Department Sues Apple over E-book Pricing

The Justice Department sued Apple and two publishers for alleged e-book price-fixing efforts (TheHill). As reported last month in the Renewing America Morning Brief, the Justice Department believes the agency agreements Apple entered into with publishers—in which Apple received a percentage of e-book sales at prices set by publishers—were designed to drive e-book prices higher than Amazon’s $9.99 standard price. Three publishers avoided litigation by agreeing to the department’s demands.

Innovation. Read more on how the U.S. capacity to innovate could play a chief role in economic growth.

Corporate Regulation and Taxation

Attack Systemic Risk with Diversity?

A recent post on VoxEU.org argues the lack of diversity among financial intuitions creates systemic risk that the Basel III capital requirements will not address. The authors discuss how converging risk management and investment strategies lead to systemic risk because the assets and liabilities of financial firms become highly correlated. The authors propose changing capital requirements: first measure the correlation between firms’ performances and the broader financial sector, and then either redefine risk weights to take into account correlations or assign a capital surcharge to highly correlated firms.

Corporate regulation and taxation. Read more from top economists and business experts on solutions for addressing corporate tax reform.

Infrastructure

Unconventional Energy Shifts Plans

The New York Times discusses how rising oil and gas production from domestic, unconventional sources is changing the energy market in the United States. While oil’s status as a globally traded commodity prevented rising domestic production from driving down prices at the pump, rising shale gas production and a mild winter drove natural gas prices to a ten year low (WSJ). Analysts say falling natural gas prices will shift the electricity mix towards natural gas. Meanwhile, new investments into coal plants are ending, and wind, solar, and nuclear plant projects are becoming less economical.

Infrastructure. Read more on how upgrading the nation’s aging network of roads, bridges, airports, railways, and water systems is essential to maintaining U.S. competitiveness.

Steven J. Markovich holds an MBA from the University of Chicago’s Booth School of Business.

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