Traditionally, education was the province of the rich. This makes sense since they had the time to dedicate to study while most everyone else was toiling in the fields. But then the Industrial revolution came about and the flow of labor went from the fields to the cities with such speed that the government stepped in to require mandatory education as a way of stemming the flood. Here too, the rich benefited from cheap labor and became richer. At least initially, this was the case. With all these increasingly educated people came discoveries that challenged the wealthy and their position of privilege. This is the time when education became the myth to enrichment.



The very best and brightest tried their hands at entrepreneurship while the more conservative strata went to work for the elite. In either case, getting an education became synonymous with wealth creation. A myth that continues even today in the face of quite a different reality.



Economic development comes from assets and their exploitation. Education helps to both create new asset as well as better exploit old ones, if and only if the legal system - political and economic system - favors it. Producing highly educated people without providing them with a space to develop is a waste of resources as they will immigrate elsewhere.



The US, like many Anglo-saxon Protestant countries, excels at creating new assets which in turn foster new opportunities for employment until such a time as returns diminish below the cost of capital. Subsequently, bankruptcy laws come into action adjusting the asset value and allowing for the continuation of that assets exploitation. Not all countries have laws favoring such an evolution over time. Consequently, education cannot be the condition for economic development.



By way of a quick example, I will tell you the tale of a recent client of mine. This client operates in India and came to me with a cash flow problem. A quick review of the company's balance confirmed a working capital problem which could be easily resolved by factoring accounts receivables. I made this recommendation only to be faced by a blank stare from the CEO. What is factoring?, he asked. In most of the world factoring has been common place for decades so I was confused myself. However, a brief online search revealed factoring was only allowed in India since December 2013. This explained why the CEO had no idea what I was suggesting. But, more importantly, the legal framework that recognized the ownership of accounts receivable, their transferability, ... all the property rights attributed to other assets, like land and machinery, did not exist before December 2013. Now, although this legislation is new, it does create the opportunity for a whole new class of businesses to arise within India that did not exist beforehand. Likewise, a whole bunch of derivative businesses can now be effected - insurance, IT,... - all of which create jobs for educated employees and economic development for the country.