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To most people, capital implies having shares in a company or money in a bank account. But these are only tangible forms of capital and are not the only types of capital. Schooling is also a form of capital. This is because through acquiring a college degree, it will raise my earnings, improve my health and even add to some good habits. Human capital basically means that human beings have a certain worth to the society/or company in this case. My college education will increase my worth and thus will make me be able to contribute to the society (the company I will be working for). Education is one of the most important investments in human capital. Investing in education is therefore worthwhile because it increases my value to the society. Through my college degree, I am sure of a raise in my income even after netting out direct and indirect costs (Becker, n.d.).
Opportunity Cost of a College Degree
Although college education is the best form of human capital invest because in terms of rate of return, college education beats most of the other alternatives like investing in bond markets or in stock markets. Opportunity cost is the value of ‘next best alternative.’ Therefore, the opportunity cost in this case will be the money I could have earned if I worked instead of going to college. This means losing college years instead of working (Opportunity cost, n.d.).
One of the most and enduring debates in America politics is the size and role of government in the American economy. Through economics, we are able to analyze and make a conclusion as to the relative merits of government intervention in the economy (Labonte, 2010). However, government intervention has resulted to increase in economic efficiency especially when there is need to rectify market failures but at the same time may lead to a reduction in efficiency when it distorts perfectly normal competitive markets. Some people argue that politic may result to choosing the second best option and as such argue that accepting marketing failures may be preferable to government intervention in some cases (The Role of the Government in the Economy, n.d.).
However, economic growth is not a very clear normative goal on the efficiency of the US economy. Historically, economic growth was been over long periods of time suggesting that market forces may be stronger than growth effects of policy changes by the government. Recent economic recession proved otherwise and the role of the government in the economy increased.
In conclusion, there is no any economic rationale for either a ‘small’ or ‘big’ government. It is not the size of the government’s role in the economy that determines its spending or regulatory services that affect the economy. It is hard to quantify an increase in government’s influence on the economy. Therefore, a ‘large’ or a ‘smaller’ role of the government in the economy of the US will depend on several prevailing factors (Labonte, 2010).