Education and National Power
Why human capital has always been the foundation of economic development
Estimated read time is 7 minutes. Enjoy!
Over the next several weeks here at Thor’s Forge, I want to take a close look at American education policy—how our system developed, why it produces such uneven results, and what that means for the country’s long-term economic future. Education debates in the United States often become trapped in narrow arguments about testing, curricula, or the affordability of higher education. Those issues certainly matter, but they tend to obscure the larger question: how we repair a system that was once central to America’s model of economic development and widely understood to be a source of national strength.
Since the nineteenth century, the United States has relied on a distinctive set of policies to drive economic growth. Financial institutions that supported capital formation, large-scale investments in infrastructure, protective tariffs that helped nurture domestic industry, and a broad commitment to mass education all played important roles in building the modern American economy. Together these policies created the conditions that allowed the United States to industrialize rapidly and eventually emerge as the world’s largest and most innovative economy.
Education was never the only component of this development strategy, but over time it has arguably become the most important. Long before economists developed formal models of growth, observers understood a simple truth: societies that invest in the knowledge and skills of their people prosper, while those that neglect education eventually fall behind.
Although many assume otherwise, governments in the United States have never funded education primarily to expand economic opportunity for individuals. At its core, public investment in education is meant to build an economy capable of outcompeting any other nation on the planet. What long distinguished the American education system was its ability to produce workers capable of innovation, adaptation, and complex problem solving. These capabilities allowed us to move beyond an economy based on simple resource extraction or low-wage manufacturing into far more productive and technologically advanced sectors. That dynamic is even more important today. In a world increasingly shaped by the emerging fourth industrial revolution, a strong foundation of basic skills and technical expertise is essential for building the workforce required to sustain international competitiveness.
Economic historian Robert Allen captures the dynamic well. As he writes, “Widespread literacy and numeracy have been necessary (if not sufficient) conditions for economic success since the seventeenth century. These mental skills help trade to flourish and science and technology to develop. Literacy and numeracy are spread by mass education, which has become a universal strategy for economic development.”
In other words, mass education is not simply a social good. It is one of the most powerful macroeconomic policies a country can pursue—and, ultimately, a source of national power.
The Foundations of American Educational Success
Education played an important role in American development even before the nation’s founding. Literacy rates in the colonies were unusually high compared with much of the world, especially in New England. Ordinary citizens read newspapers, debated political ideas, and participated actively in civic life. The political culture of the early republic depended heavily on the ability of citizens to consume written information and engage in public discourse.
Visitors from Europe often remarked on how politically engaged Americans appeared to be. Newspapers and pamphlets circulated widely, and even relatively modest households frequently possessed books or religious texts. This culture of literacy helped produce a society unusually comfortable with challenging established authority, but also one capable of pursuing the entrepreneurship and creative thinking required to build a strong national economy.
This was not accidental. Regions that relied heavily on commerce and trade—particularly New England and the mid-Atlantic states—had strong incentives to promote literacy and numeracy. A commercial economy required people who could keep records, calculate transactions, read contracts, and understand written communication. Tutors, schoolmasters, and even grammar schools emerged in these regions, becoming an important component of the economic infrastructure.
Unfortunately, the American South did not initially follow this same path. Instead its economic development was constrained by extractive institutions, most notably slavery and indentured servitude. These systems had little interest in widespread education. In fact, they often actively discouraged it. Enslaved people were frequently forbidden from learning to read, and educational investment was slow to arrive even for white children.
Over time this produced a profound gap in educational attainment between regions. The legacy of these early differences continues to inform regional distinctions today, even if those divides are gradually beginning to fade.
The Long American Experiment in Mass Education
Over the past two centuries, the United States undertook one of the most ambitious social and economic policy experiments in history: the gradual construction of a mass education system across a vast and diverse nation.
The early push toward universal schooling began with the common school movement of the 1830s, which argued that education should be widely available rather than restricted to the wealthy. Reformers such as Horace Mann contended that public education was essential not only for economic development but also for democratic stability. Schools, they believed, could help produce informed citizens capable of participating responsibly in a republic. Over time the model spread. By the time of the Civil War, many states in the Northeast and Midwest had adopted common school systems.
One feature that distinguished American education from many other countries was its high degree of decentralization, with control of education left largely in the hands of state and local governments. Local school districts determined funding levels, curricula, and governance structures. This produced both strengths and weaknesses. It allowed communities to experiment with different approaches and adapt schooling to local needs. At the same time, it created enormous variation in educational quality. Despite these disparities, by the early twentieth century the United States had built an extensive network of public schools that dramatically expanded access to basic education for children.
High schools began proliferating between roughly 1910 and 1940, extending the years of schooling available to American students and helping prepare them for an increasingly industrial and technologically sophisticated economy. This “high school movement” significantly increased the average educational attainment of the American workforce.
The result was a population that was, on average, better educated than that of most other nations. This expanding human capital base helped support the country’s continued industrialization and technological development as it became the global economic and geopolitical hegemon in the postwar years.
In effect, the American education system became a quiet engine of national growth.
Higher Education and Global Leadership
As the K–12 system was expanding, another segment of the American education landscape slowly emerged as the envy of the world: its universities.
American higher education ultimately combined relatively broad access with world-class research institutions. During the eighteenth and early nineteenth centuries, roughly 250 small denominational colleges were founded, providing a classical education for clergy and elites. In the late nineteenth century the national government helped create the land-grant university system to promote agricultural, technical, and scientific education. As these institutions expanded, the number of students pursuing a college degree roughly quadrupled. While only about four percent of young Americans could pursue such an education, these institutions still played a major role in advancing agricultural productivity, engineering expertise, and industrial innovation. Then in the postwar period, as the Cold War began to take hold, Congress passed legislation to fund the education of returning soldiers and to train the scientists and engineers needed to compete with the Soviet Union. These policies helped spur a massive expansion in higher education, with college enrollments growing to five or six times their prewar level by 1970.
American universities became centers of scientific discovery and technological development. Their laboratories produced breakthroughs in fields ranging from physics and chemistry to medicine and computing. They did more than just educate students. They helped create entire innovation ecosystems, linking research with industry, government, and entrepreneurship. Many of the technologies that shaped the modern world—from advanced electronics to biotechnology—emerged from this network of research institutions.
In many ways, the American higher education system remains one of the country’s greatest competitive advantages—though one might be forgiven for thinking otherwise based on political debates in recent years.
The Challenge Ahead
The centrality of American education to our national success story should set off alarm bells today, because the system has in many ways fallen into a multi-layered crisis over the past several decades. This has slowly eroded our ability to rely on it to push us forward into a future where international economic competition will be ever more fierce.
In the next two posts, we will explore what happened to the system. The answers lie partly in the fact that our schools, which had rarely been the focus of ideological battles, became targets of small-government and anti-woke campaigners. Even more troubling, the longstanding geographic and racial inequities within our system have become an increasingly defining feature of American education.
Allowing education to fall victim to these currents is ultimately self-defeating. Anti-reform arguments often center on dubious zero-sum assumptions and ignore the reality that today’s global economy increasingly rewards countries capable of cultivating as many highly skilled workers as possible—people who can operate in technologically sophisticated industries. Human capital has become one of the most important sources of national strength.
And while the United States still possesses extraordinary educational assets, particularly in higher education and advanced research, we are slowly eroding those strengths in ways the entire world can see. Reversing this trajectory should be viewed as a national imperative. The United States must return to its rightful place as a global leader in education—not only in higher education, but even more importantly in our K–12 system.
COMING NEXT WEEK: We will examine how the federal role in American education expanded beginning in the 1960s, how the modern education “crisis” narrative emerged in the 1980s, and how policies intended to solve these problems ultimately weakened one of the world’s great education systems.