Gates, Jobs, and Human Capital

Derrian Thompson Honorbound Naked Economics by Charles Wheelan defines human capital as “the sum total of skills embodied within an individual: education, intelligence, charisma, creativity, work experience, entrepreneurial vigor, even the ability to throw a baseball fast.”[1]Today’s society may define human capital as only something that can be attained through education and is represented in how much income that person makes. So the question has to be asked, which definition is correct? There are countless examples of people who make copious amounts of money but became famous and felt the need to stop going to school, like Steve Jobs. But there are also people, such as Bill Gates, who are successful because of their intelligence and products created that better the world. Both men created major corporations that changed the way the world works but one went to a very prestigious school and one dropped out. So again the question remains, who has more human capital?

The correct answer to that question is that it does not matter who has more because it ultimately comes down to how hard that person is going to work to achieve their goals and how much money the people are willing to pay. While Bill Gates had his own natural talents, like intelligence, he also made huge investments in his human capital. But Steve Jobs did not invest in his human capital through school, instead he came up with ideas and put them into action.

Wheelan bases the majority of his argument about human capital on whether or not a person is very educated. He says “The underlying problem is a lack of skills, or human capital. The poverty rate for high school dropouts in America is 12 times the poverty rate for college graduates. Why is India one of the poorest countries in the world? Primarily because 35 percent of the population is illiterate”[2]. Lack of skills definitely plays a hand in the problem with poverty but it is not the only factor. Everyone has some sort of human capital within them and the way that the person applies it to their environment can greatly impact their lives.

The majority of the time human capital is found in how successful a person is. But does their success actually reflect their human capital? Society today has had problems with defining what it actually means to have human capital but it is the society that chooses who is successful and who is not. An economist may have more human capital than a celebrity but people will pay to see that celebrity than a lecture from an economist. But then that goes back to Wheelan’s argument about how education really defines human capital. If the society’s definition about human capital is correct, then the person who makes more income will have more human capital. But if Wheelan’s definition is correct, then the more educated and well-rounded person has more human capital.

Wheelan and the rest of society seem to have very different definitions about what human capital truly means. Human capital is not about whether a person went to an Ivy League for law school or if they dropped out of high school to pursue a music career, it is about whether or not that person is willing to work hard and be successful. Success is not defined by grades or income, success is self-defining and human capital is one of the tools that are used to gage if a person is going to work and earn it or not.

[1] Wheelan, Charles J. Naked Economics: Undressing the Dismal Science. New York: Norton, 2002.

[2] Wheelan, Charles J.

Image: Flickr / Kay Kim

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