Now we have it! Each year, a jury of german language experts finds the German Unwort of the year. This "prize" is awarded to lingual mistakes/mishaps or word constructions which are factually inappropriate and even attack human dignity. In 2003 the jury selected Tätervolk (a nation of perpetrators). For 2004, they have selected Humankapital (Human Capital). The jury argues, the term not only discriminates each and every employee in a company, it also degrades humans to be nothing more than pieces of economic interest. Why is this mentioned in this blog? Well, because it resembles a naturelich tragedy, as Naturelich is working for a company which develops, sells and implements Human Capital Management software. This comes as a shock and one is wondering why this term could potentially be harmful! Ironically, the term was not invented in 2004. In fact, it was nobel prize winner Theodore W. Schultz (1902-1998) who has greatly contributed to human capital research. Schultz received the Nobel Prize for Economic Sciences together with Sir Arthur Lewis in 1979 "for their pioneering research into economic development research with particular consideration of the problems of dewveloping countries." (Nobelprize.org). In 1971 he formed a model where he analyzed a nation's human capital with regard to education and research. Here is a quote from his nobel prize lecture:
My approach to population quality is to treat quality as a scarce resource, which implies that it has an economic value and that its acquisition entails a cost. In analyzing human behavior that determines the type and amount of quality that is acquired over time, the key to the analysis is the relation between the returns from additional quality and the costs of acquiring it. When the returns exceed costs, the stock of population quality will be enhanced. This means that increases in the supply of any quality component is a response to a demand for it. It is a supply-demand approach to investment behavior because all quality components are here treated as durable scarce resources that are useful over some period of time.
This quote seems to stress what the jury has found to be so inhumane.
However, if we read closely, he just describes an economic model he has invented to explain how and why changes in population quality occur.
Let's continue with Schultz. A few sentences later, we read:
Investment in health
Human capital theory treats everyone's state of health as a stock, i.e., as health capital, and its contribution as health services. Part of the quality of the initial stock is inherited and part is acquired. The stock depreciates over time and at an increasing rate in later life. Gross investment in human capital entails acquisition and maintenance costs. These investments include child care, nutrition, clothing, housing, medical services, and the use of one's own time. The flow of services that health capital renders consists of "healthy time", or "sicknes-free time", which are inputs into work, consumption and leisure activities (Williams, 1977; Grossman, 1972).
The improvements in health revealed by the longer life span of people in many low income countries has undoubtedly been the most important advance in population quality. Since about 1950, life expectancy at birth has increased 40 percent or more in many of these countries. People of Western Europe and North America never attained so large an increase in life expectancy in so short a period. The decline in mortality of infants and very young children is only a part of this achievement. The mortality of older children, youths and adults is also down.
Next to health, Schultz mentions investments into the population's education as being one of the best means to increase the quality of human capital. In addition, he points out that special attention needs to be placed to the highly skilled. If a nation has huge research capacities this adds greatly to the nations welfare. In his concluding remarks, Schultz notes: A goodly number of low income countries have a positive record in improving population quality and in acquiring useful knowledge.
Therefore, the jury can only be crititzed for their ignorance. The word was not invented in 2004. It has been around since the 1970's. The expression was put forward by some of the leading economists of our times and looks at the human factor inside a country or a corporation. The term looks on an aggregated level at the quality of a group of humans and their economic value. Granted. But the term is not cruel and definitely not inhumane.
In a globalized world it seems to be a reality that poor countries try to diminish the distance to the "first world" countries. These humans are (if compared) more agile, more flexible than the (e.g.)German society. Therefore, Germany's high population quality has not increased over the years or at least not as rapidly as other countries have advanced. The gap is closing.
The term is an economic term. But it is not cynical, it does not degrade humans to things. It is an abstraction in a model to analyze qualities of humans and compare these qualities across different groups of humans. This term has created more good than evil as can be seen in Schultz research and in the works of hundreds and thousands of people in each human resource department in every corporation! They care about education. They care about equal employment opportunities. But Germany has to accept that they are now competing directly with Indians, Taiwanese, and other great nations. To a much greater extend than before. Human Capital Management deals with improving this resource factor in corporations. It is *for* humans not against them.
If only the jury had done their homework...
