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Page 106
only way in which government financed vocational or professional training, and provided the calculated earnings reflected all relevant returns and costs, the free choice of individuals would tend to produce the optimum amount of investment.
The second proviso is unfortunately not likely to be fully satisfied because of the impossibility of including non-pecuniary returns mentioned above. In practice, therefore, investment under the plan would still be somewhat too small and would not be distributed in the optimum manner.11
For several reasons, it would be preferable for private financial institutions and non-profit institutions such as foundations and universities to develop this plan. Because of the difficulties involved in estimating the base earnings and the fraction of earnings in excess of the base to be paid to the government, there is great danger that the scheme would turn into a political football. Information on existing earnings in various occupations would provide only a rough approximation to the values that would render the project self-financing. In addition, the base earnings and the fraction should vary from individual to individual in accordance with any differences in expected earning capacity that can be predicted in advance, just as life insurance premiums vary among groups that have different life expectancy.
Insofar as administrative expense is the obstacle to the development of such a plan on a private basis, the appropriate unit of government to make funds available is the federal government rather than smaller units. Any one state would have the same costs as an insurance company, say, in keeping track of the people whom it had financed. These would be minimized though not completely eliminated for the federal government. An individual who migrated to another country, for example, might still be legally or morally obligated to pay the agreed-on share of his earnings, yet it might be difficult and expensive to enforce the obligation. Highly successful people might therefore have an incentive to migrate. A similar
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11 I am indebted to Harry G. Johnson and Paul W. Cook, Jr., for suggesting the inclusion of this qualification. For a fuller discussion of the role of non-pecuniary advantages and disadvantages in determining earnings in different pursuits, see Friedman and Kuznets, loc. cit.

 
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