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Taking it Online: Human Capital Measures in Evaluating Foreign Policy

July 6, 2020 ~ Many of us are hard-pressed these days to make too many plans into the future after finding ourselves on ever-shifting ground and assumptions we had from just a few weeks ago no longer hold true now. As frustrating as that is, it is even more critical than ever before, in a major election year of a free country, to look forward to the future and plan based on what we do know and what the evidence tells us. As you read this blog, the U.S. federal budgeting process is still moving forward and both houses of the Congress are in the midst of considering Fiscal Year 2021 legislation for mark up and conferences. Let us not forget that there is still an opportunity to shape and, at a minimum, anticipate legislation on foreign affairs and policy. While balancing the budget ranks fairly low these days, those of us who are concerned, may be interested to know that the FY2021 State, Foreign Operations and Related Programs House Appropriations Subcommittee markup is scheduled for this very afternoon, July 6, at 4pm.

The financing and budgeting associated with the execution of foreign policies and programs does matter, but what also matters and doesn’t get nearly as much attention or visibility is the staffing and human capital investment that accompanies prioritization of policies and appropriation of program funds. Last month, I wrote about Pivoting U.S. Foreign Policymaking and briefly introduced how this might be done. As a start, I added my voice to those who spoke up for diversity and greater inclusion across the foreign policymaking community as there are considerable gaps in diversity of sex, color, race, ethnicity and disability that have yet to be fully acknowledged and addressed. These traits go hand-in-glove with diversity of ideas, skills and knowledge that ought to start well before university enrollment. For those of us who are Black, Indigenous and People of Color (BIPOC), I think it is a universal sentiment to say that we want to be known for our ideas, skills and our knowledge, not for our skin color or physical features. Imagine how impactful foreign policymaking would be if there were more engineers, economists and theologians who are BIPOC representing the United States across from visa applicants at the consular window, on delegations to governing body meetings and at the negotiations table to finalize bilateral agreements? There would likely be more creative, reflexive, nuanced, sustainable and potentially more persuasive, means to achieve foreign policy objectives. The disappointing reference to “pale, male and Yale in the diplomatic corps is one of many sad stories of struggle that, in recent weeks, add dimension and amplify the extent of systemic and structural challenges.

South Dakota son and 1979 Nobel laureate in Economic Sciences, Theodore Schultz’s seminal work in 1961 theorized that both knowledge and skill are a form of capital, and that this capital is a result of “deliberate investment.” He explained the increase in national output as a result of investment in human capital in Western countries and made a direct link between an increase in investment in human capital, and the overall increase in workers’ earnings. It should be noted that Schultz concluded that differences in earnings between blacks and whites were largely due to differences in education, though since then, there is evidence that other factors help explain these differences. Norris and Shenai (2010) study another aspect of human capital related to national innovation capacity with measures of Research & Development spending, science and engineering education from graduates of higher education, and conditions for technology scaling. Though the empirical work has been more debatable, there is much less debate as to how human capital theory has made an indelible mark on education and economic policy, both domestically and globally. Of special interest to the foreign policy community and my focus on this blog post, I cite Swift (2006)’s lesser known work that specifically examines Human Capital Theory to formulate new power metrics and models and how investment in human capital as soft power can result in dividends to hard power. As far as I can tell, this approach to evaluating foreign policy has been underutilized and has some potential for effectively evaluating foreign policies. There are limitations, as with any other form of analysis and evaluation. Fraumeni (2015) demonstrates how a country’s human capital rankings can differ significantly depending upon what measures are chosen.

With theory in mind, I now turn to practice. As some readers may be aware, the recently signed Executive Order attempts to reform hiring of new federal employees and shift its approach from hiring based on education to hiring based on skills as well as assessments of these skills. This is not the first attempt to reform federal hiring. What does seem new in this case is the potential for human resource officers and hiring managers to closely collaborate on determining the criteria for assessing these skills. How might they assess soft skills of diplomacy, negotiation, persuasion and thus, by extension, employ the full range of foreign policy tools and instruments? This is an immense undertaking, particularly for an agency that the Trump Administration has all but dismissed and dismantled. The U.S. Office of Personnel and Management (OPM) is the hiring arm of the federal government and has seen many attempts at reform over the years. It is too soon to know what the implications are, or even to know how this E.O. may be implemented, but it is worth our while to follow closely and add our voices to increase diversity and equity in this process. There is still more that can be done and what I began to describe in my April blog, to create mechanisms to more systematically incentivize the movement of mid-level experts between and among public and private sectors as well as between and among academia and practitioners to exchange perspective, knowledge and skills. Once new employees enter federal service, they need to be set up for continued growth and professional development, in response to emerging needs and priorities, including from experiences and insights gained across the federal government and other levels of government as well as private industry. Citations:

Fraumeni, B. M. (2015). Choosing a Human Capital Measure: Educational Attainment Gaps and Rankings, NBER Working Paper #21283 Norris, T., & Shenai, N. K. (2010). Dynamic Balances: American Power in the Age of Innovation. The SAIS Review of International Affairs, 30(2), 149-164. Schultz, T.W. (1961). “Investment in Human Capital.” American Economic Review. 51:1-17.

Swift, D. (2006). Human Capital Investment as a Realist Foreign Policy. International Public Policy Review. 2(2): pp. 68-91. Swift, D. (2006). Human Capital Investment as a Realist Foreign Policy. International Public Policy Review. 2(2): pp. 68-91.

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