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The education dodge

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Paul Krugman points out how arguments that claim not enough Americans have college degrees work as smokescreens to obscure the real drivers of social and economic inequality:

[M]y sense is that there’s a new form of issue-dodging packaged as seriousness on the rise. This time, the evasion involves trying to divert our national discourse about inequality into a discussion of alleged problems with education.

And the reason this is an evasion is that whatever serious people may want to believe, soaring inequality isn’t about education; it’s about power. . .

The education-centric story of our problems runs like this: We live in a period of unprecedented technological change, and too many American workers lack the skills to cope with that change. This “skills gap” is holding back growth, because businesses can’t find the workers they need. It also feeds inequality, as wages soar for workers with the right skills but stagnate or decline for the less educated. So what we need is more and better education.

My guess is that this sounds familiar — it’s what you hear from the talking heads on Sunday morning TV, in opinion articles from business leaders like Jamie Dimon of JPMorgan Chase, in “framing papers” from the Brookings Institution’s centrist Hamilton Project. It’s repeated so widely that many people probably assume it’s unquestionably true. But it isn’t. . .

[T]here’s no evidence that a skills gap is holding back employment. After all, if businesses were desperate for workers with certain skills, they would presumably be offering premium wages to attract such workers. So where are these fortunate professions? . . .

While the education/inequality story may once have seemed plausible, it hasn’t tracked reality for a long time. “The wages of the highest-skilled and highest-paid individuals have continued to increase steadily,” the Hamilton Project says. Actually, the inflation-adjusted earnings of highly educated Americans have gone nowhere since the late 1990s.

So what is really going on? Corporate profits have soared as a share of national income, but there is no sign of a rise in the rate of return on investment. How is that possible? Well, it’s what you would expect if rising profits reflect monopoly power rather than returns to capital.

As for wages and salaries, never mind college degrees — all the big gains are going to a tiny group of individuals holding strategic positions in corporate suites or astride the crossroads of finance. Rising inequality isn’t about who has the knowledge; it’s about who has the power.

It’s always suspicious when “everyone” is in favor of something. For a couple of generations now, almost all opinion-makers across the ideological spectrum have held the view that more formal education is an almost magical panacea for fundamental social and economic problems. On the glibertarian/corporatist right, this view dovetails nicely with a commitment to individual achievement as opposed to structural changes: as long as there’s a poor black kid going to Princeton (there probably is at least one) then Land of Opportunity, Shining City on a Hill, Bootstraps — you know the drill.

In other words, as long as the educational system helps make the class structure something less than completely rigid, then it’s A-OK for the top .01% percenters to pay a lower effective tax rate than the average American, while unions are wrecked and median wages fall, corporate profits soar, etc., because after all this poor black kid got a full ride to Princeton, got into HBS, and now he’s got Jamie Dimon’s job. (OK this didn’t actually happen, but the point is that it could happen, which is all that counts in glibertarian land).

On the liberal left, the commitment to higher ed as a magic bullet is based on a less morally obnoxious but even more economically dubious belief, to wit the theory that sending more people to college ameliorates structural unemployment via enhancement of human capital. As Krugman points out, the problem with this theory is that it doesn’t appear to be true, or at least not any more.

Who benefits from the ubiquity of these beliefs among all right-thinking people? One obvious group of beneficiaries consists, as Krugman notes, of the current Lords of Capital. There’s another group he doesn’t mention, which includes those atop our ever-growing Educational Industrial Complex, who benefit from a system that has quasi-socialized of the cost of higher ed (in the form of more than $1.2 trillion in educational loans, only 37% of which are currently in timely repayment), and quasi-privatized the immense profits it generates.

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