Economy

Paul Krugman Destroys the Latest Lie About Why We Have Rampant Inequality

Supposedly "very serious people" keep diverting attention away from the real problem.

Photo Credit: via YouTube

Supposedly very serious people keep talking about education being both the cause of and the panacea to our country's rampant and rising inequality. Education is great! Education is lovely! Who the heck does not love education, especially when it is both affordable and available to all? But all this supposedly serious talk about education, Paul Krugman writes in Monday's column,is a distraction from the real cause of inequality—which is power.

Here's Krugman's summary—and debunking—of the "education-centric story of our problems":

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.

For one thing, is the pace of technological change really that fast? “We wanted flying cars, instead we got 140 characters,” the venture capitalist Peter Thiel has snarked. Productivity growth, which surged briefly after 1995, seems to have slowed sharply.

Furthermore, there’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? You can find some examples here and there. Interestingly, some of the biggest recent wage gains are for skilled manual labor — sewing machine operatorsboilermakers — as some manufacturing production moves back to America. But the notion that highly skilled workers are generally in demand is just false.

Finally, 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 all this supposedly oh-so-serious talk obscuring? The fact that corporate profits are soaring, but rather than being spread or invested widely, those profits are going to those who have a monopoly on power, which is a rather tiny group of well-placed people. Knowledge is not power. Power is power, and it is highly concentrated. And those who have it have a big incentive to divert the discussion away from the fact that they are indeed the problem.  As Krugman points out, it would not even be that hard to begin to address rising inequality. Higher taxes on corporations and the uber-wealthy would be a great start. Raising minimum wage. You don't need a Ph.D in economics to realize these moves would help.  Corporate overlords and their lackeys in Congress are intent on making sure that never happens and are working overtime to divert the national conversation, this time to the fantasy that education will fix all.

 

 

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