By Marc Jampole
Eduardo Porter of the New
York Times is the latest journalist to advocate that the way to narrow the
gap between what the wealthiest and everyone else earns is through
education. It’s an absurdly ridiculous
argument that depends on us believing that with a college diploma nonunionized
burger flippers, garbage haulers, shelf stockers and medical orderlies will be
able to command higher salaries.
In an article titled “Equation is Simple: Education = Income,” Porter uses two sets of statistics to confuse and distract us about
why the top 1% have seen their incomes rise precipitously in recent decades,
while the incomes at every other economic level have stagnated or deteriorated.
First Porter quotes some computations of Lawrence Katz, a
Harvard economics professor and former chief economist for the U.S. Department
of Labor. Katz calculates that if the top 1% were taxed at the rates in effect
in 1979, the government could split it up equally and give every family not in
the top 1% the grand total of $7,102. Katz and Porter then contrast this $7,102
with the estimated $30,000 a year difference in wealth between what couples
with two college graduates make and what families with two high school grads
make.
Porter and Katz think this contrast proves that education
will address the growing inequality of income.
The reasoning sounds like something a group of died-in-the-wool
right-wing first-year economics majors would cook up at 3:00 in the morning
after smoking a few joints. While it’s true that education can turn the
daughter of a janitor into a high-priced accountant, it couldn’t possibly
qualify everyone for great-paying jobs because there aren’t that many
great-paying jobs around today.
These economists who think greater education will push
incomes up haven’t been looking at job trends. Most of the jobs lost in the
Great Recession have been replaced by lower-paying ones. Those who predict job
trends estimate that virtually all of the 20 job titles to gain the most
employees over the next decade are low-paying.
It is true that many of the job titles likely to grow the most on a
percentage basis are high-paying, but these job titles start with a small base:
20% of 100 engineers is a lot less than 2% of 10,000 cashiers.
If we educate everyone for higher paying jobs, what is
likely to happen is that the wages for these jobs will fall, thanks to the law
of supply and demand. In other words, what is proposed by Porter, Katz, Claudia
Goldin, Robert Reich, economists at Standard & Poor’s and the rest of the
army of scholars and pundits who have swallowed the “education ends income
inequality” Kool-aid may actually end up creating more inequality.
The only way to foster greater equality of income is to
implement laws and regulations that change the distribution of income. The
actions are obvious, because they worked to create a more equal society roughly
from 1935-1979:
- Increase the minimum wage
- Pass laws and regulations that make it easy for workers to unionize
- Use tax increases on the wealthy to provide services and support to the poor and lower the cost of higher education for the poor and the middle class
- End privatization of traditional government functions, since privatization generally leads to workers making less and management making more.
- Pass laws that place high tariffs on imported goods and services produced in countries that do not hew to our wage, safety and environmental regulations.
The “education ends income inequality” canard is one of many
falsehoods routinely perpetrated on the American economy and public by
economists and economic writers. The theory that lowering taxes on the wealthy
leads to the creation of more jobs has proven to be false. The theory that illegal
immigrant workers lower the incomes of other workers has been proven false. The
notion that unions get in the way of one-on-one negotiations between workers
and employers is an absurdity, as is the idea that people are less likely to
look for work the longer their unemployment insurance runs (despite the fact
that unemployment compensation is a miniscule portion of their former salary). Privatization of prisons, the military and
schools (through the charter school movement) has proven to be disasters.
That free trade between nations improves the domestic economy
is not quite a lie, as shown by a study cited by Harvard’s Dani Rodrik in The Globalization Paradox, his critique
of globalization. Rodrik quantifies both
the amount of wealth distributed domestically and the added gain to the U.S.
economy if all tariffs were removed on all imported and exported products and
services. He finds that the for every additional dollar that would be created
in the United States by a totally free global trade regime there would be $50
transferred from the pockets of some groups to the bank accounts of others, primarily
from workers losing their jobs to the wealthy who own the means of production,
distribution and finance. In other
words, free trade is great—for the wealthy only.
In fact, the one factor that unifies all the distortions and
myths believed by most mainstream economists is that acting on each of the
myths leads to greater inequality of wealth.
That makes economics as practiced throughout most of the United States
more of a propaganda arm of the wealthy than it is a social science.
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