On knowledge and education

23 februari, 2015 kl. 21:27 | Publicerat i Economics, Politics & Society | Kommentarer inaktiverade för On knowledge and education

Education is a friend of mine. And it should be available and affordable for all. But … people insisting that educational failings are at the root of still-weak job creation, stagnating wages and rising inequality. This sounds serious and thoughtful. But it’s actually a view very much at odds with the evidence, not to mention a way to hide from the real, unavoidably partisan debate.

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… So what we need is more and better education … It’s repeated so widely that many people probably assume it’s unquestionably true. But it isn’t … there’s no evidence that a skills gap is holding back employment.

Paul Krugman

Although Krugman doesn’t name him explicitly, Harvard economist and George Bush advisor Greg Mankiw is one of those mainstream economists who has been appealing to the education variable to explain the rising inequality we have seen for the last 30 years in both the US and elsewhere in Western societies. Mankiw writes:

Even if the income gains are in the top 1 percent, why does that imply that the right story is not about education?

If indeed a year of schooling guaranteed you precisely a 10 percent increase in earnings, then there is no way increasing education by a few years could move you from the middle class to the top 1 percent.

But it may be better to think of the return to education as stochastic. Education not only increases the average income a person will earn, but it also changes the entire distribution of possible life outcomes. It does not guarantee that a person will end up in the top 1 percent, but it increases the likelihood. I have not seen any data on this, but I am willing to bet that the top 1 percent are more educated than the average American; while their education did not ensure their economic success, it played a role.

To me this is nothing but really one big evasive attempt at trying to explain away a very disturbing structural shift that has taken place in our societies. And change that has very little to do with stochastic returns to education. Those were in place also 30 or 40 years ago. At that time they meant that perhaps a CEO earned 10-12 times what ”ordinary” people earns. Today it means that they perhaps earn 100-200 times  what ”ordinary” people earns.

A question of education? No way! It is a question of  income and wealth increasingly being concentrated in the hands of a very small and privileged elite, greed and a lost sense of a common project of building a sustainable society.


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