Tags: Paul Krugman | education | income | inequality

Krugman: Education Won't Solve Income Inequality Problem

By    |   Wednesday, 25 February 2015 07:20 AM

Many commentators say education represents the best solution to growing income inequality, as it gives the poor an opportunity to raise their job skills.

But that's not the case, says Nobel laureate economist Paul Krugman. "Whatever serious people may want to believe, soaring inequality isn’t about education, it’s about power," he writes in The New York Times.

Krugman stresses that he's not a foe of education. "It should be available and affordable for all. But what I keep seeing is people insisting that educational failings are at the root of still-weak job creation, stagnating wages and rising inequality."

That doesn't jibe with the evidence, he says. And it's "a way to hide from the real, unavoidably partisan debate."

There's no skills gap limiting job growth, Krugman writes. And when it comes to wage increases, "all the big gains are going to a tiny group of individuals holding strategic positions in corporate suites or astride the crossroads of finance," he states.

"Rising inequality isn’t about who has the knowledge, it’s about who has the power."

Meanwhile, Washington Post columnist Robert Samuelson says it's a mistake to view income inequality as the main factor holding down the middle class.

"We have this not from some right-wing think tank but from President Obama's top economists," he writes. "The bigger culprit, they show, is the slow growth of productivity — that messy process by which the economy improves efficiency and living standards. Greater inequality is a distant second in assaulting middle-class incomes."

Productivity, which measures output per hour worked, fell 1.8 percent annualized in the fourth quarter.

A report from the White House Council of Economic Advisers assumed productivity sustained its rapid growth rate of the 1950s and 1960s, that income inequality didn't rise and that labor-force participation didn't fall.

The scenario produced middle class income of $100,000 after inflation, double its actual level.

Faster productivity growth accounts for about $30,000 of the difference, less income inequality only $9,000 and higher labor-force participation $3,000. Synergy among the three trends makes up the remaining $8,000.

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Many commentators say education represents the best solution to growing income inequality, as it gives the poor an opportunity to raise their job skills. But that's not the case, says Nobel laureate economist Paul Krugman.
Paul Krugman, education, income, inequality
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2015-20-25
Wednesday, 25 February 2015 07:20 AM
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