I recently wrote about the common canard that education will allow us all to get good jobs in a world where outsourcing and globalization are the dominant economic paradigms. There are so many loads of bunk inside of that idea that it’s hard to know where to begin.
Brad DeLong recently posted some thoughts on this very issue. He wrote, in response to Greg Mankiw.
I don’t think this works particularly well. Yes, if you confront a computer with a strongly nonlinear increase in inequality and ask it to explain it by increases in skills and the values of skills of those at the top, it will spit back that there is evidence of nonlinearity. But so much? The top 0.1% in the United States has gone from 2.3% of income in 1980-23 times average-to 7.6% today-76 times average. The next 0.9% has gone from 6.3 times average to 9.2 times average. And the next 4% has gone from 3.2 to 3.7 times average. Just what have been the changes in technology over the past twenty-five years that have made the skills of the 130,000 households in the top 0.1% so much more highly-valued vis-a-vis the skills of Mr. and Ms. 95th percentile? We are awarding 550,000 advanced degrees a year in this country. The overwhelming majority of them must be gaining little or nothing in relative-income terms vis-a-vis their predecessors of 1980-and those 15,000 a year or so who will someday join the top 1% have seen their relative incomes triple. Continuity: just what is it that the top 13,000 have learned that the other 537,000
have not that is so valuable?
The implicit model, I think, is that when you get an advanced degree-or perhaps when you get an advanced degree from a good school-you not only get skills, but you also get a lottery ticket. Either because of dumb luck or because of the interaction of talent with formal education and technology or because of the interaction of the willingness to work like a dog beyond all reasonable measure with formal education and technology, the lucky or talented or workaholic today can, thanks to revolutions in computer and communications technology, leverage their symbolic-analyst skills over a much larger base of routine manufacturing, marketing, and distribution workers than they could have a generation ago. In this model, we have become much more of a “winner take all” economy than we used to be. Much more income is distributed in the form of winner-take-all tournaments than used to be the case.
What frustrates me most about the ‘education will save us’ canard is the individuality of it all. The role of the individual who chooses further education is important, but there is much more going on. Community is just as important. And the community is currently the weakest link. We need to be open to the possibility that a community may need to protect its education and economic resources against globalization.
For some individuals education may be a winning strategy. Education still has an economic benefit, just look for the studies that show college graduates earning much more than non-college graduates. But those college graduates still need to live in a strong community. And here we can link strong education to the conservative self-preservation motive - avoid ‘broken windows.’ If current trends continue we will get communities where the numbers of people who benefit shrinks and those who get shafted grows. If this goes on more and more windows will be broken.
DeLong concludes:
We should think, and think hard, about all these issues. But I don’t think that it’s useful to characterize this mechanism for increasing inequality as “a rise in the premium paid to the skills acquired through education.” I’m not sure what to call it, but it is something very different.
The problem is really individual versus community action. For the individual education will be a good thing. It will also help the community in the long run. But there is a lag between the individual benefit of education and the community benefit. It’s a lag that we don’t have to have.
Something can be done on the community level and on the individual level at the same time. The community level should be working on creating community business and natural enterprises a la Dave Pollard. The problem is that globalization never allows these community based enterprises to grow. Instead the work is shipped off to the next cheapest bidder as soon as possible. Gradually the local markets decline, the tax base shrinks, the education system declines, the jobs move further away… It’s a vicious cycle, and we need political action to respond.
