MindSpinner

Paul Krugman faults Ben Bernanke’s first Congressional testimony on only one point: that income inequality is driven by inequalities in education in a society that demands a “rising skill premium.” Krugman counters, “It’s time to face up to the fact that rising inequality is driven by the giant income gains of a tiny elite.” He cites the evidence:

In fact, college graduates on the whole are doing not so well, though better than those without college degrees:

The 2006 Economic Report of the President tells us that the real earnings of college graduates actually fell more than 5 percent between 2000 and 2004. Over the longer stretch from 1975 to 2004 the average earnings of college graduates rose, but by less than 1 percent per year.

Productivity gains, it seems, belong to the few, not the many:

A new research paper by Ian Dew-Becker and Robert Gordon of Northwestern University, “Where Did the Productivity Growth Go?,” gives the details. Between 1972 and 2001 the wage and salary income of Americans at the 90th percentile of the income distribution rose only 34 percent, or about 1 percent per year. So being in the top 10 percent of the income distribution, like being a college graduate, wasn’t a ticket to big income gains.

But income at the 99th percentile rose 87 percent; income at the 99.9th percentile rose 181 percent; and income at the 99.99th percentile rose 497 percent. No, that’s not a misprint.

Just to give you a sense of who we’re talking about: the nonpartisan Tax Policy Center estimates that this year the 99th percentile will correspond to an income of $402,306, and the 99.9th percentile to an income of $1,672,726. The center doesn’t give a number for the 99.99th percentile, but it’s probably well over $6 million a year.

Krugman points to evidence of a rising oligarchy in this country, rather than to a broader group of highly educated workers, to account for growing income disparities. I think of how powerful forces in this country manage to rally voters around certain push-button issues only to engineer the system such that your tax cut and mine translate to a weaker safety net for the most vulnerable Americans (and indeed ultimately to all of us who cannot finance our own safety nets), and to compromised opportunies for the most. What is protected, as far as I can tell, is the ability of corporations to make money that ends up in the hands of the few, not the many. The result is devastatingly short-sighted policy-making that squanders what this country represents and darkens its future. Elaborate smokescreens of issues and non-issues, soundbytes and hollow rhetoric, keep American voters too distracted to perceive the penultimate agenda, which is not only wealth but unchecked power wielded by the unwise. And education, though touted, is handily defined as the endless pursuit of test scores so that we might be too busy to remember that, in a democracy, education must be about asking hard questions, pursuing truth, and vigilantly holding government accountable for being of the people, by the people, and for the people - all the people.