Educating Our Way to Greater Equality

by Ramesh Ponnuru

In Sunday’s New York Times Magazine, David Leonhardt argues that we have the power to reverse the rise of economic inequality. I have a few comments that don’t add up to a thesis.

1) Leonhardt dismisses one proposal to fight inequality:

Piketty advocates a global wealth tax aimed more directly at capital inequality than income taxes currently are. It would apply to anyone with more than about $1.4 million in net worth and become steeper on higher fortunes than moderate ones. It’s an interesting idea, but it has little, if any, chance of passing [in] the current legislative environment.

That phrasing could leave the impression that in some past legislative environment, a global wealth tax would have been politically feasible, or that some remotely plausible change in the political environment could make it feasible. Neither is true.

2) Leonhardt moves on to arguing for a solution that could be politically plausible: increased educational attainment.

The great income gains for the American middle class and poor in the mid-to-late 20th century came after this country made high school universal and turned itself into the most educated nation in the world. As the economists Claudia Goldin and Lawrence Katz have written, “The 20th century was the American century because it was the human-capital century.” Education continues to pay today, despite the scare stories to the contrary. The pay gap between college graduates and everyone else in this country is near its all-time high. The countries that have done a better job increasing their educational attainment, like Canada and Sweden, have also seen bigger broad-based income gains than the United States.

Yet the debate over our schools and colleges tends to exist in a separate political universe from our debate over inequality. Liberals often shy away from making the connection because they worry it holds the struggling middle class and poor responsible for their plight and distracts from income redistribution. Many conservatives fear the implicit government spending involved. And so, our once-large international lead in educational attainment has vanished, and our lead in inequality has grown.

A few reactions: A) I like the idea of increasing educational attainment more than raising the wealth tax. B) I am not sure that selecting increasing educational attainment as a goal has been a major impediment to achieving it. Easier said than done, that is. C) “And so”? We’re losing our international lead in education because liberals and conservatives talk the wrong way about the connection between education and inequality? This seems implausible. D) Is Sweden so much better than we are on educational attainment? Table A1.3 here seems to say that the U.S. is ahead of Sweden in the percentage of people with tertiary education. E) There may be people who say that education does not pay, and mean by it that the pay gap between college grads and everyone else is shrinking. Most of the debate has concerned how much of that pay gap reflects skills and knowledge taught in college, whether there are ways to make college pay more for less, and so on.

3) Leonhardt continues:

A true attack on inequality would require that the country move the issue to the center of every political debate: how we tax wealth, how we tax the income of the middle class and poor (often stealthily through the payroll tax), how we finance schools and measure their results, how we tolerate income-sapping waste in health care, how we build roads, transit systems and broadband networks. These are precisely the sort of policies pursued by countries with better recent middle-class income growth than the United States.

Wait, what are “the sort of policies” we’re talking about? “How we build roads” is not a policy, and putting inequality at the center of debate about how we build roads is not a policy either. Have other countries seen stronger middle-income growth because they have put economic inequality at the center of their debates over taxation? And most developed countries have less progressive tax system than ours.

Leonhardt covers a lot of ground in a short essay, so I may just be pointing to some gaps that need to be filled. At least a book’s worth, in all likelihood.

The Corner

The one and only.