The Inequality That Matters Most
This is David Brooks, writing in The New York Times:
Blue Inequality:
This is the kind experienced in New York City, Los Angeles, Boston, San Francisco, Seattle, Dallas, Houston and the District of Columbia. In these places, you see the top 1 percent of earners zooming upward, amassing more income and wealth…Roughly 31 percent started or manage nonfinancial businesses. About 16 percent are doctors, 14 percent are in finance, 8 percent are lawyers, 5 percent are engineers and about 2 percent are in sports, entertainment or the media.
Red Inequality:
This is the kind experienced in Scranton, Des Moines, Naperville, Macon, Fresno, and almost everywhere else…It’s between those with a college degree and those without. Over the past several decades, the economic benefits of education have steadily risen. In 1979, the average college graduate made 38 percent more than the average high school graduate, according to the Fed chairman, Ben Bernanke. Now the average college graduate makes more than 75 percent more.
What Matters Most:
But the fact is that Red Inequality is much more important. The zooming wealth of the top 1 percent is…not nearly as big a problem as the 40 percent of children who are born out of wedlock. It’s not nearly as big a problem as the nation’s stagnant human capital, its stagnant social mobility and the disorganized social fabric for the bottom 50 percent.
This is an interesting analysis. The few people at the top of the income distribution (i.e. top 1%) only represents 1%. That is very small and it’s hard to see how that hurts the other 99%.
On the other hand, the distance between those with college degrees and those without represents a huge gulf. The middle class is segmenting into those with education and opportunity and those with few skills.
The solution is not to redistribute the income of the top 1%. First of all, there isn’t enough income to make a difference. It’s a fundamental problem with expectations and social norms. People who do not take the time to learn a skill cannot expect to have the same standard of living as those who learn a skill. I do not believe there is an easy solution for that.
I like what David Brooks has to say about inequality. Unlike Paul Krugman, he makes sense.