When you sell hammers...

Everything looks like a nail. I have been following the discussions about wealth and income inequality for some time. Recently I ran across this thoughtful piece via a link on Greg Mankiw's blog.

So instead of lamenting the increased earnings gap caused by education, policymakers and the pub­lic should focus attention on how to raise the fraction of American youth who complete high school and then go on for a college education. Solutions are not cheap or easy. But it will be a disaster if the focus remains so much on the earnings inequality itself that Congress tries to interfere directly with this inequality rather than trying to raise the education levels of those who are now being left behind. [More]

The authors make a convincing case for investing in education, since difference in education levels seems to be a powerful factor in future income. The question is begged by these types of conclusions if the sliver of college grads earning the astronomical salaries were excluded, would the trend be as sharp? My hunch is an awful lot of college grads (liberal arts, teaching, business, etc.) don't enjoy the enormous salary differentials making college less of a good deal than "average statistics" would suggest.

But wait, the authors are in the education business, i.e. college professors. Doesn't a whacking income inequality between people who use their products and those who don't bode well for higher education biz?

Higher education does not often examine its own efficiency or value. What I do know is more dollars buys fewer classroom hours, and those are with fewer full professors. Grades are inflated, graduate skills have dropped, and in general a college degree does not imply the level of education it used to, in my opinion. All these outcomes have one standard solution from colleges: we need more money. Without the growing income inequality, education consumers might be pressuring colleges for a better product.

With college competing with health care for Biggest Pain in the Wallet, customers may need reminding why they should fork out so much to put Morgan through Yale. No problem. We'll just turn to our unbiased Economics/Marketing Department.

The last thing an academic study would be likely to show is poor return for your dollar from academics, I would guess.

Other questions pop up: Is there an upper limit for how many college grads we can absorb? How does more money to higher education help those doing jobs for which college education has no real value? What does the rise of education competitors like India mean for those higher salaries in the future? (IT engineers are having a sobering reality check thanks to the ease of outsourcing work, for example.)

If income and wealth inequality is a problem - and I tend to think it poses some social and political hazards - offering college as THE answer strikes me as simplistic.

From where I stand, the problem calls for a farm subsidy, methinks.

It's all in your perspective.