Thanks to a comment by Daniel McDonald on my last blog post, I have become aware of a newly launched blog devoted to counteracting the malign influence of Greg Mankiw and his Econ 10 course at Harvard. The blog can be reached here: http://anti-mankiw.blogspot.com/ [I can never figure out how to insert a hypertext link, so just copy and paste it in your command line. I realize that I am revealing myself to be a hopeless old fogey, but there it is.] I recommend that you all check it out. No pictures of Lady Gaga, I am afraid, but interesting nonetheless.
When Mankiw does devote a few spare moments in his course to the subject of economic inequality, he repeats that old mistake about education that even smarter and better informed economists are prone to commit. The idea is dead simple, and all wrong: It is that since people with more education credentials [not people who are smarter or better educated or more prepared for demanding work, just people with better educational credentials] make more money, the solution to economic inequality is for those at the bottom of the income pyramid to go back to school.
One of the problems with this "solution" is that it is wrong in too many different ways. Have you ever noticed that if there is just one thing wrong with an argument, people will tend to conclude that the argument is wrong, but if there are four or five things wrong with an argument, people's brains get overloaded and they conclude that somehow the argument has survived the attack?
First things first. There is a scarcity of top jobs in America. They go, by and large, to those with the best educational credentials [not always, but enough to support certain correlations, etc.] The number of top jobs is not dependent on the number of people with a certain credential. If there are too few people with the credential, the jobs are given even to some people who lack it. That is why, in the '70s, when higher education was expanding, folks who were not yet even ABD were getting entry-level tenure track teaching jobs in colleges and universities. When there are too many people with the credential, the bar is just raised. That is why, right now, people with solid doctorates from good universities cannot get jobs, and an entry level position requires prior publication. In the alternative universe of neo-classical economics, where all the women are strong, all the men are good-looking, and all the production functions are linear homogeneous, as soon as there is an excess of over-trained job seekers, firms will shift to a new production technique that is knowledge intensive, every employee will be paid his or her marginal product, and income inequality will decline. In the real world, educational attainments have been improving for the past century or so but income inequality first went down [thanks to unions and government action] and then soared [thanks to union busting, outsourcing, and government action designed to enrich the rich and impoverish the poor].
Harvard congratulates itself on being the intellectual pinnacle of the world. In fact, it is a swamp of incompetence, at least as far as the Economics Department is concerned. Fortunately for Massachusetts residents, there is a superb Economics Department just eighty miles to the west, at the other end of Route 2, on the Amherst campus of the State University. There is however one peculiar problem, of what might be called a spatio-temporal nature. For some mysterious reason, it is thought by Cambridge residents to be vastly more difficult to travel the eighty miles west to Amherst from Cambridge than it is to travel the eighty miles east from Amherst to Cambridge. Hence, Harvard types quite generously suggest that UMass students come to Cambridge if they want to savor the intellectual delights of Harvard Square, but blanch at the suggestion that they drive out to Amherst to hear a different and more interesting story about the American economy.
Oh well, these metaphysical difficulties are quite common in the world of ideas.