AN HOMAGE TO WILE E. COYOTE

I spent an hour yesterday being interviewed by a reporter from The Spectator, the Columbia University student newspaper. The topic was a recent unsuccessful effort by some student protesters to get Columbia to reduce very slightly its sky high tuition, the highest I believe in the nation. If they ever do a story on the interview I will provide a link to it.

 

The experience got me thinking yet again about what higher education in America has become and although I could not walk today – freezing rain this morning – I did lie in bed for a while having an imaginary conversation with one of the many experts who claim that the way out of America’s severe income inequality is to provide expanded first rate tertiary education to America’s young people. I am going to take a few moments to indicate why I think this is an illusion. I have talked about this before on this blog and what I have to say strikes me as self-evident, but then the central claims of Karl Marx’s economics theory also strike me as self-evident and we know how popular they are.

 

I view these remarks as an homage to the old roadrunner cartoons with their memorable villain, Wile E Coyote. The entire argument that I shall offer, such as it is, is simply an application of that old familiar standby of elementary logic courses – The Fallacy of Composition.

 

There are something like 130 million men and women who are employed full-time or part-time or self-employed in the United States these days (rather fewer this year than last of course thanks to the pandemic.) This is so many people that it is hard to think about the economy as a whole and the impact on it of higher education, so to simplify things (and here is the tribute to the roadrunner) let us imagine that the entire American economy consists of one huge private corporation called the Acme Company. We can imagine that Acme has an agricultural division, a manufacturing division, a service division, a medical division, an education dividion, a legal division, a tech division, and so forth.

 

Let us suppose that in order to get a job in management or in one of the better paid positions in one division or another – positions that offer salaries rather than wages, paid vacations, health benefits, retirement packages, and other fringe benefits – an applicant has to have a college degree from one of the better schools (since there are 4000 and more colleges and universities in the United States offering a four year degree, by “better” I simply mean a degree from one of the top 2000 or so colleges or university campuses.) At the present time roughly 1/3 of adult Americans have bachelor’s degrees, so let us suppose that those with degrees from the “better” schools constitute perhaps 20% of the workforce. These are, by and large, the fortunate ones with good jobs.

 

Everything is going along smoothly at Acme in its wildly unequal fashion until, thanks to a program enacted by a progressive federal administration, the number of people coming out of “better” schools with bachelor’s degrees grows from 20% of the workforce to 30%. The Director of Personnel in Acme central headquarters makes an appointment to see the CEO and says to her, “Boss, so many people are applying for jobs with bachelor’s degrees from good colleges and university campuses that we are going to have to expand the ranks of our corporate management to accommodate them, and cut back on workers in the agricultural, manufacturing, office work, and distribution branches to compensate.”

 

“What on earth are you talking about?” she replies. “We have all the managers we need. And we certainly cannot afford huge cutbacks in agriculture, manufacturing, service and distribution, and so forth.  You will have to find some other way to handle the problem.”

 

“Well,” the Director of Personnel says, “we cannot in fairness choose arbitrarily which applicants will get these plum jobs. We must find some way to rank them that is at least perceived as objective, no matter how irrelevant it is to the satisfactory performance of their functions. I know, we will require as a precondition for management jobs an MBA. Nobody can complain about that!”

 

And so it is done. After a while, all up and down the line in Acme, the educational credentials required as prerequisites for jobs at various levels of compensation are raised, without in any way altering the steep pyramid of unequal wages and salaries and without noticeably changing the productivity of the workforce of Acme. Thoughtful critics of this inequality, concerned about the steepness of the job pyramid, begin to write scholarly articles explaining that post baccalaureate education, not merely baccalaureate education, is the key to flattening the pyramid.

 

When I went off to college 71 years ago, only 5% of adult Americans had a college degree. Almost ¾ of a century later, that percentage has been increased almost sevenfold without in any way altering the inequality, save to make it somewhat worse now than it was then.

 

As I said when I began this post, this is an example of the Fallacy of Composition. From the fact that any individual in the society can significantly improve his or her earning potential by acquiring a tertiary degree, it does not follow that all the individuals in the society can do so, any more than it follows from the fact that any one individual can be the first person to leave a concert that therefore everybody in the audience can be the first person to leave the concert.

 

There is of course one way in which a dramatic improvement in society-wide educational accomplishment could result in a significant shift in the pattern of compensation and that is if the availability of a large population of workers with advanced education made it possible for corporations to adopt alternative techniques of production or delivery of services that by their nature were compatible with or even compelled a less unequal structure of compensation. But the history of the last century or so shows us that is simply not the case. As Gabriel Kolko demonstrated half a century ago in his book Wealth and Power in America and as the work of countless economists since has confirmed, the patterns of inequality in the American economy have been remarkably stable for well over a century despite the radical transformations that have taken place.

I lay there in bed recalling that the father of my first wife ended his career as a vice president of Sears Roebuck Corporation even though he never graduated from high school.

 

Then I got up and had breakfast.