We have excerpted the article that follows from Thomas Piketty’s Capital in the Twenty-First Century, our bible in this blog’s examination and exploration of our economic system. It reads to us as an indictment of America today–that is the same America that in the past placed the education of its citizenry foremost. Think of Andrew Carnegie’s public libraries, the agricultural and mechanical colleges established throughout the western states after the civil war, the GI bill. The education of its citizenry had always been the foundation stone of our democracy. But today? Our public school system is falling apart; the charter schools that conservatives are promoting in its lieu have become devices for extorting student loan money from the federal government by the unscrupulous; college tuitions are spiraling, prohibiting access to the poor and saddling the successful graduate with a lifetime of crushing debt.
What is preventing us from following the example of the Scandinavian countries? Whatever money we have to spend in raising the salaries of our public school teachers, providing scholarships to those students who can’t afford the tuition and vocational training to all those unemployed and hopeless men and women in our workforce whose jobs have become extinct, will come back to us two and threefold as soon as we reestablish a prosperous middle class who can afford the luxuries of the new revived economy. It is also from these well-educated young men and women that will come the technological, scientific and artistic innovations that have in the past distinguished our nation.
By THOMAS PIKETTY from his book, Capital in the Twenty First Century
…The educational system is shaped by public policy, criteria of selection for different tracks, the way it is financed, the cost of study for students and their families, and the availability of continuing education. Technological progress depends on the pace of innovation and the rapidity of implementation. It generally increases the demand for new skills and creates new occupations. This leads to the idea of a race between education and technology, then groups whose training is not sufficiently advanced will earn less and be relegated to devalued lines of work, and inequality with respect to labor will increase. In order to avoid this, the educational system must increase its supply of new types of training and output of new skills at a sufficiently rapid pace. If inequality is to decrease, moreover, the supply of new skills must increase even more rapidly, especially for the least well educated. . .
Now consider the US case. Two economists, Claudia Goldin and Lawrence Katz, systematically compared the following two evolutions in the period 1895-2005; on the one hand the wage gap between the workers who graduated from college and those who had only a high school diploma, and on the other the rat of growth of the number of college degrees. For Goldin and Katz, the conclusion is stark: the two curves move in opposite directions. In particular, the wage gap, which decreased fairly regularly until the 1970s, suddenly begins to move in opposite directions. In particular, the wage gap, which decreased fairly regularly until the 1970s, suddenly begins to widen in the 1980s, at precisely the moment when for the first time the number of college graduates stops growing, or at any rate grows much more slowly than before. Goldin and Katz have no doubt that increased wage inequality in the United States is due to the failure to invest sufficiently in higher education. More precisely, too many people failed to receive the necessary training, in part because families could not afford the high cost of tuition. In order to reverse this trend, they conclude, the United States should invest heavily in education so that as many people as possible can attend college.
The lessons of French and US experience thus point in the same in the same direction. In the long run, the best way to reduce inequalities with respect to labor as well as to increase the average productivity of the labor force and the overall growth of the economy is surely to invest in education. If the purchasing power of wages increased fivefold in a century, it was because the improved skills of the work force, coupled with technological progress, increased output per head fivefold. Over the long run, education and technology are the decisive determinants of wage levels.
By the same token, if the United States (or France) invested more heavily in high-quality professional training and advanced educational opportunities and allowed broader segments of the population to have access to them, this would surely be the most effective way of increasing wages at the low to medium end of the scale and decreasing the upper decile’s share of both wages and total income. All signs are that the Scandinavian countries, where wage inequality is more moderate than elsewhere, owe this result in large part to the fact that their educational system is relatively egalitarian and inclusive. The question of how to pay for education, and in particular how to pay for higher education, is everywhere one of the key issues of the twenty-first century. Unfortunately, the data available for addressing issues of educational cost and access in the United States and France are extremely limited. Both countries attach a great deal of importance to the central role of schools and vocational training in fostering social mobility, yet theoretical discussion of educational issues and meritocracy is often out of touch with reality, and in particular with the fact that the most prestigious schools tend to favor students from privileged social backgrounds. . .