Paul Krugman: Knowledge Isn’t Power

A skills gap is not the problem, it’s economic power:

Knowledge Isn’t Power, by Paul Krugman, Commentary, NY Times: … Just to be clear: I’m in favor of better education. Education is a friend of mine. And it should be available and affordable for all. But … people insisting that educational failings are at the root of still-weak job creation, stagnating wages and rising inequality. This sounds serious and thoughtful. But it’s actually a view very much at odds with the evidence, not to mention a way to hide from the real, unavoidably partisan debate.

The education-centric story of our problems runs like this: We live in a period of unprecedented technological change, and too many American workers lack the skills to cope with that change. This “skills gap” is holding back growth, because businesses can’t find the workers they need. It also feeds inequality, as wages soar for workers with the right skills… So what we need is more and better education. …

It’s repeated so widely that many people probably assume it’s unquestionably true. But it isn’t…, there’s no evidence that a skills gap is holding back employment…

Finally, while the education/inequality story may once have seemed plausible, it hasn’t tracked reality for a long time…, the inflation-adjusted earnings of highly educated Americans have gone nowhere since the late 1990s.

So what is really going on? Corporate profits have soared as a share of national income, but there is no sign of a rise in the rate of return on investment…, it’s what you would expect if rising profits reflect monopoly power rather than returns to capital… — all the big gains are going to a tiny group of individuals holding strategic positions in corporate suites or astride the crossroads of finance. Rising inequality isn’t about who has the knowledge; it’s about who has the power.

Now, there’s a lot we could do to redress this inequality of power. We could levy higher taxes on corporations and the wealthy, and invest the proceeds in programs that help working families. We could raise the minimum wage and make it easier for workers to organize. It’s not hard to imagine a truly serious effort to make America less unequal.

But given the determination of one major party to move policy in exactly the opposite direction, advocating such an effort makes you sound partisan. Hence the desire to see the whole thing as an education problem instead. But we should recognize that popular evasion for what it is: a deeply unserious fantasy.