Inequality and education - and how Cold War thinking may have messed up understanding them

Paul Krugman in Rise of the Robots 12/08/25012 looks at evidence showing a huge shift of income in the US from labor to capital and explains why his own perspective in the 1990s didn't put a high priority on this. And part of the reason, he suspects, is that bringing it up might have sounded too much like "old-fashioned Marxism."

What has happened [over the last three decades], on the other hand, is a notable shift in income away from labor ...

If this is the wave of the future, it makes nonsense of just about all the conventional wisdom on reducing inequality. Better education won't do much to reduce inequality if the big rewards simply go to those with the most assets. Creating an "opportunity society", or whatever it is the likes of Paul Ryan etc. are selling this week, won't do much if the most important asset you can have in life is, well, lots of assets inherited from your parents. And so on.

I think our eyes have been averted from the capital/labor dimension of inequality, for several reasons. It didn't seem crucial back in the 1990s, and not enough people (me included!) have looked up to notice that things have changed. It has echoes of old-fashioned Marxism — which shouldn't be a reason to ignore facts, but too often is. And it has really uncomfortable implications.

But I think we’d better start paying attention to those implications. [my emphasis]

Another example of the damaging effects of Cold War ideology and post-Cold War Triumphalism.

Tags: marxism, paul krugman