Can’t tell if Barack Obama believes what he just said about expanding access to college or if he’s just cynically feeding Americans what they want to hear.

His point was that education was one of four things he’s proposing that will leads to prosperity (“growth”) and that a High School diploma doesn’t get you a decent job anymore so let’s make sure we allow more people access to  Colleges. I’m all for “investing in our people” but helping the middle class cram more of its offspring into college doesn’t stop our skyrocketing inequality or increasing poverty rates. Nor does it guarantee the creation of more jobs.

If you as an individual want to move up then a college degree might help you but it doesn’t expand the actual number of good paying jobs available to Americans. That, however, is the job of the President – to provide leadership for the creation of public policy that enables more people to do better.

Not sure how propping up an economically unsustainable nuclear industry will help, either. Not to mention that thing they do to your genes when they blow up.

More people with college degrees doesn’t result in more excellent jobs and more excellent pay. It will just mean that in order to get those limited excellent jobs, you will now have to get more education and score more critical experience. So, Obama’s plan doesn’t expand the pie and help more Americans achieve the American dream, it just means that there will be diploma inflation, with more people going for their Masters degrees in order to separate themselves from the pack.

Granted, there are fields in which we need more entrants, and in a good old fashioned command economy it would be relatively easy to just send a certain number of youth to get training, but our glut of unemployed Americans with law degrees is a good indication that the free hand of the market is groping in the dark. Supply and demand is a tricky thing when it comes to the workforce, unless you are willing to wield the interventionist heavy hand of government.

So,  over time, Americans have been subjected to degree inflation. The more education is used as a sorting mechanism to allow access to the upper classes, the more there is a race for more better degrees (see figure 1).

But while more Americans have gone into debt to get more higher education, the economy hasn’t rewarded the bulk of us. Instead, just as Mr. Obama said, more of our family members are working and we’re working longer and harder (American productivity continues to increase and be at the top of the international charts) and we have more education debt, BUT our wage compensation is friggin stagnant (since 1973 the average hourly wage in the U.S. rose a whopping 1%).

If our President actually wanted to improve the economic security of Americans he’d raise the minimum wage to a family supporting level and take action to lower unemployment (worry less about inflation, worry more about incentives to entice folks out of the workforce like they’ve done in France- shorter workweeks and work lives).

Even better, a proposal that is picking up steam in England- establishes a maximum wage to minimum wage relationship (floor to ceiling). In the federal government there is roughly a 25-1 relationship between the highest paid employee and the lowest paid employee. In the private sector it is something like 400 to 1.

A floor to ceiling cap will ensure that as CEO’s look to fatten their offshore accounts, they’ll need to bring along their lowest paid workers as well (hmm… the President would have to do something about outsourcing in addition).

So, Obama has got to know all this stuff, he isn’t Bush and he isn’t surrounded by people who regard social science as heretical. Is he really that politically opportunistic and cynical?

Sigh.

UPDATE- I might have to backtrack on the diploma inflation theory. Here’s a book I need to look at The Race between Education and Technology by Claudia Goldin and Lawrence F. Katz.

Product Description

This book provides a careful historical analysis of the co-evolution of educational attainment and the wage structure in the United States through the twentieth century. The authors propose that the twentieth century was not only the American Century but also the Human Capital Century. That is, the American educational system is what made America the richest nation in the world. Its educational system had always been less elite than that of most European nations. By 1900 the U.S. had begun to educate its masses at the secondary level, not just in the primary schools that had remarkable success in the nineteenth century.

The book argues that technological change, education, and inequality have been involved in a kind of race. During the first eight decades of the twentieth century, the increase of educated workers was higher than the demand for them. This had the effect of boosting income for most people and lowering inequality. However, the reverse has been true since about 1980. This educational slow-down was accompanied by rising inequality. The authors discuss the complex reasons for this, and what might be done to ameliorate it.

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