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Monday, February 27, 2006
The Etiology of the Harvard Money Manager Intriguing opinion piece this morning from Paul Krugman, in which he says “It’s time to face up to the fact that rising inequality [in America] is driven by the giant income gains of a tiny elite, not the modest gains of college graduates.” Krugman rightly notes the sentimental appeal of everyone believing that a college degree will increase opportunity and income and thus undermine inequality: “[It’s] comforting,” he writes, to imagine that “it’s all about returns to education,” since it suggests that “nobody is to blame for rising inequality, that it’s just a case of supply and demand at work. And it also suggests that the way to mitigate inequality is to improve our educational system - and better education is a value to which just about every politician in America pays at least lip service.” But Krugman also notes that “the real earnings of college graduates actually fell more than 5 percent between 2000 and 2004. Over the longer stretch from 1975 to 2004 the average earnings of college graduates rose, but by less than 1 percent per year.” In fact, all the big income gains in the country have occurred at the very highest income distribution percentiles: [I]ncome at the 99th percentile rose 87 percent; income at the 99.9th percentile rose 181 percent; and income at the 99.99th percentile rose 497 percent. No, that’s not a misprint. We’re into $30 million per year Harvard money manager territory here, the world of gangrenous greed. |