The NYT editorializes that the latest 4.9% blip in labor costs was caused by increases in executives’ fat bonuses and stock options, not increases in workers’ wages and salaries. Meanwhile, letters to the editor comment on David Brooks’ “Populist Myths on Income Inequality,” one saying, ” listen to Mr. Brooks and his ‘let’s get skills’ message. Mr. Krugman’s message of ‘let’s get ’em’ will lead only to further social polarization.”
The problem is that if income inequality is not related to education, more education won’t help. Some good paying jobs do require education — engineer, pilot, journalist, professor. But the jobs that pay the really big bucks — corporate CEO, entrepreneur — don’t require that much education. Bill Gates never finished college. The big bucks jobs that are producing the income inequality require greed, not education. Better education, especially for high school dropouts, might keep some people from sinking below the poverty level, but it’s not going to cure income inequality caused by corporate chieftans who keep the bulk of the profits for themselves and don’t share with their employees. For that you need government policies like progressive taxation of income and estate taxes, forcing them to share the wealth.
When progressive tax rates were really high — 75 to 90% — people complained that there was no incentive to earn more money. Then I thought that was bad, but now I’m not so sure. Maybe we should encourage the fat cats to go spend their ill gotten gains and let someone else start to earn the big bucks.