Archives for category: Economy

Peter Greene recently read a blog debate in the “Néw York Times” on the topic of how to improve teaching. He reacted strongly to the contribution by Eric Hanushek, an economist at the Hoover Institution. Hanushek is well known for his belief that the best way to tell which teachers are best is to see which ones get the highest test score gains; that raising scores will eventually produce trillions of dollars in economic growth; and that teachers who can’t produce higher scores should be “deselected.” That is, fired.

Here is the beginning of Greene’s critique of the economists’ contribution to education policy;

“When you want a bunch of legit-sounding baloney about education, call up an economist. I can’t think of a single card-carrying economist who has produced useful insights about education, schools and teaching, but from Brookings to the Hoover Institute, economists can be counted on to provide a regular stream of fecund fertilizer about schools.

“So here comes Eric Hanushek in the New York Times (staging one of their op-ed debates, which tend to resemble a soccer game played on the side of a mountain) to offer yet another rehash of his ideas about teaching. The Room for Debate pieces are always brief, but Hansuhek impressively gets a whole ton of wrong squeezed into a tiny space. Here’s his opening paragaph:

“Despite decades of study and enormous effort, we know little about how to train or select high quality teachers. We do know, however, that there are huge differences in the effectiveness of classroom teachers and that these differences can be observed.”

“This is a research puzzler of epic proportions. Hansuhek is saying, “We do not know how to tell the difference between a green apple and a red apple, but we have conclusive proof that a red apple tastes better.” Exactly what would that experimental design look like? Exactly how do you compare the red and green apples if you can’t tell them apart?

“The research gets around this issue by using a circular design. We first define high quality teachers as those whose students get high test scores. Then we study these high quality teachers and discover that they get students to score well on tests. It’s amazing!

“Economists have been at the front of the parade declaring that teachers cannot be judged on qualifications or anything else except results. Here’s a typical quote, this time from a Rand economist: “The best way to assess teachers’ effectiveness is to look at their on-the-job performance, including what they do in the classroom and how much progress their students make on achievement tests.”

“It’s economists who have given us the widely debunked shell game that is Valued Added Measuring of teachers, and they’ve been peddling that snake oil for a while (here’s a research summary from 2005). It captures all the wrong thinking of economists in one destructive ball– all that matters about teachers is the test scores they produce, and every other factor that affects a student’s test score can be worked out in a fancy equation.”

A few years ago, I engaged in an Internet debate with Rick Hanushek on the Eduwonk website. Here is the exchange:
Hanushek
My Response
Hanushek
My response

I agree with Peter Greene that economists have had far too much influence on educational policy. The attempt to quantify teaching and learning is ruinous to education and buries any consideration of the purpose of education. Children are not widgets. Learning is far too complex to be measured by standardized multiple-choice tests. Education includes many goals other than test scores. Teachers are professionals and should not be treated as interchangeable low-wage workers.

Laura H. Chapman, arts educator, has taught from pre-school through college. In this comment, she responds to the pressure on little children to be “college-and-career-ready.”

 

 

 

Arizona has a checklist for this purpose. It is offered up as graphic and “balloon questions” that should be answered as if proof that the kindergartner is on track for college AND a career. (Meanwhile Congress wants to reframe NCLB as “Every Child Ready for College OR Career).”

 

Arizona’s State Department of Education offers a graphic that also functions as a checklist for college and career readiness. There in no picture of a train on a track, just comic-like bubbles filled with text, organized around a car. The car is facing left (a visual convention that has long been used to imply “go west)”

 

You can see this graphic and some grade by grade versions of the college/career questions here http://www.azed.gov/azccrs/files/2013/10/k-12collegeandcareerchecklist.pdf

 

This kind of checklist is migrating to other states via the promoters of “personalized learning” and on-line programs where dashboard versions update information and post “recommendations” for specific colleges or for career certificates that match up with student interests, family budgets, and so on. Some of these programs are designed to by-pass the need for face-to-face guidance from middle and high school guidance counselors.

 

The permitted “vocational interest” classifications in these assessments typically match up with 16 “career clusters” and occupational pathways linked to O’Net, an online resource designed for job-seekers. The O’Net system in turn, is connected to the US Bureau of Labor Statistics that offers projections of labor markets by industry and occupations, the most recent from 2012 to 2022. These projections are updated every 2 years.

 

The Bureau of Labor Statistics labor projections show the fastest growing occupations, those with a rise or drop in average salary, those with educational requirements such as on the job training, high school diploma, and more.

 

You will not find Achieve, the U.S. Chamber of Commerce, the promoters of the Common Core, STEM, and technical education publicizing many of these projections. Why not?

 

The Bureau of Labor Statistics projections take into account outsourcing, the shifting of professional work to paraprofessionals and automated technologies, the expansion of services for the aging baby-boomers, and so on. The jobs and trend lines show that many jobs are not destined to be “drivers of the global economy.” Neither will many produce a fast turn-around in the U.S. economy. The job projections do not match much of the career hype.

 

Almost all of the business and economic reasoning from the late 1990s—prompting talk about a nation at risk from global competition, higher standards as a panacea, and implied promises of unbridled growth in high tech careers—persists, along with claims that every student must have post-secondary education, preferably college. No doubt college helps on life-long income, but that has been true for a long time.

 

The career promoters who want to reach into kindergarten with assessments and year to year tracking are doing the equivalent of killing the seed corn. The seed corn is PLAY…unleashed from any clear purpose, unencumbered by what it is good for, untethered to CEO expectations for a 21st workforce.

 

It is as if…nothing changed after 9/11—just go shopping and get your little ones prepared for that and making marketable goodies.

 

It is as if…the world economy did not tank in 2007-2008, or if so, it was the fault of low standards, not enough testing, lazy teachers, too much play in school, especially Kindergarten.

 

It is as if…it is perfectly OK that 51 percent of K-12 students today live in poverty.

 

It is as if…it is perfectly OK that 30 states provide less funding per student in 2014-15 than they did before the 2008 recession.

 

It is as if…it is perfectly OK that the price tag of K-12 education has increased since 2008, due to rising costs of supplies and tests—more tests from an unregulated industry, and and dubious investments in technology for tests and data-mining.

 

It is as if…all of those teacher salaries were outrageous. Fact check: Between 1999 and 2013 the average salary decreased by 1.3 percent (adjusted dollars), National Center for Education Statistics.

 

I hope that the teachers and parents of Kindergarten children in Arizona will download and shred this ugly graphic filled with questions about careers.

 

It is time for some civil disobedience to stop careerism, especially in Kindergarten and the early grades. This must become as important as stopping the endless testing…for the sake of children who need to experience childhood for the joy of that and as the greatest way to learn stuff that matters to them. That “stuff” may, by a circuitous path, matter more to the future of a great nation than all of the rigors and angst created by today’s strictly academic regime.”

While policymakers tell the public that the Common Core standards will prepare all students for “college and careers,” while journalists like David Brooks assert that education will reduce poverty and inequality, economists predict that 47% of jobs will disappear in the U.S. due to robots and other new technology. Not all jobs will disappear: as one of the papers below says, there will still be a need for maids to make beds in hotels.

“At The WorldPost’s Future of Work Conference, a partnership of The Huffington Post and Berggruen Institute taking place in London this week, a similar anxiety has begun to emerge — if not with workers, then with the economists who study them.

“According to our research, 47 percent of jobs in the U.S. are at risk from technology over the next 20 years,” Michael Osborne, a co-director of the Oxford Martin Programme on Technology and Employment, told me. The group’s research combined U.S. Bureau of Statistics data with a complex machine-learning algorithm of its own to draw its conclusions….”

“There are some recent trends experts are sharing which show how this new world might look like, when the small percentage of individuals or corporations that own machines (the means of production) are the only ones able to make money, and as the rest of us (the middle class) lose our jobs for the simple fact that #RobotsDoItBetter.

“Take the most-talked-about slide of the day (seen below), courtesy of Anthony McAfee, associate director of the Center for Digital Business at the MIT Sloan School of Management. The line that has been going up since about 2002 represents total gross domestic product in the U.S. The line that is going down represents wages paid as a percentage of that GDP…”

“Open the link to see the graph. It shows a large increase in productivity coupled with a declining share of income going to wages.

Here is more about the conference in London:

Weekend Roundup: Preparing to Be Disrupted

By: Nathan Gardels, Editor-in-chief

This week, The WorldPost conference on “The Future of Work” took place at Lancaster House in London. Discussion around the theme “prepare to be disrupted” ranged from how the emergent sharing economy, along with 3D desktop manufacturing, would take work back into the home to worries that automation could eliminate as much as 47 percent of current jobs in the United States.

Participants included Google’s Eric Schmidt, LinkedIn’s Reid Hoffman, economists Laura Tyson, Nouriel Roubini and Mohamed El-Erian, Steve Jobs’ biographer Walter Isaacson, Japanese robot creator Tomotaka Takahashi and Arianna Huffington among others. Jordan’s Queen Rania spoke about how social media is fostering small business startups in the Arab world and offering a different narrative than that of the fanatics. She also called for dropping the “I” from ISIS since “there’s nothing Islamic about them.”

In The WorldPost, Ian Goldin of the Oxford Martin School writes that technological advance can lead to greater inequality or inclusive prosperity depending on how we govern ourselves. In an interview, futurist Jeremy Rifkin outlines the zero-marginal cost economy he sees coming. XPrize founder Peter Diamandis discusses his new book “Bold: How to Go Big, Create Wealth and Impact the World” and how exponential technologies such as 3D manufacturing and synthetic biology are transforming all of our lives for the better. This week’s series from Singularity University looks at Germany’s advanced robotic metal sculpting machines. WorldPost Associate Editor Peter Mellgard reports that, “artificial intelligence is breaking out of the box,” according to a panel of experts who recently gathered in New York at the Council on Foreign Relations.

Amy Rosen writes that the skill most needed in the future is an entrepreneurial mindset to navigate the ever-changing innovation economy. Virgin Unite’s Jean Oelwang writes that businesses of the future are looking beyond the bottom line and are becoming people and purpose oriented. Reflecting from Tokyo on a recent visit by Thomas Piketty, Yuriko Koike explains “why Japan does not have America’s super-rich problem.”

Speaking at the London conference, MIT’s Andrew McAfee argues that digital technology is “the best economic news in human history” but says that it poses many challenges to job creation in the future. David Gergen, the long-time presidential adviser now at the Kennedy School of Government at Harvard, proposes that the best way to adapt to tech disruption is “from the bottom up” instead of waiting for government policy. Other topics reported on from the conference included: how jobs are at risk because of advancing technologies, why women are winners when it comes to successful petitions, how the myths around meditation and business have been busted and why, according to Martha Lane Fox, co-founder of Lastminute.com, none of her peers in the House of Lords understands the Internet.

As the National People’s Congress got underway in China this week, legal scholar He Jiahong writes from Beijing that establishing the rule of law in China must challenge “guanxi,” or personal connections, in business and politics. WorldPost China Correspondent Matt Sheehan gives us an inside look at dissident artist Ai Weiwei’s exhibit on Alcatraz island in San Francisco Bay. He also writes about an anti-pollution documentary that went viral in China.

Writing from Moscow, Georgy Bovt says Russia is headed down a “dark path” after the murder of Boris Nemtsov. French philosopher Bernard-Henri Lévy says Nemtsov’s example will live long after his murder at the doorstep of the Kremlin. Writing from Athens, Kyriakos Mitskotakis looks at how European realities have deeply constrained the radical plans of the new Greek government.

In this week’s “Forgotten Fact,” The WorldPost looks at Russia’s investigation of opposition leaders and why it does not bode well for the Nemtsov case.

Mia Bloom discusses “how ISIS is using marriage as a trap” to lure young women from the West and elsewhere to join with its fighters in Syria and Iraq. WorldPost Middle East Correspondent Sophia Jones reports from Istanbul this week on the merciless humor of Middle East comics directed at ISIS. She also writes about NFL stars who have traveled to Turkey to teach women football. Writing from Berlin following Bibi’s visit to Washington, German parliamentarian Philipp Missfelderargues that Prime Minister Benjamin Netanyahu is right about Iran and that “no deal is better than a bad deal.”

Finally, in light of the death of Turkey’s famed novelist Yasar Kemal, an ethnic Kurd, Behlül Özkan writes that, “in this time of great darkness in the Middle East, the Kurdish movement has reason to be hopeful about the future.”

WHO WE ARE

EDITORS: Nathan Gardels, Senior Advisor to the Berggruen Institute and the long-time editor of NPQ and the Global Viewpoint Network of the Los Angeles Times Syndicate/Tribune Media, is the Editor-in-Chief of The WorldPost. Farah Mohamed is the Managing Editor of The WorldPost. Kathleen Miles is the Senior Editor of the WorldPost. Alex Gardels is the Associate Editor of The WorldPost. Katie Nelson is the National Editor at the Huffington Post, overseeing The WorldPost and HuffPost’s editorial coverage. Eline Gordts is HuffPost’s Senior World Editor. Charlotte Alfred and Nick Robins-Early are Associate World Editors.

CORRESPONDENTS: Sophia Jones in Istanbul; Matt Sheehan in Beijing.

EDITORIAL BOARD: Nicolas Berggruen, Nathan Gardels, Arianna Huffington, Eric Schmidt (Google Inc.), Pierre Omidyar (First Look Media) Juan Luis Cebrian (El Pais/PRISA), Walter Isaacson (Aspen Institute/TIME-CNN), John Elkann (Corriere della Sera, La Stampa), Wadah Khanfar (Al Jazeera), Dileep Padgaonkar (Times of India) and Yoichi Funabashi (Asahi Shimbun).

CONTRIBUTING EDITORS: Moises Naim (former editor of Foreign Policy) and Nayan Chanda (Yale/Global; Far Eastern Economic Review). Katherine Keating (One-On-One), Sergio Munoz Bata and Parag Khanna are contributing editors.

The Asia Society and its ChinaFile, edited by Orville Schell, is our primary partner on Asia coverage. Eric X. Li and the Chunqiu Institute/Fudan University in Shanghai and Guancha.cn also provide first person voices from China. We also draw on the content of China Digital Times. Seung-yoon Lee is The WorldPost link in South Korea.

Jared Cohen of Google Ideas provides regular commentary from young thinkers, leaders and activists around the globe. Bruce Mau provides regular columns from
MassiveChangeNetwork.com on the “whole mind” way of thinking. Patrick Soon-Shiong is Contributing Editor for Health and Medicine.

ADVISORY COUNCIL: Members of the Berggruen Institute’s 21st Century Council and Council for the Future of Europe serve as the Advisory Council — as well as regular contributors — to the site. These include, Jacques Attali, Shaukat Aziz, Gordon Brown, Fernando Henrique Cardoso, Juan Luis Cebrian, Jack Dorsey, Mohamed El-Erian, Francis Fukuyama, Felipe Gonzalez, John Gray, Reid Hoffman, Fred Hu, Mo Ibrahim, Alexei Kudrin, Pascal Lamy, Kishore Mahbubani, Alain Minc, Dambisa Moyo,Laura Tyson, Elon Musk, Pierre Omidyar, Raghuram Rajan, Nouriel Roubini, Nicolas Sarkozy, Eric Schmidt, Gerhard Schroeder, Peter Schwartz, Amartya Sen, Jeff Skoll, Michael Spence, Joe Stiglitz, Larry Summers, Wu Jianmin, George Yeo, Fareed Zakaria, Ernesto Zedillo, Ahmed Zewail, and Zheng Bijian.

From the Europe group, these include: Marek Belka, Tony Blair, Jacques Delors, Niall Ferguson, Anthony Giddens, Otmar Issing, Mario Monti, Robert Mundell, Peter Sutherland and Guy Verhofstadt.

MISSION STATEMENT

The WorldPost is a global media bridge that seeks to connect the world and connect the dots. Gathering together top editors and first person contributors from all corners of the planet, we aspire to be the one publication where the whole world meets.

We not only deliver breaking news from the best sources with original reportage on the ground and user-generated content; we bring the best minds and most authoritative as well as fresh and new voices together to make sense of events from a global perspective looking around, not a national perspective looking out.

Berggruen Institute | 100 Wilshire Boulevard | Santa Monica | CA | 90401

Paul Krugman, the Nobel Prize winning economist who writes a column for the Néw York Times, demolishes the “reformers'” claim that bad education is at the root of inequality and economic issues.

He flunks the talking heads and pundits (and by implication, the Néw York Times editorial board, which employs the arguments he debunks) for asserting that schools and teachers are to blame for inequality.

Among other things, he critiques laments about the “skills gap.” If employers want certain skills, they would pay higher wages for those skills.

The Massachusetts Business Alliance for Education commissioned a study comparing MCAS, the 20-year-old state assessment system, and PARCC, the federally funded Common Core test. It concluded that PARCC is superior to MCAS in preparing students to be workforce and college ready.

This is a surprising conclusion, since MCAS has been in use for two decades and PARCC is not only untried but very controversial. When Arne Duncan handed out $360 million to create two consortia to develop tests for the Common Core, PARCC enlisted 24 states and DC. Now, only 10 states and DC are sticking with PARCC.

Even more surprising are the reports about a lack of well-prepared workers. Massachusetts is by far the most successful state in the nation, as judged by NAEP test scores. Maybe test scores don’t translate into the skills, behaviors, and habits that employers seek. But how do these business people know that PARCC will be better?

The Economist published a fascinating and disturbing article about the hardening of class lines in the U.S. most of us grew up believing that anyone could grow up to be President. Maybe it was never true, although the examples of Abraham Lincoln and Harry S Truman encouraged us to believe it was true. But now?

“WHEN the candidates for the Republican presidential nomination line up on stage for their first debate in August, there may be three contenders whose fathers also ran for president. Whoever wins may face the wife of a former president next year. It is odd that a country founded on the principle of hostility to inherited status should be so tolerant of dynasties. Because America never had kings or lords, it sometimes seems less inclined to worry about signs that its elite is calcifying.

“Thomas Jefferson drew a distinction between a natural aristocracy of the virtuous and talented, which was a blessing to a nation, and an artificial aristocracy founded on wealth and birth, which would slowly strangle it. Jefferson himself was a hybrid of these two types—a brilliant lawyer who inherited 11,000 acres and 135 slaves from his father-in-law—but the distinction proved durable. When the robber barons accumulated fortunes that made European princes envious, the combination of their own philanthropy, their children’s extravagance and federal trust-busting meant that Americans never discovered what it would be like to live in a country where the elite could reliably reproduce themselves.

“Now they are beginning to find out, (see article), because today’s rich increasingly pass on to their children an asset that cannot be frittered away in a few nights at a casino. It is far more useful than wealth, and invulnerable to inheritance tax. It is brains.
Matches made in New Haven
Intellectual capital drives the knowledge economy, so those who have lots of it get a fat slice of the pie. And it is increasingly heritable. Far more than in previous generations, clever, successful men marry clever, successful women. Such “assortative mating” increases inequality by 25%, by one estimate, since two-degree households typically enjoy two large incomes. Power couples conceive bright children and bring them up in stable homes—only 9% of college-educated mothers who give birth each year are unmarried, compared with 61% of high-school dropouts. They stimulate them relentlessly: children of professionals hear 32m more words by the age of four than those of parents on welfare. They move to pricey neighbourhoods with good schools, spend a packet on flute lessons and pull strings to get junior into a top-notch college….

“None of this is peculiar to America, but the trend is most visible there. This is partly because the gap between rich and poor is bigger than anywhere else in the rich world—a problem Barack Obama alluded to repeatedly in his state-of-the-union address on January 20th (see article). It is also because its education system favours the well-off more than anywhere else in the rich world. Thanks to hyperlocal funding, America is one of only three advanced countries where the government spends more on schools in rich areas than in poor ones.”

An economist recently predicted trillions of dollars of increased productivity if schools raised test scores and thus eliminated poverty.

This teacher has a different view, grounded in reality, not speculation.

“As a teacher in a high poverty urban school, I would like to weigh in here. My school is not set up to eliminate poverty. That argument is rubbish. Would any of these economists like to put a price on the psychological toll of poverty? My kids are worried about getting shot. It is a common occurrence in the neighborhood. They eat the school breakfast totally lacking in nutrition as if it were mana from heaven. Some wear the same clothes day after day. The vast majority are not focused on their studies due to shouldering the unrelenting burdens of poverty.”

This article in The Chronicle of Higher Education tells a fascinating story about the fate of higher education. On February 28, 1967, California Governor Ronald Reagan said that the state could no longer afford “intellectual luxuries,” and that taxpayers should not have to subsidize “intellectual curiosity.”

Dan Berrett writes:

“Sometimes, sea changes in attitude start small, gradually establishing assumptions until no one remembers thinking differently. This is how that happened to liberal education. It’s a story of events on campus and beyond: the oil embargo, the canon wars, federal fiscal policies, the fall of the Soviet Union. On that day in 1967, Reagan crystalized what has since become conventional wisdom about college. In the early 1970s, nearly three-quarters of freshmen said it was essential to them to develop a meaningful philosophy of life. About a third felt the same about being very well off financially. Now those fractions have flipped.”

Now students and policymakers alike see higher education as career training, a way to get a better job. Lost is the idea of learning for learning’s sake. That is an intellectual luxury we can no longer afford or even remember.

– See more at: http://m.chronicle.com/article/The-Day-the-Purpose-of-College/151359/?cid=wb&utm_source=wb&utm_medium=en#sthash.WZgFNwou.dpuf

The report released today–titled “Schools in Context”– by the National Superintendents Roundtable and the Horace Mann League tells a different story about international comparisons by looking at a broad range of indicators, not just test scores.

 

One part of the report is called “The Iceberg Effect,” and it shows what happens when you look only at the tip of the iceberg–test scores. A more complex and more interesting portrait of schools and society emerges when you look at the whole iceberg, not just the part that is easily measured by a standardized test. See the pdf here.

 

The full report of “Schools in Context” may be located in this pdf file.

 

The countries included in this contextual study are the United States, China, Canada, Finland, Germany, Great Britain, France, Italy, and Japan.

 

 

When we think of the phrase “the American dream,” we think about a belief that everyone has a fair chance to better themselves, to get a free education, to land a job that provides them the means to be self-supporting and live in a good home. Behind the phrase is an assumption of fairness and opportunity, of earning good wages for your work and knowing you can take care of yourself, your family, and your old age.

That “dream” is slipping away. To understand why, read this important essay-review by economist Robert Kuttner in the “Néw York Review of Books.” It is a review of two books that helps explain the profound transformation of work in our time.

One of the books is by David Weil: “The Fissured Workplace: Why Work Became So Bad For So Many and What Can Be Done to Improve It.” The other is by Eileen Appelbaum and Rosemary Batt: “Private Equity at Work: When Wall Street Manages Main Street.”

Kuttner describes a new system in which employers outsource work to contractors, keeping a close watch on the quality of the product but taking little or no responsibility for salaries and working conditions. He gives two examples for starters: the treatment of workers building NYU’s satellite campus in Abu Dhabi, and the factory fire in Bangladesh that killed more than. 1,100 workers producing luxury items for wealthy consumers.

 

Kuttner writes:

 

“The same system of outsourced employment increasingly operates at home. In the past generation, there has been a drastic change in how work is organized. Regular payroll employment is becoming the exception. The employer of record is no longer the corporation, but a web of intermediaries. The outside contractor demands stringent worker performance, even as it drives down wages, job security, and benefits….

 

“This system, which began in peripheral occupations such as janitors or security guards, has become pervasive. FedEx workers wear the company’s uniforms, drive its trucks, and adhere to stringent rules; but they are independent contractors, not company employees. At many leading hotels, room cleaners and desk clerks actually work for management companies, not for Marriott or Hilton. The technician sent by Comcast to fix your cable may well be a freelancer, not an employee. When you go into a government building, the receptionist/guard is likely not a civil servant, but the low-wage hire of a security firm.”

 

At this point, the rest of the essay unfortunately goes behind a paywall. You might find it worthwhile to subscribe (a one-week online subscription is only $4.99). I have the print edition, and I will quote a bit more.

 

“The new system frees corporations from the obligations of a tacit social compact in which employees’ loyalty is reciprocated, companies have an incentive to invest in workers, and people can look forward to predictable careers. Moreover, the entire structure of workers protections and benefits legislated beginning in the New Deal is predicated on the assumption that the employee is on the payroll of the company that makes the product. A casual worker has fewer rights, and those that carry over are harder to enforce. A contract workers or temp pays his or her own Social Security taxes, can seldom collect unemployment compensation, rarely receives company-provided health insurance or pension benefits, and has scant opportunity to organize or join a union.”

 

In the current economy, inequality of income and wealth grows, and at the same time there is a disconnect between productivity and earnings “because it allows corporations to batter down labor costs–people’s paychecks.”

 

“In explaining inequality, many economists emphasize the importance of education and technology, contending that widening gaps reflect shifts in the demands for skills and the failure of America’s educational system. Yet the old postwar social compact calling for far greater equality was respected at a time when most Americans did not go to college and many factory workers had not completed high school. Since 1980, college graduation rates have soared yet inequality has increased. Generally, it has widened among college graduates, not just between those with college degrees and those with only high school diplomas or less.”

 

Kuttner says that the new economy represents a shift of political power. Employers have been trying for over a century to lower labor costs. In this new era, with unions having lost numbers and political power, employers find it easier to outsource and replace workers with temps. Financial deregulation, he says, set off the latest round of work degradation. The second book he reviews “explains how the business strategies of these [private equity] investment companies logically destroy and degrade jobs, not for economic efficiency or better management but to transfer wealth from workers to financial profiteers.”

 

Private equity is, he says, “a sly rebranding of what used to be called leverage buyouts (LBOs), or more coarsely, corporate raids….Contrary to the industry’s claims about being experts in turning companies from losers to winners, private equity typically targets healthy companies rather than underperforming ones, the better to extract cash reserves. Having loaded the balance sheet of the company with debt–debt incurred in the purchase of that very company–they hire managers to run as lean and ruthless an operation as possible. They borrow even more money to pay themselves ‘special dividends,’ to recoup their initial small equity outlay many times over even if the operating company goes broke. The big losers in this game are the company’s workers….

 

Since the general partners of private equity firms make such outsized returns, investors want a piece of that action. But Applebaum and Batt cite data showing that most of the returns to limited partners do not beat the performance of the S&P 500. Even more peculiar is the fact that some 35 percent of the investment capital put up by limited partners comes from pension funds–which represent the deferred wages of workers. So workers’ own funds become part of the financial system that drives down workers’ wages and often plunders other pension systems.”

 

Kuttner writes:

 

“For reasons unrelated to education or technology, a great many jobs can be configured either as casual labor or as normal payroll employment. In many states, for example, home health aides are individual contractors with low wages and insecure employment to match. But in states with strong unions, such as California, home health aides have won the right to form bargaining units and are compensated as payroll employees. Warehouse workers for Walmart are hired and employed by logistics contractors; they are low-paid and subject to arbitrary dismissal. Elsewhere, however, many warehouse workers are salaried employees and receive middle-class compensation….The general trend to lower-paid work has little to do with education, technology, or management ‘efficiency.’ It is a pure transfer from labor to capital.”

 

The best way to halt job degrading is, one, to enforce the laws on the books; and two, to strengthen workers’ rights to join unions, “since unions remain the best defense against gratuitous job job-degrading.”

 

When you think about education “reform” in the context of job-degrading and rising inequality, the pieces begin to fit together with the larger transformation of our economy to the highest levels of inequality since the age of the Robber Barons.

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