NetNews Usenet Archive 1992 #27/NN_1992_27.iso/spool/talk/politics/misc/60302

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From: [e-mail] (Stupendous Man)
Newsgroups: talk.politics.misc,sci.econ
Subject: Re: Look Back in Anger, part 1: Missed Opportunities
Message-ID: <[e-mail]>
Date: 16 Nov 92 03:00:10 GMT
References: <[e-mail]> <[e-mail]> <[e-mail]>
Organization: Demonic Possesions, Inc.
Lines: 76

In article <[e-mail]>, [e-mail] (Patrick Louis Sugent) writes:
> In article <[e-mail]> <[e-mail]> writes:
...
>>
>>A level of mobility quite similar to that found in studies of the
>>1970s.  In other words, the Reagan Revolution produced no additional
>>income mobility, yet the level of inequality did rise during this period.
>>Since this rise has been found in several countries, economists are
>>still arguing over whether it is a result of the Regan Revolution or not.
>
>   Unless you've seen different studies than I have, the studies I've
> seen that claim that the "Reagan Revolution" resulted in the "poor getting
> poorer" usually include 1977-1982 (at least those put forth by
> Krugman at MIT).  The use of 1977-1982 as part of the "Reagan expansion"
> was quite deliberate since these recession marred years hit the poor
> particularly hard ('79-'82).  Krugman has since retracted his statements
> about "poor got poorer" and "rich got richer" to say that the 80s _expansion_
> was "good for almost everyone".
>
>   It really appears to me that the change in income distribution (which started
> in the mid 1970s) has a great deal to do with the returns to education faced
> as we change to an "information economy".  That is, there are clear differences
> in the movement of average per-hour real wages that appear to support the
> rational that those with higher education levels have fared much better than
> those with lower education levels.  Since "the rich" in these studies

    Right on the money.  In general, the more education one has, the more
likely you are to earn more.

>...
>   I also suspect that the growth of small businesses over large corporations
> has lead to individuals being compensated in a manner increasingly geared
> to performance.  This has the result that outstanding performers can
> often demand more than those a notch or two below them in talent.  In
> the past, rigid corporate pay grids and their like probably restrained
> this.

    Entrepenuers have certainly skewed the wage scales.  In olden days :),
Steve Wozniak would have remained with HP as a mid-level techie.  The computer
certainly helped change the way our economy works.
    Even economists admit that the computer allows them to analyze economic
data in ways that were simply unachievable as recently as a decade ago.

>   Of course, with the many variables affecting wages in an economy, I am
> putting forth neither of these as all encompassing explanations.  These
> are just two factors that I (and many others) believe have had a significant
> impact upon earnings and income distributions.

    I think education will remain the deciding factor for a long time to
come.  In the late 60s and early 70s the gap between high school grads and
non-grads was "fixed" by lowering graduation standards.  It backfired and the
gap is now between college grads and non-grads.
    Lowering standards will only yield a higher median, and not a real
improvement.  Instead of simply granting everyone who shows up to school a
degree, the solution is to have achievement exams for level progression beyond
8th grade.  Then a high school diploma really will be meaningful again and not
a cruel hoax of "empowerment".

>   Arguments concerning to what extent the Reagan administration is responsible
> for any of this can get rather muddled and I suspect I can glean where you
> stand on your political beliefs (as you can mine).  However, I do tend to
> sympathize with Brett concerning the "rewriting" of the expansion we see from
> the political and media powers.  Hopefully, the public has a better memory
> than that, but perhaps not.  We certainly appear to have a number
> of politicians and layman that say "the poor got poorer" long after Krugman
> was forced to abandon this position.

    My main goal with these series is education.  The victors used to write
the history.  Now the media does.  And whether they want to admit it or
not, their agenda is just as politcal as any victorious nation.

Brett
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80s: 18 million new jobs, deficits down (%GNP), tax rates down, tax revenues up
GNP up, inflation down, unemployment down, interest rates down, cold war won
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