I’m six months late, but I’ve just read this Forbes editorial by Tim Worstall. And I’m very confused.
Why I’m Confused
The article is about Paul Krugman’s take on the IMF’s take on inequality’s effect on growth. One way inequality affects growth is by reducing opportunities for the poor to use their talents. I’m going to quote Mr. Worstall at length here, so you can understand the source of my confusion:
Yes, it’s most certainly true that the poor in the US (most especially the urban and African American poor) do not have the same opportunities to make use of their talent. But this is a comment upon the disastrous state of the urban education system rather than anything else. That a system can have pupils for 12 years, spend $11,000 a year on each and every one of them on average, and still have people coming out of said system functionally illiterate and innumerate means that there’s something very wrong indeed inside that system. It’s not a lack of resources here, other school systems in other countries do very much better on much less money. Heck, the parochial school system inside the US does better on less money. Given that those inner city school systems are, and have been for decades, controlled by the sort of lefties who complain about inequality I’d say there’s some soul searching rather overdue there myself.
So, since urban schools spend a lot with little to show for it, there’s no “lack of resources” holding back the urban poor. And, of course, schools outside such poor areas do much better.
Isn’t the fact that schools in poor areas struggle to achieve results no matter how much money they spend a very strong argument in favor of the idea that the poverty of the students themselves is what’s preventing them from reaching their full potential? How likely is it that the same “something very wrong indeed” just happens to present itself only in schools attended by impoverished students? There is not, to my knowledge, a unified “urban education system” that coordinates the efforts of its leftie controllers across America’s poor regions. And do those miraculous “school systems in other countries” happen to be located in places that do a better job of keeping their citizens above the poverty line?
Mr. Worstall seems to be forgetting that we’re talking about inequality rather than spending, which I can only assume is a favorite bogeyman of his (oh…quite). Poor kids are held back by the lack of resources that hangs over every aspect of their lives, not by academic under- or over-spending. That’s the problem with the poverty prevalent in unequal societies, of course: it creates obstacles too great for a bit more school spending per student to overcome. And that’s what Tim Worstall is – inadvertently – telling us about inequality.
Why Else I’m Confused
As an aside, I’m also confused about the article’s “important point.” Here’s Mr. Worstall:
And thus we reach our important point. Yes, it’s true, excessive inequality can damage economic growth. Yes, reasonable measures to reduce inequality can increase economic growth. But most industrialised countries are already above that level and it’s really only the US that is particularly below it. And even for the US there’s not all that much room to do more in inequality reduction before we do start damaging economic growth. Another 3 points off the gini perhaps is possible.
Ah. So we should really be talking about this specifically in the context of America. What did Professor Krugman actually say?
This (emphasis mine):
American inequality has become so extreme that it’s inflicting a lot of economic damage.
Think about it. Do talented children in low-income American families have the same chance to make use of their talent — to get the right education, to pursue the right career path — as those born higher up the ladder? Of course not.
Will the new view of inequality change our political debate?
And government programs that reduce inequality can make the nation as a whole richer.
So which nation does Mr. Worstall think Professor Krugman is talking about? I’m confused.