Rules of Evidence

This post was a response to a student's post about economic stagnation of working class wages.

Unemployment rate in 2006 (Percent)	Education attained	Median weekly earnings in 2006 (Dollars)
1.4	Doctoral degree	$1,441
1.1	Professional degree	1,474
1.7	Master's degree	1,140
2.3	Bachelor's degree	962
3.0	Associate degree	721
3.9	Some college, no degree	674
4.3	High-school graduate	595
6.8	Less than a high school diploma	419

Note: Data are 2006 annual averages for persons age 25 and over. Earnings are for full-time wage and salary workers.

Source: Bureau of Labor Statistics, Current Population Survey.

http://www.bls.gov/emp/emptab7.htm

I think that there are historically two economic views the have dominated the economic thought. The first includes economists like Adam Smith, F. A. Hayek and Milton Friedman. Their focus has been on increasing the size of the economic pie. The belief is that the best way to pull everyone up is to have more to go around. Alternatively, economists like Ricardo, Marx and Keynes have focused more on economic class and people’s relative economic positions.

My personal view is that relative position is something to take into consideration, but that almost anytime you make policy to significantly change relative economic positions, you are destroying the system that creates wealth, and everyone ends up poorer for the effort, although more equally poor.

We have left behind an economy built on human and animal muscle. Today, we have an economy in which brain power is the most important factor. Thus, it is no surprise that over the last two to three decades, we have seen very large increases in the wages paid to highly educated professionals, while people with HS diplomas have seen a lot of stagnation in their real wages. These people are hit harder in recessions and recover more slowly. They are the first to be fired and the last to be hired. I really do not think that there is any type of macro government policy that can be helpful. Attempts to take more from those leading the economy to give to those lagging behind will simply make the most productive parts of the economy less productive.

I do think that education can make a difference. What we are doing here at UOP is very important. We are trying to take students who early in their lives did not for whatever reason decide to pursue their education and we are helping them to continue with that process. Since competitive markets tend to pay prices that reflect the economic value of things, including the value of people's skills and talents, any solution that disrupts this process causes markets to be inefficient and produce less wealth. The reason education is different from other programs designed to increase the relative economic position of lower economic classes is because it addresses the problem by actually making the individual more valuable to the economy. Thus, the effect of education is an increase in the overall amount of wealth created and from this new wealth education increases a person’s relative economic status.

		September 2, 2007 *Think Education and Not Redistribution*
	This post was a response to a student's post about economic stagnation of working class wages. Unemployment rate in 2006 (Percent) Education attained Median weekly earnings in 2006 (Dollars) 1.4 Doctoral degree $1,441 1.1 Professional degree 1,474 1.7 Master's degree 1,140 2.3 Bachelor's degree 962 3.0 Associate degree 721 3.9 Some college, no degree 674 4.3 High-school graduate 595 6.8 Less than a high school diploma 419 Note: Data are 2006 annual averages for persons age 25 and over. Earnings are for full-time wage and salary workers. Source: Bureau of Labor Statistics, Current Population Survey. http://www.bls.gov/emp/emptab7.htm I think that there are historically two economic views the have dominated the economic thought. The first includes economists like Adam Smith, F. A. Hayek and Milton Friedman. Their focus has been on increasing the size of the economic pie. The belief is that the best way to pull everyone up is to have more to go around. Alternatively, economists like Ricardo, Marx and Keynes have focused more on economic class and people’s relative economic positions. My personal view is that relative position is something to take into consideration, but that almost anytime you make policy to significantly change relative economic positions, you are destroying the system that creates wealth, and everyone ends up poorer for the effort, although more equally poor. We have left behind an economy built on human and animal muscle. Today, we have an economy in which brain power is the most important factor. Thus, it is no surprise that over the last two to three decades, we have seen very large increases in the wages paid to highly educated professionals, while people with HS diplomas have seen a lot of stagnation in their real wages. These people are hit harder in recessions and recover more slowly. They are the first to be fired and the last to be hired. I really do not think that there is any type of macro government policy that can be helpful. Attempts to take more from those leading the economy to give to those lagging behind will simply make the most productive parts of the economy less productive. I do think that education can make a difference. What we are doing here at UOP is very important. We are trying to take students who early in their lives did not for whatever reason decide to pursue their education and we are helping them to continue with that process. Since competitive markets tend to pay prices that reflect the economic value of things, including the value of people's skills and talents, any solution that disrupts this process causes markets to be inefficient and produce less wealth. The reason education is different from other programs designed to increase the relative economic position of lower economic classes is because it addresses the problem by actually making the individual more valuable to the economy. Thus, the effect of education is an increase in the overall amount of wealth created and from this new wealth education increases a person’s relative economic status.