In Europe last week, I read this Financial Times article:
"WHY FREE MARKETS HAVE LITTLE TO DO WITH INEQUALITYBy Philip WhytePublished: June 1 2008 19:27 | Last updated: June 1 2008 19:27Many Europeans believe liberal economic reforms are incompatible with social justice. The US and the UK, they point out, have more liberal markets for products and labour than in continental Europe – but also higher levels of poverty and income inequality. European countries therefore face a choice. They can either free their product and labour markets and accept the downsides or they can protect social solidarity by resisting Anglo-American neo-liberalism.
But the belief that market liberalisation increases social inequalities is not borne out by the evidence. The UK certainly has higher levels of poverty and inequality than France or Germany. But pointing this out is just selective use of evidence to support a predetermined conclusion. If there were a strong correlation between levels of market liberalisation and social outcomes, one would expect to see the pattern replicated across the European Union – not just in a carefully selected group of countries."
This article can be found at:http://www.ft.com/cms/s/0/4b92df94-2ff9-11dd-86cc-000077b07658,noOfParas=2,emailFormat=plainText,storyType=ultralight,print=no,dwp_uuid=73adc504-2ffa-11da-ba9f-00000e2511c8,_i_email=y.html
The article goes on to contrast levels of levels of education in different countries:
"The reason the Nordics and the Dutch have the most egalitarian outcomes is that they provide the best education. The correlation between educational and social outcomes across the EU is striking. People with low levels of attainment at secondary education are most exposed to the risk of poverty. Moreover, the more educated people are, the more likely they are to be in work: the employment rate for Europeans with tertiary education is 80 per cent, whereas it is just 50 per cent for those who fail to complete their secondary education.
What makes Nordic education systems special? Partly, it is quality: 15-year-olds in northern Europe have higher literacy and numeracy levels than those in southern Europe. But the length of schooling is equally important. In Denmark, Finland and Sweden, 90 per cent of 25- to 34-year-olds have completed upper secondary education – and 40 per cent have gone on to obtain tertiary qualifications. In Portugal, the respective figures are 43 per cent and 19 per cent, while in Greece they are 57 per cent and 25 per cent."
I think these trends are indicative of economic shifts due to the transition from Industrial to Information based economics. High wages will trend towards individuals and nations with higher levels of education. This is one reason why the current debates about the proper levels of taxes in American and other countries stress the wrong solutions for the current problem.
Taxes do have an impact on income, but not to the extent most people think. Taxing rich people more might make us all feel good, but it won't solve income disparities on its own.
If you want to create better jobs, be more competitive, and see income disparates shrink, then follow the Nordic example: make education free through PhD.
In fact, I would go so far as to say that countries that do not provide adequate financial support and stimulous (Denmark pays PhD candidates a "salary" to stay in school) for higher education through PhD will not be fully competitive in the Information Age.
In the Information Age, knowledge is the only competitive advantage. In the USA, our educational system is still very much rooted in Industrial priorities, and every student who drops out of high school, can't afford college, masters, or PhD degrees will become an economic burden in the knowledge-based economy.
I hope our presidential candidates will embrace 21st Century realities and discuss this topic seriously in this election cycle. Changing taxes alone won't make the US more competitive and it won't bring back high-paying information-Age jobs lost to globalization.
Changing higher educational funding will.[Read More]
Adler on Data Governance
From archive: June 2008 X