catallaxy files

catallaxy in technical exile

Rising inequality — a recipe for social disaster

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Who said this?

If the widening of the wage differential is allowed to proceed unchecked, it threatens to create within our own country a social problem of major proportions. We shall not be willing to see a group of our population move into Third World conditions at the same time that another group of our population becomes increasingly well off. Such stratification is a recipe for social disaster.

(a) Paul Krugman
(b) Milton Friedman
(c) Gary Becker
(d) Robert Reich

Answer over the fold.

(b) Milton Friedman.

In a 1995 article for the Washington Post Friedman argued that the US school system was in trouble. "The quality of schooling is far worse today than it was in 1955", he said, "There is no respect in which inhabitants of a low-income neighborhood are so disadvantaged as in the kind of schooling they can get for their children." Friedman argued that America’s outdated education system would lead to rising inequality.

According to Friedman, revolutions in communication and transport have "made it possible for a company located anywhere in the world to use resources located anywhere in the world, to produce a product anywhere in the world, to be sold anywhere in the world." A political shift to free markets and international trade has intensified the effect of technological change. First world capital can now link up far more easily with third world labour:

The greatly increased ratio of low-cost labor to capital has raised the wages of highly skilled labor and the return on physical capital but has put downward pressure on the wages of low-skilled labor. The result has been a sharp widening in the differential between the wages of highly skilled and low-skilled labor in the United States and other advanced countries.

If the widening of the wage differential is allowed to proceed unchecked, it threatens to create within our own country a social problem of major proportions. We shall not be willing to see a group of our population move into Third World conditions at the same time that another group of our population becomes increasingly well off. Such stratification is a recipe for social disaster. The pressure to avoid it by protectionist and other similar measures will be irresistible.

Friedman’s answer was for states to privatise their school systems by introducing vouchers "large enough to cover the costs of a private profit-making school offering a high-quality education." Naturally, he argued that this would be cheaper than the existing public school system.

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Written by Admin

March 19, 2006 at 11:10 pm

Posted in Uncategorized

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