Washington Ideas Forum
By Arnold Kling
You can watch the main event here, still going on this afternoon and tomorrow. I participated in a side show, not video streamed, about the future of the middle class. This was a large-group discussion, which was recorded, and at some point it may be posted. If it is, and if you listen, you will hear how out of place I was. The session lasted 3 hours, and I probably spoke for a total of five minutes, in what I would describe as staccato bursts of anger.
Listening to the other people speak, I was fuming at the hubris, the special pleading in the name of the “public good,” and at the totally unquestioned assumption that the plight of the middle class can and must be solved in Washington. I was so opposed to nearly everyone else at the table (about 20 altogether) that I could hardly compose myself, or even begin to express all of my points of disagreement.
Don Boudreaux’ favorite Senator, Sherrod Brown, made his plea for keeping manufacturing jobs at home. Senator Byron Dorgan supported him, and several Democratic Congressmen chimed in with similar viewpoints. No Republicans showed up. Three university administrators talked their book, unless you think they were being totally objective when they said what an outstanding job their institutions were doing and expressed outrage at people who compare the change in college tuition with the growth in the Consumer Price Index.
So, folks, I have to admit that I more or less lost it. On the topic of the middle class, I said that from a global perspective, the middle class has been experiencing tremendous growth. I said that there are probably U.S. policies that could retard that growth, but I expressed doubt that it is worth attempting to redirect that growth away from other countries and toward the United States.
On the whole manufacturing-jobs meme, I raised the issue of long-term income elasticity. I said that economic historian Robert Fogel has shown that the income elasticity of food and manufactured goods is far less than one, and the income elasticity of education, health care, and leisure/entertainment is far greater than one. What this means is that the decline in the share of employment in agriculture and manufacturing is not going to be reversed. At this point, the Democratic Congressman seated nearest me threw down his pen in disgust at my impertinence. Later, Rebecca Blank of the Commerce Department (I think of her as an academic by trade) pointed out that we are unlikely to go back to the 1950’s, when ours was the only manufacturing infrastructure still standing after the war. Much later, after all the politicians had left the room, Michael Lind of the center-left New America Foundation discreetly agreed with me about the trends in sectoral employment, but he pointedly distanced himself from my libertarian views, saying that we “need to rig the labor market” in education, health care, and entertainment in order to ensure that the jobs pay well.
In my final comments, I took aim at the university administrators. I said that “Education is no longer a public good.” I said that education is dominated by special interests, such as teachers’ unions. I did not add “and rent-seeking university administrators.” Before you give me kudos for courtesy and discretion, you should know that I think what actually happened is that I was working on my next train of thought and dropped the thread. I then did a 30-second rant about credentials cartels, during which I suggested that some of the college wage premium was due to artificial requirements to enter various professions. I said that government should remove the subsidies, regulations, and accreditation barriers that stifle competition in health care and education.
Basically, I played the role of nutty, right-wing extremist to the max. John Berlau, of the Competitive Enterprise Institute, put in a plug for entrepreneurship and the ill effects of Sarbox, but he did not come across as out of control as I did.
[UPDATE: Brief, sanitized coverage here.]