David Brooks last week:
Members of the second and much more persuasive school of thought on inequality say the key issue is skills. Lawrence Katz, formerly of the Clinton administration, now of Harvard, puts it this way: Across many nations, the market increasingly rewards people with high social and customer-service skills.
A contractor who can work with customers, design kitchens and organize jobs may earn five times as much as one of his workers who has identical cabinetry skills. An office worker who is creative, charismatic and really good in fast-changing interactive settings now gets paid much more than a disciplined middle manager who excels at routine tasks.
Katz describes a polarized economy. Wages are rising in the bottom quartile for workers who provide personal services. The middle is lagging. The real rewards are going to the top 10 percent, especially to those relative few who have the skills to transform organizations from the top.
In other words, the market isnâ€™t broken; the meritocracy is working almost too well. Itâ€™s rewarding people based on individual talents. Higher education pays off because it provides technical knowledge and because it screens out people who are not organized, self-motivated and socially adept. But even among people with identical education levels, inequality is widening as the economy favors certain abilities.
Well, that’s certainly a persuasive argument, Mr. McBobo! Too bad you pulled the entire thing out of your ass:
So I employed the top secret journalistic technique of picking up the damn phone (or PUDP, in TAP office parlance), and gave Katz a call. His answers confirmed my suspicions. Before he even talked about the column, he e-mailed to say that “I obviously don’t have anything to do with the “spin” [Brooks] gives the material and certainly nothing to do with the numbers he cites in the first half of his column.” And when I got him on the phone, he repudiated nearly every aspect of the piece. “There are,” he said, “clear market forces that have to do with the demand for talented individuals, but the current period is not that different from the past for that type of thing. In the past, however, we’ve done a very good job expanding access to education to keep up with growth, providing bargaining power to those left behind, and using government policy to help them. What’s changed in the last twenty years is that we’ve eroded those ameliorating institutions.”
In other words, Brooks used Katz as a good example of “the second and much more persuasive school of thought on inequality” that rejects the decline in unions, increases in CEO pay, loss of wages, and all the other standard critiques of the left. The only problem? Katz is not that sort of economist. He mentioned the importance of unions four or five times during our ten minute talk, and kept returning to the idea that the demand for new skills is nothing new and nothing specific to America– what’s different is its translation into rampant inequality. He is also a former Clinton administration economist, and so the distortion of his views gave a bipartisan imprimatur to Brooks’ remarks, allowing Brooks to place a wedge the good “Clinton” Democrats from the bad, populist liberals.
I can’t speak of intentions, I don’t know if Brooks misunderstood Katz — who, like me, he spoke to — or distorted him, or just wrote unclearly. But the opinions in that column are not those of Katz. Even the part Brooks directly attributes — the primacy of “skills,” or so-called skills-based technial change — is misleading. As Katz told me (and as others, like Emmanuel Saez, have pointed out), “Those market forces aren’t new, and other countries have had them without the inequality we’ve had.” In other words, France has computers and customer service too, and they’ve not seen the startling increase in inequality that we have.