CNN: The Poor Get Richer 2957

Just chickeny ************************************************************************************************** Rising income inequality has settled comfortably into America's big economic picture as a reliable--and much lamented--megatrend. Starting around the late 1960s, U.S. incomes started to become more disparate. The trend was remarkably steady. Recessions might slow it down or briefly reverse it, but mostly it just marched on.

While such a large tendency has many causes, the chief explanation centered on education and skills. The late 1960s were arguably high summer of the era in which a man with 12 years of schooling could work in a unionized factory or trade and earn a solid middle-clbutt or even upper-middle-clbutt income. Then began the age of the info-based economy in which higher education really started to pay. The "skill premium" began growing dramatically. The college graduate's income started beating the high school graduate's income by a wider margin every year--and income inequality began to swell.

That explanation makes sense, and the data support it. But now it appears just possible--based on the latest research available--that the whole chain of causation is falling apart. Wait before you cheer. .................................................................................................................................................. What could that trend reversal mean? The most obvious explanation seems highly counterintuitive: The skill premium, the extra value of higher education, must have declined after three decades of growing. The Fed researchers didn't pursue that line of thought, but economists Lawrence Mishel and Jared Bernstein at the Economic Policy Insbreastute did, and they found supporting evidence in the new Economic Report of the President, issued within days of the new Fed survey. It cited Census Bureau data showing that the premium had indeed fallen sharply between 2000 and 2004. The real annual earnings of college graduates actually declined 5.2 percent, while those of high school graduates, strangely enough, rose 1.6 percent. **************************************************************************************************

It is instructive to practice the Bush logic evaluating the findings above. It is also an exercise in positive thinking. Here the way it goes:

We got into Iraq because WMD were supposed to be there but the are not. It has been a good thing to do anyway because it is a right thing to do, Saddam is a bad guy + zillion of other reasons.

By the same token, we encouraged the young guys and gals to get mega-loans, acquire useless degrees to earn more. It turns out to be wrong. It is a good thing to do anyway because it closes the gap between rich and poor which is the right thing + zillions of other reasons.

Practice, gentlemen, practice ... It improves mood and boost moral. Which is the right things.