August 14, 2005

Educational mobility

By: Lea Oksman

An Economist opinion editorial from July 14th (“The Missing Rung In The Ladder”) lamented the decrease in social mobility in the United States, and suggests that the solution is for the government to pour resources and legislative reforms into improving the public school system. This, the Economist argues, is the only chance for lower-income Americans to compete with wealthy children whose parents are willing to invest in fancy college degrees. The underlying assumption is that America’s growing class separation and decreasing social mobility are due to a market failure, to be compensated for by the government. But is that really the solution?

The greatest obstacle to social mobility is the gap between income growth rates among the various economic classes. The Economist author points out that over the last several decades “the real income of the poorest fifth of American households rose by 6.4%, while that of the top fifth rose by 70% (and of the top 1% by 184%).” The higher a person’s starting capital, the faster it will grow, enabling him or her to transition into higher-investment, higher-returns segments of the economy. In addition, the costs of entering a higher-grade business grow at a rate that follows income growth in the higher classes. Thus gaps in income growth rate generate bigger gaps in income growth rate–and the more difficult it is for those near the bottom of the ladder to catch up and move into the higher classes.

But although capitalism produces the income gaps that stifle social mobility, it also creates hope for those in the lower economic stratum. Financial capital is not the only way to produce more capital. The other way is entering–or creating–new industries, where competition is still low or non-existent. The diversification of industry constantly creates opportunities even for those who cannot grow their money fast.

Let us return momentarily to the issue of education. We often hear that, if only public schools were better and less corrupt, they would increase the earning potential, and hence the social mobility, of their students. However, the more qualified students come out of public schools, the more selective colleges become. For a quick example, as more students across the nation aspire to go to college, admissions rates at all the Ivy League universities keep dropping; they are significantly lower today than they were in the 1990s, and the trend is decidedly downward. Similarly, the more people go to college, the less rare, and hence less valuable, college degrees become, and the more employers discriminate based on the schools from which job applicants get their degrees.

This means that the market value of education is a function of its exclusivity more than its quality. A stint at Harvard or Yale brings credibility and connections to powerful alumni; but most importantly, it brings distinction. Such distinction is naturally costly, both in tuition payments and in the money and time that must be invested from early on to enable a student to compete for acceptance at a top school.

Thus the children of wealthy parents will always have an advantage in the competition for employment, correlated to the gap in income growth rates between economic classes. Free public education, which by its very nature is non-exclusive, will never bridge the gap between the poor and the increasingly rich–even assuming that inefficiency and corruption could be eliminated by a wave of the No Child Left Behind wand.

There is, however, a viable alternative to expensive education. In the same way that diversification of industry can open the door to social mobility for those with little starting capital, diversification of schools can help those who cannot afford to pay for educational prestige. But diversity in education is not merely analogous to diversity in employment options; it directly leads to it. Receiving a non-standard education can help one start a non-standard line of business, due to unique insights and experience gained.

In contrast to the public school system, with its relatively uniform educational methods and non-selective admission, private schools can expose students to a wide array of educational methods and resources. Lower-income students who attend private school will emerge better suited to seek out a unique economic niche, and thus to rise above their background.

Free public schools do not give value to education and do not allow the poor to adjust to a diverse economy; thus, even when functioning well, they cannot improve social mobility in the face of growing income gaps. At the same time, they force private schools to keep prices high by cornering the low-income student market, thus making diversity in education less available to those who need it the most. Instead of solving the problem of decreased mobility, as the Economist suggests, public education only exacerbates it.

If we are to live in a just and prosperous society where a hard-working person can carve out a better life than his or her parents, we must be freed from the yoke of the public education monopoly.

Lea Oksman is a senior at Yale and a summer intern at the Capital Research Center in Washington, D.C.