Stuff: The fallacy of education as a fix for income disparities

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“We have to build a better economic engine that actually lifts everybody, not just a few.” More socialist rhetoric from Jacinda Ardern? Au contraire: it’s National leader Christopher Luxon, speaking to Breakfast’s John Campbell last week.

Luxon’s phrasing shows just how sharply the inequality debate has shifted from a decade ago, when the then finance minister Bill English was denying there was any such problem. And Luxon is right.

Since the 1980s, incomes have more than doubled for the richest New Zealanders, while rising by less than one-third for the poorest. We have built a dangerously unbalanced economy.

When Campbell challenged him on solutions, though, the National leader immediately highlighted education, saying we need to “create the rungs of social mobility, so people can lift up and rise out”.

But this is where politicians so often go astray, misled by two false assumptions: that there need be large rungs separating individuals on the ladder of life, and that it is education’s job to lift people from one to another.

Metaphorically, the rungs represent income disparities between different occupations. But while everyone, save perhaps a few hard-core socialists, accepts there will be some disparities – when people choose to work longer hours, for instance – there’s no reason for them to be especially large.

The old line is that massive inequalities are needed to incentivise entrepreneurship and economic growth, but the Scandinavians have much smaller disparities than us and much stronger economies, so that doesn’t hold.

We would do better, in fact, with smaller economic imbalances. We could ensure the well-off contribute their fair share of tax; currently many pay a lower rate than minimum-wage workers, according to Inland Revenue research. We could raise pay rates for cleaners and aged care staff – and help beneficiaries live with dignity – by strengthening the bargaining power of frontline employees, lifting benefits, and making housing affordable for all.

Then, because the rungs would be much closer together and – crucially – the lower ones much higher, people wouldn’t have to desperately scramble upwards to escape poverty, as Luxon’s “rise out” phrase suggests: they’d already be enjoying a decent life. Individuals might still retrain – from cleaners to lawyers, say – but as a means to fulfil their ambitions, not to leave an intolerable situation.

As the British thinker R.H. Tawney once argued, the good society is not necessarily one in which people can rise but one in which they can lead a decent life “whether they rise or not”.

At this point, the fallacy of Luxon’s focus on education becomes clear. For as long as poverty exists, families will naturally use education to escape it. But they shouldn’t have to, because that poverty shouldn’t exist in the first place.

Luxon also points the arrow of causation the wrong way. The most crucial years of a child’s life are the first few; “education” is too late to help there. We also know that socio-economic status, which includes factors like a family’s income, is the single biggest determinant of whether children do well at school or not. The core problem is not that educational failure causes poverty; it’s that poverty causes educational failure.

Schooling, which is principally about helping children discover their abilities and become well-rounded citizens, does have an economic role. It drives innovation and technological breakthroughs, which in turn boost growth. But – and this is the crucial distinction – that is a matter of raising living standards for a whole society, not lifting individuals above others on the ladder of life.

It generates more wealth, but doesn’t solve the problem of how to distribute it. And because poverty is partly relative, a matter of not having what is needed to participate in current society, we’ll always have to grapple with wealth’s distribution.

We need, in short, to decouple education from the idea of escaping individual poverty, by (significantly) decoupling occupational status from income.

To put it another way, schooling should be about occupational or social mobility, not economic mobility. It should ensure that a child’s occupation isn’t constrained by what their parents did. That’s a useful kind of mobility, one that widens horizons and expands opportunities for all.

But education shouldn’t be about ensuring children can earn more than their parents, because their parents should already earn enough for a decent life, whatever their occupation. That kind of mobility – economic mobility, which is what Luxon is actually talking about, even when he says “social mobility” – is relatively unimportant, if the ladder’s rungs are closer together.

In fact, it’s a zero-sum game, socially. If you educate the children of aged-care workers to become lawyers, it just means that someone else’s children have to become aged-care workers. They then suffer the resultant low pay and poor conditions.

Luxon’s rhetorical embrace of egalitarianism, in short, is welcome – but risks winding up in a dead end.