27.3.16

AUGMENT THE SUPPLY.

Ordinarily, the presence of economic profit is an incentive for people to compete it away.  Such profits also provide incentives for the possessors thereof to prevent that competition from taking place.  In "Make Elites Compete," Jonathan Rothwell of Brookings suggests the possessors thereof have succeeded in forestalling that competition.
Three of the standard explanations—capital shares, skills, and technology—are myths. The real cause of elite inequality is the lack of open access and market competition in elite investment and labor markets. To bring the elite down to size, we need to make them compete.
A data-rich elaboration follows. Then comes the rent-seeking.
Workers in occupations with no higher educational requirements see their wages held down by millions of other Americans denied a high-quality education and competing for relatively precious vacancies.

For lawyers, doctors, and dentists— three of the most over-represented occupations in the top 1 percent—state-level lobbying from professional associations has blocked efforts to expand the supply of qualified workers who could do many of the “professional” job tasks for less pay.
For future research: to what extent are institutions of higher education complicit in denying Americans a high-quality education by opting not to compete for the stronger students who might not qualify for the thick envelope from the highly regarded institutions that limit their vacancies so as to make them more precious?

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