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The Fantasy Economy: Neoliberalism, Inequality, and the Education Reform Movement
Wage stagnation, growing inequality, and even poverty itself have resulted from decades of neoliberal decision making, not the education system, writes Neil Kraus in his urgent call to action, The Fantasy Economy. Kraus claims the idea that both the education system and labor force are chronically deficient was aggressively and incorrectly promoted starting in the Reagan era, when corporate interests and education reformers emphasized education as the exclusive mechanism providing the citizenry with economic opportunity. However, as this critical book reveals, that is a misleading articulation of the economy and education system rooted in the economic self-interests of corporations and the wealthy.The Fantasy Economy challenges the basic assumptions of the education reform movement of the last few decades. Kraus insists that education cannot control the labor market and unreliable corporate narratives fuel this misinformation. Moreover, misguided public policies, such as accountability and school choice, along with an emphasis on workforce development and STEM over broad-based liberal arts education, have only produced greater inequality.Ultimately, The Fantasy Economy argues that education should be understood as a social necessity, not an engine of the neoliberal agenda. Kraus’ book advocates for a change in conventional thinking about economic opportunity and the purpose of education in a democracy.
- GenresNonfictionEconomics
292 pages, Kindle Edition
First published October 6, 2023
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July 2, 2024
The fullest, most recent explication I've seen of the "education is the path out of poverty/into the middle class" canard. Millions of people were lifted out of poverty between 1933 and 1943 without improving their educational history one whit: they were given jobs that paid a decent wage. Wages and income are political decisions, but by pretending that "the economy is becoming more knowledge-based and the way to get a better life is to have more --or the right - education" is the neoliberal way of pretending that political economy is fixed - that it is the job of individuals to overcome through costly individual education the barriers to a decent life imposed by political decisions.
In this respect, it's a good update of "Why Good People Can't Get Jobs," as well as a very specific receipt-bringing of the people who carry the water (chiefly Tony Carnavale) for the completely false notion that more and more people are going to need more and more education: in fact, about 30% of jobs require anything more than a high school diploma, and that number has not changed in recent years. Falling wages are not the result of a skills gap, but of a wage gap between now and 1972.
"In data provided by public agencies and much scholarly work, I discovered the misleading nature of so much of the conventional wisdom regarding the economy and education system. In sum, I learned that the country was far better educated than ever before but that the labor market was dominated by low-wage, low-education jobs. The labor market was not becoming more specialized or dominated by technical fields, and wages for most workers, including many working in jobs requiring bachelor's and advanced degrees, had stagnated for decades. Despite these realities -- or because of them - neoliberalism had deliberately assigned the education system the impossible task of providing economic opportunity for all. But because education cannot create jobs for graduates or set wage rates, public opposition or indifference to education was easy to mobilize. This book grew out of my frustration that so many education reforms are being led by institutions and individuals who advance a version of the economy and education system that is, at it score, an interest group campaign to continuously frame the debate about economic opportunity and equality as solely a discussion about education." (xiv).
While job requirements were falling - as manufacturing and unions declined -- "the real economy became dominated by low-education, low-wage jobs, even as educational attainment rates reached all-time highs" (2). While wages stagnated, the public was told the opposite: that education was failing. The fantasy economy is "rooted in the economic self-interests of corporations and the wealthy . . . reflecting its roots in human capital theory, the fantasy economy defines education as the exclusive mechanism providing the citizenry with economic opportunity and intentionally reduces the role of the state in mitigating the effects of the market." (2).
"Tens of millions of individuals working in low-wage jobs requiring a high school degree or no formal credential are told that because of an increasingly complex labor market, more education and training are the only ticket to economic stability. Indexing the minimum wage to inflation, limiting the use of contract workers or noncompete agreements, facilitating workers' ability to join a labor union, or simply pressuring employers to raise the wages of workers are noticeably not part of this discussion" (3-4).
Advocating for better education/more education appears selfless on the part of corporate interests, while the continuous growth of STEM programs to the drumbeat of a skills gap is "driven by firms' desire to keep labor costs down as by the desire for expanding markets for educational products and services and by the high incomes earned by many education reformers" (5).
AND these "lopsided political dynamics" lead to a situation where" the individual benefits of formal schooling have also been exaggerated, leading to disappointment and a suspicion of formal schooling when its promises are not realized . .. Higher levels of schooling cannot guarantee access to better employment and higher earnings; they may be necessary, but they are often not sufficient" (10, quoting Grubb and Lazerson 2004, 155-156")
In 2008, BLS data indicated that 31% of all jobs required postsecondary education, which would increase very modestly over a decade; Anthony Carnevale produced "alternative data held that 59% of jobs required at least some college education in 2008 and that in 2018 2/3 will require at least some college or better.
Argues the demographic cliff is a myth: "The US Department of Education's projections published in the years before Grawe's book (2018) did not project a coming collapse in either future high school graduates or higher education enrollments through 2026 (14). Further evidence lost in a save attempt around page 119.
Reformers' advocacy for college completion and post-high-school education is "politically astute, as it softens potential opposition to reformers' less popular priorities, including online education and accountability . . [reform movement] frames its overriding purpose as concern for the disadvantaged even as it rarely discusses the decidedly unpopular tenets of a neoliberal economic order that has left most workers - particularly the disadvantaged - behind." (21).
"The combined number of bachelor's and advanced degree holders substantially outnumber jobs typically requiring these higher levels of education." No education reform can alter wage stagnation. If everyone with some college were magically granted an associates or bachelor's degree, "what jobs would be available for them? What would those jobs pay? . . . These are question that the fantasy economy campaign does not even want to ask, let alone try to answer" (28).
1990 National Center on Education and the Economy report that found employers reported no skills gap, and that with some exceptions" the education and skill levels of American workers roughly match the demands of their jobs" (48).
2010 BLS data showed 70% of jobs required only a high school degree (50)
Pattern of reformers' refusal to acknowledge impact of poverty on school performance and to blame teachers (64).
NAEP data shows increases in reading and math for 9, 13, and 17 year olds from 1980-2012, and scores from 1970s through 2020 in math and reading show narrowing of achievement gaps between whites and Blacks and between whites and Hispanics at 9, 13, and 17 (67). Ravitch argues that difficulty and complexity of curriculum today is higher than decades ago (kindergarten now what first grade used to be) (68). Comparison of US with other countries is hard b/c our students are so much more likely to live in poverty; also, science and math performance is extremely unequal in the US" (69).
"Analyzing PISA data form 2005, David Berliner calculated that the US had 25 percent of the world's highest-performing students, the greatest share of any nation in the world, followed by Japan, with 13 percent, and Germany and the UIK, both with 8 percent" (71).
Claims of major reports citing a skills gap were refuted in 1991 and 1992, arguing that "at most, about 30 percent of the future labor force will need a college degree" (72).
US graduates 2-3 x as many STEM folks as jobs available in those fields (80). In 2014, 74% of those with a bachelor's degree in a STEM field were not employed in STEM occupations. Only about 1/3 of tech workers have STEM degrees, and most are "in jobs that don't appear to require bachelors-level technology degrees." B/c of oversupply of PhDs, NIH developed an $11M program to develop alternative career paths for them. (81).
86 - manufacturers citing need for workers but also that they expected wages to grow only .5%.
"We must expand the definition of conflicts of interest beyond the sale of products and services to include the terms of debate established by the elite-led education reform movement, which focuses exclusively on education's role in economic opportunity" (118).
"Because of the low wages associated with the large number of low-education jobs in our economy, most politicians would not dare to publicly state that one would not need post-high school education to obtain a good job . . . official data continued to show a very different labor market than alternative data and also showed consistently high rates of underemployment among bachelor's degree holders (Federal Reserve Bank of New York 2022a). In the end, however, it would be very difficult to exercise any political pressure on higher education by relying on this type of official labor market data" (119).
"To go beyond the fantasy economy, then, it is necessary to begin from the assumption that policy makers and business practices - not the education system - determine job opportunities and wage levels" (184).
"In the 1960s, corporate elites became increasingly concerned over the direction of both higher education and K-12 schooling. Schoolteachers went on strike in many cities, and college campuses became important sources of political protest movements, development that led economic elites to believe that the trajectory of both K-12 and higher ed needed to be changed." They channeled this giving through foundations rather than directly to obscure their involvement (185).
The Education Trust positioned education and "saving children" (using a photo of Baby Jessica in a well) while acknowledging "the existence of racism and elvat[ing] the concept of data in the education reform movement, thereby making the word 'data' ultimately more important than data itself" (188) - he's laugh out loud funny at moments, in a bleak way.
"The higher education establishment still implicitly accepts the proposition that it can fix inequality when it cannot" (193).
In CA, "Successive state government s learned that they could reduce public funding without a severe public backlash, but there was more likely to be public opposition if they sanctioned the tuition increases necessary for institutions to make up the shortfall" (197). The next step is a rhetoric that colleges must prepare students to be "flexible," code for - somehow able to overcome extreme inequality and precarity (208).
"Students and their families experience underemployment and low wages firsthand and therefore correctly see higher education as the crapshoot that it is for many, especially those without the social and family networks that can facilitate obtaining good jobs. This economic anxiety hangs over every aspect of the student experience and undoubtedly affects educational performance, the focus of Arum and Roska's extraordinarily influential book. And because the interest group-driven claims of a knowledge economy and an insufficiently skilled college-educated workforce are rarely questioned, higher education is politically powerless to fend off major reform proposals -- all of which are rooted in budgetary austerity - including higher education accountability" (210).
In this respect, it's a good update of "Why Good People Can't Get Jobs," as well as a very specific receipt-bringing of the people who carry the water (chiefly Tony Carnavale) for the completely false notion that more and more people are going to need more and more education: in fact, about 30% of jobs require anything more than a high school diploma, and that number has not changed in recent years. Falling wages are not the result of a skills gap, but of a wage gap between now and 1972.
"In data provided by public agencies and much scholarly work, I discovered the misleading nature of so much of the conventional wisdom regarding the economy and education system. In sum, I learned that the country was far better educated than ever before but that the labor market was dominated by low-wage, low-education jobs. The labor market was not becoming more specialized or dominated by technical fields, and wages for most workers, including many working in jobs requiring bachelor's and advanced degrees, had stagnated for decades. Despite these realities -- or because of them - neoliberalism had deliberately assigned the education system the impossible task of providing economic opportunity for all. But because education cannot create jobs for graduates or set wage rates, public opposition or indifference to education was easy to mobilize. This book grew out of my frustration that so many education reforms are being led by institutions and individuals who advance a version of the economy and education system that is, at it score, an interest group campaign to continuously frame the debate about economic opportunity and equality as solely a discussion about education." (xiv).
While job requirements were falling - as manufacturing and unions declined -- "the real economy became dominated by low-education, low-wage jobs, even as educational attainment rates reached all-time highs" (2). While wages stagnated, the public was told the opposite: that education was failing. The fantasy economy is "rooted in the economic self-interests of corporations and the wealthy . . . reflecting its roots in human capital theory, the fantasy economy defines education as the exclusive mechanism providing the citizenry with economic opportunity and intentionally reduces the role of the state in mitigating the effects of the market." (2).
"Tens of millions of individuals working in low-wage jobs requiring a high school degree or no formal credential are told that because of an increasingly complex labor market, more education and training are the only ticket to economic stability. Indexing the minimum wage to inflation, limiting the use of contract workers or noncompete agreements, facilitating workers' ability to join a labor union, or simply pressuring employers to raise the wages of workers are noticeably not part of this discussion" (3-4).
Advocating for better education/more education appears selfless on the part of corporate interests, while the continuous growth of STEM programs to the drumbeat of a skills gap is "driven by firms' desire to keep labor costs down as by the desire for expanding markets for educational products and services and by the high incomes earned by many education reformers" (5).
AND these "lopsided political dynamics" lead to a situation where" the individual benefits of formal schooling have also been exaggerated, leading to disappointment and a suspicion of formal schooling when its promises are not realized . .. Higher levels of schooling cannot guarantee access to better employment and higher earnings; they may be necessary, but they are often not sufficient" (10, quoting Grubb and Lazerson 2004, 155-156")
In 2008, BLS data indicated that 31% of all jobs required postsecondary education, which would increase very modestly over a decade; Anthony Carnevale produced "alternative data held that 59% of jobs required at least some college education in 2008 and that in 2018 2/3 will require at least some college or better.
Argues the demographic cliff is a myth: "The US Department of Education's projections published in the years before Grawe's book (2018) did not project a coming collapse in either future high school graduates or higher education enrollments through 2026 (14). Further evidence lost in a save attempt around page 119.
Reformers' advocacy for college completion and post-high-school education is "politically astute, as it softens potential opposition to reformers' less popular priorities, including online education and accountability . . [reform movement] frames its overriding purpose as concern for the disadvantaged even as it rarely discusses the decidedly unpopular tenets of a neoliberal economic order that has left most workers - particularly the disadvantaged - behind." (21).
"The combined number of bachelor's and advanced degree holders substantially outnumber jobs typically requiring these higher levels of education." No education reform can alter wage stagnation. If everyone with some college were magically granted an associates or bachelor's degree, "what jobs would be available for them? What would those jobs pay? . . . These are question that the fantasy economy campaign does not even want to ask, let alone try to answer" (28).
1990 National Center on Education and the Economy report that found employers reported no skills gap, and that with some exceptions" the education and skill levels of American workers roughly match the demands of their jobs" (48).
2010 BLS data showed 70% of jobs required only a high school degree (50)
Pattern of reformers' refusal to acknowledge impact of poverty on school performance and to blame teachers (64).
NAEP data shows increases in reading and math for 9, 13, and 17 year olds from 1980-2012, and scores from 1970s through 2020 in math and reading show narrowing of achievement gaps between whites and Blacks and between whites and Hispanics at 9, 13, and 17 (67). Ravitch argues that difficulty and complexity of curriculum today is higher than decades ago (kindergarten now what first grade used to be) (68). Comparison of US with other countries is hard b/c our students are so much more likely to live in poverty; also, science and math performance is extremely unequal in the US" (69).
"Analyzing PISA data form 2005, David Berliner calculated that the US had 25 percent of the world's highest-performing students, the greatest share of any nation in the world, followed by Japan, with 13 percent, and Germany and the UIK, both with 8 percent" (71).
Claims of major reports citing a skills gap were refuted in 1991 and 1992, arguing that "at most, about 30 percent of the future labor force will need a college degree" (72).
US graduates 2-3 x as many STEM folks as jobs available in those fields (80). In 2014, 74% of those with a bachelor's degree in a STEM field were not employed in STEM occupations. Only about 1/3 of tech workers have STEM degrees, and most are "in jobs that don't appear to require bachelors-level technology degrees." B/c of oversupply of PhDs, NIH developed an $11M program to develop alternative career paths for them. (81).
86 - manufacturers citing need for workers but also that they expected wages to grow only .5%.
"We must expand the definition of conflicts of interest beyond the sale of products and services to include the terms of debate established by the elite-led education reform movement, which focuses exclusively on education's role in economic opportunity" (118).
"Because of the low wages associated with the large number of low-education jobs in our economy, most politicians would not dare to publicly state that one would not need post-high school education to obtain a good job . . . official data continued to show a very different labor market than alternative data and also showed consistently high rates of underemployment among bachelor's degree holders (Federal Reserve Bank of New York 2022a). In the end, however, it would be very difficult to exercise any political pressure on higher education by relying on this type of official labor market data" (119).
"To go beyond the fantasy economy, then, it is necessary to begin from the assumption that policy makers and business practices - not the education system - determine job opportunities and wage levels" (184).
"In the 1960s, corporate elites became increasingly concerned over the direction of both higher education and K-12 schooling. Schoolteachers went on strike in many cities, and college campuses became important sources of political protest movements, development that led economic elites to believe that the trajectory of both K-12 and higher ed needed to be changed." They channeled this giving through foundations rather than directly to obscure their involvement (185).
The Education Trust positioned education and "saving children" (using a photo of Baby Jessica in a well) while acknowledging "the existence of racism and elvat[ing] the concept of data in the education reform movement, thereby making the word 'data' ultimately more important than data itself" (188) - he's laugh out loud funny at moments, in a bleak way.
"The higher education establishment still implicitly accepts the proposition that it can fix inequality when it cannot" (193).
In CA, "Successive state government s learned that they could reduce public funding without a severe public backlash, but there was more likely to be public opposition if they sanctioned the tuition increases necessary for institutions to make up the shortfall" (197). The next step is a rhetoric that colleges must prepare students to be "flexible," code for - somehow able to overcome extreme inequality and precarity (208).
"Students and their families experience underemployment and low wages firsthand and therefore correctly see higher education as the crapshoot that it is for many, especially those without the social and family networks that can facilitate obtaining good jobs. This economic anxiety hangs over every aspect of the student experience and undoubtedly affects educational performance, the focus of Arum and Roska's extraordinarily influential book. And because the interest group-driven claims of a knowledge economy and an insufficiently skilled college-educated workforce are rarely questioned, higher education is politically powerless to fend off major reform proposals -- all of which are rooted in budgetary austerity - including higher education accountability" (210).
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