Plutonomics

I’m a month late on this, but the September Atlantic has a cover story on the disappearing middle-class. If economics refers to household management, then it does seem anachronistic to use the word to describe wealth in America. The article’s proposed use of plutonomics seems useful to me, for surely the major part of our current mess results from the divorce of wealth and productivity. Beware “creative financial innovation,” and in this regard I’m quite skeptical about the author’s “solutions.” But I was particularly struck by this (largely because I have a child who has struggled to find good employment post-college, a daughter in college, and another one about to enter):

Without doubt, it is vastly better to have a college degree than to lack one. Indeed, on a relative basis, the return on a four-year degree is near its historic high. But that’s largely because the prospects facing people without a college degree have been flat or falling. Throughout the aughts, incomes for college graduates barely budged. In a decade defined by setbacks, perhaps that should occasion a sort of wan celebration. “College graduates aren’t doing badly,” says Timothy Smeeding, an economist at the University of Wisconsin and an expert on inequality. But “all the action in earnings is above the B.A. level.”

America’s classes are separating and changing. A tiny elite continues to float up and away from everyone else. Below it, suspended, sits what might be thought of as the professional middle class—unexceptional college graduates for whom the arrow of fortune points mostly sideways, and an upper tier of college graduates and postgraduates for whom it points progressively upward, but not spectacularly so. The professional middle class has grown anxious since the crash, and not without reason. Yet these anxieties should not distract us from a second, more important, cleavage in American society—the one between college graduates and everyone else.