The Middle is Merging with the Bottom

Good article by Raghuram Rajan in the May/June 2012 issue of Foreign Affairs - - The True Lessons of the Recession: The West Can't Borrow and Spend Its Way to Recovery.  One of our key problems - -

"As Americans' skills have lagged, the gap between the wages of the well educated and the wages of the moderately educated has grown even further.  Since the early 1980s, the difference between the incomes of the top ten percent of earners (who typically hold university degrees) and those of the middle (most of whom have only a high school diploma) has grown steadily.  By contrast, the difference between the median incomes and incomes of the bottom 10 percent has barely budged.  The top is running away from the middle, and the middle is merging with the bottom."

We have picked all our low-hanging economic fruit (as economist Tyler Cowen has observed) - - are current economic troubles will be difficult to correct.  The long-term solution is not on the demand-supply curve - - it is not simply the result of inadequate demand or distorted supply. 

The problem and solution circles back to the same place - - the classroom.