So long as we're on the topic of University of Chicago economists, National Public Radio has an interview with University of Chicago economist Raghu Rajan, running under the headline "Social Inequality Helped Stoke Financial Crisis." Professor Rajan is promoting his new book. On the basis of the NPR piece, the argument is a bit of a moving target. It's hard to distill what's NPR and what is Professor Rajan, but the introduction to the piece suggests the idea that the financial crisis wasn't caused simply by "inadequate regulation" or "greedy bankers" but by "social inequality."
It turns out, though, that by social inequality what the NPR-Rajan combine really means is "disparity in income" or "income inequality." And that, on further examination, even beyond that, they are concerned about educational inequality. "The supply of education is not keeping pace with demand," Professor Rajan says. "The people in the working class need a better education."
If improving education for "the working class" (a term whose use as a description of students or prospective students doesn't exactly reduce social inequality) would have averted the financial crisis, President George W. Bush certainly did his best, presiding over a 63% increase in federal education spending. Expanded educational opportunity and equal access to high-quality education are great, but there are limits to how much that will reduce income inequality or the impact of a financial crisis. And sometimes the income inequality that is being reduced is that of the unionized teachers, not that of the students.