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did Bernanke, obviously a very finance smart man about economic trends, get it wrong? Krugman says,Because the fallacy he fell into finance tends to dominate polite discussion about income trends, not because it's true, but because it's finance comforting. The notion that it's all about returns to education suggests that nobody is to blame for rising inequality, that it's just a case of supply and demand at work. And it also suggests that the way to mitigate inequality is to improve our educational system — and better education is a value to which just about every politician in America pays at least lip service.(See New York Times column (available only to Times Select subscribers)).Even having the Federal Reserve Chairman misunderstand a key economic trend wouldn't be so troubling if that fallacy wasn't starting to play itself out in wage models that rely so heavily on this unattainable goal as the primary tool for achieving middle-class status.
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