"The End of the American Dream." Really? Don't you think that's a little over the top? After all, a higher percentage of Americans are in college and getting degrees than ever before. In 2008, 29.4% of Americans 25+ had at least a bachelor's degree. In 1967 (I choose this year purposefully) a mere 10% had at least a bachelor's degree. I wouldn't make this argument, but shouldn't someone concerned with rising inequality condemn the increase in college educated Americans?

From Part I: The question conspicuously missing from your first post is "Why are college education costs rising?" It's all well and good to want something to cost less, but without analyzing why, you might as well be yelling in a vacuum.

You took plenty of economics courses at UW, so I know you know the main reasons the cost of a good rises- rising demand or shrinking supply. In the U.S., the problem is clearly rising demand.

The data I cited above is from the Current Population Survey. As more Americans demand a college education, the cost is necessarily going to rise. And it's not just Americans who want to come to U.S. colleges. Students from all over the world come to the U.S. to get an education, because they know that U.S. schools are basically unrivaled. Rising demand for college education isn't really a sign that the American Dream is over. I'd say it's just getting going.

The above is relatively politics free, but so let me take a moment to inject some libertarian sense into the debate. While I read these two posts, I couldn't help but think "what's the answer?" The typical answer from liberals is government intervention. I don't want to put words in your mouth, but if government is the answer, then what course should government pursue? Give more money to students to help cover tuition costs? This seems to be the Obama administration's plan (to be fair, it's pretty much every administration's plan). The problem is that government money is precisely the problem. (http://www.cato.org/pub_display.php?pub_id=9431). Subsidizing higher ed costs incentivizes colleges to keep raising tuition- and why not? The government will keep paying for the increase.

Lastly- Inequality. The difference between the top 20 quintile and bottom quintile has indeed increased since the 60s. But it doesn't follow that this is necessarily a bad thing. One reason income inequality has increased is immigration. I love immigration. I think America should let in just about everyone who wants to come. But a side effect of immigration is that people who are relatively poorer than most Americans will come to the U.S., by definition increasing income inequality- but not for any sinister reason. What's important is that absolute standards of living rise, and for immigrants, coming to the U.S. absolutely does this.

Another reason for the increase in inequality is from fundamental shifts in the U.S. economy. We moved from a manufacturing economy where jobs were pretty homogeneous to a services economy where jobs are often specialized. Specialization - as Smith and Ricardo taught us - is good for wealth creation. Liberals characterize this differentiation as the result of shifts in governmental policies, but really, it's just the natural result of a dynamic economy. If you're really interested, check out Brink Lindsey's "Nostalgianomics." (http://www.cato.org/pub_display.php?pub_id=9941)

The American Dream isn't over. As long as the government stays out of the way of the market, it's just getting started.

Data on education: (http://www.census.gov/population/www/socdemo/ed...)

Hi Corey,

Thanks for reading and responding! And sorry it has taken so long for me to respond to your thoughts.

In Response to you thoughts on the rising costs of a higher education:

While I do not think the American Dream is over, I do think it is being severely threatened. You are right that more and more American's than ever before (as well as people from all over the world) are getting college degree's . As the economy has become a global economy, a Bachelors degree has become more of a necessary signal the labor market that a person is employable. This,as you mention, is increasing the demand for education and dramatically increasing costs.

Unfortunately we can not treat Education like a normal good and allow supply and demand alone to dictate its cost. If an Ipod becomes extremely expensive, so only the wealthy few can buy one, it is not a socially important concern. However, if the demand for education increases its cost so only those from the upper-middle and upper classes can afford it for their children, society itself is facing a problem. This will, and is, destroying the American believe of a meritocracy (aka the American Dream). Access to a higher education needs to be based on merit, not parental income.

In response to your thoughts on Inequality"

The United States has been a nation of immigrants from its very beginning and the dramatic rise in inequality since the 1980's can not be largely attributed to immigration. The other reason for the rise in inequality that you mention, the changing from a manufacturing to a service economy, is further reason for us to be concerned about the cost of education.

If we want to sustain the middle class, which is what truly makes America great, we need to ensure that every person has the chance to get into, or stay in, the middle class. And as you mention, manufacturing jobs are fleeing America to places with cheaper labor like China, Mexico, and India, making specialized service jobs more crucial to the American economy. Specialized service jobs however, almost always demand a fairly high level of education.

In summation, it is a meritocracy that makes America the land of opportunities and that makes our economy so dynamic and powerful. It is therefore crucial to find a way to contain costs and make education affordable for all those qualified.

David Leonhardt and Geraldine Fabrikant wrote a piece for todays New York Times called, 'After a 30-Year Run, Rise of the Super Rich Hits a Sobering Wall'. It is a fascinating piece on how drastic income inequality has become over the past 30-years - with 2007 being the year with the most unequal income distribution since the IRS has kept data (1913).

Check out the story at: http://www.nytimes.com/2009/08/21/business/econ...