Neil Kraus, "The Fantasy Economy: Neoliberalism, Inequality, and the Education Reform Movement" (Temple UP, 2023)
Apr 14, 2025
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Neil Kraus, a Political Science Professor at the University of Wisconsin, reveals how decades of neoliberal policies have warped perceptions of education and the economy. He argues that the narrative of educational failure masks deeper social issues like wage stagnation and inequality, driven by corporate interests. Kraus critiques standardized testing and the education reform movement, urging a shift in how society views education—not as a neoliberal tool but as a vital social necessity. His insights challenge conventional views on economic opportunity and the true purpose of education.
The podcast critiques the neoliberal framing of education as the sole solution for economic opportunity, which overlooks systemic issues like inequality.
Human capital theory is examined as a flawed justification for income inequality, promoting the misconception that education alone resolves poverty.
The discussion highlights how accountability measures and school choice perpetuate misleading narratives about educational failure while ignoring broader economic factors.
Deep dives
The Fantasy Economy and Educational Misinformation
The concept of the fantasy economy is introduced as a misrepresentation of the relationship between education and workforce outcomes, rooted in corporate self-interest. Since the Reagan era, education has been framed as the sole avenue for economic opportunity, overshadowing other systemic issues like wage stagnation and inequality. This narrow focus has perpetuated the belief that the education system is responsible for market failures and labor shortages, fueling misguided policies. Misusing human capital theory to promote these narratives has distorted public perception, leading to the widespread assumption that only more education can address economic disparities.
The Role of Human Capital Theory
Human capital theory plays a critical role in understanding the fantasy economy by attributing individuals' income directly to their education and skills, overlooking structural economic issues. This theory has been used historically to justify economic inequality by suggesting that education alone can solve poverty-related problems. The podcast discusses how the popular narrative promotes the idea that low-income individuals are primarily at fault for their economic situations due to inadequate education. This mindset has been ingrained within society, shifting focus away from the responsibilities of employers and policymakers in creating equitable job opportunities.
Educational Attainment vs. Perceived School Failure
Despite common beliefs, educational attainment in the U.S. is higher than ever, with more individuals achieving high school diplomas and advanced degrees. The podcast argues against the narrative that schools are failing, emphasizing that many modern educational standards are actually more rigorous than in past decades. It highlights that the increased number of underemployed graduates is not a reflection of poor schooling but rather a mismatch between labor market demands and the number of available jobs. Therefore, the persistent focus on school failure detracts from discussing the broader economic factors contributing to wage disparities.
The Accountability Movement and Its Implications
The educational accountability movement, symbolized by policies such as No Child Left Behind, has intertwined standardized testing with funding, often leading to negative outcomes for students and teachers alike. This movement emerged from a narrative focusing on achievement gaps without considering the systemic inequalities affecting education. The podcast touches on how accountability measures have been politically advantageous, creating a situation where once implemented, these policies are difficult to revoke despite widespread criticism. The ongoing dependence on testing as a measure of success reflects the broader tendency to blame educational institutions for societal issues rather than addressing the root causes of inequality.
The Influence of Charter Schools and Vouchers
The shift towards charter schools and vouchers is framed within the narrative of the fantasy economy, positing that school choice can remedy perceived educational deficiencies. This portion of the discussion reveals how the language surrounding these options has been deliberately crafted to garner public support by portraying them as beneficial reforms. However, the podcast highlights that the effectiveness of such measures is questionable, with many studies suggesting they do not significantly improve educational outcomes. Ultimately, the push for alternatives like charter schools perpetuates the myth that the education system alone is responsible for economic fluctuations, diverting attention from necessary systemic changes.
Kraus claims the idea that both the education system and labor force are chronically deficient was aggressively and incorrectly promoted starting in the Reagan era, when corporate interests and education reformers emphasized education as the exclusive mechanism providing the citizenry with economic opportunity. However, as this critical book reveals, that is a misleading articulation of the economy and education system rooted in the economic self-interests of corporations and the wealthy.
The Fantasy Economy challenges the basic assumptions of the education reform movement of the last few decades. Kraus insists that education cannot control the labor market and unreliable corporate narratives fuel this misinformation. Moreover, misguided public policies, such as accountability and school choice, along with an emphasis on workforce development and STEM over broad-based liberal arts education, have only produced greater inequality.
Ultimately, The Fantasy Economy argues that education should be understood as a social necessity, not an engine of the neoliberal agenda. Kraus' book advocates for a change in conventional thinking about economic opportunity and the purpose of education in a democracy.
Neil Kraus is Professor of Political Science at the University of Wisconsin, River Falls. He is the author of Majoritarian Cities: Policy Making and Inequality in Urban Politics and Race, Neighborhoods, and Community Power: Buffalo Politics, 1934-1997.
