Nobel-Prize-winning economist Sir Angus Deaton is deeply concerned about the darkening of American society and the increasing “deaths of despair,” factors that are driving populism and isolationism.
Angus Deaton, 2015, from Wikipedia, Bengt Nyman, CC BY-SA 4.0.
Introduction
Populism, anti-elitism, isolationism, and anti-internationalism are some of the many sentiments driving the political discussions in the lead-up to this year’s US presidential elections. Many analysts and pundits are offering their thoughts on these issues. One of the most interesting is Nobel-Prize-winning economist Sir Angus Deaton.
Angus Deaton is a British-American economist who received the 2015 Nobel Prize for Economics for his fundamental contributions to the theory of consumption, savings, and the measurement of economic well-being. But he is perhaps more well known for his best-selling book, “Deaths of Despair and the Future of Capitalism,” written with his wife and distinguished economist Anne Case.
Deaton’s new book, “Economics in America: An Immigrant Economist Explores the Land of Inequality,” is a quasi-autobiographical reflection of an immigrant, a naturalized US citizen, and an academic economist on the state of inequality and the role of economists in the US. This book is a collection of many short pieces, some of which were previously published and have since been updated.
Coming to America
When Deaton arrived in the US in 1983, he was “in awe of the accomplishments of American scholars and writers, and the wealth of opportunities that America promised, especially to immigrants.” But he was also struck by a “dark side.”
“Inequalities of all kinds are wider in America than almost anywhere else on earth.”
And he believes that
“The United States has become a darker society since I arrived in 1983.”
He is shocked by American society’s indifference to poverty and inequality. Not respecting all members of society ultimately backfires.
Deaton sees a positive side to inequality in that innovators, notably in the technology field, can become very rich thanks to the wonderful innovations that they bring to humankind. But regrettably, they can use that wealth to hijack the political system and cut off opportunities for others:
- He claims that Big Pharma has three lobbyists for every Congress member!
- He is shocked by the lack of a safety net for the not-so-fortunate and the harsh politics that accompany it.
- The “corruption of the American economy and its politics, a corruption that threatens our democracy” disturbs him.
Health in America
Deaton is most concerned with America’s health and its extraordinarily expensive and inefficient health system in this book. The country spends almost twice the share of GDP on health as most other advanced countries, yet its average life expectancy is the lowest of the advanced countries. Perhaps the most glaring inequality in America is the gap in life expectancy between those with a four-year university degree and those without.
Life expectancy among those with a four-year university degree is like that of Japan or Switzerland. However, the life expectancy of those Americans without such a degree is much lower. It has declined since 2010 and took a huge hit during the Covid pandemic. This is no small matter – about two-thirds of Americans do not have a college degree.
Deaths of Despair
This falling life expectancy is mainly due to what Deaton calls the “deaths of despair,” with three rapidly rising and self-inflicted causes.
- First is the horrible opioid crisis, which started in the mid-90s. While the nefarious role of Big Pharma in the opioid crisis is now being addressed, the tragedy still lingers on.
- Another factor has been the rise in alcoholic liver disease. These two factors only became much worse during the Covid pandemic.
- The third cause of deaths of despair is a rise in suicide rates. Again, while suicide rates are falling in most of the world’s traditional high-suicide countries, suicide has been rising in America.
What are the causes of these deaths of despair? Deaton speculates that globalisation, technological change, and immigration have contributed to a breakdown of traditional communities. Lower-educated Americans are becoming disenfranchised without the protection of social safety nets. European countries have been exposed to the same forces, but social safety nets have better protected their populations.
A System that Only Delivers for the Elite
In sum, the two-thirds of the American population who do not have a four-year college degree have much to feel miserable about. This gives every reason to be swayed by populist politics, which proposes simple solutions to their complex problems and situations. America’s democracy and its leading role in international relations are inevitably threatened by a system that only delivers for the elite.
Bring Back the Draft
One of the intriguing sections of Deaton’s book is his argument in favour of a military draft (conscription). He argues that Milton Friedman persuaded President Richard Nixon to abolish the draft and have a voluntary, professional military. He believes that today, 90 percent of the economics profession would still say that abolition of the draft was a good idea. But he argues that the draft was part of the social contract between citizens and the state, a part of being an American citizen.
Deaton notes that today, military officers are typically graduates from West Point or elsewhere, whereas most of the enlisted men and women are not graduates. If the US were ever faced with the challenge of defending its American democracy, it could be a tricky situation. Enlisted men and women who feel mistreated by democracy may not feel loyal and committed to the cause of defending democracy. He also believes that America might be more reluctant to undertake overseas military interventions if more children of Congress members were in the military.
The State of Economics
Deaton reserves the final sections of his book to critique the role of economists. He believes that economists have become too enamoured of their belief in the role of markets and too narrow-minded. This means that economists
- Take efficiency much more seriously than equity,
- Show bias toward capital and against labour, and
- Often ignore power differentials.
Thus, economists bear some responsibility for America’s precarious state. They recommended financial market deregulation, which was behind financial crises. Banks were bailed out, while some citizens suffered enormously. They promoted globalisation and automation, which not only eliminated jobs but also destroyed whole communities. They argue for the positive economic impact of immigration while ignoring the impact on local communities and cultural identity.
Further, economists have argued that the winners of globalisation and technological change could compensate the losers, so everyone would be better off. But American politics has meant that such compensation was never forthcoming. Deaton believes that economists would do well to listen to philosophers, historians, and sociologists. And he decries those economists who will say anything for a nice pay cheque!
Conclusion
America’s fractious and volatile politics is potentially relevant to all our lives. This means a deep knowledge of the American economy, society, and politics can help us understand and prepare for developments and inevitable surprises in American politics. In this context, Angus Deaton’s explorations of the “land of inequality” make an important contribution.
