New book by Nobel Prize-winning economist Angus Deaton ‘feels like an existential crisis’ writing Fast business“, as he questions his own legacy – and wonders whether policies prescribed by economists over the years have unwittingly contributed to inequality” in America.
Angus Deaton: People with four-year college degrees do pretty well. But if you talk to people who don’t have a college degree, horrible things happen to them… The opportunities are getting bigger and bigger, but the safety net is getting farther and farther away. . . I think this goes much deeper than income inequality: people without a bachelor’s degree are like an underclass. They are useless…
Fast business: Why was Europe able to avoid so many increases in inequality and “deaths of despair” and not the United States?
Deaton: Anne (Case, my wife) and I wrestled with this in our book Deaths of despair. One reason is that we have no safety net here… The other story is that we have a hideous healthcare system… we spend (almost) 20% of GDP. No other country spends so much. This money comes from other things we could have, like a safety net and a better education system. And that doesn’t amount to much, except that health care providers are doing very well: hospitals, doctors, pharmaceutical companies, device manufacturers. Not only is it expensive, but we finance it in a really weird way, which is that for most people who aren’t old enough to qualify for Medicare, they get their health insurance through intermediary of their employer…
Fast business : The theme of your new book seems to be a kind of existential crisis for you as an economist. To what extent are economists responsible for some of these problems?
Deaton: (…) I think there are general things that we haven’t done very well. We have given in a little too much to the Chicago libertarian view that markets could do anything. I’m not trying to say I was right and everyone else was wrong. I was with the crowd. I think we thought the financial markets were much safer than in the past and we didn’t have to worry about them as much. It was completely false. I think we were way too enthusiastic about hyperglobalization. We thought people would lose their jobs but they would find other, better jobs, and that really didn’t happen. So there are a lot of things that I think are going to be seriously reconsidered over the next few years.
But he admits that economists lack solutions to economic inequality. “When they say, ‘Well, what would work,’” there’s this uncomfortable silence where you feel like an idiot. Everyone quotes (ancient Italian philosopher and politician Antonio) Gramsci (saying that) the old system is broken but the new system is struggling to come into being. Nobody really knows what it’s going to look like. »
The book is titled The American economy: an immigrant economist explores the land of inequality. But in the interview, Deaton remains optimistic about America, calling it “a very inventive country” and noting that in economics “there’s always hope and there’s always change; Economics is a very open profession and it evolves very quickly. “
