Russ Roberts

Brink Lindsey on the Age of Abundance

EconTalk Episode with Brink Lindsey
Hosted by Russ Roberts
PRINT
Taleb on the Financial Crisis... Klein on The Theory of Moral S...

Brink Lindsey, of the Cato Institute and author of The Age of Abundance: How Prosperity Transformed America's Politics and Culture, talks with EconTalk host Russ Roberts about the interaction between culture and politics and prosperity. Lindsey outlines the nature of prosperity in America in the 20th century, then focuses on the last half of the century when cultural change was perhaps as dramatic as economic change. The conversation concludes with a discussion of Lindsey's essay, "Paul Krugman's Nostalgianomics," a look at the longing for a return of the economic policy of the 1950's. Lindsey argues that the policies that led to a more egalitarian distribution of income in the 1950s had other much less attractive characteristics.

Size: 30.0 MB
Right-click or Option-click, and select "Save Link/Target As MP3.

Readings and Links related to this podcast

Podcast Readings
HIDE READINGS
About this week's guest: About ideas and people mentioned in this podcast:

Highlights

Time
Podcast Highlights
HIDE HIGHLIGHTS
0:36Announcement: Upcoming book club with Dan Klein to discuss The Theory of Moral Sentiments, by Adam Smith. Starting Apr. 6, 2009, with subsequent mid-week bonus podcasts. Schedule will be posted at Book Club Overview page.
2:29Intro. [Recording March 11, 2009.] Age of Abundance, sweeping cultural and economic history of the 20th century. Despite the Great Depression and two world wars, economically a great success. Per capita income multiplied four times, life expectancy grew from low forties into the seventies, precipitous declines of childhood mortality, conquest of epidemic diseases, single family homes, technological marvels from automobiles to TVs. Got rolling in latter decades of 19th century, second industrial revolution, advent of mass production and distribution, economic dynamism which led to cultural dynamism. In the post-war boom in the 1950s--in this country, vast majority of people well insulated from the edge of subsistence, where most people had lived throughout history. Insulated from want and also from nature--previously people had lived mostly as farmers, subject to the vagaries of nature. Now, living in cities, human-created world. Cultural consequences of that prosperity, emergent, Hayekian. We treat the abundance as natural, but it's not natural; we live in a situation that is radically different from how people previously lived. Of course, there must be fundamental cultural changes that go along with it. Counterpoint: economists' argument that there is always scarcity and you never have enough. Sowell: newspaper always bemoans the hardship. Claim: That is missing the bigger picture. People always want more, so in that sense there is always scarcity. But in a sociological sense, scarcity is close to that margin of subsistence, which is just not the case anymore. This economic downturn, our economy shrank 2% last year--as rich as we were the year before last. Different from going without food. Russ one of few with only a 27-inch television and no cable--prevent too much sports watching. People adjust expectations to what they are used to. We equilibrate to the new situation and want more. If our lot were to be satisfied, we wouldn't keep inventing better mousetraps and keep going.
12:06Cultural issues: Prosperity in the post-war era created two large cultural movements on the left and the right. Causation in both directions: economic changes cause cultural changes and vice versa. Abundance, end of scarcity, pushes us toward cultural individualism. When people are poor they don't have a lot of choices. Things are very simple, do this or your die. Everyone's kind of alike. When people are poor, degree of specialization is underdeveloped, everyone is a subsistence farmer; and people are alike from generation to generation, all poor, same jobs as fathers. One size fits all cultural values, can't have a lot of freelancing. Traditional moralities that evolved in the agrarian era tended to be absolutist and did not give great scope for people to go their own way. Bubbling up in the 1950s and then in the 1960s, rebellion against the confinement of old ways of doing things and for the desires of the self to "do your own thing." In race relations, spontaneous uprisings of African Americans in Civil Rights movement, in rapid order succeeding in putting an end to the system. Feminist revolution of the 1960s and 1970s, increase in jobs open to women. New consciousness of the importance of the natural environment and more interest in the quality of life. Rise in hedonism, increase in interest in physical fitness; interest in sex, drugs, and rock and roll. Pushing against traditional limits. Psychologist Abraham Maslow, "hierarchy of human needs," depicted as a pyramid. At base, existential needs, food and shelter; when those needs are in doubt, you can't think about anything else. If you can take survival for granted, you start worrying about new things: friends, am I loved, community, belonging. If you have those in the bank, start worrying about new things: potential, in tune with the real me, self-actualization needs. Individual psychology, but it applies nicely to culture of post-war America. Coming into the 1950s, we'd won our survival in WWII and economic security coming out of the Great Depression. See people climbing Maslow's pyramid. Not a coincidence that 1964, year the first baby-boomers turned 18, was the year of the first riots at Berkeley and start of the period we call "the sixties."
20:13Yet, that set of cultural forces would generally be identified with the Left. Irony: the people on the vanguard of exploring tended to be on the Left, and were hostile to the sources that had created their prosperity. Fundamentally at war with themselves, attacking the foundations of what they were all about. New Left in the 1960s; a New Right emerged at the same time though less attention paid till later, where people were defending capitalism as traditions attached to a larger set of traditions. On the one hand, the Left was condemning capitalism yet gobbling up its fruits; the Right, defending capitalism yet proclaiming its fruits are toxic. Both had at their core spiritual movements. In the case of the Right, the religious Right, unexpected and influential emergence of theologically and socially conservative Evangelicalism, and on the Left, the Counterculture. People were paying attention initially to the hippies, but proceeded in parallel and continued to the present day. Red state, blue state divide is the most recent way of thinking about these things, continuation of ideological categories that grew out of the 1960s. Red states, conservative; blue states are liberal. Red Americans tend to fight the fact that the 1960s happened and wish the changes were reversible; tend to be sympathetic to accounts of cultural and moral decline. On the Left, people averse to the great continuing economic dynamism and to Reagan, and who wish the 1980s hadn't happened; inequality, happiness literature that says we're never happier even when we are richer, always looking at the downside of economy dynamism. Half-empty/half-full story.
26:10Cultural and economic freedom. Fans of economic dynamism have half-empty/half-full problem as well: tend to talk about how well the economy has been doing but bemoan the incursions of government and size of government; argue that we haven't embraced the free market ideals but that it's just rhetorical. Friedman podcast: he talked with despair about how few of his ideas had been implemented, Russ happy that any had been implemented. Half-full view: maybe in parallel to the personal freedom relative to identity, sex roles, sexuality, music, it could be that there is more economic freedom today than in 1950. Opportunity to be an entrepreneur has probably never been greater than at any other time in history. In the larger picture, our era stacks up very nicely. Libertarians are vulnerable to golden-age thinking, all downhill since the signing of the Constitution. Thomas Jefferson, slavery, women couldn't sign contracts on land, couldn't accuse their husbands of rape till just a few decades ago; immigrants; government censorship endemic in life; cultural intolerance of small-town life that was oppressive to people who didn't fit in. Greater latitude today to live one's life. On policy side: compared to the immediate post-War decades, our economy is freer to entrepreneurship, competition and industry. High trade barriers, Europe was far away, which is now changed by technology. Economic deregulation. No one wants to go back to monopoly, regulated airfares, trucking regulations, etc. that were in effect in the 1960s. Government is bigger than ever, perverse testament to our getting our economic policies right. We're able to afford a big deadweight loss of government. 1970s breakdown, but since then, we could afford it. Investors and entrepreneurs and managers find ways to minimize the price of the regulation. Dynamic economy. Division of labor has been unleashed. Sarbanes-Oxley not as costly as it would normally be, complies with the regulation at minimal cost. Negative liberty and positive liberty: freedom from versus freedom to. Libertarians focus on negative liberty. Negative liberty conducive to positive liberty. More choices today than ever. Not just about different kinds of dental floss--which we do have--but the choices we forget about are the cultural and identity choices for people exploring life. Coming out of the '60s and '70s and the renaissance of the 1980s. Used to be only one or two ways to be cool; now many ways to fit in. Now can hook up through the Internet and find fellow-enthusiasts, feel connected, achieve self-realization. Custom-made life.
37:31Internet a bunch of strange people bowling alone, surfing alone? "Ninety percent of everything is crap" rule. In moderation, doing shallow things is fine, fun. We have more of everything: more trash, more greatness. Opportunities to live a well-lived life have never been more within their grasp. Messy mix of freedom versus top-down control. Test of adulthood, dealing with moderation, government versus parents keeping things from their kids. Traditional rules breaking down in the 1960s at first made social conservatives look like they had a good case. Crime, divorce, welfare dependency, abortions soaring from the mid-1960s through the '70s and '80s. But in the '90s things started going in the other direction: people learning how to deal with their freedom. Great exercise of freedom: to commit, living within limits. Commitment to family observed not to be part of the oppressive system but were constituent elements of a well-lived life. World's becoming more libertarian: how much is social libertarian freedom versus economic freedom. More social. Bryan Caplan's documentation: most Americans are economically illiterate, prone to economic demagoguery. And everyone likes free ice cream; big government spending frequently popular. Americans are libertarian more than Europeans, greater aversion to high taxes and bossy government. On cultural side, just clear: race, role of women, scope of cultural expression, role of religion in public life, general attitudes about religion, conceptions of what it means to be American, now freer.
45:40"Nostalgianomics:" Krugman argument: in the 1980s we got more selfish; in the 1950s different time, different rules. Argument: In the 1980s Reagan by killing the air traffic controller strike killed the unions, even though unions had been declining since the '70s. Average worker doesn't have a voice, that's why the middle class is dying. Reactionary rut: both sides nostalgic for the 1960s: Right wants to live there and Left wants to work there. Ozzie and Harriet; versus old big-business/big government/big labor triumvirate with government controlling things, incomes converging, with people at the bottom getting richer faster than people at the top. Left correct: change in income trends, now income divergence. Look at what's causing the divergence. Prevailing economic explanation: structural changes in the economy, technology revolution, skill-biased change, relative demand for highly skilled workers. Krugman popularizing work of Frank Levy and Peter Temin of MIT: that's not all of it, have to look at changes in economic policies and changes in social norms. Have had both, so makes sense that that had something to do with it. Considerable support for the fact that both have contributed to the income divergence. Krugman, though, is selective about what the changes are and wrong-headed about what the changes mean: morality tale, golden age in the 1950s until the evil right-wingers came along. Plutocratic world. Terrible history. Krugman wants to point out policies he likes that inhibited income divergence, like high minimum wage and heavy degree of unionization, but he doesn't want to point out the whole range of other cartelizing policies that made the demand for highly talented people less acute. Not a single airline went out of business between 1938 and 1978 deregulation. How intensely are people going to compete for the best managers? Pressures for getting the best people less intense. Competition for top talent has increased, which leads to higher rewards.
52:54Meanwhile: More competition among people at the bottom, partly because of immigration. White males previously didn't have to compete against white women or against blacks or against immigrants: shut down of immigration from the mid-1920s to 1960s. New wage of mass immigration, now up to 12% again; contribute statistically. Globally, inequality is decreasing. Virtually everyone in America is better off. Statistical artifact: recalculating the inequality trends if you factored in the immigrants at the beginning at their native-country wages, in which case inequality has actually fallen. If you haven't finished high school in America, though, you are doing a lot worse. Today, though, more of those students are immigrants. Increase in demand for people at the top. Unionization falling is byproduct of progress. Unions could only thrive in a relatively uncompetitive environment where they could pass the higher costs on to consumers who couldn't do anything about it. Global competition and manufacturing migrating out of northeast and midwest into south and southwest, a lot more competition. Fundamental reason for deunionization is that unionized workplaces have shrunk about 2%/year and ununionized places have grown at 2%/year. Economy is free enough to work around these cartels. Better policies, not foisted on us by conservatives but recognized as good ideas across the political spectrum. Much deregulation started under Jimmy Carter. Ted Kennedy author of airline and trucking deregulation, cheered on by Ralph Nader. Global trade talks concluded by Democratic Presidents. Tax cutting associated with Republican Presidents: Reagan lowered top tax rate from 70% to 50%, but then sponsored by Democrats it went down to 28%. Deregulation has been fundamentally bipartisan. Krugman: People used to feel sheepish about paying their top executives a lot. More complicated than that. Athletes, entertainers, not just CEOs are paid a lot. Technology, the internet, enable athletes and entertainers to make more. Talented workers are the equivalent of free agency. For the least skilled, part of problem is real, part is that educational system in poor neighborhoods stinks.
1:02:03Current situation. Claim: because of the crisis, Adam Smith, Milton Friedman, free markets are dead. Ideological, reactionary rut: both sides not tuned in to the cultural dynamism around. Right ran out of gas. What started out as a broad-based appeal to middle America--the silent majority--became more and more narrow and nasty and lost touch with everybody else.

Comments and Sharing



TWITTER: Follow Russ Roberts @EconTalker

COMMENTS (18 to date)
Steve in VA writes:

Sturgeon's Law: 90% of everything is crud.

Derived from his comment that "Sure, 90% of science fiction is crud. That's because 90% of everything is crud."

AHBritton writes:

Russ,

Like most of your podcasts I found it part enlightening, part interesting and part frustrating. I really liked his analysis of the dichotomy between the ungrateful socially progressive leftists and the socially reactionary market evangelists. And I am not normally a fan of dichotomies.

It seems to me that theoretical constructs often fall into these self contradictory problems. For example anarcho-capitalist/Austrian decry the state all the time for its evil coercive nature at the same time blowing off its benefits as mere trifles. I'm sympathetic to there views yet I have yet to see a stable, prosperous society outside of a state run social democracy. I guess you could look to Hong Kong but I doubt many of us are going to give up electing our leaders for the "safety" of a dictatorial protectorate.

Similarly I am only partially sympathetic to the free-markets distaste for "regulations." All laws are forms of regulations. There are regulations on murder and theft which I don't think anyone is itching to repeal. Now some might considered that laughable but I think much of political discussion is not about whether or not things should be regulated but how far the regulation should go. A controversial one is how much should abortion be regulated? But there are plenty and I don't think its as cut and dry as regulation/freedom good. For example usury use to be a crime the same way steeling is, but this definition has changed over time and is relatively non-existent now.

Well I'm done ranting for now. I think I have a point but I might not know what I'm talking about. Either way I'm interested in your thoughts.

AHBritton writes:

correction: "cut and dry as 'regulation bad'/'freedom good'"

Lee Kelly writes:

The word 'regulation' is misleading. Most of what politicians call regulation is actually deregulation. When something is regulated it is stabilised or organised, but the politician's "regulation" usually destabilises or disorganises, and thereby achivies exactly the opposite of the role implied by the name.

And it is not about regulation anyway, but domination. It does not regularise, but arbitrarises. More power is transferred to politicians and bureaucrats to be used at their discretion. Vast swaths of so-called regulation is almost impossible to comply with, so that almost everyone is a criminal in some way or other.

Upset the powers that be and they only need to figure out what crime you have already committed. The rule of law is destroyed because there are too many laws. Application of the law to an individuals becomes an arbitrary act ripe for abuse for political gain.

Rick writes:

I wish those who interviewed Krugman during his last book tour would have questioned his claim that the 1950s was a decade of great economic growth. Go to the Penn Tables to see that this wasn't the case by entering GDP/capita (chained)

That reveals only modest growth then, but much stronger growth in the 1960s. Still, growth was solid in every decade since.

GDP/capita reflects standards of living, even if not a perfect measurement. It is easy to look up, but none of those interiewing Krugman in 2007 challenged this claim. Either Krugman was too lazy to look this up, or he was trying to deceive.

Johan Sigfrids writes:

I'll throw out here a few thoughts that come to mind.

Brink Lindsey has a very Hegelian view of history with the left and right as the thesis and anti-thesis.

There is something called the compression of history. Details further back disappear as we combine and generalize bigger and bigger swaths of time. The uniformity of past periods in time may in an big degree be due to this.

It is refreshing to listen to somebody this unabashedly libertarian. It does bring to mind what I see as two problems with libertarianism. They have such a absurdly simplified views of freedom and power. One gets the feeling they don't base their ideological goals on a view of liberty, but define liberty to be compatible with their ideological goals.

I found it ironic that the two big techs he used as examples was the car and the TV, considering I have neither nor do I have any interest in acquiring either. But then again they are technologies of the 20th century, which belongs to you old people. Mine is the 21th century. Here the car and the TV are tools of oppression.

Sven writes:

"Here the car and the TV are tools of oppression."

Didn't you just accuse libertarians of having absurdly simplified views a few sentences earlier?

Galen writes:

Thanks Russ. I thoroughly enjoyed this podcast.

Johan Sigfrids writes:

"Here the car and the TV are tools of oppression."

That was tongue-in-cheek. I have no idea what is really happening with the TV. It does have the feeling of old tech on its way out, but I know the futility of trying to predict the technological development.

Steve E writes:

I haven't listened to this podcast yet, but I enjoy about 95 percent of them so: thanks Russ for doing these and thanks Brink Lindsey for participating in these informative and fun podcasts.

To Rick,

Using real gdp per capita is going to be worse than using real gdp to compare the decade of the 50's to the 60's. Unusually high birthrates from the mid 40's to the mid 50's lower the per capita gdp during those years then inflate the per capita gdp when those births become workers. Any comparison is difficult but do better than gdp per capita. It makes me think you found the statistic you liked and didn't think about it much.

I would suggest that the growth of the 50's was good but was it better than expected with the large amount of technology that seems to (me to) have been underutilized in the private sector cause of the depression then the war?

Steve E writes:

95 percent didnt sound grateful when I reread it but these are my favorite podcasts. Thanks to everyone involved.

rhhardin writes:

[women] couldn't accuse their husbands of rape till just a few decades ago;

The argument against it was, and is, that rape is a crime against feminine modesty; in the case of a husband there's no such thing. The correct charge in the case of a husband is assault, not rape.

Buckley argued this at length in National Review when it came up, in the 70s.

Craig K writes:

I found the argument that executive compensation was justified unconvincing. I feel that if critical free market analysis you would find that the in market executive compensation is closer to the unions of the 50s than a free market.

First like the author says mentions some regulations protected some industries from failure. With the following examples we can see the executive field is still largely isolated from failure:
- Executives can make enough in single year that they can afford to retire if they lose their job.
- Executives are protected by 'golden parachutes' in the case of firings, so firing can often be beneficial for them.
- Also being fired seems to have little affect on future employability.

The comparison between executives and athletes and entertainers also seem false. There is a correlation between athlete pay and their performance, same for big name actors. But if you look at executive compensation and performance I have seen no study that shows a correlation between executive compensation and their performance.

So as far as executive compensation goes I would say it is not functioning as a free market. One of the simplest fixes would of course be allowing shareholders the right to control compensation, but that is another discussion.

John F writes:

I have two comments

The Reagan Patco event is not the strawman you suggest. No, his firings didn't cause the downfall of unions---that's the strawman. However, on the margin it girded the loins of a number of executives to take a strike and hire replacements. It was a marginally significant event in reducing the labor monopoly of unions.

Also, the dichotomy between personal and economic freedom was glibly discussed. When Obama and his whisperers spring mandatory "National Service" on young men and women, they will learn quickly that the dichotomy is blurred.

Self-ownership is the basic economic and personal freedom. The lack of proper wariness results from the fact that multiple generations have grown up without conscription, but a bankrupt nation will look for cheap labor (involuntary servitude)under the rubric of "duty". "Selective service" is one of those Orwellian terms, coined by Wilson's patriots; it means: everyone volunteered and only the "fortunate" were selected to serve. "National Service" is another. Taxes, regulations, inflation etc. are nibbles at one's personal/economic freedom. Conscription is the big bite. And we're being set up for it.

Steve Gelmis writes:

Russ, I greatly respect the open approach you take to exploring views you disagree with. Please watch this video and if you agree with me that Richard Koo's thesis is as worthy or probing from your contrary perspective as I do, please consider trying to arrange a podcast discussion with him.

http://8.7.97.206/090326_koo.wvx

I think it would be a great public service.


AHBritton writes:

Russ,

I just want to say that I just noticed (after listening to your podcast for months) the "About ideas and people mentioned in this podcast" section. It reminds me why I love this podcast even though I don't always agree with it.

tw writes:

Russ,

Another very enjoyable and thought-provoking podcast. I especially enjoyed Mr. Lindsey's argument that we are indeed freer today in terms of the choices available to us vs. amount of regulation. That certainly flies in the face of conventional wisdom...good to hear and think about.

But no cable TV? Don't you realize what you're missing? Yesterday alone, you could have seen a rain-filled Grand Prix of Malaysia followed by a down-to-the-last-minute victory by Manchester United over Ashton Villa, and then.....oh......okay.....I see what you mean. :o)

Rajan C writes:

Thank you for hosting Econtalk and opening my mind to so many wonderful ideas.

I found the argument on executive compensation also to be unconvincing. I've just read the Economist's survey on wealth, and one of the articles in that survey mentions that the inflation in executive pay may have more to do with their ability to control their boards rather than pure talent. The article does a very nice job of divorcing the pay of athletes and executives in my opinion and also discusses issues such as attempts to hide total pay from shareholders, the impact of globalisation on pay and the claim that pay disparities are the result of differences in skills caused by advancements in technology.

Comments for this podcast episode have been closed
Return to top