Intro. [Recording date: August 30, 2016.]
Russ Roberts: Our topic for today is a recent essay you wrote with the title "Do We Need to Rethink the Robin Hood Principle?" What is the Robin Hood Principle that you are referring to?
Angus Deaton: Well, I think the common understanding is that the Robin Hood Principle is taking from the rich and giving to the poor. What I had in mind is a somewhat more technical concept, which philosophers nowadays call 'try-it-out-atarianism.' It was a bartime saying, that word. But that name I think comes from a philosopher, Derek Parfit [?]. But it was introduced into the literature by Serge Kolm[?], and perhaps most importantly by Tony Atkinson in a paper in 1969. And this is the idea that somehow, giving an extra dollar to a rich person is worth less than giving an extra dollar to a poor person. And so, the world would be a better place if you could do that. Which is, take money from a rich person, give it to a poor person. Provided you didn't flip them. So, provided the rich person stays richer than the poor person, than bringing them closer together. So it's a sort of egalitarian principle.
Russ Roberts: And why would we need to rethink it? I mean, I can think of lots of reasons. But why do you think we need to rethink it?
Angus Deaton: Well, I mean, thinking about it--I was brought up on that. Actually, the first seminar I ever heard in my professional life was Tony Atikinson, presenting that paper. I was very impressed. I thought maybe all papers in economics were like that. But, yeah: Why am I rethinking? And I'm not sure we need to rethink it. And it's clear that many people really do believe in that principle. And indeed, it's the foundation of modern tax theory: the writings of, say, Atkinson and Murley's--I think Piketty would certainly be committed to this. And so, it's a--you know, it seems like a fairly general principle. A lot of people would subscribe to. So, there's--the version of it that I was talking about in that essay is, you could imagine lots of reasons for revising even within a country. But I was thinking about it in terms of the whole world. So, for instance, if you are what I christened--and I think it's a name in the philosophical literature--a cosmopolitian prioritarianist, it would say that you sort of rank all the people in the world, no matter who they are, where they live, whether they are in Australia, the Central African Republic, or Iowa. And you give priority to the poorest ones, no matter where they live. So, that essay that you read about rethinking Robin Hood was in part a factual one. Which is: Is it really true, as we've all assumed, or as [?] thinking about these things, that the really poorest people in the world are not in the United States; and that there's no one in the United States who is as poor as people in Africa or in India, wherever you go, wherever you want to go. So, it was a purely factual thing. And then there's the question, a philosophical question, as to whether the cosmopolitan bit of that is right, which is: Shouldn't we give some extra priority to our fellow citizens, because they are fellow citizens? As opposed to just treating everybody in the world as if we were all one country together.
Russ Roberts: I guess my first thought--which wasn't what I was thinking of when I read the essay, which, you know, when I read the essay there were a lot of other things in it that we'll get to. But my first thought is that I don't think it's anyone's job or role, or nor is it desirable that we play with the income distribution in that way. I don't see--so, for example, certainly many, many of the poorest Americans are better off than--a great deal better off--than the poorest people on the face of the earth. And I would certainly not want to justify redistributing income away from them toward poor people outside the United States. But nor would I be against economic events that caused that to happen. And I think that's really what is at the heart of your essay. At least the part that struck home with me--which is: In pursuing a more global trading regime, a more open-border situation for goods to circulate around the world, it is possible that that has greatly improved the wellbeing of, say, people in China. That hundreds of millions of people have escaped the worst kinds of poverty. While, at the same time, that may have harmed, somewhat, the poorest, lowest-skilled Americans. And I think that's possibly true. And I think that's what every economist who is in favor of free trade should think about. Is it fair to say that that's a piece of what you are thinking about?
Angus Deaton: It's a piece of it. For sure. And I agree with what you just said. And I listened to your excellent interview with David Autor on these topics. And I think it's very, very important--I'm not sure how many times I would say 'very' there--that if you are thinking about globalization and it's [?] or whatever perspective, you acknowledge the first fact that you acknowledge there: which is that hundreds of millions of people have come out of poverty because of this. And these people in China and those people in India. And it's not just people in China and India; but they are the countries with the biggest numbers, being brought out of [?] terrible destitution by globalization. So, if you are going to start bitching about globalization because of what it does to people in rich countries, then you've always got to keep that in the other pan of the scales, as it were. And that doesn't mean that there aren't people in rich countries who aren't hurt by this. But however you weight those things, you've got to acknowledge that fact.
Russ Roberts: I agree.
Angus Deaton: So, let's take that as agreed ground. The bit I'm not so sure what was you said before that; and this is the factual matter that I've been rethinking. It's very, very, very difficult to measure--there I'm doing multiple 'very's again. But it's really quite hard to measure--I've spent a lot of my life thinking about global poverty and actually measuring it is really difficult. And so here is a factual question which turns out to be extraordinarily difficult to answer, which is: Is it really true, what you said a minute ago, that the poorest people in the United States are orders of magnitude better off than the poorest people in India or the poorest people in the Central African Republic? And I'm not so sure of that any more.
Russ Roberts: Why?
Angus Deaton: Well, partly--first of all, the purchasing power parity corrections that are done for global poverty are supposed to really make things right across countries, so that a dollar a day means the same in the United States as it does in India. And a dollar a day and its successor lines[?], $1.25 and now about $2.00, have been very successful, I think, among the very successful rhetorically for the international development industry, because no one can imagine living in the United States on $1.00, even $2.00 a day. So, people think, you know, $2.00 a day is the global standard of poverty; there's no one in the United States who lives on $2.00 a day because it makes it impossible. Okay? So the question is: Is that really true? And there are various strands of work that have disturbed that a little bit. First of all, one of the things you can do now, which is sort of delightful--you didn't used to be able to do--is you can go and take one of these bundles and you can price it around the world. You can go to a supermarket in California or a supermarket in Britain or a supermarket in South Africa or in India and figure out what these things cost. At least for food. Not so easy for rental or all the rest of that. And it turns out if you are just talking about food you could actually manage on $2.00 a day in the United States, you know if you take a bundle, and it's not a very luxurious bundle and it doesn't have lots of things in it that you might want. But you can get enough calories and fats and things like that as far as food is concerned for less than $2.00 a day.
Russ Roberts: Yeah, but--wait a minute. Hang on. Certainly your original skepticism about the prevalence of $2.00 a day or less poverty in the United States wasn't because you can't survive--
Angus Deaton: No, no, no, I understand that--
Russ Roberts: Most people make more than $2.00 a day.
Angus Deaton: This is just a riff. Okay? Most people make $2.00 a day. So that's right. It's just part of the story, I think. So, for a long time I thought that $2.00 a day, it was physically impossible even to get enough food to live on even in the United States on $2.00 a day, and therefore this statement that everybody in the United States had more than that is true. So that's from the consumption side. But you could ask, 'What about their incomes?' Well, first of all, none of the $2.00 a day stuff around the world is done in terms of incomes. Because incomes just aren't measured in most of the world. So, you are actually calculating the values of commodity bundles that people consume. So, and what's more if you look at in India and Africa where they are counting the number of people living on $2.00 a day, there's no charge in there for housing[heising?] whatsoever. It's just not counted. There's no charge in there for health care. It's not counted. There's no charge in there for education. It's just not counted. And the other is there's a Constitutional requirement that the state provide education. Of course it doesn't. There's a Constitutional requirement the state provide health care. Of course it doesn't. But when they do the poverty numbers and they make them up, they calculate them that way. These housing[?] surveys they use don't have those items in them. Or, they may have a tiny bit of them, the out-of-pocket expenditure the people do. And so the comparison of just saying food versus food in some sense is more relevant than you might have thought. Of course, people will say, 'Well, people in the United States, really poor people have access to Medicaid; they have access to all sorts of stuff.' But, you know, that's--if you are doing like with like, you really wouldn't want to include that stuff. So then this thing is much, much more murky. And then I can come to Kathy Edin's book about living in America on $2.00 a day--there's been a lot of dispute but it's an eye-opening book. And what turns out from that book, and the book that got a lot of attention, Matthew Desmond's book, Evicted, is that for the poorest people in the United States who are in the sort of unstable bottom end of the labor market, they may also have some mental health issues or they may not be fully abled in various other ways health-wise. That housing[?] is just a nightmare. And I think it's probably gotten worse in recent years. So if you are at the bottom of the income distribution, if you can get a job--and the argument in Kathy Edin's book is the end of welfare as we knew it, sort of workfare part of that, has really worked pretty well, in the sense that those people's lives are pretty good when they are at work. A job in Walmart is just terrific compared with what they face at home. And what they face at home is just the impossibility of finding a place to live, especially if you lose your job.
Russ Roberts: So, when you say that we ought to take more account of our fellow citizens and looking at the impact of, say, trade policy or immigration, whatever it is, you are not giving up on your cosmopolitanism. You are suggesting that maybe our fellow citizens are lower down in the rankings than we might have thought and deserve more consideration. Is that accurate?
Angus Deaton: Almost. In that I'm suggesting they are much further. There's a factual bit of this, which is, there we're thinking they may be much further down in the income distribution than we think they are. And I don't want to press that too hard, because there are all these issues about how do you account for Medicare, and so on, Medicaid? I mean, you can't buy food with Medicaid; you can't buy rent with Medicaid; but of course it's very valuable when you need it. So I'm not knocking any of that stuff. But I just wanted to introduce into the argument that it's not so clear where the poorest Americans are in this world income distribution--if you were a cosmopolitan. Of course, some of these people are like people living in the Mississippi Delta, who are incredibly poor; and they haven't been affected by globalization at all. So, you know, I resist the notion that it's all to do with globalization, or automation[?] or whatever. There's a lot of poor people in America who don't have anything to do with that.
Russ Roberts: I wonder about that. How many Americans--this is an empirical question that I do not know the answer to, and I don't know if anyone knows the answer to it, but it is an answerable--I think there's an answer and probably somewhere in Arkansas to this question, in the town of Bentonville. But my question is: How many Americans live within 20 miles of a Walmart? Is it--what percentage? Is it 90%
Angus Deaton: Oh, no.
Russ Roberts: Is it 60%? Is it 40%? [See link in Readings above for answer.--Econlib Ed.]
Angus Deaton: That's a good question.
Russ Roberts: So, that person in the Delta that you are thinking of--
Angus Deaton: May have access to--
Russ Roberts: Yeah. Because they're getting really cheap clothes and really cheap toys for their kids.
Angus Deaton: Oh, yah, yah. I agree. I'm on your side as far as that's concerned. I'm not on your side in that I think there are no losers from this.
Russ Roberts: Oh, no. I don't think that at all. Please--
Angus Deaton: Right. Okay.
Russ Roberts: I don't think there are no losers. I think there are a lot of people who have lost--
Angus Deaton: All right. That's cool.
Russ Roberts: in the short run.
Angus Deaton: Yes.
Angus Deaton: The question is--I think there's two questions. First of all, as I've said in the Autor episode, and I will continue to say it: Economists who claim that free trade is good for everybody in the literal sense that everybody is better off after a trade agreement or trade barriers are brought down--that's a lie. It's dishonest. It's just simply not true. You can say that--
Angus Deaton: People say that all the time.
Russ Roberts: I know. They shouldn't.
Angus Deaton: They say that about the minimum wage, too.
Russ Roberts: They shouldn't. Right. It's wrong; it's a form of intellectual hucksterism in my view. Now, there's a subtler view, which I would attribute to my friend and former colleague Don Boudreaux at George Mason, who argues that trade generally makes all of us better off; but any one piece of trade could harm one of us, some of us in particular, because of competition, just like any increase in competition could be harmful in the short run--or the very long run. Which is I think part of what--the semi-long run--which is what I take David Autor and his co-authors to be saying, that some of the ability of the American worker to adjust to these changes is very limited, and they may have lower wages for a fairly long period of time or may struggle to find work. So I think we agree on that. Right?
Angus Deaton: No, we're all on th same page here. But I wanted to come back to the other bit of your question, which is: there's the factual question of where these people are in the world income distribution. The second question is whether I'm a cosmopolitan or not. And I'm not. So I don't believe in cosmopolitanism.
Russ Roberts: Continue.
Angus Deaton: And I think there are lots of reasons for that. So, even if we knew where they were in terms of the world income distribution, I do think our fellow citizens deserve different and somehow special consideration that you would not give to people in the [?] Central African Republic. And this is a very unpopular view. So I got yelled at for saying that in this piece. There's an interesting piece, too--I don't know if you've read Paul Theroux's book about the Deep South--
Russ Roberts: No.
Angus Deaton: I think it's called--well, I'm not sure what it's called, but it's his most recent book. And it's about multiple visits to the deep south in the United States. And he'd written all these books about Africa and so on, and he claimed in an op-ed piece in the New York Times that these people in the deep south, the poor people in the deep south, were way poorer than anyone he'd ever met in Africa. For instance. And again, was denounced by all the usual voices saying, 'This is just ridiculous; you have no idea what you're talking about.' While I do know [?], I think he might be right. But there's just this philosophical question about whether you should think differently about your fellow citizens than you should think about your non-fellow citizens; and I think the answer to that is Yes. I've just come back from Montana. That's where they send the kids to fight. You know, you meet people who have 6 kids, all of whom would be in the military. You know, where I live around here, I know a couple of people whose kids have been in the military. The population of India doesn't get to serve in our military or our sort of [?]--[?] is too strong a word--but they don't have great other opportunities, if you grow up in Ennis, Montana, which is where we are. And so I think we owe people something for that, and we have a Veteran's Administration, and we have various benefits to veterans. We revere our veterans. We pay a lot of attention to them. I think that's right. And, you know, if we want to go on some madcap military adventure somewhere in the world, then the population of Punjab doesn't have to go into [?].
Russ Roberts: Well, I think that's something of a red herring, perhaps. Let's take the more basic point, that people growing up in rural Mississippi and rural Montana, for a variety of reasons, find the military attractive. And for a variety of reasons maybe struggle to get integrated into the information economy that you and I are a part of, the service economy that you and I are a part of that happens to pay very well as opposed to some of the other parts. The only point I would make--and I would--well, let me just make this point, that the reason that someone is desperately poor in Mississippi is not the same reason somebody is desperately poor in parts of India or Africa. Here in America, you are very near very prosperous places where they speak your language, where you may have relatives nearby, where it's somewhat familiar. And, yes, we put up a lot of barriers to that kind of movement, which I think is wrong--those are--you know, we've made housing a lot more expensive in urban areas, I think artificially more expensive, and that's a terrible thing. And that's made it harder for people to move. And it's created some forms of effective borders. And I think that's a mistake. But the economy as a whole in the United States is "thriving." Not every single piece of it, but overall thriving relative to parts of, say, sub-Saharan Africa. I don't think it's productive to think of them as anything remotely similar, even if there are indeed people for personal, tragic reasons who didn't finish school, who have trouble with mental health issues, etc., in parts of America.
Angus Deaton: Yeah, I think that's probably right. So I'm not going to fight it. And also, I thought you were going to make a different argument, which is, we have an all-volunteer force.
Russ Roberts: I was going to make that, too; but I left that alone. Good point.
Angus Deaton: So that, you know, you could the military is making opportunities for these people, and that's a good thing and we don't owe them anything for fighting for us, or nothing special that we--
Russ Roberts: Nothing special--
Angus Deaton: That we don't already. Well, we don't behave that way. We don't have an Arlington National Cemetery for Pediatricians, for instance. Or other people--
Russ Roberts: Entrepreneurs--
Angus Deaton: I think we think we owe something to those people. So that's one thing.
Russ Roberts: I just want to say: I don't disagree with the fact that people who put their life on the line deserve something special, even if the wages were enough to attract them in there. I have no problem with honoring them way beyond that. And I think part of the reason we do that is we want to attract a certain kind of person into that profession, not just for the money. So, I mostly agree with you.
Angus Deaton: Yeah. All right. But, I mean, you do agree that that's something that's different between--it's part of our social contract, which is not there for someone who lives India, for example.
Russ Roberts: That's true. Agreed.
Angus Deaton: So, the other thing, I think, is that, you know, cosmopolitan philosophers believe that--the way they like to put it is that national boundaries have no ethical significance. Right? So they are kind of arbitrary lines on a map. And it's clear there are parts of Africa where that's pretty much literally true because a bunch of colonialists came along with a bunch of maps and drew some lines for their own convenience. But, for instance, I grew up in Scotland; and I think the border between England and Scotland, even though it's not a national border and even though, you know, people have farms that span the border and commute across it and everything else, that there's something different about being Scots. And there's a whole national heritage which we're very proud of--in some cases not so very proud of: when we burn a bunch of people in caves or something. But, you know, there's something that the cosmopolitan philosophy just does not recognize, which is there's something there of a national identity which is very important; and that means we treat other Scots differently than we treat other people from very far away. Now there are limits on that. It doesn't mean we ignore people who are far away and have no obligations to them. And it's a limited set of spheres of things that you really care about. But there's something there that's not recognized by the fact that these borders are arbitrary impositions that were put there by mindless colonial bureaucrats, for instance. So, it's not entirely clear what you do with that. And I don't think the philosophical literature is always very clear about that, either. The cosmopolitanism is very easy because you say everybody's the same and we just ignore these stupid borders and we ignore politics and nationalism and all the rest of it. But, you know, there are parts of nationalism that are real and make some sense. And they are important to people like religion or something. And actually, Rawls wrote this book called The Law of Peoples, which Rawlsians don't read, and they don't like it very much, because it's very anti-Rawlsian. And he says, you know, world government would be the ultimate tyranny. And nations have the right to do things for themselves and not be part of this thing.
Russ Roberts: Well, competition is a good thing.
Angus Deaton: Yeah. And also they're different.
Russ Roberts: And the world government--
Angus Deaton: And even--you know, when I come back from Montana I always think that Washington is tyrants.
Russ Roberts: Meaning?
Angus Deaton: Well, it's sort of like there was a world government, people in Kenya would be being ruled to some extent by people from Washington. We Scots don't much like being ruled very much from London. And people in Montana don't like much being ruled from Washington.
Russ Roberts: Agreed.
Angus Deaton: Because they think they have all sorts of takes[?] and things that are important to them that are not fully recognized by the people who lord it over them.
Russ Roberts: I think there are two questions here, which are somewhat conflated by this position you are taking on national borders. Culture matters a ton. National identity matters a ton. The unique vision of America as a land of liberty, I think has made a big difference in the world, and not just for the millions of people who have had the opportunity and privilege to live here. It actually infuses daily life--less so maybe than it once did, but I think it still does. And crossing that border and being born a few miles to the south in Mexico or a few miles to the north in Canada can make all the difference. So, borders matter. But the question is whether they should matter ethically. And then the more important question is whether they should matter economically in our ethical consideration. And by that I mean, if you make a product in Texas that competes with my product in Maryland and that puts me out of work but makes a lot of Americans better off who prefer your product to my product, I don't know why that's really different if you move your factory 5 miles to the south and your factory is called a Mexican factory; and suddenly it's a Mexican factory that's making Americans better off and making me worse off. I think that's the key question. We think about how the tendency--the propensity, excuse me--to truck, barter, and exchange that your fellow Scotsman Adam Smith talked about, I think he was making a very deep point: that where it came from, who you were trading with, is not so important for whether we should be open to buying it or not open to buying it. If we close our national borders, if we close our state borders, if we close our towns' borders, we will be desperately poor.
Angus Deaton: I agree with that. And I did not go that far.
Russ Roberts: I know you didn't. But there's a temptation. You made a bit of a reductive argument.
Angus Deaton: You don't have to go all that way to recognize that there are issues over which people care on this. And you might want to say, you want to be very, very careful here, because they care about issues that are actually going to impoverish them even if they think it's going to make them better off. So, I think the cosmopolitan impulse is a very worthy one, a very good one. But I think some of these issues that--on issues where you think we would lose our Scottishness, or we would, you know, impinge on our historical thing, historical heritage, then you'd want to be a bit careful there. Which gives them some moral significance. I'm not saying, I'm not [?] for complete autarchy or nonsense like that. We don't want to turn ourselves into Albania--actually, Albania is not like that any more. Or North Korea. But let me do a third thing, then, which is something that the philosopher Dworkin argued about a lot. So, let's say these national borders exist, you know, even if they were arbitrarily drawn by crazy colonialists. Then, once you are in one of these things, whether you want to be there or not, you are subject to all sorts of laws and customs that you have no option over. All right?
Russ Roberts: Correct.
Angus Deaton: So, for instance, you have to obey the laws. They may be laws that you don't like. And so, you are in a sort of contract with other people in that thing. And you say, well, you get some benefits from living in this country; but at the same time you have some obligations. Those may be to serve in the military; but that's not the end of it. You have to serve on juries. You have to obey the laws. You have to drive at a speed you think people want to drive at. And so these are obligations that you have and foreigners don't have. And so there certainly comes a bunch of obligations to fellow citizens. And again, we could agree or disagree or talk about how extensive these obligations are. And that bit of the op-ed got sort of chopped and made much shorter. And all--I'd wanted to raise the military thing which isn't in there, but I talked about this insurance arrangement. But I do think that's important. I mean, there are, most nations have insurance arrangements of one sort or another, which limit the operation of the market. Whether it's old-age pensions or whether it's national health care or whether it's a safety net--and these vary enormously from country to country. But you are locked into that contract, whether you'd like it or not, once you are in that nation. And in that nation, that gives you certain rights. It gives you certain obligations. And it gives you certain benefits. And other people [?] aren't a part of that.
Russ Roberts: I agree.
Angus Deaton: So, I just think it's nonsense to line up everybody in the world on a scale of 1-7 billion and say who is the richest and who is the poorest. And even if we could--which, thank God we cannot--would it be, if you, you know, could bring yourself, which I doubt either of us could, to think that world redistribution was a good idea--which a lot of people think--[?], the World Bank and the international organizations--all these people are somehow dedicated to this proposition, that redistribution of income making a more equal world would be a really good thing--then I don't think you could really do it that way. You would have to recognize the national borders in some part of that formula.
Russ Roberts: That's a really, that's an interesting point, that I don't--as you suspect--didn't shine through that piece as well as it could have. You couldn't[?] get to say exactly what you wanted. But I think the other point to make in response to that is that it's all well and good to say the top billion should be giving up money to the bottom billion. But it's a very different thing to say, 'Well, we're going to pretend the top billion are giving to the bottom billion.' But it really goes to the thousand in the bottom-billion countries who happen to be living quite well according to Western standards, even; and they siphon it off for themselves. And that to me--I mean, it's one thing to have a thought experiment about whether I should feel morally obligated to give up some of my own money, either for my fellow citizens who are poorer than I am or for citizens around the world. But to do so and have it go to enhance the bower of the richest people in those poorest countries to further subjugate their fellow citizens is a horrifying thought, which I'm afraid is something of what has actually happened.
Angus Deaton: And that's what I wrote about in the last chapter of The Great Escape, which we talked about before. I mean, I think, you know, it's nonsense--I don't know if we talked about this, but one of the examples I like to give is some cult member moves next door, you know, with a wife that he subjugates. And he exploits that wife and makes that wife do all sorts of things for him. So he lives in a life of luxury while this woman is essentially a slave. And you would like to do something about it. You know, giving him money doesn't seem like the best thing to do.
Russ Roberts: Correct.
Angus Deaton: Giving her money is a complete waste of time, because it goes straight to him. And then when you think that through, maybe it would actually be better to give money to him, provided you put some conditions on it. And even that won't work if your next-door neighbor says, 'Well, why are you putting horrible conditions on that guy? I'll give it to him for free.' And then you give him the competition with your neighbors to see who can shower the most money on this guy who laughs all the way to the bank.
Russ Roberts: Or you can put conditions on him that he pretends to follow but doesn't actually.
Angus Deaton: Yeah. That's right.
Russ Roberts: Before we move on--and we're going to move on to this issue--I have a couple of things I want to add to this discussion. I just want to go back and put a footnote to the earlier part of the conversation, because I think it's so important. I made the point that you agree with, that there are people who are harmed by any particular opening of certain trade restrictions, reduction of certain trade restrictions, or just through technology. Through all kinds of reasons. We have a dynamic economy; there's creative destruction; and I think it's dishonest of any side to say everything is "good for America," implying that that's good for every American, and that's certainly not true. At the same time, I think it's really important to point out that over time--and this is why I kept making this short run/long run distinction that economists get mocked for--but I think it's incredibly important in the long run, meaning in a generation or two: the children and grandchildren of that worker are almost always better off than their parents were before them. And that's not a coincidence. That's part and parcel of accepting the dynamism of the economy. I often use the example of agriculture. Certainly it was not easy on the farmers of America to watch farming go from 40% of employment to 2% of employment in the United States in the last hundred or so years. Many people dreamed their kids would own farms; they couldn't. Many children dreamed they would own those farms; they couldn't make that work, because of technological change and consolidation, larger firms being more efficient. And so fewer and fewer people were necessary to grow even enormous amounts of food; and that's a glorious thing for almost everyone except farmers. But it's even good for farmers, if you count their children and grandchildren. And they would. A farmer in 1900 who is told, 'I have bad news for you. Your sector is going to be devastated by technological change. Your children and grandchildren will not grow up to do what you do and what you dream of them doing. But don't worry: here's what their life looks like,' they wouldn't say, 'Oh, that's a terrible deal. Don't do that to me.' They'd say, 'Thank you. My children will live long. They will have rich lives of meaning. And they will also have tremendous material wellbeing.' So I think this whole idea of merely looking at the fact that trade with China makes life hard for some people--and I concede that and it's tragedy and we ought to find ways to make it easier for people to deal with--and I'm uncomfortable saying it, as you, I think are, also, given that I have not paid any particular price from that. I get all the benefits and few of the costs. But I don't think the costs are imposed on the poorest Americans say in the manufacturing sector with only a high school education. They are right now. But I think their children and grandchildren will live richer lives for it. That's my justification for open borders, not some Pollyanna-ish, 'Everybody-benefits and the gains from trade will all be distributed tomorrow.' They won't be. But in a couple of tomorrows I think they will be.
Angus Deaton: Well, I think as a factual matter, that's right. Whether everybody would make that choice for their grandchildren, I'm a little more pessimistic about human nature than you are.
Russ Roberts: Fair enough.
Russ Roberts: Let's move to a different, but not unrelated point, which is money versus meaning. One of the issues here--the way this debate often gets framed until recently was about material wellbeing. Which counts. But as economists, again, even though everyone thinks that's all we care about, it's not all we care about, and it shouldn't be all we care about. And so for me the fundamental issue about these changes that we're talking about, these dramatic changes do to trade or globalization or aid, they are about what people's, the texture of their daily lives, not just how much food they can put on their table.
Angus Deaton: Right. I think some of what Paul Theroux was arguing about the Deep South is that the cultural texture in which many but certainly not all people in Africa live may make it much easier to live on almost nothing than the cultural texture in the United States. And I think that that's what comes through very brutally in both the Desmond book and the Kathy Edin book. I believe in both of these situations you're out of equilibrium. Some of it is there are government programs in there that aren't working and are arguably making things worse. And so maybe that's a transition. That's not a way either of them would see it, but it's just that whatever safety net we have for many of these people is clearly not working, and whatever social structure would have been there that might be there in Africa, might be there in India, is not working either. So, I'm not on very sure ground here, because it's also true that I've been in villages in India where people don't have enough to eat, even, talking about social structure and everything is okay there, that doesn't cut much [?] with me, either. If you are watching your kids dying and you don't have enough to eat and you are being brutalized and you are treated more or less as a slave, that may be a better description of a lot of people in the world than saying they are happy poor people living in a caring society.
Russ Roberts: Yeah. I don't think we should romanticize any kind of poverty, ever. But I do think--not having read the Paul Theroux book--but I do think there's a difference in how people deal with low levels of income. Or a better way to say it is, 'Other things matter.' If you are not dying, if you are not starving to death, certainly there are many consolations in life which we all have regardless of our income level which make life not just tolerable but delightful. And I think there is a tendency--one of the results of our individualistic in liberty and tolerant culture of America is that some people get left behind. And we don't force them to do things any more, like we used to. We used to lock up people who were really different. And we called them crazy. And we put them in insane asylums. And I'm glad we don't any more. But I'm not going to tell you that they have an easy life the way they live now. They didn't either, before. It's a fundamental challenge. But I do think how people get by and what gives their life meaning goes way beyond the paycheck, the size of the paycheck.
Angus Deaton: I think that's true, but as we were saying a minute ago, extreme poverty can really destroy that.
Russ Roberts: Yeah. Oh, absolutely.
Angus Deaton: And we also know which way the correlations go. So if you look at almost any of these other things, to the extent we can measure them, they are graded[?] with income. That doesn't mean that everybody has correlation--we're talking about correlation, etc., way less than 1. But there is a lot more sickness; there is a lot of bad stuff goes on among poor people which compromises the quality of their lives. No doubt about it.
Russ Roberts: But, don't you think there is a view that's arising now that--maybe it's in your piece or maybe it's not, you tell me; and tell me what you really think--but there's this view that there's an arrogance of the elites and that the underclass perceives this and feels they are not getting respected. I want to take that argument seriously, and at the same time it's the kind of argument that an elite person would cook up for feeling guilty about something that maybe doesn't exist. So, what do you think about that?
Angus Deaton: Well, it's harder. [?] We're the elites. So, even if you think you are trying to think through this honestly, you know, the old saying that what you think depends on where you sit--you always want to keep that in mind. We do the best we can. I do think that here and in Europe and in Britain people have sort of to a large extent felt that they are excluded from the political processes that are important for them. And that, I think that's largely true. I was very persuaded by Larry Lessig's book, for instance, and I thought that it really has become a problem in the United States that there's really no very well defined political structure for many of these people. We used to have unions. And God knows, unions had lots of terrible problems. But there was some political representation for a lot of those working class people, and that's gone. And so I'm not sure any more. I mean, the Democrats seem to be--they have the same needs for money that the Republicans have. But, you know, it can't be entirely that, because money is much less important in Europe and yet there's a tremendous amount of disaffection in Europe, too. So, I think that's a puzzle that we don't fully understand. Anne Case and I wrote this paper at the end of last year about the rising mortality rates among white mid-life non-Hispanics, which is most extreme among people who have a high school degree or less. And this rise in mortality is not entirely driven but the biggest categories are rising suicide rates, rising drug addiction to mostly prescription drugs and overdoses from oxycontin and the like. And alcoholism. Those are nothing to do with the health care system--well, they are, but, you know, these are behavioral conditions, not an infectious disease of some sort.
Russ Roberts: Possibly goes the other direction; and it's possible that the health care system is subsidizing those drug habits.
Angus Deaton: Yeah. I mean, I think there's a lot of what we call iatrogenic medicine going on there. Which is that--oxycontin--you know, if someone had said 20 years ago, 'Wouldn't the health care system save a lot of money if it just gave someone heroin in a pill?' Well, that's sort of what we do. And it has very serious long-term consequences. It's going to take a long time to [?] do away and getting that fixed. But it was that finding, too, that Anne and I call these 'deaths of despair'--just for a label. And that suggests that this group is really, really seriously hurting. You can say, 'Well, they're not that poor. There's lots of opportunity here in America.' But you know they are killing themselves and ever larger numbers are taking these drugs and overdosing from them. And you know, I don't think we understand what that is. We've talked about getting together with David Autor and looking at whether his correlations are the same as ours. But, there's lots and lots of other explanations, and just about every Presidential candidate in the primaries talked about that paper in some form or another. And I could reel off a whole list of explanations--
Russ Roberts: I'm tempted to say 'Congratulations,' but I'm not sure that's in order. Something--
Angus Deaton: Well, I'm not sure, either. Well, you know, we did go to the White House with the other Nobel Laureates, and having Obama greet us and say 'We've got to talk about this paper'--it is sort of every academic's dream--that you go to the White House and the President wants to talk about your paper and has read it very carefully indeed.
Russ Roberts: Well, as your fellow Scotsman said, 'Man naturally desires not only to be loved but to be lovely.' And that's one of the better examples of getting some love. I mean, that's pretty--that's a thrill. Be careful. You are hardwired to love it.
Angus Deaton: We're hardwired to love it--well, we treat it with the appropriate degree of discount. But, you know, who knows? There's been a big decline in religion. If you believe some people, it's a cultural failure, among white people, which parallels the cultural people, failure among black people 30 years ago. You know, if you are [?] Putnam you think it's to do with the collapse of opportunities for these people's kids. Which is something we haven't talked about and is a serious matter. Or at least not a collapse but very much more difficult than it once was. And, you know, it's not so easy for kids to move if their parents aren't moving, if the local school system is not what it once was. I remember Joe Stiglitz telling me that in his high school in Gary, Indiana there were something like 5 National Merit Scholars in his year. While, now, hardly now anyone goes to college from that school. And, it's much harder for the kids to get out than their parents.
Russ Roberts: I wonder what expenditure is per student in Gary, Indiana, today.
Angus Deaton: It's probably gone up.
Russ Roberts: That's not the problem.
Angus Deaton: But, no, it's not the problem. Well, it is the problem in the sense that to make it much better would take more money; but if you put more money in, it would not make it much better. Like a lot of problems in the world.
Russ Roberts: Yeah. There you go.
Angus Deaton: So, anyway, there's just a lot of things like that lurking in the background. There's been a huge upsurge in pain, which we don't understand either--and it may be that, you know, if you get pushed out of a nice job at IBM (International Business Machine) and you are now working at McDonald's you have a lot more lower back pain than you did before. These are things we're working on.
Russ Roberts: Yeah. I think these are questions that are better answered, perhaps, by a sociologist. I don't think I'd ever utter that sentence, let alone on EconTalk. But getting at the underlying causes of some of these problems is not going to show up, I don't think, in the current Population Survey. It's going to show up in somebody going door to door or house to house or city to city, town to town, trying to figure out what's going on in people's lives on the ground, if you are really going to make the case that it's deaths of despair rather than something else.
Angus Deaton: I agree with that. But that's why studies like Matthew Desmond's and Kathy Edin's are so valuable. Because they've done that. Desmond went and lived in a trailer park for a year. Rented property in the black ghetto, and [?], they've done that ethnographic work. And you don't necessarily want to buy the macro stories that come with that work. But the work itself is immensely valuable, and I'm amazingly full of admiration for people who are prepared to do that.
Russ Roberts: Yeah. No, that's interesting. I don't know either of those books, or the Theroux book; and I look forward to looking at all of them. Another book that's getting a lot of attention these days is the J. D. Vance book, Hillbilly Elegy, I think is the title. And it's obviously on the same terrain, generally.
Angus Deaton: Same terrain but very different view.
Russ Roberts: Yeah.
Angus Deaton: Whether it's in the right--but a deeply felt experience, and a very impressive book.
Russ Roberts: Can I come back to a remark you made about Europe? You made the point that Europe feels, a lot of Europeans feel, I would call it, unrepresented, dispossessed. And they have a very different political system, typically, in many European countries than we do. They have ceded some power to the EU (European Union), which is inherently not particularly representative. But I think the other issue which seems to me to be really important which doesn't get enough attention is what I would call heterogeneity. So, when people feel "I'm not being heard," or "I'm not being represented," that's a lot more important when you have an incredibly diverse country like the United States compared to, say, Norway. So, Norway is small. It's incredibly homogeneous. So, there's not going to be a lot of political malaise. There's not going to be a lot of people who feel like, 'What's in it--where's my share? Where's my goodie,' out of Oslo, out of the equivalent of Washington, or whatever capital we're talking about in Europe. And so much of it, it seems to me, is that--I desperately want to get more stuff, personally. My philosophical view is I want to get more stuff out of Washington so that politically powerful people can't steer it toward themselves. Because we are a diverse country; and by definition there's nothing that's good for 'us': there's things that are good for me, not so good for you, great for her over there. And it just seems to me that in a diverse country like ours, increasing political power in Washington is going to increasingly lead to this kind of disaffection and anger.
Angus Deaton: Yeah. There's a lot of stuff in there, and I'm ambivalent about it, at least some of it. The Norwegians are not so happy, because there's been a lot of discussion about this so-called Norwegian solution for Brexit. And, you know, the Norwegians effectively have to obey the rules of the EU without having any vote in the EU. So, that's sort of like, we're back to the Montana situation [?]. And also, I don't know how much Scandinavian noir mystery novels you read--
Russ Roberts: A few--
Angus Deaton: There's sort of a whole anime[animus?--Econlib Ed.] and concern about immigration and lack of homogeneity. Sweden has been enormously generous in doing what none of the rest of us will do, which is having an aid policy that allows foreigners and others to come and live in Sweden. And it's produced tensions, too. So I'm not sure that--I think that the homogeneity of those countries can be overstated. It's also true, of course, that I think they are much more different one from another than is the case in the United States. If you get on or off an airplane in Budapest it doesn't look the same as when you get off an airplane in Madrid. Whereas in the United States it does to a first approximation sort of look the same. That's not to say that there aren't lots of variations. And I think that's being [?] a problem, which is: if you are ruled from a not very democratic EU in Brussels it's even worse than Montanans or Alabamans being ruled by Washington, where at least we do have a lot more in common than they do that. But I do think you are seeing this thing that--Rawls would have called it this tyranny of supranational rule, because there's no way of doing it that doesn't tyrannize someone. On the other hand, you know, there are clear examples where if you don't have central control, awful things are going to happen. And have happened. Like civil rights, being an example.
Russ Roberts: Yep. There are tradeoffs, for sure.
Russ Roberts: Let me raise a policy space to see where you come down. So--that's a terrible sentence. I don't know what I meant by that. I'm going to shift gears, because I want to hear what you think about the following. Let's accept as a fact that there are large numbers of people in the United States who are struggling, whether it's for meaning, whether it's financially. Some of it, I've argued, is a result of the way we measure income over time and household structure, so that's also gone on at the same time. But let's put that to the side. Everybody would agree that there are some people who have a tough time. It could be because of trade, that they are having financial difficulties because foreign workers compete with them more directly. It could be because of immigration: they come here and compete with people more directly. It could be because of technological change: that a skill that they once has is no long of value. Or it could be cultural: they are doing okay but they don't, for whatever reason, their job does not give them much satisfaction and meaning in their life; or other institutions have withered that once gave them or their parents meaning in their life. Whatever the answer is, the actual reasons determine what our policy might be if we wanted to help these folks. But it seems to me that improving the education system is a winner--if we know how to do that--no matter what the cause. Would you agree with that?
Angus Deaton: Yeah. I would. And I've come to realize that more and more over the last year or so, as we've been talking about these things. And it's something--you and I talked about The Great Escape, and one of the great things that's missing from The Great Escape is enough discussion about education. And I don't know very much about education. It doesn't seem like we've been very successful in making it happen, though, in those communities. I was very impressed by Bob Putnam's book and just this argument that a kid like him, who grew up in, I guess, Port Clinton, Ohio. His argument is that, you know, he could go from there and be a Harvard professor and a very distinguished political scientist and sociologist; but the chance of that happening now are very remote. And he's arguing, and I don't know if it's true, but he makes a plausible case that inequality [?equality?--Econlib Ed.] of opportunity has much decreased in the United States. And you don't know that until you wait 50 years or 25 years and see what the correlation between fathers' and sons', or mothers' and daughters' incomes are. And he's sort of impatient and says, 'Well, let's look at what's going on now, and let's look at these mechanisms.' And they seem to be breaking down. And I think it would be terrific if we could stop that. We've talked about this at various points: we have this very dynamic economy. If it's not working for you in Montana, you know, go to Arizona or go somewhere else. But it's hard to do that for kids.
Russ Roberts: By 'kids,' you mean an 11-year-old.
Angus Deaton: Yeah, an 11-year-old. And I think for me, that period of my life from sort of 7-14 or something, was an incredibly important period. And I was lucky enough to have terrific educational institutions even though we had no money and we were just desperately scraping by, the educational things. And so the sky was the limit, and I could go anywhere. And I did. And, you know, [?] was the same. So it really would be a bad thing, if it is true--and Putnam knows that he has not nailed it. But it's very, very suggestive, if it were true that we can't do that any more.
Russ Roberts: Yeah. Well, it also makes Harvard education a lot less interesting than it would otherwise be, as well.
Angus Deaton: It makes what education?
Russ Roberts: Harvard education. If everybody who teaches at Harvard grew up in the suburbs of Boston--
Angus Deaton: Yes. Yes.
Russ Roberts: and the wealthy suburbs of Boston, I think that's another factor. People would argue--mainly they'd worry about the effect on inequality. But it also--there's a literal quality issue there of background. Well, that's okay. Other schools--
Angus Deaton: No, actually I think that's not true. Because--and in economics I know the numbers, and in other subjects apparently the same--something like, in the Princeton Economics Department the last time I counted there were 35 different countries [?]. And that's happening throughout academia in the United States. So that, to some extent, has substituted for domestic opportunity, if that is what has happened. And I think it actually is very important and under-recognized, that there's been this huge shift in American academia that comes with globalization. But I went to the opening exercises at Princeton a couple of years back, and you know, they give [?] to all the underclassmen, and women, because the seniors got them when they graduated. And they read out the schools they've been to. And both Anne and I were just astonished by the extent to which they were private, you know, well-endowed American private schools.
Russ Roberts: Yep. Well, there's some truth to that. And some of it's probably an artifact of the baby boom and the desperation with which people are trying to squeeze their kids into the handful of first-rate schools--which, there can only be a handful, by definition, if you only care about relative quality and not absolute quality. And it's a challenge.
Angus Deaton: And also inequality partners[?] that up, too. I mean, there are a lot of very rich young people with small caps[?].
Russ Roberts: With what?
Angus Deaton: With small caps.
Russ Roberts: Meaning?
Angus Deaton: Well, I mean, if you look at New York City, where my son lives, for instance, you don't know the competition to get into even kindergarten is cutthroat. And it's not as bad in other cities, but you see it everywhere to some extent.
Russ Roberts: Yeah, no, that's true. It's worse there, but it's bad in lots of places.
Russ Roberts: Well, let's close with some optimism and cheer if we can find it. We both are somewhat, I suspect, uncertain about our ability to either change the quality of the American school system or to get those changes that we might desire in place. You think anything else can happen in the short or medium run that's going to help people cope with the kind of changes that are coming, in technology perhaps if not trade? As one EconTalk listener pointed out to me, the Autor effect, the China effect, is probably a one-timer. It was the result of hundreds of millions of Chinese moving to cities and wanting to work in factories. It maybe accounts for--it's still only a portion of the changes in manufacturing--
Angus Deaton: Automation has got to be more important, right? It's not going to go away.
Russ Roberts: I think it is. Well, that's true. So, got anything to be cheerful about?
Angus Deaton: Well, I'd like to see much more attention paid to campaign finance reform, as paid to campaign finance reform. I don't think we can have a very good politics when Congressmen and Senators spend 80% of their time raising money. And it affects, you know, what sort of voices are heard in Washington, and I think that certainly contributes to the problem. You wanted me to be optimistic, and I'm not very optimistic that that might happen, but it would be really good if it were on more people's radar.
Russ Roberts: I couldn't disagree more.
Angus Deaton: Really?
Russ Roberts: I can't--to think that that would--first, I'm not even sure that would improve things. But secondly, I don't think it gets at the underlying problems in an important way. I don't think the--that people in Congress don't have enough time to solve our problems is not, to me, the problem. So, whether they have the incentive to do it, you could argue, is a result of the money. But I don't know--I just think there's deeper things going on here that are not related to Washington. Certainly the perception is, though; that part I agree with.
Angus Deaton: Yeah. Well, people don't feel they are being well represented by people who are beholden to interests that they think are very opposed to them. I think that perception is a big problem in its own right, because not perceiving that you are well represented is a diminution of liberty in itself.
Russ Roberts: Yeah, I agree with that.
Angus Deaton: So, anyway. But I do think the dynamism of the place and the fact that, you know, there are lots of people who are doing very, very well. And I think, for instance, my own subject, which I know best, I think it's been improved immeasurably by this influx of all these people with all these different backgrounds. And that part of globalization I think has just been wonderful. And it's made economics an infinitely more interesting subject than it used to be.
Russ Roberts: Well, let's close on that somewhat cheery note.