Professor McCloskey discussing some of her ideas
Professor Deirdre McCloskey gets a lot right. Her “Bourgeois trilogy” (the third volume will soon be published) is an important contribution to current thinking about economics. Indeed, her academic career, including a stint at the high temple of market economics at the University of Chicago, now centers on re-thinking economic discourse and perspective.* Her project of developing “humanomics” (as she has dubbed it) adds another voice to those attempting to bring a new reality to the subject of economics. In this, she joins the likes of Diane Coyle, Eric Beinhocker, and Nick Hanauer and Eric Liu among those whom I’ve read recently that want to change our understanding of the fundamentals of economics. McCloskey’s project in this area merits the highest praise and encouragement.
But I have a bone to pick. In a recent Financial
Times article, McCloskey dismisses current concerns over inequality.
Diane Coyle (Enlightenment
Economics blog) and Evan
Davis in The Spectator describe
her as taking an anti-Picketty position. McCloskey argues that “the Great
Enrichment”, the tide of economic development that has lifted all boats, counts
more than any resulting inequality. This Great Enrichment, which comes as a
result of changing ideas and practices and not so much as a result of the
accumulation of capital, has created the greatest era of human dignity and
liberty that the world has ever known. I don’t disagree. I have enough of a
sense of history to know that as a Baby-Boomer American I have lived in a
unique, golden era of general prosperity and even relative peace. (I was just
young enough—and lucky enough—not to have to go to Vietnam or even get
drafted.) McCloskey provides a compelling explanation and defense of the engine
of material and human well-being that we call “capitalism”. (She and I both
have reservations about the usefulness of the loaded word.) People around the
world have benefited immensely since thinking about economics and the bourgeois
life began to change in the 1600s. (As I write this now living in China, it
boggles the mind to consider the speed of change this country has undergone
since I first visited in 2004, not to mention since 1979.) She argues that
reducing the wealth of “the rich” (however you define them) doesn’t increase
the wealth of the poor. It’s not a zero-sum game. Innovation in ideas and
institutions create wealth, not exploitation. Thousands of years of
exploitation increased the wealth between warrior classes in a zero-sum game involving
lands and peoples with per capita incomes that hovered at about $3 a day for
about as long humans have lived in civilizations. Nor does economic growth come
from mere investment, so we have no incentive—in fact a disincentive—to choke
off investment by the rich.
McCloskey argues that the current concern with inequality
stems from envy, and to the extent her perception is correct (as it is in some
measure), she has a valid concern. Envy is a mental poison. It’s ugly. It’s
despicable. Perhaps Rene Girard is correct in identifying it (under his
designation of “mimetic desire”) as the root of evil. But perhaps most obvious
to me, entertaining envy of the rich is stupid. Why should we envy the rich,
the 1%? All the money in the world doesn’t buy you love, respect, admiration,
or other things that we value (although it can buy expensive imitations). Do I
admire Jay Gatsby or The Wolf of Wall
Street? Who admired the lead character in Wolf? I found the movie—centered on this
narcissistic, money-intoxicated jerk—too boring to finish. Having a great deal
of money and earning respect (for something other than having a great deal of
money) are unrelated. Perhaps there’s even a negative correlation. Don’t get me
wrong: all things being equal, I’d rather have more money than less. But all
things are never equal, are they? For me to have big money—I wasn’t born rich—I
would have needed to have been very lucky and willing to trade more of my time,
my energy, and my values (family, friends, leisure, community service) to get
more dollars. At some point, the marginal cost exceeds the marginal benefit. We
all draw that line at different points, as individuals and as cultures, but a
healthy individual does draw it. I’m somewhere between Henry David Thoreau and
Donald Trump, but I sure as hell hope that I’m closer to Thoreau!^
So what’s my beef with inequality if I don’t think envy
worth the coin and the rich don’t create poverty? It’s political. First, in our
American political system with its legalized corruption, money buys influence.
And lots of money buys lots of influence. Money isn’t speech. The U.S. Supreme
Court made a monumental and disastrous blunder in equating speech with money.
Money can coerce and seduce, but it does not reason. And with a lot of money,
such as Koch brothers-size money or Sheldon Adelson-size money, you can buy a
whole lot of scare time (sometimes referred to by the euphemism “air time”).
The same is, of course, true of more liberal millionaires, say a George Soros.
But either way, allowing any one person or group of individuals to dominate our
political discourse (if we can give such low talk a hifalutin name) is anathema
to reasoned, democratic discourse.
I realize that my referring to “reasoned, democratic
discourse” I have referenced (what can most kindly be labeled) a Platonic
ideal. But some conversations are more reasoned than others. It’s an ideal to
which we can aspire. I understand what most strongly motivates humans: fear,
greed, power, prestige, and sex. These are our base motives. But we want to
hide our motives in attempting to convince others. Perhaps we have an innate
shame of such animal instincts. So instead, we use reason; that is, public arguments
based on shared criteria relevant to the subject. In other words, what should
convince a disinterested audience of decision-makers? I realize this is an
ideal and not a reality. After over 30 years of practicing law, I know the
motivations that lead people into litigation: greed and an aggrieved sense of
dignity—although most persons don’t appreciate the prominence of the later. I understand
the challenge of trying to convince (what you hope is) a disinterested judge or
jury. Of course, they too have their built-in biases and motives, but like
democracy as a political system, it’s the worst way of deciding things except
when compared with all the others. (Thanks, Churchill).
When we concede the bulk of public discourse to the
super-rich, they set the agenda in their favor. They dominate the conversation
(to the extent we can call still call our democracy a conversation), and they
win the support of the populace by repeating their message over and over again
with no practical way to limit or challenge their assertions. (A lie told often
enough and sincerely enough becomes true.) Make no mistake: Republicans and
Democrats are both beholden to money. Individuals and organizations with big
dollars to contribute to campaigns for or against a candidate control the
agenda. Fear and resentment (and to a lesser extent seduction) are the current
hallmarks of mass-media political advertising. To allow this type of
communication to go unchecked, subject only to the checkbooks (and whims) of
the wealthiest, is an error of judgment that will long haunt us. Politics is
about the future, and a poisoned polity creates a poisoned future.
My other concern with inequality stems from living almost
two years in India. Corruption in India isn’t legalized and winked at as it is in
the U.S. In fact, I believe it’s comparable to the corruption experienced in
the U.S. during the Gilded Age and the era of Tammany Hall. But an even greater
problem in India stems from the pervasive and crippling social inequality that
has such deep roots there. The caste system is legally abolished, but the
social, economic, and political inequality remains. Upon exiting the Rambaugh
Palace in Jaipur, once a home to the local maja raja and now a five-star hotel
adjoining Jaipur Polo Club grounds, you can walk across the road and find a shantytown
slum of the deepest poverty. Between venues in India, one finds an impoverished
public space with poor infrastructure and little concern for the shared
environment. The rich, as they tend to do around the world, think that they can
retreat into their gated homes, their luxury cars, and their guarded,
air-conditioned buildings. But each day they have to experience “the real
India” of poor infrastructure, poor politics, and poor public spaces. I come
from a small town in Iowa where even the kid reputed to have been born a
millionaire had to attend the same schools and hang out at the same places as
the rest of us, the kids of the encompassing middle class. Based on that
experience growing up, I found the staggering inequality of India one of the
most shocking aspects of that culture. To the extent that the U.S. moves to
increasing levels of inequality—as I believe we are—we move in a way that will
denigrate the well-being of all, even the richest among us. If we in the U.S.
mimic the inequality found in India, we invite not only an impoverished public
space, but also social upheaval. While the poor can suffer from a relative lack
of money, no one willingly or happily suffers from denigration of their
dignity. This is the repeated lesson of civil rights and human rights
movements. Do we want to create a class of second-class citizens? Or rather,
perpetuate and enlarge it? I hope not.
Professor McCloskey, who has gotten so much right in her
analysis and defense of the innovation economy, the importance of ideas, and
the relative usefulness of markets (i.e., capitalism), understates the
importance of the growing inequality in America. This growing inequality, as
seen in stagnated wages and the decline of much of the white middle class, had
given rise an increasing politics of resentment and desperation. The Tea Party
and kindred groups, in the weird world of American politics, ally with the
plutocrats and free-market ideologues who denigrate government and any
intervention that limits business profits and prerogatives. It’s not rational,
but it’s real. We don’t have to soak the rich—let them keep their money. I’m
not happy when I pay taxes, but I’ve seen what happens without an effective tax
and public finance system. I don’t believe that I can buy a private world that
will insulate me from the poor, nor would I want that even if I could afford
it. I only argue that we not allow the super-rich to skew our system in a way
that warps out polity. We need to ponder the inequality that affects liberal,
capitalist democracies and not just celebrate the wealth that this system has
created.
*McCloskey also held appointments in economics and history
at the University of Iowa from 1980 to 1999. I don't believe that we ever met.
^Having said this, I must report that I’m not retired or
independently wealthy and that anyone knowing of remunerative work in Suzhou,
China that doesn’t involve me teaching English should contact me immediately!
Ditto if you know a lawyer who could benefit from my freelance lawyering
service (www.GreenleafAdvocacy.com).
