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Inequality Continues to Flummox Us: The 2022 U.C. Berkeley Stone Lecture
Delivered Virtually 2022-11-29 Tu
Slouching Towards Utopia: An Economic History of the 20th Century <bit.ly/3pP3Krk>
I want to thank Gabe. I want to thank the Stones. I want to thank the Stone Foundation. I want to thank the production team for this very nice opportunity to deliver my thoughts on how inequality is a Gordian knot of a socio-economic problem that has us as a species pretty completely flummoxed—even though human progress across the 20th century is, in many
I will divide my thoughts tonight into four parts:
1. Rebalancing the University, the Strike, & What We Deserve
The first part of this talk—the current strike…
…4. What to Do?
Finally, I arrive at the fourth part of my talk: Given all this, what should I do? What should we do? What should you do?
Remember, first, that economics’s utilitarian roots place an extremely high value on equality. We have every reason to think that the marginal utility of consumption declines steeply with wealth, even after we have gotten out of the range where a 50% increase in family wealth, cuts infant mortality by 50% and raises adult height by 2 inches. Any aversion to interpersonal comparisons of utility turns out, in practice, to be a claim that maybe it does not matter if they are poor because they would not appreciate the finer things. It is obvious how to judge any such claims.
Remember, second, that economics’s libertarian roots also place an extremely high value on equality. Absolute wealth is power over nature. Relative wealth is social power: power to seek the attention and assistance of others, to have a voice in what we are collectively going to do—and it is collectively, because on our own each of us would have a life nasty, brutish, and likely to be short. As John Stuart Mill wrote, the lives of the poor are lives of degradation and imprisonment. If one is locked in a cage, it does not matter much whether there is no key or whether one is just not rich enough to buy a key
Remember, third, ethical philosophy also places an extremely high value on equality. We have none of us made anything by our hand and brain alone, but only through what has been freely gifted to us in the form of this planet and of the accumulated stock of human wisdom, to which we are all heirs.
We understand why, before 1870, human societies were greatly unequal: humanity had no chance of baking a sufficiently large economic pie for everyone to have enough. Those who did have enough did so by virtue of their participation in the élite’s domination-and-exploitation scheme. Since 1870 humanity has accomplished a great deal: we now have the technological powers to bake a sufficiently large economic pie that everyone living before 1870 would have seen as certainly more than enough. Yet, although we have solved the problem of baking a sufficiently large economic pie, The problems of slicing and tasting it—of equitably distributing our collective wealth, and of utilizing it wisely and well so that people live lives in which they feel safe and secure, and are healthy and happy —those continue to flummox us, more or less completely.
That the social democratic order collapsed so rapidly around 1980 makes me think we should look back and try to figure out why it had not collapsed earlier—what had changed then? I am tempted to put forward the hypothesis that what had changed was the aging of those with visceral memories of the Great Depression and of World War II, who had in the front of their minds an unusually strong degree of empathy with others, remembering how the world, chance, and fate had demonstrated that we were all in this together.
So perhaps the first step is to recognize that this loss of solidarity is odd, for we are all in this together.
In his Wealth of Nations, Adam Smith argues against those who claim that a more unequal society is a better society, for in a more unequal society the rich and the government can get more work out of the poor for the same amount of coin. Adam Smith pulls an intellectual-judo move, drawing on expectations about gift-exchange:
No society can surely be flourishing and happy, of which the far greater part of the members are poor and miserable. It is but equity, besides, that they who feed, clothe, and lodge the whole body of the people, should have such a share of the produce of their own labour as to be themselves tolerably well fed, clothed, and lodged…
There are people in Pakistan whom I do not know who wove the carpets that are on the floor of my house. Whenever one of dogs looks like it might vomit, we frantically hustle them outside because the rugs are things of great beauty, which enrich our lives. In fact we should spend more time than we do looking down at them and admiring them. The thing about a well-functioning gift-exchange relationship is that each party benefits greatly on net, and each party believes that the current favor balance is against it, so it needs to do more and thus to strengthen the relationship.
Every time I walk on any of my carpets, I should think: I am really one-down with respect to the balance of favors vis-à-vis the people in Pakistan who wove this, and I should strive harder to appreciate the artistic gift they have given me, and find more ways to better their lives. I should take care that they’re somewhere close to the front of my mind.
I wish I had more to offer you. But I do, at least, have this. Thank you very much.