#115: Deaths Of Despair And The Future Of Capitalism – Angus Deaton
Sir Angus Deaton is a Nobel Prize-winning economist and coauthor of Deaths of Despair and the Future of Capitalism.
JOE WALKER: Angus Deaton, welcome to the show.
ANGUS DEATON: Thank you, pleased to be here.
WALKER: It’s a real honor to speak with you, sir. And we’re going to cover many topics of great import. But I thought we could begin with your background. And I thought we could start with your family. Tell me about your father, Leslie Harold Deaton.
DEATON: My dad grew up in a mining village in Yorkshire. He was actually born in the year of the last pandemic, the 1918 flu pandemic. And then, I guess his father worked down in the mine. Though, I think he had a fairly supervisory role. But he was down the mine. And he always wanted to get out of there. And I think he was not well educated. He left school, I think when he was 12 or so. They didn’t really have high school for kids in those villages. But he was drafted into the army on his 21st birthday in 1939. And then he got tuberculosis during the war and spent some years in the sanitarium and was eventually invalided out of the army in Scotland where he’d been training. And met my mother there, and they settled in Scotland. And he went to night school to try and make up for his education, or lack of it.
And he went to what is now the university. It was night school in those days. And took many, many years to eventually get the equivalent of a high school degree. And then a university degree and then a degree as a civil engineer. And he finished up being the water engineer for the south of Scotland. But he was always very determined that I get a better education than he’d had. And he certainly succeeded in pushing me in that direction.
WALKER: And how did he succeed?
DEATON: Well, I mean, he made it clear that, for him, education was a big deal. And actually, when I was just a kid and we lived in Edinburgh, we used to take walks on Sundays. My dad was often not there because he was working for a firm with civil engineering. And he would go off on expeditions. And so, I used to love going walking with him. And we’d often go to the botanical gardens in Edinburgh. And next to the botanical gardens was the school, Fettes College, which he had found out somewhere was a very, very good school, perhaps the best school in Scotland. And he said his ambition was for me to go there. And he knew he couldn’t afford it because the fees were a very large fraction of his salary. But there was a couple of scholarships every year. And he managed to persuade the teachers in my high school in Hawick, which was a pretty amazing thing, to give me special training to take these exams. And so, I got a scholarship and went to Fettes.
WALKER: Was that typical for a Scotsman of his generation, who was also uneducated, to be so focused on educating his children?
DEATON: Well, he wasn’t a Scotsman. He grew up in Yorkshire. And so, he settled in Scotland once he met my Mum. So, the Scots were typically … They at least liked to think of themselves as much more keen on education than the English are. But actually, it was my dad and not my … I’ve always assumed it was because he really didn’t much like this mining village. There was a lot of violence, a lot of drinking, a lot of early death. And he was a smart kid, who I think there was one kid in their school who was allowed to go to high school, and he was not it. And I think he always felt that very sharply and wanted to make sure that that didn’t happen to me.
WALKER: Angus, I’m a Walker. But on Mum’s side of the family, we’re MacIntyres. And I’ve actually still got some family in Edinburgh, Martin MacIntyre, who’s a Gaelic poet and a doctor. But my grandfather, my maternal grandfather was born in South Uist, which is a very-
WALKER: … Rugged and remote island.
DEATON: Yeah, I’ve been there.
WALKER: Yeah, grew up sleeping on hay. And then, by virtue of some hard work and scholarships, managed to get himself educated. But it was a struggle, that’s for sure.
DEATON: It was even a struggle … I mean, I was very fortunate. I had three cousins who I was very fond of who lived in the Scottish borders when we first went there. And they gave up on trying to find work. His dad worked on the railway. The railway was closed by Doctor Beeching. He had a second job on a farm. And then, when the railway job went, they couldn’t keep body and soul together. So, they all went to Australia. And they all live in and around Melbourne now.
WALKER: Nice. I read that your father refused to pay for you to renew your fishing license one year because there wasn’t enough money. Were family conversations preoccupied with money when you were growing up?
DEATON: There was certainly a lot of it. It was very tough for them, I think. And there may have been other things that I didn’t know about at the time, which meant there was a real shortage of money. But my father kept a little black book. And he wrote down every single thing he spent. And he was very, very careful with money. And I think he thought that I didn’t inherit enough of that from him, which is probably true.
WALKER: Do you like Edinburgh?
DEATON: Yeah, very much. And it’s been very sad, we would have been there this last summer. And I’m hoping, and they’ve restored Adam Smith’s final house, Panmure House in Edinburgh. And I’m giving the Adam Smith lecture there in the spring. But unfortunately, I’ll be doing it like this, I’m afraid.
WALKER: That’s a shame.
DEATON: Though, they promised I could take a rain check on the visit. But yeah, I love Edinburgh.
WALKER: Yeah. Having done a little bit of travel around Europe, I’d have to say it’s probably my favorite city in Europe, at least aesthetically. But what would you say is the most underrated thing about Edinburgh?
DEATON: I don’t know. You know, I haven’t been there, I haven’t lived there for a really long time. But we always used to make fun of Scottish food. And that’s not really true anymore. Edinburgh’s a good place to eat. And of course, the festival meant a lot to me when I was a kid. And it was really before the French started. But when I was at Fettes, we would go in the summer and hear fabulous music.
WALKER: Yeah, my impression of Scottish cuisine was that it was very path-dependent, and was originally probably poverty food. And there’s really no reason to continue eating haggis in today’s day and age. But that’s my subjective tastes. Angus, as a poor kid who made good, how do you think about the notion of meritocracy?
DEATON: Well, I think meritocracy’s great. It was great for me. But I think … You know, and you certainly think it’s a good idea that the people who know how to do things, do things. You’d like your pilot to have a pilot license, rather than be a randomly selected guy on the street, sort of thing.
WALKER: Ideally, yeah.
DEATON: And I wouldn’t be talking to you if you hadn’t made your way up through the competitive business of podcasting, or whatever it is. So, yes. And no one wants to go back to the time when everything went to the children of the aristocrats and so on. But it’s become clear recently, and you’ve read the deaths of despair, that we and quite a few other of today’s writers are exploring the much darker sides of meritocracy and thinking that meritocracy is something to do with the emergence of disenfranchised populist classes in the US and in Europe too.
I mean, it’s probably sharpest in Eastern Europe, where under communism, there was really no way of getting out of those places. And so, we all rejoiced when it was opened up and these kids could then go abroad to go to school and so on. But if Bulgaria sends all of its best kids to Harvard or other universities around the US … The IMF is now populated with Bulgarians, including its managing director, right? But there are lots of Bulgarians, very talented Bulgarians. But all of those people are not in Bulgaria. And there’s been huge exodus out of these countries and huge demographic outpouring too. And I think that’s been a problem, that they don’t even have their own meritocrats at home. But even in the US, you’ve got this ruling class of the educated elite that is not very responsive to the people who didn’t go to college.
WALKER: And in many ways looks down on them.
DEATON: Yes. You know, Hillary Clinton’s comment about the deplorables is a sort of almost perfect synthesis of those views. And it was a disaster and it remains a disaster.
WALKER: Yeah, it really struck a nerve, that word. You became an economist almost by accident and with little formal training. How do you think about self education? Is it more of a blessing? Is it more of a curse?
DEATON: Well, to say that I was self … I mean, I’m maybe a little bit self-educated as an economist. But I wasn’t self-educated. I mean, you know-
WALKER: No, no. I wouldn’t mean-
DEATON: I went to a very fancy private school in Edinburgh with wonderful teachers. And I went to Cambridge to study mathematics. And I got tired of that about the same time they got tired of me. And so I fell in to economics. But I do think that there’s something to be said for … I’ve learned a lot in a long career. And I’m always finding new techniques that I didn’t know about or new data sets or new problems. And there is a tendency to remember things that you learn for yourself rather than are drilled into you.
But I’ve always been in places where I had wonderful colleagues who would teach me, who would help me. So, when I’d be given up, beating my head against the wall trying to read some paper that I didn’t understand, I would go ask someone and they would often tell me. It’s amazing in academic how little people as other people to help them. And people love helping people, I think.
WALKER: Do you think that’s because nobody wants to expose themselves as a fool?
DEATON: Yes, exactly. Yes. And it’s a big problem in teaching in graduate school here, that kids won’t put their hand up and say, “I don’t understand that.” Or a few of them will, and they’re worth their weight in gold. But the others all don’t want to show their compatriots that they’re missing out on this.
WALKER: A key theme of your career as an economist seems to be the question of measurement and-
WALKER: … Epistemology more broadly. And I don’t want to go into all of that. But I thought I might just ask you one question about causality in economics and whether observations made in the absence of the so-called gold standard of evidence that is randomized control trials, or RCTs, are just illusions?
DEATON: Well, that’s absurd. When you get out of bed and stand on your feet in the morning, you have not done an RCT to see if your legs will support you, let alone get you to the bathroom and shave and clean your teeth. So, there’s a tremendous amount of knowledge out there that didn’t come about through RCTs. There’s also a lot of even drug knowledge, like there’s been lots of RCTs using aspirin. But I think the basic RCT on whether aspirin cures a headache is something that I don’t believe there’s been an RCT on, and we don’t need one on, because we know it works. And there’s a huge amount of things like that, that we know work, for which there really hasn’t been any very good … Or there hasn’t been an RCT. So, there’s certainly plenty of knowledge and plenty of causal knowledge without RCTs. There’s certainly some causal knowledge that’s come from RCTs. But it’s certainly not the only way of getting there. And often it’s not as good as it seems.
WALKER: Do you think RCTs have been fetishized in development economics?
DEATON: Yeah, for sure. I would love to see … Well, I’m not totally convinced that they’ve done much to reduce poverty in the world, which was the aim of them.
WALKER: And is the main problem external validity?
DEATON: That’s one problem. There’s a lot of problems with even internal validity, in that actually part of the issue is, people expect too much of them and they think they reveal the truth. And quite often, you can catch people actually saying that. They say, “We know it’s true because we did a randomized control trial.” But randomized control trials certainly don’t reveal the truth. They give you an estimate, like other statistical procedures. And that estimate has a standard error — a probability of having arisen entirely by chance. And that’s true for all RCTs. They’re not constructed in such a way … In fact, in some ways, the ideal experiment is an experiment that a physicist would do in a lab, in which you control everything. And in a lot of social sciences, you can’t control everything. And so, people rely on a randomized trial. Well, this is sort of weird because a physicist would say, “What? I very carefully controlled the air temperature in this room. What do you mean I should set it randomly?” Right?
So, random is sort of … If you can control, you control. If you can’t control, randomizing you’ll get the right idea on it, you’ll get the right answer on average maybe. But it’s not the gold standard that it seems. It’s actually a fairly weak alternative to what you’d really like to do.
WALKER: And I guess, even if you could control everything, it still wouldn’t mean that the results are applicable moving into the future, because unlike the laws of the universe, the social world isn’t stationary.
DEATON: Well, it’s not that the laws of the universe are stationary either. But yeah. No, and it’s often pretty clear that it won’t. I mean, I think what’s going on right now is very interesting. I mean, I’m not a professional in medical randomized control trials. But the discussions that are going on about these different vaccines and whether you should use them sequentially, or whether you can mix and match them. And the RCT people have been jumping up and down and saying … I heard someone on the radio this morning saying, “The British government is abandoning science,” which translated meant there’s no randomized control trial that supports what they’re doing, right? But the people who are doing it have a very good reanalysis of the data, which certainly makes assumptions.
But you know, you always have to make assumptions somewhere, including in an RCT. And so, the idea that “anything that’s not an RCT is not scientific” would rule out most of scientific endeavor on the planet. But I mean, it’s clear that there’s lots of compromises going on right now around this vaccine, and I think rightly so, that compromised any idea this is a pure gold standard, that’s always the right way to do this.
WALKER: So, capitalism in my experience is like a one-word Rorschach Test. And as Jon Haidt points out, some people hear it as a synonym for liberation, others for exploitation. And I thought just for the sake of a nice clean conversation, we could begin with a definition of capitalism in your eyes.
DEATON: I’m not sure a definition really helps very much, because then we get back into who used the word first? What did it mean to them? What has it meant historically? But it’s something to do with the largely free market systems that we have in the US and Australia and in the UK, in which production is not controlled by the government, mostly not controlled by the government. But I mean, the margin in which I’ve been trying to work is the question of variants of capitalism, because I don’t think there’s really that much option out there right now, you know? State-driven socialism was not a great success. And it really did undermine people’s liberty and in the end was not very good at producing stuff either. So, the critiques from the right on that were very much proved to be right. But on the other hand, it’s some form of market organization that has hauled a billion people out of poverty around the world. And it’s very hard for me to imagine anything that’s very different from what we have now in a systemic sense really doing that.
That doesn’t mean that a lot of it isn’t working very well. And I can understand, and I think it’s a great danger, actually, that there are so many abuses at the edges going on, especially in America. But not just America. But I can understand … if pharma companies are allowed to poison people for profit, if one of the most respected pharmaceutical companies in American, Johnson and Johnson, is growing opium in Tasmania to feed the epidemic, and if McKinsey, one of the most respected companies in America, is advising Purdue Pharmaceutical how to incentivize pharmaceuticals to kill their own … Sorry, pharmacies to kill their own patients, then you can see if that’s capitalism, why most young people don’t want anything to do with it. So I think we’ve got to fix it, otherwise we’ll lose this great engine that produces stuff and could keep us healthy and can allow us to enjoy good lives.
WALKER: The Great Escape is the story of that engine and then Deaths of Despair and the Future of Capitalism is kind of like the macabre twist at the end, which shows that that engine’s starting to malfunction in certain ways in certain countries. I just want to dwell for a brief moment on the success of this engine. And in rereading the great escape, you caused me to go back to the letters between Charles Darwin and his wife and first cousin, Emma, in 1851, when they were anguishing over the illness of their daughter, Annie. And you picked that an example because Darwin’s obviously a famous person, but it serves to illustrate the commonplace for parents for most of human history, which was, there was always the specter of losing one of your children. Perhaps just talk a little bit about that and how we’ve made such great leaps forward in things like infant mortality?
DEATON: Yeah. Well, I wanted to back off just a little bit first, which is, The Great Escape is not a pollyannish book, in that I never, ever claim that its progress was smooth, you know? And that real wages and health has improved every day since James Watt invented the steam engine or something of the sort, right? And some of the most awful setbacks have been in the 20th century, when you think of Mao Zedong and The Great Leap Forward and the 30 million people who died, never mind the Holocaust and all the rest of it. So, this is not a smoothly working system.
And I mean, I resist a little bit this idea that The Great Escape is an optimistic book and Deaths of Despair is saying, well, we got it wrong. And I don’t think what’s happening now is anything like as bad as some of those episodes. So, with that said, let’s go back to Darwin, because I do love that story. Well, I don’t love the story, I love the humanity of Darwin. And how, eventually they lost that child, I think. And he was always very worried that his wife was his cousin, and that marrying your cousin was a bad idea and might have had something to do with this.
But why did we come out of that? I think through human ingenuity one way or another, at the deepest level. I’ve put a lot of, I think of the Enlightenment as being the hinge around which all this happened at a very deep level, that people just didn’t accept their fates and didn’t just accept doing what they were told to do by the church or by the state, and started thinking out things for themselves. And then, when they did that, you began to get the industrial revolution. You began to get something like capitalism. And you know, it’s not a failsafe mechanism because by the time Darwin was there, the industrial revolution was really starting. And for the first half of the 19th century, wages were not rising. Infant mortality was not going down, especially in the cities.
But in the end, it sort of sowed the seeds where we really could come away from this and build on that. And a lot of that was because there were opportunities for people to think up new ways of doing things. And in many cases, they could get rich by figuring out those new things. So, they had big incentives. I don’t think incentives are the only things that really matter. The Chinese woman who discovered … What’s it called? The drug Artemisinin that goes against malaria was sort of ordered to go and do that by Chairman Mao, sort of, I guess. But she certainly didn’t get rich as a result of doing that. She got the Nobel Prize the same year I did. So, I don’t for a minute think you need incentives to do things, but I think they probably help. And it’s probably true that we want people to invent wonderful new things that make our lives better. And somehow, we falter around that in a way that we should be able to be better.
WALKER: How was Deaths of Despair and the Future of Capitalism born?
DEATON: Anne and I tend to spend our summers in Montana. I used to say we spend every summer in Montana, but we did not this year, although we probably could have done. And we read and we work and we go fishing and go hiking, we cook a lot of nice things away from the sort of rather frenetic atmosphere around here. And we were each working on different, but not totally unrelated things. I’d had a long-term interest in happiness and measures of happiness. And I’d promised to write a paper for a conference about whether happiness and suicide were related or not. So, suicide seems to be the ultimate unhappiness. You would have thought that places where there is a lot of suicide are places where people are very unhappy, which turns out not to be true by and large.
And I was working on that. And Anne, who suffers from quite severe lower back pain, of the kind that we describe in the book, was working on pain. And so, when we had these suicide numbers and we discovered that there’d been a big upsurge in suicide among middle-aged white Americans, which is not something we were looking for or knew. And so, we were going to have a slide in the deck on that. And then, I thought it would be quite good to see, is this a big thing or is it a small thing? That’s what we’re all trained, at least to check. Here’s this thing, it is interesting, but is it important? So, we drew a graph which showed total deaths of the same people to see whether suicide was big or small relative to that. And that was when we discovered that total deaths were going up in this age group for white, non-Hispanics in middle age. And going up quite fast for those without a BA, for instance. So, that was the beginning of this.
And I think … Then we looked and said, “Well, it can’t just be suicides. The suicides are not big enough to produce this.” So, the question was, what else is going on? And that’s when we discovered opioids, we discovered a rise in alcoholic liver disease. Actually, in a sense, we made a mistake because we looked for the things that were rising fastest, which is where you would start. And so, we got these three things, which later, I think Anne in an interview somewhat like this one had called “deaths of despair”. And that sort of caught. But actually, probably the biggest factors going on is the fact that cardiovascular disease, heart disease, and stroke, which has been falling quite rapidly in nearly all countries, all rich countries, including Australia has driven the rapid decline in mortality. And in the last quarter of the 20th century, it seems to have stopped doing that and is beginning to turn around. Different rates in different countries, but there’s so many people who die of cardiovascular disease that, even if that slows down and wasn’t actually turning around, that’s enough to make the total go the wrong way.
WALKER: So, at the same time that deaths of despair are increasing, heart disease isn’t … Like, progress there isn’t providing the same fall in mortality rates that it used to.
DEATON: That’s right. And that’s true to varying degrees in different countries. Some countries are less effected by this than others. There’s been pretty much a slowdown everywhere. But in the US, I think, it’s pretty unique in having slowed down and beginning to go up. And it’s not because … You might think, well, we’ve done so well on this that we’ve hit the floor, we can’t do better than this. And that’s not true because other countries have much lower rates of cardiovascular disease than we do.
WALKER: One of the ways your work is commonly misconstrued is that people think that poverty is the source of the deaths of despair. But it’s really not. It has to do with this lack of a four year college degree. Is that problem unique to the United States?
DEATON: I don’t know. And I suspect not. But the data don’t exist in most other countries. So, we’ve been trying to persuade the British Statistical Office to … Let me back up. In the US, the death certificate for the last 30 years has had education on it. So, we download the 40-odd million death certificates and we can look at educational status on each one. And that’s how we find these things out. It would be lovely to know what their income was or how much money they had or what occupation they were in. But we don’t know any of that. And to be fair, we don’t know their poverty status. But you’d be stretching it quite a lot, especially because for most of the period we worked on, and it’s not true anymore, African American mortality was doing just fine. And the poverty rates among African Americans are much higher than those among whites. So, we never really thought of this as really being a story of poverty.
WALKER: Do you know anything about deaths of despair in Australia?
DEATON: Well, I know you had a drug epidemic, which I think has largely been brought under control. And if Anne were here, she could answer that question much better than I can because she’s been looking at these international data. But I don’t want to say something that may not be true. But it’s certainly true that when we looked at deaths of despair across countries, it was the English speaking countries where you see some trace of it in one, two, or three of those categories, and Australia is certainly included in that.
WALKER: Angus, can you just give our listeners a sense of the scale of the problem in the United States? How many deaths are we talking?
DEATON: Well, if you add suicides and alcoholic liver disease and opioids or drug overdoses together, it’s running at about 160,000 deaths a year. So, we just got the data for 2019, which was, I think 164,000. And the two years before that were both 158,000. So, there’s 340,000 people died of COVID in ’20, or so far. So, relative to that, it’s about half of that. It’s also true that we can hope at least that COVID goes away. It’s less obvious that this will go away. I should say that the 160,000 or whatever is too many because that includes all suicides, all drug deaths and so on. So, maybe if you go back to the 90s or something, they were probably running at about 60,000 a year. So, there’s what, a 100,000, sort of 90,000 to 100,000 deaths from this that didn’t used to happen and are now happening.
And if you go to a country like Germany, there’s basically none of these there at all. Suicides which are rising pretty rapidly in the United States are falling in pretty much every country in the world. And so, the US has got suicide rates that are up near the former countries, the former Soviet Union, which were all those terrible places for suicide. So, Americans really join a pretty bad club there.
WALKER: Why did Emile Durkheim believe that it was more-educated people who killed themselves?
DEATON: I think because if you … Remember, he was writing at a time when there weren’t all that many people who were educated. And that’s one thing. But it’s also this feeling that to get educated, you move out of the social structure, which is a source of support. And then you move into another one. And when I think about it, I think about when I was at Cambridge, and I had to call my parents every so often. And like all college students, there were times when I was really troubled and I didn’t think the academics were going very well or girls or something, right? Well, you never talk about girls with your parents, but you could at least talk with them about the work in principle. But my parents had no idea what world I was in. And it was just impossible to talk about the things that meant anything to me, and for them to have any sort of understanding of what that was about.
Now that wouldn’t have been true, I guess, if my parents had been educated at the same level. It might have been easier. But I think there is the sense that, I think in Durkheim’s day, many educated people came from places where there was not. And they didn’t … The enlightenment comes with a cost. You break away from religion, you break away from the state. But boy, you’re out there on your own now. And those people are not really there to help you. So, that would be the broader idea.
WALKER: Why are African Americans much less likely to kill themselves than are white Americans?
DEATON: Yeah, well that’s a question that’s plagued us since the very beginning. So, one thing is, they are doing it now. Well, no, okay. Start again. I’d love to add to something that was actually not your question.
DEATON: We don’t know. It was true for Durkheim even. He said that Negros do not kill themselves. And you know, I don’t think there’s any super convincing story there. But Durkheim and others sort of thought they’d been treated so badly for so long that nothing you can do to yourself seems bad compared with that. And so, they’re sort of weathered in some sense, or they’re capable … They’re attuned to suffering, would be one way of putting it. So, those rates have always been low relative to those for whites. But also, women are much less likely to kill themselves than men too. That’s always been true. But when I leapt ahead at the beginning, it turned out that there was very little in the way of opioid deaths among African Americans until 2013. And then it happened there too. So, now you see this happening everywhere.
WALKER: Yeah, right. So, now people are mixing fentanyl with heroin and crack?
DEATON: Right. Right.
WALKER: In Coming Apart, Charles Murray’s book, he lays the problems of less educated whites at the feet of their own lack of industriousness and self … I guess their own pride. And indeed, to the extent that it has a theme, that’s probably also the main theme of J. D. Vance’s book, Hillbilly Elegy, that the problems have an internal source. Do you have much sympathy with that view?
DEATON: A little, not much, but some. I mean, Charles Murray’s a serious scholar with a very conservative take on these things. I mean, his book about the whites is very similar to the book he wrote about the Blacks in the 1960s sort of idea. And I think the thing that impressed us, and actually it was … the person who suggested this four days after the Deaths of Despair paper was published, the first paper, was President Obama, who said, “What you’re writing about here happened to the Black community in the 60s and 70s. You ought to go back and draw that parallel,” which was certainly a very good suggestion.
And when Murray and indeed, Daniel Patrick Moynihan wrote about the problems of the Negro family then, it reads like this is what’s happening again now. And you know, Wilson at Harvard had basically taken on Charles Murray then, basically said the problem is not within the community itself, it’s the fact that jobs had gone away. And what happened was the talented, educated blacks moved out. You were left with dysfunctional pathologies in the center cities. And a lot of that reads like what’s happening now. Now, for us, let me tell you the bit I do agree with and the bit that we have trouble with.
The bit we have trouble with is, there’s been a fall for more than 50 years. I mean, with the business cycle, it fluctuates with the business cycle. But the trend is very much down in the employment to population ratio for men without a BA. And for women, it rose, like everywhere in the world, until about 2000. But since 2000, it’s been going down too. So, why are those people not in the labor force? Well, a lot of them lost their jobs. So, every time there’s a recession, you see a big decline in this ratio, and then it picks up. And then you get another recession and it goes down again, but it never gets back to where it was last time. So, there’s a ratcheting down of this.
And Charles Murray attributes this to lack of industry, lack of industriousness, and that people would rather stay at home and play video games than they would actually go to work. The trouble with that explanation is that, if that’s happening, wages should be rising, not falling, you know? Sort of econ 101. And sure, there’s lots of other things that could be going on and offsetting that. But it’s a pretty obvious story. And you have a pretty good mechanism for why that’s the case. There’s less and less jobs for less educated workers in good firms that used to be there. There used to be jobs for drivers and elevator operators and mail room jobs and transport and food services and cleaning and security, all of that. They’re all gone. They’ve all been outsourced to labor supply companies. You could go work for those companies if they’re not in Malaysia or somewhere, but they’re not really very good jobs. And so, we really do see this as the economy’s just turned against those people.
The bit where I think Charles Murray is right is the social bit is very hard. And one big technical innovation here was the contraceptive pill, which the sociologists argue took bargaining power away from young, unmarried women who could refuse to have sex unless the guy promised to marry them. And with the pill, the responsibility just switched to the woman. And the men said, “Well, if you’re worried about that, go take a pill.” And so, there was this feeling that things got very much worse for less educated women, both white and black. And that there became a sort of disintegration within the family, which did not happen among people with a BA degree. And you get these so-called fragile families, a term that’s due to my colleague, Sarah McLanahan, in which these cohabitations are serial, they don’t last for very long, they often produce kids, and you get people in their 50s who don’t know their kids. It’s a mess. And so, that’s social destruction, which has come about partly through the contraceptive pill, but also through changes in social mores, you know?
It used to be when I was young, young men all fantasized about going off with some young woman. But we didn’t really think it was going to happen, mostly it didn’t. And it just got much easier. And so, these men got all that additional freedom. But it came back and bit them 30, 40 years later.
WALKER: And so, to summarize, the most elegant critique of Charles Murray’s view is that falling wages would suggest that this is more a problem of labor demand than labor supply.
DEATON: Right. You know? If quantity’s going down and price is going down, it’s got to be demand.
WALKER: Makes sense. So, what are some of the reasons why deaths of despair have been increasing?
DEATON: Well, I think it’s this … I mean, we come back to our discussion about causality here now, that there’s not a single cause. And you know, it’s like if you want to trace out these causal things, a lot of it’s contingent. It depends what else is happening at the same time and the environment in which it’s happening, you know? Because the globalization and automation has been hard for less-educated workers everywhere in the richer world. And it’s not just an American problem. So, why is it worse here? And one of the reasons we think is because of the incredible cost of healthcare here. And we write a lot about that in the book, and the fact that it’s done through employment instead of paid for through general taxes.
And when it’s done through employment, the fact that the cleaner’s health insurance costs about the same as the CEO’s health insurance means that the burden of healthcare and wages is intolerable at the bottom and is not really a significant thing at the top. So, we think that that has then destroyed a lot more jobs than needed to be destroyed, even though it’s happening elsewhere. The other thing which people on the left say, and may well be true, is most countries have a much more elaborate welfare system, a much more complete welfare system than we do here. So, European countries typically have a value-added tax that generates a lot of revenue. And that’s used to support a welfare state, which provides unemployment benefits and so on.
So, that’s one story. You’ve also got this crazy … another strike against healthcare. Other countries don’t allow doctors to prescribe heroin in huge amounts. I mean, it’s not called heroin, it’s called OxyContin or something. But you know, that just doesn’t happen in Britain, it doesn’t happen in continental Europe. These drugs are used in hospitals. Like, if you have a hip replaced, they might slip you a couple of those for a few days while you’re recovering in hospital. But you don’t get to take home 100 pills. Your dentist doesn’t give them to you when you have a toothache, for instance, all of which happens here. And then, once the docs had discovered what they were doing and pulled back, it had ignited a secondary explosion of illegal drugs after that. And we’re still dealing with that.
So, those are some of the things that are different here. I think the marriage things are a bit different too. The European countries seem to have given up. They don’t expect everybody to be married anymore. And it doesn’t seem to have the same negative consequences that it has here.
WALKER: There’s a pretty clear line from unemployment and falling wages to family breakdown. And that is that if men don’t have good jobs, then they’re not marriageable. Could you draw a line then also rippling further outwards to the breakdown in community that’s been documented by people like Bob Putnam? Is that related to the declining wages? Or is that something that’s been happening largely separately?
DEATON: No, I think it is related. And Bob Putnam and I talk about this quite a lot. Remember Bob Putnam’s guy who was bowling him on was in a union hall, right? Those union halls don’t exist anymore because there are hardly any unions left in the private sector. And those unions were … They helped keep people’s wages up. They helped keep even their non-membership wages up. They provided a lot of safety and working condition inspections in factories that the feds should do, but don’t have the manpower to do. And they were the center of social life in many towns. So, when the power plant goes away and “Generous Motors”, as they like to call it, closes its plant, these people are not just deprived of jobs. They’re deprived of a social life. They’re deprived of a lot of stuff that goes together with that.
So, I think the decline in unions is a big part of the story, both directly and indirectly. I also think the unions used to give people a political voice that’s not really there anymore. I think this is true in most rich countries too. It used to be … I think you probably have more of it left in Australia than we do. But you know, in Britain in 1945, seven members of the Labor cabinet had started work on the coalface. And so, these were workers. And they were representing workers. They were not professional politicians, which politicians on the left today are. So, I think there’s been a real loss of representation among working people — the ability to participate in society. Something like 98% of the US congress has a BA. And so, two thirds of the population do not. And that’s just a terrible source of misrepresentation somehow. And I think that’s been very bad for people too.
But Putnam mostly talks about religion. And many younger, less-educated Americans are drifting away from churches too. And churches have been very much more important in most rich countries. And part of the reason they’re drifting away from churches is because the churches have become very right wing. Not African American churches, but a lot of the evangelical churches are seen as being very right wing. And so, young people are repelled by that. As I think Bob Putnam showed in his book, American Grace, we have this very odd thing in America, which I first thought was really odd, which is that people choose their religion based on their politics and not the other way around.
WALKER: Yeah, that is a strangely American thing. And so, to the erosion of work and the degradation of community life, we then add at least the perception of a loss of racial privilege. Talk a little bit about that. And this was something that was obviously discussed in the book, but at the same time, it’s something that’s very difficult to quantify.
DEATON: And it’s not really our research area. I mean, we’re quoting other people who’ve written very movingly on this. And it’s not that people enjoyed the privilege. I mean, I think they had the privilege without particularly knowing it was there. But they’re not enjoying the withdrawal of that privilege, which in many cases is all they had.
WALKER: Have you read Arlie Hochschild’s book, Strangers in Their Own Land?
DEATON: Yes, very much so. No, that’s sort of what I’m quoting from here. And she reviewed our book in The New York Times too. So, you can look at the full closure on that feedback loop. But yeah, she talks about people jumping in line and people who are pursuing their version of the American dream, and they can’t do it anymore because these jobs are being given out to people who they don’t think really deserve it, led by … I think she called Obama the Cutter-in-Line-in-Chief, or something of the sort. But that’s right. And the elite universities that have diversified and are taking large percentages of minority kids of one sort or another. There’s a lot of resentment on behalf of the people who could have gone to Princeton or Harvard in the old days, but can’t anymore.
WALKER: And so, fundamentally and ultimately, people feel like they don’t really matter to anybody else, whether in their own family or their community or society at large. And that is something that underpins deaths of despair, which are really deaths of sort of a spiritual nature. And I’d also note that it’s consistent again with Durkheim’s conception of suicide, which is that it occurs in the context of a social network that’s failed to provide meaning and structure to the individual.
DEATON: Absolutely. I agree with that. And that is not a bad summary of the thesis of the book. I mean, it’s one of these interesting things when you think about causal structure. If you were to ask me what’s the proximate cause of someone killing themselves, it may be that they’re an alcoholic or they’re addicted to drugs. And that seems like the only way out of that, you know? So, it’s a pretty bad place to be there. People really do despair because they think they’ll never escape from that. Or what would have tipped me over the edge is if I was 50 years old and I’d had three sets of kids and I didn’t know any of them anymore and I was on my own living in a small apartment somewhere. I’d feel my life had been a failure and it wouldn’t be very clear to me what was worth living for at that point.
Now, of course, at that point, you’re a long way away from the labor markets that have not done very well. But this happens at many levels, and it needn’t always happen the same way. It’s just sort of how the causal structure is wired up in a particular society in a particular time, though as you said, very nicely, I think, there are still these underlying forces that seem to have been there for a long time, like Durkheim.
WALKER: I remember in the book, you quote the example of two ladies who were in, I think Kentucky. One, her husband blows his brains out with a gun because he’s carrying this enormous guilt from his son turning to drugs. And the second has cancer and has had lifelong alcoholism along with most of his friends. And pours alcohol down his feeding tube, directly into his stomach and dies from alcohol poisoning. And in those examples, the proximate causes are grief from a son who’s turned to drugs, and then alcoholism. But then, you can start to sort of dig a little deeper and ask, “What are the ultimate causes?” Which I think is sort of the great contribution of this book and the work you’ve done with Anne.
DEATON: I think just to complete that, the big tell in some ways that we haven’t probably emphasized enough is, these are not happening among people who have a BA. We can get addicted just as well as anyone else can get addicted, right? We could become alcoholics, we could become heroin addicts, but we don’t. And this education has been a really protective thing for people somehow. And so, it’s not the labor market, it’s not doing this badly for everybody, it’s doing it just for some.
WALKER: In the book, you write that before 1970, there was growth and no increase in inequality. Afterward, there was lower growth and growing inequality. Are those trends inter-related?
DEATON: Yes, but I’m not quite sure in which ways. There was much slower growth after 1972, so the increase in inequality becomes much more difficult because … We don’t mind inequality. You know, there was Hirschman’s favorite story of the tunnel, which is there’s two lines of cars stuck in the tunnel and you’re not allowed to change lanes. And you’ve been stuck for an hour and a half, and then one lane starts moving. And so, there’s a huge amount of inequality. And the lane that’s stuck is very pleased, because they think, “Okay, we’ll be out of here soon too.” But as time goes on, that pleasure turns to suspicion and eventually into outright rage as they see these people doing well and they’re not doing well at all.
So, I think the lack of growth has made this much worse than it would otherwise be. I think most of us, most people can see other people doing much better than them if they’re doing okay, life is going okay. But if their lives are not going okay, then that’s likely to produce a lot of trouble. That doesn’t tell you why all this happened. I mean, why growth slowed down. And there’s as many stories of that as there are macro economists.
WALKER: And maybe even more.
DEATON: Maybe even more.
WALKER: So, your concern is primarily with rent-seeking. And if the process that generates inequality is an unfair process, if people are sort of pulling the ladders up behind them, that’s a problem. But you’ve got no truck with the makers, as opposed to the takers. And to the extent that inequality is a problem of rent-seeking in America, perhaps the relationship between stagnation and rent-seeking is that, while there were low hanging fruit to be picked, making a success in life was primarily a task of exploiting nature, rather than other people. But in a world where the overall size of the pie isn’t growing as quickly as it used to be, or sometimes isn’t growing at all, people’s mindset is liable to shift to zero-sum and negative-sum thinking, which fosters rent seeking. What do you make of that story?
DEATON: Yeah, I’m not sure about the low hanging fruit. I mean, it’s not as if we were in an agricultural society where there were bananas lying around on trees or something. In other words, a lot of other stuff going on. But the story is not very different from the one that Mancur Olson told a long time ago, that rent-seeking would bring down modern civilization, because basically it was much more profitable to go out there and get some congressman or senator to pass a little tweak which makes you incredibly rich. And those tweaks not only make you incredibly rich, they slow down growth. So, part of rent-seeking is that it actually slows down growth too because all these people are spending their time … I think in The Great Escape, I tell the story of a manufacturer I met in India on an airplane who was flying to Jaipur. And he made some widget of some sort, I forget what it was. But it wasn’t a very significant thing.
But he ranted on our two-hour flight from Delhi to Jaipur about how the ministers in Rajasthan were so corrupt, so he had to spend his whole time lobbying them, talking to them. And then, as he got off the plane and headed off to breakfast, he said, “But the rewards are so large when they do what you want them to do,” sort of idea, you know? So, he was making some totally useless little widget, which he was protecting from the competition of widgets, all other widgets in the world, by bribing or persuading. Probably wasn’t bribing. And the enormous amount of lobbying that goes on in Washington didn’t used to be there. So, that’s happened since about 1972. So, I think you could tell an Olson type story in which everything was sort of hunky dory when people were all making stuff. And then they discovered that taking stuff from other people was much more profitable. And that slowed down the rate of growth for making stuff. So, I think that story pretty much fits this.
WALKER: Right. There’s another story we could tell altogether, which is that maybe there are now too many elites or too many people aspiring to be elites. And when that happens … Because certain positions have inelastic supply. Like, there can only be one president, only so many senators or congressmen and women. And when there are more and more elites than there are elite positions available in society, intra-elite competition begins to increase, which might be then related to things like rent-seeking.
DEATON: It’s the sort of story of Africa in some sense, that you educate all these people to get government jobs. But there’s really nothing for them to do except start civil wars. So, I think you could tell that story. But I mean, the trouble with these big stories is, there’s lots of variants of them. I mean, I just started reading this book by Joe Henrich who is an economist, come psychologist, come something else, right? Who said we all got rich because we stopped marrying our cousins. Well, maybe. But the trouble with … It really does get hard. I think of these economic histories of why the West got rich and so on, it’s like listening to symphonies or something. They’re wonderful sounds and stories and talented writing. But in the end, it’s hard to settle them.
WALKER: Yeah, Joe actually sort of inspired my thinking on the connection between slowing economic growth and rent seeking. He came on the podcast recently.
DEATON: Well, Mancur Olson unfortunately is long-dead, but he probably was the first to really push that. And it was just this free rider problem that somehow the small interest groups could always take over because they had such focused interests. And that would bring down civilization. He really thought it would. I also think there’s a lot to be said for the argument that repair after the war kept us going for quite a long time. And then it got much harder. Thank you. What’s happening to deaths of despair in Australia. Anne just brought me some water. So, you can get a freebie.
WALKER: Hey, Anne. Nice to meet you. I’m Joe.
ANNE CASE: The Australians were able to put a lid on their drug overdose problem, which they were quite concerned about. But it seems like it began to rise again recently. I have the … I actually in two minutes could tell you the exact-
DEATON: What about cardiovascular disease?
CASE: I can tell you … It flatlined as well.
DEATON: It flatlined, she says, as well.
CASE: All the English-speaking countries.
WALKER: Similar story, but not as extreme.
DEATON: Yeah. Okay, you get a freebie in there. Yeah, that’s right.
WALKER: Angus, you and Anne have a fascinating take on the financial crisis and subsequent Great Recession in the book. And I’ll paraphrase. And of course, correct me if I’m paraphrasing inaccurately. But you argue that the real impact of the Great Recession wasn’t to inflict joblessness and misery, although it certainly inflicted those a great deal, but to pull back the curtain on American capitalism and expose it as a charade for upward redistribution, because the ordinary American worker copped the full downside of the Great Recession. Whereas, the bankers were bailed out. And if that is true, can we at least partly blame Obama for the rise of Trump?
DEATON: Yeah, I think so. But I mean, the question … Yeah, I think that’s right. But it’s hard to blame Obama and say, what could he have done otherwise? Sort of. I mean, if you listen to Ben Bernanke talk about how much he hated having to not punish these guys, you know? It wasn’t like they did this voluntarily, because they didn’t know what they were doing.
WALKER: If Obama had wanted to make a better decision, could he have looked to history? Or was there really very little to help him?
DEATON: I don’t know. I think that’s very hard. But I mean, remember also, remember the TARP, the … What was it called? Troubled Asset Relief Program or something. And you know, the congress was being asked to pass this huge sum of money in those days, not so huge anymore. And they balked and they talked about moral hazard. And the people on the right said, “We don’t want to bail out these guys. We don’t believe in this.” And all the rest of it. And they took a vote, and it was clearly going to go down. And then the stock market went down by some enormous number. And I remember looking at my television and they had the vote totals on one screen and the stock market on the other. And these guys all changed their minds.
So, I think it’s sort of post … but it’s really hard. I mean, there’s questions which are beyond my expertise as to whether the repairs to Dodd-Frank and so on were done in an appropriate way to stop this happening. But I don’t think that’s what makes people angry. I think what makes people angry is that these guys did this to us and got away with it. And now the Purdue family, the Sackler family is doing exactly the same thing. And you know, they took 12 billion or whatever it is, out of the company. And then the company’s going to be left on the hook. And they’ve been convicted of criminal charges, but no one’s going to jail. No one’s being punished for that. And I think that makes people very angry too. And that’s why we wrote the story of the opiate wars and so on, which was another example of money corrupting power. So, it’s not a new thing. I mean, people would always have used government to advance their private interest.
WALKER: Can I read you what I thought was the key paragraph of the book?
DEATON: Sure. I’ll make a note of it so that I remember it too.
WALKER: So, I always kind of like to find the guts of the argument. And this was by no means the most eloquent paragraph, because you and Anne are brilliant writers. But I thought this was the most important paragraph. So, this is on page 229:
“The exorbitant price of health insurance has caused firms to shed workers. This is not a natural disaster, but rather one based on rent-seeking, politically protected profiteering, and weak enforcement of anti-trust in the healthcare sector. Anti-competitive and rent-seeking behavior is not confined to healthcare. Mergers of firms can give employers power to set wages and working conditions in local markets. Large corporations can potentially use market power to raise prices. Such anti-competitive behavior hurts consumers, who face higher prices, and workers who get hurt twice over, through lower wages and higher prices when they spend those wages. Competition, one of the hallmarks of American capitalism, has faded, while (arguably) flourishing elsewhere. Not only in the healthcare industry, but also in business more generally, anti-competitive behavior, wherever it exists, is an agent of upward redistribution.”
DEATON: Right. I like that paragraph.
WALKER: And it seems to me, the main message of the book, if I had to condense it would be, we must end rent-seeking.
DEATON: Well, that’s I think exactly right, or reign it in somehow. But it’s very hard to see how you’d do that in America.
WALKER: So, what are some ideas for reigning in rent-seeking?
DEATON: Well, I’ve talked to various members of congress who agree with the analysis. And they say you have to control campaign finance. But I don’t know. The members of congress think that because they spend 80% of their waking hours on the telephone trying to raise money. And you know, there’s a really terrific book by … Gosh, I’m getting old.
WALKER: Jonathan Tepper and Denise Hearn?
DEATON: No, I was thinking of the professor at Harvard who actually ran for president. And it’s called … Anyway, it’s about rent-seeking. And it’s about how you basically can’t run for congress unless you have strong vested interests in your-
WALKER: Oh, right.
DEATON: Right. I can look it up for you later. But I’m sure you could find it too. So, there is that aspect of it, which is you really have very little chance of even getting on the ballot somewhere unless there are pretty strong interests behind you. And that didn’t used to be. When I grew up in Britain, you had to make a positive 150 pounds or something to run for parliament. But poor people did, and poor people often won without any backing at all. And so, that has … But I find it very hard. I don’t see a way around this. And I really worry, because I think in the end, the people on the far left who want to see capitalism dismantled somehow may succeed because young people are so disillusioned with the way it’s behaved.
WALKER: Has the political left been sufficiently empathetic towards the people dying deaths of despair, given that whites aren’t perceived as a historically marginalized group?
DEATON: No, they just call them deplorables, right? I mean, I think it’s extraordinary. I mean, right now … I saw something this morning that was a petition for Joe Biden to forgive all student debt on his first day in office, right? Well, that’s just outrageous. I mean, I’m sure there’s a student debt problem. I don’t doubt that for a minute. And they say it’s a matter of racial justice. Well, maybe it is. But the people who have benefited from this enormous student debt are the universities and colleges that are charging enormous sums of money, which they didn’t used to do. And who are getting rich on the back of these people. And this is just simply a demand for the two-thirds of the population who do not have a college degree to bail out the one-third who do. And what’s more, is to promise that it’ll be done forever after in the future so that colleges can wind up their tuition rates even further, and people can borrow knowing that it’ll be forgiven.
So, this rent-seeking is happening on both left and the right. And that’s an example of where they’re trying very hard on the left to take their student constituents and the minority constituents who would love to see their debts written off. But this is like politics in India now, where people get elected on promising to forgive the farmers all their debts.
WALKER: In his book, Twilight of the Elites, Christopher Hayes argues that the iron law of meritocracy is that equality of opportunity ultimately overwhelms equality of … Sorry.
DEATON: I think it’s the other way around, yeah.
WALKER: Inequality of outcomes ultimately overwhelm equality of opportunity, because eventually, the elite are able to entrench their positions and guarantee better outcomes for their children. It seems like society’s always going to be locked in that sort of dance because it’s just sheer human self-interest. Are there any points in history that we can look to as touchstones for generations who did it better?
DEATON: Listen, I did just want to say that it’s a great book. And I think it was written maybe five years too early or something, so all the other books-
WALKER: 2012 it was published.
DEATON: 2012, yeah. And a lot of other people have been writing about those things, but he got a lot of it right very early on. Yeah, no, it’s terrific. Yes. But there’s some hope, because if you look at what happened at the end of the 19th century, right? Where there was this huge level of inequality in America. And Woodrow Wilson, who is now out of favor because it was a racist, and he really was a racist. But he campaigned against inequality his whole life. And he was appalled with what went on in Princeton, which was a rich man’s club and not a serious university. He tried to make it into a university, lost the battle and had to retreat and become president of the United States, having failed at being president at Princeton, sort of idea.
But there was a whole bunch of constitutional amendments that were passed around that time, all of which were pro-equality. One was the vote for women. One was prohibition, which was seen as … Alcohol was seen as an oppressive thing, so it was a pro-equality thing. The establishment of the Federal Reserve, the income tax. And then, you did have a long decline in inequality after that. So, I don’t think it has to go on until it bursts. It’s clear big events can help. Maybe this pandemic will help.
I mean, one of the things that I think is quite remarkable right now is that Bezos has made about 100 billion extra dollars because of the pandemic. And this is at a time when hundreds of thousands of people are dying and other people have lost their jobs and their lives have been disrupted. And if you add in Musk and Bill Gates and all the rest of it, there’s about a trillion dollars there of extra wealth that’s come about because of the pandemic. Now, do we think that people will think that’s okay? I don’t know, especially if you get Republicans back in power who suddenly worry about the deficit and decide that they have to abandon social security programs in order to repair the deficit, while the top of the income distribution has made a trillion dollars in private profit. So, I think big events like wars or things like that, or the thing being seen to be out of control, have historically led to retrenchment and change. So, it’s possible.
WALKER: Yeah, that was certainly the thesis of Walter Scheidel’s book, The Great Leveler, that inequality is reduced by any one or any combination of the four horsemen: plague, war, state collapse, and revolution. But I sense that you think that book’s a little too pessimistic?
DEATON: Well, I mean, I think there are episodes where those things didn’t happen. I also think it’s a bit optimistic about pandemics. I mean, this pandemic is generating enormous inequality within countries. Maybe not in Australia where you handled it a lot better than most people. But you know, here there’s no doubt about it.
WALKER: Is the deaths of despair catastrophe in the United States something that is uniquely American? Or is it a harbinger for other countries in the West?
DEATON: We don’t know the answer to that. But it’s a really big question. We wrote a piece in Foreign Affairs asking exactly that question. And you can tell it both ways, which is, health events, both good and bad, have often begun in America and then spread to other countries. And you see it where I grew up in Scotland, there’s now an enormous drug epidemic. And there have been alcohol problems in Britain more generally. You see some in Canada, though that could be just because we’re right next to them. And you have your own problems in Australia. So, you tend to see some sorts of deaths of despair in almost all rich, English-speaking countries. But then, you don’t have the crazy healthcare system we have. You don’t generally allow opioids to be pumped out from the medical system to everybody on the planet. You know, and you have a much better social safety net. So, those things make it less likely.
But I think the threat is really there. And even, apparently … I don’t know what happened in the end, but Purdue Pharmaceutical, when they agreed to be sort of wrapped up, the family kept a hold of their international subsidiary Omni Pharma, or I think it’s called something Omni, I think that’s what it’s called, which is doing all around the world what it did here, which is telling doctors that people should not be in pain and that they have the answer.
WALKER: Angus Deaton, thank you for joining me and thank you for all of your important work.
DEATON: Thank you, it’s been a pleasure talking to you.