Tuesday, October 13, 2015

Angus Deaton

Angus Deaton is the Dwight D. Eisenhower Professor of Economics and International Affairs in the Woodrow Wilson School of Public and International Affairs and the Economics Department at Princeton University. He is the author of five books, including the 2013 The Great Escape: Health, Wealth, and the Origins of Inequality.

From his 2014 interview with Rebecca Rolfes for The GailFosler Group:

Q: So what is it that you see as the dark side of inequality?

A: In terms of health, for example, it’s really disturbing to many of us that so many poor people still smoke when we have known for years that smoking is bad for you. Another case is the large racial inequality in breast cancer mortality rates between black and white women.

But what worries me most about income inequality is that it can turn into political inequality. If the very wealthy use their wealth to influence the political process, then the rest of us suffer. That is the danger. People who are healthy aren’t going to undermine the health of the unhealthy. But the super-rich can undermine the political process to their own benefit and harm the rest of us. Studies show that politicians are much more responsive to their rich constituents than their poor constituents.

My book uses the example of the prisoner of war camp in the movie The Great Escape. If some people get out of the prisoner of war camp and some don’t, that’s a good thing — at least some people have escaped. Some people have done well, and we congratulate them. But we worry that others will never get out.

And if those who got out turn around and collaborate with the captors to prevent others from escaping, that’s a very bad thing. It’s partly corruption but it’s also things that are perfectly legal. If trade groups lobby Congress to pass laws to protect their products from competition for instance, that’s an example of those who have gotten ahead collaborating with the powers to block off progress for those who are coming behind.

Economic growth requires creative destruction, as Joseph Schumpeter wrote. Each new generation of fundamental technology sweeps away what came before. If Blackberry had the power to go to Congress and make iPhones illegal, that illustrates the point. People from the previous generation have a lot of incentive to...[read on]
--Marshal Zeringue