Last time, University of Connecticut law professor James Kwak challenged us to upgrade our Econ 101 understanding of economics. I’ve spent the past year doing that, and have come across what appears to be the one single issue that will instantly and absolutely shut down all further inquiry. It is the ultimate economics taboo — the quickest way to destroy any hope of further learning or discussion. Taking it head on is like signing up for a an adventure tourism trip into the Labyrinth, live Minotaur included.
No thanks, I’m pretty sure I’ve got something going on that night.
It’s especially taboo if you’re an American — economists around the rest of the world talk about it all the time with a sense of urgency, like it’s something we need to get on right now if we know what’s good for us. More on that in a moment. But first, what is it? In a word,
Uh-oh. I think I just heard the footfalls of a really large, really nasty creature.
Understanding economic inequality is the key to Economics 2017. Trouble is, the topic threatens the very bedrock of a country founded on this premise:
“We hold these truths to be self-evident: that all men are created equal.”
In the USA, “equal” means “anybody can make it here.” It is the land of Horatio Alger. To suggest that public policy — where the study of economics is played out — might include income inequality on its agenda is to throw Alger’s rags-to-riches enthronement of hard work, determination, courage, and honesty under the bus. Questioning those values is un-American by definition — the province of the Occupiers, who we all know finally had to give up and get a real job.
And so it goes.
You think I’m exaggerating? Read this NY Times op-ed piece from earlier this summer, then read these two completely polarized responses. The writer who started the exchange is a Brit who writes for the Brookings Institute and wrote a book entitled Dream Hoarders: How the American Upper Middle Class Is Leaving Everyone Else in the Dust, Why That Is a Problem, and What to Do about It — which pretty much tells you everything you need to know, doesn’t it? About as surprising as finding this lesson plan primer on economic inequality on the PBS website.
And so it goes.
As the NY Times exchange makes clear, the issue isn’t so much economics, it’s the complete, total, utter American rejection of anything resembling a class system — a yoke we threw off with those Declaration of Independence fightin’ words. Which is why, these days, if you’re an European or Asian economist you’ll talk about inequality with a sense of urgency, but if you’re an American you won’t talk about it all — unless you’re a foreign-trained economist teaching at a prestigious U.S. university, which doesn’t really count. See the analysis of the USA vs. the Rest of the World Economic Divide in Why So Few American Economists Are Studying Inequality, The Atlantic, Sept. 13, 2016. (The article’s killer opening line is “In recent years, it’s been European scholars who have written the blockbuster papers on the topic.” “Blockbuster papers”? Seriously? Are we talking about economics here?)
Which is why it takes a Frenchman to write an international blockbuster (there’s that word again) economics book that takes 600 geeky pages to reckon with economic inequality. (Google Thomas Piketty’s Capital in the Twenty-First Century — it’s all over the place.)
I mentioned the book to a friend who’s a hedge fund manager. He’s the most dedicated to the study of economics person I know. His comment? “Piketty didn’t talk about benefits.”
That was it.
We can let the topic of income inequality send us scurrying to the safety of Econ 101, or we can brave the Minotaur. We’ll enter the Labyrinth next time.
By the way, the reputed lefty Brookings Institute and its equally reputed righty arch-rival American Enterprise Institute actually collaborated on a 2015 study called Opportunity, Responsibility, and Security: A Consensus Plan for Reducing Poverty and Restoring the American Dream. And if the BI is given to favoring its own touchy topics, the AEI isn’t afraid to tackle its own controversial counterparts, as I learned while squirming my way through The Inequality Taboo. I’ll just leave it there for now.