Angus Deaton: ‘The war on poverty has become a war on the poor’

9 Oct, 2023 at 16:54 | Posted in Economics | 2 Comments

When Angus Deaton arrived in the US four decades ago, he imagined he had something to say about economic inequality and how to tackle it that Americans might want to hear. Instead, the great economic minds of the time told him to shut up …

Angus Deaton | USC Sol Price School of Public PolicyAs Deaton describes in his unsparing new book, Economics in America: An Immigrant Economist Explores the Land of Inequality, he soon realized he had run headlong into the libertarian monetarists of the Chicago School of Economics, and they were driving US policy …

Deaton was surprised to discover that American economists were largely uninterested in how their policies contributed to inequality and hardship.

Deaton ticks off the list of Nobel prizes for economics won by the Chicago school’s highly regarded minds, including Milton Friedman and George Stigler. He does not doubt what he calls their intellectual contributions.

“Yet it is hard to imagine a body of work more antithetical to worrying about inequality,” he writes.

“A friend of mine, a conservative economist and deeply religious man, is fond of saying that ‘fair’ is a four-letter word that should be expunged from economics.”

Chris McGreal/The Guardian

2 Comments

  1. When an economist assumes away sticky real world issues to formulate elegant models and assumes all actors make rational decisions in all situations, you know he’s going to be blind to how real world actors game economic policy for personal benefit.

    Comment by Greenshoe Consulting— 14 Oct, 2023 #

  2. The problem is that this is not entirely true. Chicago were rarely driving or completely in control of US policy – only when the establishment allowed them to be.

    One such time when monetarists arguably were powerful was during the Volker anti-inflation policy of the early 1980s.

    But really the real cause of damage has the neo-liberal hyper-globalisaiton policies which were arguably particularly aggressively pursued from the time of Clinton and Blair. This has been a major cause of the collapse of organised labour and the latter’s disenfranchisement. This includes the international liberalisation and deregulation of goods, capital and labour flows. People who warned about the consequences of these policies early on were outside the neo-classical profiession all together. Those warnings were summarily dismissed and ignored and those that made them were accused of “being ignorant of economics”.

    This is the neo-classical economics profession evading their own responsibility. The blame cannot be apportioned to Chicago alone. In fact they are not the major culprits.

    The most powerful figures in the economics profession that have led the world to where it is have been people like Lawrence Summers and Stanley Fischer. Focussing on the monetarists allows them to escape responsibility and keeps the real problem in the economics profession – a lack of critical reasoning and pluralism – from scrutiny.

    Comment by Nanikore— 9 Oct, 2023 #


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