Deaton on 2016

Finantial Times has an excellent interview with Angus Deaton that provokes a lot of thoughts.  While full commentary will have to wait, a few quick reactions.

  1.  Deaton is fundamentally right that there is a lot of damage done by globalization, but that on the whole globalization has done on enormous amount of good as well.  This is, indeed, the fundamental dilemma–how to minimize the number of babies being thrown away with bathwater, while taking, if possible, an appropriate amount of baths.
  2. Further, point #1 requires a subtler thinking about politics and economics.  There is something fundamentally wrong with the analogy of “centrism” for the politico-economic status quo.  Spatial models, at least of Euclidean variety, implicitly assume zero sum games:  if you move to one side, you move away from the other direction. In theory, centrism should minimize the losses to all, but this is obviously not what is taking place, since #1 implies that there is a massive inequality in gains and losses among the politico-economic actors, which, by definition, cannot be “centrist.”  You could keep spatial metaphors and deal with this in theoretical terms, if you introduce more sophisticated mathematics…but Hilbert spaces drive even former math majors batty, let alone people with little or no math background pretending to be math savvy.  We need something creative, simple, and decidedly not spatial.
  3. I love the way Deaton responds to some of the questions as “simple minded questions.”  I suppose that’s more diplomatic than my more usual way of addressing them:  all answers are right, but some, even many, questions are wrong.  His answer, that the problem is plutocracy (as he puts it, “inequality that comes through rent-seeking”) cuts to the heart of the matter.
  4. This is a huge quote worth keeping in mind always:  “And I’ve been there where your life is really, really shadowed by not knowing where the money is going to come from . . . It’s a misery.”

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