ECONOMICS IN AMERICA

A Nobel laureate reports on U.S. economic policy and the state of Anglo-American economics.

A professor of economics emeritus at Princeton and author of Deaths of Despair and the Future of Capitalism, Deaton gathers essays he wrote for Britain’s Royal Economic Society over the last 25 years. One set of essays addresses substantive concerns, including health care policy, inflation and its measurement, global poverty, pensions, wealth and income inequality, and class and generational social disparities. The author casts doubt on the magic of the “free” market and claims that economic thinking is helpful but insufficient given the extent to which it is ignored by policymakers and/or used simply to justify politically determined decisions. The other essays address the economic discipline: professional organizations, journals, core disagreements, and the Nobel Prize. Deaton boldly asks why economists fail to deliver economic policy that reduces inequalities. “We have certainly made too little progress on central policy questions that ought to be amenable to scientific inquiry,” he writes. Internal disagreements, a failure of economists to recognize the political nature of advice-giving, the resistance of elected officials to issues of inequality, and the privileging of capital over labor in conventional economic wisdom stifle economic advice. Deaton bemoans American capitalism with its “government-enabled rent seeking and the destruction supported by the ideology of market fundamentalism.” However, he refuses to abandon mainstream economics, noting that we “need to put the power of competition back in the service of the middle and working classes.” To do so, the discipline must reconnect with its “proper basis, which is the study of human welfare.” Written for non-economists to help them understand “how my profession works,” the book is insufficiently attentive to the differences among and within the field’s academic, policy, and business realms.

A self-proclaimed contrarian mixes praise with disappointment to prod his colleagues in a more progressive direction.