SANTA FE ECONOMIST SAMUEL BOWLES SAYS YOU BETTER GET USED TO IT | By: Corey Pein 02/03/2010
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“The founders of the discipline of economics, almost to a man—and they were only men—thought that the problem of distribution between classes—they used the word classes—was the key to understanding why nations grew or not,” Bowles says.
What Bowles sees as the essence of his profession—problems of wealth distribution—the Friedmanites see as the road to hell.
In the years of easy credit, Friedmanites had the advantage. The recession has shifted the debate in favor of thinkers like Bowles.
“In the wake of what happened in the last year, it’s much easier for an economist to describe himself as being liberal, maybe even Social Democratic,” Henry Farrell, a political science associate professor at George Washington University, tells SFR. “Sam Bowles is still unashamedly and unabashedly a radical—God bless him.”
What Bowles sees as the essence of his profession—problems of wealth distribution—the Friedmanites see as the road to hell.
In the years of easy credit, Friedmanites had the advantage. The recession has shifted the debate in favor of thinkers like Bowles.
“In the wake of what happened in the last year, it’s much easier for an economist to describe himself as being liberal, maybe even Social Democratic,” Henry Farrell, a political science associate professor at George Washington University, tells SFR. “Sam Bowles is still unashamedly and unabashedly a radical—God bless him.”
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45.7
23
The first number is the “Gini coefficient” for New Mexico. The Gini is an expression economists use to measure equality or inequality in a society.
Zero describes the ultimate level playing field, a nonexistent land in which everyone has all the same stuff. A completely unequal society, in which one person has sole control of literally everything, would have a Gini of 100. New Mexico’s Gini score (45.7) reveals this state is more unequal than most. Utah is the most egalitarian state (with a 41.3 Gini), while the District of Columbia (53.7) is the most economically polarized, according to the most recent Census report, from 2006.
The second figure, 23, is the Gini for Sweden, the world’s most egalitarian country. Whereas most of Europe, Canada and Australia have Ginis in the low 30s, the US has over the past several decades developed inequalities usually found only in poor countries with autocratic governments.
So what? Isn’t inequality merely the price of America being No. 1?
“That’s almost certainly false,” Bowles tells SFR. “Prior to about 20 years ago, most economists thought that inequality just greased the wheels of progress. Overwhelmingly now, people who study it empirically think that it’s sand in the wheels.”
Bowles can take some credit for that shift, but he hasn’t won the battle. Many economists don’t study things empirically—that is, by looking at things in the real, physical world. Instead, they stay safely within the land of theory.
Theoryland may be the only place the “equality-efficiency trade-off” really works. Just to prove it wrong, Bowles charts the concept on a whiteboard at SFI.
23
The first number is the “Gini coefficient” for New Mexico. The Gini is an expression economists use to measure equality or inequality in a society.
Zero describes the ultimate level playing field, a nonexistent land in which everyone has all the same stuff. A completely unequal society, in which one person has sole control of literally everything, would have a Gini of 100. New Mexico’s Gini score (45.7) reveals this state is more unequal than most. Utah is the most egalitarian state (with a 41.3 Gini), while the District of Columbia (53.7) is the most economically polarized, according to the most recent Census report, from 2006.
The second figure, 23, is the Gini for Sweden, the world’s most egalitarian country. Whereas most of Europe, Canada and Australia have Ginis in the low 30s, the US has over the past several decades developed inequalities usually found only in poor countries with autocratic governments.
So what? Isn’t inequality merely the price of America being No. 1?
“That’s almost certainly false,” Bowles tells SFR. “Prior to about 20 years ago, most economists thought that inequality just greased the wheels of progress. Overwhelmingly now, people who study it empirically think that it’s sand in the wheels.”
Bowles can take some credit for that shift, but he hasn’t won the battle. Many economists don’t study things empirically—that is, by looking at things in the real, physical world. Instead, they stay safely within the land of theory.
Theoryland may be the only place the “equality-efficiency trade-off” really works. Just to prove it wrong, Bowles charts the concept on a whiteboard at SFI.
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Again with the numbers:
3032
The first number is the likelihood, expressed as a percentage, that a child born to parents whose incomes fall within the top 10 percent of Americans will grow up to be at least as wealthy.
The second is the percentage likelihood that a person born into the bottom 10 percent of society will stay at the bottom.
Just to drive the point home, here’s a third number: 1.3
That’s the percentage likelihood that a bottom 10 percenter will ever make it to the top 10 percent. For 99 out of 100 people, rags never lead to riches.
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If Bowles is right, however, the answer is more handouts, not less.
More importantly: handouts for whom?
$21,200
$24,500
The first number is the annual unemployment benefit (before taxes) that can be claimed by an average New Mexico wage earner.
The second number is the minimum in state subsidies “green” manufacturing company C/D² Enterprises will receive for each employee it hires at its new plant in Mc
More importantly: handouts for whom?
$21,200
$24,500
The first number is the annual unemployment benefit (before taxes) that can be claimed by an average New Mexico wage earner.
The second number is the minimum in state subsidies “green” manufacturing company C/D² Enterprises will receive for each employee it hires at its new plant in Mc
Kinley County. Most of the jobs will go to Navajo tribal members.
The first number represents a modest government grant to individuals on the condition that they keep looking for a wage-paying job.
The second represents a taxpayer-funded subsidy that virtually guarantees the owners of C/D² will make a profit.
The first number represents a modest government grant to individuals on the condition that they keep looking for a wage-paying job.
The second represents a taxpayer-funded subsidy that virtually guarantees the owners of C/D² will make a profit.
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Three more numbers, none of them lucky:
42
38.8
46.4
The first is how many years have passed since Bowles was inspired by King to “put his heart and his head together” and study economic inequality.
The second is the Gini measure of inequality for the US back then, a level comparable to other wealthy nations like Japan or Israel today.
The third is the most recent US Gini, as calculated by the Census Bureau. It’s at a level comparable to the Philippines, a former colony of islands where every other person lives on less than $2 a day, or Rwanda, an even poorer country in Central Africa that was home to a genocide 16 years ago—a country whose name is often synonymous with hopelessness. SFR
42
38.8
46.4
The first is how many years have passed since Bowles was inspired by King to “put his heart and his head together” and study economic inequality.
The second is the Gini measure of inequality for the US back then, a level comparable to other wealthy nations like Japan or Israel today.
The third is the most recent US Gini, as calculated by the Census Bureau. It’s at a level comparable to the Philippines, a former colony of islands where every other person lives on less than $2 a day, or Rwanda, an even poorer country in Central Africa that was home to a genocide 16 years ago—a country whose name is often synonymous with hopelessness. SFR
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