Angus Deaton on Deaths of Despair and the Future of Capitalism

Angus Deaton


Angus Deaton is the Dwight D. Eisenhower Professor of Economics and International Affairs Emeritus at Princeton University, winner of the 2015 Nobel Prize in Economics, and the coauthor (with Anne Case) of Deaths of Despair and the Future of Capitalism.

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It’s this sort of persistent loss of wages, which causes things like loss of marriage, people not living with their kids anymore, disintegration of communities with all of the things in those communities whether it’s churches or union halls or society, just friendship that used to be there. And those are the things that cause people to lose meaning or, if you like, lose hope in their lives.

Angus Deaton

Key Hightlights

  • What are deaths of despair and what causes them
  • How did the Pandemic and the Great Recession affect deaths of despair
  • Why does a four year college degree affect life expectancy in the United States
  • How has health care policy in the United States contributed to deaths of despair
  • Are deaths of despair an inevitable consequence of capitalism

Podcast Transcript

I think about deaths of despair anytime inequality comes to my mind. It is perhaps the most extreme outcome to arise out of the inequalities in American society. It also challenges many assumptions of conservatives and progressives. Deaths of despair afflict the white working class population or rather those without a college degree. It’s an odd demographic, because something needs to be done even though many of those afflicted don’t want government assistance. 

Now many longtime listeners will recognize deaths of despair from past episodes. It’s come up in passing, but I never did a deep dive to discuss the concept. So, I reached out to Angus Deaton to discuss this topic in greater depth. He cowrote the book Deaths of Despair and the Future of Capitalism with Anne Case. Deaton is a recipient of the Nobel Prize in Economics in 2015 and is among the most celebrated scholars in economics and public policy. We discuss the reasons for the deaths of despair and possible solutions.

Now before we start I want to give a shoutout to the IMF Podcast. I listened to a lot of interviews with Angus Deaton to prepare and I thought their interview stood out. I also want to recognize my first real review on Apple Podcasts from a year ago. A Curious African American wrote, “Only heard one podcast so far but picked up some insights. Keep the deeper insights coming, I’ll keep listening…” 

I really appreciate feedback like this. So, write a positive review on Apple Podcasts or your favorite podcast app and I’ll try to read it aloud. I especially love to promote other podcasts or organizations so mention those in your review. You can also send me an email to jkempf@democracyparadox.com. But for now… this is my conversation with Angus Deaton…

jmk

Angus Deaton, welcome to the Democracy Paradox.

Angus Deaton

Thank you very much. I’m pleased to be here.

jmk

Well, Angus, your book uses quite a bit of data and analysis to explain what you refer to as deaths of despair. Now, rather than offering a very clinical economic based definition, I’d like to start out with more of an anecdotal account. Can you paint a picture of what life is like for a person who’s facing the challenges that you describe in the book?

Angus Deaton

Well, I mean, you could think of a specific one kind of death of despair as someone who dies with a needle in their arm from some kind of opioid overdose and that paints one image. The other sort of paradigmatic one is someone who’s incredibly depressed and they go home and hang themselves in the garage. And in fact, the suicide comparison is an important one because Durkheim who’s the first sociologist, really, and the first person to write about suicide was very much the sort of person who talked about the sort of environment that we found very helpful for thinking about contemporary America for less educated Americans.

And, you know, the background which could lead you into a place where you’re ready to destroy yourself either, you know, accidentally, and you know, the accident is always unclear because as someone once said, ‘They may not have meant to die from the drug overdose, but they did mean to put the needle in their arm.’ And so, you know, the intentionality is always a little complicated.

But I think it was my co-author Anne Case who invented the term deaths of despair. And it was just that these deaths that we were looking at which from alcoholic liver disease, from opioid overdoses, and from suicide were rising very rapidly. And none of them were like from infectious disease, like covid, or from heart attacks or things we were familiar with. They weren’t things that the medical profession could do anything about, but they were just more things that you do to yourself either rapidly with a gun or slowly with a bottle.

jmk

Now, you identify a lot of real problems as causes of this phenomenon. We can talk about healthcare. We can talk about the loss of working-class jobs. But at the end of the day, I get the sense that It’s not just the problems themselves. But the perceived loss of hope that’s almost more important. Michael Sandel, in his recent book, has written about your work, “Something more than material deprivation was inciting the despair, something distinctive to the plight of people struggling to make their way in a meritocratic society without the credentials it honors and rewards.” Is this phenomenon caused more by perceptions or real world economic and social factors?

Angus Deaton

Well, both really. I mean, hope is pretty central to this thing, but, you know, you lose your job… Most people don’t go kill themselves. So, we think of the economy, the jobs as being this sort of fuel, but it’s a long way back in the causal chain as it were.

And it’s this sort of persistent loss of wages, which causes things like loss of marriage, people not living with their kids anymore, disintegration of communities with all of the things in those communities whether it’s churches or union halls or society, just friendship that used to be there. And those are the things that cause people to lose meaning or, if you like, lose hope in their lives, not so much just I lost my job. Except that it’s true. But it’s the disintegration of a way of life for less educated Americans that lies behind all of this hopelessness or this meaninglessness

jmk

Now is this unique to our period in history or is this something that we’ve seen at other times in the world during times of economic transformation?

Angus Deaton

I think we’ve seen things like this before. It’s a little hard to – we didn’t have the data in historical episodes, but one example I keep going back to are the hand loom weavers in Britain at the time of the Industrial Revolution. You know, so basically people had invented a way of weaving cloth that required the techniques that people were using. And those people lived in their cottages. They lived in the rural countryside. It was compatible with growing food for yourself. While you were weaving the cloth, there was this stockpot bubbling on the stove. There was a church in the village. All of this sort of stuff. And then you got about a 50-year period where hand loom weavers stopped existing and it wasn’t that they died or committed suicide though they may have done for all I know.

But, you know, moving to the city for these jobs destroyed that life. As one famous writer wrote, “The stockpot was replaced by the teapot.” You know, people were drinking sugar instead of the much healthier stock. You know, when Manchester was first developed there were no churches there. You know, because the churches were out in the countryside. There were no public toilets. There weren’t places to bury the dead. I mean, it was just sort of a mess and it was a destruction of a way of life that existed for a long time and slowly for sure. But it took 50 years before the new began to dominate what they had before.

jmk

What I find interesting though is that it’s not the people who are finding a new community who are leaving one place to join another that are facing these deaths of despair. It’s the people who are left behind. For instance, you find a difference based on race, where it’s non-Hispanic whites, but a big part of the reason that I’ve heard you mention is that Hispanics oftentimes are immigrant communities who have a different sense of hope. So, why is it that immigrants are not necessarily susceptible when they’re facing serious challenges and the breakdown or the loss rather of their community, because it’s a community that they’ve left?

Angus Deaton

Well, I’m an immigrant myself. So, I know a lot about these things. I mean, there is a tendency to compare yourself with what it was like before you left. And I can tell you that Princeton University is a lot better place to work than where I was in England before then. But immigrants everywhere do pretty well. They often do better than the natives and they almost inevitably do a lot better than the people they left behind where they came from. And that’s because you have to be healthy and you have to have some get up and go and all that sort of thing to be an immigrant. So, immigrants are a very selected population and often, you know, a very well selected and often do very well. There are other stories about there being a much stronger sense of community in the Hispanic community.

But you know, when we first wrote there were no deaths of despair in those communities. That’s not true anymore, unfortunately. So, you can begin to see the tick up, especially the drug deaths among Hispanic and black communities. Suicides are very low, but they’re increasing. So, you begin to see this pathology in these other communities too. This is all before COVID, of course, and you can’t really talk about blacks and Hispanics without, you know, recognizing the fact that they were much more affected by COVID than almost anyone else except for Native Americans.

jmk

Now, I found it interesting that in your analysis of the pandemic that you found that deaths of despair did not necessarily see a significant rise. In your recent paper you wrote, “While it was true that COVID was much more likely to kill those without a college degree, the relative mortality rates were the same as before the pandemic. It was bad in the pandemic, but it was bad before, a stunning measure of the mortality consequences of not having the degree, even in ‘normal’ times.”

Angus Deaton

Well, let me just make sure we got that straight. I mean, it was worse during the pandemic for everybody. So, for all these groups their mortality rates went up and it was that the mortality rate went up far more for people without a BA than it did for people with a BA. It’s just the ratio of the two mortality rates stood at about the same ratio as before the pandemic, which we find very surprising. It’s not at all what we would have expected would have happened.

jmk

What did you see during the Great Recession?

Angus Deaton

Not much. I mean, which is why the story that, you know, used to be told that suicides were linked to the business cycle. So, when people lost jobs that was when suicides went up. I think that used to be true, but it was not true during the Great Recession and it seems to have broken down around that time. And some of it is because these other deaths were sort of taking over, but I think the phrase we tend to use is deaths of despair were rising before the Great Recession. They rose during the Great Recession. They rose after the Great Recession. So, it was very hard. You look at this, discontinuity in economic activity where unemployment more than doubled. You get this impulse, which you might think would cause a lot of this, but it didn’t.

And with the pandemic it may be too early to know for sure and the data come with a lag and, you know, old death statistics are reported locally and then they have to be brought to the center and analyzed and all the rest of it. But it’s not really clear what happened to deaths of despair during the pandemic.

Suicides were actually down in 2020 compared with 2019. Drug overdoses rose very rapidly for the first nine months of 2020, but there were rising rapidly before the pandemic happened. So, you can’t really pin that on the pandemic. I don’t think we know about alcohol, but there are of course stories about quarantinis and all the rest of it and people, you know, buying in a lot of liquor, but we don’t know how much of that is just replacing what would have been drunk in bars and so on.

It became important because the Trump administration at some point was arguing against lockdowns on the grounds that deaths of despair would rise very rapidly if there were lockdowns and that does not seem to have been the case.

jmk

Do you think it’s because deaths of despair require a long-term sense that people are looking more into the future than they’re looking at the present moment?

Angus Deaton

Maybe. I’m not sure. One of the analogies that we thought of, you know, I watched at the beginning of the pandemic, the Queen giving a sort of Queen’s speech that if we all pull together then we’ll be okay and it was an echo of her similar speech, her first radio speech, that she’d made at the beginning of the Second World War and this wartime analogy, you know, if we all pull in this together, we’ll be okay.

It may have been very strong for some people, especially at the beginning of the pandemic. There’s a lot of evidence that suicides go down during wartime, because people sort of pull together. But, of course, applying solidarity to the description of the United States in 2020 is a real stretch. So, I don’t think we’d want to push that too far. But it certainly took people out of themselves perhaps. I mean, there was something else to worry about. A real external threat as opposed to the internal threat of my life has gone to hell.

jmk

So, the big difference between people who suffer deaths of despair versus those who do not seems to be having a four-year college degree, having a bachelor’s degree. Why does that make such a substantial difference?

Angus Deaton

Well, that’s a really good question. And, of course, what you try to do about this depends a lot on what you think about that question. You know, we could imagine one would say, ‘Well, everybody has to have a four-year college degree. And so we ought to make college free for everybody and everyone will have a four-year degree and there’ll be no more deaths of despair, but that would suggest that there’s something in the college education like a vaccine or something which protects you against death.

So, if you go take those classes, you’re sort of an inoculated against these deaths of despair. But I don’t think we really think that. We think much more along the lines of Michael Sandel’s book which you talked about already which is we constructed a sort of two class society in which the educated elite is doing very well and it has done well for the last 50 years, whereas the less educated people have seen their lives sort of come apart.

So again, it’s a little bit like the handloom weavers, you know, as opposed to the owners of the factories in Manchester who were doing very well. And there are a lot of quite uncomfortable there also thing between that, one of which is, you know, the enormous amount of wealth that’s been created by the American stock market over the last 20 years or so and especially during the pandemic.

jmk

Now most people still don’t have a college degree in the United States…

Angus Deaton

That’s right. Even if you look at adults, I mean, kids obviously don’t, but if you take people over 25, it’s about a third with a college degree. The people without a college degree are not some minority or discriminated against. They’re the majority.

jmk

As more younger people start to go to college and start having college degrees, are we seeing that the four-year college degree continues to be the difference maker or does its effect become a little bit less important?

Angus Deaton

It doesn’t. There’s not been a huge increase very recently. So, no, I don’t think we see that beginning. It’s a bit like in the labor market where the college premium, the percentage difference between earnings with a BA and without a BA seems to continue to rise. And you might’ve thought well with more people getting a BA you know, increasing supply, prices go down. But that doesn’t seem to have happened which means there seems to be an insatiably increasing demand for people with a college degree.

jmk

So, Angus, I assume that a large part of the reason why a college degree matters so much is because of the types of work that you’re able to obtain. The fact you’re able to make more money, do more meaningful work. Is it simply the fact that there aren’t as many high-quality jobs for people without a college degree or is it something more than that?

Angus Deaton

Yeah, I mean, there’s a question as to why do you really need a college degree to get some of these jobs. And that’s a very actively researched question. And I think the answer to that seems to be sort of no. That a lot of employers just put that college degree requirement on it, because it’s easy and it winnows down the applicants in a direction that really makes some sense. The problem with it is a lot of people could do these jobs very effectively. So, that’s one thing. The second thing is that, you know, we’ve known for a long time that the skill bias, technical progress, automation has replaced a lot of jobs that could be done without a tremendous amount of education.

And so, those people who really suffered a lot from that will talk about globalization. It’s obviously somewhat of an argument as to whether it was China that did it or whether it was the robots that did it. I think most of us think the robots were bigger than China simply because if you look at manufacturing output in the US, it hasn’t gone down. It’s just being made by way fewer people.

But then there’s the question as to whether, you know, we’re helping this to happen by having policies that make it worse. Things like tax treatment of an investment. If we subsidize firms who buy robots that put people out of work, that doesn’t seem like a very good idea even to people who believe in markets. And then of course there is the whole health care issue. That we have this insane healthcare system that is insanely expensive and is funded by killing jobs.

jmk

So, I want to put a pin in the healthcare discussion, because that does make up a big part of the book, makes up a big part of your articles. but to go a little bit deeper into the idea of college education. Thomas Piketty’s written a lot about it recently. The idea of how politics has changed with the rise of tertiary education. He writes in his forthcoming book, “With the rise of tertiary education, things have become more complicated. Left parties, which used to be viewed as pro-poor, have increasingly been viewed as parties defending primarily the winners of the higher education game rather than the less well-off.” Do you feel that, not just the policies, but the way that we even engage in politics has left a large number of people that are suffering deaths of despair outside the political conversation?

Angus Deaton

I think so. They’re not outside of it, but they’re in an unusual position of it which is they become allied with the rich essentially through the Republican party. So, you have this less educated group who has nowhere to go except the sort of populist Republican… It’s very hard to believe that coalition will last forever, because people who run large corporations are well-educated and, you know, they’re not naturally well represented by populists. They’re well-represented by people who lobby for them in Washington and get policies that go make them rich. But yeah, and I think the way Piketty described it is very true in Britain, for instance.

Clement Atlee’s cabinet in 1945 had seven men, of course, they were all men, who started their lives in the coalface. And so, you had here genuine x-workers who were helping run the country. And some of them like the two Bevins, Nye Bevin and Ernest Bevin, you know, were incredibly successful politicians. Ernest Bevin was a working man. He basically founded NATO and stood up to Joe Stalin So, a very successful politician by any standard of merit. And those people are not represented anymore, because the Labor party, as Piketty says, is representing this sort of educated cosmopolitan elite.

You know, there’s a wonderful sentence in George Packer’s relatively new book, you know, where he talks about a day in which Bill Clinton, Bill Gates and Margaret Thatcher sitting together and Clinton is announcing that China is joining the World Trade Organization, ‘This is going to make the Chinese fabulously rich. It’s going to make us rich and there’s a whole new politics in which no one needs suffer anymore.’ And as Packer comments, he said, ‘That’s the day that you can see the rise of Donald Trump.’ So, that coalition is clearly problematic.

And in the new paper, which I think you have, you can see that in 1976, life expectancy and the share of Republicans in the Presidential Election were very strongly positively correlated. By 2016 and 2020, it’s very strongly negatively correlated. So, that you know, the sick are voting for Republicans. It used to be the rich and healthy group that were voting for Republicans.

jmk

Now Piketty is talking about a phenomenon that’s happening in lots of different Western countries. He even has a chapter in this new book coming out that compares the United States, Britain and France and he does a lot of that in his recent book Capital and Ideology too that came out last year.

Angus Deaton

Yeah, I read that.

jmk

So, your account of deaths of despair really refers to itself as an American phenomenon.

Angus Deaton

Yes.

jmk

Has Europe begun to face a similar crisis yet?

Angus Deaton

Well, that’s a question which we’re spending quite a lot of time thinking about. So, you know, one country where the mortality rate from drugs is as high as it is in the United States is Scotland where I was born and grew up. It’s not so much opioids as meth of one sort or another. But if you read the literature on that as to why, you know, does Glasgow do so badly when other decaying cities not very far south of that, Manchester and Liverpool, for instance, were sort of doing okay. And I saw a paper the other day which tabulated what the differences in deaths were and they’re exactly deaths of despair. So, in Glasgow people are dying from alcohol, they’re dying from suicide, and they’re dying from drugs in a way that’s just not true in Liverpool and Manchester.

So, you know, there’s another place. Scotland’s an interesting case too, because there’s a huge democratic deficit in Scotland too. You know, Scotland for most of the last thirty years has been ruled by a political party that’s basically not represented Scotland at all which is one of the reasons too that the Scottish national party has become much more powerful during the same period. And so that’s the place you get something closest, I think, to America today. In England, the deaths of despair are increasing. Suicides have been rising. But again, it’s mostly drugs and there is a drug problem throughout Europe, especially associated with fentanyl which is very easily and cheaply made and very powerful and very easily transportable.

But it’s only really England and Scotland and a little bit in Canada and Canada is something like a reflection of the US, you know, sort of along border. And so, where you see anything that really looks the same. There are no that’s despair in France or in Germany as far as we can see. So, that’s one of the reasons why Anne and I in the book spend so much time talking about the healthcare system. Because as you say, and as Piketty says, you know, these changing coalitions of the educated elite versus the old workers are common throughout Europe and not just France and Germany, but also Scandinavia and elsewhere.

And, you know, automation is a problem everywhere. Globalization is a problem everywhere. But it can be different in different places. The Germans did very well, because they could manufacture cars that the Chinese like and so, they had a fabulous trade with China in German cars. But it didn’t lead to this despair. I think there are two leading candidates for that. One is there are much better welfare systems in Europe than there are in the United States. So, that there’s protection against joblessness, maybe against hopelessness. A little hard to tell. Again, you look in Britain, the sort of widening of wage inequality is there too. But it doesn’t get through to family income, because it’s netted out by the welfare system unlike the US. So, it could be that.

It could also be this ridiculous healthcare system in the US, which is forcing companies to outsource jobs that used to be within the company to the gig economy essentially. Where the jobs are not very good. Where people may not have health insurance at all. Where the wages are not very good and where there’s no sense of meaning or future prospects. So, it’s sort of a myth, obviously, that the janitor gets to be the CEO, if they’re smart enough. But it has happened and you’re not going to be made CEO of Google, if Google doesn’t hire any janitors anymore. You know, there’s been a real separation in the labor market that way. So, the mobility of less educated people seems to have changed.

So, then geographical mobility has broken down too. You know, in the old days, if you were in some part of America that wasn’t doing very well, you could get on the Greyhound bus and go to New York or San Francisco or somewhere. And now that’s basically impossible because it costs too much to live there. So, there’s sort of no entry. So, these upward paths which seem to still exist in other countries seems to have been choked off here. And we think of that as one of the major drivers for disaster.

jmk

I find it interesting how the book is about deaths so it’s easy to think about healthcare as being the solution. The idea that well, the people just need a better healthcare system.

Angus Deaton

Well, it’s true.

jmk

It is. But you think of healthcare as more of a systemic problem throughout the entire economy. You write, “We will argue that the industry is a cancer at the heart of the economy, one that has widely metastasized, bringing down wages, destroying good jobs, and making it harder and harder for state and federal governments to afford what their constituents need.” Can you talk a little bit more about how the healthcare system affects the wider economy?

Angus Deaton

Well, the first wisdom on this is an obvious one. It just cost too much and that money has to come from somewhere else. So, you know, if you’re spending $1 in 5 on healthcare, as opposed to $1 in 10, you know, you have an enormous amount of stuff that you can’t have, because you’re spending it on the x-ray machines, MRI scanners, proton beam things, incredibly expensive hospitals. All of it. So, if we choose to have that we can have good schools, have good roads, infrastructure. Now, of course, you don’t have to talk about the details of that, but if you just think of a big heap of stuff that is the economy, if you take a big chunk of it away and sequester it that you’re going to lose some of that other stuff, because you can’t have everything. There’s budget constraints.

One estimate is that it’s costing about a trillion dollars a year and that we could have the same services, as they have even Switzerland, which is very expensive and, you know, we’re so used to these trillions floating around, but I mean that trillion dollars a year, it’s just a waste. I mean, it’s not what it costs. It costs about four times that. But that trillion dollars a year would pay for the whole US military with a big chunk of change over. So, we think of the military as a huge suck hole of the economy, but this is way, way worse.

So, that’s just the broad outlines of it and if you get into the details, I mean, Alan Blinder wrote a very good book about the financial crisis and so on. At the end of the book, he talks about the prospects that happen. He looks at what US budget deficits are going to look like going ahead. This is before COVID, before any of that. So that everything that’s strangling Washington and polarizing all these fights is coming from the enormous rising cost of healthcare much of which is paid for by the government. But then the second part of it is how you fund this and how you organize it.

And, so a lot of time we spent talking in the book is about how loading this up on employment is a sort of, devilishly clever way of both hiding it from people so people don’t realize they’re paying for this. They think their employers are paying for it. Health care doesn’t cost me anything. Princeton University pays for it. But we know that it has to come from somewhere and it has to come out of the firm’s wage bills somehow. They don’t care whether you get it to take home and go on holiday with it or whether they buy healthcare for you.

And so, we talked to one CEO who talked about his healthcare people, human resources, coming in and saying, ‘Well, here’s our budget for next year.’ And he says, ‘What? The healthcare item’s gone up 40%.’ They say, ‘Sorry, you know, that’s what they say. Nothing we can do about it.’ He says, ‘Well, we can’t spend that. It will upset the whole business model of the firm if it costs that much.’ And so, what they do is they say, ‘Let’s reduce our employment. These people could be brought in from the Ram Jam Cleaning Company or something. They could be brought in from the transport services or something. And so, you know, that’s been a big downward force on jobs and on wages, on the people who still had jobs.

jmk

I think the key though is it doesn’t come out of employers. It comes out of employers who provide good jobs. The employers who are providing poor jobs, part-time work that are providing jobs as part of the gig economy.

Angus Deaton

Right.

jmk

They’re not paying for healthcare. They’re letting people join the Obamacare system. They’re letting people join Medicare. They’re avoiding taking on these large healthcare costs to themselves.

Angus Deaton

Well, they don’t care. They just don’t care what it’s spent on which of course people are not seeing, because they don’t get those wages.

jmk

Yeah. But I think that one of the points that you kind of hint at is that when the employer is providing good jobs and when the employer isn’t outsourcing some of this work, they’re treating their employees very differently than somebody who’s outsourcing those jobs. I know that during the pandemic, people who actually were providing those type of jobs were oftentimes providing employees short-term loans. They’re looking at their employees very differently. When you’re outsourcing those jobs, it’s very difficult to treat employees the same way. So, it’s more than just that healthcare is outsourcing some of the jobs. I mean, it changes the way that those employees even if the person is still a janitor, they’re being treated very differently, depending on who they’re working for.

Angus Deaton

It takes the meaning out of life. You know, when I was a kid in Scotland, if you got a job working for a big firm that was wonderful. And a lot of these people were not getting very high-class jobs. There were still mail rooms in those days. They were working in the mail room, but it was a start in life and it opened up opportunities that you might or might not be able to take. And you belonged in that firm. So, it raised your status. It raised everything. And what you say is exactly right. You know, you don’t get invited to the holiday party anymore. You know that in some ways encapsulates the difference. You’re not in the family anymore and you don’t get the benefits that you do in the family anymore and you don’t get the benefits from belonging to the family.

jmk

So, now that we’re talking about healthcare, it’s difficult to talk about the American healthcare system without referring to the opioid epidemic that happened, especially with all of the deaths that happened there. And it’s impossible not to describe those as deaths of despair. How did opioids exacerbate the phenomenon that you describe as the deaths of despair?

Angus Deaton

Well, there’s a lot of disputes about this which is sort of going on right now. And I think, you know, for a long time that the attitude on the right was you’re not counting this right. That these less educated people are doing just fine. If you put the benefits in, calculate the CPI correctly, if you calculate prices right and if we do the calculations, you know, and Heritage is happy to do this all the time, we discover that these people are doing just fine. So, when we came along and said these people are dying in droves. It’s a little hard to fake your death and so, it became harder to maintain that everything was okay.

Now a secondary line of defense that we currently see is people saying, ‘Well, it was just the opioid epidemic. It was just a few really bad companies that came in here and addicted these people and killed them off. And if we can fix that, there’s nothing wrong with American capitalism.’ So, we say, okay, those guys behaved abominably. You know, this was greed out of control. You were allowing people to kill people for money and what was worse, there was a huge political side to this too. Some of the people who were, not paid off, it’s not corrupt in that sense, but certainly blocked the enforcement by the Drug Enforcement Agency and other people at high levels of politics which were sort of enablers for these drug companies.

So, you’ve got this horrible, horrible mess with this but the argument we like to make is that opioid epidemics don’t just happen by themselves. They happen in places where there’s a lot of distress. The opioid companies themselves will tell you all they were doing was relieving pain. But why was pain rising so rapidly? Pain to us is part of despair and you don’t see this rapid rise in pain in other countries. So, there was a preexisting rise in pain. But als,o these historical opioid epidemics happen in places where there was a lot of distress. In China in the 19th century, during the Opium War, you know, the place was coming apart. The emperor was losing control.

And so, there was a lot of social decay and a lot of problems before these bastards from Scotland came upon them and made it a whole lot worse by sort of forcing them to eat opium and in America, the last great epidemic of heroin was post the Civil War. There is another famous episode in the Vietnam war where Vietnam vets, are not vets then, they were Vietnam soldiers serving in Vietnam who were using drugs at astonishingly high rates. And yet, they came home and the addictions just vanished, so it was sort of like at least as much to do with the environment in which people lived as it was to do with the stimulus that was coming from iatrogenic drug epidemic which of course it was. You know, the healthcare system did not cover itself in glory. That’s a gross understatement.

You know, if you look at Europe, they have opioids too. I mean you get Oxycontin, If you get a hip replaced. But they don’t send you home with a thousand pills or a hundred pills or even 20 pills. So, it’s being much more carefully controlled and a lot of that, I think, is to do with the way politics is run in this country. A combination of drug pushers and bad politics.

jmk

Is it the way politics is run or is it the economics of our healthcare system that encouraged that?

Angus Deaton

I think it’s both. I mean, I don’t think there would have been an opioid epidemic without Congress needing to fund itself as it does. And so, a lot of people who represent constituents that were suffering from this blocked the investigation.

Now both parties today condemn the corporations that were involved in the opioid epidemic even had the Trump administration looking for ways to be able to alleviate it while they were in office. I don’t want to get into the policies. We could debate if they were effective or not. But none of the Republicans today are talking about making significant changes to the health care system. Nobody’s talking about single payer that’s on the right. Yet a lot of the people that are suffering deaths of despair are voting for Republicans.

Angus Deaton

That’s right

jmk

Why do you think…

Angus Deaton

You’re the political science guy. I mean, I think you have to be a little bit careful about this. I mean, people don’t just vote on a single issue. You know, politicians build coalitions and a lot of politicians are getting money from the healthcare industry and it’s not just Republicans. It’s not as if Janet Yellen, Ceci Rouse, and Joe Biden himself don’t know what needs to be done. And they don’t need Bernie Sanders to tell them. But, you know, there’s a lot of Democrats who are taking a lot of money from the healthcare system too.

And if you’re trying to run Washington with a minority of essentially zero, it’s not very hard for healthcare to defend itself because it only has to pick off a couple of Democrats. Many of which live in districts where there’s not much else going on but healthcare. The other thing that makes it very powerful is, you know, every single congressional district has a hospital in it. You know, and I remember a couple of years ago when they were trying to deal with surprise medical bills, the person who blocked or one of the key players in blocking the legislation was Donna Shalala, the Congresswoman in Florida. You know, who has big hospitals in her constituency because a lot of old people there and these hospitals are helping fund her. It’s not hard to explain why they don’t get reined in.

jmk

But at the same time, during the Tea Party Movement it wasn’t just that people that were lower educated were voting for Republicans, but wanting universal healthcare. I mean, during the Tea Party Movement, a lot of the people going to the Tea Party rallies upset by healthcare reform through Obamacare, upset by changes in the system, oftentimes, were these very people who were oftentimes suffering from deaths of despair. Do you see a path for reform within the United States on healthcare in the future? Do you see a path where people get to a point that they demand systemic change at some moment?

Angus Deaton

It was what we thought might be a silver lining of the pandemic. That doesn’t seem to have happened so far. But come back to what I said before. This is disguised from people. So, my late colleague Uwe Reinhardt used to say, ‘If people got their paychecks every week or every month and at the bottom, we made them realize that $1 in every 5 was going to healthcare, then there would be a lot more demand for reform than there is.’ So, most people are quite happy with the status quo because they don’t understand how it’s undermining their lives. It’s as if this was designed by a bunch of demons to make it almost impossible to reform, because it is devilishly cunningly done. You could not have designed something that was so resistant to change.

The danger of course is this can’t go on. Right? So, eventually when it’s half of GDP, something will happen and, of course, it’s not the only sector in the economy where there’s a lot of plundering going on, this upward redistribution that’s going on. And, you know, it’s happening in many industries. I mean, a huge line of work in economics today is documenting the increased industrial power, not just of big tech, but of many companies and the loss of wages and so on that comes with that. So, healthcare is just perhaps the most extreme example of a system that’s plundering, relatively poor people to make other people rich.

Well, if you go on doing that forever, you know, there’s two ways of doing it. Either you reform it, which is what happened in the Progressive Era in the United States or you get a civil war of some sort and it’s part of this very general and very depressing picture which there seems to be so little opportunity for making things better. And what Biden is trying to do right now, whatever you think of the details of it, you’re actually reversing some of that upward redistribution by trying to get money and something to people to less and less educated Americans. Right? So, that would be a really good thing. But it seems that even now that’s impossible.

jmk

Are deaths of despair an inevitable consequence of Capitalism?

Angus Deaton

No. I don’t think so. You know, I don’t think it has to operate this way. You know, capitalism has become very unfashionable to say so, but I wrote a book called the Great Escape, my last book, you know, which is how capitalism has just really helped break people out of poverty and destitution. At its best it works great. It’s just it has this tendency to get out of hand. And sometimes we’ve been able to reform that often with the help of a world war or two. But I mean, if you read the literature written in the thirties, for instance, where many people were flirting with communism and they thought, you know, this is really broken.

And then you had the Second World War and then you had this Labour government that did sort of reform it. And then again, in the US at the end of the gilded era, , you had four constitutional amendments, all of which were designed to diminish inequality, including prohibition, which was seen as a way of redistributing from men to women. So, you know, these things can happen. But right now, it looks like reform is incredibly difficult. And you can have this very pessimistic view that the only way you ever get rid of rising inequality like This is through war and destruction of some sort.

jmk

I think a lot about a Roosevelt appointee Leland Olds who began his career as very far on the left, a socialist, even a communist and because of his work with FDR saw that Reform was possible through regulation that you were able to make real changes.

Angus Deaton

Right?

jmk

So, we’ve seen that in the past.

Angus Deaton

But let’s not lose that the power of the market is really there. You know, you don’t have to be a right-wing wingnut to think that the market can do wonderful things. And, you know, the, power of greed is a great motivator and it’s hauled enormous numbers of people out of poverty. So, you know, I really do believe in that. And, you know, that I have a strong sort of libertarian streak that, you know, it’s that a lot of these regulations are in fact rent seeking. So, there’s a type of regulation, which is just, you know, a run to redistribute upwards and yet, it’s clear that we’ve gone much too far in the wrong direction.

jmk

No, I can understand I’m a big believer in good government. Not necessarily always more government. Just kind of depends on what it is that we’re trying to accomplish at the time. So, well, thank you so much for joining me. This has been a great conversation and I’m very impressed with the work that you continue to do. It challenges a lot of the beliefs that we have, but it’s impossible to ignore the data that you bring up.

Angus Deaton

Well, thank you very much.

Key Links

Deaths of Despair and the Future of Capitalism by Angus Deaton and Anne Case

Nobel Prize

National Bureau of Economic Research

Democracy Paradox Podcast

Sheryl WuDunn Paints a Picture of Poverty in America and Offers Hope for Solutions

Jacob Hacker and Paul Pierson on the Plutocratic Populism of the Republican Party

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