Here, in other words, was Occupy Wall Street in action, but maybe a hundred times more effective: ordinary people protesting against the financialization of the U.S. economy by taking collective action to squeeze the short-sellers, saving companies they cared about and saving thousands of jobs belonging to the people who work at those companies, while forcing the suits to disgorge some part of the money they were making by treating the market like a giant video game and squeezing the life out of companies for profit. Give the money back to the people! And hats off to them boyz and girlz willing to show their faith in collective action by putting their measly day-trading accounts on the line. What a perfectly American act. What a demonstration of collective solidarity in action at a time of increasing social atomization and economic suffering, in the dead of winter, in the middle of a pandemic—why, I could just go on and on and on. …
It is hard to imagine that the biased reactions we find in our study only emerge in a low-stakes environment, such as our experiment, without spilling over to other areas of academic life. After all, as we discussed at the beginning, there already exists growing evidence which suggests that the political leanings and the personal values of economists influence different aspects of their academic lives. It is also not a long stretch to imagine that such ideological biases impede economists’ engagement with alternative views, narrow the pedagogy, and delineate biased research parameters. We believe that recognizing their own biases, especially when there exists evidence suggesting that they could operate through implicit or unconscious modes, is the first step for economists who strive to be objective and ideology-free. This is also consistent with the standard to which most economists in our study hold themselves. To echo the words of Alice Rivlin in her 1987 American Economic Association presidential address, “economists need to be more careful to sort out, for ourselves and others, what we really know from our ideological biases.”
Our profession’s lack of understanding of gender and diversity is not innocuous. Presumably, it is one reason the climate in our profession is so poor. But it also affects what gets published (or not) and our influence on policy (or lack thereof). While economics is always concerned about causal identification, the bar is higher for papers about gender because, in the words of one of my recent journal reviewers at the American Economic Review (the flagship publication of the American Economic Association): “Unfortunately, papers like this face the uphill battle of having to rule out all unobservables that could possible [sic] be correlated with gender…” [emphasis added].
Nutrition is a conundrum in developing countries. The couple argue that things that make life less boring are a priority for the poor – a TV set, something special to eat, for example. In one location in the northern Indian state of Rajasthan, where almost no one had a TV, they found the extremely poor spent 14% of their budget on festivals. By contrast, in Nicaragua, where 56% of the poor households in villages had a radio and 21% owned a TV, very few households reported spending anything on festivals.
Their work also suggested governments and international institutions need to completely rethink food policy. Providing more food grains- which most food security programmes do – would often not work and help little for the poor to eat better because the main problem was not calories, but other nutrients.
In a special edition of the Financial Times, with a dramatic cover wrap which was virtually blank but for the giant words “Capitalism: Time for a Reset,” its economics doyen Martin Wolf went out of his way to define it for readers, guessing they too had to be enlightened. In an essay which bemoaned stagnant wages and productivity, inadequate competition, and rampant inequality, he explained that rentier capitalism “means an economy in which market and political power allows privileged individuals and businesses to extract a great deal of such rent from everybody else.” The half-forgotten term is as old as Adam Smith, who first defined rentiers as capitalists who were able “to reap where they never sowed.”
How are consumption and acknowledgement related to each other?
Part of consumption may be explained as need. But we can never really know where need begins and where desire takes over. The two are inextricably intertwined. I prefer to approach consumption from another angle: the desire for distinction, explored in particular by Bourdieu.3 Unlike utilitarian visions of social action, the Mauss movement4 sees the principal motive for human action as being the desire for acknowledgement. More precisely, it sees the desire for acknowledgement in terms of gifts, the desire to be acknowledged as a generous donor; and, beyond that, to be seen in terms of generativity. We wish to be seen as being involved in life-enhancing, creative action.
Take the case of a farmer who is trying to decide on an investment strategy for the future of his farm: should he be planting new fruit trees, purchasing new equipment, increasing (or decreasing) his livestock, or investing in new buildings? Recall, now, that our hypothetical farmer gets his grain from wholesalers who themselves bought it at prices set on financial markets, and it becomes all too clear that excessive uncertainty surrounding the price of grain will leave him unable or unwilling to experiment with new strategies. The industrialist on whom Hayek based his own reasoning is likely to suffer from a similar paralysis.
Inflation targeting by the Central Bank might have some unintended consequences.
But reducing uncertainty about prices by keeping the inflation target at 2% or more might actually increase a sense of uncertainty about real things like home values or investments. While it is right to worry about massive deflation, the historical relationship between deflation and recession is not all that strong. In a 2004 paper, the economists Andrew Atkeson and Patrick Kehoe concluded that most of the evidence of a relationship comes from just one case: the Great Depression of the 1930s.
To begin with, there is the problem of exactly whom the basic income will apply to; in other words, what is the subject for claims to social justice in the world of basic income. In most formulations, from Thomas Paine forward, a basic income is conceived of as having a condition of citizenship attached to it. Though this would be a relatively straightforward in a world of limited interstate migration, the reality is that individuals and families currently exist in a wide variety of positionalities vis-à-vis the state in which they physically inhabit. In addition to citizens, there are permanent residents, refugees, students on visas, temporary foreign workers and more. The danger with a citizenship-conditional basic income, as it is unlikely that every country would implement such a policy at the same time, and certainly not at the same monetary level, is that it would further deepen the divide between citizen and non-citizen inhabitants of particular countries.
A great narrative of what happened to the U.S. economy since the end of World War II.
If you fell asleep in 1945 and woke up in 2018 you would not recognize the world around you. The amount of growth that took place during that period is virtually unprecedented. If you learned that there have been no nuclear attacks since 1945, you’d be shocked. If you saw the level of wealth in New York and San Francisco, you’d be shocked. If you compared it to the poverty of Detroit, you’d be shocked. If you saw the price of homes, college tuition, and health care, you’d be shocked. Our politics would blow your mind. And if you tried to think of a reasonable narrative of how it all happened, my guess is you’d be totally wrong. Because it isn’t intuitive, and it wasn’t foreseeable 73 years ago.