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FT, March 11, 2020
The economy has hit US white working classes hard — but Anne Case and
Angus Deaton go beyond the evidence
Deaths of Despair and the Future of Capitalism, by Anne Case and Angus
Deaton, Princeton, RRP£20, 312 pages
An epidemic is sweeping the US, taking lives on an unprecedented scale
and threatening the future of the world’s biggest economy. But this is
not a new virus, dangerous and contagious yet likely to blow over with
only a temporary hit to economic growth.
The epidemic documented in a timely and important new book by Anne Case
and Angus Deaton has been savaging America for two decades. So far, many
hundreds of thousands of lives have been lost to what the authors, two
eminent economists, label the “deaths of despair” — death by suicide,
accidental drug overdose or alcoholic liver disease.
Like all good economics, the argument in Deaths of Despair starts from
an observation — rising suicide rates among working-class Americans in
the first decades of the 21st century. The authors then use data to
describe the problem before trying to diagnose, understand and prescribe.
As you might expect from a Nobel Prize winner (Deaton) and, in Case, one
of America’s best empirical economists, the picture they paint is
painstaking in its detail and vivid in its importance. The victims of
this new epidemic, they demonstrate, are white, non-Hispanic middle-aged
Americans without a degree-level education qualification — a group that
overwhelmingly voted for President Donald Trump in 2016 and has stuck
with him since. Over the past 25 years, deaths from suicide, drug and
alcohol abuse among this group have tripled.
As a result, and after a century of falling mortality rates, the death
rate for 45-54-year-old white Americans began to rise in 2000 and has
continued to do so — while rates among Hispanic and black Americans, as
well among Europe’s working populations, have continued to fall. If the
downward trend of the 20th century had continued between 1999 and 2017,
600,000 more people would be alive today.
What is going on? Poor economic outcomes must be part of the answer.
These deaths of despair have been rising only among Americans whose
relative earning and job prospects have deteriorated sharply in recent
decades. Those with degrees have seen no such rise. Yet the authors find
no correlation between rising death rates and either poverty or rising
inequality. And why have mortality rates for older and less-educated
black Americans — who have also experienced declining employment
prospects and relative wages — continued to fall?
Outside a Franciscan shelter that serves meals to the neediest people in
Philadelphia, many of them addicted to opioids © Jerome Sessini/Magnum
Case and Deaton heap blame on the US healthcare system and, in
particular, the decision to liberalise the prescription of opioid-based
painkillers in the 1990s. It was “the carelessness of doctors, without a
flawed approval process at the FDA, or without the pursuit of profits by
the industry at whatever human cost” that led to the return of mass
opioid addiction to America for the first time since the aftermath of
the civil war. Universal health insurance and better regulation to
control costs and drug availability is the answer — although, as usual,
these US economists are doubtful about directly importing the public
provision of the UK’s National Health Service.
But why has white America been hit so hard? At this point, the authors
rely less on data and evidence, more on conjecture and sociological
speculation. First, they pin the blame for this growing pain and
unhappiness — or “carnage” as Trump famously labelled it — not on rising
material deprivation but on the decline in trade union membership,
churchgoing and marriage rates, with rising numbers of children growing
up with single parents.
They argue that black working Americans experienced a similar decline in
relative economic prospects and community cohesion in the 1980s —
“decades later, less educated whites, long protected by white privilege,
were next in line”. And they assert that the wellbeing of the previously
privileged white community has been additionally undermined by the loss
of social status relative to their black fellow citizens: “more than
half of white working class Americans believe that discrimination
against whites has become as big a problem as discrimination against
blacks and other minorities”. My own experience of working and
travelling in the US suggests this is all far too narrow and simplistic.
There is far more to current alienation than Trumpian racial envy. And
while the strength of the earlier part of Deaths of Despair lies in its
statistics and evidence, it is here, where analysis is replaced by
speculation, that the book is less satisfactory.
Large parts of the US economy, they claim, ‘have been captured to serve
the wealthy with the consent and connivance of government’
The final policy section feels muddled — the authors slip into
corporation, bank and politico-bashing with rather a Trumpian tone but
little analysis or policy to back it up. Large parts of the US economy,
they claim, “have been captured to serve the wealthy with the consent
and connivance of government”; and that “the sheriff of Nottingham has
taken up residence in Washington DC and the good cops have left town.
Robin Hood is nowhere to be seen.”
Yet the authors are also at pains to stress that capitalism remains the
answer and that inequality is a byproduct of economic incentives — “the
problem is not that we live in an unequal society but that we live in an
unfair society”.
As a result, the gap between their rhetoric and policy prescriptions
feels achingly wide. They reject an increase in progressive taxation or
a more generous “band-aid” welfare state. They predict that a rebirth of
trade unionism or comprehensive reform of corporations is “unlikely”.
Education reform is given little weight and public infrastructure
investment doesn’t get a mention.
The result is disappointing. Not only do their calls for a “modest” rise
in the minimum wage and weaker patent protection seem insufficient, none
of the policy discussion even tries to address the cultural arguments
about community cohesion and pride upon which the authors pin so much
earlier in the book.
Yet while I ended the book feeling worried that economics still doesn’t
seem to have answers to the economic and cultural dislocation faced by
so many working people in the US and across Europe too, I did feel
cheered that we in Britain still at least have an NHS that should be the
envy of any sane American.
Ed Balls, a former UK cabinet minister, is a research fellow at the
Harvard Kennedy School
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