Textbook economics teaches that people are self-interested agents who respond rationally to economic changes. They change locales as jobs move, retool themselves to match the skills of new jobs, and adjust their social lives and psychological moods to the new realities. Other than a role in shaping overall fiscal and monetary policy, government has little or no role to play as the economy moves from one state to the next adjusting to changes in commerce, technology and consumer preferences.
In reality, this is a narrative that rarely ends well. Consider the following data. In 2019, there were 70,980 deaths due to drug overdose (of which 50,042 from opioids) in the US, 3.5 times the average of 17 high-income countries. In 2018, there were 48,000 suicide deaths in the US which, adjusted for population differences, placed the US first among wealthy nations. But that’s not the whole story. Deaths attributed to suicide and drug overdose was a price paid mostly by middle-age non-Hispanic white Americans without a college degree.
Less educated Americans also happen to be those whose incomes have not just stagnated they have actually fallen. Between 1977 and 2017, real wages for non-college jobs were down by 13% while the GDP grew by 83%. Between 2010 and 2019, the economy created 16 million new jobs but less than 3 million were suitable for non-college workers.
A few years ago, the population statistics showed that the number of middle-age (45-54) white men was declining. The economists Anne Case and Angus Deaton (Nobel, 2015) dug deeper into this new phenomenon. What they discovered along with their thoughts about the possible causes are laid out in their book Deaths of Despair and the Future of Capitalism. If you are not convinced that left alone the economy can produce sad and deadly outcomes, reading this book will. And let me hasten to add that Case and Deaton are not capitalism deniers. Far from that. What they try to do is to foster public awareness about the inextricable connection of the economy to the social fabric and by extension to the human condition.
Throughout the twentieth century, mortality rates of middle age white Americans kept declining due to advances in medicine and health care. Then starting in 2000, mortality rates for middle-age whites started to creep up while it continued to drop for other advanced Western countries. However, the rise of the mortality rate in this cohort group came primarily from a sharp rise in deaths from alcohol, drugs and suicide of men (and less so from women) without a college degree. Moreover, fair or poor health, mental illness, and pain were being reported at a higher rate by less educated middle-age white men. Thus, this cohort group experienced both greater mortality and lower quality of file.
What about race? Until the late 1990s white men, whether with or without a college degree, had lower mortality rates than black men. Black men had gone through their own phase of “deaths of despair” in the 1980s when drug abuse among this group was rampant. But starting around 2000 white men without a college degree, had overtaken black men. Death rates for black men without college education started to climb again only after 2012. As Case and Deaton note, the much higher death rates of less educated black and white middle-age men is not a race but a class problem arising from inadequate educational attainment and low wages.
Case and Deaton identify several causes for this bi-furcation of mortality rates. One is lower wages for low-skill jobs. Even worse though is the lower quality of the new jobs – mostly service as opposed to manufacturing. Many of the new jobs are also less stable and involve less bonding with the firm. The sense of belonging and prestige and hence the work pride is no longer there. Additional causes are social isolation, family problems and break ups, and withdrawal from church attendance and activities that provided social support. The demise of labor unions has also deprived low-skill workers an outlet for social engagement and solidarity.
Interestingly, Case and Deaton find that differences in poverty levels and income inequality across states and demographic groups (for example, white vs. black Americans) do not always explain the higher mortality and morbidity rates of middle-age white men without a college degree. It is rather the abrupt loss of the traditional way of life and the loss of meaningfulness that has brough this cohort of middle-age white men to pain killers, alcohol and drugs, and eventually to poor health and death. From a political standpoint, the loss of social status and living wages has contributed to the resentment less educated white workers feel toward other groups, immigrants, Hispanics and Black Americans, whose living standards, though still lagging, have improved over time. This resentment finds, of course, its way to the ballot box.
Case and Deaton ask: Who has failed the American blue-color workers? First, they point the finger to the government and Congress. Inadequate regulation of opioids, low funding of public healthcare programs to fight mental illnesses and alcohol and drug abuse, as well as anti-labor laws have failed to protect vulnerable groups. Second, they are particularly critical of the US healthcare system. Weak regulation of the pharma industry, lack of monitoring and evaluation of healthcare providers, and a hands-off policy toward consolidation of hospital systems has produced a socially unacceptable reality of very expensive healthcare with only mediocre results to show and tens of millions of uninsured and under-insured people.
Finally, they argue that American capitalism has devolve to a reverse Robin Hood paradigm where corporate governance, market regulation (or lack thereof) and taxation help concentrate incomes and wealth within a narrow slice of the population without regard to those left behind.
There is an instructive detail in this calamity. The people that bore the heaviest brunt are Americans living in the middle of the country and conservative states. People who by culture and upbringing are self-reliant and independent. And yet when the jobs market collapsed around them these resilient Americans were not able to withstand the challenge of change. This shows that an economic and business system left to its own dynamic without active and socially-minded government engagement does not deliver the textbook results its advocates -and not surprisingly greatest beneficiaries – tell us to believe in.
Let's Reason 