After twenty-five years of writing for the Newsletter, Sir Angus Deaton contributes his final Letter from America, in which he reflects on past Letters, economics, and his life and times.
When I was a Research Officer in the Department of Applied Economics in Cambridge in the early 1970s, I was befriended by Thelma Liesner, then Thelma Seward. When she became Editor of the Newsletter in 1995, and after I had moved to Princeton, she remembered me and, because she was a fan of Alistair Cooke’s Letter from America on BBC Radio 4, she suggested I might write a Letter about economic events in America. She suggested the budget, which I never did write about, if only because, unlike Britain where the contents of the budget become law, the American “budget” is a fantasy wish list that the White House sends to Congress each year. But I did find other things to write about—this is my 50th letter—and found an ideal outlet in the Newsletter, always attractively produced, relatively short, and with news, professional information, and obituaries. I was always pleased when it landed on my desk and always looked at it, and others appeared to do so too.
Thelma retired in 1997, and since then I have worked with the admirable Peter Howells, who has been a model of punctuality, encouragement, and appreciation.
The Letter helped me learn to write for a non-specialist audience, or at least a non-specialist audience of economists, a half-way house that is much easier than writing for newspapers. It allowed me to write about things that interested me but didn’t always know much about, and I am grateful for my readers’ forbearance. Writing the Letter has rarely felt like work, more often joy. Many have been kind enough to say nice things over the years, and it seems that many readers know of me only through the Newsletter.
I moved to Princeton from Bristol in 1983. I have never given up my British citizenship, and did not become an American citizen until 2012, in part because, until Obama became president, I was less than enthusiastic about swearing allegiance to the United States and its leadership. But as the years passed, it seemed perverse not to acknowledge that my home was here, not to mention the homes of my children and grandchildren who had built their own lives in Chicago and New York.
More ominously, non-citizens have always been at risk in the US, especially after 9/11, even before the horrors of Trump. Under the Patriot Act of 2001 (“Inequality in America”, April 2002), universities were commanded to hand over personnel files of non-citizens on demand, and prohibited from divulging that they had done so. In my own case, I (think I) suffered nothing worse than the boorish attentions of an immigration officer, who took a dislike to me, tore up my green card, and turned my life into a bureaucratic hell that lasted for more than a year. As President Obama writes in his autobiography, immigrants “are always afraid that the life you’d worked so hard to build might be upended in an instant.” Even after that near upending, I was deterred from applying by the impossible requirement that I document every trip abroad for the last 30 years, until I eventually realized that, for the earlier trips, their records were no better than mine. And Anne found my old passports in the basement.
Once I decided to apply for citizenship, the lights turned on, and the agency that I’d seen as a persecutor became my friend. The bureaucracy could not have been more helpful—votes matter—and I even qualified for a special old-age dispensation that allowed me to answer correctly only 12 out of 20 possible questions (instead of 60 out of 100), many of which had the same answer. (What is the capital of America? Who was the first president? Who famously crossed the Delaware?) As a final hurdle, with no chance to prepare, on the day of the ceremony, I was asked at the door whether, in the two weeks since I had passed the test, I had worked as a prostitute. My late colleague, Uwe Reinhardt, claimed to have answered “I have long looked for something in that line of work, but so far without success.” At the ceremony, the immigration official who welcomed the new Americans began by telling us that voting was not an important part of citizenship, something that I already knew to be false. I resisted the urge to raise my hand.
That I long did not become American reflected real ambivalence, admiring many aspects of American life while watching others with fascinated horror. Both reactions are well represented in the Letters. I frequently wrote about the immense prosperity of American institutions like Princeton, how their riches were put at the service of scholarship, but how wealthy universities, faced with (relative) adversity after the financial crisis, acted to protect their endowments, rather than using them to ride out the crash (“Moon over Texas,” October 2010). I wrote about some of the best of American economics, how immensely distinguished scholars—and others—served changing administrations in Washington (“News for parrots,” April 2001). About how the National Bureau of Economic Research, under its longtime president (the late) Marty Feldstein, generated a stream of invaluable externalities to the profession (“Economists without borders,” October 1998).
The Newsletter, with an audience of economists, was a venue where I could write about the American profession, again with both admiration and horror. Economics remains extraordinarily open to new ideas and to young people; in the US, there are still plenty of jobs, and talented people can still be tenured at top universities in their 20s. The American profession’s susceptibility to fads is perhaps a consequence, though at 75, I doubt that I am a good judge. If the profession does well by the young, it does much less well by women; as the number of female economists grows so, rightly, do the protests about how badly they are treated in seminars and in the refereeing process.
I have written (perhaps too often) about the publication process, which today seems badly broken. The dominance of the top few journals, several not under professional control, gives great leeway to strong-minded and sometimes idiosyncratic editors who push their own views of what is good economics, regardless of whether the journals are owned by a professional association. It is hard to start a new journal, let alone a top journal, and the rents are sometimes subverted to idiosyncratic agendas.
In one Letter in 2007, I wrote positively about the extraordinary breadth of research by job-market candidates, in contrast to how economics had been in 1983 when I first arrived in Princeton, a time when theorists, empiricists and econometricians were all working on different parts of what was recognizably the same (price theory) elephant (“Random walks by young economists”, April 2007). Of course, it was a myopic elephant that knew little about poverty, inequality, race, or health, leaving such topics to other social scientists. Of those job market papers, I wrote that it was often hard to tell to which field of economics they belonged. Today, the divergence has gone further, so that, for example, looking at the contents of recent issues of the American Economic Review, it is hard to tell what subjects they cover, or whether economics has a recognizable core. Perhaps that is all to the good.
The American profession can look after itself, but publication in these same top journals has increasingly been used to assess young economists around the world, risking the demise of distinct approaches and schools that one day will be necessary for economics to evolve or to save it from excessive American inbreeding. And even within the US, I wrote of my horror at being told in a post-job-market seminar office visit that, for the candidate, whose talk demonstrated great virtuosity but neither concern for nor awareness of previous scholarship or approaches, the main threat to productivity was the amount of top-journal refereeing graduate students were expected to do. In such an environment, fads spread fast, and knowledge cannot cumulate. In contrast, I told a story from the 1970s about an elderly Italian economist who, after several glasses of brunello, spluttered with rage (and wine) about a new journal (I suspect it was the then newly-founded European Economic Review) sending papers to “unknown readers,” a procedure that was an affront to age and dignity, and indeed to the orderly production of knowledge. At the time, I thought our new world was better, that meritocracy (and unknown readers) were good things. Now, I am not so sure. (And I am increasingly fond of brunello.)
I frequently wrote about aspects of American inequality, not only in income and wealth, but inequality across race and citizenship, and my evolving understanding that the American government, unlike the British government, which my parents and I had confidently looked to for protection, was frequently an oppressor, more often redistributing up than down. One of my colleagues in 1983 liked to proclaim that “government is theft.” I was appalled, but have learned how often it is true. Members of Congress impeded regulators from stopping opioid manufacturers and distributors from addicting and killing tens of thousands of less-educated Americans, and they have consistently—across both parties—prevented attempts to rein in the depredations of a healthcare system that absorbs a fifth of GDP. There are five healthcare lobbyists in Washington for every member of Congress.
Many Letters were about American healthcare, whose horrors are an endless source of amazement and amusement to British eyes. Perhaps the highpoint was about my own hip replacement (“Trying to be a good hip-op consumer”, April 2006), trying to find a good surgeon in the first place (“He’s the guy who did the Pope, but he’s past it”) and being mistaken for someone else at 3.00 am by a terrifyingly insistent nurse armed with drugs and needles. The point of the piece was to document the absurdity of expecting consumers to shop for healthcare as they shop for other items, an idea then being pushed by the Bush administration, and still today an item of faith on the right, where free-market fundamentalists believe there is no problem that markets cannot solve. One of my ongoing sorrows about economics is that, amid the cacophony of our conflicting recommendations, we have not been able to help politicians and the public understand important, but perhaps not so obvious things, like the fact that free markets can’t deliver healthcare. The piece was picked up by one of the health columnists in the New York Times, and my hip became famous. At my son’s wedding, a guest asked who I was, and when told flashed immediate recognition, “aah, you’re the man with the hip.”
In one Letter, when I was President of the American Economic Association, I noted my surprise at discovering that the AEA was founded five years before the Royal Economic Society, which began in 1890 as the British Economic Association, and whose founding meeting was attended by Edwin Cannan, Francis Ysidro Edgeworth, Robert Giffen, Neville Keynes, George Bernard Shaw, and Alfred and Mary Paley Marshall. Richard T. Ely, a founder of the AEA, and its sixth president in 1900-1901, was a leader of the Progressive Movement, and wrote, as part of the AEA’s platform, that ‘the doctrine of laissez-faire is unsafe in politics and unsound in morals.’ He was remembered annually after 1962 through the Richard Ely lecture at the annual meetings. In 2020, the Executive of the AEA removed Ely’s name from the lecture, not because of his views on laissez-faire, but because he “wrote approvingly of slavery and eugenics, inveighed against immigrants, and favored segregation,” views inconsistent with the AEA’s code of professional conduct. In “America wakes up to inequality,” April 2014, I wrote warmly about Woodrow Wilson, a contemporary of Ely, who struggled (in the end unsuccessfully) against inequality and privilege at Princeton, and (with more success) in the United States (he was President when the Constitutional Amendments for women’s suffrage and the income tax were implemented). He too was “canceled” by Princeton in 2020, in part for segregating the federal government’s workforce, and his name no longer appears on the School where I once taught and worked. America—at least in part—has come to understand that inequality is about more than money.
Anne and I spend a month every summer in Montana, a break that keeps us sane, and the state itself, where I usually write the fall Letter, has often made an appearance. The great cosmopolitan universities on the coasts (Atlantic, Pacific, and Lake Michigan) are astonishingly disconnected from much of America, making it hard for those of us who work in them to sympathize with or understand the way that many Americans think. This includes their historically well-founded suspicion and detestation of the Federal Government. They often see federal regulations as attempts by outsiders to make them behave like extras in the theme parks where those outsiders come to play, outsiders who have little understanding of the ever more limited employment opportunities for them and for their children. You are unlikely to meet someone in Princeton who has had four children serve in the US military. I drew a parallel—that I continue to see as real—between the regulations that bother Montana farmers, and the increasing methodological regulation of academic research, from which economics is far from exempt (“Your wolf is interfering with my t-value,” October 2012).
My first Letter, in October 1996, was about the minimum wage, particularly the then new work of my colleagues David Card and Alan Krueger, and I returned to it two years ago after Alan died. I have never worked on the minimum wage, but the issues—how to do empirical work, how to bring evidence to bear on policy, the role of theory, and the potential for violent political controversy—are ones that I care about.
The minimum wage work, and its use of the natural experiment methodology, seemed like magic at the time, raising the curtain on new possibilities of investigation. As with all new methods, its problems became more apparent over time, but the history since 1994 is important and instructive. For many economists, the result that employment might go up with an increase in the minimum wage was obviously false. James Buchanan wrote that this was like claiming that water runs uphill, and was “equivalent to a denial that there is even minimal scientific content in economics.” He went on to congratulate himself and the rest of the profession, but presumably neither Card nor Krueger, for not being “a bevy of camp-following whores.” Another notable economist, June O’Neill, noted, like a good Bayesian, that “theory is evidence too.” Of course, the profession, camp followers or not, understood that the empirical result made sense if employers had monopsony power, but that fast food restaurants could be monopsonists was itself seen as likely as water flowing freely uphill.
Jason Furman later wrote that Card and Krueger’s work changed the minds of half of the profession, still a good description. In my own judgment, the accumulating evidence supports their original results, as does the experience in Britain after 2000, and, as a result, the importance of monopsony is more widely recognized, if far from universally so. This is not just water flowing uphill, but a whole new world, in which the economy looks less like a benevolent market and more like a class struggle, in which working people have good reason to mourn the decline of unions. The intense political reactions to the work from deeply interested parties, especially the fast-food industry, would have been no surprise to Adam Smith when he wrote about “The clamour of our merchants… for the support of their own absurd and oppressive monopolies.”
I also had the special pleasure of writing about the events around the Nobel Prize. One highpoint that stays with me (“Special edition from Stockholm and Washington,” April 2016) was an event that has not taken place since 2016, which is the reception in the Oval Office of each year’s American laureates. President Obama opened the door himself, and as I shook his hand, I gestured towards Anne behind me, beginning “I would like to introduce. . .” which was as far as I got. “Professor Case needs no introduction to me, and now we are going to discuss the paper that you have both written.” The paper—the first one of our “deaths of despair” work—had been published three days before, and he had read it carefully, and suggested that we draw a parallel with the catastrophe in the Black community forty years before, an idea we adopted in our book. There were no Nobel visits in the Trump years; I quoted the quip from a New York Times op-ed, asking what Trump could possibly learn from someone (Dick Thaler) who works on the lack of self-control. In the next Letter (“On becoming superannuated,” October 2016), I recounted the story of how the Nobel magic brought humanity and festivity to a dreary government benefit office. As my friend Danny Kahneman told me in 2002, the single best thing about the prize is, not the happiness it brings to the recipient, considerable though that is, but the happiness it brings to other people.
Writing these Letters has given me great pleasure, and I hope that it has brought pleasure to my readers too.