Home / Politics / News /  US’ killer capitalism

A great failure of contemporary American capitalism is that it is not serving everyone. The educated minority—the one-third of the adult population with a four-year college degree—has prospered, but the majority has lost out, not just relatively but absolutely. The facts are increasingly clear and hard to ignore. Less-educated Americans’ prospects are getting worse: they are losing materially, they are enduring more pain and social isolation, and their lives are getting shorter.

After 1970, the engine of American progress began to falter. From the early 1980s onwards, economic growth slowed, and what was once a largely equal distribution of gains became increasingly top-heavy. Economists Thomas Piketty and Emmanuel Saez’s important work with US tax records shows just how well those at the very top have done.

While many commentators with alternative calculations have questioned the extent of rising income inequality, none has succeeded in dismissing the trend. Others argue that it is not a cause for concern, provided that everyone is prospering. For them, the evidence of falling material measures is a more serious challenge. Among men without a college degree, real (inflation-adjusted) median wages have undergone a trend decline for more than 50 years—experiencing interruptions during economic booms, but never recovering enough to return to the previous peak. Even at the height of the boom just before covid-19, median wages were lower than at any point in the 1980s.

The critics argue that these data exclude various worker benefits, such as employer-provided health insurance. Yet, the extraordinary increase in the cost of these benefits is itself contributing to the wage decline and to the destruction of jobs for the less skilled. Including these benefits in the analysis is like mugging someone and charging him for the cost of the attack.

Our findings on “deaths of despair" put another dent in the argument that working Americans are flourishing despite material evidence to the contrary. Death is a lot easier to measure than real income. In 1992, life expectancy at age 25 was two-and-a-half years longer for men and women with a college degree than for those without one. By 2019, the gap had grown to six-and-a-half years; from 2010 to 2018, life expectancy at 25 fell every year for those without a degree.

Accidental drug overdoses are an important part of the story. More than half of the increase in deaths of despair since the late 1980s came from overdoses. In the late 1980s, about 60,000 people in the US died each year from drugs, alcohol and suicide. Just prior to the pandemic, annual deaths of despair were running at 170,000—an increase of more than 100,000 per year—with overdose deaths accounting for the largest share, but less than half of the total. With a little more than half of the increase due to overdoses, perhaps it is true that the US is suffering an epidemic not of despair but of drug overdoses. That is something that societies throughout history have had to endure, and will no doubt have to endure again.

The distinction matters. If the deaths are “just" drug overdoses, they can be pinned on a few unscrupulous and under-regulated pharmaceutical companies and distributors. There is nothing fundamentally awry in society, and certainly no sign of a deep flaw in the way that contemporary American capitalism is working. Despair, by contrast, is a disease of working-class Americans—people without a bachelor’s degree—whose job opportunities, marriages, and social and economic institutions have weakened over the past half-century. The drug epidemic story is one of a few bad apples. The despair story is one of a society that is not serving large numbers of its people, effectively consigning them to second-class citizenship.

Many signs point to an epidemic of despair among Americans without a college degree. Measures of poor mental health climb year-on-year for this group. They have experienced a widely documented increase in pain—a problem so severe among later-born cohorts that middle-aged Americans are now reporting more pain than the elderly, something that is not true in Europe.

Drug epidemics are not like plagues of locusts or earthquakes. They afflict societies that are already in trouble. Consider China in the 1840s. Nothing can excuse the depredations of the Scottish opium merchants William Jardine and James Matheson, nor British Prime Minister Lord Melbourne’s decision to send in the navy to support them. But there is little doubt that the advanced disintegration of the Qing Empire was a precondition for the opioid epidemic that followed.

In the US case, the most important previous opioid epidemic came during and after the Civil War. And on a smaller scale, there was widespread use of opium and heroin by American troops in Vietnam. Most of these addictions disappeared when the soldiers returned from being bored out of their minds half a world away to lead well-supported, meaningful lives at home. The fact that the current surge in drug deaths is concentrated almost entirely among those without a college degree tells us that, as in 19th-century China, despair and disintegration were preconditions that gave the dealers the foothold they needed.

Perhaps most telling of all is what has happened to suicide rates. Whereas the fin de siècle French sociologist Émile Durkheim thought that educated people were more likely to kill themselves, suicide rates in the US today are higher among those without a bachelor’s degree.

By contrast, world suicide rates have been falling for the past two decades, including in the European Union and other high-income countries. Even Japan and Finland, rich countries long troubled by suicide, now have lower rates than the US. There have also been particularly rapid declines in Russia—with rates cut by half since 2000—and in the other countries of the former Soviet Union. While Russia still has a higher suicide rate than the US, the US is coming to resemble erstwhile suicide hot spots.

Rising suicide rates are hardly marks of a flourishing capitalist democracy. There is nothing wrong with capitalism in principle, but there is a great deal wrong with the version prevailing in the US today. ©2021/PROJECT SYNDICATE (www.project-syndicate.org)

Anne Case & Angus Deaton are, respectively, professor emeritus of economics at Princeton University; and the 2015 Nobel laureate in economics and professor emeritus of economics at the Princeton School of Public and International Affairs.


Catch all the Politics News and Updates on Live Mint. Download The Mint News App to get Daily Market Updates & Live Business News.
More Less

Recommended For You

Trending Stocks

Get alerts on WhatsApp
Set Preferences My ReadsWatchlistFeedbackRedeem a Gift CardLogout