Steven Pinker’s Analysis of Wealth and Inequality

“The world has made spectacular progress in every single measure of human well-being,” as noted in a prior post, is the cheery synopsis of the new book, “Enlightenment NOW: The Case for Reason, Science, Humanism, and Progress “ (p. 52)  by Harvard University’s Johnston Family Professor of Psychology, Steven Pinker.

Two of the measures that he examines are wealth (Ch. 8) and inequality (Ch. 9), both of which illustrate his overall analysis over long periods of time and for the whole world with unusual sets of data and graphs.

Wealth

For wealth, he starts with the proposition that “wealth is created . . . primarily by knowledge and cooperation: networks of people arrange matter into improbable but useful configurations and combine the fruits of their ingenuity and labor . . . [and] that we can figure out how to make more of it” (p. 80).

His graph of Gross World Product, 1-2015 (p. 81) shows virtually no change from year 1 through the middle of the 19th century and then virtually a straight-upward line through 2015. This “Great Escape” from poverty was due to “the application of science to the improvement of material life,” “the development of institutions that lubricated the exchange of goods, services, and ideas” and “a change in values” or “endorsement of bourgeois virtue” (pp. 80-85).

The next graph–GDP per capita, 1600-2015 (p. 85)—shows, Pinker argues, that “starting in the late 20th century, poor countries have been escaping from poverty in their turn,” thereby converting the Great Escape to the Great Convergence. This is also shown, according to Pinker, by data and graphs of World income distribution, 1800, 1975, and 2015; Extreme poverty (proportion of world population), 1820-2015; and Extreme poverty (number), 1820-2015 (pp. 86-88).

For Pinker, the following are the three major causes of this Great Convergence:

  1. The “decline of communism (together with intrusive socialism).” Market “economies can generate wealth prodigiously while totalitarian planned economies impose scarcity, stagnation, and often famine. Market economies, in addition to reaping the benefits of specialization and providing incentives for people to produce things that other people want, solve the problem of coordinating the efforts of hundreds of millions of people by using prices to propagate information about need and availability far and wide.” Moreover, many market economies also “invested in education, public health, infrastructure, and agricultural and job training, together with social insurance and poverty-reduction programs.” (Pp. 90-91.)[1]
  2. Better leadership in developing countries (p. 91).
  3. The end of the Cold War (p. 91).
  4. Globalization through an explosion of international trade (p. 92).
  5. Advances in science and technology (pp. 94-96).

Inequality

The initial premise of this chapter is that unlike “health, prosperity, knowledge, safety, peace “ and certain other factors, “economic inequality is not a fundamental component of well-being.” The contrary view confuses inequality with poverty. (Pp. 98-102.)

Here Pinker asserts that inequality comes with modernity and refers to the Gini Coefficient as the usual measure of economic inequality with 0, when everyone has the same as everyone else and 1, when one person has everything and everyone else has nothing.  (Pp. 98, 102.)

He then displays three graphs of the Gini Coefficient: International inequality, 1820-2013 (population weighted and unweighted), Global inequality, 1820-2011 and Inequality, UK and US, 1688-2013. These graphs demonstrate, he says, that “inequality in the world is declining.” (Pp. 98, 103-06.) An historian, Walter Scheidel, is said to have identified the Four Horsemen of Leveling: mass-mobilization warfare, transformative revolution, state collapse and lethal pandemics by obliterating wealth and killing large numbers of workers. (Pp. 106-07.)

Moreover, “modern societies now devote a substantial chunk of their wealth to health, education, pensions, and income support (the Egalitarian Revolution).” This has “redefined the mission of government to include such social spending to inoculate citizens against the appeal of communism and fascism, to benefit the entire society, to indemnify citizens against misfortunes against which they can’t or won’t insure themselves and to assuage the modern conscience.” (Pp. 107-08.)

The conclusion from Pinker on this issue is the following:

  • “As globalization and technology have lifted billions out of poverty and created a global middle class, international and global inequality have decreased, at the same time that they enrich elites whose analytical, creative , or financial impact has global reach. The fortunes of the lower classes in developed countries have not improved nearly as much, but they have improved . . . The improvements are enhanced by social spending, and by the falling cost and rising quality of the things that people want. In some ways the world has become less equal, but in more ways the world’s people have become better off.” (P. 120.)

Conclusion

The overall thesis of this book– The world has made spectacular progress in every single measure of human well-being—is very attractive. What are the counter arguments?

The above summary of Professor Pinker’s analysis of wealth and inequality raises at least the following questions:

  • Many of the data sets used by Pinker are not well known. Therefore, do they accurately and fairly depict what they purport to depict?
  • It seems valid that “wealth is created . . . primarily by knowledge and cooperation: networks of people arrange matter into improbable but useful configurations and combine the fruits of their ingenuity and labor . . . [and] that we can figure out how to make more of it.” Any legitimate objections to same?
  • Is it valid to state that “in the late 20th century, poor countries have been escaping from poverty in their turn,” thereby converting the Great Escape to the Great Convergence?
  • Are Pinker’s reasons for the Great Convergence valid?
  • Is economic inequality not a fundamental component of wellbeing?
  • Is the Gini Coefficient a valid measure of inequality?
  • Are the major causes of Leveling or reduced inequality these factors: mass-mobilization warfare, transformative revolution, state collapse and lethal pandemics?

Comments from others who know more about these data sets and analyses are earnestly solicited.

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[1] Right now we are seeing Cuba struggle with whether and how it will modify its communist economic system to allow greater private enterprise. See Economic Challenges Facing Cuba’s New President, dwkcommentaries.com (April 5, 2018).

 

 

 

 

 

Reactions to Tom Friedman’s “Thank You for Being Late: An Optimist’s Guide to Thriving in the Age of Accelerations”

Tom Friedman’s new book’s basic thesis: now everyone on the planet is living in a simultaneous age of accelerations of changes in technology, globalization and planet earth and we all are challenged in how we can and will respond to these changes.[1] After summarizing the major points of the book, the conclusion will offer some critical comments.

Summary of the Book

Most of the book describes those changes, but nowhere is there an express “guide to thriving” in this age. Instead the reader has to pick up recommended habits and changes that are sprinkled throughout the book. Here is what I assume are the elements of such a guide.

  1. Understanding the Accelerating Changes. This is Part II of the book. Increasing technology emphasizes developments in artificial intelligence and global dissemination of these improvements. Increasing globalization includes “trade in physical goods, services and financial transactions” and “the ability of any individual or company to compete, connect, exchange, or collaborate globally.” Increasing changes to planet earth include climate change, reductions in biodiversity, deforestation, biogeochemical flows, ocean acidification, overuse of freshwater, atmospheric aerosol loading, introduction of man-man chemicals and materials and increasing human population.
  1. Understanding the Effects of These Changes. This is supposed to be the primary focus of Part III of the book. The major one I found is Friedman’s assertion that there are now international inversions: allies can kill faster than enemies; “enemies” can pose greater risks by weakness rather than strength; there is a rising risk of frail states becoming failed states; and jihadists are “super-empowered breeders” of disorder or “breakers.” Most of this Part instead discusses possible responses to the accelerating changes and effects and his conclusion that “we have no choice but to learn to adapt to this new pace of change” (p. 198).
  1. Identifying and Implementing Responses to These Changes.

Responses to changes to planet earth: we need “a compounding commitment to stewardship, a compounding wiliness to act collectively to do compounding research and make compounding investments in clean energy production and more efficient consumption, along with a willingness, at least in America, to impose a carbon tax to get compounding investments in clean power and efficiency, plus a compounding commitment to women’s education and an ethic of empowerment everywhere.” (Pp. 183-84)

In addition, nations need to learn and adapt, to be agile and adopt heterodox, hybrid, entrepreneurial, experimental measures (Pp. 298-325) and to reverse centralization of governments and increase their decentralization, and the U.S. with its federal structure is designed to do just that. (Pp. 325-27) The last point is repeated in Chapter 7 (P. 201).

Goals for innovation from Chapter 7:“[R]eimagining and redesigning . . . society’s workplace, politics, geopolitics, ethics and communities—in ways that will enable more citizens on more days in more ways to keep pace with how these accelerations are reshaping . . . [our] lives and generate more stability. [W]orkplace innovation to identify exactly what humans can do better than machines and better with machines and increasingly train people for these roles.” (Emphasis in original) “[G]eopolitical innovation to figure out how we collectively manage a world where the power of one [person], the power of machines, the power of flows, and the power of many [persons] are collapsing weak states, super-empowering breakers and stressing strong states. [P]olitical innovation to adjust our traditional left-right political platforms . . . to meet the new demands for societal resilience in the age of . . . accelerations. [M]oral innovation . . .to reimagine how we scale sustainable values to everyone we possibly can when the power of one [person] and the power of machines become so amplified that human beings become almost godlike. [S]ocietal innovation, learning to build new social contracts, lifelong learning opportunities, and expanded public-private partnerships, to anchor and propel more diverse populations and build more healthy communities.”

All individuals need a plan to succeed that includes lifelong learning and “self-motivation to tap into new global flows for work and learning.” This is a new social contract where people are hired based upon an individual’s skills, not credentials. “Most good middle-class jobs today—the ones that cannot be outsourced, automated, roboticized, or digitized—are likely to be . . . stempathy jobs,” i.e., “jobs that require and reward the ability to leverage technical and interpersonal skills.”

U.S. National Government should limit national political campaign spending and length of campaigns; stop state gerrymandering; and impose ranked-choice voting for the U.S. Senate and House of Representatives. Chapter 10 also contains a list of at least 20 suggested changes to federal laws and policies without explanatory comments and without saying whether and how they are related to changes to the earth. All of these changes will require government “to create every possible regulatory and tax incentive for every company to provide, and every worker to get access to, intelligent assistance, intelligent assistants, intelligent networks, and intelligent financing for lifelong learning.” (P. 241)

  1. Reflecting. This is the title of Part I of the book, where Friedman says, stopping “to pause and reflect . . . is a necessity” because it enables you to start “to rethink your assumptions, to reimagine what is possible, . . . reconnect with your most deeply held beliefs [and] . . . reimagine a better path [forward].”

Supposedly he realized this when a guest was late for breakfast at a restaurant, thus giving Tom a few minutes to reflect and relax and then to thank the guest for being late (and thus providing the first part of the title of the book). I was put off by his converting this trivial incident into a significant one that is in the title of the book. Friedman is a serious man of the Jewish faith, which like other religions emphasizes regular prayer and attendance at worship services to provide the opportunities for such reflection, but no mention of that or of his recommitting to a regular practice of reflection at the start of the book. In Chapter 11, however, he says, “we make God present by our own choices and decisions. Unless we bear witness to God’s presence by our own deeds, He is not present. You cannot be moral unless you are totally free. All religions have some version of the Golden Rule: do unto others as you would have them do unto you.”

  1. Identifying and Honoring Your Anchor. “We each need to be anchored [and enriched] in a topsoil of trust that is the foundation of all healthy communities . . . [and to] enrich it in turn.” For him that is Minnesota and St. Louis Park, where he grew up and where he obtained the values he holds today: “I am a socially liberal, deeply patriotic, pluralism-loving, community-oriented, fiscally moderate, free-trade-inclined, innovation-obsessed environmentalist-capitalist,” and “America can deliver a life of decency, security, opportunity, and freedom for its own people, and can also be a bulwark of stability and a beacon of liberty and justice for people the world over.”

Conclusion

Although I am not qualified to assess Friedman’s discussion of technological change, a recent Wall Street Journal article takes a less grandiose view of technological innovation.[2] It says, none of the technological change “has translated into meaningful advances in Americans’ standard of living.” Moreover, “outside of personal technology, improvements in everyday life have been incremental, not revolutionary.”

The book, in my opinion, was very poorly organized and edited. And it suggests that the U.S. responses to the accelerations should rest on the shoulders of thousands of local governments while inconsistently compiling a long list of things the federal government should do, many of which appear to be unrelated to responding to the accelerations.[3]

After a rather manic discussion of this book on the Charlie Rose Show last November, Friedman made a more effective presentation last December at Minneapolis’ Westminster Town Hall Forum.[4]

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[1] Friedman, Thank You for Being Late: An Optimist’s Guide to Thriving in the Age of Accelerations Farrar, Straus & Giroux, new York, 2016).

[2] Ip, The Economy’s Hidden Problem: We’re Out of New Ideas, W.S.J. (Dec. 6, 2016)..

[3[ Here are two of the many reviews of the book: Micklethwait, The Message of Thomas Friedman’s New Book: It’s Going to Be O.K., N.Y. Times (Nov. 22, 2016); Vanderkam, Everyone Has an App Idea, W.S.J. (Nov. 21, 2016). Unsurprisingly Friedman uses some of the book’s ideas in his New York Times columns; here are two such columns: Dancing in a Hurricane, N.Y. Times (Nov. 19, 2016); From Hands to Heads to Hearts, N.Y. Times (Jan. 4, 2017).

[4] Charlie Rose Show, Tom Friedman (Nov. 21, 2016); Westminster Town Hall Forum, Tom Friedman (Dec.13, 2016).