Economic Equality: A Nobel-Worthy Idea But a Long Way to Go

Angus Deaton's Nobel prize-winning work is inspiring, but will it solve poverty?
October 26, 2015
Princeton University Economist Angus Deaton, now a Nobel Prize winner, giving a lecture. (NYU_DRI)
By Ron Littlefield  |  Senior Fellow
Ron Littlefield, a former mayor of Chattanooga, Tenn., is a senior fellow with the Governing Institute and its lead analyst on the City Accelerator initiative. A city planner by career, he also consults to government through Littlefield Associates.

America's longest war is not in the Middle East. It’s actually much closer to home, in our cities and towns, in our neighborhoods and possibly even our families. It’s the War on Poverty.

As the eight cities in Cohort I and Cohort II of the City Accelerator focus on improving the quality of life for their low-income citizens, I’ve written about the War on Poverty before. It began long before President Lyndon Johnson gave it that title in 1964, and sadly it most likely will never end. President Johnson's declaration was in response to a national poverty rate of 19 percent. Forty-six years, seven presidents and billions of dollars later, the poverty rate still hovers around 15 percent.

Earlier this month, Princeton University Economist Angus Deaton received the Nobel Prize for Economics. The 69-year-old professor has devoted much of his life and career trying to unravel the intricacies of the ancient scourge that decimates lives and families and drags down cities and civilizations. As someone of the same age who has spent most of four decades working with the various well-intentioned efforts to combat urban poverty (Model Cities to community development), I applaud this announcement and hope Deaton’s analysis and international recognition will spur a redesign and refocus of policies and programs to improve the effectiveness of ongoing anti-poverty efforts.

My initial reaction to the announcement was that perhaps at last someone has a new idea – if not a silver bullet – that will help end poverty. However, not surprisingly, more in-depth analysis of Deaton's work reveals it's not all that easy. In fact, part of the reason for his recognition is his pointing out – in a scholarly way – the over simplifications of previous theories we have used to understand and address poverty. “Knowing how people respond to price changes is crucial to understanding the effects of governments tweaking taxes, supermarkets promoting products and the like,” The Economist notes. “Before Mr. Deaton arrived on the scene, economists used simple models that made rigid assumptions about people's consumption patterns. But upon closer inspection, it turned out the assumptions were inconsistent with real-life data on how people respond to changes in prices."

In his 2013 book, The Great Escape: Health, Wealth and the Origins of Inequality, Deaton makes a bold but profound and disturbing statement: “The political equality that is required by democracy is always under threat from economic inequality, and the more extreme the economic inequality, the greater the threat to democracy.” He goes on to underscore and more carefully unwrap his reasoning, but we don't have to look back far in history to recognize the reality of his conclusion. Most major cultural upheavals – from the French Revolution to the rise of Fascism and Communism – began with social inequality. Haven't we experienced the effects of inequality and income disparity more recently in our cities?

If we are willing to examine the issue from a faith-based perspective, let’s consider a recent NPR program featuring an interview with the sometimes-controversial Rev. Jim Wallis. Wallis leads a Christian social justice organization – the Sojourners – but was one of the leaders behind the 2008 Compassion Forum that queried presidential candidates about moral issues transcending political ideology. This year, Rev. Wallis requested all presidential candidates submit a three-minute video on how they would approach poverty, treat the poor, and deal with this issue globally and domestically.

“We've got 10 videos in so far, and this is going to put, we think, poverty on the agenda,” said Wallis. “Republicans and Democrats have to answer the same question, and they're saying different things. And that's a good debate to have, but you've got to say, unless we are committed as a fundamental priority to lift people out of poverty, help them lift themselves out of poverty, how are you going to do that? And let's have a debate about that."

Of course, poverty is a global issue and a multi-faceted problem. In his 2014 book, The Locust Effect, author Gary Haugen of the International Justice Mission relates world poverty, human trafficking and modern-day slavery to violence and the breakdown of colonial-era laws designed to protect the wealthy more than the poor (and sometimes actually intended to protect the wealthy from the poor). The book jacket reads, "Like a horde of locusts devouring everything in their path, the unchecked plague of violence ruining lives, blocks the road out of poverty and undercuts development.” President Bill Clinton calls the book, “A compelling reminder that if we are to create a 21st century of shared prosperity, we cannot turn a blind eye to the violence that threatens our common humanity.”

It should come as no surprise that there is no happy ending in sight. There is likely no end to poverty and there is definitely no easy or quick solution. It's complicated, but at least by acknowledging this fact, by utilizing new tools and ways of addressing the problem such as those offered by Deaton's analysis, and by responding to the challenge from Rev. Jim Wallis or the broader world view from The Locust Effect, perhaps we can once again take up the difficult but worthwhile task of the War on Poverty.

 
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