The deeper causes of America's troubles

 From Melbourne's The Age newspaper:

For a harder-nosed expose of life on the margins of America’s mighty economy, I recommend the recent work of the Nobel prize-winning Scottish American economist, Sir Angus Deaton. With his wife Anne Case, another distinguished economics professor from Princeton University, Deaton has obliged Americans to acknowledge an epidemic that’s been blighting their society for two decades, the ever-rising “deaths of despair” among working-class white men.

These are deaths by suicide, alcohol-related liver disease and accidental drug overdose. Much of the problem is the opioid crisis, in which increased prescription of opioid medications – which the pharmaceutical companies had assured doctors were not addictive – led to widespread misuse of both prescription and non-prescription opioids and many fatal overdoses.

Deaton and Case found that these deaths of despair had risen from about 65,000 a year in 1995 to 158,000 in 2018 and 164,000 in 2019. This increase is almost entirely confined to Americans – particularly white males – without a university degree.

While overall death rates have fallen for those with full degrees, they’ve risen for less-educated Americans. Amazingly, life expectancy at birth for all Americans fell between 2014 and 2017 – the first three-year drop since the Spanish flu pandemic. It rose a fraction in 2018, as the authorities finally responded to the opioid crisis.

Deaton and Case have found that, after allowing for inflation, the wages of US men without college degrees have fallen for 50 years, while college graduates’ earnings premium over those without a degree has risen by an “astonishing” 80 per cent.

With the decline in employment in manufacturing caused by globalisation and, more particularly, automation, less-educated Americans have become increasingly less likely to have jobs. The share of prime-age men in the labour force has trended downwards for decades.

Despite losing the popular vote to Hillary Clinton in 2016, Donald Trump won more votes in the Electoral College partly because most Republicans held their nose and voted for him, but mainly because three or four smaller midwest “rust bucket” states – still suffering from the loss of less-skilled jobs in the Great Recession – switched from the Democrats to the man who promised to give the establishment a big kick up the bum. (Instead, he gave it big tax cuts and more deregulation.)

So Trump is more a symptom than a cause of America’s long-running economic and social decay. Which doesn’t change the likelihood that his woeful mismanagement of the coronavirus pandemic will add to the economic and social causes of deaths of despair.

Deaton and Case say the pandemic has exposed and accelerated the long-term trends that will render the US economy even more unequal and dysfunctional than it already was, further undermining the lives and livelihoods of less-educated people in the years ahead.

In the pandemic, many educated professionals have been able to work from home – protecting themselves and their salaries – while many of those who work in services and retail have lost their jobs or face a higher risk of infection doing them.

“When the final tallies are in, there is little doubt that the overall losses in life and money will divide along the same educational fault line,” they conclude.

[Read more here.  And see also these posts, and this one]