Good Economics for Hard Times by Abhijit V. Banerjee

CHAPTER 1

MEGA: Make Economics Great Again

A woman hears from her doctor that she has only half a year to live.
The doctor advises her to marry an economist and move to South
Dakota.
WOMAN: “Will this cure my illness?”
DOCTOR: “No, but the half year will seem pretty long.”
WE LIVE IN AN AGE of growing polarization. From Hungary to India, from
the Philippines to the United States, from the United Kingdom to Brazil,
from Indonesia to Italy, the public conversation between the left and the
right has turned more and more into a high-decibel slanging match, where
harsh words, used wantonly, leave very little scope for backtracking. In the
United States, where we live and work, split-ticket voting is at its lowest on
record. Eighty-one percent of those who identify with one party have a
negative opinion of the other party.
Sixty-one percent of Democrats say
they view Republicans as racists, sexists, or bigots. Fifty-four percent of
Republicans call Democrats spiteful. A third of all Americans would be
disappointed if a close family member married someone from the other
side.
In France and India, the two other countries where we spend a lot of
time, the rise of the political right is discussed, in the liberal, “enlightened”
elite world we inhabit, in increasingly millenarian terms. There is a clear

feeling that civilization as we know it, based on democracy and debate, is
under threat.
As social scientists, our job is to offer facts and interpretations of facts
we hope will help mediate these divides, help each side understand what the
other is saying, and thereby arrive at some reasoned disagreement, if not a
consensus. Democracy can live with dissent, as long as there is respect on
both sides. But respect demands some understanding.
What makes the current situation particularly worrying is that the space
for such conversations seems to be shrinking. There seems to be a
“tribalization” of views, not just about politics, but also about what the
main social problems are and what to do about them. A large-scale survey
found Americans’ views on a broad spectrum of issues come together like
bunches of grapes. People who share some core beliefs, say about gender
roles or whether hard work always leads to success, seem to have the same
opinions on a range of issues, from immigration to trade, from inequality to
taxes, to the role of the government. These core beliefs are better predictors
of their policy views than their income, their demographic groups, or where
they live.
These issues are in some ways front and center in the political discourse,
and not just in the United States. Immigration, trade, taxes, and the role of
government are just as contested in Europe, India, South Africa, or
Vietnam. But views on these issues are all too often based entirely on the
affirmation of specific personal values (“I am for immigration because I am
a generous person,” “I am against immigration because migrants threaten
our identity as a nation”). And when they are bolstered by anything, it is by
made-up numbers and very simplistic readings of the facts. Nobody really
thinks very hard about the issues themselves.
This is really quite disastrous, because we seem to have fallen on hard
times. The go-go years of global growth, fed by trade expansion and
China’s amazing economic success, may be over, what with China’s growth
slowing and trade wars igniting everywhere. Countries that prospered from
that rising tide—in Asia, Africa, and Latin America—are beginning to
wonder what is next for them. Of course, in most countries in the affluent
West, slow growth is nothing new at this point, but what makes it
particularly worrying is the rapid fraying of the social contract that we see
across these countries. We seem to be back in the Dickensian world of Hard

Good Economics for Hard Times by Abhijit V. Banerjee