“Economic Man” = Boring Old White Man

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In another last-one-to-say-“Not me”-when-somebody-farts move, George Bush announced last week that income inequality was a problem in the United States. (Mother Jones has reported on the problem here, here, and here to take but a few examples.) Today, the Washington Post reports, Federal Reserve Chairman Ben Bernanke also acknowledged the income-inequality problem. Like Bush, he blamed the increasing value of education.

Bush and his Fed chief don’t want to admit that tax breaks for the wealthy might have something to do with the increasing income gap. But the education claim is not just an excuse; it’s a big fat lie. It’s false even if all kinds of education are lumped together; breaking education down by field (i.e., business or science vs. anything in the humanities) reveals even more clearly that education itself is no passkey into the upper, upper class to which the concept of “income inequality” refers.

Bernanke’s proposed solutions are fascinating, because they suggest that the Fed chief knows that a true free market screws the poor. He concedes that

the U.S. economy “creates painful dislocations,” such as factory closings and layoffs of workers with obsolete skills. “If we did not place some limits on the downside risks to individuals affected by economic change, the public at large might become less willing to accept the dynamism that is so essential to economic progress.”

There have been some very revealing articles lately about the assumptions that economists make to be able to argue that the free market is best for everyone. Bascially, they assume everyone is the same. They call that everyone “Economic Man,” and assume that he is informed and rational in all of his economic decisions. Nobel-winning economist George A. Akerlof argued recently that Friedman’s free market approach, which champions Economic Man, rather oversimplifies human behavior. As Louis Uchitelle reported in the NYT:

For example, [Akerlof] says, people don’t automatically insist on raises that keep their pay on par with inflation. They often are happy with smaller raises, considering them a compliment from the boss for valued work. That makes pressure for higher pay less inflationary than the Friedman approach would assume.

Has there ever been a better example of how a bunch of affluent white men sitting around pontificating will completely block out what real life is like for real people?

Last week, Salon‘s Andrew Leonard profiled the emerging field of neuroeconomics, which, it turns out, explores the same oversights Akerlof is talking about by way of brain scan. Leonard worries that brain scans, too, will become standardized. On the up side, maybe they’ll have to use poor people as guinea pigs and the assumptions will begin favor the needy.

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DEMOCRACY DOES NOT EXIST...

without free and fair elections, a vigorous free press, and engaged citizens to reclaim power from those who abuse it.

In this election year unlike any other—against a backdrop of a pandemic, an economic crisis, racial reckoning, and so much daily bluster—Mother Jones' journalism is driven by one simple question: Will America move closer to, or further from, justice and equity in the years to come?

If you're able to, please join us in this mission with a donation today. Our reporting right now is focused on voting rights and election security, corruption, disinformation, racial and gender equity, and the climate crisis. We can’t do it without the support of readers like you, and we need to give it everything we've got between now and November. Thank you.

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