Reader Anthony L recommended an article in the Boston Review, based on a series of speeches Angus Deaton, which extends his landmark work on deaths of despair which earned him and his co-author Anne Case a Nobel Prize.1
The latest sighting is grim. As before, Deaton ties the US record of falling life expectancy among the less educated, which is a serious outlier by advanced economy standard, to the opioid epidemic. But his data updates show US outcomes to be getting even worse over time despite efforts to curb the pill-pushing practices of opioid makers, exemplified by Purdue Pharma.
Deaton also attributes the success of Purdue Pharma and its fellow travelers in ending curbs on what amounts to prescribing heroin to the widespread uptake of Chicago School of Economic ideology, which strongly favors de-regulation. Mr. Market is supposed to take care of bad actors. Yet even though Alan Greenspan, a strong-form libertarian, confessed that the 2007-2008 financial crisis showed his ideology was flawed,2 it still retains many adherents because libertarianism is good for business, bugger the costs for broader society. Deaton attributes the popularity of this bogus belief to a deliberate misreading of his fellow Scottish economist Adam Smith.3
I strongly urge you to read the Deaton article in full.
Recall that the Case-Deaton work, first published in 2015, found that all-cause mortality had increased among middle-aged non-Hispanic whites. Note that the chart below is not stratified by educational attainment. These deaths by suicide, opioid and drug overdose, which later work found were concentrated among those with at most a high school education, were substantial enough to lead to a reported increase in all-cause mortality for the entire non-Hispanic white cohort for that age group:
Case and Deaton have been refining their findings as the passage of time adds new data. The update per the Boston Review is grim. The death rate in the US among those in their mid-40s to mid-50s with only a high school education (note this now is for all races) has become so high that it has led to a fall in life expectancy among all adults with a high school education or less (Deaton also notes that only Scotland among advanced economies is following this trajectory), and that is what is driving the decline in US life expectancy overall. Note the declines started before Covid. From the Boston Review:
This chart show the difference in the US between the more and less educated:
Deaton elaborates (emphasis his):
Figure 2 shows life expectancy at twenty-five and, for the United States, divides the data into those with and without a four-year college degree. In Scotland, we do not (yet) have the data to make the split. The remarkable thing here is that, in the United States, those without a B.A. have experienced falling (adult) life expectancy since 2010, while those with the degree have continued to see improvements. Adult mortality rates are going in opposite directions for the more and less educated. The gap, which was about 2.5 years in 1992, doubled to 5 years in 2019 and reached 7 years in 2021.
One has to wonder if Obamacare played a secondary role. It became law in 2010 and its main provisions had phased in by the start of 2014. One benefit to the poor was Medicaid expansion, but many states refused to take that up. The complexity of the scheme would also work against the less educated. Even with Federal subsidies, most policies have high deductibles that render them high-cost catastrophic coverage.
Deaton describes how Purdue Pharma won FDA approval for OxyContin in 1995. A key point:
Traditionally, doctors in the United States did not prescribe opiates, even for terminally ill cancer patients—unlike in Britain—but they were persuaded by relentless marketing campaigns and a good deal of misdirection that OxyContin was safe for chronic pain.
He neglects to include that Perdure Pharma reformulated OxyContin from an 8 hour dose to a 24 hour dose that did not last 24 hours. This was a deliberate scheme to create addicts. When the pain resumed before the 24 hours were up, doctors were told to increase the dose, even though Purdue Pharma knew that would not change outcomes.
Deaton points out that Purdue Pharma reformulated OxyContin in 2010 to reduce its potential for abuse, but by then, the horse had left the barn:
By 2012 enough opioid prescriptions were being written for every American adult to have a month’s supply. In time, physicians began to realize what they had done and cut back on prescriptions. Or at least most did; a few turned themselves into drug dealers and operated pill mills, selling pills for money or, in some cases, for sex. Many of those doctors are now in jail….
In 2010 Purdue reformulated Oxycontin to make it harder to abuse, and around the same time the docs pulled back, but by then a large population of people had become addicted to the drugs, and when prescribers denied them pills, black market suppliers flooded the illicit market with cheap heroin and fentanyl, which is more than thirty times stronger than heroin. Sometimes dealers even met disappointed patients outside pain clinics.
Deaton stresses that Smith has been misrepresented and quotes one American economist quipping that Smith had been imprisoned by the Chicago School. He turns to his economic argument. I have excised a lot in the interest of both space and not over-hoisting:
Smith’s notion of the “invisible hand,” the idea that self-interest and competition will often work to the general good, is what economists today call the first welfare theorem. Exactly what this general good is and exactly how it gets promoted have been central topics in economics ever since….
I want to discuss two issues. First, there is the question of whose good we are talking about. The butcher, at least qua butcher, cares not at all about social justice; to her, money is money, and it doesn’t matter whose it is. The good that markets promote is the goodness of efficiency—the elimination of waste, in the sense that it is impossible to make anyone better off without hurting at least one other person. Certainly that is a good thing, but it is not the same thing as the goodness of justice…
A second condition is good information: that people know about the meat, beer, and bread that they are buying, and that they understand what will happen when they consume it…..Patients must rely on physicians to tell them what they need in a way that is not true of the butcher, who does not expect to be obeyed when she tells you that, just to be sure you have enough, you should take home the carcass hanging in her shop….This is (at least one of the) reason(s) why almost all wealthy countries do not rely on pure laissez-faire to provide health care.
So why is America different? And what does America’s failure to heed Arrow have to do with the Sacklers, or with deaths of despair, or with OxyContin and the pain and despair that it exploited and created? There are many reasons why America’s health care system is not like the Canadian or European systems, including, perhaps most importantly, the legacy of racial injustice. But today I want to focus on economics.
Neither America nor American economics was always committed to laissez-faire….
Chicago economics is important. Many of us were brought up on a naïve economics in which market failures could be fixed by government action; indeed, that was one of government’s main functions. Chicago economists correctly argued that governments could fail, too…Free markets, on the other hand, would produce both freedom and equality. These ideas were often grounded more in hope than in reality, and history abounds with examples of the opposite…
Chicago analysis serves as an important corrective to the naïve view that the business of government is to correct market failures. But it all went too far, and morphed into a belief that government was entirely incapable of helping its citizens…
If the government could do nothing for African Americans, then it certainly could do nothing to improve the delivery of health care….
There is no area of the economy that has been more seriously damaged by libertarian beliefs than health care.
I hope you will read this important article and circulate it widely.
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1 I believe most readers recognize that the economics “Nobel” is a Swedish central bank counterfeit, and I do not highlight that because it also takes too many words to make the point.
2 From the New York Times on the relevant section of Greenspan’s Congressional testimony in October 2008:
Mr. Greenspan admitted…“Those of us who have looked to the self-interest of lending institutions to protect shareholders’ equity, myself included, are in a state of shocked disbelief,” he told the House Committee on Oversight and Government Reform….
“You had the authority to prevent irresponsible lending practices that led to the subprime mortgage crisis. You were advised to do so by many others,” said Representative Henry Waxamn of California, chairman of the committee. “Do you feel that your ideology pushed you to make decisions that you wish you had not made?”
Mr.Greenspan conceded: “Yes, I’ve found a flaw. I don’t know how significant or permanent it is. But I’ve been very distressed by that fact.”
3 Deaton is far from alone in pointing out the way Smith’s beliefs have been misrepresented and misused. For instance, we made that point in what amounts to the thesis statement of ECONNED:
In 1776, Adam Smith published The Wealth of Nations. In it, he argued that the uncoordinated actions of large numbers of individuals, each acting out of self-interest, sometimes produced, as if by “an invisible hand,” results that were beneficial to broader society. Smith also pointed out that self-interested actions frequently led to injustice or even ruin. He fiercely criticized both how employers
colluded with each other to keep wages low, as well as the “savage injustice” that European mercantilist interests had “commit[ted] with impunity” in colonies in Asia and the Americas.Smith’s ideas were cherry-picked and turned into a simplistic ideology that now dominates university economics departments. This theory proclaims that the “invisible hand” ensures that economic self-interest will always lead to the best outcomes imaginable. It follows that any restrictions on the profit-seeking activities of individuals and corporations interfere with this invisible hand, and therefore are “inefficient” and nonsensical.
According to this line of thinking, individuals have perfect knowledge both of what they want and of everything happening in the world at large, and so they pass their lives making intelligent decisions. Prices may change in ways that appear random, but this randomness follows predictable, unchanging rules and is never violently chaotic. It is therefore possible for corporations to use clever techniques and systems to reduce or even eliminate the risks associated with their business. The result is a stable, productive economy that represents the apex of civilization.
This heartwarming picture airbrushes out nearly all of the real business world. Yet uncritical allegiance to these precepts over the last thirty years has produced a world in which corporations, especially in finance, are far less restricted in their pursuit of profit. We show in this book how this lawless environment has led the financial services industry to pursue its own unenlightened self interest. The industry has become systematically predatory. Employees of industry firms have not confined their predation to outsiders; their efforts to loot their own firms nearly destroyed the industry and the entire global economy.
Similarly destructive behavior by other players, often viewed through a distorted lens that saw all unconstrained commercial behavior as virtuous, added more fuel to the conflagration.
Some economists have opposed this prevailing ideology; indeed, comparatively new lines of inquiry focus explicitly on how economic actors can fool themselves or others into making poor, even destructive, choices.
But when the economics profession has used the megaphone of its authority to dominate discussions with policymakers and the public, it has spoken with one voice, and the message has been the one described here. We therefore confine our criticism to these particularly influential ideas.
Theories that fly in the face of reality often need to excise inconvenient phenomena, and mainstream economics is no exception. Idealizing the rational aspects of business decisions means refusing to notice behavior that is predatory, destructive, criminal, or simply stupid. Believing that risk is manageable through mechanical systems has required not just unrealistic assumptions but also willful blindness to clear signs of danger.
