Last week, the George Mason University (GMU) Economics Society hosted Mercatus Center Faculty Director Tyler Cowen and Professor Steven Pearlstein, with GMU President Angel Cabrera moderating, to discuss their new books and different takes on capitalism, morality, and economics.
Cowen’s latest book, Stubborn Attachments: A Vision for a Society of Free, Prosperous, and Responsible Individuals, examines the intersection of philosophy and economics, emphasizing suspicion in government redistribution. Called, “his best, most ambitious and most personal work” by The Undercover Economist author Tim Hartford, Cowen finds a clear connection between common sense morality and economic growth.
According to Pearlstein, who provided a unique perspective on economics and journalism, America pursued policies in the 20th century that made the country lose its moral legitimacy. In his book, Can American Capitalism Survive?: Why Greed Is Not Good, Opportunity Is Not Equal, and Fairness Won't Make Us Poor, Pearlstein explores why so many young people are turning away from the benefits of a capitalistic society.
Both authors provided valuable accounts of their conceptualizations of morality, how income inequality and wealth redistribution should work on a policy level, and how certain variables should be treated when analyzing the success or decline of a society.
Talking about income inequality and redistribution, Cowen noted,
“I am suspicious of big, programmatic views, including Libertarianism with a large “L,” but also democratic socialism and many other contenders, that in a blanket way try to address all these issues on the basis of a single moral principle. I think it’s really looking at the data, looking at what works, what are the alternatives on the table…I find so rarely that income inequality is a control variable. It’s the result of billions of individual decisions…Don’t obsess over that. Look at making marginal improvements to systems we have.”
Similarly, Pearlstein laid out his vision for how to calculate redistribution properly through a bell-shaped curve model, which Cabrera called the Pearlstein Curve:
“On the x-axis is the amount of income inequality in a country, and on the y-axis is economic growth. If you can imagine a society in which everyone was given the same income…that would not be a very high-growth society…but on the other extreme, with no matter how much you work or how much talent you have…that basically all the income in the society would go to a couple of large families and pretty much everyone else would live in a subsistence existence. You just have to use logic to see that not many in that society would be very successful either. In between, there is probably somewhere where there is a curve and a sweet spot (for economic growth and equality).”
Despite several differing opinions on societal benefits and income inequality, both authors emphasized that continuing the conversation was essential. Pearlstein said that he and Tyler regularly have lunch to discuss these issues and more.
To read more about Stubborn Attachments or Can American Capitalism Survive?, visit Amazon.com or Marginal Revolution.