How a Quest by Elites Is Driving ‘Brexit’ and Trump
Here is an overarching theory of what we might have missed in the march toward a hyper-efficient global economy: Economic efficiency isn’t all it’s cracked up to be.
.. Against that backdrop, support for Mr. Trump and for the British withdrawal known as Brexit are just imperfect vehicles through which someone can yell, “Stop.”
.. But what if those gaps between the economic elite and the general public are created not by differences in expertise but in priorities?
.. In other words, the more evenly the pie was divided, the less pie there was to go around. There was a trade-off between equality and maximizing income, a version of economic efficiency.
Among the general American public, about half of those who played the game favored equality over efficiency.
.. Among the Yale students who played the game, 80 percent preferred efficiency to equality. They were more worried about the size of the pie, apparently, than making sure everyone got a slice.
.. “The people who are destined to fill these elite positions tend to have a strong efficiency orientation,” said Raymond Fisman, a Boston University economist and lead author of the study. “One underlying explanation may be that, if the system has been kind to you, and you find yourself at Yale Law School, you know you’re going to make out O.K. in the end, and so you don’t worry about widening the distribution of outcomes.”
.. But maybe it is really important for people who live in a place to be able to stay there indefinitely. Maybe the idea that things should stay the way they are, without new people moving in and new buildings going up, is not as inherently irrational as Economics 101 would suggest. Yes, rent control is a bad idea if you’re worried about the long-term prospects for economic efficiency. But maybe the people who advocate these policies know exactly what they’re rooting for, and that’s not it.
The rent control debate can be viewed as a microcosm of the debate about globalization and international trade.
.. It projects that the deal will add $131 billion a year to Americans’ incomes by 2030, or 0.5 percent of G.D.P. It will neither create nor destroy jobs, but is projected to add to churn — job changes — in the economy as work moves into higher-paying, more export-centric industries. The authors predict that the trade deal will mean an extra 53,700 job changes a year, but they note that 55.5 million people a year in the United States change jobs for all sorts of reasons, and that this extra churn will barely change those overall numbers.
.. If there is one crucial lesson from the success of Mr. Trump and Brexit, it is that dynamism and efficiency sound a lot better to people who are confident they’ll always end up being winners.