 So I'm Deborah Satz and I'm the Dean of the School of Humanities and Sciences and also a member of the Tanner Lecture Selection Committee and it's my honor to welcome you to tonight's lecture and also to introduce our Tanner speaker for the evening and our discussant. First just a brief word about the Tanner Lectures. So the Tanner Lectures were founded in 1978. They were endowed by Ober Tanner who was a philanthropist, an industrialist, a scholar and also a philosopher here at Stanford and then later at the University of Utah and he endowed these lectures to reflect on scholarly and scientific learning related to human values and the human condition. The lectures take place each year at seven universities in the United States as well as Oxford and Cambridge. They're one of the most prestigious lectures in the humanities and in creating the lectures Tanner said, quote, I hope that these lectures will contribute to the intellectual and moral life of mankind. I see them as a search for a better understanding of human behavior and human values. This understanding may be pursued for its own intrinsic worth but it may also eventually have practical consequences for the quality of our personal and social lives. So that's a very noble ambition that's motivating the lectures and it's an important one. Human values are found across every dimension of our social and natural lives from questions of the ethics of self-driving cars to our obligations to strangers to questions that arise even in the so-called dismal science of economics. So just to quote Gladstone, budgets are not simply matters of arithmetic but there are also records of what we care about and what we think we ought to do. This year's Tanner lectures are exploring an important, complex and surprising aspect of recent U.S. history, the rise of what our lecturers are calling deaths of despair. In yesterday's lecture and case, developed the argument that U.S. capitalism is not working well for those without a college degree. A key piece of evidence is the rise in suicides and drug and alcohol related deaths. Large numbers of people have been left out and excluded from the benefits of living in a developed country and they see little progress in their own lives and have few hopes for their children. And as I was listening to the lecture, there was a quote from Dante that kept going through my mind where Dante says, without hope, we live in desire. That is, without a sense of possibility in an open future, we're just fall back on momentary pleasures and the relief of pain. So our Tanner lectures this year are two distinguished economists and co-authors, a husband and wife dynamic duo. In case, Professor Emerita of Economics from Princeton introduced the phenomenon of deaths of despair in yesterday's lecture. Tonight I introduce the second half of that team, Sir Angus Deaton. Angus is a senior scholar and the Dwight Eisenhower Professor of Economics in International Affairs Emeritus at the Woodrow Wilson School of Public and International Affairs and the Economics Department at Princeton University. His research touches almost every dimension of our lives, from poverty, inequality, health, well-being, economic development, and randomized control trials. His work, which is incredibly rigorous and detailed, I read a quote where the economist Billy Easterly says, torturously detailed, very detailed, he swings at the big kind of questions that not many people are willing to take on. These questions concern such issues as, what's wrong with contemporary capitalism? Can capitalism work for everyone? What kinds of inequality are objectionable? He's also written on economic methodology, asking whether random control trials should be thought of as the gold standard and guiding our thinking about poverty, alleviation, and development. All of these are significant questions. In fact, he's contributed to so many areas of economics, it's hard and a brief introduction to do justice to his achievements. So I'll just note, he's been awarded with the highest academic accolades that his profession bestows, including the 2015 Nobel Prize in Economics, for his work illuminating the role that consumption plays in human well-being and economic development, the Frisch Medal for his work in econometrics, he's a fellow of the British Academy, the American Academy of Arts and Sciences, and the National Academy of Sciences, and he was knighted in 2015. So he's a wonderful example of an economist who swings wide, pays incredible attention to detail and evidence, and is not afraid to follow his arguments wherever they lead. His talk will be followed by a commentary by Stanford's emeritus, Henry J. Kaiser Professor of Economics, Victor Fuchs. Many people would say that Vic invented the field of health economics. He certainly understands more about health care delivery than just about anybody else. He's written extensively on the cost of medical care and on the socioeconomic determinants of health. He's been interested in the role of physician behavior and the financial incentives in determining health care expenditures, and he recently proposed a universal health care voucher system in which all families or individuals would be given a voucher financed by an earmarked value-added tax that would guarantee them coverage in a private health plan with a standardized package of benefits, including basic health services and catastrophic coverage. He's a member of the Institute of Medicine and was president and distinguished fellow of the American Economic Association. He received the Distinguished Investigator Award and the Distinguished Fellow Award from the Association for Health Services Research and was awarded the Baxter Foundation's Health Service Research Prize. He's a fellow of the American Academy of Arts and Sciences, and at the age of 94 he published his 17th and most recent book, we're waiting for the 18th, and the book is called Health Economics and Policy Selected Writings. He's also an incredibly modest man, somewhere I read that he refers to himself as the Blanche Dubois of economics, saying that he always learned from lots of other people and benefited from the kindness of strangers in putting together his amazing work. So we're in for a real treat tonight, so please join me in welcoming Angus Deaton to deliver this second panel lecture. What a wonderful introduction. I think maybe the only thing that Deborah missed is a comparison of heights between me and Vic. I think Vic's probably got about an inch on me. He's one of the very few people who makes me uncomfortable when I talk to him, though not as bad as Paul Volcker, who is 6'10", I think, and for a while had the office next to me and that was a disaster. Anne started us off yesterday, and this is a sort of summary slide that she already showed us about the bad stuff that's happening starting from the base year, those born in 1950 and who entered the labor market around 1970, a whole list of bad stuff that was happening to those who were not fortunate enough to get a BA. She talked about suicide, about drug mortality, about chronic pain, sciatic pain, difficulty socializing, difficulty relaxing, mental distress, heavy drinking, high body mass index, not being married, out of the labor force law, falling real wages, and falling attachment to religion. Those are things that are not happening to people who have a BA, so there's this very sharp divide. I'm going to try to sell you a story which puts some of what we think is going on behind that, and we're going to talk quite a bit about economic prospects, but we think that without what's happened in the economy, these things would not have happened, but that what happened in the economy is not enough by itself, and it actually works through things that really matter to people, like falling apart marriages, not knowing your kids, failing relationships with your children, the failure of religion to support people, increasing social isolation, and for many people, and this I think is the key important persistent and intractable physical pain, so those are the things that are the sort of proximate causes, and we're going to argue that this long-term failure, this drip drip drip of a weakening economy for those people, lies behind that too. So I'm going to talk a little bit more about the roots of despair, following up a little more on what Anne talked about yesterday, and I'm going to talk about opioids, I then want to talk about the American health care system, and then I want to talk about upward redistribution by corporate America. The book, which has the same title as Desserts of Despair and the Failure of Capitalism, elaborates this in a lot more detail, and one of the things we're really concerned about is redistribution, but a redistributive system that's actually fleecing people at the bottom in order to enrich people at the top, so I want to give you examples of that, and at the very end, I'll give you a sketch of policies, I'm not going to have time to talk about them, I'm going to talk about them tomorrow or in the discussion period, I just want to list some. So the roots that Anne didn't talk about labor market decline, not directly through material welfare, but loss of community, let me show you some pictures of that. And so here is another one of these cohort graphs, those of you who were here yesterday probably had more than you wanted to see, but they really do the job for us. So these are real wages, and they're median real wages, so they're sort of halfway up the distribution of real wages for these various groups. The guys on top are people who have a BA or more, they get higher wages, the guys on the bottom are people with less than a BA, and ages along the bottom. So what you're looking at is the life course from people joining the labor force in their 20s until their mid 50s here. You'll see that, as I said, the BA or more get higher wages than on top. The profiles are different, too, that people with a BA start off about the same place, but their wages rise throughout their lives and keep on rising until quite late in their lives. The people without a BA have much flatter profiles that just don't rise in the same sort of way. This is long been known to labor economists. So each one of these lines is a birth cohort. So if you start at the top, you can see the black line, the lowest black line is the birth cohort of 1940, and we trace them from like in their 30s through to their 50s, and that's the black line. Then the cohort of 55, we can put them all in between, but it'd just be a mess. The cohort of 55 is the broken black line, and you can see that they had higher wages at the same age throughout their whole lives, which is what you'd like to see happening as the economy grows and people get better off. The 1975 cohort is the dotted black line, and you can see that, and then you can see just a little bit of the 1990 cohort. They're too young first to follow them very far. There's a big blue arrow upwards there, which says the direction of time is going up that way. So the younger birth cohorts have higher profiles all through. Now go to the bottom one, and you can see the situation completely reversed. So the 1940 cohort is on top, the 55 cohort is behind that, the 75 it should be 75 is the next one down, and then 1990. So each successive birth cohort of people without a BA have a lower lifetime profile of real wages. So that's the first symptom of something that's really gone wrong. This is a big chunk of the economy. It's about two-thirds of these are all whites, non-Hispanic is about two-thirds of this group, and the proportion is not changing very much over time. So this is not to do with selection of various sorts. That's pretty constant. For some comparisons, selection is obviously important. So that's wages. So this sort of slow drip of life circumstances getting worse. If you look at participation in the labor force, here the solid lines are for men, the broken lines are for women, the darker lines are for people without a BA, and the lighter lines are for people with the BA. You can see that this is the employment population ratio. So it's just a fraction of people who are actually in the workforce over time for what we like to call in economics prime age people 25 to 64. And what you can see is for all of these groups, this thing has a downward slope, but the downward slope is much more severe for the darker colored things who are the people without BA's. If you look at the men and women are separate here because they're rather different, and a lot of the things we look at men and women are not that different. And there's of course the secular trend upwards in labor force participation for women, especially for people without a BA. And that stopped just after 2000 and is now going in the other direction. But if the story you can sort of see for men with less than a BA, these dotted lines are recessions. So every time the economy, you know, there's unemployment, people get shaken out of the labor force and they don't necessarily look for work. They just stay out for a bit. And then as the economy recovers, they come back and then the next recession, they drop out again. But it's a ratchet in that they're not catching up every time, especially since 1990. And you can see they're now currently doing pretty well. But again, you will see whether they ever get back to where they were before the great recession in 2008. So you get this falling wages, less attachment to the labor force. So one is sort of material well being. The other contributes to, you know, the meaning in people's lives. They have jobs. Of course, the declining wages are associated with people moving down the jobs ladder in many cases. So many people are still in work, but they're not in the sort of jobs that they used to have. This shows not in the labor force by birth cohort, BA on the bottom, not BA. And you see the same thing. This is just a BA phenomenon. Each cohort is less likely to be in the labor force. Let's turn to marriage now. So again, start over on the right, which is in some sense the natural thing. A lot of 30 year olds are not married, but they're going to get married later. And then marriage, fraction of marriage rises up until mid 40s. And then people get divorced or people die and you get widows and widowers. And so there's natural rise and then gentle fall. But look on the left for people with BA. Each cohort is less sorry, people without a BA. Each cohort is less likely to be married. So marriage is failing people too. This picture shows ever married, which takes out obviously the widows and things at the end. But you can see very much the same effect. The BA's are doing great. Now, of course, what's happening here, and I don't really have time to have too many slides about this or any more slides, but really good work by sociologists and what's been happening to these people. They're not getting married, but they are shacking up as we used to say. I don't know whether people still use that term. When my mother said that it was not a friendly term. It was not something I was supposed to do. For me, it seemed like nirvana, but never mind. So these people, they get together, they cohabit and they have kids together. But those cohabitations are very unstable. So they might stay together for three or four or five years. They have a kid or two kids, and then the woman sees someone with better prospects, gets rid of the guy, doesn't marry someone else as a kid or one with them. So this to me, if you're man in your mid fifties, you might have three, four kids, none of whom you know, all of whom are living with other men. You're getting to that time in life when you begin to wonder what your life was worth, and you don't have the comfort and joys of family and kids. They're all broken up. In Europe, this is not happening. In Europe, they don't get married either, and they cohabit, but the cohabitations are stable, much more stable than in America. And we don't obviously know exactly what that is, but there's a big literature on that. This is weekly church attendance. People with the BA more likely to go to church. People without a BA, less likely, and they've both been falling over time, but the gaps have been getting wider. So these bits of religion are not really working for people either. Just a note on voting. Voting has not been falling, at least in presidential elections, but it's much lower among people without a BA. And there's a Pew survey in 2016 that more than two-thirds of whites without a BA said there was no pointing in voting because elections were controlled by the rich and by big corporations. So I'm going to talk about corporate behavior, rent seeking and individual well-being. I want to start from the most extreme example of opioids. So you never quite know whether to start with a benign and work out to the bad stuff, or I thought we'd start with a really bad stuff. And so opioids are the largest of the three deaths of despair of drug overdose, suicide, and alcoholic liver disease, drugs are the biggest, but the other two are bigger together. So it's not like drugs are at all and there's just a little bit of other stuff. Our argument is that the despair has been unrolling for a very long time and it precedes opioids and that opioids made it much worse. So we're certainly not claiming these people would have died some other way, anyway. But the opioids, as Anne likes to say, were pouring fuels on the flames. I mean there was a lot of unhappiness and then this horrible stuff came along. So opioids, many people here know a lot more about them than I do, but here's just a quick primer. They relieve pain. They also provide euphoria. They promote physical dependence and they promote addiction. Addiction is not a technical medical term. It's more of a behavioral term for cravings and all the rest of it. Physical dependence is your body becoming dependent on this. There's been, as Anne documented yesterday, a big upsurge in pain in the U.S. over the last 40 years with, once again, each successive bulk-worth cohort experiencing reporting more pain. So then starting in around the early 1990s, the pain doc started arguing for using opioids for chronic pain. Until then, American physicians were extremely unwilling to use opioids for anything, even for people who were terminally ill from cancer, for instance. Pain became the fifth vital sign along with temperature, pulse, respiration, and blood pressure. You got these pain charts in your doctor's office that never used to be there. I'm sure many of you are familiar with them. And the docs argued, properly prescribed, opioids had little danger of addiction and it was fine to use them for chronic pain. Let me tell you a little bit about the history since I'm just relevant here and it's sort of a little more lighthearted because it's further away. Opiates have used about as long as the recorded history exists. And one particular episode, opium was exported by Britain from India to China, or at least by the East India Company, which by the middle of the early 19th century was almost totally dependent for its profits on that opium trade. Otherwise, it would have gone belly up. China occasionally tried to stop the drug dealers. It was sort of off and on, depending on whether they were focused on that or something else. Two of the most famous drug dealers were fellow Scots of mine, both medical doctors, sort of linked there, Jardin and Matheson. Lin Chi Xu was the consul in Canton, now Guangzhou, destroyed large amounts of opium and Jardin and Matheson went to the British government to lobby for recompense. And eventually, after a very, you know, Britain in its imperial period did some pretty horrible things. But it tend to have very long ethical discussions about whether to do those before they did them. And then they did them. So there's a long debate in Parliament with lots of opposition and so on. But eventually, Melbourne sent in the gunboats, and then he went riding in the park with Queen Victoria. I don't know if you've seen the televisions here anyway. So that began of what is still known to this day in China as a century of humiliation, and which keeps coming up in the trade negotiations today, sort of, I mean, it's fresh in Chinese mines. And one of the lessons from that is very hard to keep out the drug dealers if they have guns, money, or political power. And Jardin and Matheson, far from being punished from that, it's today one of the 200 largest firms in the world. Lin is known to this day as a Chinese national hero, and there's a very fine statue of him in Chinatown. More recently, opiates were used in US Civil War. Women grew opium to make morphine for soldiers on the battlefield. And then in another parallel with this thing that's happened today, another Scotsman, Alexander Wood, invented the hypodermic needle. And he claimed that morphine was not addictive if it was injected as opposed to eaten. And so there was a huge explosion of the use and the soldiers were given shots and hypodermic stringes. And in the end, estimates suggest about 100,000 soldiers became addictive to the point where opium addiction was known as soldiers' disease. About 30 years later, Bayer synthesized heroin. And once again, they sold heroin as non-addictive. You know, people are worried about addiction. And it's not just today that people are worried about addiction and that medical advances come along that are supposed to sort of deal with. And this spread widely through the population. It was used for minor aches or pains. It was given to children in large quantities. You know, if your kid is making a lot of noise and you want to get on and do something else, heroin worked pretty well. We think of that as pretty horrible, but it was pretty standard. And eventually, the medical profession turned against their colleagues and other people and got it under control. And the Harrison Act in 1914 marked sort of the end of that epidemic. And heroin was completely outlawed in 1924. So how come you would have thought, given this history, how come we have another iatrogenic epidemic almost 100 years later? One is the slow change in attitudes by physicians. There is all this chronic pain out there. And no one really knows how to treat it. Doctors are very bad at treating lower back pain, for example. And it does terrible things to people. Oxycontin, which is one of the big villains of the piece, was approved by the FDA in 1995. It entered the market in 1996. By 2016, more than 100 million people were getting prescriptions for Oxycontin or some similar opioid. Oxycontin so far been more than $50 billion of sales. It's a family firm known by the Sackler family, who are, of course, major philanthropists whose name appears on buildings. Every time I get an invitation from the National Academy of Sciences, it has Sackler written all over it. They're very uninterested in pursuing the question as to whether they might do something about that, it turns out. Relentless pushing by pharma and by prescription benefit managers. Over the deaths began in the early 90s. And now the annual toll is more than the peak of HIV. More people are dying from opioids than from guns. More people than died in Vietnam War. And the cumulative total since 2000 is more than the deaths from the two World Wars taken together. So you're talking about, you know, very large numbers of deaths. This is not. And of course, this monster was created by the American healthcare system. Docs were probably not the guiltiest people here, but they were certainly guilty of careless over prescribing, from which there was a lot of diversion. Created a black market. There was a parallel epidemic of black tar heroin coming from Mexico. Docs eventually realized what was going on. They pulled back. Oxycontin was reformulated to make it harder to abuse. And then the heroin dealers moved in. And then most later heroin, actually cheaper and stronger than Oxycontin. And then most recently fentanyl replaced heroin. It's the main cause of overdoses, especially in the eastern United States. This is now as the docs have pulled back sparked a secondary epidemic of illegal drug addiction and death. And fentanyl is now the largest killer among these things. But having started this thing off, it was sort of irresistible. There are many long term heroin addicts in the United States who've been functioning pretty well until now. But now they can't guarantee their supply has not been adulterated with fentanyl. And you read stories of people who've been taking a daily shot of heroin for many years. And now every time they shoot up, they wonder if this day is going to be the last, because the supply has been adulterated. So you know, this is an epidemic, but it's not like a virus or a bacterium. Other countries have opioids, they don't have the epidemic. 75% of the victims have a high school education or less, only 10% have a VA. And these people are the people whose lives coming apart, we've been documenting. And so this was a fertile field for them. Pharma companies were allowed to enrich themselves enormously by pumping out huge quantities. They use contract Congress to stop attempts to police. The DA was closing in on McKesson, one of the biggest distributors. And when the guy who was about to bring the warrants went to work, all his staff were gone. And Congress had closed down that part of the DEA. The guy who did it, the guy called Tom Marino in Congress was then nominated by Trump to be the drug czar. Orrin Hatch has played a long and deeply undistinguished role in protecting pharmaceuticals against proper regulation. They talk about laundering it through philanthropy. And there's 60 minutes had a story about Purdue lobbying the FDA for a label change, so that it became an unlabeled use for chronic pain, which was part of what really ignited the epidemic of death. So it's not clear that this stuff really does very much good. I mean, that's still disputed. It's not clear that opioids are more effective for chronic pain than other sometimes called interdisciplinary methods that were used for chronic pain before. And also pain continues to rise in the US. The level of reported pain is getting worse and worse, even though 100 million people taking these drugs. The FDA has come under a lot of fire from this. The fact that the these prescriptions would be diverted was entirely anticipatable. But the FDA's mandate is not to look at things like that, but only to look at what it does for individuals, not to what it does for society. And there's a National Academy of Medicine report suggesting that that be changed. And there's a lot of discussion about that. Going back to the opium war, the British didn't control all the opium. There was opium from the West of India, which was controlled by a gentleman called Jansett G. G. Boy, who was known as the Malwa Opium King. And in fact, it was his competition with Jordan and Matheson that brought the price of opium down to the point where ordinary people in China could get addicted, and which prompted the Chinese to clamp down on the thing. He got enormously rich. He was the first Indian to be knighted by Queen Victoria. And then after 20 more years of doing this, he was then promoted to a baronet seat. And if you go to Bombay today, you still see Sir J. J. Hospitals all over the place as part of his philanthropy. So all of this has happened before. Alright, so let's get a little cheerier and talk about the other monster in the room, which is the American healthcare system. And I think of this as, this is, you know, we're not talking about, well, we are talking about drug dealers, but it's not, it doesn't have this large illegal component. So this is, I now am starting to shake because Vic Fuchs is sitting there and everything I know about this, I learned from him. And he's going to get up at the end and tell you that I didn't learn it right. Let me, let me try. So our healthcare is the most expensive in the world and delivers the worst health. In 1970, the US was only a little worse than other wealthy countries. But since then, expenditures have grown while life expectancy has increased only slowly. And as Anne said yesterday, life expectancy is now falling and has fallen for three years in a row. So the truth is, this is the American healthcare is incredibly bad at promoting health. It's incredibly good at promoting the financial well being of healthcare providers. So, you know, it's not really in the business of making us healthy. It's in the business of making enormous sums of money. So here's some data from our world and data, the wonderful website that has all these numbers. And we pulled these down and pulled out some countries. So just to show you what these graphs are, the thing along the horizontal axis is money expenditure per head in US dollars adjusted in various ways. And there's life expectancy at birth, which runs from 70 up. And then these lines are going through time. So it starts at the bottom left and moves right as life expectancy goes up and as more gets spent. So that's the UK. You can see that when Gordon Brown saved the National Health Service, you get this big increase in expenditure and then it sort of came up a bit. So there's Australia, which looks not very different from the UK. There's Canada, which is quite a lot more expensive than those other two countries. Here is France, which is somewhere in between and French by enlarging extremely pleased with our healthcare system. Here's Switzerland. And Switzerland is the second most expensive after us. So you can see the line has moved over to the right. They have pretty good life expectancy to the very high life expectancy, but it costs a lot. So here's the US. And this is the US in 1970 and 1982. And you can see it's a little bit worse than all of these countries even in 1970 and 1982. But if you roll it forward, it looks like that. So it's just, you know, why are they good at making money or costing money? They're not very good at health. And you can see at the very end there, life expectancy is beginning to turn down. So it's not even delivering that. So life expectancy is now falling while money is redistributed up. And the government instead of stopping this basically licenses the upward redistribution of income. I mean, if this was really a free market, which it's not, this really wouldn't be happening. It's this combination of an industry with the government, which allows enormous amount of rent seeking to go on. So it's like a giant shakedown in which the government is complicit. I think Vic said this, which is like a tribute to a foreign power. We're spending an enormous amount of money every year, as if, you know, we'd been conquered by Iceland or somewhere. And we had to pay this enormous tribute to Iceland every year, so that they wouldn't kill us even more. But we're doing it to ourself. So this is the health care system is really a perfect example of how rent seeking generates inequality, enriching a few at the expense of many. And the problem about health care is not just what it does to health, it what it does to your pocket buy and the cost of it. And it's one of the major factors that's holding wages down in the way that I showed earlier. So you know, this is one of the things people say, well, it's not generating very good health, and it may be generating opioids and doing bad things. But that's not the monster. The monster is that it's oppressing us by taking all this money away. So again, Vic and I think a few others talk this first, the trillion dollar protection racket. We spent 17.8 percent of GDP in 2018. Switzerland's at next at 12.4 Swiss live three years longer. The difference between 17.8 and 12.4 is 5.4%, which is more than a trillion dollars. So that's more than $8,300 for each household in the United States. So you know, if you get that back to people, a lot of this stuff about bad wages would just go away, right? And we're not getting anything for it. I mean, this is like a horrible self-inflicted wound. Well, why does it cost so much? Well, this is pretty well known. A lot of its prices, it's not all prices. There's a lot. We do more, too. But docs are allowed to restrict entry into medical school or fewer docs than we might have. Pharmaceuticals are typically about three times more expensive even for identical products. So Crestor is $86 a month in the US after discount. You get a good deal. $41 in Germany, $9 in Australia. Hip replacements, I have two of those. They're three times more expensive. I could have had my hip replaced in South Africa purely paid for every bit of myself for less than the deductible that I had to pay under Princeton's healthcare plan. Britain has a regulatory agency, which it does sort of cost benefit analysis of pharmaceuticals and devices and so on, and basically doesn't license them unless they actually do some good. I like the parallel between scanners and scammers. These scammers come to your office if your physician is selling a scanner and tell you how much you can charge for each scan that no one really needs. Of course, by the time they've discovered they don't work, there's a new sort of scanner with proton beams instead of x-rays and all the rest of it. Hospitals are merging and raising prices. We've seemed to have pretty much given up on antitrust enforcement. They work hand in hand with the pharma companies. Many of you will have seen the scandal at what's it called? The Memorial Sloan Catering recently, where the patients were sort of being used as guinea pigs for clinical trials by the docs who were being paid by the pharma companies. Of course, the docs say that this is giving our patients the most best drugs quicker than anyone else, and so it's in the patient's interest. The fact that they forget to declare this on their papers seems to suggest that they know something's wrong. The government helps keep prices up through lobbying, and of course Medicare prices. Medicare is not allowed to negotiate on prices, and even more fundamental, Medicare is required to purchase all drugs that the FDA approves. I wanted to say a word or two about lobbying because I think it's actually quite important here. In 2018, the healthcare industry employed 2,800 lobbyists. That's five for each member of Congress. There were negligible numbers in 1970. Often when I say this, people say, well, the right to address your representatives is in the U.S. Constitution. It's always been there, but it really wasn't. In 1970, there were some trade associations in Washington, but almost no lobbyists. This is something that's happened since 1970, and this came out yesterday. I mean, 1970 is sort of a hinge point, and 1970 in that healthcare expense graph, that's when the lobbyists really started to move in. Half of whom are what are known as revolvers, meaning they used to be congressmen or senators or staff of congressmen and senators. They spent $556 million in 2018. Half of that came from pharma. That's more than the financial industry. If you think of the banks that's doing all this lobbying, sure they do, but not compared with the healthcare industry. It's 10 times as much as the total of all organized labor. If you think of politics about power, and unions are there, but they're just tiny compared to any of this that's going on. One example is that pharma, for many, many years, their lobbyists opposed any Medicare drug benefit. As they got stronger and stronger and got more and more lobbyists, they judged that the moment that come in which they could, because they were frightened of price controls, and then they realized they were strong enough to block the price controls and have a Medicare benefit, and then it was instituted with the lack of price controls or the prohibition on any price controls. When you look at that, that's just lobbying. Then when they turn around and say this is a free market, and if you try to stop this, it's nothing to do with a free market. It's rent seeking and lobbying. Then the question is, if we back away, the opioids are the worst. The healthcare system is pretty bad. How about all industries? Is it capitalism? Does this deeply corrupt? Well, no, it's not true. Any more than the Sacklers are like a typical pharma manufacturing. The healthcare and the opioids are certainly the worst cases. You can read accounts of what happens in finance, and you can find lots of evidence of rent seeking in other industries, too. There's been an explosion of literature in economics over the last five or six years, I guess, about increasing monopoly power and rent seeking by executives at the expense of labors and consumers, and also monopsony, which is the other side of monopoly. Monopsony is when you're the only buyer and you have control over labor. I thought this literature had really come of age when last summer at the Jackson Hole Conference, where all the central bankers of the world get together, they talked about monopsony and monopoly. So it's like it's even got on to, you know, the central bank agenda. This literature is extremely controversial, and there's really good work being done on both sides of this by people who think there's certainly a lot of increasing concentration across industries, whether that's a good thing or a bad thing, is really once being debated. We spend five weeks in Montana every summer. There's no doubt at all that the growth of Amazon has brought more competition to Montana, not less competition, because if you're buying something locally, you now have competitors that just didn't used to be there. Amazon has done wonderful things for us too, but people are terrified of the prices. So there's huge debates going on around that in relation to GAFA. I guess GAFA is the European Termin Fangs, is what they call them here. Anyway, Google, Apple, Facebook, and Amazon. One of the more interesting debates is between Brandeis on the one hand and Bork on the other hand, and Bork basically argued that previous antitrust enforcement, which much of which developed under Brandeis, was deeply flawed because it didn't focus on the prices, which is what really counted. Very much a sort of Chicago view that material well-being is the thing we should really care about, and if you get lower prices, it's improving your material well-being. Brandeis, on the other hand, thought that size was bad in and of itself, because it threatened democracy, for example, and that debate is very much being brought back to life again. There's no doubt, however, that things have gotten much tougher for labor. There's been a lot again, a debate about stakeholders versus shareholders. The shareholder value is not the same thing as stakeholder value because firms maybe should have responsibility to customers and their workers. In England, for instance, the law is not shareholder maximization. It's the benefit of the corporation, and that's what the board is supposed to do. In the U.S., there are many interpretations. It's not entirely clear what the law actually says. Many people think the stock market is an indicator of well-being, which is one of the craziest things there's ever been, because if you have a world in which GDP is not going up, but profits are being or value added is being distributed towards profits and away from labor, that increases the stock market, and that's an indicator, among other things, of the balance between profits and labor. One of the things that's clearly changed the power of labor is the almost total elimination of unions in the private sector. Their peak was in the 1950s. The literature on unions suggests they raised the pay of members. To some extent, they raised the pay of non-members, because many non-unionists were covered by union contracts. They tend to police workplace safety and work conditions in a way that the feds couldn't always do. They moderated executive salaries, stock buybacks, which is another topic I could talk about at length, because they had to persuade the workers had some power over what the executives did. Unions were also social centers in many places, but Putnam's solitary bowler was bowling all by himself in a union hall. Now there's no union hall, there's no solitary bowler, and they protested management techniques that hurt workers, and they took political action on behalf of workers. And as you saw from the lobbying numbers, that's really just not there anymore. Outsourcing has become a big deal that the workers who do janitorial work or food services or transport have mostly being formed out to outsourcing companies, often with very few benefits and so on. One thing that you don't have is you don't belong to the firm anymore if you've been outsourced to an outside agency. And there are many stories, I don't know how common it was, of people who started out as janitors finishing up as CEOs. That's not possible if you're not inside the same firm anymore. There's literature in labor economics called rent sharing which says if profits and value added in the firm goes up is some of it shared with labor. And the answer to that literature has usually been yes, some part of it is shared with labor and that share seems to have fallen over time. And of course people who've been outsourced don't benefit from that at all. There's a lot being written on non-compete clauses. You know if you work for a hedge fund you can see why you might have to sign a non-compete clause. They're now using them in fast food joints. You don't get incredible marketing skills in the McDonald's but if you can't compete you can't go work for another McDonald's it helps hold down your wages. And there's a lot to be written on the politics of this and the courts and the way the courts have become much more friendly to anti-union work. So this is really the last slide now I'm going to stop. So this is a picture that we're trying to tell a management in capital working against labor and consumers in a way that this balance of power has really changed over time. And it's the sort of story of why these people without BAs are not being well-served compared with people like us who are doing pretty well. Some people will say you haven't talked about automation, you haven't talked about globalization, isn't that what's happening? Well, yes, I mean those things have certainly weakened the negotiating positions of unions but you know they have robots in Germany too, they have robots in Britain, they have globalization all around the world and you don't see any of these deaths there. You don't see 50 years of falling and stagnant wages in any of those countries. You've seen actually about 20 years of it in Britain and there's been a fairly long period in Germany too. So one of the questions that came up yesterday and is a frontline question is is what are happening in America just you know a prequel to what's going to happen in Europe or is it a peculiarly American phenomenon? I think the Europeans should be very scared. So our argument really is policy made it worse as government and law joined the rent seekers and the political thing is sort of important here because after 1968 the Democrats more or less explicitly abandoned the white working class in the unions and became a coalition of elites and minorities and the Republicans took over the white working class and largely on social grounds but then they finished up paying a lot for their social preferences. So I'm not going to talk about this because I don't have time but here's a large list of things that you could consider. Healthcare reform I think is the most obvious one and you know Ney Bevan was the Welsh coal miner unionist who started the healthcare system in Britain and when asked how he dealt with the doctors how he made them go away he said he stuffed their mouths with gold and of course that's what you have to do if you're paying a ransom to someone you can't just say go away because going away you know they wouldn't you wouldn't be paying the ransom if they would just go away but what you have to do is you have to come up with a deal which costs a lot in the short run but you get it back over time and we're going to have to do something like that with healthcare. There's a bunch of other things for people I imagine a lot of people who are interested in UBI. I'm not in favor of UBI I think I you know I think there's wonderful arguments for it but not entirely persuasive. In the end we suspect the biggest difference between here and Europe is the sort of fierceness of competition on the one hand but also the existence of safety nets and we really don't have a safety net here anything like they have in Europe. They also don't lobby like we do. All right I just wanted to show you that's Mr. Jardin on the left that's Sir James Matheson. He became a fellow of the Royal Society actually governor of the Bank of England and he got so rich he bought most of Scotland you know huge chunk he owned the Isle of Lewis and he actually he presided as he exported many of the inhabitants the Isles of Lewis to Canada. Some of you there was a great Highland potato famine which is not as well known as the Irish potato famine but happened somewhat later. That's Lin in his pedestal in Chinatown in New York City. There's Sir James Setsey Gigi Boy the Baronat who was knighted by the Queen and there's Sir Raymond Sackler manufacturer of opioids who was also knighted by the Queen in 2015 for his service to addiction. No I'm sorry his service to philanthropy and there's Brandeis and Robert Bork two more modern figures involved in these debates. Thank you very much. Thank you Deborah for a very gracious introduction. I'm tempted to say that I don't deserve it but I have a bad back and I don't deserve that either so it kind of evens out. Thank you Anne and Angus for two wonderful lectures. We really all of us I think learned a great deal and some of us were even motivated to think more positively about the future if we will listen to some of the wise things that were said over the last couple of days. Your work is so good because unlike many economists who see something that works in practice and wonders if it will work in theory did somebody laugh? You see things that don't work in practice and ask yourself how you can make it better and I admire that a great deal. The questions you ask are important questions. Secondly you approach the work primarily in an empirical fashion. You're depending on data to supply most of the answers to the questions that you're asking. I make a humble living by that same root of empirical work. I like it very much. Practically most important of all maybe is values because when it comes to economic policy it's values that are very important. Policy is really the place the crossroads between values and analysis and I share your values to an incredible extent. If I didn't know better I would think that Angus and I when we were boys we sat in the same pew together but that didn't happen and nobody left this time. I'm just really but we may have read from the same book you can think about that also. I'm very honored to be asked to be the commentator on such distinguished lectures and such distinguished book. I've got a feeling now though that in selecting me they were looking for three qualifications. One that the commentator should be taller than the lecturer. The second that he should be older and that's certainly true and more infirm. I was probably the only person who met all three qualifications. Now given so much agreement what is a commentator supposed to do? You know I could nitpick just pick a little thing here about theory or about a data about a policy thing but that wouldn't help you very much and I don't think it would be of much interest to the audience unless there are a lot of economists present. So what I've decided is I'm going to see can I try in some way to make a good book better? Now my assignment from now on is to make suggestions about things that I've heard in the lectures and that I've read in the book to see how this could just really is a very good book and maybe some of these things I say in humility but not too much humility because you wouldn't pay any attention at all is maybe make it a little better. And I start with two of the most important economic developments of the last 60 years that you will mention in the book but I think they need more attention. Let me figure out how to work this. I was born before this was invented and I think I can make it go. Yes. The first of these is that in the last three decades or so the rate of growth of real GDP per capita has been substantially less than in the three decades that preceded. That's a difference between 2.4 percent per annum and 1.4 percent per annum. Here being an economist is an advantage because you appreciate that a difference of that magnitude year after year makes a very great difference. For example, if you had 2.4 percent per annum increase compounded over 30 years, it would take only 30 years to double the standard of living and that means that each figure of generation is about 30 years. It means that the next generation would be living at a level twice that of their parents generation and that's something that most people would appreciate because they like having a nicer home than the one they grew up with. They like to give their children better education than they were able to get and all those things. If it was only 1.4 percent per annum as you see it has been in the recent decades, then it takes 51 years to double. That's already moving and out quite a bit. The next generation isn't quite where they would have been. There's an even more important thing that I think about in connection with the 1.4 versus the 2.4 and that is that these are averages. They're averages of the whole population and there is probably a dispersion around that average. Some people do better, some people do worse. Well, if the average is 2.4, the ones, there are quite a few who are doing worse but they're still making progress. They're 2 percent, they're 1.5, they're one but they're moving in the right direction and they see some improvement. If the average is 1.4 and the dispersion is about the same and I see no reason why they wouldn't be, the dispersion wouldn't be at least as great in the more recent decades, then a great larger percentage of the population will be sliding into what we would call in the red. They wouldn't be making any progress at all. They would be, if anything, at a scale of living less than their parents had. So that difference between the 1.4 and the 2.4, thought of in those terms, is very great. Before giving you the second one, I want to go back to something that I forgot to tell you about in the beginning. And that was, like any good research, I think their research has thrown up a lot of findings that really need more investigation. And one of them that was mentioned by Ann yesterday, not mentioned by Angus today was that if you look at people who went on for more schooling after high school graduation but did not get a bachelor's degree, they didn't, you didn't find any significant difference in the things, the outcomes that you were looking at, namely the deaths of despair. That finding, first of all, it needs some explanation itself. And I've thought of at least two mechanisms. One is the failure to get that degree leads people to drinking and to alcoholism and other pathologies because they failed, they didn't get the degree. The other is that if you're a heavy drinker and have all kinds of related other bad behaviors, you never get the degree. But in any case, I think people who do research on the economics of education in general ought to pay attention to this one and see if it's at all complemented by a failure to benefit in other domains. Because I think if we think about it in terms of earnings, I'm looking at John Pencavel and wanting a shake of a head one way or the other to additional years of schooling between high school graduation and not getting a degree show up in earnings. Yeah, but year by year, the earnings go up. Yes, but not in the case of the deaths of despair. And that is something that should be looked into, I think, and more great. All right, back to where we were. The second big change over this longer period that we're looking at is the growth of a service economy. I've heard of it. You've heard of it. I even did some work. But today we live in a world that isn't dominated by steel mills and coal mines and automobile assembly lines and so on. We live in a world where people work in hospitals. They work in schools. They work in retail establishments either brick and mortar or online. Those are different worlds. They're different economies. They have implications all over the map. One of them being an acceptance and a welcoming and a much more of an opportunity for women that existed in an industrial economy. Another one being less likely to have unions even years ago. There was a big difference at a time when half the world population was working in industry and half the population was working in the service sector. Most of the unions were in industry. And now over time that has changed and almost nine out of 10 workers are in the service sector. I think that along with the slowing of the rate of growth of GDP per capita, you put those two things together you've got a huge body of basic forces that are at work and that are producing some of the things that you are calling causes they're kind of intermediate because there are consequence of those two things. Now let me show you what it means in terms of earnings. You all know what I mean by actual earnings, hourly earnings of workers in these various sectors. By expected, I mean if they earned at the same national rate as they're given their demographic characteristics. I have 168 cells and with those 168 cells we have the actual national earnings in those cells and we can then use the distribution of people in the sector or in the service sector see how much they would have earned if they had earned at the national rate for their particular characteristics. And what you find is that in the industry on average they earn people earn more or they did in 1959. They did earn more than was expected and naturally the people in the service sector earned less because together it has to come out to the national average and this is true for men. It's also true for women. It's also true for whites. It's also true for non-whites. To make it a little more specific let's talk at three particular industries and we see the differences are tremendous. These are the so-called good jobs that you hear politicians talking about all the time. Good jobs because they had benefits in addition to these but they're making 20 or 30 percent more than they would make if they made simply the average for their demographic characteristics and there's an offsetting in the service sector of some people making very much less than they would have made. Now when these so-called good jobs disappear and I see a lot of economists but there are some non-economists here too. What made these good jobs? What made these good jobs was the fact that the industries that they worked in in most cases had a lot of monopoly power. You want to know what monopoly power means? Think of General Motors at this time. How did General Motors set the prices for their cars? They set them so that they wouldn't sell more than 50 percent of all the cars in America because they felt if they sold more than 50 percent then the anti-trust people would get after them. So they made sure that the price was sufficiently high to keep their sales down to 50 percent. That's monopoly power. Now they said the price is so high that companies like Ford and Chrysler weren't nearly as efficient as General Motors but they still could make very good profits coming in under that price umbrella that General Motors set up. So the unions in those industries said hey you guys are making a tremendous profit here. How about splitting some of it with us? Otherwise we're going to make life a little difficult for you. And the people running the company said yeah okay that makes sense and they would split it with them by giving them good benefits and by paying them a wage way above what they would otherwise get for their demographic characteristics. All right. There are some other subjects not quite in the class of those two developments which I think would benefit from more data and from including explicit attention to the past. This is what I mean here that some of the attempts to establish causality in the book and there are several attempts typically take the form of finding contemporary correlations. You find this is correlated with this and you have reason to think that one is the cause of the other and that suggests causality. However that attempt to establish causality could be greatly enriched if one would look at the history of this particular phenomena. What was it like 30 years ago? What was it like 40 years ago? You can just get a more robust take on it. I would think that the things I'm going to mention now are subjects that are discussed. I'm not in any case suggesting that the discussions are wrong but I think they would be more definitive and they would be more conclusive if there were more data and particularly if the data refers to earlier periods as well as contemporary periods. One of them wasn't mentioned in either of the lectures but does play a role in the book and that is what's going on here between the more skilled people and sometimes even the less skilled people moving to the large cities to New York, to San Francisco, to Los Angeles and so forth and denuding the rural areas and you can tell a pretty dramatic story and some people do and some people say something should be done about that. I'm not going to take a position on that one way or the other. I am going to say that this is one of the oldest stories in economic development. Ever since we've had economic development there's been this problem of shifting to the rural areas to the cities. How are you going to keep them down on the farm after they've seen Paris? Very popular song after World War I. 18th century England a poet named Oliver Goldsmith writes a poem called The Deserted Village. You read it. How many others know The Deserted Village? Not too many. It was a sensation in its own time because it painted a picture of what was happening to a particular village as the people left it to go to the city to get on the escalator for the new industrial revolution that was starting to take place and it had a tagline which could be repeated throughout that is wealth accumulates man decays. Some people could say that almost anytime throughout this whole period of industrial relation. But it's not only in England it's not only in the United States. USSR in their five-year plans after World War I had a problem with people coming to the city. Not according to plan but they couldn't help. China had this after World War II. In fact China made it illegal to come to the city if you hadn't didn't have permission and license everything like that but they couldn't stop the people from coming to the city. So this is an important subject not entirely dealt with it's mentioned but not enough. Have U.S. markets become less competitive? Angus did talk about this a little and I did you get an impression that he felt that U.S. markets are now less competitive than they used to be? Did you mean you didn't mean to apply that but they might be. They might be. So that would be an important question to investigate whether they are or not and that's all I'm suggesting now. If it's true that markets are less competitive now than they used to be does that have any relationship to growing income inequality? I don't know the answer to that but I think it would be it would be good to know especially if it's changing or if it's not changing. Finally something that I haven't thought about in a long time but this research caused me to think about it and that is the role of rent seeking in a market economy in a capitalist economy. Rent thinking is peculiar because on the one hand that's what capitalism and a market economy is all about. If you weren't interested in finding a rent for non-economists that's a return over and above what would be a normal return on capital. If you invest in a company but your return is the same as if you bought a bond or if you bought a government bond or something like that what's the point? The point is to get into a company an industry something that will bring you an extra return and that's what economists call a rent. So rent seeking is the heart of a competitive market economy but once rents are achieved and maintained then the question is is there any role for policy or should those rents go on for as long as the monopoly position that you've achieved? Now there's another question should the government do anything to try to deter rent seeking? There are suggestions in the book that the government should but it's very important and I'm sure you would all agree that you don't want to deter all rent seeking after all research and development is undertaken for what purpose? To find out something that will yield a rent to your company advertising is undertaken for what purpose? To achieve a distinction that will enable you to earn a rent. So you can't say we want to stop all rent seeking but certainly bribing a congressman is something that you would want to start right from the start. I'm reminded of my friend Alan Enzo he got a good laugh from me years ago he explained to me what was a perfect defense system for the government and it was a defense system where parts were made in every congressional district and and they didn't work that just opened up the whole new world to me so that's another one that I put down as needing to be pushed a little further getting to the last part of my remarks and that has to do with the future of capitalism and here I felt that the whole discussion was not at a level equal to the rest of the book it was more speculative it got into the polemics before enough data background had been provided to justify some of the polemics I feel I felt that it needs more conceptualization theorizing if you will I'm not 100% anti-theory incidentally I thought I thought even with the main book some sketchy idea of the kind of models that you have in mind even though you don't make them explicit might be useful useful for the reader useful for yourselves to think about what variables haven't you included how do the valuables relate to one another it seems to me it could be but anyway this is the way my thinking started to go is it really capitalism that you want to explain because capitalism is all over the world or we have capitalism in China we have capitalism in these countries like Poland and Hungary and Turkey that are moving in other directions is there something else going on and I believe there is something else that's going on in the west and that has affected the west over the last few decades which might not be so much thrust at capitalism but maybe at democracy or maybe it's at a liberal society one that allows a lot of free speech and a lot of free press free publications and so on is that what's really at stake or is it the portion of capitalism that has to do with a system where prices are set in markets and market prices determine the allocation of resources for production and the distribution of income so I think some clarification of exactly what it is that we're concerned about for myself I think that this is a western problem I don't think it's a U.S. problem although it manifests itself in the deaths of despair in the United States and it may be that it didn't happen in Europe because Europe has more of a safety net although you folks don't really think that it's the extreme poverty that drives deaths of despair so that's not going to go very far maybe it's because they haven't allowed profit seeking firms to push things as far but they must advertise alcohol in England, France, Germany just as well and yet to my way of thinking all of these countries have significant problems in England what little I know of it you keep an eye on it John both countries both parties are catastrophe I accept that that's right it doesn't mean it's a permanent condition but on the other hand Brexit looks a little like the Trump election France decided to go for a leader Macron who would be more of a leader and it turned out they didn't want to be his followers so they have a leader but nobody wants to listen to him I think that once Merkel is out of Germany and they have to have new leadership I worry a great deal about what form that leadership will take we know what form it has taken in the past and a country that went one way once could go that way again so I think it's a Western problem not a US problem and here's another thing we largely discuss these problems as if they're to be solved through the social sciences that we have better tax laws so we have better antitrust enforcement or something of that kind I'm not at all convinced that that's where you get to the heart of the problem I have a feeling that the heart of the problem lies somewhere in the world of beliefs of spirit meaning of life of things that go deeper into the person in terms of their psyche and the way they live and the way they behave and I can't convince you of that but I can close with two quotations that may be suggestive Nietzsche, first he who has a why to live a why to live can bear almost anyhow and this has been picked up by a lot of people in psychology and psychiatry and think that it has a lot of depth and meaning to it the second Edna St. Vincent Millay love cannot fill the thick and long with breath nor clear the blood nor set the fractured bone yet many a man is making friends with death even as I speak for lack of love alone thank you very much did you have to get to your chair before me I just you know I am younger hang on to it as long as I never would have known thank you very mostly I just want to say one little thing sort of off the topic I do want to leave time for questions so off the topic you know I first got interested in health about 20 years ago and as Deborah so kindly said at the beginning you know I very I find it very difficult to focus on anything for very long so I move around a lot and in the late 90s I started getting interested in health and often when this has happened to me in my life and you know I go to some strange land the inhabitants are generally pretty hostile but I remember talking to Vic very early on in that and Vic was incredibly welcoming and helpful and sort of welcomed me with open arms and said you know let me show you a few things and that was really just terrific so I'll always be grateful to Vic for that quite a on a personal level quite a part from the wonderful body of work and wisdom about healthcare as an economist which is quite unequaled I think can I can I get no you have to be quiet for me so I'm not going to answer all the things and I can't do the Oliver Goldsmiths or the other but I just to bring it back to a couple of economic things and one thing that I just think is unbelievably important is what Vic said first which is the slowing of economic growth and you know if you look every decade since the Second World War the growth of per capita income even before the Great Recession and even if you knock the Great Recession out has been slower than it was the decade before and that's just it's one of these very slow underground things that you don't notice because it's not like mass unemployment or something but which is just of enormous importance because when there's a lot of growth everybody can have something when there's not so much growth I get can only get stuff because he doesn't get it and so it has this effect of sharpening all conflict in a way that is much ameliorated when there's high rates of economic growth and I think that's just being tremendously important which is not to deny the other things what Vic said too I just wanted to one thing he said that's not quite true is that you know when we did this mostly we did it with people without a college degree people with some high school and people with just a high school degree and people less than that and the graphs got awfully cluttered and so there is a return in terms of health to some college after the high school yes there is it's just not very large and so the line for the people with some college is much closer to the people who just graduated from high school than it's true to the people and that's consistent with what John Pancavel said that there's some sheepskin effect for those of you who are not economists the sheepskin effect is you know you go to college and it's not worth anything unless you actually get a sheepskin at the end so if you drop out even if you've done all the classes unless you have your degree it's not worth anything I suspect that may be stronger in this work than it is in labor economics if only because this certificate is this sort of this is the way you get into the elite in some sense you get into the people who are doing well and it has this big separation one of the big surprises of us doing this work and writing this book was just the incredible split for condition after condition for marriage for pain for socializing for wages that came from just this simple difference between having a college degree and having a four-year college degree and not having a college degree at all and you know that's just to us being a really astonishing thing and who knows what it was I can't resist just saying something about causality you know again I'm actually quite hostile to the way that most economists are thinking about causality these days and so I'm much more attached to the way that philosophers and historians think about historical causality that there's mostly there's just a lot of interacting forces which are contingent and affect each other jointly and trying to parse that out in some simple way that nails causality on the other hand it's clearly right that correlation is not causality and our method is basically a sort of perperian method which says you know if this is true then we should observe that we observe it in the U.S. so that's not any task because that's how we constructed it but does it happen in Europe does it happen in other countries in which these things are happening and that's the way we've tried to parse the thing through the book I guess we haven't been super successful all right do I get to say so sure but I'm kind of your most recent remark reminds me of two English ladies were riding a bus in London and they were overheard with the following conversation that one of them had experienced some very sad things in her life or some things weren't going right and the other one was trying to cheer her up and she said dear, don't think about it be philosophical that might be a good motto for future Tanner lectures but I'm sorry why not be good so can we move to sort of a broader question oh no I want to clarify one thing that I said about Sir Angus when I emphasized his commitment to and his skill at empirical work he knows a lot of math he could actually probably have won the Nobel on the math alone without any empirical so he deserves even more credit for what he did decide to do I have a question on some of the health facts you were saying on the health section one point you were saying that opioids are not that useful and that they can be replaced and I wondered if you could elaborate more more on the data of that because from my knowledge like when you have like people coming in with issues like advanced rheumatoid arthritis it's cruelty to not give them opioids and to have them just deal with that pain well that that's the debate that's going on but you know advanced rheumatoid arthritis was there long before opioids came along and pain has gone up not down this is a very sharp debate that's going on and many people make the position you've made some of them when you see it I mean Purdue is now imitating the tobacco companies by trying to spread this throughout Latin America and through Asia and so on and that argument is being used all the time sometimes genuinely and sometimes not and it's just impossible to tell but there are people on both sides of that issue but then follow-up is when you say that there's more pain now than there used to be is how do you measure that because like if you've gone to the doctors and they ask you to rate your pain like it feels very arbitrary at times when you choose between a four and a three and there are also changes in culture and how people report pain and how like for instance there's been articles about how in the past people were less likely to report pain or less likely to emphasize it while nowadays people are more likely and then you have even more effect from people who are coming in to hospitals and overrating their pain in order to get opioids there's no such thing as overrating pain pain is what people say it is there's no other measure and it's true what you say that people may report pain that they didn't report before but there's no such thing as an objective pain so it's just a mass yeah it's also the case if you look at the national health interview surveys which starting back in 1997 every year asked about various kinds of pain it's the people who report the pain much later in the survey also report they have difficulty going out socializing in friends whose mental health is poorer so it certainly correlates very strongly with these outcomes that we care a lot about and that in both of those circumstances those dysfunctions that increase and you even get it for things like sciatic pain which people don't make up for instance or maybe they do but it's precise enough that and you see it across all sorts of different kinds of pain yeah so I would just for perspective I chair the committee for the national academy that led to the report on relieving pain in America and so the first part of that is there is a lot of pain in America there is actually your number of how much oxy how much oxycontin was being administered is also the amount of chronic pain it's 100 million people a year but I do think and I agree with the comments that's been made to say that opioids are not helpful in pain is a misstatement it actually is very helpful in the right setting what happened unfortunately and you related this very well is this became an abuse by the Sacra family it was really a perverse incentive that was financially driven and that led many physicians to be miseducated and they began over prescribing this so it's really a social phenomenon that has a lot of ethical connotations in it but it shouldn't speak against A the fact that there is a lot of chronic pain in America and B in some settings opioids play an important role I agree with almost all of that and if I said that they don't work I withdraw that no no I don't think you said I think you know exactly but I think there is a place for them but it needs to be highly regulated and it shouldn't be because I'm also an oncologist and I can tell you that in my case for children with cancer opioids play an important difference as they're fighting serious pain yeah I don't think there's anyone in the world who would argue that you would disagree that you would not give opioids for terminal pain but there is certainly disagreement over whether the extension to chronic pain no question and I think it's the amount of opioids that was given and it's in an unregulated way that was the problem hey so much of the debate in American health over the last decade or so is focused on insurance so we've got Obamacare and things like that I'm just wondering I didn't hear that term today I don't know if it was addressed yesterday are we focusing on the wrong sort of thing thinking about nationalized insurance sorts of programs should we be focusing on other kinds of things how does insurance fit into the overall sort of set we've got that's me sure to your question actually involves two questions one has to do with health policy and what should we doing be doing about health and they are the answer would seem to be that we are obsessed and preoccupied with medical care as the route to better health when there are other determinants social determinants housing nutrition poverty so on which are very important and part of your question is should we be paying a lot of attention to those other determinants of health yes coming back to medical care itself are we making a mistake in putting a lot of emphasis on insurance and the answer there I would give is no because it's insurance that drives the system for most medical care bills 90% is paid for by somebody else other than the person seeking and getting the benefit and what I have come to realize only recently really even way is that the way we organize the system now with a heavy reliance unemployment based insurance is absolutely the long way to go what it does is it results in a system which creates a product mix catering to the high income people and the people at low and middle level income would probably be or some of them anyway would be much better served by a different product mix that put more emphasis on lower prices and a different set of amenities access extra capacity and so forth so I think the emphasis on insurance is very important in if you're going to get any fundamental reform in the health care system it's going to be through a change in the way it's financed right I agree with that I mean one of the things I mean no one should take away the idea that just getting rid of insurance would make it all okay because the health system is performing so badly that's not true at all and it's especially not true however badly it's performed in the opioid crisis we're now in a situation where a lot of people are not getting treated for opioid addiction because they don't have access to insurance which would provide them with medically assisted treatment to get over their addiction my next piece tentatively titled but the editors will change it anyway is can single payer be a catalyst to fundamental reform of health care yeah hello thank you very much for that informative talk and my question was really around alternative economic systems so you gave us a really good overview of you know what works in capitalism and what doesn't work and some of the inherent characteristics specifically around profit seeking that lead to some of the challenges over time my question was are there ideas or concepts from alternative economic systems that may be applicable in the current time especially comparing Europe and say America that may be relevant it's a great question and I again I had too much on my slides I went too fast because I would have talked some of that I'm a huge defender of capitalism and I think you know it's it's over the last 250 years it's taken us from incredible poverty to the incredible affluence that we have today China and India would not have grown as they've grown without you know the profit model and without people trying to get rich and so the question is not let's do away with capitalism I mean the only alternative we know is socialism that was just a disaster so that's the last thing we want we also have to be very careful about the right role of government because government plays this role in rent seeking you know so it's very easy for someone like me to get carried away by the libertarian view and say we don't need any government at all but that's not going to work and it's certainly not going to work for healthcare so the secret here is that I think we've gotten into a position where capitalism in America and potentially in other European countries is not delivering for a large chunk of the population the chunk of the population we've been talking about here and this has happened before I mean one of the things we talk about in the book is in 1800 you know after the industrial revolution had begun to start you had a period of regress there was no increase in real wages for 50 years basically until all the handle workers had gone and you know economists were sitting around saying the wage question the labor question you know how are we ever going to get real wages out and my friend the historian Bob Allen likes to say wages started rising on the day that Carl Marx published Thus Capital you got it just 100% wrong after the Second World War there was a widespread belief that capitalism had failed again you know the great depression that we'd been saved by the war and that something had to happen and what happened in some ways that rescue was the beverage report and its implementation in Britain by Clement Atley's government over a period of three to five years in which they started National Health Service they had pensions you know they had education for everybody and there was this sort of huge construction in the modern safety net which took the sting out of capitalism but sat at the same time you could let things rip so I think we're in a position my judgment is we're in a position now where we need another course correction like that which will preserve everything the last thing we want to do is get rid of it okay yeah you actually kind of answered my question for the first hour I had the impression that you painted a very bleak picture of the way things are currently and the reason why I was puzzled is that everything I've learned so far says just the opposite that these are the best of times this is the golden era of humanity you know the 20th century in the very beginning of the 21st century including medical and health care you know I mean look at longevity for one reason it's going down it's been going down for the last three years so right so these on a positive note these are the best of times and the worst of times that's you know my last book was all about that so I wrote a book called The Great Escape which said all of that that this is the best of all wait a few decades and you'll decide that the best of times was when you were younger I just want to pick up on two questions back and what we need in a health care system is one that is fundamentally organized organized and incentivized to keep people healthy most of the money now goes to people with chronic conditions and episodic feature service medicine is just not appropriate for that we need something much more like prepaid group practice where the incentives and the organization are to manage people's chronic conditions and you know to keep make them healthier keep them healthy it's just it's a fundamentally different kind of health care system from what we've had thank you maybe I just say one thing about just to conclude this question you know there's been huge progress over the last 250 years and we are better off than we've ever been in history so I agree with that but that was never smooth you know there were huge periods of regress think of the 1930s think of what happened during the so-called Great Leap Forward in China think of what happened under Stalin you know things went wrong and you know we always got back on track again but there's no guarantee that's always going to happen again and I think why we need a correction now is if we don't fix things now and get it back on the good side we're really in danger of losing it and that's what I want to avoid okay I want to close this out first by thanking you all for coming thanking our speaker our two Tanner lectures and our tonight's commentator there is a seminar tomorrow at 10 in which Anna Lemke and Dan Wickler will be giving further comments on the lectures so I invite everybody to come and the other commentators will be there as well for a discussion 10 o'clock in the building Littlefield the Wattus room in Littlefield and that will be from 10 to 12 and now just join me in thanking