 Hello everybody. It's nice to see you for our last session of the first day of the Common Good Summit on this session on inequality before and after coronavirus. We will have that for a very passionate conversation between two Nobel laureates and in order to introduce them and to moderate the debate, I have the pleasure to introduce Nicolas Verquin, which is in Chicago. Hello Nicolas, you are a professor associated in the Toulouse School of Economics for about five years, in the fields of fiscal policy or distribution, welfare, all these tools in order to fight inequality. And a month ago, you had a new step in your professional life since you have taken a job in Chicago and a job of economist of the Federal Reserve. So Nicolas, I will give you the floor from Paris to Chicago and thank you very much for moderating this debate with us. Thank you very much, Vincent, for this kind introduction. And before I start, let me mention that everything I will say today reflects my own views and not those of the Federal Reserve Bank of Chicago or of the Federal Reserve System. So we are incredibly honored to receive today to welcome Professor Angus Ditton and Professor Amartya Sen. Professor Angus Ditton will start with a keynote. He received the Nobel Prize in Economics in 2015 for his work on consumption, poverty and development economics. Understanding and measuring people's consumption choices is crucial to be able to design policies aimed at reducing poverty. How does consumption depend on income and the prices of all the goods in the economy? How would the demand for cars, for instance, react if the government were to raise the tax rate on consumption goods? And how would social welfare change? To answer these questions, Ditton builds abstract theoretical models of individual behavior that naturally deliver aggregate statistical relationships between prices and demand, which he can then easily estimate in the data. One of Ditton's guiding principles, which we consider to be extremely important at the Toulouse School of Economics, is that the measurement of economic relationships in the data has to be consistent with a theoretical economic model. We cannot just let the data speak and be agnostic about the underlying theoretical mechanisms. Only once a theoretical framework is specified will we be able to extrapolate the empirical evidence and design a novel set of policy interventions that will foster the common good. So this is an insight that I think we should be very careful to keep in mind in the age of big data. In the later part of his career, Ditton shifted his focus to the question of how and why some places in the world started growing 300 years ago, accumulating an unprecedented amount of wealth and dramatically improving health, but also generating unbearable inequalities between countries. Along with his wife and fellow economist Anne Case, he also focused on rising income and health inequalities within the US, where the recent increase in mortality from suicide drug or alcohol abuse is unique among developed nations. I highly encourage you to read his two latest books, The Great Escape and Deaths of Despair. They are packed with thought-provoking insights about the economics of development and inequality. Now, without further ado, Professor Ditton, the floor is yours. Thank you very much, Nikola, for that very generous introduction. Let me just plunge right in. When people talk about inequality, they are often thinking about inequality in income or inequality in wealth. Both are important, and I shall talk about them, especially wealth inequality. But I want to start with a different kind of inequality, not the distributional inequality, which is by who gets what, but relational inequality, which is the inequality when not everyone in society is treated as deserving equal consideration and respect. When some groups are assigning greater worth than others or when some groups are not given full rights as participants in a democratic society, they're first-class citizens and second-class citizens. We're all too familiar with racial and ethnic inequalities as well as gender inequalities. My main concern here is with educational inequalities in the United States today, with the increasingly different lives led by those who do or do not have a college degree. Bear in mind that only a third of American adults have a four-year college degree. The bachelor's degree has increasingly become a passport, not only to a good job, the kind of job that is worth doing and whose awards have steadily increased over the last half century, but also to good health, a long life, and a flourishing social life. Without it, you risk being a second-class citizen with implications for life at home, at work, and in society. Michael Sandel notes that the idea that a college degree is a condition of dignified work and social esteem as a corrosive effect on democratic life. It devalues the contributions of those without the diploma, fuels prejudice against less educated members of society, effectively excludes most working people from representative government and provokes political backlash. In our book, Deaths of Despair in the Future of Capitalism, in case and I told the story of how the lives of less educated Americans have, on average, deteriorated relative to the lives of those with a college degree. This began 50 years ago around 1970 and continued up to the pandemic. Perhaps the most prominent differences are seen in mortality and in life expectancy. After a century of increasing life expectancy, not only an indicator of health, but as many would argue, a sensitive indicator of the state of society, life expectancy in the US fell for three years in a row from 2014 through 2017, something that did not happen in this century since the last pandemic in 1918. The rising mortality came from a slowdown in cessation of the decline in deaths from cardiovascular disease that has been the main engine of mortality improvement for the last quarter century, as well as from increases in accidental drug overdose, the opioid epidemic, suicides, and alcoholic liver disease. We refer to these three kinds of deaths as deaths of despair. Remarkably, this rising epidemic of deaths of despair has almost entirely spared those with a college degree. For those without, we drew a parallel to Durkheim's analysis of suicide, where people find themselves in an economy and a society that no longer worked for them, that no longer provided the support that they needed to make their lives worth living. Even in normal times that are suicides, drug overdoses, and deaths from alcoholism among both the more and the less educated. But the increase in deaths of despair, now running 100,000 people a year above the rate in the mid-90s is confined to those without a college degree. It is as if those without the degree must wear a scarlet badge with the letters N-O-B-A, no-B-A. In contrast to what Durkheim believed, suicide itself is now more common among those without a college degree, those marked by the badge. Death is the last stop on the long road of despair. The starting point is a labor market that is increasingly failing those without a BA. The fraction of non-elderly adults who are employed has been declining for less educated men for half a century and for less educated women since 2000. In boom times, participation in work increases and it falls back in recessions, but the rise in each boom never attains the previous peak. The same is true for wages, falling and rising around the falling trend. For men, even in the boom leading to the pandemic, when the rise in wages for less educated men was being loudly celebrated, wages for men without a BA were lower than at any date in the 1980s. The failing labor market spills over into the rest of life. Unions are now almost non-existent in the private sector. Unions not only raised wages for their members as well as for many non-member, but also they monitored working conditions. Federal authorities are not always effective in preventing even the illegal practices and we're often in a center for social life. Bob Putnam's famous solitary bowler was bowling in a union hall. Unions provided countervailing power for working people, not only on the job, but in local and national politics. Unions have little power in Washington today and even the most powerful union lobbyists are outspent by several individual corporations such as Google. Marriage has declined among less educated, but not among those with college degrees. Instead of marrying, many Americans participate in serial cohabitations, often having children, so that men in middle age, although often fathered to several children, do not know their kids who are living with their mothers or with other men. These fragile families are scarcely able to bring the support and contentment in middle age and beyond that can come from lifelong family commitments. Morbidity has risen alongside mortality. In the extraordinary reversal of the law of nature, middle-aged Americans now report more pain than do elderly Americans. Once again, this is true only for those without a BA and it's not truly a reversal of the process of aging that happens because those in midlife today have experienced more pain throughout their lives than have today's elderly. Half of the increase in deaths of despair comes from opioid overdoses. For this, pharmaceutical companies bear huge blame for addicting the population in search of enormous profits. Pharma knew to target the less educated because it was they whose lives were in disorder and Pharma and their distributed were supported and defended by politicians. Some representing the district's most deeply affected. Money speaks very lively in American politics. Meanwhile, suicide rates rose to the levels that used to characterize the most dreadful societies on earth, the former Soviet Union and its satellites as well as women in China. Even those countries as throughout the world, suicide rates have been falling. The US, especially the less educated US is a notable and disgraceful exception. Despair is made worse by upward redistribution from poor to rich. The veritable opposite of Robin Hood, what in our book we call Sheriff of Nottingham redistribution. Opiies in the obscene profits of producers are only one example. Another is the healthcare system which delivers the lowest life expectancy of any rich country, but which costs twice as much as it should. Hospital executives, device manufacturers and pharma executives are pay huge salaries as they destroy low education labor markets through the cost of health insurance. The excess costs of the American system over the next most expensive system in terms of the share of national income Switzerland and not the total just the excess are enough to finance America's military with money to spare. As unions have faded, firms have consolidated with more monopoly and monopsony. Power has moved from labor to capital supported by a steady drift of the legal system to pro-capital as well as anti-union laws and rhetoric from the right. The wage share in national income has drifted down since 1970 and the profit share has drifted up. Productivity gains that used to show up in wage growth no longer do so. Corporate lobbying rare in Washington before 1970 not only influences lawmakers, not least through providing useful but not exactly unbiased information but by helping set the legislative agenda. The resulting laws are what Adam Smith described as those that quotes the glamour of our merchants and manufacturers as he extorted from the legislature the support of their own absurd and oppressive monopolies like the laws of Dracau. These laws may be said to be all written in blood or in deaths of despair. This is not a capitalism in which competitive markets yield benefit for all. More quotes a racket for redistributing upward than an engine of general prosperity. Politics has moved against the white working class over the last half century. The Democratic Party was once the home of working class Americans and of unions but after 1970 it gradually transformed itself into an alliance of minorities and the well educated leaving less educated whites to drift the Republicans. In the 1970s states with longer life expectancy voted Republican but by the presidential elections of 2016 and 2020 the correlation across states between the Republicans shared the vote and life expectancy was minus 0.7. But Republican policies followed the interests of capital not of labor unless educated whites were left without effective political points. They're 20 percentage points less likely to turn out in a presidential election than are more educated Americans. America's all volunteer military whose adoption owes much to Milton Friedman's advocacy has brought us another two-class system in which the enlisted men and women although not their officers are drawn from those without a college degree and is they who have borne the unshared burden of America's frequent wars. Conscription does not share perfectly but it can do so much more equitably than a volunteer army where volunteering is conditioned by education and income. The economist Robert Solo served as a sergeant in World War II and is frequently and eloquently described what his service taught him about Americans who were different from him, people that he remained friends with all their lives. That shared experience, that understanding of people who are different from us which need not necessarily be in the military is something we have lost much to our cost. Income inequality rose inexorably after 1970 though it was something of a pause after the financial crisis at least up to the pandemic. The growth in wealth inequality also halted after the financial crisis. The very richest people in America, Bezos, Gates, Musk, Buffett, Ellison, Zuckerberg, The Waltons, Bulmer, Page, Bryn and Bloomberg were all men, no women. They're all men who started or developed companies that made you and useful things. Indeed, if growth is driven by innovation in the shulterian process of creative destruction, a case can be made that those fortunes were earned in the public interest and contributed to the common good. These billionaires are or once were makers, not the takers who in much of the world became rich through inheritance, political favors, harm stealing or corruption. That said, there is an increasing skepticism about the makers and whether the fortunes might not owe much to the exercise of destructive market power. Some argue that they like Amazon so much they would be happier still if there were two of them. Others have little difficulty in imagining in a world without Facebook or Twitter. And nothing in Shumpeter tells us how large the rewards ought to be. Wealth is not only owned by the tech parents, a majority of Americans own stock market wealth either directly or through divine contribution pension funds. The three quarters of all American wealth in 2016 was held by the one third of Americans with a four year college degree. As late as 1990, global wealth had been equally divided among those with and without the diploma. In 2016, among those with the BA, a third of postgraduate degrees and have a median net worth of more than $400,000 while those with only a BA had a median wealth of a little less than a quarter of a million. Within the two thirds without a BA, median wealth was around $60,000. Then came COVID. Inner quality showed up first in the labor market. Many highly educated people could continue to work online and continue to draw their salaries. Those with spacious housing could do so in comfort with little or no inconvenience. Some of the less educated still did work but risk contracting the virus while others in transportation, retail, entertainment and a host of personal services had no work to go to. Unlike most contractions, unemployment fell most rapidly. Unemployment rose most rapidly for women, many of whom had childcare responsibilities that made it impossible to go to work. The CARES Act and later federal expending appears to have done a remarkably effective job of offsetting the financial effects of unemployment and of keeping up the demand for essentially, for certainly, for essential production such as food. But some days during the pandemic, poverty was almost certainly lower than it had been at its start. And because so much of the spending was conditioned on income, it is likely that income inequality has decreased. There is a well justified concern about children's education especially for those without adequate internet access or those with low levels of parental support and supervision. Children in private schools thrived while many in public schools did not. These inequalities are particularly distressing given the evidence of the long-term effects of interruptions in schooling. Inequalities in mortality followed familiar lives though with some exceptions. Black non-Hispanics and Hispanics died at higher rates than did white non-Hispanics. And there were extraordinarily high mortality levels among American Indian and Alaskan native communities. This was true for mortality from COVID itself as well as for estimates of excess mortality, a larger number that includes COVID deaths that were not diagnosed as such. Hispanics are the exceptions to preexisting patterns. Prior to the pandemic, Hispanic mortality rates were lower and life expectancy higher than among non-Hispanic whites. Native Americans have always had a relatively high mortality rate but the increase during the pandemic was greatly in excess of the preexisting difference. During 2020, COVID deaths among those with a BA were around half the number expected if deaths had been blundered to education. This is surprising. Jobs in retail and hospitals or even in meat packing plants or Amazon warehouses were not particularly dangerous prior to the pandemic and certainly not as dangerous as it became with an airborne virus. Yet the preexisting educational differences in mortality were essentially preserved in the pandemic, not exaggerated. It is as if the educational advantages and mortality are almost invariant to the epidemiological environment in a way that is not true for racial and ethnic differences. The life-preserving skills of education appear to operate in a wide range of circumstances. Wealth inequalities have exploded during and indeed because of the pandemic. One estimate is that American billionaires have added a trillion dollars to their net worth with Bezos the only centi-billionaire doubling his wealth. It is obvious that the pandemic would have been worse without Amazon so it is not as if Bezos did nothing to earn his extra hundred billion. All of the tech titans have served as well during the pandemic and all have been mightily rewarded for doing so. Whether those amounts are just or even necessary is a different question. But that is only one part of the story. The low interest rate policies that monetary authorities have pursued have tended to inflate the value of assets. Given that wealth is so unequally distributed, low interest rates exacerbate wealth inequality, arguably price that is worth paying to allow economies to recover from the pandemic. But this cannot be all because the effects have been different in different countries. For example, they've been much larger in the US than in Britain. The S&P 500 is 25% higher today than at the beginning of the pandemic. This is on top of a 400% increase from 2011 to the eve of the pandemic. And while the British FTSE is risen by 20% during the pandemic, it is currently 6% lower than at the end of 2020, at which time it had only gained 25% since 2011. Low interest rates are widespread, but it is the US that has the big tech companies that have become so valuable and which are expected to be even better in the future. Amazon, Alphabet, Microsoft, Apple, and Facebook, but account for almost a fifth of the S&P 500. The pandemic drove many of their big brick and mortar competitors out of business while government transfers to households propped up their spending. Remember too that the stock market values profits and conditional and national income responds negatively to higher wages. It has therefore been boosted by the declining share of labor which can reasonably be expected to continue. Easy money and the rising fortunes of capital, particularly big tech have put the American stock market on steroids, enriching not only the tech barons, but also the educated elite. The Democratic Party may not be the party of business, but it's well-educated cosmopolitan elites who, unlike the working class, have benefited from globalization and automation, have seen their portfolios shoot up over the last decade, rocketing further over the last year while they work safely at home on Zoom and Webex. Meanwhile, 587,000 Americans have died of COVID and likely many more. In major wars, the producers of arms and war material became rich and that is now their prediction, their production and even their profits were in the common good. Even universal conscription could not ensure that all citizens shared the burden equally. In the Second World War, the British Labor Party demanded it quotes conscription of wealth to match the conscription of labor. According to the political scientist, Kenneth Skeven, David Stasevich, similar compensatory agreements, arguments were widespread to justify temporary high taxes in ex-literature, belligerent countries after World War II. What ordinary people made in blood, the producers paid in treasure. There is a good case for thinking along these lines to finance the costs of the pandemic. There is certainly little left sign that business executives will restrain themselves. We know that executives award themselves bonuses and their firms are doing well. We saw whether or not the circumstances of their success have anything to do with our own behavior. Apparently the same is not true in bad times and there are a press accounts of CEOs changing the compensation rules to ensure that the pandemic could not negatively impact their compensation. Never mind that hundreds of thousands are dying. The pharma companies that were the scourges before the pandemic have now become our saviors. Johnson and Johnson long, one of America's most admired companies, the producer of band-aids and baby powder turned to opium farming in Tasmania to feed the opioid epidemic. I like the analogy of a small island plagued by powerful pirates that regularly rape and pillage its shores. When a neighboring country threatens war, it is tempting to enlist the pirates to help and to be grateful when they do. But pirates are pirates and even if they save us the day, they will return to rape and pillage tomorrow likely with even less restraint than before. Hospitals are the greatest contributor to healthcare costs and they received large sums from the federal government during the pandemic, a wise policy in the circumstances. Again, there are widespread press reports that some hospital systems used the grants to give bonuses to their executives while continuing to sue their patients for unpaid debts. There was hope at the beginning that the pandemic would expose more clearly the flaws in the American healthcare system as well as the folly of providing health insurance through employers and of leaving more than 25 million uninsured 15 months later. That hope seems forlorn and it seems more likely that the pillaging will continue to pace. Surprisingly, given the dire straits of public health and the health systems in many poor countries, death tolls as a share of population have been higher in richer countries even given the unfolding disaster in India. Even if deaths in India are understated by a factor of five or six, this per capita cumulative death toll would still be less than in France, Spain, the US, the UK, or Italy. A result of the pattern of deaths richer economies shrank by more during the pandemic. Even so, it's almost certainly the case that hardship and suffering have been worse in poorer countries. Similar percentage declines in national income will lead to larger increases in poverty in poorer countries and the pandemic is not done yet. We do not know the final toll in India and we do not know why African countries have seen so few deaths, let alone whether they will be permanently spared. Many thought that India had come through the worst. And the global distribution of vaccines is so far greatly in favor of rich countries, perhaps inevitably so. It will not be easy to vaccinate the world, though it is a crucial task that the rich countries must now undertake. What to do now? The deficits that were necessarily incurred during the pandemic are already leading to debates about whether and how they ought to be addressed. There are always hawks who push for austerity as they successfully did in many countries after the financial crisis. If that happens, the cost of the pandemic will be borne by those who already suffered the most during it. There is a British proposal for a one-time temporary wealth tax which could be mostly borne by housing and pensions. The IMF has suggested temporary taxes, what they call COVID-19 recovery contributions on high incomes, profits, or wealth. All such proposals face political resistance as well as many practical difficulties of evaluation and avoidance. But given the fortunes that have been made during the pandemic and the many deaths disproportionately borne by those who did not benefit financially, failure to do so would be a definitive sign that indeed we are not all in this together. Over the longer term, the burden of taxation must be adjusted to be fairer and to be seen to be fairer. Corporations need to be made to pay the taxes that they owe and international treaties need to be forged that will eliminate the widespread shifting of assets to avoid taxes. In the US, it's become too easy to avoid taxes on transactions that are not reported to the IRS. Common among mid-sized businesses whose owners are heavily represented in the top tiers of the income distribution. The Biden administration is working on both of these issues. Power needs to be distributed back to labor and away from firms. The long-term harassment of unions need to stop and antitrust should be reinvigorated. We need fewer ex-corporate lawyers as judges. Again, the Biden administration is dedicated to these aims. A single-payer healthcare system that covers everyone from birth and then enforces price controls would remove a metastasized cancer on the American economy that is not only reducing American health and wealth but is redistributing from poor to rich. There's also much to be said for seizing the current opportunity to remake the American safety net into something more like a European welfare state. The Biden administration is clearly moving in this direction too, although it does not grasp the nettle that would be required to finance it. Evaluate attacks. That is the embodiment of widely shared contributions for widely shared benefit. It should. Thank you very much. Thank you very much, Professor Deaton, for his insightful comments. Before we move on to the discussion with Professor Sen, I'm just gonna say a few words about Professor Sen. So Professor Martin Sen received the Nobel Prize in economics in 1998. His work contributed to the fields of welfare economics, political philosophy, and development. It's hard to summarize his many contributions in a couple of minutes. So I will just briefly describe one of them that is related to the topic of our session. Sen argued that the relevant question we should ask is not why equality, but rather equality of what? Should we aim at equalizing citizens' levels of happiness or their resources or something else? Economists commonly adhere to some form of utilitarianism, which consists of evaluating well-being based purely on individual pleasures and desireful filaments. But defining the common good as equal degrees of pleasure across people may lead to very unequal income distributions. For example, it would require giving a disproportionate share of resources to those whose only sources of pleasure are fancy champagne and caviar. On the other hand, the theory of social justice developed by John Rawls is based on how much primary goods, income, rights, et cetera, people have at their disposal. But by focusing on an equal distribution of goods, we ignore how much well-being people can achieve with these goods. And this may also create injustices. For example, a disabled person may not benefit as much as an able-bodied person from the same amount of resources. So Sen's own theory of equality avoids the pitfalls of both utilitarianism and Rawlsianism by introducing the notion of capabilities. It shifts attention from goods to what goods do to people just like utilitarianism. But it uses a metric that focuses not on the pleasure that people get from these goods, but rather on their ability to achieve certain things with them, which he also calls freedom. Of course, this extremely short and oversimplified description is unable to do justice, no pun intended, to the solitude of his views and to their far-reaching consequences. I encourage you to read his book, Inequality Reexamines, which fascinated me so much when I read it in my 20s that it led me to start studying economics. This is probably the least of your accomplishments, Professor Sen, but it is one that matters a great deal to me. So thank you so much for this. Thank you. Before we get to the discussion, let me just remind the audience that you can ask your questions in the chat. I will start with the first question, but then I will read questions from the audience. So let me start. My first question is addressed to you, Professor Sen. Some of your most famous work concerns the relationship between famines and democracy. You argue that major famines never occur in democratic systems. And the argument is that the free press, by disseminating knowledge and allowing uncensored public criticism, is what holds governments accountable and forces them to respond to the needs of their citizens. So I wonder to what extent the same argument applies to the current COVID pandemic. Many democracies from Europe to the US do not seem to have been particularly successful, at least at the beginning, in managing the pandemic, both in terms of death tolls and economic losses. So is there a sense in which, perhaps the superiority of democratic systems in managing such tragic events as famines or pandemics has weakened? And if so, would you have anything to do with the new media technologies that spread not only knowledge, but also fake news and conspiracy theories at an unprecedented scale? I would be particularly interested in your views on India, which is democracy run currently by a populist government and which is sadly going through a devastating second wave of the virus right now. So I could respond. And thank you very much for that question. But I think one of the big things that comes out from Angus' paper is how the world is divided in terms of opportunities, as well as what they identify with, what they sympathize with, and how it operates and how divisions like college and education makes a difference. And going further, quite deeper in the analysis, how things like interest rate policies also has an effect. Now, one thing just quickly to think about the famine thing. I mean, it is, would be amazing if democracy could stop famine in terms of just majority vote because no famine ever affects more than 10% of the population. That's about the maximum and usually about five, six percent. So that's a minority. The majority vote democracy would do nothing to provide a vote against famine. What happens, however, is that public discussion and basically what Adam Smith would call mutual sympathy operates in a way that the idea of people dying of hunger revolves a bulk of the more than a majority of the population and it becomes impossible to tolerate that. And that is the way it tends to work. And when it doesn't work, then democracy will not have that feature. What's going to happen to make a two quick point. One is that if you look at India now, the famine issue was a big one for a long time connected with the British Empire and wanting to end it. But the division between the rich and the poor, the upper caste and the lower caste remains very strong. And as it happened in recent years and the represent government, which is very biased in the direction of the wealthy and the, well, not supremely wealthy, but who are comfortably off compared with people who don't know where their next meal is coming from. So throughout even when the Indian government introduced in four hours nothing, a lockdown, there was no cost about what would happen to people who would lose their employment and who would be often very far away from their home. So there was no lack, no sympathy which would carry the lessons of the pandemic to bigger society because the pandemic itself was so badly managed and it's extremely badly managed in India now. But you see, I think if you contrast it, if you think about it, it's something that Angus County came close to, but given so many points, you have to come away, didn't expect so much that. In, if you look at the Second World War, when the food supply in Britain fell dramatically. And so there was an idea about how to, what to do with it. And the general thought was for the first time in British history is that everyone must be somehow protected from hunger by rationing and control. So everyone getting food at classes. The result was that what began as a threat ended up being an opportunity for everyone including the very poor. And so the poor undernourished in Britain were having a better opportunity of eating well during the war than they had at any other time. And if you look at the life expectancy increase over the decade, in the decade preceding the war decade, there were increase of life expectancy about one or one and a half years over the decade. But in the, in the war decade, it went up by six and a half to seven percent because for the first time, people are being, were being fed in a way that changed a free existing inequality situation. And of course that lesson was picked up again and again. I was very fortunate to work at the London School of Economics very well. And at LSE, that was one of the cultures, it's not one of the first lessons I met from LSE. It was a man called Brian A. Smith who had come to Calcutta for a debate. I remember talking with him on that. And of course that lesson was picked up along with very good and other commitments that were coming in to the Labour Party and others. Now the, what happened is that this led to initiation of a welfare state. And the welfare state where these things are shared makes democracy much more potent. Now one of the things that emerged from Angus' analysis is the inequalities that had been present before and that got reinforced during the COVID academy. COVID episode. And the result was that the protection that you can get from democracy in America, is a democracy, did not go as far as it could have easily gone. And that is a problem. And I think that's when Angus discusses what has happened to blue-collar workers turning Republican as opposed to more comfortable members of the working classes who may be in the democratic party. You find a kind of division whereby the main mechanism, and I was glad you raised the famine and democracy preventing it, it works through that degree of sympathy for each other, which is very central to a democratic norm. It tells him, if people don't read Adam Smith that much, he says I was very pleased that Angus had at least one quotation from Smith. Smith discusses that very much. This is where his idea of the impartial spectator come in. The fact that all of us have something of the impartial spectator in us. So I think if you broaden Angus' analysis based on the Secure Foundation that he has provided, I think we can see, and he was coming to that towards the end, what to do now, is to somehow break down these barriers and education will be a very big part of that. And then at the point of even unsuspectingly things like interest rate policy has implications on that. So I'm delighted you raised that issue. I think the connection between famine prevention and democracy is not the majority, both connected only. It is how a democracy operates in a society. It depends on things like inequality, college education, non-college education on which Angus, among other things, concentrates. This becomes very central to that. So as I read the paper, and for me, it is a kind of, I mean, I'm interested in the epistemology of it, obviously, but ultimately the ethics of it. Where do we go from here? What do we do now? I would say the lessons that emerge from Angus' paper is to see how democracy functions and be made to function better. And that is not only good in itself, but it makes a major difference to survivors in equality. And as it began, I say inequality is not just income and wealth, but it's the way you can participate. Yeah, and it's the equality of participation or reduce the inequality of participation. That's very central to that. So thank you very much, Nick, for asking the question. Thank you, Professor Sen. About this, and I'm gonna ask this question to Professor Ditton in response to his speech. So a lot of your discussion of inequality was focused on the US, and a lot of the remedies you'll propose would bring the US closer to a European style of welfare states. And in fact, in Europe, at least in France, healthcare is universal, we have no opioid epidemic. The share of income captured by the top 1% has not changed over the past 40 years, and so on and so forth. So we have our own list of problems to be sure, but many of those you mentioned are not issues here. And yet, despite these successes, despite the generosity of the welfare states and so on and so forth, we seem to have the same resentment against the so-called elites. Think of the yellow vest movement in France recently or the rise of the radical right parties throughout the continent for years or even decades now. So and this idea of relational inequality that the educated, the winners of the meritocratic race don't treat others with the equal respect they deserve. That brings true to me from my conversations in France. But so it seems that having a welfare state, having lower levels of inequality is just not sufficient to prevent this kind of resentment against elites and this kind of mutual self-respect, to foster this mutual self-respect that is lacking even in Europe. So what could be used to address specifically this idea of relational inequality? Yes, thank you. That's a really good question. Thank you, Amartya. I want to come back to several of the points that Amartya made as well as your question. Yeah, please go ahead. Really, really good ones. It's clear obviously that the situation in America is not, is worse than anywhere else. It's not unique though, so that Britain has a deaths of despair problem too, which has been rising. And my home country and Adam Smith's home country has levels of drug deaths that are comparable to the United States. It's the only other country in the world where we're seeing these sort of horrors. But I think your question, Amartya, was a great one and opens a really good line of inquiry here, which is I really wonder if the democracies they are today would be as effective at preventing famine as they used to be in the past. And that this sympathy, this community of sympathy that Adam Smith talked about, it's harder to imagine anywhere worse right now than the United States where that community of sympathy does not exist. And this division that we have with no sympathy whatsoever on either side, these polls suggest that if the other side died, people wouldn't care. So the idea that we would pull together in a pandemic or indeed in the famine is I think, I hope it's not true, but I think it is true that the failure of democracy in America and it isn't just America as Nicolas said. And a lot of this was predicted by Michael Young who defined the term of meritocracy and he thought that the meritocrats would just pull away, they would steal the smartest children of the non-meritocrats and they would form a society by themselves that would despise the other half and you get this breakdown of sympathy. And that seems to be happening everywhere. And in Britain, the party is still, the labor party that used to represent workers has become an educated elite party, a cosmopolitan party, whereas where my grandfather, the coal mining village in which my father grew up voted conservative in the last election and in the village of Clearcroft, there never was a single person who'd ever voted conservative or thought about voting conservative. The normal patterns of representation have broken down and these bonds of sympathy, which I think I probably not only agree with them, but I've learned it from them, seem to have frayed to a point that they pose enormous dangers to us all. So it's not just the American healthcare system, which I think is making it much worse. And that's one of the reasons why we have so many more deaths. But these problems of a meritocratic and educated and cosmopolitan elite that is being benefiting from globalization and technical change while the less educated are just abandoned and have no political representation everywhere. That seems to be happening widely across Europe. I think it also happened in Eastern Europe when they sent Polish smartest kids off to work in the IMF or the EU or in Brussels and so on. And so you also deprive those working-class areas of their natural representatives, because when I was a kid in the villages in Scotland where we were, there were an incredible number of really, really smart, intelligent, well-read people who talked to each other and you could learn things from. And now all those people went to university and they're not there anymore. They live in London and they work in hedge funds or something. And so I think that's happened in the US too. You've sucked all the natural talent out of the left behind places. So there's no representation anymore. The unions have gone. So a lot of the story from America applies elsewhere even if the details really do not. Thank you, Professor Editon. Let me ask a question from the audience on the chat. So it's addressed to Professor Sen but I think both of you would have things to say about this. How can rich countries be mobilized to donate the 50 billion dollars to help low and middle-income countries with vaccine supply as suggested by the IMF and also what is the strong moral ethical argument behind this call for help? So let's ask Professor Sen first because this is to whom the question is asked but I think Professor Editon, you have strong views about the efficacy of foreign aid so maybe you can also respond afterwards. Well, I don't know that's easy to do and can be done and I could, you know, I come from India, I have an Indian but seeing how the rich in India have been separated out from the war in India and indeed the bulk of the population and how little the rich in India have been doing for the war. The question could easily be asked by somebody outside saying if the rich in India, that's so little for the local poor, why is it the responsibility of Lithuania or Italy or France to do anything about it? And I think that is a difficult issue. I think ultimately, of course, the answer is, I believe this Smitian one, that's the basic sympathy no matter where people are suffering that can potentially move people anywhere and accept the possibility that other countries may be motivated to help but there are many barriers and one of the barriers is, which is not what we've got now, domestic inequality makes international inequality for life and life. But I'm very anxious to hear what Angus has to say on this. I'm actually not, well, let me preface, there's an amazingly interesting contrast today between the US and India. I mean, the US has been very successful at giving free shots to a very large share of the population in spite of having a totally dysfunctional healthcare system, which was almost totally not used in dispensing vaccines. You didn't get them in hospitals on the doctor's offices, you got them in government-run facilities or later in pharmacies. But the US that believes in the market healthcare system provided these shots for free, whereas in India they're selling them and in some cases allowing the pharma companies to set whatever prices they think is appropriate. A little bit about foreign aid though. I'm not very surprised by what has happened. It was the rich countries and India, let me put India aside from the long, but it was the rich countries that made these vaccines who paid for them and who got them first. I mean, there are many different conceptions of whether that's just or not, but if you read the beginning of a Marches book on the idea of justice, that's at least one conception of what many people think is just. We paid for it, we invented it. We got it first, we give it to our people first. Beyond that though, I actually don't think it's gonna be so hard. It's gonna take some time and there's a lot of technical barriers to be overcome and so on, but I don't think there's an unwillingness among the elites in America to send a billion doses or billions of doses abroad to poor people around the world. And I think that will happen. I think it won't be as fast as we would like, but my prediction is that that will happen and that there's no huge force against that even by within the divides in American politics. I mean, I, as you said Nikola, have been very critical of foreign aid in the past, but not of this sort of foreign aid. The foreign aid I've been critical of is foreign aid that interferes with the domestic political economy, especially in small countries like Africa that are enormously independent. This is not something that applies to in New York to China, for example, but it's just that in those countries, spending a lot of money in those countries is very counterproductive. It creates dictatorships and undermines tax collection that messes up the polity. But that's not the case with things that come from outside like healthcare, not healthcare like vaccines. And traditionally or historically, vaccines from outside have been enormously effective in increasing life expectancy in poor countries around the world. And so I don't see any ethical or practical given time difficulties in doing this or actually political difficulties or practical difficulty. You've got to get these drugs made and obviously we've lost the country that would have been the prime candidate for making huge amounts of vaccine to distribute around the world. So I'm fairly optimistic about that, but not in the next few weeks. Right, thank you so much to you both. One more question. So I would like to go back to this argument to those Kevan Stasevich arguments you made that this idea that the poor were paying the cost of the war with their blood and that's the kind of using the rhetoric of the rich have to pay the wealthy who didn't pay as much of a cost, would have to pay with their wealth, would have to pay the price of the war with their wealth. There have been similar arguments that have been made according to which the World War II would have been responsible for the increase for the franchise, for the extension of the franchise. And that goes back to what we were saying earlier about improving democracy. So here these arguments are, they ring a bell. I mean, we hear like you mentioned the fact that the poor worker or the essential workers are those who disproportionately paid the cost of the pandemic with their lives. And so that now the rich have to pay it with their wealth with the incredible amounts of wealth that have been accumulated during the pandemic. And so one idea that you dismissed I guess is the idea of the capital levy. And I just wanna make sure that everyone understands that this is not a radical idea, this idea of taxing the wealth, one of tax on wealth that's been accumulated during COVID and that could be used to pay for the pandemic. And if it's not enough, at least symbolically, it's an important way to show that we're all in this together. More generally, what would be ways in which you think we could restore the fairness of the tax system or this idea that everyone paid equally for the burden of this pandemic? I think that's probably for me, but I'm interested in what Amarchi thinks about this too. Amarchi's examples of Britain in 1945 or even when he was first at the LSE in the 60s, that's not the world we live in anymore. And I think, Nikola, what you said is makes perfect sense. Let the capitalists pay in treasure and let the workers pay in blood. This is like a war, let's do this. And several people I've talked to, not just in France, but also in Italy, where Titori has been pushing this, but getting no reaction, no positive reaction at all in government circles. So I think it's a great idea. I don't think it's radical, but I think it seems radical right now because the forces of wealth are so strong that I just can't see it happening in the US. There was a discussion in Britain, there was a commission with a number of quite distinguished people involved in that and worked out a very detailed proposal. I don't see that that's gonna be adopted either. Part of the problem is that that has, there are technical problems. I mean, that had a very low threshold, which meant most of it fell on the ordinary people through their houses and their pensions and it didn't get at these billionaires. Of course, there aren't so many billionaires in Britain. So, we really want Bill Gates and we want Vsauce to pay for the pandemic. You could make it progressive, right? Or you could, for example, tax the capital gains that have been- I think that would be a really good idea. I think there's negligible political chance of that happening. But I'm very depressed about that because it's happened before, it's not a radical idea. And the fact that it seems like a radical idea now is a terrible thing. And what I meant by this is not a radical idea is that this is an idea that's been around for a century. I mean, Keynes, Hicks, Pigu, all those great British economists in the 1920s were arguing that this should be the right instrument to pay for the cost of World War I. And recently it's been formalized by the Chicago economists Nancy Stoke and Robert Lucas. I just want to read a quote from John Cochrane who is a very conservative economist and who wrote in February 2020, so a month before this all happened in the US, that such a capital levy is, in theory, the optimal tax instrument. And he writes, capital levies are something that governments can do only in extremely rare, visible, once per century crisis with some strong pre-commitments never to do it again. So that seems like exactly the conditions we are in now. And in fact, he was using these arguments to argue against a permanent wealth tax. He says, well, let's do a one-off tax, but this can only happen in the kind of events that we are living now. And that was before the pandemic, so that's not related to that. So maybe Professor Sen, do you want to comment on this? No, I entirely did that, yeah. Absolutely. Yeah. And I, entirely, we also, that is not a new idea. And there were those who were concerned with these issues like the government attends and the consequences of these and so on dealing in that case with the Barça agreement. They went through these arguments fairly thoroughly at that time. And somehow, as Angus said, even though it seems to be sitting in front and not a new idea, it's chances of being adopted is extremely likely. I hope it, I will hope it'll happen, but you know, there's a counter argument to the Cochrane argument too, which is extraordinary circumstances in which it can only be done once. That's what income taxes were introduced that way in many countries around the world, in Britain to pay for the Napoleonic War. Well, we still have the income tax. So the credibility of saying, we'll only do this once, once you set up the apparatus to evaluate things and all the rest of it and to avoid people shifting assets. And people can shift assets around very, very quickly. Yeah, so it would need to be somewhat coordinated, I guess, at least within the EU, for example, but yeah, I agree that the credible commitment to never do it again is perhaps a long shot. No, it's just if you have a $40 million offset, for instance, you suddenly discover that all the people who are worth $40 million, so it's a lot more people worth just under $40 million and then it's very hard to calculate. Right, right, right. Let's talk briefly about intergenerational inequalities. So the older generations have been clearly the most directly affected by COVID, but there is another group about which I'm very worried, it's children. So many countries have attempted to reduce infection rates by closing schools, sometimes for a long time, more than six months in the UK, more than one year in some parts of India. Like you mentioned, Professor Ditton, there is a huge body of economic research that evaluates the returns to schooling for children and they are enormous. So the evidence from, for example, changing compulsory schooling laws suggests that an additional year of education would raise future earnings by between 10 and 15%. So as schools close, we should expect a dramatic rise in the pre-existing inequalities between families who can afford to keep providing privately a high quality education to their children and those with less time, money, or lower educational resources who can't. And so these effects, these devastating effects on educational inequalities, how will they manifest in the future for this generation and how should we prepare to tackle their consequences? I think we're just sitting here nodding because we agree, but I don't think we have much idea of what to do about it. But it certainly does suggest that priorities that were priorities before, like decent education for kids in inner cities in the US, where, for instance, there are schools that never send anyone to college, for instance. That becomes even more of a priority because those are the people who've been hurt. And I have three grandchildren. They have prospered mightily during the pandemic. They've had a lot of fun. They may have suffered a little bit from not getting to hang out with their friends in the way that they did, but there's not been much of that either. And the private schools have been incredibly good at dealing with that. They were testing kids every couple of days from the very beginning. They changed their operations a little bit, but hardly at all. And it's been a disaster for lots of other people. And I think that's something we're not focusing on right now because there are more urgent things to do, like getting people vaccinated. Incidentally, I saw the other day that the vaccine hesitancy is almost entirely explained not by racial differences or by Republican Democrat differences, but by education once again. Very few people with a four-year college degree were unlikely to finish up being vaccinated. So we're another echo of deaths down there. But this will become a huge problem as we go ahead. And I don't have any immediate measures for solving it. Yeah, I agree with that. I think one of the striking facts is that there was a time when let's begin with school education that we can think about college. The year of course carried over, as was Japan, with a determination to get every school child educated. In case of Japan, this happened following the major restoration. And this was, you know, I think probably she entered. There were, the major restoration was, I think, 1868 and by about 72, the Japanese have decided that within four decades they were to get everybody schooled. And that happened, however, it didn't happen. And in China, it happened in China for coming from a different angle, namely Maoist commitment. It was, in fact, something they were discussing even after the long march where Mao's theories were being shelled up. It didn't happen at that time in India and which is a very big part of the world. And it didn't happen in many other countries. It didn't happen in Middle East and so on. And then, gradually, there was a kind of pressure in that direction. On the European side, this had happened, but the various countries, including Britain, the hesitation of us, college, was a big thing. And if you think about the time when I first arrived in England in the 16th century, this is the time when London Robinson with the conservative economy, under the leadership, there was the Robinson Commission above, is concerned with, Angus is concerned, they have the college education for all. And this became a big thing. And somehow that declined, respectively, in their own particular ways, the college education formed there in America, there was always greater sympathy for college education than, say, in Britain. But that is the nature of that commitment that's been shifting. In India, it was moved in the opposite direction. Angus made in passing in half a sentence that now even vaccines are sold in India. It's just an amazing thing. You can't think of something which is very important for people's well-being. And it's also very important for other people's well-being. I mean, this is something that Figu came up earlier. Well, Figu in the 1920s should have seen no problem with, but it's a crime. And I think they will have to do a different paper. We said, doing it, dealing with India, the focus on America and the West, which is mainly the focus here of Angus, is very nice, it's a nice paper. But in India, why is this thing happening? It is a very big issue. And why is it that the COVID has not acted and they will work against it as they are going against it? And of course, democracy, if I make a map, is something to do with it now. I mean, there are huge number of people who want it and they are put in jail. The British used to have, while ruling India, something called, I forgot the technical term, that is basically, you can put people to jail not because they have done anything wrong, but they might do. All my uncles were in jail because not because they had done anything, but left free, they could. And after independent, that was abolished in India. Then it came back, came back in a massive way. And now, large number of people are in jail for having advocated the right of everyone to have a school. They write up everyone to be able to have entitlement to food, not to mention, vaccine. And so I think, I did want to mention that since you gave in the context of my diet, which is the famine and democracy. Democracy is still very important in India and this Indian Supreme Court's activism in preventing these aberrations would be very important. Hades Corpus, which was dropped in India about two years ago, Supreme Court hasn't had time to look at it. But Hades Corpus is very important for the kind of life that we can have as an extension of Angus' paper towards countries like India. We have to think about it very carefully. And the fact that democracy with all its fault, has some fault in America, is to some extent brought up with the fact that the country without a point that Angus made that the country without national health service still managed to give people, try to give everyone a vaccine and give high proportion already there. Where do you go? You go absolutely everywhere. Your football stadium, everything was recruited for this purpose because there was pressure, democratic pressure in that direction. So democratic pressure remains very important. And I think this republican democratic division and the republicans getting as Angus discussed it, a particular type of people who were not in the path republican, like the blue collar worker but she rejected and changed by this society. And that division is a very strong consequence and we have to redefine the politics, political being of each country at this time. It's a very important moment. So when I was reading Angus' paper, I was telling myself that we have to redefine the political commitment. When I was young, the main commitment was driven by other factors like Vietnam War and colonialism, China, the European War and so on, India, the large and finishing. And of course now we are in a different type of tunnel from which we have to pull ourselves out. And I think what we need are people, exactly people like that of Angus, but covering more and more parts of the world to see that we can move towards a use of the institution like democracy which has existed but have a different kind of urgency today. Thank you, thank you professor Sen. Unfortunately, we are running out of time. I'm not gonna ask you my last question which was about the responsibility of economists in the rise of inequality that will be for another debate but I would have been looking forward to hearing your thoughts on this, both of you. Thank you so much for participating in this discussion. This was, I have to say extremely insightful to hear both. Thank you everyone in the audience as well and sorry I didn't get to ask more of your questions. I hope you enjoyed the discussion. Thank you very much, Nicolas. Thank you, Marcia. It was fun. I thank the Parisian echo, challenge and Toulouse School of Economics for this invitation. It's a pleasure to be among you today from Toulouse. Do you know that when you are at the Toulouse School of Economics in this avant-garde building that the region has chosen to finance, you are also a few meters away from the first society by action of history. The Society des Moulins du Bazâcle, created in 1372. The site in which Toulouse is inscribed is in the memory of Toulouse, the symbol of the economic miracle that benefited the city until the end of the 19th century, during nearly 10 centuries. Then, there was the aeronautics and pioneers and then today, a place dedicated to innovation and the diffusion of research. This pioneer spirit and partnership we find at TSE. Brought by Jean-Tirolle, the Nobel Prize for Economy in 2014, TSE is a pride for the region and a major gap in the model of excellence and inclusion that we defend in Occitanie for the future university of Toulouse. But it's good because it is very far from Occitanie that it is a pride. TSE, with more than 200 researchers and PhD students, is among the 10 best research centers in the economy in the world. To protect the common good, you first need and above all, the determination and the political will to make it common. In a fragmented society, which is sometimes very violent for people, we see the risk of individualist replications. And with that, the risk that politics is summarized in the electoral marketing, choosing its categorical targets and forgetting women and men in their diversity. Here, with the president of the region, Carol Delga, we have the will to serve, serve the greatest number, to share the attention for everyone and the ambition for everyone. We have the will to be useful and therefore to respond to the needs of our inhabitants and to build the conditions for a common future. They combine the height, even far away, and the proximity. So it won't surprise you that I consider that the regional echelons, the local echelons are the most effective to combine strategic and proximity vision. The closer we are to people, the more we are able to respond to their needs, because we know their needs, because we hear them, we listen to them, we live with those and those we need, and we also build solutions with them. Confronted with the health emergency, the economic and social emergency, many things that we believed impossible in a global economy have been carried out for a long time. Businesses that completely change their production to provide local hospitals. Collectivities that succeed better than the state have organized mass distributions for our caretakers, our teachers, our students to put in place economic help at the closest to the field, of our merchants, of our artisans. I am a field student and I fully measure the need to have a more flexible and agile public action. It is the Republic of the Territories that Coral Delga defends. A model of solutions on a human and local scale far from the administrative complexity. I believe in collective intelligence and in the local initiative with methods and tools, private and public partners, between collectivity, between research and industry, participative budgets, contractual policies and agencies and houses in the region, especially the territories. Protecting the common good is to refuse social determinism or to sign a residence by developing networks that connect women and men. Mobility networks with the train, the TER but also by demanding the LGV in our territories. Telecommunications networks with the TreoDB everywhere, for everyone. Economic networks, competitive fields and clusters. Finally, to protect the common good is to protect and preserve its territory, its nature, by promoting a new model of sustainable development. The first region to adopt a Green New Deal affirms the possibility to reconcile economy and ecology by associating citizens with the construction of their future. It is built with an impact. When we make the Paris of reindustrialization by becoming an actionary region of our regional companies, when we make the Paris of regional economic patriotism by creating the first tool of financing companies by citizens, we generate a community of destiny. This is what we do in the region and we have done it since the beginning, since Carol Delga decided to allow the inhabitants of our region to choose her name in common, Oxytanie.