In a talk about his new book, “Angrynomics,” Mark Blyth explained why Westerners are angry over the current economic state and suggested a fix for broken capitalist systems.
PROVIDENCE, R.I. [Brown University] – The economist John Maynard Keynes once said, “The difficulty lies not so much in developing new ideas as in escaping from old ones.” Brown University Professor of International Economics Mark Blyth agrees – and his new book, “Angrynomics,” details the outrage citizens feel when old, irrelevant economic ideas endure to the detriment of most of society.
“Angrynomics,” co-authored by Blyth and macro-hedge fund manager and economist Eric Lonergan, explores why measures of stress and anxiety are on the rise even as the vast majority of people are wealthier than ever. The authors propose radical new solutions for an increasingly polarized and confusing world.
Blyth, who serves as director of the Rhodes Center for International Economics and Finance within Brown’s Watson Institute for International and Public Affairs, discussed the book in a Thursday, June 18, virtual talk with Ed Steinfeld, director of the Watson Institute.
“The world keeps getting richer and richer,” Blyth said. “Yet we see Americans getting more and more angry.”
Blyth explained that he and Lonergan believe that Americans’ anger stems from a condition they nicknamed “macro-angrynomics” – a reaction to the moment when the economic model stops working for the majority of citizens.
The authors used a computer analogy to help readers understand the current predicament. They explained that all capitalist economies are like computers – they contain the same hardware, but each economy arranges the parts differently. Over time, economic ideas accumulate bugs and crash countries’ respective societal machines. Each malfunction frustrates citizens the same way a computer crash might. As crashes become more frequent, societal anger mounts.
In the United States, Blyth said, “our theories about running the world are fixed at a moment in time… the ’70s. We now live in a world in which we haven’t had inflation for 20 years, except in the price of assets. So to what extent can those theories still run on the hardware? The world changes, but the code instructions stay the same.”
Economic experts and the political establishment have been slow to offer prescriptions to treat or fix the broken American economy, Blyth said – which has created an opening for political outsiders to swoop in, weaponize citizens’ anger, seize power and develop authoritarian regimes. He pointed to leaders across the globe as examples: Silvio Berlusconi, Vladimir Putin, Recep Erdoğan.
Blyth said he and Lonergan argue in their book that continued deregulation and advice from technocrats won’t solve yawning wealth gaps in Western economies. They propose giving citizens a stable, transparent financial stake in their societies through sovereign wealth funds like that of Norway.
“If you invest in stocks, they yield 6 percent, more or less, on average,” Blyth said. “Bonds? [The yield is] negative. Why don’t we, rather than private equity, just issue more bonds, buy up all those assets and put them in a completely passive fund miles away from all the politicians? You would have a multi-trillion-dollar wealth fund, for college, for health care reform. It could actually make a difference in people’s lives.”