Deaths of Despair and the Future of Capitalism

by Anne Case

Capitalism does not have to work as it does in America today. It does not need to be abolished, but it should be redirected to work in the public interest.

If governments are unwilling to exercise compulsion over health insurance and to take the power to control costs—as other rich countries have done—tragedies are inevitable. Deaths of despair have much to do with the failure—the unique failure—of America to learn this lesson.

Deaths from alcoholic liver disease were rising rapidly too, so that the fastest-rising death rates were from three causes: suicides, drug overdoses, and alcoholic liver disease. These kinds of deaths are all self-inflicted, quickly with a gun, more slowly and less certainly with drug addiction, and more slowly still through alcohol.

The increase in deaths of despair was almost all among those without a bachelor’s degree.

The historian Carol Anderson states that to someone who has “always been privileged, equality begins to look like oppression.”

After correction for inflation, the median wages of American men have been stagnant for half a century; for white men without a four-year degree, median earnings lost 13 percent of their purchasing power between 1979 and 2017.

Jobs are not just the source of money; they are the basis for the rituals, customs, and routines of working-class life. Destroy work and, in the end, working-class life cannot survive. It is the loss of meaning, of dignity, of pride, and of self-respect that comes with the loss of marriage and of community that brings on despair, not just or even primarily the loss of money.

Yet other rich countries, in Europe and elsewhere, face globalization and technological change but have not seen long-term stagnation of wages, nor an epidemic of deaths of despair. There is something going on in America that is different, and that is particularly toxic for the working class. Much of this book is concerned with trying to find out just what that something might be. We believe that the healthcare system is a uniquely American calamity that is undermining American lives.

the American healthcare system is a leading example of an institution that, under political protection, redistributes income upward to hospitals, physicians, device makers, and pharmaceutical companies while delivering among the worst health outcomes of any rich country.

Political protection is being used for personal enrichment, by stealing from the poor on behalf of the rich, a process known to economists and political scientists as rent-seeking.

We do not think that taxation is the solution to rent-seeking; the right way to stop thieves is to stop them stealing, not to raise their taxes.

men, for example, are three to four times more likely than women to kill themselves.

The only states where midlife white mortality fell by a noticeable amount were California, New York, New Jersey, and Illinois, all states with high levels of education.

Since one of the ways that obesity increases the risk of heart disease is through high blood pressure, the increased availability and use of antihypertensives may have made it safer to be heavy than it used to be.

American workers’ earnings generally peak between the ages of forty-five and fifty-four. It is worrying that fully a quarter of Americans in that age-group who left school with a high school diploma were not in the labor force in 2017 compared with only 10 percent of those with at least a bachelor’s degree.

Among America’s 350 largest firms, average CEO earnings in 2018 was $17.2 million, 278 times average earnings. In 1965 the ratio was only 20 to 1.

Children born in the top 1 percent of the income distribution are ten times more likely to become inventors than those in the bottom half of the income distribution. This failure of meritocracy is leaving “lost Einsteins” who might have changed the world for the better.8

Young refers to the less educated group as “the populists,” and the elite as “the hypocrisy.”10

11 According to a 2019 poll, only half of American adults think that colleges are having a positive effect on the country; 59 percent of Republicans—the party that has increasingly become the party of the less educated—think they are having a negative effect.12

the advantage of the more educated in life. That their risk of dying in midlife is only a quarter of that seen for those without a bachelor’s degree speaks to their advantage in death.

The fraction of people reporting pain is higher in areas with higher unemployment rates and more poverty.7 The fraction of people in an area who voted for Donald Trump in 2016 is also strongly correlated with the fraction in pain.

The genius of free markets is that people can prosper by helping others. But free markets do not work well for healthcare in general or, in particular, for addictive drugs, whose users often do things that are manifestly against their own interests.

It is estimated that around a million people in America today use heroin daily or near daily; most of them not only do not die but in fact live functional lives. Many “mature out” of their addiction, and many others quit by themselves, with medical treatment or with social support.

two-thirds of all states saw midlife suicide rates for whites increase by at least 50 percent between 2000 and 2017.

We agree that the increase in American inequality since 1970 is indeed linked to increases in deaths of despair, not directly—as in “inequality makes us all sick”—but because in the US the rich got richer at the expense of the rest of America—“reverse Robin Hood” in action.

According to a Pew survey, more than 50 percent of white working-class Americans believe discrimination against whites has become as big a problem as discrimination against blacks and other minorities, while 70 percent of white college-educated Americans disagree.28

America spends more on healthcare than does any other nation, and it boasts some of the finest hospitals and doctors in the world; patients come from all over the globe to be treated in American hospitals. How is it then possible that life expectancy at birth has fallen for three years in a row—

The vast sums that are being spent on healthcare are an unsustainable drag on the economy, pushing down wages, reducing the number of good jobs, and undermining financing for education, infrastructure, and the provision of public goods and services that are (or might be) provided by federal and state governments. Working-class life is certainly under threat from automation and from globalization, but healthcare costs are both precipitating and accelerating the decline.

Yet the fraction of national income that Germany paid in the 1920s was substantially smaller than the fraction of American income that is unnecessarily spent on healthcare today.

The US healthcare system, which absorbs 18 percent of the American gross domestic product (GDP)—$10,739 per person in 2017,1 about four times what the country spends on defense and about three times what it spends on education—is needlessly eating away at workers’ wages.

American healthcare is the most expensive in the world, and yet American health is among the worst among rich countries, something that has been true for a long time, well before the recent epidemic of deaths and the decrease in life expectancy.

The industry is not very good at promoting health, but it excels at promoting wealth among healthcare providers, including some successful private physicians who operate extremely profitable practices. It also delivers vast sums to the owners and executives of pharmaceutical companies, of medical device manufacturers, of insurers—including “nonprofit” insurers—and of large, ever more monopolistic hospitals.

Many employees think that the employer contribution—the other 71 percent of the (average) $20,000 family policy—is free to them. Yet it is not free to the firm, and it affects how much firms are prepared to pay in wages and how many workers they employ.

For a well-paid employee earning a salary of $150,000, the average family policy adds less than 10 percent to the cost of employing the worker; for a low-wage worker on half the median wage, it is 60 percent. This is one of the ways in which rising health costs turn good jobs into worse jobs and eliminate jobs altogether.

Certainly, as market fundamentalists argue, competitive free markets (together with antitrust enforcement) would almost certainly deliver lower prices than those we see today. But healthcare is not like other services. Patients lack the information that providers possess, which puts us largely in their hands. We are in no position to resist provider-driven overprovision, which can also happen with a garage mechanic, but with less serious consequences.

Because they are hidden, the problems that such costs bring are not given enough weight, compared with, for example, the fact that almost 10 percent of the population is not covered. The latter is indeed a scandal, and one that we see in no other rich country, but it is the cost explosion that is destroying the ability of the economy to serve less skilled workers as it could and should.

France and Germany also import from China, but there are few deaths of despair in France or Germany.

If you cannot afford to lobby, you are not represented, and worse, in the oft-used but accurate Washington phrase, if you do not have a seat at the table, you are probably on the menu.