- - Tuesday, June 4, 2019


By Raghuram Rajan

Penguin Press, $30, 434 pages

Harry Truman famously remarked that he wished he could find a one-armed economist since all the ones he had to deal with were constantly weasel-wording their advice with “on the one hand” and “on the other hand.” As one who routinely had to read and try to squeeze meaning out of the verbiage of White House economic advisors as a speechwriter for presidents Nixon, Ford and Reagan, I know exactly how Truman felt.

But if a one-armed economist might come in handy (pun intended), the same cannot be said for one-eyed economists. By one-eyed, I mean economists so immersed in the jargon and theory of their pseudo-science that — like a one-eyed man — they can only view economic policy one-dimensionally. They seem incapable of integrating their economic theory into an over-all, three-dimensional concept of the society they are trying to apply it in.

It gives me great pleasure to state that the author of “The Third Pillar” is, without a doubt, a two-eyed economist. Raghuram Rajan, currently a professor of Finance at the University of Chicago School of Business, is more than a scholar of note; he has also served as governor of the Reserve Bank of India and chief economist for the International Monetary Fund.

Just as importantly, he is a fluent, accessible writer on matters economic who tackles his subject in depth and in three dimensions. In the case of Mr. Rajan, the three dimensions, as his book’s subtitle indicates, are the market, the state and the community. And, as he sees it, for too long now the market and the state have been fattening at the expense of the community.

Among other things, this perspective helps to explain the growing populist reaction — from both the right and the left — against the global economy and large, central authorities at the national and even regional levels. Despite the fact that “[for] the first time in history, we have it in our power to eradicate hunger and starvation everywhere,” and that “the world has achieved economic success that would have been unimaginable even a few decades ago,” worms are gnawing away at the global apple in ways that adversely affect large chunks of the population.

Mr. Rajan points to the fact that “some of the seemingly most privileged workers in developed countries are literally worried to death.” And he has the numbers to prove it:

“Half a million more middle-aged non-Hispanic white American males died between 1999 and 2013 than if their death rates had followed the trend of other ethnic groups. The additional deaths were concentrated among those with a high school degree or less, and largely due to drugs, alcohol, and suicide. To put these deaths in perspective, it is as if ten Vietnam wars were simultaneously taking place, not in some faraway land, but in homes in small-town and rural America. In an era of seeming plenty, a group that once epitomized the American dream seems to have lost hope.”

This same phenomenon can be seen in many other affluent developed countries, the “primary source of worry” being that “moderately educated workers are rapidly losing, or are at risk of losing, good ‘middle-class’ employment, and this has grievous effects on them, their families, and the communities they live in.”

Of course, as any doctor can tell you, it is easier to diagnose a disease than to come up with a cure. But diagnosis is the vital first step, and the Rajan diagnosis is spot on. His potential cures are a little less clearly defined but make good sense as far as they go. Almost all of them are designed to restore many of the resources and decision-making powers that have been gobbled up by higher government entities and market interests to the communities that have to live with the results in their schools, homes and workplaces. Readers should find many if not most of them sensible and persuasive.

I certainly did, with a single proviso. Just as strong communities, along with market forces and government, form the triad of modern society — the three columns that support the social edifice — all three columns can only stand on a firm foundation. That foundation is the family, and it is the family and family values that are most at risk today throughout the developed world where increasingly high illegitimacy rates and more and more single-parent families go hand in hand with decreasing fertility rates, especially among the most productive members of society. Without the firm foundation of healthy families, all three pillars are doomed to topple.

Aram Bakshian Jr., a former aide to Presidents Nixon, Ford and Reagan, has written widely on politics, history, gastronomy and the arts.

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