Forget baby boxes, everyone needs Angus Deaton's Great Escape

Deaton is the one with the lower profile in his homeland. Grandson of a miner, son of a civil engineer, he left Scotland, at least for professional purposes, a long time ago – as did Mirrlees, though he has kept more in touch. Both went by way of Cambridge into the wider world, Deaton to Princeton in the US and Mirrlees (for the present) to the University of Hong Kong, a prime place for the meeting of minds between East and West.

Even from exile, both have carried forward the Scottish classical tradition of political economy. In the UK it has largely vanished: mainstream economists cast it aside in an effort to form their discipline into a science, in the sense of being mathematically predictive. As we know since the unpredicted global crisis of 2008, modern economics can in fact predict little – and now will need to start over again building itself a coherent structure on a different intellectual basis. Meanwhile in our own universities a few Scots continued to profess economics in the broader, humanistic sense dating all the way back to Adam Smith. It took into account a variety of social, political and cultural forces so that its students gained a sense of their place in the world as a whole, not just as practitioners of a narrow quantitative specialism. Mirrlees and Deaton are both in their different ways typical.

Here is what Deaton has to say about the qualities of the culture in his native Edinburgh: “Dour scepticism is one, an unwillingness to recognise or admit to happiness is another. Also a strong empirical tradition, a much more positive trait.” It makes him almost sound like Miss Jean Brodie, but it helped him to prepare for his career: “The life of the mind is familiar to anyone who grows up in Edinburgh, especially in the dark, dirty days. I had scarlet fever when I was about seven, and spent many weeks in bed, with no reading material. I suspect I turned inwards then. My father believed in education, my mother in storytelling, both important effects.”

By contrast: “Princeton is lovely, and was the cradle of the American Revolution – the medium by which the Scottish Enlightenment, in the person of John Witherspoon, came to America and informed and inspired the founders.” (Witherspoon was a minister from Paisley who rose to be president of Princeton and taught James Madison, author of the US constitution).

Deaton should be better known in today’s Scotland because it was “for his analysis of consumption, poverty and welfare”, in the words of the Nobel citation, that he got the prize. In other words, his own work coincides closely with the priority of the Scottish Government to reduce inequality in the nation. It would help if this government, instead of sloppily contenting itself with statements of the aim in the most general terms possible, could go into more detail about what we are to understand by it in practice. Were Nicola Sturgeon to consult the professor from Princeton, she might find his advice useful.

His book’s title, The Great Escape, perhaps first calls to mind somewhere like Colditz, and the prisoners-of-war who managed to get away from an impregnable fortress against impossible odds. Strange as it may seem, this image gives us his view of the dilemmas in which human societies repeatedly find themselves – hemmed in by baffling obstacles, but building secret tunnels to break out. The analogy holds for the people of earlier generations who through laborious agricultural improvement or industrial innovation rose from poverty and malnutrition to greater wellbeing. It might work also for the global economy since the crisis of 2008, long stagnant but now starting to stir in some of its more obscure corners.

Yet we can’t count on anything. “Luck favours some and not others; it makes opportunities, but not everyone is equally equipped or determined to seize them,” says Deaton. That is true especially in an economic sense: “The tale of progress is also the tale of inequality. In the world as a whole, we see the same patterns of progress – of escapes for some, and of others left behind in awful poverty, deprivation, sickness and death.”

So far from progress being a simple, linear, benign matter, there is an “endless dance between progress and inequality”. At a political level, there are often disconnects between intentions and outcomes.

All of a sudden as I was reading these passages, the thought struck me that the Scottish Government should abandon the distribution of baby boxes and instead send every household in the country a copy of Deaton’s book, which would do far more good. It shows how economic progress may in the first instance necessarily entail social inequality. This is because economic progress is not an abstract thing, only captured in the aggregated statistics of national income accounts that officials flourish before Cabinet Secretaries in St Andrew’s House. It is rather something that happens outside in the real world, amid a welter of differentiated detail at the level of individuals, among people who seek to achieve their own goals and sometimes succeed but sometimes don’t. Only trial and error show us what works best. Because the possibility of error is inherent to the procedure, certain of us are bound to fail. So progress cannot rest on equality. You can have one or the other. In Scotland at the moment we have neither.

Still, let me not pretend to any complete congruence between Deaton’s views and my own. On the contrary he has, by comparison with me, a bleeding heart and reflects on how today the economists’ complacency of the 20th century “has been shattered by events, by rapidly rising income inequality in many rich countries, and by data that show astonishing levels of income among the very rich. After decades of stagnation, the share of total income going to the top 1 per cent – mostly bankers, hedge fund managers, CEOs, lawyers, celebrities and a few doctors – has soared to levels not seen for 100 years. Worse still, this has happened at a time when most people in these countries have seen little or no gain in their living standards. Is there really nothing to complain about?”

Of course there is but, as so often in this kind of book, the answers can seem a bit tame compared to the eloquence with which the questions have been posed: “This is not a matter of resisting globalisation. It is much more a matter of labour market policies that protect working people, and that resist the tilt towards capital in both national income and political power.” At least these answers underline a basic view that “poverty is not a result of lack of resources or opportunities, but of poor institutions, poor government and toxic politics”.

In other words the state, though worshipped by Scots, is often to blame. As things stand today, we have before us yet another impasse, economic and constitutional, but “the desire to escape is deeply ingrained and will not be easily frustrated. People may block the tunnels behind them, but they cannot block the knowledge of how the tunnels were dug”. Let’s hope so in this Scotland, a country accustomed to long periods of frustration followed by sudden breakthroughs – in 1999 and maybe, just maybe, at some point in the years ahead.