The Darwin Economy
Robert Frank
I was moved to write this book by feelings of despair about our impoverished political/economic debate. With a solid majority in the House and enough votes to block legislation in the Senate, Republicans have vowed to balance the federal budget with spending cuts alone. But as anyone familiar with the numbers knows, that’s impossible. We’ll also need new revenues. Yet Republicans on the Congressional budget supercommittee have all signed a formal pledge never to approve increased taxes under any circumstances. And in a recent debate, Republican presidential candidates all said they would reject any proposal that had even one dollar of tax increases for every ten dollars of spending cuts. An economic train-wreck looms.
That’s the bad news. The good news is that there’s a painless way to avert it. In The Darwin Economy, I describe simple steps could liberate literally trillions of dollars in additional resources each year—enough not just to balance the budget but also to restore our crumbling infrastructure. No painful sacrifices would be required. No cherished freedoms would be threatened. Just a few unintrusive changes in the tax code would suffice.
These bold claims, inspired by insights of Charles Darwin, evoke the alchemist’s promise to transform lead into gold. But they rest on sound logic and compelling evidence.
Darwin understood that individual and group interests sometimes coincide, as in Adam Smith’s Invisible-Hand theory. But he also understood that group interests often conflict sharply with individual interests, and that in those cases, individual interests trump. In ways that non-human animals cannot, we can act collectively to curb the enormous waste that often results from such conflicts. And therein lies the way forward.
The policies I propose rest on a simple, uncontroversial observation—that the forces driving luxury consumption are strongly context-dependent. When the rich all build larger mansions, they succeed only in raising the bar that defines how big a mansion they feel they need. Simple changes in the tax code could cause across-the-board reductions in luxury spending whose effects would be similar to those of parallel cutbacks in weapons spending caused by military arms control agreements. Such agreements also create new resources out of thin air, by enabling rival nations to spend more on domestic services without jeopardizing their national security.