Two of the nation’s leading economic thought leaders met on Mason’s Fairfax Campus on Nov. 1 to debate the correlation between capitalism, morality and economic growth.
During a thoughtful, hour-long discussion moderated by Mason President Ángel Cabrera, Holbert L. Harris Chair of Economics Tyler Cowen and Pulitzer Prize-winning economics columnist and Robinson Professor of Public Affairs Steven Pearlstein each acknowledged the link in capitalism between fairness, equality and economic growth.
“If you want more fairness and equality, you’re going to have less growth,” said Pearlstein, who writes for The Washington Post. “If you want more growth, you have less fairness. There’s an absolute trade-off.”
The extent of the moral obligation of capitalism was the root of the debate, which took place in the Mason Club.
Cowen, an influential columnist for Bloomberg and other publications, contended that economic growth and basic human rights were moral imperatives necessary for any successful society.
“There are some things we shouldn’t do even if it does produce economic growth,” he said.
Cowen contended that government redistribution was a necessary society investment in certain cases, such as education or fighting malnutrition, but cautioned against excessive interdictions.
The gap in overall income inequality in America, he noted, has decreased over the last 20 years, with sustained economic growth that has led to longer lifespans, healthier lives, more creativity and more tolerance, among other things. It’s that kind of society that will best attract immigrants to spur future innovation rather than repel them.
“When redistribution and economic growth clash, I argue that we should really always side with economic growth,” Cowen said. “In the long term, it gives us actually better equality.”
Pearlstein wasn’t sold, saying that income inequality is often the root of political upheaval and leads to the breakdown of societal norms. He argued that greed was a successful strategy in the 1980s for most Americans as a whole to recharge a stagnant American economy into again being globally competitive before eventually going too far the other way.
“If you have a society that feels that there’s too much inequality, you can have an effect on growth,” Pearlstein said. “There’s a reason why Google shares its profits with employees and why it’s a productive company.”
But he warned that the real damage from income inequality runs far deeper.
“When inequality starts eroding societal capital, that’s too far,” Pearlstein said. “When we stop trusting and cooperating with each other—and we pretty much see a lot of that today—that’s too far.”
Cowen was reluctant to link income inequality and political upheaval, instead attributing the problems to bad governance.
“If the quality of your government is good, you will have good policies,” he said. “You will be able to moderate inequality, and you’ll get many other good things happening. If the quality of your government is bad, not so much.”
The debate, which was sponsored by the Mason Economics Society, proved a big hit among the roughly 100 students gathered in attendance. Economics major Evan Cypher, a senior, said that he’d been taught by both professors and wasn’t about to miss their civil exchange of ideas.
“I loved this event,” Cypher said. “They came at things from very different backgrounds fundamentally, but I love what they both had to say.”