Human society is built on social contracts, but decades of neoliberalism have left many of our most fundamental contracts—worker power, social safety nets, trust in key institutions— in tatters. It’s no wonder that people are pissed off: without fairness, we can’t have cooperation, and without cooperation, we can’t have a strong economy… or a strong democracy. Can we restore the social contracts that served us so well, or has our sense of fairness been damaged beyond repair? Oxford economics professor Eric Beinhocker shares his latest research into the psychology and economics of cooperation.

Eric Beinhocker is a Professor of Public Policy Practice at the Blavatnik School of Government and the Executive Director of the Institute for New Economic Thinking at the University of Oxford’s Martin School.

Twitter: @EricBeinhocker, @INETOxford

Fair Social Contracts and the Foundations of Large-Scale Collaboration https://www.inet.ox.ac.uk/publications/no-2022-26-fair-social-contracts-and-the-foundations-of-large-scale-collaboration

INET Oxford https://www.inet.ox.ac.uk

Website: https://pitchforkeconomics.com

Twitter: @PitchforkEcon

Instagram: @pitchforkeconomics

Nick’s twitter: @NickHanauer

 

Eric Beinhocker:

Cooperation is the foundation of any prosperous society. And to make that happen, you need lots of fairness in social relations.

Nick Hanauer:

I think it’s a fair question to ask, well, why are we talking about psychology on an economics podcast? And the answer to that is that the economy is people.

David Goldstein:

So you’re saying, Nick, that if you get all the grapes and the rest of us just get those nasty cucumbers, we’re not all going to cooperate with you.

Nick Hanauer:

No, no.

David Goldstein:

As well as if you shared some of those grapes.

Nick Hanauer:

Correct.

Speaker 4:

From the Home offices of Civic Ventures in downtown Seattle. This is Pitchfork Economics with Nick Nick Hanauer the best place to get the truth about who gets what and why.

Nick Hanauer:

I’m Nick Nick Hanauer, founder of Civic Ventures.

David Goldstein:

I’m David Goldstein, senior fellow at Civic Ventures. This is the first time we’ve had a chance to chat since the midterm elections, Nick.

Nick Hanauer:

Yep.

David Goldstein:

Wasn’t nearly as bad as we expected, was it?

Nick Hanauer:

No, definitely got to admit that I’m pretty elated. And by rights, this should have been a wipe out and it wasn’t.

David Goldstein:

Right.

Nick Hanauer:

And I think there’s a bunch of reasons that it wasn’t a wipe out. And the principle one being, well, let’s be honest. The Republican party has devolved into a bunch of nut jobs and reasonable people are not that into it. It’s actually shocking that they got as many votes as they did. But the other reason for the Democratic success in this cycle is the unambiguous reality of substantial accomplishments in the first couple of years. And we’ve said it on the podcast before, what the Biden administration has accomplished economically is breathtaking. It’s just no one has come close in decades.

David Goldstein:

And let’s be clear, apart from the checks that went out and the child tax credits, when we say their accomplishments, it hasn’t had a material effect on the ground in most people’s lives yet. And people understand that. And we’re in the midst of this high inflation and high gas and heating costs and so forth. So people are feeling some pain right now from the global economy, but with the Biden administration and the Democrats broadly have done, is that they’ve demonstrated their determination to make the lives of the American people a little bit better. And this gets to the heart of this podcast a little more fair.

Nick Hanauer:

Yeah, no, for sure. Absolutely. The Biden administration dedication to middle out economics, the notion that a thriving middle class is the source and cause of economic progress and growth, rather than the consequence of it, is at the center of why they’ve been so successful and have passed so many really incredible economic policies. From the American Rescue Plan to the IRA, to the infrastructure plan, the CHIPS Act, all of this stuff is aimed at making the economy grow from the middle out and the bottom up. And this is a radical departure in economic policy. And as such, Biden really is the first post Regan president because none of the Democrats that came before him governed in this way or attempted to pass these kind of policies. So anyway, it’s a really, really cool thing. And indeed, one of the central focuses is to make the economy fairer, to allow more and more people to participate robustly. Which brings us to the subject of this week’s pod.

David Goldstein:

Right. The psychology of broken contracts or-

Nick Hanauer:

Of fair social contracts.

David Goldstein:

…in particular. Yes, a fair social contract, which we have been violating for the past 40, 50 years. And finally, we have an administrations that’s not just dedicated to fixing it because I think other administrations wanted to address this issue. They didn’t know how, but also they didn’t know how to talk about it in the way that the Biden administration has and has done so successfully, clearly over the past two years.

Nick Hanauer:

Yeah, absolutely. And today I’m super excited to talk to my colleague Eric Beinhocker, who’s a professor of public policy at the Blavatnik School of Government and the executive director of the Institute for New Economic Thinking at the University of Oxford. And Eric has done some really interesting research on fair social contracts and the psychology and sociology of fair social contracts. And I think it’s a fair question to ask, well, why are we talking about psychology on an economics podcast? And the answer to that is that the economy is people. Who’d have-

David Goldstein:

Not capital?

Nick Hanauer:

Yeah, no, the economy is people. And if you don’t understand people, then you don’t understand economics. And the discussion about fair social contracts is really central to economics. And I’m very excited to have him on the pod.

Eric Beinhocker:

Eric Beinhocker, executive director for the Institute for New Economic Thinking at the Oxford Barton School and professor at the Blavatnik School of Government.

Nick Hanauer:

So Eric, it’s lovely to have you back on the pod and very excited to talk about fair social contracts. But listeners paying attention will be wondering why an issue that sounds sociological or psychological, the idea of fair social contracts, why on an economics podcast is that something we need to talk about? And why did it attract you as subject for research?

Eric Beinhocker:

I actually believe the idea of fairness is quite central to economic issues and to political issues. As you’ve often said on the podcast, the economy is made out of people and people are very conscious of and very sensitive to ideas of fairness. And whether a system or a set of arrangements in the economics or politics is fair or unfair can dramatically influence how they behave.

Nick Hanauer:

And so tell us a little bit about your research on fair social contracts. What should people know about that? What is a social contract? What’s a fair social contract?

David Goldstein:

Yeah, what is social contract and what is fair?

Eric Beinhocker:

Well, those are two big questions. Well, first, the idea of social contracts is actually an old one. It goes back to Jean-Jacques Rousseau back couple hundred years ago who came up with this idea that just as individuals can have a relationship with each other, we can be friends or neighbors or partners and have ideas of fairness or unfairness in those relationships, that we also have relationships with bigger collectives in society like governments or our employer or other institutions we’re part of. And so we can also have moral judgements about those relationships as to whether they’re just or unjust or fair or unfair. So the social contract refers to the relationship between an individual and some collective. Now what’s fair or unfair is a pretty big question that’s been keeping philosophers and psychologists and others busy for at least a few thousand years. And the way I approach it in this research is a bit different than the way philosophers approach it. So a philosophical approach might ask at a fundamental level, what’s fair or unfair and how can we justify that position looking top down at the arrangements in society? What I’ve been interested in this research is what do people actually think is unfair or fair? So that’s an empirical psychological question. And there’s-

Nick Hanauer:

Rather than a philosophical question, which is quite interesting.

Eric Beinhocker:

Rather than a philosophical question. Yeah. And so there’s a body of research where mostly experimental psychologists, but also anthropologists and other social scientists find ways to both ask people, do experiments on them, observe their real behaviors and groups and so on to figure out what do real people actually believe is fair or unfair. Now, the philosophers might take a different view of that because people as we know, aren’t always consistent in their views. So there might be lots of contradictions in those views and it may not be logical. And also there’s inevitably going to be differences across individual people and cultures as to what’s viewed as fair or unfair. But one of the big findings from this stream of research is that actually there is a lot of commonality across people and across different cultures as to that, we have some pretty basic instincts around this idea of fairness.

David Goldstein:

So you’re saying there is an actual science of fairness?

Eric Beinhocker:

Well, I wouldn’t say that there’s a science of fairness, but there is an empirical psychological literature on cooperation and our moral preferences and moral behaviors. And out of that we can see some common patterns and tendencies for how people react in different situations and what people view as as fair, unfair.

David Goldstein:

Yeah.

Eric Beinhocker:

Now I should caveat all this by saying that, the usual social scientists caveat, more work needs to be done. We don’t have a complete picture of this, but there’s been a lot of interesting work showing that these instincts start very early in early childhood. There’s experiments with infants and young toddlers showing these kinds of behaviors and even evidence that some of these behaviors exist in primates. Some listeners might have seen, there’s a famous YouTube video of two, I think they were apes, one getting a nice tasty snack, a grape, and another one getting a less tasty snack. And the other one and the one who didn’t get the tasty snack feeling very violated and unfair and expressing his views. So there’s evidence that there are some very strong deep instincts for these kinds of behaviors in humans and maybe other primates too.

Nick Hanauer:

Yeah. And just to back up just a tiny bit and remind our listeners how to connect these dots a little bit. If you don’t take the Orthodox view that the economy is money, if you understand it in a more modern way and certainly understand prosperity as not GDP, but as solutions to human problems and recognize that in order to solve complex problems, societies require immense amounts of complex cooperation, then it becomes ever more clear why a fair social contract is so important. Because in the absence of it, cooperation breaks down, so does problem solving, and hence not just prosperity, but also governance and democracy and social cohesion and all those things break down. This is why these things are so important for economic outcomes is that a highly cooperative society is one that’s going to solve really complicated problems and be really prosperous. So I just wanted to center the importance of a fair social contract and all of that in a 21st century theory of prosperity and economic progress.

David Goldstein:

So you’re saying, Nick, that if you get all the grapes and the rest of us just get those nasty cucumbers-

Nick Hanauer:

Yeah.

David Goldstein:

…we’re not all going to cooperate with you as well as if you shared some of those grapes.

Nick Hanauer:

Correct.

Eric Beinhocker:

Exactly. Now as… Well, the three of us have discussed before, cooperation is the foundation of any prosperous society. If you go around the world and look at prosperous societies, they all have very high trust, high cooperation. And to make that happen, you need lots of fairness in social relations, and particularly these institutional relations or social contracts. And in contrast, in places where there’s low fairness, low trust, cooperation breaks down and life isn’t that great. So this idea of fair social contracts actually is quite foundational to any prosperous economy. And just a very brief historical note, I would note that part of the enlightenment revolution was ideas of human rights and broader ideas of fairness in society that changed the nature of our political and economic social contracts. One could argue that that was a pretty big step in creating the great enrichment, that huge increase in living standards that happened from the 18th century onwards in Western countries.

Nick Hanauer:

So what stood out from your research? What did you learn?-

Eric Beinhocker:

Well-

Nick Hanauer:

Yeah.

Eric Beinhocker:

Yeah. So first is that across quite a variety of cultures and individuals and age groups, again some real consistency on what I’d call the dimensions of fairness. They break down roughly into three categories. One is relational fairness. So my relations with other people or with institutions in a social contract are they fair? What could be called procedural fairness, are the rules of the game fair and are they applied to everybody and followed? And then third is distributional fairness, that how resources and rewards and responsibilities and status and other things in the system are they distributed in a way that people view as fair. And then underneath these three broad categories, there were a set of very specific things that seemed to trigger people’s fairness instincts.

So for example, and in a way I like to explain this is often think you’re a child on the playground at a game and you see some kids playing a game and you want to take part. How do you judge whether it’s a fair game? Well, things like inclusion. First, am I invited to play in the game? If I’m excluded from the game, I’m not going to think it’s very fair. Do I have some choice, agency to play the game and can I make choices within the game? If I’m just put in the game and told what to do, I’m probably not going to like that either. And then things like, are the rules of the game clear? Is everybody following them? Again, if some kids get to violate the rules or play by different rules, I’m likely to view that as unfair.

Is it meritocratic? If I play the game well, do I get rewards and success and people who don’t play the game well have less success? And then things like capabilities, is it a game I’m actually equipped and able to play? If I’m forced to play a game I don’t have the capabilities for, I’m also not likely to view that as fair. And then notions of reciprocity. If I contribute to the game, to the best of my abilities, if I’m a good player in the game, do I get something back? Is there a two way street, a quid pro quo in the game? So those were examples of some of the kinds of very consistent behaviors and instincts that come out of the research.

Nick Hanauer:

What does that imply about economic policy and what doesn’t it imply?

Eric Beinhocker:

One, again, a little bit of backstory. One of the motivations for me in this research was understanding the rise of political populism in the US. It was very clear from mid 2010s onward that there was a lot of anger and a lot of feelings of unfairness and violation in the US population. And not just on the political right in the Trump crowd, but also in the Occupy Wall Street and on the left as well. And so I was interested in the connections between that and economic issues. And there’d been a lot of research showing that things like just economic inequality or unemployment or even wages didn’t really sort of explain these voting patterns. So I had a thesis that it was less about those kind of what could be called hard economic outcomes and more about the psychology around the economy that these notions of fairness had been violated and people were quite literally feeling screwed, feeling violated, that the system was broken, that their contract with the American system had been broken.

And again, part of my prompt for this was during the 2016 election, I had both family and friends really on either sides of these debates. I had Trump voting family and Bernie voting family and Trump supporting friends and Bernie supporting friends. And I was really struck by, even though their candidates and their issues and things were just wildly different, this psychological structure of feeling like the American people have been screwed, have been violated, that the contract has been broken, was very consistent. And as I dug into it more and these dimensions of fairness that I talked about, you can start mapping them onto economic policy and showing how people are right. They were pretty screwed. And you guys in this podcast have been detailing that screwedness over many episodes. So whether it’s things like just take one example, a loss of agency or loss of autonomy. If you have a loss of worker power, deunionization, your employer is controlling your schedule and sending it to you by text message the night before, all kinds of things where you feel less in control of your life, you’re going to feel pretty screwed. And we see hard evidence that those kinds of things were happening. And in fact, this slogan “Take Back Control£ was the guiding slogan of the Brexit populous movement playing to that feeling of loss of agency.

David Goldstein:

I just can’t get this out of my head, Eric you used the metaphor of the playground to describe the principles of fairness. And all I can think now is how much our politics is like a playground, just toddlers throwing fits at how unfairly they’ve been treated. And I don’t mean to diminish what has happened to real people, but oh my God, it is such a great metaphor for describing what’s happened to our democracy.

Eric Beinhocker:

Well, the developmental psychologists would say there’s more than metaphor here. That again, these instincts and behaviors do develop during our childhood and then stay with us. And so if you think back emotionally to you’re a kid on the playground and other kids are playing an unfair game and you’re not treated well and all the other things is how do you feel emotionally? You feel really upset, but these feelings of fairness violation do trigger very strong emotions. And there’s some-

David Goldstein:

Which is the point.

Eric Beinhocker:

Which is the point. There’s some neuropsychology research showing which parts of our brain light up and all the unhappy chemicals start squirting around in our brains. And it literally makes us crazy. That it shuts down our kind of more rational centers of thought. And we have these strong feelings both to punish and strike back and also to bond with the other people who feel screwed. And this is where the identity part of the politics comes in. Because then you start looking for people like me to bond with and fight back. Again on the playground if you’re some of the nerdy kids, you got excluded from the game, you try and find the other nerdy kids to go correct things.

Nick Hanauer:

Yeah. And this sort of perfectly describes the whole election denial phenomenon. Is people feeling screwed and their brains effectively in many ways shutting down and just playing this game of let’s pretend and us against them. And there you have it.

Eric Beinhocker:

One of the big findings of this line of research is that when people feel fairness and the contract is violated, they’re willing to punish the violators to their own self harm. Now to an economist, this sounds irrational, crazy. Why would I make a punishment that is more costly to me than any benefit I could get from it? But the game theorists and evolutionary theorists have an answer to that. That when you’re in part of a group that by being willing to punish even to crazy levels, you help enforce those cooperative norms. So both you’re kind of taking one for the team in sacrificing yourself to enforce the broader group cooperation, but you’re also sending a signal to those who would violate the social contract that “Hey, you should be careful about what you do because I’m so crazy. If you want to see crazy, this is crazy.” That I might come back at you in some way that’s very costly to you. So what they’ve shown both in experiments and game period is that societies that have this altruistic punishment actually can sustain higher levels of cooperation, more stable cooperation. You kind of need a little bit of craziness to keep the system stable. But obviously if things really break down and everybody’s getting crazy, like we have in our current politics today, then you can have a big kind of catastrophic unraveling of cooperation.

David Goldstein:

There’s experimental data that shows that this instinct exists across cultures.

Eric Beinhocker:

Yes. With different-

David Goldstein:

Is that the ultimatum game? I get them confused.

Eric Beinhocker:

Yes.

David Goldstein:

Yes.

Eric Beinhocker:

Yes. So listeners, they want to google this literature called the ultimatum game, which is very interesting. Which illustrates exactly this idea that I’ll actually punish someone who’s violated cooperation to my own detriment to again enforce norms of cooperation. But studies across cultures show that while that behavior is consistent across cultures, there are of course lots of, as you’d expect, lots of variations on the intensity of it, how it’s perceived and so on. But again, coming back to our politics, this helps explain why for example, there were many Trump voters who were told or knew that Trump’s policies could be bad for them, whether it’s people who might get their healthcare taken away or folks who would suffer from Trump’s trade wars, or in the case of Brexit, people who would lose out from the lost trade with Europe, that they still went ahead and supported this candidate in these policies because again, they were so keen to shake up the system, to express their anger that they were kind of willing to take one for what they saw as taking one for the team to try and change things.

David Goldstein:

It’s interesting because that expression, the rising tide lifts all boats. Well if that makes sense to you, then so does the flip side, a lowering tide sinks all boats.

Nick Hanauer:

Yeah, it’s true. That’s true. But one thing I think it’s really important to emphasize in this discussion about fairness and fair social contracts is it’s quite clear that first of all, that different people and different cultures make variable calculations about what’s fair and reasonable because people tend to look at these things differently. But it’s also true that virtually no one believes that a fair social contract means we all get the same thing.

Eric Beinhocker:

Yeah.

Nick Hanauer:

I think it’s very important to emphasize that. The sort of communist or completely egalitarian ideal that we’re all the same and all economic outcomes are the same. A violates the social contract in the same way as one person gets everything and everybody else gets nothing.

Eric Beinhocker:

Exactly. And Nick, your pointing to something that progressives often get tangled up about and actually pay a real political price for their-

Nick Hanauer:

That’s right.

Eric Beinhocker:

…confusion over this issue because fairness and equality are not the same.

Nick Hanauer:

That’s right.

Eric Beinhocker:

And a sort of short example to illustrate, imagine we’re having a hundred meter dash race with Usain Bolt. A fair outcome is against the us here on this podcast. A fair outcome is he beats us by a lot because he’s the fastest guy in the world. So an unequal outcome in that sense is fair. And on the other hand, if we all finished at the same time, people would look at it and say something’s rigged, something’s wrong with that race, somebody’s violating the rules. That’s an unfair outcome. So what people want to be equal is this what is often called kind of a moral equality, that we all are born with the same rights and have to play by the same rules.

And we all deserve dignity and we all deserve these things of agency and opportunity and reciprocity and so on. So everyone is treated equally in a kind of moral and rules of the game sense. But whether an equal or unequal outcome is fair or unfair depends on the game you’re playing. In some games you would expect an equal outcome and in other games wouldn’t. Now in the economic game we don’t necessarily expect an equal outcome because we know there’s lots of factors at play. But we do want to know that again, the rules of the game and how it’s played and how we’re treated in it is fair.

Nick Hanauer:

Yeah, absolutely. But the big trap on the left is believing that because high levels of inequality is bad for a variety of reasons that zero inequality is good, the latter is not true.

Eric Beinhocker:

I think most on the left aren’t sort that totalitarian in their egalitarian views, but you do see why Joe the plumber became such a phenomenon. So listeners might remember this famous during the Obama campaign, a blue collar plumber from, I think it was Ohio, challenged Obama, well paraphrase saying “You’re going to take money from me and spread it around to other people.” And what he was saying was it would be unfair for the government to take money that he felt he’d earned and spread it around to other people. Now we should call out, there’s often kind of like racial dog whistle and other issues lurking under these kinds of things. But what he was appealing to was notions of meritocracy and rule based that in the economic game that should be meritocratic and rule based and accusing progressives like Obama of violating that. And the Republicans have made real political hay out of those kinds of feelings with their followers. And by understanding this difference between fairness and equality, I think progressives have a chance to counter that in more effective ways.

David Goldstein:

Can I ask you something, Eric, in the economic game, is fairness a moving target? Like our perception of what was fair 200 years ago is different from what we perceive to be fair today.

Eric Beinhocker:

Oh yes, absolutely. Well, if we just take one dimension of fairness, inclusion, then in prior generations and centuries, excluding lots of people was considered perfectly normal and fair. And of course we don’t accept that today. So hopefully there’s some moral progress in our notions of fairness, but also just how these things are interpreted is always a function of a specific time and culture and so on.

David Goldstein:

Okay. Getting back to the theme of this podcast, we want to change the way people think and talk about economics, towards the end of making the economy better for everybody. So what does our understanding of fair social contracts say about how we should understand the economy?

Eric Beinhocker:

Two points. First is just the realization that fairness, fair social contracts is essential to long term prosperity. That would be big progress itself. Traditional economics has often pitted ideas of fairness against the economy. That you can either choose, you can have a more sort of fair and just economy, or you can have a prosperous growing economy. And that’s been our political frame in many ways for a long time. This work shows that they aren’t contradictions at all. That the more fairness and justice we have, the more cooperation we have and the more prosperity we have. So that in itself would be a huge change in our thinking and narrative. But then just getting a bit more concrete, I think this framework actually helps us understand how to design policies that could rebuild the social contract. The social contract after decades of neoliberalism has really been in tatters.

We’ve seen this loss of agency and worker power, loss of dignity and status also rule violations that corporations can get away with all kinds of behaviors if they just pay a small fine or that the rich have a completely different tax system than everybody else. We’ve seen losses of meritocracy, decreasing security, loss of investment in capabilities and less reciprocity. So if you go down kind of the list of all the dimensions of fairness under neoliberalism, they all got worse. And no wonder people are pissed off and vote for candidates like Trump. So we have to go through the same list and say, “How do we rebuild? What policies re-empower workers, give them that sense of agency and control over their lives? How do we increase inclusion? How do we take something like the tax system and make sure everybody’s playing by one set of fair rules? How do we restore notions of meritocracy, give people security and invest in their capabilities?” So what this framework does is it helps point you at policies that not only are the right thing to do economically, but are also likely to be politically very popular because they are appealing to these deep instincts for fairness. And I think as a political position, calling out and saying, “We know you’ve been screwed, we feel your screwedness, and here’s how we’re going to fix it by rebuilding fairness in the social contract.” Would be a very powerful political strategy.

David Goldstein:

So wait, what you’re suggesting, Eric, is that we should create policies that assure that if you work hard and play by the rules, everybody should be able to enjoy a comfortable, secure, and dignified life.

Eric Beinhocker:

I know it sounds radical and crazy, Goldie, but yes, that’s what I’m saying. And we can live in hope.

Nick Hanauer:

All right. So one final question. We’ve asked you before, we’ll ask you again, why do you do this work?

Eric Beinhocker:

We’ve all been seeing how this breakdown in feelings of fairness have led to breakdowns in our democracy and our politics and our economy. And it’s essential that if we’re going to get America back to cooperating again and back to solving problems that we need to understand this much better and find ways to fix it.

Nick Hanauer:

Cool. Well, thanks for being with us. It was great to have you on the pod as always, and more to come.

Eric Beinhocker:

Thanks very much guys.

Nick Hanauer:

Yeah. So Goldie, that’s such an interesting subject and it’s so central to economics and how we should think about economic cause and effect and frankly, how we should think about developing policy ideas. Again, I think I said it during discussion, but I think it’s worth underscoring that how people feel about fairness and what a fair social contract is not… There’s no one answer to that question. People are different and things evolve. I think the question you asked about do our notions of fairness evolve? I think that’s a really interesting question that we should air out more at some later time. But one thing’s for sure is that how we feel about how the economy generates its outcomes is very central to whether the economy will generate its outcomes, good outcomes. And this discussion of fairness is so interesting and important.

David Goldstein:

Yeah. And I also think, Nick, it gets to the heart of why orthodox economics is such bullshit. Why its models can never actually predict the economy. And that is the things we were talking about on this episode are impossible to model. Because when you ask what fairness is, the philosophers can talk all they want about notions of fairness, [inaudible 00:36:04] versus whatever. But it really comes down to it’s fair if I think it’s fair.

Nick Hanauer:

Yeah, that’s right.

David Goldstein:

Right. It’s only fair if I think it’s fair. And your feeling about fairness may be different from mine.

Nick Hanauer:

Correct.

David Goldstein:

And that’s something we have to work out inter-relationally between us. And when you have something that is so subjective, clearly there is science to this, there’s human behavior that’s built into us and influenced by culture. And there’s certain things that are universal across all people in all societies. But it’s not like physics. It’s not like if something goes up, it must come down, something else must come down like in orthodox economics. There are no hard rules and it’s a moving standard.

Nick Hanauer:

Yeah, absolutely.

David Goldstein:

That what we thought was fair during the reign of absolute kings is not what we think is fair in a modern market based democracy.

Nick Hanauer:

Yeah, that’s right. And what we think is fair today will be different than what we think is fair in 25 or 40 years or whatever it is. And we have to evolve with the times and with expectations in society and so on and so forth. But I do think that particularly for progressives, a very important lesson is that just because high levels of inequality is bad, does it mean that making everything equal is good. It doesn’t work like that.

David Goldstein:

Right. From each according to their ability to each according to their needs is not an accurate representation of human psychology.

Nick Hanauer:

No, it is not. It is not. It’s all about addressing the dimensions of fairness that Eric laid out. Inclusion and process and outcomes too. But it’s complicated and it will never not be complicated. And that’s just something we’re going to have to take into account in our economics. But like Eric says, if we can understand and speak to the psychology, if we can really begin to repair the social contract incredible ways, we can begin to heal the divisions that have opened and Bernie and Trump supporting relatives can finally talk to each other, which wouldn’t be a bad thing.

David Goldstein:

Right. Wouldn’t it be something, Nick, if sometime in the near future we can talk about Republicans as people we just disagree with over policy-

Nick Hanauer:

Yes, yeah.

David Goldstein:

…as opposed to people who are trying to totally undermine democracy and tear the system apart, ah the good old days.

Nick Hanauer:

Ah the good old days.

So gang, in the next episode of Pitchfork Economics, we’ll be talking to Professor Scott Galloway about his new book, Adrift.

Speaker 4:

Pitchfork Economics is produced by Civic Ventures. If you like the show, make sure to subscribe, rate and review us wherever you get your podcasts. Find us on Twitter and Facebook at Civic Action and Nick Hanauer, follow our writing on Medium at Civic Skunk Works and peek behind the podcast scenes on Instagram @pitchforkeconomics. As always, from our team at Civic Ventures, thanks for listening. See you next week.