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A Fireside conversation at Vichaar Manthan’s Sustainable Narratives Conference 2020

With Eric Lonergan, co-author of ‘Angrynomics’

In 2020, Eric Lonergan, a macro hedge fund manager and Mark Blyth, an economist at Brown University, co-authored a book titled ‘Angrynomics’ where they tried to make sense of why societies all over the developed world might be so angry. The book is a conversation between the two of them as they explore a wide range of issues concerning political economy. This was an accessible book, one where they use anger as a psychological symptom of the underlying failure of our economic models to deliver what we all want – prosperity for everyone, distributed fairly.

Anger, Eric Lonergan tells us, “is an appropriate response for when we see injustice”, paraphrasing Aristotle from his text ‘Nicomachean Ethics’. He gave the example of how the public reacted to the accidental death of George Floyd, caused by excessive police force, and the worldwide mobilisation of the ‘Black Lives Matter’ movement. This is what he termed as moral anger, which is largely “coherent and seems to make sense”. Then, there is a more acute type of anger, “the anger of devils”, which serves to regulate (tribal or group) identity. The proponents of this type of anger (often sports fans) use anger to control and channel their own group as much as spout out aggression to the ‘other’ group. “Tribalism”, says Lonergan, “is a precursor to violence”. In the case of the sudden public reaction to the Black Lives Matter movement, what may have happened is that a moral anger triggered the ‘anger of devils’, and what was initially a genuine reaction quickly became tribal.

A natural question arises to this type of categorisation, which is: how does one know which is moral anger, and which is the anger of devils? Clearly, it is not simply about those views that one might agree with through which anger arises that are moral, and those views that one disagrees with, which cause anger must be those of the devils. Nor is it necessarily the case that because one exercises moral anger, they are inevitably right. According to Lonergan, the answer to the question ‘is the anger rooted in moral outrage, or in tribalism”, “one need only look at the answers people give for their anger. In other words what is cognitive [to the angry person]?” For Lonergan, the angry devil is often vague and incoherent about exactly why they are angry, whereas the one suffering from moral outrage is coherent and can explain themselves. They may still be wrong of course, but the source of their anger is legitimate, just misinformed. The same cannot be said of the angry devil.

“Every time the hardware crashes, people get angry” said Lonergan, in reference to what had happened throughout the twentieth century and early part of this one. The hardware, according to Lonergan, is capitalism. The software is how we use the hardware. Pre-1930s, a “gross over-simplification” would be that we had small states, low regulation which led to laissez faire (let it be) capitalism. When this became excessive, the hardware crashed, people got angry, and we had to reboot using a new software – we called this Keynesianism. This was where the State regulated more and provided more for the working classes. The system worked well until we got to the seventies where we got into high unemployment and high inflation – the system crashed – we called it stagflation. People got angry. A new software was used to re-boot the system – we called this Thatcherism, which was essentially about de-unionising the workforce, de-regulation, handing the power of fiscal policy to independent central banks, and pulling the state back from business. This is what we broadly call Neoliberalism. We had our latest crash in 2008 with the financial meltdown. Then we had another crash in 2012 with the euro crisis, but we never really changed the software. We rebooted the system, without any significant change. The software remains the same.

People naturally became angry and recognised that the software is not providing the outcomes that the silent majority want. The vocal minority, therefore, step up. Neoliberalism, according to Lonergan, still does not have an appropriate response to the challenges of the environment, or the fact that so much wealth is concentrated in the hands of so few, or how to make recessions less likely to occur and less harmful when they do occur. These three failures have made our society angry. “Neoliberal economics is not delivering what we want”, says Lonergan. “This has been a failure of ideas”. The software failed, and we had nothing better to replace it with. In an environment where new ideas are scarce, the political class in the west, instead of offering big ideas, of which they did not have any, instead decided to go nationalist to win elections. Lonergan said “whenever I think about politics as an economist, I’m always thinking about their [politicians] incentives. Together with the media, the politicians are completely incentivised to go tribal”. He went on to explain that the media was once run in monopolies or oligopolies (where the few dominate the market), where they preached from the pulpits whatever perspectives they wanted. Today, with the internet and social media, they too are having to compete for attention, and as such, tribalism naturally sells more than sober realistic long-term focused ideas. Both the media and the political class are relying on the (vocal) minority, the angry devils, the angry crowds to rally and vote, which in effect means that a small minority angry groups can shape the trajectory of our democracies.

Lonergan did not directly address the issue of why the west has run out of new ideas. Mark Blyth and himself suggest that it is far better to address the anger of angels – those that have a genuine moral anger. These are groups that are highlighting sustainability, or better opportunity for everyone, or those arguing for a better wealth distributive model. These are causes that our economics should be addressing. “Good ideas that can mobilise people”, said Lonergan, “should have three qualities: ideas that are simple, impactful and should not be partisan in any way.” Policies that would support the environment, distribute wealth more fairly and minimise recessions are “self-evident” outcomes that everyone can get behind. Given that we are the “luckiest generation to be alive”, with (near) zero interest rates, we should be able to make massive capital investments in our green energy infrastructure. The world needs to replace its existing carbon-based energy infrastructure with sustainable energy systems. This is the right time to do so. With near zero interest rates, money has never been cheaper, and large capital investment has never been so feasible. Lonergan clearly feels that this is the right time for governments to go on an investment spree, which would create jobs, improve the State’s balance sheet, and put countries on a sustainable pathway.

Another idea that came to the fore was that of having a national sovereign fund which could be tendered out to asset managers who would be tasked to return a nominal growth of 6% per year. After twenty years the debt gets paid back and the assets belong to the State. The State can then allocate shares of the sovereign fund to that section of the society which is asset-less, and thereby giving them a stake in global capital. This would be, according to Lonergan, a smart way of distributing wealth, and bring in those marginalised sections of the society who have been left behind by Neoliberalism and share a piece of the pie with them. This would be sustainable. The anger of the devils would dissipate, and people’s concerns would be addressed, leaving us all feeling more included in our global set-up. A sustainable capitalism.

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