Renowned Economist Professor Sam Bowles on Economic Inequality

After teaching two classes today, I had the pleasure of attending Professor Samuel Bowles' lecture on "The Origins and Future of Economic Inequality." Appropriately, Sam Bowles was giving the inaugural Samuel Bowles lecture. He is a renowned economist and is a UMass Amherst Professor Emeritus. He is now heading the behavioral sciences program of the Santa Fe Institute. After 40 years at UMass Amherst he also had an affiliation with the University of Siena in Italy.

I figured that the lecture would be standing room only so I got there early and it was wonderful to even see Bowles' long-time collaborator, and also a former UMass Amherst Professor, Herb Gintis. I have had the pleasure of seeing Herb at a workshop in Hawaii, at which we were both invited speakers (and all our expenses were paid) and also at a conference at the University of Maryland. And, as I mentioned to him today, when I arrived in Gothenburg, Sweden in my apartment there as a Visiting Professor last Spring, I turned on the television and there was Herb being interviewed! No wonder I always feel so at home in Sweden!

I could not resist taking a photo of Herb Gintis featured above.

Professor Bowles was introduced by Professor Michael Ash of the UMass Amherst Economics Department. We had hosted Professor Bowles back in 2009 in our UMass Amherst INFORMS Speaker Series. He was mesmerizing then and today as well.

Bowles spoke about his data-driven research to identify why there is economic inequality and his research tackles problems over centuries. He noted how, as a student in a school in New Delhi, India, he struggled with trying to understand why people were so similar and yet some suffered from poverty. After being denied tenure at Harvard he decided that he "would either leave economics or change economics" and he has been doing the latter ever since. Luckily, we had him at UMass Amherst for 40 years. Harvard's loss was our  and the world's gain!

He is fascinated (and who is not) by such questions as why inequality may persist and intensify and on what does a more egalitarian future depend.

He described mobile hunter gatherers for whom cooperation was an essential part of their livelihood and brought out the kudu (featured below).

Since there were no refrigerators and kudu meat is perishable the society would divide up the parts of the kudu and would share.  It would be wasteful not to share. Land ownership, which is associated with hierarchical structures, rather than egalitarian ones, changed societies and wealth holdings. Inequality took place because of the rise in wealth that could be stored and inherited. Hence, farming also played a role in economic inequality.

Fascinatingly, Bowles noted that the wealth of hunters gatherers was knowledge and networks! Public speaking was important because you had to convince others. Some would walk for miles to interact with others as an "insurance network," a phrase that resonated with me.

The inheritance of material wealth was becoming much greater than the inheritance of human capacity and hunters gatherers took many years to acquire their skills and knowledge.

He spoke of the Gini coefficient with a value of 0 signifying perfect equality and a value of 1 corresponding to ownership of 1. He also presented graphs of Gini coefficients for different countries and, of course, some of my favorite ones - the Nordic countries - were singled out as having low Gini coefficients, so this shows a redistribution of wealth. He also showed  Lorenz curves for measuring inequality.

He emphasized that knowledge and human capacity now are more important than material wealth. We are past the industrial society and in the knowledge and information-based economy.. How important is material wealth in producing what we need?

He presented a math model from a published paper with 4 terms and noted that the cost of redistributing in a society of knowledge, networks, and human capacity may be lower.

Of course, he mentioned Thomas Piketty's book, "Capital in the Twenty-First Century."  Piketty delivered the Gamble lecture last year at UMass and I blogged about it. Bowles said that he was interested in Human Capital.

In the information-based economy, he said that "the winner takes all." No longer is it just the local singer that you may care about but the best singer and songs and the same for apps. He said something quite controversial - that intellectual property should be abolished. He also mentioned that because of the World Wide Web we have a "weightless economy," which I found quite interesting.

He also stated that the US because of its great inequality has a huge amount of  "guard labor," which is a drain on the economy.

I very much appreciated hearing him talk about knowledge, creativity, and networks and educational institutions, such as, of course, the university at which I teach.

The Q&A session that followed was great with issues of politics and poverty highlighted.

It was definitely a day of intellectual rigor and delights and, interestingly, the material that I covered in my afternoon seminar was an introduction to variational inequalities - a mathematical formulation that contains optimization problems as special cases. So, inequality was definitely the dominant theme for today.

Bowles in his summary and conclusions also noted that the politics of redistribution of wealth is extremely important.

Economist Thomas Piketty, Best-Selling Author of Capital in the 21st Century, Speaks at UMass Amherst

Yesterday, Professor Thomas Piketty, the author of the controversial best-seller, Capital in the Twenty-First Century,  spoke at UMass Amherst to an audience of thousands at the Student Union Ballroom.

He had flown in from Paris to Boston Logan, and had been driven to Amherst by the Chair of the Economics Department, Professor Michael Ash, who introduced him. Our new Provost, Katherine Newman, gave some welcoming remarks, as did Ash.

Piketty had been invited to deliver the Gamble Lecture. According to the announcement: His best-selling book emphasizes the themes of his work on wealth concentrations and distribution over the past 250 years. The book argues that the rate of capital return in developed countries is persistently greater than the rate of economic growth, and that this will cause wealth inequality to increase in the future. To address this problem, he proposes redistribution through a global tax on wealth.

Piketty spoke to an audience of students, faculty, staff, members of the community, and I even saw one of my Operations Management alums there, who drove up from the Hartford area. It was nice to see several of my colleagues from the Isenberg School of management there.

I appreciated his sense of humor - Piketty said that he was speaking French and, indeed, his English sounded French. He is an empirical economist and noted that he is better at analyzing the past than the future. He considers his book, which was published by Harvard University Press,  to be a "historical narrative" and a "collective data collection" project that is continuing and to which data from more countries is being added. He emphasized that the data and graphs are posted online for anyone to access. He obtains his income data from income tax data. One of his major queries was to determine as to why so much wealth is now concentrated at the top.

The Economist provided a summary of the 700 page book in four paragraphs. The book was published in French one year ago and in English last March and has taken the world by storm. It was terrific to be able to see him at UMass Amherst and, as the Provost noted,  our Economics Department is a heterodox one so a great host for Piketty. Piketty stated that he believes in Economics for Society.

I hope that you enjoy the photos below that I took at Piketty's presentation.

I also found online a presentation that he gave last March, which seems as though it is essentially the same as the one he gave yesterday, which can be accessed here.

This has been quite the intellectual week at UMass Amherst, with the Nobel laureate, Dr. Sheldon Glashow, speaking the day before!   One of the best aspects of being in academia is the knowledge exchange through wonderful speakers!

Sam Bowles Spoke in our Operations Research Series

Professor Sam Bowles spoke to a standing room only crowd in our 2009 Fall UMass Amherst INFORMS Speaker Series yesterday at the Isenberg School of Management. The title of his presentation was: The Nature of Wealth and the Dynamics of Inequality from Pre-history to the Knowledge-based Economy. His lecture, which was brilliant, was based on the research behind his co-authored paper in Science, just hot-off-the press, entitled, Intergenerational Wealth Transmission and the Dynamics of Inequality in Small-Scale Societies. The Science article had a commentary by Daron Acemoglu and James Robinson, Foundations of Societal Inequality. Acemoglu of MIT had opened up our Fall 2008 Speaker Series last year.

Professor Sam Bowles received his PhD in economics from Harvard and his teacher was the Nobel laureate Simon Kusnetz, of whom he spoke very fondly of. Bowles was moved to work on inequality while a child living in India while his father was the US ambassador to India (he subsequently returned to this position years afterward). Sam Bowles' great-grandfather (of the same name) was the abolitionist editor of the Springfield Republican, and a friend of the Amherst poet, Emily Dickinson. In fact, last week the Bowles family had been honored at a banquet put on by the Republican (I communicated with the present publisher, Larry McDermott, this morning).

Professor Bowles began his lecture by saying that he was very pleased to be speaking in an operations research seminar series because he enjoyed learning about and applying linear programming, going back to the 1960s. Indeed, in the lunch that followed his presentation we were treated even to his recollections about his travel to Cuba in 1969 to advise the Ministry of Sugar on transportation problems, using, yes, linear programming models in which there were capacities on the links. I found an interview with Sam Bowles in the Harvard Crimson that was published in 1969 after his return from Cuba.

In his lecture yesterday, he graphically (with numerous images of animals, humans, and landscapes from around the world) and mathematically (through an elegant dynamic model for which a long-run steady-state could be determined) explained the variation in inequality in different societies through the extent in which the most important forms of wealth are transmitted within families across generations. The types of wealth considered: material, embodied, and relational (which he illustrated with different network topologies).

The captivating lecture ended with a quote from the Nobel laureate Kenneth Arrow (who I have had the privilege of meeting while at a workshop at Stanford University) on information, which he then related to a quote from Karl Marx. A discussion followed on whether patents are needed and how intellectual discoveries and innovations should be priced.

Professor Bowles told us at lunch, afterwards, that he gets up at 4AM (which I am sure motivated the students who heard this) because of his passion for the research and problems that he is working on.

After Professor Bowles' lecture, we will all be seeing the world with new eyes. We thank him profusely for speaking to the undergrads, grad students, faculty, and visitors, that represent numerous disciplines (management science and operations research, engineering, computer science, economics, resource economics, organizational studies, marketing, finance, and others), who came to his talk yesterday.