Story posted September 02, 2010
"Ideas and the Democratic Ideal"
Professor of Economics B. Zorina Khan
Bowdoin College's 209th Convocation was held Wednesday, September 1, 2010, in Pickard Theater, Memorial Hall. Following is the text of Professor B. Zorina Khan's address.
I am truly honored to address the class of 2014. Let me be the 50th person to welcome you to Bowdoin. Many of you have a microeconomics class in your future, and maybe even one with me.
I usually start the class by asking what you think economics is about. Usually more than half of the students will say they expect the course is about money. In the old days, I used to extract a dollar bill from my pocket and dramatically tear it up, saying "That is the last you will see or hear of money in this class." Then one day a student came up afterwards and said, "Professor Khan, do you realize that it is illegal to destroy U.S. dollar bills?"
So now, I hypothetically tear up a hypothetical $20 bill. It is not as dramatic, but I am less likely to end up in a federal jail if one of you snitches on me.
If not money, what is microeconomics about? Here are three perspectives. First, according to Alfred Marshall, microeconomists study mankind about the ordinary business of life. Second, Milton Friedman thought that market economies flourish because there is freedom to choose: we think each person is best qualified to decide what is good for himself, and his free choices will likely increase the welfare of the rest of society as well. Alexis de Tocqueville referred to this as "self-interest rightly understood" whereby "an American attends to his private concerns as if he were alone in the world, and the next minute he gives himself up to the common welfare as if he had forgotten" his self-interest. Third, markets enable consumers to maximize their utility (economists use the word utility because we're a little embarrassed to say happiness.)
Microeconomics therefore deals with the ordinary business of life, with freedom of choice or liberty, and with the pursuit of happiness. And I don't think it is a coincidence that the principles upon which American democracy was founded are very much the principles of economics.
In the next 10 minutes I plan to cover 200 years of American economic history. In great depth and detail, of course. I once asked a famous economist what job she would choose if she weren't an economic historian. She said a detective. And it is true that we are like detectives, looking for clues to this overarching puzzle: what accounts for the wealth and poverty of nations? In the 18th century, the American colonies were among the poorest in this hemisphere. The United States was pretty much a banana republic without the bananas. By 1870, the United States had become the world's leading industrial nation, a position that it has maintained for more than one hundred years. What accounts for its enormous success?
Let us consider the models that were available in Europe. I went to school in England and my undergraduate thesis was called The Political Economy of Plato. Plato thought that the ideal society should be ruled by specially educated philosopher kings (by the way, he thought that economists weren't fit to be philosophers). Like Plato, Europeans believed that only the elites had the ability to come up with valuable ideas and only they should benefit from higher education. Sir Henry Maine declared that "All that has made England famous, and all that has made England wealthy, has been the work of minorities ... the gradual establishment of the masses in power is of the blackest omen for all legislation founded on scientific opinion."
In the United States, things were designed to be different. The 1790s was a unique and exciting time in the history of Bowdoin College, and also in the history of the republic. Americans were drawing up a blueprint for a new society, a vision of democracy that was new to the world. The democratic ideal was reflected in small as well as large matters. What should the president of the United States be called? Some proposed "Your Majesty" or "The Honorable President," but this was rejected in favor of plain "Mr. President."
In 1790, George Washington made his first address to Congress. In a democracy, he declared, knowledge and ideas are essential. He urged the members of Congress, "There is nothing which can better deserve your patronage than the promotion of science and literature. Knowledge is in every country the surest basis of public happiness."
Thomas Paine said it was a mark of a truly democratic society that it should have a constitution that was capable of fitting in one's pocket. [It's a great defect that these academic robes don't have pockets, but if it had one, I could easily tuck this copy of the constitution into it]. This brief document distilled the democratic ideal, and the very first section includes protection for property rights in new ideas. The intellectual property clause gives Congress the power "to promote the progress of science and useful arts." This national emphasis on knowledge and new ideas was an innovation in world history.
A second innovation was that American institutions ensured that rewards accrued based on productivity, rather than on the arbitrary basis of class, patronage, or privilege. What mattered was what you did, not who you were. And it was the market that decided value, not a select group of "the right people." As Thomas Jefferson stated, "a smaller [invention], applicable to our daily concerns, is infinitely more valuable than the greatest which can be used only for great objects. For these interest the few alone, the former the many." In other words, the invention of a paper clip is more valuable than a space ship because fewer people are in the market for a space ship (at least, right now).
As we know, American democracy in the 19th century excluded large groups, notably blacks and women. It is therefore all the more significant that, right from the beginning, federal protection for new ideas was available to all citizens without regard to age, race, or gender. Women could not vote, but they could get patents. Knowledge and ideas were considered to be too important to be constrained by arbitrary social biases. Thus, the nation provided equal opportunities for all inventors. One finds among the roster of patentees not only engineers and professors, but also housewives, teenagers, thieves, and even economists. For instance, in the 1870s Margaret Knight, a woman from York, Maine, patented a machine that makes the brown paper bags you get in the supermarkets. She is sometimes known as Lady Edison. One of the actual Thomas Edison's partners, Francis Upton, was a Bowdoin graduate. Edison, who did not even go to high school, called Upton "Mr. Culture" because of his superior education.
Copyright policies were different. Senator Ruggles of Maine noted that strong copyrights could be harmful for a democratic society, because copyrights could limit the diffusion of useful knowledge, "on which depends so essentially the preservation and support of our free institutions." Thus, the U.S. has always had the weakest copyright laws in the developed world. For 100 years other countries bitterly denounced us because we openly pirated their music and literature. In the United States facts, ideas and data cannot be protected by copyright. As students you will benefit from the fair use doctrine, which allows unauthorized access to copyrighted materials if it encourages learning and education.
Economists agree with the Founders that knowledge and ideas are essential for growth and "public happiness." We find that an important reason for American economic success was the emphasis on basic education for everyone. Schooling in America differed dramatically from the elitist educational systems in other countries. I'm going to reveal a secret that I don't want you to tell anyone else: I love to read children's books. When I read Little House on the Prairie I am struck by how quickly each little township would set up a school. Laura Ingalls becomes a teacher herself at age 15, and the settlement builds a new schoolhouse even though there were only three pupils. By 1850 almost every state in the west and north had laws to encourage free schools that were open to all children, and literacy rates in the U.S. were the highest in the world.
At the high school level the U.S. was also an exception. In other countries, post-primary education consisted of specific job-related training and apprenticeships; the United States instead opted for broad general schooling for the masses. Commentators today promote the notion that the spread of markets and globalization threaten liberal education and imperil the soul; that is rhetorical nonsense. This supposed dichotomy between markets and broad humanistic ideals is a false dichotomy. When I was your age, I was very fond of a book called Zen and the Art of Motorcycle Maintenance, which said that the Buddha can be found in the parts of a motorcycle transmission as readily as in the petals of a lotus flower. Americans similarly realized that the art of the deal is not incompatible with the pursuit of art; an enriching education can and does enrich both individuals and nations.
American democracy rejected the bland and complacent goal of equality, and offered incentives for superior achievement and excellence. In the 1830s Bowdoin students petitioned to get rid of grades altogether. As always, whenever there is an important question at Bowdoin (like when one of the gargoyles fell off the roof of Hubbard Hall), a committee was formed to address the issue. (No, this is not bureaucracy, it is the Bowdoin version of democracy, and students have a voice in all of these committees.) The 1830s committee rejected the students' proposal to abolish grades because "a system like this is at variance with the first principles of our free institutions. Doubtless it is painful for the man of power and wealth to see the laurels won from his own son by the son of his less conspicuous and more humble neighbor ... [but a grade-free system] is the leveling down of intellect instead of the leveling up."
At the same time, the market-oriented system recognized the merit of all contributions that were made to the best of one's ability. When we speak about the history of the college, it is common to highlight Hawthorne and Longfellow and Chamberlain. However, names we normally never hear about made crucial contributions that influenced the evolution of the College. Cornelius Dennison from the Class of 1811 was a tailor from Freeport, a "student of mature years," who inspired his classmates with his "invincible love of Latin quotations." Israel Newell in the class of 1819 was the son of a poor farmer, and he later funded scholarships to support other impoverished students at Bowdoin. John Van Surley DeGrasse and Thomas Joiner White were trained at Bowdoin in the 1840s, and were probably the first black doctors educated in the United States. Yes, Hawthorne and Chamberlain mattered, but it was the cumulative effects of the Dennisons and Newells that resulted in the preeminence of Bowdoin and, ultimately, of the United States.
The 20th century has been called "the American century," largely owing to the role of ideas in the democratic ideal of this nation. Whether or not the 21st century will also be the American century will be determined by you and your peers; by your ardor to absorb existing knowledge, and by your capacity to generate new insights and new ideas in whatever pursuit that excites your passion.
I don't want my talk to be longer than George Washington's address to Congress. So to conclude, I want to tell you about a student who graduated from Bowdoin a few months ago. Her name is Sarah Richards. She wrote an outstanding honors thesis, that investigated why male legislators voted to extend equal economic rights to women — she found they were significantly more likely to vote in favor of such rights if they had only daughters in their household. Sarah and I met each week, and discussed not just economics but "Life, The Universe, And Everything." In our last meeting before Commencement, Sarah said that it made her sad to realize that the past four years had meant so much to her, but when she was gone the College would continue as if she had never been here. I told her what I will tell you now.
Democratic institutions, whether they are colleges or national constitutions, are shaped by the ideas and contributions of each person who participates. Every individual matters; it is entirely up to you to determine how you will matter. Yes, Bowdoin will continue after you've gone; but the college will always be different because of your presence here and now, because you and the rest of your class have chosen to make this commitment to reach beyond yourself and to expand your capacity for learning and for living. From this moment on, each and every one of you is as much a part of the Bowdoin tradition as Longfellow or (I'd say, a lot better than) Franklin Pierce. So, for the 51st time, Class of 2014, welcome to Bowdoin. And welcome to your place in American democracy.