The conflict between individual and species arises because reproductive fitness is essentially a relative concept. Under natural selection, the traits that succeed are those that confer relative advantage. To spread, it’s not sufficient that a genetic variant be helpful. It must be more helpful than the other variants with which it’s competing. A trait that evolves because it helps the individual prevail in battles against members of the same species typically constitutes a handicap for the species as a whole.
— from “The Darwin Economy”
Watching squirrels stashing away nuts for the winter we can see how even wild animals practice a form of economic planning. Our brethren in the animal kingdom can teach us much about human life and during this time of great economic change a leading economist has examined the linkage between our economic realities and patterns of natural selection and survival as observed by Charles Darwin. “The Darwin Economy” by Robert H. Frank – subtitled “Liberty, Competition and the Common Good” – is Dr. Frank’s newest contribution to how we think about, study and carry out economic activity.
Robert H. Frank is Henrietta Johnson Louis Professor of Management and Professor of Economics at the S.C. Johnson Graduate School of management at Cornell University. He also writes a monthly column on economc issues for The New York Times. “The Darwin Economy” is his tenth book. His revision to the conventional wisdom about economic trends begins boldly with a rejection of one of the key elements in economic theory, the observation by Adam Smith that an “invisible hand” guides economic activity to ideally perfect efficiency. Frank expressed admiration and gratitude to Adam Smith, the father of economic science, but he finds naturalist Charles Darwin closer to the heart of economics and even predicts that future generations of economists will rate him as highly.
The wedge between self- and group interest is central to Frank’s arguments (his working title for his new book was “Darwin’s Wedge”) and at that point he enters into some of our most contentious political issues, including supply-side economics, income inequality, government regulation and tax policy, often taking positions in conflict with either liberal, conservative or libertarian philosophy. He writes that harmful behavior should not necessarily be prohibited but taxed. Observing that early post-Thanksgiving (“black Friday”) sales are starting to curb family time on the holiday he proposes in his Times column a 6% sales tax on top of other taxes on purchases prior to 6:00 AM Friday. Dr. Frank would like to see a massive revision of US tax policy, scrapping the present income tax for a “progressive consumption tax”.
Taxpayers would report their incomes to the tax authorities just as they do now. They’d also report how much they had saved during the year, much as they do now for IRAs and other tax-exempt retirement accounts. People would then pay tax on their “taxable consumption,” which is just the difference between their income and their annual savings, less a standard deduction. Rates at the margin would rise with taxable consumption. If the tax were revenue-neutral, marginal rates at the top would be significantly higher than current marginal tax rates on income, to make up for the revenue lost by exempting savings.
Robert Frank’s earlier books include “The Winner Take All Society”, “What Price the Moral High Ground?” and “The Economic Naturalist”. He has revolutionized the study of economics by emphasizing a case-history approach over mathematical procedures and is considered one of the world’s leading figures in the field of behavioral economics. Professor Frank joins Bill Jaker on OFF THE PAGE to discuss Darwin and today’s major economic issues.
Photo courtesy of Jeremiah John McBride via Flickr.