Raghuram Rajan: “The Third Pillar: How Markets and the State Leave the Community Behind”

A few months ago I receive a copy of the book, “The Third Pillar: How Markets and the State Leave the Community Behind,” by economist Raghuram Rajan. The topic is important and the book is full of interesting thoughts. It’s hard for me to evaluate Rajan’s economics and policy advice, so I’ll leave that to others.

To say it again: This post represents neither an endorsement or a disparagement of Rajan’s book. I just found it difficult to evaluate.

What I will share is the email I sent to the publisher after receiving the manuscript in the mail:

I took a look at Rajan’s book and found what seems to be a mistake right on the first page. Maybe you can forward this to him and there will be a chance for him to correct it before the book comes out.

On the first page of the book, Rajan writes: “Half a million more middle-aged non-Hispanic white American males died between 1999 and 2013 than if their death rates had followed the trend of other ethnic groups.” There are some mistakes here. First, the calculation is wrong because it does not account for changes in the age distribution of this group. Second, it was actually women, not men, whose death rates increased. See here for more on both points.

There is a larger problem here is that there is received wisdom that white men are having problems, hence people attribute a general trend to men, even though in this case the trend is actually much stronger for women.

I noticed another error. On page 216, Rajan writes, “In the United States, the Affordable Care Act, or Obamacare, was the spark that led to the organizing of the Tea Party movement…” This is incorrect. The Tea Party movement started with a speech on TV in February, 2009, in opposition to Obama’s mortgage relief plan. From Wikipedia: “The movement began following Barack Obama’s first presidential inauguration (in January 2009) when his administration announced plans to give financial aid to bankrupt homeowners. A major force behind it was Americans for Prosperity (AFP), a conservative political advocacy group founded by businessmen and political activist David H. Koch.” The Affordable Care Act came later, with discussion in Congress later in 2009 and the bill passing in 2010. The Tea Party opposed the Affordable Care Act, but the Affordable Care Act was not the spark that led to the organizing of the Tea Party movement. This is relevant to Rajan’s book because it calls into question his arguments about populism.

The person to whom I sent this email said she notified the author so I hope he fixed these small factual problems and also that he correspondingly adjusted his arguments about populism. Arguments are ultimately based on facts; shift the facts and the arguments should change to some extent.