LSE Events | Professor Robert H Frank | Success and Luck: good fortune and the myth of meritocracy

Uh, my name's, uh, John Hills. I'm co-director of the International Inequalities Institute here at LSE, and it's my pleasure to welcome you all here this evening. Uh, those of you who are in the room, um, a big welcome to those of you who are in the overflow room this evening, and also welcome to those of you who are, um, watching this, uh, watching the video podcast at some later date, um, alongside, um, some of the other, um, video podcasts we have on our website.

Um, I'll introduce Robert Frank in a moment, um, but before that, um, first of all, there are copies of this lovely book, um, available for sale outside, um, and I highly recommend it, um, but you'll hear more of the reasons why, uh, why you should read this book in a moment. Um, and after the, I hope this is correct, um, and after the, um, after the lecture, after the evening's proceedings, um, uh, Robert Frank has kindly agreed to sign, sign copies, um, if you form an orderly queue.

Um, uh, could you set your mobiles to silent, please? Um, if you have a more sophisticated mobile than mine, um, uh, the hashtag for this evening is LSE is #LSESuccess, and that indicates not so much, I mean, LSE is successful, um, but it's indicating this, um, this event.

Um, um, third, we're going to have two discussants this evening. Um, the first discussant is Professor Nicola Lacey, who is familiar to, um, many of you, in fact, all of you from LSE, um, in the audience, I'm sure. Um, her interests range across so many LSE departments, but also across so many of the interests of the Inequalities Institute, um, from law, crime, um, gender inequality, the effects of public policy in both constraining and promoting inequalities of different kinds. Um, so we'll be hearing from her, um, after Bob has finished speaking.

The second discussant this evening is the Right Honourable Ed Miliband, the former leader of the Labour Party, um, and still serving MP. Now, I have to announce that as a serving MP, we have a slight piece of bad luck, which is that the crucial vote on Brexit, not the vote, I'm afraid, that will decide for or against Brexit, unfortunately, but on the process, um, is happening in 29, 19 minutes' time. Um, now, he has, however, um, read Bob's book and knows what he's going to be saying this evening, and we are assured that there is a fast car parked in the, in the division lobby, and he is the first in the queue to vote. Um, so all being well, he will join us, um, before, um, Bob has finished speaking.

Um, but we're here this evening to honour and hear from, um, Robert Frank about his new book, "Success and Luck: And the Myth of Meritocracy." Um, all I'll say about the book, because you're about to hear much more about it, is that it's a huge pleasure to read, um, but also, I think, the arguments that he's putting forward are very important ones, um, for the way we think about the politics of inequality and the justice of where we've ended up.

Um, he's the, um, oh, I can't read my [Laughter] handwriting. He's the H, he's the H. Johnson, Louie, but I can't read the H, um, Professor of Management at Cornell University, um, in the United States, and many of you will know his work, um, on "The Winner-Take-All Society," um, but also on a whole series of other issues connected with justice, with different aspects of inequality, and some of you, I'm sure, will have read, um, his op-ed columns, um, in the New York Times, as well as, as those by his namesake, an entirely different, um, not Robert H. Frank, but entirely different Robert Frank, he was explaining earlier.

Anyway, having, having him here this evening is a huge success for us that he's here, and it's very lucky for you that he's here to talk about his book. So please welcome Robert. [Applause] [Music] [Applause] Frank.

Thank you so much, John. It's an honour to be here. Of course, um, my old friend George Annely once said to me, he's a psychiatrist, he said to me that the scarce resource in life going forward is going to be the willingness of other people to pay attention to you. People have their devices, they have their games, they have all these things that are sucking up their attention in, uh, rapid order, and there's not much left. And that's a basic human need for others to pay attention to you. And so for me, I'm fully cognizant that to be invited to give a talk like this and have a full auditorium of people who are intelligent and interested is just an incredible luxury, um, and I savour that and I'm grateful for it. So thank you all for coming.

Uh, there's a lot more to do in London each evening than there is in Ithaca. I know you've given up something, um, meaningful to be here, and I, I'll try not to disappoint you terribly. The, the book is about success and luck. Nikki, I don't know if they can turn these lights off. The, the slides are totally washed out by them. If there's, if there's any way they, they can.

Uh, the, the photo you can't see very well on the screen is, um, of my old friend and, and research collaborator, Tom Gilovich. He's one of the reasons I'm here tonight. He and I were playing tennis in November of 2007. At some point during the second set, early on, he says, as we sat during a changeover, I complained to him a feeling nauseated. He said, the next thing he knew, I was lying motionless on the tennis court. I had fallen off the bench. He knelt to investigate. He discovered that I wasn't breathing. I didn't have any pulse. I was, by all appearances, dead. He hollered out for others to call the emergency services and he promptly flipped me over onto my back and started pounding on my chest. You've seen it done in movies, um, many times, so had I. He'd never been trained to do it, but he, I, I like, I like what you just had, um, uh, more will fall asleep with it. That, that dim, but that, that's all right. He just, uh, uh, worked away. He said, after what seemed like a long time, he got a weak cough out of me, but then I died yet again. Uh, uh, and he was about to give up, when in through the doors of the tennis facility burst the emergency medical crew, and they cut my shirt off of me, they put the paddles on my chest, they got me revived. They, uh, sped me to the hospital. There I was put on a helicopter and flown to a larger one, Pennsylvania. There they put me on ice overnight, and the next thing I knew, really, was, um, four days later. Apparently, I had suffered, doctors told me, an episode of sudden cardiac death. It's also called sudden cardiac arrest. I like to ring a little bit more drama out of it by calling it sudden cardiac death. Uh, uh, it's a philosophical question, are you really dead? You are, um, indistinguishable from dead, um, when you've suffered one of these episodes, and if you don't get attention right away, you'll remain dead. You can be brought back from dead if you get prompt enough attention. And, um, it depends. There's really not a lot of, um, time leeway. Here in New York, it takes about an average of 12 minutes for an ambulance to respond to a call. That's way too long. Everybody dies in that case. And in Ithaca, we were playing tennis at a facility that was six or seven miles from town. It would normally take half an hour for an ambulance to get there, in which case that would have been the end of me too. How did this one get there so quickly? Here's the luck part of the story. In the hour before I collapsed on the tennis court, um, two separate auto accidents had occurred right in the close vicinity of the tennis center. Two different ambulances had been dispatched. One of them turned out not to be urgently needed. Nobody was seriously hurt in one of the accidents. When they had a call saying that somebody was in trouble, the driver of that ambulance could peel off and come and attend to me, and that's why I'm here.

Every culture has different ways of thinking about things like that. I, I think I'm the beneficiary of pure dumb luck, um, on that occasion. Um, there are, um, elaborate, um, visions of karma. My, my mother would have said I was destined to survive, okay? Um, there, there are lots of different ways to think about those things. I, I have no quarrel with anyone's tradition. Um, these are important things to think about, and each culture has, um, developed, um, ways of trying to parse events like this. But I like to say, um, even when I'm speaking to a big group like the one assembled here tonight, that I am the luckiest person in the room. That's one piece of evidence I would offer in defence of that claim. Um, I had a short BBC "Thinking Aloud" session this afternoon. Probably there's somebody who heard that session who's luckier than I am. If you make the, the set of people big enough, then they'll be somebody with a story that can top mine. But that's not the only story I could tell you. There are numerous other ones I recount in the book. But one of the themes of the book is that people generally tend to overlook the role of chance events in their life. Um, I recount lots of chance events that shaped my life. What am I so smart that I notice these things, and ordinary people don't? No, that is not my point. My point is that if luck, um, happens to you in a vivid enough way, you will notice it. But typically, that's not how luck unfolds in most people's lives.

I was invited, oh, I now I realize that I don't know how to. No, I, I need to push there, and I have no, my, my hunch is that if I push there, nothing will happen. So there's probably a mouse somewhere. Any, anyway, um, I will, I will tell you, um, what this slide is about. Economic success? Hard work? Talent? Determination? No, no. So says Cornell University Professor Robert Frank. He's actually smiling. He's sitting next to me. Here's what he says: Contrary to what many parents tell their children, talent and hard work are neither necessary nor sufficient for economic success. He says success has a lot to do with luck, and he's joining us right now in the studio. Professor, wait a minute. Do you know how insulting that was? I read that. I came to America with nothing 35 years ago. I've made something of myself, I think, through hard work, talent, and risk-taking, and you're going to write in the New York Times that this is... No, I didn't say that in the New York Times. What I said, actually, is that if you have lots of talent and you work very hard, you're still probably not going to be a big success. There's also a big element of luck. But it's, I know I'm taking the other side of the coin, which is you said that you... Sorry, we get... This is a Fox Business News host. I published a column about the role of luck in the labour market, and I got a call the next day from, from Fox, would I appear on this show and talk about my column? Okay. We've got more volume. Okay. And I knew it was going to be bad, but I'll just show you a little bit.

Smiling is sitting next to me. Here's what he says: Contrary to what many parents tell their children, talent and hard work are neither necessary nor sufficient for economic success. He says success has a lot to do with luck, and he's joining us right now in the studio. Professor, wait a minute. Do you know how insulting that was? I read that. I came to America with nothing 35 years ago. I've made something of myself, I think, through hard work, talent, and risk-taking, and you're going to write in the New York Times that this is... No, I didn't say that in the New York Times. What I said, actually, is that if you have lots of talent and you work very hard, you're still probably not going to be a big success. There's also a big element of luck. But I know I'm taking the other side of the coin, which is you said that you need luck, and luck is part of being wealthy and successful. You are downplaying, downplaying hard work, talent, brains, drive, and ability. You are, in fact, taking on the American dream. You're saying the American dream is not really the American dream. It's not really there. No, I don't believe I'm saying that, Stuart. No, I reviewed some footage before coming down. I would say, respectfully, consider the possibility that you're very lucky. You do a lot of hard work, I'm sure. You started with not much, but you're very lucky to have ended up successful. There are a lot of people who work hard and are just as talented. Wait, success? Am I lucky or not? Who I am and where I am? I'm lucky. You are lucky. Okay. So am I? That is outrageous. That is outrageous. What about the risk I took? Do you know what risk is involved in coming to America with absolutely nothing? Do you know what risk is involved in trying to work for a major American, uh, network with a British accent, a total foreigner? Do you know what risk is implied for this level of success? I do. Is it luck that you hold a tenured position? Yeah. It wasn't, it wasn't just luck. I got the seventh job at Cornell the year I was hired. They've never hired seven people before. So there's no, the only other off... No, it went on for seven excruciating minutes. He, I, I thought his listeners would get some food for thought. I would show them some evidence, but I just got hammered, um, mercilessly for seven minutes, and I felt bad leaving the studio because I, I was able to think immediately of all the things I should have said in response to, um, remarks he made, but didn't think at, at the moment, um, to say.

So, in what one of the, the points he makes is that he came to the US with nothing. Actually, I'd looked him up the night before, and he has a degree from the LSE. That's a pretty good claim. I'm trying to get off this, this page. There we go. So, so, yeah, he, he had a pretty good asset when he came to the US. He said, "Did I know what a handicap it was to try to make it in the US with a British accent?" Interesting. This man, most of you won't recognize. He is Frank H.T. Rhodes. He was the president of Cornell for 17 years while I, um, he, he ascended to that office shortly after I got there. He was the greatest fundraiser Cornell ever had. And to see it happen, you would immediately know that having a British accent was not a handicap. He was from England. He was educated at Oxford or Cambridge, I forget which. He came initially to Michigan. I met one of his colleagues, um, from when he first came to Michigan, at that time, who told me that, "Boy, you should have heard Frank Rhodes when he first got here. He didn't have much of a British accent then, but it's really strong now." Why? Because the alumni just reach for their checkbooks when they hear him speaking in those tones. Handicapped by a British accent? And then he said, "I took risks. Do you know what risks I took?" And I thought about it in the cab as I was leaving the studio. Well, if he took a risk, what, what's that mean? You look it up in the dictionary. It's, it's, um, something bad might happen. If he took a, a risk and nothing bad happened, if he succeeded, then he was lucky, by definition. Why didn't I say that? I didn't think of it. Four or five friends emailed me that evening, castigating me for not thinking to, to point that out to him.

There is good luck. There is bad luck. The man in the bow tie is Mike Edwards. He was one of the founding members of the group that became ELO, Electric Light Orchestra. Some of you are old enough to know who they are. He was the cellist in the group. He was retired from, um, performing. He was driving along a rural British roadway one day when a 1300-pound, I should have converted that to kilograms, I didn't think of it, it's a heavy bail of hay up on a, a mountainside that was tethered securely, broke loose from its mooring somehow and started rolling down the mountain, gathering speed. It hit a berm, it flew up over a high fence separating the field from the roadway, and landed right on top of the cab of his truck, killing him instantly. Nobody had a bad word to say about this guy. He was a nice person. He didn't do anything to deserve that fate. I don't think there are other theories, but, um, most of us would probably feel comfortable saying he was unlucky to have suffered that fate. And we notice that he was unlucky. That's the kind of luck we, we have no trouble spotting. If somebody wins the lottery, we notice that too. That person was lucky. Although you will, um, listen to the winners of lotteries explain how they, they chose the winning number, the, the insight they, they drew on that that led them to the number that that produced the millions. What's true is that we always think we can explain something that happened once we've seen it happen. Paul Lazarsfeld is the, um, person who introduced the concept of hindsight bias. I see some sociologists in the room, you'll, you'll be familiar. His illustration was, was very interesting. He described to subjects a study in which, um, supposedly the aim had been to discover who was better able to adjust to the rigors of military life: young men who'd grown up on farms or ones who had grown up in cities. And he told them that the study authors had found that it was the farm boys who did better. And the subjects he described this study to reacted, um, in the way exactly as he expected. They were not surprised. Of course, it would be the farm boys who would adjust more readily. Why would anybody need to do an expensive study to learn that? The twist, of course, was that it was the city boys who were able to adjust more readily to the rigors of military life. And if you had to construct an explanation for why that might be so, it wouldn't be difficult. You could do it. And that's the point. You see an outcome, you try to think of the, the forces that might have explained it. You round up the usual suspects, and once you've woven a plausible narrative, you're done. You, it never occurs to you that events are contingent, that if we replayed the tape a thousand times, um, any small step along the, the tens of thousands of steps that unfold in, in any life history, um, there could have been some small change that would have altered the course of the trajectory and had it end up in a completely different place in the end. We don't think in those terms.

My friend Tom Gilovich, the same one who pounded hard on my chest that day, is doing some research that bears on this issue. He and his colleague Shai David have, um, talked about an asymmetry in the way the human mind processes two concepts: headwinds and tailwinds. Look up "headwinds" on a Google search when you go home tonight, and then hit the "Images" link up at the top. You'll get a bunch of images more or less like these. You see these images, and you know immediately that it's an image illustrating the concept of a headwind. Then try this: look up "tailwinds," and you'll get gibberish. You'll see diagrams and arrows and all sorts of. There's no natural way to represent that diagrammatically, or at least nothing that's nearly as vivid as the, the headwinds representations. And when we think about these things, we think about them asymmetrically. When you're riding your bike into a heavy wind, you're, every minute of, of the time you're doing that, you're keenly conscious of it. You're working against a handicap. The course shifts. You're going with the wind. Ah, that feels great, but it feels great only for a few seconds. Then it's completely out of your mind that you've got a tailwind. You play Scrabble. What kind of letters do you get when you're playing Scrabble? They have subjects play the game in the lab. If you play it a bunch of times, people get roughly equal quality letters when they draw from the, the sack of, of tiles. But what do people think? They think, "Oh, I had four vowels and no consonants worth more than a point, and my opponent had the J and the Z and the X and the Q." People, when they recount the history of what happened in the games they played, they remember the tough letters they drew, their opponents drew good letters. And so when they, when they lost, they think it was because of bad luck. This asymmetry is very powerful. It explains why people tend to understate the role of luck in life.

I, I asked, um, Caroline Pride, the, the very able Princeton publicity director, whether "Breaking Bad" would have cultural resonance in the UK. She said, "Yes, people will probably know what it is." I had an argument with my editor. I wanted to call "Breaking Bad" the greatest television drama of all, all time. No, he wouldn't hear of that. We settled on it was one of the greatest television dramas of all time. It was, it was at any rate, really good. And one of the reasons it was really good was because of the performance of Bryan Cranston as the lead character, Walter White. He's got cancer, he wants to leave a legacy for his family when he dies. He's a high school chemistry teacher, he's really good at chemistry, and he discovers quite by chance that he could make way better methamphetamine than the people who were in the market selling it for enormous sums of money at the moment. Well, Vince Gilligan, the producer of "Breaking Bad," wanted to cast him, um, based on some intuition he had that he would be right for the part. It was going to be a big investment, this series. They did not want to spend money on an unknown actor to fill the lead role. That's understandable, I guess. The studio bosses insisted on somebody who had had a leading dramatic role in the past and would be better known to the public. I had never heard of Bryan Cranston. He was the dad in a sitcom that I never saw, "Malcolm in the Middle." He was good in it, people tell me, but I didn't know who he was. So the concern of the studio bosses wasn't mysterious, it was it was logical. So they offered the part first to John Cusack. Cusack said no. I wonder what he thinks now about that decision. Then they offered it to Matthew Broderick. Actually, I don't remember which one got it first. First Cusack, then to Matthew Broderick, maybe that was the order. Broderick said no. I can't imagine Broderick as Walter White. Maybe they would have made it work, but only after those two said no, did Gilligan finally persuade them. He showed them a clip from an X-Files episode, 20 years old, that made them think he had the chops to do this part. And he went on to win four Emmys, the, the big drama award in the show's five seasons. He was a breakout star. He's the most sought-after actor in his slice of the age demographic, um, in the United States, maybe, maybe, um, worldwide these days. And, um, if somebody said he's a really talented actor and he deserves the fame that he's, he's won, that would be exactly right. There's no quarrel about that. But the point is, and he, he's very gracious in acknowledging this, that there are thousands of others who are just as talented who never got the break that he, he got that enabled him to demonstrate how good he was. Every career has episodes like this. Maybe you had a mentor in the 11th grade, whatever form that is here, I, I don't know, um, when you're 16 or 17 years old, some, some body who kept you out of trouble, you were going, going astray, this person helped you. Well, you, you forget about that. Maybe you got an early promotion. There was a better qualified colleague who was offered it, but she couldn't take it because she had to care for an ailing family member. You got the promotion. When people try to construct their life histories, they do the best they can. They assemble them from, I, I like to use my Mac when I show slides because it tells me what the next slide is going to be. I can't, I, I can't tell what the next slide is going to be on this machine.

The, the fact is, when you try to explain why you're successful, what people do is they cobble together a narrative from the events that are accessible to them in memory. And the people who succeed, markets are incredibly competitive now. It's unbelievably, um, uh, how, how competitive they become. If you succeed in one of these high-stakes markets, you are almost certainly very talented. You are almost certainly very hardworking. That's a given. If you're not, if you don't have those qualities, you're not going to be a finalist in the contest, contest that determines who wins these big prizes. But if we look at one of these contests, and, and say, "Who's the most talented contestant? Who worked the hardest?" And identify that person, that person will have only average luck, by definition. Luck is a random thing. We picked that person because she was the most talented. What's her luck going to be? Could be good, could be bad. On average, it'll be somewhere in the middle. But if there are bounds on talent and effort, as there surely are, then there'll be lots of other contestants who are breathing down the neck of that most talented contestant. They'll be right, um, up against her, and some of them, not many, maybe, but some of them will happen to have been really lucky as well. So in simulations that we've done, even if luck counts for only 2% of total performance, let the contest be purely meritocratic. It's a foot race. How fast you run depends on your talent and your effort. That's 98% of, of your performance. The other 2% luck. Simulate that contest many thousands of times, and what you find is that the most able contestant, the hardest working one, doesn't win most of the time. Almost always, somebody else is the winner. And the average luck score of the winners, even when luck counts for only a little, is in the 90s.

Everybody here knows who the face at the top left is, I assume that's so. Uh, uh, you, you might be proud to say you don't know who the person on the bottom right is, but I'm guessing a lot of you do know. In, in the US, it would be in the high 90s, the percentage of people who would know. She is Kim Kardashian. I think there's general agreement that she has never done anything that that would command the amount of attention that she has gotten. And so people, people say without fear of, um, having others laugh at them, that Kim Kardashian is in that set of things, set of people, I guess I should say, that are famous for being famous. That's what she is. She has gotten out, um, in front of us to such a degree that now there's an appetite for news about her doings.

What about the Mona Lisa? That's the most famous female face on the planet. Why is she so famous? Most people aren't comfortable with the hypothesis that she too is famous for being famous, but there's a reasonable case to be made for that hypothesis. Here I owe the argument, um, um, in my case to Duncan Watts. He's the one who, who first made it in my hearing. He went to the Louvre some years ago. He went to see the Mona Lisa. And as all of you probably know who have done that, it's very difficult to get close to the painting. You got to elbow 300 people aside to, to get anywhere near it. It's smaller than I expected. I thought when I first saw it, "What's the big deal?" That was what Watts thought about it too. He went into the next gallery. There are two other Leonardos hanging in that gallery, and there's nobody jostling to get to see a closer look at those paintings. They've got the same, they're from the same era, they've got the same novel brushstrokes as the Mona Lisa, from, from that same period. And so he did a little digging, and what he discovered was that for most of its early history, the Mona Lisa had not been a highly famed painting. It would, it developed some commentary, um, uh, because it was a Leonardo, after all. All the Leonardos got at least some attention, but it was not until 1911 that it became a famous painting. Why did it become famous? Because in that year, Vincenzo Peruggia, an Italian custodian at the Louvre, stole the painting one night. He put it under his cloak as he left work and walked off with it. It was a sensational theft. It was, um, the first time anywhere in the world that newspapers were able to reproduce images of an artwork on their pages. And so newspapers all around the world had pictures of the Mona Lisa flashed on their front pages. She was famous, um, for the, and the theft went unresolved for two years. F, and so there were periodic reports of it, um, during that interval. Finally, Peruggia thought to repatriate the painting to Italy, where he thought it belonged, and he wanted to sell it to the director of the Uffizi, who naturally turned him in. And then there was another firestorm of publicity. Pictures on the front pages of newspapers all around, yet again. And since then, the painting has been a symbol of Western culture, writ large. It's, it's the most famous image of, of the art world. But why is it famous? Art historians say, oh, there are many thousands of treatises describing the objective features of the painting that make it, um, so famous. But, but probably, and this was Watts's conclusion, it has qualities X, Y, and Z. Well, what are those? They're, they just mean that it looks more like the Mona Lisa than any other painting. It's famous for being famous.

Watts also has another great experiment that illustrates, um, one of the main themes I try to develop in the book. He has a website that he called Music Lab. And on the website, there are 48 indie bands. My kids are indie musicians, so I know a lot about this, this industry. I've never heard of any of these bands. Even so, he had 48 bands and then one song from each. You could download any song you want and keep it on the condition that you gave it a rating, let's say from one to ten. So people downloaded songs as they chose, gave them ratings, and those ratings ranged all over the map. Some songs everybody liked, there weren't many like that. Others everybody hated, and there weren't many of them either. But then there was a massive group in the middle, um, that people had mixed feelings about. Some people liked them, others didn't. Then, and here's the crux of the experiment, they ran eight separate websites in which, um, different people went. They saw the same thing on each of the eight websites as the people saw on this one. In addition, there were two other pieces of information: how many times had each song been downloaded so far, and what was the average rating it had received from people who had downloaded it so far? The first website didn't see, and nobody saw either of those pieces of information. And the case he focuses on is one, um, a band called 52 Metro. Their song was "Locked Down." It was right in the middle of the objective quality ratings. In one of the websites, it ranked number one. One of the eight websites, and another one, it ranked number 40, so it's almost at the bottom. In one, it's at the top, in the other. What's going on here? Let me play you a sample. See what you think. Where does it belong? [Applause] You know, it's a matter of taste. I, I'd put at number 48 without hearing any, any of the other songs. But that's not who we are. We're social creatures. If other people liked it, maybe it's good. I should give it a chance. And if you're the author of a book, which I am on multiple occasions, then you know, um, most, in most cases, that you've written a good book, and yet it didn't succeed. Why didn't it succeed? Well, if somebody reviewed it early on who happened to like it, it might have done better. But if somebody was the first to review it who thought it was nonsense, then it's going to slide off the edge of the table and never be heard from again. There's an enormous amount of chance in this. This is the clearest demonstration of that because it's a, a nice randomly controlled experiment. We don't have to argue about whether, whether the phenomenon was identified. It's, it's very clearly identified.

Here are, um, some performers so good that they would succeed, succeed no matter what? This is going to be a risky claim to make in front of a UK audience, but I would have said, um, in my naive way, that the Beatles were so good that it wouldn't have mattered what happened. They would have found their way to the top. Um, I, I had a very interesting conversation over dinner one evening with a historian of that area, that era. He's got every bootleg Beatles recording ever, ever made available in the, in the auction market. And he persuaded me over the course of our dinner conversation that, um, had it not been for, and he listed then six or seven contingencies, had it not been for any one of those, none of us would have ever heard of the Beatles. I don't know, maybe that's true, maybe it isn't true. Um, George Martin, um, who was their producer, wasn't producing music albums much at the time. He heard their stuff only because everybody else had passed on it. He was producing comedy albums at the time. Do you think they would have succeeded if George Martin hadn't been their producer? I mean, if you know what he added to the mix, you know that by itself is a reason to be. So there's contingency. We don't think of the contingency. We construct our life stories by picking out the obvious things. If you succeeded, you worked hard, you were talented, you defeated a lot of able people along the way, that's why you succeeded. That's, it's a good faith explanation, but it's, it's not the only explanation.

I had that sentence that, um, Stuart Varney made fun of: "Hard work and success are neither necessary nor sufficient." Hard work and, and talent are neither necessary nor sufficient to guarantee success. He thought that was self-evidently stupid. He doesn't understand what, what the words mean. Um, if you, if you can think of an example of somebody who's not talented or hardworking who succeeded, then that part of the statement's true. If you can think of people who are hardworking and talented who didn't succeed, then the other part of the statement is true. It's, it's a transparently true statement. If you're successful, the thing to, to reflect upon is that the world could have turned out very differently. I mean, most successful people are able to say without much trouble, if they had been born in Somalia, they wouldn't have ended up where they are today. But it's a lot more sweeping than that. If, if a lot of things had been different, you wouldn't have ended up where you are today. And this matters because what's at stake is so big. This is the book that Phil Cook and I published in 1995. The prizes are huge. And when someone wins one, it's usually not the most able person. It's somebody, um, who was almost as able and hardworking as the most able person, but who happened to be a little luckier. And yet, when you win, you think you did it all on your own, and you therefore feel completely entitled to keep every nickel that came your way. People have always felt that, but now it matters more because there's so much more at stake. And it's very difficult to construct an argument grounded in moral principles of justice that would say, "I won the contest. I got 10 million pounds a year as a prize. The person who was almost as good as me, or maybe even better than me, ends up teaching third graders for, um, for, um, there's no argument for that being a just outcome." And so what we know is that, um, since the winners are so often, um, in the highest ranks of the luck distribution, people ought to think about that. And what we know is that it makes a great deal of difference in how they end up, um, feeling about their position in the world.

I used this sentence in the, as an epigraph in the front of the book. It was from an essay published by E.B. White in the '30s. I thought that meant that I could use it for free. It was out of copyright, being that old. Princeton told me, "Yeah, that would be a great thing to use, but it's going to cost you $500 to use it." And I foolishly almost said, "That's outrageous. I'm not going to use it." But then I, I thought to myself, "Oh, the hell with it. It's a, it, it really captures the, the essence of the problem in so many ways." I wanted it to be in the front of the book, so I, I wrote the check for $500. It's there. Buyers of the book can see it for free, um, if they want. But, but that's, that's the attitude. You, you don't even mention luck, um, in the presence of self-made men. They don't want to hear about that. They did it all on their own.

That's my cook in Nepal. His name is Beeram Rai. I don't know if he's still alive. He would be beyond the normal life expectancy of men in Nepal if he is still alive. He was the most resourceful and talented person I've ever dealt with. He could, um, butcher a goat, he could thatch a roof, he could make plaster from scratch and plaster a wall, he could repair my alarm clock, resole my shoes, he could bargain tough with the merchant in the bazaar without alienating them. Yet, all manner of skills, and he's very quick to master anything. Couldn't read and write. He'd never been taught to do that. The lifetime peak of his earnings trajectory was, I don't know what, but I'm going to guess, and I'm reasonably confident, that what I paid him out of my meager peace corps stipend was probably the peak of his lifetime earnings trajectory. He would have done much better here. The luckiest thing that can happen to any of us is to be born to the right parents, in the right place, at the right time. None of us can do anything about that, obviously. But together, we have some control over what kind of place we're born in. And that's where thinking you did it all yourself has been so costly. The people who have scored the big victories in winner-take-all markets have a lot of money. They deploy a lot of it in order to lobby politicians to cut their tax rates. The top tax rates have gone down year after year in, not just the US, but in most, um, advanced economies. And that means budget deficits, and that means less money available to create the kind of opportunity for people who aren't, aren't born in the first place with a lot of money.

Here is one of the most disturbing statistics I came upon in my research for the book. Here are the, the high-scoring students in the eighth grade in math, the people who scored at the upper edge of the distribution in math. The red bar is the proportion from low-income families in that group who graduated from college, um, the requisite number of years later: 29%. Here are the dumb kids, the ones who scored at the bottom of the distribution. The key kids who were in rich families who scored poorly were more likely to graduate from college. The dumb rich kids were more likely to graduate from college than the smartest poor kids. Nobody thinks that's right. Nobody, or at least I haven't met many people who would be willing to stand up in front of an audience like this and try to offer a reasoned explanation why that was a good thing. Why is it happening? It used to be that there were better opportunities for, I came from a family without a lot of money, I graduated with no debt. Somebody like me, um, today would graduate with an enormous wad of debt, and the whole early part of, of life would be, um, fighting against the miracle of compound interest working against you, instead of having it work for you in your young years.

This is the policy message of the book. If we could get successful people to just think about the role of good fortune in their lives, they would be more willing to pay forward for the common good. How do we know? There's a very big experimental literature. I'll describe one experiment. It was done by my research assistant. She designed it and carried it out all on her own. She asked people in an online sample to recall a good thing that had happened to them. One group among them, she said, "List three things you did in order to cause that thing to happen or contribute to it." Another group, she said, "List things, list three things that were external to you that caused the thing to happen." And that group listed things like a supportive teacher, a spouse, or, um, good luck, even explicitly mentioned that. And then there was a control group. At the end of the experiment, they got a bonus for completing it, and they were given the opportunity to donate some or all of their bonus to a charity of their choice, one of three. The people who were asked to think of external causes gave 25% more to the charity than the group that was asked to think of internal causes. And the control group fell roughly in the middle between those two groups. If people will think about the fact that they were, were lucky, they get a little bit more relaxed about, um, trying to hold on to every nickel. And it turns out, you, you might, if you were a successful person, you might want to say, "Well, don't tell me about that. I don't want to know about that because I'm afraid it'll make me part with some of my money or resist the tax authorities less effectively in the future." But that's not the way things turn out.

President Obama tried to tell people to remember that if they were successful in business, they'd had a break, um, along the way. Almost surely, they shipped their goods to market on roads the rest of us paid for. They hired people that the community paid to educate. They were safe in their factories from, um, from predation, um, because of the efforts of firefighters and, and policemen that we hired. So think about your responsibility to pay forward so that the next group coming along has the kind of opportunities that you enjoy. That was the message, but the reaction was extremely vitriolic to that message. Um, I think what people heard, maybe it was the sample of, of the remarks that were replayed for them that were taken out of context, but we know in at least a couple of other cases that wasn't a factor. What they heard, they thought Obama was telling them, "You're successful? Well, you don't earn it. You didn't earn it. You're, you have a lofty position in society. You're a fraud." That was not the message. He was just urging them to reflect on the fact that they didn't do it all themselves. Because we know from a whole variety of research that if we induce the feeling.

Of gratitude in a person, it's a magic elixir. It makes people happier when they're experiencing that emotion. It makes people healthier; they sleep better, they experience fewer physical complaints. It improves their social relations. It makes them more willing to contribute to the common good.

Uh, economists like to stress the metaphor of scarcity: there's no such thing as a free lunch. If you want more of this, you've got to settle for less of that. The psychologists have taught us that in the realm of human emotion, that's not always true, and it's particularly not true for gratitude. If you experience gratitude, you don't give anything up. Yeah, you might pay a little bit more, uh, to help others, but net, you'll be happier if you do that. Others will like you better.

People are worried that if they concede they had a little luck, people will respect them less than if they insist that they did it all themselves. But think about that. There are two people. One claims he did it all himself. That's almost certainly nonsense. Nobody did it all himself, so he's claiming more credit than he's due. So another person says, "Yeah, I worked hard, and, and, uh, I, I, I did the best I could, but if it hadn't been for the these lucky breaks, I wouldn't have done nearly as well as I did."

Who would you rather have a drink with? Who would you rather sit next to on an airplane? Who would you rather hire for your team? If you want to make money, the way that happens now is to be part of a high-functioning team. Most of the time, high-functioning teams have their pick; they don't need jerks. Uh, if you say you did it all yourself, what do they need you for? You're probably somebody who, when you get a chance, you'll shade, uh, the results toward your favor when no one's looking. They, they don't, they don't need people like that.

So if we could get people to think about the role that chance events played in their lives, they'd be happier, and everybody else would be happier too. So, how to do that? I've, I've one, uh, uh, exciting finding I'll report to you. I haven't done experiments systematically to confirm it, but it's happened so often that I'm feeling reasonably confident in it. Ask them about their luck. Don't tell them that they were lucky.

"Oh, you're, uh, you, you have a successful friend. Can you think of any examples of good fortune you enjoyed along your path to the top?" Just a question. Now you might think they'd get angry and defensive at hearing that question, but that has so far never once happened to me. I speak to conservative groups on occasion. Never once has, has anyone reacted in that way. They, you can tell, "Oh, that's an interesting question." That's their reaction. You can see them thinking about whether there were any lucky breaks they had along the way. And then they think of one, and their eyes light up, and they tell you about it. And they're getting happier as they tell you about it. And that, and the act of telling you about it, kindles a memory of another good thing that, that happened to them along the way. They tell you about that too. And then, before long, they're telling you about investments that we ought to be making in society. It works.

There's, I'm trying to track this down systematically. Uh, I have a psychotherapist friend who's very smart, who says that the closest thing she knows to this in the literature is, uh, AB abusive relationships. If you tell, and it's usually a woman, if you tell a woman, uh, she's in an abusive relationship, that kindles defensiveness and resistance. It makes her more likely to want to stay in the relationship. If you ask her to describe her relationship, you get a very different path coming from that question. So maybe it's something similar to that.

But my, my fondest hope in, in writing the book was to kindle conversations like these. Uh, uh, maybe you'll have a conversation like this, and, uh, your partner you're talking with won't come up with examples of investments that we ought to be making. That doesn't always happen. But at the very least, you'll hear some interesting tales about things that happen to people along the way. And usually these conversations are pleasant, uh, for all participants. And so I don't think I was compl completely naive to hope that they might have legs once they could get started at a, at a sufficient, uh, uh, uh, level in, uh, a group.

We aren't wired to believe particular things so much. Uh, it's impossible to know what is reasonable to believe. We take cues from what others believe when we decide what to believe. And so if we hear others acknowledging that luck played a role in their lives, uh, people who hear that will be more likely to embrace the idea that it might have been important in their lives too. And then if everybody believed that, we wouldn't see nearly the resistance to the public investments that we haven't been making for low low these past three or four decades.

The final point I'll make, uh, I'll make in the form of a thought experiment. People may say, "All well and good, but if, if it means you're going to tax me more, I don't want any part of that." I'll describe for you a conversation I had with a colleague. Uh, he, like, like, like me, has a successful textbook. That means he's not going to spend all his money, uh, even if he lives to be a hundred. Uh, neither am I. Uh, we're, we're not at the margin. Uh, in a town like, if, if we were in London, we could probably spend all, all of that and more. But he, he was afraid because, uh, there were all these new taxes that the government was planning to levy on us. U, that's maybe not a rational feel fear after no November, uh, anymore, but at the time, uh, it was something he was worried about.

I said, "No, I didn't even hear, I didn't even heard about all these new taxes." He was shocked. And I said, "You know why?" I said, "Because it doesn't matter for people like you and me. Is there any chance the government's going to change the tax law in a way that would make either you or me unable to buy what we need?" "No, of course not. No way that could happen." "Well, what are you afraid of? That you won't be able to buy what you want?" "Yeah, that was his worry."

And what happens when the government raises the tax rates on people like you and me? Well, uh, you try to think about, "How's that going to affect me?" And so the natural way to think about it would be to try to think back to the last time the government raised ta taxes by a lot on, on people like you and me. Well, they haven't done that in living memory. Uh, and so we can't use that source of information to figure out how we would feel if it happened. And so what did we do instead? We try to think back to the times events have caused us to have less money for one reason or another. And events like that: you had a divorce, a home fire, a bad accident, your business suffered a reverse, you were unemployed. Events like that caused you to have less money, and in each case, you were less able to buy what you want. And so you assume that if your taxes went up, which would mean you'd have less money, you'd be less able then to, to buy what you want. But that's a faulty inference.

The people have already a lot of money. What do they want? They want the special things in life. And where I'm from, it's a home with a view of the lake, or it's a choice slip in the marina, or it's a painting that everybody wants. How do you get those things? You have to... there aren't enough of them to go around. You have to engage in a bidding war against other people like you, people with similar tastes and incomes. And if you pay more tax and I pay more tax, the outcomes of those bidding contests are completely unaffected. They're not changed in any way by that fact. So lighten up. If you're successful, you could pay more in tax, and it wouldn't hurt, hurt you.

So here's the thought experiment. Let's imagine two worlds. In one, the rich pay very low taxes. The government budgets are in crisis, but the rich get to buy the Ferrari Berlinetta. It costs $333,000. That's, uh, uh, almost 333,000 pounds these days. A parallel universe has a different tax regime. They tax the rich more heavily. Uh, the rich have only enough money to buy a Porsche 911 Turbo in that regime. So the question, first of all, is: who do you think's happier, the rich in the high-tax regime or the rich in the low-tax regime? I haven't said anything at all about where the tax money goes. Uh, just forget about that for the moment.

What we know is that it would be very hard to detect any measurable difference in the happiness levels of the rich, because mainly once you get beyond a certain point... I mean, this car has every meaningful refinement that could be added to a car that would affect its performance. Is this car better? Uh, there, there are knowledgeable people who would say, "No, it's not really better." Uh, but just suppose it is better. The people, people here don't see that car. People don't buy that car in their world. It's like in the UK, people buy engines with small displacement. Uh, those cars would seem like wimp-mobiles in the US, uh, but they don't seem that way in the UK. Why? Because everybody, because of the taxes on engine displ placement, they buy cars with small. So these people would probably just as happy as these people, because they're each driving the best car out there, and the cars in an absolute sense are, are really, really close.

Okay, but now comes the easy part. The tax money didn't get flushed down the toilet. It was spent on public services, some of which included better maintenance of the roads. So who's happier? Somebody who drives his Ferrari on roads like these—that's the kind of roads we drive on—or somebody who drives his Porsche on well-maintained roads? Come on, that's a no-brainer. It's a very easy question to answer.

Well, people said, "Well, if I could be sure the government would spend it on, on road maintenance, I'd say yes." But, you know, they, they, they still say no. Uh, they said the government does spend it on road, road maintenance, that, and that's why they don't spend as much as they need to un road maintenance, because there isn't enough money. Uh, they used to spend more when we had more money. The roads were better. They're worse now.

So that's the argument. People think they made it all on their own. That makes them want to hang on to every, every sent, uh, and they lobby effectively for lower tax rates. And that means the public sector gets starved of, of revenue for doing the things that we all want it to do. Uh, and if we could get people to reflect more carefully on the fact that if things turned out right for them, they were lucky, in addition to working hard and having a lot of talent, uh, we could move past this. Uh, it's, it's not a hopeless thing to think about being able to solve problems like this.

So again, uh, this shortage in life is the willingness of people to pay attention to you. You, you, you all have been a terrific audience. Uh, you, you seem to, uh, get the, the point at every juncture, and, and, uh, I, I feel, I feel terrific at having had, had a like this to speak with you. Uh, we can do comments first, and then questions from, from the [Applause] [Music] [Applause] audience.

Hi, um, that was, um, terrific. Um, we do have, um, a little more time. Um, I'm proposing that we should run until 8:00, um, but I know then some of you will need to leave leave, um, to I. We do have a report. Um, it doesn't, it doesn't specify whether the car involved is a Ferrari or a Porsche, but, uh, Mr. B. Millerand is in it, U, and we hope we'll, we'll arrive in the next few minutes. Um, but if he's run into, um, congestion, then we, we may be in trouble. But to open up the discussion, um, I'm, I'm very happy to bring in, uh, my colleague, Nicola Lacy.

Thank you very much, John, and thank you, Bob, for a fantastic talk. I can save some time, since we're quite short of time, by cutting down all the good things I was going to say about the book, because I don't need to tell you what a wonderful book it is, because you've just heard Bob talk about it. Um, it's an incredibly engaging reminder that very complex economic and philosophical arguments can actually be put in not only an accessible way, but a way that is frankly a page-turner, as just a marvelous book. So you must all buy it and read it. Um, and it has this very persuasive underlying argument, which Bob has set out, that just as it's easy for us all to get into personal habits which are alluring in the short term but harmful in the longer term, it's very easy for societies to get stuck on public policies that seem to satisfy rational self-interest, but which are in fact collectively irrational, particularly over the long term. And my own Field Criminal Justice is full of such EX examples, American Mass Imprisonment being one of the more baleful ones.

Um, I think another really huge strength to the book is, is its exposure and critique of meritocracy. And I must say, as I was thinking, I was trying desperately to be optimistic and think about what we could we do about this on a societal level. And I started thinking about, you know, informing school children, you know, trying to make this argument quite early on. And I think one of the difficulties we face is that one of the inventions we have, uh, reduced to regulate ourselves in our very individualistic world are practices of testing and auditing, which make it much harder to get across the message, uh, about luck, because precisely because, uh, that message seems to be contrary to the incentive system that those systems put in place.

But of course, uh, the book doesn't end with analysis and critique. It's trying to change hearts, minds, and indeed policies. And it is a tremendously politically consequential book, which is why it's so great to have Ed here. Um, and at the core of the book, I'm going to start where really where, where Bob left off, is this very beguiling idea, which is that we could introduce a relatively simple tax policy, a progressive consumption tax, which would actually benefit the rich by creating resources for the government to improve the quality of public services and infrastructure on which even they depend. It's very easy to explain, it's rationally compelling, it's morally persuasive.

And so the big question, which Bob himself puts in the book, is: why haven't governments acted on it? And the main argument that Bob canvases about this in the book has to do with, as he puts it, that conservatives find it hard to buy this argument. And as you can imagine, he comes up with all sorts of persuasive arguments, uh, like the Porsche-Ferrari argument, uh, to try and persuade them that they should. Um, but he, he to concede, I think, that at a certain level of wealth, it may be that, uh, you may not care as much about your Ferrari getting damaged as, as the rest of us would of our, you know, old jalopy did. Um, and you know that it may be pretty tough call to convince these people they're being irrational.

But the main question I want to put on the table really is whether the main problem here is about these conservatives, all these very, very, very wealthy people. It seems to me that the, the problem is a larger one than that. It's really a problem that politicians in many countries, um, particularly the more individualistic countries, um, are appearing to find it harder and harder to convince even a much larger group of people in the middle-income range, in the middle of society, a a group which is much more likely to swing elections, one hopes, than the very tiny super-rich, uh, to vote for these sorts of, uh, rational, progressive policies.

And let me just suggest, um, three reasons why that might be particularly the case in some countries rather than others. There's a lot to say about this comparatively, obviously. Um, first of all, I think in certainly in, in this country, and I imagine even more in the States, um, there is a sort of fear among middle-income earners, particularly in these, uh, adversarial political systems, where a government with a safe majority has an enormous freedom of maneuver. So the voters don't absolutely know what the government's going to do if it w wins a big majority. Um, and I'm afraid that some of them fear that the extra tax revenues may be directed to things that they don't see as being in their self-interest, or may even not be well spent. So there is an issue there about, particularly under conditions of declining solidarity, motivating that trust.

And that, secondly, uh, relates to, um, levels of trust in diff, in, in politicians, in government, in different countries, uh, and trust about where this extra tax revenue will be used. Will it be used for public goods? And of course, in the US, that is further complicated by at least two other things: uh, anti-big government sentiments historically, plus this very fragmented political system where you have to win the argument in a whole number of different fora.

And then a third issue, which isn't so much about the political system but the social system, and that is really, I'm afraid, to sort of skepticism about the willingness of the super-rich to pay these taxes and their sort of belief in their capacity to get round of them. So a lot of those people in the middle, I think, are thinking, "I'm going to have to pay these taxes, but are those, you know, people with the Ferrari is going to?"

So to conclude, um, you know, probably many of you, like me, have been reading Lyndon and Williamson's recent economic history of American growth and inequality. And they make a really interesting point in conclusion, I think, which is that in many areas, even if we ar absolutely sure still what causes these spikes in inequality over history, we actually have a pretty good idea what kinds of social policies could mitigate them. What is much harder is to know how to motivate the political support for those policies. And that seems like a really good opportunity to hand over to the politician. I'll, and why don't we swap so you're near the [Applause] go for.

Right, well, I'm in a s slightly odd position not having heard the lecture, so, uh, uh, if I seem off point, that is my, uh, that is my, uh, explanation. First of all, can I just say, Robert, it's a great privilege to be, um, on the, uh, platform with you, and I'm a have been a long-standing admirer of your, um, work. And it's great to be here with Nikki and, uh, and John. And I think John's Institute is a very, very important innovation.

Um, so, uh, reading the book, I have read the book, that's my sort of, uh, even though I wasn't here for the lecture. Um, reading the book sort of, you know, it prompts you to... I recommend reading it, uh, as well, and buying it and reading it. Uh, uh, it sort of prompts you to think about, uh, different luck stories, because it is, it is replete with great luck stories. And my favorite luck story, my favorite political luck story, was told to me by David Axelrod, uh, who, who used to work for Barack Obama. And he said this publicly, and it, um, it's, uh, it's him sitting, uh, in the Oval Office with, uh, Barack Obama, and they're in a very, very close vote. Uh, and, uh, the Congressional Aid, the person liaising with Congress, says, um, "Well, I don't know how it's going to go, Mr. President. How lucky are you feeling?" And he says, "Well, my name is Barack Hussein Obama, and I'm President of the United States, so I'm feeling pretty lucky." Uh, uh, I don't know whether they won the vote, um, uh, or not. Um, so I read the stuff about the progressive consumption tax, and I thought, I need to sort of think more about this. I suppose I am instinctively skeptical that there is a single-bullet policy solution, um, to the, uh, problems that you rightly identify in the book. But there are four lessons that I sort of wanted to draw out a little bit, uh, from the book, which I think are really, uh, important lessons, um, for progressive politics, or important thoughts that it stimulated my mind about progressive politics.

The first is, um, and this is sort trying to show that I've read the book, uh, but it's on page 12, unfortunately, so, uh, um, but, but so doesn't quite prove it. But, but, uh, I don't think you do, you cite it in your lecture. And this is this very, very famous Elizabeth Warren clip, which some people will have seen, uh, what's known as a "you didn't build it," uh, uh, clip. You didn't talk about... I mentioned the Obama speech, which is essentially the same, right? Um, and, uh, and I think that is an incredibly powerful thought, which is that people's private, uh, wealth, people's private, uh, success, is a consequence of public, uh, a kind of framework of public institutions. And I think as a, and I gather, just having gone back to look at the clip, that it was actually George Lov who first, um, talked about this, um, maybe at the same time as Elizabeth Warren. But I think that thought, that it's the investment you make in Ed, that the public goods have an absolutely crucial role in private success. And I think the interesting thing about this is that that doesn't rely on saying people are necessarily lucky. Um, it doesn't, I mean, it's, it's obviously, you obviously feature it in the book, but it isn't, I would suggest, it isn't sort of contingent on a luck analysis. It's contingent simply on the know that, you know, the workers that are educated, the roads that are built, and all of that provide a platform on which people can succeed. It doesn't bear on the question, but I think it is an incredibly important framing point, and a framing point that we haven't, uh, exploited and talked about and enough. And as bar Obama found, I don't know whether you mentioned this, you know, his version of it got him into a lot of trouble, uh, because of the particular phrase phrase that us he said, "If you build a great business, you didn't build it," and then he had a whole, uh, uh, business. But that's the first thing.

Secondly, and this relates to your 'Takes All' book at, but also what you say in, in this book, I, I, I suppose I raise a question, which is whether you sufficiently sort of, um, account for, uh, the question of norms. So you talk a lot about chief executive pay. It's gone from 40 times the lowest-paid worker to 400 times the, the lowest-paid worker, or something like that. And you talk about the, the way the market has changed, uh, and, uh, so globalization and so on. Um, I suspect you do talk about norms in the book, but it seems to me norms are an incredibly important, powerful thing. So it was sort of unacceptable as a chief executive in the 1950s or 1960s to pay yourself 400 times your average worker. It's was not unacceptable today. And I think, I, I think the, you know, we, this interaction of the cultural norms of the time with the political philosophy of the time, I think, is incredibly important. You know, it can't, it's not coincidence that this happened in the Reagan-Thatcher era, when people were being told, "We're going to cut taxes for you at the top, and it's okay, you can make as much money as you like. You don't have any other obligations?" Question mark. Is that changing? I, I think to some extent it may be changing. I'm going to come on to that, um, in a second. So, so I think that's the sort of second thing that it made me think about is how do you change these norms, because I think they do go to this question of, um, of how you tackle inequality and how, how you can overcome some of the things you talk about in the book.

Thirdly, um, in the book you have a, um, passage which is the sort of, which I think is really important at the moment, is to sort of make us feel better, um, about the general state of the world, which I think in 2016 is really, uh, uh, very, very, very necessary. And you say, "Look, you know, it's disappointing when you go on Fox News." Did you show the Fox News qu? Yeah, when you, it's disappointing when you go on Fox News and, you know, have this guy shouting at you and all of that, and it doesn't feel like the culture is changing in the way that you'd want. And, you know, uh, the sort of rich people you talk to aren't necessarily completely accepting your argument. But you say, actually, the, the worst, the effect of, you know, history is on our side and so on. And you cite the example of same-sex marriage. And I think this is really interesting, this question of, of, of same-sex marriage, because if I think about my political lifetime, or did my adult lifetime, the biggest single change that I've seen, the biggest single progressive change, is the change in attitudes towards again, lesbian rights. Now, the, the interesting question is, is sort of why? Um, because at least it, it should give us some inclination about what it means about other progressive causes that we want to fight for. My intuition, but I don't have much scientific evidence for this, like most politicians, uh, uh, is, uh, my intuition is it's because people came up against the gay lesbian people they knew who were saying, "Hang on a minute, we, we, we, we, we are your friends, and we demand equality." And, and that, that was an incredibly powerful sort of drive to change the attitudes of ordinary people.

And then, and this is a less optimistic thought, um, the, the, the problem is that it seems to me that divided societies beget even more divided societies, in the sense that part of the problem that we face today is people tend to lead parallel lives. And, and the more people lead parallel lives, the more unsympathetic they are to some of the arguments that progressive politics makes. And a, a, and the more they'll lead even more parallel, um, lives. So that's slightly gloomy.

Um, the, but the, the last point is, um, this: you, you, you cite in the book a conversation that you have with Robert putam about his excellent book, 'Our Kids'. And, and you sort of, s, you talk about a discussion that you had with him about whether one should be arguing out of self-interest or moral principle, which is clearly a very, very, to the rich in particular, which is a very interesting, um, question. It seems to me that out of a very, very gloomy 2016, one of the things that has to happen is this has got to be a teachable moment for the business class and the top echelons of our society. And in the following sense that I just, to talk about my own personal experience for one, uh, second, 2015 personal experience, one of the things that strikes me... I lost the general election, in case you didn't know. Uh, uh, uh, um, I was just telling our American friend. Um, the, the, the, the, the one of the things that strikes me is business, business, um, resisted the relatively modest incremental changes I was proposing, partly on the grounds that I was so-called anti-business, and voted for the competence an order that David Cameron would bring. Uh, and it obviously hasn't quite worked out, um, that way. But, but beneath that sort of thought, there is an interesting question. There's an American billionaire called Nick Hanah, who has done a brilliant talk called 'The Pitchforks Are Coming', who he's a plutocrat who sort of warns other plutocrats, this is a couple of years back, "If we don't do something, things are going to go really bad for us." And I, I remember when I was proposing the top rate of income tax, a very top business person in Britain said to me, "I can't possibly support your terrible top rate of income tax plan, but I do believe that for capitalism to survive, there needs to be fairness." And in a sense, so, so one of the things I take out of this moment and out of reading the book is these points, but, but, but fundamentally, you've got to appeal to both self-interest and moral principle, and that both things are absolutely important. And, and, and this is the point I will end on, which is I think lot of people in the room—this is just a sort of guests that I'm making—aren't delighted by Brexit and Trump. Um, but I think it's incredibly important not simply to be gloomy and to think, you've obviously got to, you know, if you're an American, you're going to fight against some of the worst excesses of Trump. But, but to think, what does this teach us about what people are saying about our society, and how we do we turn this moment of crisis into a moment of opportunity? Thank you.

[Applause]

Thank you very much indeed, both of those remarks, and for the efforts you made to get here this evening, um, against the odds. Um, I think given the time, I'm going to ask, um, Bob to say some final remarks in response to those comments. There will then be a chance, um, there are, as we've said, mentioned several times, copies of the book outside, and will be signing them, um, so there'll be a chance to take up points with him then. But can I leave you to to to, um, wind up and respond to the, the beginning of what I'm sure will be a conversation that will carry on for a long time outside this room? Thank you.

Yes, I'm, I'm very grateful for, you know, the insightful comments, uh, from both of you. Really, that's terrific to have attention from such people to something I thought about and tried to do my best with, and then to get feedback like that is, is really a, a great gift.

Uh, Nikki mentioned how you, uh, appeal to the people in the middle, maybe even below the middle, who don't hear the message that you're trying to tell them. Uh, going back to the George W. Bush Administration, uh, one of, one of his favorite projects was to sell people on the desirability of eliminating the estate tax, the tax you pay, or your family pays, after you die. Uh, that's by far the best tax we have. You don't, you don't pay it until you die. It's not unpleasant, uh, when it comes to, uh, it, it, at current levels in the US, at least, it affects a tiny number of families. The exemption levels are so high. And yet, uh, consistent with, uh, Nicholas's comments, the, the poor, even the people in the bottom quintile, uh, think it would be a great idea to eliminate the estate tax, and that's often cited in political proposals to do that.

Uh, you, you really need to go a little deeper than, uh, some of those superficial attempts to probe what people in the middle think. Uh, I, I hired Cornell's Survey Research Institute to do a survey about the estate tax. And so what I ask them to do was, was to query respondents, uh, "Do you think we should eliminate the estate tax, the tax people pay after a death?" Uh, full stop. Uh, 75% said yes, uh, up and down the income distribution.

I did a second wave, had them do a second wave of the survey, saying that it's been proposed that we eliminate the estate tax. "If we do that, uh, and then here's how much revenue it raises, if we do that, we will have to do some Comin combination of three things: uh, increase sales taxes, income taxes, other taxes, or cut back on government services." And then a couple of quick examples of services that had been recently cut back. "Uh, and/or borrow more money from the Japanese and the Chinese, which would have to be repaid with full in full with interest. Should we eliminate the estate tax?" Uh, people up and down the income lad said no, 75%, when you asked them that.

So I think nobody likes tax. If somebody says he's going to tax you, of course that's a negative thing. But the, the, the point of, of much of the argument in the book is that this is not a zero-sum class war. This is not taking from one group, making them worse off, uh, in order to give to another group who may not seem deserving to the people we've taken from, to make them better off, even though they're not working as hard as we are. They're not working as hard as the people at the top are. They people at the top work 80 hours a week. Uh, I don't know here, but in the US, that's quite common. This is a, a shift that will make people at the top better off, never mind everybody, uh, below that. The, the expenditures that we have encouraged by allowing the income distribution to come so richly skewed are not in the interests of any person in the society. They are wasteful, and waste is a transparently immoral thing if you think there's not enough to do everything that would be good to do.

So what a fantastic evening we've had that, um, even though we are well over time, um, uh, people are only just now leaving. Um, you just mentioned that, um, there is a problem of, of the, the bar being raised as far as spending on marriages is concerned. Those of us who lecture, um, now face the horrible, um, realization that the bar has been raised in terms, terms of excellence of presentations of this kind. Um, you said earlier on that, um, if you induce feelings of gratitude, it makes people both feel better and become more generous. I know we are all now feeling a lot better, and we will all now be a great deal more generous as a result of having such a fantastic presentation. Thank you very much. [Music] Indeed.