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Columbia University economist Edmund Phelps. (BRENDAN MCDERMID/REUTERS)
Columbia University economist Edmund Phelps. (BRENDAN MCDERMID/REUTERS)

Economist Edmund Phelps on restoring the spirit of adventure Add to ...

Columbia University economist Edmund Phelps made some waves at a conference in Beijing last month that included three fellow Nobel Prize winners. His blunt message: Too many young Chinese are intent on pursuing government jobs that are a waste of their talents and education. What is being lost in this “public servant frenzy” to obtain secure but unrewarding work is the eagerness to embrace risks, strike out in new directions and spark the widespread innovation needed to develop a thriving modern economy.

China faces other cultural and political hurdles on the road to mass prosperity, not the least of which is its lack of democratic freedoms. “I am inclined to think that the [Chinese] government will be keeping too much of a lid on things for a completely uncontrolled outbreak of thousands of new companies producing God-knows-what, unrecorded amounts of undefined goods,” Prof. Phelps says in an interview from his Manhattan office. “It’s hard to see how the government would be comfortable with that.”

But what really bothers him is how similar unhealthy attitudes have infected once-dynamic free-market economies in Europe and North America, with serious consequences for their future well-being. That’s the theme of his wide-ranging new book, Mass Flourishing: How Grassroots Innovation Created Jobs, Challenge and Change, a distillation of years of research and thought about the changes in values and attitudes that once unleashed wide-scale creativity and risk-taking and which are under severe threat today.

For that, Prof. Phelps blames, among other things, a resurgence of traditional values that seek to restore the primacy of the state and community over the individual, changes in the way parents raise their children and the market-driven incentives that prompt politicians, business executives and investors to focus on short-term results rather than groundbreaking ideas that might take years of costly investments to produce any sort of payoff.

“To be a modern capitalist economy, they’ve got to be innovative,” he says. “I would like to see people dreaming of striking out on their own into some other country or their own, wherever they feel the action is, in the hope of an exciting and rewarding career.”

Prof. Phelps has always disliked the notion that work can somehow be disengaged from the rest of a person’s life. Indeed, the 2006 Nobel laureate has identified being fully involved in a challenging job as one of the vital building blocks of what we might today call “the good life.” The energetic professor, who recently celebrated his 80th birthday at a big bash in Manhattan, certainly practises what he preaches about work and life. When he isn’t spending full days running Columbia’s Center on Capitalism and Society and penning important books, he dashes over to southern China, where he serves as dean of a business school.

In Prof. Phelps’s telling, the drive toward modernity began in the 1820s in Britain and subsequently spread to France, Belgium, Germany and later North America. During this period of enormous creativity, which stretched until about 1960 in the United States, the forces of change were not a handful of brilliant scientists or industrial visionaries like Henry Ford but millions of people who found themselves with the freedom and incentive to create and market a wave of new products and processes. He colourfully depicts these industrializing economies as “a vast imaginarium” brimming with new ideas.

“People were adventurous. They struck out on their own. They thought for themselves; they worked for themselves; they happily competed with each other,” he says. “They were ready to embark on voyages into the unknown. It was a period of enormous pioneering spirit. We’ve seen a significant decline in that.”

Today, he observes, “people have gotten the idea that the government is just a fountain of benefits and that the most profitable thing you can do is try to wangle your share. Never mind earning income the old-fashioned way by trying to offer something new or distinctive. It’s a misuse of government. Instead of having the resources to do its core functions, like a bit of economic justice, subsidies for the working poor and education … so much is going into carve-outs and regulations and favours to this sector and that sector.”

The trick is how to restore the spirit of personal adventure. Prof. Phelps has concluded that “not a heck of a lot can be done until we realize that we’ve had the wrong attitudes and we have to correct them: this sense of entitlement, this endemic rent-seeking, this habitual feeling that the government exists to protect us from each other and whatever vicissitudes strike the country. Without a fundamental change in that substructure of attitudes and beliefs, it’s hard to see how much can be done in the way of improving institutions.”

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