A Discussion of Bourgeois Equality Chapter 51 “Sweet Talk Rules the Economy”
No, this is not about inappropriate talk. Dr. McCloskey has been arguing all along in her book that the rise of ideas, rhetoric and language that respect the dignity of the bourgeois merchant was key to the Great Enrichment.
This chapter is the first in Part VIII that is laying out why she thinks ideas are what caused the modern developed world.
She explores the role of persuasion, what she calls sweet talk, in many of our jobs in this chapter. Next chapter she informs us that she uses sweet talk as a synonym for rhetoric. (p. 499)
To make sense of her subtle point, she starts off on a favorite topic, bashing mathematical economists.
Economists’ models are looking at dollars only, balancing marginal costs and marginal revenues, with no room for the words of one seller persuading buyers more than another. Such words are considered “cheap talk” because it costs little to say them so economists assume they cannot make much difference. (p. 489)
The Samuelsonian economist merely smiles and carries on taking her first partial derivative. And the Marxian economist merely scowls and carries on searching for contradictions. (p. 490)
McCloskey is saying economists ignore a significant activity in the economy — that approximately 25% of national income is earned from persuasion, sweet talk. (p. 490)
She is not talking about advertising — what many of us first think of when bringing up persuasion and commerce. She says advertising only adds up to 2% of GDP and much of that is informative advertising like signs and business-to-business advertising. (p. 491)
Instead, she is talking about people needing to talk to each other to get their jobs done. They are not robots relaying information and in most cases they are not tyrants who can order others around. Much on the job communication has to be persuasive to get things done.
Literal talk is special — in particular it is cheap…We say. “A word to the wise is sufficient.” Sweet talk is the carefully chosen but to a large degree opportunity-cost-free words of persuasion, and a quarter of our income comes from it. (p. 495)
Where does she get this figure that says about 25% of our national income comes from sweet talk?
She runs through some occupations and assigns a percentage to each of the time they spend engaged in this persuasive sweet talk.
Lawyers and judges she puts at 100%, managers, salespeople, and writers at 75%, teachers, loan officers and claims adjustors at 50% and so on. (p. 493)
She takes the number of jobs in each category times the percentage of sweet talk and comes up with 36 million equivalent workers — which is about 25% of the 140 million employed people. (p. 494)
Though she is presenting this causally here, she did coauthor a piece for the prestigious American Economic Review on this calculation in 1995. I think for this book she was just updating the figures to 2007. She also cites another economist, Gerry Antioch, who followed her 1995 article and found the number to be 30% in 2009. (p. 494)
Next chapter she will go further into why this matters, but here she is noting that sweet talk is human — something simple Samuelsonian, Max U economics tends to leave out.
A thorough survey of seven thousand workers in the United States by Daniel Pink confirms the result, as reported in To Sell is Human: The Surprising Truth about Moving Others (2012). ‘Across a range of professions,’ he writes, ‘we are devoting roughly 24 minutes of every hour to moving others’ in non-sales sweet talk, that is, without a purchase. He asked, ‘What percentage of your work involves convincing or persuading people to give up something they value for something you have?’ and got the reply of 41 percent. ‘The capacity to sell isn’t some unusual adaptation to the merciless world of commerce…Selling is fundamentally human. (p. 496)
The good news is there will be plenty of work to do in the future — you do not have to worry about the robot invasion.
It is fashionable today to wring our hands about what will happen when people do not have jobs anymore as more jobs become automated. I am always annoyed by that because creative destruction is a part of the trade tested system of betterment we have.
New inventions mean some things go away, but also new things, and jobs, are created. McCloskey says it really well.
Easily four-fifths of the employments of 1850 no longer exist — doing laundry by hand at the river, or climbing the rigging… Yet we are not four-fifths unemployed. (p. 497)
The old economics textbook example is that all the buggy whip manufacturers lost their jobs when the car took over. This is structural unemployment. And yet there were many jobs and supportive industries created by the car. The old jobs are destroyed freeing resources up for the new industries which create the new jobs.
The trend towards AI and automation causes some job loss. However, automation works for the parts of the jobs that are more mechanistic; we cannot automate sweet talk.
McCloskey says that the sweet talk share of the economy has not gone down over time though structural unemployment has been a feature for over two hundred years.
She sums it up with one last dig at the dollars only Samuelsonian economists.
The work we do will be more and more about decisions and persuading others to agree, changing minds, and less and less about implementation by hand. The reason so many intelligent economists have feared technological unemployment is that they do not put persuasion in the national product. But the economy does. (p. 498)
Reference: McCloskey, Deirdre Nansen, 2016. “Sweet Talk Rules the Economy,” Chapter 51 of Bourgeois Equality, The University of Chicago Press.
