3:59

Professor Princeton, now Emeritus,

4:02

which means retired. I'm

4:04

the author most recently of Economics

4:07

in America, an immigrant economist

4:10

explores the land of inequality. But

4:13

I'm also the author with Anne Case of

4:15

three years ago, All Deaths with Despair

4:18

and the Future of Capitalism. And

4:20

before that, a book called The Great Escape.

4:23

Fabulous. Tell us about your new book and what

4:25

inspired you to write it.

4:27

Well, some of the pieces were occasional

4:29

pieces that I'd written over the years. And

4:31

it occurred to me and to Princeton

4:33

Press that they might with a suitable

4:35

amount of work be turned into

4:38

sort of a coherent book. So

4:40

it's partly memoir, sort of about

4:42

me, but also

4:45

memoirs of other economists that

4:47

I've met over the last 40 years. And

4:50

through that, I wanted to give people

4:53

a view of what it was like to

4:55

be an economist, what economists

4:57

do, whether they're really all

4:59

corrupt or whether some of them are actually nice.

5:02

I wanted to talk about some good economics,

5:05

some bad economics. Towards

5:08

the end, I think I

5:10

want to talk a little bit about

5:12

how my profession I think has gone

5:14

a little bit off, maybe more than a little

5:17

bit off the rails. And

5:19

a lot of the problems that

5:21

we face today, especially

5:23

the polarization around

5:25

a lot of very angry, very disillusioned people

5:28

as something, not everything, but

5:30

something to do with the way we practice and

5:33

interpret economics.

5:35

Yeah, so you call America the

5:37

land of inequality. It wasn't

5:40

always this way. There is

5:42

a suspicious correspondence

5:45

between when you came to the United States and

5:47

when it started to get more unequal, I

5:49

should say. I'm thinking of myself

5:51

a little bit before that.

5:59

date of around 1970. And

6:02

also, one of the things

6:05

that I feel very strongly about is that the inequality

6:07

you're referring to there, which is sort of rising

6:10

income and wealth inequality, is extremely

6:12

important. But it's not the only

6:14

sort of inequality that's really important.

6:17

I mean, most Americans, most people

6:19

who talk about these things are certainly equivalent and

6:21

certainly familiar with

6:24

racial inequalities of horrendous

6:26

and long lasting sort. But

6:28

the other inequalities that I've been much

6:31

concerned about is between people who

6:33

do and do not have a four year college

6:35

degree. And the

6:37

terrible outcomes that are besetting

6:39

the two thirds of the population without a college

6:42

degree.

6:43

Right. Now, we talked with

6:45

Michael Sandel a few weeks back

6:47

about that. And I

6:49

know you quote him in the book and you go into this

6:52

in great detail. This is

6:55

really the, as you point out, and

6:58

it started in the mid 1970s,

7:00

this is really the big sort of shift

7:02

that not only has the

7:05

stagnant and declining wages of non-college

7:07

educated, well, men particularly,

7:11

but it's led not just to rising

7:14

inequality, economic

7:16

inequality, but also to this

7:19

degradation of the American political

7:22

system.

7:22

Yes. And also for a lot of people,

7:25

it's a degradation of their communities. Yeah.

7:28

It's a degradation of power,

7:31

which they used to have, perhaps most

7:33

notably through unions, which hardly

7:35

exist anymore. And

7:39

more seriously, perhaps most seriously

7:41

of all, I'm not sure I would put it up there, but somewhat

7:44

declining life expectancy. Yes. In

7:47

a way that's just incredibly unusual.

7:50

Yeah. That part is particularly

7:52

shocking. But can you speak

7:55

a little bit about the

7:57

good, the bad and the ugly of economic inequality?

8:00

economics over the last, over

8:02

the span of your career. You know,

8:04

you have touched so many things.

8:07

You've been awarded a Nobel Prize. You've

8:10

been at the center of the orthodoxy

8:13

and a critic of it. If

8:15

you could, you know, just

8:17

expand on that as you

8:19

reflect on your profession

8:21

and your career. What does it make you

8:23

think and feel?

8:25

Confused,

8:26

I think. Me

8:29

too. Good. Yeah, we're, yeah. It's

8:32

quite hard to be at the center of the mainstream

8:35

and do all these things I've done, like being president of

8:37

the American Economic Association, for instance. But

8:39

compared to the AEA, it's

8:42

always been very diverse. So,

8:44

you know, this was an association that had both

8:46

Milton Friedman and Ken

8:48

Galbraith as presidents. So

8:52

it's never taken a very narrow view of

8:54

things. But come back to the good, the

8:56

bad, and the ugly. I mean, I

8:59

think the gun is, in some ways,

9:01

become much broader. You know, when

9:03

I came here permanently in 1983, it was becoming

9:08

more and more mathematical. It was all concerned

9:11

with general equilibrium theory or with

9:13

macro or with

9:15

micro theory. And there

9:18

were really very few people

9:20

in top universities

9:23

in economics department working on things

9:25

like poverty or inequality,

9:27

let alone race. So

9:30

people do work on these things now. So there's

9:32

been a big broadening of topics.

9:35

We're also very good compared,

9:38

perhaps, with some other social sciences

9:41

at working with data. We can sort

9:43

of count like accountants. And,

9:47

you know, as the world has become more data

9:49

intensive, that has certainly

9:52

opened up lots of avenues

9:53

which have been explored by

9:56

some very good people and with very interesting

9:58

results. The bad

10:01

and the ugly, maybe I can run

10:03

those two together, I'm not even quite sure what

10:05

the distinction is, is

10:08

that economics has

10:11

been very narrow in its focus compared

10:15

with its origins. So if you

10:19

read Adam Smith or Karl Marx or Ricardo

10:23

or John Stuart Mill or even Keynes, there's

10:26

a very broad set of issues,

10:28

including philosophy, some psychology,

10:31

but a serious contemplation of

10:34

the human condition in all its strengths

10:36

and weaknesses and in all

10:39

its dimensions. Whereas

10:41

a lot of economics over the last 20 or 30 years

10:44

has become obsessed with efficiency,

10:47

with the sort of allocation of

10:49

scarce resources among competing

10:52

ends to use Lionel

10:54

Robbins's famous definition. And

10:56

actually I think a lot of economists today, if you

10:58

ask them what economists do, they would say that.

11:01

Whereas other economists have

11:03

had much broader statements. I mean, Pigou had talked

11:06

about being motivated by withered

11:08

minds and mean streets, meaning

11:10

doing something about poverty. Keynes

11:13

talked about efficiency,

11:16

social justice and liberty and

11:19

trying to reconcile those two things.

11:22

We sort of given up on the second two of

11:24

those and seem

11:26

to focus almost entirely on

11:29

efficiency. And that means

11:31

economists have come out against lots

11:33

of things that are really important to ordinary

11:35

people, including minimum

11:37

wages, for instance. We've become

11:40

very in favor of unrestricted

11:43

free trade and free transfers of capital

11:46

around the world. We've become very

11:48

pro-immigration and have not really been

11:50

thinking very hard about whether there might be flaws

11:52

in that case or whether the

11:55

people who worry about it may have a

11:57

legitimate reason to worry about it. And

12:00

so I think we've taken over the political

12:04

and economic discourse in

12:06

a way that has missed a lot of

12:08

really important things and thus contributed

12:11

to the polarization and to

12:13

in some sense the disenfranchisement

12:16

of working people in America.

12:19

Why do you think that that happened?

12:21

Because it's certainly a transformation that has taken

12:23

place over half a

12:26

century more than more. Is it

12:28

something in the broader

12:30

culture or is it something some

12:33

pathology unique to

12:35

economics? Because it really

12:38

seems to function differently than a lot

12:40

of other sciences

12:42

or alleged sciences. Yeah,

12:44

I don't know the answer to that. I mean, there

12:46

clearly are very broad social forces

12:48

going on. So, you

12:51

know, people talk about neoliberalism

12:54

and, you know, the sort

12:57

of eventual retrenchment

12:59

of the New Deal as we move

13:01

back to something that looked much

13:03

more like the Gilded Age with

13:05

both the legal system and the economic system

13:08

and looking like that. And the redistribution

13:11

of power away from labor and

13:14

towards capital, which has swung back

13:16

and forward several times in

13:18

American history. So these broad social forces

13:21

were going on. I think economics

13:23

picked up on that, but also contributed

13:25

to it. You know, the mathematically

13:28

of economics didn't help. Also the fact when

13:30

you think of the huge increase

13:32

in fractions going to college and

13:34

everybody who gets a four year degree has to

13:36

take an economics course somewhere along the way.

13:39

And those economics 101 courses,

13:42

you know, are pretty brutal things

13:45

and I think tend to conform to the

13:49

story I've been telling about focusing

13:51

on efficiency and not much else.

13:53

That raises an important question because we

13:56

have confronted

13:58

other economists before.

13:59

for

14:01

and

14:02

they have said, oh, it's not economics.

14:04

It's, you know, everybody knows that the

14:06

story they tell in the Econ 101

14:08

textbook is, you know, a vast

14:11

simplification and the problem is not

14:13

enough people have gone on to take higher level

14:16

economics to know that what they were taught in

14:18

that first course isn't broadly

14:21

applicable and isn't necessarily true.

14:23

They're just useful fictions

14:25

as Krugman has said.

14:27

Is our problem, and I say our, Nick

14:30

and I, is our problem with

14:32

economics or is it merely with

14:35

introductory economics textbooks?

14:38

So why are the economics, I

14:40

think this idea of this is a

14:43

useful simplification. I just don't buy it all.

14:45

I mean, could you imagine what

14:47

Marx's Econ 101

14:50

would have been? Yeah.

14:54

So, you know, I think that economics 101 has

14:57

done a huge amount of damage. I mean, and there's,

14:59

you know, a group in London that's

15:02

putting together an online

15:04

free textbook which takes very different

15:06

attitudes. And actually, I'm encouraged

15:08

that quite a number of my Princeton colleagues are

15:11

using that text. Yeah, that's Sam

15:13

Bowles' effort, right? Well, it's partly

15:15

Sam Bowles and other people

15:17

at university college, London and so on. So, you

15:20

know, it's a lot of people, but yes, an

15:22

attempt to take a very different

15:24

view of these things. So I think the idea is a useful

15:26

simplification. If you, I mean, the problem

15:29

is most of these people are going to only do

15:32

one course. Yeah.

15:34

So then they go away and go to law school and they

15:36

turn into the Federalist Society or something,

15:39

you know. I mean, that's not really a good way to do

15:41

it. So Angus, you know, one of the things

15:44

that just really

15:48

surprises us is

15:50

the intensity

15:53

of resistance to

15:56

empirical evidence that contravenes

15:59

some of these. ideas. Famously,

16:01

I mean in your book you note

16:04

some of the people who attacked

16:07

Alan Kruger and Andrew Card when they first did

16:09

that first empirical study, James

16:12

Buchanan's famous quote in the

16:14

Wall Street Journal about them being camp following

16:16

horrors and all that stuff. Where

16:19

do you think that anger

16:21

comes from? Like why did it make

16:23

them so angry that

16:25

the empirical evidence seemed to suggest

16:28

that raising wages didn't kill

16:31

jobs?

16:32

Well I tell part of that story. I

16:34

think incidentally I may be the one who

16:37

was responsible for

16:38

finding that Buchanan quote. It's

16:40

in a tiny little addendum in

16:43

buried deep in the Wall Street Journal somewhere.

16:46

It's not you

16:48

know something that's very obvious and I was sort of appalled

16:51

by it at the time. First of all

16:53

it's money you know so a lot of the

16:55

opposition was

16:58

coming from the fast food industry and

17:00

what's it called the employment practices Institute

17:03

or something? Right we call it the

17:05

of the other EPI. The other

17:07

evil EPI.

17:12

And you know it's not obvious when you go

17:14

to the website where the money is coming from but of course

17:16

it is obvious that it's coming from the industry.

17:20

But that's not so surprising

17:22

right after all. You know you

17:24

can expect businesses to defend themselves.

17:27

It actually is somewhat of a confirmation

17:30

of their original case because

17:32

the original case only really makes sense

17:35

if this money is not.

17:38

The truth is that it's coming out of profits not

17:41

causing unemployment right. Right.

17:44

He told me the other day that Buchanan is a textbook

17:46

in which he even says that

17:49

if there's monopsony in the fast

17:51

food market you know then

17:54

increasing wages will actually just cut

17:56

profits. It doesn't cut employment at

17:59

all. least over a modest

18:01

range. Anyway, so it's

18:03

not a surprise that people vested

18:05

interests defend themselves. What

18:08

is a little more disturbing is how many

18:10

economists are happy to line up behind

18:13

them.

18:13

That's what I'm after. And, you know,

18:15

I don't have much to say about

18:17

that. I think there are a lot of people out there

18:20

who are,

18:21

you know, corruptible, if you call

18:23

it that, but they're certainly prepared to

18:26

adopt pleasing positions.

18:29

Yeah. That's where

18:31

the London School of Economics student noticed on his

18:33

door saying pleasing positions

18:35

adopted for cash. But

18:43

surely that's not

18:45

why most economists entered the profession.

18:48

No, that's true. But that doesn't mean they're

18:50

not susceptible

18:52

to the blindishments that come

18:55

their way. You know, and if you ask them about

18:58

those, they'll say things like, I've never

19:00

said anything that I felt the slightest bit

19:02

uncomfortable with, some of which

19:04

traces back to the way they think about economics.

19:07

And, you know, it's clear that most

19:10

economists – well, I'm not going to – I don't want to go

19:12

there. But, you know, money is very tempting.

19:14

To some extent, I came to America because

19:17

I got a much higher salary here, a much

19:19

higher standard of living. And, you know,

19:21

that turned out to be true. So I'm not

19:24

trying to sell myself as a model of virtue.

19:26

And, you know, something that your listeners

19:29

might want to know is this is not a book saying

19:31

Angus Deaton was right and all these other bad guys

19:33

were wrong. You know, it's

19:35

very much a book of how we were all wrong

19:38

or we all over-weighted

19:40

some things and not enough others.

19:42

Yeah, right. So you consider

19:45

yourself a mainstream economist?

19:48

It's not clear that other people do. But,

19:53

yeah, I think so. But,

19:55

I mean, it may be that in recent

19:57

years, maybe I'm just getting old and senile

20:00

or maybe I'm

20:02

a little further distance. Another

20:05

thing that's really important is I grew up in a very different

20:07

place and I talked a little

20:09

bit about that in the book. Where

20:12

I was, my first job was in Cambridge

20:15

in England, a very lowly job as a research assistant.

20:20

That could not be further away

20:22

from Chicago, libertarian

20:25

economics than

20:28

anywhere. I mean that is sort of the

20:30

ultimate opposite in some sense.

20:34

Those people regarded

20:36

Cambridge mass economics

20:38

as the enemy level of people

20:40

in Chicago who were

20:43

pushing libertarian ideas. So they were very

20:45

left wing. John Robinson

20:47

was sort of a Maoist. There

20:49

were a lot of Trotskyists there and so on. A

20:52

lot of them were actively organizing

20:54

communist unions.

20:56

So it was a very different sort of place from

20:59

any sort of American

21:01

department. I think those

21:03

ideas and those feelings

21:06

have stayed with me and they're always

21:08

really there ready to try

21:11

and interpret the world I'm living in today.

21:13

So Angus, I'm not asking

21:16

a rhetorical question. I'm asking a serious question.

21:18

So this podcast is dedicated to

21:22

telling a new story about economics and is

21:24

in many ways an attack

21:27

on what we see is the orthodoxy,

21:31

a bunch of ideas that look to

21:33

us as a protection

21:36

racket for the rich. The

21:39

idea that the economy, for example,

21:41

is a parade of optimal equilibrium, couldn't

21:44

be a more powerful idea to protect

21:47

the status quo. Because

21:49

in that world view, anything you do to mess with it

21:52

decreases the

21:54

efficiency and harms everybody. The

21:56

idea that price equals value, that people are paid

21:58

their marginal product. GDP equals

22:00

welfare. All these ideas, while

22:03

internally consistent and mathematically

22:06

elegant, when taken together

22:08

and taken seriously and

22:11

interpreted into policy, can't

22:14

but create any outcome other than making

22:16

rich people richer and everybody else poorer. Do you

22:19

substantially agree with that?

22:22

Substantially.

22:23

Yeah. And so my question

22:25

is, what advice would you give

22:28

us to be the most

22:31

useful critics of

22:34

the system

22:35

in order to advance a better world?

22:37

Like, you know, if you were our boss, what

22:40

would you tell us to do? That's

22:42

too hard a question. I've

22:47

never been very good at getting other people to

22:49

do things I wanted them to do. And

22:52

I mean, I think that in some ways has helped

22:54

me because I often work alone

22:56

and think alone. But to come

22:58

back to that, I mean, I was

23:01

reading a book by Andrew Koppelman

23:03

the other day about libertarianism, which

23:06

I liked. And it's sort of a critique

23:08

of libertarianism from a socialist from

23:10

a left wing perspective. And

23:13

he very clearly he has a lovely

23:15

phrase, which I can't quite put here, but

23:18

I can't quite remember precisely.

23:20

But it's exactly what you say. I mean, if libertarian

23:24

rhetoric, which is, you

23:26

know, leave the free market, keep government

23:28

out of things in an economy that

23:30

you're pretending is an economy like

23:33

that, an economics 101 economy,

23:36

is simply just a license for plunder. Yeah.

23:40

And that is exactly what

23:42

we have. And I think, you know, I've

23:44

tried for years to track it down. But I

23:46

remember reading Joan Robinson saying,

23:48

you know, American neoclassical

23:51

economics, I guess the term neoliberal

23:53

didn't exist, but you know,

23:56

neoclassical economics is

23:58

an appalloger for America. And

24:02

I wish I could find where she wrote that, but I've

24:04

so far not

24:05

been able to. And even chat GPT

24:07

doesn't seem to be able to fund

24:09

it. Oh, interesting. Well, I substantially

24:12

agree. And there are feedback loop, right?

24:15

I mean, American capitalism didn't always

24:18

view the only purpose of

24:20

the corporation to be – to

24:23

increase corporate profits for

24:25

shareholders, right? That's a relatively new

24:27

invention from the 70s, by the way, from

24:29

economists, right? Well, I

24:32

mean, there were – I mean, it's

24:34

chickens and eggs again, right? Yeah. There

24:39

were very rich people funding those economists

24:41

to spread the Constitution, the

24:43

story of the Moon Peril and society and all

24:46

that sort of stuff. You

24:48

know, as part of it and those people,

24:51

you know. So I

24:53

think Milton Friedman really believed what he thought.

24:56

And, you know, he was happy

24:58

to take money to help push those

25:01

ideas and the business market who funded

25:03

them. But, you know, there have been cycles

25:05

of this, too. I mean, there have been

25:07

earlier periods in the American history where corporations

25:09

were different. And there weren't –

25:12

there wasn't much corporations in the early

25:14

funding days when, as you said, there

25:16

was a large middle class and not very much

25:19

inequality of any kind.

25:21

In your book, you describe – you

25:24

define both conservative

25:27

and progressive mainstream economists

25:30

virtually identically, with

25:32

the exception that progressives are

25:35

more willing to make the big

25:37

trade-off for welfare purposes. I'm

25:40

curious, on the heterodox

25:42

side, outside of the mainstream, where

25:45

do you think the greatest

25:49

opportunities are in the

25:52

evolutionary camp, complexity?

25:55

Just rethinking the things. I'm glad you

25:57

picked that up, incidentally, because I wrote that

25:59

very carefully. And I hope someone would notice.

26:03

Oh, we say the exact same

26:05

thing. So of course I picked up on it. We've

26:08

been saying that about Democrats, that they're just

26:10

as bad as Republicans, they're just willing

26:12

to make that big tradeoff.

26:15

But they think it's there. They didn't used to be. I

26:18

know. There's been a big change.

26:20

That is the big change that's happened is within

26:22

the Democratic Party that sort of moved

26:25

away from a party of working class people. Largely

26:28

supported by unions to become

26:29

a party of

26:32

Econ 101. And

26:35

these educated leads who evolved on Econ 101.

26:38

We call it trickle down light. Okay.

26:44

So that I think is becoming pretty widely understood.

26:47

I'm encouraged by young

26:49

people in the profession who are thinking

26:51

in a very different direction. One

26:53

of the good things about economics is it's very

26:55

open. So you don't have to wait

26:58

until you're 60 years old to get a good

27:00

job in a powerful institution

27:03

when people are changing. And

27:05

there are important people and important

27:07

universities who are challenging the orthodoxy.

27:10

So I saw you to Darren Asmogla

27:12

on the show. Doron

27:15

is goring one of the sacred cows

27:18

of economics, which is that all political

27:20

change is good. Right?

27:22

That's very important work. And he's a very

27:24

important figure and that will really help. And

27:27

I think other people are changing

27:29

too. I mean, Danny Lourdrick's work

27:31

on trade, you know, and

27:33

how the so-called gains for trade are

27:35

tiny compared with the enormous amount of disruptions

27:38

they've done. People have

27:40

identified, you know, Charlie Schultz

27:43

is one of the great apostles of efficiency.

27:47

And you know, that is another

27:49

ox that's been pretty seriously gored. So

27:52

I think I'm, you

27:54

know, at my age, I'm 78 years old. I'm

27:57

not about to change the field. But

27:59

I mean, I do. perhaps exert some influence

28:02

as an elder, but I think there are young

28:04

people picking these things up.

28:06

Yeah, for sure. Do you think it

28:09

can be fixed or is it something

28:12

that the orthodoxy needs to be torn

28:14

down and replaced?

28:15

Well, I don't think it needs to be torn down,

28:18

it just needs to be ignored. Oh,

28:24

okay. Well, you

28:26

know, economics is, if you

28:28

talk to some of the philosophers of science, some

28:31

of them we've worked with who are interested in economics,

28:34

they will point out the fact that economics has multiple

28:36

models, many of which contradict

28:39

one another. So it's like

28:41

you go into a well-stocked store in which

28:43

there are many models there and you

28:46

can pick and choose which ones you want to look

28:49

at, the ones you want to use for a particular

28:51

problem. And the fact that they're mutually

28:53

inconsistent with one another is not really that

28:55

important provided you're

28:57

choosing correctly. And so

29:00

I think that the fact that these things

29:03

will change really

29:06

does make a difference. I mean, after all, I

29:08

mean, you know, Greg Manke taught 101 at

29:10

Harvard or EC1 or whatever,

29:12

EC10 I guess is what it's called. EC10, yeah.

29:14

And then they decided the students

29:17

protested to the point and now it's

29:20

Jason Furman. Like

29:23

one inch better. Yeah,

29:25

and using Manke's book. It's

29:27

a lot better. It may not

29:29

be where you and I would choose to make it go, but

29:32

it's a lot better than it was. And

29:34

you know, that process I think will,

29:36

you know, that's progress and sometimes

29:39

progress is pretty incremental.

29:41

Yeah.

29:42

So I want a definitive answer

29:44

on the titles of the final two

29:47

chapters of the book, which are, did

29:49

economists break the economy and

29:52

is economic failure a failure of economics?

29:56

Yes or no.

29:59

They don't have sole responsibility for breaking

30:02

the E. And that's the story

30:04

that runs through the book. It's a combination

30:06

of bad economics who were prepared and

30:08

a lot of money. And when you put those

30:11

two things together, you can do a lot of harm.

30:13

Yeah. Do we

30:15

always ask in our interviews, a

30:17

benevolent dictator question? I guess

30:20

one form of it would be, if

30:22

you had to do your career over again,

30:25

would you do anything differently?

30:27

I don't know. That's not a benevolent

30:29

dictator question. And one

30:32

of the things you tell your children is that

30:35

decision you're about to make is

30:37

not as important as you think it is, because

30:40

once you're on the other side of it, you'll have no idea

30:42

what it would have been like

30:43

had you done something different. Yeah.

30:46

So I've had a good time. I've learned

30:49

a lot. And I've

30:51

had a lot of recognition for what I do. And

30:54

I wouldn't undo that. But

30:56

I hope that maybe the next generation,

30:59

as I've been talking about, will

31:02

help move the profession in a somewhat different

31:05

direction.

31:06

So if you were a benevolent... Let's get to,

31:08

yeah, the actual benevolent dictator

31:10

question. If you were a benevolent dictator and

31:13

had controls

31:14

over the

31:15

levers

31:17

of policy, knowing what you know about

31:19

economics. And knowing what you know about

31:22

economics in America, the title of

31:24

your book. Yeah. What would you do? I'd

31:26

abolish all the laws that make it hard

31:28

to unionize. Okay. So

31:31

countervailing power. Yes. Let's

31:34

have some countervailing power back again. I

31:36

think that would be the single most important change

31:39

that we could have. And we'd

31:41

have to do it soon, because otherwise,

31:43

you know, I think it's in your title.

31:46

They're going to come for us with pitchfork.

31:48

Yeah. Yeah. No. Okay.

31:50

It's a good answer. Are you encouraged by

31:53

what you're seeing with the UAW strikes

31:55

and the attitudes of the UAW?

31:58

I am. And

31:59

I'm... I'm encouraged.

32:01

We all like to see our work having some effect

32:04

and the work that Anna and I have done

32:06

on deaths of despair has

32:08

moved people so that yes, Janet

32:11

Yellen has been a huge supporter of our

32:13

work since it first came out and talks

32:16

about it frequently. I think

32:18

you know that brings us

32:21

great pleasure

32:22

Yeah, well and the Biden administration

32:24

has broken with

32:27

the last 40 years of neoliberal

32:29

economic policy in a really profound way

32:32

and you know, I think you can take some credit for that.

32:35

Well, thank you. I wasn't

32:38

going to say that but I'm

32:40

very encouraged by that. The question

32:42

of course is just whether it's you

32:45

know green shoots that are about to be sunk

32:47

under an avalanche of money or whether

32:50

it really will rekindle a new future

32:52

and let's hope for the latter.

32:54

And our final question is Why

32:57

do you do this work?

32:59

You probably asked

33:01

my therapist that. I

33:06

mean I grew up pretty poor. We

33:09

worried about money a lot until quite

33:12

late in life even after I

33:14

was by myself. So

33:17

I've always had an

33:20

understanding of that end of things

33:22

I think. I was never desperately poor but

33:26

this sense of worrying about money all the

33:28

time is something that's very very

33:30

bad for people and I wanted

33:32

to understand how that came about and I wanted

33:35

to understand you know, what makes

33:37

people tick and so a lot

33:39

of the early work I did which is you know, very

33:41

mathematical very mainstream and so on

33:44

was still was about that and

33:47

you know, the two people who've had the most

33:49

influence on me

33:50

were Richard Stone who I

33:53

talked about in the book and he

33:55

was one of the great measurers of

33:57

the 20th century. You know, he was interested

33:59

in collecting data describing

34:02

what was going on. And the other was Amartya

34:04

Sen, who I've known almost as long,

34:07

and you know has always had that sort

34:10

of moral compass as part

34:12

of why we do economics. Yeah,

34:14

definitely one of our heroes. Well,

34:18

Angus, we can't

34:20

thank you enough for coming

34:22

on our show. We're huge fans

34:25

of your work. We're just really

34:27

thrilled to get to talk to you, and we

34:30

wish you all the best in

34:32

your future endeavors. We think you still

34:34

will change the profession. We give you more

34:36

credit. I

34:39

think the thing that worries us most about the work

34:41

we're doing now is the sense that many people

34:43

seem to believe there's

34:45

no real crisis at all, and

34:48

you know it's just an opioid crisis,

34:51

or we just got our numbers wrong. And

34:53

you know basically America's

34:56

pretty saddened, and they're jumping

34:58

up and celebrating how well the American

35:01

economy is doing relative to Europe while

35:04

people are dying in droves. Yeah,

35:06

yeah.

35:06

Well sir, thank you so much for being

35:09

with us. Thank you. Yeah,

35:16

Goldie, I was really hoping that Angus

35:18

would give us some really wise

35:20

advice about how to be,

35:23

it was a stretch, an overreach

35:26

in order to get some

35:28

more clarity about what we

35:30

do and how we do it. I think

35:33

you know it is a... But he did. Yeah. He

35:36

simplified it, which is countervailing

35:39

power. Yeah. You need more of that, and

35:42

that's where unions come in. Yeah. I just

35:45

have to ask you, so if you were Angus

35:47

and I asked you that question, would your answer

35:50

have been the same? I know,

35:52

probably not, largely because

35:56

it takes me much longer to drill

35:58

down the core principles. I tried

36:00

to get there, but when I think

36:02

about his answer, what

36:04

he's essentially saying is that when you

36:07

create the conditions for countervailing

36:10

power, it works organically

36:12

in

36:13

the market. As a first principle,

36:16

he's either right or damn near right, correct?

36:18

Right. The thing is, it's really simple

36:21

to do. It's

36:23

not complicated. What you do is

36:26

you make it a hell of a lot easier

36:29

for workers to organize. You support

36:31

organized labor. You take away

36:34

all the restrictions that we've built out

36:36

over the years, and then you

36:38

allow

36:39

organized labor. You allow workers

36:42

to organize

36:44

to

36:45

build their own power to countervail

36:48

the power of employers, and

36:50

you get good things from that. You

36:52

don't have to overthink it. We've

36:54

talked about this a lot, Nick, that what

36:56

we have in our economy

36:59

is a grotesque power

37:02

imbalance that

37:04

is inherent to markets

37:06

operating unfettered. You

37:09

can go all the way back to Adam Smith

37:12

and see that observation. It

37:15

runs through

37:16

classical economics, and

37:18

it actually runs through much

37:21

of

37:21

what became neoclassical

37:23

economics. You see it in Galbraith.

37:26

You see it in Keynes. There

37:28

are different ways of enabling

37:31

and exercising countervailing power,

37:33

but the simplest and the one with the best

37:37

historical support

37:39

is organized labor. You see

37:41

it throughout history that conditions only

37:44

improved when workers were allowed

37:47

to organize. Capitalism

37:50

was not good for the vast majority

37:52

of people until workers were

37:54

able to organize, which by the way was illegal

37:57

for the first century of capitalism.

38:00

It's true. It's true. I think yeah,

38:03

you were hoping and I was hoping for

38:06

a more detailed prescription But

38:08

I think what again the wisdom

38:10

of that answer Is that he understands

38:14

and if you read the book you you understand how

38:16

how complicated the politics is and

38:20

how much money there is on

38:23

the side of capital

38:25

capital and so again A

38:28

lot of capital on the side of capital Right.

38:31

So this is a a very simple

38:33

solution. It's not the only thing you need to do,

38:35

but it would go a A long way

38:38

and again, we we brought it up near the end. You

38:40

see it with the uaw strikes and

38:43

by the way how important just uh

38:45

political leadership is how roundly

38:48

criticized president biden was for

38:51

allegedly violating norms by

38:54

Joining Unbelievable.

38:56

Yeah on the picket line and that's all

38:59

he did Yeah with show

39:01

up there and side with them.

39:03

Yeah, that's all he did and

39:05

a few weeks later You see

39:08

the the strike being settled first ford

39:10

then salantis now gm with

39:13

these big victories for the

39:15

uaw and To

39:18

the uaw leadership's credit They're

39:20

not stopping there because they understand

39:23

if they get these big contract

39:25

concessions out of the big three You're

39:28

just gonna and that's all you do and

39:30

you don't use that as a step towards

39:34

organizing dumler, uh bents

39:36

and Toyota

39:38

and honda and kia

39:41

and everybody else building cars here

39:43

Then you're just going to shift production to yeah

39:46

uh the uh, the so-called Right

39:49

to work states and to non unionized

39:52

plants. So this is

39:54

one step You get this contract

39:56

and now you go to striking you go to autoworker

39:58

zelser and say you could have this too.

40:01

Let's organize and join together." And

40:03

that's what's important. And it's

40:06

big what's happening now. And he's right.

40:08

These may just be green

40:11

shoots that are smothered in the

40:14

collapse of our democracy. That

40:16

could come in the next couple years. But

40:19

hopefully they're not. Yeah. Yeah. I've

40:21

got one other takeaway from this, and that is,

40:23

you know, to point out in the

40:25

book, by the way, his first chapter

40:27

starts with the minimum wage. I know. So

40:29

great. He talks about the $15 wage fight

40:33

in Seattle. And we've

40:35

repeated that before, the Buchanan

40:37

quote, which is one of my favorite quotes

40:40

of all time. Buchanan, by the way, also

40:42

a Nobel Laureate, which is a

40:44

cautionary tale about Nobel Laureate.

40:48

Yeah, yeah, yeah. Half the Nobel Laureates

40:50

in economics were total shitbags. Right.

40:54

So, but it's really

40:56

important when it comes to the

40:58

credibility of mainstream

41:01

macroeconomics in particular and how mathematically

41:04

it's become. When Cardin-Kruger

41:07

did that initial study on minimum

41:10

wage differences in New Jersey and Pennsylvania,

41:13

this difference in difference study and found that

41:16

in fact employment increased

41:18

faster in New Jersey where they raised

41:20

the minimum wage than it did in Pennsylvania.

41:23

And they were roundly criticized. And

41:25

you could understand back then in the

41:28

90s where it's just core

41:30

to orthodox theory that if you raise

41:33

the price of something, people will buy less

41:35

of it. So if

41:35

you raise the minimum wage, employers

41:37

will

41:38

hire fewer people. And they were

41:40

the first to really have

41:42

some study. And you know how these things work.

41:44

There's methodological

41:47

issues all the time, not just in

41:49

economics, but in all the social

41:51

sciences and even

41:53

the hard sciences.

41:55

But it's been decades. It's been

41:58

decades. And the math

41:59

has become more sophisticated, the

42:02

data has become more detailed,

42:05

and decade after decade,

42:07

this finding is confirmed. And

42:09

yet, decades later, only

42:12

about half of economists

42:14

accept these results. There's all this

42:16

empirical data and all

42:19

of this good science, all of this

42:21

good math, and

42:23

these mainstream economists who, you

42:25

know, when I criticize their

42:28

work, I'm often told, well, you just don't understand

42:30

the math, which is true, I don't understand the math.

42:32

I'll admit that, I don't

42:35

understand the math, I can't do it. But

42:38

they understand the math, it's telling them they're

42:40

wrong, and only half of economists

42:42

will accept these results, and I think that speaks

42:45

very poorly to the profession. Yeah,

42:47

absolutely, and, you know, distinguishes

42:49

it from, if I may say so, a

42:52

real science in many ways, where there are

42:54

controversies in physics at the bleeding edge

42:57

of string theory and cosmology

43:01

and so on and so forth. But the simplest

43:03

propositions, like force equals mass times

43:05

acceleration, not controversial.

43:09

Right, and the other thing about science

43:11

is it's not a science if it can't

43:13

be proven wrong. That's

43:16

a religion. Yeah. Well, how

43:18

cool to have Angus on, and

43:20

it's a cool book, and it's in the show

43:22

notes. It's in the show notes again, Economics

43:25

in America, an immigrant economist

43:27

explores the land of inequality.

43:30

I mentioned Angus before we started recording.

43:33

I listened to the audiobook, and I admit

43:36

this, I listen, most of the books I read are

43:38

audiobooks, it's the only way I can get through

43:40

all this stuff. And he reads it himself,

43:43

job well done, but also something I

43:45

hadn't heard in one of these books before. There's

43:48

outtakes, which provide

43:50

a lot of insight, and

43:53

it's just kind of fun to

43:55

hear how an audiobook is

43:57

made, different from the actual design.

44:00

writing it, the reading of it. So highly

44:02

recommend it. Links are

44:04

in the show notes. You can buy this book at

44:06

your local independent bookstore

44:09

or the nameless giant

44:12

monopolist if that is what is most

44:14

convenient for you.

44:27

For

44:30

more information on our website, follow our writing on

44:32

media at civics.org and keep behind the podcast

44:34

scenes on Instagram at Pitchfork Economics.

44:37

As always, from our team at Civic Ventures, thanks

44:39

for listening.

44:41

See

44:41

you next week.