0:01

The rising inequality and growing political

0:03

instability that we see today are

0:05

the direct result of decades of

0:07

bad economic theory. It's time to

0:09

build our economy from the bottom

0:11

up and from the middle out,

0:13

not the top down. Middle

0:15

out economics is the answer. Because

0:18

Wall Street didn't build this country. Great

0:20

middle class built this country. The

0:22

more the middle class thrives, the

0:24

better the economy is for everyone,

0:26

even rich people like me. This

0:34

is Pitchfork Economics with

0:37

Nick Hanauer, a podcast about

0:39

how to build the economy from the middle out.

0:42

Welcome to the show. In

0:50

March of 2019, Nick, we had

0:53

on the economist Jared Bernstein

0:55

to talk with us about

0:57

the board game Monopoly. Well,

1:00

it turns out in the years since he's

1:02

gone on to a somewhat

1:04

bigger game. That's right. Today on the

1:06

podcast, we get to talk to my

1:10

really old friend Jared Bernstein, who

1:12

is basically the

1:14

he's the chair of the Council

1:16

of Economic Advisors, President Biden.

1:19

He also served as Vice President Biden's

1:21

chief economist and economic advisor from 2009

1:23

to 2011. He

1:27

and I have collaborated on economic

1:29

policy for I mean, wow, I

1:31

think literally for as long as I've been thinking

1:33

about economics and he is just he's

1:36

both a great economist, but also a

1:39

wonderful man. Just a

1:41

great, lovely guy. And

1:43

at the center of the Bidenomics

1:46

revolution. That's right. That's right. And

1:48

absolutely, you know, Jared and I

1:50

have gone back and forth on so many things over so

1:52

many years. And it's just such

1:55

a great thing for me to

1:57

see him get to implement

1:59

so many things. of the things

2:01

that we wrestled over so many years. So

2:04

with that, let's talk to

2:06

Jared about Bidenomics and the

2:09

administration's middle-out approach to economic

2:11

policymaking. Hi,

2:19

I'm Jared Bernstein. I chair

2:21

President Biden's Council of Economic Advisers. What

2:24

do I do? My

2:26

day job is apparently answering

2:28

emails but I

2:31

like to think I do more than that.

2:33

The Council of Economic Advisers provides economic

2:35

guidance, advice to the president

2:37

and the senior staff here

2:39

at the White House, including

2:41

policy analysis, but also tracking

2:44

the data flow really at

2:47

a very granular level. Well, Jared, thank

2:49

you for being with us. How

2:51

long have we known each other? How

2:53

long have we been at this? Was

2:56

trying to get it's, I mean, so long,

2:59

so many years of grinding. So

3:02

it's so great to have you on the show and

3:04

to both talk about and celebrate

3:06

the accomplishments. So let's start with

3:08

that. Can you explain to our

3:11

listeners what the key principles and

3:13

goals of Bidenomics are and how

3:15

they differ from previous

3:17

economic approaches? In terminology

3:19

that will be very familiar to you.

3:22

Bidenomics starts from a framework

3:25

that growth originates from the

3:28

bottom up to the middle

3:30

out. That's very different, you asked for a contrast, then

3:33

top down, trickle down economics,

3:35

which not only doesn't

3:38

work, but, and that's an empirical

3:40

statement, not a judgmental one, but

3:43

has in fact, exacerbated inequality

3:46

and damaged growth, particularly

3:48

through an inability

3:50

to make the kind of investments that you see our

3:53

administration making. So let's get to the

3:56

pillars of Bidenomics because investment is one

3:58

of them. Pillar

4:00

one, empowering workers, Nick, you

4:02

and I, as long as

4:04

we've known each other, have talked about

4:07

the importance of worker bargaining power. Right.

4:09

And in fact, that word power, if

4:11

it's, you know, we've been talking for about a

4:13

minute and a half, and we said it already.

4:16

Those five letters mean a

4:19

ton to how economies

4:21

function, and yet, they are

4:23

little discussed in much of

4:25

classical economics. Pillar two, investment,

4:28

that is reversing decades of

4:30

disinvestment in our public goods. In

4:32

many cases, partnering with the private

4:35

sector to invest in

4:37

domestic production in key areas where

4:39

markets have consistently failed to provide

4:41

adequate investment, and part three, competition

4:44

and lowering costs. So those are

4:46

the three pillars, and I'm sure

4:48

we can go into whatever details

4:50

you like, but as I

4:52

said, I'm sure that's quite familiar to the

4:54

two of you. Yes, absolutely. So, you know,

4:56

why don't we talk for a minute about

5:00

the remarkable

5:03

success this approach represents?

5:07

There's just been a lot of, I mean, remarkably

5:10

positive economic data that's come out

5:12

over the last months that

5:14

suggests that this sort of

5:17

middle out approach is working. Can you tell us

5:19

a little bit about, can you share

5:21

some of that data with us? Yeah,

5:23

tell the president's accomplishments here, because you're

5:25

not getting much help from the mainstream

5:28

press. Well, you know, in

5:30

the way you teed up the question, the

5:33

word remarkable came up a few times, and I

5:35

myself have used that, but there's

5:37

a way in which what's going

5:40

on actually isn't that remarkable in

5:43

a way that it's kind of

5:45

predictable in fact. So look, I

5:47

think remarkable is, yep, and you

5:49

wanted some numbers. When the expectation,

5:51

like we had for job growth in January, is for 185,000, and you

5:53

end up with 353,000, I

5:58

think it's fair to call that. kind of

6:00

remarkable and the fact that the unemployment rate's been

6:02

below 4% for two years running. I

6:05

don't think that's remarkable but I

6:08

think it's certainly persistently low unemployment

6:10

and links up to my

6:12

original answer here which is

6:14

there's something not so remarkable going on which

6:17

I'll get to in a second. But then one thing

6:19

that has also gotten that VR

6:21

word, the remarkable word is the

6:24

fact that while all of this growth

6:26

has been ongoing, inflation

6:28

has come down a great deal. The

6:31

classical economic theory is that you'll never

6:33

get this much disinflation without giving up

6:35

many points of growth whether much higher

6:37

unemployment or recession or something

6:39

like that and President Biden never

6:42

believed that and I suspect he shares that

6:44

with the two of you which is the

6:46

idea that you have to achieve

6:49

the inflationary goals on the backs of

6:51

workers completely antithetical to the way he

6:53

thinks about how the economy works and

6:56

in fact how it's been working. So

6:58

what do I mean when I say not

7:00

so remarkable? Well when you

7:02

empower the middle class, when you

7:04

have a situation like we have

7:07

in our job market where workers

7:09

have real bargaining power both because

7:11

of the extent to which this

7:13

president has leaned into union power

7:15

but also because of the persistence

7:17

of very low unemployment, the benefits

7:19

of growth flow much more readily

7:21

to those in the middle

7:23

class and then in the you know

7:26

bottom three quarters of the income scale

7:29

and that creates a perpetual motion

7:32

kind of device with this middle out

7:34

you know growth theory that you guys

7:36

have originated and talked about. So

7:39

in a way, I suspect you

7:41

would agree that there's some remarkable

7:43

things going on but they're not

7:45

unexplainable. No, right? No, they're

7:48

unexplainable using Manku's Principles of Economics. Yes,

7:55

exactly. And

7:58

you know the thing. that is both

8:00

true and slightly frustrating is that if you

8:03

look at the last hundred years

8:05

of empirical economic evidence, you find

8:07

that there is an absolutely

8:10

consistent pattern which

8:13

is that when you do things

8:15

similar or the same as what

8:17

the administration is doing, you

8:19

get the same results. You get more

8:22

job creation, higher GDP growth rates,

8:24

more productivity increases, you know,

8:27

sort of the panoply of better economic

8:29

results than you do when you cut

8:31

taxes for rich people and you stop

8:33

investing in the country and in

8:36

Americans themselves. And

8:38

you know, I guess what's

8:40

so interesting and what must

8:43

make your job so interesting is to be at

8:45

the helm of this transformation

8:48

and how we see economic

8:50

cause and effect. And

8:52

you know, on the sidelines, it's super funny

8:54

to watch all these

8:56

pundits twist in the

8:59

wind, effectively complaining

9:01

about these good results because it's

9:03

like they can't believe they're happening.

9:05

I think what's compelling about this

9:07

from the perspective of the Biden

9:09

administration is I've been talking about

9:11

these issues with Joe Biden since

9:13

2008. I

9:16

was his chief economist, I mean, as the

9:18

vice president and I started

9:20

talking to him late that year,

9:22

moved into the White House when

9:25

he was VP 2009, President Obama. This

9:28

is how he has understood the

9:31

economy to work since he's been

9:33

in politics, which has been all

9:35

of his professional life. And it's kind

9:37

of interesting and almost a little

9:39

weird that someone who's been in the

9:41

system for so long has not drunk the

9:43

Kool-Aid that says, no, you got to listen

9:45

to the rich donors and do what they

9:48

say. I mean, he's always thought

9:50

trickle down was obviously a

9:53

false idol. And so, you

9:55

know, the idea that you... A

9:57

common sense to the average person. would

10:00

dictate that if you give a

10:02

bunch of money to rich people,

10:05

all the good things the trickle down says are

10:08

going to happen, you know, are not obviously going

10:10

to happen. They'll be richer, but they

10:12

won't necessarily invest more. Why should

10:14

they? They're getting richer without

10:17

that. Instead, if you

10:20

grow an economy from the bottom

10:22

up in the middle out, and you have

10:24

very strong demand from the vast majority of

10:26

the population, because, you know, news flash, the

10:28

top 1% is comprised by

10:30

only 1%. Right.

10:32

So, you know, if the

10:35

vast majority are

10:37

doing well, not only is that

10:39

going to continually boost growth through

10:42

the consumption channel, we've seen that

10:44

this is 70% consumer spending economy,

10:46

but it's going to signal to

10:48

investors that it's a good

10:50

climate to invest in because consumer

10:52

spending is strong, the broad middle

10:55

class is strong. Now, you don't have

10:57

any guarantee that the

10:59

investment is going to flow

11:01

to places where markets have failed

11:03

to adequately invest. Clean energy

11:05

is a great example. Domestic

11:08

production of semiconductors is another great

11:10

example. Of course, public goods and

11:13

our infrastructure, another great example. So

11:15

not only has this president applied

11:17

straight up common sense economics to

11:19

our economy, but he's also managed

11:21

to get across the goal line three

11:24

pieces of legislation that address each one

11:26

of those market failures on the investment

11:28

side of the equation. So

11:31

it's been a great privilege

11:33

to sit here and watch that and play what

11:35

little role I can in helping to move it

11:37

forward. Is this starting to

11:39

sway the minds of mainstream

11:42

economists? I mean, you used to be, you know,

11:44

10, 15 years ago, you would have been the

11:46

minority in the room if you were allowed in

11:48

at all. What's happened,

11:50

the empirical evidence over the past

11:52

few years, over the course of

11:54

this administration, the Bidenomics program and

11:57

the success it's had so far.

12:00

minds being changed or are

12:03

they sticking to the old ways of thinking? I

12:06

think that some minds are being changed

12:08

a little bit but that

12:11

the real change is coming from

12:13

younger more dynamic

12:16

economists. You know, there's the

12:18

old statement about science proceeds one funeral at

12:20

a time or something like that. As

12:23

the old guard steps down, there's

12:26

younger economists coming on who

12:28

are much more empirically driven, much quicker

12:30

to reject theories about how the world

12:33

should work even if it doesn't work

12:35

that way for decade after decade. And

12:37

that's been tremendously refreshing and you know,

12:40

we scooped up as many as we can to

12:43

come help us but it's also very refreshing to

12:45

see them on the outside. I mean, I will

12:47

put in a plug for the gamma policy institute

12:49

which is where I cut my teeth and Nick's

12:51

very familiar with their work. You

12:53

know, I remember Larry Michelle who ran the

12:55

EPI teaching me early on

12:58

that you know, economists

13:00

far too often seem

13:02

to believe their job is to

13:04

explain to policymakers why they

13:06

can't do what they want to do. Oh, you want

13:08

to you know, you want to help low income people

13:11

by raising them in a wage, you can't do that.

13:13

You want to regulate a particular industry so

13:16

it doesn't poison kids, no, you can't do

13:18

that. So I

13:20

would say that you know, the

13:22

EPI model of understanding ways in

13:24

which markets underperform and fail is

13:26

much more pervasive and there's a

13:28

lot of great younger

13:30

people coming online in a profession that

13:32

espouse that position. Jared, can we go

13:34

back? I wanted to emphasize some

13:37

of the things that you said because there's this you

13:39

know, there's a not unreasonable view

13:42

that middle out economics, this approach

13:44

is simply a demand side argument

13:46

that we should just increase demand

13:49

By consumers and that will take care

13:51

of everything. And I think it's really

13:53

worth underscoring that this middle out approach

13:55

is much broader than that. Of Course,

13:57

we want to empower workers so their

13:59

costs. Go down the and their

14:01

incomes go up because in fact,

14:04

that is what creates the increasing

14:06

returns dynamic that you talked about

14:08

that drives the economy's but investments

14:11

are an incredibly important part. Of.

14:14

This approach that not just in people

14:16

but also in the infrastructure and in

14:18

the Us. Market failures that you noted

14:21

but would also core to this approach

14:23

is promoting competition. The executive order that

14:25

is working it's way through. You know

14:28

it, and it's the again one of

14:30

it's one of the cannons. a trickle

14:32

down economics is it's any kind of

14:34

regulation on big corporations will harm productivity

14:37

growth and all that. And in fact

14:39

the opposite is true that when you

14:41

deregulate industries, all that happens. Is

14:44

that they consolidates and oligopolies

14:46

which both increases prices, decreases

14:48

wages, and slows competition. And

14:50

that promoting competition thing that

14:52

you guys are all over

14:55

is unbelievably consequential and probably

14:57

the least well understood part

14:59

of this program. So can

15:01

you speak to that little

15:04

bit. Here. And I I

15:06

run on underscore the way you

15:08

are practice around here which is. I

15:11

do think that many people think

15:13

middle out bottom up is are

15:15

exclusively a matter of north people

15:17

in the middle class lower income

15:19

communities have more resources to be

15:21

more demand. That's true, yeah can't

15:24

be the whole program and one

15:26

of the reasons that the just.

15:28

Saying. What you said of my all languages

15:30

that you can't ignore the economy, supply side.

15:33

I'm in anyone who thought you could add,

15:35

I think even many professors fell into this

15:37

trap. and mostly because you're so focused on

15:39

the man which is insufficient for so many

15:41

years. that reads maybe took some of our

15:43

i offer ball on the supply side of

15:45

the economy and I know you you can't

15:48

do that or someone we mean by the

15:50

supply side of your car. well as part

15:52

of it is just logistics. you know one

15:54

of the things the President recognize and Twenty

15:56

Twenty one. Was. that in order

15:58

to get inflation back to where we needed

16:00

it to be, we were going to have to unsnarl supply

16:03

chains. And we worked very carefully

16:05

with the private sector, we never could have

16:07

done it by ourselves. To get that unsnarling

16:09

happening, we had something called the supply chains

16:11

disruption task force. I was a member, we

16:13

sent a representative out to the ports of

16:15

LA and Long Beach to help get those

16:18

ports kind of talking to each other in

16:20

ways that they hadn't before. Again, working with

16:22

the unions, working with the

16:25

report management. And

16:27

all of that turned out to be

16:29

very important. Now you're talking about competition.

16:31

So that means taking on big

16:33

pharma. One of the things this president

16:35

did that no one's ever been able to get over

16:38

the goal line before is pretty

16:40

obvious. We talked about bargaining power before,

16:42

well, Medicare should have really powerful bargaining

16:44

power. But it was always

16:47

prohibited due to the effectiveness of

16:49

big pharma lobbyists from using that

16:51

bargaining power to lower prescription drug

16:53

costs. No more part of

16:55

the IRA is President Biden getting

16:58

that over the legislative goal line

17:00

and giving Medicare the ability to

17:02

bargain for lower costs. Insulin $35

17:05

a month topping that for seniors,

17:07

saving 15 million Americans $800 per

17:10

year on health care, cracking down

17:12

on hidden junk fees on ways

17:15

in which corporate America is

17:17

not passing savings on to their consumers,

17:20

canceling a student debt where we

17:22

can, helping with internet access, helping

17:24

with housing costs, all of those

17:26

I view as ways

17:28

to unclog and to

17:31

hypercharge the economy supply side.

17:34

So both sides of that equation are

17:36

important. Yeah, absolutely. And

17:39

so important for people to

17:41

understand how crucial

17:44

promoting real competition is to

17:47

making markets function the way that they

17:49

should. My favorite example of one of

17:51

your recent accomplishments is the elimination of,

17:54

becoming elimination of non-competes,

17:58

which is, again, theoretically

18:01

in a competitive market right?

18:05

It's like prima facie absurd. Does everybody know

18:07

what those are? Do we need to... Yeah,

18:10

well, I mean, I think we've talked about

18:12

before, but go ahead. Yeah. Well,

18:14

I mean, I know that this is a smart audience.

18:16

So I don't know what kind of... Yeah,

18:18

this is the idea that if you leave

18:21

a job at firm A to

18:23

go work for firm B, you

18:25

might not be able to make

18:27

that transition because you would be

18:29

violating a non-compete clause, meaning that

18:31

you can't take your institutional knowledge

18:33

and then go work for a

18:36

competitor, for example. Well, you can certainly

18:38

see ways in which having some secret

18:40

recipe or something might make sense there,

18:42

but those were extended to even middle

18:44

and lower wage workers couldn't possibly be

18:47

carrying any kind of secrets from one

18:49

firm to another. So it was just

18:51

a way of dampening precisely the kind

18:53

of competition which capitalism needs to run

18:56

on. And the president has said this

18:58

many times, capitalism

19:00

without competition looks a

19:03

lot more like exploitation.

19:05

So I always think it's a good thing

19:07

when we can sort of

19:09

follow some of the rules of

19:11

basic economics in ways that

19:14

more conservative elements violate all

19:16

the time. But

19:18

how is a poor CEO

19:20

going to maximize shareholder value

19:23

in a competitive market? It's

19:25

impossible. Well, the stock

19:27

market kind of returns 7% or 8% a

19:30

year on average one

19:32

way or another. So I

19:34

noticed there are lots of people

19:37

that put it this way because I

19:39

can't get into politics and my own

19:41

person, my own restrictions. So there are

19:43

people claiming credit for the stock market

19:45

going up on any given day. Obviously,

19:47

that should be heavily discounted.

19:49

What really makes financial markets

19:51

do well? They are not

19:54

the dog, they are the tail. So it

19:56

really makes financial markets do well. And again,

19:58

you guys know much about this. as anybody

20:01

is when the broad economy is doing

20:03

well, when the middle class is doing

20:05

well, when there's a good investment environment,

20:07

when unemployment stays low, when job growth

20:09

stays strong, it is really easy

20:12

to say that the stock market is

20:14

up today because I'm talking to Nick and Goldy and

20:17

such silliness should be ignored.

20:21

Let's talk for a moment about the

20:24

disconnect between how

20:26

good the economic indicators are and

20:28

how people are feeling about the

20:30

economy. Because I do

20:33

think it's important to level set

20:35

and recognize that for most

20:37

people, the economy

20:39

is simply my job and the

20:41

expenses. And for lots and lots

20:43

and lots of people in the

20:45

country, because of the pandemic, prices

20:47

rose dramatically. And

20:49

many people continue to be underwater.

20:51

This is, of course, not President

20:54

Biden's fault. But it

20:56

is a reality that you folks are

20:58

having to manage through

21:00

and confront. So

21:02

how do you think about that? And

21:05

where will we go in the future? Every

21:08

time the president talks about the autonomy,

21:10

he points out that there are still

21:13

some prices that are too high. And

21:16

I think we shouldn't forget that we've been

21:18

talking very positively as we should about

21:20

a set of economic

21:22

indicators, underscoring a theory

21:25

of the case that I think has

21:27

been proved time and time again, proved

21:30

when we've undertaken the kind of initiatives

21:32

that we've had, improved when the opposition

21:34

has applied triple down. But that doesn't

21:36

mean everybody is where they want or

21:38

need to be. And

21:40

one of the things that we have to

21:42

keep doing is putting pressure on lowering costs.

21:45

One of the best ways to do that

21:47

is what we've already talked about, more competition,

21:49

blocking big pharma from overcharging

21:52

when it comes to prescription drugs. We've

21:54

obviously been taking that on, pushing

21:57

back on junk fees and overdraft

21:59

fees and non-transparent pricing,

22:01

we're taking that on aggressively. And so

22:03

a big part of our agenda, in

22:05

fact, I told the pillar three of

22:08

Bidenomics is to promote

22:10

competition and eradicate

22:12

non-transparent pricing and junk

22:14

fees in order to

22:17

further lower prices. And

22:20

we will continue to work on

22:22

that. But I also think two

22:24

other points are germane. One is this

22:27

theory of the case that we've been describing.

22:30

I said this months ago, so I'm not making this up

22:32

today. If we are able to

22:35

build the economy from the middle out in the bottom

22:37

up to maintain a tight job

22:39

market while easing inflationary pressures, real wages will

22:41

start to go up, which they have now

22:43

for about 10 months in a row, year

22:45

over year, so a trend, not a blip.

22:48

And people will start feeling it. People

22:51

will start to feel it and we'll

22:53

start to see that in the sentiment

22:55

or confidence indicators. Well, over the

22:57

last few months, we've started to see

22:59

precisely that. Confidence indicators are up strongly.

23:02

The University of Michigan survey, up 29%

23:04

over the past two months, haven't seen

23:06

growth like that for decades in that

23:09

survey. So not there yet by a

23:11

long shot, more work to do. But

23:13

there is evidence that we're moving in

23:15

the right direction. Now, I said two

23:18

things. The second thing is this,

23:20

compare and contrast. It's not enough to

23:22

just explain what we're doing. We also

23:24

have to look at what the opposition

23:26

says they want to do in this

23:28

space. And I'm sorry to report

23:30

as predictable as it is, is that

23:33

they want to go back to trickle down economics

23:35

and they literally want to repeal some

23:38

of the very measures that are helping

23:40

to reduce costs as we speak, particularly

23:42

the IRA, the Inflation Reduction Act. Repealing

23:45

that would of course make prescription drug

23:47

prices go up, make the cost of

23:49

insulin go up, make the cost of

23:51

health coverage go up. So it pushes

23:54

in exactly the wrong direction while undermining

23:56

the middle out bottom up approach that

23:58

is working. But the evidence shows it's

24:01

working very well in

24:03

recent years. And so Jared,

24:06

obviously there's much work left

24:08

to do. When you folks

24:10

are reelected, what

24:13

will the next four years bring? And

24:16

forget for a moment the challenge of

24:19

Congress. What is the work

24:21

left to do? We made so

24:23

much progress in these years, but there were

24:25

many things that we didn't get to do

24:27

or couldn't do that we

24:30

wish we had. So can you

24:32

speak to that a little bit? I can

24:34

speak to that. But before I get to

24:36

the things we have, the

24:39

unfinished business of which there is some really

24:41

important parts, let me just say that,

24:43

and this is very Biden-esque, implementation

24:47

of what we are doing

24:49

is in many ways

24:51

just getting started. You

24:53

don't implement transformational investment

24:58

programs of the type that we've

25:00

talked about, transforming our energy supply

25:03

in the country, transforming

25:05

our ability to build semiconductors

25:07

in ways that will make

25:09

us less dependent on

25:12

the vicissitudes of foreign suppliers.

25:14

You don't make

25:16

a lasting infrastructure investment

25:19

without extensive and

25:22

years-long implementation. Remember, the vast

25:24

majority of the capital that's

25:26

supporting the IRA domestic

25:29

production, whether it's EVs, batteries,

25:31

or clean energy production,

25:34

is coming from the private sector, of

25:36

course. 600 and

25:38

counting billion dollars of investment in building

25:40

manufacturing facilities here in those countries. Those

25:42

facilities take a couple of years to

25:45

build. So this is

25:47

an investment, a seed, that must be

25:49

nurtured, that must be watered over time,

25:52

versus an opposition who wants to come in

25:54

and tear it up by its roots, absolutely

25:57

counterproductive to the end.

26:00

the kinds of growth counterproductive in

26:02

a productivity sense. Yeah. And

26:04

then there's then there's unfinished business. So two

26:06

big issues there. Housing and

26:08

childcare. So we have a shortage

26:10

of affordable housing that has been

26:12

10 years in the make. It

26:14

met us when we got here.

26:16

And we have a great

26:18

set of plans of $175 billion of investment

26:21

in affordable housing,

26:23

we think we could stand up 2 million

26:25

units of affordable housing. Congress obviously has to

26:28

work with us on that. That's

26:30

a per strings issue

26:32

and we need

26:34

the resources to do that. We

26:36

can't do it administratively. And that

26:39

investment is paid for by the

26:41

way with progressive tax changes. Second

26:43

childcare. Same kind of market failure.

26:45

These are two big

26:47

market failures. The market has

26:49

clearly failed to provide enough

26:52

affordable housing for people and

26:55

affordable accessible childcare for caretakers who want

26:57

to get into the workforce without spending

26:59

a huge share of their income on

27:02

childcare. We have great plans in both

27:04

cases. We want to implement them going

27:06

forward. That's great. What

27:09

about the minimum wage? We're still stuck.

27:12

Do you think there's hope in the

27:14

new Congress to raise the minimum wage

27:16

to $15 an hour nationally? I always

27:18

think there's hope. I think if I didn't think there's

27:20

hope, I'd have a hard time getting here. And you

27:23

know, I think that the

27:25

extent to which Joe Biden keeps pulling

27:27

legislative rabbits out of hats, yeah, should

27:29

continue to give you hope. Because I

27:31

think if I told you

27:33

a few years ago, we'd be talking about some

27:35

of the largest, most transformative investments in the area,

27:37

you would have laughed at me. And

27:40

yet here we are. So there's always

27:42

hope. I think with the minimum wage,

27:45

obviously, we have a lot of states who have

27:47

acted on their own. And that's great. But the

27:49

fact that at some level, the minimum wage is

27:51

the federal minimum wage is the southern minimum wage

27:54

because those states have yet

27:56

to act simply informing people that

27:58

the minimum wage In a lot

28:00

of places in this country, it's

28:02

$7.25 an hour. Okay?

28:06

Everybody knows that's nuts. That's

28:08

my sophisticated economic analysis.

28:13

And so simply based on,

28:15

again, common sense goes a long

28:17

way for Joe Biden. So simply based

28:19

on common sense, we've got a great

28:22

argument there. If you want to layer

28:24

on that decades of empirical research showing

28:26

that increases in the minimum wage, don't

28:28

have the traditionally predicted negative

28:31

impacts, in part because of the

28:33

bottom up mechanisms we've been talking

28:35

about. The argument is

28:37

strong. So we'll see. Yeah,

28:40

great. A couple of final

28:42

questions. I don't know. Do

28:45

you ask like the chief economic advisor

28:47

to the president's benevolent dictator question? Yeah,

28:49

we always have this. It's about as

28:51

close to being one of the benevolent

28:53

dictator you get. Yeah. Yeah.

28:57

I think you overestimate where I am on

28:59

the cutting field here. But

29:01

go ahead. If it was you and you were in

29:04

charge, let's say you got a clean sweep in Congress.

29:07

What would be your top five

29:09

or four or three economic

29:12

objectives in the next administration? If

29:14

you could implement what you wished

29:16

you could, what would you do? Feel

29:18

free to reject that question if it

29:20

puts you in a awkward place on

29:23

political grounds. Yeah, yeah, yeah. I

29:25

mean, it sounds a

29:27

little repetitive, but, you know,

29:31

affordable childcare and affordable housing are

29:33

just such obvious

29:35

impediments that we have to fix. And the idea,

29:37

and interestingly in housing, by the way, I believe

29:39

I have this number, right? There

29:42

are 225 members of Congress on both

29:44

sides of the aisle who recognize how

29:46

important this is and have supported, at

29:49

least on paper, a lot of the initiatives

29:51

that we're pursuing. And one

29:53

of the reasons is, if you're talking about housing

29:55

and childcare, that's not a blue or a red

29:57

problem, right? There are people in all counties. and

30:01

all regions that face

30:03

those constraints. So if I

30:05

were a benevolent dictator, I would simply, you

30:07

know, instead of parting the seas, I'd part

30:11

members of Congress and get out of your own

30:13

way and pass some things that I think you

30:15

actually agree on. You know, look, if I were

30:17

a benevolent dictator, there'd be, we

30:19

would do a lot more on guns. That

30:21

in fact, we've managed to make some

30:23

progress there, but of course we

30:26

need to make a lot more. I

30:28

think we've made some progress on racial

30:31

justice, but I would like to make

30:33

a ton more progress. So it is

30:35

underappreciated that in 2023, the

30:38

black unemployment rate was the lowest on

30:40

record with data going back to 1972 and

30:43

the black white unemployment rate gap was the lowest

30:45

on record going back to when that data begins

30:48

in 1972. So

30:50

I would build on these

30:52

accomplishments in terms of racial gains

30:55

because they very much sit right

30:57

into the middle out bottom up

30:59

framework where oftentimes under

31:02

much more, you know, under

31:04

the trickle down framework, folks

31:06

are just, economically vulnerable

31:08

communities are just so often left behind.

31:11

Yeah. And one final question. Why

31:14

do you do this work? I

31:17

think, you know, I'm not gonna say that

31:19

I'm good at it, but it's the only thing that

31:21

I do, you know, kind of okay, I think. So

31:24

part of it is, part of it is

31:26

just personal proclivities, you know, what you try to

31:28

do, what your least bad at. It

31:31

is really, so you said

31:33

it earlier, Nick, you and I have

31:35

been talking about this stuff forever. Okay? So

31:38

you and I would be sitting around in, you

31:41

know, a ratty old couch in the

31:44

boardroom of some underfunded think tank

31:46

talking about, you know,

31:49

what's this all about? And

31:51

we thought we had it right, but

31:55

not too many people were listening to us. Thanks

31:58

to president Biden. we've had a

32:00

chance to implement a

32:02

common sense agenda that we thought

32:05

would have many of the

32:07

very outcomes that we're seeing. And

32:10

to be able to sit here, you know,

32:12

and talk to the president about this, to

32:15

brief him on a jobs

32:17

report, calls me from Air Force One the

32:19

other night and says, you know, wow,

32:23

tell me about what just happened with the jobs number. And

32:25

I can talk about this in a way that resonates

32:27

with him. That's why I did this work. Because

32:31

I think that an economy that

32:35

is failing to reach the people who

32:37

need it most is a huge

32:41

problem. And an economy that's

32:43

reaching folks who would

32:45

otherwise be left behind is

32:48

my life's work. And I know your

32:50

life's work. And to be able to do that

32:52

life work from here, tremendous privilege.

32:54

That's why I do it. Yeah, got to

32:57

be awesome. Well, Jared, thank you

32:59

so much for being with us. And

33:01

thank you for your work. I have not

33:04

been at this as long as you have

33:06

been at it for a long time. So

33:08

I know how much blood, sweat and tears

33:10

has gone into getting to where you've gotten.

33:13

And we just appreciate it so much. So

33:16

thank you for being with us. My pleasure.

33:18

Take care. Well,

33:24

obviously, that was a great

33:27

conversation. But amongst all those

33:29

words, three stood out

33:31

to me. The words power, common

33:34

sense, and hope. That's

33:38

assuming you spell common sense as

33:40

a single compound word instead of

33:42

two words. Otherwise, it's

33:44

four words. I know the editor in

33:47

me. I think Thomas

33:49

Paine had it as one.

33:51

I can't remember. Anyway, and

33:53

he kicks off right

33:55

away with the word power. And

33:57

let's be clear about

33:59

that. there's multiple meanings

34:01

to it, that from

34:06

orthodox economics and

34:09

it's not missing from

34:11

by dynamics. That's right. It's

34:14

really important for listeners

34:16

to understand that the

34:19

idea of power was

34:21

effectively, theorized away, theorized

34:23

away out of

34:26

neoclassical economics. If

34:28

you assume that markets are perfectly efficient, if

34:30

you assume that people and business owners have

34:32

the same amount of power, if you make

34:34

all these absurd assumptions, you

34:36

can just pretend

34:39

like power differentials do

34:41

not exist in

34:43

market economies. Pretending

34:46

that power doesn't exist in economics would

34:48

be like pretending that gravity doesn't exist

34:50

in physics. It sure makes the

34:52

math easier. It makes the math easier. I

34:54

mean, how could you do these models if

34:56

you had a model power into the equation?

34:58

And of course, if you assume in a

35:01

world where some people have lots of power

35:03

and most people have no power, that power

35:05

doesn't exist, that is very advantageous

35:07

to the people with lots of power.

35:10

That's right. And just an example

35:12

of how important power is, we

35:14

were talking, Jared was talking to

35:16

us from the White House, right?

35:19

We have somebody either

35:22

with power or clearly with the ear

35:24

of people with

35:27

power, the ear of the president,

35:29

who is pushing this

35:31

new economic paradigm. Well,

35:34

because he believes it, which brings

35:36

me to the

35:38

second word or words that stood out for

35:40

me, which is common sense. His

35:43

point about the president just having

35:45

this common sense take on the

35:47

economy that trickle down was, well,

35:49

I don't think he said it, but

35:51

obviously bullshit. Yeah, it was a scam. Right.

35:55

And I've said this before, Nick, people

35:57

talk a lot about the

35:59

president. age. And yeah,

36:01

do I really want an

36:04

octogenarian president? Would I prefer

36:06

that somebody younger was

36:09

in charge? I'd feel more comfortable, right?

36:11

My own parents and grandparents have grown

36:13

old. I've seen that happen. But there

36:15

is a huge

36:17

advantage to having an

36:19

80-year-old in the White House who

36:21

was elected to the Senate in

36:24

the early 70s who predates the

36:26

neoliberal era. Exactly. He's

36:28

the only guy in politics

36:30

today, probably in America, that

36:33

remembers the country before neoliberalism

36:35

wrecked it. He can remember

36:37

an actual vital

36:39

middle class. He remembers

36:41

a world where the country

36:43

wasn't dominated by these oligopolies

36:46

and where you didn't have to

36:48

continually hear about Jeff Bezos and

36:50

Elon Musk and Mark Zuckerberg and

36:53

the rest of these narcissistic clowns.

36:57

And as much as I

36:59

admire President Obama as smart

37:01

and as well-meaning as he

37:03

clearly was as

37:05

a president, he was just too

37:07

young to know any better. He

37:10

literally came out of the University

37:12

of Chicago. Right. Straight up neoliberal.

37:15

Right. And so neoliberalism was

37:17

common sense to him. That

37:20

in the end, you don't want to

37:22

interfere too much in markets because markets

37:24

are rational and always produce more efficient

37:26

outcomes than government. He understood there was

37:29

a need for government, but he was

37:31

afraid to go too far and he

37:33

didn't go far enough. So common

37:35

sense, we have a president with common

37:38

sense and that has really paid dividends

37:40

over the past few years. And

37:43

the final word that stood out

37:45

to me was hope. And there's

37:48

this saying about economics, they

37:50

call it the dismal science. And

37:52

Jared brought this up, this idea

37:54

that what the role, the job

37:57

of economics was to

37:59

tell you what you. couldn't do. You can't raise

38:01

taxes because that would hurt

38:03

investment. You can't regulate because

38:05

that would introduce inefficiencies and

38:07

drive jobs elsewhere and all

38:09

that. It was

38:11

all about the things you couldn't

38:14

do. It's about scarcity and

38:16

restrictions and that's not what

38:18

middle-out economics is about. That's

38:21

not by dynamics and what

38:24

this new economics about and you can see

38:26

it in Jared, not just in the words

38:28

he's saying but the expression on his face,

38:30

the tone of his voice. He's

38:32

hopeful what he sees are all

38:34

the things that economics, all the

38:37

good that economics, good economics can

38:39

do for the country, can do

38:41

for the economy, can do for

38:43

the typical American and how much

38:46

that pays off in the long

38:48

run and that's why we

38:50

have an administration that is willing to

38:52

invest in the future because as he

38:55

pointed out, these big

38:57

investments that the Inflation

38:59

Reduction Act and these other measures,

39:01

these landmark measures are making, they

39:04

don't pay off. These are not

39:07

short-term investments. These are long-term investments

39:09

that will take years, decades to

39:11

fully pay off and it's interesting

39:14

again to have an 80-year-old

39:16

president looking 20 years out

39:19

in the future because you

39:21

weren't getting that in the

39:23

past because you had to

39:25

produce real results right now

39:27

and they've been willing to wait it

39:29

out and so

39:31

confident has President Biden

39:34

and Jared been in

39:36

Bidenomics and this middle-out bottom-up

39:38

theory of growth that they

39:40

were willing to stick by

39:42

it and keep pushing it

39:44

and keep talking it and

39:47

wait for the positive economic effects

39:50

to start changing people's minds and

39:52

particularly voters' minds and as we've

39:54

as he pointed out as we've

39:57

seen in recent months you see

39:59

consumer confidence, it's just

40:02

spiking up and

40:04

you know hopefully we'll see that

40:06

continue through to November. Yep, absolutely.

40:08

Crossing our fingers for more progress

40:10

in the future. The

40:16

Division of Economics has produced my civic venture. If

40:19

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40:26

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40:38

See you next week.