WEBVTT - Why Studying Keynes Is More Important Than Ever 0:00:08.200 --> 0:00:11.920 Hello, Odd Lots listeners, It's Joe Wisenthal. I want to 0:00:12.000 --> 0:00:15.319 let you know about something cool that's coming up. On Wednesday, July, 0:00:16.160 --> 0:00:19.600 Odd Lots of holding our first ever live stream event. 0:00:20.480 --> 0:00:24.239 Tracy and I will be interviewing Carson Block, founder of 0:00:24.360 --> 0:00:28.440 Muddy Waters Research. We're gonna be talking to Carson live 0:00:28.520 --> 0:00:32.640 on Bloomberg dot Com, the Terminal, Twitter, et cetera. It's 0:00:32.640 --> 0:00:36.920 gonna be eight p m. Eastern Time on Wednesday, July Team, 0:00:36.960 --> 0:00:39.360 so be sure to follow at podcast to catch the 0:00:39.440 --> 0:00:58.000 live stream of the event. So check it out. Thanks, Hello, 0:00:58.040 --> 0:01:01.200 and welcome to another episode of The Odd Lots Podcast. 0:01:01.240 --> 0:01:05.399 I'm Joe Wisenthal and I'm Tracey all Away. So, Tracy, 0:01:05.520 --> 0:01:07.640 we're still in the middle of a crisis. Yes, we 0:01:07.680 --> 0:01:11.760 are three months on still crisis mode. You know, like 0:01:11.880 --> 0:01:14.800 one of the things we've been doing throughout this whole 0:01:14.840 --> 0:01:20.120 crisis is we've been making sure that listeners know the 0:01:20.200 --> 0:01:22.720 date that we were recording this. And I feel like 0:01:22.760 --> 0:01:25.640 it's especially important because a this as you mentioned, it's 0:01:25.680 --> 0:01:29.160 been going on a long time. We you're in Hong Kong, 0:01:29.360 --> 0:01:31.360 and Hong Kong you just had one of its worst 0:01:31.440 --> 0:01:34.200 days of new cases ever and you guys were like 0:01:34.520 --> 0:01:36.880 the the exemplars that everyone are, one of the best, 0:01:36.880 --> 0:01:38.920 that we're all supposed to aspire to. And it's not 0:01:39.040 --> 0:01:42.440 even over there. Yeah, it's pretty worrying. Uh, one of 0:01:42.440 --> 0:01:44.560 its worst days on record, as you just mentioned, and 0:01:44.600 --> 0:01:48.640 also Tokyo had a really bad day for infections as well. 0:01:48.840 --> 0:01:51.960 So the concern is that even in countries that have 0:01:52.120 --> 0:01:54.720 done reasonably well in containing the virus so far, there 0:01:54.760 --> 0:01:58.840 is a risk for a big resurgence. Right so that 0:01:59.280 --> 0:02:02.800 the date is at least in the US time, it's 0:02:02.840 --> 0:02:07.240 morning where you are, but it's July nine, and yes, 0:02:07.680 --> 0:02:10.080 several months after this began, we are still in the 0:02:10.120 --> 0:02:13.320 thick of it. You're in Hong Kong, I'm in Texas, 0:02:13.400 --> 0:02:18.079 where everyone is, where cases are very bad. This crisis 0:02:18.240 --> 0:02:21.240 is a long way from over, and it doesn't seem 0:02:21.320 --> 0:02:25.239 like there's any obvious path out as of as this 0:02:25.360 --> 0:02:30.080 work moment. That's an accurate, if depressing description. Yes, And 0:02:30.120 --> 0:02:32.320 the thing you know, obviously we've talked about this a lot. 0:02:32.400 --> 0:02:36.080 It's it's a multi crisis crisis because there's the health crisis, 0:02:36.800 --> 0:02:40.480 there's the political credibility crisis because even if leaders want 0:02:40.520 --> 0:02:44.040 to do something or have a you know, plan to 0:02:44.120 --> 0:02:47.240 fight the virus itself. There's a question of whether they 0:02:47.280 --> 0:02:50.160 can actually uh sort of get the country behind it. 0:02:50.200 --> 0:02:53.000 And then of course there's the straight up economic crisis, 0:02:53.600 --> 0:02:57.799 mass unemployment, a major slowdown in activity, and yeah, and 0:02:57.840 --> 0:03:00.480 of course all three of those different crises seem to 0:03:00.600 --> 0:03:03.800 feed off each other and make each one worse. Uh, 0:03:04.000 --> 0:03:06.359 you get this really bad feedback loop, i'd argue, is 0:03:06.880 --> 0:03:11.440 the economy worsens, people get more upset with their politicians 0:03:11.480 --> 0:03:15.560 and aeticians arguably get more distracted when it comes to 0:03:15.639 --> 0:03:18.400 dealing with the health crisis, and then people get more upset. 0:03:18.480 --> 0:03:22.440 It's a very bad cycle. It's a real like stress test, 0:03:22.600 --> 0:03:25.200 I feel like on the entire system all at once. 0:03:25.280 --> 0:03:28.560 We had a conversation a while back with Adam Two's 0:03:28.600 --> 0:03:30.960 it's sort of like the everything crisis, and I think 0:03:31.040 --> 0:03:33.480 right as you said, like maybe there was some appetite 0:03:33.480 --> 0:03:38.840 in the US for a barely hard lockdown policies early on, 0:03:39.040 --> 0:03:43.000 but you know, come to summer, it's really hard. So um, yeah, 0:03:43.080 --> 0:03:45.600 it's a it's a bad situation. Okay, So we've set 0:03:45.640 --> 0:03:47.839 the scene, which is pretty dire. What are we talking 0:03:47.880 --> 0:03:51.160 about today? So if you're listening to the podcast we're 0:03:51.200 --> 0:03:53.920 actually this is that you can view this on YouTube. 0:03:54.120 --> 0:03:57.360 We are going to be talking today with Zach Carter. 0:03:57.600 --> 0:04:01.640 He is a senior reporter at The Huffington's Post, but 0:04:02.200 --> 0:04:04.520 right now he's also a best selling author of a 0:04:04.560 --> 0:04:08.480 new book, The Price of Peace, Money, Democracy, and the 0:04:08.560 --> 0:04:11.720 Life of John Maynard Keynes. And I feel like, um, 0:04:11.760 --> 0:04:15.000 you know, a you know, in the economic crisis that 0:04:15.040 --> 0:04:17.279 we're experiencing, I think a lot of people are talking 0:04:17.279 --> 0:04:23.920 about Keynesian economics, arguably even more than the Great Financial Crisis. 0:04:23.960 --> 0:04:27.520 We're seeing the sort of greater willingness on policymakers to 0:04:27.680 --> 0:04:30.840 just spend, like a pure recognition that that has to 0:04:30.880 --> 0:04:35.080 be part of the playbook. Much more aggressive fiscal policy. Um. 0:04:35.120 --> 0:04:37.400 But it's even more. And I think one of the 0:04:37.480 --> 0:04:39.560 things and we're going to talk about with Zach is 0:04:39.600 --> 0:04:42.560 that Canes was dedicated his life to a lot more 0:04:42.600 --> 0:04:45.480 than just spending when the economy is bad, which is 0:04:45.520 --> 0:04:49.119 how many people think of Keynesianism. But it's actually many 0:04:49.240 --> 0:04:53.080 more lessons and implications of his work than just what 0:04:53.120 --> 0:04:55.160 people know him for. Um. I think the fact that 0:04:55.240 --> 0:04:58.600 we are in this everything crisis sort of makes this 0:04:58.720 --> 0:05:01.840 a very timely conversation. Yeah. I think this ties in 0:05:01.920 --> 0:05:03.719 with a theme that we've been touching on, which is 0:05:03.800 --> 0:05:06.599 there is a purpose to economics, which is supposed to 0:05:06.600 --> 0:05:08.839 be to make everyone better off, and it feels like 0:05:08.839 --> 0:05:11.640 that sometimes gets a little bit lost, especially in times 0:05:11.680 --> 0:05:14.520 like now. All right, So without further Ado, Zack, thank 0:05:14.560 --> 0:05:16.520 you very much for joining us. Thanks so much for 0:05:16.560 --> 0:05:20.600 having me. Guys, I'm really excited to be talking to you. So, like, 0:05:21.520 --> 0:05:23.440 you know, why is it so hard to read like 0:05:23.520 --> 0:05:25.520 the general Theory? Like I've tried reading in a bunch 0:05:25.520 --> 0:05:29.960 of times. Yeah, I have my chapters like the one 0:05:30.000 --> 0:05:32.960 about like the beauty contest is pretty interesting, like talked 0:05:33.000 --> 0:05:34.880 about the stock market, and some of it I really get, 0:05:35.240 --> 0:05:37.000 and then other times I read it like, man, I 0:05:37.080 --> 0:05:39.719 really really tough, Like what's the deal with that? Yeah, 0:05:39.920 --> 0:05:42.640 you know, if you want to get through the general theory, uh, 0:05:42.680 --> 0:05:44.919 And I feel like this is a pretty high folutint audience, 0:05:44.960 --> 0:05:46.800 so we can we can just go straight to the 0:05:46.839 --> 0:05:50.040 general theory. Uh, you know, you can get you can 0:05:50.080 --> 0:05:52.080 get a lot out of that book if you just 0:05:52.120 --> 0:05:54.560 read chapters twelve and twenty four, and those are the 0:05:54.560 --> 0:05:57.600 most readable chapters. They're they're those that seem to make 0:05:57.640 --> 0:06:00.320 the most intuitive sense about the world that we live 0:06:00.320 --> 0:06:02.640 in today. You know, I think there are two things 0:06:02.680 --> 0:06:06.320 going on with the general theory, but it's in its unreadability. 0:06:06.320 --> 0:06:09.039 One is that Kin's is actively still trying to work 0:06:09.080 --> 0:06:12.040 out his ideas about what's going on as he is 0:06:12.200 --> 0:06:14.679 as he is writing, and he is in a sense 0:06:14.760 --> 0:06:19.200 uncomfortable with the sort of radical implications of the ideas 0:06:19.240 --> 0:06:21.280 that he's developing, because by the time he gets to 0:06:21.400 --> 0:06:24.800 chapter twenty four, he says, uh, you know, I think 0:06:24.800 --> 0:06:28.040 we'll have to have some sort of semi comprehensive socialization 0:06:28.040 --> 0:06:31.120 of investment. And by investment he means he means, you know, 0:06:31.279 --> 0:06:34.719 corporate investment, you know, spending on equipment, research and development, 0:06:34.760 --> 0:06:37.880 things like that, in order to prevent the type of 0:06:37.880 --> 0:06:41.240 thing that we're we're experiencing right now. This is the 0:06:41.240 --> 0:06:43.680 Great Depression, which in Britain has been going on for 0:06:44.200 --> 0:06:48.560 seventeen years. So he's, uh, you know, someone who comes 0:06:48.560 --> 0:06:53.040 from this very you know, traditional liberal Enlightenment tradition, and 0:06:53.120 --> 0:06:56.839 that is not a place that he is like super 0:06:56.880 --> 0:06:59.960 eager to go to, but he does want to preserve 0:07:00.040 --> 0:07:04.159 all of those liberal values about freedom of conscious, freedom 0:07:04.200 --> 0:07:07.120 of choice, all of these things that that individual liberty, 0:07:07.120 --> 0:07:09.720 that that we associate with liberalism. But he's he's getting 0:07:09.760 --> 0:07:11.440 the point where he just doesn't think those things can 0:07:11.480 --> 0:07:15.120 be saved without massive government activity, and he's not totally 0:07:15.120 --> 0:07:17.840 comfortable with that. The other thing, though, is that you know, 0:07:17.880 --> 0:07:20.480 when Cain's knew what he wanted to say, he was 0:07:20.560 --> 0:07:24.080 very clear. He was a very accomplished financial journalist, and 0:07:24.080 --> 0:07:26.360 I think one of the reasons why we still remember 0:07:26.520 --> 0:07:29.920 who he is is because he had this incredible ability 0:07:29.960 --> 0:07:32.760 to connect with the public over the course of his lifetime. 0:07:32.960 --> 0:07:36.200 So for most the twenties and the thirties, he's easily 0:07:36.560 --> 0:07:40.440 the most popular sort of financial press person in the world, 0:07:40.600 --> 0:07:42.320 not just in Britain or the United States, but all 0:07:42.320 --> 0:07:45.480 over the world. People people read his his columns and 0:07:45.520 --> 0:07:49.200 his magazine articles, and they they understand the way the 0:07:49.240 --> 0:07:52.720 economy works through what Kin's is saying. He has almost 0:07:52.720 --> 0:07:56.680 no influence throughout this period on actual government policy. So 0:07:56.800 --> 0:07:59.520 he's a guy who's capable of communicating when he wants to. 0:08:00.040 --> 0:08:02.160 But I honestly think that when he got to the 0:08:02.160 --> 0:08:05.840 general theory, he said, you know, we are like I'm trying. 0:08:05.920 --> 0:08:08.520 I've had this great success communicating with the public, I 0:08:08.560 --> 0:08:11.760 have not been able to persuade the policymakers. What if 0:08:11.800 --> 0:08:13.640 I make this really hard to understand so that a 0:08:13.680 --> 0:08:16.320 bunch of economists will read it, Like if I make 0:08:16.400 --> 0:08:19.440 this really hard to understand, economists will spend forever diving 0:08:19.480 --> 0:08:22.240 into it and trying to decipher you know, liquidity preference 0:08:22.320 --> 0:08:24.760 and all these things. He'd been making the sort of 0:08:24.760 --> 0:08:28.720 basic policy arguments for about about seven years before the 0:08:29.160 --> 0:08:31.840 General theory came out. He was talking about the multiplier, 0:08:32.320 --> 0:08:35.320 he was he was talking about deficit spending, he was 0:08:35.320 --> 0:08:37.559 talking about public works, all all of these things that 0:08:37.600 --> 0:08:42.320 we associate with Kynesianism today that long predated the general theory. 0:08:42.360 --> 0:08:44.360 I think he just tried to sort of mystify it 0:08:44.760 --> 0:08:47.320 so that economists would spend a lot of time digging 0:08:47.360 --> 0:08:50.559 through it. And and as a result, it became this 0:08:50.640 --> 0:08:55.400 big work of economic theory that only the great brilliant 0:08:55.440 --> 0:08:58.840 economists could understand. And then the great brilliant economists could 0:08:58.840 --> 0:09:02.280 take it to policymakers, into into legislatures and too you know, 0:09:02.520 --> 0:09:06.160 two presidents and say, well, uh, only we can really 0:09:06.240 --> 0:09:11.360 understand this incredible work of impenetrable genius. Um you know 0:09:11.840 --> 0:09:14.480 you you must listen to us now, and and that 0:09:14.600 --> 0:09:17.760 empowered a whole generation of of you know what we 0:09:17.800 --> 0:09:21.440 now call Kanzie and economists to to to push for 0:09:21.520 --> 0:09:24.040 deficit spending. Essentially, I think there's a lot more to 0:09:24.120 --> 0:09:26.560 Kaanes than deficit spending, but that I think that's how 0:09:26.600 --> 0:09:30.240 he ends up becoming so influential in in the late 0:09:30.240 --> 0:09:35.280 thirties and in Zach. Maybe just to stop and back 0:09:35.360 --> 0:09:38.400 up for a second, can you walk us through how 0:09:38.559 --> 0:09:43.480 radical Keynes's ideas were actually considered in the nine thirties, 0:09:43.520 --> 0:09:47.000 because I think nowadays everyone just assumes Keynesianism is kind 0:09:47.000 --> 0:09:51.439 of the economic orthodoxy, but obviously it wasn't always considered 0:09:51.480 --> 0:09:54.400 that well, and it's it's been the orthodoxy that's fall 0:09:54.440 --> 0:09:56.240 in a favorite. I think I think now it's it's 0:09:56.320 --> 0:09:58.719 it's back in vogue today. When we think about the 0:09:58.800 --> 0:10:02.520 gold standard, which was the dominant mode not only of 0:10:03.160 --> 0:10:08.680 economic exchange, but of of sort of international economic cooperation, 0:10:08.720 --> 0:10:12.960 it was the global geopolitical order. Today we think about 0:10:12.960 --> 0:10:15.559 the gold standard as as sort of an instrument of conservatism. 0:10:15.720 --> 0:10:19.359 People who like the gold standard are are typically associated 0:10:19.400 --> 0:10:23.280 with the hard right they're associated with the very right 0:10:23.320 --> 0:10:27.160 wing of Republican Party or or anti internationalist movements, things 0:10:27.240 --> 0:10:30.280 like that. That wasn't the case in the early twentieth century. 0:10:30.520 --> 0:10:32.640 The people who were committed to the gold Standard. There 0:10:32.679 --> 0:10:34.439 were right wingers who were who were part of it, 0:10:34.760 --> 0:10:39.000 but there was this belief that liberal internationalism, that that 0:10:39.520 --> 0:10:43.120 free exchanged between different peoples in different countries would help 0:10:43.200 --> 0:10:46.439 bring the world to a sort of peaceful place. And 0:10:46.640 --> 0:10:50.520 Kines was saying, I like those ideals, but this doesn't 0:10:50.520 --> 0:10:53.400 actually work, and we're not getting more peaceful, we're becoming 0:10:53.440 --> 0:10:56.360 more warlike, and and this is leading us to domestic 0:10:56.440 --> 0:11:01.120 misery and international conflict. And what he's doing when he 0:11:01.280 --> 0:11:03.880 says that is blowing up not just sort of a 0:11:03.960 --> 0:11:10.880 conservative paradigm, but the paradigm that dominates conservatives, liberals, and centrists. 0:11:10.920 --> 0:11:12.480 It's it's it's sort of be like coming to the 0:11:12.600 --> 0:11:15.160 United States today and saying rule of law is a 0:11:15.240 --> 0:11:18.760 bad idea, the Constitution is stupid. Don't do that anymore. 0:11:18.840 --> 0:11:21.679 I've got a better idea. It's very very radical, and 0:11:21.800 --> 0:11:24.199 in the sense that it's a deep departure from what 0:11:25.320 --> 0:11:29.880 what the understood way of doing things and the international 0:11:30.040 --> 0:11:33.280 order is there's an almost sort of like quasi religious 0:11:33.480 --> 0:11:36.800 moral significance to this order. You know, the gold standard 0:11:36.880 --> 0:11:40.800 isn't just about growth and and balance, trade and prosperity. 0:11:40.840 --> 0:11:45.080 It's it's it's about respecting different countries. It's about uh, 0:11:45.200 --> 0:11:48.920 you know, sort of sort of loving your neighbor in 0:11:49.040 --> 0:11:51.079 this in this really this way that people really do 0:11:51.160 --> 0:11:53.560 take seriously at the time, even though I think of retrospect, 0:11:53.640 --> 0:11:55.959 it seems kind of silly. And and so kanes Is 0:11:56.160 --> 0:11:57.920 is saying, we have to throw all that out. If 0:11:57.960 --> 0:12:00.480 we care about these values, we have to totally change. 0:12:01.000 --> 0:12:04.319 He's not totally comfortable with the policy implications of of 0:12:04.480 --> 0:12:07.040 changing that, and he changes his mind over the course 0:12:07.080 --> 0:12:09.319 of the nineteen twenties and the nineteen thirties many times. 0:12:09.400 --> 0:12:11.640 But by the time you get to nineteen forties. In 0:12:11.679 --> 0:12:14.480 the United States, he's famous for being the deficit spending guy. 0:12:14.559 --> 0:12:17.920 But in the UK his biggest policy achievement is being 0:12:17.960 --> 0:12:20.839 the financial architect for the National Health Service. So he 0:12:21.080 --> 0:12:24.719 follows this logic through and comes to the conclusion that 0:12:25.000 --> 0:12:27.760 they have to socialize not just health insurance, but actually 0:12:27.840 --> 0:12:31.640 the the entire medical system in the UK, and he 0:12:31.960 --> 0:12:35.959 he helps push that through politically. So the implications of 0:12:36.080 --> 0:12:38.679 this are are much more radical, I think than what 0:12:39.160 --> 0:12:41.280 than what we've come to understand him as in the 0:12:41.400 --> 0:12:43.880 United States, where he's the sort of deficit therapist who says, 0:12:44.160 --> 0:12:46.160 spend money when things go off the cliff. He was 0:12:46.240 --> 0:12:50.959 talking about realizing UH and and UH fostering a more 0:12:51.040 --> 0:13:11.800 harmonious democratic society in good times and in bad I 0:13:11.920 --> 0:13:14.800 want to get to that uh soon, like the gap 0:13:14.920 --> 0:13:19.320 between what we call kanesie and economics and cane Zone ideas. 0:13:19.320 --> 0:13:22.360 But before we do so, we set this up. Obviously, 0:13:22.640 --> 0:13:24.640 it feels to me like your book is very timely 0:13:24.720 --> 0:13:29.920 given this massive international crisis, which you probably weren't anticipating 0:13:30.240 --> 0:13:32.400 when you decide to write it. But why did you 0:13:32.559 --> 0:13:36.400 like what prompted you as a journalist to say, like, 0:13:36.440 --> 0:13:38.280 I want to write a Keynes biography because there are 0:13:38.440 --> 0:13:42.960 Canes biographies. We've interviewed uh Lord Skidelski at least once 0:13:43.040 --> 0:13:47.520 on the podcast, who is probably the most famous Canes biographer. 0:13:48.120 --> 0:13:50.520 But from your perspective, what was it that in your 0:13:50.600 --> 0:13:53.079 views like there needs to be another Canes book, and 0:13:53.160 --> 0:13:54.400 I want to do it because it's gonna be a 0:13:54.480 --> 0:13:59.680 tough two thousand eight changed the way people looked at 0:13:59.760 --> 0:14:05.200 cane Zinism in in a kind of foundational way. Cans 0:14:05.520 --> 0:14:07.400 was already sort of if you look at the like 0:14:07.520 --> 0:14:09.640 academic literature, and the stuff was already sort of coming 0:14:09.679 --> 0:14:12.040 back into vogue over the course of the Bush administration, 0:14:12.280 --> 0:14:16.400 but it had been really really deep in the legitimacy 0:14:16.640 --> 0:14:21.240 ditch before that, so it's just barely coming back into 0:14:21.360 --> 0:14:25.640 respectability among among academ economists. And two thousand eight makes 0:14:25.800 --> 0:14:28.520 a lot of the criticisms of Kanzianism seemed very silly. 0:14:28.640 --> 0:14:31.800 And for me, I was working as a banking reporter 0:14:31.960 --> 0:14:34.720 at a trade publication called SNL Financial, which is now 0:14:34.840 --> 0:14:38.480 part of SMP Global, and you know, doing just analyzing 0:14:38.520 --> 0:14:42.320 banking data and and looking at credit quality and you know, 0:14:42.880 --> 0:14:45.520 delinquent loans and all the rest. And I really love 0:14:45.640 --> 0:14:47.800 that job. But it became very clear that in two 0:14:47.840 --> 0:14:49.360 thousand and eight, all the people that I talked to 0:14:49.680 --> 0:14:53.840 went from saying markets are rational, um, they reach equilibrium 0:14:53.960 --> 0:14:56.240 and we've got to obey the verdict of the rational 0:14:56.320 --> 0:14:59.040 market to saying we have to bail at the financial sector. 0:14:59.520 --> 0:15:03.000 And that was clearly people weren't stupid like people are 0:15:03.000 --> 0:15:05.680 talking to knew they were changing their tune, right, they 0:15:05.760 --> 0:15:08.120 weren't just like hypocrites, but it was very clear that 0:15:08.200 --> 0:15:11.240 there was an intellectual shift that was happening. And I said, okay, well, 0:15:11.400 --> 0:15:13.640 let me read this Kane's guy. I've only ei leaned 0:15:13.720 --> 0:15:15.920 him from my eCOM one of one classes. But when 0:15:15.920 --> 0:15:17.800 I went back and read him, and I tried to read, 0:15:17.840 --> 0:15:19.640 to be perfectly honest, I tried to read the General 0:15:19.720 --> 0:15:23.000 Theory first, and I found it sort of like it 0:15:23.120 --> 0:15:27.200 was as pleasant as as like eating a pretzel covered 0:15:27.240 --> 0:15:30.560 in Thorn's right, it's just not great. I'm glad I'm 0:15:30.600 --> 0:15:32.360 not the only one. I was like a little nervous. 0:15:33.200 --> 0:15:36.320 I'm just glad that No, it's it's terrible. It's terrible. 0:15:36.360 --> 0:15:38.560 I mean, Kane's most of the time is a beautiful writer. 0:15:38.680 --> 0:15:41.120 His friends are people like Virginia Wolf and Litton Straitchy 0:15:41.200 --> 0:15:44.280 and Ian Forster, and he is capable of doing beautiful 0:15:44.360 --> 0:15:47.320 things with language about economic policy. But the General Theory 0:15:47.400 --> 0:15:51.560 is just not That's not not his his most lyrical work. 0:15:51.760 --> 0:15:54.040 So I went back and read The Economic Consequences of 0:15:54.120 --> 0:15:56.400 the Piece, which is the book that he writes at 0:15:56.480 --> 0:15:59.280 the end of the negotiations over the Treaty of Versailles. 0:15:59.360 --> 0:16:02.920 He is the top representative from the British Treasury at 0:16:03.120 --> 0:16:07.680 at the talks about how to establish both an economic 0:16:07.760 --> 0:16:10.640 and political order at the end of World War One, 0:16:10.800 --> 0:16:14.640 and he is furious about about what his own government 0:16:14.680 --> 0:16:18.000 has done and about the ultimate agreements, and he says, look, 0:16:18.360 --> 0:16:21.800 the economic terms that we have committed ourselves to and 0:16:21.880 --> 0:16:24.480 this treaty are going to march the entire continent towards 0:16:24.560 --> 0:16:27.280 dictatorship and war. And I think it's just, you know, 0:16:27.520 --> 0:16:29.720 there are people who have have quibbled with some of 0:16:29.800 --> 0:16:31.880 his figures here and there over the years, but I 0:16:32.040 --> 0:16:35.320 just think it's very difficult to argue with that basic premise. 0:16:35.920 --> 0:16:39.880 He was talking about something that came to pass, and 0:16:40.640 --> 0:16:43.720 and for reasons that are very closely connected to why 0:16:43.840 --> 0:16:47.160 they came to pass. The reparations that were assigned to 0:16:47.240 --> 0:16:51.000 Germany were essentially unpayable. They destroyed the German economy and 0:16:51.440 --> 0:16:55.560 UH and that economic wreckage sort of created the breeding 0:16:55.600 --> 0:16:58.920 ground for fascism. And when I read that, it became 0:16:58.960 --> 0:17:01.720 clear to me that Haynes wasn't just talking about money 0:17:01.760 --> 0:17:05.760 and numbers economic consequences. The piece is not about deficit spending. 0:17:06.000 --> 0:17:08.560 Kanes hasn't even thought of that yet. He's just talking 0:17:08.600 --> 0:17:12.640 about international cooperation and figuring out a way to link 0:17:12.720 --> 0:17:16.440 economic policy with global harmony. He's still committed to the 0:17:16.480 --> 0:17:18.760 gold standard in nineteen nineteen when he writes this book. 0:17:19.000 --> 0:17:20.520 But it seemed to me like it was a work 0:17:20.600 --> 0:17:23.359 of political theory, like the works that I had studied 0:17:23.359 --> 0:17:26.320 when I was an undergraduate. I studied philosophy, so you know, 0:17:26.440 --> 0:17:31.480 Hobb's lap were so enlightenment philosophy stuff, and and he 0:17:31.640 --> 0:17:34.040 just seemed like one of those guys to me, And 0:17:34.119 --> 0:17:36.439 so I started reading, and I kept reading. And when 0:17:36.480 --> 0:17:40.119 you read Skidelski and other accounts, these are very good biographies. 0:17:40.119 --> 0:17:42.120 I don't want to denigrate them at all. But they're 0:17:42.160 --> 0:17:44.879 written from the perspective of of looking at Kines as 0:17:44.880 --> 0:17:47.919 an economist and how he came to develop his economic ideas. 0:17:47.960 --> 0:17:50.680 They're very, very useful for that purpose. But if you 0:17:50.720 --> 0:17:53.080 think of Kines as a social theorist, and if you 0:17:53.200 --> 0:17:55.680 think of him as a statesman, there's a lot going 0:17:55.760 --> 0:17:58.400 on in the economic theory that is happening for these 0:17:58.600 --> 0:18:03.120 these moral political hole reasons that I think are really 0:18:03.160 --> 0:18:04.639 the things that are driving him. I think in a 0:18:04.720 --> 0:18:07.480 lot of ways, Canes comes up with a solution that 0:18:07.600 --> 0:18:10.520 he comes to believe is morally or politically necessary, and 0:18:10.560 --> 0:18:14.000 then sort of reverse engineers it to be economically acceptable 0:18:14.080 --> 0:18:17.960 to people. In economics, he has a really great essay 0:18:18.000 --> 0:18:19.800 on Isaac Newton. A lot of people don't know is 0:18:19.920 --> 0:18:22.840 what was an important economist in the British Empire in 0:18:22.920 --> 0:18:25.320 the in the eighteenth century. Um in charge of the 0:18:25.320 --> 0:18:27.840 British meant all sorts of monetary policy stuff he's doing, 0:18:27.880 --> 0:18:30.240 But he talks about Newton and says, you know, Newton's 0:18:30.800 --> 0:18:33.679 great genius was this this ability to have a flash 0:18:33.760 --> 0:18:36.480 of creative insight, and then he would dress up the 0:18:36.520 --> 0:18:39.480 creative insight with mathematics after the fact. And I think 0:18:39.560 --> 0:18:42.520 Canes was doing the same thing in economics, um and 0:18:42.720 --> 0:18:44.879 and that makes him, you know, sort of more of 0:18:44.960 --> 0:18:47.760 an artist than an economist that as we would think 0:18:47.800 --> 0:18:51.800 of the economist today. It's really interesting how you mentioned 0:18:51.880 --> 0:18:53.560 it sort of took the two thousand and eight financial 0:18:53.600 --> 0:18:57.399 crisis to bring Keynesianism back in vogue, and then, of 0:18:57.480 --> 0:19:00.280 course it kind of took the Great Depression to make 0:19:00.359 --> 0:19:04.240 people take Kane seriously. In the first place. But just 0:19:04.400 --> 0:19:05.920 to back up for a second, can you talk to 0:19:06.080 --> 0:19:08.920 us more about his social vision, like what is it 0:19:09.080 --> 0:19:12.720 that he is trying to reverse engineer here? So with Kansa, 0:19:12.920 --> 0:19:14.800 you have always have to be careful because he changes 0:19:14.840 --> 0:19:17.960 over time. He's not monolithic, but he does have this 0:19:18.280 --> 0:19:22.760 very consistent vision of beauty and the good life um 0:19:23.080 --> 0:19:26.840 that he gets from from being an undergraduate at Cambridge 0:19:26.920 --> 0:19:29.639 and being a member of the Bloomsberry set. So friends 0:19:29.680 --> 0:19:32.560 with Virginia Wolf, the great writer, Litton Straighty, the great writer, 0:19:32.680 --> 0:19:35.160 Ian forrest Or the Great writer, a lot of painters 0:19:35.160 --> 0:19:37.960 who are not as well known today, but people like 0:19:38.040 --> 0:19:41.680 Duncan Grant and and Vanessa Bell who was Virginia Wolf's sister, 0:19:41.960 --> 0:19:44.720 who in their day were considered very great artists. You know, 0:19:45.119 --> 0:19:47.520 Vanessa Bell would go and hang out with Pablo Picasso 0:19:47.680 --> 0:19:50.800 in in Montparnas all the time that that was they 0:19:50.880 --> 0:19:54.440 were part of this big international cultural milieu. And Kines 0:19:54.520 --> 0:19:58.480 himself ended up marrying a ballerina named Lydia Lapakovo who's 0:19:58.520 --> 0:20:02.080 from St. Petersburg, who's basically the most famous ballerina in Britain. 0:20:02.280 --> 0:20:04.119 This is at time when ballet is sort of like 0:20:04.200 --> 0:20:09.560 a combination between like football and and like Netflix. It's 0:20:09.640 --> 0:20:13.439 it's easily like the most popular and powerful cultural thing 0:20:13.560 --> 0:20:17.720 that's happening in Europe at the time. So he's very 0:20:17.800 --> 0:20:19.800 deeply involved with this cultural life and he thinks that 0:20:19.880 --> 0:20:23.119 this this this vibrant thing where you can, you know, 0:20:23.240 --> 0:20:25.960 you can hang out with Stravinsky and you can and 0:20:26.080 --> 0:20:28.680 you can you know, make out with ballerinas and and 0:20:28.760 --> 0:20:31.200 drink champagne with Virginia Wolf while having your hair cut 0:20:31.320 --> 0:20:33.920 by you know, somebody who's just got back from seeing 0:20:34.000 --> 0:20:36.879 Gertrude Stein. He thinks this is really the life, and 0:20:37.000 --> 0:20:38.760 it's hard to you know, it's hard to disagree with 0:20:38.800 --> 0:20:40.400 the guy. I mean, that sounds like a pretty good 0:20:40.880 --> 0:20:43.920 way to live, and he wants to preserve that. And 0:20:44.240 --> 0:20:46.920 when he starts out as a as an economic thinker, 0:20:47.359 --> 0:20:49.920 he's really just trying to preserve that for his his 0:20:50.040 --> 0:20:54.200 sort of upper middle class, quasi elite milieu. But as 0:20:54.320 --> 0:20:58.119 he continues to develop his his thinking, he says, you know, 0:20:58.520 --> 0:21:01.800 if we don't open this space up to other people, 0:21:02.280 --> 0:21:04.480 the rabble are going to revolt and they are going 0:21:04.560 --> 0:21:06.840 to overthrow us, and we are not going to be 0:21:06.880 --> 0:21:09.000 able to have these parties anymore, and that is going 0:21:09.119 --> 0:21:12.119 to be terrible. So in in order to preserve this 0:21:12.280 --> 0:21:15.080 sort of lifestyle, we've we've got to democratize it. And 0:21:15.240 --> 0:21:19.520 he starts thinking about ways to essentially alleviate the very 0:21:19.600 --> 0:21:22.600 high inequality of the late Gilded Age that he's living 0:21:22.640 --> 0:21:25.200 in um in order to preserve the sort of high 0:21:25.359 --> 0:21:29.080 cultural achievements of that of that era, thinking that, you know, 0:21:29.240 --> 0:21:31.920 it's better to democratize these things than have them be 0:21:32.040 --> 0:21:34.360 smashed by what he's particularly worried about as the marks 0:21:34.400 --> 0:21:37.359 of authoritarianism, which he thinks is brutal and violent and terrible, 0:21:37.440 --> 0:21:40.400 but but also just kind of ghost just just there's 0:21:40.760 --> 0:21:43.600 bad art from the fascists. So if you want to 0:21:43.720 --> 0:21:47.960 have a beautiful world, you're going to need to democratize it. 0:21:48.080 --> 0:21:51.760 And as he continues to develop his thought, he believes 0:21:51.840 --> 0:21:55.879 that the sort of possibilities for democratizing this or wider 0:21:55.960 --> 0:22:00.600 and wider, so he ultimately ends up concluding that economic scarcity, 0:22:00.720 --> 0:22:03.480 which at least when I was studying economics as a 0:22:03.760 --> 0:22:06.000 as an undergraduate, I was told you first thing, first 0:22:06.080 --> 0:22:08.359 day and ecoon one on one is economics is the 0:22:08.400 --> 0:22:12.119 study of you know, scarce resources and and infinite wants. 0:22:12.480 --> 0:22:15.240 Kanser says, that's not that that's not the subject of economics. 0:22:15.320 --> 0:22:19.160