Speaker 1: Hello, Odd Lots listeners, It's Joe Wisenthal. I want to
Speaker 1: let you know about something cool that's coming up. On Wednesday, July,
Speaker 1: Odd Lots of holding our first ever live stream event.
Speaker 1: Tracy and I will be interviewing Carson Block, founder of
Speaker 1: Muddy Waters Research. We're gonna be talking to Carson live
Speaker 1: on Bloomberg dot Com, the Terminal, Twitter, et cetera. It's
Speaker 1: gonna be eight p m. Eastern Time on Wednesday, July Team,
Speaker 1: so be sure to follow at podcast to catch the
Speaker 1: live stream of the event. So check it out. Thanks, Hello,
Speaker 1: and welcome to another episode of The Odd Lots Podcast.
Speaker 1: I'm Joe Wisenthal and I'm Tracey all Away. So, Tracy,
Speaker 1: we're still in the middle of a crisis. Yes, we
Speaker 1: are three months on still crisis mode. You know, like
Speaker 1: one of the things we've been doing throughout this whole
Speaker 1: crisis is we've been making sure that listeners know the
Speaker 1: date that we were recording this. And I feel like
Speaker 1: it's especially important because a this as you mentioned, it's
Speaker 1: been going on a long time. We you're in Hong Kong,
Speaker 1: and Hong Kong you just had one of its worst
Speaker 1: days of new cases ever and you guys were like
Speaker 1: the the exemplars that everyone are, one of the best,
Speaker 1: that we're all supposed to aspire to. And it's not
Speaker 1: even over there. Yeah, it's pretty worrying. Uh, one of
Speaker 1: its worst days on record, as you just mentioned, and
Speaker 1: also Tokyo had a really bad day for infections as well.
Speaker 1: So the concern is that even in countries that have
Speaker 1: done reasonably well in containing the virus so far, there
Speaker 1: is a risk for a big resurgence. Right so that
Speaker 1: the date is at least in the US time, it's
Speaker 1: morning where you are, but it's July nine, and yes,
Speaker 1: several months after this began, we are still in the
Speaker 1: thick of it. You're in Hong Kong, I'm in Texas,
Speaker 1: where everyone is, where cases are very bad. This crisis
Speaker 1: is a long way from over, and it doesn't seem
Speaker 1: like there's any obvious path out as of as this
Speaker 1: work moment. That's an accurate, if depressing description. Yes, And
Speaker 1: the thing you know, obviously we've talked about this a lot.
Speaker 1: It's it's a multi crisis crisis because there's the health crisis,
Speaker 1: there's the political credibility crisis because even if leaders want
Speaker 1: to do something or have a you know, plan to
Speaker 1: fight the virus itself. There's a question of whether they
Speaker 1: can actually uh sort of get the country behind it.
Speaker 1: And then of course there's the straight up economic crisis,
Speaker 1: mass unemployment, a major slowdown in activity, and yeah, and
Speaker 1: of course all three of those different crises seem to
Speaker 1: feed off each other and make each one worse. Uh,
Speaker 1: you get this really bad feedback loop, i'd argue, is
Speaker 1: the economy worsens, people get more upset with their politicians
Speaker 1: and aeticians arguably get more distracted when it comes to
Speaker 1: dealing with the health crisis, and then people get more upset.
Speaker 1: It's a very bad cycle. It's a real like stress test,
Speaker 1: I feel like on the entire system all at once.
Speaker 1: We had a conversation a while back with Adam Two's
Speaker 1: it's sort of like the everything crisis, and I think
Speaker 1: right as you said, like maybe there was some appetite
Speaker 1: in the US for a barely hard lockdown policies early on,
Speaker 1: but you know, come to summer, it's really hard. So um, yeah,
Speaker 1: it's a it's a bad situation. Okay, So we've set
Speaker 1: the scene, which is pretty dire. What are we talking
Speaker 1: about today? So if you're listening to the podcast we're
Speaker 1: actually this is that you can view this on YouTube.
Speaker 1: We are going to be talking today with Zach Carter.
Speaker 1: He is a senior reporter at The Huffington's Post, but
Speaker 1: right now he's also a best selling author of a
Speaker 1: new book, The Price of Peace, Money, Democracy, and the
Speaker 1: Life of John Maynard Keynes. And I feel like, um,
Speaker 1: you know, a you know, in the economic crisis that
Speaker 1: we're experiencing, I think a lot of people are talking
Speaker 1: about Keynesian economics, arguably even more than the Great Financial Crisis.
Speaker 1: We're seeing the sort of greater willingness on policymakers to
Speaker 1: just spend, like a pure recognition that that has to
Speaker 1: be part of the playbook. Much more aggressive fiscal policy. Um.
Speaker 1: But it's even more. And I think one of the
Speaker 1: things and we're going to talk about with Zach is
Speaker 1: that Canes was dedicated his life to a lot more
Speaker 1: than just spending when the economy is bad, which is
Speaker 1: how many people think of Keynesianism. But it's actually many
Speaker 1: more lessons and implications of his work than just what
Speaker 1: people know him for. Um. I think the fact that
Speaker 1: we are in this everything crisis sort of makes this
Speaker 1: a very timely conversation. Yeah. I think this ties in
Speaker 1: with a theme that we've been touching on, which is
Speaker 1: there is a purpose to economics, which is supposed to
Speaker 1: be to make everyone better off, and it feels like
Speaker 1: that sometimes gets a little bit lost, especially in times
Speaker 1: like now. All right, So without further Ado, Zack, thank
Speaker 1: you very much for joining us. Thanks so much for
Speaker 1: having me. Guys, I'm really excited to be talking to you. So, like,
Speaker 1: you know, why is it so hard to read like
Speaker 1: the general Theory? Like I've tried reading in a bunch
Speaker 1: of times. Yeah, I have my chapters like the one
Speaker 1: about like the beauty contest is pretty interesting, like talked
Speaker 1: about the stock market, and some of it I really get,
Speaker 1: and then other times I read it like, man, I
Speaker 1: really really tough, Like what's the deal with that? Yeah,
Speaker 1: you know, if you want to get through the general theory, uh,
Speaker 1: And I feel like this is a pretty high folutint audience,
Speaker 1: so we can we can just go straight to the
Speaker 1: general theory. Uh, you know, you can get you can
Speaker 1: get a lot out of that book if you just
Speaker 1: read chapters twelve and twenty four, and those are the
Speaker 1: most readable chapters. They're they're those that seem to make
Speaker 1: the most intuitive sense about the world that we live
Speaker 1: in today. You know, I think there are two things
Speaker 1: going on with the general theory, but it's in its unreadability.
Speaker 1: One is that Kin's is actively still trying to work
Speaker 1: out his ideas about what's going on as he is
Speaker 1: as he is writing, and he is in a sense
Speaker 1: uncomfortable with the sort of radical implications of the ideas
Speaker 1: that he's developing, because by the time he gets to
Speaker 1: chapter twenty four, he says, uh, you know, I think
Speaker 1: we'll have to have some sort of semi comprehensive socialization
Speaker 1: of investment. And by investment he means he means, you know,
Speaker 1: corporate investment, you know, spending on equipment, research and development,
Speaker 1: things like that, in order to prevent the type of
Speaker 1: thing that we're we're experiencing right now. This is the
Speaker 1: Great Depression, which in Britain has been going on for
Speaker 1: seventeen years. So he's, uh, you know, someone who comes
Speaker 1: from this very you know, traditional liberal Enlightenment tradition, and
Speaker 1: that is not a place that he is like super
Speaker 1: eager to go to, but he does want to preserve
Speaker 1: all of those liberal values about freedom of conscious, freedom
Speaker 1: of choice, all of these things that that individual liberty,
Speaker 1: that that we associate with liberalism. But he's he's getting
Speaker 1: the point where he just doesn't think those things can
Speaker 1: be saved without massive government activity, and he's not totally
Speaker 1: comfortable with that. The other thing, though, is that you know,
Speaker 1: when Cain's knew what he wanted to say, he was
Speaker 1: very clear. He was a very accomplished financial journalist, and
Speaker 1: I think one of the reasons why we still remember
Speaker 1: who he is is because he had this incredible ability
Speaker 1: to connect with the public over the course of his lifetime.
Speaker 1: So for most the twenties and the thirties, he's easily
Speaker 1: the most popular sort of financial press person in the world,
Speaker 1: not just in Britain or the United States, but all
Speaker 1: over the world. People people read his his columns and
Speaker 1: his magazine articles, and they they understand the way the
Speaker 1: economy works through what Kin's is saying. He has almost
Speaker 1: no influence throughout this period on actual government policy. So
Speaker 1: he's a guy who's capable of communicating when he wants to.
Speaker 1: But I honestly think that when he got to the
Speaker 1: general theory, he said, you know, we are like I'm trying.
Speaker 1: I've had this great success communicating with the public, I
Speaker 1: have not been able to persuade the policymakers. What if
Speaker 1: I make this really hard to understand so that a
Speaker 1: bunch of economists will read it, Like if I make
Speaker 1: this really hard to understand, economists will spend forever diving
Speaker 1: into it and trying to decipher you know, liquidity preference
Speaker 1: and all these things. He'd been making the sort of
Speaker 1: basic policy arguments for about about seven years before the
Speaker 1: General theory came out. He was talking about the multiplier,
Speaker 1: he was he was talking about deficit spending, he was
Speaker 1: talking about public works, all all of these things that
Speaker 1: we associate with Kynesianism today that long predated the general theory.
Speaker 1: I think he just tried to sort of mystify it
Speaker 1: so that economists would spend a lot of time digging
Speaker 1: through it. And and as a result, it became this
Speaker 1: big work of economic theory that only the great brilliant
Speaker 1: economists could understand. And then the great brilliant economists could
Speaker 1: take it to policymakers, into into legislatures and too you know,
Speaker 1: two presidents and say, well, uh, only we can really
Speaker 1: understand this incredible work of impenetrable genius. Um you know
Speaker 1: you you must listen to us now, and and that
Speaker 1: empowered a whole generation of of you know what we
Speaker 1: now call Kanzie and economists to to to push for
Speaker 1: deficit spending. Essentially, I think there's a lot more to
Speaker 1: Kaanes than deficit spending, but that I think that's how
Speaker 1: he ends up becoming so influential in in the late
Speaker 1: thirties and in Zach. Maybe just to stop and back
Speaker 1: up for a second, can you walk us through how
Speaker 1: radical Keynes's ideas were actually considered in the nine thirties,
Speaker 1: because I think nowadays everyone just assumes Keynesianism is kind
Speaker 1: of the economic orthodoxy, but obviously it wasn't always considered
Speaker 1: that well, and it's it's been the orthodoxy that's fall
Speaker 1: in a favorite. I think I think now it's it's
Speaker 1: it's back in vogue today. When we think about the
Speaker 1: gold standard, which was the dominant mode not only of
Speaker 1: economic exchange, but of of sort of international economic cooperation,
Speaker 1: it was the global geopolitical order. Today we think about
Speaker 1: the gold standard as as sort of an instrument of conservatism.
Speaker 1: People who like the gold standard are are typically associated
Speaker 1: with the hard right they're associated with the very right
Speaker 1: wing of Republican Party or or anti internationalist movements, things
Speaker 1: like that. That wasn't the case in the early twentieth century.
Speaker 1: The people who were committed to the gold Standard. There
Speaker 1: were right wingers who were who were part of it,
Speaker 1: but there was this belief that liberal internationalism, that that
Speaker 1: free exchanged between different peoples in different countries would help
Speaker 1: bring the world to a sort of peaceful place. And
Speaker 1: Kines was saying, I like those ideals, but this doesn't
Speaker 1: actually work, and we're not getting more peaceful, we're becoming
Speaker 1: more warlike, and and this is leading us to domestic
Speaker 1: misery and international conflict. And what he's doing when he
Speaker 1: says that is blowing up not just sort of a
Speaker 1: conservative paradigm, but the paradigm that dominates conservatives, liberals, and centrists.
Speaker 1: It's it's it's sort of be like coming to the
Speaker 1: United States today and saying rule of law is a
Speaker 1: bad idea, the Constitution is stupid. Don't do that anymore.
Speaker 1: I've got a better idea. It's very very radical, and
Speaker 1: in the sense that it's a deep departure from what
Speaker 1: what the understood way of doing things and the international
Speaker 1: order is there's an almost sort of like quasi religious
Speaker 1: moral significance to this order. You know, the gold standard
Speaker 1: isn't just about growth and and balance, trade and prosperity.
Speaker 1: It's it's it's about respecting different countries. It's about uh,
Speaker 1: you know, sort of sort of loving your neighbor in
Speaker 1: this in this really this way that people really do
Speaker 1: take seriously at the time, even though I think of retrospect,
Speaker 1: it seems kind of silly. And and so kanes Is
Speaker 1: is saying, we have to throw all that out. If
Speaker 1: we care about these values, we have to totally change.
Speaker 1: He's not totally comfortable with the policy implications of of
Speaker 1: changing that, and he changes his mind over the course
Speaker 1: of the nineteen twenties and the nineteen thirties many times.
Speaker 1: But by the time you get to nineteen forties. In
Speaker 1: the United States, he's famous for being the deficit spending guy.
Speaker 1: But in the UK his biggest policy achievement is being
Speaker 1: the financial architect for the National Health Service. So he
Speaker 1: follows this logic through and comes to the conclusion that
Speaker 1: they have to socialize not just health insurance, but actually
Speaker 1: the the entire medical system in the UK, and he
Speaker 1: he helps push that through politically. So the implications of
Speaker 1: this are are much more radical, I think than what
Speaker 1: than what we've come to understand him as in the
Speaker 1: United States, where he's the sort of deficit therapist who says,
Speaker 1: spend money when things go off the cliff. He was
Speaker 1: talking about realizing UH and and UH fostering a more
Speaker 1: harmonious democratic society in good times and in bad I
Speaker 1: want to get to that uh soon, like the gap
Speaker 1: between what we call kanesie and economics and cane Zone ideas.
Speaker 1: But before we do so, we set this up. Obviously,
Speaker 1: it feels to me like your book is very timely
Speaker 1: given this massive international crisis, which you probably weren't anticipating
Speaker 1: when you decide to write it. But why did you
Speaker 1: like what prompted you as a journalist to say, like,
Speaker 1: I want to write a Keynes biography because there are
Speaker 1: Canes biographies. We've interviewed uh Lord Skidelski at least once
Speaker 1: on the podcast, who is probably the most famous Canes biographer.
Speaker 1: But from your perspective, what was it that in your
Speaker 1: views like there needs to be another Canes book, and
Speaker 1: I want to do it because it's gonna be a
Speaker 1: tough two thousand eight changed the way people looked at
Speaker 1: cane Zinism in in a kind of foundational way. Cans
Speaker 1: was already sort of if you look at the like
Speaker 1: academic literature, and the stuff was already sort of coming
Speaker 1: back into vogue over the course of the Bush administration,
Speaker 1: but it had been really really deep in the legitimacy
Speaker 1: ditch before that, so it's just barely coming back into
Speaker 1: respectability among among academ economists. And two thousand eight makes
Speaker 1: a lot of the criticisms of Kanzianism seemed very silly.
Speaker 1: And for me, I was working as a banking reporter
Speaker 1: at a trade publication called SNL Financial, which is now
Speaker 1: part of SMP Global, and you know, doing just analyzing
Speaker 1: banking data and and looking at credit quality and you know,
Speaker 1: delinquent loans and all the rest. And I really love
Speaker 1: that job. But it became very clear that in two
Speaker 1: thousand and eight, all the people that I talked to
Speaker 1: went from saying markets are rational, um, they reach equilibrium
Speaker 1: and we've got to obey the verdict of the rational
Speaker 1: market to saying we have to bail at the financial sector.
Speaker 1: And that was clearly people weren't stupid like people are
Speaker 1: talking to knew they were changing their tune, right, they
Speaker 1: weren't just like hypocrites, but it was very clear that
Speaker 1: there was an intellectual shift that was happening. And I said, okay, well,
Speaker 1: let me read this Kane's guy. I've only ei leaned
Speaker 1: him from my eCOM one of one classes. But when
Speaker 1: I went back and read him, and I tried to read,
Speaker 1: to be perfectly honest, I tried to read the General
Speaker 1: Theory first, and I found it sort of like it
Speaker 1: was as pleasant as as like eating a pretzel covered
Speaker 1: in Thorn's right, it's just not great. I'm glad I'm
Speaker 1: not the only one. I was like a little nervous.
Speaker 1: I'm just glad that No, it's it's terrible. It's terrible.
Speaker 1: I mean, Kane's most of the time is a beautiful writer.
Speaker 1: His friends are people like Virginia Wolf and Litton Straitchy
Speaker 1: and Ian Forster, and he is capable of doing beautiful
Speaker 1: things with language about economic policy. But the General Theory
Speaker 1: is just not That's not not his his most lyrical work.
Speaker 1: So I went back and read The Economic Consequences of
Speaker 1: the Piece, which is the book that he writes at
Speaker 1: the end of the negotiations over the Treaty of Versailles.
Speaker 1: He is the top representative from the British Treasury at
Speaker 1: at the talks about how to establish both an economic
Speaker 1: and political order at the end of World War One,
Speaker 1: and he is furious about about what his own government
Speaker 1: has done and about the ultimate agreements, and he says, look,
Speaker 1: the economic terms that we have committed ourselves to and
Speaker 1: this treaty are going to march the entire continent towards
Speaker 1: dictatorship and war. And I think it's just, you know,
Speaker 1: there are people who have have quibbled with some of
Speaker 1: his figures here and there over the years, but I
Speaker 1: just think it's very difficult to argue with that basic premise.
Speaker 1: He was talking about something that came to pass, and
Speaker 1: and for reasons that are very closely connected to why
Speaker 1: they came to pass. The reparations that were assigned to
Speaker 1: Germany were essentially unpayable. They destroyed the German economy and
Speaker 1: UH and that economic wreckage sort of created the breeding
Speaker 1: ground for fascism. And when I read that, it became
Speaker 1: clear to me that Haynes wasn't just talking about money
Speaker 1: and numbers economic consequences. The piece is not about deficit spending.
Speaker 1: Kanes hasn't even thought of that yet. He's just talking
Speaker 1: about international cooperation and figuring out a way to link
Speaker 1: economic policy with global harmony. He's still committed to the
Speaker 1: gold standard in nineteen nineteen when he writes this book.
Speaker 1: But it seemed to me like it was a work
Speaker 1: of political theory, like the works that I had studied
Speaker 1: when I was an undergraduate. I studied philosophy, so you know,
Speaker 1: Hobb's lap were so enlightenment philosophy stuff, and and he
Speaker 1: just seemed like one of those guys to me, And
Speaker 1: so I started reading, and I kept reading. And when
Speaker 1: you read Skidelski and other accounts, these are very good biographies.
Speaker 1: I don't want to denigrate them at all. But they're
Speaker 1: written from the perspective of of looking at Kines as
Speaker 1: an economist and how he came to develop his economic ideas.
Speaker 1: They're very, very useful for that purpose. But if you
Speaker 1: think of Kines as a social theorist, and if you
Speaker 1: think of him as a statesman, there's a lot going
Speaker 1: on in the economic theory that is happening for these
Speaker 1: these moral political hole reasons that I think are really
Speaker 1: the things that are driving him. I think in a
Speaker 1: lot of ways, Canes comes up with a solution that
Speaker 1: he comes to believe is morally or politically necessary, and
Speaker 1: then sort of reverse engineers it to be economically acceptable
Speaker 1: to people. In economics, he has a really great essay
Speaker 1: on Isaac Newton. A lot of people don't know is
Speaker 1: what was an important economist in the British Empire in
Speaker 1: the in the eighteenth century. Um in charge of the
Speaker 1: British meant all sorts of monetary policy stuff he's doing,
Speaker 1: But he talks about Newton and says, you know, Newton's
Speaker 1: great genius was this this ability to have a flash
Speaker 1: of creative insight, and then he would dress up the
Speaker 1: creative insight with mathematics after the fact. And I think
Speaker 1: Canes was doing the same thing in economics, um and
Speaker 1: and that makes him, you know, sort of more of
Speaker 1: an artist than an economist that as we would think
Speaker 1: of the economist today. It's really interesting how you mentioned
Speaker 1: it sort of took the two thousand and eight financial
Speaker 1: crisis to bring Keynesianism back in vogue, and then, of
Speaker 1: course it kind of took the Great Depression to make
Speaker 1: people take Kane seriously. In the first place. But just
Speaker 1: to back up for a second, can you talk to
Speaker 1: us more about his social vision, like what is it
Speaker 1: that he is trying to reverse engineer here? So with Kansa,
Speaker 1: you have always have to be careful because he changes
Speaker 1: over time. He's not monolithic, but he does have this
Speaker 1: very consistent vision of beauty and the good life um
Speaker 1: that he gets from from being an undergraduate at Cambridge
Speaker 1: and being a member of the Bloomsberry set. So friends
Speaker 1: with Virginia Wolf, the great writer, Litton Straighty, the great writer,
Speaker 1: Ian forrest Or the Great writer, a lot of painters
Speaker 1: who are not as well known today, but people like
Speaker 1: Duncan Grant and and Vanessa Bell who was Virginia Wolf's sister,
Speaker 1: who in their day were considered very great artists. You know,
Speaker 1: Vanessa Bell would go and hang out with Pablo Picasso
Speaker 1: in in Montparnas all the time that that was they
Speaker 1: were part of this big international cultural milieu. And Kines
Speaker 1: himself ended up marrying a ballerina named Lydia Lapakovo who's
Speaker 1: from St. Petersburg, who's basically the most famous ballerina in Britain.
Speaker 1: This is at time when ballet is sort of like
Speaker 1: a combination between like football and and like Netflix. It's
Speaker 1: it's easily like the most popular and powerful cultural thing
Speaker 1: that's happening in Europe at the time. So he's very
Speaker 1: deeply involved with this cultural life and he thinks that
Speaker 1: this this this vibrant thing where you can, you know,
Speaker 1: you can hang out with Stravinsky and you can and
Speaker 1: you can you know, make out with ballerinas and and
Speaker 1: drink champagne with Virginia Wolf while having your hair cut
Speaker 1: by you know, somebody who's just got back from seeing
Speaker 1: Gertrude Stein. He thinks this is really the life, and
Speaker 1: it's hard to you know, it's hard to disagree with
Speaker 1: the guy. I mean, that sounds like a pretty good
Speaker 1: way to live, and he wants to preserve that. And
Speaker 1: when he starts out as a as an economic thinker,
Speaker 1: he's really just trying to preserve that for his his
Speaker 1: sort of upper middle class, quasi elite milieu. But as
Speaker 1: he continues to develop his his thinking, he says, you know,
Speaker 1: if we don't open this space up to other people,
Speaker 1: the rabble are going to revolt and they are going
Speaker 1: to overthrow us, and we are not going to be
Speaker 1: able to have these parties anymore, and that is going
Speaker 1: to be terrible. So in in order to preserve this
Speaker 1: sort of lifestyle, we've we've got to democratize it. And
Speaker 1: he starts thinking about ways to essentially alleviate the very
Speaker 1: high inequality of the late Gilded Age that he's living
Speaker 1: in um in order to preserve the sort of high
Speaker 1: cultural achievements of that of that era, thinking that, you know,
Speaker 1: it's better to democratize these things than have them be
Speaker 1: smashed by what he's particularly worried about as the marks
Speaker 1: of authoritarianism, which he thinks is brutal and violent and terrible,
Speaker 1: but but also just kind of ghost just just there's
Speaker 1: bad art from the fascists. So if you want to
Speaker 1: have a beautiful world, you're going to need to democratize it.
Speaker 1: And as he continues to develop his thought, he believes
Speaker 1: that the sort of possibilities for democratizing this or wider
Speaker 1: and wider, so he ultimately ends up concluding that economic scarcity,
Speaker 1: which at least when I was studying economics as a
Speaker 1: as an undergraduate, I was told you first thing, first
Speaker 1: day and ecoon one on one is economics is the
Speaker 1: study of you know, scarce resources and and infinite wants.
Speaker 1: Kanser says, that's not that that's not the subject of economics.
Speaker 1: The subject of economics is uncertainty and human decision making
Speaker 1: in the face of uncertainty. Scarcity is not the thing
Speaker 1: that we have to worry about. We can give all
Speaker 1: this stuff to everybody. That's very, very radical, I think
Speaker 1: rethinking of what economics is, and I don't think it's
Speaker 1: ever really been integrated into the policy agenda of people
Speaker 1: who call themselves Kinesians in in sort of government politics,
Speaker 1: like I don't think Paul Krugman, for instance, talks about
Speaker 1: uncertainty very often. He talks about deficits and you know,
Speaker 1: debt to GDP ratios and things like that. You don't
Speaker 1: see these guys talking about uncertainty. One of the great
Speaker 1: contributions I think that Lord's goodels ty May, I think
Speaker 1: was trying to recenter uncertainty as the key to Dick
Speaker 1: ckenzie and thought all the way back in the nineteen
Speaker 1: eighties you said he was scared of fascism. I'm just
Speaker 1: wondering was it fascism or was it communism? Because I
Speaker 1: think people forget in the nineteen twenties and nineteen thirties,
Speaker 1: how absolutely terrified most of the world was about rising
Speaker 1: waves of socialists and communism in the East. It's it's
Speaker 1: both early on. But he has a very interesting quote
Speaker 1: in he goes to uh to this big international conference
Speaker 1: at Genoa in Italy, which is designed to renegotiate the
Speaker 1: terms from the Treaty of Versailles from nineteen nineteen, and
Speaker 1: he's he's writing all of these dispatches back that are
Speaker 1: being published all over the world. He's he's syndicated. It's
Speaker 1: very famous guy. And he basically says that there are
Speaker 1: people who think the big challenge of the world today
Speaker 1: is between the sort of bourgeois liberal states of the
Speaker 1: nineteenth century and and the socialist stuff that's happening in
Speaker 1: in Soviet Russia, which is has you know, there's very
Speaker 1: recent Russian Revolution stuff. He said, I disagree. I think
Speaker 1: the real allunges between this this thing called militarism and
Speaker 1: I'm paraphrasing here and liberalism, and that militarism believes in
Speaker 1: the imposition of a culture, in the imposition of of
Speaker 1: sort of social hierarchies against people, and liberalism is is
Speaker 1: about free ideas and free individuals and socialism is sort
Speaker 1: of this this you know, kind of weird variant of
Speaker 1: liberalism that he's he's not totally comfortable with yet, but
Speaker 1: he doesn't see it as being a totally alien thing
Speaker 1: the way he sees that the hard right that's rising
Speaker 1: in Europe at the time. And I think we forget
Speaker 1: when we talk about Canes often and the rise of fascism.
Speaker 1: There's like Canes in nineteen nineteen, and then there's there's
Speaker 1: Hitler in nineteen thirty two. But there's the beer Hall
Speaker 1: Putch in nine, there's Mussolini in nineteen. There are there's
Speaker 1: just all of these very intensive outbreaks of far right
Speaker 1: political violence that are happening across Europe very quickly after
Speaker 1: the end of the First World War, and that's that's
Speaker 1: what's really animating him. He doesn't He eventually goes to
Speaker 1: Soviet Russia in nine and comes back and says, this
Speaker 1: is a disaster. Don't do this. These people don't believe
Speaker 1: in the good life. They're totally acetic, like they refuse
Speaker 1: to enjoy anything. It's it's he's against the sort of
Speaker 1: political oppression that he sees that the sort of paranoia
Speaker 1: that he sees the in the government breeding, but he
Speaker 1: also just thinks that it's sort of like a colorless,
Speaker 1: lifeless existence, that it's it's made people, um, joyless and
Speaker 1: in this really sort of spiritual way. So he's a
Speaker 1: critic of communism, but it there's a reason why a
Speaker 1: lot of his critics who arise after World War Two
Speaker 1: are are on the right and and not on the left. Um.
Speaker 1: He he sees the coming of right wing militaristic authoritarianism
Speaker 1: as the great threat facing society, and he also says, well, yeah,
Speaker 1: we shouldn't do Soviet Russia too. At the same time, um,
Speaker 1: he's he's often saying we need of find ways to
Speaker 1: move left what we'd call left today on economic policy
Speaker 1: in his time, it's not clear what whether what he's
Speaker 1: doing is left right or center to be be very clear,
Speaker 1: but he's often saying we need to do left wing
Speaker 1: economic policies to prevent this this sort of right wing
Speaker 1: dictatorship politics from taking over. So how did that change?
Speaker 1: So here you have this sort of social theorist philosopher,
Speaker 1: even perhaps as you characterize him, something of an artist,
Speaker 1: who then sort of built a economic vision to sort
Speaker 1: of buttress that those ideals and those ideals, as you said,
Speaker 1: you know, about spreading his vision of the good life
Speaker 1: to more people maintaining that lifestyle. How did we get
Speaker 1: this thing called Kanzian economics, which is, oh, the you know,
Speaker 1: the unemployment is here, so we have to set interest
Speaker 1: rates here, and we have to spend this much. How
Speaker 1: did that become a thing where it got so seemingly
Speaker 1: divorced from the philosophy. Well, I think this gets back
Speaker 1: to your first question, Joe, when you were talking about
Speaker 1: why is the general theory so hard to read? And
Speaker 1: we have remembered Kanes because the economics profession took him
Speaker 1: up as sort of this important, idle icon that they
Speaker 1: could hold up and say, look, the great Kine said
Speaker 1: we must do it this way, therefore it is legitimate.
Speaker 1: He's like a historical figure who had great prestige, who
Speaker 1: was well respected around the world, and in invoking his name,
Speaker 1: had this sort of legitimizing power over policies that people
Speaker 1: would invoke and the policies that people wanted to pursue.
Speaker 1: In the United States, which became the sort of global
Speaker 1: economic hedgeman at after World War Two, which and that's
Speaker 1: important because the UK was the global economic hegemon before
Speaker 1: the US took over. And so because Kines is the
Speaker 1: most prominent economic figure from that, Americans are very very
Speaker 1: eager to take somebody from sort of the last old
Speaker 1: order and say, look, this guy, this guy is a
Speaker 1: serious you knew what he was doing. We can refer
Speaker 1: to him for for our policymaking. But in the United States,
Speaker 1: the economics profession doesn't really want to abandon its basic assumptions.
Speaker 1: It likes the Kanesie and policies because they can see
Speaker 1: that they work. I mean, they watched the you know,
Speaker 1: the New Deal and the great in World War two
Speaker 1: and saw the war spending. But they don't really want
Speaker 1: to shift the focus of economics away from rational actors
Speaker 1: in general equilibrium theory, and and so they start saying, well,
Speaker 1: you know, I think the most the most popular version
Speaker 1: of this is Paul Samuelson, who's probably a lot of
Speaker 1: viewers here, you know, like me. You know you've read
Speaker 1: the Samuelson textbook. Is your econ one on one book, right?
Speaker 1: I mean this is this is how Kanzie and ideas
Speaker 1: really get out into the main streams is through these textbooks.
Speaker 1: And Samuelson basically says, look, things get kind of wacky.
Speaker 1: If we're not at full employment, markets are rational. You know,
Speaker 1: you've got supply and demand and they hit their equilibrium.
Speaker 1: That happens unless we're not at full employment. And if
Speaker 1: we get into full if we get out of full employment,
Speaker 1: things going to this topsy turvy world. So we just
Speaker 1: have to figure out a way to make sure that
Speaker 1: we have full employment and will do fiscal policies. And
Speaker 1: he doesn't really investigate what that means for the nature
Speaker 1: of the broader theory. You know, why is it that
Speaker 1: things would not be at equilibrium if people are rational
Speaker 1: actors and things generally do reach equilibrium, why do you
Speaker 1: they start talking about external shocks and and things like
Speaker 1: this that that have no Really they're sort of ad
Speaker 1: hoc additions to the theory, but they don't require you
Speaker 1: to break from these other other things about economics, which look,
Speaker 1: they're useful there, it's not you know, people talk about
Speaker 1: these things because they're intuitive. They make sense. And when
Speaker 1: you're talking particularly about like a small business and or
Speaker 1: a household and and supply and demand and how monetary
Speaker 1: flows work there, they make a lot of sense. They
Speaker 1: don't tend to work I think on on a large
Speaker 1: social scale, but they just sort of keep keep handwaving that.
Speaker 1: And in the United States, this this principle is really
Speaker 1: useful because it just says, look, the government can spend
Speaker 1: on anything and it will be good for the economy.
Speaker 1: So whatever it is that you're democratic or republican government
Speaker 1: wants to spend on, whether it's the war in Vietnam
Speaker 1: or the invention of medicare under under Lyndon B. Johnson
Speaker 1: in the nineteen sixties, these projects are all good for
Speaker 1: the economy because they will increase demand and they will
Speaker 1: they will get the economy back to equilibrium. And Keynes
Speaker 1: wasn't in favor of spending as such, he wasn't in
Speaker 1: favor of deficits as such. He had a social vision
Speaker 1: and it mattered very deeply to him what you actually
Speaker 1: spent the money on and why. But if you turn
Speaker 1: him into this sort of sterile economist who only thinks
Speaker 1: about money and numbers, who is only a scientist who
Speaker 1: you know, pushes up his glasses on his nose and
Speaker 1: and just tells you how the equations balance, then you
Speaker 1: can use that guy to to justify different moral considerations,
Speaker 1: and he's not this sort of partisan or or philosophical
Speaker 1: or or or a moralist figure who who would have
Speaker 1: an agenda right, and he's dead, so we can't defend himself.
Speaker 1: And this is what happens over the course of the
Speaker 1: fifties and especially the nineteen sixties. And then of course
Speaker 1: you have this inflation crisis in the nineteen seventies and
Speaker 1: people say, well, Kennism is responsible for for inflation, so
Speaker 1: it doesn't count anymore. Um, But you have about twenty
Speaker 1: years where people are just trying to justify the political
Speaker 1: agenda that they have for you know, good and bad reasons,
Speaker 1: for conservative and liberal reasons. And Kanes is the guy
Speaker 1: who can be invoked. Nixon invokes him, lb J and
Speaker 1: gall Braith invoke him. Uh, there are very different types
Speaker 1: of presidents in the United States who are saying this
Speaker 1: is our guy, and this is this is why we
Speaker 1: are doing what we are doing. Just to dig into
Speaker 1: that a bit more, I'm curious, who do you think
Speaker 1: misused Kane's the most in that con It's it's really hard,
Speaker 1: it's really hard to say, you know. I think lb
Speaker 1: J is a very is a really fascinating person to
Speaker 1: me because I think his social programs that he's doing
Speaker 1: in the United States are exactly the types of programs
Speaker 1: that Cain's thought were were necessary. So, you know, LBJ
Speaker 1: creates food stamps, a lot of the New Deal programs
Speaker 1: that we like like in the United States, like social Security,
Speaker 1: they become the thing that we understand that to be
Speaker 1: because LBJ expands them so much, and he creates Medicare.
Speaker 1: There's just a lot of this social safety net kind
Speaker 1: of work that seems very canzy, and to me, this
Speaker 1: protecting society from the swings of the market. You know,
Speaker 1: when things go up or things go down, you've still
Speaker 1: got this stuff and you're not going to be a
Speaker 1: sort of thrown to the wolves. But lb J is
Speaker 1: also doing the Vietnam War, and Caines wanted to do
Speaker 1: all of that stuff so that people wouldn't go to war.
Speaker 1: He thought he thought you could use economic policy to
Speaker 1: both create social justice and prevent international conflict. And so
Speaker 1: there's just this deep contradiction within that administration from from
Speaker 1: a canzie in perspective, where they're doing all the things
Speaker 1: that Caines would approve of, but they're simultaneously using his
Speaker 1: ideas to spend an enormous amount of money on this
Speaker 1: conflict in Vietnam, which kills you know, at least a
Speaker 1: million people in Vietnam. It's it's it's fifty tho Americans,
Speaker 1: but it's it's a complete catastrophe for for people living
Speaker 1: in Vietnam. And I think he he would have been extremely,
Speaker 1: extremely uncomfortable with that. I think would furious frankly, and
Speaker 1: you get to Nixon, and Nixon basically does you know,
Speaker 1: the same thing, but with a more explicit focus. He
Speaker 1: invokes the name of Caines, you know, a couple of
Speaker 1: times saying I'm going to do deficits. Uh, I just
Speaker 1: think that war stuff. He was so scarred by World
Speaker 1: War One, you know, he he came of age thinking
Speaker 1: that everything was fine. He didn't even have to become
Speaker 1: a famous economist, didn't have to become a famous writer.
Speaker 1: He could just sort of frolic in the lawns of
Speaker 1: Cambridge and talk about you know, philosophy and Plato with
Speaker 1: these with these other smart people, and everything would be
Speaker 1: because because they were all working their way towards progress
Speaker 1: and beauty, and war was going to be a thing
Speaker 1: of the past, because all these great ideas were making
Speaker 1: society more and more harmonious. And then the war comes along.
Speaker 1: It just shatters that vision entirely. And so he's just
Speaker 1: spending his entire life trying to prevent another war. He
Speaker 1: just thinks that this he's he's deeply, deeply shaken by this,
Speaker 1: and so the idea that his theories would be used
Speaker 1: to create massive international war machines, I think would have
Speaker 1: absolutely horrified him. M Let's bring it forward a little
Speaker 1: bit to the present, because, as you mentioned, you know,
Speaker 1: basically since the last financial crisis, Hainzian ideas have been
Speaker 1: on the rise of somewhat. He's been invoked a lot lately.
Speaker 1: And I you know, there's there was lot of reluctance
Speaker 1: to spend money during two thousand and eight two thousand nine.
Speaker 1: Now everybody is spending money, even even the Germans, who
Speaker 1: are like famous for like not spending money, even they're
Speaker 1: spending money. Like let's talk about like some of the
Speaker 1: other things. So obviously, okay, spending money. It seems like
Speaker 1: that's necessary. We need to do a lot more of it.
Speaker 1: There's not a whole lot of disagreement. It's kind of impressive.
Speaker 1: No one even really talks about like deficits that much.
Speaker 1: With the national debt like nowhere nearer where in two
Speaker 1: thousand and eight, two thousand nine. But a we have
Speaker 1: a problem of we haven't been able to end the
Speaker 1: virus crisis, especially in the US where there's a serious
Speaker 1: political legitimacy problem. It's really it's been really hard to
Speaker 1: marshal the resources to get it done, to suppress it
Speaker 1: to an acceptable degree. And then even if we do,
Speaker 1: are you know, we just came off of like almost
Speaker 1: a decade of underemployment from the latter is such a
Speaker 1: slow recovery. I don't think anyone wants to know, you know,
Speaker 1: to wait until twenty thirty until we have the unemployment
Speaker 1: rate below five percent again. So like, beyond just the
Speaker 1: acute need to spend money, what can the next set
Speaker 1: of leaders, whoever it is here elsewhere, But what are
Speaker 1: the ideas that they should draw from from pains so
Speaker 1: that we don't have this like ongoing political legitimacy crisis
Speaker 1: and we don't have another ten years of underemployment, you know,
Speaker 1: with the caveat that it's always a very dangerous thing
Speaker 1: to your view of like what you know, you know,
Speaker 1: I think, um, you know, I think your point about
Speaker 1: about the the public health crisis is. It's very simple,
Speaker 1: but it's really important. You know, Canes didn't want to
Speaker 1: be remembered as a deficit theory therapist. He wanted to
Speaker 1: be remembered as a guy who addressed the great problems
Speaker 1: of his day. And the great problems of his day
Speaker 1: were war in depression. The great problem of our day
Speaker 1: is this pandemic. So you have to address the pandemic.
Speaker 1: You have to figure out how to cope with that
Speaker 1: and how to credibility with the public, in particular about
Speaker 1: how how to how you're going to deal with that.
Speaker 1: You know, a lot of Kinzie infurial and economics is
Speaker 1: not about equations balancing just so, but about uncertainty and
Speaker 1: building a confidence among not only investors but the public
Speaker 1: that tomorrow could be better than today. Because if you
Speaker 1: don't believe that tomorrow can be better today than today,
Speaker 1: you're going to keep hoarding your money. You're not going
Speaker 1: to go out and spend, and investors are not going
Speaker 1: to go out and invest. You're gonna keep your money
Speaker 1: under the mattress. Right, I've spent a little bit more
Speaker 1: money in the pandemic because I've had some pretty decent
Speaker 1: books sales. But you know, I'm still not like, you know,
Speaker 1: I didn't buy a house, right, Like you'd be crazy
Speaker 1: to right, people are that's the weird thing. How does
Speaker 1: it actually doing really well? So it's it's weird. It
Speaker 1: makes no sense to me. But yeah, I keep waiting
Speaker 1: for New York rents to go down and so I
Speaker 1: can move, but it doesn't happen. So the the thing
Speaker 1: there is is to find a way to make the
Speaker 1: public believe in what you're doing. And I think for
Speaker 1: the US this is not so much of a problem
Speaker 1: of dollars and cents is as it is a problem
Speaker 1: of just straightforward leadership. Like nobody believes the Trump administration right,
Speaker 1: and I don't know if anyone is going to believe
Speaker 1: them until they change that. There's there's sort of this um.
Speaker 1: The closest parallel I can think of this is the
Speaker 1: ECB in in sort of fourteen austerity crisis in in
Speaker 1: UH in Europe. E c V just kept saying crazy
Speaker 1: things for for years and years, and people were like,
Speaker 1: there was just no reason to believe that anything they
Speaker 1: were going to do is actually going to solve the problem.
Speaker 1: And then all of a sudden, drug he says, no, what,
Speaker 1: We're just going to provide unlimited support. We're just gonna
Speaker 1: do it, And there's this huge shift in investor sort
Speaker 1: of confidence, in in in the the general sort of
Speaker 1: belief about how the world works. That's just with a decree,
Speaker 1: but he backs it up with actual trual policies. I
Speaker 1: don't know if Trump is capable of making a decree
Speaker 1: like that, because I don't think people believe him the
Speaker 1: way they believe other public officials. They don't trust him.
Speaker 1: But somehowever or other, the government's got to be able
Speaker 1: to convince the public that they can actually control the
Speaker 1: pandemic to such an extent that when they say, you know,
Speaker 1: if these kids are going back to school, it's actually
Speaker 1: pretty safe. If you want to go to the beach,
Speaker 1: it's actually pretty safe. But if you want to go
Speaker 1: to a bar, maybe it's not. You know, there have
Speaker 1: to be ways to figure out what we can do
Speaker 1: in such a way that people aren't just you know,
Speaker 1: hiding in their apartments all the time, becoming miserable and
Speaker 1: angry and getting ready to protest. Right, Not that I
Speaker 1: have a problem with the protests live been happening, but
Speaker 1: I think it's pretty obvious that a lot of the
Speaker 1: energy that's being expressed in the streets is pent up
Speaker 1: pandemic anger. So you have to deal with the crisis first,
Speaker 1: the actual public health crisis. You have to you have
Speaker 1: to care about the optics and and and so the
Speaker 1: communication with the public and why they would why they
Speaker 1: believe in you. But you then also have to convince
Speaker 1: the public that the government actually works for them. You know,
Speaker 1: the United States has had thirty five years of accelerating inequality,
Speaker 1: and as a result of that, I think it's pretty
Speaker 1: clear that they're different people who were living in different
Speaker 1: political worlds, different societies really, and the pandemic is really
Speaker 1: underscoring this. There are people like me who get to,
Speaker 1: you know, hide out. And I'm in my in laws
Speaker 1: house in northern Virginia. Here, I'm hiding out here, talking
Speaker 1: to you guys and and collecting royalties for a book.
Speaker 1: You know, I don't get to do all the fun
Speaker 1: things I used to do. But this is not like
Speaker 1: mass suffering for me. I take my dog down to
Speaker 1: the creek. It's okay. There are other people who have to,
Speaker 1: like go to work every day and risk death in
Speaker 1: order to serve the rest of the country. And that
Speaker 1: is just an accelerated, intensified version of the way that
Speaker 1: the country has been sort of bifurcating for for decades now.
Speaker 1: And if we're going to be part of the same
Speaker 1: political project, I think Kines would look at that and say,
Speaker 1: you know, forget about even social justice. Those guys are
Speaker 1: not going to hang together. These who are going to
Speaker 1: be at war with each other if you don't find
Speaker 1: a way to make them feel like they're part of
Speaker 1: the same project. And economically, you've got to just bring
Speaker 1: them closer, closer together so they're living in the same world.
Speaker 1: And and so you know, he would he would talk
Speaker 1: about inequality, not so much as a not even not
Speaker 1: even for you know, he came up with reasons to say,
Speaker 1: here's here's why, you know, giving poor people money is
Speaker 1: more effective than giving rich people money, so that you know,
Speaker 1: you get more growth out of it. But you know,
Speaker 1: his real motivation for this was that he was afraid
Speaker 1: society would fall apart and to send into chaos. And
Speaker 1: I think I think addressing inequality would be something that
Speaker 1: he would have very very high on his list. But
Speaker 1: I think he would also be looking at the breakdown
Speaker 1: of these international systems. The relationship between the US and
Speaker 1: China is just awful right now, the relationship between the
Speaker 1: countries of Europe is awful right now. And he would
Speaker 1: come up with some brilliant sort of grand plan that
Speaker 1: would probably be politically impossible, where he would try to
Speaker 1: alleviate inequality in the United States, fix the trade relationship
Speaker 1: with I know, and cure the pandemic all at once.
Speaker 1: And you know, I don't pretend to have his his
Speaker 1: like creative genius, but he would try to find some
Speaker 1: magic formula that would attack all three of these things,
Speaker 1: and then he would pitch it everybody across the world,
Speaker 1: and then he would watch in dismay as everybody refused
Speaker 1: to do it, and the world then descended into chaos again.
Speaker 1: Just on that note, what do you see is the
Speaker 1: major weakness of Kynesianism, Because as I listened to you
Speaker 1: talk and to me, it seems like if you want
Speaker 1: the government to be a stabilizing force not just on
Speaker 1: the economy but on society at large, then that government
Speaker 1: needs to be capable in various ways and aligned with
Speaker 1: a certain form of society. So to me, that seems
Speaker 1: like a flaw on the plan but I'd love to
Speaker 1: get your thoughts on what you see is the big
Speaker 1: problem here. No, I think that's exactly right. Canes believed
Speaker 1: he's very much this philosophical rationalist. He believes that there
Speaker 1: are real eternal truths that are out there sort of
Speaker 1: in the ether, that we can you know, divine through
Speaker 1: through pure reason, and once we see them, we will
Speaker 1: we will, you know, a light will go off and
Speaker 1: we will recognize that. And that by arguing with people
Speaker 1: and presenting good, good arguments to them, people will come
Speaker 1: around and they will agree to these things. And he
Speaker 1: is he is he is reacting very sharply against Marxism,
Speaker 1: against particularly the like very hard materialist versions of Marxism
Speaker 1: presented by Lenin that are very very popular in Europe
Speaker 1: in the twenties and thirties, um, where the argument is
Speaker 1: that people don't listen arguments at all. Everything is determined
Speaker 1: by the economic structure of society and so it's a
Speaker 1: it's a it's a fool's air, and do you even
Speaker 1: engage in philosophical debate And he thinks that's just totally outrageous.
Speaker 1: But I do think that while I mean, I think
Speaker 1: it's very clear that people can be persuaded. I think
Speaker 1: Knes's belief that people are persuaded it just based on
Speaker 1: the the eternal truths of arguments is uh, it's politically naive.
Speaker 1: You know, people find different things persuasive. People do listen
Speaker 1: to arguments, but the reasons they find them persuasive and
Speaker 1: non persuasive are often dependent on all sorts of other factors.
Speaker 1: They don't have to necessarily be you know, the forces
Speaker 1: of production or whatever that that you would see from
Speaker 1: from you know, certain sort of crude Marxists from the
Speaker 1: twenties and thirties. But it's it's hard to it's hard
Speaker 1: for me to believe that, you know, you could talk
Speaker 1: to somebody from the Mortgage Bankers Association and tell them
Speaker 1: that we can really save the economy if we just
Speaker 1: right off. You know, second leans, there's a reason why
Speaker 1: people don't find that persuasive, and they don't They don't
Speaker 1: even have to be acting in bad faith to not
Speaker 1: find it persuasive. It but there's that there are factors
Speaker 1: in their lives that have made them think in certain
Speaker 1: channels that make that difficult. You know, when I used
Speaker 1: to work at S and L Financial Um, we had
Speaker 1: CNBC on in the office all day. He starts thinking
Speaker 1: about the world through that media that's being pumped into
Speaker 1: your the horizons of what is possible, start to start
Speaker 1: to feel that way. It's not because you're stupid, it's
Speaker 1: not because you're your venal or corrupt or something. It's
Speaker 1: just this is the way you become accustomed to thinking
Speaker 1: about things. And when I came to huf Post, suddenly
Speaker 1: we had an MSNBC pumping into my head all the
Speaker 1: time in the office. It's a totally different set of
Speaker 1: assumptions that just sort of start undergirding your thinking. And
Speaker 1: you have you have to be careful in all these situations,
Speaker 1: right to try to maintain your independence. But but people
Speaker 1: are stamped by the sort of social forces around them.
Speaker 1: And for Canes, I just think he was too. He
Speaker 1: had this very majestic and and kind of childlike belief
Speaker 1: in people's ability to be persuaded that that sort of
Speaker 1: took them to be these these sort of rational atoms
Speaker 1: that had nothing, no social forces at play on them,
Speaker 1: and and that's just that's just not the way people are.
Speaker 1: You know. I love your point about the sort of
Speaker 1: the state that we're in is sort of this accelerated
Speaker 1: version of the pre pandemic state, particularly with respect to inequality.
Speaker 1: And there are people whose jobs require them to work
Speaker 1: often at very little pay and expose themselves to potential
Speaker 1: health risks and death every day. And then there are
Speaker 1: people like the three of us who get to talk
Speaker 1: about canes professionally and safely. And it's but it's also
Speaker 1: you see it in the market too, And you see
Speaker 1: like this acceleration where tech stocks which were already doing
Speaker 1: very well pre crisis have absolutely soared, interest rates which
Speaker 1: were already headed down, headed out further. Like every trend
Speaker 1: it feels like going into this crisis has actually been accelerated.
Speaker 1: It hasn't been a reversal at all in some sense.
Speaker 1: But I'm just curious, Like you know, you said, Kine
Speaker 1: sort of lived in fear of chaos and society falling apart.
Speaker 1: I've always sort of been paranoided at myself even before that,
Speaker 1: So I feel sympathetic, Like do you think we're sort
Speaker 1: of like this is a big moment, like just you know,
Speaker 1: obviously it's a big moment in terms of a crisis,
Speaker 1: but in terms of like these trends potentially hitting their
Speaker 1: breaking point or their possible limits if we don't take
Speaker 1: a different approach, or can we put it back in
Speaker 1: the bottle and just sort of go back to December,
Speaker 1: you know. I think the sort of nice response the
Speaker 1: two thousand eight crisis was the Occupy Wall Street movement,
Speaker 1: where you had all these hippies hanging out in Zukkati
Speaker 1: Park and they're pretty much harmless, right, They're just they're
Speaker 1: just walking around talking about love and trust and and
Speaker 1: having really unproductive sort of strategy sessions, but like but
Speaker 1: meeting well and like talking about a better world. They
Speaker 1: succeeded in I think, reframing the sort of narrative about
Speaker 1: what was wrong in two thousand and eleven. It's stopped.
Speaker 1: It was stopping about if you if you were watching
Speaker 1: mainstream cable news of the time, it went from being
Speaker 1: everything from me about the deficit to being about inequality.
Speaker 1: Very very clear shift in the narrative. But but then
Speaker 1: it was over. I think the really nasty response to
Speaker 1: twenty eight is the Trump candidacy and the way that
Speaker 1: Trump demagogues against immigrants and scapegoats people who are vulnerable.
Speaker 1: I think that's that's another way of expressing and channeling
Speaker 1: the anger that happened as a result of that of
Speaker 1: that crisis, we are. We were at a point, I think,
Speaker 1: before the pandemic, where it looked like we might just
Speaker 1: sort of glide past the Trump administration into something might
Speaker 1: might miss the you know, a lot of people have
Speaker 1: suffered in the last four years from you know, Hurricane
Speaker 1: Maria all the rest. But but we would have missed
Speaker 1: these these massive, massive calamities that I think people who
Speaker 1: were very worried about the Trump administration had been talking about.
Speaker 1: UM And we've now not missed those, And I think
Speaker 1: the question is what what comes next. We've watched on
Speaker 1: the right, people armed with you know, these massive, crazy
Speaker 1: looking guns just sort of storming the Michigan State Legislature.
Speaker 1: On the left, we've had uprisings in every American city
Speaker 1: for the last month. Basically, I think they're they're they're
Speaker 1: dying down a little bit now because the pandemic is
Speaker 1: getting so bad. But you know, that's that's a combustible situation.
Speaker 1: UM and this in this situation, economically, it does not improve, right,
Speaker 1: things are gonna get worse. We haven't even seen this
Speaker 1: as a financial crisis. It's possible that all of this
Speaker 1: stuff that's happening in the real economy transfers to the
Speaker 1: monetary economy, and we have a banking crisis that that
Speaker 1: compounds all of this. It's possible, it just gets much
Speaker 1: worse without that. The uncertainty that's hanging over people's lives,
Speaker 1: I think is extremely damaging. People don't know when they're
Speaker 1: going to be able to go back to work, they
Speaker 1: don't know when they're gonna be able to have fun.
Speaker 1: No one knows if they're going to be able to watch,
Speaker 1: you know, basketball in the fall. I mean, these very
Speaker 1: simple things about people's lives, simple and and then emotionally compelling,
Speaker 1: are are up in the air. And that just creates
Speaker 1: a great deal of anxiety. So I find it very
Speaker 1: hard to believe that we're not at some sort of
Speaker 1: inflection point. I cannot believe that the global economic order
Speaker 1: that we are going to see in is going to be,
Speaker 1: you know, some sort of moderately tweaked version of the
Speaker 1: global economic order in nineteen I think something is going
Speaker 1: to have to change because the system is just breaking.
Speaker 1: It's it's not working right. We were already having stresses,
Speaker 1: particularly for globalization, before this happened, But but right now
Speaker 1: I mean all sorts of trade, you know, supply chains
Speaker 1: are breaking down and trade relationships are just following apart
Speaker 1: because of the pandemic, and it's it's really hard to
Speaker 1: see how you rebuild in a globalized way without either
Speaker 1: massive international coordination, which would require a total rethink of
Speaker 1: the way that we're doing things now, or or sort
Speaker 1: of a sort of retreat into economic nationalism where people
Speaker 1: just where countries just try to do things on their
Speaker 1: own so they don't have to be dependent on these
Speaker 1: international uh you know, legal issues. Either way, things are
Speaker 1: going to change very radically, and and and there will
Speaker 1: be a lot more social unrest before before it's over.
Speaker 1: Zach Carter, thank you so much for joining us. I've
Speaker 1: started your book. I haven't finished it, but I'm really
Speaker 1: looking forward to finishing it now. And that was fantastic
Speaker 1: and it really does feel very timely. Uh you know,
Speaker 1: I know, I'm sure multi year. What year did you started?
Speaker 1: I sold the proposal in uh, March of seen, but
Speaker 1: I've been working on it for a year, so I
Speaker 1: really started taking it seriously in March, so right around
Speaker 1: basically when the Trump president Trump campaign seemed to be
Speaker 1: taking off. I was like I just can't keep covering
Speaker 1: American politics day to day all the time without something
Speaker 1: else because I'll go nuts. Because I was covering the
Speaker 1: twenty sixteen campaign, it just it was an unpleasant thing
Speaker 1: to cover. It just was not fun. So I sold
Speaker 1: the book is like a a way to you know,
Speaker 1: retreat into a different part of the world that still
Speaker 1: felt intellectually serious enough to actually allow you to like
Speaker 1: emotionally engaged, so that you could retreat from what was
Speaker 1: going on. Tracy, this is a good reason for us
Speaker 1: to write our books. I was going to say, I
Speaker 1: wish I was this productive because when I want to
Speaker 1: retreat from the world, I watch like old movies and
Speaker 1: eat junk food. But I very much admire that you
Speaker 1: went off and wrote a book about Kanes, and yes, Joe,
Speaker 1: we should write it old movies and jug food, have
Speaker 1: a have A have A Place that I did plenty
Speaker 1: of that in twenty six too. But but you know,
Speaker 1: you could only distract yourself for so long. You have
Speaker 1: to find something to like invest yourself in, and that
Speaker 1: that's really the way to escape. And for me it
Speaker 1: was British monetary policy in the nineties. Well, Tracy, let's
Speaker 1: get on our book. Let's let's start working on it,
Speaker 1: all right, Zach Carter, thanks for joining us. Thanks guys, No,
Speaker 1: I thought that was great. And Tracy and the um.
Speaker 1: You know what Zach talked about at the end, specifically,
Speaker 1: it's sort of like the difficulty of really even imagining
Speaker 1: just going back to like some version of twenty nine team,
Speaker 1: you know, just beyond the economics in the life, like,
Speaker 1: you know, just from an investors standpoint, that's a huge question. Yeah,
Speaker 1: I agree. I'm actually really surprised that we managed to
Speaker 1: go through that entire podcast without mentioning MMT once. For you,
Speaker 1: I was waiting for you to. I never bring it
Speaker 1: up anymore. It's always someone else. It's always you. You know,
Speaker 1: I don't it's not okay. But really, I mean, there
Speaker 1: is that well you either call it a criticism or
Speaker 1: a compliment, I guess, but there is that line of
Speaker 1: thought that MMT is just another version of Kynesianism. Yeah,
Speaker 1: we could have asked him. I'm in a like a
Speaker 1: chat room where we talk about MMT. Is accident too,
Speaker 1: so I'm in a chat room where we exclusively talk
Speaker 1: about MMT. But it was a really fascinating conversation and
Speaker 1: I don't know like it. It's sort of it sort
Speaker 1: of makes me think that the problem isn't necessarily economic,
Speaker 1: it's political, which is what I've said about MMT over
Speaker 1: and over. So you're the one who keeps this is
Speaker 1: like three or four times now in a row where
Speaker 1: I don't say anything about it, and it's always you
Speaker 1: bring here. Okay, Okay, I'm not going to say m
Speaker 1: m T anymore. I'm just gonna say listening to Zach
Speaker 1: it really makes me think that again, the problem is
Speaker 1: about politics and not necessarily economics. It's these different visions
Speaker 1: of the world, and no one can actually agree on
Speaker 1: where we're supposed to be going and get aligned on
Speaker 1: them agree. And I really do think that, like, even if,
Speaker 1: like you know, you're purely just an investor, and even
Speaker 1: if like you just want to like make money, I
Speaker 1: think that point is so crucial that you can't avoid politics.
Speaker 1: And I think that people think of like politics and like, well,
Speaker 1: maybe Joe Biden is gonna win and raise the tax
Speaker 1: rate by what's that gonna mean? Or maybe he's gonna,
Speaker 1: you know, put a higher tax on prescription drugs, what
Speaker 1: does that mean? Whatever? But I think that right now
Speaker 1: like there's a deeper question politically, and it's in the
Speaker 1: US but also around the world, but also like specifically
Speaker 1: the US, as will this force us to go in
Speaker 1: some different trajectory? And I almost feel like if you're
Speaker 1: of an investor, it's like and you want to figure
Speaker 1: out what's gonna hapen with inflation or what's gonna happen
Speaker 1: with wages? You know, we're like everyone's you know, they
Speaker 1: look at like the FED balance sheet or they deficits
Speaker 1: or whatever. But I do feel like these fundamental questions,
Speaker 1: like what kind of like world will political leaders try
Speaker 1: to rebuild when the virus is gone? He is going
Speaker 1: to just be this huge thing, and there's so much
Speaker 1: uncertainty and the question of like ken we will we
Speaker 1: they will they try to just get back to twenty
Speaker 1: nine light is a huge unknown question absolutely. All right,
Speaker 1: Well on that big question, shall we leave it there? Okay?
Speaker 1: This has been another episode of the All Thoughts Podcast.
Speaker 1: I'm Tracy Alloway. You can follow me on Twitter at
Speaker 1: Tracy Alloway, and I'm Joe Wisenthal. You can follow me
Speaker 1: on Twitter at the Stalwart and you should follow our
Speaker 1: guests on Twitter. Zach Carter his handle is Zack D. Carter,
Speaker 1: and of course check out his new book, the best
Speaker 1: seller The Price of Peace, Money, Democracy, and The Life
Speaker 1: from John Maynard Kines. And be sure to follow our
Speaker 1: producer on Twitter, Laura Carlton at Laura M. Carlton, Call
Speaker 1: of the Bloomberg had a podcast, Francisca Leady at Francisca Today,
Speaker 1: and check out all of our podcasts under the handle
Speaker 1: at podcast. Thanks for listening