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Speaker 1: The work week maybe over, but this economy, it never

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Speaker 1: takes time off.

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Speaker 2: I'm justin Morpher's and this.

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Speaker 1: Is off the Clock unwinding the week's news. We're I'm

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Speaker 1: joined by my favorite economics journalist, Stacy Vanix Smith to

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Speaker 1: talk about the week that was.

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Speaker 3: It's very good to be back, Justin. Thank you for

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Speaker 3: having me. I am a columnist at Bloomberg Business Week

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Speaker 3: and the co host of their podcast Everybody's Business.

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Speaker 1: So you've been paying attention, and today we're gonna pick

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Speaker 1: through the headlines and we're here to tell you what

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Speaker 1: you should actually be concerned about, what you can safely ignore,

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Speaker 1: and maybe we'll see if we can find some silver

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Speaker 1: linings in there too. So we got three big stories

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Speaker 1: to talk about today, Stacy, Yes, so.

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Speaker 3: Justin, everyone's been talking about SpaceX, but you and I

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Speaker 3: are pureists. We only have eyes for larger important economic

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Speaker 3: topics like inflation. Is this just the passing through, crashing

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Speaker 3: on your couch for a couple of nights kind of

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Speaker 3: inflation that we're experiencing right now, or is this the

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Speaker 3: sticking around suddenly strangely getting mail sent to your apartment

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Speaker 3: kind of infletion?

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Speaker 1: That's the big question, Stacy, enough about your personal life,

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Speaker 1: let's make sure about the economy. I love that that

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Speaker 1: was a real life So look, we're going to move

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Speaker 1: from the highs of inflation to talking about a big

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Speaker 1: new report on the Social Security Trust Fund, and before

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Speaker 1: you start yawning at home, we're going to hit the

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Speaker 1: important points that you really need to know.

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Speaker 3: Also exciting news. The World Cup kicked off this Thursday.

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Speaker 2: And I saw what you did there?

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Speaker 3: Yeah? Did you see what I did? There? A lot

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Speaker 3: of economics involved, right.

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Speaker 1: Justin, so much economics, and we're going to dig into

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Speaker 1: the economics of the World Cup. And the World Cup

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Speaker 1: is a metaphor for what's happening to our economy.

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Speaker 2: Ready to get into it?

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Speaker 3: I am ready? Okay, justin, are we really not going

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Speaker 3: to talk about SpaceX?

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Speaker 2: I mean, yeah, let's let's really not do it.

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Speaker 3: Okay, Okay, we won't talk about SpaceX.

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Speaker 2: Who cares? It doesn't affect my life? You know what does? What?

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Speaker 3: Okay? Well, justin speaking of the grocery store, if SpaceX

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Speaker 3: is like the jalapeno poppers of the week's economic news,

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Speaker 3: I have only been thinking of spinach aka inflation. We

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Speaker 3: got a lot of inflation news I have. I'm really

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Speaker 3: happy to have you here because I have some big

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Speaker 3: questions about this. Just to explain a little bit, consumer

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Speaker 3: Price Index came out this week. That is the CPI,

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Speaker 3: aka the big inflation report that comes out every month.

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Speaker 1: Well, I've I've had so many acronyms. You've got a

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Speaker 1: CPI and a I K A oh right.

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Speaker 3: That is bad writing.

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Speaker 2: It's bad writing, feel okay?

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Speaker 3: Uh So? Yes, the CPI, the Consumer Price Index, it

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Speaker 3: tracks prices all across the economy, and it came in

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Speaker 3: kind of hot, four point two percent, which means prices

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Speaker 3: across the economy on average arising at a rate of

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Speaker 3: about four point two percent. And the rate that we

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Speaker 3: like to see that economists like to see is two percent.

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Speaker 3: So it's a lot higher. So that's not great news.

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Speaker 3: What did seem to be better news, and where I'm

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Speaker 3: really excited to start off here, is that core inflation

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Speaker 3: came in at two point nine percent, a lot lower.

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Speaker 3: So core inflation is inflation, but you take out gas

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Speaker 3: prices and food prices, it tends to be more volatile.

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Speaker 3: So economists like yourself always like core inflation to sort

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Speaker 3: of see if the fund how the fundamentals are moving.

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Speaker 3: That seemed like good news to me. But justin what

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Speaker 3: did you see in.

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Speaker 2: All this might a'm mari.

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Speaker 1: So inflation at the headline level of full point two

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Speaker 1: percent of that high full percent eight, people are feeling it,

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Speaker 1: and they're feeling every So the first thing is what's

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Speaker 1: happened to people's paychecks? Reallyd to that, so real wages

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Speaker 1: when we compare what's happened to wages, and wages have

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Speaker 1: risen about three and a half percent. Well, prices have

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Speaker 1: risen about four percent over the past year.

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Speaker 2: The difference between those is the rate.

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Speaker 1: Of change how much you can buy with your paypacket,

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Speaker 1: and prices are growing faster than wages. As they have

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Speaker 1: over the past year, what you can buy with your

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Speaker 1: paypacket goes down.

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Speaker 2: We call that real wages.

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Speaker 1: I actually calculated since Inauguration Day, at first wages were

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Speaker 1: growing faster than prices. Now prices have caught up. So

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Speaker 1: in fact, between inauguration day and today, real wages are

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Speaker 1: literally unchanged, and they've now been falling for six months, and.

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Speaker 2: So I think people are going to be feeling that

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Speaker 2: quite a bit. Now.

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Speaker 1: The job of an economist is to say, don't worry

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Speaker 1: about that. A lot of it's transitory.

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Speaker 2: I kind of hope.

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Speaker 3: It's transitory me too, of course, I hope it's transfering. Well,

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Speaker 3: that's what I wanted to ask about with the core inflation, because,

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Speaker 3: of course the thing everybody always says, and I feel this.

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Speaker 3: I used to get angry when I learned about the

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Speaker 3: concept of core inflation. I actually got angry because I

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Speaker 3: was like, you're taking out food and gas, like those

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Speaker 3: are the things I can't get out of buying, which

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Speaker 3: is true. But in this case, you know, we all

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Speaker 3: know what is causing that. The straight up hoorror moves

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Speaker 3: being closed. It's affecting fertilizer shipments and oil shipments, so

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Speaker 3: it's restricting the supply and raising the price. So the

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Speaker 3: good news would seem to be, you know, that is

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Speaker 3: a temporary knock on wood event. So if and when

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Speaker 3: the strait reopens, things will normalize, prices will come back down,

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Speaker 3: and if we're not seeing it so much in the

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Speaker 3: rest of the economy, that seems like really good news.

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Speaker 2: Absolutely.

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Speaker 1: So look, the reason we look at core is the

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Speaker 1: reason you said, which is often you know, there's a

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Speaker 1: drought somewhere or some crazy thing happening in the Middle

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Speaker 1: East that we don't control, and you want to sort

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Speaker 1: of look through that, you know, what's the underlying inflationary

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Speaker 1: impulse or the psychology of people deeply worried about it.

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Speaker 2: That pretty much makes sense. Now. The thing is, in

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Speaker 2: this case, we know there's been a very sharp.

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Speaker 1: Increase in the price of energy. Think about that as

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Speaker 1: a pebble you throw into a punk. The first thing

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Speaker 1: that happens is the price of Brent crude oil and

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Speaker 1: West Texas Intermediate, which are.

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Speaker 2: Just fantastic flavors.

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Speaker 1: Next time you're at the ice cream shop, get yourself

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Speaker 1: some West Texas Intermediate. And then those are ingredients that

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Speaker 1: go into gasoline. So the price of gas has gone up.

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Speaker 1: It also then goes into jet fuel. We're already seeing

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Speaker 1: airfares go up. It also goes into diesel, which is

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Speaker 1: a big input into agriculture. That's what a lot of

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Speaker 1: the tractors use, it's what a lot of transportation uses.

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Speaker 1: And so before you know it's almost everything you buy

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Speaker 1: touches or as affected by oil.

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Speaker 2: And so really the big question.

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Speaker 1: Right now is how big are these second and third

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Speaker 1: round ripples going to be? Is the price of Barbie

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Speaker 1: dolls going to spike because Barbie's made of plastic, and

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Speaker 1: past plastics made of petrochemicals, and petrochemicals, the petro bit

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Speaker 1: means something to do with oil. So are we going

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Speaker 1: to start seeing it at the toy store? Are we're

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Speaker 1: going to see it at the grocery shop? Are we're

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Speaker 1: going to see it in wage demands?

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Speaker 2: And so on?

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Speaker 1: And it's just too early to be particularly optimistic about

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Speaker 1: what we've seen so far. So right now I'm mostly

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Speaker 1: just holding my.

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Speaker 2: Breath the thing that the FED is very worried about.

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Speaker 1: So there's a story. Let me, Stacy. Can we do

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Speaker 1: three levels of analysis here?

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Speaker 3: Yes?

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Speaker 1: If this will Goldie locks level spinach, three level spinach,

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Speaker 1: that's great.

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Speaker 2: It's the spinach dip. I mean, I've had a five before.

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Speaker 3: It's sports season, it's dip season.

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Speaker 2: It is dip season. I declare it.

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Speaker 3: It's efficiently started. Walk us through the dip.

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Speaker 2: Okay.

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Speaker 1: So look, if you want a thin, watery dip that

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Speaker 1: doesn't have much flavor, you just do what most economics journalists,

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Speaker 1: not Stacey Manic Smith do, which, as you say, if

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Speaker 1: inflation's high, the FED has to raise rates. Now that's

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Speaker 1: right half the time. That's why there is a little

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Speaker 1: bit of spinach in this dip, just not that much,

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Speaker 1: because that's the right instinctive. We're talking about what economists

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Speaker 1: call a demand schock. A demand tchock is there's too

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Speaker 1: much demand. Too many people want to buy more stuff

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Speaker 1: than there is, and so therefore prices go up.

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Speaker 2: So what you got to do is pull demand back.

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Speaker 1: And so the simplest reaction, if you're a rookie journalist

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Speaker 1: who's never seen a textbook, is any time inflation's high,

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Speaker 1: you say, oh, fed's going to raise interest rates.

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Speaker 2: But if you want the next layer.

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Speaker 1: What would you call a slightly more sophisticated spinach dip?

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Speaker 1: Here Stacey, I'm not sure.

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Speaker 3: I mean then we're getting into like seven the seven

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Speaker 3: layer dip arena.

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Speaker 1: Oh yeah, I do like a seven layer yeah, I

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Speaker 1: mean there's there's the spinach is always a delicious layer,

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Speaker 1: but there's like the beans and the sour cream and

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Speaker 1: the taco seasoning.

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Speaker 3: I did an inflation indicator of seven layer dips, so

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Speaker 3: I know a lot about seven layer dip. I don't

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Speaker 3: want to get audio serious journalism.

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Speaker 2: I just didn't get on with the economics.

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Speaker 1: But can I just pause because Americans may not understand

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Speaker 1: just how extraordinary that country is.

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Speaker 2: That's one of my favorite things about the country.

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Speaker 1: Hey, we measure foods. The quality of foods is how

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Speaker 1: many things are on it? So like a four cheese pizza, Like,

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Speaker 1: I don't know where I come from. In Australia, we

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Speaker 1: just have one cheese on our pizza at a time. Actually,

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Speaker 1: so to the Italian.

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Speaker 3: Okay, now justin I need to stop you because isn't

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Speaker 3: this the land of the bloomin Onion?

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Speaker 2: Like? Which is no, no, No.

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Speaker 3: Isn't Outback Steakhouse is not originally Australian. It's like Americans.

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Speaker 2: Has nothing to do, We're Australia.

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Speaker 3: No.

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Speaker 1: In fact, there was a wonderful review of we are

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Speaker 1: going to get back to Economics. There's a wonderful review

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Speaker 1: of the op it's owned by Americans, and Americans who

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Speaker 1: don't understand Australia at all. If they did, they'd have

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Speaker 1: good coffee or good beer. There was a wonderful review

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Speaker 1: in the New York Times. I have never been able

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Speaker 1: to find it again, but they said, you know, this restaurant,

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Speaker 1: the Upback Steakhouse, does not understand Australia. Because they have

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Speaker 1: a dessert called the Chocolate Thunder down Under. And if

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Speaker 1: you understood the Australian obsession with the scatological, you simply

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Speaker 1: could not name it.

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Speaker 2: Assert the Chocolate Thunder down Under.

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Speaker 3: That seems problematic anywhere. But anyway, I deeply apologize for

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Speaker 3: connecting out Back Steakhouse to your great country.

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Speaker 2: Look, now, appropriation is the word of the day.

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Speaker 1: Let's move on to the second, the second dip. Right, So,

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Speaker 1: if you're a journalist who's actually gone to school, or

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Speaker 1: if you're someone who's got who's you know some of

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Speaker 1: them have gone. Why am I making fun of journalists?

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Speaker 1: I like journalists. Okay, if you want to.

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Speaker 3: Go, I deserve it. Could you know I I there

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Speaker 3: are my people, I love them, and you know we

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Speaker 3: can take it.

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Speaker 1: If folks at home want to know what I talk

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Speaker 1: about when I teach instructory, you can. We talk about

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Speaker 1: there being the possibility of both demand shocks too many

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Speaker 1: people wanting to buy more stuff than we have, and

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Speaker 1: supply shocks. Supply shocks make the cost of doing business

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Speaker 1: higher and they force prices up. So the thing is,

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Speaker 1: what's happening in the straight uphor is a supply shock

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Speaker 1: it's harder to get oil. Oil is an input. Therefore

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Speaker 1: the cost of doing business rises. So the thing about

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Speaker 1: a supply shock is the price of oil goes up,

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Speaker 1: even if it.

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Speaker 2: Never comes down again.

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Speaker 1: That Remember, inflation is the rate of change of prices,

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Speaker 1: so the price can go from low to high. That

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Speaker 1: will cause a temporary blip in inflation. I said the

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Speaker 1: word temporary. And then if it stays high forever, then

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Speaker 1: inflation is just going to go back to normal. So

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Speaker 1: you just watch and wait and the inflation will disappear.

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Speaker 1: High prices won't, but inflation will disappear. So that's why

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Speaker 1: economists sometimes say the advice in the central banking.

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Speaker 2: Textbook would be to look through a supply.

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Speaker 1: Shock, which means basically ignore or discount the supply shock.

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Speaker 1: And so that is what then says, well, maybe the

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Speaker 1: FED doesn't need to be super responsive to what happened

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Speaker 1: with hot inflation this week. What it needs to be

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Speaker 1: instead is patient. And I actually think that too often

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Speaker 1: we forget our textbook, and so we should think about

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Speaker 1: being patient, which means high inflation doesn't.

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Speaker 2: Necessarily mean high in strates. Now, do you want to

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Speaker 2: come to.

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Speaker 1: Graduate school and go to third level level spinach dib. Yes, Okay,

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Speaker 1: this is what happens if you take a higher level

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Speaker 1: course in money and banking. One of the things we

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Speaker 1: think of as being a critical determinant of inflation is

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Speaker 1: inflation expectations.

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Speaker 2: So is this the view that.

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Speaker 1: The belief that inflation might occur is enough that people

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Speaker 1: are worried their costs are going to rise that they

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Speaker 1: raise their prices. And so the belief that inflation might

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Speaker 1: occur creates the reality that inflation occurs, so it can

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Speaker 1: be a self fulfilling prophecy. And so if inflation expectorations

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Speaker 1: cause more inflation, then the fed's most important thing to

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Speaker 1: do is try and cut get people's inflation expectations down.

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Speaker 1: What's happened, right, and that's why we have a two

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Speaker 1: percent inflation target. It's the Fed's job to walk around

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Speaker 1: and yell to everyone, Hey, inflation is going to be

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Speaker 1: two percent. You've got to believe me. I'm serious, And

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Speaker 1: then everyone else's job is to believe them, and then

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Speaker 1: we get the virtuous cycle of believing prices won't rise much,

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Speaker 1: so we don't raise our prices much. The problem for

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Speaker 1: the FED is we've had high inflation now well, above

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Speaker 1: the two percent target for five years. That's long enough

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Speaker 1: where people are thinking, I don't know. You keep saying

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Speaker 1: inflation is going to be two percent, but mate, I'm

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Speaker 1: not sure I believe you. And if that's the case,

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Speaker 1: then the FED has to go back and re earn

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Speaker 1: that credibility and say, hey, I mean it, I am

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Speaker 1: going to crush this economy. If that's what I've got

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Speaker 1: to do to bring inflation back to normal, you should

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Speaker 1: believe me. So look, that was a long side in

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Speaker 1: the monetary economics. Let me try and bring it back

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Speaker 1: to where we are right now. What the That's what's

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Speaker 1: really happened is we were looking at a few right

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Speaker 1: cuts this year, interest rates coming down. It now looks

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Speaker 1: likely that next move in rights will be up. And

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Speaker 1: that's as a result of this hot inflation report. And

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Speaker 1: how many more rises we get and how severe they'llbey

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Speaker 1: that is what we're we're waiting on tender hooks to

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Speaker 1: figure out.

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Speaker 3: This is making me think of we talked many times

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Speaker 3: during the transitory inflation moments back in like twenty two,

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Speaker 3: and there was a lot of talk back then about

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Speaker 3: the supply chains. This was the idea that you know,

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Speaker 3: there was like supply chains were all kinked up all

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Speaker 3: over the world, and as a result of that, store

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Speaker 3: shelves were empty in a lot of places. Prices got

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Speaker 3: pushed up. And the idea was when supply chains normalize,

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Speaker 3: prices will come back down to normal and inflation will

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Speaker 3: will peter out. That did not happen. And one thing

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Speaker 3: that occurred to me about this and that moment I

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Speaker 3: wanted to run this by you. It seems like the

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Speaker 3: thing that triggers the inflation can be different from the

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Speaker 3: thing that sustains it, Like the trigger can go away,

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Speaker 3: but that doesn't necessarily mean the inflation will go away.

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Speaker 3: So even if let's say next week, the strait of

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Speaker 3: Hormon's reopens, like you say, all of a sudden, we're

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Speaker 3: that doesn't necessarily mean that prices and inflation will start

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Speaker 3: to drop. And I feel like it's an important distinction

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Speaker 3: to make too, because you know, if your coffee like

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Speaker 3: jumped up to seven bucks and stays at seven bucks.

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Speaker 3: That's if it stays at seven bucks, then inflation hasn't risen,

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Speaker 3: but you're still paying seven bucks for your coffee. But

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Speaker 3: inflation can kind of take off for because, like you said,

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Speaker 3: consumer expectations like it can sort of latch on in

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Speaker 3: this way when even after the trigger, the thing that

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Speaker 3: triggered it goes away. Is that right?

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Speaker 2: Yeah?

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Speaker 1: And actually, what you've just done, you've you've invented your

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Speaker 1: Halloween costume.

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Speaker 2: It sounds like you can get dressed. Is Kevin Walsh

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Speaker 2: is worst? Not me?

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Speaker 1: Yeah, Kevin's worst nightmare is the oil shock causes inflation

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Speaker 1: to rise and in turn inflation expectations.

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Speaker 2: We just got some new data, by the way, from

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Speaker 2: the University of Michigan.

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Speaker 1: Inflation expectations have risen and if they stay then that

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Speaker 1: could cause inflation to persist for quite some time. Now, Stacy,

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Speaker 1: I could talk inflation all day. In fact, I might

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Speaker 1: go home and I might do it myself tonight. Just

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Speaker 1: have a bit of a chat with the kids, force

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Speaker 1: them to talk inflation. But there's even more issues that

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Speaker 1: are hitting this week, and a big one that I

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Speaker 1: think it affects more of the next generation up older. No,

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Speaker 1: we're going to relentlessly not talk to that at all,

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Speaker 1: and we're doing in a marvelous job. It's social security.

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Speaker 1: It's the thing that keeps old people out of poverty.

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Speaker 1: And you might have said there was news earlier this

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Speaker 1: week that the Trustees. So there's a bunch of nerds

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Speaker 1: whose job is to put together complicated report that says, hey,

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Speaker 1: do we still have enough money to keep Social Security going?

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Speaker 1: They now expect the Social Security Trust Fund. And there's

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Speaker 1: a lot of moving pats here, So let's make sure

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Speaker 1: if people understand all of them. They now expect the

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Speaker 1: Social Security Trust Fund to become insolvent by the end

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Speaker 1: of twenty thirty two.

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Speaker 2: Let's unpack there. Where do you want to start?

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Speaker 3: So let's talk. Let's just talk about the program itself. Now,

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Speaker 3: social Security it is like the biggest expense the government has.

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Speaker 3: It is huge. It is also really popular because, and

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Speaker 3: I think partially because everybody gets it. But that's also

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Speaker 3: part of why it's so expensive. I remember someone saying

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Speaker 3: to me years ago, Warren Buffett doesn't need social Security,

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Speaker 3: but social Security needs Warren Buffett. It's it's become a

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Speaker 3: political because everybody gets it, no matter how wealthy they are.

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Speaker 3: But that also makes it really expensive.

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Speaker 1: Yeah, right, The problem in some sense isn't that it's expensive.

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Speaker 2: We can do expensive things if we save up money

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Speaker 2: for it.

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Speaker 1: Okay, So I'm going to give so I agree with

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Speaker 1: everything you said, and now I'm going to give an

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Speaker 1: economists description of what the structural problem is.

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Speaker 2: So a lot of us think.

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Speaker 1: The way social security works is I send the government

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Speaker 1: a check, or my employer sends them a check, and

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Speaker 1: then they put it in a safe and it sits

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Speaker 1: in the safe until I'm old, and then they pull

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Speaker 1: it out of the safe and they give it to me,

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Speaker 1: or if it's a very sophisticated government, they put it

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Speaker 1: in the bank and it grows interest and they give

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Speaker 1: it back to me. That's not how it works at all.

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Speaker 1: So there's no such thing as your money and their system.

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Speaker 1: What happened was when it was set up, and this

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Speaker 1: is in some sense the original sin.

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Speaker 2: They just started it.

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Speaker 1: Where young people would pay in and old people would

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Speaker 1: start getting money. Both happened on pretty much on the

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Speaker 1: same day.

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Speaker 3: This is in the thirties, is that right?

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Speaker 2: Yeah? Yeah, it was a Roosevelt. Roosevelt how do you

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Speaker 2: even say American words?

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Speaker 3: Yes, Roosevelt is how I see it.

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Speaker 1: But I could be wrong, and I stumble so often

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Speaker 1: over the things you learned in elementary school, because I

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Speaker 1: didn't go to elementary school.

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Speaker 2: Here.

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Speaker 1: Okay, so young people are paying money in, and that's

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Speaker 1: great because now the government can at the same truck

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Speaker 1: time write checks to old people. So there's no big

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Speaker 1: bag of money there at all. There's just money coming

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Speaker 1: in and money coming out. Now, in an economy where

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Speaker 1: there's lots of young people, there's lots of money coming in,

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Speaker 1: and if there's not many old people, there's not much

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Speaker 1: money going out. And as a result, actually you might

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Speaker 1: build up a little bit of a bank balance in

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Speaker 1: the middle if there's lots of old people and not

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Speaker 1: many young people, and that's where we were. Then what

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Speaker 1: happened is, remember we had lots of young people, they

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Speaker 1: got older and they became the old people. Now we're

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Speaker 1: in a world with lots of old people and not

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Speaker 1: very many young people. Well, so therefore there's not much

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Speaker 1: money coming in, but there's a lot of people a

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Speaker 1: lot of checks going out, which means whatever bank balance

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Speaker 1: metaphorical bank balance the social security had built up, and

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Speaker 1: that's what we call the Social stee Security Trust Fund.

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Speaker 1: How much they got ahead when there was more young

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Speaker 1: people than old people. Now there's more old people than

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Speaker 1: young people, we're running down that balance. And so when

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Speaker 1: we talk about the fund becoming insolvent. It just means

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Speaker 1: that in twenty thirty two we will have run that

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Speaker 1: balance down to zero. Now realize, if I think about

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Speaker 1: being bankrupt, I think about having no money. But that's

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Speaker 1: not right, because there's still going to be young people

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Speaker 1: and they're still going to be sending checks in. But

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Speaker 1: because there's fewer young people and old people and there's

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Speaker 1: no money in the bank to run down, that's going

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Speaker 1: to mean there's less money to pay out of.

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Speaker 2: The old people.

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Speaker 1: And so what that lets us do is I want

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Speaker 1: to puncture one of the important myths. People say, if

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Speaker 1: Social Security goes bust, it won't be there for you.

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Speaker 2: They say that to my.

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Speaker 1: Kids or older people are worried that they've retired and

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Speaker 1: there'll be nothing there.

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Speaker 2: That's not right.

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Speaker 1: What we're talking about is the amount that goes out

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Speaker 1: will have if Congress does nothing.

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Speaker 2: There's a big gift there. So we'll come back to that.

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Speaker 1: If if Congress does nothing, the amount that goes out

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Speaker 1: will have to be equal to the amount that comes in.

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Speaker 2: And that basically means.

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Speaker 1: What we'll have to do is cut every Social Security

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Speaker 1: check to be twenty two percent lower. That's a big

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Speaker 1: cush yes, but it's still seventy eight percent coming out.

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Speaker 2: So look, what you just say is right.

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Speaker 1: That's a very very serious issue, and we'll talk about

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Speaker 1: the seriousness.

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Speaker 2: But the one thing I don't want to do is

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Speaker 2: overblow it.

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Speaker 1: If you're looking forward to your retirement, realize all this

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Speaker 1: talk of social security and soolvency is important to force

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Speaker 1: politicians to act, but you're still going to get sent

442
00:21:41,040 --> 00:21:44,440
Speaker 1: something now. Having said that, there's a lot of old

443
00:21:44,480 --> 00:21:46,760
Speaker 1: people who barely get by on their social security.

444
00:21:46,440 --> 00:21:48,200
Speaker 2: And I don't want to cut it by twenty two percent.

445
00:21:49,880 --> 00:21:54,440
Speaker 3: So justin a couple things here. One of the proposals

446
00:21:54,600 --> 00:21:56,240
Speaker 3: there are a lot of proposals about how to deal

447
00:21:56,280 --> 00:21:59,679
Speaker 3: with this. One of the proposals that I've heard is

448
00:21:59,680 --> 00:22:04,119
Speaker 3: you could cut the amount of money going to wealthier people,

449
00:22:04,359 --> 00:22:06,639
Speaker 3: so it could be a little bit less. But those

450
00:22:07,480 --> 00:22:09,960
Speaker 3: are the people who've paid the most into social security,

451
00:22:10,080 --> 00:22:12,040
Speaker 3: but they may not need it.

452
00:22:12,800 --> 00:22:17,920
Speaker 1: Right, it's let me just reflect something back. It's a

453
00:22:18,119 --> 00:22:21,679
Speaker 1: it's a very unusual system. So let me reflect on

454
00:22:21,720 --> 00:22:24,040
Speaker 1: being Australian for a moment, because I came to think about.

455
00:22:23,880 --> 00:22:27,760
Speaker 3: All, you guys have a super annuity well done. In

456
00:22:27,760 --> 00:22:29,119
Speaker 3: addition to the bloomin onion.

457
00:22:30,080 --> 00:22:34,000
Speaker 1: We do not have a bloomin onion, but you have

458
00:22:34,080 --> 00:22:36,879
Speaker 1: more cheeses on your pizzas. So look, when I was

459
00:22:36,920 --> 00:22:38,560
Speaker 1: young in Australia, we used to do something just called

460
00:22:38,560 --> 00:22:41,280
Speaker 1: the old age Pension, and it was basically, if you're old,

461
00:22:41,440 --> 00:22:43,000
Speaker 1: we know you can't work, we don't want you to

462
00:22:43,000 --> 00:22:44,720
Speaker 1: go hungry. The government's going to mail you a couple

463
00:22:44,840 --> 00:22:49,040
Speaker 1: hundred bucks every week. And over time we realized we

464
00:22:49,080 --> 00:22:51,320
Speaker 1: don't want to send a couple hundred bucks to rich people,

465
00:22:51,359 --> 00:22:52,000
Speaker 1: so we did.

466
00:22:51,880 --> 00:22:53,800
Speaker 2: More what we call means testing, just sending it to

467
00:22:53,800 --> 00:22:54,520
Speaker 2: people who need it.

468
00:22:55,480 --> 00:22:58,560
Speaker 1: So that's a fairly standard sort of a system around

469
00:22:58,600 --> 00:23:00,960
Speaker 1: the world that you have a government system which is

470
00:23:01,000 --> 00:23:02,640
Speaker 1: basically about looking after.

471
00:23:02,440 --> 00:23:03,320
Speaker 2: Old, poor people.

472
00:23:03,480 --> 00:23:05,040
Speaker 1: We think of it as being part of the welfare

473
00:23:05,080 --> 00:23:08,479
Speaker 1: state power of how we help those who might otherwise

474
00:23:08,520 --> 00:23:12,879
Speaker 1: be left behind. So social security is not that right.

475
00:23:12,960 --> 00:23:14,679
Speaker 1: And the other thing social security is not is we

476
00:23:14,720 --> 00:23:18,719
Speaker 1: have something called superannuation, which is Americans are sort of

477
00:23:18,800 --> 00:23:21,359
Speaker 1: told and it's sort of a promise. You're sending in

478
00:23:21,400 --> 00:23:23,919
Speaker 1: your check and it's going into your Social Security account

479
00:23:23,960 --> 00:23:26,760
Speaker 1: and you'll be able to pull your money out. But

480
00:23:26,840 --> 00:23:29,000
Speaker 1: in reality you don't have a bank account there that

481
00:23:29,040 --> 00:23:33,040
Speaker 1: you own. What you have is a piece of legislation

482
00:23:33,160 --> 00:23:35,000
Speaker 1: that says we hope to pay you this much in

483
00:23:35,040 --> 00:23:38,800
Speaker 1: the future, but it's not actually your money. It's the

484
00:23:38,840 --> 00:23:41,040
Speaker 1: federal government's money. This is why this is seen as

485
00:23:41,320 --> 00:23:44,760
Speaker 1: a part of fiscal policy. And so the way we

486
00:23:44,800 --> 00:23:47,480
Speaker 1: sell social Security to Americans if say you pay in

487
00:23:47,520 --> 00:23:49,639
Speaker 1: and you get out, and we try and create this

488
00:23:50,520 --> 00:23:52,439
Speaker 1: very strong connection between what you put in and what

489
00:23:52,480 --> 00:23:55,720
Speaker 1: you get out, and that gives it political sustainability because

490
00:23:56,160 --> 00:23:56,680
Speaker 1: you say.

491
00:23:56,520 --> 00:23:58,080
Speaker 2: Well, if I put in, I get it out, it's

492
00:23:58,080 --> 00:24:00,640
Speaker 2: not about that terrible stuff like redistribution.

493
00:24:02,400 --> 00:24:04,320
Speaker 1: But in fact it's not a private system, which is

494
00:24:04,320 --> 00:24:07,720
Speaker 1: what superannuation is. So we're in this funny world where

495
00:24:07,720 --> 00:24:10,440
Speaker 1: we can't decide if what we're doing is a little

496
00:24:10,480 --> 00:24:13,040
Speaker 1: bit about redistribution and a little bit about stuff you

497
00:24:13,080 --> 00:24:16,359
Speaker 1: actually own. It's a uniquely American political compromise.

498
00:24:17,920 --> 00:24:23,800
Speaker 3: Is there actually a possibility that Social Security would be

499
00:24:23,880 --> 00:24:26,159
Speaker 3: cut or not go out? And I only say this

500
00:24:26,280 --> 00:24:30,240
Speaker 3: because I started in journalism. It has been a minute,

501
00:24:30,720 --> 00:24:33,560
Speaker 3: it's been more than fifteen years, and I've been doing

502
00:24:33,800 --> 00:24:36,200
Speaker 3: stories about how Social Security is about to run out

503
00:24:36,240 --> 00:24:40,719
Speaker 3: of money. That entire time. It sort it feels a

504
00:24:40,720 --> 00:24:44,359
Speaker 3: little bit like the debt ceiling fights, like a little

505
00:24:44,359 --> 00:24:47,480
Speaker 3: bit like here we go again. Of course this can't

506
00:24:47,520 --> 00:24:49,679
Speaker 3: isn't going to fail. And I know if you keep

507
00:24:49,760 --> 00:24:53,720
Speaker 3: walking super close to the edge all the time, one

508
00:24:53,760 --> 00:24:58,959
Speaker 3: time you may stumble. But are you actually worried about

509
00:24:58,960 --> 00:25:02,439
Speaker 3: this at this moment? Actually think there's a chance that

510
00:25:03,119 --> 00:25:06,639
Speaker 3: this wouldn't get funded because the thing about older people

511
00:25:06,840 --> 00:25:08,080
Speaker 3: is they vote a lot.

512
00:25:08,640 --> 00:25:10,440
Speaker 2: Right, I'm terrified.

513
00:25:11,000 --> 00:25:13,560
Speaker 1: I think that this speaks to a level of dysfunction

514
00:25:13,640 --> 00:25:15,680
Speaker 1: that's far greater than the dead ceiling and the other

515
00:25:15,720 --> 00:25:18,560
Speaker 1: examples you're thinking about. And the why is exactly the

516
00:25:18,600 --> 00:25:21,560
Speaker 1: story you told. Ever since I arrived in the United States,

517
00:25:21,560 --> 00:25:23,560
Speaker 1: which is probably around the same time as a young

518
00:25:23,600 --> 00:25:27,600
Speaker 1: Stacey became a journalist, economists have been saying this is

519
00:25:27,640 --> 00:25:30,000
Speaker 1: going to happen in the future. So first thing I'm

520
00:25:30,000 --> 00:25:32,159
Speaker 1: want to say recognize is good job economists.

521
00:25:32,200 --> 00:25:32,720
Speaker 2: You were right.

522
00:25:33,840 --> 00:25:35,560
Speaker 1: I'm not always going to say that, But when it

523
00:25:35,560 --> 00:25:38,879
Speaker 1: comes to stuff that's basically driven by demographics, demographics are

524
00:25:38,920 --> 00:25:42,280
Speaker 1: really really easy to predict, right, Because you become a

525
00:25:42,359 --> 00:25:46,360
Speaker 1: year older every year. It's very easy to predict this

526
00:25:46,480 --> 00:25:47,640
Speaker 1: and so that.

527
00:25:47,600 --> 00:25:49,960
Speaker 2: Where in an era where we have not many.

528
00:25:49,800 --> 00:25:51,760
Speaker 1: Young people and a whole lot of old people. We

529
00:25:51,840 --> 00:25:56,920
Speaker 1: knew that was coming. Thirty years ago Bill Clinton ran

530
00:25:57,000 --> 00:26:02,000
Speaker 1: on save Social Security put ready first. That's how long

531
00:26:02,080 --> 00:26:05,360
Speaker 1: we knew this moment was coming for Clinton ran on it.

532
00:26:06,960 --> 00:26:08,199
Speaker 2: Bush, George W.

533
00:26:08,359 --> 00:26:13,320
Speaker 1: Bush ran on reforming Social Security. Someone somewhere along the

534
00:26:13,320 --> 00:26:15,679
Speaker 1: line was going to put social Security in a lock box?

535
00:26:17,000 --> 00:26:17,639
Speaker 2: Was that Gore?

536
00:26:18,600 --> 00:26:21,240
Speaker 3: Yes, I remember the lock box. I think it was Gore.

537
00:26:22,040 --> 00:26:26,000
Speaker 1: Okay, you know what's happened is we've had thirty years

538
00:26:26,000 --> 00:26:31,200
Speaker 1: of a slow motion disaster and literally nothing got past.

539
00:26:32,640 --> 00:26:35,840
Speaker 1: Now we're six years away and we're not even talking

540
00:26:35,880 --> 00:26:40,720
Speaker 1: about it anymore. Remember, if nothing happens, checks are going

541
00:26:40,800 --> 00:26:42,239
Speaker 1: to go out, but they're going to go out at

542
00:26:42,240 --> 00:26:43,520
Speaker 1: seventy eight cents on the dollar.

543
00:26:44,320 --> 00:26:45,160
Speaker 2: So do I.

544
00:26:45,200 --> 00:26:48,040
Speaker 1: Feel enormous confidence that what has been called the third

545
00:26:48,119 --> 00:26:51,679
Speaker 1: rail on American politics is all of a sudden going

546
00:26:51,680 --> 00:26:54,440
Speaker 1: to be something that Democrats and Republicans get together to fix,

547
00:26:54,480 --> 00:26:57,119
Speaker 1: because it will require that given the filibuster.

548
00:26:58,359 --> 00:26:59,800
Speaker 2: I've seen Washington the last.

549
00:26:59,680 --> 00:27:02,760
Speaker 1: Couple of years, and I think that if you think

550
00:27:02,800 --> 00:27:08,640
Speaker 1: political function describes America, you're probably not paying attention. So look,

551
00:27:08,680 --> 00:27:10,320
Speaker 1: for thirty years in a row, we've failed at this

552
00:27:11,200 --> 00:27:15,960
Speaker 1: and we only have six left. And this is complicated

553
00:27:16,040 --> 00:27:19,159
Speaker 1: and there's no easy way out, and it comes back

554
00:27:19,200 --> 00:27:21,240
Speaker 1: to the point that you made, Stacy. The amounts of

555
00:27:21,280 --> 00:27:25,560
Speaker 1: money involved are staggering, so you can't there's no pretending

556
00:27:25,680 --> 00:27:29,199
Speaker 1: you can cut waste, fraud, and abuse. I mean, the

557
00:27:29,240 --> 00:27:33,119
Speaker 1: world's first trillionaire tried that and discovered that he was wrong.

558
00:27:33,440 --> 00:27:35,240
Speaker 3: We are going to talk about SpaceX.

559
00:27:35,400 --> 00:27:38,639
Speaker 2: No, we're not under no conditions.

560
00:27:39,240 --> 00:27:41,320
Speaker 3: What we're doing just testing defense.

561
00:27:42,119 --> 00:27:45,200
Speaker 2: You are what we're doing.

562
00:27:45,240 --> 00:27:47,400
Speaker 1: I want to take a moment on why you're right

563
00:27:47,480 --> 00:27:51,439
Speaker 1: to not talk about SpaceX. Nothing matters more for the

564
00:27:51,480 --> 00:27:54,040
Speaker 1: actual living standards of the folks we're talking to who

565
00:27:54,040 --> 00:27:56,520
Speaker 1: are listening and watching us right now than getting Social

566
00:27:56,520 --> 00:27:59,879
Speaker 1: Security right. There will be a billion column inches about

567
00:28:02,119 --> 00:28:04,800
Speaker 1: there's an IPO today. I think SpaceX they're calling it.

568
00:28:05,119 --> 00:28:07,359
Speaker 2: Who can like that? Right?

569
00:28:09,560 --> 00:28:12,480
Speaker 1: If we can't get people to say we need a

570
00:28:12,560 --> 00:28:16,720
Speaker 1: long term plan for ways in which people can look

571
00:28:16,800 --> 00:28:17,920
Speaker 1: after themselves when.

572
00:28:17,720 --> 00:28:22,160
Speaker 2: They're older, yeah, we have to have an adult conversation

573
00:28:22,280 --> 00:28:22,760
Speaker 2: about that.

574
00:28:22,800 --> 00:28:25,439
Speaker 1: And honestly, I sound like the most boring bloke in

575
00:28:25,440 --> 00:28:26,960
Speaker 1: the world right now, I wish we could have an

576
00:28:27,000 --> 00:28:28,600
Speaker 1: O conversation about social security.

577
00:28:28,760 --> 00:28:31,160
Speaker 2: I want to blow my own brains out. I sound so.

578
00:28:31,160 --> 00:28:34,359
Speaker 1: Boring right now, But the thing I want people to

579
00:28:34,359 --> 00:28:37,040
Speaker 1: realize is I'm prepared to bore you because it's so important.

580
00:28:37,400 --> 00:28:41,200
Speaker 3: This is the Spinach episode and I am here for it.

581
00:28:41,800 --> 00:28:44,880
Speaker 3: Here's the thing that I also feel like is in there,

582
00:28:44,920 --> 00:28:48,200
Speaker 3: and I wanted to ask you about this. It seems

583
00:28:48,320 --> 00:28:52,360
Speaker 3: like I spoke with Jessica Ridal, who's an economist who

584
00:28:52,400 --> 00:28:56,160
Speaker 3: looks into this. She's with brook Ins now and she

585
00:28:56,360 --> 00:28:59,920
Speaker 3: said she's I guess she's super worried about the budget,

586
00:29:00,920 --> 00:29:03,240
Speaker 3: budget debt. This is her thing. And when I spoke

587
00:29:03,280 --> 00:29:06,520
Speaker 3: to her about it, she's like, everybody is all obsessed

588
00:29:06,520 --> 00:29:08,800
Speaker 3: about the budget and the debt until they get into power.

589
00:29:09,560 --> 00:29:13,040
Speaker 3: And she said, there's There's the problem is like, there's

590
00:29:13,160 --> 00:29:17,320
Speaker 3: no party that wants to save money anymore. It used

591
00:29:17,360 --> 00:29:19,760
Speaker 3: to be that the Republicans were sort of whatever fiscally

592
00:29:19,840 --> 00:29:23,640
Speaker 3: conservative or that was the you know, a chunk of

593
00:29:23,680 --> 00:29:26,600
Speaker 3: the Republican Party. It used to be that, you know,

594
00:29:27,520 --> 00:29:32,440
Speaker 3: Democrats would promote like raising taxes in order to fund things,

595
00:29:32,520 --> 00:29:35,200
Speaker 3: and now nobody wants to raise taxes and nobody wants

596
00:29:35,240 --> 00:29:40,360
Speaker 3: to cut spending, and it just seems like there's no

597
00:29:40,400 --> 00:29:42,120
Speaker 3: political will to change this at all.

598
00:29:42,760 --> 00:29:46,040
Speaker 1: Right, so let me violently disagree with Jessica and then

599
00:29:46,120 --> 00:29:50,760
Speaker 1: violently agree. Okay, just a wonderful and a terrific policy won't.

600
00:29:50,840 --> 00:29:54,560
Speaker 1: So here's the violent disagreement. Jessica is also a recovering Republican,

601
00:29:55,560 --> 00:29:57,960
Speaker 1: and so when she says, no one.

602
00:29:57,880 --> 00:30:00,240
Speaker 3: Has this as much of this country, justice.

603
00:30:00,240 --> 00:30:04,120
Speaker 2: Absolutely, I don't.

604
00:30:03,160 --> 00:30:05,200
Speaker 3: Lots of platypus listeners.

605
00:30:05,040 --> 00:30:09,600
Speaker 2: Absolutely absolutely. I just look. All I want to do

606
00:30:09,720 --> 00:30:11,480
Speaker 2: is talk about facts.

607
00:30:13,200 --> 00:30:17,800
Speaker 1: And when Jessica says there's never been a constituency around

608
00:30:17,800 --> 00:30:21,280
Speaker 1: the budget deficit, I feel duty bound to remind her

609
00:30:21,880 --> 00:30:25,200
Speaker 1: that Clinton balanced the budget, Yes he did, and that

610
00:30:25,280 --> 00:30:29,560
Speaker 1: Obama did a huge amount of budget repair, and George W.

611
00:30:29,680 --> 00:30:32,880
Speaker 1: Bush blew it out, Reagan blew it out, and Trump

612
00:30:32,920 --> 00:30:36,400
Speaker 1: blew it out. The Democrat I've not described in this

613
00:30:36,520 --> 00:30:41,120
Speaker 1: narrative so far is Biden, who I think sort of

614
00:30:41,360 --> 00:30:43,840
Speaker 1: was the first sign that Democrats might just be content

615
00:30:43,920 --> 00:30:44,760
Speaker 1: to look the other way.

616
00:30:44,920 --> 00:30:46,600
Speaker 2: So there was.

617
00:30:46,600 --> 00:30:49,760
Speaker 3: A COVID shark, which I feel like in Trump won

618
00:30:50,040 --> 00:30:52,760
Speaker 3: and for Biden, I don't know I feel like that

619
00:30:52,880 --> 00:30:55,000
Speaker 3: was a very extraordinary circumstance, and so.

620
00:30:55,040 --> 00:30:57,520
Speaker 1: Let's just leave that as hard to figure out. But

621
00:30:57,600 --> 00:30:59,880
Speaker 1: it's not hard to figure out. Reagan blew out the budget.

622
00:31:00,280 --> 00:31:02,880
Speaker 1: Bush blew out the budget. Trump blew out the budget.

623
00:31:03,400 --> 00:31:07,600
Speaker 1: There's no argument that Clinton did repair, and very little

624
00:31:07,680 --> 00:31:08,800
Speaker 1: argument Obama.

625
00:31:08,440 --> 00:31:09,520
Speaker 2: Did a lot of budget repair.

626
00:31:09,920 --> 00:31:13,000
Speaker 1: Look, the first thing I want to notice that reverses

627
00:31:13,000 --> 00:31:15,160
Speaker 1: the story that Jessica's parents would have grown up with,

628
00:31:15,360 --> 00:31:18,440
Speaker 1: which there was always this image that Republicans were the

629
00:31:18,440 --> 00:31:21,240
Speaker 1: party of fiscal responsibility. But I do want to acknowledge

630
00:31:21,280 --> 00:31:23,400
Speaker 1: the point that I think Biden looked the other way.

631
00:31:23,440 --> 00:31:25,520
Speaker 1: But let's not argue about Biden. What I want to

632
00:31:25,560 --> 00:31:28,440
Speaker 1: do now, I'm going to turn to violently agreeing with Jessica,

633
00:31:28,560 --> 00:31:32,400
Speaker 1: who's saying there's no constituency here. So what happened in

634
00:31:32,440 --> 00:31:34,840
Speaker 1: the last fifty years of American politics. Here's a very

635
00:31:34,840 --> 00:31:39,640
Speaker 1: simple story. Reagan either believed tax cuts would pay for themselves,

636
00:31:40,760 --> 00:31:45,760
Speaker 1: or that's taking the literal interpretation, turns out they don't.

637
00:31:46,360 --> 00:31:50,040
Speaker 1: Or he said I want to starve the beast. I

638
00:31:50,080 --> 00:31:52,160
Speaker 1: want the government to be small. The best way to

639
00:31:52,200 --> 00:31:54,440
Speaker 1: do that is if there's no money, they can't spend money,

640
00:31:54,640 --> 00:31:55,560
Speaker 1: so he cut taxes.

641
00:31:56,840 --> 00:31:58,880
Speaker 2: Now, George W. Bush did the same thing.

642
00:31:58,920 --> 00:32:01,840
Speaker 1: At this point, we knew that tax cuts don't pay

643
00:32:01,840 --> 00:32:05,600
Speaker 1: for themselves. He went all in on tax cuts again,

644
00:32:07,440 --> 00:32:08,560
Speaker 1: and Trump did the same.

645
00:32:09,600 --> 00:32:10,720
Speaker 2: So what's going on here?

646
00:32:10,880 --> 00:32:12,719
Speaker 1: I think now it's a more political thing, which is,

647
00:32:12,920 --> 00:32:14,840
Speaker 1: there's only so much money. If I the more I

648
00:32:14,920 --> 00:32:17,120
Speaker 1: spend a bit, they're less there's left for the next

649
00:32:17,120 --> 00:32:18,000
Speaker 1: bloke the other side.

650
00:32:19,560 --> 00:32:21,040
Speaker 2: And so Bush, George W.

651
00:32:21,120 --> 00:32:23,840
Speaker 1: Bush spent a lot of money, there's less left for Obama,

652
00:32:24,240 --> 00:32:25,960
Speaker 1: and Trump is spending a whole lot of money, and

653
00:32:25,960 --> 00:32:30,120
Speaker 1: therefore there'll be less left for whoever the next president is.

654
00:32:31,320 --> 00:32:33,800
Speaker 1: If that's the game they're playing, Now, what I want

655
00:32:33,840 --> 00:32:37,560
Speaker 1: to do is imagine a Democratic political strategist calls me

656
00:32:37,600 --> 00:32:40,800
Speaker 1: and says, justin what should the Democratic Party do after

657
00:32:40,840 --> 00:32:44,760
Speaker 1: it next wins the presidency? Yeah, Well, if the answer

658
00:32:44,880 --> 00:32:46,840
Speaker 1: is if we repair the budget, they're going to blow

659
00:32:46,840 --> 00:32:52,479
Speaker 1: it all on the stuff for their guys, then I

660
00:32:52,520 --> 00:32:55,200
Speaker 1: can't good conscience tell a Democrat.

661
00:32:56,160 --> 00:32:58,120
Speaker 2: To be fiscally.

662
00:32:57,760 --> 00:33:00,120
Speaker 1: Responsible because all they're doing is essentially taking money and

663
00:33:00,200 --> 00:33:02,920
Speaker 1: blowing it on, leaving it for the next president to

664
00:33:02,920 --> 00:33:03,200
Speaker 1: blow on.

665
00:33:03,280 --> 00:33:06,240
Speaker 2: Republican priorities, and so this is Jess because.

666
00:33:06,080 --> 00:33:08,560
Speaker 1: Point once you get into this place, we're now both

667
00:33:08,600 --> 00:33:10,560
Speaker 1: trying to spend all the money so the other guys

668
00:33:10,600 --> 00:33:11,520
Speaker 1: can't get hold of it.

669
00:33:12,920 --> 00:33:15,160
Speaker 3: And this is the tragedy of the Commons.

670
00:33:15,400 --> 00:33:19,960
Speaker 2: It is in fact very much budget. Yes, yeah, the Commons.

671
00:33:20,000 --> 00:33:23,680
Speaker 1: Here is our fiscal situation, and both sides are blowing it.

672
00:33:23,840 --> 00:33:27,840
Speaker 1: They're overgrazing their sheep and they're destroying the Commons for

673
00:33:27,880 --> 00:33:31,240
Speaker 1: all of us. So that's why let me just wrap

674
00:33:31,240 --> 00:33:33,280
Speaker 1: this up. The point I think that comes out of

675
00:33:33,280 --> 00:33:35,760
Speaker 1: that is the only way forward is a bipartisan deal,

676
00:33:36,040 --> 00:33:40,400
Speaker 1: which sounds very very two thousand, but I don't see

677
00:33:40,400 --> 00:33:41,640
Speaker 1: any way other way out of that.

678
00:33:42,320 --> 00:33:44,600
Speaker 3: It does seem like it has to be bipartisan. You know.

679
00:33:44,720 --> 00:33:46,240
Speaker 2: The tragedy that comments, how do you solve that?

680
00:33:46,280 --> 00:33:48,840
Speaker 1: You get the very sheep farmers together and you say,

681
00:33:48,840 --> 00:33:51,200
Speaker 1: can we just all agree to let the grass grow

682
00:33:51,240 --> 00:33:51,720
Speaker 1: for a while?

683
00:33:53,000 --> 00:33:55,720
Speaker 2: Speaking of grass? That was a smooth transition.

684
00:33:55,880 --> 00:33:59,760
Speaker 3: Oh my gosh, this is this is like, you know, yeah,

685
00:33:59,760 --> 00:34:00,240
Speaker 3: this is.

686
00:34:00,120 --> 00:34:04,240
Speaker 2: Poetry speaking of grass. Let's get onto the World Cup.

687
00:34:04,800 --> 00:34:05,560
Speaker 2: World Cup.

688
00:34:06,240 --> 00:34:09,960
Speaker 1: First of all, how exciting. There's a genuinely, profoundly global

689
00:34:10,000 --> 00:34:12,480
Speaker 1: event happening, and the world is glued on it. And

690
00:34:12,560 --> 00:34:14,799
Speaker 1: I think that in itself is a metaphor for at

691
00:34:14,880 --> 00:34:16,759
Speaker 1: the very least, how I like to think about the

692
00:34:16,760 --> 00:34:21,480
Speaker 1: global economy. We have a shared humanity, a shared moment,

693
00:34:22,160 --> 00:34:24,440
Speaker 1: and we get better football when we play against other

694
00:34:24,480 --> 00:34:26,400
Speaker 1: teams soccer.

695
00:34:27,440 --> 00:34:31,239
Speaker 2: That's what I said, football. Okay, So.

696
00:34:33,280 --> 00:34:38,480
Speaker 1: Really interesting fact that my friend Florian Eatert noticed so FIFA,

697
00:34:39,200 --> 00:34:43,759
Speaker 1: the International Football Association, which is incredibly not at all

698
00:34:43,840 --> 00:34:49,799
Speaker 1: corrupt and has a long history of fantastic judgment. Wait,

699
00:34:49,840 --> 00:34:53,200
Speaker 1: where was the last World Cup held, Stacey Qatar? Okay,

700
00:34:53,200 --> 00:34:53,920
Speaker 1: the one before that?

701
00:34:55,120 --> 00:34:57,000
Speaker 3: Russia? I believe it is Russia.

702
00:34:57,160 --> 00:35:02,040
Speaker 1: Okay, great, So really believe in freedom. I love that

703
00:35:02,120 --> 00:35:04,520
Speaker 1: about them, and they believe.

704
00:35:04,280 --> 00:35:07,280
Speaker 3: In long been criticized for all kinds of things.

705
00:35:07,680 --> 00:35:10,000
Speaker 2: They believe in peace too. I think they just started

706
00:35:10,040 --> 00:35:11,160
Speaker 2: a peace prize, didn't they.

707
00:35:12,120 --> 00:35:14,360
Speaker 3: They did, Yes, they. I think the first ever fore

708
00:35:14,400 --> 00:35:17,759
Speaker 3: You for Peace prize was given to our president recently

709
00:35:18,280 --> 00:35:18,600
Speaker 3: is that.

710
00:35:18,560 --> 00:35:19,680
Speaker 2: For starting the Iran war.

711
00:35:20,560 --> 00:35:21,319
Speaker 3: This was pre that.

712
00:35:22,000 --> 00:35:27,600
Speaker 1: Oh great, okay, back when we were in favor of it. Okay, great. So, look,

713
00:35:27,640 --> 00:35:30,560
Speaker 1: FIFA has marvelous judgment and it should never be questioned.

714
00:35:31,280 --> 00:35:32,759
Speaker 1: In fact, let me say it the other way. If

715
00:35:32,800 --> 00:35:34,840
Speaker 1: I'm a conservative and I want to talk about multi

716
00:35:35,080 --> 00:35:38,560
Speaker 1: international organizations being corrupt and pointless and unable to organize

717
00:35:38,560 --> 00:35:40,799
Speaker 1: anything remotely, well all I do is spend my all

718
00:35:40,880 --> 00:35:44,239
Speaker 1: days pointing at FIFA. The flip side of this is

719
00:35:44,360 --> 00:35:48,640
Speaker 1: football is a beautiful game, so not even FIFA can

720
00:35:48,680 --> 00:35:50,400
Speaker 1: destroy football.

721
00:35:50,760 --> 00:35:53,040
Speaker 2: They've tried so.

722
00:35:53,160 --> 00:35:55,279
Speaker 1: Every now and then there's a big concert tour and

723
00:35:55,400 --> 00:35:58,920
Speaker 1: how I went to see Taylor Swift and there's this

724
00:35:59,320 --> 00:36:04,080
Speaker 1: they always over they always sell out, And then there's

725
00:36:04,120 --> 00:36:06,440
Speaker 1: a million thin pieces written by economists who say, well,

726
00:36:06,440 --> 00:36:08,400
Speaker 1: the problem is the scalpers are getting rich here. How

727
00:36:08,440 --> 00:36:10,960
Speaker 1: do we prevent the scalpers getting rich? What we need

728
00:36:11,040 --> 00:36:14,719
Speaker 1: is a more complicated pricing mechanism. And if you're an

729
00:36:14,719 --> 00:36:17,879
Speaker 1: economist who works on that sort of area, you get

730
00:36:17,920 --> 00:36:20,759
Speaker 1: paid thousands of dollars to consult and come up with new,

731
00:36:20,800 --> 00:36:24,800
Speaker 1: more marvelous ways of allocating tickets. And so FIFA tried

732
00:36:24,880 --> 00:36:28,640
Speaker 1: that with dynamic pricing, where the price today is not

733
00:36:28,640 --> 00:36:32,480
Speaker 1: the same as the price yesterday. It's unbelievably opaque. And

734
00:36:32,560 --> 00:36:35,440
Speaker 1: here's the funny thing. By the way, they sort of

735
00:36:35,440 --> 00:36:37,719
Speaker 1: act a lot like the sort of organization that would

736
00:36:37,760 --> 00:36:40,800
Speaker 1: think Katara and Russia are great places to do business.

737
00:36:42,239 --> 00:36:44,800
Speaker 2: My friend Florine either. It was on seat Gek.

738
00:36:45,160 --> 00:36:49,919
Speaker 1: Florian's an economist at Boston University, and he noticed seat

739
00:36:49,960 --> 00:36:52,400
Speaker 1: geek is one of these places you can resell your tickets.

740
00:36:52,719 --> 00:36:55,400
Speaker 3: Yes, and look for tickets for things that are technically

741
00:36:55,440 --> 00:37:00,000
Speaker 3: sold out, like tail of Swift concerts and soccer dams.

742
00:37:00,280 --> 00:37:02,600
Speaker 2: Yeah. Absolutely. In fact, I've still got my Taylor Swift

743
00:37:02,600 --> 00:37:05,720
Speaker 2: bracelet right here. It says our.

744
00:37:05,640 --> 00:37:10,120
Speaker 1: Song I'm going to pop that back on nice. What

745
00:37:10,160 --> 00:37:12,399
Speaker 1: would our song be, Stacy. No, I'm going to stay

746
00:37:12,440 --> 00:37:17,000
Speaker 1: on topic while you think about it. So what he

747
00:37:17,120 --> 00:37:20,480
Speaker 1: noticed on seat geek, you know, you'd think, well, maybe

748
00:37:20,480 --> 00:37:22,800
Speaker 1: some family couldn't make the trip or couldn't get a visa,

749
00:37:22,880 --> 00:37:24,720
Speaker 1: so maybe there'll be four seats in a row.

750
00:37:25,680 --> 00:37:28,160
Speaker 2: What he discovered was whole blocks of.

751
00:37:28,080 --> 00:37:32,919
Speaker 1: Seats were being offered. It's literally impossible for a member

752
00:37:32,920 --> 00:37:34,920
Speaker 1: of the public to buy a block of seats to

753
00:37:35,040 --> 00:37:36,319
Speaker 1: resell them on seat Like.

754
00:37:36,360 --> 00:37:39,160
Speaker 3: You could only buy the seats if you bought them

755
00:37:39,200 --> 00:37:41,320
Speaker 3: in book, like thirty seats at a time.

756
00:37:41,600 --> 00:37:43,719
Speaker 2: No, No, I didn't mean to say that, but you know,

757
00:37:43,760 --> 00:37:45,920
Speaker 2: when you click on the stadium view and it shows

758
00:37:45,960 --> 00:37:47,160
Speaker 2: you what seats are available.

759
00:37:47,520 --> 00:37:48,480
Speaker 3: The blue dots.

760
00:37:48,680 --> 00:37:50,560
Speaker 1: Yeah, the blue dots were all next to each other.

761
00:37:51,920 --> 00:37:54,640
Speaker 1: It couldn't be a coincidence that everyone who's just sitting

762
00:37:54,680 --> 00:37:56,120
Speaker 1: in Bay thirty eight is just.

763
00:37:56,080 --> 00:37:57,640
Speaker 2: Like, oh, I can't make the game this week. I'll

764
00:37:57,640 --> 00:37:59,200
Speaker 2: have to go to seat geek. Oh.

765
00:37:59,280 --> 00:38:01,640
Speaker 3: Right, So this means that there are scalpers or bots

766
00:38:01,680 --> 00:38:03,960
Speaker 3: buying a big swaths of tickets and then putting them

767
00:38:04,000 --> 00:38:04,439
Speaker 3: up for sale.

768
00:38:04,760 --> 00:38:06,960
Speaker 2: Worse than that, FIFA.

769
00:38:08,120 --> 00:38:11,760
Speaker 1: Oh, these are tickets that never hit the market.

770
00:38:12,239 --> 00:38:13,280
Speaker 2: So FIFA is over.

771
00:38:13,120 --> 00:38:15,440
Speaker 1: Here on one website saying we want to democratize this.

772
00:38:15,560 --> 00:38:17,560
Speaker 1: Everyone can get access, come and buy seats. There are

773
00:38:17,600 --> 00:38:19,120
Speaker 1: mere two thousand dollars a pop.

774
00:38:20,960 --> 00:38:21,440
Speaker 2: It's telling you.

775
00:38:21,440 --> 00:38:23,560
Speaker 1: Around, that's all it's doing, But it's actually secretly selling

776
00:38:23,600 --> 00:38:24,840
Speaker 1: seats on SeatGeek.

777
00:38:26,360 --> 00:38:32,400
Speaker 3: Suggestin. Yeah, this is definitely not an admirable practice, but

778
00:38:33,440 --> 00:38:35,960
Speaker 3: it seems economically pretty smart.

779
00:38:40,960 --> 00:38:45,560
Speaker 1: This always gets difficult, Yeah, because let me tell you

780
00:38:45,600 --> 00:38:46,120
Speaker 1: something else.

781
00:38:46,400 --> 00:38:50,759
Speaker 2: I look, okay, I'm going to concede in the abstract.

782
00:38:50,920 --> 00:38:52,840
Speaker 3: Are you at war inside of yourself?

783
00:38:53,000 --> 00:38:53,359
Speaker 2: Right? Yeah?

784
00:38:53,880 --> 00:38:56,239
Speaker 1: This is why this is such a difficult issue, because

785
00:38:56,280 --> 00:38:59,680
Speaker 1: it's so funny. Fans are always like, it's outrageous, tickets

786
00:38:59,680 --> 00:39:00,719
Speaker 1: should go to the biggest fan.

787
00:39:01,760 --> 00:39:03,440
Speaker 2: She's a lot of economics here.

788
00:39:04,320 --> 00:39:07,680
Speaker 1: And the tickets all sell out, and then the scalpis

789
00:39:07,760 --> 00:39:10,600
Speaker 1: make a bunch of money, and then the economists like, oh,

790
00:39:10,640 --> 00:39:12,799
Speaker 1: that's not an optimal making this, because what happens is

791
00:39:13,160 --> 00:39:14,960
Speaker 1: scalpus realize they can make a lot of money by

792
00:39:14,960 --> 00:39:17,200
Speaker 1: lining up early or programming bots and all the grubby

793
00:39:17,200 --> 00:39:18,360
Speaker 1: things scalpers.

794
00:39:17,920 --> 00:39:20,600
Speaker 2: Do, and so they then resell the tickets.

795
00:39:20,640 --> 00:39:23,920
Speaker 1: They do resell them to fans, right, who's buying from

796
00:39:23,960 --> 00:39:24,840
Speaker 1: the scalpers fans?

797
00:39:26,160 --> 00:39:30,719
Speaker 2: So at some level the fans are getting in the stadium, and.

798
00:39:30,680 --> 00:39:33,879
Speaker 3: The biggest fans are willing to pay the most ostensibly,

799
00:39:34,480 --> 00:39:40,080
Speaker 3: And so then this is classic, isn't this elastic demand?

800
00:39:40,080 --> 00:39:42,960
Speaker 3: Where it's like the ones who really want to go

801
00:39:43,040 --> 00:39:45,719
Speaker 3: see Taylor Swift, they will make the sacrifice and pay

802
00:39:45,719 --> 00:39:47,440
Speaker 3: a lot, whereas the ones who are like, that'd be

803
00:39:47,520 --> 00:39:50,280
Speaker 3: nice to go aren't going to pay the higher prices,

804
00:39:50,320 --> 00:39:52,480
Speaker 3: and so they go away. This seems like the free

805
00:39:52,520 --> 00:39:54,040
Speaker 3: market making beautiful music.

806
00:39:54,800 --> 00:39:57,600
Speaker 2: Well not quite so.

807
00:39:57,760 --> 00:40:03,359
Speaker 1: When I teach economics, I call this the Kim Kardashian problem.

808
00:40:03,960 --> 00:40:05,440
Speaker 2: I'm atriatt yes.

809
00:40:05,800 --> 00:40:09,160
Speaker 1: So look, the idea is, if the intensity of our fandom,

810
00:40:09,520 --> 00:40:12,400
Speaker 1: if you love Taylor Swift twice as much as I

811
00:40:12,440 --> 00:40:15,000
Speaker 1: do and we have the same incomes, you might be

812
00:40:15,000 --> 00:40:16,520
Speaker 1: willing to pay three hundred dollars for a ticket, and

813
00:40:16,560 --> 00:40:18,920
Speaker 1: I'm only willing to pay one hundred and fifty. And

814
00:40:18,960 --> 00:40:23,000
Speaker 1: so therefore, if the ticket is priced below three hundred

815
00:40:23,000 --> 00:40:24,400
Speaker 1: and above one hundred and fifty or go to you

816
00:40:24,480 --> 00:40:27,160
Speaker 1: instead of me, therefore it goes to the superfan, and

817
00:40:27,160 --> 00:40:27,680
Speaker 1: that's good.

818
00:40:28,080 --> 00:40:28,279
Speaker 2: Right.

819
00:40:28,680 --> 00:40:30,480
Speaker 1: So there this is the idea that price is a

820
00:40:30,520 --> 00:40:32,799
Speaker 1: signal of your willingness to pay, and your willingness to

821
00:40:32,840 --> 00:40:35,880
Speaker 1: pay is related to how much you love Taylor Swift.

822
00:40:36,320 --> 00:40:39,440
Speaker 2: Right, here's the problem.

823
00:40:39,800 --> 00:40:42,520
Speaker 1: Your willingess to pay for a Tailor Swift concert, or

824
00:40:42,560 --> 00:40:45,000
Speaker 1: for World Cup tickets what we're talking about today, maybe

825
00:40:45,040 --> 00:40:47,080
Speaker 1: a lot higher, not because in fact we know.

826
00:40:47,040 --> 00:40:47,640
Speaker 2: It's like this.

827
00:40:48,120 --> 00:40:49,520
Speaker 1: You're willing is to pay a lot more for a

828
00:40:49,520 --> 00:40:51,040
Speaker 1: World Cup ticket, maybe a lot higher.

829
00:40:50,920 --> 00:40:53,479
Speaker 2: Not because you love football, but because you're rich.

830
00:40:55,600 --> 00:40:57,880
Speaker 1: And so if we allow fee for to charge very

831
00:40:57,960 --> 00:41:00,240
Speaker 1: very high prices, you're going to get the ticket because

832
00:41:00,239 --> 00:41:02,319
Speaker 1: you like football, but because you're rich, and I the

833
00:41:02,360 --> 00:41:06,480
Speaker 1: true fan, I'm going to miss out. And so the

834
00:41:06,520 --> 00:41:11,080
Speaker 1: problem here is that someone's willingness to pay is a

835
00:41:11,120 --> 00:41:14,359
Speaker 1: function both of how much they love the event how

836
00:41:14,440 --> 00:41:16,359
Speaker 1: much joy they get from it. We can use words

837
00:41:16,400 --> 00:41:20,799
Speaker 1: like utility here if you want, and their ability to pay.

838
00:41:20,880 --> 00:41:23,160
Speaker 1: And the thing is, when we use prices to allocate,

839
00:41:23,880 --> 00:41:26,480
Speaker 1: that means partly we're allocating on how much people love it,

840
00:41:26,600 --> 00:41:28,919
Speaker 1: and partly we're allocating on just how rich they happen

841
00:41:29,000 --> 00:41:34,200
Speaker 1: to be. And so very high prices, if we all

842
00:41:34,239 --> 00:41:37,040
Speaker 1: had the same incomes, very high prices would be a

843
00:41:37,040 --> 00:41:38,960
Speaker 1: great way of making sure only the super fans got

844
00:41:38,960 --> 00:41:42,680
Speaker 1: in the stadium. In reality, very high prices are making

845
00:41:42,719 --> 00:41:44,640
Speaker 1: sure that rich folks get in and poor folks are

846
00:41:44,719 --> 00:41:45,200
Speaker 1: left out.

847
00:41:45,920 --> 00:41:48,000
Speaker 2: And in fact, you can see this directly watching the

848
00:41:48,040 --> 00:41:48,799
Speaker 2: World Cup right now.

849
00:41:48,840 --> 00:41:50,080
Speaker 1: If you look at a lot of the seats right

850
00:41:50,120 --> 00:41:53,480
Speaker 1: on the halfway line, those are the seats brought by corporates,

851
00:41:54,000 --> 00:41:56,680
Speaker 1: and the corporates are inside having a lovely glass of

852
00:41:56,719 --> 00:42:01,279
Speaker 1: wine and a cannot pay, and they don't care about

853
00:42:01,280 --> 00:42:05,719
Speaker 1: football at all, And honestly, that makes me kind of sad. Now,

854
00:42:05,840 --> 00:42:08,120
Speaker 1: this version of the problem, I call it the Kim

855
00:42:08,160 --> 00:42:11,400
Speaker 1: Kardashian problem, because the way I tell the story is

856
00:42:11,560 --> 00:42:14,400
Speaker 1: often Kim Kardashian will outbid you for things, not because

857
00:42:14,400 --> 00:42:16,960
Speaker 1: she's more passionate about the world, but because she's rich.

858
00:42:17,040 --> 00:42:21,000
Speaker 1: That's why it's called the Kim Kardashian problem. This problem

859
00:42:21,040 --> 00:42:22,480
Speaker 1: with the world, it's not just a problem about the

860
00:42:22,480 --> 00:42:25,880
Speaker 1: World Cup. It's actually a problem fundamental to capitalism.

861
00:42:26,200 --> 00:42:26,399
Speaker 2: Right.

862
00:42:26,440 --> 00:42:31,640
Speaker 1: We use prices to decide who gets what, and when

863
00:42:31,640 --> 00:42:34,759
Speaker 1: economists talk about prices as being magical, it's because they

864
00:42:35,400 --> 00:42:39,320
Speaker 1: because the ticket goes to the super fan, not the wannabe.

865
00:42:40,840 --> 00:42:44,760
Speaker 1: But yeah, too often that's not what happens in reality.

866
00:42:44,960 --> 00:42:48,440
Speaker 3: So I'm going to get so much hate from the

867
00:42:48,480 --> 00:42:52,360
Speaker 3: plata pi, but I'm just going to go here. Yeah,

868
00:42:52,640 --> 00:42:59,280
Speaker 3: I feel like in the case of concerts or games,

869
00:43:00,600 --> 00:43:03,160
Speaker 3: this isn't not the worst thing, Like it is a

870
00:43:03,239 --> 00:43:06,360
Speaker 3: soccer game. I'm gonna get so much hate mail, but

871
00:43:06,400 --> 00:43:09,279
Speaker 3: I'm just gonna keep going. You know, there's not like

872
00:43:09,440 --> 00:43:12,520
Speaker 3: harm done. Everybody can still see the game. They can

873
00:43:12,560 --> 00:43:14,160
Speaker 3: see it at their local bar, they can watch it

874
00:43:14,200 --> 00:43:20,799
Speaker 3: on TV. It's still seeable. FIFA is not harming anybody.

875
00:43:21,000 --> 00:43:23,440
Speaker 3: Is this like the most admirable practice. No, is it

876
00:43:23,520 --> 00:43:25,879
Speaker 3: kind of sad that the biggest fans don't get to go.

877
00:43:26,200 --> 00:43:30,239
Speaker 3: It's a little sad, But I don't put like this

878
00:43:30,320 --> 00:43:34,560
Speaker 3: isn't food, this isn't healthcare. This feels like a discretionary

879
00:43:34,600 --> 00:43:39,879
Speaker 3: activity that's fun to go to. But if you don't

880
00:43:39,920 --> 00:43:43,120
Speaker 3: have whatever it is that, I think it's like thousands

881
00:43:43,200 --> 00:43:45,279
Speaker 3: and tens of thousands of dollars to sit on the

882
00:43:45,280 --> 00:43:47,720
Speaker 3: fifty yard line and instead you go in and watch

883
00:43:47,760 --> 00:43:50,680
Speaker 3: it down the street at the bar like that seems okay.

884
00:43:51,760 --> 00:43:53,399
Speaker 1: I just want to stay you sugny. First of all,

885
00:43:53,520 --> 00:43:56,799
Speaker 1: I love how American you are. Soccer does not have

886
00:43:56,840 --> 00:43:58,120
Speaker 1: a fifty yard line.

887
00:43:58,840 --> 00:44:02,680
Speaker 2: The rest of the world doesn't even talking yards. It

888
00:44:02,719 --> 00:44:04,000
Speaker 2: has a halfway line.

889
00:44:04,560 --> 00:44:07,560
Speaker 3: The rest of the world. Oh okay, And then who.

890
00:44:07,520 --> 00:44:10,799
Speaker 2: Pairs who gets to see a soccer game? This is football?

891
00:44:11,960 --> 00:44:14,000
Speaker 3: Okay? Sorry, but you know it's not.

892
00:44:15,040 --> 00:44:16,520
Speaker 1: Do you know who you sound like right now? And

893
00:44:16,560 --> 00:44:18,680
Speaker 1: I just want to know someone else made this exact

894
00:44:18,840 --> 00:44:23,400
Speaker 1: argument this week who they were talking about a different sport.

895
00:44:23,719 --> 00:44:25,160
Speaker 1: They were talking about the Knicks.

896
00:44:26,239 --> 00:44:28,759
Speaker 3: Yeah, do you know what your nuts?

897
00:44:30,400 --> 00:44:32,120
Speaker 2: No, our president.

898
00:44:33,400 --> 00:44:35,200
Speaker 1: Said, it's not a big deal that other people can't

899
00:44:35,239 --> 00:44:37,040
Speaker 1: get in that it costs ten thousand dollars to get

900
00:44:37,040 --> 00:44:39,680
Speaker 1: a ticket because you can see it on TV. And

901
00:44:39,719 --> 00:44:45,640
Speaker 1: that's all just the same. Okay, I am going to make.

902
00:44:45,800 --> 00:44:48,359
Speaker 3: You a halfway me me at the fifty yard line.

903
00:44:48,440 --> 00:44:52,480
Speaker 2: Yes, oh wow, that hurt.

904
00:44:55,040 --> 00:44:58,400
Speaker 3: The halfway line. Really, that's what you guys call it.

905
00:44:58,400 --> 00:44:59,240
Speaker 2: It's in the middle.

906
00:45:01,000 --> 00:45:03,480
Speaker 3: Okay, okay, yes, anyway, tell me.

907
00:45:06,360 --> 00:45:10,400
Speaker 1: I'm going to accept this is not food. Although I

908
00:45:10,440 --> 00:45:11,920
Speaker 1: do want to point out to you lots of people

909
00:45:12,080 --> 00:45:15,400
Speaker 1: give up food in order to afford their World Cup ticket,

910
00:45:15,600 --> 00:45:19,000
Speaker 1: so to them it is actually is important. But what

911
00:45:19,120 --> 00:45:21,040
Speaker 1: I really want you to do. Look, I don't really

912
00:45:21,080 --> 00:45:22,840
Speaker 1: want to riff on the world. I don't want to

913
00:45:22,960 --> 00:45:26,720
Speaker 1: rip on Kim Kardashian, Taylor Swift or the World Cup.

914
00:45:26,840 --> 00:45:29,359
Speaker 1: I wanted to point out a deep tension in how

915
00:45:29,400 --> 00:45:31,680
Speaker 1: we talk about markets. You said, oh, it doesn't matter

916
00:45:31,680 --> 00:45:34,080
Speaker 1: who does or doesn't get in. That's the whole game.

917
00:45:34,120 --> 00:45:39,000
Speaker 1: To an economist, that's all of economics. Economics is the

918
00:45:39,040 --> 00:45:40,800
Speaker 1: world has scarce resources.

919
00:45:41,200 --> 00:45:42,880
Speaker 2: How do we get the most out of them? And

920
00:45:42,920 --> 00:45:44,919
Speaker 2: so when you said you don't care who gets into

921
00:45:44,920 --> 00:45:46,120
Speaker 2: the stadium, you.

922
00:45:46,239 --> 00:45:50,160
Speaker 1: Tore my heart out. That's my life's work. That's what

923
00:45:50,239 --> 00:45:51,320
Speaker 1: my tribe does.

924
00:45:52,880 --> 00:45:57,960
Speaker 3: And what if it's like affording an emerald tiara? And

925
00:45:58,000 --> 00:46:00,279
Speaker 3: it's like, well, what if the person who really once

926
00:46:00,320 --> 00:46:04,120
Speaker 3: the emerald tiara is not earning enough to buy the

927
00:46:04,160 --> 00:46:08,560
Speaker 3: emerald tiara? Like there are just that's not I mean

928
00:46:08,680 --> 00:46:11,160
Speaker 3: food and healthcare. That seems like it's in a different

929
00:46:11,160 --> 00:46:13,520
Speaker 3: category to me, and that does seem like a ripping

930
00:46:13,560 --> 00:46:16,200
Speaker 3: your heart out issue. But this is different than that.

931
00:46:16,440 --> 00:46:20,759
Speaker 1: I mean, Okay, I don't see, and I get so

932
00:46:20,840 --> 00:46:23,440
Speaker 1: much trouble with the economics profession for the following, Well.

933
00:46:23,280 --> 00:46:25,000
Speaker 3: All the sports fans are going to come after me,

934
00:46:25,160 --> 00:46:27,360
Speaker 3: so I'm like super canceled.

935
00:46:27,400 --> 00:46:30,959
Speaker 1: We've got two ways of allocating World Cup tickets. One

936
00:46:31,080 --> 00:46:33,640
Speaker 1: is you're going to run an auction where every ticket

937
00:46:33,680 --> 00:46:35,960
Speaker 1: goes to the highest bidder, and you'll be sitting there

938
00:46:35,960 --> 00:46:38,560
Speaker 1: next to Richie rich and that's fine. None of them

939
00:46:38,600 --> 00:46:40,279
Speaker 1: know what the rules are and they'll be wondering where

940
00:46:40,280 --> 00:46:43,359
Speaker 1: the fifty yard line is the problem there is.

941
00:46:43,400 --> 00:46:45,200
Speaker 3: A lot of assumptions about.

942
00:46:44,960 --> 00:46:46,000
Speaker 2: Okay, there are a few in there.

943
00:46:46,040 --> 00:46:50,000
Speaker 1: There are a few, But just to point out, economists

944
00:46:50,040 --> 00:46:52,919
Speaker 1: often talk about prices as being efficient. They're efficient because

945
00:46:52,960 --> 00:46:55,680
Speaker 1: they allocate according to those who are willing to pay

946
00:46:55,680 --> 00:46:58,520
Speaker 1: the most dollars for a ticket. Partly that's because they're

947
00:46:58,520 --> 00:47:00,200
Speaker 1: more passionate, but partly it's because they're rich.

948
00:47:00,600 --> 00:47:01,600
Speaker 2: Here's a different approach.

949
00:47:02,040 --> 00:47:05,360
Speaker 1: We could make all World Cup tickets forty dollars, but

950
00:47:05,400 --> 00:47:08,040
Speaker 1: there has to be a line, and so you have

951
00:47:08,080 --> 00:47:11,719
Speaker 1: to camp out like it was a duke basketball game. Now,

952
00:47:11,800 --> 00:47:15,720
Speaker 1: think about who's going to camp out. Definitely the super fans.

953
00:47:16,840 --> 00:47:18,520
Speaker 1: And so then I want to ask you which of

954
00:47:18,560 --> 00:47:21,600
Speaker 1: these two mechanisms makes the world a better place. Now Here,

955
00:47:21,840 --> 00:47:24,520
Speaker 1: I'm going to give you your counter argument.

956
00:47:25,560 --> 00:47:26,880
Speaker 2: Oh, it's totally clear.

957
00:47:27,000 --> 00:47:29,440
Speaker 1: If we have people camp out, the people who love

958
00:47:29,480 --> 00:47:31,719
Speaker 1: the game the most are going to get in. The

959
00:47:31,760 --> 00:47:33,839
Speaker 1: counter argument, of course, is they've had to camp out

960
00:47:33,840 --> 00:47:37,280
Speaker 1: for three days, and that's a waste of life.

961
00:47:37,760 --> 00:47:39,600
Speaker 3: It's a way you can't afford to do that.

962
00:47:41,120 --> 00:47:43,080
Speaker 2: We all have three days in our lives.

963
00:47:43,760 --> 00:47:46,080
Speaker 3: Yeah, but if you're like living pcheck to pcheck, you

964
00:47:46,120 --> 00:47:47,520
Speaker 3: might not be able to take time off work.

965
00:47:47,920 --> 00:47:50,000
Speaker 2: Absolutely sure, yeah. Sure.

966
00:47:50,320 --> 00:47:52,840
Speaker 1: To be clear, what we've just described is using queueing

967
00:47:52,880 --> 00:47:56,919
Speaker 1: as an allocation mechanism rather than prices. And we often

968
00:47:56,960 --> 00:47:59,960
Speaker 1: talk about queuing as being a very bad allocation mechanism,

969
00:48:00,560 --> 00:48:02,880
Speaker 1: and it's mostly is because you're wasting your life in line.

970
00:48:03,760 --> 00:48:06,160
Speaker 1: I was just pointing out that's not always in everywhere true.

971
00:48:06,160 --> 00:48:07,799
Speaker 1: I mean, you are wasting your time in line. But

972
00:48:07,840 --> 00:48:09,839
Speaker 1: on the flip side, we're letting the right people into

973
00:48:09,880 --> 00:48:13,160
Speaker 1: the stadium. So who knew the World Cup was actually

974
00:48:13,239 --> 00:48:16,319
Speaker 1: a metaphor for systems of organized and so that, by

975
00:48:16,360 --> 00:48:19,080
Speaker 1: the way, is why you're willing to allocate healthcare with

976
00:48:19,120 --> 00:48:23,000
Speaker 1: a different system. We allocate healthcare largely by I know

977
00:48:23,040 --> 00:48:26,759
Speaker 1: it's not officially called queing. You've got to call your

978
00:48:26,920 --> 00:48:29,160
Speaker 1: insurance company and yell at them for hours at a time,

979
00:48:29,160 --> 00:48:30,640
Speaker 1: and if you yell at them long enough then you're

980
00:48:30,640 --> 00:48:33,919
Speaker 1: allowed to get the operation. So that's a lot more

981
00:48:34,160 --> 00:48:38,600
Speaker 1: like queueing up to get into the World Cup. Now,

982
00:48:38,600 --> 00:48:40,680
Speaker 1: we don't like it because no one likes to spend

983
00:48:40,680 --> 00:48:43,000
Speaker 1: their life on the phone yelling at their insurance company.

984
00:48:44,560 --> 00:48:49,520
Speaker 3: Can I offer a counter example, yeah, mate. So here

985
00:48:49,520 --> 00:48:55,160
Speaker 3: in New York, Shakespeare in the Park has very cheap tickets. Yeah,

986
00:48:55,280 --> 00:48:58,240
Speaker 3: you cannot pay more. I think it's like fifty bucks

987
00:48:58,239 --> 00:49:01,359
Speaker 3: for a ticket. And the US actors that come in

988
00:49:01,440 --> 00:49:03,640
Speaker 3: and it is spectacular and you have to get in

989
00:49:03,719 --> 00:49:07,239
Speaker 3: line and wait. There's a lottery system, but then there's

990
00:49:07,239 --> 00:49:09,000
Speaker 3: also they release a certain amount of tickets stay up

991
00:49:09,000 --> 00:49:10,160
Speaker 3: and you have to get in line and wait and

992
00:49:10,239 --> 00:49:15,239
Speaker 3: guess what has happened? Oh, what your economists brain to this?

993
00:49:15,480 --> 00:49:16,680
Speaker 3: Like what has happened?

994
00:49:17,040 --> 00:49:18,960
Speaker 1: A lot of first dates where they bring a lot

995
00:49:18,960 --> 00:49:21,040
Speaker 1: of sharden I and have no interest in the bard.

996
00:49:22,160 --> 00:49:25,080
Speaker 3: No, there are people who will wait in line for you.

997
00:49:26,880 --> 00:49:30,759
Speaker 3: There are task rabbits or like people hire people to

998
00:49:30,840 --> 00:49:36,120
Speaker 3: stand in line with them and outsource that. So yes,

999
00:49:36,560 --> 00:49:40,200
Speaker 3: even the sacred line, even the beautiful law of the line,

1000
00:49:40,280 --> 00:49:45,720
Speaker 3: can sometimes get capital capitalismed Stacy.

1001
00:49:45,719 --> 00:49:48,719
Speaker 1: That seems like the perfect place to end this, because

1002
00:49:48,719 --> 00:49:50,319
Speaker 1: I would like to think where the sort of high

1003
00:49:50,320 --> 00:49:54,080
Speaker 1: falutant show that gets at least one Shakespeare reference and

1004
00:49:54,200 --> 00:49:56,480
Speaker 1: leaves all of us feeling a little smarter.

1005
00:49:56,760 --> 00:49:59,120
Speaker 2: So this has been off the clock.

1006
00:49:59,520 --> 00:50:03,200
Speaker 1: This is the Economics podcast in which we slow down,

1007
00:50:03,280 --> 00:50:05,960
Speaker 1: review the week that was, and try to sort out

1008
00:50:06,120 --> 00:50:07,560
Speaker 1: what really mattered.

1009
00:50:07,640 --> 00:50:08,480
Speaker 2: Now we're going to.

1010
00:50:08,480 --> 00:50:11,200
Speaker 1: Take two weeks off because Stacy and I are both traveling,

1011
00:50:11,200 --> 00:50:12,560
Speaker 1: but we're going to be back in time for the

1012
00:50:12,600 --> 00:50:14,640
Speaker 1: fourth of July. And you've got to bet there's going

1013
00:50:14,719 --> 00:50:17,719
Speaker 1: to be economic fireworks. See what I just did there

1014
00:50:18,400 --> 00:50:21,919
Speaker 1: roundabout then, So in the meantime, let me just say

1015
00:50:21,920 --> 00:50:24,120
Speaker 1: this is to show that only works if.

1016
00:50:24,040 --> 00:50:26,200
Speaker 2: We find an audience. So if you've enjoyed it, what

1017
00:50:26,280 --> 00:50:27,000
Speaker 2: I want you to do.

1018
00:50:26,960 --> 00:50:28,799
Speaker 1: Is find a mate and say, hey, why don't you

1019
00:50:29,160 --> 00:50:32,000
Speaker 1: take a look at off the clock platypus economics is

1020
00:50:32,040 --> 00:50:35,920
Speaker 1: making me a little smarter, it's helping me navigate the

1021
00:50:35,920 --> 00:50:38,240
Speaker 1: world a little better, and hopefully it makes you feel

1022
00:50:38,239 --> 00:50:42,600
Speaker 1: better about the week ahead. And so this week Stacey

1023
00:50:42,640 --> 00:50:45,120
Speaker 1: and I am going to keep watching the economics news,

1024
00:50:45,360 --> 00:50:56,920
Speaker 1: will report back and in the meantime, stay curious.