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Speaker 1: Bloomberg Audio Studios, Podcasts, Radio News.

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Speaker 2: Hello and welcome to another episode of the Odd Lots podcast.

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Speaker 3: I'm Joe Wisenthal and I'm Tracy Alloway.

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Speaker 2: Tracy, it's January twenty eighth. I think our new mayor

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Speaker 2: here in New York City. Maybe he hasn't done much,

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Speaker 2: but the snowstorm seemed to go fairly well, not too

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Speaker 2: many big disruptions.

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Speaker 3: I wasn't here, but you were able to walk around,

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Speaker 3: get out of your apartment.

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Speaker 2: There have been several mayors who's like entire reputation failed

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Speaker 2: because they couldn't handle a snowstorm, and so he seems

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Speaker 2: to have passed the first test.

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Speaker 3: So it feels like a low bar for New York mayors.

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Speaker 2: I gotta say, my guess is, if we looked at

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Speaker 2: I agree it is a low bar. But on the

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Speaker 2: other hand, it's like, Okay, first big test of the

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Speaker 2: new administration seems to be doing well. I don't think however,

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Speaker 2: ultimately the Zarnmumdan the administration will be judged on snow removal,

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Speaker 2: like this is not going to be how history probably

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Speaker 2: remembers how well.

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Speaker 3: No, and he certainly wasn't elected on his snow removal.

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Speaker 2: No, no, this is capabilities.

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Speaker 3: Although I did see the videos of him, you know,

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Speaker 3: getting his shovel out, and.

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Speaker 2: He's so good at like retail politics like that was like, say,

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Speaker 2: he's so good at that.

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Speaker 4: Yeah.

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Speaker 3: But speaking of tests, I mean there are bigger tests

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Speaker 3: coming up, right, mostly concentrated in the economic policies heah.

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Speaker 2: Right, I think we know, like sort of and of

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Speaker 2: course we talked to him, but like the affordability question

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Speaker 2: in New York City clearly central one of the if

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Speaker 2: the most central topic in the campaign. And what I

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Speaker 2: would say is that the very most, not all of them,

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Speaker 2: but at least a handful of the ideas that he's

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Speaker 2: proposed are the types of ideas that like, economists hate them, right, So,

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Speaker 2: especially anything where the government is intervening in rent, the

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Speaker 2: idea of Like I there might not be a more

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Speaker 2: hated idea among economists than anything that smacks rent control

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Speaker 2: or anything like that.

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Speaker 4: Right.

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Speaker 3: So, I am not very knowledgeable when it comes to

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Speaker 3: actual economic theory and how it's developed over time. But

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Speaker 3: one thing I do know is that you know, the

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Speaker 3: sort of forerunner or ancestor of a lot of traditional

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Speaker 3: economic theory that we see today, like neoclassical economic theory

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Speaker 3: Adam Smith, right, talking about like the freehand of the

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Speaker 3: market and how if the market is functioning, like everything

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Speaker 3: should be fine, right, Yeah, And.

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Speaker 2: I think like economists, even like you know, almost all

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Speaker 2: but the most sort of true hardcore lais a fair

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Speaker 2: economists would say that there are areas that you know,

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Speaker 2: they call it market failure, right right, there are certain

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Speaker 2: situations in which maybe we can't expect markets to do

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Speaker 2: the job. Maybe they'd say, like, oh, it really doesn't

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Speaker 2: make sense. They have like private fire departments for example,

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Speaker 2: although some people actually do propose private fire departments. But yeah,

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Speaker 2: you know, even the most sort of like true believers,

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Speaker 2: a sort of liberal or neoclassical economics, they're like, oh, yeah,

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Speaker 2: well there are market.

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Speaker 3: Failure, is right, in which case the government should see then.

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Speaker 2: There's a role, but only in failure that unless you

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Speaker 2: like define some areas like okay, there's a reason why

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Speaker 2: markets don't work for this particular area, but that after

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Speaker 2: then sandboxing a few of those things, then it's like, okay,

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Speaker 2: as much as possible, you just want.

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Speaker 3: To you all about don't interfere.

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Speaker 2: Let the price signals do their work.

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Speaker 3: Yeah, so this has become I guess the orthodoxy, and

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Speaker 3: Mamdani is very much in the the heterodox. The heterodox. Yeah,

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Speaker 3: that's a word that always comes up when people are

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Speaker 3: talking about well, when economists start talking about policies that

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Speaker 3: they don't like.

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Speaker 2: That's that's right. It's a euphemism for policies that they

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Speaker 2: they're like, ohtho, at least a handful of people wear

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Speaker 2: that bad shortly. But like these history, how do they

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Speaker 2: become the orthodoxy, et cetera. Right, like, it's not the

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Speaker 2: law of gravity or that the Earth is round, and

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Speaker 2: which are orthodox ideas for a good reason. There are

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Speaker 2: some people who don't believe that the Earth is round,

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Speaker 2: but they're like, I think we is pretty good. We

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Speaker 2: have good reason to believe it.

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Speaker 4: And they are the.

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Speaker 2: People who don't believe that the round. They're not heterodox.

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Speaker 2: They're cranks, right, right, Like that's like they're sort of

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Speaker 2: a difference. Those are cranks. And so, but where do

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Speaker 2: these orthodoxies emerge from? How did some ideas get shunted

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Speaker 2: into the category of heterodoxy or whatever.

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Speaker 3: And how did they evolve?

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Speaker 2: I have no idea, Like, I mean, I've read a

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Speaker 2: little bit about the past, but this is not much.

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Speaker 2: I don't know much about this.

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Speaker 3: We should talk about it.

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Speaker 2: We should, especially because our new mayor may in fact

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Speaker 2: pursue some heterodox ideas about economic management. Anyway, I'm very

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Speaker 2: excited to say, we really do have the perfect guest.

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Speaker 2: We're going to be speaking with, Jommy Modude. He is

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Speaker 2: a professor of economics at Sarah Lawrence College, also a

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Speaker 2: board member of the Law and Political Economy Collective, and

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Speaker 2: he's written a lot about these topics, including sort of

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Speaker 2: the intellectual history of some of these economic ideas. So, Jommy,

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Speaker 2: thank you so much for coming on.

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Speaker 4: Ou thank you so much. Joe and Tracy, what kind

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Speaker 4: of stuff.

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Speaker 2: You're teaching the kids at Sarah Lawrence these days?

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Speaker 4: So the interesting thing is I teach Introduction to Economic

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Speaker 4: Theory and Policy, which is a year long lecture and

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Speaker 4: that actually deals with some of these central questions markets, money,

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Speaker 4: the monetary system, and so on. And I actually teach econometrics.

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Speaker 2: When you say actually, it's because like people don't expect

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Speaker 2: this sort of unorthodox thinker to like actually do the numbers,

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Speaker 2: the technical stuff.

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Speaker 4: So it's interesting that you posted it that way because

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Speaker 4: one of the things that I do teach in econometrics

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Speaker 4: is method, like you know, like when you're it's not

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Speaker 4: just about number crunching, but where do you get the

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Speaker 4: numbers from? Yeah, and so like weaving in these questions

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Speaker 4: of method as we're trying to understand social and economic

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Speaker 4: reality is it makes for a solid training in economics.

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Speaker 4: And you know, so those questions of method woven into

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Speaker 4: the construction of theory, Yeah, that kind of informs the

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Speaker 4: way I teach. And why that matters, not just as

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Speaker 4: kind of a an inn ellectual exercise, but why that

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Speaker 4: matters for practical issues like what you guys were talking about.

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Speaker 3: So truly the perfect guests. Maybe just to begin with,

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Speaker 3: we could perhaps define our terms a little bit. You know,

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Speaker 3: Joe and I gave a properly terrible summary of neoclassical

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Speaker 3: economic thought. But in your mind, what is the orthodoxy?

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Speaker 4: So the orthodoxy is neoclassical economics. It comes from an

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Speaker 4: intellectual tradition, which so if I may differ a little

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Speaker 4: bit with what you say, Smith, Adam Smith is not

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Speaker 4: the forerunner of neoclassical economics. The expression invisible hand in

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Speaker 4: but I have my students do this experiment every time

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Speaker 4: because it's an eight hundred page book The Wealth of Nations.

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Speaker 4: How many times does the expression invisible hand appear there? Once?

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Speaker 4: So the point here is that there was an older

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Speaker 4: idea of what markets and of capitalism are and that

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Speaker 4: gets revived again in the nineteen twenties and thirties, and

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Speaker 4: I'll talk about that later. But that older idea, which

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Speaker 4: is called classical political economy, did not make any assumptions

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Speaker 4: about human behavior, that human beings are inherently rational, that

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Speaker 4: markets behave in this optimal manner full employment. That would

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Speaker 4: be neoclassical economics, right, that knowledge is more or less perfect.

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Speaker 4: There was none of that you're.

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Speaker 2: Talking about in the classical economics prior to neoclassical exactly

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Speaker 2: talk what years and what thinkers are we talking about?

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Speaker 4: So we could just talk about Adam Smith, Okay, yeah, great,

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Speaker 4: to some extent, David Ricardo or Karl Marx, the physiocrats.

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Speaker 4: I mean, so you had a range of authors in

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Speaker 4: a wide range, ideologically not necessarily on the same page,

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Speaker 4: but they had a vision of capitalism, which so the

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Speaker 4: original name of economics was political economy, and that meant

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Speaker 4: that you cannot really talk about economic questions without thinking

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Speaker 4: simultaneously about and many of these folks were actually trained

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Speaker 4: in law, So the question of law's role in structuring

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Speaker 4: the economy this kind of lurks in that intellectual tradition,

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Speaker 4: and one of the implications was that the economy is

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Speaker 4: not some natural transhistorical institution or thing, but it is

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Speaker 4: profoundly a product of history. And I think that's where

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Speaker 4: the big split arises, because if you teach or if

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Speaker 4: you study neoclassical economics, it is taught in a way

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Speaker 4: by which the economy is treated as something eternal, as

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Speaker 4: something almost in naturalistic terms, and therefore, like gravity, the

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Speaker 4: economy is always there exactly. But also like the rational

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Speaker 4: individual general equilibrium theory, all of these things are supposedly

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Speaker 4: just happen. And in that sense, this idea of lesser

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Speaker 4: affair that the economy is fundamentally pre political, that it

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Speaker 4: arises before politics, rather like the kernel of a walnut,

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Speaker 4: in which the walnut, which is the shell is if

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Speaker 4: you think is constitutional law or politics or law that

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Speaker 4: emanates from politics, that would encase this thing called the economy.

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Speaker 4: And only under extreme search of this new classical economics,

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Speaker 4: if there is quote unquote market failure, then the state

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Speaker 4: can step in a little bit to do this that

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Speaker 4: or the other, but fundamentally leave the market B. And

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Speaker 4: you're familiar with this argument. This idea is not really

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Speaker 4: there in Smith. And one of the things that people

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Speaker 4: sometimes get surprised about, and I always tell this to

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Speaker 4: my students is read his chapter on wages in the

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Speaker 4: Wealth of Nations, and he says very clearly that there

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Speaker 4: is a difference in power between those who own property

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Speaker 4: and workers who don't own property. So this idea that

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Speaker 4: the market is sort of this place where equals me

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Speaker 4: to create contracts that was not in Smith. It was

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Speaker 4: not in Ricardo. And of course you know that was

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Speaker 4: not there. But people if you evoke marks, then people

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Speaker 4: often say, well, you talk about socialism, Well Smith was

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Speaker 4: not a socialist.

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Speaker 2: What is his idea? Like, what was his contribution? Or

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Speaker 2: I admit, like I'm like guilty too. It's like, oh,

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Speaker 2: Adam Smith, the visible hand, right, the butcher. But I

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Speaker 2: have been told and I have heard that the sort

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Speaker 2: of caricature that we all have of Smith is wrong.

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Speaker 2: What was his project?

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Speaker 4: So I think the way to think about it is,

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Speaker 4: you know, just to sort of get out something which

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Speaker 4: I think is kind of important which is institutions. Okay, Now,

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Speaker 4: there have been many different readings of Adam Smith, and

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Speaker 4: so I'll come to them in a little bit, but

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Speaker 4: just to get it out there. When when you talk

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Speaker 4: about institutions, you're talking about the system of implicit and

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Speaker 4: explicit social constraints within which we exist. Right. So we

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Speaker 4: are having the spontaneous conversation, but in the context of

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Speaker 4: a building which is subject to certain zoning laws and

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Speaker 4: so on, we may and you know, in current zoning

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Speaker 4: laws we cannot smoke, but.

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Speaker 3: We were certain expectations involved.

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Speaker 4: But those expectations are codified in a kind of a

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Speaker 4: legal framework. Right. So institutions, the formal institution is law,

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Speaker 4: and informal institutions are cultural norms, and notions are right

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Speaker 4: and wrong and justice and all this. So Adam Smith,

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Speaker 4: according to I think is a convincing strain of thought,

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Speaker 4: was an institutionalist. He understood that, yes, the sphere of

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Speaker 4: private behavior, private interactions, lesser affair, actually sits on a

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Speaker 4: foundation which is of human creation, the system of property

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Speaker 4: rights and the system, you know, the system of power

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Speaker 4: relations and all of that. So politics was already there.

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Speaker 4: It's not that the economy was pre political. Now those ideas.

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Speaker 4: If you read Adam Smith his Glasgow University Lectures seventeen,

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Speaker 4: you know that was before the Wealth of Nations. It's

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Speaker 4: very clear that he's writing that. But what happened, says,

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Speaker 4: the rise of neoclassical economics in the late nineteenth century

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Speaker 4: eviscerates that history and it changes the story. The political

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Speaker 4: goes out of a political economy and it becomes economics,

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Speaker 4: so the principles of economics and so then this generation

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Speaker 4: of economists are trained to think of the economy as

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Speaker 4: completely separate from politics, and that in the post war period,

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Speaker 4: so that leads to what is called the Walrasian general

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Speaker 4: equilibrium theory. And I'll be happy to explain that, Arla.

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Speaker 3: Can I just ask? I have so many questions already,

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Speaker 3: but what was the environment that actually gave rise to

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Speaker 3: the neoclassical So.

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Speaker 4: This is really interesting because we're talking about the late

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Speaker 4: nineteenth century and this is a time of enormous social turmoil.

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Speaker 4: So to think that an idealized view of markets would

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Speaker 4: arise when you know, you've got the great Depression of

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Speaker 4: the eighteen ninety.

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Speaker 3: And then it goes through World War One and World

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Speaker 3: War two.

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Speaker 4: Yeah, yeah, But here's the funny thing that happens in

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Speaker 4: this tradition. So what is interesting about American economics is

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Speaker 4: that the American Economic Association is founded by institutionalists. But

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Speaker 4: institutionalists not of the neoclassical kind. They were explicit. So

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Speaker 4: they were trained, these authors like Richard T. Eli and others.

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Speaker 4: They were trained in the German historical school of economics.

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Speaker 4: And the method of the German Historical school of economics

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Speaker 4: was that theory has to be constructed in dialogue with

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Speaker 4: social reality. W. E. B. Du Bois trains at Berlin

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Speaker 4: but as a sociologist, and he brings that method to

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Speaker 4: the study of racial inequalities in this country, in which

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Speaker 4: he's constructing a theory of race and class by looking

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Speaker 4: at actually the living standards of black people in this country.

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Speaker 3: Right.

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Speaker 4: So it's a particular method that was not deductive, but

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Speaker 4: it was inductive. It was engaging with social reality. So

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Speaker 4: what happens is that when the AEA is constructed of

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Speaker 4: American Economic Association, these are institutionalists of that kind, and

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Speaker 4: they come to dominate American economics right through the nineteen thirties,

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Speaker 4: informing many of these economists lawyers who are part of

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Speaker 4: Roosevelt's brains trust. I mean, many of those folks were lawyers,

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Speaker 4: but you had these folks who were trained in a

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Speaker 4: way by which they were absolutely opposed to this idea

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Speaker 4: that the economy is pre political. What happens in the

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Speaker 4: nineteen forties is the war, and then you had the role.

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Speaker 4: And so Philip Morowski discusses this in his book Is

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Speaker 4: a Historian of Economic Thought, Machine Dreams, in which he

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Speaker 4: argues that economics eventually becomes dominated by mathematicians and engineers

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Speaker 4: who kind of eviscerates society and politics and history and

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Speaker 4: construct the economy as a machine populated by cybords right,

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Speaker 4: pre program perfectly rational, exactly all knowing, all seeing, et cetera,

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Speaker 4: et cetera, And that way of conceptualizing economics eclipses this

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Speaker 4: older tradition and in so doing becomes dominant in the

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Speaker 4: nineteen fifties and sixties. And in this way, I mean

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Speaker 4: very much a state project, in the sense that these

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Speaker 4: folks were employed at institutions that got a lot of

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Speaker 4: money from the Department of Defense. So there was a

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Speaker 4: very sort of like an intellectual framework is being constructed

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Speaker 4: about the economy in which many of these authors were

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Speaker 4: very explicitly trying to model weapons systems, input output, that

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Speaker 4: kind of thing, and that how do you optimize this

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Speaker 4: input output system that the flying plane, how to shoot

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Speaker 4: it down, et cetera. So the economy becomes this engine

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Speaker 4: and becomes increasingly more and more mathematically sophisticated, but in

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Speaker 4: so doing divorce from social reality. In nineteen eighty five

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Speaker 4: eighty six, the National Science Foundation convened a symposium on

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Speaker 4: the state of economics teaching in the top graduate schools,

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Speaker 4: and they were extremely concerned about what was being taught.

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Speaker 4: That led to the Commission on Graduate Education in Economics.

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Speaker 4: It was a survey of the top graduate programs in

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Speaker 4: economics and the article in question was published in the

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Speaker 4: Journal of Economic Literature, and it was pretty dismal because

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Speaker 4: it was saying that these students are learning math, econ,

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Speaker 4: but they cannot apply this to social reality. And the

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Speaker 4: conclusion was quite interesting. They said, the concern is that

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Speaker 4: the profession is trained idiot savants. That was an exact

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Speaker 4: term in the JEL article.

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Speaker 3: It's not the worst thing that's ever been said about economists.

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Speaker 2: Yeah, that's true. That's true.

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Speaker 4: So this issue of the way by which the discipline

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Speaker 4: itself has sort of captured the narrative in which math

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Speaker 4: becomes rigor as opposed to history and society, and so

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Speaker 4: then government intervention and non intervention become the sort of

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Speaker 4: flashpoints of the fight. But it's a false debate, I would.

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Speaker 2: Argue, can we talk a little bit more about the

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Speaker 2: post war environment coming out of the nineteen forties? My impulse,

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Speaker 2: I feel like if I were there, it's like, you know,

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Speaker 2: governments can be absolute monsters, right, and or.

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Speaker 4: You're talking about McCarthy.

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Speaker 2: No, I'm talking about the rise of militaristic dictators all

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Speaker 2: around the world. True, like true, the sort of like

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Speaker 2: monstrous creations. Of course, the first half of the twentieth

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Speaker 2: century was like characterized by the rise of like.

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Speaker 3: With strong dustrial policy.

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Speaker 2: My impulse, like, I think if I had been around

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Speaker 2: in the nineteen foury, I was like, oh, we need

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Speaker 2: to like come up with an economics that constrains the

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Speaker 2: state as much as possible, because we've just witnessed how

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Speaker 2: the state can be absolutely monstrous and destructive. And of

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Speaker 2: course right before that was the Great Depression, et cetera. Like,

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Speaker 2: I don't know I would have I just in my mind,

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Speaker 2: I would have a lot of sympathy for that view

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Speaker 2: at the time.

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Speaker 4: Here's the thing, though, so this I discussed is in

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Speaker 4: one of the chapters in my book, and I had

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Speaker 4: a lot of fun writing about this, is that if

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Speaker 4: you look at post Second World War European reconstruction, it

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Speaker 4: involved it was not less affair at all. It involved

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Speaker 4: industrial and social policies, right, the mobilization of central banks.

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Speaker 4: And actually the US Congress had two studies done on

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Speaker 4: European central Bank's role in mobilizing finance and credit to

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Speaker 4: promote industrial and social policies, you know, the reconstruction, building

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Speaker 4: of hospitals, et cetera, et cetera, and the export economies

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Speaker 4: and France and Germany and so so you did have

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Speaker 4: a pretty strong state. But these were demo social democratic states.

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Speaker 4: And this is an important point. I mean, you know, so,

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Speaker 4: for example, the Bank of France is nationalized in nineteen

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Speaker 4: forty five forty four, and the National Credit Council, which

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Speaker 4: is at the core of the BF, has in it

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Speaker 4: different constituents of French society unions, employers, farmers, and so on,

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Speaker 4: who were sort of involved in planning the allocation of

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Speaker 4: credit to different sectors of society. Across the border in

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Speaker 4: Germany you have the KfW, which is a public bank,

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Speaker 4: again with different stakeholders including unions, and they are involved

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Speaker 4: in sort of the economic and social reconstruction through credit allocation.

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Speaker 4: But these were democratic states, you know, So I hear

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Speaker 4: that in the sense that, for sure, you can have

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Speaker 4: industrial policy of a type which is consistent with authoritarianism. Yeah,

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Speaker 4: and all of us would be a post authoritarianism. But

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Speaker 4: there was an industrial policy of a social democratic kind also,

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Speaker 4: and we have plenty of examples of those just from

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Speaker 4: postwar Europe.

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Speaker 3: So just to better understand, maybe we could apply some

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Speaker 3: of the theory to current economic policies. When you look

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Speaker 3: at Mamdani's agenda, you know, things like of freeze on

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Speaker 3: rent or I think right now the hot topic is

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Speaker 3: a tax on billionaires. How does that fit into the

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Speaker 3: intellectual history of economics? And I guess how heterodox is

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Speaker 3: it versus the orthodoxy that we've been talking about.

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Speaker 4: Well, I mean it's a it's it's a it's a

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Speaker 4: big question in the sense that I can answer it

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Speaker 4: in two ways. One is the narrative that this is

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Speaker 4: going to tank the economy. So let's just talk about

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Speaker 4: the tax Park. Let's just get that out of the way,

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Speaker 4: that this this small increase in the billionaires size is

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Speaker 4: going to tank economy. And my responses were, geez, then

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Speaker 4: capitalism would have been dead a long time ago because

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Speaker 4: the sixteenth Amendment would have killed American capitalism.

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Speaker 2: That was wait, remina, what's the is that the one

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Speaker 2: that gave the government, the federal government the ability to.

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Speaker 4: Well, that was the sixteen Amendment really legalized the progress

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Speaker 4: income taxes, right, and so if you look at across

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Speaker 4: the western world, you know, like in the US, tax

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Speaker 4: rates were actually much more progressive in that as you

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Speaker 4: know in the fifties and sixties, other countries had this

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Speaker 4: growth of more progressive taxes Britain and Franz and so on.

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Speaker 4: None of that led to the collapse of capitalism and.

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Speaker 2: The people those were the golden agers of capitalis okay.

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Speaker 4: So the question really is not the tex but what

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Speaker 4: is it being used for? And right, and so's that's

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Speaker 4: a separate conversation. But is that necessarily is that contrary

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Speaker 4: to orthodoxy? And yes, in a way it is because

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Speaker 4: it comes back to this idea that analytically, I mean,

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Speaker 4: every textbook will tell you, well, you've got this self

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Speaker 4: contained black box called the economy, which equilibrates at general equilibrium,

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Speaker 4: the production possibility, frontier per et to optimality, all these

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Speaker 4: sort of aspects of orthodoxy. So any act of state

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Speaker 4: intervention into it will automatically generate some negative outcomes. Right,

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Speaker 4: So from that standpoint, I would say that it is

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Speaker 4: profoundy opposed to the Orthodoxy this way of thinking about it.

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Speaker 4: But if you think of the Orthodoxy as a touchstone

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Speaker 4: or as a gold standard, then of course you would say, well,

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Speaker 4: these are outlandish ideas. But if you don't fall into that,

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Speaker 4: that and then you would say, well, yeah, but this

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Speaker 4: has been done. Is so weird about it?

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Speaker 2: Can we go back? I want to talk more about

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Speaker 2: the present tense, but we can't just like jump over

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Speaker 2: the war completely without ay.

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Speaker 3: You have you've talked about reconsty.

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Speaker 2: No, no, no, but sorry, I want to go back

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Speaker 2: to the war, not reconstruction. You're reading, or you did

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Speaker 2: read Wages of Destruction.

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Speaker 3: Right, which is why I mentioned German industrial policy.

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Speaker 2: But it occurs to me there's something I think is

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Speaker 2: very interesting. I think about it a lot, and i'd

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Speaker 2: love your take out of this, Like if we hear

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Speaker 2: like someone as an economist these days. Yeah, they come

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Speaker 2: up with a bunch of like big ideas, they have theories,

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Speaker 2: and they run tests and write papers and try to influence.

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Speaker 2: But when you think of like, okay, the economists in

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Speaker 2: the Department of War in whatever country was fighting at

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Speaker 2: the time, et cetera, it seemed like a more humble

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Speaker 2: profession in this sense, like a lot of the jobs

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Speaker 2: seem to just be counting, not even like advanced mathematics

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Speaker 2: per se, but the job seem to be a sort

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Speaker 2: of like very like the people who keep track of

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Speaker 2: the resources within the economy, and those are the economists,

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Speaker 2: which sounds to me very different than the picture that

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Speaker 2: we would often get in our head today. If you

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Speaker 2: hear that someone is an economist, is that fair? Is

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Speaker 2: that a fair understanding of history?

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Speaker 4: I'm not sure that I agree.

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Speaker 2: Okay, let's fine.

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Speaker 4: Because I think that, I mean, in some sense, there's

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Speaker 4: truth to what you're saying, because a lot of these

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Speaker 4: economists who were involved in war planning, that's exactly what

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Speaker 4: they were doing. I mean, you know, yeah, they were

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Speaker 4: actually but they were actually doing math modeling. I mean,

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Speaker 4: the whole mathematization of post war you know, math economy,

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Speaker 4: and all of that really came from like sophisticated mathematical models.

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Speaker 4: So it did come from that. But I think maybe

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Speaker 4: what you might be getting at over here, but you know,

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Speaker 4: just tell me what I'm hearing is that this notion

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Speaker 4: that the economy is an engine and the economist is

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Speaker 4: like this technician who is just like tinkering on with things, right,

435
00:25:01,240 --> 00:25:04,840
Speaker 4: And I think this idea and so that's how the

436
00:25:04,880 --> 00:25:08,720
Speaker 4: economist is kind of constructing this engine, as opposed to

437
00:25:08,800 --> 00:25:13,040
Speaker 4: an economist who is actually attempting to fix the engine

438
00:25:13,160 --> 00:25:16,200
Speaker 4: but also trying to see what the component parts are built.

439
00:25:16,240 --> 00:25:18,520
Speaker 4: In another words, society, this is history.

440
00:25:18,960 --> 00:25:20,919
Speaker 2: I'm going to take what you said and make it

441
00:25:20,960 --> 00:25:24,240
Speaker 2: what I meant to say, Okay, because I do. Yeah,

442
00:25:24,480 --> 00:25:26,880
Speaker 2: that's what I'm mean. Oh, that's exactly how I meant

443
00:25:26,920 --> 00:25:29,800
Speaker 2: to put it. Okay, thank you for validating perspective.

444
00:25:30,080 --> 00:25:33,280
Speaker 4: Okay. And I think those reflect two very rival methodologies.

445
00:25:33,359 --> 00:25:35,840
Speaker 4: Ok So, I think that one of the things that

446
00:25:36,320 --> 00:25:41,680
Speaker 4: so often gets missed out in the teaching of economics

447
00:25:41,720 --> 00:25:44,280
Speaker 4: and then the learning of economics is that the students

448
00:25:44,320 --> 00:25:47,320
Speaker 4: don't learn method They could say that way. I mean,

449
00:25:47,440 --> 00:25:51,160
Speaker 4: a textbook should say Okay, this is neoclassical economics. Here

450
00:25:51,240 --> 00:25:55,000
Speaker 4: is a method that is used, and here is this alternative.

451
00:25:55,200 --> 00:25:57,239
Speaker 4: Call it whatever you like to. I generally don't use

452
00:25:57,280 --> 00:26:01,520
Speaker 4: heterodox economics, I say critical political economy or you know

453
00:26:01,560 --> 00:26:05,320
Speaker 4: that kind of thing. It employs a different method. And

454
00:26:05,720 --> 00:26:08,119
Speaker 4: here's why it matters. Now, if you just do, like,

455
00:26:08,200 --> 00:26:11,760
Speaker 4: spend a few chapters on that, that already sets the

456
00:26:11,760 --> 00:26:15,159
Speaker 4: stage for an intelligent conversation. But if you don't do that,

457
00:26:15,680 --> 00:26:19,600
Speaker 4: and it's just that this is economics, then what happens

458
00:26:19,680 --> 00:26:23,679
Speaker 4: is it it kind of leaves out any possibility of

459
00:26:23,760 --> 00:26:30,480
Speaker 4: even understanding the world. Right, So Chinese, the Chinese economic miracle,

460
00:26:30,600 --> 00:26:34,800
Speaker 4: or the Japanese economic miracle, those are seen as somehow

461
00:26:35,600 --> 00:26:38,680
Speaker 4: I don't know that they were cheating, right, right, this

462
00:26:39,080 --> 00:26:42,239
Speaker 4: notion that these countries were cheating, as opposed to saying, well,

463
00:26:42,400 --> 00:26:45,000
Speaker 4: you know, they use industrial policy of a certain kind,

464
00:26:45,640 --> 00:26:49,080
Speaker 4: so did Sweden of a different kind in the post

465
00:26:49,119 --> 00:26:52,320
Speaker 4: war period, And can we learned something from that theoretically?

466
00:26:52,680 --> 00:26:54,840
Speaker 4: And what does that say about the relationship in politics

467
00:26:54,880 --> 00:26:57,040
Speaker 4: and economics, which is exactly where we started out with.

468
00:26:57,520 --> 00:26:59,600
Speaker 4: And I think that's the way the conversation should go.

469
00:27:00,840 --> 00:27:03,240
Speaker 3: Can you just remind me very quickly, but how does

470
00:27:03,400 --> 00:27:07,440
Speaker 3: neoclassical economics actually explain the fact that we do have

471
00:27:07,560 --> 00:27:10,840
Speaker 3: market failures? Right? Because in theory, if the market is

472
00:27:10,920 --> 00:27:16,959
Speaker 3: perfectly functioning and always generating an optimal outcome, always at

473
00:27:17,119 --> 00:27:21,439
Speaker 3: equilibrium between supply and demand or whatever, they shouldn't be happening, right,

474
00:27:21,480 --> 00:27:24,800
Speaker 3: And yet throughout history we have market failures all the time.

475
00:27:25,280 --> 00:27:28,040
Speaker 4: So that's the way where I would say that market

476
00:27:28,040 --> 00:27:31,880
Speaker 4: failures don't actually exist, because I mean, think about one

477
00:27:32,240 --> 00:27:37,359
Speaker 4: instance of what is often characterized as market failure. Pollution. Now,

478
00:27:37,600 --> 00:27:43,120
Speaker 4: pollution is ubiquitous. I mean any act of production involves

479
00:27:43,240 --> 00:27:46,600
Speaker 4: inputs of raw materials which are extracted from somewhere. Then

480
00:27:46,640 --> 00:27:50,800
Speaker 4: you've got a physico chemical process, outcomes and output, and

481
00:27:50,840 --> 00:27:52,800
Speaker 4: it could be an intangible output, it could be you know,

482
00:27:52,920 --> 00:27:57,240
Speaker 4: the output from your computer, right, And then there's waste,

483
00:27:58,200 --> 00:28:03,800
Speaker 4: there's pollution. So now if pollution and waste are ubiquitous,

484
00:28:04,400 --> 00:28:08,000
Speaker 4: and if market failures are ubiquitous, then they're not market

485
00:28:08,000 --> 00:28:12,920
Speaker 4: failures logically, they are the legal design of the property

486
00:28:13,000 --> 00:28:16,919
Speaker 4: rights that enabled the owner of the factory to actually

487
00:28:17,000 --> 00:28:19,480
Speaker 4: dump chemical waste or for Google to take your in

488
00:28:19,600 --> 00:28:25,440
Speaker 4: my private data, right it's a that brings you straight

489
00:28:25,520 --> 00:28:30,720
Speaker 4: back to the fact that the social cost that industry,

490
00:28:31,280 --> 00:28:35,720
Speaker 4: you know, can inflict, depends on the legal design of industry.

491
00:28:35,760 --> 00:28:39,960
Speaker 4: So before the National Environmental Policy Actor sixty nine, industry

492
00:28:39,960 --> 00:28:43,320
Speaker 4: had far greater leeway to dump more chemical waste than

493
00:28:43,360 --> 00:28:46,520
Speaker 4: after that. So I would just say that, yeah, I

494
00:28:46,600 --> 00:28:49,600
Speaker 4: think we need to move away from this notion of

495
00:28:49,640 --> 00:28:52,840
Speaker 4: market failure. And then, you know, so that's a usual

496
00:28:52,840 --> 00:28:55,040
Speaker 4: debate that well, okay, so you got market failure, then

497
00:28:55,120 --> 00:28:58,240
Speaker 4: do we one state intervention or not? And I argue

498
00:28:58,240 --> 00:28:59,520
Speaker 4: in the book that that's a bit of a lack

499
00:28:59,560 --> 00:29:03,360
Speaker 4: of family debate between liberals and conservatives because both sides

500
00:29:03,400 --> 00:29:06,400
Speaker 4: agree that there's market failure, and then one side said, well,

501
00:29:06,400 --> 00:29:09,840
Speaker 4: we should probably not have state intervention, and the other

502
00:29:09,880 --> 00:29:12,920
Speaker 4: side says the opposite. My point is they are always

503
00:29:12,960 --> 00:29:17,240
Speaker 4: social costs, and politics, through the law, is going to

504
00:29:17,240 --> 00:29:20,600
Speaker 4: be structuring the composition and level of those costs, and

505
00:29:20,640 --> 00:29:23,400
Speaker 4: so I think that's where the conversation, I think should

506
00:29:23,400 --> 00:29:23,720
Speaker 4: go to.

507
00:29:24,120 --> 00:29:27,880
Speaker 3: So it's a political decision about which costs to minimize

508
00:29:28,000 --> 00:29:29,440
Speaker 3: or avoid versus an economy.

509
00:29:29,480 --> 00:29:31,920
Speaker 4: I mean, it's always been that, and that's where I

510
00:29:32,000 --> 00:29:34,520
Speaker 4: think in that sense. If you come back to issues

511
00:29:34,560 --> 00:29:38,120
Speaker 4: of affordability and such, I would say that if you

512
00:29:38,400 --> 00:29:41,600
Speaker 4: let housing prices be whatever they are so that people

513
00:29:41,680 --> 00:29:45,840
Speaker 4: lose their homes, that's as much a political structure ring

514
00:29:46,080 --> 00:29:51,040
Speaker 4: of real estate as otherwise. You see what I'm saying. Yeah,

515
00:29:51,240 --> 00:29:54,040
Speaker 4: So it's not any which way politics is there. The

516
00:29:54,120 --> 00:29:56,959
Speaker 4: question is who's benefiting and who's losing. This is I

517
00:29:56,960 --> 00:29:59,040
Speaker 4: think for me, this is the question.

518
00:30:14,680 --> 00:30:20,040
Speaker 2: Okay, So there are some things where markets work very well. Right,

519
00:30:20,360 --> 00:30:23,240
Speaker 2: you know, if we want to have really good bagels,

520
00:30:23,640 --> 00:30:25,800
Speaker 2: then there's a good chance that like a good way

521
00:30:25,880 --> 00:30:27,640
Speaker 2: to get there is you have a lot of bakery

522
00:30:27,840 --> 00:30:34,240
Speaker 2: entrepreneurs and they're competing on price and quality and so forth,

523
00:30:34,800 --> 00:30:38,520
Speaker 2: et cetera. But then they're gonna emmit waste. So let's

524
00:30:38,520 --> 00:30:41,080
Speaker 2: just go back to the pollution example in the process,

525
00:30:41,120 --> 00:30:43,640
Speaker 2: and we say, like, okay, the market worked really well

526
00:30:43,920 --> 00:30:46,480
Speaker 2: in the creation of the bagel, but we have this problem,

527
00:30:46,560 --> 00:30:50,120
Speaker 2: which is that they're creating they're creating waste that has

528
00:30:50,160 --> 00:30:52,240
Speaker 2: to be solved. And even if that's benign, you know,

529
00:30:52,320 --> 00:30:54,240
Speaker 2: it's like, of course anyone is good, but there's gonna

530
00:30:54,240 --> 00:30:56,800
Speaker 2: be some waste involvary and it's not the most polluting thing,

531
00:30:57,120 --> 00:30:59,920
Speaker 2: so we need some sort of like Okay, so then

532
00:31:00,000 --> 00:31:03,200
Speaker 2: and the new classical economics, Yeah, there's market failure. This

533
00:31:03,400 --> 00:31:06,560
Speaker 2: is why we have we have to have a public

534
00:31:06,640 --> 00:31:09,920
Speaker 2: the sanitation workers, right because otherwise they'd always be dumping

535
00:31:09,960 --> 00:31:12,000
Speaker 2: it out on the street. And so okay, so we

536
00:31:12,080 --> 00:31:16,080
Speaker 2: have public sanitation workers. You reframe this and you're like, no,

537
00:31:16,560 --> 00:31:18,719
Speaker 2: market failure isn't the right way to think about it.

538
00:31:18,720 --> 00:31:21,280
Speaker 2: It's endemic to production. It's part of how market works.

539
00:31:21,320 --> 00:31:23,200
Speaker 2: It's not failure. What do we then do with this

540
00:31:23,680 --> 00:31:26,760
Speaker 2: information so that we no longer conceive of these sort

541
00:31:26,800 --> 00:31:30,480
Speaker 2: of like edge cases of mostly markets work or frequently

542
00:31:30,480 --> 00:31:33,040
Speaker 2: markets can work. But then you get market failures. You

543
00:31:33,160 --> 00:31:35,280
Speaker 2: flipped this entire thing on the head and like, market

544
00:31:35,360 --> 00:31:39,640
Speaker 2: failures are not a useful thing. Okay, we accept that premise.

545
00:31:39,800 --> 00:31:41,440
Speaker 2: Then what do we do with that? Do we have

546
00:31:41,560 --> 00:31:43,080
Speaker 2: this new lens, and then what do we.

547
00:31:43,040 --> 00:31:46,720
Speaker 4: See Some of those social costs would need to be internalized.

548
00:31:46,720 --> 00:31:48,600
Speaker 4: In other words, they would as they always have been

549
00:31:48,920 --> 00:31:51,080
Speaker 4: said throughout the history of capitalism. Again, so this is

550
00:31:51,120 --> 00:31:54,000
Speaker 4: not just an obbortuary statement, but if you look at

551
00:31:54,000 --> 00:31:57,680
Speaker 4: throughout the history of capitalism, this janus faced nature of

552
00:31:58,160 --> 00:32:01,960
Speaker 4: capitalist activity, wealth creation on the one hand, and social

553
00:32:02,040 --> 00:32:05,160
Speaker 4: costs on the other hand. And then at some in

554
00:32:05,280 --> 00:32:08,440
Speaker 4: various moments in time, some of those social costs were

555
00:32:08,480 --> 00:32:11,520
Speaker 4: extremely high in terms of the rates charged on something

556
00:32:11,560 --> 00:32:15,640
Speaker 4: on the other Monvill, Illinois eighteen seventy seven landmark Supreme

557
00:32:15,680 --> 00:32:20,320
Speaker 4: Court case came out of the Interstate Commerce Act Commission,

558
00:32:20,720 --> 00:32:25,320
Speaker 4: which put caps on railroads and on grain elevators because

559
00:32:25,520 --> 00:32:29,959
Speaker 4: what was happening was that the farmers were storing, they

560
00:32:29,960 --> 00:32:33,000
Speaker 4: were charging extremely they were being charged extremely high rates

561
00:32:33,240 --> 00:32:38,600
Speaker 4: by grain storage elevators and railroads, and what was happening

562
00:32:38,640 --> 00:32:41,760
Speaker 4: was the price for food was rising. So the Illinois

563
00:32:41,800 --> 00:32:44,520
Speaker 4: state legislature put a cap on that went up to

564
00:32:44,560 --> 00:32:47,440
Speaker 4: the Supreme Court. And so there was this whole idea,

565
00:32:47,640 --> 00:32:50,840
Speaker 4: and the Supreme Court ruled in favor of price caps

566
00:32:50,880 --> 00:32:52,880
Speaker 4: on these rates charge because they said, well, this is

567
00:32:53,760 --> 00:32:56,800
Speaker 4: this is of social importance. Food should be affordable. There's

568
00:32:56,800 --> 00:33:01,320
Speaker 4: a very long history of this in American constitutional history.

569
00:33:01,800 --> 00:33:05,480
Speaker 4: That is basically exemplifying the basic point that at some

570
00:33:05,640 --> 00:33:09,560
Speaker 4: points and in various points, some of these social costs

571
00:33:09,560 --> 00:33:12,760
Speaker 4: were deemed too high, and then in some way they

572
00:33:12,760 --> 00:33:17,000
Speaker 4: would need they had to either be internalized or you know,

573
00:33:17,120 --> 00:33:20,720
Speaker 4: maybe smaller businesses could not internalize some of these costs. Okay,

574
00:33:20,880 --> 00:33:23,320
Speaker 4: give them some kind of a tax credit. You see

575
00:33:23,320 --> 00:33:26,840
Speaker 4: what I'm saying. There's intelligent ways of thinking about public policy.

576
00:33:27,120 --> 00:33:30,640
Speaker 4: So Mamdani's policies, whatever they may be, they may affect

577
00:33:31,880 --> 00:33:34,520
Speaker 4: I don't know, smaller businesses differently from a larger ones.

578
00:33:34,560 --> 00:33:37,600
Speaker 4: So the ones that have less cash flow, they can

579
00:33:37,600 --> 00:33:40,440
Speaker 4: get a tax credit as a write off, right, I mean,

580
00:33:40,480 --> 00:33:42,680
Speaker 4: you can think about all of these kinds of policies,

581
00:33:43,080 --> 00:33:44,880
Speaker 4: and at least that's whay I think about it. In

582
00:33:44,920 --> 00:33:45,720
Speaker 4: practical terms.

583
00:33:46,160 --> 00:33:48,080
Speaker 3: I'm trying to think how to frame this question, and

584
00:33:48,120 --> 00:33:50,360
Speaker 3: I probably won't get it right, but here goes. We've

585
00:33:50,360 --> 00:33:53,280
Speaker 3: been doing a lot of episodes on Venezuela recently, and

586
00:33:53,360 --> 00:33:56,440
Speaker 3: so if I think about, you know, some famous heterodox

587
00:33:56,680 --> 00:33:59,840
Speaker 3: economic policy that perhaps weren't kind of wrong, that would

588
00:33:59,840 --> 00:34:04,720
Speaker 3: be a good examples when you're thinking of designing actual

589
00:34:05,080 --> 00:34:11,759
Speaker 3: economic policy. If you're doing it prioritizing or politics, or

590
00:34:11,840 --> 00:34:15,680
Speaker 3: on a political basis, and you don't have that sort

591
00:34:15,719 --> 00:34:22,360
Speaker 3: of scientific rational framework that is so endemic in neoclassical thought,

592
00:34:23,320 --> 00:34:27,720
Speaker 3: does that help you design policy? Is that a useful

593
00:34:27,960 --> 00:34:29,040
Speaker 3: framework for you?

594
00:34:29,680 --> 00:34:33,680
Speaker 4: I guess the question is what defines science. So the way,

595
00:34:33,719 --> 00:34:38,280
Speaker 4: for example, the institutional economist that I was talking about,

596
00:34:38,360 --> 00:34:42,800
Speaker 4: the way they designed policy was on the basis of

597
00:34:42,920 --> 00:34:48,239
Speaker 4: theory that was evidence based, social reality, historical reality, court cases,

598
00:34:48,280 --> 00:34:51,279
Speaker 4: you know, this kind of thing. Neoclassical economist doesn't do

599
00:34:51,400 --> 00:34:55,000
Speaker 4: policy that way though, or theory. It's deductive, it assumed.

600
00:34:55,080 --> 00:34:59,239
Speaker 4: So it's constructing this model on the basis of no evidence,

601
00:35:00,200 --> 00:35:01,279
Speaker 4: neoclassical on.

602
00:35:01,200 --> 00:35:03,160
Speaker 3: The basis of a reality that does not in fact

603
00:35:03,160 --> 00:35:04,120
Speaker 3: exist exactly.

604
00:35:04,200 --> 00:35:06,880
Speaker 4: Thank you for putting it that way, because that already

605
00:35:06,920 --> 00:35:10,799
Speaker 4: exemplifies the problem, which is that how on earth are

606
00:35:10,840 --> 00:35:14,120
Speaker 4: you designing a policy based on a theory for which

607
00:35:14,160 --> 00:35:17,200
Speaker 4: you have which has not been subjected to any kind

608
00:35:17,360 --> 00:35:22,280
Speaker 4: of theoretical you know, any kind of intellectual engagement with reality.

609
00:35:22,680 --> 00:35:24,720
Speaker 4: In the wake of the financial crisis of two thousand

610
00:35:24,719 --> 00:35:29,120
Speaker 4: and seven two thousand and eight, when prominent neoclassical economists

611
00:35:29,160 --> 00:35:31,799
Speaker 4: were asked, wait a second, are you now going to

612
00:35:32,640 --> 00:35:36,440
Speaker 4: rethink your models because this should not have happened per

613
00:35:36,480 --> 00:35:41,319
Speaker 4: the neoclassical framework, they said, nope, And I think that's

614
00:35:41,360 --> 00:35:45,120
Speaker 4: the problem here. That policy is being designed in this

615
00:35:45,120 --> 00:35:47,240
Speaker 4: particular way on the basis of theory of this nature.

616
00:35:47,960 --> 00:35:52,680
Speaker 4: But if you bring in a more engaged way of

617
00:35:52,719 --> 00:35:57,040
Speaker 4: thinking about policy and politics, then the nature of the

618
00:35:57,040 --> 00:35:59,800
Speaker 4: politics matters. I mean, who you know, is it a

619
00:36:00,040 --> 00:36:03,600
Speaker 4: raitarian state? Is in a democratic state? So I don't

620
00:36:03,680 --> 00:36:10,120
Speaker 4: like authoritarianism, sure, so I think policy should reflect theory

621
00:36:10,840 --> 00:36:13,360
Speaker 4: on the basis of democratic principles in some in a

622
00:36:13,400 --> 00:36:13,960
Speaker 4: broad sense.

623
00:36:14,680 --> 00:36:18,120
Speaker 2: You know, going back to the contemporary debates about housing

624
00:36:18,280 --> 00:36:22,080
Speaker 2: in New York City right now, and there are others

625
00:36:22,520 --> 00:36:26,280
Speaker 2: who might buy exactly what you're saying at the conceptual lens,

626
00:36:26,880 --> 00:36:29,960
Speaker 2: and they would say, you know what, Johnny is completely

627
00:36:30,080 --> 00:36:33,920
Speaker 2: correct about everything. The problem is that existing politics have

628
00:36:34,000 --> 00:36:36,480
Speaker 2: made it too hard to build. The problem is that

629
00:36:36,680 --> 00:36:41,239
Speaker 2: existing politics have made it so that we're paying too

630
00:36:41,320 --> 00:36:44,640
Speaker 2: much for labor, et cetera. The problem is that existing

631
00:36:44,920 --> 00:36:50,080
Speaker 2: landlords control have too much influence and are constraining the

632
00:36:50,080 --> 00:36:54,040
Speaker 2: building of new that they like. It strikes me as

633
00:36:54,280 --> 00:36:58,879
Speaker 2: there are many versions of your framework that to take

634
00:36:58,880 --> 00:37:02,440
Speaker 2: it to specific policies that don't necessarily lead to and

635
00:37:02,520 --> 00:37:05,799
Speaker 2: therefore rent control is okay that you can say, look,

636
00:37:05,800 --> 00:37:10,359
Speaker 2: there's our current system is riven with politics, and that

637
00:37:10,520 --> 00:37:13,239
Speaker 2: the way to engage democratically, and the way to think

638
00:37:13,239 --> 00:37:16,560
Speaker 2: about this is we need to liberalize. The solution to

639
00:37:16,600 --> 00:37:20,879
Speaker 2: affordability is getting rid of some of these zoning laws, etc.

640
00:37:21,760 --> 00:37:24,640
Speaker 2: It seems to me like that you could agree with

641
00:37:24,760 --> 00:37:28,759
Speaker 2: sort of your conceptualization of some of these challenges and

642
00:37:28,840 --> 00:37:32,720
Speaker 2: yet and still arrive at very different outcomes in terms

643
00:37:32,719 --> 00:37:36,560
Speaker 2: of a policy response. And in fact, in fact, Zoran

644
00:37:36,680 --> 00:37:40,279
Speaker 2: himself may even agree with that, because we know that

645
00:37:40,760 --> 00:37:43,799
Speaker 2: he is more liberal than say, many on the left

646
00:37:43,840 --> 00:37:46,600
Speaker 2: when it comes to the role of private capital for

647
00:37:46,760 --> 00:37:47,720
Speaker 2: developing new houses.

648
00:37:48,000 --> 00:37:52,279
Speaker 4: Okay, so my response is that this is true. First

649
00:37:52,280 --> 00:37:53,880
Speaker 4: of all, to concede. I think in any kind of

650
00:37:53,880 --> 00:37:56,279
Speaker 4: a discussion, you concede what the other person is saying.

651
00:37:56,280 --> 00:38:00,360
Speaker 4: And this is true about the sort of impedibles of

652
00:38:00,840 --> 00:38:03,880
Speaker 4: current politics and power structures, this and the other. But

653
00:38:03,960 --> 00:38:06,640
Speaker 4: that's always been the case. It's always been the case,

654
00:38:06,760 --> 00:38:10,439
Speaker 4: and so like if we thought of that as the

655
00:38:10,480 --> 00:38:15,399
Speaker 4: supreme impediment to actually making things better, then we would

656
00:38:15,400 --> 00:38:20,120
Speaker 4: have abandoned society, would have abandoned any attempts to, let's say,

657
00:38:20,200 --> 00:38:25,280
Speaker 4: have safer cars. Sure, because the automobile industry for tooth

658
00:38:25,320 --> 00:38:30,000
Speaker 4: and nail against seatbelts for decades, making them safer, you know,

659
00:38:30,040 --> 00:38:33,560
Speaker 4: the whole design of cars. So the point here is

660
00:38:34,160 --> 00:38:39,640
Speaker 4: it's not as though that proposing a policy implies that

661
00:38:39,680 --> 00:38:42,680
Speaker 4: you wave a magic wand and it just happens. They're

662
00:38:42,719 --> 00:38:46,080
Speaker 4: going to be insuperable problems and there's going to be impediments.

663
00:38:47,360 --> 00:38:49,919
Speaker 4: But that's always been the case. That doesn't mean that,

664
00:38:50,480 --> 00:38:53,120
Speaker 4: you know, you cannot lose track of the fact that

665
00:38:53,960 --> 00:38:58,560
Speaker 4: lack of affordability in this country and elsewhere in the

666
00:38:58,560 --> 00:39:04,799
Speaker 4: world has recently eroded democracy, yeah, as we know, and

667
00:39:04,880 --> 00:39:09,719
Speaker 4: has has fuel authoritarian politics. There's a clear relationship here

668
00:39:10,040 --> 00:39:15,480
Speaker 4: between economic and security and authoritarianism undeniably.

669
00:39:16,239 --> 00:39:19,440
Speaker 2: Just to press further on this, however, so one of

670
00:39:19,440 --> 00:39:22,359
Speaker 2: the things that the housing people love to say is that,

671
00:39:22,560 --> 00:39:25,640
Speaker 2: you know, there was a rule change several years ago.

672
00:39:25,880 --> 00:39:29,960
Speaker 2: Ironically it was under the Cuomo administration. There was a

673
00:39:30,040 --> 00:39:34,440
Speaker 2: rule change that made it harder for landlords to raise

674
00:39:34,480 --> 00:39:38,600
Speaker 2: the rent of a rent stabilized building after the tenant left.

675
00:39:38,960 --> 00:39:40,799
Speaker 2: And then so then the new tenant comes in and

676
00:39:40,800 --> 00:39:43,160
Speaker 2: they like, can't move it up by much. Meanwhile, we

677
00:39:43,200 --> 00:39:45,680
Speaker 2: have inflation, and so we have this effect, at least

678
00:39:45,680 --> 00:39:49,280
Speaker 2: according to many housing people where a lot of supply

679
00:39:49,400 --> 00:39:51,800
Speaker 2: has been taken off the market because they can't raise

680
00:39:51,840 --> 00:39:54,840
Speaker 2: the rent the law prevents them from raising the rent,

681
00:39:55,280 --> 00:39:57,560
Speaker 2: and their maintenance costs have gone up, and so like

682
00:39:57,600 --> 00:39:59,920
Speaker 2: these are no longer economical to run.

683
00:40:00,440 --> 00:40:00,600
Speaker 3: Now.

684
00:40:00,680 --> 00:40:06,040
Speaker 2: Again, Like, my point is not they're right, they're wrong, whatever.

685
00:40:06,560 --> 00:40:10,280
Speaker 2: My point is that all of this could be true,

686
00:40:10,440 --> 00:40:13,400
Speaker 2: and all of this framework can be very helpful, but

687
00:40:13,520 --> 00:40:18,360
Speaker 2: it doesn't necessarily lead to the conclusion the Zoron is

688
00:40:18,520 --> 00:40:22,719
Speaker 2: right to take a stronger line on what you can

689
00:40:22,800 --> 00:40:25,239
Speaker 2: just do by FIAT in terms of price constraints.

690
00:40:26,920 --> 00:40:32,160
Speaker 4: Well, you know, yeah it does. I mean I think

691
00:40:32,200 --> 00:40:35,359
Speaker 4: I would disagree. Okay, great, because I think that if

692
00:40:35,600 --> 00:40:39,560
Speaker 4: by that logic, then we shouldn't have ever done anything anyways, right,

693
00:40:39,640 --> 00:40:42,880
Speaker 4: so we could have you know, so so for example, opposition,

694
00:40:42,960 --> 00:40:44,840
Speaker 4: I mean, so like sort of moving this sort of

695
00:40:44,840 --> 00:40:47,359
Speaker 4: the discussion a little bit away from housing. But let's

696
00:40:47,360 --> 00:40:50,440
Speaker 4: say to taxation, right, we were talking about taxation earlier on.

697
00:40:50,680 --> 00:40:53,799
Speaker 4: There was massive opposition during the Gilded Age that if

698
00:40:53,840 --> 00:40:57,040
Speaker 4: you have progressive taxation, if you even have the sixteen Amendment,

699
00:40:57,440 --> 00:41:00,759
Speaker 4: this is going to destroy the whole society. And so

700
00:41:00,840 --> 00:41:04,799
Speaker 4: the struggles in that Gilded Age period which ultimately lead

701
00:41:04,920 --> 00:41:11,080
Speaker 4: to the sixteenth Amendment, exemplifies the point that yeah, I

702
00:41:11,120 --> 00:41:13,239
Speaker 4: mean there are going to be there is going to

703
00:41:13,239 --> 00:41:13,840
Speaker 4: be opposition.

704
00:41:13,960 --> 00:41:17,719
Speaker 2: So just well, then what is the limiting principle? Or

705
00:41:17,960 --> 00:41:22,160
Speaker 2: maybe okay, there are different methods to doing economics, and

706
00:41:22,200 --> 00:41:24,560
Speaker 2: you say, the new classicals of one method and other

707
00:41:24,560 --> 00:41:27,240
Speaker 2: people of other methods, how do we know, Like, okay,

708
00:41:27,719 --> 00:41:30,719
Speaker 2: let's say we want to impose more stringent caps on

709
00:41:30,760 --> 00:41:33,000
Speaker 2: how much you can raise rent, Like we don't know,

710
00:41:33,800 --> 00:41:35,480
Speaker 2: like it could go well and it could go bad. Right,

711
00:41:35,520 --> 00:41:36,960
Speaker 2: I assume you would agree that there are ways to

712
00:41:36,960 --> 00:41:37,760
Speaker 2: do this very badly.

713
00:41:37,840 --> 00:41:38,440
Speaker 4: Yeah, of course.

714
00:41:38,560 --> 00:41:41,520
Speaker 2: So what are the methods that we could employ that

715
00:41:41,560 --> 00:41:44,520
Speaker 2: the new classicals are blind to such that we can

716
00:41:44,520 --> 00:41:45,240
Speaker 2: get this policy.

717
00:41:45,280 --> 00:41:48,279
Speaker 4: We could, for example, provide so for for the for

718
00:41:48,320 --> 00:41:50,920
Speaker 4: the smaller landlords, the ones or the less or the

719
00:41:51,360 --> 00:41:54,200
Speaker 4: ones who are they don't have enough cash to fix

720
00:41:54,239 --> 00:41:56,839
Speaker 4: the leaks, you know, upkeep the building, that they could

721
00:41:56,880 --> 00:41:57,880
Speaker 4: be given tax credits.

722
00:41:57,960 --> 00:41:58,440
Speaker 2: Yeah.

723
00:41:58,520 --> 00:42:02,319
Speaker 4: Right, So that companies for the rent control would be

724
00:42:02,840 --> 00:42:05,120
Speaker 4: that Okay, if you're a large real estate cooperation and

725
00:42:05,120 --> 00:42:08,040
Speaker 4: you've got lots of cash flow, then clearly you do

726
00:42:08,120 --> 00:42:10,960
Speaker 4: have the cash flow to deal with the problems. But

727
00:42:11,160 --> 00:42:13,680
Speaker 4: if you're a smaller landlord, then you could be given

728
00:42:13,680 --> 00:42:15,319
Speaker 4: some kind of a tax credit, you could be given

729
00:42:15,360 --> 00:42:17,759
Speaker 4: some kind of public subsidy that could deal with that

730
00:42:17,840 --> 00:42:19,840
Speaker 4: kind of an issue, which brings you straight back to

731
00:42:19,880 --> 00:42:23,120
Speaker 4: the question of the public financing after all of this. Right,

732
00:42:23,440 --> 00:42:25,839
Speaker 4: So that's the way at least I would tentatively think

733
00:42:25,840 --> 00:42:26,799
Speaker 4: about the issue.

734
00:42:27,120 --> 00:42:31,160
Speaker 3: Since we've been talking about politics for basically this entire discussion,

735
00:42:31,280 --> 00:42:34,000
Speaker 3: I want to talk about political realities for right now,

736
00:42:34,400 --> 00:42:38,360
Speaker 3: what are the constraints that have prevented this kind of

737
00:42:38,440 --> 00:42:43,279
Speaker 3: heterodox policy from becoming the norm in a place like America.

738
00:42:43,320 --> 00:42:47,320
Speaker 4: Well, that's a great question, And I think the issue

739
00:42:47,480 --> 00:42:49,560
Speaker 4: is that these kinds of ideas are not in the

740
00:42:49,600 --> 00:42:53,879
Speaker 4: public domain. And so whenever you use the word economics,

741
00:42:53,960 --> 00:42:55,640
Speaker 4: let's say it comes up, let's say, who are the

742
00:42:55,680 --> 00:42:59,320
Speaker 4: experts who come say, let's say to CNN, They're already

743
00:42:59,400 --> 00:43:02,360
Speaker 4: coming implicitly, even if they don't say it, from this

744
00:43:02,480 --> 00:43:06,640
Speaker 4: idea that markets are sort of prime and then everything

745
00:43:06,680 --> 00:43:10,240
Speaker 4: else follows afterwards. So I mean, in order to push

746
00:43:10,239 --> 00:43:13,680
Speaker 4: back against that, you need to have more conversations about the.

747
00:43:13,600 --> 00:43:15,719
Speaker 2: Discipline thank you for that.

748
00:43:15,920 --> 00:43:19,080
Speaker 4: Thank you. I think that these kinds of conversations are

749
00:43:19,239 --> 00:43:21,880
Speaker 4: helpful because at least it opens up the space for

750
00:43:21,960 --> 00:43:24,400
Speaker 4: thinking about that well, I mean, okay, so when you're

751
00:43:24,440 --> 00:43:27,560
Speaker 4: talking about foundational questions like the market economy, what exactly

752
00:43:27,600 --> 00:43:30,799
Speaker 4: do you mean by that? And you know, so those

753
00:43:30,840 --> 00:43:32,520
Speaker 4: are the kinds of questions I think. So the come

754
00:43:32,600 --> 00:43:35,880
Speaker 4: back and coming back to your question that's an impediment

755
00:43:36,239 --> 00:43:39,239
Speaker 4: because if you're going to say that, well, I want

756
00:43:39,280 --> 00:43:43,080
Speaker 4: to make some aspect of social services I don't know,

757
00:43:43,680 --> 00:43:47,359
Speaker 4: affordable or something, then you'll always come up to this

758
00:43:47,520 --> 00:43:50,880
Speaker 4: impediment that will are you a state interventionist? Whereas this

759
00:43:50,960 --> 00:43:54,440
Speaker 4: is the free market and that's the lingua franca. And

760
00:43:55,080 --> 00:43:57,279
Speaker 4: that's the hard part of it, that to say that,

761
00:43:57,320 --> 00:44:00,560
Speaker 4: well okay, to push the conversation further, as opposed to

762
00:44:00,600 --> 00:44:03,200
Speaker 4: saying well, okay, you know, if you think of markets

763
00:44:03,200 --> 00:44:05,799
Speaker 4: in different ways, then it may be hard to make

764
00:44:05,840 --> 00:44:08,840
Speaker 4: the change. But at least the market is not pretty political.

765
00:44:09,560 --> 00:44:11,160
Speaker 4: So for me, that's the problem.

766
00:44:11,920 --> 00:44:16,200
Speaker 2: What's the basic gist of why Europe in the US

767
00:44:16,400 --> 00:44:19,680
Speaker 2: from the historian perspective sort of went different directions, and

768
00:44:19,680 --> 00:44:24,799
Speaker 2: obviously the democratic socialist, the democratic socialist tradition obviously much

769
00:44:24,800 --> 00:44:28,200
Speaker 2: more robust in Europe. I mean, it's never really you know,

770
00:44:28,560 --> 00:44:32,160
Speaker 2: it doesn't have as nearly as much history in the US,

771
00:44:32,320 --> 00:44:36,120
Speaker 2: et cetera. Union is much more robust throughout Europe. How

772
00:44:36,120 --> 00:44:39,840
Speaker 2: did that like generally speaking, except for maybe like a

773
00:44:39,880 --> 00:44:44,080
Speaker 2: couple decades, partly just there's any sort of like socialis

774
00:44:44,120 --> 00:44:45,520
Speaker 2: tradition every I took root in the US.

775
00:44:46,000 --> 00:44:47,920
Speaker 4: First of all, we do have a long history of

776
00:44:48,000 --> 00:44:51,160
Speaker 4: municipal socialism, but sewer socialism in this country. I mean,

777
00:44:51,200 --> 00:44:53,640
Speaker 4: so there's you know of so you know, in other words,

778
00:44:54,760 --> 00:44:56,600
Speaker 4: you know, there's a lot has been written actually that

779
00:44:57,040 --> 00:45:00,680
Speaker 4: what Mamdani is doing here, it's actually pretty there's a

780
00:45:00,719 --> 00:45:04,120
Speaker 4: long history behind that. Gail Radford has written about this

781
00:45:04,280 --> 00:45:09,560
Speaker 4: a historian. I think the issue is and so that's

782
00:45:09,560 --> 00:45:13,160
Speaker 4: the first point. The second point is that if you

783
00:45:13,239 --> 00:45:15,680
Speaker 4: look at and this comes back, I think tracy to

784
00:45:15,719 --> 00:45:20,000
Speaker 4: your question, which is that in the public discourse, we

785
00:45:20,120 --> 00:45:23,279
Speaker 4: don't know, there's a kind of an idea that the

786
00:45:23,360 --> 00:45:27,719
Speaker 4: New Deal was an outlier and therefore we need to

787
00:45:28,000 --> 00:45:31,960
Speaker 4: basically go back to some pre New Deal romanticized small government.

788
00:45:32,440 --> 00:45:34,800
Speaker 4: You know, Steve Bannon makes his that's why the attack

789
00:45:34,800 --> 00:45:37,800
Speaker 4: against the administrative state is premised from this. The problem

790
00:45:37,880 --> 00:45:41,360
Speaker 4: is the many legal historians and legal economic historians appointed

791
00:45:41,360 --> 00:45:43,799
Speaker 4: and this is not true that the US developed a

792
00:45:43,880 --> 00:45:49,279
Speaker 4: very robust developmental state in the reconstruction period. So there's

793
00:45:49,320 --> 00:45:52,239
Speaker 4: a really a lot of history there that is not

794
00:45:52,440 --> 00:45:57,040
Speaker 4: part of the public domain and the discourse on economics,

795
00:45:57,040 --> 00:46:01,320
Speaker 4: because the teaching of economics does not require students to

796
00:46:01,480 --> 00:46:05,719
Speaker 4: actually require not as an elective, but required them to

797
00:46:06,000 --> 00:46:10,440
Speaker 4: actually read economic history in most places in their training.

798
00:46:10,680 --> 00:46:13,399
Speaker 4: So they don't know the history, and so this new

799
00:46:13,480 --> 00:46:17,880
Speaker 4: notion of the market prevails, and then they don't know

800
00:46:17,920 --> 00:46:20,720
Speaker 4: their own history. I don't think that's any different in Europe,

801
00:46:21,120 --> 00:46:24,759
Speaker 4: and we can talk about that, but there are interesting

802
00:46:26,560 --> 00:46:30,480
Speaker 4: issues here. So for example, the American historically, the American

803
00:46:30,520 --> 00:46:34,000
Speaker 4: taxation system was much more progressive than in Europe. Yeah, right,

804
00:46:34,280 --> 00:46:36,799
Speaker 4: so there is that. But I think what happens in

805
00:46:36,840 --> 00:46:41,120
Speaker 4: the post war period, post Second World War period is

806
00:46:41,160 --> 00:46:45,560
Speaker 4: that that kind of sent a jolt for a lot

807
00:46:45,560 --> 00:46:48,040
Speaker 4: of people, and I think that kind of revived the

808
00:46:48,160 --> 00:46:52,279
Speaker 4: left in some sense because fascism and there was a

809
00:46:52,320 --> 00:46:57,719
Speaker 4: clear understanding that massive inequality was you know, one of

810
00:46:57,760 --> 00:47:00,840
Speaker 4: the one of the ingredients of the rise fascist movements

811
00:47:00,880 --> 00:47:04,360
Speaker 4: in the nineteen twenties and thirties, and so reducing inequality,

812
00:47:04,880 --> 00:47:09,000
Speaker 4: embedding social and economic rights and constitutions I'm thinking here

813
00:47:09,080 --> 00:47:13,279
Speaker 4: with the German constitution super important as a kind of

814
00:47:13,640 --> 00:47:16,640
Speaker 4: insulation at least to some extent, against a repetition of

815
00:47:16,680 --> 00:47:20,200
Speaker 4: those horrors. So this created a kind of a different

816
00:47:20,239 --> 00:47:26,200
Speaker 4: social model based on these progressive constitutions. We haven't had that.

817
00:47:26,320 --> 00:47:31,640
Speaker 4: Our constitution is a first generation constitution, and in that way,

818
00:47:31,680 --> 00:47:35,240
Speaker 4: there are no explicit commitments to economic and social rights,

819
00:47:35,680 --> 00:47:38,360
Speaker 4: human dignity, the expression I don't think appears in the

820
00:47:38,480 --> 00:47:40,920
Speaker 4: US Constitution. It does appear in a lot of these

821
00:47:40,920 --> 00:47:44,400
Speaker 4: European constitutions, and that matters. You have the rights of

822
00:47:44,480 --> 00:47:48,840
Speaker 4: personhood right the fourteen Amendment, but you know that, you

823
00:47:48,880 --> 00:47:51,000
Speaker 4: know very well that how that's been weaponized for corporate

824
00:47:51,000 --> 00:47:54,400
Speaker 4: personhood and so on. That's I think part of the

825
00:47:54,440 --> 00:47:58,400
Speaker 4: story as to why the welfare state has been somewhat

826
00:47:58,480 --> 00:48:02,000
Speaker 4: more robust, though it's all so seen fractures in Europe

827
00:48:02,480 --> 00:48:05,880
Speaker 4: than here, where that has not been the case. So

828
00:48:06,080 --> 00:48:08,960
Speaker 4: we're still stuck with this constitution, which at least in

829
00:48:08,960 --> 00:48:11,759
Speaker 4: my view, is not a very good constitution.

830
00:48:12,600 --> 00:48:16,200
Speaker 3: I wasn't expecting constitutional analysis to come into this conversation,

831
00:48:16,239 --> 00:48:18,400
Speaker 3: but I think it does illustrate your point about the

832
00:48:18,400 --> 00:48:22,040
Speaker 3: intertwining of politics and the economy. Can I ask one

833
00:48:22,080 --> 00:48:24,960
Speaker 3: more thing, and maybe it doesn't even make sense or

834
00:48:25,000 --> 00:48:28,320
Speaker 3: fit into this conversation, but when I think about las A,

835
00:48:28,480 --> 00:48:33,000
Speaker 3: fair markets or economics, there seems to be an emphasis

836
00:48:33,080 --> 00:48:39,080
Speaker 3: on absolute gains so positive some outcomes where it does.

837
00:48:39,239 --> 00:48:42,840
Speaker 3: You know, two countries start trading with each other guns

838
00:48:42,840 --> 00:48:46,320
Speaker 3: and butter or whatever. Both the countries are better off,

839
00:48:46,760 --> 00:48:50,400
Speaker 3: it doesn't matter how much better off they are relative

840
00:48:50,440 --> 00:48:54,120
Speaker 3: to each other. When we think about heterodox economics and

841
00:48:54,160 --> 00:48:57,320
Speaker 3: the importance of politics, are we basically saying that every

842
00:48:57,400 --> 00:49:01,320
Speaker 3: policy decision the emphasis is much more on relative gains

843
00:49:01,560 --> 00:49:02,840
Speaker 3: versus absolute gains.

844
00:49:03,640 --> 00:49:06,040
Speaker 4: I'm not aware of that tracy, That is not from

845
00:49:06,040 --> 00:49:11,319
Speaker 4: my standpoint. I do think that markets and the sort

846
00:49:11,360 --> 00:49:15,840
Speaker 4: of private initiatives in markets that does generate wealth. I

847
00:49:15,840 --> 00:49:17,400
Speaker 4: mean that you go back to Smith. He says that,

848
00:49:17,480 --> 00:49:21,439
Speaker 4: so in that sense, it's true that market activity does

849
00:49:21,520 --> 00:49:25,640
Speaker 4: generate enormous social wealth. Yes it does. But what people

850
00:49:25,719 --> 00:49:27,960
Speaker 4: tend to forget is that there's also a flip side.

851
00:49:28,000 --> 00:49:30,200
Speaker 4: To that the social costs, and so we have to

852
00:49:30,200 --> 00:49:33,600
Speaker 4: then think about, Okay, can we somehow how do we

853
00:49:33,680 --> 00:49:37,040
Speaker 4: reduce some of those social costs in terms of affordability

854
00:49:37,360 --> 00:49:41,960
Speaker 4: or pollution or climate crisis. That's I think saying that, Okay,

855
00:49:42,280 --> 00:49:45,759
Speaker 4: markets are great, but what are they sort of embedded

856
00:49:45,880 --> 00:49:49,400
Speaker 4: on that infrastructure that I was talking about that is

857
00:49:49,480 --> 00:49:54,160
Speaker 4: sort of leading to massive emissions of greenhouse gases. I mean,

858
00:49:54,200 --> 00:49:57,440
Speaker 4: that's clearly unsustainable and we all know that. So I

859
00:49:57,480 --> 00:50:00,120
Speaker 4: feel like I don't know that I would necessarily to

860
00:50:00,239 --> 00:50:04,080
Speaker 4: think about it in terms of positive and negative sum gains.

861
00:50:04,120 --> 00:50:07,560
Speaker 4: I would just say that market activity does generate enormous

862
00:50:07,800 --> 00:50:11,359
Speaker 4: social wealth, but also enormous social costs, and so then

863
00:50:11,440 --> 00:50:13,480
Speaker 4: that's where I think the conversation has to go to

864
00:50:13,680 --> 00:50:15,120
Speaker 4: how to reduce the social costs.

865
00:50:16,040 --> 00:50:17,919
Speaker 2: Jommy Modude, thank you so much.

866
00:50:17,960 --> 00:50:18,640
Speaker 4: Thank you so much.

867
00:50:19,160 --> 00:50:34,800
Speaker 2: It's really fascinating conversation. Appreciate you so much time. Okay, Tracy,

868
00:50:34,840 --> 00:50:37,840
Speaker 2: we should do more intellectual history episodes. I really like

869
00:50:37,920 --> 00:50:40,800
Speaker 2: that topic. I don't know, like I think I'm.

870
00:50:40,680 --> 00:50:44,600
Speaker 3: Still scarred from doing international relations at college, and whenever

871
00:50:44,640 --> 00:50:49,520
Speaker 3: someone talks about intellectual histories of particular theories I kind

872
00:50:49,560 --> 00:50:51,000
Speaker 3: of I get nervous.

873
00:50:52,160 --> 00:50:54,440
Speaker 2: Let's just make the whole I'd be down to make

874
00:50:54,440 --> 00:50:56,600
Speaker 2: the whole podcast A No, I do think this is

875
00:50:56,640 --> 00:50:58,480
Speaker 2: like really interesting. Look, I think this is a very

876
00:50:58,520 --> 00:51:02,120
Speaker 2: timely conversation because one thing, you know, he mentioned Bannon

877
00:51:02,360 --> 00:51:05,440
Speaker 2: there at the end. One thing that I feel is

878
00:51:05,480 --> 00:51:09,000
Speaker 2: that regardless of where many people are on the political

879
00:51:09,040 --> 00:51:14,080
Speaker 2: spectrum these days, there seems to be a deep intuition

880
00:51:14,200 --> 00:51:17,680
Speaker 2: that many people have about the corrosive effects of society

881
00:51:17,680 --> 00:51:19,520
Speaker 2: on any quality, or the corrosive effects of.

882
00:51:19,480 --> 00:51:21,760
Speaker 3: Inequality on society.

883
00:51:22,239 --> 00:51:25,080
Speaker 2: And I thought your question was really good, which is

884
00:51:25,120 --> 00:51:28,080
Speaker 2: like many people economists could say, like, look, you're better

885
00:51:28,120 --> 00:51:31,360
Speaker 2: off too it in this relationship you uber driver, Like

886
00:51:31,719 --> 00:51:35,160
Speaker 2: maybe you feel that you're maybe people find it to

887
00:51:35,200 --> 00:51:37,960
Speaker 2: not be great work, but the alternative is nothing or whatever.

888
00:51:38,239 --> 00:51:40,640
Speaker 3: You're not a billionaire, but at least your employee.

889
00:51:40,200 --> 00:51:42,400
Speaker 2: You're employed, right, And this is something and a lot

890
00:51:42,400 --> 00:51:45,959
Speaker 2: of people say, Look, everyone is on paper or maybe

891
00:51:46,000 --> 00:51:50,040
Speaker 2: even in reality, better off from this set of transactions. Right,

892
00:51:50,320 --> 00:51:52,799
Speaker 2: But then it aggregates up to something that I think

893
00:51:52,840 --> 00:51:54,800
Speaker 2: people find to be very destabilizing.

894
00:51:55,840 --> 00:51:58,840
Speaker 3: Right, So intuitively, a lot of people seem unhappy with

895
00:51:58,920 --> 00:51:59,880
Speaker 3: their current situation.

896
00:52:00,000 --> 00:52:02,600
Speaker 2: All right, so the transaction makes everyone happier in the

897
00:52:02,640 --> 00:52:05,640
Speaker 2: micro sense. But then when everyone when it all scales out,

898
00:52:06,120 --> 00:52:09,120
Speaker 2: this sort of like deep inequality. Who has the means

899
00:52:09,160 --> 00:52:12,840
Speaker 2: to create, who has the ability to like actually do something,

900
00:52:13,120 --> 00:52:16,200
Speaker 2: who is just a sort of who is not in

901
00:52:16,239 --> 00:52:19,480
Speaker 2: that position? I think it feels very again destabilizing.

902
00:52:19,640 --> 00:52:23,759
Speaker 3: Yeah, I do think. I mean, to Jommy's point, like

903
00:52:23,880 --> 00:52:26,160
Speaker 3: it does feel like so much of it just boils

904
00:52:26,200 --> 00:52:29,440
Speaker 3: down to politics, right, yeah, right, like the economy itself,

905
00:52:30,560 --> 00:52:32,960
Speaker 3: to go back to how we began. This conversation did

906
00:52:33,000 --> 00:52:37,440
Speaker 3: not spring forth from the universe. It's a human construction

907
00:52:37,760 --> 00:52:41,880
Speaker 3: and we put a lot of thought and effort into

908
00:52:42,000 --> 00:52:45,960
Speaker 3: how it actually works. And that's a political that Yeah,

909
00:52:46,400 --> 00:52:47,520
Speaker 3: that's a political reality.

910
00:52:47,760 --> 00:52:49,960
Speaker 2: Yeah. And like you know, we could talk all this

911
00:52:50,000 --> 00:52:53,960
Speaker 2: stuff and like the contrast with Chinese industrial policy I

912
00:52:54,000 --> 00:52:56,720
Speaker 2: think is very helpful for juries as one is. Okay,

913
00:52:56,760 --> 00:53:00,279
Speaker 2: you could look at various things and say, well, this

914
00:53:00,320 --> 00:53:02,040
Speaker 2: is actually very effective, and there was a role for

915
00:53:02,080 --> 00:53:05,879
Speaker 2: the public sector and so forth, but it's like we're

916
00:53:05,920 --> 00:53:08,560
Speaker 2: all at each other's throats. Yeah, right, then you're never

917
00:53:08,600 --> 00:53:12,200
Speaker 2: going to have any hope of like operationalizing these ideas,

918
00:53:12,320 --> 00:53:14,399
Speaker 2: and this why I've said this before, Like I feel

919
00:53:14,400 --> 00:53:18,800
Speaker 2: like there are certain societal problems that truly like precede economics. Yeah,

920
00:53:18,840 --> 00:53:21,920
Speaker 2: the toolkit does not entirely exist in economics to solve

921
00:53:22,000 --> 00:53:24,120
Speaker 2: problems that on payper loook economic right.

922
00:53:25,040 --> 00:53:28,279
Speaker 3: This I think is important because in the neoclassical perspective,

923
00:53:28,360 --> 00:53:32,759
Speaker 3: so everything springs from the economy and the focus is

924
00:53:32,800 --> 00:53:38,920
Speaker 3: on the economy itself. Meanwhile, as a society, you know,

925
00:53:39,000 --> 00:53:42,600
Speaker 3: you might want to prioritize different outcomes, like maybe we

926
00:53:42,600 --> 00:53:44,840
Speaker 3: should all be happy. You know, I would like to

927
00:53:44,880 --> 00:53:49,359
Speaker 3: prioritize everyone's happiness. And to your point, like if we're

928
00:53:49,400 --> 00:53:52,840
Speaker 3: all focused on relative gains, if free market capitalism is

929
00:53:52,880 --> 00:53:56,560
Speaker 3: increasing inequality, then that might not necessarily do that.

930
00:53:57,360 --> 00:54:01,840
Speaker 2: We should prioritize everyone getting off their devices and reading,

931
00:54:02,040 --> 00:54:04,000
Speaker 2: and then I think we'll have a touch grass, we'll

932
00:54:04,040 --> 00:54:04,880
Speaker 2: have better outcomes.

933
00:54:04,960 --> 00:54:09,320
Speaker 3: Yeah, we're getting dangerously close to like talking about Bhuton

934
00:54:09,480 --> 00:54:10,800
Speaker 3: and national.

935
00:54:10,840 --> 00:54:12,799
Speaker 2: You know, we got to I've read some.

936
00:54:13,239 --> 00:54:16,040
Speaker 3: Yeah, I know, I know that's why we should stop.

937
00:54:16,080 --> 00:54:16,759
Speaker 3: Shall we leave it there?

938
00:54:16,840 --> 00:54:17,640
Speaker 2: Yeah, let's leave it there?

939
00:54:17,640 --> 00:54:18,040
Speaker 4: All right.

940
00:54:18,120 --> 00:54:20,680
Speaker 3: This has been another episode of the ad Loots podcast.

941
00:54:20,800 --> 00:54:23,960
Speaker 3: I'm Tracy Alloway. You can follow me at Tracy Alloway.

942
00:54:23,680 --> 00:54:26,280
Speaker 2: And I'm Jill Wisnenthal. You can follow me at The Stalwart.

943
00:54:26,560 --> 00:54:30,120
Speaker 2: Follow our producers Carmen Rodriguez at Carmen armandesh Ol Bennett

944
00:54:30,120 --> 00:54:32,799
Speaker 2: at Dashbot and kill Brooks at Kilbrooks. And for more

945
00:54:32,800 --> 00:54:35,399
Speaker 2: odd Laws content, go to Bloomberg dot com slash odd

946
00:54:35,440 --> 00:54:38,040
Speaker 2: lots we're the daily newsletter and all of our episodes,

947
00:54:38,200 --> 00:54:40,040
Speaker 2: and you can shout about all of these topics twenty

948
00:54:40,080 --> 00:54:44,200
Speaker 2: four seven in our discord Discord dot gg slash odd lots.

949
00:54:44,120 --> 00:54:46,239
Speaker 3: And if you enjoy a thoughts, if you want us

950
00:54:46,280 --> 00:54:49,640
Speaker 3: to do more episodes on the intellectual history of economics,

951
00:54:49,640 --> 00:54:52,600
Speaker 3: then please leave us a positive review on your favorite

952
00:54:52,600 --> 00:54:56,359
Speaker 3: podcast platform. And remember, if you are a Bloomberg subscriber,

953
00:54:56,440 --> 00:54:59,520
Speaker 3: you can listen to all of our episodes absolutely add free.

954
00:55:00,040 --> 00:55:02,240
Speaker 3: All you need to do is find the Bloomberg channel

955
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