WEBVTT - Jamee Moudud on the Intellectual Roots of Zohranomics 0:00:02.720 --> 0:00:16.520 Bloomberg Audio Studios, Podcasts, Radio News. 0:00:18.360 --> 0:00:21.599 Hello and welcome to another episode of the Odd Lots podcast. 0:00:21.640 --> 0:00:24.040 I'm Joe Wisenthal and I'm Tracy Alloway. 0:00:24.480 --> 0:00:27.720 Tracy, it's January twenty eighth. I think our new mayor 0:00:28.320 --> 0:00:30.680 here in New York City. Maybe he hasn't done much, 0:00:30.720 --> 0:00:34.440 but the snowstorm seemed to go fairly well, not too 0:00:34.440 --> 0:00:35.279 many big disruptions. 0:00:35.320 --> 0:00:37.760 I wasn't here, but you were able to walk around, 0:00:37.880 --> 0:00:38.960 get out of your apartment. 0:00:39.240 --> 0:00:42.720 There have been several mayors who's like entire reputation failed 0:00:42.760 --> 0:00:45.720 because they couldn't handle a snowstorm, and so he seems 0:00:45.720 --> 0:00:46.960 to have passed the first test. 0:00:47.040 --> 0:00:49.920 So it feels like a low bar for New York mayors. 0:00:49.920 --> 0:00:52.239 I gotta say, my guess is, if we looked at 0:00:52.680 --> 0:00:54.720 I agree it is a low bar. But on the 0:00:54.720 --> 0:00:57.000 other hand, it's like, Okay, first big test of the 0:00:57.040 --> 0:01:00.440 new administration seems to be doing well. I don't think however, 0:01:00.920 --> 0:01:06.679 ultimately the Zarnmumdan the administration will be judged on snow removal, 0:01:06.760 --> 0:01:08.679 like this is not going to be how history probably 0:01:08.720 --> 0:01:09.520 remembers how well. 0:01:09.720 --> 0:01:12.479 No, and he certainly wasn't elected on his snow removal. 0:01:12.560 --> 0:01:13.880 No, no, this is capabilities. 0:01:13.920 --> 0:01:15.960 Although I did see the videos of him, you know, 0:01:16.280 --> 0:01:17.399 getting his shovel out, and. 0:01:17.400 --> 0:01:20.280 He's so good at like retail politics like that was like, say, 0:01:20.400 --> 0:01:21.280 he's so good at that. 0:01:21.400 --> 0:01:21.720 Yeah. 0:01:21.760 --> 0:01:25.200 But speaking of tests, I mean there are bigger tests 0:01:25.240 --> 0:01:29.760 coming up, right, mostly concentrated in the economic policies heah. 0:01:30.000 --> 0:01:32.240 Right, I think we know, like sort of and of 0:01:32.240 --> 0:01:35.240 course we talked to him, but like the affordability question 0:01:35.600 --> 0:01:40.280 in New York City clearly central one of the if 0:01:40.480 --> 0:01:44.080 the most central topic in the campaign. And what I 0:01:44.120 --> 0:01:47.080 would say is that the very most, not all of them, 0:01:47.120 --> 0:01:49.680 but at least a handful of the ideas that he's 0:01:49.760 --> 0:01:53.960 proposed are the types of ideas that like, economists hate them, right, So, 0:01:54.120 --> 0:01:58.440 especially anything where the government is intervening in rent, the 0:01:58.520 --> 0:02:00.640 idea of Like I there might not be a more 0:02:00.680 --> 0:02:05.000 hated idea among economists than anything that smacks rent control 0:02:05.080 --> 0:02:05.920 or anything like that. 0:02:06.080 --> 0:02:06.280 Right. 0:02:06.440 --> 0:02:08.840 So, I am not very knowledgeable when it comes to 0:02:09.160 --> 0:02:12.760 actual economic theory and how it's developed over time. But 0:02:13.000 --> 0:02:14.920 one thing I do know is that you know, the 0:02:14.960 --> 0:02:20.280 sort of forerunner or ancestor of a lot of traditional 0:02:20.320 --> 0:02:24.079 economic theory that we see today, like neoclassical economic theory 0:02:24.600 --> 0:02:28.120 Adam Smith, right, talking about like the freehand of the 0:02:28.160 --> 0:02:32.200 market and how if the market is functioning, like everything 0:02:32.240 --> 0:02:34.600 should be fine, right, Yeah, And. 0:02:35.040 --> 0:02:38.079 I think like economists, even like you know, almost all 0:02:38.120 --> 0:02:40.919 but the most sort of true hardcore lais a fair 0:02:41.320 --> 0:02:44.720 economists would say that there are areas that you know, 0:02:44.840 --> 0:02:47.120 they call it market failure, right right, there are certain 0:02:47.160 --> 0:02:51.000 situations in which maybe we can't expect markets to do 0:02:51.040 --> 0:02:53.160 the job. Maybe they'd say, like, oh, it really doesn't 0:02:53.160 --> 0:02:56.120 make sense. They have like private fire departments for example, 0:02:56.160 --> 0:02:59.960 although some people actually do propose private fire departments. But yeah, 0:03:00.120 --> 0:03:03.280 you know, even the most sort of like true believers, 0:03:03.320 --> 0:03:06.600 a sort of liberal or neoclassical economics, they're like, oh, yeah, 0:03:06.600 --> 0:03:07.520 well there are market. 0:03:07.240 --> 0:03:09.960 Failure, is right, in which case the government should see then. 0:03:09.880 --> 0:03:12.440 There's a role, but only in failure that unless you 0:03:12.880 --> 0:03:15.520 like define some areas like okay, there's a reason why 0:03:15.560 --> 0:03:19.160 markets don't work for this particular area, but that after 0:03:19.320 --> 0:03:23.280 then sandboxing a few of those things, then it's like, okay, 0:03:23.280 --> 0:03:25.840 as much as possible, you just want. 0:03:25.639 --> 0:03:28.520 To you all about don't interfere. 0:03:28.160 --> 0:03:29.480 Let the price signals do their work. 0:03:29.560 --> 0:03:33.799 Yeah, so this has become I guess the orthodoxy, and 0:03:33.919 --> 0:03:38.680 Mamdani is very much in the the heterodox. The heterodox. Yeah, 0:03:38.720 --> 0:03:41.160 that's a word that always comes up when people are 0:03:41.200 --> 0:03:43.640 talking about well, when economists start talking about policies that 0:03:43.640 --> 0:03:44.200 they don't like. 0:03:44.200 --> 0:03:48.280 That's that's right. It's a euphemism for policies that they 0:03:48.360 --> 0:03:50.480 they're like, ohtho, at least a handful of people wear 0:03:50.520 --> 0:03:53.360 that bad shortly. But like these history, how do they 0:03:53.400 --> 0:03:56.720 become the orthodoxy, et cetera. Right, like, it's not the 0:03:56.800 --> 0:04:00.040 law of gravity or that the Earth is round, and 0:04:00.520 --> 0:04:03.240 which are orthodox ideas for a good reason. There are 0:04:03.280 --> 0:04:05.440 some people who don't believe that the Earth is round, 0:04:05.840 --> 0:04:08.560 but they're like, I think we is pretty good. We 0:04:08.600 --> 0:04:09.720 have good reason to believe it. 0:04:09.920 --> 0:04:10.600 And they are the. 0:04:10.560 --> 0:04:13.680 People who don't believe that the round. They're not heterodox. 0:04:13.720 --> 0:04:16.600 They're cranks, right, right, Like that's like they're sort of 0:04:16.640 --> 0:04:19.080 a difference. Those are cranks. And so, but where do 0:04:19.200 --> 0:04:22.800 these orthodoxies emerge from? How did some ideas get shunted 0:04:22.880 --> 0:04:25.880 into the category of heterodoxy or whatever. 0:04:25.680 --> 0:04:26.600 And how did they evolve? 0:04:26.640 --> 0:04:28.200 I have no idea, Like, I mean, I've read a 0:04:28.200 --> 0:04:30.360 little bit about the past, but this is not much. 0:04:30.680 --> 0:04:31.560 I don't know much about this. 0:04:31.600 --> 0:04:32.400 We should talk about it. 0:04:32.480 --> 0:04:35.920 We should, especially because our new mayor may in fact 0:04:36.000 --> 0:04:40.039 pursue some heterodox ideas about economic management. Anyway, I'm very 0:04:40.040 --> 0:04:42.159 excited to say, we really do have the perfect guest. 0:04:42.160 --> 0:04:44.080 We're going to be speaking with, Jommy Modude. He is 0:04:44.120 --> 0:04:47.400 a professor of economics at Sarah Lawrence College, also a 0:04:47.440 --> 0:04:50.880 board member of the Law and Political Economy Collective, and 0:04:50.920 --> 0:04:54.120 he's written a lot about these topics, including sort of 0:04:54.160 --> 0:04:58.320 the intellectual history of some of these economic ideas. So, Jommy, 0:04:58.440 --> 0:04:59.880 thank you so much for coming on. 0:04:59.800 --> 0:05:02.320 Ou thank you so much. Joe and Tracy, what kind 0:05:02.360 --> 0:05:02.960 of stuff. 0:05:02.680 --> 0:05:05.000 You're teaching the kids at Sarah Lawrence these days? 0:05:05.120 --> 0:05:07.919 So the interesting thing is I teach Introduction to Economic 0:05:07.960 --> 0:05:10.680 Theory and Policy, which is a year long lecture and 0:05:10.720 --> 0:05:14.360 that actually deals with some of these central questions markets, money, 0:05:14.400 --> 0:05:17.960 the monetary system, and so on. And I actually teach econometrics. 0:05:18.680 --> 0:05:21.320 When you say actually, it's because like people don't expect 0:05:21.320 --> 0:05:25.120 this sort of unorthodox thinker to like actually do the numbers, 0:05:25.520 --> 0:05:26.440 the technical stuff. 0:05:26.560 --> 0:05:28.440 So it's interesting that you posted it that way because 0:05:28.480 --> 0:05:31.040 one of the things that I do teach in econometrics 0:05:31.120 --> 0:05:33.760 is method, like you know, like when you're it's not 0:05:33.839 --> 0:05:35.480 just about number crunching, but where do you get the 0:05:35.560 --> 0:05:39.359 numbers from? Yeah, and so like weaving in these questions 0:05:39.360 --> 0:05:42.080 of method as we're trying to understand social and economic 0:05:42.160 --> 0:05:47.719 reality is it makes for a solid training in economics. 0:05:47.760 --> 0:05:51.760 And you know, so those questions of method woven into 0:05:51.760 --> 0:05:54.520 the construction of theory, Yeah, that kind of informs the 0:05:54.520 --> 0:05:58.640 way I teach. And why that matters, not just as 0:05:58.800 --> 0:06:01.440 kind of a an inn ellectual exercise, but why that 0:06:01.480 --> 0:06:05.400 matters for practical issues like what you guys were talking about. 0:06:05.600 --> 0:06:08.640 So truly the perfect guests. Maybe just to begin with, 0:06:08.760 --> 0:06:12.240 we could perhaps define our terms a little bit. You know, 0:06:12.440 --> 0:06:16.640 Joe and I gave a properly terrible summary of neoclassical 0:06:16.680 --> 0:06:22.239 economic thought. But in your mind, what is the orthodoxy? 0:06:22.360 --> 0:06:28.040 So the orthodoxy is neoclassical economics. It comes from an 0:06:28.040 --> 0:06:33.080 intellectual tradition, which so if I may differ a little 0:06:33.080 --> 0:06:36.359 bit with what you say, Smith, Adam Smith is not 0:06:36.440 --> 0:06:41.080 the forerunner of neoclassical economics. The expression invisible hand in 0:06:41.080 --> 0:06:43.360 but I have my students do this experiment every time 0:06:43.400 --> 0:06:46.000 because it's an eight hundred page book The Wealth of Nations. 0:06:46.920 --> 0:06:50.239 How many times does the expression invisible hand appear there? Once? 0:06:50.720 --> 0:06:55.279 So the point here is that there was an older 0:06:55.400 --> 0:07:01.080 idea of what markets and of capitalism are and that 0:07:01.080 --> 0:07:03.360 gets revived again in the nineteen twenties and thirties, and 0:07:03.400 --> 0:07:06.479 I'll talk about that later. But that older idea, which 0:07:06.480 --> 0:07:10.440 is called classical political economy, did not make any assumptions 0:07:10.440 --> 0:07:14.520 about human behavior, that human beings are inherently rational, that 0:07:14.880 --> 0:07:18.280 markets behave in this optimal manner full employment. That would 0:07:18.320 --> 0:07:23.360 be neoclassical economics, right, that knowledge is more or less perfect. 0:07:24.000 --> 0:07:26.040 There was none of that you're. 0:07:25.880 --> 0:07:29.200 Talking about in the classical economics prior to neoclassical exactly 0:07:29.680 --> 0:07:31.880 talk what years and what thinkers are we talking about? 0:07:31.920 --> 0:07:34.800 So we could just talk about Adam Smith, Okay, yeah, great, 0:07:34.920 --> 0:07:37.640 to some extent, David Ricardo or Karl Marx, the physiocrats. 0:07:37.640 --> 0:07:40.000 I mean, so you had a range of authors in 0:07:40.080 --> 0:07:44.160 a wide range, ideologically not necessarily on the same page, 0:07:44.600 --> 0:07:49.320 but they had a vision of capitalism, which so the 0:07:49.360 --> 0:07:53.640 original name of economics was political economy, and that meant 0:07:53.720 --> 0:07:58.240 that you cannot really talk about economic questions without thinking 0:07:58.320 --> 0:08:02.560 simultaneously about and many of these folks were actually trained 0:08:02.600 --> 0:08:08.000 in law, So the question of law's role in structuring 0:08:08.080 --> 0:08:11.480 the economy this kind of lurks in that intellectual tradition, 0:08:12.000 --> 0:08:15.440 and one of the implications was that the economy is 0:08:15.520 --> 0:08:22.400 not some natural transhistorical institution or thing, but it is 0:08:22.560 --> 0:08:26.680 profoundly a product of history. And I think that's where 0:08:26.840 --> 0:08:30.200 the big split arises, because if you teach or if 0:08:30.200 --> 0:08:33.440 you study neoclassical economics, it is taught in a way 0:08:33.559 --> 0:08:37.640 by which the economy is treated as something eternal, as 0:08:37.679 --> 0:08:42.280 something almost in naturalistic terms, and therefore, like gravity, the 0:08:42.360 --> 0:08:46.280 economy is always there exactly. But also like the rational 0:08:46.320 --> 0:08:50.880 individual general equilibrium theory, all of these things are supposedly 0:08:51.040 --> 0:08:55.079 just happen. And in that sense, this idea of lesser 0:08:55.080 --> 0:08:58.400 affair that the economy is fundamentally pre political, that it 0:08:58.480 --> 0:09:02.000 arises before politics, rather like the kernel of a walnut, 0:09:02.640 --> 0:09:05.959 in which the walnut, which is the shell is if 0:09:05.960 --> 0:09:10.280 you think is constitutional law or politics or law that 0:09:10.720 --> 0:09:15.199 emanates from politics, that would encase this thing called the economy. 0:09:15.679 --> 0:09:18.920 And only under extreme search of this new classical economics, 0:09:19.240 --> 0:09:22.040 if there is quote unquote market failure, then the state 0:09:22.080 --> 0:09:23.640 can step in a little bit to do this that 0:09:23.760 --> 0:09:26.800 or the other, but fundamentally leave the market B. And 0:09:26.840 --> 0:09:31.120 you're familiar with this argument. This idea is not really 0:09:31.120 --> 0:09:34.040 there in Smith. And one of the things that people 0:09:34.080 --> 0:09:36.400 sometimes get surprised about, and I always tell this to 0:09:36.440 --> 0:09:40.120 my students is read his chapter on wages in the 0:09:40.120 --> 0:09:43.360 Wealth of Nations, and he says very clearly that there 0:09:43.559 --> 0:09:47.599 is a difference in power between those who own property 0:09:47.840 --> 0:09:51.560 and workers who don't own property. So this idea that 0:09:51.600 --> 0:09:54.760 the market is sort of this place where equals me 0:09:54.960 --> 0:09:57.600 to create contracts that was not in Smith. It was 0:09:57.640 --> 0:09:59.520 not in Ricardo. And of course you know that was 0:09:59.559 --> 0:10:03.040 not there. But people if you evoke marks, then people 0:10:03.080 --> 0:10:05.800 often say, well, you talk about socialism, Well Smith was 0:10:05.840 --> 0:10:06.599 not a socialist. 0:10:07.240 --> 0:10:11.240 What is his idea? Like, what was his contribution? Or 0:10:11.720 --> 0:10:13.720 I admit, like I'm like guilty too. It's like, oh, 0:10:13.760 --> 0:10:18.720 Adam Smith, the visible hand, right, the butcher. But I 0:10:18.800 --> 0:10:20.840 have been told and I have heard that the sort 0:10:20.880 --> 0:10:23.199 of caricature that we all have of Smith is wrong. 0:10:23.440 --> 0:10:24.559 What was his project? 0:10:24.880 --> 0:10:26.960 So I think the way to think about it is, 0:10:27.120 --> 0:10:28.920 you know, just to sort of get out something which 0:10:28.920 --> 0:10:33.000 I think is kind of important which is institutions. Okay, Now, 0:10:33.040 --> 0:10:35.120 there have been many different readings of Adam Smith, and 0:10:35.160 --> 0:10:36.720 so I'll come to them in a little bit, but 0:10:37.440 --> 0:10:39.760 just to get it out there. When when you talk 0:10:39.800 --> 0:10:44.280 about institutions, you're talking about the system of implicit and 0:10:44.360 --> 0:10:49.600 explicit social constraints within which we exist. Right. So we 0:10:49.720 --> 0:10:52.960 are having the spontaneous conversation, but in the context of 0:10:53.000 --> 0:10:56.640 a building which is subject to certain zoning laws and 0:10:56.720 --> 0:10:59.400 so on, we may and you know, in current zoning 0:10:59.480 --> 0:11:01.520 laws we cannot smoke, but. 0:11:01.640 --> 0:11:03.840 We were certain expectations involved. 0:11:03.920 --> 0:11:06.120 But those expectations are codified in a kind of a 0:11:06.200 --> 0:11:10.400 legal framework. Right. So institutions, the formal institution is law, 0:11:11.000 --> 0:11:15.320 and informal institutions are cultural norms, and notions are right 0:11:15.360 --> 0:11:18.600 and wrong and justice and all this. So Adam Smith, 0:11:19.320 --> 0:11:23.360 according to I think is a convincing strain of thought, 0:11:23.679 --> 0:11:27.480 was an institutionalist. He understood that, yes, the sphere of 0:11:27.640 --> 0:11:34.840 private behavior, private interactions, lesser affair, actually sits on a 0:11:35.720 --> 0:11:40.679 foundation which is of human creation, the system of property 0:11:40.760 --> 0:11:43.679 rights and the system, you know, the system of power 0:11:43.679 --> 0:11:47.679 relations and all of that. So politics was already there. 0:11:48.400 --> 0:11:51.360 It's not that the economy was pre political. Now those ideas. 0:11:51.360 --> 0:11:55.120 If you read Adam Smith his Glasgow University Lectures seventeen, 0:11:55.120 --> 0:11:56.840 you know that was before the Wealth of Nations. It's 0:11:57.000 --> 0:12:00.280 very clear that he's writing that. But what happened, says, 0:12:00.320 --> 0:12:04.040 the rise of neoclassical economics in the late nineteenth century 0:12:04.360 --> 0:12:08.840 eviscerates that history and it changes the story. The political 0:12:08.920 --> 0:12:11.920 goes out of a political economy and it becomes economics, 0:12:12.360 --> 0:12:16.640 so the principles of economics and so then this generation 0:12:17.080 --> 0:12:21.320 of economists are trained to think of the economy as 0:12:21.600 --> 0:12:28.480 completely separate from politics, and that in the post war period, 0:12:29.360 --> 0:12:31.520 so that leads to what is called the Walrasian general 0:12:31.559 --> 0:12:34.760 equilibrium theory. And I'll be happy to explain that, Arla. 0:12:35.320 --> 0:12:38.119 Can I just ask? I have so many questions already, 0:12:38.280 --> 0:12:42.000 but what was the environment that actually gave rise to 0:12:42.040 --> 0:12:43.680 the neoclassical So. 0:12:43.640 --> 0:12:46.680 This is really interesting because we're talking about the late 0:12:46.760 --> 0:12:52.200 nineteenth century and this is a time of enormous social turmoil. 0:12:52.640 --> 0:12:56.240 So to think that an idealized view of markets would 0:12:56.280 --> 0:12:59.040 arise when you know, you've got the great Depression of 0:12:59.040 --> 0:13:00.640 the eighteen ninety. 0:13:00.440 --> 0:13:02.320 And then it goes through World War One and World 0:13:02.400 --> 0:13:02.800 War two. 0:13:02.880 --> 0:13:05.520 Yeah, yeah, But here's the funny thing that happens in 0:13:05.559 --> 0:13:10.000 this tradition. So what is interesting about American economics is 0:13:10.000 --> 0:13:15.600 that the American Economic Association is founded by institutionalists. But 0:13:15.720 --> 0:13:19.560 institutionalists not of the neoclassical kind. They were explicit. So 0:13:19.600 --> 0:13:23.560 they were trained, these authors like Richard T. Eli and others. 0:13:23.800 --> 0:13:27.040 They were trained in the German historical school of economics. 0:13:27.320 --> 0:13:30.240 And the method of the German Historical school of economics 0:13:30.480 --> 0:13:34.760 was that theory has to be constructed in dialogue with 0:13:34.840 --> 0:13:41.000 social reality. W. E. B. Du Bois trains at Berlin 0:13:41.880 --> 0:13:45.200 but as a sociologist, and he brings that method to 0:13:45.559 --> 0:13:48.600 the study of racial inequalities in this country, in which 0:13:48.640 --> 0:13:52.920 he's constructing a theory of race and class by looking 0:13:53.000 --> 0:13:55.960 at actually the living standards of black people in this country. 0:13:56.040 --> 0:13:56.240 Right. 0:13:56.240 --> 0:14:00.120 So it's a particular method that was not deductive, but 0:14:00.160 --> 0:14:04.800 it was inductive. It was engaging with social reality. So 0:14:04.880 --> 0:14:09.160 what happens is that when the AEA is constructed of 0:14:09.480 --> 0:14:13.320 American Economic Association, these are institutionalists of that kind, and 0:14:13.400 --> 0:14:17.640 they come to dominate American economics right through the nineteen thirties, 0:14:18.800 --> 0:14:23.760 informing many of these economists lawyers who are part of 0:14:24.080 --> 0:14:27.080 Roosevelt's brains trust. I mean, many of those folks were lawyers, 0:14:27.360 --> 0:14:30.200 but you had these folks who were trained in a 0:14:30.240 --> 0:14:34.640 way by which they were absolutely opposed to this idea 0:14:34.680 --> 0:14:39.000 that the economy is pre political. What happens in the 0:14:39.120 --> 0:14:45.000 nineteen forties is the war, and then you had the role. 0:14:45.120 --> 0:14:47.640 And so Philip Morowski discusses this in his book Is 0:14:47.640 --> 0:14:51.840 a Historian of Economic Thought, Machine Dreams, in which he 0:14:52.080 --> 0:14:58.760 argues that economics eventually becomes dominated by mathematicians and engineers 0:14:59.080 --> 0:15:03.360 who kind of eviscerates society and politics and history and 0:15:03.520 --> 0:15:09.360 construct the economy as a machine populated by cybords right, 0:15:09.440 --> 0:15:14.240 pre program perfectly rational, exactly all knowing, all seeing, et cetera, 0:15:14.320 --> 0:15:21.040 et cetera, And that way of conceptualizing economics eclipses this 0:15:21.280 --> 0:15:24.640 older tradition and in so doing becomes dominant in the 0:15:24.760 --> 0:15:27.880 nineteen fifties and sixties. And in this way, I mean 0:15:28.040 --> 0:15:30.840 very much a state project, in the sense that these 0:15:30.880 --> 0:15:35.200 folks were employed at institutions that got a lot of 0:15:35.240 --> 0:15:39.440 money from the Department of Defense. So there was a 0:15:39.560 --> 0:15:43.120 very sort of like an intellectual framework is being constructed 0:15:43.680 --> 0:15:47.520 about the economy in which many of these authors were 0:15:47.640 --> 0:15:53.560 very explicitly trying to model weapons systems, input output, that 0:15:53.680 --> 0:15:56.440 kind of thing, and that how do you optimize this 0:15:56.560 --> 0:15:59.280 input output system that the flying plane, how to shoot 0:15:59.280 --> 0:16:02.880 it down, et cetera. So the economy becomes this engine 0:16:03.400 --> 0:16:08.200 and becomes increasingly more and more mathematically sophisticated, but in 0:16:08.280 --> 0:16:13.680 so doing divorce from social reality. In nineteen eighty five 0:16:14.320 --> 0:16:19.560 eighty six, the National Science Foundation convened a symposium on 0:16:19.640 --> 0:16:22.600 the state of economics teaching in the top graduate schools, 0:16:23.440 --> 0:16:27.840 and they were extremely concerned about what was being taught. 0:16:28.440 --> 0:16:34.000 That led to the Commission on Graduate Education in Economics. 0:16:34.320 --> 0:16:37.360 It was a survey of the top graduate programs in 0:16:37.400 --> 0:16:41.200 economics and the article in question was published in the 0:16:41.240 --> 0:16:45.680 Journal of Economic Literature, and it was pretty dismal because 0:16:45.720 --> 0:16:50.160 it was saying that these students are learning math, econ, 0:16:50.720 --> 0:16:54.840 but they cannot apply this to social reality. And the 0:16:54.920 --> 0:16:58.400 conclusion was quite interesting. They said, the concern is that 0:16:58.760 --> 0:17:03.120 the profession is trained idiot savants. That was an exact 0:17:03.240 --> 0:17:04.719 term in the JEL article. 0:17:05.040 --> 0:17:07.400 It's not the worst thing that's ever been said about economists. 0:17:07.440 --> 0:17:08.400 Yeah, that's true. That's true. 0:17:08.600 --> 0:17:11.399 So this issue of the way by which the discipline 0:17:11.440 --> 0:17:16.159 itself has sort of captured the narrative in which math 0:17:16.320 --> 0:17:20.439 becomes rigor as opposed to history and society, and so 0:17:20.600 --> 0:17:24.879 then government intervention and non intervention become the sort of 0:17:25.200 --> 0:17:28.400 flashpoints of the fight. But it's a false debate, I would. 0:17:28.240 --> 0:17:46.880 Argue, can we talk a little bit more about the 0:17:47.119 --> 0:17:53.040 post war environment coming out of the nineteen forties? My impulse, 0:17:53.560 --> 0:17:55.639 I feel like if I were there, it's like, you know, 0:17:56.480 --> 0:17:59.439 governments can be absolute monsters, right, and or. 0:17:59.440 --> 0:18:00.560 You're talking about McCarthy. 0:18:00.960 --> 0:18:05.239 No, I'm talking about the rise of militaristic dictators all 0:18:05.240 --> 0:18:07.560 around the world. True, like true, the sort of like 0:18:07.800 --> 0:18:10.800 monstrous creations. Of course, the first half of the twentieth 0:18:10.840 --> 0:18:15.560 century was like characterized by the rise of like. 0:18:15.800 --> 0:18:18.359 With strong dustrial policy. 0:18:18.880 --> 0:18:21.399 My impulse, like, I think if I had been around 0:18:21.440 --> 0:18:23.359 in the nineteen foury, I was like, oh, we need 0:18:23.400 --> 0:18:26.600 to like come up with an economics that constrains the 0:18:26.720 --> 0:18:30.719 state as much as possible, because we've just witnessed how 0:18:30.920 --> 0:18:33.840 the state can be absolutely monstrous and destructive. And of 0:18:33.880 --> 0:18:37.000 course right before that was the Great Depression, et cetera. Like, 0:18:37.440 --> 0:18:39.840 I don't know I would have I just in my mind, 0:18:40.600 --> 0:18:42.240 I would have a lot of sympathy for that view 0:18:42.280 --> 0:18:42.680 at the time. 0:18:43.480 --> 0:18:45.600 Here's the thing, though, so this I discussed is in 0:18:45.640 --> 0:18:46.840 one of the chapters in my book, and I had 0:18:46.880 --> 0:18:49.440 a lot of fun writing about this, is that if 0:18:49.480 --> 0:18:56.199 you look at post Second World War European reconstruction, it 0:18:56.320 --> 0:19:02.280 involved it was not less affair at all. It involved 0:19:02.320 --> 0:19:06.360 industrial and social policies, right, the mobilization of central banks. 0:19:06.760 --> 0:19:09.879 And actually the US Congress had two studies done on 0:19:10.000 --> 0:19:14.000 European central Bank's role in mobilizing finance and credit to 0:19:14.119 --> 0:19:18.560 promote industrial and social policies, you know, the reconstruction, building 0:19:18.560 --> 0:19:21.919 of hospitals, et cetera, et cetera, and the export economies 0:19:21.920 --> 0:19:24.840 and France and Germany and so so you did have 0:19:25.119 --> 0:19:30.000 a pretty strong state. But these were demo social democratic states. 0:19:30.480 --> 0:19:32.840 And this is an important point. I mean, you know, so, 0:19:33.480 --> 0:19:36.760 for example, the Bank of France is nationalized in nineteen 0:19:36.800 --> 0:19:40.520 forty five forty four, and the National Credit Council, which 0:19:40.560 --> 0:19:43.359 is at the core of the BF, has in it 0:19:43.840 --> 0:19:50.600 different constituents of French society unions, employers, farmers, and so on, 0:19:50.840 --> 0:19:54.199 who were sort of involved in planning the allocation of 0:19:54.240 --> 0:19:58.399 credit to different sectors of society. Across the border in 0:19:58.440 --> 0:20:01.360 Germany you have the KfW, which is a public bank, 0:20:01.840 --> 0:20:06.600 again with different stakeholders including unions, and they are involved 0:20:06.680 --> 0:20:11.560 in sort of the economic and social reconstruction through credit allocation. 0:20:11.680 --> 0:20:14.520 But these were democratic states, you know, So I hear 0:20:14.880 --> 0:20:17.320 that in the sense that, for sure, you can have 0:20:17.800 --> 0:20:22.880 industrial policy of a type which is consistent with authoritarianism. Yeah, 0:20:23.440 --> 0:20:26.199 and all of us would be a post authoritarianism. But 0:20:26.240 --> 0:20:29.280 there was an industrial policy of a social democratic kind also, 0:20:29.720 --> 0:20:33.040 and we have plenty of examples of those just from 0:20:33.560 --> 0:20:34.800 postwar Europe. 0:20:35.040 --> 0:20:37.800 So just to better understand, maybe we could apply some 0:20:37.840 --> 0:20:41.200 of the theory to current economic policies. When you look 0:20:41.240 --> 0:20:46.320 at Mamdani's agenda, you know, things like of freeze on 0:20:46.440 --> 0:20:49.520 rent or I think right now the hot topic is 0:20:49.520 --> 0:20:53.159 a tax on billionaires. How does that fit into the 0:20:53.200 --> 0:20:57.879 intellectual history of economics? And I guess how heterodox is 0:20:57.880 --> 0:21:00.760 it versus the orthodoxy that we've been talking about. 0:21:01.320 --> 0:21:04.359 Well, I mean it's a it's it's a it's a 0:21:04.359 --> 0:21:06.600 big question in the sense that I can answer it 0:21:06.640 --> 0:21:10.119 in two ways. One is the narrative that this is 0:21:10.160 --> 0:21:12.160 going to tank the economy. So let's just talk about 0:21:12.160 --> 0:21:13.840 the tax Park. Let's just get that out of the way, 0:21:14.160 --> 0:21:17.320 that this this small increase in the billionaires size is 0:21:17.320 --> 0:21:21.160 going to tank economy. And my responses were, geez, then 0:21:21.200 --> 0:21:23.640 capitalism would have been dead a long time ago because 0:21:23.640 --> 0:21:26.560 the sixteenth Amendment would have killed American capitalism. 0:21:27.000 --> 0:21:29.840 That was wait, remina, what's the is that the one 0:21:29.840 --> 0:21:32.000 that gave the government, the federal government the ability to. 0:21:32.440 --> 0:21:35.959 Well, that was the sixteen Amendment really legalized the progress 0:21:36.080 --> 0:21:38.600 income taxes, right, and so if you look at across 0:21:38.600 --> 0:21:41.280 the western world, you know, like in the US, tax 0:21:41.359 --> 0:21:43.679 rates were actually much more progressive in that as you 0:21:43.680 --> 0:21:46.679 know in the fifties and sixties, other countries had this 0:21:46.840 --> 0:21:50.640 growth of more progressive taxes Britain and Franz and so on. 0:21:51.160 --> 0:21:53.919 None of that led to the collapse of capitalism and. 0:21:53.920 --> 0:21:57.120 The people those were the golden agers of capitalis okay. 0:21:57.359 --> 0:22:00.800 So the question really is not the tex but what 0:22:00.880 --> 0:22:04.160 is it being used for? And right, and so's that's 0:22:04.200 --> 0:22:09.840 a separate conversation. But is that necessarily is that contrary 0:22:09.880 --> 0:22:13.440 to orthodoxy? And yes, in a way it is because 0:22:13.480 --> 0:22:16.880 it comes back to this idea that analytically, I mean, 0:22:16.920 --> 0:22:19.600 every textbook will tell you, well, you've got this self 0:22:19.600 --> 0:22:24.360 contained black box called the economy, which equilibrates at general equilibrium, 0:22:24.440 --> 0:22:28.280 the production possibility, frontier per et to optimality, all these 0:22:28.320 --> 0:22:31.560 sort of aspects of orthodoxy. So any act of state 0:22:32.040 --> 0:22:37.000 intervention into it will automatically generate some negative outcomes. Right, 0:22:37.280 --> 0:22:40.480 So from that standpoint, I would say that it is 0:22:40.520 --> 0:22:45.360 profoundy opposed to the Orthodoxy this way of thinking about it. 0:22:45.880 --> 0:22:48.680 But if you think of the Orthodoxy as a touchstone 0:22:49.000 --> 0:22:51.240 or as a gold standard, then of course you would say, well, 0:22:51.280 --> 0:22:55.280 these are outlandish ideas. But if you don't fall into that, 0:22:55.280 --> 0:22:58.119 that and then you would say, well, yeah, but this 0:22:58.200 --> 0:23:01.600 has been done. Is so weird about it? 0:23:02.480 --> 0:23:04.640 Can we go back? I want to talk more about 0:23:04.800 --> 0:23:07.960 the present tense, but we can't just like jump over 0:23:08.000 --> 0:23:09.679 the war completely without ay. 0:23:09.880 --> 0:23:11.880 You have you've talked about reconsty. 0:23:12.000 --> 0:23:14.160 No, no, no, but sorry, I want to go back 0:23:14.200 --> 0:23:17.120 to the war, not reconstruction. You're reading, or you did 0:23:17.160 --> 0:23:18.720 read Wages of Destruction. 0:23:18.520 --> 0:23:21.880 Right, which is why I mentioned German industrial policy. 0:23:22.080 --> 0:23:24.720 But it occurs to me there's something I think is 0:23:24.800 --> 0:23:26.720 very interesting. I think about it a lot, and i'd 0:23:26.760 --> 0:23:28.560 love your take out of this, Like if we hear 0:23:28.640 --> 0:23:32.159 like someone as an economist these days. Yeah, they come 0:23:32.240 --> 0:23:34.679 up with a bunch of like big ideas, they have theories, 0:23:34.800 --> 0:23:39.200 and they run tests and write papers and try to influence. 0:23:39.520 --> 0:23:42.239 But when you think of like, okay, the economists in 0:23:42.400 --> 0:23:45.840 the Department of War in whatever country was fighting at 0:23:45.880 --> 0:23:48.880 the time, et cetera, it seemed like a more humble 0:23:48.960 --> 0:23:51.920 profession in this sense, like a lot of the jobs 0:23:51.960 --> 0:23:55.880 seem to just be counting, not even like advanced mathematics 0:23:55.920 --> 0:23:58.320 per se, but the job seem to be a sort 0:23:58.359 --> 0:24:01.159 of like very like the people who keep track of 0:24:01.200 --> 0:24:05.120 the resources within the economy, and those are the economists, 0:24:05.359 --> 0:24:08.159 which sounds to me very different than the picture that 0:24:08.160 --> 0:24:09.919 we would often get in our head today. If you 0:24:09.960 --> 0:24:13.320 hear that someone is an economist, is that fair? Is 0:24:13.320 --> 0:24:14.879 that a fair understanding of history? 0:24:15.600 --> 0:24:17.080 I'm not sure that I agree. 0:24:17.200 --> 0:24:18.640 Okay, let's fine. 0:24:18.520 --> 0:24:21.359 Because I think that, I mean, in some sense, there's 0:24:21.920 --> 0:24:24.000 truth to what you're saying, because a lot of these 0:24:24.000 --> 0:24:29.000 economists who were involved in war planning, that's exactly what 0:24:29.040 --> 0:24:30.639 they were doing. I mean, you know, yeah, they were 0:24:30.720 --> 0:24:32.880 actually but they were actually doing math modeling. I mean, 0:24:32.920 --> 0:24:37.760 the whole mathematization of post war you know, math economy, 0:24:37.800 --> 0:24:41.639 and all of that really came from like sophisticated mathematical models. 0:24:41.640 --> 0:24:45.160 So it did come from that. But I think maybe 0:24:45.200 --> 0:24:47.679 what you might be getting at over here, but you know, 0:24:47.800 --> 0:24:53.280 just tell me what I'm hearing is that this notion 0:24:53.440 --> 0:24:57.359 that the economy is an engine and the economist is 0:24:57.440 --> 0:25:00.960 like this technician who is just like tinkering on with things, right, 0:25:01.240 --> 0:25:04.840 And I think this idea and so that's how the 0:25:04.880 --> 0:25:08.720 economist is kind of constructing this engine, as opposed to 0:25:08.800 --> 0:25:13.040 an economist who is actually attempting to fix the engine 0:25:13.160 --> 0:25:16.200 but also trying to see what the component parts are built. 0:25:16.240 --> 0:25:18.520 In another words, society, this is history. 0:25:18.960 --> 0:25:20.919 I'm going to take what you said and make it 0:25:20.960 --> 0:25:24.240 what I meant to say, Okay, because I do. Yeah, 0:25:24.480 --> 0:25:26.880 that's what I'm mean. Oh, that's exactly how I meant 0:25:26.920 --> 0:25:29.800 to put it. Okay, thank you for validating perspective. 0:25:30.080 --> 0:25:33.280 Okay. And I think those reflect two very rival methodologies. 0:25:33.359 --> 0:25:35.840 Ok So, I think that one of the things that 0:25:36.320 --> 0:25:41.680 so often gets missed out in the teaching of economics 0:25:41.720 --> 0:25:44.280 and then the learning of economics is that the students 0:25:44.320 --> 0:25:47.320 don't learn method They could say that way. I mean, 0:25:47.440 --> 0:25:51.160 a textbook should say Okay, this is neoclassical economics. Here 0:25:51.240 --> 0:25:55.000 is a method that is used, and here is this alternative. 0:25:55.200 --> 0:25:57.239 Call it whatever you like to. I generally don't use 0:25:57.280 --> 0:26:01.520 heterodox economics, I say critical political economy or you know 0:26:01.560 --> 0:26:05.320 that kind of thing. It employs a different method. And 0:26:05.720 --> 0:26:08.119 here's why it matters. Now, if you just do, like, 0:26:08.200 --> 0:26:11.760 spend a few chapters on that, that already sets the 0:26:11.760 --> 0:26:15.159 stage for an intelligent conversation. But if you don't do that, 0:26:15.680 --> 0:26:19.600 and it's just that this is economics, then what happens 0:26:19.680 --> 0:26:23.679 is it it kind of leaves out any possibility of 0:26:23.760 --> 0:26:30.480 even understanding the world. Right, So Chinese, the Chinese economic miracle, 0:26:30.600 --> 0:26:34.800 or the Japanese economic miracle, those are seen as somehow 0:26:35.600 --> 0:26:38.680 I don't know that they were cheating, right, right, this 0:26:39.080 --> 0:26:42.239 notion that these countries were cheating, as opposed to saying, well, 0:26:42.400 --> 0:26:45.000 you know, they use industrial policy of a certain kind, 0:26:45.640 --> 0:26:49.080 so did Sweden of a different kind in the post 0:26:49.119 --> 0:26:52.320 war period, And can we learned something from that theoretically? 0:26:52.680 --> 0:26:54.840 And what does that say about the relationship in politics 0:26:54.880 --> 0:26:57.040 and economics, which is exactly where we started out with. 0:26:57.520 --> 0:26:59.600 And I think that's the way the conversation should go. 0:27:00.840 --> 0:27:03.240 Can you just remind me very quickly, but how does 0:27:03.400 --> 0:27:07.440 neoclassical economics actually explain the fact that we do have 0:27:07.560 --> 0:27:10.840 market failures? Right? Because in theory, if the market is 0:27:10.920 --> 0:27:16.959 perfectly functioning and always generating an optimal outcome, always at 0:27:17.119 --> 0:27:21.439 equilibrium between supply and demand or whatever, they shouldn't be happening, right, 0:27:21.480 --> 0:27:24.800 And yet throughout history we have market failures all the time. 0:27:25.280 --> 0:27:28.040 So that's the way where I would say that market 0:27:28.040 --> 0:27:31.880 failures don't actually exist, because I mean, think about one 0:27:32.240 --> 0:27:37.359 instance of what is often characterized as market failure. Pollution. Now, 0:27:37.600 --> 0:27:43.120 pollution is ubiquitous. I mean any act of production involves 0:27:43.240 --> 0:27:46.600 inputs of raw materials which are extracted from somewhere. Then 0:27:46.640 --> 0:27:50.800 you've got a physico chemical process, outcomes and output, and 0:27:50.840 --> 0:27:52.800 it could be an intangible output, it could be you know, 0:27:52.920 --> 0:27:57.240 the output from your computer, right, And then there's waste, 0:27:58.200 --> 0:28:03.800 there's pollution. So now if pollution and waste are ubiquitous, 0:28:04.400 --> 0:28:08.000 and if market failures are ubiquitous, then they're not market 0:28:08.000 --> 0:28:12.920 failures logically, they are the legal design of the property 0:28:13.000 --> 0:28:16.919 rights that enabled the owner of the factory to actually 0:28:17.000 --> 0:28:19.480 dump chemical waste or for Google to take your in 0:28:19.600 --> 0:28:25.440 my private data, right it's a that brings you straight 0:28:25.520 --> 0:28:30.720 back to the fact that the social cost that industry, 0:28:31.280 --> 0:28:35.720 you know, can inflict, depends on the legal design of industry. 0:28:35.760 --> 0:28:39.960 So before the National Environmental Policy Actor sixty nine, industry 0:28:39.960 --> 0:28:43.320 had far greater leeway to dump more chemical waste than 0:28:43.360 --> 0:28:46.520 after that. So I would just say that, yeah, I 0:28:46.600 --> 0:28:49.600 think we need to move away from this notion of 0:28:49.640 --> 0:28:52.840 market failure. And then, you know, so that's a usual 0:28:52.840 --> 0:28:55.040 debate that well, okay, so you got market failure, then 0:28:55.120 --> 0:28:58.240 do we one state intervention or not? And I argue 0:28:58.240 --> 0:28:59.520 in the book that that's a bit of a lack 0:28:59.560 --> 0:29:03.360 of family debate between liberals and conservatives because both sides 0:29:03.400 --> 0:29:06.400 agree that there's market failure, and then one side said, well, 0:29:06.400 --> 0:29:09.840 we should probably not have state intervention, and the other 0:29:09.880 --> 0:29:12.920 side says the opposite. My point is they are always 0:29:12.960 --> 0:29:17.240 social costs, and politics, through the law, is going to 0:29:17.240 --> 0:29:20.600 be structuring the composition and level of those costs, and 0:29:20.640 --> 0:29:23.400 so I think that's where the conversation, I think should 0:29:23.400 --> 0:29:23.720 go to. 0:29:24.120 --> 0:29:27.880 So it's a political decision about which costs to minimize 0:29:28.000 --> 0:29:29.440 or avoid versus an economy. 0:29:29.480 --> 0:29:31.920 I mean, it's always been that, and that's where I 0:29:32.000 --> 0:29:34.520 think in that sense. If you come back to issues 0:29:34.560 --> 0:29:38.120 of affordability and such, I would say that if you 0:29:38.400 --> 0:29:41.600 let housing prices be whatever they are so that people 0:29:41.680 --> 0:29:45.840 lose their homes, that's as much a political structure ring 0:29:46.080 --> 0:29:51.040 of real estate as otherwise. You see what I'm saying. Yeah, 0:29:51.240 --> 0:29:54.040 So it's not any which way politics is there. The 0:29:54.120 --> 0:29:56.959 question is who's benefiting and who's losing. This is I 0:29:56.960 --> 0:29:59.040 think for me, this is the question. 0:30:14.680 --> 0:30:20.040 Okay, So there are some things where markets work very well. Right, 0:30:20.360 --> 0:30:23.240 you know, if we want to have really good bagels, 0:30:23.640 --> 0:30:25.800 then there's a good chance that like a good way 0:30:25.880 --> 0:30:27.640 to get there is you have a lot of bakery 0:30:27.840 --> 0:30:34.240 entrepreneurs and they're competing on price and quality and so forth, 0:30:34.800 --> 0:30:38.520 et cetera. But then they're gonna emmit waste. So let's 0:30:38.520 --> 0:30:41.080 just go back to the pollution example in the process, 0:30:41.120 --> 0:30:43.640 and we say, like, okay, the market worked really well 0:30:43.920 --> 0:30:46.480 in the creation of the bagel, but we have this problem, 0:30:46.560 --> 0:30:50.120 which is that they're creating they're creating waste that has 0:30:50.160 --> 0:30:52.240 to be solved. And even if that's benign, you know, 0:30:52.320 --> 0:30:54.240 it's like, of course anyone is good, but there's gonna 0:30:54.240 --> 0:30:56.800 be some waste involvary and it's not the most polluting thing, 0:30:57.120 --> 0:30:59.920 so we need some sort of like Okay, so then 0:31:00.000 --> 0:31:03.200 and the new classical economics, Yeah, there's market failure. This 0:31:03.400 --> 0:31:06.560 is why we have we have to have a public 0:31:06.640 --> 0:31:09.920 the sanitation workers, right because otherwise they'd always be dumping 0:31:09.960 --> 0:31:12.000 it out on the street. And so okay, so we 0:31:12.080 --> 0:31:16.080 have public sanitation workers. You reframe this and you're like, no, 0:31:16.560 --> 0:31:18.719 market failure isn't the right way to think about it. 0:31:18.720 --> 0:31:21.280 It's endemic to production. It's part of how market works. 0:31:21.320 --> 0:31:23.200 It's not failure. What do we then do with this 0:31:23.680 --> 0:31:26.760 information so that we no longer conceive of these sort 0:31:26.800 --> 0:31:30.480 of like edge cases of mostly markets work or frequently 0:31:30.480 --> 0:31:33.040 markets can work. But then you get market failures. You 0:31:33.160 --> 0:31:35.280 flipped this entire thing on the head and like, market 0:31:35.360 --> 0:31:39.640 failures are not a useful thing. Okay, we accept that premise. 0:31:39.800 --> 0:31:41.440 Then what do we do with that? Do we have 0:31:41.560 --> 0:31:43.080 this new lens, and then what do we. 0:31:43.040 --> 0:31:46.720 See Some of those social costs would need to be internalized. 0:31:46.720 --> 0:31:48.600 In other words, they would as they always have been 0:31:48.920 --> 0:31:51.080 said throughout the history of capitalism. Again, so this is 0:31:51.120 --> 0:31:54.000 not just an obbortuary statement, but if you look at 0:31:54.000 --> 0:31:57.680 throughout the history of capitalism, this janus faced nature of 0:31:58.160 --> 0:32:01.960 capitalist activity, wealth creation on the one hand, and social 0:32:02.040 --> 0:32:05.160 costs on the other hand. And then at some in 0:32:05.280 --> 0:32:08.440 various moments in time, some of those social costs were 0:32:08.480 --> 0:32:11.520 extremely high in terms of the rates charged on something 0:32:11.560 --> 0:32:15.640 on the other Monvill, Illinois eighteen seventy seven landmark Supreme 0:32:15.680 --> 0:32:20.320 Court case came out of the Interstate Commerce Act Commission, 0:32:20.720 --> 0:32:25.320 which put caps on railroads and on grain elevators because 0:32:25.520 --> 0:32:29.959 what was happening was that the farmers were storing, they 0:32:29.960 --> 0:32:33.000 were charging extremely they were being charged extremely high rates 0:32:33.240 --> 0:32:38.600 by grain storage elevators and railroads, and what was happening 0:32:38.640 --> 0:32:41.760 was the price for food was rising. So the Illinois 0:32:41.800 --> 0:32:44.520 state legislature put a cap on that went up to 0:32:44.560 --> 0:32:47.440 the Supreme Court. And so there was this whole idea, 0:32:47.640 --> 0:32:50.840 and the Supreme Court ruled in favor of price caps 0:32:50.880 --> 0:32:52.880 on these rates charge because they said, well, this is 0:32:53.760 --> 0:32:56.800 this is of social importance. Food should be affordable. There's 0:32:56.800 --> 0:33:01.320 a very long history of this in American constitutional history. 0:33:01.800 --> 0:33:05.480 That is basically exemplifying the basic point that at some 0:33:05.640 --> 0:33:09.560 points and in various points, some of these social costs 0:33:09.560 --> 0:33:12.760 were deemed too high, and then in some way they 0:33:12.760 --> 0:33:17.000 would need they had to either be internalized or you know, 0:33:17.120 --> 0:33:20.720 maybe smaller businesses could not internalize some of these costs. Okay, 0:33:20.880 --> 0:33:23.320 give them some kind of a tax credit. You see 0:33:23.320 --> 0:33:26.840 what I'm saying. There's intelligent ways of thinking about public policy. 0:33:27.120 --> 0:33:30.640 So Mamdani's policies, whatever they may be, they may affect 0:33:31.880 --> 0:33:34.520 I don't know, smaller businesses differently from a larger ones. 0:33:34.560 --> 0:33:37.600 So the ones that have less cash flow, they can 0:33:37.600 --> 0:33:40.440 get a tax credit as a write off, right, I mean, 0:33:40.480 --> 0:33:42.680 you can think about all of these kinds of policies, 0:33:43.080 --> 0:33:44.880 and at least that's whay I think about it. In 0:33:44.920 --> 0:33:45.720 practical terms. 0:33:46.160 --> 0:33:48.080 I'm trying to think how to frame this question, and 0:33:48.120 --> 0:33:50.360 I probably won't get it right, but here goes. We've 0:33:50.360 --> 0:33:53.280 been doing a lot of episodes on Venezuela recently, and 0:33:53.360 --> 0:33:56.440 so if I think about, you know, some famous heterodox 0:33:56.680 --> 0:33:59.840 economic policy that perhaps weren't kind of wrong, that would 0:33:59.840 --> 0:34:04.720 be a good examples when you're thinking of designing actual 0:34:05.080 --> 0:34:11.759 economic policy. If you're doing it prioritizing or politics, or 0:34:11.840 --> 0:34:15.680 on a political basis, and you don't have that sort 0:34:15.719 --> 0:34:22.360 of scientific rational framework that is so endemic in neoclassical thought, 0:34:23.320 --> 0:34:27.720 does that help you design policy? Is that a useful 0:34:27.960 --> 0:34:29.040 framework for you? 0:34:29.680 --> 0:34:33.680 I guess the question is what defines science. So the way, 0:34:33.719 --> 0:34:38.280 for example, the institutional economist that I was talking about, 0:34:38.360 --> 0:34:42.800 the way they designed policy was on the basis of 0:34:42.920 --> 0:34:48.239 theory that was evidence based, social reality, historical reality, court cases, 0:34:48.280 --> 0:34:51.279 you know, this kind of thing. Neoclassical economist doesn't do 0:34:51.400 --> 0:34:55.000 policy that way though, or theory. It's deductive, it assumed. 0:34:55.080 --> 0:34:59.239 So it's constructing this model on the basis of no evidence, 0:35:00.200 --> 0:35:01.279 neoclassical on. 0:35:01.200 --> 0:35:03.160 The basis of a reality that does not in fact 0:35:03.160 --> 0:35:04.120 exist exactly. 0:35:04.200 --> 0:35:06.880 Thank you for putting it that way, because that already 0:35:06.920 --> 0:35:10.799 exemplifies the problem, which is that how on earth are 0:35:10.840 --> 0:35:14.120 you designing a policy based on a theory for which 0:35:14.160 --> 0:35:17.200 you have which has not been subjected to any kind 0:35:17.360 --> 0:35:22.280 of theoretical you know, any kind of intellectual engagement with reality. 0:35:22.680 --> 0:35:24.720 In the wake of the financial crisis of two thousand 0:35:24.719 --> 0:35:29.120 and seven two thousand and eight, when prominent neoclassical economists 0:35:29.160 --> 0:35:31.799 were asked, wait a second, are you now going to 0:35:32.640 --> 0:35:36.440 rethink your models because this should not have happened per 0:35:36.480 --> 0:35:41.319 the neoclassical framework, they said, nope, And I think that's 0:35:41.360 --> 0:35:45.120 the problem here. That policy is being designed in this 0:35:45.120 --> 0:35:47.240 particular way on the basis of theory of this nature. 0:35:47.960 --> 0:35:52.680 But if you bring in a more engaged way of 0:35:52.719 --> 0:35:57.040 thinking about policy and politics, then the nature of the 0:35:57.040 --> 0:35:59.800 politics matters. I mean, who you know, is it a 0:36:00.040 --> 0:36:03.600 raitarian state? Is in a democratic state? So I don't 0:36:03.680 --> 0:36:10.120 like authoritarianism, sure, so I think policy should reflect theory 0:36:10.840 --> 0:36:13.360 on the basis of democratic principles in some in a 0:36:13.400 --> 0:36:13.960 broad sense. 0:36:14.680 --> 0:36:18.120 You know, going back to the contemporary debates about housing 0:36:18.280 --> 0:36:22.080 in New York City right now, and there are others 0:36:22.520 --> 0:36:26.280 who might buy exactly what you're saying at the conceptual lens, 0:36:26.880 --> 0:36:29.960 and they would say, you know what, Johnny is completely 0:36:30.080 --> 0:36:33.920 correct about everything. The problem is that existing politics have 0:36:34.000 --> 0:36:36.480 made it too hard to build. The problem is that 0:36:36.680 --> 0:36:41.239 existing politics have made it so that we're paying too 0:36:41.320 --> 0:36:44.640 much for labor, et cetera. The problem is that existing 0:36:44.920 --> 0:36:50.080 landlords control have too much influence and are constraining the 0:36:50.080 --> 0:36:54.040 building of new that they like. It strikes me as 0:36:54.280 --> 0:36:58.879 there are many versions of your framework that to take 0:36:58.880 --> 0:37:02.440 it to specific policies that don't necessarily lead to and 0:37:02.520 --> 0:37:05.799 therefore rent control is okay that you can say, look, 0:37:05.800 --> 0:37:10.359 there's our current system is riven with politics, and that 0:37:10.520 --> 0:37:13.239 the way to engage democratically, and the way to think 0:37:13.239 --> 0:37:16.560 about this is we need to liberalize. The solution to 0:37:16.600 --> 0:37:20.879 affordability is getting rid of some of these zoning laws, etc. 0:37:21.760 --> 0:37:24.640 It seems to me like that you could agree with 0:37:24.760 --> 0:37:28.759 sort of your conceptualization of some of these challenges and 0:37:28.840 --> 0:37:32.720 yet and still arrive at very different outcomes in terms 0:37:32.719 --> 0:37:36.560 of a policy response. And in fact, in fact, Zoran 0:37:36.680 --> 0:37:40.279 himself may even agree with that, because we know that 0:37:40.760 --> 0:37:43.799 he is more liberal than say, many on the left 0:37:43.840 --> 0:37:46.600 when it comes to the role of private capital for 0:37:46.760 --> 0:37:47.720 developing new houses. 0:37:48.000 --> 0:37:52.279 Okay, so my response is that this is true. First 0:37:52.280 --> 0:37:53.880 of all, to concede. I think in any kind of 0:37:53.880 --> 0:37:56.279 a discussion, you concede what the other person is saying. 0:37:56.280 --> 0:38:00.360 And this is true about the sort of impedibles of 0:38:00.840 --> 0:38:03.880 current politics and power structures, this and the other. But 0:38:03.960 --> 0:38:06.640 that's always been the case. It's always been the case, 0:38:06.760 --> 0:38:10.439 and so like if we thought of that as the 0:38:10.480 --> 0:38:15.399 supreme impediment to actually making things better, then we would 0:38:15.400 --> 0:38:20.120 have abandoned society, would have abandoned any attempts to, let's say, 0:38:20.200 --> 0:38:25.280 have safer cars. Sure, because the automobile industry for tooth 0:38:25.320 --> 0:38:30.000 and nail against seatbelts for decades, making them safer, you know, 0:38:30.040 --> 0:38:33.560 the whole design of cars. So the point here is 0:38:34.160 --> 0:38:39.640 it's not as though that proposing a policy implies that 0:38:39.680 --> 0:38:42.680 you wave a magic wand and it just happens. They're 0:38:42.719 --> 0:38:46.080 going to be insuperable problems and there's going to be impediments. 0:38:47.360 --> 0:38:49.919 But that's always been the case. That doesn't mean that, 0:38:50.480 --> 0:38:53.120 you know, you cannot lose track of the fact that 0:38:53.960 --> 0:38:58.560 lack of affordability in this country and elsewhere in the 0:38:58.560 --> 0:39:04.799 world has recently eroded democracy, yeah, as we know, and 0:39:04.880 --> 0:39:09.719 has has fuel authoritarian politics. There's a clear relationship here 0:39:10.040 --> 0:39:15.480 between economic and security and authoritarianism undeniably. 0:39:16.239 --> 0:39:19.440 Just to press further on this, however, so one of 0:39:19.440 --> 0:39:22.359 the things that the housing people love to say is that, 0:39:22.560 --> 0:39:25.640 you know, there was a rule change several years ago. 0:39:25.880 --> 0:39:29.960 Ironically it was under the Cuomo administration. There was a 0:39:30.040 --> 0:39:34.440 rule change that made it harder for landlords to raise 0:39:34.480 --> 0:39:38.600 the rent of a rent stabilized building after the tenant left. 0:39:38.960 --> 0:39:40.799 And then so then the new tenant comes in and 0:39:40.800 --> 0:39:43.160 they like, can't move it up by much. Meanwhile, we 0:39:43.200 --> 0:39:45.680 have inflation, and so we have this effect, at least 0:39:45.680 --> 0:39:49.280 according to many housing people where a lot of supply 0:39:49.400 --> 0:39:51.800 has been taken off the market because they can't raise 0:39:51.840 --> 0:39:54.840 the rent the law prevents them from raising the rent, 0:39:55.280 --> 0:39:57.560 and their maintenance costs have gone up, and so like 0:39:57.600 --> 0:39:59.920 these are no longer economical to run. 0:40:00.440 --> 0:40:00.600 Now. 0:40:00.680 --> 0:40:06.040 Again, Like, my point is not they're right, they're wrong, whatever. 0:40:06.560 --> 0:40:10.280 My point is that all of this could be true, 0:40:10.440 --> 0:40:13.400 and all of this framework can be very helpful, but 0:40:13.520 --> 0:40:18.360 it doesn't necessarily lead to the conclusion the Zoron is 0:40:18.520 --> 0:40:22.719 right to take a stronger line on what you can 0:40:22.800 --> 0:40:25.239 just do by FIAT in terms of price constraints. 0:40:26.920 --> 0:40:32.160 Well, you know, yeah it does. I mean I think 0:40:32.200 --> 0:40:35.359 I would disagree. Okay, great, because I think that if 0:40:35.600 --> 0:40:39.560 by that logic, then we shouldn't have ever done anything anyways, right, 0:40:39.640 --> 0:40:42.880 so we could have you know, so so for example, opposition, 0:40:42.960 --> 0:40:44.840 I mean, so like sort of moving this sort of 0:40:44.840 --> 0:40:47.359 the discussion a little bit away from housing. But let's 0:40:47.360 --> 0:40:50.440 say to taxation, right, we were talking about taxation earlier on. 0:40:50.680 --> 0:40:53.799 There was massive opposition during the Gilded Age that if 0:40:53.840 --> 0:40:57.040 you have progressive taxation, if you even have the sixteen Amendment, 0:40:57.440 --> 0:41:00.759 this is going to destroy the whole society. And so 0:41:00.840 --> 0:41:04.799 the struggles in that Gilded Age period which ultimately lead 0:41:04.920 --> 0:41:11.080 to the sixteenth Amendment, exemplifies the point that yeah, I 0:41:11.120 --> 0:41:13.239 mean there are going to be there is going to 0:41:13.239 --> 0:41:13.840 be opposition. 0:41:13.960 --> 0:41:17.719 So just well, then what is the limiting principle? Or 0:41:17.960 --> 0:41:22.160 maybe okay, there are different methods to doing economics, and 0:41:22.200 --> 0:41:24.560 you say, the new classicals of one method and other 0:41:24.560 --> 0:41:27.240 people of other methods, how do we know, Like, okay, 0:41:27.719 --> 0:41:30.719 let's say we want to impose more stringent caps on 0:41:30.760 --> 0:41:33.000 how much you can raise rent, Like we don't know, 0:41:33.800 --> 0:41:35.480 like it could go well and it could go bad. Right, 0:41:35.520 --> 0:41:36.960 I assume you would agree that there are ways to 0:41:36.960 --> 0:41:37.760 do this very badly. 0:41:37.840 --> 0:41:38.440 Yeah, of course. 0:41:38.560 --> 0:41:41.520 So what are the methods that we could employ that 0:41:41.560 --> 0:41:44.520 the new classicals are blind to such that we can 0:41:44.520 --> 0:41:45.240 get this policy. 0:41:45.280 --> 0:41:48.279 We could, for example, provide so for for the for 0:41:48.320 --> 0:41:50.920 the smaller landlords, the ones or the less or the 0:41:51.360 --> 0:41:54.200 ones who are they don't have enough cash to fix 0:41:54.239 --> 0:41:56.839 the leaks, you know, upkeep the building, that they could 0:41:56.880 --> 0:41:57.880 be given tax credits. 0:41:57.960 --> 0:41:58.440 Yeah. 0:41:58.520 --> 0:42:02.319 Right, So that companies for the rent control would be 0:42:02.840 --> 0:42:05.120 that Okay, if you're a large real estate cooperation and 0:42:05.120 --> 0:42:08.040 you've got lots of cash flow, then clearly you do 0:42:08.120 --> 0:42:10.960 have the cash flow to deal with the problems. But 0:42:11.160 --> 0:42:13.680 if you're a smaller landlord, then you could be given 0:42:13.680 --> 0:42:15.319 some kind of a tax credit, you could be given 0:42:15.360 --> 0:42:17.759 some kind of public subsidy that could deal with that 0:42:17.840 --> 0:42:19.840 kind of an issue, which brings you straight back to 0:42:19.880 --> 0:42:23.120 the question of the public financing after all of this. Right, 0:42:23.440 --> 0:42:25.839 So that's the way at least I would tentatively think 0:42:25.840 --> 0:42:26.799 about the issue. 0:42:27.120 --> 0:42:31.160 Since we've been talking about politics for basically this entire discussion, 0:42:31.280 --> 0:42:34.000 I want to talk about political realities for right now, 0:42:34.400 --> 0:42:38.360 what are the constraints that have prevented this kind of 0:42:38.440 --> 0:42:43.279 heterodox policy from becoming the norm in a place like America. 0:42:43.320 --> 0:42:47.320 Well, that's a great question, And I think the issue 0:42:47.480 --> 0:42:49.560 is that these kinds of ideas are not in the 0:42:49.600 --> 0:42:53.879 public domain. And so whenever you use the word economics, 0:42:53.960 --> 0:42:55.640 let's say it comes up, let's say, who are the 0:42:55.680 --> 0:42:59.320 experts who come say, let's say to CNN, They're already 0:42:59.400 --> 0:43:02.360 coming implicitly, even if they don't say it, from this 0:43:02.480 --> 0:43:06.640 idea that markets are sort of prime and then everything 0:43:06.680 --> 0:43:10.240 else follows afterwards. So I mean, in order to push 0:43:10.239 --> 0:43:13.680 back against that, you need to have more conversations about the. 0:43:13.600 --> 0:43:15.719 Discipline thank you for that. 0:43:15.920 --> 0:43:19.080 Thank you. I think that these kinds of conversations are 0:43:19.239 --> 0:43:21.880 helpful because at least it opens up the space for 0:43:21.960 --> 0:43:24.400 thinking about that well, I mean, okay, so when you're 0:43:24.440 --> 0:43:27.560 talking about foundational questions like the market economy, what exactly 0:43:27.600 --> 0:43:30.799 do you mean by that? And you know, so those 0:43:30.840 --> 0:43:32.520 are the kinds of questions I think. So the come 0:43:32.600 --> 0:43:35.880 back and coming back to your question that's an impediment 0:43:36.239 --> 0:43:39.239 because if you're going to say that, well, I want 0:43:39.280 --> 0:43:43.080 to make some aspect of social services I don't know, 0:43:43.680 --> 0:43:47.359 affordable or something, then you'll always come up to this 0:43:47.520 --> 0:43:50.880 impediment that will are you a state interventionist? Whereas this 0:43:50.960 --> 0:43:54.440 is the free market and that's the lingua franca. And 0:43:55.080 --> 0:43:57.279 that's the hard part of it, that to say that, 0:43:57.320 --> 0:44:00.560 well okay, to push the conversation further, as opposed to 0:44:00.600 --> 0:44:03.200 saying well, okay, you know, if you think of markets 0:44:03.200 --> 0:44:05.799 in different ways, then it may be hard to make 0:44:05.840 --> 0:44:08.840 the change. But at least the market is not pretty political. 0:44:09.560 --> 0:44:11.160 So for me, that's the problem. 0:44:11.920 --> 0:44:16.200 What's the basic gist of why Europe in the US 0:44:16.400 --> 0:44:19.680 from the historian perspective sort of went different directions, and 0:44:19.680 --> 0:44:24.799 obviously the democratic socialist, the democratic socialist tradition obviously much 0:44:24.800 --> 0:44:28.200 more robust in Europe. I mean, it's never really you know, 0:44:28.560 --> 0:44:32.160 it doesn't have as nearly as much history in the US, 0:44:32.320 --> 0:44:36.120 et cetera. Union is much more robust throughout Europe. How 0:44:36.120 --> 0:44:39.840 did that like generally speaking, except for maybe like a 0:44:39.880 --> 0:44:44.080 couple decades, partly just there's any sort of like socialis 0:44:44.120 --> 0:44:45.520 tradition every I took root in the US. 0:44:46.000 --> 0:44:47.920 First of all, we do have a long history of 0:44:48.000 --> 0:44:51.160 municipal socialism, but sewer socialism in this country. I mean, 0:44:51.200 --> 0:44:53.640 so there's you know of so you know, in other words, 0:44:54.760 --> 0:44:56.600 you know, there's a lot has been written actually that 0:44:57.040 --> 0:45:00.680 what Mamdani is doing here, it's actually pretty there's a 0:45:00.719 --> 0:45:04.120 long history behind that. Gail Radford has written about this 0:45:04.280 --> 0:45:09.560 a historian. I think the issue is and so that's 0:45:09.560 --> 0:45:13.160 the first point. The second point is that if you 0:45:13.239 --> 0:45:15.680 look at and this comes back, I think tracy to 0:45:15.719 --> 0:45:20.000 your question, which is that in the public discourse, we 0:45:20.120 --> 0:45:23.279 don't know, there's a kind of an idea that the 0:45:23.360 --> 0:45:27.719 New Deal was an outlier and therefore we need to 0:45:28.000 --> 0:45:31.960 basically go back to some pre New Deal romanticized small government. 0:45:32.440 --> 0:45:34.800 You know, Steve Bannon makes his that's why the attack 0:45:34.800 --> 0:45:37.800 against the administrative state is premised from this. The problem 0:45:37.880 --> 0:45:41.360 is the many legal historians and legal economic historians appointed 0:45:41.360 --> 0:45:43.799 and this is not true that the US developed a 0:45:43.880 --> 0:45:49.279 very robust developmental state in the reconstruction period. So there's 0:45:49.320 --> 0:45:52.239 a really a lot of history there that is not 0:45:52.440 --> 0:45:57.040 part of the public domain and the discourse on economics, 0:45:57.040 --> 0:46:01.320 because the teaching of economics does not require students to 0:46:01.480 --> 0:46:05.719 actually require not as an elective, but required them to 0:46:06.000 --> 0:46:10.440 actually read economic history in most places in their training. 0:46:10.680 --> 0:46:13.399 So they don't know the history, and so this new 0:46:13.480 --> 0:46:17.880 notion of the market prevails, and then they don't know 0:46:17.920 --> 0:46:20.720 their own history. I don't think that's any different in Europe, 0:46:21.120 --> 0:46:24.759 and we can talk about that, but there are interesting 0:46:26.560 --> 0:46:30.480 issues here. So for example, the American historically, the American 0:46:30.520 --> 0:46:34.000 taxation system was much more progressive than in Europe. Yeah, right, 0:46:34.280 --> 0:46:36.799 so there is that. But I think what happens in 0:46:36.840 --> 0:46:41.120 the post war period, post Second World War period is 0:46:41.160 --> 0:46:45.560 that that kind of sent a jolt for a lot 0:46:45.560 --> 0:46:48.040 of people, and I think that kind of revived the 0:46:48.160 --> 0:46:52.279 left in some sense because fascism and there was a 0:46:52.320 --> 0:46:57.719 clear understanding that massive inequality was you know, one of 0:46:57.760 --> 0:47:00.840 the one of the ingredients of the rise fascist movements 0:47:00.880 --> 0:47:04.360 in the nineteen twenties and thirties, and so reducing inequality, 0:47:04.880 --> 0:47:09.000 embedding social and economic rights and constitutions I'm thinking here 0:47:09.080 --> 0:47:13.279 with the German constitution super important as a kind of 0:47:13.640 --> 0:47:16.640 insulation at least to some extent, against a repetition of 0:47:16.680 --> 0:47:20.200 those horrors. So this created a kind of a different 0:47:20.239 --> 0:47:26.200 social model based on these progressive constitutions. We haven't had that. 0:47:26.320 --> 0:47:31.640 Our constitution is a first generation constitution, and in that way, 0:47:31.680 --> 0:47:35.240 there are no explicit commitments to economic and social rights, 0:47:35.680 --> 0:47:38.360 human dignity, the expression I don't think appears in the 0:47:38.480 --> 0:47:40.920 US Constitution. It does appear in a lot of these 0:47:40.920 --> 0:47:44.400 European constitutions, and that matters. You have the rights of 0:47:44.480 --> 0:47:48.840 personhood right the fourteen Amendment, but you know that, you 0:47:48.880 --> 0:47:51.000 know very well that how that's been weaponized for corporate 0:47:51.000 --> 0:47:54.400 personhood and so on. That's I think part of the 0:47:54.440 --> 0:47:58.400 story as to why the welfare state has been somewhat 0:47:58.480 --> 0:48:02.000 more robust, though it's all so seen fractures in Europe 0:48:02.480 --> 0:48:05.880 than here, where that has not been the case. So 0:48:06.080 --> 0:48:08.960 we're still stuck with this constitution, which at least in 0:48:08.960 --> 0:48:11.759 my view, is not a very good constitution. 0:48:12.600 --> 0:48:16.200 I wasn't expecting constitutional analysis to come into this conversation, 0:48:16.239 --> 0:48:18.400 but I think it does illustrate your point about the 0:48:18.400 --> 0:48:22.040 intertwining of politics and the economy. Can I ask one 0:48:22.080 --> 0:48:24.960 more thing, and maybe it doesn't even make sense or 0:48:25.000 --> 0:48:28.320 fit into this conversation, but when I think about las A, 0:48:28.480 --> 0:48:33.000 fair markets or economics, there seems to be an emphasis 0:48:33.080 --> 0:48:39.080 on absolute gains so positive some outcomes where it does. 0:48:39.239 --> 0:48:42.840 You know, two countries start trading with each other guns 0:48:42.840 --> 0:48:46.320 and butter or whatever. Both the countries are better off, 0:48:46.760 --> 0:48:50.400 it doesn't matter how much better off they are relative 0:48:50.440 --> 0:48:54.120 to each other. When we think about heterodox economics and 0:48:54.160 --> 0:48:57.320 the importance of politics, are we basically saying that every 0:48:57.400 --> 0:49:01.320 policy decision the emphasis is much more on relative gains 0:49:01.560 --> 0:49:02.840 versus absolute gains. 0:49:03.640 --> 0:49:06.040 I'm not aware of that tracy, That is not from 0:49:06.040 --> 0:49:11.319 my standpoint. I do think that markets and the sort 0:49:11.360 --> 0:49:15.840 of private initiatives in markets that does generate wealth. I 0:49:15.840 --> 0:49:17.400 mean that you go back to Smith. He says that, 0:49:17.480 --> 0:49:21.439 so in that sense, it's true that market activity does 0:49:21.520 --> 0:49:25.640 generate enormous social wealth. Yes it does. But what people 0:49:25.719 --> 0:49:27.960 tend to forget is that there's also a flip side. 0:49:28.000 --> 0:49:30.200 To that the social costs, and so we have to 0:49:30.200 --> 0:49:33.600 then think about, Okay, can we somehow how do we 0:49:33.680 --> 0:49:37.040 reduce some of those social costs in terms of affordability 0:49:37.360 --> 0:49:41.960 or pollution or climate crisis. That's I think saying that, Okay, 0:49:42.280 --> 0:49:45.759 markets are great, but what are they sort of embedded 0:49:45.880 --> 0:49:49.400 on that infrastructure that I was talking about that is 0:49:49.480 --> 0:49:54.160 sort of leading to massive emissions of greenhouse gases. I mean, 0:49:54.200 --> 0:49:57.440 that's clearly unsustainable and we all know that. So I 0:49:57.480 --> 0:50:00.120 feel like I don't know that I would necessarily to 0:50:00.239 --> 0:50:04.080 think about it in terms of positive and negative sum gains. 0:50:04.120 --> 0:50:07.560 I would just say that market activity does generate enormous 0:50:07.800 --> 0:50:11.359 social wealth, but also enormous social costs, and so then 0:50:11.440 --> 0:50:13.480 that's where I think the conversation has to go to 0:50:13.680 --> 0:50:15.120 how to reduce the social costs. 0:50:16.040 --> 0:50:17.919 Jommy Modude, thank you so much. 0:50:17.960 --> 0:50:18.640 Thank you so much. 0:50:19.160 --> 0:50:34.800 It's really fascinating conversation. Appreciate you so much time. Okay, Tracy, 0:50:34.840 --> 0:50:37.840 we should do more intellectual history episodes. I really like 0:50:37.920 --> 0:50:40.800 that topic. I don't know, like I think I'm. 0:50:40.680 --> 0:50:44.600 Still scarred from doing international relations at college, and whenever 0:50:44.640 --> 0:50:49.520 someone talks about intellectual histories of particular theories I kind 0:50:49.560 --> 0:50:51.000 of I get nervous. 0:50:52.160 --> 0:50:54.440 Let's just make the whole I'd be down to make 0:50:54.440 --> 0:50:56.600 the whole podcast A No, I do think this is 0:50:56.640 --> 0:50:58.480 like really interesting. Look, I think this is a very 0:50:58.520 --> 0:51:02.120 timely conversation because one thing, you know, he mentioned Bannon 0:51:02.360 --> 0:51:05.440 there at the end. One thing that I feel is 0:51:05.480 --> 0:51:09.000 that regardless of where many people are on the political 0:51:09.040 --> 0:51:14.080 spectrum these days, there seems to be a deep intuition 0:51:14.200 --> 0:51:17.680 that many people have about the corrosive effects of society 0:51:17.680 --> 0:51:19.520 on any quality, or the corrosive effects of. 0:51:19.480 --> 0:51:21.760 Inequality on society. 0:51:22.239 --> 0:51:25.080 And I thought your question was really good, which is 0:51:25.120 --> 0:51:28.080 like many people economists could say, like, look, you're better 0:51:28.120 --> 0:51:31.360 off too it in this relationship you uber driver, Like 0:51:31.719 --> 0:51:35.160 maybe you feel that you're maybe people find it to 0:51:35.200 --> 0:51:37.960 not be great work, but the alternative is nothing or whatever. 0:51:38.239 --> 0:51:40.640 You're not a billionaire, but at least your employee. 0:51:40.200 --> 0:51:42.400 You're employed, right, And this is something and a lot 0:51:42.400 --> 0:51:45.959 of people say, Look, everyone is on paper or maybe 0:51:46.000 --> 0:51:50.040 even in reality, better off from this set of transactions. Right, 0:51:50.320 --> 0:51:52.799 But then it aggregates up to something that I think 0:51:52.840 --> 0:51:54.800 people find to be very destabilizing. 0:51:55.840 --> 0:51:58.840 Right, So intuitively, a lot of people seem unhappy with 0:51:58.920 --> 0:51:59.880 their current situation. 0:52:00.000 --> 0:52:02.600 All right, so the transaction makes everyone happier in the 0:52:02.640 --> 0:52:05.640 micro sense. But then when everyone when it all scales out, 0:52:06.120 --> 0:52:09.120 this sort of like deep inequality. Who has the means 0:52:09.160 --> 0:52:12.840 to create, who has the ability to like actually do something, 0:52:13.120 --> 0:52:16.200 who is just a sort of who is not in 0:52:16.239 --> 0:52:19.480 that position? I think it feels very again destabilizing. 0:52:19.640 --> 0:52:23.759 Yeah, I do think. I mean, to Jommy's point, like 0:52:23.880 --> 0:52:26.160 it does feel like so much of it just boils 0:52:26.200 --> 0:52:29.440 down to politics, right, yeah, right, like the economy itself, 0:52:30.560 --> 0:52:32.960 to go back to how we began. This conversation did 0:52:33.000 --> 0:52:37.440 not spring forth from the universe. It's a human construction 0:52:37.760 --> 0:52:41.880 and we put a lot of thought and effort into 0:52:42.000 --> 0:52:45.960 how it actually works. And that's a political that Yeah, 0:52:46.400 --> 0:52:47.520 that's a political reality. 0:52:47.760 --> 0:52:49.960 Yeah. And like you know, we could talk all this 0:52:50.000 --> 0:52:53.960 stuff and like the contrast with Chinese industrial policy I 0:52:54.000 --> 0:52:56.720 think is very helpful for juries as one is. Okay, 0:52:56.760 --> 0:53:00.279 you could look at various things and say, well, this 0:53:00.320 --> 0:53:02.040 is actually very effective, and there was a role for 0:53:02.080 --> 0:53:05.879 the public sector and so forth, but it's like we're 0:53:05.920 --> 0:53:08.560 all at each other's throats. Yeah, right, then you're never 0:53:08.600 --> 0:53:12.200 going to have any hope of like operationalizing these ideas, 0:53:12.320 --> 0:53:14.399 and this why I've said this before, Like I feel 0:53:14.400 --> 0:53:18.800 like there are certain societal problems that truly like precede economics. Yeah, 0:53:18.840 --> 0:53:21.920 the toolkit does not entirely exist in economics to solve 0:53:22.000 --> 0:53:24.120 problems that on payper loook economic right. 0:53:25.040 --> 0:53:28.279 This I think is important because in the neoclassical perspective, 0:53:28.360 --> 0:53:32.759 so everything springs from the economy and the focus is 0:53:32.800 --> 0:53:38.920 on the economy itself. Meanwhile, as a society, you know, 0:53:39.000 --> 0:53:42.600 you might want to prioritize different outcomes, like maybe we 0:53:42.600 --> 0:53:44.840 should all be happy. You know, I would like to 0:53:44.880 --> 0:53:49.359 prioritize everyone's happiness. And to your point, like if we're 0:53:49.400 --> 0:53:52.840 all focused on relative gains, if free market capitalism is 0:53:52.880 --> 0:53:56.560 increasing inequality, then that might not necessarily do that. 0:53:57.360 --> 0:54:01.840 We should prioritize everyone getting off their devices and reading, 0:54:02.040 --> 0:54:04.000 and then I think we'll have a touch grass, we'll 0:54:04.040 --> 0:54:04.880 have better outcomes. 0:54:04.960 --> 0:54:09.320 Yeah, we're getting dangerously close to like talking about Bhuton 0:54:09.480 --> 0:54:10.800 and national. 0:54:10.840 --> 0:54:12.799 You know, we got to I've read some. 0:54:13.239 --> 0:54:16.040 Yeah, I know, I know that's why we should stop. 0:54:16.080 --> 0:54:16.759 Shall we leave it there? 0:54:16.840 --> 0:54:17.640 Yeah, let's leave it there? 0:54:17.640 --> 0:54:18.040 All right. 0:54:18.120 --> 0:54:20.680 This has been another episode of the ad Loots podcast. 0:54:20.800 --> 0:54:23.960 I'm Tracy Alloway. You can follow me at Tracy Alloway. 0:54:23.680 --> 0:54:26.280 And I'm Jill Wisnenthal. You can follow me at The Stalwart. 0:54:26.560 --> 0:54:30.120 Follow our producers Carmen Rodriguez at Carmen armandesh Ol Bennett 0:54:30.120 --> 0:54:32.799 at Dashbot and kill Brooks at Kilbrooks. And for more 0:54:32.800 --> 0:54:35.399 odd Laws content, go to Bloomberg dot com slash odd 0:54:35.440 --> 0:54:38.040 lots we're the daily newsletter and all of our episodes, 0:54:38.200 --> 0:54:40.040 and you can shout about all of these topics twenty 0:54:40.080 --> 0:54:44.200 four seven in our discord Discord dot gg slash odd lots. 0:54:44.120 --> 0:54:46.239 And if you enjoy a thoughts, if you want us 0:54:46.280 --> 0:54:49.640 to do more episodes on the intellectual history of economics, 0:54:49.640 --> 0:54:52.600 then please leave us a positive review on your favorite 0:54:52.600 --> 0:54:56.359 podcast platform. 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