1 00:00:02,720 --> 00:00:07,960 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. 2 00:00:17,120 --> 00:00:20,079 Speaker 2: I'm Stephanie Flanders, head of Government and Economics at Bloomberg, 3 00:00:20,360 --> 00:00:22,560 Speaker 2: and this is Trumpnomics, the podcast that looks at the 4 00:00:22,600 --> 00:00:25,960 Speaker 2: economic world of Donald Trump, how he's already shaped the 5 00:00:25,960 --> 00:00:28,920 Speaker 2: global economy, what on earth is going to happen next? 6 00:00:29,560 --> 00:00:32,720 Speaker 2: This week, we're actually taking a break from trump Panomics 7 00:00:32,840 --> 00:00:37,000 Speaker 2: to consider the alternative. We discuss every week how Donald 8 00:00:37,000 --> 00:00:39,159 Speaker 2: Trump is changing the US and the world, and we 9 00:00:39,440 --> 00:00:41,760 Speaker 2: hear quite a lot from people who think he's taking 10 00:00:41,840 --> 00:00:46,239 Speaker 2: us in the wrong direction economically or sometimes politically, but 11 00:00:46,760 --> 00:00:49,520 Speaker 2: we haven't spent much time on what a seriously alternative 12 00:00:49,560 --> 00:00:53,000 Speaker 2: agenda of policies might look like. Do the critics think 13 00:00:53,040 --> 00:00:55,680 Speaker 2: the answer to America's economic and political problems is simply 14 00:00:55,720 --> 00:00:58,840 Speaker 2: to turn back the clock, go back to Obama and 15 00:00:58,880 --> 00:01:02,440 Speaker 2: Biden near a policy, or do these times call for 16 00:01:02,480 --> 00:01:06,959 Speaker 2: an anti trumpnomics that's just as disruptive and radical as 17 00:01:07,000 --> 00:01:09,200 Speaker 2: what's been coming out of the White House. While the 18 00:01:09,200 --> 00:01:11,920 Speaker 2: answer matters for Democrats in the US obviously, who are 19 00:01:12,240 --> 00:01:14,600 Speaker 2: hoping to win votes from the president's party in next 20 00:01:14,680 --> 00:01:18,800 Speaker 2: year's mid term elections and defeat Trump's candidate in twenty 21 00:01:18,840 --> 00:01:21,880 Speaker 2: twenty eight for that matter. But given that a version 22 00:01:21,920 --> 00:01:26,520 Speaker 2: of Maga style populism is also building support and even 23 00:01:26,520 --> 00:01:29,080 Speaker 2: in power now in many other parts of the world, 24 00:01:29,440 --> 00:01:33,000 Speaker 2: not least Europe, in the UK anyone else should also 25 00:01:33,080 --> 00:01:37,320 Speaker 2: be thinking about it as well. The official Democratic candidate 26 00:01:37,360 --> 00:01:39,920 Speaker 2: for mayor of New York's around Mandani. While he has 27 00:01:39,920 --> 00:01:44,480 Speaker 2: his answer an aggressive left populist agenda challenging big business, 28 00:01:44,640 --> 00:01:48,240 Speaker 2: grocery prices, big oil, all in the name of tackling 29 00:01:48,240 --> 00:01:52,200 Speaker 2: the affordability crisis, and most of that makes the Democrat 30 00:01:52,280 --> 00:01:57,160 Speaker 2: establishment extremely nervous. But what's their suggestion. I'm not sure 31 00:01:57,200 --> 00:02:02,400 Speaker 2: we're hearing it from them or from mainstream politic in Europe. Well, 32 00:02:02,600 --> 00:02:04,640 Speaker 2: we're going to get into this with one of my 33 00:02:04,720 --> 00:02:09,040 Speaker 2: favorite substack columnists, Noah Smith, who wrote a column recently 34 00:02:09,520 --> 00:02:12,160 Speaker 2: on precisely this topic, and I'm delighted to say he's 35 00:02:12,280 --> 00:02:14,920 Speaker 2: joined me to discuss it on a sunny Friday morning 36 00:02:15,200 --> 00:02:18,320 Speaker 2: in the first week of August. Noah, thank you very 37 00:02:18,400 --> 00:02:19,480 Speaker 2: much for joining us. 38 00:02:19,919 --> 00:02:20,799 Speaker 3: Thanks for having me on. 39 00:02:24,520 --> 00:02:26,600 Speaker 2: It still pains me deeply that you're no longer a 40 00:02:26,639 --> 00:02:29,320 Speaker 2: Bloomberg columnist, but I see your substack is the second 41 00:02:29,360 --> 00:02:32,640 Speaker 2: most popular substack on economics and business, which is is 42 00:02:32,639 --> 00:02:36,280 Speaker 2: a brilliant achievement, and it's great that trumpnomics can still 43 00:02:36,600 --> 00:02:40,160 Speaker 2: lure you on occasionally. That column of yours that caught 44 00:02:40,200 --> 00:02:43,120 Speaker 2: my eye, I think the title was should Democrats go 45 00:02:43,240 --> 00:02:46,960 Speaker 2: back to Neoliberalism? And I guess when we say neoliberalism, 46 00:02:47,120 --> 00:02:50,880 Speaker 2: we mean the kind of market oriented, centrist version of 47 00:02:51,000 --> 00:02:55,520 Speaker 2: progressivism that we saw under Bill Clinton and Barack Obama. 48 00:02:55,680 --> 00:02:57,520 Speaker 2: So let's start with that. I mean, should they go 49 00:02:57,639 --> 00:02:59,000 Speaker 2: back to neoliberalism? 50 00:02:59,160 --> 00:03:01,799 Speaker 1: Well, so you have to ask what does neoliberalism mean 51 00:03:02,040 --> 00:03:05,800 Speaker 1: in practice? And in practice it basically means let the 52 00:03:05,800 --> 00:03:08,640 Speaker 1: free market do what it wants and then use government 53 00:03:08,720 --> 00:03:13,600 Speaker 1: to sort of redistribute income, wealth, et cetera. You know, 54 00:03:13,639 --> 00:03:17,720 Speaker 1: provide public goods like building infrastructure, things like that, and 55 00:03:17,760 --> 00:03:20,440 Speaker 1: then after that just let it be. It's a fairly 56 00:03:20,520 --> 00:03:21,639 Speaker 1: simple idea. 57 00:03:22,000 --> 00:03:22,560 Speaker 3: I feel like. 58 00:03:24,080 --> 00:03:27,880 Speaker 1: The degree to which this was working well is underrated. So, 59 00:03:27,960 --> 00:03:30,200 Speaker 1: for example, one thing you saw was that the US 60 00:03:30,280 --> 00:03:34,360 Speaker 1: welfare state grew and grew throughout the late nineties, despite 61 00:03:34,400 --> 00:03:37,800 Speaker 1: Clinton's welfare reform the two thousands and the twenty tens, 62 00:03:37,840 --> 00:03:42,400 Speaker 1: with food stamps, Section eight, housing vouchers, EITC, child tax 63 00:03:42,440 --> 00:03:46,080 Speaker 1: credit and these welfare programs which are either giving people 64 00:03:46,080 --> 00:03:48,880 Speaker 1: the basic necessities of life or just giving them cash 65 00:03:48,920 --> 00:03:51,320 Speaker 1: to buy whatever they want and doing it in a 66 00:03:51,360 --> 00:03:54,480 Speaker 1: way that didn't really discourage people from working, which is 67 00:03:54,480 --> 00:03:59,520 Speaker 1: pretty cool. And so poverty in America had dropped quite 68 00:03:59,520 --> 00:04:02,880 Speaker 1: a bit. And we haven't eliminated poverty in America, but 69 00:04:02,920 --> 00:04:05,880 Speaker 1: if you look at the child poverty standard with a 70 00:04:05,920 --> 00:04:08,600 Speaker 1: supplemental poverty measure, for example, it had dropped just a 71 00:04:08,680 --> 00:04:12,360 Speaker 1: huge amount. Obama Care had reduced the number of uninsured 72 00:04:12,400 --> 00:04:17,160 Speaker 1: people to a pretty low level, and healthcare had stopped 73 00:04:17,400 --> 00:04:20,920 Speaker 1: growing as a percentage of the cost in the economy. Actually, 74 00:04:21,720 --> 00:04:25,719 Speaker 1: and college tuition it's so expensive, except college tuition has 75 00:04:25,839 --> 00:04:28,680 Speaker 1: flattened out and has fallen in the last decade or so. 76 00:04:29,360 --> 00:04:33,520 Speaker 1: And economic growth has been mediocre, which means growth in 77 00:04:33,560 --> 00:04:36,160 Speaker 1: living standards for the median person has been fairly mediocre 78 00:04:36,160 --> 00:04:37,160 Speaker 1: since the seventies. 79 00:04:37,760 --> 00:04:38,479 Speaker 3: It's not zero. 80 00:04:38,680 --> 00:04:40,200 Speaker 1: The people who tell you that we got poor since 81 00:04:40,200 --> 00:04:43,600 Speaker 1: the seventies are just wrong. Wages definitely grew, but not 82 00:04:43,680 --> 00:04:46,200 Speaker 1: at quite as great a paces before, but the rest 83 00:04:46,200 --> 00:04:49,200 Speaker 1: of the developed world did worse than us, and was 84 00:04:49,279 --> 00:04:52,280 Speaker 1: arguably considerably less neoliberal than us, but yet did worse 85 00:04:52,279 --> 00:04:55,240 Speaker 1: on these media, income wages, living standards for the average person. 86 00:04:55,839 --> 00:04:59,359 Speaker 1: And so we're left asking what was the big harm? 87 00:04:59,720 --> 00:05:02,240 Speaker 1: ACT have problems with neoliberalism. I think there's ways we 88 00:05:02,240 --> 00:05:04,240 Speaker 1: could do better, we could improve on that. But when 89 00:05:04,240 --> 00:05:05,760 Speaker 1: we just look at the base of it, is this 90 00:05:05,800 --> 00:05:08,720 Speaker 1: screaming for revolution? Is this something screaming to be torn up? 91 00:05:09,000 --> 00:05:09,440 Speaker 3: And why? 92 00:05:09,920 --> 00:05:13,080 Speaker 1: And that's the question that I think the critics of 93 00:05:13,120 --> 00:05:16,800 Speaker 1: neoliberalism have largely failed to answer. 94 00:05:17,400 --> 00:05:19,239 Speaker 2: There's a lot there, but I don't want to get 95 00:05:19,279 --> 00:05:21,400 Speaker 2: sidetracked by that back because I think there's a broader 96 00:05:21,440 --> 00:05:24,440 Speaker 2: thing which I think about. Even from the time I 97 00:05:24,520 --> 00:05:26,640 Speaker 2: was in the US Treasury, was you know, the last 98 00:05:26,640 --> 00:05:28,919 Speaker 2: time we had a budget surplus, It was the late nineties, 99 00:05:28,920 --> 00:05:31,479 Speaker 2: early two thousands, some of the latter part of that 100 00:05:31,520 --> 00:05:34,080 Speaker 2: Clinton era that you talk about, And of course we 101 00:05:34,200 --> 00:05:37,000 Speaker 2: thought it was all our brilliant policies. And in the 102 00:05:37,080 --> 00:05:39,960 Speaker 2: years after that, the fact that you continue to have 103 00:05:40,040 --> 00:05:44,680 Speaker 2: decent growth, low inflation, policymakers, central bankers were all kind 104 00:05:44,680 --> 00:05:48,680 Speaker 2: of congratulating themselves for having found the perfect policies, and 105 00:05:49,080 --> 00:05:52,440 Speaker 2: some of those you could call neoliberal, but in retrospect, 106 00:05:52,680 --> 00:05:55,720 Speaker 2: there's certainly a view that says they were just lucky. 107 00:05:55,880 --> 00:05:59,919 Speaker 2: There were just some profound disinflationary forces that were so 108 00:06:00,160 --> 00:06:04,640 Speaker 2: porting a much higher level of non inflationary growth. Policymakers 109 00:06:04,720 --> 00:06:06,680 Speaker 2: kind of helped things along, and as you say, there 110 00:06:06,680 --> 00:06:09,800 Speaker 2: were some very helpful interventions in terms of tax credits 111 00:06:09,800 --> 00:06:13,720 Speaker 2: and other things. But ultimately it was a particularly benign 112 00:06:13,920 --> 00:06:19,880 Speaker 2: confluence of global and technological forces which enabled that non 113 00:06:19,920 --> 00:06:24,960 Speaker 2: inflationary growth. Rapid growth of employment particularly favored the US 114 00:06:25,200 --> 00:06:30,160 Speaker 2: and that environment, the US was not penalized for continuing 115 00:06:30,160 --> 00:06:33,320 Speaker 2: to run very large trade deficits, and other countries were 116 00:06:33,400 --> 00:06:35,599 Speaker 2: kind of benefiting from selling a lot to the US. 117 00:06:35,920 --> 00:06:39,920 Speaker 2: But under the surface, risks were building up, particularly in 118 00:06:39,960 --> 00:06:43,720 Speaker 2: the financial system, which ultimately put us on a rather 119 00:06:43,800 --> 00:06:47,920 Speaker 2: different path. But there were also things that naturally came 120 00:06:47,960 --> 00:06:51,080 Speaker 2: to an end. Trade was never going to continue to 121 00:06:51,200 --> 00:06:53,760 Speaker 2: become more than one hundred percent of the global economy. 122 00:06:54,200 --> 00:06:56,400 Speaker 2: There were some things that were step changes in the 123 00:06:56,440 --> 00:06:59,520 Speaker 2: global economy which the US benefited from. They related to 124 00:06:59,560 --> 00:07:02,720 Speaker 2: neoliberal but they were not going to endure. So I 125 00:07:02,760 --> 00:07:04,360 Speaker 2: guess I would just ask you on that front. I mean, 126 00:07:04,360 --> 00:07:06,479 Speaker 2: we look back at that period, but it's not clear 127 00:07:06,520 --> 00:07:10,040 Speaker 2: that going back to those policies in one way or 128 00:07:10,040 --> 00:07:12,800 Speaker 2: another is just going to take us back to that era, 129 00:07:12,880 --> 00:07:14,960 Speaker 2: which has changed in an awful lot of other ways. 130 00:07:15,040 --> 00:07:15,960 Speaker 2: The world has moved on. 131 00:07:16,600 --> 00:07:18,760 Speaker 1: So what are the main things you see as having changed? 132 00:07:19,320 --> 00:07:21,760 Speaker 2: So, for a start, that China has gone through the 133 00:07:21,800 --> 00:07:26,240 Speaker 2: expansion of the global labor force that produced a disinflationary 134 00:07:26,960 --> 00:07:29,720 Speaker 2: wave and a kind of step change in the potential 135 00:07:29,760 --> 00:07:32,360 Speaker 2: of the global economy that's worked its way through the 136 00:07:32,560 --> 00:07:36,360 Speaker 2: China has now got a shrinking workforce, it's got rising 137 00:07:36,440 --> 00:07:39,560 Speaker 2: labor costs. There's no country that's waiting to sort of 138 00:07:39,600 --> 00:07:41,960 Speaker 2: replace China, even if we continue to have the kind 139 00:07:42,000 --> 00:07:44,760 Speaker 2: of open global economy that we had. We don't know 140 00:07:44,800 --> 00:07:48,800 Speaker 2: what's going to happen with technological change, but it seems 141 00:07:48,880 --> 00:07:53,520 Speaker 2: that the sort of balance of policies globally now is 142 00:07:54,000 --> 00:07:57,280 Speaker 2: more likely to push up prices than to push them down. 143 00:07:57,720 --> 00:07:59,680 Speaker 2: And we have these enormous investments that we would have 144 00:07:59,680 --> 00:08:01,440 Speaker 2: to run to take if we were, for example, want 145 00:08:01,520 --> 00:08:04,400 Speaker 2: to be serious about net zero. I mean, I just 146 00:08:04,760 --> 00:08:08,320 Speaker 2: it just it feels like there's some quite big structural 147 00:08:08,400 --> 00:08:12,360 Speaker 2: changes that actually kind of make things more expensive going forward. 148 00:08:12,760 --> 00:08:15,120 Speaker 1: I know, the situation has changed, But in terms of 149 00:08:15,160 --> 00:08:17,400 Speaker 1: the actual challenges we need to address, I think before 150 00:08:17,400 --> 00:08:19,480 Speaker 1: we think about the optimal policies that we need to 151 00:08:19,520 --> 00:08:23,120 Speaker 1: address a set of challenges, we should probably think about 152 00:08:23,280 --> 00:08:26,680 Speaker 1: what those challenges are and boil them down in as 153 00:08:26,720 --> 00:08:28,560 Speaker 1: simple way as possible. So when I look at what 154 00:08:28,760 --> 00:08:32,480 Speaker 1: those challenges are, I definitely think inflation right now is 155 00:08:32,600 --> 00:08:37,719 Speaker 1: running at over two percent. It's ultimately like, you know, 156 00:08:38,000 --> 00:08:40,520 Speaker 1: two and a half percent, two point eight percent. I mean, 157 00:08:40,559 --> 00:08:42,600 Speaker 1: that's that's a little bit higher than we're used to. 158 00:08:43,360 --> 00:08:45,000 Speaker 1: It's a little bit higher than the inflation target. But 159 00:08:45,000 --> 00:08:47,200 Speaker 1: if you look at historical inflation in the United States, 160 00:08:47,240 --> 00:08:49,360 Speaker 1: it's still pretty low. We had those two years of 161 00:08:49,360 --> 00:08:52,600 Speaker 1: inflation under Biden, but we're not having that level of 162 00:08:52,600 --> 00:08:56,800 Speaker 1: inflation now. And then as for climate change, we can 163 00:08:56,840 --> 00:08:59,000 Speaker 1: talk about that how to allay climate change. I think 164 00:08:59,040 --> 00:09:01,800 Speaker 1: if you get a lot of left just critics of neoliberalism, 165 00:09:01,800 --> 00:09:03,600 Speaker 1: they'll talk about climate change is the main reason why 166 00:09:03,640 --> 00:09:05,560 Speaker 1: we need to throw out our economic system and pull 167 00:09:05,559 --> 00:09:08,080 Speaker 1: in a new economic system, and we can talk about that, 168 00:09:08,160 --> 00:09:09,280 Speaker 1: but am I getting it all? 169 00:09:09,320 --> 00:09:09,840 Speaker 3: What else is. 170 00:09:09,840 --> 00:09:11,880 Speaker 2: Another thing I would add, which I think changes the 171 00:09:11,920 --> 00:09:17,600 Speaker 2: sort of policy environment pretty fundamentally is what's happened to 172 00:09:17,679 --> 00:09:22,199 Speaker 2: borrowing and to the debt public debt since that era, 173 00:09:22,760 --> 00:09:28,520 Speaker 2: which just constrains even the agenda for a neoliberal set 174 00:09:28,559 --> 00:09:29,680 Speaker 2: of policies, Does it not? 175 00:09:30,559 --> 00:09:34,400 Speaker 1: Yes, I agree, it definitely does. I personally think that 176 00:09:34,480 --> 00:09:38,640 Speaker 1: the national debt has becoming a major problem and needs 177 00:09:38,640 --> 00:09:40,840 Speaker 1: to be dealt with. And there's only one way to 178 00:09:40,840 --> 00:09:43,320 Speaker 1: deal with the national debt and the long term, which 179 00:09:43,360 --> 00:09:45,960 Speaker 1: is austerity. And in the short term you can do 180 00:09:46,040 --> 00:09:49,360 Speaker 1: things like force interest rates to be lower, or force 181 00:09:49,440 --> 00:09:52,640 Speaker 1: banks to subsidize your debt. That's called financial oppression. Forcing 182 00:09:52,640 --> 00:09:55,080 Speaker 1: interest rates to be lower's called fiscal dominance. And there's 183 00:09:55,080 --> 00:09:57,199 Speaker 1: a bunch of shannigans you can do to sort of 184 00:09:58,280 --> 00:09:59,760 Speaker 1: put off the day of reckoning. But in the long 185 00:09:59,840 --> 00:10:03,120 Speaker 1: term you need austerity, and austerity is two things, tax 186 00:10:03,200 --> 00:10:07,000 Speaker 1: increases and spending cuts. You must tax are people more 187 00:10:07,400 --> 00:10:10,960 Speaker 1: and you must spend less to bring the budget into balance. 188 00:10:11,760 --> 00:10:15,600 Speaker 1: I'm not sure whether austerity is neoliberal or not. 189 00:10:16,720 --> 00:10:17,600 Speaker 3: I know that. 190 00:10:17,440 --> 00:10:20,160 Speaker 1: Certainly most people on the left would associate austerity and 191 00:10:20,160 --> 00:10:24,439 Speaker 1: neoliberalism together. I would not necessarily because I think I 192 00:10:24,480 --> 00:10:27,080 Speaker 1: feel like neoliberalism is more related to sort of structural 193 00:10:27,559 --> 00:10:31,240 Speaker 1: microeconomic policies about how we interfere in the market, more 194 00:10:31,280 --> 00:10:33,680 Speaker 1: than it is about macroeconomic policies about what we do 195 00:10:33,720 --> 00:10:36,520 Speaker 1: with the national debt. But if you want to call 196 00:10:36,520 --> 00:10:38,760 Speaker 1: austerity neoliberalism, that's one more reason to take a second 197 00:10:38,800 --> 00:10:40,320 Speaker 1: look at neoliberalism. 198 00:10:40,400 --> 00:10:42,160 Speaker 3: Because I agree that the debt is a problem. 199 00:10:43,280 --> 00:10:45,800 Speaker 2: You probably don't want to call it austerity, right, I mean, 200 00:10:46,679 --> 00:10:51,400 Speaker 2: it's fiscal control, fiscal rigor deficit reduction. 201 00:10:51,720 --> 00:10:53,400 Speaker 1: You know, we can call it whatever we want. But 202 00:10:53,679 --> 00:10:55,559 Speaker 1: I think austerity is a good is a good name 203 00:10:55,679 --> 00:10:58,719 Speaker 1: because you have to be austere. You have to you know, 204 00:10:59,280 --> 00:11:01,800 Speaker 1: you get less stuff. You can't have your tax cut, 205 00:11:01,880 --> 00:11:04,920 Speaker 1: you can't have your spending program. And people have to 206 00:11:04,960 --> 00:11:07,760 Speaker 1: know that the debt is out of control, and so 207 00:11:07,800 --> 00:11:09,680 Speaker 1: there's a limit to the amount of goodies we can get. 208 00:11:09,800 --> 00:11:12,280 Speaker 1: And I think that to people's credit. In the late 209 00:11:12,320 --> 00:11:15,040 Speaker 1: eighties and early nineties, we had that moment where people 210 00:11:15,080 --> 00:11:17,880 Speaker 1: embraced austerity. I remember, I don't really remember, but I've 211 00:11:17,880 --> 00:11:20,720 Speaker 1: gone back intook but everyone in the nineteen ninety two election, 212 00:11:21,600 --> 00:11:25,120 Speaker 1: Ross Perode, Bill Clinton, and even Georgia shelb Bush was 213 00:11:25,160 --> 00:11:27,120 Speaker 1: talking about the need for deficit reduction, and we had 214 00:11:27,120 --> 00:11:29,360 Speaker 1: this big deficit clock up on the outer wall of 215 00:11:29,440 --> 00:11:31,840 Speaker 1: a big building in New York. Everybody was talking about 216 00:11:31,840 --> 00:11:33,960 Speaker 1: the debt, the debt, the debt, and people were willing 217 00:11:34,160 --> 00:11:37,560 Speaker 1: to accept spending cuts and tax increases to stop that 218 00:11:37,800 --> 00:11:40,880 Speaker 1: national debt. Because we were willing to accept austerity. We 219 00:11:40,920 --> 00:11:43,760 Speaker 1: didn't use the word austerity. We just said cut the deficit. 220 00:11:44,200 --> 00:11:46,080 Speaker 1: And maybe that's what we can say, cut the deficit, 221 00:11:46,679 --> 00:11:49,400 Speaker 1: but that's what we need. And so I don't know 222 00:11:49,400 --> 00:11:51,120 Speaker 1: whether you want to call that neoliberal or not, but 223 00:11:51,160 --> 00:11:51,880 Speaker 1: we do need it. 224 00:11:52,520 --> 00:11:54,240 Speaker 2: We don't need to get tied up on labels. The 225 00:11:54,240 --> 00:11:55,920 Speaker 2: reason I was pushed back in a bit on austerity, 226 00:11:55,960 --> 00:11:57,760 Speaker 2: and obviously is partly because I was sitting in the 227 00:11:57,840 --> 00:12:00,360 Speaker 2: UK when it was discussed in the nineties. It was 228 00:12:00,400 --> 00:12:03,679 Speaker 2: not called austerity. When it was called austerity post global 229 00:12:03,760 --> 00:12:07,840 Speaker 2: financial crisis, it was associated, particularly within UK, a conservative 230 00:12:07,840 --> 00:12:10,840 Speaker 2: agenda which the same cuts would not have looked the 231 00:12:10,880 --> 00:12:13,800 Speaker 2: same under a labor government. But I'm also reminded also 232 00:12:13,840 --> 00:12:16,880 Speaker 2: in the nineteen nineties but when Sweden, for example, the 233 00:12:16,920 --> 00:12:19,320 Speaker 2: Social Democrats were having to get on top of their 234 00:12:19,360 --> 00:12:21,559 Speaker 2: debt situation. I was always struck by the way they 235 00:12:21,600 --> 00:12:24,360 Speaker 2: talked about it, which was about this is about having 236 00:12:24,400 --> 00:12:27,040 Speaker 2: the fiscal independence to do the things we want to 237 00:12:27,040 --> 00:12:30,320 Speaker 2: do progressively. And as long as I'm beholden to the 238 00:12:30,320 --> 00:12:32,680 Speaker 2: global bomb market, i am not free to do the 239 00:12:32,679 --> 00:12:36,120 Speaker 2: progressive social democrat things I want to do. So if 240 00:12:36,120 --> 00:12:38,880 Speaker 2: we do this hard work, it is actually a progressive 241 00:12:38,920 --> 00:12:41,240 Speaker 2: policy because then you're not beholden to anyone and you 242 00:12:41,320 --> 00:12:44,080 Speaker 2: can actually do what you want to do as a government. 243 00:12:44,120 --> 00:12:45,719 Speaker 2: And there was a sort of an aspect of that 244 00:12:45,800 --> 00:12:48,600 Speaker 2: with the Clinton agenda as well. I think the broader 245 00:12:48,600 --> 00:12:51,720 Speaker 2: point is the things that we're talking about. You know, 246 00:12:51,760 --> 00:12:54,600 Speaker 2: austerity is one thing we would probably both agree that 247 00:12:54,640 --> 00:12:56,320 Speaker 2: you would also want to move away from the kind 248 00:12:56,360 --> 00:12:59,320 Speaker 2: of protectionist agenda if you're following this kind of line 249 00:12:59,320 --> 00:13:02,760 Speaker 2: of alternative policies, more neoliberal policies, you know, free trade 250 00:13:02,840 --> 00:13:04,120 Speaker 2: or free trade would. 251 00:13:03,880 --> 00:13:04,960 Speaker 3: Be part of that. 252 00:13:05,280 --> 00:13:09,040 Speaker 2: But does the alternative to Trump have to find some 253 00:13:09,200 --> 00:13:12,800 Speaker 2: way to tap into the populist mood while still being 254 00:13:12,800 --> 00:13:14,760 Speaker 2: consistent with these policies, or do you think it's just 255 00:13:14,800 --> 00:13:17,800 Speaker 2: a contradiction that we just have to persuade people that 256 00:13:18,600 --> 00:13:21,439 Speaker 2: there's no need for populism because everything was doing fine before. 257 00:13:22,240 --> 00:13:26,040 Speaker 1: Well, Americans and people in some other countries too, are angry. 258 00:13:27,200 --> 00:13:29,960 Speaker 1: And there's this idea that a lot of people have 259 00:13:30,080 --> 00:13:32,640 Speaker 1: that if people are angry, what you need to do 260 00:13:32,720 --> 00:13:35,360 Speaker 1: is you need to change your economic system. And I 261 00:13:35,400 --> 00:13:39,080 Speaker 1: think this idea comes fundamentally from the industrial age and 262 00:13:39,280 --> 00:13:43,240 Speaker 1: from Marxism and the fact that for a long time, 263 00:13:43,480 --> 00:13:47,359 Speaker 1: conditions for the working class are very bad under industrialism, 264 00:13:47,440 --> 00:13:49,720 Speaker 1: and the idea was that this was making people mad, 265 00:13:50,240 --> 00:13:52,640 Speaker 1: and that we need to change our economic system to 266 00:13:52,640 --> 00:13:55,480 Speaker 1: make people less mad, and that when we implemented things 267 00:13:55,520 --> 00:14:00,720 Speaker 1: like unions, weekends, child labor laws, labor standards, fair states, 268 00:14:00,840 --> 00:14:04,520 Speaker 1: et cetera, people got less mad. And I think that 269 00:14:04,640 --> 00:14:06,640 Speaker 1: was a major through line on a story in the 270 00:14:06,679 --> 00:14:10,440 Speaker 1: twentieth century, the story of class conflict, and class conflict 271 00:14:10,480 --> 00:14:16,480 Speaker 1: resolved through social democratic means as an alternative to communism, 272 00:14:16,520 --> 00:14:20,160 Speaker 1: which was not an effective solution. You can tell that 273 00:14:20,200 --> 00:14:22,200 Speaker 1: sort of potted story of the twentieth century. It's certainly 274 00:14:22,240 --> 00:14:23,720 Speaker 1: not the only thing that was going on, but it 275 00:14:23,720 --> 00:14:26,160 Speaker 1: was certainly a big part of what's going on. But 276 00:14:26,320 --> 00:14:29,240 Speaker 1: now I think that when people are getting mad in 277 00:14:29,320 --> 00:14:34,120 Speaker 1: developed countries, we instinctively reach for that same story. We 278 00:14:34,200 --> 00:14:36,840 Speaker 1: instinctively reach for a repetition of that twentieth century story. 279 00:14:37,160 --> 00:14:38,880 Speaker 1: We say people must be mad because they don't have 280 00:14:38,960 --> 00:14:43,160 Speaker 1: enough stuff, they're economically deprived. But I think that by 281 00:14:43,200 --> 00:14:46,120 Speaker 1: and large that's not true. I do think people do 282 00:14:46,160 --> 00:14:48,200 Speaker 1: get mad at economic things. I think people were mad 283 00:14:48,200 --> 00:14:51,880 Speaker 1: about inflation. We got two years of you know, five 284 00:14:51,920 --> 00:14:54,400 Speaker 1: to eight percent inflation under Biden, and I think people 285 00:14:54,400 --> 00:14:56,840 Speaker 1: were mad about that, and they were right to be mad. 286 00:14:57,440 --> 00:15:00,200 Speaker 1: But I think that overall the anger that you see 287 00:15:00,920 --> 00:15:02,560 Speaker 1: how is to do with a lot of things that 288 00:15:02,960 --> 00:15:04,880 Speaker 1: don't look like what people are mad about in like 289 00:15:04,960 --> 00:15:08,360 Speaker 1: nineteen twenty five. They're mad about social things. They're mad 290 00:15:08,400 --> 00:15:12,640 Speaker 1: about the fact that they feel like their race, their religion, 291 00:15:12,840 --> 00:15:16,200 Speaker 1: their gender, et cetera. Is getting discriminated against because they 292 00:15:16,200 --> 00:15:18,600 Speaker 1: have people yelling hate at them on social media, and 293 00:15:18,640 --> 00:15:22,000 Speaker 1: they have government policies that they feel are discriminatory towards them. 294 00:15:22,080 --> 00:15:25,040 Speaker 1: They feel or they feel loss of status in society. 295 00:15:25,520 --> 00:15:29,600 Speaker 1: They feel just a general lack of comedy, lack of nationhood, etc. 296 00:15:29,920 --> 00:15:32,200 Speaker 1: From all the screaming on social media that happens, even 297 00:15:32,240 --> 00:15:34,440 Speaker 1: if they don't identify that as the culprit. But that's, 298 00:15:35,120 --> 00:15:38,360 Speaker 1: you know, they feel like they're countries against them. Immigration 299 00:15:38,440 --> 00:15:40,520 Speaker 1: people are super mad about and we could talk about 300 00:15:40,520 --> 00:15:43,280 Speaker 1: immigration as a neoliberal policy if you want, But I 301 00:15:43,280 --> 00:15:45,840 Speaker 1: think the reason people are mad about immigration is not 302 00:15:45,880 --> 00:15:49,720 Speaker 1: fundamentally economic. Immigrants don't hurt the native born workers, and 303 00:15:49,760 --> 00:15:51,840 Speaker 1: when people say they do, I think it's a proxy. 304 00:15:51,920 --> 00:15:54,840 Speaker 1: It's what they're really upset about is the fact that 305 00:15:54,880 --> 00:15:59,080 Speaker 1: immigrants are changing their culture. Immigrants are changing their sense 306 00:15:59,120 --> 00:16:02,280 Speaker 1: of what the nation is all about, and all this 307 00:16:02,720 --> 00:16:06,440 Speaker 1: social stuff. And there's this thing called the politician syllogism. 308 00:16:06,680 --> 00:16:10,960 Speaker 1: It says something must be done, this is something, Therefore, 309 00:16:11,160 --> 00:16:12,120 Speaker 1: this must be done. 310 00:16:12,720 --> 00:16:13,680 Speaker 3: Trump's people have. 311 00:16:13,640 --> 00:16:16,920 Speaker 1: This attitude, certainly with respect to Trump's economic policies. They say, 312 00:16:17,200 --> 00:16:19,000 Speaker 1: we don't like the way America is going. We have 313 00:16:19,080 --> 00:16:21,920 Speaker 1: to do something. Trump flails around and just attacks everything 314 00:16:21,960 --> 00:16:25,000 Speaker 1: in sight. They say, Okay, that's something. Something was done, 315 00:16:25,240 --> 00:16:26,880 Speaker 1: and it was done by someone that we perceive to 316 00:16:26,880 --> 00:16:29,200 Speaker 1: be on our side, to you know, to be on 317 00:16:29,240 --> 00:16:32,600 Speaker 1: our team in the Great American Culture War, and he 318 00:16:32,640 --> 00:16:35,040 Speaker 1: did a thing, and therefore that thing must have been good. 319 00:16:35,400 --> 00:16:38,920 Speaker 2: I think we see it in polls that even when 320 00:16:40,160 --> 00:16:43,560 Speaker 2: people give the president a lot of the benefit of 321 00:16:43,560 --> 00:16:45,440 Speaker 2: the doubt even on the economic things, even when he 322 00:16:45,480 --> 00:16:49,160 Speaker 2: says he's going to bring business back to the US 323 00:16:49,240 --> 00:16:51,600 Speaker 2: or he's going to prevent jobs from going and then 324 00:16:51,640 --> 00:16:55,080 Speaker 2: he brings in tariffs that actually make it harder to 325 00:16:55,160 --> 00:16:58,040 Speaker 2: grow manufacturing in the US. You find that they know 326 00:16:58,120 --> 00:17:03,440 Speaker 2: there's these overwhelming forces acting against them and even against 327 00:17:03,640 --> 00:17:06,320 Speaker 2: Donald Trump, so they'll just give him credit for having tried, 328 00:17:06,520 --> 00:17:09,080 Speaker 2: because nobody else was trying. Just thinking back on the 329 00:17:09,119 --> 00:17:13,880 Speaker 2: powerful argument you make about people thinking they need to 330 00:17:13,920 --> 00:17:18,560 Speaker 2: respond economically to challenges that certainly political challenges that have 331 00:17:19,560 --> 00:17:23,080 Speaker 2: cultural and social routs, and the sort of how counterproductive 332 00:17:23,080 --> 00:17:24,879 Speaker 2: it is to be thinking you have to have a 333 00:17:24,920 --> 00:17:28,320 Speaker 2: whole new economic plan to respond to things that are 334 00:17:28,359 --> 00:17:32,720 Speaker 2: actually not economically routed. So I guess one simplistic way 335 00:17:32,880 --> 00:17:36,880 Speaker 2: of thinking, Okay, what's the implication of your analysis is 336 00:17:37,200 --> 00:17:42,320 Speaker 2: on the economics front, a party or politicians who want 337 00:17:42,359 --> 00:17:46,160 Speaker 2: to be a realistic alternative to Trump or the thing 338 00:17:46,200 --> 00:17:49,120 Speaker 2: that will come after Donald Trump, you wait for Trump 339 00:17:49,160 --> 00:17:53,600 Speaker 2: andnomics to implode economically because all that flailing around will 340 00:17:53,640 --> 00:17:59,000 Speaker 2: ultimately show itself to be futile. And you concentrate on 341 00:18:00,119 --> 00:18:05,439 Speaker 2: the cultural distrust that you face, and you stick to that, 342 00:18:06,040 --> 00:18:08,480 Speaker 2: and implicitly your economic policy is that you're going to 343 00:18:08,520 --> 00:18:13,639 Speaker 2: go back to Democrat policies circa I don't know middle 344 00:18:13,680 --> 00:18:17,200 Speaker 2: of Obama's term. It's a simplification. But does that make sense? Well, 345 00:18:17,200 --> 00:18:17,879 Speaker 2: what's wrong with that? 346 00:18:19,119 --> 00:18:20,720 Speaker 3: Yes, that's pretty good. 347 00:18:20,920 --> 00:18:23,600 Speaker 1: But then I think that instead of saying, Okay, guys, 348 00:18:23,640 --> 00:18:26,080 Speaker 1: neoliberalism work, let's go back to that. I say that 349 00:18:26,080 --> 00:18:28,440 Speaker 1: because it's provocative. I want to make people think about that. 350 00:18:28,840 --> 00:18:31,840 Speaker 1: You know, you spent ten years saying that, like, neoliberalism 351 00:18:31,880 --> 00:18:33,320 Speaker 1: has failed and we need something else. 352 00:18:33,720 --> 00:18:34,760 Speaker 3: How true? Is that really? 353 00:18:35,119 --> 00:18:39,240 Speaker 1: Reevaluate that baseline bedrock assumption that you had. Did that 354 00:18:39,320 --> 00:18:41,639 Speaker 1: just come out of the Great Recession? Was it just 355 00:18:41,880 --> 00:18:45,760 Speaker 1: a sort of a knee your twentieth century response to 356 00:18:45,800 --> 00:18:47,919 Speaker 1: twenty first century problems like reevaluate that? 357 00:18:48,000 --> 00:18:50,160 Speaker 3: And so that's why I said that. So, first of all, 358 00:18:50,240 --> 00:18:51,000 Speaker 3: I do believe. 359 00:18:50,720 --> 00:18:52,360 Speaker 1: That there's lots of things we need to do differently 360 00:18:52,359 --> 00:18:54,520 Speaker 1: than we did in the twentieth century. For example, we 361 00:18:54,600 --> 00:18:58,040 Speaker 1: need to focus much more on building more housing, on 362 00:18:58,200 --> 00:19:00,760 Speaker 1: making easier to build. Land use is the great economic 363 00:19:00,760 --> 00:19:03,200 Speaker 1: issue of our times, I think, and making housing cheaper 364 00:19:03,920 --> 00:19:06,320 Speaker 1: and more abundant has got to be a big goal, 365 00:19:06,720 --> 00:19:08,880 Speaker 1: and that's not something we focused on in nineteen eighty 366 00:19:08,920 --> 00:19:10,960 Speaker 1: five or nineteen ninety five. Maybe in two thousand and 367 00:19:11,000 --> 00:19:13,240 Speaker 1: five we focused on it by building out some exerbs. 368 00:19:13,600 --> 00:19:14,800 Speaker 3: But then in. 369 00:19:14,800 --> 00:19:19,119 Speaker 1: Terms of densifying our cities, making transit that works just 370 00:19:19,280 --> 00:19:23,040 Speaker 1: allowing building everywhere. We've reached the limit of sprawl in 371 00:19:23,119 --> 00:19:25,840 Speaker 1: terms of how far people are willing to commute. We 372 00:19:25,960 --> 00:19:29,160 Speaker 1: now need to densify the suburbs and build duplexes and 373 00:19:29,200 --> 00:19:32,200 Speaker 1: small apartment buildings and things like that can house a 374 00:19:32,200 --> 00:19:34,879 Speaker 1: few more people in the suburbs. And yet when you 375 00:19:34,920 --> 00:19:39,040 Speaker 1: look at what works on housing affordability, allowing more housing 376 00:19:39,080 --> 00:19:42,440 Speaker 1: to be built, which is a neoliberal policy, is effective, 377 00:19:42,800 --> 00:19:44,760 Speaker 1: it doesn't necessarily solve the whole problem. I mean, you 378 00:19:44,840 --> 00:19:47,320 Speaker 1: have a demand shift of people moving to big cities 379 00:19:47,320 --> 00:19:49,159 Speaker 1: and wanting to live in big cities because they're nicer. 380 00:19:49,840 --> 00:19:52,720 Speaker 1: Young people and young higher earners move in, and that's 381 00:19:52,880 --> 00:19:58,199 Speaker 1: a demand shock that raises prices, raises rents because you 382 00:19:58,200 --> 00:20:01,080 Speaker 1: have all this new demand. But if you accommodate that 383 00:20:01,119 --> 00:20:03,840 Speaker 1: demand by building a ton of housing like Austin has 384 00:20:03,840 --> 00:20:06,520 Speaker 1: been doing, then you relieve a lot of that pressure 385 00:20:06,520 --> 00:20:09,560 Speaker 1: and you prevent a lot of displacement of existing people, 386 00:20:09,640 --> 00:20:12,680 Speaker 1: and you accommodate those shifts. If you want to call 387 00:20:12,680 --> 00:20:15,520 Speaker 1: that a neoliberal policy, I'm happy to do that. Sometimes 388 00:20:15,560 --> 00:20:19,080 Speaker 1: you can have the government actually promote housing, so like Singapore, 389 00:20:19,280 --> 00:20:20,919 Speaker 1: the government goes out and builds a bunch of houses 390 00:20:20,920 --> 00:20:22,840 Speaker 1: on the land that it owns. We can do that, 391 00:20:22,960 --> 00:20:26,280 Speaker 1: we absolutely should do that. But most land is privately 392 00:20:26,280 --> 00:20:29,800 Speaker 1: owned in urban areas and settled areas, and so that 393 00:20:29,880 --> 00:20:34,000 Speaker 1: means that allowing construction on private land is a big deal, 394 00:20:34,760 --> 00:20:36,399 Speaker 1: and government has to do things to support it, like 395 00:20:36,440 --> 00:20:39,800 Speaker 1: build transit right or at least allow transit, facilitate transit, 396 00:20:40,119 --> 00:20:42,320 Speaker 1: to make it easier for people who have like apartment 397 00:20:42,320 --> 00:20:44,920 Speaker 1: buildings to get around without having to drive everywhere. Congestion 398 00:20:45,040 --> 00:20:47,000 Speaker 1: pricing in New York, There's things like that. But then 399 00:20:47,119 --> 00:20:51,639 Speaker 1: ultimately you've got to let people build housing. Is that 400 00:20:51,680 --> 00:20:53,920 Speaker 1: a neoliberal policy if you want to call it that, Sure, 401 00:20:53,920 --> 00:20:57,040 Speaker 1: it's an abundance policy. But I think the way things 402 00:20:57,040 --> 00:21:00,840 Speaker 1: evolve back toward neoliberalism is simply looking at what Trump 403 00:21:00,880 --> 00:21:03,320 Speaker 1: does and say and saying, look, that didn't work, Let's 404 00:21:03,320 --> 00:21:05,520 Speaker 1: cut these tariffs. It's not like you say free trade 405 00:21:05,560 --> 00:21:08,880 Speaker 1: is great. I love free trade. You instead say these 406 00:21:08,920 --> 00:21:11,280 Speaker 1: tariffs suck. Let's get rid of that. It's hurting people. 407 00:21:12,040 --> 00:21:14,080 Speaker 1: Point to the thing that's causing pain and make it 408 00:21:14,119 --> 00:21:17,200 Speaker 1: go away. And so I think national debt it's bad, 409 00:21:17,359 --> 00:21:19,639 Speaker 1: let's get rid of it, not get rid of it. 410 00:21:19,680 --> 00:21:21,200 Speaker 1: But it's not making worse. 411 00:21:21,040 --> 00:21:21,719 Speaker 3: Anything we can. 412 00:21:22,320 --> 00:21:24,240 Speaker 2: You mentioned the abundance agenda. I mean, that's obviously the 413 00:21:24,240 --> 00:21:26,960 Speaker 2: thing that's kind of lurking in many of these conversations. 414 00:21:27,080 --> 00:21:29,879 Speaker 2: The book by Ezra Kline and Derek Thompson, which was 415 00:21:29,960 --> 00:21:32,879 Speaker 2: kind of an initial manifesto for a different way for 416 00:21:32,920 --> 00:21:36,440 Speaker 2: progressives to think about the road ahead. Although it's been 417 00:21:36,520 --> 00:21:39,320 Speaker 2: endorsed a little bit by Zoramum dany I would say 418 00:21:39,400 --> 00:21:42,560 Speaker 2: is quite different from what he's suggesting for New York. 419 00:21:42,880 --> 00:21:46,240 Speaker 2: But the big point that that book makes is that 420 00:21:46,280 --> 00:21:49,439 Speaker 2: some of the places where government works least well have 421 00:21:49,560 --> 00:21:52,879 Speaker 2: been run by democrats for years. And your column you 422 00:21:52,880 --> 00:21:55,040 Speaker 2: talk about a kind of need for a combination of 423 00:21:55,080 --> 00:21:58,240 Speaker 2: neoliberalism and a development state that you see in East 424 00:21:58,320 --> 00:22:01,800 Speaker 2: Asia places like a poor you're thinking about that on 425 00:22:01,840 --> 00:22:03,639 Speaker 2: a state level as well. I mean, is that a 426 00:22:03,680 --> 00:22:07,520 Speaker 2: place for democrats to prove competence. 427 00:22:07,680 --> 00:22:14,200 Speaker 1: Yes, Democrats have run states and cities poorly, and progressive 428 00:22:14,240 --> 00:22:18,840 Speaker 1: ideology does lots of things that make people poorer at 429 00:22:18,880 --> 00:22:21,080 Speaker 1: the local and state level. You look at the places 430 00:22:21,080 --> 00:22:23,560 Speaker 1: that are building the housing and that are having more 431 00:22:23,600 --> 00:22:26,440 Speaker 1: efficient public services. These are run by Republicans. That should 432 00:22:26,480 --> 00:22:29,199 Speaker 1: be unacceptable for people who think that big government is 433 00:22:29,240 --> 00:22:29,560 Speaker 1: the answer. 434 00:22:29,640 --> 00:22:30,520 Speaker 3: Big government is good. 435 00:22:31,080 --> 00:22:34,080 Speaker 1: We need big government liberalism back, and we need to 436 00:22:34,119 --> 00:22:35,480 Speaker 1: make it work. 437 00:22:35,520 --> 00:22:36,680 Speaker 3: We need to make it effective. 438 00:22:37,000 --> 00:22:39,679 Speaker 1: We need to stop paying ten times as much as 439 00:22:39,720 --> 00:22:43,080 Speaker 1: other countries do for infrastructure for public services. We need 440 00:22:43,160 --> 00:22:46,200 Speaker 1: to allow housing to be built, and not just housing. 441 00:22:46,200 --> 00:22:47,920 Speaker 1: We need to allow shops. We need to allow people 442 00:22:47,960 --> 00:22:51,360 Speaker 1: to open small businesses. We will make small business people 443 00:22:51,480 --> 00:22:53,760 Speaker 1: just go through insane amounts of red tape to open 444 00:22:53,800 --> 00:22:56,080 Speaker 1: small businesses. We need to let them. We need to 445 00:22:56,080 --> 00:22:59,359 Speaker 1: get away from the idea that tolerating public disorder is 446 00:22:59,400 --> 00:23:01,440 Speaker 1: a form of war welfare, and that we're reducing harm 447 00:23:01,480 --> 00:23:04,240 Speaker 1: for poor people by allowing them to do fentanyl in 448 00:23:04,280 --> 00:23:07,720 Speaker 1: the street and realize that's not actually helping poor people, 449 00:23:07,800 --> 00:23:10,560 Speaker 1: and that failing to arrest shoplifters, the people who just 450 00:23:10,560 --> 00:23:13,439 Speaker 1: loot stores, that's not a form of wealthy distribution. This 451 00:23:13,520 --> 00:23:16,480 Speaker 1: is not robin hood. This is bad for poor people. 452 00:23:16,520 --> 00:23:19,960 Speaker 1: It's destroying poor neighborhoods. Progressive governance has failed on so 453 00:23:20,000 --> 00:23:24,399 Speaker 1: many fronts, so dramatically. Texas is building more solar power, 454 00:23:24,440 --> 00:23:28,440 Speaker 1: wind power, and batteries than California by mile. That's unacceptable, 455 00:23:28,520 --> 00:23:30,520 Speaker 1: even though California has a lot more people who it 456 00:23:30,560 --> 00:23:34,639 Speaker 1: needs to deliver electricity to. It's unacceptable that a red state, 457 00:23:35,040 --> 00:23:38,760 Speaker 1: simply by reducing regulation, you know, clean green energy is 458 00:23:38,800 --> 00:23:42,919 Speaker 1: out building California in those energy technologies by a mile. 459 00:23:43,560 --> 00:23:46,800 Speaker 1: So what I'm saying is progressive governance has failed at 460 00:23:46,840 --> 00:23:49,200 Speaker 1: the state and local level, and it needs to improve, 461 00:23:49,960 --> 00:23:52,760 Speaker 1: and then we need to recognize and deal with that 462 00:23:52,800 --> 00:23:54,920 Speaker 1: failure instead of simply denying it and trying to look 463 00:23:54,920 --> 00:23:55,680 Speaker 1: for someone to blame. 464 00:23:56,080 --> 00:23:58,399 Speaker 2: I guess one pushback or at least a dissonance of 465 00:23:58,440 --> 00:24:01,200 Speaker 2: what we're saying. You know, we really dumped on California 466 00:24:01,359 --> 00:24:04,080 Speaker 2: and the dysfunctionality of the government there, But it does 467 00:24:04,119 --> 00:24:06,280 Speaker 2: also produced some of the companies that you've just talked 468 00:24:06,280 --> 00:24:10,720 Speaker 2: about that were associated with the biggest innovations in AI 469 00:24:11,280 --> 00:24:14,920 Speaker 2: and in technology. Tesla managed to establish a pretty successful 470 00:24:14,920 --> 00:24:18,520 Speaker 2: company in California to left you know, most of the 471 00:24:18,520 --> 00:24:22,080 Speaker 2: most successful companies of our era, certainly the most important ones, 472 00:24:22,240 --> 00:24:27,040 Speaker 2: have come from that supposedly impossible state. So something was 473 00:24:27,080 --> 00:24:28,240 Speaker 2: going right in California. 474 00:24:29,000 --> 00:24:33,080 Speaker 1: Well, California is a very strong network effect where Silicon 475 00:24:33,119 --> 00:24:35,960 Speaker 1: valleys in California. So tech companies all move there because 476 00:24:35,960 --> 00:24:38,280 Speaker 1: that's where the engineers are, and the engineers moved there 477 00:24:38,320 --> 00:24:39,760 Speaker 1: because that's where the companies are, and they all moved there 478 00:24:39,760 --> 00:24:42,120 Speaker 1: because that's where the financiers are, and the financiers moved 479 00:24:42,119 --> 00:24:44,280 Speaker 1: there because that's where the companies are. And so there's 480 00:24:44,280 --> 00:24:46,440 Speaker 1: this big network effect, right, But they. 481 00:24:46,320 --> 00:24:48,480 Speaker 2: Managed to build those factories, you know, Tesla managed to 482 00:24:48,480 --> 00:24:51,120 Speaker 2: build a big factory there initially. 483 00:24:50,960 --> 00:24:53,440 Speaker 1: True, that's true, they did, although it was already built. 484 00:24:53,440 --> 00:24:55,440 Speaker 1: It was the new Me factory. They took it over. 485 00:24:56,200 --> 00:24:58,880 Speaker 1: They couldn't have built that factory new Oh yeah, that's interesting. 486 00:24:59,119 --> 00:25:00,719 Speaker 1: I know this because I know people were trying to 487 00:25:00,880 --> 00:25:03,879 Speaker 1: replicate this and building factories in California. Now, a network 488 00:25:03,880 --> 00:25:05,920 Speaker 1: effect is a powerful thing, and it functions a bit 489 00:25:05,960 --> 00:25:08,920 Speaker 1: like oil, you know, because you're essentially making your money 490 00:25:08,920 --> 00:25:11,480 Speaker 1: from land, except instead of something that's under the land, 491 00:25:11,640 --> 00:25:15,000 Speaker 1: it's simply the Land's location. You can kill a network effect, 492 00:25:15,040 --> 00:25:17,560 Speaker 1: It's very hard. You have to make incredibly bad policies. 493 00:25:17,960 --> 00:25:21,480 Speaker 1: But what California has been doing with its ineffective policies, 494 00:25:21,560 --> 00:25:24,280 Speaker 1: it has been tapping the network effect tax in effect, 495 00:25:24,359 --> 00:25:28,600 Speaker 1: taxing that network effect and exploiting it and using it 496 00:25:28,640 --> 00:25:33,200 Speaker 1: for very inefficient forms of redistribution. And you've seen housing 497 00:25:33,440 --> 00:25:36,159 Speaker 1: prices go through the roof and California not accommodating that 498 00:25:36,200 --> 00:25:38,719 Speaker 1: by building more housing to house people. So the new 499 00:25:38,760 --> 00:25:40,760 Speaker 1: people push out the old people, and people are fleeing 500 00:25:40,800 --> 00:25:43,159 Speaker 1: the state of Californian drows. Yes, you've got all these 501 00:25:43,160 --> 00:25:45,160 Speaker 1: great companies coming out of California. You know what else 502 00:25:45,240 --> 00:25:48,360 Speaker 1: is coming out of California residents, and so they're moving, 503 00:25:48,359 --> 00:25:50,399 Speaker 1: They're moving to Texas, they're moving to places where housing 504 00:25:50,440 --> 00:25:53,439 Speaker 1: is cheaper because California did not accommodate the influx of 505 00:25:53,480 --> 00:25:56,479 Speaker 1: people that came to work in those knowledge industries, those 506 00:25:56,520 --> 00:26:01,200 Speaker 1: clustering industries. And so you've seen California refused to tax 507 00:26:01,240 --> 00:26:03,600 Speaker 1: property and so have to do a bunch of taxes 508 00:26:03,760 --> 00:26:06,360 Speaker 1: on businesses that are not tax stuff that are suffering, 509 00:26:06,880 --> 00:26:09,240 Speaker 1: and those costs get passed on to people. California is 510 00:26:09,280 --> 00:26:11,480 Speaker 1: very unaffordable in many ways, and. 511 00:26:11,440 --> 00:26:12,240 Speaker 3: People are leaving. 512 00:26:12,560 --> 00:26:14,879 Speaker 1: Yes, it's good to have like Google and whatever whatever 513 00:26:14,960 --> 00:26:16,840 Speaker 1: come out of the state, right, it's good for the 514 00:26:16,920 --> 00:26:20,520 Speaker 1: national economy, But people from California are actually not staying there, 515 00:26:20,680 --> 00:26:22,400 Speaker 1: and ultimately people are voting with their. 516 00:26:22,320 --> 00:26:25,200 Speaker 2: Feed I'm reminded a bit of the old joke about 517 00:26:25,200 --> 00:26:28,520 Speaker 2: the guy in the Latin American country that's had multiple 518 00:26:28,960 --> 00:26:32,159 Speaker 2: coups and populist governments, and he says he dreams of 519 00:26:32,160 --> 00:26:34,040 Speaker 2: a time when people will be on the street with 520 00:26:34,080 --> 00:26:38,120 Speaker 2: the banners saying moderation or death, and reading your columns 521 00:26:38,160 --> 00:26:41,159 Speaker 2: say we need fewer ideological crusades and populist cludges and 522 00:26:41,240 --> 00:26:45,600 Speaker 2: more competence and capacity. But is that exciting enough in 523 00:26:45,640 --> 00:26:49,440 Speaker 2: this era? Is that a strategy that's going to get 524 00:26:49,440 --> 00:26:52,280 Speaker 2: people elected? You know what, do we want competence and capacity? 525 00:26:52,440 --> 00:26:53,680 Speaker 2: When do we want them? Now? 526 00:26:54,040 --> 00:26:55,160 Speaker 3: Do people want excitement? 527 00:26:55,480 --> 00:26:58,439 Speaker 2: Well, they've got used to that, so that action, that 528 00:26:58,520 --> 00:26:59,919 Speaker 2: sort of action all the time. 529 00:27:00,520 --> 00:27:04,399 Speaker 1: I think we're not living in a revolutionary era where 530 00:27:04,400 --> 00:27:07,960 Speaker 1: people are thinking of bright hopes for the future. It's 531 00:27:07,960 --> 00:27:12,080 Speaker 1: not excitement. It's not the hope of this shining utopian 532 00:27:12,119 --> 00:27:15,879 Speaker 1: future that's driving policy, and I think that you do 533 00:27:15,960 --> 00:27:19,040 Speaker 1: get times when people are driven by those positive future visions, 534 00:27:19,920 --> 00:27:24,200 Speaker 1: and those are times of rapid economic growth, growth and 535 00:27:24,280 --> 00:27:27,800 Speaker 1: living standard abundance, when people are confident. When people are 536 00:27:27,800 --> 00:27:31,520 Speaker 1: feeling confident, they want those positive visions of the future. 537 00:27:31,760 --> 00:27:32,760 Speaker 3: They believe in them. 538 00:27:33,200 --> 00:27:36,360 Speaker 1: Right now, people are angry, and yes they're angry mostly 539 00:27:36,400 --> 00:27:39,240 Speaker 1: about cultural issues, but also a lot of the things 540 00:27:39,280 --> 00:27:42,720 Speaker 1: being done by people who get elected because of cultural 541 00:27:42,800 --> 00:27:44,639 Speaker 1: issues are bad on the economic front, and people will 542 00:27:44,640 --> 00:27:46,680 Speaker 1: get mad. People are mad at the Biden administration because 543 00:27:46,720 --> 00:27:49,280 Speaker 1: of inflation, and so people are going to get mad 544 00:27:49,320 --> 00:27:52,240 Speaker 1: at the Trump administration because terists are stupid. People get 545 00:27:52,240 --> 00:27:55,440 Speaker 1: mad at progressive governance that fails at the city level. 546 00:27:55,520 --> 00:27:57,879 Speaker 1: So do I think this is going to excite people? 547 00:27:57,960 --> 00:27:58,480 Speaker 3: I don't know. 548 00:27:58,720 --> 00:28:00,760 Speaker 1: I think what it can do and what it should 549 00:28:00,800 --> 00:28:04,680 Speaker 1: do is harness anger. I don't need utopia to want 550 00:28:04,720 --> 00:28:08,720 Speaker 1: to avoid dystopia, all right. I want to stop the pain. 551 00:28:09,119 --> 00:28:13,600 Speaker 1: Why is Trump hurting us? Why is he canceling research 552 00:28:13,640 --> 00:28:17,480 Speaker 1: into promising cancer cures? Why is he hurting us manufacturing 553 00:28:17,480 --> 00:28:19,480 Speaker 1: by making it impossible for them to use their supply chains. 554 00:28:19,480 --> 00:28:21,560 Speaker 1: Why are manufacturing people getting laid off? 555 00:28:21,600 --> 00:28:24,159 Speaker 3: Right? Now, why are workers getting laid off? Why are 556 00:28:24,240 --> 00:28:26,720 Speaker 3: we being hurt? We should be angry at that. We 557 00:28:26,760 --> 00:28:27,520 Speaker 3: should be angry. 558 00:28:27,600 --> 00:28:30,560 Speaker 1: I don't think like some kids in the Sunrise movement, 559 00:28:30,720 --> 00:28:34,000 Speaker 1: like sitting around talking about utopia, is actually the electorate. 560 00:28:34,240 --> 00:28:38,200 Speaker 1: The electorate is mad. They're not sitting there envisioning you know, 561 00:28:38,880 --> 00:28:41,960 Speaker 1: luxury space, communism or whatever. They're actually simply sitting there 562 00:28:42,000 --> 00:28:46,080 Speaker 1: thinking like why did my prices go up? Gar I'm angry, 563 00:28:46,440 --> 00:28:49,120 Speaker 1: and so then like why is this grocery store? Why 564 00:28:49,160 --> 00:28:51,560 Speaker 1: are these groceries a little more expensive? I'm angry and 565 00:28:51,640 --> 00:28:56,520 Speaker 1: so harness that anger against the people who deserve the anger, 566 00:28:56,760 --> 00:29:01,520 Speaker 1: which is maga at the national level and stupid progressive 567 00:29:01,560 --> 00:29:04,400 Speaker 1: governance at the local level. Throw the bums out and 568 00:29:04,440 --> 00:29:08,560 Speaker 1: get something that works. I'm excited to not be hurt anymore. 569 00:29:09,920 --> 00:29:12,960 Speaker 2: Now, A Smith, thank you very much, thanks for having 570 00:29:12,960 --> 00:29:25,280 Speaker 2: me on. Thanks for listening to Trump and Noomics from Bloomberg. 571 00:29:25,360 --> 00:29:28,000 Speaker 2: It was hosted by Stephanie Flanders and I was joined 572 00:29:28,000 --> 00:29:32,360 Speaker 2: by the economic blogger Noah Smith. This Trumponomics was produced 573 00:29:32,360 --> 00:29:36,280 Speaker 2: by Moses and Sasadi and Tala Amadi with help from 574 00:29:36,320 --> 00:29:39,880 Speaker 2: Amy Keene and special thanks to Rachel Lewis Chrisky and 575 00:29:39,960 --> 00:29:43,680 Speaker 2: John Ring. Sound design is by Blake Maples and Sage 576 00:29:43,720 --> 00:29:50,080 Speaker 2: Bowman is the head of Bloomberg Podcasts. To help others 577 00:29:50,120 --> 00:29:52,240 Speaker 2: find Trump and nomics, please rate it and review it 578 00:29:52,400 --> 00:29:54,000 Speaker 2: highly wherever you listen to it.