WEBVTT - Will the Shutdown Lead to DOGE 2.0? 0:00:02.600 --> 0:00:08.560 Bloomberg Audio Studios, Podcasts, radio News. 0:00:13.039 --> 0:00:14.920 This is Everybody's business from Bloomberg Business Week. 0:00:14.920 --> 0:00:16.959 I'm Max Chafkin and I'm Stacy Vannoxsmith. 0:00:17.200 --> 0:00:19.800 Stacey. Have we got a story for you. 0:00:19.920 --> 0:00:24.279 It is about the wildest, weirdest, most interesting man in crypto. 0:00:24.440 --> 0:00:26.239 His name is Justin Sun will tell you all. 0:00:26.200 --> 0:00:28.960 About it, Okay, I'm looking forward to that. Before we 0:00:29.040 --> 0:00:31.600 get to that, We've got, of course, the big news 0:00:31.600 --> 0:00:33.479 of the week, Max, government shutdown. 0:00:33.800 --> 0:00:35.760 Oh Stacy, we're doing this again. 0:00:36.080 --> 0:00:38.800 I know, I know, government shutdowns they happen periodically, but 0:00:38.880 --> 0:00:41.720 this time I think is different. We've got Justin Wolfer's 0:00:41.720 --> 0:00:43.880 an economists here to help us break that down. 0:00:44.479 --> 0:00:47.440 And Stacy the underrated story of the week. Yeah, two 0:00:47.520 --> 0:00:49.680 words for you, little teas splendid. 0:00:49.760 --> 0:00:57.880 Daddy's splendid. Daddy's all right, hang around for that, Okay, Max. 0:00:58.000 --> 0:01:01.080 This week the news has been completely are taken by 0:01:01.080 --> 0:01:04.640 the government shutdown. It's all the headlines, it's everywhere, It's 0:01:04.640 --> 0:01:05.880 all anybody can talk about. 0:01:06.040 --> 0:01:09.920 Well, is Stacy, there is one very very positive economic 0:01:09.959 --> 0:01:11.800 indicator that we need to discuss. 0:01:12.000 --> 0:01:14.920 Yes, tell me I want some positive economic indicators. 0:01:15.040 --> 0:01:18.080 Life of a Showgirl the new Taylor Swift album hitting 0:01:18.160 --> 0:01:22.080 on Friday tomorrow. As we record this today, as you listen, 0:01:22.440 --> 0:01:25.880 you know, Taylor Swift obviously huge mega phenomenon. She she 0:01:26.000 --> 0:01:28.880 criss crosses the country raising hotel rooms. 0:01:29.040 --> 0:01:31.920 Hit pause on the podcast and just go listen to that. 0:01:33.160 --> 0:01:35.480 But I mean, seriously, this is it does feel like 0:01:35.680 --> 0:01:40.280 a big cultural moment. You know, Taylor Swift obviously the 0:01:40.360 --> 0:01:43.080 biggest pop star on the planet right now. 0:01:43.080 --> 0:01:44.600 She's had this amazing run. 0:01:45.000 --> 0:01:47.880 She's been mentioned in the Beige Book as I don't 0:01:47.920 --> 0:01:51.840 know what courses that has moved local economies when her 0:01:51.840 --> 0:01:52.800 concerts come through town. 0:01:52.920 --> 0:01:55.000 That's what I was alluding to, like the arostour when 0:01:55.000 --> 0:01:57.559 it would hit a town, like hotel room prices would 0:01:57.560 --> 0:01:59.920 go way up, you know, restaurants would sell more. 0:02:00.400 --> 0:02:02.600 I think there were literal earthquakes that. 0:02:02.680 --> 0:02:06.680 Happened because people were moving around so much in these stadiums. 0:02:06.760 --> 0:02:09.799 So you're saying, this is this moment, is the shutdown 0:02:09.880 --> 0:02:13.280 versus Taylor Swift? Can she do enough to salvage the 0:02:13.680 --> 0:02:16.200 US economy? I'm the government shutdown. 0:02:16.280 --> 0:02:19.919 Donald Trump and Chuck Schumer, they all have their calculations 0:02:19.960 --> 0:02:22.680 about where Americans are going to fall and how much 0:02:22.800 --> 0:02:25.280 pain are people going to be willing to accept? But 0:02:25.360 --> 0:02:27.680 they haven't counted on the fact that everyone's going to 0:02:27.680 --> 0:02:30.799 be distracted for like the next month listening to this. 0:02:30.800 --> 0:02:32.480 Album and dissecting all the lyrics. 0:02:32.840 --> 0:02:36.960 Indeed, that aside Stacy, I mean, the shutdown is happening, 0:02:37.480 --> 0:02:41.480 and like this sense of chaos, political chaos that then 0:02:41.600 --> 0:02:44.240 kind of tries to spill into the business world that's 0:02:44.240 --> 0:02:46.480 continuing this week, and I feel like that's maybe where 0:02:46.520 --> 0:02:47.240 we need to start. 0:02:47.480 --> 0:02:50.079 Yes, indeed, and in fact, I was at the University 0:02:50.080 --> 0:02:53.080 of Michigan earlier this week. I got to drop in 0:02:53.280 --> 0:02:56.720 on economist Justin Wolfer's ECON one oh one class, which 0:02:56.760 --> 0:02:59.560 was delightful. It's a class of five hundred students and 0:02:59.600 --> 0:03:01.720 at the end and I tracked some of them down 0:03:01.800 --> 0:03:04.399 and asked them how they were feeling about the economy 0:03:04.440 --> 0:03:06.880 and like what their worries were about the economy at 0:03:06.880 --> 0:03:09.480 this moment. Here's what they said. What scares you about 0:03:09.480 --> 0:03:10.440 the economy right now? 0:03:10.800 --> 0:03:13.440 The cost of living? Like I have like a girlfriend, 0:03:13.480 --> 0:03:15.000 and when we talk about. 0:03:14.720 --> 0:03:16.919 Like our future, it's like are we gonna be able 0:03:16.919 --> 0:03:18.799 to get a house or like what are we gonna do. 0:03:18.840 --> 0:03:21.360 I think it's a lot harder for people to get jobs. 0:03:21.520 --> 0:03:22.960 I think that's just a bigger worry and a lot 0:03:23.000 --> 0:03:23.840 of students' minds. 0:03:24.120 --> 0:03:25.600 I mean, I would agree with And I've applied to 0:03:25.600 --> 0:03:27.200 a bunch of jobs like Panera, bread and. 0:03:27.160 --> 0:03:29.960 Things like that, and I haven't heard bag at all. 0:03:30.160 --> 0:03:33.040 I was originally given a pelgrant and then it got 0:03:33.200 --> 0:03:36.680 taken away wit how saying I don't know, just like 0:03:36.720 --> 0:03:39.280 the current administration announced that they would be like repealing 0:03:39.760 --> 0:03:41.840 to a certain like student. 0:03:41.920 --> 0:03:43.600 Like your pel grant got taken away? 0:03:43.680 --> 0:03:46.640 Yeah, just literally gone. There wasn't an edification or email 0:03:46.720 --> 0:03:47.080 or anything. 0:03:47.120 --> 0:03:49.240 It's just what was gone that scares you about the 0:03:49.320 --> 0:03:50.880 economy right now, I would have. 0:03:50.840 --> 0:03:54.040 To say the tariffs, And that's really terrifying because President 0:03:54.040 --> 0:03:56.560 Trump does state that the other countries will be paying. 0:03:56.320 --> 0:03:58.200 These taxes, but as we've also learned in econ one on. 0:03:58.240 --> 0:04:01.800 One, American consumers will probably be paying a lot of 0:04:01.800 --> 0:04:02.520 the tax for it. 0:04:02.600 --> 0:04:03.440 The cost of food. 0:04:03.560 --> 0:04:05.760 Remember, like back in the day, like you could get 0:04:05.760 --> 0:04:07.240 a candy bar from ninety nine cents. 0:04:07.320 --> 0:04:09.600 Right now get king sized candy bars going. 0:04:09.480 --> 0:04:11.640 Up to like three dollars, three dollars fifty cents, Like 0:04:11.680 --> 0:04:12.880 at the stadium. 0:04:12.440 --> 0:04:14.880 A bottle of water could be like five six dollars. 0:04:14.960 --> 0:04:17.200 So what, oh is this when you guys go to games? 0:04:17.920 --> 0:04:19.000 Do you all go to games? 0:04:19.279 --> 0:04:19.479 Yeah? 0:04:19.560 --> 0:04:24.080 Yeah, really University of Michigan, Big ten school, they all 0:04:24.080 --> 0:04:24.880 go to the games. 0:04:25.040 --> 0:04:26.480 You know what I love about that? 0:04:27.000 --> 0:04:28.719 Like and I say love, but I mean what I 0:04:28.720 --> 0:04:32.200 appreciate about hearing those voices. We live in an era 0:04:32.320 --> 0:04:35.520 defined by kind of like reality television and social media, 0:04:35.600 --> 0:04:38.599 where like presentation is everything, and our politics is playing 0:04:38.600 --> 0:04:41.640 out essentially on screens, and you have these two sides 0:04:41.720 --> 0:04:45.120 like trying to spin stuff. But all these policies, all 0:04:45.120 --> 0:04:48.320 the stuff that's happening in the economy, it has consequences. 0:04:48.400 --> 0:04:52.000 And that, like that woman talking about the pelgrant, Yeah, 0:04:52.160 --> 0:04:53.159 is a consequence. 0:04:53.240 --> 0:04:55.520 I mean sounds really bad. It sounds really tough. 0:04:55.839 --> 0:04:59.080 And I do wonder as we think about how the 0:04:59.120 --> 0:05:02.599 consequences of this government shutdown that we're entering right now 0:05:03.080 --> 0:05:04.919 are going to play out. Those are the kinds of 0:05:04.960 --> 0:05:08.520 stories that are going to define like how we experience it, 0:05:08.560 --> 0:05:11.480 not like what Trump says on TV, not what Schumer 0:05:11.520 --> 0:05:14.400 whoever says on TV. It's going to be stories like 0:05:14.440 --> 0:05:17.080 that and and I don't know, I just feel like 0:05:17.120 --> 0:05:20.640 we have to keep talking to those people. So good job, Stacey. 0:05:22.720 --> 0:05:27.719 The teacher of these really lovely students is economist Justin Wolfers, 0:05:27.720 --> 0:05:31.000 and he is here today to talk government shutdown. Thanks 0:05:31.000 --> 0:05:33.719 again for letting me sit it on your class and welcome. 0:05:34.200 --> 0:05:37.720 Hey Stacey, Justinould, what did you think of what your 0:05:37.800 --> 0:05:38.720 students had to say? 0:05:39.120 --> 0:05:42.440 Well, they're brilliant. They I think, well, try and articulate. 0:05:43.640 --> 0:05:46.920 And I think it's so lovely to hear young voices 0:05:46.960 --> 0:05:50.719 engaging in our economic debates. We're fighting about the future, 0:05:51.000 --> 0:05:52.040 and that's who they are. 0:05:52.680 --> 0:05:53.320 Is all around. 0:05:53.520 --> 0:05:56.320 That's what I say, Oh, you're for grade inflation now. 0:05:58.040 --> 0:06:01.520 But Justin, we brought you on to talk about the 0:06:01.560 --> 0:06:05.640 government shutdown, that terrible moment when politics and economics meet 0:06:05.800 --> 0:06:09.000 and it is a mess. And right now we are 0:06:09.080 --> 0:06:11.520 in the middle of a shutdown. Before we kind of 0:06:11.600 --> 0:06:15.560 jump into the more granular issues, what do you see 0:06:15.560 --> 0:06:16.400 as going on here? 0:06:17.720 --> 0:06:18.680 Mostly politics. 0:06:18.960 --> 0:06:21.680 I understand that people's first instinct at a moment like 0:06:21.720 --> 0:06:24.200 this is to call an economist because it feels like 0:06:24.360 --> 0:06:28.040 a big deal economically. I think the reality is, if 0:06:28.040 --> 0:06:30.279 we think about the macroeconomy, the ups and downs of 0:06:30.320 --> 0:06:33.400 GDP and unemployment and recessions and booms and. 0:06:33.320 --> 0:06:36.040 Stuff like that. It's just not that big of a deal. 0:06:36.440 --> 0:06:38.760 So for folks who are not working in or very 0:06:38.760 --> 0:06:43.240 closely with the government, what I think the appropriate status 0:06:43.040 --> 0:06:45.320 is sort of disappointed parent. 0:06:46.320 --> 0:06:49.080 But seven hundred and fifty thousand people are not working 0:06:49.600 --> 0:06:52.920 today because of this, that feels like a big economic deal. 0:06:53.400 --> 0:06:56.520 Absolutely, Although Stacy, there's one hundred and forty million people 0:06:56.520 --> 0:06:59.880 who are and one hundred and forty million is substantially big. 0:07:00.160 --> 0:07:03.320 In seven hundred and fifty thousand, we're probably talking about 0:07:03.320 --> 0:07:05.800 a matter of weeks rather than the full year, and 0:07:05.839 --> 0:07:07.839 so you start to do this sort of math and 0:07:07.880 --> 0:07:10.480 it starts to become fractions of a percentage point. Look, 0:07:10.800 --> 0:07:13.160 two things are true, and I want to be really 0:07:13.200 --> 0:07:16.400 clear about it, and I thank you for drawing it. 0:07:16.400 --> 0:07:19.360 It can be that something's not a major macroeconomic issue 0:07:20.320 --> 0:07:24.760 yet still is a dumb and horrendous and pointless waste. 0:07:25.240 --> 0:07:28.400 And were I president, it wouldn't change the reality that 0:07:28.440 --> 0:07:31.520 a billion dollars is both a tiny fraction of GDP 0:07:32.360 --> 0:07:36.000 and a ton of money and wasting it for no 0:07:36.160 --> 0:07:41.360 reason whatsoever. Feels utterly pointless and utterly disparity. 0:07:42.960 --> 0:07:46.520 So justin you're saying it, it doesn't matter economically, or 0:07:46.520 --> 0:07:48.920 at least on a macroeconomic point of view. And I 0:07:48.920 --> 0:07:51.600 feel like Stacey and I talked about this. We've both 0:07:51.600 --> 0:07:55.040 been business journals for a long time. These shutdowns come 0:07:55.640 --> 0:07:58.520 with some frequency, right, the last one was in twenty eighteen. 0:07:58.880 --> 0:08:01.200 We're constantly hitting the debt ceiling. And if you've been 0:08:01.240 --> 0:08:04.680 through this a few times, a dozen times, however many 0:08:04.720 --> 0:08:08.160 it's been, you basically just start to feel like, eh, 0:08:08.200 --> 0:08:10.520 like this is like they're going to get it figured out. 0:08:10.560 --> 0:08:13.280 This is a sort of a manufactured political crisis. The 0:08:13.320 --> 0:08:16.160 only thing that matters really is who gets blamed. 0:08:16.240 --> 0:08:16.400 Right. 0:08:16.560 --> 0:08:19.880 I do wonder if this one is a little bit different, 0:08:20.400 --> 0:08:24.000 only because this is coming in a larger context, which 0:08:24.000 --> 0:08:27.800 is that the Trump administration has been since the beginning, 0:08:27.840 --> 0:08:33.160 since January, just trying in various ways to kind of 0:08:33.200 --> 0:08:36.560 kneecap parts of the federal government. Right, and to me, 0:08:36.679 --> 0:08:40.080 this really feels like an almost repeat of Doge, which 0:08:40.120 --> 0:08:43.480 might seem weird to say, but like we had during 0:08:43.520 --> 0:08:47.000 the first couple months of the administration, Elon Musk going 0:08:47.080 --> 0:08:50.960 around sort of purporting to close various federal agencies laying 0:08:50.960 --> 0:08:53.600 people off. I think it's yesterday as we record this 0:08:53.679 --> 0:08:58.160 on Thursday, October two, that the workers who took deferred 0:08:58.200 --> 0:09:01.599 resignations are are in fact leaving the government. It's like 0:09:01.600 --> 0:09:04.160 another one hundred thousand workers. And when you listen to 0:09:04.200 --> 0:09:06.680 what the Trump administration is saying, and we listen to 0:09:06.760 --> 0:09:08.959 what russ Vote the head of the OMB is saying, 0:09:09.440 --> 0:09:12.199 they see this as an opportunity not just to furlough workers, 0:09:12.240 --> 0:09:15.760 but to attack parts of the bureaucracy permanently. 0:09:16.880 --> 0:09:21.160 Yes, so much. There max so full of ideas. Let 0:09:21.160 --> 0:09:24.079 me start with the first one. You're like, eugh, another, 0:09:24.160 --> 0:09:28.360 the government shutdown? Who cares? The problem with that thinking 0:09:29.240 --> 0:09:33.199 is the thing that eventually ends the shutdown is people 0:09:33.240 --> 0:09:37.200 are like, holy cow, this is terrible, and it causes 0:09:37.240 --> 0:09:40.640 political pain for one side or other of politics. That 0:09:40.760 --> 0:09:42.920 causes enough that pushes them back to the table, and 0:09:42.960 --> 0:09:45.960 they sort it allowed. If we all sit around and 0:09:46.040 --> 0:09:48.920 take people like me seriously and say, hey, it's not 0:09:49.000 --> 0:09:51.959 that big of a deal, then actually it will never resolve. 0:09:52.960 --> 0:09:55.360 And so I think your point that we're all sort 0:09:55.360 --> 0:09:58.880 of a little bit indifferent, right, Well, battered, bruised, and 0:09:59.040 --> 0:10:03.439 used to large scale shocks to how the government works. 0:10:03.520 --> 0:10:07.120 Right now, this would have been outrageous six years ago, 0:10:07.600 --> 0:10:10.040 and you and I I think our blood would have boiled. 0:10:10.200 --> 0:10:13.080 And this might be the thirteenth worst thing to have 0:10:13.120 --> 0:10:17.640 happened so far in October. That removes the urgency. And 0:10:17.679 --> 0:10:20.640 if you remove the urgency, that then creates the possibility 0:10:20.679 --> 0:10:22.520 that this one actually runs on a whole lot longer. 0:10:22.640 --> 0:10:25.040 So the last one went thirty four days. When I 0:10:25.120 --> 0:10:29.199 say government shutdowns are not a huge event, I should 0:10:29.240 --> 0:10:32.080 say one, We're already shut down most of the government 0:10:32.080 --> 0:10:34.599 two days every week, so if we made it a 0:10:34.640 --> 0:10:35.680 third wouldn't be a big deal. 0:10:35.840 --> 0:10:38.480 So the government gets shut down right now, it's not 0:10:38.559 --> 0:10:43.679 that huge of a deal macroeconomically, and potentially, you know, 0:10:43.880 --> 0:10:46.160 thousands of people will lose their jobs. 0:10:46.760 --> 0:10:49.000 Wait, Stacy, could we just hold up because they want 0:10:49.000 --> 0:10:52.040 to get the premise right. So what has historically happened 0:10:52.440 --> 0:10:55.480 is non essential employees are told not to do any work. 0:10:56.160 --> 0:11:00.480 The government remains shut down for two weeks then and 0:11:00.480 --> 0:11:02.520 then they shutdown ends and they come back to work. 0:11:03.559 --> 0:11:06.360 And usually in every past case, Congress has passed a 0:11:06.440 --> 0:11:08.560 law saying even though you didn't do any work for 0:11:08.559 --> 0:11:11.760 those two weeks, we're going to pay you anyway. So 0:11:12.200 --> 0:11:16.160 no one historically was losing their jobs through this. And 0:11:16.200 --> 0:11:18.440 then there's the essential workers who keep working, but they 0:11:18.520 --> 0:11:20.840 keep working without getting paid, and then they'll get repaid later, 0:11:23.120 --> 0:11:25.960 So there's no job cuts that are essential to this. 0:11:26.440 --> 0:11:28.680 What this gets to, though, is Max's earlier point, which 0:11:28.720 --> 0:11:31.199 is this is a political escalation at the current moment. 0:11:31.200 --> 0:11:35.400 This one's different because normally presidents are embarrassed by their 0:11:35.400 --> 0:11:37.199 inability to keep the government open. 0:11:37.600 --> 0:11:39.400 Right this is like a shameful moment, like, oh, you 0:11:39.400 --> 0:11:42.680 couldn't get it together and make a deal again, And. 0:11:42.600 --> 0:11:45.760 What we have is escalation. 0:11:45.840 --> 0:11:48.480 Certainly in claims the president says he's going to go 0:11:48.520 --> 0:11:53.200 after democratic priorities. He's going to definitely not collect the 0:11:53.280 --> 0:11:58.959 trash from outside Max's house, and so on. This president's saying, well, 0:11:59.000 --> 0:12:01.480 you guys are doing me, I'm just going to fight back. 0:12:02.040 --> 0:12:04.720 So it sounds like when my kids were five. He 0:12:04.800 --> 0:12:08.280 has no new powers to fire people right now that 0:12:08.320 --> 0:12:10.800 he didn't have yesterday. So if there was whole departments 0:12:10.800 --> 0:12:12.600 he wanted to shut down, if he could do it, 0:12:12.600 --> 0:12:16.160 he could do it. Two days ago, and he could 0:12:16.160 --> 0:12:18.360 still do it in two days time. So the presidents 0:12:18.360 --> 0:12:21.319 claim that this brings on an escalation. There's no structural 0:12:21.400 --> 0:12:25.520 change that creates that escalation. So the escalation, though, is 0:12:26.000 --> 0:12:28.040 that he would be taking advantage of the political moment 0:12:28.160 --> 0:12:30.520 that somehow the press and the people would let it 0:12:30.600 --> 0:12:33.400 slide that he's going to do something, and other times 0:12:33.440 --> 0:12:34.520 we would find repugnant. 0:12:35.559 --> 0:12:38.800 You know, I spent earlier this year a couple of 0:12:38.840 --> 0:12:40.960 months reporting on Russ Vote, who I said, head of 0:12:40.960 --> 0:12:44.840 the OMB, super interesting character. He wrote part of the 0:12:44.880 --> 0:12:47.280 Project twenty twenty five. I think he was involved in 0:12:47.320 --> 0:12:49.360 the last government shutdown in fact, and he was kind 0:12:49.360 --> 0:12:51.120 of like hanging behind the scenes with Doge. 0:12:51.200 --> 0:12:51.360 Right. 0:12:52.160 --> 0:12:54.120 I described him as like, you know, I can't remember 0:12:54.120 --> 0:12:56.160 the words I actually use, but like the real mastermind 0:12:56.240 --> 0:12:59.520 or the ideological mastermind or something like that. And what's 0:12:59.559 --> 0:13:03.439 interesting is Vote had been saying for like a decade 0:13:03.480 --> 0:13:06.880 basically that if we could, we should just like cut 0:13:06.920 --> 0:13:10.720 all these woke agencies, defang the deep state, massively cut 0:13:10.760 --> 0:13:12.960 back in the government, and that that was like a 0:13:13.000 --> 0:13:16.760 political end in itself, and that's what we saw essentially 0:13:16.840 --> 0:13:19.640 with Doge A couple months ago right where where they 0:13:19.640 --> 0:13:23.520 did this and then discovered, oh crap, it's unpopular. Elon 0:13:23.600 --> 0:13:27.560 Musk suddenly had people protesting outside of his dealerships. People 0:13:27.559 --> 0:13:30.520 were suddenly putting bumper stickers on their cars, you know, 0:13:30.559 --> 0:13:33.720 trading their teslas in. People hated this because, you know, 0:13:34.080 --> 0:13:37.040 for all the times we sort of complain and grouse 0:13:37.040 --> 0:13:39.720 about the ways that the government doesn't work, like it 0:13:39.760 --> 0:13:41.160 actually does work pretty well. 0:13:41.160 --> 0:13:42.680 That was one of the things I think we learned 0:13:42.840 --> 0:13:43.440 with Doge. 0:13:44.000 --> 0:13:46.760 And now they're kind of trying to run it back, 0:13:47.360 --> 0:13:49.720 but this time blame the Democrats. And like you said, 0:13:49.800 --> 0:13:53.760 justin nothing's really changed from a legal perspective, although I'm 0:13:53.760 --> 0:13:56.559 sure there might be arguments to be made about, oh, 0:13:56.559 --> 0:13:58.720 maybe it's an emergency or something like that, But really 0:13:59.120 --> 0:14:03.160 this is about can we pin this on Chuck Schumer? 0:14:03.200 --> 0:14:04.600 And I don't know what the answer to that. I 0:14:04.600 --> 0:14:07.000 don't think any of us actually know what the answer 0:14:07.000 --> 0:14:09.600 to that. I'm not even sure russ Vote Donald Trump 0:14:09.760 --> 0:14:11.160 or Chuck Schumer knows the answer. 0:14:12.080 --> 0:14:15.720 I'm not a very good political scientist, so I'm far 0:14:15.800 --> 0:14:18.920 less interested in who we pined on, although that's ultimately 0:14:18.960 --> 0:14:21.440 going to be what results. Is right one side or 0:14:21.480 --> 0:14:24.240 the other will find the situation's not working well for 0:14:24.280 --> 0:14:26.760 them and it's better for them to end it. There's 0:14:26.800 --> 0:14:30.000 a deeper economics here, which is why was Dozier failure 0:14:30.080 --> 0:14:33.080 and why would the same logic fail at the current moment. 0:14:33.800 --> 0:14:36.280 So many of us have an image in our minds 0:14:36.400 --> 0:14:39.000 of the federal government is big and bloated and pointless. 0:14:39.720 --> 0:14:42.920 And last time I went to the DMV, I thought 0:14:42.920 --> 0:14:44.800 the person behind the count it might actually have been 0:14:44.840 --> 0:14:45.320 a sloth. 0:14:46.080 --> 0:14:50.320 There's a kid's movie where it's Zutopia. It is Utopia. 0:14:50.880 --> 0:14:54.600 Yeah, I got three little ones about twenty times. 0:14:55.240 --> 0:14:58.400 It's a wonderful movie. But yeah, you walk in and like, literally, 0:14:58.480 --> 0:15:01.160 the DMV is run by a sloth. And I've been 0:15:01.200 --> 0:15:04.920 in that DMV and the sloth isn't even cute. They're 0:15:04.960 --> 0:15:09.440 resentful and middle aged and slow moving. And we take. 0:15:09.280 --> 0:15:11.200 That experience with that, I'm just kidding. 0:15:13.120 --> 0:15:15.000 We take that experience and we projected on the rest 0:15:15.040 --> 0:15:17.360 of government. There's a few things to recognize here. First 0:15:17.400 --> 0:15:20.000 of all, most of our experiences with government, with these 0:15:20.000 --> 0:15:22.280 annoying officers are actually state and local. 0:15:22.960 --> 0:15:24.680 I was just gonna say, you're talking about a state 0:15:24.720 --> 0:15:26.920 agency that's a problem from Michigan. 0:15:26.880 --> 0:15:29.880 Absolutely, but we all have that idea, and that's why 0:15:29.960 --> 0:15:32.640 there's this strong current, particularly through public and politics. Oh, 0:15:32.760 --> 0:15:34.960 let's run the government like a business, or let's choke it, 0:15:35.040 --> 0:15:37.240 or let's get rid of all these useless employees, which 0:15:37.280 --> 0:15:39.720 is what you're hearing a lot of right now. That's 0:15:39.760 --> 0:15:42.040 the wrong model for the federal government. There's an old 0:15:42.080 --> 0:15:44.760 saying about the federal government. It's an insurance company with 0:15:44.760 --> 0:15:47.600 an army. What do I mean by that? The federal 0:15:47.640 --> 0:15:49.920 government most of its spending is on what we call 0:15:50.080 --> 0:15:54.800 insurance programs. It's unemployment insurance, it's Medicare, it's Medicaid, and those. 0:15:54.560 --> 0:15:56.440 Are like not an issue here at all. I mean, 0:15:56.480 --> 0:16:00.080 those are mandatory things. That is not This is what 0:16:00.200 --> 0:16:02.640 always blows my mind about the shutdowns. It's not about 0:16:02.680 --> 0:16:05.080 the big stuff, you know. I looked into this. I 0:16:05.080 --> 0:16:08.320 got really interested in how big a share of the 0:16:08.360 --> 0:16:11.520 federal budget went to federal workers, and so I actually 0:16:11.520 --> 0:16:14.120 looked this up, and as it turns out, if you 0:16:14.160 --> 0:16:17.760 count the military of salary benefits, everything adds up to 0:16:17.800 --> 0:16:19.960 about seven percent of the US budget, and if you 0:16:19.960 --> 0:16:22.320 don't count the military, it's about five percent. So this 0:16:22.360 --> 0:16:25.640 is a very small part of the budget. And then 0:16:25.720 --> 0:16:28.560 this healthcare subsidy, the thing that's become a big point 0:16:28.600 --> 0:16:31.280 of contention between the right and the left, these sort 0:16:31.320 --> 0:16:33.400 of extra subsidies that got rolled out during the pandemic 0:16:33.480 --> 0:16:35.640 to help people afford health insurance. I mean, that is 0:16:35.720 --> 0:16:38.440 like zero point two percent of the budget. That's really little, 0:16:38.480 --> 0:16:42.240 and it's just it really striking to me that so 0:16:42.440 --> 0:16:45.040 much is happening over something that is such a small 0:16:45.120 --> 0:16:48.440 part of the seven trillion dollar budget that we spend 0:16:48.480 --> 0:16:48.920 every year. 0:16:49.240 --> 0:16:51.560 The federal government's it's a small share of the economy. 0:16:52.040 --> 0:16:54.840 Much of its function is printing Social Security chicks does 0:16:54.920 --> 0:16:57.600 checks is still going to go out. There are important 0:16:57.600 --> 0:17:00.240 things the federal government does. Some of them will be 0:17:00.240 --> 0:17:04.280 shut down for a small number of weeks. Maybe I 0:17:04.320 --> 0:17:06.640 just want to come back to this is not a 0:17:06.680 --> 0:17:10.399 macroeconomic moment. Every dollar we waste is a dollar we 0:17:10.440 --> 0:17:13.200 didn't have to waste, and it's all for political posturing. 0:17:13.280 --> 0:17:17.520 So it's as if we've just given several billion dollars 0:17:17.560 --> 0:17:20.719 to both Democrats and Republicans to spend on political advertising 0:17:20.760 --> 0:17:21.880 so they can yell at each other. 0:17:22.400 --> 0:17:24.560 And the billion dollars is that the cost or what is. 0:17:24.560 --> 0:17:27.480 The cost here, It's going to be several billion, which 0:17:27.600 --> 0:17:30.240 again is a real amount of money. I hate wasting 0:17:30.240 --> 0:17:33.240 a billion dollars. We could spend that billion building schools, 0:17:33.320 --> 0:17:37.000 or feeding hungry or giving tax cuts to people whose 0:17:37.080 --> 0:17:39.959 yachts are not big enough, guilding the White House, gilding. 0:17:40.640 --> 0:17:44.760 We could probably guild another whole room with that. One 0:17:45.040 --> 0:17:48.560 part of the story we haven't told is the public servants. Right, 0:17:49.320 --> 0:17:53.640 These are real people who I teach the other job 0:17:53.680 --> 0:17:56.359 I have you started with my economic students. I also 0:17:56.359 --> 0:18:00.360 teaching the Ford School of Public Policy. These are young 0:18:00.400 --> 0:18:04.280 things in their early twenties who answered Kennedy's call to 0:18:04.680 --> 0:18:06.560 ask not what your country can do for you, but 0:18:06.600 --> 0:18:08.719 what you can do for your country, who believe deeply 0:18:08.720 --> 0:18:11.440 and profoundly in public service and have gone off to 0:18:11.480 --> 0:18:13.480 school to become smarter at it, and can't wait to 0:18:13.520 --> 0:18:17.520 go back out there and serve the greater good. And 0:18:17.600 --> 0:18:20.040 they're being treated appallingly. They're being treated as if they're 0:18:20.040 --> 0:18:22.760 the public enemy. For the generation of students I'm teaching 0:18:22.840 --> 0:18:25.560 right now, there may not be jobs for them. For 0:18:25.600 --> 0:18:27.640 the folks who are currently in the federal government, which 0:18:27.640 --> 0:18:30.760 includes many of my former students. They're being asked to 0:18:30.800 --> 0:18:33.960 go without pay for as long as the politicians decide. 0:18:34.640 --> 0:18:36.479 And that's the thing I will just tell you. This 0:18:36.520 --> 0:18:38.320 is not being an economist, This is being a person. 0:18:38.840 --> 0:18:41.320 I find it utterly dismaying the extent to which we 0:18:41.400 --> 0:18:46.240 are using people as pawns in greater political games. And 0:18:46.320 --> 0:18:49.200 I've seen more of that since January of twenty twenty 0:18:49.200 --> 0:18:51.639 five than I've ever seen in my life. And every 0:18:51.680 --> 0:18:53.920 time I see it, it churns my stomach a lot. 0:18:54.480 --> 0:18:58.000 Wow, justin, thank you for being here. Thank you, justin, 0:18:58.680 --> 0:18:59.480 thank you very much. 0:19:05.400 --> 0:19:07.800 Okay, Max, at the top of the show, you promised 0:19:07.960 --> 0:19:09.720 that we were going to hear about the most interesting 0:19:09.720 --> 0:19:11.280 man in crypto. It is time to deliver. 0:19:11.560 --> 0:19:13.600 Yeah, but we need to back up, and I just 0:19:13.640 --> 0:19:16.000 need to explain a little bit about Trump and crypto 0:19:16.080 --> 0:19:18.199 because I think that's what the big issue here is. 0:19:18.480 --> 0:19:21.000 Okay. I do feel like the first six months of 0:19:21.040 --> 0:19:24.480 the Trump presidency there's been a lot of crypto news. 0:19:24.880 --> 0:19:26.920 Some of it I followed, some of it not so much. 0:19:26.960 --> 0:19:29.400 So what is going on right now with Trump and crypto? 0:19:29.640 --> 0:19:33.040 Yeah, this is an industry that Trump seemed to despise, 0:19:33.200 --> 0:19:36.080 during his first term. It's also one that I'm sure 0:19:36.280 --> 0:19:41.040 most listeners know. Lots of controversy, lots of allegations, some 0:19:41.080 --> 0:19:43.720 big ups, some big downs, and many of the leading 0:19:43.800 --> 0:19:45.840 lights you know going back a few years ago were 0:19:45.880 --> 0:19:50.240 either criminally charged or convicted or the subject of SEC cases. 0:19:50.680 --> 0:19:54.760