WEBVTT - Jared Bernstein on the Next Stage of Bidenomics 0:00:10.119 --> 0:00:14.320 Hello, and welcome to another episode of the Odd Lots Podcast. 0:00:14.400 --> 0:00:16.720 I'm Joe Whysenthal and I'm Tracy Alloway. 0:00:16.880 --> 0:00:20.160 Tracy, So we're recording this of Friday, June thirtieth. It 0:00:20.280 --> 0:00:23.919 really felt like this week a bunch of people kind 0:00:23.920 --> 0:00:26.319 of like declared victory on the economy or suddenly like 0:00:26.360 --> 0:00:28.400 there's been like something in the water, you know, like 0:00:28.440 --> 0:00:30.520 they put LSD in the water or something like people 0:00:30.560 --> 0:00:32.600 are like feeling good. There's a good mood vibe. 0:00:32.640 --> 0:00:32.880 Yeah. 0:00:32.920 --> 0:00:36.440 If last year we were all worried about the Vibe session, 0:00:36.720 --> 0:00:39.080 so the idea that all these survey based measures were 0:00:39.080 --> 0:00:42.440 turning down even while activity was still relatively robust. What 0:00:42.479 --> 0:00:45.480 are we going to call this one? 0:00:45.080 --> 0:00:45.120 VI? 0:00:45.520 --> 0:00:47.240 What's the vibe expansion? 0:00:47.280 --> 0:00:48.200 I don't know vibe Spanish. 0:00:48.240 --> 0:00:50.360 You need to get Kyla Scanlon up, yeah, to come 0:00:50.440 --> 0:00:54.160 up with the term. But yes, the vibes shifted somehow 0:00:54.200 --> 0:00:54.600 this week. 0:00:55.040 --> 0:00:58.880 Yeah, And it's interesting because a lot of the trends 0:00:58.880 --> 0:01:02.920 that we saw last to her, you know, very low unemployment, 0:01:03.360 --> 0:01:07.240 you know, still some inflationary pressures, housing market relatively robust. 0:01:07.400 --> 0:01:07.959 Those have just. 0:01:07.920 --> 0:01:11.640 Continued this year. So not a lot has changed, but 0:01:11.760 --> 0:01:15.039 it definitely feels like people are more optimistic. 0:01:15.319 --> 0:01:17.880 Yeah, right, exactly, a bunch of people declaring that all 0:01:17.920 --> 0:01:20.520 the recession calls are null and void. The vibe session 0:01:20.600 --> 0:01:23.360 is over. Noah Smith had a blog saying that. And 0:01:23.560 --> 0:01:26.800 I think most notably, the White House sort of chose 0:01:26.840 --> 0:01:29.480 this week as a week to stamp out the success 0:01:29.480 --> 0:01:32.039 of what they're calling Bidenomics. And they're basically, you know, 0:01:32.520 --> 0:01:34.920 we had the president and they're sort of saying, yes, 0:01:35.120 --> 0:01:38.040 this is the economy that the White House is planned 0:01:38.080 --> 0:01:40.800 for and designed and the envisioned. And so I think 0:01:40.800 --> 0:01:42.600 that's a sign they're kind of like in a position 0:01:42.600 --> 0:01:44.560 where they want to brag a little bit. Yeah, they 0:01:44.560 --> 0:01:45.400 want to talk about it. 0:01:45.520 --> 0:01:45.759 Yeah. 0:01:45.760 --> 0:01:48.400 And it is interesting in and of itself that the 0:01:48.400 --> 0:01:52.200 White House feels comfortable enough to choose this moment to 0:01:52.360 --> 0:01:54.560 kind of put a time step on the idea of 0:01:54.560 --> 0:01:58.400 Bidenomics and declare it an early success. 0:01:58.560 --> 0:01:58.800 Yeah. 0:01:58.800 --> 0:02:00.680 And so I mean, obviously we know like some big 0:02:00.720 --> 0:02:02.600 components of it, and they are these really sort of 0:02:02.600 --> 0:02:07.720 extraordinary like you know, industrial policy like strategies, the Chips Act, 0:02:07.760 --> 0:02:09.440 which we talk a lot about on the show, the 0:02:09.480 --> 0:02:13.920 Inflation Reduction Act, the reshoring, domestic investment, all of these 0:02:13.960 --> 0:02:17.520 things sort of like sort of ongoing fiscal support for 0:02:17.560 --> 0:02:20.360 the economy, putting money in the hands of workers, et cetera. 0:02:21.000 --> 0:02:24.560 And you know, again, the numbers today seem solid, and 0:02:24.600 --> 0:02:26.400 so then I guess the question is like, Okay, what 0:02:26.560 --> 0:02:29.880 is the big coherent thought and like where going from next? 0:02:29.919 --> 0:02:32.400 Because we're getting the investments, we see the factory announcements 0:02:32.440 --> 0:02:34.880 all the time, but then like what's next for all 0:02:34.919 --> 0:02:35.639 that's being built? 0:02:35.720 --> 0:02:37.160 Why now? And what's next? 0:02:37.320 --> 0:02:40.760 Well, to learn more about what is Bidenomics and what 0:02:40.880 --> 0:02:44.080 is next, we are going to be speaking with Jared Bernstein. 0:02:44.200 --> 0:02:46.560 He is the head of the White House Council of 0:02:46.600 --> 0:02:50.600 Economic Advisors. Jared Bernstein, thank you so much for coming 0:02:50.639 --> 0:02:52.959 on Odd Loaves today, huge week. 0:02:53.680 --> 0:02:55.680 Wait a second, am I am I the perfect guest? 0:02:55.760 --> 0:02:55.920 Or not? 0:02:57.560 --> 0:02:58.960 We have the perfect guest? 0:03:00.000 --> 0:03:01.160 Okay, that's what I wanted to hear. 0:03:01.400 --> 0:03:04.320 Yeah, soone told us recently how devastated they would be 0:03:04.360 --> 0:03:07.240 if they got intro without the perfect guest. Mentioned you 0:03:07.280 --> 0:03:08.680 are the perfect guest. 0:03:08.800 --> 0:03:10.800 I mean once you start, once you start saying that, 0:03:10.840 --> 0:03:12.760 it sort of becomes like, wow, yeah, we have to 0:03:12.760 --> 0:03:14.320 say it every time. I didn't get it. 0:03:14.639 --> 0:03:17.280 But when we don't say it. It's never intentional. Yes, 0:03:17.360 --> 0:03:22.600 we don't. It's not that volumes huge week, obviously. Why now, 0:03:22.919 --> 0:03:25.520 you know, the economy is hot and it's been hot 0:03:25.560 --> 0:03:29.120 for a while, inflation is elevated, labor market tightness. Why 0:03:29.280 --> 0:03:31.960 was this the week that President Biden in the White 0:03:31.960 --> 0:03:35.080 House chose to sort of sort of declare that biden 0:03:35.160 --> 0:03:36.880 Nomics is working well. 0:03:36.920 --> 0:03:39.040 I think the simple answer is that there's a lot 0:03:39.120 --> 0:03:42.520 of evidence that it is. And in terms of the 0:03:42.560 --> 0:03:46.440 broader economy, you know, I think that there's headwinds and 0:03:46.480 --> 0:03:48.760 there's tailwinds. And I think one of the things that 0:03:49.000 --> 0:03:50.680 I know, I listened to you guys all the time, 0:03:50.680 --> 0:03:52.920 and I really enjoy what you do. But I think 0:03:53.000 --> 0:03:56.080 all of us here in this business get very focused 0:03:56.120 --> 0:03:58.320 on the news of the day, the news of the minute, 0:03:58.320 --> 0:04:00.560 the news of the week. You know, the mark asset 0:04:00.600 --> 0:04:03.360 that's in trouble, or the market asset that's soaring, the 0:04:03.400 --> 0:04:08.040 supply chain that's broken, the dwell time in some port somewhere, 0:04:08.280 --> 0:04:11.080 all of that's critically important to all of us, and 0:04:11.120 --> 0:04:12.880 you two do a great job of reporting on that. 0:04:13.280 --> 0:04:17.680 But you know, Bidenomics takes both a near term and 0:04:17.760 --> 0:04:21.080 a very long term view. So when we're talking about 0:04:21.360 --> 0:04:25.280 the bipartisan Infrastructure Law, the inflation reduction at the Chips Act, 0:04:25.320 --> 0:04:27.159 and I know you've done shows on all of those, 0:04:27.640 --> 0:04:31.760 we're talking about a long term play here where if 0:04:31.800 --> 0:04:36.840 we get the implementation and the public private aspects of 0:04:36.839 --> 0:04:41.480 those investments right, we have the potential to transform the 0:04:41.480 --> 0:04:45.120 economy very much in the spirit of Bidenomics, bottom up, 0:04:45.279 --> 0:04:49.680 middle out growth, a complete reversal from the trickle down, 0:04:49.839 --> 0:04:54.080 top down approach that I think decades of evidence fails 0:04:54.120 --> 0:04:57.400 to support. So I do think there is a longer 0:04:57.520 --> 0:05:01.479 term view here that gets away from the headwinds and 0:05:01.480 --> 0:05:02.320 tailwinds of the day. 0:05:02.960 --> 0:05:05.320 So I'm glad you mentioned this because this sort of 0:05:05.320 --> 0:05:08.440 feeds into one of the criticisms that you sometimes hear 0:05:08.800 --> 0:05:13.560 about a more active industrial policy or you know, Bidenomics, 0:05:13.600 --> 0:05:17.640 where investment, long term investment does take a more central role, 0:05:17.680 --> 0:05:22.080 and that criticism is that potentially you are pulling a 0:05:22.160 --> 0:05:25.799 lot of investment forward, so you're sort of front loading capex, 0:05:25.839 --> 0:05:28.720 and that maybe you know in the next downturn, which 0:05:28.760 --> 0:05:31.920 hopefully will be a long time from now, that maybe 0:05:32.000 --> 0:05:34.919 you won't have as much ammunition for this type of spending. Again, 0:05:35.000 --> 0:05:36.000 how would you respond to that. 0:05:36.640 --> 0:05:41.200 Well, I think one of the very positive attributes of 0:05:41.400 --> 0:05:44.800 the Bidenomics investment that we're seeing right now is the 0:05:44.880 --> 0:05:47.800 extent to which public investment, which does have a longer 0:05:47.920 --> 0:05:51.920 term spend out it's much smoother, is pulling in private investment, which, 0:05:51.960 --> 0:05:54.440 as you suggest, can be kind of lumpy. Part of 0:05:54.440 --> 0:05:58.599 that is because of the actual building the initial cost 0:05:58.680 --> 0:06:03.000 that take place when we are standing up a domestic 0:06:03.040 --> 0:06:07.280 semiconductor industry, when we're standing up a domestic electric vehicle 0:06:07.360 --> 0:06:11.000 electric battery industry, when we're making these longer term investments 0:06:11.000 --> 0:06:14.000 in clean energy. So here's a way to think about that. 0:06:14.279 --> 0:06:17.240 If you look at the record on the prior administration 0:06:17.720 --> 0:06:22.200 of domestic spending on manufacturing facilities, So the construction of 0:06:22.320 --> 0:06:27.279 manufacturing plants in flatlined for many years. I think it 0:06:27.320 --> 0:06:31.080 grew two percent real in the prior administration. That's up 0:06:31.080 --> 0:06:34.760 one hundred percent since the president took office. So that's 0:06:34.760 --> 0:06:37.200 a hockey stick kind of a figure in the Treasury 0:06:37.200 --> 0:06:39.080 Department putut a nice blog on that if you want 0:06:39.120 --> 0:06:41.760 to just post the figure on that, And what the 0:06:41.760 --> 0:06:44.280 Treasury folks did in their blog was they looked at 0:06:44.320 --> 0:06:49.920 where those manufacturing facilities, what sectors is that construction taking place, 0:06:50.400 --> 0:06:54.480 and it very clearly relates to the investments that are 0:06:54.480 --> 0:06:58.360 incentivized by the legislation that we've been talking about. So 0:06:58.600 --> 0:07:00.880 of course you're going to see a big initial spend, 0:07:01.320 --> 0:07:04.640 but I think over the longer term that smooths out, 0:07:04.680 --> 0:07:07.479 and if we do it right, it keeps delivering in 0:07:07.560 --> 0:07:12.640 terms of domestic production and high quality jobs for American workers. Tracy, 0:07:12.680 --> 0:07:15.800 I want to comment on something you said. You guys 0:07:15.800 --> 0:07:19.200 talk a lot about industrial strategy policy. I'm not sure 0:07:19.280 --> 0:07:21.920 that this point has been made clearly enough, though you know, 0:07:22.800 --> 0:07:25.720 if it has, I'm repeating it, which is that, yes, 0:07:25.840 --> 0:07:31.320 we certainly have a very clear, conscious, visible, elevated agenda 0:07:31.360 --> 0:07:33.440 in that space. Nobody's trying to be cute or hide 0:07:33.480 --> 0:07:38.920 any balls. But I also think that you cannot find 0:07:39.040 --> 0:07:42.880 a time in our economic history when there wasn't an 0:07:42.880 --> 0:07:46.960 industrial policy of some sort or another. And you know, 0:07:47.040 --> 0:07:49.400 obviously you can go back to the beginning of our 0:07:49.440 --> 0:07:52.400 country and see a very clearly articulated industrial policy of 0:07:52.560 --> 0:07:57.120 Hamilton's manufacturing initiatives. But what I'm talking about is something 0:07:57.320 --> 0:07:59.920 much less positive than that. What I'm talking about is 0:08:00.000 --> 0:08:04.640 an industrial policy that is a function of who has 0:08:04.800 --> 0:08:08.280 the best connected lobbyist to get the tax code that 0:08:08.320 --> 0:08:11.560 they want and what you end up with, What you 0:08:11.680 --> 0:08:14.920 end up in that kind of industrial policy is the 0:08:15.040 --> 0:08:19.840 deepest pocketed, best connected, in many cases, most divorced from 0:08:19.920 --> 0:08:24.320 actual economic productivity initiatives are the ones that get the brakes, 0:08:24.320 --> 0:08:27.960 the funding, the tax credits, the attention. One thing you'd 0:08:27.960 --> 0:08:30.960 expect to have in that scenario is an outsized role 0:08:31.040 --> 0:08:34.840 for finance. And you know what I call the shampoo cycle, 0:08:34.880 --> 0:08:37.640 bubble bust, repeat, and you know, we've seen a lot 0:08:37.640 --> 0:08:40.319 of that. So I think that it's wrong to think that, 0:08:40.400 --> 0:08:41.760 you know, we sort of fell out of the sky 0:08:41.840 --> 0:08:45.760 with in industrial strategy, and more more correct to view 0:08:45.800 --> 0:08:48.760 this as very intentional and I hope very thoughtful. 0:08:48.800 --> 0:08:52.160 One I want to ask about, you know, you mentioned 0:08:52.200 --> 0:08:55.440 the investment in structures and it's it is a hockey stick. 0:08:55.559 --> 0:08:58.000 And we see the battery announcements almost every other day, 0:08:58.040 --> 0:09:01.160 and the chip announcements almost every other day. What is 0:09:01.360 --> 0:09:04.439 next and by next them specifically, what can you and 0:09:04.480 --> 0:09:07.440 the administration and the rest of the administration do to 0:09:07.520 --> 0:09:11.440 focus that what happens inside the plants actually happens in 0:09:11.440 --> 0:09:14.839 a cost competitive way that good cutting edge batteries are made, 0:09:14.880 --> 0:09:17.880 that we compete, that they compete globally, that good cutting 0:09:17.920 --> 0:09:22.240 edge chips are being made. What's next in terms of, basically, yeah, 0:09:22.320 --> 0:09:26.160 guaranteeing that what's built inside these structures sort of delivers 0:09:26.200 --> 0:09:26.959 on the outside. 0:09:27.400 --> 0:09:30.359 Well, the thing with capitalism is that there's no guarantees. 0:09:30.800 --> 0:09:33.360 The idea of you know, the government sort of getting 0:09:33.400 --> 0:09:36.360 in there and saying, you know, don't use this widget, 0:09:36.440 --> 0:09:39.480 use that widget sounds kind of unappealing to me. I 0:09:39.520 --> 0:09:43.680 think the best thing for our industrial strategy, and certainly 0:09:43.800 --> 0:09:46.480 the way I believe the President thinks about this, is 0:09:46.520 --> 0:09:49.679 that we create the environment and the conditions, both in 0:09:49.800 --> 0:09:53.440 terms of capital investment, in terms of worker quality, and 0:09:53.520 --> 0:09:57.520 in terms of the ancillary functions which I'll explain that 0:09:57.880 --> 0:10:00.880 workers need to make this all work. So, the first 0:10:00.960 --> 0:10:05.439 thing is there are deep market failures where private investors, 0:10:05.480 --> 0:10:08.400 because of risk reward ratios being what they are, will 0:10:08.520 --> 0:10:14.320 underinvest in critical sectors such as climate, such as batteries, 0:10:14.320 --> 0:10:18.559 such as more resilient supply chains here, and so our 0:10:19.000 --> 0:10:22.200 financing structures. And again, you've had lots of good conversations, 0:10:22.240 --> 0:10:24.240 You've had folks from the government on to talk about this. 0:10:24.600 --> 0:10:27.600 Our financing structures have to tweak those risk rewards so 0:10:27.640 --> 0:10:29.960 that we can get so that we can get the 0:10:29.960 --> 0:10:33.000 investment we need. That's you know, a pretty thirty thousand 0:10:33.040 --> 0:10:35.840 feet up versus you know, having to get into factory 0:10:35.840 --> 0:10:37.640 and make sure the chips are coming out the right way. 0:10:37.880 --> 0:10:40.360 But that's important. And then secondly, we have to make 0:10:40.360 --> 0:10:43.560 sure that the workforce is empowered and educated, and that 0:10:43.640 --> 0:10:45.920 happens to be Pillar two of Bidenomics, by the way, 0:10:46.080 --> 0:10:49.600 empowering and educating the workforce. And I think one somewhat 0:10:49.640 --> 0:10:53.760 underappreciated part of chips is the very significant resources in 0:10:53.800 --> 0:10:57.520 that bill to provide training for workers to come into 0:10:57.520 --> 0:11:00.240 these places, places which, by the way, and this might 0:11:00.280 --> 0:11:03.200 even be an od launch show someday, places that are 0:11:03.320 --> 0:11:06.160 being stood up all across the country. This is my 0:11:06.280 --> 0:11:10.760 favorite aspects of Bidenomics and the investment agenda. They're showing 0:11:10.880 --> 0:11:14.320 up in the Southwest, in upstate New York, in Ohio 0:11:14.480 --> 0:11:17.760 and Tennessee and Oklahoma, in blue places, in red places. 0:11:17.760 --> 0:11:19.760 You know, the President has a joke, I'll see you 0:11:19.760 --> 0:11:21.760 at the ribbon cutting for people who didn't vote for 0:11:21.880 --> 0:11:24.400 the legislation, would show up to cut the ribbons. And 0:11:24.440 --> 0:11:26.200 I think that's great. I mean, I think that's the 0:11:26.200 --> 0:11:29.080 way to have the most productive economy. But where's it 0:11:29.160 --> 0:11:32.280 going the third part of your question, Well, look, our 0:11:32.360 --> 0:11:35.679 car agenda is really important. That may sound divorced from 0:11:35.679 --> 0:11:39.120 what we're talking about, but it's not. Just like we 0:11:39.760 --> 0:11:42.440 announced earlier one of these weeks. They all mushed together 0:11:42.480 --> 0:11:45.080 for me. We're going to make sure that if you 0:11:45.160 --> 0:11:48.880 live in rural America, you have affordable high speed broad 0:11:49.160 --> 0:11:52.840 that is economic oxygen to people in those places. You 0:11:52.920 --> 0:11:55.839 can't participate without it. I'd say the same thing about 0:11:55.880 --> 0:11:59.280 accessible and affordable childcare. That's something we have to work 0:11:59.320 --> 0:12:01.400 on going forward, and it's in our budget we have 0:12:01.480 --> 0:12:03.200 to I think that's a great tool for us to 0:12:03.240 --> 0:12:06.400 work on, both in the context of helping people's personal 0:12:06.760 --> 0:12:10.200 budgets in their economies, their household economies, but also in 0:12:10.280 --> 0:12:12.920 this context to make sure people have access to the 0:12:13.000 --> 0:12:15.880 job market and to these good jobs. 0:12:16.360 --> 0:12:18.600 Well, Joe and I would be more than happy to 0:12:18.720 --> 0:12:21.640 do a Studs Turcle version of the show where we 0:12:21.679 --> 0:12:23.920 go on the road and talk to workers and new 0:12:23.960 --> 0:12:26.280 types of jobs. But just on that note, you know, 0:12:26.480 --> 0:12:29.720 Joe asked you about being cost competitive. How do you 0:12:29.840 --> 0:12:35.080 thread the needle between creating, for instance, a semiconductor factory 0:12:35.800 --> 0:12:39.440 and also a semiconductor factory that's able to, you know, 0:12:39.720 --> 0:12:44.959 compete on a global basis with empowering workers and making 0:12:44.960 --> 0:12:47.160 sure that workers are getting a fair deal. And the 0:12:47.200 --> 0:12:48.880 reason I asked that is because I think we just 0:12:48.920 --> 0:12:51.920 saw a headline that came out saying that there are 0:12:51.960 --> 0:12:57.440 some semiconductor firms that are talking about importing migrant labor 0:12:57.640 --> 0:13:00.560 rather than hiring locally in order to keep costs down. 0:13:00.720 --> 0:13:03.480 And we know that, for example, the auto workers are 0:13:03.520 --> 0:13:06.520 concerned about wages and paid some of the battery factories 0:13:06.559 --> 0:13:08.520 replacing the ice factories. 0:13:09.240 --> 0:13:11.280 I think this is very much a walk and chew 0:13:11.320 --> 0:13:14.080 gum kind of question. I think when it comes to 0:13:15.160 --> 0:13:18.640 the cost of production, we very have a very conscious 0:13:19.240 --> 0:13:22.400 agenda to lower cost curves, and I think we're seeing 0:13:22.400 --> 0:13:25.280 some success there. We've seen cost curves come down, particularly 0:13:25.320 --> 0:13:28.200 in renewable energy, where the prison and I believe said 0:13:28.200 --> 0:13:30.080 this in this speech in Chicago the other day, that 0:13:30.120 --> 0:13:34.000 some of the price points around renewable energy, given the 0:13:34.120 --> 0:13:36.800 increasing capacity in those sectors, have come down to be 0:13:37.280 --> 0:13:40.559 quite competitive with traditional sources. I think we could say 0:13:40.600 --> 0:13:44.040 the same thing with chips if our plans are able 0:13:44.120 --> 0:13:46.920 to be realized with the pace that they're on now. 0:13:47.320 --> 0:13:51.120 And that's just a very simple aggregate supply demand chart, 0:13:51.200 --> 0:13:55.559 whereby increasing capacity increasing supply, you help on the price side. 0:13:55.840 --> 0:13:58.520 And then you know, the other part is the job market. Look, 0:13:59.280 --> 0:14:02.120 we've had an on that's below four and a half percent. 0:14:02.280 --> 0:14:05.599 That's below four percent for eighteen months, a year and 0:14:05.640 --> 0:14:08.319 a half we've had. When you do that, you start 0:14:08.360 --> 0:14:12.880 seeing workers get a bit more bargaining cloud and that 0:14:13.000 --> 0:14:16.120 shows up in pay. And in fact, we're finally starting 0:14:16.160 --> 0:14:20.360 to see real wage gains as inflation begins to ease 0:14:20.440 --> 0:14:23.720 and the job market remains strong. We've now seen a 0:14:23.760 --> 0:14:26.760 year over year wage gain in the last job support 0:14:26.800 --> 0:14:29.000 real wage guyers say, a year over year real wage 0:14:29.040 --> 0:14:31.920 gain in the last job support. We now have real 0:14:31.960 --> 0:14:35.160 wages up a percent since last June. If you look 0:14:35.200 --> 0:14:39.200 for production non supervisory workers, so blue collar workers, non managers, 0:14:39.200 --> 0:14:42.080 that's eighty percent of the workforce, their pay is up 0:14:42.160 --> 0:14:46.280 one point five percent since last June. So interestingly that 0:14:46.360 --> 0:14:49.960 it's up fifty BIPs more than the overalls. That's a 0:14:49.960 --> 0:14:53.320 bargaining power story. We have blog on the CEA website 0:14:53.360 --> 0:14:56.880 showing gains for black workers even closing some of the 0:14:57.200 --> 0:15:00.160 black white gap a little bit because of the important 0:15:00.160 --> 0:15:02.760 that bargaining power. We have an economy that can do 0:15:02.840 --> 0:15:05.600 both of the above. That's the answer to Tracy's question, 0:15:05.720 --> 0:15:07.920 that can do both of the above, that can invest 0:15:08.520 --> 0:15:11.960 in productive capacity to bend cost curves while we run 0:15:12.040 --> 0:15:14.440 a tight enough labor market that workers are getting their 0:15:14.480 --> 0:15:17.600 fair share of the growth that they're helping to create. 0:15:17.640 --> 0:15:19.600 And by the way, one of the ways that happens 0:15:19.640 --> 0:15:24.360 mechanically or arithmetically is by labor share of income getting 0:15:24.400 --> 0:15:27.120 back to some of its historical average. It's been pretty 0:15:27.120 --> 0:15:31.320 depressed lately, and that's actually a non inflationary way of 0:15:31.440 --> 0:15:35.280 paying for higher real pay is through a higher labor share. 0:15:52.040 --> 0:15:56.280 Can you talk about international trade under the bidonomics framework, 0:15:56.360 --> 0:15:59.760 and I'm thinking specifically about some of the frustrations from 0:15:59.840 --> 0:16:01.960 our our friends and allies in Europe about some of 0:16:02.000 --> 0:16:04.040 the rules that were put in place with the Inflation 0:16:04.160 --> 0:16:07.160 Reduction Act, and how you think about that relationship and 0:16:07.200 --> 0:16:10.360 how you know, what is the bidonomic stance on how 0:16:10.400 --> 0:16:11.800 we relate to our trading partners. 0:16:12.160 --> 0:16:14.200 Yeah, one of the things I get to do is 0:16:14.280 --> 0:16:17.280 chair of the CEA. Is I chair something called the 0:16:17.320 --> 0:16:21.200 Economic Policy Committee of the OECD, and we recently had 0:16:21.200 --> 0:16:23.680 a meeting over there and I was talking to folks 0:16:23.800 --> 0:16:27.160 in my position in many different many other countries, and 0:16:27.240 --> 0:16:30.000 it was a very good, robust discussion about this point. 0:16:30.280 --> 0:16:33.040 I think there's actually a lot more commonality, a lot 0:16:33.120 --> 0:16:38.120 more agreement that we're all engaged. Many of these economies 0:16:38.160 --> 0:16:41.320 we're talking about, if you look at their policy agendas, 0:16:41.480 --> 0:16:44.120 we're all doing some version of the same thing. And 0:16:44.160 --> 0:16:47.960 it's exactly what we've been talking about in our investment discussion, 0:16:48.240 --> 0:16:50.480 and in fact, in many cases, Europe's been doing this 0:16:50.520 --> 0:16:53.120 for a lot longer than we have. You know, industrial 0:16:53.160 --> 0:16:56.400 strategy was not a bad couple of words over there, 0:16:56.520 --> 0:16:59.400 I would say, longer than has been the case here. 0:17:00.080 --> 0:17:04.399 And the idea is to I think, promote more spillovers 0:17:04.440 --> 0:17:06.880 than sort of head to head competition. If we can 0:17:06.920 --> 0:17:10.399 help lower the cost curve for producing the components of 0:17:10.440 --> 0:17:13.800 clean energy economy, components of electric vehicles. Yes, of course 0:17:13.800 --> 0:17:16.119 there's going to be competition, but there's also going to 0:17:16.160 --> 0:17:20.240 be I think some cooperation and some benefits from the 0:17:20.240 --> 0:17:22.879 increased capacity that we have here. Let me give a 0:17:22.880 --> 0:17:27.120 concrete example. If you're making a battery here, you're making 0:17:27.200 --> 0:17:31.240 it here, and if you follow the president's plans, you're 0:17:31.320 --> 0:17:34.720 creating good union jobs for folks to do that here. 0:17:35.400 --> 0:17:40.360 But nature, in her wisdom put the components of electric 0:17:40.400 --> 0:17:44.480 batteries under the earths of many different countries, and most 0:17:44.520 --> 0:17:46.919 of them aren't this one. I think there's some of 0:17:46.920 --> 0:17:49.639 that up in Alaska, but there's just you're going to 0:17:49.680 --> 0:17:53.159 be getting those intermediate inputs from other countries. So I 0:17:53.160 --> 0:17:56.080 think one mistake that's been made in this discussion is 0:17:56.119 --> 0:18:01.440 somehow assuming that our international trade policy is leaning towards 0:18:01.760 --> 0:18:05.080 autarchy and you know, far less in terms of trade flows. 0:18:05.280 --> 0:18:07.919 That is demonstrably false if you look at the trade 0:18:07.920 --> 0:18:11.240 flows themselves, which have been quite robust. I mean, I 0:18:11.320 --> 0:18:13.360 try to point people just do a couple of clicks 0:18:14.040 --> 0:18:18.520 and you'll see we engage in robust trade. But I 0:18:18.560 --> 0:18:21.560 would say, you know what really frames are thinking about 0:18:21.600 --> 0:18:25.280 this differently is we don't look under bidnomics. We don't 0:18:25.359 --> 0:18:29.399 look at Americans as consumers one hundred percent, full stop. 0:18:29.760 --> 0:18:34.359 We recognize that they and their communities are also working people, 0:18:34.440 --> 0:18:38.560 workers who depend on domestic production, getting good jobs here. 0:18:38.840 --> 0:18:42.040 If all you thought about was consumer spending, you'd say, 0:18:42.280 --> 0:18:45.040 let me import everything to try to increase the supply 0:18:45.119 --> 0:18:48.080 and lower the price. If you thought about consumers on 0:18:48.240 --> 0:18:51.639 people are consumers, but they're also workers, you'd think about 0:18:51.720 --> 0:18:54.880 both and you'd say, yes, we want robust trade flows. 0:18:55.080 --> 0:18:58.200 Yes we want to work with our partners to lower 0:18:58.200 --> 0:19:01.000 the costs of goods that are so quick for our future. 0:19:01.240 --> 0:19:03.399 But we also want to have good jobs here and 0:19:03.480 --> 0:19:06.600 we don't want to hollow out our communities. So I 0:19:06.680 --> 0:19:08.800 think that's really the way to think about the package. 0:19:09.320 --> 0:19:13.560 Just going back to the investment side of Bidenomics, and 0:19:13.760 --> 0:19:20.040 I guess differentiating between bad industrial policy versus smarter industrial policy. 0:19:20.440 --> 0:19:23.520 You mentioned the idea of you know, potentially money or 0:19:23.560 --> 0:19:26.880 power being concentrated in the hands of a few firms, 0:19:27.359 --> 0:19:32.360 and I know that anti monopoly measures are of interest 0:19:32.400 --> 0:19:36.359 and a big plank of the Bidenomics agenda. So does 0:19:36.440 --> 0:19:40.880 this type of ramped up public investment, does that need 0:19:40.920 --> 0:19:44.760 to go hand in hand with stronger anti monopoly measures, 0:19:44.800 --> 0:19:46.920 and what are you thinking on that front? 0:19:47.760 --> 0:19:50.080 I think it does, and I think that's h and 0:19:50.119 --> 0:19:53.200 that happens to be Pillar three of Bidenomics, by the way, 0:19:53.600 --> 0:19:58.680 which is promoting a competition both to lower costs and 0:19:58.800 --> 0:20:01.080 to give a smaller busin This is a seat at 0:20:01.080 --> 0:20:03.560 the table, chance to leap over some of those anti 0:20:03.600 --> 0:20:06.280 competitive barriers that you were just kind of alluding to. 0:20:06.680 --> 0:20:09.240 In terms of what it means, it's it's really everything 0:20:09.240 --> 0:20:13.679 from some very granular stuff to getting some competitive cops 0:20:13.680 --> 0:20:15.800 back on the beat. So on the granular side, you've 0:20:15.800 --> 0:20:19.080 seen a president who's who's come out strong against junk fees, 0:20:19.480 --> 0:20:24.359 who has implemented anti overdraft initiatives. I was talking to 0:20:24.400 --> 0:20:26.520 the President about this the other day and he reminded 0:20:26.520 --> 0:20:29.360 me about a famous case I know, Aaron Kline Brookings 0:20:29.400 --> 0:20:32.359 talks about this of this banker who had a boat 0:20:32.560 --> 0:20:34.760 that was called overdraft. He had a yacht and he 0:20:34.760 --> 0:20:38.080 had named it overdraft. You know that that was something 0:20:38.119 --> 0:20:42.000 that that does not sit well with President Biden, and 0:20:42.520 --> 0:20:45.280 so he took an action that's saving consumers five and 0:20:45.280 --> 0:20:48.320 a half billion dollars a year on overdraft fees. You know, 0:20:48.480 --> 0:20:51.440 non competes, which I think you've probably talked about. I'm 0:20:51.480 --> 0:20:53.719 sure you know what I'm talking about, the idea that 0:20:53.800 --> 0:20:58.200 workers are come out from these really non competitive, non 0:20:58.240 --> 0:21:00.879 compete closes, and to allow that to get jobs in 0:21:00.920 --> 0:21:03.639 the same or similar industries where they were in a 0:21:03.640 --> 0:21:06.560 way that doesn't do anything to hurt company disclosures or 0:21:06.600 --> 0:21:09.760 anything like that. So that's the granular side of that equation. 0:21:09.880 --> 0:21:12.320 I think the other side, which there are other people 0:21:12.320 --> 0:21:14.600 who could talk about it know more thoroughly than me, 0:21:15.240 --> 0:21:18.199 is just having the FTC back on the beat, and 0:21:18.240 --> 0:21:20.480 you've seen lots of action there. I think it's fair 0:21:20.560 --> 0:21:23.440 to say they're an independent regulator, just like the FED, 0:21:23.520 --> 0:21:25.080 so we don't like the gut up in their knitting, 0:21:25.240 --> 0:21:27.480 but I think it's fair to say that they have 0:21:27.640 --> 0:21:32.159 taken this kind of view very seriously, the idea that 0:21:32.240 --> 0:21:36.920 when too many of your industries retail, healthcare, technology are 0:21:37.000 --> 0:21:40.760 so concentrated that's non or anti competitive. They've taken that 0:21:40.800 --> 0:21:45.159 seriously and they're actively working to fix the damage in 0:21:45.200 --> 0:21:46.800 a way that I think is impressive. 0:21:47.359 --> 0:21:49.560 We just have about a minute or two left with you. 0:21:49.560 --> 0:21:52.879