Why are rich corporations getting more stimulus money from the government, and getting it faster, than small businesses and individuals? Matt Stoller returns to the show to explain how recovery funds are distributed: Money isn’t neutral, and how money travels matters.

Matt Stoller is the author of BIG, a newsletter about monopoly and finance, and the Director of Research at the American Economic Liberties Project. His recent book, ‘Goliath: The 100-Year War Between Monopoly Power and Democracy’, examines how concentrated financial power and consumerism transformed American politics.

Twitter: @matthewstoller

Further reading:

Subscribe to BIG: https://mattstoller.substack.com/welcome

The Cantillon Effect: Why Wall Street gets a bailout and you don’t: https://mattstoller.substack.com/p/the-cantillon-effect-why-wall-street

Congress “CARES” for Wealthy with COVID-19 Tax Policy Provisions: https://itep.org/congress-cares-for-wealthy-with-covid-19-tax-policy-provisions/

The Relief Package Ushers in Trump’s Planned Economy: https://www.wired.com/story/the-relief-package-ushers-in-trumps-planned-economy/

End Shareholder Primacy Once and For All: http://bostonreview.net/class-inequality/lenore-palladino-end-shareholder-primacy-once-and-all

We All Have a Stake in the Stock Market, Right? Guess Again: https://www.nytimes.com/2018/02/08/business/economy/stocks-economy.html

Website: http://pitchforkeconomics.com/

Twitter: @PitchforkEcon

Instagram: @pitchforkeconomics

Nick’s twitter: @NickHanauer

Nick Hanauer:

We’ve had all these bailouts and some people are feeling the effect of those bailouts, namely big companies and Wall Street. And some people are definitely not.

Matt Stoller:

When you expand the money supply, which is what happens in a bailout, the people who get that money first are people who are powerful, that are near the gold mines.

David Goldstein:

A lot of the companies who are getting bailed out now, they’re the ones who spent $6.3 trillion on stock buybacks and dividends.

Speaker 4:

From the offices of Civic Ventures in downtown Seattle, this is Pitchfork Economics with Nick Hanauer. One American capitalist’s take on how we got into this mess and how we can get out.

Nick Hanauer:

I’m Nick Hanauer, founder of Civic Ventures.

David Goldstein:

I’m David Goldstein, senior fellow at Civic Ventures.

Nick, as we record this on May 18th, the stock market is going gangbusters. I think it’s up three, 4% today.

Nick Hanauer:

Yeah.

David Goldstein:

That means the crisis is over, right?

Nick Hanauer:

Yeah. Well, we’ve had all these bailouts and more still to come and definitely some people are feeling the effect of those bailouts, namely big companies and Wall Street. And some people for sure are definitely not feeling the effects of those bailouts. All the folks I know who run restaurants, low wage workers, those folks mostly, unless you’re working for a grocery store are really struggling. And that speaks to the dynamics of how these bailouts work. When they happen, some people get lots of money first and other people just get dribs and drabs.

David Goldstein:

A lot of the companies who are getting bailed out now who are doing great in the markets, they’re the ones who spent $6.3 trillion over the past 10 years on stock buybacks and dividends. Money that could have been used to build up reserves for, I don’t know, a pandemic or some other rainy day. But instead just went to shareholders.

Nick Hanauer:

That’s right. And today our guest, our old friend, Matt Stoller, friend of the pod, is going to take us through the dynamics of that, why that happens and what we can do to make it work better.

Matt Stoller:

My name is Matt Stoller. I’m the director of research at the American Economic Liberties Project. And I have a book out called, Goliath: the 100-Year War Between Monopoly Power and Democracy.

Nick Hanauer:

Matt, you have written extensively about Wall Street bailouts, and to paraphrase your most recent article, Why Wall Street Gets a Bailout and You Don’t. And I think that this issue is top of mind for a lot of Americans, it’s certainly top of mind for the folks who listen to this podcast. Tell us about this fancy Cantillon effect. Cantillon, how do you say it?

Matt Stoller:

Cantillon, if you want to impress people or intimidate people just name and after an 18th century Frenchman. That’s the goal. Richard Cantillon was a French merchant and he wrote a book, basically the first economics textbook. It was before Adam Smith. And one of the things that he talked about was how what happens when you do monetary policy and you print a bunch of money. Now in the 18th century, what that meant is that you found a gold mine in your territory. If you found a gold mine in your territory, that was the equivalent of expansionary monetary policy.

What he found is that basically when you expand the money supply, which is what happens in a bailout, the people who get that money first are people who are powerful, that are near the goldmine. People that are close to the king basically. And that eventually prices go up for everyone as gold gets out there. But that takes a while before the money supply expands for everyone. Prices go up for everyone before the gold gets out to everyone. And so the powerful get bailed out or get more money before everyone else get money.

But more fundamentally what he was saying is that institutions matter. In the 18th century, the institutional setup was that the wealthy and the powerful were closest to the king. That’s not inherent. It’s just that the institutional setups matter. How money travels is actually a really important component of social justice. Now, when we’re talking about the bailouts today, what we saw is that institutions still matter. We obviously didn’t find a gold mine. We just print from the Fed or elsewhere.

The CARES Act, which was the bailout bill that passed to deal with the pandemic, if you notice the stock market’s doing fine. The money that went out through the Fed got there instantly. It got to the powerful instantly, but everybody else had to go through this much more rickety, small business lending apparatus, and much more rickety unemployment apparatus. And so that money didn’t get out nearly as quickly. And that’s the Cantillon effect. It’s the way that money travels is not neutral. It has to do with the institutional setup.

And the last part, because I don’t want this to be a bummer story. This is not inherent. A lot of the New Deal in the thirties, forties and fifties was about setting up institutions so that money did travel more neutrally, so that it didn’t immediately go out just to the wealthy and sort of screw everyone else. And we had a whole bunch of programs and projects, some of which are still around like Fannie and Freddie, some of which are not. And that was a big part of why we had a strong middle class.

Nick Hanauer:

And to be clear, the institutional framework of the New Deal, that was intentional. They understood this.

Matt Stoller:

Yeah. They had fought a lot within the 1930s with the robber barons who didn’t want that setup to happen. Yeah, absolutely it was institutional. And they had the battle scars to prove it.

Nick Hanauer:

Right. And the fact that we have dismantled that institutional structure, that was intentional too.

Matt Stoller:

Yeah. And let’s not overstate how much they dismantled. They did dismantle a lot of it. But the small business administration, which got the paycheck protection program out there, that is a residue of a New Deal agency. The Reconstruction Finance Corporation eventually, which was basically a public bank that FDR used, that turned into a number of agencies, including the Small Business Administration. And unemployment insurance, that’s a New Deal thing. Now these things have been weakened, but these institutions are still around and we use them.

Nick Hanauer:

But can we take a step back? And can you explain what you mean when you say, when there’s more money, prices go up? Explain to our listeners what you mean by that and how that mechanism works.

Matt Stoller:

Right. In the 18th century, when you got a bunch of gold, what you would buy was more servants and you would buy meat pies and things like that. A very 18th century fanciness. And when there’s more money, when there’s more gold in a town, then the people that sell meat pies can charge more for them. And so what you would find is that when you’d have a gold, all of a sudden you’d strike gold and people would, there’d be a bunch of gold in the town. And so prices would go up because people would say, “Oh, I can charge more for what I’m selling.” Because the people have more gold. That’s just an overall inflationary, that’s inflationary when you have more money in a society.

It’s not inherently inflationary because if you’re not spending, if that gold is not being spent a lot. If one person just takes a bunch of gold and sticks it in a drawer and doesn’t spend it, then it’s not going to be inflationary. If they spend that money and the person who gets it then spends it, then that person gets it and spends it, then it’s going to be more inflationary. That’s what’s called the velocity of money. It’s not just the amount of money that’s in a society, it’s also how quickly it’s spent. But that’s the gist of it is when you just all else being equal, when you increase the amount of money there’s going to be, prices are going to go up.

Nick Hanauer:

But even before the pandemic, we were in an era of historically low velocity.

Matt Stoller:

Yeah. What you saw was that prices were going up where there was pricing power. That would be like education. Universities and healthcare, those were massive increases in costs but for a lot of other things, prices were either stagnant or declining.

Nick Hanauer:

Money in the same way that the velocity of blood slows, the smaller the veins and capillaries, the slower the velocity of money flows the farther away it is from as you put it, the king, the source, power. And the closer it is individuals essentially. Ordinary working and middle class people.

Matt Stoller:

Yeah, that’s right. And that’s just depending on how you set things up, the pipes can be bigger or smaller. You got that 100% right.

Nick Hanauer:

We were starting to talk about the institutional arrangements, which can increase that flow around and amidst working and middle class people, the small business administration is one of them. What other institutional arrangements help with that?

Matt Stoller:

Well, so in the 1930s, what FDR did was the Reconstruction Finance Corporation did a whole bunch of things. They lent money to cities and states. One of the easiest ways to get money out into the public is to give it to local governments. And that’s been a fight really, you can go back to the Revolutionary War and the debates in the Constitution. You can go into the 1890s and into the 1930s. There’s always been arguments about cities and states versus federal government in terms of where the power over the money supply is. That’s a really easy way to get money out there.

Another way that FDR did it was through things like rural electrification. Farmers could come together if they didn’t have electricity, they could build a co-op and then they could go and they could borrow money to build an electric utility. And that was a way of getting money into a rural area that didn’t necessarily have it.

But there’s all sorts of ways to get money to people. And, we do it in different ways. It’s just right now, and largely since the 1980s, what we focus on is making sure that a very narrow segment of the public, which is to say people who own financial assets, are able to get money really quickly. They’re very liquid. And so if they need, if they want to seize the opportunity to buy financial assets in a crisis, they can. And most of us who don’t have financial assets, or if we do it’s a home, which is what most people who have financial assets own. We can’t get access to that same opportunity to command resources.

Nick Hanauer:

Let me ask you a question, Matt. Obviously the money is going to Wall Street because that’s the easiest place to send the money. They can take it, they can use it. If we had wanted in the CARES Act to more directly send money to the people, apart from sending it to the states and some states would do it right and some states wouldn’t. Would it have been possible in such a short timeframe to build or rebuild the institutional structure to be able to achieve a New Deal like direct distribution?

Matt Stoller:

Well, yeah, you couldn’t do it perfectly. There would be a lot of corruption because it’s sort of like working out after you haven’t worked out for a real long time. Your muscles are weak. But when you use your muscles, they do get stronger. It’s like, look at the Paycheck Protection Program, which is the small business program. They did get $500 billion out there. There was some corruption, there were some problems. I think, you could look at that as having not fulfilled what people hoped for, but you could also look at it and say, “A lot of businesses now actually have some cash that they’re using to protect themselves and their workers.” And I think the SBA has improved their operations a lot in the last month and a half because they’ve had to. That’s a good example of how using these programs actually makes them stronger.

I think what you could have also done is, I do think the only channel that really was functional and could have accepted all that money where the cities and states. I wouldn’t necessarily dismiss that. You couldn’t have gotten money out directly to people because there just isn’t, there are too many people that don’t have bank accounts. It would have been too difficult to move it out to everyone. Although you could have moved a lot of it through businesses. Through the IRS or payroll companies, you could have moved money through businesses. That’s what they did in a lot of countries where the government just picked up the payroll, just started, government just took over payroll. You could have done that. You could have just taken those institutions that were already working and had the government repurpose those. I don’t think it would have been impossible. We could still do it. And I think in the meantime, we are rebuilding that capacity or at least understanding the conceptual need to rebuild that capacity.

Nick Hanauer:

Can you explain a little bit more about what you mean when you say Wall Street got money? Because clearly stock market has behaved in the last weeks, like nothing happened. And there’s a bunch of dynamics that are going into that. But when you make this claim that they got a lot already in what form did that come?

Matt Stoller:

Yeah, largely it came in the form of indirect and implicit subsidies, not actually direct subsidies. This is important because a lot of the way that we think about the world, normal people think about the world and they say, “If the government is going to support you, it means that the government is paying you money or lending you money directly and there’s a contract there.” But in fact, in the financial sector, the Federal Reserve largely supports people implicitly. Boeing, for example said, they needed a bailout because all their planes tend to crash and then also their spacecraft tend to collapse, but also the pandemic didn’t do well for, didn’t help them out. And so they needed a bailout. And Congress put money for them directly in the bailout that they could have gone to the government and taken the money, but they would have had restrictions on that. And it would have been humiliating for them to take government money.

Instead they issued bonds, a $25 billion bond issuance at a relatively low interest rate. And that, which is to say they borrowed a bunch of money from people in the capital markets. And then they announced proudly, “Oh, we didn’t even need a government bailout.” But the only reason they were able to borrow that money in the bond market is because the Federal Reserve said, “We’re going to eventually start buying bonds. We’re going to use our money printing.” And the Federal Reserve can print an infinite amount of money. They said, “We’re going to go into certain bond markets and we’re going to buy bonds.” And so investors knew, well, even if Boeing can’t pay us back, it doesn’t really matter because we can always sell the bonds to the government, to the Federal Reserve.

That is an implicit subsidy to Boeing, which isn’t really generating enough income to pay off those bonds. But people don’t care. The same thing happened maybe even more explicitly with Carnival Cruise Lines. Carnival Cruise Lines, has no income today, because nobody’s taking cruises. They’re not producing income. Why is Carnival Cruise Line worth 10, $12 billion? They’re not generating income. The reason is simply because investors think, well, the Federal Reserve is going to buy Carnival Cruise bonds, effectively backstop the ability for Carnival Cruise to borrow money. They can just borrow money instead of getting income until whatever we can get back to some semblance of normal or until, and I think people really haven’t thought through what that until blank is because they’re just kind of thinking three to six months ahead, but that’s where things are.

And that’s why we’re like, it’s like an anesthetic. It’s like it’s the stock market is kind of floating where it is and we’re just kind of like, we’re all kind of asleep and just pretending that a lot of these stocks that are representing companies, that they have value, even though they’re not actually, there’s no underlying economic activity. It’s a very weird situation right now, but the Fed is effectively lending them money indirectly through the bond markets, by telling the bond markets, “Don’t worry, we’ll take you out of your position if these bonds go south.”

Nick Hanauer:

This may be a great segue into our favorite idea, don’t you think Goldie?

David Goldstein:

I’ll tell you what, we got a lot of feedback from listeners wanting to know more about this. Bounce it off Matt and see what he thinks.

Nick Hanauer:

Yeah. I think that the.

Matt Stoller:

It’s a terrible idea. It’s a terrible idea.

Nick Hanauer:

I knew it. Here’s the thing that I find really frustrating is that I acknowledge that a lot of these companies are in dire straits. And obviously it’s hard to run a business when there’s zero demand. I get that the airlines are struggling, but the airlines are also struggling because they used all of their free cash flow for the last 10 or 20 years on stock buybacks. They didn’t put any of the money they earned on their balance sheets and saved it for a rainy day. Rather they paid it out in executive bonuses and earnings per share. And I acknowledge that it’s important for the broader economy, even though the people who run these companies are greedy clowns, to save them. That it’s worse to bankrupt them probably than to, that we should save them.

But what I can’t understand is why we don’t take essentially preferred shares on behalf of Americans. If it was me, if any of these companies needed any help whatsoever, whether explicit or implicit, it would be in the form of preferred shares bought on behalf of social security card holders. And so you’d create this giant stock, joint stock company. And if a company or an industry needed money, the federal government would be the lender of last resort and we would buy stock and have a preference over all of the other shareholders. And if the company went away, well, that would be it. But if it prospered in the future, well then now every American has a tiny share in that business.

David Goldstein:

Right. The beauty of this is that every bailout, you’re not just bailing out a corporation, you are actually putting money in the hands of the American people.

Nick Hanauer:

Right. Like we own shares.

Matt Stoller:

Yeah, no, I think that what you’re saying is essentially like you’re saying you’re not governing. And what you’re saying basically, our corporate assets at this point are arbitrarily, we’re making arbitrary decisions to preserve the people like the people that own capital now. We’re just saying you get to continue to own capital.

Nick Hanauer:

Your whole.

Matt Stoller:

Right. You guys are saying well, since we’re just, since none of these have income and all of the values are just arbitrary anyway, why don’t we take a piece for ourselves? Why don’t we just.

Nick Hanauer:

Well, if you need help, look, I’m a venture capitalist. People come to me all the time for help with money. But what I never do is write a huge check and then forgive the loan in the future. I cannot understand for the life of me, why Congress is not requiring businesses who need help to take the help on that basis.

Matt Stoller:

Let me give you the Fed’s objection to that. Which I think has some legitimacy, but doesn’t point to where the Fed wants to go. Because I think it ultimately points to where you want to go, but I think there’s an interim step you’re missing.

The Fed would say, “Well, Boeing, maybe they got a subsidy, an implicit subsidy from us, but do you really want to take Boeing and throw it to vulture investors like Apollo or Elliot or any of these really scummy kind of billionaires who will take Boeing, rip it apart and sell it to the Chinese and destroy the American enterprise?” There’s value, there’s intrinsic value in having a company like Boeing and all of those engineers and all that capacity. You don’t just want to rip it apart by selling it to vulture investors.

And what would happen if we impose coercive terms on money going out the door is that a lot of these companies would say, “Screw you. I am an executive and I can get bought off by Apollo. I’m going to screw my own shareholders before going to let the government screw them.” And they would destroy the underlying business enterprise, lay off lots of people and we still wouldn’t get any money. That’s the Fed’s objection to your plan, which is, let’s just put a lot of conditions on any government aid. What I would say is, I agree with that objection so what we need to do is we need to make sure that we wipe out a lot of the predatory practices that those guys can engage it. We have to basically control and constrain and put back in the bottle the worst parts of private equity.

The ability for guys to asset strip, to use leverage to buy up companies and lay people off and price gouge and all these different things. You’ve got to get control of the financial sector otherwise executives will say, “Screw you. I’m not going to take government aid. I’m going to go over to Leon Black and I’ll take money from him.” First you got to constrain the financial sector, then you can put conditions on government aid and guess what? That whole thing of controlling the financial sector, and then restructuring the corporate sector to basically for socially beneficial purposes, that’s called governing.

Nick Hanauer:

Yeah, governing.

Matt Stoller:

That’s called governing. And we haven’t done it in a long time, but that’s essentially what we need to be doing. And that requires a mindset where we want to deliberately make choices about financial markets and markets for goods and services. And I think part of what’s happening right now is people look at the airlines and they say, “You really screwed me over. You always gave me the middle seat and you spent all your money on buybacks. And so screw you. I don’t like you.” And that’s just sort of true across the economy. We have a trust problem because even though we don’t want to destroy these companies, the management of these companies have been bad actors for a really long time.

And so we have to assault that essentially what is kind of like a layer of business management slash organized crime and get rid of the organized crime so it’s just business management. I think we should have power over corporations and market structure, regardless of whether we own shares. I don’t really want, I don’t think direct ownership is particularly, that’s one way you could do it. I don’t think you need to do it that way. You could do it in lots of other ways too.

But the point here is that Donald Trump and I think the Democrats too, they really are against having public control of a lot of these domestic institutions, which is very weird because on a global level, they do see market structure as deliberately engineered. Which is to say, when it comes to China, when it comes to tariffs and international trade, they are very deliberate about structuring markets. But when it comes to those same markets domestically, they become Libertarians. And it’s actually not. It’s because it’s different people. It’s the trade people have one type of philosophy and the Mnuchin Treasury people have a different philosophy.

Nick Hanauer:

If you were, how do we put it?

David Goldstein:

Benevolent dictator? Can you be benevolent?

Nick Hanauer:

Benevolent dictator and tell us what you would do if you were in charge.

Matt Stoller:

Well, honestly, I would probably argue with people on Twitter. Because I’m addicted.

David Goldstein:

It’s presidential apparently.

Matt Stoller:

Yeah, apparently. No, so I’d be happy to be benevolent dictator and you’d also have to get me to kick my Twitter addiction. That’s the other piece.

David Goldstein:

Okay. We’ll take it away from you.

Matt Stoller:

Yeah. You take it away from me. That’s just now I’m very unhappy, but benevolent. What I think what you have to do is I would break up the Fed. I would take the Fed and I would say, “Part of you is going to handle monetary policy.: Which is to say the terms of borrowing and lending in the economy. And that’s just the amount of money printing money or not printing money. And then the other piece I would say is, “The part of the Fed that’s dealing with the real economy, like structuring businesses, which is to say a lot of the bailout programs, I would put that in a separate agency.” A planning agency, which we had the Reconstruction Finance Corporation and I would make that much more deliberate about choosing what industries we want to sustain and what new ones we want to create.

And then I would also, I would obviously put constraints on private equity. Essentially force them to focus only on investing and producing better underlying goods and services, as opposed to a lot of the predatory stuff that they’re doing now. But fundamentally the problem that we have is we’re in a planned economy, but it’s Donald Trump’s planned economy and he’s not solving the key problem. And the key problem is there’s about 20% of the economy about economic activity that we were doing before the pandemic that we’re not doing now and that isn’t productive to do now. It doesn’t make sense to have a bar open right now. It doesn’t make sense to have a travel industry and so on and so forth.

But there is a bunch of stuff we need to be doing that we’re not doing. We need to do testing and tracing. We also need to do things like manufacturing medicines here. There’s a bunch of things that we need to be doing for social ends that we’re not. And the way that you traditionally get a bunch of people and assets to stop doing something that’s unproductive and to start doing something that’s productive is through the financial markets and through bankruptcy. And that’s what a financial system in a capitalist society is good at. It’s flexible. And the fact that we destroyed that system by basically not allowing bankruptcy anymore and just having the Fed sort of bail out these institutions is preventing that shift from unproductive activities to productive activities.

And there are ways to make that shift really brutal. You can do it through deflation and mass bankruptcies and unemployment, and it can be horrific. And there are ways to make that shift easy. You just have the government do the transition and just wipe out people who have capital that isn’t real. And you basically have a modified form of bankruptcy and you have government lending. That often happens in war time when you just, everybody just says is like, “Okay, yeah, we do need public leadership to meet this threat.” But, that’s the fundamental problem that we have to get to. I want people to be in more of a governing mindset and recognize that we can make these deliberate decisions. And instead of saying, “What can we preserve?” The way that people are talking about the post office, they’re saying, “We need to save the post office.” Why don’t we think about the post office we need in the pandemic?

In Taiwan, the post office is a logistics delivery agency of medical supplies and masks for people who need it. We have such a logistics system, it is called the post office. Why don’t we, instead of saying, “Let’s save the post office.” Why don’t we say, “Let’s use the post office to do the things that we need to do in this pandemic.” And in the process, they will be fully financed. But it will not be because we like the post office and we like the ads on TV and people like getting mail. It will be because it is doing something useful that we need to have done. That’s the mindset that we need to get into, which is, what do we need to do to structure the society that we want? And then, what are the means to get there?

And I think that one of the problems that we have with both Democrats and Republicans, although I’m going to focus on Democrats because I’m a troll of the Democrats, is that they really are just focusing on the means of making sure that sad, poor victims have income and that their random bureaucratic programs gets funded. They’re not actually, they don’t have any broader social ends in mind. They don’t think that far ahead. And so that’s the basic problem is we need to think about what kind of society we want and then structure means to get there. That’s what you do, ends first.

Nick Hanauer:

Well, Matt, thank you so much for spending the time with us.

Matt Stoller:

Thanks for having me.

Nick Hanauer:

It was fascinating and we appreciate your work and we’ll be talking soon.

David Goldstein:

Good talking again.

Matt Stoller:

Thanks, guys.

David Goldstein:

Bye.

Matt Stoller:

Bye.

Nick Hanauer:

Bye bye.

David Goldstein:

One of the lessons I learned from the great recession was that one of the reasons why all the economic models failed to predict it was that those models didn’t include banks.

Nick Hanauer:

That’s right.

David Goldstein:

I found that startling.

Nick Hanauer:

Yep. Definitely startling.

David Goldstein:

Because the idea was that money is like water and the banks are like plumbing and the money would just flow through the banks to the highest ground to where it was needed so you didn’t need to model the role of banks. But it turns out, and I think this is one of the things that Matt emphasizes is that in fact money is not neutral. And the institutions through which it flows are certainly not neutral and that they have a big impact on who gets what, and when.

Nick Hanauer:

That’s right. And the institutional arrangements we have in place define both the velocity of the money and who gets it.

David Goldstein:

Yeah. And to keep that water analogy, you can think of it with water rights and irrigation. The folks who are upstream, who are closer to the source, they get more of that money, more of that water. They have control over and the folks way downstream, they only, it’ll trickle down there eventually if there’s any left. But it’s not the way people normally think of money, but it’s actually the way the real world works.

Nick Hanauer:

Yeah. It’s super interesting to me that, this Cantillon effect, and that as far back as the 18th century that folks were recognizing it. And so we’re literally seeing this play out in real time today that the folks nearest the king are doing super well and the people who are far away are struggling. And I think, Matt made it really clear that it’s not all bad news in the sense that you can build institutional arrangements that can have a really positive effect on that. But in order to do that, you have to do as he I think so eloquently puts it, you have to govern. You have to know what you want to do and the kind of society you want to create and manage towards that ends and worry about the means a little bit less.

David Goldstein:

Again, you look at who owns what. The distributional effects. When I argue, and I mean it, wipe out the shareholders. I know a lot of people respond, “Well, aren’t stocks good for everybody? When everybody owns stocks through pensions and 401Ks, and doesn’t a rising market actually benefit everybody not just the super rich?” Well, it turns out not everybody. And certainly not a majority. What was the statistic we saw? It was what? 83% of all shares are owned by the top 10%?

Nick Hanauer:

Yeah.

David Goldstein:

Well that doesn’t leave a lot for the rest of us.

Nick Hanauer:

Governing, institutions, knowing what kind of society you want to create, I think that’s the message that we got from Matt today. And I think he’s dead right.

In next week’s episode of Pitchfork Economics, we’re going to hear from Tahir Amin about why vaccine development needs a new incentive structure.

Speaker 4:

Pitchfork Economics is produced by Civic Ventures. If you like the show, make sure to subscribe, rate and review us wherever you get your podcasts. Find us on Twitter and Facebook @CivicAction And Nick Hanauer. Follow our writing on medium at civicskunk.works and peek behind the podcast scenes on Instagram @PitchforkEconomics. As always, from our team at Civic Ventures, thanks for listening. See you next week.