We’ve lived in the shadow of trickle-down economics for over 40 years. During that time, our leaders unquestioningly embraced economic policies that prioritize the wealthiest and most powerful, with the idea that their wealth will eventually “trickle down” to everyone else. Finally, a contrasting progressive economic understanding is beginning to take hold. Middle-out economics—the idea that prioritizing the working- and middle-class is better for everyone in the economy—is having a moment. But where did middle-out come from? Michael Tomasky’s new book chronicles the history of middle-out and the rise of progressive economics in the United States.
Michael Tomasky is a journalist and author. He’s top editor of The New Republic. He’s editor of Democracy: A Journal of Ideas, as well as a contributing opinion writer for The New York Times.
Twitter: @mtomasky
The Middle Out https://www.penguinrandomhouse.com/books/671443/the-middle-out-by-michael-tomasky
Website: https://pitchforkeconomics.com
Twitter: @PitchforkEcon
Instagram: @pitchforkeconomics
Nick’s twitter: @NickHanauer
Nick:
We knew, or I knew, that in order to defeat trickle-down economics, we had to build an alternative that contrasted with it very sharply.
Michael:
Economics is a set of numbers, but it’s also a set of ideas.
David:
The more people you fully include in the economy, the faster and more prosperous, and more inclusive it grows.
Nick:
Yeah, absolutely.
Michael:
Yep.
Nick:
The economy is people.
David:
Right.
Michael:
Yeah.
Nick:
That’s what it is.
David:
And that is why it grows from the middle-out.
Speaker 4:
From the home offices of Civic Ventures in downtown Seattle, this is pitchfork economics with Nick Hanauer, the best place to get the truth about who gets what, and why.
Nick:
I’m Nick Hanauer, founder of Civic Ventures.
David:
I’m David Goldstein, senior fellow at Civic Ventures. On this episode, Nick, we’re going to get a little personal and talk about one of your babies.
Nick:
Yeah.
David:
Yeah. Tell us a little bit about your child known as middle-out.
Nick:
Well, yeah. Today, on the pod, we’re going to interview our old friend, Michael Tomasky, on middle-out economics, and I’m really happy to get to do that. But it has been a long road. As you may recall, when Eric Liu and I wrote our last book, The Gardens of Democracy, we … The first book we wrote, which was The True Patriot, made the argument that true patriotism in America meant putting the country first, that selfishness was morally wrong, largely.
And The Gardens of Democracy made a parallel argument, which was that selfishness wasn’t just wrong, it’s actually stupid and self-defeating. And one of the central ideas in that book was advancing a narrative, a counter-narrative to trickle-down economics, which was in 2010, nine, eight, totally dominant as sort of the … And neoliberalism was ascendant. It was ascendant, but there were cracks everywhere.
And certainly, that was during the Obama administration, and those guys were democrats, but as neoliberal as they come. And what we knew, what I knew, absolutely, was that the progressive project was not possible without an alternative theory of growth. That you can’t just say no to trickle-down economics. You have to say yes to some affirmative alternative to that, and you have to ground that set of policy ideas and intellectual framework in a narrative about economic cause and effect that people can understand and contrast with trickle-down. And so, oh, my god. Goldie, I mean, I think this was before you and I worked together.
David:
Right. Just before, yeah.
Nick:
Yeah. But holy crap, we went through so many. I cannot remember the number of alternatives that we went through before we settled on what we thought was the least worst option, which was middle-out economics. And there were so many other possibilities.
David:
Yeah. It’s funny how that works out, because it’s actually the perfect option in so many ways, Nick, because the most powerful kind of narrative is a counter-narrative.
Nick:
Yes.
David:
Because it gives you an enemy. It has a built-in enemy, because this is, we’ve talked from the very first episode, this is about storytelling. Economics is about storytelling, and middle-out explicitly, in its name, and in its arguments, is a counter-narrative to trickle-down.
Nick:
Right.
David:
Yeah, and so it works beautifully in that way, because it names the enemy by contrast.
Nick:
That’s right. And just reflecting on what you just said, our listeners have only gotten to know me as a sort of political activist, pontificator about economics. But in my former life, I was pretty much, centrally, a marketing and business strategy person. I was very good at it, and I took at as seriously as I do economics. For example, building. If you want to have a successful positioning strategy for a product, you must be able to position it against something.
David:
Right.
Nick:
Right? Humans cannot perceive things unless they are in contrast to other things. If you hold your hand up in front of your face, you can only see it because there is not-hand behind it. And so, we knew, or I knew, that in order to defeat trickle-down economics, we had to build an alternative that contrasted with it very sharply, and so that’s basically how we came up with middle-out economics. Now-
David:
It is, Nick, by the way, one of the counter-intuitive truths about marketing, that competition is good for you if your competitor is going to make the market for you. Now you have, okay, let your competitor make the market, and then you can compete against your competitor in the market they made.
Nick:
Yeah, correct.
David:
And so, you already have trickle-down. It’s like the classic flip on minimum wage where you took the supply-side argument that when you raise the price of something, people buy less of it. If you raise wages, employers will hire less people, and you flip it to, when workers have more money, businesses have more customers and hire more workers.
Nick:
Right.
David:
They’re pretty much inverse instantiations of the same argument. But the other side spent so much time laying the groundwork for you, that it’s really easy to take that and flip it 180, and it makes perfect sense. Plus it puts most people back into the center of the economy where they want to be instead of employers.
Nick:
And we had two big advantages. One being exactly what you said, is that you’ve now built a narrative that puts the vast majority of people at the center of it rather than the periphery. And the other massive advantage we had, was, it was true. That’s the thing, is it turns out it is not true that, if you raise wages, it kills jobs.
But it is true that if nobody has any money, than no one will buy any stuff. Right? That when workers have more money, businesses have more customers and hire more workers. This is, in-fact, how markets work. Anyway, I mean, that’s sort of generally the story. Enough about us, let’s talk to Michael.
Michael:
I’m Michael Tomasky, editor of The New Republic magazine. I’m also editor of Democracy; A Journal of Ideas, Quarterly Journal. I write fairly frequently for The New York Review of Books, and I am the author of a new book published in September by Doubleday called The Middle Out: The Rise of Progressive Economics and a Return to Shared Prosperity. We’re not quite there yet, it’s a little bit of an optimistic subtitle, but-
Nick:
We are most definitely headed in the right direction.
Michael:
I think so.
Nick:
Yeah. Michael, so much to talk about, obviously. You and we have been on the middle-out journey here for, wow, a pretty long time together.
Michael:
Yeah.
Nick:
For our listeners, just sort of give us a summary of your book, and the arch of the story of middle-out.
Michael:
I guess I should start by saying that I borrowed the title of the book from a earlier book, more than a decade old now, by two guys named Eric Liu and Nick Hanauer who coined the phrase, the middle, out. Meaning that the economy grows from the middle, out. Not from the top, down, as Joe Biden likes to say. I use the phrase, because I think it’s very a resonant phrase, and I think it’s, as you and I have discussed many times over the years, it’s a phrase that sets up an exact answer to supply-side trickle-down neoliberal economics, and it has a theory behind it.
It’s not just empty words. It has real substance of ideas behind it. That’s why I chose it as the title. I want to help do what I can to make that phrase stick and get out there in the public. As for the book, it’s organized in two sections. The first section is historical exposition, I suppose I would say, that goes back to the 1930s and the 1940s, and up through, really, The Great Recession. And tries to tell the history of the United States from a more economic perspective than a political perspective, and explains to people how [inaudible 00:09:45] took over in the form of new deal liberalism after The Great Depression. Then how [inaudible 00:09:51] lost its foothold in the 1970s because of the OPEC crisis, and stagflation, and other economic issues.
How Milton Friedman and the neoliberals, and the supply-siders then took over. And it brings people up to speed on how and why we had those shifting economic paradigms. That’s part one of the book, the first five chapters. The last four chapters are more reported, and tell the story of efforts in our world over these last 10 or 12 years to try and change that, to try and end the neoliberal regnancy in economic thinking in this country.
And I introduced readers to some of the people who have been central to that fight, including Nick Hanauer, but also including Larry Kramer, the head of The Hewlett Foundation, who funds a massive effort along these lines. My friend Felicia Wong of The Roosevelt Institute, with whom I co-host now, a new podcast, which I’m going to plug here, called How to Save a Country.
And then I described changes in the activist world, the think-tank world, the foundation world, and importantly, in the economics profession itself, where a lot has changed in the last 20 years, mostly all for the better. Then finally, the last chapter is the prescriptive chapter where I sort of say what elected democrats should do about all this.
Nick:
Mike, why did you decide to write the book?
Michael:
This is one of the most important stories of our time in politics. There are two stories of our time, one is the assault on democracy, and that’s, I think everybody understands how serious and grave a situation that is. The other is this effort to try and reinvent our economy in ways that help more people, and that transfer of wealth from the top to the middle and the bottom. We have, as you both know, in this country, the central economic fact of the last 40 years, is a massive transfer of wealth from the middle to the top.
The RAND Corporation study that I’m sure you’ve mentioned before to your listeners from 2020 that describes a 50 trillion dollar transfer of wealth from middle to the top over the last 40 years. It’s time to transfer that wealth back. And by the way, it goes hand in hand with democracy and freedom, as I discuss in my last chapter. These aren’t two different things or three different things. It’s all one argument. A stronger middle class strengthens democracy. This is something democrats don’t say enough.
But when you have too much economic and political power in the hands of the one percent, you creep toward oligarchy. And we’re doing that, if indeed we’re not already there. A stronger middle class strengthens democracy and increases people’s freedom.
Nick:
Yeah, absolutely. In your research, was there anything … I mean, Mike, you have been, obviously, not just an observer of this transformation, but an active participant. Cripes, how many years ago did you publish The Middle-Out Moment in Democracy Journal?
Michael:
Right. I looked that up not along ago.
Nick:
Yeah.
Michael:
2014.
Nick:
2014, right?
Michael:
Yeah.
Nick:
We have been grinding for a long time. And so, obviously, you’ve been pretty steeped in all this stuff. What surprised you? Is there stuff you learned along the way doing the research for this book, that you just didn’t know, that really sort of jumped out at you? It was like aha moment stuff?
Michael:
Yeah. I knew, as you suggest, the foundation and think-tank activity, and the political activism pretty well. I learned a lot of stuff about economics, and about the economic profession, and about the changes in the economic profession. And this is chapter six of the book, and it’s kind of my favorite chapter because it’s the one where I learned the most doing the research and the interviews.
But economics, basically, has moved from being based primarily on theoretical modeling, to being based primarily on data and empirical research. Now, people listening to this show, that might sound weird to people, and it might confuse people. “What? You mean 30 years ago, economics wasn’t based on data?” Well, I’m not saying that. That’s overstating it. But there is truth to the assertion that, in the economics profession, over the course of the, oh, I don’t know, ’60s, ’70s, ’80s, ’90s, theoretical modeling became more dominant than empirical research.
And then, in the ’90s and the early aughts, with more powerful computers, and simply more data. For example, the data that Thomas Piketty used for Capital in the Twenty-First Century. Decades of United States income tax returns just wasn’t available to people before. More powerful computers and more data made better empirical research possible. And to a considerable extent, the empirical research has shown what people like you and I have been saying for 15 or 20 years.
Nick:
Yeah.
Michael:
That the game has been-
Nick:
The models are wrong.
Michael:
Yeah, that the models are wrong, and the game has been rigged. And we have, as I said a few months ago, transferred massive wealth toward the top. And so, to the extent that the economics profession in general has been pushed to the left by a younger generation of economists. It’s not really because of their ideology, it’s because that’s what the data say.
David:
Does that really mean they’ve been pushed to the left, or have they been pushed to reality towards the truth?
Michael:
Yeah. Yes. Yeah, exactly. Yeah, and I write that very sentence in the book, Goldie, that economics is … And I quote Heidi Shierholz, Economic Policy Institute, who I’m sure you both know, and who is wonderful. I quote her as saying that economics has finally caught up with reality. And that was in the context, Nick, of talking about a point I’ve heard you make many times, which is how wages are set, which is largely not through impersonal market forces, but workers earn what they have the political power to earn.
Nick:
Yeah. I mean, and again, we’ve talked about this on the pod ad nauseam, but just an example to underscore Mike’s point about a world lived in theory rather than reality, wasn’t until 1994 when the first empirical analysis was done of the impact of the minimum wage on employment, where Andrew Card and Alan Krueger discovered, to their horror, that none of the theories were true.
Michael:
Yeah.
Nick:
And when they published that, that created a giant shit storm that largely continues to this day as the most orthodox, and the most right-wing economists continue to dig in around theory, and just simply cannot believe that their precious theories are not born out by reality. And of course, the reason theories don’t comport to reality is the theories are all based on nonsense assumptions about human behavior, and the dynamics of human socials systems, and the rest of it. Right?
They’re tractable and easy to mathematize, but they’re just not true. They just don’t accurately represent what happens on planet Earth. Yeah, it’s a fascinating thing. The more you peel the layers of this onion back, the more flabbergasted you become about what people believed, and why they believed it, and what assumptions they were making. And it just boggles the mind how screwed up this profession has been, and what a terrible impact it has had on humanity over the last 50 years.
Michael:
Yeah, absolutely terrible. There’s a story I tell in the book that’s famous in these particular circles, where Card and Krueger were presenting their findings at The Brookings Institution, and taking questions, and somebody, there’s a debate these days over who exactly it was. But somebody, finally exasperated at all this talk of data, stood up and said, “Well, you know, theory is evidence, too.”
David:
Yeah. Well, that reminded me of the old economics joke about the economist when confronted with some exciting new data from a student, remarks, “Well, that’s all very well and good that it works in practice, but does it work in theory?”
Michael:
Yeah, that’s about the size of it. But to make a more serious point, to pick up on your second point, Nick, that, yeah, these effects in the world have been very harmful, and based on lies. Based on things that just aren’t true. And it’s depressing, the extent to which our political discourse, and this is another reason I wrote the book. I really, I hope and pray that as many house and senate democrats as possible, read this book and think about these arguments, and take them seriously.
Because, and they’re not just my arguments. I’m synthesizing a bunch of arguments by a bunch of people. Because, for example, on the minimum wage, they need to get out there and say, “There’s virtually zero evidence from the real world that the minimum wage is a job killer.” There was the one controversy over the Seattle effort that you were involved in, and The University of Washington study, that they backtracked on.
David:
Yeah. No, the principal author, Jake Vigdor, essentially wrote a mea culpa on his blog.
Michael:
That’s right. That’s right.
David:
Saying that, “Maybe in the end, it adversely affected teenagers, possibly.”
Michael:
Yes, right.
David:
“Possibly.”
Michael:
Possibly. Possibly. Right.
David:
Yeah.
Michael:
But that doesn’t prevent national republicans from standing up there and saying, “A higher minimum wage is a job killer.” Joe Manchin even obviously believed that to some extent. I think he probably would’ve gone for 11 or something, but Kyrsten Sinema didn’t apparently want any kind of increase at all. It’s still conventional wisdom in political circles, that old saw about raising the minimum wage. And I just, the democrats get a miracle this election, and keep the house, and add a couple senators. I pray to god they get rid of the filibuster.
Nick:
Yeah, and get some more stuff done. Yeah.
Michael:
For voting rights, for sure. But to raise the minimum wage. To raise the minimum wage to at least 13.
Nick:
Yeah. No, I agree. The other thing that I’m feeling incredibly good about. Just to be clear, the country may still descend into fascism and chaos, and revolution, but certainly, it’s true that the Biden administration has accomplished more, economically, than any administration, well, in my lifetime. And I really truly believe that that is because they drove a counter-narrative to the neoliberal trickle-down narrative, and governed to that narrative. And as a consequence, they got all this great stuff done.
There’s a couple of thoughts I have that I’d love you to respond to. The first is, you can’t beat a thing unless you have another thing. Right? And one of the beauties of the Biden administration getting behind middle-out economics, is that they’re not just, democrats, are not just the party of, “No, we don’t want to give tax cuts to rich people.” Now you have an affirmative story to tell people about what you want to do. How you want to govern, how you want to generate more productivity and growth, and other things like that, which I think is incredibly, well not incredibly important, it is absolutely essential if you want to govern.
The other thing is that it’s so much easier to kill a thing if you can name it. And what really strikes me, I think a great example of how far we’ve come is the catastrophe that beset to trust people in the UK, and they played the trickle-down playbook. Right?
Michael:
Yeah. That was one of the most heartening things I’ve seen in politics in a long, long time.
Nick:
Absolutely!
Michael:
Just from Jump Street, people pounced on her and said, “What? What is this warmed over nonsense that’s completely irrelevant to our times?” That was really encouraging to see.
Nick:
Yeah, and she backtracked. And for listeners who, not all of you are following, closely following British politics, but if you haven’t been, there’s a new prime minister named Liz Truss who is a conservative, and to be fair, the prior conservative government has been moderately constructive with respect to economic policy. That had what they call the Leveling Up Agenda, which sought to make wages go up for working people and a bunch of other reasonably productive things. Not perfect, but not as bad as it could be.
Boris Johnson got booted out. Liz Truss came in, and her first play was 1980s style trickle-down economics. Huge tax cuts for the rich. There were limits on the bonuses that bankers could get. She took those off. It was just like opening up a 1980s political playbook and picking the top five things to do. And what was most surprising about it, was that with a virtually universal pushback from the policy making and economics profession, about how stupid that was. Because it just demonstrably doesn’t produce any of the benefits that it’s supposed to.
Michael:
Now, would that happen here? I honestly don’t know. I mean, Trump’s 2017 tax cuts were not popular.
Nick:
No.
Michael:
That kind of thing isn’t, people aren’t buying it anymore. People see through it. Our side has finally, I think, won that debate. That doesn’t necessarily mean it would stop the republicans from just going back to that same old 1980s style.
Nick:
Oh, 100%.
David:
Because the difference here is that the republicans have set up things so that they’re totally immune to public opinion.
Nick:
Yeah, right.
David:
They don’t care whether what they do is popular with the broader population. It only needs to be popular with their base.
Nick:
Yeah, correct. And 80% of Americans are in favor of universal background checks for guns, too, but it’s been a brutal thing to do anything on that. I mean, the United States suffers from a lack of democratic accountability, but there is no doubt that no one really takes seriously that playbook as a way to generate economic progress. She had to reverse herself. She reversed herself 10 days, two weeks after she announced it, which is astonishing.
Michael:
Yeah, it was amazing. I’ve never seen anything like it. I think that those politics, those ideas, are dead, and dying, even here. Even as lockstep the republican party is, I still think democrats, and liberals, and progressives … And you’re right that Biden’s middle-out framing does tell a different story and provide a different context. They’re getting there, and progress is being made. I think there’s one really important point that needs more emphasis, that I don’t hear democrats talk about much, which is that there is no trade-off. Okay?
And you and I have talked about this recently, Nick. There is no trade-off between inclusivity and growth, or equality and growth. Better equality gives better growth. More inclusivity provides better growth. If people don’t want to take it from me, they can take it from the OECD, which has published a number of papers along these lines.
They can take it from The International Monetary Fund, which published a paper that I site in the book, that said that if women around the world were permitted to be in the economy at their full productive capacity, the advantages to global GDP would be just absolutely enormous. I forget the number, but it’s just a massive number. That’s a backwards thing that the old theoretical economics just had wrong, that you don’t sacrifice growth when you try to improve equality, economic equality.
David:
I’m glad you brought that up, because as Nick mentioned, both of you have mentioned earlier, there’s real economic theory behind middle-out, and this is the core, I think, the fundamental theoretical heuristic of middle-out economics, is the inclusionary principle, that the more people you fully include in the economy, the faster and more prosperous, and more inclusive it grows.
Nick:
Yeah, absolutely. The economy is people.
David:
Right.
Nick:
That’s what it is.
David:
And that is why it grows from the middle-out, because that’s where most of the people are.
Nick:
People are, right.
David:
That’s where the talent is. That’s where the work is. That’s where the consumption is. That’s where the entrepreneurialism is. It’s not about capital, it’s about people. And some of them wield capital, but it’s not about capital. It’s about including more people in the economy, and there’s a ton of theory behind that.
Nick:
Yeah. And again, as you point out, Mike, that is the opposite of what people have been learning in economics textbooks for generations. Right? They were basically taught that there was always this trade-off between a society that was more helpful to people, and economic efficiency. Which, of course, economic efficiency, as a concept in and of itself is a scam. Which is just, it’s a fancy way of saying, removing the barriers to making rich people richer. That’s what most people think of as economic efficiency.
Michael:
Yeah. The broader point is that this is a big public reeducation project. And because it’s not just talking about, “Well, if we do this policy, it’ll generate this billion in benefits to middle class people.” Or whatever. It’s baseline assumptions. As I write in the introduction of the book, economics is a set of numbers, but it’s also a set of ideas about how society should be organized, about what constitutes the good life, and about, what are the best decisions we make to get there?
And democrats, they kind of have to reeducate people about these ideas, and these assumptions. I mean, it can be done. The conservatives did it. They did it. If they can do it, we can do it. But everybody has to buy into the idea that that’s the job that has to be done.
Nick:
Yeah, and we have to be relentless, and just stick with it for a long time.
David:
How much of an effort do we need to make to reeducate journalists? I mean, how bad is journalism at this? Every time a CBO or Penn Wharton model report gets published, it is just repeated credulously in the press as if, “Oh, well. Increasing the minimum wage is going to kill jobs, because the models say so.” And they report it without questioning the models.
Michael:
Yeah. There’s a lot of journalistic shorthand that political journalists use, and they may not, they probably don’t know a whole lot about economics. They probably haven’t read a whole lot of this kind of stuff. I don’t think they mean any harm in doing it, but they actually perpetrate some harm in repeating these things. I mean, here’s a recent example that just kind of blew my mind. The cost of Biden’s student loan forgiveness, I forget the number that CBO put on it. Was it four trillion?
Nick:
400 billion dollars. 400 billion-
Michael:
400 billion? Yeah. Well, okay. Usually, those CBO estimates are over 10 years, and journalism leaves that 10 years out every time. They say, “It’s going to cost X.” And that makes people think it’s going to cost X this year. No, it’s over 10 years. But it’s even worse in this case, because this was over 33 years.
Nick:
Yes, why? Why?
Michael:
But I read a bunch of stories after it, even in-
Nick:
No!
Michael:
Even in the top newspapers in our country, and they just use the 400 billion number without saying 33 years. Well-
Nick:
And by the way, we usually only talk about it in 10. And really, it’s only about 20 billion dollars a year, which is less than one percent of what the top one percent earn every year.
Michael:
Yeah.
Nick:
Meantime, we’re spending 1.2 trillion dollars a year on stock buybacks just to put that 20 billion a year in perspective. It’s just unbelievable how stupid that is, and how irresponsible it is. I just cannot understand it.
David:
Also, let’s be honest. There is no cost. I mean, it’s not real money. The money has already been spent. This is money owed to the federal government, most of which was never going to be repaid. This is stuff that would’ve been written off eventually anyway after creating decades of misery on the borrowers.
Nick:
And bankruptcies, right. Yeah.
David:
Right. But it wasn’t going to be repaid, and therefore that money was never going to come in. It’s not new money being spent into the economy, so it’s not inflationary in any way, and it wasn’t going to create bigger deficits. It’s not real money. It’s just saying, “Oh, we were owed this money, and now we’re not owed this money.”
Michael:
Yeah. Journalism is bad in these ways. But I will say this in journalism’s semi-defense. Most reporters, they’re not opinion writers like me. They have to report what people say. That’s their job. Somebody has to say that. Somebody has to say that. Democrats need to say, at Capitol Hill gaggles, Goldie, what you just said, that it’s not even real money. And the rest of it, and they have to point 33 years. 33 years. 33 years.
Maybe they do. I don’t spend my days on Capitol Hill. And maybe they say these things, and they just get left on the cutting room floor. But I kind of don’t think so. Democrats need to reframe, they need to just give a lot of thought to reframing the way political journalists get this economic information. Just the way they allowed the Build Back Better be described the way it was described. And just the simple use of the word spending instead of investment.
Nick:
Right, absolutely. Michael, one of the questions that we get a lot from our listeners is, “Okay, what can I do? What should I do?” Like a, “We’re with you.” But, what should folks do? It’s tough question. It’s easier for us because we’re in the business of doing these things. Right? But-
Michael:
Well, how much power does an individual have in this massive country? I could see people thinking, “What I do doesn’t make a difference.” But first of all, vote. Because if people don’t vote, then there’s no excuse for not voting in this day and age. There might’ve been 30 years ago, but there sure isn’t an excuse for it now. Get involved locally in some minimum wage campaign, or something like that. Just do something to support any effort you see locally.
Because it’s not all about Washington. It’s not all about congress. Minimum wages have been increased in many, many states and cities, and right-wing places. My home state of West Virginia, and many other states have done this because the federal government isn’t acting. Find a local living wage campaign, or something like that. Any effort that is trying to take money away from rich people and give it back to middle class and working class people. Get involved. Even at a small scale, it makes a difference.
Nick:
Yeah. And I also think that dinner table conversations make a difference. That every citizen can have an affect on the collective common sense that we hold about economic cause and effect. And when someone says to you, “Yeah, if they raise the minimum wage, it’ll kill jobs.” Having both the courage and ability to push back on that and say, “Look, that’s just a thing rich people say to poor people to keep profits high and wages low.” That intervention is super important, and needs to happen a million times a day in this country over the next 10 or 20 years as we push back on all these terrible economic ideas.
Michael:
And you’re right, it is a 10 or 20 year project. If we can preserve democracy, though, I do think that we can win this economic fight.
Nick:
Yeah, I agree. I agree. And the shame of it, of course, and we’re not going to have time to go into this deeply, is that the reason we’re in a democracy fight is because of the economics.
Michael:
Yes, of course.
Nick:
Because both democrats and republicans governed in such a way that for the bottom 90% of Americans, things got worse and shittier every year for 45 years. And after that length of time, people can be forgiven for wanting to burn the whole thing down.
Michael:
Demagogues only arise where there is economic pain and frustration.
Nick:
That’s right. Absolutely. And so, hopefully we can begin to brew the economy in a way that will prove to people that democracy is worth saving, fast enough. But we shall see. Well, we have one final question, Michael, which is, why do you do this work?
Michael:
Well, I originally did it because it was kind of the only thing I was good at.
Nick:
Okay.
David:
That’s journalism in a nutshell.
Michael:
Yeah. Yeah, that’s about right. I mean, I grew up in a very political household. My parents were both pretty stout liberals. My dad was a lawyer, and my mom was a school teacher. And in West Virginia, back when, everybody wasn’t necessarily liberal, but everybody was mostly democrat. That’s not the case now. But I was taught to pay a lot of attention to politics, and from the time I was a boy. And then as I grew, it turned out that I had a little bit of a flair for writing, so I just decided to combine the two. That’s why I started.
And when I was young, covering politics was a lot of fun. I went out on the campaign trail, and we didn’t have a bunch of fascists threatening to destroy the country. Republicans were still conservative, and they weren’t my cup of tea, but they weren’t nuts. Journalism through much of my career was very fun, but now it’s not fun. It’s serious work at a serious, serious moment in our history. My mission now is a little bit more focused, or whatever.
David:
I feel old, but anybody with children, we need to take this seriously if we love our children. Because that caveat, that depressing caveat you gave us a few minutes ago, if we manage to preserve democracy, that there should even be an if, is just, it’s amazing.
Michael:
Yeah. We all have kids under 20, I think, or around that. And I think about my daughter’s future a lot.
Nick:
Absolutely. Well Michael, thank you so much for being here. Thank you for writing the book and playing such a central role in driving this narrative. And more to come, right?
Michael:
Well, absolutely. And I could, of course, say all of those things to you. And I’m grateful to you both for having me on this show. I appreciate it.
David:
It was great talking with Michael, and I highly recommend his book. A lot of stuff in there. One of the things that we didn’t talk in-depth about though, Nick, was the economics. The actual economic theory behind middle-out. And to be clear, that is the biggest difference from the time I started working with you in 2014, where you already had middle-out. And I know you had a good idea that it was true. It wasn’t just propaganda.
Nick:
Yeah, correct.
David:
You believed that there was economics behind it. There was a lot of economic data already that was supporting the general ideas behind middle-out. But a lot has changed over the past, oh, my god, 7-8 years?
Nick:
Yeah.
David:
And that is that the economic theory has really come together in a very clear and compelling way.
Nick:
Yeah. I mean, the big difference, of course, is that over these last eight years, A; there’s been an avalanche of empirical evidence showing that none, really, of the claims that the neoliberals and trickle-downers were making about economic cause and effect, or the benefits that their policies would bring is true. Right? Never happens. The only thing that happens is the rich get richer. And the other thing that’s come together, of course, is a much tighter and more compelling way of understanding economic cause and effect using the new science and assumptions that the last 40 years of research make obviously true. Right?
The economy isn’t this [inaudible 00:41:23] equilibrium. Markets don’t work because they’re efficient allocators of existing resources. They work by evolving new solutions to human problems. Prosperity isn’t GDP, it’s really the accumulation of solutions to human problems. All of that stuff that we’ve talked about on the pod before comes together in a way that allows you to understand economic cause and effect in a much more precise way, and make, I think, much better decisions about what kind of policies are going to work, and which kind of policies aren’t going to work.
And so, the economics behind all of this has made huge strides, which gives, frankly, political leaders and policy makers much more confidence in doing the kinds of things that the Biden administration has just got done. I mean, you just have to remember that the Obama administration could have done everything the Biden administration just did. They actually had more political power, right? They had bigger majorities, but they chose not to. Not because they couldn’t, but because they didn’t believe that these things were good.
It’s really quite astonishing when you think about two successive democratic administrations. One that was completely paralyzed around economic policy, and this one aggressively pursuing transformational policies that are going to make a big difference in people’s lives.
David:
And to be clear, a lot of the science that underlies middle-out, that underlies the economic theory behind middle-out, that has been emerging for decades in social sciences, psychology, sociology, anthropology, physics, game theory, information theory. And what middle-out does, and I think this is what’s really important, is we’re kind of synthesizing it and putting the name on it. And you shouldn’t underestimate the power of naming something. I think you said that in the interview.
Naming something is really important, because now we’ve got a place to put it, and it gives it a power because it now exists on its own instead of this sense that, “Oh, man. Things don’t really seem to be like we’re taught they’re supposed to be. Now we know what they are.”
Nick:
Yeah, that’s right.
David:
And the truth is, the economy grows from the middle-out. The more people you include in the economy, the faster and more prosperous it grows, because the main economic resource is the knowledge and know-how of the people in the economy. That is where solutions come from, and that is how we make our world and our lives better.
Nick:
That’s right. And it’s pretty simple to say, and it’s pretty easy to understand, and we’re very fortunate to have an administration that fundamentally agrees with that proposition, and is governing and leading in that way. And we’re lucky to have our friend Michael Tomasky to write books about it.
David:
To chronicle it for us, yeah.
Nick:
Exactly. Everybody buy Michael’s book. Link will be in the show notes.
David:
Link in the show notes. The Middle Out: The Rise of Progressive Economics and a Return to Shared Prosperity.
Nick:
Well, in the next episode of Pitchfork Economics, we’re going to talk about middle-out and the midterms. We’re going to be discussing middle-out policies that’ll be on the ballot in the upcoming midterm elections with some super smart political folks from the winning jobs initiative, Bobby Clark and Melissa Morales.
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 at Civic Action and Nick Hanauer. Follow our writing on Medium at Civic Skunk Works and peak behind the podcast scenes on Instagram at Pitchfork Economics. As always, from our team at Civic Ventures, thanks for listening. See you next week.