Nick and Goldy answer your questions! How is any form of union busting legal? Why can’t America be more like the Nordic countries? Is taxing unrealized capital gains a good idea? And more!
Thanks to Brad from Pennsylvania, Larry from Boston, Julie from Arizona, Duncan from California, Zach from Minnesota, and Dave from Illinois who left the great voicemails included in this episode. If you have any questions for a future AMA episode, leave us a voicemail at 731-388-9334.
The Velocity of Money https://pitchforkeconomics.com/episode/the-velocity-of-money-with-ann-pettifor
Two new studies published about the Seattle minimum wage ordinance https://www.washington.edu/news/2019/02/06/two-new-studies-published-about-the-seattle-minimum-wage-ordinance
U.S. employers are charged with violating federal law in 41.5% of all union election campaigns https://www.epi.org/publication/unlawful-employer-opposition-to-union-election-campaigns
Website: https://pitchforkeconomics.com/
Twitter: @PitchforkEcon
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Nick’s twitter: @NickHanauer
Brad:
Hi, Nick and Goldy.
Larry:
When did you figure this out and would you have had to make any changes in your own business as a result?
Julie:
They want to enact attacks on the unrealized capital gains of billionaires. I would love to hear your take on this issue.
Brad:
And my question is …
Duncan:
How is any form of union busting legal? Isn’t one of our most fundamental rights, the right to assemble?
Dave:
Thank you for letting me leave my question. I appreciate it very much, and I love this show,
Announcer:
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 who gets what and why.
Nick Hanauer :
I’m Nick Hanauer, founder of Civic Ventures.
David Goldstein:
I’m David Goldstein, senior fellow at Civic Ventures.
Hey Nick, it’s been a long time time since we have actually done a podcast and even longer since we’ve done an AMA.
Nick Hanauer :
That’s right, and today will be the day to answer some listener questions. But in the meantime, little bit of economic news, what’s interesting is it’s going for the country anyway in general so well. The economy added, at least, the initial reports are 467,000 jobs in January, even though Omicron was going crazy. And what’s even more interesting Goldy and I actually don’t understand how they can be so far off is that the re the early reports from November, December that weren’t that strong have now been revised way upwards, I can’t remember exactly what it is, but it was like-
David Goldstein:
Yeah, I have the numbers in front of me. And I remember at the time, how we were expecting these great job reports and they were coming in much lower and there was all this kind of fear and loathing about what was happening with the economy, because we were expecting this booming economy and it didn’t seem to be showing up in the jobs report. In November, they were expecting 550,000 jobs be added, only 249,000 were reported initially. Well, that was just revised up to 647,000 jobs. So a beat expectations. In December, again, they were expecting 400,000 jobs to be added. The initial report was only 199,000.
Nick Hanauer :
That’s right.
David Goldstein:
We’re going backwards. And the revised report is 510,000 jobs added. That’s 700,000 jobs that were initially missed in the November, December report. That’s a lot. On its own, that would’ve been a decent jobs report had there been 7,000 jobs and those are the ones missed. So again, we look at January where they say we added 467,000. There’s every reason to believe that that’s an underestimate. So you see jobs being created at a record rate, you see the unemployment rate near 50, 60-year lows. Yeah, we’re waiting on the inflation numbers and inflation is still up, but we still have all those supply chain issues and weird COVID related things. Omicron has certainly played a big role in that, the auto industry is still has that cheap shortage and everything.
So who’s to say, but I want to say there’s an interesting thing about inflation, which I think has gone a little underreported, is that with that 5% or so inflation we’ve had over the past year, well, one of the interesting side effects of inflation is that if the government is borrowing at 1.5% and inflation is at 5%, you’re actually eating away at the real value of the federal debt. And it turns out that those trillions of dollars that were spent over the past two years in COVID relief have been zeroed out by inflation. In real dollars, the national debt has not gone up. And if you think that’s weird, of course, if you ever read Piketty’s book, you understand that that’s always the way of national debts.
Nick Hanauer :
Right.
David Goldstein:
It’s always been inflation, not repayment that has eaten a way a debt.
Nick Hanauer :
That’s true. It is true. But with that, let’s get to the questions.
David Goldstein:
Okay.
Brad:
Hi, Nick and Goldy, this is Brad Armstrong from Bethel, Pennsylvania. And my question is, we hear a lot from our neoliberal friends that we can’t do the things in this country that are done another countries as far as true prosperity due to homogenous societies and having less citizens. So I was wondering if you could address that. Thank you very much.
David Goldstein:
That’s the Finnish example, right? We love Finland, but it’s just filled with Finns and it’s small so of course they can have a strong social safety net. But we can’t.
Nick Hanauer :
Yeah, here’s the thing is that it is true, if we use a sort of more honest language about Brad’s question, it is true that racism drives a lack of social cohesion in the United States and may be contributing to the fact that we cannot, as a country, address these collective action problems at the scale that other societies have. And I think that while it is true that the racists among us hold back progress, the core problem has been that both politic parties sort of drank the neoliberal Kool-Aid. And Goldy, you and I have been fighting this fight long enough and have been engaged with folks in the Democratic party long enough to be able to testify in the first person that our friends are often our enemies on these issues. You know, Barack Obama could have done far more than he did, but the man was a straight up neoliberal and just chose not to address these issues.
And so I do think that there is, is some hope for making more progress because in the Democratic party, those deeply held neoliberal views that anything you do for rich people will be good for the economy and anything you do for working or middle class people will raise the debt and bankrupt our great country. Those views are evaporating. And the Biden administration’s economic agenda is a great example of that. I mean, the fact that Kyrsten Sinema and Joe Manchin are idiots and turds doesn’t change the fact that the agenda itself is really pro worker and pro middle class and would be fantastic if we implemented it.
David Goldstein:
Right. And so I’ve just summed this up, Brad, by saying there’s a big difference between can’t and won’t.
Nick Hanauer :
Correct.
David Goldstein:
We certainly could do all these things. There’s nothing about the U.S. economy that makes it impossible to do universal healthcare, that makes it impossible to guarantee that everybody has a quality education, that everybody has access to affordable daycare and affordable housing that guarantees that we don’t have the horrendous and inexcusable homeless problem that we have in the United States. There’s nothing that says we can’t address all these issues. So far, we haven’t and partially it’s that lack of cohesion due to the lack of homogeneity, but partly, as Nick just pointed out, it’s simply bad ideology. We believe we can’t do these things because it would be bad for the economy, and that is the excuse that we do not even try. But we certainly could, if we wanted to,
Larry:
Hi guys, this is Larry from Boston. Love the show. My question is, when did you figure this out and would you have had to make any changes in your own business as a result? Thanks. Bye.
Nick Hanauer :
Yeah. Okay. So Larry, as we heard your question, I read two separate questions into it. The first was what, or when was it that I first started to believe that the sort of neoliberal economic or market fundamentalist economic order was nonsense and did it affect my personal business practices. And so the answer to the first question is, it’s hard to give a precise answer other than that the only course I ever dropped in college was ECON 101 course because I had grown up running family business. I got about a quarter of the way into the course and just felt like everything they were telling us about how the economy worked was just objectively false. It might have been internally consistent, but it was certainly untethered to what actually happened and in business and in markets.
And then some years later, I read my first book on complex systems, complexity theory and chaos theory, and realized that the thing that had made neoclassical economics so wrong and the reason that I felt like it was untethered to reality was that the way in which that system of thought, economics, conceptualized human social systems was as this equilibrium system, when in fact they weren’t at all, they’re complex adaptive ecologies. And when you see it like that, you realize that these supply and demand curves, all of that is just made up nonsense. And that started my journey. And then I got to know my friend, Eric Beinhocker, who was sort of the leading heterodox economic thinker at the time. The more you researched what was actually happening, clearer it became that the whole framework was effectively nonsense. And I’ve spent the last 10 or 15 years kind of grinding on trying to figure out what that alternative is. And Eric and I are working on a book and have been for way too long, but we hope to describe what can come after neoclassical economics.
With respect to my own business practices, to be honest, I think I would’ve been more aware of some of the more corrosive practices that we probably were part of. A great example being the erosion of the overtime threshold that I sort of grew up with and remember as a major factor in how businesses got organized. But by the time I was running tech companies, that standard was long gone. And the practice of effectively getting three workers who were working 40 hours a week to be two workers working 60 hours a week was definitely something that we encouraged and made a lot of money doing. And that would be, I suppose one really good example of a business practice that I think should end, at least for people who are in less than maybe a $100,000 a year or something like that. And for sure, as I’ve learned more and experienced more, there’s definitely lots that you look back on in which you had done slightly differently, but I guess life is a learning process.
David Goldstein:
So looking back, Nick, if there are two or three books that you might recommend that somebody read to kind of open their mind to the way the economy really works, what it might be.
Nick Hanauer :
A great starting point is Eric Beinhocker’s Origins of Wealth, which is to date, the best sort of assault on the neoclassical economic framework. But that’s a great place to start. When you’re done with that book, you’re like, “Oh no, all of this stuff is wrong.”
David Goldstein:
Yeah. And in terms of it being what might be the right way to think about it, the book where it all gelled for me was when I got to Cesar Hidalgo’s Why Information Grows?
Nick Hanauer :
Yeah.
David Goldstein:
It sounds really esoteric and technical, but it connected everything for me.
Nick Hanauer :
I agree. It’s a fantastic book and quite a short book too.
Julie:
Hi Nick. This is Julie Reese. I’m calling from Phoenix, Arizona. I have a question about Janet Yellen’s proposal. They want to enact a tax on the unrealized capital gains of billionaires. The fear is that it will lead to average Americans paying taxes on unrealized capital gains in their 401k plans or paying for the equity they have in their homes, paying taxes on that. I would love to hear your take on this issue. And I absolutely love your show. I hope you keep putting on that podcast for a long time. Thank you.
David Goldstein:
This was proposed in early 2021. The Democrats did not move on it, so it is not an active … There’s no legislation on this right now, but would you mind paying tax on your unrealized capital gains? I know that would be a hassle for your accountants.
Nick Hanauer :
Yeah. This is sort of a … You know, tax on unrealized capital gains is effectively a wealth tax.
David Goldstein:
Yes.
Nick Hanauer :
Right? And personally, I’ve never been crazy about a wealth tax because in many cases, it gets extremely complicated to implement. It’s very difficult to pay taxes on unrealized capital gains if those capital gains are non-liquid, for example. Because then, how do you pay the liquidity to pay the tax? So one answer is you could borrow the money to pay the tax, but what if the value of the asset declines by 80% one year, because something goes wrong and you’ve paid taxes on it. It just gets really, really complicated.
And so for my own part, I think that there are simpler ways to get at this that would just work better, raising the tax rate to a reasonable level. For instance, to the level of the highest tax rates on ordinary income is a great start. Making sure that our inheritance tax rates are both high enough and unavoidable and some other things like that.
Let me just directly address the fear that everyone else will be taxed. Look, that’s always the attack that people who hate taxes …
David Goldstein:
Slippery slope.
Nick Hanauer :
Yeah, slippery slope. That’s nonsense. If you stipulate, this is a good idea, you can have a high threshold and that’s that. That’s nonsense.
David Goldstein:
Yeah. And let’s be clear, most people don’t have unrealized capital gains outside of their retirement accounts. And let’s be clear, you don’t pay capital gains tax in your retirement plans. That’s the whole point of a 401k or an IRA.
Nick Hanauer :
That’s right and-
David Goldstein:
You only pay money when you take it out and if it’s a Roth IRA, not even that.
Nick Hanauer :
Yeah. And homes are traditionally exempt from this sort of stuff. That attack is just nonsense.
Duncan:
This is Duncan Mandel from Newhall, California. My question is, how is any form of union busting legal? Isn’t one of our most fundamental rights, the right to assemble? How are people and companies getting around this? Thank you.
Nick Hanauer :
The answer to the question is that this has nothing to do with economics. It has everything to do with power. And I suppose the economic narratives that we’ve accepted, that the broad public has accepted about where prosperity comes from. And the basic story, we’ve been over this 10,000 times, is that academic and economists in concert with political leaders from both parties persuaded the American public, that when corporations were more profitable and when rich people got richer, that was going to be good for everyone. And anything that contravened those forces was going to kill the economy and make everybody poor. And as a consequence, we put in place a bunch of new laws, or we savaged old laws that it protected the rights and power of working Americans. And that sort of relentless process has been at play for 50 years and it continues a pace.
The reason that unions are getting less powerful is that political leaders in both parties are passing laws that make unions less powerful, or are not passing laws to maintain the power of folks to organize. And that’s that. It’s not a economic process, it’s a political process driven by this nonsense economic narratives. And nothing except electing new political leaders who will unambiguously before giving unions more power and making it easier for people to organize will stop that.
All that being said, we should never forget that the form of worker power that the United States chose, this sort of workplace organizing construct is the worst possible construct available, that it’s suboptimizing and inefficient in all sorts of ways. And if we really want to fix this problem, then we should adopt something like the German system, which allows workers to organize not by firm, but by sector. It’s sectoral bargaining. So all the restaurants negotiate together and all the restaurant workers negotiate together. And in that way, you don’t have this terrible problem where one firm is unionized and another firm isn’t, and that creates all sorts of subsidiary problems.
David Goldstein:
Right. I think to get a little philosophical on this Duncan, it’s important to point out that in a society, there is no such thing as a natural right. And you talk about this, the right to organize being a fundamental right. It is a fundamental right when it’s recognized by society as a fundamental right. And for the first couple centuries of industrial capitalism, not only was it not recognized as a fundamental right, it was illegal. Most union organizing was essentially illegal. And it wasn’t until really with the National Labor Relations Act that we fully embraced labor unions as a necessary part of the economy. And of course, that was in the context of what was then primarily an industrial manufacturing economy. And that’s where the unions were in these giant workplaces, like auto plants and coal mines and steel mills, et cetera, where you could organize a workplace.
And then ever since we gradually eroded those rights through law and unions eroded with it. One of the interesting things that has happened over the past five years is this sudden revival in the polls public support for unions, which had been at an all time low and is now rising to like a 40-year high. So there is support for unionization again. And I think, Nick, you’ve pointed this out in the past that Congress is a … You know, this is a confirmatory body. It doesn’t lead on these issues. It follows public opinion and it lags behind. So hopefully if our democracy survives the Republican coup of the next couple years, the next attempted coup, eventually Congress will catch up with the spirit of the American people, the will of the people and we will get laws that make it easier to organize.
Speaker 9:
The next question came through our inbox. It was submitted via email from Jacob who says, “Enjoyed your show on the minimum wage and restaurants. Are you able to explain the underlying economics of why we wouldn’t expect to see increases in many prices or layoffs as a result of wage increases? How would that work?”
David Goldstein:
Okay, Jacob. So there’s so many points to hit here. Let’s start off with Orthodox economics. If you go to the Orthodox economic textbooks, the neoclassical textbooks, you’ll see that raising the minimum wage will always, this is the supply demand curve that when you’ve raised the price of something, people buy less of it. So if you raise the minimum wage, there will be less employment in these low-wage sectors. Except, but, and there is an exception in these books, in a monopsony environment, that is where there is a concentration of power amongst buyers, in this case employers. And in a monopsony situation, when you raise the price of something, when you raise the minimum wage, where there is monopsony power, or monopsony-like power in the labor market, you will not see a decrease in employment, you will actually see an increase. And that is because these large employers have been holding wages below what would have been in neoclassical economic terms, the market clearing price.
And when you raise that, it attracts more people into the workforce. And I think you can see that now. Right now, where you see raises rising and employers are still struggling to find enough workers. That’s because wages were too low and they were too low because there was too much power within these large employers. Walmart, all of the fast food chains, franchises, big retailers, et cetera. So there is a perfectly explainable economic situation where raising the minimum wage does not decrease employment. All that said, Nick, I think you would agree that that supply and demand curve in those textbooks has been proven to be kind of bullshit.
Nick Hanauer :
Yeah, absolutely. And the truth is that when workers are paid more money, businesses have more customers and hire more workers. If the economy runs on demand and when businesses are required to pay workers more, that creates more opportunity for all the businesses that operate in that environment. And that’s the most fundamental thing. I think there’s a very important point to be made though about prices, and that is that one of the reasons that wages can go up without prices increasing is you can actually decrease corporate profits. So corporate profits, as a percent of GDP have risen from about 5% of GDP to about 11% of GDP over the last 30 or 40 years. That’s at least a trillion dollars a year. So you could effectively raise workers’ wages a trillion dollars, lower corporate profits a trillion dollars, and have prices be exactly the same, but workers earning way, way more. And that-
David Goldstein:
And shareholders getting a little less.
Nick Hanauer :
That’s right. The problem in our economy isn’t that we don’t have enough money in it. The problem is that the wrong people are getting the money.
David Goldstein:
But it’s also, Nick, as we like to point out, not a zero-sum game and there’s other factors involved. And I think it reminds me back to this 2015 study from the Cornell University Institute for Hospitality Labor and Employment Relations, that is a mouthful, but we’ll provide a link in the show notes so you can look up the study, that actually said it would be good for the restaurant industry to raise the minimum wage. And the reason why was that when workers were paid more and they had these much more stable, happier lives, they were more productive, there was less absenteeism, there was less turnover. And those cost savings to restaurants made up for the cost of the higher wages. So when you pay a little more and you get more productivity, it balances out.
Nick Hanauer :
Yeah.
David Goldstein:
And I think you’ve seen that a lot. Over the past few years, Walmart started raising their wages because they found that they were not competitive with other stores because they weren’t being able to provide the same sort of customer service with low wage workers compared to let’s say, it’s that great between Costco and Sam’s Club, which is Sam’s Club is Walmart, how Costco has always paid several dollars an hour more than Walmart than Sam’s Club and provided all these benefits. And they have the most productive workforce in the industry. There’s different ways of doing business. You can take the low road and try to squeeze as much as you can out of your workers, or you can take a higher road and pay them more and end up with better workers.
Nick Hanauer :
Yeah. And at the end of the day, of course, it’s true that in an economy where the minimum wage was, let’s say $25 an hour, that hamburgers will cost more in that environment than they do in an economy where workers are paid $7.25 an hour. But the question isn’t, which economy is better because the hamburgers are cheaper? The question is, which economy do you want to live in? And the answer is unambiguously, the one where people are earning 25 bucks an hour, because in that economy, everybody can afford to buy hamburgers.
David Goldstein:
Even the people making them.
Nick Hanauer :
Even the people making the hamburgers can afford to buy hamburgers. And so because the hamburgers don’t go up by four times, the labor component of making hamburger is only about 20%-25%. So yeah, of course, the hamburger costs more, but everyone can afford to buy them. And that turns out to be a much more robust economy than the alternative.
David Goldstein:
Right. So even if the are price increases, not necessarily a bad thing.
Nick Hanauer :
No.
David Goldstein:
I’d also say even if there were some layoffs, you increase productivity, maybe you need fewer workers. That’s okay. That’s actually how we improve the economy over time by increasing productivity. That’s not the metric that we want to measure minimum wage by. Do we broadly improve lives? Not, do we keep prices low and employment at its maximum?
One final point to make in all this, Jacob, is that when you actually look at the studies that have evaluated this in Seattle and elsewhere, you don’t actually see these significant price increases due to a rising minimum wage. We didn’t see it in Seattle pre pandemic. Post pandemic, prices are going up because people are … I think workers are fed up. But you didn’t see it in Seattle, in the grocery industry or in the restaurant industry. You didn’t see employment going down in multiple studies around the country. So that alleged effect, it didn’t prove true in reality.
Speaker 9:
This next question was also submitted via email. It’s from Richard who says, “I’ve always grappled with the fact that money doesn’t just disappear and that it simply changes hands. What impact do the super rich have by sucking up all the wealth? Where does it then go? I’m assuming that bills of cash aren’t being thrown into vaults and that instead the money is reinvested back into the economy or used to purchase private jets, yachts, art, et cetera. Why isn’t that money making its way into the pockets of workers? Does the money just bounce back and forth between plutocrats and corporations? I feel like many people, including myself, don’t understand the very basics of how wealth moves through our society. Also, it blows my mind that Nick who is basically royalty takes the time to answer questions from the public. He should be a complete asshole yet he sounds so normal and nice. Can Nick even fathom how wealthy he is?”
David Goldstein:
So Nick, in answering Richard, I’m thinking back to something which you wrote about, I think way back, maybe in the original Pitchfork’s piece, you can only spend so much money, right?
Nick Hanauer :
Yeah.
David Goldstein:
You only buy so many pairs of pants. You can only eat so many meals a day. You are a human being like the rest of us. Isn’t that true?
Nick Hanauer :
Yeah, it is true. And folks who earn unfathomable amounts of money like I do, and many of my peers do, we live extravagant lives and so some of the money that we make does flow back into the economy. We buy more cars than other people, we buy more houses than other people, although that actually doesn’t circulate money usually. But you know, like I buy a lot of shit, but the truth is, the majority of income that wealthy people have, it takes the form either dividends or something like that or of appreciating assets. But that the majority of that money is reinvested into assets that keep on going up in value. The majority of that money doesn’t go into the hands of the local hair cutting place or restaurant or manufacturer of kitchen appliances, because we already own all that stuff. It effectively does go into this giant sort of fungible asset pool that circulates around the world that doesn’t touch the real economy as you might say. And that process, one of the things that’s happened of course, is that as the wealthy have effectively commandeered a greater and greater proportion of the income that the world generates, the velocity of money has slowed down a lot, right?
David Goldstein:
Right. So I think Richard, there’s this common misconception that all savings is investment, that if you save money, it goes in the bank, the bank lends it out to somebody who builds a factory and hires employees. And that’s just not true. A lot of savings is just rent seeking. It’s just sitting in these money market funds or in treasuries or whatever earning interest. And that is not productive money and it also sits in assets that increase in value. Like, if you buy a piece of art or you buy a piece of real estate and it triples in price, you haven’t added anything to the economy, even though you have gotten wealthier. And what you see is that if you think about it, it’s very clear.
When you are in the bottom half of the income scale, when you are low wage or middle income, you are spending almost everything you earn. You have to, just to get by. So every dollar that comes into your bank account goes out again, very quickly. You’re paying your rent or your mortgage or your car payment, or you’re buying food or clothing or stuff for your kids, whatever you’re doing, you spend almost everything you earn. And that money changes hands very quickly. But when you’re Nick, you don’t spend almost every dollar you earn. A lot of it goes into various investments. You’re sitting on giant piles of cash just in case he might want to make an investment or just to keep safe in case the pitchforks are coming. I mean, who knows? I mean, there’s people buying private islands and hoarding gold. They’re literally hoarding money. And as we’ve had this $50 trillion upward redistribution of income over the past 45 years from the bottom 90% to the top 1%, that means that that 50 trillion is changing hands less quickly. And it speaks to something that we call the velocity of money, the frequency at which dollars change hands over a given period of time.
And what we’ve seen over the past 40 years is that quarterly velocity, velocity of money is a ratio of quarterly GDP, has declined from about 3.5 in 1980 to just 1.0 in 2020. That means that each dollar in circulation today is generating 70% less economic activity than a dollar did 40 years ago. And that’s largely because it’s been redistributed upwards. Had those dollars remained in the bottom 90% where most of it would’ve been spent, the economy would be much, much larger than it is today. And that would mean more jobs and higher wages for everybody else in a positive feedback loop.
Nick Hanauer :
That’s right. And this is why this isn’t a zero-sum gain. This is why pre distributing more income from the top to the middle and the bottom, in the end, isn’t bad for the people at the top because in an economy, which is just intrinsically larger because the median worker has a lot more to spend, even the people at the very tippy top massively benefit from that, right? Because the size of the enterprise that they own can be much, much larger.
David Goldstein:
Right. And by the way, Richard, this is not just me and Nick saying this. Here’s a quote from the St. Louis Federal Reserve, The answer lies in the private sector’s dramatic increase and their willingness to hoard money instead of spending.” That’s what we’ve seen, that’s where this slow down and the velocity of money has come from. The upward redistribution of income and wealth combined with the people who have the money hoarding it. They’re literally hoarding money.
Nick Hanauer :
Yeah. We are hoarding money, but one other reasons we’re hoarding money is that there’s not a better economic thing to do with it. In other words, one of the reasons corporations are hoarding all this capital is that they don’t need the capital to expand. Why don’t they need the capital to expand? Because the market size isn’t big enough to force that expansion. If every single customer business had twice the income, then all of the excess profits that corporations made would need to be deployed to increase effectively the capacity of the organization to serve their customers, right? One problem creates this other problem and it’s a negative feedback loop. And that’s what we have to get on top of.
David Goldstein:
We should get to the second part of Richard’s question, which I’ll rephrase as, so Nick, why aren’t you a complete asshole?
Nick Hanauer :
Oh, golly. I try and only be an asshole on Monday, Wednesdays and Fridays. Tuesdays and Thursdays, I I take off.
David Goldstein:
What I can say is that Nick can be an asshole, but he’s our asshole.
Nick Hanauer :
Exactly.
David Goldstein:
And everybody needs an asshole. I think there are a lot of people on the other side who think you’re a complete asshole, Nick.
Nick Hanauer :
I know, I know. Yeah, I know that.
David Goldstein:
It’s a matter of perspective.
Nick Hanauer :
It is a matter of perspective.
David Goldstein:
Okay. And to follow up, Nick, can you fathom how wealthy you are?
Nick Hanauer :
I don’t know how to answer that question. I think I can fathom.
Zach:
Hi, this is Zach Holiday from [White Lakes 00:36:39]. I’m curious about what kind of skills or education a person like me would need to where I could like pursue a career or just get involved somehow in whatever, something similar to whatever you guys are doing? Like, whether it’s the political advocacy or the campaign work and whatever, like do I have to … Is it recommended to get a political science degree? What is a person would have to do to get into your guys’ line of work? All right. Thanks.
David Goldstein:
We’ve assembled this interesting team here, Nick. What’s the secret? What’s the secret to our success, if you want to get in on this exciting career path?
Nick Hanauer :
It’s hard to answer that question precisely. I think if you want to be good at anything just starting and learning and doing is the only way. Obviously, we have a lot of experience doing these things, Goldy, in our team. A lot of us have been at this for a very long time and there’s almost no substitute for just having been involved in so much of this stuff for so long. And Goldy, you’ve been involved in advocacy effectively your entire adult life as well. And you know, most of-
David Goldstein:
Well, Yeah. I mean, I think that the lesson we learned-
Nick Hanauer :
You’ve been engaged.
David Goldstein:
I’ve been engaged, but I didn’t actually do anything about it for the first part of my adult life.
Nick Hanauer :
Okay. But it wasn’t like, you know you-
David Goldstein:
I paid attention.
Nick Hanauer :
You were paying attention.
David Goldstein:
I was a dinner party pundit.
Nick Hanauer :
That’s right. Yeah. But anyway, I mean, I think that if I was going to give somebody career advice who wanted to go into this line of work, definitely go get a political science degree or something like that, that would be pretty helpful, but then start volunteering for campaigns or for NGOs working on the kind of problems that you find interesting as quick as you can, and just start getting experience.
David Goldstein:
See, I would differ with you on that. I don’t think the political science degree is all that important. Get a liberal arts degree, I think for anything. Get a liberal arts. Nick, you were a philosophy major.
Nick Hanauer :
I was, yeah.
David Goldstein:
Yeah. I was a history major. The most important thing is to learn how to learn.
Nick Hanauer :
Yep.
David Goldstein:
So when you actually get that experience on the ground, you’re able to take advantage of it, but don’t think that any career path you’ve taken has locked you out of a different career. So Zach, it turns out Annie sent your question around to the Civic Venture staff to ask for their feedback. And my initial response was that I didn’t think that my own experience was a useful example because it was so nontraditional. And it turned out that most of my teammates here disagreed. We all got here taking a variety of different paths and there’s many different ways at getting at this.
I mean, in my case, it was kind of the result of a midlife crisis. I gave up a tech job for political activism and political blogging, which led me into journalism and talk radio and eventually here working with Nick. And when I look around at everybody else on the team, it’s been a variety of paths. Some of them more traditional with a political science degree and working on campaigns. Many of us studied other things. History, in my case. Nick studied philosophy, law, et cetera. So I think there are many different ways at getting into this line of work as there are people in it. So I think the lesson I take away from my coworkers and my own experience is that there’s no specific degree path into this field.
Obviously, you could get a degree in political science, but I’ve always been a big believer in the liberal arts. Study something that you want to study, that appeals to you and what’s most important is that you learn how to learn. And that allows you to be flexible and to put the experience you gain in the field, in other fields to good use over time. But of course, we’re looking at politics. A lot of that is about persuasion. So you need to be able to have good research skills. You need to be able to argue. We do a lot of arguing here. You need to be able to communicate your thoughts well. We’ve talked about this a lot, so much about politics is the art of narrative. We need to tell better narratives, so people understand the way the world works.
In addition to learning how to argue, well, you also have to learn how to listen. I know I don’t have a good reputation for that, but in fact, I’m listening all the time. I’m not always accepting what other people have to say. I think the people who are best at this are people who have a lot of empathy, who are able to put themselves into other people’s shoes and try to get inside other people’s heads and experience what they’re experiencing as best you can, being not them. I think a big mistake that a lot of policy makers make is that they think they know what’s best for other people, but they don’t actually talk to the other people whose lives they’re trying to improve. And so sometimes they’re even starting out from the wrong place.
The big thing, and this is true about almost everything in life, Zach, is that if you want to get involved in politics, the most important thing to do is to just show up. Go to community forums, raise your hand, ask questions, testify before your legislators, get involved in activist group, be there because the person who shows up is going to be the person who ends up getting stuff done, because most people don’t show up. And of course, it’s much easier to show up when you’re showing up locally. Everybody focuses on national politics because that’s the exciting stuff that everybody’s interested in, but it turns out that the big impact the government has on our daily lives, that happens at the local level. So not only is it easier to show up locally because it’s local, you’ll also have the bigger impact.
But in general, my final recommendation would be, don’t sweat it. In this work, there are few unrelated skills. A lot of the skills that you pick up in other job experiences will be useful here. I think for me, for example, my experience as a technical writer was probably one of the best experiences I had in being able to understand and communicate policy. So it’s what allowed me to wrap my mind around economics and write about it for other people and who would’ve thought that writing boring technical manuals would’ve ended up allowing me to explain things like the velocity of money. So show up, get involved and just do the best work you can.
Speaker 9:
The next question was submitted through our Instagram. It’s from Ricardo, “Are there any neoliberals you truly respect?”
Nick Hanauer :
Oh, golly. I mean, I know a lot of neoliberals who are really smart, good people. The majority of these folks weren’t bad, they’re just wrong. And most of the folks in the economics profession, they’re not actively evil. They drank the Kool-Aid in and really believed a lot of this stuff and continue to believe that their field and their framework can work in the public good if you just adjust the dials a little bit more and account for the things that they didn’t account for. There’s tons of people that are operating within the framework and that are again, smart, well-meaning, fine folks.
I think that for my own part, the problem with the neoliberal and neoclassical economic framework isn’t that it can’t be useful. It’s just that it starts out sort of pointed in the wrong direction. It was a system of thought that made a lot of stylized and simplifying assumptions about the world in order to make it more sort of internally consistent, mathematically elegant, and ideally more predictive. And the problem is, is that the underlying assumptions are just so biased against where you’d want to end up starting, for instance, with the assumption that the economy is this parade optimal equilibrium, which just starts you out in a place which is biased against change. It biases you to believe that the existing arrangements are the best and most efficient and most morally justifiable arrangements, which is obviously incredibly beneficial if you’re sitting at the top of those arrangements and seeing the economy as an ecology effectively, or as a garden, which is an even better metaphor where you’ve got to encourage the good stuff and weed out the bad stuff in a very activist and deliberate manner all the time. It just sort of sets you up to think about the problems and into it solutions in a fundamentally different way.
David Goldstein:
We’ve had neoliberals. It’s a definitional term. I don’t know that everybody who is a neoliberal identifies as one, I think there are some people who you’d be surprised that they identify as neoliberal, but you think of them as being progressive
Nick Hanauer :
Well, and you know, we like you and me Goldy and our little gang, we have toxified that word over the last five years, right?
David Goldstein:
Right. Intentionally.
Nick Hanauer :
Intentionally.
David Goldstein:
In the same way that the conservatives went and toxified the word liberal.
Nick Hanauer :
Correct. And we have made it uncomfortable for somebody to admit that they are neoliberal, because we have done a really good job of connecting that word with all of the pathologies of that way of thinking. But we have a ton of friends who are neoclassical economists who are just super awesome people and are on the right side and we’ve had lots of them on the show, who are working hard with us on trying to make the world a better place.
Dave:
My name is Dave [inaudible 00:48:04]. I’m from Hoffman Estates, Illinois. Things continue in the U.S. as they are. There’s a real good chance that we could have a one-party authoritarian state in the next few years. Authoritarian governments are known for more corruption and even worse, pay to play politics than we currently have even, where some get advantages and other are left out. Given this, if that happens, do corporations and rich donors who already control this country for the most part, welcome it, have no clue about it, or are in denial that it will happen, or will they do something to stop it by not giving money to people who are wanting this to continue? Thank you for letting me leave my question. I appreciate it very much. And I love the show.
Nick Hanauer :
You know, I think that the country is veering towards authoritarianism and the Republican party most definitely is sort of a post democratic organization that’s more interested in power than in the democracy continuing.
David Goldstein:
White power.
Nick Hanauer :
Yeah. Probably.
David Goldstein:
They’re a white nationalist party.
Nick Hanauer :
Yeah. But the problem I think is that in many ways, the party has decoupled from a lot of the sort of business leaders who traditionally were pro Republican just because they kept taxes low and stuff like that. I don’t know a lot of wealthy people who were fired up about the collapse of the democracy. I’m not sure there’s much that those people can do to stop it at this point. But I do think that the core problem is how many people in the country are super angry at the political system, because it has not served them well.
And there are just so many millions of working in middle class people who have been savaged over the last 40 years, who honestly think if we burned the whole thing down, it’d be better. And who supported Trump because it felt like he was more likely to burn the whole thing down. This is the great problem and challenge of extreme inequality in a country like ours, is that if you make the case, that for most people, the system obviously is not working for them, then they will not be supportive of the system or the democracy. And look, the truth is that democracy has not worked very well for the majority of citizens in our country for the last 50 years, which is why it’s in trouble. And as hard as the Biden administration is working to try to reverse that, there’s 40 or 50 years of going backwards that we have to account for somehow. And so this objective reality is going to be very hard to get past and it’s dark days. So, we’ll see.
David Goldstein:
Yeah, I mean, you’re appealing to my dark place, Dave, and I actually think we are more likely to slip into a one-party authoritarian state than not. And I think that because the constitution is broken, it clearly doesn’t work within the current United States where we give all this power to small red states and they’re going to use it and they are using it. And you combine that with gerrymandering and voter suppression, and really what you saw with Trump attempting to steal the election last time. They’re setting up to do it for real this time. I think there’s a good chance this happens. And no, I don’t think corporate America stops it. I don’t know how many of them want to stop it, but I look at history and it’s not like corporate Germany was all in on Adolf Hitler yet they certainly played along when it was in their interests.
And it didn’t work out for, for them well in the end, but I don’t see any evidence in history that says that we can look to corporate America to be our savior and say, “Oh no, this will be terrible for the economy.” Because it will be terrible for the economy, but these corporate executives are going to come out fine, because they’ve got a shit ton of money hoarded all of … And their safe houses and their private islands and so forth.
So yeah, things could get really bad. And let’s be clear, our way of understanding the economy says that this potential authoritarian era will be a disaster for the American economy. It will be an utter disaster. And no, don’t point to China and say that authoritarianism can work. It hasn’t been there. It’s been too short a period of time there and I don’t want to be China. So yeah, I think things can get very bad. I will end that on a positive note by saying that I don’t think that that’s a reason to stop fighting for a better future. It’s not a sure thing. We still have to fight for better policy and better ideas and better narrative and a more inclusive economy and a more inclusive politics.
Nick Hanauer :
Well, thanks everybody for the questions. They’re always fascinating and super interesting to think about, challenging for us. So keep them coming. And of course, at any point you can ask us a question, just call the number on the show notes. And we truly do appreciate both your questions and you listening to our podcast.
Announcer:
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 peek behind the podcast scenes on Instagram at Pitchfork Economics. As always, from our team at Civic Ventures, thanks for listening. See you next week.