This week Nick & Goldy are joined by Heather Boushey, Chief Economist for President Biden’s Invest in America Cabinet, for a deep dive into the transformative economic policies of the Biden administration. Boushey discusses the paradigm shift towards a middle-out economic approach to crafting economic policy and the impact of legislation like the American Rescue Plan, CHIPS Act, Bipartisan Infrastructure Law, and Inflation Reduction Act. Their conversation explores the importance of investing in infrastructure, clean energy, and manufacturing to drive growth and create good jobs. They also discuss the challenges of implementation, the success of the administration’s industrial policy, and its remarkable economic outcomes including record low Black unemployment, high new business applications, and equitable wage growth.
Even though this episode was recorded before President Biden announced he was withdrawing from the presidential campaign and endorsing Vice President Harris, this wide-ranging conversation offers plenty of valuable insight into the past, present, and future of middle-out economics.
Heather Boushey is a distinguished American economist who specializes in economic inequality and public policy. She serves on President Biden’s Council of Economic Advisers and is the Chief Economist for the Invest in America Cabinet. Before joining the Biden Administration, she was the co-founder and President of the Washington Center for Equitable Growth, a research organization dedicated to advancing evidence-backed ideas and policies that promote economic growth and reduce inequality.
Twitter: @HBoushey
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Nick Hanauer:
The rising inequality and growing political instability that we see today are the direct result of decades of bad economic theory.
Joe Biden:
It’s time to build our economy from the bottom up and from the middle out, not the top down.
Nick Hanauer:
Middle out economics is the answer.
Joe Biden:
Because Wall Street didn’t build this country. Great middle class built this country.
Nick Hanauer:
The more the middle class thrives, the better the economy is for everyone, even rich people like me.
Speaker 3:
This is Pitchfork Economics with Nick Hanauer. A podcast about how to build the economy from the middle out. Welcome to the show.
Speaker 4:
One of the things that really me pisses off, Nick, about the way the press is covering the presidential election is how shallow they’ve been on economic issues, on economic policy. How little talk there has been about the Biden Administration’s accomplishments and the benefits that we’re experiencing now. How strong the economy is compared to the rest of the world and why. And instead just focusing on his age, whether he’s a good debater. You just see nothing in the press that actually educates voters about the economy.
Nick Hanauer:
Yeah, it’s true. It’s a shame, but it is complicated and to a certain extent.
Speaker 4:
Well, you don’t want to do anything complicated like the New York Times.
Nick Hanauer:
Exactly.
Speaker 4:
Better to look at a historic speech on saving democracy and your lead is, “Oh, he didn’t stumble.” Or look at the debate purely from a horse race perspective and not talk at all about the fascist promises coming out of Trump’s mouth. But this is an economics podcast, Nick, and fortunately we have somebody here today who can talk about the Biden Administration policy and the impact it’s been having on our economy.
Nick Hanauer:
That’s true. We’re very privileged to get to talk to our old buddy, Heather Boushey, who is a member of the Council of Economic Advisors and is the Chief Economist for the president’s Invest in America Cabinet at the White House. So she’s a super key advisor to the president in economic policy, has been at the center of the middle out economic transformation and played a really significant role in crafting the legislation, the CHIPS, Bipartisan Infrastructure Law, the Inflation Reduction Act, et cetera. So it’ll be really fun to talk to her today about what’s going on and how these things work and fit together and what the future is.
Heather Boushey:
Hi, my name is Heather Boushey. I’m a member of President Biden’s Council of Economic Advisors and I’m also the Chief Economist for his Invest in America Cabinet where we are focusing on the economics of the president’s economic agenda.
Nick Hanauer:
So Heather, on the podcast, we’ve talked a lot about the remarkable legislation that the president has passed, economic legislation, the American Rescue Plan, CHIPS, Infrastructure Law, the Inflation Reduction Act, all the rest of it. But can you help us understand the implementation part of all of this legislation? Because obviously that’s where the rubber meets the road.
Heather Boushey:
Well, yes, certainly. I mean, let me just start out by making the point that the president’s Invest in America agenda is made up of a series of separate pieces of legislation that we’re designed together and are designed to be implemented together. So although it seems like it’s a whole bunch of disparate pieces, this was a part of a holistic plan. And I think of that as actually starting with the American Rescue Plan, getting the economy back on track after the pandemic, worked our way through the pandemic and working our way through the recession that happened. That is the first piece of the president’s economic plan. And that led to, of course, this historic economic recovery, which we can talk about. But let me go on to the other three pieces of legislation, which were the Bipartisan Infrastructure Law and then followed by the CHIPS and Science Act and the Inflation Reduction Act.
So these three pieces of legislation, BIL, CHIP and IRA, these three pieces of legislation are about making productivity enhancing investments across the United States that are going to public investments in things that matter and are going to crowd in private capital. And one of the things that is so core to know about these pieces of legislation is that they focus on making sure that what we make in the United States, whether or not we have infrastructure, including access to broadband and clean water as well as roads and bridges and transportation networks and all the other infrastructure things. But what we make in terms of these public sector investments on top of making sure that the things that the private sector makes are the things that are really important for America, that we have those investments being made. And here we’re talking about investments in semiconductors and cutting edge technology that’s so important to America’s future as well as investments in the clean energy economy to move us towards our goal of net zero, net zero emissions that is.
So when we think about the implementation of these, this is a lot of different pieces of legislation with different teams all across government that are all focused on making sure that we’re spending the money out through these pieces of legislation, that we’re delivering results for American families and American communities all across the country. And we’re doing so in a way that makes sure that we’re creating good jobs for workers all across the country. And so far, just to get to the punchline here of what we’ve actually seen, so far we’ve seen in terms of public investment in infrastructure and in clean energy all across the country, we’ve seen $552.8 billion go out. So that’s a lot of money in a relatively short period of time. We’ve seen 63,000 infrastructure projects announced since the law was put in place. On top of that, we’ve seen $877 billion in private sector announcements have been made.
And so this is private companies saying, “Hey, I’m going to invest in a community to invest in semiconductors or clean energy manufacturing or batteries or electric vehicles or clean power.” And so when you look across the country, those totals now are almost $400 billion in semiconductors and electronics, over $175 billion in electric vehicles and batteries, $80 billion in clean energy manufacturing and infrastructure and $155 billion in clean power. So we are seeing money going out the door. And if you were to look at what we expected to have gone out the door, we are meeting or exceeding expectations for most of these private sector industries that the legislation was aimed at encouraging.
Speaker 4:
Can we put this in a little historical perspective? You said it was about $800 billion in private investment, that’s mostly in manufacturing. How does that compare to what we’ve seen over the past decade or so?
Heather Boushey:
Well, let me point you to a couple of statistics that I think are really indicative of this. So when I first got to the Council of Economic Advisors, one of the civil servants, we were talking about the implications of the president’s investment agenda, and he’s served in government for decades, and he said, “All of you, you come in and you claim that your policies are going to boost investment, but we’ll see if that turns out.” And we can’t see this because it’s on a podcast, but I’m looking at a chart here that I can share with you after the show that looks at private investment in manufacturing construction across the country.
And what we see is that this indicator has skyrocketed. It’s more than doubled since the president’s plans have been put in place. And what this means is that it’s not just that companies are announcing, “Hey, we’re going to make an investment,” but they’re actually putting money out there, investing in the construction of new manufacturing facilities all across the country at this record rate. We have not seen this in decades. So that is a real shift between what has happened under the Biden Administration and under previous administrations.
Speaker 4:
Really? So the Trump tax didn’t have that promised effect?
Heather Boushey:
No.
Speaker 4:
I say sarcastically.
Heather Boushey:
Yeah. I mean, when you look at this chart and you say, “Hey, did those tax cuts lead to a jump in investment in manufacturing construction?” So I’m just looking at that fine tune point. No, you did not see that kind of bump like you saw after this Investing in America agenda. And that is really the crux when the president talks about how he wants to grow the economy from the middle out and bottom up versus trickle down, the theory of the case of what causes investment. Is it giving firms and those at the top tax cuts that then they will just make investments in things? Or is it saying to the private sector, do you know what’s really important? What’s really important is that the United States be on the cutting edge of new technologies like semiconductors that are so important for economic and national security. One little data point on that, about a third of the inflation in 2021 was caused by the lack of supply of semiconductors.
That was actually very important. It meant that the cost for all sorts of things for Americans rose. Not just for things that had semiconductors in them, but a whole bunch of other things because of the effects on the economy. So really being on that cutting edge of technology, it’s important for national security, it’s important for innovation, it’s also important for prices. On the other hand, we also know that investing in clean energy is the way that we’re going to wean ourself off fossil fuels, creating this whole new clean energy economy and giving those incentives for private businesses to make those investments. We’re seeing it working.
So one more stat, which is it’s not just that we’ve seen this investment skyrocket, but for three quarters after the passage of the Inflation Reduction Act, for three solid quarters, the contribution of private non-residential investment in manufacturing construction to real GDP, that is the share of that investment as a share of real GDP growth over time, those three quarters were the three largest quarters of that contribution that we’ve ever had going back to the 1950s.
Speaker 4:
Wow.
Heather Boushey:
And it’s still very high and it’s still, in the fourth quarter, it’s still at very high levels. So when you look at a chart of that, again, it just skyrocketed and it is driving the economy forward, helping to drive in a greater sense than it had been before. Let me be very clear, it’s still a small share of our economy overall, but that it is popped up and that really you’re showing what that investment is doing to our economy and then the effects of that all across that the economy are real.
Nick Hanauer:
Yeah. But I mean, here’s the thing is that we’re looking at the first order effects of how those investments are affecting our economy, but the real effects will be second order effects. The real effects will be when we actually get that stuff built and we actually start producing these things in new and profoundly more productive ways, right?
Heather Boushey:
100%. Well, so there’s two kinds of second order effects. So one kind of second order effect is we’re going to be able to have all of this clean technology that will allow us to, again, wean ourselves from fossil fuels. That’ll be good for the planet, it’ll be good for our economy, it’ll help American businesses be able to be on the cutting edge of these new technologies that are going to be so important for American competitiveness for decades to come. How we produce energy, how we use it. This is one of the most important global questions. And really helping American industry figure that out and get on the forefront of that, that’s going to be amazing in terms of second order effects down the road. But here’s the thing, we know that what we’re seeing now is the investment of these facilities.
So we’re seeing a lot of construction workers on the job and we’re seeing these investments go disproportionately to places where folks are less likely to have a college degree, places that have lower average income overall. So these investments are going to places that need it most. So that’s going to create economic growth and vitality in places that have for too long been left behind. So creating more comeback communities across the country. And that in turn, once those facilities are built, that will start to create jobs and economic vitality in those communities. We think it takes, our estimates are that previously it takes about six to eight quarters for investment in the construction of a new facility to show up in terms of manufacturing jobs. So that probably won’t happen until next winter, if past practice is any indication. But you will see those jobs and those jobs will be permanent.
And now I want to be very clear here that we’re not saying that every worker in America is going to be in manufacturing or working in these new sectors, but that that’ll help provide anchor industries that can provide growth and vitality and good jobs for people in those communities. And again, this is happening all across the country. One more stat before I let you ask your next question. Which is that in this recovery, we’ve seen that the gap between the state with the lowest unemployment rate and the state with the highest unemployment rate has hit record lows. And it did so over a number of months. It’s not its record low right now, but it has been over this recovery. And that’s a testament to the goal of, again, building an economy from the middle out, creating economic opportunity, creating productive capacity across the country so that the economy can grow together and so that you can have more people being able to join the middle class.
Nick Hanauer:
Fantastic. So just a couple of thoughts. The first, I think, is to remind our listeners on this wonky economics focused podcast, that orthodox neoliberal economic theory suggested that these public investments would actually crowd out private investment. In other words that the Penn Wharton model suggested, told us, that the $500 billion that we were going to invest publicly would lead to zero accompanying private investment. Isn’t that true?
Heather Boushey:
100%. And I want to be clear here, one of the things that we are really focused on is that what we make here in the United States matters. And how we make it, the kinds of jobs we create, where those jobs are created, the working conditions, but the what as well. So one of the things about those models that you just mentioned, Nick, is that they’re completely agnostic on what you build. It doesn’t matter whether or not you are building-
Nick Hanauer:
Washing machines.
Heather Boushey:
Yeah, washing machine or apps for my phone that help me do something important like get from place A to place B quicker or whether or not it’s a new game. Note to some people that like to play games on our phones. Agnostic about the what. But we are in this moment in 2024 where we are facing a global existential crisis of climate change. And we know that there are certain things that we really need to make and that it really does matter what we produce. And that there’s certain kinds of technologies, certain kinds of industries where it’s not just they’re important for our wellbeing, but they’re also going to be important for economic competitiveness. What are the things that people are going to want to buy for decades to come? Well, they’re going to need and want to buy really awesome electric vehicles at cheap prices, right?
Nick Hanauer:
Yes.
Heather Boushey:
They’re going to need to buy heat pumps that work really well. We need those markets to be vital and competitive. And that’s what we’re doing. And so in some sense, what we’re saying is that it’s okay. In fact, it’s important for policymakers to put their thumb on the scale and say, “There things are economy needs for our wellbeing, for competitiveness, and we want to make sure that we do what we can to encourage those.” And to see money flowing into those sectors is so important, particularly at this moment in time.
Nick Hanauer:
Yeah, I think that is so important. Again, in theory, it’s all widgets, right?
Heather Boushey:
It’s all widgets in theory, but in reality, it’s not all widgets.
Nick Hanauer:
It’s not all widgets. It is not all widgets.
Speaker 4:
That’s interesting you say that because I just put together a shopping list and once again, there were no widgets on it. And I always felt like I was doing something wrong.
Nick Hanauer:
Yeah, exactly. So can you speak to the challenges of implementation and what’s going on?
Heather Boushey:
Yeah. Well, let me speak to a few different challenges of implementation. So first, this is a lot for government to do very quickly. And I think that I want to remind all of your listeners and you as well, and I think it’s important to remind myself this every day, is what are our metrics of success? And what is the timeline upon which we expect those metrics to be made? So I’ve gotten a lot of questions from people, “Oh gosh, it seems like not everybody in America has an electric vehicle yet. Is your program working?” And you have to think about, well, what were our expectations of how fast we could move forward on implementation and how fast we could encourage the private sector to act? So one question on implementation, and of course the flip side to that, before I go into the first question on that, the flip side to that is we need to make sure that we do these things well.
We need to make sure that those tax dollars are spent well, that the government programs are set up well, that they are going to be effective, that they’re not just giveaways to industry, but we’re asking industry the right questions and setting up the right rules. And all that takes time. So you want to take the time you need, but we also want to get things done. And so one issue in implementation is balancing that need for speed with the need to be smart and effective and successful in that endeavor. So that has been a challenge, balancing that. And balancing that against the expectations of the public who want to see things move really quickly and who also don’t want to be super inconvenienced. When you’re building new roads or bridges or you’re doing some of these bigger projects, it can be dislocating to people in communities, roads might be closed. So you also want that to go quickly, but you want it to be really smart.
A second set of challenges is in the macroeconomic context. So this is something that we haven’t actually spent a lot of time talking about publicly. I haven’t heard a lot of people talk about as much. Which is that all of these things that we’re doing, the policies to encourage investment in the production of electric vehicles, the policies to encourage the production and standing up of wind turbines, these are all being done within the context of a macroeconomic environment. And is that macroeconomic environment making it more challenging or less challenging? Of course, our policies are making those investments easier. We’re giving businesses subsidies and the like. And we’re working hard to reduce barriers, I’ll get to that in the third issue, in terms of permitting the like.
But are there other kinds of headwinds that are coming down the pipeline? Of course, we had the rise in costs during the pandemic. The pace of price increases have come down by about almost two-thirds since their peak. And we know that prices for many of the things that are purchased for investment in manufacturing have also come down. So that’s less of a headwind than it was. But of course, interest rates are higher. And so that’s a second bucket of issues.
And then third, of course, are the barriers to implementation in terms of permitting or access or being able to really execute on the ideas, again, as quickly as possible. And here the administration has done a great deal of work. There was a whole series of announcements recently from the Department of Energy on how they were easing the pathway to permitting, doing what we could do at the federal level. And of course, many of these are local level issues. And I know you’ve talked about this on your podcast, but it goes without saying that so many of the things that we’re doing actually flow through state or local governments. So that’s another issue. So that partnership is really important. And what I can tell you is we have focused a lot on that partnership issue from day one.
Nick Hanauer:
Yeah, it all must be so complicated. And this whole whole of government, whole of country effort is otherwise known as industrial policy. And in our country, we have been allergic to any strategy. And I think that if you look around the world at the major strategic successes of our competitor nations, it seems unambiguously obvious and clear that those are all a consequence of industrial strategy. For example, Taiwan’s dominance in semiconductors wasn’t this miracle of the market. It was a consequence of a 20 year all of government plan to make it so. Same with batteries in cars and chips in China and so on and so forth. And do you think we’re taking a similar approach here now or how do you see it in the context of global competition?
Heather Boushey:
I think it’s so important to think about this question. You think about the fact that solar and wind are now cost competitive with fossil fuels. One of the key reasons is that decades ago governments started investing. Investing in the research and development of these technologies and then helped them get to scale. We all already have… I mean, just to keep focusing on energy because I think it’s both important, but it also is a really good case study to show how this is working. We all already get energy. We don’t need something new. But we do need something new for the wellbeing of the planet. We need to switch out how. But the way to make that possible is to make those new technologies to get them to commercial scale as quickly as possible, get them cheap for people to buy as quickly as possible, make them available and make them affordable.
And using the toolkit of industrial policy is helping government do that in a way that can work for businesses and families and communities all across the country. And so what do we mean by that? It’s like, well, what do you mean when you say it? We talked about industrial strategy and part of the reason that I like to say that is it’s strategic A and B. It’s not one policy, it’s a basket of policies. So for example, we’re making investments both to encourage the supply of new investments in critical technologies and also to help people afford those technologies through supporting demand. So if we think that the biggest problem of clean energy is that there’s not enough of it and it’s not affordable, okay, let’s spur the development of more of it. Let’s help producers make more. And let’s help make that affordable by supporting consumers.
So we are helping businesses invest. We’re giving them tax credits when they make investments. And by the way, when they make those investments, if they use prevailing wages for workers in their factory, they get a much bigger tax credit. If they invest in a low income community or a fossil fuel community, they get more of a tax credit. So also, you’re using this industrial strategy to encourage equitable growth, to encourage building the economy from the middle out. You’re bringing in workers and communities into your industrial strategy. So that’s on the supply side. We’re also giving loans to businesses saying, “Hey, we really need these kinds of technologies.” So you’re investing in the R&D, which the government has been doing for decades, and now we’re like, “Oh, these technologies are almost ready for commercial scale. Can we give them loans or grants to help them get over that valley of death so they can get to the next level?
At the same time, we’re giving consumers tax credits so they can afford a new heat pump or to weatherize their home or things like that or an electric vehicle. And we’re also, and this I think is one of the most important issues, we’re solving coordination problems. For example, in electric vehicles, one of the biggest problems is whether or not there’s charging stations. I can buy an electric vehicle, but if I can’t charge it, it’s hard to drive it. So making those investments. And importantly putting together the standards so that we have a single standard for a charging network across the country. Encouraging that private sector investment. That’s solving what we would call a chicken and egg problem. So all of this is a way to say that this is really looking inside of an industrial sector and saying, what can we do to help this sector succeed without unnecessary giveaways and without putting our finger too much on the scale of what we think is the right answer?
So most of this money is tax credits that any firm can get so that we’re not saying that we’re deciding which technologies or which businesses should succeed, we’re letting the market do its part. We like to say this is government enabled, but private sector led. But then where it makes more sense to do more directed grants or loans, then we’re doing that as well. But using the full array of tools to make sure that we make in America what really matters and that we do it in a way that creates good jobs and benefits communities.
Nick Hanauer:
All of this, if you look at the statistics, appears to be working like crazy. I mean, for example, so Black unemployment has hit record lows, female employment has hit record highs. Black business ownership has broken records. Overall new business applications are at an all time high. This seems to me to be all the result of this very middle out approach to building economic growth. And I think that when you compare how our economy is doing to basically every peer economy in the world, ours is just massively outperforming right now. Isn’t that true?
Heather Boushey:
We’re the envy of the world. I mean, let me just rattle off a few stats. And I just have to say, I mean, this is the moment where I always feel a little bit emotional because so proud to be a part of this huge team, just to play this small role in delivering these economic outcomes. The strongest jobs recovery in memory. The fastest comeback of jobs. The lowest unemployment rate. And we’ve had the unemployment rate at or below 4% for 30 months now. A record going back to the early 1970s and a streak of months going back to the early 1970s. I already noted the stat on the smallest gap between the state with the highest and the lowest unemployment rate. The lowest Black unemployment rate. The lowest gap between the Black and white unemployment rate. That is a strong recovery. That’s exactly what you want to see. And we delivered that. This president delivered that. That’s incredible.
Okay, so that’s great. Well, and then also 80% of workers who are production and non-supervisory workers, they have seen their wages rise faster than workers overall and have been seeing real wage gains, that is in wage gains after inflation for over a year. So that’s also great. So this has been equitable in terms of wage growth as well. Then on top of that, we’re making these game changing, productivity enhancing, capacity building investments for today on into the future that are going to benefit communities.
Often whenever I get on podcasts or talk, I go right to this invest.gov set of maps that we have on the website where you can see where these investments are going and you can see all these little dots all over the country. And I’ve been very fortunate, been able to travel the country, going to Michigan and Florida and California, and I got to go to Washington State and Colorado and a whole host of other states, I’m going to Kentucky in a couple of weeks, and meet with people who are benefiting from these investments, meet with business owners and workers who can see the real change in their community. And of course, the people are so excited because they’re getting new money for their airport or their other infrastructure project. And the real change it’s making in people’s lives.
And then I want to just double down on one stat that you noted, Nick. We’ve seen three years of historically high new business applications and the fastest creation of Black owned small businesses in more than 30 years. And every single one of those people that is starting a new business, that is an act of hope and confidence in this economy that they can make that business succeed. And it’s exciting to see that. It looks like we’re on track this year for a fourth year of record small business investment.
And I keep harkening back to the early days of being on the phone in the midst of the pandemic and we’re all telecommuting. And I was advising then candidate Joe Biden with a few other economists advising him on how we thought about what we should do about the pandemic and the recession. And I swear on almost every single call, if not every single call, he kept asking about the little guy, kept asking about how small businesses were going to get through this. And to see those businesses people start up, to see businesses thrive, have that hope and optimism and this confidence that we are building a brighter, cleaner future. No, it’s very exciting.
Speaker 4:
Wait, you’re telling us that our economy is the envy of the world? I’m beginning to think that Donald Trump may have been lying to us in the recent debate.
Heather Boushey:
I did a lot of traveling abroad. I haven’t done so much this year since February, but I did a lot over the last year and I kept hearing that from people. You go to different countries and they’re like, “Your economy’s so great. Tell me more about this Inflation Reduction Act or this IRA.” Or whatever they call it, IRA. And to see other countries now starting to do their own versions of this. Again, because we know that we need growth that is delivering equitably and we need growth that is delivering sustainably and it’s going to help solve our climate future. So yes, it’s very exciting. And I mean, I’ll note we’ve had growth that has been faster. We’ve had our inflation. Yes, our inflation shot down, so did everybody else’s. And ours has come down just as fast, if not faster, than most of our economic competitors. So we have gotten through this crisis together and are ending up better on the other side, building back better, if you will.
Nick Hanauer:
Yes.
Speaker 4:
Industrial policy has a long track record of working, but it’s a terrible name. So I suggest in the spirit of essentially renaming the Green New Deal, the Inflation Reduction Act. Which by the way, I thought was great, I think that’s good politics. I say we call it prosperity policy.
Heather Boushey:
I like that. And I like that you also gave a shout out to the echoes of the Green New Deal. We couldn’t have done it without the people that were pushing that economic vision and connecting the dots between economic outcomes and saving the planet. It’s just they were such an inspiration, but also so many of the ideas activists do, they really do have an influence on policy.
Speaker 4:
I agree.
Nick Hanauer:
Heather, can I ask you a more personal question? As you think about the arc of your career in economics, how long have you been at this?
Heather Boushey:
Decades. It’s almost [inaudible 00:33:11] ask me how many decades?
Nick Hanauer:
Yeah. When you think about yourself and your own thought processes and your own conception of the economy, do you think it’s different today than it was 20 years ago? Do you think your thinking has evolved?
Heather Boushey:
Yes.
Nick Hanauer:
I’m asking this question because what’s so interesting, and of course you and I have talked about this 1,000 times and worked on it together, but this remarkable transformation that you have been part of the leadership of, it’s so dramatic. Because we were basically for 50 years headed in one direction and then Joe Biden came into office and so did you and we turned effectively 180 degrees. And it’s just such an interesting sociological question about how that happened and what led to this phase change effectively in economic policymaking. I just wonder how you think about it personally.
Heather Boushey:
That’s a great question. And I’ll tell you a story. Many years ago in the, I mean I guess it was the late teens, when I was at Equitable Growth, and we were thinking about what does inequity across our economy and our society do to the economy? We were looking at the outcome of decades of rising inequality. You had all this evidence. Outcome of decades of, as you said, trickle down economics or decades where we put those ideas into place. And what did it mean? And one of the things that we unearthed through that research is that when you have markets that are more concentrated, that leads to bad outcomes for consumers, for workers, for entrepreneurship and innovation. It’s stifling to the economy. So we need to change our thinking then on how we think about enforcing the antitrust laws. That body of work that so many people worked on for so many years, that’s embedded in the president’s economic agenda. He has done so much to foster a whole of government approach to competition. And that’s embedded in our industrial strategy.
And if we had more time, we could talk about that more as well. So that’s one way things changed. You look at the outcomes and you said, “Wow, that really isn’t delivering.” And then you look at the outcomes in terms of the kinds of jobs that would be creating across the economy. And one approach to that is to say, okay, well if we’re not creating good jobs, let’s find ways to subsidize people’s income. We should tax more at the top and think about how to level the income out as an outcome metric. And that’s super important. But it also brought to the fore, and there’s a famous chart that the Economic Policy Institute has produced for years that shows the growing gap between productivity and wages over time.
That they used to go in tandem, that if productivity grew, how much you produce per hour grew, wages grew in tandem. They started to spin apart after 1980. And that tells you that something has gone wrong in what we produce in America that workers weren’t gaining. And why was that? And was it because the rising concentration across firms? Was it because of the decline of unions? It gives you all of these answers. Once you start asking those questions, you start looking for the answers. And honestly, the policy agenda that we have been embarking on, I think came from so many people. And particularly I’ve got to give credit to the people that served in the Clinton Administration and since then who’ve really looked deeply and said, “What can we do better to help American workers, American consumers, American families, American businesses?” What have we learned from what policies have been put in place and how can we pivot to things that are really going to help?
And I think one of them is that it does matter what you’re competitive in. That matters for the kinds of jobs, it matters for the kind of investment, and that affects what kinds of jobs you create. So those are some of the changes. And I want to just end this answer on a note. One thing that did not make it across the finish line, but it remains in the president’s budget. Which is the work to ensure that we have the care infrastructure across our society that we need. One of the things we’ve learned is that if families can’t access care, they can’t get to work, they can’t care for their families in the way that they need to. And we need to make sure that those are good jobs in the care sector, but they’re delivering for families at a price point that families can afford. That’s part of the unfinished business that the president fought for. He continues to have this very robust agenda in his budget, but that didn’t get across the finish line. But that also was a part of our learning in recent decades.
Speaker 4:
Are economists learning from this learning broadly? Because I mean, the past 10 years, we’ve seen studies that prove that the alleged, when it comes to the minimum wage, that inverse relationship between price and demand doesn’t hold up as we’re taught. You were talking about crowding in when the orthodox economics tells us that those public investments would crowd out. We’ve seen this on issue after issue. Are economists changing their minds? Or as we were told, who was it that told us, Nick? Used the old quote, “Economics is changing one funeral at a time.”
Heather Boushey:
Well, I work with economists and I have some of the best colleagues in the world. I will say that there is certainly a lot of openness and excitement about what we’ve done. And a lot of people who are doing new cutting edge work on industrial strategy questions. There’s a whole new cadre of scholars out there studying this. And people really trying to help make sure that we solve problems and we do so in a way that benefits workers and families and communities.
And I think that the really hard thing for economists to wrap their head around is that just because a policy is efficient, it doesn’t necessarily mean that it fits the goals of the policymaker. And I see more economists really grappling with, well, okay, you have this goal to deliver a more equitable outcome. Or you have a goal to deliver lower emissions while also delivering greater investment in the United States. How do we meet these multiple goals at once and how do we develop tools to do that? The thing is that economists, they can develop these amazing tools. And so I’m excited to see this next generation take on these challenges.
Nick Hanauer:
Yeah, we could devote a whole podcast to the ridiculousness of the idea of efficiency as-
Speaker 4:
That’s a [inaudible 00:40:17].
Nick Hanauer:
Yeah. It’s like a rotting whale on a flatbed draws a crowd, it doesn’t mean it’s good.
Speaker 4:
Efficient way of drawing crowds, Nick.
Heather Boushey:
Yes, exactly. So my assistant is telling me that I actually need to go.
Speaker 4:
Okay. Skip to the final question very quickly, Nick.
Nick Hanauer:
Why do you do this work?
Heather Boushey:
I do this work because I can’t do anything else. I mean, it’s so important. I do this work because I do this work for the community that I came from. I’ve told this story before to you, Nick, I think, but I’ll tell it again here. Which is that in the early 1980s, my family moved to Mukilteo, Washington. And I can say Mukilteo on a call with you because you all know where that is.
Nick Hanauer:
We do.
Heather Boushey:
But it’s north of Seattle. And it was a mile down the road from the Everett Boeing plant where my dad started off as an inspector and then he became a crane operator. He was a machinist there for decades. And in the early ’80s, what I now know as an economist, was the Volcker Recession. Everybody in my community, I went to a little bus stop where there were about 50 kids, this whole housing development, this set of cul-de-sacs. And in the early ’80s, every kid’s dad had gotten a pink slip. They’d all been laid off.
But I remember that the thing that I was worried about, and my parents assured me, we weren’t going to lose our house, nothing… I was a kid, what did I know? But I was really worried about whether or not I could stay on the swim team. And I do this work because little kids shouldn’t have to worry about whether or not they can stay on the swim team or whatever it is that they’re doing. They should feel that economic security. And policymakers play a really important role in that. And so I am so excited to be able to work on both delivering a recovery that brings jobs to people all around the country and good wages, but also working on making sure that we make things in America that matter and that we can be proud of being a leader in clean energy technologies. That’s what I’m doing it for, for those future families.
Nick Hanauer:
I love it. Well, you run to your next thing. Thank you again for being with us, so kind of you to take this time
Speaker 4:
And thank you for letting us take you so long.
Heather Boushey:
Thank you both. It’s just a joy and a pleasure.
Nick Hanauer:
The thing that just really jumped out at me about that conversation with Heather, and of course I understand this legislation reasonably well and talked about it before, but just how well it all fits together. How coherent this approach to building long-term economic growth in the United States is. And just how obvious it is that it is working. The one question I didn’t get to ask Heather is how many times an economist or one of the folks in the bureaucracy has said to her, “I might’ve been wrong.”
Speaker 4:
Probably never. I think you don’t say that as an economist.
Nick Hanauer:
Yeah, maybe. I don’t know.
Speaker 4:
That’s the first thing you’re taught. I think in economics you’re basically taught, one, invisible hand. Two, never admit you’re wrong.
Nick Hanauer:
Yeah. What is it that old saw from the spy world, which is if you’re a spy that’s caught, your approach is denial, denial, denial. Make counter accusations.
Speaker 4:
Right. The question I didn’t get to ask Heather about these really four consequential acts, and as you said, the way they all work together is how’d you get that past Congress?
Nick Hanauer:
Sneaky.
Speaker 4:
How’d you trick them into doing something consequential?
Nick Hanauer:
Yeah, I don’t know.
Speaker 4:
It’s really amazing when you think about it. Again, I’m still aghast at the way that all the press wants to do is focus on how old Biden is and they don’t talk about his accomplishments. My God, this administration has passed so much consequential legislation. Whether you agree with it or not, whether you think it’s socialism or whether you think it’s the best middle out agenda ever, it doesn’t matter. You’ve got to admit they’ve passed a shit ton of consequential legislation. They have done a lot. And that’s amazing, especially considering the gridlock in Congress.
Nick Hanauer:
That’s right. Finally, you can’t say government doesn’t do anything.
Speaker 4:
No. Government keeps doing things. If anything, the other side is upset that it’s doing too much.
Nick Hanauer:
Yes. Exactly.
Speaker 4:
But weirdly, we don’t hear about it. Unless you’re the kind of well-informed person who listens to Pitchfork Economics.
Nick Hanauer:
That’s right. Exactly. That chosen few. Anyway, what a great conversation. And whenever I talk to these folks, I just feel so fortunate to have them working on our behalf. Just such an incredible thing.
Speaker 4:
Yeah. And maybe if people do listen to podcasts like this and learn a little more, Heather and her team will have four more years to carry this agenda out.
Nick Hanauer:
I agree.
Speaker 6:
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.