When did ordinary people come to believe that free market solutions are always better than government intervention? How do we create a future where markets serve democracy instead of stifling it? In this episode we’re talking about the “magic” of the marketplace and the myth that the free market is ruthlessly efficient and always knows best. The co-authors of The Big Myth explain exactly how American business taught us to loathe government and love the free market.
Naomi Oreskes is Professor of the History of Science at Harvard University. Her opinion pieces have appeared in the New York Times, the Washington Post, the Los Angeles Times, and many other outlets.
Erik M. Conway is a historian of science and technology and works for the California Institute of Technology. He is the author of seven books and dozens of articles and essays.
Twitter: @NaomiOreskes, @ErikMConway
The Big Myth https://www.bloomsbury.com/us/big-myth-9781635573572
The Silicon Valley Bank Bailout Didn’t Need to Happen https://prospect.org/economy/2023-03-13-silicon-valley-bank-bailout-deregulation
Website: https://pitchforkeconomics.com
Twitter: @PitchforkEcon
Instagram: @pitchforkeconomics
Nick’s twitter: @NickHanauer
Nick Hanauer:
Market fundamentalism, is that the big myth?
Naomi Oreskes:
The big myth is what Ronald Reagan called the magic of the marketplace, the idea that the market has power, that it has wisdom, that it has almost a godlike quality in its ability to sort out problems, and therefore we should trust and have faith in the marketplace.
David Goldstein:
How do we get past the big myth? What do we need to do? And the thing that we need to do and what we’ve tried to do on this podcast and in all of our work is tell a better story.
Speaker 4:
From the home offices of Civic Ventures in Downtown Seattle, this is Pitchfork Economics with Nick Hanauer, the best place to get the truth about who gets what and why.
Nick Hanauer:
I’m Nick Hanauer, founder of Civic Ventures.
David Goldstein:
I’m David Goldstein, senior fellow at Civic Ventures.
Nick Hanauer:
The magic of the marketplace is working its way out. This morning, Goldie, all my Silicon Valley buddies are in an absolute panic over the collapse of the Silicon Valley Bank. And up until Thursday evening, they were all absolutely convinced that government was evil and that libertarianism was the righteous path, and that if we just had less regulation and paid less taxes and had less government interference, that all would be be well and everyone in the whole wide world would be better off.
And this morning, oddly, Monday morning, they’re screaming bloody murder about how the federal government needs to step in and rescue this institution and them as depositors in it, because darn it, mistakes were made, but not by them.
David Goldstein:
Yeah. Not by them. No. In the end, it’s got to be the government’s fault because-
Nick Hanauer:
It does.
David Goldstein:
… think of it this way, this bank wouldn’t legally be insolvent if we didn’t have laws defining insolvency.
Nick Hanauer:
That’s true. That’s true.
David Goldstein:
Right? They could continue to operate without any money until it was an even bigger failure-
Nick Hanauer:
That’s right.
David Goldstein:
… bigger bank failure. Yeah. No, of course, especially in Silicon Valley. Look, I don’t know these guys because I don’t socialize with the winners like you do, Nick. But I was peripherally involved in the tech industry from the early ’80s. And then later on in my career, I worked in tech, and my God, that libertarian ideology all throughout the industry, from top to bottom, the programmers drinking their Jolt Cola back then at 2:00 in the morning, writing their code, and eating their burritos.
And so, man, they were self-made. I don’t know what they thought they were, but they were all self-made and did it all by themselves. And man, if government would just get out of the way, things would be so much better. Of course, it’s an industry that’s entirely built on government investment, but we don’t want to go into that, let alone bailing out their bank, which, by the way, all of them, they all use the same bank and they put all of their money in it.
Nick Hanauer:
No. No. That’s not true. But anyway, just-
David Goldstein:
Well, what was it? Roku had how many hundred?
Nick Hanauer:
500 million bucks. Yeah.
David Goldstein:
Oh my God.
Nick Hanauer:
But again, this is all part of this generalized idea, this generalized market fundamentalism that we have been railing against, because it’s just a pack of flipping lies. And today, we get to interview some people who are absolutely authorities on this subject. We’re going to talk to Naomi Oreskes, who’s a professor of history of science at Harvard University, and her colleague, Erik Conway, who’s a historian of science at the California Institute of Technology, and they have this fantastic new book called The Big Myth: How American Business Taught Us to Loathe Government and Love the Free Market.
In this book, they go straight at not just the belief system, which is market fundamentalism, but the history of how it got propagated in our society, how a small group of people worked incredibly hard and used a lot of money to persuade the American public that anything government did was bad and inefficient, and anything business did was righteous and good.
Naomi Oreskes:
I’m Naomi Oreskes. I’m the Henry Charles Lea Professor of the History of Science at Harvard University, and the coauthor with Erik Conway of our new book, The Big Myth: How American Business Taught Us to Loathe Government and Love the Free Market.
Erik Conway:
Hi, I’m Erik Conway. I’m a historian of science and technology living in Pasadena, California. I work for Caltech. And with Naomi, I’m here to talk about our new book, The Big Myth.
Nick Hanauer:
So what is the big myth, and why did you guys decide to write about it?
Naomi Oreskes:
The big myth is what Ronald Reagan called the magic of the marketplace. First of all, the idea that there is such a thing as the free market that exists unto itself, the idea that the market has power, that it has wisdom, that it has almost a godlike quality in its ability to sort out problems, and therefore we should trust and have faith in the marketplace.
And the third component of the big myth is the linkage of free markets to capitalism and freedom, the idea that markets are not just good as a way to deliver goods and services, but that actually, they’re a bulwark of freedom. And therefore, if you compromise markets, say through government regulation of the workplace, you threaten to compromise political freedom as well.
Nick Hanauer:
And you guys, Erik, have characterized this as market fundamentalism. How do you think about that? Is that the big myth, this market fundamentalism?
Erik Conway:
Market fundamentalism is a major component of it. As Naomi has said, we tend to look at the myth as having three different components. We chose market fundamentalism from George Soros’s meaning of it as this quasi-religious faith in markets, and I thought it was important to keep that element of faith when writing and talking about our work because it has been… And we’ve got a chapter in the book on this.
Free market principles have been built into seminary curriculum in the United States so that Americans hear and receive the market faith from their pastors and ministers in church, which tells you that it’s not really about science at all, but about a set of beliefs. That’s what faith is. So we thought market fundamentalism was the best phrase to use, even though it’s not the most common, for the set of belief systems.
Nick Hanauer:
Yeah. We actually use the term market fundamentalism pretty often on the podcast, but we also use the word neoliberalism, which we accept effectively as synonymous. Does that make sense to you guys?
Naomi Oreskes:
It makes sense because there’s huge overlap, but they’re not exactly the same thing. And in the book, we actually explain that. So we see market fundamentalism as actually, in a way, bigger and broader. Neoliberalism comes into our story around the middle of the story. So one of the things we show in the book is how these arguments, these arguments about having faith in the marketplace and the thread that is represented by government action in the marketplace, actually goes back to the early 20th century, a good 45 or 50 years before the rise and popularization of neoliberalism.
And one of the things we show in the book is how American market fundamentalists actually invited key neoliberal thinkers from Europe, Friedrich von Hayek and Ludwig von Mises, to come to the United States as part of their program to build market fundamentalist thinking in the United States and to give it a kind of credibility that it hadn’t previously had.
David Goldstein:
You go way back. It’s fascinating in the book how you detail the deliberate campaigns by corporate America. When did this start and why?
Nick Hanauer:
Yeah. What’s the origin story?
Naomi Oreskes:
So the story begins with a set of arguments in the early 20th century related to failures of the market economy, and these failures can be thought of as flowing into two categories. One are social costs. So factories are operating legally, but they’re killing workers. Workers are dying in droves in factories across the country. The rate of death and dismemberment of workers was so great that it actually had a name. It was called the Accident Crisis. And the other was child labor, that all across America, huge numbers of children, sometimes as young as two years old, were working in textile mills, in mines, and other factories.
So these were the social costs, injury to people, to children, to workers, by capitalism operating legally. The other were market failures where the marketplace wasn’t providing people with the goods and services they wanted, and the example we explore in the book is electricity. So in the early 20th century, the private sector had been quite effective in electrifying cities, but had been ineffective at electrifying rural areas, yet rural customers wanted electricity and many reformers thought that they needed electricity.
And so, a set of debate begins to develop about these market failures and social costs, in which reformers argue the need for government action in the marketplace to protect workers, to protect children against child labor, and to make sure that rural Americans had electricity. And in this debate, we find the origins of market fundamentalist propaganda in the United States.
A group of business leaders and trade organizations led by the National Association of Manufacturers and a group called the National Electric Light Association begin to propagandize market fundamentalist ideology in order to prevent or to try to prevent reform of the capitalist system. Now, they don’t mostly succeed, but they do have an impact even in this early stage, because one part of the propaganda campaign involving NELA, the National Electric Light Association, is an attempt, not just an attempt, an actual successful attempt to rewrite textbooks.
So NELA pays academics to alter curricula, to rewrite textbooks, to make them celebrate the glories of free enterprise, to promote the idea that capitalism and freedom go together, and that if the government gets involved in the marketplace, it’s a threat to personal freedom, and to promote this, to build it into the curriculum of American schools and universities across the United States.
David Goldstein:
And you’re not tossing off the word propaganda lightly. They understood that that’s what they were doing in the original sense of that word. They were propagandizing.
Naomi Oreskes:
Yes, exactly. And they both admitted it themselves, and also, observers at the time said so. So some of the documents that we have from the National Association of Manufacturers explicitly used the word propaganda. They discuss recruiting Edward Bernays, who’s generally thought to have been the founder of public relations and wrote a book whose title was Propaganda. NELA is later investigated by the FTC, the Federal Trade Commission, and they described the NELA campaign as the largest peacetime propaganda campaign in US history.
Nick Hanauer:
Wow.
David Goldstein:
Yeah, Nick. So that’s what we’re fighting. It goes back 125 years of deliberate, corporate-funded, and managed propaganda.
Nick Hanauer:
Right. The core of the market fundamentalist proposition, the core of the belief system is that anything good that happens to the owners of capital will be good for everyone, and anything good that happens to anyone else in the economy harms economic efficiency and will be bad for everyone and harms welfare. And as we think about this challenge, in no place has that been more consequential than the Friedman doctrine, the idea that the only legitimate purpose of business is to enrich shareholders, and by so doing, we make the economy more efficient and better for everyone, and anything that steps in the way of that will be terrible. Can you speak to that and where the logic of that argument comes from?
Erik Conway:
Well, as you say, it’s Milton Friedman’s doctrine, and it later gains the term shareholder value in the ’80s.
Nick Hanauer:
Yeah.
Erik Conway:
And it comes down to Friedman simply not believing that corporations should do anything other than reward their shareholders. They shouldn’t invest in communities. They shouldn’t be supporting orchestras. They shouldn’t be even reinvesting in their own workers or things like R&D laboratories, et cetera. Anything that doesn’t contribute to the current bottom line, he thought as a violation of business principles. And, of course, he formulates this in the ’60s, and it’s a couple of decades before it really takes off. Right?
It takes off after Reagan becomes president. And to some degree, I think General Electric is the poster child for that too, just as it was Reagan’s big backer in the 1950s, because GE turns itself inside out. It begins to eliminate its own research functions, turn itself into a financial company, because that’s where the money was, shuttering plants all over the country, whereas GE in the ’30s, and ’40s even, had been a progressive company and it had invested in its environments, the towns and cities that it operated in, and it thought that that was simply part of being an American successful business. You reinvested in where you were, and that all kind of goes away.
Nick Hanauer:
Yeah. And the really evil part and the part that has such a hold on society, and I am a capitalist and I’ve helped start dozens of companies and I hang around with a lot of capitalists, and the thing that is most pernicious is this idea that by focusing merely on corporate profits, we are doing God’s work. Right? We are making the society better.
David Goldstein:
It’s the normative impact you’re talking about, Nick. Not his positive claim. It’s the normative claim that has changed norms.
Nick Hanauer:
But it is the positive claim, that by doing that, we enrich everyone that has had such a big impact on society, because, I mean, Milton Friedman didn’t say, “Screw the poor. We are rich and we want to keep it that way, and therefore we should not worry about anything else but profits.” He made a much broader claim, which is that when you do that, everyone benefits. And that’s the really interesting part.
David Goldstein:
Did Milton Friedman not want to screw the poor? Because I’ve been rereading-
Naomi Oreskes:
That’s right.
David Goldstein:
… him recently and I’m not so sure.
Naomi Oreskes:
Well, I don’t think I can say what he wanted in his heart, in the depths of his soul, but I think that what was just said was right, that he doesn’t say, and none of these people say, “Oh, we want to screw the poor. We want to exploit three-year-old children in factories. We want to kill workers.” They never say that because that wouldn’t be credible. So they make a claim that seems virtuous. I mean, it’s the very definition of meretricious. It seems virtuous, but it’s not. The claim is that this will benefit everyone, but of course, the evidence doesn’t really support that.
And so, how do they try to make this claim seem credible? Well, one of the ways they do it is by supporting academics like Milton Friedman. And we have a extensive discussion in the book about how a group of business executives funded this program at the University of Chicago, the so-called Free Market Project, which involved bringing Friedrich von Hayek, one of the founders of neoliberalism to America, funding Milton Friedman, funding George Stigler to give these arguments academic credibility.
And one of the things they do is to present these ideas as if they’re laws of nature. So when Milton Friedman talks about shareholder value, I think Erik said correctly, this is his opinion, and he’s certainly entitled to that opinion, but it’s not a law of nature.
Nick Hanauer:
No.
Naomi Oreskes:
But it gets presented as if it is. And we can go back even further and think about how they talk about Adam Smith. I mean, it’s really interesting to see the way Chicago school economists cite Smith as if he’s some kind of oracle, some kind of God, that if Smith said it, it must be true. And yet, well, first of all-
Nick Hanauer:
It’s so weird. Right?
Naomi Oreskes:
It’s very… Right.
Nick Hanauer:
It’s so weird. The guy was… He’s 400 years old. If you’re going to go get medical treatment, they’re not quoting some 400-year-old doctor.
Naomi Oreskes:
Correct. Correct.
Nick Hanauer:
Right? Crazy.
Naomi Oreskes:
Right. And it’s also a misrepresentation of Adam Smith. We show in the book how actually Adam Smith is much more nuanced, how he supports bank regulation, for example, but even something as basic as the so-called law of supply and demand. Well, it’s really not a law, because look at our story about electricity. I mean, here’s an example where people want electricity and they’re willing to pay for it, and they’re willing to pay a fair price. So there is a demand, and yet the market doesn’t supply it.
Nick Hanauer:
Let’s talk a little bit about where we should go from here.
David Goldstein:
In terms of blowing up the myth?
Nick Hanauer:
Yeah.
David Goldstein:
Your book is a great start. What else needs to happen? Do we need a century of propaganda on our side to dismantle this, or can we do it a little quicker?
Erik Conway:
So it took them a half of a century to convince Americans to abandon some element of faith in the government in favor of this unregulated free market ideology again, and I have to hope that it doesn’t take another half of a century of propaganda to overcome it because, for one thing, I don’t know who would fund the propaganda. And the second problem is this.
Nick Hanauer:
Other than me.
David Goldstein:
Yeah.
Erik Conway:
Well, they’d had quite a network of funders and so forth. And maybe there is one on the left, but if there is one, I’m unaware of it. I would say, though, that what undid the market fundamentalists the first time and brought in the brief era of a more regulated capitalism in the mid-20th century, of course, was economic collapse. It was the failure of market fundamentalists’ faith to deliver that did it. And it’s pretty clear these days that the economy doesn’t work for a lot of Americans, and yet many of the protections, the firewalls that were put into place in the New Deal are actually still there and operating.
So we won’t have a collapse, I don’t think, like the Great Depression, and I hope not because I don’t want to live through one, but it also means it’s more difficult to figure out where the impetus for reform comes. So we write in the hopes that people will read the book and think, “Huh, I’ve been misled about these things for decades, for maybe my whole life, and maybe I need to think and vote differently.” But beyond that, I don’t have a vision, because they’re so entrenched, it takes a catastrophe to unseat them. Maybe climate will be that, though. Maybe that’s a segue for Naomi to talk about how maybe climate action can actually be a bridge to that different economics.
Naomi Oreskes:
Well, the way I think about our role as historians is, I think it’s very hard to change something when you don’t know why you’re doing it the way you do or how you got there. I mean, if you think about personal change, it always begins with self-awareness. What am I doing? Why am I doing it? And is it working for me? And if it’s not, then we could think about change. And so, I think to build on what Erik just said, so many of us take market-forward ideology for granted. We don’t really stop to think about why do we believe these things, or so many Americans have accepted the idea that big government is bad without actually recognizing how much big government has actually done for them, Social Security, Medicare.
I mean, the whole joke about “take your hands off my Medicare,” that people don’t even actually see all the things that our government, and should we say governments, both state and federal, have done for us. So I think part of what we’re trying to achieve in this book is to open up a conversation about these issues and to say, “We need to be talking about why we came to believe these things that aren’t actually true,” and then how we can open up a space for a different kind of conversation.
And one of the things one of my students said to me when we were talking about this whole issue of big government, he said, “Even the language of big government.” In the book, we show that the business community actually introduced the language of, quote, “big government” as a way to try to have a foil against, quote, “big business,” because in the 1930s, most people were blaming big business for a host of American ills. Polls showed that most people thought the government was their ally and that big business was the enemy. And so, they consciously sought to reframe this to make us think that big government was the enemy.
But the whole notion, we should really stop using that language because, actually, and we say this in the book, the American federal government is actually relatively small compared to the governments of most European countries, if you look at it in terms of, say, per capita or GDP, but also, it’s the wrong question. I mean, the question is not really what the size of our government should be. The question is, what is the purpose of government? What do we want our government to do? And that’s a conversation that we almost never have in America.
Erik Conway:
Yup.
Nick Hanauer:
Yeah. And it’s worth just noting, we’re recording this podcast on the Monday following the collapse of Silicon Valley Bank, and the Twitters are filled with the hysterical worry of all my friends in Silicon Valley, who, until Thursday afternoon, were strict libertarians mostly, who believed that big government was the enemy and regulation created harm and that they shouldn’t have to pay any tax, and markets were perfectly efficient, and if we just got out of their way, everything would be fine. And this morning, Twitters are filled with begging and groveling for the federal government to step in and save their ass.
Naomi Oreskes:
Exactly. It’s very easy to hate big government until you actually need it, and then suddenly things look different.
Nick Hanauer:
Yes. Exactly.
David Goldstein:
Nick, we shouldn’t be having this conversation, because in the words of Larry Summers, this is no time to talk about moral hazard.
Nick Hanauer:
Exactly. To talk about moral hazard is-
David Goldstein:
The time to talk about moral hazard is when we’re talking about student debt forgiveness.
Nick Hanauer:
Exactly.
Erik Conway:
Yes.
Nick Hanauer:
Exactly.
David Goldstein:
Not when we’re talking about bailing out Silicon Valley. Keep your priorities straight.
Nick Hanauer:
And it reminds me of the hysteria in the news over, for example, the CHIPS Act requiring companies who take taxpayer-funded government money to, gasp, provide some childcare for the workers that are going to have to work in those factories, as if the expense of a little childcare will make the difference between whether these programs are successful or not. It just boggles the mind.
David Goldstein:
Also, the great irony, Nick, that side by side to an article with the people complaining about how it was inappropriate to make them set up childcare, there’s an article about how there’s a labor shortage and they can’t fill all these jobs.
Nick Hanauer:
Exactly. Yeah.
David Goldstein:
Well, maybe providing childcare might help.
Naomi Oreskes:
Well, no, no, no. They don’t want to provide childcare. They want to bring back child labor, put those children to work.
Nick Hanauer:
Exactly.
Erik Conway:
Yes.
Naomi Oreskes:
Right? Right. Yeah. I’m glad we raised the issue of Silicon Valley, and we talk about this in the book. I mean, the position of many leaders in Silicon Valley, the libertarian view that you just described that the government should get out of the way, it’s either just hypocritical beyond belief or ignorant beyond belief, because the reality is that Silicon Valley was built on big government. Some of the earliest successful companies in Silicon Valley, like Hewlett-Packard, came straight out of government contracts during World War II, and Stanford, which has been a hub for Silicon Valley innovation, was built on government grants and contracts, federal funding for scientific research.
And, of course, the whole foundation of modern Silicon Valley today, the format that is allowing us to speak to each other, is the internet, which was a big government project. It was the federal government supporting scientists, engineers, who built what was originally DARPANET. DARPA is a federal agency, and then the federal government that passed the legislation to allow this technology to be commercialized. And if it hadn’t been for that program, Silicon Valley, as we know it today, would never exist.
But Silicon Valley tells a story that is very, very different and about guys in garages in hoodies. And yes, there were some of those, but none of this would have been possible had the federal government not laid the foundations through basic scientific research and development.
David Goldstein:
I just have to ask, one of the great pleasures of doing this podcast is I read a book and then I get to talk to the authors, so if I have direct questions. It turns out that just before I read your book, I was rereading Capitalism and Freedom, which you talk a lot about in the book. And I consider myself to be a bit of a propagandist. I understand I’m a white-hat propagandist, and I’m reading Milton Friedman, and at times, incredibly impressed, and at other times, disbelief that he’s had such influence.
When you read his arguments, they make no sense whatsoever, but they’re written in a way that makes them sound like they make sense. I don’t doubt that he was a very smart man. Either of you or both of you, Naomi and Erik, did Friedman believe what he was writing, or was he writing what he needed to write in order to achieve a greater goal?
Naomi Oreskes:
Well, like we said before, I think it’s almost impossible for us to really know what any person really truly believes in their hearts, although sometimes if you can get deep into the archives, as we did with Merchants of Doubt, you can get a sense of it. And certainly, in Merchants of Doubt, we came to the conclusion that those people we studied there really did believe what they were saying. They really live with a kind of Cold War anxiety about the threat of communism, and I think they really did fear that environmental regulation would become a sort of back door to socialism. So having won the Cold War, the front door of the Cold War, we would lose through a back door of, quote, “government encroachment.”
And since we had access to their private letters and their letters they wrote to each other, we were able to make that judgment. It’s harder with Milton Friedman, but the way I think about it is that there are shills. There are people who are paid to do what industry wants them to do. They exist. But in general, those are not the people who are most effective, because I think most of us have pretty good sensors for authenticity and inauthenticity, but it works more effectively if you can find people who actually authentically believe what they do and foster and nurture and promote them, and I think that’s what we see in this story.
I think many of the Chicago school people, not just Friedman, but George Stigler and some of the others, did authentically believe what they were saying. Why exactly they believed it, I’m not in a position to judge. But what we see is that they’re being nurtured, and it’s a kind of unnatural selection. I mean, there’s another example of the hypocrisy. While these people are going on and on about the free market of ideas, they’re actually distorting the marketplace of ideas by cultivating these free market fundamentalists, giving them a lot of financial support, creating jobs for them, creating a job for Friedrich von Hayek.
I mean, one of the interesting details in the book is that the Economics Department at the University of Chicago did not want to hire Friedrich von Hayek. So he’s hired through this backdoor channel. Yeah. I mean, it’s a great story. So these people have a kind of support that other people, whose ideas might actually make more sense or be more scientific or have more empirical support, they don’t get the same kind of support. So it’s not a level playing field. And so, Friedman gets a lot of funding. He gets a column in Newsweek magazine. He becomes an advisor to Ronald Reagan, in part because he’s telling these people what they want to hear.
David Goldstein:
So you’re telling me if I had catered to the Koch brothers, I’d have made a lot more money over the course of my career?
Nick Hanauer:
Almost certainly.
Naomi Oreskes:
Exactly.
Erik Conway:
Yes.
Naomi Oreskes:
And when anybody ever accuses me and Erik of doing this because of money, we always say that, “Oh my gosh, we could have made so much more money going over the dark side.”
Nick Hanauer:
Yeah.
Erik Conway:
Yup.
Nick Hanauer:
Okay.
Erik Conway:
It’s not a free market of ideas. It’s a rigged market.
Nick Hanauer:
Yeah. Economics is not mostly a science. It’s mostly a way of rationalizing who gets what and why. It’s how the powerful impose their wishes on humanity.
Naomi Oreskes:
But again, we want to be careful here. We’re not dissing the entire field of economics. I have plenty of great colleagues who do empirical work and who test their theories, like any good social scientists should do, but they’re often not the people who are being quoted in The Wall Street Journal or Fortune magazine.
Nick Hanauer:
No. No.
Erik Conway:
No.
Nick Hanauer:
No.
David Goldstein:
Right.
Nick Hanauer:
Because the data does not support that narrative.
Naomi Oreskes:
Right.
David Goldstein:
It is amazing how science-free capitalism and freedom is. It’s not a book about economics.
Naomi Oreskes:
Correct.
Nick Hanauer:
So couple of final questions. The first posed to both of you in turn is our benevolent dictator question. If you could do anything, what would you do? Erik?
Erik Conway:
Well, first off, I don’t want to be a dictator. I’d be bad at it. I’d be terrible at it because I’d probably do what most dictators do and surround myself with people who all agree with me, and that’s always a mistake. I guess, thinking about the academic problem, I would want to find a way to encourage more diversity of thought in economics departments.
One of the stories we haven’t told here but is in the book is in the way business people worked to ensure that economics departments conformed to the free market line. And if we want a better and more inclusive economics, then we would want to find a way in which you don’t have to be a free market, pro-big business economist to get a job in American academia. So I guess that’s one thing I would do. And then, let’s see, then I’d let Naomi tell me what to do.
Nick Hanauer:
Okay. Okay. Naomi. Okay.
Naomi Oreskes:
Well, I think the great part about this question is that we don’t actually have to be dictators, because the reality is we have an incredible number of statutes already on the books that, if only they were enforced, would actually go a long way to solving this problem. So one of the interesting things about the current debate over child labor, and I have to say, I find it astonishing that we’re even having this conversation. Whenever Erik and I work together, we always have some moment where we think, “Okay. Well, one thing we don’t have to worry about is anyone’s going to try to bring back child labor.” And here we are. Oh my God.
Erik Conway:
Yeah. And we’re doing it.
David Goldstein:
To be fair, in the chips industry, those chips are really small, so we need-
Naomi Oreskes:
There you go.
David Goldstein:
… to make use of their tiny hands.
Nick Hanauer:
You do need those tiny little hands, don’t you?
Naomi Oreskes:
Right. Exactly.
Erik Conway:
That’s what the two-year-old in the factory is for.
David Goldstein:
Uh-huh.
Naomi Oreskes:
It’s like Snowpiercer, right? If any listener who haven’t seen the movie Snowpiercer, they have to go see it now. Right. So the reality, one of the things we’ve seen in this country in recent months, when there’s been this whole discussion about how some Republicans would like to repeal the statutes protecting children from dangerous workplaces, is that actually there’s been already a big pattern of nonenforcement. And in the book, we talk about how we can trace this back to Ronald Reagan. Reagan actually did not get most of the things he wanted. He wasn’t able to repeal, for example, most of the environmental protections, because the American people actually want these things.
Nick Hanauer:
Yeah.
Naomi Oreskes:
Polls have consistently shown for decades that Americans believe in environmental protection, but what the Reagan administration did was realize they could just not enforce the law.
Erik Conway:
That’s right.
Naomi Oreskes:
And we’ve seen that in lots of areas. We’ve seen it in voting rights. We’ve seen it particularly in the area of antitrust. I think a lot of our problems today… And I do credit the Biden administration here, because we’ve seen some different attitudes coming out of the Department of Justice in recent years. But if the federal government would simply enforce the existing antitrust statutes, a lot of the problems we have with the monopolization of telecommunication, the monopolization of social media, many of these problems could be not solved completely, but we could go a long way to solving them. So I don’t think I have to be a dictator. I would just like to see our federal government and our courts enforce the statutes, the hard-won statutes that we already have on the books.
Erik Conway:
Let me add one more. We used to have ownership limitations on telecommunications platforms, and one of the big ones that goes down in the Reagan administration, limited the number of radio stations anyone can answer, or could own rather. I think the rule was you couldn’t have more than seven. And now, most of the US is blanketed by a couple of giant owners with political motivations. And to me, those seem to be the most powerful propaganda tools for people who aren’t spending most of their day on Twitter.
Nick Hanauer:
Yeah.
Naomi Oreskes:
Yeah. That’s a great point. So, I mean, if we could just bring back the-
Erik Conway:
Ownership limits would be a big change.
Naomi Oreskes:
Yeah. Bring back the ownership limits and the fairness doctrine. And while we’re on movies, this was part of the plot twist in the great movie Working Girl, because it was about ownership limits. So, again, there are statutes on the books that could be enforced. There are statutes like the fairness doctrine that could be reintroduced.
And it’s not a coincidence. You may have noticed that one of the things Rick Scott would like to do is to have some kind of constitutional amendment that all laws would be phased out in five years if they weren’t… I mean, he’s crazy, but he’s crazy like a fox because he gets it, that we actually have a lot of great laws on the books. And if those laws were to be sunset, well, then it would be complete free range for the wolves of Wall Street.
Nick Hanauer:
Yeah. Absolutely. Well, you guys are no fun. Just to be clear, Goldie and I would love to be dictators, wouldn’t we?
David Goldstein:
Yeah.
Naomi Oreskes:
Yeah. We could tell. Yeah.
David Goldstein:
Well, let’s be… Look, Nick, it’s not our role to be dictators. That’s the job of the Federalist Society.
Nick Hanauer:
That’s true.
Naomi Oreskes:
Right. Right.
Erik Conway:
Talk about freedom, but it’s the freedom of the iron fist.
Nick Hanauer:
Yeah. Exactly.
David Goldstein:
Yeah.
Nick Hanauer:
Okay. And one final question to each of you. Why do you do this work?
Naomi Oreskes:
Because I can’t help myself.
Nick Hanauer:
There you go. That’s the right answer. Say a few words more.
Naomi Oreskes:
Well, sometimes people who know I’ve written books will say, “I really want to write a book.” And I’ll say, “Okay. So what do you want to write about?” And they say, “Oh, I don’t know. It just seems like it would be fun to write a book.” And I want to say, “No, you have this completely backwards. It’s not fun to write a book.”
Nick Hanauer:
Horrible.
Naomi Oreskes:
“It’s an insane amount of painful, hard work, but you do it because you can’t stop yourself.”
Nick Hanauer:
Correct. I love it. How about you, Erik?
Erik Conway:
When Naomi was convincing me that we had to write Merchants of Doubt, her winning argument was, “How can you know these things and not feel an obligation to write about it? How can you know these stories and not tell them? Where is your ethical sense?” And she’s right. That’s the answer. We have some obligation to transmit our knowledge, maybe, and help change the world.
Naomi Oreskes:
Erik, I didn’t remember that I had said that, but that’s really good. I’m really glad you said that.
Erik Conway:
Yeah.
Nick Hanauer:
It was very good.
Erik Conway:
No. Yup. No.
Naomi Oreskes:
I guilt-tripped you into writing with me, and here we are, 13 years later.
Erik Conway:
Yes. It’s like a dozen years ago, and I remember it. Yeah. More than that.
David Goldstein:
So according to Milton Friedman, there is no social responsibility of business, but there is a social responsibility to being a historian, you’re telling me?
Nick Hanauer:
There you go.
Naomi Oreskes:
Definitely.
Nick Hanauer:
I love it.
Erik Conway:
Yup.
Nick Hanauer:
Well, thank you both for being on, and thank you for writing the book.
David Goldstein:
Yeah. I really enjoyed the book. It’s very frustrating. I’m familiar with a lot of the ground you’re treading. It’s told in great detail and at times entertaining, but very frustrating to have to go through this history. It’s maddening.
Erik Conway:
Thank you.
Nick Hanauer:
So, Goldie, what do you think? I mean, we are in violent agreement here with the thesis of this book, obviously, that market fundamentalism is a big myth that markets, admittedly, are an extraordinarily important social technology, but they definitely are not sufficient to build a prosperous, secure, and sustainable society.
David Goldstein:
Well, I think this gets back, Nick, to something we’ve been talking about since the very first episode of this podcast, where we emphasize the importance of narrative, because as we talked about with Naomi and Erik, when you go back to somebody like Milton Friedman, who is a Nobel Prize-winning economist, in air quotes, I’m not exactly sure why and how he won the Nobel Prize, when you go back to his most influential work, there’s nothing economic about it.
Economics is supposed to be a science, a social science, but that’s still a kind of science. It’s not the same thing as physics, but there’s still a scientific method. And when you read his arguments, there is absolutely nothing scientific about it. It is pure storytelling. It turned out to be very effective storytelling, but it was pure storytelling nonetheless.
And we ask that benevolent dictator question, how do we get past the big myth? What do we need to do? And the thing that we need to do and what we’ve tried to do on this podcast and in all of our work is tell a better story. Not just a different story, but a better story. And I think one of the things that the bad guys hit upon is the power of that word freedom, because their main argument is, the freer we are, the more prosperous we are. We just have to be free. Right?
Nick Hanauer:
Yeah.
David Goldstein:
Economic freedom. You can’t have political freedom, you can’t have individual liberty without economic freedom. That’s their main argument. And that was not the American way, as they point out in the book. They made an effort to redefine the word freedom.
Nick Hanauer:
Yeah. And, look, to a certain extent, economic freedom is essential to prosperity. If you don’t have some economic freedom, you can’t innovate. If you can’t innovate, you can’t create new solutions to human problems. But unlimited freedom, negative freedom is not the beginning and end of freedom. Obviously, we need constraints and we need regulations, and we need to make sure that markets are harnessed not just to the well-being of the bank accounts of the owners of capital, but rather to the public good, to the interests of the broader society.
And that is not market fundamentalism. That’s markets in service of humanity, which I think we’re both big believers in. So, anyway, really interesting book. Great effort. Loved the answer, Naomi’s answer of why she did it, because she has to. Yeah. That’s exactly right. So, anyway, I highly recommend this book to our listeners.
David Goldstein:
As always, a link in the show notes. And you can buy wherever you want it, but your local independent bookstore is always preferable.
Speaker 4:
Pitchfork Economics is produced by Civic Ventures. If you like the show, make sure to subscribe, rate, and review us wherever you get your podcasts. Find us on Twitter and Facebook @civicaction and Nick Hanauer, follow our writing on Medium @civicskunkworks, and peek behind the podcast scenes on Instagram @pitchforkeconomics. As always, from our team at Civic Ventures, thanks for listening. See you next week.