This week, Nick and Goldy are joined by Pulitzer Prize-winning columnist David Leonhardt to discuss his latest book, Ours Was the Shining Future: The Story of the American Dream. They discuss the relationship between academic economics and the forces that sought to dismantle the mid-century consensus that promoted shared economic growth in the post-World War II era. Leonhardt shares anecdotes from his extensive research, highlighting what lessons from the past could guide us toward a more equitable future.
David Leonhardt is a Pulitzer Prize-winning journalist and columnist for The New York Times, where he writes its flagship newsletter, “The Morning.” He has also been the newspaper’s Washington bureau chief, an op-ed columnist, a staff writer for The New York Times Magazine, and the founding editor of “The Upshot.”
Twitter: @DLeonhardt
Further reading:
Ours Was the Shining Future: The Story of the American Dream
New York Times: Why Are Republican Presidents So Bad for the Economy?
The Great Exception: The New Deal and the Limits of American Politics
Website: https://pitchforkeconomics.com
Twitter: @PitchforkEcon
Instagram: @pitchforkeconomics
Nick’s twitter: @NickHanauer
Nick Hanauer:
The rising inequality and growing political instability that we see today are the direct result of decades of bad economic theory.
President 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
President Joe Biden:
Because Wall Street didn’t build this country. A 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.
Nick Hanauer:
Well, Goldy, as you know, one of the funnest parts about having this podcast is getting to talk to such amazing and interesting people. And today I’m super fired up because we have Pulitzer Prize winning journalist and columnist for the New York Times, David Leonhardt, as our guest to discuss his latest book, Ours Was The Shining Future, which is his analysis of the complex history of the American economy and the decline of the American dream. Obviously, this is something we talk about a lot and feel very strongly about.
Goldy:
I got to tell you, Nick, we have the best book club in the world-
Nick Hanauer:
We do have the best.
Goldy:
… because it’s me, you and the author of the book. It’s not the only book on this topic, but it’s written in such a personal and accessible way. It’s certainly one of the more readable books exploring these issues of what went right following the Great Depression and for the next 30 or so years, and then what went wrong and why.
Nick Hanauer:
So let’s talk to David.
David Leonhardt:
I’m David Leonhardt, I’m a senior writer at the New York Times, and I’m the author of Ours Was the Shining Future: The Story of the American Dream.
Goldy:
Okay, boomer.
Nick Hanauer:
So why don’t we start by just providing an overview of the main themes and ideas you explored in your book?
David Leonhardt:
I’ll start with what is the first chart in the book. The book doesn’t have a lot of charts, but the first chart in the book, in some ways, the book is an attempt to unravel the mystery in the first chart, and it shows life expectancy in every high income country, there are about 20 of them, since 1960 or so. And what you see is that in the sixties and seventies, the US had a normal life expectancy, right near the average for a rich country. And starting in the 1980s, our life expectancy started growing more slowly than pretty much any other country on that chart.
And for nearly the last 20 years, the United States has had the lowest life expectancy of any rich country, and it’s not even that close anymore. That’s a shocking and disturbing statistic. And I’m an optimist by nature, and yet I wanted to understand how is it that we’ve ended up with this society and economy that doesn’t seem to work for so many people, particularly people without a college degree? And so I set out to tell the story of the American economy and American politics over really the last century and try to unlock that mystery of why things just don’t work as well for many people as they used to.
Nick Hanauer:
What happened?
David Leonhardt:
What happened? Well, look, I’m a capitalist. I’m going to admit that up front. I think capitalism works better than any other economic system out there. It’s hard to find any non-capitalist country that’s ever provided rapidly rising living standards. But not all forms of capitalism work equally well. And for the middle decades of the 20th century, we adopted a version of capitalism that I call democratic, small d, capitalism in which we use democracy to address the weaknesses of capitalism, and the successes of capitalism strengthen democracy in turn. And so what does that mean? It means we used our government to make big investments in education, in roads, in scientific research that often the private sector doesn’t fund on its own. We use the government to regulate the economy and prevent companies from getting too big and make it possible for workers to join labor unions. We also had a corporate culture that was less selfish than today’s corporate culture.
And that version of capitalism worked really well. I mean, look, American society had terrible problems, terrible discrimination in the 1950s and 1960s and yet not only were incomes rising, but economic inequality was falling. I mean, we almost think of today economic inequality like some scientific force, that it can move in only one direction. But in the forties, fifties and sixties, the pay of the middle class and the poor was increasing more rapidly than the pay of the rich, the white-Black pay gap, even before the civil rights movement was declining, the white-Black life expectancy gap was declining. And so we can’t just go back to the past, all lots of things have changed, but that version of capitalism worked really well.
And starting in the late seventies, early eighties, we moved toward this more rough and tumble version of capitalism in which the government withdrew more from the economy. And the people who pushed that version of capitalism, they made specific promises. They said, look, if we let companies get bigger, if the government invest less, if we cut spending, if we shrink labor unions, if we cut taxes on rich people, this will work out better for everyone, for the entire economy. And those promises haven’t come to fruition. And instead, we’re living in this society with really high inequality. And that statistic I opened with, the United States now has the lowest life expectancy of any high-income country in the world, lower than every country in Western Europe, lower than South Korea, Japan, Canada, Australia. And it’s not particularly close. And so something we’re doing isn’t working.
Nick Hanauer:
We’re in violent agreement with your analysis.
David Leonhardt:
Excellent.
Nick Hanauer:
But what I think we’d love to do in this conversation is tease apart what you think went wrong. How did this happen? How did we move away from a consensus, which clearly, I mean where not only did middle class people do better and working people do better, but the economy actually grew, in aggregate, faster, right? It’s not like the decades that you refer to was this epoch of low growth but high… that we somehow traded off growth for inequality or something like that.
Goldy:
There was no big trade-off in the 1950s and 60s.
David Leonhardt:
Yeah, no, that’s right. We had 90% top marginal tax rates and faster economic growth than we do today, right? In some ways, those two stats summarize it.
Nick Hanauer:
Exactly. So what happened?
David Leonhardt:
I think it’s important to try to put ourselves back in the mindset that Americans were in when we made this big shift to a different kind of economy. And I really place it in the late seventies and early eighties. As late as 1976, the Republican Party’s economic platform was Eisenhower-esque and really accepted large parts of those middle 20th century decades consensus. And what was happening back then? There were real economic problems in this country. Inflation was miserably high, growth was slowing, unemployment was rising. There was this term stagflation to highlight the fact that everything was sort of going wrong. And I don’t think it was crazy that people looked around and they said, “Wait a second. This isn’t working. What can we do to try to fix it?” Part of the answer that they came to was they basically decided that this mixed economy, this version of democratic capitalism wasn’t working. Many people decided the government was too big, there were too many regulations, and that all was causing inflation in the problems.
Now, I think that when they made that diagnosis, they really tended to underestimate, or at least underplay how much of a role simply Middle Eastern chaos played and high oil prices were creating inflation all around the world rather than some sort of, it was that the government had gotten too big. And if you go back then, I mean the time where the economy really starts on a whole new trajectory is after 1973 when the Arab oil embargo begins, and oil prices come to basically a new high level. But the idea that Americans looked around and said, “This isn’t working, let’s try something else,” and that they became attracted to or at least open to the ideas of people like Jack Kemp and Milton Friedman and most importantly, Ronald Reagan. I don’t think that was crazy. Things weren’t working.
The problem is when you then go and you look at the promises that Ronald Reagan and his disciples made about the economy they would create by cutting taxes and shrinking labor unions and allow companies to grow much larger, they haven’t delivered at all. I mean, if you look at what the American economy has been like since the 1980s, it’s been really good for affluent people. It’s been really good for corporate profits. It’s been bad for middle-class pay. It’s been bad for low-income pay. It’s been bad for middle-class and low-income wealth. It’s been bad for life expectancy. And it’s been bad by all these other measures of social health. How many kids grew up with two parents, how many people spend time in jail, how lonely people are, how happy they are about the country. And so I understand why we started on this new path, I just think it’s important to revisit. And in some ways, I think we already are revisiting whether in fact it delivered what we were promised.
Goldy:
One of the things that I think is clear though is that this wasn’t something that just spontaneously happened in the 1970s and eighties. An interesting historical tidbit in your book, which I wasn’t aware of, is we talk disparaging about the University of Chicago a lot and the role it played in undermining that old consensus. But I was unaware of the role the university played in establishing that post-war consensus. And yet David, it wasn’t really a consensus because people like Milton Friedman and that whole Chicago school had been working for decades just waiting for their chance. And it was well-funded by corporate interests throughout the fifties and sixties.
David Leonhardt:
Yes. Look, I think one thing that’s important is we live in a big, diverse, complicated country and things are rarely only one way. And so there were always parts of corporate America, and there were always parts of the Republican Party, which for a long time was, has been, depending how you think about it, the party of corporate America. So in the 1920s, the 19 teens and twenties, that laissez-faire part of corporate America and big business was the dominant one. And the Supreme Court very much represented its interests as it still does today, and made it nearly impossible for American workers to join the labor unions. And they got rid of regulations. And that really was the dominant strain of both corporate executives and politics, not just the Republican Party, but primarily the Republican Party and large parts of the Democratic Party.
And then a combination of the Depression and World War II and with it the rise of fascism and communism in Europe and the threats that they represented, and then on the other side of the war, the Cold War really created a lot of fear among large parts of our corporate leadership. And that fear basically translated itself for many of them into a kind of patriotism, a kind of communitarianism. And there became a really important part of corporate executives who said, “You know what? We can’t keep going with this high profit, low wage economy that has caused people to question the basic premises of capitalism and democracy.”
Now, there had been some moderates before, and there were still the hard laissez-faire reactionaries into the fifties and sixties, but the center point of power, the center of political gravity shifted in the forties and really moved toward these more moderate corporate executives. They were still quite conservative. They were still Republican in lots of ways. I tell the story of Paul Hoffman, the CEO of Studebaker, in my book, I think he’s got a great story about how he went from being this anti-New deal, anti-FDR executive to someone who said, “Boy, we’ve got to try something new.” He remained a Republican, and I know that there are some people out there who say, “Come on, was corporate America really ever less aggressive than it is today?” And the answer is yes, it really was. Even though those more radical parts of it were always there, they lost their dominance.
And I think the easiest way to see this is after Ike wins the presidency in 1952. Dwight Eisenhower is the candidate of corporate America, so much so that after he wins the day after election day, he flies to Augusta National, the golf club in Georgia to plan his new cabinet and picks mostly CEOs to serve in his cabinet while playing golf in Georgia. And yet, even though he’s the candidate of corporate America, and even though the top marginal tax rate is 90%, what does Dwight Eisenhower do to reduce that top tax rate? Nothing. At that point, he and the corporate people who are advising him accepted that high marginal tax rate. They were more conservative than the Democrats, but they basically accepted this post-war consensus.
And so I really do think corporate executives behaved differently back then, I do think politicians behaved differently and into the seventies, you just had a level of acceptance that the point of our economy and of companies is not simply to maximize the incomes of the people running them in a way that today feels very far away.
Goldy:
You bring up the example of you compare Mitt Romney to his father, George, who actually declined a bonus he was promised because it would’ve violated a cap on CEO income.
David Leonhardt:
Yes. I mean, imagine that. The cap was $225,000, which in today’s terms is a few million dollars. And George Romney was the CEO of of a major car company. Imagine the CEO of a major company today saying, “I’m sorry, it would be unseemly. It would be grotesque for me to earn more than a few million dollars. Please rescind my bonus so the ratio of my pay to my workers remains more reasonable.” George Romney did that.
Nick Hanauer:
And David, that was my dad. I grew up in a family business. That was my dad. Right? I’ve told the story a million times, when my brother and I went to work for the family business we wanted to buy a sports car. My dad forbade it because he was so appalled by the idea that my brother and I… But by the way, we didn’t make any money. But we compromised until I think I was 28 years old, I shared a car with my younger brother. That was the compromise. I mean, it sounds trivial, but these norms of behavior were incredibly important for social cohesion, right? They just made a giant difference.
David Leonhardt:
They absolutely were.
Nick Hanauer:
Giant difference. I want to challenge a little bit of what you said-
David Leonhardt:
Please.
Nick Hanauer:
… because it’s been my view, and I think the consensus between Goldy and me, that of course, you had powerful self-interested actors in corporate America who worked hard and funded think tanks to demolish that old consensus in favor of one that benefited them more.
But there was something else which happened that was equally, and I guess we would argue even more pernicious, which is the way in which academic economics evolved to create this framework of thought, which, if taken seriously, can only lead to one thing, which is the rich will get richer and everyone else will get poorer. And basically all of the underlying assumptions of orthodox economic thinking today, whether it’s understanding the economy as a Pareto optimal equilibrium, understanding people as rational and selfish, understanding GDP as an adequate measure of welfare, thinking about growth as factors of production, that price equals value. I could go on and on. If you take any of this stuff seriously, it effectively is a protection racket for the rich.
And David, when I got to work on these issues 20 years ago and became an activist around economic inequality, 100% of the people I encountered, whether they were on the right or the left, had completely adopted this framework of thought, which effectively prevents you from helping people. Like if the consensus is, for example, within the academy and in the policymaking apparatus that there is an inverse mechanical relationship between the amount you pay people who are earning the minimum wage and the number of jobs you will have, then you are trapped. And we cooked up the $15 minimum wage largely as a way to challenge that orthodoxy, to break that paradigm, because until you do, you’re screwed. I mean, I remember going into United States senators’ offices again and again and again arguing for increasing the minimum wage and 100% of the Democrats were absolutely convinced that if you raised the minimum wage, you would kill jobs. And that didn’t come from the poetry department. That came from the economics courses that they took in college. And so from our point of view, academic economics has a lot to answer for here.
David Leonhardt:
Yes. I think that one reason to be somewhat encouraged is we do see a shift.
Nick Hanauer:
Yes.
David Leonhardt:
So I think it’s completely fine to look back and say those… in fact, not just fine. I think it’s important, look back and say those people made a set of promises. We can debate whether they genuinely believed them. I think in many cases they did genuinely believe them, but it doesn’t matter that much. The question is, did what they say would happen happen? And the answer is no, it did not happen. And I think there is reason to take some optimism, and Nick, I would assume you agree with this from the fact that people are now revisiting some of those [inaudible 00:19:39].
Nick Hanauer:
The academic consensus is shifting dramatically. And we met for the first time face-to-face at a conference devoted to that a couple of weeks ago and you could just see that shift happening in very, very dramatic ways.
David Leonhardt:
Just briefly, so I’m 51 years old, and I remember when I started interviewing economists who were younger than me who clearly had a different view of, for lack of a better term, neoliberalism than economists in their fifties and sixties and seventies, and they were much more skeptical of it. I’m not talking about not just economists at clearly left think tanks. I’m talking about tenured people at top universities.
Goldy:
But there’s still the introductory econ course that they’re teaching, which is all most people actually take, and that informs our policymakers and politicians, they’re still teaching that old orthodox economics. We keep hearing this, as much as academics is changing, it’s not changing in terms of what the… the textbooks haven’t changed.
David Leonhardt:
I would be surprised if it weren’t starting to change.
Nick Hanauer:
It is starting to change.
David Leonhardt:
But I take your point that the word starting there might be doing a bunch of work.
Nick Hanauer:
You wrote this marvelous piece for The Times, I can’t remember, six months or a year ago, something that said, why are Democrats better for the economy than Republicans or something like that, I know you’ll remember the piece, which details-
Goldy:
You mentioned it in the book.
Nick Hanauer:
Yeah.
David Leonhardt:
Yes.
Nick Hanauer:
And we’ll provide a link to that in the show notes of the podcast because it’s such a great piece. But the most interesting thing about that piece that you wrote, which details the stunning differences in economic performance between Democrats and Republicans over the last 100 years or whatever it is. The most interesting thing in the piece is that the economists you interview are completely baffled by this empirical reality. They’re baffled by it. And the reason they’re baffled by it is because if you take the orthodoxy seriously, these results are impossible. They cannot be true.
David Leonhardt:
Well, and just imagine, let’s imagine the reverse were true. Let’s imagine that the economy performed much better under Republican presidents than Democrats. Think about how much the Republican Party would trumpet that and broadcast it and brag about it, and deservedly so, by the way. We can’t know exactly how much of it is a coincidence and how much of it is based on policy, but the odds that it’s all a coincidence seem pretty small to me. And so in some ways, I’m more struck about the fact the Democrats don’t spend more time talking about
Nick Hanauer:
Yes. And we’re trying to fix that, by the way. But again-
Goldy:
I’m struck by the fact that the media doesn’t spend more time talking about it because we see all this, and this is empirical, just coverage of the economy has become more negative over the past 10 years. The headlines are always, “Great Jobs Report. Bad News for Biden,” because that’s going to prevent the Fed from lowering rates. The public believes that Republicans are far better on the economy than Democrats, partially because Democrats aren’t very good at messaging. They never have been. But also because it’s reinforced by what they read and hear in the media. Not that I’m blaming you personally. I like your work.
David Leonhardt:
I’m happy to hear media criticism. I would say a few things there. So one, I don’t think our bias in the media toward bad news is greater when there’s a democratic president than a Republican president.
Goldy:
Yeah. I’m not implying that. I’m just saying over the past few years, it has become much more negative. There’s empirical work on that, that the people feel like the economy is bad, and they’re largely hearing that the economy is bad.
David Leonhardt:
Yeah. Look, that’s clearly a big mystery to unlock. Why are people so grumpy about the overall economy today? I’m a little bit more sympathetic to the fact that people are unhappy with the economy. I think it’s-
Nick Hanauer:
Because they’ve been screwed for 50 years.
David Leonhardt:
… so two things. Exactly. So that’s the first, right? We’re talking about background trends that are really bad, the story I tell in my book. But then also the last few years in particular, if you just look around, there are lots of ways in which the pandemic broke our society. Broke’s too strong a word, damaged our society. You go to local high schools, and it’s harder for them to get volunteers. Elementary schools too, right? I spent a lot of time on the subway systems, both Washington and New York. I grew up in New York, I promise you, people jumping the turnstiles, it was something that I almost never saw five or six years ago. I see it all the time, right? There are basic ways in which the pandemic and the fact that society shut down for about a year, created chaos, created anxiety, created all kinds of things.
So when people think about the question of how is the economy doing, I think inflation plays a big role. But I also think some of the general chaos that our post-COVID world has plays a role too. Now, I don’t think Joe Biden deserves blame for very much of that, but I am sympathetic to the idea that I know those questions ask about “the economy”, but if we’re thinking about American society and you walk around a somewhat empty downtown relative to 2019, there are a whole bunch of ways in which America in 2024 just feels a little less healthy than America did five years ago. And I think that’s probably some of what’s happening when people are asked about “the economy”.
Nick Hanauer:
Yeah. That analysis, you have to be at least partially, right?
David Leonhardt:
Right. The degree to which I’m right, we can debate.
Nick Hanauer:
Yeah, yeah. So David, let’s talk just a little bit about the glorious future. What should we do?
David Leonhardt:
The first thing I would encourage progressives to do is to be reflective about why they struggle to win over the more vulnerable Americans who they claim to speak for. The Democratic Party, and in particular, progressives have such an incredibly proud history of fighting for the vulnerable. And yet today, if you look around, by many measures, people who lack college degrees are less likely to vote Democratic than they are to vote Republican. The House districts that are below median income are more likely to be Republican. There are about 20 states in which Democrats can’t win any election, and they skew lower income.
And for a long time, progressive said, well, it’s racism. Racism plays a role. The Republican Party has a pretty shameful history of using racism as a campaign tactic, but I don’t think it’s just racism. And I think we can see this by the Democratic Party’s shrinking margins with Asian and Latino, and although only a few percentage points so far, Black working class voters as well. And so I think I would encourage progressives to spend less time saying, how is it that those people vote against their economic interests? And more time saying, why is it that when working class Americans look at the left, they see something they don’t want to be a part of? And I think a big part of the answer is that the same way that affluent people are willing to vote for the Democratic Party and tax increases on themselves because of deeply held values about reproductive rights, about the climate, about you name it, a lot of working class-
Goldy:
Democracy.
David Leonhardt:
Democracy, absolutely. Absolutely. Those are legitimate reasons to base your vote, right? So if you believe those-
Nick Hanauer:
Economic growth.
David Leonhardt:
… if think those things are legitimate reasons to base your vote, then I think the same is true of working class people who look at our immigration system and say it’s completely out of control and say that huge numbers of people from around the world can show up and claim they need political asylum, even when they have a fairly flimsy case, and they can be led into this country. And by the way, they can often jump the line ahead of other immigrants who’ve been waiting years for work permits. Or when conservatives look at things and they say, I’m uncomfortable with the speed of some of these changes around gender. I don’t think that makes me a horrible person. Or I’m more religious than the Democratic Party is. Or I’m more pro-America, when you look at polls about who’s proud to be an American.
And so I just think that one of the things that needs to happen is that I think the Democratic Party should spend a little bit less time, and the left should spend a little bit less time making excuses for their election struggles in so much of the country and blaming the voters. And instead say, how is it that we can do a better job of representing and listening to and reflecting, and thus winning working class people?
Goldy:
And you think that we’re at a moment now where it’s possible for another shift to take place?
David Leonhardt:
I think we’re always at moments when shifts could take place. Tell me specifically what you’re thinking?
Goldy:
Well, so you point out that that shift from the laissez-faire dominance happened at a time of turmoil, the Great Depression, the wars in Europe, et cetera, and that it was possible for Roosevelt to make this move towards the New Deal and for the business community to rethink their role. And we are at a similar moment of crisis.
David Leonhardt:
Yes, I think it’s unlikely to be a big bang the way the Roosevelt era was. Jefferson Cowie, a Pulitzer Prize-winning historian, has written this great little book called The Great Exception that I recommend to everyone. And he basically argues we shouldn’t try to recreate the New Deal because it won’t happen, right? It depended on a war and a depression and a Democratic Party that still had Southern segregationists in it, among other things. But I do think that we are in a moment where large numbers of people are questioning what has been the consensus. As Gary Gerstle says, “We’re moving beyond the neoliberal era.”
And so I do think that we see signs of this. We see signs of it in some of the industrial policy of the Biden administration, which by the way, some of which has won some Republican votes. We see it, Nick, you mentioned the minimum wage. We see it in the minimum wage movement. We see it in things like Obamacare expansions winning ballot initiatives, even in red states. We see it in people’s increased interest in labor unions, which I think are an absolutely vital part of this, labor unions both economically and politically. They’re central to what a well-functioning, inclusive capitalist economy looks like. They’re also central to a successful Democratic Party, which the Democratic Party has sometimes forgotten in recent decades.
And so I do think that we’re at a moment where we could see some things shifting. The reason I focused so much on why the left alienates so many working class people is for that shift to happen, I think the Democratic Party needs to become less the party of relatively affluent professional college graduates that it has increasingly become, what Thomas Piketty calls the Brahmin left, and needs to genuinely think about how can we listen to working class people more? How can we win more of their votes? And that can’t simply mean telling them to ignore the Democratic Party’s views on a long list of social issues. It has to mean respectfully listening to those people and trying to think about, hey, maybe we should have a different policy on say immigration
Nick Hanauer:
Well, or at a minimum, at a minimum, take policy positions on basic economic issues that affect working class people in ways that prove to them that we actually are on their side, which is something the Democratic Party has not done for decades, until Joe Biden came around, because Barack Obama certainly did not. And part of the problem is we haven’t stood with those people, forget the other issues, we haven’t stood with them economically for a generation either. So the whole thing is a mess. But we only have you for another few minutes. We have two more questions that we have to ask you. The first is-
Goldy:
Well, I think maybe just go to the final question because we kind of, sort of hit the benevolent dictator.
Nick Hanauer:
Okay. So why do you do this work?
David Leonhardt:
Oh, that’s a nice question. I mean, in some ways I don’t have an intellectual answer to that. I was a five-year-old kid living in Boston who fell in love with the Boston Globe sports section arriving at my doorstep every day. And before I even realized what I wanted to do, I wanted to be one of the people who made that thing that told people what was going on in the world. I eventually moved away from sports. I worked for my high school newspaper, my college newspaper. It’s kind of all I’ve ever done.
But I also think there are more intellectual answers to the question, which is maybe this is still emotional, but I’m very grateful to this country. My grandfather escaped the Holocaust in February of 1940, escaped Europe and what would become the Holocaust in February of 1940. That’s really late to get out of Europe. This country isn’t perfect. At times, it’s treated my family poorly, as I tell in the introduction of my book, the story of my great-grandfather getting fired from his job because of his nationality. So I get this country has real, real flaws. But there’s a reason that so many people around the world want to live here, because every country has flaws and for a long time, this country has really delivered a good life to a lot of people. And when I see the ways in which we are off track, it deeply saddens me, it worries me. And I also think it doesn’t have to be.
My conclusion is strangely optimistic for a book that talks about how threatened the American dream is, and that’s because I basically still believe in the power of grassroots politics to change this country. The labor movement did it, the Civil Rights movement did it, the Women’s Rights Movement did it, and in the 21st century, the movement for marriage equality and the gay rights movement did it. It’s happened repeatedly over the last century. And so I continue to believe that a grassroots movement dedicated to producing increasing living standards for most Americans has the potential to succeed.
Nick Hanauer:
Fantastic answer. Well, thank you so much for being with us. Terrific conversation.
David Leonhardt:
I really appreciate it. Thanks for the great questions.
Goldy:
Thanks for your work.
David Leonhardt:
Thank you.
Nick Hanauer:
So I love that conversation, Goldy, he’s such an interesting guy, but I don’t think he’s a boomer.
Goldy:
No. No. I have to apologize. I was responding to the title of the book, Ours Was the Shining Future. That is a very boomer attitude. But I have to say, and I’m sensitive to this… No, he said he was what, 51. So he’s an Xer. And I’m sensitive because as you know, Nick, I am a late boomer, and I’ve always objected. I like to say that I’m transgenerational. I’m an Xer trapped inside the body of a boomer because my cultural me you is more ex. Whereas Nick, I think you’re definitely squarely a boomer.
Nick Hanauer:
Thank you.
Goldy:
Yeah. So that’s an insult he didn’t deserve.
Nick Hanauer:
But anyway, what I think is so interesting and so hard to disentangle is the interaction between academic economics and the forces of evil that wanted to overturn that mid-century consensus that was just working so well for everybody. Of course, it’s impossible to disentangle that stuff ultimately. But it’s such an interesting interplay. And one of the things that I so wonder is the cause and effect. I mean, how many academic economists invented ideas to conform with that new social consensus that we should jettison that New Deal deal and move in another way?
Goldy:
It’s really important, that observation, because he talks about, he makes a point in the book about how there was this shift of norms within the business community that accepted that there was some ratio of CEO pay to the pay of the average worker beyond which was obscene, that the Eisenhower administration, filled as it was with CEOs, the top marginal income tax rate only dropped from 93% to 91%. That there were these norms that developed, partially in defense of capitalism, because remember, we had just fought that war against fascism in Germany and Japan, and now we were in this Cold War with the Soviet Union and there was this sense that our whole system, what David calls democratic capitalism, was that risk here, and that the only way for it to survive would be to grow wages and living standards substantially compared to the alternative. And so that was part of the compromise that was made.
But when we talk about these norms, and we’ve talked about this before on the show, Nick, that there are these studies that show that getting an education in economics makes you more selfish.
Nick Hanauer:
Yeah, yeah, yeah. And there’s a good reason for that is that it’s self-justifying, right?
Goldy:
Right.
Nick Hanauer:
The story of orthodox economics is the more selfish you are, the more value you create in the world.
Goldy:
And so a lot of this norm creation is coming out of academia. We are teaching students, when you take that Econ 101, that introductory course, you tend to come out of it more selfish because they teach you that that’s the way the economy works. It’s good for the economy. It’s the invisible hand. It’s your self-interest ends up always working on behalf of the public good. And it’s not true. It’s a myth. It’s a story we tell ourselves. And again, that’s why books like this I think are important in that they help show the story for what it is, just a myth that it was this way and then it wasn’t this way, and everybody prospered and now it’s this way again. And we have a risk that the whole thing might fall apart.
Nick Hanauer:
Yeah. Yes, indeed. Yes, indeed. But anyway, really cool book. Links to it in the show notes. And we should also put a link to David’s really interesting piece on the difference between Republican and Democratic administrations in terms of economic performance.
Goldy:
And again, you’ll find those links in the show notes. The book is Ours Was the Shining Future. The story of the American Dream.
Speaker 4:
Pitchfork Economics is produced by Civic Ventures. If you like the show, make sure to subscribe, rate and review us wherever you get your podcasts. Find us on Twitter and Facebook at Civic Action and Nick Hanauer, follow our writing on Medium at Civic Skunk Works, and 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.