Callum Williams from The Economist predicts what we can expect from the economy in the coming months based on past periods of massive non-financial disruption, including past pandemics and major world wars.

Callum Williams is a senior economics writer at The Economist.

Twitter: @econcallum

What history tells you about post-pandemic booms: https://www.economist.com/finance-and-economics/2021/04/29/what-history-tells-you-about-post-pandemic-booms

Website: https://pitchforkeconomics.com/

Twitter: @PitchforkEcon

Instagram: @pitchforkeconomics

Nick’s twitter: @NickHanauer

 

David Goldstein:

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We’re getting a clearer idea of what the post-pandemic American economy might look like.

Nick Hanauer:

Based on history, there’ll be some good things and there may be some bad things too.

Callum Williams:

These pandemics and wars and that sort of thing force people to reevaluate their lives in lots of ways, and make them realize that actually life is quite short and precious, and maybe gives them a sense of, “Actually, I’m going to try and do something really amazing.”

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. So Nick, guess what I did the other day?

Nick Hanauer:

Something terrible and depressing. I don’t know. What?

David Goldstein:

Counter to character, no, I went to a bar. I had a beer in a public place and it was glorious. You know what that means, at least for me?

Nick Hanauer:

You can get drunk again. The pandemic is over. I don’t know.

David Goldstein:

The pandemic is over. That’s what it is.

Nick Hanauer:

Okay.

David Goldstein:

I’m too old and inhibited to get drunk, but I certainly am able to go out in public. I’ve gone to stores. I wear my mask indoors, but outdoors, there’s no more mask wearing. It feels like, for me, things are getting back to normal. You can see that happening across the economy.

Nick Hanauer:

Yeah, for sure.

David Goldstein:

At least in the United States, the pandemic is coming to a close. At the very beginning of this pandemic, we had several episodes about what this was going to mean for the economy. Now that it’s coming to a close, we’ve seen how the years played out. We’re getting a clear idea of what was temporary, what changes might permanent and what the future the post-pandemic American economy might look like.

Nick Hanauer:

That’s right. It will be hard to know for certain in the near term, but today we get to talk to somebody who’s thought about it deeply and more importantly done a bunch of research on what happened the last time. Callum Williams is a senior economics writer at the Economist. He’s also the author of The Classical School, a book about the history of economic thought. It turns out that there have been other pandemics, smallpox, Spanish flu, Black Death, cholera. Nature does its business over the years, and what happens afterwards is a matter of record. It’ll be really interesting to talk to Callum about it. He’s written a really interesting article about what he thinks happened the last time. At least based on history, there’ll be some good things and there may be some bad things too.

David Goldstein:

I mean, we’re hearing projections of 6% GDP growth this year, which would be four points higher than the pre-pandemic trend. That would be amazing. We saw something like this in the Roaring Twenties after the Spanish flu in the first World War. Unfortunately, we’ve also seen civil wars and revolutions after past pandemics.

Nick Hanauer:

That’s right. Yeah. The way in which a pandemic upends the norms and traditions and the patterns of society, again, where everything falls out afterwards, a bunch of things can be better. Certainly, in history, one of the things that’s happened is that for a variety of reasons, labor has gotten stronger. In many cases, innovation has increased, but also civil unrest and revolutions and all the more yucky things that you would prefer to avoid. And so, with that, let’s talk to Callum.

Callum Williams:

My name is Callum Williams. I’m a writer about economics for the Economists. I cover a bunch of different things, at the moment focusing a lot, as you’d imagine, on what the world looks like as it emerges slowly, but hopefully surely from lockdowns into a personal down future. So that’s what I’m working on at the moment.

Nick Hanauer:

Yeah. You wrote this really interesting article, where you look back at periods of massive non-financial disruption, smallpox, Spanish, flu, Black Death, et cetera. So, what does the record suggest?

Callum Williams:

Yeah. So, a bunch of things. So yeah, thanks for distinguishing non-financial disruption, because this is not about banking crises and financial crises, and that kind of thing. This is basically about pandemics and wars, but mainly pandemics, actually. As you’d expect, they have a bunch of different impacts, but the best way to think about it is that they come into three categories, I guess. One is to do with how people spend their money. One is to do with how businesses change how they’re working. And then the third one is to do with the political ramifications, which tend to echo down the generations for many years to come after the pandemic has ended. The idea about this article was to give readers a sense of what to expect over the next few years.

Nick Hanauer:

Based on what you’ve learned, what are your predictions about what will come?

David Goldstein:

Or what might come?

Nick Hanauer:

Yeah.

David Goldstein:

What are the possible futures that could come, the good, bad, ugly?

Callum Williams:

Okay. I mean, maybe the good one is what people do with their money after the pandemic has ended. So, as everyone knows, what’s happened, say, in the U.S. over the past year is that people have been trapped at home, haven’t been able to go out and spend. A lot of people have also received checks from the government and other sorts of government assistance. Not everyone has been able to build up their savings. Absolutely not. But on average, the average American household has built up their savings by quite a lot actually. If you basically look at bank balances, they’ve got quite significantly, but this is not the first time that something like this has happened. So if you go back and look, for instance, what happened during World War I and World War II in the U.S., particularly World War II when there was a lot of rationing in place and people were actually forbidden from buying certain things. So for instance, the car industry basically completely shut down in World War II.

I think if I remember correctly in 1943 or maybe 1942, the entire U.S. car industry produced about 40 cars. So they’re just simply weren’t things to buy. And so, what you then got was that the war ended, the pandemic ended, and people had more money in their bank accounts than they did at the start of the pandemic. And so, they have this tremendous sense of positivity about the world. Things are going to get better. And so, the question is what do people do with their money? The evidence suggests that there does tend to be a bit of a spending boom, and which is great. It’s great for the global economic recovery, and it’s great for putting people back into work, obviously, who were still out and there are many millions of people who are still out of work.

I think the thing that I was a bit surprised to discover there from looking at the historical evidence is that people at the time didn’t really feel as though they were having as wonderful a time as you might think. So, for instance, if you look at the Spanish flu in the U.S. in the late 1910s, Spanish flu ends. People are actually aware that it ended, but the historical evidence suggests that people still feel a bit scared of infection. They feel quite tired. They feel a bit worn out with the death and destruction that’s been surrounding them for the past little while. So, there’s an amazing PhD thesis, which looks at America during the Spanish flu and reports on Time Square in 1920, which was the first New Year’s Eve when even the threat of infection had decisively passed. It didn’t actually feel like much of a party town. So, people basically weren’t out doing anything. They were just at home because they felt a little bit scared.

Nick Hanauer:

People were still scared.

Callum Williams:

Yeah, exactly.

Nick Hanauer:

Still scared. Yeah.

Callum Williams:

Even after the Black Death, which was the biggest pandemic of all, if you read blogs about the Black Death, often there’s this assumption that the end of the Black Death came and people were just went completely nuts and had these enormous medieval parties and stuff. Maybe there was a bit of that, but unfortunately it wasn’t quite as raw courses we might’ve hoped. So, that’s the best thing.

Nick Hanauer:

I mean, of course, in the moment, you don’t know it’s over because you’ve been told it’s been over for a long time, right?

Callum Williams:

Exactly. That would be right.

Nick Hanauer:

So, you can only know it was over looking back 20 years, not in-

Callum Williams:

That’s exactly right.

Nick Hanauer:

… that moment at all.

David Goldstein:

Right. So, you find that people do spend more after the disruption, but they don’t spend everything they saved all at once.

Callum Williams:

Exactly. So for instance, in after World War II, the evidence suggests that America or Americans spend about 20% of their savings that accumulated during World War II. Now, because they’d accumulated so much, that was a huge pot of money that was being injected into the U.S. economy. So it was really good for the economy, right? There’s no doubt about it, but they absolutely weren’t just going out and blowing it all on one massive night out or big holiday.

Nick Hanauer:

Yeah. The other thing that the research tends to reveal is that on the supply side of the economy, business dynamics may change too. In particular, it seems like people are willing to do things in new ways and take risks that they might’ve not once taken.

Callum Williams:

Yeah, it is. I think that is right. So, something that’s been happening in the U.S. in particular in the past year, but not just in the U.S. is that the number of new businesses being created. Entrepreneurship and innovation of new businesses, startups, and all that stuff has been booming. More and more people are saying, “I’m going to start my own business and employ people. So, I’m going to be the owner of the business.” The way to think about America is actually for a long time, the rate of entrepreneurship among the population in the U.S. was actually going down. We hear all this stuff about startups and about Silicon valley, blah, blah, blah, but actually, none of that’s true. Rate of innovation has been going down for about 40 years. But then COVID came, it’s going to back up again. Again, if you look back at the historical record, what you find is that this is actually a pattern you see again and again.

So again, to talk about the Spanish flu example in the U.S., in 1918 to 1920, it’s quite amazing, the acceleration you get after 1920 of new businesses being created. I think this is basically because people sort of… These pandemics and wars and that sort of thing force people to reevaluate their lives in lots of ways, and make them realize that actually life is quite short and precious, and maybe gives them a sense of, “Actually, I’m going to grab this by the scruff of the neck and I’m going to try and do something really amazing,” or, this is definitely true at the moment, the pandemic creates lots of new needs and demands. So at the moment, we’ve got a lot more demand for takeout, really cool takeout stuff, because people are still nervous about dining out. So that has led to lots more startups in that space to meet at the moment. So, it’s partly that.

David Goldstein:

I suppose, because of the increased savings, there’s a lot of entrepreneurs who now have access to a little bit of capital they didn’t have before the pandemic.

Callum Williams:

Totally right. Yeah, that’s really important as well, I think. Yeah.

Nick Hanauer:

Yeah. In my circles, talking to people who run businesses, the number one question that people are asking is what the impact will be in the future, given the way in which the pandemic accelerated and made possible really remote work. The knock on effects of a world in which people to a much lower degree need to get up in the morning, drive to work, spend eight hours or 10 hours in an office or in a cubicle, and then drive home to get all their stuff done, the implications of that changing are really broad reaching and will create a huge amount of opportunities for different kinds of economic activity.

Callum Williams:

Yeah, totally.

Nick Hanauer:

Some things will get less valuable and other things will get way more valuable and so on and so forth.

Callum Williams:

Yeah, it’s a huge change, for sure.

David Goldstein:

Are you familiar with Walter Scheidel’s book, The Great Leveler?

Callum Williams:

Yeah.

David Goldstein:

Yeah. I think, Nick, actually, he was on our very first episode, if I remember correctly.

Nick Hanauer:

That’s right. That’s right. That’s right.

Callum Williams:

That’s very cool.

David Goldstein:

He points out that every period of economic leveling, closing that inequality gap has taken place due to essentially one of the four horsemen of the apocalypse. Pandemics being one of them. It’s interesting. I’ve been looking at the reaction of some business people and politicians, the Republican states that are revoking the generous unemployment benefits, people complaining that people are unwilling to go back to work or that they’re demanding wages that are too high. It reminded me of historically after the Black Death, the English parliament. I think it was called the Statute of Labourers, where they actually passed a law mandating that people accept the wages at the rates that existed prior to the Black Death.

Callum Williams:

Right. The maximum wage. Yeah, exactly.

Nick Hanauer:

Right. How’d that work out?

Callum Williams:

Well, I mean, of course, there was also a massive rebellion in, I think, 1381, so a few years after the Black Death had ended. So yeah, you’re completely right. I mean, this was basically the result of the fact that there were fewer workers around after the Black Death. And so, if someone was treating you badly, it was a bit easier to get up and say, “Actually, I’m going to go work for someone else.” What you see after the Black Death in England particularly, but not just there is that people at the very bottom of English society have a bit more power and this culminates in this massive rebellion in a few years later. But if you look generally at post-pandemics and wars, what you find is that wages, average wages, they go up. They go up quite noticeably actually. I think that speaks to something, I think, potentially why you refer to this [inaudible 00:16:29] thing, because I think there is a sense after the pandemic ends that certain people, and it really is basically always the people who have the least money and the least political power have suffered the most during that period.

So, there’s a political world to try and sort it out. Another great example of this is after the big cholera outbreak in the early 1830s in Paris. This is part of the story of Les Misérables, which, of course, everyone has either read or seen or know something about, which was that there was this huge outbreak in Paris and the people that died in huge numbers were all the poor, and the rich had fled to that country homes, just like people fled New York and San Francisco a year ago. As a result, when the pandemic passed, there was a sense of people said, “Okay. That was really unfair. We need to try and work to fight these inequalities.”

David Goldstein:

Right. So that brings us to the potential downside of the pandemic. On the upside, we could see a post-pandemic world with a nice little economic boom lit, more entrepreneurship, higher wages, particularly at the low end of the wage scale. On the downside, history tells us we could see civil war?

Callum Williams:

Yeah. I mean, I guess the-

Nick Hanauer:

Other than that, it’s going to be great.

Callum Williams:

Yeah. Yeah. Yeah. I mean, look, obviously not all protest is bad, right? So, it’s not necessarily a downside. It depends where you are and where your political leanings are, I guess, and where you are in that fight. But yeah, you’re completely right. This is something that the IMF, the International Monetary Fund, has done quite a lot of work on, actually, which basically looks at much more recent pandemics, so like Zika virus in Brazil and Ebola, which was in 2013, ’14, and SARS and things like that. They have these measures of political instability and civil unrest, so things like how many protests there are per year in a given country. They find that these pandemic events tend to accelerate or to increase those kinds of events taking place. The increase is particularly large in societies that are more unequal.

So society that goes into a pandemic that is fairly equitable tend to not to have a big explosion of civil unrest afterwards, but a society that goes into it very unequal tends to have a big one. One of the interesting findings in one of the IMF papers is that civil unrest tends to peak about two years after the pandemic ends and quite what ends mean is a bit subjective, obviously. But I mean, in the U.S. obviously you’ve had your lowest cases now for a very long time on a Monday or Tuesday. So, maybe it’s near to ending. So I suppose in June 2023, we might see some sort of crazy thing happening. Who knows?

David Goldstein:

Right. So, 2020, we had those huge Black Lives Matters protests around the country with the police riots and response. That’s how I’ll characterize it. We saw the January 6 insurrection at attempt to actually overthrow the government of the United States, but you’re telling me the worst is two years out.

Callum Williams:

Well, I guess I am. I mean, I know these sociologists and economists, we talked about this for ages, but I personally would be definitely convinced by the idea that perhaps the Black Lives Matter protests and the storming of the Capitol might not ever happened hadn’t [inaudible 00:20:15] pandemic because so many things were just completely influx. You have to remember that back in June 2020, when all of the protests started, the U.S. unemployment rate was like 20% and 50, 20%. I mean, that’s just insanely high. The sense of injustice and inequality at that point was really profound. So hopefully, there’s not going to be more to come, but the historical record would suggest that that is quite [crosstalk 00:20:47].

David Goldstein:

Okay.

Nick Hanauer:

I think that one of the important psychological points that you made in this piece you wrote is that after a bunch of pandemic death, other risks seem moderate by comparison, right?

Callum Williams:

Yeah. Yeah.

Nick Hanauer:

So if you’re in a bad circumstance, you may feel more compelled, more comfortable in pressing for new arrangements.

Callum Williams:

Yeah, 100% percent. Yeah. Yeah. So the classic example of that is, again… I mean, the Black Death is the easy example, I suppose, because it was so big. All the effects it had was so large that it was easy to spot them. But yeah, as you say, so some historians have drawn this interesting link between the end of the Black Death and the start of European imperialism and colonialism, because… And they do. They do coincide quite well actually. There was obviously other stuff going on as well. But I think that was down to this idea that traveling on a ship in 1340 was quite a risky activity because the chance of dying from disease was really high or chance of sinking was really high. But then when a plague comes along and all your friends are dying anyway, anything I planned to do are chances actually, because this can make me a lot of money. If I stay at home, I’ll probably just die anyway. So, why not go sailing on the world? So yeah, you’re pretty right.

David Goldstein:

There’s also economic historians who suggest that the Black Death played a big role in triggering the changes that led to the rise of market capitalism.

Callum Williams:

Absolutely. Yeah, in lots of ways. So we’ve talked about the power of work, labor, workers being somewhat higher than it was. So that’s really important. I think the other thing, which is really essential to the rise of capitalism in Europe is the printing press, because it enables information to be disseminated far more quickly and for cohesive markets to form in Europe. Again, that is also something which a lot of historians have argued was accelerated by the Black Death. Because if you wanted to reproduce something before the Black Death, you could just get a bunch of people to sit there and to copy it out, monks or whatever, whatever they did back then. But then, of course, all the monks were that by 1360, so you didn’t have any money left to copy the stuff out. So, that was much more of a need to find other ways of copying things out. And so, you have the Gutenberg printing press that emerged. It’s not really that long after the end of the Black Death. So, there could be some parallels there too, I think, for today.

David Goldstein:

So, automation to the rescue. So that brings me back to the current economic recovery. Are we seeing a surge in labor-saving technologies as a result of this pandemic, either due to the unwillingness of people to take these low-wage jobs or just simply, man, machines don’t get sick.

Callum Williams:

This is a bit of a bugbear of mine generally with both economists and journalists who write about economics, because they love to argue that machines are taking over. There’s so many of it. You’ve probably read about a million yourself, where they say, “By 2027, five in 10 jobs will be automated, blah, blah, blah.” This is going to overdrive during the pandemic for the reasons you described and perhaps a good reason because there is historical evidence of this. So, to work out whether this is actually happening or not is something that very few people, for reasons I don’t really know that is bother to look at, they just tell you that it’s happening. But actually, the evidence that it is happening, at least at the moment, is quite limited.

So even in a place like Australia, where you would think that they would be ahead of everyone else, because they’ve, at least for now, beaten COVID, they’re in the post-COVID future, there’s no evidence really that the kind of jobs that you would expect to go if the robots took over have gone. So for instance, there’s as many people doing manual data entry as they were before, which is exactly the kind of job that you’d expect the robots take over, but it’s the same in the U.S. So, to answer your question, not yet, but that might change.

Nick Hanauer:

Yeah. I mean, these arguments just never make any sense to me at all. I mean, we have gone through both the industrial revolution and the computer revolution of the last a hundred odd years and gone from a planet that had a billion people on it to one that has almost eight billion people on it, and almost everybody is still employed, right? [crosstalk 00:25:28].

Callum Williams:

It was. Yeah, totally. But I mean, before the pandemic, there were more people than ever in work.

Nick Hanauer:

Yeah. This idea that the robots are coming to take our jobs… I mean, if a weaving machine is not a robot that can take a lot of jobs, I don’t know what is. If a backhoe that can dig holes and ditches is not a robot taking a lot of jobs, I don’t know what it is, but we continue to have lots of people, virtually every one busy doing something, despite the fact that we have all this automation. I just think this doomsaying is just ridiculous. Of course, there can be disruptions in particular fields and industries or in particular tasks, but I am 100% with you. Callum, I think the reason that this gets so much play in the press is that the anecdotes are easy to find, right? You can always find it, just like you can always find a business that will claim that they closed because we raised the minimum wage to $15 an hour, right? You can always find some business to say that, “Well, we bought these machines because workers were hard to find.”

David Goldstein:

Because they wanted a living wage.

Nick Hanauer:

Yeah.

David Goldstein:

Robots don’t demand a living wage.

Nick Hanauer:

Yeah.

Callum Williams:

No, they don’t.

David Goldstein:

Okay. So we’re not seeing the robots coming to take all of our jobs. What are we seeing in the recovery right now?

Callum Williams:

So, there’s some boosts that got going on, which is that… I mean, let’s not go by so fast, actually. So all the weird stuff is that you still have a lot of people… Let’s talk about U.S. You still have about eight million people who won’t work before the pandemic who were not in work now. Way of thing is that at the same time as that, you have many companies, more companies than ever before saying that they can’t fill vacancies. Actually, if you look at the number of vacancies in the U.S. economy, there have never been more unfilled vacancies now. Not now, sorry. So, you got this weird thing, loads people out of work, but companies complaining they can’t fill jobs. So that has a bunch of explanations, I think, but no one really quite knows what was going on. So, that’s weird.

You also have this other weird thing about this shortage of goods. So companies are also complaining that getting inventory into their shops or whatever is really hard. If you look at inventory levels in U.S. retailers, they’ve never been so low. Actually, the amount of stuff they’re holding in the back of the shop to sell on the shelves has never been so low, which is completely nuts. And that, again, has a bunch of explanations, which is… I think it’s a bit easier to say what’s going on there. And then on the good stuff, so what you had before the pandemic was about, well, quite a few years, actually, of big companies cutting back on investing, investing in new factories, investing in new business techniques, investing in R&D and all that sort of stuff, and instead they are much more likely to give their money to shareholders in the form of buybacks and dividends, whatever.

What you’ve seen recently is that that appears to be changing. Actually, companies are now embarking on this once-in-a-generation investment boom, which is basically great. Again, not quite sure why it’s happening, but they’re basically investing in loads of things. So, global sales of computers are going completely nuts. People are buying loads of machines and investing in factories and all that sort of stuff. I think this is great because basically the reason why were so much richer today than we were a hundred years ago is because businesses invested in new technologies. And so, that’s a weird thing that I don’t think anyone really saw coming with the pandemic, but that’s also happening. So, there’s a lot going on at the moment, basically.

Nick Hanauer:

In my opinion, something that will accelerate that investment boom will be significantly higher corporate taxes and higher taxes on dividends and so on and so forth is because the low tax regime neoliberal view was that the lower taxes are, the more investment will be made, and that turns out to be exactly the opposite of true. The lower taxes are, the easier it is for business owners to take money out of the businesses. The higher the taxes are, the more investment looks like a better alternative in the near term, rather than paying the high tax rates. And so, that may be very helpful, too.

Callum Williams:

Yeah, that’s interesting.

David Goldstein:

Do you think this is the result of a change in attitudes, a change in thinking, or just like CEOs finally had the opportunity to do maybe what they wanted to. I’m thinking a case of big companies like Ford that eliminated their dividend at the peak of the crisis for obvious reasons. The economy had cratered. Rather than reinstating their dividend, they’ve recently announced that they’re going to invest like $40 billion in electrifying their lineup. That seems like a net plus in many ways. I’m wondering whether could Ford have made that decision without the pandemic, or would they just been slammed by Wall Street for-

Callum Williams:

That’s a great point, Goldy.

David Goldstein:

… eliminating a dividend?

Callum Williams:

Yeah, that’s really interesting. I mean, I think so. I mean, hard to be sure, obviously, but I do think that the amazing innovation of the past year, obviously at vaccines, but there’s so many other things as well that we just take for granted now, but we didn’t really do a year ago. So many amazing innovations are taking place. Maybe it has reminded us that like, when we put our minds to something and try and get something really cool done, we can actually do it. Isn’t that amazing? And so, investing and stuff actually does pay off and maybe we’ve forgotten that somehow in the years leading up to the pandemic. So yeah, I’m totally with you on that cultural explanation.

Nick Hanauer:

So, we often ask this question. We call it the benevolent dictator question. If it was up to you, if you were in charge of the West, what would you be doing to help the West recover from this pandemic and embrace the good stuff and avoid the bad stuff?

Callum Williams:

Well, I mean, I would’ve said this before the pandemic, to be honest. I’m hopefully going to write a book about this question. One of the things that I think is underappreciated still is the question of the damage to every aspect of life, the current housing market, not just in the U.S. but in other countries as well does. I really do believe that of all the policies that any government could implement that was seeking to effect progressive change, sorting out the housing market, building more houses, improving tenants rights, improving the quality public housing is just the number one thing by such a long way, but weirdly it’s not talked about that much. And so, that needs to change.

David Goldstein:

We have one final question before we let you go, which is why do you do this work?

Callum Williams:

I mean, it’s probably just because it’s fun. It’s intellectually very satisfying. I think the media has a really important role to play. I often feel the media gets a very bad rep. Most of the time that’s completely unjustified and some of the time, it is justified. I think that someone has to write pieces that are true and tell it as it is. That’s not a very good answer, but that’s probably as good as I could give.

Nick Hanauer:

Well, Callum, thank you so much for being with us. This is a great, interesting conversation. We look forward to chatting with you more.

Callum Williams:

Thank you so much for-

Nick Hanauer:

Yeah. So Goldy, do you think will the COVID pandemic make people less or more averse to inequality, less willing to put up with bad governance?

David Goldstein:

You know what, I think it’s one or the other. I think we’re seeing it already that I think a lot of workers have reevaluated what they’re willing to accept as a fair wage. I think that’s one of the reasons why you’re seeing this upward pressure on wages. I think a lot of economists and policy makers are coming to terms with the very apparent fact that our labor market is dysfunctional. Callum raised that weird situation, where you have eight million people out of work at the same time that you have employers saying that they have all these jobs they can’t fill. Orthodox economics tells us that’s impossible, that the labor market, well, in that situation something’s got to give. Again, I think was it Heidi Shierholz on a recent episode, who said that whenever they say that they can’t fill a job, an employer says, “We can’t fill a job,” what they mean is we can’t fill a job at this particular wage, at the wage we want to pay.

Nick Hanauer:

Yeah. To be clear, I think that it turns out that it is difficult, costly, and time consuming to hire people. It just is under the best-

David Goldstein:

It is.

Nick Hanauer:

… of circumstances. When American companies laid off or fired all those millions and millions of workers in the worst parts of the pandemic, they should have understood that getting those workers back was going to take a lot longer than sending out the email saying, “You’re out of here.” Right?

David Goldstein:

Right.

Nick Hanauer:

It takes one minute to fire somebody and sometimes six months to get somebody to come back to work. There’s just a lot of friction in the labor market. It’s finding good to say there are all these jobs available, but then the right workers have to find the right jobs and the right places. And it all has to settle out and it just will take time. And so, a lot of the complaining is simply a reflection of the time lag and the natural inclination of employers to want to get to bring people back at some exploitive wage, and it may not be possible anymore.

David Goldstein:

It does suggest perhaps that we do unemployment wrong, that we should have put more money into preventing people from being laid off than to pay them once they’re laid off, because of those costs of bringing people back onto payroll, everybody might’ve been better off from that. Also, had we done that, we might not have some of the supply crunch that we have right now, the shortages-

Nick Hanauer:

Obviously.

David Goldstein:

… in certain goods. So I think on the positive side and you’re seeing this from the Biden administration as well, there’s more emphasis on raising wages, on protecting the rights of workers and the interests of workers. Something we haven’t seen a lot of the past 40 years.

Nick Hanauer:

That’s right.

David Goldstein:

On the other hand, I still worry about the future politically. I see the very real possibility of political unrest, political violence that January 6 insurrection being just a practice for the bigger insurrection from the right that comes as the Trumpist Republican party realizes that the only way they can hold power in a democracy is to destroy it. So I think if we don’t improve a lot of lives very quickly-

Nick Hanauer:

Yeah, there will be trouble.

David Goldstein:

… there will be a lot of trouble and we risk undermining the whole thing.

Nick Hanauer:

I agree. Let’s hope we’re wrong.

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 at Civic Skunk Works, and peek behind the podcast scenes on Instagram @PitchforkEconomics. As always, from our team at Civic Ventures, thanks for listening. See you next week.