Jessyn Farrell:

The incoming Biden administration is really going to be inheriting some massive challenges.

Idrees Kahloon:

The immediate challenge that Biden faces, of course, is all tied to the COVID-19 epidemic and its economic fallout. He’s going to have to get right to work.

Nick Hanauer:

Obviously, Democrats have a lot of challenges, but I think the biggest, the central challenge, is to prove to the majority of citizens that they can change this country economically for the better.

Announcer:

From the home offices of Civic Ventures in downtown Seattle, this is Pitchfork Economics with Nick Hanauer, the best place to get the truth about who gets what and why.

Nick Hanauer:

I’m Nick Hanauer, founder of Civic Ventures.

Jessyn Farrell:

I’m Jessyn Farrell and I’m Senior Vice President at Civic Ventures and a former state legislator.

Nick Hanauer:

So Jessyn, hopefully tomorrow is Inauguration Day.

Jessyn Farrell:

Yeah, we’re hoping.

Nick Hanauer:

Fingers crossed that the United States of America continues to exist till tomorrow and beyond. But the Biden administration will take over from the Trump administration and get underway. We’ve been talking about what they should do, including many past podcast guests who are now part of that administration.

Jessyn Farrell:

Yep. And on Friday we’ll release a bonus episode compiling some of our best moments with them, so look out for that.

Nick Hanauer:

So today we’re going to interview a very smart reporter, Idrees Kahloon, who is the Washington correspondent for The Economist, and he covers U.S. policy, poverty and other things, to find out how a very, how should you put it, conventional institution views what the Biden administration should be doing. It’ll be a very interesting conversation.

Jessyn Farrell:

I think the thing that I’m interested in is how the voice of consensus economics, which The Economist often represents, is going to be weighing in on and framing really unprecedented economic times, right? The economy that Joe Biden is going to be inheriting is a mess. You have 10.7 million people who are officially unemployed. This is a November number so it’s probably changed. Of course, we all have a strong critique of what the unemployment number really represents. It’s probably a pretty significant under count. Millions have been experiencing cuts in pay and hours. There are folks who are continuing to face an eviction crisis. There are 3.3 million unemployed, but misclassified as employed or not in the labor force. So the numbers are really, really daunting. The way the COVID economy is being felt by individuals is really, really challenging. So the incoming Biden administration is really going to be inheriting some massive challenges.

Nick Hanauer:

And just to be clear, what makes this interview interesting is that the neoliberal orthodoxy that The Economist and places like it have represented, if you take that orthodoxy seriously, doesn’t create a lot of room to do anything about these problems other than to just cut services, because budget deficits. The good news is that orthodoxy is shifting and our guest has given voice to that shifting orthodoxy. But it’ll just be fun to hear about how they’re thinking about these problems and what to do about them.

Idrees Kahloon:

My name’s Idrees Kahloon. I’m the Washington correspondent for The Economist. Right now I’m working on impeachment and that sort of stuff, but who isn’t?

Nick Hanauer:

That’s awesome. Well, we’re super excited to have you on the show because The Economist is obviously a loud and important voice around issues of economics and politics. You have been writing a lot about the challenges that the incoming President Biden faces. So we’d just love for you to talk a little bit initially about how you see that and how you hope that it will unfold.

Idrees Kahloon:

The immediate challenge that Biden faces, of course, is all tied to the COVID-19 epidemic and its economic fallout. Even now, there are 10 million fewer people who are working than were at the start of the pandemic. If you look at measures of things like the number of Americans who say that they’re having to go without food, that’s something like one in eight American adults are saying things like that. A substantial portion of American renters are saying that they’re unable to pay for next month’s rent. Containing the fallout of that is the immediate challenge that President Biden is going to face. Before he got elected, he had a very ambitious agenda that aimed to reform everything from climate policy to tax policy. Getting that through a very narrowly-divided Congress is also going to be a challenge. But those are the big things that are on his slate and he’s going to have to get right to work if he wants to get this stuff accomplished.

Jessyn Farrell:

One of the things The Economist mentioned as a first challenge was also persuading Congress to keep the purse strings loose until the vaccine has brought about a full reopening. How do you think that looks, especially in light of the fact that a recent stimulus was passed on top of the CARES Act?

Idrees Kahloon:

You always see with Republicans in Congress more attention to deficits and debt when the sitting president is a Democrat. I imagine you’ll see… I tried to put that delicately. I imagine that you will see a resuscitated worry about those things this time around. But we are also living in a time of fairly low interest rates. It seems like debt and deficit have been able to increase without very much risk of increasing inflation. If those numbers start to move, then obviously that changes the context. But Biden himself has already said that there needs to be another round of stimulus. That’s probably going to be the first thing, the first big legislative package that he works on. He also has big plans for infrastructure that I imagine he’s going to try to get through. I don’t think he’s going to be personally daunted by the levels of debt and deficit that we’ve seen grow during the COVID-19 epidemic, but also just throughout the Trump presidency and before that.

Nick Hanauer:

Yeah, for sure. We often like to point out, we are doing an experiment with MMT and have since Reagan.

Idrees Kahloon:

Yeah, especially in the last [crosstalk 00:06:38].

Nick Hanauer:

Yeah. So which early signs out of Biden’s approach do you take hope in? And which make you nervous or wary? Obviously, you don’t know exactly what he’s going to do, but there have been strong signals.

Idrees Kahloon:

The immediate challenges are the economic ones, the fact that still so many Americans out of work, still so many are having trouble affording food and affording housing. What gives me some hope is that it seems that Biden’s initial focus legislatively is going to be on precisely those questions and trying to do something about them. Those are the kinds of measures that you can see some Republicans going along with. Even though Democrats have narrow control of the Senate, they’re going to need some Republican support to do any of the big things that are on Biden’s agenda.

In terms of avoiding the gridlock that I think has characterized Washington, DC for the past decade, it’s important that you focus on things like that. It doesn’t seem like they’re going to spend their political capital on healthcare, first of all, which is a mistake that a lot of people think that not only the Obama administration did when they first came to Washington in ’08 and ’09, but also the Trump administration did when it’s first legislative priority was [inaudible 00:07:54] the ACA. That went, obviously, nowhere. They came into Washington with unified control of Congress and got very little done. The only thing they got done was the tax cuts, which are fairly…

Nick Hanauer:

Tax cuts for rich people.

Idrees Kahloon:

Yeah, I mean, their fairly standard Republican tax bill. It’s not particularly Trumpy if you think about the long lasting effects of Trump. I think they’re more how they live on within the Republican party itself, rather than an enduring policy shift as you might’ve pointed to with Reagan, for example.

Jessyn Farrell:

In addition to the pandemic, obviously major economic challenges coming from that, what other economic challenges are in front of the Biden administration?

Idrees Kahloon:

There’s the short-term challenge, which containing the epidemic presents and containing the fallout, making sure kids are going back to school, people have enough money to eat. Then there are the medium-term and even long-term challenges that Biden is going to deal with. The fact that the economy is shifting, that service sector industries are being disrupted by digitization and technologies is going to be something that he’s going to have to be thinking about. Also, the fact that climate change is real. Something big needs to be done about it.

American investment in clean energy is going to be a huge focus of the Biden administration. But it’s setting up America for what the economy will look like in 15 or even 20 years. He’s already pledged, for example, to decarbonize the electricity sector by 2035, to decarbonize the economy as a whole by 2050. Those are things that are probably going to happen and that’s planning for an economy that’s well ahead. So that’s going to be a big focus, I think, of theirs.

Nick Hanauer:

Our podcast is devoted to exploring economic issues in a pretty broad way. But in particular, is focused on pushing back on the orthodoxies which have in many ways created the mess that we’re in. I don’t want to put you in a super tough spot. But a lot of the neoliberal policies that have led to the extreme inequality that we are facing today have been given, they’ve been promoted by and given voice by not just The Economist, of course, but a lot of prominent fixtures in journalism like The Economist. What I’m interested in hearing about is how that orthodoxy is shifting within your organization or how you see it shifting more broadly and what that shift can do to create more space for reform.

Idrees Kahloon:

Our Editor-in-Chief wrote a long essay on this subject about two years ago on the occasion of our 175th anniversary. We’ve been around for a while. I’ve not been around for as long, but we’ve been around for a while, since 1843 when we published our first issue with a table of corn prices at the very front. That’s pretty much our bread and butter. I think that The Economist is a paper that has a very clear worldview. It’s one that values markets as a way of organizing society. But it’s also one that’s cognizant of market failures. I think within what’s changed, you can be one of the people who thinks of neo-liberalism as a pejorative and describe all the ills of modernity to neoliberalism. And that’s fine if you want to think about what the tenets are, I think, of let’s say, modern neo-liberalism.

I think it also encompasses things that we didn’t think as part and parcel of it. So I think it now encompasses something like a robust safety net and this idea that there needs to be compensation for people who are at the bottom of the income distribution. Things like unemployment insurance needs to be more efficiently managed, those sorts of things. There’s also, I think, a recognition that free and fair trade, which we’re very much a proponent of and I think that has a tremendous value for people, that it also can have consequences. I think we’ve seen that, at least, politically [inaudible 00:12:15] economically in America. I think that there’s a shift in our thinking of what can be encompassed within the framework of these overall ideas, which are not only economic in terms of our belief, that markets are generally pretty good at allocating capital and also transmitting information. It goes beyond that, as well.

Nick Hanauer:

Interesting. But do you see the orthodoxy shifting? I think it’s really important that we are mindful of the ways in which the orthodoxy is shifting, because that shift creates more room for political leaders and policymakers to do things which can actually make the world better. I wonder if you guys are thinking about that in a programmatic way.

Idrees Kahloon:

I think part of the difference that’s driving this is the way that economic research is conducted now. There is a neoclassical basis for the idea that an increase in wages will reduce supply. That falls from Econ 101. The way that we’ve updated that is we’ve gone out into the real world, our economists have, and examined, well, what happens when you increase the number of employees in Florida? That’s a famous study, or agricultural migrants. They see that there’s very little detectable effect. That has shifted, I think, our thinking on what minimum wage increases do. The fact that one thing that The Economist prizes is evidence-based policy. Everyone claims that they do. What we think is that when the evidence points you in a certain way, you should follow it, especially if it’s empirical, rigorous. We like randomized control trials for this reason. In my own work I’ve written quite a bit about how a child tax credit expansion, for example, could come close to having child poverty on its own, could have dramatic effects on the income segregation in America, which is going to be a huge problem, I think, for generations to come.

But the evidence that that contention lies on is a lot of the very good work that folks like Raj Chetty and other of his colleagues have been doing that demonstrate the importance of neighborhood-in-place to future outcomes. I think that there’s been a move from the neoclassical, okay, we drew a supply curve and demand curve and here’s what it implies and, therefore, that’s how the world works to a much more, the world is complicated. And when we observe these things, here’s what happens.

Jessyn Farrell:

The whole idea of a K-shaped recovery and the policies that have centered wealthier people in our society, whether it’s through tax cuts or home ownership, that kind of thing, and then the fact that there’s another really significant sector of society who have really borne the brunt of the COVID economic hardship. It’s really bifurcated in a lot of ways. That, to me, really gets at Nick’s point around a theory of growth and where growth really emanates from. Is it from a worker having adequate wages so that he or she can take care of his or her basic needs? Or is it through mechanisms that help stock prices and that kind of thing? I think that’s one of the questions that policy makers need to be wrestling with. I’m curious if The Economist sees this theory of growth question as one that’s really an important question to be wrestling with right now.

 drees Kahloon:

Yeah, absolutely. I think that it is. And I think we think that not only because of its economic implications, but also its political ones. I’ve written quite a bit about the disparities in recovery since COVID-19. The fact, again, that those statistics I said at the beginning about families in America that are having to go without food, not able to pay the rent, they’re disproportionately, if you look at the breakdowns by education or income, concentrated among people who have the least education. Concentrated among people who are not earning as much right now. It’s very much where all the harm is concentrated. I’ll add to that for children as well, the kinds of kids who are able to get to school who are likely to suffer the biggest learning losses are precisely non-white children. They’re poorer children and children who are already not going to the best schools. That’s, to me, a huge problem. It’s one that I’ve tried to focus our coverage on for that reason.

Not only in a humanitarian perspective, although I think that’s important to retain, but also because if you just care about things like aggregate consumption or long run productivity, or even these sort of abstract things, it still makes sense for you to focus on what’s happening, not only to the middle class, but also the bottom of the income distribution. That’s something that I’m quite focused on. We in our own coverage have been quite surprised almost, like everyone else, with how robust stock markets have been to all the shocks of COVID-19. That’s a puzzle. I don’t write for our financial pages. I work on our political side, but it’s something that we’ve wrestled with and just like everyone else have been amazed by. I’ve been trying to think about how exactly that’s coming out.

Jessyn Farrell:

Given those challenges that we have the stock market that continues to be fairly robust, but also that a lot people are really feeling pressure around rent and job loss and that the job loss is so unevenly felt, in particular with black men and women, women of color, what do you think then are the big ticket policies that the Biden administration should pursue to get in front of all of this?

Idrees Kahloon:

I can be glib and say that it’s almost easy because we know what’s causing this. We know that it’s the economic consequences of lockdown caused by COVID-19. We know that unless you are able to arrest the progress of the epidemic, then you won’t be able to start up an economic recovery fully. The first order of business is we’re still not great on tests, on contact tracing, on PPE even. Those are the very, very basics that we’ve been talking about for nine months in America. And in parts of America those are still not being done well.

Then there’s vaccine distribution, which right now is really, really sluggish. It needs to go a lot faster. The same problems that we saw at the beginning of the epidemic, where a decentralized public health infrastructure led to very slow starts and probably ended up worsening the epidemic are repeating now with the way that vaccines are going. That’s the first set of things you have to deal with. It’s very clear that things are not going to recover fully unless you deal with that.

The second bucket is, again, things that we know work. When the CARES Act passed, basically it’s just the economic stimulus side of it to cushion people while the economy gets back on track. We saw when the CARES Act passed in March that poverty actually declined fairly substantially, by 15 to 20%, depending on which measures you look at, despite the pandemic. The reason for that was again, not to be glib, if you give cash to poor people they become less poor. You saw that with basically the $600 unemployment top-ups that people were getting per week in addition to the $1,200 stimulus check. We saw what that did to poverty. We saw very clearly. We have a natural experiment on what happened. The economic suicide of it, which is also something that President Biden needs to look at, has to take from the very recent example.

Unemployment insurance, even after Congress did its most recent stimulus deal, is slated to, those benefits are slated to expire sometime in March. I don’t think we’re going to be beyond this in March. That’s going to be number one and number two, I think, the biggest priorities. They’re not especially hard to think about. They’re exactly what we should have been doing throughout this crisis. But those, I think, are the big ones that need to be taken on.

Nick Hanauer:

Can I ask you one final question? So what big ticket policies are a bridge too far for you? What could the Biden administration do that would be overreaching at this point?

Idrees Kahloon:

What I think matters is getting actual things done. I think, for example, on climate you clearly need to do a lot. I think healthcare needs to be a lot better. I would much prefer for something to be done than for nothing to be done. I think that the body of folks will be savvy in how they pursue it. But for example, proposing something like the Green New Deal, they’re not going to call it that ever, would mean they would be laughed out of Congress and nothing would happen. We’d go probably another four years with very little done on climate. If you go for what some people might consider as being too moderate or too milk toast, I think that Biden’s climate agenda is, at least as he laid out in the campaign, was fairly frozen. It’s getting those $2 trillion. A lot of that focused on clean energy jobs, funding research, those sorts of things that I could see getting through Congress that I think would make a huge difference.

Similarly, I think that Medicare for all is going to be a non-starter. They’re not going to propose it, but it would be a non-starter. It would mean that the fact that one in 10 American adults or thereabouts, their health insurance would continue. If you instead push on the levers that they are anticipating that they will push on, which are maybe reducing the Medicare age, trying to propose a public healthcare option, you can see those things actually happening. That would do a lot of good for the country. In terms of where I want the country to go, I think incremental moves that way that are actually accomplishable will get us pretty far. There’s a need for folks to always be pushing in one direction, because that’s how you move the moderates in the way that you want the country to go. But in terms of me personally and the things that I value, I value results and I could see some elements of the approach that they’ve outlined, working.

Nick Hanauer:

That’s awesome. Well, I think we are about at the end of our time and we always finish with this one question, which is why do you do this work?

Idrees Kahloon:

That’s a great question. I feel like journalism is not even a job sometimes. It’s everyone is interested in what is going on in the world around them. I feel incredibly lucky that I get to think about what is happening in the world, talk to people who are very smart and try and understand it and then try to explain that to people in a way that helps them realize what’s going on around them. There’s this joke that if you do what you love, you’ll never work a day in your life. It doesn’t quite work out that way. It ends up basically taking over your life, but it’s also great. It’s great to be motivated and to feel like you are putting something out into the world that has social benefit.

Nick Hanauer:

Thank you so much for joining us. This was a great conversation and we really appreciate your thoughts and frankly, your mastery of the policy landscape. Super cool. Look forward to reading more stuff that you’re writing.

Idrees Kahloon:

Okay, great. Well, thanks for having me.

Jessyn Farrell:

Thank you.

Nick Hanauer:

Thank you so much. So, Jessyn, what did you think?

Jessyn Farrell:

Well I thought one of the interesting things was where we went towards the end, which was what needs to get done and what are the principles that would guide Idrees if he were in charge. He just said, “Get something done.” Not worrying about some of the big flashy or democratic agenda items like a Green New Deal or healthcare for all, but really focusing on getting something done. I think that’s interesting because I think we might take a different approach to social change than the just get something done.

Nick Hanauer:

I’m sympathetic to the argument. But the thing is, is that the Democratic party has negotiated with itself and with Republicans over the last 40 years to the point where nobody knows what it stands for anymore. Certainly, the shit show that we’re in is a consequence. And that massive distrust of the Democratic party is a consequence of a huge proportion of relatively reasonable people believing that the party doesn’t represent them or their interests, which is just objectively true. We’ve talked about it a thousand times. Most people, the typical earner in America, has had about 50% of their wages stolen by the top 1% over the last 40 years, every year. Democrats were complicit in that.

I worry that if we focus too much on what’s pragmatic, the Biden administration will not effectively enough represent that they’re fighting for the right stuff. Because ultimately, politics is about conflict and choice. Americans, certainly on economic stuff, have not been given a real choice for 40 years. It was either trickle-down economics or a slightly kinder and gentler form of trickle-down economics. But that was it.

Jessyn Farrell:

Exactly. I think that the real choice that Democrats need to set up is a theory of growth, the neo-liberal theory of growth, which is about tax cuts for the rich, as we’ve said a million times, regulation, wage suppression. Or a theory of growth that is fundamentally about raising wages, putting more money in your pockets, cutting costs of things that are real pain points for people like healthcare, childcare, housing and then taxing the rich to do it. It’s that theory of growth, where does growth come from? And picking policy fights that set that up. That’s where the win will be for the Democratic party if they could do that.

Nick Hanauer:

Absolutely. Growth comes when the majority of citizens in the middle of the bell curve are thriving. When their wages are increasing, we have more economic, real economic growth, not when the stock market is going up. I think that that’s what it’s going to be all about.

Jessyn Farrell:

The interesting thing, too about these particular fights is that you could just do something to get something done. As it turns out, it’s just as much pain and sweat and tears to get something incremental done as it is to get something big done. If we look back through our history and the 1930s and the lasting Democratic majorities that were built, because government was dedicated to helping regular people economically, that’s a pretty good playbook. I think there should be a strong interest in building a lasting Democratic majority by making people’s economic situation better. It seems like a winning play to me.

Nick Hanauer:

Absolutely. Obviously, Democrats have a lot of challenges. But I think the biggest, the central challenge, is to prove to the majority of citizens that they can change this country economically for the better, for most citizens. And materially enough so that people really can tell day to day.

Announcer:

Pitchfork Economics is produced by Civic Ventures. If you liked 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 @pitchforkeconomics. As always, from our team at Civic Ventures, thanks for listening. See you next week.