While President Biden has embraced middle-out economics here in the states, the UK’s new leaders have decided to enthusiastically revive trickle-down economics. Political economist Mark Blyth, who teaches International Economics, shares his thoughts on the United Kingdom’s troubling new budget policies, certainty’s role in building an economy, and much more on this wide-ranging episode.
Mark Blyth is Director of the William R. Rhodes Center for International Economics and Finance. He’s a professor, author, and political economist. His latest book, Diminishing Returns, is out now.
Twitter: @MkBlyth
Forget trickle down, what the UK needs is middle-out economics https://www.theguardian.com/politics/2022/sep/25/forget-trickle-down-what-the-uk-needs-is-middle-out-economics
Angrynomics by Mark Blyth and Eric Lonergan https://angrynomics.com
Website: https://pitchforkeconomics.com
Twitter: @PitchforkEcon
Instagram: @pitchforkeconomics
Nick’s twitter: @NickHanauer
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Goldy:
A lot of economic problems in the UK, even worse than in the US.
Nick Hanauer:
The trickle down stuff coming out of the Truss government … it’s like a Saturday Night Live skit.
Mark Blyth:
If you go talk to economists under 40 and you say, “What do you think of Truss?” They would all be on the floor laughing, as well. There has been tremendous change in the discipline already, but it’s just that it takes a little bit of time for that to filter into public consciousness.
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. Apparently, Nick, you’re not satisfied just being a bomb thrower here in the United States. You’re off in the UK throwing bombs in the editorial pages, too, I see.
Nick Hanauer:
I am. I’ve been in the UK less than a week and already antagonizing my friends. Eric Beinhocker and I have a piece in the Guardian/Observer criticizing the new government here, the Truss government, for the criminal stupidity of this trickle-down economic agenda they have just unveiled.
David Goldstein:
Well, that sounds like you’re a very bad guest. What’s the reaction there to a couple of Yanks making fun of their new Prime Minister?
Nick Hanauer:
Goldy, the good news is that we were part of a giant chorus of criticism. Five years ago, seven years ago, 10 years ago, our criticism would’ve been lonely and ridiculed. Today, from every corner, people are saying roughly the same thing, which is this economic agenda is useless, silly and counterproductive, and won’t achieve any of the objectives that they believe it will. It’s great to be, for once, part of that chorus of criticism and hopefully, some of these idiots will listen and learn. The pound is nearing parity with the dollar. It’s an absolute catastrophe for the country here. Very good to be an American with dollars right now, I will tell you, but the consensus is this was idiotic.
David Goldstein:
Of course, low pound would be good for exports, if the UK still had anything to export.
Nick Hanauer:
That’s right. Of course, they could have chosen to invest in the capacity to export, but not.
David Goldstein:
A lot of economic problems in the UK, even worse than in the US, and you are not the only one who’s noticed that.
Nick Hanauer:
That’s right. Our guest today, the mesmerizing Mark Blyth … he’s a professor. He’s director of the William R Rhodes Center for International Economics and Finance at Brown University, and a political scientist whose research focuses on, in particular, how uncertainty and randomness impact complex systems, particularly economic systems. With that, let’s talk to Mark and get his views.
Mark Blyth:
The short version … my name is Mark Blyth. I’m a political economist. I teach and work at Brown University, and I’ve most recently published a book called Diminishing Returns, which is about underlying growth models of capitalism and where all the growth went.
Nick Hanauer:
Mark, you also recently published a book called Angrynomics. Let’s start out and … just give us a summary of Angrynomics.
Mark Blyth:
Sure. It starts off this way. It’s about anger. We got interested in anger in politics, Eric, my co-author, and I, when we went to, of all things, a Watford-Everton match. Now, if you want to see the bottom of the bottle’s bottom of the bottle for soccer, that’s pretty much it. What we noticed there standing amongst the really hardcore Watford fans was that the real fans don’t spend any time shouting at the opposition teams. They shout at each other. They’re identity regulators. they’re collective action troops. They make sure that everyone’s in line. We started to think about what are the functional roles of anger in politics. Of course, we’ve been through the Brexit debates, we’ve been through Trump, the rise of populism globally, and a common theme seemed to be everybody’s angry all the time.
We started to think about it in terms of anger and we started to read about anger, et cetera, and we settled on two versions of this. One is basically moral outrage. If you think about Black Lives Matter and the events of 2020, clearly, there’s a moral wrong. It needs to be righted. That’s what animates the populace. That’s what animates the coalition that gets behind that. If you think about another one, tribal identity, whether it’s Watford fans or whether it’s MAGA rallies, there’s an element of this. Now, we don’t draw a bright line between the two of them synthetically. We use them as an analytic. What I mean by that is, if you think about the people who went to the Capitol building on January the 6th, they were morally outraged, too. You may disagree with those morals, but that was a motivator for their anger.
We got interested in this whole area and we basically settled on a story about macro-angrynomics and micro-angrynomics. Macro-angrynomics is when you have giant financial shocks and you basically write a put option on the taxpayer at the bottom end of the income distribution so that the assets and incomes of the top 20% get preserved. People notice that and it fragilizes faith in your existing institutions. The micro side of it is best seen in labor markets and is really less about inequality and more about precariousness: that, if you don’t have a feeling of control over your lives … You can double the national minimum wage in the United States, but if everyone’s still working just-in-time contracts with no right and no way to claim their share of productivity in the future, then they’re still living a precarious existence and that all the social psychology shows you is what really drags people down and makes them angry. We were interested in really working through what anger meant for political economy and giving a very political economy account of why we have this angry politics.
Nick Hanauer:
That’s fascinating. If I may say so, in our research, we came to the same conclusions, that the kind of inequality that America has experienced and most of the West has experienced over the last 40, 50 years … of course, it’s worst in England and the United States, really, in the developed world, is it has effectively shredded the reciprocity norms that make social cohesion and democracy possible.
Mark Blyth:
That’s exactly right.
Nick Hanauer:
If you build an economy that systematically makes things tougher for the bottom nine deciles every single year for 40 or 50 years, it should not surprise you that, at some point, they want to burn the whole damn thing down, which is where we are.
Mark Blyth:
I think that’s exactly right. I’m reminded of the great story about the Brexit debates when the Remain campaign went up to Sunderland and went to the Nissan factory. Given that 90% of the exports go to the European Union, the home team thought they were on home ground, but they started to get crap from the people who worked there. One of the people in the stands said, “You know, lads, you’ll have to remember there’ll be a tremendous loss of GDP if we do this,” and one of them shouted back, “Your GDP.” If all the returns are going to one part of the population, to shareholders, if every time I sign a contract, my bathroom break gets worse, why should I actually have faith in this project?
Nick Hanauer:
Absolutely. It is absolutely true. Tell us about your new book, too.
Mark Blyth:
Essentially, it’s this idea of growth models. Now, this has been around for a long time in post-Keynesian macro, that you’re disaggregating GDP. The simplest way to think about it is what bits of underlying GVD aid do you need to tickle to get GDP growth? What we wanted to do [inaudible 00:09:20] was to put this in a more international context because the sources of growth are no longer, if they ever have been, entirely domestic. Even with large countries … Britain’s shown this just now. Britain has been able to have an overvalued exchange rate and consume more than it’s ever going to valorize with real exports simply because of the kindness of strangers wanting to buy their financial assets. Once that goes, you’re in trouble.
Similarly, if you’re a country like Ireland, 50% of your GDP comes out of Dublin. How should we think about that, particularly when two inversions from two pharma companies can double GDP or double GNP overnight? What are the international sources of growth, how does it tie into the domestic sources of growth and what are the political coalitions which support this and impede change in those growth models?
David Goldstein:
In a financialized economy, is economics real? I’m having a crisis of faith in economics over recent weeks because, as I told Nick on a recent podcast, or I told somebody, I’m falling into the, “Nobody knows anything about anything,” school of economics. What’s real here?
Mark Blyth:
I think what’s real here in the current moment … let’s get away from my book and just talk about what it is. Let’s take the example of the United Kingdom. What you’ve done is you’ve taken your shock absorbers, your welfare state and, in 2010, 2011, you weaponized the Greek crisis as an excuse to take one of the most residualized welfare states in the world and turn it into basically the worst one in the OECD to ever claim welfare. Despite that fact, you then live a propaganda life as a political party where there’s these claims that all of these foreigners are flooding the United Kingdom to go and live on this welfare state, which is the worst one in the OECD, despite any evidence to the contrary. Then, you get involved in the Brexit fantasies and you basically rip that up.
Now, if you’d actually had a real plan for an alternate growth model that would’ve been really invested in and pushed, then perhaps that might have, in some sense, worked, but this has just been a fantasy disaster. Now, on top of that, coming out of COVID, we have the same response as everyone else, which is basically to make sure that this doesn’t become a cratering depression. They’ve now decided to go on a Thatcherite [inaudible 00:11:38] back to the 1980s tribute band.
What’s real in this is the fantasy politics and the fantasy economics, but the economics itself reasserts itself because, at the end of the day, why is the pound tanking? Because people who hold sterling assets look at this and go, “What is going on? I’m not sure I want to hold this anymore.” I think the reality is still there, it’s just that, for several years, if not a whole generation, politicians have been living in a la-la fantasy land, have only been talking to each other, have been pursuing policies which markets have tolerated and have now got to a point where that’s just no longer the case.
Nick Hanauer:
Well, markets tolerated a lot of these policies because many of the policies advantaged the owners of capital, right?
Mark Blyth:
Totally but, now, you’re getting to a point where it clearly doesn’t.
Nick Hanauer:
The trickle-down stuff coming out of the Truss government is … it’s like a Saturday Night Live skit.
Mark Blyth:
Absolutely is.
Nick Hanauer:
It’s just literally the retreads from 1985 or something like that. It’s just astonishing that, given what we know about the effectiveness of these policies, somebody could actually believe that they could deliver the goods. It just boggles the mind.
Mark Blyth:
Biden was completely correct. The work that you’ve done has shown this and lots of people have done. It simply doesn’t work. It’s not trickle-down, it’s trickle-up. I think there’s two ways of thinking about this. The first one is, they know that they’re dead, they’re going to be out for a generation, so they’re basically trying to steal everything for them and their mates on the way out the door, which is reductionist, but might actually have some degree of truth. The other one is, this is another attempt to basically squeeze the remnants of the British welfare state even more, but this is a bit like what Martin Wolf said about their project in the Financial Times: “Once you’ve done Thatcher, you can’t do it again.” You only get to basically liberalize your banking system once. Once you’re there, you can’t do it again.
It’s the same thing. Once Cameron and Osborne clobbered the welfare state half to death, there’s nothing left to cut. The reason that you’ll see this is, as the economy gets steadily worse, as it has to do with this policy mix, more and more people are going to be thrown to rely on those institutions which they think are there that actually aren’t and are in an incredible state of dysfunction. I do worry about the sociopolitical unrest that could arise in Britain as they basically figure out that they’re being paying high taxes for years, the welfare state isn’t there to support them, the idea that housing wealth is going to be there forever and it’s always secure evaporates, and a combination of a supply shock on gas, plus rising rates, plus a massive import bill that’s increasing because of devaluation hits households all at once.
The idea of the tax cut … it’s a bit like this. The idea that, if you put all those things together, you’re looking at supply shocks, particularly in the European inflation stuff. It’s really just supply shocks. Why do you raise interest rates? “Well, I don’t know.” All right. Think about it. You’re making people poorer, particularly if they pay more for their credit, to solve an oil and gas supply problem. It’s not exactly joined up thinking, and this is why even the Germans now are basically thinking about price caps and targeted interventions, whatever. What is it that Brits are doing? Tax cuts. It has nothing to do with it. The banker’s bonus thing … that was the worst example of Brexit gaslighting I’ve ever seen.
Nick Hanauer:
Would you explain that to our listeners, that particular provision?
Mark Blyth:
Sure. Basically, after the financial crisis, Gordon Brown put in a cap on banker’s bonuses and, at first, everyone went, “Oh, that’s terrible. We’ll all move our jobs.” Actually, a couple of hedge funds did move to Switzerland, then they found out it was really boring and just as expensive, then they moved back. Then, eventually, what they did was they altered the salary component to compensate for the cap on the bonus. What’s happened is Truss has just come in and said, “Hey, bankers, you’re awesome. Why don’t you just have all the bonus you want,” and everyone went, “Great, that’ll earn me a couple of more grand, but what’s the point when public services are falling apart?” That was the most commented comment in the Financial Times from people who work in the city.
Nick Hanauer:
I think, if there is a silver lining to this cloud, it is, at least it’s my impression, that the consistency and volume of the criticism is something that you would not have seen 10 or 20 years ago.
Mark Blyth:
Totally agree.
Nick Hanauer:
Everybody is like, “What? You can’t believe this. Nobody believes this anymore. Stop.” 20 years ago, people would’ve been like, “Well, okay, tax for the rich, create growth. They’re all the job creators,” blah, blah, blah, blah, blah. We are making some slow progress, but it is just-
Mark Blyth:
I’m not sure you’re making that much progress with the core of the Republican coalition in the United States.
Nick Hanauer:
… No. No, no, no, no.
Mark Blyth:
But everywhere else, I think that’s absolutely true.
Nick Hanauer:
In terms of progress, there isn’t a better example than the Biden administration, which I think has surprised the hell out of virtually everyone except maybe for them about … although I think they’ve even surprised themselves about the depth, breadth and ambition of rebuilding the economy from the middle out. If you look at the spectrum of what they have accomplished and the nature of these accomplishments, it really is breathtaking and something I would not have predicted myself. My call prior to this was with a person I will not name, but who is an economist, the top economist at one of the most important departments in the government. We were just chatting about how astonishing all this progress has been. You would’ve thought that the Truss people maybe would’ve taken a look at that, but no.
David Goldstein:
I just wanted to get away from politics for a moment and back to economics, as if you can separate the two. One of the things … I don’t know if it was in your book or in one of the interviews I listened to, but you hit on one of my little pet peeves, which has to do with certainty in the economy. You always hear from business owners from the Chamber of Commerce here how important certainty is to their businesses, and yet, the entire neoliberal era has been one of taking certainty away from working people. How much a role is this sense of uncertainty playing in both our current economic crises and our political crises?
Mark Blyth:
I think that one feeds the other. Here’s what I mean by that. Jacob Parker at Yale has been working on this for a long time. Ages ago, he did a book that really opened up this agenda called the Great Risk Shift. The basic idea behind this is, well, what used to be insurance by public and quasi-public institutions, for example, collective bargaining agreements, higher replacement rates and longer duration on unemployment insurance, et cetera, has essentially become first residualized in the first wave of neo-liberalism and then basically abolished in a time of just-in-time contracts, multiple subcontracting, franchising and the rise of very much precarious labor contracts.
There’s been this, “We’re going to take the risk that inheres in capital and we’re actually going to transfer it all to labor. Labor doesn’t get any of the upside we get to take,” if you will, “all of the extra social surplus generated by shoving the risk on someone else.” I think that’s basically created that feeling of precarity, et cetera, that’s there. If you think about it through a lens of certainty rather than uncertainty, what we’ve done is to make the lives of others incredibly uncertain. That’s emotionally draining and very, very stressful. That’s one way to think about it and I think it’s a good way to think about what’s happened.
Nick Hanauer:
That’s so true. One bit of data that I cannot remember specifically but just generally that so supports this thesis is JP Morgan, of all things, data on the variability of income for lower wage workers. It’s one thing to say somebody makes $30,000 a year or whatever it is but if, on a monthly basis, it’s highly variable, it’s just impossible to run your life, right?
Mark Blyth:
Absolutely.
Nick Hanauer:
If in one month you make a thousand dollars, that won’t cover your rent and everything else despite the fact that, the next month, you may earn three.
Mark Blyth:
Well, this explains why payday loans and food banks have become part of the private welfare state, because you’ve got such income volatility and such uncertainty over employment that you end up being trapped in these, again, private institutions which have taken the place of the public institutions and public contracts that used to ensure workers against this. We really have just dumped the risk on them and said, “You deal with it. You could go get a loan at 40% on your next paycheck. It’s your fault for being poor.”
Nick Hanauer:
Correct. Mark, tell us about what you think we should do. What’s the Mark-
Mark Blyth:
In which specific area, because there’s so much to do.
Nick Hanauer:
… I don’t know.
Mark Blyth:
Where would one start? One thing I was heartened to see … the problem in the UK in part is obviously the Conservative Party. If you think about it, in a weird way, every 50 years, they blow up the country. If you go back to 1925, going back on gold and causing the Great Depression, check. You could go to ’57 and Anthony Eden, east of Suez, check. You could call Thatcher the crisis that got lucky because of Falklands and the turnaround in the global economy but, every generation, they just basically decide to blow the thing up, and we’re in the midst of that. The problem with this is the Labor Party then comes in and cleans things up and, rather than being a crusading force that picks up the mantle and says, “Why do we allow these people to do this time and time again,” they go, “We promise to be a little bit more fiscally responsible,” et cetera. They come in and they clean stuff up.
One thing I’ve been heartened to see in the conference is a discussion at last of a sovereign wealth fund. This is something that we discussed at the end of Angrynomics: that we’ve squandered, unfortunately, the early 2000s and the negative yielding debt that meant we could have refinanced debt and issued debt at a negative real rate. Inflation has now taken care of this but, if you think the yield’s on renewable investments around 6%, inflation drops to four, you do targeted loans on green sector investment through a sovereign wealth fund acting as a kind of public corporation, you can begin to move the needle substantially on decarbonization and you can do it in such a way that it doesn’t lead to extra fiscal stress on the official budget.
You see the way the Germans are doing this. It’s a variant of that with off-budget expenditures, et cetera, and there’s this growing recognition that we need to invest, we need to rebuild, we need to decarbonize and all of these things can go together in a virtuous circle. What we have on the other side of the table are basically long carbon assets that are fighting against the inevitability of their demise who fund the opposition. That’s very much how I see where these battle lines are being drawn.
Think about it this way, a very simple one: if you need to actually switch from central heating, central air systems and very electricity-intensive things, and you want to go to heat pumps, you’ve literally got to put a heat pump in every house. Now, that makes the demand for HVACs engineers, which is a skill job that pays well, go through the roof and stay there for about 30 years. There is literally no downside in investing in those skills and rolling out that tech because, at the end, we all benefit.
Nick Hanauer:
Absolutely. There are a hundred more examples just like that, which is what the Truss government should be focusing on.
Mark Blyth:
No, they’re focusing on tax cuts.
David Goldstein:
As somebody who’s in the process, I just got a $22,000 bid to do exactly that, to convert my old oil furnace into a heat pump. The Biden administration with the Inflation Reduction Act is promising an $8,000 tax credit, tax rebate, on that. That makes perfect sense. These types of massive investments in decarbonizing the economy … are the downsides purely political or is there any economic downside to doing it?
Mark Blyth:
Of course there are. Transitions are hard. No single country, let alone a planet, has tried to transit its entire energy system, but the costs of not doing it are you lose everything. When I look at that balance sheet … You hear this often. “Well, we really need to decarbonize, but can we afford it?” I’m like, “Honestly, you can’t print a new planet, but you can print money.” If the worst thing that’s going to happen to you is you’re going to have above-term inflation, nobody dies of inflation, usually. People will die of climate change. I think that needs to be put into perspective but yeah, there’s a downside.
I’ll give you one of the obvious downsides. You need a lot of rare earths. It’s not that you can’t find them in places like Europe and the US, it’s just that you don’t have the refining capacity. The refining capacity is all in China. If you want to do this, if you want, basically, refined beryllium and all the rest of it, you need to be nice to China at a time that you’re not being nice to China and China’s not being nice to you. There are real geopolitical risks involved in all this stuff that needs to be smoothed over or not, but if you don’t, what’s your plan B for getting your hands on this stuff?
No one’s saying it’s easy. It could be, but it takes time to build capacity. Simple as that. Seven years for a mine, 10 years for a refinery. It takes time and we don’t have a lot of it. None of this is easy, but it’s 100% necessary. To me, the real action is, if you look at the Republican side and you get a little bit of this through the other black door that is the policy advisors to Truss in Downing Street, a lot of this comes out of the US carbon coalition. They’re basically fighting the loss of all of their assets and they want to delay that loss as long as possible.
That, to me, is one of the critical battle lines. If you look at the way the GOP are behaving just now, the whole war on woke capitalism, the politicization of ESG, going after finance groups, et cetera, for basically having political agendas … this is exactly the same playbook, if you will, as critical race theory applied to the economy. It’s a purely defensive tactic, a smokescreen, a politicization. There’s nothing positive about it.
Nick Hanauer:
Could not agree more, although I do have to put in a plug here for my colleague Eric Beinhocker and Doyne Farmer’s work on the cost of the energy transition. Basically, the faster we go, the cheaper it gets.
Mark Blyth:
Absolutely.
Nick Hanauer:
Because scale.
Mark Blyth:
You’ve got less crap to clean up. That’s basically it. That’s it. There’s the three variables right there: time, amount of crap, how much stuff you need to do it. Go.
David Goldstein:
Also, the point is just that the technology gets cheaper the faster you do it. It’ll get cheaper faster, their main argument being that a fast transition is actually less expensive than a slow transition because the technology will be cheaper faster.
Mark Blyth:
There is a caveat on that, though, and it’s worth acknowledging. Brett Christophers … I don’t know if you know this guy. He wrote this brilliant book on Britain, basically, as a society generated by rents a couple of years ago. He has a new book coming out with Random House called Our Lives in Their Portfolios. It was about asset managers owning real assets. He lives in Sweden. Super smart guy. He has a piece that takes that and says, “Hang on a minute though, lads, you are forgetting something, which is profit. If, at the end of the day, you can make renewables so cheap that actually putting them out at scale means you don’t need any money, then you need a system other than capitalist profitability to actually make it happen.” There’s actually a downside to making things so cheap so quick: nobody wants to go near it because they won’t make any money. That is actually a constraint we’re not thinking enough about.
David Goldstein:
This sounds like a role for government.
Mark Blyth:
Careful. When you start saying that, people will call you a socialist.
Nick Hanauer:
One of the questions we love to ask on our podcast is the … What is it, Goldy? I’m … the …
David Goldstein:
The benevolent dictator question.
Nick Hanauer:
The benevolent dictator question, yes. If you were put in charge of … ordinarily, I would say the American economy, but-
David Goldstein:
King of the world.
Nick Hanauer:
… Yeah, if if you were king of the world, what would you do?
Mark Blyth:
King of the world.
David Goldstein:
That’s right. No political constraints. You can print all the money you want.
Mark Blyth:
I think let’s focus on the transition because I think it is genuinely the most important thing over the next 20 to 30 years. How do you get this to work? Currently, there’s three versions on the table. The first one is, basically, we’re going to get the private sector and we’re going to nudge them with nudge strategies and incentives to doing more stuff. There’s a little bit of that, but a lot of it has ended up as greenwashing and basically ESG box ticking. It hasn’t really turned on the taps.
Nick Hanauer:
Otherwise known as bullshit.
Mark Blyth:
It hasn’t turned on the taps. It’s not because people aren’t trying. If you look at blended finance contracts and all the rest of it, your rate of return’s really good, it’s just why are they not going into it? Answer: because it’s easier to do other stuff you’re familiar with, I guess. Then, you’ve got a second version of this, as well: they’re not going to do it, so the state should do it. They should build all the assets and run them. Given the fact that we’ve spent the past 40 years hollowing out the state, laughing at anybody who works for it and making sure there’s a huge talent diversion into finance, giving up on that talent and also giving up on the private sector’s much bigger balance sheet than the vast majority of states, excluding possibly the US and a handful of others, strikes me as not the best idea.
What you’ve got to get is in between that, a system whereby you’re not just incentivizing finance, you’re channeling that finance usefully into decarbonization in such a way that you’re not just giving them a free option on the future. They’ve got to have skin in the game as well, but they’re incentivized in such a way that they know that they have to do it. That means taking a firm stance on carbon assets. That means phasing things out. That means giving up on the fantasy of ever imposing a carbon tax because, to impose it at the right level, it would have to be so high you would force sectors out of business, and the lobbying that would go on would ensure that would never happen. It’s been a 40 year distraction. I would focus basically on developing state capacity that would then allow us to channel finance more effectively into the transition, keeping private finance as a partner because you need the expertise and the size of their balance sheet, but making sure that we’re all on the same page.
One place has done this quite well so far, a small example, I know, but in Denmark, they have a climate law that it doesn’t matter who wins the election, everybody’s agreed to the targets ex ante. There’s no backing out. You don’t get to flip back onto carbon no matter what. I think those types of agreements, both at the governmental level and also in the financial world, would be a major step forward as to getting us where we need to go. We can’t just rely on nudges. They don’t work. We can’t just hope that the giant big New Green Deal’s going to happen because it’s probably not. We need to work in that in between space.
David Goldstein:
Wow. You’re not being much of a dictator there.
Mark Blyth:
I just don’t really have it in me. The thing about it is, I’m Scottish, which means that we’re not born optimists, you’ve probably noticed. The other side of it is I’m a Scottish Catholic and a Scottish Catholic … it’s weird. Most Scottish Catholics come from Ireland in the 1870s onwards, and that’s exactly where my mother’s side of the family came from, but we’re actually the Scottish Catholics … we’re the 6% that they didn’t manage to throw into the sea during the Reformation.
Nick Hanauer:
You want to keep a low profile.
Mark Blyth:
That gives you a particular view on the world. It says, “Don’t be a dictator because, if you do, some other dictator’s going to come along and try and kill you.” I’d prefer to do the, “Come on, lads, let’s all go to the pub,” strategy rather than the, “You will all drink Guinness at 12:00,” strategy. I don’t think that really works.
Nick Hanauer:
That’s fantastic. One final question. Why do you do this work?
Mark Blyth:
Honestly, if you switch the cameras on, you’ll know that I’m sitting in a recording studio surrounded by instruments. I wasn’t meant to do this work. I was basically meant to be a professional musician, but then I realized something that’s true about life in general: there’s no shortage of talent, only opportunity, and there’s always someone who’s better than you. I gave that up after trying it in New York for a while, I finished my PhD and I discovered that I’m good at this. I’m not the best, other people are better at me in different things and all the rest of it, but I figure I can contribute. I enjoy teaching, I enjoy research. Now, particularly this moment, I have an 11-year old and I want her to actually have a future. If we’re not focusing on this stuff, if we are talking about trivia, if we’re doing the politics of distraction, you’re putting my 11-year old’s future and everyone else in her generation in deep, deep risk. That is unacceptable.
Nick Hanauer:
Perfect answer.
David Goldstein:
I got to say, Mark, I think there’s a much greater shortage of talent in economics than there is in music. Much more opportunity there.
Nick Hanauer:
It’s a much less competitive field.
Mark Blyth:
In defense … Actually, I’ll go back to this for a minute, though. I think generational change is a very important thing. As Niels Bohr once said, society evolves one funeral at a time. If you go talk to economists under 40 trained in the top US departments and you said, “What do you think of Truss,” they would all be on the floor laughing as well. They don’t believe any of this stuff either. There has been tremendous change in the discipline already, but it’s just that it takes a little bit of time for that to filter into public consciousness. I think what we are still rebelling against is an economics that took hold 30 years ago that most practicing economists under 40 no longer believe.
Nick Hanauer:
Sadly-
David Goldstein:
But the politicians still do.
Nick Hanauer:
… they still believe it.
Mark Blyth:
The politicians still do. Well, they believe fairy stories and folks folk songs. They get the distilled version that speaks to their priors, and that’s always the problem.
David Goldstein:
One thing, Mark: at the very top, when we asked for your slate, you described yourself not as an economist, but a political economist. Is that becoming more the norm in the field?
Mark Blyth:
Well, for me, I have an economics title cause I run an economic center, but my PhD’s actually in political science. What I’ve always done from my earliest book onwards is I’m really fascinated by economics, not just as a way of explaining the world, but as a thing in the world. Someone who’s written a really good book about this recently is Elizabeth Berman, the sociologist, who wrote this great book on how economics became the language of US public policy, how we gave up on fairness and basically fetishized efficiency.
This is what I’ve always been interested in because, if you think about economics less as a lens for seeing the world and more as a language of power, whoever gets to define what is efficiency has tremendous power for setting the agenda. Whoever gets to say that something is economically illiterate, that’s an incredible retort. You’re arguing from this position of authority which may or may not have any foundations but, nonetheless, it’s an incredibly powerful political device. That’s definitely what we saw in the ’80s, the ’90s and in all sorts of forms, and we’re living with those consequences now. For me, it’s I’ve always studied economics, but mainly as a thing in the world rather than a thing to understand the world, although I think it’s useful in that case, too, up to limits.
Nick Hanauer:
So interesting. I couldn’t agree with you more. Economics is how we rationalize who gets what and why.
Mark Blyth:
Exactly. It’s ultimately distributional. Think about it this way: when you had the old school macro, [inaudible 00:35:41] was pushing the frontier out and, if you worried about distribution at all, it was a secondary concern. Now, if you go to the big econ meetings, the largest single section of panels is on inequality. The world does change.
Nick Hanauer:
It does. Well, Mark, thank you so much for being with us. I hope you will join us again sometime.
Mark Blyth:
I would be happy to.
Nick Hanauer:
Just absolutely fascinating conversation and so nice to meet you.
David Goldstein:
Yeah, really enjoyed it.
Mark Blyth:
It was a great conversation. Enjoyed meeting you guys. All the best.
David Goldstein:
Mark sounds like a fellow traveler, Nick. What’d you think?
Nick Hanauer:
Yeah, he’s super fun, hilarious and smart guy. Thank goodness he didn’t become a musician, I’ll just say that.
David Goldstein:
I don’t know. You’ve never heard him play.
Nick Hanauer:
I Know. Indeed, listeners, I want you to know that when we connected with Mark this morning, he is indeed in a music studio with instruments piled around him. It’s the first time we’ve ever interviewed a guest who was in a music studio when they were talking to us but, obviously, an incredibly smart and thoughtful guy. Definitely is thinking about economics in very much the same way that we are and I think we can confidently assert is a big believer in our middle-out economic approach and agenda.
David Goldstein:
Right. Also, I think at a deeper level, our approach … from the very beginning of this podcast, from the very first episode, we have talked about how important narrative is not just in describing the economy but in changing it, that how we talk about the economy really changes the way the economy works and can work in the future because it gives us permission to run the economy differently. I think that, really, a major theme of Mark’s writing has been, and as he told us, this approach, trying to understand the economy as this thing separate from just something that tells us what policies to do, how high, how low to raise the taxes, set interest rates and so forth. We couldn’t agree with him more on that.
Nick Hanauer:
Absolutely.
David Goldstein:
Just to circle back, I want to encourage everybody to read Nick’s op ed in The Guardian. We will put a link in the show notes.
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 peak behind the podcast scenes on Instagram, @pitchforkeconomics. As always, from our team at Civic Ventures, thanks for listening. See you next week.