Pitchfork Economics with Nick Hanauer

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The post Why Bosses Get Away With Stealing Your Wages (with Terri Gerstein) appeared first on Pitchfork Economics.

BONUS: Pitchfork Politics: Who are the new swing voters?

Freddy Doss — Fri, 30 Oct 2026 04:27:49 +0000

Working-class voters are now the most volatile bloc in American politics, and they are judging both parties by a simple test: are paychecks rising faster than costs?

Hosts Zach Silk and Richard Trent connect decades of change elections to economic dissatisfaction, explain why the old “soccer mom” model of the swing voter no longer fits, and assess what the coming election will reveal in places including Alaska, Texas, Kansas, and Maine. The takeaway for campaigns is direct: earning power requires a credible economic agenda that voters can feel at the kitchen table, and governing power requires delivering on it.

Pitchfork Politics is a project of Civic Ventures and the Middle Out Center, produced by Sam Holman and Larj Media. Tina Nole and Isaac Kaplan-Woolner produced and edited this episode. Greg Shishman engineered the episode.

The post BONUS: Pitchfork Politics: Who are the new swing voters? appeared first on Pitchfork Economics.

Why Your Raise Doesn’t Feel Like a Raise (with Angela Hanks)

Freddy Doss — Wed, 28 Oct 2026 03:52:54 +0000

You got a raise. So why does it feel like you’re still struggling?

New research finds that rising debt payments have swallowed more than half of real income gains for a typical one-earner household since late 2022. Angela Hanks of The Century Foundation joins Goldy and Paul to explain how debt is deepening America’s affordability crisis, trapping workers in bad jobs, and weakening their bargaining power. And why fixing the problem requires more than just getting people out of debt.

Angela Hanks is Chief of Policy Programs at The Century Foundation and a coauthor of the report: Half of Every Dollar: How Household Debt Eats Into Workers’ Income Gains.

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Further reading:

Half of Every Dollar: How Household Debt Eats Into Workers’ Income Gains

Men at Arms by Terry Pratchett

Sam Vimes ‘Boots’ Theory of Socio-Economic Unfairness

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Nick Hanauer:

The rising inequality and growing political instability that we see today are the direct result of decades of bad economic theory.

Goldy:

The last five decades of trickle down economics haven’t worked, but what’s the alternative?

Nick Hanauer:

Middle out economics is the answer.

Goldy:

Because the middle class is the source of growth, not its consequence.

Nick Hanauer:

That’s right.

Announcer:

This is Pitchfork Economics with Nick Hanauer, a podcast about how to build the economy from the middle out. Welcome to the show.

Goldy:

Paul.

Paul Constant:

Hi.

Goldy:

You’re not Nick.

Paul Constant:

I am not Nick. Sorry.

Goldy:

But speaking of which, Paul, as you know, we both met, we were at The Stranger where we were these low paid alt weekly journalists. And I had spent almost a decade blogging before that where I was mostly an unpaid blogger/journalist. And one of the great things about working for our plutocratic overlord, Nick Hanauer, who is not with us today, is that he pays us a very generous white collar wage.

Paul Constant:

It’s true.

Goldy:

For you, the first time in your life, for me for the first time in like 20 years. So I spent my peak earning years earning very little money. And by the time I started working for Nick, I had about $30,000 in credit card debt. I had a car loan on a car that was getting old. I had a mortgage, which put me in a better position than most of our colleagues at The Stranger, almost all of them at the time. And the first thing I did was I paid off those credit cards and then I actually bought a… Not only did I pay off that car loan, I bought a new car for cash eventually. And then I paid off my mortgage, which I think financial advisors would say it was a stupid thing to do. It was not a high interest loan at the time, but it felt really good to be debt free.

Paul Constant:

Well, while we’re giving out bad advice, I also have to say before I worked at The Stranger, I made even less. I’ve worked at Walmart, I’ve worked at Wendy’s, I’ve worked at Sears. I worked in a lot of retail. I worked in bookstores, both corporate and independent. And I think one of the reasons I was able to do that is I followed my parents’ advice of not getting a credit card and not picking up any debt at all. And this meant that I was scraping absolute bottom. I was literally living paycheck to paycheck, but I did not have the temptation of digging myself a hole that would get worse and worse as things went on. Of course, when it came time for me to, once I worked at The Stranger and saved a little bit of money, and then when I started working for Nick and saved a little more money and it became time to buy a house, the person at the bank informed me that it would’ve been better for me to have bad credit than no credit at all.

And so it was a little bit of a challenge, but honestly, I think if I had access to credit cards, I could have gotten myself into a lot of trouble.

Goldy:

When I started working at The Stranger, I had no credit card debt. I knew I needed, I told them I needed $50,000 a year, which was not a lot of money. They gave me $40,000 a year. I was there three years before they fired me. And lo and behold, my budget was right. I was now $10,000 a year was what I went into debt. And I had a child and a house and a car and an old house where things kept breaking. It wasn’t going out for fancy meals and taking vacations. It was just scraping by, which in fact is how most Americans are using their debt. When people fall into credit card debt, it’s because they need to use that to get by. When they have student loan debt, it’s because that was the only way they could afford a college education. When they have auto debt, car loans, it’s because you need a car to get to work.

It’s not people, mostly people who are being irresponsible with their money. It’s people who don’t earn enough money and incurring debt that is at very high interest rates.

Paul Constant:

And one of the more interesting things about debt I think is that a lot of our economic metrics have not considered how debt impacts people’s lives. And that’s part of the reason why we’ve seen all those headlines from 2023 on saying the economy’s doing great. Why are working people so upset? And we’re seeing sinking consumer confidence numbers and things like that. And a lot of that is because of the debt that is not showing up in a lot of these economic reports.

Goldy:

Right. We know that the Biden administration, people in the Biden administration struggled with this. All the mainline economic numbers said the economy was doing great. Inflation was coming down-

Paul Constant:

Yeah, we were leading the world.

Goldy:

… real wages were up, consumer spending was up, unemployment was low, yet people were really upset about the economy. And the Trump administration is facing the same thing because they look at those top line numbers, Bessent and others saying, “This is the best economy ever.”

Paul Constant:

Golden age.

Goldy:

Yeah. If you’re in the top 10%, especially if you’re in the top 1%, or especially if you’re in the Trump administration because you’re just raking in money hand over fist with all that corruption, best economy ever. And they’re having trouble connecting. Well, they’re not even bothering trying to connect with voters because in their world it is the best economy ever. And those numbers support it, low unemployment, what else more do you want? Turns out if you start looking at debt and how it is distributed unequally throughout the economy, those rising real wages, which we don’t have anymore, past six months we’ve had declining real wages. But even when it was rising, it really wasn’t rising in terms of compared to not just inflation, but also your debt payments.

Paul Constant:

Yeah. And that’s why I was so excited to see this new report from the Century Foundation and Protect Borrowers that looked into how debt is actually eating into workers’ incomes, particularly over the last four years and what that means to actually live in the economy. So the report is called Half of Every Dollar: How Household Debt Eats Into Workers’ Income Gains. And let me tell you, Goldy, I read a lot of reports. Every week I work doing research for our newsletter, The Pitch, and I read a lot of reports. And this report is one of my favorites in recent memory because it clearly identifies a problem, it breaks new ground, it’s well considered. I feel like it breaks some walls in a way that a lot of economic reports don’t. It really puts a finger on a real problem that people were having trouble articulating.

Goldy:

Yeah. I knew the basics that this was an issue, but man, the way they break it down in this report, the clarity is very impressive. And we will of course provide a link in the show notes. We encourage you to read it, but also we encourage you to listen to our conversation with one of the report’s authors, Angela Hanks, chief of policy programs at the Century Foundation.

Angela Hanks:

I’m Angela Hanks. I’m the chief of policy programs at the Century Foundation. We are a more than 100-year-old think tank that has its roots in the New Deal and has worked on a variety of domestic and international policies from the beginning up till now. We focus on health, labor, education and the economy. And I’m here today to talk about some of the work that we’re doing on consumer debt, really diving deep into consumer debt as a way to understand what’s happening in the economy and why people are so concerned about their financial futures.

Goldy:

We just saw there were report that real wages have declined now for six to eight months and people talk about that creating a lot of the pain in the economy right now and all the voter unhappiness. But your report, it’s actually, when you look at consumer debt, it’s far worse than that. Tell us what you found.

Angela Hanks:

Yeah, so I think over the last several years, we’ve all kind of heard and seen the same things where we see unemployment going down, save the last six months, which we can talk about. There was a period where real wages were rising and yet in survey after survey, when you look at consumer confidence, consumer sentiment, you see that people and you look at, I mean, we’re doing polling on this, you see what people are saying about their own financial lives and it’s pretty disturbing. People are deeply concerned and pessimistic about the economy. They’re worried about their own financial lives. They’re telling us in polls that they are struggling to pay for medication. They’re struggling to pay for meals.

We did a survey last year that showed one in three people said that they or someone in their household had skipped meals in the last year in order to make ends meet. When you look at the top line indicators that we use to measure the strength of the economy, it tells a quite different story. And really, I think we’re starting to see that those things are really starting to deviate from people’s lived experiences. And so this is not to trash the traditional economic data. We should still look at the unemployment rate every month. And I think we’re all still waiting for the clock to turn from 8:29 to 8:30 to look at the CPI and other data. And I think what we know is that it’s not telling us enough about what’s happening in people’s homes and in their pocketbooks.

So we did this report trying to better understand actually as a starting point, how consumer debt was impacting the labor market. So really trying to take an issue that is often thought of as a question of prices and think about the labor dynamics at play when it comes to consumer debt. And along the way, we found some pretty striking things about what’s happening to real wage gains. So first of all, like you said, we actually know that real wage gains are a fiction. At this point, we’re not getting them, but when we were getting them, what our report found is that since the end of 2022, a significant portion of people’s real wage earnings is actually going straight out the door to debt payments. That amounts to over the last four years or three years, people have seen about $109 of real wage gains on average. 57% of that has gone toward debt, which means that 52 cents on every dollar of real wages earned in the last couple of years has gone immediately out the door to debt.

Now that’s credit card debt, auto loan debt, student loan debt in our analysis. It doesn’t even include a variety of other debt, but really this shows that even if you paint sort of the rosiest picture of what’s happening with people’s debt, you see something that’s pretty disturbing. Real wage gains actually feel a lot lower to people than the data showed that they are. And as a result, you kind of start to understand why people feel so pessimistic about the economy. It’s because they’re being told over and over again, “You’re doing great. You’re getting these real wage gains. Don’t you see you’re up 0.3% from last month or at least they’re not going down or whatever.” And the reality is for some people for quite a long time, they’ve been not nearly as high as we thought they were. And for many people, we’re actually seeing that real wages are declining because so much of this is going out in debt service.

Goldy:

And those numbers you just gave us, those are in the aggregate. What you find is that the lower down the income scale, the larger these debt payments play a role. In fact, when you count this in, people are losing out there. They’re seeing negative wage gains.

Angela Hanks:

Yes, that’s right. I mean, we started out, again, trying to tell a story about the labor market, which this does, but really it tells a story about income inequality and wealth inequality more broadly. So we looked at households by income tier, and if you look at the top income quintile, that percentage that I mentioned, 57% going to debt service is somewhere closer to 32%. But if you look at the bottom income quintile, it’s 72%. I mean, that is stunning. That is like three quarters of your dollar is going straight out the door to debt payments month after month. And meanwhile, things are getting more expensive. You’re trying to figure out how to make ends meet. And these are people who don’t have a lot of extra breathing room in their lives to begin with. And that’s when you start to get into the real consequences for people in their actual lives where they don’t have the kind of cushion where they can bear not getting a raise for years at a time as prices go up.

They can’t bear having something like a car accident or your kid gets sick. Any of these things for people who are living that kind of marginal economic life are going to be catastrophic. And this really lays out why people are feeling increasingly strapped and increasingly worried that their own financial footing is on pretty uncertain ground.

Paul Constant:

One of the things that really struck me about the report is the revelation that not all debt is created equal. The median car payment is $462 a month for borrowers in the bottom fifth of the income and 495 in the top fifth. It’s almost the same bill and they’re both obviously drawing very different incomes. And there’s also sort of a contrast between people borrowing against their homes and assets to build wealth and others borrow to cover daily necessities. And I was wondering if you could talk a little bit about the differences, what it means to be in debt if you’re rich and to be in debt if you’re poor.

Angela Hanks:

Yeah. I mean, I think one of the things that this report does is really kind of challenges that good debt assumption in a couple of ways. So I would say one, as we were looking at the amount of money that people are paying toward debt service and their real income gains, we didn’t include mortgage debt in the equation for a couple of reasons. One, we wanted to be able to compare the kinds of debt that are really weighing people down. And like you said, mortgages are a little bit different. I would say there’s even nuances in there when it comes to what neighborhood do you live in and your race and your income. And even there, the question of good debt still looms large, but I think it’s hard to argue that as you’re paying your car payment month over month, that you’re getting an appreciating asset.

We all know it loses value the moment it goes off the lot. And cars in particular are really interesting actually. So we did a previous report looking at auto loan debt a couple of months ago, and there a couple of things stand out. Like you said, there is very little difference in the monthly payment between people who are at the top of the income spectrum and the people who are at the bottom. And there’s a few reasons for that. One, frankly, there’s just no cheap cars anymore. So this isn’t people going out and buying a Lexus when they can really afford a Honda. This is actually now the Honda cost what a Lexus used to. And so people are just having to take on bigger and bigger loans in order to have something that helps them get to work, that helps them keep their job, that helps them get their kids to school.

Most people in America require a car to maintain their employment, to maintain their daily lives. And so this is an expense that is not optional for most people. And there are very few people in the world who can afford to lay down $30,000, $40,000 $50,000 for a car and walk out the door debt free. Most people, almost everyone is putting this into some kind of installment payment. And so as we’re seeing fewer cheap cars, we’re seeing a lot of riskier lending terms pop up in order to meet demand for cars, but also this is coming at the expense, especially of lower income lenders. So in addition to seeing really high rates, we’re talking a 10% loan on average for a car, we’re also starting to see a lot of extended loan terms. So more and more people are getting a seven-year loan on their car.

And this is, again, 30-year loan on your house is a relatively safe bet. You’ll pay it off at some point or you’re likely to pay it off and you’ll have that asset that’s appreciated at the end. Seven-year loan on a car is a huge risk. You don’t know what’s going to happen seven years into your car. I don’t know cars, but the engine might stop working or there’s some kind of mechanical failure that costs you thousands of dollars that you’re having to roll over into a new loan. You have to get a new car because someone hits you.

This is something that really doesn’t pay off for people over time, but is taking, especially for people who are lower income, a huge amount of their paychecks in order to be able to have this thing. And it’s kind of creating this hamster wheel for people where they never can get out of something like auto debt, which is supposed to be the temporary thing that gets you to a place where you own your car outright. And now that’s just like you get less and less time of that the more people are taking on seven-year loans.

Goldy:

Right. 50, 60 years ago, the average auto loan was 24 to 36 months. Now it’s 60 to 72 months that you’re paying off your car. The line that really jumped out at me, we talked a little bit about housing versus auto loans, housing debt versus auto loans. This one line, “The groups that carry more of the debt that drains income hold less of the debt that builds wealth.” And you’re not even including the mortgage numbers in there, but it’s a very different type of debt.

Angela Hanks:

Yes, exactly. You don’t pay off your credit card debt and then get to sell it to somebody else, right?

Goldy:

At a gain.

Angela Hanks:

Right. At a gain. You don’t have those same avenues for recouping your investment for these other things. What they are is ways that people are figuring out how to get from point A to point B. So with credit card debt, the way that people are using this, and we know this mostly from polling and other survey data that’s available out there, is they’re using it to meet their basic needs. They’re using it for gas, for groceries, for things that they are not able to afford with a debit card or their bank account or whatever. These are really for purchases that are out of reach for people, and it’s not an expensive vacation to Disney World. It’s like being able to put gas in your car to get to work, be able to put food on the table, be able to go to the doctor and take your kid to the doctor when they’re sick.

And so those kinds of expenses are both incredibly necessary to people’s lives. And some of what this report shows is that people’s paychecks are just not going far enough. The credit card ends up being sort of the source of income of last resort for people who just aren’t getting paid enough. They’re seeing prices rise. They’re maybe seeing their incomes rise, again, not lately, but at the same time, they’re not really seeing the kinds of income gains that would get them out of this cycle. The monthly fluctuations that we see in the wage data are not enough to fundamentally change the way that people can approach decisions about their healthcare or their childcare or their education. They’re really just enough to keep up with what’s happening at prices, and again, not even in any cases recently. And so people are using this debt just to stretch their very last potential dollar.

And then the consequence at the other end of it is they’re doing that just to meet their basic needs, and then they’re paying for the product twice. You’re paying for it on your credit card and you’re paying that over time, but you’re doing it at 20%, 22%, 25% interest. And so these products that are already too expensive are rendered much more expensive when they’re on a credit card. But again, most people find themselves in a position where there just really isn’t a choice.

Goldy:

Right. And these differences, the inequality we see is not just across income levels. It’s very clearly across race and gender at the same income level. And I don’t need to tell you, it’s like the worst is for Black women. They’re getting the rawest deal of all.

Angela Hanks:

Yeah. I mean, so we did a bunch of breakdowns in this report on race and gender, and I’m really glad you asked about Black women because I think this is where you really see the story of how this shows up as a story about income inequality, labor market inequality, and wealth inequality all at the same time. So Black women have lower wages than their peers and they have higher levels of education than their peers. And so Black women, we end up in this situation where we have lower income but more debt in part because part of seeking out that debt in the first place is to raise Black women’s fortunes on the income side. So you’re taking on debt for student loans in order to be able to increase your prospects in the labor market. And what happens in the end is you don’t see those returns in the labor market as the same as your peers who are white or male, and you still have the debt that you have to pay off.

And that debt is often higher because of the household wealth inequality that we know exists between Black and white households. So you’re sort of in this situation, particularly for Black women, where it’s the combination of having little financial cushion in terms of wealth in order to be able to weather financial storms, but also take on big expenses like an education and the rewards that you get for that in the labor market are lower often because of outright discrimination because of your identity. And so it puts those workers in particular in a really compromising place. And we see this show up in the data where Black women are sort of at the most risk of seeing their paychecks being eaten up by debt because of that sort of inequality on the debt and the wage side.

Paul Constant:

And there’s also Hispanic women devoting about 23% their take home pay to debt versus 14% for white men. Sticking with race, what kind of choices disappear when you can only afford your own debt compared to other households who can’t because of this structural inequality?

Angela Hanks:

I mean, pick your financial decision that people make in their lives. We talk about the debt and income, but people use their income to pay for their lives. It’s decisions about what childcare you can enroll your kid in, whether you can send your kid to college, whether you can afford groceries, whether you can afford a car that’s safe enough to drive to work, or do you have to stick with the thing that the mechanic is like, this maybe is going to crap out, but you got to drive it anyway. All of those decisions are taken away from you when you’re spending all of your money just to keep your head above water and pay down your debt. And so it really does create a situation where people are in a position that again, we see from the polling that we’ve done, where they’re making impossible choices about their lives every day. They’re choosing between food and medicine.

They’re choosing between a roof over their heads and a vehicle to drive them to work. They’re choosing between going to the doctor and not. I think that was one of the more disturbing things we saw in some of our polling last year is just the number of people who are putting off medical care because they can’t afford it. And so these sort of start and I think sound like problems of debt, but when you zoom out, you start to see that these are problems with labor market that’s not functioning well enough for people, a healthcare system that’s not functioning well enough for people, an education system that’s not functioning well enough for people. They are really kind of left on their own to piece together what should be kind of systems that work for all of us with debt in a way that makes their lives even more precarious.

Paul Constant:

You’ve said that many of the measurements, the economic measurements we use to gauge how consumers are doing just don’t even count debt. And you did a good job of capturing some of that, but you acknowledge you don’t get only about 85%, 90% of the debt payments. And I was wondering if you could talk a little bit about those that are not in the report. You’ve already mentioned some of it, and also what is the most important part of the life as an American worker right now that we’re not measuring in our regular reports and measurements?

Angela Hanks:

On the things that we don’t measure in this report, so that 52 cents on a dollar figure that I mentioned earlier includes just student loan, auto, credit card debt. What it doesn’t include is quite broad. And that means that when we’re talking about 52 cents on the dollar, we’re talking about the rosiest picture possible. The actual figure is actually probably quite a bit higher and we don’t know for sure because it doesn’t show up in the data that we have access to. But as folks are looking at this, I would caution you to think about this as kind of best case scenario. This is what people are holding, but it’s actually probably a lot greater and probably you can see the differences showing up, again, much more significantly depending on the income quintile that you’re looking at with more debt held at the bottom quantiles.

But the types of debt we don’t include is buy now pay later loans, so-called earned wage access loans, which is a payday loan from your employer, which exists for reasons that we can get into later. We don’t include medical debt. We don’t include rental or mortgage debt. We don’t include any other kinds of installment loans that people might have, like that might be your actual payday lender in the corner or others. And so this is sort of the best case scenario. If you’re just looking at these three products, it’s about half of every real dollar in wage gains earned, but more likely it’s much higher than that. The data that’s out there, I love the BLS. I want them to continue what they’re doing and do it unfettered, and that data is really important to understanding how the economy works. And I think that the big wake up in this report is that we need more and better and more comprehensive data in order to be able to really analyze what’s happening.

I mean, we couldn’t do this analysis without the wage data from BLS and from Census to be able to understand this, but I think the analysis that we’re doing really sits alongside the other indicators that are out there. And actually this paper proposes a new indicator that can sit alongside all the others that are out there. It’s called Real Income Net of Debt or RIND, and it is exactly how it sounds. It’s a very descriptive name, but basically looking at this real income, both in the straight out what you get from the Bureau of Labor Statistics, but also then taking into account how much of that is going directly out the door to banks, to credit card companies, to your auto lender, to your student loan servicer in order to better understand how people are experiencing those wage gains. It’s complimentary, it’s not in substitute of, but I think really gives us a new dimension by which to look at the economy.

And then I think your last part of the question was about workers and how-

Paul Constant:

I think that debt strips workers of a certain amount of freedom, right?

Angela Hanks:

Yeah.

Paul Constant:

If you have all this debt that you have to pay off every month, if you walk off the job, you’re not able to pay those debts and then you have even more debt and it just feels insurmountable. So yeah, can you talk a little bit about what that debt is doing to workers?

Angela Hanks:

As a starting point, we talk in the report about debt as a source of job lock for workers. It really is limiting on worker mobility. We know that best way to get a raise is to quit your job and go to a different one. When people have debt, it’s harder and harder to do. You might not be able to afford even one or two days without a paycheck. You might not be able to afford taking a risk on a job that might lay you off a week later because you’re the last in the door and potentially the first out if there’s a round of layoffs. It really does put workers in a more precarious position when they have no financial cushion that can help them move from one job to the next. In addition to the job lock, it also prevents people from using their limited resources to invest in the types of education or training that might help them improve their mobility in the labor market.

And so that is another constraint. But what this kind of boils down to for workers is it really is a limit on bargaining power. One of the best bargaining chips that you have with your employer is your ability to get up and walk away. And when you can’t do that, it means that employers have more power over you and your livelihood and your wages than they should have in the first place. And so debt really acts like an anchor both for workers individually, but also on the labor market more broadly. And we even kind of zoom out in the paper to think about that in terms of the macroeconomic costs as well. If we have a labor market where workers are tightly constricted into the jobs that they have and no one moves, which by the way happens to be the labor market we have right now, as folks have said, a low hire, low fire labor market, that makes for a less dynamic labor market and economy overall.

We want people to be changing jobs. We want people to be getting better jobs. We want people’s incomes to meaningfully go up so they could afford to put that money back into the economy as consumers. And none of those things can happen if you are stuck toiling away at a job that you cannot leave because you cannot even afford a few minutes between paychecks or else your family is going to be completely underwater. So the stakes for workers here are incredibly high as individuals, but I would also say for our economy writ large, it really puts us in a more precarious place overall when workers don’t have that kind of mobility that they need.

Goldy:

Right. It’s interesting because on the right, one of the pushbacks to this idea that of rising income inequality is that, “Oh, but not if you count government transfers. If you count government transfers, the inequality…” So they’ll want to work that back in, but they don’t work in the disparity in terms of debt. And also, we don’t really have good numbers, unless you know something I don’t know, on the CPI on inflation and how it impacts different groups, both by income and when you get to housing by race as well. So all of that is missing from these broader numbers.

Angela Hanks:

It is hard to square how at this particular moment where we are reaching robber baron levels of wealth at the top and increasingly concentrated stock market among a couple of companies that are propping it up and the introduction of trillionaires into our economy and society that the income inequality isn’t a problem. So I think we could just dismiss that as unserious because it seems kind of silly. But on this question of are we measuring the right things, I think that’s exactly right. We’re missing a lot in the existing data on what’s happening to people and people are finding new and creative ways to navigate around that. We actually hosted a paper from an academic that he released over the summer looking at Nielsen data to show the differences in inflation by income group. And one of the purposes of that was to say when the top line inflation data tell us this, what people are actually experiencing fluctuates quite significantly across households.

And so some people are experiencing much higher inflation than their peers. And you see that kind of bear out similar to this report, again, by income where lower income people are experiencing higher inflation than their higher income peers. And so there’s a lot of ways to understand what’s happening to people, but I would say the thing I feel most clear on is that we have enough evidence between what we’re proposing and the kind of analysis that other people are doing that’s kind of digging into what’s going on with people to be able to say that people are not making this up. They actually are experiencing a real crunch in their household finances and they are feeling like they’re on their own. That’s the reason these debt products are getting so much play because they don’t have anywhere else to turn. The transfers that the right would tell you are good enough to get people by clearly are not enough.

And there’s different ways to solve that. Of course, there’s policies that you would want to increase the transfers that we’re making to people, but also people need a raise. They just need more money in their pockets and that’s a good place to start. And it can’t be this piecemeal, you get 0.1% month over month or whatever, really has to be meaningful in order to make a difference in people’s lives.

Goldy:

But you also proposed debt cancellation as a possible solution. We know how controversial that was when Bernie Sanders and others proposed student debt forgiveness. And part of the pushback on that was that, “Oh, this would just be welfare for rich people because they’re the ones sending their kids to college.” But your data actually shows the burden falls disproportionately on the lower income deciles.

Angela Hanks:

I’m so glad you asked about this because this gives me an opportunity to talk about one of my, I don’t know, favorite, most hated myths, which is we’re going to help rich people with college loans. I [inaudible 00:33:18] people when I went to college who would talk about how their parents frowned when they had to write a check. I had no idea that people had the amount of money where they could just sit down and write a check for college and just send it off in the mail. That was new information to me that that kind of wealth even existed. And that is how rich people pay for college. They do not take on a student loan that they hold for 30 years and can never pay off. People who do that are people who have low incomes, who don’t have any household wealth, who are using student debt as an instrument to try to get to the next thing to try to improve their fortunes for the next generation.

It’s not rich people. And so anyway, just that’s a little…

Goldy:

And we’re not just talking about percentage of income. It’s actually actual dollars that lower income student loan borrowers have higher debt payments in dollars-

Angela Hanks:

Right. Exactly.

Goldy:

… than people with higher income.

Angela Hanks:

And that’s where the wealth inequality shows up because you’re seeing people who the first dollar that they’re paying for college is a loan. There’s not like you or your parents grimped and saved to be able to put some kind of initial payment down. It’s that every dollar that you need to pay for college is a loan when you have no wealth that supports that endeavor. And so you see that show up in student loans in particular, but I think in other places as well. And of course this impacts people’s ability to get medical care or housing or other things when they don’t have those resources to draw on when they have a major financial expense come into their lives like college. But the reason we start with debt cancellation is, I don’t know, this may sound scary to say, but I would say debt cancellation in some ways is the low hanging fruit here.

It’s relative to some of the other things that we mentioned in the report. It could be somewhat inexpensive depending on what you’re talking about. I mean, you hear stories all the time about how cities and states are able to purchase medical debt for pennies on the dollar much more cheaply than you can rewrite your whole healthcare system at the state or municipal level or whatever. And it’s something that would immediately give workers a raise. So I think obviously that’s not a substitute for the things that we can do more directly to raise workers’ wages, but when we’re talking about changing that 52 cents on the dollar figure, if you just wipe out a bunch of sources of debt, that’s one way to get the balance to shift pretty immediately. And I would say it’s just the beginning. That is the first step to help people get on stronger footing, but really the kind of big challenges that are creating this debt for people in the first place live way upstream.

And so we have four sets of solutions that we talk about in the report that begin with debt, but end with some bigger structural changes to our economy that would help people live better economic lives. So again, starting with things like debt cancellation, we also have quite a bit in there about going after predatory financial products and institutions. So this is where you get into some of the loan products that we can’t even cover that people are increasingly turning to like buy now pay later, earned wage access. The fact that your employer can become your debt collector certainly has an impact on your job mobility because now they have even more power over you. And so addressing some things like that as well. Again, there’s a lot we need to do to more directly raise wages for workers, including raising the minimum wage, but also increasing worker bargaining power through organizing that can help people bargain more directly with their employers either at the firm level or the sectoral level in order to get those higher wages over time.

We need a labor market that’s free of discrimination. We talked about this when we talked about Black and Hispanic women, but you see people who are going to school, getting the education that is supposed to be a ticket into a higher paying job in the labor market, not see those gains in part due to discrimination. So having a really strong enforcement arm helps with that. And then finally, highest upstream, we have to solve these big financial problems that are holding people back. And that stuff like healthcare, childcare, the cost of education, really the things that are the biggest sources of people’s paychecks every month going to things like very expensive and rising healthcare premiums, very expensive childcare, very expensive education that’s making it harder for people to get ahead. I think all those things kind of work together. I would love to see Congress act on any one of them would be wonderful, but really it is about solving the problems for people right now and then really solving at the root for these things that are driving people into debt in the first place.

Paul Constant:

So we always ask our guests the magic wand question, which was if you could wave a magic wand and change anything about our economy, what would you change? I think you might have already addressed that. Were there any other policies that you’ve talked about in the report that you wanted to discuss?

Goldy:

Or one that stands out far above the others is the first thing you would do.

Angela Hanks:

Oh gosh. I mean, I really can’t pick. It’s like picking your favorite child. I can’t do it. But I will say this, and I was warned about this question, so you would think I would have a better answer, but I think maybe I’ll talk about a way that I would know it had happened. So I mentioned a little bit at the beginning the reality that labor share of income is at the lowest level on record and what that means for our economy writ large. And I think if I had a magic wand, I would just flip it to get back to where we were 50 years ago, in part because that is the things that we lay out in the report are a path to get us there. And so magic wand, we’ve already done it and we flipped labor share back to where it was a generation ago, but absent that, let’s do all these things and then try to push it in that direction over time.

Paul Constant:

Wow. I think that might be my favorite magic wand answer on record, so thanks for that.

Goldy:

So we’re just going to reverse that whole $79 trillion upward redistribution of income and wealth.

Angela Hanks:

I mean, this is why it’s a magic wand.

Paul Constant:

Exactly.

Goldy:

That’s right. Well, orthodox economics is all about that invisible hand and it’s got a wand in it.

Angela Hanks:

Right, exactly.

Goldy:

[inaudible 00:39:21].

Angela Hanks:

Invisible hand is pushing up corporate profits over time.

Paul Constant:

So the last question-

Goldy:

Final question, Paul.

Paul Constant:

The last question we ask everyone, why do you do this work?

Angela Hanks:

Because I live it and my family lives it and my community and everyone I know and people who I don’t know live it every day and we got to do something. I mean, people are really struggling. It’s both depressing to see it show up in the aggregate data we look at. And I find myself increasingly talking to people in my life and people I know who know other people who really are just struggling so deeply to just afford the basics. The number of times I feel like I hear in just casual conversation things are so expensive or people worried about their jobs or about whether they’re going to get a raise or laid off or whatever. People are really sort of suffering from this lack of power in our economy. And I don’t know, I think we should fix that and we have the tools to do it and so we should.

Paul Constant:

There’s this economic theory that I think about a whole lot, and I bet you haven’t heard of it, Goldy.

Goldy:

I haven’t heard of an economic theory?

Paul Constant:

I know. I know. It’s hard to believe. This one, are you familiar with the author Terry Pratchett?

Goldy:

Yes.

Paul Constant:

Terry Pratchett was a wonderful fantasy author. I had the great gift of interviewing him once in Seattle. He was a wonderful, smart, very funny man. He wrote an amazing series of books that I recommend to anybody age 13 to 130 called the Discworld Series. And in one book in particular, he came up with the Vimes’ Boots theory of the economy. The character’s name is Vimes. And the theory is that because poor people can’t afford luxury products, they wind up spending much more by buying cheap things. And the case he uses is boots. You can’t afford a good pair of boots that will last five years if you’re working on a night watchman salary, which is the character in the book is living on. And so you buy cheap boots with some cardboard in the soles and the boots fail after six months or so of working and walking on the job.

And so you’re spending more for boots in the aggregate over time than rich people who are able to afford luxury boots that last for 10 years and then can get them resold and things like that. And so the aggregate cost of being poor is so much larger than the cost of one good pair of boots because you can’t afford to buy the damn good boots when you need them. So that kind of made me, this whole report and this whole conversation made me think of that, that corporations, financial institutions, things like that have gotten very good at providing just enough money for people to get by in such a way that they can reap tremendous profits in the form of debt payments.

Goldy:

I’m sorry, did I disappoint you that I was familiar with the Vimes’ Boot theory?

Paul Constant:

Yeah, I thought I got one on you. Sorry.

Goldy:

Yeah, you thought you stumped me.

Paul Constant:

I did.

Goldy:

But it speaks to a larger issue because, and that this report gets to, in that it’s really expensive to be poor. A lot of people don’t get it. It is more expensive to be poor than it is to be rich. And for a number of reasons, one of them is what you said, that cheap stuff is more expensive in the long run, but also when it gets to this, the fact that you have more debt, you need more debt, you could buy that good pair of boots on a credit card and then you’re paying 26% interest over the life of the boots as you pay them off and soon to be higher because the Fed is raising interest rates to deal with rising and… Oh, we wouldn’t want that inflation caused by a war in Iran. So we’re going to raise interest rates. So now your credit card bills are going to go up in everything.

Your mortgage rates are going up. If you have an adjustable rate mortgage or you’re looking to buy a house, you’re really shit out of luck right now. So that increased your cost. It’s expensive. It’s just more expensive to be poor than it is to be rich. Now, the rich spend more money, that’s because they can, but they don’t have to. And that’s where most of the debt comes from is what you have to spend your money on.

Paul Constant:

Yeah. And that was why I really appreciated what Angela was saying. I mean, first of all, her repeated saying that we need to raise wages and recognizing that wages are a significant part of the problem. That is something that we don’t hear enough of, I think, when people are talking about debt. But also I think the proposal for the rind measurement of debt I think is really important because this is something that we were not capturing before fully. We were not getting the full picture of what it’s like to be poor and all the expenses that poor people are paying in the economy that are pulling them out of the economy and making the economy weaker for everyone.

Goldy:

One more insight from this report that I think is important to highlight is I love the way they bring labor power into this equation, that when you have these higher debt levels, it makes it harder to quit your job, to look for a better paying job. It actually reduces labor mobility and labor power. And this is not some radical lefty assertion. This is right there in Adam Smith’s Wealth of Nations. He points this out that employers inherently have more power than their employees because they can last out a strike because they’re not going to have a problem putting food on their table or paying their rent. Whereas if workers strike or quit, they and their kids could be starving within a month or two. It’s really important that what happens is when this increase in debt at lower income levels actually ends up depressing wages.

And that’s just not part of the equation that people tend to think about.

Paul Constant:

Well, look at that, Goldy. I started out by talking about a humorous series of fantasy novels and you brought us all the way back to Adam Smith and that’s why you get paid the big bucks.

Goldy:

Well, one would argue that some of Adam Smith is a fantasy novel, at least the way it’s interpreted by orthodox economics. I mean, one mention of an invisible hand and it’s just as magical as Terry Pratchett’s books.

Paul Constant:

Well, in any case, we encourage you to check out the report, Half of Every Dollar: How Household Debt Eats Into Workers’ Income Gains. There is a link in the show notes. I encourage you to read it and to share it. And if you found this conversation interesting, please share it with your friends.

Freddy:

Pitchfork Economics is produced by Civic Ventures. If you like the show, follow us and leave a rating or review wherever you get your podcasts. You can also find Pitchfork Economics on Facebook, Instagram, Threads, Bluesky, and YouTube. For the latest economic news and analysis and ideas for building an economy from the middle out, subscribe to our weekly newsletter, The Pitch on Substack. If you’d like to read more from Nick, subscribe to his writing commentary at nickhanauer.substack.com. And for links to everything we just mentioned, plus episode transcripts and more, visit pitchforkeconomics.com. As always, from our team at Civic Ventures, thanks for listening. See you next week.

The post Why Your Raise Doesn’t Feel Like a Raise (with Angela Hanks) appeared first on Pitchfork Economics.

Anti-Fascist Economics (with Isabella Weber)

Freddy Doss — Wed, 21 Oct 2026 03:39:37 +0000

What happens to democracy when people can no longer afford the basics of everyday life?

Economist Isabella Weber argues that the affordability crisis isn’t just an economic problem—it’s a threat to democracy itself. Drawing on her new book, Anti-Fascist Economics, she joins Nick and Goldy to explore how inflation, austerity, and corporate profiteering fuel the rise of the far right, and why protecting democracy requires more than defending its institutions. From housing and groceries to energy and healthcare, Weber makes the case for an economy that puts people’s livelihoods, dignity, and democratic power ahead of corporate profits.

Isabella Weber is an associate professor of economics at the University of Massachusetts Amherst and founding director of Essential Economics. Her research focuses on inflation, corporate pricing power, and economic policy. She is the author of Anti-Fascist Economics: In Defense of Affordability, Dignity, and Democracy and How China Escaped Shock Therapy.

Social Media:

@isabella_m_weber

@IsabellaMWeber

www.isabellaweber.com

Further reading:

Anti-Fascist Economics: In Defense of Affordability, Dignity, and Democracy

Best of Times, Worst of Times: Record Fossil-Fuel Profits, Inflation and Inequality

How China Escaped Shock Therapy

The Wall Street Journal – America Made Me Very Rich. There’s a Pro-Market Way to Give Back.

Instagram: @pitchforkeconomics

Threads: pitchforkeconomics

TikTok: @pitchfork_econ

YouTube: @pitchforkeconomics

LinkedIn: Pitchfork Economics

This episode originally aired December 10, 2024.

Substack: The Pitch

Nick’s Substack: NickHanauer.Substack.com

Goldy:

Hey, Pitchfork listeners, Goldy here. Be sure to stay tuned at the end of the episode for our new segment, Ask Me Anything with Nick Hanauer.

Nick Hanauer:

The rising inequality and growing political instability that we see today are the direct result of decades of bad economic theory.

Goldy:

The last five decades of trickle-down economics haven’t worked, but what’s the alternative?

Nick Hanauer:

Middle out economics is the answer.

Goldy:

Because the middle class is the source of growth, not its consequence.

Nick Hanauer:

That’s right.

Speaker 3:

This is Pitchfork Economics with Nick Hanauer, a podcast about how to build the economy from the middle out. Welcome to the show.

Goldy:

So Nick, fuel prices are in the news a lot today. Most particularly diesel fuel, which is heading towards $7 a gallon nationally, $8 a gallon here in Seattle. That means heating oil-

Nick Hanauer:

Yeah.

Goldy:

… prices are rising too, because heating oil and diesel oil are essentially the same fuel. And that means that coming this winter, you’re going to see a lot of suffering throughout much of the country, particularly in the cold regions where a lot of people use oil to heat their homes. I’ll give you an example. Up until a few years ago I had a oil furnace. I converted to a heat pump, which is great. Thank you very much, Nick, for paying me-

Speaker 3:

Yeah.

Goldy:

… enough to be able to afford that conversion. But filling that 600 gallon tank, which is what I might go through in mild Seattle, it’d be costing me over $4,000 this winter if I still had that tank. Imagine you’re living in Maine, or Vermont, or New Hampshire, or-

Nick Hanauer:

Michigan-

Goldy:

… Michigan-

Nick Hanauer:

… or wherever. Yeah.

Goldy:

… Wisconsin, whatever, and you’ve got-

Nick Hanauer:

Where it gets actually cold?

Goldy:

Where it gets actually cold. If you’re still relying on home heating oil, people are going to have to make a real choice this winter between heating their home and paying their mortgage, or their rent, or purchasing food. You’ve got heating oil at $8 a gallon and you have ground beef at $8 a pound, and these aren’t exaggerations.

Nick Hanauer:

Yeah. No, this is what brings fascism to countries. I mean, we’ve been arguing this for a long time, is that in a world where life gets shittier and harder for the majority of citizens every year for 50 years while a few people make out like bandits, who needs democracy? And I guess the reason we’re chatting about this is that today on the pod we get to talk to the economist, Isabella Weber, who has this fantastic new book out called Anti-Fascist Economics: In Defense of Affordability, Dignity, and Democracy. And her core point is this, that economics and democratic governance are inextricably intertwined, that you can’t hope to have a functioning democracy without an economy that is organized around making sure that ordinary people benefit from that arrangement, and clearly that’s the opposite of what we have today. And as a consequence, not only is our country under threat of fascism, but it’s obviously rising all over the world, which is such a terrifying and serious problem.

This is something that’s so important for us to acknowledge and to address. And so, that’s why it’s super fun to get to talk to somebody like Isabella about this problem and how we might get out from under it.

Isabella Weber:

Hi everybody, my name is Isabella Weber. I’m an economist. I just wrote Anti-Fascist Economics, which is about to come out in October, and I’ve been doing work on inflation and profits.

Nick Hanauer:

So Isabella, we’ve taken a look at an early copy of your book, and there is so much to cover in this conversation. And we are in, I think pretty obviously, so much alignment around the ideas that you express. Why don’t you start by sort of laying out your general thesis and then we’ll take the conversation wherever you want to go.

Isabella Weber:

So, this book really started with a tweet on the night when Donald Trump was reelected, and I posted, “Can we finally have a serious conversation about anti-fascist economics?” And that was really a spontaneous reaction to the election recite, but it was also a reflection to the experience that I’ve had in economic policymaking in the years prior where I have been quite involved in the debate around inflation. And I got quite frustrated, to be blunt, how the economics debate was completely separate from the democracy debate. So, it was as if we could do one thing for the economy and then do something else for democracy. I don’t know, call Trump a fascist and hope that that’s enough for him not to be reelected.

So, this is a book that really tries to bring the two together by covering the history, telling the story that actually one of the lessons of the horrors of the Nazi time was that never again is an economics question, and then kind of illustrating how in economic policymaking, we too often treat people’s livelihoods as collateral damage in market adjustments, and that actually puts our democracies and really our dignity at risk.

Goldy:

We’re weirdly seeing this right now with the Federal Reserve raising interest rates, which I don’t mind them doing that to troll Trump, that’s great, heading up to the midterms. But as an economic policy, I mean, the whole goal of raising interest rates is to reduce demand, raise unemployment. It’s basically to put it on the backs of workers and consumers as if that’s our only tool.

Isabella Weber:

I mean, we are seeing an inflation that was unleashed by an illegal war against Iran that led to the closure of the Strait of Hormuz, and all the fallout from there, from oil to fertilizers, to all sorts of key ingredients across production lines. The idea that we could fight that kind of inflation by making the cost of credit higher is quite frankly just absurd. And I mean, it is bad economics, I think. It’s quite straightforwardly bad economics. But I also think, well, it might be useful to throw Trump ahead of the midterms, but we have to recognize that extreme right is in a global alliance and is on the rise globally. I mean, I’m speaking here with a German accent and we just had the worst elections in post-war history where an openly right-wing extremist party with clear neo-Nazi elements has won 44 and more than 38% in two states.

So, that kind of moment when in the heartland of Western democracies where we thought we had learned the lessons, this is the election results that we get. I don’t think that we can think the fact hiking interest rates, which I mean, exerts enormous pressure on people’s livelihoods, it’s basically following the logic that we have to throw people out of work in order to cool down the economy. And we know that there’s a link between economic insecurity and support for the extreme rate. So in that kind of situation, pursuing that kind of economic policy is really putting democracy at the line globally in ways that I think is truly dangerous.

Goldy:

It’s interesting, because the historical lesson that we’re told Germany learned from the rise of fascism was that it was the inflation of the Weimar Republic that brought the Nazis to power. But you basically argue in the book that it was the austerity of the German government and the German economy that was at the heart of it.

Isabella Weber:

Well, I mean, you had more than one economic insecurity shock. Just like right now, I mean we have had more than one economic insecurity shock. We first had the global financial crisis, which was the first booster to the rights of the extreme right. And then we had an inflation, that I’ve been labeling centers inflation, because it’s basically an inflation that is in large parts accounted for by profits, that was another major economic insecurity and inequality shock that came down on us or that was allowed to happen by the ways in which we do economic policy. Now historically, I mean, there was hyperinflation, which was obviously undoing the economy, destroying the ways the economy worked, I mean, creating enormous economic hardship. But then there was the Great Depression and the unemployment crisis. And then in the middle of that, we had Chancellor Bruning, who imposed the most obscene forms of austerity.

But the interesting thing is that even in Germany, even then there actually was an alternative. There was an economist named Vojtinskij who was proposing [inaudible 00:09:39] a key to a job guarantee. He later on actually went to the U.S. and it’s a program that Roosevelt of course eventually picked up on. But so, there was an alternative to going down the austerity route, and Hitler at the time was very conscious that austerity was what was going to get him elected.

Nick Hanauer:

It’s interesting. And I think what I’d love to do is just interrogate more about the connection between economics and democracy, because I think that’s the biggest strand through the book. And what we’ve been saying for a long time on this podcast and elsewhere is in a world where for 50 years the circumstances of the majority of citizens get worse while a few people at the very top do infinitely better, after 50 years of that, who needs a democracy? If this is what democracy buys you, then clearly it’s not delivering what it should. And I’m very taken by your analysis, which I think in some ways goes deeper than ours, which tends to be a little bit instrumental in the sense that our view has been for a long time that the big problem is wages. And I think you may have heard us say or know that if the median income had simply stayed the same proportion of the economy for the last 50 years, people would earn in the range of twice as much per citizen per year as they do today.

And I think it’s fair to say that if that was the case, then we would be in much less deep shit than we are today. But I think the point that you make is that it’s deeper than just the dollars and cents, it has a lot to do with agency, power, and how people feel about how they interact in the economy. And because at the end of the day the economy is a power structure, and we have for 50 years left most people behind in that.

Isabella Weber:

Yeah, absolutely. I mean, we are in the middle of a deep crisis of livelihoods. I mean, we are facing climate change, we are facing geopolitical turmoil on a scale that was hard to imagine just a couple of years ago. And all of this feeds into a real crisis of the material foundations of our lives. And in the middle of this, we are still kind of captured by the neoliberal mindset where the idea is that the best that we can do is to subordinate people to the market, because the moment that someone steps in and takes agency and acts, it’s somehow ruled by man over men. So in other words, we are still captured in this Hayekian way of seeing the world. Now, what I’m arguing is that by focusing on the essentials, which is what we need to restore and to reorganize to address the crisis of livelihoods, we can at the same time achieve very concrete change.

If you make groceries affordable, this is something that people can register at the check-out counter in very concrete ways. But at the same time, you establish the possibility of elected governments acting in the interest of the people. And this sounds banal, right? But it-

Nick Hanauer:

No, but it’s the whole point.

Isabella Weber:

Yes, exactly.

Nick Hanauer:

This is the whole point.

Isabella Weber:

It’s all banal, but it is the whole point.

Nick Hanauer:

No, when democratic governments surrender economic decision making to supposedly natural market forces, they effectively surrender part of democracy itself. And that’s what’s driving everybody crazy, right?

Isabella Weber:

Exactly. And I mean, it is inequality, because under these obscene levels of inequality that we face, we know, as you just said, that some people have just outrageous amounts of power. So in that sense, the neoliberal ideology is not coming out of nowhere, because behind the rhetoric of the invisible hand of the market hides profit fundamentalism, because ultimately when we say we have to organize this through the market, what we are really saying is we need to organize this through gigantic private companies whose primary goal is to make profits. So in that sense, it’s a subordination under capital and profits that at some point becomes incompatible with any serious notion of democracy.

Nick Hanauer:

Democracy, right. And this is why people like Peter Thiel hate democracy, because it conflicts with the unrestrained ability to make ever more profit. I think this is the biggest issue facing Western democracies today is that we have allowed … Economists, I think traditionally will tell you that the existing economic framework does not contain a moral framework, that morality and economics are different. But of course we did smuggle a moral framework into neoclassical economics, and it is the primacy of capital returns. I mean, the word efficiency simply means returns to capital. It doesn’t mean environmentally efficient, it doesn’t mean efficient for workers, it doesn’t mean efficient for consumers, it means do I maximize my returns on capital? And that is the moral framework that guides not just the economy but our societies most generally today.

Isabella Weber:

Yeah. And I mean, to go back to your earlier question, why is what I’m saying different from just expansionary macro policy? Because if we say, “Okay, we just have expansionary fiscal policy, where just the responsibility of the state is to make sure that the government is spending enough so that we don’t get into a slum,” then basically the job of the government is to somehow pump money into the economy to keep the music playing. But the logic of profit fundamentalism stays intact.

Nick Hanauer:

Yes.

Isabella Weber:

Now, what I am arguing in a very much Polanyian spirit is to say that the essentials of life are things that people cannot do without. That’s kind of the definition. I mean, no one can do without shelter, no one can do without food, no one can do without energy and utility needs, transportation, care and so on. So, these are the areas. I mean, Polanyi defines it more abstractly in terms of labor, money and nature, but I think we can break this down into these concrete things. And these are the areas where the market basically is a lie because you don’t have an option to say, “Oh, today I’m choosing not to eat.” You don’t have an option of saying, “Today I’m choosing not to heat by home,” when it’s extremely cold outside. So in that sense, in these areas, by the nature of these areas, the markets is destined to fail.

And as we are in this combination of crisis, this failure is becoming very eminent and it’s actually failing in ways where people are pushed into extreme anxieties over their material security, where at the same time, the same shocks, the same crises are the pretext for windfall profits on a scale that … Extraordinary. And that then leads to a situation where if you look at the unit profits, I mean, everybody’s now talking about the massive jump in unit profits under Trump, and that is absolutely scandalous and that shows you where the extreme right stands. They very much stand on the side of profit fundamentalism, when push comes to shove. But during the inflation, we have seen a jump in the unit profits. So, the share of every dollar that is going to profits from 0.14 or 14 cents per dollar, to 23 cents per dollar. So, this is extraordinary.

This is basically unprecedented in the data series for the United States. And this is possible because of these shocks, because of these crises that unravel our essentials.

Goldy:

Nick, you brought up Peter Thiel and you said he doesn’t support democracy because it’s good for his profits. It’s good for maximizing his profits. I think there’s something you’re missing in that, which is there’s always been this psychological component to neoliberalism. Foundationally, it’s the belief that because it’s a meritocracy, the best and the brightest and the most capable are the wealthy, are people like you, Nick. And so, you should be running the economy. And I think that is fundamental to neoliberalism and has infiltrated Orthodox economics that people like Thiel and Musk, and yes, you, it’s your wealth that actually means you should be making the decisions. And so, there is this weirdly, in Hayek with The Road to Serfdom, there is this fundamentally undemocratic idea embedded in the Friedman and Hayek ideology.

Nick Hanauer:

Yeah.

Isabella Weber:

Yeah. Thank you for bringing this up, Goldy. I think this is a really important point. And in fact, as I argue in the book, I think this is kind of where neoliberalism and fascism converge, because the ideology of neoliberalism is social Darwinist at the end of the day. It’s the idea that whoever prevails on the market is the strongest and therefore should have the most resources and the most power. And then the ideology of fascism is to add a racist interpretation to this and a group-based, hate-based interpretation to this, where it’s then no longer just the people who happen to perform best on the market, but the superior race, the group that is meant to rule, the group that is meant to be on top of the hierarchy, and everything that is going wrong with society is projected on this mythical hierarchy being undermined by whatever policies they can identify.

So as such, we have this convergence between neoliberalism that is willing to treat people’s livelihoods as collateral damage, as the interest rate policy is actually established very clearly. When Larry Summers goes on TV and says, “X percentage point of people have to be unemployed in order for the economy to get back to a more stable place,” then he’s saying those people’s livelihoods are collateral damage. We don’t care what is happening to their communities, we don’t care whether they’re able to put food on their kitchen table, we don’t care whether their children lose three years of critical child development while this unemployment prevades. And that’s actually this willingness to treat people’s lives as collateral damage is where Polanyi locates the fascist virus already in the 19 … He projects us back on the 19th century and says that with this logic, if you take this to its conclusion and you add racism and racist ideology, you arrive at fascism.

And that’s why I think it’s not so surprising that someone like Thiel is at the same time a libertarian, and someone that quite openly embraces fascist ideology.

Nick Hanauer:

Yeah.

Goldy:

As does Musk. I mean, I don’t think anybody’s gone more openly Nazi than Musk.

Isabella Weber:

Absolutely. And I mean, this is actually also one of the things that I was grappling with in the book. I mean, everybody has seen these pictures of the inauguration where suddenly the world’s richest man, the tech elite, the tech CEOs were standing in front of elected officials, had a front row seat when Trump was being re-inaugurated. And at the time there was this big kind of surprise, like how did all of these people who until recently had donated to the Democrats in support of the Democrats jumped ship? And I think there are people like Peter Thiel who have very clear fascist ideology that they have embraced and expressed openly, and there are people like Musk who I think has also turned quite explicitly racist and fascist. And then there are others who surprisingly are actually more kind of followers, who basically don’t have any core ideology, but their ideology is profit fundamentalism. So whenever power changes, they will be on the side of power.

Nick Hanauer:

Pure greed.

Goldy:

And this is actually really familiar historically. There were many American industrialists who supported fascism and supported the Nazi regime, and Hitler in particular, most famously Henry Ford, who was an infamous anti-Semite. So, that was ideological support among others. But you had, of course, Fred Koch, the Koch family, you had the head of General Motors, of Standard Oil of New Jersey. You had Thomas Watson, the head of IBM, who actually received a medal from Hitler in 1937. Most of that support wasn’t from ideological grounds, it was they were heavily tied up in business in Germany and the Nazis were good for business, until of course they weren’t and they basically seized control of their German investments. Though of course, these American companies continued to share in the profits.

Isabella Weber:

Yeah. And I mean, we saw something similar in Germany in the sense that there was a core group of industrialists that supported Hitler, a small core group, but the brunt of them really came around to either openly supporting or at least very pragmatically accommodating in ways that ultimately propped up fascism once Hitler was in power. So, that’s-

Nick Hanauer:

And you’re watching American corporations do that today, just roll over for Trump.

Isabella Weber:

Exactly. So, that’s why I have this chapter in the book that is Capital Won’t Save Democracy. We can’t wait for capitalists to save democracy. We have to realize that the only choice for democracies to survive is to organize the economies in the interest of the people. And at the end of the day, this means going up against capital interests, and this means confronting profit fundamentalism heads on. It doesn’t mean nationalizing everything, it doesn’t mean you’re turning everything into a planned economy, but it means reorganizing the economy essentials in ways that it can work for the majority of people.

Nick Hanauer:

Yeah.

Goldy:

And this means not just redistributing incomes, it means redistributing power in the economy, because that’s where this all starts.

Isabella Weber:

Exactly. And I think that’s also where I’m trying to push us beyond a tax the rich agenda. I mean, I’m obviously very much on board with taxing the rich, but I think it’s not enough to keep the machine running as it is running and then have this … I mean, if you think of it as kind of a water pumping machine, you have large parts of the water constantly being pumped into one bucket, and then take a little scoop and you scratch a little bit out of it and put it back in the other bucket. No, we have to actually work on how the machine is designed, and that’s what I’m trying to get at. But it’s also not possible to change the whole machine overnight. We have to do this in a gradual fashion because we have to restore power.

I mean, democratic power is extremely fragile at this point. We have to regain people’s trust. That’s I think why Mamdani’s New York is so inspiring when he insists that with every pothole that is being filled, a little trust in democracy is being restored and in the ability of governments to deliver for the elected constituencies, and I think he’s exactly getting at that. So, we have to have these immediate steps that we can take. But at the same time, in addition to these quick fixes and relief measures, we need structural change that actually transforms the ways in which we organize the economy and transforms very concretely the ways in which we provision essentials, because that’s also something that we have to do because climate change is a reality and the crisis of livelihoods that we face in considerable parts is driven by climate change.

Goldy:

And just adding like everything else, it’s the people with the lower incomes who are going to suffer most both from rising prices and from the-

Nick Hanauer:

Rising sea levels.

Goldy:

… impending climate catastrophe. Yeah, Nick’s going to be fine.

Nick Hanauer:

Well, maybe I will.

Goldy:

You’re going to be in your bunker somewhere, but yeah.

Nick Hanauer:

On my mountaintop.

Isabella Weber:

Absolutely. And again, that’s why what Naomi Klein and Astra Taylor call anti-fascism is something that also converges with this neoliberal logic. When the anti-fascists say, “We are going to be in our bunker, we are going to be on our island, we are going to be in our freedom city and we are just going to be fine,” and we let the planet burn and we let the pandemics run through populations and have herd immunity, which really means people just buying in swaths. And we let the energy prices explode and we let the fishermen in the Philippines go without diesel after three days and go without food after two weeks, then this idea of anti-fascism actually converges with the idea of markets on nation and the neoliberalism.

Nick Hanauer:

So Isabella, if you were going to do three big things to get this mess cleaned up, what would those be?

Goldy:

And this is a without political constraints.

Nick Hanauer:

Yeah. If you were-

Goldy:

So, just the magic wand question.

Nick Hanauer:

Yeah, the queen of the world.

Goldy:

We used to call this the benevolent dictator question, but politics have degraded to the point where the word dictator is becoming too much of a realistic outcome. So, the metaphor doesn’t work for us anymore.

Isabella Weber:

Okay, I’ll make one meta point. I don’t know if I can squeeze this in as a fourth point, and then I go into my actual points. So, I think the first point is actually going back to something that you said, Nick, is that we need to realize that economics is a moral science. And for a reason, Smith didn’t only write The Wealth of Nations but also The Theory of Moral Sentiments, and pretending that there are no moral implications from economics is part of what has led us into this crisis. Now, of course every discipline will overstate their own importance. And as an economist, I’m bound to think it’s all about economists. But having been in the room in the energy crisis when important government decisions were being taken in the German context, I have become quite convinced that economic ideas have to change, that we need a mind shift in order to get change in the real world. Now in terms of what kind of-

Nick Hanauer:

Just to say, we are in violent agreement with that.

Goldy:

Right. We are all about paradigm.

Nick Hanauer:

100% in agreement that the biggest part of this problem was a bunch of terrible economic ideas that were taken seriously, enacted into policy, and ridden for a long time. So, we’re completely with you on that.

Isabella Weber:

I mean, to add one more of these meta points, I think on the paradigm shifting, on the broadly progressive side, I think we are very good at finding division. So oh, you are Brandeisian antitrust person and I am a green planning person, so therefore really there’s nothing that unites us, and I think this is exactly wrong. When it comes to the question of how can economics help to fight fascism, I think we have to recognize that whatever is moving the needle towards power for the people and away from profit fundamentalism, and away from overburdening corporate power and towards public control over the essentials of our lives, these are good things. And this means all courts on decks, and the toolbox has to be as broad and as versatile and as united as we can be. Now, in terms of concrete policy measures, I mean, as at this point of the conversation you will not be surprised to hear, I would start from the essential.

So, I would start from what has now become termed the affordability agenda. I would start from the question of housing, the question of energy, the question of food, transportation and care. And I would argue that we need quick interventions to stabilize the prices of these things. And at the same time, for each of these sectors we need policies that change structurally the ways in which provisioning happens in these sectors. So if you take the example of housing, I do think that in a city like New York we need rent control, but we also need a build out of public housing. We need to limit the amount of housing that can be owned by private equity. We need zoning reforms. We need incentives for landlords to refurbish apartments that they have in a great way, and ideally incentives that actually empower tenants. So for example, you could say tenants have the right to demand from the landlords that they build in heat pumps, which can cool in the summer and heat in the winter.

And then landlords might get some subsidies in return for this, but we are doing this in a way that actually strengthens tenant power. So, this is just one example. Then I think all of this essential stuff is at the end of the day about putting a floor under people’s livelihoods, but we also need a ceiling that limits extreme profits and ultimately extreme forms of wealth. So, that’s where the whole taxation agenda comes in, but also where the public options agenda comes in, because we see that in this era of overlapping emergencies and shocks, in essentials, profits explode, windfall profits explode. We have done research on the fossil fuel industry where we show that off the record, record fossil fuels in 2022, 50% went to the top 1% and the bottom 50% only got 1% of those profits, which meant that for the top 1% the claims on fossil fuel profits was enough to compensate their whole inflation burden. But of course the bottom income-

Nick Hanauer:

Yeah, they were totally screwed. Yep.

Isabella Weber:

… has a higher inflation burden because they spent more on essentials where the prices go up disproportionately, and they don’t get anything from those profits. So, that means that public options in energy, in housing, in care, but also I think experimentally and importantly in grocery and food commodity trading are things that can deliver both affordability and levers to actually change the ways in which our machine is running and change the way that returns from those essentials are being distributed.

Nick Hanauer:

Thank you so much for your work on this, and your book.

Goldy:

Got the final question?

Nick Hanauer:

We have one final question, that’s right. Why do you do this work?

Isabella Weber:

Thank you for that question. I mean, I did all this technical inflation work. I could have quite easily written a book about profits and inflation, and made it kind of a technical issue. Something where after having been called basically insane by some fellow economists, I was vindicated on because central banks came around, even the IMF came around saying that this is correct. So, that would’ve been a very easy choice. But what’s happening in terms of the economic policy debate, in the late Biden years and with Kamala Harris’s campaign and watching what’s happening around the world, and having grown up in Nuremberg were the idea that anti-fascism is my first civic duty in a city where … I grew up in the inner city of Nuremberg within the medieval city walls where 70% of the city was bumped down to the ground. And when I grew up, it wasn’t like, oh, the evil Americans came and bumped down our city.

It was like something so terrible, so horrendous happened that we needed this destruction on a civilizationist scale from the perspective of our city, like the old infrastructure that literally goes back to the 13th, 14th century being completely destroyed, to come out of this horror. So in that sense, the question of never again was really one of my first experiences as a person. So, I got to the point where I was like, “I can no longer pretend that on the one hand I’m an economist and I’m doing these technical things. And on the other hand, there’s all this politics going on and this has nothing to do with it.” Meanwhile, the threat of fascism is as imminent as it hasn’t been since World War II.

Goldy:

So Nick, you recently published a piece in the Wall Street Journal in which you basically make the argument that if you can’t explain why markets can deliver the kind of economy that the American people want, that voters say they want, with affordable housing, healthcare, education, food, transportation, the essentials that Isabella talks about, if you can’t defend market capitalism you’re not the right person to defend it.

Nick Hanauer:

Correct.

Goldy:

And I think Isabella makes this other argument that you’re not the right person to defend democracy, because-

Nick Hanauer:

Right, both. Either.

Goldy:

Right, because it’s democracy that actually sets the rules and enforces the rules of the market, and sets the priorities and so forth. And if democracy is going to allow this economy to continue to do with what it’s doing, you’re going to give up on it in the same way that people are giving up on capitalism. The reason why socialism is no longer as dirty a word as it used to be, the reason why people like Mamdani are winning elections and are so popular is because they’re actually offering a different economic solution. They’re saying, Hey, no, we can deliver these things. Right?

Nick Hanauer:

Yes, we absolutely can.

Goldy:

Right. And the reason why Trump was able to rise to power was on his faux populism. Economic distress fuels fascism, it always has. It is right now. It’s doing it here, it’s doing it in Germany. You’re in London right now? It could be the next election-

Nick Hanauer:

For sure, for sure.

Goldy:

… you could see the far right in charge for really the first time ever.

Nick Hanauer:

Yeah. Or Farage, who’s about that. Yeah. No, the whole thing is really deeply worrying. Lots of work to do to get things back on track. But I just really appreciated also the way in which Isabella connects power and agency in her book to these issues, because I think that sometimes we can be a little bit too instrumental in our analysis in the sense that by saying effectively that, well, if all it was is wages were higher everything would be better. And I do, just to be clear, I think if wages were way higher things would be better, but that’s not enough.

Goldy:

But the point is there’s a reason why they’re not higher, and that is-

Nick Hanauer:

Which is power.

Goldy:

Which is power. And our failure in the neoliberal era to provide the, well, not even to provide, but the success at dismantling other forms of power, dismantling countervailing power, dismantling the eroding away the power of organized labor, and eroding the minimum wage and the overtime threshold, and antitrust enforcement, we have essentially allowed power to concentrate in the hands of the few, intentionally. That’s a policy choice that we’ve made for more than 50 years, basically informed by a set of really shitty ideas. And core to our argument is that shitty ideas lead to shitty policies, and shitty policies lead to shitty outcomes. And the shittiest outcome of them all would be a long collapse into fascism. Because it-

Nick Hanauer:

Yes, absolutely. That would be very, very bad.

Goldy:

It’s not going to address the economic issues. It’s not going to make our lives better. It’s certainly not going to address the climate crisis. So, we agree that there’s like three crises going on simultaneously, this crisis of inequality, this crisis of democracy, and this crisis of climate and anti-fascist economics if we’re going to deal with this, because fascism-

Nick Hanauer:

No, that’s true.

Goldy:

… certainly isn’t going to make it better.

Nick Hanauer:

That’s right.

Goldy:

Anyway, I’m sure it will help Isabella, if you order her new book, Anti-Fascist Economics: In Defense of Affordability, Dignity and Democracy. Nick and I both had a chance to look in an advanced copy, we can’t recommend it more highly.

So, judging by the hundreds of comments left on YouTube and other social media, Nick, I apparently don’t do a very good job asking you questions, because our listeners have a ton of questions for you.

Nick Hanauer:

Okay.

Goldy:

So, we’re going to start answering these on a regular basis, starting with a question that in one form or another dozens of our listeners have asked. And it’s a two-part question, Nick.

Nick Hanauer:

Okay.

Goldy:

First, could you explain exactly how we use the term neoliberalism, what we mean by neoliberalism? And I’d suggest maybe how that might be sometimes a little different from how other people use it and the alternative terms. And following on that up, where the hell did market humanism come from? The term, not the idea.

Nick Hanauer:

Oh, golly.

Goldy:

Yeah. So, let’s start with neoliberalism. What is it, Nick?

Nick Hanauer:

So great question, hard to answer, but I will do it my best. So, neoliberalism and neoclassical economics are inextricably intertwined. So, if you go and take economics in college, they teach you classical neoclassical economics. So, your Econ 101 textbook is a textbook of economics that teaches you a variety of things about the world. Neoliberalism is the ideology, the sort of political narrative, the heuristics, the rules of thumb that emerge from that academic framework. So, you can think of neoliberalism-

Goldy:

You’re pissing off a lot of economists here, Nick-

Nick Hanauer:

Maybe.

Goldy:

… because they would disagree with you.

Nick Hanauer:

So, neoliberalism is sort of the weaponized ideological framework that emerges logically and naturally from the underlying economic theory that today is mostly taught in universities. Let me give you an example. In the textbook, the economy is understood as a Pareto optimal equilibrium system. And-

Goldy:

Which means?

Nick Hanauer:

Which means in neoliberal terms, raising wages kills jobs.

Goldy:

Right. Technically, you can’t make one person better off without making somebody worse off. That’s when you’re at a Pareto equilibrium.

Which is what has happened-

Nick Hanauer:

Yeah.

Goldy:

… during the neoliberal era. The way I would summarize this, Nick, is that neoliberalism is an economic ideology that is built atop a flawed economic model. So, neoclassical economics is this equilibrium model. And what you’re saying is that it inevitably leads to neoliberalism is basically that if you believe in its assumptions and theories, if you believe its model is correct, it drives you towards a neoliberal worldview-

Nick Hanauer:

Correct.

Goldy:

… this market fundamentalist worldview, that’s another term that people use, where the market always has primacy and you only use government to interfere or impede it to fix market failures, or to make a societal choice where you are knowingly and willingly giving up efficiency. You’re making everybody a little worse off in order to achieve some other kind of societal goal.

Nick Hanauer:

That’s right.

Goldy:

That’s the only reason why you would interfere in the market, because left to its own devices it will magically deliver societal welfare for everybody. I will say there was a history to this of course, and that is the term started being used by Friedrich Hayek, and it was his objection to the way the word liberal had changed in America. When he called himself neoliberal, he was re-embracing classical liberalism. The rest of the world uses the word liberal differently than we do. It doesn’t mean progressive, it means more like libertarianism. So he was reclaiming that word, and that’s why he used neoliberal instead of liberal to make that distinction that he’s an old-timey liberal, not the newfangled new deal kind.

Nick Hanauer:

Now, as for market humanism, it’s a great question.

Goldy:

I can give you a little insight into that, Nick.

Nick Hanauer:

Okay.

Goldy:

Because we struggled with what to call this for a-

Nick Hanauer:

No, exactly.

Goldy:

… very long-

Nick Hanauer:

For a very long time. We had some really bad-

Goldy:

We had some ideas.

Nick Hanauer:

Terrible ideas, terrible ideas. So, you can argue that market humanism isn’t wonderful, but it is so much-

Goldy:

But it’s better.

Nick Hanauer:

… with everything else-

Goldy:

Than all the other crap that we came up with.

Nick Hanauer:

Yeah.

Goldy:

And I’ll tell you, it first occurred to me, Nick, as an alternative to market capitalism.

Nick Hanauer:

Yeah. Right.

Goldy:

To make the distinction that it’s not capital and capitalists that are at the center of the economy, but actual human beings.

Nick Hanauer:

Exactly.

Goldy:

But that’s not really how we use it, use that term.

Nick Hanauer:

Yeah. So our listeners, I think know that most of my career was devoted to commerce and businesses, and I’ve helped start a whole lot of them. And I have named so many things, so many companies, so many products, and it is always messy and hard. And I’ll tell you what, you think about the name amazon.com, which is what we named amazon.com. And I was in the room, I just want to say, when we did decide to do that.

Goldy:

And what was the alternative, Nick?

Nick Hanauer:

Oh my God. Well, Cadabra was one of our alternatives. Cadabra, but it sounds too much like cadaver. And we came up with Amazon because it was like Earth’s biggest river, Earth’s biggest bookstore. That was literally it. But believe me, when we came up with that name, there were a lot of people that were like, “God, that is a dumb name.” And I’ve named so many things that in the beginning sounded really, really dumb and terrible, and after a while you just get used to them. Is Zillow a good name? I remember when my friend Rich Barton came up with that one, he was like, “Yeah, it’s like Zillow and pillow, and had something to do with Dr. Seuss and who knows, but today we use it quite easily. But I do think that market humanism really is a good name, because it has the two things we care about in it, a commitment to markets, which we believe if well managed are an extraordinarily important social technology, and humans, which is the whole point of the system, that we want a market economy that is dedicated to human flourishing.

And so, market humanism I think goes together quite well. But if it doesn’t roll off the tongue quite as well as you might hope it was, it’s definitely better than solutionism, which was another idea that we had, because prosperity is-

Goldy:

Or, you want the worst one?

Nick Hanauer:

I can’t remember what it was.

Goldy:

Eucapitalism.

Nick Hanauer:

Oh yes, yes. E-U, E-U-

Goldy:

As in eugenics.

Nick Hanauer:

No.

Goldy:

It’s the same. Yeah.

Nick Hanauer:

It means for you social. Eusocial.

Goldy:

I know that’s where we got it from, but-

Nick Hanauer:

That’s right. For those who don’t know, believe me, in our work we go deep on crazy things, but eusociality, E-U-S sociality is a very important concept from the study of cooperation in the animal kingdom. Bees and ants and creatures like that are eusocial. And because we felt so strongly about cooperation as the origins of prosperity in human societies, eusociality is a thing that we talk about a little bit in the big book. And anyway, so eucapitalism was one of our terrible ideas that we quickly got out from under. Solutionism because prosperity in human societies is best understood as the accumulation of solutions to human problems. So, we went with that for a while. True capitalism was something we tried, that didn’t work out. So anyway, I feel very strongly that market humanism is the least worst idea we had.

Goldy:

And you know what, Nick? It’s descriptive. It does what it says on the tin.

Nick Hanauer:

Yeah, exactly.

Goldy:

It describes a market economy that centers human beings, and we mean humanism in both senses of the word. It is both a narrative that is grounded in science like the humanists were, and it scientifically puts human beings at the center of the economy, not capital or capitalists.

Nick Hanauer:

Yes. All right. So, hopefully that completely satisfies-

Goldy:

Yeah, we only went twice, two to three times as long as we intended.

Freddy :

Pitchfork Economics is produced by Civic Ventures. If you liked the show, follow us and leave a rating or review wherever you get your podcasts. You can also find Pitchfork Economics on Facebook, Instagram, Threads, Blue Sky and YouTube. For the latest economic news and analysis and ideas for building an economy from the middle out, subscribe to our weekly newsletter, The Pitch, on Substack. If you’d like to read more from Nick, subscribe to his writing and commentary at nickhanauer.substack.com. And for links to everything we just mentioned, plus episode transcripts and more, visit pitchforkeconomics.com. As always, from our team at Civic Ventures, thanks for listening. See you next week.

The post Anti-Fascist Economics (with Isabella Weber) appeared first on Pitchfork Economics.

Housing Is a Market Power Problem (with Sandeep Vaheesan & Brian Callaci)

Freddy Doss — Tue, 13 Oct 2026 03:29:12 +0000

Housing is still ridiculously expensive, and building more housing is absolutely part of the solution. But supply alone won’t fix a system where landlords have the power to jack up rents with the assistance of algorithms, and developers make more money building for the wealthiest in the market, rather than building homes a typical family can afford.

In this 2024 conversation, Brian Callaci and Sandeep Vaheesan join Nick and Goldy to explain why America’s housing crisis is about more than a shortage of homes. They dig into landlord power, RealPage and algorithmic rent-setting, tenant protections, rent stabilization, and why relying on private developers alone won’t produce enough housing that working- and middle-class families can actually afford.

They also make the case for a bigger public role in housing—including social housing and other public options that can create affordable homes without requiring every project to maximize private returns.

Brian Callaci Campaigns Director at the Strategic Organizing Center and the former chief economist at the Open Markets Institute. He is also the author of Chains of Command: The Rise and Cruel Reign of the Franchise Economy.

Sandeep Vaheesan is Legal Director at the Open Markets Institute, where he leads the organization’s legal advocacy and research, including its amicus program. His work focuses on antitrust, monopoly power, labor markets, and fair competition.

Further reading:

“The Market Alone Can’t Fix the U.S. Housing Crisis”

“Deconstructing Housing”

“Supply and the Housing Crisis: A Debate”

U.S. v. RealPage

Social Media:

@briancallaci.bsky.social

@brian_callaci

@sandeepvaheesan

Instagram: @pitchforkeconomics

Threads: pitchforkeconomics

TikTok: @pitchfork_econ

YouTube: @pitchforkeconomics

LinkedIn: Pitchfork Economics

This episode originally aired August 1, 2023.

Substack: The Pitch

Nick’s Substack: NickHanauer.Substack.com

The post Housing Is a Market Power Problem (with Sandeep Vaheesan & Brian Callaci) appeared first on Pitchfork Economics.

Who Is Industrial Policy Really For? (with Isabel Estevez)

Freddy Doss — Wed, 07 Oct 2026 03:20:40 +0000

Industrial policy is back at the center of the economic debate. But tariffs, factories, and reshoring are only part of the story. In this 2023 conversation, development economist Isabel Estevez joins Nick and Goldy to argue that industrial policy is ultimately about choices: what we produce, how we produce it, and who benefits. She explains why a smart industrial strategy has to look beyond manufacturing output to workers, communities, climate, public investment, and the broader public good.

Because the real debate isn’t whether the government shapes markets. It already does. The question is what—and who—we’re shaping them for.

Isabel Estevez is an institutional and development economist and Co-Executive Director of i3T—Industry, Infrastructures and Innovation for Strategic Transformation. She previously served as Deputy Director of Industrial Policy and Trade at the Roosevelt Institute and as a Senior Policy Advisor at the Sierra Club.

Further reading:

Using Industrial Policy for Productive Transformation: Three Lessons from Development Economics for US Industrial Strategy

How Can (Green) Industrial Policy Serve Human and Natural Flourishing?

Global Green Industrial Policy: Navigating Power Dynamics for a Pro-Working-Class, Pro-Development Green Transformation

The New Economics of Industrial Policy

Social Media:

@isabel_estevez_

isaestevez.com

Instagram: @pitchforkeconomics

Threads: pitchforkeconomics

TikTok: @pitchfork_econ

YouTube: @pitchforkeconomics

LinkedIn: Pitchfork Economics

When Companies Run the Courts: How Forced Arbitration Became America’s Secret Justice System

Substack: The Pitch

Nick’s Substack: NickHanauer.Substack.com

The post Who Is Industrial Policy Really For? (with Isabel Estevez) appeared first on Pitchfork Economics.

When Companies Run the Courts: How Corporate Power Becomes Legal Power (with Brendan Ballou)

Freddy Doss — Wed, 30 Sep 2026 04:55:12 +0000

We like to think that if a company cheats us, steals our wages, or breaks the law, we can take them to court. Unfortunately, there’s a good chance you’ve already signed that right away.

This week, Brendan Ballou returns to the podcast to explain how forced arbitration created what he calls America’s secret justice system—and why this is as much an economic story as a legal one. He joins Paul and Goldy to unpack how corporations use economic power to weaken workers’ and consumers’ legal power, why the myth of the “voluntary contract” falls apart when every option comes with the same fine print, and how making corporate misconduct harder to challenge changes the incentives that shape the entire market.

Brendan Ballou is the founder of the Public Integrity Project, a nonprofit anti-corruption law firm, and the author of When Companies Run the Courts: How Forced Arbitration Became America’s Secret Justice System.

Further reading:

Plunder: Private Equity’s Plan to Pillage America

Pitchfork Economics: Stop the Steal: Revisiting Private Equity’s Plan to Pillage America (with Brendan Ballou)

Public Integrity Project

Social Media:

@brendanballou.bsky.social

Instagram: @brendanballou

Substack: @brendanballou

@brendanballou

Ask Pitchfork: Have a question for Nick, Goldy, or the show? Leave it in the comments on YouTube or Spotify with #askpitchfork.

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Threads: pitchforkeconomics

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LinkedIn: Pitchfork Economics

@lindsayowens.bsky.social

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Nick’s Substack: NickHanauer.Substack.com

Goldy:

Hey, Pitchfork listeners. One of the joys of co-hosting this podcast is that I get to ask Nick questions from time to time that put him on the spot. Is that one of your joys, Nick?

Nick Hanauer:

It is absolutely not one of my joys.

Goldy:

But he loves it so much, despite what he just said there, we’re going to give you the opportunity to play Goldy by asking Nick questions yourself.

Nick Hanauer:

That’s right. And we will read every submission. We will not answer every question. But we’ll answer the most interesting and spicy ones because it’s a really fun way to connect with listeners and just find out what’s on people’s minds.

Goldy:

And if you want to put me on the spot, you can feel free to ask me a question too. To submit, just comment on this week’s episode on YouTube or Spotify with the #askpitchfork, and we’ll also put a link in the show notes. Thanks for listening and thanks for making us listen to you.

Nick Hanauer:

The rising inequality and growing political instability that we see today are the direct result of decades of bad economic theory.

Goldy:

The last five decades of trickle down economics haven’t worked, but what’s the alternative?

Nick Hanauer:

Middle out economics is the answer.

Goldy:

Because the middle class is the source of growth, not its consequence.

Nick Hanauer:

That’s right.

Announcer:

This is Pitchfork Economics with Nick Hanauer, a podcast about how to build the economy from the middle out. Welcome to the show.

Goldy:

Paul.

Paul Constant:

Hello. How are you, Goldy?

Goldy:

I’m okay. Before we start this podcast recording, look on your screen, there’s a little box you need to click. I have this user agreement that I want you to … Don’t bother reading it. It’s about 10 pages long.

Paul Constant:

Okay, cool.

Goldy:

Trust me. It’s routine.

Paul Constant:

Cool, cool, cool. Yeah. Scroll, scroll, scroll, scroll, scroll, click. Okay.

Goldy:

That’s just the sanity clause.

Paul Constant:

Okay, so what did I just sign? Do you have ownership rights of my dogs now?

Goldy:

No, they actually have ownership rights over you.

Paul Constant:

That’s true. That’s a very colorful illustration, Goldy, thank you. Of what we’re here to talk about … I don’t usually do this, but I do want to say before we talk about this that we’re talking about a legal issue that might sound boring or complicated or-

Goldy:

A legal issue that might sound boring or complicated?

Paul Constant:

Exactly. For some of our listeners, I don’t like to talk about this in advance because I don’t think there’s any such thing as a subject that is truly inherently boring, but I do understand sometimes you start a podcast and you’re like, “Oh God, this is about legal stuff,” and then you skip ahead to whatever.

Goldy:

I just want to tell you what a hypocrite you are because you often accuse me of talking about things that are inherently boring.

Paul Constant:

Well, you are inherently boring, but the things you talk about don’t have to be if somebody other than you talks about them. So I just want to lay out really clearly and really straightforwardly what we’re talking about. Right now, listeners of this podcast, along with millions, tens of millions of other Americans are in a system in which if they were to take a legal case against a corporation, they would be signed in instead to a secret corporate court. They basically signed away their rights to sue corporations and employers and things like that and agree to the rulings of a court that is not the US legal system.

Goldy:

Right. An arbitrator that is chosen and paid for by the company you’re having a dispute with.

Paul Constant:

Exactly. Right.

Goldy:

That seems fair.

Paul Constant:

Yes. It is a secret legal system that is overwhelmingly biased towards the corporations that pay for it. And that is a big damn deal. It’s called forced arbitration, and it is a very important issue. Luckily, we have here a lawyer who knows how to talk about these things in a way that is very understandable. His name is Brendan Ballou. He’s been on the pod before. He is here with a new book called When Companies Run the Courts. It’s an excellent and very accessible guide to forced arbitration. And it’s also ultimately very hopeful about ways that we can undo the system and return legal power to the American people.

Goldy:

And the best thing of all, you don’t need to sign any contracts in order to listen to our interview with Brendan.

Brendan Ballou:

My name is Brendan Ballou. I’m the founder of the Public Integrity Project, which is a nonprofit anti-corruption law firm, and I’m the author of When Companies Run the Courts: Forced Arbitration in America’s Secret Justice System.

Goldy:

Wow, that sounds ominous. I mean, I though we lived in a country with the rule of law where we’re all treated equally and have equal access to the courts and the law, but you’re telling us that’s not true?

Brendan Ballou:

I hate to break it to you. I have some terrible news for you. So yeah, no, I’m happy to explain the basic issue here and the basic problem that that book was trying to deal with, which is the problem of forced arbitration, which is a private justice system that is an alternative to our public courts that is in large part administered by and controlled by America’s companies, often the companies that you are trying to sue, the companies that you’re trying to hold accountable. As you can imagine, when one side controls that court process, it very rarely goes well for consumers and for employees.

Paul Constant:

And you talk about in the book, I love the book by the way, thank you for writing it, you talk about the sort of campaign to make this forced arbitration system happen. And I recall some of this from when I was a teenager. It felt like every media company suddenly really cared about McDonald’s getting sued for the woman who splashed with hot coffee. And it was all the late night jokes were about it and people were calling for reform.

Could you talk a little bit about how this came to be?

Brendan Ballou:

Yeah, absolutely. I think for anybody that was alive in the ’90s they kind of have this ambient awareness of this national hatred for lawyers. There are lawyer jokes all the time. And as you said, Jay Leno was constantly joking about the woman who spilled coffee in her lap at McDonald’s. I’m happy to talk about that. But the short answer is beginning in the 1960s, there was an explosion of rights for consumers, for workers, for women, for minorities, for people that were experiencing environmental harms and discrimination and so forth. And just as soon as those rights emerged, there was a backlash by large companies, companies that frankly didn’t want to deal with getting sued because their cars exploded or because their implants migrated or allegedly caused cancer.

And so they started telling the story of the idea of a litigation explosion, this idea that there is a huge number of frivolous cases that are out there in the United States that are bankrupting businesses and raising prices for people, forcing people to get fired and so forth. We can go into the details if it’s helpful. The data doesn’t really bear that out. It’s not at all clear that a litigation explosion happened or if it did, it was in large part litigation against retirees and veterans. We can get into the details of that.

But I think just as powerful as the supposed numbers were these stories that you alluded to. The story of Stella Liebeck, who was this 80-year-old woman who had McDonald’s coffee spilled on her as she was in the drive-through, it was a national joke and yet for her it was anything but. The coffee had been heated to near boiling temperature. In fact, McDonald’s had a policy of doing that, I think to disguise … I’ve talked with folks about this afterwards. One of the reasons they might have done that is the coffee tasted really bad and it’s harder to notice the taste of coffee if it’s really hot. But they had this policy of heating up the coffee to near boiling levels when it slipped and fell in her lap. She actually got third degree burns in her thighs, vagina and buttocks. She was in recovery for weeks. She was below a hundred pounds at one point and had to recover for multiple years.

She actually just tried to settle for the cost of her medical bills and McDonald’s repeatedly refused. Forcing her to go to trial, at which point she was able to get several million dollars in punitive damages because as I mentioned, it turned out McDonald’s had a policy of doing this and it had hundreds of similar incidents and yet had done nothing. So that was actually a case where the legal system really worked to rectify an individual harm and to create a little bit of a financial incentive to prevent a company from doing this in the future. And yet it became this national joke and a basis for instituting all these reforms that ultimately made it much harder for ordinary people to get justice when big companies hurt them.

Paul Constant:

Yeah. And can you talk a little bit about the scope of this system? It’s really sort of mind boggling.

Brendan Ballou:

Yeah. So the scope of forced arbitration is … And I think it’s helpful to just set for your audience what exactly forced arbitration is. So as we were alluding to earlier, forced arbitration is a private alternative to the public court system. So ordinarily you have a dispute, your boss discriminates against you, the company you buy something from doesn’t sell you the product or the product breaks or causes cancer, whatever it happens to be. You can, at least in theory, sue in court. That decision will be decided by a judge who’s paid for by the taxpayers. And if the judge makes a mistake, you can appeal that decision.

None of that is necessarily true in forced arbitration. In forced arbitration, “the judge,” the arbitrator is not paid for it by the taxpayer, paid for by the parties. And unsurprisingly, when they are often paid for by the corporate defendant, they typically rule for that corporate defendant. So you actually have one side typically paying for the cost and paying the judge that’s going to decide your case. And unlike in an ordinary court system, these proceedings almost can never be appealed. So if that judge, again, a judge that has a lot of incentives to rule against you, in fact does rule against you, there is almost nothing that you can do to appeal that decision.

And I think perhaps most concerningly for the rule of law, unlike in a public court system, which happens in public, decisions are written down, they form a precedent on which the law develops and people can be treated on an equal and fair basis, forced arbitration happens overwhelmingly in secret. And so you quite literally don’t have what we would consider the law in arbitration because you don’t have written decisions upon which other people can rely. And so ultimately forced arbitration is a highly biased, highly secretive, and often highly unfair system that people have to live in, and yet it surrounds us.

Goldy:

So I’d like to play devil’s advocate here. And of course by devil, I mean introductory economics textbook author. According to economics, I mean this is a voluntary contract that people go into. They could choose not to agree to this and this is their freedom. How is that not the case that we’re all making this choice to get into these arbitration agreements and giving up our rights to sue in court?

Brendan Ballou:

That’s a great question. And I should say that the federal law that authorized arbitration in general really was not meant to extend to what you might call the take it or leave it contracts that we deal with every day. When you sign up for a bank account or for a new cell phone carrier or when you visit a website and say that you accept the cookies and the terms of service and so forth. These are what lawyers call contracts of adhesion or take it or leave it contracts. And fundamentally, they’re not things that we can negotiate over. When’s the last time that you wanted to sign up for a cell phone agreement and you got that large legal document and said, “Well, I agree with sections one and two, but Verizon, you’re going to have to give me something on section three and four.” That’s not how those agreements work. So at a practical level, where arbitration agreements often are, overwhelmingly are, are in contracts that we have no say over. Now, ultimately, you can decide whether or not to sign up with that company at all.

But think about the companies that we’re talking about. How many cell phone carriers do you get to choose from? How many credit card companies do you get to choose from? I’m willing to bet that it’s probably not that many options. And I’m also willing to bet that most and probably all of those companies have forced arbitration agreements. So in the abstract, yes, this is something that you could contract away or choose a competitor for, but in the reality of how most of these industries work, you don’t have a choice at all.

Goldy:

Right. And we think of this a lot from the perspective of the consumer, because of course as consumers we face these … We don’t read these things. We just click accept all the time. But this also applies to a lot of workers and you can’t get a job without agreeing to one of these contracts.

Brendan Ballou:

Exactly. And it’s not just that oftentimes when you start a job, there is an arbitration agreement. Oftentimes companies will send you an email after you’ve been working there for months or years or decades saying that by continuing to work there, you agree now to an arbitration agreement. And simply by continuing to work at the company, you accept this new system where you can’t go to court if the company allegedly discriminates against you, refuses to pay you, creates unsafe working conditions and so forth.

One of the things that’s really shocking is these agreements bind you whether or not you actually sign them. And oftentimes even if you try to fight them, there was a really interesting case in California state court where one worker was told at a conference meeting that the company was switching over to binding arbitration by continuing to work at the company, everyone was agreeing to arbitrate their disputes. I think she said that she was going to opt out within days of that company making that announcement and then ultimately filed a written version of that within a matter of weeks. I think right around the Christmas holidays and so forth. She was really prompt despite the fact that people were out, that the holidays were going on.

But the court said that by continuing to work there, I think for a period of somewhere around three weeks while she was trying to contest the forced arbitration agreement, she bound herself to it and she was ultimately forced to arbitrate her disputes with the company.

Paul Constant:

What happens when you change the incentives like this when consumers can’t get a fair retribution for something wrong or when employees can’t take their employers to court for an egregious breaking of the rules, violation of the rules?

Brendan Ballou:

Well, I think we have a system a lot like what we all experience every day, which is I think at an intuitive level, a lot of us feel that companies probably treat us worse than they did 30 years, 20 years ago, maybe even 10 years ago, that think about how many times you’ve tried to get somebody on customer service to help you or that you’ve had to talk to a chatbot that had absolutely no answers and you felt helpless to do anything, that helplessness is very real. It’s intentional. It’s that a lot of companies know that there’s very little that you can do legally if they cheat, harm, discriminate against you or anything else.

One of the things that I think is really important to understand about forced arbitration is it doesn’t just force you into a private system. It often makes harms that are anything less than life changing functionally impossible to fix. So what I mean by that is when you sign up for an arbitration agreement, oftentimes it’ll say not only do you agree to arbitrate a dispute if you have a problem with a company, but you agree to do so individually. You can’t join a class action or have something like a class action in arbitration. And class actions matter because it allows people to share a single lawyer or a single law firm for everybody who’s hurt in a certain kind of way, the family members of everybody who dies in a plane crash or everybody who’s cheated by some scammy business online or whatever it happens to be.

The problem that you’ve got is if you have to pursue each case individually, you’re only going to do so for the absolutely most dangerous, most deadly, most expensive harms. If you have to arbitrate each individual case, how much money would have to be at stake? Just think personally, think psychologically, how much money would have to be at stake for you to go through the process of initiating arbitration, going through it, writing motions, arguing it yourself in order to try to get justice? And that number’s probably pretty high.

And so what that means is forced arbitration makes all but the most expensive harms that companies perpetrate really beyond the reach of the law, at least for consumers and employees. So if you feel like companies are scamming you out of a few dozen or a few hundred dollars sort of without consequence, forced arbitration in large part explains why.

Goldy:

Okay, so here we are. I personally I’ve lived through the era of seeing this grow. A lot of us have first experienced it with software, with shrink wrap licenses and the click agreements and all that. And now it’s on literally everything. What’s the solution? How do we get people their legal rights back?

Brendan Ballou:

Well, the Supreme Court has really expanded forced arbitration well beyond whatever the law really intended. It really wasn’t meant to apply, as we were talking about earlier, to click to accept agreements. It wasn’t meant to apply to disputes between employers and employees or between consumers and the companies that they buy from. But the Supreme Court over a series of years has really expanded forced arbitration to include all of these things and to allow forced arbitration to kill class actions like we just said. I think it’s unlikely that the Supreme Court’s going to change direction on this, and I think it’s unlikely that Congress is going to enact comprehensive reform around forced arbitration because Congress really struggles to accomplish much of anything in the 21st century.

So I think if we’re going to make progress, it’s really going to be happening at the state and local level. The Supreme Court will invalidate a lot of state and local legislation around this, but what we can do and what will be very hard to invalidate is legislation that makes forced arbitration more transparent, more equitable, more appealable. In other words, that makes forced arbitration more like an ordinary court system. The more that forced arbitration is made to look like court, ironically, the less likely companies are going to be attracted to it. And so I think we really need local action on this. We actually have written up model legislation on exactly this issue and we really just need the will to act at the local level.

Paul Constant:

You have an example in the book of a situation that was reformed, the actor Eliza Dushku, who was Faith on Buffy the Vampire Slayer, who is what I know her from, where she suffered some really atrocious sexual harassment on set of a TV show that she though she was going to be on for seasons. And when she protested, she was fired and then forced into a forced arbitration situation. But it sounds like there’s been some reform in that area, and I was wondering if you could talk a little bit about that and also if that provides any sort of a roadmap for fighting forced arbitration in other areas.

Brendan Ballou:

Yeah. And Dushku’s story was pretty upsetting. She was experiencing persistent sexual harassment allegedly by one of her co-stars. She was ultimately able to get a settlement, but had to keep secret. She had a non-disclosure agreement and was only able to come forward because her previous employer seemingly violated its terms on the agreement and started speaking up publicly, so she decided she could too.That action, coupled with a lot of news from the Me Too era, pushed Congress to take action to exempt claims of sexual harassment and sexual assault from forced arbitration, which is really great. That is life changing for so many people. I’ve seen so many cases where people were forced to arbitrate really extraordinary cases of alleged rape, alleged wrongful birth in arbitration because they weren’t allowed to go into the court system. So this really does change people’s lives. But it is one part of a huge mosaic of things that people want to challenge companies on.

Unfortunately, I don’t think there’s really ambition in Congress to enact comprehensive reform. Perhaps there’ll be an attempt to sort of do for other forms of discrimination what they were able to accomplish with sexual harassment and sexual assault, perhaps around age discrimination, racial discrimination and so forth. But it’s hard to imagine Congress taking on less popular constituencies or taking on harms that just ordinary consumers face. So again, I think that’s a really great step forward, but I think it’s one part of a larger puzzle that’s going to really be led by state and local politicians that are going to be able to limit forced arbitration here.

Paul Constant:

Okay. So we have on this podcast something called the magic wand question, which is generally what you would do if you had the power to wave away broad swaths of legislation or do anything you want. But I want to narrow it down a little bit here for the purposes of this conversation. If you could rewrite the rules tomorrow with no political constraints, what rights would you make it so that workers and consumers could never be allowed to sign away?

Brendan Ballou:

So I think your question is a really good one about sort of what’s a specific thing that we can empower workers and employees on. And I should say, arbitration by itself is not an unmitigated bad. In fact, arbitration can make a lot of sense for people who want to avoid the formality and time and cost of typical court proceedings, but it really needs to be freely chosen. And that’s why my critique is not of arbitration, but of forced arbitration, what might more technically be called pre-dispute arbitration.

So I would be totally fine, and I think most people would be totally fine with if you have a dispute with your employer, if you have a dispute with the company that you bought something with and one side proposes, “Hey, court’s going to take us years to solve this. We could get this done in six months if we do this in arbitration.” Mutually agreeing to that is totally fine.

What we really need to prevent is what’s called mandatory pre-dispute arbitration. So having the arbitration clause in that cell phone contract you sign, in that credit card contract you sign, in that employment agreement you sign, or that email that you get from your employer saying that by continuing to work there, you agree to arbitrate your disputes. If we can stop pre-dispute arbitration, I think our court system is going to be vastly more fair and I think companies are going to start treating us a lot better.

Goldy:

Final question. Oh, I get to ask it this time. Why do you do this work?

Brendan Ballou:

That’s a very generous question of you to ask. I think for me, I’m a practicing lawyer, so I’m not an economist. I come at this as somebody that deals with this stuff every day. I think people in America feel very strongly that the legal system is stacked against them, that powerful individuals, powerful companies have huge systematic advantages that regular folks do not. As a practicing lawyer, I want to explain to them that in fact, they’re right, that the system really is biased towards the very powerful, but try to explain it in a way that’s specific enough that people understand the specific mechanics by which our legal system gets biased towards one side. And if we can explain it really specifically how we got to our present moment, we can hopefully be more productive in figuring out how we get back. And so by talking about the specific seemingly technical issue of forced arbitration, hopefully we can empower people to take specific action on this because if we can fix this, our entire legal system is going to become a lot more fair.

Goldy:

So Paul, I’m sure some of our regular listeners might be wondering what the hell does this have to do with economics? And the short answer is everything. One of the things that’s missing from Orthodox economics, and we talk about this a lot, I know Nick talks about this a lot, it’s a big issue here, is that economics as it’s taught, as it’s understood, just theorizes away power. There is no power in the economy because it’s a free market and we all enter into these voluntary contracts and we all have perfect information and if you don’t want to agree to forced arbitration at this employer, you just go and get a job with another employer. Or if you don’t like the contract at AT&T, you go and you can choose your preferred forced arbitration contract from Verizon or T-Mobile because it’s choices, it’s the market and everything.

But of course there is power in the economy and there’s a lot of power in the economy. And what we’ve seen over the past half century is large corporations concentrating power in many different ways. Sometimes it’s market power and sometimes like this, they’re using legal power. They’re actually changing our legal system from one in which we all have the same right to go to court and sue for damages or to protect our rights to one which if you want to participate in the economy you pretty much have to sign all these rights away. And the only people who have power are the corporations, are the employers, are the people selling you the potentially shoddy goods or not providing the services you though you contracted for. And all this does is make the natural power imbalance in a market economy even more imbalanced. And that is not just bad for workers and consumers, it’s bad for the economy. It actually, I hate to use this word, it introduces inefficiencies.

Paul Constant:

Well, by inefficiencies, this is also trampling people’s rights and stealing money from people and yes-

Goldy:

Right. Which is anti-market because for the market to work best, there has to be a certain amount of trust that people will be treated fairly. And the more that corporations get away with disempowering you, with taking away your legal rights, and that’s what they’re doing, they’re taking away your legal rights, the more power they have to screw you over either in the workplace or in the market. So to think that this is a legal issue and not a market issue, it’s not an economic issue is just wrong. They’re using their economic power to increase their economic power.

Paul Constant:

Yeah. And so this is one of those issues where I feel like our listeners have a little more power to change the system than they might otherwise have, because as Brendan said, this is not an issue that’s going to be won at the Supreme Court.

Goldy:

No, not this court.

Paul Constant:

Exactly.

Goldy:

Maybe with the 15 justices of the next court.

Paul Constant:

Why Goldy, that’s so optimistic of you. Yeah, not with this Supreme Court, not with this Congress for sure. It is the kind of thing that can be won at the state and local level, I think. And it’s something that is an issue that you could bring to your local legislators and local candidates for office and get more bang for your buck by promoting this issue locally. It wouldn’t have to take very many states to do away with forced arbitration for the issue to suddenly change drastically, right?

Goldy:

Right. And we’ve seen this with other types of contract issues. For example, states have been pretty forceful and successful in recent years where they choose to be in getting rid of non-compete agreements-

Paul Constant:

Exactly.

Goldy:

… in most cases. It used to be that fast food restaurants could make you sign a non-compete agreement that essentially prevented you from working at other fast food restaurants because you wouldn’t want to … It’d be bad for that company to lose the trade secrets on how to make a burger or a sandwich, right?

Paul Constant:

Right. Yeah.

Goldy:

Yeah.

Paul Constant:

Sandwich artist, it’s an arcane art form.

Goldy:

Yeah. And really, you owe it to your employer for every skill you’ve learned slapping cold cuts on a piece of stale bread.

Paul Constant:

Exactly. We’ve done a few episodes on non-competes in the past and we’ve made great progress. Like you said, that was … Man, you are in a great mood today, Goldy. We can fight city hall and-

Goldy:

We can fight city hall, Paul. We just can’t fight the Supreme Court or Congress or the White House.

Paul Constant:

Right.

Goldy:

I don’t know.

Paul Constant:

We’re just going to …

Goldy:

Rather than the Supreme Court, I’d like to see this all settled in the International Criminal Court at The Hague.

Paul Constant:

Okay. All right. Okay. Glad to have you back, Goldy.

Goldy:

Yeah.

Paul Constant:

But I think this is an issue that I am excited that we have this issue that can be dealt with. A state level that people can get excited about and that you can see genuine change. And so thank you for joining me in that brief foray into optimism, Goldy. I’m glad you’re back under your rain cloud.

Goldy:

And if you want to learn more about this topic, we encourage you to read Brendan’s book, When Companies Run the Courts: How Forced Arbitration Became America’s Secret Justice System. Of course, we will provide a link in the show notes. And Paul, where might people buy a book like this?

Paul Constant:

Well, they can buy them at bookshop.org if they’d like, or they should also give their local independent bookstores their business if possible.

Freddy:

Pitchfork Economics is produced by Civic Ventures. If you like the show, make sure to follow, rate, and review us wherever you get your podcasts. Find us on other platforms like Twitter, Facebook, Instagram, and Threads @pitchforkeconomics. Nick’s on Twitter and Facebook as well, @nickhanauer. For more content from us, you can subscribe to our weekly newsletter, The Pitch, over on Substack. And for links to everything we just mentioned, plus transcripts and more, visit our website, pitchforkeconomics.com. As always, from our team at Civic Ventures, thanks for listening. See you next week.

The post When Companies Run the Courts: How Corporate Power Becomes Legal Power (with Brendan Ballou) appeared first on Pitchfork Economics.

Gouged: How Big Tech Reinvented the Rip-Off—and Killed the Fair Price (with Lindsay Owens)

Freddy Doss — Wed, 23 Sep 2026 04:34:01 +0000

For 150 years, the price tag made a simple and universal promise: the price you saw was the price everyone saw. Now, that promise is disappearing. This week, Lindsay Owens, President and CEO of the Groundwork Collaborative, returns to discuss her new book, Gouged: The End of a Fair Price — And What That Means for Your Wallet. She explains how corporations are using algorithms, personal data, and AI to figure out not what something costs, but how much you personally are willing to pay. From Instacart’s grocery experiments to the coming world of AI shopping agents, the conversation asks a basic question: If nobody knows what the real price is, can markets actually work the way we’re told they do?

Lindsay Owens, PhD, is the President and CEO of Groundwork Collaborative, an economic policy think tank focused on corporate power, prices, and an economy that works for workers and families. She is also the author of Gouged: The End of a Fair Price — And What That Means for Your Wallet.

Social Media:

@groundwork.bsky.social

Further reading:

Gouged: The End of a Fair Price—and What That Means for Your Wallet

“Same Cart, Different Price: Instacart’s Price Experiments Cost Families at Checkout”

When the Invisible Hand Becomes An Algorithm with Lindsay Owens

How Outsized Corporate Profits Raised Prices with Lindsay Owens

Instagram: @pitchforkeconomics

Threads: pitchforkeconomics

TikTok: @pitchfork_econ

YouTube: @pitchforkeconomics

LinkedIn: Pitchfork Economics

The Common Good Economy: How to Make Capitalism Work for Us All

Substack: The Pitch

Nick’s Substack: NickHanauer.Substack.com

Nick Hanauer:

The rising inequality and growing political instability that we see today are the direct result of decades of bad economic theory.

Goldy:

The last five decades of trickle-down economics haven’t worked, but what’s the alternative?

Nick Hanauer:

Middle out economics is the answer.

Goldy:

Because the middle class is the source of growth, not its consequence.

Nick Hanauer:

That’s right.

Announcer:

This is Pitchfork Economics with Nick Hanauer, a podcast about how to build the economy from the middle out. Welcome to the show.

Goldy:

I would guess, Nick, that you are a little less price-sensitive than I am.

Nick Hanauer:

It is true. Almost certainly.

Goldy:

Right. You go to the store, you see you want some raspberries, you really want them, you don’t care if they’re $6 a pint or 4, you’re going to buy them, right?

Nick Hanauer:

Yes. Correct.

Goldy:

Whereas, I don’t have as much money as you and I’m a little cheap, so it really matters to me. But you do look at prices like-

Nick Hanauer:

I do.

Goldy:

… and you assume that’s the price. You assume that we go into the store that they’re not selling me raspberries for $3 a half pint and they’re charging you $6 a half pint. Whereas-

Nick Hanauer:

No.

Goldy:

… you say you have a thousand times more money, they could be $3,000 a half pint.

Nick Hanauer:

Correct.

Goldy:

You’re pretty confident and we’re all-

Nick Hanauer:

Correct.

Goldy:

… pretty confident that we’re both getting the same price.

Nick Hanauer:

Yeah. It turns out that’s not true.

Goldy:

How’s that happening, Nick? Are you telling me that companies-

Nick Hanauer:

You’re getting a-

Goldy:

… are taking-

Nick Hanauer:

You’re consistently getting a lower price than me, and I think that’s what I’m telling you. At least that’s what our friend Lindsay Owens is telling us. Lindsay is an old friend of ours who is the President of the Groundwork Collaborative, which is an economic policy think tank in Washington, D.C. And she has a new book out that is focused on what I know to be one of her personal pet peeves in the world, which is algorithmic pricing. And her book is called Gouged: The End of a Fair Price-and What That Means for Your Wallet. And the thing is, it’s really hard to see this happen in practice.

Goldy:

Intentionally.

Nick Hanauer:

Exactly. If I’m-

Goldy:

It’s intentionally hard.

Nick Hanauer:

… if I’m on a website and I’m buying something, how do I know what the… You and I would have to spend a lot of time at this for us to be able to determine if I was paying a different price than you were at different moments on different items. And Goldy, I think there may be some validity in certain kinds of markets, airline tickets, hotel rooms being the canonical example probably. If a hotel room has one room left during a big week in a convention, they rightly probably charge higher prices for that than if the hotel is completely empty and no one is around and you want to book the room. You can demand a lower price and often get one. Las Vegas is a great example of that. There are some weeks where a room will cost a thousand dollars and some weeks where that same room would cost $200 depending on whether there are people in Las Vegas filling up rooms or not.

But if you’re buying a box of Tide detergent or something like that, there is no scarcity of Tide detergent. And I know that most people would like to believe that the price that they’re paying for Tide is the same that everybody else is paying when they’re buying it at a particular place, not feeling like, “Well, because I was in a hurry or my income is a little higher or I’m just not as attentive to these things that they’re going to stick me with a higher price than someone else.”

Goldy:

Are you telling me that a rising Tide price doesn’t lift all boats?

Nick Hanauer:

Does not. A rising tide does not lift all boats. But anyway, I think that these predatory pricing practices that people are beginning to find everywhere are another instantiation of the neoliberal inshitification of the world that we live with. But nobody knows more about this than Lindsay Owens, I think. She’s now the global expert, so I think we should talk to her.

Lindsay Owens:

I’m Lindsay Owens. I’m the President of Groundwork Collaborative. We’re a D.C.-based think tank focused on anything that’s impacting your wallet. And I’m the author of a forthcoming book, Gouged: The End of a Fair Price-and What That Means for Your Wallet. That’ll be out with Penguin Viking on September 29th. And you can pre-order it now wherever you get your books, Bookshop, Amazon, Barnes & Noble.

Nick Hanauer:

So Lindsay, your book asks a deceptively simple question. What happened to a fair price? What’s your answer?

Lindsay Owens:

Yeah. The book is about what I call the reinvention of the rip-off and how that is eroding a fair price in America. And there are a lot of answers to that question that are more complicated, but there’s one that’s maybe a bit more simple, which is Big Tech happened to the fair price. Big Tech reinvented the rip-off. Companies have been out to make a buck for a really long time. Some of them have found pretty unsavory ways of doing that. There are a lot of old-school ways to empty your wallet, price fixing where a bunch of CEOs get in a room and hatch a plan to keep prices high.

But there are also a lot of new ways that that is happening to consumers throughout the economy. And most of those new ways are facilitated or accelerated by new technologies that on their face don’t need to be used to rip you off, but are being deployed by companies in the service of emptying your wallet. And so I suppose the quick answer to that is Big Tech is what happened to the fair price.

Goldy:

Can we just start at the very beginning, though? Just I think people in our era are all accustomed to the idea of a price tag, that an item outside of negotiating for a new car, which people always hate, that essentially you walk into a store, it has a price tag. That was not always the case. That was once a new technology. When did that start and when did that become the norm, at least in the West?

Lindsay Owens:

Yeah. So over thousands of years, we all haggled, right?

Goldy:

Right.

Lindsay Owens:

You didn’t get a price on anything you purchased. You walked into the market and you asked for what you wanted and then that began the process of negotiation. And your negotiation skills maybe determined your price, what you showed up in, what you wore maybe determined your price. You looked like you could pay more, you probably did. Social information determined your price. You had a little dirt on the shopkeeper, you probably got a better deal. “Are you sure you want to rethink that price?” But about 150 years ago in the U.S., we stopped haggling. I did a little bit of digging into the history of this and people pegged this moment to a couple of changes.

The first is the Quakers who had really strong moral and religious objections to haggling. They felt like all men were created under God, all men should pay the same price for the same item, and they stopped using haggling and started using a fixed price. The actual price tag that you’re used to seeing on an item of clothing in the store, that’s credited to John Wanamaker shortly after the Quakers made their move. John Wanamaker-

Goldy:

Wow.

Lindsay Owens:

… Philadelphia, a retailer.

Goldy:

Everything starts in Philadelphia. Quakers-

Lindsay Owens:

Oh yeah, all the good stuff.

Goldy:

… John Wanamaker, me.

Lindsay Owens:

Yeah, John Wanamaker. I mean, look, I think he is said to be a deeply religious man. I think he was influenced by the move the Quakers made, but let’s be honest, he was a businessman. And while he wanted consumers to spend a lot of time in Wanamaker’s, there was a Crystal Tea Room, you could have tea and lunch and spend your whole day shopping. It was a place of leisure and commerce. When it was time to check out, haggling is kind of slow and labor-intensive, and it’s much better for you to get your items into your horse and buggy quickly. Yeah. So John Wanamaker is sort of credited with the price tag in the U.S., and for 150 years we’ve had a price tag, we’ve had a posted price, and that posted price has made pricing transparent, which is pretty important if you want pricing to be competitive.

It’s hard to comparison shop and it’s hard to drive people to the lower price or the better deal, which helps discipline prices in the market if people don’t know what prices are. But it also made pricing more predictable, which, of course, is important for things like budgeting, making sure you have enough money to pay for all the items you need and you clear at the end of the month or the end of the week. So the posted price was pretty great and it still is and where you can find it.

Nick Hanauer:

So Lindsay, can you give us some of the more egregious examples of what’s going on? Because, obviously, the strategy is to hide all this from people so they don’t know. It’s not like you get to the website and they’re like, “For you, we’re charging you more,” right?

Goldy:

I think they’re exploiting the fact that we have 150 years of norms expecting one price.

Nick Hanauer:

Yeah.

Goldy:

So we go and expect, “Well, that’s the price,” but what are they actually doing?

Nick Hanauer:

Yeah.

Lindsay Owens:

Yeah. So a couple of examples. I mean, the kind of topic that a lot of people are talking about these days is this idea of surveillance pricing. And there are 40 pieces of legislation to ban or curtail surveillance pricing moving in 24 states and additional localities in the United States right now. The governor of New Jersey just signed a law to ban surveillance pricing in food. The governor of New York is looking at signing a law to ban surveillance pricing, but surveillance pricing is a kind of lay term for something that economists refer to as personalized pricing or sort of perfect price discrimination. And this is the idea that companies set a price just for you based on information they have about your willingness to pay your individual demand for an item. How is this possible? Well, it’s pretty hard to run a personalized pricing play in a grocery store.

I mean, Nick, if you and I are standing in line at the grocery store and we’re checking out with the same item and you go before me and you’re charged $2 more than me, you’re still bagging your ice cream and you look up and say, “Hey, wait, what were you-

Nick Hanauer:

For sure.

Lindsay Owens:

… “charged for that item?” And I said, “Oh, I only paid 3.99.” You pull out your receipt, you’re like, “Wait, why was I charged 5.99?” We’d either think there was a mistake or we get pretty ticked off, right?

Nick Hanauer:

Yes.

Lindsay Owens:

It’s sort of not socially acceptable to charge us different amounts for the same item at the same time. But, of course, in e-commerce, I have no idea what you’re buying and what’s in your cart. And we’re in this really atomized marketplace where we don’t have visibility into our contemporary consumer friends, so it’s much easier. And, obviously, other technologies make that atomization more possible still, this idea that companies can create individualized storefronts. So even if you and I were sitting next to each other purchasing the same item, we could be seeing different prices and different items because we’ve been given a personalized storefront. Things like dark patterns are used to create really individualized and sort of curated retail settings.

If we start shopping using an agent in something like Gemini, agentic commerce now headed our way, McKinsey says that’s going to be a trillion-dollar industry by 2030, you have no idea what your chatbot is bringing back to you and at what price versus what mine is bringing back to me and at what price. So all of the ways in which shopping has evolved have made it more possible to run a personalized pricing play without running afoul of consumers. And candidly, when consumers do find out about this kind of thing, and about a year ago, we helped expose some of what Delta was doing using this artificial intelligence company called Fetcher to get better and better at personalized pricing.

When consumers found out about this, it was a PR problem for Delta, and something great happened, which is what we like to see happen, which is the CEOs of Southwest and American came out and said, “Yeah, we’re not going to do that. That’s crazy.” And, obviously, that put pressure on Delta, Delta’s CEO immediately. He just sort of didn’t walk it back. He just said, “We were never going to do that. We got over our skis.” You know?

Goldy:

Because if there’s any industry that’s known for transparent pricing, it’s the airline industry.

Nick Hanauer:

Yeah. Simple, straightforward pricing.

Goldy:

Those prices never change. Everything’s right there. There’s no hidden fees or yeah. Airline, yeah.

Lindsay Owens:

I mean, I could have written about the airline industry in every chapter. It shows up in almost every chapter in the book. The airline industry is where revenue management, which is what a lot of people call this form of dynamic pricing and personalized pricing, originates. The airline industry used to have price controls when it was-

Nick Hanauer:

Oh yeah.

Lindsay Owens:

… deregulated in the Carter era. CEOs had to start figuring out how to price themselves. They hired an army of pricing consultants. Those consultants pioneered the revenue management software that has built dynamic pricing, algorithmic price fixing, and surveillance pricing, as well as drip pricing and unbundling prices, paying for the seat and the luggage and the fare separately.

And they have exported all of that across the economy. I talk in the book about RealPage, this algorithmic price-fixing software that a real estate tech company uses and came under scrutiny in the Biden administration, but all of the RealPage software originated with the airlines. And, in fact, the very people that RealPage hired to put together their revenue management software were the people who built the revenue management software in the airlines decades earlier.

Nick Hanauer:

So if I go to Walmart, not the store, but the website, am I going to pay a different price for something than somebody else?

Goldy:

Did you wonder why that jar of peanut butter, Nick, is $4,000 for you?

Nick Hanauer:

$4,000. It seemed expensive, but I didn’t know. It’s been a long time since I bought one.

Lindsay Owens:

Yeah. So it’s hard to know where surveillance pricing is being used and when it’s being used on you. And that’s, of course, by design, but we have a few clues, and I can give you some specific clues around Walmart. The first thing that we’ve taken a really close look at is Walmart’s patent applications, the ones they filed and the ones that have been granted. And I think what you’ll see if you review Walmart’s patent applications is they’re well on their way to building a whole host of pretty sophisticated pricing algorithms that would allow for personalized pricing, personalized discounting, as well as personalized pricing. The second thing we know about Walmart is they have started using Sparky. Sparky is Walmart’s shopping assistant, AI shopping assistant that you can use to help you navigate Walmart online and in the app. And we listen pretty closely to earnings calls.

That’s a big part of how I did the research for this book, but it’s also something my organization enjoys doing in our leisure time. And when Walmart talks about Sparky, they say a few things. The first is that revenue in Sparky relative to non-Sparky users is up by like 35%. There could be a lot of reasons for that. Higher income folks use Sparky, lower income folks don’t. Sparky’s upselling, Sparky’s closing, making sure you don’t forget to leave the stuff in your cart. Lots of kind of kind of perfectly innocent reasons. But one thing that we are, I think, keeping our eye on and are pretty worried about is Walmart’s executive team has said a couple of times that Sparky is the key to Walmart’s personalized future, this idea that they’re getting better and better at offering you the particular products you want, which could be beneficial and efficient and nice.

Shopping online is hell and comparison shopping is hell and there’s information overload and it’s really nice to think about outsourcing some of this work. But at the same time, the more information you give someone like Sparky, that you’re in a hurry, that your toddler has a birthday party on Saturday, not that I would know about that, the more likely Sparky is to say, “Okay, you need it now. I’ve got you over a barrel. I can offer the higher price point item. I could maybe charge more.”

Nick Hanauer:

How about Amazon?

Lindsay Owens:

Yeah. Amazon’s pricing is a dystopian hellscape. Uncovering all of the different dimensions of Amazon pricing is a task that we could devote the entire D.C. think tank industry to for years and still not get to the bottom of. They have run massive pricing experiments and dynamic pricing experiments throughout their existence at any given time. I mean, the amount of products that are on Amazon that you can be testing pricing on is immense. They are also really investing in shopping assistance. They have Rufus to Walmart’s Sparky. These guys all have funny names, guys or gals, I’m not really sure which. But yeah, I mean, look, Amazon is doing a ton of dynamic pricing at any given time. And there have been some examples of sort of personalized pricing that have arisen from investigations into Amazon, but we really, honestly, are really just scratching the surface of what is possible with pricing at Amazon and what we know about how Amazon prices.

Goldy:

One example you have which is really clear, and we talked about it with you before on the pod, is the experiments that Instacart was doing.

Lindsay Owens:

Yeah.

Goldy:

Just very quickly remind our listeners about what you found.

Lindsay Owens:

Yeah. Late last year, my organization teamed up with Consumer Reports and More Perfect Union and experimented on Instacart’s experiment. And so we recruited about 400 volunteer secret shoppers to buy groceries from Instacart from the same locations at the same time, same basket of groceries, the 12-ounce box of Barilla pasta, the Lucerne eggs. And what we learned is that Instacart was offering groceries from the same store to consumers at different price points. That wasn’t occasionally. 75% of the items were being offered at multiple price points. Sometimes the same item was being offered at five different price points at the exact same time in the exact same store location. The price difference between the low price and the high price in our experiment was as much as 23%. I mean, that’s an enormous difference when you think about groceries because you don’t just buy one grocery item and you don’t buy one basket of groceries.

You buy a big basket of groceries and you go every week. And so the potential price variation across consumers was substantial. We estimated using Instacart’s own numbers for what a household of four spends on groceries in a year, that the pricing experiments could be costing a family as much as $1200 over a given year, which is like a month’s rent in some cities. So we exposed sort of a large-scale experiment. And this wasn’t a big surprise to us. We knew that Instacart was running experiments on grocers. How do we know? Instacart in the early 2020s bought a company called Eversight. Eversight was a company designed to help e-commerce platforms run experiments on shoppers. And Instacart was really proud of this acquisition and talked about it a lot. Eversight was really proud of what they built and has a website letting you know what they do. Eversight’s or Instacart’s CEO, who purchased Eversight, heads over to OpenAI a few years later to join their team.

It was big news at the time, I think. It’s been, I think, really influential in sort of spurring this kind of flourishing body of legislation to ban some of these practices. But I think this core idea that you and I should be charged the same amount for the same item at the same time really violated by the sort of large-scale experiments they were running on millions of Americans while they shop for their groceries. And I also think this idea that they were running these experiments on something as simple as food and an essential item for us also really rubbed people the wrong way. Look, we expect dynamic pricing in the airlines. There’s five tickets left. There’s only so many seats on a plane. You going to pay more if you want one of those last five seats. Dynamic pricing has been used to ration scarce resources.

There are obviously other ways to ration scarce resources. We saw this with the outrage around FIFA, who rolled out dynamic pricing for the first time ever for this American World Cup. You can use a queue, first come first serve. You can use a lottery, you can give everyone a chance to get a seat on the plane. Target isn’t running out of Wheat Thins. This wasn’t about rationing scarce resources. This was about-

Goldy:

Also, the difference between a lottery or an auction is that those are transparent ways of distributing scarce resources. There’s nothing transparent about Instacart just randomly or maybe not randomly assigning you a higher price.

Lindsay Owens:

Yeah. But look, this kind of thing, using dynamic pricing in settings where goods aren’t scarce is becoming more and more common. And there was an interesting example last year of a Las Vegas newspaper sent a bunch of interns to the casinos and had them go shopping in the sundry stores and said, “Okay, shop for the sunscreen, shop for the Monster Energy drink, shop for the six-pack of beer, the bottled water, et cetera.” And they went over and over again different times of day, different days of the week. And what they found is dynamic pricing is really becoming the norm in a whole host of settings, particularly settings in which you’re more captive. It takes a while to wind your way out of Caesar’s Palace and get across the strip to a CVS.

Nick Hanauer:

Yeah. You’re not going across the street to get a Gatorade.

Lindsay Owens:

Yeah.

Nick Hanauer:

[inaudible 00:22:48]-

Goldy:

When it’s 115 degrees outside.

Lindsay Owens:

A hundred percent. Right, and a can of sunscreen, right?

Nick Hanauer:

It takes you 40 minutes to walk there, so you’re definitely captive.

Lindsay Owens:

Yeah.

Nick Hanauer:

But they were changing prices within those sundry stores.

Lindsay Owens:

Unbelievable variation. And-

Nick Hanauer:

Wow.

Lindsay Owens:

… it was a really great piece. They did a couple of interviews. I talk about it in the book. They did a couple of interviews. They did interviews with some of the cashiers who said, “Yeah, we actually, there are no price tags anymore, so we have no idea what anything costs until we ring it up. And the algorithm from HQ displays the new price. So if you were to ask me how much this costs, I couldn’t tell you until I ring it up.” They also did an interview with a guy who was pretty upset about price variation for beer. He was quite cute and said that the first time he went back for another beer and it was a higher price, he wasn’t quite sure if he remembered the right price from the previous time because he’d been drinking a lot of beer, but once he sort of pieced it together, he was like, “Hey, this is really unfair.” You know?

Goldy:

Well, that makes-

Nick Hanauer:

Wow.

Goldy:

… a lot of sense. Every subsequent, once you’ve had a couple, the subsequent beer should be more expensive.

Nick Hanauer:

Yeah, exactly.

Lindsay Owens:

You’re much less price sensitive and price aware.

Goldy:

Yeah.

Nick Hanauer:

Yeah.

Goldy:

Well, I’m curious, you said how many states are pushing legislation to ban this right now?

Lindsay Owens:

Yeah. So we’ve seen 40 pieces of legislation in 24 states since the beginning of the year. Unfortunately, we have already seen some vetoes. So Governor Polis in Colorado vetoed the legislation there, despite the fact that it passed out of their legislature. We’ve also seen a fair amount of watering down. So Maryland claims to have the first piece of legislation cracking down on some of the surveillance pricing and groceries, but actually, by the time it got to Wes Moore’s desk, it’s unclear how much impact it’s going to have. Yeah.

Goldy:

So what is the economic argument opponents are making against these bills?

Lindsay Owens:

They’re not making sort of coherent economic arguments. They’re making advocacy arguments. And their biggest argument is that proponents of bans on surveillance pricing are opposed to discounts and that we hate discounts and that we’re out to-

Goldy:

Oh, they’re… Oh, okay. They’re not using it to raise prices. They’re only doing it to lower prices because-

Lindsay Owens:

Exactly.

Goldy:

… they’re the good guys.

Lindsay Owens:

Exactly. And that if I can’t get that personalized coupon for a dollar off Pantene in the 17th coupon at the end of the CVS receipt, that’s the end of the economy. And our argument back is we love a discount. Give everybody a dollar off Pantene, do a Memorial Day mattress sale, give us an AARP discount, give us a happy hour. We’re fine with discounts. But if you get a discount and I don’t, I paid more than you, and that’s personalized pricing. And we’ve run polling on this to test the efficacy of industry arguments and trade association arguments. And, unbelievably, 72% of Americans say that they’re okay with discounts being a little smaller on average if everyone gets access to the discount.

And I think that’s actually really incredible in a world in which everyone’s looking for a fair price and a low price that people are willing to accept slightly lower discounts on average if it means that we all have access to them rather than that they’re being meted out based on a company’s assessment of whether or not they can get you to pay full freight or they’re going to need to lure you in at a lower price point individually. Pretty interesting that that industry argument falling on deaf ears. Yeah, this is in some cases an 80-20 issue, in some cases a 90-10 issue.

That says to me, this isn’t really a policy conversation, this is a values conversation. And fair pricing touches on a moral issue, the one that the Quakers identified so many years ago, this idea that we should all have access to a fair price. And this is a tough argument to have in public, which is why most of these industry assaults on these pieces of legislation are happening with lobbyists in closed rooms.

Nick Hanauer:

Yeah.

Goldy:

Morality and economics-

Nick Hanauer:

Yeah.

Goldy:

… come on, those two aren’t supposed to-

Nick Hanauer:

Cats and dogs living together. So Lindsay, what should we do?

Lindsay Owens:

Oh man. All right. So in the book, I put forward a few offerings. One thing I did, because everyone always asks me, is I laid out kind of what consumers can do for themselves. I think, Nick, you and I probably agree on this. It really shouldn’t be the job of every consumer to duck and dodge, bob and weave and beat the robot. That’s going to get harder and harder as agentic commerce really takes over and upends what we know today of e-commerce. So I think we had a few options. The first is I put forward something I call a shopper’s bill of rights, which I position as an updating of what consumers are owed in a marketplace in this age of e-commerce, age of agentic commerce, age of new technology. Things like algorithmic price fixing is price fixing and, therefore, is illegal. Things like if you buy it, you own it and you should be able to repair it.

Things like one fair price, there’s no surveillance pricing. You can’t use my data against me to overcharge me. You can’t spy on me and pick my pocket. All-in pricing, we don’t need drip pricing. It’s impossible to comparison shop if one price is being decomposed and one price is full. And it really penalizes the company that offers the full transparent price upfront because their price looks higher initially, even though it may not be by the time you complete the transaction. So I talk about a lot of things like that in the book. I also think in the land of agentic commerce, look, if Gemini is telling you that this agent is shopping on your behalf, then this agent better be shopping on your behalf and not their behalf.

Nick Hanauer:

Yeah.

Lindsay Owens:

Agents throughout history have been required to serve your best interest. That’s a common law expectation. So when we start to see more shopping in agentic commerce, agents should be working in your best interest. Mark Warner, hardly a anti-tech progressive firebrand, has actually put forward draft legislation to do exactly this. So those are some of the things I talk about in the book. I’m also really interested in some conversations that I’ve gotten to have as folks have reached out to us after the Instacart study and as we’ve been talking more publicly about the book from folks in the business community who are interested in building extensions that help folks find the best price and agents that will shop and work in consumers’ best interests. So I think there’s a burgeoning but kind of interesting element here where some new technologies could be offered in the public interest and consumers could vote with their feet. But look, I think there is, and I’ve said this for a long time, there is a market for companies who are willing to offer fair pricing, cost-plus pricing, transparent pricing.

And there are people who’ve done well in this way. Costco does cost-plus pricing. Mark Cuban’s healthcare empire is going to be cost-plus drugs. There are people who are saying, “Actually, there’s a better way to do this. We could charge you the maximum you’re willing to pay for a cancer drug because you’re about to die, or we could offer it at cost plus a little margin to keep us building the next set of drugs and to pay our staff.” In the sports setting, one of the examples I talk about in the book is the Savannah Bananas, who’ve built this actually kind of really interesting kind of minor league variety show baseball empire that’s doing really well and actually doing better than some major league teams in terms of revenue. And they offer fan-first pricing and fair pricing, all-in pricing. Even concessions are included in some of their ticket prices.

They use a lottery system instead of auctioning off tickets. So I think they’re also a nice set of examples of folks in the private sector who are bucking the trend. And I think there’s a reason why people like shopping at Costco. They feel like it’s transparent, even if it’s not always the cheapest option on the table.

Goldy:

Right. And it’s not always the cheapest option-

Lindsay Owens:

No.

Goldy:

… but the public resentment to surveillance pricing, personalized pricing, I think it’s a great example of loss aversion. That idea, “Oh, you might get a discount,” but nobody wants to be ripped off. And that’s the thing about Costco shopping is you know you’re not being ripped off. Everybody’s paying the same price, you’re getting a fair price. You don’t have to be perfectly informed.

Nick Hanauer:

I mean, the thing about this stuff is it just requires mental energy that people don’t have available.

Lindsay Owens:

Yeah.

Nick Hanauer:

That’s the thing that’s infuriating is to get to the damn store or wherever, I get to the website and I just want to be treated fairly. I don’t want to have to think through if I’m getting ripped off here because my income is a little bit higher than the next or whatever. Do you know what I mean? It just-

Goldy:

Do people try to rip you off, Nick, because your income is higher-

Nick Hanauer:

[inaudible 00:31:38] yeah.

Goldy:

… than the next person almost always?

Nick Hanauer:

Continually.

Lindsay Owens:

I mean look, there’s always this kind of interesting question with surveillance pricing. Will it have this Robin Hood effect by overcharging wealthy people and-

Nick Hanauer:

No.

Lindsay Owens:

… cross-subsidizing poor people?

Nick Hanauer:

No.

Lindsay Owens:

No. Look, like-

Nick Hanauer:

No.

Lindsay Owens:

… if you’re in a time crunch, if you’re desperate for something, if you’re dealing with an essential, even if you’re a poor person, your willingness to pay is high because you need it now. You’re over a barrel. So that definitely won’t happen. The sort of most likely scenario is everyone will get overcharged to the greatest extent that they can be overcharged. But yeah, absolutely. We hear from companies all the time that in this K-shaped economy where consumption is plugging along at a steady clip, particularly in the upper ends of the income distribution, companies are taking advantage of that, right? They are-

Nick Hanauer:

Yeah.

Lindsay Owens:

… charging well more than you need to in part because they know there are shoppers who will pay a premium. So really, the way that it shows up and sort of the extent of it looks different maybe in some settings across the income distribution, but I think the TLDR is everyone’s going to get ripped off, right?

Nick Hanauer:

Yeah.

Lindsay Owens:

Yeah.

Nick Hanauer:

Yeah, yeah, yeah. So okay, so Lindsay, if you were going to do like one thing, what would you do?

Goldy:

Zero political constraints, you can enact one thing.

Lindsay Owens:

Yeah. As I mentioned, I’m sort of pretty fixated on the future of agentic commerce and the extent to which that’s going to upend traditional e-commerce, the way that AI has upended search, the way that Google Search no longer works the way you want it to. Similarly, a lot of e-commerce will be eroded. So I’m pretty worried about that. And I think the good news is most people aren’t shopping in AI right now, not using chatbots to do all their shopping. So I think there’s still time to get out in front of it. And I’d say, look-

Goldy:

But wouldn’t… I mean, I’m just shocked that you think a chatbot wouldn’t have my best interest at heart.

Nick Hanauer:

Okay. But it’s an agentic shopper is not a hard thing to set up.

Lindsay Owens:

Yeah.

Nick Hanauer:

There will be a lot of competition in that space. And the number one thing that people will be competing on is price. And I just guarantee you that there will be plenty of agentic shopping options where the company irretrievably commits to being on your side. Who would sign up with one that wasn’t?

Lindsay Owens:

Look, I think the question here is the dominance of some of these major platforms and the extent to which Gemini is going to let your agent go shopping on your behalf or require you to use their agent. So I think there are a lot of questions here about the future-

Nick Hanauer:

Yeah, but somebody-

Lindsay Owens:

… of e-commerce.

Nick Hanauer:

… can license these. Obviously, you can license these platforms and set one of these things up and be like, “No, no, no, no. We’ll show you all the options. Here are your 10 options. Here are the prices. This is the best one.” I don’t know. I mean, agentic shopping may put the kibosh on some of this stuff. I mean, again, there is this scenario where there is no choice and you have to go with whatever the terrible people are offering, but I just don’t think that’s realistic. I think that it-

Lindsay Owens:

And, well, I think the concern that I have in the surveillance pricing setting with agentic commerce is the extent to which these companies have a level of information about you that previous retailers could have only dreamed of. They’re putting together breadcrumb trails based on your purchase history, based on third-party data they buy about you, based on crude proxies they infer about you, like your IP address and what zip code you hail from, and that’s a proxy for your income. The types of information people give to chatbots about themselves, about their families, about buying habits, they can infer a whole host of information about you, but they can also just ask you like, “How soon do you need this? How desperate are you for this? What is the trade off here between how quickly you want it and how premium you want it and what kind of deal you want?”

So I think there’s just a level of sort of privacy concern and how that matches up to personalized pricing that is quite concerning. And so one of the things I’ve been most interested in seeing is, and I don’t know if I have the policy solution exactly right, but I really like this conversation around agents being required to act in your interest in the way we require financial advisors to act in your interest or realtors act in your interest.

Nick Hanauer:

But, in fact, financial advisors often don’t act in your interest.

Lindsay Owens:

Sure.

Nick Hanauer:

And there was a whole-

Lindsay Owens:

We’ve been debating these-

Nick Hanauer:

… you end up [inaudible 00:36:12]-

Lindsay Owens:

… issues in Washington for decades. But-

Nick Hanauer:

I can’t remember the fight that I believe we lost to require financial-

Lindsay Owens:

The fiduciary rule fight in the Obama era.

Nick Hanauer:

Did we lose that fight? I mean-

Lindsay Owens:

Well-

Nick Hanauer:

… Lindsay-

Lindsay Owens:

… we won it until we lost it in the courts.

Nick Hanauer:

Okay. Okay, I couldn’t remember.

Lindsay Owens:

We won it in Washington, and then we got held up in Texas, and-

Nick Hanauer:

Yeah. Oh, that’s right.

Lindsay Owens:

… yeah.

Nick Hanauer:

That’s’ right.

Goldy:

But if we do get it and an agent violates it, we’ll just send that agent to jail-

Lindsay Owens:

What I will say is there’s been some-

Goldy:

… and we’ll prosecute it.

Lindsay Owens:

… there’s been some early research on this by some computer scientists and economists at Princeton and University of Washington. And they had the agents do some shopping for them. They had the agents do some financial advising for them. And what they found is they’re almost always recommending the higher priced product despite the fact that it’s not better necessarily. And they’re often recommending predatory products. So we had an example of someone being offered a payday loan. And so the early indication is not good. The good news is, and why I’m kind of bullish on this conversation, is it’s early. The horse isn’t totally out of the barn. You and I aren’t doing all of our shopping in Gemini right now, right?

Nick Hanauer:

Right. Interesting. Well, this is a fantastic conversation, Lindsay, as always. And congratulations on the book.

Goldy:

You want to do the final question, Nick? We’ll ask her again. We’ll see if she’s got a surveillance answer and she changes each time she’s on the podcast.

Nick Hanauer:

We’re going to match your answer to the other times that you were on-

Lindsay Owens:

Oh, no. What’s-

Nick Hanauer:

… the podcast.

Lindsay Owens:

… what’s my question?

Nick Hanauer:

Why do you do this work?

Lindsay Owens:

Oh God.

Goldy:

It’s a personalized answer to this particular episode.

Lindsay Owens:

Yeah. I mean, I will say I wrote this book because I’m rip-roaring mad about the extent to which the conversation in Washington continues to fixate on this idea that prices fall from the sky and that they are a function of competitive markets. And I think what this book shows over and over again is high prices are a function of corporate decision-making and the deployment of new technologies in the service of ripping you off and emptying your wallet. And I think exposing it and shining a light on it is the first way to start the conversation around how to end it and fix it. And so that’s sort of, I think, the reason I wrote the book and it’s really part of my work as well. I think the imbalance of power between corporations and consumers and workers has gotten to an unacceptable and dangerous level in the U.S. economy and in our democracy as well.

And while folks are focused on prices and while I think those types of conversations can sometimes feel abstract, when you bring them down literally to the level of the pocketbook, I think it starts to make things a bit clearer. And so I think this is an important kind of entry point into larger conversations about the role of Corporate America and how far we will let them go and when the American people’s taste for fairness should overrule a corporation’s ability to extract from you.

Goldy:

So I was actually struck, Nick, by what Lindsay said at the end of the interview when we asked her why she did this work. And this gets to a fundamental of economics about pricing. You can have dynamic pricing. You talked at the beginning of things like hotel rooms. There’s a limited inventory of hotel rooms and if there’s only one or two rooms left, they’re going to raise the price. The demand is exceeding the supply.

Nick Hanauer:

Yeah.

Goldy:

But what we’re actually seeing is something very, very different. What we’re seeing is dynamic pricing on goods that are not scarce.

Nick Hanauer:

Yeah, that’s right. For which there’s-

Goldy:

And-

Nick Hanauer:

… infinite supply-

Goldy:

… right.

Nick Hanauer:

… effectively.

Goldy:

They’re not running out of pasta. So there’s no reason for Instacart to charge one person 2.50 a pound and the other person $1.75 a pound. There’s plenty of pasta. They’re charging dynamic pricing on a non-scarce good.

Nick Hanauer:

Yeah.

Goldy:

And if you understand economics, the way it’s taught at the introductory level, that’s not possible in a functional market. There are some really basic assumptions. We know, we go back, Mankiw’s textbook, economics is the study of how society distributes scarce resources. It’s all about distributing scarcity and it’s all this equilibrium system in which there is this natural inverse relationship between price and demand. And that is how markets efficiently and fairly allocate resources because when the price goes up, some people will purchase less of it, it will reduce demand, and producers will create more because the price is high and eventually you will balance supply and demand.

But when the price is totally disconnected from demand, even if you believed that’s how a market economy basically works, and we don’t say that supply and demand isn’t a thing. We just say that it’s not the thing that really describes how the market produces benefits. But regardless, whatever you believe, if that’s what it is, that market isn’t working. It’s not a market anymore. It’s not efficient. It is what Lindsay says in the title of her book, it’s gouging.

Nick Hanauer:

Yes.

Goldy:

And so for me, anybody who defends market capitalism, who defines themselves as a capitalist, who believes that markets are the best thing since non-dynamically priced sliced bread, To defend this dynamic pricing, personalized pricing, it’s the end of capitalism.

Nick Hanauer:

Maybe not. For sure-

Goldy:

I’m just saying it’s not capitalism, Nick. It is not efficiently as they define it.

Nick Hanauer:

No-

Goldy:

It’s not-

Nick Hanauer:

… that’s for sure.

Goldy:

… efficient. It’s not fair, and important, and we know it’s not fair, it can’t be efficient because there’s-

Nick Hanauer:

Because nobody knows what the real price is.

Goldy:

… right. And that’s part of the magic of the price tag is that it helps in one of the other assumptions behind Orthodox economics. And that is for you to make a rational decision based on price. Price is information. You need to be perfectly informed. And when there’s a price tag, you are perfectly informed of the price you are going to pay.

Nick Hanauer:

Yeah.

Goldy:

When there is no price tag and you could log on in one minute it’s this price and the next minute it’s that price and you might get a different price than me who might get a different price from my neighbor, there’s no way to be informed about pricing anymore. And that assumption is really important. Again, for it being an equilibrium model, it can’t be working that way if we have no idea what the price is. And it also gets to another core claim of orthodox economics about price, is that price reflects both value and cost. That is what they teach you in that textbook, that the price is reflecting both value and cost. Now, I think that’s silly, but that’s what they’re claiming. It clearly is not reflecting either. It’s reflecting some algorithm’s ability to gouge you for as much money as it possibly can.

Nick Hanauer:

Yes. Yeah.

Goldy:

That’s not a market economy.

Nick Hanauer:

And it’s certainly not good for most people.

Goldy:

No.

Nick Hanauer:

That’s for sure.

Goldy:

So if you want to learn more about this, we urge you to go online and search for the lowest price for pre-ordering Lindsay’s book, Gouged: The End of a Fair Price-and What That Means for Your Wallet.

Freddy Doss:

Pitchfork Economics is produced by Civic Ventures. If you liked the show, make sure to follow, rate, and review us wherever you get your podcasts. Find us on other platforms like Twitter, Facebook, Instagram, and Threads, @PitchforkEconomics. Nick’s on Twitter and Facebook as well, @NickHanauer. For more content from us, you can subscribe to our weekly newsletter, The Pitch, over on Substack. And for links to everything we just mentioned, plus transcripts and more, visit our website, pitchforkeconomics.com. As always, from our team at Civic Ventures, thanks for listening. See you next week.

The post Gouged: How Big Tech Reinvented the Rip-Off—and Killed the Fair Price (with Lindsay Owens) appeared first on Pitchfork Economics.

Can We Build a Common Good Economy? (with Mariana Mazzucato)

Freddy Doss — Tue, 15 Sep 2026 16:23:18 +0000

Economics teaches us to think of markets as natural forces, and government as something that should only intervene when they fail. In her new book, The Common Good Economy: How to Make Capitalism Work for Us All, economist Mariana Mazzucato argues that story is backward. She joins Nick and Goldy to ask what changes when we recognize that markets are choices — shaped by rules, institutions, public investment, and power — and what that means for the kind of economy we could build instead.

If we designed this system, can we redesign it?

Mariana Mazzucato is a Professor in the Economics of Innovation and Public Value at University College London (UCL) and founding director of the UCL Institute for Innovation and Public Purpose. She is the author of several acclaimed books, including The Entrepreneurial State, The Value of Everything, Mission Economy, The Big Con, and most recently, The Common Good Economy: How to Make Capitalism Work for Us All.

Social Media:

@mazzucatom.bsky.social

@MazzucatoM

@mazzucatom

Further reading:

UCL Institute for Innovation and Public Purpose

The Entrepreneurial State

Mission Economy: A Moonshot Guide to Changing Capitalism

The Big Con

The Great Transformation by Karl Polanyi

A Mission-Oriented Approach to School Meals

Mission-Oriented Public-Private Partnerships: Lessons from the Oxford–AstraZeneca COVID-19 Vaccine

Instagram: @pitchforkeconomics

Threads: pitchforkeconomics

TikTok: @pitchfork_econ

YouTube: @pitchforkeconomics

LinkedIn: Pitchfork Economics

Read the 2026 Social Security Trustees Report Summary

Substack: The Pitch

Nick’s Substack: NickHanauer.Substack.com

The post Can We Build a Common Good Economy? (with Mariana Mazzucato) appeared first on Pitchfork Economics.

The $29 Trillion Social Security Crisis We Already Know How to Fix (Rey Fuentes)

Freddy Doss — Tue, 08 Sep 2026 16:11:56 +0000

Americans are told Social Security is in trouble because there are more retirees and fewer workers to support them. But that story leaves out a major part of the problem: how much income now sits outside the system that funds Social Security.

Roosevelt Institute’s Rey Fuentes joins Nick and Goldy to explain how rising inequality, stagnant wages, and an outdated payroll-tax structure helped create Social Security’s looming shortfall — and why benefit cuts are far from inevitable. Plus, Nick puts forward a different way to think about fixing the system — one that starts with a basic question: why should some kinds of income count toward Social Security while others don’t?

Rey Fuentes is Director of Strategic Initiatives at the Roosevelt Institute.

The $29 trillion figure in this episode’s title refers to Social Security’s projected 75-year unfunded obligation. According to the 2026 Social Security Trustees Report, the combined retirement, survivor, and disability programs are projected to have a $29.3 trillion financing shortfall, measured in present-value dollars, between 2026 and 2100. That is not $29 trillion that comes due when the retirement trust fund is projected to deplete its reserves in 2032.

Social Media:

@rooseveltinstitute.org

@rooseveltinst

@therooseveltinstitute

Further reading:

Social Security Doesn’t Need Cuts. The Fiscal Panic Is Missing Where the Money Is

1983 v. 2032: The Economics of the Last and Next Social Security Reform

What’s Actually Behind Social Security’s Trust Fund Shortfall

“Will Social Security Run Out?” Is the Wrong Question: How Lawmakers Can Protect Beneficiaries and Strengthen OASI

“Sound, Needy, and Patriotic Legislation”: Preserving the Fundamental Promises of the Social Security System

Instagram: @pitchforkeconomics

Threads: pitchforkeconomics

TikTok: @pitchfork_econ

YouTube: @pitchforkeconomics

LinkedIn: Pitchfork Economics

@chrismurphyct.bsky.social

Substack: The Pitch

Nick’s Substack: NickHanauer.Substack.com

Nick Hanauer:

The rising inequality and growing political instability that we see today are the direct result of decades of bad economic theory.

Goldy:

The last five decades of trickle-down economics haven’t worked, but what’s the alternative?

Nick Hanauer:

Middle-out economics is the answer.

Goldy:

Because the middle class is the source of growth, not its consequence.

Nick Hanauer:

That’s right.

Announcer 1:

This is Pitchfork Economics with Nick Hanauer, a podcast about how to build the economy from the middle out. Welcome to the show.

Goldy:

Nick, I know you’re a few years older than me. You’re how old now?

Nick Hanauer:

66.

Goldy:

You’re 66. So that means that next year you qualify for your full Social Security. You must be worried, all the talk about how the trust fund’s running out, how cuts and benefits might affect you.

Nick Hanauer:

Yeah. Yes, very worried. Losing sleep.

Goldy:

Well, I actually-

Nick Hanauer:

I don’t even know how much I would get.

Goldy:

Yeah, probably nothing because you probably don’t pay it because all your income is in capital gains. When was the last time you earned a wage?

Nick Hanauer:

Yeah, it’s been a long time.

Goldy:

So you can’t even remember. That could be due to your advanced age that you and I are boomers, but I think it’s more likely that you haven’t earned a wage since the early 1990s or something.

Nick Hanauer:

Yeah, that’s probably true.

Goldy:

Yeah, which gets actually to the heart of the conversation we’re going to have today, that we have this impending shortfall in the Social Security Trust Fund. And we keep hearing that we’re going to have to cut benefits, I think was it by 2032, something like that, unless we fix this. But the reasons for this shortfall are not what people think it is.

Nick Hanauer:

No, they are not. And we have a wonderful guy today, Rey Fuentes, who works for the Roosevelt Institute, whose interest is Social Security. He’s the director of strategic initiatives at the Roosevelt Institute and has a lot to say about why Social Security is threatened and how it’s pretty straightforward to fix it.

Goldy:

Well, then let’s talk to Rey.

Rey Fuentes:

Hi, my name is Rey Fuentes. I’m the director of Strategic Initiatives at the Roosevelt Institute. We’ve been doing a lot of work debunking myths related to Social Security, and so that’s why I’m happy to chat with everybody about today. But Roosevelt’s thinking broadly about the economy and how it’s working for people.

Nick Hanauer:

So you have been writing about Social Security recently and you have a provocative headline out, “Social security doesn’t need cuts. The fiscal panic is missing where the money is.” I think we are in complete agreement with that sentiment, but kind of explain what the panic is around Social Security and why that panic may not be valid.

Rey Fuentes:

Conventional story around Social Security solvency starts, I think, many times with demographics where people say, “Oh, there are too many people retiring, too many people getting benefits, and so we need to figure out a way to make it affordable.” And really the first place they look because they’ve misdiagnosed the problem as one of demographics is they think, “Well, we just need to cut the benefits. We need to make sure that we are spending less.” But really the question is why? How did we get to this point? And that’s what Roosevelt’s work is focused on. That’s what my work is focused on, is really getting to the correct diagnosis because if we can’t diagnose the problem, we’re not going to treat it. And the underlying diagnosis is a weaker economy, one that was battered by the great recession and one in which earners are not really participating as much as they could in the economy.

I don’t know if you saw the recent report out that a quarter of the American workforce is functionally unemployed, means they are involuntarily working part-time hours, that they are earning poverty wages, and that directly contributes to the long-term health of Social Security because the money comes from wages. So if we have a better economy, we can really get to the root of the solvency crisis as well as thinking about how we can bring in more revenue. I know we’ll talk about all of those pieces from the top, but I think getting the diagnosis correct will set us on a better path to have a conversation about what the future of this program looks like.

Nick Hanauer:

So I guess our view for the longest time has been that the challenges that Social Security faces are largely a byproduct of rising inequality. When Social Security was set up, as I recall, 85% of all income was captured by the tax because even rich people got paid wages for their income. Today, I think it’s under 50% of all income is affected by the cap because so much income in the country is above the cap and is in forms of income, not wages that aren’t addressed by the Social Security tax at all, aren’t affected by the Social Security tax at all. For example, capital gains, which are Social Security-free and are the source of most income for most wealthy people.

Goldy:

So are you telling us, Nick, that you don’t pay Social Security on most of your income?

Nick Hanauer:

No, no, no.

Rey Fuentes:

Nationwide put out this survey. They had a really good piece out where they asked kind of true and false questions about Social Security to the respondents, and they asked whether or not they thought a person earning $200,000 a year versus earning a million dollars a year, if they’re paying the same rate in Social Security tax. And only 34% of the respondents correctly identified that as true, which is part of the problem. They either think that the richest Americans are paying more because they’re earning more or they don’t know.

And that I think is part of this fundamental mismatch because you’re exactly right, Nick, that we have a Social Security payroll tax cap. We only tax up to a certain amount. Now, you’re not going to receive more benefits if you’re wealthier above that amount, but you can contribute more. So the effective tax rate you’re paying on those wages, that’s fundamentally unequal.

And so that creates a systemic imbalance. And you’re right, early on in the program, it captured in the high 80s to 90%, and it was at a moment in 1983 when the last major reform of the program was set, that we were capturing 90% of wages in the economy. And that precipitously fell because, as I think we are correctly identifying here in this conversation, that inequality pushed wages far higher for those people above the cap.

So as people were earning more money, escaping the Social Security tax, and then converting that money into something that wasn’t, as you mentioned, Nick, it wasn’t labor income, it was income from capital, it was income from other sources.

Nick Hanauer:

Right, yeah.

Rey Fuentes:

So I think that has really skewed the finance base for the program in a way that I think could be reversed. And I think that’s the policy fix we should be talking about, not whether or not we should be cutting the program’s benefits.

Nick Hanauer:

Yeah.

Goldy:

It’s two-pronged the problem. One is that rising inequality has pushed a larger share of wages above the cap, and the other is that it has reduced wages share of the overall economy substantially over the past 40, 50 years.

Rey Fuentes:

And it’s one that we’ve correctly identified. I think you had Kathryn Edwards on talking about labor income and AI generation, and she’s written a paper for us where she talks about the overall health of the program as functionally a component of economic management. If we did better ensuring that wage earners could earn more and be more productive, we wouldn’t have to worry about things like the growth of the program’s benefits because it would be covered by the economic productivity. If we were better at allowing more immigrant labor to come into this country and work effectively, if we had childcare that provided opportunities for people to come into the labor market, if we could manage the economy better, Social Security would be better. And I think those are the fundamental connection points that we want to make.

Nick Hanauer:

I mean, I think what most people just don’t understand is that I think the cap is now 185,000 bucks or plus or minus.

Rey Fuentes:

184 and change.

Nick Hanauer:

If you make $185,000 a year, 12.5% of your income is devoted to Social Security, right? The six you pay and the six-year employer pays.

Rey Fuentes:

Yeah. And it’s actually more. We know that employers shave their wages to cover some of that tax. So employees are more than their half essentially in lost wages. And so that I think is the other fundamental mismatch when we talk about what people are paying into this program. We made a promise to them the benefits would be available and guaranteed when they reach retirement, and we want to ensure the benefits are there because they paid in over this period of time. And I think that’s one of the reasons protecting this program is, we think, vital for a civic infrastructure as well.

Nick Hanauer:

Right. So if you make $185,000 a year, you devote a lot of your income to Social Security. If you make $18 million a year, I just did the math.

Rey Fuentes:

In wage income.

Nick Hanauer:

Yeah. No, on any income. Right? Let’s just assume you also make $185,000 in wage income, which may not be true, but let’s just assume that you do. Is it 0.01% of your income to Social Security?

Rey Fuentes:

Yeah.

Nick Hanauer:

You basically don’t even notice that you’re spending the money. And that disconnect I think is really is part of the problem here.

Rey Fuentes:

And even in components of the economy where we think about labor income being reclassified, for example, as profits, people set up a pass through, they set up an S corp where they are generating income through their labor that would in any other time in our economy be classified as labor income, be subject to the payroll tax gap, and that money would also flow into the program. And so in fact, there are Social Security Administration actuaries who have assessed the value of a proposed reforms that would capture some of that pass through income and even raise the payroll tax cap at a more conservative level than what we would argue for. And you could actually close the solvency gap just with those reforms. You wouldn’t raise taxes, you wouldn’t have to raise the payroll tax for current workers who are paying into the program.

Goldy:

So you mentioned the solvency gap and you’re talking about the so-called trust fund, the Social Security trust fund.

Rey Fuentes:

The lockbox.

Goldy:

What I find amusing about all this is that for decades we’ve had critics telling us that the trust fund is a fiction. It’s not really there. And now that it faces insolvency, oh no, that trust fund that I’m told was fictional, now it’s real and it’s insolvent and that’s why we need to cut benefits by 30%.

Rey Fuentes:

Yeah. I mean, it cuts both ways for people in this conversation because really it is an accounting tool. And I think that’s the way we should be thinking about it is a tool. The reason it was set up in the first place was to accumulate more income from a working population because the SSA actuaries understood and accurately predicted that there’d be a lot of baby boomers retiring and drawing on Social Security benefits. So we needed to get over that hill, which is why we generated a trust fund in the first place, which is why it generated reserves. And it was held by the federal government for that purpose. And as that trust fund is depleted, we then run into the statutory problem where the program itself is required to make cuts if it doesn’t have those reserves in place. But again, these are changeable problems, fixable problems, things that Congress can address, but it’s a functional tool that’s allowed us to accomplish a specific task.

And that’s part of the misdiagnosis problem is that the 1983 reformers correctly identified the demographic trends. And even today, we have better worker to beneficiary ratios than they though we would in 1983. So we’re actually doing better in some senses in terms of the demographics of the situation, but the great recession and the lack of economic growth long-term has really taken a hit to the program. And I think the challenge is protecting the program and correctly identifying the problem. Otherwise, Social Security is used as a punching bag for every conversation related to, “Oh, we spend too much. Oh, the government is too generous to certain populations.” And I think that misidentifies the problem and actually obscures the solution, which is why Roosevelt is in this fight.

Goldy:

Yeah, I agree.

Nick Hanauer:

Right.

Goldy:

It’s an entitlement, I’ve been told, isn’t it?

Rey Fuentes:

Yes. It’s an entitlement. We say that for a reason that we’ve made a promise to people, the paying into the program. And as a form of social insurance, we argue that this program also represents, because it is that promise we’ve represented to the beneficiaries who one day can claim those benefits, but it’s a promise for society. I think the misconception is that Social Security isn’t just like a 401(k) with a federal logo on it. It’s also some people’s only access to life insurance, their only access to disability insurance.

And again, this is my favorite line from Kathryn Edwards again, that you couldn’t buy this type of protection on the open market. This isn’t something the private market would provide for. We’ve had folks and analysts talk about how we should eliminate the program to incentivize private savings, yet only 60% of people even have access to 401(k)s, even if they wanted to retire.

And that’s assuming they had excess income after all the costs in their life to devote to their retirement. So we’ve set up a system through Social Security to protect against so many of the things that we know are going to happen to so many people throughout their lives. And then we act because they somehow get to an age where they can finally start collecting those benefits, that they have the temerity to grow old in retirement and use those benefits that somehow now they’re a drain on the system. And we think that gets it fundamentally backwards.

Goldy:

So you’ve talked about the solution being that we can outgrow this, this solvency gap. I’m curious the idea of if we actually did cuts in benefits, what that would do to economic growth, because that’s money you’re taking right out of the economy. If you’re cutting retirees benefits by 30%, a huge chunk of retirees rely on Social Security for the majority of their retirement income.

Rey Fuentes:

Absolutely. And they spend those dollars locally. They spend those dollars on goods every month and they’re going to use that money and it cycles throughout the economy. Billions of dollars in economic activity, hundreds of thousands, even not millions of jobs. I’d have to get the exact statistics, but I think that is, I think, a functional part of the program is that supporting a lot of demand. But the other component, I think, as you mentioned, Goldy, the idea around the program itself really being one where we could think about benefit cuts, but that I think obscures the fact that there is revenue available to help stabilize the program. Now, I wouldn’t go so far as to say the only way to sell the program is just to outgrow it because we’ve waited so long that we need to take action, but the action available to us is revenue left on the table.

As Nick had mentioned, if we open up our Social Security revenue streams to income that should otherwise be classified as labor income, for instance, there will be opportunities to really revitalize the program and ensure that it has a long-term future, but one that is really not the conversation right now. You can really think about the cost to the program and then never once have a conversation about the money that’s on the table in one of the wealthiest countries of the world. We suddenly forget we had that money.

Goldy:

Nick, you have a specific proposal that you have talked about and written about.

Nick Hanauer:

So if it was me, Rey, what I would do, given that 50% of all income of all types is above the cap today, what I would do is reduce the Social Security tax to 6.4% and apply that rate to all income of all types. And if you do that, something like 95% of Americans get a giant tax cut.

Goldy:

So when you say 6.5%, you’re talking about the total, the employee-employer, so you’re going to have the Social Security tax.

Nick Hanauer:

Yeah, you go from 12.4 to 6.2%, plus or minus. I mean, it’s not exactly… It’s within a couple of fractions of a percent. And then you apply to all income. I don’t see why capital income should be protected from this tax. If you make money, you should pay into the system. And when you were born, you definitely knew you needed to be able to retire, but you did not know that you were going to make capital income versus labor income, right?

Rey Fuentes:

Or that it existed when the program was created, right?

Nick Hanauer:

That’s right. Yeah.

Rey Fuentes:

There are now forms of income that no one could have imagined people [inaudible 00:17:08] the system.

Nick Hanauer:

That’s right. And so I think it’s really stupid to have some income subject to the tax and some income not subject to the tax. All that does is encourage people to find income that isn’t subject to the tax, right? You just have this sort of force generating more cheating effectively. But GDP growth rates in the country would be significantly higher if 90 or 95% of Americans earned 6% more in income. And if a tiny minority of people at the very top paid 6% more in tax, there would be no effect really on the economy from those folks paying more in tax and a huge effect from the majority of people paying less in tax. And now you never have to worry about the system ever again. It’s just fixed. As the economy grows, so shall Social Security. Full stop.

Goldy:

Okay. So your solution, Nick, is we’re going to have or substantially lower the rate.

Nick Hanauer:

It’s about half.

Goldy:

The Social Security tax rate, and then we’re going to apply it to all income, no cap, wages, capital gains-

Nick Hanauer:

Dividends.

Goldy:

Interest, dividends, everything.

Nick Hanauer:

Anything you get.

Goldy:

All income at approximately 6.2%.

Nick Hanauer:

Correct.

Goldy:

Okay. That would mean that for a lot of billionaires, their tax rate, their effective tax rate would increase from 0% to 6.2%.

Nick Hanauer:

It’s possible. Yes.

Rey Fuentes:

What a dramatic increase. Yeah.

Goldy:

What do you think about that, Rey? How would that work? Do you think, could it work? I mean, either technically or politically?

Rey Fuentes:

What’s great is that, I mean, the SSA, the actuaries have actually evaluated part of Nick’s proposal and part of it is, oh, could we raise that 6.2% of the payroll tax cap on net investment income for very wealthy earners? And if you did that, you could close about 18% of the 75-year actuarial solvency that the actuaries actually look at to determine whether or not we are effectively resolving the solvency gap. That’s not a solution to sneeze at. That’s actually real money on the table.

And I think one thing that I like about that proposal is that it also correctly, as we talked about at the top, it correctly diagnoses the problem as one related to inequality because we know, I mean, just putting concrete numbers to it, from 1983 to 2000 when economists were studying the issue, they saw that the 6% of workers that earned money over the cap, their incomes grew by 62% in that time period. But of the 94% of people under the cap, their income, their wages grew 17%.

Goldy:

Correct.

Rey Fuentes:

So the idea that we’ve misdiagnosed the problem, but then also not invested in an economy where people can work and be as productive as possible as share in those gains, but also contribute more into the Social Security program. So I like the proposal around getting rid of the tax cap. That’s absolutely something that should be on the table. It’s something that would close, depending on whether or not you also extended benefits to the additional taxpayers, you could close roughly half to almost two thirds of the 75-year solvency just by eliminating the tax cap. So I think there are a lot of questions you’d have to go forward in terms of analyzing that proposal, but it’s definitely on its merits. I think there’s a lot to like.

Goldy:

So how large is this gap in trillions of dollars? Put a number on it over the next, you’re saying 70 years or?

Rey Fuentes:

Yeah, I’d have to-

Goldy:

Because we’re told it’s like 2030 something the trust fund runs out. So how big is the gap?

Rey Fuentes:

Yeah, I’d have to go back to the trustee’s report and have it open to give you the exact number. It’s in the trillions because. And again, this is where we get into the topic of the big scary number. That’s what is being used essentially as a bludgeon against advocates who talk about are there ways to resolve this issue? Had Congress acted earlier and just either raised a small portion of the payroll tax itself or eliminated portions of the tax gap, we could have resolved the solvency gap. But the challenge now is thinking about how you resolve it as you’re getting so close to the solvency date. And that’s fundamentally what matters. But I think the other kind of challenge in communicating this issue to folks is also that when you hit that gap, it’s not as if federal funding kind of falls off a cliff.

It’s just the statute that creates Social Security says that you can’t pay any more money because there’s no more money in the reserve to pay out. There’s no more money available. And so there’s a statutory cut in benefits, but the revenue is there. That also tells us that the program will continue paying benefits at a reduced rate. So it’s not that Social Security is going to implode and go away tomorrow, but a significant cut for, I think the last survey that I saw about the bottom quarter of income earners, half of their wealth is Social Security. Having a cut like that would be devastating.

Goldy:

I think the big takeaway here is that this is not a fiscal problem, this is a political problem. There are multiple things we could do to solve this with the political will to actually do it. I mean, I think the easiest thing to do personally would be we just mint a trillion dollar coin or three every once in a while and deposit it into the trust fund and problem solved. The money’s there. I mean the economy as people are planning for it, we’re still planning for it as if retirees are going to get their full benefit and that money will be spent. So in a sense, that money is already spent in the future in terms of expectations. What’s inflationary about letting that money be spent? It was going to be spent anyway.

Rey Fuentes:

Yeah. We’ve heard those types of proposals before to erase the deficit, to handle the debt. And I think there are economists much smarter than me that could answer why we shouldn’t approach the challenge in that way in terms of its effects on inflation, its effects on savings in the future, and how we think about the budget discipline necessary to run a government. And that’s the challenge is kind of thinking through some of those pieces. But in our existing system, we could solve this problem without new exotic tools. We have all the tools in front of us. I think that’s the part we communicate. We have a dedicated system that funds into the program. It’s there. It’s been working for 91 years now, and it’s the economy that really has failed us. It’s the economy that hasn’t really kept up its end of the bargain, mostly because we have leaders that have not invested in things like childcare, immigration reform.

Nick Hanauer:

It’s not the economy let us down. It’s-

Rey Fuentes:

Well, our policymakers mismanage the economy. That’s probably a better way to describe it.

Nick Hanauer:

Economists who let us down.

Goldy:

Right.

Nick Hanauer:

Economic policymakers, political leaders let us down. It wasn’t the economy.

Rey Fuentes:

Yeah. A better way to phrase it. Yes.

Nick Hanauer:

Yeah. I guess, how much are Social Security payments annually?

Rey Fuentes:

The average benefit amount is around $2,200 a month for the average beneficiary. And it obviously which is-

Nick Hanauer:

How many beneficiaries are there?

Rey Fuentes:

Roughly over 70 million beneficiaries. And this includes people, and like I said at the top, this includes people who are receiving survivor’s benefits. These are people who are receiving spousal benefits.

Nick Hanauer:

Do you remember what the aggregate amount that goes into the economy is from Social Security?

Goldy:

Annual payments?

Rey Fuentes:

Yeah, I’d have to look at the specific payment amounts that come into the program, but we know that it reflects billions of dollars of economic activity, but I’d have to look at the actual, again, from the trustee’s report that details a lot of those aggregate statistics. I wish I had them right the top of my hands, but that’s a piece that absolutely is in the trillions of dollars and you have roughly 70 million beneficiaries. And that’s why we talk about part of this cut being devastating is if the average monthly Social Security amount is around $2,200, that’s a $500 haircut that people have to take. And for many beneficiaries, that’s their only source of income. It’s hard for me to imagine how someone lives off of $2,000 a month and meets all of their expenses, and it’s even harder to think about that. They lost a third.

Nick Hanauer:

So my calculator says like $150 billion. If it’s 70 million times 2,200, I don’t know. I mean, we got to look it up, but it’s a lot of money and it’s a lot of haircuts and it’s a lot of restaurant visits and it’s a lot of rent and it’s a lot of things. Rey, if you were in charge of Social Security and just wave your magic wand, what would you do?

Rey Fuentes:

Absolutely. We spent a lot of time at Roosevelt thinking about this issue. We actually just put out a paper around the history of the program and its guarantee and its promise. I think when we think about Social Security itself, if I had a magic wand, it would be come back to the negotiating table when we were thinking about Social Security reform because the initial package included federal unemployment insurance, it included universal health insurance. We were talking about ensuring the vast majority of risks that people are experiencing in their life. And for various reasons, those things went off the negotiating table. And we got Social Security and we got many other things that came along with it like disability insurance. We now have SSI, supplemental security income. And so what I would do, absent constraints, is thinking about how can we guarantee the promise of this program as it was designed?

And one is through guaranteed benefits, through ensuring that individuals have access to those benefits in a clear, easy, and dignified way. I think we can have this dog conversation around what it did to the Social Security administration being objectly horrible thing, but we should make it as easy as possible for people to access the benefits. And then we should think about the other things surrounding the program. What about the people that have worked really physically demanding jobs up to the age of retirement?

Nick Hanauer:

Yeah.

Rey Fuentes:

Having bridge benefits so they can access those benefits earlier. What happens if a single mom is caring for her children for a good portion of her working years? We should have care credits that recognize that form of labor. So there are ways of reforming the program that reflects the economy we have while also protecting the dignity and security of people coming into retirement.

Nick Hanauer:

Interesting. One final question. Why do you do this work?

Rey Fuentes:

Yeah. I think a lot about my parents coming into retirement. My dad worked a physically demanding job on an oil field. My mom’s a cancer survivor. The idea that they would have to take a cut in their Social Security benefits that they paid into during their working years doing some of the hardest work I could imagine, but also raising a family and then thinking that their moment of retirement should be one where they can access a dignified retirement that allows them peace of mind. The idea that in this moment, people like my parents would have to worry about that rather than thinking about how they’re going to spend that time, to me is a moral failure. And I’m in this fight because of that specifically, because I think we can do better by our promise and thinking that we can just cut our way or that benefit cuts would be easy and they wouldn’t be a real tragedy for a lot of families in this country is something we want to correct.

Nick Hanauer:

Goldy, at the end of the day, to fix Social Security, it’s got to be some variation on my idea. Basically, we have to capture more income that is now finding a way to evade the tax, whether that’s capital income or dividend income or pass through income or whatever it is. The problem isn’t Social Security. The problem is the way in which our economy has evolved to provide income, particularly to wealthy people, which is not subject to that tax. That’s the problem.

Goldy:

This is a system designed to work in a 1930s-

Nick Hanauer:

Economy.

Goldy:

… industrial economy where most people’s income came from wages, not capital income, and where the economy was less unequal.

Nick Hanauer:

Yeah, correct.

Goldy:

That wages consumed a much larger portion of the economy than it does now. So as inequality grows, an increasingly smaller portion, I don’t know how to. A decreasing portion of the economy is actually subject to the Social Security tax.

Nick Hanauer:

That’s right. So by way of example, wages in 1970 were 51% of the economy. Today they’re 41%. So 10%, that’s $3 trillion plus or minus that used to be wages and is now other things, mostly corporate profits. But if-

Goldy:

And 90-some percent of that would’ve been subject to the Social Security tax.

Nick Hanauer:

Correct. So now you’re talking about, well, what’s 12% of, call it 10% of 3 trillion, it’s 300 billion extra that would be going into Social Security if we didn’t have an economy.

Goldy:

And that would cover the gap.

Nick Hanauer:

And that would cover the gap.

Goldy:

Right. It’d be growing the trust fund instead of shrinking it. I mean, there is another solution, which I think in the Republican Party you might find more politically palatable. And that is, and this is a two birds with one stone approach. What we do is we eliminate Medicare. So we don’t have that trust fund problem either coming up. So no more Medicare. And then all of us boomers die early. Well, not you, Nick, because you got plenty of money, but people like me who couldn’t afford to buy insurance on the private market or pay for insurance. We die early, thus reducing the stress on the trust fund. Problem solved.

Nick Hanauer:

Works for me.

Goldy:

No more boomers, right? That demographic problem goes away like that because instead of the average lifespan for somebody my age being 83, that’s what they say. At 63 years old, on average, median, I should expect to live to be. That’s what I need to expect in terms of saving, will die by in their early 70s. They save like 10 years of Social Security benefits right there.

Nick Hanauer:

Well, Soylent Green. It’s people.

Goldy:

Well, there we can solve the ground beef problem too. That’s true. Exactly. All at once. As these boomers die-

Nick Hanauer:

We can make them into hamburger.

Goldy:

Maybe not ground beef, but let me tell you, any meat, no matter how tough, slow cooked with onions, tender and delicious.

Nick Hanauer:

Delicious. Exactly.

Goldy:

I would be tasty that way.

Nick Hanauer:

Exactly. Exactly. Goldy, I think we’ve solved the nation’s problems.

Goldy:

Right. Look, the point is, all joking aside, as I said during the interview, this is not a fiscal crisis.

Nick Hanauer:

No.

Goldy:

This is not a fiscal problem. This is not a budgetary problem. This is not something that requires a lot of sacrifice. It is a political problem. There are multiple ways around this, lift the cap, add in capital gains, however you want to do it. There are multiple things that can be done without cutting benefits and in fact with increasing benefits. And there’s a strong argument to make for increasing benefits rather than cutting.

Nick Hanauer:

That’s right.

Goldy:

We can do these things with the political will.

Nick Hanauer:

Absolutely.

Goldy:

And the fact that we haven’t is because-

Nick Hanauer:

Neoliberalism.

Goldy:

Yeah, it’s politics. Anyway, if you want to read more about this issue, we will provide links in the show notes to some of Rey’s writing, much of it at the Roosevelt Institute.

Announcer 2:

Pitchfork Economics is produced by Civic Ventures. If you like the show, make sure to follow, rate, and review us wherever you get your podcasts. Find us on other platforms like Twitter, Facebook, Instagram, and Threads @pitchforkeconomics. Nick’s on Twitter and Facebook as well, @NickHanauer. For more content from us, you can subscribe to our weekly newsletter, The Pitch, over on Substack. And for links to everything we just mentioned, plus transcripts and more, visit our website, pitchforkeconomics.com. As always from our team at Civic Ventures, thanks for listening. See you next week.

The post The $29 Trillion Social Security Crisis We Already Know How to Fix (Rey Fuentes) appeared first on Pitchfork Economics.

Profit, Power, and the Crisis of the Common Good (with Sen. Chris Murphy)

Freddy Doss — Tue, 01 Sep 2026 17:25:13 +0000

Why do so many Americans feel powerless, lonely, and disconnected — and what does that have to do with our economy?

Senator Chris Murphy joins Nick and Goldy to discuss his new book, Crisis of the Common Good, which makes the case that America’s political crisis is inseparable from a deeper collapse of power, connection, and shared purpose.

They dig into the “cult of profit,” Market Humanism, AI, scarcity, corruption, and the limits of an economy organized around efficiency and extraction. It’s a conversation about what happens when profit becomes the highest measure of success, and what it would mean to build an economy rooted in dignity, connection, and the common good.

Senator Chris Murphy is the junior United States Senator for Connecticut

Social Media:

@ChrisMurphyCT

Further reading:

Crisis of the Common Good: The Fight for Meaning and Connection in a Broken America

Watch Nick Debate Obama Admin Economist Jason Furman: NickHanauer.Substack.com

Instagram: @pitchforkeconomics

Threads: pitchforkeconomics

YouTube: @pitchforkeconomics

LinkedIn: Pitchfork Economics

@briancallaci.bsky.social

Substack: The Pitch

Nick’s Substack: NickHanauer.Substack.com

Goldy: So Nick, before we start this episode, I’d like to have an hour-long debate with you about whether capitalism is broken.

Nick Hanauer: I just did that, Goldy.

Goldy: Really? With who?

Nick Hanauer: I debated Jason Furman, the former head of the Council of Economic Advisors under President Obama, Harvard economics professor, and friend of mine.

Goldy: A friend of yours. Oh no. It got a little spicy there.

Nick Hanauer: It did, it did, it did. We had a really fun debate over the question of whether capitalism is broken. I argued that it is. He argued that it isn’t.

Goldy: And where could people see this debate if they wanted to watch or listen to it?

Nick Hanauer: I would love for them to come to my Substack at nickhanauer.substack.com. Honestly, I think it was a really interesting discussion, really fun. Did get a little spicy in places. The moderator told us that he had never done less work in a debate. I’m not sure if that’s a good thing or a bad thing.

Goldy: I think we’ve got a talent here for not letting somebody else have a word in edgewise. Anyway, we will put a link in the show notes. Again, go to nickhanauer.substack.com. And now, onto our conversation with Senator Chris Murphy.

Nick Hanauer: The rising inequality and growing political instability that we see today are the direct result of decades of bad economic theory.

Goldy: The last five decades of trickle-down economics haven’t worked. But what’s the alternative?

Nick Hanauer: Middle-out economics is the answer.

Goldy: Because the middle class is the source of growth, not its consequence.

Nick Hanauer: That’s right.

Announcer 1: This is Pitchfork Economics with Nick Hanauer, a podcast about how to build the economy from the middle out. Welcome to the show.

Nick Hanauer: So Goldy, today, we get to talk to a pretty old friend of mine, Senator Chris Murphy from Connecticut, who I think is one of the most thoughtful political leaders in the country today. I’ve been talking to Senator Murphy about economics for a long time. For as long as I’ve known him, he’s always been like, “Yeah, but there’s deeper stuff going on.” It’s not just all dollars and cents.

Goldy: Right.

Nick Hanauer: There’s this moral rot at the center of things that I think is really a big problem. And he has this new book out, which is The Crisis of the Common Good, which I think is the expression of this feeling that he has had for a very long time that we are on the wrong track. And I’m very excited to talk to him about it today.

Goldy: I think, Nick, if I have a criticism of you and your approach to things, it is your, well, we’ll get into this, the use of the word cult with him, but your faith in how much of the problem is just economics-

Nick Hanauer: Yeah.

Goldy: … that if we fix the economy, we fix everything. And I think it’s a big part of the problem, obviously.

Nick Hanauer: Yeah. But you’re right, it’s not everything.

Goldy: Yeah.

Nick Hanauer: It’s definitely not everything.

Goldy: And to be clear, it’s all closely related, because our ideas about economics very intentionally in the neoliberal era, in this neoliberal cult, have seeped into all aspects-

Nick Hanauer: Yeah.

Goldy: … of our lives in terms of how we-

Nick Hanauer: Our culture.

Goldy: … interpret the world-

Nick Hanauer: Right. Our values.

Goldy: … how we see our place in it. Right.

Nick Hanauer: All that.

Goldy: And that is very intentional in that neoliberal ethos, that all of human existence can be reduced to just market interactions-

Nick Hanauer: Yes.

Goldy: … whether it’s actually in an actual marketplace or in the marketplace of ideas, et cetera, that very phrase, the marketplace of ideas. But when I hear Senator Murphy talk about these things, he’s obviously… I think he has a little richer, more nuanced stake-

Nick Hanauer: Yeah.

Goldy: … that is clearly focused on economics, but is not just economics.

Nick Hanauer: Yeah. Correct, correct. Well, with that, let’s talk to Senator Murphy.

Senator Chris M…: Chris Murphy, Boston Red Sox fan, United States Senator, author of Crisis of the Common Good.

Nick Hanauer: So you and I go back pretty far, and we’ve been talking about the economic and political issues that face the country for a long time. And I would say that our focus, by our, I mean mine and my team’s, has been very much on the economics of the problems. But you’ve gone further in your new book, and connected the economics to, I think, what amounts to a moral crisis in a really interesting way. And so, if you would, just lay out your thesis about what’s wrong or what went wrong, and how you’re thinking about it right now.

Senator Chris M…: Well, great to be with you, Nick and Goldy, thanks for including me in this. Yeah. Listen, I think it’s pretty amazing that we are celebrating this year 250 years of this revolutionary document that contains this revolutionary phrase, the idea that government should care about people’s happiness. GDP doesn’t show up in the Declaration of Independence, unemployment doesn’t show up, student test scores doesn’t show up. No, the word happiness shows up. And so what does that mean, that government should think about people’s happiness? Well, it means that we actually have to have a conversation about what leads to a happy, fulfilled, meaningful life, and we have to admit that less people than ever before in this country are waking up every day feeling happy, feeling like they are leading a purposeful, meaningful life, and government has a lot to do with the way that people are feeling.

So it sounds kind of soft that government should care about how people are feeling, but we’re literally celebrating 250 years of the document that tells us that we should do that. And the two things that I think more people than ever before are feeling today are a sense of powerlessness-

Nick Hanauer: Yes.

Senator Chris M…: … in their life and a sense of loneliness, that they just aren’t connected to people or to their community. And so this book is really about how we got to a place where so many people feel powerless, so many people feel lonely, and how that explains our politics. And so it’s not just you’ve got to run an election to get rid of Donald Trump. It’s that you have to really understand why we have structured both an economy and a culture that have left people feeling pretty miserable. And what I worry is that in particular, my party seeks to adjust the dials of the economy to impact unemployment, GDP, crime, but not happiness and purpose.

Nick Hanauer: Yeah.

Senator Chris M…: And those might be different dials, or you might have to turn them a lot farther than we’re turning them to actually make people feel better about their lives. That’s what this book is really about.

Nick Hanauer: Yeah. Interesting. In your book, you kind of decompose the problems into six cults.

Senator Chris M…: Yeah. I mean, I use this word cult very intentionally. It’s obviously a loaded word. But we have come to worship false idols that give you maybe an immediate shot of endorphins, a false sense of happiness, but underneath, you’re rotting spiritually when you end up worshiping these cults, worshiping these idols. And so, yes, that’s the way that I want to think about America today, that we just have our fundamental priorities about what we value misordered.

Nick Hanauer: Yes.

Senator Chris M…: And unless you shift those fundamental priorities about what matters in life, you are going to just fester in this sense of spiritual rot that I think the country’s in the middle of.

Nick Hanauer: Right. And the first cult is the cult of profit, which I suppose, in many ways, is the most obvious instantiation of neoliberalism, which is the thing that-

Goldy: Of economics as it’s taught. It’s the invisible hand, is the pursuit of profit benefits society at large-

Nick Hanauer: Yeah.

Goldy: … the individual pursuit of profit.

Senator Chris M…: Yeah. The cult of profit is this, that we’ve decided the point of the economy is to create profit instead of the point of the economy being to create a healthy community and fulfilled, happy individuals.

Nick Hanauer: Right.

Senator Chris M…: And what we are learning is that when the only thing you care about is profit, what occurs is the massive concentration of wealth and power in a handful of a very small number of people, and the vast majority of people in the country feeling out of control of their life, that they have no agency-

Nick Hanauer: Yeah.

Senator Chris M…: … and they get angrier and angrier and angrier. And so the question is, why are we worshiping that particular God, the God of profit? Yes, profit and return on investment should be a part of what-

Nick Hanauer: Correct.

Senator Chris M…: … an economy seeks to produce, but it’s not the only thing that an economy should seek to produce. And why do we choose to live in a world in which a good company, judged by current standards, is an economy where a company pillages the community in which it lives, that it creates a product of no social value-

Nick Hanauer: Or negative social value.

Senator Chris M…: Negative social value.

Nick Hanauer: Yeah.

Senator Chris M…: It treats workers really badly, but it makes a profit, and as long as it makes a profit-

Nick Hanauer: Yeah.

Senator Chris M…: … it’s a good company.

Nick Hanauer: Yeah. One of the things that I’m noticing or feeling right now is that we’ve had this cult of profit for a long time. It is reaching sort of surreal and comical levels, prediction markets being a great example of taking this to its logical extreme, where anything you can monetize, you should. If you can monetize harm, if you can monetize pain, great.

Senator Chris M…: Yeah. I mean, it does leave you feeling really cold and empty when everything in your life-

Nick Hanauer: Yeah.

Senator Chris M…: … exists just for somebody else’s financial benefit.

Nick Hanauer: Right.

Senator Chris M…: And we understand that there must be limits on that. So it’s not as if we’ve given up on the idea that certain things should be run just for the good of the country or our community. So for instance, we don’t accept that police and fire protection should be run for profit. We’re very comfortable with the purpose of police and fire protection being-

Nick Hanauer: For now.

Senator Chris M…: Well-

Nick Hanauer: For now.

Goldy: Actually, there are plenty parts of the country where fire protection is run for profit.

Senator Chris M…: Yeah.

Goldy: That’s a thing.

Senator Chris M…: I know it is. And obviously, it used to be a thing. And of course, there’s all sorts of supplemental security services. I mean, the number of houses in Connecticut that now have gates around them and private security is stunning and alarming. But I only bring that up because it’s not as if we have lost the entire fight over whether-

Goldy: Yeah.

Senator Chris M…: … certain things should be in the common goods, in the public commons. So yes, the example I use to start the book is this example of my kid’s hockey league. He’s a hockey player. He’s not going to the NHL. He’s a good athlete. But his hockey league is owned by private equity-backed for-profit company. And so he plays 60, 70 games a year, which is totally unnecessary for a kid who’s not going to play professionally. But even worse, all the rules of the league are designed not to make the product of youth sports better for him, but to extract money from him and his parents.

One terrible example is that we are not allowed to use our phones to livestream the games for the parent that’s not there. And often, the games involve hours and hours of travel, so one parent often is staying home. We can’t do that because there’s a streaming service built into the league in which you have to pay, I kid you not, upwards of $50 a month in order to see your little kid, these are eight-year-old, nine-year-old kids, play hockey. And that exists only to maximize the profit for the owners. It has nothing to do with the best experience for the family. And that just seems sick to me-

Goldy: Yeah.

Senator Chris M…: … that youth sports is not run only for the benefit of the kid and the family, that youth sports is now run primarily as an extractive exercise for people to make a profit. There’s still going to be tons of things to make a profit off of. Nobody needs the government to run the breakfast cereal industry, right?

Goldy: Yeah.

Senator Chris M…: There’s plenty of places where you can make a profit. It just feels like police and fire protection, youth sports, maybe even big parts of our healthcare system should just be places where the primary driver-

Goldy: Yeah.

Senator Chris M…: … is what’s best for people, not what’s best for the owners of the capital.

Goldy: Yeah.

Nick Hanauer: And so take us through the cult.

Senator Chris M…: Yeah. The cult of profit, which we’ve talked about, I call it the cult of everywhere, the sense that we are all global citizens today and we should just be happy about it, and we should just accept that we no longer have local, healthy, unique places to call our own.

Goldy: Yeah.

Senator Chris M…: The cult of consumption, this idea that you’ll feel better if you buy more stuff-

Goldy: Yeah.

Senator Chris M…: … rather than if you engage in making your community better.

Goldy: Yeah.

Senator Chris M…: The cult of credentialism, this idea that we’ve sorted the country into haves and have-nots based upon whether you have a college degree, and if you don’t have a college degree, you’re less worthy than everybody else. The cult of corruption, the idea that if you win in our politics, if you win in our economy, you should just use your power to grab everything that’s available to you, that there’s no value of modesty or restraint left, that if you have power, you maximize it.

Goldy: Yeah.

Senator Chris M…: That is a feature both of our politics and of our government.

Nick Hanauer: So we’re in violent agreement with your analysis. I mean, we’ve come at it in a slightly different way, but I think that your assessment is largely correct. The way in which we’ve commodified everything, we’ve reduced everything to a question of whether it creates efficient returns for capital, et cetera. What do we do to get out from under this?

Senator Chris M…: Well, I sort of come back to this question of how do you design an economy built for happiness? And there’s this false dichotomy in politics today, Nick, you see this very plainly, in which people think there’s only two choices. One choice is market fundamentalist profit-obsessed capitalism, basically what we have today, or socialism.

Nick Hanauer: Yeah.

Senator Chris M…: And that’s not the only choice. Scandinavia, those countries are amongst the happiest places in the world. They have fairly highly regulated economies. They have a very high floor.

Nick Hanauer: Yeah.

Senator Chris M…: You show up and you get a certain set of things, a dignified retirement, free public education and childcare. But they’re also pretty vibrant capitalist societies.

Nick Hanauer: Yes.

Senator Chris M…: In fact, those countries have the highest percentage of millionaires in the world, and so you can succeed and get rich in those countries. And so the question is, can you build an economy here where the floor for everybody is higher, that if you’re working full-time, everybody gets to lead a dignified life, where you feel more fulfilled because you have more power as an individual and the economy is less exploitative, and yet you can still become rich-

Nick Hanauer: Yeah.

Senator Chris M…: … that you can still do things that allow you to provide very well for you and your family.

Nick Hanauer: Yeah.

Senator Chris M…: I think that that’s possible. We can raise the floor, create more competition, still create a lot of wealth-

Nick Hanauer: Yeah.

Senator Chris M…: … but not have the economy feel so extractive.

Nick Hanauer: Yes. That sounds like market humanism.

Senator Chris M…: Yeah. Sounds like a book you wrote. Sounds like a book you wrote. And really, the only difference is that my book just adds on this layer of metaphysics, which is that-

Nick Hanauer: Yeah.

Senator Chris M…: … okay, how does that make you feel, right?

Nick Hanauer: Which I think is so important.

Senator Chris M…: Right.

Nick Hanauer: I think what you’ve done is very, very important, which is taking it beyond the dollars and cents, because being paid a wage that enables you to live a dignified life is table stakes, right? That’s the starting point. But in order to build a society in which people are generally connected and happy, you have to go beyond that. You do have to reach into all of these other dimensions that I think you outline really well.

Senator Chris M…: Yeah. Let’s talk for a second about something called the scarcity mindset.

Nick Hanauer: Yeah.

Senator Chris M…: The scarcity mindset is this idea that when you do not have enough to live, that you view those in your community not as neighbors, but as competitors.

Nick Hanauer: Correct.

Senator Chris M…: And so you wake up every day thinking, okay, I’ve got to compete, compete, compete in order to just get my pile big enough so that I can put food on the table, and everybody is a threat-

Nick Hanauer: Yes.

Senator Chris M…: … to take away from that pile. And so that means you don’t view them as potential friends. You don’t view them as potential collaborators in a block party. And what we know is that happiness comes actually not from the pile being big enough. You need the pile to be big enough to live. Happiness comes from connection, from friendship-

Nick Hanauer: Right.

Senator Chris M…: … from common purpose. And so when you live in an economy where the intentional design is scarcity, it is not just that you are living a life of permanent economic neglect, but you also are really antsy, really anxious, and unable to engage in the kind of metaphysical connection with your neighbors that you would be able to-

Nick Hanauer: Yeah.

Senator Chris M…: … if you woke up every day knowing that you had enough.

Goldy: We don’t use the word cult, but really, this podcast is about the cult of economics. And you just brought up that scarcity mindset, and it is absolutely fundamental to the way that economics is taught in the United States. The leading introductory textbook, Mankiw’s Principle of Economics defines economics as the study of how a society allocates scarce resources. That is literally how we teach economics. And my guess would be that most of your colleagues never got beyond Econ 101 because they’re not economists, right? A lot of them are lawyers, whatever. But they probably took an introductory textbook. Are they in that cult of economics? When they hear you talk about metaphysics, do they roll their eyes and think, oh, what are we talking about metaphysics when it’s actual physics, like economics, it’s a science, and you are disagreeing with the science? How do you communicate this to them, and are their minds open to breaking with that cult that they were raised in?

Senator Chris M…: There’s no easy answer to that. Yes, I think generally, we have been conditioned to believe that our job, as I said at the outset, is to just kind of turn the dials-

Goldy: Yeah.

Senator Chris M…: … on unemployment and wages, and then just accept that if things head in the right direction, people will be happy. But one of my very prominent colleagues often talks in small groups about the case study of the well-paid firefighter, somebody who is actually doing well, who is making a good living, who is able to provide for their family, but is still waking up every day feeling kind of angry about the world in which they live in, is the biggest supporter of Donald Trump, is a believer in this argument of scapegoats, and the question is, why is that?

It’s because when you create an economy, even for people that have enough, in which you don’t have a local downtown that feels unique any longer, that you have technology in your pocket that’s poisoning your kids, in which it just seems okay that people are becoming trillionaires, and that the only purpose of the economy is to make a handful of people more and more rich, where politics seem broken and you have to be a billionaire in order to have influence, that if you make a really good living, that you don’t have any place in our politics unless you’re filthy rich.

So even for people that are making triple the minimum wage, they are feeling like the economy doesn’t serve them, like the culture doesn’t serve them. And I think people are starting to understand that, that Trump didn’t get votes just from really, really poor people, he got votes from a lot of folks who are feeling adrift even as they make a living wage. And that’s because the rules of the culture and the economy around them are still pretty disempowering even for somebody that makes a decent wage.

Nick Hanauer: This is one of the big problems with inequality, is that in a highly unequal society, everybody is a loser, except the 2,000 people at the very top, right? That’s the problem. I just remember, I went to a public high school in Bellevue, Washington in the olden days of the middle class, and two of my best friends, one went off to run a gas station and the other went off to become a diesel mechanic, and they viewed those choices as legitimate choices. The guy who went off to be a diesel mechanic, he explained to me… Because I was like, “Why aren’t you going to go to college?” He was like, “Why would I do that? I can go to diesel mechanic school for two years and make…” I don’t know, some absurd amount of money at the time. I mean, but by today’s standards, nothing.

Senator Chris M…: Right.

Nick Hanauer: But it was triple what the median wage was or something like that as a diesel mechanic, or double what the median wage was. And today, those options really aren’t available, because even doctors and lawyers can’t afford to live in big cities anymore, or they certainly are not part of the upper crust, because we’ve created a society where if you don’t have half a billion dollars or a billion dollars or a hundred million dollars, you’re not in the game, in that sense, and it’s incredibly corrosive.

Senator Chris M…: Listen, all those jobs that you talked about that today provide for a viable living wage, a dignified life, may be short-lived, because the biggest metaphysical and economic challenge to the world is artificial intelligence.

Nick Hanauer: Right.

Senator Chris M…: And I missed the third cult, the sixth cult as I was listing them, the cult of technology.

Nick Hanauer: Yeah.

Senator Chris M…: And part of what is making a lot of people in this country increasingly anxious, even those who have a decent pile, is that government isn’t taking seriously the oncoming job threat of artificial intelligence-

Nick Hanauer: Right.

Senator Chris M…: … because only a handful of people have influence in this country, and they are the ones that are going to profit-

Nick Hanauer: Yeah.

Senator Chris M…: … off the massive dislocation of jobs in this country. And so if all you care about is profit, well, those AI companies, unregulated and unchecked, are going to be massively profitable, i.e. successful. But that’s the kind of success that will lead to political disintegration in this country, and that’s what’s on people’s minds a lot today too, even people who have good jobs.

Nick Hanauer: Right.

Goldy: And do your colleagues see an alternative? Because what that means is, again, if you understand economics, the way it’s been taught to them, is that they’re going to make that profit because it’s going to be massively efficient to eliminate these jobs and replace it by technology, by AI. And efficiency, more productive, productivity, that’s what we want out of an economy, and yeah, there’ll be some winners and losers, but in the long run, in the aggregate, everything will be better. Do they see the existential threat, or do they just think, eh, economics says it’ll work out in the long run, so let’s let it happen?

Senator Chris M…: I think it’s much more frequently the latter. I do think the cult… I mean, it’s still a cult. Just because I wrote the book, didn’t mean the cult broke.

Goldy: If only.

Senator Chris M…: Yeah. If only. Yeah. I mean, I went to Wesleyan University this spring, and I gave a speech that was on the general theme of the book, but called The Value of Inefficiency, about how marvelous inefficiency is, how necessary inefficiency is, and how you should actually strive to create a world that involves inefficiencies. And that idea in the political world today is heresy-

Goldy: Yeah.

Senator Chris M…: … because we have been conditioned to believe that it’s not just profit that matters, it is the incessant maximization of efficiency. And yes-

Nick Hanauer: Which, by the way, in our parlance, just means capital efficiency. That’s all it means, just to be clear. When we talk about-

Senator Chris M…: But also, I mean, why are these AI friendship bots becoming so popular? It’s because they’re really efficient friends. They never let you down. They tell you exactly what you want to hear all the time.

Nick Hanauer: Yeah.

Senator Chris M…: And increasingly, people are being drawn to them, even though they are poison.

Nick Hanauer: Yeah.

Senator Chris M…: I mean, friendship is so wonderful in part because it isn’t efficient, because it does let you down. That’s what living is. And so it is capital efficiency, but it is also all sorts of other kinds of efficiency that we’re driving to, that sound good in the abstract, but ultimately, I guarantee you, will rot you out from the inside.

Nick Hanauer: So what should we do? What’s your plan?

Goldy: Yeah. Let’s say that you were a powerful US Senator-

Nick Hanauer: Or President of the United States, for example.

Goldy: … or President of the United States. Obviously, and by that, we mean you have no political constraints whatsoever because the courts have decided that the President has no political constraints.

Senator Chris M…: I’ll give you two things, and I’ll bring us back to, I think, the first time that, Nick, you and I met. You came, and you and I have talked about this, you came and gave a lunchtime talk to the Senate Democratic Caucus maybe 10 years ago, and you were right at the beginning or right in the middle of the experiment to dramatically raise wages in Seattle. And you came and just said, “I want you to imagine what’s going to happen here.” And what you’ve described was this idea that once you pay everybody more money, they have more money to spend, and so they spend it. I mean, you’ve given the speech a million times. But you blew the minds of people in that room because people just had never really thought that that’s how an economy actually works, that you pay people more and they spend more, and then everybody can afford to pay people more. And then, you went and you did it and you proved it to be true.

And so the first thing I think we need to do is not accept that every single solution is going to come from the federal government all at once, that I think we are going to have to have a lot of local experimentation, state-based experimentation when it comes to some radical ideas on how to put power back in people’s lives. The second thing is nothing’s going to happen until we unrig our democracy. The corruption of our economy is downstream of the capture of our politics by billionaires and corporations, and I would like my party to be almost singularly focused on the things necessary to rid corporate influence from our politics. That probably involves a constitutional amendment. That’s really hard. But we’ve amended our Constitution before, and I’m just worried that our vision is too small right now. So I think we’ve got to prioritize cleaning up and un-rigging democracy to get anything else done.

Nick Hanauer: Okay.

Senator Chris M…: And in the meantime, I think we’ve got to put a lot of resources behind states and localities that are going to try out different models.

Nick Hanauer: Yeah. No, I think that makes good sense. But I also think we may be seeing some of the green shoots of this kind of thinking. What comes to mind is James Talarico, his campaign.

Senator Chris M…: Yes.

Nick Hanauer: I mean, we don’t know whether he’s going to win. I am not a religious person, but I find his approach to be incredibly compelling and he’s really onto something. I think there are other people who are talking about this a little bit more too, but I definitely think… I mean, what do the kids at Wesleyan think?

Senator Chris M…: The reception was really good. I mean, I was just giving them some specific advice-

Nick Hanauer: Yeah.

Senator Chris M…: … like don’t order your coffee ahead of time all the time. Just go and stand in line-

Nick Hanauer: Yeah.

Senator Chris M…: … and see what happens in line. After I gave the speech, somebody forwarded me this Kurt Vonnegut quote, which I won’t remember specifically, but he was talking about a friend telling him to buy stamps online or through the mail or something like that, and he said, “No, I’m going to go to the post office, because you never know what will happen on your walk to the post office. I might see a dog.” He’s like, “A fire engine might ride by.” He’s just like, “Yeah, that’s life that happens. Life happens in the inefficiency and in the waiting.”

Nick Hanauer: Yeah.

Senator Chris M…: I got a lot of great response, probably more so from the parents, who I think worry at this point that they’ve taught kids that all that matters is that efficiency. They’ve let them come to believe that that’s true, more so from the parents than from the kids. But the parents could wake up and decide to want a different world, and those parents are in charge right now. They’re very powerful parents, and they could make a difference too. It’s not too late.

Goldy: I don’t know that paying Wesleyan tuition is the most efficient use of those parents’ money anyway, so you might have had a favorable audience to begin with.

Senator Chris M…: The cult of credentialism is right in that book and it challenges that idea.

Goldy: Yeah.

Nick Hanauer: Well, congratulations on this. We’ve known each other a pretty long time, and I know you’ve been thinking about this stuff for a really long time. You have been mumbling about these things-

Goldy: Mumbling?

Nick Hanauer: … for as long as I… No. I mean-

Goldy: He’s out there… I mean, honestly, I have to say this-

Nick Hanauer: No. Every time I meet with him, he’s like, “Well, if you thought about it like this or that.”

Goldy: See, you meet with him. I’ve met you a couple of times in a small room with Nick, said hello, whatever. But I see you out there, I see clips of you, and I honestly don’t know that there’s another politician out there who is speaking more forcefully and more thoughtfully about these issues-

Nick Hanauer: Yeah.

Goldy: … and I appreciate that in a politician.

Senator Chris M…: But I mean it sincerely, I mean, a lot of this book is around not accepting the way that things are. That’s why I use this very strong word cult.

Nick Hanauer: Yeah.

Senator Chris M…: And it really was one of the aha moments for me in my metamorphosis sitting in that room with you, Nick, and just realizing, wait a second, I’ve been thinking entirely wrong about the world. I’ve been under an influence of this cult of economics. And so my journey that gets me to this book intertwines and intersects not inconsequentially with your work and your team’s work.

Nick Hanauer: Yeah. Thank you so much. Thank you so much.

Senator Chris M…: Thanks, guys.

Goldy: You want to do the final question?

Nick Hanauer: Yeah. Final question.

Goldy: We haven’t done it.

Nick Hanauer: Yeah. Why do you do this work?

Senator Chris M…: I mean, I do this work because I just don’t take for granted that I live in this wildly revolutionary country. It’s wild that the United States of America, 250 years into self-governance in a multicultural nation, nobody’s ever, ever done that for 50 years, nevermind 250 years. And I just feel like the price of admission is participation-

Nick Hanauer: Yeah.

Senator Chris M…: … that it is really, really fragile. It should be fragile. We’re different from each other, and yet we’ve figured out a way to govern ourselves. And so I woke up one day and realized that I liked people and I liked solving problems, and that maybe the way that I could participate was to be in politics. I think politics is a noble profession, and I think right now-

Nick Hanauer: Yeah. Great.

Senator Chris M…: … it’s more essential than ever, because this experiment, this quarter-of-a-millennia experiment is at risk of dying. And so I do this work because I think it’s worth continuing, and I think that people like me who have some ideas and have some energy should step up.

Goldy: Nick, there’s so many things I could go into on what he said, but I’m going to focus on one particular phrase because it really speaks to something that you and I both believe in, and that is when he talked about the value of inefficiency.

Nick Hanauer: Yeah. This is one of your favorite things.

Goldy: It is, because one of my phrases is, and we’ve written this, I don’t know if we’ve published this line yet, but it’s the best things in life aren’t free, but they are almost always inefficient.

Nick Hanauer: Inefficient, correct.

Goldy: When you actually think of your life, I mean, you don’t play with your children efficiently. You don’t have sex efficiently.

Nick Hanauer: Yeah.

Goldy: You don’t go out to dinner with friends efficiently, walk your dog efficiently. That’s not what life is about. Life is not about efficiency. And maybe hundreds of years ago, when capital was scarce and food was scarce and most people lived in a subsistence economy, where if you weren’t efficiently raising the chickens and attending to your garden, you might starve in the winter, efficiency might’ve been more important. But one of the benefits, if you believe in capitalism, as a lot of people do, if you believe in markets, one of the benefits of the past couple of hundred years of capitalism and industrialization is that we don’t live in that scarcity world anymore.

Nick Hanauer: Yeah.

Goldy: We have plenty of stuff to adequately feed, clothe, house, educate, and give healthcare to all eight billion people in this world.

Nick Hanauer: Yeah.

Goldy: We should let the machines do the boring stuff and the tedious stuff and the dangerous stuff, and allow ourselves to enjoy the inefficiency-

Nick Hanauer: Yeah.

Goldy: … that we have accumulated, this opportunity to enjoy inefficiency.

Nick Hanauer: Yeah.

Goldy: And that is just anathema, both to economics, orthodox economics as it is taught, and if you want to go… He was talking about metaphysics. If you want to go to the old idea of the Protestant work ethic in America, the idea that we should all be hardworking and save all our pennies and reinvest it in the future, it’s not the American way.

Nick Hanauer: I mean, I think that neoliberalism has a bunch of moral dimensions that are not explicit, but are nevertheless incredibly powerful, right?

Goldy: Right.

Nick Hanauer: Because once you reduce everything to effectively capital efficiency, there are such profound social, moral, and cultural ramifications to that-

Goldy: Right.

Nick Hanauer: … that we end up in this society where all the social ills that Chris points out become inevitable. It is inevitable that we’ll have prediction markets. It’s inevitable that you will not be able to film your own kids’ hockey game, right?

Goldy: Right.

Nick Hanauer: Because just the inevitable march of monetization never ends.

Goldy: Yeah. But I think also, if you want to go deeper into neoliberalism, Friedrich Hayek was not just an economist, he was a philosopher.

Nick Hanauer: Yeah.

Goldy: And absolutely fundamental to his ideology is that it is about individual freedom. It’s about maximizing individual freedom. I mean, that is the road to serfdom. It’s either Soviet-style or Nazi-style totalitarianism or it is free markets.

Nick Hanauer: Yes.

Goldy: There’s no in between-

Nick Hanauer: Yes.

Goldy: … that if you take a little step down that road, you’re going to end up subjugating people to some authoritarian state.

Nick Hanauer: Right.

Goldy: And so there’s this idea that both Hayek and Friedman have, where Friedman [inaudible 00:37:06] capitalism and freedom, this idea that the only way to ensure individual freedom is to ensure economic freedoms.

Nick Hanauer: Yeah.

Goldy: The freer the market, the freer we will all become. And that’s true for somebody like you.

Nick Hanauer: Yeah. But it’s not true for anybody else, right, yeah, yeah.

Goldy: Right? If you have a shit ton of money, if you’re Elon Musk, you’re really free.

Nick Hanauer: Free. Correct.

Goldy: Most people are not in America, because we have debts and-

Nick Hanauer: Yeah.

Goldy: … we have jobs where we have to do what the boss tells us to do, and we have healthcare expenses and rent or mortgages and tuition and all that other stuff, and it’s a hard life because you’re constantly going month to month, paycheck to paycheck, and that is not freedom.

Nick Hanauer: Right.

Goldy: And I think that is the most disappointing thing about the neoliberal era. It’s not just the slower economic growth and the slower productivity growth and the radical inequality it’s created.

Nick Hanauer: Yeah.

Goldy: It’s also, it’s made us less free.

Nick Hanauer: Yeah.

Goldy: It has not delivered on its core promise of freeing people to live the type of lives they would like to live.

Nick Hanauer: Yeah, I agree. Well, Chris wrote a good book, I think.

Goldy: Yeah. It’s the Crisis of the Common Good. You can get it at your favorite local independent bookstore, you can probably get it out of your local library, or if you want to, you’re always free to get it from that big online monopolist.

Announcer 2: Pitchfork Economics is produced by Civic Ventures. If you liked the show, make sure to follow, rate, and review us wherever you get your podcasts. Find us on other platforms, like Twitter, Facebook, Instagram, and Threads @PitchforkEconomics. Nick’s on Twitter and Facebook as well, @NickHanauer. For more content from us, you can subscribe to our weekly newsletter, The Pitch, over on Substack. And for links to everything we just mentioned, plus transcripts and more, visit our website, pitchforkeconomics.com. As always, from our team at Civic Ventures, thanks for listening. See you next week.

The post Profit, Power, and the Crisis of the Common Good (with Sen. Chris Murphy) appeared first on Pitchfork Economics.

Chains of Command: How Franchising Turned Control Without Responsibility Into a Business Model (with Brian Callaci)

Freddy Doss — Tue, 25 Aug 2026 15:13:11 +0000

When you walk into a McDonald’s, it looks like one company. But legally, the person making your fries probably doesn’t work for McDonald’s at all. Brian Callaci, Chief Economist at the Open Markets Institute and author of Chains of Command, joins Nick and Goldy to explain how franchising became a blueprint for corporate control without responsibility — shifting risk, liability, and labor costs onto franchisees and workers while profits flow upward.

Brian Callaci is the chief economist at the Open Markets Institute and author of Chains of Command: The Rise and Cruel Reign of the Franchise Economy.

Social Media:

@brian_callaci

briancallaci.com

Further reading:

Chains of Command: The Rise and Cruel Reign of the Franchise Economy

Franchise: The Golden Arches in Black America by Marcia Chatelain

Sectoral bargaining FAQ: Collective bargaining, sectoral wage and standards boards, and worker power

The Founder (2016)

Continental T.V., Inc. v. GTE Sylvania, Inc., 433 U.S. 36 (1977)

Senate Subcommittee on Antitrust & Monopoly Hearing on Distribution problems affecting small business. Part 1: franchising agreements, March (1965)

Instagram: @pitchforkeconomics

Threads: pitchforkeconomics

TikTok: @pitchfork_econ

YouTube: @pitchforkeconomics

LinkedIn: Pitchfork Economics

The Joy of Money: How to Do More With and Feel Better About Your Money—No Matter How Much You Have

Substack: The Pitch

Nick Hanauer:

The rising inequality and growing political instability that we see today are the direct result of decades of bad economic theory.

Goldy:

The last five decades of trickle-down economics haven’t worked, but what’s the alternative?

Nick Hanauer:

Middle out economics is the answer.

Goldy:

Because the middle class is the source of growth, not its consequence.

Nick Hanauer:

That’s right.

Announcer:

This is Pitchfork Economics with Nick Hanauer, a podcast about how to build the economy from the middle out. Welcome to the show.

Goldy:

I think, Nick, one of the big differences between the two of us is that whereas I’ve never worked at a franchise like a fast food restaurant, you’ve actually been a franchisor.

Nick Hanauer:

It’s true. It is true. It is true. Yeah, my family-

Goldy:

Class difference here.

Nick Hanauer:

Yeah, it is. This is probably why I have lots of hair and you don’t, please.

Goldy:

Yeah, that’s right.

Nick Hanauer:

Today on the pod, we’re going to talk about franchising with a guy who knows a lot about it. Brian Callaci is a chief economist at the Open Markets Institute, and he has a new book out on franchising called Chains of Command, and he has a lot of really mean things to say about franchising and franchisors.

Goldy:

People like you.

Nick Hanauer:

Like me.

Goldy:

Right?

Nick Hanauer:

Yeah. So I’m feeling a little bit defensive.

Goldy:

Okay.

Nick Hanauer:

And just to be clear, so in the distant past, when I was working full-time for my family’s bed pillow and down comforter business, we owned part of, or partners with, a company called Scandia Down, and we sold high-end down comforters and pillows via franchised stores around the country. And so I didn’t run the company. I think we had a small piece of it, but it was an important part of the family business. It was something I knew a lot about. And I definitely didn’t think that we were being evil back then. I don’t have any memories of being evil. I may have repressed the bad parts, but-

Goldy:

Because America has no history of pillow magnets being evil.

Nick Hanauer:

Except for one. Yeah. Why did that fucking guy have to be in the pillow business, right? Most of us pillow people are decent people.

Anyway, and yet at the same time, Brian’s book points out a lot of problematic aspects of this business model, and a lot of it is very, very sobering. I think we should talk to Brian about the pluses and minuses of it and learn what we can about the evils of franchising.

Goldy:

Yeah. Okay, great. Let’s talk to Brian.

Brian Callaci:

Thanks for having me. My name’s Brian Callaci. I’m the chief economist at the Open Markets Institute. It’s an anti-monopoly focused think tank based in Washington, DC, although I live in Peekskill, New York. And I just wrote a book called Chains of Command: The Rise and Cruel Reign of the Franchise Economy, which is out now at bookstores and online at bookshop.org from University of Chicago Press.

Nick Hanauer:

Great. That’s fantastic.

Goldy:

That word cruel seems like some editorializing.

Brian Callaci:

Yeah. Yeah.

Nick Hanauer:

Let me start out by saying that I’m a recovering franchisor.

Brian Callaci:

Oh.

Nick Hanauer:

As you may know, I’ve helped run a million different businesses, but in my early years, we had a franchise business called Scandia Down Corporation, and we sold down comforters and pillows and so on and so forth through a network of franchisees across the United States, and I don’t recall us being evil.

Goldy:

Or cruel, Nick?

Nick Hanauer:

Yeah.

Goldy:

Are you telling me that you-

Nick Hanauer:

I don’t-

Goldy:

… didn’t sell cruel comforters?

Nick Hanauer:

Yeah. No, I don’t remember being racked with guilt about what we were up to. It seemed like the best way to build a retail presence around the country, and the franchise construct, from our point of view, made a lot of sense. You have independent business people who make investments, which means you don’t need the capital to expand. And obviously, you engage their intense interest in the success of the enterprise, for better or worse, sometimes worse, sometimes better, and their knowledge of their local market and so on and so forth. And I do remember having the occasional conflict with the franchisees over processes and procedures and what’s appropriate and what’s not and what prices you can sell things at, like stuff that you worry about if you’re trying to build a national brand, but I don’t recall any of the evil practices that you elaborate.

So I guess my question is, just to kick off the conversation, is franchising intrinsically evil? Which is kind of where you end up where if you read your book, or is it like everything else in American life, it just got corrupted over time?

Brian Callaci:

Yeah. So the word cruel is in the title, but what’s cruel is the franchise economy, not individual franchisors who have built their businesses on this legal structure. So as a social scientist and economist, I try to focus on these systemic issues, and some of the worst abuses that we find in franchising are really more…

So you have these two layers, you’ve got the franchisor who owns a brand and licenses the use of that brand to the proprietary, the franchisee, and then you’ve got workers. And there is in my… This is a little bit outside the book, but in my other econometrics sort of type research, we do find some heterogeneity or variety between industries and between franchisors and how the model is run. So I don’t think the answer is to fix the hearts of good franchisors and that kind of thing. It’s more of that there is this legal structure that is just an open door for avoiding the whole apparatus of particularly labor and employment, but liability and other types of regulations that we have to hold corporate actors accountable for the consequences of their actions, good or bad.

That was, it wasn’t every franchisor, but there was a group of them, they’re still around today, called the International Franchise Association, the Trade Association, who did through a concerted and very, have to give them credit for it, imaginative and sharp elbowed effort of litigation and lobbying, created this loophole in between our various bodies of law that allowed their business model to exist and enable the abuses. And I would say, we can get to this later, but a lot of other business models have been built on that legal architecture, including Amazon with their outsource delivery program all the way up to Uber and Lyft. And the key there is that franchising allowed these business models where you get all of this intense control if they want it. Not every franchisor does exercise that kind of minute, even up-to-the-minute control over their so-called independent franchisees, but many of them do. That structure was not legal until franchisors created it in the 1960s and 1970s.

Nick Hanauer:

Okay.

Goldy:

Yeah. You remember the International Franchise Association, Nick. They’re the ones who sued-

Nick Hanauer:

That’s right.

Goldy:

… to block Seattle’s minimum wage.

Nick Hanauer:

That’s right. Our old friends at the IFA. Yeah, I remember that. Oh my God, you’re bringing back happy memories. We crushed those bastards.

Goldy:

Yeah, we did crush them.

Nick Hanauer:

Yeah.

Brian Callaci:

Love to see it.

Nick Hanauer:

Yeah. Okay. Taking you a little bit off track or the interview a little bit off track, let’s back up. And why don’t you… Not everybody listening to this podcast has been a franchisor or a franchisee. Let’s start at the beginning and just explain, what is the construct? Where did it come from and what are the problems with it?

Goldy:

Yeah, and importantly, everybody purchases goods and services from franchisees without knowing it often. So get a little definitional here and lay out what it is and how large a part of the retail economy it is.

Brian Callaci:

So franchising, the basic structure is you’ve got a company that has some intellectual property, a trademark, in this case, that they then license to a independent proprietor to operate an outlet and establishment under that brand name, and in exchange for that, they have to follow the detailed rules and prescriptions of the franchisor, which we can get into how intense those are, but they can be quite minute and intense.

Nick Hanauer:

Okay. But just to be clear, I’m just feeling a little defensive.

Goldy:

Will somebody just pity the poor billionaires? Oh my God, it’s really tough on them these days. Massage his ego a little bit, Brian.

Nick Hanauer:

Shut up.

I mean, the franchisor has to have a little bit more than a trademark, right? I mean, what the franchisor is selling is a product or a service. And that product is, if it’s worth buying a franchise for, is going to be a unique product. And associated with that product are going to be a lot of processes that enable an independent operator to deliver that product in a way and at a service and quality level, which is consistent with that trademark and brand, right? So that’s what you’re buying. You’re not buying a logo, you’re buying effectively a business model.

Goldy:

Business in a box plus the marketing and the-

Nick Hanauer:

Yeah, the brand associated with it, the supply chain. You’re buying almost certainly-

Goldy:

You’re McDonald’s, you’re not sourcing your own french fries.

Nick Hanauer:

No. Definitely not. And if you were buying a Scandia Down franchise, you were buying down comforters and pillows from us to our specifications and exactly what we wanted you to sell. And I think it’s important just to say because-

Goldy:

Man, you are defensive today.

Nick Hanauer:

Yeah. Well, I mean, there are good reasons for that because you can’t build a good national brand any other way.

Brian Callaci:

And that was one of the attractions for these franchisees who bought franchises, but a lot of it was, particularly in the early days, is the national brand names also meant there’s market power with that.

Nick Hanauer:

Of course.

Brian Callaci:

And you could know, you see over and over again in historical record franchisees saying, particularly Black franchisees who were frozen out of these opportunities in the initial years. It was a wonderful book by Marcia Chatelain called Franchise that goes into that, but they would say, “Yeah, I would’ve loved to open Brian’s donut shop, but I couldn’t compete with Dunkin’ Donuts, so I had to buy the brand name.” And not to say anything about your franchise business-

Nick Hanauer:

It’s okay.

Brian Callaci:

… which I’m sure was a wonderful one, but there’s a wonderful movie about this actually called The Founder about McDonald’s.

Nick Hanauer:

Oh, yeah, yeah. It’s a great movie.

Brian Callaci:

Ray Kroc was a famously vindictive guy. And he basically… They agreed to sell it to him, but once he had the McDonald’s name, the McDonald’s brothers thought they could even operating the restaurant, the model, the business model that they had invented, just keep doing it under a different name. I think it was called Big M’s or something, and Ray Kroc opened a McDonald’s right next to their business and put it out of business. It was more than just the operational prowess. The brand name really counted for something.

Nick Hanauer:

Of course.

Brian Callaci:

But yeah, to your point about why this sort of arose, I think you explained it at the beginning very well, which is that the founding generation of franchisors, and they were very impressive entrepreneurs and visionaries. I wouldn’t take that away from them. Ray Kroc at McDonald’s, Bill Rosenberg of Dunkin’ Donuts and so forth, they had the ambition to build out national chains of restaurants. And those already existed, things like White Castle, but White Castle owned the restaurants, they employed the workers, and that grows a little more slowly than a franchise model, where-

Nick Hanauer:

Yes, it does. It’s much harder.

Brian Callaci:

… you tap the capital of these investors who also work. They supply capital and labor and you don’t have to take out bank loans or equity. And so franchising solved those problems. So franchisees put up their own capital and they fork over a percentage of their sales. It’s usually between 10 and 20% to the trademark owner and they keep what’s left, and that of course motivates them and incentivize them to work pretty hard and to follow the rules unless they use access to that system and intellectual property.

Nick Hanauer:

Correct. Yeah.

Brian Callaci:

It did also allow franchisors to sidestep the New Deal era regulatory apparatus that guaranteed worker rights and protected independent business proprietors from control by large corporations. And they were explicit about this, “We want to have White Castle, but we don’t want the legal liabilities that White Castle faces if their workers want to unionize, if their workers want to file a wage and hour claim against us, or if coffee’s too hot, as a famous case and it burns a customer. We don’t want any of that. We just want the national branded chain aspects of it.” And they got that. They succeeded in getting that.

Goldy:

And that was very explicit. A lot of these franchise founders were very anti-labor and the franchise system was a way to get around these labor regulations and make it hard to unionize. We see this today with people trying to unionize individual stores. You can’t unionize McDonald’s because there’s all these different… It’s not a McDonald’s. You’re unionizing a franchisee who may own a store or-

Nick Hanauer:

Three employees.

Goldy:

Maybe a dozen or whatever.

Nick Hanauer:

Yeah. Yeah.

Brian Callaci:

Yeah, and that’s absolutely part of what happened, and that was part of the appeal of the business model. And again, none of this stuff was secret. This is what they said they were trying to do and they achieved it. I think that what franchising does is there’s sort of two mechanisms going on with that sort of legal separation. First of all, there’s the exclusion. Just those legal lines act as barriers of exclusion. So you think about how we had a mid-century middle class, General Motors was a vertically integrated corporation and it employed a lot of people, not much was subcontracted. So whether you were a janitor at General Motors or a production worker or a secretary, you had both a moral social claim and a legal claim as a member of the United Auto Workers on all those profits of General Motors, and McDonald’s did not want that. They wanted to be able to exclude workers from being able to access those rents, we call them in economics, but all those profits.

And the second advantage of franchising is again, those incentives, and those incentives can be… There can be good things about having an independent franchisee under a franchise contract, having skin in the game. More than a salaried manager, they are going to be extra motivated to do a really good job, to work hard, to do all of those things, and that’s aligning incentives. That’s how a good business should run. But the problem comes into what are they incentivized to do. And in the case… I particularly focus on fast food because that’s a very labor-intensive industry, and what those franchisees are incentivized to do, because they don’t control their own prices, they don’t control the hours they operate, they don’t control their suppliers. They don’t control, if I mentioned prices yet, but they don’t control their own prices in many cases. The only thing that really is left for them to control is their labor costs.

Nick Hanauer:

Yes, correct.

Brian Callaci:

So they are basically labor supervisors. They’re middle managers, they’re the line supervisors, and they are very focused on both driving wages down as low as possible and on working those workers as much as possible. Saying everyone who has worked with fast food has heard, “If you can lean, you can clean.” These are unlike salaried managers, there’s really no downtime. And it’s also, it’s not designed for productive, harmonious, mutually respectful labor relations. Those franchisees are under intense pressure to keep those labor costs down. And it’s not a model for harmonious small business labor.

Goldy:

I mean, because to be clear, it’s one of the few things they can control. They’re business owners, because you use this phrase in control without responsibility. That’s the franchisor. That’s Nick. He had control without responsibility, especially in that cost.

Nick Hanauer:

Living the dream.

Goldy:

But the franchisee themselves has very little control. Even like with McDonald’s, they don’t get to choose their location. They’re leasing from McDonald’s. McDonald’s builds the rest-

Nick Hanauer:

McDonald’s is basically a real estate company, isn’t it?

Goldy:

Yes.

Nick Hanauer:

Yeah.

Goldy:

Right. So they’re also locked into a lease with McDonald’s as well as the franchise contract.

Nick Hanauer:

So can I just zoom in on this? Because I think you make a good point, which I’d never considered, which is that, look, every business is trying to control its labor costs, right? You try to control what you can control. But in the case of franchises, you are right. If you take away the need to control your inputs and you don’t need to control your advertising and you don’t need to control your location, all you’re controlling really is your workers. I acknowledge that that must put extra pressure on that element of it.

Okay, so tell us more.

Brian Callaci:

Sure. Yeah. So the history here is sort of when franchisers first got this started, their concern was actually not labor law. I mean it was, but they were much more concerned about antitrust law, which blew my mind when I first started digging into this. I’m an economist, but I decided for some reason to go into some of the legislative and litigation history. And thankfully for me, the International Franchise Association had a very robust publishing policy in the 1960s. So all these discussions were happening out loud. And so the issue here was that… And they pioneered the model that we hear about now is move fast and break things business model. Franchises were doing this in the 1950s and 1960s where they knew what they were doing was not really legal. They did it anyway, and then that would trigger litigation and then they would help with the…

Nick Hanauer:

What element of it was not legal? I don’t understand.

Goldy:

Well, a lot of states had restrictions on chains, right?

Nick Hanauer:

Yeah. That was in the good old days before Bork. Right?

Brian Callaci:

Right. Yes.

Nick Hanauer:

Yeah. I mean, we used to live in a world which affirmatively advantaged small business.

Goldy:

But not being corporate-owned, did they go into these states that had limits on chains and said, “Oh no, these are locally owned businesses.” Is that part of their argument?

Brian Callaci:

Well, the chain store tax issue is an interesting one. It is part of the impetus for the invention of franchising with chainstore taxes. And a lot of the innovators here were actually petroleum companies who created sort of the first franchise models, Shell, Texaco, I mean oil-

Goldy:

The gas station.

Brian Callaci:

Yeah, gas stations. And they also pioneered the McDonald’s model of owing the real estate under the dealership or the gas station. And the reason for that is not just trying to make money from rent, but you can evict the so-called independent business owner from their own business, and so you don’t have to worry about triggering a chain store tax, which is based on control, not just ownership. I’m not telling what price to charge. He just knows that if he doesn’t charge the price that I want him to charge, I’m going to evict him and there goes his business.

So there was a bunch of cases like that up through the 1960s and ’70s where courts up to the Supreme Court looked at franchisees and enforced this notion that has deep roots in American antitrust and anti-monopoly, that there has to be some meaning to being an independent business owner. That comes with autonomy and the right to, not unlimited, but rights to run your business as an independent business, and what franchisors were doing was conflicting with that because in antitrust parlance, they’re called vertical restraints, but McDonald’s is telling the franchisee in very minute detail, “Again, this is the price, these are the suppliers you’re going to use, this is the hours you’re going to operate.” And the franchisees who are promised independent business like, “Wait a minute, I thought I was independent.” So they filed lawsuits under antitrust laws, and in some cases they won.

So the franchisors, that put them into a bit of a panic, “Well, we need to stop this.” And they were allied with the University of Chicago intellectuals like Bork. Bork spoke. He was a featured guest at the very first legal strategy meeting that the International Franchise Association held in 1962 before he was Robert Bork. And yeah, so there was this effort to overturn those laws. And then once they got this right to control, this right to control with this 1977, the famous case, Continental TV… Famous in antitrust, but Continental TV versus GTE Sylvania, then because they won that control, they started to face all of these other dangers to them of work because in most bodies of employment and labor law, it’s the control that makes you an employee. Employee is the person who obeys. If you are ordered around, that makes you an employee.

And franchisors had won the right through antitrust to order people around. They had overcome this antitrust anxiety about corporate control over independent, the yeoman farmer, the small gas station dealer, et cetera. And now they had that control. Now we have this whole issue of labor rights. The reason why we started this was to not have those burdens and regulatory complaints. So they opened this loophole and they’ve been defending and expanding it ever since through the 1980s, 1990s up to the present.

Goldy:

Man, how did we ever win that minimum wage case? Because the issue in Seattle was we had a different rate for large businesses and we counted-

Nick Hanauer:

Franchises as large businesses.

Goldy:

… franchises as the size of the franchisor, not the franchisee, and we won.

Brian Callaci:

Yeah. So you made the correct argument and you were able to win and I was thrilled to see it.

Nick Hanauer:

Yeah, they screamed bloody murder.

Brian Callaci:

Yeah, it would ruin them. And guess what?

Goldy:

It was hilarious.

Brian Callaci:

And there are still plenty of fast food restaurants in Seattle, I believe. I’ve been there for a while.

Goldy:

Oh, yeah. Yeah. Yes. This is not a wasteland of shuttered fast food restaurants.

Nick Hanauer:

Okay. So if you were in charge, what would you do? Do you believe that the construct is that we should just get rid of franchises? Or again, I’m being defensive because I do think that there’s validity to this business model. And I do agree that the franchisor needs some control. You can’t build a national brand if everybody’s out doing whatever the hell they want. The number one feature of a brand is consistency. Can’t be one thing one day and another thing another day. Is there a way that we could organize this so you keep the good and get rid of the bad? I mean, what is your view? How should we proceed?

Brian Callaci:

Yeah, I think that there is a way for this to work out, for it to be mutually beneficial rather than exploitative. And the phrase that I used in this book and in previous work is “control without responsibility.” Just like having your cake and eating it too. And that’s the problem, is that there is this control without the corresponding responsibility, and there are numerous ways you can fix that. One of them, they’re not mutually exclusive. A higher minimum wage for workers and franchises, particularly fast food, a very low wage industry will help make sure that those profits are shared with workers. McDonald’s will have to allow the franchisees to keep more of the money to give to the franchisees.

My co-author on some papers, Marshall Steinbaum and Sergio Pinto, have some new research where they look at a huge body of franchise contracts. And they do find that, for example, when franchisors leave some profits downstream, for example, by giving a franchisee a protected territory, those franchisees tend to pay higher wages. So not trying to squeeze every penny out of the franchisees.

The basic problem is the control without responsibility. So I think things like that Seattle model where franchisors are held accountable for the low wages that their policies cause is a major way out. There’s something called joint employer in both employment and labor law that holds the franchisor accountable if they exercise sufficient control, and such that the economic realities of the situation require workers to bargain with McDonald’s, for example, in a union context, rather than with a franchisee who doesn’t have the money. The money goes to the top. So those kinds of policies.

And then on the antitrust front, to me, the problem is not so much the control. The problem is the control without responsibility. So the fact that franchisors are allowed to impose these contracts isn’t the most important thing. But if we roll back some of those Chicago school antitrust victories through the 1970s up to the present where they really allow controls, including over what used to be a third rail of antitrust, things like vertical price fixing, McDonald’s setting prices downstream, let’s just imagine a world where the franchisors had not won those battles if they couldn’t minutely control franchisees, just set sort of quality standards to a lesser extent. We would see more corporate-owned chains, which I don’t think is the end of the world. We’d see more Chipotles and Starbucks, which tend to pay higher wages than your McDonald’s or your Taco Bells. And then you might see more truly independent restaurants rather than just that sort of monotony of strip malls. They would be more truly independent businesses. So I think there’s those sorts of things.

Nick Hanauer:

Yeah. For sure. I mean, I think both Goldy and I would be in violent agreement with the general sentiment that the world would be a better place with less corporate concentration.

Goldy:

And more truly independent business ownership.

Nick Hanauer:

Truly independent businesses.

Goldy:

And communities would be better because-

Nick Hanauer:

Yeah, everybody would be better.

Goldy:

… there’s lots of evidence that shows that that keeps more money in the community than being extracted out to distant corporate headquarters.

Nick Hanauer:

Right. Right.

Brian Callaci:

Totally.

Nick Hanauer:

What are the three biggest things you would change if you had to try to fix this thing?

Brian Callaci:

So joint employer is the big one. I mentioned that’s the legal doctrine where workers have both rights under wage and hour law and under unionization laws against their franchisor. And it’s very interesting the way that the franchisors, particularly their trade association, responded to stronger joint employer rules under, first, the Obama, and then the Biden administration, was to sort of admit that the whole purpose of their business model was to thwart workers’ legal rights under the National Relations Act.

The law of the land still since 1935 is that it is the policy of Congress that worker is to promote collective bargaining. Promote, not just allow. And franchisors say, “Well, if we allow joint employer, that’s going to open the door to unions to unionize our industries.” That is the point of the law, and the fact that they resist joint employers, that’s the main one.

The second one is to roll back some of the particularly restrictive vertical laws, antitrust. These are all judge created legal doctrines. That has nothing to do with Congress. Some of those decisions have really opened the door to… I mean, nowadays, particularly with technology, McDonald’s knows which employee, at the 42nd Street location, it was Greg who was five seconds too slow in servicing that customer. They tell the franchisee, “Do something about that.” And of course the franchisee without being told to will terminate the worker. So those kinds of minute controls.We should return to the sort of 1960s, 1970s doctrines of, there has to be a really good reason for you to impose those kinds of strict contractual controls.

And then third, more experimentally, we could try things like in California, there’s this sectoral bargaining structure where they bring together workers, franchisors, and franchisees all around the same table, including of course representatives appointed by the governor who stand for the public interest as well, but let’s get all sides of the market together and work out a way where this can work for everybody rather than right now where franchisors just have the right to get everything they want without any of the corresponding risks, costs, and responsibilities.

Goldy:

We tend to think of this, or at least I tend to think of this, as trying to address the needs of workers who are exploited under this situation. Obviously, some of the franchisees do very well, else they wouldn’t be doing this. It wouldn’t be such a popular business model, but I presume there’s support amongst franchisees for addressing this imbalance of power within the industry, that this would actually be good for these so-called independent business owners if they actually had more independence.

Brian Callaci:

Yeah. So franchisees have been fighting for rebalancing the power relationships since the very beginning up ’till… Anyway, and they’ve mostly lost, but they’ve had two main beefs with the way that franchising was set up. The first one was their promised independence and they didn’t get it. Workers also accepted a minimum wage employment contract, but the power imbalance means that the better contracts or you don’t have the bargaining power available to you. And it’s also illegal for franchisees to try to collectively bargain. There’s an antitrust, very strict antitrust prohibition.

The way antitrust works is after the Chicago school is anything McDonald’s does unilaterally against its franchisees, that’s legal, but if franchisees try to do anything together the other way, that’s strictly illegal. So reversing that kind of dynamic a little bit on the antitrust side would be helpful.

And I’ll say, I sort of memorized this passage, but there was I think a really illustrative case from… This is 1965, the Senate Antitrust Committee is having a hearing on franchising and the general counsel for the committee, a guy named Jerry S. Cohen, is questioning the chair of the president of the International Franchise Association who’s saying, “We should be able to control everything, especially prices.” And this antitrust lawyer can’t believe his ears. “Well, wait a minute. If you’re telling this franchisee exactly what prices he has to charge, what supplies he has to use, what business he has to operate in, he’s not independent, is he? He’s really more like a manager, a part of your integrated operation.” So franchisees have been fighting, first of all, for a little more autonomy, particularly in things that aren’t that kind of crucial. Franchises are not asking for, “We want to use grade B or whatever beef in the Big Mac.” They want things like-

Nick Hanauer:

Oh, they do it in a minute. Just to be clear, they would do it in a minute if they get away with it.

Brian Callaci:

Right. If they could get away with it, but they’re not pushing for the legal right to do that, I would say. So they want that kind of autonomy.

The other thing is sort of protection from unfair termination or non-renewal, the right to send it to their kids who keep the business in the family, those kinds of things. And the way that the kind of regulation that we actually got, the regulation through the Federal Trade Commission that franchisees have, none of them wanted. None of them asked for it, and it’s basically this disclosure, “As long as we tell you in advance all the ways we’re going to screw you, we’re allowed to do it”

Nick Hanauer:

“We get to screw you.”

Brian Callaci:

And it makes it very hard to sue because, “Well, we told you in advance, what’s your problem?” And the problem is not, “I was misled.” The problem is this is an unfair, unbalanced power relationship.

Goldy:

Final question, Nick

Nick Hanauer:

Yeah, absolutely fascinating conversation. Why do you do this work, Brian?

Brian Callaci:

So my first interest in franchising was not innocent and it’s not just academic interest. I am an economist, but it was because I had a very minor, and I would emphasize minor, role as a mid-level staffer on the Fight for $15, and one of the things that I was asked to do was we didn’t care about franchise. It was just this, well, we have this huge industry of low wage workers and let’s do something about it.

My boss at the time said, “Brian, I think you should look at franchising. I think that’s going to be really important.’ He and a lot of other, my mentors [inaudible 00:33:09], had come out of the garment trades, which had very similar structures. You’ve got these big, powerful brands that subcontract all the manufacturing, and it’s impossible for workers, particularly when it goes overseas, to make your immediate employer, the small garment factory, does not have the power to raise your wages. You have to take the fight to the brand owner. So yeah, that’s sort of how I got into it.

And the second half of how I got into it is when I got to grad school in economics, I realized that where I saw this mechanism of control without responsibility, the economics profession just sees efficiency.

Nick Hanauer:

I know.

Brian Callaci:

This is the best way to run this business. It aligns the incentives.

Nick Hanauer:

Create an optimal.

Brian Callaci:

I’m not saying, Nick, that that is not the case and that these are all evil, scheming, awful people, but in addition to that aligning of incentives and all those kind of efficiency things, there’s this whole other thing going on too, that at least if you listen to the franchisors themselves, they were trying to make this legal loophole the whole time.

Nick Hanauer:

Fascinating.

Goldy:

Thanks for joining us and thanks for making Nick feel a little uncomfortable about his past business activity.

Brian Callaci:

Thanks for having me. This is a great conversation. And I love having a little bit of pushback and back and forth. Yeah. So this is a lot of fun for me.

Goldy:

So Nick, did you learn anything today about your evil past?

Nick Hanauer:

Well, I think the points Brian makes on the pod in his book, I think those are very valid points. The whole control without responsibility dynamic is a very important one, and the ways in which these big franchisors have… What’s the word? Subverted? Is that the right word?

Goldy:

Mm-hmm.

Nick Hanauer:

All sorts of worker protections.

Goldy:

Exploited.

Nick Hanauer:

Yeah. Yeah, yeah. All that stuff.

Goldy:

Exploited the law. Yeah.

Nick Hanauer:

Yeah. Has to be valid. But I do think, I continue to believe, that the model itself, I mean, the fundamental model, which is, you have a brand, you want to expand, and you want to enlist other people to represent your brand in some way, shape or form around the country, around the world, I continue to believe that that’s a valid construct.

Goldy:

So what you’re saying here, Nick, is that franchises don’t kill people, franchisers do?

Nick Hanauer:

Something like that.

Goldy:

It’s just a tool like any other tool, and in the hands of a…

Nick Hanauer:

Responsible [inaudible 00:35:44].

Goldy:

The only thing that can protect you from a bad person with a franchise is a good person with a franchise.

Nick Hanauer:

A good person with a franchise. Yeah, exactly. That’s exactly what I’m saying. No, for listeners who are wondering why we have stretched this metaphor so far, it’s because when we get off the podcast, we do gun violence politics for living too.

Goldy:

Anti-gun violence.

Nick Hanauer:

Anti-gun violence politics for a living too.

Goldy:

We’re 90% income inequality, 10% responsible gun laws. That’s our advocacy in the office.

Nick Hanauer:

And thank you so much for reminding me of the fight we had with the International Franchise Association doing $15 minimum wage in Seattle. I forgot that.

Goldy:

And man, that lawsuit, remember, and this is like everybody in the office is going to drink a beer when they hear me say this, one of their arguments in their lawsuit was basically they were challenging… They wanted to go back to Lochner, right? They were challenging the ability of government to even regulate these things. They wanted to go back to the early 20th century legal doctrine that prevented even things like the minimum wage. So that’s how far the franchise association is willing to go.

Nick Hanauer:

That’s right. Anyway, we did beat them, which means they’re beatable. And probably they need to get beat again.

Goldy:

I think one of the thing that stands out for me, which I think needs to be emphasized, and this is something we’ve talked about before more explicitly on the podcast, is there’s nothing natural about this franchising model. It is a legal construct. It is entirely a legal construct. And like much of the modern capitalist world we live in, most of that legal construct is not created in law by legislators. It’s not like we’ve passed… Some of it is.

Nick Hanauer:

No.

Goldy:

We have passed laws that facilitate this, just like a corporation.

Nick Hanauer:

Yeah. But most of it’s made up by judges.

Goldy:

Right. And Brian emphasizes that these are judge-created legal doctrines that have evolved over the past several decades that are not written in law, and so there’s two ways you can change this. One is different judges can make different rulings and we can overturn these doctrines. Our current Supreme Court is very intent on doing that.

Nick Hanauer:

No, I mean, the court is a trickle down court, right?

Goldy:

In the other way. And the other thing is we could legislate the fuck out of the franchise model. If we want these protections, and what particularly stands out, obviously the joint employer model, but I think I’ve been coming around to this more and more. And again, we’ve talked about it for years, Nick, sectoral bargaining.

Nick Hanauer:

Yes.

Goldy:

On something like this, it makes sense to have sectoral bargaining in the fast food industry, for example, and not just labor versus management. It is there are three parties here, two of which are aggrieved to some extent. Labor, obviously, who are the most exploited out of this, but also the franchisees. A lot of franchisees have very legitimate complaints with how they are treated by the parent corporation, by the franchisor, and would love to see reforms that gave them more independence. And in the end, we know independent businesses tend to treat their employees better. And we also know that they keep more money within the local economy-

Nick Hanauer:

Yes, that’s for sure.

Goldy:

… instead of just sucking it all out to a distant corporate headquarters and the shareholders who are largely giant funds on Wall Street.

Nick Hanauer:

Yeah, for sure.

Goldy:

So it seems like the easiest approach to this is some sort of, again, legislatively-imposed sectoral bargaining. And then we let the three parties work it out at the table with some moderators there to help settle all this. And that would be… I don’t know what that would’ve done to your pillow business, your pillow franchise.

Nick Hanauer:

I just don’t think… I mean, again, our business was not very labor-intensive.

Goldy:

Right. Yeah.

Nick Hanauer:

It didn’t matter. It never came up.

Goldy:

Right.

Nick Hanauer:

It just never came up.

Goldy:

It’s not like the fast food industry, which is-

Nick Hanauer:

No, no.

Goldy:

… very labor-intensive.

Nick Hanauer:

You’re selling thousand dollar comforters to rich people, right?

Goldy:

Well, it’s got the word Scandia or something in it. We know that means it’s expensive.

Nick Hanauer:

Yes, exactly.

Goldy:

Because Nordic things are always expensive. Anyway, if you want to learn more, we highly recommend Brian’s book, Chains of Command: The Rise and Cruel Reign of the Franchise Economy. And of course, we will provide a link in the show notes.

Nick Hanauer:

Hey gang, if you like Pitchfork Economics, I recently joined a four-part IDEAS documentary series called The Billionaire Age about how extreme wealth is shaping our economy and democracy. Three episodes are out now, and we’ll include a link in the show notes. Please take a listen.

Promo Announcer:

Today, there are more than 3,000 billionaires with a combined worth of $25 trillion surpassing the GDP of every country except the United States. I’m Mary Lynk with IDEAS, and I’ve been looking into the impact of this record-breaking level of wealth concentration at the very tippy top, including a deteriorating middle class and the expectation that there will be five trillionaires within a decade. To understand why this is happening, listen to my series, The Billionaire Age on IDEAS, wherever you get your podcasts.

Freddy:

Pitchfork Economics is produced by Civic Ventures. If you like the show, make sure to follow, rate, and review us wherever you get your podcasts. Find us on other platforms like Twitter, Facebook, Instagram, and threads @pitchforkeconomics. Nick’s on Twitter and Facebook as well @NickHanauer. For more content from us, you can subscribe to our weekly newsletter, The Pitch, over on Substack. And for links to everything we just mentioned, plus transcripts and more, visit our website, pitchforkeconomics.com. As always, from our team at Civic Ventures, thanks for listening. See you next week.

The post Chains of Command: How Franchising Turned Control Without Responsibility Into a Business Model (with Brian Callaci) appeared first on Pitchfork Economics.

The Joy of Money (with Carrie Joy Grimes)

Freddy Doss — Tue, 18 Aug 2026 06:46:12 +0000

Most personal finance advice starts with the same basic premise: you’re doing money wrong. But Carrie Joy Grimes, founder of WorkMoney and author of The Joy of Money, says that misses half the story.

Yes, people need real tools to budget, save, pay down debt, and plan for the future. But no amount of discipline can fix an economy where wages are too low, costs are too high, and working people have lost power over the rules that shape their lives. This week, Nick and Goldy talk with Grimes about why money is “math and feelings,” how shame keeps people stuck, why so much financial advice is written for people who already have money, and why the best thing we can do is not teach people to be better at being poor — but build an economy where fewer people are poor in the first place.

Carrie Joy Grimes is the founder and CEO of WorkMoney and author of The Joy of Money. Before founding WorkMoney, she spent two decades as a union organizer fighting for higher wages, better benefits, and stronger worker power.

Social Media:

Carrie Joy Grimes

Work Money

Further reading:

WorkMoney – Provides free tools, tips, and resources to help people lower their living costs, find financial assistance, and increase their overall income.

MoneyFinder – A bill-negotiation service launched by WorkMoney.

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Nick Hanauer:

The rising inequality and growing political instability that we see today are the direct result of decades of bad economic theory.

Goldy:

The last five decades of trickle-down economics haven’t worked, but what’s the alternative?

Nick Hanauer:

Middle out economics is the answer.

Goldy:

Because the middle class is the source of growth, not its consequence.

Nick Hanauer:

That’s right.

Announcer:

This is Pitchfork Economics with Nick Hanauer, a podcast about how to build the economy from the middle out. Welcome to the show.

Nick Hanauer:

Goldy, today on the pod, we have our old friend Carrie Joy Grimes, who is both the founder of WorkMoney, which is I think now the nation’s largest nonprofit devoted to the economic security of working Americans, and is also the author of a new book, The Joy of Money: How to Do More With and Feel Better About Your Money― No Matter How Much You Have. Carrie Joy wrote this book to help folks navigate the challenges of money, and it’ll be really interesting to hear how she merges the two interests of being better with money, but also the fact that most people don’t have enough.

Goldy:

Right, because unlike most people who write on this topic, she’s actually talking about both sides of the equation.

Nick Hanauer:

Right.

Goldy:

It’s not just what do you do with your money, which if you watch all the financial advice shows on the morning TV, or on PBS or something, it’s all about investing. How to invest, in some cases also how not to spend, a bit. You want to spend more wisely, et cetera, so you don’t go into debt, and pay off your debts first and all that stuff. But she also talks about the other side of the equation because it is, of course, double entry bookkeeping. It’s a balance sheet. You have both income and outcome. So she doesn’t just talk about the outcome, she talks about the income, and it’s not just like, “Do what Goldy did. Quit the alt weekly job and work for a rich guy, and he’ll pay you more.” It’s about society collectively, as a whole, where we’ve gone wrong and where we’ve fallen down on the wage side. That has allowed so many people like you, Nick, to become so wealthy-

Nick Hanauer:

Yes.

Goldy:

… while everybody else’s incomes have stagnated.

Nick Hanauer:

That’s right. Well, anyway, let’s talk to Carrie Joy about her new book, The Joy of Money.

Carrie Joy Grimes:

Hello, I’m Carrie Joy Grimes. I’m the CEO of WorkMoney. We are a nonprofit that helps people navigate their money, kind of like the AARP, but we’re about money and finances instead of about aging. And I recently wrote a book, called The Joy of Money, which is meant to help people figure out how they can get some joy with their money.

Goldy:

Nick, you are the most joyful person I know then, if you could equate joy with money. So we should let you guide this conversation.

Nick Hanauer:

So Carrie Joy, tell us a little bit about how you came to write this book. Give us the sort of history of WorkMoney and first your desire, then the actualization, of a book.

Carrie Joy Grimes:

I mean, you’ve written books, you know.

Nick Hanauer:

Yes.

Carrie Joy Grimes:

I don’t know anybody who…

Nick Hanauer:

Terrible.

Carrie Joy Grimes:

It’s such a process. And so I will say that, it wasn’t like I… My husband is an author, and he’s compelled to write, from inside himself. And I felt compelled to write from outside, meaning, we just got so many questions from our members over the years. And the same questions. And at some point it was like, “Oh, for crying out loud, we should put this stuff on paper.” Because it turns out that there aren’t a lot of places everyday people can get basic money information about what’s in their self-interest.

And WorkMoney was started in 2020 during the pandemic, where a lot of folks were calling me up or emailing and saying, “Hey, how do I handle this crazy financial moment?” And so I made a website with some folks, and then it just took off. And now WorkMoney is an organization of nine and a half million members, we help people navigate money in all different kinds of ways. I mean, you know, Nick, you’ve been a supporter for a long time, and a collaborator of mine off and on over the years. And the book kind of came out of having the same questions asked over and over and over again.

And I’ll just say, money is not rocket surgery. There’s just not that many hard choices to make when you have the information. The problem for most people is that they don’t have the information from somebody they trust. And a lot of us don’t have enough money. And so the book is really meant to help people solve those two problems.

Nick Hanauer:

Right, yeah. And we’ll get to all of this. Obviously, you can handle money poorly, which will create problems.

Carrie Joy Grimes:

Yeah.

Nick Hanauer:

But obviously, an intrinsic part of the challenge for most Americans is they’re just not paid very much.

Carrie Joy Grimes:

Yes.

Nick Hanauer:

So if you have only a little, it’s very hard… You have to be perfect, effectively.

Carrie Joy Grimes:

Yeah, that’s right.

Goldy:

Yeah.

Nick Hanauer:

Right? You can’t make any mistakes.

Carrie Joy Grimes:

No.

Nick Hanauer:

Right? There’s no cushion.

Carrie Joy Grimes:

You have to stick the landing every time. You have to get a 10 on every single attempt. Yeah, that’s right.

Goldy:

And I’ve talked about this before, Nick. I’ve been working with you for 12 years now, and you pay me a very decent wage. But before that, I was a weekly reporter, and before that, just an unpaid blogger living off tips and a little bit of ad revenue. And I did not know how financially stressed out I was until I was not financially stressed out at all. And the difference between the pre-Civic Ventures Goldy, in terms of my life versus The Post, is just night and day. It is so much less stressful. Obviously, I’m not rich like you, Nick, but I am comfortable. I don’t live day to day, I don’t live month to month anymore, and it is so much easier.

Carrie Joy Grimes:

I mean, Goldy, that’s just such a common experience. Part of why I wrote the book is that it was hard to find financial information for people who know the feeling of pulling out their debit card, not even a credit card, and hoping it goes through at the grocery store. Like, that moment, which I had as a young person. And then had a kid, I was a single mom, I have really had to navigate money when I didn’t have any. And there aren’t a lot of places you can go to find out, “What do I do when I don’t have quite enough? What do you do? What are the trade-offs?” And the places where you… Because most financial information is meant for people who have a lot of money to make a lot of choices-

Nick Hanauer:

Yes, right.

Carrie Joy Grimes:

… because somebody makes money off of those choices.

Nick Hanauer:

That’s right.

Carrie Joy Grimes:

And so, having a nonprofit you can trust, who’s really just trying to help you figure it out, it’s like a big gap in the financial information landscape. And that moment where you go from, and this is the joy of money part, I think. Is that moment… You know, the absence of stress isn’t joy, but it is required for joy.

Goldy:

Yeah.

Carrie Joy Grimes:

And so the idea is, when you ask me, “What’s your financial security goal? What is a good life for you?” And I always say the same thing, which is, “It starts with just knowing that I’m probably going to be okay when I wake up tomorrow and so are the people I love dearly.” And right now in this economy, that’s pretty hard for a lot of folks. So the joy of money is like, “Okay, how do you individually do everything you can to get your hand of cards the right, how do you play the hand you’re dealt in the best possible way? But then also, how do we do the work to improve the hand of cards we get in the first place?”

Goldy:

Right.

Nick Hanauer:

Right.

Carrie Joy Grimes:

Because both things are what get us, I think, towards more joy.

Goldy:

And not everybody can just go to work for a billionaire to solve that problem.

Carrie Joy Grimes:

No, not unless you’re willing to hire all of America, like Nick and billionaires who are out there. That’s-

Nick Hanauer:

Not likely.

Carrie Joy Grimes:

… yeah, unlikely.

Nick Hanauer:

Not likely.

Carrie Joy Grimes:

Right?

Nick Hanauer:

One of the things that you just said, CJ, that really struck me, that’s worth saying again is, if you go to the store and try to buy a book on money, financial advice. I mean, I haven’t gone to the store and looked for those books in a long time, but-

Carrie Joy Grimes:

You haven’t needed that book in a long time.

Nick Hanauer:

… I am morally certain that what you say is true. That 99% of those books are written for people who have a lot of money, by people who will make money, by advising the people who are buying the book. It’s all part of this financialization game. And what you were trying to do is fill the space for 90% of Americans, or whatever it is, who don’t have a lot of money. And for whom, there probably isn’t a business model in helping them manage money.

Carrie Joy Grimes:

No, that’s-

Nick Hanauer:

Right?

Carrie Joy Grimes:

… that’s right. That’s right.

Nick Hanauer:

Right.

Carrie Joy Grimes:

There were a few things that were really surprising to me. From my young years until now, when I really figured out how to do money, that’s my language. I do money, and I do money very well. I’m doing very well for myself, because I learned how to do money. And look, if I can learn, anyone can learn. I’m not one of those… My husband is like this, he can do all the math in his head really fast, and he’s the kind of guy who can figure out cryptocurrency and all that jazz. I mean, look, if I applied myself, I have no doubt I could. But it’s not like I’m a natural.

I thought, one of the biggest surprises I’ve had in doing this was, from when I was young and I was figuring out my money. I know how to do money. I learned it myself, because I thought I was really bad at money. I just thought, “Hey man, this is a natural-born problem that I have. I am inherently bad at it.” And it was very surprising to me to realize, I was so lucky to be a union organizer, where I was just talking to thousands of people every year, basically about their money. About why they wanted a raise, or why they needed a raise. And it turned out that I wasn’t the only person who thought that.

And the second surprise for me was realizing how much my mental mindset about that changed what I could do. Let me be really clear. This is not one of those things where you buy yourself a crystal and you wish that you could be good at money, and then magically, money falls from the sky. That’s not how it works. There are real things to learn, there’s real math involved with money, but the part where I was in my own way was a really big surprise for me.

The second surprise, those are two surprises. A, that I’m not the only one that’s alone and B, that I could fix it. The third big surprise was, that there is really basic math to do. It’s not that complicated. Most of us don’t make enough money to max out our tax advantage retirement accounts. For the everyday American, doing that, put your money, have an emergency fund, don’t get into high interest debt. We could talk about all the steps and levels, but the real banger is, just max out your tax advantaged retirement accounts. And after that, there’s some pretty basic stuff to invest in. Things like low cost index funds, to track the market, or the S&P. The math on the money side was not nearly as complicated as I thought it was.

The part that actually makes most people succeed or fail is the mental rig that they carry around.

Nick Hanauer:

The emotional stuff, in other words.

Carrie Joy Grimes:

Yeah. I have this little line I use which is, “Money is math and feelings. And the feelings are what get you.”

Nick Hanauer:

So let’s talk about the feelings. What are the feelings? Let’s talk about our feelings. My wife would be so proud.

Goldy:

Aw.

Carrie Joy Grimes:

I know, you guys love this. I mean, this is-

Goldy:

Yeah, Nick and I, we’re very feelings people.

Carrie Joy Grimes:

You guys really are.

Goldy:

That’s what we usually talk about on the pod.

Carrie Joy Grimes:

Anybody who has pulled that card out, or avoided opening that envelope, knows that money feelings tend to come in the form of worry, anxiety. Mostly I hear avoidance.

Goldy:

Shame.

Carrie Joy Grimes:

There’s a lot of that. And people are not crazy for doing that. Our brains are hardwired to avoid bad stuff, because it will kill us, because we’re animals at a certain point. And so when something makes us feel like we’re in danger, our brains are like, “Get away, get away.” So it’s like a normal biological response, it just isn’t really well suited for an environment where you have to do the uncomfortable thing. So I often say to people, “Discomfort is not danger. And avoidance makes the problems bigger.” I mean, this is all such basic stuff. Honestly, most people listening to this podcast are like, “Yeah, I know.” The reason the book exists is because yeah, you know, and there are some things that people can do about it.

And so I talk a lot about understanding what happened for you, in your life, that gave you whatever your money feelings toolkit is. Like, what’s your background? And then how to sort of pause and choose how you want to behave in moments when you feel those moments of stress. But I want to say one thing, which is everyone has to learn to play the hand of cards they’re dealt. That is necessary. We each have a personal responsibility. And I’m not here to say, “If you do all of that, then you will be a bajillionaire.” You know what I mean?

Goldy:

Yeah.

Carrie Joy Grimes:

There’s a second part of the equation, which is figuring out how we create the rules that benefit more people. And I don’t mean more people like special groups here and there. I mean the most of us, because right now, I think it’s pretty clear who the rules are benefiting. No offense, Nick, but it’s folks mostly in your class.

Nick Hanauer:

Yeah.

Carrie Joy Grimes:

And so, we’ll get to that, but the only reason I bring that up here is that the feelings part can be tricky, because it really convinces us that we individually are the problem.

Goldy:

Yes.

Carrie Joy Grimes:

And that’s really reinforced by media and the outside world.

Nick Hanauer:

Yeah.

Carrie Joy Grimes:

So breaking that spell, I think, is really helpful for folks in getting themselves up and going on their own money stuff.

Nick Hanauer:

Right. And there’s a kernel of truth to the idea that if your money stuff isn’t going well, it’s your fault, because there’s always a level of discipline that is available to you that you don’t quite get to. Right?

Carrie Joy Grimes:

Yeah, that’s right.

Nick Hanauer:

In every circumstance. “Yeah, if I had just done 500 more pushups,” blah, blah, blah, whatever. “And if I just not bought that, or gone here, or done-“

Carrie Joy Grimes:

That’s right.

Nick Hanauer:

… “X, Y, and Z, then I’d be better off,” blah, blah, blah. So there is a kernel of truth to that. And so, it has to be true that if your money circumstances are screwed up, some of it may be your fault.

Carrie Joy Grimes:

That’s right.

Nick Hanauer:

But to be clear, the reason that the majority of Americans are barely getting by, is most definitely not their fault.

Carrie Joy Grimes:

Correct.

Nick Hanauer:

Right? That is most-

Carrie Joy Grimes:

Correct.

Nick Hanauer:

… definitely-

Carrie Joy Grimes:

That’s right.

Nick Hanauer:

… not your fault.

Carrie Joy Grimes:

That’s right.

Nick Hanauer:

The reason that most Americans can’t get by, or can barely get by, is because over a long period of time, we changed the rules in ways that made it really hard for normal people to get by, and really easy for a tiny minority of people at the tippy top to get by.

Carrie Joy Grimes:

That’s 100% right.

Nick Hanauer:

And that’s the main problem. And so, what’s challenging about your work and this book is, managing the intersection of those two things. The legit, “Your fault, you should get your act together better” stuff, blended with actually, even if you stick every landing in these circumstances, you’re still screwed.

Goldy:

I’d like to phrase this a different way, Nick, because I hate using the word fault. I think it is clearly, a lot of, if you want to say poor people, financially struggling people, could do a better job at being poor. There’s things they could do better. And this book is a handbook, in part, for that. But the best thing we can do is not make so many people poor.

Nick Hanauer:

Yes. Right.

Carrie Joy Grimes:

Yeah. Well, I’d argue that it’s not even poor. I mean, this is a middle class problem.

Nick Hanauer:

Right.

Carrie Joy Grimes:

I mean, we have folks at WorkMoney, who are members, who make money that we would all assume is middle class. I mean, ask anybody, “What do you think middle class living is, and do you aspire to it?” Anyone with a later age teenager is going to tell you that, I mean, all of us, I have a 19-year-old, I know you both have kids. How they navigate this economy and world is a little bit befuddling. And are they going to afford… Like my kid tells me all the time, “Well, I’ll have a house when you die or give me one.” And I’m like, “Whoa. That’s not… I want you to believe you can do that.” And she’s like, “Yeah, whatever, Mom. Yeah, good luck to all of us. Thanks, boomer.” Like, “I’m not a boomer. It’s not me.”

Goldy:

Right. That is a joke I’ve long made, that my daughter, the only way my daughter will ever own a house in Seattle like the one she grew up in is if I die in it.

Carrie Joy Grimes:

Yeah. I mean, that’s sadly also my family’s joke, which tells me it might be a lot of family’s jokes.

Goldy:

Yes.

Nick Hanauer:

Yeah, right. Really.

Carrie Joy Grimes:

And I will say that, some language I use, is that we’re all responsible for our individual money. And we are also all responsible for our collective money. And getting your individual money figured out is table stakes. You got to do that. And getting our individual money figured out doesn’t solve enough of the problem to just do that. And so part of what the book does is it says, “Okay, here are the basics of individual money.” It’s not rocket surgery. It mostly ends up being behavior. And the one thing that I say to everybody, including my kid, “If I could install,” you know The Matrix, where you can plug into the back of the head, and you can just give a skill in there? The one skill I would put in everyone’s head is the ability to course correct after you make a mistake. Is to get up off the floor once you fall. To get back on that horse.

Because that’s the thing. We’re all going to make mistakes. It’s impossible to stick the landing every single time. Think about the greatest athletes that you know, they don’t stick the landing every single time. And all they do is think about how to stick that landing. And so, we’re not like LeBron James or Damian Lillard, to talk about my favorite basketball player. So I really mean this. The one money skill everyday people, if I could impart, it’s just to know how to correct when you make a mistake.

Because what happens is, when I used to make mistakes I was like, “Oh, more evidence that I’m bad at money.” Just the shame, and the feelings of like, “Ugh, I can’t do this,” would just kind of take… I’m like, “Yeah, well, I guess when I go to Target and it’s 8:45 at night, and I go in with a list, and I have all these extra things that weren’t really on my list or in my budget, I used to think, “Well, I’m bad at money anyway, so might as well just blow up my budget.” And so the figuring out how to make that mistake and say, “Oh, you know what? Actually, I made a mistake. Lots of people make mistakes. I know I can do better,” and get back on. That is the one individual skill.

And then the one collective skill, which is a weird thing to say, I don’t think you can have a collective skill. I think that’s a strange turn of phrase, I just made it up but, is getting yourself into an organization of any kind that’s really trying to figure out how to shape the system so that working and middle class people can do better. And I don’t need to tell you all this. I mean, and anybody who’s listening to this podcast has already heard about how healthcare costs, how education costs, housing, energy costs. I mean, childcare, you name it, all going up so much faster than wages. And in this kind of an economy, figuring out how we create conditions for everyday people to be able to afford more, which I would argue is about controlling costs, but it’s also about raising people’s incomes.

Goldy:

Right. Both sides.

Carrie Joy Grimes:

Both sides. I think that that is the stuff that makes personal finance more possible, financial security more possible.

Nick Hanauer:

Yeah. I feel even stronger about that. I think that-

Goldy:

About the wage side, Nick?

Nick Hanauer:

… yeah. I mean, I think that there’s a narrative out there that we have an affordability crisis, and I think that that’s nonsense. I mean, we do not have an affordability crisis-

Goldy:

Well-

Nick Hanauer:

… we have a wage crisis.

Goldy:

… it is an affordability crisis-

Nick Hanauer:

But you can’t-

Goldy:

… but it’s as much due to-

Carrie Joy Grimes:

It’s solved by money.

Goldy:

… stagnant wages-

Nick Hanauer:

Yeah, yeah.

Goldy:

… as it is rising costs.

Nick Hanauer:

Yeah. And the problem with understanding the problem as an affordability crisis, is it points you towards policy interventions to lower prices, which do not exist.

Carrie Joy Grimes:

Right.

Nick Hanauer:

Those policy interventions do not exist. There is no policy that will enable you to lower the price of gas, or lower the price of housing. I mean, over time you may be able to do some interventions, but the big interventions are wage interventions.

Goldy:

Right.

Nick Hanauer:

Those are the things that you could do, we could do tomorrow-

Carrie Joy Grimes:

Right.

Nick Hanauer:

… and make everybody’s lives better.

Carrie Joy Grimes:

Yeah. Look, I love a good market. I love a good market economy, where people can participate, and I don’t want to have to tell companies how to price their stuff. That is so suboptimal in so many ways.

Nick Hanauer:

Yeah.

Carrie Joy Grimes:

I think that the obvious solution is paying people more.

Nick Hanauer:

Yeah.

Carrie Joy Grimes:

And I think we can afford to, in the general sense. And I think you and I have talked several times about this over the years. And Goldy, I know you’re well steeped in this as well. When we began to, between NAFTA, and the financialization of everything, and share buybacks. And all of the, just the dismantling, the things that had some controls, where working people and middle class people could have a voice in the policies that get set in the economy. Over the last 40 years, working and middle class folks have lost not only our share of income, we’ve also lost our share of power to change things.

Nick Hanauer:

Right.

Carrie Joy Grimes:

And I think that, watching that erosion, you can just clock it. As we got less access to decision makers, and less access to the decisions that got made, the decisions that got made benefited the people that were already benefiting. And I just will say this one thing, and Nick, I know you’ve said this a million times. So I’m kind of quoting you to you, which is a little weird, but I’m going to do it anyway. Which is, “The economy is not the weather. The economy is not some crazy natural system that we just have to hunker down and endure.” It’s decisions, made by people in business, whose businesses we invest in, we shop at. It’s decisions made by people we elect, or the people that they appoint that we elect. We, and by we, I mean the majority of everyday people, we do still have some levers here. And no one is going to invite us to join the table where the decisions get made.

I mean, heck, if I had all the decision-making power I wouldn’t want to share it. I’m not even mad at the folks who are doing that, they’re just doing what they do. But we’ve got to be grownups here and take responsibility, and pull our chair up to that table, and make sure we get what we think makes sense. And I want a growth economy where businesses are booming, I’m not out here trying to take from businesses, and shake my finger at them. I know how jobs work, and I know what a healthy economy looks like, but this is not a healthy economy.

Nick Hanauer:

Right. So in the last chapter of your book you outline, in some ways, the things that people can do to be engaged in this broader problem-solving effort to try to make the economy work for more people. Tell us a little bit about what you think people should do.

Carrie Joy Grimes:

Oh, this is my favorite question.

Nick Hanauer:

Yeah.

Carrie Joy Grimes:

Well, referencing the thing I just said, there are a bunch of different levers that everyday working class people have, like middle class people. We have a bunch of different levers that can shift, I think, how the economy works and how we individually get better cards into our hands, our better money cards. And the biggest one is pretty obvious. There’s market power, where we can come together, and we can bargain for cheaper stuff and things. And it takes many tens of millions of people to do that. That’s part of why you’ll hear me talk about WorkMoney, the nonprofit that I run, workmoney.org, for those who want to check it out. Part of what we’re doing on purpose here is trying to get to 50 million people, so that we can start to bargain for cheaper stuff.

Nick Hanauer:

Right.

Carrie Joy Grimes:

Everything from cell phone plans to auto insurance, to… I mean, heck man, mortgages, health insurance. There’s lots of ways we can band together and create a market. And that is the biggest, you want to really shift business behavior, get together and then negotiate. They do it all the time. There’s no reason why we can’t. So the market power is my favorite one to talk about.

Then there are some other obvious ways that we can get together and use our big, like a lot of people in a big group, get what we want. There’s constituent power. Obviously, we all vote. And I’m just going to say it, this is not about left and right, I don’t think either political party has the answer here. I think we have to decide for ourselves what makes sense regardless of party, I think we’ve got to go for the person and the policies that we think are right. So I’m very disinterested in one party over the other. I think we got to take responsibility and demand from everybody. So there’s constituent power, and there’s obviously market power.

And there’s things like audience power. We decide, we watch a lot of stuff. I mean, I don’t know how much content y’all are consuming, but I bet you it’s not zero. And so figuring out how to make sure that we demand or create the kinds of things we want to watch.

And then I’ll say two other things. One is, there’s obviously labor power, as an old union organizer, so I know what that looks like. But the last one, the one that I think is really, really interesting, is entrepreneurial power. We can invent our own self, especially with technology being where it is. If something doesn’t exist in the market, we can make it. Like WorkMoney just built our own company to negotiate people’s cable, cell phone, and internet bills. It’s called moneyfinder.com. You can go there, and we will negotiate down your cable, cell phone, your internet bill, and we’ll do it for way cheaper than anybody else. Because we’re not doing it to-

Nick Hanauer:

For the money.

Carrie Joy Grimes:

… no, we’re not doing it… No, we’re not trying to rip people off. We’re trying to literally build the stuff that we need to continue in this country, and to save us a little bit of money. So that’s it. I think there are five big levers, and that’s why I’ll just say one last thing here. An organization is the way that all those things kind of come together.

Nick Hanauer:

Right.

Carrie Joy Grimes:

That’s why WorkMoney, the nonprofit exists, is to figure out how we get people into enough of a formation that we can exercise all those different levers of power.

Nick Hanauer:

Yeah, and I guess, those organizations used to exist. A third of Americans used to be in a labor union. Right?

Carrie Joy Grimes:

Yeah.

Nick Hanauer:

And even if you weren’t in a labor union, you benefited from the policy changes that labor unions pressed through.

Carrie Joy Grimes:

Yeah, that’s right.

Nick Hanauer:

Today, I mean, very few people are in a union. And I think it’s true, even if you wanted to be in one, it’s not really available. Right?

Carrie Joy Grimes:

No, it’s pretty hard.

Nick Hanauer:

So in many ways, I guess WorkMoney is your best, nearest alternative.

Carrie Joy Grimes:

Yeah.

Nick Hanauer:

Right? It’s something you can join-

Carrie Joy Grimes:

That’s right.

Nick Hanauer:

… that is trying to accomplish the same kinds of things, but just because your workplace doesn’t offer it doesn’t mean you can’t have it.

Carrie Joy Grimes:

Yeah, that’s right.

Nick Hanauer:

And I guess that explains why the organization has grown from zero to almost 10 million members pretty quickly.

Carrie Joy Grimes:

Yeah, I think that’s right.

Nick Hanauer:

Because there’s a lot of people out there who feel like they’re being taken advantage of.

Carrie Joy Grimes:

Yeah. And it turns out, everybody likes money. One of the things I get so excited about is that, A, WorkMoney is growing like a weed. Everybody just wants things to get better, which is great.

The other thing, and this is something you both are very well steeped in, is that it’s not like there aren’t a bunch of good ideas for what we can do.

Nick Hanauer:

Correct.

Carrie Joy Grimes:

Right? This is-

Nick Hanauer:

We know what to do.

Carrie Joy Grimes:

… this is not an unsolvable problem.

Nick Hanauer:

We know what to do.

Carrie Joy Grimes:

Yes, this is not an unsolvable problem.

Nick Hanauer:

It’s not complicated.

Carrie Joy Grimes:

It’s just about will and power.

Nick Hanauer:

Yeah.

Carrie Joy Grimes:

That’s all we need here. Will and power. But we have a ton of options for how to raise wages, how to manage costs in some cases, how to make sure people get a fair shot. Look, I don’t believe in equality of outcome. I do believe in equality of opportunity. And that’s what we don’t have. And I think there are innumerable policies, ideas, programs that we could put into play, to make life better for working in middle class people. It’s just that everything is stuck because the incentives, both for business, I think, and for government, have not really been for us.

Nick Hanauer:

Yeah.

Carrie Joy Grimes:

I’m curious if you two have reactions to that, because I know both of you have thought a lot about this.

Nick Hanauer:

No, I mean, I think that’s basically true. Right?

Goldy:

Yeah.

Nick Hanauer:

Goldy?

Goldy:

Right. Yeah. In the end, I mean, we talk about this a lot on the pod. One of the things that is missing from orthodox economics is power. The market, there’s no power. The market just settles all that. It’s just efficient, don’t worry about power, it’s not a thing. That Nick has more power than me, and I really… No, no. Supply equals demand, and that’s what sets my wage, and I’m paid exactly what I’m worth. No, as Nick has often said, “Employers don’t pay you what you’re worth. They pay you what you can negotiate.”

Carrie Joy Grimes:

Yeah, that’s right.

Goldy:

And we have had this huge shift in power over the past three, four, five decades, that has resulted in this upward redistribution of wealth and income that has left so many people financially stressed.

Nick Hanauer:

Yeah.

Carrie Joy Grimes:

Yeah, that’s right. And especially when we’re facing these really uncertain and turbulent economic times ahead, not just because the market’s going like this, or it feels disconnected from what is real value. And we could talk about bubbles or not, but also just the transformation that AI might have on the economy, and how many people already were feeling like they didn’t see a path for themselves or their loved ones. And now to face even more confusion about what comes next, if ever there was a time to make sure that we built and exercised the power of many-

Nick Hanauer:

Right.

Carrie Joy Grimes:

… to steer what happens next, it is now, I feel.

Goldy:

And this is what democracy is for, right?

Carrie Joy Grimes:

Yeah, that’s right.

Goldy:

AI is just a tool. It’s a technology. It doesn’t have to be used to immiserate and disempower people-

Carrie Joy Grimes:

Correct.

Goldy:

… and concentrate wealth in the hands of the few. It doesn’t have to be used that way.

Carrie Joy Grimes:

That’s right.

Goldy:

If we say, “Well, the market. If the market says so, then that must be the best…” No, no, no. We have a democracy for a reason, and that is to rein in the market when it’s not serving the needs of the majority of people. We can have AI that works for everybody, if we choose to do so, as you said, collectively.

Carrie Joy Grimes:

That’s right.

Goldy:

We can use our collective power, through our democratic institutions, which I suppose explains why people like Musk and Thiel and Trump are so intent on dismantling our democratic institutions and norms.

Carrie Joy Grimes:

I really think that you said something important, which is, AI could be a real banger for everyday people. It really could. You can see application of it. And I don’t just mean curing cancer, which is great, or flying cars, hello Jetsons. I mean stuff like, the stuff of life. I mean getting access to medical care when you need it, getting access to support for your kids when they need it, getting access to… I mean, I don’t know about you, but if I have to figure out what to make for dinner after a long day of work, and figure out how to go to the store and get that stuff and make it, it’s like one of my… There’s lots of ways that AI could change our lives. We could work less. We could be paid more. There are so many ways this could go well for us. But without a demand for that, it’s just going to go a bad way.

And I’ll say, I am a little worried because what I hear a lot of. I did a lot of, I said before, union organizing. And I bargained contracts. And when you are bargaining to avoid a pay cut, you can probably do some good, and have less of a pay cut, that’s great. But you don’t get a raise, you don’t get retire… You don’t get the good stuff. And right now, the AI conversation I hear in America sounds a lot like some of us bargaining to avoid a pay cut. Do you know what I mean?

Nick Hanauer:

Right.

Goldy:

Right.

Carrie Joy Grimes:

Rather than making demands and… Or, I don’t mean demands even in a tin-eared kind of way, like crazy, nonsense stuff. I mean, let’s actually figure out, what do we want? And I think there’s real open space here, for us to create the conditions where the kinds of AI businesses that succeed and policies that get passed, are good for everybody. For the companies, for the people in it. But without there being a real push for that, I worry that it’s going to go… Either we’re going to leave money on the table for working middle-class people, or the Musks and Thiels of the world will sort of decide that the philosopher king mentality is the thing that we need. And then we’ll have less and less power over time. But I think there’s a chance we could have something pretty great, but it’s going to take us getting together and pushing. I’m curious if you two have reactions to that.

Nick Hanauer:

Yeah. Again, the technology itself isn’t to be feared. It’s the economic system that we have embraced, which traditionally socializes the losses and privatizes the benefits.

Carrie Joy Grimes:

Yeah.

Goldy:

And also, Nick makes sacrosanct property rights, that if, “Well, if Musk owns the AI, and this is what he chooses to do with it’s his property. If he monopolizes all of the benefits, oh, well. There’s nothing we can do about it, because it’s his. Property rights are sacrosanct.”

Nick Hanauer:

Yeah.

Carrie Joy Grimes:

Oh, yeah.

Nick Hanauer:

So what’s the number one thing you would do, CJ, if you could, if you were-

Goldy:

Our magic god.

Nick Hanauer:

… our goddess emperor.

Carrie Joy Grimes:

Ugh. I could do anything I want?

Nick Hanauer:

Yeah.

Goldy:

Yes. No political constraints whatsoever. What would you do?

Carrie Joy Grimes:

Okay. Well, I would not buy myself the horse I want and the land to keep it on, because that would be selfish. But I will admit I would have to remind myself not to do that.

But what I would actually do is, I would double everyone’s wages.

Goldy:

That’s so retro of you. You would just go back to 1975. And distributions.

Carrie Joy Grimes:

I mean, I know we all know this.

Goldy:

We were more equal. Yeah.

Carrie Joy Grimes:

We all know this, but if our wages had kept pace with our share of the pie from that era, median wage would be double.

Goldy:

Yeah, I know.

Carrie Joy Grimes:

That’s median. By the way, that means some people, more. I would just greatly increase people’s incomes. That’s what I would do.

Nick Hanauer:

And I think if we did that, then the country would be in great shape, and there would be a few thousand really sad rich people, but that would be it.

Carrie Joy Grimes:

I mean, you think about the small business booms, think about what would happen. And look, the slow transfer of responsibility around retirement from employers and the government, over to individual people. There’s so many things that get solved if we just increase incomes, that are commensurate with where they were in the ’70s. I’m not even asking for more than that. I just want to go back in time to the 1970s, except for the clothing, but I did love the music.

Goldy:

Yeah, okay.

Nick Hanauer:

There you go.

Carrie Joy Grimes:

And I would like to just say, we make… That’s what I would do.

Goldy:

I think, Nick, if you only had $500 million instead of a billion dollars, you would still get an awful lot of joy out of your life.

Nick Hanauer:

Yeah, no. We could raise wages a lot. And final question, why do you do this work?

Carrie Joy Grimes:

I have a kid. I have a kid, and I got to know that she’s going to be okay. And I also really love people. I just think people are, I think we’re all okay. The kids are all right. We’re actually fundamentally pretty good. You know what I mean? We’re pretty good. That’s why. Because I really love and believe in people. And think about it. Collectively, I know lots of us are like, “Ugh, people.” But think about the people that you love and that you know. Most of them are trying to do a good job. Some of them are a pain in the ass, but most of them are trying hard. And that’s why. I love people, and I love my kid, and I want to make sure she’s going to be okay.

Goldy:

It’s really interesting, Nick, the way that Carrie Joy describes WorkMoney, the organization that she helped create and that she runs as kind of like an AARP, but for really, everybody else. Right?

Nick Hanauer:

Not old people, working people.

Goldy:

Right. AARP is for retired people, and WorkMoney is more focused on working people. People who are saving, rather than figuring out how to spend their retirement as joyfully and efficiently as possible. But there’s something else that AARP does, which is really, really important, that they have been tremendously successful at over the decades. And that is, advocating on behalf of retired people-

Nick Hanauer:

That’s right.

Goldy:

… advocating on behalf of seniors. And if you’re as old as we are, and we’re getting pretty old, we remember the days when there was a lot of senior poverty in this country. Where there were memes before we called them memes, of elderly people buying cat food, and eating that because the canned tuna in the cat food was cheaper than the canned tuna that was meant for people. This was a real thing, that there was a lot of senior poverty, a lot of senior hunger, a lot of struggling.

And to society’s credit, and AARP deserves a lot of credit for this-

Nick Hanauer:

Credit for that, yeah.

Goldy:

… as well, for advocating. We increased incomes, we increased Social Security. We provided a lot of support. We’ve done a lot, so that fewer Americans now retire in abject poverty than they used to, through Social Security and Medicare. Which, by the way, did not exist until the late 1960s. People forget that, that a lot of retired people, a lot of elderly people didn’t have access to healthcare, because we didn’t have Medicare. And we didn’t have Medicaid, either. So that’s what AARP has done.

What excites me about WorkMoney is not just the work they’re doing to advise people, and teach people how to better manage their money on both sides of that equation, but the potential that’s there. She says it’s 10 million strong already?

Nick Hanauer:

Almost, yeah.

Goldy:

Yeah, that is amazing. The potential there is to start to advocate, in the ways that AARP does. In a nonpartisan, bipartisan fashion, AARP is neither Democratic or Republican. It advocates for retired people, it’d be great to have an organization that could advocate for working people too, in the same manner.

Nick Hanauer:

Absolutely.

Goldy:

And hopefully with the same success.

Nick Hanauer:

Yes. In any case, it’s a great project for Carrie Joy, The Joy of Money. And again, I was just so struck by her observation that 99% of the stuff out there is written for people with a lot of money, written by people who want to make money off the people who have a lot of money.

Goldy:

There’s money to be made off of people without money, but that’s mostly charging them late fees-

Nick Hanauer:

Yes, exactly.

Goldy:

… and usurious interest rates, and stuff like that.

Nick Hanauer:

Exactly.

Goldy:

In any case, if you want to learn more, we will provide links in the show notes, both to WorkMoney so you can get involved with that organization and to Carrie’s book, The Joy of Money: How to Do More With and Feel Better About Your Money― No Matter How Much You Have.

Nick Hanauer:

Hey gang, if you like Pitchfork Economics, I recently joined a four-part IDEAS documentary series called The Billionaire Age, about how extreme wealth is shaping our economy and democracy. Three episodes are out now, and we’ll include a link in the show notes. Please take a listen.

Mary Link:

Today, there are more than 3,000 billionaires with a combined worth of $25 trillion, surpassing the GDP of every country except the United States. I’m Mary Link, with IDEAS, and I’ve been looking into the impact of this record-breaking level of wealth concentration at the very tippy top, including a deteriorating middle class and the expectation that there will be five trillionaires within a decade. To understand why this is happening, listen to my series, The Billionaire Age on IDEAS, wherever you get your podcasts.

Announcer 2:

Pitchfork Economics is produced by Civic Ventures. If you like the show, make sure to follow, rate, and review us wherever you get your podcasts. Find us on other platforms like Twitter, Facebook, Instagram, and threads @pitchforkeconomics. Nick’s on Twitter and Facebook as well, @NickHanauer. For more content from us, you can subscribe to our weekly newsletter, The Pitch, over on Substack. And for links to everything we just mentioned, plus transcripts and more, visit our website, pitchforkeconomics.com.

As always, from our team at Civic Ventures, thanks for listening. See you next week.

The post The Joy of Money (with Carrie Joy Grimes) appeared first on Pitchfork Economics.

What Happened to Liberal Democracy (with Nobel Prize-winning economist Daron Acemoglu)

Freddy Doss — Tue, 11 Aug 2026 19:08:39 +0000

Nobel Prize-winning MIT economist Daron Acemoglu joins Nick and Goldy to discuss his new book, What Happened to Liberal Democracy? Remaking a Politics of Shared Prosperity. They explore why so many people have lost faith in democracy, how inequality and weakened worker power have reshaped politics, and why democracy has to deliver in people’s daily lives. They also dig into AI, automation, and whether new technology will concentrate even more wealth and power — or help build a more prosperous, democratic future.

Daron Acemoglu is a Nobel Prize-winning economist and Institute Professor at MIT. He is one of the world’s leading thinkers on political economy, institutions, inequality, technology, and the relationship between democracy and shared prosperity. His books include Why Nations Fail, The Narrow Corridor, and Power and Progress. His new book is What Happened to Liberal Democracy? Remaking a Politics of Shared Prosperity.

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Further reading:

What Happened to Liberal Democracy? Remaking a Politics of Shared Prosperity

New York Times – Nearly 200 Economists and Tech Leaders Warn of A.I. Threats

NBER – Automation and Repression

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Nick Hanauer:

The rising inequality and growing political instability that we see today are the direct result of decades of bad economic theory.

Goldy:

The last five decades of trickle-down economics haven’t worked, but what’s the alternative?

Nick Hanauer:

Middle out economics is the answer.

Goldy:

Because the middle class is the source of growth, not its consequence.

Nick Hanauer:

That’s right.

Announcer:

This is Pitchfork Economics with Nick Hanauer, a podcast about how to build the economy from the middle out. Welcome to the show.

Goldy:

Nick, so I need to start today’s pod by just being extremely hypocritical.

Nick Hanauer:

Okay.

Goldy:

You know how I love to make fun of the so-called Nobel Prize in economics, that it’s not a real Nobel Prize. Well, I take that back completely for today’s guest who actually is a Nobel laureate in economics. And if it is a real prize, he certainly deserves it.

Nick Hanauer:

Yeah, for sure. Today we get to talk to … I mean, could be the world’s most important economist. Don’t you think?

Goldy:

Well, certainly very influential. Several of the books he’s co-authored have been very influential to us, not the least of which being Why Nations Fail, but also I think, have we talked to him about all of his books? The Narrow Corridor, Power in Progress. And he has a new book coming out.

Nick Hanauer:

Came out today. It couldn’t be true, and we get to talk to Daron Acemoglu, who is, in my opinion, one of the most important economists in the world and whose books have been enormously influential, including Why Nations Fail and Progress in Power and the Narrow Corridor, so on and so forth. And an incredible public intellectual and thinker who has a new book out called What Happened to Liberal Democracy: Remaking a Politics of Shared Prosperity, which basically addresses the fact why so many people have lost faith in democracy and what we have to do to get that faith restored.

Goldy:

Right. And we’ve talked about that a lot over the years on the pod. The reason why so many people have lost faith in liberal democracy is because it’s not working for them because market capitalism is not working for them, because we have had 50 years of rising and radical inequality in which economic growth has been totally disconnected from growth in wages, larger growth in incomes, growth in employment, et cetera.

Nick Hanauer:

Yeah.

Goldy:

So that disconnect between economic growth and the shared prosperity of the bottom 90% of Americans, yeah, you can see why people are losing faith in our institutions.

Nick Hanauer:

Yeah. Yeah. Absolutely and now, with AI threatening to reshape work power and the economy all over again, I think this argument is even more important. It’s even more urgent to begin to address these things in a way that secures democracy and shared prosperity. So with that, let’s talk to Daron.

Daron Acemoglu:

Well, thank you. First of all, I’m so happy to be with you. My name is Daron Acemoglu. I’m an institute professor at MIT. I’m an economist, and I’m excited about many things, but mostly right now about my forthcoming book, What Happened to Liberal Democracy?

Goldy:

I don’t know. I guess, Nick, the first question is, what the hell happened to liberal democracy?

Nick Hanauer:

Exactly. And I guess it’s safe to say that your diagnosis is highly aligned with our diagnosis, but why don’t you lay out your thesis?

Daron Acemoglu:

So I believe that, and the book documents this, we are so fortunate today in the grand scheme of history to be living in a society that’s still largely shaped by the freedoms, access to public services, political participation, and remnants of shared prosperity that liberal ideas inspired and liberal democracy worked towards, realizing to such an extent that even the most enlightened people who lived more than 300 years ago could not have imagined the kind of society that we live in.

So in the grand sweep of history, liberalism has been a success. Liberal democracy as the institutional realization of liberal ideals has been a success. But that success has recently, meaning over the last four decades or so, plunged itself into crisis for two main reasons. One, because the times changed, especially the structure of production changed and liberal institutions did not change with it. And second, because liberalism and liberal ideals and activism became victims of their own success in that, they overreached in a way that especially was not right for the time given the developments that were happening. The first-

Goldy:

Can we just pause for a moment for a quick definition? Because we use the word liberal differently than the rest of the world. And so, when you say liberalism, when you say liberal democracy, if you could just briefly define it.

Nick Hanauer:

Yeah. I think that’s right.

Daron Acemoglu:

Yeah, absolutely. Absolutely. And we could spend several hours defining liberalism.

Goldy:

That’s right. You don’t need to.

Daron Acemoglu:

And my definition is actually somewhere between the American and European definitions in that, I start from the European definitions that liberalism is a big tent philosophy that is about individual freedoms and aspirations about progress and that progress being shared, to the extent that I’m talking about these achievements, I think I am particularly focusing on the left liberalism, meaning sort of those liberals that put a lot of emphasis on shared prosperity and dealing with discrimination and other inequities in society so that everybody can have an opportunity to enjoy meaningful freedoms.

Goldy:

Okay.

Daron Acemoglu:

Other than the two mechanisms, I think the most important part of the success of liberal democracy was to enshrine an environment in which shared prosperity became a reality. And that was about democratic governance, which created a level playing field, education and things like that. Trade unions that created protection for workers, but mostly it was also about the market economy during the industrial age where many companies invested in new technologies and in expansion. But in doing so, they also needed workers.

And in the conditions created by democratic governance and trade unions, that meant that they had to pay these workers higher wages. They couldn’t coerce them, they couldn’t cheat them. They had to go and convince them to work for them and stay with them. So that created a natural pathway for shared prosperity whereby market expansion and economic growth was accompanied by wage growth and employment growth. And those are the most surefire ways of sharing and spreading widely prosperity.

But the world has changed. Digital technologies ushered in what you might call the post-industrial age where educated workers’ skills became much more valuable. There was a lot of digital automation severing the link between market expansion and labor demand. Many companies could now expand, but without wanting to hire more labor. And some of them could in fact expand and lay off workers. And that created a very different challenge for creating shared prosperity to which liberal democracy and liberal politicians and liberal activists did not fully adjust to.

At the same time, also these same changes empowered educated segments of society. People like us, college graduates who live in large cities often with more than a college degree. These groups became much more socially influential. Also at the same time, culturally more homogeneous because they are living together and they’re becoming a large group with similar aspirations, similar education, similar occupations. And they did not sufficiently internalize the economic and social plight of the less educated, what we can call the working class.

In fact, they culturally overreached in terms of how they wanted to transform society. And in the process, they also ignored a very important lesson that was de facto a central part of early liberal democracy, which is community, local governance and local choice. And those things fade by the wayside. And all of these contributed, especially with a backlash that was triggered by right-wing entrepreneurs, radio hosts, and cultural counterfigures that exploited this overreach and some of the economic hardship in order to create a powerful backlash against liberal democracy.

Nick Hanauer:

But don’t you think that it’s the democracy’s inability to deliver material welfare for the majority?

Daron Acemoglu:

You have to be careful, at least in my opinion, in stating this as democracy’s difficulty. It’s not an unconditional difficulty. It’s a function of how the world has changed and what democracy and democratic dynamics have prioritized-

Nick Hanauer:

Correct.

Daron Acemoglu:

After all, the period of unprecedented shared prosperity where wages grew faster than productivity, lower education workers actually gained faster than higher education workers. Wages grew faster than profits where the three and a half decades that followed World War II, and that was firmly under liberal democracy’s institutions and under liberalism’s tutelage.

Nick Hanauer:

Right.

Daron Acemoglu:

So we can recreate that, but not just by going back in history, by adapting to changing times.

Nick Hanauer:

At the risk of antagonizing perhaps the world’s most important economist.

Daron Acemoglu:

Please do.

Nick Hanauer:

That being you.

Daron Acemoglu:

I thought it was somebody else you were going to-

Nick Hanauer:

No, no. No, we’re talking about you.

Goldy:

Not living economist.

Daron Acemoglu:

Yeah, living economist.

Nick Hanauer:

What role do you think that economics played in the collapse of support for ordinary Americans and the aggregation of both economic advantage and power at the top?

Daron Acemoglu:

I think many disciplines in their own ways contributed to it. So as the college educated became socially more powerful, that was not a uniform process that everybody with a college degree agrees. There are deep divisions and different disciplines and different emphasis played different roles. Economists, I think, were at the forefront of saying free markets and free rein by very large tech companies would somehow lift us up. And that was the most important contribution from economics.

Nick Hanauer:

Yes.

Daron Acemoglu:

A lot of engineers thought that they could treat human society and social organizations as an engineering system. That was not a great contribution and ignored a lot of the social aspects of prosperity and as social aspects of cohesion and progress.

Nick Hanauer:

Right.

Daron Acemoglu:

A lot of lawyers legalistically interpreted politics that didn’t help. And humanities and the more left-leaning social sciences were at the forefront of trying to impose liberalism’s values on communities at the expense of all the backlash and removing or weakening self-government at the local level.

Nick Hanauer:

The cultural issues.

Daron Acemoglu:

The cultural issues.

Nick Hanauer:

Yeah, yeah, yeah.

Daron Acemoglu:

So I think we’re all to blame.

Goldy:

Okay. So now, we’re in this situation. Obviously, as a bleeding heart American liberal, we’re in great agreement on a lot of the economic issues.

Daron Acemoglu:

Yeah.

Goldy:

I understand your thesis. I find it uncomfortable to consider accepting that local communities, cities, states can enact policy based on some of the cultural issues that I find hateful and counterproductive. I understand that this is put like the Democratic Party in a situation where … and this is actually Sohrab Ahmari’s thesis that the working class is culturally conservative and they should be aligned with the right, that we have the wrong political alignments in the United States. And that serves his end as a social conservative.

How do you address people like me who are saying, “No, we really can’t back away from defending the LGBTQ community or from fighting over racism or from keeping religious fundamentalism out of our public schools, even though those are issues that make it hard for us to implement the economic policies that would ultimately address this divide.”

Daron Acemoglu:

Well, thanks for putting it this way, Goldy, because I think you’ve put it very clearly and it’s a very important issue. So I would give it a three fear answer. First, everything I say that liberalism should aspire to is a kind of pluralism subject to basic freedoms. So we should never allow communities at the local level to enact practices or laws that go against the most basic principles of liberalism. So freedom of speech, freedom of religion, freedom of association have to remain.

So ethnic communities in Europe, ethnic Muslim communities that impose Sharia law or religious communities here that impose certain beliefs and don’t let their children to be educated, those are not allowed. Second, I think liberalism by any measure, when you look at its philosophical foundations, has always celebrated pluralism. I think it would not be liberalism. It would be something else. Some sort of what I would associate with Rousseau, Rousseau type of progressivism. If it said, “We want progress and these are the ideals and we’re going to impose them on everybody.” So pluralism is a very important part of it.

Nick Hanauer:

Yeah, particularly in a country like the United States of America.

Daron Acemoglu:

Particularly in the United States, particularly in Europe, but particularly also in Latin America.

Nick Hanauer:

Yeah. Yeah.

Daron Acemoglu:

But what I’m going one step further, and as the third tier of it, is that it’s not enough just to have pluralism at the individual level, but you also need pluralism at the community level for two reasons. One reason is because individuals are defined by often get their shared moral values, their communication, their solidarity from communities. So you cannot impose uniformity over them. And second, a lot of the experimentation that is critical for idea generation and progress are not done at the individual level, they’re done at the community level.

So you want some diversity at the community level. And that means that you have to let communities, again, subject to those basic freedoms, make certain decisions themselves. That doesn’t mean that they should be allowed to tell people how they can pray or what they can do, but they should be able to emphasize different values and organize their communities in different ways. So in some sense, it’s not going as far as, yes, we can allow Ku Klux Klann, whatever, to do whatever they want to do. Absolutely not, because they would very, very strongly contradict with basic freedoms.

But how much they emphasize religion and how they organize local public goods and local policies, there will have to be a lot of heterogeneity there. And when you do that … By the way, just one final thing. When you do that, if you can do that, I think Ahmari is wrong. Working class shouldn’t be necessarily aligned with the right. I think working class liberalism, what I call, is something that can bring the working class inside the tent of left liberalism.

Nick Hanauer:

Yeah. And I feel very strongly that one of the things that’s pushed working class people culturally to the right has been the economic commiseration they have faced over 50 years, right?

Daron Acemoglu:

100%.

Nick Hanauer:

It’s much easier to be tolerant when things are going well. When you’re hanging on by your fingernails, you have very little patience for others and difference and the rest of it, right?

Daron Acemoglu:

But the way I would think of it is that economic hardship, especially the kinds of jarring inequalities that we have in the United States, it’s a ticking bomb.

Nick Hanauer:

Yes.

Daron Acemoglu:

But when it actually explodes is also very related to cultural backlash and how that cultural backlash is exploited. So inequality increased a lot in the 1980s, and you saw a lot of grumblings, but you didn’t see that big sort of backlash against liberal democracy in the 1980s or in the 1990s. But it starts much more a little bit in the 2000s and much more in 2010s when both the overreach is there and the cultural matters, but it’s also being very skillfully exploited by first AM radio show hosts and then all sorts of other political entrepreneurs and then social media.

Nick Hanauer:

But to be clear, inequality may have gone up in the ’80s, but it’s much, much, much worse today.

Daron Acemoglu:

Absolutely. It’s been keeping going up. Yes. Yes.

Nick Hanauer:

As a practical matter, in the 80s, things were much easier on the median family than they are today.

Goldy:

How much did the two great shocks, the 2008 financial collapse and then the COVID shutdown, how much did they contribute to the polarization that has undermined liberal democracy? I mean, had those not happened, had we not had giant catastrophic shocks like that, might we be in a different situation or were we just going to get there inevitably on the path we were on?

Daron Acemoglu:

I don’t know. That’s a great question, Goldy. I would say that … and I do not emphasize this enough in the book, and that’s my bad, but certainly the financial crisis and how it was dealt with damaged the legitimacy of liberal democratic expert decision-making and for good reason.

Nick Hanauer:

For sure.

Daron Acemoglu:

COVID is a more complicated story. Actually, the policy response during COVID economically-

Nick Hanauer:

It’s pretty good.

Daron Acemoglu:

Made sure that poverty did not increase. In fact, there was a reduction in poverty because of the transfer programs. But the cultural aspect of COVID was A, mismanaged, and B, very badly exploited by very skillful provocateurs.

Nick Hanauer:

Yeah.

Daron Acemoglu:

And that’s why you saw, for example, anti-fax ideas become so much more powerful. I mean, they were there before COVID, but they became so much more powerful, or things like wearing masks became-

Nick Hanauer:

Politicized.

Daron Acemoglu:

… such a key cultural political topic. That was skillful exploitation. On the other hand, own goals by the liberal establishments, school closures. They were the most destructive, socially costly policies that were also tone-deaf and of course became fodder for in the culture wars.

Nick Hanauer:

So I think we’re in violent agreement with the basic thesis that until democracy starts delivering the goods, it’s not unreasonable to mistrust democracy, especially if you live-

Daron Acemoglu:

100%, and I think that’s the most important message.

Nick Hanauer:

Yeah. If you’ve lived through-

Daron Acemoglu:

Democracy has to deliver if it wants people support. And democracy can only survive with people’s support.

Nick Hanauer:

That’s right. And our thesis is our democratic crisis is the consequence of an economic crisis.

Daron Acemoglu:

Yeah, we’re broadly in agreement then. Absolutely. Yeah. That is the foundational block.

Nick Hanauer:

Yeah. Yeah.

Daron Acemoglu:

But then what goes on on top of it, determine the direction of the crisis and the severity and many others.

Nick Hanauer:

And the texture of it.

Daron Acemoglu:

And the texture of it.

Nick Hanauer:

Yeah. Adjacent to this work on this book and as a consequence of your last book, Progress and Power, which was about the role that technology plays in human societies. And I mean, I think the main point of the book was, I hope I get this right, technological progress does not automatically turn into shared prosperity.

Daron Acemoglu:

100%. You got it right again. Thank you, Nick.

Nick Hanauer:

And if you look it back in history, in almost every case, technological progress did not turn into shared prosperity.

Daron Acemoglu:

Let’s say in several cases.

Nick Hanauer:

And if it did, it took a while and it took-

Daron Acemoglu:

Exactly. That’s it. That’s exactly it.

Nick Hanauer:

… extra technological forces. It took social forces, democratic forces, political forces.

Daron Acemoglu:

And also direction of technology that was more conducive to work-

Nick Hanauer:

More conducive, yeah. Sort of sandwich in between these things, you just did this other paper entitled Automation and Repression, which seems to have … which you were kind enough to quote me, and I’m not sure I should be flattered or not.

Daron Acemoglu:

Yeah, well, because you articulated the name pitchforks.

Nick Hanauer:

Yes. Exactly.

Daron Acemoglu:

It’s so central to the ideas there.

Nick Hanauer:

Exactly.

Daron Acemoglu:

Of course, you have to be quoted twice, Nick. Twice.

Nick Hanauer:

I know. I’m very flattered. I want you to know. But that seemed to be a formalization of a lot of these arguments.

Daron Acemoglu:

It is. It is.

Nick Hanauer:

Yeah. And can you just talk a little bit about that paper-

Daron Acemoglu:

Well, let me actually take one step back.

Nick Hanauer:

Yeah. Okay.

Daron Acemoglu:

And make another point which will then lead to that, which is also in the book, which is that if AI, which of course is going to have several transformative effects on our society and economy, goes in the direction of automating more and more work and concentrating more and more wealth in the hands of a very narrow group of people. Not only will shared prosperity will become a distant dream, but I don’t think liberal democracy or democracy can survive. And automation and repression paper picks up from there.

And it says, if you are having more and more automation, what will happen to the social life and to the political life? And one thing is that if automation, as theory suggests, and data support, keeps on increasing capital labor inequality, meaning the capital share increases, the labor share declines, that’s going to create more and more political reaction from laborers that might turn into a revolt.

Nick Hanauer:

Yeah.

Daron Acemoglu:

Summarizing it briefly, essentially that would make the richest people who are often politically influential really afraid of the pitchfork coming out-

Nick Hanauer:

Yes.

Daron Acemoglu:

As many people have expressed in one way or another. And then, they will have two reactions. One is they can redistribute. They can provide more public goods, more transfer programs, better healthcare, UBI or things like that, or they can repress. And what that paper does … this is about the future. It refers to some historical data, but it’s a scenario planning, but it points out the forces that ultimately repression has an advantage because the more you keep on automating, the more you need to redistribute. And the cost of redistributing more and more will become higher and higher on the people who are becoming wealthier and they won’t like that.

Whereas if you repress, you pay the fixed cost or the necessary cost for a big army and a security force, and that becomes more economical at some point.

Nick Hanauer:

Yes.

Daron Acemoglu:

So that’s the very dystopian scenario planning.

Nick Hanauer:

It’s a very depressing paper.

Goldy:

Well, also, there’s something peculiar about the technology. It’s not like the spinning Jenny was a tool of repression. It increased productivity. But AI, that’s a tool that can be used for repression, specifically used that way if that’s how you want to use it.

Daron Acemoglu:

Absolutely. 100%. 100%. And in fact, well before AI had any productivity effect in say manufacturing, it was already being used for repression by China.

Nick Hanauer:

Yes. Right. Correct.

Daron Acemoglu:

And Russia, and perhaps the NSA.

Nick Hanauer:

Yes. Yes. Almost certainly. Yes, most certainly.

Goldy:

How do we get out of this mess?

Daron Acemoglu:

So I think it’s a multipronged approach we need to adopt. First, liberal democracy needs to be renewed, and that means the aspirations of liberal democracy renewed and a demonstration effect to show, perhaps starting from the community level, that these aspirations can be translated into practice and would deliver what people want, better public services, true self-government and voice. And most importantly, as we agree, Nick, shared prosperity. And what I suggest is as an implementation of that in our current age, it would be what I call working class liberalism.

Liberal ideas merge with working class priorities, making jobs and shared prosperity central, but also emphasizing the importance of community and that community level pluralism that we talked about. But then second, if AI keeps on going on its current path, all of that would become impossible for the reasons that we’ve already touched upon. So then I suggest why there is a different direction for AI, which I call pro-worker AI, where we use AI tools to work workers more productive, better inform, better at problem solving, better at performing new tasks, better at contributing to the production process.

And I try to outline, and of course in a brief way, but my other research goes into more detail, why that’s a feasible direction and why it would have a variety of much better social consequences.

Nick Hanauer:

So can you highlight a few of the practical ways in which we might point AI or technologies like it in directions that are more aimed at human welfare rather than capital returns, and ideally analogize to another instance in history where we did the same thing?

Daron Acemoglu:

Well, let me do that in two stages because I think the most important one, but also the more straightforward one is to argue and change the narrative that this direction that I’m suggesting as pro-worker is actually feasible. And for that, what I do in the book and in my research is first of all, show that throughout the last eight decades, there have been a lot of new tasks and new activities enabled by technology where workers have been central and they’ve been great for job creation and wage growth.

Then explain why AI opens new windows to do those kinds of things. So I explain, for example, how we can use AI tools to help electricians become better electricians and perform more tasks, nurses to do many more things, educators to work much more productively in different ways. So rather than sideline, displace these workers and automate work, give them tools to do better, gain more expertise, do new things, be better at problem solving, that’s a change in narrative and change in focus. And the best way to do that would be change the conversation and convince people, especially in the tech sector, that it’s a feasible and exciting direction and they should go down that way.

But of course, none of that happens in a vacuum. You need societal pressure and you need some policies to support that. I do not believe that the government can be the entrepreneur and bureaucrats can dictate the direction of technology.

Nick Hanauer:

Yes.

Daron Acemoglu:

So the government’s role is to create the framework within which that can happen. But I think historical analogies, as you suggest, Nick, are central. And one great analogy, and which actually is quite telling, comes from the energy sector. As recently as the early 2000s, renewable energy was more than 10 times as expensive as fossil fuel energy. Today, it’s cost competitive with fossil fuels and cheaper in a few activities and more expensive in other activities because of storage and high energy density difficulties, et cetera.

But it’s made tremendous progress. How did it do that? Because there was a change in the direction of research. People became much more excited and put much more investment and much more energy into renewable solar panels, wind, and other things.

Nick Hanauer:

Yeah.

Daron Acemoglu:

Why did that happen? First of all, there was a realization that this was an important priority. Second, there were certain policies that supported that, starting with … in Germany and in Europe, and then in the United States regulations as California, then translating into certain activities in China. Then there was a lot of support for renewable and other clean technologies in terms of the R&D space. And all of these imperfectly, none of them working perfectly, some of them being exploited, some of the biggest recipients of green technology subsidies were big energy companies, but so be it.

It’s still on the whole work and it redirected research, which had tremendous consequences as I’ve just explained. So those are the same parameters that we need. We need a changing conversation. We also need to get rid of distortions that support automation. Some of them are in the tax code, some of them are in other places.

Nick Hanauer:

So the distortions in the tax code are like depreciation, fast depreciation schedules.

Daron Acemoglu:

Right, right. Those are the components of it. What a summary measure would be that we tax labor heavily, we subsidize capital. So which means that if I have two pre-tax cost equivalent ways of doing something, I have a significant benefit from doing the more capital intensive automated one because the tax code subsidizes.

Nick Hanauer:

Yes.

Daron Acemoglu:

And also some subsidies for blue sky, new AI, ventures that would be more human complimentary. So all of those I think need to be bundled in some way that’s not going to be identical to the energy sector’s developments over the last 20 years, but from which we can learn a lot.

Nick Hanauer:

The biggest thing that happened in the energy sector is rights law, right?

Daron Acemoglu:

Yeah.

Nick Hanauer:

The scale economies-

Daron Acemoglu:

But scale economies were previously working in favor of fossil fuels.

Nick Hanauer:

Yeah, and now they’re working in favor of-

Daron Acemoglu:

Exactly. And how did that happen? Because of an intervention by the government and the democratic process and aspirations.

Nick Hanauer:

That’s right. That’s right. So if you could wave a magic wand, what would be the first three things you would do?

Daron Acemoglu:

First of all, I don’t think any policy would have remotely the effect that change in the mindset of Silicon Valley would have. If tomorrow we woke up miraculously and 60%, or let’s say even 50% of the tremendously talented people who are working on AI in the United States said, “No, we’re no longer so interested in artificial general intelligence and artificial super intelligence. We want to develop human complimentary tools, pro-worker AI,” it would happen. So policies are supporting for that process. I would say one is the tax code, which is very easy to change in theory.

Nick Hanauer:

In theory. In practice. Yeah.

Daron Acemoglu:

Very difficult in the current political environment.

Nick Hanauer:

Yeah. Yeah.

Daron Acemoglu:

The second one, you might find a little bit of a wild one, but I think legislating a proper set of laws for control and property rights over data. Everybody understands and agrees that data is going to be much more important than land in the new AI digital economy. But nobody can go and take your plot of land is this in the United States. Technology companies routinely take and expropriate everybody’s data. That is not just inequitable, but it’s also very bad because it kills any incentives to create high quality data. And high quality data is very important for these human complimentary things where expertise needs to be combined with AI.

And all of that needs the infrastructure where people can create data, they are secure, they can sell that data or lease it and all sorts of other arrangements, both individual ownership and collective ownership over data. And then third one, I think we need an AI agency similar to NIH where there are a lot of expertise. So state-of-the-art understanding of AI and security are developed and conveyed to the rest of the government and society. Best practices are articulated for companies and some regulatory knowledge is produced as well as support for under researched areas that are socially beneficial just in the same way that NIH does.

Nick Hanauer:

Interesting.

Goldy:

And this is why Elon Musk and Peter Thiel and others have decided that we don’t need liberal democracy anymore because that would just interfere with their right to use their intellectual property however they want to use it.

Nick Hanauer:

Yes.

Daron Acemoglu:

Well, their intellectual property or whatever. I mean, their power. Once we become that rich, it’s not just your intellectual property we’re talking about, it’s power.

Nick Hanauer:

It’s power.

Daron Acemoglu:

It’s dominance. And that’s one thing. Again, liberal ideas are not against inequality. No serious liberal thinker has ever said we want a society in which everybody is equal.

Nick Hanauer:

Right.

Daron Acemoglu:

But liberalism never accepts very deep hierarchies or what new Republican thinkers call dominance relations where I have so much power over you that you cannot even exercise any meaningful choice over your life. And that’s what Peter Thiel and Elon Musk want.

Goldy:

And almost have, already-

Daron Acemoglu:

Almost have.

Goldy:

The idea of changing the mindset in Silicon Valley, I mean, it just takes-

Daron Acemoglu:

Good luck to you. Right, exactly.

Goldy:

It just takes one sociopath. And let me tell you, there’s a hell of a lot more than one. Nick Veltrop. I mean-

Daron Acemoglu:

Okay then, I’m going to leave you guys to a point … sociopath, you want to change the values there.

Goldy:

I mean…,

Daron Acemoglu:

But let me just say one thing though, the extent of Elon Musk’s wealth is now non-comparable to anything. But if you look at the 2000s, Sweden had a lot of billionaires too. None of them, none of them, not a single one of them had any discernible, very negative effect on Swedish political economy. Why not? Because institutions were such that you could not turn your money-

Goldy:

Into power.

Daron Acemoglu:

… into a political weapon.

Goldy:

Yeah.

Daron Acemoglu:

In the United States, we’ve bungled the laws. We’ve bungled the north, we’ve bungled the practices in such a way to make that possible. So we as well as them are responsible.

Nick Hanauer:

Yes. No, it’s true. Citizens United and the rest of it.

Daron Acemoglu:

Yeah.

Nick Hanauer:

Calling money speech. Yeah.

Goldy:

And the latest ruling saying essentially allowing coordination between parties and candidate campaigns now means that Elon Musk can basically spend unlimited amount of money, give it to the party, it’s unlimited, and then that can be coordinated with a campaign. If he wants to put 100 million dollars into a governor’s race, he can put 100 million dollars into a governor’s race.

Daron Acemoglu:

Absolutely, but it’s not just that. I mean, it’s not just that. So let’s be clear. It’s a broader impunity against corruption.

Goldy:

Yes.

Daron Acemoglu:

And also the fact that we’ve turned our politics into a rat race between different levels of spending, which makes money so important in political campaigns.

Nick Hanauer:

Yeah. The whole thing is a catastrophe. And Daron, we’ve taken up a lot of your time. We have one final question which you’ve answered before, but I want you to answer it again. Why do you do this work? What motivates you?

Daron Acemoglu:

Look, I stay up many nights because I’m worried about our future, because if democracy collapses, the consequences will be tremendously bad. I worry other nights equally because of what AI might do to our society if it goes on its current path. And I think it’s all of our responsibility to try to articulate different, better futures so that we have a hope of surviving this period.

Goldy:

I get the feeling actually that you’re as gloomy as I am. Despite writing a book with … it’s such a positive idea that we can remake a politics of shared prosperity.

Daron Acemoglu:

Well, I mean, what I’m saying, we can.

Goldy:

We can. Yeah.

Daron Acemoglu:

I’m not saying that it’s easy. And I’m saying we have to try. We have no other place.

Nick Hanauer:

Here’s the thing. If there’s anything history teaches, we will once again at some point in the future have a politics of shared prosperity.

Goldy:

We just may all be dead for a couple millennia it happens.

Nick Hanauer:

Before we get there.

Goldy:

I mean, this is a tiny blip in history.

Daron Acemoglu:

It will be the foundation period in Asimov’s novels.

Nick Hanauer:

That’s right. That’s right. That’s right. Yeah. Goldy, that was a fantastic conversation. And I find myself nodding in agreement with almost everything Acemoglu says. But with one caveat, at some point, it would be fun to press a little harder on the role that economics played in this debacle.

Goldy:

I think he acknowledges it, and I think it’s consistent with the feedback loop that is described in Why Nations Fail, that political inclusion feeds economic inclusion and economic inclusion feeds political inclusion. And when you break one of those-

Nick Hanauer:

Yeah.

Goldy:

Well, that’s when nations fail.

Nick Hanauer:

Right.

Goldy:

Because you undermine both democracy and the economics that creates broad support for democratic institutions.

Nick Hanauer:

That’s right.

Goldy:

And that’s what we’ve seen. The fact that he’s coming back to this issue is not … and in somewhat a more less theoretical, more practical way in his new book, I think is an indication of how existential he views this threat to be.

Nick Hanauer:

Yeah, absolutely. Which it clearly is.

Goldy:

But not without solutions. I mean, we can do things to fix it and they are hard, but we’ve done hard things in the past as a nation.

Nick Hanauer:

We have. Usually only when we’re in a complete panic.

Goldy:

When faced with existential crises, but we did it with the New Deal. That was hard. Much of the rest of the world was going totalitarian. It was going fascist or communist. And we found a path to save both democracy and market capitalism by remaking our institutions. We fought an existential war in the Second World War, and we were able to come together as a nation, even though going into that war, there was majority opposition to getting involved in another World War. And we did it in a way just the extraordinary economic power of this country just suddenly marshaled towards war production in …

If you ever go back and you look at the numbers, like the number of airplanes produced in 1940 versus the number in 1943, it’s astounding. It’s just astounding what we were able to do when we put our minds together as a people, as a nation and actually did it. And it reminds me of that great quote from John Maynard Keynes where he says, “Anything we can do, we can afford.”

Daron Acemoglu:

Yeah.

Goldy:

When people say we can’t afford to address this crisis because the gap is just so big, we can’t afford to provide Medicare for all, or whatever you want to call it, provide every American access to affordable healthcare or housing or education or childcare or elder care. These are the things, the basic costs of a middle-class life that have been going through the roof much faster than inflation over the past 50 years as incomes have been flat. Well, we can afford to do those things. If they can be done, we can afford them.

We can’t afford to address climate change. It’s too expensive to build, to transform our energy systems to … Well, yeah, it can be done. We know technically how to do it. We could marshal our forces to do it if we wanted to. So you know me, Nick, I’m a pretty gloomy person. I think Daron sounded pretty gloomy himself, but I like to call myself … I describe myself as a cockeyed pessimist. Speaking of clean energy, I see no shame in tilting at windmills.

Nick Hanauer:

Yeah. No, for sure.

Goldy:

Generally, it’s futile and hopeless, but occasionally you knock one over. And a good example is a pet issue of ours, the $15 minimum wage.

Nick Hanauer:

For sure.

Goldy:

Not only did we pass that in Seattle, but that helped change how everybody thinks about the minimum wage and higher minimum wages have been passed in cities and states around the nation, including red states. So when he talks about changing the mindset of Silicon Valley, we helped change the mindset of America about that so-called inverse relationship between wages and employment-

Nick Hanauer:

So it can be done.

Goldy:

It can be done. It’s possible.

Nick Hanauer:

It’s just hard.

Goldy:

It’s hard and maybe unlikely, but it’s possible. And that’s why we continue to do this podcast. Did I talk us into being confident, Nick? Are you optimistic now? I don’t know. Anyway, if you want to read more from Darren, we will provide a link to his book in the show notes. What Happened to Liberal Democracy: Remaking a Politics of Shared Prosperity. It is actually out in bookstores right now, released today. You can get it at that big online monopolist or at your favorite local independent bookstore.

Freddy:

Pitchfork Economics is produced by Civic Ventures. If you like the show, make sure to follow, rate, and review us wherever you get your podcasts. Find us on other platforms like Twitter, Facebook, Instagram, and Threads @pitchforkeconomics. Nick’s on Twitter and Facebook as well @NickHanauer. For more content from us, you can subscribe to our weekly newsletter, The Pitch, over on Substack. And for links to everything we just mentioned, plus transcripts and more, visit our website, pitchforkeconomics.com. As always, from our team at Civic Ventures, thanks for listening. See you next week.

The post What Happened to Liberal Democracy (with Nobel Prize-winning economist Daron Acemoglu) appeared first on Pitchfork Economics.

What Happens When the Other Washington Stops Enforcing Antitrust? (with WA State Attorney General Nick Brown)

Freddy Doss — Tue, 04 Aug 2026 16:20:20 +0000

Paramount Skydance wants to merge with Warner Bros. Discovery in a $111 billion deal that would put even more of Hollywood—and two major newsrooms—under one corporate roof.

Washington State Attorney General Nick Brown joins Nick and Goldy to explain why a coalition of states is suing to stop it, how they forced Paramount to pause the merger, and why state attorneys general are increasingly stepping in as the federal government retreats from antitrust enforcement. They also discuss the successful fights against Live Nation–Ticketmaster and Kroger–Albertsons—and what happens when corporations become powerful enough to escape competition.

Nick Brown is the Attorney General of Washington State.

Social Media:

@atg.wa.gov

@AGOWA

Further reading:

Washington Post – Washington state is suing Paramount. Here’s why.

Check out THE BILLIONAIRE AGE on IDEAS

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Threads: pitchforkeconomics

TikTok: @pitchfork_econ

YouTube: @pitchforkeconomics

LinkedIn: Pitchfork Economics

@elizabethwwilkins.bsky.social

Substack: The Pitch

Nick Hanauer:

The rising inequality and growing political instability that we see today are the direct result of decades of bad economic theory.

Goldy:

The last five decades of trickle-down economics haven’t worked, but what’s the alternative?

Nick Hanauer:

Middle out economics is the answer because the middle class is the source of growth, not its consequence. That’s right.

Announcer:

This is Pitchfork Economics with Nick Hanauer, a podcast about how to build the economy from the middle out. Welcome to the show.

Nick Hanauer:

Goldy, these days, corporate mergers always come with the same sales pitch, right? It’s going to be better for everybody. When we get bigger, we’re going to eliminate duplication, unlock efficiencies. Consumers are going to benefit, workers are going to benefit, everybody’s going to benefit, but those promises have never, ever come to pass. And now Paramount wants to merge with Warner Brothers Discovery in a $111 billion deal, which combines some of the most important news channels in the world and et cetera.

Goldy:

Yeah, give Barry Weiss control of CNN too.

Nick Hanauer:

Exactly.

Goldy:

That’s great for American democracy. Because it took her no time to destroy CBS News.

Nick Hanauer:

That’s right. Yeah.

Goldy:

She’s got plenty of time on her hand now.

Nick Hanauer:

Exactly. And the wonderful Ellisons.

Goldy:

The Ellisons, yeah.

Nick Hanauer:

Anyway, these promises are consistently untrue. And of course, given that if there’s a dumb thing to do, they will do it, the Trump administration’s Justice Department has backed away from preventing this merger. And I guess to my surprise, a whole bunch of states got together, including our own Washington State, to oppose this merger, which I think is incredibly exciting because it gives you hope that all is not lost when it comes to these things.

And today we get to talk to Washington State’s Attorney General, Nick Brown, who has joined in a multi-state lawsuit to block this about the work that they’re doing with other states and why they’re doing it and how they’re doing it and so on and so forth. It’s very timely and very interesting.

Goldy:

Right, right. Especially timely on the heels of not only filing the suit, getting the temporary injunction they asked for, and reaching an agreement with Paramount to actually put the merger on pause until at least June, unless they come up with some agreement beforehand. So let’s talk to Nick and find out how that happened.

Nick Hanauer:

Yep.

WA Attorney General Nick Brown:

My name is Nick Brown. I’m the Washington State Attorney General, and I have nothing to plug today other than the great work in this office.

Goldy:

Unusual for a guest on this pod.

Nick Hanauer:

Yeah, but you have something to plug, which is you wrote in the Washington Post recently that our state, Washington, is suing to block the Paramount Skydance Warner Brothers Discovery merger, whatever it is, this giant thing. And listeners of this podcast are acquainted with our views on corporate consolidation, that it is most generally bad, but why don’t you just kind of explain to the listeners what you’re doing and why you’re doing it?

WA Attorney General Nick Brown:

Yeah, we were happy to co-lead this case going against Paramount and Warner Brothers for their proposed $110 billion merger that essentially would take two of the five largest movie producers in the country and merge it into one entity. We worked on this case with California as the lead and 10 other states to challenge this action. And we did so because the Department of Justice refused to take any action against this type of merger.

And in broad strokes, we’re challenging three aspects of the proposed merger, two which impact the theater and movie distribution against mega high distribution films. And then the other aspect is around the merger that would impact basic cable channels. And we did so because it reduces competition, it reduces choices for consumers, has an impact on the workforce and looked to us like a violation of the federal antitrust laws.

Nick Hanauer:

Can you start by telling us, and I may be the only person surprised, tell us more about states having the standing to challenge this? Because I naively thought that if the federal government gave up, that was that. But apparently this is not true.

WA Attorney General Nick Brown:

Yeah, it’s definitely not. And increasingly you’re seeing states step into this enforcement role on a much larger scale than they had. But this has been a part of many state attorney general’s offices for many years now, including Washington State. We have one of the most successful and robust antitrust divisions in the country because we have taken action to counter both mergers that are happening in our state, so only with Washington State companies, and also against mega mass corporation mergers on a national level. And so we have standing because we advocate on behalf of consumers in our state, both on state and federal grounds.

So in this case, this proposed merger, even though it doesn’t involve corporations that are based here in Washington, it would undoubtedly have an impact on Washingtonians, both consumers and our workforce here that work in this industry. And that gives us standing because of the harm to that class of people and that group of people. And so in this particular case, we’re filling in the void of the Department of Justice to enforce federal antitrust laws, but there are also cases where we’re doing actions purely on state law.

Nick Hanauer:

Interesting. Now, of course, the folks who want to merge, they’re making these arguments, this is going to be better for everybody. It’s going to be better for creators. It’s going to be better for consumers. It’s going to-

WA Attorney General Nick Brown:

Everybody wins, right?

Nick Hanauer:

Everybody wins. But there is effectively an overwhelming amount of evidence that that is not likely to be true.

WA Attorney General Nick Brown:

Yeah, absolutely. I mean, first, let’s put aside this case specifically. In general, when you merge leading players in any given industry, what almost undoubtedly happens every single time is that they reduce competition, prices go up, and the people in the respective states bear the brunt of those mergers.

In this particular industry, we don’t have to look too far back to see other mergers that happened that had a negative impact on consumers. When Warner Brothers and Disney were merging, they made the same sort of promises that we’re hearing now. They went from producing 12 to 15 unique new movie theatrical releases every year down to a third of that about. We also saw the impact on the workforce. And so you see this in history throughout many different industries, way going back to our founding as a country when we went through the industrial revolution and these corporations merge and the competition decrease, this impacts all of us. And in this industry, we’ve seen it in real time.

And so look, I don’t want to downplay the complexity of this case or the challenge that we have as states. This is not an easy lift to bring this type of action, but it is important that we do it because the claims that Paramount and Warren Brothers are making just aren’t borne out by the facts. And our research and our experts that we have retained as states in this case point a very different picture.

Nick Hanauer:

Yeah.

Goldy:

Shortly after this case was filed, Paramount Skydance announced that they would postpone the merger until June. Were you surprised that they acted so quickly to do that? Or was that always the expectation that filing the case would put a pause in the proceedings?

WA Attorney General Nick Brown:

Well, they didn’t act independently. They acted because we brought this case. And so we felt very confident as a group of states that we had a compelling case to bring, that we had a compelling story to tell across the country and the strength of our coalition and our team that were working on this case. We felt very good about that case. But as Nick was just highlighting, Paramount was posturing about their case and really trying to say that our claims had no basis in law. And I think the opening line of their opposition to our complaint and moving for a temporary restraining order was something like this is the weakest case they’ve ever seen, and the judge rejected that. And so getting that initial TRO, temporary restraining order was very important for us because the judge found quite clearly that we had made a strong showing that this violated monopoly laws.

And so winning that TRO was important. And once we won that initial TRO, I was, I guess on the outside, because I’m not one of the line lawyers, I was surprised how quickly that we were able to reach a resolution, but it was because of the strength of our case. And we’ve got a long fight ahead of us, but our current status is they have agreed to postpone the merger until June or if the judge rules more quickly on the case. And so in all likelihood, we will have some initial resolution before that June timeframe, but it definitely slows us down and forces the company through a lot more rigorous process of review.

Nick Hanauer:

And so where will the Paramount case be heard?

WA Attorney General Nick Brown:

It’ll be in federal district court. So we filed in the Northern District of California with a federal judge there. Again, with California being the lead state on this, and Washington playing a significant role, we want it to be on the West Coast and filing in California is the appropriate venue for that. So that will be where the merits of the case decision are made. And then depending on who prevails and who loses, we’ll see what happens after that.

Nick Hanauer:

And so this action comes as a consequence of effectively the collapse of the federal government’s willingness to enforce antitrust.

WA Attorney General Nick Brown:

Yeah, absolutely. I mean, it is one of the many, many sad consequences of this current administration. And I think oftentimes we focus on other things that are also pressing, the immigration enforcement issues, some blatant corruption that I think is coming out of this administration. We don’t often talk about is all these other areas where states have really partnered with the federal government to lead on protecting people in our states. We’re talking about consumer protection issues, certainly environmental protection, one that is near and dear to me, civil rights protection, and antitrust is part of that list. And these are areas where the federal government has taken the laboring oar for decades now across multiple administrations because of the expertise and resources that the federal government can bring to bear on a case.

And traditionally, Attorney General’s offices have not had those internal resources to certainly lead a case like this independently. We’ve seen that change. But in this particular area, the DOJ Civil Rights Division has been depleted, but so has the Antitrust Division. And they had a rigorous champion for antitrust leading that work in the beginning of the Trump administration second term. And by all accounts, she was largely forced out from her leadership position and from the department altogether because she did not agree with the very, very business-friendly, merger-friendly policies of this administration. And so once we saw that signal early on in this Trump term that this expert who was not a Democrat by any means, but an expert in antitrust enforcement was being forced out because of her advocacy, it became very clear that the Department of Justice was not going to be a trusted partner when it came to antitrust enforcement. And so into that void, states have really stepped up.

And the best example of that early on this year was on the Live Nation Ticketmaster case. This is a company that has a true monopoly over a live musical and other productions, both on the concerts and also the venues that operate these concerts. And we had worked in partnership with the Department of Justice for many months as they were leading this multi-state bipartisan case, but they kept us in the dark in terms of how they were negotiating. And they cut a very favorable deal for Live Nation Ticketmaster. And the states to their credit refused to accept that. And this was a rare example of true bipartisan partnership among state attorney generals. We were in that case along with Tennessee and some other Republican-led states, and we continued to take that case to trial and we won and we prevailed and convinced a court that what the Live Nation Ticketmaster was doing was unlawful and harmful to consumers. And so at the end of the day, we’re going to get a much better result for consumers and lower ticket prices and more options.

So because the federal government is acquiesced, it’s us.

Nick Hanauer:

Yeah. Can you tell us a little bit more about where that is headed, the Live Nation thing?

WA Attorney General Nick Brown:

Well, we won on the merits. The court found that, in fact, the allegations that we were making about the monopolization of this market was true, and now we’re going to litigate the remedies phase. And so that is both a financial penalty to Live Nation, and we are advocating for a breakup of certain parts of their business. They control most of the large concert venues in Washington state, including The Gorge, including other areas. And so what we are pushing for is a divestiture of some of those entities as well as part of the remedy. Because importantly, small business venues really, really get harmed by mass corporations over this industry. But we’re going to fight about these remedies in the coming months.

Nick Hanauer:

So for those of us who don’t understand how this unfolds legally, you won on the merits of the case, and then you litigate the remedy. How does that work?

WA Attorney General Nick Brown:

Well, sometimes they happen at the same time, but it’s very similar to a criminal case. You determine whether the person is guilty or innocent, and then the judge determines what’s the right punishment. In civil cases, sometimes they happen at the same time, but for a very big complex case like this, the judge first has to determine, did this company break the law as we alleged? And then if they broke the law, then you sort of present what the right remedies and penalties should be. And that’s monetary penalties and other prohibitions on their business operations and that kind of thing.

Goldy:

That’s the Live Nation case. In terms of this suit, I assume the goal is to just block the merger or is there some other-

Nick Hanauer:

That’s where I was headed to, yeah.

Goldy:

… in between state that you might come to terms with?

WA Attorney General Nick Brown:

Our principal goal is to block the merger. We think the merger as proposed is harmful to consumers at the end of the day and violates the anti-competition laws in the United States. In theory, the parties could negotiate something different than the merger that’s on the table. And Paramount could say as an alternative, that certain aspects of the business that they were proposing to merge aren’t going to be merged in the same way, but there’s a lot of different iterations of that. But our argument is the merger that they have proposed that they are trying to sell as pro-competitive is not in fact pro-competitive and it’s harmful and violates the law.

Goldy:

So obviously the Justice Department has enormous resources much more than any state AG’s office. But until a functional democracy is reimposed in the other Washington, it looks like it’s up to the AGs in terms of enforcing antitrust? I mean, with the exception of, let’s say if Trump really doesn’t like a CEO at a corporation, then they might try to block a merger. But that aside, since they all seem willing to pay him off, I’m curious when you work with other AGs in other states, you’re obviously spreading the work and spreading the cost together with other states. Do you have the sort of resources to combat these giant corporations in a same way or at least similar to the Justice Department?

WA Attorney General Nick Brown:

Well, a few things. I think first, the Live Nation Ticketmaster is a great example of how the states have power in this field. When the DOJ cut and run, we did not. We stood strong and advocated on behalf of our residents of our states. Washington could not have done that independently in a case of that size and complexity. And Paramount is the same way. This is going to be a complex fight with a lot of experts, economists, and market analysts and that kind of thing. And it would not be a good use of our time or resources to try to do this case independently. But with a coalition of a dozen states, we can bear that burden and we think it’s worth the cost.

And in this particular case, we’re talking about some of the larger, more sophisticated AG’s offices. California is the biggest law firm on the West Coast. Washington is second to California in terms of its size and capacity. But having them in a leadership position very much helps. But we also have New York and other states who are part of the team, and so we are going to share both those legal resources and the financial resources that we need to bear on this case.

And increasingly, you’re seeing more states recognize this moment and recognize the leadership position that states should have. Oregon, just to our south, has had traditionally only a couple of lawyers in their antitrust division, but their legislature just allocated funding for 16 new positions, both lawyers and staff and analysts. So they’re going to grow substantially. And Washington already has a pretty sizable antitrust division here that we have grown over the last 15 years. And more states are seeing the bang for the buck.

It’s interesting, it’s one of those rare bipartisan things. Most people don’t like big corporations controlling things. Most people like small businesses, they want more options. And so you’re seeing some bipartisanship on this particular area and people seeing the value of states being engaged.

Goldy:

So for the near future, this is the future of antitrust enforcement in the United States. It’s up to the individual states banding together.

WA Attorney General Nick Brown:

Well, look, I mean, the Department of Justice still has an antitrust division. They still bring cases. We try to partner in good faith with them where we can, but I would just say there’s a healthy amount of skepticism to put it mildly. And it used to be we could trust them. We could trust that they would lead and had our interests at heart, and-

Nick Hanauer:

And actually cared about the issue.

WA Attorney General Nick Brown:

Yeah. And I mean, the president is very explicit. He likes big corporations, he likes mergers, he’s pals with all these CEOs. This is right in his wheelhouse. He likes this thing. And just despite the harm that it causes for people. So I haven’t given up all hope, Goldy, but I’m skeptical.

Goldy:

He likes the idea of David and Larry Ellison doing to CNN what they’ve already done to CBS News. I know that’s not explicitly part of your case, but I’m sure that’s part of the motivation of this merger.

WA Attorney General Nick Brown:

Well, yeah, I won’t speak for Paramount’s motivations. For the states, it was what is the impact and harm to our people? And that’s nothing to do with whatever relationship the president has. But certainly I think from Paramount’s perspective, being cozy with the president helped and that helps a lot of companies.

Goldy:

I’m a little concerned that a $110 billion merger financed by $86 billion in debt is not going to turn out well for the employees at Warner Brothers when they decide they need to cut costs in order to meet their debt payments.

WA Attorney General Nick Brown:

Yeah, I mean that’s more down in the weeds than most people see. But the fact that they took on this exorbitant amount of debt and are still promising that people aren’t going to be harmed by it, that workers are still going to have their jobs, that’s just not math. The math’s not mathing as kids say these days. That’s just not the way it works. Somebody’s got to pay that price and bear that burden, and that is almost always going to be the line workers, the new employees, the younger people in particular.

And that’s not just in California, that’s across the country. Washington has a small but important industry here and movie theaters require more content to put out. And more and more content is available on streaming, but that’s not what movie theaters do. They rely on new original content and the staff and workers behind that work.

Nick Hanauer:

Interesting. And you may not be able to say, but are there other opportunities for this sort of collaborative work? Is there other stuff that you guys are collectively looking at?

WA Attorney General Nick Brown:

Well, I think there’s all kinds of possibilities. I mean, I think across many different market sectors, we’re seeing a lot of consolidation. And this work is not new for us. Most importantly, in the last year plus, we prevented the merger of Kroger and Albertsons. Same ideas, same consolidation of a particular industry. In that one in particular, we could point to the real devastating impact on the people working at these grocery chains. And that was specific to here in Washington State, but it prevented a multi-billion dollar merger. And so there’s more of that kind of thing in the future.

Nick Hanauer:

Okay. So I’m embarrassed to admit that I lost track of that merger because I remember when it was in the news.

WA Attorney General Nick Brown:

Yeah, we won.

Nick Hanauer:

Oh, that’s incredible.

WA Attorney General Nick Brown:

And Kroger and Albertsons are now fighting with each other about whose fault it is. So there’s more litigation ahead, but we won on the merits. And that was a really important case for us on a lot of different fronts.

Goldy:

Right. It would’ve been pretty devastating in Seattle where the two largest supermarket chains are Safeway, which is Albertsons, and QFC, which is Kroger, well, QFC and Fred Meyer, which is Kroger, and to have that type of merger would’ve really reduced competition in that industry. So it was great to see the victory there and blocking that.

WA Attorney General Nick Brown:

Yep. We’ve got a team that’s looking at things all the time, and a lot of our work is driven by what people are seeing in their community. They’re worried about all kinds of mergers. And we do the same sort of review in a different context, but hospital consolidation is something that we’re concerned about because of the impact on healthcare deserts and there’s other areas like that. So we’re not going to back up from this work.

Goldy:

So this raises another question. Obviously blocking these mergers to prevent even more consolidation is a great thing. And it’s wonderful to see the AG’s offices across these states working together to fill that void that’s been left by the Justice Department. What about addressing the concentration that already exists? Is there any role at the state level for trying to force some of these giants to break up?

WA Attorney General Nick Brown:

It’s much harder in general to break up an existing company rather than stop a proposed merger. It doesn’t mean that antitrust laws are not relevant once a company has combined, but it is harder to attack that. But there are a few companies that we’ve taken a look at where we’ve seen this consolidation, but I have to say it’s a heavier lift in general to do.

At the same time, antitrust is one of the tools that we have. The other for us is our Consumer Protection Act laws that we enforce. And so oftentimes when you see these big corporations merge, you also see an increased level of consumer protection violations because there’s less scrutiny from their competition and they get to control larger portions of the market. And so we have dozens of cases going on right now in the consumer protection space against some of these corporations that have been subject to mergers.

Goldy:

I’m curious about you personally. Obviously the AG is essentially the state’s attorney. Right? You represent the state, you represent all the officers. That’s I think traditionally, primarily what an AG was understood to be. Did you go into this when you ran for office conscious of the fact that you would be stepping into the world of antitrust enforcement in the large way you’re doing now?

WA Attorney General Nick Brown:

Well, yes and no. I mean, I wear two hats. The office has two principal roles. We are the lawyer for state government. We represent every state agency, board and commission, big and small. That makes us large in and of itself because not every state is structured that way. We have 840 lawyers roughly who work here. New York has about 900 because their laws don’t give them principal authority over all state agencies. But that’s one big bucket of our work and it’s the biggest, our client work. But I have a separate constitutional authority to be the advocate for the people of the State of Washington by law under consumer protection, antitrust, civil rights, environmental protection. And I get to sign my name on these cases on behalf of eight million plus Washingtonians.

And so I knew that coming in. In some of these areas, I certainly hoped that we would be doing it in partnership with the federal government and letting them lead on many of these areas. And again, for me, the erasure of their civil rights division breaks my heart. I mean, I grew up professionally in the Department of Justice. I was a line prosecutor and the U.S. attorney. I have a lot of respect for the legacy that they’ve created, but they have reverted from those core responsibilities down to the bare bones. I did not anticipate necessarily that we would be leading the charge and the absence of the federal government against some of these things. But on many different issues, I could not certainly imagine being in any other position because our leadership individually and collectively is so important.

And so taking on Paramount was not something I would’ve predicted when I was running. Another case that we just won and important in an early verdict is we run a preliminary injunction motion against Kalshi, one of the two large prediction markets in the United States because they’re violating Washington state laws.

Nick Hanauer:

Right. Tell us more about that.

Goldy:

Online betting.

WA Attorney General Nick Brown:

Yeah. I mean, look-

Nick Hanauer:

Yeah, I’ll tell you a story. I am indirectly an investor in Kalshi.

WA Attorney General Nick Brown:

Sorry for your loss.

Nick Hanauer:

No, no, no, no, no. I got to tell you this story. So I’m not sure if I’ve told on the pod before, but very good friend of mine who’s the founder of the venture firm that made the investment asked me to meet with these guys to help them talk through regulatory challenges when the company was first founded. I had no idea what it was. I’ve never heard of it. Then I’m like, “Yeah, sure. I’m happy to talk to these guys.”

So we get on this Zoom call and they outline their business model to me. And I was like, “You’re going to do what?” And they’re like, “No, it’s going to be great. You’re going to be able to bet on everything.” And I’m like, “How is that good for the world?” And they’re like, “Well, business people can bet on whether their prices are going to go up.” I’m like, “What proportion of the human population has the kind of advanced statistical training to be able to appropriately make a wager like that?” It’s 0.1%. Everybody else is just getting conned.

Goldy:

That’s the business model.

Nick Hanauer:

Exactly.

Goldy:

What don’t you get about gambling? It’s like casinos, 95% of the profits.

Nick Hanauer:

You should not do this. This is a terrible idea.

WA Attorney General Nick Brown:

Yeah, so let me just say a few things. For better or worse, whether you like it or not, Washington has a very regulated gaming marketplace. In particular for sports gambling, it’s very regulated and limited. And every state’s a little bit different, but Washingtonians have decided that we are going to limit the expanse of gaming to a very narrow sector of our community. So that’s first and foremost. My job is to enforce Washington law.

Kalshi is breaking the Consumer Protection Act of Washington State and our state gambling laws by offering these bets. And look, I love sports. I like to gamble. I used to go to Vegas and bet on things. But that’s not just what they’re doing, and they can literally bet on everything. And so one, they’re breaking Washington State law in a way that I think is harmful. But two, I think, Nick, to your original point, there’s something very corrosive about what they’re doing.

Nick Hanauer:

It’s a corruption machine. Right.

WA Attorney General Nick Brown:

Oh, yeah. Well, it’s a corruption machine because there’s the insider knowledge. I mean, Trump’s teleprompter operator just got in trouble because he was betting on the length of the president’s speeches and content. The person doing it was betting on it. But also earlier this year, they had a market where people could bet on the number of measles cases that were going to happen in Washington State and the number of hospitalizations. They currently have a market right now where you can go and bet on the extent of wildfire damage in various locations. There’s something gross about that.

Goldy:

That seems like an incentive to set wildfires.

Nick Hanauer:

Correct.

WA Attorney General Nick Brown:

It seems like a bad idea. And look, I’m not the morality please for Washington State. I enforce Washington state law, and that’s what we’re doing in this case. But me in my personal capacity, there is something really unnerving and I think troubling about our community, our country, if this is flourishing.

Nick Hanauer:

That’s right. Deeply immoral and corrupt. It’s terrible. It’s just more monetizing humanity’s deepest vulnerabilities, right?

WA Attorney General Nick Brown:

Yep. I really think so.

Nick Hanauer:

Listen, Nick, congratulations on all this work. It’s really exciting.

WA Attorney General Nick Brown:

Thank you.

Nick Hanauer:

Thank you on behalf of all of us for digging in and trying to prevent some of this bad stuff. And it’s really super interesting and frankly, a little bit of sort of surprising for those of us who are not deeply involved in.

WA Attorney General Nick Brown:

We really have some tremendous public servants who work here and almost 2,000 employees in this office, lawyers and staff, and they’re doing work every day on behalf of the public and they don’t get the credit they deserve. So I stand with them on the work that they’re doing and it’s fun. This job is so much damn fun, I couldn’t imagine doing anything else.

Nick Hanauer:

Will it be possible to reconstitute a proper Department of Justice?

WA Attorney General Nick Brown:

Yes, it will be. It is not going to be easy. I think it’s going to take a few different iterations of leadership and administrations.

Nick Hanauer:

It’ll be years, won’t it?

WA Attorney General Nick Brown:

It will be years. What I’d like to see happen, and I think that the thing that Trump and the Trump era has most sort of revealed to me in terms of government is that for many, many years, maybe since our founding, we assumed that the goodwill of mankind would help keep in place some safeguards and protections. And that could be articulated through policies or practices or customs in various agencies. And what Trump has shown is that someone without a moral core or anything beyond his own narcissism makes that all a fallacy.

And so what I think that we need to do at a bare minimum is to put into law some of the protections that we just assumed would never happen. I would start with, you can’t be the Attorney General of the United States of America if you’ve been the president’s personal lawyer in the last 10 years or something like that. Just put it into law that you can’t do that. There are things like that.

And even for people who I used to work with who are looking at DOJ with a lot of anger and sadness, there’s still some reluctance, I think, to put into statute some of these norms and customs. But I think we need to. I think we need to institutionalize in a way that makes it harder to reverse. I mean, laws can be changed, but if you put into statute these sort of basic things and there’s a whole laundry list of them, I think we’ll be in a much better place.

Nick Hanauer:

Yeah. Okay. One final question. Why do you do this work?

WA Attorney General Nick Brown:

It’s I think what I am best suited to do. Both my parents were public servants. They always really did push me to care about what’s happening in the community. I mean, I was that kid running for student government when I was young, and it’s always this called to me. And it’s fun to come to work every day and to do things that really matter and are having an impact and that never gets boring. And right now this role is sort of a manifestation of my prior experiences and I think just what I was pushed to do since I was a kid.

Nick Hanauer:

That’s great. That’s great. Well, thanks for what you do, and thanks for being with us.

WA Attorney General Nick Brown:

I appreciate you both. Thank you for having me on.

Goldy:

So Nick, since Trump won reelection, I have been writing on social media and talking about something I call soft succession. Other people use that term as well, which really describes a devolution of powers that we typically have left to the federal government to have and to enforce and leaving them to the states to do. And I think this is a really good example of states stepping up, filling the void and using their collective resources to help enforce, in this case, antitrust law, not just in the Paramount Skydance Warner Brothers merger, but as Nick talked about also in the Live Nation case. And I think it’s a really important development, not just politically of course, but also economically because when you look at things like antitrust, it can have such a huge impact, not just on employees and consumers, but on the economy as a whole.

Nick Hanauer:

Right, right. No, it’s very exciting and hopeful that the states can intervene and win in these cases, absent support from the federal government. Although it is just a profound shame that we need to use our resources in this way. There are so many other things.

Goldy:

You do. These are the circumstances we’re in. And to be clear, when we talk about something like the entertainment industry, if people just diss it as, oh, who cares how many movies are being made or who’s making them or who’s distributing the TV shows, you are missing one of the greatest economic forces of the U.S. economy over the past hundred years. The U.S., just financially, as an exporter of entertainment content, of TV and movies and music is just enormous and overpowering. But also it turned us into a cultural power. The U.S. culture has been dominant worldwide since World War II because of this industry.

And it’s amazing, it happened in California. That was the first time California kind of revolutionized the economy by creating this global power, this global cultural and economic power. They did it a second time in Silicon Valley with the tech revolution. Again, just enormously important to our economy and our ability to export not just our goods and services, but again, our soft power and our culture.

And it’s kind of maybe happening again in a very scary way with AI, which is a new industry that connected to tech and connected to Silicon Valley, but has huge, not just financial, but again, cultural implications, both for the U.S. and for the entire world. And if we’re going to let clearly the federal government, again, you look at AI, they want nothing to do with regulating it and preventing harm to consumers or businesses or the environment in the case of the data centers. It’s up to the states.

And so we’ve argued as a big part of our economic theory of the new economics of market humanism, that there is a legitimate and necessary role of a functional government to regulate the economy in a market economy to constrain the worst impulses of market capitalism in order to ensure competition and in order to assure an equitable distribution of economic gains. And if the federal government is not going to do that and the states can’t step in, then that’s going to result in not just less competition, but slower growth and more inequality.

So it seems odd to talk to a state attorney general on an economics podcast, but if you think about how market economies really work, in this moment, in this historical moment, it’s absolutely necessary for AGs like Nick Brown to be there and taking a very proactive role.

Nick Hanauer:

Yeah. In helping shape markets in ways that will benefit people broadly rather than just Larry Ellison.

Goldy:

That’s right. That’s the role of government is to provide a countervailing power against super rich sociopaths like the Ellisons.

If you want to hear more from Nick Brown and his thoughts on this, we will provide a link in the show notes to his op-ed in the Washington Post.

Nick Hanauer:

Hey gang, if you like Pitchfork Economics, I recently joined a four-part IDEAS documentary series called ‘The Billionaire Age’ about how extreme wealth is shaping our economy and democracy. Free episodes are out now and we’ll include a link in the show notes. Please take a listen.

Freddy:

Pitchfork Economics is produced by Civic Ventures. If you like the show, make sure to follow, rate, and review us wherever you get your podcasts. Find us on other platforms like Twitter, Facebook, Instagram and Threads @PitchforkEconomics. Nick’s on Twitter and Facebook as well @NickHanauer. For more content from us, you can subscribe to our weekly newsletter, The Pitch, over on Substack. And for links to everything we just mentioned, plus transcripts and more, visit our website, pitchforkeconomics.com.

As always, from our team at Civic Ventures, thanks for listening. See you next week.

The post What Happens When the Other Washington Stops Enforcing Antitrust? (with WA State Attorney General Nick Brown) appeared first on Pitchfork Economics.

The Good Life Economy (with Elizabeth Wilkins)

Freddy Doss — Tue, 28 Jul 2026 15:02:36 +0000

What is the economy for — GDP, corporate profits, or people?

This week, Nick and Goldy talk with Elizabeth Wilkins, President and CEO of the Roosevelt Institute, about Roosevelt’s new Good Life Agenda and why so many old assumptions about markets, government, and growth are suddenly up for grabs. It’s a conversation about human flourishing, public power, and what democracy has to deliver if people are going to believe in it again.

Elizabeth Wilkins is the President and CEO of the Roosevelt Institute. She previously served as Chief of Staff to the Chair and Director of the Office of Policy Planning at the Federal Trade Commission. She has also held senior roles in the White House and the Office of the Attorney General for the District of Columbia, clerked for Justice Elena Kagan and then-Judge Merrick Garland. She began her career as a labor organizer with SEIU 32BJ. She is one of the authors of Roosevelt’s new report, The Good Life: An Agenda for Fuller Lives, a Stronger Economy, and Renewed Trust.

Social Media:

@ewwilkins

Further reading:

The Good Life: An Agenda for Fuller Lives, a Stronger Economy, and Renewed Trust.

Instagram: @pitchforkeconomics

Threads: pitchforkeconomics

TikTok: @pitchfork_econ

YouTube: @pitchforkeconomics

LinkedIn: Pitchfork Economics

This episode originally aired April 2, 2024.

Substack: The Pitch

Nick Hanauer:

The rising inequality and growing political instability that we see today are the direct result of decades of bad economic theory.

Goldy:

The last five decades of trickle-down economics haven’t worked, but what’s the alternative?

Nick Hanauer:

Middle-out economics is the answer.

Goldy:

Because the middle class is the source of growth, not its consequence.

Nick Hanauer:

That’s right.

Announcer:

This is Pitchfork Economics with Nick Hanauer, a podcast about how to build the economy from the middle-out. Welcome to the show.

Nick Hanauer:

Goldy, it’s so interesting how you can just watch, if you’ve been at this for as long as you and I have been at it, how things change, how people’s views change, how the collective common sense evolves. Today, we’re talking to our good friend, Elizabeth Wilkins, who is President and CEO of the Roosevelt Institute about their new Good Life Agenda.

Goldy:

By Good Life Agenda, they don’t mean your life-

Nick Hanauer:

No.

Goldy:

… which is flying around the world, in yachts, and yeah.

Nick Hanauer:

No, but they mean a normal good life agenda. The thing that really struck me about it was that it’s anchored by a foreword by Paul Krugman, who is a brilliant, but it’s safe to say, pretty orthodox economist.

Goldy:

Well, he defines himself as neoclassical. We’ve had him on the pod. That’s how he thinks. He is obviously very progressive, but he is an orthodox economist.

Nick Hanauer:

Yeah. His foreword to The Good Life Agenda is centered around the proposition that the purpose of the economy is, doesn’t use exactly these words, but human flourishing as what we’re committed to in marking humanism.

Goldy:

To improve people’s lives.

Nick Hanauer:

Yes. Not GDP for the sake of GDP. The Good Life Agenda embraces that sense of the purpose of the economy and fills out the picture of what it takes from a policy perspective and an intervention perspective to do that. It’s so interesting because it’s just not what we would’ve seen 10 years ago.

Goldy:

We’re not saying that Krugman used to be opposed to the good life.

Nick Hanauer:

No, no, no, no, no, no, no.

Goldy:

We’re saying he…

Nick Hanauer:

This is not the language he would’ve used-

Goldy:

Yes.

Nick Hanauer:

… to talk about economics-

Goldy:

Yes.

Nick Hanauer:

… what the purpose of economics is.

Goldy:

That’s right.

Nick Hanauer:

We are definitely in this moment where people are coming to terms with the fact that they’ve been sold the bill of goods, and that we need to fundamentally change our approach-

Goldy:

Right.

Nick Hanauer:

… to economic policymaking, and democracy, and a whole bunch of other things. For that reason, I am very excited to talk to our friend Elizabeth who has been at the center of economic policymaking for a really long time, not just at The Roosevelt Institute, but in various administrations, and so on, and so forth.

With that, let’s talk to Elizabeth.

Elizabeth Wilkins:

Hi, my name is Elizabeth Wilkins. I’m President and CEO of The Roosevelt Institute. We just put out our Good Life Agenda, which I’m very excited to talk about.

Nick Hanauer:

That’s fantastic. What I was really struck by was Paul Krugman’s foreword because he was all, the economy isn’t about GDP, it’s about welfare, which is beautiful.

Goldy:

He doesn’t use the term human flourishing-

Nick Hanauer:

I guess.

Goldy:

… but improving people’s lives.

Nick Hanauer:

Yeah. I know Paul’s been on our side for a really long time, but I believe that that is movement. That’s a change from before. Obviously, your report fully embraces that, but it’s just interesting to hear from a pretty serious economist.

Goldy:

From an economist, yeah. It’s not like he never supported improving people’s lives. Obviously, that was his life goal. That’s just not the language he used.

Nick Hanauer:

Yeah.

Elizabeth Wilkins:

Right.

Nick Hanauer:

Obviously, you’re highly familiar with our work enough to know that we are violently in agreement. But just tell our listeners more about the agenda, and why you did it, and why you think it’s new and different.

Elizabeth Wilkins:

Well, first of all, I love that you started there, Nick, with Krugman’s foreword and with this idea of what the economy is for. That is one of the most important things-

Nick Hanauer:

Yes.

Elizabeth Wilkins:

… that this report does is to reorient us to what policy is supposed to be. We’re in a really interesting and in some ways terrible, but some ways exciting moment right now, where a lot of baseline assumptions are up for grabs. That means we need to seize the moment and the narrative and lay out what life could look like, what society could look like, if we make different choices than what we have before. That starts with what our baseline grounding assumptions and values are.

And so, one of the most important things that we wanted to do with this report is precisely that, to say, “What is the economy for?” If we change our answer on that, what might life look like? What might follow in terms of economic assumptions and policy? What might follow in terms of the role of government in relationship to markets? What might that feel like for human beings? There’s a little bit of both, what is economic policy for, it’s truly for human flourishing. What should it feel like, it should feel like everybody having the building blocks for a good life. Trying to start and end with that in a serious policy agenda about economics felt like an important intervention to make in this time where assumptions are contested.

Nick Hanauer:

Yeah. Well, we couldn’t agree more.

Goldy:

Contesting assumptions is our shtick.

Nick Hanauer:

Yeah, exactly.

Goldy:

That’s what we do here.

Nick Hanauer:

The framework that you’ve built has basically, six pillars, public options, taxes, industrial policy, anti-monopoly policy, monetary policy, and countervailing power, which pretty much covers it. Tell us a little bit about how you came at the problem and how you got to all of this.

Elizabeth Wilkins:

This is going to sound very familiar to you guys. One of the difficulties we have in policymaking is, neoliberalism isn’t a policy. It’s not one single thing. It’s the water we swim in. It’s a set of assumptions that move in the background. And so, what does it take to actually change people’s default or background assumptions? That’s a little bit why we had a whole chapter on policymaking tools, is to say, “We can’t just keep saying tax cuts don’t work.” We have to actually actively give policymakers a different set of tools that they should be defaulting to, and to give them a map of, okay, if this is the problem you’re trying to solve, what should you reach for? Should you reach for a tax cut? Should you reach for a tax credit? Should you reach for a deregulatory solution? Or should you say, “Okay, what kind of a problem is this?” Is it undersupply of something? Is it a negative externality? And then give them an alternate toolbox to reach for that should be their default.

Oh, it’s an undersupply of something. Maybe there are some industrial policy tools that we should use to drive market incentives towards producing more of that. Oh, there’s weird incentives happening in this market based on what the private profit making incentives are. Maybe a public option is actually the right tool to reach for to fix that. This is a little bit, what does the work of changing the baseline assumptions of a particular political order look like? Some of that is changing the economic models. Some of that is changing academia. And then some of that is changing, as I said, the baseline default assumptions that policymakers have for what tools are the right ones to reach for to fix certain kinds of problems.

This is something that we’re actually working on more broadly. We put out a long paper on public options earlier this year that goes really deep into a taxonomy of, when are these good tools to use to solve what problems for whom? We’re doing some more of that with state capitalism and industrial policy tools, trying to say to policymakers, there really is an alternative. We’re not just saying this set of neoliberal tools over here is bad. We’re saying there’s a whole policy toolkit that was forgotten, or that other countries use all the time that we can reach for to better solve those problems.

Nick Hanauer:

Let’s zoom in on that. What tools have policymakers over relied on for the last 50 years, and what tools have we forgotten to use? Can you give us some examples?

Elizabeth Wilkins:

Sure. I talked a little bit about them already. Tax cuts, A, number one, we just celebrated the one-year anniversary of the one big ugly bill. I was listening to a clip of our president recently talking about how he delivered the biggest tax cut and it’s going to create the most jobs, which is just a baseline…

Nick Hanauer:

Lie, lie.

Elizabeth Wilkins:

Right, lie.

Nick Hanauer:

It’s a lie.

Elizabeth Wilkins:

I’ll take it, lie. I’ll take it.

Nick Hanauer:

Okay.

Elizabeth Wilkins:

Lie.

Nick Hanauer:

It’s a lite.

Elizabeth Wilkins:

Yes, right, okay. Trickle-down ec- The idea that you cut taxes, it invests in the economy in a way that goes to everybody’s benefit is a lie. It’s a tool that we have reached for forever, and that we are still very actively reaching for, and that we need to get rid of. That’s a good one.

Tax credit is a more complicated one. There are some really good things that tax credits have done. The EITC is fantastic, it does fantastic work. The child tax credit is fantastic, does fantastic work. That’s a place actually where progressives with good intentions have shoved a lot of policy precisely because it’s not as salient as big spending government programs. But do you know what that does also? It submerges the role of government in people’s lives. People don’t even know they’re getting it. In the Biden administration, we had the biggest expansion of the child tax credit ever, and nobody knew about it, and there was no political will for it, and we lost it. That’s one of the major stories of COVID relief.

And so, I’m not saying tax credits should never happen, but we have to be really careful about what it does to submerge all of our really good social policy in some place that is hidden and where people don’t understand it, versus say, social security, which everybody understands and everybody loves.

And then the last one I would think that one… Not the last one, there’s plenty others, but what I think about a lot is, in the Biden administration, we did more industrial policy than we have in decades more explicitly, right?

Nick Hanauer:

Yes.

Elizabeth Wilkins:

Very exciting. We did it almost entirely with corporate subsidies, grants, loans, et cetera. We really did it through private entities. That’s not the only way to do industrial policy. In fact, this administration is pulling out a whole bunch of tools like taking equity stakes, sovereign wealth funds, et cetera, that the US government has left on the table for a very long time, but are now back on the table.

Those are three examples where, one example, which we should really not do very much at all, tax cuts. But two, examples where it’s not that we should never use those tools, it’s that right now we think those are the only ways to do things, when actually there’s a much more expansive and much more direct public power toolkit to get our work done.

Nick Hanauer:

Yeah. One of the things that you say in the report is that certainly, lots of Democrats say is that we have to defend democracy, but your report makes it pretty clear that democracy needs to be more than defended. Democracy needs to deliver. That’s the thing that we feel so strongly about is, for 50 years, no matter who is in power, whether it’s Democrats or Republicans, the lives of ordinary people get worse while a few people at the very tippy-top do better. At some point, rational people conclude that democracy is stupid and doesn’t work.

Goldy:

Right.

Nick Hanauer:

And so, then they begin to reach for authoritarians who promise to fix it all. That’s the box we’re in, right?

Goldy:

And don’t and make things worse, which undermines faith in democracy and markets even more-

Nick Hanauer:

Even more.

Elizabeth Wilkins:

Even more.

Nick Hanauer:

Right, yeah.

Goldy:

… which allows them to do more bad things.

Nick Hanauer:

Yeah.

Elizabeth Wilkins:

Indeed, there are many ways in which the distance between elected leaders and policymakers on the one hand and ordinary people on the other, is really toxic for the way that our democracy works. But one of them is, I suspect everybody in this conversation gets a little dopamine hit when we put our I Voted sticker on. I like democracy. I have a value of democracy that’s separate and apart from everything else. But it is very easy to remember that I am weird, I am not normal in that sense. It is much more normal to be living one’s life and to care more about whether you can make ends meet, have time on the weekends, spend time with your family, et cetera. Whether or not you feel good about voting is much more inherently tied to, whether you think voting or other symbols of being-

Nick Hanauer:

Right.

Elizabeth Wilkins:

… connected to democracy, feel connected to those things that are inherently valuable to you. The last 50 years have pulled democratic institutions farther and farther and farther away from people’s sense of whether or not they actually do anything for the things they care about in their regular lives. If we’re going to save democracy, we’ve got to pull those things closer together again.

Nick Hanauer:

That’s right, absolutely.

Give us some more of the highlights of the report.

Elizabeth Wilkins:

I will say, I’ll step back and say, there’s a lot of, this is a moment right now where everybody’s coming out with the, these are the five things that every political leader needs to think about. That is not what this report is intended to do. This report is intended to reframe the debate to say a couple of things. One, we’re in this affordability moment. Fine.

Nick Hanauer:

Yeah, but are we? But are we? Can we just…

Elizabeth Wilkins:

Well, what’s your pushback? What’s your pushback?

Nick Hanauer:

We’re not really in an affordability crisis. We’re in a wage crisis.

Elizabeth Wilkins:

Yes. Well, okay. Well, here, this is… Fine, I was about to problematize it. I’ll problematize it. You can tell me where I should do it more.

One of the moves the report tries to say is, if we stop at this idea of an affordability, a cost affordability moment, we will really miss the mark both on what people are asking for and the opportunity for more radical change. When people say, “Things cost too much,” I think they’re saying a couple of other things and this is what’s in the report. One, their wages are too low. There’s two sides to the cost equation.

Nick Hanauer:

Yes.

Elizabeth Wilkins:

But two, even more deeply, people are saying, “I have no control over my life. I can’t control whether I can afford my groceries. But more broadly, I can’t afford retirement. I don’t know what my life is going to look like. I don’t know when my kids are going to be able to buy a house.” That is way, way, way broader than, let’s put a cap on utility fees. That is like, there is something fundamentally broken between the, I contribute and what do I get back? That’s move number one.

What that says to me is, our economic policy has to fundamentally reshape power in our economy. It’s not just about capping costs or a redistribution model where we make sure to put more money in people’s pockets. That is about dismantling the amount of power both that corporations hold and that now we can see so clearly corporations walk over into political power, translate into political power, and it means building up the power of ordinary people.

Our solutions to this quote-unquote, “Affordability crisis,” have to be deep and structural. We need to be able to fix our housing market, our healthcare market, our market for higher education. We have to have deep fixes for those markets, and we have to have a government that is actually resourced and skilled enough to use those tools that we just talked about to fix those markets. That’s really what the agenda tries to say.

It has some examples about things we could do. For example, more public options in housing finance, public options in childcare. But I would say, all of the ideas are good in there obviously, but they are not meant to say, “If you do these 20 things, we’re done.” They’re meant to say, “Here’s an example.” Here’s a set of really powerful examples for how if we do things differently, people will experience the economy differently in the way that we aspire for them to.

Nick Hanauer:

Yeah, but I just want to emphasize one thing which we’ve been thinking about. The so-called affordability crisis is a bit of a red herring, in the sense that there is, in the near term, nothing you can do about prices. You could, we could pass a law which allowed the government to set prices, but there is a huge amount of evidence to show that that does not work out very well.

Elizabeth Wilkins:

Right.

Nick Hanauer:

The only thing that government can do in the near term is increase wages.

Elizabeth Wilkins:

That’s very true.

Nick Hanauer:

And so, when everybody’s like, “Look, affordability crisis, look over here, affordability,” we are distracting people from the real problem, which is stagnant wages for 50 years. Two quick interventions like a $25 minimum wage and a $90,000 overtime threshold, which you could do tomorrow-

Elizabeth Wilkins:

Yes.

Nick Hanauer:

… would end the affordability crisis for most people.

Elizabeth Wilkins:

Indeed.

Nick Hanauer:

Just like that, and that is something you can do.

Elizabeth Wilkins:

Yes.

Nick Hanauer:

It’s just that people don’t want to face the idea of doing it because it makes them uncomfortable.

Goldy:

This is true in public policy across the board that we only talk about the spending side of the equation. We never talk about the other side of the balance sheet, the income side. With government, it’s always, government’s overspending, not that they’re not raising enough revenue. It’s always that households need to manage their budget better or things have gotten too expensive. It’s never about, oh, well, wages are too low. They’ve been stagnant for 50 years.

Nick Hanauer:

Yeah.

Elizabeth Wilkins:

Right.

Goldy:

Across the economy, we just never talk about that side.

Elizabeth Wilkins:

Well, and let’s just point out, part of the ideological fight that we are in is this question of interventionism or not in markets. Raising the minimum wage is a major intervention in business operations and markets that we should all feel totally comfortable with-

Nick Hanauer:

Yes.

Elizabeth Wilkins:

… because that is driving business investment to the places that we want it to be rather than places that we don’t. But it requires a particular attitude towards the relationship between government regulation and private market that we have lost for a long time.

Nick Hanauer:

But also, and this speaks to our work, it requires a different way of understanding the economic cause and effect. Our work, our work on a new economic paradigm is aimed at this, which is this view that is embedded in policymaking in the heads of policymakers, both on the left and the right, that because it’s Pareto-optimal equilibrium, if you raise wages, it’ll kill jobs and therefore it makes no sense to do it.

Goldy:

And Nick, growth comes first-

Nick Hanauer:

Yeah.

Elizabeth Wilkins:

Right.

Goldy:

… and improving people’s lives come second, building a middle class comes second where we say it’s the other way around.

Nick Hanauer:

Yeah. Just to emphasize in this conversation and for our listeners, how deeply this stuff is embedded. I was on the phone with, I had a call yesterday with an unnamed but very prominent left-wing economist who told me that indeed when we cooked up the $15 minimum wage, which happened in Seattle in the 2012, ’13, that he and his collaborators mostly all thought we had lost our minds, that it was much too much, much too fast, and that it would be a debacle.

And so, here’s the thing, if even left-wing economists think an intervention like the $15 minimum wage is a terrible idea, it is very hard to help people.

Elizabeth Wilkins:

Yeah, totally.

Nick Hanauer:

It is very hard to help people, and that’s what we have been up against. Obviously that is softening, but it should be profoundly embarrassing to the economics profession that it took a couple of clowns from Seattle to cook up this intervention and prove to them that they weren’t right.

Goldy:

Right, it took three decades of empirical evidence.

Nick Hanauer:

Yeah.

Elizabeth Wilkins:

Right. What is really interesting about the project of market humanism, the project of the good life, and a bunch of other projects that are happening right now is, it is the work of, yes, the ground is softening, but what would be a death knell? You need an alternative to truly have a death knell for something.

And so, what I see you guys doing is, attacking and trying to build an alternative model for the economics that underlies so much of this.

Nick Hanauer:

Yes.

Elizabeth Wilkins:

One piece of this is, we’ve got to dismantle the economics and build something new. I see these as parallel interventions-

Nick Hanauer:

Right, yes.

Elizabeth Wilkins:

… because then there’s economists. If I think about, what are all of the things that we need to dismantle and reorganize and rebuild in a different way? There’s the economists, there’s policymakers and lawyers who aren’t economists, but have…

Nick Hanauer:

Absorbed the economics.

Elizabeth Wilkins:

By osmosis, exactly, absorbed the economics.

Nick Hanauer:

Yes.

Goldy:

Right.

Nick Hanauer:

They’ve learned the worst lessons.

Elizabeth Wilkins:

Yes, correct. And so, we need interventions at each part of this ecosystem to drive the stake into the heart. And then also, offer an alternative for like, okay, if I’m not supposed to behave that way, how am I supposed to behave? The thing that’s super cool about this moment with market humanism, with a good life, with a bunch of these other interventions is, all right, we’re just going to push ahead to what the thing should look like in the next era. We’re going to start planting some flags instead of c- It is always easier to critique. It’s always easier, not that it’s easy, but it’s always easier to tear down and say, “This doesn’t work. Let me poke holes in it.”

But I do think that there’s this moment where many of us who are like-minded are saying, “All right, we’re now going to do the hard work. We’re going to get criticized for it. People are going to start poking holes in our thing,” blah, blah, blah, but this is actually the hard work that we have to do now is to put out the alternative that people should start reaching for, and let’s just start doing it and start building it. This is the work. This is the work.

Goldy:

I was curious in reading the piece, it looked like, at times, you and your co-authors carefully chose your words. We’re talking here about reframing this conversation. I’m curious about how much effort you put into the narrative, the words you chose to describe things.

For instance, I’m a big fan of the term, public option. A friend of the pod, Ganesh Seetharaman has a whole book on that. And I was talking to somebody recently, for example, about Mamdani’s proposal for city-owned grocery stores in food desert areas. It sounds like, oh, the government’s going to own a grocery store. It’s really just a public option. If you think about it instead as, it’s a food bank, but we charge cost for it. If it works well, and maybe a private grocer wants to come in there, oh, there’s a market there. We could be providing better service for a few cents more, then they can come in. It doesn’t sound so bad.

It’s like, I hate the term, social housing. Social housing, it sounds like it’s a commune. Social, it’s going to be a bunch of-

Nick Hanauer:

Hippies.

Elizabeth Wilkins:

Yeah.

Goldy:

… lefties, hippies, whatever. It doesn’t describe what it is. It’s a public option. That’s all it is. It’s a public option for rental housing that provides not just more affordable housing, but stable pricing because it is not rent seeking in the economic sense of the term. I’m wondering how much thought you all put into this when you actually decided how to describe these policies.

Elizabeth Wilkins:

A good amount. It’s funny that you pick out public options, that goes both ways. On the one hand, I’ve heard lots of feedback saying, “That’s a very wonky expert term,” et cetera, et cetera. Nobody knows what it is. But you’re right, if people don’t like the word socialism or they don’t like-

Goldy:

Right.

Elizabeth Wilkins:

… big government programs or government-run X, an option is consistent with choice, which is consistent with a very individualistic version of freedom. This is very much not that scary.

I actually, we did a poll alongside The Good Life Agenda, and I was surprised at this. We did a bunch of polling on public options. To the first comment I made, which is like, “Nobody knows what a public option is. Everybody tells me this is a wonky term,” off the charts, public option for healthcare, public option for college, for parks, for public transit, for banking, everybody was like, “Yes, we love this.” Maybe it’s not wonky and maybe it’s doing exactly the work that we’re talking about, which is, government’s not taking over this. We’re just providing one good option, which ideally will discipline the market to make the whole market better.

Goldy:

Right. People say, “Oh, public. Oh, it’s like public housing. Nobody likes the word public.” Public schools, public libraries, public parks, public swimming pools. These are all popular things that people support-

Elizabeth Wilkins:

Yes.

Goldy:

… and vote to spend their tax dollars on. Okay, if you have a little public bodega because you don’t have one in your neighborhood.

Elizabeth Wilkins:

Yes, how bad could that be? No, exactly. That’s right.

Goldy:

Right.

Elizabeth Wilkins:

Again, the report is doing something interesting. It’s trying to say, we’ve got to figure out how to talk about post-neoliberalism in terms that people can understand, what’s the life that people want to lead. But the tools really are focused on policymakers. Here’s the toolkit that you…

There’s a little bit of going back and forth about the terminology and who are we speaking to. But I love that you picked out public options because it’s one that I thought was in one category. It turns out, it’s pretty publicly popular, so who knew?

Goldy:

That’s good to know because I hadn’t actually seen any focus group or polling on it to support my intuition that it’s a pretty good term.

Elizabeth Wilkins:

It is.

Goldy:

The fight for the Affordable Care Act, when we didn’t get the public option, that educated a lot of people about what a public option is.

Elizabeth Wilkins:

Is.

Goldy:

In fact, that’s the first time most people heard it. When you bring it up, they immediately think, healthcare? Now that my premiums are doubling, maybe that public option would be preferable.

Nick Hanauer:

Yeah, absolutely.

Elizabeth Wilkins:

Right, exactly right.

Nick Hanauer:

Elizabeth, one of the other things you talk about in the report is time, which is really, really super important. Time is related to agency, obviously. Can you speak to that a little bit?

Elizabeth Wilkins:

Yeah. This is a really important piece of this idea that we put human beings back at the center of economic policy. If we do that for real, then we understand that people don’t just live for their household balance sheets. In fact, they definitely don’t live for their household balance sheets. They live for everything that that balance sheet can provide. If you go back to that slogan, the labor movement, we brought you the weekend, that the human-centered economics really does center the idea of leisure time. The idea of, it’s a little bit of pushing back on an uber capitalist understanding of all of us human beings as just cogs in a wheel producing economic value and reverses that, and says, “No, no, the economy is supposed to give us back value.”

Nick Hanauer:

That right.

Elizabeth Wilkins:

For us, the value, it may be. I am lucky enough to be one of those people who loves my job, but that’s not the premise that everybody should. It’s great if that’s what you want. But what you want is to be able to work in order to live, we should have an economy that allows for that. That was the idea about putting time as a pillar to say, “This is not an afterthought for economic policy. This should be core to what economic policy is trying to provide.”

Nick Hanauer:

Elizabeth, I just have to mention that a couple of months ago, I went down this rabbit hole, created this thing for myself, it’s only for myself so far, called the Human Flourishing Index. It was anchored around the idea that you just expressed, is that the point of life is life, not work. What I did is, I re-ranked all of the economies in the world, basically how much leisure they provided their citizens.

Of course, what happens is that the US, in GDP terms, the US ranks very, very near the top, top two or three. But if you re-rank based on the baseline assumption that an hour of leisure is worth twice as much as an hour of work to the typical person. For some people, it might be 10X. For some people, it might not be worth more. You may love your job so much, you’d rather do it 24 hours a day, but it’s safe to say that the majority of citizens consider leisure time more important than work time.

When you do that, you come up with a completely different way of looking at who is delivering the goods and who isn’t. This is at the core of what we should be moving to, is thinking about the economy in that way because people want to go on vacation. In most of our peer nations, people get 2 to 10 times as much time off as Americans on average get.

Elizabeth Wilkins:

Exactly right, exactly right.

Nick Hanauer:

It’s crazy.

Elizabeth Wilkins:

Totally crazy, it’s totally crazy. It really does show you how much capitalist ethic has colonized the way that we think about things. It’s such an obvious point, and yet one that we do not do policy for at all.

Now, I will say one thing that has been an interesting conversation since we released the report is, so then some folks say, “Oh, okay. This proposal that AI companies have to eliminate a bunch of jobs and give everybody universal basis income, you must love that because isn’t that all time?”

Nick Hanauer:

Bullshit.

Elizabeth Wilkins:

I was like, “Oh, boy, that is definitely not where we were going with this.”

Nick Hanauer:

No.

Elizabeth Wilkins:

Definitely, definitely not.

Nick Hanauer:

No.

Elizabeth Wilkins:

Because we were…

Goldy:

Well, that’s where orthodox economics goes because there is no such thing as voluntary unemployment. You’re just choosing to be unemployed because you like the leisure of it.

Nick Hanauer:

Yeah.

Elizabeth Wilkins:

Yes. We skipped some part of this equation where people want actual agency in their lives and choice and dignity, et cetera, et cetera. The idea of handing all of our otherwise democratic control over to a very small set of companies to make all of the decisions for us is really not consistent with time. I just felt like I needed to say that because I’ve heard that enough now that I feel like it’s important to say. But other than that, yes.

Nick Hanauer:

Just to be clear, the AI companies are not going to pay people a universal basic income.

Elizabeth Wilkins:

Yes.

Nick Hanauer:

They’re going to monetize the world’s intellectual property, keep all of that for themselves, and let the rest of us tax ourselves to pay for the universal basic income.

Elizabeth Wilkins:

But yes, other than that, it is a very simple, but at the same time, somewhat profound insight. What exactly are we trying to govern for? What are we driving for for people? When we think of, quote-unquote, “economic policy,” we have a hard time not thinking about anything other than what we consider to be economics. But if we put humans at the center of that, it becomes pretty clear that people’s economic lives, what we consider to be people’s economic lives are only one slice and sometimes not even the most important slice of what they do and what they care about, and we should be making policy for the whole people.

Nick Hanauer:

If you could implement just one thing in your agenda, if you were the goddess of the world…

Goldy:

No political constraints-

Nick Hanauer:

Yeah.

Goldy:

… what is at the top of the list?

Elizabeth Wilkins:

Okay. Well, you could cons-

Nick Hanauer:

Several of her staffers are going to be really mad now.

Elizabeth Wilkins:

I know. I’m going to have to pick some of my favorite children.

Actually, I find this easier to answer for the following reason. There are policies that are load-bearing economy-wide, and then there are policies that are core to actually delivering for people. I would say, if I had to pick a couple, I would pick the load-bearing structural ones. Major tax reform, major financial regulatory reform, things like that to me are almost upstream of your ability to do a bunch of the stuff that you care about the most.

Nick Hanauer:

Okay, okay.

Elizabeth Wilkins:

I would pick, those two are the ones that come to mind immediately as unlocking the ability to do all of the rest of what we would want to do. And then if you made me pick a child from the… It’s hard not to say, housing and healthcare feel pretty high up there in terms of, again, not the, can you make your ends meet today or this week, but is there a promise of long-term stability where you feel like the bargain of, I contribute and I get back. Those two feel like places where that promise is pretty fundamentally broken.

Nick Hanauer:

Yeah.

Goldy:

Weirdly, the things you chose, these are all big lifts. They’re actually the most doable because we know how to do them.

Elizabeth Wilkins:

Yes, we do.

Nick Hanauer:

Yeah. Yes, we know how to do them.

Elizabeth Wilkins:

It’s about will.

Goldy:

It’s really clear.

Nick Hanauer:

Yes.

Goldy:

Right. It’s really clear what to do.

Nick Hanauer:

Yeah.

Elizabeth Wilkins:

I do not disagree. It is about will. Again, there’s a lot of things about this moment that are pretty upsetting and depressing, but the one thing that is positive is that so many more things are up for grabs, and so many people are so frustrated. We found 32% of our poll, we called disillusioned because they were just like, “Everything government touches is bad. Nobody cares about me,” et cetera, et cetera. The work that we have to do to re-energize those people is not tinkering around the edges. It is doing big things. That is seeping in to the common sense right now, so I do think there’s an opportunity of, we can seize it to do a couple of big things.

Nick Hanauer:

Yeah, great. One final question, why do you do this work?

Elizabeth Wilkins:

Oh, man. My dad was Head of the Community Relations Service in Department of Justice under President Johnson.

Nick Hanauer:

Wow.

Elizabeth Wilkins:

In the 1960s… I know, right? In the 1960s, it was his job to fly around the country whenever there were riots, to meet with community leaders, to understand why people were so unhappy. And then to come back to government and do something about it. It was the 1960s, so basically they thought, great. I hope this is a safe podcast to say this. Great, we hired our Black guy. He’s going to be our community relations guy. He’s going to quell the problems, and those crazy people who are rioting will quiet them down.

My dad instead was like, “I am the movement’s inside guy. My job is to deeply feel and understand why people feel disconnected to the institutions of our country,” and then come back into government and fight like hell to get the levers of power to work for these people, to make them understand that these are our citizens, our community who want jobs and education and freedom. That has always been my model and my inspiration.

Nick Hanauer:

He apparently did a pretty good job.

Elizabeth Wilkins:

He is in a long line of people who are just going to keep fighting and fighting and fighting. I feel like I have a legacy to uphold.

Goldy:

Nick, you started at the top talking about Paul Krugman’s foreword and how it surprised you a little to see how he was talking about the purpose of economics being to improve people’s lives. As opposed to GDP, and let’s be clear, as I said, he is an orthodox economist. He thinks of himself as a neoclassical economist. At the core of orthodox economics for the past 50, 75, 100 years, has been this distinction between what they would say positive economics, versus normative economics.

Nick Hanauer:

Right.

Goldy:

That positive economics is how the economy actually works.

Nick Hanauer:

Yes.

Goldy:

Normative, they dismiss as, that’s wishful thinking.

Nick Hanauer:

What you should do, what you should do.

Goldy:

How it should work, how it should work. But really the neoclassicals have focused on the positive.

Nick Hanauer:

Yes.

Goldy:

And so, when you get to, he’s saying the purpose of economics should be to improve people’s lives. Essentially, you’re saying that’s what economics should be about. And then we get to the most popular introductory textbook of the previous 30 years, which describes economics…

Oh, I have the page open in front of me so I can give you the quote.

Nick Hanauer:

Amazing, amazing.

Goldy:

Economics is the study of how society manages its scarce resources.

Nick Hanauer:

Right.

Goldy:

What a bummer. What, what, what a bummer of a science that, oh, it’s just about distributing scarcity. It’s a scarce world we live in. All of these things that people want, that affordability they want, that affordable housing, the affordable healthcare, the high quality affordable public schools, the time off, the leisure, well, there just isn’t enough of all of that to go around.

Our goal should be to figure out how to distribute it efficiently in a way that rewards people for their contribution to society, which, oh, magically, that’s what markets do. Whatever the outcomes are, those are the most efficient distribution of resources. They’re the most fair because marginal productivity and all of that bullshit, it’s a meritocracy.

I go there at this point because it’s really important to see how not just the policy proposals of this Good Life Agenda are a radical departure from that old way of thinking, but the language of it. They’re calling it The Good Life Agenda as if that’s something economics can deliver. That’s something that democracy can deliver. That’s something that the United States of America can deliver for its people is the good life.

In fact, since we just celebrated the, I don’t even know how to say it, the semiquincentennial, is that right? Whatever, the 250th anniversary of what we consider the founding of our nation, the signing of the Declaration of Independence. Remember that important phrase that’s in there that Jefferson wrote, “Life, liberty, and the pursuit of happiness.” That line, “The pursuit of happiness,” what he was doing was translating from the ancient Greek. We’ve talked about this. Happiness, that is a translation, it’s eudaimonia. It’s the eudaimonic goal, which is the good life.

Nick Hanauer:

Yes.

Goldy:

That is what he was talking about. Remember, he didn’t say, “Life, liberty, and happiness.” He said, “The pursuit of happiness.” It’s not that we’re going to guarantee outcomes. We’re going to guarantee opportunity that everybody has an opportunity to achieve the good life. How could economics not be about anything but that?

Nick Hanauer:

Well, sure hasn’t been for a long time, so let’s hope it changes.

Goldy:

Right. If you want to read more, obviously we encourage you to read the full report. We will provide a link in the show notes to The Roosevelt Institute and their report, The Good Life, An Agenda For Fuller Lives, A Stronger Economy and Renewed Trust.

Freddy:

For more content from us, you can subscribe to our weekly newsletter, The Pitch, over on Substack. For links to everything we just mentioned, plus transcripts and more, visit our website, pitchforkeconomics.com.

As always, from our team at Civic Ventures, thanks for listening. See you next week.

The post The Good Life Economy (with Elizabeth Wilkins) appeared first on Pitchfork Economics.

Myths That Built Trickle-Down Economics: Productivity Doesn’t Trickle Down (with Preston Mui)

Freddy Doss — Tue, 21 Jul 2026 14:59:20 +0000

Some of the world’s richest executives are selling AI as the engine of a yet-to-be realized “historic” productivity boom — while warning that it will also eliminate millions of jobs. But if workers absorb the disruption while the gains flow upward, that isn’t shared prosperity. It’s trickle-down economics with better software.

In the final installment of Myths That Built Trickle-Down Economics archive miniseries, we’re returning to Nick and Goldy’s conversation with economist Preston Mui about why productivity is a policy choice. Mui explains how full employment, sustained public investment, resilient supply chains, and affordable essentials create the conditions for workers and businesses to produce more value.

Technology may help us build a more productive economy. Policy will determine who benefits from it.

Preston Mui is a senior economist at Employ America specializing in macroeconomics, labor economics, productivity, and Federal Reserve policy.

Social Media:

@prestonmui.bsky.social

@PrestonMui

Further reading:

Post-ECI note: The Supply-side May Spoil Warsh’s Productivity Story

The Dream of the 90s is Slipping Away in 2025

Early Estimates of the Impact of AI

Within BEA’s Industry Economic Accounts

Our Mission In An Age Of Turbulence: Creating A New Economic Policy Toolkit

Instagram: @pitchforkeconomics

Threads: pitchforkeconomics

TikTok: @pitchfork_econ

YouTube: @pitchforkeconomics

LinkedIn: Pitchfork Economics

⁠This episode originally aired on December 12, 2023⁠.

Substack: The Pitch

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Myths That Built Trickle-Down Economics: Austerity Politics (with Clara Mattei)

Freddy Doss — Tue, 14 Jul 2026 17:09:11 +0000

This week, we’re continuing our archive miniseries, Myths That Built Trickle-Down Economics, with the myth that austerity is responsible economic policy.

We’re revisiting this conversation now because the austerity playbook is still very much alive. The Trump administration and DOGE have cut federal agencies, pushed out public servants, and treated public infrastructure like waste — even though those are the systems we need most during a crisis. And if the economy turns downward, politicians will almost certainly reach for the same old answer: slash public support, make working people pay the price, and call it responsibility.

Nick and Goldy talk with professor and political economist Clara Mattei, author of ⁠The Capital Order: How Economists Invented Austerity and Paved the Way to Fascism⁠, about how austerity became one of the most powerful myths of modern capitalism, how economists helped sell it as common sense, and why it has always been about more than budgets.

Clara Mattei is a professor of economics at the University of Tulsa, Founding President of FREE: Forum for Real Economic Emancipation, and author of ⁠The Capital Order: How Economists Invented Austerity and Paved the Way to Fascism⁠ and ⁠Escape from Capitalism: An Intervention.⁠

Social Media:

⁠@claraemattei⁠

Further reading:

⁠The Capital Order: How Economists Invented Austerity and Paved the Way to Fascism⁠

⁠U.S. Treasury: The U.S. Economic Recovery in International Context⁠

⁠CBPP: Robust COVID Relief Bolstered Economy and Reduced Hardship for Millions⁠

⁠GAO: Federal Agency Workforce Changes⁠

Website: ⁠https://pitchforkeconomics.com⁠

Facebook: ⁠Pitchfork Economics Podcast⁠

Bluesky: ⁠@pitchforkeconomics.bsky.social⁠

Instagram: ⁠@pitchforkeconomics⁠

Threads: ⁠pitchforkeconomics⁠

TikTok: ⁠@pitchfork_econ⁠

YouTube: ⁠@pitchforkeconomics⁠

LinkedIn: ⁠Pitchfork Economics⁠

Twitter: ⁠@PitchforkEcon⁠, ⁠@NickHanauer⁠

Substack: ⁠The Pitch⁠

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Myths That Built Trickle-Down Economics: Zombie Economics (with Paul Krugman)

Freddy Doss — Wed, 08 Jul 2026 00:13:45 +0000

This week, we’re continuing our archive miniseries, Myths That Built Trickle-Down Economics, with the myth that bad economic ideas die once the evidence proves them wrong.

They don’t. They come back as zombie ideas: tax cuts for the rich sold as growth policy, safety-net cuts sold as responsibility, and market fundamentalism sold as common sense. These ideas have failed again and again, but they keep returning because they still serve the people and institutions with the most power.

In this episode, Nobel Prize-winning economist Paul Krugman joins Nick and Goldy to explain why zombie economics refuses to die, how bad assumptions infected mainstream economic thinking, and why defeating trickle-down economics requires more than better evidence — it requires naming the myths that keep shaping our politics.

This episode originally aired on March 31, 2020.

Paul Krugman is a Nobel Prize-winning economist, professor, author, and former New York Times columnist. His book Arguing with Zombies: Economics, Politics, and the Fight for a Better Future examines the failed economic ideas that continue to dominate American policy debates.

Social Media:

@pkrugman.bsky.social

Paul Krugman on Substack

Further reading:

Arguing with Zombies: Economics, Politics, and the Fight for a Better Future

CBO: Estimated Distributional Effects of the One Big Beautiful Bill Act

KFF: Tracking Implementation of the 2025 Reconciliation Law: Medicaid Work Requirements

CBPP: The 2017 Trump Tax Law Was Skewed to the Rich, Expensive, and Failed to Deliver

EPI: Setting High Standards for a Federal Minimum Wage

Tax Foundation: Who Pays Tariffs? Americans Will Bear the Costs of Tariffs

Instagram: @pitchforkeconomics

Threads: pitchforkeconomics

TikTok: @pitchfork_econ

YouTube: @pitchforkeconomics

LinkedIn: Pitchfork Economics

This episode originally aired on February 19, 2019.⁠

Substack: The Pitch

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Myths That Built Trickle-Down Economics: Shareholder Value (with William Lazonick and Lenore Palladino)

Freddy Doss — Tue, 30 Jun 2026 19:59:40 +0000

This week, we’re continuing our archive miniseries, Myths That Built Trickle-Down Economics, with the myth that corporations exist to maximize shareholder value.

For decades, Americans were sold the idea that if corporations focused on boosting stock prices and rewarding shareholders, prosperity would trickle down to workers, consumers, and communities. Instead, shareholder primacy helped justify stock buybacks, wage suppression, layoffs, and underinvestment — extracting wealth from the real economy and funneling it upward.

In this episode, Nick and Goldy talk with William Lazonick and Lenore Palladino about how shareholder value became one of the core myths of trickle-down economics, why it has caused so much damage, and what it would mean to build corporations around workers, consumers, communities, and long-term prosperity instead.

Lenore Palladino is associate professor of economics and public policy at the University of Massachusetts Amherst, a senior fellow at the Roosevelt Institute, and author of Good Company: Economic Policy After Shareholder Primacy.

William Lazonick is professor emeritus of economics at the University of Massachusetts Lowell and co-founder and president of the Academic-Industry Research Network.

Social Media:

@lenorepalladino.bsky.social

@Lazonick

Further reading:

Good Company: Economic Policy After Shareholder Primacy

Washington Center for Equitable Growth – To restore democracy, end shareholder primacy at U.S. corporations and on Wall Street

Roosevelt Institute – Regulating Stock Buybacks: The $6.3 Trillion Question

Roosevelt Institute – Ending Shareholder Primacy in Corporate Governance

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Myths That Built Trickle-Down Economics: Regulations Kill Growth (with Robert Reich)

Freddy Doss — Wed, 24 Jun 2026 04:49:55 +0000

This week, we’re kicking off our archive miniseries, Myths That Built Trickle-Down Economics, with one of the most persistent myths in American politics: that regulation kills growth.

Corporate lobbyists and trickle-down evangelists have spent decades branding any rule that limits big business as a “job killer.” But what if good regulation isn’t the enemy of prosperity, but one of the things that makes prosperity possible?

Former U.S. Labor Secretary Robert Reich joined Nick and Paul back in 2019 to explain why we should stop calling these rules “regulations” and start calling them what they really are: protections.

Because the economy always has rules. The real question is who they’re written to protect.

This episode originally aired on February 5, 2019.

Robert Reich is the former U.S. Secretary of Labor, co-founder of Inequality Media, and author of Saving Capitalism.

Social Media:

@rbreich.bsky.social

@RBReich

@rbreich

Further reading:

Saving Capitalism: For the Many, Not the Few

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TikTok: @pitchfork_econ

YouTube: @pitchforkeconomics

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AI Job Loss Is Real. The Catastrophe Is Optional (with Kathryn Edwards)

Freddy Doss — Wed, 17 Jun 2026 04:44:14 +0000

AI doomsdayers want us to believe mass job loss would be unprecedented. But Kathryn Anne Edwards has a sharp reminder: In the first five weeks of the pandemic, the U.S. economy shed 22.5 million jobs—larger than any single AI job-loss estimate she has seen. The difference was policy. Unemployment support, direct cash to families, and a strong public response helped workers survive the shock and helped the labor market recover.

This week, Nick and Paul talk with Edwards about what the pandemic recovery can teach us about AI, automation, unemployment, and the future of work. Why do AI debates so often treat workers as passive victims and government as irrelevant? What would a serious policy response to technological disruption look like? And why should we be skeptical of billionaires and tech leaders who insist that this time, unlike every other economic transition, they are uniquely important and special?

Kathryn Anne Edwards is a labor economist, independent policy consultant, Bloomberg Opinion columnist, and co-host of the Optimist Economy podcast.

Social Media:

Further reading:

Optimist Economy Podcast

Bloomberg Opinion – AI Can Lead to a Fix of This Broken Government Program

Bloomberg Opinion – Is AI Coming for Your Job? A Bigger Government Can Help

Bloomberg Opinion – AI Anxiety Won’t Be Eased by Universal Basic Income

Instagram: @pitchforkeconomics

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TikTok: @pitchfork_econ

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This episode originally aired on June 1, 2021.

Substack: The Pitch

Nick Hanauer:

The rising inequality and growing political instability that we see today are the direct result of decades of bad economic theory.

Goldy:

The last five decades of trickle-down economics haven’t worked, but what’s the alternative?

Nick Hanauer:

Middle out economics is the answer.

Goldy:

Because the middle class is the source of growth not its consequence.

Nick Hanauer:

That’s right.

Announcer:

This is Pitchfork Economics with Nick Hanauer, a podcast about how to build the economy from the middle out. Welcome to the show.

Nick Hanauer:

Well, gang, today on the podcast, in addition to being joined by a fantastic guest and old friend, I am joined not by Goldy, but with my colleague Paul Constant. Paul, how are you?

Paul Constant:

I am just fine. Usually I am the substitute you, so it’s odd that we’re both in the same place at the same time. I’m coming to you today with a question, Nick. Do you know anybody whose job has been lost to AI?

Nick Hanauer:

I don’t think so. That’s a great question. I don’t think the answer to that question is yes. The people I tend to socialize with are not the people who are likely to be directly affected by this. I should just say that for my own part, the way I look at these tools is that they make all of the people that, like on our team, just more productive. I don’t want less people. I want the existing people to be able to ideally do more and better work. And I think that I suspect that lots of companies will look at it that way. There are two ways to compete with your competitors. One is to be cheaper, the other is to be better.

Paul Constant:

Yeah.

Nick Hanauer:

Right?

Paul Constant:

Well, unfortunately we’re in an economy where a lot of people choose the cheaper option than the better option. I know. I mean, as a writer, I think I’m maybe a little more sensitive to this than some other people.

Nick Hanauer:

Yeah. For sure.

Paul Constant:

But I definitely know people who have been replaced by ChatGPT.

Nick Hanauer:

You do.

Paul Constant:

It started with the freelancers for sure. The people who would write blurbs for travel publications and things like that. The sort of low hanging fruit of large language models is they just get… They were very quickly after, you remember there was a point on social media where everybody was making ChatGPT write sonnets and things like that?

Nick Hanauer:

Yeah.

Paul Constant:

And it was a toy. It was a cool toy that everybody was playing with. And almost immediately after that, I started hearing from friends who lost their longtime freelance jobs and things like that.

Nick Hanauer:

Wow. Okay.

Paul Constant:

Started at the freelance level for sure. And it’s slowly moving up through the ranks to the people with a regular job. So I don’t have a solid number of how many people, but I would say at least a dozen people in my social network have-

Nick Hanauer:

Really?

Paul Constant:

… lost their jobs to AI. Yeah. Yeah.

Nick Hanauer:

Wow.

Paul Constant:

So it’s real. It’s definitely real and it’s out there and I think we’re just sort of starting to see the effects of it.

Nick Hanauer:

Interesting. Well, today on the pod, we have somebody who’s thought deeply about this. Our old friend, labor economist, Kathryn Edwards, who has a new three-part series out for Bloomberg Opinion on the American labor market and how it should react and adjust to the impact of AI. And I think she starts from a very, I think, very defensible point of view, which is you don’t need to know exactly how many jobs AI will eliminate to know that our current system leaves workers exposed to the circumstance. It makes perfect sense to begin right now, not in a year or two years, thinking through how we might adjust the existing frameworks and systems that we use for unemployment to be better and more resilient and more flexible as we watch the AI thing unfold. In whatever form it takes, I think it’s quite difficult to know what will happen over time.

Paul Constant:

This essay is really thoughtful and sort of far ranging and draw some conclusions that I haven’t seen in other people in the ongoing omnipresent debate about AI. I think she really hits some great points.

Nick Hanauer:

I agree.

Paul Constant:

Let’s talk to Kathryn.

Kathryn Edwards:

My name is Kathryn Ann Edwards. I’m a labor economist. I’m an independent policy consultant. I’m a columnist for Bloomberg and I am officially an economics influencer.

Paul Constant:

Well, that is so great. Catherine, am I an economics influencer?

Kathryn Edwards:

I mean, I think if you talk about the economy and you have enough followers, you could be an economics influencer.

Nick Hanauer:

Do you get a plaque?

Kathryn Edwards:

Yeah, I have a plaque.

Paul Constant:

Do you have to join a club?

Kathryn Edwards:

I felt like not embarrassed. You go through the PhD training, it’s very formal. There’s lots of expectations of what you’re supposed to do. And then within 10 years of getting that little doctorate, I’m sitting there talking into my phone saying, “Here’s what you need to know about social security’s long-term shortfall.” And there’s a part of me that’s like, “How did you get here? What are you doing?”

But then the truth is this is where people are. I think experts really like to… Their expertise almost buys them out of having to communicate how other people prefer. If I’m the expert, I talk how I want to talk. And I think I’ve learned over the years that you have to meet people where they are. And at first it was weird to be like, “Yeah, so I’m on TikTok.” And being at a very professional conference when people are like, “Well, I got into this journal.” And I was like, “Well, I’m on TikTok.” It was a little hard, but now-

Nick Hanauer:

How many people read your journal article? Nine. How many people my TikTok video. A million.

Kathryn Edwards:

Yes, it is. I think you got to fake it till you make it. I tried to be really confident in talking to people of like, “I’m on TikTok and just really hold it in.” And then I’ve now found that there are so many people in the economics profession who will reach out to me to tell me that they would rather throw themselves in front of traffic than do what I do, but they’re so happy that I do it. And they’re like, “That chip is missing. I can’t do that. It is my worst nightmare, but I’m so glad that you are doing it.” So I feel like I’ve kind of come to a place of ownership of-

Nick Hanauer:

That’s great.

Kathryn Edwards:

… being an economics influencer and feeling the love of a lot of people in my profession who are proud of me and happy for me and glad that I’m doing it.

Nick Hanauer:

That’s fantastic. Well, speaking of being happy you’re doing it, you recently wrote a series of really interesting pieces for Bloomberg, where you are a columnist, broadly the impact of AI on employment and the structures that we have in place, or don’t have in place, to meet that challenge. Why don’t you tell us a little bit about the three pieces you wrote and let’s talk about what you think is most important for people to understand about the coming transition?

Kathryn Edwards:

I took as a given in writing these pieces that there will be AI job loss and it could be subtle and it could be catastrophic, but from a policy perspective, what do you need to know to actually act? You need to know that job loss is coming. That’s enough information to be motivated to make a change. I lay out in three pieces. If the information you need is there will be layoffs coming from AI, then let’s respond to that problem. And the first piece I outline how we need a new short-term unemployment insurance system. The system we have was built in the Great Depression. It has a lot of strengths, but we also know all of its weaknesses and we can build a better one. And the second piece I advocate for something the US has never had, which is a long-term unemployment insurance system.

Something for people who you can think of it as the difference between being able to get a job on your current resume versus having to do something different. The resume’s not working and you have to make some type of change and that’s really kind of the mark of a long-term unemployment. And then the third piece was to say, even if you were to have a very good short-term unemployment system, a very good long-term unemployment system, part of the problem of job loss and AI is that the floor of the labor market sucks. The gap between a high class job, a middle class job, and a working class job is just their oceans apart. You have a job that is white collar where you get health insurance, where you get retirement, where you’re paid a decent wage, and then the alternative is to go into low wage shift work where we don’t have a viable minimum wage, we don’t have enough regulation of shifts. You might not even get sick days, let alone holidays or vacation. You’re not going to get paid family leave.

And it’s really the gap between how far we let the top and the bottom of the labor market pull away from each other. And as part of the fear of AI job loss, it’s not that I can’t take any job, it’s just that the bottom is such a terrible alternative.

Nick Hanauer:

Well, it’s not the bottom. It’s anything but the top.

Kathryn Edwards:

It’s anything but the top. Yeah.

Nick Hanauer:

Right.

Kathryn Edwards:

So that was kind of the pieces of like, let’s just logically, like if this is the problem, just identify the solutions short term, long term, and let’s fix the outside option.

Paul Constant:

I just wanted to sort of contextualize where we are. It feels like we’re at a new phase of the AI conversation. The first part was like 100% sugar rush hype, and you do a little bit of contextualizing about the AI apocalypse, the jobs’ apocalypse. And I was wondering if you could sort of unpack that a little bit as we’re getting started, just so we know what is the size of the problem now and what do you think the scope is going to be in the near future?

Kathryn Edwards:

Oh, is the rapture coming? Yeah. I try to put forward two pieces of information or maybe three pieces of information for context. The first is the way that technology is absorbed into the economy is through productivity and that changes labor demand. So if my workers can do a certain amount of things on the job and then they can do more, I’ll change who I want to have employed. That’s kind of like the kind of meanest, simplest way to think about it. When you look at productivity in the United States over almost a century, there’s no jumps. There’s no like, oh, and I can see like that’s computers or that’s the internet or that’s Microsoft Office. You don’t see any of these massive technological changes incorporated into productivity because the technology being developed is very much at odds with the technology being adopted into the workplace, which also is at odds with the technology leading to changes in labor demand.

The technology can be developed quite quickly, but its adoption takes a long time for workers and employers to feel comfortable with. And so I just try to put in perspective that I realize that AI is different and special and they all tell us that, but historically speaking, every new frontier technology that was hard to imagine, it didn’t have a kind of rapture event either in the productivity side of like, and now we’re all 10 times more productive or on the layoff side. The second piece of information I offer is that I have seen estimates that AI could lead to a loss of somewhere between five and 15 million jobs and the sense of urgency and crisis of like, we’re going to lose these jobs, I think has a really classist element to it.

I even had someone who worked in AI tell me that the difference between this technology and others is that it will replace human intelligence, which was a very assertive way of telling me that people who are working class are not intelligent on the job and that manufacturing workers being replaced by machine, well, that’s not the same as intelligence.

Nick Hanauer:

That’s not a big deal.

Kathryn Edwards:

It was so classist. And when people bring it up, I say like, “I understand that there might be a crisis of five million jobs, but it seems like you don’t care that much about these seven and a half million unemployed people we have now. Where is their crisis? Why don’t you care about their job loss? Why is it just these sets of workers that could be smaller than the unemployed people we have now?”

The third piece of perspective I offer is that the US economy has in fact experienced the rapture that AI proponents and hawks and doomsdayers talk about in the first month of the pandemic. And within five weeks, the US economy shed 22 and a half million jobs, which is larger than any single estimate I’ve seen for AI and they did it in less than five weeks. Here we are six years later and people don’t even remember it, because policy responded with unemployment support, policy responded with cash to families. Those people got jobs again, the labor market recovered within three years and we’re moving right along.

So the job loss isn’t scary, it’s all about the capability of the policy response. And so as much as they want to talk about how terrifying it will be when we have these mass AI job loss, you just need a good response from policy. The doomsdayers really don’t think about, I would say, the perspective of other actors in the economy or other periods of economic history we’ve been through. And when you add that in, they kind of maybe take a step back and see that it’s always hard to give this lesson in real time, but like maybe they’re not that important or special. And thank you, I’m an economist. This is my job. You are neither important or special. You’re welcome.

Nick Hanauer:

Yeah. We matter you don’t.

Kathryn Edwards:

Yeah.

Nick Hanauer:

Okay. Great context. Why don’t we kind of march through your analysis a little bit? Let’s start with the system we have and its strengths and weaknesses.

Kathryn Edwards:

Sure. We have a state administered unemployment insurance system. It’s paid for via a payroll tax that the employer pays only, and it’s distributed at the state level and states set the tax rate and the benefit level. Really good things about this system; it’s highly efficient. You end up with a trust fund, everyone pays into it, everyone can claim out of it. It is very good in terms of coverage. It covers all W2 employees and it can be scaled quite easily because you have a track record of everyone’s wages, you can make the benefit individualized. So it’s not like you lose your job and you go and get the unemployment benefit and it’s like food stamps where it’s need-based. Your unemployment benefit is based on how much you earned previously.

That’s great. Those are all good. Things that are bad. Yeah, it shouldn’t vary across states because some states have good programs and some states have bad programs, but everybody has decency on the job, so they should have decency out of the job. Or should have decency on both on the job and off the job. It shouldn’t vary based on your state.

Right now, the tax is structured to be experience rated, which means that it would make sense in manufacturing employment in the 1930s, but basically if an employer sends a lot of people into unemployment, they have to pay more in taxes. I mean, I’m all for soaking the rich and the employers, but it creates horrible incentives in the program to keep your workers from benefiting from unemployment. I think the last big problem is unemployment insurance is gate kept by your prior employer. Your prior employer has to give you permission before you can get the benefit. Those things can go, but the good news is that’s really easy to change. You set up a federal payment system, a federal benefit system… Or sorry, federal tax system, federal benefit system, everyone’s entitled to the same thing.

But I think the kind of emotional hurdle for a lot of policymakers is that you have to let just anybody get it. Someone could be fired, someone could quit and then walk down to the unemployment office and get a short term benefit. That’s a huge psychological hurdle for policymakers, but it’s the only alternative to their employer gives them permission.

Nick Hanauer:

Is it permission or is it just an acknowledgement that you were not fired for cause?

Kathryn Edwards:

Yes, it is an acknowledgement that you weren’t fired for cause, but it operates as permission. Okay. And the permission part, I would say that some of the more effective tactics that employers have used is delay. Like you can’t get unemployment insurance when you apply for it until your prior employer approves the claim to say you weren’t fired for cause. They have 21 days to do that. So typically they take like 20 days and seven hours. I mean, they’ll wait until the very last day. By which point you had to wait a week to apply and they get three weeks to adjudicate the claim on their end. And so by that point, four weeks have gone by. I mean, if a month has gone by since you’ve lost your job, you’ve had to get the car payment, the bills, utilities, like your rent, food. You are a month into this before you can get any help and by that point you might have already taken another job or you’ve given up and just assumed you won’t get it and there’s already harm done.

The permission part is really just, maybe permission’s not the right word, but it’s like they hold onto it. It’s in their power.

Nick Hanauer:

Okay. And then in the second piece you wrote, you spoke more directly about what you thought we should do on a national basis. Isn’t that true?

Kathryn Edwards:

Yeah. The first piece kind of goes through right now we have one 26 week benefit for unemployment and you really need to divide that in two. Have a more generous, very short benefit. Think like six weeks. Like you walked out, you’re able to get through a month of stuff and then if you need unemployment for a longer period of time, then you go in and you reapply, you get counseling and services. But most people who are unemployed aren’t unemployed for that long. You’re kind of just giving them a bridge to get to the next month, by which point a lot of them will have actually found a job.

Nick Hanauer:

Okay.

Kathryn Edwards:

So you take the short term program and you split it in two.

Nick Hanauer:

Okay.

Kathryn Edwards:

The second piece really talked about this idea of a long term unemployment system. People who don’t get reemployed even after say nine months to a year of looking. I think this gets a lot of hand wavyness from people of like, “Oh, just train them, be plumbers, be plumbers.” And it just seems such shallow thinking that it feels dismissive. People who have been unemployed for a long time, I mean, they’re going to have taken a huge psychological hit, and the idea that after going without the income they had had kind of walking away from the career they had, they’d be like, “Okay, and now here’s six months to be a plumber or two years to be electrician,” that that transition actually makes sense for a lot of people I think is kind of farfetched. The policies that I offer are things like moving assistance. It could be that you have family somewhere else, you have a friend that can help you with a job somewhere else, but you’re so out of resources, you can’t move across the country.

Yeah, I mean help people move. Give them a check to move across the country and like register at an unemployment office in that state or locality. I actually think we have investor backed home purchases. We have an investment group will buy a bunch of houses in one place and then they turn it over into the rental market. People hate this.

Nick Hanauer:

Yes.

Kathryn Edwards:

I mean, but just have the government buy your house and then they’ll sell it right back on the market and rather than having to deal with like losing so much buying and selling a house to the realtor cost and then worrying about taking it at a loss just to have the government buy it at cost, sell it at cost to stabilize the housing market if there is mass unemployment and then to help people be more mobile and move across the country. You could do all of those things in a long-term program.

I think most people’s preferred backup plan is to start their own business to have some kind of side hustle, some money that comes in on the side that they expand into more of a permanent business. You could have a long-term unemployment program, help people with that. And then the problem with government training is that it’s really expensive and so the practicality ends up forcing you into really short programs that aren’t associated with very good jobs. How much is it going to cost to subsidize … I mean, we all know the student debt crisis. Is the government really going to pay to send everyone to school for four to five years to get a new degree?

Nick Hanauer:

No.

Kathryn Edwards:

Or are they going to say like, “Hey, here’s eight weeks to become a forklift operator.” And you don’t have income during that period, so how are you subsidized? So I try to set up that if you were a little bit more… Like had other paths out of long-term unemployment, you could put resources into training that’s not just short-term classes that aren’t associated with really high paying jobs.

We have a teaching shortage, we have a nursing shortage. If there were people who had had office job for 15 years, they probably don’t want to become a forklift operator, but maybe they would be more interested in teaching and nursing, but they can’t go without income for the two years it takes to get the credentials. I think you could be really creative of like accelerated credentials for high demand occupations that require a college degree but also require training. If you didn’t go about it in the cheapest way and you had other kind of like… Imagine like all the people who are long-term unemployed and you have like some get into moving and some go into businesses, that allows training to be more tailored to the person.

Just kind of as a historical sidebar, the US has like a lot of experience with this. The GI bill coming out of World War II, its take up was so much larger than the government had ever predicted. They had no idea how many people would take advantage of the GI bill for education, and a lot of the GIs coming out, they had families, they had children, they did not want to be in school for four years. And so colleges made accelerated GI programs to basically keep them in school all year round, accelerate the degree so they could finish a four-year degree in like two and a half.

Nick Hanauer:

Wow.

Kathryn Edwards:

Oh, and that’s actually how George Herbert Walker, H.W. Bush went to Yale. He had an accelerated degree with a bunch of other GIs. So I think we could be really creative if we don’t just shove people into kind of a training program.

And the last part of that is the thing that conservatives are probably most afraid of, public employment. If you can’t find a job, have a public employment service where you do public service through government jobs.

Paul Constant:

Yeah. So would you characterize that as a job guarantee or is that different?

Kathryn Edwards:

I guess I see it as maybe like the job option.

Paul Constant:

Okay.

Kathryn Edwards:

The way that I think about the world is really through triage. The way to make it more successful is to have it targeted to the people for whom it will probably be more successful. So if you have in a long-term unemployment program that there are people that can go into public service through public employment, it’s not about saying everyone can have a government job, which I think is a jobs guarantee. I think it’s more about having an option open for people for whom it would be beneficial without kind of saying, this is for everyone. Because I think it’s not for everyone, and maybe that’s just a semantic thing in my mind. For as much as I talk, I actually am not that great with words all the time. I’m like, jobs guarantee. It’s too literal.

Nick Hanauer:

Yeah.

Paul Constant:

No, that’s interesting. That’s interesting.

Nick Hanauer:

But as an option-

Kathryn Edwards:

As an option.

Nick Hanauer:

… there’s a lot of stuff that we could do. There’s a lot of stuff we could build. There’s a lot of stuff we could fix. There’s a lot of kids we could teach.

Kathryn Edwards:

And it doesn’t have to be a federal job. It could also be a state or county or city job, right? There’s wherever the need is. I think you would see a lot of places, you have this kind of like knee-jerk of like, “That’s not a real job if you’re for the government.” And then you would probably have a lot of cities that are like, “Oh, if you gave us money to employ 20 people in community development, we would find a job for them.” And I think some places and localities would be really creative and take a lot of advantage of something like that to the benefit of their community, and rather than seeing it as the way people who are unemployed or often talked about as just some handout that’s fancy, I think a lot of states and localities would see it as a potential to make an investment in their community.

Nick Hanauer:

Yeah. I mean, I like that construct, which is a federal program that puts people where the work actually happens in local places because local places know what they need.

Kathryn Edwards:

They do.

Nick Hanauer:

And they know that they don’t have enough resources to do the things that they need. So a bunch of people who show up who all of a sudden are subsidized or paid for by the federal government, and who until recently, were high functioning working people, right?

Kathryn Edwards:

This is actually how I pitch universal childcare actually.

Nick Hanauer:

You take the little kiddies from their families and you put them to work for the government.

Kathryn Edwards:

Yes. In a big Soviet building, but there’s like just children. It’s the toddler factory.

Nick Hanauer:

The fats of gruel. Yeah.

Kathryn Edwards:

Oh yeah, they’re tiny little hands. They’re so productive. Yeah. I realized I did leave you open for that and I’m glad you took it, frankly. No, I mean, what would a universal childcare system look like? I mean, people in their mind are like Soviet block building with 300 kids in a room and we just import old communists to like walk the rows and keep them in line, but really it’s just-

Nick Hanauer:

Got to feed them gruel.

Kathryn Edwards:

Got to feed them gruel. They can’t get anything.

Nick Hanauer:

Feed them gruel. Yeah.

Kathryn Edwards:

But really, I mean, we have a mixed distribution system already, which means that most people go to a private provider and they pay for it out of pocket. In a free childcare system, it would be the government that picks up the tab, but you would still have private providers. So you would have more Head Start centers, but you’d also have more small businesses, more kind of community efforts, more employers that add a site to their work sites. So you would have a childcare center inside your office because your employer would be able to offer it without having to pay for it out of their own revenue, and you would have… Basically, I always pitch it, I was like, this would be probably one of the largest investments the federal government has made in communities across the US and every community would benefit from it, and they would get to decide where they put the childcare centers.

I mean, people talk about the government raising your kids and it’s like, but it’s not really raising your kids so much as writing them a check, and then using that money to have your communities, and you could put them in community centers and immigrant centers and churches and temples and houses of worship and you get money to convert a room into a childcare space and this is a way for your community to connect with families. Everything we know about kids growing up is that they need more community and mentorship than they’re getting today. So I’m willing to buy it, pay for it.

Nick Hanauer:

Yeah, yeah, absolutely. How about UBI? I mean, can that play a role? I’m not a big fan, but what about you?

Kathryn Edwards:

Why aren’t you a big fan?

Nick Hanauer:

Well, just generally I’m not a big fan of UBI because I feel very strongly that if we merely required large companies to pay workers enough to get by without food stamps, we erase 90% of the challenge in our economy and probably double the GDP growth rate at the same time. UBI is a thing that is solving a problem that need not exist, but does because of the absence of reasonable labor standards.

Kathryn Edwards:

Okay. My problem with UBI. UBI has like two origin stories and it’s the tech one and then the good one. The good one is really descended. Think of like the freedom budget from MLK and Rustin and Randolph of, if you had a minimum amount of income that was an outside option, people would be able to have more power in their relationship with employers and society. And a lot of people still believe that UBI is a power transfer and disruptor as opposed to just some cash. The other side of UBI I think really comes more from the tech sector and it’s, you can pick this up from Sam Altman’s writing, artificial intelligence will create a new idle class and we just need to give them money. And that first thinking is really about how do we disrupt the power imbalance that we can all see between workers and employers?

Nick Hanauer:

Yes.

Kathryn Edwards:

The tech side is like, it’s lazy, it’s judgmental and it’s pretty shallow. And I always think that one layer down is… And if we had UBI, we wouldn’t need Medicaid or food stamps or any other form of assistance. And my problem with both sides of UBI is that it doesn’t address market failure. I gave you $20,000. Are you affording health insurance?

Nick Hanauer:

No, nothing. No.

Kathryn Edwards:

No. I give you $20,000. Can you afford childcare and health insurance?

Nick Hanauer:

You can’t afford rent. Nothing.

Kathryn Edwards:

No, you can’t afford anything. And so it’s almost like a get out of jail free card of like, “Well, here’s some money, you’re an idle class, you’ll never work again. I gave you 20 grand for my largess and all your problems are solved.” But you can out earn a market failure, but you can’t change it. Government has to change market failures.” And so I think it leaves too many things unaddressed and almost as just this kind of weak sav of like, “By the way, here’s money.” I think I might be more kind in talking about it and less, I don’t know-

Nick Hanauer:

Less cynical.

Kathryn Edwards:

Less cynical. If the posture of the people promoting it wasn’t so arrogant and judgmental of workers.

Nick Hanauer:

And to be clear, it’s self-dealing.

Kathryn Edwards:

Yeah.

Nick Hanauer:

Of course these tech guys like UBI, they’re not going to have to pay for it, right?

Kathryn Edwards:

Or like, why should I take it like, put yourself from the perspective of who makes public policy and how this would work.” Government, you know who you should listen to about a worker’s potential in the labor market? Only their former employer and that’s it.” And if the employer employer says, “I let this person go and now they’re going to be idle for the rest of their lives.” Why would you give them that much power over workers or so much sway over how they’re evaluated? You get to give up on 20 million people because one of their former employers is like, we don’t need them anymore. It really to me feels like it treats workers as trash. I just don’t like people so casually talking so dismissively about the value and worth of the American worker.

Nick Hanauer:

Kathryn, if you were in charge, quickly lay out what you would do.

Kathryn Edwards:

How long do I have?

Nick Hanauer:

As long as you want.

Paul Constant:

We’ve talked about a lot of policies. I guess maybe the question might be to triage, what would you do first?

Kathryn Edwards:

Okay. This will be like one part practical to two parts idealistic. How about that?

Nick Hanauer:

Great.

Paul Constant:

Sure. Perfect.

Kathryn Edwards:

Okay. I think the first thing we can do is a lot of quick changes that are labor regulatory. Think like, I could drop this into our economy and I don’t have to do much else for it to work. I could raise the minimum wage. I could require universal paid sick days. I could require overtime for more white collar workers. I could require paid vacation. I could have shift regulation.

Nick Hanauer:

Yeah.

Kathryn Edwards:

I could drop most of that into the labor market really quickly. In fact, I could do that in like a month. Give them a year to sort it out, but we could do that really quickly. I think if anything, what American workers need right now is someone who actually champions them and who puts forward a policy that champions them. So I think coming out strong with like, we are going to do this for workers right away is it’s been a while.

Nick Hanauer:

Yeah.

Kathryn Edwards:

Then I think that we need money to buy some really awesome stuff. We need to reform the tax system. There are some easy wins and then there are some really hard conversations that have to be had. I think the progressives have hit on the easy wins, tax rich people. I don’t think it’s that necessarily that simple. I think we could change the estate tax, we can change the step-up basis. We can put in some thoughtful concerns around like the farmer objective, but I think we can change the estate tax back to a reasonable level and that’s one source of revenue. But the real problem with our tax system is that it has 271 coupons of deductions and credits and adjustments that are made to your tax bill that change how much you have to pay. And that has created 271 constituencies of people who have a vested stake in keeping the tax system complicated.

That is hard to overcome because if you’re going to raise taxes, why do you have to get rid of my thing?

Nick Hanauer:

Yeah.

Kathryn Edwards:

It is a tough conversation. I testified in front of Congress about this and I made some videos for social media after the fact. Social security is the largest public program we have. It’s $1.6 trillion a year or thereabouts. We give away $2.3 trillion of coupons in the tax system. It’s called tax expenditures. That’s the official congressional definition. It’s money that would have been collected, but is refunded back through exceptions to the tax system. $2.3 trillion, it’s 50% larger than Social Security. So I am optimistic and part cynical and idealistic and practical. You have to go after the big guns first. So if I could wave my magic wands, I would go after the tax system because I think everything else is easier when the US is raising revenue.

Then it’s easy to expand Medicaid. Then it’s easy to have universal childcare, but all of these things are harder when we’re running a deficit that’s 7% of GDP. The debt is 100% of GDP and we’re not moving in the right direction. So I think if I could wave my magic wand, it would be to have really awesome tax reform.

Nick Hanauer:

Okay. All right. One final question. Why do you do this work?

Kathryn Edwards:

Why do you do this work? Because Americans deserve it.

Nick Hanauer:

Yes.

Kathryn Edwards:

Because they deserve to have a better economy. We could do so much better than we’re doing now. We could have higher wages. We could have higher income. We could have an easier time in our cost of living. We could be a society that invests in children that recognizes that we are all in some way dependent on each other. We don’t have to be so shortsighted. We don’t have to be so cruel. We don’t have to be so self-dealing. All of these things can be different if we make better policy choices. I think the most dangerous thing in the United States is cynicism, because cynicism is permission to your POS representatives that they don’t have to try because you’ve already given up so then they’re off the hook. They don’t have to address the tax system. They don’t have to fix social security. They don’t have to invest in children because you don’t think they’re going to do it anyway and then they don’t have to.

And so I think that an absolutely reckless level of optimism is what Congress needs more than anything else because then it’ll be so clear how bad of a job they’re doing. So I won’t give up on them and I’m going to believe that we can have change because that’s the only way change will happen. They’re not going to decide on their own to do the right thing if you give them a free pass.

Paul Constant:

Yeah. Love it. I agree.

Nick Hanauer:

Fantastic answer. Well, Paul, I learned from Kathryn that we may be economics influencers.

Paul Constant:

That’s your takeaway from the conversation.

Nick Hanauer:

I have to put that on my resume now.

Paul Constant:

Change your LinkedIn. For sure.

Nick Hanauer:

Yeah. Change my LinkedIn. Yeah. No, I mean, as always, Kathryn’s just so smart and so thoughtful and has thought about these things so carefully. And I think what I take away is that her point is really obvious, that these systems are just, they’re not terrible. They’re just inadequate to the challenge of our time and it’s time to update them. And I think that one of the things that she said that I think really made so much sense was that whatever it was, 25 million people lost their jobs in the first month of the pandemic and we made it through that. We figured out how to-

Paul Constant:

Figured out answers. Yeah.

Nick Hanauer:

Yeah. We do have the answers and I think we could have the answers again if we wish to have the answers. The question is whether we have the political will to generate the answers and then enact them.

But I do think that there’s a lot of room for experimentation and we talked about a lot of that. I think I’m a big fan of… I think UBI is dumb. I think a federal jobs guarantee is a fantastic idea. I think the economics of that is just so much better.

Paul Constant:

Well, and if we learned anything during the whole DOGE thing and the resulting dips in the labor market, it’s that government jobs are real jobs no matter how much Elon Musk and trickle downers try to claim that government jobs take from the economy, which is ridiculous. It’s real work that produces real benefits and real additions to the economy.

Nick Hanauer:

Of course.

Paul Constant:

It’s insane to argue that a government job is less than another job, a real private sector job.

Nick Hanauer:

Yeah. I know that people can point to government workers being ineffective and lazy, but I don’t think you have to go far in private industry to find people who are ineffective than lazy. You could probably get rid of a third of the people that work for every big company in America and never know the difference too. So I do think that there are some really interesting solutions out there that are waiting to be enacted. We just have to have the political will to do it. Kathryn’s podcast is the Optimist Economy, definitely something to check out, and we’ll have a link in the show notes, in addition to her three recent articles in Bloomberg Opinion.

Paul Constant:

Absolutely. They should check those out. I listen to Optimist Economy every week. I’m a big fan. So this was a great conversation and I was really excited to talk to her and she did not disappoint.

Freddy:

For more content from us, you can subscribe to our weekly newsletter, The Pitch, over on Substack. And for links to everything we just mentioned, plus transcripts and more,

visit our website pitchforkeconomics.com. As always, from our team at Civic Ventures, thanks for listening. See you next week.

The post AI Job Loss Is Real. The Catastrophe Is Optional (with Kathryn Edwards) appeared first on Pitchfork Economics.

The Policy Choices That Suppressed American Wages (with Josh Bivens and Larry Mishel)

Freddy Doss — Wed, 10 Jun 2026 04:37:33 +0000

Why have wages for working Americans stagnated for decades—even as productivity, corporate profits, and the wealth of the people at the top continued to rise?

The mainstream explanations are familiar: automation, globalization, education, or simply the unavoidable forces of the market—but wage stagnation was not inevitable. It was the result of policy choices.

This week, we’re revisiting a conversation with economists Lawrence Mishel and Josh Bivens about the decisions that reshaped the American economy, weakened worker bargaining power, and made it harder for working people to claim their share of the prosperity they helped create.

As we continue sharing more about Market Humanism—the idea that markets are human-built systems shaped by rules and power—this conversation feels especially relevant. The economy we have did not emerge naturally. It was built. And that means it can be rebuilt.

Josh Bivens is the chief economist at the Economic Policy Institute. His research focuses on macroeconomics, inequality, social insurance, public investment, and the economics of globalization.

Larry Mishel is a distinguished fellow and former president of the Economic Policy Institute. His research focuses on labor economics, wages and income distribution, industrial relations, productivity growth, and the economics of education.

Social Media:

@joshbivens-econ.bsky.social

@joshbivens_DC

@larrymishel.bsky.social

@LarryMishel

Watch Nick on The Diary of a CEO

Nick recently joined Steven Bartlett and entrepreneur Daniel Priestley for a wide-ranging debate about the wealth divide, stagnant wages, artificial intelligence, and whether capitalism can still deliver broadly shared prosperity.

Watch the conversation on The Diary of a CEO.

Further reading:

Economic Policy Institute: Identifying the Policy Levers Generating Wage Suppression and Wage Inequality

Economic Policy Institute: The Productivity–Pay Gap

Economic Policy Institute: Wage Calculator: How Much More Would You Be Making If Pay Had Kept Pace With Productivity?

Roosevelt Institute: Democratic Abundance: An Abundance That Works for Workers

Roosevelt Institute: From Safety Net to Power Base: Reimagining, Not Restoring, the US Antipoverty System

Markets Built for Humans: A Guide for Policy Professionals to the New Economics

Instagram: @pitchforkeconomics

Threads: pitchforkeconomics

TikTok: @pitchfork_econ

YouTube: @pitchforkeconomics

LinkedIn: Pitchfork Economics

Markets Built for Humans – A Guide for Policy Professionals to the New Economics

Substack: The Pitch

The post The Policy Choices That Suppressed American Wages (with Josh Bivens and Larry Mishel) appeared first on Pitchfork Economics.

Market Humanism: A New Operating System for the Economy (with Nick Hanauer)

Freddy Doss — Wed, 03 Jun 2026 04:31:40 +0000

For the first time in Pitchfork Economics history, Nick Hanauer is on the other side of the mic.

Goldy and Paul sit down with Nick to discuss Market Humanism: the emerging economic paradigm he and Eric Beinhocker believe can replace the trickle-down ideas that have shaped American policymaking for the past 50 years.

Why have wages stagnated while inequality soared? Why does conventional economics treat policies that help ordinary people as threats to growth? And what changes when we recognize that markets are human-built institutions—not forces of nature?

The conversation exposes the failures of the old economic model, how power shapes who gets what and why, and why a fairer economy is also a more prosperous one.

Nick Hanauer is a Seattle-based entrepreneur, venture capitalist, and civic leader dedicated to building a more inclusive and sustainable economy. He is the founder of Civic Ventures, a public policy incubator, and co-host of the podcast Pitchfork Economics. A leading voice for “middle-out” economics, his commentary has appeared in The Atlantic, Politico, Bloomberg, and The New York Times. He is the author of The Gardens of Democracy , The True Patriot, and a frequent advocate for policies that put working people at the center of economic growth.

Social Media:

@nickhanauer.bsky.social

@NickHanauer

Further reading:

Democracy Journal – Market Humanism: A New Paradigm for a New Era

The Atlantic – The Economic Experiment That Upended Reality

The Gardens of Democracy

The True Patriot

Corporate Bullsh*t: Exposing the Lies and Half-Truths That Protect Profit, Power, and Wealth in America

Instagram: @pitchforkeconomics

Threads: pitchforkeconomics

TikTok: @pitchfork_econ

YouTube: @pitchforkeconomics

LinkedIn: Pitchfork Economics

Substack: The Pitch

Nick Hanauer:

The rising inequality and growing political instability that we see today are the direct result of decades of bad economic theory.

Goldy:

The last five decades of trickle down economics haven’t worked, but what’s the alternative?

Nick Hanauer:

Middle out economics is the answer.

Goldy:

Because the middle class is the source of growth, not its consequence.

Nick Hanauer:

That’s right.

Announcer:

This is Pitchfork Economics with Nick Hanauer, a podcast about how to build the economy from the middle out. Welcome to the show.

Goldy:

Paul.

Paul Constant:

Hi.

Goldy:

Oh, it’s always fun to have you on the pod filling in for Nick or sometimes filling in for me.

Paul Constant:

Uh-huh. Yeah.

Goldy:

And today it’s a really special episode of Pitchfork Economics with Nick Hanauer because this is-

Paul Constant:

Wouldn’t miss this to the world. Yeah.

Goldy:

This is the first, first time we’ve ever done this. This is actually Pitchfork Economics with Nick Hanauer. With Nick Hanauer. Yeah. So the reason why you’re joining me, the two of us here, is we’re going to actually interview our boss today, which is something we-

Paul Constant:

Very fair and balanced interview.

Goldy:

That’s right. A little caveat upfront. He pays us. So keep that in mind. We like to wear our bias on our sleeve and we want you to judge us in that context. But the reason why we’re doing this is because longtime listeners know that we’ve been talking about what we’ve called middle out economics for a very long time. We have started using this term “market humanism” to describe the fundamental economic paradigm that informs middle out economics. Middle ed economics is a pretty simple high level political and policy narrative that is meant to provide rules of thumb for how to manage the economy and how to talk about it. But it has always been informed by a much deeper scientific foundation. And it’s something we’ve been working on in the office. And more importantly, Nick and his co-author, Eric Beinhocker, have been working on a book forever. I think certainly the entire time you’ve been working here, Paul, which is almost-

Paul Constant:

Yeah. 12 years.

Goldy:

Right. 12 years, they started going public with it. There’s a little handbook, which is a summary of this much bigger book, which will be coming out in a year or two called Markets Built for Humans. And recently in the past couple weeks put their flag in the ground with a couple pieces in major publications. There’s a piece in The Atlantic and a piece in Democracy Journal, which goes into with much greater detail. So we thought it might be a good time to turn the mic on and put Nick on the other side of the mic and have a conversation about what market humanism is and why now.

Paul Constant:

To be clear though, he is going to still be using this end of the mic to talk into.

Goldy:

Yes.

Paul Constant:

Because if we put him on the other end of the mic, that would make for a bad podcast.

I just want to clarify one thing you were saying, Goldy, because you were throwing some terms around. When we talk about neoliberalism, for instance, and we talk about trickle down economics, neoliberalism is sort of the economic paradigm. It’s the overarching thing that they teach in schools that is in the textbooks and things like that. And trickle down-

Goldy:

Well, neoclassical economics is the thing they teach in textbooks. Neoliberalism is the broader economic ideology that has dominated our policy and the way we think about economics and the economy for the past 50 years. All these terms, and if you don’t like the term neoliberalism, some people use the term market fundamentalism. This idea that tries to reduce all of human activity to market interactions. And they teach you how to think like an economist in terms of, I don’t know, dealing with your children.

Paul Constant:

And then trickle down as a term, generally, we use it when we’re talking about the policy and the political argument around it and things like that, sort of the ground level, right? So what we’re talking about here is market humanism. And that kind of holds the same place in the model as neoliberalism or neoclassical. Which would you say?

Goldy:

In a sense. It’s confusing, but both. What we are talking about is not just replacing that neoliberal ideology, which is dominated, but actually replacing what we teach in introductory economics courses. The fundamental principles of economics, the textbook that is taught is titled Principles of Economics. Market humanism argues that those principles are wrong. It’s a big plane. And so since Nick earns a thousand times more than us a year, who better to go and support this claim?

Paul Constant:

Exactly. Since he’s clearly a thousand times better than us at explaining it since the market is open.

Goldy:

Let’s see if that’s true. So why don’t we talk to Nick?

Nick Hanauer:

My name is Nick Hanauer. I am the founder of Civic Ventures and the host of Pitchfork Economics. And happy to be here on the Pitchfork Economics podcast.

Goldy:

On the other side of the mic for a change.

Nick Hanauer:

Yes, exactly.

Paul Constant:

So Nick, you and Eric Beinhocker, you have two new pieces out making a pretty big argument.

Nick Hanauer:

We do.

Paul Constant:

What are you trying to do with these pieces? Let’s start there.

Nick Hanauer:

Yeah. Well, as listeners of the podcast know, we have been hard at work for a really long time on a new economic paradigm. Why? Because the existing economic paradigm is mostly a pack of lies. And in its current form it functions effectively as a protection racket for the rich. That if you take that paradigm seriously, what we call neoclassical economics or neoliberalism and enact policy on the basis of it, only one thing can happen, and that is the rich will get richer and everybody else will get poor. And the people who represent that paradigm want you to believe that it is the objective truth about how economies work and that there is no alternative to it. And that also is not true because all of the underlying assumptions of that paradigm are just objectively measurably false.

And you can start with one of the oldest of those assumptions, the idea of being utility maximizers. This is a thing that Jeremy Bentham thought up in 1787. He ran no experiments. He had no empirical basis upon which to decide this is how the world operated, but it sounded good and it was mathematically tractable and people grabbed onto it and just assumed it was true.

Goldy:

And why wouldn’t you? I mean, after all, this is a guy who, in his will, had himself mummified and is now in a glass case like in the lunchroom at the London School of Economics.

Nick Hanauer:

That thing’s ugly.

Goldy:

So what could be more credible than that?

Nick Hanauer:

Exactly. Exactly.

Goldy:

Not a weirdo at all.

Nick Hanauer:

No, not a weirdo at all.

Goldy:

I can’t see why he had this deep insight into human nature.

Nick Hanauer:

Yeah, exactly. Not a weirdo at all.

Paul Constant:

Could I ask a follow-up actually?

Nick Hanauer:

Yeah.

Paul Constant:

For people who are now, they’re going to the grocery store, their prices have been rising nonstop for four years, things like that, why is it important to be talking about paradigms right now? Why is that where you’ve been putting your energy?

Nick Hanauer:

Why would anybody care? Why should anybody care? Yeah. So that’s a great question. It is the question because economics, how we see economic cause and effect, which is what a paradigm is, is the operating system of the world. It defines for us how we see the world, what we see in it, and what we think we should do to make the world a better place.

By way of example, the existing paradigm tells you that the existing distribution of income is the socially and economically optimal distribution by definition and that anything we do to change that distribution will harm welfare for everybody, will make the economy less efficient. And as a consequence of that belief, the minimum wage, by way of example, has not been increased since 2009 and sits at $7.25 an hour or $2.13 an hour plus tips for tipped workers because the consensus economic view held by both Republicans and, to a great extent, Democrats is that because of all that stuff, if you raise the minimum wage, it will create a corresponding amount of job loss.

Now, none of that is true. It’s the farthest thing from the truth. And one of the reasons is not true is that academic economics has made a category error by insisting that the economy is this Pareto-optimal equilibrium, which it is not. It is an ecology of increasing returns. So if you understand the system correctly, as our new paradigm does, as effectively an ecology, claiming that when wages rise, the number of jobs in the economy will fall would be like claiming that when plants grow, animals shrink. This is obviously not how the system works.

Affordability crisis that people feel that they have isn’t really an affordability crisis. It’s a wage crisis. If the minimum wage had tracked productivity gains for the last 50 years or something like that, as it once did-

Goldy:

Over 30 years, it did.

Nick Hanauer:

That’s right. It did. And it stopped exactly when the neoliberal revolution took over in the mid ’70s. But if the minimum wage had tracked productivity gains as it once did, instead of being $7.25 an hour, it would be in the range of $25 an hour. And if the overtime threshold, which now covers 10% of salaried workers had tracked productivity gains or basically kept up with the economy, it would include two-thirds of workers.

Goldy:

Which it once did.

Nick Hanauer:

Which it once did.

Paul Constant:

Right.

Nick Hanauer:

And if that was true, the median income in America would be someplace between 50 and 100% higher and we would not have an affordability crisis. And that’s why people should care, is because your policymakers, whether they be Democrats or Republicans with a few small counter examples, still believe that if they raise the minimum wage, it will be a job killer. And what the old paradigm does, neoliberalism effectively, is that it takes off the table any policy intervention that could actually help ordinary people because it codes all of those things as bad for the economy, even though they’re not.

Goldy:

And by bad for the economy, the economists mean bad for average working people?

Nick Hanauer:

It does, right, for you.

Goldy:

If you raise the minimum wage, it’s bad for workers. If we tax Nick Hanauer, it’s bad for me and all.

Nick Hanauer:

Correct. Correct.

Goldy:

Which might be true because you pay us, but-

Nick Hanauer:

That’s right.

Paul Constant:

In this very particular case. Yeah.

Nick Hanauer:

In this very particular case, right? But for sure, the reason that the vast majority of Americans have fallen farther and farther and farther and farther and farther behind every year for the last 50 years is because of the old economic paradigm.

And look, let’s be clear, part of what’s animating that paradigm is the intention of terrible people who just do not care about anyone but themselves, who understand perfectly clearly that raising wages doesn’t kill jobs, but just say it because it’s the most effective way they’ve ever found to keep wages low and profits high. And those people will not be healed by better information about economics. Those people need therapy. But the broader problem has been this consensus, which is not nefarious, which is just wrong. We’re wrong. We were wrong about what the economy is. We were wrong about human behavior. We were wrong about the origin’s prosperity and the nature of it.

And while we will never get rid of the terrible people, they will always exist. Incredibly rich people who do not care about anybody else and who are absolutely convinced that what is good for them is good for everybody, that will never go away. But what we can do for the other 95% of people is show them that we’ve been understanding economic cause and effect, not just wrong, but effectively backwards.

Raising wages doesn’t kill jobs, it creates them obviously because if nobody has any money, who will buy the stuff in the economy? That’s why this is essential work, is that if we let the existing paradigm continue to dominate policymaking, all of the things that policymakers should do to improve the lives of ordinary Americans will be taken off the table as big government job killing attacks on freedom or whatever it is. And that’s why it’s such essential work.

Goldy:

We’ve been talking about these ideas and you have started using the term market humanism a little bit on the pod.

Nick Hanauer:

Correct.

Goldy:

But we’ve been starting talking about the ideas for years now. All of a sudden, Nick, you and Eric have two pieces simultaneously won this larger piece in Democracy Journal, which talks directly about paradigms and lays out what’s wrong with the old paradigm and what the new paradigm teaches us.

Nick Hanauer:

Yes.

Goldy:

You also have a piece in The Atlantic-

Nick Hanauer:

Correct.

Goldy:

.. which focuses on the minimum wage.

Nick Hanauer:

Yeah. Narrows the analysis to the minimum wage. Right.

Goldy:

And I want to talk a little bit about why focusing on the minimum wage is so important, what it does in terms of tearing down the old paradigm.

Nick Hanauer:

Yeah. I mean, we like the minimum wage. We call it the minimum wage the gateway drug of political economy, because it’s the simplest thing if you can use the minimum wage as a way to understand economic cause and effect in a very clear, discreet way. And again, that canonical idea that if you raise wages, it will automatically kill jobs, it’s one of the central claims of neoclassical economics and neoliberalism.

Goldy:

It’s even more central because… And for those who are watching on YouTube, I’m holding up Principles of Economics. It is Mankiw’s Textbook, The 10th Edition. This is the textbook most widely used to teach introductory economics around the nation. It’s by a Harvard professor. It’s taught at Harvard. And one of the core principles of neoclassical economics, of Orthodox Economics, is that there is an inverse relationship between price and demand. When the price of something goes up, demand for it goes down and that is the driving force behind this equilibrium system that is the economy. And we all know from our own behavior, it’s somewhat true depending on the things you’re talking about. But the illustration, the literal textbook illustration of that inverse relationship is the minimum wage.

Nick Hanauer:

Yes.

Goldy:

They use the minimum wage to demonstrate this fundamental law that when the price of something goes up, people purchase less of it.

Nick Hanauer:

Yes. And this is obviously… It may not be obvious to our listeners. It is demonstrably false. Why? Because there isn’t a profound connection between how much people are paid and how much they can buy.

Goldy:

Right. Even if you don’t buy that causal relationship, Nick, we have 30 years of empirical evidence showing that it’s not true.

Nick Hanauer:

Correct. It’s just so important for people, both political leaders and policymakers, but also just the ordinary citizens that go about trying to make a way in the world, to understand this stuff because we have to start to push back on these terrible ideological lies.

Goldy:

Right. And when you say, Nick, that it’s wrong about the minimum wage, what we’re saying is it’s wrong about the law of supply and demand, right?

Nick Hanauer:

Of course.

Goldy:

That it is not a fundamental law. And this is what I love about focusing on the minimum wage. You call it a gateway drug. I like to call it the wedge issue. If it’s wrong about that-

Nick Hanauer:

It’s wrong about everything.

Goldy:

Yeah.

Nick Hanauer:

It’s wrong about everything.

Goldy:

You got to start questioning everything because if it’s not a law, the whole thing unravels. None of the rest of their theory works.

Nick Hanauer:

Correct.

Goldy:

It has to be true. And that’s why they teach it is true, because the rest of it falls apart.

Nick Hanauer:

That’s right. That’s right. Just to your point, Goldy, the reason that we’re now talking about marketing humanism is that Eric and I and dozens of other scholars have been at work on this stuff for a very long time. And what our contribution has been, my colleague, Eric Beinhocker, and I, what we did is we could see the hazy outlines of an alternative paradigm in the scholarship but spread across disciplines. There was all this amazing scholarship within the economics community, but also in anthropology, psychology, physics, mathematics, sociology, so on and so forth.

And what we’ve spent the last 10 years doing is excavating all of that scholarship and organizing it into a coherent hole that you can now see as an economic paradigm that can replace the old one. Just to be clear, there’s almost no original ideas from us in this new paradigm.

Goldy:

Right. You’re not doing science.

Nick Hanauer:

No.

Goldy:

You’re doing narrative.

Nick Hanauer:

We’re doing narrative. And what we’re doing is organizing the science into a narrative that people can understand and use. And when you do that, when you organize all of the recent scholarship, you end up with this framework that is unbelievably compelling because it’s rooted in actual empirical science where people actually did scientific tests to determine if this stuff was true, tests about human nature, tests about the origins of prosperity, all this stuff.

Again, when you see it in its whole form, it totally transforms how you see economic cause and effect and it opens up a huge amount of interesting territory for the exploration of new policies and new ways to understand how we should organize a society.

Goldy:

And that’s why it’s important.

Nick Hanauer:

And so the piece in The Atlantic, which narrowly focuses on the minimum wage begins to explore this new paradigm. The piece in the Democracy Journal, which is longer, explains both what a paradigm is, what the old paradigm is, and explains to a certain degree what the new paradigm is.

And I hope, in fact, I insist that we also provide a link to the booklet that we call Markets Built for Humans, which is an abbreviated version, although it’s quite large, it’s 150 pages long or something like that, of the paradigm itself where all of the detail is located. And all of this stuff is free to download. We hope that everyone downloads a copy, reads it, and then shares it with everybody that they know. Because here’s the thing, citizens are going to have to get the word out about this stuff because the academic economics community is not likely to do it. And the forces of evil are definitely not fired up about this new way of understanding economic cause and effect. So we’ll take a lot of work to get the word out.

Paul Constant:

So what does it mean to say that markets should be built for humans as opposed to the reverse, which I think is what we’ve been living in for my entire life?

Nick Hanauer:

What neoclassical economics did, neoliberalism did, is it elevated capital efficiency, effectively returns to capital as the highest social and economic good. And anything that in any way took away from the advantages that owners of capital get by deploying capital was understood to be terrible for everybody.

The word efficiency, for example, in modern parlance, simply means returns to capital. And as a consequence, all the policymaking that took place within this framework helped capital returns and harmed everything else because the word efficiency should be interrogated, right? Efficient for whom?

Paul Constant:

Right. Right.

Nick Hanauer:

Is it efficient for workers to be laid off? But there’s all sorts of ways of looking at it. By way of example, corporate profits as a share of GDP have doubled over the last 50 years from about 5 or 6% to 12% or 13%, while labor’s share of GDP has fallen by exactly that amount, more or less. It’s in the range of $2 trillion a year now. That extra $2 trillion a year in profits isn’t profits because it needs to be or should be or has to be. It’s profits because powerful people prefer it to be. That’s not more efficient. That’s just a different way of cutting up the value created by enterprise in the society. There’s nothing more efficient about making risk people richer.

Goldy:

It’s more profitable. And I think a great example, I think-

Nick Hanauer:

It’s more profitable, Goldy, but worse for the economy overall.

Goldy:

I think a great example was provided by COVID and the supply chain crises. Those global supply chains were very capital-efficient.

Nick Hanauer:

Yes.

Goldy:

It cost less. Rather than having manufacturing here and paying people, western wages and keeping large inventories of protective equipment, we outsourced all of that to China and we had just in time delivery of these things. You didn’t need to have a big inventory. And when that crisis hit and everything shut down, we had doctors wearing garbage bags for lack of protective equipment. We had this huge shortage. And that was not necessary. It was not efficient in that moment, obviously. It was extremely costly to deal with that supply chain crisis, both in terms of money and in human lives. People unnecessarily died-

Nick Hanauer:

That’s right.

Goldy:

… because they did not have masks and other protective equipment. You had that trade-off between efficiency and resilience. And what we have built is an economy that is not very resilient to shops.

Nick Hanauer:

Yes.

Goldy:

Is it efficient? Sure, when it works.

Nick Hanauer:

Yeah. Well, I mean, but, again, the word efficient, efficient for whom and for what?

Goldy:

Yeah. And is that good?

Nick Hanauer:

Right?

Goldy:

I’d rather be resilient.

Nick Hanauer:

Yes.

Goldy:

Beneficient.

Nick Hanauer:

And you’d rather have a society where no one working for a large company is paid less than it takes to live in dignity without government assistance. I consider that to be efficient. It is not efficient to have these giant companies paying people so little that they all require food stamps and Medicaid and rent assistance and they’re always having to hold down three jobs and stuff like that. That is not efficient. That’s capital efficient.

Goldy:

So let me ask you something, Nick. I’m going to cuss play Fox News host here. You are a venture capitalist who became extraordinary wealthy investing in companies, creating companies, investing. What turned you into a communist?

Nick Hanauer:

Yeah. So I definitely don’t feel like I’m a communist or a socialist because even though capitalists and neoliberals and neoclassical economists misunderstand what markets are and why they’re good, they are correct that they are a great social technology. So the conventional view is that markets allocate scarce resources efficiently. And that is not true.

Goldy:

Right.

Nick Hanauer:

There is nothing efficient about how a market works.

Goldy:

By the way, again, going to the textbook, literally the definition of economics in the textbook is the study of how a society distributes scarce resources. That’s what economists do, okay?

Nick Hanauer:

That’s right.

Goldy:

I’m just saying that I’m not making it up. This is what they teach impressionable youth.

Nick Hanauer:

Yeah, that’s right. And that’s just not true. The reason that markets are so fundamental to creating prosperity, enabling the human spirit to a great extent, is that they’re evolutionary systems. They’re like an ecology where firms act like organisms and this structure enables groups of people to cooperate to solve complex problems, which is what prosperity actually is.

Prosperity isn’t money or GDP. It is the accumulation of solutions to human problems. Going from aspirin to antibiotics, that is economic progress. That’s creating prosperity. And you do that by having groups of people come together with different ideas, putting old ideas together in new ways and creating new technology, new innovations that can improve our circumstances. And this is what markets do better than anything else we have ever devised. And so I am a huge fan of markets but not of capitalism, which sees markets simply as a way to extract value from the rest of society.

I mean, that’s not intrinsic to markets. You can structure markets in a way so that they do serve human flourishing, right? You can use government to ensure that businesses are solving more problems than they’re creating. I mean, this is what regulation is. Regulation is merely the act of encouraging economic activity that improves people’s lives and discouraging economic activity that harms people’s lives. And when you do that, you end up… Look, you’re never going to have a Utopia and there will always be, again, sociopaths who run companies who try not to do the right thing, but we can very much change the standards by which we operate markets in ways that will both ensure that they are sort of directionally pointed at helping people, not harming them, and minimizing the damage when there’s stuff that goes wrong.And again, market humanism is not a Utopian paradigm, but it does point towards a way to organize a society where we will all live much better lives.

And I want to make one very important point. Listening to this, you may hear that it’s worth making a trade-off against growth for a fair economy. I am not saying that. What I am saying is that a fairer economy will grow faster than an unfair economy.

Goldy:

Right.

Nick Hanauer:

Right? We are not trading off against growth here. By way of example, just so folks know, we used to have an economy that grew at 4, 4.5% a year, even given that GDP is its a terrible measure, but just stipulate that you’re using that measure. And as soon as the new liberals took over, it fell to 2%. Why? Because all the money in the economy left the pockets of ordinary citizens who actually make the economy go and ended up in the offshore bank accounts with people like me parked in places that don’t help the economy.

Putting a $200 million painting on your wall is not driving the economy forward. I’ve said this a million times. I make a thousand times as much as the ordinary citizen, but I don’t have a thousand times as many pairs of jeans. I only get a haircut every two months.

Goldy:

I’ll just rub it in that you need haircuts.

Nick Hanauer:

Yeah, there you go. Yeah. Yeah. But anyway, so that’s the core of the thesis, is that our economy would grow faster if we included people more robustly in it.

Goldy:

And this is the core middle out argument that we’ve been making for years when we use that term that this idea that the middle class is a consequence of growth is backwards, that it’s a large growing robust middle class that grows the economy.

Nick Hanauer:

Correct.

Goldy:

And the middle class is not a consequence of market capitalism. It was a political choice that was made in the wake of two World Wars and a great recession-

Nick Hanauer:

Correct.

Goldy:

… and the rise of communist dictatorships in the Soviet Union and elsewhere that, “Ah. We need to prove that our system works.” I mean, it was a bargain. People negotiated over this. The leaders of industry agreed to it. There was the Treaty of Detroit.

Nick Hanauer:

Yeah. That’s right.

Goldy:

We had both parties. We had… What was it? During the Eisenhower administration when the top marginal tax rate was 94%.

Nick Hanauer:

That’s right.

Goldy:

I mean, this was a choice that was made to build the middle class mostly for white people, but you have to put it in the context of our racist past, but it was a political decision. Political and policy decisions were made and then were later unraveled from the mid 1970s onward.

Nick Hanauer:

That’s right. I mean, I think you raised a very important point. One of the central distinctions between the neoclassical paradigm and the new economics, it’s relative understandings of the underlying mathematical dynamics of these systems. And the old system assumes that the system effectively is stable. It’s like if you compared it to games and the old system, we’ll be playing rock, paper, scissors where what happened before has no effect on the future.

But the modern economics, market humanism, acknowledges that that is not how a modern economy actually works. It’s called a non-ergotic system, but basically means that what happened before matters a lot. That’s called path dependence. And luck is also an incredibly important factor and compounding is also an incredibly important factor. And that game is a lot like the game of monopoly. And the thing about monopoly is it doesn’t matter if you go to monopoly school. If five people sit down to a game of monopoly and they play it long enough, one person will own everything and everyone else will own nothing. It’s in the nature of the game. And this is how a modern market economy works.

Goldy:

Right. And it’s not necessarily meritocratic.

Nick Hanauer:

No. No.

Goldy:

Right? It’s who lands on boardwalk first and has the ability to buy.

Nick Hanauer:

Exactly. And it just compounds.

Goldy:

Right. And it compounds over time.

Nick Hanauer:

That’s right. Four lucky roles in a row and you own the game, right? That’s it, which is exactly how it is in life. Which is not to say that talent and luck don’t play a role. They do. At least 50% of the role, but not all the role. And what that means is that there is no middle class in the history of middle classes that was not created without deliberate policy aimed at ameliorating these internal mathematical compounding dynamics. And that means that if you want to have a middle class, you have to deliberately create one. And that’s why the idea of this laissez faire, just let the free market sort it all out, stuff is such utter nonsense. Unless you’re the Koch brothers, in which case you don’t care, you just want to get richer, right? You don’t care about other people.

Goldy:

And this is where democracy comes in, Nick.

Nick Hanauer:

That’s right.

Goldy:

Because one of the big things that’s missing from the old paradigm, deliberately and ridiculously missing, is power.

Nick Hanauer:

That’s right.

Goldy:

There is no power in the old economics, right? It assumes that it’s everything set by prices.

Nick Hanauer:

Yeah. Does the word even appear in the Mankiw textbook? I can’t remember, but-

Goldy:

Only in the context of market power.

Nick Hanauer:

Okay.

Goldy:

The idea that you could get some type of monopoly, large share of a market, and then you’re able to set prices. But it doesn’t talk about the power imbalance between me and you, Nick.

Nick Hanauer:

Yeah. Correct. Right.

Paul Constant:

So in the Mankiw view, this is just three equal economic actors having a chat.

Nick Hanauer:

Three terms.

Paul Constant:

Yeah. Three economic… Yeah. Okay.

Goldy:

Right.

Paul Constant:

We all have equal… Okay.

Goldy:

It’s funny, you say this and we never… One of your phrases, Nick, is that employers don’t pay you what you’re worth. They pay you what you’re able to negotiate. And we never get to negotiate with you over our raises more.

Nick Hanauer:

Exactly.

Goldy:

You’ve taken yourself right out of the equation because that’s what rich people do. There is a natural power imbalance. And even Adam Smith talks about that in the wealth of nations that employers have more power naturally.

Paul Constant:

That’s right. That’s right.

Nick Hanauer:

Yeah. I mean, one of the tricks of the neoclassical paradigm was literally taking power out of the equation. And an economic theory that doesn’t account for power would be like a physics that didn’t account for gravity. It’s absurd. It’s absurd.

Obviously, power has a huge impact on these arrangements. One of the great examples of this trick is the principle of marginal productivity. This is the theory of economics that says that what you are paid perfectly represents the value you create in the enterprise. The history of this idea is so instructive and such a great parable about how this framework was put together. I’m going to get these dates more or less right. In about 1879 or something like that, a guy named Henry George writes a book called Poverty and Progress, which basically says the richer stealing from you. And there’s no reason for us to be poor. It’s just this unfair and scandalous.

Goldy:

Those of you, the urbanists out there, it’s the land tax guy, the land value tax guy.

Nick Hanauer:

That’s right.

Goldy:

That was his main argument.

Nick Hanauer:

So this book doesn’t just become a bestseller. It becomes the bestselling book in the history of the United States up until that time. And the powers that be freak out. So was it Morgan? JP Morgan? I think it was JP Morgan freaks out, hires an economist named John Bates Clark, brings him to the University of Chicago and says, “Fix this.” And John Bates Clark comes up with this idea called the theory of marginal productivity. And basically, what it says is that no matter what you’re paid, that’s what you’re worth. But in the book that he writes, “Clark, he says what he shouldn’t have said out loud, the quiet part out loud, which is, ‘Hey, you guys, we have to tell people that they earn what they deserve because if they don’t believe that they’re getting paid what they’re worth, they will be angry, they will revolt and they will kill us and we can’t have that’ So we have to persuade them that no matter how much you’re paid, that’s the reflection of the value you create.”

And this idea will not surprise anyone listening to this podcast, that that idea sounded great to a whole bunch of rich people and they swept it up into the economic paradigm and worked it in. And today when you take Econ 101, they tell you that no matter how much you earn, that’s all you’re worth. So if you earn $12 an hour as an EMT saving people’s lives, that’s because 12 bucks represents the value you create. And if you rub money together to make more money on Wall Street and earn $100 million a year, well, that’s because that’s the value you create, which is obviously nonsense. It’s just nonsense.

Goldy:

It’s because you’re doing God’s work according to the CEO of Goldman Sachs.

Nick Hanauer:

Yeah. Exactly. But it is a belief that is very hard to root out because everyone has to be the hero of their own story. And I guarantee you that Ken Griffin believes that his $50 billion in net worth is absolutely a reflection of the enormous amounts of value he has created in the world and has absolutely no compunction about the fact that school teachers can barely put food on the table. Not a problem for him, right? But these narratives are incredibly important to people because the cognitive dissonance that would be created by having to wrestle with the fact that you’re a parasite and you manipulate markets in a very particular way in a context that rewards that, that doesn’t feel great.

Goldy:

We’ve been talking for a while. This brings us full circle back to paradigms. What you and Eric are calling for, what we’ve been essentially working for on this podcast for the past 150 years that we’ve been doing it feels like that sometimes.

Nick Hanauer:

Feels like.

Goldy:

We’re talking about a paradigm shift, right? We’re talking about going from the way they teach economics in these textbooks, the way it’s been understood and taught for half a century and the way people view their own role in the economy and what it does, what the economy is basically, what economics is. And you’re talking for a complete paradigm shift.

Nick Hanauer:

Yes.

Goldy:

We’ll admit it’s big, but explain why that’s not impossible.

Nick Hanauer:

Well, it’s not impossible because it’s happened before, right? The neoliberal paradigm was created by a small group of people who were committed to the cause. As much as I hate neoliberalism today, it’s worth acknowledging that the people who created it created it in a context where it made a lot more sense. So that was the context within which the sort of Soviet and Chinese style authoritarian socialism was on the rise, which was distinctly worse than what we had. And they were, I think, appropriately worried about those paradigms taking over the world. And so not all of it was nefarious. Some of it was well-meaning. Like all things, the pendulum swung too far and the worst actors got ahold of it and weaponized it to their advantage. And this is not unprecedented in human history. This is just kind of often what happens. So there’s that. There’s precedent for these paradigms changing. And the other thing is that this paradigm is good for about 99% of the people on earth. Good for 100%.

Goldy:

It’s good for you, too, Nick, if it means that the people don’t rise up and murder you.

Nick Hanauer:

Exactly. But Goldy, even then, even if I wasn’t afraid of that, a world in which the median worker earned twice as much as they presently do, in other words, if the median worker had maintained their same share of GDP since about 1975, they would earn in a range of twice as much. Instead of about $60,000 a year, they would earn the range of $120,000 a year. If we had done that, our economy would be effectively twice as large, which means that all of my businesses would have twice as many customers. Or if not twice as many customers, customers who could buy twice as much stuff and the country would have effectively zero budget deficit because there would be so much more tax paid by everybody, by the way, both federally and locally. And we would have 1 jillionth of the political polarization that we currently have and none of the political craziness because everyone would feel like, “Well, I was kind of included in this.”

That’s all people wants. They just want a fair shot. They don’t expect everyone to be equal. They just want to feel like it’s moderately fair that, “If I work hard, play by the rules, I will get ahead.” And I don’t think that you’re likely to be able to build a society on planet earth that’s much better than that. I think that’s all people want.

Goldy:

Right. There will always be haters, Nick, but it’s hard to blame trans people and immigrants for all your problems when you don’t really have that many problems.

Nick Hanauer:

You don’t have that many problems. Right. Right. Yeah, you’re going to retire and your kids are doing fine and you can afford to send them to college and your healthcare is not going to bankrupt you and all the things. People are not unreasonable. They just want kind of the basics. And especially when they can see with their own eyes a small group of people doing nothing which appears to be very productive, living beyond the dreams of Avarice, which is the situation we find ourselves in.

Goldy:

Right. And let’s be clear, when you say that it’s happened before, paradigm shift, I mean, shifts happen and they happen pretty regularly and long-

Nick Hanauer:

Yeah, 50 to 100 years.

Goldy:

Right. Right. We had that shift in the 1970s. Before that, what neoliberalism replaced was the old Keynesian consensus that came out of the Great Depression and guided us through World War II and beyond. Before that was the old laissez-faire paradigm-

Nick Hanauer:

That both Roosevelts addressed, right? Teddy and FDR.

Goldy:

That’s right. And before that, I guess Mercantilism before… And so these things happen.

Nick Hanauer:

And for that, [inaudible 00:45:32].

Goldy:

Right. So these things happen. Shifts happen essentially. And what’s important about the past few shifts is that they came out of intellectual movements, very concerted efforts to change people’s minds about how markets worked best. And now we have all this science saying that the old paradigm is wrong and that what we’re calling market humanism is directionally much more scientific and-

Nick Hanauer:

That’s right. And Goldy, I mean, as you know, we’ve only been showing this paradigm to people for about 90 days or something like that, but the reaction from people has been absolutely incredible. Obviously it’s pretty technical, but for people for whom these sorts of ideas are mission-critical, they are flipping out, flipping out about this paradigm because it reframes everything. It just makes everything clearer and it makes doing the right thing see rational rather than irrational. So again, I just really encourage folks who are listening to this podcast to download all this stuff, take a look and then share it with everybody because that’s what it’s going to take to begin to push back on this orthodoxy.

Paul Constant:

Yeah. We’ll have links to The Atlantic piece, the Democracy piece, and the booklet in the show notes. Do you have a preferred reading order in that order? Maybe The Atlantic piece and then the Democracy piece and-

Nick Hanauer:

Yeah, I might read the Democracy piece first just because it’s all encompassing.

Paul Constant:

Okay.

Nick Hanauer:

It’s a big reading list. Sorry, folks. We’re weighing you down, but hey, if you don’t want to live in a authoritarian hellhole, it’s going to take work.

Paul Constant:

A little bit of reading is all. Yeah. Yeah.

Nick Hanauer:

Yeah. It’s going to take a little reading.

Goldy:

Okay. I want to take advantage of this very special situation, Nick, to ask you the final question. Why do you do this work?

Nick Hanauer:

That’s a good question. Yeah, I get asked that a lot as you can imagine. And the best answer I’ve been able to come up with is one-third is just empathy. I think I’m a reasonably empathetic person and I am happy when other people are happy. I’m not happy when other people are sad. Living in a world where most people are struggling is not the world I want to live in. There’s no reason for it. It’s unnecessary and bad and we shouldn’t do it. So there’s that.

A-third of it is that I just find this work unbelievably interesting and stimulating. It’s just a joy to work on these problems and to try to use your brain to figure them out. I mean, Goldy, I know you agree, right? Paul, you do too, right? It is such a privilege to get to work on this stuff and to think about it and to talk to people who are working on it and all that stuff. So it is fun.

And a-third is I think if I’m just self-reflective at all, I’m pathologically ambitious. I’ve always been ambitious. I never saw a problem I didn’t want to solve or a mountain I didn’t want to climb or whatever it is. And I just think that rewriting the operating, the system of the world ambitious, yeah, crazy. Like comically ambitious. But it’s just the kind of stuff I love to do and I’ve always liked to do. I’ve always wanted to start big companies and do crazy things. And so this is currently the outlet for my ambition.

Goldy:

Right. And Nick, I think something you and I really share is we both like being proven right.

Nick Hanauer:

Yes, we love to be right.

Paul Constant:

So I really liked where Nick landed at the end there when he referred to this as the operating system of the world, because I think that’s something I don’t think that we actually talked about something we say around the office a lot is that economics is the story of who gets what and why. And that’s the whole ballgame. That’s like the explanation of why we make what we do and why Nick makes what he does. And I think operating system is a relatively modern way of thinking about it, but it seems very clarifying to me in that it signifies both how it works, how this paradigm works, and also the size and scope of the challenge.

Goldy:

Right. We emphasize throughout that this is all of our claims are grounded in science. And one of the scientific claims, it’s clearly true, is that we are storytelling creatures. This is how we evolved. We understand the world and our place in it through the stories we tell. And if you understand economics as a story, as you said, a story we tell ourselves to justify who gets what and why, we begin to understand that we can interact with the economy differently, we can guide it, we can change it, we can choose different outcomes, not just different policies, but different outcomes if we tell ourselves a different story.

And that’s what that giant stupid textbook is. It’s a story you go through. And he tells little stories, make you tells little stories throughout it. It’s a story supported by graphs and charts that are grounded in absolutely fucking nothing. And I want to get to this because this is really important. I want people to understand this because I don’t think it was emphasized enough in this conversation how deeply rounded in science market humanism is. Not just psychology or anthropology, evolutionary science, but all the way down to physics. How many of the most influential thinkers that have guided the new economics, whatever it ends up being called and however its narrative is eventually formalized, how much has come out of just plain old physics, physicists, the complexity theorists, the information theorists. It is real hard science of which there is none in the old economics.

It is this fascinating thing that the old economics, neoclassical economics, its whole equilibrium system is modeled on the first law of thermodynamics, which is the conservation of energy. When one thing goes up, another thing must go down. It’s modeled on that. That is the metaphor that guides all of the old economics, Orthodox economics. And yet there’s no actual physics in it. It just adopts the metaphor and is totally unscientific after that. And it’s ironic because at the time the old economics was formulated, the second law of thermodynamics had not been discovered yet. And that is essentially entropy, that the universe is on this path towards the cold, dark, depth of the universe, that to do any sort of right work to create any sort of order, you need to use energy. And using energy, converting energy into order always creates waste, which ends up creating more disorder in the end.

And this is what life does. The organisms access energy to create order in our own bodies. This is what the economy does, what societies do. We access information, create order not just in our bodies to feed us, but in our physical world. None of that is in the old economics. It’s not mentioned at all. It’s not a part of it. And so you can’t ask economics to solve the climate crisis when it doesn’t acknowledge the central role of energy in extending our lives and creating high living standards because it doesn’t look to science at all. It’s just not scientific. It’s a bunch of theories and simplifying assumptions that have been created in order to satisfy that equilibrium model that they put together in the 1870s. And everything goes from that. If you go through and you read that Market Built for Humans books, you’ll see all the citations, you’ll see the science in there. It is scientific.

Paul Constant:

I would inherently mistrust anyone who came down and said, “I devise this system.” I like that Nick led by saying this is all out there and we organized it. Organized is an interesting word. I might have said synthesized, but yeah, it’s a tremendous amount of reading and thinking and arguing that has been going on behind the scenes for decades. And within our shop, especially within the last year, it was building up to this, on this podcast. And we’re very excited to have it out in the world and so that other people can join the conversation and argue and add and keep working on it. And so it’s a big moment. It’s a big moment for us.

Goldy:

And we’ll be obviously talking about this a lot more on the pod in the future.

Paul Constant:

Yes. And so you can start by reading the pieces in the show notes. We have a link to the booklet that Nick mentioned called Markets Built for Humans. And we also have links to the piece in The Atlantic titled The Economic Experiment that Upended Reality. And in the Democracy Journal, there’s a piece titled Market Humanism: A New Paradigm for a New Era.

Freddy:

For more content from us, you can subscribe to our weekly newsletter, The Pitch, over on Substack. And for links to everything we just mentioned, plus transcripts and more,

visit our website pitchforkeconomics.com. As always, from our team at Civic Ventures, thanks for listening. See you next week.

The post Market Humanism: A New Operating System for the Economy (with Nick Hanauer) appeared first on Pitchfork Economics.

What Comes After Neoliberalism? (with Nick Hanauer & Eric Beinhocker)

Freddy Doss — Tue, 26 May 2026 04:26:01 +0000

This week, we’re sharing a special episode from Washington Monthly featuring Pitchfork Economics co-host Nick Hanauer and Oxford professor Eric Beinhocker in conversation with Anne Kim about Market Humanism.

For decades, American capitalism has been organized around efficiency, shareholder value, and the idea that prosperity naturally trickles down from the top. But as Nick and Eric explain, that story has failed on its own terms: inequality has exploded, workers have been squeezed, and democracy itself has become more fragile.

In this conversation, they make the case for a new economic paradigm they call market humanism: the idea that markets should be built to solve human problems, strengthen democracy, and improve people’s lives—not simply maximize returns for owners of capital.

If we want an economy that actually works, the question can’t be “How do we make markets more efficient for the wealthy?” It has to be: “How do we build markets that help people flourish?”

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The post What Comes After Neoliberalism? (with Nick Hanauer & Eric Beinhocker) appeared first on Pitchfork Economics.

The Worker Power Missing From the Abundance Debate (with Kate Andrias and Alexander Hertel-Fernandez)

Freddy Doss — Wed, 20 May 2026 04:19:32 +0000

Everyone wants more housing, more clean energy, more transit, more care infrastructure, and more of the things people need to live good lives. But too much of the “abundance” debate treats workers, unions, environmental review, and community voice as obstacles to building — instead of asking who has power, who benefits, and who gets left out.

This week, Goldy and Paul talk with Columbia professors Kate Andrias and Alexander Hertel-Fernandez about their Roosevelt Institute report, Democratic Abundance: An Abundance That Works for Workers. They argue that the problem isn’t too much democracy — it’s too little. If we want to build at the scale this moment demands, we need an abundance agenda that puts workers, communities, and democratic power at the center from the start.

Kate Andrias is the Patricia D. and R. Paul Yetter Professor of Law at Columbia Law School, and serves as co-director of both the Columbia Law School Center for Constitutional Governance and the Columbia Labor Lab. Previously, she served as associate counsel and special assistant to President Barack Obama and as chief of staff in the White House Counsel’s Office.

Alexander Hertel-Fernandez is an associate professor and vice dean at Columbia University’s School of International and Public Affairs, and serves as co-director of the Columbia Labor Lab. From 2021 to 2023, he served as a deputy assistant secretary in the Department of Labor and a senior fellow in the White House Office of Information and Regulatory Affairs.

Further reading:

Report: Democratic Abundance: An Abundance That Works for Workers

State Capture: How Conservative Activists, Big Businesses, and Wealthy Donors Reshaped the American States and the Nation

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Nick Hanauer:

The rising inequality and growing political instability that we see today are the direct result of decades of bad economic theory.

Goldy:

The last five decades of trickle-down economics haven’t worked, but what’s the alternative?

Nick Hanauer:

Middle-out economics is the answer.

Goldy:

Because the middle class is the source of growth, not its consequence.

Nick Hanauer:

That’s right.

Announcer 1:

This is Pitchfork Economics with Nick Hanauer, a podcast about how to build the economy from the middle out.

Welcome to the show.

Goldy:

It’s Paul again.

Paul Constant:

Yes, it is. Here I am.

Goldy:

Man, we’ve been getting an abundance of Paul on these podcasts recently.

Paul Constant:

Waka Waka. I know I’m bringing down the median salary of our podcast team here.

Goldy:

Yeah. Well, that’s not hard. Every time Nick is not on the show, it’s a very different class feel, I guess.

But speaking of an abundance of Paul, we’re talking about abundance again.

Paul Constant:

It’s been over a year. We’ve had an abundance of conversations about it, and the abundance conversations will continue until morale improves.

I’ve been thinking a lot about abundance. Obviously, I read the book last year. We had some listeners who were upset that we mentioned it in our year-end book roundup, although I still stand by the fact that it was an important economic conversation.

Goldy:

It was an important book. Look, look. You look on my bookshelf, you’ll see the communist manifesto, Das Kapital, Mein Kampf. Mein Kampf is a terrible book. It’s an important part of history. I didn’t read the whole thing, but reading bits of it.

I’m not equating abundance with Mein Kampf.

Paul Constant:

Let’s get that on the record.

Goldy:

But it’s another one of those books that I hate-read.

Paul Constant:

Sure, sure.

Goldy:

I had to read it.

Paul Constant:

Well, and I’ve been thinking about it a lot lately because even locally in Seattle, we’ve had three or four ongoing conversations that sort of apply to abundance in different ways.

Like there’s a conversation about one of Seattle’s wealthiest communities happens to be right next to the region’s biggest children’s hospital. And it turned out that the wealthy homeowners made it so that helicopter trips from Idaho and Montana and other regions of the Northwest, if they were not enough of an emergency, that the children would land in the helicopter a mile away from the hospital and be ambulanced in the rest of the way so as not to interrupt the sleep of the poor wealthy homeowners.

Goldy:

Right.

Paul Constant:

So that’s one thing, that’s a NIMBYism debate. The-

Goldy:

Yeah. And just to put that in perspective, the only pediatric trauma center in Washington, Idaho, Montana, Alaska, this is the only place to take them.

But if it’s the wrong time of day, kids will have to wait.

Paul Constant:

They need their beauty sleep.

And then there’s a debate about, an ongoing debate that I think a lot of parts of the country are having about banning the construction of data centers until the AI conversation is still going hot and people don’t want to have something that might drive up energy costs and suck the groundwater out for everybody and, yeah, so that’s an ongoing debate.

And we’re also having an issue with transit. Our transit construction so far has been incredibly popular. Our light rail line keeps over-performing all of the estimates for how many people will be taking it once it’s built.

But we’re running into some budget shortfalls, and now there’s some austerity talk, and there’s a big conversation about which communities get rail first and which ones have to wait until 2050 to see their light rail lines.

Goldy:

Right.

Paul Constant:

So these are all different facets of what seems like the abundance conversation.

Goldy:

It’s interesting because let’s be clear, we’re talking about abundance, and you are focusing on all of the obstacles to abundance, right?

Paul Constant:

Yeah.

Goldy:

And that really is what the book is about in a sense is that there are these things, these obstacles, these legal, regulatory, social obstacles to building the things we want, and they argue for eliminating a lot of that.

And one of the things which is often brought up, which is what we’re talking about predominantly today, is the role that labor plays in allegedly making it more difficult to build and more difficult to build affordably.

And to have that conversation, we’re going to talk to a couple of experts on the subject.

Kate Andrias is a professor of law at Columbia Law School where she focuses on labor law, constitutional law, democracy and political economy.

And Alexander Hertel-Fernandez is a professor of government in the School of International and Public Affairs at Columbia University. His work focuses on American political economy, labor, public policy and democracy.

Paul Constant:

That’s right. And together, they are the authors of a new report from the Roosevelt Institute titled, Democratic Abundance: An Abundance That Works for Workers.

Kate Andrias:

I’m Kate Andrias. I’m a professor of law at Columbia University, where I teach labor law and constitutional law.

Goldy:

Oh, we still have a constitution? I wasn’t sure.

Kate Andrias:

It’s hanging in there by a thread.

Alex Hertel-Fernandez:

I’m Alex Hertel-Fernandez, and I am Kate’s colleague at Columbia. I teach at the School of International and Public Affairs with a focus on political economy, workers and labor power as well.

And we’re both excited to be talking about our report, Democratic Abundance: An Abundance That Works for Workers, which is hot off the press with the Roosevelt Institute.

Goldy:

I guess we should start off with, there’s been a lot of talk about abundance, we’ve talked about it on the pod. We’ve talked about it off the pod with some maybe not-as-polite language.

Why don’t you define for us, first, what abundance is when people are talking about abundance now, and what you mean by democratic abundance?

Kate Andrias:

So abundance means, or what its proponents say it means, is that government should be organized in order to produce more of what people need. It should produce more housing, transit, clean energy, infrastructure, and we should be able to do that at scale.

Abundance argues, in large part, that the problem, the reason we’re not doing that is because of excessive procedure delay and veto points, which are largely driven and abundance is used by overregulation and various litigation challenges.

Our point is not to reject abundance, but to argue that it has to be done in a way that’s democratic and pro-worker if it’s going to survive and if it’s going to help society.

Alex Hertel-Fernandez:

Yeah. I guess what I would say is that we agree on the goal, but I think we would disagree with many of proponents of abundance’s diagnosis and solutions for how to get that goal of better infrastructure, better housing, more goods and services that everyday people need.

Paul Constant:

So I guess first, let’s start sort of counterintuitively and maybe you could share what you think that the original abundance argument gets right. Like were there things that resonated with you as you started building your report?

Alex Hertel-Fernandez:

Yeah, I’m happy to start and say I think there’s something really helpful about what abundance the book laid out, which is this vision of a society that has more of the everyday things that Americans need, whether it’s affordable energy, housing, care infrastructure. These are all really worthy goals.

I think abundance is also helpful in reminding us that at one point we did do a lot of this, and we did more of it at scale, thinking especially, for instance, about the New Deal period and period immediately following World War II.

And abundance also helpfully points out that there have been an erosion in our ability to do more of this at scale, and I think, as we mentioned, where we depart from the diagnosis that abundance offers is in unions, workers, and many regulations as being the key obstacle to all of that.

I’m curious what you think, Kate.

Kate Andrias:

Yep, I think that’s right. I mean, abundance focuses on process as being the problem and participation as being the problem.

One of the arguments that a number of abundance proponents make is that too much involvement by unions and by labor slows things down and drives up costs.

They have similar complaints about participation by other people in our society.

And we think that’s focusing on the wrong culprits. That, in fact, the big problem that abundance is leaving out is distribution of power.

That what really matters is who’s dominating current policy debates and the production of goods. And that unless we shift that, we’re not going to see different outcomes in terms of both the amount that’s produced and who it’s benefiting.

Goldy:

One of my big complaints is they do ignore… They don’t ignore distribution. They shoved it aside. They make the political argument that Democrats have been focusing on distribution for too long and not on abundance.

Personally, I’m not pro-scarcity, which I think is the opposite of abundance. So they really set themselves up with a wonderful… That’s a great word. It’s a wonderful argument.

Paul Constant:

I know that some abundance advocates argue that unions are part of the problem. They raise costs, slow projects down, make it harder to build.

That’s an argument that labor has had to fight for pretty much my entire life. And I was wondering if you could talk about what the evidence actually shows in regard to that and what you think about that argument.

Alex Hertel-Fernandez:

Sure. Happy to start here.

And I think you’re right that this is not a new critique of the labor movement, that unions raise costs and make it harder to do things.

But we also, despite the fact that it’s a longstanding critique, we just don’t think it’s right. And I think when I look to abundance and the discourse around it, I often find that a lot of the proponents of this view fixate on individual cases where it seems to be the case that it was unions responsible for making it harder to build things.

But as academic researchers, we know we can’t just focus on individual cases. We have to look at what the evidence says more generally. And when we do that, as we do in our Roosevelt Institute report, we just don’t find compelling evidence that unions are the main reason or even a primary reason why we can’t build things in the United States.

And let me give you two examples of the kind of evidence that we’ve looked at.

One is cross-nationally. We know that countries that have much stronger labor movements than the United States, in Western Europe, especially in Northern Europe, they’re able to build things much more effectively and at scale than we are in the United States. So it can’t just be the case that it’s the strength of the labor movement.

And even within the United States, it’s just not the case that labor costs are driving high infrastructure costs or erecting barriers to housing, especially residential housing. There’s some really compelling work, including by some abundance proponents showing that the strength of labor just does not relate to, for instance, how much it costs to build a mile of highway.

And so in our view, the evidence is just not there that unions are the primary obstacle to building things.

Goldy:

Let’s talk a little bit about the role that unions play in enabling abundance, how they can play a role in building things, making it easier.

Kate Andrias:

Yeah. Our report traces several ways in which they play an important role in helping build.

One is that they play a critical role in training and supplying the skilled workers that are needed to build infrastructure. There are a lot of problems with shortages of labor, and there’s a lot of evidence showing that union apprenticeship programs and union training programs help increase the pipeline and provide the labor pool that’s needed to do massive building.

A second way that they can help and that they have helped is by building political coalitions for public investment. So labor support for public investment and for new infrastructure can be instrumental in getting it passed.

And third, we show that unions also help build legitimacy and effectiveness into public infrastructure programs, in the sense that when you have buy-in from workers in the community, the programs are more likely to be supported. And they are also likely to benefit from the expertise of the workers who are going to be both helping build the infrastructure, but also benefiting from it at the end.

Goldy:

But there are things that labor can do different to enable this.

Alex Hertel-Fernandez:

That’s right. And we look at the labor movement not monolithically, and we see some unions that are much more proactive in thinking about how they can be part of abundant solutions. And we know that that’s not every union, and we tie that back to the structure of labor law in the United States.

And this is an area where Kate’s done a lot of research, showing that the structure of labor law in the United States that puts organizing and bargaining at a very micro level, unions have to go store by store, factory by factory, generally work site by work site, to organize and bargain with employers. That that means unions often bring a narrower set of preferences to the bargaining table than they might in a context where unions are bargaining and negotiating with employers and government over entire regions or industries, what’s known among labor scholars as sectoral bargaining.

And so we think that a way to bring even more of labor to the table to support these kinds of abundance reforms is to think about labor law reforms like sectoral bargaining that would help push unions to think about a broader constituency when they’re bargaining with employers and also bringing government to the table in negotiating with workers as well.

Kate Andrias:

We also show that even within the existing legal regime, there are ways that some unions have been more creative about compromising on abundance programs or on infrastructure programs.

So for example, we point to the role that the carpenters played in the reforms in California where they wanted to see more growth and more building, but wanted to make sure it didn’t happen at very low wage standards that would exploit workers.

And so they were willing to engage in a compromise that would enable them to organize more residential housing workers into the union and also enable more growth of housing construction, even if that meant some changes to the kinds of agreements they would normally expect.

Goldy:

And what type of compromises did they agree to?

Alex Hertel-Fernandez:

So the general principle is that, instead of getting the highest wage that they were accustomed to, maybe accepting a lower starting wage that would apply to new residential projects, with the aim of ensuring more production that, in turn, could generate more potential new members. So really thinking about a shift from delivering immediate gains on wages to existing members to thinking about the opportunity to build their membership by ensuring more production.

Another way I often think about this is getting unions to think outside of the mindset of just focused on one project at a time to thinking about how they can ensure production or construction on a stream of projects over time that could build their membership.

Kate Andrias:

One other thing that’s important to note about the California compromise is the compromises that were made were for workers who were almost entirely non-union. So it wasn’t about lowering standards of existing members or existing workers, but about raising standards in an industry that had long been very low wage and non-union.

Goldy:

Did this require any legislative changes as well? Because I know in Seattle, in King County, government-funded projects are required to pay prevailing wage and are required to hire unionized contractors.

Alex Hertel-Fernandez:

Yes. So the California compromise was part of a string of legislative agreements that were hashed out between the lawmakers and the building trades and particularly the carpenters, as well as proponents of more residential construction.

And I think it’s a nice example to return to one of the ways that Kate mentioned unions can be part of the abundance coalition of unions showing up and saying, “We’re interested in building more, but we want to make sure that we raise the floor, particularly for the most vulnerable workers.”

Paul Constant:

One of the things I noticed when I was reading abundance is that a lot of it is directed to the CEO level, like the deregulation and all that.

And then there’s a lot that’s devoted to the consumer level, like what it would be like to live in a place where medication was cheaper and so on and so forth.

But there is very little directed to the worker level, which is a pretty important exclusion. And I was wondering if you could talk about what you think that worker abundance world might look like.

Kate Andrias:

Yeah. One thing to note is that workers do occasionally get mentioned in abundance, and there are certainly some people within the kind of broader abundance umbrella that are willing to say, yes, workers are important as well. But as you say, they pass over that really quickly, and workers don’t really play a central role in what the vision of an abundant society would look like.

And we think it’s important for labor abundance for abundance that works for workers to come with good jobs, more jobs, jobs that are good quality, but also a system where workers have a voice at the outset in helping define what the priorities are, what it is that we’re going to build because workers are both workers who help produce goods, and they are also the consumers of whatever gets built in the end.

Goldy:

I hate to move away from labor, but just briefly, when we talk about democratic abundance and we talk about how important power this is, a lot of the arguments in the abundance book was about environmental regulations and how they are used and the courts are used to block projects.

What does democratic abundance look like in that context where, clearly, there’s a trade-off in terms of the power of communities to say what they want built within them?

Alex Hertel-Fernandez:

Yeah. I think it’s such an important question, and it gets to the question of trade-offs. What is it that communities value?

And we think that communities should have a seat at the table when these trade-offs are being discussed, what configuration basically of good jobs, of environmental protection, of new production?

And that’s an important role that we think a democratic abundance vision can offer to people is the chance for communities to have a say in making these kinds of decisions.

There’s been some interesting new work looking at community benefit agreements, for instance, as a vehicle for communities to be able to have this kind of voice when there’s new construction that’s happening in particular regions, making sure that community members have a seat at the table with government, with developers to be able to think through what are these trade-offs that we want and where do we put the most value?

For instance, do we want to generate jobs? Do we want to protect particular areas of the environment, and do we want to ensure that there is equitable gains from whatever the new construction is?

And so we view those mechanisms as being a key part of the way that democratic abundance could work in practice, creating mechanisms for communities to be able to sit down and think about the kind of policy and deal that they would want ultimately struck.

Kate Andrias:

The only point I would add to that is we’re really urging that communities be brought in in the front end. So if environmental concerns and labor concerns are brought in at the front end and projects move ahead quickly, but with good jobs and minimal harm to the environment built into the project, then that makes the need for constant litigation at the back end less.

One of the things that the abundance proponents really complain about is endless litigation. Nobody’s for that. That’s a bad thing. It takes up a lot of resources, and it delays.

But if you can incorporate the concerns that communities have about environmental degradation and the need for good jobs in the projects before they get off the ground and bring people to the table through tripartite arrangements, then you can minimize the need for that litigation at the back end.

Goldy:

Are there procedural changes on the legal end? And obviously, the intent of these environmental review laws, when they were created, was not to create an opportunity for opponents of projects to just endlessly block them until they no longer pencil out financially.

Are there ways to reform the laws such as to still preserve that original intent, yet remove the ability of opponents to just abuse the legal system towards their own end?

Kate Andrias:

Yeah. We think that there are at least two really important mechanisms.

One is by creating tripartite negotiation at the front end. So if you bring in groups that are concerned about the environment and labor groups to the table at the front end and come up with a community benefits agreement or framework for the project that satisfies those needs, then a reasonable trade-off is to reduce litigation challenges at the back end.

So tripartite administrative arrangements sometimes is what these get referred to as another frameworker’s community benefits agreements, but it’s the same idea. It’s increasing front-end input and, in exchange for that, decreasing the ability to litigate at the back end.

Paul Constant:

This might be a curveball, and it’s fine if you don’t have an answer.

In the news right now, there is an ongoing debate about construction that seems like it might have some lessons for abundance, and I’m not entirely sure about this, but the construction of data centers, which seems very unpopular with everyone, but that a lot of politicians seem sort of dead-set on progressing even against the will of the people.

And at least in Maine, which is where I’m from, so I pay attention to it, where they passed a data center ban that Governor Mills overruled, vetoed and that was generally thought to be sort of the killing blow to her senatorial campaign.

Is there anything that you’re watching from this? Are there any takeaways from this? Is there anything that you are especially interested in as the data center debate goes on?

Alex Hertel-Fernandez:

Yeah. I mean, I think the first thing to say is the public backlash against data center construction, I think, shows the risk of building and enacting a bold new agenda without actually consulting the public.

I think one of the reasons why there’s so much opposition to the construction of data centers is that people view it as one of the few ways that they can have some degree of agency over the course of AI development in the United States. We aren’t having a national discussion about the role that citizens or workers should play in the development and deployment of AI.

And so this is one of the only mechanisms through which people can sort of put up their hand and say, “I don’t feel good about this. I want this to slow down. I want to have some sort of say in the process.”

With that said, I think there are some interesting models that we could evaluate that are happening at the local level, again, to return to the example of community benefit agreements where communities and workers are thinking about the kind of deals that they would want to strike with data center developers and the firms that are building it, to be able to have a say in the kind of jobs that they create, the kind of environmental standards that they would need to meet and the kind of benefits that they would return to their local communities.

But to return to where I started, the big lesson I take away is if you try and build a lot of things without consulting people, they’re going to understandably get frustrated and mad and seek to slow down the process as a whole.

Paul Constant:

We used to call it the benevolent dictator question, and now we call it the magic wand question due to current events.

If you could redesign the abundance agenda with zero constraints, what would you build into it from the start?

Kate Andrias:

We would build worker power in from the start, strong labor standards, union apprenticeship pipelines, project labor agreements, community benefit agreements, tripartite. So having workers have a seat at the table from the beginning and guaranteeing that whatever gets built gets built in ways that are good for workers that aren’t premised on exploited labor, unsafe working conditions.

We would also build in mechanisms for other community members to have a say in what happens.

So we’re all about abundance. We need to build the things that our society needs. We need to produce more of what we all need. We just need to do it in a way that benefits working people, that benefits community members and that doesn’t just benefit concentrated economic interests that already are dominating the policy process.

Alex Hertel-Fernandez:

Maybe the other thing I would just add is, Paul, you joked a little about how you had to rename the benevolent dictator segment.

Because we are living through a moment of genuine democratic backsliding with every day seeing a new form of authoritarian overreach and violation of our basic democratic norms and institutions, I just think now is not the time to be thinking about either trying to bypass or weaken one of the most important pillars of our civil society that we know, from both our past and from other countries, will be so essential to the fight for democracy here in the United States.

And so it’s not just important for its own terms that we support a democratic abundance with workers. It’s also important for our democracy as a whole to make sure that these institutions, that channel the voices of so many Americans into the economy and into politics, can be strengthened and can really have a role to play in how these decisions are decided.

Goldy:

Right. So we don’t want a dictator to be able to say, “Absolutely no to wind power, can’t have that wind farm, but yes, you have to have that AI data center.”

I guess our final question, why do you do this work? We’ll start with Kate.

Kate Andrias:

I have been doing this work for so long. I started as a union organizer.

From the very beginning, I’ve wanted to have, all of us have a greater say in what our society looks like. And I think that by building collective organizations and participating in our democracy, we can have the kind of abundance we all deserve, point number one.

Point number two, doing the kind of careful research, empirical studies and actually looking at what works and what doesn’t helps us all make better decisions about what direction to go in the future.

Alex Hertel-Fernandez:

On my part, part of my family is from Chile and South America that saw a brutal dictatorship come to power, in part because there were fundamental imbalances of economic and political power with a lot of inequality.

And that country has really struggled ever since with a return to a fully inclusive responsive democracy, and I grew up hearing about the importance of labor in that story, both in pushing for a return to democracy and in fighting for a more equal economy that could support a better functioning democracy.

And so as I thought about the work that I do, for me, workers and democracy are just so intimately connected, that you can’t have a well-functioning democracy without a vibrant and healthy and strong labor movement.

And so that’s what motivates a lot of the work I do, trying to understand how we can achieve that vision of a better functioning economy and democracy that puts workers at the center.

Paul Constant:

So Goldy, I think we have an abundance of takeaways from that conversation.

Goldy:

Well, you know me, Paul, I always have an abundance of opinions.

Well, there’s several things that bothered me about the abundance take from Ezra and company, and part of it is, as I mentioned, the way they ignore distribution as being part of the problem, that we actually live in a society, in a world, an economy full of abundance.

We have an abundance of resources, more than enough to clothe, house, educate, feed everybody beyond their basic needs. And the fact that we don’t do this is a political choice, not an economic choice.

And the reason why we make that political choice and the reason why that political choice ends up having the unequal effects it does is because we don’t have an equal distribution of power.

This is one of those things that is missing from mainstream economics. They ignore power, that markets always even things out in the end because of that magical invisible hand.

And, of course, the reason why we have organized labor in the first place is to try to balance that power between capital and labor, so that built-in power advantage that employers have, that you can go all the way back to Adam Smith and the Wealth of Nations and see even him acknowledging that’s always been there. Without organized labor, workers do not have power.

And the interesting thing about labor power, especially when it comes to big construction projects like you had mentioned at the top, Seattle’s Light Rail, or one of the things that I spend a lot of time thinking about, what people call social housing, what I like to call a public option, this idea that government can play a very big role in building affordable housing, not subsidized housing, affordable housing that the market cannot do, is that when you have labor on your side, on the same side as the builders, as the developers, when they are part of the conversation and they are at the table and they are working with you to get these things done, you now have the power of organized labor on your side.

And that creates a bipartisan effort to do big things because certainly, locally in Washington State and in Seattle where labor does have a lot of power, it has a lot of power with the Democratic Party and it is the Democratic Party that is essentially running the show here and labor plays a big role in that.

So if you have labor, the power of organized labor, as diminished as it is compared to where it was 75 years ago, it’s much easier to get big things done.

Paul Constant:

I think it’s also important because the labor is more likely to actually live in the community that they are building things in, as opposed to some of these CEOs who want to swoop in and build, say, a data center or something like that.

So in a lot of ways, labor can be sort of a proxy for the community voice that has been missing from some of these conversations.

Goldy:

Right, because it turns out the people that are in labor are workers, and workers live in the community. They’re also consumers.

It’s weird how it’s the people. The majority of people actually are the workers, not the investors. So you might want to take their opinion into account.

But also, and I think this is important because I’ve looked at it from the housing side, there are things about our agreements with labor and the way the laws are written and that make it more expensive for government to build that increases the labor costs.

And the idea that we can bring labor to the table to compromise in an effort, and this is really important, and I think it’s something that Kate pointed out, is that rather than focusing on maximizing, simply on maximizing the wages for your existing members, if you are looking at growing your membership, you’re not just growing your membership as a labor union, as a trade union.

You are growing your power because the more members you have, the more powerful you are, and that benefits all your members in the future, as opposed to just looking at the present on one individual project.

Paul Constant:

These are the kinds of things that happen when you reinsert power into economic conversations where it’s been stripped out over the course of 50 years or so.

Goldy:

Personally, I know about 30% of the country disagrees with me on this, I think democracy is a good thing, and we should be expanding it, rather than diminishing it.

And it’s an interesting take, and I think an important report for people to read because it does provide this counter to the straight-up abundance argument that, if we just get all those regulations and unions out of the way, we can finally build good things again.

Paul Constant:

And of course, as always, you can find a link to that report in the show notes. It’s absolutely free to read.

Goldy:

It’s Democratic Abundance: An Abundance That Works for Workers.

Freddy:

For more content from us, you can subscribe to our weekly newsletter, The Pitch, over on Substack. And for links to everything we just mentioned, plus transcripts and more,

visit our website pitchforkeconomics.com. As always, from our team at Civic Ventures, thanks for listening. See you next week.

The post The Worker Power Missing From the Abundance Debate (with Kate Andrias and Alexander Hertel-Fernandez) appeared first on Pitchfork Economics.

How the AI Oligarchy Went Hyperscale (with Tim Murphy)

Freddy Doss — Wed, 13 May 2026 06:06:51 +0000

The AI “cloud” sounds weightless. But behind every chatbot, every prompt, and every promise of a coming AI revolution is a massive physical footprint: hyperscale data centers consuming enormous amounts of land, electricity, water, and public subsidies.

This week, Nick and Goldy talk with Tim Murphy, national correspondent at Mother Jones, about his cover story on how the American oligarchy went hyperscale in the age of AI. Murphy has been reporting from communities across the country where residents are watching enormous data centers rise in their backyards, often with little transparency, few long-term jobs, and huge demands on local infrastructure.

The result is a familiar story: public risk, private reward. Tech billionaires get the profits. Communities get higher utility costs, depleted resources, tax breaks they may never recoup, and facilities that could become tomorrow’s stranded assets when the AI bubble bursts.

AI may be new. But the economic model behind this boom is very old: extract from communities, concentrate power at the top, and call it progress.

Tim Murphy is a national correspondent at Mother Jones.

Social Media:

@timothypmurphy

@motherjones.com

@MotherJones

Further reading:

Mother Jones – How the American Oligarchy Went Hyperscale

Instagram: @pitchforkeconomics

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LinkedIn: Pitchfork Economics

This episode originally aired October 1, 2019.

Substack: The Pitch

Nick Hanauer:

The rising inequality and growing political instability that we see today are the direct result of decades of bad economic theory.

Goldy:

The last five decades of trickle-down economics haven’t worked, but what’s the alternative?

Nick Hanauer:

Middle out economics is the answer because the middle class is the source of growth, not its consequence. That’s right.

Announcer 1:

This is Pitchfork Economics with Nick Hanauer, a podcast about how to build the economy from the middle out. Welcome to the show.

Goldy:

Where are you, Nick? You’re in Seattle with me, right?

Nick Hanauer:

I am. Seattle Washington, USA.

Goldy:

And it’s a lovely spring day atypical for Seattle, not a cloud in the sky.

Nick Hanauer:

Yeah, exactly. And today we’re going to talk about clouds, and cloud is such a harmless sounding thing, isn’t it? It’s light, it’s airy.

Goldy:

Yeah. It’s like it’s not there except actual clouds are real. They’re filled with water vapor and sometimes-

Nick Hanauer:

Clouds are good for the world.

Goldy:

That’s right.

Nick Hanauer:

What would we do without clouds?

Goldy:

Right. But we’re not talking about that kind of cloud, are we?

Nick Hanauer:

Yeah. We’re going to talk about the AI cloud, the data centers that people are building everywhere to power the AI boom. And that cloud is definitely not ethereal and harmless. The cloud that we’re building involves the kind of physical infrastructure that I think it’s almost safe to say the world has never seen before.

Goldy:

Right.

Nick Hanauer:

Buildings so large that they stagger the imagination consuming so much power that it’s beyond precedent.

Goldy:

I think you’re pointing out something which is something we don’t really think about in the tech world because we are accustomed to the dematerializing of the economy, right?

Nick Hanauer:

Yeah.

Goldy:

In the information age, information is not physical in form, but of course to store it, to transmit it, to use it actually requires physical infrastructure. And the reason why we don’t think about it is that most of us don’t see it. It’s the cables and the fiber that’s underground that’s stringing along the telephone poles, but also now to feed-

Nick Hanauer:

Yeah. But it used to also be servers too, right, to be fair?

Goldy:

Right. Yeah. But servers are there-

Nick Hanauer:

Yeah. But just as a scale-

Goldy:

… but we’re not seeing them, but we also weren’t building them at the massive scale that they’re being built to fuel AI or as it’s now called, not just… It’s hyper scale, because we have to add that word hyper, and it doesn’t even do it justice in terms of the amount of physical material that goes into it.

Nick Hanauer:

What’s happening around the country is that people are waking up to the fact that their communities are being transformed by the addition of these giant facilities adjacent to them. And that transformation, while it may have some positive effects, also has huge negative effects that the community is asked to bear for a very nebulous benefit. And today on the pod, we get to talk to somebody who has learned a lot about this.

Tim Murphy, who’s a national correspondent at Mother Jones, spent what appears to be a big proportion of his life recently traveling around the country talking to people and witnessing the evolution of this AI boom and how it is physically affecting the places where it is appearing.

And it’s a super interesting story. It speaks to a lot of the issues we cover in the pod about plutocracy and inequality and a world in which a few people benefit and most everybody else gets screwed. So with that, let’s bring Tim into the conversation.

Tim Murphy:

My name’s Tim Murphy. I’m a national correspondent at Mother Jones Magazine and I’m here to talk about my cover story for our May, June issue on newsstands now about how American oligarchy went hyperscale in the age of AI.

Goldy:

We have one of those oligarchs here, though not an AI oligarch.

Nick Hanauer:

If only.

Goldy:

If only. All right, because you’re not rich enough.

Nick Hanauer:

So Tim, we read with interest your really interesting article where you excavate the physical impacts, if you will, of the AI bubble. Maybe it didn’t catch you by surprise, but it caught the rest of the world by surprise. Usually these tech waves happen in bits, not atoms. And this one is happening in atoms as much as bits and the impacts I think are beginning to be felt and recognized. So why don’t you just tell us a little bit more about that and what you found in your reporting?

Tim Murphy:

Yeah. Actually, as I read this and I started working on this, I had this classic early WIRED story from Neal Stephenson, the novelist, and they devoted the entire issue to it. When they were laying a transatlantic fiber optic cable and his entire deal was he just followed the cable to its endpoint and he just wrote about every single thing that went into the physical internet. And I had that idea in my head when I was thinking about the AI boom that’s being pushed right now.

And I wanted to get a sense of what that actually looks like and what that feels like, not on your smartphone, but in your community and in your backyard. And I think what’s been really interesting is that a lot of people, millions and millions of Americans, the way they’re experiencing the AI boom at the moment is not necessarily through their office, through their smartphone.

It is through their community and their reaction to the physical infrastructure of it in the AI hyperscale data centers. And so what we’ve seen starting in around 2023, 2024, and rising and rising ever since is a building boom with little precedent in modern times, the evocative of things like the transcontinental railroads of these massive companies competing to see who can build the biggest, most powerful structure in the most places the fastest. And that is having major repercussions in communities across the country.

Goldy:

Yeah. It’s interesting you started by mentioning fiber, that we had one of these booms, but that was very different because it was invisible. It was all buried and it was mostly that infrastructure was being put in along existing right of ways so it was not disruptive to communities.

But of course the whole internet that followed, even though there was a crash in that, was built on that fiber infrastructure, which is still invisible. This just must be overwhelming in some parts of the country in terms of the amount of physical infrastructure and the disruption in building it. If you could go into a little bit of what’s actually happening at the community level?

Tim Murphy:

Yeah. And in certain parts of the country and particularly in Northern Virginia, it really is overwhelming. We had some incredible photos in the piece, which you can read at motherjones.com, of a baseball field at a elementary school in Northern Virginia, and there’s just a massive Amazon facility or something like that towering over it. It’s everywhere these communities are running out of spaces where they can actually develop these data centers.

And NOVA is a unique place in some respects because there just is going to be a demand, and because there is a geographical reason for there to be a massive data center industry because of government, because of fiber optics. But across the country in communities that are being targeted by speculators, by third party agents for hyperscale sites, people are furious at the demands that are being placed on them and the facelessness that they perceive from the companies that a lot is being asked of these towns and they’re not even really getting the dignity of knowing who’s asking because everything is being done under NDAs. And there are, to some extent, explicable reasons for a large corporation to do everything under NDAs, but-

Nick Hanauer:

Wait, it hides the corruption.

Tim Murphy:

Yes, that’s certainly a sentiment that you would get at a town hall. If you go to any community meeting in the United States over the last year, people just wondering who the heck is building this thing that is necessitating billions of dollars in tax breaks. And they are enormous. They’re measured in units of Manhattan.

Something like the OpenAI Stargate facility in Abilene, Texas, just outside of Abilene, is about the size of Central Park. And if you drive by it at night, as I did last summer, it feels like you’ve discovered a secret base under construction in an alien movie or something like that. They’re not some early Microsoft data center in Redmond, Washington. They’re the size of airports basically. And so they feel like you’ve built something enormous and completely different in the middle of a community that’s really not used to that.

Nick Hanauer:

Wow. And one of the things that the world is waking up to, and certainly these communities have woken up to it earlier, is that the impact these things have on electricity prices and water availability because they require so much resources, right?

Tim Murphy:

Yeah. And there are solutions to different extents for some of the different problems that are raised by a hyperscale data center. For instance, in their first under construction, one of the stories you saw a lot was how much water they use. Well, it turns out you can design them so that they don’t use as much water.

The way you do that is you use a lot more power, and that’s one of the major complaints that you get is just how much power is needed for a hyperscale data center. Literally onboarding, reopening nuclear power plants like Three Mile Island in Pennsylvania power a Microsoft data center, the Meta Hyperion campus, because they’re all named for Greek mythology in Richland Parish, Louisiana.

Goldy:

But they haven’t learned any lessons because they use names like Icarus. What happened?

Tim Murphy:

Yeah. That wasn’t included in the AI summary of the story.

Nick Hanauer:

Yeah, but the names come out of a bad James Bond movie, right?

Goldy:

Yeah, or AI apocalypse stories.

Tim Murphy:

I was just going to say, in Richland Parish, Louisiana, they’re building two natural gas plants on site directly across the street from this Central Park size data center right next to a church, right next to this lovely old lady that I spent time talking to about it. They’re adding tons of carbon into the air in communities and they’re driving up utility prices. And so now there’s a push to build more and more of these power plants behind the meter, but they’re opening up all sorts of big questions about who these public resources belong to, what kind of infrastructure we should be prioritizing and actually building.

Goldy:

Do you know what the mix is in terms of the power demand between powering the processors and cooling the processors?

Tim Murphy:

No, I don’t have that breakdown in front of me, but in order to develop these technologies so they’re not just sucking up all of the water out of West Texas or a disproportionate number are being built in water-scarce areas like West Texas, like Arizona.

Goldy:

And hot areas. They’re building it in the hottest parts of the country mostly.

Tim Murphy:

Yeah. And that correlates to you can just build anything in West Texas. You can build this nuclear-powered Rick Perry startup outside of Amarillo. You could just build things, but because you’re doing this in these water-scarce areas, you’re having to spend even more money and use even more power in order to maximally conserve your water resources there.

Nick Hanauer:

New industries are the story of civilization, I suppose. This is not the first time that big new industries have come into communities and disrupted them, but I feel like this is slightly different because it seems so obvious that this technology is going to benefit a few people and not everybody. It’s really obvious how these things will benefit Elon Musk and his shareholders and…

Goldy:

Assuming they’re the ones who win, because they’re not all going to win. We’ll get to that in a moment.

Nick Hanauer:

That’s true. And for your ordinary person, it’s cool to be able to use AI to help you write a letter to your lawyer or something like that, but it’s definitely not going to put more food on the table or help your kids lead a better life or anything like-

Goldy:

Let’s talk about the way it’s sold to communities. Obviously, if they’re getting tax breaks, it’s to create jobs. It’s always about creating jobs. Obviously, there are a lot of jobs created in constructing these massive facilities. What type of jobs are created for these communities once they’re built?

Tim Murphy:

It’s really striking. Take this community in Louisiana where Hyperion is being built. It’s one of the largest data centers ever built. I think there’s something like 11 buildings and two power plants and whatnot, requires a lot of engineering and will take years to come online. So there will be thousands of construction workers over successive waves. And so you’ll have different groups of thousands.

You’ll have the initial crew who are the earth movers and they’re hauling in dirt and gravel from all over and they’ve had to set up man camps, and everything is an RV park now and there’s food trucks everywhere to feed everybody in this small, poor, rural parish. They’re going to leave and then a new group of several thousand people will come in to put these buildings together. You’ll have even more highly skilled technicians who are actually assembling a cutting edge Silicon Valley data center.

So you’ll have many, many people actually putting this project together and those are construction jobs or engineering jobs and those are all inherently short term. When this thing is actually up and running, if it is ever fully up and running to the scale initially promised, you will have a lot fewer people. I don’t know the numbers for Meta off the top of my head, but for Abilene, this OpenAI Stargate project, the actual guarantee for number of jobs that they’ll have for a comparably sized hyperscale facility is around 100. Now, it could very easily be more than that.

Nick Hanauer:

It could be 200. Yeah. But who cares?

Tim Murphy:

Right. But it could very easily be more than that, but it’s very, very unlikely to be-

Nick Hanauer:

It’s not going to be 20,000.

Tim Murphy:

Yeah. It’s not going to be the same as if you built an automotive manufacturing facility, which is what was originally what the site in Louisiana was intended for. They hoped that they were going to lure Hyundai by turning this cotton plantation into an economic development site. They never got the car company. 10 years later they get a data center, and the difference between those two job profiles is pretty enormous.

Nick Hanauer:

100 jobs versus 10,000 or something like that. Interesting.

Goldy:

And you mentioned if it ever does get built to the full capacity. It strikes me, you used the term cutting edge, these cutting edge data centers. For how long do they remain cutting edge before the technology is obsoleted?

Tim Murphy:

Yeah. One of the tenets underpinning this, and you’ll see somebody like Sam Altman talk about, is Moore’s Law, which is not a real scientific law. It’s just a article of faith that high-end computing chips will double their capacity roughly every two years. And so there is this enormous built out based on a 2024, 2025 understanding of what you need to build out and not just based on your sense of what you currently need, but also just an enormous guess about what the future needs will be or even just a deliberately bloated target based on your desire to put together an impressive market sheet or to intimidate your rivals.

So there’s all this sense where they’re throwing out numbers, $500 billion of investment. I think Mark Zuckerberg said to Donald Trump at the White House dinner they had together last year, something similar for Sam Altman, where they’re just throwing out enormous numbers, and it’s not really clear to what extent they’re real. And so if you’re in a small town, and I watched a community meeting like this in Wisconsin, and you’re being presented with a giant hyperscale project from an invisible third party, you don’t know who it is.

Well, you do really have to wonder, is this going to be one of the real data centers or is this going to be one of the ones that is maybe just on the books for a few years while we figure out if we need them? And so people really don’t want to be the town that’s left holding the bag when this all goes away or if this all goes away.

Nick Hanauer:

Yeah, because if the music stops and somebody’s built a Central Park size structure next to your town, what do you do with it?

Goldy:

It’s very different again, going back to the fiber analogy. We had that overbuild of fiber before the dotcom crash that was part of that crash and we had all that dark fiber, but 10 years later that fiber wasn’t dark anymore. It didn’t go away. It was still usable. That’s not true, certainly at least the GPUs that are in these data centers. If this is a bubble and things stop, what is the value of these facilities to these communities, to anybody?

Tim Murphy:

It’s a very large, painful course.

Goldy:

Well, that’s fun at least.

Nick Hanauer:

It’s one of 20,000 pickleball courts indoors.

Tim Murphy:

One of the interesting examples in this town, Menomonie, Wisconsin that comes up at this community meeting, everybody there is thinking about Foxconn, because on the other side of the state, about 10 years ago, Scott Walker dangled billions of dollars in incentives for this Chinese manufacturing company to come, and it was going to create 13,000 jobs, and that was hailed as a godsend for the de-industrializing Midwest. It created maybe 1,300 jobs. It was an enormous boondoggle.

It probably brought down Scott Walker, and it’s now the poster child for over-promised tech manufacturing jobs that are going to save your community. And ironically, what ends up popping up in the Foxconn footprint in Racine, Wisconsin is data centers, Microsoft data centers, because it’s not actually the thing that you land when you want to bring in a ton of jobs. It’s the thing that you land when you couldn’t bring in a ton of jobs, but you still had this footprint.

Goldy:

So let’s talk about the end game here. Obviously, it’s a handful of tech billionaires who are competing with each other to be the dominant player in… We’re not talking about chatbots here in the end that they’re trying to build. They’re trying to build actual artificial general intelligence, right? Obviously they all can’t win. This is going to consolidate down to one, two, three major players. What is it that the Zuckerbergs and Musks and so forth, what’s their vision of the future? It’s the end of democracy? They’re our new overlords?

Tim Murphy:

This is something that comes up a lot in their public manifestos of which they keep producing time and again, particularly Altman and Dario Amodei, and it’s something that comes up in their correspondence with each other, which we’ve seen a lot of, for instance, with the ongoing court case between Sam Altman and Elon Musk, that originally centers on this mutual idea that they shared that Google was going to create this all powerful AI that was going to control the world and it was one guy was going to be in charge of this and we couldn’t afford to do that because we had to stop that.

They had to do a Fellowship of the Ring type deal and they had to band together and develop AGI first basically. And so that’s why they created OpenAI. And as you saw over the course of that experience, none of them trust each other. They don’t trust anybody else. And so you have this inherent skepticism of everybody else in this industry getting too much power that drives them all to be the one to acquire all of that power because they don’t trust their competitors to develop artificial intelligence.

Nick Hanauer:

Yeah. A bunch of psychopaths competing with one another for power. What could go wrong?

Goldy:

Well, look, if one of your competitors gets too much power, it’s nothing that a couple drone strikes couldn’t fix. I’m joking, but I’m not joking. I wonder at what point they start declaring war on each other since they certainly seem to think they’re more important than nation states at this point. I don’t know. Tim, it doesn’t make me confident about the future.

Tim Murphy:

No. And I think some of that is built on maybe them over-hyping their own technology. It’s not like we’re saying this from Elon Musk’s Mars base right now, but it does speak to I think the genuine sense that some of these tech founders have that they really are the person-saving civilization and that it really is incumbent upon them to do this. I don’t know that that’s as true of Mark Zuckerberg as it is of Elon Musk or Sam Altman necessarily. I think Zuckerberg would be happy maybe if we all just had Ray-Bans with cameras on them that hooked up to his latest AI model.

But I think what you’ve seen and then over the last couple of election cycles is what’s happening in tech with AI is fused with a political development inside the Republican Party where you have these people who are building a new civilization, and tech have joined forces with people who want to save a particular idea of American civilization and they’ve found a common ground and a a techno manifest destiny with AI playing the part of the transcontinental railroads.

And that political alliance, which has contributed hundreds of millions of dollars plus the Department of Government Efficiency has had enormously destabilizing impacts on the democratic process on the United States as a whole. And it’s something that I think will continue heading into the midterms.

Goldy:

Thiel is open about this. He wants to destabilize democracy. He thinks democracy is a bad idea. Is that part of the end game?

Tim Murphy:

Certainly for Peter Thiel, he felt like American democracy was something that needed to be completely broken up. He had his own alternative ideas, but even with Donald Trump, I think it’s been reported his fear was that Trump would not break things enough for Thiel’s own demands. We’ve seen Elon Musk getting in and treating the federal government like one of his companies, we’ve seen what that looks like.

You take somebody like Sam Altman, who I think he now describes himself as politically homeless, which he might just be saying for political reasons to be a little bit more flattering to the Trump administration. He’s somebody who’s also talked about how AI will necessitate some deep societal change. We’ll have to completely rethink how we tax and how we spend and how we allocate wealth to society. So I think the people driving this very much do think that they’re producing something deeply destabilizing that will lead and necessitate a radical response.

Nick Hanauer:

Yeah. I wonder if they’re counting on swinging from lampposts themselves, which I think is going to be part of the end game here.

Goldy:

I’m glad you said it, Nick. Because I feel whenever I say something-

Nick Hanauer:

I think it’s going to get Bad Mary and people are going to be mad and they’re going to want blood. What’s unfolding in communities? What’s the trend?

Tim Murphy:

The trend is that if you are coming to a community with a proposal for a data center in 2026, you are going to get booed. You are not going to meet a welcome reception. And now these are still getting built and most of them are still getting built, or at least most of them are being green lit. But in the first half of just last year, something like $94 billion worth of data center projects were paused or scrapped based on community opposition. It’s happening all across the country and it is leading up from that ultimate grassroots level up into the political level where Alexandria Ocasio-Cortez has now called for a full moratorium. So has Bernie Sanders.

And maybe you think, “Well, of course they have.” Josh Hawley and Ron DeSantis are vocally anti-data center within the Republican flank. And that’s going after that JD Vance-y and Silicon Valley alliance a little bit. So I think this has quickly become one of… It’s not a third rail of American politics. It’s something everybody wants to touch and hammer home that they don’t like these data centers and Silicon Valley is fighting a real rear guard action against that. Now they’ve started spending a lot of money on advertisements to try and pitch the public in a way that they didn’t really pitch them the first time along, because they’ve been doing this anonymously and through LLCs and stuff like that.

So Meta has now spent millions of dollars on ads after this vast pitch about how nothing will ever be the same and we’re changing the world. They now spotlight a small town in Iowa that has built data centers and it’s got Friday night lights and it’s got old people hanging out at the diner and the pitch is actually completely opposite. It’s build a data center and you won’t have to change. And I think that’s really striking.

Nick Hanauer:

Given that you’re now a global expert on all this, if you were going to give a community advice today, what advice would you give them?

Tim Murphy:

One of the things that I’ve been really impressed at, and you can watch a lot of community meetings and recoil a little bit. Sometimes, they can be a real den of conspiracies and certainly you get conspiracies here, but some people are really extraordinarily well-read, and you’ll watch this and for instance, they’ll be talking about data analysis on water and power usage that they read about in Bloomberg Business Week, or they’ll talk about the latest they heard on NPR or something like that. And so I think just actually doing your research on these things, the credible sources, really goes a long way and that’s the type of research of just showing up that is not often done. If you look at, and I was watching old footage of community meetings when this Abilene project was first coming up in 2021.

And it wasn’t with OpenAI yet, it was just this third party developer saying, “We’d like to build a data center here.” And there was a sigh of relief that they weren’t going to be building an ammonia plant because that would smell. And basically no one showed up. No one had anything to say. Maybe one person, a local gadfly, talked and bang the gavel, “Great, we’re going to build it.” If that had happened in 2025, there would have been hundreds of people there. And so it’s those two things of actually being informed and actually showing up is the difference between what’s happening in American communities now and what might have looked like at the very beginning of this story.

Nick Hanauer:

Fantastic. Tim, why do you do this work?

Tim Murphy:

I really like to go to random towns I’ve never been to before, but more importantly, I love to dig into a subject I didn’t really understand going in and just really get my hands into it and understand the world and be able to relay that information back to people.

Goldy:

I think when you look at the long history of economic development in rural and exurban communities, you see this interesting path. It used to be that you’d build some light manufacturing or heavy manufacturing, a car plant, something. And that is something that would generate jobs for working class people. You can have your farm and you can maintain the farm. People can be working on the farm and then going into the factory to make money on the side, this steady living, doing manual labor. Not unskilled labor. It’s skilled, manufacturing things. Obviously these weren’t always great jobs, but with the rise of the labor movement, they became middle class jobs and you could build a very good living and towns grew up.

Nick Hanauer:

And you can build a community around these things.

Goldy:

Right. Right. Because they employed a shit-ton of people. And then of course the de-industrialization of the 1970s, ’80s, ’90s, aughts devastated a lot of these towns that had come to defend on this manufacturing base. And to replace that we got Walmarts, and maybe you were lucky and you got a Costco. It became more a service industry job, which didn’t create as many jobs and they weren’t nearly as well-paying, but they did produce a lot of jobs. They did employ a lot of people and they provided services within the community. May not have been great for all the other retailers when a Walmart came in, but certainly for consumers-

Nick Hanauer:

You got something.

Goldy:

… you got something out of it, right? You can make an argument that it benefited the community in some way and you can see why a lot of these communities were desperate to go to Walmart. That was a boon to them at least as consumers. And now in this third stage of economic development, instead of a factory that’s going to employ 3,000 people or a Walmart that’s going to employ 600 people and sell you stuff cheap, you’re going to get this data center.

Nick Hanauer:

Yeah. Which is as big as Central Park, doubles your electricity bills, and employs 100 people.

Goldy:

Employs 100 people. They’re not farmers. These aren’t low scale. They’re bringing these people in.

Nick Hanauer:

Probably.

Goldy:

Maybe. It’s not like this is employing local people who are out of work. You’re not getting a job out of this once the construction of the data center is done. And you raised that important point about it’s actually raising your costs because of the incredible demand on the electric grid. This demand is growing so much faster than we are growing capacity, especially now with Trump spending billions of dollars to kill wind farms.

But also, I don’t know if you know this, Nick, in a lot of the country, the water utilities have been privatized too. So these aren’t public utilities and so it’s raising electricity rates, it’s raising water rates, it is raising property values in a lot of these places, just driving out the locals. And then at the end of it, you get this data center that will employ 100 people for, in the best case scenario, 10 years, 15 years, something like that. There could be an AI bust, that bubble burst and you’re not employing anybody and now you just have this giant facility that’s good for nothing where at least before you were growing cotton.

Nick Hanauer:

Something.

Goldy:

Look, you and I have differing opinions about AI. You love it because you think Claude can replace me.

Nick Hanauer:

No. Claude could never be as annoying as you, Goldy.

Goldy:

That’s right. Well, they’re working on it. That could be a feature. You can turn off the annoying…

Nick Hanauer:

Yeah, the annoying button. Yeah.

Goldy:

Right. You love it. I think I’m disappointed. It’s great at doing funny photos and stuff. I think it’s less useful right now than people think it is because it can help you with your research, but you can’t trust any of its citations. I think it’s amazing it can write as well as it does. It still sucks. And it’s not the AI that I was promised, which is that real artificial general intelligence where it becomes self-aware and then destroys humanity. But we have this differing opinion about how useful it is and I question the impact.

Nick Hanauer:

Yeah, put that aside. Put that aside.

Goldy:

But we can put that aside entirely.

Nick Hanauer:

Put that aside.

Goldy:

Because that’s not what this is about.

Nick Hanauer:

No.

Goldy:

This is about what it’s doing to individual communities.

Nick Hanauer:

Whether I’m finding AI more useful than you are is beside the point. It’s certainly hard to believe that for the ordinary American family, it’s going to do anything useful in terms of their welfare. At least directly. Indirectly, maybe AI will discover a drug that will be beneficial or whatever it is, but is it leading to children being better educated? No. Is it leading to a tighter knit community? No.

Is it putting more food on the table for the typical family? Absolutely not. And the downsides potentially are absolutely enormous. If there’s anything we can be sure of, it’s that Elon Musk, Sam Altman, and Mark Zuckerberg will not likely have to deal with the downsides, right?

Goldy:

Right.

Nick Hanauer:

They will be completely insulated from that, again, until the pitchforks come and they actually end up swinging from the lamppost.

Goldy:

You know what I see it as, Nick? And it seems weird because it’s high-tech and they’re building things. It’s a form of resource extraction. If you are a community with a giant hyperscale data center, they are extracting your electricity, they’re extracting your water, they’re extracting your land, but the profits from this are going to a handful of-

Nick Hanauer:

Elsewhere.

Goldy:

… tech bros, right?

Nick Hanauer:

Exactly.

Goldy:

They’re not really putting anything back and they’re not creating something that you’re directly benefiting. The point being that they could put that data center someplace else and you would benefit just as much from using the ChatGPT or Claude or whatever. So it is a form of resource extraction and I have a hard time seeing how that benefits local communities in the long run.

Nick Hanauer:

Yeah, I agree. Well, another day in the life of Plutocratic America.

Goldy:

Yeah. If you want to read more, we will provide a link to Tim Murphy’s piece in Mother Jones, How the American Oligarchy Went Hyperscale.

Freddy:

For more content from us, you can subscribe to our weekly newsletter, The Pitch, over on Substack. And for links to everything we just mentioned, plus transcripts and more,

visit our website pitchforkeconomics.com. As always, from our team at Civic Ventures, thanks for listening. See you next week.

The post How the AI Oligarchy Went Hyperscale (with Tim Murphy) appeared first on Pitchfork Economics.

Why Philanthropy [STILL] Isn’t the Answer with (with Anand Giridharadas)

Freddy Doss — Wed, 06 May 2026 05:58:10 +0000

Billionaires are shaping everything from elections to education to climate policy—and they want us to believe it’s generosity.

That’s why we’re re-airing this conversation with Anand Giridharadas, author of Winners Take All, on the power of elite philanthropy—and why it can’t fix the inequality it helps sustain.

Giridharadas breaks down how modern philanthropy allows the ultra-wealthy to “give back” on their own terms, while avoiding the kinds of structural changes—like higher taxes, stronger labor standards, and real regulation—that would actually redistribute power and opportunity. Yes, philanthropy can do good. But it can also function as a pressure valve—easing public outrage while leaving the underlying system intact.

If you’ve been following the surge in billionaire political spending, debates over wealth taxes, or the outsized influence of private foundations, this conversation will hit differently now, because the real question isn’t whether the rich should give more.

It’s why they get to decide in the first place.

Anand Giridharadas is a writer and political analyst focused on inequality, power, and democracy. He is the author of multiple books, including the national bestseller Winners Take All and The Persuaders. Giridharadas is an editor-at-large for TIME, an on-air analyst for MSNBC, and the publisher of the newsletter The.Ink, where he writes about politics, money, and power. He is also a visiting scholar at the Arthur L. Carter Journalism Institute at New York University.

Listen to Eric Beinhocker discuss Market Humanism on Hal Singer’s podcast The Slingshot.

Social Media:

@anandwrites.bsky.social

anandwrites

@AnandWrites

Further reading:

Winners Take All: The Elite Charade of Changing the World

The Persuaders: At the Front Lines of the Fight for Hearts, Minds, and Democracy

Instagram: @pitchforkeconomics

Threads: pitchforkeconomics

TikTok: @pitchfork_econ

YouTube: @pitchforkeconomics

LinkedIn: Pitchfork Economics

This episode originally aired November 11, 2025.

Substack: The Pitch

The post Why Philanthropy [STILL] Isn’t the Answer with (with Anand Giridharadas) appeared first on Pitchfork Economics.

Crypto, Cryptocurrency Scams, and the Illusion of Easy Money (with Ben McKenzie)

Freddy Doss — Wed, 29 Apr 2026 05:46:49 +0000

Crypto is back—new hype cycles, rising prices, and fresh promises that this time, cryptocurrency is changing the financial system for good. But the questions haven’t changed: is this innovation or just another wave of speculation, scams, and financial fraud?

That’s why we’re revisiting this conversation with actor and author Ben McKenzie—whose bestselling book Easy Money: Cryptocurrency, Casino Capitalism, and the Golden Age of Fraud, and new documentary, Everyone is Lying to You For Money, are once again fueling the debate over crypto’s real impact.

What started as curiosity became a deeper look at how the crypto boom blurred the line between investing and gambling—and what that reveals about an economy increasingly driven by speculation instead of real value. McKenzie joins Nick and Goldy to pull back the curtain on the hype, the believers, and the system that made it all possible.

Ben McKenzie is an actor, author, and director best known for his roles on The O.C., Southland, and Gotham. A graduate of the University of Virginia with a degree in economics and foreign affairs, he has emerged as a leading critic of the cryptocurrency industry. He is the co-author, with journalist Jacob Silverman, of Easy Money: Cryptocurrency, Casino Capitalism, and the Golden Age of Fraud, and has expanded that work into a documentary, Everyone is Lying to You For Money examining the rise—and risks—of crypto.

Social Media:

@benmckenzie.bsky.social

@ben_mckenzie

Further reading:

Easy Money: Cryptocurrency, Casino Capitalism, and the Golden Age of Fraud

When Prophecy Fails

Mistakes Were Made (but Not By Me)

New York Magazine: Congress Just Injected Crypto Directly Into the Most Stable Part of the Economy What could go wrong?

Instagram: @pitchforkeconomics

Threads: pitchforkeconomics

TikTok: @pitchfork_econ

YouTube: @pitchforkeconomics

LinkedIn: Pitchfork Economics

From Safety Net to Power Base: Reimagining, Not Restoring, the US Antipoverty System

Substack: The Pitch

Nick Hanauer:

The rising inequality and growing political instability that we see today are the direct result of decades of bad economic theory.

Goldy:

The last five decades of trickle-down economics haven’t worked, but what’s the alternative?

Nick Hanauer:

Middle out economics is the answer.

Goldy:

Because the middle class is the source of growth, not its consequence.

Nick Hanauer:

That’s right.

Announcer:

This is Pitchfork Economics with Nick Hanauer, a podcast about how to build the economy from the middle out. Welcome to the show.

Nick Hanauer:

Goldy, this week we’re talking to an actor. We don’t usually do that.

Goldy:

No, we don’t. It’s-

Nick Hanauer:

No. I think this may be our first actor, ever.

Goldy:

I think a lot of our guests are, especially the politicians, are actors of art.

Nick Hanauer:

They are. That’s true. That’s true. That’s true.

Goldy:

But this is an actual professional actor you’ve seen on TV, Ben McKenzie. You might know him from his roles on the OC, Southland, or Gotham. He’s an actor and a writer. Also, apparently we learned he’s directing a film that’ll be coming out shortly. And he is also the co-author of the book, Easy Money: Cryptocurrency, Casino Capitalism, and the Golden Age of Fraud with journalist, Jacob Silverman. And in case you couldn’t tell from that title, that easy money he’s talking about isn’t really money, Nick. It’s crypto.

Nick Hanauer:

Yeah, exactly.

Goldy:

You got some friends into that?

Nick Hanauer:

Not really. Only at the margin. I mean, I’m sure some of my friends own a little bit of crypto, but I don’t know any real hardcore crypto people myself.

Goldy:

Man, you’re just so old. You’re not even a real tech bro anymore. No.

Nick Hanauer:

Can’t stand it. Well, I’m excited to talk to him because I think crypto is stupid and it’ll be interesting to see what Ben says.

Ben McKenzie:

My name’s Ben McKenzie. I don’t know. I’ve done a lot of things. I’m an actor and now an author of a book named called Easy Money. And I am also a director of a film that will be coming out to film festivals this fall called Everyone Is Lying to You for Money about how stupid cryptocurrency is.

Goldy:

Ah.

Nick Hanauer:

Awesome.

Goldy:

Well, that’s a good segue into our conversation.

Nick Hanauer:

The thesis of your book is different from the motivation for writing the book. So if we could start with that, what happened to you that made you do this?

Ben McKenzie:

Sure, exactly. Well, it was the pandemic and my normal profession showbiz was on ice. There was no work as an actor.

Nick Hanauer:

So you had nothing else to do. So you thought you’d mess with-

Ben McKenzie:

Yeah, pretty much.

Nick Hanauer:

… the crypto bros.

Ben McKenzie:

Yeah, exactly. And I have an undergraduate degree in economics from the University of Virginia. I hadn’t used it much in 20 years in showbiz because the last thing people want to hear about is the dismal science at the craft service table. But I started paying attention to the financial markets for the first time in my life, basically just because I was bored. And at the same time, a buddy of mine, Dave, from college, came to me and said, “I needed to buy Bitcoin.” I think a lot of people have had this experience. Somebody came to them wanting to buy crypto.

The thing is with Dave, he’s given me terrible financial advice before. He encouraged me to invest in this penny stock. Well, what I think is a penny stock pump and dump back in the mid-aughts when I had a little money from TV. And he wasn’t scamming me. He got scammed too or so, I think. But when Dave came back to me, once been twice shy, I was skeptical at the beginning. And then as soon as I started diving into it very quickly, I was like, “This doesn’t make any sense at all.” I mean, this is not a currency in any way that makes sense in the English language. People aren’t buying things with Bitcoin.

And then the market is run through these corporations in the Caribbean. And anyway, it all felt very, very sketchy. Well, I had also gotten my medical marijuana card over the pandemic because I needed a little release and I like alcohol, but there’s a limit. And I got high one day and I decided I wanted to write a book and then I woke up the next day… A lot of people have had this experience. I woke up the next day really thinking, “I don’t actually know how to do that.” And so I reached out to this journalist who I met on Twitter, Jacob Silverman. And this is August of 2021. And I invited him to drinks at a local Brooklyn bar.

He said, “Hey, what about writing a book? I don’t know how to write about events that haven’t happened yet.” And he was about to go on paternity leave. His wife was about to have their second child, so he was actually kind of ready for something like this. And we started reporting on it and that led to this book, Easy Money. So it’s the sort of way it all came about.

Nick Hanauer:

I just wonder if you got scammed or… Yeah.

Ben McKenzie:

Well, only by Dave. Well, not Dave, by someone via Dave.

Nick Hanauer:

I mean, go ahead and just frame the argument that you make.

Ben McKenzie:

Sure. Right. So I tried to look at the argument from multiple levels. The book is a work of investigative journalism to some degree. Jacob and I went out and interviewed a lot of the top players, including Sam Bankman-Fried before it all fell apart.

Nick Hanauer:

Total fraud.

Ben McKenzie:

Yeah. Total fraud, quite amusing, I have to say. He’s in the documentary. I have him on camera. I also have a guy named Alex Mashinsky who was running a fraud called Celsius on camera. Alex has now got 12 years for running a fraudulent scheme. So there’s interviews with fraudsters there, which went to El Salvador, which is the only country, was the only country in the world trying to use crypto, Bitcoin as real money. Spoiler alert, it wasn’t working. And testified to the Senate Banking Committee in December of 2022, which is right as Sam was being charged with these crimes and crypto was in free fall.

So it’s some of that. And then I also spend a little bit of time talking about the economics of it and how it can’t work as money for a variety of reasons. First of all, it doesn’t work practically speaking right now. No one is using Bitcoin to buy their bagel at the neighborhood deli. If I went over to my Brooklyn deli and asked to buy my Bagel and Bitcoin, they’d look at me like I was crazy. It can’t fulfill the functions of money because it’s not a good store of value, medium exchange or unit of account. It also wasn’t being used that way. It was being used as a speculative instrument for people to basically gamble on, and it was being used for crime.

And then I lay out the history of cryptocurrency, which is spoiler alert, a lot of crime. And then I also spend time talking about arguments like, well, even if it were to be money, even if you could somehow make crypto into money, would it be a good idea? Would it work? And the short answer is no. And we know that because if crypto doesn’t come from the government, that’s what its advocates will sort of boost to you and boast about, then it has to come from somewhere.

Where does it come from? They don’t like to talk about this, but it comes from corporations because corporations are the ones mining the Bitcoin, multi-billion dollar publicly listed corporations in many cases, mine the majority of Bitcoin today. So that’s private money as opposed to public money. Private money is something we tried in the 19th century during the free banking era when banks were allowed to issue their own notes, their own currencies. It was also called the Wildcat Banking era when you were only allowed one chapter of your bank. And so you would set up your chapter as far away from your depositors as possible where the wildcats roamed.

And once you had their money, it was fairly easy to take off with it. So there was a lot of fraud. And basically the failures of the free banking area led to the reestablishment of the Fed and needing to have a central bank. So we’ve actually tried this thing before and it didn’t work even if it were to work as money. So the book is… Sorry, that was a long answer, but the book is a lot of different things.

Nick Hanauer:

So draw the distinction between the function of crypto and the function of real currency. You alluded to it, but be more precise.

Ben McKenzie:

Sure, exactly. Let me define those terms because I brush right past them. And I’m sure your listeners, like many of them already know this, but some of them don’t perhaps. I had to refresh my memory of Econ 101. So if you ask most people what money is, they look at you like you’re stupid and then they think about it and they realize, “Oh, it’s actually kind of hard to define.” And then they’ll usually say something like, “Well, you buy stuff with it.” And that’s true. That’s one of the functions of money. There’s three. Medium of exchange is the first one, which is you can buy and sell stuff with crypto.

One reason why crypto can’t work is a medium exchange, at least Bitcoin can’t, is the technology itself. The consensus algorithm that runs the computer code that allows Bitcoin to work, I would explain that to you, but it’s too long and boring. It can only process five to seven transactions a second. Bitcoin can only do five to seven transactions a second. Visa can do 24,000. Even Sam Bankman-Fried admitted this to me when I interviewed him, it cannot scale. Bitcoin cannot scale. So what you end up doing is building all these other systems on top of it, which are rife with fraud and manipulation.

So medium exchange is the first function of money. The second, I would say a unit of account is their price discovery. Can you run your books using the money? All currencies are made up, right? We made up money.

Nick Hanauer:

They’re imaginary.

Ben McKenzie:

It’s a collective hallucination in a way. We all sort of randomly agree on this thing. And so all currencies are fallible. All currencies are fragile. We are numb to this idea in America because we have the world’s reserve currency since World War II or even before then. Even with the recent bout of inflation, we have a very stable currency in terms of how it’s treated all over the world, but that is not… We’re the exception, not the rule. I mean, currencies have existed for hundreds of years… Well, longer than that, thousands of years, and most of them have failed as the governments or countries that issued them have experienced turmoil and failed.

So store of value means that the value of the currency stays relatively consistent over time. Cryptos can’t do that. I mean, you see the charts in crypto. They’re quite funny. They look like a rabbit on amphetamines. I mean, they’re just bouncing around all over the place. So crypto can’t fulfill any of the three functions of money.

Goldy:

But blockchain, it’s magic.

Nick Hanauer:

It’s going to change the world.

Ben McKenzie:

Yeah.

Goldy:

When I expressed my own skepticism to the crypto people, they always say, “Well, you just don’t understand blockchain.” It fixes everything. The future is blockchain.

Ben McKenzie:

That’s right. That’s right. Which is amusing. They say it’s the future of money. But as I was pointing out before, it’s private money. That’s actually the past of money. So it’s kind of funny. So the technology argument was the one that I found most intimidating initially because I’m not a cryptographer. I don’t understand computer science really. I’m kind of a Luddite in many ways. So I researched it and went into it and talked to experts in the field. Blockchain is over 30 years old. It goes back to 1991. It is a very relative to the history of cryptography. It’s pretty old and it’s not used outside of the world of cryptocurrency, hardly ever because it doesn’t work that well, or it only works for certain things.

A blockchain is just a ledger. It’s called a timestamped append only ledger, meaning a ledger of transactions, a record of transactions that can only be added to and never subtracted from. You can’t reverse a transaction, which is one of its key features, attributes for those that believe in it, but for the rest of us it should be considered a fault of it. For example, the reason that scammers and fraudsters, one of the reasons they like crypto is once you send your crypto to someone else on the blockchain, you can’t get it back.

I mean, it’s over there in their account and you can trace it potentially and find out where it went if you can figure out who owns that, who’s in charge of that address, who owns that wallet, but it’s irreversible. It’s not like a credit card. Your credit card gets stolen, you can call the bank and reverse the charges. So the irreversibility of it is good for scammers, but is terrible for the trust that’s needed to run a monetary system.

Nick Hanauer:

Yeah. I mean, I would say that we’re in complete agreement with you.

Goldy:

You’re not a crypto billionaire, Nick? This isn’t…

Nick Hanauer:

No, I’m not. But do I wish I’d put a million dollars into crypto 10 years ago? Of course I do.

Goldy:

Let me tell you a story, Nick. When I was an unpaid blogger, I wanted to write a piece about Bitcoin because I thought it was so stupid, but to do it, I wanted to show how impossible it was to buy something with it. So I went to this ATM at Westlake to try to buy $50 worth of Bitcoin and three times I went there trying to buy it and the ATM wouldn’t work. Had I bought that $50, I’d be employing you-

Nick Hanauer:

You wouldn’t have to work for me.

Goldy:

Not the other way around. I’d be the billionaire. That’s what that 50 bucks would’ve been because I wouldn’t have been able to spend it. There was nothing to spend it on. There was a pizza place I could have tried to use it.

Ben McKenzie:

Yeah. I would say probably the strongest argument in terms of psychologically, in terms of convincing people to invest is that argument, right? Is the argument, “Well, it’s gone up for a long time.”

Nick Hanauer:

It’s a speculative bubble. I mean, but it has definitely benefited a bunch of people and they are… It’s cheerleaders, right?

Ben McKenzie:

Yeah, totally. And until it busts again, which inevitably it will, because if you look at the history of crypto, I mean, in its brief but sorted history, it’s had more boom bust cycles than any other asset I can think of. But until it bursts again, people are going to be drawn into that. So I studied that and I studied the economics of it. I’m not really a math guy. That was always like my holdup with econ was I was never going to be able to get a more advanced degree or practice it in real life because I was always more interested in the behavioral economics of it.

And so Robert Schiller is my favorite economist and he talks about what he calls naturally occurring Ponzi schemes where the price of a speculative asset rises way out of relation to its any potential value of it, but that attracts a lot of attention. And people notice that the price rising. They buy into it, which then increases the price more, which then brought more people into it. And so these things take on a life of their own. That’s leaving the manipulation of the market aside, which is quite serious as I go into it in the book.

But just on its own, these speculative bubbles can last a very long time and frauds can last a very long time as we know with Bernie Madoff who was running his fraud for decades.

Goldy:

Are you surprised that it’s as strong as it is now years after you’ve written this book?

Ben McKenzie:

It’s funny, I addressed that in the film, Everyone Is Lying to You for Money. At the end where I say, it’s funny because I think I was as right as I hoped I would be or more, and yet I had less of an effect. At the end of the day, people are going to buy it no matter what anyone says. Right?

Nick Hanauer:

Yeah, for sure.

Ben McKenzie:

And there’s this interesting phenomena where… So I interviewed this fraudster named, Alex Mashinsky. His scheme fell apart and a lot of people were hurt by it. Hundreds of thousands of people invested in it. I found some of those folks and interviewed them for the documentary. And at the end of the film, I come back and I asked them, “Do you still believe in cryptocurrency?” Even though they’ve lost a lot, some of them have lost their life savings. Every single one of them said yes.

Nick Hanauer:

But that’s a psychological phenomenon.

Goldy:

Yeah. Cognitive dissonance is a powerful thing.

Ben McKenzie:

And it’s also some of the dynamics, I hate to say it, of a cult.

Nick Hanauer:

No, that’s right. We’re talking about the same thing.

Ben McKenzie:

Yeah, exactly. The more you’re bought into it, almost in this case, literally bought into it, the more you cannot accept that you’ve been scammed or defrauded.

Nick Hanauer:

And what people do, they don’t wake up and be like, “Oh, that was a terrible mistake. They double down.”

Ben McKenzie:

Sure, exactly.

Nick Hanauer:

Like Trump voters.

Ben McKenzie:

I mean, there is a lot of overlap there. Obviously the crypto market and the investors are not monolithic. They come from all shades of the political spectrum, but it has this libertarian anarcho-capitalist underpinning that appeals to folks that are into…

Nick Hanauer:

Yeah. It’s a quasi-religious thing for a lot of people.

Ben McKenzie:

It is a little bit. It was really hard for me to understand that. I was talking to my therapist and he was recommending a paper called When Prophecy Fails, and it’s about cults and what happens when the cult leader predicts the world is going to end today.

Nick Hanauer:

And there’s an even better book called Mistakes Were Made, But Not by Me. It’s a fantastic book.

Ben McKenzie:

Okay. I got to check that out.

Nick Hanauer:

It basically details the psychological processes that get people to make these terrible choices. And then when the universe intrudes and proves that it was a terrible choice, they don’t say, “Oh my God, I made a terrible choice.” They double down on that terrible choice because-

Ben McKenzie:

Yeah, it’s really quite fascinating.

Nick Hanauer:

… it’s too psychologically painful to admit that you were wrong.

Goldy:

There’s a number of world religions that are founded on this.

Ben McKenzie:

Yeah. I mean, yeah. Groupthink is a powerful motivator.

Nick Hanauer:

So why do we care?

Ben McKenzie:

Great question.

Nick Hanauer:

So a bunch of dumb people do this thing. Some of are going to make money. A whole bunch of them are going to lose money. Do I give a shit? Should I give a shit?

Goldy:

No, you don’t, Nick, because you’re insulated, whereas when the economy collapses and it takes my-

Nick Hanauer:

Okay, but that’s the-

Goldy:

… meager retirement accounts with it.

Nick Hanauer:

Okay. That’s my question. That’s my question.

Ben McKenzie:

Well, what Goldy is saying is exactly my answer, which is in the abstract, I’m somewhat sympathetic to the argument. I came into this thinking that what most of crypto is gambling. And I came into it thinking, “Is gambling that bad?” I’m a guy. I was once a young guy. I remember gambling. I would play poker with my friends. Funnily enough, you remember the online poker craze of the mid 2000s?

Nick Hanauer:

Yeah.

Ben McKenzie:

So my buddy Dave was into that as well.

Goldy:

Of course.

Nick Hanauer:

We got to get this guy Dave on the podcast.

Goldy:

Dave sounds…

Ben McKenzie:

Yeah, you got to get him on. He’s great. We play poker with each other where we’re giving each other physical dollars. But then he’s gambling online. I’m like, “Dave, where are you sending the money? Where does it go? ” And he’s like, “Oh, that’s a good question. I haven’t thought about that. ” It goes to the same Caribbean countries that were running crypto scams, which is FGX, which was run out of the Bahamas. Because as soon as you send the money overseas, it’s obviously a lot harder to claw it back and they’re not subject to US regulation or at least theoretically. So it’s a lot of gambling. And in the abstract, I don’t have a ton of problem with people gambling. I mean, I do, of course, believe people should be allowed to do what they want with their own money to some degree.

But the more I’ve looked at it and the more I’ve spent time with victims, you notice how much gambling is out there. I mean, if you watch a sports game, it’s every single ad break. And in 2021 and 2022, it was a crypto ad and then a gambling ad and then a crypto ad and then a gambling ad. There are social costs to this stuff.

Nick Hanauer:

I don’t watch sports on TV. Is that true these days?

Goldy:

Yes. And it’s even worse now with sports podcasts. It’s all gambling. They’re all… I’m a Philadelphia Eagles fan.

Nick Hanauer:

I’m embarrassed to admit, I had no idea.

Goldy:

I listened to Philadelphia Eagles podcasts, and it’s amazing that you can support a dozen full-time journalists covering one sports team and you can’t get more than half a dozen into a newsroom in a major city just to cover the news, but it’s all supported by gambling, by sports gambling now. It’s like every ad is sports gambling. That’s the entire industry.

Nick Hanauer:

Wow. Jesus.

Ben McKenzie:

In terms of trying to reach men who are going to be your target audience here for both crypto and gambling, sports advertising is the most effective way to do that. But there’s a lot of cost to that. Gambling addiction is actually a pretty serious addiction. It affects mostly men and it has to do with our pride. We don’t like to admit that we’ve made a mistake, that we’ve lost money. And so I talked to some experts for the book. Guys hide it from their families and-

Nick Hanauer:

Yeah. For sure.

Ben McKenzie:

But let’s leave that aside for a second. So the gambling is one thing. The main point I would say is what Goldy was saying, which is crypto had already made inroads integrating itself into our regulated financial system, obviously. But to give you an example, when SAM and FTX exploded in November, December of 2022, I testified to the banking committee as I mentioned. I told them, “If we let crypto infect our banking system, we’re going to be back here.” Well, I didn’t know how right I was. Three months later, three months later in March, those banks failed, Silvergate, Silicon Valley and First Republic, they were all tied to cryptocurrency.

A lot of the investors in those banks, the people that were parking their money there, sorry, were tied to crypto and we had to bail them out. I mean, the Fed had to step in and bail out all of those banks. It’s not a coincidence that they were all into crypto. If you’re valuing something at this crazy speculative level and then all of a sudden the bottom falls out and you need to cash in for real dollars, the bank doesn’t have them.

I mean, it’s fractional reserve banking. So I’m terrified that that’s about to happen… Not about, I don’t know, when. At some point, that’s going to happen again because what they’ve done in Congress now is passed a piece of legislation called the GENIUS Act, which if you know anything about this Congress, if it’s called GENIUS, it’s got to be stupid.

Nick Hanauer:

Exactly.

Ben McKenzie:

Got to be dumb. And it basically allows corporations to issue their own money. So it’s literally private money, their own stablecoins, I should say. A stablecoin is like a crypto that’s pegged one to one against a real currency. So one Amazon buck would theoretically be worth $1. So now the corporations can issue their own money, which sounds like a great idea for them because once they have our money, they can earn interest on it. And the delay in cashing back out into real money can earn them a lot of money. I don’t know what we get out of it. The average person gets out of it. It behaves like a money market mutual fund sort of, a money market fund.

Nick Hanauer:

Like those tokens you get at the carnival where you give them dollars and they give you the little…

Goldy:

Oh, wooden nickels?

Nick Hanauer:

Yeah.

Goldy:

Remember the old expression?

Nick Hanauer:

It’s the thing that you put in the machines and then you inevitably end up with a few and you can’t cash them back in.

Ben McKenzie:

Yeah, exactly. I mean, you’re calling the thing a dollar and you’re trading off of the trust in the US dollar, but it’s not a dollar. It’s not backed by the government. It’s issued by a private corporation. And by the way, just like stepping aside, just stepping back for a second, do we really want corporations to have more power? Is that our way forward? That’s just terrifying and so wrongheaded.

What scares me is that they passed the bill, the president signed it. And not only have they bought off the Republicans, they’ve also bought off a significant portion of the Democratic lawmakers, over a hundred Democrats voted for this GENIUS Act, including Hakeem Jeffries and Chuck Schumer. And they’ve done that, I don’t think because they believe in blockchain or even understand what the hell it is, because I think the crypto lobby, which has a lot of money that they’ve taken from their customers, will spend it, has spent it influencing politics.

They spent $120 million, I think it is, in the last election cycle. One in every two corporate dollars came from crypto and people in the crypto industry. They have not only sort of incentivized people to vote for their legislation, but they’ve said, “If you don’t vote for us, we’re going to come after you.” And a good example of that is when I testified to the banking committee, Sherrod Brown was the chairman of the committee at the time. They spent $40 million supporting a literal used car salesman, Benny Moreno, and he won. So they’re extremely powerful and that terrifies me.

Nick Hanauer:

Why do you do this work?

Ben McKenzie:

Because I love it, because I love it, because I couldn’t stop thinking about it. I was just fascinated by it. And then intellectually, I couldn’t stop thinking about it. And then once I started going into the actual characters and the actual what was going on on the ground, I became obsessed with it. I’ve always loved true crime. And my favorite subgenre of true crime is what I call stupid crime, where the criminals are obviously committed crimes in public, sometimes via tweets, and then they get caught, of course, and then they turn on each other. Sort of Cohen Brothers-esque crime. And crypto is just chocked full of that.

So I’ve had an absolute blast covering it, and I would love people to support this film, this completely independent movie that I’ve made. It’ll be playing at DOC NYC November 16th at 4:15 at the IFC Center. You can go on DOC NYC’s website to buy tickets, but it’s a comedy about how stupid this stuff is.

Nick Hanauer:

I can’t wait to see it.

Goldy:

I can’t wait to see it.

Ben McKenzie:

Yeah, please, please. If you are in New York, please come. I’m really, really proud.

Nick Hanauer:

I will not be in New York, but at some place, man, I hope you get a good distribution deal out of it and-

Ben McKenzie:

Thanks.

Nick Hanauer:

… we can go see it. Well, Ben, it’s really nice to meet you.

Goldy:

We’ll talk to you later after the crash.

Ben McKenzie:

Exactly. Exactly. I’ll be back.

Nick Hanauer:

So, Goldy, I’m struggling to care.

Goldy:

You’re struggling? Of course you are, Nick. You’re there. You’re in your mansion in London.

Nick Hanauer:

No, no, no, no.

Goldy:

Enjoying the life of it.

Nick Hanauer:

I’m struggling to care because when the crash comes, as it inevitably will-

Goldy:

You’ll make a fortune off of it.

Nick Hanauer:

No, I won’t make a fortunate. I just think it was hilarious. It will be hilarious.

Goldy:

When the crash comes, it’s going to take down everything with it. And there’s going to be this giant bailout, especially-

Nick Hanauer:

Then I will not make money.

Goldy:

… if it happens during the Trump administration because his son Barron just made a billion dollars on crypto. He has his own crypto. You can be sure they’re all being bailed out.

Nick Hanauer:

Yeah, that’s true.

Goldy:

But it’s okay. As long as we get rid of Medicare, Medicaid, social security, we can afford this. I care about it for a number of reasons, Nick. And this is something… Let’s start with the first one, which I think you can agree with me on is that, we both like being right.

Nick Hanauer:

Okay. Fair point.

Goldy:

Right? I mean, like Ben, you and I, we saw this and we’re like, “What the fuck? I mean, this is nuts.” It doesn’t do anything except-

Nick Hanauer:

It’s just a speculative bubble.

Goldy:

… crime.

Nick Hanauer:

Crime.

Goldy:

Crime and speculation.

Nick Hanauer:

Guns and drugs.

Goldy:

It’s great, perfect. It’s money laundering and all the smart people telling us we’re too stupid to understand it, I get angry about this. It’s just, “Fuck you.” No, this is like digital tulip bulbs. It’s all bubble.

Nick Hanauer:

Yeah. Okay.

Goldy:

So first of all, we can agree on that. The schadenfreude will be incredible.

Nick Hanauer:

That’s right. Well, that’s what I mean. That’s what I mean. The schadenfreude overwhelms everything else for me, but go on.

Goldy:

But because you’re in a position where you can survive all this. But I’m 62, I’m going to be retiring at some point in the near future. And if my 401k and my IRA go down 60% due to some sort of major crash that crypto will be related to, the crypto AI crash that is coming, and that’s a topic for another episode, the AI bubble that’s going on. I know you love AI. There’s some practical things to it, but you got to admit that the investment stuff, if there’s a Ponzi scheme going on there too.

Nick Hanauer:

It’s nuts.

Goldy:

There’s a lot of corrupt stuff.

Nick Hanauer:

I wouldn’t call it a Ponzi scheme. It’s just a bubble.

Goldy:

It’s a bubble.

Nick Hanauer:

It’s a bubble.

Goldy:

Okay. Well, we’ll get into that at some point in the future. It’s going to be bad for a lot of people. It’s going to be bad for the economy. It’s like, “Who cares if people are buying houses that they can’t really afford by saying they have income that they don’t have?” If they lose their houses, that’s on them as we learned-

Nick Hanauer:

Yeah, that’s not exactly it.

Goldy:

That’s number two. Number three-

Nick Hanauer:

You’re saying I’m being insensitive.

Goldy:

I’m saying that none of this affects you personally, but it affects a lot of other people.

Nick Hanauer:

No, you’re right. You’re right.

Goldy:

And then the other thing is, Nick, and this is something… Maybe you’re familiar with this about me, I’m very anti-gambling. I am not pro gambling. I think the explosion of legalized gambling over the course of our lifetime has been really detrimental. Obviously, it’s like drinking. I drink a little bit. I have a couple drinks a week, whatever. I’m not an alcoholic. Alcoholism runs in my family. It runs in my ex-wife’s family. My daughter doesn’t drink at all because of that. Alcohol destroys lives, right?

Nick Hanauer:

Yeah, for sure. And as does gambling.

Goldy:

And gambling is the same way. Most people, it’s entertainment for them, whatever. It’s not a big deal. But 95% of the industry’s profits are made off of the 5% of people who are problem gamblers. And the entire industry is designed in a way to create compulsion. You are trying to get the people who have a problem to gamble irresponsibly. That’s where the profit is. The profit is in the problem gamblers. And the same thing is true with crypto. The people are going to get wiped out or the people who can’t afford to get wiped out. I could care less about the tech pros who are worth $2 billion today who might be worth a hundred million dollars tomorrow. Oh, boo-hoo for them.

Nick Hanauer:

Yeah.

Goldy:

Right? But there’s a lot of people who are like, “This is my chance to actually have a comfortable life, to have a comfortable retirement,” and they’re going to lose it all. And it’s going to destroy a lot of lives. And that’s what bubbles do. It sucks in, especially near the end, it sucks into people who are least able to deal with the negative consequences. I see it as just part of our gambling culture. He talked about it early in his book where there are these Super Bowl ads with major actors and athletes like Tom Brady-

Nick Hanauer:

Embarrassing.

Goldy:

… who were shilling this and like, “Oh, these are heroes, people who you look up to.”

Nick Hanauer:

Matt Damon. Matt Damon.

Goldy:

Matt Damon. Why did-

Nick Hanauer:

Who, by the way, is both rich enough and smart enough not to have done that. He’s a super bright guy. What are you doing, dude? He’s also a good guy.

Goldy:

Yeah. So it brings in a lot of people. It uses their reputation to pull you in and it’s toxic. It’s bad. And it’s led to some really bad policy. And here’s the final reason you should care about this, Nick. And that is the political money that this has unleashed.

Nick Hanauer:

Yeah, that’s for sure.

Goldy:

The amount of how it is corrupting our politics that you have all of this fake crypto money out there buying elections.

Nick Hanauer:

Yeah, that’s true.

Goldy:

And that’s like Elon Musk who spent $250 million to elect Trump. And that is really, really dangerous, not just to American democracy, but to democracies around the world.

Nick Hanauer:

Yeah, no.

Goldy:

So anyway, if you want to learn more from it, you can buy Ben’s book, Easy Money: Cryptocurrency, Casino Capitalism, and the Golden Age of Fraud. We will have a link in the show notes. You can get it at your favorite online monopolist or your favorite local bookstore. And we’ll also throw a link into Ben’s upcoming film.

Nick Hanauer:

Yeah. I’d like to see that.

Freddy:

For more content from us, you can subscribe to our weekly newsletter, The Pitch, over on Substack. And for links to everything we just mentioned, plus transcripts and more,

visit our website pitchforkeconomics.com. As always, from our team at Civic Ventures, thanks for listening. See you next week.

The post Crypto, Cryptocurrency Scams, and the Illusion of Easy Money (with Ben McKenzie) appeared first on Pitchfork Economics.

From Safety Net to Power Base: Reclaiming Economic Power for Working People (with Jamie Keene)

Freddy Doss — Wed, 22 Apr 2026 05:37:53 +0000

The social safety net wasn’t supposed to work like this.

Decades of neoliberal choices from politicians in both parties reshaped it—turning what was meant to support people into a system that often leaves them stuck.

This week, Jamie Keene, a fellow at the Roosevelt Institute and former Biden White House policy advisor, joins us to break down how we got here—and why today’s anti-poverty system can actually reinforce the very conditions it’s meant to solve.

From requirements that trap workers in low-wage jobs to public programs that quietly subsidize those business models, we unpack how the system evolved—and what it would take to turn it into a system that actually gives people power.

Jamie Keene is a stratification economics fellow at the Roosevelt Institute and a former White House policy advisor on equality and opportunity. She is also the author of From Safety Net to Power Base: Reimagining, Not Restoring, the US Antipoverty System.

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Nick Hanauer:

The rising inequality and growing political instability that we see today are the direct result of decades of bad economic theory.

Goldy:

The last five decades of trickle-down economics haven’t worked, but what’s the alternative?

Nick Hanauer:

Middle out economics is the answer.

Goldy:

Because the middle class is the source of growth, not its consequence.

Nick Hanauer:

That’s right.

Announcer:

This is Pitchfork Economics with Nick Hanauer, a podcast about how to build the economy from the middle out. Welcome to the show.

Paul Constant:

So, Goldy.

Goldy:

So, Paul.

Paul Constant:

I know that having been born in the 19th century. Yeah.

Goldy:

I was going to start this off by saying that I’m old, but you just did it for me.

Paul Constant:

So, having been born in FDR’s first term, Goldy, you might not be able to relate to this, but speaking for myself, my entire life, I have known America’s social safety net programs as something that Republican presidents try to dismantle and then Democrats come in and try to tweak at the edges of what the Republicans were doing. And then the next Republican comes in and they do more damage. And it’s been this sort of game of attrition. We’ve been losing safety net by attrition my whole life.

Goldy:

It’s been bipartisan, Paul. Remember it was Bill Clinton who proudly claimed that we were ending welfare as we know it.

Paul Constant:

That’s true. That is true.

Goldy:

Which I always found interesting, because the word welfare is positive.

Paul Constant:

Yeah.

Goldy:

Right? And if you understand economics, it’s not like, “oh, the social welfare state.” It’s welfare economics. That’s literally what neoclassical economics used to call itself, welfare economics. I mean, that’s what it’s about is increasing the welfare of as many people as possible. But no, Reagan said welfare was a bad word, so now that’s considered a negative.

Paul Constant:

And you’re right. Clinton was pretty much full on attacking welfare when he was in office. But it’s generally been a back and forth, the game of tennis.

Goldy:

It Is a back and forth. And historically, let’s be fair, Jimmy Carter was essentially our first neoliberal president. A lot of the deregulation started under the Carter administration. The deregulation of the trucking industry and the airline industry most famously. Also, tax cuts kind of… Actually, it was first JFK who started cutting taxes after the Eisenhower administration. So, both parties share the blame. They don’t share the blame equally. One party just thinks, “Oh, no, we’re constrained by economics. These are the things we have to do.” That’s the Democrats. And the other party is, “Hey, let’s screw all the poor people.”

Paul Constant:

I don’t Know.

Goldy:

Is that unfair?

Paul Constant:

No, no. More or less, I think that’s directionally accurate is maybe how I’d put it.

Goldy:

In any case, the point, the inspiration for this conversation, Paul, I think, if I know where you’re going, is that, I don’t know, how should we, what’s the technical way of phrasing this? Our social safety net is totally Fucked up.

Paul Constant:

Yeah. I think in tatters is the cliche of the day when it comes to politicians talking about it, but yes, fucked you up also works.

Goldy:

Right. And one of the things that we’ve seen in the past is that when the Republicans come in and break things, and by things we mean the economy, our democracy, not just individual things like all of government, which this administration is doing. But when the Republicans break things, the Democrats who actually… Old time liberals who actually believe in government. I mean, that to me is the difference. Liberalism, American liberalism is we believe that the government is a force for good in improving people’s lives. You can take your progressive values and put that on top of it, but underneath it, it is a philosophy of governance. And Democrats come in and they try to restore norms and rebuild institutions, and fix the things that the Republicans intentionally broke. And I think the guest we have on today is going to tell us that maybe fixing this old system isn’t the right approach. Maybe we need a more dramatic approach to re-imagining how we approach poverty in America.

Paul Constant:

Yeah. You’re talking about Jamie Keene. She is the stratification economics fellow at the Roosevelt Institute, and a former Biden White House policy advisor. Her report is called From Safety Net to Power Base: Reimagining: Not Restoring the US Anti-Poverty System, which is just… I just love that. I love that. I love that title. I think it’s really… It sings. It’s got art to it.

Goldy:

Well, then let’s talk to Jamie, and let her sing.

Jamie Keene:

Hi, I’m Jamie Keene. I’m a fellow at the Roosevelt Institute. I work on a range of issues, including progressive economic policy, democracy, and civil rights. And I used to work in the Biden White House. I was a special assistant to the president for equality and opportunity. And I have a new report out that looks at how we might reimagine the social safety net so that it does a better job of rebalancing power in our economy.

Goldy:

Well, thanks for joining us. I was reading the report, and you hit a soft spot for me here. Something I’ve been thinking a lot about how broken the system is, and that it’s not enough just to fix it. If you could just explain your general thesis at the top before we go on.

Jamie Keene:

So, I think we all know that the safety net is under attack. Trump has literally financed this massive transfer of wealth upwards by cutting off healthcare and food assistance for the poor. It’s very Draconian. But my argument is that even before these attacks started, the safety net really was broken. And it’s true that millions of people rely on safety net programs, but the safety net has really been eroded by neoliberal policy design. I think neoliberalism has told us that if we deregulated markets and we privatized public services, then wealth would magically trickle down from the top of our economy, and it would alleviate poverty. But that vision has failed, but it has really shaped the way our safety net is designed. And I would point to three kind of structural design issues with the safety net we have today.

The first is we have a safety net that relies on private markets to deliver assistance while failing to regulate those markets. So, most of our safety net programs assume that if we just give people a subsidy into a private market, that they’ll be able to not be poor anymore. And we ignore that it’s the conditions of those markets themselves that are creating conditions of poverty to begin with.

I think the second structural problem is that our safety net has become really fragmented. It is so complicated to get help in this country. We force people to jump through big hurdles, and the safety net is just not keeping pace with changes in our economy.

And the third problem is that it’s really passive. We’ve assumed that markets will work, and then the safety net will catch people after they fall. And I think that logic has really proven to be backwards. And the cumulative effect is that we’re the wealthiest nation on Earth, but one in 10 Americans live in poverty. And for millions of Americans who live above that poverty line, they’re facing downward mobility. That’s not an aberration in our economy anymore, it really is a dominant economic condition for millions of people.

I would just point to a sort of quote from history that I think sums this all up, because many of these ideas are not new, but Martin Luther King in his 1967 speech Where Do We Go from Here? He says, “We are called upon to help the discouraged beggars in life’s marketplace, but one day we must come to see that an edifice which produces beggars needs restructuring.” I think that restructuring is what I’m trying to get at in this report.

Paul Constant:

To take a look at that edifice as it currently stands though, I wanted to ask, I think that most people define poverty as a lack of income, and you talk about it as a lack of power. And I was wondering if you could talk about what that looks like for people who are in the system today.

Jamie Keene:

Yeah. So, our safety net has taken what I would describe as a pretty one dimensional approach to measuring poverty. Programs say like, “How much income do you have?” And then, “What are some of your costs?” And income is clearly a big part of poverty, but I think there’s a different test we should be using, which is, do you have the power to say no? Do you have other choices? So, you might be employed, you might even be receiving one of our primary anti-poverty programs, the earned income tax credit, but if you can’t leave a shitty job without risking eviction, you don’t actually have power in our economy. You might be receiving a childcare subsidy, but if you can’t pick the childcare provider that you trust the most because your employer has the power to change your schedule with no notice, then you don’t have power, even if you’re receiving safety net assistance.

And I think the sort of painful truth is that many parts of the way the safety net itself is designed contributes to this disempowerment. Nothing exemplifies this better than work requirements. This is a really coercive trap. In order to get benefits that aren’t enough to survive off of, you have to award a job that won’t pay you enough to survive off of. If you leave the job, you lose your benefits. That is disempowerment that’s sort of baked into policy design. So, I think poverty is not just about income, it’s about how much control you have over the decisions that affect your life. And our economy is really converting that control into a luxury good.

Goldy:

When you talk to Democrats about this, and I assume you have, I know there’s this instinct within the party that, if we still have a democracy and we take back control, we get Congress and eventually the White House, that we’re going to fix all these things that were broken. How resistant are they to the idea that fixing the old system isn’t sufficient?

Jamie Keene:

Well, I think Democrats aren’t a monolith. There are plenty of Democrats who still believe that we can tax credit our way out of economic inequality. And I think that just pumping up the system we have today is not going to be good enough.

I do think we’re in this political moment where the question is whether you are going to double down on the institutions we have, or kind of reimagine them wholesale to rebalance power in our economy. And there are some Democrats who get that. But I think that the safety net is often an afterthought in our economic policy and in our economic politics. And part of that is just that it hasn’t been delivering the kind of economic freedom and economic power that people need. So I think we need a much bigger imagination about what the safety net can do to bring it back into the heart of our economic policymaking.

Goldy:

Right. And as you point out in the report, it’s part of an integrated system, or at least was initially intended to be part of an integrated system. And that we’ve lost those other parts and we treat them all separately. It’s not just that it’s market failures that create the conditions of poverty, it’s actually the market working how markets work.

Jamie Keene:

That’s exactly right. I mean, I think the argument I’m making in this report that I think is likely to ruffle the most feathers is an argument that the safety net is sometimes inadvertently subsidizing the same corporations that are creating economic precarity in the first place. And I know that this can feel uncomfortable, because millions of people rely on these programs every day and their lives are made better by these programs every day.

But I think when we take sort of a big step back, the safety net functions as an inadvertent form of corporate welfare, and I’d like to point to like a couple ways that that happens. One is that the safety net lets some companies offload their costs onto the public. So, when wages are insufficient and jobs are insecure, people still need to eat, they still need healthcare, they need a roof over their head. And it’s public programs that are filling that gap. And effectively what that means is that employers get to offload part of the cost of sustaining their workforce onto the public. It’s like this hidden subsidy for low wage and high precarity business models.

And I look at a place like Walmart. One in four SNAP dollars are now spent at Walmart. They are an enormous corporate beneficiary of the program. And at the same time, Walmart itself is one of the most prevalent employers of individuals who use food stamps to make ends meet. And at the same time, Walmart has a long history of preventing union organizing among its workers. So SNAP is doing a lot of really helpful things for Walmart, and I don’t think that that’s the way we want our anti-poverty programs to operate.

Goldy:

Right. And it’s not just SNAP, of course, the earned income tax credit, I mean, that is a direct subsidy to employers. You only get it if you have a poverty wage job. You have to be working at a job that doesn’t create an income sufficient to support you to get it. So it’s people that work at low wage employers like Walmart who qualify for the EITC.

Jamie Keene:

Well, there’s like a long and spicy history of debating whether the EITC subsidizes low road employers. I think the argument I want to make is, it’s not just in the context of the labor market that the safety net is providing these subsidies to corporate actors who are really creating economic precarity. Let’s look at Medicare Advantage for a moment.

Medicare Advantage was created under the argument that the private sector could deliver healthcare more efficiently than the government could. And we’re approaching a place where a majority of Medicare recipients are actually receiving benefits through Medicare Advantage rather than through direct Medicare. But in 2024, Medicare paid over 80 billion more to Medicare Advantage insurance for the cost of coverage, than if those same seniors had just been enrolled in traditional Medicare. And at the same time, Medicare Advantage Marketplace has become completely concentrated. There are just two insurers, UnitedHealth and Humana, that now carry 40% of all Medicare Advantage plans. And these same Medicare Advantage companies are being investigated by the DOJ for engaging in really egregious anticompetitive practices.

So I think we have to ask ourselves, funding that is supposed to meet the needs of low income people or economically precarious people, is really being like siphoned up by corporate actors in our economy who have found ways to make their interactions with the safety net very profitable.

Paul Constant:

Part of your critique is that there’s been a divorce between social policy and market policy in terms of the safety net. And I was wondering if you could talk a little bit about what that means and why it’s important that they not be divided.

Jamie Keene:

I think one of the things neoliberalism has taught us to think is that markets are natural and they’re inevitable. And then social policy should come behind those markets and do a little bit of cleanup for anyone who’s fallen through the cracks. But that’s a political construction. Markets are shaped by rules. And I think what’s happened over the last several decades is that we really systematically deregulated and restructured markets to favor capital, while relegating social policy to this compensatory model. And this shows up in really basic ways in the way we organize policymaking. So, federal and state systems that provide subsidies into a marketplace through safety net programs generally don’t coordinate or share strategies with the regulators of those same marketplaces. So for example, an employer who has been found to have engaged in wage theft against their own employees can still receive federal workforce training investments.

And that disconnect between social policy and market policy, I think is making the safety net really much less effective than it could be if we had shared market strategies and social policy strategies that we were bringing to bear in the sectors of our economy that create conditions of poverty, as opposed to focusing on regulations and programs as these separate functions of the state.

Paul Constant:

And so the title of the report, it’s very catchy, From Safety Net to Power Base. Could you talk a little bit about what the difference between a safety net and a power base is?

Jamie Keene:

Well, part of my argument is that if we look back historically to the origins of our safety net, we find many of these programs are built in the New Deal era. And the New Deal, it’s not just a set of new programs, it’s a power rebalancing project. FDR uses market regulations, public options where markets had failed, and social insurance programs. He uses these tools together to create counterweights to concentrated economic power. And as that framework eroded, as new deal liberalism gets replaced with neoliberalism, we really lost the idea that governments could actively shape markets in the public interest. And so I think part of our task is to really restore the power balancing promise of the new deal, but for the conditions we face in the 21st century. And I think there are a couple ways that we could start thinking about how to make this shift.

The first is, in so many contexts, private subsidies into unregulated markets is not working, and we should be building strong public options. So, some of the most impoverishing parts of our economy are the care sector, childcare, healthcare, elder care. These are just crushing families budgets. And I think we’ve sort of learned time and time again that the markets are not really capable of serving the interests of low income people in care sectors. So we need public option childcare, we need public option healthcare, we need public option elder care. I think one of the biggest sectors where we need a public option is actually in financial services. James Baldwin famously observed how extremely expensive it is to be poor, and that’s true. Poor people get hosed by credit card fees, and overdraft fees. And we need public options, public option banking to give people a better option for financial services.

I think another way that we might shift from a safety net to a power base is to really build towards a system that is capable of planning and making investments. So, instead of a reactive safety net that catches people if they fall, we need a safety net that is actively monitoring the economy for disruption and planning ahead. And I just think about the magnitude of disruption that may be on the horizon as AI raises the potential for job displacement. Our safety net has almost no tools to proactively manage and transition this potential disruption in our economy. That’s a real problem and it makes people very vulnerable.

Goldy:

Right. One of the things we’ve known for a long time is coming, for example, is long haul trucking is going to be eventually, it’s not yet, but it’s going to be displaced by autonomous vehicles. And there are millions of truck drivers in this nation. It’s one of the largest job categories in many states. And we know it’s coming, and we’re doing nothing about it from the perspective of the workers who are going to lose their jobs.

Jamie Keene:

I mean, it’s exactly right.

Goldy:

And that’s what you mean when you talk about our system being too passive.

Jamie Keene:

Right. The way our system would work today is, let’s say, tens of thousands of long haul truckers start losing their job because of the adoption of autonomous vehicles. What we have available for them is like unemployment insurance, which is time limited. It’s a system that is already struggling to keep pace. I mean, just a huge number of unemployed people cannot actually access unemployment insurance. That’s especially true for gig workers. And we have very few tools to help people transition, or upskill, or participate in another part of the economy. And this idea that we should just wait for people to get hosed by economic transition, and then offer them piecemeal support, the rate of change in our economy, I think demands something that’s much more active.

Paul Constant:

You actually make the case that when you strip people of economic power, it creates the conditions for an authoritarian state, purely hypothetically, of course. And I was wondering if you could talk a little bit more about that link, how the one feeds into the other.

Jamie Keene:

I think this relationship is just so basic. If people’s primary interaction with the government is trying to get safety net assistance, and the safety net treats them with disrespect, and it’s hard to get the help you need, and you feel like your social status and your economic status is diminishing, and the government is not there to help you, why would you continue to have faith in that system? So, I argue that feelings of economic powerlessness really are a breeding ground for right-wing populism. And there’s actually really compelling evidence that when people feel like they’re experiencing regional decline, or a loss of economic standing, they’re more likely to support anti-democratic movements, because those movements promise to tear the system down, and to restore people’s sense of pride and prosperity. But I think the other connection here between wealth inequality and threats to our democracy is just that we’ve wrongly treated money like speech in this country. And so, wealthy people just have more power in our democracy than poor people do. And that’s a pretty frontal threat, I think, to longstanding democratic legitimacy.

Goldy:

You talked about providing public options in a number of areas. One of the things you bring up, which seems to be a recurring theme on the podcast these days is sectoral bargaining. Explain why that’s important and how it would work.

Jamie Keene:

Yeah. So one thing I argue for in my report is this idea of shifting from this liberal obsession with delivering programs really well to taking a more sectoral approach. And I mean that in two ways. So one is, we should shift towards sectoral bargaining in our labor policy. Sectoral bargaining is the idea that, instead of a union having to negotiate individually with employers, that they should be able to negotiate at the sector wide level. And I think this makes pretty basic sense. Why would nurses at one hospital have worse pay and benefits than nurses at another hospital a few miles away? We should be able to bargain at the level of healthcare workers. So, I think sectoral bargaining is a really important way to rebalance power for workers, but I think a sort of additional idea is the idea of taking a sectoral approach to anti-poverty policy.

We know which sectors of our economy create conditions of poverty. It’s like healthcare, childcare, utilities, groceries. These are the areas of life that sort of dominate the affordability debate right now. But affordability I think is, it is sort of a sanitized way of saying that conditions of poverty are creeping up the income ladder. And so I think instead of just delivering grocery assistance, we need a much more comprehensive approach to rebalancing power in the grocery sector. And so that sectoral approach would mean organizing the way the state engages in a fundamentally different way than what we do right now. And as I mentioned before, there’s this basic disconnect where the people who subsidize markets often are like not in the same room as the people who regulate those markets. And that allows corporations to capture a pretty big share of public investments that are intended to counteract poverty.

Goldy:

Yeah. If you think about it, if you think about, obviously our approach to market economies is that it’s this complex adaptive system with various feedback loops. You make one small change here, it creates another change elsewhere. It totally, it doesn’t make any sense that we wouldn’t bring these interventions together, that the regulators wouldn’t be working with the people who are delivering the safety net programs, that we wouldn’t be thinking of the tax system as part of this entire system. Yeah, it’s a different way of approaching it, but again, it is a lot more complicated. And I think there’s one benefit to our very complicated system of, or at least it has been our complicated system of delivering safety net programs and aid and so forth, and that is the more complicated it is, the harder it is to dismantle. It’s one of my critiques of universal basic income when people tell me how much more efficient it would be just to give people money than to provide all of these services.

And that’s, well, once you’ve eliminated the social safety net and you’ve replaced it with a universal basic income, as efficient as that might be on paper, now all you need to do is erode the universal basic income, and you’ve eliminated everything.

Jamie Keene:

I have my own reasons for why I think universal basic income is not a silver bullet. But I don’t think I agree with you that complexity makes us safer. I think part of why Trump has been able to take a sledgehammer to the safety net is that it’s so complicated that people don’t really understand how it works. It’s so complicated that some of these programs just don’t feel that good to receive. And so they are easier to attack politically. Notice how much harder it is to attack social security than it is to attack more complicated, fragmented programs. Social security works because it’s really straightforward. Like you turn 65, you get your benefits. And I think that we need…

Goldy:

Well, 67 now.

Jamie Keene:

67, yeah. Well, then fair enough. And actually, we should, I think, be having a debate about lowering the retirement age in this country. But we need more parts of our safety net to operate in that straightforward, accessible, guaranteed way.

Goldy:

Right. I can tell you, I’m 63, and so I started to investigate Medicare recently. And I got to tell you, I was shocked. I just assumed that I would turn 65, and European style socialized medicine. I’d suddenly, no more premiums, no more deductibles, no more messing around with anything. Just one simple system. Oh, my God, is it complex. And it seems to be designed to drive people into Medicare Advantage where they can then take advantage of you. I think that’s where the advantage comes from in the branding.

Jamie Keene:

100%. And just wait until you start getting calls from all the insurance brokers who are going to try to sell you a plan you don’t actually need, because it turns out that they’re taking kickbacks from Medicare Advantage providers to do so.

Goldy:

Yeah.

Paul Constant:

You touched on this briefly, and I just wanted to sort of get it on the record, because for a long time, giving people money was seen as the solution in various parts of the Democratic sphere. I know Vox was big into it. And I mean, we did see some success, I think, during the pandemic, during the lockdowns, when we did send people money, and it did strengthen the economy. But I was wondering if you could talk about why giving people money isn’t the end-all solution.

Jamie Keene:

Well, I think it’s a big part of the solution, so I want to be clear about that. I mean, cash is the most dignified, efficient way to help people who are struggling in our economy. And I think we would be in much better shape today if more of the safety net operated as cash-based programs. But I think the challenging reality is that, if rents keep rising because we haven’t fixed that marketplace, if healthcare costs keep rising because we haven’t fixed that marketplace, then pumping more cash into people’s pocketbooks is going to get absorbed by broken markets.

So, I think cash is a floor that we should provide to more people, but it needs to be part of a much broader intervention into the economy. I’m very skeptical that cash on its own can do all of the heavy lifting for rebuilding an economy that is fair.

Goldy:

So, we’re going to put you in charge. No political constraints. You can fix the system however you want. What might it look like the next new deal that comes out of your report?

Jamie Keene:

If I could sort of make one change today to the safety net, I would think about expanding social security for families with children. We are such an outlier globally in our failure to provide a child allowance. Having a kid in this country is so expensive. Actually, having a baby in this country precipitates a period of poverty for something like 40% of moms. And that’s ridiculous. We’re the wealthiest nation on Earth. Social security has been one of the most effective anti-poverty programs in the country, and I think that a bold idea is that families with little kids need that same kind of help. Child tax credit showed us what is possible when we expanded it. During the pandemic, we cut child poverty in this country in half in one year. That’s remarkable. I think that there’s no reason to believe that we shouldn’t expand the promise of social security when people start a family.

Goldy:

Well, that makes sense. Treating it like disability insurance. I remember when my daughter was young, I was pretty disabled much of the time.

Jamie Keene:

I mean, I do think there’s this interesting opening in our politics, where there are some reasonable people on the right who I think are starting to realize that deregulating the labor market has led to a set of economic conditions that are totally hostile to family life. But I think we really need to be careful that we don’t buy into the pro-natalist argument, which I think Really leads you down the path of policies that diminish people’s personal freedom and power. What we need is that everyone has the power to make choices about when and how to start a family.

Paul Constant:

So, you’ve been really generous with your time, so thank you for that. I did want to ask you the one question we ask all of our guests. Why do you do this work?

Jamie Keene:

I started my career in local government working on homelessness services. And I think that we have this sort of bizarre thing that has happened to many of us morally, where we see homelessness in the midst of our enormous wealth. And we treat it like it is just sort of a natural byproduct of the economy. And when you spend time with people who are experiencing homelessness, you’re really seeing just like the canary in the coal mine that our system has just rotted out for people. And there is a level of desperation in this country that we cannot ignore. I think we’re just at the outer limits though of how much we can fix with the systems we have. And so I think it’s just important that we use a bigger imagination to think about rebuilding the systems we have.

Goldy:

When you asked her that final question, Paul, and she talked about her work at the city level with homelessness, and talking about how we kind of accept this as a natural byproduct, I’d argue it is a natural byproduct. It’s a natural byproduct of a market economy. It’s not a natural byproduct of a functional society, and a functional democracy, but left to its own devices, it is and always has been a byproduct of markets. So, this is the sad truth. We’re pro market. Nick is, I am, I assume you are, our offices, our whole philosophy. It is a pro market economic philosophy.

But at the same time, we understand that markets inevitably, inevitably create extreme inequality, and inevitably as well they concentrate wealth and power in the hands of the few. And inevitably, when this power is unchecked by a functional democracy from what Jamie talks about in her report, countervailing power, sufficient countervailing power, it will produce immense immiseration, it will produce things like homelessness. There has never been a point in our history where the market has created affordable housing, high quality affordable housing, something we would consider sufficient where the market has built that for homeless people to bring people out of homelessness.

The market cannot and will not do that. It will create more homelessness because there’s a lot of money to be made off of poor people.

Paul Constant:

I am starting to doubt your credentials as a libertarian, Goldy. I think they might kick you out of the party.

Yes. No, I agree. I agree. I mean, that’s what the government is for, right? That’s supposedly what it’s for is to redirect and to punish people who take advantage, and to create a system that ensures that everybody is involved in the economy, and in society, and that everybody has a voice, and everybody has economic power. And yeah, this is the most basic sort of political question of our time. And it’s amazing that so many people are failing at it, but… Yes.

Goldy:

Right. And I think it’s really important she makes this point about how not addressing these issues helps feed authoritarian populism. That if we want to save our democracy, we need to rethink, reimagine, and we need to address this better. And if you go back to the New Deal, and of course, it’s the Roosevelt Institute, they always go back to the New Deal, right?

Paul Constant:

Sure. Yes.

Goldy:

Yeah. Right? It is the Roosevelt. That’s the Roosevelt they’re talking about. It’s not the Teddy Roosevelt Institute, it’s Franklin Roosevelt Institute. But you look what Roosevelt did with the New Deal. He saved American democracy. I mean, he saved us from… I mean, we could have gone the totalitarian route like Germany did, like the Soviet Union did. And there was this understanding that market capitalism was failing, and that when it failed, those were the types of things that happened. Disaster followed.

And so a lot of the compromise in the 1940s and ’50s and ’60s, that post-war period where we saw the creation of the largest and most prosperous middle class the world has ever seen, we saw inequality fall, and poverty rates fall. We saw incomes rise with economic growth and with productivity growth. Part of this compromise was that, even the American business community, the people with power and money understood they needed to do this to protect the system that benefited them. It’s cliche to call for a new, new deal, because that worked out. But it was this integrated system that wasn’t just about providing services to the poorest of the poor. It really was a rethinking. In that moment, it was a rethinking and a reimagining of how the American economy worked, and the role of government in it. And I think we’re at this point of multiple interrelated crises, this crisis of inequality, of democracy, and of climate, where we need that type of imaginative rethinking if we’re going to save the American Republic.

Paul Constant:

Something that struck me, as we were listening to Jamie talk, is that she is accurately identifying both the problem and the solution, which we’ve been doing this, some form of podcasting for about 10 years, the better part of 10 years now, right? And you and Nick have been doing this for that long. And it struck me listening to her talk that 10 years ago, if we were to get someone from a progressive institute, they would not talk about rebuilding a social safety net program into a power base, or a public healthcare plan, or any of the things that she was talking about. Those things, the whole left economist policy machine was basically invested only in tinkering around the edges. And more and more people we talk to now are like Jamie, where they acknowledge that the system is busted and we need something new, so we need to think about the new.

And I find that incredibly hopeful, talking to her feels so much better than speaking to someone who says, “We need to increase the EITC to pull 0.6% of Americans out of poverty,” or whatever. It’s a big swing, and it’s time for big swings and people acknowledge that. And I really enjoy, I really like hearing that type of talk from [inaudible 00:39:30].

Goldy:

How many times have we heard about how the EITC is the most successful anti-poverty program in American history that no other program has lifted more people out of poverty? But what it hasn’t done is addressed the issue of poverty wage jobs. If anything, it’s exacerbated it. So yes, it ameliorates the problem without addressing the cause of it, which is we are subsidizing parasitic employers.

Paul Constant:

Yeah. Walmart is the real welfare queen in this scenario. Yeah.

Goldy:

Right. So yeah, it’s good to hear this. It’s good to hear it coming from different sources, from different people, different ideas. We’ve talked about the public option before, a very important idea, both in terms of how to phrase it, but also just sometimes markets don’t work well, and there isn’t a lot of competition. And so you do a government option, a public option, provide that competition. And it doesn’t necessarily displace the market players. It says, “No, no, you got to compete with us.” Right? I mean, that’s why they fought the public option, the public option in healthcare. They don’t want a public option because they don’t want to have to compete. They’d rather just have, who’d she say it was UnitedHealth, and the other one had 40% of the market?

Paul Constant:

Yeah.

Goldy:

Humana. They don’t want competition from the government. They’d rather just price fix between themselves. So, you can look at that throughout various sectors. Obviously, I’ve talked about it before. I believe we need a public option for housing that will never address the affordability crisis until we have a public option for rental housing as a major part of the market. Not the dominant player in the market, not the landlord to the majority of Americans, but a significant place in various markets actually force the private market to compete. And that’s how you drive down housing prices in the long run.

And she’s right, obviously childcare, daycare, it’s not working in the private sector. We need a public option there. I am sympathetic to the idea of public option for grocery stores and food deserts. I think it’s worth trying. Maybe it doesn’t work. Maybe it’s something that is not the type of thing government can provide, but I’m sympathetic to trying. And that’s another thing, getting back to FDR, the name of that institute, the Roosevelt Institute, he very famously said that the thing we need to do in this moment is to try things. And if they fail, try something else. Don’t be afraid of failure.

Paul Constant:

If anybody knows not being afraid of failure, it’s you, Goldy.

Goldy:

That’s right. I’ve said this before. This is actually true. Paul, when I’ve described the track of my life is I’d rather fail big than succeed small. And man, have I done that from time to time.

In any case, if you want to read more from Jamie, we will provide a link in the show notes to her full report, From Safety Net to Power Base: Re-Imagining Not Restoring the US Anti-Poverty System.

Freddy:

For more content from us, you can subscribe to our weekly newsletter, The Pitch, over on Substack. And for links to everything we just mentioned, plus transcripts and more,

visit our website pitchforkeconomics.com. As always, from our team at Civic Ventures, thanks for listening. See you next week.

The post From Safety Net to Power Base: Reclaiming Economic Power for Working People (with Jamie Keene) appeared first on Pitchfork Economics.

The Second Estate: Where Billionaires Don’t Pay. You Do. (with Ray D. Madoff)

Freddy Doss — Wed, 15 Apr 2026 05:29:27 +0000

Would it be a surprise if we told you the rich don’t actually live in the same tax system as everyone else?

Tomorrow is Tax Day, when millions of Americans will be filing their taxes or applying for extensions, so Nick and Goldy sit down with Ray D. Madoff, Professor of Tax Law at Boston College, and author of The Second Estate, to pull back the curtain on how wealth really moves—and why so much of it never gets taxed at all.

Because here’s the twist: The system wasn’t supposed to work this way.

But over time, something changed. Now, the people who live off paychecks carry the tax burden… while the people living off wealth often don’t have to play the game at all.

Professor Madoff explains what happened and what it would take to fix it.

Ray D. Madoff is a professor at Boston College Law School and director of the Forum on Philanthropy and the Public Good. She is a leading expert on tax policy, wealth, and philanthropy, and author of The Second Estate: How the Tax Code Made an American Aristocracy.

Social Media:

@raymadoff

Further reading:

The Atlantic – How to Tax Billionaires

CNBC – Lawsuit over $21 million donor-advised fund highlights risks of DAF giving

Washigton Post – A Signature GOP Issue Is Omitted From Trump’s ‘Big’ Tax Bill. Weird

New York Times – America Builds an Aristocracy

Instagram: @pitchforkeconomics

Threads: pitchforkeconomics

TikTok: @pitchfork_econ

YouTube: @pitchforkeconomics

LinkedIn: Pitchfork Economics

The Wage Standard: What’s Wrong in the Labor Market and How to Fix It

Substack: The Pitch

Nick Hanauer:

The rising inequality and growing political instability that we see today are the direct result of decades of bad economic theory.

Goldy:

The last five decades of trickle-down economics haven’t worked, but what’s the alternative?

Nick Hanauer:

Middle out economics is the answer.

Goldy:

Because the middle class is the source of growth, not its consequence.

Nick Hanauer:

That’s right.

Announcer:

This is Pitchfork Economics with Nick Hanauer, a podcast about how to build the economy from the middle out. Welcome to the show.

Goldy:

You know what tomorrow is, Nick? A very special day, do you know what tomorrow is?

Nick Hanauer:

I think it’s tax day.

Goldy:

Well, I was going to say it’s my birthday, but yeah, it’s also tax day. Makes a lot of sense considering how much I talk about taxes and over the years, how I focused on that. And I’m a tax day baby.

Nick Hanauer:

I did not realize that, but all of a sudden it makes perfect sense.

Goldy:

And so we have a tax day, not really my birthday themed podcast today, but a tax day themed podcast.

Nick Hanauer:

Yeah.

Goldy:

We’re going to be talking about taxes with a tax lawyer, a professor of tax law.

Nick Hanauer:

And why wouldn’t we?

Goldy:

So much better than the way I normally celebrate my birthday as a kid, which was with a [inaudible 00:01:37] birthday cake. If you ever had one of those.

Nick Hanauer:

And the person we’re talking to obviously is a big tax expert. Ray Madoff is a professor at Boston College Law School and director of the Forum on Philanthropy and the Public Good. She’s also a leading expert on tax policy, wealth and philanthropy, and is the author of ‘The Second Estate: How the Tax Code Made An American Aristocracy.’ She has a lot to say on the subject that’ll be very, very interesting.

Goldy:

Yeah, and as a member of the aristocracy that the tax code made, maybe you’ll be looking for some tips.

Nick Hanauer:

I most definitely will be looking for some tips.

Goldy:

So let’s talk to Ray.

Ray D Madoff:

I’m Ray Madoff. I’m a professor of law at Boston College Law School, and I have a new book called ‘The Second Estate: How the Tax Code Made An American Aristocracy’.

Goldy:

We have one of them here, one of the aristocrats from right here. Nick, you want to start off?

Ray D Madoff:

Nice.

Nick Hanauer:

Why don’t you start by just sort of laying out your thesis?

Ray D Madoff:

So we think of the tax code as something that is designed to counter aristocracy. And in fact, that’s the purpose with which it was written, right? If you think about it, our modern tax code came of age in the 1913, 1916, in the wake of the gilded age, and there was a lot of concern about concentrations of wealth. The only taxes that we had at the time were tariffs because the income tax had been found unconstitutional. And these tariffs imposed great burdens on consumers and farmers, much like today.

And so in response, Congress enacted two different tax provisions. First, the income tax after getting an amendment to the Constitution that allowed a new income tax to come into being, an income tax that soon had progressive rates, meaning those that earned more, paid more. And then for the richest Americans, an additional estate tax. And the purpose of the estate tax was to prevent dynastic wealth. Together, these were designed to impose greater burdens on those who had the greatest capacity to pay. A lot of Americans live under a system where they believe this is still the case because the rules are still in place. We still have a progressive income tax and a estate tax. And even if it’s not as progressive as it once was, it’s still pretty progressive. However, what has happened over the past 40 years is that with this same tax code, the wealthy have been able to entirely remove themselves from the system.

So the system we have today is that the Americans that work for a living, that have jobs, at all income levels; low income, mid-income, high income, are paying the vast majority of all the taxes, and the wealthiest Americans are able to avoid taxes, first because they avoid taxable income and then because they’re able to avoid the estate tax. So we have now created a system that does just the opposite. Rather than it being one that particularly burdens the wealthy, it’s one that gives the richest Americans a free pass.

Goldy:

So I want to be absolutely clear on something you stated at the top, that the purpose of the tax code was to reign in this aristocracy, was to make the economy more equal. That was the intent? We talk about that like the intent of the framers, the intent of Congress when they write legislation.

Ray D Madoff:

Well, fair enough. Yeah.

Goldy:

Was that actually a stated intent at the time?

Nick Hanauer:

Yeah, that’s a really interesting-

Ray D Madoff:

Yeah. It’s very hard to know even with legislation that’s enacted today, what is the intent? The intent obviously comes from lots and lots of different people who have lots of interests. A big concern at the time was the fact of these concentrations of wealth. We had Teddy Roosevelt saying it was a problem. We also had the Wall Street Journal saying it was a problem. And the reason it was a problem for people across the political spectrum was because capitalism itself was at risk. This was a time when socialism was really pretty powerful. We had the Russian Revolution, we had McKinley was assassinated. We had a lot of concern about socialism, and there was a belief that capitalism had to prove its worth, and it had to prove that people who profited under the systems like those robber barons and their heirs, would also be supporting the public at large.

Nick Hanauer:

Interesting. I think most of our listeners may understand this, but I think it’s important to elaborate about the difference between earning income from a job and earning income from investments, whether that income turns into actual income that you report in your taxes, right? Or whether it’s just the appreciation of assets that don’t trigger taxable income.

Ray D Madoff:

Right.

Goldy:

Right? Because you haven’t realized the gain-

Nick Hanauer:

That’s right.

Goldy:

But you can borrow against it.

Nick Hanauer:

I think one of the points you’re making is it’s a double whammy. Income that comes from wealth appreciation is taxed at half the rate-

Goldy:

If at all.

Nick Hanauer:

… than if income from salaries is taxed at, which is completely nuts.

Ray D Madoff:

Yeah.

Nick Hanauer:

And income, I mean, we’re using words that don’t really describe-

Ray D Madoff:

Acquisitions of wealth.

Nick Hanauer:

… appreciation, the value of the stock you hold doubling triggers no taxable event until you sell it. And obviously, this is the problem we face at the extremes, right? People like Musk and Zuckerberg and Bezos are worth $100 billion and pay-

Ray D Madoff:

You wish they were worth $100 billion.

Nick Hanauer:

I mean, whatever it is, right?

Ray D Madoff:

Musk is probably worth $800 billion today. It’s very hard to keep up with it. It’s like the number keeps growing faster and faster, but yeah.

Nick Hanauer:

Effectively pays zero taxes.

Ray D Madoff:

So I teach tax law at a law school. And when you teach tax, if you teach income tax, you start with the definition of gross income. What’s subject to the income tax? And it’s this very comprehensive term. Gross income is all income from whatever source derived. That’s Section 61. And then it lists all sorts of things. And so it includes things like you find money on the street, you’re supposed to report it, you’re given a prize, you win the lottery, you win a small amount in the lottery. All of those things you are supposed to report to the federal government and pay taxes on. In addition, even if you do a barter exchange, if you shovel your neighbor’s walk and they build a website for you, then each of you have taxable income based on that barter exchange and you’re supposed to report it to the federal government.

So we have this very broad definition, but then we have things that we do not treat as taxable income, even though they are very much acquisitions of wealth. The biggest ones is any money received by gift, inheritance, or life insurance. No matter how much you receive from those ways, you don’t even have to tell anybody. It is excluded from the definition of income, even though it clearly is income, right? If I give you $100 million-

Nick Hanauer:

Hold on gifts? You have to pay gift tax?

Ray D Madoff:

Oh, I’m talking about income tax, right? So the only system we have is the estate and gift tax. We’re going to talk about that problematic system. Under our income tax system, and I’m so glad you said it that way, because there is a common misperception that gifts in excess of a certain amount, maybe $19,000, are subject to income tax. I get this question all the time. No income tax, no matter how big. So whether somebody gives you 20,000 or 20 million or 20 billion, no reporting of that, that’s just your business.

Nick Hanauer:

No, no. That’s-

Ray D Madoff:

I promise. And that’s something-

Nick Hanauer:

Then Ray, I need you to talk to my attorneys.

Ray D Madoff:

Yes, because what you’re talking about is the estate and gift tax. You’re talking about a tax on donors who transfer more than $15 million, that’s the estate and gift tax. And we’re going to get to that in a minute. We’re starting on the income tax, okay?

Nick Hanauer:

Right, okay.

Goldy:

When I give my daughter… I just paid off a student loan of hers. When I give her money, she doesn’t pay income tax on that. Now, if over the course of my life, including her inheritance, I give her more than, what is it? 15 million now? What is the exception?

Ray D Madoff:

15 million now.

Goldy:

Then there’s a tax on the amount above that.

Ray D Madoff:

On you.

Goldy:

But because I’m not going to leave her that much money, Nick, unless you give me a very generous bonus when I retire.

Nick Hanauer:

Oh, yeah, yeah. No, she will-

Ray D Madoff:

Yeah, that’s coming your way.

Goldy:

She will not have to pay any tax on those gifts-

Nick Hanauer:

Yes, correct.

Goldy:

… whatsoever because it’s the same as-

Nick Hanauer:

Right. I’m aware of that.

Goldy:

… an inheritance.

Nick Hanauer:

I’m aware of that.

Ray D Madoff:

And now here’s the thing, you’re probably thinking… And this is why we have this exclusion. It’s because we have this well-functioning estate and gift tax that’s going to take care of those transfers. That’s why we’ve taken them out. That’s why they were excluded because the idea is that we have this other system that will presumably catch it and more. But we’re going to start with the income tax system, right? No income taxes. We’re going to then see how our estate tax is failing us, by the way, in case you’re wondering where we’re heading with that.

Nick Hanauer:

Yeah.

Ray D Madoff:

And then on top of that, money, as you pointed out, when you have property that grows in value when you buy Apple stock or Facebook stock or any investment, and it grows in value from $10,000 to $10 million, as you pointed out, that’s not subject to tax either, even though you can access those funds by borrowing against them, because it’s not realized. And our system doesn’t ever require realization. You have to sell the property in order to realize the gain.

Nick Hanauer:

Right.

Ray D Madoff:

And if you simply pass the property onto your kids, either when you’re alive or at death, that doesn’t trigger gain for you either. You have to sell it. And this is unlike the rule in Canada where whenever somebody disposes of property, whether by sale or gift or inheritance, it’s going to be subject to tax. All of that gain will be subject to tax to the donor, but we don’t have that system.

Goldy:

I know that there’s the step-up, because I live in a different economy than Nick. There’s the step-up basis on my house. The extent of my estate planning, I have an only child, is to die in my house, which I’ve owned in Seattle since 1997, that way there’s no capital gains tax. Is that true on other assets or is that particular to-

Ray D Madoff:

Every asset. Every asset.

Goldy:

Every asset.

Ray D Madoff:

But the catch is, you have to pass it through your estate at death in order to get the step-up in basis. So step-up in basis means that for your listeners, what it means is that your house, let’s say you bought it for $50,000 and it’s now worth $50 million because of where you’re located, that gain-

Goldy:

Not quite that good.

Ray D Madoff:

Not quite. But Let’s say it’s worth 15 million so we don’t get any estate taxes involved, then if you pass that property on at death, your children are treated as if they had bought it for $15 million. And so when they sell it, they pay no taxes on it. Whereas if you sell it, you have to pay a lot of capital gains taxes, or if you gift it to them during life, they would have your, what we call, carryover basis.

Goldy:

Right.

Ray D Madoff:

So if you gift it, then they would pay tax on the gain if they sold it. The effect of this is that this thing that we call step-up in basis, also called the angel of death loophole, the estate planners are very clever, it’s a tremendous distortion in the market. Which is interesting because conservatives are always saying, “We don’t want to distort the market.” But the biggest distortion in the market is step-up in basis.

Goldy:

Right.

Ray D Madoff:

Because that’s why people don’t sell their houses because they don’t want to have to pay that extra gain. In addition, people don’t sell their stock. Even if they have a stock that they think is no longer doing very well, the market, they are not going to sell their stock because they’re going to have to pay tax on that gain. So it’s a big distortionary effect on the market, our current rules.

Nick, I feel like you’re giving a look like I am definitely not convincing you.

Nick Hanauer:

No, no, no, no, no. I mean, we’re generally aligned, but I watched some of the videos that you made, and I think we’re talking about the same thing. So for sure, the estate tax $15 million exemption is a significant loophole in the system. I mean, people pay zero estate tax on assets less than $15 million.

Ray D Madoff:

I mean, it’s the rule in the system, whether to say that, I don’t think that’s the source of the problem is the exemption amounts.

Nick Hanauer:

If you have a billion dollars and you want that to flow to your heirs-

Goldy:

Are you asking for tax advice here, Nick?

Ray D Madoff:

No, you’re saying, why isn’t the estate tax doing its job?

Nick Hanauer:

You’re most definitely going to pay 40% at least of that, above the 15 million, you’re definitely going to pay 40%.

Ray D Madoff:

You would think.

Nick Hanauer:

Yeah. Dude, if that’s not true, I need to hear about it now.

Goldy:

Yeah, because you need some new advisors, Nick. I thought that was the whole point of your foundation.

Nick Hanauer:

Unless you give it all the charity. So you take Bill Gates and Steve Ballmer, right? These guys are worth whatever it is, more than $100 million.

Ray D Madoff:

Yeah, billion.

Nick Hanauer:

They are going to pay zero estate tax because their kids are already billionaires and everything else is going to go to their foundations.

Ray D Madoff:

So there’s a lot of issues that we’re raising here.

Nick Hanauer:

But there’s no way around that 40%.

Ray D Madoff:

Okay. Yeah.

Nick Hanauer:

You can set up trusts for your kids and stuff like that, but there’s limits to all that.

Ray D Madoff:

Yeah. But there is a tremendous capacity for tax avoidance.

Nick Hanauer:

Like what?

Ray D Madoff:

And so I’m going to tell you.

Nick Hanauer:

Yeah. Let’s hear it. Tell me. I’m going to write it all down.

Goldy:

Are you taking notes here, Nick?

Nick Hanauer:

Yeah, I am.

Ray D Madoff:

I feel a little bit badly though because I feel like I’ve gotten us to this subject without finishing that two-tier system that you had wanted me to talk about.

Nick Hanauer:

Yeah, we can go back to that.

Ray D Madoff:

Should we finish that and then we’ll come back here?

Nick Hanauer:

Yeah.

Goldy:

Yes. And then you’ll tell Nick how to avoid paying taxes when he’s dead.

Ray D Madoff:

When Americans think about the tax system, they typically think of the income tax system, because that’s the system that most people live with. The estate tax is a very large exemption. It’s not relevant for them. And so the income tax system looms large in the visions of most Americans, as it should, because the combination of the income tax and payroll taxes means that anybody who has a lot of income pays a lot of taxes. And somebody who even has modest income, let’s say $60,000, which is the median income in this country, still will pay $13,000… If they’re a self-employed person, they will pay $13,000 in income taxes and payroll taxes. And this is a significant burden for working Americans. If you think about it, if you’re trying to live on $60,000 and $13,000 of it has to go to taxes, that really takes a bite out of what you have.

Goldy:

And that’s the federal taxes because there’s also state and local.

Ray D Madoff:

And that’s just federal. There’s states on top of it, exactly.

Goldy:

Which is going to be like another 11, 12%-

Ray D Madoff:

Depending on where you live.

Goldy:

… depending on where you are. Yeah.

Ray D Madoff:

Yeah. And so the thing that I want to mention also is that high income earners pay the vast majority of the taxes. And the reason I want to mention this… So in 2024, the top 1% of earners paid 40% of all income taxes. And the reason I want to highlight that is because that’s a statistic that is often distorted to tell the public that rich people are already paying all the taxes. We don’t need to worry about rich people paying taxes because then they’ll just say, the top 1% are paying 40% of the taxes, and 40% of Americans pay no income taxes. This is something that misleads the public into thinking our system is very progressive.

And the problem is, first of all, for a lot of working Americans, they’re paying significant payroll taxes on that 40%. But the other issue is that when we’re talking about the top 1% paying 40% of the income taxes, these are people with high incomes; lawyers, doctors, bankers, finance people, they have high incomes. They pay most of the taxes. This is not people like Bezos, Musk, Zuckerberg, all of our billionaires, and even frankly, our centi-millionaires, who also don’t have to pay taxes, because they avoid taxes by avoiding taxable income, and they do so because they avoid salaries, they avoid selling their property, and when they inherit property, none of it is subject to income taxes. So they are not subject to the income tax world at all.

And indeed, they are just as likely to be in the 40% of Americans that pay no taxes as they are in the top 1% of payers. And this is, if your audience takes away nothing from this call, I hope they take away this point about how it is that our system is unfair because they’re constantly being told that, oh no, the system is fair. Top 1% are paying 40% of the taxes. What are you complaining about? But it is the top 1% of earners and wealthy people avoid taxes by avoiding taxable income.

Nick Hanauer:

Okay. But to be clear, if you inherit money-

Ray D Madoff:

We’re going to come to the estate and gift tax too.

Goldy:

You can see the different worlds we live in.

Ray D Madoff:

Yes, I know it.

Goldy:

How focused he is on the inheritance side of it and how much I’m focused on the income and payroll tax side of it, because that’s what I pay.

Ray D Madoff:

Yes, exactly. So I want to just get our income tax world clear because, for example, when we had this campaign against the estate tax, which is going to be relevant for our story, it was like, we have to get rid of the estate tax. It’s so unfair. It’s a death tax that hurts family farms, right? But nobody was noting that none of this money will ever be subject to tax if it’s not subject to estate taxes under our current system.

Nick Hanauer:

Yeah.

Ray D Madoff:

Okay. So now let’s talk about what happened to the estate tax. The estate tax is essentially a 40% flat tax on transfers of wealth, by gift or at death, in excess of $15 million writ large. There’s some exclusions, but that’s basically the rule. It looks like it should do a really great job because that’s a pretty significant tax. And if you’ve got some people that are like multi-billionaires, that’s going to be a lot of money.

The problem is that in order for a tax to work, so tax is my field, I’ve been a tax lawyer a long time, I teach tax, I live in the tax world, but there is a dance that happens in the tax world, which is that Congress makes rules, then people hire lawyers, your lawyers, my students, and they learn their ways around the rules. And then Congress is supposed to come back in, they patch up those loopholes, then people find new loopholes, right? It’s a dance between Congress and taxpayers. And for much of the history of the estate tax, Congress participated in the dance.

I’ll just give two quick examples. In 1976, and then they reissued in 1986, Congress enacted a whole backup set of rules to address long-term trusts that were called the Generation Skipping Transfer Tax. It was an additional tax that was designed to make sure the taxes were imposed at each generation. And if a grandparent gave a gift to a grandchild, that would be subject to two levels of tax, to make sure the tax was exacted at each generation. That was enacted in 1986. 1990, Congress enacted four new sections of the tax code that were all designed to address valuation gaming because people were doing all of these gaming techniques and Congress said, “We got to put a stop to them.” And they adopted these special valuation rules. Both of these rules were enacted under Republican presidents, and they were designed to shore up the estate tax.

So you had a lot of work shoring up the estate tax. However, in 1990 began a campaign funded by 18 of the country’s richest families, the Melons, the Cokes, the Mars family, the Mars family is very big into this area of fighting estate taxes, and they decided that they wanted to push for repeal of the estate tax. And no, they were not arguing that we should bring inheritances into the income tax. They just wanted there to be entirely tax-free wealth that passed from generation to generation, compounding, compounding, where all the rest of us have to pay taxes whenever we find money on the street, but they wanted their heirs forevermore to never pay any taxes.

And they hired this guy, Frank Luntz, who was a great communications expert. Frank Luntz was famous for, if you ever used the phrase global warming, and remember how scary it was, like the world is getting hotter and this is a problem and melting ice caps, but now it’s climate change, not necessarily worse, just different, right? That was brought to us by Frank Luntz. Frank Luntz’s biggest thing though was he introduced the term the Death Tax, and this was hugely successful. Today, I’m sure, you stop a person on the street and you say, “What do people call the estate tax?” They will say, “The Death Tax.” And they will say, “It hurts family farms and businesses.” And they will say, “It’s an unfair double tax.” This was an extraordinarily successful campaign. The goal of the campaign was to get Congress to repeal the state tax. George W. Bush was the big champion, and he enacted a 10-year tax bill that resulted in there being no estate tax in the year 2010.

Goldy:

Yeah. Good year for rich people to die. Yeah. Sadly, I missed it.

Ray D Madoff:

Exactly. Sadly for your kids. The estate planners, ever a jolly group, called it the, ‘Throw Mama from the Train Year’, right? Because it was the year that you’d want somebody to die. George Steinbrenner died, as well as eight other multi-billionaires died that year, and their estates passed entirely free of taxes. Okay.

Nick Hanauer:

I tried to knock off my mom in 2010, but it didn’t work.

Ray D Madoff:

I understand. Well, it was worth the… That was the other thing that the estate planners would say, “Gifts for your parents in 2010, hang gliding lessons and warm chicken salad.”

Nick Hanauer:

Yeah, exactly.

Ray D Madoff:

So anyway, that was the-

Nick Hanauer:

We call it mayonnaise.

Ray D Madoff:

Yes. So this campaign, one would think, just looking at that history, that it failed because the estate tax went away in 2010, but it came back in 2011. So what did it really do? It was so effective in shifting how the public thought of the estate tax that the last time Congress closed a single loophole to the estate tax, you want to guess when it was? 1990, 36 years ago.

So basically what we have had is we’ve had complete quiet quitting by Congress, but we have not had quiet quitting by the estate planning bar, right? My students, others, I teach them how to do it. There are so many devices for the wealthy to avoid taxes. They are dynasty trusts, GRATs, rolling GRATs, QBRs, QTIPs, CRATs, CRUTs, CLATS, CLUTs. You have to go see your estate planner. And basically, typically they are done through lifetime transfers. They are often done through sales. Basically, you sort of shrink the property way down low, then you sell it for a very low interest loan, and then you swap property in and out. And dynasty trusts are really the worst of the worst. And these are vehicles that are designed to be tax-free and creditor proof from generation to generation.

And even here in Boston, which is not New York, not Seattle, not LA, just old folksy Boston, lawyers have multiple clients who have multi-billion dollar dynasty trusts. And these dynasty trusts weren’t supposed to be funded with more than $15 million. They were only exempt with $15 million, but people can leverage, primarily through these sales is the most effective way, and they are shoving assets into these tax-free creditor-proof trusts. I want to just offer up a few more numbers because I think these numbers are useful for people to have.

Okay. So 2024, 2025, the numbers were largely the same, which is that the government took in, in rough numbers, about $5 trillion from all sources and spent about seven trillion, and therefore we had to borrow two trillion. Okay?

Nick Hanauer:

Yeah.

Ray D Madoff:

So we added that two trillion to our national debt. Guess how much wealth was owned by the richest 1% at the end of 2024?

Nick Hanauer:

Oh, it’s got to be like $50 trillion or something like that.

Ray D Madoff:

$50 trillion.

Nick Hanauer:

Was it really 50?

Ray D Madoff:

It’s literally $50 trillion. Plus, we had a $2 trillion shortfall. The top 1% owned $50 trillion, and I think it matters whether this group pays taxes. So remember, this group, arguably a lot of the people in this group, not necessarily everyone, some of those top 1% are also high income earners, right? They’ve paid taxes, but a lot of them aren’t. And a lot of the wealth is owned by people who aren’t. And so the estate tax, 40% tax that applies to all transfers during life and at death, guess how much taxes was raised from this group in estate taxes in 2024? 30 billion.

Nick Hanauer:

30 billion out of 50 trillion.

Ray D Madoff:

Yeah, that’s 0.06%. Okay? Musk on his own earned and lost $30 billion in a single day.

Nick Hanauer:

But what I’d be really interested knowing, and not to put you on the spot is-

Ray D Madoff:

Put me on the spot.

Nick Hanauer:

… the richest people in the country have an aggregate net worth of 50 trillion.

Ray D Madoff:

Yeah.

Nick Hanauer:

What percentage of those people died in 2025?

Ray D Madoff:

No, but what I’m saying is they didn’t have to die. Most of them were gifting their property because anybody who has an estate planner is gifting… You need to see an estate planner who’s telling you to make gifts.

Goldy:

You obviously are too honest, Nick.

Ray D Madoff:

No, it’s honest. It’s all allowed. That’s the thing. Somebody with significant wealth should be doing significant gifting, discounting, GRATs, all sorts of stuff to be getting that money out of their estate. So they’re doing a lot of gifting.

Goldy:

So what you’re telling us is because we haven’t used the tax law to address these innovations, there’s been an evolutionary battle between the tax code writers and the tax attorneys and then that stopped. It’s like antibiotic resistant bacteria in an era where we’re no longer developing new antibiotics.

Ray D Madoff:

Right, exactly. That’s a good one. That’s a good comparison. Yeah. It’s basically, right. So Congress stopped closing loopholes. The grantor trust rules are the number one example. They are the big source of abuse. This is a set of rules that were designed to close a loophole. Am I getting too much in detail here?

Nick Hanauer:

No.

Ray D Madoff:

Okay. This was a set of-

Goldy:

He needs it. He’s taking notes to send off to his tax attorney.

Nick Hanauer:

Yeah, that’s right.

Ray D Madoff:

All right. The biggest friend of estate planners is these grantor trust rules. This is a set of rules that were adopted at a time when trusts were subject to income tax at lower rates than individuals. So individuals would take their money, they would put it into a trust, and it would be subject to tax at a lower rate. Congress, to close that loophole, adopted these rules called the grantor trust rules, that said, “We’re going to treat that trust as if it’s still owned by the grantor.” To close the loophole of people avoiding taxes by putting money into these trusts that were subject to tax at a lower rate.

Starting many, many years ago, trusts were no longer subject to tax at a lower rate. Individuals are subject to a lower rate than trust. So the grantor trust rules are no longer serving any tax avoidance purpose. They’re not closing any loophole. But instead they are being used by estate planners to transfer money into trusts and the trusts are treated as if you’re transferring it to yourself so it’s tax-free. So donors are taking their appreciated property, they’re putting them into their trust, getting it out of their estate for estate tax purposes, but paying no taxes on it for income tax purposes because the trust is treated as themselves. These rules are just as an estate planner’s friend. Congress still hasn’t done anything to get rid of them. This is not rocket science. This is not something that like, “Oh, these problems are way too complicated. We can’t fix them.” They’re not doing anything and they could easily do it.

Everyone thinks the estate tax is unfair. And the estate tax has an Achilles heel that makes it vulnerable to this claim. That for some people it really is a double tax. For people who earned their money through salary, they might’ve paid income taxes up to 50% and then they die and they are going to be subject to another 40% tax. And that feels unfair to people. It feels unfair to me. Of course, for most of our rich people, they’ve never paid taxes on that gain because it’s gone up in value. They never realize the gains. But we have the same rule that applies to people who pay taxes as to people who didn’t pay taxes. Taxes are complicated and people have limited patience and attention span. And so it’s easy to our current estate tax-

Nick Hanauer:

Yeah, that’s an interesting point.

Goldy:

Yeah.

Ray D Madoff:

… makes it vulnerable.

Goldy:

You’ve opened my eyes a bit because we focused a lot on how we have slashed tax rates on individuals and corporations. I don’t know if this is true or not. I’ve seen this statistic a number of times that apart from the extraordinary expenses of the responding to the financial collapse in 2008 and to COVID, that all of the accumulated debt over the past 25 years could be attributed to the Bush and Trump tax cuts. But we’re not talking about tax cuts. We’re just talking about not responding to the innovations of tax attorneys. Nobody cut taxes. They just didn’t close these loopholes.

Ray D Madoff:

Yes. And honestly, I do not agree that the problem is the rates. I think we need to have a broad base and we need to have a reasonable rate. Because back in the day when we had 70, 80 and 90% rates, these types of confiscatory rates, people weren’t paying them. There was widespread tax avoidance. And interestingly, it was actually Ronald Reagan, the Tax Reform Act of 1986 that put an end to those tax shelters, which were very big in allowing rich people to avoid taxes. And the solution was to cut rates and to expand the base.

Now, there were a lot of problems with that bill, but I think that idea was the appropriate idea, because nobody wants to pay 50, 60, 70%. I mean, all across the world, top rates have come down. I think that we no longer live in a society, I don’t think, where people feel good about those types of rates, but we don’t need to do it.

Nick Hanauer:

Well, we don’t have the kind of social cohesion that makes something like that viable.

Ray D Madoff:

Well, also a lot of those countries that have the social cohesion, they also are very homogeneous. We’re a very diverse country and we have a different culture. So I think when people advocate for, we have to raise income taxes on top earners, I think that’s a big mistake. Our top earners are already paying all the taxes. And this is where I feel that Democrats have made a lot of mistakes in their messaging because they just anger people who are already paying a lot of taxes. When they say the problem is people who make $400,000, I think that you take a whole group of people and you’re like, well, these are not people who are living high off the hog. I have a lot of former students, they make four or $500,000. They are barely making ends meet when it comes to owning houses in Massachusetts and putting your kids through childcare and schools and all of that. So I think that we have to be realistic about things and there’s plenty of room. There’s plenty of things to tax. There’s plenty of things that are passing tax-free that shouldn’t be tax-free.

Goldy:

So how about if we tax, in addition to that, we tax as income the proceeds from loans on unrealized gains?

Ray D Madoff:

Yeah. So that’s one that’s another one. It seems like this will be a good solution because people are borrowing against their money. The problem is it barely gets at any of the problem. So if we have our billionaires with like $200 billion now, as I say, it’s constantly keeping up with these numbers are crazy. They’re not borrowing $200 billion, right? Maybe they’d borrow $2 billion. I mean, this is a lot of money, these billions. And because of it, that would be a solution that I think would be a bad one because it would not get at the nature of the problem.

The nature of the problem, so I’m not hiding the ball as I see it, is that we are not taxing the sources of income for wealthy Americans, which is their investment gains and their inheritances. And by inheritances, I mean that writ large to inheritances, gifts and life insurance. Those two things are not subject to tax because we count on the estate tax to do it and the estate tax isn’t doing it. So what I think we need to do is bring them into the income tax system. And we could do that by taxing gains whenever property is transferred, whether by gift or at death or during life, that would avoid the lock-in effect, right? People would get a step-up in basis because somebody had actually paid taxes on the gains. We could exclude things like people’s primary residents if we wanted to do that. We don’t have to treat everybody the same. We could have a certain amount excluded.

But generally speaking, when somebody has an asset that increases by a hundred million or a hundred billion, we should tally the gains at some point. When they give it away or when they die holding it, and impose the tax on the gains then.

Goldy:

And you’re saying an income tax, not an estate tax?

Ray D Madoff:

An income tax. Forget the estate.

Goldy:

Right. Forget-

Ray D Madoff:

You should appeal the estate tax because the estate tax is providing cover for the rich, making the public think that they’re paying a 40% tax and it is not exacting any revenue and it is not working.

Nick Hanauer:

Okay. So Ray, just playing this back to you, you eliminate the estate tax, which you think is just not workable. And in place of it, people just have to pay a 40%, but plus or minus 40% income tax on anything they get, whether it’s a gift, an inheritance, anything else.

Ray D Madoff:

Yeah, we could have exception. Yeah, but-

Nick Hanauer:

Okay. Well, and there are already exemptions. There’s a $15 million exemption for God’s sakes.

Goldy:

That’s a lifetime exemption.

Ray D Madoff:

Yeah. What I would say is that each person… I think that we need to recognize that we have a preference for inherited wealth. So if we go back to your, this is a world, what do you call it? Middle out, what do you call it?

Goldy:

Middle out. Yeah.

Nick Hanauer:

Middle out economics.

Ray D Madoff:

If you think middle out, right, you have two people, you have one person who they’re earning whatever, $100,000. Say they get a pretty good job, they earn $100,000, right? They’re paying $30,000 in taxes. Somebody who is given $100,000 every single year pays no taxes on that, because we have a preference for that type of wealth. We have a preference for this inherited wealth and we need to recognize that’s what we have.

Goldy:

And is it fair to say that an income tax is harder to evade than-

Ray D Madoff:

Yes, because, I’ll tell you another advantage of an income tax. Is that if you bring things into the income tax space, you help not just the federal budget, but all the state budgets that have an income tax based on the income tax, federal income tax base. So we have undermined things and we didn’t get a chance to talk about it, but another big source of income used to be dividends. And true, they’ve changed the rate, but dividends used to be taxed at the highest rate. It meant that people with a lot of stock paid a lot of dividends, but in 1982, the SEC changed the rules to a lot of stock buybacks, and now we got rid of dividends and now we just have tax-free growth. That’s another thing that has undermined our tax system. So it’s time to bring everybody into the tax system.

Nick Hanauer:

Couldn’t agree more. So one final question, Ray, why do you do this work?

Ray D Madoff:

Yes, because I am passionate for the public to understand these rules that have a significant impact on people’s lives. And I think that when they don’t understand the basics of it, they are duped by things like, oh, top 1% are already paying 40% of the taxes. This is fundamentally unfair. It has a significant impact on people’s day-to-day lives. And I think we can do better as a country. I’m fundamentally an optimist, and I think that if people understand things, then we’re going to see change.

Goldy:

So a little tour inside the sausage factory for our listeners, our producer, Freddie, before every episode, provides us with this very detailed sheet of show notes with a bunch of questions. And today, Nick, I think we set the record for not following the outline.

Nick Hanauer:

I think you’re right.

Goldy:

I think we got to question two-

Nick Hanauer:

I know, and then it went off the rails.

Goldy:

… and the just went off on a tangent on estate taxes, and we never fully came back.

Nick Hanauer:

No, but I mean, look, I think we did go off the rails a little bit, but I think we had a really interesting conversation-

Goldy:

Yes.

Nick Hanauer:

… about the right stuff, and I think Ray raised some really interesting points. I do completely agree with her that the tax system is working exactly as it’s designed, right? That it’s not an accident that super wealthy people… Or no, no, no, no, no. I put that wrong. It’s not that super wealthy people are doing something illegal by not paying tax. They’re simply following the rules that we have put in place and-

Goldy:

Or have somehow create… I mean, this is what lawyers do. They create law and they create rules. I mean, we had this conversation. I’m trying to remember the name of the guest who talked about this, how so much of the law is actually created by lawyers in how they interpret it. And you see that in the tax code. These loopholes, these tax preferences were not imagined by Congress-

Nick Hanauer:

That’s right.

Goldy:

… when the tax law was written. They’re created by lawyers.

Nick Hanauer:

Yeah. But also we didn’t have people worth $800 billion.

Goldy:

Right.

Nick Hanauer:

This craziness was not anticipated by the previous framework or the people that built it. And so we now are in a very different kind of economic regime, which requires a different approach and different rules.

Goldy:

Right. And what’s intentional about this has been the way Congress has neglected to go back in and-

Nick Hanauer:

Acts of omission.

Goldy:

Right.

Nick Hanauer:

Yeah.

Goldy:

Throughout the history of the tax code, this was this ongoing battle between legislators and tax lawyers, and you’d have to come back and forth and match what the other was doing. And we have intentionally, over the past few decades, not matched the work of tax lawyers and allowed them to essentially rewrite the code in terms of the norms what the courts allow based on their creativity on behalf of people like you, though from the conversation, either you don’t know what your accountants and tax lawyers are doing, your estate planners, or you need to hire some new ones because you seemed a little-

Nick Hanauer:

I think it’s a little harder to transfer billions of dollars tax-free to your heirs than Ray imagines. Although there are scenarios. I mean, I have friends who put huge amounts of company stock in their kids’ estates, when it was worth nothing, thinking that it wouldn’t probably ever actually be worth very much, and all of a sudden it was worth an insane amount, that is a way that you can do that.

Goldy:

Right.

Nick Hanauer:

But you have to get very, very lucky in order for that to pan out.

Goldy:

But let’s be clear, you’re in the business, as a venture capitalist, if one out of 10 investments pay off, most of them fail.

Nick Hanauer:

Yeah, correct.

Goldy:

So if you gave your kids a taste out of all of your investments when they were young and you gave them their shares, yeah, most of them wouldn’t pay off.

Nick Hanauer:

Yeah.

Goldy:

But obviously some of them would have-

Nick Hanauer:

That’s true.

Goldy:

… and they would benefit very greatly from that. Whereas for somebody like me, the thing that we give our kids is-

Nick Hanauer:

Your house equity.

Goldy:

Yeah. Or when they’re young, a 527 to save for college, I’m not giving her shares in Amazon.

Nick Hanauer:

Yeah. But also, I think that one of her big points is this idea of making everything income, eliminating the estate tax.

Goldy:

Making all transfers income. And that really simplifies everything because even though my stepfather is a tax accountant and he once told me that the four rules of tax accountancy are defer, that’s number one. Number two is defer.

Nick Hanauer:

Defer.

Goldy:

Number three is defer. And then number four is die. So it’s defer, defer, defer, die. That’s how you avoid paying taxes, but then under what she’s proposing, the heirs would pay it and they would pay it as regular income. And something we didn’t talk about, which actually is rather appealing is that a lot of people get small inheritances. Most people are not getting large inheritances. They’re getting small inheritances, and it’ll be based on your income. If you’re a family of five, five kids, and one of thems a doctor making $200,000 a year, and another one is whatever, making $40,000 a year, and they each inherit $25,000, their share of the parents’ estate, the child earning $200,000 a year is going to pay more tax on that than the child earning $40,000 a year. And that makes sense because you’re paying it based on your own income, not on the income of the parent, but it is-

Nick Hanauer:

And certainly, I mean, if you write a rule that says you pay income tax on anything you get, and you could do exemptions, you could even do a $15 million exemption.

Goldy:

Well-

Nick Hanauer:

You could.

Goldy:

You could. But the point being, it simplifies everything tremendously. If you just say, “You know what? No estate tax. When you inherit something, when somebody gifts you something, that’s income.” In the same way as if you, as she said, find money. What came to mind is also if you steal money, if you get it illegally. I mean, that’s how they got Al Capone. It was a tax charge. They got him on tax evasion from his illegal booze and prostitution business. I don’t, maybe that’s apocryphal. That’s how I understood the story. They got him on a tax charge.

Nick Hanauer:

I think it is true. Yeah.

Goldy:

Yeah. So if we could just get Elon Musk on a tax charge.

Nick Hanauer:

Take charge. Yeah, that’d be great. Anyway, well, it’s super interesting discussion and obviously she’s more or less right. The system is a mess. It lets the worst and most able people off the hook in a way that is just deeply unfair and impractical, and we need to find a way to stop it.

Goldy:

Right. And if you want to read more from Ray Madoff, we of course will provide links in the show notes, including a link to her book, ‘The Second Estate: How the Tax Code Made American Aristocracy’, speaking of which you could buy it online at that big bookstore, owned by an Aristocrat, or you could buy it at your local independent bookstore.

Freddy:

For more content from us, you can subscribe to our weekly newsletter, The Pitch, over on Substack. And for links to everything we just mentioned, plus transcripts and more,

visit our website pitchforkeconomics.com. As always, from our team at Civic Ventures, thanks for listening. See you next week.

The post The Second Estate: Where Billionaires Don’t Pay. You Do. (with Ray D. Madoff) appeared first on Pitchfork Economics.

The Wage Standard: What’s Wrong in the Labor Market and How to Fix It (with Arin Dube)

Freddy Doss — Wed, 08 Apr 2026 05:16:08 +0000

Corporate profits are booming. So why haven’t most workers gotten a raise?

For decades, we’ve been told a simple story: work harder, become more productive, and your wages will follow. But what if that story was never really true?

This week, Nick and Goldy talk to Arindrajit Dube—one of the most influential economists shaping how we understand wages, and author of a new book, The Wage Standard: What’s Wrong in the Labor Market and How to Fix It —for a conversation that cuts to the heart of how pay actually works in America.

At a moment when the gap between what the economy produces and what workers take home keeps growing, this episode challenges some of the most fundamental assumptions in economics—and asks what it would take to build a labor market that actually delivers for working people.

Because if wages aren’t just set by “the market”… then they can be changed.

Arin Dube is an economist at the University of Massachusetts Amherst and one of the leading researchers on wages and labor markets. He is the author of The Wage Standard: What’s Wrong in the Labor Market and How to Fix It, and has advised policymakers in the U.S. and internationally on minimum wage policy and labor market dynamics.

Social Media:

@arindube.bsky.social

@arindube

Further reading:

MBAs in management lead to lower employee pay, study finds

Eclipse of Rent-Sharing: The Effects of Managers’ Business Education on Wages and the Labor Share in the US and Denmark

Minimum Wage Effects Across State Borders: Estimates

Using Contiguous Counties

NELP Research Brief on Minimum Wage Effects Across State Borders: Estimates Using Contiguous Counties

Minimum wage own-wage elasticity repository: a representative estimate of the own-wage elasticity (OWE) of employment from every minimum wage study published since 1992.

Instagram: @pitchforkeconomics

Threads: pitchforkeconomics

TikTok: @pitchfork_econ

YouTube: @pitchforkeconomics

LinkedIn: Pitchfork Economics

@matthewstoller.bsky.social

Substack: The Pitch

Nick Hanauer:

The rising inequality and growing political instability that we see today are the direct result of decades of bad economic theory.

Goldy:

The last five decades of trickle down economics haven’t worked, but what’s the alternative?

Nick Hanauer:

Middle out economics is the answer.

Goldy:

Because the middle class is the source of growth, not its consequence.

Nick Hanauer:

That’s right.

Announcer:

This is Pitchfork Economics with Nick Hanauer, a podcast about how to build the economy from the middle out. Welcome to the show.

Nick Hanauer:

Goldy, I am so fired up today because we get to talk to our old friend, Arin Dube.

Goldy:

What a geek you are. You’re all fired up to talk to a University of Chicago trained economist.

Nick Hanauer:

Oh my God. No, but Arin Dube is my hero. Arin Dube is the godfather of the empirical study of the minimum wage and has been such an important-

Goldy:

I just can’t tell you how many other labor economists you’ve just offended.

Nick Hanauer:

I’m sorry everybody, but no, come on. The guy has made such a big contribution-

Goldy:

I know.

Nick Hanauer:

… to our understanding of the impact of the minimum wage on jobs and has been at it for a really long time. And Arin is an economist at the University of Massachusetts Amherst, and he’s got this killer new book out called The Wage Standard: What’s Wrong with the Labor Market and How to Fix It. And we’re just very fortunate to get to spend time with Arin and talk about all these issues. I know he’ll have a very interesting perspective on it. I’m just psyched to talk to him.

Goldy:

Well, I’d add in some pithy comment, but I’ll save that for the outro, Nick. Why don’t we just go talk with Arin?

Arin Dube:

Hi, I’m Arin Dube. I’m professor of economics at University of Massachusetts Amherst and the author of The Wage Standard.

Nick Hanauer:

So Arin, we’ve known each other now for a long time.

Arin Dube:

Yeah.

Nick Hanauer:

Goes back all the way to the early days of the $15 minimum wage-

Arin Dube:

That’s right.

Nick Hanauer:

… which you were super helpful with. And you’ve been grinding on all these wage issues for your whole career.

Arin Dube:

Look, I went into grad school in economics because I wanted to understand how people get paid and why they get paid what they do. So these are questions I’ve wrestled with pretty much since I was a student. I actually did my first work studying minimum wages when San Francisco became one of the first cities to pass its minimum wage back in 2004. So that was my entree into this literature and studying particularly what wage floors do.

Goldy:

You came out of the University of Chicago, right?

Arin Dube:

I did. University of Chicago, especially back at that time, the idea that you may want to intervene in the labor market and set wages was not kindly looked upon. It was a very interesting time because this was the late 1990s, early 2000s. And this was when the profession of economics was just really shaken up somewhat by the early evidence from David Card and Alan Krueger.

Nick Hanauer:

And that was ’94, was it not?

Arin Dube:

That’s right. ’94 was their paper and then ’95 they wrote a book. And in 2000, they published a follow-up responding to critics. And all of that made it a very exciting time to start thinking about it. But I also saw things around myself when I was a grad student. I was actually, even though my degree is from Chicago, I ended up spending quite a bit of time at Harvard. And I in fact worked with Richard Freeman, who’s an economist there. And during that time, I actually saw there was a lot of effort to actually raise wages for Harvard service workers. The book, in fact, is dedicated to Frank Morley, who was a janitor-

Nick Hanauer:

Oh wow.

Arin Dube:

… who worked at the Department of Economics, cleaning the Littauer Hall as a janitor. But here’s the really interesting thing. Frank being a contract janitor was paid less than in-house janitors who worked at Harvard, doing the same job, sometimes cleaning similar buildings on campus, but for a different pay. And that was wild because you could just never expect that to happen if you believe the market.

Nick Hanauer:

Well, if you’re an economist.

Goldy:

The only people who would not expect that to happen. It’s right there in black and white in Mankiw’s book. It can’t happen. It’s impossible.

Arin Dube:

I’m trying to understand how workers like janitors can get paid differently because of contracting. But when I talked to my advisors at Chicago, they would say, “What do you mean by that? That doesn’t make any sense.” And so this was very much of a learning experience. In many ways, I learned more actually just seeing what was going on around me, but also how you could change things. Because as it turns out, after a year long campaign to raise wages, Harvard ended up very substantially increasing wages of service workers and in fact, tying all pay to a floor negotiated by the unions. And in many ways, it reflects a lot of the ideas that I actually propose in the book of how you build standards like that. So this was happening around me, both in the classroom and outside and has deeply affected my own thinking about it and seeing both what can go wrong, but also what can go right.

Nick Hanauer:

Yeah.

Goldy:

That’s where you went wrong being influenced by the real world, because we all know that the more unrealistic the assumptions, the better the model.

Arin Dube:

Well, I will say that the economics of today is in a much better place than the economics-

Nick Hanauer:

Yes, it is. Yes, it is.

Arin Dube:

… when I was in grad school. It’s hardly all problems are solved, but nonetheless, we can have arguments in a more useful fashion.

Nick Hanauer:

That’s right. And you are one of the bright lights of the modern economics, which is why we’re so happy to have you on to talk about this stuff. So just tell our audience just a little bit about the book and just kind of take us through the argument that you’re trying to make.

Arin Dube:

So the core proposition of the book may be of interest to your audience because it says, “Most American workers deserve a raise.”

Nick Hanauer:

Yes.

Arin Dube:

And research shows us why we haven’t been getting one and how we can do it. Okay? So the starting point is to sort of go back to about 1980. And this is not new terrain, but it’s useful to summarize. Look, since 1980, the economy grew by about 75% when it comes to productivity in this country, but wages in the middle grew maybe at most 25% and wages at the bottom even less. So then the question that I really am trying to answer in the book is, why did the labor market stop delivering for most workers? Because in the several decades prior to that, wages and productivities were growing together.

So the answer turns out to be less about impersonal market forces, which often economists focus solely on, like things like technology or trade, these things matter, but it also matters the choices we make. And it turns out the choices include corporate choices, policy choices, and even choices by the economics profession to decide what to pay attention to. The big idea is that wages are not just natural numbers set in some well-oiled job market machine that supply and demand matter. But they matter in an environment that’s teeming with all sorts of different business strategies, pay norms, institutional forces, and even the macroeconomic environment, and your paycheck-

Nick Hanauer:

And cultural influences too, moral and cultural influences on top of that.

Arin Dube:

Absolutely. Absolutely. And ideological influences as well, as I talk about in the book. So your paycheck reflects this employer power, and that is a key thing that people have often overlooked because those employer power can be shaped by a lot of stuff, including corporate ideology. So do you share the gains broadly or do you maximize shareholder return at all costs? It also reflects institutions. Do you have unions that are strong enough to actually set the standards that get adopted perhaps even more broadly? And of course, it reflects policy choices as Nick knows very well. When we stop raising the minimum wage as we did starting in the 1980s for the first time, there are real consequences.

And then finally, and the other part that I think is also quite important is to the extent that we want to make the market work well, having a commitment to being full employment is really critical. And it just turns out after 1980, we spent a lot less time at or near full employment than we did in the decades prior. And these things all kind of come together as they did after 1980 to be a real perfect storm of sorts that really shifted against the workers leading to that big gap in pay and productivity.

Nick Hanauer:

Arin, if you don’t mind, would you just, for our audience, refresh their memory about why it is that your colleagues at the University of Chicago believed that wages always reflect productivity?

Arin Dube:

Yeah. So a basic model of supply and demand we usually teach in our econ 101 courses sort of lays out a competitive labor market. And in that competitive labor market, if one employer decides to offer a lower pay saying, “Well, I’m going to pay a little less.” Well, here’s what happens. All their workers leave and they go somewhere else. And when that competition ensues, all employers are competing against each other to make sure they can attract workers, wages will rise until workers are paid what they’re contributing to the system, to the economy. And that’s what we call the marginal product.

So if the wage at all falls below that, this hyper competition will ensure that the wage comes back up. So everyone basically receives what they are contributing. So it’s possible that some people are getting lower pay, but it’s just that maybe they don’t have the skills. So then if basically some people have not seen their pay rise for many years, the solution is you got to train them. Maybe they have to learn how to code or whatever it is that will raise their skills so they can raise pay. It’s never in that scenario because employers are choosing a low wage strategy.

Nick Hanauer:

Yeah. Interesting.

Goldy:

Did it never occur to economists that maybe when one employer lowers their pay, that creates a competitive advantage that forces the other employers to lower their pay since in fact employers have more power in price setting than workers do?

Arin Dube:

Well, I think the starting point is if you really have this market where employers are just competing so fiercely with each other, the idea that they can go awry somehow and in fact compete downwards just is ruled out sort of as a logical aspect. But that’s because the starting point is flawed. The starting point is it’s absolutely easy for workers to just replace their jobs. As it turns out, that is absolutely not true. In fact, you can start by something really simple. You can just go ask people how easy it is for you to find a job about as good as you have. It turns out only about a third of people say that it’s very or somewhat easy. That’s a kind of a shockingly low number and that turns out to be true even when you ask during periods of low unemployment rate and tight labor markets, even then it’s not all that easy for you to actually change your job.

And when that happens, that means if you, that company paying, let’s say 10% lower pay, you don’t have a mass exodus of workers out the door. Yes, you have a higher quit rate, but it turns out if you’re paying 10% less, your quit rate may be about 2% higher. So it is higher, but not very much. That also means then you have a good amount of discretion of what kind of wage strategy to pursue. And you see this. So you see, for example, UPS and FedEx workers do similar job, both employ around half a million workers and generate something like $150,000 in annual revenue per worker, but they pay very differently. Walmart pays about 25% lower than Target. I can go on and give you many examples, but this is very sort of apparent just looking around.

And as it turns out, even when you follow the same worker going company to company, their pay, not surprisingly, varies by the company they’re working in. And that is the example of what has a funny name in economics, we call it monopsony power. But it’s a funny name-

Nick Hanauer:

It’s the evil twin of monopolies.

Arin Dube:

That’s right. Yeah. So monopoly, of course, is when you have a single seller, a monopsony literally would be if you had a single buyer. No, in reality, that’s not the case. What it means is that the buyer or the employer has a degree of market power, that they have such choice. They’re deciding, well, I could pay a higher wage and have lower turnover in quits, or I could choose a lower pay. And if I’m not bound by any other forces or countervailing power, like for example, a union or policy, then I’m going to choose a wage strategy that is going to be reflecting either my profit or some other value that I have or some ideology that I have. And what’s really interesting is how those pay-setting ideologies really changed over the ’80s and ’90s. One of the most compelling examples comes from a study by Daron Acemoglu, who’s an economist at MIT and co-authors who studied what happens when companies started to hire CEOs who had a MBA.

Now that might seem funny because don’t CEOs always have MBA. And it just turns out that they’re much more likely to today than they were 40 years ago. And this is relevant because especially starting in the ’80s, the idea of the sort of shareholder revolution was really spreading. And so if you actually had a CEO who used to be a worker and they sort of climbed up the ranks, they had a different value system than someone who’s just a freshly minted MBA. As it turns out, when the company switched with a CEO with the MBA, pay fell by about 6% and by almost 10% for lower wage workers, while basically profits rose.

Nick Hanauer:

Executive comp went up.

Arin Dube:

And executive pay went up. Exactly. So this is like the same company compared to other similar companies, just choosing a different strategy based on essentially sort of a business ideology that led to a different outcomes in profits, in wages, but it didn’t change productivity. It didn’t make the company work better.

Nick Hanauer:

The products didn’t get better. The products didn’t get cheaper.

Goldy:

Well, there’s a classic example here in our backyard of Seattle, and that’s Boeing, which historically had been run by engineers until the McDonnell Douglas acquisition and essentially the finance guys from McDonnell Douglas took over the company.

Nick Hanauer:

And then the planes started falling out of the sky.

Goldy:

And then the planes started falling. Right. And they went after the unions and suppressed pay and you had all these other deadly consequences that came from it. But that was a totally different business philosophy than what had built Boeing to be the world’s largest aircraft maker at the time.

Nick Hanauer:

So Arin, I want to zoom in on an area that you have made, I think, almost an unparalleled contribution to, which is the study of the effect of the minimum wage, raising the minimum wage on job laws. Because I don’t think there’s a human alive that’s done more or better work on this than you have. And that’s basically what you devote chapter six of the book to. Can you just speak to this a little bit?

Arin Dube:

Yeah. Yeah. So we have had a federal minimum wage in this country since the 1930s. And from then until about 1980 or so, most years, we raised the minimum wage at the federal level. And so the minimum wage kept up with overall cost of living and actually more than that overall productivity. And then it stopped because President Ronald Reagan decided he did not want to raise the minimum wage and he didn’t. And as a result, we started, as I see it, a long stretch of extremely dysfunctional way of setting wages in this country. So without a federal standard, what happens is that states had to actually step up. So this is the sort of silver lining of this dysfunction, is it gave nerds like myself and nerds before me, like Card and Krueger, a really great way of studying the causal effect of this policy.

Goldy:

A whole bunch of natural experiments.

Arin Dube:

A whole bunch of natural experiments. Natural experiments is the silver lining of dysfunction. And so there we have it. So we can now study what happens if New Jersey raises its minimum wage? Well, how do we know what would’ve happened? Maybe New Jersey would’ve done something else, maybe jobs would’ve risen or something. Oh, let’s look right next door in Pennsylvania. And that’s exactly what Card and Krueger did in their famous 1994 study. Following up on that, I think basically our contribution in some ways was summarized by the word many. Say, let’s do many New Jersey and Pennsylvania cases. Why do one when you can do many?

And we now have the data to do many. And we did that in our 2010 work that compared border counties. And we basically found that, look, the minimum wage goes up, pay goes up in the restaurant sector, which is a major source of employment for minimum wage workforce. And then employment, what happens? Let’s look at both sides. For four or five years afterwards, it doesn’t change. It doesn’t really change at all. So this is a win-win for low-wage workers, and that was really, I think, an important [inaudible 00:21:36].

Nick Hanauer:

But an inconvenient fact for the National Restaurant Association.

Arin Dube:

That is true, but it is interesting because what happened after that, as Nick played such an important role in, is to really push us to do more. And this is important because look, I believe in evidence-based policymaking, but I also know that when the evidence only comes from fairly limited experiments, we don’t know what would happen if we actually do something more bold. We can’t simply avoid doing things that are bold because we have never tried it, right? So we have to balance between those. And in some ways, that’s exactly what happened with the Fight for $15 movement.

Ironically, we engaged in an even more egregious national experiment, the natural experiment where roughly half the country now has gone for more than a generation without raising its minimum wage, to the point where we actually, for the first time, 20 states in this country effectively have no minimum wage because the 7.25 is economically not very different from a zero. So that means that basically 20 states-

Nick Hanauer:

$2.13 cents plus tips is effectively zero, right?

Arin Dube:

Yes.

Nick Hanauer:

Why not just say zero plus tips?

Arin Dube:

Yeah, well.

Nick Hanauer:

Let’s just call it slavery.

Goldy:

Well, Nick, because the employers get to keep the difference between the 2.13 and the 7.25-

Nick Hanauer:

I guess.

Goldy:

… in tips. So this is a way of actually subsidizing employers. That’s why we keep it.

Arin Dube:

But at the same time, we have now states that have taken more ambitious approaches, and then that actually allows us to see what happened for these higher minimum wages. And in a more recent work, that’s exactly what we did. Just again, look at these natural experiments, including the more recent period with higher minimums and continuing to find virtually the same answer. And that is, again, reassuring. And this is where I think the learning that’s happened has really affected pay setting. And not just here in the US, also around the world.

So in 2019, I was asked by the conservative chancellor of United Kingdom to look into the evidence in UK, and they wanted to use that to sort of inform what kind of minimum wage, or as they call it, the national living wage they wanted to set. And I looked to see there was a significant increase also in the 2010s in UK. And when I reviewed the evidence, I found that it was actually quite successful.

Following up on that, the British government decided to move the minimum wage to about two-third of their median wage, placing the United Kingdom as one of the higher standards around the world. One of the things I point out in the book is that none of our states today, none of them actually reach a two-third of a median wage standard. This would require, and it would allow us to actually go higher than we have even in some of the higher states. And this sort of highlights to me that there’s more work to be done when it comes to the minimum wage.

Goldy:

So what you’re telling me, and I never knew this before, is that we have Ronald Reagan to thank because we never could have changed our thinking about the minimum wage without the opportunity for all these difference in different studies to actually compare what happens across borders.

Arin Dube:

Unintended consequences are real, man.

Nick Hanauer:

Okay. So Arin, tell us a little bit about the glorious future.

Arin Dube:

So one of the things that I also talk about in the book is try to sort of build on what we have learned from the minimum wage experiments to try to sort of tackle in some ways a broader problem because like I started with saying that productivity and pay has really not gone together for the typical American worker. It’s true at the bottom, but it’s also true at the middle. The question is, what can we do to help increase and rebuild the middle class? Now, one thing we could do is push the minimum wage even more, which I think we can do some more of, but there’s a limit to that. But here’s what I argue is that, in fact, we should consider having wage standards for lots of jobs. And if that sounds like a radical idea, it turns out most of our high-income peer countries do some variant of that.

It’s in some ways we are an exception. We are an exception where most jobs just don’t have any wage pay standard. And so the good news is we’re actually starting to see this. Even here in America, for example, nursing homes in Minnesota have actually a wage board based on representatives from employers, from unions that actually have set a wage floor for different types of nurses. This is actually a great example of how we can start to rebuild wage standards, again, using sort of our understanding and knowledge of what we have seen with the minimum wages, but taking it more to scale in a variety of context. And I argue that in fact, experimentation like this, it doesn’t require us to solve the broken politics in DC, right? We can do this at the state level and we are starting to see this.

Nick Hanauer:

Although, just to be clear, it’s a good thing we can do it at state level, but it is suboptimal.

Arin Dube:

Absolutely. Look, one of the things that we should do is to really change our labor law and have the kind of sectoral approach that has worked well in many places. I think we should absolutely strive to do that, but we don’t have to simply say, “Until we get there, there’s nothing to do.”

Nick Hanauer:

Yeah, we can’t do anything.

Arin Dube:

Because there’s a lot to be done at the state level. We can start today.

Nick Hanauer:

Okay. Answer me one thing. There must be hundreds of academic studies on the impact of raising the minimum wage on job creation.

Arin Dube:

Yeah. We actually compiled nearly 100 studies that basically show what happens to both pay and wages. And then you can kind of ask, well, what do most of those studies find? We actually have put together a database. You can go look at it. It’s online. We try to update it pretty regularly. It has a wonky name, the own wage elasticity, but it’s a simple idea. The idea is this, when the minimum wage rises, how much does it increase pay for some group of workers, like maybe fast food workers, and how much does it change employment? Of course, if you look at the studies, it turns out there’s some studies that suggest very large job losses. There are also studies that suggest substantial positive job gains. If you take the average, the average is pretty darn close to zero.

It suggests that the typical study has found very small changes in employment for the kind of wage changes that we’ve gotten. As it turns out, I would argue that the studies that are particularly more careful and actually just studies that have been done more recently where there’s better data, those studies tend to find even closer to zero effect or more positive effect in some cases.

Nick Hanauer:

Yeah. I know our opponents would disagree, but I have looked very carefully at the studies that show that there are big job losses and they are super suspect. Because the parameters that they use and the assumptions that they make are just not realistic.

Arin Dube:

There’s a good example that’s relevant. It has to do with Seattle. Okay?

Nick Hanauer:

Yeah. Right.

Arin Dube:

And so I talk about this in the book. So there was a study from the University of Washington that was released that actually found very substantial job loss. The initial working paper, the unpublished version, is one of the… In that database of nearly 100 studies, it’s probably the second most negative estimate compiled. But here’s the thing, and just to be clear, the researchers who did the work, there were definitely very solid economists and they used very solid methods. But here’s the issue. The issues that they were comparing, what happened to the number of jobs paying less than $19 in Seattle? And how did that change? And then how did the number of jobs paying less than $19 change in rest of Washington State? Okay.

And they found that compared to rest of the state, after the policy change, the number of jobs paying less than $19 actually in Seattle fell quite a bit. And they interpreted that as job loss because the minimum wage was under $15 at the time. So they thought that… Now, here’s the issue. There are two reasons why you can have fewer than $19 an hour job. One is that they’re less jobs. The other reason is maybe because they’re paying more than $19.

Nick Hanauer:

Exactly.

Goldy:

Arin, there were literally job ads from Jimmy John’s, not even in Seattle across the border at the time that study came out where they were paying over $20 an hour for delivery drivers.

Nick Hanauer:

Right. Exactly.

Arin Dube:

And cities like Seattle have seen wage and price growth much more than rural areas. And this is going to mean that even if nothing had changed, even if there were no minimum wage, in general, you would have had less jobs paying $19 or fewer in Seattle. So if you are-

Nick Hanauer:

Just to be clear, as I recall, the economists who did that study withdrew it. Well, he recanted with the later studies.

Arin Dube:

So what happened is that-

Nick Hanauer:

Jake Vigdor recanted.

Arin Dube:

… in their published version, they actually do still have that estimate, but they have a very different estimate as well. And that very different estimate is quite sensible. You just follow low-wage workers, they actually lose jobs in Seattle versus outside of Seattle. And doing the second method suggested an employment effect close to zero. Okay? So in the published version, the authors say that they don’t take a stance on which of these, they’re either very close to zero or one of the largest negative estimates in the literature is more correct. I have my very strong view because in follow-up work, we actually looked at nearly 40 cities that passed minimum wages and showed why if you took an approach like the less than $19 measure, you would find, again, a similar problem in suggesting job losses when it was really just wage growth was faster in major large cities like Seattle in this period.

So I think that’s an example. When a study has found very substantial negative effect, look, the reality is there’s some time they’re going to get a lot of publicity as they did. And then over time, however, it’s quite useful to recognize that when we learned more, we actually found that maybe that was not really what actually happened. And maybe the effect of the minimum wage in Seattle was more effective than that the original results seemed to suggest.

Goldy:

Another conclusion from the Seattle minimum wage study was they looked at prices because we get this a lot that, oh, if you raise the minimum wage, that’s why things are so expensive here. And what they found was no impact on any industry except for the restaurant industry, whether it was a small increase in prices.

Arin Dube:

That’s right.

Goldy:

Not in retail, not in hospitality, the hotels. It was just the restaurant industry. How have other studies followed up on that?

Arin Dube:

That’s a great question. So I take the perspective that at a certain level, most people, most voters, if you ask them, “Are you willing to pay a bit more to make sure that we have a strong minimum wage?” By and large, most voters say, “Yes, I’m okay paying a bit more if that means substantial pay growth for people at the bottom.” The studies, and you look at minimum wage effects, they absolutely do find some price effect in the restaurant sector, but you’re also absolutely right. If you look at the overall price level, it’s a very small impact. It’s largely in the restaurant industry, that’s where you actually see the prices, but these are relatively small price increases compared to any of the wage gains that occur. So as a result, you can take in any price effect. Most consumers don’t really notice much, and even as the wage gains at the bottom are very much noticed by the workers and their families.

Nick Hanauer:

Yeah. And just to level set for the audience, I think what’s really important in this price discussion is to keep in mind the fact since 1980, more or less, the wage share of the economy has gone from something like 52% to 45%. While the profit share of the economy has gone from something like 5% to something like 11% or 12%. So it’s a 6-ish, 7% share of the economy that went from wages to profits. And 6% of 24 trillion is, that’s a lot.

Goldy:

It starts to add up, right?

Nick Hanauer:

It’s a trillion and a half dollars or something like that. And what that means is that you could take a trillion and a half dollars of corporate earnings, give it to workers in wages, and prices would not have to change one cent. So there’s a lot of room in the economy for working people to earn more without consumers having to pay more. We have just gotten used to a world in which corporate profits are outsized.

Goldy:

But there’s other factors as well. There’s lots of studies showing, particularly in the restaurant industry, that when you increase wages, you get less turnover, higher productivity. It actually lowers other costs.

Nick Hanauer:

If you were king and you could do one thing, anything, what would you do?

Arin Dube:

Yeah. I think one thing that I would certainly do is commit to full employment. And in the last five years, we’ve actually seen pay gap between the 10th and the 90th percentile. That gap actually shrink by about a third of the increase in that gap that happened between 1980 and 2019. So if that’s a little confusing, what I’m saying is that this one measure of pay inequality, the gap between the 90th and the 10th percentiles, a third of the increase that occurred in that inequality in the post-1980 era was reversed. And that happened because of two reason, full employment and minimum wage. Okay?

Nick Hanauer:

No, I’m going to push back on that. The reason that happened is because the top 1% left everyone else behind. If you were to compare that gap between the bottom and the real top, it expanded.

Arin Dube:

Oh, absolutely. Now I said one measure. You’re right. The 1% share of income is definitely not something that has fallen.

Nick Hanauer:

No.

Arin Dube:

The pay however-

Nick Hanauer:

And that gap has widened, has it not?

Arin Dube:

The wage gap between the bottom 10th percentile and say the 90th or the 95th percentile even, that has shrank largely because we saw very strong wage growth at the bottom during a very tight labor market. Okay?

Nick Hanauer:

Relative to the 90th percentile, but not relative to where the real money is being made in the economy, which is in the top 1% or 2%.

Arin Dube:

This is the way, what I would say. I would say that, look, full employment and tight labor markets can be very effective, but they will.

Nick Hanauer:

100% agree.

Arin Dube:

… only work for periods of time. And even in the best case scenario, they will not deliver all the things that we want. And this is where if I really could really institute a different governance system in this country, I would absolutely move towards sectoral bargaining, having sectoral standards that make sure that we’re really building a strong middle class in this country because that can really happen.

Goldy:

You had used earlier, you had compared UPS and FedEx. And one of the big differences between those two companies is not just their pay, but the fact that UPS is unionized and-

Arin Dube:

That’s right.

Goldy:

… FedEx is not.

Arin Dube:

Absolutely.

Goldy:

And absent a strong organized labor movement, sectoral bargaining is the next best thing.

Nick Hanauer:

Well, we have gone over our time, but this has been an amazing conversation. Why do you do this work?

Arin Dube:

This is what really gets me up in the morning. I want to understand why people get paid, what they do, and how we can give more people a raise.

Goldy:

One of your words of wisdom, Nick, that I have repeated often is-

Nick Hanauer:

Do I have words of wisdom?

Goldy:

Yeah, you do. You come up with these pithy phrases like when workers have more money, businesses have more customers-

Nick Hanauer:

Okay. Good point.

Goldy:

… and hire more workers, and that’s a great one.

Nick Hanauer:

That is why they pay me the big bucks after all.

Goldy:

That’s right. But here’s another one. Speaking of being paid big bucks, okay? You have said repeatedly, employers don’t pay you what you’re worth. They pay you what you negotiate.

Nick Hanauer:

Yeah, what you have the power to negotiate.

Goldy:

Right. And I bring that up with Zach every year during our annual review to no avail because I don’t have any power.

Nick Hanauer:

Yeah, right.

Goldy:

But you still pay me well. Yeah. Yeah. And it turns out that when you look at the minimum wage, when you look at the wage standard, that is just-

Nick Hanauer:

Absolutely. As much as I love Arin and value his work, what drives me bananas still is the fact that he has to do the work. Now, I think that the best and funniest part of that conversation was when he told us that the silver lining of the debacle, which is the American economy over the last 40, 50 years, is it provided all this opportunity for people like him to do really interesting studies, which is so good.

Goldy:

In the end, and I think there’s this deep irony here that it’s Ronald Reagan who set this in motion. Ronald Reagan, who put an end to the routine increases in the minimum wage. Remember, Arin says that he would start off, he would try like two thirds of median wage, setting the minimum wage to that. Historically, when the minimum wage was first implemented, and this was picked out of thin air, it was 50% of the median wage.

Nick Hanauer:

Yes.

Goldy:

The minimum wage was set at 50% of the median and the overtime threshold was three times the minimum wage, and these were just random numbers with no empirical evidence to support it. But decade after decade after decade, and I think I did the right number of decades at that point, because it really was for only three, three and a half decades, we raised the minimum wage to keep it… We’d jump ahead and then fall back, but we were shooting for that 50%. And then Reagan comes along and is like, “Nope, we’re not going to raise the minimum wage anymore. Screw the poor.”

And based on this idea that you learn in your econ 101 textbook, they literally still use the minimum wage as the textbook illustration of supply and demand, of that inverse relationship between price and demand that if you raise the minimum wage above that equilibrium price, you will get unemployment, you will lose jobs and nobody really studied it. And it turns out I didn’t realize one of the reasons why was not just because there was a, and there was a kind of cultural prohibition within the field of economics to study something as basic as this, but also nobody could study it in the way that Card and Krueger eventually had an opportunity to do.

Nick Hanauer:

Yeah, it never occurred to me. Yeah, yeah, yeah. No, you’re right.

Goldy:

I’ve used this story to just badmouth the economics profession, but it turns out it created an opportunity to do this study. And the reason why I think this is so ironic, and we’ve talked about this before, is that the minimum wage is a wedge issue in economics. Because it proved one of the most fundamental assertions of economics, of neoclassical economics, that inverse relationship between price and demand, it proved that it was wrong, that economics was wrong about one of its core assumptions, a main principle that everything else is built on top of. And if it’s wrong about this, what else is it wrong about?

Nick Hanauer:

Yeah, pretty much everything. Yeah.

Goldy:

Right. And I think these minimum wage studies, these minimum wage hikes, these state and local minimum wage hikes and the studies that followed up that show no disemployment effect or very little, sometimes employment gains and no significant increase on prices. It’s just opened up the entire field of orthodox economics to a reevaluation and reanalysis and a whole new way of trying to understand how the economy works. So thank you, President Reagan, we thank you for your service.

Nick Hanauer:

Yeah, yeah, whatever. But anyway, I just think that the frustrating part is, and the work that we’re trying to do to make this different is to start with a framework that with this massively asymmetric level of scrutiny. Where anything that benefits poor people requires a massive amount of studies to prove that it’ll do no harm. But no study has ever been done on the job killing effects of Wall Street bonuses, which clearly kill more jobs than the minimum wage does, right? Because if you took all that Wall Street bonus money and gave it to working people, all of them would have twice as much money. They would buy twice as much stuff. And there would be twice as many jobs, right? That’s a little bit of an oversimplification, know what I mean, right?

And that is the neoliberal paradigm. The neoliberal paradigm is Arin Dube’s source of permanent employment because it requires you to continue to prove that the most basic things to do to hold the society together do no harm. And it’s just incredibly nuts. And saying that the principle of marginal productivity obtains, except if the economy isn’t perfectly efficient, would be like saying that the moon is made of cheese, except if the laws of physics obtain. It’s just not how the world works.

Goldy:

And it’s the difference, the standard of proof that’s required for something that benefits workers versus something that benefits Wall Street. It’s entirely different. It has been 35 years since that Card and Krueger study came out. And as Arin said, there’s been hundreds of studies since. Most of them in the past decade, because that’s when we’ve had this surge of local minimum wages, and the evidence, the empirical evidence is overwhelmingly clear that there is no disemployment effect. And yet, there’s a lot of people who still don’t accept it because-

Nick Hanauer:

It’s not convenient to accept.

Goldy:

… the theory just says otherwise, and they’re not going to accept it. In any case, we highly recommend the book. It is The Wage Standard: What’s Wrong in the Labor Market and How to Fix it. You can, of course, buy it from that big online monopolist who shall not be named or from your local independent bookstore.

Freddy:

For more content from us, you can subscribe to our weekly newsletter, The Pitch, over on Substack. And for links to everything we just mentioned, plus transcripts and more,

visit our website pitchforkeconomics.com. As always, from our team at Civic Ventures, thanks for listening. See you next week.

The post The Wage Standard: What’s Wrong in the Labor Market and How to Fix It (with Arin Dube) appeared first on Pitchfork Economics.

The Boomcession: Booming on Paper. Brutal in Real Life. (with Matt Stoller)

Freddy Doss — Wed, 01 Apr 2026 05:10:04 +0000

What happens when the economic data says one thing, but people’s lives say another?

This week, Nick and Goldy talk to Matt Stoller about what he calls a “Boomcession”—the disconnect between headline economic indicators and how the economy actually feels for most people.

They go straight at the disconnect: why the numbers say everything’s fine… and people say otherwise. If the economy is supposed to work for people, why do so many people feel like it isn’t?

Matt Stoller is the research director at the American Economic Liberties Project and author of Goliath: The 100-Year War Between Monopoly Power and Democracy. He writes the Substack newsletter BIG, focused on monopoly power, corporate concentration, and political economy.

Social Media:

@matthewstoller

Further reading:

The Boomcession: Why Americans Hate What Looks Like an Economic Boom

Goliath: The 100-Year War Between Monopoly Power and Democracy

Organized Money Podcast

Instagram: @pitchforkeconomics

Threads: pitchforkeconomics

TikTok: @pitchfork_econ

YouTube: @pitchforkeconomics

LinkedIn: Pitchfork Economics

Measuring the Income Gap from 1975 to 2023

Substack: The Pitch

The post The Boomcession: Booming on Paper. Brutal in Real Life. (with Matt Stoller) appeared first on Pitchfork Economics.

The $79 Trillion Price of Inequality (with Carter Price)

Freddy Doss — Wed, 25 Mar 2026 05:03:52 +0000

Over the last 50 years, nearly $79 trillion that could have gone to the bottom 90%…didn’t.

Where did it go—and what did that cost you?

Nick and Goldy are joined by Carter Price, senior mathematician at the RAND Corporation, to break down how rising inequality reshaped wages, growth, and even the federal budget—and why the economy feels so disconnected from everyday life. Because this isn’t just about who got richer. It’s about what everyone else lost.

Carter Price is a Senior Mathematician at the RAND Corporation and Professor of Policy Analysis at the RAND School of Public Policy

Social Media:

@CarterCPrice

Further reading:

RAND Budget Model: Groundbreaking insights into the everyday impacts of federal policy

Unlocking the Tax Code with RAND’s Tax Code Analysis Tool

Preliminary Strategies for Reducing the Burden of Federal Debt

Impacts of the Retirement Savings for Americans Act

Instagram: @pitchforkeconomics

Threads: pitchforkeconomics

TikTok: @pitchfork_econ

YouTube: @pitchforkeconomics

LinkedIn: Pitchfork Economics

Swiftynomics: How Women Mastermind and Redefine Our Economy

Substack: The Pitch

Nick Hanauer:

The rising inequality and growing political instability that we see today are the direct result of decades of bad economic theory.

Goldy:

The last five decades of trickle-down economics haven’t worked, but what’s the alternative?

Nick Hanauer:

Middle out economics is the answer.

Goldy:

Because the middle class is the source of growth, not its consequence.

Nick Hanauer:

That’s right.

Announcer:

This is Pitchfork Economics with Nick Hanauer, a podcast about how to build the economy from the middle out. Welcome to the show.

Goldy:

One thing I know about the last 50 years, Nick, is that it has been a tremendous half century for people like you and your friends.

Nick Hanauer:

I know. And nobody has been more effective at demonstrating the breadth and size of that than our guest today, Carter Price.

Goldy:

That’s right. Yeah.

Carter was one of the lead authors of really a seminal study about five years ago that, to be fair, we helped instigate, your money helped pay for it, which showed the… Essentially was a counterfactual, which tried to take a look at what would have happened if the level of inequality that we had in the mid 1970s, in 1975, when the economy was far more equal than it is today, what would have happened if that level of inequality had remained constant? How much better off would the bottom 90% of Americans be? And it turned out, I think the technical term, is a lot.

Nick Hanauer:

Yeah. It’s almost inconceivable how different the country would be if we hadn’t screwed it up so bad.

Goldy:

There’s some updated numbers as of 2024, from 1975 to 2024, had inequality remained constant, the bottom 90% of Americans would have earned $79 trillion more than they actually did. That’s in inflation adjusted dollars. And in 2024 dollars, they would have earned $79 trillion more over the previous 50 years. And in 2024 alone, just 2024, the bottom 94% would have earned an additional $4 trillion. And I know these are big numbers. It’s a big economy that may not seem like… What does that mean?

Nick Hanauer:

But if you spread that out over the bottom, let’s say 100 million workers, which is 75% or something like that, that’s 40,000 a piece.

Goldy:

Right.

Nick Hanauer:

That’s how much.

Goldy:

Imagine what you would do with an additional $40,000 a year.

Now, Nick, I can’t imagine because what’s $40,000 to somebody who’s benefited from the past 50 years of rising inequality. But for most people-

Nick Hanauer:

That’s life changing.

Goldy:

… that’s going from median income of what? Sixty, $65,000 to over $100,000 a year. And that makes a big difference.

Inequality matters. It’s had a huge effect on the economy and as it turns out, not just on the incomes of the typical American, but also on the federal budget.

Nick Hanauer:

Yeah. And today, again, we get to talk to our old friend, Carter Price, who is a senior mathematician at the RAND Corporation, whose research focuses on inequality labor markets and economic policy. We worked with Carter for a long time on a lot of these issues, and he is definitely one of the world’s leading experts in his field.

Carter Price:

Hi. I’m Carter Price, a senior mathematician at the RAND Corporation, and we’ve been doing a lot of work on fiscal policy analysis, budget analysis, and are really working to better understand how the economy works and how to make the economy work for everyone.

Nick Hanauer:

That’s awesome.

Goldy:

Great.

Nick Hanauer:

Carter, we wanted to cover a couple of things today. We wanted to start with your recent analysis of the inequality trends, but later in the discussion, talk a little bit about the new model you’re building, because that’s a very exciting development as well. Why don’t you start just explain a little bit about your updated estimate on the way in which income is being distributed in the United States? You did an update to a report you did a few years ago.

Carter Price:

Essentially, everyone knows, and particularly the listeners to this podcast, know that inequality has been rising for many decades, but it wasn’t always that way. In the 1950s and ’60s, if the US economy grew 5%, then income to the bottom, incomes to the top, and income to the middle grew about 5%. And so it really was a period of rising tide lifting all boats. That changed in the 1970s. And so we took a look at what would’ve happened if that didn’t happen. If the economy kept working such that when the economy grew, incomes grew at the middle, at the bottom, and at the top.

Our first study was a study with Kathryn Edwards, who was an economist, colleague of mine, and we looked at it up to 2018, from 1975 to 2018, and found inequality had essentially was costing people about two and a half trillion dollars a year. And if you added it up from 1975 to 2018, that would’ve totaled almost $50 trillion. A few years later, it’s about five years later, I went back and updated the numbers and because of inflation, because of just adding five more years, and it turned out that things had gotten worse in that time period, as far as the concentration at the top, that we came up with a higher number of $79 trillion, so almost 80.

Nick Hanauer:

Yeah. And just to be clear, what you’re saying is that since 1975, effectively, an incremental $79 trillion in income has flowed from the bottom 90% of Americans to the top 1% of Americans. Is that correct?

Carter Price:

Yeah. From the vast majority of working Americans, the 90% up to… It’s really the top 0.2%, but-

Nick Hanauer:

2%.

Carter Price:

That second percent, they don’t get that much. It’s really the top 0.1% that wound up with much higher income.

Nick Hanauer:

Right.

Goldy:

So congratulations, Nick, on the past half century.

Nick Hanauer:

I know.

Goldy:

It’s worked out very well for you.

Nick Hanauer:

Worked so hard. So hard.

Goldy:

Well, we’ve always said, you clearly work a thousand times harder than I do, which explains why you earn a thousand times more money.

Nick Hanauer:

That’s right. It’s simple.

Goldy:

And that annual increase, you said it was about 2.5 trillion in 2018 when you updated the study, what was it? Three and a half trillion a year?

Carter Price:

Yeah. It was almost four. So yeah, it was about-

Goldy:

4 trillion, I think. Yeah. Very close.

Carter Price:

$4 trillion a year, that’s how much more the people in the bottom 90% of the economy would have earned had inequality stayed constant at 1975 levels.

Nick Hanauer:

What’s $4 trillion between friends?

Goldy:

Yes. And that’s out of an economy of what? About 25 trillion that year?

Carter Price:

Yeah, a little less than… Yeah, somewhere between 25 and 30. Yeah.

Goldy:

That’s a sizable chunk. So you can see why maybe people feel a little upset, like the economy’s not working for them, right? They might lash-

Nick Hanauer:

They might object.

So your research doesn’t really say anything about what caused that.

Carter Price:

That’s right. Yeah.

We looked at what was going on, not why it was going on and so looking at the numbers, looking at the trends. But we didn’t try and do any causal analysis. Now, certainly, there is a lot of economists, a lot of sociologists, and other researchers have been working on that. It is very hard to assign blame and say 30% was because of this and 40% because of that.

Nick Hanauer:

You could do that analysis, but you guys have not done that analysis?

Carter Price:

We have not. Yeah.

Goldy:

You can divide it in terms of some of it is due to the falling share of the economy going to labor as opposed to capital, and part of it is due to dramatically rising incomes at the top with stagnant wages at the bottom and the middle.

Carter Price:

Exactly. Yeah. We can describe the mechanics of what happened, but why did corporate profits go up for the last 50 years as a share of the economy and the labor share go down?

Nick Hanauer:

Carter, can you remind me if this is pre-tax, post-tax, pre-redistribution, post-redistribution?

Carter Price:

This is all pre-tax. This is what you get from your employer. When you get paid, this is what you get. And it does include things that don’t come from your employer. So it includes rents, dividends, interest, [inaudible 00:10:14]-

Nick Hanauer:

All income.

Carter Price:

Yeah.

Nick Hanauer:

In your experience with both creating and then talking about these numbers, have you gotten any interesting pushback?

Carter Price:

I think so.

I think that one of the primary objections has been this doesn’t take into account people’s careers. So I start off making not that much money, but then over time, who’s in that top 10%? Who’s in that top 1% changes? Maybe I’m not in the top 1% this year but in the next year, maybe I will be in the top 1%. I think that was one of the primary arguments made against this. It turns out I’m not that convinced by that because-

Nick Hanauer:

No. It’s ridiculous.

Goldy:

Well, because 99%-

Nick Hanauer:

It’s a 50-year-

Goldy:

… of people aren’t going to be in the top 1%?

Nick Hanauer:

Yeah.

Goldy:

[inaudible 00:11:03].

Carter Price:

Yeah. The argument that at some point in your career you might be but if you make a million dollars this year, unless it was you won it in the lottery or you sold your business and you’re retiring, then you’re much more likely to make a million dollars next year because, and if you’re making minimum wage, the likelihood that you’re making a million dollars next year, very unlikely. It certainly happens. People go from working a minimum wage job and then they get drafted in the NBA or something like that. But it’s a very small subset of people that do that.

The other argument that I think warrants some consideration is why is this any of my business? Why is it any of your business what people are making? Yeah. I think-

Nick Hanauer:

What?

Carter Price:

That’s an interesting argument.

Nick Hanauer:

What do you mean? You mean why are we paying attention to this?

Carter Price:

Yeah. And it’s like we live in a society and we want to understand how our society works and that’s why it’s our business. But there is-

Nick Hanauer:

So there are people who legitimately object to even doing this analysis?

Goldy:

Well, Nick-

Nick Hanauer:

I’m not surprised but…

Goldy:

… inequality is evidence that the market is working, right?

Nick Hanauer:

That’s fantastic.

Goldy:

Right? That people like you, you’ve just created all this wealth for society, all this good, and you deserve to be rewarded. And so why should we even look at the numbers because then we might unjustly criticize you?

Nick Hanauer:

Yeah.

Carter, this provides a good segue into what I also want to talk to you about, which is the new model, the new macroeconomic model that you guys are building with help a little bit from me and a lot from our friend, Alexander von Fürstenberg. Tell us a little bit about the model and tell us what you’re doing, why you’re doing it, and then let’s come back and talk about the model’s ability to judge what the economy would have been like if this rising inequality had not occurred, which is a really interesting question to answer. So how fast would GDP have grown? What would government deficits be, et cetera, et cetera, et cetera.

Carter Price:

We’re not the first people to build a budget model. You have the Congressional Budget Office, you have the Penn Wharton budget model, and there’s a relatively new model, the Yale Budget Lab. Each of those groups is approaching the problem in a similar way, but maybe with slightly different assumptions and slightly different viewpoints.

And so why are we jumping in this mix? I think part of it is because it’s important to take into account, look at the problem holistically. So not just focus on, okay, what’s the budgetary effect or what’s the effect to the macroeconomy as measured by GDP?

GDP doesn’t capture… You can have the same amount of GDP if all of the money is going to one person or a handful of people or it’s more evenly distributed. And so it’s not capturing those distributional effects. And so that’s something that we think is really important because when it comes to people’s lived experiences of the economy and of GDP growth, people don’t care if the economy grew 5% if their incomes didn’t grow 5%, or if their incomes grew 5% but prices grew 5%. And so we want to expand what’s captured by these models and therefore expand the policy discussions.

The other thing that we can bring to bear here is I’m not an economist. I’m a mathematician. My training is very different than a lot of people that work in this space and mathematicians have different tools that we use when we approach these problems. The co-director of the budget model of RAND’s budget model is an economist, so we’re not just making stuff up.

Goldy:

Oh, come on. Economists make stuff up all the time.

Carter Price:

You said that, not me.

Goldy:

Yeah. But mathematicians don’t make stuff up. That is true.

Carter Price:

We try not to.

We’re bringing different tools to bear. So for example, instead of looking at the tax code, okay, if we insert this section of the tax code and look at each part individually, what an economist will do is they’ll apply some elasticity or a multiplier. So they’ll take that number and then multiply it by some other number to tell you, “Okay, this is what’s going to happen.” And they do that generally in isolation or maybe they’ll look at it compared to one other thing.

We’ve developed a tool to look at all 7,000 pages of the U.S. tax code, all 1,900 sections, break it down and see how they’re all connected. So when an individual is filling out their tax form, there are 58 different possible tax forms that an individual can fill out and there are 94 different forms that corporations can fill out. Looking at what does that actually mean? Where does that link up to the tax code and then connecting that to other data sources so that we can get a complete picture of the U.S. tax code of the U.S. tax system.

We’re doing something similar, looking at the spending. usaspending.gov has for something 98% of federal spending. Where did it go? What was it spent on? How much money went there? And so we can look at where those dollars are flowing. So instead of looking at everything at here’s one big number, this is the economy or this program, what is it actually doing to people? What is it doing to our economy? Who’s benefiting and who’s paying for it, and how are they paying for it, and how much are they paying for it?

So using the techniques that computer science and data science have revolutionized a lot of fields and it’s drifting into economics too, but really bringing that to bear on these fiscal models.

Goldy:

And the old fiscal models, the CBO model and the Penn Wharton model, they’re not using these modern techniques and tools?

Carter Price:

They’re definitely starting to, and they’ve been taking steps for a long time to adopt these models. We’re essentially doing it from the ground up and we’re trying to make as much of this open source as possible so that they can use our stuff too. In this case, a rising tide lifts all boats where if everybody is starting to adopt these better methods, then everybody gets better analysis. And that’s, I think, good for everybody.

Nick Hanauer:

Yeah.

Goldy:

Right. So this is where the economists come in, they could use the same tools, the tool that you’re developing right now and then just plug in their old assumptions and get very different outcomes from the model than we might?

Carter Price:

Certainly, our hope is for it to be transparent so that by making this open source, if you want to change one of the assumptions and get different numbers, that’s up to you. But you have to specify, “Okay, I’m going to change this assumption.”

Nick Hanauer:

Yeah.

Goldy:

Yeah. It’s been one of my complaints, by the way, the CBO model, whenever it models what a minimum wage increase would do, it always models job losses because built into their model is the assumption that raising the minimum wage has a disappointment effect. It’s just built in. It has to come to that conclusion and-

Carter Price:

Well, the CBO is starting to make a lot of their models open source also. And so they have a GitHub repository where it’s out there and people can look at them and see them. Everybody’s advancing with the times and it is an exciting time to be doing this research because a lot of those old assumptions, a lot of these old models are getting rebuilt and revetted.

Nick Hanauer:

Just tell us where you are on building the model. What’s the status?

Carter Price:

Yeah. So we’ve been releasing papers for a while now, and I guess probably last August was when we came out with our three biggest papers. One describing our tax tool, one describing our spending tool, and one looking at the debt and deficit.

Essentially, the concept behind the debt and deficit piece was we reached this year, or I guess last year, a national debt of roughly 100% of GDP. We don’t include things that we owe to ourselves like Social Security and Medicare. That’s about where we were in 1946 after the Second World War. We paid down that national debt from the Second World War. In 28 years, we got it down to below 30% of GDP.

It was mostly economic growth, but a lot of that was in spending restraint and actually collecting taxes. We’ve dug ourselves into this 100% of GDP whole over about 50 years. From the same time period that all these other bad things happened that we discussed in those other papers, we got in a lot of debt and we looked at a way that you could reasonably get back to that 1974 level in 30 years. It took us 50 years to get into this problem. I think we can get out of it in 30 years.

Nick Hanauer:

What does it take to get out of it?

Goldy:

I’m guessing taxing you, Nick, but I’ll let Carter explain.

Carter Price:

Well, we looked at different combinations of options. Taxing alone, spending cuts alone, economic growth alone are not likely to get us there. And so it will likely take some combination of that.

So keeping the deficit below 3% of GDP and then letting economic growth and inflation take care of the rest would be one way to do it. And then it’s up to policymakers to figure out, “Okay, how do we get our national debt, our national deficit below 3%?”

Nick Hanauer:

But Carter, as I recall, from our earlier conversations, one of the really striking findings was that in an economy where inequality didn’t rise in the way that it did over the last 50 years, and median worker did retain effectively their same share of GDP, we wouldn’t have deficits.

Carter Price:

Yes, that’s very likely true and-

Nick Hanauer:

It’s directionally, I mean, not to the dollar, but it’s directionally correct.

Carter Price:

Absolutely. The tax proceeds would’ve been higher, the spending on safety net programs would’ve been lower.

Nick Hanauer:

Would’ve been lower. Right.

Carter Price:

And we would not be in the same fiscal situation we are now.

Nick Hanauer:

Yeah. Just to expand on that thought, which I think is really, really, really important, in one way, our budget deficits are not a consequence of… By the way, Social Security is threatened, is not a consequence of profligate spending, although we have done that, and it’s mostly a consequence of tax cuts, rich people, and wage suppression for everybody else. And that if people… In round terms, if the median worker had retained their same share of income from 1975, then they’d make effectively twice as much money per year.

Carter Price:

Yeah, in that ballpark, yeah.

Nick Hanauer:

What that means, of course, is that if the median family in America made twice as much as they do presently, they’d probably be paying four times as much tax, right? Because not only… They wouldn’t just pay twice as much in tax, they would probably bump up into a higher tax bracket.

Carter Price:

Payroll tax generation would be higher.

Nick Hanauer:

Yeah. Everything, everything. And Social Security contributions, we hire… Everything. And of course, now people don’t need food stamps and they don’t need EITC and the rest of it.

Goldy:

And housing, heating, oil.

Nick Hanauer:

Well, everything.

Goldy:

Yeah.

Nick Hanauer:

I think what’s important for Americans to understand is that our fiscal crisis is largely a product of our inequality crisis, and that if we had managed our economy in a fundamentally different way, then we would really probably not have the budget deficits that we have today, because everybody would be paying a lot more taxes, except maybe people at the very tippy top.

Goldy:

Also, the economy would’ve grown faster.

Nick Hanauer:

Right. Can you speak to that?

Carter Price:

So that’s not something that we did as part of this. There was many years ago, I did work on a study looking at that, and that there is substantial evidence that more equal economies grow faster than less equal economies. And that’s a really interesting area of study and the economists have put up a lot of ideas about why that is, and that’s-

Nick Hanauer:

Okay, but it’s pretty simple, isn’t it?

Carter Price:

Yeah.

Nick Hanauer:

It’s pretty simple.

If people have twice as much money, they will definitely buy twice as many things. And when they buy twice as many things, people will have to employ twice as many people and so on and so forth. This is not a complicated concept.

Goldy:

Nick has talked about this for a decade, that he may earn a thousand times more than me. He may have a thousand times more than me, but he doesn’t eat a thousand times more food.

Nick Hanauer:

No.

Goldy:

Despite all of his fancy houses, he doesn’t spend a thousand times more on housing. He doesn’t buy-

Nick Hanauer:

More haircuts or-

Goldy:

… thousand times more clothing. There’s just no way for him to spend the money as if you took that and you distributed that out to a thousand people and they would spend the money, more of that money than he does.

Carter Price:

And the economy would look different too, in the sense that if you have fewer people with, at the very top, maybe you have fewer luxury car dealerships or things like that, and you have more mid-market restaurants and better mid-market cars than the high-end luxury stuff.

Nick Hanauer:

Yeah, absolutely.

I think you could very convincingly argue that not only would the economy be bigger, but it would be more innovative because the more robust and diverse demand is, there are more incentive for innovation that exists, right?

I do think it’s, Carter, maybe you guys know the number, but I believe now something like 80% of the consumption in the economy comes down to the top 20% of Americans, or maybe it’s top 10% of Americans today. It’s some crazy skewed number. And of course, that concentration diminishes the reason that businesses have to either create themselves or to be created or for people within businesses to create new products for large and robust markets. And so you slow down that feedback loop between innovation and demand that is what the economy really is.

Carter Price:

Yeah. And one of the other risks that that has is when your economy relies so much on so few people, any disruption there can be really problematic.

So as part of a different study, we looked at what would happen if AI resulted in mass layoffs and particularly among white collar workers. Well, white collar workers are the highest earnings segment of the population. And if you had a big disruption among that top, somewhere in that top 10%, that could really damage the broader economy because the segment is responsible for a large share of consumption. And when you put all your eggs in one basket and then something disrupts that basket could be very painful for the economy broadly and how the pain would trickle down if the-

Goldy:

It will do more than trickle down.

Carter Price:

Yeah.

Nick Hanauer:

Yeah. Yeah, it will.

Tell us a little bit about the future of this model.

Carter Price:

We have maybe next week, maybe in two weeks, we’ll put out another big installment of the tax tool. For that, we can look at the complexity of the tax code, how the tax code has changed over the last hundred years, do a lot of, I think, very innovative work about how the tax code fits together as a whole, and so that will be coming out soon. And then we’re doing more work on how might investments in different segments of the population pay off in the long term.

So we had a study on the Retirement Security for Americans Act, RSAA. About half of Americans don’t have access to 401ks from their employer and so if there were a government program that helped there that provided matching support for those workers, what would that look like? One of the things that we found was that it would greatly diminish the needs for supplemental security income for seniors and also Medicaid for seniors. That those first few years, if people have assets, as soon as they retire, they don’t need to hop on these safety net programs.

And it turns out that if you get enough participation in these accounts, that that could lead to net savings for the federal government. So that could be deficit neutral, not in the 10-year window that’s typically used to assess these things, but by 20, 25, 30 years out, these things could wind up paying for themselves. Essentially after you have people that are participating for long enough in these programs that when they actually do retire, that you see the benefit.

Nick Hanauer:

What you just said raises another, I think, really interesting point that people should know about, which is that one of the profound weaknesses of a lot of these conventional models is they only look out 10 years.

Carter Price:

Yeah.

Nick Hanauer:

So any long-term investment, the canonical example being a preschool for little kids will look like a dead loss if you only look at it 10 years, because obviously a 12-year-old who got great preschool is not going to be generating a lot of GDP or benefit in the broader economy, but if you go out 30 years, that investment may look like the smartest thing you ever did.

Carter Price:

Yeah.

Nick Hanauer:

Yeah.

Goldy:

The 10 years is longer than the actuarial estimate for remaining lifespan for the average senate committee chair. So why would you want to look out any longer because the world won’t exist for them beyond 10 years?

Carter Price:

One thing I’ll note on this Retirement Savings for Americans Act is that President Trump in the State of the Union address announced they Trump retirement account, and so that’s a variant of this Retirement Savings for Americans Act that captures some of that. And so that may wind up being something that could benefit that 50% of American workers that don’t have access to a 401k.

Nick Hanauer:

Yeah. Tell us what else you’re working on. I know you’ve got some other pretty interesting things that…

Carter Price:

Yeah. I think the budget model, one of the other studies we have on the budget model is looking at science and technology spending across the federal government. And so really understanding how the federal government invests in science and technology, how does that affect local communities in terms of if you have a research university in your community, there’s a lot of money that’s flowing to those universities from the federal government and that has an economic effect on those communities.

But in addition to that, we don’t invest in science and technology purely because it’s cool. We also expect things from it. And so it has larger effects on our economy and helps us have such an innovative economy. That aspect of our economy is in many sense as the enemy of the world, really understanding how that works.

Nick Hanauer:

Can we go back to the tax model that you’ve created? I just want to ask a couple of followup questions about that. Can you tell us, so we understand it better, what kind of questions you can answer with that model?

Goldy:

And how is that different from the traditional models?

Nick Hanauer:

Yeah.

Carter Price:

For example, one of the things that changed as part of some recent tax legislation was the depreciation, how research and development is depreciated, and instead of being immediately depreciated, it’s over five years. And so that’s something that, okay, it’s the same amount of money, it’s just spread out a little differently so what kind of effect would you expect that to have? Well, it turns out that you had big layoffs among R&D staff at Microsoft and other places like that, that were tied to that.

And so linking these changes in the tax code to the IRS forms, so we know, okay, who is actually exposed to this? So when you tweak this section, what other things does it touch? Understanding how changes in one part of the tax code affect other things because section 199A is all about qualified business income and deductions associated with that. And so if you tweak something there, that’s really important to S-corps. It’s really important to a lot of different types of businesses. And so understanding how the small change here might flow into other parts and affect behavior elsewhere. That’s something we’re hoping to capture.

Nick Hanauer:

Just using the example that you raise, are you saying that it seems likely that because it effectively got more expensive to do R&D because the depreciation was spread out more over five years, people reduced their budgets. Is that the causal or correlative link that your data suggests?

Carter Price:

Yeah. That’s something that the news reports at the time attributed to that. And that makes sense from a business standpoint that if I can’t expend something in the year that I incur it and I have to spread it out over five years, if there’s a lot more uncertainty there, then I might want to change my behavior and reduce the spending so that-

Nick Hanauer:

Okay, lower my risk and so on and so forth. Interesting.

Carter Price:

Yeah.

Nick Hanauer:

Okay. Can you think of other examples?

Carter Price:

Yeah. It turns out that there were three different programs associated with alternative fuel vehicles and electrical vehicles. So there’s three different programs that were on the books and you only actually saw action in one where people were participating in one and not so much in the other two. Similarly, you’ll have different types of credits that are available for different groups and understanding how many people are claiming these, do you actually need these other two special carve outs, or why have three when you could just have one?

We also looked at by industry, all of the different sections of the tax code that are devoted to different sectors, and unsurprisingly, the insurance and finance sector of the economy has by far the most special sections in the tax code and they pay on the lower end of effective tax rates. If you look at the profits, they pay less on taxes than, say, manufacturing, where you have many fewer special carve outs for manufacturing.

Goldy:

They’re the most productive members of the society, the finance people. So why wouldn’t they pay a lower effective rate?

Carter Price:

Yeah. And so understanding how different industries are treated differently and what effects does that have on businesses on our economy more broadly. So really-

Nick Hanauer:

So you could effectively print out a table of effective tax rates by industry?

Carter Price:

Yeah, I have it.

Nick Hanauer:

Do you really?

Carter Price:

I’m not sure I can pull it up right right now-

Goldy:

Nick is going to ask for that.

Carter Price:

… but I might be able to pull it up right right now.

Nick Hanauer:

Well, send it to us and we’ll put it in the show notes. That’s fantastic. Yeah.

Carter Price:

It’ll be in the document that comes out in a few days, next week or two. So yeah, I’ll make sure to send out to you.

Nick Hanauer:

Yeah. Great. Is it embarrassing?

Carter Price:

Embarrassing to whom, I guess.

Goldy:

I don’t know. What’s the think tank industry look like?

Carter Price:

So we’re, I think, fall into professional services, but RAND is a nonprofit, nonpartisan research organization so 501(c)(3) actually do have a lot of special provisions in the tax code, but it’s more things that prevent us from doing certain things. I can’t do political activity. I can’t do things like that.

Nick Hanauer:

I love the idea of the tax rate by industry. That’s a great thing to know about. Just a great thing to know about.

Carter Price:

We have a figure that shows the… The way we mapped it was the number of special provisions in the tax code and then the effect of rate.

Nick Hanauer:

I cannot wait to see it.

Goldy:

Nick, we should probably get to the final question.

Nick Hanauer:

Why do you do this work?

Carter Price:

I’m from Arkansas originally, and Arkansas is consistently one of the poorest states in the country and I couldn’t do the kind of work that I want to do if I stayed there. And I think it’s really unfortunate that our country can’t work for everybody.

Nick Hanauer:

Well, thank you. Thank you. And it’s always super interesting to talk to you, Carter. You’re always working on such amazing and interesting and consequential things, and we can’t wait for the next update but for sure, send us the new stuff. Can’t wait to see it.

I must say. This modeling stuff is so complex that it’s hard to hold it all in your head and if you’re not working on it every day, really hard to conceptualize what the challenges are and what the benefits are of taking different approaches and so on and so forth. But it was fun to hear Carter talk about the kinds of questions that they could answer by doing this stuff in different way.

And in particular, I’m just on pins and needles waiting to hear what… I love that stack rank of tax burden by industry and connected to the number of exemptions in the tax code that these folks get. That’s shining a light on a thing that I’ll bet you a lot of people would prefer no one knows about.

Goldy:

What would be interesting, Nick, would then to be combined that with lobbying dollar expenditures per industry, and then we can see the return on investment of lobbying.

Nick Hanauer:

Yes. Yeah. No, that’s a good idea. That’s a great idea. Yeah.

Goldy:

I’ll tell you what stood out to me from this conversation.

We started off talking about the past half century of rising inequality and how that has stagnated the incomes of the bottom 90%. And then we also talked about when we got to the budget models, the past half century of rising national debt that we had gotten from that post-war level of a debt equal to 100% of GDP, all the way down to 30% of GDP during that era, the three decades where we had the most… We built the largest and most prosperous-

Nick Hanauer:

Surprise.

Goldy:

… middle class the world has ever seen. We had incomes at the bottom, the middle, rising actually a little faster than those at the top, but at all levels, roughly with economic growth, we had the lowest levels of income and wealth inequality the world had ever seen. And then in the half century that followed, when inequality took off and we created a world of billionaires and centibillionaires, oh my God, at the same time, we’ve seen debt as a percentage of GDP rise back up from that 30% level to 100% of GDP and got to wonder if the two are a little related.

I know-

Nick Hanauer:

Obviously.

Goldy:

… correlation does not equal causation.

Nick Hanauer:

No, it’s obvious. It’s obvious. Of course, it’s obvious. It can’t not be. It can’t not be true, right? Again, if people made twice as much money, they would pay way more tax. They would need way less support.

And of course, the other thing that happened at the same time is that the tax burden, the tax rates on the biggest corporations fell in half, we went from a 45% tax rate for corporations to a 20% tax rate for corporations. We went from a 50% effective tax rate for rich people to effectively a 20% effective tax rate on rich people. And the rest is history, right?

Goldy:

Right. Remember near the end of the Clinton administration-

Nick Hanauer:

No. We were paying down the deficit.

Goldy:

We were paying down the deficit. We were paying down the debt.

Nick Hanauer:

Yeah. That’s right we did. Yeah.

Goldy:

We had certain pluses. And there was a study a couple years back that if you took out the extraordinary expenses of dealing with the 2008 financial collapse and COVID, there were some extraordinary expenses there, if you took those out, those were emergency measures that all of the deficit of the past 25 years were due to the attributable to the Bush and Trump tax cuts, that if not for those tax cuts, we would have had no deficits in those intervening years. And of course, if you didn’t have deficits, you wouldn’t have had rising interest on the debt, so you would have had lower overall debt across the board.

So a lot of it has to do both with rising in equality, the upward redistribution of income and wealth to the very top and then at the same time, lowering the top marginal tax rates on these people that now hold so much more of the nation’s wealth than they did 50 years ago. Obviously, it’s related in many ways, both in terms of reducing growth and increasing deficits.

Nick Hanauer:

That’s right. Milton Friedman-

Goldy:

So I guess my-

Nick Hanauer:

… would be so proud.

Goldy:

This is the world he wrote…

Nick Hanauer:

Yeah.

Goldy:

Oh, well, anyway, we will provide some links in the show notes if you want to learn more about how… I’m assuming most of you listening to this, you’ve been screwed by the past 50 years of the economy and you can read more about the work that Carter has been doing.

Nick Hanauer:

All right.

Freddy:

For more content from us, you can subscribe to our weekly newsletter, The Pitch, over on Substack. And for links to everything we just mentioned, plus transcripts and more,

visit our website pitchforkeconomics.com. As always, from our team at Civic Ventures, thanks for listening. See you next week.

The post The $79 Trillion Price of Inequality (with Carter Price) appeared first on Pitchfork Economics.

Swiftynomics: Who’s Afraid of Women’s Economic Power? (with Misty Heggeness)

Freddy Doss — Wed, 18 Mar 2026 04:56:49 +0000

What Is Swiftynomics—and Why Does It Matter?

Taylor Swift didn’t just break records—she broke the way economists think about the economy. Because if one artist can reshape entire cities overnight, what else are we missing?

This week, economist Misty Heggeness uses the “Swift effect” to expose a bigger problem: the models we rely on weren’t built to see women’s power, unpaid care, or culture as real economic forces.

What would change about our economy if we actually counted women’s work—and treated culture as real economic power?

Misty Heggeness is an economist and the author of Swiftynomics: How Women Mastermind and Redefine Our Economy, which uses Taylor Swift and broader pop culture as a lens for examining women’s economic power, labor markets, and the persistent blind spots in mainstream economic thinking.

Social Media:

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@m_heggeness

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Limitarianism: The Case Against Extreme Wealth

Substack: The Pitch

Nick Hanauer:

The rising inequality and growing political instability that we see today are the direct result of decades of bad economic theory.

Goldy:

The last five decades of trickle-down economics haven’t worked, but what’s the alternative?

Nick Hanauer:

Middle out economics is the answer.

Goldy:

Because the middle class is the source of growth, not its consequence.

Nick Hanauer:

That’s right.

Announcer:

This is Pitchfork Economics with Nick Hanauer, a podcast about how to build the economy from the middle out. Welcome to the show.

Paul Constant:

Hey, Goldy.

Goldy:

Paul.

Paul Constant:

I have a question for you, Goldy.

Goldy:

Okay.

Paul Constant:

What’s your favorite Taylor Swift song?

Goldy:

Who? No, of course I know who Taylor Swift is. I may not be much into pop music, but I’d even recognize her face. If you showed me her face, I’d know who she was, which is more than I could say for most pop stars. But I do not have a favorite Taylor Swift song, not because I love them all equally, but because I could not name one.

Paul Constant:

Okay. All right. Great. Well, you are the perfect co-host for this episode.

Goldy:

I know, I know.

Paul Constant:

And by the way, for the record, I like Folklore as an album and Midnights also is an album. And I really like the song, I’m The Man, because I went down a huge Taylor Swift rabbit hole when the Eras Tour was going on a couple summers ago, because it was just such a huge thing. It was unignorable. Even a cultural idiot like you. Sorry, sorry, a pop-cultural idiot like yourself.

Goldy:

That stuff I listened to was popular in the 1950s and ’60s.

Paul Constant:

That’s why I said pop, yes. Yeah, yeah. Yes, exactly. Even a modern pop music idiot like yourself knew what was going on. You knew that Taylor Swift was dropping into these different cities and it was basically like, I almost want to say economic bomb, but it was a positive economic bomb. She was going from city to city and basically upending the transit, the systems, the hotels, the economies. She was at one point basically holding up the American economy coming out of COVID. It was really quite remarkable. So, yes, even you couldn’t ignore it to the point where you know her name and her face, which is maybe even-

Goldy:

That’s right.

Paul Constant:

… one step further than I thought was possible. Even though you are not the Taylor Swift expert that I need by my side, I thought you would be an interesting cohost. For today’s conversation with Misty Heggeness, she is the author of a book called Swiftynomics: How Women Mastermind and Redefine Our Economy. And yes, and I’m sure you cringed when you saw the title of the book.

Goldy:

Yeah. Well, look, I think what we’ll do is there’s two of us here. We’ll split the chore here. You can work on the Swifty part of the book and I’ll work on the nomics.

Paul Constant:

Yeah. And because the nomics part is actually the meatier part of the book. There’s a lot of conversation about Swift as an economic actor and the impact she has on the economy, but she uses the book… In the book, she uses Taylor Swift as sort of a lens to talk about a bunch of different things, including all the work that labor that women put into the economy that doesn’t get measured. Something that’s especially close to my heart is she talks about how art and culture is often ignored by economics as a profession and economist in general. There’s a lot of really great economic thoughts in this book. There was one passage that really blew me away.

We have talked on this podcast a lot about homo economicus, the idea of the economic man who’s perfectly rational and the idea that the perfectly rational, perfectly selfish, perfectly informed utility maximizer that operates in the economy. And she asks this question, there’s this passage that I love. “What if today’s homo economicus is not a man, but rather a woman or perhaps someone who identifies as non-binary?”

Goldy:

And it’s interesting because that stood out to me too, Paul, because we’ve made fun of a lot. We’ve disputed the economicist part of it, the idea of economic man, that’s we behave like economic creatures. And it never occurred to me that, in fact, part of the problem was that we’re modeling this as a man specifically. Right. I thought of it as like humankind, but no, no, these economists, they’re really only looking at men.

Paul Constant:

It is absolutely an economic man. Yes. Yeah. Yeah. And just that observation kind of blew open a door that had been, I didn’t even know was there when I was thinking about economics. And so, the book really gets into all of the things that aren’t measured. And so, I’m excited to talk to Misty Heggeness about the book and her observations about the economy.

Goldy:

Okay. Then let’s talk to Misty.

Misty Heggeness:

My name is Misty Heggeness. I am an associate professor of economics and public affairs at the University of Kansas, former senior advisor at the US Census Bureau. And my book is called Swiftynomics: How Women Mastermind and Redefine Our Economy.

Goldy:

I should start with just a fair warning as Paul can attest, I have no pop culture knowledge whatsoever, but Taylor Swift is big enough. I was telling Paul beforehand, I would recognize her face.

Misty Heggeness:

Well, it’s never too late, so I’m glad we’re here talking.

Goldy:

And I also have a confession to make. You talk in the book about how some football fans were unhappy about her showing up at Chiefs Games, and I’m one of them, but not for the reasons you cite in the book. It’s because she was raised like me to be a Philadelphia-

Misty Heggeness:

Eagles.

Goldy:

… Eagles fan, and this sort of disloyalty is just unforgivable. I mean-

Misty Heggeness:

Yeah, valid.

Goldy:

Even Travis’s brother is an Eagles fan, so I just have to start right there. So, you’re…

Misty Heggeness:

Totally makes sense. Totally makes sense.

Paul Constant:

Whereas I am familiar with Taylor Swift, but I don’t follow sports at all, so I did not get any of that last pick. So, I guess we should probably start with the obvious question and one that I’m sure you’ve answered a bunch before. Why use Taylor Swift as the lens for your book on economics?

Misty Heggeness:

Yeah. So, my book is a general overview of women in the economy with the focus on the modern woman. And so, thinking about how women act as economic agents today, and it actually looks different than the stereotypes that we have in our head about how women behave in the workforce or how they behave at home. And as an economist who lives deeply in this profession, I’m very aware of how these type of stereotypes around gender influence the way we see the world. They influence the models that economists work with. It infiltrates everything. And so, I’ve been working with data for more years than I would like to admit.

And one of my favorite subjects is sleuthing or one of my favorite things to do, sleuthing around in the data to look at what’s going on with women, and particularly mothers. I’m a mother myself. The data just keeps on telling us different stories than what we tell ourselves in the news media or what we think about women. And so, that’s what the book is about. It’s really about reframing how we think about women as economic agents today. And as I was developing the concept for the book, I had been following Taylor’s career and was just continually impressed with the way that she herself maneuvers in an industry that is very male-leaning, especially in leadership and executive roles in the music industry.

And I just felt like she would be such a great news and infusing the stories of her career into this book about how women behave today economically just felt like it had to be done. So, I did it.

Paul Constant:

Did that speak to you? I mean, I think as a woman in the economics field, it’s traditionally, I mean, it’s still overwhelmingly male, I believe, right? Statistically speaking.

Goldy:

Yeah, I think actually, you give it too much credit in the book for the progress it’s made because compared to other fields, it’s made far less progress.

Misty Heggeness:

It definitely has. So, I’m not of Taylor’s generation. I’m a little bit older than she is, but I do feel like there’s a lot of similarities in her experiences in the music industry and women’s experiences in the field of economics, definitely. And I think that women in the field of economics actually could learn quite a bit by observing and paying attention to the way that Taylor has maneuvered in her own space. And women in many industries, to be honest, I definitely over-identify with Taylor.

Paul Constant:

Before we dig too much more into the book, I also wanted to talk something that really struck me about your book and the reason I flagged it as something I wanted to discuss was it’s not just that it’s about a woman, but that it’s about culture and art, right? I mean, even though it’s stadiums and it’s a billion-dollar business, it’s art, right? And I think that economists tend to treat culture as separate from the real economy, right? In much the same way as they ignore a lot of women’s work, which we’ll get into soon. What do you think that we misunderstand when economists draw a line around culture and art as something sort of separate from the real economy?

Misty Heggeness:

Well, I mean, so I’ll just say to start out with that I really don’t appreciate how we teach economics to the younger generation today, which is you have this bland textbook and there’s lots of widgets and we talk about efficiency, efficiency, efficiency. And we spend very little, if any time, talking about initial endowments and how there might be inequities there. One of the pieces of art and culture that I think is so beautiful is that it’s innovative and economists care a lot about innovation. We care a lot about technological change and innovation. And there’s so much innovation that happens in art.

And the other piece is that we have expectations about art and culture in the society around us. And those expectations fuel both how we see rank and order in society and then how we act amongst each other and within our social networks based on that rank and order. And that’s something that permeates everything we do as economic agents. And I don’t think that it’s possible to talk about economics and the economy as some blank white slate, I guess pun intended there with the… But it’s just like we need to incorporate that level of diversity and cultural differences into how we think about economic theories if we’re ever going to actually be helpful in the best way that we can in thinking about how economies function and how they flourish.

Goldy:

But if you can’t mathematize those things, how do you work them into a model?

Misty Heggeness:

Yeah. I love the fact that we are so hung up on math. I teach a class right now, economics, Taylor Swift, and the very first day of class I tell everyone, it’s upper level class. And I say,” There will be no math in this class. We’re not going to do math. “Math is easy, you memorize and it’s predictable and you just have to train yourself on it. It’s a lot harder to really use your brain to think about the broader aspects of what you’re doing. It’s easy to write down a model, but it’s harder to think about what actually belongs in that model. Once you figure out what actually belongs in that model, the math is generally usually straightforward. And I think economics is so caught up in math, math, math.

And then we just to the extreme that we don’t even value the ability to think about what actually belongs in this model and what actually are the determinants of influencing whatever outcome we’re interested in looking at. And I think we need to get better at that. I mean, yes, math is important in economics, don’t get me wrong. Everybody, yes, go take your linear algebra, go check your calculus, yes, do all the things, real analysis, but you should be able to study economics even without a heavy background in math. And the fact that we don’t let people do that is a big disservice to society.

Goldy:

One of my favorite quotes from an economist is a woman, is Joan Robinson’s classic quote, that the purpose of studying economics is to learn how not to be deceived by economists. And it’s funny, you talk about what belongs in the model. One of the things that clearly doesn’t belong in the Orthodox model is women for the most part.

Misty Heggeness:

Well, I mean, you look at the 1970s labor economists who would just throw women out of their models, because we were too complex to figure out how to model.

Goldy:

Both in terms of the contributions in the home being hard to, but not really hard. They just didn’t want to put in the work for that. As you mentioned in the book, there are ways to mathematize the contributions of home care and housework and cooking and so forth, but also too complex on the consumer side as well, because it was assumed while they’re not behaving rationally like as you talk about in the book, homo economicus.

Announcer:

Now we hear Goldy mentioning that great passage on “homo economicus”, Misty and her team were kind enough to provide us the segment from her book, Swiftynomics, narrated here by Nan McNamara.

Swiftynomics audiobook clip:

Traditional models of economics originated in the mid 19th century and assumed the existence of a generic non-gendered economic agent called homo economicus. Homo economicus was born in 1836 to John Stuart Mill and was later promoted by other male economists of the time. A 19th century ideal, homo economicus’s primary pursuit in life was to minimize costs while maximizing profits or earnings in business. Its goal was to maximize satisfaction or pleasure called utility. It was ageless, colorless, genderless, and identityless.

To top it off, homo economicus was something of a mathematical whiz, propelling linear algebra, calculus, and real analysis to the front of the classroom, where they became the gold standard in modern economics. In the 20th century, homo economicus grew some kahunas and began to be known as economic man. Math became prioritized as the most efficient, least biased and fastest method for accomplishing his primary pursuit in life, minimizing consumption of items and activities he does not like or need so that he can maximize consumption of things he does. To understand this, think about your own consumption patterns.

Your primary consumption goal might be to purchase the biggest, best truck you can, or maybe it is being able to afford the biggest, best home within a friend or acquaintance group, so you can flex your homeowner status. It might be owning the most parent approved career, one that gives you leverage over your siblings and parents. For parents, it might be the best education or childcare for your children. For economic man, every moment is spent in the pursuit of maximizing pleasure and experiences that bring joy.

Misty Heggeness:

So, let me just give you a Taylor Swift spin on this idea. When Taylor started in her career, she was 14. She wanted to write country music songs for other teenage white women, and that was really what she was passionate about. And she went to the country music industry and they said, “We’ll put you on a development contract,” which means they weren’t going to let her produce her own albums. They weren’t going to let her sing her own songs. She broke from that contract. She was, again, 14 years old. She broke from that contract and she went off with some guy who was starting his own label, which ended up being Big Machine.

And she took a risk with him by joining with him, but he agreed to let her write her own country music songs about the experience of young white teenage girls and then produce those albums to sell. And when you look back at that now, you have country music executives who were saying, “There’s no consumer market of value for us in teenage girls. We don’t think that writing country music songs that speak to the lived experiences of teenage girls has any value.” And look at Taylor now and all you can say is, “Boy, were they wrong? And gee, they must be kicking themselves in the shin right now.” And I feel like it’s similar with economics.

We’ve got some folks up at the very top of this established, well-oiled machine who are really convinced that their theories and their way of thinking about the world is the right way. They don’t necessarily see value in women’s contributions, women’s economic contributions. If they did, we’d be living in a different space and I’m just waiting for the next Taylor Swift of economics to come out and prove them wrong.

Goldy:

The Taylor Swift of Economics. Well, you know what? I think it would be more educational to have your intro economics class taught by a 14-year-old girl than most of the professors who teach it better that than Furman. I don’t know.

Misty Heggeness:

Yeah. So, I mentioned that I teach this class, Economics of Taylor Swift. This semester, I’m teaching it. It’s three guys and all women. And the first day of class, after class, they all shuffled out. I’m packing up my bags and then enter stage right, the next class comes in. It’s like five girls and the rest guys. And I asked them, I’m like, “Oh, what class are you here for?” Introduction to microeconomics and just painting the visual there. I’m teaching an economics class.

The next class was an economics class, but the fact that I am able to bring economics into a topic area that is of interest for women means that I get way more women in my class and there’s a lesson to be learned there in terms of how we teach economics.

Goldy:

And to be clear, there’s a lot of economics in this book. I mean, that’s the part that appeals to me, obviously, not attuned to pop music, but the way you use that to actually Taylor Swift and the other women you mentioned in the book to actually teach what’s wrong with Orthodox economics and the way it’s generally taught.

Misty Heggeness:

To be fair, I’m just doing that because I’m essentially telling the story of economics from my own perspective, from the way that I see it. And the way that I view it is a way in which I don’t want to believe that this dominant profession that has historically either not included me or not counted a lot of the work that I do in my own household, I don’t want to believe that that’s the correct path forward because it doesn’t represent who I am and it doesn’t represent all of my identity as an economist.

And that’s why I wrote this book, because if we’re going to frame things differently, if we’re going to have broader discussions that are more inclusive in the field of economics, we have to be willing to meet people where they are, and we have to be willing to think about economics in some alternative format, whatever that might be. And for me, that is bringing in this angle of all of the economic activity that women do that gets excluded from national accounts, et cetera, et cetera.

Paul Constant:

Let’s talk a little bit about care privilege. How does the labor market being built around that assumption change the outcomes of lives and labor and all of that? Who wins and who loses?

Misty Heggeness:

I think I came up with that concept of care privilege really just to try to identify something that I had been observing, at least in the political sphere, but pretty much everywhere. So, my mother and her brothers are of the baby boom generation, and my uncles have a ton of care privilege, a ton of care privilege. And so, I would go off to college when I was 18, 19, 20. And again, with my parents telling me, “You can be anything, you can do anything, the world is your oyster.” And then I would come home for Christmas break and it was like all of the women, my mom and all my aunts in the kitchen cooking the meal. And then we’d all eat.

And then we have this little trick in our family where myself and all of the cousins are responsible for washing the dishes. And so, this idea of care privilege is essentially you’re an able-bodied adult, but you have somebody else who takes care of your care needs. And I wanted a definition that wasn’t pejorative and I wanted a definition that wasn’t accusatory. So, we all have different levels of care privilege in our life and they ebb and flow over time. Sometimes we’re in a situation where somebody else is taking care of us because we’re sick or whatever it might be, or other times we have small children.

And so, we end up having to do a lot of caregiving or aging adults or aging parents, whatever it might be. But the interesting thing about care privilege is if you’re a person who has lots of it, oftentimes it’s more challenging or more difficult to understand the ways in which not having it holds other people back. And that’s the piece that gets at the invisible labor. And so, when I talk about care privilege, I do it within the context of policies because I think the US has really, really struggled to really support and sustain policies that allow people who don’t have care privilege to thrive in the labor market.

And so, one of the reasons why I think that is because if you look at the Hill, it’s changing over time. There’s more women, legislators, there’s more parents who are parent legislators, parents of small kids who go up to the Hill. But I think one of the reasons why we haven’t been able to successfully really create sustainable and lasting infrastructure in this country around providing care supports that families need is because the legislating is being done by a bunch of people who have lots and lots of care privilege.

And so, they assume since somebody is taking care of their kids at home, somebody is cooking their meals or washing their clothes so that they can go to work every day, they just assume that that type of informal, invisible family style structure exists for anybody who wants to go into the labor market and it just doesn’t. I lived a rat race with my kids between the time they were born and the time they entered school because it’s daunting taking care of a toddler and an infant while you’re working full-time in the federal government in DC with a bunch of type A style people. It’s like it’s a rat race.

And so, that for me, care privilege is just this idea of recognizing why it’s really challenging for us as a society sometimes to really create supports for people who have lots of care roles and responsibilities.

Paul Constant:

A little early in the program, usually at the end we ask the magic wand question, but I had a follow-up to that that I wanted to ask. So, if you could wave a magic wand and build an economy that actually counts the things your book argues we’ve been missing, how would it work differently? What would be different?

Misty Heggeness:

Yeah, so economic statistics would be more inclusive. We would really invest in time use surveys and we would be able to measure the amount of economic activity people do for non-pay within households and across households. We would invest in social policies that really gave families the flexibility and the choice to either decide whether they wanted to care for their own children in their home or they wanted to have their children be in a high quality affordable childcare. The way that I talk about this is there’s always this discussion that seemed to always get tripped up on and it has to do with cost and pricing. There’s no money in the budget to fund, for example, universal childcare.

And my response to that is that is, again, this is not a white slate or blank slate, whatever. It’s not a surmountable problem. And what happens is that we act as though it is. And so, I say this in the book, but in my lifetime, I’ve lived through two auto bailouts, a banking bailout, and during the pandemic, I lived through an airline bailout.

Goldy:

And right now, you’re living through a billionaire bailout.

Misty Heggeness:

Yes.

Goldy:

Well, we’re spending all this money on billionaires.

Misty Heggeness:

So, it’s about values and it’s about priorities. And this is the piece, again, where I think we need to be really upfront about this, that this is the way the world works and this is the way humans act and behave, and we need to think about that first and foremost within the context of economics. So, there’s really no reason why we can’t provide funds, prioritize early childhood education or childcare, universal childcare. And we’ve done it before in World War II with the Lanham Act, we provided universal childcare for moms so they could go in the manufacturing industries and make bonds and other weapons for the guys over in Europe. And that universal childcare was comprehensive.

Women would work 10, 12 hour shifts and their kids would be in high quality, safe childcare environments while they were working. So, we’ve done it before. We have infrastructure in this country, so it’s not rocket science. The infrastructure is we already have universal childcare today. It’s called our public school systems. And all you need to do is lower the age of public school systems to create an infrastructure for a childcare setting for younger kids. So, none of this is hard, but we make it seem so hard.

And part of the reason why we do that is because we’ve lived so long under these assumptions that this invisible labor that women do in families will always be there and we take it for granted and therefore we don’t prioritize fixing this problem. And women are in a real crunch today because their educational attainment is higher than it’s ever been before. Women are more likely to have careers than jobs. They look at younger generations of women, millennials and Gen Z, and they’re not necessarily sure they want to have kids, they’re partnering up later. All of this is because of a work-life balance issue that is solvable.

Goldy:

Right. Well, to quote one of Joan Robinson’s colleagues, or one of her coworkers, “Anything we can do, we can afford.”

Misty Heggeness:

That’s right.

Goldy:

As Cain’s told us.

Paul Constant:

So, I wanted to ask you, this is very speculative, but I bet you’ve thought about it. If economists did take all of this seriously about participation in care work and cultural power, how do you think that would change the way that we think about economic growth and shared prosperity? What would the outcomes be for that kind of a system?

Misty Heggeness:

Yeah. I mean, I think we would kind of go back to the mid 20th century style thinking about this in terms of not necessarily in the field of economics, but just in terms of valuing community output or valuing community investments. So, I think one of the biggest challenges today is we no longer value inputs and investments that we make at the community level. It’s like everybody is out for themselves. So, you think about some of the infrastructure that was developed in between during and after the World Wars where we have our interstate system. Now, anytime there’s a new highway built, what happens?

We’ve got to put the tollways on it and make people pay to keep it clean because there’s no money and or we’re just Don’t want people to have access to something unless they’re paying for it. And so, without recognizing the whole purpose of a taxation system is to redistribute wealth and create a more equitable community where we can all thrive.

Goldy:

I want to get back to that. I think you give the profession too much credit. You said it’s what? In terms of professors, full professors, it’s still about 80% male, but it’s more than that. It’s not just male, it’s overwhelmingly white men. And on top of that, white men who grew up in privilege, disproportionately more than any other field, these are people whose parents had graduate degrees or professional class degrees. It is unlike any other, I don’t know, science? Is it a science? Whatever. It’s unlike any other field, and yet it has so much impact on our culture. It is the least inclusive academic profession we have. And you see that throughout economics and the impact it has on our society.

So, I really enjoyed the way you point that out in the book, even if I didn’t recognize most of the lyrics and songs that you mentioned.

Misty Heggeness:

I mean, I think it’s a really important and really valid point. And maybe I do give my profession too much credit, but I’m a glass half full type of gal. I am hopeful. And just for every potential bad actor that exists in my profession that happens to be old white male, there’s another 10 or 15 or whatever of those same actors who actually do care a lot about the profession, who do care a lot about the next generation. Part of my purpose of writing this book is I consider myself a feminist, but I also consider my spouse a feminist. And I think he would also agree. And I think men and women need to work together to figure out these problems. And I think we need to be open to having these discussions.

And I think if we’re going to get any further along in this trajectory of thinking about equity and thinking about the role of women in the field of economics, women for a long time have been in the lane of feminist economics doing their own thing because they weren’t accepted into the profession. And I want to be a feminist economist who is in mainstream. That is what I think we need. I don’t want to have to live at the fringe of my discipline because I value these things. And I think it’s only women that values these things. We all need to value these things.

And so, that’s probably why I come off as rosier than maybe perhaps I should is because I’m really focused on wanting to have these discussions in the mainstream. And I think that’s how the field of economics is going to grow and improve itself is if we do it that way.

Paul Constant:

That’s fantastic. Thank you. Thank you so much for being so generous with your time. Thank you for the book. I really loved the book. I especially loved the homo economicus passage really sort of opened my eyes in some ways. And Goldy loves musicals. So, if he had to listen to one Taylor Swift song, what would you recommend?

Goldy:

I’m sure I’ve heard the songs. I just wouldn’t know it was Taylor Swift.

Paul Constant:

Yeah. No, I know. But he’s into wordplay and musicals and things like that. So, I was wondering if he had a recommendation.

Misty Heggeness:

Here we go. Of course I do. The Last Great American Dynasty.

Paul Constant:

Thank you.

Misty Heggeness:

That is a song about Rebekah Harkness. Do you know who Rebekah Harkness is?

Goldy:

Yeah. Well, I do now because you mentioned it in the book.

Misty Heggeness:

Yes, yes. And if you like musicals, you can watch The Eras Tour Concert, her first iteration. She does a whole set on The Great American Dynasty. So, you can watch it as a musical if you like.

Goldy:

Okay. Thank you.

Paul Constant:

I love that song. That’s my favorite album of hers. Not that anybody asked, but yes.

Goldy:

Normally Nick gets to ask this, but since he’s not here, I’ll let you ask it, Paul, the final question.

Paul Constant:

Oh, yeah. I’m sorry. One final question. Why do you do this work?

Misty Heggeness:

That’s a great question. I do this work because I passionately love the discipline of economics and I passionately love being a woman. And I feel like I should be able to be proud about both of those things simultaneously and that that should be recognized. And I want other young women and men to enter into the profession for the same reasons.

Goldy:

You know, Paul, when I saw this book come my way, I was a little skeptical as you might imagine. And look, there’s a lot of great examples, as you mentioned at the top about the economic impact that Taylor Swift herself has had on the economy that having a Taylor Swift tour come to your town is like having the World Cup come through with all the economic activity it generates for the local economy. I mean, it’s really impressive. But what impressed me about the book was not those anecdotes, and certainly not the quotes from Taylor, which didn’t speak to me because the way it will speak to a lot of other readers.

But the way Misty managed to use this narrative frame to actually teach economics, it is, in many ways, if you read this book instead of Mankiw’s Principles of Economics, I think you would get a more useful understanding of how the economy works. And for a lot of reasons, she talked about in the interview how innovation is important to economists. Okay. Yeah. No, it isn’t. I mean, in terms of like art and culture that being innovative and you’d think it would be important to economists, now innovation, that’s exogenous. There’s nothing in the Orthodox model about where innovation comes from. It’s kind of important, sure, but it’s just a shock and then it upsets the equilibrium, then we reach a new equilibrium. But there’s no talk.

I mean, if you actually go to the textbook, it doesn’t tell you where innovation comes from. It spends very little time talking about that. Again, we had discussed at the top this idea of economic man. My God, the example she uses, it just really demonstrates how much of the problem in economics is that it focuses exclusively on men. And for all the reasons that Misty talks about, that these are people who are used to being taken care of. So, they don’t really value the care. She goes all the way back to Adam Smith, the fact that while he’s writing his books, he’s being taken care of by his mother.

He lives at home with his mom who cooks for him and cleans for him and makes clothes for him and really takes care of him his entire life. And that is not a one-off story. That is the great men throughout history, as she says in the book, actually, not a woman behind them, but a woman right beside them, doing all the things that allow them to get through life.

Paul Constant:

Yeah. I wonder if you did a survey of economists with families, how many of them refer to taking care of their children as babysitting?

Goldy:

And as you know, Paul, look, I think she’s saying this half full. She’s looking at economics and the progress that’s made. I will say there is a generational thing that has been going on. And I am a late boomer. I hate being described as a boomer. As I’ve said before, I think of myself as transgenerational that I’m an extern trapped inside the body of a boomer. But my sister, who’s two years older, definitely a boomer. I just want to be clear about that. But I’m a late boomer and I was raised in a pretty progressive, fairly feminist household in terms of values, in terms of what they taught us, but not in the way it was run. It was pretty traditional. My father was a doctor.

My mother was a school teacher who, throughout our childhood, worked part-time. And my father did, except for maybe ethic grill or making a sandwich now and then did none of the cooking, certainly did none of the cleaning. My mother took care of the house and yet we were raised to respect women as equals. I mean, we were taught that. And my sister went on to become a doctor. And so, while I didn’t grow up in a household that really valued the work of women, I was raised to value the work of women. And as you know, I’m a girl dad and I take the rights and welfare of women very seriously because I want that for my daughter. And I was also the primary caregiver for much of her childhood.

Not so great at the house cleaning part of the care economy, but I was pretty good at the cooking and the childcare side of it. So, you make progress. Maybe next… No, I raised her to be a slop, next generation. There won’t be much house care, but much housework either. So, it takes time. There’s this idea in the Old Testament about why the Israelites had to wander in the desert for 40 years after leaving Egypt. And that was to wait for the children of slavery to die. It’s this generational thing. Didn’t want to bring people with a mindset of slavery back into the promised land. And so, as a student of history, I see these things in generational terms.

So, yes, there is progress and there will be more progress. Even if our parents didn’t lead by example, they at least instilled us with the values that future generations can do a little bit better.

Paul Constant:

Oh my gosh. Hope again. Look at that. Hope out of the mouth of Goldy. It’s amazing. It’s a miracle. It’s a Taylor Swift miracle.

Goldy:

It couldn’t have happened without Taylor Swift too.

Paul Constant:

Exactly.

Goldy:

Again, though, I have to be clear. Raised a Philadelphia Eagles fan. I can’t accept the Chiefs fandom under any circumstance.

Paul Constant:

And you lost me. Yep.

Goldy:

Yeah, I know. There’s two things like my… Well, it could be worse. You could have become a Cowboys fan. So, I mean, two things I’ve always told my daughter, I’ll accept anything you want to be in life, any partner you choose. I don’t care except for two things. Can’t be a Republican, can’t be a Cowboys fan. With that, Paul, again, I think both of us recommend the book. And Paul makes a living recommending books and where can you find it, Paul?

Paul Constant:

You can find it at bookshop.org or your neighborhood local independent bookstore.

Goldy:

Oh, not the big online monopolist. And of course, we will provide-

Paul Constant:

If you must.

Goldy:

… a link in the show notes. And again, it’s Swiftynomics: How Women Mastermind and Redefine Our Economy. And of course, there will be a link in the show notes.

Freddy:

For more content from us, you can subscribe to our weekly newsletter, The Pitch, over on Substack. And for links to everything we just mentioned, plus transcripts and more,

visit our website pitchforkeconomics.com. As always, from our team at Civic Ventures, thanks for listening. See you next week.

The post Swiftynomics: Who’s Afraid of Women’s Economic Power? (with Misty Heggeness) appeared first on Pitchfork Economics.

Same Cart, Different Price: When the Invisible Hand Becomes an Algorithm (with Lindsay Owens)

Freddy Doss — Wed, 11 Mar 2026 04:51:27 +0000

The price you see online might not be the real price.

A new investigation found that Instacart was quietly running pricing experiments—charging different customers different prices for the same groceries at the same time.

This week, Paul and Goldy talk with Groundwork Collaborative Executive Director Lindsay Owens about how companies are using AI and massive data sets to run experiments on consumers—testing exactly how much each of us is willing to pay.

And if every shopper sees a different price, one big question follows: Do markets still work the way economists say they do?

Lindsay Owens is the Executive Director of the economic think tank Groundwork Collaborative and author of the forthcoming book, GOUGED: The End of a Fair Price in America.

Should There Be a Limit to Wealth? (with Ingrid Robeyns)

Freddy Doss — Tue, 03 Mar 2026 20:18:04 +0000

Economic debates often focus on poverty — how to raise wages, strengthen safety nets, and ensure people don’t fall too far behind. But what if fairness also requires asking a different question: how much wealth is too much?

This week, we’re resharing our conversation with ethics professor Ingrid Robeyns about her book Limitarianism, which outlines the argument that societies should place moral limits on extreme wealth accumulation. Rather than starting with policy prescriptions, Robeyns asks a deeper question about justice, democracy, and what kind of economy we want to live in.

As inequality continues to dominate public debate, this conversation invites listeners to reconsider something we rarely question: not just how to lift people up, but whether an economy without limits at the top can truly work for everyone.

Ingrid Robeyns is a distinguished scholar and Professor of Ethics of Institutions at Utrecht University, and author of the new book, Limitarianism: The Case Against Extreme Wealth. Professor Robeyns’ research in the field of Ethics and Political Philosophy focuses on issues of justice, inequality, well-being, and the ethical dimensions of societal structures and policies.

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Nick Hanauer:

The rising inequality and growing political instability that we see today are the direct result of decades of bad economic theory.

Goldy:

The last five decades of trickle-down economics haven’t worked, but what’s the alternative?

Nick Hanauer:

Middle-out economics is the answer.

Goldy:

Because the middle class is the source of growth, not its consequence.

Nick Hanauer:

That’s right.

Audio:

This is Pitchfork Economics with Nick Hanauer, a podcast about how to build the economy from the middle out.

Welcome to the show.

Freddy Doss:

Hey, Pitchfork listeners. I’m Freddy, producer at Pitchfork Economics. For years, economic policy has focused on building a floor, minimum wages, safety nets, and protections meant to keep people from falling behind. But as inequality reaches historic levels, a new question has entered the chat. Should there also be a ceiling?

This week, we’re revisiting the case against extreme wealth, a conversation with ethics professor, Ingrid Robeyns, who challenges the idea that unlimited wealth accumulation is simply the natural outcome of a healthy economy. She also asks whether extreme wealth can ever be justified in a society committed to fairness and democracy.

We spend a lot of time talking about how far people can fall, but this conversation asks us to think just as seriously about how high wealth should be allowed to rise and what happens when an economy has a floor, but no ceiling.

Goldy:

You’ve been spending a lot of time in London the past few years, Nick, haven’t you?

Nick Hanauer:

I have.

Goldy:

Yeah. I don’t know how much British history you’ve studied, but I have a little historical fact for you that you may find surprising.

Nick Hanauer:

Tell me.

Goldy:

Do you know that nearly 70% of the land in the UK is owned by less than 1% of Britains, and that the vast majority of that land is owned by descendants of the Normans who invaded over a thousand years ago and stole that land. That if you are paying rent in Britain, you are paying rent to a descendant of a Norman invader.

Nick Hanauer:

What’s the moral of that story, it pays to invade?

Goldy:

The moral of that story, Nick, is how long inherited fortunes can last.

Nick Hanauer:

Oh yeah.

Goldy:

Not just a generation or two, but for a millennium, you can have that extreme inequality. Again, chances are your landlord … Now, I assume you bought your house as opposed to renting it. Though I don’t know, maybe you had to rent the land because I don’t know how it works there.

Nick Hanauer:

No, no, no, no, no. In fact, you’re right. Most of the places in London are land leases, right? Where you pay, again, some aristocratic landlord.

Goldy:

That’s right. An actual lord. We call them landlords now, but they are Norman Lords.

Nick Hanauer:

No, it’s true. All of which is to say that this arrangement would be deeply offensive to our guest on the podcast today, a Dutch professor, Ingrid Robeyns, who’s a distinguished scholar and professor of ethics of institutions at Utrecht University, and who has a new book out with the audacious title, Limitarianism: The Case Against Extreme Wealth.

I think it’s fair to say that Ingrid goes somewhat farther than I do or we do. When it comes to inequality, she doesn’t want to reduce it, she wants a hard cap, which is a very interesting proposal, obviously.

Goldy:

Speak for yourself about going too far.

Nick Hanauer:

Anyway, I think we should just get right into it. Let’s talk to Ingrid.

Ingrid Robeyns:

So my name is Ingrid Robeyns. I’m a Belgian Dutch philosopher and economist, and I work as a professor of ethics at Utrecht University in the Netherlands. And I wrote a book which was published a couple of months ago called Limitarianism: The Case Against Extreme Wealth.

Goldy:

Oh, so shall we start, Nick?

Nick Hanauer:

Welcome to Pitchfork Economics.

Ingrid Robeyns:

Thanks. Yeah. Should we start by having her make the case against you and your extreme wealth?

Nick Hanauer:

Yes. Yes, ma’am.

Ingrid Robeyns:

Yeah, shall I?

Nick Hanauer:

Yeah, absolutely.

Goldy:

Give us the thesis.

Ingrid Robeyns:

Okay.

Nick Hanauer:

Ingrid, you should know they didn’t surprise me with this interview. I knew you were coming.

Ingrid Robeyns:

No, of course. I always, of course, say I’m not talking about particular individuals, so that’s not what I’m going to do now either. But I do argue in the book that there is a case against extreme wealth concentration and against extreme wealth inequality, which are two sides of the same coin. And the reasons are that if you look at it statistically hands at population level, we see that extreme wealth is harmful for society because it undermines democracy and is incompatible with principles of ecological sustainability, that it’s wasteful because if wealth were distributed in a different way it would lead to much more equality of opportunity and flourishing. And that also often there are traces or there are ways in which it was acquired that are not quite moral. So there are problems in the way it’s been acquired, the money. And then finally, there is some evidence that it doesn’t make the super rich happy. So that’s in a nutshell all the different reasons why I think we should move to a society with less extreme wealth concentration.

Nick Hanauer:

So we’re in violent agreement with many of the things that you said, but I think it-

Goldy:

Not that last one, because I can tell you, Nick is extremely happy.

Nick Hanauer:

That is true. That is true. But for the purpose of this conversation, it seems like it might be useful to divide somewhat arbitrarily the challenges of extreme inequality into two buckets, practical considerations and moral considerations.

Ingrid Robeyns:

Yes.

Nick Hanauer:

Okay?

Ingrid Robeyns:

Yes.

Nick Hanauer:

So let’s start with practical considerations. So I think that it is very, very true, has to be true, that highly unequal societies concentrate both advantages and disadvantages, and it is very hard in a highly unequal society for the majority of people to actually be robustly included in it. If you want true opportunity, then it turns out that wages are the way in which we distribute opportunity in most societies. And if people don’t have any, they can’t flourish.

Ingrid Robeyns:

Well, it’s not … Yeah.

Nick Hanauer:

Yeah. And I would go-

Ingrid Robeyns:

It’s not just wages.

Nick Hanauer:

Well, Of course, it’s-

Ingrid Robeyns:

I think it’s really what happens before you’re 18.

Nick Hanauer:

Yeah. All the things. All the things.

Ingrid Robeyns:

Yeah.

Nick Hanauer:

Wages is just a placeholder for the variety of things that it takes to be included in a society. But I think that there’s an additional factor that you did not mention, although I’m sure you agree, which is that less unequal societies actually grow, even primitive measures of growth like GDP go up a lot faster. Because obviously, if nobody has any money, who will buy the stuff, right?

Ingrid Robeyns:

Yes.

Nick Hanauer:

In a society where you distribute the value generated in a broader way, obviously more people, a higher proportion of people can robustly participate in the economy, not just as consumers, but equally as innovators, entrepreneurs, risk-takers, et cetera. It is a more direct path to creating that feedback loop between innovation and demand, which drives economic progress.

Ingrid Robeyns:

Yes. No, I totally agree. So I also, actually, you have written about this many years ago, Nick, I know, and I actually cite you and discuss your argument in the book, but I think it’s also a response to those who criticize my proposal for saying, “Oh, but nobody will no longer want to innovate if you reduce inequality because people want to have that possibility to become extremely rich and hence the economy will shrink.” That’s what they say. But I say, no, if you were to give people genuine equal opportunity, which right now many people do not have because they never get the opportunity to build their human capital use to use economists language, they may not innovate and make the products and the services that they would otherwise in a fairer society be able to offer to all the consumers.

So yes, I think there is definitely a so-called business case or an economic case for reducing inequality. I’ve tried to go for … The most part of the book is really trying to go for the most, what I would think fundamental moral reasons, but often I respond to objections and then often these objections all have to do with the economy because many of the people who criticize my work seem to assume that having a larger economy is always a good thing. Whereas I as a philosopher would say, no, the economy is good to the extent that it enables people to flourish. And that depends on how that economy actually looks like. It depends on the quality of the economy.

Nick Hanauer:

Yeah. Again, I think Goldy and I would substantially agree with you.

Goldy:

Right.

Nick Hanauer:

The way in which we depart from traditional economics orthodoxy is that we agree with you that the point of the economy is not to produce more GDP, it’s to enable human flourishing, it’s to maximize human flourishing.

But now let’s turn to the moral case. So lay that out in more detail.

Ingrid Robeyns:

Yeah. So the moral case comes in different strengths. I think the one that I think most people could agree with is that what liberals call the non-harm principle should not be violated. So that means whatever you do, you should not harm others. And there we see that if you look at it population-wise, and of course I know there are many exceptions, I call them the activist billionaires who try to really counter these negative effects, but we see that wealth concentration undermines democracy and principle of political equality is I think a fundamental one for our societies.

And the other one is that it is that super rich have lifestyles, but also investment patterns, patterns that are incompatible with principle of ecological sustainability, which means that they are harming the prospects of other human beings and actually also other species to live good lives on this planet and also all the people who will live in the future. So the problem is that basically wealth concentration has all these negative effects on other people. And that is, I think, a very important moral case. It’s a type of argument where you can come up with counter examples. So you can say, “Oh yes, but here’s this one person that really does all these fantastic things or that has a negative carbon footprint. These people exist.” But if you look at the statistics, this is what comes out of the empirical work. So that’s the first kind of moral argument which is related to harm.

And then the other one I think is more problematic for people to accept because it is based on our view of human nature. So the view of human nature I defend in a book, and which is based on how I read science to do with human development and so forth, is that luck plays a really, really big role in what people can do with their lives. So there are different types of luck. There is, you could call it genetic luck, biological luck, your strength with which you were born, your talents, whether you are a very quick and energetic person, or whether you have possibly impairments or illnesses, all of that is pure luck.

If you are a strong person who is creative or smart, I mean, this creates a possibility to generate economic prosperity as an individual and also for society, but it is a matter of luck that you are talented. That’s one. But the other one is also social luck. And social luck is basically just an aspect to do with what is the class or the social group in which you were born. And there we see that people have massively different opportunities in life to get ahead. And then there’s also this thing called market luck where the way markets are formed, the way things develop beyond your control as an entrepreneur or as somebody who offers their labor on the market can have a big influence of where you end up.

So what I want to do in that chapter, which I think is the most fundamental and philosophical chapter in the book is to displace the view that we now have in economics, which is to attribute both our successes and our failures to the individual to say, “Wait, there’s so much of it due to luck.” And if we were to embrace that in how we understand ourself, we would be much more, I think, generous in sharing what we’re able to acquire because we just see it’s also just a matter of things that are beyond our control. And that’s a very different way of looking at human beings than the one that are dominant in our cultures.

Nick Hanauer:

And you frame this, luck is a moral argument, but we know when it comes to what you call market luck, that argument is empirically supported. It’s just plain math. The market is a non-ergodic system and therefore is driven by luck, path dependence and compounding. And while merit plays a role, it’s more noise than signal.

Ingrid Robeyns:

That is true, but the moral arguments, at least if they’re applied moral arguments like I developed them in a book, they always are based on empirical assumptions. And so also for the case of the biological, the natural lottery, so genetic luck, but also for the case of social luck, there’s the same empirical evidence.

Nick Hanauer:

Of course. Yeah. And in your book, you offer up some specific limits. Can you speak about those?

Ingrid Robeyns:

The limit should be determined depending on at what level we really see those two forms of harm kicking in. But at the same time, taking into account that we want to create enough positive financial incentives for people who are motivated mainly or primarily by financial gain in order to innovate or contribute to the economy. So I don’t know, any research, any empirical research that has estimated where this limit would be, I give in the book as really a ballpark figure and a rough guess, I just say, okay, let’s say 10 million.

And I also say this is context dependent. It is for a society with a solid welfare state. So it’s basically the societies that I know, which is continental Europe, a solid welfare state, a free, high quality public education, a healthcare system. I think if you have all these kind of security levels, then if you want to make sure that people will still really contribute and be incentivized to contribute to the economy, I think allowing them to earn up to 10 million seems to me the way we should organize society.

Nick Hanauer:

Per year you mean, 10 million per year?

Ingrid Robeyns:

No, that is actually wealth. I’m very sorry. It’s very, very low, I know. I know that people in the U.S. find it shockingly low, and I’m very happy to have another number. Bbut the question really is, what is the amount of wealth that people have when you see them having these harmful effects on society? So if you have 10 million in terms of just your assets, and actually pensions are also excluded. And that’s again, because our pensions, they are systems whereby we save collectively. So my savings do not include my pensions. So that’s why I say these estimates should be context dependent.

But for me, the real question is, when do you have so much wealth that if you were to give it away to do something that undermines democracy, that the kind of opportunity cost of you giving away that wealth becomes almost zero. So if I were to give, say, 10,000 euros to a political party, I would really make a sacrifice because it would mean I could not do something else with that money, something really valuable for me or my family. But if you have billions, what is 10,000 euros or $10,000? It’s nothing. Actually, 100,000, even a million is nothing. So I don’t think we should get to a point where being able to give a donation to a political party or to hire lobbyists or whatever one can do to influence democracy too heavily comes at no opportunity cost. That is a big question.

And the other one is, of course, when we see that a certain amount of wealth has a negative effect on ecological sustainability. And there I fear, given current technological setup, the wealth limit would actually be much lower. It would affect many people who are now not just in the 1%, but probably in the next 20%, because we know that the most important determinant of greenhouse gas emissions and other forms of environmental damage is people’s affluence. So that is what I call in the book the political limit, which is you could say an institutional limit the way we want to organize society. And then there’s a second ethical limit. But perhaps you first want to tell me that political limit is crazy.

Nick Hanauer:

Yeah, yeah. So I mean, some thoughts. So most of what you said, I would say we agree with. We’re very sympathetic to the view, for example, that people, economic outcomes are largely determined by path dependence and luck. And when you put in things like race and gender, it gets even worse than that. That merit is a component of how well people do in life, but it is a much smaller component than people believe. We are also, of course, I mean, we don’t call it Pitchfork Economics for nothing, we definitely believe that massive concentrations of wealth at the top are bad for societies in practically every way that you can imagine. And I absolutely don’t believe that limiting, somewhat limiting the amount of money that you can make will decrease the amount of incentive there is in the economy for people to innovate and build new things. The rate of innovation in the United States did not go up when the capital gains tax was reduced from 28% to 15. Bill Gates did not decide not to start Microsoft when he did because the capital gains tax rate was 28%, right?

Ingrid Robeyns:

Absolutely. Yes.

Nick Hanauer:

And yet at the same time … So I’m not a philosopher, although I did study philosophy as an undergraduate, I will have you know. But we are very much more oriented towards policy and politics, what’s practicable. And what strikes me about your proposal is that it’s one thing to say to a class of very energetic and very status driven, because all money is is frozen status, right? People don’t want money, they want status. That’s what we’re all competing for.

Goldy:

Well, beyond a certain point.

Nick Hanauer:

Yeah, beyond a certain point.

Goldy:

The people you hang out with.

Nick Hanauer:

The class of people I hang out with are driven by a desire to be at the mountaintop.

Goldy:

Yeah. I know a lot of people who need that money for things like rent and mortgage payments and food.

Nick Hanauer:

Correct. But we are talking about wealthy people. They were very determined. It’s one thing to say, you’re going to live in a society where the tax rate is higher, differentially higher. So if you make a billion dollars next year, we’re going to take 60% of that or 70% of that.

Ingrid Robeyns:

Yeah, progressive taxation.

Nick Hanauer:

And you can keep 300. But it’s an entirely different proposition to say to that same person, the limit of your income this year will be effectively $200,000 because the differential between $200,000 in income and 300 million net, that’s very large. And as a practical matter, I do not believe that you could ever get the entire planet to all the nations of the earth to agree that we should limit wealth in that way. And again, we often do things like, for example, raise the minimum wage in Washington state before anyone else did, and heard all these cries of all the businesses would leave and all the rich people would leave.

And we discounted that because the differential was not great enough to create that incentive. But if we had raised the minimum wage to $100 an hour, it is absolutely the case that everybody probably would have left. And likewise, we just pushed through a 7% tax on capital gains here in Washington state and we got all the cries of, well, everybody’s going to leave and it’s all going to collapse. And of course, I don’t really believe that, but if the tax in Washington state on capital gains was 90%, I can guarantee you that all of the wealthy people who were capable of generating capital gains would indeed leave.

Ingrid Robeyns:

Except if the rest of the world would also have 90%.

Nick Hanauer:

No, no, no, no. But now you’re in a collective action problem.

Ingrid Robeyns:

Absolutely. No, this is great because now it becomes really kind of interesting between us to have this conversation.

Nick Hanauer:

Yeah.

Ingrid Robeyns:

So I should say, I don’t believe limitarianism will ever be implemented. It’s not a proposal for … It’s not a policy proposal. I have in the last chapter of the book, I say what I think we should do, and some of these things are basically, it’s like increasing taxes on capital and especially income from capital, but also considering wealth tax. So decreasing taxes, that’s actually more for Europe, but decreasing taxes on labor because they are much higher than taxes on … So all these things that I mean many, many, many other economists and philosophers and political scientists argue. So you could say, “Oh, but this is like what many other peoples are arguing, so why then how is the link with this more radical and absolutist proposal of limitarianism?” But limitarianism is what philosophers call a regulative ideal.

So it’s something that we will never reach, but we have reasons to want to move in that direction. Anybody who says there is a limit to inequality, there is inequality is too big, is in effect almost by way of logic saying that means that there is a certain level where if inequality arises, it becomes either harmful or unacceptable or illegitimate, which means that if you say that inequality can’t just be whatever it happens to be, you must think about a certain level to which you want to reduce it. And I think that’s a conversation I want to provoke to really make us think, well, how much inequality and how much wealth concentration actually can be justified. And for me, the main point about the book really is the reasons. So it’s the ones that I was already talking about, it’s the harm arguments, it’s the luck argument.

There’s also the argument about how this world actually was often … How that world historically was generated because, for example, to the extent to which world can still be traced back to say transatlantic slavery or exploitation of labor in the global South, all these world concentrations are illegitimate in that and immoral in that respect. And I think I overlap here a lot with what people who just argue more generally about the harms or the bad effects of excessive inequalities say we agree a lot. And I should also say that my colleagues, political philosophers internationally do not find the arguments I make very radical at all because the philosophical foundations of it are widely discussed in the academic literature. But the idea that the arguments may actually lead us to the point where as a matter of principle, we should accept that at some point it’s enough.

That is just something that is so at odds with our culture, with whatever you want to call it, the ideology, but also possibly with the form of capitalism that we have because one definition of capitalism is of course that there will always be people who try to increase profits and profits are what then is what happens. First, you have profits and then you turn them into personal wealth. So if you say that profits can be endlessly, and if the idea of the economy is that entrepreneurs try to maximize profits, then yes, there is a tension with the arguments that I have and what I propose. So I think in the end, I’m really also arguing for reconsidering the type of capitalism that we have. I’m not anti-capitalism, but I just think the type of capitalism that we have has become really harmful for human beings and the planet, and that the focus on what too big inequality does is one example of where we can see this.

Nick Hanauer:

Yeah. Can I offer an idea, and this may be anticipated by you, but … So for example, we have a minimum wage in the United States, which is at the federal level, woefully low. And one of the propositions that I’ve thought would be really interesting is to tie the minimum wage to the income of the top 1%. In other words-

Ingrid Robeyns:

Wow. That’s a great proposal.

Nick Hanauer:

Yeah. In other words, I’m not so much in favor of limiting the top, but in absolutely ensuring via policy that the people at the bottom in the middle do as well as the people at the top, because I think that that arrangement is more dynamical and less problematic than just saying, “Hey, there’s a hard limit to what you can have.”

Goldy:

So this, Nick, would be your arising yacht lifts the tide?

Nick Hanauer:

Yeah, something like that. I don’t know, but honestly, if the minimum wage in the United States tracked the after tax income of the top 1%, and you believe, as I do, that the minimum wage compresses up all other wages, I mean, there are some other things you would have to do, but if you could imagine a society where … I mean, one of the problems, of course, Ingrid, is that the amount of inequality we have in the United States is too much today and should be shrunk. But let’s just stipulate that you managed to have the distance between the top and the bottom, and then you tied them together. How do you feel about that?

Ingrid Robeyns:

I think that would … So I am, of course, I like to think out of the box. So I really like this idea, although I think it is almost as … I don’t know whether it’s much more implementable than many of the proposals I have in my book, but I really, really like the idea because it incentivizes the entrepreneurs and the innovators. However, I think it would only work if you couple it with almost complete inheritance taxation, because the problem is not income, the problem is wealth. If you talk about genuine big economic inequalities,

Nick Hanauer:

Yeah, yeah, yeah. Of course.

Ingrid Robeyns:

So if you say-

Nick Hanauer:

You still have the corrupting power at the top. You still have the concentration of both wealth and power at the top.

Ingrid Robeyns:

Yeah. But if you say, okay, we agree that … So I propose in my book that in terms of inheritance, because I do acknowledge the role that parental love and all these which embody values played, so I don’t think in contrast to some of my colleagues that we should abolish inheritance completely, but I think it should become very, very small. So say you can receive as a person over your lifetime, the equivalent of half the price of the medium price of a house, whatever that is in the U.S., I think in my country it would right now be something like 200,000 euros, which is by the way, much more than most people ever get in terms of inheritance, because most people get almost nothing. And then everything else would be completely a text.

I mean, what I also propose is actually that we redistribute this money to make sure that everybody has a headstart when they’re 18, but that is a different thing. But if you do that, then you really level the playing field and then you could do something like the proposal you just mentioned. But if we do the proposal you just mentioned in the world as it is without first equalizing the playing field, then there will still be many people who are born with multiple millions and billions, and then what does it matter for them? So it would be a way to lift the poor out much more radically, except of course we do also have poor people that disabled namely who do not have wage.

Nick Hanauer:

Yeah, of course. Yeah.

Ingrid Robeyns:

And there’s also, of course, the global dimension because in some of the industries in which billionaires make their fortune, actually it’s not so much the workers in the U.S. or in Europe that are at low wages. It’s say the people working in the garment industry in Bangladesh or people working in the factories in China in grueling circumstances. So this is of course … So I think in terms of feasibility, we always run into problems of international corporation. And that is also why I believe we should really change the ideology. We should change, I mean, you know that we had in the late ’70s, we had this shift in how economic theory was perceived. So we had the rise of the influence of people like Hayek and Friedman and all the other neoliberals.

And they’ve not just influenced policy. They’ve not just put politicians there to execute those policies that were already in all the books, but they have also really changed the culture, the way we as people look at ourselves. And I think we should have … So we should not just look at policies, but we should also really think about, okay, but when do we think we deserve something? When do we think something is ours? And it’s to that level of … So I am in a book doing many different things, also endorsing some proposals, but I’m also really trying to unsettle and try to come up with alternatives for how we think about ourselves and also how we think about society.

Nick Hanauer:

So can I ask you a question about the word limitarianism?

Ingrid Robeyns:

Yes.

Nick Hanauer:

Was that … I don’t know how that translates into other languages, but certainly in the U.S., people don’t like limits. I don’t think that’s a popular word. Oh yeah, what I want are more limits. How intentionally provocative was that?

Ingrid Robeyns:

Yeah. So it actually came because this is based of course on scholarly work that I’ve been doing in political philosophy and actually partly also in welfare economics going back 10 years. And in both welfare economics and political philosophy, we have, of course, these different, we call them principles when we talk about distributive issues and they’re called egalitarianism, prioritarianism, sufficientarianism. And I was first of all making a contribution as a scholar to that academic debate. And that’s why I came with this term limitarianism. In academia, nobody cares about whether something is motivating or an aspirational term. And in the end, my trade publishers, Penguin in the UK and Astra House in the U.S., liked that term, but I can see that it may be seen as limiting the freedom of people or not allowing people to really grow.

So I can see that point. But I also just increasingly think perhaps we should also sometimes accept limits because we have limits everywhere in our lives. We have speed limits. I mean, if you drink too much alcohol, you go beyond the limit of what’s good for you and goods for those around you. And so perhaps it’s also this idea that perhaps sometimes we should just accept that embracing limits actually is good for us. And that’s also in the chapter that I have on that it may actually be good for the billionaires themselves with some exceptions, but it works. I mean, we have some scholarship that says that it works as an addiction, that accumulating wealth you always want to have more and more more.

Nick Hanauer:

Correct.

Ingrid Robeyns:

Also, because of the status effect.

Nick Hanauer:

No, again, you have to remember that this is all about status. And in a status contest, there is never enough.

Ingrid Robeyns:

So one of the things I did not really … I have not developed a proposal in the book, but I think that is really, really interesting is can’t we come up with a different way for people to acquire status? So for example, you know we have this Forbes billionaire list. Why don’t we have something, a list, a public list that tells or gives an estimate of what your contribution to the world has been? I don’t know what that would be because it’s difficult. I mean, of course, or the easy thing about the Forbes list is that it counts money, whereas if you look at contribution to humanity or to the world, it is of course different. So you get problems of incommensurability. But still, I think we should also really try to come up with to decouple this status-seeking element, which I think is almost impossible to get rid of because of the way human beings are to some extent, to tying it so much to money. And there I don’t have a good proposal, so perhaps you do.

Goldy:

Yeah. The Forbes 400 list of top snarky podcast co-hosts.

Nick Hanauer:

There you go. I love it. I love it.

Goldy:

That would work for me.

Nick Hanauer:

So Ingrid, we’ve gone over time, but we have a couple of final questions. So the first is the benevolent dictator question. I mean, you’ve answered to a certain degree, but given if you took all the constraints out, what are the top three things you would do?

Ingrid Robeyns:

So I think if you think about policymaking, I think the first one is really international coordination and especially trying to close tax havens, because as long as we have tax havens there will be some money that is just beyond the reach of anybody who wants to tax. And then also to have international coordination on having a minimum tax on either wealth or capital gains or something else, but that really focuses on the incomes and the wealth of the super rich. But if I were to be able to pick my policies, of course, we also want something that focuses on the poor.

My book focuses on those at the top because I think we haven’t paid enough attention there as political philosophers, but of course, ultimately, you want to make sure that people do not live in misery. So we must come up with something like either just an economy where there are more good jobs for everybody and we have a decent safety net for those who cannot work or else something like a universal basic income at a high enough level. It’s one of those things. And then I also just think we need to really reform the economy to make it ecologically sustainable, because anybody who has children should worry about what we are going to leave them.

Nick Hanauer:

Yeah. And one final question. Why do you do this work?

Ingrid Robeyns:

Yeah. Why did I do this? So I actually do not have a personal reason to do this. I was not born poor and I’m not rich, so it’s not related to my personal life, but I’ve been working on questions of inequality and distributive justice all my life. And it’s really at this interface between economics and philosophy, which are the two disciplines in which I was trained, that these kind of questions come together. And I’ve always had a kind of an unease with what I was taught when I studied economics. I just felt so many things were wrong, if I may say so.

Nick Hanauer:

Yeah, that’s a pretty good-

Ingrid Robeyns:

Yes.

Nick Hanauer:

That’s a pretty good choice of words. Yeah.

Goldy:

Good intuition.

Nick Hanauer:

Yeah.

Ingrid Robeyns:

Yeah. And that’s actually why I then moved to, you could almost say retrain in philosophy and I made my career there, but I still feel the economy is way too important to leave just to the economists-

Goldy:

That’s for sure.

Ingrid Robeyns:

And that’s why I think I should … Yeah. And also the work I want to do that I started doing now and want to do in the future is really thinking about economic systems and how, because there are all sorts of proposals about alternative economic systems, but which one really can we now judge as being the best one or a number of really good ones where then the people can decide what they want. So I think we need an alternative for neoliberal capitalism, but it needs to be well thought through. And that’s where I hope to devote my energies to in the next decades.

Nick Hanauer:

Love it. Well, thank you so much for being with us. It’s been a fascinating conversation.

Ingrid Robeyns:

Thanks for having me.

Goldy:

$10 million, Nick. To me, if I had $10 million, that would be a lot of money. To you, not so much.

Nick Hanauer:

Correct.

Goldy:

Basically, I’m of two minds on this.

Nick Hanauer:

Yeah.

Goldy:

On the one hand, if your wealth was capped at $10 million, I’m pretty sure I wouldn’t have a job.

Nick Hanauer:

That’s correct. That is correct.

Goldy:

But Nick, on the other hand, if your wealth and all of your buddies was capped at $10 million, this job wouldn’t be necessary.

Nick Hanauer:

Yeah, but a job would be necessary.

Goldy:

A job, but I’m saying, but the job I do right now, which is we’re trying, like Ingrid, to change policy and norms, I mean, that’s what this podcast is about. It’s about changing the narrative, about changing the norms of extreme inequality. We wouldn’t have a Pitchfork Economics podcast because there would be no need for it because that problem would be solved.

Nick Hanauer:

Yeah. So Goldy, this was a really interesting conversation with Ingrid. And there’s a lot, I think, to like about her arguments and her book. Certainly much of her analysis is dead right, that extreme inequality is both morally and practically bad, but the limitarian element of it, I think honestly, is more of a provocation than a proposal. I think she is absolutely right that we need to surface all of these ideas. For example, and you and I have talked about this, of course, extensively, the role of luck, path dependence, and compounding, to say nothing of race and other preferences in how people do in modern market societies and the outsized …

And actually the relatively small part that merit plays often in where we end up. And she’s right to raise the issues of our culture, that the only form of status that we seem to be able to find is how much money you have, or even more egregiously, how many followers we have on Instagram or some damn thing like that. And surely there are better ways to assess your contribution in society than those things. Of course, one of the really interesting facts about this idea that if you put somebody like me at the very tippy top that my wealth would be limited to $10 million, is that as a practical matter, I suspect that that would create a society where the median wealth would be $5 million because you can’t squish the money around any other way without making most people multimillionaires.

And if you could do that, that would obviously be a pretty great society where everybody in it was financially independent and thriving. The question is, as a practical matter, can you get there? And for my own part, I don’t think limits are the way. I certainly believe that the tax code should be infinitely more progressive. I’m serious about the proposal of linking the wages at the bottom to the wages at the top. I think that that’s a way to tie the fortunes of the society together, I think, in a very, very productive way. I think that we have to find a way certainly to contain the political power that accumulates when wealth accumulates. And this is why Citizens United and this idea of $1, one vote that replaced one person, one vote in the United States is so egregious. But I’m not sure I can get behind actual limitarianism. How about you?

Goldy:

How about if it was a billion dollars?

Nick Hanauer:

Yeah. I’m still not sure that that’s the path.

Goldy:

Really?

Nick Hanauer:

Yeah. I’m just not sure-

Goldy:

This is the thing, Nick, I understand all the practicalities. And look, it’s hard just even to pass a progressive income tax in this country.

Nick Hanauer:

Correct.

Goldy:

It’s hard, obviously Piketty is right, we need a global wealth tax, and Ingrid’s right, we need to eliminate these tax havens and so forth.

Nick Hanauer:

Hundred percent.

Goldy:

Because you guys can take your gold bullion and go wherever you want. All of that practical stuff aside, what I think is really important about books like this and that term limitarianism, is that it’s sparking the conversation now.

Nick Hanauer:

Yeah, it’s a useful provocation.

Goldy:

Because what really, and we know this from our own practice, we run campaigns out of our office. And we’ve always had this philosophy that we’re using these campaigns, these policy campaigns to change the narrative. And we use the narrative to advance the campaigns, and it is this feedback loop. And so when you talk about limitarian policies, it helps raise awareness and change that conversation, get people thinking, “Well, yeah, there probably should be some limits.” There should be some limits to extreme wealth, to how wealthy and powerful any one individual should be in a democracy.

Nick Hanauer:

Yes.

Goldy:

I mean, because clearly democracies, our founders understood this. They wrote a constitution, as our friend Ganesh Sitaraman says, it was a middle class constitution that did not imagine extremes of wealth in the U.S. like there was in Europe. And of course, as Louis Brandeis famously said or didn’t say or said something like it, we can have wealth concentrated in the hands of the few or we can have democracy, but we can’t have both. So it’s important to raise this conversation and have people accept the fact that there should be limits. In a sense, what exactly these limits are and how they’re enforced is less important than just changing the norms about limits in general.

Nick Hanauer:

Yeah. Well, this may be so.

Freddy Doss:

For more content from us, you can subscribe to our weekly newsletter, The Pitch, over on Substack. And for links to everything we just mentioned, plus transcripts and more,

visit our website pitchforkeconomics.com. As always, from our team at Civic Ventures, thanks for listening. See you next week.

The post Should There Be a Limit to Wealth? (with Ingrid Robeyns) appeared first on Pitchfork Economics.

AI Won’t Decide the Future of Work—We Will (with David Autor)

Freddy Doss — Tue, 24 Feb 2026 20:09:41 +0000

Every wave of new technology has come with the same promise: productivity rises, and everyone benefits. That’s not how it usually plays out.

This week, we’re resharing our conversation with MIT economist David Autor, one of the world’s leading experts on how technological change reshapes labor markets. Autor challenges the familiar story that innovation inevitably destroys good jobs, arguing instead that AI could expand human expertise and help rebuild pathways into the middle class — if the gains are broadly shared.

As companies race to adopt AI and workers wonder what comes next, this episode offers a clearer way to think about the future of work: technology doesn’t determine economic outcomes. The rules we build around it do.

David Autor is a labor economist and professor of economics at the Massachusetts Institute of Technology who studies how technological change and globalization affect workers. He is also co-director of the MIT Shaping the Future of Work Initiative and the National Bureau of Economic Research Labor Studies Program.

Social Media:

@davidautor.bsky.social

@davidautor

Further reading:

NOEMA – AI Could Actually Help Rebuild The Middle Class

New York Times – How One Tech Skeptic Decided A.I. Might Benefit the Middle Class

Instagram: @pitchforkeconomics

Threads: pitchforkeconomics

TikTok: @pitchfork_econ

YouTube: @pitchforkeconomics

LinkedIn: Pitchfork Economics

Substack: The Pitch

Nick Hanauer:

The rising inequality and growing political instability that we see today are the direct result of decades of bad economic theory.

Goldy:

The last five decades of trickle-down economics haven’t worked, but what’s the alternative?

Nick Hanauer:

Middle-out economics is the answer.

Goldy:

Because the middle class is the source of growth, not its consequence.

Nick Hanauer:

That’s right.

Voiceover:

This is Pitchfork Economics with Nick Hanauer, a podcast about how to build the economy from the middle out. Welcome to the show.

Freddy:

Hey, Pitchfork listeners. I’m Freddy, producer of Pitchfork Economics. Every new wave of technology comes with the same promise, progress will make everyone better off, but executives have been bragging on earnings calls about using AI to cut jobs and shrink payrolls as if their massive campaign of layoffs is proof the future has arrived. This week, we’re revisiting how AI could help rebuild the middle class, a conversation with MIT labor economist, David Autor, who argues the real danger isn’t artificial intelligence itself, but an economy that uses innovation to replace workers instead of expanding what they can do.

We’ve been here before. Technology moves fast. Workers are told to adapt, and somehow most of the gains end up in the bank accounts of the wealthy. Technology doesn’t decide who benefits the rules of the economy do. This conversation explains why that matters so much right now.

Goldy:

We’re recording this about a month after the election, Nick, and obviously there’s a lot of things for me to feel really anxious about. Just one more thing, I just need to ask you, are you planning to replace me with AI?

Nick Hanauer:

If I could, I would, buddy. If I could, I would.

Goldy:

Spoken like a venture capitalist.

Nick Hanauer:

Yeah. I think we’re a years away though.

Goldy:

I’ll tell you what, I don’t know that AI can ever figure out how to do what I do because I’ve never figured out how to do what I do so I don’t know what it would learn from. It’s a great way to lead into today’s conversation because we’re talking about the potential future of AI.

Nick Hanauer:

We get to talk to David Autor, who is one of the country’s most highly respected economists.

Goldy:

Labor economist.

Nick Hanauer:

Labor economist, but economists more generally. He’s a economist at the Massachusetts Institute of Technology, and he studies technological change and globalization and how it affects workers principally. He’s a very consequential guy and has out a really interesting new paper arguing that AI, rather than decimating the middle class, may actually help them. It’s an interesting article, I would say. There are a lot of assumptions baked into the argument.

Goldy:

Really? Economists relying on assumptions? Never.

Nick Hanauer:

I’m not sure I agree with, but I think that AI is here. It’s here to stay, and we’re going to have to wrestle with what to do with it. It’s certainly a good thing that people like David are thinking about it and talking about it. With that, let’s jump into the conversation with David and find out what he thinks.

David Autor:

My name is David Autor. I’m the Daniel and Gail Rubenstein professor of economics at MIT, but basically, I’m a labor economist and I work on things that affect jobs, skills, mobility, employment, income and inequality.

Nick Hanauer:

That’s awesome.

Goldy:

Our main question is how long before you were replaced by AI? Is that where we’re going, Nick?

Nick Hanauer:

Yeah, exactly.

David Autor:

I would be delighted, man. I could really use a break.

Nick Hanauer:

You’ve got this fascinating new article out where you make this contrarian argument that AI, rather than being bad for the middle class, may in fact be good for it. Before we get into that, just help us understand why you think that AI is not just part of the tech industry hype cycle?

David Autor:

No, I think it is not. I mean, let be clear, there’s lots of hype. There’s going to be lots of companies that fail, there’ll be a bubble, et cetera. In the long run and the medium run, the technology would be extremely consequential because it unlocks capabilities that we just didn’t have before. Machine AI can do things so just to make the contrast, traditional computing followed rules and procedures. It could do what we could program it to do and nothing more.

That was incredibly useful, but it never had new ideas. It didn’t improvise, it didn’t solve a new problem. It didn’t think of a better way of doing things. We had to explicitly understand how to do something to write a program so the computer could follow those steps to do it. AI learns a lot like we do, not the same, but which is, it learns inductively. It learns experientially, it learns tacitly. Most of what we know, we don’t know formally.

We know formally how the structural language works, how to make a joke, how to have a hypothesis. We don’t even know formally how to recognize a child in a photograph or ride a bicycle. These are all things that we understand tacitly. For that reason, we couldn’t really teach computers to do them because we didn’t know how to write the program. AI can learn as we do from unstructured information, can recognize patterns that we’re not told to look for.

It can produce new ideas that we didn’t program into it, and that makes it applicable to a whole host of problems that we couldn’t previously apply computing to. Whether that’s in discovering the structure of proteins or whether it’s in recognizing things in medical scans, or whether it’s helping people write and come up with ideas or make inferences from data. It’s really quite broadly applicable though I will say we don’t really know what it’s for yet.

I mean, we’re still in the early age of experimenting and trying to figure out what is it good for and what is it not good for. A lot of what it’s not good for is what it’s being used for at present. Because the first thing you’re doing in new technology is you say, “Well, what does allowed me to do better, cheaper, faster than that I was already doing?” There’s two problems with that. One is AI can do many things that you couldn’t do with the old technology, so you’re kind of missing half the picture.

The other is it’s not good at a lot of things that old technologies are good for. It can’t reliably do math or keep facts straight. Think of that relative to traditional computers. There’s a lot of instinct to, let’s use it for this calculation. Let’s use it to write a law brief. Let’s use it to write a letter recommendation and do those things badly. It’s going to confabulate, it’s going to not make a calculation correctly.

Nick Hanauer:

I’ve actually been shocked by how bad the analytics are sometimes. You ask it a question and then you go look for the data and you’re like, “Dude, this is not close to the real data.” They’re like, it’s like, “Sorry, it did.”

David Autor:

Even if it was right and you told it was wrong, it would still say sorry, because it wouldn’t know. No, you can challenge it to rock paper scissors, which is a simultaneous move game. Then it will say rock. You can say paper, and then they’ll go, “Oh, you won. I guess you’re lucky.” There are many ways you can convince yourself. It lacks an understanding of the world, but that doesn’t mean it’s not incredibly powerful.

For many things that we need to do because many things, we are looking at data and recognizing patterns and making predictions, and that’s a lot of what cognition is about. That doesn’t mean it’s better than us, but it can help us to do those things even when we’re good at it. We’re not consistent. We’re inattentive. We get tired.

Goldy:

Not good at math, but could be good for, I don’t know, enslaving humanity.

David Autor:

Sure. If that’s what you’re into.

Goldy:

Well, I look at some of the billionaires who are funding AI, and I worry that that is in fact what they’re into. If Elon Musk could create Skynet, he would just to prove the point.

David Autor:

Actually, I agree with this point that a lot of AI research is driven by the idea of how do we replicate human capabilities in machines? The truth is we have lots of human capabilities, and I don’t think we’re scarce. We’re running short of those. We want additional capabilities that we don’t have, right? Flight was not a human capability. Penicillin was not a human capability. Telecommunications was not a human capability.

What makes technologies transformative actually is not that they automate the stuff we already do, but they enable us to do things we couldn’t previously do. That’s where AI has so much potential.

Nick Hanauer:

That’s a really good point. You make this broad argument that AI may in fact be good for working in middle class people because it will allow, if I may summarize your argument, it will allow people with less skills to apply themselves in areas which require a lot of skill and therefore be more productive and ideally compensated better.

You also make the point, I think it’s very important in your piece, that the world is undergoing a demographic transition in which we are very rapidly going to run out of people. That the idea that we’re going to run out of jobs is something you do not subscribe to, which I’m in violent agreement with. I think that as long as humanity faces problems, we’re going to have jobs. What I want to understand from you is why you are optimistic that these workers who are just more productive will share in the benefits of that productivity. How do you see this unfolding?

David Autor:

Sure. There are a lot of lessons in there. Let me respond to a few of them. We are definitely running into it just on the demographic point because we have low birth rates, our populations are aging. We have large and growing retired populations and actually numerically smaller number of people in prime working years to support them. That labor scarcity, and that’s in the industrialized world. And we’ve seen that really intensively since the pandemic.

Now, we should recognize that’s artificial. There’s a lot of people in the rest of the world who would like to come to these countries and work. There’s not really true labor scarcity worldwide. There’s labor scarcity in rich countries, but rich countries don’t seem that interested in bringing those people in.

Nick Hanauer:

Just to be clear, if you go out 25 or 30 years, you are seeing a massive decrease?

Goldy:

You go out a hundred years, you are going to see massive decrease and across the world.

David Autor:

The problem is there’s nothing wrong with having a smaller world population. It’s the transition between sizes that creates this demographic imbalance.

Nick Hanauer:

There’s always those pesky transitions, isn’t it?

David Autor:

Yeah, exactly. About allowing what AI can enable, so than the word skill, which sounds one-dimensional, right? People have more education, have more skill. I like to use words expertise. Expertise could be the expertise to code an app, but it could be to remodel a kitchen, right? To land a plane, to fix a washing machine, to do accounting. Expertise is really what makes labor valuable in the rich world, it’s the capability to do valuable things. Not everyone knows how to do them, requires specialized knowledge.

Our rich world is dominated by experts. There really are kind of a choke point on everything in education, in healthcare, in law, in design, more and more of our national income goes to highly educated people who are the tops of their fields and making these high stakes decisions, and we’re really beholden to their expertise. I can point the finger myself. I’m an academic, so I’m a paid expert.

In 50 years ago, we had a lot of people in the middle doing office work, clerical admin, and also a lot of production operative work. A lot of that work was automated by computing because it followed well-understood rules and procedures that could be encoded in software and done by machines. That has moved a lot of people who aren’t part of this elite. The 40% of people of college degrees, for example, four-year college degrees into services, food service, cleaning, security, entertainment, recreation, socially valuable work.

It’s poorly paid because it doesn’t require specialized training or skills. Even some of those valuable jobs being a crossing guard or a daycare teacher, these are life and death activities. They’re poorly paid substantially, not entirely, but substantially because most people of able-bodied adults can do that work without specialized training or certification.

We created this hollowed out middle and what we would like as a world in which more people who are not at the hyper elite educated could do more valuable work in software development, in medical, medical technical work. Administering care doesn’t have to be doing surgery or in creating legal documents or in designing, doing kitchen redesign and the engineering around that.

I think what AI is complimentary to is the judgment and knowledge to do those things without having as much of the specific technical, formal frontier knowledge. I liked the example I give in my article is let’s say I wanted to change the breaker box, sorry, the fuse box in my hundred-year-old house to a breaker box, old technology, new technology. I could go to YouTube and there’s hundreds of videos telling me how to do that.

Imagine I have no electrical skills. I’ve never worn a pair of insulated gloves or used a wire stripper. I could watch one of those videos and I will surely electrocute myself, set my house on fire, cannot work out well.

Nick Hanauer:

It probably produce another really great YouTube video in the process. Something that will go viral on TikTok.

David Autor:

Exactly. Of course, if I’m a master electrician, I’m not going to watch the video. What’s the point? Actually if I have some basic knowledge, if I’ve done electrical projects, I have an O meter, I know some basic stuff, with this tool, I could extend my expertise further. My judgment and knowledge is a compliment to the tool, not a substitute.

The good scenario is where we use AI as a tool that enables people to take on important problems, expert problems, without being at the frontier. What I mean, the frontier is I’m not imagining a world where everyone can do everything. That’s not even a good world actually from a leader point of view. A world where someone who’s a registered nurse could do more care tasks or someone who’s a junior law associate could do more legal work or someone who didn’t do a four-year degree in CS, computer science from MIT could do good coding.

AI is very supplementary, or it supplements judgment, but it requires something we’ve seen from tons of research now in AI, and there’s lots and lots of case studies. AI is really good when you have enough judgment to know if it’s doing well, and it’s dangerous if you don’t. It requires domain expertise and training, but it doesn’t necessarily require, if you have that you can apply that tool to do things like I can code in a computer programming language. I don’t know because I know enough to know when it’s producing the right output so I can use this tool.

Goldy:

What makes you confident that workers will actually reap the monetary benefits of using these tools rather than the owners of the intellectual property? Because I can see a dystopian future of just massive rent-seeking from a handful of AI giants.

David Autor:

That’s a good question. I’m speaking of a possibility, not a certainty. I think there’s a case where we can do this, whether we will is not clear. I think there’s two issues that both of which you’ve now raised. One is of course, how are the tools being designed? Are they being designed to basically replace people or to leverage their expertise? That matters, right? We have a lot of choice about how we use, they’re incredibly flexible. There’s a million ways to use them, that’s one question.

Then the next one is, well, is the market structure such that they get the returns to that productivity or not? It depends, in my opinion, substantially to whether that expertise remains scarce and valuable. No one thinks that people with bachelor’s degrees, certainly PhDs are underpaid relative to what they do, why they have scarce expertise and because of that, there’s a lot of competition for their services. A good example would be registered nurses, four-year degree, and they make a very decent income in the United States. I think having expertise remains scarce.

Goldy:

I actually think a lot of adjunct professors would disagree with you.

David Autor:

You’re right. You’re absolutely right. That’s again about competition, right? It’s about market structure and the concern you’re raising, which is a valid one, is maybe this will all be monopolized by a few companies. I think that’s a risk that we have to be really vigilant about. I don’t want to take it as a given, this all goes well.

Nick Hanauer:

The case you’re making, of course is plausible or possible. What I’ve said a million times is that we cannot fear technology. What we have to fear is an economic system like neoliberalism that privatizes all the benefits of technology and socializes all of the disadvantages of technology where a few people atop get all the benefits and everybody else gets screwed.

I guess given history, take truck drivers. At one time, one person could move very little in terms of goods from one place in the country to another place in the country because they would either have to carry it on their back or use a donkey or something like that. Now, a big truck can move a lot of goods from one place to another.

Truck drivers are very poorly paid generally, even though they are creating a huge amount of value relative to the alternative. That’s a consequence of the fact that truck drivers have no power that they have-

Goldy:

We deregulated the trucking industry. In fact, truck drivers earned a middle class wage before deregulation.

Nick Hanauer:

Likewise administrative assistant, before computers, that job was X productivity. With a modern computer, you can obviously accomplish a heck of a lot more, do 10 times as much work really relative to what you could with a typewriter. Those folks don’t earn more today, they earn less than they used to. Their wages have compressed down over the last 50 years.

By the way, this is true of people with bachelor degrees too. In general, people with bachelor degrees, their wages have, they’re either plateaued or decreased. This is the story of the last 50 years, is that the only people who really benefited from economic growth were the people in the top 1 or 2%.

David Autor:

I am not agreeing with that, by the way.

Goldy:

Okay, top 10%.

David Autor:

No. Basically, people who have a college degree on up, which is 40% have seen real income growth, but there’s been a lot of stagnation-

Nick Hanauer:

But they haven’t, but they have not maintained their same share of GDP.

David Autor:

This is actually, this is the point I wanted to make. Six out of every $10 in the US economy approximately is first paid to workers. It’s fallen somewhat, although it’s still pretty high. What’s actually remarkable, and I think many people find this surprising, is you might think in the richest countries, the countries have the most capital, the most technology, the most infrastructure that labor’s share of economic activity would be relatively small, but in fact, it’s larger.

The world average about 50% in parts of North Africa, it’s 45%. One of the amazing things actually about the industrialized countries is even as we’ve gotten all this technology, we’ve made our labor more valuable, not just in terms of we pay higher wages. A larger share of all that activity has gone to workers. Now, we should be concerned about that declining, but it’s still actually relatively high here. I would argue in the case of truckers, this is part of the reason wages haven’t risen with productivity.

You can make the same argument about cashiers or many activities is because the labor is not scarce. The people who can do it, the capability to do it as abundant. That’s why I really focus on this notion of what makes expertise valuable. The problem that we have is that people who do not have, or a problem that we have is that the majority of people who do not have a college degree have been pushed downward into non-specialized work, clerical work, production work that required real skills and knowledge and training that made it valuable over long periods of time.

In a world in which people are doing work that many, many others can do, it’s very difficult for that to pay well. Now, I don’t want to make the case that it can’t pay. Well, obviously it pays more in some countries than others, and that’s a function of the way they structure their economies.

Nick Hanauer:

Well, power.

David Autor:

Yeah, sure.

Nick Hanauer:

I mean, some people who work at McDonald’s make $20 an hour. Some people who work at McDonald’s doing exactly the same job make $7.25 cents an hour. That is not a reflection of rarity, that’s a function of we somehow delivered more power to the people who were earning $20 than the people who earned $7.25.

David Autor:

I say, in almost all countries is sort of the ranking of earnings across occupations activities is very similar, but the disparities vary enormously. In Scandinavia or even in Canada, wages substantially higher for people doing that same work. That is not an economic inevitability. That’s a choice of power, as you say. How is the social system organized?

Again, going back to these two questions. One is, can we augment the value of expertise? Can we enable more people to compete in these high paid activities? It won’t necessarily be good for doctors or lawyers or software coders, but if more people who are not at the elite were able to do that work, it would be better for them. It would also bring down the price of goods and services. It would improve the quality of jobs for some, it would improve the availability of a lot of expensive stuff for others.

Then there is the question that was just asked, “Well, what’s to prevent firms from monopolizing that?” It depends on healthy labor market competition. It absolutely does. That means the way we structure regulations, the ability, the worker voice and institutions to protect that labor standards and social norms about what we view as tolerable. I don’t think it’s either-or. I think we need to be productive.

Ultimately, how much we can distribute depends on how much we produce, and we want to use these tools well, but we don’t want to use them in a way that just makes human labor unnecessary or superfluous. We want to use it in a way that makes more people’s judgment and knowledge and expertise more applicable across valuable things.

Goldy:

Earlier when we were talking about the impending demographic, I don’t want to use the term crisis, collapse, decline, whatever, it certainly doesn’t have to be a crisis. You emphasize it’s the transition that’s the difficulty, not the smaller global population, but the transition to it as a student of history and technology can broadly say that new technologies in the long run have proven beneficial. We have a much higher living standard now than we did 200 years ago, and we’re all better off-

David Autor:

Incommensurately.

Goldy:

… for that transition, but in the moment that transition immiserated people, it was very difficult. We all live in the moment. The people who are going to live through the AI revolution, a lot of them risk being displaced and demiserated. What are the policies that we need to focus on to get through the transition without, I don’t know, undermining democracy?

David Autor:

Just to put a fine point on it. First, let me agree with you that even if the long run outcome is a good one, the transitions are often really costly. I mean, the transition into the industrial Revolution, working class incomes did not rise in Britain for the first 60 years of the industrial Revolution. People were immiserated, and even when they started to rise, there’s lots of people who are just displaced. People are on the upside are usually not the ones on the downside.

Pittsburgh has reconstituted itself after losing steel and coal, but the people in Pittsburgh who are doing well now are people in education, people in healthcare, they’re not former steel workers or former coal workers. Even if you think it’s all going to work out great, that doesn’t mean every person is going to benefit. Then there’s the even harder problem, let’s say it’s all going to be great for people in the long run, but not in the first 20 years. I think that’s a very, very serious challenge.

Part of it depends on how fast it changes and this is a very important. If you told me 20 years from now, all trucks will be self-driving, I’d say, “Well, we can manage that at 20-year transition. People will retire, people won’t enter.” If you told me that’s going to happen on New Year’s Day, I would say that’s a crisis. Part of it is how fast it happens. Then the other of course, is the support systems that we have to enable people to thrive and rebound.

That is something where the US falls uniquely short among developed countries. We spend one-tenth as much per capita or per GDP, as does for example, Denmark on retraining people and getting them back in the workforce. We used to believe that we had a national job security program. It was called Get a New Job. We’ve learned that that just isn’t such a good program, that’s why I worry the most about the US.

I think the US does so little to buffer against the damaging forces of inequality and the scars they leave, that it actually inhibits economic mobility, inhibits opportunity. It’s not just cruel, it’s also inefficient. We have a thriving meritocracy from the median on up. Then for everybody else, we underinvest in their skills and their security and their healthcare and their safety and their education. I think that’s the danger that we run.

Survey evidence says that US workers are more nervous about technology than people in other countries. You say, “Why? We’re creating this technology, why shouldn’t we love it?” The answer of course is what you said earlier, they recognize the economic system. It’s not they’re afraid of the technology, they’re afraid of the cost they’ll personally pay.

The science fiction writer Ted Chiang said, “Fear of technology is not fear of the machines, it’s fear of capitalism. It’s the fear of I don’t win when we get more productive because someone else, something else takes my job.”

Nick Hanauer:

That’s what I said. It’s not the technology, it’s the neoliberalism-

David Autor:

That’s right.

Nick Hanauer:

… that kills you.

David Autor:

Exactly. I think we are an amazing, we are in a transitional period there is incredible, once you simultaneously be fearful and optimistic in the sense that there’s a lot to be worried about. The things outside the labor market are arguably more worrisome than even what’s going to happen in the labor market, but there’s also enormous opportunity. There’s no question that we will enhance the rate of technological progress.

We’ll be able to do better things with addressing some of our most challenging problems. If we do it well, we’ll enable more people to do valuable work. It’s going to be, that doesn’t mean, even if that’s good over a while, it doesn’t mean it’s good for everyone by any stretch of metrics.

Goldy:

Are you suggesting that labor markets do not inevitably return to a Pareto optimal equilibrium that we can just trust the invisible hand? I mean, you’re an economist. I don’t know what you teach in your classes, but…

David Autor:

I think labor markets, well-functioning labor markets are central to democracy. You cannot have a well-functioning democratic system where most people don’t perceive themselves to be stakeholders and aren’t perceived to be productive contributors. A society where everybody is seen as a ward of the state is not politically stable because the people who perceive themselves as the income generators will say, “Why are we supporting all these people?”

The best you get, the best case scenario is a country like Kuwait where you have no taxation and no representation, but at least the dictatorship is relatively benevolent. We have a real stake in maintaining labor’s value, making sure that work pays well, and that people have economic security that is tied to it. Work is not just about the displeasure of going to a job. It’s about community. It’s about identity, it’s about esteem. For many people. It’s also a source of meaning and fulfillment.

Nick Hanauer:

By the way, I think one of the things that we can be most optimistic about is that a greater and greater proportion of humans on planet Earth every year have jobs from which they can derive meaning.

David Autor:

This has been the best 30 years in the history of humanity in terms of elevating people out of poverty. From the perspective of the West, we say it’s been mid, we haven’t grown that much, but billions of people have been lifted out of poverty actually by China’s rise and the prosperity has created in Sub-Saharan Africa and Central and South America. Yes, it absolutely is the case. China, it’s not a democracy. It is a market economy and that has helped.

Nick Hanauer:

Yeah, for sure. Just a couple more questions, David. If you were in charge of the world, we have a benevolent dictator question, political constraints aside, what would you do with respect to AI to lead to the promised land that you described?

David Autor:

A couple of things. First of all, the first thing I would do just because it’s easy, is I would regulate the use of intellectual property. I actually think there’s enormous IP theft occurring in industrial scale. Intellectual property law was not meant to protect people against machines that would read everything and regurgitate it. I think people should be paid for their creations, and that’s a first order problem, but more at a deeper level, I think we should be investing in these good use cases.

We should say, how do we make healthcare a place where more people can use expertise, where it’s cheaper and more available? How do we make education more effective and accessible? And actually AI is a way, a tool that we can use to make AI, sorry, to make learning more like simulation, more like a flight simulator, less like a chalkboard. I would be investing for good use cases and then I would build lots of labor market supports that are not really around AI. They’re just around insecurity.

We have trade production programs in the United States where people whose jobs are displaced by trade, but we don’t have technology displacement protection programs. Why not? I mean, why do I, if I lose my job, I lose my job. I don’t care if it’s because I lost it because of a robot, or I lost it because of a competitor in another country. I just need economic security. There’s where we have models of countries that do this much more effectively than we do now.

It’s hard. We can’t just become Denmark, but we shouldn’t think that it’s impossible to do because we know it is possible to do. Certainly even during the Obama administration, they stood up what was called a wage insurance program for people displaced from trade. Essentially it said, “If you take a new job at a lower wage and even been displaced by trade will make up some of the difference for a while.” That got people back into the labor market faster.

It didn’t help them recover earnings per se, it didn’t get them back to where they were, but it made that transition at least more successful. Long-term unemployment is devastating for people, not just economically, but psychologically.

Nick Hanauer:

One final question, why do you do this work?

David Autor:

It just seems the most natural thing in the world to care about work and how people make their living. I think that the labor market is the most central social institution, more than the church, more than the government, more than the bowling alley that’s talked about by people who studied social capital. It’s constantly changing, right? It’s at the center of these tectonic forces of globalization, of trade, of technology, and I see how it affects people.

I worked for several years in nonprofits. I did education for poor kids and adults. I did volunteer work in South Africa, and I saw how the world was changing around them and how difficult it was for the people to adapt and how the institutions were not in place to enable them to thrive. I feel like the first thing we need to do is understand, so we can respond appropriately.

I do hope that my work and as my colleagues and many other people in my field have helped us better understand both how computerization has changed a set of jobs and the skills we need, how labor market institutions shape opportunity, shape wages, shape allocation, fairness, and how globalization has been such a mixed bag. Something economists were really rah, rah about.

My work in those, my co-authors is it really suggested that it does lead to economic growth, but the direct cost to individuals are enormous. This will be the same with AI in some ways. It will create growth, but there will be huge displacement and the beneficiaries will be pretty diffuse. The people who are on the losing side will be very concentrated.

They all know why they lost their job, and we should invest in them and try to both for their sake, because it’s morally just, it’s the right thing to do. Collectively, it’s really in our interest to have a society where people feel that their opportunity is protected and preserved and invested in. We would want them to do the same for us. We need that for political function and social harmony and for human well-being.

Nick Hanauer:

And democracy.

David Autor:

Democracy.

Goldy:

Weird social cohesion is efficient, I guess.

Nick Hanauer:

Well, David, thank you so much for being with us. It’s obviously a fascinating and timely topic. I do hope you’re right.

David Autor:

I hope I’m right. I want to say, as I say in the end of the article, I’m painting I think an intellectually and morally coherent idea. It’s not really a prediction.

Nick Hanauer:

It’s not a prediction.

David Autor:

It’s a possibility. It’s saying this is something we could attain and we should try. It’s not out of our reach. It’s actually more within our reach than it has been.

Nick Hanauer:

I’m 100% in agreement with that. The future you describe is absolutely possible. It will just take a remarkable amount of political and economic leadership to get us there.

Goldy:

My guess, Nick, it’s not what your buddies in venture capital are hoping for when they invest in these-

Nick Hanauer:

It is not what Marc Andreessen was thinking.

David Autor:

No. Even not knowing him personally. I’m sure that that is correct.

Nick Hanauer:

Anyway, thank you so much for being with us.

David Autor:

Thank you.

Nick Hanauer:

It’s been fantastic.

David Autor:

Thank you both very much. Great show and appreciate the opportunity to speak with you.

Goldy:

I think it’s important, Nick, to reiterate what David said, that he’s not predicting the future. He’s not predicting this utopian future. He’s just painting a portrait of a possible future in which AI benefits everybody.

Nick Hanauer:

I think that it is absolutely true that that future is possible. I just think it’s not probable.

Goldy:

Well, not probable under our current institutions and nuance.

Nick Hanauer:

I think that we have had tens of thousands of years of technological advancement. It is certainly true that over time that technological advancement has benefited people broadly. As we spoke about in the chat that it’s those pesky transitions that usually are pretty terrible.

Goldy:

Our lives are so much better for the millions of people who were mutilated in the mills of the 19th century.

Nick Hanauer:

Exactly.

Goldy:

Enslaved in the cotton plantations. Without all that-

Nick Hanauer:

Such nice fabric that we did.

Goldy:

Right, without all that, because of all that suffering, the modern world is made possible, the genocides, all that, we are better off for it. I think the important thing is one could imagine that we could have gotten to this future in less awful ways.

Nick Hanauer:

That’s right. I really truly do believe that that is true, that there is a way to go towards the future ambitiously without the horrific downsides that these transitions generally generate. I do think it’s all about recognizing the downsides. I guess if I have to quibble with David, it’s just that I think that there’s this view among economists generally that talent and ability is connected to benefits and that the most expert people are most highly rewarded.

In some abstract sense, some of that may be true, but this narrow ability, for example, to trade stocks on Wall Street or some other obscure financial thing, which produces an income of a hundred million dollars a year against somebody who teaches high school calculus, it’s very hard to make the argument that the person trading financial derivatives or something like that is more expert than the person who is teaching high school calculus.

Goldy:

We’re more meritorious. I mean, David did make this comment that we basically have a meritocracy from the median up. We’ve talked about this before. We don’t believe it is a meritocracy.

Nick Hanauer:

I think that the real danger going forward is to pretend that it’s not about power.

Goldy:

That the market will handle this, that the Marc Andreessens and Elon Musks and Peter Thiels, I mean, you look at their comments and it’s like they actually think we need the immiseration. I mean Musk talking about we need a big economic collapse. There’s got to be a lot of pain and suffering coming up. He thinks that’s a good thing.

Maybe that’s because he looks at history and thinking all those people who suffered in his family’s emerald mines created a much better world in the future. There’s this mean-spirited ideology among the super-rich. No, it’s not all of you.

Nick Hanauer:

No. Larry Summers thinking that the only way out of inflation is to put 7% of Americans or 8% of Americans out of work, that’s the only solution.

Goldy:

It turned out there was another path.

Nick Hanauer:

Well, there were a lot of other paths, but making the little people suffer seems like to a lot of people the only path, which is I think the problem.

Goldy:

I don’t see a problem in the technology itself other than the possibility of Terminator style like the AI becomes self-aware and says, “Oh my god, humanity does what?” Decides to enslave or destroy us. I guess that’s a possible future too. To me, it’s ownership. It always comes down to ownership. Are we going to allow the owners of the IP, of the intellectual property, of the AI to extract all of the benefits for themselves or most of the benefits for themselves?

Are we going to regulate it in a way that benefits, that broadly benefits society? If we do the latter things, quite possibly will be okay. The vision that David put out here, if we allow Elon Musk and Marc Andreessen and Peter Thiel and so forth to determine how it is used and who it will benefit, it’s not going to be such a good outcome. That transition’s going to be very, very bad.

Nick Hanauer:

Well, it’s a great conversation.

Goldy:

We will provide a link in the show notes to David’s piece. AI could actually help rebuild the middle class.

Freddy:

For more content from us, you can subscribe to our weekly newsletter, The Pitch, over on Substack. And for links to everything we just mentioned, plus transcripts and more,

visit our website pitchforkeconomics.com. As always, from our team at Civic Ventures, thanks for listening. See you next week.

The post AI Won’t Decide the Future of Work—We Will (with David Autor) appeared first on Pitchfork Economics.

LIVE FROM DC: The Magic Wand Question — Policy Pitches for Working People

Freddy Doss — Tue, 17 Feb 2026 19:58:55 +0000

If you could order a presidential administration to do one specific thing to improve the lives of working people — what would it be?

At Democracy Journal’s recent conference in Washington, DC, Nick and Goldy heard some of the country’s leading economic thinkers take their best shot at that magic-wand question: one idea, three minutes, no BS.

The result is a rapid-fire lineup of bold proposals — from fixing Social Security and raising wages to reclaiming time, strengthening unions, and rethinking what “affordability” really means.

This week, we’re sharing some of our favorites with you. This episode is a quick policy lightning round packed with big ideas, sharp arguments, and plenty to discuss.

Elizabeth Garlow is a Senior Fellow at New America focused on economic policy and the future of work, with research centered on time, caregiving, and policies that improve everyday economic security.

Jim Kessler is the Executive Vice President for Policy at Third Way, where he works on economic reforms aimed at expanding wealth-building opportunities and retirement security for working families.

Thea Lee is a visiting fellow at American University and a longtime labor economist specializing in worker rights, trade policy, and labor standards in global supply chains.

Heidi Shierholtz is president of the Economic Policy Institute, where she focuses on wage growth, labor markets, and policies that strengthen workers’ bargaining power and reduce inequality.

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