« The Weeds

How do you solve a problem like Harvey Weinstein?


Sarah, Ezra, and Matt dig into the Harvey Weinstein story, talk a bit about tax reform, and cover new research on Medicaid expansion and savings. White paper: Medicaid and Household Savings Behavior: New Evidence from Tax Refunds

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This is an unofficial transcript meant for reference. Accuracy is not guaranteed.
Catalan drinks repatriated Biagi, as can be up high energy hello, welcome to another, so did the weeds on the box media pod, cast network Matthew Place his advent right as recline and Sarah Clip are we gonna get a great show coming up for use of some tax reform, show stopping Medicate expansion research paper, but you know first, oh it we did when I talk about a subject that has really been dominate the new. and understand, I think, quite obviously, as as weeds ie, but I think does you know, get us eventually into into some real some real policy questions. Yes, a we wanted, obviously Harvey wines, dean and sexual harassment has been pretty much everywhere for the past few weeks and, like mad said this is not.
necessarily the domain of policy. But I think there actually is an angle we ve been kicking around for the past week or so you don't remounted chatting about how this happens and how you prevent that from happening in the future. What are the steps you take? A company as a culture If you want to have fewer Harvey widened students in the world and how do you end up with a Harvey wide seen? What are the circumstances that allow this to happen? I think one of the things that has been in meaning and surprising to me as an outsider, to all of this, as you know, a non Hollywood person is what in open secret at was that this was something where there were jokes. Ask her about women who were nominated for Oscars, not having to, like everyone, see now that they ve gotten their nomination, their jokes on thirty rock about you know one of their character, sleep With our view, I've seen that it was such an open secret that it was. Very there in pop
sir and as worsening with leather reporting in the New York Times in the new Yorker, is something that a lot of women experience to end the source of it. You know when I think about how something like this happens. One big factor seems to be the massive power imbalance that you had some one who was quite powerful working with people who are very not, but not as powerful lacked power. In Hollywood, who actresses you are less known and ones Did it become well known kind of accepting? This is a secret. They kept the New York Times recently talk to Kenneth Paltrow, who in came forward after their first story, ran who kind of mention that she felt like this was a secret chica Does she got more famous ass? She became better known to have power Melanie,
and you have a lot of people who are getting their jobs through this person, whose understanding of this is the way that Hollywood works. One of the things that even again as an outside of the surprise me the entire network that built up around the US that it wasn't just Harvey Ones, Ninos, assistance and with other peoples agent setting up meetings with him in hotel rooms that made it feel very form all that this almost became a formal part of the process that, of course, you need in a hotel room and, of course, your professional aid, one set you up for something weird and bizarre, like this end formality around. It seems to have allowed it to continue in a way it is felt like a system. It wasn't one RO, one off guy texting, someone saying can beat me in a hotel. It was an agent setting up meeting with a powerful person in a hotel who would have an assistant who would offer you a drink who set it up as a formal me,
thing, and then it would turn into quite something else, and you knew I think that is helpful in thinking through look. What do you do differently? How do you structure a business and how do you structure an industry where doesn't happen, and I think it's hard, I think it involves. I think it is likely and optimistically. I think there are possibly be changes coming out of what we ve seen in Hollywood right now, but I think one of the things has to involve you better channels for the powerless. I dont have. Unions are quite the right answer there. Actually pretty strong unionization need acting by those don't seem d prevented this, but something that gives gives people the ability to speak up again. Something that seems like a formal system seems to be part of what has to happen
in order to address the problem like this one I want to zoom in on the word formal, because I think formals are really important word here, so it's so. What you're saying here, which is correct, is that there was this weird quasi formal overlay, unless fundamentally very informal, hiring system right so Harvey Wednesday made his sexual predation look professional by having an assistant take up to his room, and started. There is someone else there and then the other person left in suits you like. Maybe it was a business meeting but but with interesting bout, it horrifying about. It is at the core. What was going on with an increased Please inform all non process. Orient did into right right, where the way you get an incredibly What job is Harvey wine steam likes you and something that you see across the stories and across timed when different kinds of abuse is not just. sure predation and an assault and harassment, but but also different kinds of, but
management, discrimination, pay discrimination. All kinds of things is a move towards more formal processes, because it's in this kind, of informal relationship Orient dead, we're running thing that a lot of abuse can take root around the edges. So, give example all the way. On the other side of this, the federal government, the way it hires the way it does races the way it does performance review. The way it does. Almost everything in terms of personnel is incredibly frustratingly bureaucratic process driven and informal. It's hard to get out of yet we know raises onto different levels. It's hard to say: hey this person, just fucking great we're gonna, give him way more money or her way more money, which is something that you can do in the private sector with much more ease. It is very, very hard to fire people but the reason that the federal government emerge that way. The civil service immerse outweighs it for an incredibly law
time the way the whole thing workers, patronage right. I mean these position, were used hit for people to arrogate and and retain power, and so it corrected all the way to this. Other side and something that I think A lot of industries over time have done, but but but hollow and specific is going to have to do now and then maybe has been doing in recent years. I mean that their way. In which I think that the wine city models, Eddie, beginning tend to weaken, which is part of what he's begun to loosen up power that the stuff all began to come out is that you cannot have or at least it is very hard over a long period of time to have a industry with much money and that much power or the decision, with a key decisions, are made so informally, primarily by white men like that is just a recipe for terrible abuse and people like D like hearing that or what you need is more meetings and you need to interview people on panels. Unlike performance, is it like you
a system where it's more meritocratic and end. You know that this more transparency and how people are being done like when we You here, like I've, just been part of our interview process, a box for fur, this daily punk, position were, were hiring and is like. We have spreadsheet of questions, and we interviewed people's Party group and we write down the answers to the questions so that we know like people are getting away Emily similar, look every time and were trying to pull bias out of the process, and that is something that off the times when you do it, people feel like oh, it's getting too bureaucratic or oh it's getting the leg you you're, taking artistry out of this, but one reason you do that and I think it doesn't have any cost, but is because it's in these- very informal, very relationship driven eyes, Spain, is it where a lot of different kinds of abuse can learn? and and Harvey wanted was a particular monstrous form of abuse I mean something I was thinking about improvising
his Gary Becker, some sort of reducing distinguished her economist, associate with university Chicago sort of that Milton Friedman, sidekick it at times Maybe two demeaning, but you know a pop out of intellectual force in the sort of free market turn in this sort of last corner of of the twentieth century and some of his work that I think right wing people's summons, really liked it to point to two like show how great they are was on discrimination but racial discrimination. But it also applies to two gender discrimination in its basically a sort of elaborate effort to show that, in a competitive market place having an irrational bias, against, hiring black workers say should be run out of the mark right and so that the solution he this was based on work. You didn't the nineteen fifty is went.
was a civil rights. Racial equality was a real hot button, political topic and he was trying to set make the case that, like free market economics, was like the way to achieve these entities. Nation goals and to me, when you look, you know not just at at her room, Spain, but also at Roger Ales and other high profile stories. You see about this Donald Trump Way, other way in some ways, I think, once in an would make the point more clearly even than Trump. You see how not true that it swayed like you might think ok. So this was an open secret p, when Hollywood like had the word that everyone say mistreated, beatbox so on. The margin actresses would be disinclined to work for him and they would work for other producers, and so those other producers would have liked better movies and his company would lose its prominence,
lose its its grasp and all across Amerika. You would see that you know even without formal dispute recognition mechanism. are strong unions are enforceable, anti discrimination laws that just like there, I wanted women. They dont want to work for abusive bosses. so in the end like the abusers, lose out, and we all went in and you can like draw up that model as Becker did and like it. It looks really nice, but I just the overwhelming force of reality is indicating that, like that is not happening, The actual way the civil rights Revolution came to America was like not the free market way that, like some very forceful laws that
in in a certain reading there, like a little bit odd there, like you, can't decide who gets to have lunch at your restaurant, you have to just take all the customers like that's what it that's what it took an I've been. I did a little frustrated by how much the conversation in the wake of these big stories has focused the idea of a sort of voluntary mystic changes. I mean I'm I'm for voluntary exchanges like men, should improve their behaviour, ventured confronting each other. You know behind closed doors when appropriately and things like that. But I'd look at things and I I said myself like how can we change with blunder instruments like what's what's going on here, that one of the things that really striking to me about the once in situations
is that if you look back at the twenty five thirty year arc of this, you would not say even now that having gone into business with Harvey Steam, was a mistake for major movie distribution companies and other people. If your thought ghetto ten years ago, was this guy's, a talented producer who puts movies together the do well So I'd like to be in business with him nevermind these rumors, like you, have been a hundred percent vindicated that judgment. If you were Rupert Murdoch and you look back on the whole trajectory of Fox NEWS and you say, Rodger Ailes seems like a smart guy. I think it's going to make it successful. Cable television network I hear maybe he abused- women, I don't care like you, ve been completely like, even though these guys were eventually brought down the like volume of the monetary consequences to people who work with them and protected them is just not heavy
and, like you need a world in which people say not like, because I'm a good person or because I want to do the right thing, but because I am a businessman who wants to make money and not lose money that I can be exposed to like massive catastrophic legal liability. If it turns out, I haven't done due diligence and I'm working reacting for these people themselves, like, if you think I like the o Reilly. they I mean they did lose some things, but it's not like the end of the world like financially they're doing fine. I think a lot of it just comes down to how much is an industry. You don't care about these things like if you actually think they are wrong. There was a peace that I'm mere Kirshner. A canadian actress wrote for the globe in male, where she explained how there, sag. The screen actors Guild Investigation process works and she writes of a sack member launches a complaint,
the union rights a letter and asked the production Hauser Studio involved to conduct an internal investigation of the alleged abuse. You can imagine its effectiveness and in House investigation by the very nature of being in house doesn't cultivate impartiality, and especially when percent who in is being investigated in literally runs the studio. You can imagine that in house investigation does not work a spy really well to ameliorate these things. So you could see an easy policy change at the union level. Have a third party, investigator instead of having been run by the production house itself I think those policies they failed, They reflect the values we have talked about this year and that shows that a lot of policy proposals they reflect. What we think is important, where you put your mom me, if it's here in DC or what you no type of investigator you choose is really a reflection of
You value, I think, another key changes having more women in power. You don't having more women in production positions, kind of creates and that's a whole series of things related to the wage gap related to flexibility in hours and related you, how you structure your workplace in unison things as there was talking about having a hiring process that tries as much as it can take the biased. that and also having a culture that twice as much as they can to take the bias out of it that doesn't reward people who stay incredibly, lay just because they can but aren't actually getting more time, but are just putting in a ton of face time to look like someone who is always at the office is going to disadvantage someone who has a family who has other obligation, outside of work. You know having all of these. I think I really grew with Matt Dominance, verily arise, natural
they are the result of concerted efforts to change things, and a lot of that, I think, really comes back to saying like we. Think this is a problem and we are going to implement the policies that might make some very powerful people uncomfortable. But we think we need to tip the balance in favour of people who have less Paul, or who, who need some intervention on their side, whereas the already a crude a lot of power? They they don't need that kind of intervention, and I think people people are often ok with this. I think in theory and then, when they start mapping it out in practice, people get very uncomfortable. So one of the more controversial pieces I've ever written was a defensive affirmative sent laws are not laws actually, as our. If I'm remembering this issue correctly, its regulations it at various campuses, we're not talking about soda legal issue, we're talking about how to campuses and investigate claims, a sexual assault
and if you don't know about this debate, affirmative consent basically booze. This move for this idea that, if affirmative consent wasn't given, then the act if referendums, because that wasn't given Orkut not have been given, because a person was heavily intoxicated, then the active basic council, sexual assault and these regulations really make people caught one understandably, so I mean when I first heard about them, they made me uncomfortable right. There is a lot that happens between college kids. That is not sir, have like people get taken away, passion people answer to stop at every moment and say: like hey like you now, are we still good? Is it still what you want began talking to her to women in my life about their their experiences with us and the rest. That that I changed my mind on these laws was that it became really cleared me that we were living in a new equilibrium where
The grey area was all against women that there there was all this space in which the norms had become such that the mistakes that were being made or the crimes that were being committed really really favoured awful, like like a culture of assault right. What people call it a culture of rape and just like every woman I do who had these experiences into something about affirmative consent laws. You know people are worried about like will somebody come afterwards feeling, like There would like they just made a mistake right. They were too drunk, and I wish I hadn't done that and say like. Oh Never I never gave consent in its true like bad things can happen, but one thing they you, it seems like we are in a society that we need to think about is changing where the equilibrium is cheap, honestly, and any people hated that I wrote it this way, but but I think it's true changing, who is afraid.
You know when I go to my friends house. I can't take their ship not legally, like I need affirmative consent to borrow up stand. Mixer no one at some, my friends, I'm really good friends with unlike not really that concern that if I, like you know something on my way out there that I needed to use that they're gonna like call the police, right that we have enough understanding that that that that it works out. But we really take property rights seriously in this country, so we make it the case that, like you, need to be pretty fuckin sure that you ve consent before you take somebody else's stuff, or you really need to ask them. You need to talk about that. You need to talk with them we in a lot of other spaces. They have not done that. We don't take it seriously and so the kinds of who we are allowing and cultivating a space, an environment in which a lot of the places
those grey area end up against the people who have lost power and and- and I think this is very particularly true sexually. We have It is a world in which women really bear the brunt of keeping themselves safe and often can't keep themselves safe and then, when they try to do anything about it, it incredibly hard. It's incredibly hard because of the way the laws are constructed incredibly hard because of where power is constructed, but you know by spirits even is talking about this stuff. Is it when you begin to talk about anything we're? Yes, there might be abuses of the new system there's no legal equilibrium. How that is perfect, that people should have the people will agree that Harvey wanting should be able to be a sexual predator, but having the kind of like pretty big Agents, asylum norms, where you really moved aware, like fear, sides in different places where people feel all the sudden. The way they ve done things forever that maybe have to change.
I'm like. Maybe they don't understand what will be required to change it, and maybe they'll like have to be more candid, and like it won't hurt them. even if they're, not even if they don't think of themselves as a bad person like That is a real change in power, and people react to that very very badly, but I I think, that what Donald Trump Roger Ales and Harvey ones. Dean and everything else we know says, is it. We have created a cultural environment in which the by It is much more is way way way way way, ah against women and way way way way to permissive other of a second culture that has a lot of assault in it and a lot of things it and up feeling like assault, in this grey area that we decided to have ultimately advantage men and that that's a big
change and it's scary change and I dont want to suggest in any way that the costs of change, but it is, it is one I think that we need to make. What can I do that by as like often rests on women? dredging up some pretty terrible moments in their past in order to effectually any kind of action. There is this kind of me two storytelling hashtag Lisbon going around and It's something a lot of women, I'll talk to you, and you know myself. I feel conflicted about this idea. On the one hand, it seems like one way you effectually changed by showing how common of a problem- this is how this is something that is pretty pervasive in a lot of it. Trees, especially creative industries, but on the other hand, it just feels a little sick and queasy that the thing women have to do is dredge up these terrible stories from their past and that's going to be the way that action happens. You need there was
list, I believe as titled shitty media man, I've never side but buzz a story about it that was essentially supposedly list of men. Women and had bad experiences with- and I think that speaks to kind of that- you know it it does not sound like a great way. It does not sound like a great policy intervention to have an informal list of like people that men men that some people think are shitty. It's not a great way to adjudicate these things, but it kind of speaks to that shift, unlike whose afraid idea you're talking about instead of women being afraid of sharing stories, its men being afraid, to be on that list. By this me two hashtags idea sharing stories. It's something I mean it's difficult, it's nice! It doesn't feel like a great thing that the way to fix this is a lot of people who have been abused, have to come forward and go through the painful process of talking about that abuse
for a very specific example here, maybe not far away so I just read the complaint Summers are both who was a candidate on the apprentice filed against Donald Trump for defamation in the aftermath of what is a sexual assault, and I think it's very telling tat sick you're, the story that she tell so she says that so she was if on the apprenticeship she got fired. She didn't wind, like Donald Trump you they had a good relationship. She thought he liked her, and so she wanted to get a job with him or or get mentorship advice so He lives in Orange, county cow foreign actually run from, but she goes to need and she's a meeting with Donald Trump and she emails. Emily says I be I'd, be happy to see you come by the office and when she comes in, he kisses her on the lips and she thinks well that that's weird, but then they mostly have a normal meeting. Any compliments her and she thinks ok, maybe XL. Fine, maybe he's got come like a year,
and thing going on and he discusses peep on the lips and as she leaves he does it again. Ok,. So then nothing, nothing, nothing and then Donald Trump is coming up to the West Coast is two thousand seven now and he calls her or how somebody call her. I don't know, And says, oh, you know I'd love to continue our conversation. Let's meat for dinner at the Beverly Hills, hotel, she's great, so she goes in Beverly Hills, hotel. She is brought by trumps. parity, be telling us all, as she alleges at random, I'm telling you what is in her complaint she's brought by Donald Trump Security, to terms bungalow, where she said like a bunch of clothing on the bed and trumpet, like no other, be found, but either heat. She can hear me in another room is like, and we like, sings out hello to her like she says action, singsong voice, and she would run for fifteen minutes any comes out, and he just
but remember this is what he says about himself: the excess Hollywood tape. It is like a magnet, he just begins kissing them. Just remember that line from him. He ended to her comment. He comes out. He just immediately start trying to capture and she's wait. Stop like this is not what I want and he likes her. Ah, you know and then At another point he tries to two grabber breast. At another point, you even basic who hate rugs genitals, honour, its its is not an end. She rebuffs him according to her. She rebuffs him. They ultimately do have this kind of weird awkward dinner. Where he's sullen and telling her to default on her mortgage. It's the whole thing is strange. I was trying to imagine there's a line that she says he said to her recent. What what do you want that night? I just wanted to have dinner and I was trying to put myself in Donald Chumps chew Actually like is there a world in which he like had kissed her on the lips at his office and
he had invited her to dinner, and she accepted and he's like great, this woman is interested in me. This is what we both want right. He does this I did not hear the part where she really wanted a job and wanted mentorship like he believes he actually magnetic- and you know everybody wants him- and- and this goes I think her too- to this point about can and in this point about where legal liability rests and how we think about these kinds of situations, I dont want to be the person if any, Donald Trump in this situation, I am not. I think that you can imagine how Donald Trump believed that there was an opening for him here and in. The kind of complete Lee, like anything, goes real tell towards man. Men are supposed to be sexually aggressive, never ask right. Like bout interrupt the moment, it creates a world in which Donald Trump tries goes for it,
A world in which the standard, the legal standard is it before Donald Trump kissed her or touched her breast or rubbed himself honor, he had to ask if he had not ass. If you just not got in permission that its I would have made his active. old. If she had tried to prosecuted you can really understand why Mendel like hearing that right, you can understand you can. I can imagine all these like. I've had dates, I like Eileen, did because someone- and you know like it was for him. cod, but you don't like it. You know that was how what I thought I supposed to do. You can understand how like a change like this, would be really scary. but on the other hand, you understand how could have protected her right in far as may be, there was an doll, trumps head, some kind of good faith mistake here, like idea that he was supposed like barrel through the awkwardness, unlike basically attacker the hopes it she would respond positively. It's really bad, and we know this is it
didn't like this is like an ongoing like there was just a subpoena in this lawsuit that got the got it put out in March. reported over the weekend, but it also just like this it. It shows. I think it's like this story. The just shows that this is not a good equilibria like it's. It's an equilibrium where, if you wanna be generous to a guy like Trump in this case, and I dont think given his history, this a lot to be generous to. But if you wanted to try like that's actually in argument for moving, from this moving away from this world where like he should have asked, and he should have heard no and then it should have not happened. Not all this other bullshit which is like it's all on some reserve- owes who is looking for a job and his much younger than tribe and his Ike intimidated by him and his there with his security details. outside till I literally physically fight him off like it's a bad situation. Yes,
I've been eight, it is a bad situation, a bright. I also, I think that we need to really look at changing the legal liability rules that exist around this situation, because I think that people understand that there are very strong incentives that women who are victimized have to not come forward right and that that's a real issue here that for one in your odds of prevailing legally are not that core. It just necessarily is usually not really clear, totally objective. Third party It adds there's sort of rhetoric in politics, rum, you don't believe women believe victims and there's there's something to that, but that also doesn't that doesn't work as like a legal standard at at a trial. Secondarily, people who want to continue
to work in a field? Dont want to be known as complainers or troublemaker swayed, and so the overwhelming tendency among women who speak up and speak out is to suffer consequences, negative consequences where precautions for their own careers and some That could be because a sort of powerful man is directly retaliating against them, but a lot of it is just that in general, it's not in your interest to have a reputation as somebody who files lawsuits against your bosses, even if you prevail, even if other people hate your boss, who you sue like it's, it's not it's not good for you. It's not it's not good for business. I thought one of the more interesting stories about this that that we heard was York stories about add that the danish tractor Lars Frontier, in which she was saying that
is a weird dynamic for her as she was already a successful and famous musician who didn't really care if she went on to have a movie career, but she could tell that the likes of habits of abuse in the industry ingrained that it like didn't occur to anyone that she wasn't gonna. Take this shit, but then her career, as an actress, was like over You know that it was just like you're supposed to get along with the famous directory work with, and if you stand up to him, I it's it's done for you and she was because that wasn't her light fright but like that that just how it is and so knowing that it is very unlikely that victims are going to come forward that it's unlikely. The victims who do come forward will necessarily prevail, and that is pretty good reason on both sides to sort of in a really egregious case
pay some money and sign a non disclosure agreement of some kind. We have to think about changing the legal framework to create really big rewards for people whose claims do prevail, because, if a really strong and compelling public interest in having victims come forward, even though is generally not in the sort of private interests of the victims. To do that, and that's different right, I mean in a sort of standard product liability case. If your recognised, if you have like a good claim- and you really were victimized by Negligence- some company, like lawyers
talk you into suing like it's. It's a good idea to to go forward with the suit and that's good for society where it makes companies really cautious about you, know making cars that exploded and things like that and the basic dynamics of these sexual assault. Cases in workplaces are not like that. There are pretty good reasons for completely bona fide genuine victims, do not bring these things forward is a ton of personal stress, personal cost, and of course, you get some financial benefit if you win, but society reaps enormous benefits from people doing the work and bearing the costs of exposing these kind of situations, and I dont like right off the top of my head- have what the answer is, but there needs to be sort of serious thought
given to to that that I think damages are awarded in civil cases, typically on the assumption that bona fide victims will want to sue and that you do have a class of cases here where bonafide victims will generally I want to sue and we need to make allowances for that in terms of the amounts of money that are involved in years of who is liable at and things like that, because otherwise, Z You just you, you have this situation where you know we can start to have these below ups and everyone can be like well how to go on with everybody sort of knowing, but the reason is it went on with everybody sort of knowing, because it was in everybody's interests to sort of keep going along and nothing about this wave of of stories and social media confessionals at anything.
that has fundamentally changed that dynamic, like you have to ask yourself like today. If there is a successful Hollywood producer today, who you have heard from many people is like involved and fucked up treatment of women, but you don't have like definitive proof in your hands that that's the case and he proposes making a movie distribution deal with you There is no reason right now to freeze him out. There is no reason to say: oh before we make that deal, I have to do some due diligence on the harassment, rumours that I've heard around you there's just no culpability. You know it's true that if the exact same kind of stuff comes out about somebody else, that one guys career will probably be ruined, but there's no secondary damage. There's no secondary fall out and this frankly, not that good odds that other people are necessarily going to be exposed. I mean,
Even nothing about this situation has made it seem like, while coming from Third and naming names and going public with allegations as it is a really great idea, is in many ways is reinforced the fact that, like that it is it, to end its? I don't know I mean I. I just think that we ve, an enormous benefit news coverage and people flying around allegations of political hypocrisy, but that we really need to sort of crack open that the legal system and change how this works. I group that I have a slightly more optimistic cake that it feels like theirs most like a moment of some of these things, you shouldn't have an impact. I don't think it's all the way there like, I don't think. Obviously Donald Trump said he likes to grab by their genitals and was elected president like. Obviously, this is not a problem that we have solved, but it seem like in the last year, you have seen with Belt Cosby
Belle Riley now Harvey wines in more and more women banding together to say that we can. We can do something about this. We can take the Whisper network public. We can expose these people and there will be some level of consequences that things will act change. These people lose their positions of our. You know I've from women. I know I e in media who are saying like hey. You know I had this experience. I'm talking to other people had this experience. Maybe we're going to to another reporter about it. Who will write about it. I think there's something about watching Harvey Winston scandal and fold that is in a way empowering. I dont think it fixes the whole system. I think I agree with you. Now that you need me even more legal pushed, it is too to make this a more to make this an easier thing to expose, but I think there is something about just like your seeing this
ball with more and more women speaking out against Harvey Weinstein's that it is different. Have this many women saying something about it and I think you know that probably doesn't open the floodgates but a crack them open a little bit more than they were before this. Let's take a break and come back and talk about tax reform there's more to life than them white papers and in politics and in policy. It's nice to just sort of sit back and relax sometime with with a nice guy, so wind, but it's so nice to make their be actually relaxing rather than a kind of stressful research. Experience. and saw on its own terms at and that's where winked cover said it spoke W? and see, and they make it easy to discover great wine without needing to research it without having to go through with like a ton of we're back and forth between snooty windstorms guys they ve got wine exports, you select ones that are matched to your taste, personalized for you, ship right to your door and starting a just thirteen dollars about
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back up tax reform is, is a big subject. We ve talked about before we're gonna talk about again, I think today we just want to talk about one sort of slice of this, which is that the council cannot make it. Visor is chaired by Kevin Ass. It formally American Enterprise Institute put out a interesting paper this week, titled corporate tax reform and wages, fury and evidence, and it puts forward the striking claim that reducing the corporate income. Acts from thirty. Five percent to twenty percent would lead to a four thousand dollar per household. Wage increase conservatively
This is an interesting seeming tension here, which is a little bit unusual. It seems like the White House Communication staff wants to go with the four thousand dollar number, which seems crazy to me, but that has it in his heart wants to say that the real number is nine thousand and is being restrained. Would sightly inverts than normal relationship between a communication shop at an economic shop I would not say that the evidence that he presents for this is before going about its. Can you this? I want to talk to us so that the corporate tax got we're talking here. If you don't pay, for it is about two hundred billion dollars a year. Yes, the waging you were talking about here is in the five hundred billion dollar range. It's a little bit unclear I mean you can. You can, depending on exactly what they mean I've, You could say he's saying wages will go by as much six hundred billion or as little aquatic quote as four hundred billion. But yes, it twice or more right.
the value of the tax had an insult soldiers. Just excited. Israel gets up, The chain of events were what you're doing your cutting taxes on corporations by x amount. Then there, research into saying through that indirect approach you are increasing wages, affirm, households by two acts or more yet Beth. Sorry, that's! What's like that channel their they talk. Thrill also, I mean the basic law,
here is that we have an in global integrated capital market right money flows seamlessly across borders, and so, if you make your country an attractive place to invest capital by, for example, cutting the corporate tax rate, then you will suck international financial flows into your country and that this is going to lead to the creation of a lot of tangible physical capital. Right so will have more buildings, will have more machines, more offices, more equipment and that by providing such a larger stock of capital, goods, you're gonna greatly increase the wage earning potential of typical workers and to give this theory its do right at. I think that if you think about a small poor country, Something along these lines is pretty clearly correct, right that I've been to out Cambodia, as I think that the poorest country,
that that I've ever been to and in Cambodia has some great assets right, like obviously anchor what is an amazing place. Dial industry in that kind of low wage manufacturing has started to get it to hold their as as chinese wages have increased. but this is like not a lot of stuff in in Cambodia. That's nice! It's a poor country, full of poor people, living and sort of shacks and and and stuff like that and to tap the potential of their tourism market. For example. They need you a lot of fancy hotels for westerners and then you might also want a bill by restaurants for people to go to, and you might want to build more factories for people to get out of the rice, paddies and you know work and in textile manufacturing, and then you, by want stores for those new factory workers to go shot
that in to get all that done out of Cambodia's domestic resources is really hard because it's like the countries poor to be less poor, then he more stuff but to get more staff they need money so to get the money, it's good to have a very investor friendly climate, so that japanese people or whoever will put the money in and get that all done. I don't think it makes any. I agree that you can sort of drop on paper this model where this exact same dynamic applies no matter what's going on, but I think it really defies common sense. I mean looking at the United,
AIDS, where government trick Treasury Bonn rates are really really low. Carbon rates are really low. Jump on rates are really low. Stock market prices, as Donald Trump likes to say, are really really high, where we have a huge domestic stock of billion, airs and millionaires. I just don't buy that like this is what's going on that, like people do not, want to put money into business ventures in the United States and we need to somehow like get our hands on some money, and then we could have more stuff, and then people would be better off like I don't. I don't see that at all on any level being how the american economy operates. What's holding us back anything like that, and to cite this evidence with which which he shows that ok,
An oecd countries that cut corporate tax rates had investment booms, but he's he's looking it post communist eastern european countries Would that not all right, but I mean again that make sense to me right that you're looking at post soviet baltic countries. I'm totally imagine that out of love, Lithuania and Estonia in the nineteen nineties. Whichever of them cut their corporate tax rate to the lowest amount would attract the most international investment and therefore economic boom. But Ireland, the island story, weighty meanings, equally or or that right that Ireland has won some tax competition game but like what does it mean that have to do with the United States like fundamental. But I mean do you keep asking this question with the answers? It is nothing to do. The like, there's been its worth
that there has been this sort of wide feasting on the bad details of this paper, practically from past chief economists and Jason Furman. Who is the who is the common house? Its predecessor came out. Internal was none of this makes any sense, learn summers, call it dishonest and then, the Kevin House of accused him of and at home, in an attack, Solaris hummers written up at explaining why he thought it was so dishonest. The tax policy centre. Poland, Berman Centre, is ridiculous It is not good analysis. I mean Kevin ass. It is one of these folks who, when he came into the trumpet administration it took some time, but that people are broadly glad to see him there I mean he is not. He's like a normal republican economists, guys been around town. People know em some some his work is good, but he's quite far out there on taxes This is even if you got Gregg Bank, you like this not who is like
Harvard economic pressure. He was one of Georgia. We bushes chief economist. This is not as far as great mank you would go. like this is not where this is. Way beyond and you know, has its thing: A very very long time has been exe extremely optimistic estimates of the degree to which corporate tax cuts get translated into wage gains. I dont think this makes a tunnel sense, but I also done think of it, there's like some mystery here, the Republican Party is really into tax cuts it. Had for a very long time, a lot of artillery focus on making an argument that there are good idea, and this isn't it streamlining aggressive version of the argument that this is a good idea. I think the tell in all this is it if it weren't true right, if let's say it is not a four thousand dollar wage increase would like not await increase. Basically, do we think any vote,
in the Senate. Would change? Do we think Heaven has its opinion? Would change The answer is no. I think that this is a view you about corporate taxation of you about what kind of taxation is just into view about like how to keep corporations going. I don't think this is actually a debate about how to raise middle class wages and All feels like of a weird side show where we're pretending to have an argument were that were really just like not having, because it seems like if you wanted to give the middle class tax cut, you could just write a middle class tax cuts that also feels like the tat instead of going through this like well, as can only two x y and Z and then you'll end up with people. Our seems I got simpler way. If that is in fact, your policy goal, it seems like there are
easier ways were heard in ways that gap it? That's why I wanted put in figure. I disagree with what you said about Gregg Mank. You re because great make you who is not in government and does not need to be as political about this stuff. What would he wrote in January? Is it? What the government ought to do is eliminate the corporate income tax entirely so not cut from thirty five to twenty, but from thirty five zero, and he acknowledged that you would have to pay for this and we proposed paying for it by creating national retail sales tax and he appears justice really believe that eliminating the corporate income tax and paying for it with a hefty tax on poor peoples groceries would make typical Americans better off. due to the incredible dynamic growth of facts of of corporate income tax, repeal and so too, to serious point, the The reason
If they really believe this, I think I often accused various figures and were above them. Takes a being liars, but is I can tell this is like the most sincerely held conviction of of conservative faith. Is that not just the one off indirect financial flows, but the compound growth, the facts of creating a more investor friendly climate will so large right has. It says in the paper that you know it's four thousand a year in the first year, but it grows over time in a way that a payroll tax cut wouldn't trade and so like this is the the route to a kind of of economic Nirvana, and this is the the supply side revolution that Ronald Reagan brought to America in nineteen. Eighty register,
Not think about these sort of petty demand, side put money in people's wallets and let them go spend it, but is that if we make a more investor friendly climate, we will have more capital goods and in the long run, will all be way way better off. I don't. I can't really understand why people think this, but it's it's like it's very widespread, its endorsed by the the legitimately like the leading experts in the right of centre worldview, and I feel like it. It like it drives the whole bus of every now that happens. Republican politics are to take a break and the new await big. We should take a break. His aim to bring paper can take the break for a white paper
people will listen to. The winds are curious, are eager or as much as possible. I am too and that that's why no you can enjoy watching the great courses plus is by this. I do they get thousands of fastening video lectures on a huge range of topics that got world history that politics they got photography even got chess in its all presented by trusted engaging experts. The great courses plus offers unlimited access to learn about anything that interests you, stream or download lectures to watch any device anytime, you want. They ve got this great course on the history, the Supreme Court, that I've been a camera, I think a lot of us. Our image of the Supreme Court is very, very dominated by a sort of heat. citizens from that the hay day of the civil rights. And those are really important, but It's really useful to sort of put those cases and no longer contacts in the history of this institution where it came from frankly serve its darker days in the late nineteenth century. When this report was a real impediment to serve social change. It really helps you understand better. How do you mean-
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Ok. So we have a white paper not from and me are, but from compound of its a competitor, assess our end that counter the competitor then we're I dont soon I think, is, moreover, a positive, Martha Yard, as rightly anyway that you know more about the guy. I don't know what to deal with, as I see it as our social science research network, I'm a loyal ass to act. If you could tell us about the internal politics, ignoring all weeds at box outcome anyway, these will do that. This is called medicated household saving behaviour, new evidence from tax refunds. It comes from Emily Gallagher? I might Messapus names sorry she Emily email me? This paper mutton, two of her colleagues RADA, Chris Non cope alone and Jorge survive at Washington stand Saint Louis John, I'm on business, school and they are looking at what happens to savings in Medicaid expansion, households. What changes when you get
medicated coverage and, in you could see this going one of two ways: people might save less money, they figure they have this backstop. That they have Medicaid. Now that they don't need to have that cushion they used to keep but one of the ideas, You know Gallagher and her colleagues this year. Is that low income families already kind of had a high deductible insurance plan was called bankruptcy that you could. usually filed for bankruptcy. It would wipe out your savings, But you know you wouldn't have that medical bill anymore and that kind of has the question of. Why bother saving if you're just going to lose all that money to a medical bill? At some point They look through how much people say from their tax refined, which is probably the largest amount of disposable income that someone who is eligible for medicated getting each year. And what they find somewhat surprisingly, is that medicate Alan
quality medicate expansion eligibility increases. Tax revenue savings by about four percent are roughly a hundred dollars for the average household in financial hardship and they measure financial hardship by asking people about whether they ve been able to pay the rent on time for the past, because, like you once again, that number seems word me: it increases the savings rate by four percent and that's equal to a hundred dollars. I can percentage points like source, never alone. So the idea they raise here- and they say this- is not true among all medicate expansion- households, though just those that really seem to be unable to pay ranch experiencing financial hardship that it actually increases savings because you're not going to lose that money to a medical. any more that you are saving this money, you're not gonna, lose it throw bankruptcy filing that it actually encouraged,
even with this, which is a surprising finding an independent context. This is not what all the research finds there's separate earlier. Research from John Gruber and am I t who has found the opposite? That Medicaid expanded on eligible anti decreases? Saving is quite honestly finding. I would have expected from this paper but I think in a larger picture of things, what are the things as paper speaks? Do for me is that health insurance often isn't about health health. as is often about money and financial protection, that the thing insurance is doing in this field. Clear, when we look at other lines, insurance like homeowners, insurance, that its protecting you from financial ruin of something really bad happens, and we see this in, for example, the Oregon experiment, where we don't see really solid Hopkins, we see people better financial footing, last medical bankruptcy, less stress about bills, less unpaid credit card bells, Medicaid is people getting check ups, and it is people getting access to healthcare, but
also a financial insurance vehicle that is a seemed in the researcher, seeing bringing more stability to a population that may not always be able to pay their bills on time. You know having that backs up and healthcare costs actually changes financial realm of families. Life did. The only thing that add to that is that I think is papers, reminder of just how devastating v in these are of not having health care when you're really really poor right, I mean dear you're, seeing a situation where the people really under financial hardship are basically refusing to save, because they need the option of going bankrupt at it like development and there's other things like this to write. Their allotted states were even now, but but practically part of the medikit expansion and and now and non medikit expansion states were medicate eligibility a strange right where you can make a little bit money, and then you go off a complete cliff right. You go from like being able to get mad
hate, all the set in not having anything at all and, like that's really scary, can lead people to something. Republicans talk a lot about me: people to try to hold their incomes down in this and prior people interview and makes total the guy. I'll lose twenty bucks a week to keep your medicated. The stress of not being sure that you're gonna, be able to take care of yourself in the event of a health crisis is a terrible kind of stress that you mention organ health experiment. talked about that on the show, but what one of big findings areas that even more you didn't see as big health changes as some people expected to sell very big improvements and the mental being drops and depression drops and anxiety. It's just its really bad to be poor and uninsured? I mean it's bad to be anything and uninsured, but it's really really scary to be poor and uninsured people really orient there
lives around trying to protect against the worst outcomes of that, and we are a more than rich and of society that we should be able to give people assurance bit. They're gonna be fine, just did serve connect. This are a little bit it to the tax discussion. One thing that I think does not receive the appropriate level of attention in the United States is that if you compare twenty seventeen to nineteen, eighty or nineteen, seventy seven, if you like wow numbers, we have adopted a lot of policy shift since that time, whose putative rationale is to increase savings and investment levels in the United States that, in terms of primarily lower marginal tax rates, a sort of special discount for capital gains special carve out from the capital gains rate visa for one k accounts how savings accounts flexible spending accounts, something to education. Savings vehicles is oughta, stuff
got on lower inflation is supposed to have this resolve, and yet in the aggregate, the savings rate in the United States is much lower than than it was in the in the Sixtys and Seventys, and that shows that there is something that we are not getting right with the sort of basic tax focus framework, and it would be really worth Y all to do more investigation of the kinds of questions that this medicate paper raises like. What actually and specific detail are the reasons that households save or don't save, money way and there's a good there's, a good story in this paper right about the functioning of
insurance, that sort of bankruptcy as a covert high value planet, and things like that, and you know what can we really do to create a like a savings friendly society right and, in this case, giving people protection against catastrophic medical expenses appears to at least potentially encourage them to do savings, whereas they know lacking that insurance protection? That savings is just ultimately gonna wind up going into a sort of, a medical billing more and that's how we used to think about these kinds of issues more in the is more on a practical, concrete terms like how is this can impact, what people do
and- and I think that would be a lot of merit to sort of coming back to the anti rethinking. The idea that what we need is to just sort of operate purely on like tax discounts for investment income channel as a way to produce these outcomes yeah, and if you want to know more about high medical bells, you might want to check out my new part gas to the impact. The first episode is about this, hundred and twenty nine dollar bandaid, which would be enough the wipe out actually lot of low incomes, families, savings and emergency room visit where a bandied was given a little girl, I'm so we are live. The first episode is up. You can go. And do it right now subscribe, unable I can read it
It really is reading all the ratings and she is reading all the ratings and you should leave her rating and make her happy yeah. Here's than uncombed here is a secret. I will share with you guys I obsessively read the reviews and it's so exciting, to hear people think about it. I've been reading out the emails that come into our impact, inbox com or email address and participating conversations in the Facebook group for the weeds man's, so the impact is alive but subscribe. We have some great episodes coming for you guys over the next few weeks awesome? That's another. A third of the way this gets say fun but allows topics, are a little bit gram, but thank it our engineer, Peter Leonard TAT, to match the Sarah to all of you are the weeds on the box media pie, casting network and we'll be back in a couple of days.
Transcript generated on 2021-09-13.