Ezra and Matt discuss two big papers that help explain America's economic malaise:
Income and Wealth Inequality: Evidence and Policy Implications
The Rise of Market Power and the Macroeconomic Implications
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This is an unofficial transcript meant for reference. Accuracy is not guaranteed.
The manual science, Thomas Picky and Gabriel Superman people talk about them unpack ass. All the time, though, want them to another sort of the weeds and the box media had cast network. I met with glaziers with me in the studio is as or climb and no one else. No one else is an empty and empty room
turn mano amano. Sarah. When she did she go on vacation at an ugly.
Despite invocations time in her seat. Everyone
In other words, we ve changed that the ceding with and were also then a tweet. The forum
a show a little bed yeah so that their these two papers. It came out that that I think, are a really good way of thinking about that. The broader con me now we're in a more
where a lot of economic indicators actually look pretty good too, so that the doubts at twenty two thousand its highest number that has ever been at damage has been wrecked cited about. That's is
putting it, I'm in the media, we have reported the head, but it's it's a high number for the DOW unemployment is down to four point: three:
and something about neighbourhood get low. Although we a good GDP numbers last quarter last year, was a little bit more modest and gdp, but good GDP numbers last quarter now. This is not that different from the twenty sixteen economy, which also was beginning to to push
these records. Get down to low unemployment dollar some thought that economy was bad unusually flipped on it, but I think that if you look at the broader
Such about the economy, a pretty soon the research has come out in the last couple of months. You see why
Why there is so much anger about
Kennedy where a lot of the macro level numbers are not that bad. I think that to me has been the great mystery of all this when you look at them like twenty. Sixteen, you see bestow
market. Having new highs, you see on a
down beneath five percent. You see,
very very strong year in median wage growth with PETE, which had been lagging release. Two thousand and fifteen with a very strong and median wage growth. We expect two thousand- and sixteen probably was too I'm not sure with the census numbers on that. Yet, and yet people are unhappy about the economy.
You know right track wrong track. Numbers are low. You saw
huge searches for candidates who had a very aggressive critique of the economy, and we we have two papers here this week- that I think
help, explain why in really paint a grim picture. Some of let you
the choice here do on a start with market concentration. Or do you want to start with the rich people? Stealing all the money, let's start with, but the inequality, because I think that market concentration helps explain Ellie, since it is an effort to help explain that the basic data from the inequality paper August of income.
They paper. This is a paper by superstar world, beating economists
spaghetti manual, sizes and Gabriel Suke men. You have heard of them be part of the kiddies book on probably have not read it, but, but I have heard of it like like most of us and what they did was the created a paper that is answering.
Of this central critiques of their previous work, maybe using certain kinds of data estimate how income in America's distributed and what they found,
that data, as we have heard is it is distributed extremely extremely unequally. The top one percent may be huge huge gains in the income distribution. Now there's been a critique coming from cancer,
It is for a while now that the problem with the kind
The data they're using is it it doesn't take into account. Government transfer programme so doesn't taken too
things like Medicaid and earned income tax credit that it doesn't taken to account changes in household,
formation or changes in the age distribution sufferance. We more single parent households
the households and be dead. Forty years ago, more women are in the workforce. The workforce is getting older they're. All these things happening, and it's been a critique
bye, bye folks got when shit, but many others that this
It is wrong that this idea that the bottom fifty percent are not getting any the gains of the economy is wrong
so basically what what size Manual and Zortman I'm so size picketing encircling did here was they begin to aggravate more kind.
Of data into their project, and I'm not gonna try to go into the weeds of this, because I will
we get a wrong. It's too many weeds, even for me, but
They're doing now is pulling together data that shows both income distribution has government transfers is able to look at things like household formation, and it looks really really really
when you go into that data is fucking grim so
Let show that the bottom half of income distribution has completely completely been shut off from economic growth is nineteen. Seventy, some quoting them now from nineteen eighty
twenty fourteen, the average national income per adult hurdle, grew by sixty one percent. In the? U S, so that's your headline number
average national income per don't go by sixty one percent, but the average pre tax income of the bottom. Fifty four
of individual income earners stagnated at about sixty thousand dollars per dulled after adjusted for inflation, the income at the top off the top one percent when up by two hundred and
percent. So, if you're in the bottom, fifty percent of the income distribution,
You did not really see arrays from eighteen. Eighty two, twenty fourteen we're talking here protects income if you're in the top one percent, your income went up by two hundred and five percent. If you
the top point o o one percent its by six hundred thirty six percent. But ok what what about government right? We do all this taxiing. We have all these government programmes. What happened when you put in the when you put the government in here
so this changes it a little bit, but it's not by much the average post tax income of the bottom, fifty percent of adults. So now, post text now includes government transfers increased by only twenty one percent, between one thousand nine hundred and eighty and two thousand and fourteen much less than average.
no income so again, average national income is run. Sixty percent per adult, when you include all that progressive taxing in spending, we do the bottom. Fifty percent only sees a twenty one percent race and something that that the
Authors of this note a lot of that. The transfer of spending is not cash at its Medicaid, its Medicare. It's all these different thing
People get, but they get him in order to be able to keep up a certain kinds of cause. It's not the same as having money to buy it.
Kids things they want or to buy yourself. The things you want is also interesting that this is. This is directly contrary to sort of that. The promise of the the Reagan revolution yeah right, like the the concept of like the right word, turn
American political economy was that we were going to maybe care less about inequality. Get big government out of the way, and the growth that would unleash would lead everybody's income
go up by so much that we wouldn't care. What's happened is like the opposite of that and a whole number of levels like inequality,
got up and it's gonna not that the rich are gaining income at a faster pace than they used to. But overall, growth is slower.
And there has been some income growth for people on the bottom, fifty percent, but that's come exclusively because of the growth of government transfer programme. Slight right. So it's like
It's a doubly. The rising tide has not lifted about what has lifted boats to the extent that they ve been lifted at all. Is the growth of
welfare state yet as a great line from from Thomas Edison worth at the New York Times, he writes so the argument of the right has to be cash market income of the bottom. Ninety nine percent of adult has stagnated
bottom. Ninety nine percent get much more expensive. Private and government provided healthcare benefits, some more government transfers and they have fewer kids. This does not seem like the great situation, especially from a conservative point of view, I think
he's sitting also with this comes up all the time- and I just I refuse
Disagreement with consumers about this,
often want to say: will you should adjust
was incomes for declining household size, where they're making the point that we're ok, fifty thousand dollars to support one kid is a lot easier than five,
thousand dollars to support three kids, which is obviously is true up to then just like a just the missing children away seems to me to be like a huge.
conceptual error, like one reason why people have smaller families is that children are so expensive
so to say, like oh, no, no, no you're, not really
worse off, because you just like didn't have as many children as you might have had
your income was higher or housing was more affordable or daycare with more affordable is,
dreamily confused in the end, it seems like something coming out of a leg
dean, seventies, left wing like population bomb mindset. Her had rather than actual conservative minds are right. You would say that, like in the good life, people would be
in plenty of money and they would be having you know, not necessarily giant families, but they would not be feeling economically constrained and their ability to have second of their children.
leaving the house can turn into a kind of scavenger high. I fear the parent of a toddler like I am really see that that's true is a tonne
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One other thing this paper does, which I thought was really interesting- is someone to hear an argument that well. This is just this modern
on me. It's globalize with so much technology. It has. He superstar effects is gonna, be happening everywhere.
not a lot. Any one country can do to stop it and their days
as in pity and indignant, are trying to create this kind of measure across a lot of economies, but one of the other ones. It began with this France, because two of these three countries are from France
and they are the stories really really different, actually in France, a bottom fifty percent of
real inflation adjusted protects incomes, grew by thirty two percent from nineteen, eighty, twenty forty. So in America, the Bonnet fifty percent of pretext stagnated and frantic grew by thirty two percent.
and which was approximately the same rate as national income per adult. So Francis Head slower growth, but if you're in the bottom, fifty percent you ve got a lot more of it.
So who what wanting this leads to is, while the bottom, the fifty percent,
it comes from eleven percent lower in France and then in the? U S in nineteen eighty there now sixteen percent higher. So all France is still poor.
Than America, including on a per person basis- I you are now
better off in the Bonnet fifty percent of France that you're in the bottom, fifty percent of America. That feels pretty damning to me? Yes,
yeah- and I think a lot of Americans have not got you- know France, they these guys, are french, so they pull. That example out, I think to troll US
but I mean that the votes I just that there also might just be very worried. They pay very easy for me to read that data. Isn't there
first acts data. As best we can tell that France is not
Is neither the richest nor the most about Terry right European country an end? It is actually a large set of northern european countries. Netherlands, Denmark
Norway, probably Ireland, possibly Belgium, most clearly where living standards for the bottom half of Americans have have slept. And then you know, if you count for leisure time. You know these things can start to take on a quite dark, Hugh Americans tat many fewer vacation days than french people, which is a plausible social trade off, but you would expect Americans to have higher material
standard than people who get two months off a year, that that would be the trade off right and we are really not not getting it, particularly for people at the bottom
says one more just out upon a one apart from this paper, because I really want to stress this: data is bad
it's really bad and I think we should be very upset about it and edit this went answering a lot of the main criticisms have been lobbied it, so they right because a pretext, incomes at the bottom, fifty percent stagnated, while average national comfort or group
the share of national income earned by the bottom, fifty percent collapsed. So in nineteen eighty, the bottom, fifty percent of Americans they made about twenty percent of national income by two thousand and fourteen that had fallen to twelve point. Five
so for every dollar made in America. The bottom fifty percent is to get twenty cents and in twenty four king they got twelve point five cents or the
exact same period, the top one per cent of that dollar.
They started by getting ten point. Seven percent and other get twenty point, two percent so
one thing they note is at the bottom, fifty percent and the top one percent have
which to their income, shares almost exactly as a Yo Yo, sometimes get
the argument. I've been in this argument and end of often wondered about it.
is what we are seeing. The rich taking money,
The poor writing in some Broadway is obviously economies not fixed. It's possible. The rich could,
Greece, their share of the of the national economy, but still everybody would be getting really robust.
As I should think that is like the Reagan. Vision right, the economy will be growing everyone
doing rapier, maybe the richer gonna accelerate faster, but because their driving so much economic growth, the Bonnet fifty percent can be getting these
huge races, bigger than they would otherwise be. I know, for example, over this same time period, inequality is exploded right, but is also obvious that the vast majority of chinese people are better off than they were before. That's like that was what we were promised was there was a China like expansion to China. Think is almost like the Reagan example than France
is like the example that conservatives have argued like you: shouldn't have slower growth, but the bottom, fifty percent or more of it and America has become this sort of. I mean, depending on how you look
but for how Haifa kid, at worst, of both worlds, we're getting this explosion in it.
Quality, but you really not getting any compensation down down at the bottom, fifty percent. So this is bad
this is a paper saying:
by numbers are real you're getting a lot of growth. You're, seeing you know the vehicle
I'm going to see me come and go faster than it is grown in other countries seeing grow faster per person, then it is grown in other countries, but that growth is being entirely eaten up by
the top one percent and not just eaten up but more than eaten up by their works
ending their share extremely fast of of of the income distribution. This is the american economy right now. It's an economy
it grows that is able to create jobs, is able to create incumbents able to innovate tremendously, but that most of the people in it,
are sharing very little of it and also that our tax and transfer system is
anywhere near robust enough to make up for
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I think it's interesting to look at this other new paper, which looks at a sort of a possible driver of of these kind of trends.
And this is this- is done by two two guys
Yonder locker and Jan Acute, I think, are their name said they. They seem to be dutch or possibly flemish, an answer there.
Taking a sort of different and I think, more interesting, look at the idea of market concentration and market power which you have been talking about.
over the past few months a year in the United States, but often in it in a way that fizzle hand? Wavy to me,
They go into a sort of big, then entirely comprehensive, but but really large dataset of financial information from publicly traded american companies and they look at
Could you calling mark ups- and this is basically in in their definition of a mark up it's? How much does something cost
This is what is the marginal cost to the company of producing another one of them right. So you know
go to Mcdonald's and big MAC costs? You know, but whatever it costs for back, sir or something
then there is the question of war on the margin. What does it cost Mcdonald's to assemble an additional big MAC? That's not how people who operate businesses think about their mark ups, which I think is important it to put pin in that, but they call that they call the difference between the price and the marginal cost a mark up, because in economic theory, in a fully competitive, totally idealized frictionless.
I get the cost of something should be equal to the marginal cost of producing it, and we have this on the internet content game that isn't I participated, ready
marginal cost of distributing an extra page view to like you. The audience is zero and consequently the vast majority websites are free, whereas in print it cost something to deliver. The newspapers to people see charged a little for a newspaper
you, even though it was, it was pretty cheap, so they are showing that for decades from nineteen fifty two nineteen, eighty or so the average market,
scanning meandered up for a little while and then down, but basically ended up exactly where they started, and there were no big changes
But since nineteen eighty they ve been going up, they ve been sort of drifting up and then spiking during each recession, and then drifting immense spiking and
Dignan spike, and so they say that
in eighty, the average markup was eighteen percent of marginal cost and its sixty seven percent. Now
say that you find this in. Essentially, all industry is that it is not just like a handful of really big companies that, in some ways of small companies, see the same thing, but that's because of the the composition
us all the different sorts of of industries that that exist we hold here, could be part of the paper that I kept reading over and having a little trouble coming.
but the vivid example for myself so they're saying that I think when we think of concentration, we're thinking of the biggest company, what they're saying the markets are not concentrated in be, like literal biggest companies way, but their concentrated in mid size companies, though bigger companies within an individual industry, yeah
Well, it's Gimme exempt like what you think is the wage others like a few levels of this analysis. You might at first say like a high like there is increasing
get power. So that means that, like all of the money is going to the biggest companies like Exxon, you look at the dad and that's not really true. It's happening at small companies is as well
big companies, those they ok. We then look at industry swayed. So all I'll companies are big company, swayed, there's no like mom and pop leg. You know a desert. It doesnt work like that, whereas you look like the restaurant industry and restaurant companies tend to be pretty small right in the scheme of things like even tv. I Fridays is like not that big of a company
in the global view of things, but it's a big company for a strong company and so they're saying that if you look at the food service industry, the rise in markups is concentrated in the bigger food service companies. Even though even the biggest food service companies tend to be modest compared to the biggest oil.
beneath an and software companies, and you know some industry is right. If you think about like things related to construction, are the companies are really small way compared to the even food serve spread like there's no chain of plumbers right there
all really small businesses but their showing that China within specific industry sub sectors, the bigger companies, tend to be getting the larger mark
They are showing that this is happening across all industries, which eight I do think is important when it comes into. How do we want it interpret this the sort of data I seen it-
bull critiques of this paper, one from from Adam Smith, Institute that a thing is just wrong: they
try to say in this M Psmith Paper, oh
it's all its biased by survivor Shep, because obviously, companies that that are able to charge higher prices will was live longer. But there's a chain
trajectory right from nineteen, fifty two nineteen, eighty, it's not going up and then from eighteen. Eighty, two, twenty fourteen, it is gone.
So you need some problem with the data that would explain that flexion pointed and they don't have that
Taylor Cohen rights. I think correctly that these
Like throw around the english language word like market power and the way I would put it is
You can imagine, reading this paper and the voices of two different politicians,
Elizabeth Warren is gonna, say. Ah, we have a paper which shows that the biggest players
each industry are massing. More and more market power do too lax government regulation, there jacking up prices, putting profit
had a people, it's driving wages, down an increasing disparities, wealth in income
You can also magic marker, Rubio reading this paper and saying
What we are seeing is that big government and red tape is increasing, fixed costs for companies all across the board. It's getting harder and harder to enter a new
business to form a new start up and its,
Todd Lange. You know a handful of incumbent industry is decreasing opportunity and decreasing growth across the board. Those two lines are both, I think, entirely consistent.
the actual research finding here. There's no way in this data to distinguish between a classical
application scenario in which somehow I have gobbled up all my competitors and I'm just like jacking prices up to screw consumers and a question of like if you make it really hard to get building permits, then the cost of operating a restaurant becomes
Firstly, the fixed cost of getting your building and the marginal food and labour costs become less and less significant. So your mark up
as they measure them will go up and up, and you in both cases, have the same kind of like bad outcome, but should be looking at a pretty different policy fix, depending on which of those you think is happening or, but rather I think something is interesting about this paper or two things are interesting about this paper. One is that it is a paper that is not
Lee measuring market power. Its paper measuring this definition of mark ups, where there's no measure in here of industry concentration is no measure here of you know what habit indifferent industries and more concentration. What they basically done is take an outcome. They think would come from firms having more market power. They find that outcome is happening across the economy in all kind
different industries and the same will that clearly shows it somehow or other. These firms are developing more market power, whether its by consolidation
concentration. I think we have reason to believe it is, but the authors cannot go there.
This paper is not a measure that this papers just a measure of whether not not businesses now have the power to charge higher prices than what they are paying to producer products like that is what the paper show
The other thing is interesting about this paper that an echo your point about the two political ways to read it. The second half of this paper is about
the math, showing that this outcome is consistent with, like em,
We single problem in the economy. You could possibly imagine they literally
that market power
can be behind. Could declining
labour share, which is how much of them
The economy goes to labour, declining wages, declining labour force participation, labour
market. The slowdown, labour market dynamism decrease job mobility.
Lower migration rates
failing. That is a lot of things your explaining guess. I was not real
able to evaluate how persuasive the exponent
This is behind every one of those things was. I'm had some interesting graph, showing
there. There were places where, like the charts, really seem to track each other of like this problem and also mark ups, but
I think they are showing here- is that I'm not sure they are proving that all this coming from markups with their showing is that these are all
stories. Things were worried about an economy that are consistent with a rise in market power and so
if you're thinking about how much of a problem corporate power is in
market concentration and other things that you think lead to more corporate power. How much a problem you think it is for the economy. I think this paper is very strong evidence that you're onto something
that the causal mechanism, your positing for what's gone wrong in the economy is at least a plausibly. True causal mechanism, being
I do think there's been a long strain of argument to men and we ve had it even on the show. I think saying that, while your big companies, furthermore fish and they bring down prices, is a lie.
the Reagan era, Anti trust staff which annul note this view, these numbers go
UP and eighty. So it's a round happen
at the new antitrust. Thinking begins to come into vogue has been this long time work when you see it in some of the big players like Amazon, the right who people like they're, going to hold down prices, they're going to increase labor market dynamism and end with this paper.
Is actually across an economy. If you're seeing markups all across the board, you're looking
at a situation consistent with the very things you're worried about not inconsistent with yeah
The one thing I would say, as you know, I was trying to present like two different modes of high partisan political analysis of this
and I think there is good reason to believe that, both of them
true and that is important to keep both of them in our heads, I think in the fine also the two years of the Obama administration, Jason, firemen and the council, we cannot get viruses did it did a series of
birds that I think you could think of his all looking at different pieces of this same markups issue that that this research stems
it's an you know they did one on the growth of licensing requirements due to practise a tray it right this minute.
huge increase in the number of things that you need to do for a semi arbitrary jumping through two hopes to be able to cut hair or fix locks, or do various things like that. There's been a huge increase in the burden, sameness of zoning regulations and the difficulty of creating new house
in the most expensive areas. There has also been a declining vigorous nests of merger enforcement and a tendency for companies to be allowed to combat
in the end, and we ve seen research showing that mergers have led to a lot of price increases, are what where they ve happened, and so
there's been a tendency, though I feel like in the think tank food fight world to posit these explanations has
competing accounts of the declining dynamism of the american economy. So people who are like really
gun how about more merger enforcement- or you know some kind of break up Google scheme referring to downplay some of that dead. Zoning and licensing type research, and vice versa. What's most important, I think about this- is that it does show that the increasing markups existence
all industries essentially, and it is simply not plausible to believe that inadequate merger enforcement is what's responsible.
for everything all the way down into a lot of sectors of the economy that are clearly not dominated by a handful of national chains. Like I have I eaten restaurants. That is not how the restaurant economy works on the flip side is clearly not the case that argue, patient licensing is driving high markups in the south.
Where industry, where they dont have occupational licensing and it clearly is dominated by a handful of a really big firms. We
doing of you could argue that Non competes have kept it right, concentrated in California. I mean
There's there's things you you could say, but I mean there's clear
Some of this happening on both sides and I thought
tat telephones be some, as I thought was a little bit odd. I mean he seemed to be throwing up a kind of argument from anecdotes
is that like ask anyone and they'll tell you that, like the economies more competitive than it ever has been before that which is true. That is what everybody says. I, but also everybody, says the people change
more often than they used to and the people move more than they used to and that technologies displacing workers at a faster pace than it used to Anne, and none of that is true, he's written several good books about how none of that is true, and given that none of that is true right, like people are moving last people are changing jobs less the economy is growing less overall, something like what they are saying about. A decline in the volume of competition also has to be true. It's each is not possible for the economy to be in this, like four netteke pace of competition, that business been perceived themselves,
to be in, but actually nobody's investing nobody's, upgrading capital equipment. Nobody is moving. Rank is like if we were competing as vigorously as you thought. You were you. Some of that stuff would be happening and like it is like
The pace of change is slowing, even opium.
don't seem to perceive it that way:
you're busy, I'm busy everybody's busy these days. At the same time, we have little snatches of time here and there and a lot of us if we totally honest with ourselves our kind of wasting their time steepling but their phones, I so what? If you could use it instead to really accomplished something and learn? That's what the blinkers step is about. They ve got over two thousand of the best selling nonfiction bugs transformed into powerful packs it you could reader, listen to, and just fifteen minutes is, I guess, or a cheat for
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These attempts eight through tenth, it's a great value when take it gets you access to all twenty five live shows throughout the weekend, but now here this fast that com to get tickets- that's now here this fast that cop. I think this is a good point. It should emerge these two papers Abed. What word, what we're seeing painted here is a picture of an economy that, on the one hand,
all of the income gains are being pulled in by the by the rich, basing economy where power is.
Power is being exerted, much more so by the wretch they are. They are being able to increase their mark up between what they preach.
And how much money they get for it? And then
the business side to saying the same thing: the powers being held up by corporations by somewhat bigger ones in every industry that they are being able to increase the amount they take home based on what they produce
and that in both cases it does not appear to be doing the economy much good, and I do think that this is a place where we are so focused on what the Trump Administration is doing, that I think it is sometimes hard to keep an eye on what they are not doing. There is no economic theory, currently anaemic,
the Chump administration and in their policies, except for a generalised orientation towards deregulation? They dont have a chief economist, like the sea aid, does not have a chief economist appointed to it. They are now,
running any kind of overall theory Emmy towards the end of the Obama administration. As you know, there's something interesting meeting in pap in their CIA, with Jason Furman around trying to look at some of this monopolistic stuff in and try to think about how to do it. They began talking about occupational licensing and and and trying to develop again
okay, we did all this stimulus send and financial rescue things. I couldn't fix the economy, even if it is a bird aduro worst catastrophe. What do we have to do next, and I do think it is
pity on right now and end of failure. Is it
There is no work in any serious way happening in
the decision to diagnose the problems in theory, he ran on and come up with something to do about them. They want to do tax reform, but they do not
what kind of really why they want to deregulate cause like that
instantly regulations. But again it's not a targeted kind of approach, and I just this is bad. Like bees, these papers, a single summit,
deeply fundamentally wrong in the american economy, even if the economy as a whole is still growing, okay and still creating jobs, and so even creating income, and
I am not sure that their though I think we are just in appeared in the Trump administration of drift on this automatically sit out pretty for back half Obama when they did not have really power to pass much. But this is not.
these are real problems and we are not doing anything about it.
Wait a minute Obama. I think we ended up in the second term in a substantive drift, but there was a intellect
Billy exerting tat when they were, they were trying to trying to work something out to paint and even darker portrait. Donald trumps. View of things is that you should ask which business man about the economy and that Donald Trump himself could run the economy,
because that he himself is in which business ban and there's a fair amount of evidence from what I've I've talked to people on the other
credit side, who did focus groups and and looked at things, that this is very persuasive to a lot of sort of normal people that they think of
business owners and managers as a kind of economy experts who, if they told their thinking a little bit, you know what would know how to get it.
But if we are looking at her is a problem of an economy that has become systematically insufficiently competitive, ripe, calling up the ceos of the twelve biggest technology companies in America and asking them. What can apple, Google Facebook IBM
Microsoft, Amazon or agree on as an agenda like they are going
agree on an agenda that makes it harder for new companies to compete with them and that
this incentivize them to even compete with each other right. I mean
obviously not marketing sit down at one of these ceo round tables and come up with like an explicit. Like here's, how to make our sector a cosy cartel, but that's the natural drift of this sort of policy making process. If you get a lot of existing successful business men in a room and have them describe to you what their problems are
and try to work out something in common you're, going to develop an agenda for cartel accusation. It and you are going to very much exacerbate the sorts of issues that the economy actually seems to be suffering from
which is that it is it's too hard for smaller companies to be founded,
rise and compete, and there is too little pressure on existing companies to really invest and sort of poaching into each other's landscapes, and it's not just the Trump, doesn't have an agenda to do that. He doesn't have a team that could possibly
to the creation of an agenda like that? He will talk at rally. Sometimes we both want to say it's a gas, but I don't think it's a gas. I think it said it's a field tested message that works. It's like I got a rich guy is my commerce secretary and another rich guy.
Your secretary and Gary Con man, easy chairs, he's super rich too, because, like you want you want, which guys handling you're you're kind of money stuff on theirs.
I think a profound analytic error there
Sometimes what you want is a bunch of pointy, headed technocrats, to kick the tires of the system and come up with a remedy and end trump does not does not believe in academic or bureaucratic expertise as
phenomenon, that could possibly exist in in the universe and so far it has only done modest things on the policy front, but the things he has done, particularly on telecom regulation having been extraordinarily harmful. In this regard, they ve been to sort of shift power and leverage and influence back toward the telecom infrastructure, owning companies which, as you know, a really pure example of a sector.
that is not dynamic or prone to dynamism. They own these cellphone towers and they just gonna wanna charge you a fee to use them a fee that is much higher than the cost of operating them and they want to consolidate. They dont want to compete. They want to leverage that market power into sort of non neutral treatments of of internet traffic- and you know Trump in his fcc- are going to. Let them do that because if you get a round table business, men like they're gonna tell you that's what they
did it and I think the other piece of ass he opened. It also contributes to these kinds of analytic errors. I think this is really what you see in the picky size and zoom in paper. Is that the economy is working,
currently than you do, and we are very. You stood looking at a certain set of indicators and,
drawing a macro view out of those indicators. So what is happening to growth? What has happened in jobs? What is happening to the DOW Jones
more than about half of the country has zero die
is invested in the market. If the market is going well, it says nothing about half of the country. Now it would tell you
Corporations are doing reasonably well in and not a good thing to care about, except that corporations doing well does not appear to be going downward to her
the country right there, not sharing that wealth, so the not getting the gains of the stock market. There are not getting the gains that the corporations that the stock market is measuring, r, r, r r locking in so. I think that one other piece of this is that we do need
think about what are we tracking in the economy and an? And what are we watching for every one with the EU?
look at his median wages and I think that's a valuable one to look at, and I do think there some there's some real evidence is going up. Although will see how long that that that goes for but
In a general sense. We
real ass. She ran out distribution and I think it is increasingly clear that you can have a report.
looks like a strong economy, but the gains are so anew unequal.
Share that it actually isn't truly a strong economy, something that is of a nice.
line in the the inequality paper we ve got is that they they right. They, I think they make
comparison well in it. I wouldn't go too far with it, but but I think it's worth noting there are
in nineteen eighty fox in the top one percent earned twenty seven times more than the Bonnet fifty percent. Today they earn eighty one times more, so the top one percent or eighty one times what people the bottom.
percent earn on average, this ratio of one day. Eighty one they note is similar to the gap between the average income in the? U S and the average income in the world's poorest countries
among them the Democratic Republic of Congo, the Central African Republic and Burundi, so you're. Thinking about how big the gap in America is now, obviously some one in the Bonn if it wasn't America's way better off than someone in the central African Republic boy you're. Thinking about how large the gap is between people, the top and people not just
bon a bullock just average folks in the bottom, half the distribution you're dealing with a gap that is unbelief
the enormous much much much much much bigger than it used to be, and so, when you're looking at that,
looking economy where the top thirty percent- the top twenty percent,
seem actually able to capture this much of the gains you can have an economy that looks healthy and there's a whole other country at the bottom. Half of that
to me it is getting nothing out of it, and so I do.
it even outside the context of Trump everything you say about. Who is a simple I think a spot on. There is also the
issue up we're very attuned to
comic numbers. It are not really teaching us how much anymore
I would also say I mean this is something that's been kicked around a lot, but it
there's a vision notion that is out there that that David Brooks put forward in a weird combat,
and which is and that that rigid reads as put forward in a book that is
less silly cop could dream quarters- and this is very much the sort of politics or Donald Trump in its focused on emphasising the gap in lifestyles and economic outcomes between, I would say, people, Roman ninetieth, presentable, sort of elite professionals.
What you would consider: fancy jobs and sort of median working class people. That is a real gap. The gap in how people live in material living standards is is large and significant. It's a gap that has grown somewhat, but one thing that the biggest Zortman charts really show is that this is it now
explain very much about the macro economy. If you look at people in the ninetieth too many fifty percent, or so they have continued to do.
Similarly, well in the post, nineteen eighty situation, as they had done previously at their incomes, have grown a little bit more slowly than they had grown in the past its for people in the bottom. Ninety percent things have grown much much more slowly slowly and we on the top two, but really point. Why
percent incomes, it skyrocketed and it's a it's a real, were beaten switch. I think, to try to get people to see
the meaning false significant divide in the country as being between the people who are in a while. You know our are buying organic back, Troy at the farmers market and in the media in American. It's true
who did that gap has grown overtime, but it's gonna tiny amount compared to the gap between the people who
a rich enough to own tons and tons of stock and to make a living off of ownership of capital. That's when his Willie sort of
accelerated, and that's why you should be careful when looking at these kind of stock market indicators for things that
is. A number called Tobin Skew and that's it
ratio of what stocks are worth to, what the kind of stuff that companies are made up of
is worth, and their number has gone up a lot over the past thirty five years, which is to say that just owning companies has become more lucrative rather than companies have generated lots and lots of additional equipment and envy
for people and it is extremely insidious- and I think, has
come to be a little bit hidden
as the number of truly wealthy people is actually
sufficiently small that they are not
socially present in most peoples,
I in any kind of meaningful way. I think a typical person
in a normal suburb of a medium sized american city is going to roughly never encounter a member of the top point. One percent and you're gonna have in your head that, like the richest guy, you meet like the dental
It is like a rich guy, and he is, I mean, there's there's a big difference between May
forty grand a year and making two hundred thirty grand a year or something, but why,
You're. Seeing in these parts is that the gap between affluent profession,
all's, unlike truly rich business owners, has just exploded in a completely insane
that I have not. You know, isn't done
from is not going to address it. But I don't think the Obama administration really talked about that kind of inequality in her in a persuasive or meaningful way, but you know would be
waste of meaningful at your recommendation for this back ass, dear friends and tonight,
everyone you now, I'm no. You said you should rate the weeds. You should recommended your friends. You should check out, I think, your interesting
and Vanderwiller excellent pop culture. Past worldly
from our are foreign to you. My I'd, listen to their upset about the Philippines, learn to talk about their kind of wacky, but
turns out more horrifying, then I realized leader over there and you should come back
Friday for another exciting up. So you and Sarah did you do these end
hard cost recommendations, and you always forget one. I don't forget
don't listen to my pockets b. Should come attributes awesome seen a couple.
Transcript generated on 2021-09-13.