← Pitchfork Economics with Nick Hanauer
Pitchfork Economics with Nick Hanauer
AI Job Loss Is Real. The Catastrophe Is Optional (with Kathryn Edwards)
00:38:36
Loading summary
Transcript120 lines
- [00:02]
A
The rising inequality and growing political instability that we see today are the direct result of decades of bad economic theory.
- [00:11]
B
The last five decades of trickle down economics haven't worked.
- [00:15]
A
But what's the alternative? Middle out economics is the answer.
- [00:19]
C
Because the middle class is the source of growth, not its consequence.
- [00:23]
A
That's right.
- [00:29]
B
This is Pitchfork Economics with Nick Hanauer, a podcast about how to build the economy from the middle out. Welcome to the show.
- [00:45]
A
Well, gang, today on the podcast, in addition to being joined by a fantastic guest and old friend, I am joined not by Goldie, but with my colleague Paul Constant. Paul, how are you?
- [00:57]
C
I am just fine. Usually I am the substitute you. So it's odd that we're both in the same place at the same so. Yeah. So I'm coming to you today with a question, Nick. Do you know anybody whose job has been lost to AI?
- [01:12]
A
I don't think so. That's a great question. I don't think the answer to that question is yes. The people I tend to socialize with are not people who are likely to be directly affected by this. I should just say that for my own part, the way I look at these tools is that they make all of the people that, you know, like on our team just more productive. Right. I don't want less people. I want the existing people to do, be able to ideally do more and better work. And I think that, you know, I suspect that lots of companies will look at it that way right there. There are two ways to compete with your competitors. One is to be cheaper, the other is to be better. Yeah, right.
- [01:55]
C
Well, unfortunately, we're in a, we're in a, an economy where a lot of people choose the cheaper option than the better option. I know, I mean, as a writer, I think I'm maybe a little more sensitive to this than some other people, but I do know, I definitely know people who have been replaced by ChatGPT. You know, I know it started with the freelancers for sure. Like the people who would write blurbs for travel publications and things like that. Like the sort of low hanging fruit of large language models is. They just get. They were, is very quickly after. You remember there was a point in, in on social media where Everybody was making ChatGPT write sonnets and things like that. And it was like, it was, it was a toy. It was a cool toy that everybody was playing with. And almost immediately after that I started hearing from friends who lost their longtime freelance jobs and things like that started at the freelance level for sure. And you know, and it's slowly Moving up through the ranks to the people with a regular job. So I don't have a solid number of how many people, but I would say at least a dozen people in my social network have, have lost their jobs to AI. Yeah. Yeah.
- [03:04]
A
Wow.
- [03:04]
C
So it's, it's, it's real. It's, it's definitely real and it's out there and I think we're, we're just sort of starting to see the effects of it.
- [03:12]
A
Interesting. Well, today on the pod we have somebody who's thought deeply about this. Our old friend, labor economist Catherine Edwards, who has a new three part series out for Bloomberg Opinion on the American labor market and how it should react and adjust to the impact of AI. And I think she starts from a very, I think very defensible point of view, which is you don't need to know exactly how many jobs AI will eliminate to know that our current system leaves workers exposed to the circumstance. It makes perfect sense to begin right now, not in a year or two years thinking through how we might adjust the existing frameworks and systems that we use for unemployment to be better and more resilient and more flexible. As we watch the AI thing unfold in whatever form it takes, I think it's quite difficult to know what will happen over time.
- [04:21]
C
So this essay is really thoughtful and sort of far ranging and draws some conclusions that I haven't seen other people in the ongoing omnipresent debate about AI. I think she really hit some great points.
- [04:35]
A
I agree.
- [04:36]
C
Let's talk to Katherine.
- [04:42]
B
My name is Katherine Ann Edwards. I'm a labor economist. I'm an independent policy consultant. I'm a columnist for Bloomberg and I am officially an economics influencer.
- [04:54]
A
Well, that is so great, Catherine. Am I an economics influencer?
- [05:02]
B
I mean, I think if you talk about the economy and you have enough followers, you could be an economics influencer.
- [05:09]
C
Do you get a plaque?
- [05:10]
B
Do you get a plaque?
- [05:11]
A
Do you get to join a club?
- [05:15]
B
I felt like, not embarrassed. You know, you go through like the PhD training, it's very formal, there's lots of expectations of what you're supposed to do. And then within 10 years of getting that little doctorate, I'm sitting there talking into my phone saying like, here's what you need to know about Social Security's long term shortfall. And there's a part of me that's like, how did you get here? What are you doing? But then the truth is like, this is where people are. I think experts really like to their expertise almost like buys them out of having to communicate how other people prefer. Like, if I'm the expert, I talk how I want to talk. And I think I've learned over the years that you have to meet people where they are. And at first it was weird to be like, yeah, so I'm on TikTok. And there was being at, like, a very professional conference when people are like, well, I got into this journal and I was like, well, I'm on TikTok. That was. That was like a little. It was a little hard, but now.
- [06:07]
A
How many people read your journal article? Nine. How many people saw my TikTok video? A million.
- [06:14]
B
Yes, it is. I think, you know, you always. You gotta, like, fake it till you make it. I tried to be really confident in talking to people of, like, I'm on TikTok. I'm just like, really, like, hold it in. And then I've now found that there are so many people in the economics profession who will reach out to me to tell me that they would rather throw themselves in front of traffic than do what I do. But they're so happy that I do it. And they're like, I don't have. Like, that chip is missing. Like, I can't do that. Like, I would just. It is my worst nightmare. But there. But I'm so glad that you are doing it. So I feel like I've kind of come to a place of ownership of being an economics influencer and feeling. Feeling the love of a lot of people in my profession who are proud of me and happy for me and glad that I'm doing it.
- [06:55]
A
That's fantastic. Well, speaking of being happy you're doing it, you recently wrote a series of really interesting pieces for Bloomberg, where you are a columnist. Broadly, the impact of AI on employment and the structures that we have in place or don't have in place to meet that challenge. Why don't you tell us a little bit about the three pieces you wrote, and let's talk about what you think is most important for people to understand about the coming transition.
- [07:25]
B
You know, I took as a given in writing these pieces that there will be AI job loss, and it could be subtle and it could be catastrophic. But from a policy perspective, you know, what do you need to know to actually act? You need to know that job loss is coming. That's enough information to be motivated to make a change. So I lay out in three pieces, if the information you need is there will be layoffs coming from AI, then let's respond to that problem. In the first piece, I outline how we need A new short term unemployment insurance system. The system we have was built in the Great Depression. It has a lot of strengths, but we also know all of its weaknesses and we can build a better one. And the second piece, I advocate for something the US has never had, which is a long term unemployment insurance system. Something for people who, you can think of it as the difference between being able to get a job on your current resume versus having to do something different. You know, the resume is not working and you have to make some type of change. And that's really the kind of the mark of a long term unemployment unemployment. And then the third piece was to say, you know, even if you were to have a very good short term unemployment system, a very good long term unemployment system, part of the problem of job loss in AI is that the floor of the labor market sucks. The gap between a high class job, a middle class job and a working class job is just, they're oceans apart. You know, you have a job that is white collar, where you get health insurance, where you get retirement, where you're paid a decent wage, and then the alternative is to go into low wage shift work where we don't have a viable minimum wage, we don't have enough regulation of shifts, you might not even get sick days, let alone holidays or vacation. You're not going to get paid family leave. And it's really the gap between how far we let the top and the bottom of the labor market pull away from each other as part of the fear of AI job loss. It's, you know, it's, it's not that I can't take any job, it's just that the bottom is such a terrible alternative.
- [09:22]
A
Well, it's not the bottom. It's anything but the top.
- [09:25]
B
It's anything but the top. Yeah, right. So that was kind of the pieces of like, let's, you know, we, let's just logically like if this is the problem, just identify the solutions, short term, long term, and let's fix the outside option.
- [09:37]
C
I just wanted to sort of contextualize where we are. It feels like we're at a new phase of the AI conversation. Like the, the first part was like 100% sugar rush hype. And you do a little bit of contextualizing about the, the AI apocalypse, the jobs apocalypse. And I was wondering if you could sort of unpack that a little bit as we're getting started, just so we know sort of what is the size of the problem now and what do you think the scope is going to be in the near future.
- [10:03]
B
Oh, is the rapture coming? Yeah. You know, I try to put forward two pieces of information, you know, or maybe three pieces of information for context. The first is, you know, the way that technology absorbed is absorbed into the economy is through productivity, and that changes labor demand. So if I. If my workers can do a certain amount of things on the job and then they can do more, I'll change who I want to have employed. That's kind of like the kind of meanest, simplest way to think about it. When you look at productivity in the United States over almost a century, there's no jumps. There's no like, oh, and I can see, like, that's computers or that's the Internet, or that's Microsoft Office. Like, you don't see any of these massive technological changes incorporated into productivity because the technology being developed is very much at odds with the technology being adopted into the workplace, which also is at odds with the technology, leading to changes in labor demand. The technology can be developed quite quickly, but its adoption takes a long time for workers and employers to feel comfortable with. And so I just try to put in perspective that. I realize that AI is different and special, and they all tell us that. But historically speaking, every new frontier technology that was hard to imagine, it didn't have a kind of rapture event either in the productivity side of, like, and now we're all 10 times more productive, or on the layoff side. The second piece of information I offer is that I have seen estimates that AI could lead to a loss of somewhere between 5 and 15 million jobs. And the sense of urgency and crisis of like, we're going to lose these jobs, I think has a really classist element to it. I even had someone who worked in AI tell me that the difference between this technology and others is that it will replace human intelligence, which is a very assertive way of telling me that people who are working class are not intelligent on the job and that manufacturing workers being replaced by machine, well, that's not the same as intelligence.
- [12:00]
A
That wasn't a big deal.
- [12:02]
B
It was so classist. So I think when people bring it up, I say, I understand that there might be a crisis of 5 million jobs, but it seems like you don't care that much about these seven and a half million unemployed people we have now. Where is their crisis? Why don't you care about their job loss? Why is it just these sets of workers that could be smaller than number than the unemployed people we have now? The third piece of perspective I offer is that the US economy has in fact experienced the rapture that AI proponents and hawks and doomsdayers talk about in the first month of the pandemic. Within five weeks, the US economy shed 22 and a half million jobs, which is larger than any single estimate I've seen for AI. And they did it in less than five weeks. Here we are six years later and people don't even remember it. Because policy responded with unemployment support. Policy responded with cash to families. Those people got jobs again. The labor market recovered within three years and we're moving right along. So the job loss isn't scary. It's all about the capability of the policy response. And so as much as they want to talk about how terrifying it will be when we have these mass AI job loss, you just need a good response from policy. The doomsdayers really don't think about, I would say, the perspective of other actors in the economy or other periods of economic history we've been through. And when you add that in, they kind of maybe take a step back and see that it's always hard to give this lesson in real time. But maybe they're not that important or special. And thank you. I'm an economist. This is my job. You are neither important or special. You're welcome.
- [13:37]
A
Yeah, we matter, you don't.
- [13:40]
B
Yeah.
- [13:41]
A
Okay, so great context. Why don't we kind of march through your analysis a little bit. Let's start with the system we have and its strengths and weaknesses.
- [13:54]
B
Sure. We have a state administered unemployment insurance system. It's paid for via a payroll tax that the employer pays only and it's distributed at the state level and states set the tax rate and the benefit level. Really good things about this system. It's highly efficient. You end up with a trust fund. Everyone pays into it, everyone can claim out of it. It is very good in terms of coverage. It covers all W2 employees and it can be scaled quite easily because you have a track record of everyone's wages. You can make the benefit individualized. So it's not like you lose your job and you go and get the unemployment benefit and it's like food stamps where it's need based. Your unemployment benefit is based on how much you earned previously. That's great.
- [14:37]
A
Okay.
- [14:37]
B
Those are all good things that are bad. Yeah. It shouldn't vary across states because some states have good programs and some states have bad programs. But everybody has decency on the job. So they should have decency out of the job or should have decency on both on the job and off the job. It shouldn't vary based on your state. Right now, the tax is structured to be experience rated, which means that it would make sense in manufacturing employment in the 1930s. But basically, if an employer sends a lot of people into unemployment, they have to pay more in taxes. I mean, I'm all for soaking the rich and the employers, but it creates horrible incentives in the program to keep your workers from benefiting from unemployment. And I think the last big problem is unemployment insurance is gatekept by your prior employer. Your prior employer has to give you permission before you can get the benefit. Those things can go. But the good news is that's really easy to change. You set up a federal payment system, a federal benefit system, or sorry, federal tax system, federal benefit system. Everyone's entitled to the same thing. But I think the kind of like emotional hurdle for a lot of policymakers is that you have to let just anybody get it right. Someone could be fired, someone could quit and then walk down to the unemployment office and get a short term benefit. That's a huge psychological hurdle for policymakers, but it's the only alternative to their employer gives them permission.
- [15:55]
A
Is it permission or is it just an acknowledgement that you were not fired for cause?
- [16:01]
B
Yes, it is an acknowledgment that you weren't fired for cause, but it operates as permission.
- [16:06]
A
Okay.
- [16:06]
B
In the permission part, I would say that some of the more effective tactics that employers have used is delay. Like, you can't get unemployment insurance when you apply for it until your prior employer approves the claim to say you weren't fired for cause. They have 21 days to do that. So typically they take like 20 days and seven hours. Yeah, I mean, they'll wait until the very last day. By which point you've been, you had to wait a week to apply and they get three weeks to adjudicate the claim on their end. And so they, by that point, four weeks have gone by. I mean, if a month has gone by since you've lost your job, you've, you've had to get the car payment, the bills, utilities, like your rent, food, like you, you are a month into this before you can get any help. And by that point you might have already taken another job or you've given up and just assumed you won't get it and there's already harm done. So the permission part is really just. Maybe permission's not the right word, but it's like they hold onto it. It's in their power.
- [17:06]
A
Okay. And then in the second piece you wrote, you spoke more directly about what you thought we should do on a national basis. Isn't that true?
- [17:15]
B
Yeah. The first piece kind of goes through right now. We have one 26 week benefit for unemployment and you really need to divide that in two. Have a more generous, very short benefit. Think like six weeks like you, you walked out, you're able to get through a month of stuff and then if you need longer, if you need an unemployment for a longer period of time, then you go in and you reapply, you get counseling and services. But most people who are unemployed aren't unemployed for that long. You're kind of just giving them a bridge to get to the next month, by which point a lot of them will have actually found a job. Okay, so you take the short term program and you split it in two.
- [17:48]
A
Okay.
- [17:49]
B
The second piece really talked about this idea of a long term unemployment system. People who don't get re employed even after say nine months to a year of looking. I think this gets a lot of hand wavy ness from people of like oh, just train them. Be plumbers, be plumbers. And it's, I would just say it just seems such shallow thinking that it feels dismissive. People who have been unemployed for a long time, they're going to be, I mean they're going to have taken a huge psychological hit. And the idea that after going without the income they had had kind of walking away from the career they had be like, okay, and now here's six months to be a plumber or two years to be electrician. That, that transition actually makes sense for a lot of people I think is kind of far fetched. Yeah, the policies that I offer are things like moving assistance. You know, it could be that you have family somewhere else, you have a friend that can help you with a job somewhere else, but you're so out of resources you can't move across the country. Yeah, you help people move, give them a check to move across the country and like registered an unemployment office in that state or locality. I actually think, you know, we have investor backed home purchases. We know where the, you know, we have an investment group will buy a bunch of houses in one place and then they turn it over into the rental market. People hate this.
- [19:05]
A
Yes.
- [19:06]
B
I mean but it just have the government buy your house and then they'll sell it right back on the market. And the, rather than having to deal with like losing so much, buying and selling a house to the realtor cost and then worrying about taking it at a loss, just have the government buy it at cost, sell it at Cost to stabilize the housing market if there is mass unemployment and then to help people be more mobile and move across the country. You could do all of those things in a long term program. You could do. I think most people's preferred backup plan is to start their own business. You're right to do, to have some kind of side hustle, some money that comes in on the side that they expand into more of a permanent business. You could have a long term unemployment program, help people with that.
- [19:45]
A
Yeah.
- [19:45]
B
And then the problem with government training is that it's really expensive and so the practicality ends up forcing you into really short programs that aren't associated with very good jobs. Okay, how much is it going to cost to subsidize? I mean we all know the student debt crisis. Like is the government really going to pay to send everyone to school for four to five years to get a new degree or are they going to say like hey here's eight weeks to become a forklift operator and you don't have income during that period so how are you subsidized? So I try to set up that if you were a little bit more like had other paths out of long term unemployment, you could put resources into training. That's not just short term classes that aren't associated with really high paying jobs. Like we have a teaching shortage, we have a nursing shortage. If there were people who had had office job for 15 years, you know, they probably don't want to become a forklift operator but maybe they would be more interested in teaching and nursing. But they can't go without income for the two years it takes to get the credentials. So you can, I think you could be really creative of like accelerated credentials. High demand occupations that require a college degree but also require training. Like if you didn't go about it in the cheapest way and you had other kind of like imagine like all the people who are long term unemployed and you have like some get into moving and some go into businesses that, that allows training to be more tailored to the person. Just kind of as a historical sidebar, the US has a really like a lot of experience with this. The GI Bill coming out of World War II, its take up was so much larger than the government had ever predict. They had no idea how many people would take advantage of the GI Bill for education. And a lot of the GIs coming out, they had families, they had children, they did not want to be in school for four years. And so colleges made accelerated GI programs to basically keep them in school all year round. Accelerate the degree so they could finish a four year degree in like two and a half.
- [21:44]
C
Wow.
- [21:44]
B
So. So colleges can be very. Oh, and that's actually how George Herbert Walker H.W. bush went to Yale. He had an accelerated degree with a bunch of other GIs. So I think we could be really creative if we don't just shove people into kind of a training program. And the last part of that is the thing that conservatives are probably most afraid of. Public employment. If you can't find a job, have a public employment service where you do public service through government jobs.
- [22:12]
A
Yeah.
- [22:12]
C
So would you characterize that as a job guarantee or is that different?
- [22:17]
B
I guess I see it as maybe like the job option.
- [22:20]
C
Okay.
- [22:21]
B
The way that I think about the world is really through triage. The way to make it more successful is to have it targeted to the people for whom it will probably be more successful. So if you have in a long term unemployment program that there are people that can go into public service through public employment. It's not about saying everyone can have a government job, which I think is a jobs guarantee. I think it's more about having an option open for people for whom it would be beneficial without kind of saying this is for everyone. Because I think it's not for everyone. And maybe that's just a semantic thing in my mind. For as much as I talk, I actually am not that great with words all the time. So I'm like, jobs guarantee. It's too literal.
- [23:03]
A
Yeah, yeah.
- [23:05]
C
No, that's interesting.
- [23:05]
A
That's interesting. But as a, as an option.
- [23:08]
B
As an option, there's a lot of
- [23:10]
A
stuff that we could do. There's a lot of stuff we could build. There's a lot of stuff we could fix. There's a lot of kids we could teach. There's a, you know, like, it doesn't
- [23:19]
B
have to be a, a federal job. It could also be a state or county or city job. Right. You know, there's, you know, wherever the need is. I think you would see a lot of places, you know, you have this kind of like knee jerk of like that's not a real job for the government. And then you would probably have a lot of cities that are like, oh, if you gave us money to employ 20 people in like community development, like we would have, we would find a job for them. And I think some places and localities would take, would be really creative and take a lot of advantage of something like that, you know, to the benefit of their community. And rather than see seeing it as the way people who are unemployed are often talked about as just some handout that's fancy. I think a lot of states and localities would see it as a potential to make an investment in their community.
- [24:03]
A
Yeah, yeah. I mean, I like that construct, which is a, you know, a federal program that puts people where the work actually happens in. In local places. Because local places know what they need.
- [24:18]
B
They do.
- [24:19]
A
And they know that they don't have enough resources to do the things that they need. So a bunch of people who show up who all of a sudden are subsidized or paid for by the federal government and who until recently were high functioning working people. Right.
- [24:35]
B
This is actually how I pitch universal childcare. Actually.
- [24:39]
A
You take the little kiddies from their families and you put them to work for the government.
- [24:43]
B
Yes. In a big, think Soviet building. But there's like just the toddler factory bats of gruel.
- [24:52]
D
Yeah.
- [24:53]
B
They're tiny little hands. They're so productive. I realized I did leave you open for that and I'm glad you took it, frankly. No, I mean, what would a universal child care system look like? I mean, people in their mind are like Soviet bloc building with 300 kids in a room. And some we just import old communists to like walk the rows and keep them in line. But really it's just gotta feed them gruel. Gotta feed them gruel. They can't get into the.
- [25:22]
A
Feed them gruel.
- [25:23]
B
Yeah, but really, I mean, we have a mixed distribution system already, which means that most people go to a private provider and they pay for it out of pocket. In a free childcare system, it would be the government that picks up the tab, but you would still have private providers. So you would have more Head Start centers, but you'd also have more small businesses, more kind of community efforts, more employers that add a site to their work site. So you would have a child care center inside your office because your employer would be able to offer it without having to pay for it out of their own revenue. And you, you would have basically. I always picture as like this would be probably one of the largest investments the federal government has made in communities across the US and every community would benefit from it. And they would get to decide where they put the childcare centers. And it's, it's really just. I mean, people talk about the government raising your kids and it's like. But it's not really raising your kids so much as writing them a check.
- [26:18]
A
Yeah.
- [26:19]
B
And then using that money to have, you know, your communities. And you could, you could put them in community centers and immigrant centers and churches. And temples and houses of worship. And you get money to convert a room into a childcare space. And this is a way for your community to connect with families. Everything we know about kids growing up is that they need more community and mentorship than they're getting today. So I'm willing to buy it, pay for it.
- [26:45]
A
Yeah, yeah, yeah, absolutely. How about ubi? I mean, does that, can that play a role? I'm not a big fan, but.
- [26:54]
B
Why aren't you a big fan?
- [26:56]
A
Well, it just generally am not a big fan of UBI because I feel very strongly that if we merely required large companies to pay workers enough to get by without food stamps, we erase 90% of the challenge in our economy and probably double the GDP growth rate at the same time. UBI is a thing that is solving a problem that need not exist, but does it because of the absence of reasonable labor standards.
- [27:26]
B
So, okay, my problem with ubi, so there's. I think there's two. UBI has like two origin stories, and it's the tech one and then the good one. The good one is really descended. Think of like the freedom budget from MLK and Rustin and Randolph of if you had a minimum amount of income that was an outside option, people would be able to have more power in their relationship with employers in society. And a lot of people still believe that UBI is a power, power transfer and disruptor as opposed to just some cash. The other side of UBI are like, I think really comes more from the tech sector. And it's. You can pick this up from Sam Altman's writing. You know, artificial intelligence will create a new idle class, and we just need to give them money.
- [28:13]
A
Yeah.
- [28:13]
B
And that, you know, that first thinking is really about how do we disrupt the power imbalance that we can all see between workers and employers. The tech side is like lazy. It's judgmental and it's pretty shallow. And I always think that one layer down is, and if we had ubi, we wouldn't need Medicaid or food stamps or any other form of assistance. And my problem with both sides of UBI is that it doesn't address market failure. Right. I gave you $20,000. Are you affording health insurance?
- [28:44]
A
No. Nothing?
- [28:45]
B
No, no, no. I give you $20,000. Can you afford child care and rent?
- [28:50]
A
Nothing?
- [28:51]
B
No, you can't afford anything. And so it's almost like a get out of jail free card of like, well, here's some money. You're an idle class. You'll never work again. I gave you 20 grand. For my large s and all your problems are solved. But you can out earn a market failure, but you can't change it. Government has to change market failures. And so I think it leaves too many things unaddressed and almost as like a, like just this kind of weak salve of like by the way, here's money. I think I might be more kind in talking about it and less, I
- [29:23]
A
don't know, less cynical.
- [29:25]
B
Less cynical if the posture of the people promoting it wasn't so arrogant and judgmental of workers.
- [29:33]
A
Like, and to be clear, it's self dealing. Yeah, of course these tech guys like ubi, they're not going to have to pay for it.
- [29:41]
B
I mean, right? Or yeah, or like why should I take it? Like, like hey, government, like put yourself in the perspective of how, who makes public policy and how this would work. Government. You know who you should listen to about a worker's potential in the labor market? Only their former employer. And that's it. And if the former employer says I let this person go and now they're going to be idle for the rest of their lives. Like why, why would you give them that much power over workers or so much sway over how they're evaluated? Like you get to give up on 20 million people because they're, because one of their former employers is like, we don't need them anymore. It really to me feels like it treats workers as trash. And I just don't like people so casually talking so dismissively about the value and worth of the American worker.
- [30:27]
A
Katherine, if you were in charge, quickly lay out what you would do.
- [30:31]
B
How long do I have?
- [30:33]
C
We've talked about a lot of policies, so I guess maybe the question might be like, to, to triage, like what would you do first?
- [30:40]
B
Okay, this will be like one part practical to two parts idealistic. How about that?
- [30:44]
A
Great.
- [30:45]
C
Sure.
- [30:45]
B
Perfect. Okay. I think the first thing we can do is a lot of quick changes that are labor regulatory. Think like I could drop this into our economy and I don't have to do much else for it to work. I could raise the minimum wage. I could require universal paid sick days. I could require overtime for more white collar workers. I could require paid vacation. I could have shift regulation.
- [31:09]
A
Yeah, yeah.
- [31:10]
B
I could drop most of that into the labor market really quickly. In fact, I could do that in like a month. Give them a year to sort it out. But we could do that really quickly. And I think if anything, what American workers need right now is someone who actually champions them and who puts forward a policy that champions them. So I think coming out strong with, like, we are going to do this for workers right away. It's been a while.
- [31:32]
A
Yeah.
- [31:33]
B
Then I think that we need money to buy some really awesome stuff. We need to reform the tax system. There are some easy wins and then there are some really hard conversations that have to be had. I think the progressives have hit on the easy wins tax rich people. I don't think it's that necessarily that simple. I think we could change the estate tax. We can change the step up basis. We can put in some, like, thoughtful concerns around, like the farmer objective. But I don't. I think we can change the estate tax back to a reasonable level, and that's one source of revenue. But the real problem with our tax system is that it has 271coupons of deductions and credits and adjustments that are made to your tax bill that change how much you have to pay. And that has created 271 constituencies of people who have a vested stake in keeping the tax system complicated. That is hard to overcome because if you're going to raise taxes, why do you have to get rid of my thing? It is a tough conversation. And I was recently making a. I testified in front of Congress about this and I made some videos for social media after the fact. Social Security is the largest public program we have. It's $1.6 trillion a year or thereabouts. We give away $2.3 trillion of coupons in the tax system. It's called tax expenditures. That's the official congressional definition. It's money that would have been collected but is refunded back through exceptions to the tax system. $2.3 trillion. It's 50% larger than Social Security. So I am cynical. I am optimistic, in part. Cynical and idealistic and practical. You have to go after the big guns first. So if I could wave my magic wand, I would go after the tax system because I think everything else is easier. When the US Is raising revenue, then it's easy to expand Medicaid, then it's easy to have universal childcare. But all of these things are harder when we're running a deficit that's 7% of GDP. The the debt is 100% of GDP and we're not moving in the right direction. So I think if I could wave my magic wand, it would be to have really awesome tax reform.
- [33:41]
A
Okay. All right. One final question. Why do you do this work?
- [33:45]
B
Why do you do this work? Because Americans deserve it.
- [33:48]
C
Yes.
- [33:50]
B
Because they deserve to have a better economy. We could do so much better than we're doing now. We could have higher wages, we could have higher income, we could have an easier time in our cost of living. We could be a society that invests in children, that recognizes that we are all in some way dependent on each other. We don't have to be so shortsighted, we don't have to be so cruel, we don't have to be so self dealing. We could, we all of these things can be different if we make better policy choices. And I think the most dangerous thing in the United States is cynicism.
- [34:19]
A
Yeah.
- [34:20]
B
Because cynicism is permission to your POS representatives that they don't have to try because you've already given up. So then they're off the hook. They don't, they don't have to address the tax system, they don't have to fix Social Security, they don't have to invest in children because you don't think they're going to do it anyway. And then they don't have. And so I think that an absolutely reckless level of optimism is what Congress needs more than anything else because then it'll be so clear how bad of a job they're doing. So I won't give up on them and I'm going to believe that we can have change because that's the only way change will happen. They're not going to decide on their own to do the right thing if you give them a free pass.
- [34:56]
C
Yeah, love it.
- [34:57]
A
I agree. Fantastic answer. Well, Paul. Yeah. I learned from Katherine that we may, may be economics influencers.
- [35:11]
C
That's your takeaway from the conversation?
- [35:16]
A
I'm going to put that, I have to put that on my resume now. Yeah.
- [35:21]
C
Change your LinkedIn.
- [35:22]
D
Yeah.
- [35:22]
A
Change my LinkedIn.
- [35:23]
B
Yeah.
- [35:25]
A
No, I mean, as always, Catherine, it's just so smart and so thoughtful and has thought about these things so carefully and I think, you know, what I take away is that like our point is really obvious that these systems are, are, you know, just, they're not terrible, they're just inadequate to the challenge of our time and you know, it's time to update them. And I, you know, I think that, you know, one of the things that she said that I think really made so much sense was that whatever it was, 25 million people lost their jobs in the first month of the pandemic. And you know, we, we made it through that. Right. Like we figured out how to. Yeah, yeah, we did. We do have the answers and I think we could have the answers again if we wish to. Answers the question is whether we have the political will to generate the answers and then enact them. But I do think that there's a lot of room for experimentation and we talked about a lot of that. I'm a big fan of. I think UBI is dumb. I think a federal jobs guarantee is a fantastic idea. I think the economics of that is just so much better.
- [36:33]
C
Well, and if we learned anything during the whole DOGE thing and the resulting dips in the labor market, it's that government jobs are real jobs. No matter how much, you know, Elon Musk and trickle downers try to claim that government jobs take from the economy, which is ridiculous there. It's real work that produces real benefits and real, you know, additions to the economy. Like, of course it's insane to argue that a government job is less than another job, a real private sector job, you know.
- [37:01]
A
Yeah, I know that people can point to government workers being ineffective and lazy, but I don't think you have to go far in private industry to find people who are more ineffective than lazy. You know, you could probably get rid of a third of the people that work for every big company in America and never know the difference too. Yeah. So I do think that there are some really interesting solutions out there that are waiting to be enacted. We just have to have the. We just have to have the political will to do it. Katherine's podcast is the Optimist Economy. Definitely something to check out and we'll have a link in the show Notes in addition to her three recent articles in Bloomberg Opinion.
- [37:44]
C
Absolutely. They should check those out. I listen to Optimist Economy every week. I'm a big fan. So this was a great conversation and I was really excited to talk to her and she did not disappoint.
- [37:59]
D
Pitchfork Economics is produced by Civic Ventures. If you like the show, make sure to follow, rate and review us. Wherever you get your podcasts. Find us on other platforms like Twitter, Facebook, Instagram and Threads. Itchforceconomics Nick's on Twitter and Facebook as well. Ickhanhauer for more content from us, you can subscribe to our weekly newsletter, the Pitch over on Substack. And for links to everything we just mentioned, plus transcripts and more, Visit our website pitchforceconomics.com as always from our team at Civic Ventures interest, thanks for listening. See you next week.