Back to Basics Series: What the hell are they talking about? Econ terms explained! (with Nick and Goldy)

Summary

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Podcast Summary: Pitchfork Economics with Nick Hanauer

Back to Basics Series: What the hell are they talking about? Econ terms explained! (with Nick and Goldy)

Date: July 8, 2025
Host: Civic Ventures
Guests/Speakers: Nick Hanauer (“B”), David Goldstein/Goldy (“A”)

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Episode Overview

In this special “Back to Basics” episode, Nick Hanauer and Goldy revisit the core economic terms and concepts frequently used on Pitchfork Economics. Aimed at demystifying jargon for listeners, the episode provides clear, practical definitions of foundational concepts like neoclassical economics, neoliberalism, trickle-down economics, heterodoxy, monopsony, and stock buybacks. Hanauer and Goldy infuse their explanations with humor and critique, challenging the orthodoxies that have shaped American economic policy for decades.

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Key Discussion Points & Insights

1. Why Define Economic Terms?

• The hosts recognize that economic jargon can alienate listeners.
• “If you want to discuss with me, define your terms.” (Nick quoting Bertrand Russell, 01:00)

2. Neoclassical Economics

• Described as the “orthodox” school of economics, dominant since the mid-1900s.
• Core assumptions:
  • Humans are “rational self maximizers”—perfectly selfish and rational.
  • Value equals price: What you’re paid is what you’re worth.
  • Markets are in equilibrium, meaning gains for some require losses for others (Pareto optimality).
• Implication: Ideas like “raising wages kills jobs” and “tax cuts for the rich create growth” stem from neoclassical thought, despite lacking real-world evidence.
• Goldy: “So neoclassical economics, this is what you are taught in Econ 101.” (04:12)
• Hanauer: “We have drawn a bunch of conclusions from neoclassical economics… which are just objectively false.” (03:58)

3. Neoliberalism

• A political and economic ideology built atop neoclassical economics, developed as a response to the threat of communism/statism (1930s–40s).
• Core beliefs:
  • The only legitimate form of freedom is “freedom from constraint.”
  • Free markets and competition are the only valid organizing principles.
  • Capital (especially concentrated capital) is always the source of growth.
  • Corporations exist solely to maximize shareholder value.
• Neoliberalism has dominated U.S. politics and economics for the past 40 years.
• Hanauer: “It’s what most people accept, like gravity… there’s nothing you can do about it.” (06:50)
• Goldy: “If it means that I make $7.25 an hour and you make a billion… There’s nothing we can do about it because it’s a natural law.” (07:00)
• Hanauer: “And all of that’s bullshit.” (07:10)

4. Trickle-Down Economics

• Not a formal school, but a “set of memes and political rationalizations” used to justify policies that disproportionately advantage the wealthy.
• Key claims:
  • “Tax cuts for rich people create growth.”
  • “Deregulation for powerful people creates growth.”
  • “Raising wages kills jobs.”
• Timeline: Has shaped economic policy since Reagan’s presidency (1980s).
• Hanauer: “Again, all of which is bullshit.” (08:12)

5. Heterodox Economics (“Heterodoxy”)

• An umbrella term for non-orthodox, non-neoclassical economic thinking.
• Asserts that:
  • Humans are reciprocal and use heuristics, not always rational.
  • Value is about solutions and welfare, not just price.
  • Growth comes from the “evolution of fitness” rather than just production factors.
  • Economies are ecologies, not equilibrium systems.
• Draws insights from physics, biology, evolutionary theory, psychology, sociology, anthropology, information theory, and network theory.
• Goldy: “It is actually a synthesis of the latest science in a broad number of disciplines.” (09:13)

6. Monopsony

• Definition: A market where there’s a dominant buyer (as opposed to monopoly—a dominant seller).
• Example: Chicken farmers often have only one company (e.g., Tyson or Purdue) to sell to, dictating all terms and prices.
• Hanauer: “All of the value of that supply chain has been sucked out… aggregated into the earnings, bonuses and stock price of these big companies.” (11:12)
• Goldy: “The next time you get your chicken nuggets on the dollar menu, remember it’s not just the chickens who were suffering, it’s the chicken farmers.” (11:32)

7. Stock Buybacks

• When a public company uses its cash to buy its own shares, reducing the number of shares outstanding.
• Results in:
  • Higher share price (fewer shares, buying pressure).
  • Higher earnings per share (EPS), prized by Wall Street.
• Hanauer: “This is a way to make the stock price of a company go up without the pesky burden of having to make better products and services.” (12:33)
• Critiqued as a “pernicious practice”—currently about $1 trillion/year, or 5% of GDP.
• Hanauer: “A trillion dollars that does nothing in the economy but make a few rich people richer is a remarkable source of money for all those things [like education, health care, climate].” (13:10)

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Notable Quotes & Memorable Moments

• Nick Hanauer: “Defining our damn terms.” (13:40)
• Goldy (on neoclassical economics): “If you pay me $7.20, that is what you are worth. That’s all I’m worth. And then when we pass a $15 minimum, somehow magically you’re 15.” (02:18)
• Hanauer (on stock buybacks): “You don’t even actually be good at your job.” (12:44)
• Goldy: “A cabal of guys… And it legitimately, and in a well meaning way, in response to communism and authoritarianism around the world.” (on the origins of neoliberalism, 04:56)

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Timestamps for Important Segments

• 00:59 – 01:09 — Importance of defining economic terms.
• 01:09 – 04:18 — Neoclassical Economics Explained.
• 04:29 – 07:42 — Neoliberalism and its distinction from neoclassical economics.
• 07:38 – 08:15 — Trickle-Down Economics defined.
• 08:27 – 09:47 — Heterodox economics and interdisciplinary thinking.
• 09:50 – 11:40 — Monopsony: definition and examples.
• 11:48 – 13:35 — Stock Buybacks: mechanics and critique.

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Conclusion

This episode provides a much-needed glossary for both new and long-time listeners, reinforcing Hanauer and Goldy’s accessible yet incisive approach to economic critique. They break down dense concepts, challenge dominant orthodoxies, and invite listeners to rethink the fundamental stories that shape our economy.

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Listener Tip: If you want further clarification on other economic terms, the hosts invite emails to: [e-mail].

Transcript

[A]

Hey, Pitchfork listeners. Goldy here. We've been doing this podcast for a long time now, so we thought we'd take a little break this summer, but we don't want you to miss us too much. So we thought we'd revisit some of the most central episodes from early in our history with a Back to Basics summer series. And if you're ever listening to an episode and wonder what the hell we're talking about, this might help. Econ terms and definitions explained by me and Nick. So, Nick, one of the problems with you knowing so much about economics is that you toss out these big words that we know really well. Yes, but not everybody is as tuned in as we are. Correct. So what I thought we'd do, as a little bonus, is go through some of the terms we use a lot and try to explain our $10 words and maybe seven or eight dollars.

[B]

Yeah, exactly. I think it was Bertrand Russell who said, if you want to discuss with me, define your terms.

[A]

Okay.

[B]

And we need to define our damn terms.

[A]

Let's start with one of the classics. Well, actually one of the neoclassics, Neoclassical economics.

[B]

Yeah. And before we get to the actual definition, let's just be clear that we use these words in a very particular way. And there are people who would contest.

[A]

Our view of this term, but screw them, because this isn't their podcast.

[B]

Yeah, exactly. Screw them. So neoclassical economics is basically orthodox economic theory, dating more or less to now from the middle part of the last century. And it is made up of a bunch of assumptions about human behavior, about the dynamics of human social systems. It includes a theory of value and identifies how the economy works to create growth and prosperity. And basically, neoclassical economics holds that human beings are rational self maximizers, that we are perfectly selfish and perfectly rational. It holds that value equals price, that the price of something in a society represents its true value.

[A]

So if you pay me $7.20, that is what you are worth. That's all I'm worth. And then when we pass a $15.

[B]

Minimum, somehow magically you're 15. Yeah. And if you're an orthodox thinker, like another podcaster, Russ Roberts, by so doing, you have defied the laws of economics, where the market defines what you're worth, and you have essentially crossed the beams and violated a law of nature, and you are therefore paying somebody more than they're worth, and therefore you've harmed the economy and harmed welfare and eventually killed jobs. Again, nothing could be further from the truth. And neoclassical economics also holds that the economies are equilibrium systems, which basically Means if one thing goes up, another thing goes down. That those systems therefore are something called Pareto optimal, which means that they come to an equilibrium where if you push one thing down to get a, for instance, more increasing justice, you will harm welfare. Another place that basically the system is imbalanced in this way, you can't improve.

[A]

Somebody else's lot without hurting somebody else.

[B]

Correct. And basically, you know, our view and the purpose of this podcast is to show people the ways in which all of those assumptions about economic behavior and life and systems, those things are just not true. They were mostly just made up. There's a bunch of stuff in addition to that that was made up that's even more technical. And most of it was made up to make the math work so that you could mathematize the system and build models that you could use to represent the world. The sad part, of course, is none of the models work. They don't represent the world very well. They don't predict anything. And we have drawn a bunch of conclusions from neoclassical economics like raising wages kills jobs and tax cuts for rich people create growth, which are just objectively false.

[A]

So neoclassical economics, this is what you are taught in Econ 101.

[B]

Correct.

[A]

And what we talk about here on our podcast, this is what you will be taught in econ 101 in about 15, 20 years.

[B]

Yes, hopefully. Hopefully.

[A]

So let's move on to one of the more contentious terms we use, and that is neoliberal.

[B]

Right.

[A]

It's used a lot as a pejorative from the left. What is a neoliberal? And what do we mean when we say neoliberal?

[B]

So neoliberalism was a thing created by a bunch of, well, guys.

[A]

Cabal.

[B]

A cabal of guys. And it legitimately, and in a well meaning way, in response to communism and authoritarianism around the world. And these folks in the 30s and 40s legitimately believed that there were some very bad things happening in the world, that statism and collectivism were going to destroy freedom and destroy economies and destroy society. And so neoliberalism was a reaction against that and a commitment to free markets and freedom and a bunch of other things. And a lot of that is totally legitimate. They were absolutely correct to believe that market economies did and will always outperform non market economies. But neoliberalism as it evolved, got hijacked by a bunch of folks and became essentially an ideological framework that grew out of neoclassical economics. And it means a bunch of things to us. Specifically, it entails a particular definition of freedom which is that freedom from constraint is the only kind of freedom that matters. It asserts that the only legitimate organizing principle for an economy is competition and markets. It asserts that the source of growth in an economy is always capital and concentrated capital in particular. That what you are paid defines your worth and contribution to a society. And you know, among other things, the only legitimate purpose of the corporation is to maximize value to shareholders. And there's a bunch of other beliefs, but those kind of roundly summarize what was extracted from neoclassical economics. That makes up a bunch of the culture of economics that we live with today. And that's what neoliberalism is doing.

[A]

That sounds like mainstream economic and political ideology for the past 40 years.

[B]

It is. That's exactly what it is. And it's what most people accept, like gravity, that this is just how it is and there's nothing you can do about it.

[A]

If it means that I make $7.25 an hour and you make a billion.

[B]

Then that must be what we're worth, respectively.

[A]

There's nothing we can do about it because it's a natural law.

[B]

That's right. And all of that's bullshit.

[A]

So to be clear then, to build on this conversation, neoclassical economics, that is a school of economic theory and neoliberalism, is a political and economic ideology and.

[B]

Narrative built on top of that.

[A]

Built on top of that, which is used to kind of define the set of policies that are available to us. Correct.

[B]

And what sits on top of that is another term of art that we use a lot, which is trickle down economics. And trickle down economics is really a set of memes and political rationalizations for what you want to do. And we call trickle down economics. Tax cuts for rich people creates growth, deregulation for powerful people creates growth, and raising wages kills jobs. Those are the anchor claims of trickle, trickle down economics. And they are what has framed economic policy and politics in the United States for.

[A]

Well, since like 1980. Yeah, since Reagan for the most part.

[B]

Again, all of which is bullshit.

[A]

Okay, so then let's move on to another term which we don't use as much, but people talking about the stuff we talk about use, and that is heterodoxy.

[B]

Yeah, so this is a, an emerging term of art, but basically heterodox economic thinking is non orthodox economic thinking. It's economic, not neoclassical and not neoclassical. And it means an economic thinking which challenges these behavior, value growth and systems ideas. We are heterodox economic thinkers. We assert that humans aren't rational and selfish. We are reciprocal and heuristic that value isn't price, it's actually solutions and welfare. That growth is basically the evolution of fitness rather than factors of production. And that the systems aren't equilibrium systems, they're basically non equilibrium ecologies.

[A]

And one of the reasons why it's referred to as heterodoxy is rather than just drawing from economics, it is actually a synthesis of the latest science in a broad number of disciplines.

[B]

Physics, biology, evolutionary theory, psychology, sociology, anthropology.

[A]

You know, a huge information theory, network theory. All of that coming together, converging and being mixed into this new way of viewing the economy.

[B]

Correct. What's our next term?

[A]

Let's go for our favorite word recently, which is monopsony.

[B]

Yeah. Monopoly's evil twin. What is it, Goldie?

[A]

Actually, it's very much like monopoly. Everybody knows a monopoly, strictly monopoly, is when you have 100% control of a market, but really in reality it's when you have a dominant share of a market. Often it's like duopolies. But a monopoly is when you have dominant control of the market so that you can set the price of things. Monopsony is when you have dominant control of a market from the perspective of the buyer, you can control the cost of things. I think one of the best examples of monopsony, Nick, is the plight of chicken farmers in America where essentially in most parts of the country there's only one or two, usually one customer who's buying their product.

[B]

Yeah, One huge agribusiness, Tyson or Purdue.

[A]

And they set all the terms. As a chicken farmer, you're not really an independent business anymore. They make you buy the chicks from them, they give you standards on how to raise them, and they set the price per pound. So chicken farmers in America, same with a lot of pork farmers. Farmers, they've really been impoverished over the.

[B]

Last couple decades and all of the value of that supply chain has been sucked out of it by those giant agribusinesses from ordinary farmers and workers and essentially is aggregated into the earnings, bonuses and stock price of these big companies.

[A]

Right. So the next time you get your chicken nuggets on the dollar menu, remember it's not just the chickens who were suffering, it's the chicken farmers.

[B]

It's exactly right.

[A]

And finally, let's close on one of our little pet issues. Yeah. What's a stock buyback?

[B]

So what a stock buyback is, is when a public company uses its cash or cash flow to buy its own shares of stock. Why would you do that?

[A]

Why would you explain that?

[B]

Idiotic. So why would you do that? Well, when you do it, you reduce the number of shares outstanding, and two things happen. Often the price of the stock will go up because there's fewer available and you're putting buying pressure on it. If you're an owner of the stock, that's very, very good. And also, the earnings that the company makes are divided by the number of shares outstanding.

[A]

Eps.

[B]

EPS per share. Right. And as the number goes down, the EPS goes up, which means that the.

[A]

Stock price will go up because Wall street loves eps.

[B]

And so this is a way to make the stock price of a company go up without the pesky burden of having to make better products and services.

[A]

Wow. That's like magic. You don't even actually be good at your job.

[B]

You don't. You can make shit products and all you do is, you know, at least in the near term, you buy more shares and stock price goes up. And it's a very pernicious practice. And it is one of our pet peeves because it is so huge, because stock buybacks now represent about 5% of GDP. About a trillion dollars a year.

[A]

A trillion dollars a year.

[B]

And as we think through all the things that we need to do with money to get the economy back on track, pay people more, invest in education, secure people's retirement, pay for health care, all of those things address climate change. Yeah. A trillion dollars that does nothing in the economy but make a few rich people richer is a remarkable source of money for all those things.

[A]

Okay, so there you have it. A quick refresher on a lot of the terms.

[B]

Defining our damn terms, right?

[A]

Defining our terms. A lot of the words we toss around here on Pitchfork Economics. If you're listening, and there are any more terms that you think we missed that you'd like us to. To explain a little more in depth, please send an email to pitchitchitchfork economics.com and let us know.

[B]

Awesome.

[C]

Pitchfork Economics is produced by Civic Ventures. If you like the show, make sure to follow, rate and review us wherever you get your podcast. 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, pitchfork economics.com as always, from our team at Civic Ventures, thanks for listening. See you next week.