If America Is “Winning,” Why Does the Economy Feel Like This? (with Talmon Joseph Smith)

Summary

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Podcast Summary

Pitchfork Economics with Nick Hanauer

Episode: If America Is “Winning,” Why Does the Economy Feel Like This?
Guest: Talmon Joseph Smith (Economics Reporter, New York Times)
Date: December 23, 2025

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Overview

This episode explores the disconnect between America’s record-setting economic wealth and most citizens’ lived experiences of financial precarity. Hosts Nick Hanauer and Zach bring on Talmon Joseph Smith, New York Times economics reporter and author of the upcoming book Clout and Capital, to discuss the gap between aggregate prosperity and widespread hardship, challenges in defining economic security, and what real solutions might look like—from wages, to the social safety net, to housing.

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Key Discussion Points & Insights

1. America’s Astonishing Wealth vs. Ordinary Insecurity

• Talmon Joseph Smith highlights that the U.S. has reached $200 trillion in aggregate wealth (inflation adjusted), the most in human history ([04:08]).
  • Yet, the “bottom 50%” only holds about 2.5% of that wealth:
    “Not everybody is experiencing an equal share of that wealth, to say the least. The bottom 50%...only has a claim to about 2.5% of that $200 trillion.” ([04:08])
• The mainstream media and political class are only now engaging with the disconnect between economic data and public sentiment, though most Americans have experienced it for years ([01:35]–[01:41]).

2. The Cognitive Elite and the Bubble of Perception

• Smith underscores that even the “top 20%” represents 66 million people—more than major countries. Their economic reality is profoundly different from the rest ([05:25]).
  • This skews aggregate data like median income and consumption, masking the true depth of insecurity for most.
  • “The top 20%...in the way that an entirely different ecosystem and economy experiences the American economy is the reason that the data is skewed in such a favorable way.” ([06:19])

3. What Defines Middle-Class Security Now?

• Viral debates, such as Michael Green’s calculation that “the new poverty line should be $140,000 for a family of four,” stir controversy because the cost of essentials (housing, healthcare, childcare, education) has soared ([08:39]–[09:23]).

  • Smith finds the $140,000 figure provocative but important for igniting debate about what truly constitutes security, not just survival.
  • “The best and broadest point at the heart of the piece was an important one...once the working poor do...what orthodox thought would tell them to do...at a certain point you’re effectively punished [with loss of benefits].” ([09:33])
  • He notes even those who “do everything right” risk falling into precarity as benefits are withdrawn and costs rise ([09:33]–[11:55]).

• Nick Hanauer contextualizes:
  “If you compare just kind of the vibe of the lives of...a family of four in a city with a family 60 years ago...those families are going to look a lot the same. They’re going to be hanging on by their fingernails.” ([12:52])

4. Essential Costs Have Outpaced Wages

• The hosts share personal anecdotes about living “month-to-month,” even above official poverty lines ([15:00]–[16:44]), and discuss the societal reluctance to acknowledge widespread precarity due to embarrassment or perceived privilege.
  • “People are just in a mood where they’re like, God damn it, I’m tired of apologizing for feeling like I’m not getting ahead...” —Talmon Joseph Smith ([16:44])

5. The Policy Conversation: Wages, Social Goods, and the Role of Government

• Hanauer points out the absurdity that “paying people more” is rarely mentioned as a solution ([01:58]):
  • “They had 27 experts on what we should do about the affordability crisis. Not one of them mentioned paying people more.” ([01:58])
• Smith agrees raising minimum wages has not produced the predicted disastrous job losses in Denver, California, Seattle, etc. ([21:13]–[22:05]):
  • “Denver now has a $19 minimum wage. Unemployment... I think on last check below 4%.... Where is the sky falling? It hasn’t.” ([21:14])
• Smith proposes that tax and social policy should not excessively penalize those climbing the income ladder ([23:17]).
• Housing emerges as the toughest challenge:
  • YIMBY (Yes In My Back Yard) policies help but aren’t sufficient; rent inflation and affordable housing for the bottom 60-70%, not just the upper middle class, require deeper interventions ([24:03]–[26:40]).
  • “We have to sort of dig down into what gets us to the next leg of...having housing affordable just for the upper middle class...but how do we actually get those people who are the most rent burdened...to more affordable home prices?” ([25:00])

6. The Need for Better Policy Analysis and Debate

• Smith suggests the Congressional Budget Office (CBO) should focus more on inflation risk in scoring policy, not just budget windows ([28:30]):
  • “If CBO scores were much more focused on inflation risk, not just...the in and out of outlays and revenues...that’s what people care about...” ([28:58])
  • Real inflation risk, not outdated fears about “wage-price spirals,” should shape policy debates ([32:05]).

7. The Larger Stakes: Division, Stagnation, and Resentment

• Smith warns that when the “affordability crisis” is denied or minimized, it lays fertile ground for demagoguery and division ([16:44]–[17:57]):
  • “If this country continues a denialism about that while we’re also being distracted by all sorts of culture wars...I don’t really want to think about what happens next.” ([16:44])

8. Solutions and Vision

• The conversation concludes with agreement that raising wages, building stronger public goods (healthcare, childcare, housing), and re-framing policy conversations are all necessary paths forward ([34:57]–[40:00]).
  • Other countries provide public goods that make life affordable for the majority—America’s privatized systems are unaffordable by comparison ([39:00]).
  • “There are ways to deal with these costs...public goods in most other countries. And here it’s all privatized and surprise, it’s unaffordable.” — Zach ([40:00])

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Notable Quotes & Timestamps

• Nick Hanauer: “The rising inequality and growing political instability...are the direct result of decades of bad economic theory.” ([00:02])

• Talman Joseph Smith: “It is just not at all the same ecosystem...the top 20%...is the reason that the data is skewed in such a favorable way.” ([06:19])

• Zach: “$140,000 for a family of four in...Seattle or New York is not a lot of money. And it does leave you precarious.” ([12:33])

• Smith: “I think people are just in a mood where they're like, God damn it. Like, I'm tired of apologizing for feeling like I'm not getting ahead...These are not...just emotional feeling[s], but...deep economic reality.” ([16:44])

• Smith (on raising wages): “Denver now has a $19 minimum wage...where is the sky falling? It hasn't.” ([21:14])

• Smith (on CBO and policy debate): “If CBO scores were much more focused on inflation risk...that would just be much, much better.” ([28:58])

• Zach: “We've gone from an era in which health care was largely affordable...to now....childcare...over $20,000 a year...These are all real numbers.” ([38:01])

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Timestamps for Major Segments

• 00:02–01:41 – Introduction and the “vibes” gap: numbers vs. lived experience
• 03:28–08:39 – Talman Joseph Smith on America’s unprecedented wealth and stark inequality
• 08:39–12:33 – Michael Green's “$140k poverty line” and why basic costs inflate definitions of security
• 15:00–16:44 – Zach's anecdote: middle-class precarity, privilege, and apology culture
• 21:13–22:05 – Minimum wage increases and their actual effects on employment
• 24:03–27:00 – Housing: Why YIMBY alone can't fix deep affordability for the bottom 60%
• 28:30–32:41 – Policy analysis and the case for better inflation risk scoring (CBO)
• 34:57–40:00 – Recap: The crisis in costs, the promise of public goods, and necessary shifts for future solutions

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Memorable Moments

• Satirical take on economists: “27 experts...not one of them mentioned paying people more. It's just astounding.” —Nick Hanauer ([01:58])
• Personal note: “I didn't realize how financially stressed out I was until I wasn't financially stressed anymore.” —Zach ([16:44])
• Future warning: “History tells us just because you get one demagogue doesn't mean there's not another worse one coming.” —Smith ([16:44])
• Punchline on inflation debate: “If people like me...could do a better job...uplifting the inflation side...that would just be much, much better.” —Smith ([29:14])

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Tone

• Candid, evidence-driven, and critical of economic orthodoxy, but with a fundamentally solution-oriented and empathetic approach.
• Guests and hosts blend data, personal story, and wit to illustrate complex structural issues.

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Conclusion

This episode powerfully frames the central tension of contemporary American life: record-high collective prosperity that feels, for the majority, like personal financial fragility. The hosts and guest make a strong case that rising wages, robust public goods, and a paradigm shift in economic policy and measurement are not just preferable but necessary. The call is clear: until the economic narrative matches lived reality, insecurity—and resentment—will dominate American politics.

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Transcript

[Nick Hanauer]

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

[Zach]

The last five decades of trickle down economics haven't worked. But what's the alternative?

[Nick Hanauer]

Middle out economics is the answer.

[Zach]

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

[Nick Hanauer]

That's right.

[Talman Joseph Smith]

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

[Zach]

Welcome to the show. So, Nick, how are your vibes this morning?

[Nick Hanauer]

My vibes are fine.

[Talman Joseph Smith]

Yeah.

[Zach]

You're feeling good about the economy? Things are going well for you? It's a good economy.

[Talman Joseph Smith]

Yes.

[Zach]

I don't know if you knew this, but apparently not all Americans feel that way.

[Nick Hanauer]

Yeah, no, I'm aware. And today we're joined by an economics reporter from the New York Times who agrees with that. Yeah.

[Zach]

Who's been focused on it is a.

[Nick Hanauer]

Recent article out called America's Never Been Wealthier. Here's why it doesn't Feel that Way, which digs into this growing gap between the numbers and the lived experience of most people. And I think it's obviously, it's a very big issue in America today. It was big in the last election. It's obviously, it's been a big deal for 25 years. We're just finally beginning to grapple with it.

[Zach]

Well, to be clear, the majority of Americans have been grappling with this for quite some time.

[Talman Joseph Smith]

Yeah.

[Nick Hanauer]

That was unfair, wasn't it?

[Zach]

It's politicians, it's the political and media elite who are just beginning to grapple with. My God, and GDP is so strong. Aggregate wealth is so high. Why are people so upset? My private plane has never been faster.

[Nick Hanauer]

Yeah, exactly. Anyway, you know, it's just going to take a long time to get this to evolve. More sensible conversations about this. I want to raise this anecdote with you, which is just so funny. So I was reading CNN and they had a feature which included the advice of 27 economists, experts on what we should do about the affordability Crisis. They had 27 people. Not one of them mentioned paying people more. It's just, you know, you live in a neoliberal world. Socialism, well, we're the only obvious thing that fixes the problem is not mentioned. It's just astounding.

[Zach]

Anyway, yeah. And I can tell you, Nick, from personal experience from the before times, which is before I worked for you.

[Nick Hanauer]

Yeah.

[Zach]

But I was a lovely alt weekly journalist working for you. Paying people more really improves your lives. You're like, I know it was, it's, it's made me A lot. A lot more comfortable.

[Nick Hanauer]

Yeah, it's magical. Anyway, with that, let's get to Talman Joseph Smith and talk to him.

[Talman Joseph Smith]

I am Talman Joseph Smith and I'm an economics reporter at the New York Times and the author of the forthcoming book Clouton Capital Stories of Wealth, Wages and Struggle and. And the American 2000 and twenties.

[Zach]

Great. Thanks for joining us.

[Nick Hanauer]

Yeah, thank you for joining us, Tel. And you have written a lot about the disconnect between America and its citizens, economically speaking. And in particular you've been writing about how on paper America is definitely getting wealthier, but that doesn't seem to be how most people are experiencing America or how they feel. Can you talk about that a little bit, that disconnect?

[Talman Joseph Smith]

Sure. It's something I've been obsessed with for quite some time. Not that I'm the only or the first person to be obsessed with it. And it's been great. Obviously it's a sad phenomenon, but it's been great to see. All of a sudden it seems like the hot topic not only in our little corner of econ, but suddenly in mainstream politics. You know, the Today show is talking about the affordability crisis and disconnect between consumer sentiment and sort of standard economic growth numbers and things like that. So first and foremost, it's just good to be having this conversation. That's. That's all you can hope for as a journalist. On the substance of it, yes, America is more prosperous than ever. We just reached about $200 trillion in total wealth, and this is adjusted for inflation. That is almost an incomprehensible amount of wealth, in part because nobody else anywhere ever in the history of the world has been able to experience that. The word experience, though, is very important there in the sense that not everybody is experiencing an equal share of that wealth, to say the least. The bottom 50%, as it were, only has a claim to about 2.5% of that $200 trillion in wealth. And they're upset about it, and for good reason. I think another problem that we have here that goes to sort of making sense of the overall versus sentiment is not just that people are necessarily being envious of others in some sort of social media jealousy way. If you look at the country and you think of the way that back to the Occupy Wall street, the 1% versus the 99% discourse, you can sort of lose track in those percentage terms of how many people we're talking about. For example, another way that we divvy up the sort of income inequality convers is to Talk about the top 10% or the top 20% making up the majority of consumer spending of consumption, which is also another remarkable stat of inequality showing up in consumption data. Well, 10% of the country can seem like a small slice. Excuse me. And it is a small slice in percentage terms, where if you think of a pie chart, 10% is not a big part of the pie. But in a country of 330 million people, 10% of the country is 33 million people. I mean, that is many, many more people than you have in major European countries. And if you expand that out to the top 20%, and when you sum up those two top deciles, you have a top 20% that is something like 66 million people. And so to wrap this up and connect back to your question, I'm sure you all have been aware of the very, very heated conversations people have been having online as this affordability issue has come to the fore about essentially whether this is some mix of jealousy from people now more than ever, being able to see folks doing better than them live out their lives online, and some lack of numeracy, essentially, you know, that people are too dumb to understand that they're doing well. And I think remembering those percentages shows that the folks that think it's a numeracy and jealousy are wrong. The thing that I think is actually happening is many of those people who tend to occupy the center left and center right and are sort of the cognitive elite of the country, I'm not sure they realize the bubble that they are in, that we all are in. I mean, the top 20%, in the way that entirely different ecosystem and economy experiences the American economy is the reason that the data is skewed in such a favorable way. Even when you try to account for the way that data can be skewed by high outliers by using the median, that doesn't quite solve things either. And so I think the entire country is trying to mash together sort of this richistan that lives amongst our midst with workers that are making between 15 and $21 an hour. And it is just not at all the same ecosystem. And so I think I'm not a politician, I'm not a policymaker. I don't have the perfect stew to necessarily maybe fix it. But I certainly know in terms of diagnosis that when I think of my work, whether that's the sort of the meeting I'm going to at blackrock next week or the many, many months that I've spent throughout the country talking to people who are ubers and dental clerks and car wash attendants. Like that's the disconnect that I feel and that I see.

[Zach]

Yeah, yeah. I mean, between the time we originally booked you and the time we finally got a hold of you, Michael Green's piece went viral in which he did his calculations and said, you know, the poverty line, if you adjust it from the original early 1960s rate, should be at $140,000 for a family of four. And there's a lot of. That sounds outrageous to a lot of people. There's a lot of good arguments about that. And, and it largely has to do with the rising costs of housing, health care, education, childcare, transportation, the essentials of a comfortable middle class life.

[Talman Joseph Smith]

Sure.

[Zach]

How did you respond when you saw that number out there and people's reactions to it? Because there was outrage on both sides.

[Talman Joseph Smith]

Well, Mike's a clever guy. Very few people will defend the poverty line being, give or take some number around 30, something thousand for a family of four as capturing what true struggle can look like in America as a threshold. I mean, living off of $30,000 just to support yourself, much less have hopes of saving for the future, you're still going to be facing a lot of hardship and you're definitely not economically secure. So, yeah, for years now there's been an open debate about what might be a better reflection. 140. You know, I don't necessarily think it's defensible. There's plenty of people that have gotten to the details and the weeds of why that is misplaced. But I thought the best and broadest point at the heart of the piece was an important one that started an important debate, which is it is true that in this country, even though we probably don't do enough for the poor, that we do have programs for the poor, but then once the working poor do, what sort of neoclassical orthodox thought would tell them to do, which is become a more valuable worker, become more educated, do whatever you can to get a raise. If you follow through and you do get a raise and you do move up the wage scale at a certain point, you're effectively punished. Your effective marginal tax rate is very, very, very high, and you lose a lot of benefits that you got when you were poor. And this is something that also happens to working class married couples. And it's, and it's, you know, both liberal and sort of conservative leaning economists have expressed concern that this is harming, for lack of a better term, the marriage market. So it is a real problem. And the oddest thing about it, for Me is I wish people would focus more on the. The corollary of that, which is we're talking about this because there is some point, right, where you shift from feeling like you're being punished for going from being a working poor person that's still poor enough to experience certain, though still quite meager benefits from the federal government to sort of being out on your own, even as the cost of living rises and the middle class gets squeezed. There's a certain point where you ascend then to the upper middle class. And then maybe you're in the sort of affluent. You know, the sort of people that when they're at dinner parties, they say politely, oh, we're comfortable. Right. Increasingly, the number to reach that polite cocktail party, we're comfortable is incredibly high, especially if you live in almost any large city. And that is the pincer that is making everyone across the board increasingly on the right and the left of the country's politics, not even the economics, really upset. And I think that's the nerve that he touched, and that's why it went viral. And I think that is much more important than think tank debunkings of why this exact number is boneheaded. Yeah.

[Zach]

Look, $140,000 for a family of four in a city like Seattle or New York is not a lot of money. And it does leave you precarious.

[Talman Joseph Smith]

Yeah.

[Zach]

Because of the cost of housing and health care and child care and, you know, saving for a college education.

[Nick Hanauer]

And I think the point. The broader point he was making, which I'm deeply sympathetic to, is that if you compare just kind of the vibe of the lives of somebody, you know, a family of four in a city with a family 60 years ago of a family of four slightly above the poverty line, those families are going to look a lot the same. They're going to be hanging on by their fingernails.

[Talman Joseph Smith]

Yeah.

[Nick Hanauer]

Because of the cost structure of participating in America. And that's the other thing I think he said that was very, very clever, is the problem is you can't participate in our society without owning a smartphone and paying for Internet access and all these other things that, you know, the good people at AEI think that poor people should just do without.

[Zach]

Right.

[Nick Hanauer]

Which is frigging bullshit. You can't do without it.

[Zach]

Which is weird because Adam Smith spoke directly to this in the wealth of nations, their God. Adam Smith, you know, talked about how different economies and require goods and services that you didn't need in the past. So suddenly in. In his Scotland, in England, you. You needed to actually have A shirt and shoes to participate in the economy, which you didn't have to have 100 years before.

[Nick Hanauer]

Yeah, yeah.

[Zach]

And now it's a smartphone.

[Talman Joseph Smith]

Part of what we're circling around here is sort of pick your poison, because on the one hand, I think it's quite understandable for people to be up in arms about 140k being the poverty line. Right. Specifically poverty. Right. I think that's a very weighty word. And yet. Right. If he doesn't. If Mike Green doesn't put poverty line or exactly whatever he said in the headline that was so provocative, does his broader argument even get seen? Right. And I don't know. So maybe for him, right. It's mission accomplished. And if we, if we end up having a debate that, you know, I hope can get beyond the 140k number, you know, then we're all. We're all better served.

[Nick Hanauer]

Yeah, yeah, for sure.

[Zach]

I mean, you could call it the precarity line and that might be more accurate.

[Talman Joseph Smith]

Yeah.

[Zach]

But that doesn't. That doesn't mean anything to most people. People know what the poverty line means, and I think it gets to this heart of this thing you're talking about. Yes, our circles are in the top 20%, Nick. In the top 0.1%. And it's not the experience of the vast majority of Americans. But I can tell you that for a decade plus, as a blogger and alt weekly journalist, I was not in the top 20%. You know, I was earning $40,000 a year in Seattle. And yes, I had privileges in that due to my previous career. I owned a house, I paid a mortgage on it, I had a car, it was 10 years old. I had access to credit, and I had a family I could fall back on if I was ever in a position where I might lose my house. I always knew I had that safety net. But my God, I know what it is to go live month to month and think you're finally going to pay off that credit card and then the hot water heater breaks or your car breaks down and you suddenly have this unexpected repair. Fortunately for me, I could always put it on another credit card. But it's a living in precarity. I've said this before. I worked for the Stranger, an alt weekly, and I said I had PTSD after Post Traumatic Stranger Disorder. For several years after I went to work for Nick. I didn't realize how financially stressed out I was until I wasn't financially stressed anymore.

[Talman Joseph Smith]

Right. And do you see how much you were apologizing, like, how much you were apologizing even for saying that you felt financially insecure. Right? Like, immediately what you jumped from what you experienced, which was real. And then you anticipated, you know, me, big, bad, mean establishment reporter or, you know, name your institution that is trying to say that, you know, maybe this affordability thing is overplayed. And then so you started adjusting to. Right. Like, yes, but I also acknowledge this, this and that privilege. And I think people are just in a mood where they're like, God damn it. Like, I'm tired of apologizing for feeling like I'm not getting ahead for feeling like I want a kid, but I feel like I can't afford to give any kid, that I'd have a life that the child would deserve. Right. Like, these are not. I mean, on the one hand, that's a deeply emotional feeling, but it's also a deep, deep economic reality. And I think if this country continues a denialism about that while we're also being distracted by all sorts of culture wars that our politics are obsessed with, then I don't really want to think about what happens next. Because, you know, history tells us just because you get one demagogue doesn't mean that there's not another worse one coming.

[Zach]

Well, this is one thing where I think the socialists are right. This creates this ripe opportunity for class division, for, you know, we're all. We're all, you know, 80, 90% of Americans are struggling under the same circumstances, and we have politicians using this to turn them against each other. That it's those damn poor people getting the. The getting snap and getting Medicaid that are making me struggle when I'm not getting those benefits. And I think that's a big part of Mike's argument in that piece.

[Nick Hanauer]

No, I agree. Let's turn for a minute to your upcoming book, Clout and Capital. Tell us a little bit more about that. Sure.

[Talman Joseph Smith]

It is a book that essentially tries to answer the question, what are the actual constraints to lifting the baseline standard of living for Americans as high as possible, as soon as possible for as many people as possible? And then what are the not necessarily fake, but potentially overplayed constraints that are not actually there or may be there, but the people saying that they are there are only half right, which also means they're half wrong. And there are actual consequences to being half wrong as well. Right. And when are there constraints that are claims have been in place that aren't there at all, but are perpetuated by either political incumbents or market incumbents that benefit from a status Quo. Because why would you want it to change? And the way I tried to do that is that with all due respect to the many, many great books which I've learned from that told the story of the pivot from Keynesianism to Reaganomics and the Washington consensus in the latter half of the 20th century and the decline of unions and corporate led globalization. The thing is, we all already know that. And the question that I think we're still wrestling with in this decade, and it's only been five years, but my God, it feels like, it feels like we've already had a decade of stuff to grapple with is to really sit in the last 10 years, in the last five years and do sort of old school on the ground magazine reporting, yes, at some Wall street getaways, yes, in the back doors of Washington, but also in states in every single region of this country trying to grapple with what is actually stopping this given person, this given family from getting ahead, from feeling more economically secure and how much of this is easily solvable and actually could be a win win situation and when might things be difficult. And we just need to garner more creative policy solutions. So to just gird that with a bit more specificity, what I've found and what recent economic research has found is that despite all the boogeyman narratives around the minimum wage, you know, we've seen places like Massachusetts and Colorado, specifically Denver, increase their minimum wage by more than 50%. What's been the effect on employment, on unemployment, which is the big risk, the big concern? Supposedly it's been quite negligible.

[Nick Hanauer]

Zero.

[Talman Joseph Smith]

Denver now has a $19 minimum wage. Unemployment, which is what we're supposed to be worried about is I think on Last check below 4%. Now state data is a bit more volatile. Also. Correlation is not causation. Right. Who knows what will happen next year. The economy softens. Overall, we shouldn't necessarily blame a rising unemployment rate in Colorado or in Denver on that policy. It could just be the economy weakening overall. But still, if we just keep things as tight and as narrow as possible in that analysis, where is the sky falling? It hasn't. To take this step when we're further on minimum wage. I'll try to give another example. In California, they did something that kind of made me a bit woozy, I suppose, and that they didn't do a phase in for sectorally bargained minimum wage fast food workers. Right. Usually when you increase the minimum wage, you allow businesses which might have a business model predicated on low wages and you say, hey, you have three years to adjust to this phased in increase. And this will be the wage floor by say 2030, 2027 by 2026. Right. And so on and so on. California, as I understand it, just pretty immediately made a jump to $20 an hour. What's happened? Are there mass layoffs of fast food workers and fast casual workers in California? Not as I can see it. Of course. This doesn't mean that, okay, now you're making $19 an hour, now you're making $20 an hour and your problems are solved. And then so there are questions like, okay, well what are we doing with tax policy? Does Uncle Sam really need the tax dollars of people making $40,000, $35,000, even $60,000? Right. This can all be a discussion how much tax money does, does the government actually need from those people in order to fund itself? I think there's a good argument to be had that if you can control for inflation, there's a reason actually to bring down the tax bill for many working Americans below that call it 40k to 60k level. There's evidence of how this is possible, weirdly enough, through what Donald Trump has done. One of the most shocking things as a reporter that I've seen, and I've been a reporter at the Times for quite some time now, is how Donald Trump actually beat Kamala Harris and Joe Biden to the left on working class tax cut policy. Now I know all of the catches, I've reported on the catches. There are a lot of snags and there are certain ceilings on the no tax on tips, no tax on overtime rules. But for a party that's wondering why they did not capture those who make under $50,000 in a recent election, maybe it's because they're not seeing evidence of a full throated and easy to understand way that you are fighting for them. And the last thing I'll add in there is I think housing is incredibly important. And speaking of catches, there just really is this catch 22 where the whole point of developers is to have rental income be the source of revenue and profits for you. So when rental markets are very tight and rent prices are surging, that invites in a bunch of development. If you have enough yimbyism, which is shown to be effective, at least partially, then developers can come in, do their thing, build, they capture those high rents. But inflation eventually starts to flatten with the new supply. But then there's a new equilibrium which is reached in which, okay, well, rent inflation has now fallen and suddenly it becomes much, much Much, much less attractive for the next marginal build. I'll just leave that as a teaser. I spent a lot of time trying to whether I was in Montana, Colorado or western North Carolina and Nashville trying to figure out what different folks, economists, developers, nonprofit developers for profit developers, think about how you solve that. Catch 22 because we can't, we can't do nothing. But also I fear that yimbyism has come to be seen as a silver bullet. Right. I think you all have actually had guests on which have pointed out that it's not quite that if we're going to be serious about policy, we have to sort of dig down into what gets us to the next leg of not just to call back to earlier part of the conversation having housing affordable just for the upper middle class and for the affluent, which doing yimbyism alone might do. But how do we actually get those people who are the most rent burdened in the bottom 60 or bottom 70 and certainly the bottom 50%. How do we restructure these markets by hook or by crook, right through government mechanisms or private sector mechanisms? How do we bring down rent inflation and give more affordable home prices to them? And the last thing I'll leave you all with here is I think dealing with rent inflation. Shelter inflation overall is also a huge, huge, huge thing for the macro and the interest rate environment. If we're able to as a nation bring down shelter inflation, I should say to be most specific, which is about 40% of core inflation and maybe it's not down to zero, but it's closer to running at 1% on average for a long number of years then underlying inflation suddenly is far, far, far lower than anything that we've certainly recently been experiencing. And what does that do besides hopefully of course, making people's lives less precarious? Well, all of a sudden, I mean the Fed could have a neutral rate of maybe 2%, maybe 1.5%. All of a sudden all sorts of things can be funded. Businesses are dealing, small businesses and mid sized businesses are hiring more people and able much lower cost of capital. For those who care about government interest rates and government borrowing costs, though I have the slightly different perspective on that. It also brings down government borrowing costs. These things are all really interconnected. And what I tried to do, and obviously I won't be the judge of this, you all and a bunch of other people will be the judge of it. I tried to show how through on the ground reporting and through storytelling of not just people but places, just sort of entire ecosystems that these conversations on these wonderful nerdy podcasts like Yalls that we're having and the sort of daily frustrations of what people are experiencing and not sure what to make of, they're actually deeply connected. And if we put aside some of the culture war that is so plaguing us, to your point, Goldie, and just try to focus on being as solutions oriented as possible, I think that there's something there. And, you know, I'm. It won't be up to me, right, to decide how we solve any given problem, but, like, there are solutions there. And what's great about a book is that my day job, right, is mostly to just give people the who, what, where, when. Which is fine. I mean, like, people want the news. They're like, I don't know. Yeah, yeah, People say this, people say that. Tell me what happened. Who, what, where, when. The great thing about a book is that I had the opportunity to speak more in my voice, which is true, it is nice. But also I get to focus much more not just on the who, what, where, when, but also the how and the why. You know, it took a lot of work, but I hope people enjoy it.

[Nick Hanauer]

So if you could wave a magic wand, what would be the one intervention you would make in the American economy to fix some of this stuff?

[Talman Joseph Smith]

That's a very good question. And while I have already said I'm speaking as the author of the book here, not as the New York Times, I probably still don't want to answer that as I'm on the news side. Here's what I will say in terms of process and having a better debate. Right. Because that's one thing I do think I can do, is just try to find stories, tell stories that provoke better debate, it would be wonderful if the CBO.

[Nick Hanauer]

Pulled his head out of his house.

[Talman Joseph Smith]

Your words, not mine. CBO scores were much more focused on inflation risk, not just, you know, the budget score over a five or ten year window in terms of the in and out of outlays and revenues.

[Nick Hanauer]

Yeah.

[Talman Joseph Smith]

Because I think that's what actually people care about and it's what markets care about. I know people have a complicated relationship with markets, especially some of your listeners, but they do matter. And if market inflation expectations fly out of control, a lot of things go off the handle. Yeah, but you know, also consumer inflation expectations matter a lot. And consumers are 70% of the economy. And of course, actual inflation matters a lot because it's what affects the dollars in our pocket and in our bank accounts. So if the cbo, which actually does in some cases report on inflation effects of certain policies too. If maybe to flip that around, if people like me, maybe I could do a better job of uplifting the inflation side of their score. If they do score inflation risk, I think that would just be much, much better. Because when we just look over the past 40 years, the fact is that's when interest rates have jumped and when markets have become concerned is when inflation erodes the purchasing power and real value of your fixed income assets, for example, or your real assets. And there's just much less evidence that the in and out of the box of revenues and outlays matters. Especially when we know that there's a Treasury borrowing, sorry, tbac, the Treasury Borrowing Advisory Council, which works with the treasury to literally decide on the different types of maturity and our debt issuance. Right. So for example, there was a time during the height of inflation where essentially the biggest buyers in the treasury market were like, we would love these juicy T bills way at the front of the treasury curve, which have very little duration, but we're essentially making 5% on our cash, actually a little bit more. And then things changed a bit and then duration got more popular. Seven years, five years, years, even 10 years. And then the Treasury Secretary, whether Janet Yellen or now Scott Besant, says, okay, sure. And then the auction is not a surprise to anybody because you are telling the market you're going to sell them. There's a lot more that in a completely non political, nonpartisan way that both the treasury and the Fed do to keep the treasury market, which is the backbone of the entire global economy, which also happens to be, if you strip out intra governmental debt, sort of one to one with the quote unquote, big scary national debt. There's a lot of ways that our government has to manage that though. Sure. If people want to raise taxes to have annual deficits be smaller, sure, go for it. But in terms of policy and having better policy, that's the one thing I'd say just let's focus more on scoring inflation risk. And I think that would be better.

[Zach]

For everyone though, of course, if CBO's model continues to use these unrealistic assumptions. Sure.

[Talman Joseph Smith]

Like on the minimum wage and stuff. Yeah, yeah.

[Zach]

That it's a wage price spiral is how they do. They're predicting inflation. It's not going to do much good if they focus on inflation risk.

[Talman Joseph Smith]

Well, then we could have an interesting conversation where you're lobbying the CBO and other peoples that are other people that agree with you to have a different calculation. Right. Like and then that, and then that's there, you know, and then, hey, that's a really interesting news story. And then there'll be a fight over all of a sudden the staff of the, of the makeup of the staff of the cbo, which, like, would excite me. Right? What a, what a great story. I'm not sure whether it would excite other people, but yeah, I don't think that'd be so bad. Goldie versus the cbo.

[Zach]

Well, I think it's more Nick. Yeah, Nick versus. Because as you pointed out earlier, you know, Nick is the one who gets taken seriously. I'm just his sidekick. So he's the plutocrat, he's the billionaire, he's the person who gets taken seriously.

[Talman Joseph Smith]

Sincerely, I listen to the show and I enjoy what you have to say and your contributions equally.

[Zach]

Well, thank you.

[Talman Joseph Smith]

But I do appreciate your self deprecating jokes.

[Zach]

Well, it's not just a joke, it's a strategy. I mean, Nick is. Look, I love Nick. This has turned out to be a far better collaboration than I ever thought possible. But Nick plays this important role because in our world, this is true. People with great wealth get taken seriously. That Elon Musk gets taken seriously is ridiculous. But he's extremely wealthy.

[Talman Joseph Smith]

Some people think the fact that I get taken seriously is ridiculous. And sometimes I feel like I agree with them. But hey, what do I have a little bit of cultural capital from the newspaper I work for, and it's got me into a lot of rooms. And what I try to do is just honor the standards, but then also, like, honor, like I think the spirit of public service and journalism.

[Nick Hanauer]

Why do you do this work?

[Talman Joseph Smith]

Oh, right, yeah. This is always also on question. Good one. I do this work because I feel like I've been given so much and I want to explore the realities of the distribution of people, power and money. And if it turns out that everybody can be doing better based on what I find out in my questioning and in my learning and my exploration, then I have an obligation to point out that that could be a very real possibility. And then I feel like it's my job to then say, hey, here are the hurdles. I love people, all of this country, and I truly do believe that while utopia is not attainable, I think surely, surely we can figure out and tell stories about how it could all be better shared while still growing the pie. I think it's possible.

[Zach]

So we open by talking about how nobody likes to talk about paying people more. And of course, that's been our focus and it was Interesting. For the past decade, we've largely been the pay people, more people, starting with the minimum wage. It was interesting how Tom. And brought up basically how the minimum wage has not created the disemployment that orthodox theory says it would in Denver or California. And as we know here in Seattle.

[Talman Joseph Smith]

Where we, I think we're up to.

[Nick Hanauer]

$22 an hour, aren't we?

[Zach]

We're over 20, but it's. But where we, we pioneered this and even those large sudden jumps in the minimum wage 50% increase has not created that disappointment effect. And you know, we always felt from the very beginning that we were probably right about this, that it wouldn't create much disemployment, if any. We were pretty confident, but we weren't sure. It was an experiment. But if we were proven right, we felt it was a wedge issue. It was a wedge which undermined orthodox economics. Because if it's wrong about this, what else?

[Talman Joseph Smith]

Right.

[Zach]

And, and this has been a battle that's been going on for a very long time. So, yeah, we've been very involved on the, on the wage side of it, on the inside income side of it, on the distribution side of it. But it's not like it's escaped us the cost side of it, which is a lot of what Tomlin's been writing about and the piece we talked about from Mike Green that has gone viral recently and that is the costs of living a dignified, comfortable middle class life have increased dramatically over the past half century. You know, we've talked about it before. How much did it cost you when you went to the University of Washington and your family could have afforded to pay your full freight, but what Was.

[Nick Hanauer]

It like $250 a quarter a semester? There were 3, 750 bucks a year.

[Zach]

And now in state, it's hard to even imagine. It's like 13,000. Out of state, it's 20 some thousand. And Washington is less expensive than a lot of other states in terms of state universities. We went from a country where you could pay your tuition and fees with your savings from a summer job.

[Talman Joseph Smith]

Yeah.

[Zach]

Working at McDonald's, a minimum wage summer job was enough to pay for your tuition and fees for the year and you could literally work your way through college. You can work your way through college.

[Nick Hanauer]

Today if you're an investment banker.

[Zach]

Yeah. Or at a minimum wage job as long as you're working 15 months a year.

[Talman Joseph Smith]

Yeah.

[Zach]

So it's impossible. We've gone from an era in which health care was largely affordable, and this is something that Mike Green talks about in his piece. And now, and we're seeing now with the subsidies, the Obamacare subsidies disappearing, you know, people are seeing their health insurance double. You know, a family making $140,000 a year, when your premiums are go from $800 a month to $2,000 a month, that takes a big bite out of your budget. Whether you think that's the poverty line or not. You see the cost of people, just the cost of childcare, of daycare, where it can be over $20,000 a year for daycare for your child, more than you, than college tuition. And these are all real numbers. And the thing is, you know, we talked to Tomlin about the solutions and you know, which he, I presume he will get to in his book. There are solutions out there. There are other countries that provide free or very low cost health care and child care and high quality preschool and that have a public option for rental housing where you have housing stability just sort of built into everything. There are countries with very robust public transportation system so that not everybody needs to own a car. There are ways to deal with these costs. And you know, in the same way, Nick, that, you know, you open by saying, you know, people didn't, those economists didn't want to talk about raising wages. There's a lot of people who don't want to talk about providing these basic public goods. And that's what these things are. They're public goods in most other countries. And here it's all privatized and surprise, it's unaffordable.

[Talman Joseph Smith]

Yep.

[Zach]

If you want to read more from Talman, we will provide links in our show notes. And of course, we'll have him back on when his book is out.

[Podcast Producer]

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. Itchfork Economics. Nick's on Twitter and Facebook as well. Ickhanhower 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.