Slate Money: “The Economists’ Hour” (October 12, 2019)

Host: Felix Salmon (Axios)
Co-hosts: Emily Peck (HuffPost), Anna Szymanski (Breaking Views)
Special Guest: Binyamin Applebaum (The New York Times; author of The Economists’ Hour)

Overview

This episode explores the impact of economists on public policy since the late 1960s and the far-reaching consequences of their rise to prominence. With Binyamin Applebaum as a special guest, the discussion centers on his book The Economists’ Hour, questioning whether the influence of economists has ultimately been beneficial or detrimental to society. Major themes include deregulation, the value of human life in regulatory calculations, the myth versus reality of the “free market,” and the intersection of business ethics and international politics, specifically viewed through the lens of recent NBA-China controversies.

Key Discussion Points & Insights

1. The Rise of Economists in Policy (02:11 – 03:55)

• Applebaum’s “Elevator Pitch”
  Applebaum describes his book as “a revolution that starts in the late 1960s and the early 1970s where economists begin to assume a really central role in shaping economic policy in the United States… advocating for the government to step back and do a lot less management of the economy, to rely much more on markets to allocate resources.” (02:11)

• Was it ultimately good?

  • “No is the one word answer.” – Binyamin Applebaum (02:37)
  • While some innovations were beneficial, the changes “went too far.”
  • Consequences include: slowed growth due to lack of public investment, soaring inequality, and strain on democracy.

Quote:
“One of the big shifts… is that economists really convince policymakers to stop worrying about inequality… this is a really important reason that inequality has exploded in recent decades.” (03:13 – 03:55)

2. Deregulation and the Case of Airlines (04:01 – 06:32)

• Discussion of Deregulation
  The push by economists led to the dismantling of regulatory frameworks, such as those controlling airlines.

• Outcome:

  • Initially, deregulation led to increased competition and lower prices.
  • However, over time, “they so much eliminate economic regulation that they also stop worrying about industry consolidation… finally just four big airlines.”
  • Europe, by contrast, keeps more regulation and enjoys cheaper flights and more competition.

Quote:
"It’s the first time in history that it’s been cheaper to fly in Europe than in the United States." – Binyamin Applebaum (04:51)

3. Politicians vs. Economists: Where Does Responsibility Lie? (08:18 – 12:28)

• Are Politicians Naturally “Good” Until Swayed by Economists?
  Applebaum refutes this, “Politicians were the same venal beings, and they were wrestling with how to serve the interests of their constituents… what changes is the introduction of these new ideas...” (09:13)

• Cost-benefit Analysis
  Economists introduced discipline with cost-benefit analysis, putting a dollar amount on both costs and benefits of regulation. While this leads to more informed decisions, there’s concern about letting economists be the sole arbiters.

Quote:
“If you put economists into the position of being essentially the sole adjudicators of the value of a policy… that’s where it goes too far.” – Binyamin Applebaum (11:58)

4. The Myth of the “Free Market” – Taiwan and Beyond (12:28 – 15:41)

• Taiwan’s Growth:
  Marketed as a free-market triumph, Taiwan’s economic rise was actually state-driven, with careful government management and investment.

• Broader Implication:
  Nearly every so-called “free market” success story involves significant state intervention (examples: Taiwan, Japan, Germany, South Korea with K-pop).

Quote:
“There’s this myth about the free market that actually bears very little… it’s not at all the way these stories actually unfolded.” – Binyamin Applebaum (14:20)

5. The NBA, China, and the Limits of Corporate Morality (15:41 – 25:18)

• NBA-China Incident:
  Examined as a microcosm for bigger questions about global capitalism and corporate ethics. The idea that economic engagement would liberalize China is called “ridiculous in retrospect.” (16:46)

• Corporate “Wokeness”:
  The NBA episode “exposes the lie of the Woke brand or the Woke company. I mean, there’s just no such thing. There are limits.” – Emily Peck (20:45)

• Profit vs. Principle:
  U.S. corporations tout “enlightened” values domestically, but “leave those morals behind” when they operate abroad, especially in lucrative markets like China or Saudi Arabia.

Quote:
“If South Africa… was the size of China, we would have been doing business there.” – Felix Salmon (23:29)

• Can companies have social responsibility?
  Applebaum holds that corporations, as social creations, have obligations, but acknowledges the complexity and limits when large sums are at stake.

6. Valuing Human Life: Regulation and the “Price” of a Person (29:05 – 41:38)

• Cost-Benefit in Practice:
  U.S. regulatory agencies use a dollar figure—currently about $10 million (45:06)—as the “value of a statistical life” for policy decisions.

• Methodology:
  Stemming from work at RAND and by Thomas Schelling, economists estimate life value by analyzing wage premiums for risky jobs.

• Politicization:
  The value fluctuates by administration, and attempts to adjust for age or type of death (e.g., Obama admin asserting children’s lives matter more).

Quote:
“What you basically have is…you can agree even that younger lives have more value than older lives. And it’s still a question of whether you want that to push up your baseline number or to push down your baseline number.” – Felix Salmon (33:53)

• Limits and Controversies:

  • Assigning value to life is uncomfortable and complex (“a weirdly distasteful science”).
  • The process can fail to account for lives not associated with high economic output or formal labor, as discussed by Emily and Anna from a gender perspective.

• QALY (Quality-Adjusted Life Year):
  A refinement used in development and health economics, valuing not just the length but the quality of life years gained or preserved.

7. Numbers Round & Notable Data Points (42:34 – End)

Notable Numbers:

• 1978 (43:26, Emily Peck): Year of the U.S. Pregnancy Discrimination Act, prompting discussion on how recently overt discrimination was legalized.
• –0.02% (43:48, Felix Salmon): Negative yield on Greek 3-month treasury bills, symbolizing anomalies in sovereign debt markets.
• $10 million (45:06, Binyamin Applebaum): Value of a statistical life used in U.S. regulation.
• $1.3 billion (45:51, Anna Szymanski): The savings projected for Ecuador after ending fuel subsidies—which sparked social unrest.

Memorable Quotes & Timestamps

• “No is the one word answer.”
  — Binyamin Applebaum, on whether the rise of economists in policy has been good for society (02:37)

• “They so much eliminate economic regulation that they also stop worrying about industry consolidation… then finally just four big airlines.”
  — Binyamin Applebaum (05:45)

• “There’s this myth about the free market that actually bears very little… it’s not at all the way these stories actually unfolded.”
  — Binyamin Applebaum (14:20)

• “The NBA episode…exposes the lie of the Woke brand or the Woke company. I mean, there’s just no such thing.”
  — Emily Peck (20:45)

• “Corporations are creations of the state. They are part of our society. They have an obligation to behave as part of our society.”
  — Binyamin Applebaum (25:21)

• “The current valuation is about $10 million.”
  — Binyamin Applebaum, on the value of a statistical life (32:22)

• “Economics models are all perfect until you add humans.”
  — Anna Szymanski (42:02)

Key Moments & Timestamps

• Introduction of Binyamin Applebaum & Overview of Episode: 00:10 – 02:09
• Elevator Pitch and Consequences of Economists’ Rise: 02:11 – 03:55
• Airline Deregulation Case Study: 04:01 – 06:32
• Interplay of Economic and Political Power: 08:18 – 12:28
• Debunking “Free Market” Development Stories: 12:28 – 15:41
• NBA, China, and Corporate Ethics: 15:41 – 25:18
• Valuing Human Life in Policy: 29:05 – 41:38
• Numbers Round: 42:41 – End

Conclusion

This episode offers a lively, critical, and engaging look at the ascendancy of economists over American public policy and its global ramifications. It challenges the listener to consider the trade-offs and sometimes uncomfortable realities of quantifying values—whether it’s the price of a human life or the ethical constraints on multinational corporations. With incisive anecdotes, policy history, and candid debate, the discussion deepens our understanding of how economic thought shapes—and sometimes distorts—the world we live in.