Gavin Newsom (4:19)

We were hopping and bobbing to the Crocodile Rock.

Mike Pesca (4:34)

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Harry Holzer (7:14)

It's good to be here.

Mike Pesca (7:15)

Give me so we could start with and I gave a little bit. And if anyone's been hearing any of the Ezra Klein and Derek Thompson book tour, there are all these examples of how long things take. And even when there's an infrastructure bill passed, it takes a year and a half to not even get it done. So I'm going to assume that many of my audience know these examples. But my first question to you is as someone who is inside the federal bureaucracy and also as someone who's dedicated his life to using the power of the government to correct problems, for how long have you been aware that this isn't just a bit of a frustration, but it is a real crisis?

Harry Holzer (7:55)

It's interesting. It's not something that a lot of us focused on for a long time. I'm a labor economist, so I mostly focus on wages and employment and worker skills and how to improve them. And we can come back to that later. But several important writers, Rui Teixeira at the American Enterprise Institute, of course, Ezra Klein and Derek Thompson, among others, Yoni Applebaum, have really brought out this to our attention over the last two or three years. And frankly, Kamala Harris defeat in 2024, which has led to some long overdue soul searching among Americans and several problems contributed to that. But the difficulty of building and people's frustration with the terribly high cost of housing. And as a Democrat, since I'M marked with a big D on my forehead from my time in the Clinton years. The fact that population is flowing quite steadily and even quite rapidly out of all the major blue states and cities. San Francisco, Louisiana, New York, Chicago, and where are they going? People are going to Arizona and Texas and Florida where housing is much cheaper, taxes are lower, et cetera. That's a real wake up call to the Democrats if they want to win elections in, in the future.

Mike Pesca (9:25)

So it was kind of what an economist might call a revealed preference.

Harry Holzer (9:29)

That's right. In the end, the markets do work. So. But, but, but a lot of us just weren't as focused on this as we should have been for a long time.

Mike Pesca (9:39)

Right. And I assume it's for a few reasons. One is that some amount of regulation are not only necessary, but in fact were probably some of your life work. I wonder, I don't know how much direct input you had, but when you're with the Clinton administration, you were probably advocating for certain policies which amount to regulation, which might now be the sort of regulation we point to and say, well, that's what's slowing things down. Was that the case? Well, you couldn't have gotten everything perfect.

Harry Holzer (10:10)

Yes. Since I'm a labor guy, the regs that I was most involved with was attempts to very moderately raise the federal minimum wage to make sure that pensions are safe, things like that, which again, if they're done in moderate amounts, create good things or at least the positives to the economy outweigh the negatives. And that's still true. And in a world where climate change is a real thing, it's not a hoax. And I think we will need good regulation going forward. Of course, not just in the United States, but all around the world. So I don't want this to be viewed as an anti regulation, but in some areas, most clearly housing, the rules have just piled up and piled up. And I think that's one of the problems is that we seem to add new regulations all the time and we're not as good as eliminating the old ones that are maybe less justified. And so you have this, you know, it's not like any specific regulation necessarily tipped us from positive to negative. It's this general increase without doing enough to take away the ones that are.

Mike Pesca (11:19)

Less timely because there is not an easy mechanism for that, but also because there are constituencies that want those regulations because it marks you, especially if you're in a place where you can lose to Republicans. That's a very Republican right coded thing to be anti regulation. And you add that all up and there is this huge disincentive to ever change. Unless you get what just happened, which is the wake up call of a lost election.

Harry Holzer (11:44)

That's right. Now and of course on the housing thing, this is very clear. If you are an owner of an existing property or housing, your housing values and therefore your wealth are probably higher because of all these regs. So there is a conflict between the interests of the current homeowners versus people who need to own but who are squeezed out by these terribly high costs.

Mike Pesca (12:09)

Yeah, that's true. But as a homeowner there, maybe I'm using the term wrong, but there's a lot of exogenous inefficiencies and there's a lot of cost.

Harry Holzer (12:20)

No, no, absolutely.

Mike Pesca (12:22)

Crisis affects homeowners effects. If you just want to be talking about like rational economic actors.

Harry Holzer (12:27)

That's right.

Mike Pesca (12:28)

Affects the prices of homeowners. And this is because of bad.

Harry Holzer (12:30)

That's right.

Mike Pesca (12:31)

And sorry, bad housing policy.

Harry Holzer (12:32)

And even those of us who benefit from high housing values, and I'm certainly in that category, what about our kids and our grandkids and their ability to buy housing anywhere nearby is severely curtailed by these problems.

Mike Pesca (12:45)

Right. Or to get back to politics, what about the next generation to ever put their faith in Democrats and therefore maybe have the other parts of the Democratic agenda that might be helpful. Mention climate change.

Harry Holzer (12:56)

Exactly.

Mike Pesca (12:56)

You know, I do wonder if I had an environmental expert on who probably would agree with that op ed of yours I read in the Hill. They might say something like well the environmental regulations, those we need. But let's talk about the. Maybe they'd say housing regulations. If I had a housing person on, you might say, well, the housing regulations, you have to understand we can't have sprawl. But some of these labor regulations are what's causing the process to be so slow. So I went on the Harvard Law School center for labor and a Just Economy. I know you went to Harvard. I don't know if you're. You have many academic affiliations. I don't know if that's one. But they write that the passage of what was then a once in a generation slate of industrial policy bills give state and local recipients an historic opportunity to enable worker power building strategies that can be leveraged to empower workers who work on. They list a couple of the bills. IRA chips include project labor Agreements, Prevailing wage Agreements, labor peace Agreements, local and targeted hiring Authorities, Workforce developments and Apprenticeship Place Place based Energy, Community tax credits, Domestic content requirements, child care provisions, a scoring system for Competitive discretionary grants and loans that incentivizes the use of community benefit plans that encourage fear and fair choice to a union. There are trade offs in economics. So I don't know, maybe a lot of those are a wish list. But aren't a lot of those also exactly contributing to the problem you diagnose?

Harry Holzer (14:22)

I think they did. I mean, again, I have sympathy to the general notion that we need to help workers earn higher wages and improve their skills and even have more power in the workplace. And there's different ways.

Mike Pesca (14:36)

Let me interrupt and say. So the audience knows you don't just have sympathy like much of your life work has gone towards that end, right?

Harry Holzer (14:43)

That's right. But at the same time, like if we were talking about the minimum wage right now, I would say these are the positives of minimum wages, especially when they go up to $15, $20 an hour. But these are some of the negatives. How do you balance those out and get to sort of an optimal place? And the long list that you read is instrumental because again, if you take any of those in isolation, they might not be a bad thing. It's that 10 or 12 items plus buy American rules. You know, it likely slowed down the progress on those three big bills. And by the way, I supported those bills wholeheartedly. But the tragedy is that by election year 2024, the Biden administration had actually fairly little to point to of things completed. One of the big numbers that you see a lot in the press is that they only completed 58 electric vehicles charging stations, you know, which is shocking. You throw that many billions of dollars or something should end up in more than 58 stations after the two or three years they had. So again, I think that was the problem. It was overkill. And even without any of that stuff, it would have been hard to do this fairly quickly. You know, you look at the Boston Big Dig a few decades ago and other things, and there's a guy at Brookings named DJ Griff Ribbon who writes about this a lot, and all the tension between federal rules and state and local rules and jurisdiction. So it would have been challenging anyway. But to take a challenging situation and add that much, so many extra regs, so much extra paperwork, it couldn't have helped. I can't say how much it hurt, but it certainly didn't help. And that's a whole different problem from the housing issue, which is mostly a state and local issue rather than federal.

Mike Pesca (16:36)

Yeah. And the thing with the Big Dig is it did cost a lot and it there were so many stories about it. But, you know, today I was just talking to someone in Rhode island and they were like, you know, I could get to Logan Airport in less than an hour. And that's because of the Big Dig. So I don't know if that person will say the words I just said, and that's because of the Big Dig, but it is. And someone could make that point. And I don't know we'll ever get that statement with the charging stations. I don't know that in 10 years we'll ever have thousands of charging stations that work for whatever generation of EV vehicle is in operation.

Harry Holzer (17:09)

Well, we probably won't, simply because I imagine the Trump folks are going to try to kill off, you know, certainly on the green energy part of this, if that hadn't happened, if Kamala Harris had won or some other Democrat and this had been preserved, you know, you would have seen this very, very slow progress over time. 20 years from now, people might look, and again, I supported all three bills. I think you can make a strong case for why all of them are necessary and will provide benefits. It's just that we've made it too hard and too slow to make great progress on them.

Mike Pesca (17:43)

So how can progress be made on this issue? Is it a question of the people who get elected empowering their bureaucrats, maybe their labor economists in their departments to prioritize not just the wish list of people we want to help, but something like efficiency and priority and prioritization? Is that possible?

Harry Holzer (18:05)

Well, I think it is. I mean, I think the first thing that has to happen is Democrats have to embrace this idea that this part of the abundance agenda, that this really matters and it affects their appeal. And then if and when they get elected, they have to figure out, and again, it's hard for me as an outsider to know exactly what changes in the regs, but to prioritize a process for rethinking, preserving the regs that really do make sense, but trying to slim down those that are, that may be dated or just, just add too many costs. And, you know, and I think as, as we, as we talk about how bad this is, we got to talk about, you know, the near miracle that Josh Shapiro pulled off in Pennsylvania, you know, when the I95 highway, a chunk of it was destroyed and he replaced it in a stunningly quick amount of time. Now, he declared an emergency and he still used unionized labor. But it just shows that if you prioritize this, it can happen. And he had a real emergency. He did have an emergency. So he had. It was easy for him to invoke under that emergency ruling changes that otherwise might not be politically possible, but at least under some circumstances, it can be done. So what can we learn from the Josh Shapiro example and others where the not only which were successful, but achieved with modest time and modest cost?

Mike Pesca (19:30)

Yeah, from what I understand, there were two crews right next to that section of highway and his transportation, the Pennsylvania State Transportation Authority. The executive went in and said, all right, you, you're going to work here and you, you're going to work there. And that was the same day they were working on the Big Dig. And they didn't involve a scoring system for competitive discretionary grants and loans that incentivize the use of community benefit plans.

Harry Holzer (19:52)

No, that's right.

Mike Pesca (19:52)

You can't do that. You can't have both.

Harry Holzer (19:54)

That's right. That's right. And again, but the other thing is.

Mike Pesca (19:57)

In an emergency, when a section of highway essentially blows up, maybe that's one thing and you're relaxing, but isn't this established? I'm not going to say deep state stakeholders who just will not give up this idea that the only way to get the climate justice they want, the labor justice they want is to go through these very procedures, costs. If not, you're selling out important stakeholders. And especially for Democrats, they're very sensitive to that.

Harry Holzer (20:26)

No, that's right. And you know, one of the, one of the disadvantages that Democrats have relative to Republicans is that the Democratic constituency is much more diverse. And I don't mean just racial or gender diversity. I'm talking about diverse stakeholders and interests. And each one cares about one dimension of this problem a great deal, whether it's environment or racial justice, labor standards. But there are times when, you know, and I look back to some of the successes of the Clinton years and to some extent the Obama years, where they were able to prioritize and not everybody liked it. But in the end, he was able those two presidents were able to convince people, this is really necessary if we want to have a successful party in the future, we will try to preserve the things that matter to you most. So when I was in the Clinton administration, it was pretty soon after NAFTA was passed, and organized labor was not happy about that. And yet I think the Clinton folks reached out to them, tried to accommodate their interests as best they could and make clear to them, you know, we're not forgetting your needs, but in this case, we had to prioritize economic development and economic growth. So it's hard, you know, but you know, a strong leader with some charisma, with good communication skills, I think could make it happen. And again, it's also got to happen at the state and local level, not just federal because that's where the housing, the regs that, that, that choke off housing or that's where most of them are worst.

Mike Pesca (22:04)

From your perspective as a one time insider to the Clinton administration, which did prioritize economic growth, as per your testimony here and your observer as an academic who was looking at the Biden proposals which you supported, was there more of a adherence to the wishes of the groups to Was there less. Was the Biden administration less likely to say what you just said? The Clinton said to labor, The Biden just wouldn't say, hey, listen, we all want what's best, but our priority now is growth.

Harry Holzer (22:39)

Yes. I mean the quick answer is yes, there was more of that under Biden. I mean the Biden administration and even the economists in the Biden administration very explicitly were in some ways rejecting what a lot of people have called the neoliberalism of the Clinton and Obama years. That and some people thought the economists had too much power in those administrations. And we did make some mistakes. I mean, you know, when we let China and the World Trade Organization, we didn't correctly anticipate this massive flood of imports and how much damage it would do in that first decade to manufacturing industries to we just weren't ready for that flood. And so we didn't pay enough attention to those costs and to prepare for them. But I think the Biden folks went in with this notion of we're going to empower workers, we're going to stand strong with environmentalists, we're going to stand strong with racial justice and equity warriors. We're not going to worry that much about what the economist said. Yeah, I think they made a lot of explicit choice along those dimensions. And I think in the end the costs of that approach and of course the biggest costs, if we pivot some of these other issues, that first relief bill nearly $2 trillion when the economy was already recovering, there's no question that that was inflationary. People still argue about how much and it contributed something. That was an example where in some sense it's almost the revenge of the neoliberals saying, hey, you know what, these market forces still matter a lot in fiscal discipline. But yeah, I think the Biden folks, and I'm friends with virtually all of the economists, some of them are outstanding economists, but I think they let the pendulum swing too far in the other direction.

Mike Pesca (24:29)

Harry J. Holzer is a Professor of Public Policy at Georgetown, a Fellow in Economic Studies at Brookings, and a former Chief Economist at the US Department of Labor. Thank you so much.

Harry Holzer (24:39)

Thank you Mike.

Mike Pesca (24:40)

The man has so many insights and we don't want to keep them from you. So Pesca plus subscribers will be able to access all this extra material like more of Harry Holzer and you get an ad free podcast that's also part of your purchase price. And every month we do a great thing like a book club type event or this month baseball season and also prestige TV season. I've got Ben Lindbergh, friend of mine, writes and edits for the Ringer. We're gonna talk about things like White Lotus severance and I don't know if the Milwaukee brewers middle Relief will hold up. Yes, the ghosts of Teddy Hidalgo. Don't worry if you didn't understand any of those phrases. We'll keep it on the white lotus. Or just listen to more of Harry holder. Go to subscribe.mike pesca.com and now the spiel Democrats are wondering what they need to do differently, what they need to do better, how to reach out and connect to the average voter to tell them we see you, we hear you, we are you. We're barring that at least we don't hate you. The Democrats we don't hate you tour only seems imperative now that election results confirm that a lot of the electorate seems to think that Democrats hate them. The rural, the non college graduate, the white, the street male. You know, the punchline people. It turns out that if you decry whiteness and white supremacy 10 to 20,000 times, white people, you know, some of whom might not be smart enough to understand the deep historical context of what you mean, or to get the subtle nuance difference between critiquing whiteness as identity and criticizing being white. But also maybe, yeah, we also are criticizing being white. Maybe the people who don't get that will turn around and say I don't think they like us. And then if you are a white male, you know, both combined. Having heard the whiteness discourse paired with the toxic masculinity mantra, you just might form somewhat of a hostile picture of Democrats reasoning. I think they have a hostile picture of me. This could lead to, and this is a big word everywhere lately, grievance. Now in this theme, I want to share one maybe it's a relic, maybe it's just something that happened six years ago, but something from a little bit of a different era where the concerns of white People weren't just dismissed, they were in fact treated as a threat to black people. It wasn't egregious, it wasn't scandalous, what I'm about to play you, but it also wasn't rare. Brown professor Juliet Hooker explained that grief and grievance had the same root, words for loss. But when communities of color experienced loss, it was because they were harmed. But when white communities experienced loss, it led to a propensity to do harm.

Juliet Hooker (27:35)

Eras the two most important forces driving racial politics in the US Are black grief and white grievance. Black grief is exemplified in the Black Lives Matter protests against police violence, which continue a long tradition of black political mobilization catalyzed by black death as a result of white violence that is subsequently channeled into public mourning. Simultaneously, during the Trump presidency, long simmering cries of white victimhood have crisp crystallized into a potent politics of white grievance that frames the US As a white country under siege from threats from within and without, at the hands of people of color such as ungrateful and unpatriotic blacks, criminal. I'm quoting Latino immigrants, Muslim terrorists, violent refugees, etc.

Mike Pesca (28:28)

So the professor there was doing air quotes for those phrases at the end. This was a common way to think. It was common in elite institutions and in very progressive quarters, and I would certainly say among the highest reaches of the Democratic Party. I bet it still resonates as true in a lot of those places, even if they're less likely to say so out loud for fear of losing funding. But the idea of grievance isn't easy and it's not straightforward. The point that you just heard there a variation, that one woman's loss is another man's grievance. That's something to consider for sure. But lately the imperative has shifted more toward the care and tending of the white grievance. This is pretty much what California Governor Gavin Newsom has been saying on his new podcast.

Gavin Newsom (29:15)

It's not that we're not right, but I think we're wrong not to understand more deeply and fully that people think we are deeply full of ourselves and we're talking down to people and past people. People want to be protected, they want to be respected, and they want to be connected. And I think this notion of respect is something that keeps coming back to me. People that. That just feel like we don't respect them.

Mike Pesca (29:39)

And of course, when protecting and connecting, you've got to come correct to project a message of respect. Okay, fine. That's all fine. White male voters or rural voters or Perhaps the not most extensively educated voters can certainly be talked to with respect. And that's great. But I've been thinking about a certain kind of grievance. The grievance where you asked yourself, ooh, what do we do with this? The grievance which to Democrats seems illegitimate. Right. Some of these grievances. Well, every decent politician knows how to cajole and massage a little bit. Right. A person simply needs to know that you have some care and understanding. Let's take a really easy example that won't get everyone very upset. LED lights. Why do I need to use LED lights? Okay, good question. Let me try to explain or maybe even. Okay, sure. Don't the other lights seem easy enough? And don't they light things well? And then you explain and you meet them where they are. Maybe they had a grievance, now maybe they don't. Now not using a certain kind of light bulb in your house, it doesn't affect the kind of lights in my house. But what about another issue where your insistence on respect strikes a person of the progressive persuasion as disrespectful or worse, like your desire to own guns or to own semi automatic rifles or to open carry. And when you say that's not being respected, I'm not being respected. Well, does this need to be rebutted or does this need to be respected? What is a person in the care intending to grievance industry or project to do? Then take another quite common demand for respect.

TV Doctor (31:25)

I just had a baby, seven months old and you know, my baby, I was like, no, I'm not getting any vaccines. The doctors came in, they made me feel like a very bad mother for not doing that. Right. I was very pressured.

Mike Pesca (31:37)

Well, making you feel like a bad mother is counterproductive to the goal, which is to get your baby vaccinated. Let's be clear, that should be the goal of every society because it is better for your babies and for all of our babies were they do become vaccinated. And your opinion of yourself as a mother or your opinion of or perspective on someone else's opinion of your motherhood, that's really beside the point. And a good communicator can get that across. But can a person on what I consider to be the right side of this issue, that is get your babies vaccinated, can you really communicate respect in the face of this grievance? So this guy in the video that we're talking about is a TV doctor. He does well, he talks to vaccine skeptics all the time. And here's how he handles them.

Steve Bannon (32:26)

Well, first of all, congratulations on the birth of a seven month old. The fact that anyone made you feel bad in the health care system, I feel like is a failure on us in the health care system. So I'm sorry that happened to you.

Mike Pesca (32:37)

Okay. Good communication skills, but pay attention to the nature of respect being exchanged. He speaks respectfully. He certainly respects her as a person, whatever that means. But he is not saying I respect that choice. Right. Because the absolute best way to bond with this mother would be to say, of course you're not a bad mother, but the doctor can't say that. Or maybe he could in an ends wind up justifying the means kind of way. Or maybe from the theory that, oh, you just don't have all the information yet, but still, it's a lot different from we generally agree on the same things and I'm just not saying it right. Think about this, what I'm going to play next. Also from Gavin Newsom's podcast, think about this request for respect, this specific grievance.

Unnamed Speaker (33:29)

What do you mean for Trump?

Gavin Newsom (33:30)

I think sort of the grievance narrative that comes from Trump, this, this, this notion there is a sort of a victim.

Unnamed Speaker (33:37)

Well, they did try to, they did try, they did try to put him in prison for 300 years.

Harry Holzer (33:41)

Right.

Unnamed Speaker (33:41)

They did try to bankrupt him. A guy ever had a, ever had a set of grievances they did steal, according to us, and we're firm believers, the 2020 election.

Mike Pesca (33:51)

Steve Bannon there is saying, what about respecting me for my opinion about our stolen election? So how do you treat that with respect? My first instinct is to say you don't. You call out the lie. You let the chips fall where they may. You're never going to get election deniers anyway, right? Well, actually, you probably could get election deniers. People are interesting. There is definitely people out there who deny the election but just want to vote for who's ever best on the economy. And if you say, all right, we're going to be Democrats who make inroads with Republicans and win back voters, but we're not going to get the Republicans who deny the election, guess what? You just wrote off 2/3 of the Republicans, how respectful should you be to that grievance and others like it, Grievances that you do not agree with at all. If you're not respectful seeming about that grievance and it's a big grievance to a lot of people, will you even be heard on the other grievances? I think it's a Bit of a Democratic fantasy to think that we'll be able to talk reasonably and communicate empathy on all of these issues because there are big gaps in understanding and just agreement with what the right policy is. It's not only about tone or communication style. A lot of grievances are born of beliefs that run very much counter to Democratic fundamental ideals. Take guns Again, most good Democratic politicians will go out of their way to communicate respectfully about guns. Hey, listen, I'm not trying to take away your gun. We understand you're a hunter. A lot will say, I grew up around guns. I respect the Second Amendment. But through grievance, all that's heard is we look down on you and your love of guns. And you know what? The majority of Democrats with national profiles do look down on Republicans and their guns, their love of guns, their obsession with guns. So changing your tone and really appreciating what you're saying and what your slogans are saying, that's absolutely necessary when it comes to reaching people. But I don't hear Democrats actually articulating ways in which they're going to change because I don't think they really want to change or are going to change. Not most of them. It's a tone only thing that we can agree on. Gavin Newsom, he's a pretty good listener, or at least he's good at performing, listening. But I don't know how far you're going to get just nodding and saying, I understand, I understand, respectfully, I get it. And I appreciate that. Instead of saying, okay, we're going to change, we hear what you're saying. And here's our new set of actual policies. Not all of them, not 180, then they'd be Republicans. But to make some actual change, that's a good way to communicate. I hear you. Not only do I hear you, we're changing on these issues that you care about. Because right now Democrats are in a stage which is necessary but insufficient. And in some cases it's impossible. It's good for them to recognize that they've left a lot of voters behind and to try to make amends. This is the reconciliation phase of grievance. I think Democrats are going to find out that some grievances can't be reconciled. That's it for today's show that just is produced by Cory Warra and Michelle Pesca as our far flung CBSO OOM Peru. G Peru DO Peru. Thanks for listening.