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The Realignment
587 | Mike Konczal: What’s Actually Driving the Affordability Crisis + Announcing the Niskanen Summer Institute for Undergrads
00:42:52
Mike Konczal, Senior Director of Policy and Research at the Economic Security Project and co-author of The Affordability Framework, joins The Realignment. Marshall and Mike discuss the why the affordability crisis is rooted in "broken markets" and "broken incomes," why two administrations in a row have struggled to handle the affordability issue, and how the Economic Security Project's long-term framework can inform future policy decisions. Plus, Marshall introduces the Niskanen Center Summer Institute for undergraduates, launching this summer.
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- [00:01]
A
Marshall here. Welcome back to the Realignment. You're probably wondering why this episode is out on a Friday instead of a Thursday. And the answer is that I spent way too much time on X, formerly known as Twitter, and got hopped up about the incorrect leaks that we be at war with Venezuela on Wednesday night. And I then thought you'd all wake up to an irrelevant episode on the affordability crisis and how to confront it. The good news ended up being that a we didn't end up going to war and b the actual thing that President Trump discussed during his address was the economy and affordability. Vice President J.D. vance also discussed affordability during a trip to Pennsylvania earlier this week. So clearly, not only were 2024 and 2025 defined by the affordability crisis, but 2026 through the midterms and beyond will be as well. With this timeline we see that two very different administrations, Biden and now Trump's, have struggled with this topic at both a political level and a policy level. So today I'm excited to interview the Economic Security Project's Mike Kunstol, who, with Becky Chao, has put together a report called the Affordability Framework that diagnoses the affordability crisis as rooted in broken markets and broken incomes. You can find a link to the report in the show Notes One other thing, I'll put together a more dedicated episode on this later this month, but I'm excited to announce the 2026 Niskanen center summer Institute. The week long program runs from this upcoming June 8th through 12th, and any undergraduates in the class of 2026 or later is eligible to apply. Your travel, lodging and meals are covered, plus you get a $250 stipend. You expect daily seminars with the broader scanning cinematic universe, and the program focuses on political realignments, the challenges facing institutions and need for reform, and emerging policy debates and issues across the spectrum that we cover on this show. I'll just say that personally, think tank summer programs are actually high. I'll just say that personally that a think tank summer program was how I actually got my start in dc. And I genuinely think that aside from basically launching this podcast, coming to D.C. to do a week long program was like just the fundamentally most important thing I've done in my career. So I really hope any undergrads who are listening to this show or any parents, friends, cousins, whatever who want to recommend any undergraduates as well for this program. So please forward and you can find the link in the show notes. Hope you all enjoy the conversation. Mike Consol welcome to the Realignment thank.
- [02:43]
B
You for having me on.
- [02:45]
A
Very excited to chat with you. So the timing of this recording could not be better because everyone, their cousin now knows they need to say affordability. Affordability, Affordability. So let's just start with the broadest question, which is that why does affordability during this post 2024 moment seem to be the unifying across the political spectrum? We need to think about this topic story.
- [03:10]
B
I say there's three things. One is that there are longer term challenges that existed in 2019 that have accelerated, I think of housing in this category where we were missing millions of homes back in 2019. We built a bunch of homes in 2021, but we then rebuilt fewer. And so things like that, long term care, childcare were already a price point issue for a lot of families in 2019. That also got worse. I think second is the sticker shock of inflation. Inflation, you know, prices went up about 20% as a result of the pandemic reopening. I can talk at length about the various theories why, but prices did in fact go up. Normally prices are going up a little bit all the time, but they're about 12 percentage point higher coming out of the Biden administration than people had expected. And I think that the wages also went up. You can argue about who and for and what. There's a general increase in both prices and wages. That sticker shock and the fact that some people were behind in that exchange I think really resonates with people. And they feel the price of groceries as being much higher than they're used to. They feel the price of anything being much higher as a level than they were before the pandemic and the reopening. And last, I think President Trump has been doing a lot of things that are pushing on affordability. The tariffs are taxes, particularly on people who buy more goods, which tend to be working class people. The mass deportations, I think will, it's tough to tell right now, but I think we'll ultimately have a real price shock in terms of food and construction and other things. And in general, the rising healthcare costs that are going to roll off this administration between the cuts to Medicaid next year that are in the tax bill and the ending of the premium tax credits. You know, medical facilities are already anticipating those cuts and, you know, front loading them. So, you know, there's longer term trends, there's the pandemic and the reopening and the inflation that ensued. And then specific choices being made this year that I think are putting affordability really front center in people's minds.
- [05:20]
A
And something I'm curious about. I want to start by focusing on Trump now that he's a year into his presidency almost. So you talked about tariffs and tariffs are actually something that I have mixed opinions on because you wrote a previous book, Freedom from the Market. America's trying to liberate itself from the grip of the invisible hand. And I very much come from the post neoliberal crew of people. We basically are looking at how post 1980s we got a lot of big things wrong, especially when it comes to industrialization, factories, the sort of economy, domestic resilience that we released on Hyper during COVID And I can hold two ideas at once in my head. One, Trump's tariffs are bad because they put tariffs on everything and they weren't strategic. They imperrored our alliances. This just isn't the way you would implement a tariff policy. I also believe that tariffs could play a really important role when it comes to actually achieving our national objectives. And I think the way the Biden administration handled terrorist fire China, especially focused in critical sectors, is a very good idea. And already I am talking to friends of mine who work in Democratic party politics in D.C. who are just saying, wow, tariffs are just totally bad and we're going to ignore the use of tariffs forever. And the answer is to go back to basically 2000s level discourse on this. Now that Trump has screwed this up so much, I think we could believe Trump tariffs bad. But also tariffs are a vital strategic tool that we can use to achieve our goals. That's the answer I've come to. It's not like a sexy answer, but it's empirical. What's your answer to this dilemma that anyone on the left to liberal categories can be thinking about right now?
- [06:59]
B
Yeah, I think what you said is really useful there. I'd approach it with two elements here. One is that there's what are we trying to achieve? And the Trump administration doesn't actually have a good answer for it because it doesn't really exist for the way they're doing tariffs. Sometimes they're doing it to try to like isolate China. I think that's an important answer that comes from that circle. But if you're doing that, you're not trying to annex Canada or annex Greenland or bully countries that just happen to have a trade deficit with us, even if they're much smaller than us. You wouldn't be so aggressive against, say, India in the way the Trump administration has been. You know, if you wanted to, you know, shore out of China towards other allies like in India. So that doesn't make much sense is a thing. The way it's on things like food in a way that wouldn't be particularly food products that we don't even make here. The way it's hitting certain kinds of goods where we're penalized for making them inside the country rather than just importing them as a finished good because the tariff schedule is much more straightforward. I saw a cool article about chocolate having this kind of component, but it's happening with all kinds of goods. The fact that there isn't a clearance or the Biden administration, you know, they, you know, a lot of people are like, well, they kept the Trump tariffs, but like the way they did tariffs was particularly around trying to build up an EV capacity, electrical vehicle capacity because China is very aggressively exporting electric vehicles. You know, many different peer countries were also doing that. I think, you know, like if there's a strategy for it, I think that makes a lot of sense. But you know, the strategy here is really at the end of the day this very crude mercantilism that the existence of a trade deficit is like, you know, just obvious from the point of view. Just like obviously us being abused as opposed to just the way economies evolve. And while you can make that argument about China, they're making it about every country. And that I think is inappropriate. I think the second dimension to add to that though is like if you're going to have this tariff, it's raising a lot of revenue, it's a tax. And you can argue how much is being paid by whom. But I think within a year or two, most of it be being paid by consumers and certainly a majority will be being paid by consumers. And it's gonna be a lot of money. It might be like $300 billion a year is one estimate. If you're asking everyday people to pay that kind of tax increase, ideally you want it to go to a broad based effort to reduce the deficit where the rich are also kicking in or some kind of public good, like I don't know, maybe like expanded healthcare or childcare or more housing or whatever, something that benefits the public if the public as a whole is paying it. And it went to pay for high end tax cuts, tax cuts for people who make millions of dollars, tax cuts for people who have specialized high end incomes. They went to pay for the big beautiful bill. And I think that's really offensive to ask everyday people to pay for the 1% to get more income.
- [09:48]
A
So then the follow up on the Trump administration is obviously Trump Made the price of milk and eggs, like, very Central to his 2024 campaign. And now that we're past, as of now, a year away from the election, how would you rate expanding beyond just tariffs, like their approach to handling affordability questions?
- [10:09]
B
I mean, I think it's gone quite poorly. I think there's a couple different ways they could try to go about it. But in general, the unstrategic use of tariffs is raising prices. We see it in goods prices. There's about an extra half a percentage point of overall inflation that you wouldn't have expected if they hadn't done tariffs the way they did this year. I think not focusing on securing the border or dealing with criminals or dealing with very specific cases, but instead a broad deportation quota, which kind of incentivizes or even forces ICE agents to go after people that they can find, which are generally people who are in the system, people who are trying to work with the system. You're hearing more and more cases about people who are green card holders, workers. People who are here are long settled, peaceful, but they had a drug arrest like 10 years ago, and so they're getting deported. You know, in a period where our economy is already slowing down, having fewer workers while we are also producing less because of the tariffs, I think is a recipe for slower growth and slower inflation. Now, the reason people are opposed to tariffs generally aren't because of inflation or like high levels of cost or recessions, because generally tariffs just aren't that big of a deal. Now, the rate at which they're imposing has gotten people very nervous in the fact that the economy was already slowing down a bit when they took office. It slowed down more. But the AI boom is still very strong. So that's obviously putting both pressure on electricity prices. Probably there's a lot of debate about this out in 2025, but so you know that they're inheriting this AI boom. The stuff that they're doing, I think, is not particularly focused on bringing down the costs of things that are important for everyday people. They would be doing the tariffs differently if they wanted to make housing cheaper. They would think of a different way of handling immigration if they wanted to get more workers into the country. Given that we have been around full employment for a while, at least last year. This year, the economy, the labor market has slowed down. So I'd give them a failing grade, but I don't even think it's really honestly a priority for them. I think their priorities are elsewhere.
- [12:23]
A
And the issue then is just that certain administrations, Democratic or Republican are just going to struggle with a specific issue set because the issue set goes against the broader theory of the case that they actually have, which is that obviously Trump being a talented politician, focused on prices during the 2024 campaign, but his actual priorities, trade tariffs, mass deportations, et cetera, just have nothing to do with this affordability story. And they're always going to retreat back to sort of those sort of frameworks. So it's going to be really difficult. What you're going to need to do if you're in the White House, some of which you are listening to this podcast right now, is develop a new theory that's going to be, you know, that's going to work with that. So I think that takes us to the report that you co authored of Becky Chow. It's called the Affordability Framework. How about you just introduce the overall framework? So there's two of them identifying broken markets, and then two noticing that broken incomes are just working together as dual drivers of the affordability crisis.
- [13:26]
B
Yeah. So what we wanted to do was not just give like a list of proposals or like, here's the five things to make things affordable. There's a lot of lists of proposals. We'll be doing more of that in the future. But we, you know, still a little early in this debate, we want to step back a little bit and say, what are the core drivers? What are the core things that make things unaffordable across many different sectors of the economy? And, you know, a lot of the work that's done in this sector or a lot of the things that are done on policy in general and affordability specifically, tend to be pretty siloed. They are housing experts who are focused on housing or they're focused on tools. So, like antitrust people who look at antitrust tools, they tend to be at a very specific point, either like a federal intervention or just a state intervention. And the economics of what's connecting it across many different sectors tends to get a little missed. And so we want to step back and say, like, what are the big drivers? And we thought there's two ways to approach it. One is that there's broken markets, that there are reasons markets aren't working to get the supply that's needed. And the second is broken incomes. The idea that people just don't have the money that they need to get things even, no matter how much supply there is and how much markets are working. Economic Security Project, where I work, has focused on both these in different ways over its 10 years. They've done Work around guaranteed income. So things like expanded ctc, EITC on one hand and then on the other hand, things like antitrust, public options, market crafting to make markets work better. And when you look at that, and we give six reasons why, three for each, but I think, you know, we'll just do two for each I think are relevant. If you look at markets like there's the not enough supply because you know, there's broken ability to make the things that we need. And this often goes to the so called abundance movement. And we know we talk a lot about housing and that there are, you know, factors holding back supply, but there's also concentration, you know, especially since the year 2000 I think is when a lot of people book it. Markets have become a lot more concentrated and we think, you know, each of those have huge costs for everyday people. On the income side, there's not social insurance when we need it. People need resources when they're young, before their peak earning years, so they can start families. And when they're older or when they're children, they're not working or they're elderly, or when they're children, they're not working generally, so they don't have income. So you need social insurance to tackle that. But in addition, there's also a big step up in inequality both between labor and capital and within workers among the 1%, 99% over the last two generations, then inequality means that wages aren't tracking productivity very closely. There's only been a few years for wages have gone up since the year 1980. And basically when we've had full employment. We also talk a lot about macroeconomics and recessions and inflation and you know, those four things. This is the last point I thought was useful, is that by approaching this way you can kind of blend the best thinking that's going on on this. Again, going back to the silo thing, there's often a lot of like, well there's this one way to look at it or this other way and putting them in unnecessary, I think tension when each part of them has a part of the story. When you're looking at housing, for instance, you do want to look at the, you know, the supply side barriers, the zoning and other barriers to building housing. You want to look at things like real pages. I think there's real numbers around things like real pages increasing rents. And you want to look at things like the recession that was caused by Wall street in the great financial crisis which put us back millions of homes that we needed. And I think you know, the way we wanted to approach it was to blend this best thinking that's out there and show that they're not actually in the sharp tension. I think some people want to put them in, but they actually speak together pretty well.
- [17:05]
A
Yeah, and I could speak to personal experience because you actually described a lot of people. You know, there's a big New York magazine article on abundance versus socialism where I was mentioned. Super exciting note there. I'll actually speak to you. I'll actually bring up that segment and ask your thoughts on it in a minute. But why people who just are civilians and just aren't working in these spaces are just genuinely listing out the policies and the proposals and asking why are these in conflict? And part of the reason why they're in conflict is to your point, these are tools and these are frameworks. And the issue is that certain tools and frameworks have been attached to certain factional coalitions who see themselves in conflict with one another and not purely at a level of policy, but actually to peer at a sort of perspective of like personalities and priorities within the governing coalition. So like the antitrust people, they're the concentration folks. And you know, a lot of the housing people, they are the abundance folks. And I think what's so useful about building a framework here rather than just sort of listing out policies is when we list out policies, we start just like ranking. Well, actually in housing, it's the supply side that's more important. And then we get the sort of anti people saying, no, it's got to be that the housing market's concentrated, rather than just sort of saying, if we take a broad based perspective at this issue, what are the various tools and approaches that we take to address it? And that seems to be the more obvious answer as opposed to the factional, we're competing for our sort of theory or our tool being the one that's the most important. So that's just like an important note for the future, for everyone, which is that like, think in frameworks, think in terms of like, what's the actual problem? Rather than just sort of trying to jump at things with one specific approach.
- [18:50]
B
Yeah, I think that's right. And you know, the Democratic Party is having a generational identity crisis. It's starting to get a little bit better. But you know, at the peak of it earlier this year, it doesn't surprise me that people are on edge and feeling out what the territory is and that that can be. You know, normally that's done more in private, but in our age of social media, A lot of it happens online very visibly. For better or worse. Probably for worse. But, you know, one thing we've heard from, you know, we've heard from a lot of staffers, like progressive staffers, who are, like, excited to see YIMBYism bracket abundance for a second, but like YIMBYism be incorporated into something that also has more populist or progressive economics with it. I think that gets lost. But a lot of, like, the really much more aggressive YIMBY proposals in the 2010s were coming from people like Senator Sanders and Senator Warren, and that there's always been a very progressive element to it. You know, I look a lot to California, which over the last few months, actually just recently, in a quick go, you know, they passed a big upzoning bill that they're really important upzoning, especially near transit centers. That was a big priority for the movement over the last decade, but certainly the last several years of concentrated focus. And they also put limits on algorithmic pricing, which is a big demand from antitrust world. And they also put some limits, it's on pharmacy benefit managers, these kind of middlemen who are seen as squeezing a lot of people on pharmacies and prescription drugs, both of which were big antitrust, like more progressive asks. And it was often the same legislators, Buffy Wicks, Scott Weiner, who were like, leading the charge on both these. So I think when you look at the state level, they're actually not as much conflict as you'd think. And then, you know, just talking to people, people are complicated. They have a lot of different opinions about different things, and they, like, want to balance in a lot of different ways. And we thought by showing that you can do a lot of different parts of this, we might be able to get some moderate members to think a little bit more progressively and some progressive members to see other things that are outside their immediate ecosystem. And so far, we're pretty happy with the response we've gotten on it.
- [20:55]
A
And speaking of debates around the vision for the Democratic Party, I'd say that antitrust is in this really interesting and frustrating moment right now. So I think the Democratic Party needs more main characters who aren't just elected politicians. So I will always defend Alina Khan to my more centrist friends, where I'm like, look, here's this person. They're a new face. They had a pov. That's good. That shows you a dynamic, responsive political moment. And I would love to see more centrists who are anti Lena say, like, okay, who's your Lena where is your Lena who's writing and thinking, developing and building? And my career doesn't have those people. So I think that's something that we should keep in mind when we start throwing stones. And what I will just say on this though is I appreciate how you frame antitrust around the concentration question. Because when I talk to centrists about why I care about antitrust, so much of the Lina Khan beef that centrist has is just rooted in debates about tech policy, right. And acquisitions in Google. And then everyone's just very hostile, gets controversial, whatever. But the second we start talking about hospitals, healthcare, other parts of the market where it's just not related to IPOs and company acquisitions at a tech level, everyone's on board in favor of it. So I think it's just so interesting that if we talk about concentration as a problem that's specifically impacting affordability in people's actual living, that is a version. I'm not demanding that the antitrust left like abandoned the tech side of the story. I can't make demands like that of people. But the more you focus on telling a story, if it's beyond just Meta and Google and whether or not Google has to sell Google Chrome, this is, I think going to be much more relevant and obvious to centrist people in the same way that you said that the EMB story is more obvious to people on the left populist side when you make clear. But it's a part of a broader framework that could keep their concerns in mind. It's also helpful to say, hey, if you're a centrist, you don't have to just say no antitrust. Here are these actual areas of concentration, or here are these areas you care about that are best understood through a concentration framework. So that's just like my learning and takeaway from the way you phrase this in the report.
- [23:01]
B
Yeah, absolutely. And it is funny that fighting happens because if a theory of abundance is that government regulators need to work better and agencies need to do their jobs better, you know, the FTC was really like a backwater with respect to the people who work there. You know, it was like a backwater before Lena and crew took it over and made it a much more effective regulator. And so in terms of like revamping the government to do things better, I think the abundance people, few, few people you could learn more from than Lina Khan and her people who turned the FTC into a very cutting edge agency that's done a lot. I, I make an argument similar about that with the consumer financial protection Bureau too, which was, you know, a big progressive win back in the Dodd Frank Act. You know, the thing I always think about the most with FTC in terms of, of what you brought up was the ban on non competes.
- [23:52]
A
Everyone loves those. A bunch of. When, when, when the non compete ban was signed, a bunch of centrist orgs sent me the press releases and they were like, cover this on your show. So like, and these are people who, if you talk to. And some of these places are very, very tech funded. So it's just like a funny example of how like it's actually much more complicated than the like, yay or nay, sort of tech centric version of the story.
- [24:12]
B
Absolutely.
- [24:13]
A
So I guess my next question would basically be you spent some time focused on inequality, and inequality as a political narrative is in kind of weird place right now because it really was just the phrasing that progressive politicians especially were focused on in the 2010s and I think part of the problem for inequality discourse is I like to separate policy topics and political topics into two different buckets. So there's just a little question of is there a policy outcome that's bad and a problem that needs to be attacked at a policy level. And then there's the question of what is something that sells itself politically as something that people really need to focus their attention on. And sometimes something that's politically charged could also be a successful policy project and vice versa. But I think the awkward thing with inequality is that my general non expert rebuttal to the inequality is the center of everything politically story which is separate than that. Inequality is a policy problem impacting people's lives that may have lower salience is. I struggle to think of inequality as the issue of our age. Why Donald Trump would win two back to back elections and then suffer basically no penalty, though the affordability one's a little more complicated. Suffer no penalty for not confronting it. For not only not confronting inequality, but actively making it worse and getting rewarded for it. So I'd just be curious how you think of how we should think of inequality as part of the story of 21st century America.
- [25:37]
B
Yeah, I mean it's, it's tough, right? Because Trump did lose an election there in the middle somewhere, I think.
- [25:43]
A
And if Covid didn't happen, I think he wins reelection. That's supposed to be the. Yeah, but I just want to say.
- [25:50]
B
Yeah, and so, you know. Right. You know, so to step back. So this report is analytical, right? So we're meant to like, try to diagnose some things that Help and then draw commonalities. So in terms of like, what is the most salient for voters, what you should take and put in a marketing document, I purposely step back from that because this is, you know, we did not pull this aggressively. We did not, you know, like, we're running some polling on things related to affordability. But like, you know, this isn't chosen for that. It's chosen because I think this is the best analytical way to put it forward. And then it's up to people who think much more critically about that last smile of getting it to voters, the majority of the trip getting hit to voters in terms of messaging and so forth and what to prioritize. And so I think it's hard to talk about ERA without inequality. And I think in a couple different ways, I think the explosion of 1% income in the late 20th century and then the explosion of capital income in the 21st century, I think can't really be overstated. I think it's really important whether or not you think it is a good or bad thing, whether or not you think it is a fair or poor outcome of our market economy. I think it just characterizes the way communities have evolved, the way housing markets and many other things we can get have evolved. I think if you look at the mad dash for a lot of scarcity goods or a lot of positional goods and a lot of the bidding up of a lot of things, I think inequality plays a really important story there. I think people fight about this a lot, but that there was only a few years in the last 45 years where wages, real wages, genuinely went up under the most strict version and essentially was like whenever unemployment was under four and a half percent. So like the late 90s and then the late 2010s, I think is pretty telling. I think it's pretty important. I would also say that so. So I'd say that. I'd say the way we talk about inequality has evolved a lot of different ways and people have focused on different things. I think there is a small resurgence of like 1% inequality and calling out inequality as being like the millionaires and billionaires, in the words of Senator Sanders, I don't know if that will take off or continue, but certainly the sense that something has gone wrong in that part of the social contract and that the rich are lifting off and not in pulling up the ladder behind them, I do think is relevant politically, and I think you see it in some of the polling. But I agree with you. It's not as simple as just Saying, you know, rich people bad and then like, you know, voters show up.
- [28:18]
A
And I do want to offer not just praise but total endorsement for the analytical way of looking at problems. So I've done some coverage of this lately, but I just am not a huge fan of the polling based discourse on any side. I just don't think it's useful. I think polls are very easily manipulable by basically everybody and I think a better actual framework to actually solve people's structural problems, this is just focus on. So I want to just like really praise you there and then. Two, I actually really like your point around inequality 2.0. Discourse that we're experiencing right now is actually a little different. I'd love to talk to you about why. Now that I'm responding to your thought, I think it's a little different. So I think the inequality discourse of the 2000s and 2010s, obviously a bit of it was about like the Wall street bailout and the way that Wall street like destroyed the economy. But like it was largely about I think a structural reality that wasn't anyone's people were responsible. But being responsible is different than being at fault. So in the sense that like, hey, look, like after the 1980s, like we built an economy structured around like services and finance and education, the knowledge economy and deindustrialization happened that led to an America where certain types of Americans like did better than others, especially those at the top of those people. And some of those people earn more stock than people on the bottom. And then you just saw this gap very, very, very widening. So it's about like structures and ideas and whole groups of people. I think what's happening, I think this is very driven frankly, by the way Trump 2.0 is governed is it's actually about specific groups of individuals where affirmative governing choices are being made and business and technological decisions are being made to really, really, really help them. So like I'm going to talk about inequality if I am worried that my job is going to be wrecked by AI in the next five years and there is literally no option available for me. And it just turns out there's 100 people who are invested in these AI companies who are going to give them all the returns of this new thing leave me basically with crumbs. So that's about very, very, very, very specific people. And that's also why when people see that Sam Altman is asking the federal government to provide backing for OpenAI's data centers and their buildouts, they just see that even more so it's like, wait, so they're going to make all these returns if they supposedly, like, destroy all of our jobs? And in case it gets screwed up, they demand the federal government to just give them total backing to help them get even more and more and more. So that's sort of my understanding of how it's just so personal. Right. Like, you also, when you see people walk in with the golden models to like Trump's White House office, like, those are specific individuals who are specifically, these are specific billionaires who are gifting a billionaire president very specific things in order to get even more billions on their balance sheet. So I think that's what I see as sort of different about this one. But yeah, be curious how you think this one, how specifically you think this iteration is different than the 2010s one.
- [31:22]
B
Yeah, that's a good question. So, yeah. And you know, obviously, as you said, inequality is an abstraction by definition. Like, it's just, it's a number. It's an abstract way of looking at physical, complicated, you know, things that are happening in the world. And so, you know, whether or not it's the Wall street bailout while you were getting foreclosed on, that animated a lot of that, I think in the, you know, 2000s and early 2010s, you know, it's that, you know, as you said, you might lose your job to AI, which is, you know, has a very close relationship with the Trump administration that, you know, there's. They're building a golden bribery cathedral next to the White House or attached to the White House while people's food stamps are going and while everyone's healthcare is gonna get jacked up. The fact that this government is so close to the tech sector and so close to the private sector in its actions and the direct appeal to bribery and money and direct resources and the exertion. This, I read as far right people, obviously this very new way of putting federal pressure on specific institutions and specific deals that they want from law firms or universities or private businesses is quite shocking. And I think we'll give it a. If it connects, it'll have this different characteristic to it where it's also tied to what's been going on in the government.
- [32:54]
A
Here's something I'm really curious about. So one of the post election takeaways is that you had Zoron winning New York, but Spanberger and Mikey won in New Jersey and Virginia respectively. And it just turns out Democrats are going to try to win anywhere and everywhere if they can, and different factions get different wins and hopefully it produces a coherent whole. And people are basically pointing in this fusionist sense that affordability is going to be the real thing. But as you and I know, given the circles we run in, I think what's going to get very awkward for centrists within the Democratic Party's coalition who want to talk about affordability very quickly, I think the populist left and left in general start pivoting it towards, well, you know, if you ask people what's actually really unaffordable, it's not just their house. So you can't just do yimby abundance agenda stuff. It's not just childcare. They're going to talk about healthcare specifically and they're going to talk about the cost of college and higher education. So like this report references single payer health care, the public option. Obviously we had the debt forgiveness debate during the Biden administration. You had the public free college thing during the 2020 Democratic Party campaign. How do those like publicly tagged goods like education and health care fit into this? Because this is where my crew is going to start feeling very, very awkward because they're going to, I imagine this way that there's definitely a centrist who thinks they could walk in to a left space and say I care about aff. And then everyone's going to cheer and then they're going to say, what do you think about public free college? And they're like, oh, I'm not sure. And they're going to say, do you support single pay? They're like, well, I don't know. That's how that's actually going to go down. So like how do you think about health and education specifically within this affordability framework?
- [34:45]
B
Yeah, that's a great question. I think just to step back one bit, you know, I think a couple different ways people have been talking about this week is that, you know, all those elections you just brought up all featured like utilities or housing or other things that are few people feel is very unaffordable. And I think, you know, in general the way you want to tackle some of these problems is what you want to deal with the demand side and the supply side. So you want to find ways to expand supply, you want to find ways to subsidize demand and throttle prices. And so you need to do those together. Right. Because the supply interventions probably take a very long time to come online in some cases. It depends on specific markets and things are unaffordable right now. But if you just deal with subsidizing or otherwise dealing on the demand side, then you won't, you'll, you will overwhelm the supply response. Right. And so I think that interconnectedness, I think is really important on healthcare. We have a pretty good sense on what should be done. Right. You want to, you know, we have this, you know, coming out of the Obama years. At the end of his presidency, second term, President Obama said there's three things to do to help build on the aca. One is to cap prescription drug prices, which has been a long standing Democratic ask. And the Inflation Reduction act finally has done that for a handful of drugs for senior citizens through Medicare. It's a huge lift to get there. President Trump seems to be doing something in this direction with Trump Rx. It's very unclear what that looks like, but they might be building on it, in which case you can continue to build on it and if not, you can say that that was a good idea. California's rolling off California Rx insulin, which I think is a very interesting possible solution as well. You know, you want to increase the subsidies on the Affordable Care act exchanges, which were kind of like infamously low when they passed. They weren't able to go back and do it. It was always kind of a very big that in the state level expansion of Medicaid were always the big problem spots. They finally did that with the premium tax credits, you know, in multiple bills. Those are expiring as we're talking. They're a big part of the shutdown. We'll see what happens with that. I think you'll have to, for healthcare you have to look at what's going on with Medicaid and this work requirements. They're, I think certainly serious people understand them to be bad faith. They're not about trying to actually get people to work or actually try to get healthcare to certain people, but more just to create this kludgy way of like denying people care because they can't keep up with the paperwork or there's, you know, it's being used by state governments to try to shut down what that actually looks like. We'll find out more. I think the more that they can stop that, the better. You're already seeing a lot of damage to rural communities. I think this will particularly hit a lot of Republicans on voters very hard, which is why Senator Hawley and many others have like flagged that this is a big concern for them. But there's things to be done on health that I think are pretty practical and straightforward. Whether or not you push for more like a public option, whether or not you pull for more structural changes, I think that'll just depend on what the coalition looks like, whether or not you have the Senate, how far you can push. But even on that list right there, I think there's a lot of work that can be done to genuinely bring down healthcare costs without sacrificing quality.
- [38:04]
A
What about higher education?
- [38:08]
B
You know, I have to take a look at that again. You know, so much is chaotic because of the Trump administration's attacks on higher education. And so whether or not it very shocking, like caps on. And so I would say two things. One is that the way the Trump. The Trump administration is going to fundamentally change how higher education looks over the next few years, whether or not that's a permanent shift or not is kind of unclear. The fact that instead of doing this by rules, which is generally how you do things in a liberal society, they're doing it by deals, which is saying that they're going college to college and demanding specific things of those colleges, rather than saying, like, any title, any, you know, major university needs to do this kind of thing. When it comes to foreign students, they're going, like, shaking down schools, school by school. I think gives it an extra level of chaotic confusion. But they're trying to, you know, they're trying to defund higher education, which, you know, they see as their enemy, which is very unfortunate because it's one of our few. It's a very important part of what we offer the world, and the fact that we are going to lose a lot of it, I think is really destructive. So I don't have the affordability agenda for higher education. But, like, the first step is to just the Trump administration to stop doing what they're doing. If there's specific rules that they would like to see different than do that as an actual procedure. Don't send people to just shake down universities at random.
- [39:33]
A
That actually takes me to my last question, which would actually just be my Niscanin Center. Centrist economics sort of mildly triggered me when you talked about, in your framework, subsidizing, increasing supply, subsidizing demand, and then throttling prices. I think the part where I get triggered and where most in this cannon will get triggered is the idea that you can subsidize demand and throttle prices at the same time. Right. The example would be, and this is the higher education one, when we do student loan forgiveness or when we increase Pell grants, we do stuff like that. You're subsidizing demand, so you're making it cheaper for individual users. But obviously that has coincided with universities essentially getting subsidized to increase their prices even more. And then we increase the grants the next year and we do more student loan debt forgiveness down the line, et cetera, et cetera, et cetera. So obviously, I think you've given part of the answer by saying increase supply, subsidized demand, and then throttle prices. But how do you just think of this dynamic?
- [40:40]
B
Yeah, I wouldn't say you do all three of them all the time or anything like that. I'm just saying that's the general approach. And with universities, I think you want to bring some public pressure to like, bring down the cost of higher education. And a lot of the higher cost of the increase in the cost of higher education has come from essentially amenities. This is a big argument. I think Ms. Ken has made this argument. Certainly many other people have made this argument. And those are things that's almost like a collective action problem, because if one school offers the expensive gym, then someone else has to offer it to be competitive. And if there's ways to bring down that price pressure, that lowers the cost of price. It's a throttling of price in that sense. But without us believing that's going to sacrifice much of the quality of higher education. And we can debate that a lot. I'm not at the frontier of those debates in higher education, but I do know that is one way to approach it. I think there's often this sense that subsidizing demand only goes into prices, but I don't think that's always true. And I think it depends a lot on what the thing is and where it's happening. But for some things like care work, which is very underpaid, and it's going to become increasingly in demand, especially as more baby boomers retire, that is going to be captured in some sense by higher wages. But we want that because we do think higher wages will bring more people into working, and not working fast food, but doing work, taking care of people in society. And so it's obviously complicated and depends on one thing, sector by sector, which is one reason we wanted to step back and look at this as a kind of more holistic thing. But I think that's ultimately the way to look at is when you step back, you can kind of see that there's these elements on the income side and on the market side. And if you look at incomes, there's sometimes people just need more money because of their life cycle, or they're just. They don't have enough money because of inequality and their wages not keeping up with the overall economic growth. But on the other hand, you know, like, there's also the supply side, and getting those in balance, I think is the right way to approach it.
- [42:37]
A
Yeah, I think that's the perfect place to leave it. So the report is the Affordability Framework by Mike and Becky Chow. And this is via the Economic Security Project. Mike, thank you for coming on the realignment.
- [42:51]
B
Thanks for having me on.