Pod Insights The Ezra Klein Show This Isn’t Your Grandpa’s Joe Biden About this episode President Biden’s economic policy isn’t what you would have expected from his long career. That’s true in the legislation he’s backing, which is bigger and bolder than anything we’ve seen from him before, but it’s even truer in the appointments he’s making and the theories he’s embracing. On everything from antitrust to inflation to employment to power, Biden is reflecting a new strain of progressive economics thoughts — one that wants to direct markets, not just correct them.
Felicia Wong is the chief executive of the Roosevelt Institute, one of the think tanks that’s been central to building the new progressive economics that Biden has picked up. She joined me for a conversation on Biden’s theory of the economy, how antitrust thinking has changed, whether Jerome Powell should be reappointed chair of the Federal Reserve, whether progressives need to reckon with Amazon’s wild popularity, what kind of inflation problem we have and much more.
Mentioned:
“Socialists Will Never Understand Elizabeth Warren” by Henry Farrell
Book recommendations:
Undoing the Demos by Wendy Brown
The End of the Myth by Greg Grandin
Difference without Domination by Danielle Allen and Rohini Somanathan
You can find transcripts (posted midday) and more episodes of "The Ezra Klein Show" at nytimes.com/ezra-klein-podcast, and you can find Ezra on Twitter @ezraklein. Book recommendations from all our guests are listed at https://www.nytimes.com/article/ezra-klein-show-book-recs.
Thoughts? Guest suggestions? Email us at [email protected] .
“The Ezra Klein Show” is produced by Annie Galvin, Jeff Geld and Rogé Karma; fact-checking by Michelle Harris; original music by Isaac Jones; mixing by Jeff Geld, audience strategy by Shannon Busta. Special thanks to Kristin Lin.
Transcript Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.
0:05 Ezra Klein? I'm Ezra Klein and this is the Ezra Klein Show.
0:20 Ezra Klein? There's been a lot in the Biden administration's economic agenda that has surprised me. Some of that has gotten a fair amount of attention. The fact that his legislation is bigger, that it's more ambitious, that the price tags he is willing to work with are far beyond the things Joe Biden ever considered at any other point in his career. People know about that. But to me, the really striking thing has been the personnel, the appointments he's made, the regulators he's putting in key positions. They speak to a very different approach this administration is taking to the way it governs and shapes markets. And I do want to hold on that word markets for a minute. It's really, really important.
1:01 Ezra Klein? This is not just an administration that is more liberal in terms of building new social insurance programs or building new public options for things. It is an administration that simultaneously believes in markets, but wants to use them much more aggressively to achieve public goals. And that's a pretty big phase shift, building on a decade, or you could argue decades of changes in progressive economic thinking. So to have this conversation, I wanted to bring on Felicia Wong, the CEO of the Roosevelt Institute. Roosevelt is a new-ish economic think tank. It's not one of the real old players like Brookings, but it's become very influential in recent years. It's a generator of a lot of this new economic thinking.
1:43 Ezra Klein? A number of people have gone through Roosevelt are now in the Biden administration. And Wong, who is a trained political scientist, has a very good sense for this interface between economics and politics and how policy change actually happens. So this is a conversation where we dig into the details, really talking about some of the ways antitrust thinking has changed, the way the Democratic Party's thinking about economic power has changed, what to think about the central banks and Jay Powell and whether or not he'll be reappointed. It's a good wonky conversation about something that really matters, which is how the Biden administration will use the economic power it has as a presidency, not just that it has through pushing legislation to reshape.
2:29 Ezra Klein? Not just the country's economy, the country. As always, my email, azra kline show at mytimes.com.
2:39 Ezra Klein? Felicia Wong, welcome to the show.
2:41 Speaker 01 Thanks, Azra. It's nice to be here.
2:44 Ezra Klein? So from what we've seen over the past nine months, how would you describe Joe Biden's economic vision?
2:49 Speaker 01 You know, I think a lot of people actually misunderstand Biden's strategy. And I think that's because they default to a kind of old understanding of what Democrats stand for. This idea that, you know, Democrats are tax and spend liberals. Don't get me wrong, I'm all for taxing. I'm all for spending. But what Biden is trying to push is much more about actually remaking our economy so that it does different things and it actually regularly produces different outcomes. Biden has a vision for leading an economic transformation that really is kind of high care, low carbon.
3:32 Speaker 01 That is really what the Biden strategy is all about.
3:36 Ezra Klein? Something I see, to my surprise, when I look at the Biden administration, is a tribe of what I've heard called around Elizabeth Warren, left neoliberalism. There's this great piece by Henry Farrell, political scientist. I'll put it in show notes about this. You see it with appointments like Lina Khan, the antitrust thinker to the Federal Trade Commission. It's not a shift from Democrats who like markets to Democrats who don't like markets and just believe in government. It's a shift from Democrats who believe the government's role is to step in when markets fail, to Democrats who believe the government should shape and structure and direct markets to achieve better social outcomes. Is that fair?
4:15 Speaker 01 I do think that that is what a lot of people, not just Lina, but a lot of the people at the National Economic Council, a lot of the people at the Council of Economic Advisers actually think about markets, which is that they need to be constructed to promote more care, to promote more decarbonization. So, you know, I think Henry is right in that sense. And I do think there is a kind of left rulemaking that can be seen as left neoliberalism. But when you combine it with this real expansion of childcare and pre-K and the child tax credit
4:58 Speaker 01 and Medicaid expansion, and this idea that you're going to spend, at least at one point in the plan, it was $450 billion to increase the pay of home health workers. Yes, that's about remaking the market in home-based healthcare so that women are actually getting higher wages for doing work that is incredibly difficult. So yes, that's about remaking a market, but that's actually about a kind of public spending that no neoliberal could ever sort of have imagined and countenanced. So it's not left neoliberalism in a narrow, just change the rules sense.
5:37 Speaker 01 It's a kind of new economics, a kind of mission economics or purpose economics that sees that a lot of spending is what you have to do. And in fact, in some cases, you could argue that spending is the feature, not the bug here, because spending is actually going to push on the size of the economy and actually drive healthy growth. But that is really at the heart of the vision. It's not just a bunch of green eye shades lefties. I think it's more than that.
6:04 Ezra Klein? I want to ground this conversation in what I think is a particularly revealing example, which is antitrust. Personnel is policy, and Biden has put basically all the key leaders of the new antitrust thinking into top positions. We've mentioned Lena Khan, who's now head of the Federal Trade Commission. Biden's got Tim Wu at the National Economic Council. He's nominated Jonathan Cantor to lead the antitrust division at the Department of Justice. This was surprising to me. This is a new development in liberal thinking. It's been gaining power over the last decade, and it has fully taken over the Biden administration quickly, really quickly. So I'd like to talk about the background of this. What has changed in the thinking on the left around antitrust?
6:47 Speaker 01 The main thinking is really that the consumer welfare standard, which had been the standard against which mergers and acquisitions had been judged. A merger could only be seen as a problem if it led to a rise in consumer prices. People didn't think about whether or not workers were going to be affected. They didn't think about whether the company itself, and this is where Lena's Amazon article was such a revelation. People didn't think about whether companies themselves could actually have so much market power that they would end up dominating a sector, kind of like a giant company town, in the middle of the internet.
7:26 Speaker 01 So none of those other ways in which companies can end up essentially extracting from their consumers, from consumers extracting from the general public, none of those things were actually considered to be legitimate in considering whether or not a company could buy or sell another company. And so antitrust law was quite brittle and quite thin. But I would say five years ago, led by Senator Warren and others, a number of political people and a number of economists, like my colleague Joe Stiglitz, began really talking about market power
8:10 Speaker 01 as an enormous problem that antitrust had to solve. I think they saw it as a problem in economics. I frankly think they also saw it as a problem of democracy and a problem of national security. I certainly see it in all of those ways. And so because of that, this idea that there are a few places in government, the FTC, the antitrust division of the Department of Justice, the White House itself, Tim Wu was on the National Economic Council advising on technology and competition policy.
8:47 Speaker 01 There are very few places where you could actually lever up a different rulemaking structure to take on this enormous political fight. And so that is what is compelling and exciting about thinking about corporate power in this way, or constraining corporate power in this way, thinking about antitrust in this way. And the other thing, of course, that's pretty exciting about it is it's mostly does not require legislation. So the agonizingly slow legislative processes that we see now for both the infrastructure bill and for the budget, you know, a lot of this work can actually be done on the executive side.
9:31 Speaker 01 And that is pretty important when you think about just how our federal government is structured and the ways in which checks and balances have become sclerotic to the point of non-existent.
9:43 Ezra Klein? So I want to go back for a second to the two things you put together there, which is the economic critique of market concentration and the political critique. And I've heard these described as the economic critique and the neo Brandeisian critique. And they lead you in different directions, that if you're just looking at how much market power a firm or a couple of firms have, that's one thing. But if you're trying to bring in these more intangible questions of bigness and political power, that requires a pretty different analysis. The big tech firms are a good object case here because a bunch of them do not operate as traditional economic monopolies. Amazon, which is huge, it doesn't have anything close to a monopoly in retail, nothing close to it.
10:26 Ezra Klein? It competes with Walmart and Target and Costco and a lot of others. And it's not charging outrageous prices for its products, but they do have a lot of power. Or take Facebook. Facebook doesn't look like a traditional monopoly. It competes with Twitter and Snapchat and TikTok. Its product is essentially free. But they do have a tremendous effect on our democracy. They have so much power. So can you talk about which of these approaches, the economic approach or the power approach? You think the Biden administration is actually taking?
10:57 Speaker 01 I'm interested in the way you're thinking about this critique because I do think that competition policy generally can move in two different directions. I think one kind of competition policy does focus on just making markets into better markets in ways that can, and maybe this is what some critics call left neoliberal. If you just have markets work better, there's no guarantee of any of those other kind of public purposes in the economy that we've been talking about. But markets working better would be better than markets not working. And so that's like one direction for competition policy. And the other direction competition policy really does lean toward making sure that you're not going to have dominance.
11:42 Speaker 01 And you have to define dominance, as you just said, very, very differently than, you know, when it was about sort of railroads and steel manufacturers. Because dominance looks very different in the tech world than it might have when we were talking about, you know, roads, bridges, bricks and mortar. But a focus on dominance is different than a focus on making markets work in a more sort of elegant way.
12:06 Ezra Klein? I think that's a good cut, and I might even add one more. I think that there is a way of thinking about this. It is literally about competition. But if you just think about it as competition, you're not going to pull in a lot of the players that people worry about. So then there's dominance. And then I'd say there's influence. This is where I talk about the neo Brandeisian critique of Barry Lynn and others that is really about political power. I had a conversation with Lynn recently, who runs the Open Markets Institute, which has been incredibly influential in driving this new thinking on competition policy.
12:41 Ezra Klein? And I was struck by how much, and I don't want to speak for him, but this is from our interview. I was struck by how much he was thinking about power, not competition. I mean, we talked about Amazon for a while, and his big critique of Amazon was not that it was too big and had to be made smaller, but that it had the power to treat different people differently. And that a lot of these companies, in having that power to treat different people differently, to discriminate, and then given their influence over markets, given their influence over politics and political communication, I would almost say the direction some of them are going is less in a traditional antitrust frame and more thinking about when to move a company into
13:24 Ezra Klein? the status of almost a public utility, subject to extremely high level of regulation in service of a small D democratically defined public good. And those are different, but they are often merged together in the conversation. And I find that people move from one to the other a little bit quickly. And so my question is, what you think the Biden administration is actually trying to fix in competition policy, because trying to make Amazon marketplaces more competitive versus trying to make democracy work better are actually pretty different goals.
13:59 Speaker 01 That is such a good question, because I think the policy and the politics actually can move in some different directions. So I think that people like Lina and Tim and other thinkers like Sibel Rahman, who is now working at Oira, thinkers like that have been absolutely seminal in thinking about the domination question. The analogy that some of them like to use is the innkeeper on the lonely road, right? You can run a two-bedroom inn on a very lonely road. You don't have to be very big to be very powerful and to be able to
14:38 Speaker 01 charge a tremendous amount or do all kinds of other things to essentially kind of get whatever you want if you're the small innkeeper on a lonely road. They often think about this kind of pincher quality that tech firms can have. And they consider that to be dominance and power, even if it isn't about bigness or markets working in this more elegant or more effective way. I absolutely think that a lot of these younger, newer thinkers who are now in positions of power, that is the direction they're going. And at the same time, you can get a bigger coalition.
15:22 Speaker 01 And I think this is maybe one of the reasons that people slip back and forth in the conversation and are a little bit sloppy when they talk about competition policy and market power in the same breath. It's because you can get some moderates, you can get some Republicans, you can get some, you know, traditional Democrats. You maybe even can get Josh Hawley, although that's another story. But you can get a lot of people on board with a sort of competition policy markets should work better in the ways that the true neoliberals, you know, from the 1940s and 50s envisioned. You can get a much bigger political coalition than if you're like, well, you know, I want to take down market power, I want to take down big tech.
16:06 Speaker 01 It's that's a lot narrower path. And so I think that one of the challenges here is that the politics and the policy, the real policy, I would consider it to be the real policy, kind of move in different directions.
16:19 Ezra Klein? One critique I've heard of focusing on bigness in this way is that it leads to a lack of standards for what government is actually doing, which can then lead to quite a bit of government abuse. So you mentioned Josh Hawley, Senator Josh Hawley, a second ago, and big critic now of big tech, but a big critic of big tech because he feels that it discriminates against conservatives like him.
16:45 Speaker 01 Right.
16:46 Ezra Klein? And in the Trump administration, you saw a lot of fear that Trump was going to try to use antitrust powers to pursue his political agenda. One recurrent example was that, at least in his public statements, it was clear that he was trying to scare Jeff Bezos into having The Washington Post cover him more positively by threatening Amazon.
17:11 Speaker 01 Right.
17:11 Ezra Klein? Right, and trying to put those together. And so the critique I've often heard of this approach to bigness is that unlike the consumer prices standard as a way of deciding when the antitrust regulators will act, focusing on these more difficult to measure questions of political power and influence and domination gives government too much power to define these questions alongside its own whims. So how do you think about setting the standards around these kinds of analyses?
17:45 Speaker 01 So this is where you have to get back to stuff that makes neoliberals and many economists really uncomfortable because it's a lot harder to measure, but it is the most important because you have to get back to values and public purpose, which I know is a lot harder to measure than a price. But you have to be able to get back to that. And you also have to be able to get back to the politics themselves, which means that this kind of government power to make determinations around bigness or abuse or dominance, that really only works
18:25 Speaker 01 if we have a real democracy in which people are able to not just have full access to the vote, but actually ensure that their policy demands and/or the politicians who represent them, that they're able to vote for them and they're not going to see their policy demands, you know, either shut down by a dominant, but very narrow Supreme Court. So I guess my point here is that for this to work, you actually have to trust in politics, democracy and values. So that might not be a very satisfying kind of economic or economic policy answer, but I do think you can't get out
19:08 Speaker 01 of that, looking just at the economics themselves. You have to look at the democracy elements and you have to look at the political elements.
19:16 Ezra Klein? But I do wonder then if there isn't more divergence between the values of some of the liberals in this conversation, probably including me and the public. So I'll use Amazon as the example here. I am very sympathetic to critiques of Amazon, and I think they do a lot that is deeply, deeply unfair and anti-competitive. And at the same time, I think something that needs to be reckoned with is they are insanely popular. A 2021 Harris Poll found 72% of Americans approve of Amazon, putting it just beneath the US military in terms of popularity and way above any politician or political party you can
19:56 Ezra Klein? think of. And to their credit, they've been able to use their size to provide a service a lot of people really love. Like, it is very convenient to use Amazon. So that, I think, leads to one question, which is, is it possible that the antitrust movement on the left either underestimates the values of bigness or is in danger of, at the least, diverging from the public in terms of what the public's values around companies actually are?
20:26 Speaker 01 Yeah, that's possible, because I think you're absolutely right that Amazon is popular, and they are popular for all the reasons that you say. But I also think they are popular because they are basically one of the only options. And so I think there is a real question. I mean, you might be right that some of what we want to fight for in terms of lack of domination, it's a very hard thing to think about what a better set of options is when you think about just how dominant Amazon has become, and frankly, how good they've been at certain elements of what they do. I'm not, I'm not sure that that's that satisfying, sorry.
21:10 Ezra Klein? No, I think it's an important thing to admit in these fights. I think that it is a mistake the left sometimes make to suggest that public opinion will always be with them. And it's, at least as a starting point, important to say when, when maybe it isn't.
21:24 Speaker 01 I think that's an easy mistake, though, for the left to make or for progressives to make, because there are so many things now, over the last 10 years, so many economic policies that the public is with us on, whether it is minimum wage, or universal pre-K, or childcare, or expanding healthcare, or the child tax credit. And so I think it's, to some degree, an understandable mistake to make, to think that something else that also does genuinely deserve critique and/or scrutiny, like Amazon, it's an easy mistake to make, to think, well, just because we see all these reasons to critique Amazon,
22:09 Speaker 01 it's easy to then forget, well, this is one thing that the public likes, because Amazon is actually quite convenient.
22:37 Ezra Klein? This is a strange moment to cover the Biden administration, where you are watching, I am watching, their domestic agenda on the knife's edge of succeeding way beyond my expectations, or collapsing. So you have the bipartisan infrastructure bill, there's some static around that, passing around House moderates, but I expect that will pass. But then you have the reconciliation bill, which is really the entirety of their long-term liberal investment agenda. And that needs every Senate Democratic vote. In the Senate, Senator Sinema has already said she will not vote for a $3.5 trillion bill.
23:20 Ezra Klein? And yet it clearly could pass in some form. I'm curious about how you see the agenda's chances at this moment.
23:29 Speaker 01 Yeah, I think we shouldn't pretend here. I think that the politics here, as you so very well put it, and is, you know, as headlines in the newspaper every day, the politics here are incredibly tenuous. But I'd like to actually take a step back and to think a little bit longer term about why the politics are so tenuous. Because I think it's important to remember that the conservative economists, the neoliberals, you know, they had 30 years between the building of their ideas and their academic bastions, that was in like the 40s and 50s, and the building of their political movement in the 60s and the 70s.
24:14 Speaker 01 And then their taking of the presidency and the federal government in the 80s. And what is really important to understand about our politics at this moment is that progressives or the center-left or whatever coalition you want to talk about that is not on the right, we do not have the luxury of time. We have to figure it all out all at once. These ideas that we've been talking about are pretty new. They really have come about in the academy, in the mainstream academy, only over the last 10 years. And the institutions, you know, we've been naming people who are in these institutions who are progressive, but these institutions are massive.
24:59 Speaker 01 And the institutions need a tremendous amount of change in order to be able to actually hold all of these political advances, these new ideas, and to execute on them, to make them a reality. So we've been trying to figure out the ideas, the politics, the policies, the institutions all at once. You know, we've imagined this new world, but it's pretty new. It's pretty nascent and we don't know how to handle either the politics or frankly, the institution building. So I think that's the background. For what is playing out right now, that's the background for the kind of politics that you reference, the razor thin margins that you see in both the Senate and the House.
25:45 Speaker 01 You know, I think both Speaker Pelosi and Leader Schumer have shown a tremendous amount of skill in navigating to this point, frankly, but it's a 50 50 Senate, right? Democratic unity is incredibly fragile and of course mainstream Republicans are really dead set against progress. But all the razor thin margins, the sort of, you know, political vitriol and animosity, obviously the rules which you talk so much about, you know, the constraints of reconciliation, the problems with the filibuster rule, and even now the crammed political calendar, the fact that we have only several months
26:26 Speaker 01 to get this legislation done. And then you've got to also look at the fact that the debt ceiling is coming up. There are so many things that are happening in this calendar, but all of these political problems, to me, they are the result of the fact that this new thinking is so new. So we've got this massive change and we're trying to both think about it, write it down, staff it and act on it all at the same time. And that is just a challenge that I think the neoliberals have never had to contend with.
27:01 Ezra Klein? I want to identify also a policy politics interface problem, which is the dominant view among the left is that you can build policy feedback loops. And I've written about this a lot, that you can build these policy feedback loops where you give people a good policy. And then if you are able to make it clear and simple and they know it was from you, it builds support to continue that policy to build your political power. And that's really been the dominant view of the Biden administration in particular. And they have done some things that say the economists in their coalition have been.
27:41 Ezra Klein? Have raised their eyebrows at like the stimulus checks in order to build this momentum. And one thing I would say at this juncture is you are not seeing that momentum build. So the child tax credit has begun going out. You saw celebrations. I mean, these very moving TikToks about people getting these checks that really helped them and their family that they they weren't expecting. But if you then look at Joe Biden's approval numbers, you don't see anything there. It's not like it's led to a mass mobilization for the expansion of the child tax credit to pass. And so I'm curious how you see that question of of policy feedback loops, because this is all much harder if there isn't a connection between policy that helps people's lives and the politics
28:26 Ezra Klein? then enables the coalition that passes that policy. If this is all just abstract political warfare, it's much harder to see your way through it.
28:37 Speaker 01 Well, I think there's two things to remember here. One is really obvious, but it's worth repeating. We are still in the middle of a pandemic, right? So what what is dominating people's day to day lives? You know, can I send my kid back to school in ways that are safe? Are we going to be able to resume regular travel at any point in the near future? So I think that one of the things you see happening, there's just a kind of exhaustion and overload that's in part born of Trumpist and vitriolic politics and in part born of this unprecedented global public health crisis. So that's maybe an obvious thing to say, but it's worth saying in the context of public
29:18 Speaker 01 feedback loops and things like the child tax credit, that there is just a lot of noise in people's lives that makes it harder for them to access some of the things that are really going well in the economy and that Biden ought to get credit for. And at the same time, I think you are right to point something out, which is that much of our civic infrastructure, and of course, many people have written about this for years, is just really thin. We don't have the kinds of Labor unions or the kinds of other civic institutions that we might have imagined in the sort of Tokvillian America, right? And even some of our activist organizations don't have the
30:03 Speaker 01 kind of deep membership that would make it much easier for people to understand and build civic power around real benefits like the child tax credit. So I think you are absolutely right to point that out. That being said, I do think that there is one element, perhaps the biggest and most obvious element of the Biden economy that we haven't really talked about, that workers do really recognize and do really give this administration credit for, which is that we have seen a kind of economic boom, especially for low-income workers, the kind of wage increases
30:43 Speaker 01 that you're seeing, especially for workers in the lowest wage quintiles. It's just incredible, right? $15 an hour, which had been like an activist dream even just a few years ago, $15 an hour is now becoming the norm in many places because actually a combination of the Biden team in terms of getting the rescue package out and passed. The Biden team, Democrats in Congress, and also the actions of the Fed have led to a kind of really hot, high-pressure economy that is benefiting people. So I don't know if it's the same kind of feedback loop that, you know, one would have expected with, and one still could see actually with the child tax credit.
31:28 Speaker 01 But I do think that people recognize that the economy is a lot better than we could have possibly anticipated a year ago. And it is better in large part because the Biden team, Democrats, and the Fed have fought this recession in ways that are just revolutionary, especially when you compare it to, you know, the tools that the federal government used against the Great Recession in 2008, 2009, and 2010.
31:59 Ezra Klein? So I see the the politics of that as a conflict right now between the celebration of wage increases, of employment increases, and the fear of inflation eating those away.
32:14 Ezra Klein? And I'm curious how you look at the balance between those. We're talking on the day that Jerome Powell, the Fed Chair, just gave a big presentation on inflation. And it is higher than even liberal economists were projecting a couple of months ago. How do you see inflation and the politics that surround it?
32:36 Speaker 01 Well, two things. One, I think that many liberal or progressive economists, including many of my closest friends, said it was definitely going to be bumpy over the course of the summer. And so I think some of this we actually had anticipated. But I think the most important thing here is to look beyond the sort of inflation averages and to actually rethink what inflation really is and inflation as compared to wage growth. There is a new emergent way of thinking about inflation, not as too much money chasing too few goods and then the average of all of those prices.
33:14 Speaker 01 But instead, you've got to think about inflation as the aggregation of many prices in this bottom-up way. And the problem that you have in certain sectors or certain segments of the economy is that it's not too much money, but it's too much spending in very particular ways. So the question about inflation is about needing to clear those bottlenecks in those very specific places. So let's just look at the data right now for just a second. When you think about it, the big price increases are really in cars, airline tickets, and energy.
33:56 Speaker 01 The prices for food are more or less flat. And so, given that, there's an argument to be made that workers, especially low-income workers who are getting those wage increases that I talked about, are doing better now, even given the price increases that we do see in some of these sectors. And they're definitely doing better if they, you know, do not need... If you need to buy a car, it's pretty difficult right now. But if you don't need to buy a car and if you don't need to buy an airline ticket, it's not as bad. So I think that's an important new way to actually think about inflation. But I think it's also important to remember that inflation actually hurts shareholders,
34:40 Speaker 01 which are mostly the upper 10% of all Americans. But at the same time, a little bit of inflation can actually further employment and job growth. And so I think this has led to kind of a political psychology in which the fear of inflation has become kind of a thing in and of itself.
34:57 Ezra Klein? Yeah, I definitely agree with that last point. If people want to go back and listen on this, Betsy Stevenson, the economist, was on the show probably a few months ago now and talked a lot about the idea of inflation as a conceptual framework, that inflation is driven by fears of inflation. So I want to get into something you were saying there about how perhaps the policy model through which we think about inflation is wrong. So on the one hand, I want to say that I don't think it's correct to be sanguine about the inflation we're seeing. You know, if you're a low wage worker and you need your car breaks down and you need to buy a used car, you're in bad shape right now. And that eats up a lot of the gains you're getting in wages, if you are getting gains
35:42 Ezra Klein? in wages. And energy has gone up quite a bit, too, and that also hurts low wage workers quite a bit. So I think sometimes liberals can be a little too at ease with this. But on the other hand, we have this legacy from the Volcker period at the Fed where we firebomb inflation, where we think about the way of handling inflation as slowing the entire economy down all at once, as opposed to really legislating or making economic policy to try to manage specific problems. But you know, if we're worried that cars are not going to bounce back quickly enough, there are things we can do there. There are targeted interventions we can take. The same to some degree is true in in energy, although I think it's actually more complicated
36:27 Ezra Klein? given our carbon goals.
36:30 Ezra Klein? But it seems to me that there needs to be a bit more of a policy conversation because I find that the place people feel pushed into is inflation pro or con. When we, you can have targeted efforts to ease inflation in various areas. And by the way, I'd add to this, long term, a lot of the very, very dangerous inflation for people is in homes. And there's a lot you can do, not this year necessarily, but, but over the long term to ease housing prices. And so I, I see a policy conversation that instead of taking inflation seriously in the ways we could change it in specific sectors, just wants to debate whether to slow down the economy as a whole.
37:12 Speaker 01 That's entirely right, Ezra. I mean, so first of all, let me be clear, I am not sanguine about inflation at all. I think that it is very important to think about how to control prices in things, especially that low income people really need, housing, healthcare, transportation, energy. So like, that's incredibly important. But the conceptual problem is that inflation is just too much money chasing too few goods in a big picture sense. And whether or not that is what is happening in the aggregate, that's deeply unhelpful when you think, when you try to think about policy solutions.
37:55 Speaker 01 So if the problem in cars is partly because, you know, a lot of rental car companies sold off their cars when they thought that there was going to be no travel and so they weren't going to be able to rent their car. Like, if there are specific reasons in the car sector, then those are the kinds of things you need to try to figure out how to solve. You need to think, try to clear bottlenecks, sort of product category by product category, rather than saying like, well, just like, put the brakes on. It's about managing the boom. It's not about sort of like boom, yes or no.
38:31 Ezra Klein? Is this a distinction between fighting inflation and fighting inflation expectations? Because that's part of what I hear there, that if what has happened is that the entire economy's expectation of how much inflation there is has gotten out of whack, well, then maybe you need to put the brakes on the whole thing. But if what's happened is you have a couple of distinctive sectors out of whack, you actually have an inflation problem, not an expectations problem, then you can have more targeted approaches. And one reason I think perhaps that distinction would be important is if people felt, if they were convinced that we had specific inflation problems that could be alleviated either through time or policy, and that they were being alleviated through time
39:16 Ezra Klein? and wise policy, and that would probably keep them from developing inflation expectations that are out of control.
39:23 Speaker 01 You know, actually, this is a huge debate right now amongst the sort of handful of inflation macro geeks that I talk to. You know, how much of it is specific sort of sector by sector policy? And how much of it is psychological? And what's the interplay between those two things? You know, I know Betsy Stevenson was, you know, making the argument that it was inflation was about fear of inflation. So she was basically making the psychological argument. I think it's probably some of both, obviously. And I think the most important change in the entire inflation conversation is to start to think about it in either or both of those ways and the relationship between the two, as opposed to thinking about, well, I guess we need to raise interest rates now.
40:08 Speaker 01 If what you're worried about right now is housing shortage, and we definitely should be worried about that right now, the last thing you'd want to do is to raise interest rates. That's going to make the prices of housing more expensive. So anyway, it just, it seems like the revolution in thinking about inflation. I think there's going to be a lot more policy conversation on this in the coming years, and I think that's healthy.
40:53 Ezra Klein? Roosevelt has been writing about what is probably the most important personnel decision Biden has coming up on the horizon, very related to this inflation conversation, which is whether Jay Powell, the Chair of the Federal Reserve, should be reappointed. And Powell, of course, was appointed by Trump. But I think liberals in general believe he's doing a good job. So how do you see that decision? Should he get another term?
41:17 Speaker 01 I think the first thing to remember is there are actually four seats open on the Fed. So Powell as Chair is obviously important. His seat is, he would be up for reappointment in February. But it's important to think about all of those possible appointments. And it's important to think about our goals for the Fed generally. Because I think our goals are a couple of things. First, I think it's essential that the Fed keeps its focus, and Powell's been excellent on this. But the Fed should keep its focus on the labor market and on full employment. And frankly, the Fed, the next Fed Chair, whether it's Powell or somebody else,
42:01 Speaker 01 should do everything she or he can to institutionalize those expectations. The part of the dual mandate that we have given short shrift to over the last decades and that we need to be paying attention to now are questions of full employment and the labor market. So that's the first thing. But the second goal for the Fed, right? The Fed, in its regulatory powers, can do much, much more to mitigate climate change than it has done. And that's a very important and sort of under-discussed power that the Fed really has. So the Fed could regulate banks and other financial entities so that they disinvest in fossil fuels.
42:46 Speaker 01 They can require banks to run climate stress tests. They can require higher capital. Requirements for banks that are more exposed to oil and gas and other climate-related risks. And this is a real economic risk. This isn't just left environmentalists, although some of it is, you know, promoted, of course, by environmental groups. But climate change is a legitimate risk to the Fed's full employment mandate. It's a legitimate risk to economic stability. And so the Fed can and should be doing this. And I do think that we haven't seen as much as certainly I would like from the Powell presidency to date on this set of issues.
43:29 Speaker 01 So the question for whomever is the next Fed chair is, can we really promote both of these things? And can we think of other great candidates for those other seats who have a track record in regulation and in mitigating climate change in particular, through the financial system?
43:49 Ezra Klein? Who would your top draft pick for a climate-focused central banker? Not for the chair necessarily, but for a seat be?
43:56 Speaker 01 Well, there's lots of great people. I happen to think that Sarah Blum Raskin is tremendous. And I also think that Lisa Cook is tremendous. And I have to say that there's a lot of room for better policy here under a Chairman Powell as well.
44:14 Ezra Klein? We've talked a lot here about what the Biden administration and liberals in general are trying to do. But at the federal or state level, what are the biggest blind spots or points of failure in liberal governance right now?
44:29 Speaker 01 I think that we do not do enough to connect the economic pieces, where we've seen a tremendous amount of real success or at least advance. And that's what we've been talking about for this last hour. We don't do enough to connect that directly to both the race question and the democracy question. And by that, I mean, obviously, in 2020, we saw a tremendous amount of public support for the Movement for Black Lives and public outcry. Against racist police brutality and racist economic systems generally. But questions of policy on race have begun to sort of fade to the background.
45:14 Speaker 01 And what I see a lot is a kind of assertiveness on the economics, which I think obviously is terrific, and a kind of hesitance or fear on, you know, really talking about race and really talking about the ways in which, you know, good economic policy and good racial policy can move in the same direction. And so I actually think that we need to bring those things together and to make better sort of clear strategic moves that show that the new economic thinking and new racial justice thinking move in the same direction.
45:53 Speaker 01 Instead, I think, to be honest with you, I think that many sort of center-left thinkers on race, not all, but you know, if you're like running in a suburban district or you have to attract a large coalition of voters, people still don't want to talk about race, right? But we have to be able to do that. We have to be able to build a coalition that attracts Americans who aren't part of the MAGA faction. And I don't think we are willing to do that enough. And I don't think we're willing to make a full-throated case for some of the ways in which racial inclusion is better for all of us.
46:38 Speaker 01 So I think it's a real mistake.
46:39 Ezra Klein? You've talked before about how tenuous a Biden agenda is even now. So I think the obvious question from that is, is it possible those frontline Democrats in more centrist districts, those Democrats who have experience trying to put together these broad coalitions and have looked at polling and looked at studies suggesting that when you racialize progressive economic policies, you make them less popular? Is it possible they're right? I mean, the child tax credit is a great policy for racial justice. And I think the counter from that side of the Democratic Party would be, the point here is to get the outcome. And the way to get the outcome is not to frame the child tax credit as a racial justice policy. It is to frame it as a policy for all.
47:23 Ezra Klein? So when you, when you say that, that's a political argument. What makes you confident that these Democrats who, you know, have won in these seats and are holding on by fingertips aren't right?
47:32 Speaker 01 So I actually think that that is something that can and should become a new common sense, recognizing, as you definitely point out, that in some places, when you need to build a big political coalition, there are different ways to talk about the benefits of these programs for different groups of people. I'm not trying to say that in every single, not everybody lives in Mondaire Jones's district or AOC's district, I completely get that. But I do think that we cannot be so afraid of the overall public benefits, the overall public welfare benefits of some of these programs, so that we don't actually lean
48:14 Speaker 01 into making the argument that they are good for all people. I think that Heather McGee, by the way, has been terrific at sort of helping us see the other side of that coin, which is that racism actually has hurt all of us. She talks about the drained public pool. No one can swim because we didn't want the pool to be integrated. And that is actually a very, very, very powerful image. So I think we need to be better at pushing forward on these sort of race-forward policies wherever we can. And then the other thing I'll say is that not all of this is about electoral politics, right? A lot of this is about changing things at the policy design level, at the sort of level we've been talking about, which
48:58 Speaker 01 includes how government agencies actually work. And a lot of it is actually also jurisprudential. Not all of this actually needs to be the center of suburban Democrats', you know, kind of run for office. But we actually really do need a new kind of jurisprudence that says that sometimes it is okay for, and maybe often it is okay for our policies to take into account racism or racial exclusion in the past. I mean, a great example of this is the USDA attempt to move money to Black farmers who have been discriminated against
49:42 Speaker 01 by USDA policies in the past. This was something that was part of the early Biden administration. Billions of dollars were on the line to actually move to black farmers so that they could invest in their farms. And this policy is now being held up in the courts because it is considered to be facially race-conscious, and that very well may be true. That means we need new jurisprudence in order for that set of race-conscious USDA helping black farmers' policies to actually go through. So my point is that there are many pretty creative ways to think about bringing the new economics and the new racial justice together.
50:26 Speaker 01 Not every single one of them has to be sort of naming race in every single stump speech for every single suburban candidate, but there are a lot of things that we can and should be doing to bring race, economics, and democracy together.
50:41 Ezra Klein? I think it's a good place to come to a close. So always our last question, what are three books you would recommend to the audience?
50:48 Speaker 01 So the first book is Undoing the Demos by Wendy Brown. Wendy's a theorist at Berkeley, let me make a big plug, by the way, for the Berkeley School of Political Theory. I went to Berkeley to study political theory, but I actually love it because it embraces the political part of politics rather than looking at politics as a giant math problem. But anyway, Brown, in Undoing the Demos, really unpacks neoliberalism, not just as a problem of economics, but also as a problem of democracy. And she shows that our democracy itself really cannot withstand a system of thought that remakes everything and everyone into this image of like homo economicus.
51:32 Speaker 01 It is a great book. I highly recommend it. And she really shows why liberal democracy doesn't survive neoliberalism, or was going to struggle in surviving neoliberalism. It's a great book. The second book I'd recommend is called The End of the Myth by Greg Grandin. I love this book because I'm from the West. I know you are in the West now, in California. I really think of myself as a Californian. And Grandin shows the way in which the West has played so strongly in our political imagination. The United States, America, has always been defined by this Western expansiveness, boundless freedom, the frontier, until Trump.
52:12 Speaker 01 And the wall, right? The wall is like an end, the end of the myth. But Grandin also shows the ways in which racist subjugation, he focuses a lot on Andrew Jackson and like the horror of Native American removal. Grandin shows the ways in which that is at the center of the American frontier myth. And so that's really powerful. And the other thing I love about this book is he really shows the way in which the frontier is a paradigm. And that paradigm doesn't have to be abstract or complicated or multi-syllabic. Like, the frontier is a paradigm that like literally hundreds of movies were made about. And so we do have a national myth, and that national myth doesn't have to be complicated, but it does really structure how we think about ourselves and what's possible in our
52:57 Speaker 01 politics. So it's a great book. And then finally, the last book I'd recommend is called Democracy Without Domination, and it's by Danielle Allen and Rohini Somanathan. And the heart of the book, it's an edited volume, and the heart of the book is this argument that justice, racial justice and all justice, has to focus on non-domination. And this leads them away from this kind of liberal reliance on John Rawls and a kind of difference principle, and towards a very new or different way of thinking about democracy. I think it has some practical implications, too. For example, they argue that representation has to move away from statistical mirroring.
53:41 Speaker 01 You know, like if you are 40% of the population, you should get 40% of the political representatives. We have to move away from that to a politics that makes sure that rules and institutions don't allow one group to dominate another group. So it's a great book.
53:57 Ezra Klein? Felicia Wong, thank you very much.
53:59 Speaker 01 Thank you. Great to be here.
54:10 Ezra Klein? Beza Klaunjo is a production of New York Times Opinion. It is produced by Jeff Geld, Rojai Karma, and Annie Galvin. It's fact-checked by Michelle Harris and original music by Isaac Jones. Mixing by Jeff Geld.
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