N. Gregory Mankiw: On the Economic Ideas of the Right and the Left Today

[Music] welcome to conversations I'm bill kristol and I'm joined again I think we've had one of these conversations right by Greg Mankiw professor of economics at Harvard author of the best-selling economics textbook for a long time right it's amazing what 25 years yeah like that that's right Wow and that's much more impressive than big a professor the real market is speaking there right yes absolutely and a chairman of the Council of Economic Advisers under president george w bush and other many other senior positions and to a to catalysts to mention so really what are the most respected economists in the country and respected on both sides and and i thought we talked i think we had a first conversation a couple of years ago about the surprising disregard for certain economic truths and principles on to some degree on both sides of the of the political spectrum The Situation's gotten worse so we need to we need to address this again more do a better job this type of explaining to people what really is a problem to worry about and why people may be falling in love with certain fake solutions and and attractive least attractive sounding things that wouldn't work so where to begin there's so much bad information we're in a situation now of tremendous polarization including on economic policy but not among economists if you talk to economists they kind of range from center left to center right and you get a bunch of economists in the room they're more likely to agree than disagree with each other despite the fact the political parties are pushing out to these streams we have Donald Trump becoming very isolationist in his trade policy you have Elizabeth Warren who's becoming very populist in her attacks on the rich and so you have sort of both parties so drifting apart to go into these streams where they and the economists tend to be left in the middle being a little surprised that both political parties are abandoning them and so I suppose to defend the political types I could say well you you know you guys got it wrong you know all these promises you made turned out globalization wasn't so great markets don't work there there's increased income inequality there's wage stagnation there's I don't know problem big tech is monopolistic I mean maybe we shouldn't listen so much to the economists for sure we don't get everything right but I think most of what we teach in econ 101 or we could call it like 10 at Harvard is basically right I mean the basic theory of supply and demand what markets can do well when markets need government er vention I think that basic theory is still right and and I think so economists really do know a lot about how the economy works I think there are two trends that are disturbing we don't have a full explanation for but I'm but it helps explain the sense of dissatisfaction so one trend is slowing economic growth economic growth has not been as robust in the past 15 20 years as it was in the post-world War two ERA more broadly and and we're also here in the US or globally globally it's in developed countries we've seen very rapid growth in some of the developed world in particular like China and India but sort of been in developed a world we we've seen declining economic growth and we've seen a widening income inequality so people with less skills are not doing as well as people with more skills now having said that this is this is good news to I don't want to sort of say it's all bad news we CV two pieces of good news one is I feel like a global poverty like the percentage of people living on less than a dollar two dollars a day it's lower now that's ever been in human history and that's largely because rapid growth in Asia has pulled billions of people out of very very deep poverty and that's something that we should applaud the second thing is United States is still doing pretty well by global standards you know if you're a person living at the poverty line in the United States you are wealthier than eighty-five percent of people in the world so maybe the US economy is not living up to our aspirations but it's doing pretty well if you take a global or a historical perspective on it so I guess one could say okay well that's nice but what damage because some of these bold proposals do I mean surely trade is at its downsides and maybe it needs to be rethought some and surely income inequalities you just said it has increased and so wite-out a wealth tax so maybe we should just go through some of these sure I mean proposals and what is true in them or what is what is they're useful in them and well how much of it are really false prescriptions for what ALS well let's first talk about trade the basic lesson about economic trade is that free trade expands the size of the economic pie but the Sun but while it's doing that it's also creating winners and losers so not everybody's going to benefit and so in particular than when the United States opens up to trade with the rest of the world we tend to import goods produced with less the unskilled labour piece unskilled laborers abundant abroad that's gonna tend to reduce the demand for unskilled labor here and we increase the demand for our skilled labor we tend to export things that are intensive in skilled labor so that's gonna exacerbate income inequality we could we could reverse that by retreating away from international trade but that the overall pie is gonna shrink and so we gotta we should think about ways to distribute the economic pie more fairly but not not shrink it and he said that let me also say the trade is probably not the main reason than income inequality is going up most economists would give more weight to technology and there's a great book by two of my Harvard colleagues Claudia Goldin and Larry Katz it's called the race between education and technology and their basic story is that technology tends to increase inequality because technology tends to replace unskilled workers and tends to I increase the demand for skilled workers are using the technology so you can sort of think of me becoming more productive because I don't need a secretary tie my papers like I just do it with a word processor or think of a bank we replace the teller with the automatic teller machine and it makes the bank overall more productive more you see better for customers but reduces the demand for Tellez which is relatively unskilled job so that what conical skill-biased technological change is going to tend to make the world less equal the other side is tug-of-war is education these education turns the unskilled workers and the skilled workers and the Golden Calf story is that from basically World War two to the 1970s education was winning this race between education and technology and we were becoming more equal as a society and then sometime in the 1970s educational advancement slowed down and technology started running that race and so what if you believe that what does it mean it probably shouldn't change technological progress and proudly and have the capability to do that it'd be nice if we could create technologies that would increase the productivity of unskilled workers rather than replacing them but innovators invent what they think of and it tends to be easier to room to automate unskilled jobs but we'll be willing to just focus on education to get more the unskilled workers into skilled workers and that's why from my perspective actually increases educational attainment is probably the most important priorities easier said than done these are formal educate the educational system is not an easy task but that should probably be over the priority as both in terms of increasing growth and on reducing income inequality how about since you've sort of acknowledged that income inequality I think it's just a fact right has increasingly now has just crack it has mobility also decreased I mean that would be worse I think if they were both more inequality and less economic mobility oh I think the mobility stories interesting there's two different notions of mobility what's called a relative mobility and absolute mobility so we tell you where they are relative mobility is what's the likelihood of somebody born into the 20th percentile making it an 80th percentile or moving among the percentiles of the income distribution that's called the relative mobility that has not changed that's been relatively stable what has changed is what's called absolute mobility in the literature what absolute mobility is what's the probability that you will earn a higher incomes than your parents did and that has gone down mm-hm and the reason relative mobility we're talking America I'd say this is do we have do we have this state in the United States and a lot of the stuff has been done about my colleague at Harvard Raj Chetty and so you might say well how can absolutely go down if relative mobility staying the same they seem like they're very related concepts and they are but absolute mobility is also affected by the other two trends I've talked about which is rising inequality and slower economic growth so even if relative mobility stays the same but we get slower growth than the probability you're doing better than your parents is going to go down and if most of the growth is is accruing to people to top the income distribution and then also the probability of you doing better than your parents is going down so it's only a few people at the top that are getting the benefits so we have so relative mobility people move churning around the income distribution is it's pretty much the same but it matters more because the gap between the people at the top and people the bottom has grown so much I guess so my answer to that is well so we should really want policies that increase broad-based economic run yes yes we should if we're to do that well I think you know that well education I mean education increases growth these makes workers more productive and in turning the unskilled workers into the skilled workers it means they get the benefits of the skills and also by the way when people get educated it even benefits unskilled workers because the unskilled workers have fewer other workers to compete with right so by reducing the supply 10 skilled the unskilled wages should go up as well so education really seems to be the magic bullet but trying to figure out how to get more people through a college in high school high school is not easy so I suppose if I were Elizabeth Warren I would say well typical of economists they want to say hey let's fix education that's the else's job but why don't we just get addressed some of this directly what about a wealth tell oh yeah ok yeah well that's right so the idea of education is what is fixing the income inequality that's created by the market you know we want people to be able to earn more but you might say ok well we can't do that let's fix the outcomes the outcomes are given let right that we can redistribute outcomes and we do that already which is absolute grants of income taxes oh yeah we add the Earned Income Tax Credit for example you know it's very important for helping people the bottom and if you look at sort of measures of inequality inequality has gone up less if you look post tax and transfer and you look pre-tax and transfer because we have expanded things like the Earned Income Tax Credit so the questions why don't we do more of that and maybe we should action the question is which tools should we use there's sort of two bold proposals out there being debated right now I think one of them is a good idea bolide eeeh and the other is kind of a crazy idea the crazy idea from my perspective is the wealth tax because I I think it's gonna be very very hard to implement many European countries have tried it most of them have given it up and there's a whole variety of problems with it so for example suppose I own a chain of dry cleaners or hardware stores or something that's that's my privately held business what's the value of that you could you sort of add up the value of my merchandise at the real estate I own but truth is most of what I have is probably goodwill which is a very kind of thing the value of the business on ongoing is an ongoing concern is the government have to go in there and try to evaluate the value of this business ever every year and how are they going to do that they do that a little bit every once once a lifetime when they the estate tax that makes it but it's pretty people just study the state tax knows that's pretty difficult they state taxes and some some negotiated tax between you and the IRS you want every small business definite ago she ate every year with the IRS of what the value of its businesses and there's no obvious way to mark to market because there's because in the markets no yeah business isn't for sale yeah that's right there's yeah you know for Jeff Bezos easy we see here's Amazon stock and no way that we can value that is there's a market for that but but for a lot of closely held businesses there's no market and it's not like you can sort of put your chain of seven different hardware stores on the market and see what the prices I mean advice so it the valuation issue becomes very very difficult so I actually think the wealth tax is a non-starter I think it I see it why it has political appeal because as described by Elizabeth Warren it's gonna only affect 0.1% of the population so if you tell the night if you tell 99.9% they're gonna get free stuff paid for by the 0.1% that sounds attractive but it's probably not realistic whatever is sort of why it's always slightly appealed to me I've got to say is it is some senses such as in some ways that you think it makes more sense than income I mean theoretically if you leaving aside this rather big implementation problem taxing people's wealth rather than their income makes a certain amount of sense because the income is stuff they're getting each year which you sure that I look a bit I'm going to the other good proposal for a second okay but let me let me talk about this issue let's let's imagine we have two people who make the same income so I have two CEOs both of which make ten million dollars a year and so they're they're in this tight they and the top point one percent and you tell and one of them says okay I want to take my ten million dollars a year and you know have a lavish parties fly private jet and we're spelling to blow it another says I want to accumulate it and invest in small businesses and eventually leave some to my kids and grandchildren and nephews and nieces and give some to my alma mater the Tech says the second guy should pay more tax in the first guy so I don't to me I don't sort penalizes saving it's penny knowledge save him the counter I gonna guess is that if someone makes two people makes Emily in a year one guy already has a billion dollars it matters to him less obviously I mean the 10 million increment is less important and it seems a little unfair to tax them the same I guess that the the one guy who's making his first ten million and the first was making his hundred ten million maybe that's a little silly in a row well I mean let me go back to what may go to the puzzle that actually I'd like okay at least the things worth thinking about and that's the proposal andrew yang now I'm not a door here to endorse Andrew yang but I think his basic idea at least seems workable to me and his idea is to put a value-added tax which is basically flat consumption tax and use it to finance universal basic income so everybody gets lonesome back that I think could work in the sense that we know value-added tax is working much of Europe it's a fairly efficient way to collects revenue that's why many European countries use it and I've kept using it for many many years universal basic income is a pretty easy thing to implement everybody has to check they do it in Alaska right with the oil revenue so the whole thing would work and the whole thing would be progressive it'd be like it's sort of a super-duper Earned Income Tax Credit although it doesn't require you work because everybody would get it but it's basically a way to redistribute resources from people high up in the income distribution towards people at the bottom to me that that's attractive in purposes I think would work but also in part because it this distinction into two CEO is one of which is spending lavishly and consuming a lot and the other was is saving to give money to his alma mater it's gonna penalize the guy who's spending who's living the lavish lifestyle more and I think it's a good thing so I think the consumption tax aspects quite desirable the universal basic income part kind of makes sense as a way to help people at the bottom this idea mother has been floating around for a very long time there was a during the Nixon administration there's a talk about about this right and I remember even before that Milton Friedman talked about the negative income tax and his right book in the early 60s capitalism and freedom so it's like do you have a universal basic income or negative income taxes been floating around for a long time and so to me actually that might you think that was preferable to the ER I mean so I think the orange a Tax Credit kind of became a version of that where it's limited to people's labor I mean yet they have to work something works physically I'm a good thing though you would argue right well you know I mean the system we have now the social safety net we have now it says okay we're going to distinguish between the deserving poor and the undeserving poor so if you work hard but have low wages let's you're deserving well if you're disabled and you can't work well then you're kinda serving if you if you know if it's a period of high unemployment will extend your unemployment insurance benefits well then you're kind of deserving but other people aren't deserving so requires the government to draw these distinctions between the deserving in the undeserving do we really have that ability to sort of fine-tune the social safety net in that way I think it's I think it's hard to know I mean what we know what if somebody has a serious mental illness the government really what if they have serious back pain it's very hard to diagnose yeah I think just distinguishing to the deserving and the undeserving is a very difficult thing for the government to do you know some people are object to the idea of well what if somebody just wants to spend all the time surfing right they're fully able lazy surfer kid and for middle-class parents should he get should he get that our tax money yeah exactly so I I kind of understand that to me that doesn't strike me as a bigger problem as the government's trying to have decide all your disabled you say your back pain but we just we can't really diagnose it so you're not disabled so we're not gonna help you so I've always been attracted ever since I Brett read it and Milton Friedman's book when I was a student I've always been attracted by the negative income tax universal basic income idea because it was about simplicity it really takes the government out of people's lives including it on the lives of the poor no I think charles murray is endorsed aversion yes but that has always said but you need to get rid of all these other programs from his point of view yes actually yang proposed on clothes a little bit of that if you accepting like lying what he calls the freedom dividend if you accept his freedom dividend then you're not eligible for certain other programs so he does i think he goes the entire way that charles murray wants to go no but there's something of that in the program there's something to be said I suppose for me do these other programs and you get endless disputes gaming of the system what is disability and you don't want to be hard-hearted and say no to this person within some else fakes it and then you get the some government person having a doctor having to certify something and then the doctors sort of yeah exactly one thing we learned is that once people become disabled even when the economic conditions get better they're my people to work part-time disinclined to do it they've already establish themselves as disabled whereas this universe basic income systems no you know we're not gonna judge you and if you want to come back in the labor force when you want to find so so to me actually think the idea makes sense it would be a pretty radical change where we are I understand that but I think it's unlike it was with Warren thing which is also a radical change on this what I could see working where's Elizabeth Warren's wealth tax I just don't see it I see this I like this kind of headline out of this conservative economist of course is giving money away to everyone and to lazy surfers that's but it seems to me the distinction is partly that you say you think the Elizabeth Warren tax wouldn't work but the wealth tax wouldn't work but also this kind of distinction in the way you and the way you're thinking about these taxes right I mean one of them is I don't know how to put this now exactly I mean well maybe there isn't this thing I'm trying to figure well I mean it seems to me that the letting the market work in the first place and then saying but look some people this should be a better safety net for the people at the bottom yes and there's some people at the top of paying in effect just a higher progressive right what a VAT would be or sales tax and those people would sort of just be an additional income well yes so if you're if you're buying if you're rich and you're buying that yacht you can't pay the value-added tax on that yacht right so it's sort of let it let the market do its thing but then correct some of the excessive I mean thanks of it where's the Elizabeth Warren thing seems more intrusive somehow you know it's a real you know it's really changed people who are just sitting there saving their money are not just paying interest on the taxes on the interest on the dividends or on the capital gains as they do today but somehow are marking to market and having to give the government a chunk of their actual yes resources well I did that's right the people who are in favor of the the Warren wealth tax seem to have this idea that vast some assets are initial in and of themselves right they really want to get rid if you read the work of Thomas Piketty and Manuel sayas gay bros Luckman they really what kind of might get rid of billionaires they somehow think of people sitting on vast sums of money is it something is a bad thing I don't look at that and see it's a bad bad thing particularly I want to help people the bottom I'm much more focused what we can do to help people at the bottom which i think is what the yang thing does and was if somebody was to sit on invest you know Warren Buffett wants to spend you know he's sitting at hundred billion dollars or so if he wants to sort of sit on that invested during his lifetime living modestly and then eventually give his money to charity which is who's planning to do I don't see any problem with them I mean I that that's just that does not seem to a problem with need of fixing it seems like a fine thing for society I'm more worried about people at the bottom who are losing their jobs sometimes to trade but more often to technology I mean to give you an example they'll be self-driving trucks probably in our lifetime several million truck drivers will be out of work perhaps the what are we gonna do for those people I don't think it's a nice it's not gonna be an easy an easy problem we can decide ok who who can get find another job who can get another job but it was I think universal basic income says little if your will give you a leave you suddenly something you're not gonna we're not gonna pay you as much as you earn into the truck driver but at least you have some safety net to fall back on when you get on a unemployed from your from your truck driving job are you optimistic about job retraining in those kinds of programs that would be another way of dealing with people who lose their jobs because of automation why I think we need to think hard about how to do that I I don't think the track record there is great and so the questions how do you and how do you encourage lifetime learning I think that's an important thing to do but it gives again it's easier said than done my economic growth generally I mean how much are we stuck in for whatever reason a slower growth world than we thought we would be in or then we were in once was just a weird product of post-world War two and so forth and both in the labor force women come into the labor force and stuff and now we're just in a different world or could one reasonably do things to get basic economic growth higher well that that is that's the million-dollar question I don't think we really know the answer to that I think there there is a view out there in the economics literature that was what's going on really is a depletion of ideas you see this it wouldn't work a couple different form lines of work one is by a book by Robert Gordon Northwestern called the rise and fall of American growth you see it some work Chad Jones at Stanford and the basic thesis is that if you look at history of in a history of economic growth it's mainly driven by technological progress we learned how to do new stuff it's not like we're not learning how to do new stuff but maybe the stuff we're learning is not quite as life changing as it was in previous generations in a previous generations stuff like you know electrification we saw indoor plumbing on the internal combustion engine and this raised use life changing innovations and now we get to tweet out 280 characters at a time so you don't be perhaps perhaps you're inventing new stuff it's just not as profound there's nothing in economics that says that you can have two percent growth forever there's no economic theory that says that and if you think of the path of human history and people lived sort of pretty close to subsistence for you know thousands of years before the Industrial Revolution and things started taking off and there's nothing that said ok once the Industrial Revolution started that now growth is gonna continue forever might applied plateau at some point rather than it's a continuing up to infinity and might so there's nothing there's nothing that's gonna guarantee that we're going to continue I think these things we can do at the margin I thinking encouraging research and development is important I think education is also contributes to economic growth this is all sort of externalities associated with education encouraging Enterprise formation so you know things sort of the United is a very dynamic economy venture capital is easy to get here than most countries so that's a good thing we don't we don't we don't want to sort of demonize the financial system which actually does support new ventures but I don't think it's any magic bullet says only feel awful and we do this we'll go back to the 3% growth forever that we've experienced during some decades I do think you mentioned innovation and enterprise and I'm very struck talking to people how they just take that for granted as if that just could always be a feature of our society and our culture and our economic system and I I think that's a I don't know my view is that that's a huge people underestimate how important that is yes you can week this tax and tweak that even education system but the end of that you really need that spirit of enterprise which is a little hard to put your finger on where that comes from and there are cultural aspects to it and so forth but it's just you just make a huge difference ultimately yeah this is when I hear quotes from Adam Smith I'm not gonna get this exactly right but he says he says roughly the only thing that's needed to bring a nation from Louis barbers and to greatest opulence is peace easy taxes on a tolerable administration of justice and if you think of the dynamism just economies because we usually have a system that's pretty much free from corruption it pretty the taxes are kind of low by international standards we tend not to be really worried about we've been involved in Wars but not Wars that affect the US economy directly was if you look around the world that countries that aren't prospering there often suffer from your right spend corruptions civil wars threat threats from neighbors so we really have in some sense the foundation that Adam Smith said is he needed for populism and then everything else some generates itself or you have you have they see create an environment where you can trust the rule of law where we can you're not gonna get you know to bribe government officials to start a business and then the private enterprise system is gonna generate the dynamism and that's why we're States is one of those prosperous countries in the world today I'd say immigration don't you think that that's really yeah I just have come more to the view over the last few years based on no empirical data that it yeah I may have looked at the in protocol day where the other it's pretty hard to prove that immigration is just such a huge plus in terms of leaving aside the details which are important of whether it puts downward pressure on wages and the other groups do better and other groups to worse and all that but that the the degree to which it does create a sense of ambition and enterprise and upward striving is really hard to replicate I mean it's almost unique I agree I think I think immigration is a bit that it is basically applause but I do think it's think we think about immigration you have to kind of distinguish between two different kinds the skilled immigration unskilled immigration I think skilled immigration is unambiguous plus along every dimension in babies people if an engineer comes in from another country or physician comes in from another country they're gonna contribute to the u.s. economy they're gonna surely pay more in taxes and they're getting and benefits by increasing the supply of skilled labor they're gonna tend to reduce income inequality so it's a good thing I'm in a quality standpoint so that's both pro-growth and prone equality we talked earlier by the value of education the simple so I'd increased education isn't important right the educated worker broad and say and let them come in here so that automatically increases the education of our of our workforce so you know and if any foreign student that gets a degree from American University you know they should have the green card so stapled onto their diploma and encourage them to stay if they can unskilled immigration I think requires a more difficult set of trade-offs because I think by and large we do benefit in the same way that we benefit from wolf you know free exchange but it probably does but somewhat downward pressure on the wages of unskilled Americans not huge because I said earlier I think technology is probably a bigger force but I think it is one of the forces my colleague George George Morehouse has done a lot of work on this and he estimates there are seeing significant not huge but significant downward pressure on unskilled American wages because of unskilled immigration from abroad that we now have the highest percentage I think of people born abroad yes in a century or something here and we have pretty good wage growth it turns out that if you yeah if the economy's gotta be strong it's always up you know and and I think which makes me a little dubious about how much allege you know how much time how much alleged damage it's doing maybe it did and it appeared a slope of slower growth I suppose obviously by definition at some point if you have more in skilled labor it's gonna put some downward pressure on wages just because of supply and demand but I think the other the harder question to ask it's not the only economic question it was what obligation moral obligation do we have to people in other countries I mean when unskilled worker comes from other country comes the United States by far the person affected the most is that worker and most of us have descent have ancestors who came over as unskilled immigrants might might for grandparents all came from Ukraine just before World War one none of them had more than a fourth-grade education and maybe they did put a little downward pressure on us unskilled wages when they came here but boy they did impact on their lives was huge and then their parent their their children and he more educated their grandchildren coming even more educated yet and I so I actually have a lot of empathy for the unskilled immigrants abroad as they try to come to United States because they really not any different than that what my grandparents faced a century ago yeah a lot of skilled skilled people who are contributing a lot to the economy are the children skilled people so that's right that's right that's where I'm sorry slightly hostile or skeptical of the excessive distinction between skilled and unskilled that's what your and a few of your right human capital that's right that way no I agree with that but the question that yes I mean it'd be to mother like four grandparents came here and I became a Harvard professor there's a sensory glad but if you take a long view and for absolutely for sure and I do tend to take a longer view and that's why I tend to be more sympathetic to the to the immigration of all of all kinds but absent of acknowledges some evidence that yeah these Leeson's over the horizon over the you know 10 20 year horizon they an unskilled work workers are affected so there was a recent study as I saw to know how definitive or so I think was from NBER so respectable study was only that contrary to some fears social mobility of what would it be first-generation second-generation children of immigrants is as good as everyone else's it's not the case that oh yeah I can believe that yeah I haven't even seen the site about this yeah that's a surprise yeah the notes but there was a sort of a notion that some of there were recent immigrant groups were more static they were there kids were doing less well they were similarly less well the educational improvements were less dramatic than maybe your parents compared to your grandparents or you compared to your parents but that doesn't seem to be the case actually yeah it's um and some of the wealthiest groups in America are pretty reasonable recent immigrant groups the awesome know kind of small particular African nations so I think in every generation there's the sense that all the new immigrants are different from the old immigrants you know people yes seems look at oh you know the the towns are like a Germans or the Ukrainians aren't like right Italians like you know but they could come here and then we assimilate so I I I'm not worried about the long-term assimilation I think it doesn't make the US economy stronger but on the right especially turn to the right here well let me ask one more car at the last Shores the left also does seem too decided that money grows on trees and we can have a green new deal and we could have Medicare for all and I'm exaggerating a little bit but I don't think they strike don't exaggerate at all yeah striking how much I mean some people do mirror or some of the name other Democratic presidential candidates what I shouldn't do it all one sir that's a little too goes a little too far but it's surprising a little pushback this bit I would say to what once would have been thought to G and we have a trillion dollar deficit and can we really just afford that I mean so what about that kind of argument and how worried what should one be about just you know I'm well I'm very worried about the long-term fiscal sustainability if you mean if you look at the CBO's long-term fiscal projections at the debt to GDP ratio it's basically rising without bound they see heading off towards infinity now currently it's not that bad right well it's I mean yeah that's right but it's about it but it's it's really a trajectory I mean if if it weren't if we were gonna stabilize where we are now that say there's no problem but the problem is as my gener I'm a baby boomer so as my generation goes into retirement years and starts collecting what we're due under Social Security and Medicare government spending is going to automatically go up and tax revenues is not there under current law to pay for it and so either we're gonna we're gonna have to sort of raise a revenue in some way to cover those those commitments or scale back those commitments and my guess is as my generation gets closer and closer to getting what we're do scaling back things for the elderly is gonna go hard and harder it's one thing to scale back the for the elderly would do with a 30-year lead you say you know you expect less than 30 years they should save more privately but once people are on the verge of retirement it's very hard to cut back on those benefits for the elderly so my guess is we're gonna have to have higher revenues at some point and so the conservative party the Republican Party in this case which traditionally has at least talked about debt and deficit even if it wasn't always super responsible and dealing with it for half so super energetic and though it's Paul Ryan's credit they tried for a while there to get serious about entitlement reform and he got the entire House Republican Conference to before it and so forth and Romney and he ran out of in 2012 and it didn't obviously hurt them particularly I wouldn't say yeah but anyway what that's all about pushing grandma Radcliffe but it's not clear that that really was the you know Obama ended up getting reelected I sort of conventional vote and the Republicans held the house and so forth but boy that's gone away I mean and how worried are you about that I mean if neither party cares about debt and deficit isn't that kind of a worrisome sign about the yeah I at a time now we there's nothing pressing because interest rates are low and so as a result the the the cost of the budget a bit there of paying for the debt is not isn't impressing on them but at some point it's a great will rise and even if the don't rates don't rise at some point the debt is gonna keep rising and so the interest costs are gonna keep rising so some point there'll be pressure on it doesn't have to be the next two years or four years but you know our in our lifetimes it'll I think it'll be coming as a big issue again and what about interest rates incidentally isn't that it like a little mysterious how they could be so low isn't normal it is yeah I think it is something to do with what we talked about earlier which is the slow growth you know if technological progress is slows down that's going to tend to push down down one interest rates because maybe as much demand for funds to finance investment projects but it's posted a lot of economists and economists are trying to figure out what it means for low economic growth what it means for monetary policy and I we haven't figure out all the answers yet I think it's a lot of a lot of internal debate I mean one of the weird things for me is that on the one hand everyone's sort of discontent so people on the Left are unhappy with mainstream economics and certainly with what free markets produced or more or less free markets people on the right are now very unhappy swear I found fashionable to decry simple-minded relief in markets and so forth and you sort of think to yourself well things really are people unhappy because things are bad or are people unhappy because things have actually been pretty good for a long time for the big hiccup and Oh a but it quickly we're pretty quickly recovered from hiccups be fair and people are so complacent now they can sort of indulge I don't know fantasies is too strong but you know pipe dreams on the left and the right in a way that I don't know the old days seems like maybe you just couldn't get away with that I mean it does feel like a little bit there's a little unreal unreal adore our whole economic situation now I think I think people are judging the economy based on their aspirations of what they'd like it to be and I could I can understand their aspirations are higher they'd rather have more equality I would - they'd rather the faster growth I would - but not as the things are terrible I mean if you live the median American is is better off materially than 99% of people that were ever born on this planet I mean we would it's not like economic growth is going to reverse is just slowed down you know quality is high but it's not like we've never been here before we you know about a hundred years ago in equalities probably about the same as it is today so it's so these things are not completely unprecedented but what I like to but I like things to be better sure but I don't think we should lose sight of the good fortune that I mean we really have and in many ways in light of the challenges we face and where are you incidentally I can't resist guessing on the kind of what gee wages haven't gone up in 40 years real wages real median wages whatever first is the what I take to be the counter-argument which is kind of yeah but that's an inaccurate way of measuring and it doesn't capture all kinds of improvements and standard of living and stuff yeah well I think that's right I mean there's kind of I've talked for years about how inflation tends to inflation measures tend to overstate inflation because we don't take into account the improvements in quality of products and so on new products so the flip side of inflation being over measured is that real wage is underestimated because they're always deflating wages by inflation measures so if the if flay ssin has a bit too high then the real wage growth is too low so I think we probably are better off than we were generation ago but there's no question that inequality has gone up and so people are comparing themselves not only to what they remember their parents enjoying 3040 years ago they're comparing themselves with their neighbors enjoying and the fact that their neighbor may have the bigger house and so on I think so there's no question that rising inequality is going to lead to a sense of dissatisfaction something and you mentioned earlier I think that people's children no longer are as likely to outpace them and it used to be the case yes yeah the probability that you will it used to be probability will have a higher standard of living than your parents for people who are born in like the 40s and 50s the probably you'd be better than off till your parents was like 90% almost certainty that you all have a higher standard of living than your parents and now it's much lower than that and that's because growth has slowed and because the growth we've had has accrued more the top the distribution then across the board and the baseline is higher yeah if more of your parents so already middle class yes yes yes you know you could have a normal middle-class life but it's just not yes so better than your middle-class parents because your parents were working-class immigrants into the middle class was a huge step but that is a better big don't you think affects attitudes a lot because so much of the American creed the American Dream is you you will do better than your parents if so many parents invest so much and the assumption that their kids will do get better than them and you could tell them you know hey it's not gonna be so hot so automatic as it used to be and but I think people that probably does lead to a certain kind of discontent it does and I think particularly discontent for a relatively unskilled workers and if you look at the the voting patterns over time for most elections people with college degrees and without college degrees sort of vote for the same candidate so the pew is something to work on this and so the skilled the unskilled sort of tend to vote the same except in 2016 we're so very big divergence where the college-educated tend to vote for Hillary Clinton and the non college educated tend to vote for Donald Trump and that's perfectly understandable if you think that the economy has been particularly bad for the unskilled workers that they're the ones who who really felt like all the elites in Washington weren't doing us any favors we need to shake things up and I could have I understand that sentiment I don't think Donald Trump is shake things up in a useful way but you don't understand their their motivation of feeling dissatisfied with the economy that they've been living through well so let's talk about some of the Trump be or you know the new Republican conservative discontents with sort of traditional markets so there's trade there's immigration they don't like that there's the critique of the big companies the corporate America big tech I mean it's is striking how much of a nerve some of that nationalist populist rhetoric is hit yeah it has I think talked about chomped a trade policy I think there's an element of truth to the Trump trade policy than it is then it's been then then gone gone haywire so the element of truth is that we do have issues with China and China's like is one of our major trading partners and the me and then of the big issues the Trump administration does emphasize is intellectual property right and and Unites States tends to be an exporter I'm intellectual property whether its software or a movies even economics textbooks and we predict support intellectual property and just good in the case of economic and China tends not to respect intellectual property and that's a problem for us from my perspective stealing copying someone's software or making a legal copy of somebody's movie is basically a form of theft it's only that it's not functionally different from theft and so I think we have a real serious issue now the question why knees pay for their translation if your textbook well it's interesting you know I've had students come back from China saying I've been to both the bookstores and I've see several different versions of your textbook in stores so some of them there was another look because it authorized version unauthorized versions selling in the same stores so the questions what do you do with sort of that failure to protect intellectual property well I think we have allies sort of similar interests than we have and there's organizations like the WTO that we should be working with and so I think we do need to deal with that instead the term administration has really lashed out against all our trading partners including allies like Europe and Canada Mexico I mean these people we should be working with not opposed to and then their complaints aren't narrowly focused on what our problems like intellectual property they're like on all sorts of things like we're running a trade deficit with China wise that's terrible where's most economist would say a bilateral trade imbalance is basically meaningless statistic so so I think there's an element of truth but then I think it's been to the Trump complaints about trade policy but then it's it's led to a completely trade negotiations stance that's completely lacking in nuance so I I understand sort of where they're coming from but I think they they really haven't handled it very well we've talked about about immigration that we I think is on at a-plus with the economy so I'm not at the mention I think there's what's go personally I think what's going on at the border and the family separations is morally repugnant so putting aside the economics I mean this is it's hard not to be horrified by that and in general I think what's really bothered me a lot about the Trump ministration goes beyond economics which is a basically treatment of our out traditional allies terribly really from the beginning but recently what's going on with Ukraine what's going on with the Kurds in northern Syria I mean it's it's it's just so morally repugnant so long so many dimensions and it there's a kind of mercantilism which spills over from a sort of narrow economic work realism to a general attitude and you see this very clearly with Trump that if we're the only way we do well is by other people doing worse yes and we need to in fact make other people do worse because that'll even help us do even better and the whole point if I could say for almost moral philosophy point of view of Admiral Smith and FreeMarkets leaving aside the strict economic arguments is to try to cut away from that oh absolutely you know rising to I mean it can be overdone it can be oversimplified rising tide maybe doesn't list every vote but there's some truth to that and it's a healthier Society when you have that basic I think a sense that you know you can in doing well you can do good and vice versa not not those are not a total odds with one another absolutely in fact one of the very first things that I emphasize when I teach introductory economics is that trade is not this is zero-sum it's not like oh there's a winner and a loser it's that we can both be better off engaging international trade and that understands that helps us understand not just trade among nations betrayed along individuals we live an internal marketer exactly exactly it's I mean it's why we interdependent why don't I live like Robinson Crusoe growing our own food and making our own clothing it's because we all gain from trade and the trade is positive some and so understanding the economics of that is is the first part to understanding why it's not really bad to be interdependent it's not bad to rely on other people or other countries you know there's a mercantilism is this old idea that it's it's so trade is good only because when you sell things to other people in fact that people are selling you stuff is in some sense the cost you have to bear to sell to sell them your stuff whereas economist is more the other is more the opposite I mean it's like we bit we getting benefit from be able to buy things from other people and the reason we have to sell things other people you have to get some money to buy things buy things from them and so it really thinks about international and interpersonal trade you know you know in a very different way I mean what am i opening your Times articles I said you know without Trump objective Americans want to vacation and Trump International Scotland Golf Resort you know we think it's a bad thing because after all they're buying import rights of Scottish vacation right I presume he wouldn't object he's the thing isn't American flying off to Scotland to play golf there's a bad thing and then oh similarly that whenever we'd sort of buy an import we're gonna the person behind the import is gonna benefit and you mentioned teaching your students I'm just curious about this you hear a lot of conservatives particularly worried about the younger generation polls show that they like socialism and they don't like capitalism at all what do you make of that is that real is that just kind of they say it but they don't mean it I think it is I think it's some element of truth to it because I don't I mean for me the Soviet Union loomed large as a as a tale of what could go wrong I grew up going to Ukrainian church with my parents and you know they every week they would pray for the independence of Ukraine and you know I remember thinking as a snarky teenager think Oh that'll never happen yeah totally right but it did right and I think we've really learned a lot from you know comparing North and South Korea or East and West Germany that centrally planned economies don't work you see now in Venezuela that lesson I think what doesn't loom as large a student's yeah so they when they think of socialism they think of Scandinavia the Scandinavian seemed fine and that truth is that's not really essentially plant economy that's the they just have a more robust social safety net than we have but it's basically they're basically market economies with a lot of economic freedoms and with in some respects I believe tougher anti entitlement growth and fiscally and more fiscally responsible apologize that we've had right they cut back on stuff that we've never been able to get back on in terms of some of the benefits yeah the thing that know about a lot ease your pain countries is they the reason they have a more generous social safety net is they taxed the middle class higher than we do know I've often said that in our country the the left and the right are agree on ninety nine percent of tax policy that is the Republicans don't want to raise taxes on anybody the Democrats only want to raise taxes in the top one percent so they're ninety nine percent agreement right but if you look at Europe what they actually have a robust social safety net by taxing everybody there's things like a value-added tax has a very broad-based tax so if we want to be more like Scandinavia which you can decide to do or not do you have to acknowledge that to do that we'd have to basically tax everybody more not just the one percent of the point one percent it has a broad-based taxes and then we could use it to provide more benefits if we wanted to and do you think they do pay a price in terms of both general economic growth and innovation and enterprise with the higher taxes on them and I think they do I think there's evidence that when taxes are higher people work less at Prescott a Nobel Prize winner from the University of Minnesota has has a paper on that might basically find I find that credible I mean it's not terrible I mean it sound like people they're miserable right but I think there's a trade-off and yet it's a luck we could we could have a more equality by you know we could do the yang plan with you know higher value-added tax together the universal basic income that there's more equality but will probably be less less have a lower average income and be less prosperous by that metric and do you agree with argument I think it Connard and some others make this more businessman maybe than economists it's a little unquantifiable that you need you need the outsized returns which seem to some people a little bit crazy and horrifying and do to me to seven Kate gets lucky with one invention suddenly he's worth eight or a million dollars or something like that but you do need that to have Silicon Valley to have the kind most insane churning and people taking risks and giving up jobs at reasonable salaries to put out to put everything into some startup and how strong is that dear aight i think it's very hard to know you know but you know the Riv yeah and I know the argument which is that you know why we know what Bill Gates have wouldwould Bill Gates have created Microsoft if they had been a billionaire tech you know billionaire tax i'd say it's less the gates but she would have because he would still become hugely rich it's and it's less even the number two and three people Microsoft it's the number thirty person who joined Oh make I'm making this up but I'm yeah in general who left a good job maybe a save your job yeah at IBM where was getting very well paid for being a senior blah blah blah you know vice president marketing and went to some pretty obscure startup with the offer of equity thinking you know what it's nice to make fun of it I make missile you know forty thousand dollars a year at IBM and it's very pleasant it's not even that hard work but I'm gonna give that up for much somewhat lower salary to start with or maybe in anyway a places go bankrupt in two years but I'm gonna have a chance to really hit it rich and I think his argument or at least ads version of it is more you know it's less Gates and Steve Jobs they'll do what they do probably anyway it's more the kind of the amazing of willingness of American upper middle management talent including not necessarily the tech people themselves but the people who make these companies succeed once the tech gets evented the marketers the lore everyone you know they it's an interesting sort of need that kind of there's certainly different career paths and you know you're leaving you're deciding they want a relatively secure job position which is I know for sure I'm gonna make you know why three hundred thousand a year but I like you know a billion here or do I go to Silicon Valley and then roll the dice and maybe I'll become a billionaire maybe not Europe went as the sense has a lot of well-paid good jobs really intelligent well-educated people and they stay in those jobs yeah and they not either in government but also outside of government so you're at some big fancy French company and you move up from the French company and it's very nice then it doesn't even occur to them the way every American impression every American businessman even if the biggest companies in the back of his mind is thinking maybe I will jump to this you know my cousin seems to think he has some clever start off and maybe it's worth taking it on that and that is something healthy I think health it is not agree I agree I don't I don't know of any I don't have any evidence I would absolutely closely prove that to a sceptic but it strike me as a plausible hypothesis so what worries you the most I mean and but each party is that kind of leaving aside maybe president Trump's personal character is president which I think you and I are not crazy about at least but in terms of policies I mean where would you see things really going off the rails as opposed to just kind of you know a little bit of silliness well I mean the trade war could get worse I mean it could really escalate and it's not us the Democrats a great free traders either no no I think generally Republicans have been the better party for trade it's interesting the Democratic presidents often better than Democrats in Congress yes like like I was skeptical about Barack Obama because he's his record as a senator was not great voting on trade things but he'd be presenting them pay much better so be right in conquering Congress the Democrats are not great free traders and the Republican could constituency seems to have disappeared on this because they're following Trump on this issue even though I I'm guessing in the back of their minds they're thinking that that's the wrong direction to head so I'm worried about that I'm also worried about climate change by the way I would actually do take the scientists seriously I'm not a scientist I can't really evaluate the science behind climate change bono majority of scientists tell me it's a real thing then I'm inclined to believe believe them and I think the fact that President Trump apparently legitimately thinks it's a hoax is a bit as a bad sign right and I think what the longer we wait the harder it's gonna be so I worry about this there's like a manageable thing if you had sensible it does good family policies or does I mean I've been part of this group it's almost called the the Baker Schultz plan of putting a carbon tax along with deregulation and using all the tax revenue to rebate in terms of they call carbon dividends it's got the climate Leadership Council is the group that's been pushing this and I've signed on to that I think among economists that this got a large consensus of people kind of see both the right in the left because it's a market friendly it takes climate change seriously just want to do something about it don't incentivize people to reduce their carbon footprint but does so in a way that's gonna let market forces work it's not going to micromanage business decisions which is what I'm afraid of with you if you want to sort of do this via central planning it's not gonna be as effective and it's going to be very very interventionist and very inefficient I mean the green new deal I think shows the way in which the climate issue can be used to justify an awful lot of government planning some of which honestly it's very little to do with climate but it's just you know they want to do a lot more planning I suppose yeah that's right so I'm right now that doesn't seem to be the constituency for this carbon tax and dividend plan but I think there's some people in Congress that kind of know it's the right thing to do I think they know it's politically dangerous for them but I think they know it's not a complicated idea and it's daityas and floating on long enough I think Congress would be ready to do it if the American people were behind it and on the left if Elizabeth Warren becomes the nominee and president and even has a fairly supportive Congress which of the things that she would do would you think you know well the interesting one it's a I'm deeply skeptical of is the whole change of corporate governance and she wants to to take all big companies and say look your job is no longer to maximize profit for shareholders you know have to take into account all your stakeholders and we're gonna put more labor representatives on your board and so when you're deciding whether to close a factory you just couldn't shouldn't think about whether it's profitable to close the factory move it to a different country or a different state you've got things okay the effect of all your stakeholders that's the fundamental change in American capitalism it so changes the role of companies in a way that I think sort of moves them in a not good direction because once you have a CEO saying mine my job not to maximize profit my job is to be central planners and decide who know who's what's good for everybody well then who are they really responsible to you know if you're if you have three or four different masters who's really here master it's very hard to hold CEOs accountable if they can always say oh I didn't do I didn't do I know what the City maximize profit it's benefiting labor or it's benefiting the environment or they have some other reason they could really dance out of free discretion do whatever they feel like what about the counter-argument that the current system instead of Isis and too much to worry about quarter-to-quarter short-term profits and not be responsible in terms of longer-term you know well I think if it I'm not convinced by that because if they're really they're not thinking about the long-term profitability that's gonna tend to depress the stock price some private equity guys they come in there and this really for our medicines our senses yeah I think the markets Qasim that's that's one the whole private equity guys are there to basically take over companies that are badly run and make them more profitable now I know those like evil and some people yes maybe that just taking them over to strip them of their assets and sell them back quickly yeah that's only a profitable thing to do if the assets aren't being used well I mean if that's if that's those are being used well then they're not gonna strip them they're gonna they're gonna try to get ahead of how to make them more profitable so you're a pretty firm defender of the kind of more or less the current system of us of incentives and rewards in terms of corporate governance you don't think there's a big crisis room no I don't and III but I think we could we could create one if we really try to change the rules with Warren has proposed is that what you think that really would be a problem and you could just end up I think so I think it'd be very hard to know how to run a company if all their sudden you're told to you have these five different stakeholders and you have to take them all into account and you the CEO get to wait the importance of one stakeholder versus the importance of another stakeholder my colleague Jonathan last night a piece where he went through the little bit the history of we work and said that's why people are for Elizabeth Warren then every summer there's something wrong with capitalism if we have this kind of you know ludicrous bubble and one company and then the guy walks away with hundreds of millions of dollars where he seems to be totally responsible and stuff I mean what's your answer to that I haven't followed that particular situation I mean stipulate I mean port ports of directors have important role to make sure that the management does do their job which is maximize profit for the shareholders and if the the boards aren't doing their job they should have figured some way to reform that so I'm perfectly happy to think about corporate governance but telling the telling the managers oh you're not responsible shareholders anymore there's only one of a list of people who you should care about that strikes me as a dangerous way to go one answer to Jonathan's point is of course well you know what people lost money we work for a bunch of investors who stupidly believed in some promises that were probably should have been obvious if you looked at them more closely we're not sustainable we didn't well I mean this is not quite true because there are side side effects of course an innocent third parties who you know get punished when a company goes under and and you know index funds that have a little bit of money in that but on the whole it was willing investors who lost and I suppose that is something the point people don't make enough I think when you see these headlines you guys an outrage how could that happen well it happened even that these fraud obviously people fraud is illegal and stuff but even the people who lost money and that fraudulent Silicon Valley yeah a medical company or whatever that you know fan it was a notice or whatever was there knows the affairs but that wasn't right I mean yeah that didn't cost middle America really I don't know there's a bunch of rich investors yeah so the system worked in a sense right I mean yeah I think for I mean there's no question that there's a role for government in dealing with corporate governance things like fraud I mean we should put people in jail for fraud that that's a good thing so I mean it's not like I'm advocating for Anarchy but I just don't want to turn every CEO into a little central planner trying to figure what's good for society overall yeah that seems like like a mistake and what else would worry you the most so Elizabeth Warren takes over corporate governance the wealth tax well to be honest I suspect the wealth tax will never actually happened only because the Ways and Means Committee you look into it they'll start studying anything else it's not such a good idea there's other ways to text the rich by the way then then the wealth tax oh you this thing's like closing the carriage loophole and this is other things we could do you know if they want I'm not particularly favor raising the capital gains rate to the ordinary come tax rate but that strikes me as sort of less problematic and then let's say the wealth tax so I think there's other things you can do to increase taxes on the wealthy which you'll do and then the and the question is emit the medical system I mean I met it to me Medicare for all is a very radical step we have a medical system that works well for most people it's the engine of of medical innovation in the world really if we go in the direction of medicare-for-all we can't probably save money in the short run but also can reduce the incentives for technological innovations I maybe could so control drug prices for example that that's the only other countries do that but if we do that with the biggest market now if we do that this certainly be less than a innovation in a new drugs and so if you think about the long term you know your children and grandchildren what's gonna make their lives better medical innovations probably top of the list and so we don't want to reduce the incentive for that it does seem to be in general that people on right and left that is really what the trumped right and the Elizabeth Warren left have in common is that I think a total lack of appreciation for innovation enterprise yep growth and what makes that possible and it doesn't automatically happen and there are some aspects of what make it possible that are sort of not so beautiful you know they have like side effects that aren't so nice and some unpleasant people get rich because they get lucky and being in the right place at the right time or whatever and it's not really there you know they don't deserve it quite the same way someone who invents a genuinely life-saving drug does and so forth but they don't understand kind of what could yeah how much you would give up if you started to have a system that didn't reward innovation yeah we did conscious ways I mean The Economist Joseph Schumpeter writing on your left nearly a century ago talked a lot about this that it's a it it's basically creative destruction that's driving it a little bit higher and the process of creative destruction does give monopolies to innovators in the short run until some other other innovator comes through and replaces their innovation with a better innovation soap yeah so so there's this dynamics or people seem to get very rich and sometimes things get very expensive like drug prices because of that but I but we have patents on drugs for a reason right that's a policy decision we want to give people patent students incentivize innovation and then when we grant them this monopoly we shouldn't be appalled that they charge monopoly prices because we've decided as a society to give them that in that monopoly for a good reason yeah if we want to deal with particular drugs we can subsidize them or yes you know whatever I suppose yes yeah yeah shrimp a day would be worth really having a both I think for the creative destruction argument but also for the you know capitalism democracy argument the extent to which people lose an understanding of capitalism once capitalism starts to succeed and yes lose an understanding if it's free gas my understanding is that Schumpeter thought we were eventually drift toward socialism and yeah out of a kind of shows I should go we read it to a certain kind of complacency almost right in and sort of yeah I don't think it plotted I think he's now seem to think that we were drifting that direction yeah he maybe wouldn't have been so surprised by you know really vital is before and I know Trump in the sense that it and taking it for granted after all these years I guess that's what strikes me too you know I see this in foreign policy to you said talk about the last seventy years and people of course all these good things were gonna happen anyway we're gonna have a third world war we're gonna have you know nineteen twenties thirties type recession we're gonna have this we're gonna have that we're gonna the Soviet bloc was eventually gonna tumble India was gonna be a prosperous nation instead of being on the brink of starvation all the time just take that for granted and now we're gonna be extremely upset about a bunch of other things it didn't quite work out as well as we like it does seem to me like people don't appreciate the yeah I think it the more the more international view one has the more historical view one has the more appreciative one should be of where we unite States is today because yeah things aren't perfect we have aspirations that are perhaps better than what the reality we're living but compared to the international experience compared to the historical experience were actually not in a terrible place but you wouldn't know that from our know rhetoric from either side really that's and and somehow the rhetoric can then become self-fulfilling right because it can then push us towards solutions that really would sort of damage yes right I mean one of my favorite books with intersection between politics in economics is the myth of the rational voter by Bryan Caplan and BC brought what Brian does is he basically documents and that this the typical voter has a lot of systematically wrong beliefs about how the economy works has no particular incentive to correct those wrong beliefs given that their probability they're vote being decisive is so so small and politicians who are hyper rational in terms of getting elected are going to then shape their the policy their policy proposals to appeal to the systematically mistaken voter that's that seems to be playing out in spades yeah right now and I guess the political science version of that is also the concentrated you know cost to fuse benefits things yes yes this group benefits tell plant closes and five hundred people lose the job yes thousands tens of thousands hundred thousands people will benefit from generally right lower consumer prices on all the goods etc that doesn't quite they don't think they don't you don't think when you go buy something that hey it's like it is international trade worse it's really making this refrigerator more affordable or something you know yeah I mean what he documents Brian talked observer AIA T of different biases that voters have and one of them is an anti market bias another one is an anti far and bias and another one is original pessimism bias that people are generally more pessimistic then they should be and it's just one of the great things but teaching economics especially the at the freshman level is you're helping to educate the next generation of voters but usually insulate them from some of the automatic biases that they might they might have its that happening well you know I've thought for the longest time that introductory economics should not be a college-level course it should be a high school level yeah because much of the same way that every takes a year of American history in high school because to be a smart voter you need to know a little bit American history I think to be a smart voter you need to know a little bit of economics so what we teach in in econ 101 really should be taught to juniors and seniors in high school I don't think it's heart to hard so it could certainly be taught at that level and I think we have a better body politic if if everybody had gone through that just the concept of trade-offs and of you know no few agencies yeah exactly very basic things would be healthy I think yes and but it is striking we were better educated than ever I suppose as a country and I would argue people are more credulous than to some degree than ever nothing ever but then they were twenty or thirty years ago perhaps about various promises on the left and right and a very in a surprising way you'd think with all the information that's out there and so forth you know we'll see I mean right now the Democratic Party they're sort of playing opportunist for the left lane and the moderate lane and I think it's still 50/50 at this point which lane is going to prevail so and I suppose whether trumpism really ends up dominating the party or whether it's a kind of temporary thing with a kind of culture person I mean okay I'd love to believe it's a temporary things that do to cult of personality but watching brexit makes me wonder that's not because the brexit phenomenon and the UK is not all that different from the Trump phenomenon here it's this sort of it's it's a xenophobia general suspicion of elites so I think this this sense of dissatisfaction that affected American voters I think affected a lot of British voters which date and I think much of the same way that may a lot of Americans are thinking maybe this Donald Trump thing is not working out so well after all take a lot of the Brits are thinking maybe this breaks and things not working out so well after all but also what happens with that I think cycle house I collagen say that one reactor that is gee I better rethink that another reaction is a kind of stubborn oh you're thinking sort of guns and even doubling down or certain away blaming you know this lead or that you know group not letting it work out the way it was supposed to right yes what one of the developments and economics past 30 years has been the rise of behavioral economics and one of the big findings and behavioral economics originally came from psychology is confirmation bias the tendency of to interpret evidence to confirm whatever you already thought because changing your mind is difficult for people and it's kind of useful thing to know that because once you sort of recognize all these biases that the behavioral economists have documented you start seeing that in yourself and so it sort of forces you to say huh am i interpreting this way just for confirmation bias and so I think it'd be useful for people to learn that in this new high school of course we've just designed they learn about some of the their decision-making by I see so maybe they can they can counter counterbalance them you know like that well at least they can learn about rethink some of their biases I hope because if these this conversation and others like it and thank you for taking the time to join me today Greg and thank you you know for really bringing I think fairness and clarity and fair-mindedness to do this discussion I really wish more people thought clearly about all these issues and as you say it didn't simply and either indulge hopes or go with confirmation so well thank you Bill it's a pleasure thanks Greg and thank you for joining us on conversations

Channel: Conversations with Bill Kristol

Views: 22,822

Rating: 4.835391 out of 5

Keywords: Economics, Harvard University, Social Science, American Politics, Green New Deal, Free Trade, Protectionism, China, Gregory N. Mankiw, William Kristol, American Economy

Id: 2JNs6bC4NbY

Length: 69min 19sec (4159 seconds)

Published: Sat Jan 11 2020

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[u/kanray86]

Mankiw knows what he’s talking about

[u/LongVoyage001]

Did Mankiw get some talk points from Yang or Yang got some from him? many of the sentences they use are pretty much same.

Besides UBI/Automation, even the Immigration topic, "We should staple a green card to the diplomas of international students came here and graduated from our universities..... ", that's exactly what Yang said in some town hall or interview.

I don't think Mankiw gonna endorse Yang directly, but he is pretty much a member of Yang Gang now according what he is talking about.

[u/Pro_Echidna]

Very good arguments against the Wealth Tax. I trust this guy more than the "Fax Machine" guy.

Yang Timestamps:

14:00 - 20:00

48:00

[u/MrCharlieBones]

The majority of economists are against a wealth tax. They don't work. There's a reason they've been repealed in nearly every country they've been tried. You don't raise much revenue and you supress economic activity.

[u/mochiipeach]

I love this so much. I love hearing people who know what they're talking about consider different options and share their findings with us. I really want to transcribe some of the timestamp referenced talking points and use it as reference for talking to people. Such a great video (and economist of course). Really like hearing such a smart guy talk in general.

[u/bigjokker1400]

What will it take for Sanders/Warren to understand that the Wealth tax will be a complete failure? Other countries have already tried it and repealed it because it did not work. Now N. Gregory Mankiw the man who wrote the Textbooks on economics saying it will not work,

[u/Mockingbirddd]

It is by far the best redistributive policy. If you care about income inequality, this is only thing that works.

Warren wealth tax does not make any economic sense. Been tried in so many countries and failed.

Bernie m4A is ridiculously expensive and will never be passed. Even if it does pass, it benefit ppl who are old and sick which is too late to close the income gap.

Yang policy will immediately solve poverty, make more money for the country and is easier to implement.

[u/Ryanm715]

first video I actually had to slow down the playback speed. Man this guy can talk a mile a minute