Latest / Trumponomics / The United States of Inertia

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The United States of Inertia · Trumponomics

0:00
Speaker 1: The United States of France. Americans like to think of
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Speaker 1: themselves as being great risk takers, rolling back frontiers and
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Speaker 1: imbibed since birth with this spirit of entrepreneurship. And to
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Speaker 1: an extent, that's true, and it attracts people like me.
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Speaker 1: Yet what if, what if despite the technology success stories
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Speaker 1: that have at least superficially transformed society, there's an increasing
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Speaker 1: desire for safety. What if we're just becoming an old, cranky,
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Speaker 1: more risk averse society. What if we're more like Europe
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Speaker 1: and those poster children for sclerosis France, Germany and Italy.
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Speaker 1: Welcome to The Bloomberg Benchmark, a happy podcast about the
0:53
Speaker 1: global economy. I'm Daniel Moss, executive editor for Global Economics
0:57
Speaker 1: in Washington Today, and I'm Sky Landman and economics editor
1:01
Speaker 1: with Bloomberg in Washington too. So let's be sure we
1:05
Speaker 1: have that right, Dan. We have a society known for entrepreneurship,
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Speaker 1: we have technological prowess and progress that we've made in
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Speaker 1: the past fifty years, hundred years, even just in the
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Speaker 1: last ten years, and yet we're talking about our society
1:19
Speaker 1: becoming so sclerotic that we're comparing it to France. Technology
1:24
Speaker 1: may have just released our Inner Status, and our guest
1:27
Speaker 1: today is going to explain how Tyler account chair in
1:31
Speaker 1: economics at George Mason University and author of The Complacent Class,
1:36
Speaker 1: The self Defeating Quest for the American Dream, and full disclosure, Tyler,
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Speaker 1: you're also a Bloomberg View columnist. That's correct. Well, welcome
1:44
Speaker 1: to the show. And do I have that right? Our
1:47
Speaker 1: great technological progress, matching music, matching dates, film choice, political
1:53
Speaker 1: and social preferences of our neighborhood, that's all a bit misleading,
1:57
Speaker 1: actually doesn't lead to progress, but ultimate only a design
2:00
Speaker 1: for statis Do I have that right? Yes? American culture
2:04
Speaker 1: has lost a lot of its dynamism or at the
2:07
Speaker 1: point where so many parents they're afraid to even let
2:10
Speaker 1: their children play outside. We medicate ourselves at much higher rates,
2:15
Speaker 1: we move across state borders at much lower rates. That's
2:18
Speaker 1: fallen by about fift from its peak. Our productivity and
2:22
Speaker 1: even innovation are down. And if you look at our
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Speaker 1: best innovations like Netflix or Amazon, they're so often about
2:29
Speaker 1: finding a way just to stay at home. So are
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Speaker 1: these kinds of innovations that you're talking about, are they
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Speaker 1: just not on the level of say the lightbulb or sewers.
2:40
Speaker 1: You know, the kind of arguments that Robert Gordon has
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Speaker 1: also made. Is it the pace of innovation that's slowing?
2:46
Speaker 1: Is it the level of innovation? What is it? It's
2:49
Speaker 1: both the pace and the kind of innovation that have
2:52
Speaker 1: been slowing. So many recent innovations. They're about enjoying your
2:56
Speaker 1: leisure time better, which is great, but the actual productivity
2:59
Speaker 1: of our economy is down significantly. Even at work, people
3:03
Speaker 1: spend a decent chunk of their time checking social media,
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Speaker 1: and in so many areas, ranging from getting around this
3:10
Speaker 1: country to infrastructure, we're actually moving slightly backwards. So it's
3:14
Speaker 1: a misconception that our society, even Silicon Valley, is really
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Speaker 1: a source of great innovation anymore. Well, Silicon Valley is
3:22
Speaker 1: a source of great innovation, But I think the point
3:25
Speaker 1: is we don't have so many more such sources in
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Speaker 1: today's America, and in the past we used to have
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Speaker 1: a lot of them. You ask people what's a big
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Speaker 1: dynamic company today, they might say Uber. Uber is nice.
3:36
Speaker 1: I took an Uber to get here, but it's really
3:38
Speaker 1: just a slightly abused I wasn't abused, but I felt
3:41
Speaker 1: this is nice. It's a slightly quicker, taxi cab a
3:43
Speaker 1: little bit cheaper. When that's the big deal in your economy,
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Speaker 1: you're not moving forward that quickly, right. So you spend
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Speaker 1: quite a bit of time in the book talking about
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Speaker 1: dating services, music services and the degree of specialization and
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Speaker 1: seemingly infinite choice with in these narrow bands of specialization,
4:03
Speaker 1: and that that's symptomatic of the broader problem. Can you
4:06
Speaker 1: expand on that a bit well. I think music is
4:09
Speaker 1: a good example of how near infinite choice leads to
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Speaker 1: a kind of stasis. I can access almost any recorded
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Speaker 1: music I want to using my iPad. One can go
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Speaker 1: to YouTube, their Spotify, iTunes, so many ways to do it.
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Speaker 1: You can listen to to what you want when you want.
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Speaker 1: But the end result of that is that people are
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Speaker 1: now spending much less money, much less time supporting new music.
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Speaker 1: And I think we've become less creative. In any one moment,
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Speaker 1: it feels good because you're hearing what you want, but
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Speaker 1: over time, again we're cutting into our stock of creativity.
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Speaker 1: So technology has kind of walled us off. It hasn't
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Speaker 1: unleashed us on the world. It's imprisoned us within our
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Speaker 1: own prejudicial choices. But in a fairly comfortable prison, of course,
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Speaker 1: So keep that in mind. This is happening because we
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Speaker 1: wanted it to happen, But I also think it's going
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Speaker 1: to prove dange risk in the longer run. So what
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Speaker 1: is the underlying thread that connects all these UH vignettes,
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Speaker 1: these economic vignettes that you bring together in your book
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Speaker 1: that have resulted in what you call the complacent class.
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Speaker 1: One thing that came to mind for me is another
5:19
Speaker 1: show that we had recently. We have the historian Walter
5:22
Speaker 1: Scheidel from Stanford University. He was he has a new
5:26
Speaker 1: book out that talks about how inequality grows except in
5:31
Speaker 1: times when there's a total war or or black death,
5:37
Speaker 1: or you know, something pretty depressing like that. Is this
5:41
Speaker 1: a natural function of our society just being stable and
5:44
Speaker 1: without a major war for a long time. It's a
5:48
Speaker 1: natural phenomenon. You see related things happening in Japan in
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Speaker 1: most of Western Europe. So it's because security and safety
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Speaker 1: they really do feel good, right well? Yeah, and also
6:00
Speaker 1: compare you compare the situation. You look at China. You
6:04
Speaker 1: talk about some of the innovation there. You profile the
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Speaker 1: founder of Ali Baba UH briefly in your book, but
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Speaker 1: isn't the reason for some of the activity we've seen
6:14
Speaker 1: in China a function of the fact that that society
6:17
Speaker 1: was closed off for forty some years before. They've really
6:21
Speaker 1: unleashed a wave of of economic opening and innovation in
6:27
Speaker 1: the last two or three decades. Well, for sure, some
6:29
Speaker 1: of China is just playing catch up, but a lot
6:32
Speaker 1: of their dynamism now it's actually on the frontier. If
6:35
Speaker 1: you look at we Chat, it's better than any messaging
6:38
Speaker 1: system that's come from Silicon Valley. If you look at
6:40
Speaker 1: electronic payments, the Chinese are way ahead of us. In biomedicine,
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Speaker 1: they may end up ahead of us quite soon. So
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Speaker 1: China is not just copying and growing fast because it
6:50
Speaker 1: was poor. It's remarkable how well China has used its
6:53
Speaker 1: dynamism in a number of areas actually to leap to
6:56
Speaker 1: that frontier. China is like the United States circa and I,
7:00
Speaker 1: and yet China is facing its own demographic challenges. You
7:04
Speaker 1: talk a little bit about the demographic challenges facing the
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Speaker 1: US in the book. What many people listen to this
7:10
Speaker 1: podcast might not know is that China's labor force is shrinking,
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Speaker 1: It's population is aging. You know, this is not this
7:21
Speaker 1: sort of low cost ten percent growth perannum nirvana anymore. Sure,
7:26
Speaker 1: China may itself face a lot of these problems, but
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Speaker 1: they have one thing that we don't. They have so
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Speaker 1: many talented people in the countryside still who haven't been
7:36
Speaker 1: mobilized yet, and that may help them forestall these processes
7:40
Speaker 1: quite a bit. And it's not that you're saying the
7:42
Speaker 1: US economy is doing terribly right, not at all. Unemployment
7:46
Speaker 1: is low, things are fairly stable in disease of investment
7:51
Speaker 1: and share price volatility. Are doing fine, But there's a
7:54
Speaker 1: long run cost when you start being dynamic and a
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Speaker 1: eventually you can't pay off your debt and be in
8:02
Speaker 1: the short run when the pie is fixed, your politics
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Speaker 1: becomes worse and your governance becomes dysfunctional. And believe it
8:09
Speaker 1: or not, there are actually some signs of that happening
8:11
Speaker 1: right now. I'm shocked to hear it. I would never
8:14
Speaker 1: have guessed. So can you actually go back to a
8:17
Speaker 1: state or rekindle the dynamism in the US economy Even
8:23
Speaker 1: if you had a hugely disruptive event like like a war. Uh,
8:29
Speaker 1: you know, you you still have a lot of these
8:32
Speaker 1: same trends that are happening you know, you quote the
8:36
Speaker 1: great sociologist as ease On Sorry in in your book,
8:40
Speaker 1: you're talking about how mating has become, you know, a
8:43
Speaker 1: much less random process than it was in the past. Uh.
8:48
Speaker 1: You know, we have a lot of technological innovations that
8:52
Speaker 1: are just we're just not going to go back to
8:55
Speaker 1: society where you know, we're we're listening to random LP
9:00
Speaker 1: he's at the music store and trying to decide whether
9:03
Speaker 1: or not we we like them. Is there really a
9:06
Speaker 1: way to become a more dynamic economy again? I think
9:10
Speaker 1: we will have to become dynamic again. Keep in mind,
9:13
Speaker 1: the least complacent class in this country are the immigrants,
9:18
Speaker 1: and as long as we keep on taking an immigrants,
9:20
Speaker 1: I think we'll have the chance to refresh our own dynamism.
9:23
Speaker 1: This country tends to do quite well when the chips
9:26
Speaker 1: really are down and we've exhausted all other options. We
9:29
Speaker 1: all know the famous Winston Churchill quote America will will
9:32
Speaker 1: do the right thing when it's gone through every other choice.
9:35
Speaker 1: So in the medium to long run, I'm very optimistic
9:38
Speaker 1: about this country. But I also think the time for
9:41
Speaker 1: those big bumps has come now, and I'm trying to
9:44
Speaker 1: give people a framework for understanding why isn't this the
9:47
Speaker 1: idyllic future or three growth that maybe so many of
9:50
Speaker 1: us were expecting in the nineties. But we're not going back.
9:54
Speaker 1: We're not exactly going to be letting a ton of
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Speaker 1: immigrants into the country. We're recording this on the day
10:00
Speaker 1: that the Trump administration has announced the new revised ban
10:06
Speaker 1: on immigrants from six nations, ban on refugees, or temporary
10:12
Speaker 1: ban if you want to call it. That. Aren't we
10:15
Speaker 1: moving the direction where if you have to open up
10:17
Speaker 1: the economy that way, there's just not a political appetite
10:20
Speaker 1: for it. I don't at all favor that ban, but
10:23
Speaker 1: I think it's striking actually how weak it is relative
10:26
Speaker 1: to the overall flow of migration. And the chance of
10:29
Speaker 1: getting a big deal immigration reform may possibly be higher
10:33
Speaker 1: under Trump then say it would have been under a
10:35
Speaker 1: President Clinton. So we may be taking a pause from
10:38
Speaker 1: higher levels of immigration. But I don't yet see that
10:41
Speaker 1: trend as being reversed. Just to get back to this
10:44
Speaker 1: point about how it may be more likely under President Trump,
10:49
Speaker 1: then perhaps under President Clinton, is that a Nixon goes
10:53
Speaker 1: to shawin our analogy you're drawing there, that's a Nixon
10:55
Speaker 1: goes to China. Analogy. If Trump would sign off on
10:58
Speaker 1: a plan, Republicans would have a cover to vote yes
11:01
Speaker 1: on it. Not quite predicting that, but I think under
11:03
Speaker 1: Clinton the chance of that would have been close to zero.
11:06
Speaker 1: You had you know, Rubio and Cruz and everyone else,
11:09
Speaker 1: you know, jumping on top of the idea of the wall,
11:11
Speaker 1: whereas now there's at least a possible path forward. But
11:15
Speaker 1: I would say, if we really do cut off immigration,
11:17
Speaker 1: America's dynamism probably will not recover. Do you detect any
11:21
Speaker 1: support in the country for a cutting off of immigration
11:25
Speaker 1: per se? I mean, you know, it's only last year
11:28
Speaker 1: that I took the oath, and I guess you know
11:31
Speaker 1: hundreds of people like me did that. Today, at its core,
11:36
Speaker 1: there was still sympathy for a strong immigration program. It's
11:40
Speaker 1: just a discussion about what that program looks like. Do
11:43
Speaker 1: I have that right? I agree completely. But imagine we
11:46
Speaker 1: had another terror attack and it was somehow connected to immigrants,
11:50
Speaker 1: and we had a skillful executive branch determined to cut
11:53
Speaker 1: off immigration. Now, as far as I can tell, we
11:56
Speaker 1: don't actually have any of those things, but it's not
11:58
Speaker 1: impossible to think we might get all three, and that's
12:01
Speaker 1: how it would happen. But my default scenario is we
12:04
Speaker 1: will go through a major social, political, and possibly even
12:08
Speaker 1: economic crisis, hit those bumps in the next say, ten
12:11
Speaker 1: to fifteen years rather rapidly, and basically decide we're going
12:16
Speaker 1: to do things right once again. And I think we'll
12:19
Speaker 1: see a more dynamic America which is turning information technology
12:23
Speaker 1: into all the different parts of its economy and making
12:26
Speaker 1: most of the economy dynamic, not just your Facebook page.
12:29
Speaker 1: But that's not right around the corner. Right the world
12:32
Speaker 1: we're going to live in is going to feel very bad,
12:35
Speaker 1: look less liberal, possibly involve more foreign conflict, and our
12:39
Speaker 1: government will appear and indeed not be up to the
12:42
Speaker 1: task of doing that much about it. So this reminds
12:45
Speaker 1: me of a couple of themes from other shows that
12:48
Speaker 1: we've done. We had Robert Gordon on a few months ago,
12:52
Speaker 1: and he talked about his book and how and his
12:55
Speaker 1: research showing that he thinks the best days of American
12:58
Speaker 1: growth are behind us. Uh. And then on another show
13:01
Speaker 1: we had Eric Brynilson from m I T on who
13:04
Speaker 1: takes an opposite view that maybe we're underestimating the you know,
13:08
Speaker 1: the productivity the innovations that are out there in Silicon
13:12
Speaker 1: Valley and how they're going to contribute to our society.
13:16
Speaker 1: What I'm hearing from you is, you know, in some
13:18
Speaker 1: ways it's it's a hybrid. You take you take one
13:21
Speaker 1: part of Gordon, which is that you know, we we're
13:26
Speaker 1: not getting as much from innovation as we used to,
13:28
Speaker 1: and yet you do talk about some of the promise
13:31
Speaker 1: of technology and if we go through an upheaval in society,
13:35
Speaker 1: well we'll get that. Is that fair? Absolutely, the pessimists
13:38
Speaker 1: are write about the last eighteen years. The optimists are
13:41
Speaker 1: right about the future. Given a choice, I'd rather be
13:45
Speaker 1: right about the future. You talk a bit in the
13:47
Speaker 1: book about de Talkville. Now all of a sudden we're
13:50
Speaker 1: hearing about him from everywhere. Why is he so on
13:53
Speaker 1: Vogue these days? He's the deepest theorist of America who's
13:58
Speaker 1: still relevant, still worth three, still highly readable. So Toaquville
14:03
Speaker 1: produced the you know, the classic portrait of America through
14:05
Speaker 1: French eyes, through Western European eyes. I think of my
14:09
Speaker 1: book in a sense as trying to write a portrait
14:11
Speaker 1: of contemporary America, but through Chinese eyes or the lens
14:15
Speaker 1: of another emerging economy. How do we look to what
14:18
Speaker 1: the world actually is these days, and not just to
14:20
Speaker 1: a bunch of French bureaucrats, And then I think we
14:23
Speaker 1: look pretty stagnant and complacent. Do you think more Americans
14:27
Speaker 1: should spend more time in their own country? Well, there's
14:31
Speaker 1: a distinction between what's good for you individually and what's
14:34
Speaker 1: good for broader society. Insofar as individuals in America would
14:38
Speaker 1: take more risk, change more things in their lives, travel
14:42
Speaker 1: more abroad, I'm quite convinced this will be good for
14:45
Speaker 1: the country as a whole. But all of that costs money,
14:48
Speaker 1: it involves chance, so it's not in every case good
14:51
Speaker 1: for those particular individuals. And it's exactly that collective action
14:55
Speaker 1: dilemma that has gotten us to where we are. You
14:57
Speaker 1: talk in your book about the federal budget. You almost
15:00
Speaker 1: seem to be describing the budget the structure of it,
15:05
Speaker 1: as a micro causum of what ails us. Absolutely, the
15:09
Speaker 1: federal government budget is becoming more and more of an
15:12
Speaker 1: insurance company through Social Security, Medicare, and Medicaid programs, which
15:17
Speaker 1: do serve some very valuable functions, But when they take
15:20
Speaker 1: up so much of your budget, when so much of
15:23
Speaker 1: the money we have is locked in, not available for innovation,
15:27
Speaker 1: not available to spend on the future, not there for
15:29
Speaker 1: discretionary spending. I feel we're actually making our future riskier,
15:34
Speaker 1: and that's because there's this political desire for safety, which
15:37
Speaker 1: ultimately comes from constituents. Correct. But when the next emergency comes,
15:42
Speaker 1: be it a foreign conflict, North Korea with nuclear weapons,
15:45
Speaker 1: a pandemic, whatever it may be, we do not now
15:48
Speaker 1: have that fiscal freedom and institutional and also ideological flexibility
15:53
Speaker 1: to respond the way saying earlier America put a man
15:56
Speaker 1: on the moon in seven years time. So back to
15:59
Speaker 1: Ten's original point, are we still America or is this
16:03
Speaker 1: country becoming France? Is it already France? We're still America.
16:08
Speaker 1: France itself is a quirky country, possibly on the verge
16:11
Speaker 1: of voting for its own strange candidate and disrupting its
16:14
Speaker 1: own complacency for the worst. I would say, I think
16:18
Speaker 1: we're trying to be more like Denmark, most of all
16:21
Speaker 1: in our cities. But a country of three and twenty
16:23
Speaker 1: million people with so much ethnic and intellectual diversity can't
16:27
Speaker 1: do a good job of being Denmark. We need a
16:29
Speaker 1: new story about the United States. I've only been to
16:32
Speaker 1: Denmark once, but Copenhagen strikes me as a very livable city.
16:36
Speaker 1: It's an extremely livable city. Keep in mind that's not
16:39
Speaker 1: the country as a whole. But Denmark works as a
16:42
Speaker 1: small country because it's tightly knit, and ultimately it is
16:46
Speaker 1: borrowing a lot of protection and also innovation from larger countries,
16:50
Speaker 1: which is fine. I love Denmark. The United States cannot
16:53
Speaker 1: do the same thing. Did you ever watch the Danish
16:56
Speaker 1: political drama Bogan is perhaps my favorite TV show. I've
17:00
Speaker 1: seen every episode. Okay, so she grapples with this. Burger
17:05
Speaker 1: Nyborg is the fictional prime minister in Borgan. Borgan is
17:08
Speaker 1: the parliament compound in Copenhagen. It's kind of a Danish
17:12
Speaker 1: West win Now. The hero of the show, Burger Nyborg
17:15
Speaker 1: grapples with how to square the reality of governing with
17:20
Speaker 1: her instinctual social democratic tendencies. Now, looking at how the
17:27
Speaker 1: show worked out and how you know, the creators of
17:32
Speaker 1: that show sort of leave it hanging a little bit
17:34
Speaker 1: at the end, any lessons for us. She's a wise
17:38
Speaker 1: leader in the show. I think by the end she
17:40
Speaker 1: realizes that although she's a social democrat, Denmark has to
17:44
Speaker 1: be about more than just stability. She realizes how conservative
17:49
Speaker 1: a lot of her constituents are and that she has
17:51
Speaker 1: to be PM for the whole country and not just
17:54
Speaker 1: for her party. But does she succeed in turning around
17:58
Speaker 1: a malaise that Denmark has its well, its productivity numbers
18:01
Speaker 1: as does this country. She doesn't because it's so deeply
18:05
Speaker 1: dug into all of our societies. There is no single
18:08
Speaker 1: magic bullets. In the end, she leaves to be Foreign Minister,
18:11
Speaker 1: that's correct, looking abroad to do something where she feels
18:14
Speaker 1: something can be done. Where can I watch this show
18:17
Speaker 1: Netflix or order the discs on Amazon? It's one of
18:20
Speaker 1: the best TV shows ever made? Bargain? How many hours
18:23
Speaker 1: is it? Three seasons? All right, Well, I'll get on
18:26
Speaker 1: that for for next time when we have our discussion
18:29
Speaker 1: of Danish politics and Danish television. Well, Tyler, it's been great. Um,
18:34
Speaker 1: I think it's been great. Kind of depressing, but there
18:37
Speaker 1: is still this hope at the end that you know,
18:39
Speaker 1: America has this capacity to reinvent itself. I would just
18:43
Speaker 1: say the dedication of the book is quote to the
18:46
Speaker 1: rebel in each of us. So complacency does not reign
18:50
Speaker 1: in every regard the dynamism is still there. We simply
18:54
Speaker 1: need to rediscover it. Tyler, thank you so much for
18:57
Speaker 1: joining us. Thank you, thank you. Benchmark will be back
19:00
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