Economist Noah Smith was so focused on libertarianism's theoretical flaws, he overlooked its political importance. Trump's tariff policy opened his eyes and made him re-assess the virtues of both libertarianism and Econ 101. Listen as he and EconTalk's Russ Roberts explore the way political competition has shaped economic policy in surprising ways in recent years.
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This week's guest:
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Additional ideas and people mentioned in this podcast episode:
The Economics of Tariffs and Trade (with Doug Irwin). EconTalk. EconTalk #1000 (with Russ Roberts). EconTalk.A few more readings and background resources:
Bruce Yandle on Bootleggers and Baptists. EconTalk.A few more EconTalk podcast episodes:
Chuck Klosterman on But What If We're Wrong. EconTalk. David McRaney on How Minds Change. EconTalk. Matt Ridley on the Evolution of Everything. Discussion of the "Great Man" theory and Lord Acton's observation that 'great men are usually bad men.' EconTalk. Lessons from Lincoln, Then and Now (with Diana Schaub). EconTalk. David Kennedy on the Great Depression and the New Deal. EconTalk. Eric Rauchway on the Great Depresson and the New Deal. EconTalk. Bruce Bueno de Mesquita on Reagan, Yeltsin, and the Strategy of Political Campaigning. EconTalk.More related EconTalk podcast episodes, by Category:
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| 0:37 | Intro. [Recording date: May 20, 2025.] Russ Roberts: Today is May 20th, 2025, and my guest is economist Noah Smith. Noah's Substack is Noahpinion, N-O-A-H-P-I-N-I-O-N, Noahpinion. I recommended it; it's fascinating. This is Noah's fifth appearance on EconTalk. He was last here in August of 2024, talking about the challenge of escaping poverty. Our topic for today is a recent essay that he wrote, "I owe the libertarians an apology," which among other things is about political forces having unexpected consequences. It's also a lesson in humility, which I deeply respect. And, I hope we're going to grapple along the way with the power of simple economics, even when it threatens to become simplistic. Noah, welcome back to EconTalk. Noah Smith: Thanks for having me back. |
| 1:27 | Russ Roberts: We've known each other for quite a while, mostly online, but occasionally we've met a couple of times in-person, and I've always been impressed that you are willing to both criticize, quote, "your team"--the people who you generally are going to agree with--but also show a rare ability to reflect on your own views. And this essay was really quite unusual in that sense, and I have tremendous respect for it. I hope we're not going to beat you up, you and me combining to beat yourself up, with your mistakes. But, I think the intellectual journey and the insights that you have are quite interesting, regardless of where you are on the political spectrum. I want to start with how you start your essay, which is: you've been in the past quite critical of libertarian thought. Why? Give us the critique as you saw it when you were writing in the past with what's wrong with it intellectually. Noah Smith: Right. Well, so basically I had a few critiques. I think one of them is that I read a lot of history and I have this keen sense that there's bad actors in the world and that you need to defend yourself against them. And that if you--liberty today and liberty forever are different. I deeply value freedom as a good in and of itself. But then, the question is, how do I keep my freedom not just today, but tomorrow? And, if a conqueror, such as Tamerlane, is the example I use, is coming over the hill to conquer me, then I've got to be able to defend myself. Of course, I think pretty much all but the wackiest, libertarian philosophers of history--but all the mainline ones like Robert Nozick and whoever, obviously Milton Friedman, support national defense. And, yet, if there are public goods--public production goods--that make a nation richer and better able to defend itself, then I think that you have to countenance those interferences in the economy, too, or at least some amount of them, in order to be able to defend yourself. In other words, if industrial policy is necessary to have the peacetime manufacturing capacity to be able to surge production during wartime, like we did in World War II. You know, World War II, of course we had defense contractors building stuff, but we didn't have normal defense contractors. We basically took everybody from every job--like Ford just started manufacturing bombers and tanks. And then, we just--all these civilian companies surged production into defense manufacturing, because it was this giant effort to win this war against unthinkably evil people who would have destroyed us had we not been able to do that. I think that that was, if you need to do industrial policy to keep a manufacturing base in order to be able to do that, then you do that. Because, there's always totalitarians. I think in the 1990s and the early 2000s we were lulled into this moment of thinking that that was over. End of history--where the totalitarians were gone. Yay, Nazis and communists left, and everybody's just a nice, happy, peaceful capitalist now. We all have McDonald's, and McDonald's makes us never fight. And, it was wrong. And even China--we opened up trade with China, and China's going to become nice, happy, democratic, liberal, blah, blah, blah--but it didn't work. That's not to say we shouldn't have opened up trade with China, but that's another question entirely. But I'm saying, like, certainly, they are powerful, and not the nicest of guys. And, Russia is less powerful, but even meaner than them. There's Iran, there's all these other guys. So, that was my first critique. And I think the second critique was that I felt like state power was not the only kind of power in society. If the state keeps its grubby hands off everybody, then you have local bullies who can still oppress people. Before the Civil Rights Act you had restaurants, whole neighborhoods that would just say, 'No Black people allowed.' That's bullying, you know. That's power. Or churches or religious organizations that would cover up sexual assaults--you had that. That's power, even if they're not--there is power there. And, I think that libertarianism always under-emphasized the degree to which you need the big bully of the state to kind of countermand the little bullies; to which you need dad to say, 'Stop beating up your sister,' without being an abusive parent himself. |
| 6:12 | Russ Roberts: I want to talk about these first two and then you can add--I know you have a little more to say, but-- Noah Smith: Those are the main ones. I think I'm done. Russ Roberts: Okay. We'll go in reverse order, then. Let's start with the first--the one you just mentioned. I accept the view that there's coercion. I should just say, I am roughly a classical liberal. I've had my own changes in my own views over the last 20 years, but I'd say I'm more of a classical liberal than you are. I think that's a safe thing to say. And, while I accept--and I think many serious economists who would describe themselves as libertarian or classical liberals would concede there's power outside the state. They would then emphasize the ability of people to walk away--the power to exit. You don't have to use certain products, for example, even though they might have some market power. And I think we have to concede--our side has to concede--that in the short run there can be a lot of something unpleasant. It might not be coercion the way the state can do it, which--because it can kill you, execute you, throw you in jail, take away your house, and so on. But, there is market. There's market power and there's social power, the social forces that you're talking about as well. The church, for example, and its tolerance of the certain scandals hurt itself. It did pay a price; but it didn't disappear at all. Noah Smith: Right. Russ Roberts: Similarly, the people who said Google is now going to rule the world, because: we have to have search, and they've managed to embed search and our need for search into everything; and we're the customer. And that was somewhat worrisome. We've done a ton of episodes on that. All of a sudden AI [artificial intelligence] comes along and there's competition in that space that was unimagined a few years ago, and it's remarkably competitive. When the AI started, ChatGPT [Generative Pre-trained Transformer] started, I thought, 'Oh my gosh, the amount'--and people said this, and I don't know how it got solved, maybe you know, but--'the amount of capital it's going to take to create an AI going through all the data in the world, it's going to mean that only a handful of places will have it, and they can exploit us.' All of a sudden, there's--I have five different ones on my computer. It's kind of amazing. It's--you know, they're losing money. It will get more expensive, probably. It may get cheaper because of technology improving it, but it's--all of a sudden Google's market powers suddenly much diminished. And then you can debate whether those of us who are skeptical of government intervention into market power, whether we're right, because, 'See, competition does come along.' Or you could say, 'Well, it takes a long time and it's pretty uneven, and along the way it's pretty unpleasant.' So, that's the only thing--that's my footnote to what you said. And, on the first point about--I want to say one thing about industrial policy and see what you think. Kind of an interesting thing that the United States in the post-World War II era is the bulwark against tyranny around the world. Of course, it's not the only thing it cares about. It's not perfectly kind. It's not run by benevolent dictators who are trying to save the world for freedom. But, there are good things that come from United States being strong. It's not just about defending itself, your point, and-- Noah Smith: Global public goods, if you will. Russ Roberts: Say that again? Noah Smith: Global public goods-- Russ Roberts: Correct. And, I will have some negative things to say, I'm sure, about economic policy in the Trump Administration. But it's striking to me that one of his themes is how the world has been a free rider on certain aspects of American exceptionalism--I would say pharmaceutical innovation, national defense. He's certainly been outspoken in his desire for nations outside the United States to pay, quote, "their fair share." And, it's an interesting question of whether the United States needs to maintain industrial capacity for the kind of war that you're worrying about; and other nations--but the other nations don't have to because they could just rely, they can free ride on the United States. That's a fascinating aspect of this. But, the other point I would just make is-- Noah Smith: Oh, I never said that. Russ Roberts: I know you didn't. I'm adding it. Noah Smith: I wasn't saying--in fact, when I talked about the need to defend yourself, I did not even mention the United States. Russ Roberts: Well, I was having them in mind and I was thinking-- Noah Smith: I was thinking maybe Poland. Russ Roberts: Say again? Noah Smith: Certainly Poland. Russ Roberts: What about Poland? Noah Smith: Poland is on the front lines against Russia-- Russ Roberts: True-- Noah Smith: They know that if Ukraine falls, they're next on the menu. They certainly are amping up GDP [Gross Domestic Product], defense spending, to 5% of GDP, 6%. It's like they're really going all in on defending themselves. And, I think that that's--in a perfect world where you wouldn't have to do that; but they do. Russ Roberts: Well, a perfect world where people weren't bad actors. Noah Smith: Right, yeah. Russ Roberts: But, my point is simply that Poland could buy defense capacity from those who can produce it, who are friendly--and there usually are such nations--they could import it. But, it's an interesting question of how many nations in the world need to be had their own industrial capacity versus a manufacturing ability versus relying on, say, the Big Brother of the United States. A big issue for Israel right now, where I'm sitting: Israel has historically relied, you might say, on the United States. It's not quite true. There was a long period of time where Israel relied on France. Only got weapons and airplanes from France. They got some weapons of [?] 1948 from Czechoslovakia, from the Soviet Union. But now the United States is its main supplier of military technology. And, given the pressure the United States has put on Israel in the Gaza War, many people here in--Netanyahu recently said, explicitly--'United States: Israel needs to wean itself from its dependence on U.S. military technology.' And that's costly, to develop your own when you could buy it. But, if you're worried you won't be able to buy it or it comes with strings, it's understandable that you might-- Noah Smith: Israel has done a very large amount of interference in its economy for the purpose of maintaining and expanding a defense industrial base in order to be able to defend itself. Russ Roberts: Yeah, but it's an interesting--the challenge with that argument is that it has a lot of applications that are, I would call bootlegger-and-Baptist applications. That have a strong self-interested component. Example here that's fascinating is that not many people live up in the northern part of Israel by the Lebanese border. So, there's a policy here in Israel of keeping out eggs--eggs, eggs, chickens, chicken eggs--from foreign countries. The argument is: that way, the chicken farmers who tend to be in this northern region will be a bulwark against an invasion from Lebanon. And so we have securing of the northern border. Many Israelis have told that to me: 'That's a good policy, keeping out foreign eggs, because it makes sure that there's population up in the north where people otherwise wouldn't be so willing to live.' Well, making eggs expensive for poor people in Israel doesn't strike me as the best way to get people to live up by the northern border. I don't think-- Noah Smith: That's really a very bootlegged-- Russ Roberts: Yeah. Anyway. So, do you want to add anything else that's wrong with libertarianism? Noah Smith: No, no. I think those are my initial critiques. I mean, I think that there's the standard welfarist critique of, like, if you have a perfectly free economy where poor people just starve, then maybe you want to give them--tax the rich--to give them some food. You know, or other stuff. There's the welfarist argument, like, poor people need that dollar more than rich people do. But of course, taking it from rich people requires distorting your economy. So, it has negative effects. And so, it opens leaky bucket is the idea right there, and you've got to balance the corrosive effect of economic distortions with the utilitarian welfare effect of giving stuff to poor people. And I think you don't see an advanced economy that doesn't give a lot of stuff to poor people, really. I think the closest was Hong Kong, but it wasn't really independent. And they would have if they could have. But, you know, Singapore certainly rates highest on economic freedom. Singapore will give you a house, man--you get a house, you get one house, a government house. And they're great. They're great government houses, and the government officially owns all the land, although it's more like condo kind of situation. But, yeah, so then Singapore will give you a house; and then that house becomes your pension when you resell it. So, yeah: like, every society that gets to choose, chooses this. They choose welfarism. And they choose to take some from the rich and give some to the poor. Now, they make many different choices. If you're Denmark, you do a hell of a lot of redistribution. And, if you're Singapore, you do less. If you're South Korea, you do less. And so, societies make different choices, and that's fine. But I think that, you know, the sort of relentless drive to eliminate the welfare state that you saw from some people back in the day, I think was misguided: that, I think that by now most people have agreed that a welfare state is something we're always going to have to some degree. |
| 16:18 | Russ Roberts: So, I've written quite a bit on the potential of private charity to solve that problem. I understand it's not going to be nearly as large. I think what's interesting about the discussion of the welfare state is the nature of it. And, why it's so complex, say, in the United States, as opposed to being replaced by a simple negative income tax: Just give people money. That's a whole--maybe down the road you and I could have a conversation focusing on that. I think it'd be interesting. But you're right: Most cultures and societies use the power of government to put a floor under people's wellbeing. They differ in how high the floor is. And I'm really only making the side-point that they also make some other strange choices: not just the size of the welfare state, but how it's structured. And, some of that is presumably inertia and other inexplicable things. But, some may be political forces that are different across countries. Noah Smith: Sometimes--you know, a lot of times the people will demand some kind of, like, in-kind provision from the government, like with healthcare. They'll really want that. Like, and then, not every country in the world has government-provided health insurance, but I would say that of rich countries more than half do. And so, people, kind of, they really want that. And then, you have Kenneth Arrow who is just sitting there. He's a mathematical economist and whatever. He can talk to you about Pareto efficiency. And he just writes this paper about healthcare, and he is like, 'Look, people want government to do this, man. They want it.' Russ Roberts: Well, that's, again, that's a whole other Pandora's box I'm not going to completely open-- Noah Smith: Smartest economist in the world you see shrugs. He's like, look: Norms, people would expect this. And then, like, at some point, like, I can't say that countries where the government does health insurance is terrible. All it can do--you know, because not. All I can do is say, 'Look, you know, I've seen how Japan and Korea do this, and I've seen how Canada does this, and the Japanese way is better than the Canadian way.' Russ Roberts: Yeah and I would say having friends in England and living here in Israel--both of which have large public intervention in healthcare, as does the United States--I would just add very important, people somehow seem to think it's a private market for healthcare. Noah Smith: We have the worst of both worlds. Russ Roberts: Yeah. We'll put that to the side. But, the point I want to make is that I have, having lived here for four years and having good friends who've lived in England for longer, I would much rather be at the mercy of the Israeli healthcare system. So, it's related to my point about welfare. The general economist simplified: The government should have a role in this. The devil is in the details. And, there are ways of doing it that are very different, even though they're both--government is very much involved in both Israel and in the United Kingdom. |
| 19:16 | Russ Roberts: Let's--what changed for you? This article is a--you say, 'I owe Libertarians an apology.' What has happened in the world that has made you reconsider your critique? And, of course, I don't think you've reconsidered the critique, but you missed something. What is it? Noah Smith: Right. The critiques were fine as far as they went. But then, I think that in choosing to just focus on bashing libertarianism for so long, I ignored the good that libertarianism was doing under the surface in our society that I didn't see. I was thinking, honestly, too much on the margin. And I think in economics we teach marginal thinking as the way to analyze problems. And, I think it's a great descriptive analysis of how people think. And, it is a great descriptive analysis of how I thought when I--because I was thinking, 'From where our society is now, should we get a little more libertarianism or a little less?' And, I was thinking, 'Here's some things I'd like to do with a little less.' What I didn't think about was the inframarginal part, the submerged bottom of the iceberg. The inframarginal effect--so, what happens when you have a large change in society. And, I didn't really think about large change. I thought America is so good, why would you want to bring in some crazy, orange-skinned, like, guy who just does mercurial policies that destroy the economy for no reason? I didn't think people would want that. And, I was wrong. Russ Roberts: Yeah. I started our conversation by saying, we're going to try to avoid ad hominem and stick with policy. But okay, I'll let you get away with that one. Noah Smith: Oh, no, Trump's policies are not bad because his skin is orange. Russ Roberts: Yeah. That's all. Noah Smith: If an orange-skinned man does great policies, I will sing the praise of spray tans. So, it was neither here nor there. I was merely identifying him in a humorous way. But, no, I didn't think people would go for that. I didn't think we'd see some of the social upheavals and some of the policy upheavals that we've seen in the last decade in America. I did not expect it. I had no frame of reference to expect it, because I was young. And I didn't see the 1970s. And I didn't see Nixon. And, to me, I was like, 'Ah, Nixon, big deal. He did some crimes. He resigned because of crime, whatever.' I didn't realize how close he came to going all in on what his advisors were advising him to do, which is basically declare himself a dictator. You know, like--Roger Stone was telling him to do that, right? The same guy who advised Trump. Russ Roberts: I don't think it was anything close. They may have advised that, I don't know what that was, or he may have advised-- Noah Smith: They advised him to do it, and he refused. He was basically, like, 'I'm not a dictator.' Russ Roberts: And, I'm not particularly interested in how authoritarian Trump is. I am interested in--as we've talked a little bit; well, we might come back to it--but I think the question of the destruction of norms that constrain people in power in America until, I don't know, it's hard to say when it started. For me, it's been mostly a slow erosion, and with Trump it's become a much faster erosion. There's a willingness of Trump--but there was a willingness in his predecessors as well--to skip this nasty, annoying thing called democracy or representative government or republican--republic, the republic that we're in. You need to get things done. And, you heard this on about the Left and the Right, right? My favorite example is Thomas Friedman, the, you know, the Times columnist, said, 'Wouldn't it be great if we could just be China for a day?' Meaning: we wouldn't have to do this checks and balances, and get a majority in both the House or the Senate, and override vetoes, etc., etc. And, I thought that was a really horrible idea. Noah Smith: Did you see this under Obama? Russ Roberts: Sure. Obama used executive orders, so did Biden, so did Bush. I mean, it's a very tempting to-- Noah Smith: But they used less than presidents in the past. Russ Roberts: Say again? Noah Smith: They used fewer than presidents in the past. Russ Roberts: Oh, that may be-- Noah Smith: Executive orders. Russ Roberts: I'm not here to evaluate--I'm not saying this one was better than that one. I'm not saying this was a steady-- Noah Smith: Oh, I'm just saying, I don't feel that I lived most of my life under creeping authoritarianism. I thought that the biggest-- Russ Roberts: I'm talking about two different things. We're talking about two different things-- Noah Smith: the post-9/11 security state was concerning. Russ Roberts: Yeah, I agree. But this is--we're talking about two different things here. I'm going to make a distinction between creeping authoritarianism--which ignores some of the constitutional protections that you and I value--versus cutting political corners because it's just a lot easier. They're related, I don't deny the-- Noah Smith: Give us an example of the latter. Russ Roberts: Say again? Noah Smith: So, that I know what you mean: What's an example of the latter--of cutting political corners? Russ Roberts: Tariffs. Let's just have an executive order. Now, as we talked about recently with Doug Irwin, I think we got the history of this on that episode-- Noah Smith: Well, Biden's student debt relief didn't go through Congress at all. He just decided it. Russ Roberts: Yeah. Noah Smith: Okay. Yeah. Russ Roberts: And, those didn't impress me. I didn't feel like, 'Oh my gosh, the state's going to run--I'm at risk of losing my civil rights.' It just was: 'It's annoying. Let's just get it done.' To go through the normal channels. Noah Smith: Yuh. Yeah. |
| 25:04 | Russ Roberts: Okay. So, what's interesting to me about what you just said is: I continue to argue--maybe I'll change my mind at some point--but I continue to argue that Trump is more of an effect than a cause. Of course, he's also a cause. But, when you said, 'I never could have imagined people wanting this'--that didn't happen in a vacuum. Right? A lot of what we're going to be talking about over the next half hour is how political forces--as economists, the way you and I look at political forces is kind of related. Right? Things change; that causes other changes. And then, the famous question of--I keep forgetting whether it's Thomas Sowell or George Singer[?]--'And then, what?' So, it's one thing to say, 'I want this.' 'Well, okay? fine. That might be good. And then, what?' And so, what's happened in the United States clearly is a remarkable change in the competitive political landscape where Republicans sound like the Democrats of five years ago--eight years ago, 10 years ago. And, the Democrats sound like the Republicans. I mean, it's just inexplicable. Not inexplicable, but a crazy set of political forces. People trying to exploit political opportunity the way in markets a company might look for a profit opportunity. We're talking about political actors exploiting profit opportunities in the political marketplace. That's the way I look at it. Noah Smith: Yeah. I mean, I think that's right. Yeah. So what I didn't understand, I think, was the political economy of libertarianism. I went to--I lived in Japan, you know. And I read about other countries, but I lived in Japan, and I saw the Right--the Political Right in Japan--was something much different than what the Political Right was in America. In America the Political Right, when I was young for my entire youth up until 2015, 1916, was broadly libertarian in its outlook. It was Reaganesque. You know? Reagan is the first President that I ever can remember. And, Reaganism sort of ruled the Right for all those years. But, that was different. In Japan, the Right was corporatist. It was protectionist, it was corporatist, it was for heavy interference in the economy. And then, what it focused on in cultural issues was also different. But, I guess the point is, I didn't realize how special it was to have a Conservative Movement that focused on economic liberty as one of its core pillars. Then, how unusual and how weird that was, and how, you know, like, in France or in, you know, how in Germany or in Russia or in India, that wasn't what it meant to be on the Right, on the Political Right. And I didn't understand how unique and special that was for America and how important that was. Russ Roberts: It's a fantastic insight. And, it's obviously true here in Israel. The Right is welfarist. The Right wants to support the ultra-Orthodox on welfare. It's the Progressives who want free markets and high-tech flourishing and who like capitalism. They also are redistributive to some extent, but not necessarily the ultra-Orthodox who are subsidized often to learn in Yeshivas rather than in the marketplace. But, I think that's a tremendous insight. |
| 28:45 | Russ Roberts: I just want to ask one piece of that, probe one piece of that, which I used to be sort of one of my pet peeves. You said it was Reaganesque. I want to put the emphasis on the 'esque'. But it's--Reagan, himself, was Reaganesque. He would talk about free markets, and he was broadly sympathetic to market forces. But, he would also put quotas on Japanese cars. And, you could say, 'Well, that was just one small thing.' And, in the overall picture, it was relatively small. It was a smallish intervention against free trade. But, I do think the Republican Party, if we consider them the representatives of conservatism--which you have to, over the last 40 years, going back to Reagan, 50 years even--their devotion to markets was really rhetorical rather than in practice. And, one of the things that frustrates me, and I've written a long essay on it, and you've written recently on it as well, is that the idea that we lived in some kind of free-market paradise--from a libertarian perspective--and then all of a sudden it got ruined, is a lie. It's not what America was like. Noah Smith: It was a bit of hype. Russ Roberts: Yeah, it was a bit of hype. So, I just want to put that in there. But, what I accept is: That rhetoric was a very important part of the conservative movement. And, within the conservative movement, even though the main conservative actors--like Reagan, Bush, the successful ones, and even the failed ones like Romney, McCain less so--they would at least pay lip service to free-market rhetoric. And, the reason they did, by the way, is because they sort of believed in it, but not too much. The reason was, is there were viable, important, influential members of their coalition who felt very strongly about it--Jack Kemp being an example in the history of things, and many, many others. So, the little digression I want to make now is: What happened to that? Why do you think that wing of the Republican Party suddenly became irrelevant? Which it is. Noah Smith: I think that the short answer is immigration. Russ Roberts: Yes. Well said. Noah Smith: The short answer is that if you look at Reagan, he was the biggest supporter of immigration. And, it was one of his central issues, and it was one thing that made him palatable to liberals. And, it was one thing we could all agree on for a while. You know, when I was a kid--you know, like, in the 1990s people were concerned about illegal immigration. But, in the 1980s no one cared. Like, no one cared about immigration at all. And then, in the 1990s, like, some people started to care; and you saw Pat Buchanan, you saw efforts to restrict welfare, which Clinton did actually in 1996. The Personal Responsibility and Work, blah, blah, blah, Act--whatever that was--welfare form, that also kicked all immigrants--not just illegal immigrants--off most forms of Federal welfare. Not all actually, but most. And so you saw that. And that went a lot farther than Prop 87 had in California. Russ Roberts: Explain what Prop 87 is. Noah Smith: Oh, it was this thing that Pete Wilson tried to do, the Republican Governor of California. He supported this, like, ballot initiative to, like, strip illegal immigrants of, like, all state welfare benefits. And it failed. And it got Latinos really mad at the Republican Party. And so, it led to the death of the Republican Party in California, because Latinos started voting really strongly Democrat after that. But then, Clinton comes along and does, like, something 10 times more severe at the national level, because it includes legal immigrants, too. And then it, like--Federal welfare is more important, I guess, in many ways. And then, Democrats don't even get punished at all. And so--because it's part of this larger thing. And, framed as this personal responsibility thing instead of this anti-Latino backlash, right? Anyway, so then we go back to not caring about immigration for a while. But, we're on the clock at that point. Anger is building up among the anti-immigrant people. And they haven't been a majority of America. I think even now, a majority of America is pro-immigration. Even though a majority of America wants to stop the sort of disorderly, chaotic, asylum flood: they don't like that Biden allowed that. They want democratic control over who gets in. They want to have a border. They want to have a nation that says, 'You may get in; you may not.' But then, in terms of thinking that kicking people out is purifying our country and we need to defend Western civilization because these people are polluting Western civilization, that's a minority of Americans. That's not a big--and they know it. They know it's a minority. But yet, it was perhaps at least a temporary majority of the Republican Party and the Conservative Movement; eventually, that's what libertarians--libertarians were, too, were not sufficiently focused on the tribalism that a lot of the grassroots people on the Right demanded-- Russ Roberts: That's a great insight. Noah Smith: I think that's what ultimately factored in. |
| 34:07 | Russ Roberts: That's a great insight. I talked--it hasn't come out yet, but I recently taped a monologue for EconTalk, that's out now when this is being aired--a conversation where I talked about how in maybe 2015 or so as Trump was coming on the rise, as Trump's on the rise, economic policy issues just suddenly became less important. Fiscal policy--who cares? Monetary policy--nobody cares. We went from a world where Alan Greenspan was the most powerful American and the most talked-about American to where I think most people don't know who the Chair of the--I would guess a much smaller proportion of the American people know who the current Chair of the Federal Reserve is. But, that's just an example of how we went from, 'It's the economy, stupid,' which was James Carville's portrayal of the 1990s political fight, to, 'What does it mean to be an American?' And, all of a sudden the economic policy issues that were the bread and butter of, I would say 30 years--1970s, 1980s, and 1990s--suddenly became, not just less important: irrelevant. No one wants to hear about Okun's leaky bucket. And, you can google that and we'll put a link-up to it. No one wants to care about, 'Oh, well, welfare policies can increase these distortions.' They only want to talk about, overwhelmingly: What does it mean to be an American? What's our narrative? It's a backlash against immigration. It's a backlash in the Republican Party against the DEI [Diversity, Equity, and Inclusion] and Woke aspects of the cultural revolution of the early part of the 21st century. And those are the only things that get the oxygen. Everything else is irrelevant. So, the advocates of market-oriented economic policy, they don't get any airtime. Not because it's a conspiracy. No one's interested in it. And that change is, I think, partly what's explaining what you're writing about. Noah Smith: Yup, I think that's exactly right. Yes. And I think that issues of identity were important to people in ways that libertarian philosophy has essentially no way to deal with. Russ Roberts: Yeah. Nothing to say about it. Noah Smith: Nothing to say. Like, Milton Friedman just never talked about it. He never talks about identity. Russ Roberts: I'd say less than nothing-- Noah Smith: Not that I've seen-- Russ Roberts: Less than nothing, because I have many, many friends in what we will call the libertarian movement or even the classical liberal movement. They don't really like national borders. They don't really like--it's not just that they're free traders, they also believe in the free flow of human beings. Bryan Caplan is the most outspoken on this, who says, 'This is the way to make the world better. Let's get rid of borders. Borders are artificial.' And yet, that totally misread, in my view--and Bryan will be back on the program sometime in the future; he can defend himself--but, that totally misread the way people feel about where they live. And, we see it's not just in the United States: it's in England, it's in Brexit, it's in all kinds of countries now that have moved to the right--whatever that means. And, what I would emphasize is, other than Malay and Argentina, moving to the right has nothing to do with free-market economic policies. It has to do with closing borders, preserving what is perceived to be, whether it's right or wrong, a national identity. And, having a narrative about your country and where you live that makes you feel like you belong. Noah Smith: Right. I think that's right. Yeah. And so, of course, I don't think that the Right has a good approach to that. But, I also don't think that the Left necessarily has a good approach to that, either. And--yeah. I have a question for you. |
| 38:16 | Russ Roberts: Yeah? Noah Smith: I know you're interviewing me, but I have a question for you, which is-- Russ Roberts: It's okay. I love it when my guests turn the tables. Noah Smith: Of all leaders, of all leaders in America--in American history--that you know of, who had the best approach to American identity? Russ Roberts: You know, this is not my field, so I probably should not say anything. But I'll take a stab at it, since you were so kind to ask me a question. I think for most of American history it wasn't the issue that it is now. Because, among the people who mattered politically--and that was mostly White people and White men--the narrative was pretty--there was a consensus about the narrative. And, what happened is that as non-white people got more political power in the United States--rightfully so--and non-men more political power, that narrative got a little harder to believe. There was a certain idealism about the United States. Somewhat earned. It's an exceptionally great country relative to the alternatives. But, it's not perfect. It's deeply flawed. The way it treated Native Americans is horrifying. The way it treated Black people, horrifying. Could debate about Jews, gays--not a great story. It's not as bad as the others, but it's not great. So, America had an ideal that it struggled to live up to, but you could argue increasingly got closer to that ideal over time. And so, the narrative got richer. It allowed other people to believe in it--in principle, right? In theory. That's evidently not so easy. And, I think the thing that fell apart in the 21st century for America--and we face similar issues here in Israel; they're just different, they have different names--but the question is: When you have a diverse country--and America is extremely diverse, and it's had a huge amount of immigration; it has lots of people of different races, it has lots of different religions, unlike say, many, many European countries that until recently were just very much more homogeneous--once you have that diversity, what's your narrative? Who are we? What does it mean to belong, to be an American? And, we've had different answers. Americans had different answers to that question. And, I don't think there is one now that is remotely satisfying to the bulk of the people. And, that's the problem for me. And, it's also, again, why free-market, libertarian stuff is out of fashion. It was never in big fashion, but it's off the table. And, it's because, as you point out, they don't have much to say about it. Noah Smith: Right. I think that's right. So, where do we go from here? Russ Roberts: What's your answer to that? About narrative? Which leader, which--? Noah Smith: Franklin Delano Roosevelt. Which, you know, I mean, his answer in terms of his rhetoric and the idea of American identity that he urged on people did not always fit the actions of his Administration, such as when they in interned a bunch of Japanese people. You know? So, I can't say that his actual actions were ideal. Certainly that was really bad. Russ Roberts: And he was the beneficiary of coming after a Depression and a World War where Western civilization was actually at stake. And, that made his ability to pull people together--it came easier. Not everybody liked him. Not everybody agreed with him. But he had a huge consensus; he won four terms in a row. And, similarly, Reagan, I think, exploited the economic failures of the Carter years and then the Cold War to do a similar thing. Even though many people hated his guts, a non-trivial amount. Especially after he was gone, people were able to say--and he was dead--'You know, he kind of, America was more,--' fill-in-the-blank. And, maybe you need external enemies and crisis to do that kind of more consensus narrative. Noah Smith: Maybe so. But, you need leadership, too, because I think that we have had four singular figures in America who had the chance--singular leaders in America who had a chance to define what America would be like for the next era. For decades, let's say--not centuries but decades, each. Who got a choice--who had a major crisis, and then also lots of popularity at the same time. George Washington, Abraham Lincoln, Franklin Delano Roosevelt [FDR], and Ronald Reagan. And, those four people, they were able to choose what America would be. And, they didn't always--there were lots of things to criticize about all of their choices. I mean, you know, like, George Washington chose an America, basically left the South alone to do slavery. Abraham Lincoln chose an America that focused so much on putting the Civil War behind it that it ignored a whole lot of other problems that started building up. You know, FDR, you could argue was too statused. And then, Reagan ignored these problems of identity. And yet, I think that they all overall chose well. I do not--I mean, yes, I know that the America that Reagan chose wasn't perfect. And, economically speaking, too, I think there were mistakes that were made. Although, I think that Clinton attempting to steal Reagan's thunder and triangulate made more of those mistakes than Reagan himself. I mean, it was Clinton who hollowed out the U.S. defense industrial base, not Reagan. Reagan would never. Anyway, so that was that; but I think that Reagan made the American Right into a broadly liberal Right. And, not liberal in the American sense of Left liberal-- Russ Roberts: Freedom-oriented. Noah Smith: Yes-- Russ Roberts: The original meaning of the word-- Noah Smith: A classical liberal Right. And, that was a very special, unusual thing that arguably only Britain had, other than us. And, even they didn't do it as well as we did. They were a little hokier. But then, maybe, like, Milei, Argentina with Milei has this. But it's rare. It's very rare to have this kind of Right Wing. And, we did under Reagan. People do not remember, but they should read Rick Perlstein books. There were KKK [Ku Klux Klan] people who cheered for Reagan. They actually tricked Reagan into doing some speech on some famous southern KKK important day in some town. Anyway--and then KKK, people would show up to his rally. People would show up to Reagan rallies with swastikas. People are like, 'Oh my God, there's swastikas at this Unite the Right rally for Trump.' People showed up to Reagan rallies with big swastika flags, and they were, like, 'Okay, get the cameras away from that.' And, Reagan himself was horrified and was basically like, 'What?' He was not even from the South. And, when he would go to the South, there would be these overt classic racists who would come out and support him. And, he would be like, 'No, I don't want those guys.' And then, his advisor would be, like, 'We have to not say anything, because it's part of our coalition.' And, he would just be, like, 'Okay, well, I don't want those guys in my coalition.' But, Reagan forced the Right to be more oriented toward freedom-- Russ Roberts: Yeah. No, for sure-- Noah Smith: than it constitutionally or naturally would have been. And then, it was in other countries, and that was a major accomplishment. FDR made the Left much more capitalist than otherwise would have been. And, he--you know, like, complain all you want about the New Deal State, but the America in the post-war years was pretty capitalist. Russ Roberts: Well, and also we also, there were a lot of voices who wanted us to endorse Fascism in the 1930s. They didn't want the New Deal. They wanted Mussolini and Hitler's state control of industry. And so, in many ways, he was, again, a force against that. Noah Smith: Yes. And, there's a really interesting book called American Midnight about how America had been going in a more authoritarian direction since the end of the Civil War. And then, in the 1920--after World War I that dramatic--oh sorry, during World War I it dramatically accelerated. Woodrow Wilson-- Russ Roberts: Oh, yeah-- Noah Smith: accelerated--Woodrow Wilson controlled the press. He passed--Woodrow Wilson basically declared himself in charge of the entire media and censored the entire American media. And, the Supreme Court later struck it down, but it was press controls of a type that are utterly unimaginable today. And, he said, 'It's for war, and so I'm going to just decide what you can and can't say.' And, what he did was he covered up the Spanish flu. He said, 'No one in America, no newspaper is allowed to write about the Spanish flu.' And so, more people died. People couldn't, like social distance or whatever they had to do. And so, a lot of people died. And then, a significantly larger percentage of the American population died than from COVID, from Spanish flu. And, one reason was because they wouldn't let the information get out. Anyway, we had the KKK marching in Washington, taking over whole towns and sometimes whole states. We had all this crazy stuff in the 1920s, we were--and then overt Nazis in America. You had Douglas MacArthur constantly talking about military coups and stuff. You had--America was sliding toward authoritarianism. And the 1930s would have provided a good impetus to slide--you talked about how the 1930s helped FDR. Well, yes, they did, but they also helped Hitler. They helped Mussolini. And, the 1930s gave rise to authoritarianism in every country--arguably every country--except ours, and maybe Britain. But, every country went more authoritarian as a response to the Depression. Except for us: we became more respectful--freedom and diversity, and a lot of the ideas of diversity that got repurposed for Woke stuff. And, people complain, everyone complains about that. But, those ideas came from FDR. FDR was a--he created this idea--not him personally, but people in his administration--created this idea of the rainbow mosaic of America and how we're all Americans, but we all also have our identities that we like. And, they created the term Chinese-American. And, I think the idea that 'I'm fully Chinese, but I'm fully American.' Of course, they did this for foreign--so they could support the Chinese Nationalists against the Communists. Sorry, that was Truman, not FDR. But FDR and Truman, these New Deal guys created a vision of American identity that worked for a long time. And, it has been put under strain. But, if we went back to that, we would be a great nation again. Russ Roberts: Yeah, I think it's going to be harder to put that genie--I don't know what the right metaphor is, but-- Noah Smith: Back in the bottle? I don't know. I don't know about that. Because I think he did. I think we didn't have that sense of identity before FDR. |
| 50:09 | Russ Roberts: So, that argument--let me give you two versions, two different explanations; and then I want to move on to economic, Econ 101. And, I think you have some interesting observations, and I would add something to it. You mentioned we had four singular leaders. America had four singular leaders--George Washington, Abraham Lincoln, FDR, and Reagan--over the life of the country so far. And, I think people would disagree with you about authoritarianism and FDR. But, let's put that to the side. I want to give you two different theories of these four people and see where you stand. One view says they were exceptional leaders. They were exceptional human beings. We can make a long list of what's exceptional about all four of them. Reagan would be the one that I think people would struggle to accept. I think he was consistently underestimated, both intellectually and as a political genius. And, Trump similarly is, I think, greatly underestimated as a political genius. That he has managed to get himself elected twice--he would say three times--but, that he's won two national elections is a tribute to how skilled he is, as I mentioned earlier, at seeing an opportunity that no one else saw. No one else saw and it didn't seem plausible. But so, let's put--I want to include Reagan. Let's accept that these four people--Washington, Lincoln, FDR, and Reagan--were political, intellectual, whatever you would call them, exceptional and great leaders. Noah Smith: Right. Russ Roberts: How much of that was who they were--America just got lucky that a great leader rose to the top? Versus: They lived in times of such crisis--the Founding of the country; the Civil War, the South versus the North, before the war and during the war; the Great Depression; and then the Cold War and the economic malaise of stagflation that Reagan confronted? That's all. They just had that. Because of those external crises they were able to do things that other people couldn't have done. And, it was that. That's why we recognized them as great, not because they were inherently great. They were adequate. But, the crisis is what has enhanced our view of them, not so much the people themselves. What do you think? Noah Smith: I think that the crisis is what enables greatness. But, the crisis does not confer greatness. And, I refute it by pointing out Adolf Hitler, and Joseph Stalin, and Vladimir Lenin, and Kaiser Wilhelm, Eric Ludendorff, and those guys. And, some guys in Japan, whose names you might not know, but they were there. And then, Pol Pot, Mao Zedong, and all these guys. And, people who--Augusto Pinochet: I don't know, you can say, 'Well, Pinochet is not the worst dictator in history.' No, but it kind of sucks. Russ Roberts: But, what's your point about this list? What are you saying? Noah Smith: My point with this list is these people all came to power in the middle of crises that tapped them on the shoulder and said, 'It creates[?] crisis time. You need to rise to this crisis. It's time for greatness.' And, they were singular individuals, but they chose poorly. Russ Roberts: They chose darkness. Noah Smith: They got history. The crisis gave them a choice to choose what their nation would be. And, all those people I named chose poorly. And, the thing about the four people I named was that, by and large, they chose well-- Russ Roberts: The Americans, yeah-- Noah Smith: Not perfectly, but they chose well. We had four leaders who came at a moment when history gave them the opportunity to make a choice. It was not their singular talent that gave them the opportunity to make a choice, because there's plenty of people with even greater talents who never got that opportunity, but history. So, they were in the right place at the right time, obviously, to be able to choose. But, it was their choice, and they chose well. It was not--the character of our nation did not automatically determine what kind of choices that they would make. I'm sure it had influence on them, because they grew up in America and they knew what America--they had American values and all these things, but there were--I could--have you read The Plot Against America, the book? Russ Roberts: No. Noah Smith: It's this fictitious--it's actually not-- Russ Roberts: Philip Roth? Noah Smith: Yeah, Philip Roth. It's--Charles Lindbergh gets elected instead of Roosevelt, and he chooses to make America a quasi-Nazi kind of state. Russ Roberts: Which he-- Noah Smith: I don't think-- Russ Roberts: was quasi-Nazi. He was very sympathetic to Hitler. Noah Smith: He was quasi-Nazi. And, Henry Ford, our greatest industrialist was more like Elon Musk than anyone wants to admit. Russ Roberts: I think that's not fair. I'll just say that. Henry Ford--I don't know what you're referring to, but Henry Ford was a rabid antisemite, and I don't think that's a-- Noah Smith: I think he-- Russ Roberts: fair criticism of Elon Musk. Noah Smith: He platformed antisemites in his newspaper that he bought and put in every Ford dealership. And, Elon Musk has platformed antisemites on Twitter-- Russ Roberts: Yep. But, a lot of Jews, too. So, it's different. It's a different marketplace. Noah Smith: That is true. That is true. Henry Ford did recant. He apologized publicly for the antisemitism. Repeatedly and publicly he apologized for this. Cut ties with the America First movement. And, he did--he said he's sorry for all the platforming the antisemites. Russ Roberts: Okay. What year was that, that apology? I don't know that. Noah Smith: I put it in a column when I was writing about these parallels, but hold on. Henry Ford, antisemitism, 1927. 'On June 30th, 1927, Henry Ford released a letter under his signature that apologized for dozens of anti-Semitic articles that appeared in his newspaper, The Dearborn Independent'-- Russ Roberts: Well done-- Noah Smith: 1927. Russ Roberts: I thought maybe that was 1946. But, let's-- Noah Smith: No, no, no. Way before the Nazis. |
| 56:46 | Russ Roberts: I want to shift gears. I want to talk about Econ 101, because you have some interesting things to say about it. And, I have strong feelings about it, so I want to share those when you've shared yours. So, talk about what--I thought your observations about trade, housing are extremely interesting and important. So, what changed with your viewpoint on Econ 101? Explain what you mean by Econ 101, also? Noah Smith: Well, Econ 101 teaches simple models. And, I'm not one of the people who says, 'You should teach much more complex models than Econ 101,' because honestly, like, you can't. It's a real struggle to get people to understand what supply and demand even mean. Try teaching some, like, intertemporal optimization. No, no: that's Econ 401. Anyway, so you can't do that. So, the thing I always wanted Econ 101 to do was engage more with evidence and empirics. Teach people, like, how would you estimate a demand curve? You can talk about supply and demand, but, like, suppose you're a company: how do you know what demand is? And, the answer is, it's actually really hard, because you've got to--it's actually really hard. But, you can talk about it in simple terms: you can teach people about--basic econometrics, you can draw a line through some dots. You can talk about doing, like, collecting survey data on prices and doing experiments and things like that with your prices to estimate a demand curve. How would you know this? Right? You can talk about--or in macroeconomics, you can look at, like, how would you know that this Phillips Curve is a--how would you know that this is the real relationship or whether or not it changes when you do this other thing? Like, that's important, inflation and unemployment. And, of course, we all know that the problem with this was that the relationship wasn't stable. Anyway, it depended on other stuff you did. And so, how would you know? Anyway; but then in microeconomics you can actually get pretty good data. Like, there are great ways of estimating demand. You know, you just throw a bunch of, like, demographic characteristics and whatnot into things and purchasing power and all these things, and actually, you can get a pretty good estimate of demand. You don't have to teach people a Multinomial Logit Model[?], you can just--but you can show them some dots and lines. But, talk to people about, 'How would you know that this is the right model to use?' And then, sometimes in Econ 101 we teach alternative models: Two different models. So, like, we teach monopoly. Right? We teach the monopoly model in Econ 101, and we teach the perfect competition model. Of course, reality is somewhere between the two, we don't know where. And, there's a lot of complexity there that we can't teach in Econ 101 because it's too hard. But, you could at least teach people, like, 'Okay: How would you know if there's monopoly power in this market?' And, to be honest, it's really hard. But, you could teach people how to think about it. And, get people to think, you know, like: 'How would you know if it's time to pull out the old monopoly model and see what that says? How would you know that if you have these alternative models'--which you always do in economics--'how would you know?' So, that was my critique of Econ 101 was that it was too theoretical, not empirical enough. And, I think that people understand stuff when you connect. Like, physics class will, like, do experiments. You'll drop balls and time the balls so you can time the acceleration of gravity. Right? You look at spinny things and stuff and measure their speed. And so, like, those are the same experiments Galileo was doing. We do the same thing in undergrad in high school physics that Galileo was doing. He was a little smarter, because he thought of it first. But, a high school kid can do those experiments. I think economics should have the joy of trying to figure out how the world really works, not simply the joy of trying to intuit how the world must work, or might work. You know, so I think that economics as a whole had become a much more empirical discipline since the 1980s as computers allowed us to gather data and to do better statistical analysis of data. And, I think that that was not generally reflected in the changes in economics education, and it should be. Russ Roberts: But, that's a--that wasn't the focus of your article. Your article was making-- Noah Smith: On Econ 101? Russ Roberts: Yeah, your argument was that the fundamental--this is the way I took it; you can disagree: The fundamentals of Econ 101, which are, quote, "wrong"--perfect competition, supply and demand, ignoring monopoly, ignoring oligopoly, ignoring price discrimination, ignoring the thousand complexities of modeling that you've just implicitly talked about--actually has some useful things that evidently people don't know. Like: Build more housing, prices go down. Why is that controversial? But, it is. So, talk about that. Noah Smith: Yeah. So it's really difficult to get people to believe in basic supply and demand. It's really hard to get people to believe it. It's hard to get people to even understand it. It's hard to get people to think that's real. But, the reason it's hard--this may blow some audience minds here--the reason it's hard to get people to believe it is the same reason why it's hard to estimate empirically, your basic supply and demand model. Which is to say--and Paul Romer made this point: When you get people in a city--right?--and people move into the city because there's a tech boom in San Francisco: they move into San Francisco. And San Francisco responds--like, say, 100,000 people move in--and San Francisco responds by building 10,000 houses. Well, prices are going to go up. The basic supply and demand model says prices will go up, because you didn't build enough houses. And, when you put it that way, it sounds very obvious. But, when you're sitting in the ground in San Francisco and you don't understand the larger context of why people are flooding into the city, or even know that there is some reason--you don't understand the demand shock, you don't understand what that means. What you look--you can see the supply response. You see cranes, you see buildings going up, you see some apartments. You're, like, 'We just built 10,000 houses and price went up. Supply and demand is fake, man.' Like, 'Look at how all the supply we built and then prices just went up. Building houses must make prices go up.' And so, this is why identifying supply and demand curves and identifying supply and demand shocks is so important, because if you can then you know, 'Oh, what happened was we had small supply increase and a very large size demand increase. And, obviously, the demand increase outweighed the supply increase, so you're going to get prices go up.' And so, that's the empirical kind of thing that I think teaching that would help people believe in supply and demand. Russ Roberts: Well, I would say it a little differently. I would say we moved along the supply curve. We didn't shift the supply curve. And, that increase in the quantity supplied doesn't bring prices down. It's a response to the increase in demand that started things moving. |
| 1:04:07 | Russ Roberts: But, put that to the side. I'm going to give you a different interpretation, which--I taught supply and demand for 30 years. It was the heart and soul of the micro- or price theory classes that I taught. But, I felt differently about supply and demand when I was 25 years old coming out of grad school than when I was 55 years old teaching it for the 30th year. Supply and demand--and this I think explains why I think people don't--I agree with you, I don't think people--it's really hard to absorb it. It's really hard to use it as a tool. But the reason is--I have a different interpretation--the reason I think it's hard is that it's not true. Supply and demand--so I don't agree with you about the empirical side. I'll make my rant and then you can react to it. It's a waste of time to estimate supply and demand empirically. I think empirical things matter, of course. But, the reason people don't believe it is because it's not true. There's no price--there's not one price called P-star. We say, 'Oh yeah, but that's only for a particular quality.' Yeah but, every quality is different. Every house has its unique aspects. And therefore this whole thing is like a--literally is--a mental construct, not something that exists in reality and is not the way actual prices are set. Actual prices are set by landlords and developers and people in construction who put a label on it. And, the deep insight of economics is that you're not free to put whatever price you want. And, the reason is because there's competition. And, I'm going to get at that--imperfect or perfect, doesn't matter, something, it's really in between--I'm going to get at that with this weird construct called supply and demand. Which doesn't exist. There's no such thing as a supply curve. There's no such thing as a demand curve. That, you can't find them. They are our way of organizing our thinking about the fact that thousands of people are constantly buying and selling. And, how many are trying to move into an area to buy, versus how many new houses get built because there's a improvement in technology that lowers the cost of making houses--those have different effects. But, you can't really model. You could: You can have multi-agent interactions and some kind of simulation. But in general, if you want to have a simple way to organize your thinking about the way prices change in the real world, we're going to use this tool that's really not realistic. It's not true. But it's very useful. It's not true, this perfect competition. Ever. It's a silly, abstract idea. But it helps you think about how competition works in the real world. And, it insulates you for making stupid--sorry--foolish--sorry--inaccurate statements about what happens if holding everything else constant, you built more houses. And then prices would fall. It insulates you from mistakes like, 'Gee, if we keep out foreign goods, I bet the prices of American goods are going to go higher.' And those simple tools are very, very useful. Your turn. Noah Smith: But, first of all, that model isn't always the best model to think about things. Sometimes--so for example, a great example is the one I was just giving with monopsony power and minimum wage. So, you raise the minimum wage and your basic perfect competition model says you'll cause unemployment. Your monopoly model says-- Russ Roberts: And, you'll reduce the number of low-skilled jobs are, which is even more important than the thing we call unemployment. Yes, you will--there'll be more people looking. But there'll be fewer jobs. Noah Smith: Fewer jobs, yes. But, if you pull out the old monopoly model, you say there's some amount that you can raise the minimum wage where you will create jobs. More people will be employed if you raise the minimum wage. Now, which is true. Well, what can you do? So, one thing you can do is you can just try it and see. See what happens. 'Cross the river by feeling for the stones,' as Deng Xiaoping said. And in practice, that's what we do. But you can also use empirics--use this amazing tool we have called 'look at the reality of the world and see what's going on,' instead of just imagining how it must be in our heads. I mean, we have to imagine how it must be in our heads. That's one of our skills as humans. But we must also look out the window and see what is really going on. And, we have these two possible models of how things will work. These two simplifications, neither of which is what's actually going on. They're both radical simplifications of what's going on-- Russ Roberts: They're stylized-- Noah Smith: Stylized. Heavily stylized. You got to be able to tell which model to use if you want to know whether this policy is going to help or hurt. And, if you only--and, that's one thing. Another thing is that there's, in real life, there's trade-offs. And you want to know how big those trade-offs are. You know: If I raise income taxes on higher earners, will many of them just say, 'You know what? It's not worth working anymore. I'm going to lay on the beach.' Or, will they say, 'Oh man, I'm earning less per hour. Better work more hours so I can maintain my income.' Or will they just do not much of anything? You need to know, you need to know-- Russ Roberts: That's a great example-- Noah Smith: what will happen-- Russ Roberts: That's a great example-- Noah Smith: You need to know how much you'll hurt the economy by raising taxes on rich people. Are we hurt a little or a lot? Or corporate taxes? Practically any decision that we can make. And when you ask people to not just vote, but also to write op-eds and to talk to their friends and then to, like, get involved politically, and all these things that democracy does, based on these policies we ought to--you know, Econ can inform them better. And I think that in terms of Econ 101, connecting with the reality of numbers and data. |
| 1:10:39 | Russ Roberts: So, that's--I accept that point and I think it's a different point. It's one I'm sympathetic to in theory, but not so much in practice. I think we know a little bit about the disincentive effects of taxes on rich people and we would--I think the consensus is the effects are relatively small. And, for high-income earners, they might not be small for different parts of the income distribution. And, they may be different for men and women. We understand that. Noah Smith: Agreed. How do I convince an undergrad of that? I think the fact that you just said we know this: Do I simply name some famous economist and say, 'Look at Raj Chetty's paper,' whatever-- Russ Roberts: No-- Noah Smith: And, he says, 'So, receive wisdom'?--- Russ Roberts: No, absolutely not-- Noah Smith: How do I convince an undergrad that the effect is pretty small? Russ Roberts: No. Well, you could study the literature, and you'd certainly have to teach them some econometrics before you did that--so I agree with you. And, it wouldn't be Econ 101, but it would be part of an Econ education. An Econ major, a good Econ major. But I think you'd also have to concede--and this is where we probably disagree--that our ability to tease out the marginal impact of one policy change in a complex world is very imperfect. And so, the example you gave of the minimum wage--which is a great example, for listeners who don't know: There's a well-documented, much-reviewed published set of articles that say, 'It's theoretically possible that the minimum wage will not decrease jobs, but rather increase them, if the market structure is what is called a monopsony.' And, that's what you were referring to. It turns out our ability--there is some evidence that the minimum wage either has a negligible or maybe even positive effect on employment. And, there's a literature that says, 'No, it goes the other way,'--the way the Econ 101 without the monopsony, just the supply and demand story.' And-- Noah Smith: Then there's Ioana Marinescu's paper-- Russ Roberts: Say again? Noah Smith: That says that--there's Ioana Marinescu's paper that basically looks at concentration. As we all know, concentration is not a perfect proxy for monopoly power, or monopsony power. But, you know, it could roughly correlate. So they look at concentration in local labor markets and they find that when local labor markets are highly concentrated in terms of employers. For example, a small town, where you've got one big Walmart that employs everybody, or one big plant, like chicken processing plant that employs everybody. Where you've got these very concentrated small labor markets, you see very small or even positive effects of minimum wage unemployment; where in, like, more competitive labor markets, you know, we have a lot more stuff. You'll see a bigger negative effect. Which is exactly what we predict from looking at these two theories. And, then, you know, like, again, I want to be able to convince an undergrad. Russ Roberts: Yeah; no, that's interesting. Noah Smith: I don't want to just be able to tell an undergrad; I want to be able to convince an undergrad. Russ Roberts: I haven't seen that paper. We'll put a link up to it. But, that's a really important example, because in the early days of this debate, second chapter--meaning the chapter where people started to wonder whether maybe the Econ 101 story of minimum wages needed to be made more complex. In the early days people told me that, 'You know, it wasn't in small towns. It was in big cities.' And I thought, 'Well, that doesn't make sense.' And, they would say, 'Well, but that's just what the data say. So you have to accept it.' And, I would say, 'The data don't talk. It's hard to--I'm sure there are other ways to slice it.' But, anyway. |
| 1:14:18 | Russ Roberts: I want to close and talk about where we started. Which is: The American political landscape has lost the voices--certainly on the political side. The economists are still talking. I still have a lot of friends and colleagues in the economics profession who are upset about, say, tariffs. But, what's interesting--and this is your observation; I think it's a fantastic one--that there's no political voice. You mentioned Rand Paul, he's the only one. He's like this lonely-- Noah Smith: Nobody cares about him-- Russ Roberts: The only libertarian-ish person in American elected office right now at the national level who is speaking out. That--I mean, there may be others, but I don't--he's the most dramatic one. Any thoughts on what that could change? Will it change? It's strange. It's a new era. Noah Smith: Yeah. I mean, in Argentina it took decades upon decades of Peronism for Milei to emerge. Russ Roberts: Yeah. Noah Smith: Like, it took a lifetime of Peronism for Milei to emerge. And, when was Peron? I don't even remember. It's-- Russ Roberts: I want to say the 1950s. 1950s. Noah Smith: 1950s. Russ Roberts: Yeah, I think. Noah Smith: Yeah. Anyway, long time ago. Yes, 70 years, 60 years at most, at least 60 years, 70 years. Anyway, that's way too long, man. I hope that Trumpism will not define American thinking on economic policy for the next however many years. I mean, like, Reagan--you know, we can say maybe the neoliberal era began with Carter and his de-regulations, which let's say 1978 or something. And then, like, let's say it ended with Trump, 2016. Okay? That's, like, around four decades, right? Around four decades. And, I don't want to see Trumpism last four decades. I hope that that is not the case. And, so the question is: Will the economic failures of Trumpism--which we're going to get to see one way or another--will they be big enough to get people to make an abrupt heel turn? Or, will they be palatable enough where culture war issues will dominate and people will grumblingly accept Trump's stupid bad economic program because they think that Trump is more valuable for other unrelated reasons? I think that's the big question. |
| 1:17:04 | Russ Roberts: Okay. So, last question. Could you and I be wrong about trade? Because I'm sure there's some listeners who are sympathetic Trump's arguments, think that trade has hurt the average American. I disagree strongly with that as I know you do. But, what if we're wrong, and this is going to make America better? This more national, so-called nationalistic trade policy. Noah Smith: Well, I'll say that I do believe that there probably are policies that would make the average American better off than perfect free trade. And, I think Trump's approach has essentially nothing to do with those policies. So, you know, whatever corrections I wanted to make to the errors of free trade, I'm never going to get to make those, I don't think. Because, either there will be a giant backlash against protectionism, or people will sort of grumblingly accept it and then do it and accept it in the Trump fashion. And, so, I think that those are the two--politically, those are the two most likely outcomes by far. And that, so for example, I think that we should make a big total common market between us and all countries that would or might want to be on our side against China. We make a common market with basically whoever would. Like, that was the idea behind TPP [Trans-Pacific Partnership] and TTIP [Transatlantic Trade and Investment Partnership], these trade deals. And, that dream is dead, man. Nobody is saying, 'Yeah, TPP, let's go back to that.' I thought that was a good idea. I don't know--I thought that--well, yeah, like, industrial policy, because if a war happens, you don't want China to be making the stuff you need to fight that war. You want to be able to make that yourself. So, I want to do that. Trump is just canceling that left and right, doing tariffs instead, which he thinks will magically create manufacturing when in fact they destroy manufacturing. So there's things that I want to do that are not just like free trade, done. There's things that I want to do that are not that, but I won't get a chance to do them. Because now, Trump will either dominate that brand or sully that brand, and whichever one of those happens, it leaves the alternative ideas for that kind of an[?] out. And, yeah, honestly, I don't know. And, my ability to prognosticate American politics is quite limited. And, I've become much more humble about thinking. I used to think the Normies would always win in America--just your, like, regular, mildly conservative sort of business-oriented kind of average American that we know and love from all our lives living in America--that person would just win and win and win, whether it was Democrats or Republicans. And then radicals who wanted to just do crazy stuff would be on the outs. And, whether we could get smart policy passed would depend on our ability to convince Mr. and Mrs. Normie to do the thing. And, now I realize that Mr. and Mrs. Normie have been utterly destroyed by just online brain poison of social media. And, they're gone. And, now it's Mr. and Mrs. Crazy-ass pseudonymous meme-maker who is actually like some teenager from Bulgaria pretending to be a conservative right-wing influencer on Twitter. That's who is ruling our country now. And, I don't know if that's going to change or if media technology has just screwed us, because the inmates are running the asylum here, whereas the only countries that are insulated from the chaotic power of social media are authoritarian monsters like China. Maybe that's true now, and we just lose: liberalism just loses because social media destroys democracy, and only authoritarianism can win now. I don't know. I hope that's not true. Russ Roberts: My guest-- Noah Smith: That would suck. Russ Roberts: My guest today has been Noah Smith. Thanks for being part of EconTalk. Noah Smith: Thanks so much for having me on. |
READER COMMENTS
Ajit Kirpekar
Jun 9 2025 at 3:50pm
Apologies to Noah Smith, but I found myself incomplete and firm disagreement about his view of econ 101 and its challenges.
I might be unfairly characterizing his views, but he’s basically saying economic ignorance is largely attributed to the fact that these people can’t absorb theory without doing some data validation, in no small part because the theory is too hard.
Noah Smith has almost assuredly taken econometrics. I wonder how easy he thinks that subject is being taught to econ 101 students compared to supply and demand graphs. And if he’s going to advocate to playing around with data without any knowledge of statistics and economics, I would argue to him that that’s not helpful either. He sort of implies it doesn’t have to be complicated like a multinomial logit, But if he really wants to estimate, supply and demand curves, he’s going to need at a minimum vector auto regression knowledge. Or if he wants to estimate the effects of minimum wage, you better know diff and diff and synthetic control. Just playing around with data. Does not confer much wisdom in my opinion and can do far more harm when you don’t know what you’re doing.
Pigging backing on all of this. I don’t even agree that the issue of ignorance is one born because of a lack of something. Economists views run counter to the Zeitgeist because people first and foremost think would their feelings on stuff they don’t understand. I tried to argue to some people that supporting unions intellectually is equivalent to supporting a monopoly. You can still have good reasons to support the union, but at least recognize intellectually what these two things are. I was met with a ton of hostility and derision for this viewpoint.
Sometime back Russ told a story about minimum wages and being at the picnic table and people just moving away from him. That reaction is pretty normal and didn’t start because people just didn’t know what economics was or hadn’t played with some data.
Maybe I’m an eternal pessimist but the people who do understand this stuff end up self-selecting to understand this stuff and it doesn’t come naturally and it comes with many years and a lot of Earnest effort. I don’t think that’s something you can just distill into students in an econ 101 or an econ 201 course even if they paid attention.
Robert Swan
Jun 12 2025 at 10:03pm
Ajit Kirpekar,
I might disagree with you on this point.
For context, I think this is the part of the conversation you are responding to:
My training was in applied maths, so I’ll only address statistics.
As it is usually taught, statistics doesn’t work up from first principles (unlike calculus, for example). Students learn to apply probability distributions (Chi-squared, Students-T, etc.) without the necessary skills to derive these distributions. I didn’t find this training in circus tricks at all satisfying.
Later in my course the *optional* subject of statistical theory was offered. I signed up. Turned out I was the only one who did, and they cancelled it. (ultimately I’ve worked through a fair bit of the theory by myself)
That experience suggests there might be a lot of people trained to the circus tricks level with no feel for the limitations.
One possible solution to this problem would be to present statistics like calculus. A whole bunch of fairly tricky theory, and only training people in hypothesis testing, linear regression, etc., after they’ve mastered the foundations.
Another approach would be to teach students how computer simulation can be used to illustrate the behavior of samples from large populations. No tricky maths, and the students understand what’s happening. These methods are then available when instructing in traditional stats techniques.
Best of all, it makes it quite easy to illustrate what happens when the assumptions aren’t true — non-random sampling; non-uniform variance; etc.
Done well, I think it would make quite a big improvement to the statistical literacy of stats graduates.
June Davis
Jun 9 2025 at 5:02pm
This is the first Econtalk podcast that I could not finish and I have listened to hundreds, some multiple times. When Russ warned him off ad hominem attacks this guest doubled down and tried to make everything political. This podcast is for mature thinkers who know how to make a point without resorting to calling someone childish names. When he got into Nixon he made a foolish, unsubstantiated, unnecessary attack that caused me to turn off the podcast. look forward to my Monday morning. Econ talk so I was sorely disappointed.
Nick R
Jun 10 2025 at 9:55am
Yes, the notion that with Trump we’ve descended into unfettered interventionism after four years of relative economic freedom under Biden is a bit hard to swallow. And given that the guest was unable to articulate any way his views have been revised in the direction of greater economic freedom, it’s hard not to conclude he’s a partisan who just likes the last team better than this team.
SK
Jun 9 2025 at 5:07pm
Please provide to link of Henry Ford saying he not an antisemite.
In discussing healthcare systems reference to Japan is one thing, but seems to me the Swiss offer the best health care system. Gov mandates as to coverage and private market managed through insurance companies similar to US Blues. For the needy, vouchers given.
Might make sense for Econ Talk to have a discussion of comparative health care systems and their pros and cons.
Lauren Landsburg, Econlib Editor
Jun 10 2025 at 3:24am
Regarding your request for a link to Henry Ford’s saying he was not an antisemite, here is one link, which looks like the one Noah Smith looked up real-time during the conversation and read from:
“Henry Ford’s Apology,” by Kevin Proffitt. ReformJudaism.org, June 25, 2015.
I’ve also now added that to the Delve Deeper section.
SK
Jun 10 2025 at 4:08pm
Thank you for the reply and the link. Whether it was a genuine apology was and may still be an open question. What one might take in to account is the hiring practices at Ford Motor Company before and after this printed apology. As best I can tell they did not change and Jews employed by Ford Motor Company did not change after the apology and if so not in any meaningful way.
So each will have to decide on their own if the printed apology was real in light of both Ford’s post apology interactions with Jews and any substantive changes in Ford Motor Company hirings.
Nick Ronalds
Jun 9 2025 at 7:18pm
I find it frustrating that after four years of what can charitably be called Biden’s immigration “policy”—essentially non-enforcement of existing immigration laws—many sophisticated thinkers (even economists!) fail to distinguish between legal and illegal immigration. The distinction is fundamental. One can support immigration, even lots more, within the framework of a coherent, enforced policy while simultaneously opposing the admission of millions of undocumented individuals based on a single criterion: that they managed to cross the border. Characterizing any attempt to reform non-enforcement of immigration laws as “anti-immigration” stifles meaningful debate about what sensible immigration policy might look like.
You don’t need to be a MAGA partisan to recognize that Trump has at various times expressed support for policies like granting green cards to foreign graduates of U.S. universities, expanding H-1B visas, and increasing admission of skilled labor. A belief in the need to control the border does not equal opposition to immigration itself.
Ajit Kirpekar
Jun 9 2025 at 8:59pm
Let me play Brian Caplan and ask…
If illegal immigrants were to receive some basic civil indoctrination and no welfare programs, are you still against it?
[I think you want to say you are playing Bryan Caplan, not Brian Caplan. In this modern world with so many people whose names are spelled similarly, it helps to spell the name right.–Econlib Ed.]
Nick Ronalds
Jun 9 2025 at 9:37pm
Personally, I would be open to such conditions, but there should be some vetting. Among the millions who have entered illegally, could any be agents from countries that wish us ill, of which there are some? Or common criminals? Needless to say, none of those Caplanesque conditions can happen in the U.S. in the 21st century.
Mark
Jun 10 2025 at 2:28am
That’s because there’s no economic difference between an illegal immigrant and a legal one. It would be absurd to argue that the former take our jobs but the latter somehow don’t.
And it really is pretty nonsensical for someone to purport to be pro-immigration but favor a harsh crackdown on illegal immigration. Illegal immigration is very similar to legal immigration, empirically, in pretty much every meaningful way except the law. If illegal immigration is bad for the county, then probably so is most legal immigration, and if legal immigration is good for the country, the so probably is most illegal immigration. If immigration is good, then supporting mass deportations is akin to supporting throwing the book at everyone who ever drives 3mph over the speed limit.
No one supports rigid and consistent enforcement of the law. Everyone – including you – routinely breaks laws they seem to be pointless in some circumstance because obeying them would be an inconvenience. Hence why ‘because it’s illegal’ is a flatly unconvincing argument. People who are vehemently opposed to illegal immigration are just using ‘the law is the law’ as a pretense because it’s the most socially acceptable way to support reducing the immigrant population generally, whether they even admit it to themselves.
Nick Ronalds
Jun 10 2025 at 7:56am
The difference between an illegal and legal immigrant is that the former is illegal. If you’re saying unrestricted immigration should be legal, fine, build a consensus and get the necessary legislation enacted. A country in which laws are optional is not one most of us would want to live in.
Gregg Tavares
Jun 10 2025 at 2:36pm
I know tons of legal immigrants against illegal immigration. I guess I don’t really get your argument. If you throw a house party and 100 uninvited guests show up are you ok with that? Is an uninvited guest the same as an invited guest? My house can not fit 100 people so I limit the number of guests by inviting only that many.
As for economic concerns, there are plenty of recent studies that too much immigration is a net negative for the local population. Maybe you disagree with them but it is definitely not a settled issue. Like the party example, ideally we figure out how many we can take in and take in that many.
ps: I come from a family of immigrants. I’m against illegal immigration. I also want to immigrate to a particular country (not the USA) and yes, it’s frustrating that I have to jump through hoops to get a visa. Still, I choose to follow the law instead of break it and try to find a legal way in.
Ajit Kirpekar
Jun 12 2025 at 11:35am
I think your party analogy is problematic because the uninvited guests aren’t coming to your house in the sense that the US has strong property rights accruing to one or more individuals. In reality, they come and voluntarily supply their labor to voluntarily accepting employees. The rest is merely a matter of economic book keeping.
I understand the concerns about security, abuse of social programs, criminality, and other issues anti immigration folks have – but it seems to me there are more straightforward solutions to those issue than the having a highly inconsistent and intentionally convoluted immigration process.
Immigration has been an overwhelming success to the United States since the day it was founded. I would argue it is as much a part of this country’s ethos as any democratic value it was born with.
Tom
Jun 11 2025 at 10:29am
Whenever someone inserts the word “absurd” as a counterargument I know they are pounding the table.
An old lawyer adage is “If you have the facts on your side, pound the facts; if you have the law on your side, pound the law; if you have neither the facts nor the law, pound the table.”
Tom
Jun 9 2025 at 9:18pm
I have to disagree with a lot of the thinking and some of the theories that I heard on this podcast. I think the reason I disagreed so much is because the discussion was not led by two people who objectively were looking at the world but two liberals who were trying to rationalize the events and emotions of recent history and why everything was not liberal. The guest seemed flummoxed by reality.
The importance of Libertarianism can be drawn from looking at history and observing what a heavy influence it was on the minds of the Founding Fathers of the United States. There was really no such thing as a country “by the people and for the people” and the Founding Fathers were intent on pushing away from authoritarian leaders who exercised centralized control and various forms of sticks and carrots to control people and manage their lives. They dispersed the power of the federal government into 3 separate branches so they would serve as offsetting power centers. I would argue that they were exercising a form of Libertarianism or at least working towards that outcome of having the federal government constrained by making it difficult to exercise authority. This is what both parties complain about in DC that nothing gets done. That was the intent. States were where they power should reside.
The problem that has arisen over time is that the electorate has little understanding of our democracy and the journey this democracy has taken and the pitfalls it has avoided and needs to avoid. Rather than a strategic loyalty to the principles and ethics of the Constitution and the principles of democracy the electorate has adopted a tactical loyalty to political parties in a team sport mentality and only provide lip service to constitutional issues when their side is out of power. An election loss is considered an existential threat which provides people the mental framework to vote for an authoritarian because the alternative seems worse! I can’t say this enough times. That is the road we have been on and both political parties are on that road.
An election win is considered an opportunity to sign Executive Orders and bypass the legislative process where the electorate is represented. What is lost on the voters and ignored by party activists is that any tool that is unsheathed at the federal level can work for you or against you. It is only an election away from changing 180 degrees. Overall this is fantastically unhealthy for a true democracy. I believe the only way to return to a road of a democracy based on the principles of the founding fathers and to avoid an eventual full blown authoritarian is to educate everyone much deeper on the Constitution and the concerns the Founding Fathers were addressing in their discussion and writings. This should be just as important as reading, writing and arithmetic. It should be core to the curriculum. It’s critical to note that a democracy is a historical anomaly. Authoritarian or centralized control of people and wealth is the norm. To avoid that outcome again will take focused effort.
Free Trade needs more honest and clear headed discussion. I believe in Free Trade. I believe in Ricardian Competitive Advantage. But if the USA is the only country that believes in free trade then we are the sucker in the room with our pockets inside out and preaching gospel to a bunch of thieves. Then the game is just a capital allocation exercise and splitting up of a global neighborhood like a bunch of Mafia Dons would. This is how I see a lot of global trade working now. I would also challenge what is Competitive Advantage? If country A makes a product that cost more than country B but country B has no taxes or environmental costs then does country B really have a Competitive Advantage? Our current approach only consider the price of the final product and the other costs like environmental are not considered. When you think about autos being made in Canada and shipped into the USA, what is their Competitive Advantage? Currency? Taxes?
Finally, I am not so pessimistic economics cannot be taught IF we include a condition with every conclusion. And that is ceteris paribus. Economics is a great framework to understand the world and analyze problems but it is not reality so we should promote it as a very good analytical tool but not oversell it so people disparage it immediately as they can point out exceptions in their own lives.
Ethan
Jun 10 2025 at 8:30am
I have to disagree with Noah about the 4 exceptional Americans. He rattles off a list of dictators and so his conclusion is that we got lucky? That is naive. The American system is what kept our country from the devolving, not benevolence. Also I’d disagree with his characterization of Reagan’s steering if the Republicans party. Barry Goldwater and Bill Buckley predate him and had “libertarian” tendencies.
Alan Clift
Jun 10 2025 at 1:25pm
The description of the podcast begins with”Economist Noah Smith was so focused on libertarianism’s theoretical flaws, he overlooked its political importance.” And I wonder if I shouldn’t apply that myself “I was so focused on the podcast’s flaws, that I overlooked its importance.”
Ajit Kirpekar
Jun 10 2025 at 9:20pm
After reflecting over a few days, I thought I would post one more thing.
Noah Smith cut close to saying but didn’t actually say what I think he really believes. Which is he’s against libertarianism so long as the right people are in charge. Now that Trump, the libertarian have a point.
This is the fatal liberal conceit at work. If only the right person was elected and given all this power then we as a society would be so much better off. It seems even highly trained economists fall prey to this line of thinking
Tom
Jun 11 2025 at 10:42am
Agreed.
Another view of this deep belief and religion is that if liberals had absolute power then we would experience some kind of Utopia. Equity and all those other words would be realized. Well the 20th century had some great test cases of the left wing taking over a country with centralized planning and distribution and the failures were incredibly spectacular. To the point where left wing activists don’t even want to own them but they are clearly left wing case studies. Namely the USSR and the PRC.
If one can’t see the value of Libertarianism between the ditches of left and right wing authoritarians then people have no respect for the lessons of history.
BH
Jun 11 2025 at 11:52am
When Noah said FDR made the Left more capitalist I almost spit out my coffee. The central elements of the New Deal — AAA, WPA, NIRA — were the antithesis of free market capitalism. This statement betrays even a rudimentary knowledge of the good work that economic historians have amassed since the New Deal ended.
Noah also implied that the New Deal helped make post-WWII more capitalist. George Selgin has a timely new book, False Dawn, in which he argues (convincingly, in my biased view) that policymakers eventually realized that to win World War II they had to abandon the New Deal, not lean into it!
I would love to hear an Econtalk episode with George Selgin discussing this book, assuming one has not already been recorded.
Ajit Kirpekar
Jun 12 2025 at 8:47am
There have been two episodes on this very podcast that went into FDR’s “pro” capitalist bonafides.
https://www.econtalk.org/ohanian-on-the-great-recession-and-the-labor-market/
https://www.econtalk.org/shlaes-on-the-great-depression/
Michael McEvoy
Jun 11 2025 at 2:29pm
Thanks Russ and thanks Noah . I felt like this was genuine conversation for the curious . The conversation was at times very discursive . That can be frustrating but I also feel it pulls the listener in – I know I have to listen more carefully . I know I cannot predict what comes next . One commenter above could not get through the interview , whereas I kept hoping I would get a chance to listen ( I live a somewhat fragmented life – many and frequent demands on my attention leads me to listen in shorter chunks ) . I enjoyed the give and take . Russ talked at greater length than usual . The way Russ came in felt unscripted and drawn in . I liked that . On a different note, Commenter Ethan above disagreed with Noah on his choice of 4 great Americans . I disagree with Ethan respectfully that the system or environment , such as it was , determined the actions and decisions of GW or AL . I do think they were great because they worked against the system .
Dan
Jun 11 2025 at 8:13pm
I was also disapointed in this episode.
I agree with BH and Davis 100%. FDR made the left more capitalist? Huh? Amity Shlaes, who wrote The Forgotten Man, A New History of the New Deal, and was an econtalk guest in 2007 will give you the accurate assessment of just how progressive FDR was.
Also- FDR was not a dictator? Yes this was mentioned by Smith (who said this was really bad- is that it?). Tell that to the tens of thousands of Japanese-American citizens and their descendents who were not only put in camps against their will, but many had to sell all of their hard earned possesstions. Can you imagine if this was a conservative?
Robert Swan
Jun 12 2025 at 8:11pm
Guest and host could have done with a refresher on Arnold Kling’s Three Languages of Politics.
We heard many mentions of right and left and libertarian as if these were neat pigeonholes. The labels aren’t useful without a focussing issue. It’s unlikely there are any 100% libertarians. People who see themselves as libertarians are keen on free markets, or borders, or development, etc., but only an extremist would want a free-for-all in property rights. On Thou shalt not steal, nearly everybody is a “conservative” (at least where their own property is concerned).
Throughout the conversation, from the differences between the “right” in the USA vs. Japan/Israel, to import tariffs and immigration control, it would have been more illuminating if Russ had invited the guest to look at each issue through Kling’s three lenses.