Why Studying Keynes Is More Important Than Ever

live stream of the event. So check it out. Thanks, Hello, and welcome to another episode of The Odd Lots Podcast. I'm Joe Wisenthal and I'm Tracey all Away. So, Tracy, we're still in the middle of a crisis. Yes, we are three months on still crisis mode. You know, like one of the things we've been doing throughout this whole crisis is we've been making sure that listeners know the date that we were recording this. And I feel like it's especially important because a this as you mentioned, it's

been going on a long time. We you're in Hong Kong, and Hong Kong you just had one of its worst days of new cases ever and you guys were like the the exemplars that everyone are, one of the best, that we're all supposed to aspire to. And it's not even over there. Yeah, it's pretty worrying. Uh, one of its worst days on record, as you just mentioned, and also Tokyo had a really bad day for infections as well.

So the concern is that even in countries that have done reasonably well in containing the virus so far, there is a risk for a big resurgence. Right so that the date is at least in the US time, it's morning where you are, but it's July nine, and yes, several months after this began, we are still in the thick of it. You're in Hong Kong, I'm in Texas, where everyone is, where cases are very bad. This crisis is a long way from over, and it doesn't seem like there's any obvious path out as of as this

work moment. That's an accurate, if depressing description. Yes, And the thing you know, obviously we've talked about this a lot. It's it's a multi crisis crisis because there's the health crisis, there's the political credibility crisis because even if leaders want to do something or have a you know, plan to fight the virus itself. There's a question of whether they can actually uh sort of get the country behind it.

And then of course there's the straight up economic crisis, mass unemployment, a major slowdown in activity, and yeah, and of course all three of those different crises seem to feed off each other and make each one worse. Uh, you get this really bad feedback loop, i'd argue, is the economy worsens, people get more upset with their politicians and aeticians arguably get more distracted when it comes to dealing with the health crisis, and then people get more upset.

It's a very bad cycle. It's a real like stress test, I feel like on the entire system all at once. We had a conversation a while back with Adam Two's it's sort of like the everything crisis, and I think right as you said, like maybe there was some appetite in the US for a barely hard lockdown policies early on, but you know, come to summer, it's really hard. So um, yeah, it's a it's a bad situation. Okay, So we've set the scene, which is pretty dire. What are we talking

about today? So if you're listening to the podcast we're actually this is that you can view this on YouTube. We are going to be talking today with Zach Carter. He is a senior reporter at The Huffington's Post, but right now he's also a best selling author of a new book, The Price of Peace, Money, Democracy, and the

Life of John Maynard Keynes. And I feel like, um, you know, a you know, in the economic crisis that we're experiencing, I think a lot of people are talking about Keynesian economics, arguably even more than the Great Financial Crisis. We're seeing the sort of greater willingness on policymakers to just spend, like a pure recognition that that has to be part of the playbook. Much more aggressive fiscal policy. Um.

But it's even more. And I think one of the things and we're going to talk about with Zach is that Canes was dedicated his life to a lot more than just spending when the economy is bad, which is how many people think of Keynesianism. But it's actually many more lessons and implications of his work than just what people know him for. Um. I think the fact that we are in this everything crisis sort of makes this

a very timely conversation. Yeah. I think this ties in with a theme that we've been touching on, which is there is a purpose to economics, which is supposed to be to make everyone better off, and it feels like that sometimes gets a little bit lost, especially in times like now. All right, So without further Ado, Zack, thank you very much for joining us. Thanks so much for having me. Guys, I'm really excited to be talking to you. So, like, you know, why is it so hard to read like

the general Theory? Like I've tried reading in a bunch of times. Yeah, I have my chapters like the one about like the beauty contest is pretty interesting, like talked about the stock market, and some of it I really get, and then other times I read it like, man, I really really tough, Like what's the deal with that? Yeah, you know, if you want to get through the general theory, uh, And I feel like this is a pretty high folutint audience, so we can we can just go straight to the

general theory. Uh, you know, you can get you can get a lot out of that book if you just read chapters twelve and twenty four, and those are the most readable chapters. They're they're those that seem to make the most intuitive sense about the world that we live in today. You know, I think there are two things going on with the general theory, but it's in its unreadability.

One is that Kin's is actively still trying to work out his ideas about what's going on as he is as he is writing, and he is in a sense uncomfortable with the sort of radical implications of the ideas that he's developing, because by the time he gets to chapter twenty four, he says, uh, you know, I think we'll have to have some sort of semi comprehensive socialization

of investment. And by investment he means he means, you know, corporate investment, you know, spending on equipment, research and development, things like that, in order to prevent the type of thing that we're we're experiencing right now. This is the Great Depression, which in Britain has been going on for

seventeen years. So he's, uh, you know, someone who comes from this very you know, traditional liberal Enlightenment tradition, and that is not a place that he is like super eager to go to, but he does want to preserve all of those liberal values about freedom of conscious, freedom of choice, all of these things that that individual liberty,

that that we associate with liberalism. But he's he's getting the point where he just doesn't think those things can be saved without massive government activity, and he's not totally comfortable with that. The other thing, though, is that you know, when Cain's knew what he wanted to say, he was

very clear. He was a very accomplished financial journalist, and I think one of the reasons why we still remember who he is is because he had this incredible ability to connect with the public over the course of his lifetime. So for most the twenties and the thirties, he's easily the most popular sort of financial press person in the world, not just in Britain or the United States, but all

over the world. People people read his his columns and his magazine articles, and they they understand the way the economy works through what Kin's is saying. He has almost no influence throughout this period on actual government policy. So he's a guy who's capable of communicating when he wants to. But I honestly think that when he got to the general theory, he said, you know, we are like I'm trying. I've had this great success communicating with the public, I

have not been able to persuade the policymakers. What if I make this really hard to understand so that a bunch of economists will read it, Like if I make this really hard to understand, economists will spend forever diving into it and trying to decipher you know, liquidity preference and all these things. He'd been making the sort of basic policy arguments for about about seven years before the

General theory came out. He was talking about the multiplier, he was he was talking about deficit spending, he was talking about public works, all all of these things that we associate with Kynesianism today that long predated the general theory. I think he just tried to sort of mystify it so that economists would spend a lot of time digging through it. And and as a result, it became this big work of economic theory that only the great brilliant

economists could understand. And then the great brilliant economists could take it to policymakers, into into legislatures and too you know, two presidents and say, well, uh, only we can really understand this incredible work of impenetrable genius. Um you know you you must listen to us now, and and that empowered a whole generation of of you know what we now call Kanzie and economists to to to push for

deficit spending. Essentially, I think there's a lot more to Kaanes than deficit spending, but that I think that's how he ends up becoming so influential in in the late

thirties and in Zach. Maybe just to stop and back up for a second, can you walk us through how radical Keynes's ideas were actually considered in the nine thirties, because I think nowadays everyone just assumes Keynesianism is kind of the economic orthodoxy, but obviously it wasn't always considered that well, and it's it's been the orthodoxy that's fall in a favorite. I think I think now it's it's

it's back in vogue today. When we think about the gold standard, which was the dominant mode not only of economic exchange, but of of sort of international economic cooperation, it was the global geopolitical order. Today we think about the gold standard as as sort of an instrument of conservatism. People who like the gold standard are are typically associated with the hard right they're associated with the very right wing of Republican Party or or anti internationalist movements, things

like that. That wasn't the case in the early twentieth century. The people who were committed to the gold Standard. There were right wingers who were who were part of it, but there was this belief that liberal internationalism, that that free exchanged between different peoples in different countries would help

bring the world to a sort of peaceful place. And Kines was saying, I like those ideals, but this doesn't actually work, and we're not getting more peaceful, we're becoming more warlike, and and this is leading us to domestic misery and international conflict. And what he's doing when he says that is blowing up not just sort of a conservative paradigm, but the paradigm that dominates conservatives, liberals, and centrists.

It's it's it's sort of be like coming to the United States today and saying rule of law is a bad idea, the Constitution is stupid. Don't do that anymore. I've got a better idea. It's very very radical, and in the sense that it's a deep departure from what what the understood way of doing things and the international order is there's an almost sort of like quasi religious moral significance to this order. You know, the gold standard isn't just about growth and and balance, trade and prosperity.

It's it's it's about respecting different countries. It's about uh, you know, sort of sort of loving your neighbor in this in this really this way that people really do take seriously at the time, even though I think of retrospect, it seems kind of silly. And and so kanes Is is saying, we have to throw all that out. If we care about these values, we have to totally change.

He's not totally comfortable with the policy implications of of changing that, and he changes his mind over the course of the nineteen twenties and the nineteen thirties many times. But by the time you get to nineteen forties. In the United States, he's famous for being the deficit spending guy. But in the UK his biggest policy achievement is being

the financial architect for the National Health Service. So he follows this logic through and comes to the conclusion that they have to socialize not just health insurance, but actually the the entire medical system in the UK, and he he helps push that through politically. So the implications of this are are much more radical, I think than what than what we've come to understand him as in the United States, where he's the sort of deficit therapist who says,

spend money when things go off the cliff. He was talking about realizing UH and and UH fostering a more harmonious democratic society in good times and in bad I want to get to that uh soon, like the gap between what we call kanesie and economics and cane Zone ideas. But before we do so, we set this up. Obviously, it feels to me like your book is very timely given this massive international crisis, which you probably weren't anticipating

when you decide to write it. But why did you like what prompted you as a journalist to say, like, I want to write a Keynes biography because there are Canes biographies. We've interviewed uh Lord Skidelski at least once on the podcast, who is probably the most famous Canes biographer. But from your perspective, what was it that in your views like there needs to be another Canes book, and I want to do it because it's gonna be a tough two thousand eight changed the way people looked at

cane Zinism in in a kind of foundational way. Cans was already sort of if you look at the like academic literature, and the stuff was already sort of coming back into vogue over the course of the Bush administration, but it had been really really deep in the legitimacy ditch before that, so it's just barely coming back into respectability among among academ economists. And two thousand eight makes a lot of the criticisms of Kanzianism seemed very silly.

And for me, I was working as a banking reporter at a trade publication called SNL Financial, which is now part of SMP Global, and you know, doing just analyzing banking data and and looking at credit quality and you know, delinquent loans and all the rest. And I really love

that job. But it became very clear that in two thousand and eight, all the people that I talked to went from saying markets are rational, um, they reach equilibrium and we've got to obey the verdict of the rational market to saying we have to bail at the financial sector. And that was clearly people weren't stupid like people are talking to knew they were changing their tune, right, they weren't just like hypocrites, but it was very clear that

there was an intellectual shift that was happening. And I said, okay, well, let me read this Kane's guy. I've only ei leaned him from my eCOM one of one classes. But when I went back and read him, and I tried to read, to be perfectly honest, I tried to read the General Theory first, and I found it sort of like it was as pleasant as as like eating a pretzel covered in Thorn's right, it's just not great. I'm glad I'm not the only one. I was like a little nervous.

I'm just glad that No, it's it's terrible. It's terrible. I mean, Kane's most of the time is a beautiful writer. His friends are people like Virginia Wolf and Litton Straitchy and Ian Forster, and he is capable of doing beautiful things with language about economic policy. But the General Theory is just not That's not not his his most lyrical work.

So I went back and read The Economic Consequences of the Piece, which is the book that he writes at the end of the negotiations over the Treaty of Versailles.

He is the top representative from the British Treasury at at the talks about how to establish both an economic and political order at the end of World War One, and he is furious about about what his own government has done and about the ultimate agreements, and he says, look, the economic terms that we have committed ourselves to and this treaty are going to march the entire continent towards

dictatorship and war. And I think it's just, you know, there are people who have have quibbled with some of his figures here and there over the years, but I just think it's very difficult to argue with that basic premise. He was talking about something that came to pass, and and for reasons that are very closely connected to why they came to pass. The reparations that were assigned to

Germany were essentially unpayable. They destroyed the German economy and UH and that economic wreckage sort of created the breeding ground for fascism. And when I read that, it became clear to me that Haynes wasn't just talking about money and numbers economic consequences. The piece is not about deficit spending. Kanes hasn't even thought of that yet. He's just talking about international cooperation and figuring out a way to link

economic policy with global harmony. He's still committed to the gold standard in nineteen nineteen when he writes this book. But it seemed to me like it was a work of political theory, like the works that I had studied when I was an undergraduate. I studied philosophy, so you know, Hobb's lap were so enlightenment philosophy stuff, and and he just seemed like one of those guys to me, And

so I started reading, and I kept reading. And when you read Skidelski and other accounts, these are very good biographies. I don't want to denigrate them at all. But they're written from the perspective of of looking at Kines as an economist and how he came to develop his economic ideas.

They're very, very useful for that purpose. But if you think of Kines as a social theorist, and if you think of him as a statesman, there's a lot going on in the economic theory that is happening for these these moral political hole reasons that I think are really the things that are driving him. I think in a lot of ways, Canes comes up with a solution that he comes to believe is morally or politically necessary, and then sort of reverse engineers it to be economically acceptable

to people. In economics, he has a really great essay on Isaac Newton. A lot of people don't know is what was an important economist in the British Empire in the in the eighteenth century. Um in charge of the British meant all sorts of monetary policy stuff he's doing, But he talks about Newton and says, you know, Newton's great genius was this this ability to have a flash of creative insight, and then he would dress up the

creative insight with mathematics after the fact. And I think Canes was doing the same thing in economics, um and and that makes him, you know, sort of more of an artist than an economist that as we would think of the economist today. It's really interesting how you mentioned it sort of took the two thousand and eight financial crisis to bring Keynesianism back in vogue, and then, of course it kind of took the Great Depression to make

people take Kane seriously. In the first place. But just to back up for a second, can you talk to us more about his social vision, like what is it that he is trying to reverse engineer here? So with Kansa, you have always have to be careful because he changes over time. He's not monolithic, but he does have this very consistent vision of beauty and the good life um that he gets from from being an undergraduate at Cambridge

and being a member of the Bloomsberry set. So friends with Virginia Wolf, the great writer, Litton Straighty, the great writer, Ian forrest Or the Great writer, a lot of painters who are not as well known today, but people like Duncan Grant and and Vanessa Bell who was Virginia Wolf's sister, who in their day were considered very great artists. You know, Vanessa Bell would go and hang out with Pablo Picasso in in Montparnas all the time that that was they

were part of this big international cultural milieu. And Kines himself ended up marrying a ballerina named Lydia Lapakovo who's from St. Petersburg, who's basically the most famous ballerina in Britain. This is at time when ballet is sort of like a combination between like football and and like Netflix. It's it's easily like the most popular and powerful cultural thing

that's happening in Europe at the time. So he's very deeply involved with this cultural life and he thinks that this this this vibrant thing where you can, you know, you can hang out with Stravinsky and you can and you can you know, make out with ballerinas and and drink champagne with Virginia Wolf while having your hair cut by you know, somebody who's just got back from seeing Gertrude Stein. He thinks this is really the life, and it's hard to you know, it's hard to disagree with

the guy. I mean, that sounds like a pretty good way to live, and he wants to preserve that. And when he starts out as a as an economic thinker, he's really just trying to preserve that for his his

sort of upper middle class, quasi elite milieu. But as he continues to develop his his thinking, he says, you know, if we don't open this space up to other people, the rabble are going to revolt and they are going to overthrow us, and we are not going to be able to have these parties anymore, and that is going to be terrible. So in in order to preserve this

sort of lifestyle, we've we've got to democratize it. And he starts thinking about ways to essentially alleviate the very high inequality of the late Gilded Age that he's living in um in order to preserve the sort of high cultural achievements of that of that era, thinking that, you know, it's better to democratize these things than have them be smashed by what he's particularly worried about as the marks of authoritarianism, which he thinks is brutal and violent and terrible,

but but also just kind of ghost just just there's bad art from the fascists. So if you want to have a beautiful world, you're going to need to democratize it.

And as he continues to develop his thought, he believes that the sort of possibilities for democratizing this or wider and wider, so he ultimately ends up concluding that economic scarcity, which at least when I was studying economics as a as an undergraduate, I was told you first thing, first day and ecoon one on one is economics is the study of you know, scarce resources and and infinite wants. Kanser says, that's not that that's not the subject of economics.

The subject of economics is uncertainty and human decision making in the face of uncertainty. Scarcity is not the thing that we have to worry about. We can give all this stuff to everybody. That's very, very radical, I think rethinking of what economics is, and I don't think it's ever really been integrated into the policy agenda of people who call themselves Kinesians in in sort of government politics, like I don't think Paul Krugman, for instance, talks about

uncertainty very often. He talks about deficits and you know, debt to GDP ratios and things like that. You don't see these guys talking about uncertainty. One of the great contributions I think that Lord's goodels ty May, I think was trying to recenter uncertainty as the key to Dick ckenzie and thought all the way back in the nineteen eighties you said he was scared of fascism. I'm just

wondering was it fascism or was it communism? Because I think people forget in the nineteen twenties and nineteen thirties, how absolutely terrified most of the world was about rising waves of socialists and communism in the East. It's it's

both early on. But he has a very interesting quote in he goes to uh to this big international conference at Genoa in Italy, which is designed to renegotiate the terms from the Treaty of Versailles from nineteen nineteen, and he's he's writing all of these dispatches back that are being published all over the world. He's he's syndicated. It's

very famous guy. And he basically says that there are people who think the big challenge of the world today is between the sort of bourgeois liberal states of the nineteenth century and and the socialist stuff that's happening in in Soviet Russia, which is has you know, there's very

recent Russian Revolution stuff. He said, I disagree. I think the real allunges between this this thing called militarism and I'm paraphrasing here and liberalism, and that militarism believes in the imposition of a culture, in the imposition of of sort of social hierarchies against people, and liberalism is is about free ideas and free individuals and socialism is sort of this this you know, kind of weird variant of liberalism that he's he's not totally comfortable with yet, but

he doesn't see it as being a totally alien thing the way he sees that the hard right that's rising in Europe at the time. And I think we forget when we talk about Canes often and the rise of fascism. There's like Canes in nineteen nineteen, and then there's there's Hitler in nineteen thirty two. But there's the beer Hall

Putch in nine, there's Mussolini in nineteen. There are there's just all of these very intensive outbreaks of far right political violence that are happening across Europe very quickly after the end of the First World War, and that's that's what's really animating him. He doesn't He eventually goes to Soviet Russia in nine and comes back and says, this is a disaster. Don't do this. These people don't believe in the good life. They're totally acetic, like they refuse

to enjoy anything. It's it's he's against the sort of political oppression that he sees that the sort of paranoia that he sees the in the government breeding, but he also just thinks that it's sort of like a colorless, lifeless existence, that it's it's made people, um, joyless and in this really sort of spiritual way. So he's a critic of communism, but it there's a reason why a lot of his critics who arise after World War Two

are are on the right and and not on the left. Um. He he sees the coming of right wing militaristic authoritarianism as the great threat facing society, and he also says, well, yeah,

we shouldn't do Soviet Russia too. At the same time, um, he's he's often saying we need of find ways to move left what we'd call left today on economic policy in his time, it's not clear what whether what he's doing is left right or center to be be very clear, but he's often saying we need to do left wing economic policies to prevent this this sort of right wing dictatorship politics from taking over. So how did that change?

So here you have this sort of social theorist philosopher, even perhaps as you characterize him, something of an artist, who then sort of built a economic vision to sort of buttress that those ideals and those ideals, as you said, you know, about spreading his vision of the good life to more people maintaining that lifestyle. How did we get this thing called Kanzian economics, which is, oh, the you know, the unemployment is here, so we have to set interest

rates here, and we have to spend this much. How did that become a thing where it got so seemingly divorced from the philosophy. Well, I think this gets back to your first question, Joe, when you were talking about why is the general theory so hard to read? And we have remembered Kanes because the economics profession took him up as sort of this important, idle icon that they could hold up and say, look, the great Kine said we must do it this way, therefore it is legitimate.

He's like a historical figure who had great prestige, who was well respected around the world, and in invoking his name, had this sort of legitimizing power over policies that people would invoke and the policies that people wanted to pursue. In the United States, which became the sort of global economic hedgeman at after World War Two, which and that's important because the UK was the global economic hegemon before

the US took over. And so because Kines is the most prominent economic figure from that, Americans are very very eager to take somebody from sort of the last old order and say, look, this guy, this guy is a serious you knew what he was doing. We can refer to him for for our policymaking. But in the United States, the economics profession doesn't really want to abandon its basic assumptions. It likes the Kanesie and policies because they can see

that they work. I mean, they watched the you know, the New Deal and the great in World War two and saw the war spending. But they don't really want to shift the focus of economics away from rational actors in general equilibrium theory, and and so they start saying, well, you know, I think the most the most popular version of this is Paul Samuelson, who's probably a lot of viewers here, you know, like me. You know you've read the Samuelson textbook. Is your econ one on one book, right?

I mean this is this is how Kanzie and ideas really get out into the main streams is through these textbooks. And Samuelson basically says, look, things get kind of wacky. If we're not at full employment, markets are rational. You know, you've got supply and demand and they hit their equilibrium. That happens unless we're not at full employment. And if we get into full if we get out of full employment, things going to this topsy turvy world. So we just have to figure out a way to make sure that

we have full employment and will do fiscal policies. And he doesn't really investigate what that means for the nature

of the broader theory. You know, why is it that things would not be at equilibrium if people are rational actors and things generally do reach equilibrium, why do you they start talking about external shocks and and things like this that that have no Really they're sort of ad hoc additions to the theory, but they don't require you to break from these other other things about economics, which look, they're useful there, it's not you know, people talk about

these things because they're intuitive. They make sense. And when you're talking particularly about like a small business and or a household and and supply and demand and how monetary flows work there, they make a lot of sense. They don't tend to work I think on on a large social scale, but they just sort of keep keep handwaving that.

And in the United States, this this principle is really useful because it just says, look, the government can spend on anything and it will be good for the economy. So whatever it is that you're democratic or republican government wants to spend on, whether it's the war in Vietnam or the invention of medicare under under Lyndon B. Johnson in the nineteen sixties, these projects are all good for the economy because they will increase demand and they will

they will get the economy back to equilibrium. And Keynes wasn't in favor of spending as such, he wasn't in favor of deficits as such. He had a social vision and it mattered very deeply to him what you actually

spent the money on and why. But if you turn him into this sort of sterile economist who only thinks about money and numbers, who is only a scientist who you know, pushes up his glasses on his nose and and just tells you how the equations balance, then you can use that guy to to justify different moral considerations, and he's not this sort of partisan or or philosophical or or or a moralist figure who who would have an agenda right, and he's dead, so we can't defend himself.

And this is what happens over the course of the fifties and especially the nineteen sixties. And then of course you have this inflation crisis in the nineteen seventies and people say, well, Kennism is responsible for for inflation, so it doesn't count anymore. Um, But you have about twenty years where people are just trying to justify the political agenda that they have for you know, good and bad reasons, for conservative and liberal reasons. And Kanes is the guy

who can be invoked. Nixon invokes him, lb J and gall Braith invoke him. Uh, there are very different types of presidents in the United States who are saying this is our guy, and this is this is why we are doing what we are doing. Just to dig into that a bit more, I'm curious, who do you think misused Kane's the most in that con It's it's really hard,

it's really hard to say, you know. I think lb J is a very is a really fascinating person to me because I think his social programs that he's doing in the United States are exactly the types of programs that Cain's thought were were necessary. So, you know, LBJ creates food stamps, a lot of the New Deal programs that we like like in the United States, like social Security, they become the thing that we understand that to be because LBJ expands them so much, and he creates Medicare.

There's just a lot of this social safety net kind of work that seems very canzy, and to me, this protecting society from the swings of the market. You know, when things go up or things go down, you've still got this stuff and you're not going to be a sort of thrown to the wolves. But lb J is also doing the Vietnam War, and Caines wanted to do all of that stuff so that people wouldn't go to war. He thought he thought you could use economic policy to

both create social justice and prevent international conflict. And so there's just this deep contradiction within that administration from from a canzie in perspective, where they're doing all the things that Caines would approve of, but they're simultaneously using his ideas to spend an enormous amount of money on this conflict in Vietnam, which kills you know, at least a million people in Vietnam. It's it's it's fifty tho Americans, but it's it's a complete catastrophe for for people living

in Vietnam. And I think he he would have been extremely, extremely uncomfortable with that. I think would furious frankly, and you get to Nixon, and Nixon basically does you know, the same thing, but with a more explicit focus. He invokes the name of Caines, you know, a couple of times saying I'm going to do deficits. Uh, I just think that war stuff. He was so scarred by World War One, you know, he he came of age thinking

that everything was fine. He didn't even have to become a famous economist, didn't have to become a famous writer. He could just sort of frolic in the lawns of Cambridge and talk about you know, philosophy and Plato with these with these other smart people, and everything would be because because they were all working their way towards progress and beauty, and war was going to be a thing of the past, because all these great ideas were making

society more and more harmonious. And then the war comes along. It just shatters that vision entirely. And so he's just spending his entire life trying to prevent another war. He just thinks that this he's he's deeply, deeply shaken by this, and so the idea that his theories would be used to create massive international war machines, I think would have

absolutely horrified him. M Let's bring it forward a little bit to the present, because, as you mentioned, you know, basically since the last financial crisis, Hainzian ideas have been on the rise of somewhat. He's been invoked a lot lately. And I you know, there's there was lot of reluctance to spend money during two thousand and eight two thousand nine. Now everybody is spending money, even even the Germans, who are like famous for like not spending money, even they're

spending money. Like let's talk about like some of the other things. So obviously, okay, spending money. It seems like that's necessary. We need to do a lot more of it. There's not a whole lot of disagreement. It's kind of impressive. No one even really talks about like deficits that much. With the national debt like nowhere nearer where in two

thousand and eight, two thousand nine. But a we have a problem of we haven't been able to end the virus crisis, especially in the US where there's a serious political legitimacy problem. It's really it's been really hard to marshal the resources to get it done, to suppress it to an acceptable degree. And then even if we do, are you know, we just came off of like almost a decade of underemployment from the latter is such a

slow recovery. I don't think anyone wants to know, you know, to wait until twenty thirty until we have the unemployment

rate below five percent again. So like, beyond just the acute need to spend money, what can the next set of leaders, whoever it is here elsewhere, But what are the ideas that they should draw from from pains so that we don't have this like ongoing political legitimacy crisis and we don't have another ten years of underemployment, you know, with the caveat that it's always a very dangerous thing to your view of like what you know, you know, I think, um, you know, I think your point about

about the the public health crisis is. It's very simple, but it's really important. You know, Canes didn't want to be remembered as a deficit theory therapist. He wanted to be remembered as a guy who addressed the great problems of his day. And the great problems of his day were war in depression. The great problem of our day is this pandemic. So you have to address the pandemic.

You have to figure out how to cope with that and how to credibility with the public, in particular about how how to how you're going to deal with that. You know, a lot of Kinzie infurial and economics is not about equations balancing just so, but about uncertainty and building a confidence among not only investors but the public that tomorrow could be better than today. Because if you don't believe that tomorrow can be better today than today,

you're going to keep hoarding your money. You're not going to go out and spend, and investors are not going to go out and invest. You're gonna keep your money under the mattress. Right, I've spent a little bit more money in the pandemic because I've had some pretty decent books sales. But you know, I'm still not like, you know, I didn't buy a house, right, Like you'd be crazy to right, people are that's the weird thing. How does it actually doing really well? So it's it's weird. It

makes no sense to me. But yeah, I keep waiting for New York rents to go down and so I can move, but it doesn't happen. So the the thing there is is to find a way to make the public believe in what you're doing. And I think for the US this is not so much of a problem of dollars and cents is as it is a problem of just straightforward leadership. Like nobody believes the Trump administration right, and I don't know if anyone is going to believe

them until they change that. There's there's sort of this um. The closest parallel I can think of this is the ECB in in sort of fourteen austerity crisis in in UH in Europe. E c V just kept saying crazy things for for years and years, and people were like, there was just no reason to believe that anything they were going to do is actually going to solve the problem. And then all of a sudden, drug he says, no, what,

We're just going to provide unlimited support. We're just gonna do it, And there's this huge shift in investor sort of confidence, in in in the the general sort of belief about how the world works. That's just with a decree, but he backs it up with actual trual policies. I don't know if Trump is capable of making a decree like that, because I don't think people believe him the way they believe other public officials. They don't trust him.

But somehowever or other, the government's got to be able to convince the public that they can actually control the pandemic to such an extent that when they say, you know, if these kids are going back to school, it's actually pretty safe. If you want to go to the beach, it's actually pretty safe. But if you want to go

to a bar, maybe it's not. You know, there have to be ways to figure out what we can do in such a way that people aren't just you know, hiding in their apartments all the time, becoming miserable and angry and getting ready to protest. Right, Not that I have a problem with the protests live been happening, but I think it's pretty obvious that a lot of the energy that's being expressed in the streets is pent up pandemic anger. So you have to deal with the crisis first,

the actual public health crisis. You have to you have to care about the optics and and and so the communication with the public and why they would why they believe in you. But you then also have to convince

the public that the government actually works for them. You know, the United States has had thirty five years of accelerating inequality, and as a result of that, I think it's pretty clear that they're different people who were living in different political worlds, different societies really, and the pandemic is really underscoring this. There are people like me who get to, you know, hide out. And I'm in my in laws

house in northern Virginia. Here, I'm hiding out here, talking to you guys and and collecting royalties for a book. You know, I don't get to do all the fun things I used to do. But this is not like mass suffering for me. I take my dog down to the creek. It's okay. There are other people who have to, like go to work every day and risk death in

order to serve the rest of the country. And that is just an accelerated, intensified version of the way that the country has been sort of bifurcating for for decades now. And if we're going to be part of the same political project, I think Kines would look at that and say, you know, forget about even social justice. Those guys are not going to hang together. These who are going to be at war with each other if you don't find a way to make them feel like they're part of

the same project. And economically, you've got to just bring them closer, closer together so they're living in the same world. And and so you know, he would he would talk about inequality, not so much as a not even not even for you know, he came up with reasons to say, here's here's why, you know, giving poor people money is more effective than giving rich people money, so that you know, you get more growth out of it. But you know, his real motivation for this was that he was afraid

society would fall apart and to send into chaos. And I think I think addressing inequality would be something that he would have very very high on his list. But I think he would also be looking at the breakdown of these international systems. The relationship between the US and China is just awful right now, the relationship between the

countries of Europe is awful right now. And he would come up with some brilliant sort of grand plan that would probably be politically impossible, where he would try to alleviate inequality in the United States, fix the trade relationship with I know, and cure the pandemic all at once.

And you know, I don't pretend to have his his like creative genius, but he would try to find some magic formula that would attack all three of these things, and then he would pitch it everybody across the world, and then he would watch in dismay as everybody refused to do it, and the world then descended into chaos again.

Just on that note, what do you see is the major weakness of Kynesianism, Because as I listened to you talk and to me, it seems like if you want the government to be a stabilizing force not just on the economy but on society at large, then that government needs to be capable in various ways and aligned with a certain form of society. So to me, that seems like a flaw on the plan but I'd love to get your thoughts on what you see is the big

problem here. No, I think that's exactly right. Canes believed he's very much this philosophical rationalist. He believes that there are real eternal truths that are out there sort of in the ether, that we can you know, divine through through pure reason, and once we see them, we will we will, you know, a light will go off and we will recognize that. And that by arguing with people and presenting good, good arguments to them, people will come

around and they will agree to these things. And he is he is he is reacting very sharply against Marxism, against particularly the like very hard materialist versions of Marxism presented by Lenin that are very very popular in Europe in the twenties and thirties, um, where the argument is

that people don't listen arguments at all. Everything is determined by the economic structure of society and so it's a it's a it's a fool's air, and do you even engage in philosophical debate And he thinks that's just totally outrageous. But I do think that while I mean, I think it's very clear that people can be persuaded. I think Knes's belief that people are persuaded it just based on the the eternal truths of arguments is uh, it's politically naive.

You know, people find different things persuasive. People do listen to arguments, but the reasons they find them persuasive and non persuasive are often dependent on all sorts of other factors. They don't have to necessarily be you know, the forces of production or whatever that that you would see from from you know, certain sort of crude Marxists from the

twenties and thirties. But it's it's hard to it's hard for me to believe that, you know, you could talk to somebody from the Mortgage Bankers Association and tell them that we can really save the economy if we just right off. You know, second leans, there's a reason why people don't find that persuasive, and they don't They don't even have to be acting in bad faith to not find it persuasive. It but there's that there are factors in their lives that have made them think in certain

channels that make that difficult. You know, when I used to work at S and L Financial Um, we had CNBC on in the office all day. He starts thinking about the world through that media that's being pumped into your the horizons of what is possible, start to start to feel that way. It's not because you're stupid, it's not because you're your venal or corrupt or something. It's just this is the way you become accustomed to thinking

about things. And when I came to huf Post, suddenly we had an MSNBC pumping into my head all the time in the office. It's a totally different set of assumptions that just sort of start undergirding your thinking. And you have you have to be careful in all these situations, right to try to maintain your independence. But but people are stamped by the sort of social forces around them.

And for Canes, I just think he was too. He had this very majestic and and kind of childlike belief in people's ability to be persuaded that that sort of took them to be these these sort of rational atoms that had nothing, no social forces at play on them, and and that's just that's just not the way people are. You know. I love your point about the sort of the state that we're in is sort of this accelerated version of the pre pandemic state, particularly with respect to inequality.

And there are people whose jobs require them to work often at very little pay and expose themselves to potential health risks and death every day. And then there are people like the three of us who get to talk about canes professionally and safely. And it's but it's also you see it in the market too, And you see like this acceleration where tech stocks which were already doing very well pre crisis have absolutely soared, interest rates which

were already headed down, headed out further. Like every trend it feels like going into this crisis has actually been accelerated. It hasn't been a reversal at all in some sense. But I'm just curious, Like you know, you said, Kine sort of lived in fear of chaos and society falling apart.

I've always sort of been paranoided at myself even before that, So I feel sympathetic, Like do you think we're sort of like this is a big moment, like just you know, obviously it's a big moment in terms of a crisis, but in terms of like these trends potentially hitting their breaking point or their possible limits if we don't take a different approach, or can we put it back in the bottle and just sort of go back to December,

you know. I think the sort of nice response the two thousand eight crisis was the Occupy Wall Street movement, where you had all these hippies hanging out in Zukkati Park and they're pretty much harmless, right, They're just they're just walking around talking about love and trust and and having really unproductive sort of strategy sessions, but like but meeting well and like talking about a better world. They succeeded in I think, reframing the sort of narrative about

what was wrong in two thousand and eleven. It's stopped. It was stopping about if you if you were watching mainstream cable news of the time, it went from being everything from me about the deficit to being about inequality. Very very clear shift in the narrative. But but then it was over. I think the really nasty response to twenty eight is the Trump candidacy and the way that Trump demagogues against immigrants and scapegoats people who are vulnerable.

I think that's that's another way of expressing and channeling the anger that happened as a result of that of that crisis, we are. We were at a point, I think, before the pandemic, where it looked like we might just sort of glide past the Trump administration into something might might miss the you know, a lot of people have suffered in the last four years from you know, Hurricane

Maria all the rest. But but we would have missed these these massive, massive calamities that I think people who were very worried about the Trump administration had been talking about. UM And we've now not missed those, And I think the question is what what comes next. We've watched on the right, people armed with you know, these massive, crazy looking guns just sort of storming the Michigan State Legislature. On the left, we've had uprisings in every American city

for the last month. Basically, I think they're they're they're dying down a little bit now because the pandemic is getting so bad. But you know, that's that's a combustible situation. UM and this in this situation, economically, it does not improve, right, things are gonna get worse. We haven't even seen this as a financial crisis. It's possible that all of this stuff that's happening in the real economy transfers to the monetary economy, and we have a banking crisis that that

compounds all of this. It's possible, it just gets much worse without that. The uncertainty that's hanging over people's lives, I think is extremely damaging. People don't know when they're going to be able to go back to work, they don't know when they're gonna be able to have fun. No one knows if they're going to be able to watch, you know, basketball in the fall. I mean, these very simple things about people's lives, simple and and then emotionally compelling,

are are up in the air. And that just creates a great deal of anxiety. So I find it very hard to believe that we're not at some sort of inflection point. I cannot believe that the global economic order that we are going to see in is going to be, you know, some sort of moderately tweaked version of the global economic order in nineteen I think something is going to have to change because the system is just breaking.

It's it's not working right. We were already having stresses, particularly for globalization, before this happened, But but right now I mean all sorts of trade, you know, supply chains are breaking down and trade relationships are just following apart because of the pandemic, and it's it's really hard to see how you rebuild in a globalized way without either massive international coordination, which would require a total rethink of the way that we're doing things now, or or sort

of a sort of retreat into economic nationalism where people just where countries just try to do things on their own so they don't have to be dependent on these international uh you know, legal issues. Either way, things are going to change very radically, and and and there will be a lot more social unrest before before it's over. Zach Carter, thank you so much for joining us. I've started your book. I haven't finished it, but I'm really looking forward to finishing it now. And that was fantastic

and it really does feel very timely. Uh you know, I know, I'm sure multi year. What year did you started? I sold the proposal in uh, March of seen, but I've been working on it for a year, so I really started taking it seriously in March, so right around basically when the Trump president Trump campaign seemed to be taking off. I was like I just can't keep covering American politics day to day all the time without something

else because I'll go nuts. Because I was covering the twenty sixteen campaign, it just it was an unpleasant thing to cover. It just was not fun. So I sold the book is like a a way to you know, retreat into a different part of the world that still felt intellectually serious enough to actually allow you to like emotionally engaged, so that you could retreat from what was going on. Tracy, this is a good reason for us

to write our books. I was going to say, I wish I was this productive because when I want to retreat from the world, I watch like old movies and eat junk food. But I very much admire that you went off and wrote a book about Kanes, and yes, Joe, we should write it old movies and jug food, have a have A have A Place that I did plenty of that in twenty six too. But but you know, you could only distract yourself for so long. You have to find something to like invest yourself in, and that

that's really the way to escape. And for me it was British monetary policy in the nineties. Well, Tracy, let's get on our book. Let's let's start working on it, all right, Zach Carter, thanks for joining us. Thanks guys, No, I thought that was great. And Tracy and the um.

You know what Zach talked about at the end, specifically, it's sort of like the difficulty of really even imagining just going back to like some version of twenty nine team, you know, just beyond the economics in the life, like, you know, just from an investors standpoint, that's a huge question. Yeah, I agree. I'm actually really surprised that we managed to go through that entire podcast without mentioning MMT once. For you, I was waiting for you to. I never bring it

up anymore. It's always someone else. It's always you. You know, I don't it's not okay. But really, I mean, there is that well you either call it a criticism or a compliment, I guess, but there is that line of thought that MMT is just another version of Kynesianism. Yeah, we could have asked him. I'm in a like a chat room where we talk about MMT. Is accident too, so I'm in a chat room where we exclusively talk about MMT. But it was a really fascinating conversation and

I don't know like it. It's sort of it sort of makes me think that the problem isn't necessarily economic, it's political, which is what I've said about MMT over and over. So you're the one who keeps this is like three or four times now in a row where I don't say anything about it, and it's always you bring here. Okay, Okay, I'm not going to say m m T anymore. I'm just gonna say listening to Zach it really makes me think that again, the problem is

about politics and not necessarily economics. It's these different visions of the world, and no one can actually agree on where we're supposed to be going and get aligned on them agree. And I really do think that, like, even if, like you know, you're purely just an investor, and even if like you just want to like make money, I think that point is so crucial that you can't avoid politics. And I think that people think of like politics and like, well, maybe Joe Biden is gonna win and raise the tax

rate by what's that gonna mean? Or maybe he's gonna, you know, put a higher tax on prescription drugs, what does that mean? Whatever? But I think that right now like there's a deeper question politically, and it's in the US but also around the world, but also like specifically the US, as will this force us to go in some different trajectory? And I almost feel like if you're of an investor, it's like and you want to figure out what's gonna hapen with inflation or what's gonna happen

with wages? You know, we're like everyone's you know, they look at like the FED balance sheet or they deficits or whatever. But I do feel like these fundamental questions, like what kind of like world will political leaders try to rebuild when the virus is gone? He is going to just be this huge thing, and there's so much uncertainty and the question of like ken we will we they will they try to just get back to twenty nine light is a huge unknown question absolutely. All right,

Well on that big question, shall we leave it there? Okay? This has been another episode of the All Thoughts Podcast. I'm Tracy Alloway. You can follow me on Twitter at Tracy Alloway, and I'm Joe Wisenthal. You can follow me on Twitter at the Stalwart and you should follow our guests on Twitter. Zach Carter his handle is Zack D. Carter, and of course check out his new book, the best seller The Price of Peace, Money, Democracy, and The Life

from John Maynard Kines. And be sure to follow our producer on Twitter, Laura Carlton at Laura M. Carlton, Call of the Bloomberg had a podcast, Francisca Leady at Francisca Today, and check out all of our podcasts under the handle at podcast. Thanks for listening