Fresh Air - Can The Lessons Of 1929 Prevent Another Crash?

Episode Date: December 10, 2025

New York Times columnist Andrew Ross Sorkin, a student of past financial calamities, talks about the likelihood the U.S. economy could be headed toward another crisis. He says there are concerns about the impact of AI, crypto currencies and shadowy investment firms operating outside the regulated banking system. How the nation fares, he says, depends much on the judgement, and perhaps financial interests of Donald Trump. “The entire business world now runs through one address – 1600 Pennsylvania Avenue – and to some degree through the prism of the whim of one individual,” Sorkin says. His new book, 1929, is about the financial panic that led to the Great Depression.Learn more about sponsor message choices: podcastchoices.com/adchoicesNPR Privacy Policy

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It hasn't happened much in recent years, but there have been times when the U.S. economy has experienced the kind of convulsive upheaval that threatens the jobs and life savings of millions of people. In 2008, only massive cash infusions from the federal government prevented the collapse of leading financial institutions critical to the functioning of the economy. Today, many analysts are again warning of serious risks. building in the economy, from heavy speculative spending on artificial intelligence, the influence of so-called shadow banks, the growing use of cryptocurrency, and uncertainty caused by the unpredictable tariffs imposed by the Trump administration, risks that could potentially lead to another crisis. Our guest today, Andrew Ross Sorkin, follows all of this, and also looks for valuable lessons in the history of past financial calamities. He wrote a best-selling book about the

2008 crisis called Too Big to Fail. For his new book, he spent the past several years combing over records of the 1929 stock market collapse that led to the Great Depression. Sorkin is a business and financial columnist and the founder and editor of the New York Times Deal Book, which publishes a business and policy newsletter, and he hosts an annual summit that draws leaders in business and government. He's also co-host of Squawk Box, a daily business program on CNBC. Sorkin co-produced the HBO series based on his book, Too Big to Fail, and co-created the Showtime series Billions. His latest book is 1929, inside the greatest crash in Wall Street history and how it shattered a nation. I spoke to him yesterday. Andrew Ross Sorkin, welcome

back to fresh air. Thank you so much for having me. You know, the crash of 1929 has lived in the memories of generations of Americans. Maybe not as much young folks today, but it was known for stories of stockbrokers leaping out of windows, which you tell us in the book was a little overstated, not so common. But there's a moment in the book, I think, which really captures the kind of speculative frenzy that was going in the 1920s when it seemed like everybody was playing the stock market and expecting to get rich. And this is a story of a British journalist, Claude Cockburn, who's having lunch at the home of a wealthy banker named Edgar Spire. There are plenty of servants, and they're eating a saddle of lamb, whatever that is.

And the lunch is interrupted. Tell us what happened. Well, the lunch is interrupted because they hear screaming, effectively, these murmurs from the kitchen. And nobody knows what exactly is going on back in the kitchen. But what is, in fact, going on is that the chefs and the waiters and the other servants in the household have all been playing the market. And they are back there looking at the ticker, trying to figure out what to do. They actually literally had a ticker in their home. And it was just so emblematic and indicative of the hysteria and the mania around the stock market and how it had touched so many people's lives in the late 1920s. This was really the first time in America that ordinary Americans were playing the market.

they were participating and investing in this entire new world. And in that unique moment, the market was dropping and dropping precipitously. This is literally at the epicenter in October of 1929 as it was falling. Right. And they want Mr. Spire, who I'm sure advised them on all of this, to come into the kitchen and tell them what to do, make a phone call. Help me, right? Exactly.

In part because they're watching. the market drop and they want to know, should I buy, should I sell, what should I do? And the truth is, at that moment, most people had bad information, which is to say that the prices of the stocks that they were even seeing on the tickers were so out of date, out of time. They were wrong. They were oftentimes three, four, five, seven hours behind the actual trading that was happening on the floor of the New York Stock Exchange that people didn't know in that moment what to do. Right. And for them, the stakes were high, savings that they really couldn't afford to lose. This was a time when I think you've written that broker ships were popping up on street corners.

Oh, my goodness. I mean, the same way we have Starbucks on the corner of every street now, we had brokerages popping up on the corners of streets all across America, especially in the big cities. And you could walk into one of these brokerage houses. and literally if you wanted to put down a dollar of your own money, and this was really the major shift, they would not just take your dollar, but they would then lend you $10 against your dollar to go buy stock. So for every dollar you were putting down, they were oftentimes lending you 10 times that so you could buy into the market. And so long as the market was going up. And for a period of time from the beginning of 1928, for example, to the fall of 1929, the stock

market was up some 90%. It felt like free money for most Americans. I mean, this was just this extraordinary boom time. And they had never seen anything like it in their life. But of course, when things go wrong, when you're effectively buying stock on margin, where they're loaning you money to buy that stock when it goes down, boy, do you have a problem? Yeah, so I want to spend a moment just examining how that process works. Let's say I'm a plumber. And I don't have a lot of money, but I've saved some money. And I've got, you know, $20, which was a decent chunk of money back in the 1920s.

And I want to put that into the market. I go to a broker, you know, Sorkin and Sons. And I come to you and you say, well, yeah, you can afford this stock, which costs $100. dollars. We'll take your 20, and then we're going to loan you the other 80. And the tricky thing here now is that that stock, which I then happily get and hope to see it rise so that we all win, that stock is collateral for that $80 loan you gave me, right? That gives you a power over me, right? It's more than just a power because oftentimes what you're doing is you're assigning to the bank the prospect of your home or any other kind of collateral that you have for

that loan and people had never experienced a downturn before. So they would walk into these brokerage houses and sign away whatever they had, not ever recognizing that the market could go down. And in fact, that if the stock that they were buying fell, it wasn't just that they were losing money because the stock was 50% of what it was before. It was that they had taken out such a large loan that they now owed 10 times what they had even put down in the first place. Right. And so this is a margin call where the bank, the broker, the financial institution says, okay, we're calling in that loan now. You owe us all this money. That's terrible news for the plumber or whoever signed the collateral of the stock and other assets like maybe their home. It's also bad news for the banks, right, if this happens to thousands of people. Well, if it happens en masse to thousands of people, all of a sudden the banks don't have enough money, and then the banks unto themselves start to crater. And when rumors emerge about the solvency of a bank, the idea that they may not have all the cash that they thought they had, you know, people like in the movie, a wonderful life, they literally get in line at the bank to try to take their money out, hoping that they're going to get their money out before the bank goes under.

And you saw that play out in 1930, 31, 32, 33, to the point where literally 9,000 banks in America failed. We got to a point of 25% unemployment in the United States in large part because all of this came unwound. You write about a lot of the key figures in the financial world who were encouraging all of this. They themselves were often engaged in stock trading, often insider trade. often insider trading, special deals for friends and clients of theirs. And there were some voices out there condemning it, particularly Senator Carter Glass of Virginia, a name that lives on in a influential piece of legislation. They blamed these titans of finance for what was happening.

Were they right? So Carter Glass was, he was probably the equivalent to maybe like an Elizabeth Warren kind of character in the late 20s. And he used to rail for years about this thing called Mitchellism. There was a guy named Charlie Mitchell who ran a bank called National City. National City later becomes Citigroup. That's the bank we know today. But Charlie Mitchell ran what was the largest bank in the country, was soon to be the largest bank in the world. He was probably the equivalent of a Jamie Diamond-like character in terms of just sort of pure fame back then.

it's also worth recognizing in the 1920s it's really the first time that business leaders became celebrities and they were on the front pages of newspapers on the covers of magazines for the first time but it really was Carter Glass who was ringing the alarm bell and ringing it loudly and early to say all of these folks on wall street are creating this speculative fever which in his mind was going to ultimately falter and therefore upend the U.S. economy. Right. And it's also just taking note of the lifestyles of some of these folks. You describe, I don't know, the homes, the servants. Give us a little picture of that. Oh, goodness. Well, Charlie Mitchell lived up on Fifth Avenue between 74th and 75th Street.

Today, his home is the French embassy. But that's where he lived. I mean, it's an extraordinary property, if you've ever even walked past it here in New York City. But so many of these business leaders lived like true kings. They were living in the mansions, what are now many of the embassies and other big, large buildings that exist across, you know, Fifth Avenue in the Upper East Side. That was born in the 1920s. In fact, so much of New York City was born in the 1920s. The Empire State Building was born in 1929.

In fact, it was financed literally just months before all of this. The Waldorf Astoria, Rockefeller Center was being constructed. So it really was this sort of remarkable period. And you can see what boom times created even today. So when the stock market really began the nosedive and stock started to crash, in the kind of popular memory of this, that led to the Great Depression. But it's interesting when I read your book, the slide into the economic depression, really took a while. By the end of 1930, the market had counter-rallied a little bit,

no widespread bank failures. But by the end of 1932, 11,000 banks had closed. Unemployment was 23%, 13 million Americans out of work. And the question was, what should the government do about this? Herbert Hoover was the president. He'd been elected in 1928, right? What was his approach. So Herbert Hoover arguably was probably in the best position to deal with this. He'd actually been in Treasury at the time of the last crash, which was 1920, 1921. But, you know, he doesn't get into office into the White House until March 4th of 1929. So there actually wasn't a lot of time ahead of the crash in October. So there's a real question of what should if he do? done on the front end to have prevented the crash? And then, of course, the question is,

in the aftermath of this crash, what are the right tools to have used? So to prevent the crash, the question is, could have they really tamped down the amount of margin that people were using? Or had people use so much margin that had you actually tried to stop people effectively from borrowing money to buy stocks the way they were? And there was. attempt to do that, though quite unsuccessful. Let me say, Marge, you're talking about essentially squeezing credit and just not making it so available, right? Squeezing credit.

If you had gone to the banks and said, look, you know, if somebody walks in the brokerage and says they're going to give you a dollar, you can't give them 10. You can give them up to three, which is, by the way, what it is basically today. Back then, there were no rules. There were no what they're called capital requirements. Banks didn't have to keep a certain amount of money on hand at any given moment. there were no insider trading laws. So all of the sort of manipulative behavior, even the corruption that was taking place, was genuinely legal, not illegal, legal.

Then you have the crash itself. And as you described, it really is like a slow motion crash. I think everyone has an impression that somehow this all happened on one day. First of all, the crash itself actually happened over multiple days. There's a black Thursday. There's a black Monday. There's a black Tuesday. day. And even then, even when the market drops effectively 50% between October and November of

1929, by the end of the year of 1929, the stock market was only down 17%. And you might say, oh, that sounds fine. But the truth is, because so many people were caught in the down draft and because they had borrowed so much money, they weren't able to benefit when the stock market came back to only being down 17% because they already had to pay off those loans and therefore had to mortgage their homes and oftentimes sell their homes. And that's what really sucked the first sort of domino of confidence out of the system. Then we get to 1930, and I think of this is sort of a successive series of dominoes of policy choices. And President Hoover at that point decides, for example, that he wants to raise taxes. Well, his first

approach, to be honest, was to almost ignore the problem. He didn't believe that the connection between the stock market and the real economy was real, and that was a big miss. But the other piece of it became almost an approach to all of this in the context of almost austerity to some degree. So instead of throwing money at the problem, he was pulling back. He was talking about raising taxes. He was talking about implementing tariffs and the like. And all of those things combined to actually slow the economy not to grow it. One thing he did do was a billboard campaign. You have to mention this.

So one of the things that Hoover believed was that you could ultimately jawbone your way out of a crisis. That if you could convince the public that what was happening to them in reality wasn't, and if you could tell them to sort of put a smile on their face, that somehow you could actually will the economy back into being. And I think we saw it in 1929. That was something that did not work very well for President Hoover. He was putting up billboards to try to change that dynamic. And I think we're, you know, feeling that even today. You know, President of the United States will tell you that, you know, inflation isn't happening. And yet it is. By the way, I say this in a bipartisan way. There was a period of time where President Biden previously was telling the public that,

that, you know, the economy was doing better than it was. And you heard people say, that's not the way I feel about it in my own life. So Hoover was ineffectual. And, of course, he lost the election to Franklin Delano Roosevelt in 1932. And Roosevelt pursued the New Deal and other policies, including new regulations. But what's interesting is that I think economists now are pretty sure they know what the government should have done to prevent this wholesale. lapse, right? They needed to pump money into the system, right? That is the lesson of 1929, and I think we saw how that lesson played out actually in 2008,

and then again during the pandemic. In fact, Ben Bernanke, who was the chairman of the Federal Reserve in 2008 during that financial crisis, had done his PhD thesis on the Great Depression when he was at Princeton. And the lesson for him of the Great Depression was, as politically unpalatable as it may very well feel in the moment, you need to throw money at the problem. You need to bail out the system, even if it appears as if you're bailing out the arsonists, if you will. And I think you saw him do that in 2008. And obviously, there's still political questions about that, frankly, to this day. But from an economic perspective, mathematically, I think you can say to yourself and look at what happened. We did not fall into the kind of depths of a crisis with the

kind of length of crisis that clearly happened in 1929. And I would even argue if you go and look at what happened during the pandemic, you know, again, we threw an extraordinary amount of money into the system to prevent a true financial calamity. And to a large degree, it worked. Having said that, Every time we do these bailouts, we add even more debt to our problems. And I think there are people who worry rightfully that there will be a breaking point, which is to say at some point you will attempt to bail out the system once again. And bondholders around the world will say, you know what, United States, we're happy to buy your treasuries, but you're going to have to pay us a lot more money to bear the risk.

because we're not sure you'll ever really be able to pay us back. One of the reasons that the seemingly most effective public policy is to pump money into the very people who were stoking and benefiting from the speculative rise and walk away rich is that we have this paradox is that in this capitalist system, the banking system is a public utility in effect, right? I mean, it is what keeps business and commerce moving. We need it to function. And yet it is run by individual economic actors, maximizing their profits and acting in their own interest. Right. I mean, there are so many parts of our economy today that you could argue are like utilities for our country and our world. The banks underlie so much of what we do.

You know, we bailed out airlines during the pandemic. They are a public utility in terms of just the ability to transport people and therefore, growth around the nation and around the world. And I think now we're starting to see it even with what might be described as cloud providers, you know, the folks who basically allow us to access the internet. That unto itself in many ways has become a utility in the same way that we think about electricity and water as a utility in our daily lives. And yet all of these things for the most part, or a lot of these things we're describing, are run by private institutions, some of which are more or less regulated than others. We need to take another break here. Let me reintroduce you.

We are speaking with Andrew Ross Sorkin. He's a financial columnist for the New York Times. His new book is 1929, inside the greatest crash in Wall Street history and how it shattered a nation. He'll be back to talk more after this short break. I'm Dave Davies, and this is Fresh Air. This message comes from Wise, the app for using money around the globe. When you manage your money with Wise, you'll always get the mid-market exchange rate with no hidden fees. Join millions of customers and visit Wise.com. T's and C's apply. Support for this podcast comes from Dignity Memorial. For many families, remembering loved ones means honoring the details that made them unique.

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Support for NPR and the following message come from the Lemelson Foundation, dedicated to improving lives through invention, innovation, and climate action. The separation of investment banking from commercial banking, so you wouldn't be using your depositors' money to gamble, I mean, that was essentially repealed in a bill signed by Bill Clinton in 1999 and probably contributed to the 2008 crisis. A lot of economists and academics and business writers are saying that now there are some pretty scary signs out there. We see a roaring stock market, but underlying trends that maybe could threaten another crash.

I mean, the things that people cite a lot are a lot of optimistic spending based on the assumption that artificial intelligence will transform businesses. We're seeing these huge data centers go up around the country. Increasing use of cryptocurrency, particularly now that it has been embraced. by Donald Trump. And then the growing influence of these shadow banks, I don't quite get this. These are financial firms that can finance a lot of stuff but operate outside the regulated banking system, right? Let me explain the shadow banking thing because I think it's important. After 2008 and the financial crisis that we had there, we decided to regulate our banking system in a much more meaningful way, frankly, which made it harder for banks to lend money the way they had before.

one of the things that sprung up on the other side of that regulation was an entire new system where effectively private equity firms and other investment firms decided they would start to loan money to businesses, small businesses, large businesses, instead of the banks. And as a result, those firms are not regulated like banks, but so much of the lending in America has really moved into what we call the shadow banking system because, it's a shadow lending system. It's almost like the banks without the regulations that the banks historically had. And so there's one view that it's actually a safer form of lending because it's not attached to the banks in the same way. But there's another question, which is because we don't have transparency into this marketplace, we don't really know how large the loans are and how interconnected those loans are, what happens if things turn bad? What is the additional risk Well, there's a couple of risks. The first is this is not just rich people's money being loaned out. It's pension money being loaned out. It's insurance money that's being loaned out. And because it's so concentrated and so much of the loan process is now moving through what's called private credit or shadow banks, the question is if the economy were to turn south and this community decides that they're just not going to make loans. I mean, that's really part of.

of the issue. It's not just the loans turn bad, but that they are not going to make new loans. You could really see how the gears of our economy could slow in a remarkable way. And that unto itself, I think, has people concerned. Now, what about all of the spending on all these data centers for artificial intelligence? What's problematic about that? Look, right now, artificial intelligence and the spending on data center are hundreds of billions of dollars a year right now. is what is largely keeping our economy afloat. Jason Furman from Harvard has did a study on this. If you removed the spending on artificial intelligence in America right now,

you would have flat GDP in this country, practically. And so you have all of the growth concentrated in this one particular area, and so much of it is requiring a big bet, which is that the economics of artificial intelligence grow, into these remarkable valuations. You look at a company like OpenAI, which runs ChatGPT, you know, they're talking about a company that could be worth $500 billion, a trillion. Well, for it to reach those numbers, it's also going to have to invest real cash,

hundreds of billions of dollars. And the question is whether those numbers will all add up and add up in the time sequence that they need to, which is to say if you're investing hundreds of billion dollars today, you need to make the revenue to pay for it. And there's a question about whether they will be able to do that. And what about the increased use of cryptocurrency? Cryptocurrency, to me, is a little nerve-wracking because there's a lot of people who have taken out extraordinary loans, very similar to 1929, to buy that cryptocurrency. So as long as Bitcoin, for example, is at these very high prices, $90,000 now, for example, it may. It may,

be okay. But if Bitcoin drops to $50,000 or less, a lot of people who had taken out those loans, not just will have less value in their Bitcoin, but they're going to owe a lot of money to a lot of other people. And that then can have a knock-on effect to the rest of the economy. People are borrowing to buy Bitcoin. People are borrowing to buy Bitcoin. They're borrowing to buy Ethereum. They're borrowing to buy what's called Solana. They're borrowing to buy a lot of these different cryptocurrencies. One of the other questions about cryptocurrency is, is it actually a product that has a useful purpose? That is the million, billion, trillion dollar question about cryptocurrency. You know, some people look at Bitcoin and say it's like digital gold. It's a

more transportable version of gold, but you have to believe in it. And other people think it's worthless. You know, Warren Buffett would say, you know, why should you own it? He thinks it's like rat poison. He and his former colleague, Charlie Munger, used to describe it that way. So I think it's going to be a long time before we will have a final verdict on this. Having said that, I do think there are certain forms of cryptocurrency that do have a use case. Ethereum is being used for people to transport information and value from different transactions and things. These things called stable coins allow financial transactions to happen at much cheaper, prices than the way our current system works. So there are elements to what's called blockchain

that I think do have value, but it doesn't mean that some of these cryptocurrencies unto themselves inherently have to have extraordinary value to work. Is the Trump administration equipped to evaluate all this and act in the public interest? Are they capable of recognizing where the problems are? I would hope that they will be. I don't think we know. And I think The truth is that this administration in particular has such a deregulatory focus that they're not putting up guardrails, if anything, they're trying to take them off. We're speaking with Andrew Ross Sorkin. He's a financial columnist for The New York Times. His new book is 1929, inside the greatest crash in Wall Street history and how it shattered a nation. We'll talk more after this short break. This is fresh air.

There's also the issue of tariffs. As you note, there was a major tariff bill imposed after the 1929 crash, the Smoot-Hawley tariff bill, which economists, I think, generally feel was not helpful. We now have a president who loves tariffs, uses them liberally, threatens them, imposes them, backs off. I mean, you've talked to a lot of business leaders in, you know, the summit that you held. What are you hearing about where we are on tariffs and what their effect is likely to be? Look, I think that the biggest shift we've seen under this administration is that the entire business world now runs through one address, 1600 Pennsylvania Avenue, and to some degree through the prism of the whim of one individual, that's a very different construct than our country and business leaders and either other politicians have lived through for a very long time.

The tariffs are the most visible version of that, which is to say that they have a huge impact on not just our businesses exporting to other places, but obviously, you know, what we're able to import, what we're able to manufacture here. But I think it's just completely scrambled the calculus for how any business operates. and they are now thinking in almost every case, whether it's a merger or an investment or where to manufacture something, it is literally, how is this going to be perceived and accepted or not accepted by the White House? And so there's still not a kind of consistent policy. I mean, you know, businesses like predictability. They want to know what to expect.

Are we at that point yet on this? Oh, I don't think we're at that point. I don't think we'll ever be at that point because to me, when you think about the tariffs, for this president, they're the ultimate chess piece. They're the ultimate piece of leverage. And what that means ultimately is that you can move them at any moment, up or down. So if there's a country that you want to do a favor for, you can say, you know what? I can go from 15% to 10%. Or, oh, you're not going to do the favor for me? Well, actually, I can go to 20 or 25%. And so I don't think that these tariffs, which really are, I think, leveraged chess pieces for this president over the rest

of the world in large part. I don't think that they settle to a particular place. And I don't think he wants them to settle to a particular place because the moment you think that they're settled is the moment he's actually lost leverage. We should note that there are court challenges to the president's authority to impose tariffs unilaterally. And, you know, some business or even lining up to get refunds, hoping that the courts will agree. What's your take on that? You know, I spoke with Scott Bessent, the Treasury Secretary, last week, and he made an important point, which is even if the Supreme Court decides that the tariffs as constructed today are illegal, there are a number of avenues and paths with which the White House can continue to use its executive orders to implement tariffs on a, I would describe, almost permanent basis. The Treasury Secretary said it could be done on a permanent basis. If you really look into it, I think it's harder than that. But there are ways for this administration to continue to

impose tariffs in all sorts of different and unique ways for sustained periods of time without approaching it the way they have. Therefore, whatever ruling we get for the Supreme Court, I don't think, at least in the immediate term, actually changes the dynamic that much. I want to talk to you about a couple of other topics in the year here. One is there's a potentially earth-shaking transaction underway in the entertainment world. Netflix has this agreement to buy Warner Brothers Discovery, which has people worried about whether there'll be too much concentration of power in that world or that Warner Brothers movies will no longer appear in theaters and go straight to streaming.

And now, you know, Paramount has come in with a takeover effort of their own. This is backed by the Ellison family, who are big backers of the president. And this deal apparently also involves sovereign wealth funds from the Middle East that Jared Kushner is involved in. This is a lot to take in. Tell us what the average person should make of this. I think this is an important deal because it speaks to so many parts of our nation and our culture. It touches us in the context of the movies we go see at movie theaters and frankly whether we will continue to see movies at movie theaters. It goes to control over news in the context that the Ellison family would ultimately own CNN if this transaction were to move ahead.

It goes to the idea of creators and the creator economy and film producers and TV producers and actors and what kinds of shows will get made in the future and, frankly, how many productions and programs and films will be produced in any given given some of the savings that. that both companies arguably will hope to be able to ring out of a deal of this sort in the context of the paramount transaction. It involves, as you mentioned, Jared Kushner, the son-in-law of the president being one of the investors that's backing that deal and also these Middle Eastern sovereign wealth funds, which they say will be, quote, passive investors, but invariably will raise questions about what kind of influence of foreign ownership could ultimately have. So there's so many different component parts to this. And then, of course, what it does to consumer costs, how much you're going to spend on your Netflix or Paramount subscriptions

in the future, how much advertisers are going to pay to reach folks, how much these companies are going to have to buy rights for sports and other kinds of programming. So, it really does touch so much of life. And then, by the way, you throw in the fact that the Ellison family in particular, Larry Ellison owns Oracle, which is a big database company. They're very involved with AI. They're also going to be part owners in TikTok. And so you start to think about just all of the different tentacles of these various businesses as well. Yeah.

Now, we do have antitrust laws, right? I'm not exactly sure how they get enforced. Does the FTC weigh in? Does the Justice Department have to sue if there is an antitrust issue? Exactly. In terms of how this plays out from a regulatory perspective, we would see the Justice Department likely sue if, in fact, they wanted to block such a deal. I think what's particularly unique about this deal is that the president said maybe the quiet part out loud the other day, where he said that he plans to be involved in the decision. decision-making. Historically, we have never heard presidents, including President Trump, even in his first term when AT&T was trying to buy Time Warner, interestingly, would never say, at least publicly, that they were actively going to be part of that decision. Now, of course, the president does appoint the head of the Department of Justice. So that influence to some degree exists, at least in terms of the prism context with which the Department of Justice and the antitrust department inside the Department of Justice might think about these things. But at least historically, it was supposed to be at arm's length and sort of left to them to those lawyers to make those determinations. Clearly, in this case, very publicly, we know that the Ellison family went to go visit with the president.

We know that Ted Sarandos, who's the CEO of Netflix, literally sat in the Oval Office with the president to discuss this. These are very unique times. This is a very different world we're living in. Let's take a break here. We are speaking with Andrew Ross Sorkin. He's a business and financial columnist for The New York Times. His new book is 1929 inside the greatest crash in Wall Street history and how it shattered a nation. We'll talk more after this short break.

This is fresh air. You know, you and I are speaking on Tuesday, and the president will be in Pennsylvania as part of a tour to convince America that the economy is strong, that his policies are working, that affordability is kind of. of a phony democratic narrative. What's your take on this? Is this going to be effective? You know, it's very interesting to think about how Americans think about the success or failure of the economy at any one moment. It all is quite relative. And talk about short memories. It's all relative to where you think your life was six months or 12 months ago. It is not typically relate to history, which is to say, here we are in a four plus percentage unemployed. world, for example. Most people over the last hundred years would say that's sort of

Allison Wonderland. That's actually pretty good, frankly. You know, we had unemployment 10% after the financial crisis of 2008. We had 25% unemployment after the 1929 crash. We had 14% unemployment during the pandemic. The lowest unemployment we were had in this country was in 1950s. That was 2.5%. So it's hard to know when people say things are unaffordable. It's how we feel in the moment. So do I think that people feel that things are unaffordable? Sure. I just took a taxi across town in New York City, and I thought, oh, my goodness, this bill is shocking. And I think people feel that all the time. But on a relative basis, it's hard to say what affordability is. And I think the issue of jawboning, meaning the president

publicly trying to tell people that the economy is better than somebody feels it is, that's a very hard thing to overcome. Before I let you go, I want to return to kind of another big question. You know, in the 1930s,

when things were really bad in the United States, there was talk about whether capitalism had outlived its usefulness. And, you know, I think it's clear unfettered free enterprise

can create great wealth but also great inequity. And there, you know, There is creative power in competition, and markets are beneficial. But if you look at the landscape today with, you know, multi-billionaires, you know, wielding just such enormous influence in a campaign finance system, which essentially allows unlimited special interest spending, and, you know, the lessons that we thought we had learned from the 1929 crash and the, you know, the guardrail set up to make things better

are, you know, kind of increasingly repealed or ignored or worked around. You talk to a lot of people about this. You think about these things. Should we be questioning the viability of capitalism in the modern economy? So I'm of the view, not that we should be questioning the system unto itself, which is to say that capitalism, I think, with the appropriate guardrails, with the right regulations, with people doing things hopefully for the right reasons, with the right motivations and the right incentives, capitalism has done extraordinary things for this country and frankly for huge swaths of the world, including arguably even places like China in terms of lifting people out of poverty and the like. I think the problem, and I think you're identifying it, is that sort of classic capitalism is not classic capitalism today. In fact, all of the things we've been discussing feel a lot more like state-sponsored capitalism or something, some other kind of flavor or variation of capitalism that may not really be capitalism. And because capitalism, at least in this moment, seems like it's been, quote, perverted by all of these other forces, whether it be, you know, the lack of regulation or the lack of competition or some of our tax systems, which seem to favor the wealthy over the poor, that it's raising questions about whether it

works at all. I'm not sure it's not that it doesn't work. It only works when you have all of the sort of component parts working in tandem with it. And I think arguably right now they are not, but I'm not sure throwing it out entirely gets you to the right answer either. When you say state-sponsored capitalism, you're not talking about like, you know, Stalinist economic planning. You're talking about government policy, which sort of allows special interests to essentially take control. I think state-sponsored capitalism is a combination of that, but it's also a combination of a period of time now where so much of what businesses are doing is being directed by the same. state, literally. Invidia is now going to be selling chips to China, and the government is going to take a 25% piece of every sale of those chips. We're now taking the U.S., this is, is taking

stakes in businesses like Intel, in, you know, rare earths companies. It's just, it's shifted the balance. The tariffs effectively direct investment capital manufacturing by companies as a functional of the way they are being constructed. So everything, as I said, really does run through 1600 Pennsylvania Avenue. You know, Trump has said he's going to give farmers with the number $12 billion to make up for what they've been hurt by. The tariffs, he's talking about, you know, lower income taxes because tariff money is available to cancel that out. What do you make of all this? I think it's going to be very challenging to lower income taxes. taxes given the amount of debt that we have in this country. And despite the money that is coming in

via the tariffs, which by the way, I think prove the question, are tariffs a form of a tax? The answer is that they are. That's how we're collecting all of this revenue. As for the farmers, there's no question that the tariffs that have been implemented have hurt them. And I think the president is trying to find a way to ameliorate what could be effectively an uprising by farmers in large swaths of the country that have been hurt by these tariffs. And one way to do that is to send them checks. The last question I have to ask you is one you can't possibly answer, which is investment advice. I mean, you know, everybody's worried about their 401ks. I mean, they're great now. But if 1929 happens again and they lose half, two-thirds of their value, it's dramatic.

Should people be making big moves or just watch and see? I always hesitate to offer investment advice except to say this. I hope that the world and the economy is better 20 and 30 years from now than it is today. And if you can have that kind of time horizon when you think about your own investments, I think you can take a long view and you can be invested in this market. I think if you need the money, you genuinely think you're going to need. the money in six months from now, a year from now, or even two or three years from now, I think you need to be more cautious and think about how much money is in the stock market

versus how much money is in your bank account. Andrew Ross Sorkin, thank you so much for speaking with us. What a privilege it's been. Thank you. Andrew Ross Sorkin is a business and financial columnist for The New York Times. His new book is 1929, inside the greatest crash in Wall Street history and how it shattered a nation. On tomorrow's show, we hear from longtime sports journalist Sam Smith and Phil Jackson, who coached the Chicago Bulls and Los Angeles Lakers to 11 NBA championships. Their new book, Masters of the Game, shares untold stories and hard-won lessons from some of the greatest

players in basketball. I hope you can join us. To keep up with what's on the show and get highlights of our interviews, follow us on Instagram at NPR Fresh Air. Fresh Air's executive producer is Danny Miller. Our technical director and engineer is Audrey Bentham. Our managing producer is Sam Brigger. Our interviews and reviews are produced and edited by Phyllis Myers, Roberta Shorock, Ann Marie Baldinato, Lauren Crenzel, Monique Nazareth, Thaya Challoner, Susan Yakundi, Anna Bauman, and Nico Gonzalez Whistler. Our digital media producer is Molly C.V. Nesper. Our consulting visual producer is Hope Wilson. Teresa Madden directed today's show. For Terry Gross Antonia Mosley, I'm Dave Davis.