Tangle - INTERVIEW: Economist Noah Smith

Episode Date: August 28, 2022

On today's episode, Bloomberg columnist Noah Smith comes on the pod to talk about inflation — and what impact Biden's student debt cancellation might have. Smith also shares his view on what he will have to see to feel that inflation numbers are truly improving, and talks about how the U.S. stacks up to other nations across the globe.You can read today's podcast here.You can subscribe to Tangle by clicking here or drop something in our tip jar by clicking here.Our podcast is written by Isaac Saul and produced by Trevor Eichhorn. Music for the podcast was produced by Diet 75.Our newsletter is edited by Bailey Saul, Sean Brady, Ari Weitzman, and produced in conjunction with Tangle’s social media manager Magdalena Bokowa, who also created our logo.--- Send in a voice message: https://podcasters.spotify.com/pod/show/tanglenews/message Hosted on Acast. See acast.com/privacy for more information.

Based on Charles Yu's award-winning book, Interior Chinatown follows the story of Willis Wu, a background character trapped in a police procedural who dreams about a world beyond Chinatown. When he inadvertently becomes a witness to a crime, Willis begins to unravel a criminal web, his family's buried history, and what it feels like to be in the spotlight. Interior Chinatown is streaming November 19th, only on Disney+. The flu remains a serious disease. Last season, over 102,000 influenza cases have been reported across Canada, which is Chinatown is streaming November 19th, only on Disney+. yourself from the flu. It's the first cell-based flu vaccine authorized in Canada for ages six months and older, and it may be available for free in your province. Side effects and allergic reactions can occur, and 100% protection is not guaranteed. Learn more at flucellvax.ca.

From executive producer Isaac Saul, this is Tangle. Good morning, good afternoon, and good evening, and welcome to the Tangle podcast, the place where you get views from across the political spectrum, some independent thinking, without all that hysterical nonsense you find everywhere else. I'm your host, Isaac Saul, and I am thrilled today to be joined by economist and columnist Noah Smith. By now, Noah should need no introduction to Tangle readers. His writing is featured prominently in my newsletter all the time. He is an assistant professor of finance at Stony Brook University, or was, I should say. Was, was. Blogs at his Substack newsletter, No Opinion, which I highly recommend you reading,

and is frequently published in Bloomberg. Noah, thank you so much for coming on the show. Hey, thanks for having me. So there's a lot we could talk about. I think, you know, obviously we've got some breaking news with the Biden administration and student debt cancellation, which we will get into. But the big story in the economy right now is the inflation and the inflation debate. You know, this is kind of a bizarre moment in economic times. I'm not an economist. I read a lot of

economic writing and I feel like nobody kind of knows how to describe it. It's like unemployment rates are low and wages are growing, but inflation is high and real wages are declining and the Fed's raising interest rate. How would you describe this moment? I mean, where are we in the big kind of macro economic picture right now? Well, I mean, the easiest way to describe it is that we had an overheated economy. I mean, the easiest way to describe it is that we had an overheated economy. You know, we had some supply disruptions from COVID. And later on, we had some real supply disruptions from a temporary spike in oil and food prices related to the start of the Ukraine war.

But really, what we're seeing is an economy that's just overheated. And it's this thing that we were warned about for years and years, and it just didn't happen. And people started believing it didn't exist. It's like one of those monster movies where they were like, the monster could return. It came when I was a kid. And you're like, no, that monster is not real, grandma. That monster is gone forever, blah, blah, blah. And then, of course, the monster starts eating the kids. It's like that, right? And the monster is inflation, and it's economic overheating. And it turned out that economic overheating isn't just this very simple function of like what your interest rates are and like what your deficit is, because we had very low interest

rates and lots of quantitative easing and blah, blah, blah, plus big deficits in the wake of the Great Recession. But it turns out that that was at a time when demand was being pushed down by a financial crisis and this debt overhang and things like that things like that everyone was scared to go out and spend then in at the end of covid everyone was like spend yes bye bye bye and everyone was so relieved from the covid was like well you know not as scary as before you know it's not over but it's it's over in the pandemic sense right it and uh and so everyone was so relieved that they just went out and bought a bunch of stuff. And they bought stuff that our system

was not as well equipped to handle. You know, for years, the trend had been toward people buying local services, going out to eat a lot in the movies and did blah, blah, blah, you know, expensive, fancy haircuts, I don't know. And so then suddenly everyone was buying their stuff, just buying a lot of goods on Amazon for their home

because that's what they could spend money on because they were staying at home out of fear of COVID. And it really was fear of COVID. There were people talk about lockdown. We didn't really do a lockdown and it was over pretty quick. The fear of COVID is what kept people home. And so, and so we had this rotation and, and people bought a lot of stuff that our economy wasn't prepared to handle and we couldn't pay, you know, we just bid up the prices for prices for it and so and also our government just dished out a shit ton of money to people and that that increased the the situation right uh that pumped up demand a whole lot massive demand stimulus from the fed as well with super cheap loans some of which were not actually loans they're actually just like the fed giving people

money yeah and so we had all this stuff happen, like to goose demand, and that produced inflation. So this month, we got, I think, objectively, some of the first non-terrible inflation numbers in a long time. Obviously, the inflation is still up year over year, but Biden very infamously now went around saying, you know, inflation was flat because the month to month numbers had had cooled off and energy prices seem to be coming down. What was your read on the latest report? How should the public understand it?

I mean, what's the takeaway from from the latest numbers we've gotten? It's just one month. Is it so? So it looked like inflation was going away around summer 2021. And then it just roared back before the Ukraine war, before any of that oil prices, whatever it just inflation roared back after seeming to go away for a couple of months. And you've got to, you've got to wait. You've got to wait to make sure it's gone away.

And, um, and, and we haven't seen that go away yet. The, the number that Biden was quoting to say that inflation was zero is a month-on-month number. That means that prices were the same from one month to the next. And whether that is zero inflation or not depends on whether you're talking about

month-to-month or year-to-year inflation. Year-to-year inflation is much less volatile because it depends on what happens over 12 months rather than what happens over just one month. So if this really is the start of inflation cratering, we should be looking at the month to month numbers and that Biden was absolutely right. If it's the start, if it's simply a blip, then we should look at the year to year numbers and wait, which basically means wait longer to see what's really going on. So both sides are right. And it just, you know, yes, inflation suddenly dipped, took a big dip.

But it may be just as a temporary jag, right? Temporary zigzag. And we need to wait. And I'm sorry, but we need to wait at least like a couple more months to see what's going on with this inflation. If we have two more months where inflation is really low, or if we have like four or five more months where inflation is like pretty low, we can start to come out of our bunkers, right? But as long as it's still, until then, I would say it's not safe to come out of

the bunkers because the threat maybe has just like very slightly paused and isn't really gone. because the threat maybe has just very slightly paused and isn't really gone. Unfortunately, I think that the student debt cancellation has kind of prematurely come out of the bunkers here. Yeah, well, that's a good segue into some questions I've got down the line. So obviously a little bit of breaking news. We're recording this on Wednesday afternoon. It's five o'clock. President Biden announced today that he's going to forgive student loan debt for millions of Americans. It sounds like the target is people making up to $125,000 a year, individuals, and there's $10,000 of forgiveness or $20,000 if you were on a Pell Grant. The early estimates I'm seeing, I think these are from Wharton, is that the cost is about $300 billion.

There's a ton of debate about whether this will worsen inflation. Everybody's sort of getting into our kind of tribal pods right now on this one. Very curious to hear what you think. I know you're just published a fresh newsletter and I've read through it once very quickly, but what's your read on this? Is this good, bad? It sounds like you have some worries. I wouldn't have done it because now is the wrong time. Biden's doing it by executive action. So if it's a popular thing you think is going to rally the vote, you want to save that until 2024. If you think that that's going to help you electorally, you want to save it till 2024. And because it's a big amount, like the amount of student debt cancellation that Biden's doing, although it's spread out over like a decade, it is equivalent to the amount that we're going to raise taxes with

the Inflation Reduction Act. So it's as if we took all that money that we raised from the Inflation Reduction Act, which really would reduce inflation to raise taxes like that. And we spent it on giving student debt relief to a bunch of middle class people and like honestly yes we also spent 380 billion dollars which was also over a decade by the way uh we spent that much on the energy transition which is incredibly important to the future of our economy we and on stopping climate change was incredibly important to the future of our world. And we spent almost the same amount on mailing checks to middle-class people

in the middle of an inflation. That is not a thing I would have done. That was not a good idea in my opinion. There are many benefits to student loan cancellation. It increases economic dynamism. It lets people move around the country. It lets people move from job to job, improve their earnings over time.

There are absolutely benefits to doing this. It is not the kind of thing that where I'm always going to say it's bad. What do you think about the people who paid their college debts? What do you do with them? No. Okay. So I think the student debt cancellation as a one-off policy was a thing that I advocated for for years, but that was when inflation was low. And that was when we needed more demand to goose the economy. It would have been a good

form of stimulus, especially because it helps with dynamism, right? It helps with the supply side as well, as long as inflation is not threatening. And so, but now is the wrong time. We don't know for sure yet that the inflation monster has been conquered and pumping, you know, you're not immediately pumping 300 billions of dollars of cash into the economy like you did with COVID relief, but people can look ahead. They know that suddenly they're much less financially burdened and that's going to induce them rationally to go out and spend. And that's going to pump up demand at a time when we're still seeing the whites of inflation's eyes.

We need to not stop firing until we stop seeing the whites of their eyes, to mangle a metaphor there. Yeah, no, I mean, it makes sense to me. I'm 31, so I have a lot of friends who are like the generation that's been strapped with student loan debt. And I'm in group chats with old college friends and friends, professional friends who are, within the 28 to 40 year old bracket. And there's like a lot of jokes flying around, like Biden just bought me a PS5 and I can't wait to blow this money on a nice dinner. And it's like, yeah, it's funny and it's

great. And I'm happy that some people have this debt or being relieved from it. But it does seem rational to me to expect that this is going to juice demand. Do we have any studies or models or any estimates about what this might actually do to inflationary pressures? I mean, is it too soon to say, or do we have some forward-looking research on this? I looked around for research on this kind of debt cancellation and couldn't really find it because we've never really canceled $300 billion of debt for people. It is difficult to say. It's going to do something and it's going to be difficult to tell how big of a thing it is because a lot of other stuff's happening at the same time. What we'll do, though, here's how we'll do it. There's an income cutoff of $125,000 of income,

where above that you can't get anything, right? So we look at people who are making $124,000 versus $126,000. We look at those people, it's called a regression discontinuity. We look at those people and we say, how much more do they spend relative to the people who made only a couple thousand dollars less, but got all of the student debt cancellation. Because built in with this fairly inefficient little cliff, that cliff is inefficient, but it lets us look at the difference in people who don't really have income that makes them in a different economic class, right? Like making $126,000 or $124,000 doesn't mean you're in a different economic situation, right? Yeah. But we can look at the different behavior of those people

and we can see how much debt cancellation led to a rise in consumption. I know that an economist named Peter Ganong is preparing this data collection as we speak. He and some other team, but he always does this. And some other teams will do it as well. Yeah. And so we'll get to see, we'll get to see how much it does. I suspect that it's not going to be huge. It's not going to be like COVID relief size, because first of all, 300 billion is only,

it's only like one sixth of one of the of the covid bills right the total covid bill we had uh 4.9 trillion dollars so it's it's basically like um it's one-sixteenth of total covid spending and the the forward-looking effect is not perfect so the fact that it's spread out over 10 years will mean that that moderates the effect as well so maybe 120th 125th so we're not looking at like it's going to just explode inflation it will be difficult to see the impact but but it's just not a it's not good timing right it's not we don't want to do anything to encourage inflation it also sends a signal that the government is still in curll money at people mode. And that signal may be important to people because people may expect more.

Maybe, maybe not, because Republicans might win back the House in November. And that means essentially no more free checks for people. But anyway, it's just not I wouldn't have done it at this time. I would have waited till 2023 and 2024 when you can still do it because you still have the same executive power to do it. Pause interest until then, make it so people's debts don't grow until then, just kick the can until we know that inflation's beat. That's what I would have done. That would have been smart. I don't know why they went out and shot their shot right now. We talk about inflation a lot in this US context. I'm curious, zooming out to the global inflation situation. I know I saw a headline a week ago or so that the, I think it was the UK is in double

digit inflation now. Obviously, there's a lot of news about the US dollar reaching parity with the euro. Where do we sort of sit globally in terms of how this issue is affecting us compared to other similar countries? I guess there's kind of no clean comparison in terms of demographics and size and economy and all that stuff. But I'm wondering just how we're doing on inflation when we're put into the global context. Our inflation for most of the inflationary period has been higher than other rich countries, which probably reflects both some of our logistical difficulties. We don't automate any of our ports, for example, blah, blah, blah. It reflects that, but it also reflects the fact that we gave much bigger stimulus than most countries. And so people were able to people just suddenly got all these big checks and they were able to spend it buying a bunch of stuff off Amazon and that increased the price of stuff off Amazon. Or maybe not Amazon, it could be like a used car, it could be like anything that uses

computer chips, could be in any of the things, you know, new house, lumber, any of the things we saw prices increasing for. My neighbors in the lockdown, our brief, quote unquote, lockdown, my neighbors bought a new car. In fact, lots of people I know bought a new car during COVID. Then suddenly you couldn't get cars anymore. And so we gave out a lot more money than other countries. And that was good. I would have done it. I would have done that. I think that was the right move. But it did end up fueling inflation because some people saved it and it looked like they didn't go out and spend. And then that money started burning a hole in their pocket as soon as the pandemic was over. You had this delayed effect, delayed, built up, pent up savings,

as they call it, where people will say, okay, well, now I'm flush with cash, time to buy a house. Yeah. And so Americans are still consumerist. It would take generations to change that culture. We're very consumerist. We want to buy, buy, buy. And so when we had the only thing stopping us buying was coronavirus. And then when, when we're no longer scared of it, whether we ought to be or not, but whether we're no longer scared of it, then we go out and buy and we have all this money sitting around in our pockets. And so it looked initially like this COVID stimulus, COVID package was not really causing people to spend, but maybe it did just with a lag, with, you know, delayed reaction, lit the long fuse that exploded in the bomb of consumption and inflation. So that's a strong possibility.

Based on Charles Yu's award-winning book, Interior Chinatown follows the story of Willis Wu, a background character trapped in a police procedural who dreams about a world beyond Chinatown. When he inadvertently becomes a witness to a crime, Willis begins to unravel a criminal web, his family's buried history, and what it feels like to be in the spotlight. Interior Chinatown is streaming November 19th, only on Disney+. The flu remains a serious disease. Last season, over 102,000 influenza cases have been reported across Canada, which is nearly double the historic average of 52,000 cases.

What can you do this flu season? Talk to your pharmacist or doctor about getting a flu shot. Consider FluCellVax Quad and help protect yourself from the flu. It's the first cell-based flu vaccine authorized in Canada for ages 6 months and older, and it may be available for free in your province. Side effects and allergic reactions can occur and 100% protection is not guaranteed. Learn more at flucellvax.ca. So I'm curious, I mean, I've noticed in your writing that you tend to advocate for much higher interest rate hikes than a lot of other economists I've seen out there to sort of just stem the tide of inflation. I'm wondering, you know, based on where things are kind of trending now, if your mind has changed on

that, if you still think there should be sort of this shock to the system from the Fed, where are you on that? For inflation? Yeah. I mean, the Fed is raising interest rates at a rapid clip, not the most rapid we've ever seen, but sooner in the inflation than we've seen in the past. Like in the seventies, it took us years and years to get serious and start really hiking rates a lot. Now we're just almost immediately starting. We still had that little period where we vacillated and where they're like, is this for real or is this just transitory? Maybe that lasted like the better part of a year. And that was a bad delay.

They shouldn't have delayed, but it didn't take them six years to get it. It took them one year. And so that's an improvement from the 70s, right? You know what I mean? And so that happened. And now they raised interest rates like 75 basis points, 50 basis points. People are expecting another at least like 50 basis point

hike. They've promised to do it. So I would just keep doing that. Interest rates are like 2. Something percent now. Raise it to see what happens when you get in like the 3%, 4% range and see if inflation starts to die. Don't let up, especially because we've just now done the student loan cancellation. The people at the Fed are obviously sighing and going, okay, well, now we have to raise rates a little bit more. Yeah. I mean, I've noticed, I've seen that you, I think at one point you were calling for a two-point raise because there was a sense, I guess, that we needed to do something that was sort of a little bit beyond expectations. And it sounds like your sense now is we just need to not let up. It can't

be that we stop where we are because that'll sort of trap us in the position that we're in. The Fed is, I think, a lot more dovish than people had realized before this inflation. And now people have questioned the Fed's credentials and questioned whether the Fed is really hawkish. And the Fed knows that they've been questioned and that they've lost some of their credibility. Although that's really hard to measure, but there are some indications that the Fed has lost its credibility. some indications that the Fed has lost its credibility. When you look at insurance on interest rates, when you look at swaps that people use to buy insurance on big inflation movements, people are buying insurance against very large movements in inflation, which means that they think that there's a possibility the Fed will allow that. That is something Ricardo Rice pointed

out the other day. He pointed out, he said, look, inflation expectations aren't actually that high, but the tail risk, the possibility of this larger move, financial markets are definitely thinking it's a possibility. And so what that means is that the Fed knows that it has lost a bit of its credibility and that people are wondering, is this Fed really dovish? And in fact, I think they're right that the Fed are just human, right? And they're not robots. And they lived through the Great Recession and then the early coronavirus pandemic when it looked like we were going to have another Great Recession.

They lived through those things and they lived through decades and decades of low inflation and i think that this made them dovish this made them not prepared to fight inflation whereas you had a previous generation with the greenspans and vulcars and whoever and even bernanke who um they had gone through the great inflation you you know, been in power during the great inflation, especially Greenspan and Volcker, they, inflation was always first and foremost in their minds, right? Whereas for this Fed, recession, recession with low inflation was first and foremost in their minds. Just maybe like Arthur Burns and the people, early people in the seventies who didn't, who were slow to react to inflation, they were more worried about unemployment because they had grown up in the Great Depression. And so basically, I think that this Fed was too dovish and that it took it, but that to its credit, it took only a year instead of six years to get that dovishness kind of out of their system.

Now they've got to prove that they're as hawkish as they ought to be. them, now they've got to prove that they're as hawkish as they ought to be. And I think that that means that they should, and I hope they do, keep raising interest rates, especially in the face of this loan cancellation, which will be working against them. Do you think, I mean, when we first spoke, I interviewed you about a year ago and the murmurs of inflation were kind of just starting. And one of the things that we got into, I think more as a thought exercise than this is some sort of immediate risk was just what's the ultimate fear, which is hyperinflation. And I'm wondering if you think there's still a risk of that or where that stands, you know, because that was kind of in the beginning of all this, it's like, that is the scenario that you really, really don't want. And this is all about

really preventing that outcome, which is just kind of what could bring down an entire economy. Right. And so the very bad scenario I was talking about before is called hyperinflation. It's not something that we have seen. We have not seen that yet. Turkey may be headed there right now. Britain could very well head there if they don't get their act together. Turkey might be there. We are not there. Our inflation peaked at like in year over year terms. Our inflation has hit like, you know, eight percent, nine percent. That's high. That's not quite as high as it was in the 70s. In the 70s, we were seeing like 17% inflation, something like that. So it's not that high. It's definitely not to the hyper range. If

we were in the hyper range, we'd be seeing inflation three times as high as it is now at the very beginning. And then from there, an absolute explosion. So we're not in that range yet. The bad scenario hasn't happened yet, but that doesn't mean the bad scenario is impossible. There's a good chance that the bad scenario, I won't say good chance, there is a non-zero chance that the bad scenario is still out there, still lurking, still waiting to pounce. And that if we let up, especially in the face of student loan debt cancellation and other policies that make things a little harder, or maybe resource prices will bounce back. Food and gas prices have gone down.

We all made these jokes about dark Brandon, the evil behind the scenes wizard Biden, pulling the strings of the world. But really we just got lucky and China had a big recession. But yeah, so that if those resource prices come back if they bounce back that'll mean you know expensive uh inputs fertilizer inputs are still expensive so we might still see food crop issues we might see that and it might be that the the fed you know over interprets that one monthly data point and fails to hike rates and people

are like, okay, okay. Rate hike was a joke. Now back to the inflation party. All these things could happen. All these things are pretty realistic. So we got to keep the pressure on. We have to keep firing until we no longer see the whites of their eyes. We have to keep the pressure on inflation until we know it's gone. And we'll know it's gone only after several months of inflation returning to normal. And then we can cut rates. So we're coming up on time here. I want to ask you one last question. You did something that I really loved and I don't see very much from economic writers. You published a piece on four things that you got wrong over the last year, which I thought was both fascinating and

just a really cool thing to do. I've done some of that in my newsletter and I always find it a really rewarding experience to kind of look back on the stuff you've written over the course of a year and pick out the stuff where you were off. One of the big ones, I think maybe the biggest ones was that the impact of COVID relief on spending and consumption. And you basically argued initially that COVID relief was not going to provide this huge fiscal stimulus. And then in this piece, looking back on those things, you kind of acknowledged that personal consumption skyrocketed after the stimulus. So I was just curious to ask you why you think, why you think you got it wrong? What, what did you sort of learn from that? And where do you think you, you missed, I guess? So on that specifically, the reason I got it wrong was that people did studies showing that

nobody was going out and spending their COVID stimulus. They were just saving it all. I said, okay, well, that makes sense. You know, like you're scared to go spend, so you're going to save it. Right. But what I didn't understand was that that might have a lag with this pent up savings effect. Right. And I didn't, I also didn't understand that people's fear of COVID would vanish long before COVID did. Cause if you look at the Omicron wave, we start, which was in, you know, end of 2021. That was many months after inflation started. And yet people still just went out and spent, went out and spent. Unlike in the early pandemic, they did not retreat to their houses anymore.

And so that behavioral change is something I didn't anticipate that people would just decide they were done with COVID, even if COVID wasn't done with them. And they went out and died in there. More hundreds of thousands of people died. They just went out and died or went out and got sick. And they did that. And that's the thing I didn't think they'd do. I thought they'd keep being scared. And I didn't know that. And I didn't realize that the pent up savings effect would be that big. And so basically that's just, we don't really know how the economy works and i don't but also other people don't it's not just me right so i got that one wrong um and with that with that

that was the cause of the other big thing one of the other big things i got wrong which was that i thought that cash benefits were going to be this big transformational thing and inflation just came in and killed that because it turned out that Democrats policy programs are very, very oriented toward depression fighting and very, very oriented toward this idea of stimulating demand by giving people money because that marries the imperative of getting people jobs and getting the economy back to normal with the progressive goal of making a more egalitarian society. And that's been a formula that has succeeded again and again since the new deal.

When the depression comes, you give people money, it reduces inequality while increasing employment. Classic formula. Inflation really fucks with... Can I say a bad word here? Yeah, you can. All right. Inflation really fucks with Democrats. A mojo. It really interferes with their modus operandi because it is not, it inflation creates a trade-off that's not there in a depression. Inflation says, if you try to remedy inequality by handing out checks to poor people, it won't work because you'll just prices will rise and poor people, it won't work because you'll just, prices will rise and poor people will get screwed. And that has turned out to be what happened. And that killed this idea that we were going to switch to this cash-based welfare benefit system with

this expanded child tax credit, which I thought was like greatest. And I still think someday we should do that, but inflation is not the time. The Biden administration has pushed ahead with giving people cash with student debt forgiveness and with increasing Obamacare subsidies, which were $100 billion. So $400 billion of extra cash given to people, even in the face of inflation. And I think it's going to be very hard for Democrats to change their spots here, to think, okay, instead what we need is supply increase. We need to increase, stop focusing on goosing demand and start increasing supply. Go out and have the

government build people a bunch of houses. Increase the spots at universities. Have the government mandate that if you want to get, that we'll give you money, but you have to decrease, you have to spend it, you know, you have to, you can't increase tuition. The extra money we're going to give you, you have to spend on expansion. We are, we're not doing anything like that. We're not expanding, you know, Biden had a plan to have the Fed, have the federal government build a hundred thousand houses, which is a drop in the bucket. Interesting pilot program though. We need to be building so much more.

We need to build, you know, like 50 million new houses, maybe 50 million, maybe 20 million. I don't know. We need to build millions and millions of new houses, not hundreds of thousands. We need to be building, you know, building more power plants and grid connection so that people can have cheap electricity, cheap energy. Now that green energy can be cheaply built, just build a lot of that. And that's good that the, you know, the In be cheaply built just build a lot of that um and that's good that the um you know the inflation reduction act does a lot of that or it gives incentives tax credit incentives to do a lot of that uh but so that's great um but that's

what we need to be doing on everything right we need to be doing that for every expensive thing we need to just be providing more of it instead of giving people more money to pay for it. Stop this thing where we take an already overpriced industry and we restrict supply and we subsidize demand. Something which the Niskanen Center has labeled cost disease socialism. But it's basically just restrict supply, subsidize demand. Price goes up. Quantity doesn't go up. That's bad.

It's fine if you're fighting a depression because it gives people jobs. We have a demand shortage to just mail out checks. Yes, good. But now in this time of inflation and this time of trade-offs and this time of costs and limitations and constraints, we need to focus on busting through those constraints. That doesn't mean we need to do what Reagan did and deregulate or Carter did deregulate. Actually, it doesn't mean we need to cut tax cuts, deregulate and do all this libertarian bullshit. No, instead you can, you can have the government go out and build people a bunch of stuff. You can have government activism do this, but you have to have it on the supply side instead of the demand side. That's what we need right now. And that's what I see the Democrats somewhat

shifting toward with the Inflation Reduction Act, with the climate subsidies. I see the energy subsidies. I see that on energy, and I see a slight movement of that toward that on housing, but not enough yet. And I see basically no movement toward that on higher education or healthcare. But that's what we need. We need abundance. Noah Smith, people want to keep up with your work, read some of your writing. Where's the best way to do that to follow your stuff? Google just Noah Smith blog and my sub stack will pop right up. You can Google the name, which is Noah Pinion, N-O-A-H-P-I-N-I-O-N, but people spell it wrong and put an O in the middle all the time where there's no O.

But yeah, just Google Noah Smith blog. It'll come right up. You too can be a subscriber to my awesome, amazing blog. Join 73,000 other readers of my blog. Noah, thank you so much for the time. I appreciate it. Looking forward to checking back in in a few months and seeing where things are. Awesome. Looking forward to that. Our newsletter is written by Isaac Saul, edited by Bailey Saul, Sean Brady, Ari Weitzman, and produced in conjunction with Tangle's social media manager Magdalena Bokova who also helped create our logo. The podcast is edited by Trevor Eichhorn and music for the podcast was produced by Diet 75. For more from Tangle subscribe to our newsletter Thanks for watching! Based on Charles Yu's award-winning book, Interior Chinatown follows the story of Willis Wu,

a background character trapped in a police procedural who dreams about a world beyond Chinatown. When he inadvertently becomes a witness to a crime, Willis begins to unravel a criminal web, his family's buried history, and what it feels like to be in the spotlight. Interior Chinatown is streaming November 19th, only on Disney+. The flu remains a serious disease.

Last season, over 102,000 influenza cases have been reported across Canada, which is nearly double the historic average of 52,000 cases. What can you do this flu season? Talk to your pharmacist or doctor about getting a flu shot. Consider FluCellVax Quad and help protect yourself from the flu. It's the first cell-based flu vaccine authorized in Canada for ages six months and older, and it may be available for free in your province. Side effects and allergic reactions can occur, and 100%

protection is not guaranteed. Learn more at FluCellVax.ca.