The Munk Debates Podcast - Be it Resolved, American workers have never had it so good

Episode Date: March 28, 2024

The US economy is booming. Public investments in infrastructure, education, clean energy, and more is accelerating labour productivity, growing wages, and spurring employment. Recent economic data shows that “Bidenomics” is working and just as a rising tide lifts all boats, the average American worker hasn’t had it so good in a generation or more. But critics are pointing to the high cost of living – from expensive groceries to housing to health care – to the rise of precarious work to exploding levels of economic inequality as proof points that the president’s economic policies are in fact debt fuelled chimera and achieving the American dream is fast becoming an impossibility for millions of workers. Arguing in favour of the resolution is Steven Rattner. He’s the former head of Obama’s Auto Task Force, an Economic Analyst on MSNBC’s Morning Joe, and a contributing writer to The New York Times Op Ed page Arguing against the resolution is Michael R. Strain,  the Director of Economic Policy Studies and the at the American Enterprise Institute. SOURCE: MSNBC   The host of the Munk Debates is Rudyard Griffiths  Tweet your comments about this episode to @munkdebate or comment on our Facebook page https://www.facebook.com/munkdebates/ To sign up for a weekly email reminder for this podcast, send an email to [e-mail].   To support civil and substantive debate on the big questions of the day, consider becoming a Munk Member at https://munkdebates.com/membership Members receive access to our 50+ year library of great debates in HD video, a free Munk Debates book, newsletter and ticketing privileges at our live events. This podcast is a project of the Munk Debates, a Canadian charitable organization dedicated to fostering civil and substantive public dialogue - https://munkdebates.com/   Executive Producer: Ricki Gurwitz Senior Producer: Daniel Kitts Editor: Kieran LynchBecome a Munk Donor ($50 annually) to get 72-hour advanced access to the full length editions of Friday Focus and Munk Dialogues. Go to www.munkdebates.com to sign up. Hosted on Acast. See acast.com/privacy for more information.

You don't help the poor by making everybody poorer. The media has a frame, and the frame is Israel is the oppressor, and the Palestinians are the oppressed. I shouldn't be forced to acknowledge my privilege unless I desire for that to be part of my interaction with somebody else. What I know to be true and what all of my fellow Gen Z know to be true is that this is the most talented generation yet. With respect to every indesia of disadvantage, there is still a racial higher. And though I am, of course, an Anglo, certainly not a fucking Saxon. Welcome to the Monk Debates. Every episode we provide you with a civil and substantive debate on the big issue of the day.

Our goal with each and every program of the Monk Debates is to arm you with enough information to make up your own mind. Today's debate, be it resolved, American workers, have never had it so good. Guess what? Bydenomics is working. When I took office, the pandemic was raging and our economy was reeling. Supply chains were broken. Millions of people unemployed. Hundreds of thousands of small business on the verge of closing after so many had already closed.

Today, the U.S. has the highest economic growth rate leading the world economies since the pandemic. The highest in the world. The U.S. economy is booming public investments in infrastructure, education, clean energy, and more is accelerating labor. productivity, wage gains, and spurring continuing high employment. Recent economic data shows that Bidenomics is working, and just as a rising tide lifts all boats, the average American worker hasn't had it so good in a generation or more. Here's U.S. Treasury Secretary Janet Yellen. Americans are getting ahead.

They're getting solid wage increases that exceed inflation, but there's really no evidence of inflationary pressure coming from the labor market and we just have excellent strong performance. The U.S. economy is performing better than any advanced nation around the world. But critics point out that the high cost of living from expensive groceries to housing to health care to the rise of precarious and part-time work to record levels, all against a backdrop of increasing economic inequality are proof points that the president's economic policies are falling flat. They are, in fact, fueled by a chimera of record levels of public. Deadness, an American dream that continues to slip away for millions of working class people.

Here is American Congressman Joe Wilson. Biden wants Americans to believe his policies are working, but his borrow, tax and spend by dynamics created a 40-year high inflation, causing families to suffer from skyrocketing energy and grocery costs and discouraging increases of rent and mortgages. On this installment of the Monk Debates podcast, we challenge the essence of these arguments by debating the motion, be it resolved. The American worker has never had it so good. Arguing for the motion is Stephen Ratner. He's the former head of President Obama's auto tax Force, an economic analyst on MSNBC's Morning Joe, and a contributing writer to the New York

Times op-ed page. Arguing against the motion is Michael R. Strain, the director of economic policy studies at the American Enterprise Institute. Stephen Michael, welcome to the Monk Debates. Thank you. Thank you. Nice succinct. Thank you.

For a nice, succinct debate on an important topic, be it resolved American workers' have never had it so good. Stephen, you're arguing in favor of the motion. Let's have your opening statement first, please. Look, I think the evidence is incontrovertible that American workers have never had it so good. You have unemployment at around 3.7%, which is right around the lowest that's been since the 1960s,

which are widely regarded as one of our more housingic periods of economic prosperity. You have wages going up in real terms. I know there's a lot of controversy. about that, but the facts are they are going up in real terms, have for the last four years. You have narrowing income inequality. Wages are going up faster for those at the bottom

than those at the top. That's a phenomenon that actually started in fairness right before COVID, and it's really a consequence of running the economy so-called hot, where there's more demand for workers and there are workers as reflected in the law unemployment rate. And so people get big pay increases. What's interesting, one of the little facts

that's interesting, fun facts, I guess, that's interesting to know, is that you've got black unemployment rate at 5.3%, you know, the lowest on record. You have women coming back into the labor force. You have labor force participation overall doing well. Men is still a little behind where they were, but moving in the right direction. And so on all fronts, it seems to me that people are better off. Obviously, there's inflation.

This is something that's on the minds of all workers. But inflation has been subsiding far more dramatically than any of us, including myself. would have predicted without any kind of economic recession or disruption. And as I said before, even though people have sticker shock over the prices, the fact is an accurate analysis of the situation would tell you that inflation has come down a lot and that people do have more spending power than they had before all this. I know there's a lot of trauma and so forth about it. But there is.

There's also sort of little things. in the 2022, the last year available, the conference board found that job satisfaction was at an all-time high in America. So I think, yes, there's a lot of, look, there's a lot to be done, a lot of ways to improve a lot of workers, so a lot more work to be done on things like health insurance and giving people security they'll be taken care of. But all in all, I think this, even though it may not always feel that way. I think objectively looking at the numbers, this has been a very successful period for American workers, and they are better off today than they have ever been. Thank you, Stephen Ratner. What a great opening statement. Sincinct to the point. We appreciate it. You're listening to

our debate today, be it resolved. American workers have never had it so good. Michael Strain, you're arguing against the motion. Let's have your opening remarks now. Thank you. I am arguing against the motion, I'm arguing against the motion focusing quite a bit on the word never, because I agree with a lot of the thrust of what Stephen said. I do think that right now, the American worker has it pretty good. We have quite low unemployment. The unemployment rate is still below 4%. We have been in a period. I agree with Steve that we've been in a period where inflation adjusted wages have been rising. We've been in a period where income inequality has been narrowing, if that's something that you're worried about. I imagine Steve's more worried about it

than I am. And lots of important groups of workers that are the victims of discrimination or who are vulnerable for one reason or another are seeing success in the labor market. But I do think that this has been a rocky period for the American worker. I think the same underlying forces that led to a really rapid recovery from the pandemic recession also led to four-decade high inflation, and that that has sufficiently eroded the benefits of the last couple of years for American workers, that I think it's an overstatement to say that they've never had it better. To take one important metric, coming out of the pandemic, inflation-adjusted wages fell until the summer of 2022.

Now, they've been rising since the summer of 2022. They've been rising for about two years. But that was a two-year period where inflation-adjusted wages for the average worker were falling and not rising. median household income was lower in 2022 than it was in 2021, and it was lower in 2021 than it was in 2020 after adjusting for inflation. That's a pretty significant factor. In addition, consumers feel quite bad about how the economy is doing, and I think we should, I think we should take that seriously. So, you know, my view, if you look at the labor market of 2018 or 2019, I would take that labor market over the labor market. of the last few years.

I think that labor market had the good features that our current labor market has without the bad features. And I think that there are other periods of American history since the Second World War where American workers have had it better than they have in recent years. So I reject or I argue against the motion. But with the important qualification that while I don't think it's true that American workers have never had it this well. I think that was a pretty good time. Thank you, Michael Strain, for that opening statement. Rebuttles now.

Stephen, you're up first. Yeah, I think the way the question was framed, I felt very comfortable answering, which is I say they've never had it better. I define never as their economic state, how many television sets they own and can buy, how many times they can go out to dinner, buying a new car, new house, and whatever. And I think on that basis, I would say, stand by what I said, I think it is certainly true that as we look back into the 1960s and other periods of time, people in 50s post-war period, people felt very good. They were suddenly getting more things. So it's a little bit of a static analysis or a rate of change kind of analysis.

If you look back into the 50s and 60s, things were improving faster. I would absolutely concede that. I would simply say in terms of the absolute level of where people were, that people have never had it better. I mean, let me just give you a fun fact. A lot of states have been raising minimum wages to try to help the people at the bottom. And today, as we sit here, there are only 68,000 people who make the federal minimum wage, and that's down from 1.7 million people in 2010. So we have dramatically been able to, through state actions, because the federal government seems incapable of acting on this, to get people back up to or get them up to something that gets closer to a living wage. Let me say one word about gas prices as a proxy for inflation.

I know inflation bothers people. I had someone look up for me that two-thirds of the people who are voting age today were not able to vote the last time inflation was 4%. So you have a lot of people out there who've never seen inflation. Don't know what it means. I see this crazy stuff, as Michael probably does on CNBC where people talking about prices coming back down again. That would actually be a bad thing. That would be deflation. That would not be good for a country with $34 trillion of debt. So inflation is part of our life. But if you take something like gas prices and you adjust for inflation, gas prices at three and a quarter, I think they are, are actually at a median of where they've been over the last 40 years. Gas is not

at some extraordinarily high price. So again, I understand why people who are used to buying it were used for a while to buying it at $2,000 kind of freak out. But if you put this thing in historical context, gasoline is just averaging price. Thank you for that rebuttal. Let's come now to you, Michael, your chance to react to what you just heard from Stephen. Go back to his opening statement. The floor is yours. So I think that Steve makes an important distinction between the rate at which the economy is improving and the absolute level of the economy. You know, I think that even if you want to talk about the absolute level of the economy, there's some good reason to doubt the motion. government data are produced with a lag. And so the last time the Census Bureau updated its inflation adjusted median household income statistics was for the year 2022.

But in the year 2022, the median household had less purchasing power from income than it had in 2021. And it had less in 2021 than it had in 2020. And the high mark of the series is 2019. that's exactly the measure that Steve's talking about when he's talking about the number of TVs you can buy and the number of dinners you can go out to because that's inflation-adjusted median household income. And it captures the typical household because the median is a good measure for the typical household. I also think that there's, you know, we are, I think it's important to recognize that we have not seen the end of, of this current cycle. You know, if the current business cycle were a movie, the movie hasn't finished yet.

And the economy is living with very high interest rates, you know, relative to previous decades. So far, that has kept, that has not found the unemployment rate to rise above 4%, which is pretty remarkable. But the unemployment rate is four-tenths of a point above where it was in 2019, which, you know, is, I think, considerable. I mean, that's, you know, that represents a large number of workers who are able to find a job now, who are not able to find a job now, but who would have been in 2019, 3.5% unemployment versus 3.9% unemployment. And there's reason, I think, to be concerned that the unemployment rate is going to keep going up as interest rates remain high. And so, you know, I kind of return to the thesis I advanced in my opening, my opening remarks. I think, I think now is a good time. This is a good period for American workers and a good period for American households.

But I think, I think 2019 was better. And I think that there's, you know, we haven't seen the end of the movie yet. And there's reason to be concerned about where we're headed over the course of the coming year. Thank you, Michael. You're listening to our debate today, be it resolved American workers have never had it so good. Gentlemen, let me join the conversation now. Think up some questions that are top of mind for our listeners. And Stephen, let me come to you first.

You know, subjective opinion is subjective opinion, i.e. it's someone's sense of how they feel. How do you reconcile surveys that seem to show really deep, pestil, And concern on the part of many American workers about their economy, about their future prospects. How do you resolve that with your contention that they've never had it so good? That doesn't seem to be what they're reporting to pollsters, what they're saying about the working lives that they're waking up to each and every day. Well, you know, that's a question I get asked, and I'm sure Michael does too, somewhere between two and eight times a day by people who want to understand if the economy. economy is so good, why do they feel so grumpy? And let me address up, but let me just say one quick thing in advance to that, which is to drag out the old line that was attributed to Israeli,

but it probably wasn't him, where you talked about the three greatest lies being lies, damn lies and statistics. You can come to a conversation like this with any sort of statistics. My client has his about household well-being. If you look at inflation-adjusted disposable per capita of income, it's at an all-time high. It's up six and a half percent since February 2020, 23 percent since 2014. And so there's a lot of ways to slice the salami on this thing. But I think we would both agree. The economy is doing surprisingly well. I don't think I ever would have guessed we'd be quite in this place. Happy we are. And prospects seem so good. Let me get to your question. I get asked this question, as I said a lot. Michael gets asked

this question a lot. I don't know that any of us have a clear and convincing answer. to it. I would say a couple things. I would say first, the whole period since the GFC has been a kind of shock therapy for the American public. The GFC was a shock. You then had this strange period of what Larry Summers called secular stagnation when it felt like the economy was never going to grow again. Then I will say under President Trump, the economy was growing, but then we hit COVID and that knocked everybody for a loop. And so I think people are still trying to kind of process all that and figure it what that means. Number two, I do think inflation, and there was a good front-page story in the Wall Street Journal, I think on Friday or Thursday about this, I do think that inflation really

is psychologically damaging to people. And as I said, most people have never experienced inflation before. If you've never been in battle before, you're probably a lot more scared and a lot more confused than ill at ease than a guy who's been through a couple of wars. Not that any of us want to be in wars. But the point is that you've got an American public that's just so unused to this. There's been some bad luck. You had the avian flu, which drove the prices of eggs into stratospheric heights. Most people buy eggs at some point or another. They see that. We did have the blip up in gasoline prices. Absolutely, we did. And gasoline stations are poster boards for prices. And so people are totally aware of what they're paying for gasoline. And I think all this got inured into their

into their system. Now, I also think, and this, I know if there's a segue into your next topic, so I'll make this comment short and we'll see where it goes, and this is something I suspect Michael and I are going to agree a lot on. We have an enormous federal deficit. It is not an issue in which people seem to be voting on because it just almost never comes up almost, except an ad-honoring kinds of attacks in the campaign, but we have $34 trillion of debt. Both of these presidents have amassed enormous amounts of debt, some for necessary things like COVID, some for things I would support like infrastructure and the IRA and so forth. And some, frankly, just checks that never probably should have been sent out.

But the result is that I think this is a piece of why people are very pessimistic about the future. If you talk to, you know, you look at these surveys and you try to evaluate them and you try to look in their entrails to see what they mean, they sort of seem to mean that, to me, anyway, that things are actually okay now, but the future looks really dismal to them for whatever set of reasons, whether it's the fact that they can't find a house or their kids can find a house that they can afford, whatever the reason, people are extremely pessimistic. You're seeing surveys for the first time, I think in survey history, where people are saying that they think their kids are going to be worse off than they were. And all that kind of gets discounted back to the present

and becomes part of a present feeling that's one of significant malaise. I wouldn't argue with that. Really interesting answers. Stephen, thank you. You helped me understand. this a little bit better. Michael, what's your take? Why do you think people are so darn rumpy out there when it comes to the economy? Are they experiencing something that would support your contention that, in fact, maybe this isn't the peak moment for American workers? Maybe they're sussing something out that they understand that the dismal science economics maybe hasn't fully captured. Yeah, I don't know that I want to impugn the dismal science. But I do think that Steve is right to focus a lot of his answer on inflation.

And, you know, just to maybe back up a step, inflation is the rate at which kind of general prices throughout the economy are growing. And the rate of inflation is different than the level of prices. And so if the price of eggs, is growing at, you know, 10% a month and then it slows to 5% a month and that it becomes 2% a month. You know, we might say, hey, the price of eggs is increasing at 2% per month once the problem. Well, that's true if you look at the rate of growth of the price of eggs. But if you look at the level of egg prices, you know, it's gone up a lot, even if the rate of growth in prices is slowing.

And I think that people are likely reacting to the level of prices. And at some point, they're going to adjust to that. At some point, these prices are going to, you know, become normal. And I remember when I was a kid, I used to be able to buy a can of Coke, a can of soda out of a vending machine for a quarter. And then I remember it became 35 cents. and that was irritating because I had to, you know, find a dime. And, you know, then at some point it became like a buck and, you know, then it became two bucks.

And, you know, that now kind of feels normal to me, right? I don't feel like I'm getting ripped off when I go to a vending machine and pay $2 for, I guess now it's like a 20-ounce bottle. It used to be a 12-ounce can. But I don't feel like I'm getting ripped off when I pay $2 for a 20-ounce bottle of Diet Coke. But if that had happened to me in 1997, I would have felt like I was getting ripped off. You know, I'm an economist. I pay close attention to these issues as does Steve.

And I was surprised by my own emotional response to higher prices. I mean, you know, I take my family out to lunch on Saturday to a restaurant that we have been going to for years. And all of a sudden, you know, instead of $40, it's $60. And I kind of feel like somebody's punched me in the face and taking a $20 bill out of my wallet. And, you know, I still, I don't feel that as intensely after having lived with this. And especially because, again, the rate of inflation is normalizing. But I still haven't fully gotten used to these higher prices. And I don't think the American people have either.

And I think that's particularly salient for food prices. The last time I looked, food prices are 20 or 25%. higher than they were when President Biden took office. And that's a big increase and that's going to put people in a dour mood. I also think that, I mean, and this is a point, again, that Steve made earlier, you know, a lot of people who are adults today didn't live through the inflation of the 70s. They've never experienced this before. And I do think that, you know, a lot of economists are puzzled by how low consumer sentiment is. I think part of the the answer is that the people who are experiencing the inflation today experienced, you know,

years, decades of very low inflation. The big problem we had, the big, well, a macroeconomic problem we had going into the pandemic was that inflation was too low. The Fed has a 2% inflation target, and it was not able to achieve 2% from the downside. And so if you've lived, you know, if you've lived 15 or 20 years in an economy where inflation is 2%, 1.5%, 1%, something like that, your response to a 9% CPI is likely to be a lot different than it would have been for people in the 70s. And then another point I would make is that interest rates are quite high. And I think that is weighing on sentiment. according to data from the New York Fed, credit card delinquency rates are higher than they were prior to the pandemic.

So not only do people have these high credit card balances, but they're actually entering, entering severe delinquency on their credit cards. If you're trying to start a family and buy a home, a 7% mortgage rate feels very high to you. I think, and that makes homeownership feel a bit out of reach. And so I think that interest rates are another big part of the story. First, on your restaurant anecdote, which is something we all feel, I'm stunned at the prices in restaurants now relative to what I used to see. And then on the other kind of, you know, obviously I'm going to slightly nicer restaurants, but on the other end of the spectrum, you've probably seen McDonald's talking about how their low-end customers are trading down, that they've had to raise the price.

I'm not going to get these numbers exactly right, but a Big Mac fries and a drink, like $17 or something like that, and it puts a lot of pressure. Well, part of why those are up a lot is because wages are up a lot, because we've increased state minimum wage, haven't increased the federal minimum wage at all, but we've increased state minimum wages very substantially. And so now you have McDonald's workers making $15 or $17 an hour, which I'm all in favor of, but somebody has to pay for that. And it's being paid for, oddly enough,

by maybe not oddly enough, by people like us on the call who are not in the bottom income bracket, but are further up. And it's in a little, it's in a very small way, moving income from us to them. And I, you know,

none of us like it, but I think I personally anyway would like to see the people at the bottom do better. So I'm prepared to pay it, you know, slightly grudgingly. The one, the one area, I think, in all of the sunniness, or at least my sunniness, that I think we have to, I would freely concede this issue as housing. And Michael reminded me of it when he talked about interest rates.

Interest rates being where they are has made it really tough. The lack of construction of housing since 2008, not a complete lack, obviously, but the low level of housing construction since 2008 has put real pressure on prices. And so it has become the affordability problem. And I have four millennials who are in one form or another in the housing market. And the, uh, the difficulty it's created for people starting out especially to be able to afford the kind of house that their parents afforded. They think they should afford whatever, uh, has, has definitely, uh, been impacted. And, and that is, that is a something that is not the best that's ever been in history. I will concede that one. If you're enjoying the monk debates podcast, come over to

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Michael, let me come to you with another thing that's probably in a lot of listeners' minds. It's the extent to which we're debating whether American workers have never had it so good as they do now. I think some people feel maybe this goes back to sentiment, but I think there's something more than just sentiment here that, yeah, they've never had it so good because the U.S. economy is running trillion-dollar deficits every hundred, hundred days. In other words, this is all a chimera. It's not real. And people have cessed this out, that there is massive levels of fiscal stimulus coursing through the U.S. economy, wartime levels, as a percentage of GDP. It's unsustainable. It's not going to continue. And what this is,

is it's a fiscal sugar high. And American workers are going to have a hangover. Maybe the American government, taxpayers, too, when deficit spending finally has to come back to Earth, come back to reality in the face of higher sustained borrowing costs that may have nothing to do ultimately with Fed policy. I think it's an interesting hypothesis. Here are some things that we know. We know that Congress and the president engaged in really unprecedented acts of fiscal policy in 2020 and 2021. We know, we know that that played a large role in savings, household savings rising to extremely high levels. And then we know that American consumers really voraciously spent those savings levels down. I kind of expected that the savings rate would fall until it returned to where it was

before the pandemic. It kept falling after that. And then consumers, you know, built a up a bunch of credit card debt, like I mentioned, and now we're saying credit card delinquencies. I think the main kind of explanation behind that voracious appetite for spending is what came to be known as the revenge spending narrative, that people had been cooped up in their houses because of the pandemic and because of the associated restrictions on business activity. And, you know, they wanted to get out into the world and go on vacation and they didn't care what the plane tickets cost and they wanted to go out to dinner a lot and they didn't care what the prices were and that that was that was mainly a reaction to the pandemic. I think it's also possible

that at least in part, it was a reaction to something quite related to what you asked about, a reaction to the fact that a lot of the money in their checking accounts wasn't earned by them. It was transferred to them as part of pandemic fiscal programs. and that they were more willing to spend it and more willing to spend it quickly. And, you know, did that create a psychology of kind of a fragility around household finances? Does that make consumers spending strength less of a statement about the strength of the economy and more a statement about fiscal support? And is that a way to kind of square the circle of boy, consumers,

they're spending money. They're not, they're not, you know, saving money. So their behavior tells me that they have confidence about the economy, but the consumer sentiment numbers tell me that they don't, potentially. I mean, it's an interesting hypothesis. Stephen, what do you think about this? You know, the American economy went from, you know, radical monetarism in the post-GFC phase up to COVID. Now, yes, interest rates much higher, inflation real.

but fiscal spending is off the charts. Like, is it fair to say that the American workers never had it so good? If the only reason the American workers never had it so good is because of government largesse, which we know, at least if international debt markets or any indication, is something that will be temporary. I hope this debate hasn't been disappointing to you that Mike and I have not gotten in a fistfighter started yelling at each other. other about supply-side economics or something or another, but so far is so good. And so I'm going to

stay in an area where I suspect there's going to be heated agreement between him and me, which is we have an unsustainable fiscal policy. I'm not saying we cannot run deficits of $2 trillion forever. We do have the nation's, the world's reserve currency, and I don't worry too much about that being jeopardized, but it is completely imprudent fiscal policy. We are, And this gets a bit to maybe my earlier answer of why people are grumpy. Well, we're stealing from their kids. I mean, you'd be grumpy, too, if somebody was stealing from your kids. We're basically setting up a fiscal policy dynamic with an aging society in which there's

going to be no choice but to either make people pay a heck of a lot more for their Social Security, Medicare, Medicaid, and Obamacare, whatever, or go without it or have less of it. And at some point, and I know people have been saying this for 40 years since my old colleague and friend Pete Peterson started saying in the early 70s that we had an unsustainable budget deficit. One of these days are going to be right. I don't think, I'm not in the school. It thinks the Treasury market is suddenly going to crash and interest rates are going to go soaring when everybody realizes. But I just, I think we've got this intergenerational transfer going the wrong way from our kids to us. You know, instead of leaving our kids, as most people do, you know, some money and some this

and some that, we're leaving them a bunch of debt. Well, leaving some of the first thing, hopefully, as well, but we're leaving them a bunch of debt in the federal government that they're going to have to deal with. I'm not saying they're going to pay off the debt. That's never going to be paid off. But when you look, when you combine rising interest rates, and I think everybody would agree with me about this, rates are not going to come back down to zero. That is over for this at least long cycle.

You know, race will settle out at 4% on treasuries and the Fed may be around the same place. And that is a fairly, with 2% inflation, you know, that's a fairly normal kind of place to be. But that is going to substantially increase the government's budgeting costs as their lower cost debt rolls over. And that creates a squeeze. And it makes it harder and harder to pay for defense, which is really important to our country, to pay for roads and bridges and national parks and all the things, the FDA, to make sure our drugs and our food are safe and all the things people like.

And it's going to be a real problem. And again, I don't think it's going to be a big bang or suddenly there's a crisis and we address it. It's more like the parable of the boiled frog. The water's just getting hotter and hotter. And at some point, the frog's going to be dead. The French love frog soup. So maybe dead frogs won't be so bad after all.

Stephen, let's allow Michael a final word in here. And then we're going to come to closing. statements. Michael, I just want to have you assess, you know, what we're seeing in stock markets right now, which S&P at all-time highs. Isn't this an important barometer of just how good the economy is? Isn't, in fact, all that, at least paper wealth that's being generated? Isn't that partly what's responsible to a credible case that workers have never had it so good because companies' balance sheets have never been so strong. And yes, that beloved trickle-down effect is happening at a scale that, again, we would not have imagined even 18 months ago. To a point,

I don't think that it can be said often enough that the stock market is not the economy. The stock market is not the economy. The stock market is not the economy. And I think that there are peculiarities in the current market. I think that there are peculiarities in the current market. I think I think that there is reason to believe that some equities are overvalued. I think if you look beneath the hood of the S&P 500, I think it's the index you mentioned, that you'll see that a lot of that growth is driven by a small number of companies. I think that optimism about the future path of developments in artificial intelligence is responsible for a lot of the growth in stock prices.

That may or may not happen. And I think equity investors are reacting to what is, in my view, an overly optimistic forecast of the extent to which interest rates will fall over the course of the next several months. So that's, you know, those are a lot of caveats. But, you know, all that, all that being said, I mean, yes, you know, it's, it is a sign that investors. are feeling good about the prospects for American business. And I strongly believe that if American business is doing well as a general matter, that's a good thing for workers. Stephen, let me just hear you quickly on this,

because a lot of the companies that seem to be, as Michael points out, you know, really kind of experiencing this incredible moment of massive capital appreciation are in the kind of high tech space. They're in fact companies that really don't employ that many workers that in a sense suggests, doesn't it, Stephen, that the economy is headed in a very different direction, a direction that might not be friendly to the American worker that you're arguing today has never had it so good? We would need to do an entire other. podcast to discuss. I agree. I was just in San Francisco for three days, and you can imagine I was immersed with the techno optimists. I was also interested in that many of the most technical, and much of

this discussion was AI, that much of the techno, some of the techno optimists are also worried about jobs of the future and there's going to be enough jobs or they have to be retraining, whatever. I have written on this. I suspect Michael and I would have agree on it, but I don't know, that technology is our friend, not our enemy. And that is what is going to, if we have a hope of producing a economy that grows the way it has in the past, that is our hope. And so I'm rooting for those guys to succeed and develop lots of products that are labor saving, because we have, we don't, just to state the obvious where we started, we do not have a job shortage at the moment. We have a worker shortage at the moment. I'm not

getting an immigration on this podcast either, but we need to, we need to, you see business everywhere. I just got the newspaper from the little summer place where I go, the little summer community up in Massachusetts and some restaurants closing because they can't find enough workers this summer. So it's not, it's not like we just don't have workers. So maybe I lost your question. Maybe you just. No, no, no, you answered it in a sense. We shouldn't necessarily, you know, have a kind of moral panic here about, Silicon Valley and the magnificent seven taking over the S&P and basically dominating all the industrial and manufacturing and other parts of the economy, at least reflected in the stock market,

in terms of where capital is flowing. We do have some issues that are, again, outside the scope of this podcast to think about there is a trend not just in Silicon Valley, although they epitomize it, but in large other parts of the economy where bigger companies are outper. performing smaller companies simply by their heft and their market power and so forth. And I'm not calling for, you know, for Teddy Roosevelt style breaking up of companies, but the market part of what is, part of what is going on. And you've heard many people on the left complain that as corporate profits have risen over the last really 30 years, workers have not gotten

their full share. And there is some truth to that, even as profit margins of companies have stayed very high. And so there are some things that I would advocate for. Again, we probably don't have time for it today to redress a bit the balance of power between labor and business to make sure labor gets its fair share of the profits. Thank you. Stephen, let's go to closing statements. You've been listening to our debate today, be it resolved American workers have never had it so good. Michael, sum up in a couple minutes. What do you want listeners to leave this conversation with in terms of your side of the debate that maybe there was a time, another point in American history where workers did have it better.

And the Cup, well, maybe it's half full, but it's not overflowing. I think it's been a very good conversation. I would say the Cup is more than half full. I think now is a good time to be an American worker. American workers are in good shape. And that's also true of American households. I do think that whether judged by the rate of progress or judged by the kind of absolute level of well-being, that this is not the best that we've ever had for American workers. Americans feel pretty lousy about the economy, and we have to take that seriously.

Interest rates are very high. that's leading to credit card delinquencies that are above pre-pendemic levels, that's making it much harder for people to purchase homes. Inflation-adjusted median income has been falling since the pandemic, at least up until 2022. Inflation-adjusted average wages were falling until the summer of 2022 and have been rising since then. The unemployment rate is four-tenths of a point higher today than it was in,

2019, which is a significant amount higher, and that represents lots of workers who would like to find a job but aren't able to. And so, you know, I wouldn't want to overstate the case. We have low unemployment. We have rising wages. We have rising inflation adjusted wages. We have, you know, relatively high inflation adjusted wages and incomes. But I think if you asked me to pick, between this economy and the economy of 2019. I would take 2019. And I think, importantly, that we don't know how this ends. There's a chance the economy re-accelerates and the Fed has to deviate from its current plan to start cutting interest rates.

There's a chance that current interest rates lead to a pretty rapid deterioration in economic conditions. and we see substantial increases in the unemployment rate. And so any kind of assessment of this period of economic history, I think ultimately we have to say TBD. TBD. Thank you, Michael Strain, for that closing statement. Well, Stephen Ratner, as per debate convention, we're going to give you the last word in our discussion today,

be it resolved. American workers have never had it so good. Michael made, I think, an interesting point that I want to pick up on, or maybe it wasn't, and maybe used it slightly differently the way he meant it, but maybe not. I think you can distinguish, when you try to answer that question, I think you can distinguish between rate of change and absolute level. In other words, I would argue that at an absolute level, in terms of like how many things people have, how many cars they have, how many trips they take to Disneyland, how many times

a week they eat out, how often they or how much they buy and close. I would say if Americans aren't the best off they've ever been, they're pretty damn close. Where I think it gets less optimistic and where I worry too is that the rate of change has slowed. In other words, the secular growth rate of the economy has slowed from where it was, certainly back in the 50s and 60s and even in the 90s and certain other parts of our history. And that gets back to productivity, which is a very elusive concept, we'll save for another day, but essentially people becoming more efficient at their work, which is also slowed. Without high productivity, you can't have high real income growth. And so there are things to worry about and work to be done to make

things better. We can argue about today's unemployment rating is a few points higher, a few tens of a point higher than it was at some other low point in the cycle, maybe, but it's higher in large part because workers are coming back into the workforce, especially men, not all the way back, but getting close and women back more than ever. And no one can argue that there's a shortage of jobs. Layoff rates are down. The new claims for unemployment insurance, which is one measure of the difficulty of people finding jobs are still at a very low level. There's jobs everywhere. We need workers at the moment.

So I have plenty of things I worry about, which we've gone over, gone through in this podcast. But as we sit here today, I think at least I'm very happy being on the positive side, the pro or whatever you want to call outside of this debate, to be able to argue that Americans, as I would at least define it, have never had it so good, recognizing there are always things that aren't going to be perfect and certainly things to worry about for the future. Thank you, Stephen, for that closing statement. And thank you, Michael, for participating in this civil and substantive debate. You know, a little agreement, a little harmony in the world of public policy and public discussion is never a bad thing. So I've enjoyed listening to you both

and finding points of agreement and disagreement along the way. We're all much richer off for the conversation. So on behalf of the Monkdebik's community, thank you so much for coming on the program. Thank you. It was a lot of fun. Always fun to be with Michael, who I have a lot of respect for. And we have had an interesting conversation and look forward to another one. Yes, thank you very much.

And wonderful to be here with my pal, Steve. Well, that wraps up today's program. I want to thank our participants, Stephen and Michael, for a terrific conversation. they certainly gave us a lot to think about. If you have questions or feedback on what you've just heard, please send us an email to podcast at monkdebates.com. Thank you for bringing your time and attention to our efforts to restore the art of civil and substantive debate,

one conversation at a time. I'm your host and moderator, Rudyard Griffiths. The Monk Debates are a project of the Aurea and Peter and Melanie Monk Charitable Foundations. Rudyard Griffiths and Ricky Gurwitz are the production. Be sure to download and subscribe wherever you get your podcasts. And if you like us, feel free to give us a five-star rating. Thank you again for listening.