The Prof G Pod with Scott Galloway - Conversation with David Leonhardt — The State of the US Economy

Episode Date: February 29, 2024

David Leonhardt, a senior writer at The New York Times, where he writes “The Morning” newsletter, joins Scott to discuss themes from his book, “Ours Was the Shining Future: The Story of the American Dream.” We hear about the state of the US economy, investments that could fuel economic growth, and how the political parties have contributed to a decline in American prosperity.  Scott opens with his thoughts on his stock pick for 2024.  Algebra of Happiness: create a time machine. Learn more about your ad choices. Visit podcastchoices.com/adchoices

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NMLS 1617539. Episode 289. 289 is the area code serving ontario canada 1989 the berlin wall fell between east and west germany pro tip here if you surrender to the germans it's like having sex with a horse people remember you for that the rest of your life fair go, go! Welcome to the 289th episode of The Prop G-Pod. In today's episode, we speak with David Leonhard, a senior writer at The New York Times and author of Ours Was the Shining Future, The Story of the American Dream. We discuss with David the state of the U.S. economy, investments that could fuel economic growth, and how the political parties have contributed to a decline in American prosperity. Okay, what's happening? The dog is back in London. I was barking in Spain for a while. I was in Madrid. Some observations in Madrid. I have PTSD from Madrid. I was teaching at Instituto Impresa.

I think I talked about this a few weeks ago, and I recognize all of you listened to every word, but in case you missed it, I taught at Instituto Impressa, I think in 2005. And I was flailing professionally, and I decided I wanted to be an activist investor, and I raised $80 million, and I bought 17% of Gateway Computer. And I was commuting back and forth from Madrid when I thought it'd be cool to teach a class in Spain for a semester, to fucking Irvine. Anyways, that took a real toll on me. The woman I was seeing at the time, the relationship was like hugely tumultuous, and I was totally stressed out. Anyways, I have no desire, I had no desire to go back to Spain. I go back to Ibiza, but that's different. That's like kind of like Mykonos, where they just speak Spanish. And I like it there and I like the DJs and I like the hot people and I like the drugs. And should I say that? Do I like

the drugs? I don't really do the drugs, smoke some pot, do some edibles. But anyways, don't love or didn't have a great experience in Madrid. And so never really wanted to go back. Wow. What a city. What a city. I went to this restaurant called Amazonica, and then I went to this other place called, I don't know. But they were both very nice. They were both very nice. They stayed at this hotel, the Villa Magna, and it is a beautiful city. It feels like it's had this multi-billion dollar facelift, great food, really cool fashion, and people are nice. I love Spanish. If I was going to speak another language, it would be Spanish. I think it's such a beautiful language and I love Latin cultures. Anyways,

had a wonderful time, came back, immediately went to the Carabao, the finals of the Carabao Cup, where I saw Chelsea lose in the 28th minute of overtime to Liverpool, which was basically brought the house down. My youngest is a huge Chelsea fan and really needed this win. I mean, if you're a Chelsea fan, we really needed this win. And I'm not a big Chelsea fan. I'm more Arsenal. But anyways, that kind of made for an awful evening because my son is 13 and has trouble not controlling his emotions. Let's look at the glass is half full here. He's very good at expressing his emotions. And so the rest of the night was sort of ugly at the Galloway household. And it was back in England, going to football matches and surviving

in what is a beautiful spring day. And that is the sun came out for about 17 minutes, and I think it popped up above 55 degrees Fahrenheit. I'm sticking with Fahrenheit. I'm sticking with Fahrenheit. That's me clinging to America. Okay, let's move on to the news. What is the most important stock in the world? What is the tail wagging the world right now? NVIDIA.

From the firm's surge in stock price and market value to the way it's dominating the chip and AI race, no one can seem to get enough of the $2 trillion company. The latest stock surge added a record $277 billion to its market cap. There was a new record set just a couple of weeks ago when Meta announced their amazing earnings, but NVIDIA bested it with a $200 billion. I mean, this is just so staggering to give you a sense of how staggering that is. Basically, NVIDIA, since the beginning of the year, has added the value of Tesla. NVIDIA is now worth almost as much as the entire German stock market. If you took out the Magnificent 7 last year, it was a meddling year for the S&P, but because there is the 7 in the S&P 500, you had a year that was just bonkers, where it was up 24%. It's getting hard to see how they can maintain this momentum, however.

Famous last words. And what we have here is likely an example of when to zig, when everyone is zagging. So while NVIDIA is getting the limelight, I want to reiterate and I want to talk about what I think. Every year, I have a big tech stock pick. And I want to be clear, this is not financial advice. I get it wrong all the time. I've been fairly lucky with stocks, but I'd call it more lucky than good. And I've always practiced

diversification. So given that when I was born and when I came into my prime income earning years, it's easy to feel like a genius because the markets have been on a tear. For the last 15 years or 16 years, the markets have just gone up through bailouts that transfer wealth from young people to old people. But anyways, that's another talk show. So it's easy to start believing that you're a good stock picker. And when you see something like NVIDIA up 450% in the last 12 or 18 months, you get tempted to go back into stock picking. And I've got a lot of questions around, all right, so what do you do? You want to participate in this updraft. It still probably has a lot of momentum. It's dominating AI. AI seems to be on everybody's mind. It's likely it could go up another 20,

30, 50% at the same time. If it got cut in half, it would just seem obvious that it got cut in half. Aswath Damodaran, kind of our Yoda evaluation, says that if you look at the numbers and the forward price-earnings ratio on this stock, the market or investors specifically are assuming that NVIDIA is going to find another market distinct from AI and dominate it the way it dominates AI. So it's just hard to love this thing from a valuation standpoint. At the same time, the market's not really concerned with your bottoms of valuation. I would argue over the long term, the medium and the long term, things do return or there is a regression to the mean valuation is sort of like gravity. You know, Michael Jordan can stay in the air for a long

time, but eventually it has to come down. But that famous saying, the markets can stay irrational longer than you can stay liquid. Or in this case, Michael Jordan can stay up in the air long enough to monster dunk you and your investment wisdom that you think the stock is going to go down. I wouldn't get near this thing. Now, what this is, is a lesson, not in stock picking, but it's a lesson in how important and how smart it is to do index funds or ETFs. Because if you go into an index fund, basically a third of your capital is kind of going into the Magnificent Seven. So you essentially are buying, you're putting a third of your portfolio in these stocks because it's a weight-adjusted index, and these companies now represent about 30% of the S&P. So right now we kind of have the S&P

Seven. Aswath calls them the Seven Samurai. But I like the dollar cost averaging into an index fund. That way you know you get to participate in the upside here if it keeps going crazy. But at the same time, you're diversified. And one of the wonderful things about our society, one of the wonderful things about America, one of the wonderful things about American markets is that their natural trajectory over time has been up. We continue to attract the best and brightest minds. We continue to reward risk. We continue to have a culture and brightest minds. We continue to reward risk. We continue to have a culture of entrepreneurship and innovation. For all the shitposting about California and America, for God's sakes, California just

created the entire auto industry in about four weeks. What do I mean by that? They added the value of the auto industry in four weeks. And guess what? Jensen Huang can live anywhere he wants. Where does he choose to live? Where does he choose to go to college? California and Stanford. By the way, shout out to the great state system of Oregon, the great public school system. He went to Oregon State as well. But he could move

anywhere and he could decide to pay lower taxes and move to Texas or move to Florida. And guess what? He and Sam Altman and all of these other entrepreneurs and companies, employees and VCs and educators and firemen and cops all decide they want to pay those high taxes in California. Why? Because it's worth it. It really is a testament not only to America, but also to California. So having said that, that was my big rant about California and stock picking or against stock picking. I do like every year to pick one big tech stock that I believe will outperform relative to the other big tech stocks. I think it's fun. I think it's interesting. I think we can all learn about the company. And if you want to take a small portion of your portfolio for stock picking, that's your business. I do the

same thing. I have about a third of my assets in individual stocks that I think can outperform. It's fun. I think of it as consumption. Occasionally, I get lucky or I get lucky enough to think that I'm good at it. But I do put the majority of my capital, as you should, in index and ETF low-cost index funds. Anyways, is that true? Sort of true. I'll go with I'm very, very diversified. Anyways, what have you done for me lately, Scott? The big tech stock pick of 2024, Alphabet.

Alphabet. Why? Alphabet is actually the only company on a valuation basis in the Seven Samurai or the Magnum's in Seven whose P.E. is actually lower than the broader P.E. of the S&P. So it's trading at a reasonable valuation. It's an unbelievable business. First off, its core business is arguably the best business ever invented. It's essentially a giant tollbooth for our economy. If you want to play in the digital world, i.e. where the world is heading, you have to pay a toll, and that toll is search. Google, or search, I believe, is now a $160 or $180 billion business. It absolutely dominates. I know this personally. I invested a few million dollars in a subscription search company called Neva, and we never got any traction. We just couldn't bump. It was like bumping up. It was like a gnat slamming up against the windshield of a, you know, a Mack truck. I mean, Google is just that deep and is that the technology is that strong and it has that sort of consumer depth and resonance.

Anyways, by the way, we got our money back because I got sold to Snowflake. I think of it as the perfect venture investment. It was kind of a lottery ticket. Then when you don't hit the lottery, you get your money back. I thought that was a great deal. Got very lucky there. Feel very fortunate. Anyways, back to Google. The search business is unbelievable. By the way, what doesn't get enough credit? What is the most successful streaming company in the world? Is it Netflix? Well, I don't know. Yeah, it makes sense. Netflix? No, it's not Netflix. Well, wait a minute. Is it HBO? No, it's not that either. It's YouTube. YouTube is the most successful streaming platform in the world. It commands more time. It commands more engagement.

It commands more revenue. A recent Nielsen report revealed back in January, YouTube represented 8.6% of streaming usage in the United States, which is a bigger share than Netflix at 7.9%. Think about that. Think about all the attention that Netflix gets. And it's not as big a business. It doesn't command the same attention as YouTube. All right, so what do we have? The best business in the world, the best streaming company in the

world, cloud, probably the second best business in the world behind AI right now, or the one that's got the second greatest level of enthusiasm. And on top of that, it's AI. Google literally is AI. Alphabet, essentially, a lot of the IP and the initial kind of deep minds and the IQ and the bandwidth started and still reside at Google. So if last year was Star Wars, I think this year is going to be the Empire Strikes Back. Specifically, I think Gemini is going to be a winner. They already have shot themselves in the foot with their release, which had a lot of complaints about being just totally obtuse and that some of the results seemed to be too DEI focused and the

whole thing got, I don't know if a lack of a better term, the launch was just a total clusterfuck. Okay, fine. They will figure that out. They will figure that out. Google could go down as the ultimate case study in the innovator's dilemma where in an effort to protect their core search business, they didn't go as aggressively at AI as they could, whereas the innovator, OpenAI, didn't have a search business to protect, so they went all in on AI, and here they are sitting on a $90 billion valuation, and that's nothing compared to what is probably a $1 trillion increase in valuation recognized by their core investor and largest shareholder, Microsoft. So everyone has participated in this AI rally across the real big folks, whether it's a meta, which has their own AI offering, whether it's

Microsoft, obviously NVIDIA, except kind of the old faithful here or the original gangster, and that is Alphabet. And I believe that ultimately they're going to get AI right, and they're going to come back swinging and come back strong. Why do I believe that? If you think about AI and try and bucket it into three kind of core attributes or three legs of the AI stool, the first is the infrastructure, specifically the chips. NVIDIA, C above, stock market capitalization equivalent to the German stock market. Obviously, that has been played, right? That is, it words out that NVIDIA is a good buy. And then in the middle, you have the LLMs, the large language models that actually figure out how to leverage these GPUs and have incredible technology and then take crawl data and then spit out something using the relationship between words that resembles

a very good answer to almost any question and now good graphics and maybe even movies. It was really fascinating, wasn't it, when Tyler Perry saw what AI could do with video, he's now pulling back his investment on kind of real-world video production. God, that must have sent chills down the spine of the industry. Anyway, so you have in the middle the LLMs, and then you have the content that gets fed in, right? And I would argue, okay, so we have the infrastructure, we know what the play is there. In the middle, I believe that the LLMs are going to be commoditized. What do I mean by that? I think that AI models will not let any AI get too far out ahead of any other AI. I think an AI

will be able to reverse engineer any LLMs technical advantage pretty quickly and will have sort of parity, if you will, around the LLMs. So what will be the differentiating feature here? One, the GPUs, we know that. That's been recognized in the market. But also, what's been under-recognized is on the front end, and that is the coal that's going to be shoved into the furnace here. And that is, there is a difference between sweet-like crude and shale oil. If I sound like I don't know what I'm talking about, trust your instincts. Maybe a better analogy is supposedly great chefs will say that the key is the right ingredients or, you know, farm-to-table, whatever it is,

organically raised beef or bacon from a pig that is being stroked and lightly caressed while listening to Mozart before they slit its throat, whatever it might be, right? It's the ingredients. It's the core. That was a little graphic. That was a little graphic. Farmer Scott slitting the throat of his swine as he's listening to Mozart. Maybe as I'm drinking a Spanish wine for my newfound love of Madrid. Anyways, it could happen. It could happen, except I hate the outdoors. Although I do love animals. I'd like to have a pig. I'd like to have a pig. I think that would be interesting. Although I'm somewhat remiss to inject a third pet into the household because I was with my friend in Lisbon. I stopped by Lisbon on my way back from Madrid to check out my friend's Orlando's home, and I hadn't seen his wife and kids in a while. And they have a third dog, and it has totally messed up the dynamic because when you put in a third dog, they start acting like a pack,

and they get more aggressive. Anyway, so no third animal for the Galloway household. Anyways, where were we? Oh, yes, that's right. The content, the content, the ingredients, the light, sweet, crude, the better, you know, grass-fed pork that goes into these LLMs. Who has the best data in the world? You guessed it, Alphabet. What do they have? They have your YouTube video preferences. They have your calendar, which I think is actually the gangster one. And they have your Gmail. So, for example, I am headed, I am headed to LA in a couple of weeks. First, I'm going to South by Southwest. I'm really excited. I'm speaking at weeks. First, I'm going to South by Southwest.

I'm really excited. I'm speaking at Atlassian, and I'm doing a bunch of stuff on the main stage. I love South by Southwest. I think it's a ton of fun. I love Austin. I think Austin is overrated and still amazing. I was expecting literally, like, I don't know, the lost ark in terms of the way people describe it. Overrated, but still fantastic.

Anyways, going to Austin. but then I'm going to LA and that's on my calendar and that's in my Gmail. And shouldn't Gemini or won't Gemini be capable of saying, Scott, every time you're in LA, you do a few things. You go to In-N-Out, I don't think there's a lot to do there. But if you're gonna go there, we're gonna start using our Gemini capable AI to reach out to whoever it is that flies there,

Southwest, United, JetBlue, send you on your phone via Gmail or on alerts. Maybe we have it integrated into Android, though I don't use Android. And we're going to give you opportunities to make your life easier. And we've noticed that every time you're in LA, you either stay at the Waldorf Astoria, nice, discreet, corporate, edges a little sharp, edges a little sharp, little sort of doctor's housewife turns interior decorator, but still a lovely hotel, a lovely hotel. I like it there a lot, or the Beverly Hills Hotel, which makes me feel like a producer in the 60s that's having an affair. And that's how I want to roll. And I walk around in a pink robe and I put on these big Aristotle

and Nassus glasses, have a cigarette in my mouth that I don't light. And occasionally someone walks by me and I say, Jackie, marry me. I make you a very happy woman. That has nothing to do with what we're talking about. Anyway, shouldn't the Gemini AI be able to recognize and proactively look at my calendar and start offering opportunities and getting in the middle of those transactions and taking a bit of a cut? Think about, and then I'm going back to New York, and every time I'm in New York, I go and I get my teeth cleaned. Won't Gemini AI be able to figure that out and speak to their Gemini capable AI and figure out the appointment for me and look at my calendar? The utility, the access to the utile applications they're going to have are going to be extraordinary. So what do we have? What do we have? We have a company that is trading at a price earnings multiple that is lower than the S&P. Why? It's been overpunished, similar to the way Meta was overpunished for their fumble around the metaverse, the same way that Alphabet is being punished for their fumble and how flat-footed they were around AI. But here's the thing, they'll get it and

they'll catch up, I believe, in a hurry based on access to proprietary, very utile data that is going to give them a host of applications that other AIs will not be able to replicate easily. So what do we have? An undervalued stock in AI with core businesses that are cash volcanoes, specifically Search, YouTube, and the cloud. Alpha bet. Alpha to the bet, says the dog. We'll be right back for our conversation with David Leonhard. Welcome back. Here's our conversation with David Leonhard, a senior writer at The New York Times and author of Ours Was the Shining Future, The Story of the American Dream. David, where does this podcast find you? Washington, D.C.

You live in D.C.? Yeah. How long have you lived in D.C.? Oh, my goodness. 15 years. Oh, wow. 16 years. I did not know that. No one knows it because I'm a New Yorker and I work for a company that has New York in the name.

There you go. So let's start kind of meta. Distill down, if you can, what you believe is going on in the U.S. economy right now. So there's a lot of discussion about how good is the U.S. economy? Are Americans irrational for being unhappy with the economy? And in a short-term sense, I think that's an important debate and a fair debate. And there are some ways in which people are maybe a little bit more pessimistic than the economic numbers warrant. But in the big picture, our economy has been disappointing for most Americans for much of the last half century.

You can see that if you look at wage statistics. You can see that if you look at wealth or net worth statistics. You can see that if you look at wealth or net worth statistics. You can see that if you look at all kinds of measures of social well-being, like the percent of kids who grow up with two parents, the percent of people who spend time behind bars at some point in their life, the percent of people who suffer chronic pain. You can see it in the polls, how Americans feel, not just in this current moment, but about the country's direction. And then in some ways, to me, the single most important and most alarming statistic is that in the 1960s and 70s and even into the early 1980s, the United States had a normal life expectancy for a rich country. And for the last 15 years or so, we have had the lowest life expectancy

of any rich country, lower than Canada, lower than any country in Western Europe, lower than Japan or South Korea or Australia. And so I think in a really basic way, our economy and our society isn't working for huge numbers of people, particularly people who don't have four-year college degrees. So I'm reminded of the William Gibson quote that the future is here, it's just not evenly distributed. I think that's a decent way to describe the economy, that prosperity or unprecedented prosperity is here, it's just not evenly distributed. Would you agree with that? Yes. The only thing I would add is if you're not receiving the distribution, it's less important that in some

theoretical sense, unprecedented prosperity is here. But I absolutely agree with you that given the bounty that our economy produces, we could have an economy that works really well for huge numbers of people. The fact that we don't is not a small detail or a footnote, not that you're suggesting it is, but in some ways it's the main story. Well, it's outrageous. I mean, NVIDIA is now worth almost as much as the German stock market, but one in five households have food insecurity. I mean, it's just sort of, it only makes your point that much more stark, right? Yeah.

So I'll put forward a thesis and you respond to it, that we are moving to a Hunger Games economy, where the number of billionaires in the last 10 years has quintupled. And because Americans are such optimists, we believe that our kid is going to be the billionaire. So we don't. And also the incumbents, corporations and the wealthy are very sophisticated in terms of getting overrepresented in Washington, D.C. And we've just seen a massive crowding effect of the spoils into the top 1%. Am I oversimplifying it? No, I think that's right.

We have seen that. And although the 1% is a useful cutoff, we've seen even more of a crowding to the top 0.1 or 0. numbers. And I end up with a core criticism of both the political right and the political left in our country. And they are two different, very different criticisms. I think the political right about 50 years ago, Ronald Reagan being the key figure, offered this prescription for what ailed our economy in the 1970s. And it wasn't a crazy prescription. Our economy really was struggling in the 70s. And Reagan and the people around him came along and they said, look, if we cut taxes, particularly for rich people, and we shrink labor unions, and we shrink regulation, and we let companies get really big,

and we move toward this neoliberal economy, it'll be better for everyone. And it hasn't been. I mean, you and I just went through the statistics, whether it's on income or wealth or life expectancy. This economy really for decades hasn't been working very well for huge numbers of Americans. And we see parts of the Republican Party start to question that laissez-faire model. But for the most part, the dominant economic policy of the Republican Party is still this economic policy that really hasn't worked that well for most people. And then on the left, we have a lot of Democrats who say, why is it that these working class people are so irrational that they won't come and support our party because we believe in different economic ideas. And that is true.

But it's also true that the Democratic Party has increasingly become a party of college graduates and relatively affluent professionals and has adopted a whole set of policies on other issues, immigration arguably the number one one right now in the debate that really are alienating to huge numbers of working class people. And for a while, Democrats said, well, that's because those people are ignorant and they're hateful and they're racist. I think that was obviously racism plays a big role in American politics. But I think it was wrong to suggest it was all that in five or 10 years ago. And it's clearly wrong now because we have seen substantial numbers of

voters of color move away from the Democratic Party in the last five years, mostly working class voters who look at the Democratic Party and say, that's not a party I want to be a part of. And when you put these two things together, neither of our parties reflects the interests and the values of working class people and is out there trying to create an economy that works better for them. So let's start there, an economy that works better for more people. What do you think are some of the building blocks of restoring or greater distribution of this immense prosperity? I think labor unions are really important, and I'm a bit self-critical on that. I've been writing about the economy at the New York Times for most of the last 25 years, and I don't think I've paid

enough attention to labor unions. Now, labor unions are not perfect. I have been in a labor union and at times been frustrated. I manage people in labor unions, in a labor union. I understand that labor unions can sometimes be an impediment to important change. But when you look at the history and the research, the dominant experience is that labor unions lift the wages of workers and they don't cause companies to go out of business. They instead basically redistribute money that would go to top executives and to shareholders and instead increase the wages of workers. And yes, labor unions are flawed, but so are corporations. And when you don't have flawed labor unions checking the power of flawed corporations, you end up with the kind of highly unequal economy that we had in the 1920s and that

we have had for the last few decades. So I want to unpack that. And I'm generally open to learning here. I think the intention, the stated goals, kind of the gestalt of unions and labor are positives. My issue is that 46 of the 47 countries that have unions have seen their membership decline dramatically. Union membership here has been cut in half. The bottom line is by most metrics, America just doesn't buy into unions. And unless you can have a union that represents a majority of workers in an industry in a large region, you have a brace to the bottom. And that is states that are anti-union end up attracting more business, and there's a lower tax base and fewer jobs for those union towns. And let me propose a solution. There should be one union and it should be the federal government. And we should raise minimum wage to 25 bucks a share, maybe some exceptions for exceptionally low income or low cost of living regions. All the admirable aims, they don't work as a construct. I'm a little more optimistic for a few reasons. One, if you look at polling, huge numbers of

Americans say they would like to be part of a labor union. Labor unions have higher approval now in polling than they've had in decades. It's true that many of them struggle to join unions. But the fact that there aren't unions isn't on its face evidence that there couldn't be. There also weren't labor unions in the 19 teens don't necessarily recognize why it can lead to a larger share of organized labor. Our economy is increasingly a service economy, right? It's less a manufacturing economy it used to be, and it's more a service economy. That's not going to change. So if your fear is that, hey, if that factory unionizes in Pennsylvania or Michigan, a rival company or that company can just move to a non-union state like Alabama or can move to a much lower wage country like in Latin America or say Vietnam, and then just make the same

product and undercut the union wages. So even if you have that concern, think about just how much of our economy now that doesn't apply to. So your local Starbucks can't move to another state or another country and still be your local Starbucks. Your local hospital can't move to another state or another country and still be your local hospital. The Amazon warehouse that serves your community can't move to another state or another country and still be your local warehouse. And so in a service economy, it is much harder for companies to simply get around unions by leaving the area. And if we had different federal policy, I actually think that a service economy makes it possible to have a meaningfully larger share of workers represented by unions and able to take advantage of collective bargaining than we now do. I think that's a compelling argument. Wouldn't it be more efficient to just take minimum wage if minimum wage had kept up with productivity? I mean, here's what we've had the last 40 years. We've had unbelievable gains in

productivity. Workers haven't shared in it. Their wages have gone flat. Productivity is up into the right, and the gap between the two is literally trillions of dollars in stakeholder value that is accreted to shareholders and the top one, if not the top 0.1%. So the question is, how do we shove more money into the lower 99, quite frankly? And it'd be good for the economy. They spend the money. You know, the 1% invests, which brings interest rates and costs of capital down. And you could argue they're more efficient. They do crazy things like build rockets and endow, you know, new wings at universities with their names on it. There's some good to that. But it's not as good as putting more money in the pockets of middle class and lower income people because they spend it all. It's sort of stimulus, right? The multiplier effect is greater. So if that's the goal, and we all agree that that makes sense, wouldn't it be more efficient to just have, again, $23 or $25 an hour minimum wage or some sort of negative income tax where everyone makes $10,000 no matter what? And if you make zero, you get a tax rebate of $10,000. And if you make, you know, and you figure out some sort of sliding scale that gives people the motivation to work, but have it be for, you have a social security number, you're in a union, right? Technically. Wouldn't that be a more efficient way than trying to, because for all, you talked about Starbucks. I'll use that as an example. 300 Starbucks have unionized, have voted to unionize is my understanding, but not one has come to an collective bargaining agreement. And so for all the talk about this great resurgence of unions,

it's not having any much impact as far as I can tell on the current level. Oh, I agree. But I think we would need changes in federal law, basically, so that what happens now is a Starbucks store unionizes and Starbucks basically refuses to negotiate with them. They somehow find violations by the people who helped organize the union and they let them go. But federal law could change and could basically say, look, when workers unionize, companies really have to recognize them and work with them. So the fact that that hasn't happened so far, to me, it could still happen. We do need changes in federal law for it to happen. On your point about minimum wage, look, I think a higher minimum wage would have tons of benefits, but it is a minimum wage.

It isn't going to have that much of an effect on middle class people. And so we can raise the floor, but I don't see how a minimum wage or a higher earned income tax credit can help working class and middle class people nearly as much as labor unions do. Because what we're talking about now are someone who right now might be, you know, earning $40 an hour, but actually because of their productivity should be earning $50 an hour. That isn't something that a minimum wage is going to address. A minimum wage and EITC are really good for helping lower income people, and we should help lower income people. They're less good at helping working class and middle class people. So labor or renewed strength or maybe

laws that make it easier to unionize, that's one solution. Talk about some other solutions or recommendations. I think investment is enormously important. Investment defined really broadly. So private sector investment, as you just noted, is really important. We need companies investing in things that are going to help in the long term. But there are a whole set of things that the private sector on its own doesn't tend to invest enough in. The private sector doesn't tend to invest enough in basic research and development because it's impossible to know how to profit from that in the moment, right? There's a reason that the federal government built the internet. There's a reason that the federal government essentially financed the entire

early computer industry in this country. Because at the very beginning, it was hard to know exactly who would profit from it. And not only that, but, you know, IBM was a big maker of punch cards. And so initially, IBM said, well, we don't need a computer. We have this profitable business in punch cards. And so when the government doesn't invest enough, you tend to end up with a society that doesn't have enough basic R&D. It doesn't tend to have enough transportation infrastructure. And really crucially, it doesn't tend to have enough of an educated population. So if you're over 65 in the United States, you're part of the most educated generation in the world.

There is no other country where people over age 65 are more educated than Americans are. If you're younger, you are not part of the most educated generation in the world. There is no other country where people over age 65 are more educated than Americans are. If you're younger, you are not part of the most educated generation in the world. And so to me, a whole set of policies where we decide we're going to spend money today to make life better tomorrow is another really important part of creating an economy that is more prosperous for most people than our current economy is. We'll be right back. Talk to us about what are your views on immigration? And I'd be curious if you could tie it back. It strikes me that it's going to probably be either the number one or the number two issue in the campaign. But give us your view of the atmospherics around immigration and what the right and the left are getting wrong and what you think,

how you think it's going to play out in the election. The chapter in my book on immigration is the one that I was most uncertain, and if I'm being honest, nervous about what the response would be. And I actually think it's been the one where the feedback I've gotten has been the best, which makes me feel really happy because it also might be the chapter that I learned the most while researching and writing. There's probably a relationship between those two things. And so I spent a ton of time in the archives retracing the history of the 1965 law that has really created our modern immigration system. And that law has a really, one really heroic piece of its legacy and one much less heroic

piece of its legacy. The heroic piece of its legacy was that starting in the 1920s, our country basically said, we will only take immigrants from Western Europe. The one other exception was at the time there were no limits on immigration from Latin America, which may seem shocking today, but at the time there just weren't that many people coming from Latin America. So our country basically said, we won't take people from Eastern Europe, we won't take them from Eastern Europe. We won't take them from Southern Europe. We won't take them from Africa. We won't take them from Asia.

Obviously, a racist policy, right? It was just taking them from white countries. And the 1965 law got rid of that old system. And they said, we will treat all people who want to immigrate to our country equally. At the same time, the advocates for that 1965 law promised repeatedly. We're talking about LBJ, Ted Kennedy, who managed the bill in the Senate, Republicans and Democrats who pushed the law. Repeatedly, they promised we are only changing who can come in. We are not changing how many people come in. They promised Americans again and again and again, we are not meaningfully increasing the level of immigration. If they hadn't done that, the bill couldn't have passed. Americans did not favor a huge increase in immigration. And yet, for technical reasons that I won't bore your listeners with, the bill did, in fact, lead almost immediately to an enormous increase in immigration, mostly involving

exceptions with family members who didn't count toward the cap. But basically, what happened in the 1960s was we vastly opened our immigration system, and Congress and the president sold it to the American people under false pretenses. And I'm not saying that all of our immigration policy and all of the toxicity of the debate around it stems from that one decision. But for people who tend to be in favor of much higher levels of immigration, of very high levels of immigration, which I would say are basically two groups of Americans, kind of business-friendly Republicans who see it as a way to increase the workforce and probably hold down wages, and then progressives who believe in high

levels of immigration from sort of a social justice standpoint. For people who believe in higher levels of immigration, it's worth grappling with the fact that the history of this is not a simple history in which the people who were in favor of more immigration were on the side of light and truth, and the people who were worried about it were not. And I think that we have lost this tradition that we had for a very long time in our country in which there were progressives who worried about the effects that immigration would have on recent immigrants and on lower income native born Americans. Historically, civil rights leaders and labor leaders and progressives were not in favor of huge levels of immigration in this country. And we've sort of lost that.

And to me, it's really an important part of why so many working class people across races look at the Democratic Party today and say, oof, I'm not completely comfortable with that party. And on the flip side, the Republican Party just engages in this really, really stark and nasty xenophobia on immigration. And we've sort of missed this middle ground where we have people saying, look, we should welcome immigrants. We are a nation of immigrants, but we also need borders and we need border security. And everybody who wants to come to this country because it's a richer country than most countries can't simply come because they want to. And I think that kind of summarizes where we've ended up on immigration and frankly, why it's become such a huge problem for Joe Biden. And what it strikes me is such a political hot potato when you think about an approach to immigration.

Who would you point to or what policy would you point to that you think is as a way forward? Barbara Jordan, the former congresswoman, late congresswoman from Texas, one of the first post-Reconstruction Black Americans to represent the South in Congress. She became famous during Watergate. And she, if you read some of her historical positions on this, she said, look, we need to be pro-immigrant, but that doesn't always mean being pro-immigration. We need to reject the xenophobia and racism that often greets immigrants, but that doesn't mean that we should have an open border. I think that is the position that, first of all, tends to reflect what most Americans believe and also has very strong economic arguments behind it. And today, I think where you tend to see that a lot is you tend to see it from Democrats

who are mayors and governors and who've actually had to grapple with some of the really costly and chaotic influxes that we've had over the last couple of years, but also reject some of the race baiting that many Republicans use. So, David, you're obviously, you have your finger on the pulse. I just want to, as we wrap up here, I'm just very curious to get your view on the role that age and this presidential race is going to play. I mean, one of the hardest questions right now, right? Here's one way that I think about the overall frame. Age is absolutely a legitimate issue to talk about, and it's important to talk about it with both candidates. It's also important to acknowledge that there are several ways in which Donald Trump seems more energetic

and presents as less old than Biden. There are other ways in which, you know, Trump says a whole bunch of things that don't make any sense and forgets things. And There are other ways in which, you know, Trump says a whole bunch of things that don't make any sense and forgets things. And there are other ways in which Trump's aging seems to be at least as much of a problem as Biden's does. At the same time, as a journalist, I'm a little bit haunted by a Gallup poll that came out after the 2016 campaign that asked Americans what they'd heard about each candidate. And the number one thing that most Americans reported hearing about Hillary Clinton was about her emails. I think Hillary Clinton's emails were a legitimate story.

Surely they were not the most important thing about Hillary Clinton in 2016. And I worry a little bit that those of us in the media are at some risk of repeating that and talking so much about Joe Biden's age in particular that we come to make it seem like the only issue in this election. Joe Biden's performance as president suggests he absolutely can do this job. And so we're not dealing with someone who appears to be incompetent as president, whether you agree or disagree with his policies. Just look how much legislation he's gotten passed. More than I expected, quite frankly. Much of it bipartisan.

I don't have a nice pat answer here, Scott, but I'm just trying to get at the fact that on the one hand, it's a legitimate issue. And on the other hand, I think sometimes the media, those of us in the media, have a tendency to take a legitimate issue and make it seem like the only issue. And I think we'd be making a big mistake if we did that with Joe Biden's age. David Leonhard is a senior writer at The New York Times, where he writes The Morning, the Times flagship daily newsletter. He's also been the newspaper's Washington bureau chief, an op-ed columnist, a staff writer for the New York Times Magazine, and the founding editor of The Upshot. He won a Pulitzer Prize for commentary in 2011. David's also the author of Ours Was the Shining Future, the Story of the American Dream,

which The Atlantic and the Financial Times called one of the best books of 2023. He joins us from his home in our nation's capital. David, really appreciate your time. Scott, thank you so much for this good conversation. Algebra of Happiness, build yourself a time machine. I was watching The Black Mirror. I'm watching Black Mirror with my son. He really likes it.

It's kind of disturbing, probably inappropriate for a 13-year-old, but we've been watching it. It reminds me of the old Twilight Zone. I love the old Twilight Zone. Anyways, I watched San Junipero, this episode. It was really nice about, I won't spoil it. It's about two women who are very much in love and they're in a simulation, if you will. And it got me thinking about the following.

I want you to build a time machine, and I want you to imagine you're in a simulation. Imagine that, say, you're my age, 49, 59, but say you're 49. And in 50 years, you live 50 years, you've been working out, you've been taking your testosterone, you've been eating fairly well, fairly well, you're happy, people love you, people you love, and you live to 99, and you're at the very end. And in 50 years, they've advanced the technology and they said, okay, okay, we can actually, for a short period, send you back in time. And you get to do whatever you want for a short time. And you're 99, you're at the end. This is it, right? You're never going to walk on the sand again. You're never going to hang out with your dogs on the couch with your boys and watch Black Mirror. You're never going to get in bed with your

wife or your partner and spoon them. You're never going to get to, you know, have the frustration of walking around a foreign city with your boys as they're bitching and complaining. And then at night, I'll go have dinner together. You're never going to do any of this stuff, right? You're never going to know what it's like to sweat again, working out. None of that. It's all gone. It's over. This is it. And maybe you're like me and think, okay, this is really it. This is an address rehearsal. It's over. And they have the technology to put you in a time machine and send you back and send you back for a little while, right? Imagine that you're at the end, but you can come back. But you got to write down what you would do when you come back, like how you would behave

differently, right? What would you do more of? What would you do less of? Well, now I want you to convince yourself this has happened. And I want you to think about, okay, I'm back to 99. What am I going to do differently? And I guarantee you, or I would speculate, that it's not going to be about buying more shit. It's not going to be about trying to be more of a baller. It might be maybe taking more risks. But I would guess if you really put yourself in that spot where you imagine no more, this is it, it's going to be things like telling people you love them. It's going to be,

I'm going to decide to spend more time with people who are important to me. I'm going to be kinder to myself. I'm not going to beat myself up as much. I'm going to move on. I'm going to channel my anger and any sense of revenge towards just having a fucking amazing life. I'm going to do shit I want to do. I'm going to be the person I want to be, not what my parents want me to be, not what my religion wants me to be. Write a list of things that you would do differently if you're there at the end and come back. And here's the thing. It's happening. It's happening. You're 99 and you're at the end.

And this is a simulation. You're here now. What are you going to do differently? This episode was produced by Caroline Shagrin. Jennifer Sanchez is our associate producer. And Drew Burrows is our technical director. Thank you for listening to the Prop G Pod from the Vox Media Podcast Network. We will catch you on Saturday for No Mercy, No Malice, as read by George Hahn,

and on Monday with our weekly market show. Okay, we're going with the sex with a horse joke then, because it's just more appropriate.