The Riches Of This Land

Audio length: 00:43:15

Felix Salmon and Anna Szymanski are joined by Jim Tankersley of the New York Times to discuss his book The Riches of This Land: The Untold, True Story of America’s Middle Class, TikTok, and the digital future of media.

And in the Plus segment: The economy in the Trump era.

TRANSCRIPT

S1: This ad free podcast is part of your Slate plus membership.

S2: Hello and welcome to the riches of this land, Ed. This leaked money or guide to the business and finance news of the week, I’m Felix Salmon of Axios.

S3: I’m here with Anna Shamansky of Breaking News. Hello. And we are also here with Jim Tankersley from The New York Times. Who are you and what is your book?

S4: Jim Tankersley I cover tax and economic policy for The New York Times. My book is called The Riches of this Land The Untold True Story of the American Middle Class.

S3: We have a great episode this week. We are going to talk to Jim about his book. Of course, we’re going to learn all about the middle class and how it got to where it is. We are going to talk about China and whether TikTok is going to be banned or whether the TikTok is going to wind up being merged into LinkedIn, which would be quite a thing. We are going to talk about the digitization, the virtualization of the American economy, whether that’s going to last. And we are also in Slate plus going to talk about Donald Trump and what kind of credit he can claim or blame we can lay at his feet for the state of the economy. All of that coming up on Slate money. So, Jim, you’ve written a whole book about the American middle classes, and it’s a book full of people and a lot of the people in your book, as with a lot of Americans, had generally positive experiences up until a certain date. And then since that day, they have had generally not so positive experiences. So what is the middle class and when did things start going sideways?

S5: Great question. The American middle class is actually sort of a relatively new phenomenon. Is this thing that Americans have in our minds that we’ve always had this vibrant middle class, but really wasn’t true for a decent part of the nation’s history and really the big rise of the middle class, the boom was after World War two starts with the war effort and continues in the decades that end somewhere in the late 70s, early 80s, when millions of Americans get pulled into what we think of perhaps somewhat arrogantly as then the American dream. You know, it’s just really I think about economic security, being able to own a home, being able to own a car, be able to send your kids to school and have a retirement and just some sort of assurance that even if things get bad for a little while, you have enough of a cushion that you’re going to make it. And that period after World War Two, when those decades that followed was the time in America when there really wasn’t growing vibrant middle class. And since then, it has it has not been like that at all.

S3: Has it been shrinking? Has it is it growing but just more slowly than it was previously?

S5: So there is this amazing debate in Washington and around the sort of wonk community about how to measure this. There are people who will tell you that the middle class has been completely obliterated since 1980. There were people who tell you that I don’t know. It’s been doing fine by the numbers that I see. It’s actually been going backwards in the twenty first century. We’ve been people have been falling out of the middle class, millions of people. And it is, you know, along those lines, not been performing anywhere close to the expectations people had, which I think is the non-controversial way to say this. There is no question that the middle class grew and thrived much, much more after World War Two than it has since really the Reagan era and in particular the twenty first century has been brutal. The last great stretch for the American middle class was the Clinton late 90s growth. And since then we’ve had some really disappointing income growth, really disappointing job gains and very little of what we would think of as tight labor markets that helped workers.

S1: One of the things I found really interesting about your book was that you didn’t just focus on white working class workers and especially white male working class workers. You certainly talked about them. But I think one of the really interesting things that you bring up is the idea that the middle class has always involved people of color and women.

S6: Yeah, it is this great myth that Americans, so many white Americans have sold to the rest of the country. Is this idea that we have this Leave It to Beaver middle class. And it is certainly something that political reporters and I include myself in this criticism and talk about it. A lot of the book really overemphasized in Twenty Sixteen, which was the role of white working class Americans. The truth is actually the real economic research shows us is that the reason the middle class grew and thrived in those decades after World War Two was that we opened up the American labor market and the highest skilled, highest talent, highest paid jobs in the country to non-white guys, to women of all races, to men of color who had been held back by overt discrimination, by actual laws from doing those jobs. And in the struggle for civil rights and starting with the necessity of the war effort, women and men of color gained the entry to those occupations. They didn’t get full equality. They still do not have equality of opportunity. But that simple progress of opportunity unleashed what economists call a productivity boom.

S3: This reminds me very much of one of my favorite economics papers by Joe Stiglitz, where he looked at the effects of microfinance and the insofar as microfinance has really had a positive effect in poor countries, it seems to be entirely a function of its ability to bring women into the workforce. And to no one’s surprise, if you bring millions of women into the workforce, then that creates economic activity and that and microfinance their ability to sort of employ themselves in the highly discriminatory environment where people weren’t giving them jobs made a big difference even without creating equality. And this seems to be like a very similar story that you’re telling about America.

S6: Absolutely. And and it’s it’s just sort of so intuitive when you think about it. If you look at if you were like an alien coming to Earth and given nothing but sort of statistics about the economy, saying here is the types of skills that are demanded in the modern economy and the types of people who hold those skills, you would assume the vast majority of of the. Top Americans in top jobs are women, they’re more educated, they have dramatically improved their skill attainment over the last few decades, particularly compared to men who have stagnated. And that’s not the case. Right. So that’s to me, I see that as a huge amount of opportunity. We have policies that hold women back, whether it’s child care policies or or, again, the overt discrimination in boardrooms. But, yeah, empowering women has this opportunity to put more talented people in jobs they should be in where they can contribute more to the economy. And that lifts everybody up.

S1: And I think this is really interesting because it kind of cuts a little bit across the right and left divide, because I think on the kind of populist right right now, you have this idea of immigrants taking jobs, that kind of thing. And then on the left, you sometimes also have this idea that it’s it’s almost like a limited pie. The economy is a limited pie. And while we do need better reallocation of wealth, we all know that it’s also about growing the pie. It’s the idea of getting more people and also using people’s skills in the most productive way possible.

S5: Yeah, I know. And I think, again, that’s that’s both the lesson of history. But also I just think it’s a really intuitive and optimistic way of looking at the economy. Now, if we better allocate the resources in the pie, the pie will grow faster. And what we know is that a faster growing pie at a time of low unemployment is the recipe for big income gains. And so I think that the most sustainable version of that is these productivity gains. And, yeah, you’re right, it’s it’s the first excerpt of this book got a lot of blowback from both of the populist left and the populist right. The populist right wanted to tell me that now immigrants don’t actually lift the economy, which I argue in the book that they clearly do. And the populist left wanting to tell me that, no, this is all just about taking money from billionaires and giving it to workers, and that’ll make everything fine. But I really think there’s something in here. No matter how you view the economy that you could pursue, there’s a path for market oriented policies. There’s a path for government oriented policies to try to correct these productivity failures we have right now.

S3: So I have a question about productivity and looking at it more from maybe the capitalist side of the equation or the employer side of the equation about the labor side of the equation, which is the during the boom that you were talking to, which ended around nineteen eighty employers, would you want to employ people who are becoming more productive and that those people became more productive and that if they had bargaining power thanks to unions, they could reap the fruits of those of that productivity. And what I’m seeing now. For a lot of Americans, but especially for ones without college degrees, is the when employers look at them and say, like, how much money can we can we make from these people? Maybe they can make a bunch of money. But on the other hand, there’s no real need to a lot of the time to pay them more because they can make even more money if they pay someone in Mexico instead or like we’re in a very global world now. And so I guess my question for you about how to bring living wages back into the middle classes or to I guess that would be a tautology, how to bring living wages back into the people who should by rights be part of the middle classes is how did those people compete with. Mexico, Vietnam, China and the rest of the world, this may be a frustrating answer.

S7: It’s certainly been a frustrating answer for some of the people I’ve talked to about it. But I actually I don’t think there’s a very good chance that most of the jobs that have been outsourced are coming back. I’ve covered this long enough. I’ve seen enough politicians promises Donald Trump had promised to repatriate all these jobs from and he’s actually tried a bunch of different levers of trade and tax policy and they haven’t worked. So I don’t when I talk to CEOs, there’s very, very low chance they are actually bringing their supply chains back. So I think we’ve seen this in America before, entire groups of jobs that just dry up and never come back. And usually what happens is they replaced with something that makes better use of those workers over time. When when farming technology made enormous amounts of the agricultural workforce redundant, a lot of those workers moved on to factories where they were more productive. But what hasn’t happened now is those better jobs, better uses of those people haven’t appeared. So my argument is sort of really, again, frustrating because I’m not going to I can’t tell you where it’s going to come from, but I really believe if you empower the people who actually have a view toward solving human problems with capital and want to invest in that in health care and in carbon mitigation, in a bunch of other industries where there are new frontiers of ways that putting people to work can be helpful and productive, I think those will be good jobs. And so I don’t know where they’ll be exactly or where they’ll be located, but I believe they’ll be the sorts of things that could put even the workers. You’re talking about workers without college degrees to use it and in ways that pay more and make better use of their skills, which are essentially not in demand right now in our economy.

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