Chris Hughes on How to Craft a Thriving Market

Joe Weisenthal (0:02)

Bloomberg Audio Studios.

Chris Hughes (0:04)

Podcasts, radio, news.

Joe Weisenthal (0:18)

Hello, and welcome to another episode of the Odd Lots Podcast. I'm Joe Weisenthal.

Tracy Alloway (0:23)

And I'm Tracy Alloway.

Joe Weisenthal (0:24)

Tracy, we recently did another special live episode at the New York Public Library.

Tracy Alloway (0:29)

Yeah, a really great venue, a really special evening. And fittingly, given that we were recording at a library, the library in New York, it was all about a new book.

Joe Weisenthal (0:40)

That's right, it was a pretty fitting location. So you're going to listen to our live episode that we recorded with Chris Hughes. He's actually one of the original founders of Facebook, but he left fairly early into the company's journey. He's currently getting his Ph.D. at Penn in economics, and he's the author of the book Marketcrafters, The 100-Year Struggle to Shape the American Economy.

Tracy Alloway (1:02)

Yep, take a listen.

Joe Weisenthal (1:04)

Thrilled to be chatting. Why Marketcraft? You know, we talk, people use the term industrial policy a lot these days, got very hot over the last several years. What does Marketcraft mean? Why title it that?

Chris Hughes (1:16)

Well, hello, hello. I'm happy to be here. And before I answer exactly what Marketcraft is, and we spend the next hour talking about it, I just have to say that it is such a huge honor to be both here at the library, an institution that I care immensely about, and to be a guest on this live taping of Odd Lots.

Joe Weisenthal (1:35)

Thank you for the reminder.

Chris Hughes (1:35)

Odd Lots is my number one favorite podcast. And so, I feel...

Joe Weisenthal (1:38)

We love when they say that on the recording, but that is a good reminder. It is a live taping, so, you know, silent cell phones, you can cheer and clap a little bit.

Chris Hughes (1:46)

So, Marketcraft, what is it? The basic idea is that policy makers are often harnessing and shaping, harnessing private markets and pointing them towards public goals, like making Americans richer, safer, and more economically secure. And that there's actually a very long history of doing that in the United States. It's done by Republicans. It's done to ensure energy stability, financial stability, or make semiconductors here at home. There are a ton of successes in the past, plenty of failures, and the whole point of writing the book was to try to tease out what are the lessons for our contemporary policy environment today, because we're going to have to rebuild on the other side of the chaos that exists in the world right now.

Tracy Alloway (2:39)

So, just on this point, I mean, a large part of the book is pointing out that the US does in fact have this history of market craft, as you put it, and certainly other countries, this is kind of the norm. Norway has sovereign wealth funds, parts of the Middle East have sovereign wealth funds. Even in economies that aren't necessarily centrally controlled, there's a bigger role for governments to play in the economy. Yet in the US, up until fairly recently, I think it's fair to say industrial policy was almost like a dirty word, and there's this knee-jerk reaction to this idea. Why is that?

Chris Hughes (3:15)

Yeah. I mean, I think, listen, we all exist with this idea in our heads that markets exist and are almost forces of nature. And then on the other side of the balance sheet, there's government. I mean, I'm the first to say that the language that I've used for years has been around verbs like to intervene, as if markets come first and then government is just like the emergency room that happens when things go awry and you've got to bail out a bank. And the whole point of my book is to say, actually, something bigger is happening. Like if you look at the American economy between health care, pharmaceuticals, aviation, semiconductor and high tech, clean energy, and add up the size of these industries, you are well over half of American GDP in industries where the state not just has a heavy hand, but is actually crafting it from the beginning. And so it is about industrial policy. There's a lot in there about industrial policy, but it's actually about something bigger. Marketcraft is something that encompasses what the Fed does in financial markets, what the Strategic Petroleum Reserve does in energy markets. There's a whole set of strategies that I think we have to be wrestling with.

Joe Weisenthal (4:34)

All right. I had a question that I was going to save to near the end after we had gotten more relaxed, et cetera. But I've decided... Let's just do it. I've just decided that I'm just going to jump in with this question, which is, you're one of the co-founders of Facebook. Many people in Silicon Valley and tech have enjoyed extraordinary fortunes under a sort of existing market economic regime. And in recent years, we've seen a number of them become seemingly very hostile towards the public sector, this sort of emergent anti-state politics. And people have different theories. Some people are like, oh, they got their feelings hurt from the New York Times or something like that. What is your theory for the emergence of this?