Ezra Klein on the Future of Supply-Side Liberalism

Joe Weisenthal (0:10)

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

Tracy Alloway (0:16)

And I'm Tracy Alloway.

Joe Weisenthal (0:17)

Tracy, obviously, one of our themes for years now has essentially just been all of these ways in which it seems like the supply side of the economy is kind of broken or put under, I would say the pressure of the last two years has revealed a lot of weak points.

Tracy Alloway (0:36)

Yeah, so I call this the choke point economy, which maybe I should have come up with a catchier title, but it was basically the idea that the extraordinary events of the pandemic had exposed the shortages or choke points in things that the economy actually really needs. Everything from semiconductors, which is kind of where we started our supply chain exploration, to, I mean, vaccines themselves, right? Some countries couldn't get enough vaccines, others had too many, and you can expand it to tons of different things. Everything from housing to healthcare.

Joe Weisenthal (1:11)

Right. It's kind of like this running joke of Odd Lots listeners on Twitter, where they're like, this is the new thing that's broken. When are Tracy and Joe gonna do a show on it? But it also does, when you have this, these myriad broken aspects of the supply chain, or shortages, or choke points, or bottlenecks, it sort of gets the question, is there a bigger effort that can be made?

Because you can tackle these one at a time, and of course, that's being done, and private companies and governments are working on that one at a time, but is there a broader effort that can be made where maybe government involvement, regulation, something such that we just have more robust supply side of the economy?

Tracy Alloway (1:58)

Absolutely, and I think over the past year or so, we've certainly seen pockets and indications of that. Like the Biden administration's Build Back Better program, the Inflation Reduction Act, all of those are to some extent aimed at increasing capacity, building out vital infrastructure and things like that. So it does feel like there is a recognition that this is an issue, but the solutions are still kind of tricky. And even if we all agree to build more capacity, it's gonna take a while. There's still gonna be questions over how best to do that. It's gonna be tough to identify some of those capacity constraints.

Joe Weisenthal (2:36)

Like what actually is the constraint?

Tracy Alloway (2:37)

Exactly.

Joe Weisenthal (2:39)

It's funny because for years, there was the supply side economics in modern parlance has this very specific idea. And I think of like the Reagan era and a bunch of people's economists who sort of made their bones in that era, but really it just means like tax cuts. Like really, like when people say supply side economics, they say tax cuts, tax cuts for companies, make them more competitive.

Tracy Alloway (3:02)

Right, just make it easier for everyone to produce more.

Joe Weisenthal (3:04)

By cutting tax. Right.

Now there is this sort of revival of so-called supply side economics, a certain supply side progressivism. We've heard Janet Yellen talk about it, which is no, actually supply side economics doesn't have to just be tax cuts. It can actually be about all this, the Chips Act, et cetera, active efforts in which the government in theory can play a productive role in making more robust, resilient, and abundant supply side capacity, which speaks to both the shortages, the inflation that we're experiencing right now, and just like, what does it mean to have an economy that just delivers more goods for the public?

Tracy Alloway (3:42)

Yeah, and to some extent, it's almost a return to Keynesianism, right? It's about smoothing, not business cycles necessarily, but smoothing like the investment cycle. If markets aren't doing it by themselves, then maybe the government can step in and say, actually, we need to build up this specific area of the economy or this particular piece of infrastructure.

Joe Weisenthal (4:03)

Absolutely. So our guest today is someone who I think has been very influential on building out in public this idea of like a new supply side progressivism or reclaiming supply side economics as something that's beyond just cutting taxes or cutting interest rates and actually optimistic about the role that governments can play in alleviating some of these bottlenecks and shortages and not running into all these scarcities again and just delivering more stuff, more housing, more goods for the public. We are going to be speaking to Ezra Klein, columnist at the New York Times and the host of the podcast, The Ezra Klein Show.