Jamee Moudud on the Intellectual Roots of Zohranomics

SPEAKER_2 (0:02)

Bloomberg Audio Studios, podcasts, radio, news.

Joe Weisenthal (0:18)

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

Tracy Alloway (0:22)

And I'm Tracy Alloway.

Joe Weisenthal (0:24)

Tracy, it's January 28th. I think our new mayor here in New York City, I mean, he hasn't done much, but the snowstorm seemed to go fairly well, not too many big disruptions.

Tracy Alloway (0:35)

I wasn't here, but you were able to walk around, get out of your apartment.

Joe Weisenthal (0:39)

There have been several mayors whose like entire reputation failed because they couldn't handle a snowstorm. And so he seems to have passed the first test.

Tracy Alloway (0:47)

It feels like a low bar for New York mayors, I got to say.

Joe Weisenthal (0:51)

My guess is if we looked at it, I agree, it is a low bar. But on the other hand, it's like, OK, first big test of the new administration seems to be doing well. I don't think, however, ultimately, the Zohran Mamdani administration will be judged on snow removal. Like, this is not going to be how history probably remembers how well.

Tracy Alloway (1:09)

No, and he certainly wasn't elected on his snow removal capabilities. Although, I did see the videos of him getting his shovel out.

Joe Weisenthal (1:17)

He's so good at retail politics. He's so good at that.

Tracy Alloway (1:21)

But speaking of tests, I mean, there are bigger tests coming up, right? Mostly concentrated in the economic policy sphere.

Joe Weisenthal (1:29)

Right. I think we know, and of course, we talked to him, but the affordability question in New York City, clearly central, one of the most central topic in the campaign. And what I would say is that the very most, not all of them, but at least a handful of the ideas that he has proposed are the types of ideas that economists hate them, right? So especially anything where the government is intervening in rent, the idea of like, there might not be a more hated idea among economists than anything that smacks rent control or anything like that.

Tracy Alloway (2:05)

Right. So I am not very knowledgeable when it comes to actual economic theory and how it's developed over time. But one thing I do know is that the sort of forerunner or ancestor of a lot of traditional economic theory that we see today, like neoclassical economic theory, Adam Smith, right? Talking about like the free hand of the market and how if the market is functioning, everything should be fine, right?

Joe Weisenthal (2:34)

Yeah, and I think like economists even like, you know, almost all but the most sort of true hardcore laissez-faire economists would say that there are areas that, you know, they call it market failure, right? There are certain situations in which maybe we can't expect markets to do the job. Maybe they'd say like, oh, it really doesn't make sense to have like private fire departments, for example. Although some people actually do propose private fire departments. But yeah, you know, even the most sort of like true believers as sort of liberal or neoclassical economics, they're like, oh yeah, well, there are market failures.

SPEAKER_2 (3:07)

Right.

Tracy Alloway (3:08)

In which case the government should stand up.

Joe Weisenthal (3:09)

And then there is a role, but only in failure. Unless you define some areas like, okay, there's a reason why markets don't work for this particular area. But after then sandboxing a few of those things, then it's like, okay, as much as possible, you just want to stay out, don't interfere. Let the price signals do their work.

Tracy Alloway (3:29)

Yeah. So this has become, I guess, the orthodoxy.

Joe Weisenthal (3:33)

Yeah.

Tracy Alloway (3:33)

And Mamdani is very much in the...

Joe Weisenthal (3:36)

The heterodox.

Tracy Alloway (3:37)

The heterodox. Yeah, that's a word that always comes up when people are talking about, well, when economists are talking about policies that they don't like.

Joe Weisenthal (3:45)

That's right. It's a euphemism for policies that they, they're like, oh no, at least a handful of people wear that badge proudly. But like these histories, how did they become the orthodoxy, et cetera, right? Like it's not like the law of gravity, or that the earth is round, which are orthodox ideas for a good reason. There are some people who don't believe that the earth is round, but they're like, I think we have good reason to believe it. The people who don't believe that the earth is round, they're not heterodox, they're cranks.

That's a difference, those are cranks. But where do these orthodoxies emerge from? How did some ideas get shunted into the category of heterodoxy or whatever?