Should We Have Billionaires?

Added: 2026-05-25

[00:00:00]I'm Charlie Sykes. Welcome back to the To the Contrary podcast. And congratulations on making it to the long weekend. And after what we've just gone through, probably, and I don't know about the word, probably the most blatant, brazen act of political corruption in the most corrupt administration in history. I'm referring to, of course, the Goon Squad slush fund and Donald Trump essentially granting himself forever immunity from any IRS audit. This would be Donald Trump, members of his family and his company can do anything and the IRS promises never to look at their books again.

[00:00:34]Meanwhile, Trump's revenge campaign rolls on in the last week. He ended the political careers of Senator Bill Cassidy in Louisiana and Thomas Massie in Kentucky. Um, but but wait, wait. As I wrote in my newsletter yesterday, the narrative seems to have kind of flipped over the last few days as people realize this revenge tour may actually be backfiring as more and more Republican senators are bucking the president. I mean, they are pissed about his endorsement of Ken Paxton. They are livid about this. They've killed the billion dollar ballroom deal. They are not firing the Senate parliamentarian or getting rid of the filibuster. And and this is kind of shocking. more Republicans in the House of Representatives are reacting to Trump's attempt to bully them by saying, "Hell no." Um, I mean, now this may be a false spring. Okay, I concede that we we've been through this before, but it's also an indication that there are limits to bullying. And right now you have I'm looking at the list here. You have a critical mass of Republican senators and members of the House who are um you know ready to maybe say we don't need to do everything that Donald Trump says that we have to do. You know particularly after you know he's thrown John Cornin under the bus. I mean, imagine you're a Republican senator. In the next 7 months, you're there and you're sitting next to the political corpses of U. Tom Tillis, uh, Cassidy, maybe John Cornin, and then you have people like Lisa Marowski sitting there and Susan Collins sitting there and Mitch McConnell who loves revenge served cold. That's enough votes for Donald Trump to run into some real serious problems when he really doesn't need it. But again, you know, if only these folks had been warned, they're just getting a reminder that while Trump demands absolute loyalty, he has none in return. So, uh I do think that, you know, um this is this is one of those things where, you know, be careful what you what you wish for.

[00:02:36]Meanwhile, economic anxiety is rising.

[00:02:38]The Iran war quagmire drags on and on and on. And Donald Trump continues to be rather remarkably tonedeaf, calling high gas prices peanuts, pushing ahead with his 250 ft tall golden arch without congressional approval. And so we have to ask that evergreen story, what could possibly go wrong?

[00:03:06]And joining me on the podcast today to try to make sense of it all is the man who makes sense of it all, the professor of economics who explains economics to the rest of us, Justin Wolfers. Justin, thanks for coming back on the podcast, >> man. Excited to be here. Before we get into this, just tell me about, you know, last time we were on, you said you had something to announce, and I'm looking over your shoulder. Platypus Economics.

[00:03:33]You have joined, you're out here, you know, on this little pirate skiff, right, of independent media. Just tell me what you're doing because I have been loving your YouTube videos and loving the new Substack. It just feels like, you know, the neighborhood's gotten a little smarter. So, welcome.

[00:03:51]Thanks, Charlie. Mate, you've been an inspiration. Um, I one of the things I've learned by coming on your show is uh that there's a real media outside the the other me the old media. The old media is frankly dying. Um, I want to do two things. I want to skate to where the puck's going and I want to meet people where they are and you and your audience have taught me here's where they are.

[00:04:14]Look mate, the the underlying story is I want to teach the world economics. It's all I want to do. I this is the second act of my career and the first act was modestly serious professor still a professor I'm just not at all modestly serious and when I think about the world right now we all have different diagnosis of what's going on but economic literacy I think is a tremendous thing to have um I think it's doubly important at the current moment and I think an attachment to the truth so you You know, as a research economist, my job was to try and come up with more rigorous economics. And when I look at the current moment, the problem is not a shortage of rigorous economics.

[00:05:00]The problem is a lack of trust and understanding of the rigor that's out there. So rather than spend the second half of my career trying to make something that's extremely rigorous, more rigorous, I want to try and make something that's been a difficult sale an even tastier sale. uh move a bit of that rigger, move a bit of that insight into the public debate. Make you, whoever I'm looking at, not you, Charlie, your audience a little smarter.

[00:05:25]And you know, Platypus Economics, it's a smartass name. I'm a smartass bloke. Um, but the mission >> more smartass.

[00:05:34]>> Well, we we need we need more smartass, but we also need more literacy. So, you mentioned that economic literacy is valuable to have. I mean, we're also seeing the the ongoing price we pay for economic illiteracy. So, I want to get to the wonky stuff, bond prices, oil prices, the stock market. I want to get to all of that in a moment. But since you are the people's economist, I mean, one of the jobs of economists is to explain things like billionaires and how their minds work. So Justin, could you explain to me the mind of Jeff Bezos right now? He gave an interview to CNBC the other day where and I actually was was telling this to somebody yesterday.

[00:06:17]They didn't believe me where he's actually describing Donald Trump 2.0 as more disciplined and more focus used to describe Donald Trump. And everybody's looking around going, "Has he been paying any attention to what's happening over the last week? Has he ever read any truth social posts?" So, so help me understand why a billionaire, and I apologize for the language, and we've done this before, a billionaire who has [ __ ] you money just cannot say [ __ ] you ever, you know, what what's going on?

[00:06:50]What issues is he working through?

[00:06:52]>> Yeah. I look, I don't know inside the man's mind. And he built an amazing business. And actually for many of us, I live in the Midwest and 20 years ago wouldn't have had anywhere near the assortment of goods that are available to me from all over the world. He's actually improved my life. I just want to acknowledge that. Um there are a couple of things that happen.

[00:07:14]>> You know, that's fine.

[00:07:16]>> Um I just I like to see the sunny side and everything. Um >> there's a couple of things going on. So, one, if you've ever spent time with rich people, and I have a funny feeling that you run in fancy enough circles that you you times.

[00:07:30]>> Yeah.

[00:07:31]>> And the thing is, if you're that rich, you walk in a room, the room stops, everyone stares at you, and then they tell you how handsome you are, how smart you are, you can fart up any idea that you want, and someone will call it brilliant. Um, >> and as a result, you become quite detached from reality. I think this actually sort of, this is not economics.

[00:07:50]This is closer to so sociology or even psychology which is if there's no one calling you a fool you're the fool. Um and it's I think it's actually uniquely disqualifying for higher office. I am so glad that I have two teenage kids who continually tell me what number. I think it's profoundly grounding. So first thing is you you lose that grounding. Um the second thing is we each get to tell our own stories. The the truth from an economic perspective is there's probably a lot of people who were trying to start docom businesses around about the same time and Bezos got a little lucky and was a little smart.

[00:08:28]>> Mhm.

[00:08:29]>> Um and the reality of his story, the reality of mine and the reality of yours is it's a little bit of little bit of luck, little bit of brains, little bit of tenacity in some measure. If you can keep the humility together, you'll understand a lot of it is luck. A fair bit's tenacity and a little bit gift.

[00:08:46]>> But you get to tell your own story. And the thing is there is a an economic twin of Bezos out there. Someone who had the same idea at the same time and the luck went the other way.

[00:08:56]So you and I get to understand that reality and we tell the stories involving a lot of luck. Bezos only sees Bezos's rise. And so he's going to tell his story as one of um brilliance. Um, and so once again, you you have an elevated self-esteem with no one telling you you're an idiot, >> but but but not elevated enough not to feel the need to suck up to the orange god king. See, this is the part that I I get the huge ego, but at a certain point, isn't part of that ego is like you don't want to appear to be sucking up and graveling, right? I mean, >> so why did he say what he said? I've been struck by how many people have thought he was being sincere.

[00:09:39]>> Um, >> okay, >> maybe he was, but >> there's one lesson in American business right now, which is if you can be quoted on the president, make sure the quote is positive.

[00:09:50]>> Okay?

[00:09:51]>> If you're a business school professor right now, you you would not say it is in your corporate best interest to tell the truth. You would say it is in your corporate best interest to flatter. And so if you meet someone who's highly erratic, it's in your corporate best interest to call them disciplined. It it's completely obvious, right? That has not always been true in American history, right? It used to be that we had presidents who understood people didn't like them, that they would make rules of the game so that everyone can go out and compete fairly. What we have instead now is someone who sends contracts in particular ways, punishes perceived enemies, and so on. So that form of crony capitalism. Yeah, >> one breaks markets. It breaks markets because the products that the companies that succeed are the companies that flatter rather than build a better mousetrap. It also breaks politics because there was some reason we looked up to captains of industry in the past, which is they had a lot of information.

[00:10:48]They knew what was going on in the economy and if they told the truth that would be an opinion worth putting weight on. But political discourse is broken because the only idiots dumb enough to tell the truth >> are you and me.

[00:11:02]>> Um we don't move markets apparently.

[00:11:05]>> Yeah. Well, I mean you do. You move.

[00:11:08]So, so this this leads to my next question because you know I think a lot of people when they think of economics they think of the numbers and they think of all of the you know you know things like you know um you know costbenefit analyses but but there is also >> stop making my blood rice >> exciting. So, so yeah, but there's also an ethical and moral component to all of to to economics and particularly to free market economics. And so when you get to a point where the market uh appears to the market is corrupted, when there is no longer a rule of law, when it is kind of when when um which we're describing right now here is is a kind of crony capitalism, this has an effect, right?

[00:11:55]Right? I mean, markets work when they are efficient and they're actually free.

[00:11:59]But corruption is a tax on that market or I don't know how you want to put it, a weight on the market. It's not irrelevant if Americans begin to believe that the market is completely rigged against them um and in fact corrupt actors are um running the show. So just talk to me about that because you know for I think for for decades and centuries there was that understanding that the economy didn't work without a certain ethical uh underlying and then of course you know there arose that philosophy that the only thing that mattered was making profit which made sense for a while until we we had the bad actors come along. So just talk to me about all of that because I do wonder about this this world of corruption and the world of the economy. They're not separate from one another. How do they intersect?

[00:12:48]>> Right. Um, look, all human endeavor, including economics, starts with morals and ethics. Um, you can never rule out there's no machine that >> operates independently that has no ethical impact in the world. So, I appreciate you starting there. Um, and anyone who's ever been taught badly might have been taught that that's not the case, but >> we're in a smarter place here. Um I think there's two points I want to make here. Um when economists and particularly free market economists but honestly even center left economists like me say markets are a really useful mechanism.

[00:13:25]We are talking about the fact that if customers are naturally going to go to the best product that creates a very strong incentive to build the best product. That's the underlying genius of markets. I don't know who's going to invent the best cellular telephone, but I do know if they go there, I'm going to give them my money, right? And then that means there's inventors all across the country, all across the world trying to think about the best smartphone, and we get ongoing innovation. And that is the genius of capitalism. And don't for a moment forget there's a genius to it. Uh remember the contrast between South Korea and North Korea. South Korea did not adopt markets. South Korea people are hungry. They're poor. They're literally shorter than people, sorry, North Korea, they're hungry, they're poor, they're literally shorter than people in South Korea because of malnutrition.

[00:14:13]Um, so this is without having to even use the libertarian language of freedom.

[00:14:18]This is just >> the failure to use markets leads to incredible costs. Um, it it leads to rates of child mortality and and and pain and misery. South Korea is is rich, has much healthier people, less hungry people, happier people, more fulfilled people. And that's before again we talk about freer people. Um, so there's a genius to markets and any lefty who tells you otherwise is wrong. There's a problem with markets. Uh, the problem is markets provide incentives. If you corrupt the incentives, you corrupt the market.

[00:14:56]>> Mhm. If we move to a world in which remember the old political divide would have been 20 years ago Charlie would have been on this show saying Justin you lefties are all about government intervention. Us center right folks are all about allowing market forces to work.

[00:15:13]>> That's true.

[00:15:14]>> The reason Charlie is on the never Trump side is this is the most inctionist White House of our lifetimes and it's not even close. He is intervening in markets in ways in which left-wing presidents would never dare and never dream of. But more importantly intervening in a way that fundamentally distorts them. Uh when Intel walks into the White House and walk out an hour later and accidentally left 10% of the company down the back of the White House couch, >> that is distorting. When the president takes the greatest AI company in the world, which right now is anthropic, and it doesn't want to do business with him the way he wants it to do business, and refuses to engage with it and puts a thumb on the scale of every other AI company instead, that's letting the greatest company fall behind rather than push ahead. It's distorting the signals and the incentives when deals are done at Mara Lago rather than better products being discovered in the market. That distorts the signal.

[00:16:17]There's a general problem and this is one that those of us in the center left worry a lot about. Competition is the for market competition lower prices and better products is the force that causes markets to succeed. The problem of course is businesses become profitable the more they can lessen competition.

[00:16:36]>> Businesses are actually always trying to undermine competition. One of the ways they do that is they strike a deal with the White House. You know, I'll praise you and you'll send government contracts my way. And so all of that is markets don't work if you distort the signals.

[00:16:53]And that's what we're doing. That's point one. I want to get to point two.

[00:16:57]>> Markets need public support.

[00:17:01]So, one of the funny things about being a public intellectual, I feel weird saying that, is sometimes you get invited into rooms full of rich people.

[00:17:09]>> Rich people have figured out if you piss everyone off, capitalism and markets are not long for this world.

[00:17:18]And so, if everyone feels the current system's not working, >> Yeah.

[00:17:22]>> then the current system is not sustainable. And in a deep sense, you don't need to doubt me on this theory, which is that's sort of what happened with the rise of Trump.

[00:17:31]>> There was a feeling that our current system, whatever it is, wasn't delivering, particularly for working-class people, and they wanted to put stick their middle finger up at Washington and Trump was the nearest middle finger. Um, now Trump has failed to deliver. The sense in polls in which people believe that he's looking out for them, that he has their interests at heart, that he's good for the economy has never been lower.

[00:17:58]And that again sets in motion political tides that will help some people, but are certainly the opposite of conservative.

[00:18:11]you know, as a as a member former member of the center, right? Well, I still am a member of the center right. You know, what's really truly shocking about this is it feels like five minutes ago that every conservative and you know, free market advocate would argue that what we don't want is government picking the winners and losers. That that that government putting its its thumb on the scale would distort the markets would in fact make it less likely that we would become prosperous and that the best companies would rise to the top. It's one of the reasons why conservatives always had a suspicion of central planning, of industrial planning, um, up until the moment that Donald Trump comes into office and, you know, has this quasi socialist syndicicalist, uh, whatever you you call it, state capitalist system where he sits back there and like, you win, you don't, I will, I will I will pump you up. I will you know if you bribe me all of those things which are all about the concentration of power in government rather than in the market. So talk about an abandonment of anything remotely like conservative economics. other point that you made which is absolutely crucial and I did realize this even back in the before times and I can still kind of remember many of the conversations when I realized that being pro- free market was not the same thing as being pro business because businesses generally do not favor the free market. You spend time with businesses and you understand that no they like the idea of being able to rig the market. They like the idea of being able to go in and be a moocher.

[00:19:40]you know, they love the the return on investment of, you know, flying a Gulfream jet to Washington, sucking up to the right people and getting something for it. So, corporate welfare became a way of life. I actually wrote a book that that many of our listeners would probably hate right now. It's called a nation of moochers, and people thought it was this right-wing attack on the welfare state. Half the book is about corporate welfare and the way in which these markets were being distorted by these, you know, big fat cat companies that would went in and, you know, got special deals for themselves, which contributed to the collapse back in 2008 and angered people when many of them were were bailed out and yet we are living in this world right now. So I I don't know whether you know but but continuing this. Yeah, please go ahead.

[00:20:29]Yeah.

[00:20:30]I actually teach this in my introductory economics class and when I do it some of the students go wow >> because they you know this the language you used is exactly right pro market versus pro business and so part of it is our political rhetoric is like some people like businesses suck I want to tax them I hate corporations and then other people are like corporations create jobs who the hell are you and that what's getting lost there is what delivers for us is market competition Right?

[00:21:01]>> Which means you're pro market or alternatively phrased pro competition and that allows businesses the freedom to compete and the best to rise and the worst to fall. And by the way, we should be comfortable with the worst of them falling. That creates the space for the best of rise.

[00:21:17]>> So absolutely >> creative destruction.

[00:21:20]>> Yeah. I've never had this argument with someone who at the end of it said, "Oh, you know what? You're right. I'm pro business rather than pro market."

[00:21:26]They're like, "Oh, I thought I was pro business, but actually I'm pro market."

[00:21:31]I want to point out what this means, though. If you're pro market, you're pro competition. You care as much about big existing businesses as the unborn and as small businesses. Which means if you're genuinely pro market, what you want to do is set the rules and let them compete. Which means if a CEO calls you, you say, "Why are you calling? I want you to go and compete."

[00:21:55]You literally don't take their call. You don't know any CEO's name. That's what being pro market is about.

[00:22:03]Pro business means, oh, I call these guys. We share power between us.

[00:22:09]That might feel like it's good for the economy because everyone who's in the room is making the pie grow, but what you're forgetting about is the people who aren't in the room. And the people who aren't in the room are the small businesses who want to be the next generation of big businesses or the unborn businesses. Trump has been terri has been great for big existing businesses. They can call him >> great.

[00:22:26]>> Yes.

[00:22:27]>> Which means he's been terrible for the unborn. I'm using that language lightly provocatively.

[00:22:35]>> But I'm totally serious about it. It is very hard to start a company right now to compete against Apple because Tim Apple can call the president because they want to build walls around themselves. This is why this is another something that that people on the center right used to understand is that businesses are not anti- businesses are not anti-government regulation as long as they can capture those regulations as long as they can create rules and situations that make it impossible for the little guy to compete against them.

[00:23:05]So what you have is you have Apple and and uh and Jeff Bezos who kind of like the idea of the walls and the moes that they can create from this cronies. And this again, you know, going back to to the Bezos thing is that yes, there's a clear obvious self-interest of these guys sucking up that they're figuring out that, you know, I can become even richer. I can become, you know, a a billionaire or a trillionaire. this is good for me and maybe for my shareholders um at the expense of the these market principles that you're talking about. So Jeff Bezos could say what what is in the interest of the country? What is interest in the interest of the culture?

[00:23:42]What is in the interest of consumers?

[00:23:44]What is in the interest of the overall marketplace? And basically he said [ __ ] it. You know what's in my interest? you know, you know, he and Elon Musk and various others sit around Tim Cook and they they're they're going to do great, right? So, it is rational for their self-interest, but there used to be kind of a recognition that that rational self-interest would also be that you don't want to inshitify the rest of the country in the marketplace, right? Is that this this was ultimately not but that's kind of abstract, isn't it?

[00:24:14]That's that's not the way people in the real world make decisions.

[00:24:20]I want to go one further with you. Do you want to have a I I'm not sure about the following idea and it's going to get me in a lot of trouble. So I have a feeling you want to hear it.

[00:24:28]>> Um should we have billionaires?

[00:24:33]I mean that is a question. So the standard view is um if you have strong incentives to create great companies like Amazon, then we get the next Jeff Bezos, the next Amazon, more delivery, more stuff. We grow the pie. People's lives are better.

[00:24:49]Um, the problem with that view when it gets to billionaires is once you've got $100 million, you can have a house in New York, a house in the Hamptons, a house in London. You can walk into any restaurant, buy any bottle of wine, and order any food off the menu. You can have a butler, an assistant, and the butler can have an assistant. Um, you can't run out of money.

[00:25:08]>> That's at roughly $100 million. I I made that number up.

[00:25:12]>> Doesn't matter what it is.

[00:25:14]>> I could live on that, maybe.

[00:25:15]>> Right. So more money than that doesn't buy you more stuff to have a better, richer, fuller life.

[00:25:24]What does it buy you?

[00:25:26]I can only think of one thing you can buy.

[00:25:29]>> Yeah.

[00:25:30]>> Power. And so then the question is, are we comfortable with people buying power?

[00:25:39]Because if that's the only thing you can buy once your income gets above 100 million, if we're uncomfortable with the idea that some people should have more power than others, and I am, then maybe we don't have any need for any person ever to earn more than 100 million.

[00:25:56]I'm being a little provocative, but I mean it. Why allow billionaires?

[00:26:03]Why not just create a 100% tax rate in a billion?

[00:26:05]>> Well, I am shocked at your lack of empathy. Because can you imagine can you imagine the soul crushing experience of being worth $1 billion if the guy next to you has $3 billion and the dark night of the soul that that person is going through if the person down the road has $30 billion?

[00:26:28]>> It's terrible >> because can you ever have enough? And if you're worth $30 billion and you walk into the room with Elon Musk and you think, "Shit, what terrible thing has happened in my life that I am worth 1% of what he is worth?" And I just made made that number up because that's what it gets to at a certain point. It becomes, you know, this endless vortex of of envy and and and what aboutism.

[00:26:52]But you've raised the question of of of of power because the concentration it was you know I mean you know a few decades ago we've you know we've we've we've had debates about uh you know inequality forever right um the you know the income gap you know is getting worse and worse but now we are in a position where America has a ruling class and I was actually thinking about that this morning this was one of the things that Americans we used to say about ourselves you know unlike the Brits unlike the Brits We don't have a class structure really.

[00:27:24]We have, you know, you know, class mobility and we do have a lot of class mobility, but we definitely have an oligarch ruling class. And I've never before in my lifetime said that. And you cannot understand American politics or power without understanding that fact.

[00:27:41]Right.

[00:27:42]>> Yeah. So, let's think about what you can buy with that much money. So, let's go to M. Um, >> okay. Musk put I think it was roughly 200 250 million into the Trump campaign.

[00:27:52]Does that sound right?

[00:27:53]>> Yes.

[00:27:54]>> Yes, it does. Yeah.

[00:27:56]>> So, and he won and in fact then was given the keys to the US government, our government, >> and in the business of trying to save us a trillion dollars, probably cost us money, destroyed USID, created the needless deaths of tens of thousands of people around the world.

[00:28:13]>> Um, did damage to in ways that we we're still yet to count it all. What's stunning actually is how cheap that is.

[00:28:22]You know, the bloke's worth, I just looked it up, like 800 billion.

[00:28:27]He didn't even spend 1800th of his wealth and he bought the highest office in the in the world.

[00:28:35]Um, >> okay, let's do that math. Let's do that math again. Okay, so he's worth $800 billion. You you and I have had this conversation that people don't make distinction between million, billions, and trillions. 800 billion. So 250 million which is more money than than most of us can imagine >> right he's 250 million >> which is a quarter of a billion >> right >> and he has about 800 billion >> right >> uh so that means he pocket >> 1 3000th of his wealth >> uh which I hate doing maths like this 0.03% 03% of his wealth, right? He's got 99.97% left after he bought the presidency.

[00:29:19]And actually, it raises this really interesting question. One of the things I found very surprising over the whole last many years is Trump claimed, and I think he probably was a billionaire when he ran in 2016, and then he asked working-class moms and dads to send in $20 donations to fund his campaign.

[00:29:38]This week alone, Trump got a $1.8 billion slush fund. He's got the right now to never pay taxes again. Um, he started crypto businesses worth literally billions of dollars.

[00:29:51]>> And in some sense, the question is why didn't he buy the presidency? He actually beg, borrowed, and steal stole his way there. Mhm.

[00:29:59]>> But he actually probably if he was going to rape the US Treasury the way he is, he probably just should have ponyed up 500 million >> Mhm.

[00:30:08]>> and run the most expensive campaign ever and made it not even close.

[00:30:14]I I mean the biggest business decision, biggest failure of Donald Trump's is to not have spent more to get here quicker given how quickly he's >> evacuated. you would think.

[00:30:24]>> Well, what is interesting is like why why he didn't do some of this stuff earlier is because that I I think that he is has just discovered in Trump 2.0 what he can get away with. I think that he figured out that he did not even he did not fully realize how vulnerable we were, how how actually how weak the system was. And I there's a part of him that's is is like this little kid who's kind of amazed that oh my god, I can do this. What if I did this? Would I be able to get away with Oh my god, I got away with that. And now, and this week felt like it was like, okay, you know, you only live once. Let's see if I can give myself $1.8 billion of taxpayer money to give out to my cronies, including the, you know, people who attacked the cops on January 6th, who are now saying, "Yes, we want millions of dollars for attacking the the capital." But then I'm not even sure that it feels like it pales to what if I can like build on the immunity that John Roberts gave me by making the IRS never look at me, my family or my businesses ever again. I can commit any tax fraud for the rest of my life and I will never be held accountable for. And he's all he's got to be like part of him saying, "You think I'm gonna get away with that?

[00:31:40]Because that would be sweet. I means really sweet.

[00:31:45]>> There's a really >> I'm I'm going to think about it when I'm filling out my taxes, just so you know.

[00:31:50]>> Right. I I I had that thought and it got me nowhere healthy.

[00:31:55]>> Yeah.

[00:31:55]>> Um there's an interesting question. I want to turn it around. Um so many of us like it's unbelievable. It's crazy. He was able to just write it his >> the 1.8 8 billion slush fund and lots of people like how did it get to be so big?

[00:32:12]And the answer to that question is what prevented it getting bigger?

[00:32:16]>> Mhm.

[00:32:16]>> Which is a really interesting thing. So there must still be some constraints within our political system because he stopped at 1.8. He didn't actually go to 18 billion or 180 billion. And I think the question is why? I think it's a really important question because whatever it was, we want to keep it there. Um, and it also helps inform us about what the next step is. Maybe this was just the first step and now he's gone to 1.8 next time he goes to 18.

[00:32:43]>> Well, actually, you know, it's not 1.8.

[00:32:45]You you know way came up with that number. 1 bill7. Yeah. 1 bill776 million because somebody said we can make it 1776. And frankly, that's that may be the answer. Now, why he didn't make it 17 billion dollars, I don't know. But yeah, >> right. That that that's my question. I really want to know what that constraint is because I think it's critically important to our future.

[00:33:12]>> It's not his conscience >> cuz at 1.8 billion, it was still enough to get front page above the fold headlines at the New York Times. So, if you multiply by 10, the headlines can't get any bigger than they were.

[00:33:23]>> No. The outrage my friend Charlie Sykes feels over this is already so large it's not going to be 10 times larger if you make the number 10 times larger. So this >> or 100 times larger. Yeah.

[00:33:33]>> Yeah. So what stopped him?

[00:33:37]>> We we don't we don't know >> well see now this is going to be the part of the question that we can't answer today. Um is you know is was this finally that mythical line that you know that we've been talking about for the last 10 years. you know, at what point will Republicans push back against him?

[00:33:54]And and I I'm was almost reluctant to do my intro today where I'm, you know, talking about the senators that were pushing back on him and the and the members of Congress because I feel like we've been Lucy with the football for so long. On the other hand, there is that that moment where you have an election and try to I'm imagine being a senator or a congressman and going back and explaining to your constituents why um when when they're economically suffering and have economic anxiety, why you support the slush fund, um why you support the fact that Donald Trump should be exempt from any any scrutiny ever again in in the future, why you would want to spend a billion dollars on the ballroom. why the president's priority is there are you know these these are these are moments where even in this Republican party there might be some who just can't stomach it but I feel naive even saying this okay so can we get into the other mysteries of economics of the week >> let's do it appears that the oil markets and oil prices the people who set the oil you know prices have a different view of the world right now than the stock market.

[00:35:04]Stock market continues to be happy days are here again. The oil markets the prices continue to well they look like they're rising. There are certainly and as you wrote earlier this week it would certainly suggest that uh there is the belief that oil prices are going to will stay elevated for years. So, can you explain this little dissonance between Well, there's there's dissonance between three things. The stock market, the oil market, and consumer confidence. They're not tracking, are they?

[00:35:37]>> Yeah. So much to say here, and it is something I've been writing about a lot lately. Um, let me I'm going to bore your audience or make them smarter or both, but a serious question deserves a serious answer. Um, the stock market is not high because of what's going on in the run. That's the conclusion. Let me work backwards. The stock market reflects a lot of things.

[00:36:00]It reflects what's going on in Iran, what's going on with AI, what's going on with a whole bunch of other stuff. And so, if you just say the stock market today is higher than it was in the past, this is what the this is standard right-wing talking point now. And so, you say therefore the president must be doing everything right.

[00:36:17]Well, no. and not if it's coming from say a bunch of AI stuff that's unrelated to him. So then the question is how do we figure out what parts of the stock market movements are in response to say Iran and it turns out it's a very easy way of doing this which is you look at a very very narrow time period in which the only thing that happens in that narrow time period is the president escalates in Iran and if it's a very narrow time period because it's such a short period there couldn't have been much news about AI or the rest of the economy and so on and when you do that every time you look at a narrow time period where the president has escalated in the Iran stocks have fallen And every time it is deescalated, stocks have risen. So what you learn from that is the market's judgment is our adventure in Iran makes large American companies less profitable.

[00:37:03]So then we can back out from that and we can say, okay, the market as a whole is up, but it's not because of Iran. It must be because of the other things. And that makes sense. There are other things going on in the world beyond Iran. In fact, we can do a calculation one step deeper. And this is something I did in a recent newsletter and video. Um, we can look at days in which the oil price rises and see what happens to the stock market. Those are basically days in which there's been a lot of escalation of tension in the Middle East. And on those days, oil prices rise, stocks fall. On days which the opposite happens, the opposite happens. And what we learned from that is roughly speaking that a 10% rise in oil prices causes events in the Middle East escalation generally that would cause oil prices to rise by 10% cause US stocks to fall by about.9%.

[00:37:53]Now we know that as a whole oil prices are about 60% higher than they were before the war. So now I'm going to multiply that 60% by my.9. I told you I was going to bore people.

[00:38:05]And I can infer from that that the stock market today is about 5% lower than it would otherwise have been if the Middle East had stayed calm.

[00:38:14]And I can go a step further than that.

[00:38:15]So now I've said not just the stock market doesn't believe in Iran. I've now said the stock market thinks it's worth 5% less as a result of our adventure so far.

[00:38:26]5% the US stock market's worth about 60 the S&P 500 is worth about 60 trillion.

[00:38:31]5% of 60 trillion is $3 trillion.

[00:38:36]So now that says Trump's adventure in Iran has led the stock market to behave as if the future profitability of large American companies is $3 trillion lower than it would otherwise have been. The other thing I could do is I could just do the standard uh economist thing of saying well 3 trillion is that a lot of money. There's roughly 100 million households in the United States. three trillion divided by 100 million. I know you already got the motors wearing over there, Charlie. It's $10,000 per family.

[00:39:06]Um, so the president, according to the stock market, the president's adventure in Iran has been tremendously expensive to the average American.

[00:39:20]Um, the stock market as a whole might be up because there are other reasons for optimism. Look at the AI boom we're in the middle of. It's not that hard to understand that there are other things going on there. Now, let's bring this back to you asked me to connect the stock market, the oil market, and consumer sentiment. The final part of that then is how do we connect this to consumer sentiment?

[00:39:41]>> Yeah.

[00:39:41]>> Um, we people understand war is bad for lots of things. It's bad for troops. It's bad for people abroad.

[00:39:54]It hurts the conscience. It hurts the world. and it hurts the economy.

[00:39:59]And so it's not just that Trump has cost the typical American family tens of thousands of dollars.

[00:40:06]We also understand this was not one of those macroeconomic events that just happens out there. This is a war of choice from a man who promised no wars of choice.

[00:40:16]Do you think people are pissed about that?

[00:40:19]>> A bit.

[00:40:20]>> I do. I think there's every reason to think that people respond even more negatively to self-inflicted wounds and this is profoundly self-inflicted.

[00:40:29]>> How do I You want to grade the exam, mate?

[00:40:31]>> Well, no. And and and of course they you know the they're experiencing it every single time they go to the the grocery store. So there there is a there is a it is no longer an abstract question for them. And and this of course is why Trump, you know, feels absolutely stuck.

[00:40:49]You can you can you know sort of sense that Benjamin Netanyahu is like hey listen I need I need this war to keep you know to keep in office and I let's let's keep bombing and and Trump is listening to who knows you know the various autocrats in in the in the Middle East. He wants desperately to get out of this. My guess is that he's going to try to just change the subject to to Cuba. I don't know that that's going to work because you know when people feel bad I mean a a lot of a lot of you know you know well you a lot of just economic sense is like how do you feel about your future? I mean do you feel optimistic or not? You make that decision to spend money. Am I going to spend you know $5,000 on a vacation because you know I I think things are going pretty well or are you thinking you know what I'm I'm really getting kind of nervous. I'm getting nervous about the cost of living. I'm getting nervous about my job. I'm not going to spend that money.

[00:41:37]So these things like sentiment are not irrelevant, right? I mean these things, you know, consumer spending is a lot of it is just driven by just your mood, your your your just sense of whether you're optimistic or pessimistic or nervous, right?

[00:41:52]>> Yeah. Um I sorry I just sometimes the feelings well up a little bit, mate. Um it's the other part of this is we were promised four to five weeks. Yeah, >> we're more than double that. And I have a vague memory. Correct me if I'm wrong.

[00:42:11]I have a vague memory early on coming on your show and saying we always underestimate the cost of wars. We always underestimate how long we'll be.

[00:42:19]>> You got a great piece on the in the New York Times on that. They're still lying about the cost. I mean, when they're saying it cost 25 to$29 billion, does anybody seriously believe that?

[00:42:28]>> No, it's trillions of dollars. And so I hate doing the victory lap of saying, "Hey, I was right." But I I do have to tell you, Charlie, I was right. Um, >> but the thing that I find distressing about the current moment is, as far as I can tell, there's no urgency to solve the problem.

[00:42:44]>> No, that's the amazing thing.

[00:42:46]>> What did he do last week? I mean, I know he declared war on various parts of the Republican party, but I'm not sure what we did to solve the problem in Iran. And the thing that puzzles me is if you look at November 2026 oil futures, >> they're up. They're suggesting Republicans are going to the midterms with high energy prices that they caused. I don't understand why Republican congressmen and women and and Republican senators aren't screaming at the White House, could you at least take a meeting with these guys, figure out your plan or if you got a bomb and bomb like just do something. Look, if you you know why? Because they're all just too scared. This this is that this is the downside of of Trump's revenge is he's basically saying to them, don't don't allow any any daylight between you and me because if you do, I will destroy you. But of course, all of these Republican politicians, this is what they need to survive is a little bit of daylight or the ability to push back on this. And the vast majority of them um are too terrified and have been too terrified for ever, >> right? Sometimes each of us spends some time with older people, like Thanksgiving, and after a good meal, sometimes I'll walk past one of them and they've fallen asleep on the couch in front of the TV.

[00:44:07]>> And I'm not calling out any of my in-laws in particular.

[00:44:10]>> Yeah.

[00:44:12]>> But that happens at a certain age.

[00:44:15]I have no evidence, and I'm not being funny when I say this, I have no evidence the president hasn't fallen asleep in front of the Iran TV. Oh jeez.

[00:44:24]>> It does.

[00:44:25]>> What would be different if he had fallen asleep?

[00:44:34]>> I I got that image now in my head. Okay.

[00:44:37]So, in the few minutes that we have left, can we just change the subject completely?

[00:44:40]>> Let's do it, brother.

[00:44:42]>> Because I and there are so many things that I want to talk about or that I want to write about that that every day I'll sit down and then suddenly there's something that goes on in the world. I say, you know, I I have to address this.

[00:44:52]But you know one of the the the you know one of the things that I've been very interested in for very you know a very long time written a bunch of books about education the impact of smartphones on education the impact of smart on smartphones of children how hard it must be to be a kid these days when you have that constant screen and the social media I mean it was hard enough growing up you know if somebody called you a spaz on the playground but if you you know every day you open up some you know Tik Tok video and somebody is talking about you it's got to be a nightmare.

[00:45:20]Anyway, you had a very very interesting piece about how some schools are experimenting with these new Well, talk to me about it. What's the name of these little wallets they're called?

[00:45:32]>> I mean, I'm just going to check my messages now, Charlie. Give me a moment.

[00:45:35]And >> I got it. Okay.

[00:45:38]>> Yeah, I just have to I just have to check the latest on Blue Sky. But go on.

[00:45:43]Um, >> what are they called?

[00:45:44]>> So, right, they're called Yonder pouches. And >> yonder pouches.

[00:45:49]>> Yep. So, look, schools understand the distraction. And by the way, I teach at a university. I understand the distraction. Students in my classroom are allowed to use computers and uh iPads, but they're not allowed to use phones.

[00:46:02]>> Um, it's not clear I should even let them use computers, but I didn't want to fight that fight anymore. The best research says put away your device. Um, there's I think this an issue we're all battling with, like what role should devices play in our lives? What role should social media play in our lives?

[00:46:18]It's not just about kids, but um I I'll give it a little plug here, Charlie. One of the things I like to do in Platypus Economics is I'm an economics professor.

[00:46:26]I talk to leading researchers across a wide range of economic issues all day, every day cuz that is my nerd life. And I found this piece of research where what they did is they studied schools that were adopting these pouches. So at many, this is very common, by the way.

[00:46:42]schools now require you go to school and the first thing you have to do is lock your phone into a pouch that's magnetically locked and you can't get back to your phone.

[00:46:50]And so they were able to compare schools that adopted that policy with schools that didn't adopt that policy.

[00:46:56]Similar schools and then they it's amazing data. They were able to figure out are students actually using their devices despite the rules and sometimes they are. Um but they asked the students about their feelings of um happiness and anxiety and a whole bunch of feelings.

[00:47:12]>> Yeah.

[00:47:13]>> They asked the teachers about what the classroom was like. We can track their grades. All sorts of things. It's a really interesting study. Not just cuz wow, what a great thing to do. But actually, social science never quite follows our standard uh kitchen table or political simple lines. So for instance um the first year after they adopted this new system was a bit of a wreck. Um students are a wreck, students are anxious, students are mad and like >> I like it. Yeah. Yeah.

[00:47:42]>> Changing habits is really hard. And that's what was going on that first year. But actually after that student well-being and I mean emotional well-being rose by a reasonable amount and enough that this seems like it's a pretty good policy. And you might think to yourself, well, if my this is 13year-old and 16-year-old would be happier like this, maybe I would be too.

[00:48:05]Um, >> the metaphor for a lot of parenting that you might have some short-term disappointment and pain, but much longer term happiness and satisfaction. I mean, this is the kind of this is valuable social science because basically you're saying that that that if you, you know, take that deep breath and are willing to put up with a lot of bitching and moaning and unhappiness for a short period of time, after a while when people get weaned from their heroin, from their from the crack cocaine of having that phone in their hands for the whole time, they actually end up happier, smarter, with better lives. So, but it's it's good to know that that's over the horizon, right? because you have to go through some [ __ ] you know, >> mate. So much of parenting feels like the good stuff's over the horizon, >> right?

[00:48:50]>> Look, that's something I love, which is social science can and does help us live better, richer, fuller lives. This is my generation of parents.

[00:48:59]There is no there previously wasn't much research on this because there's not previous generations that have grown up exposed to this technology and so we're using our bad intuitions and occasionally reading you know like Cosmo or Oprah who we probably shouldn't believe at all. So we got real social science doing a great job and so >> I love to lift that up and help people see how my tribe social scientists are helping uh cast light on some of the really big questions. And so you and I right now we're going to spend all our time talking about macroeconomics and politics, >> but life is more than that. And um you know, social scientists are working on all this and it's it's a great joy and it's exciting and I hope folks find it useful.

[00:49:41]>> Well, and also I think you know issues like this will affect the culture going forward. Um it is not it is not a distraction or a digression from what we're talking about. There may be these developments. Um I I'll post a link to that piece. Now where can people find your work again? I mean, if they want to go right now and look at that piece, >> look at that, Charlie. Set me up like that. I I'm not as good at this as you are, but um I have a a Substack newsletter called Platypus Economics. I have a YouTube page called Platypus Economics. I have a podcast called Platypus Economics. And basically what I'm doing is I try and think about things and I want to find people where they are. If you're driving somewhere, pop on the podcast. If you're sitting at home, give it a read. Uh, and also you'll find me in all the socials because apparently that's what the kids do these days.

[00:50:28]>> That's what the kids do these days.

[00:50:29]Thank you so much, Justin. It's always it's been fun. And thank you all for listening to this episode of To the Contrary podcast. And you know why we do we do this? Because we have to remind ourselves over and over and over again that we are not the crazy ones. Thank you.