How a New Economics Went Mainstream (with Suzanne Kahn)

Episode Summary

Executive Summary: The episode argues that U.S. economic policymaking has undergone a major “sea change” away from neoliberal assumptions toward a middle-out framework centered on workers, public investment, and competition policy. Suzanne Kahn of the Roosevelt Institute traces this shift from Occupy Wall Street and the 2008 crisis through Bidenomics, showing how ideas once considered radical—student debt relief, anti-monopoly enforcement, and full-employment policy—have become mainstream.

Main Topics: The neoliberal-to-middle-out paradigm shift (Priority: 5/5): The hosts and guest frame the last 15 years as a profound break from market-first neoliberal economics toward a new consensus that government can and should shape economic outcomes. Occupy Wall Street and the post-2008 reaction (Priority: 5/5): Kahn describes Occupy and the Great Recession as the starting point for a generation of challenges to austerity, debt, and market fundamentalism. Student debt as a case study in changing economic theory (Priority: 5/5): The discussion traces how student debt moved from a neoliberal model of private human-capital investment to a public-good framing that enabled pauses and cancellation efforts. Competition policy and corporate power (Priority: 4/5): The episode highlights the Biden administration’s use of antitrust and the FTC, especially through Lina Khan, to confront corporate concentration and restore market power balance. Bidenomics and full employment (Priority: 5/5): The guests argue that Biden’s policies—especially ARP spending and labor-market support—reflect a willingness to prioritize workers, investment, and demand over austerity. The fight for $15 and labor power (Priority: 4/5): Minimum-wage activism is presented as a crucial challenge to orthodox claims that higher wages destroy jobs, helping shift public and elite thinking. The role of crisis and ideas in policy change (Priority: 4/5): The conversation ends on the idea that crises create openings, but the available policy ideas determine the direction of change, making current intellectual work consequential.

Key Arguments: The current economic moment represents a genuine “sea change” in policymaking, not just a minor policy adjustment. Occupy Wall Street and the Great Recession helped expose the limits of neoliberalism and seeded new economic ideas. Student debt became politically contestable because activists and economists reframed higher education as a public good rather than private human capital. The Biden administration’s response to the pandemic—mass spending instead of austerity—demonstrates a new willingness to use government to stabilize the economy. Antitrust and competition policy have re-entered mainstream politics because policymakers are recognizing corporate power as a central economic problem. Empowering workers and pursuing full employment are now seen as legitimate policy goals, not distortions of the market. The fight for $15 helped disprove orthodox wage theory, showing that higher minimum wages do not necessarily reduce employment. Crisis alone does not guarantee progress; the policy ideas “lying around” shape what governments do when disruption hits.

Data Points: Timeframe of the shift: about 15 years - Kahn says the report tracks the change in economic policymaking over roughly the last 15 years. Reference point for policy change: 4 years ago - She notes the policymaking landscape is now very different even from four years earlier. Reference point for policy change: 8 years ago - Several policies now seen as mainstream were unimaginable eight years ago. History of neoliberalism in U.S. policy: about 40 years - The hosts describe neoliberalism as the dominant framework for roughly four decades. Reagan revolution era: early 1980s - Used as the benchmark for the previous paradigm shift ushered in by Reagan. Generation affected: millennials - The report’s internal joke title was “millennials, now old,” reflecting how a generation was shaped by the post-2008 era. Period of student debt pause: months - Student debt payments were paused during the pandemic, which the guest says likely would not have happened without prior organizing. Historical comparison: 150 years - The hosts argue public education had historically been treated as a public good for much of the previous 150 years. Income shift: $2.5 trillion - The hosts cite a shift in income from the bottom 90% to the top 1% over the neoliberal era. Alternative estimate of shift: $1 to $1.5 trillion - They suggest minimum-wage orthodoxy helped explain a large portion of the income transfer upward. Great Recession recovery period: 10 years - Kahn references the long, slow recovery after the 2008-2009 crisis. Pandemic unemployment spike: “magnitudes greater than anything we’ve ever seen in history ever” - The hosts emphasize the scale of the COVID-era labor-market collapse. Unemployment warning: 7.5% for two years - A hypothetical austerity response mentioned as a cautionary contrast to actual pandemic policy.

Pivotal Quotes: "Only a crisis, actual or perceived, produces real change. When that crisis occurs, the actions that are taken depend on the ideas that are lying around." — Milton Friedman: Cited by Nick Hanauer to explain how neoliberalism rose and why current ideas matter now. "It is really about what a huge change has occurred over the last 15 years or so in the sort of shared common sense in which policymakers make economic policy." — Suzanne Kahn: Her top-line description of the report’s central finding. "We are in a middle out moment." — Nick Hanauer: The hosts describe the current era as a transition toward middle-out economics.

Implications: The episode suggests that worker power, public investment, and antitrust policy are no longer fringe ideas; they may define the next economic era. Whether that shift sticks depends on future elections, institutional power, and how well advocates tell the story.