The Weeds: there's a disturbing economic trend no one's talking about. Obama's top economist explains.
"Some firms are super successful, posting high returns year after year after year, and other firms are pretty mediocre. Of course, that's always true … but the gap between them has grown enormously. Combine that with the fact that if you work for a more successful company, you will be paid more even if you're doing exactly the same job and have exactly the same skills you would've brought to a less successful company. This increased inequality among firms translates through to wages and is generating and contributing to some of the increase in inequality we're seeing." — Jason Furman
Jason Furman has been described as the "wonkiest wonk in the White House." For the past three years, he's worked as the chair of the Council of Economic Advisers — Obama's chief economist — but he's been an important part of Obama's brain trust since the 2008 campaign, helping design the stimulus and Obamacare.
He's also just a very interesting person; he had a teenage career as a street juggler in Greenwich Village, and was college roommates with Matt Damon, who describes him as "one of the smartest people that I’ve come across."
And in the later years of the administration, he's started doing some really interesting research into rent seeking: a term economists use for ways in which people and businesses try to get more money for themselves without actually creating anything of value. That additional slice of the pie is known as a "rent." What Furman has found is that zoning rules that make it hard to build in big cities, and occupational licensing requirements that keep people out of jobs, are generating huge rents for landlords and license holders, and holding back the economy a lot in the process.
I recently sat down with Furman for a special episode of The Weeds.(You can listen to our discussion by subscribing to the podcast or streaming it on SoundCloud.) Listen to hear about rent seeking but also:
- What Furman is proudest of achieving in the White House — and regrets not getting to
- Why he still supports the Cadillac tax when Hillary Clinton and Bernie Sanders are calling for its repeal
- Why Medicaid's still a good deal despite that Oregon study casting doubt on it
- How the share of working-age men outside the labor force has been steadily growing — and no one really knows why
- What we can learn from Chinese trade's effects on American jobs
For more podcast conversations — including episodes with Rachel Maddow, Bill Gates, political scientist Theda Skocpol, Sen. Cory Booker, restaurateur David Chang, and conservative activist Grover Norquist — you should also subscribe to The Ezra Klein Show.
Show notes
- The Cadillac tax, explained
- David Cutler's case for the tax
- The case that the tax won't work
- Furman defends the tax in a speech last year, and with Matthew Fiedler in a New England Journal of Medicine article this February (paywalled)
- The Amy Finkelstein, Nathaniel Hendren, and Erzo Luttmer paper on why Medicaid users might just prefer getting cash
- What the Oregon Health Study really said
- The case that the study was "underpowered"
- The Anna Case/Angus Deaton study showing rising death rates for middle-aged white people
- Furman and Peter Orszag's paper on rent seeking