 When you have to do something as large as climate change, the scale of the transformation terrifies people. People from West Virginia say, I saw what happened to Cleveland and Detroit. Why should I join this romance when you guys are gonna leave us behind and crush us? In other words, the resistance to the obvious dangers of climate come from the people who don't trust the system to create transformational energy so that we're all better off. Rob Johnson has been a player among the elites, but he's also a plain-spoken, passionate critic of an economic, financial, and political system that leaves too many behind. He previously served as chief economist of the U.S. Senate Banking Committee, was an executive producer of the Oscar-winning documentary Taxi to the Dark Side, was a management director at Soros Fund Management, and is now the president of the Institute for New Economic Thinking and host of the podcast Economics and Beyond. Welcome, Rob Johnson, again, to free-form a world that just might work. Well, Terence, it's a pleasure to be here with you, and I was delighted to look through your crystal ball from November of 2020 and see how much foresight you brought to the table. I'm looking forward to more of it today. Yeah. You know, I like listeners to get a feel for the people. I say we don't interview books or projects. We talk to people. So people behind the ideas in the work, and I'm going to throw you a curve. I know there's a segment of your life and career that doesn't show up in the bio very often, and that's your time in the music business. I want you to just tell me a little bit about your time in the music, what you did, and what you learned that stays with you in the work you do today. Okay. Well, that's a fascinating challenge. I'll start with, in growing up in Detroit, I have a father, his name was Arthur Johnson, who was a jazz pianist and a physician. He had various patients, famous Motown artists and so forth. He was very involved in the jazz scene. My mother was a choral singer for holidays and so forth with the Detroit Symphony and became their development director. So if you said to me, what did I learn? When I came home from sports practice, I'd take a shower, I'd sit at the top of the steps, dad's on the piano, mom's in the kitchen, she's singing along. I could tell, can I ask for an increase in my allowance, the car keys, report a bad test or report card. I could feel from the music where we were, and the music was more truthful than words. And so that, what you might call spirit compass, was a very, very big part of my childhood. And I got very involved in the music scene. Obviously Motown music was there in Detroit, but even the British invasion in Iraq, I'm talking about late 60s, early 70s, and you would harken back to the blues. So a little bit later in my life, when I left the financial industry, I set up a blues label. And I was very fortunate to meet and work with a man named Jim O'Neill, who founded Living Blues magazine. He had founded Rooster Blues and I could work with him. I bought some masters from him and then we worked on a whole variety of things, some new artists at the time, Willie King, who won all kinds of W.C. Handy Awards for Best New Artists, and his song Terrorized was written as he watched 9-Eleven, but it was a song about how his people had been terrorized and we didn't have the sympathetic reaction that you were seeing for the people that were victimized in the buildings. And there were all kinds of dilemmas in that. I worked with a genius artist who was a very controversial creature, Ike Turner, in his comeback. And he made a record, which we called Here and Now, and then he made a subsequent record, some of the masters came from us, where he won a Grammy just in 2007 for Best Traditional Blues Record. It was on another label, because I had closed my label by the time, but what I learned about that was redemption. This is a guy, I'm not apologizing for what he did or denying anything, but I watched him take the gifts that God gave him, what he could impart, put himself together and get back out there. So he went through some tough times, and for some reason, God willing, he won a Grammy in the last year of his life. So that, I've been involved with a wonderful project in 2018, the film Amazing Grace. Aretha Franklin made it in 1972, but came back to life, reconnected with Detroit, saw her just before, a few months before she passed away, when she thought her cancer was in remission. And what I can say to you to summarize all of this is, my father was an atheist, my mother was a devout Scottish Presbyterian. I don't know where I sit on the father and the son, but when it comes to the Holy Ghost, you got Jimi Hendrix's guitar, you got Aretha's voice, you got Bob Dylan's lyrics, you got Marvin Gaye's social conscious, you got John Coltrane's horn, there are more. But I think there is a Holy Ghost. I think there is a spiritual dimension that rides right along with this guy who got trained as an economist and worked in which might call the mechanics of government and finance. And so it changed my lens in ways that are very powerful. So let me ask you any response to my introduction. You already said that you think it's a good starting point, but any more specifics? I think what you perceived was that an election, there might be a lesser of two evils, but there was a systemic structure that was largely broken and there are enormous challenges on the horizon, albeit the pandemic was emerging then, but it's been more persistent than either of you or I might have expected. Climate change has reared its head. And what I would say is it had reared its head long before. My friend David Fenton and all kinds of other people, Naomi Klein, others have been telling us, but what happened was with the turmoil, and I'll add January 6th to that though, that's not in your night, but with the turmoil in the politics, with the disservice to large portions of the country during globalization, automation, machine learning and so forth, the stresses were accumulating. And once you become afraid, you become more sensitive to that, which makes you more afraid. So the awareness of climate change is heightened. The prescient ones that I mentioned were already there. The merchants of doubt were working the media channels for the fossil fuel industry, but everybody now I think is on deck and alert. The pandemic in some ways was an unmasking of all the structural flaws that we see. And as I said, and we said that it does create an opportunity, and the question is who attempts to take advantage of that opportunity and are we able to reach deeper than usual because of the break to, as we reimagine how we come out of this, do we make enough of a difference to make a difference? Yeah. Let me take us back a little bit. What I perceive is that there was a time when people on the left believed in government. I'll talk about the New Deal FDR era through Lyndon Johnson. It's a faith in the Kennedy administration early on. And there were people who disagreed with that, largely in the Republican Party, and they believed in the market. So you had what you might call a romantic faith in government on the left and a romantic faith in markets on the right. What's happened in recent years as the role, I'll start with approximately the Carter administration, as the role of money in politics has become enormous. And my research director, Tom Ferguson, Benjamin Page, Martin Gil, and a lot of these scholars have really codified this. The role of money in politics led to something. There's a gentleman, a former musical artist named Stuart Zekman, who gave a prescient podcast in 2010, where he said an unnamed Obama official said, we can't go back to be like the New Deal. People don't believe in that anymore. And he dug into the Gallup polls that this anonymous Obama official put on an interview, I think on Politico or something. And in the Gallup polls, what did he find? He found that the people on the left didn't trust the government because he thought it was captured, that the role of money in politics had overridden the legitimacy of governance. And that has really scrambled our deck, bringing it closer to the present, not the surface. Now you have a left. If I may, I don't want to lose your train of thought, but two thoughts that have come to me so far. One is that one of the things that we were told was that President-elections, that the influence of television in presidential elections happened in 1960 when the debate between Kennedy and Nixon were televised. I think the real revolution of television happened a bit later when television advertising became the key component of campaigns because that skyrocketed the money. And you had Republicans whose platforms, when they used to have them, were aligned with their funders. So Republicans could go for touchdowns. They were doing their funders bidding. Democrats, funders became the same. Clinton was the strongest one to go in that direction. Although, as you say, once the price of campaigns changed, all Democrats began leaning in that direction, and yet they espoused principles. And this is very much that thing that we both have noticed and will talk about more. They espoused principles that weren't necessarily their funders, but were more the people. But if you're split that way, you don't go for touchdowns. You satisfy yourself with getting to the 20-yard line and kicking a field goal. And you end up losing. Go ahead. Yes, yes. I think you're right on target. I'll cite my friend Tom Ferguson again, his book with Joel Rogers' right turn, the form of the Democratic Leadership Council, the move which Clinton eventually became, which you might call the candidate of their choice. And people can lament, which you might call the immoral nature of that, but you're talking about something that's true. The structural change meant if you're going to thrive, you have to raise money. Now you've got to find donors. And that transformed the very nature of politics. So when you come forward, a person like Barack Obama, there was a certain magic about him when he was a candidate in 2007 and 2008. I had a son who was in college at the time, at Pomona College in California. And he said, Dad, your generation makes sure that Obama's going to win. I said, why is that? He said, because you guys all talk romantically about the civil rights movement and the anti-war movement. He's anti-Iraq war. He sounds like a preacher. This guy's going to get elected. The young people are really going to flock to it. And so will your generation. We did. But then the money concentration of Wall Street and the bailouts, as David Sarota has recently articulated beautifully in his podcast that he made with my old friend Alex Gibney called Meltdown, which you can get on Audible for free. That changed us into an environment where, as you're saying, you're trying to kick a field goal, but you got the Tea Party on one side and Occupy Wall Street spawned on the other. Nobody's happy with field goals. And then it continues on Republican control of the House, role of the Senate, Donald Trump elected. I was in Detroit the night before the election in 2016 preparing for a conference that we were doing on the Friday after the election. And I talked to a man who used to work in a building as a security officer where my father worked. And I asked him, what do you think's going to happen in the election? He said, Mr. Johnson, when there is nothing on the menu anybody wants to order, they don't go out to dinner. There's not one B turnout. And I said, well, you got Trump in this. And he said, well, Trump's telling everybody the system is rigged and the big three have lost all the jobs. Very few people have talked that kind of truth. I said, okay, why'd you come out for him? Well, I'm scared of him. What about on the Clinton side? Well, they did NAFTA. They did criminal justice reform. They did welfare reform. That's not going to sell in Michigan. And as you know, Donald Trump won, I think, by 13,000 votes in the state. Why didn't the bailout of the auto companies play bigger in that vote? I've always wondered that. You may know. I don't know, but I heard from people who stayed there. I have a lot of friends who like gone to law school, gone to MBAs and stuff that work in the southeastern Michigan. And what they said was that the bailout of the auto industry took care of the white collar workers, but allowed some of the money to be used to build new plants in China and Mexico. Now, I don't have a zoom lens on that, but that is what I kept hearing over and over and over. When Trump got nominated in Cleveland, he came to Detroit, to the economic club at Detroit. And he took on top management. He didn't pander to donors in that theatrical episode. Obviously, you might say in the subsequent years, because that structural system we're talking about is there, he seduced and abandoned the people that he got to support him with his tax cuts and support for the fossil fuel industry and what have you. And how would I say it felt to a lot of people, like Obama had gone to Wall Street and Trump had gone to Plutocracy, both engendered a hope, neither delivered on the hope. Right, right. Well, yeah, the way I had thought about it last night was Obama didn't try and Trump did bait and switch. Got it. Hell, that's right. But then, and if we can, let's deal just a little bit with the Biden administration, because my third thing is, the Biden platform did seem to speak to some of the pain of both not just people of color, but also white working class, the working class and the middle class, if you could snap your fingers and the Biden platform were enacted, they would benefit. However, from my perspective, and then I'll toss it to you, the precariousness of the Senate majority, if you will, 50-50 with the Vice President is a result of the past two decades of everything we've been talking about, of the Democrats not delivering for those people. So now when you come 20 years later, and you say, now I'm going to deliver for you, you haven't got the backing that allows you to do it, and now that feeling that government is rigged and incompetent or insufficient is now reinforced. And I feel that's the moment we're kind of in now. Your thoughts on where we stand a year after where we started? I think that's right. I mean, my own intuition at the time was that someone like Bernie Sanders or Elizabeth Warren put a progressive platform out there, but nobody trusted that they could navigate the rapids of this system. Biden gave the feel of an awareness and caring, particularly for what you might call white middle class, what they used to call Reagan Democrats. So people thought he may be the guy that can take the Reagan Democrats back from Trump and win. But once he won, he inherited the system that you talked about, and what you might call the stalemates, build back better, can't change the filibuster, all the kind of things that are taking place. It's demoralizing the public. This current debate about whether congressional officials working on policy ought to be able to buy stocks in the realm where they are the architects of what will be the rules of the game or the enforcement is also, it's extremely demoralizing. And it also makes you feel almost like the politicians are tone deaf about what angst is out there. And what kills me, Rob, is that the people that like Pelosi, let's say, and others, the people in power in the Democratic Party, they've made enough damn money. They're old. They've made plenty. To right now come out for that policy, full force would be such a smart thing to do. No, it's a restoration of ethical balance. It's on, how would I say? It's what the doctor ordered in part. It's not sufficient, but it's a dimension of it. And it's symbolic of a healthier sense of governance. And the other thing that I find very, very painful, you know, coming from Detroit, create some of the echoes here. I always tell people, I grew up in the city that America divorced when it needed help. But when I see evidence that Inet has fostered in some of his research about, let's call, the geography of up and down in the economy, in the localities where there's a downturn, obviously surveys of anxiety about health and future economic prosperity concerned about for your children rises up in the surveys. When you look at the geographic map in the United States, and I'll go beyond that in a moment, but when you look at that geographic map, what you see is the places where people are anxious about employment security are also the places where racial animosity explodes. People blame others when they're scared. And the destruction, my friend and scholar Peter Timmons wrote a book about the decline of the middle class. And what he essentially said is, because of automation, other things, we transform to a service-based economy. With a service-based economy, there are two kinds of services, low-margin services, what they call like flipping hamburgers or whatever. And high-margin services that require an education. So in the old days, people like the great Nobel laureate, W. Arthur Lewis, talked about the migration from the farm to the cities and the plants. The Wizard of Oz is a parable of that whole thing. But you were moving to high productivity. Today, the movement from low to high productivity services is through the education system. But when you had all this racial animosity, all of the turmoil impeded the formulation of a national education platform, what we call public schools, so that everybody could have a chance to go up that escalator. And this was very interesting to Dr. Peter Timmons because as he said in some panels and wrote that where Inet was working on, he said this is really a problem because about 70% of the population is going to be in these low-margin services. And these white people are destroying their own ladder because they're distracted in a way that you and I have talked about Nancy Frazier in a wonderful, illuminating pamphlet talked about the substitution of identity politics for focus on economic structure of which the education system is a part. Yeah, let's jump to Nancy Frazier. There's no telling what will end up missing and what will end up covering in this hour. But you recommended Nancy Frazier's... You call it a pamphlet because it's a 63-page book. It's called The Old is Dying and the New Cannot Be Born and I in turn recommend it to listeners and viewers because I feel she clarifies in names some aspects of our political and economic situation, which I'd been talking about sort of in rougher terms. And she very specifically coins the term progressive neoliberalism. And that's what came with Clinton and Blair in the UK and so on and Gore and the Democratic Leadership Council. And what you did was, going back to what we said before, your funders are now Wall Street and big corporations and wealthy individuals. And Silicon Valley. And Silicon Valley, exactly Hollywood. Whoa, yeah, Hollywood, exactly. And yet you speak, as you said, identity politics, women, gender issues and race and so on, but it means that you can make progress socially, you can make progress culturally, but you won't really change the money issues. And at the same time, you're not changing the money issues for the white working in lower middle class. And they see that you are making gains for the other and that goes back to Arleigh Hoek's chilled strangers in their own land in which she has that wonderful image of the deep story that she discovered in Southern Louisiana, which is that I'm in line for the American dream. I'm not getting anywhere and you, Obama, Democrats, etc., are helping other people break in front of me. And so it's such a, well, on the one hand I look at it, you look at it and we say this is such a losing strategy and yet it completely took over the Democratic leadership for two decades. There's also a book that I thought illuminated this very well. Sarah Krenzier book, I think was called The View from Fly Over America, where the coastal regions were prospering and the Midwest, the core, the Mid-South were migrating towards Donald Trump out of despair. Yeah, I suppose you take it one step further and you go to the folks who wrote about the deaths of despair, the ones who didn't just vote for Trump, but died of obesity and opioid addiction and alcoholism from the same disappointment, desperation, and just a feeling that you no longer matter, you no longer belong. And the media has been no help at all in this. No, Angus Deaton, some Angus Deaton and case. That's right. Woman named Shannon Monot, who was at Syracuse for a time. And they, by the way, I said, I'd take this a little bit internationally. When I look at these geographic studies of despair, where economies suffer largely because of machine learning, automation, globalization, or austere state and local budgets, you see things happen like Brexit in the UK, Marie Le Pen in France, the AFD party in Germany, or a comparison of how Donald Trump did against Hillary Clinton versus the last time that two challengers were running against each other. And that was when George W. Bush was running against Al Gore. And the places where Trump's Delta was biggest were the same places that were suffering from the diseases of despair. Sure. And the analog in the other countries fits like a glove too. And the thing is, despair can lead to suicide. It can lead to self-destruction. But if you think that the only time you get to express your despair is in an election, it leads to anger. Yes. Right? You don't take it out on yourself on that one election day that comes up every two to four years. You take it out and you vote for Trump. When Nancy Fraser analyzes, she says, what we've been saddled with on the Democratic side is progressive neoliberalism. And neoliberalism, I'll let you give us a quick definition and then let me return to what I'm saying. So you're the economist among us. Well, I guess when people talk about neoliberalism, it's joining the market romance. It's not like we're looking at the ends that people experience. We're looking at the means, which is the use of the market, the illusions that it creates freedom, where those in poverty are not entirely responsible. There's a notion they call economic justice. Economic justice says in the literature, you have a certain level of productivity for which you are responsible to cultivate through education, disciplines, good nutrition, what are all the elements of it? And you get paid what economists call your marginal product. And that's economic justice. If you get paid more than your marginal product, that's called a subsidy. If you get paid less than your marginal product, that's called exploitation. Now, there's a problem. Your marginal product is grown in the context of social institutions for which we are all collectively responsible. And so it's not as if you can blame the victim when certain regions of the country get devastated while the wealthiest winners who used to be accused of tax evasion have lobbied and now keep their money offshore and we call it tax avoidance. And then we say we can't afford it in the United States. So the collective systemic design has an awful lot to do with whether your position of productivity and economic justice allows you to support a family, your health, your life, etc. In other words, the illusion that neoliberalism fosters or contributes to is that the market is providing that vitality and efficiency and that there is no collective responsibility. And that's a convenient ideology for a progressive Democrat who needs to go raise money in order to get reelected. And I think offline, I've shared this with you, I recently interviewed in the last few months both Branko Milanovic, economist who's a great focused on. I know it's done a lot of work with him. Yeah, he's great. And Rebecca Henderson at the Business School at Harvard and both of them said that when the raising of stockholder value becomes the primary goal of corporate action rather than in other countries and in other times it's been much broader than that. But Milton Friedman suggested in 1970 that it should just be the stock price. When you do that it becomes logical in pursuit of that goal to rig the rules you play by. The return for the stockholder is going to be improved if you can use your wealth and your influence to rig the rules. And that's what corporations have done. It was of course accelerated with Citizens United but at that point capitalism has no chance of fulfilling an illusion of fairness. Well the idea of capitalism is that it is embedded in a democracy that governs it to give it its moral legitimacy. And when the servant becomes the master when you have the inversion as I guess Sting had that song wrapped around your finger. Then the moral legitimacy of the system breaks down and the side effects the results the despair the the unresponsiveness of the system becomes rampant. I was going to say so so we what what Nancy Fraser says is there's progressive neoliberalism which we've kind of you pander or not pander you may even deliver on social and cultural aspects to as we said people you know on on gender issues on on Latino black women and so on all of that stuff but you don't deliver where it really matters. And then she's the rival is reactionary neoliberalism the old-fashioned one that makes no bones about who's you know what it's what its vision is and what it's trying to do. And she says that what can deliver us from this current situation we're in and she says she doesn't think that reactionary neoliberalism could ever bring along the folks that the Democrats are serving with their identity politics but that if you had a transformed and revitalized progressive set of policies you might be able to bring people who were the Trump voters the Reagan Democrats over can you talk just a little bit about that. Yeah let me let me start with something that really sticks in my cross 400 years and slavery in the United States is the absolute contradiction of our founding principles that's most vivid and repairing that whether you call it reparations or what is necessary to our rebalancing but we are in an era where while that mission is essential when I look at our prison industrial system and all that it's a nightmare when I look at the and my friend Peter Teman has a book coming out shortly I net series Cambridge University Press called Never Together about all of the pushback to refute racial progress that's taken place since the reconstruction after the civil war and it's it's really a haunting manuscript to read but what I'm what I want to bring this to is all of that is part of justice but when everybody else's ship is sinking to they're not going to say you can take care of them while I drown you've got to do something much more broad based which includes that necessary condition and what I don't like on what I'll call the hard right is how they demonize people who've suffered because they're not being carried by the agenda that relates to the necessary reparation of of 400 years of crime as a friend of mine former NBA basketball player Isaiah Thomas said we shouldn't be talking about human rights we should be talking about birth rights that all humans have regardless of their ethnic or racial background and my sense is that we are in this place where the the pain and the fear is so large that we're splitting further rather than healing and the danger that I see now with the U.S. at the center of a world system with China growing up in terms of its prosperity and its power and its military when I see all of these tensions related to environment and everything else the danger of fear leading to an authoritarian alternative rather than the healing in an inclusive democratic alternative is upon us and I think as you and I have focused on in the earlier parts of this conversation the role of money in politics the role in money and who gets appointed to the courts and whether you're dealing with argentine sovereign debt in new york courts by judges who were appointed because hedge fund managers wanted them or whether you're talking about anything related to voter representation what's okay about gerrymandering or not the struggle to disenfranchise for concentrated powerful interest benefit is terrifying and people can see this the struggle going on in plain sight so I do think that the fear and we got a taste of it from donald trump the fear when that man runs around the country and says the system is rigged if you look at the ads you can find them on youtube of his last message that was played during that cubs versus cleveland world series when the cubs finally won the world series and the next day which was right before election day it was a sunday and a monday and he is saying and the american people are the only ones that can rise up to defeat this rigged system as he's showing pictures of the chinese with hillary clinton of people like george soros people like um gulman sacks executives and he is painting a picture of him being their warrior and then as you said when he got acclimated to the system he seduced and abandoned the people he inspired well i think found he found a taste of the disease to surf on but he didn't heal it and if we don't get into the healing business now with climate change requiring us to both heal and massively transform the economy and what i and i want to say one last piece when you have to do something as large as climate change the scale of the transformation terrifies people people from west virginia say i saw what happened to cleveland in detroit why should i join this romance when you guys are going to leave us behind and crush us in other words the resistance to the obvious dangers of climate come from the people who don't trust the system to create transformational energy so that we're all better off yeah a couple of reflections from what you said one was that well it all comes down to the sort same sort of thing really is that i've often felt that we now as i said in the intro face crises that range from the really critical to the existential um and you know i enumerate them previously in these in these conversations climate change pandemic and future pandemics uh economic injustice racial injustice uh and um the nuclear weapons the bigger and the and the and the fragility of democracy itself yes the bigger the crisis the more we need to come together yes and yet the crises are feeding tribalism fear all of that sort of thing and it's tension between how people are responding to what they feel and what's needed to actually respond as a nation or as a global society to what we face are pulling pulling apart i wanted to say just one other thing that i've realized as you were speaking and then let's talk about what might help what might begin to move us in the right direction and one was that as difficult as the civil rights advances of the 1960s were and we we know the pic the pictures we saw we know the mistreatment we know the divides in society that were taking place the country was doing pretty well the middle class was living a good life you felt your kids were going to have a better life than you did your kids were going to have more education than you did you and so the fact that we could handle a huge problem like that in as much as we did partly rested in the fact that the need to scapegoat the african-american was less felt by less people let or you know what i'm saying well they didn't see it as a zero-sum game that's right saw us on an escalator yeah right and those were the biggest advances we made in the 20th century you know were because and now when the last 50 years have hollowed out the possibilities for those people now you try to solve critical problems and you run into what we're talking about resignation anger tribalism fear etc yes yes how i think about this a lot you think about this a lot how are we going to be able to move together to solve some of this it's we're talking about systemic change political economic social and cultural yes but political and economic it seems to me hand in glove are working against our best fortunes rather than for them at this point yeah i think there are lots of dimensions to this one which you're a wonderful counterweight to is what kind of information do people get about the possibilities and the dangers if you say universities are dependent on big corporate laboratories and wealthy donors if you say the mainstream media is dependent upon advertisers what what is either i mean you're kind of where you come down to as as you go to sleep each night thinking about this stuff or as you get up in the morning thing where where do you in your in your gut in your heart where do you think where is our path to actually solving some of this which given the crises we've talked about is is um is serious business for us for our children and for the rest of the planet yep i think that we are in a place where each individual in our republic has to start with resisting their own temptation to rage from fear you