Feel Your Feelings: Jobs, Trump Accounts, and America's Big Birthday | Off the Clock

Stacy.
One of the wonderful and profoundly unfair things you do
on this show as you ask me questions which would
be the foundation of a wonderful dissertation. The work week
maybe over, but the economy it never takes time off,
even for America's two hundred and fiftieth birthday. I'm justin
Morpher's and this is Off the Clock, the show in
which we unwind the week's economic news.
After a couple of weeks.
Off, I'm back with my friend and America's leading economics journalist,
Stacy Vanick Smith.
Wow. Well, I got a major promotion right there.
Technically speaking, I think if we're going to fact check this,
you can say that I'm a columnist for Bloomberg Business
Week and co host of the podcast Everybody's Business. That
will check out. But justin, I'm really glad to be
here with you on this the day of our nations
two hundred and fiftieth anniversary.
Stacey, it looks like you might be feeling to heat there.
Mate, Oh my god, it is. Yes, it is so hot.
My floor is sticky.
It's a scorcher one hundred and one degrees apparently today.
Oh God, bless new York. Okay, so today we're going
to wear are you I am on Cape.
Cod auspiciously refreshed.
Yeah, I've got a different backdrop because I'm in a
different place.
I went for a swim this morning. I worked out.
I hope you notice the rippling muscles.
I'm just going to see something.
It's not that you'll notice the good mood.
Oh I'm very jealous.
Well, I hope that you all are having you Betsy
and the kids are having a good breezy time.
That sounds divine.
Okay, so we're going to do some work.
We're going to peek through the week's headlines. Our job, Stacey,
as you know, we're here to tell you what you
should actually be concerned about, what you can safely ignore,
and my favorite bit, we're going to talk about some
silver lining.
So today we've got three big stories to talk about.
The latest jobs report, how the economy is going, what
it means for folks at home, what it means for
the Fed, what it means for the world. July fourth,
the official launch of a new part of the tax code.
I'm jta Independence Dave yep Trump accounts.
I mean, you're right, a nation founded on.
A tax revolt celebrates its two hundred and fiftieth with
a new few new paragraphs in the tax code called
Trump Accounts. And lastly, Stacey, I want to end with
a bit of reflection on the two hundred and fiftieth
anniversary of our nation's birth and year. You can say
that in an Aussie accent. Because this is a country
of immigrants. How can you and I as economists help
folks appreciate all the ways we've grown and changed.
Well, let's dive in.
I'm very excited to get started, and Happy birthday to America,
land of immigrants.
Indeed, which is why we do so well in soccer.
By the way, Okay, so Stacey, what did you say
in the jobs report?
Right? Okay, this I'm very excited to talk with you about.
Because we got the job support on Thursday, because the holiday,
we got it a day early.
It was not looking awesome.
I think the US economy added fifty seven thousand jobs,
which was less than we thought of. The unemployment rate
did tick down a little bit. I think we're at
four point two percent overall. It's fine, Like it's not
bad news. But I will say justin that the last
couple jobs reports were so positive and it was quite
exciting to see because things have been kind of sluggish
and the job market doesn't feel great, so it seemed
really exciting, and I just want to ask you about that,
but also a little bit of a larger question at
the same time while you're answering, which is this economy.
I've been covering the economy for a long time and
I'm a journalist and to see stories, right, I like
to see narrative threads in the economy, and normally the
economy delivers the narrative threads, and now I don't know
what's going on. I feel like it's like a bad
boyfriend this economy. It's like one minute you're like, oh,
things are going great, and the next minute you're like, wait,
what happened? And then you're like, oh, this seems really bad.
And so no, no, I guess things are okay. And
I feel like that is exactly what I thought about
when I saw this job's report, and I need you
to weigh in and tell us what is happening with
the jobs report and then beyond.
I love that Sticy. The thing you always do is
you focus is on the bigger pictures.
Thank you for that.
I mean, it is a good it's a great question,
because it does feel like whiplash. I've got a sixteen
year old daughter. I know a little bit about bad boyfriends.
Right now, I'll go a little bit about.
She's not watching.
I know a little bit about the ups and downs
that occur, and honestly, I'm a little bit imoshinal. I've
noticed that from time to time when it comes to
the economy, not bad boyfriends, and I've been through a rollercaster.
So how do we make sense of that?
So one view is people often start with their politics
and move to their economics. I think that's the wrong direction.
So let me tell you an amazing fact. Let's imagine
five years ago at Stacey, I said to you in
June of twenty twenty six, the unemployment rate will be
four point two percent.
Oh great, awesome, awesome.
And that is our reality. It's a really strong reality.
It's a reality that goes against a lot of people's
emotional feeling about the economy right now. But it's a
reality that's worth It's not a false four point two percent.
They're not redefining it away. The numbers aren't being fiddled with.
This isn't account of how many people are on benefits.
It's a genuine four point two percent. This is actually
the sort of thing you and I would have dreamed
about a few years ago, historically.
Low unapplayment rate. It's awesome.
So I feel really good about that.
So how do we understan stand the emotional rollercoaster you
were just thinking about. I have my view on this,
which is I want to draw a distinction between the
economy and economic policy. The economy, the numbers that have
been coming out right now, four point two percent, as
you said.
Is pretty good.
That wasn't true through all of twenty twenty five. Twenty
twenty five wasn't just a bad boyfriend. It was almost
an abusive boyfriend.
You know.
The numbers were going way up, way down. We actually
had periods of creating no jobs whatsoever. It was that
was the sort of relationship where you would intervene. But
right now I think we're doing okay. So the economy
and I'm not saying it's perfect. Right A million people
are going to tell me. Remember you're talking about the average.
The distribution is maybe folks at the bottom aren't doing
as well. There's many, many individual stories of people who
are struggling. This workers young people who were finding it
hard to find work, which is a reality.
That's the economy.
The other side's economic policy, which is folks like you
and me have been out here saying, you know, I
just think it's a bad idea to start a global
trade war on a whim, with a set of tariffs
that make no sense that we're literally written up the
night before Liberation Day. I think it's a bad idea
to start a global trade war using tariffs that proved
to be unconstitutional, so we get all the downside of
the tariffs, and then we still pay them back anyway.
I think it's a bad idea to start an immediate
sharp immigration purge. I think it's a bad idea to
get the rest of the world off side. I think
it's a bad idea to then decide to bomb a
run without any sort of exit strategy or even victory strategy,
not to mention possibly that we don't win.
So economic policy I.
Think is unquestionably weak, poor, and in fact, something like
three quarters of Americans would judge economic policy right now
to be weak. So when you say to me, how's
the economy doing, I'm not sure, which are those two
questions you're asking me.
We did also get other data though that I just
want to interject in here really fast, about job openings
and hiring, and that also was looking pretty flat, which
is the real worrying thing. I mean, unemployment is low,
but they're calling you know. Also hiring is low and
job openings are low. So it can feel if you're
in a job now like you're stuck a little bit.
And if you don't have a job right now, the
unemployment low unemployment rate is great, but if there aren't
very many job openings, that doesn't feel great either.
Yeah.
So another way of saying this is you can be
in a stable labor market where the unemployment rate is unchanged,
which is roughly where we are two different ways. One
each month we fire almost no one and we hire
almost no one, or the traditional American way was actually
a lot of people lose their jobs each month, but
a lot of people gain jobs each month. That means
the American lab market historically was very distinct from the
rest of the world. So in much of Europe, for instance,
or even for a long time in my home country
of Australia, if you lost a job, it would take
you a year to find your next job. Oh, so
that's the problem with if no one's getting fired and
no one's getting hired. If you lost your job, no
one's getting hired, So it will literally take you months
and months, maybe a year in some cases two years
to find work. So the risk of unemployment. Historically in
the US, the average duration of unemployment was around about
three months. So if you lost your job, you dust
yourself off, get back out there, throw out some measure made.
You wouldn't run down all your savings.
You very dynamic.
Yeah, and in what's happened with this low higher low
fire that we're in, would become a little bit more European,
not in the good way that our bagets taste better.
American baking could still use a leg up. It could
become a little more dynamic. Oh I see. This is
one of those mains where you say, I live in Brooklyn.
We have terrific bakers, we.
Have some good bread but by and large, it's very
difficult to say you're wrong on this one. Breads. Breads
are not where we shine as a country.
Yeah.
No, and then so it is one of the most
important reasons it's hard for young people. Is young people
exit college or Finnish high school without a job, and
so in a world in which there's no hiring, it
hurts young people more than it hurts others. So one
of the biggest debates that's running around now is we
see that young people are finding it hard to get work.
Question one is is it AI or is it this
movement to low higher low fire that remains somewhat unresolved.
The answer is it's a bit of both. That's boring
because I could be saying it's twenty eighty or eighty twenty.
The answer somewhere between those two.
So can I ask a question here?
I always thought one of the main reasons, at least
in Europe why there was low hire, low fire was
there were so many regulations in place that made it
hard for companies to fire people that then they hesitated
to hire people. But that's not really the key in
the US. So the causes must be different. Why aren't
people getting fired and hired?
Right?
So, when we look across countries, you're exactly right to
try to figure out why do some countries have more
versus less dynamic labor markets. We usually look to what
we call institutions, which are what are the lasting features
of the labor markets. So it's not a question if
you know what happened to monetary policy last month. That's
what are the laws around firing. That's one of absolutely
one of the most important ones. Other things like how
much assistance is there to help the unemployed become retrained,
to become employable again in a changing economy, and in
some countries the welfare state, which is to say, unemployment
insurance is sufficiently generous that you think to yourself, should
I look for a job today, No, it's okay, I
can wait till tomorrow.
I'm trying to say that carefully. I don't want to be.
Ungenerous to people who are struggling. Whereas in the US
our unemployment insurance turns off after six months, and so
I better get a job or else.
I'm going hungry.
As not super generous, and in most places the amounts
are pretty low, like you can't live comfortably on unemployment.
Absolutely, and so none of those things have dramatically changed
in the United States. So, Stacy, one of the wonderful
and profoundly unfair things you do on this show is
you ask me questions which would be the foundation of
a wonderful dissertation.
That is, I think, very diplomatically put too broad.
Is that what I've saying.
No, I think it's actually no, You're doing exactly the
right thing. These are the most important questions of our times.
What's changing that we're becoming somewhat more sclerotic. I don't
want to overstate the degree to which work become somewhat
more sclerotic, but it's absolutely the case. Now, you know,
you could say, let me give you a sketch of
an answer that I don't believe just because I'm not
sure it's big enough to explain all of this. This
administration believes very closely, very much in its relationship to business.
The President's always calling in Tim Apple or other business leaders.
Sam Altman's by the White House every second day.
All of that.
What he's doing is his striking deals. He's getting stuff
out of the way. But notice the only people the
president can talk to with the leaders of existing businesses.
In fact, it's all big businesses, and so what that's doing.
And also, by the way, tariff uncertainty, all of the chaos,
These big businesses have armies of lawyers whose job is
to look through this. If you run a small business,
like say Platypus Economics, you find the whole thing thoroughly confusing.
And so all of this, and by the way, Platypus
Economics has never been invited to the White House to
talk about the regulations that are getting in our way.
Not one, not once, not once tomorrow lago.
Even while I was invited, it was a million bucks
of plate and Platypus Economics didn't have that. But so
you see how this systematically hard wires a bias towards
existing businesses. And now I'm going to use provocative language,
but it's actually the only use for language the unborn.
Who this hurts the unborn businesses. Oh, so it's.
Harder to get off the ground.
It's more expensive to get a loan because interest rates
are high, and you aren't big enough to get a
carve out the way that you can if you are,
you know, Tim Cook or something that's right.
And so I'm not I think that that's everything I
just said is true. I suspect it's true enough to
be economically meaningful, but I haven't done any enough work
to say therefore it explains this, And so I don't
want to say that I have an explanation for you.
In some sense, was using that as an opportunity to
riff Stacey. Have you figured out why people are so
unhappy if the economy is doing all right?
I think it's a few things.
I mean, consumer sentiment.
We talked about this before, and you've done I know,
platypus videos on this is the consumer sentiment which is
out of your your home University of Michigan, and has
been since the thirties. I think, lewis it's ever been
on record, which is wild because, like you say, the
data actually is quite good in a lot of ways.
Four point two percent of employment is amazing. Our stock
market's never been higher.
In a lot of ways.
Our economy is just a beacon in the world. But
it does not feel great. I think part of it
is the low higher low fire, because that makes you
feel a little trapped as a worker.
Yeah, let me double doubt on that.
Betsy Stevenson, who is I mean, I'm going to sign
on these podcasts. She's my fist sake and favorite economist.
You're my favorite sticicy I'm not an economist. Great, great,
I want everyone sh Betsy is my favorite economist. Sticy's
my favorite economics journalist.
I will take that. That makes me very proud. That
makes me very proud.
Yeah, but honestly, no one till Betsy please, oh my god.
Okay, yeah, no that that that will not happen. That yeah,
I can, I can.
And actually no, I'm rethinking it. Even if you were
an economist.
Stacey, I prefer her.
I just that's fair, that's fair.
The mother of Miels I would also prefer her.
She does excellent work.
Well, who do you like more out of me and her?
I mean, I don't worry.
It's like a tie.
I can't the male leg I can't take it. Speaking
of male league as, here's my favorite job market fact. Yes,
since January twenty twenty five, women have gotten ninety percent
of all job gains.
What does that mean? Job gains?
Okay, take the level of employment in January of twenty
twenty five. Take the level of employment today. Count up
how many extra female jobs you've got? Count up how
many extra male jobs?
Like who's getting hired?
Yep?
Men or women?
Okay, there are nine times as many new jobs with
women in them as there are jobs with men in them.
Is that because of the kind of job or just right.
I love just the sort of shooter irony of it.
The Trump economy is delivered for women.
All that talk of hard hacks, steel toe burts, manufacturing renaissance,
it has delivered big buffy blokes a returned to nineteen
sixties family values has delivered jobs for women and almost
none for men.
You guessed exactly right. What it is is.
Almost entirely the structure of the job gains. That they're
coming into industries that have been historically female carded. Yeah,
most particularly healthcare and social services.
Right the healthcare has been the big I mean, it
has been the begon of our job market for a
long time. But one of the things that actually Betsy
spoke about with me at one point, this was a
little while ago, but she said she was especially worried
about AI coming after women's jobs. That she worried that
previous industrial revolutions had really taken a lot of jobs
that had been traditionally done by men, and she worried
this one was going to take a lot of assistant
jobs and other jobs that were sort of primarily female
right now, So it's interesting, it's an interesting moment for
women in work.
And so we'll follow the usual rule of economics, which
is Betsy's always right. And to those who don't know,
by the way, Betty Stevenson is both a superb economist.
She was one of President Obama's advisors. She's a professor
at the University of Michigan. She's also my partner and
baby mama and occasional source to Stacy.
That's right, yah.
So there was a lot of hats, so many hats,
and you know it looks like hats for sale.
I don't know if you've ever read that book.
So it's about a man who has a lot of
hats and he sells them.
Doesn't have a lot of name.
Sounds like an app title.
Yeah, yes, it's a kid's book. So you know what's
going on with AI and the gender aspect. I think
the simplest way of thinking about this is past revolutions,
things like electricity, the steam engine and so on, have
been a substitute for braun. Yes, and blokes tend to
have more braun. I'm going to go fully Aussie on you.
And the opposite of a bloke is a sheila. And
so this one's coming after cognition and blokes don't have
a competitive advantage in cognition. If anyone has a comparative
advantage racial cognition brain to braun, Sheila's are a head
on that ratio. I'm not saying Sheila is a smarter
I'm saying that they have less braun. I think that's
okay to say. And so women are in knowledge work
and pink color occupations. Another way thing thinking about this
is this revolution is fundamentally one of language. Yes, and
language is an important part, for instance, of your job stacy.
Yeah, very much so.
So.
The other thing that's going on in this economy right
now is the traditional brawn based model is disappearing. I
think it's disappearing before the Ai Revolution. In fact, it
has been disappearing for decades. The president came to power
promising a manufacturing renaissance. We're still losing manufacturing jobs. There
are people who will focus on this month's number. That's
almost always commenting on statistical noise. But you know, the
traditional big boofy bloke jobs are continuing to decline. The
future of work for men, if there is one, is
getting a little bit comfortable with with moving into the
service economy, which is not historically male.
Coded come on in the water's fine.
Look it's also even Yeah, so much I could say
about modern masculinity, but I'm not going to go there.
Right, Wow, that's a whole other podcast.
Yeah, speaking Actually, actually there's a light transition here, which
is we saw a display of a certain form of
masculinity by Kevin Walsh, who is our new.
Yes, Yes, first press conference.
Yes, Okay, I'm dying to hear your breakdown of this,
because I of course was watching with beited breath. Actually,
most people probably were not as excited about this as
I was, but I think people were very interested even
in general, to see what he was going to say.
Yeah, a few things.
One I observed he made it clear that his is
not a continuation of the previous administration.
Right.
The length of the statement was one hundred and thirty words.
Statement.
He almost tweeted a statement instead of it being as
it typically is, a page long five hundred.
I actually he was a reporter.
If some if your editors, as can you do one
hundred and thirty words? It feels like either the deadline
is really near, or they don't think the story is
very good, or you're on the social media desk or
you're on the social media desk.
That's right.
Should in thirty words, that is wild.
I didn't realize Kevin is not a big believer in
central bank communication.
No, he's not into transparency.
He wouldn't say it that way, but I believe that
that's exactly right.
He would even I mean, BERNANKI was so into transparency
explaining financial crisis. This is what's going on, this is why,
this is what we're going to do. Forward guidance, you know,
where he's like, this is what we're going to do.
This is why we're going to do it. And worsh
has been pretty explicit, like fewer press conferences. We don't
need to explain ourselves. We don't need to tell everybody
what we're thinking.
Yes, his side of the story is if we explain ourselves,
then everyone thinks that that's a contract, and then we
have to move this way even if the world changes.
The Steelman version of this.
Now, if your concern was if I say something, I'm
going to feel locked in by it, my therapist would say,
just don't be locked in just because she said something.
Justin that he says it all the time. You don't
have to fall through you can change your mind, that's
all right. And so look, I'm gonna send Kevin my
therapist's number, and you know, if he actually calls.
I mean, there is a.
Certain vary in defense of ye, mister Walsh. I think
it's a little bit different because the markets are so
reactive to everything the Federal Reserve does. I mean, forget,
let us not forget the Taper tantrum where Ben bernank
like basically hinted that maybe all of the federal Fed
intervention into the economy was going to let up now
that the financial crisis seemed to be mostly behind us.
The markets lost their minds for months. It was like
sell off, sell up, sell off. So there is this
outside reaction to everything the Fed does.
So I do I have some I have, you know, I.
Don't think it's a it's without reason to want to
be a little less transparent.
I think there's a logic to it.
I'm going to violently disagree. Actually, so I only disagree.
Tell me the historical.
Reference for folks was during the bananki Fed. You know,
he basically said a comment in a half and markets
sold off.
And everything went crazy. So here's the.
Thing is, if what you're doing is you're telling a
story and you add another sentence to the story every week.
Then markets are grounded. They understand where you're coming from
and where you're going. If you move back to I'm
just going to occasionally speak, they're guessing and then like,
oh he just said this, it must mean this crazy thing.
Oh we just said that, it must mean this other thing.
So were we in a gambling frame of mind, I
would be willing to bet we're going to see greater
volatility in Federal Fund's futures as a result of WASH's
opacity opacity although he did.
Give some pretty strong I mean, I don't I feel
like the effect of his talk was not volatility. He said,
you know, we are committed to price stability, which is
basically fed code for we're not going to cut interest rates.
At least that's how I read it. So I think
he did give a pretty strong shot across the bow
and exactly the way you're talking, Stacy.
What I love is giving you the last word. So
you just had it. You beat me, you win.
The reason I gave you the last word is I
want to get to another topic, which is we are
celebrating the official lawnch not just the two hundred and
fiftieth birthday of the United States, but we're celebrating and
both throwing cash in the air.
Which is as of July fourth.
The Trump accounts, which are tax advantage investment accounts for
the kiddos. They were created as part of the One
Big Beautiful Bill. They're now officially with us. Stacey, do
you know about this? Do you want to take a
first stab at trying to explain what they are?
From what I understand, it's a little bit like this,
this concept people have often had of baby bonds, where
somewhat a child is born and you set up an
account for them and you can put some very safe
assets in it. It's a little bit protected from you know,
taxes and things like that, and it's just a way
to give this kid a little start in the world.
It's a place where you can put money they can
save for college. It's a little bit like a four
to oh.
One k, but for life instead of for retirement.
That's that's my very basic understanding of the Trump accounts.
It sounds adorable.
I know, baby bonds. What's not to love?
Okay, So let me actually dig into some of the
detail because I think what it is is a lightly
adorable pace with which distracts from my inequality enhancing set
of tax deductions. So there's actually two parts to this,
so one and also plus there's the populist nonsense you
would expect at a moment like this. So the first
part of it is, if you're a baby born between
twenty twenty five and twenty twenty eight, the government puts
a thousand dollars in a stock account for you. That's
really nice. I mean, if you're born in twenty twenty nine,
I'm sorry, you know. So the whole thing's not funded.
It's not really that serious.
It doesn't happen. I thought it.
I knew there was an early start date, but there's
like it's like a finite little window.
Oh wow, which, by the way, might not be how
you do physical policy, but it is a way of
you might notice. The end of it is twenty twenty eight.
Is there anything happening in November of twenty twenty.
Eight presidential election is happening?
Wow?
I wonder why these things keep sunsetting exactly in even
numbered years. By the way, that's also winning the no
tax on tips goes away, no text on overtime. Who
by the way, don't worry, Stacy. I see you're worried,
but don't worry. The tax cuts for the rich they
don't sunset. It's only the populist policies at sunset.
Okay, So.
The basic rule of dumb is, if it affects the
middle class, sunsets in twenty twenty eight. If it affects
the elites, we're already paid prittle.
That's permanent.
Interesting.
Yeah, anyway, so talk more about these accounts though. So
you get a thousand bucks if you're born within this
window before twenty twenty nine. And then but you were
talking about how like you're worried it's going to contribute
to inequality or maybe exacerbate current inequality.
You get the thousand bucks in Yeah, it goes into stocks,
which is really interesting. By the way, it's rhetorically interesting,
it's economically interesting. So you know, the rhetorically interesting part
is you know, you're eighteen and you look down and
your own stocks. Yea, you own part of the American economy.
And I think the economically interesting part of you know,
when this has been by the way, this has been
historically suggested by progressive economists Corey Booker had a plan
like this as well. Corey Booker's plan was a much
bigger amount of money, and it was means tested, so
it would only get to low income kids. So it's
only one thousand dollars. It's you know, all right, fine,
It's typically been very progressive. But one of the nice
things it does is historically, in many economies, including the
United States, has been a fight between capital and labor.
That's been the most important division, and those fights can
be quite unproductive. And if you can find ways in
which regular families, regular workers own some of the stock market,
then they're also part of capital. And as a result,
you can blunt in these distributional conflicts, which changes politics
and the scope for productive economic policy, which is great.
Giving a baby on a thousand bucks isn't going to do that.
But you know, there's a lot of pro business, pro
stock market rhetoric around all of this. I'm basically okay
with that. Okay, So that's the main policy. It's what
progressive economists have been in favor of. It's much smaller,
but you know, it moves in the right direction, and
it's unfunded. Be on twenty twenty eight. Okay, the other
side is that your family and your employer can contribute
another five thousand dollars in a tax advantaged way to
your account. Okay, Now, the thing about that is, first
of all, lots of families don't have five thousand dollars
a year to put in. But more to the point,
the way to think about tax advantages. So the tax
system is so bloody complicated. And by the way, our
audience is going to be thrilled by this. I don't
understand taxes very well. Actually, they might not be thrilled.
They might be hoping for expertise. But I'm as confused
as you are. Fortunately I can ask an expert, which
is my better half, Betsy Stevenson, does in fact understand
all of this. So here's one way of thinking about
tax advis It's basically, I invest my five thousand dollars
dollars and the government sends me a check. Now, in reality,
what they do is, instead of me sending the government
a big check, I send the government a smaller check.
That's what any kind of tax deduction is, right. I
think it's more honest to think about it as if
the government's sending me a check, because it's like a
form of welfare. Okay, so realize any time the government
announces a tax deduction, it's almost always an income tax deduction.
A lot of working in middle class Americans pay a
lot of taxes, but no income taxes.
Right.
They pay a lot of sales taxes, they pay a
lot of payroll taxes, but they don't pay federal income tax.
You know, there's the un income tax credit and so on.
So a new credit where the government is offering to
reduce my tax bill. When my tax bill is zero,
it's worth zero dollars to me.
Okay.
What that means is anytime the government, and this is
true of no taxes on Social Security, no taxes on tips,
and on anytime the government does something through tax deductions
as opposed to checks. It's it's a very clever way
of disguising the reality that working class Americans won't get it.
It only when it goes to upper middle class and
above Americans.
And so that's a general.
Commic mortgage tax deduction, things like that, right.
And actually it's even crazy than that. Right.
Imagine the government says I want to send your kid,
you know, a few thousand dollars, yeah, to the amount
that it sends your kid, because it's a cut off
my taxable income. The higher my taxable income is, the
higher my tax rate is. So therefore the higher subsidy
I get from the government is So this point I
want to dwell on it because I think it's important
beyond Trump accounts. I want people to get in the
habit of understanding whenever you hear the word tax deduction,
it's a way of helping those who are and more
rather than those who are less, and actually providing even
more assistance to those in the highest incomes because they're
at the highest tax brackets. Now, a common counter is, yes,
but the low income folks they don't pay taxes, so
this is fair, And that's not true. They do pay taxes.
They pay a lot of taxes, they just don't. They
pay state taxes, they pay sales taxes, they pay payroll taxes.
It's just income taxes, one part of our whole slew
of taxes. So by doing all of this through the
income tax system, we're doing it through the one way
in which we're not helping a bunch of folks.
Interesting, that is really interesting.
So you see the Trump bonds, the baby bonds, as
potentially very much advantaging wealthier kids because if you are
a wealthier parent, you can afford to put more kind
of protected money in this bond, and your kid has
even more of a leg up than they already would have.
Yeah, it's it makes it cheaper for the upper middle
class and above to transfer money to the next generation. Right,
So I want people to understand Trump accounts as two policies.
Here's a three thousand bucks. I'm not going to tell
you what your view about that is. I just want
you to have one. And here's a set of tax
advantages for the upper middle class and above to transfer
money to their next generation. They're quite separate, calling them
Trump accounts, and actually just reading the analysis, it's mind
blowing how hard it is to separate those two ideas.
It seems like quite self consciously done. And of course
when people think about Trump accounts. By the way, if
you are having a kid anytime soon, folks at home,
I do want you to go and sign up for
that thousand bucks. You actually have to sign up for it,
because this is the government, and the government doesn't actually
just I can get all though enrolled in a bunch
of things.
But apparently they don't like sending you.
A thousand bucks, so enroll your kid, get your thousand bucks.
They deserve it, You deserve it, and I'm happy to
pay my taxes to make your little baby there the
holder of a thousand dollars worth of stock certificates.
What a beautiful moment.
I agree.
See now, I also want to just vent about something.
If I may, go for it, that's why we're here.
I went to Trump accounts dot is it?
It's part of it?
Okay, feelings about the economy, gotta let it out.
You're a therapist, would agree.
I'm sure when I say I talk about my feeling,
let it out.
Feeling your feelings. That's what therapists always used to say,
feel your feelings.
Feel okay, great?
Well, then I never figure out what that meant.
I'm I'm I'm going to lean into feeling my feelings.
I am kissed. I went to Trump Accounts dot GV. Okay,
look this Trump account sing it's a very serious policy
that lasts for three years, a non serious amount of time,
so with a non serious amount of budgeting. But's you know,
it's economic policy.
It's serious.
This is a ton of money. This is real people's
real lives well on their website.
Wait, I'm going now, what is it called.
Trump Accounts dot gov. It's the most infuriating set of
horseshit bullshit and wives. They have a calculator telling you
how much your Trump account will grow to. And what
they've done is they've just thrown utterly absurd assumptions of this.
And according to Trump Accounts dot Gov, which is to say,
the White House that if you get these government thousand
dollars contributions by age eighteen, you don't put anything in
that'll be worth six grand fair enough.
They reckon that by age fifty five that'll be worth
a quarter of a million dollars.
It's possible.
Yeah, absolutely might be snowing in New York next June
as well.
If you buy Apple at for dollars a share.
You know, their claim, I'm not kidding, is you accept
the government's thousand, and you contribute the five thousand a
year while your kid's a kid, right un till they're eighteen.
They reckon by age fifty five that'll be worth thirteen
million dollars.
Wow, I mean no, that's bullshit. That's very optimistic.
Yeah, a much better journalist than I am calling that optimistic.
I'm done with you if, Missms, I'm sick of bullshit.
This is people's lives, and if you're going to give
them estimates, they should be realistic estimates. They should be
adjusted for inflation, they should have an error band around them.
They should give you a basis for making real decisions.
Saying if you take up this plan, your kid will
be worth thirteen million dollars is a flat out line,
and I'm pissed about it, and I'm feeling my feelings.
But I guess at this point dishonesty, that's nothing new.
So why don't we talk about something happier, Stacy?
That sounds good. I'm just looking at this calculator now.
Yeah, apparently, if you just get the thousand dollars by
age fifty five, you'll have two hundred and forty three thousand.
Even.
Sure, that's true.
It's a magic money machine.
I'm all for magic money machines.
But yeah, Stacey, let's change the emotional mode.
Let's do it. Yes, Okay, let's feel.
Some happy feelings. Is there anything to make me happy? Stacey?
I mean I would say that whatever your feelings are
at this moment about the economy or the country.
Fourth of July. You know, we've made it two hundred
and fifty years. That's pretty good.
I am taking the kids out to a small town parade. Oh,
my son's going to be in the parade. What they're
going to throw candy?
Awesome?
I feel incredible about it.
So I actually thought, this is a nice moment also
for us, as you can on enthusiasts to reflect on.
So it's the point, you might say, so I love it.
If we go week to week, you can get annoyed
and frustrated and feel naked of about the economy and
what it's delivered. But if you look over longer periods
of time. You've told me to look over fifty year
periods of time, it's start to see a more optimistic story.
But so I thought, today, let's look over two hundred
and fifty years and compare today's economy to what it
was in seventeen seventy six.
Oh my gosh, Yes, I love this.
That you're going to discover the magic of economic growth,
that in fact, ours is a narrative of progress, and
that we've got to get out of this week to
week and pan back and you'll see that our lives
today are pretty extraordinary compared to what they might once
have been.
Yes, I'm very excited to hear this. What did you find?
Okay, So this blew my mind. How many?
So there's three hundred and forty million people in America today?
How many do you reckon there were in seventeen seventy six.
Counting need of populations, Yes, hmm, like ten million.
I think I'm gonna I'm going to give you a
really good grade. That's two and a half million. But
for economics, getting the right number of zeros is really good.
I appreciate the great inflation.
Right, So basically the United States was smaller than Kansas
City is today.
Wow. Two million people.
That's okay.
Here's the one that really blew my mind. If you
look at material standards of living, the typical American in
seventeen seventy six, their average income, their average production we
call it GDP per capita if you want, was roughly
at the level of poor Sub Saharan African countries today.
Wow, which I think is interesting in two ways.
One how poor we were back then, and two how
much some economies have failed that folks are stuck at
not much above survivor and in some cases below survival
to even today. So the United States was born at
one level, one of the rich, a very very rich
country compared to other countries at the time, but still
by any measure, a very very poor country. But what's
striking about that is it's only two hundred and fifty
years later, and our material standards of living are roughly thirty.
To forty times higher.
Wow.
So the amount of stuff we can buy, the amount
of stuff we produce there, and this is adjusting for
things like quality changes and so on. So you know,
you hear people occasionally look back wistfully and say, wasn't
America great back then? And the answer is no, no, no,
it wasn't. Typical person life expectancy at birth was about
maybe late thirties.
Wow.
Now, it turns out, by the way, lots of folks
back then lived into their sixties. So you could say,
how's life expectancy so low? I mean, it's stunning, right,
thirty five, thirty six, thirty seventy eight, some number line that,
And it's because so many people died before age five.
Yeah, well, and a lot of people died in childbirth,
and also new antibiotics. So if you yeah, I mean,
if you got an infection, if you got to cut
the god infected it was curtains.
Yeah, I think that's actually really amazing. So not only
was the rate at which women died during childbirth so very,
very high, people must have known that, Like you know,
you lost an aunt, a sister, or a neighbor. So
just think about the extraordinary act of faith it must
have been to become a parent knowing you might die.
I mean, I'm really struck by it. I am.
Yeah, I'm a dad.
I sat next to Betsy while we were going through childbirth,
and the truth is, actually, if Betsy with our pregnancy,
can I call it ours?
I don't know if that's that's very progressive. Yes, I
think she were pregnant, Yeah.
She'd call it stolen valor you know, a couple of
things went wrong, which meant she would have died.
In seventeen seventy six.
Yeah.
And I don't know whether it's something about the resilience
of the human spirit that people really want to create
another generation, or you know, the other side of me
can't help but joke, maybe people were so damn horny.
I mean, that's part of it.
Yeah, I mean putting death on the table doesn't that.
I mean I could just imagine a candlelight dinner back then,
and I don't know, if I was a Sheila, I'd
be like, you know what, we're not going past third
base tonight.
I just don't feel like dying.
Yeah, yeah, well, I mean there were other things too,
because if you were a Sheila back then, chances are
it would have been a little tough to earn a living.
So there was like an economic issue too, where.
You know, yeah, yeah, So look, all of that's just
to say I didn't hope, I didn't get distracted by
anything along the way there. All that's to say, heavy Birthday, America.
There's another one, finally, extraordinary change. I want to leave
you with, because there's so much angst and anxiety on
this two hundred and fiftieth birthday about AI and dramatic
economic change, and I just want to remind you that
dramatic economic change is the story of America. That back
in seventeen seventy six, almost everyone farmed. They farmed because basically,
one person could grow enough crops to one family could
grow enough crops to feed one point two families, and
as a result, you needed sort of eighty or ninety
percent of the population working on farms. Now one point
two percent of American population is on farms. It's not
the food went out of fashion, in fact, I just
ate it was delicious. Instead, it's that the folks on
farms have become so intensely productive they had the AI
of their time them become so intensely productive. We didn't
need that many people doing the stuff that in sevene
and seventy six we imagined was the stuff of economic life,
which was agriculture. And so the optimistic story about AI
is maybe we're about to discover that we don't need
so many of us doing all the things we do.
As you and I are.
About to be replaced by AI, we have fewer people
doing that stuff, and we discover whatever it is that's
going to be the new and beautiful story for the
next two hundred and fifty years.
I love that takeaway. I love that perspective on AI.
And you're right.
I mean progress is always uncomfortable, and as is growth,
and I feel like your therapist would agree with me there.
But it's also like part of you know living, you know,
evolving changing shedding things, and I like thinking of AI
as part of that cycle. I think that's like a
really beautiful framing and really a really nice way to
go into the two hundred and fiftieth.
So let's take that optimism. I love it.
Let's bottle that optimism. Remember that actually our economic story
is an optimistic story. So, folks, this has been Off
the Clock the Economics podcast in which Stacy Mannix Smith
and I slow down, we review the week that was
and try to sort out what really matters. We're going
to be back in a couple of weeks with the
next installment. In the meantime, Platypus Economics is an experiment
and we need your help. So if you enjoy this,
can you let a mate know, Can you drop a comment,
can you subscribe?
Can you like? But actually, what I really.
Want to do is you find someone today or this
week and say America is celebrating one hundred and fifty
years and the best way to do that is to
subscribe to Platypus Economics, because there is nothing more American
than a platypus.
In the meantime, Stacey and I are going to keep
on top.
Of all the economic news you don't have time for,
say stay Creius.
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