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Transcript:
Rob Johnson:
I’m here today with Saikat Chakrabarti who is the President of New Consensus. Previously, he was the Campaign Manager and then the Chief of Staff for New York Representative Alexandria Ocasio-Cortez, also known as AOC.
Rob Johnson:
Saikat has been crafting with his colleagues a set of proposals or revisions of how the Biden Administration, newly elected and the electoral college has now affirmed and how they can transform this country. Get us to a place that is what I might call healing and moving beyond the frustrations and despair that led to the election of Donald Trump. Saikat, thanks for joining me today.
Saikat Chakrabarti:
Thanks so much for having me, Rob.
Rob Johnson:
I mean, this is such a turbulent year. We’ve had this presidential election, the pandemic, all kinds of financial bailout, anxiety, this and that and I think everybody’s looking forward to 12 midnight on December 31st so we can turn the clock. But I’m curious what you’re seeing and I’m looking backwards before we look forward, what have you seen this year? What are you seeing now amidst the pandemic? What do you affirm? What brings you joy? What scares you? What do you wish you were seeing? What does it look like to you?
Saikat Chakrabarti:
Yeah. I think the pandemic in a lot of ways has really shone a spotlight and exposed a lot of the systemic and deeper issues that were always bubbling there. I almost hate to say bubbling beneath the surface because they’re bubbling in a real way for the vast majority of American people, but they weren’t bubbling beneath the surface in terms of the attention our politicians and our media gave on it.
Saikat Chakrabarti:
Because a lot of the problems that have been exposed are not the problems that politicians in Congress are directly facing. They’re not the problems that the people writing our news generally are facing directly. These problems of just a lack of access to basic healthcare, wages have been stagnating for decades, life expectancy going down everywhere and the pandemic kind of shone a spotlight on it and it sort of put a bunch of these problems into SuperDrive and exacerbated them.
Saikat Chakrabarti:
And the other thing it really shone a spotlight on is the complete lack of ability. It’s hard for me to figure out how much of the blame to put on Trump directly versus to put on the system we’ve created directly, but the lack of ability for anyone at any level of our government and business to take responsibility, take action, and think it’s their job to do something about the fact that hundreds of thousands of people are dying of a deadly virus and our economy is in free fall.
Saikat Chakrabarti:
There are very obvious things that could have been done and people were proposing to do at the very beginning of the pandemic and we saw… We literally got a playbook from countries that got the pandemic before we did, from places like South Korea and Singapore and we could have just mobilized to knock that playbook and we just completely failed instead it became the worst of politics.
Saikat Chakrabarti:
It became a battle of finger pointing, Trump trying to take his hands off of it and let the States duke it out and fight with each other for resources which is just a terrible thing to do. States and towns were literally competing in an open market for PPE, for their doctors and nurses. That’s the kind of thing that’s completely insane if any other country look at our response for handling a pandemic.
Saikat Chakrabarti:
But it wasn’t just Trump, it was also people like Governor Cuomo. New York State was the hardest hit state in the nation and continues to be one of the States with the highest death rates. And he’s trying to claim that he’s doing a good job of leading, but he also failed on the job. So it’s just utter lack of failure at all levels of government. And I think if anything, the thing that I feel positive about this whole crisis is that people are recognizing that big, bold systemic action is necessary if we’re to have any sort of future for this country at all.
Rob Johnson:
I think it’s kind of interesting to see what… You refer to how dreadful things are for people that the pandemic is unmasked, but I think some of the fault lines were hiding in plain sight for a long time before the, which we might call, acute stress, illuminated that even further and, how do we say, is reaching our heartstrings and compelling a change of focus or a change of design for our country.
Rob Johnson:
And I think your sense of how… It’s a very fascinating thing to me, because there was a time in recent years where people would say things like, “What are you going to do?” It was a despondency, a resignation, whereas now it feels things have become so acute that people feel ashamed of not being active.
Rob Johnson:
You see more people out, elderly, white people out with Black Lives Matter posters in the rain or the snow or what have you. And it feels like it’s a call to action and we can’t afford to pretend there’s nothing we can do about it. And maybe this is going to help vis-a-vis things like climate change as well.
Saikat Chakrabarti:
I absolutely agree. And I think that sense of despondency, the disappointing reality of that is even when you could talk to our leaders in Congress I’ve met many members of Congress and folks who were supposed to be the ones that are actually the ones doing something about it, they feel the same way. That’s the really disappointing piece, they also feel like they can’t do anything about it.
Saikat Chakrabarti:
The system is what it is. It’s too big a problem to solve. And what you end up seeing often is so much time gets spent amongst our political leadership focusing on the small problem, because those, at least you can do something about. And that’s why we have all these bills renaming post offices that happened. Those are the majority of the bills going through every Congress and very little effort being put on solving the largest problems.
Saikat Chakrabarti:
And that I think it’s coming to a head. It’s coming to a point where we just can’t ignore the largest problems anymore. And in some ways what the crisis did, what the pandemic did… I actually think if the pandemic had only affected the bottom 80% of society the way all of these problems so far have, we probably would have continued ignoring these problems.
Saikat Chakrabarti:
But because the pandemics have a way of affecting everybody in society, it doesn’t matter how much money you’re making. It’s of course affecting people in the bottom 80, 70% more than it’s affecting people in the top 1%, but the top 1% are also getting sick. They’re also seeing it. They’re also not being able to shop. They’re not being able to go to their restaurants. And so that’s brought a sense of urgency to the doorstep of the people who we hold real power in our society. And I think that’s a good thing.
Rob Johnson:
Yeah. You recently wrote a memo with your colleagues that you sent to the transition team, and obviously President Elect Biden and Vice President Elect Kamala Harris, and it was called Building Back Better with or without Senate Majority. Tell me, there’s a lot of anxiety.
Rob Johnson:
We’re making this recording where you must say the Georgia election control center is still in front of us. It hasn’t been resolved. What is it that, how would I say, gives you confidence that you can do things without having the majority in both houses, given what we experienced during the Obama years?
Saikat Chakrabarti:
Yeah. I want to start by saying it absolutely opens up more avenues and possibilities of the kind of stuff we can do if we do in the Senate. There’s basically more tools in Biden’s toolbox if the Democrats have the Senate, but the main point of our memo, step back even further.
Saikat Chakrabarti:
One of the things that was exciting about Biden’s campaign is he actually campaigned on this multi-trillion dollar plan to rebuild the economy, to create millions of high wage jobs, building the industries of the future. And that includes, of course the green industry is the future to solve climate change, because as it turns out solving climate change isn’t a cost to solve climate change.
Saikat Chakrabarti:
It turns out all the new technologies and new things they’re building, electric cars energy efficient buildings. Those are actually just what an updated economy would be building, because they’re cleaner, better, cheaper. Everything about them is better for people. If we were just doing normal economic development, that’s what we would be doing.
Saikat Chakrabarti:
But he’s also talking about mobilizing industry and our economy to do things like make our economy pandemic-proof, build all kinds of stuff in America to recreate the jobs that have been lost over the past several decades that have led to wages stagnating.
Saikat Chakrabarti:
And in my mind when he talked about Build Back Better, literally the vision I have in my head is, you go to a place like Janesville, Wisconsin, where there was a GM factory that was pumping out cars paying people 30, 40, $50 an hour. And that factory disappeared in the 2008 recession and got replaced with minimum wage, $10, $12 an hour jobs. And that’s the best that community can get and that has driven…
Saikat Chakrabarti:
That is a story all across America. That story has happened in so many places that neighbors have been driven apart, communities have been torn apart and it’s led directly to the kind of political turmoil and disunity that we see right now, the kind of nasty politics that we see right now because people are suffering and people are hurting.
Saikat Chakrabarti:
And so I say all that because it’s encouraging that Biden campaigned on an actual plan to intentionally go back into a place like Janesville and say, “I’m going to build you a factory that’s making the electric cars of the future and paying you $50 an hour again,” because that’s the actual solution to that problem.
Saikat Chakrabarti:
Now, I give the whole backstory because the big challenge to doing something like this, of course is where do you get the money to finance that. It’s a different question from how do you pay for it. I use the term finance, because a lot of what I’m talking about and a lot of what Biden was talking about building, building electric cars, building electric charging stations, solar panel factories, TVs, batteries, clean steel plants.
Saikat Chakrabarti:
These are businesses that produce something and make a return. It’s not just an improvement to social safety net, it’s actually building the economy of the future. And so what we proposed in our plan is, one way to do this of course, would be to pass a multi-trillion dollar industry investment plan through Congress and invest directly in those communities that way.
Saikat Chakrabarti:
But another way to do it is to actually use the incredible power of the Federal Reserve System. And to go back a little bit, basically the Fed is what was used by both Obama and Bush in the ‘08 crisis to bail out Wall Street to the tune of about somewhere between seven and $29 trillion, so a whole lot of money.
Saikat Chakrabarti:
And what we’re proposing and planning is basically do the same thing. But this time instead of just having the Fed bail out Wall Street, let’s actually re-engage the regional federal development banks that are all around the country and empower them to give money directly in the form of low-interest long-term loans to businesses that are going to be working on these industries that Biden described in Build Back Better.
Saikat Chakrabarti:
That’s kind of a high-level idea is let’s use the Fed. Biden should lead because the Fed isn’t going to do this on their own. That’s one key part. The Fed generally doesn’t like to act independently and seem political. They usually like it if Congress gives them the permission to go do something like this and change their normal of mode of operation.
Saikat Chakrabarti:
And we’re saying Biden could actually do that by leading and by calling on the Fed to do it. Work together with Powell, have his do it. And it wouldn’t be unusual. It’s what our government does in times of crisis over and over again. It’s what, as I mentioned, Obama and Bush did with the Fed in ‘08.
Saikat Chakrabarti:
It’s what FDR did with the Fed and Marriner Eccles in the 1930s. So this is just using the tools, using the Fed as a central bank. One of the pieces I want to mention real quick is the Federal Reserve System when it was first put in place, it was actually meant to be kind of a central bank that develops the country. It wasn’t meant to just be a banking system that pops up Wall Street.
Saikat Chakrabarti:
It was meant to be something that gives money out to main street to help actually develop the economy. And so what our proposal is really talking about is bringing the Fed back to its original roots. Spread the Fed by letting these regional Feds take control of their regions and develop their local economies and have Biden lead to give them kind of political space to enact Build Back Better.
Rob Johnson:
In my own reading of your memo, I just want to help our listeners’ curiosity, a number of things came across my mind. First was I was fascinated that someone who was associated with Justice Democrats and the development of AOC, you had such a constructive tone in relation to this president elect.
Rob Johnson:
It wasn’t like those fights where they say that the thing that a centrist progressive most disliked, so people on the left and vice versa and all, they leave the right wing alone and get caught in their own fights. But I actually thought you took this very enthusiastically, very constructively and actually beyond partisan and beyond rivalry, and essentially embraced what you might call a structural economic development vision that everybody should applaud.
Rob Johnson:
And that kind of what I would call healing is pretty much what the doctor ordered. It feels to me like the tone you set from your historic vantage point is something that I would encourage people on both sides of the aisle and all parts of the pendulum to emulate.
Saikat Chakrabarti:
Okay. Yeah. Rob, the thing is I come from a place where I believe you should always present ideas in the benefit of doubt first, because there’s even a tiny, tiny chance that Joe Biden is going to lead a national development program that improves the lives of millions of people, that’s great. I’m going to give him that chance and I will cheer him on if he does it.
Saikat Chakrabarti:
And I also always believe in removing all excuses for inaction. That was a big goal of that memo is to show, even if we don’t win the Senate, there is no excuse for inaction. Biden absolutely can do everything that he said he wanted to do in the campaign. And the ideas presented in the memo, you’re absolutely right, are not partisan ideas.
Saikat Chakrabarti:
In every country, the basic idea of developing a country’s economy is not partisan. That’s just what a country does. Just to give an example, in America, I mean, first of all, all of America as example versus the entire system of development that so many countries have used to become wealthy all around the world, whether talking about places like South Korea or even China, to some extent.
Saikat Chakrabarti:
We kind of create a lot foundation that I think Friedrich List of German industrial fame credited Alexander Hamilton for a lot of the ideas he used to industrialize Germany. And currently in America we do have one example of a state-owned development bank that actually proactively tries to develop its state, and that’s in North Dakota.
Saikat Chakrabarti:
Not a bastion of Socialists or Democrats or anything. It’s a Republican state, North Dakota. They’ve had a public bank for 100 years. In fact, most of the States in America used to have a public bank, but most of them are gone now. North Dakota is the last one. And it turns out North Dakota was the state, I think that did the best per capita in terms of receiving PVP loans because they had their central bank manage the whole operation of getting those loans to local businesses.
Saikat Chakrabarti:
And they’re the only state, when I checked at least a couple months ago, that had net increase in employment during the pandemic, because they had planned for this kind of a downturn because they had looked ahead a little bit when their times were going well. They saved and tried to diversify their economy. And now that times are tough, they’re using their savings to try to keep you all from going under.
Saikat Chakrabarti:
And that was the same story in the ‘08 recession. North Dakota did remarkably well through the ‘08 recession. Just the basic idea of building resilient economy where the people at the bottom of the economy are still doing well and we’re actively trying to improve everyone’s lives is not a partisan issue at all. This is just basic, what you do as a country or you fall behind and become a poor country overall.
Rob Johnson:
And do you feel like… How would I say? You talked about the resistances that, in other words, people can sense the need to do something like you talked about the wake up call of the pandemic, but, how would I say, the pathways through which things were achieved.
Rob Johnson:
We always relied on monetary policy because we said fiscal policy was too messy. You couldn’t do things in the short-term or what have you. And when I read your memo, you kind of broke it into what was the task? Then, how would I say, I think you called it instrumental [crosstalk 00:19:30]
Saikat Chakrabarti:
Instrumentalities. Yeah.
Rob Johnson:
Instrumentalities. Yes. I’m sorry. And then in other words, the different institutional structures and innovations or redeployment of existing institutions, and then what would be the benefits. And what I felt like you did a beautiful job of is that you were showing the analogies, particularly vis-a-vis the central bank, how it’s behaved historically, not an identical consequences, but analogous similar consequences.
Rob Johnson:
And how with, what you might calls slight adjustment, you said this in the introduction of moving away from funding the financial sector in order to fund the recovery, to going directly to the real economy, which is more likely a fiscal policy than a monetary policy.
Rob Johnson:
But I sensed that you were very, how would I say, effective in saying even without a change in the Senate, you got things you can do that look just like things that the Fed has done or the so-called the Reconstruction Finance Corporation or national development banks. And with a little courage and a little change of habits, these things are not unfeasible.
Saikat Chakrabarti:
Yeah. And we’re also saying that the things we’re proposing here, it’s not just stuff that we did in the past. It’s stuff that most developed countries around the world do right now. I like to give this example often of the iPhone. All the parts in the iPhone got built through research that was Federally funded largely by American taxpayer dollars, but also by the governments of a bunch of few other countries.
Saikat Chakrabarti:
And then Steve Jobs and Apple, which was a great company, managed to figure out how to put those pieces together into this small device that we call the iPhone that’s changed so many people’s lives.
Saikat Chakrabarti:
But then when it came time to actually build the iPhone and the benefits of this stuff that got invented in America, the places that got the contracts to build the parts of the iPhone, of course, we all know about China, but actually more than half the dollar in the iPhone is built in high-wage industrialized countries like Germany, Switzerland, South Korea.
Saikat Chakrabarti:
All places that also have central banks that plan their economic development. They look forward to the next technological leap, they invest in it, and then they tried to proactively make sure that they’re building some of it to create wealth for their nation. That’s just a basic thing countries do.
Saikat Chakrabarti:
And so when we’re proposing this whole idea of what Biden should do, you mentioned the resistances, right? And I think you nailed it on the head that fiscal policy is something that’s fallen out of favor because it’s hard. The real resistance of doing something like what we’re talking about is that it seems big, but you know what? We got a big problem. Climate change is a big problem.
Saikat Chakrabarti:
Our country in an economic depression is a big problem. And the current approach, the hands-off approach we have to these problems which is this faith in another power to come in and solve it for us isn’t going to work. So either we have to roll up our sleeves and decide to tackle the big problems, or we’re just kind of accepting the long suffering, grueling demise of America and we’re saying we’re okay managing that decline.
Rob Johnson:
How would I say? When you’re exploring this, I’m sure you’ve been out and about. I know you’ve written in the nation, the political, been interviewed in various places. What kind of blow back do you get? What kind of resistance do you get from financiers?
Saikat Chakrabarti:
The main resistance I think I would get, because honestly the folks I’ve talked to in the news over there, they usually come away from this surprised because whenever you tell anyone that actually we can do everything we want to do, there’s nothing stopping us. And the only things really stopping us are political will and kind of political norms that we’ve set up for not doing these things, they find that surprising and they’re like, “Well, why aren’t we just doing it?”
Saikat Chakrabarti:
But I’d say the real pushback from non journalists and people who are more traditionally in economics is they just don’t think that that’s what the government should do. It’s just this fundamental value that they have. I don’t know if you read Reed Hundt’s book about kind of… I think his book is called A Crisis Wasted. I think I’m not mixing up titles, but he has this anecdote in that book about-
Rob Johnson:
Yeah. I read the book.
Saikat Chakrabarti:
Yeah. And there’s this great anecdote in that book about how after the recession, Joe Biden actually and Barack Obama both kind of proposed building something concrete. Obama, I think famously said when he saw Larry Summers’ plan for the bailout and everything, he said, “Where’s the Hoover Dam.” Where is the actual thing we’re building to create jobs? And their instincts are 100% right.
Saikat Chakrabarti:
But the unfortunate thing was they were being advised by people like Larry Summers whose response to that was, “Well, that’s not what the government does.” And so it’s just this basic, fundamental, wrong-headed kind of ideology actually. It really is in some way.
Saikat Chakrabarti:
I think of it as these ideologically strict people who haven’t been able to become flexible to a different time, who are ideologically opposed to the government doing anything and especially to the government building things or investing in industry and developing the economy intentionally.
Saikat Chakrabarti:
And I think that’s just an old conservative ideology the time for which has gone. That’s in the past and now we got to look forward and actually look towards… We can’t think of ourselves. This whole idea of either a developing country or a developed country is I think at the crux of this. You shouldn’t become a developed country that stops developing.
Saikat Chakrabarti:
The moment you stopped developing at the moment you start dying. And we should go back to the mindset of being a developing nation. Because we should constantly be developing our nation and constantly be trying to create the jobs and the industries of the future that will give people the means of making a living in this country.
Rob Johnson:
I think that notion of, that’s just not what we do. There’s a leftist blogger, I think his name is Ian Welsh, who basically says, “Well after 2008, all of the bailouts and everything of the financial sector without real consequences essentially destroyed the discipline of capitalism.” I think he calls it the mother of all moral hazards.
Rob Johnson:
And what he was essentially saying is if you’re going to adhere to that market discipline, then you have to let financial institutions pay the price for their misdeeds and they hadn’t. Now I know there are others who would say their misdeeds have, what economists call negative externalities and they can take us all down with the ship and we all drown and none of us should pay that much of that price.
Rob Johnson:
Probably more supervision, more capital buffers required of the financial institutions or something like that would have, how do I say, diminish the likelihood. But what I see is this, it’s right on the edge of what I might call wild-eyed corruption, which is, if you think you can do whatever you want because you can control the government and get yourself subsidized expos, what I call access to contingent fiscal capacity, then there is no discipline.
Rob Johnson:
On the other hand, as you’ve pointed out so artfully in your essays and your memo, we’re already doing these kinds of things. And I go back to a man who I worked with around the time of the beginning of the savings and loan bailout, the investment banker, Felix Rohatyn. He’s no longer with us. And I used to talk with him quite a lot and he wrote a book called Bold Endeavors: How Our Government Built America, and Why It Must Rebuild Now.
Rob Johnson:
And that came to my mind as I was reading your articles and your memo, that in essence it’s kind of a false consciousness to think we ever had that market system and what you might call those moral winner lose boundaries that people of a more conservative orientation wish we could achieve.
Saikat Chakrabarti:
Yeah. I would agree and I got to read that book. I haven’t read that. But the way I sort of see often how markets work and this isn’t 100%, this is a little bit simplifying the course of things, but it’s often the case that the government creates the space in the ecosystems for the new market to flourish. The government guides and directs and creates the place for a market to flourish. And we’ve seen this in the major industries of our country.
Saikat Chakrabarti:
I mean, look at Silicon Valley, right? All the initial technology investment came from the government and Semiconductor Research. And so government research invested and created the foundation of Silicon Valley, it wasn’t just research though it was also government… One of the first piece of financing Apple got as a company was a small business loan from the government, right?
Saikat Chakrabarti:
And so my take on the ‘08 recession and the ‘08 crash was that actually in that moment, I agree, I don’t think we should have let all the banks fail because it would have taken everyone down with it, but that was a half solution. That was maybe even a third solution. And we only did that part of the solution because Wall Street was in the ear of the administration saying, “That’s the most urgent thing. That’s what we got to do.”
Saikat Chakrabarti:
But then we didn’t do the other side of the solution, which was also making sure to put in money to save our small businesses and the economy elsewhere, and also putting in money to keep the mortgage holders from going under and keep the American people from suffering. Because if you look at the recovery after the recession for most Americans it was at least 10 years. If that, many people never recovered.
Saikat Chakrabarti:
And so that’s the kind of thing that I worry about. We’re seeing it again now in response to COVID. So much of our congressional action has been so tilted towards just saving the Boeings of the world and almost nothing has gone towards saving the people and the small businesses of the world. And I’m not saying we necessarily need to make Boeing suffer. I’m saying, let’s do the whole damn thing.
Saikat Chakrabarti:
Let’s actually develop the entire economy. Don’t just do these bandaid solutions to keep our inefficient and poorly functioning financial system going. Let’s do the actual productive stuff and let’s actually build those new ecosystems that would be incredibly pro-business. Ecosystems like Janesville in Detroit for building cars and Silicon Valley for building software technology and Wichita, Kansas for building airplane parts.
Saikat Chakrabarti:
That’s the kind of stuff we should be focusing on doing for all the new things that we know we need to build like electric cars and machines to build electric cars and solar panels and batteries and everything else that goes along with that.
Rob Johnson:
I think, how would I say, that that has an optimistic error. There’s kind of a bootstrap that people think they can get a job, get paid a little more. What was the book when we were talking before this Janesville that you talked about. It was people in Wisconsin who used to get 40 to $50 and now they get 10 to 12. But the idea of higher value added even physical work, not just mental knowledge intensive work, bringing that back to life, modernizing our transportation systems.
Rob Johnson:
I have a friend who works at the IMF, he’s from China, and he comes up to see me in New York. And he’s always just shaking his head after he rides the Amtrak train. Like, “Why do you guys have these trains that go one third of the speed of the ones in China?” I think there’s not only the structural benefits from the changes, there’s the employment benefits, but there’s a sense of pride that you’re getting back what you might call to having a cutting edge society and infrastructure.
Rob Johnson:
And also I think that the people who wanted everything to be what markets do or governments do, I don’t think we should underestimate the relative importance of public goods relative to private commodities in our society in terms of what you might call platforms of wellbeing and the way which I remember reading in one of your offerings.
Rob Johnson:
The way in which having more vigorous public goods improves the rate of return for private investment and creates a more vigorous, what you might call bootstrap of private investment. Because it’s planting its feet in the context of a more efficient and potentially more profitable system.
Saikat Chakrabarti:
Yeah. It’s the whole debate about the government’s role versus the private industry’s role. It just misses the point because there isn’t some structural silver bullet that will fix everybody’s life. There isn’t some answer of like, “Okay, if the government does 30% of job and we give 70% of the economy to private industry, then everything works out.” No. That’s just never going to work that way. It’s never how any modern developed nation, as we would call them, got there.
Saikat Chakrabarti:
The way we get there is through actually figuring out problem by problem how to solve it together as a society, whether that’s public, the government working together with private industry, or sometimes it’s maybe the government doing its own thing, investing in public good, because there are many, many things that should just be services and things like infrastructure should just be a service that exists.
Saikat Chakrabarti:
And I remember reading something about how the highway system, for example, has basically returned $6 for every dollar spent back into the economy because it was incredibly good public money spent, but also things like paid family leave.
Saikat Chakrabarti:
It’s a moral atrocity that we don’t allow new mothers and fathers to spend any time with their children, but it’s also terrible for our economy because, you’re basically creating the situation where people have to figure out a way to pay for childcare or bring their kids or not be able to work if they had a kid and then they lose money and go into poverty. It’s just a bad idea on every front to not have paid family leave.
Saikat Chakrabarti:
And so there’s a lot that the government can do and should do just in terms of basic social safety net stuff that where America is very far behind. And then there’s a lot that America can do in terms of investing in infrastructure and creating public goods.
Saikat Chakrabarti:
But then separately, the thing that we’re really talking a lot about in this plan is there’s a lot that government can do in working together with private industry to build new industries. And that’s a piece that I think hasn’t been a big focus in our politics at least recently.
Saikat Chakrabarti:
One of the things I wanted to quickly mention, Rob, just because it’s a little bit of an inspiration for me in all this kind of work that I do is just this idea that when my father came to this country back in the 1970s, that was during the era of when we were building the interstate highway system and we were growing so fast that we were demanding immigrants to come to this country.
Saikat Chakrabarti:
We were recruiting immigrants. My dad actually got recruited at an immigration recruitment center in India to come to this country and he was able to walk around with a resume and get a job in his first day as an engineer in New York. And there was just this environment that was so positive and felt like…
Saikat Chakrabarti:
Of course there are entire parts of society are being left out and we didn’t have everything right. But it felt like the direction was going in the right direction and the direction was forward and that we had something to look forward to.
Saikat Chakrabarti:
And that’s really when I think of what Biden could do through a plan like this, that’s sort of the image I have in my head, is, “Can he create this country where everyone’s feeling positive even if we’re not getting the returns immediately? Everyone’s not going to come out of poverty on day one, but at least it feels like there’s some hope for the future.”
Rob Johnson:
Well, I grew up in Detroit, Michigan, which is what I will say the place that America divorced after the Civil Rights and Voting Rights Act. And when the downturn came in the auto industry, it, how would I say, created a consciousness that the American dream, which Detroit had personified was evaporating both violently and rapidly.
Rob Johnson:
And as a result, there was a lot of public relations, not with coming to their assistance, but to blaming the victims as though it was some character flaw, black public administration, entrepreneurs were fat cats, now they lost their mojo. All that kind of stuff.
Rob Johnson:
And I watched the disintegration of the Detroit area and I often see that experience as a window into what’s happened in the aftermath era of globalization, automation, austere state local budgets. It’s almost as if the divorce of Detroit was an early warning indicator for the deterioration of society.
Rob Johnson:
I do some philanthropic work now, and I was curious because I know you used to work in the Silicon Valley world prior to your entrance into public policy and politics. And I’ve often thought that internet infrastructure, particularly now with so much remote schooling in light of the pandemic should be a public good and provided at a performance threshold to the United States of America.
Rob Johnson:
I think of it for several reasons. I’ve seen a lot of internet companies start up and migrate to other places where the population was dense, provide quality internet there, which inspired more people to migrate to that area. And so there was kind of a amplifying feedback loop which had negative consequences in places like Western Massachusetts. But I also feel as though…
Rob Johnson:
I mean, in Detroit itself, which is not quite a million people now, but there’s a lot of population there. There’s a study that I read that the internet infrastructure measured by performance of the top 275 cities, Detroit finishes 254th. And I started thinking about what the importance related to education, remote education and so forth. We’re not just harming those people in a one-shot.
Rob Johnson:
When those people don’t get the access and the training and the ability to satisfy their curiosity, become lifelong learners. They’re probably more difficult to manage, how would I say, socially transitions and welfare payments, et cetera, as opposed to versatile and new jobs. And it weakens STEMocracy to have citizens who are, I’ll call it, not well-trained to think about public issues.
Rob Johnson:
And so I feel as though just leaving it up to the private sector to set up the internet infrastructure, I’m not talking about not, how would I say, contracting people for providing services and installation and all that kind of stuff, but doesn’t there need to be a national standard of internet quality on every square inch of our 50 States and Puerto Rico and beyond?
Saikat Chakrabarti:
Yeah, absolutely. I mean, universal broadband is one of those issues where there should be broad-based consensus. It’s not a left or a right thing. In fact, it would probably most improve the live as you kind of referenced in rural areas, which tend to vote Republican. And there are Republicans who are for expanding broadband, but that’s actually one of the issues I found in commerce that’s most defined by the opposition’s entirely money because the utility companies or the internet companies in a lot of these areas have these strong monopolies and they play a hard ball.
Saikat Chakrabarti:
They try to make sure even when cities try to do municipal broadband that they’re not able to do it. They make their lives very difficult. And it’s the kind of thing where the Federal Government is the entity that has a big enough hammer and enough of a presence to fight against that and make it happen. There’s no reason internet should not be a universal public good.
Saikat Chakrabarti:
For a lot of things where people say there should be a right. Sometimes there’s an actual… It’s difficult to build it out. We don’t have the resources to do it or whatever, but the internet, it’d be a drop in the bucket of the Federal budget to create universal by broadband. And there’s no obvious left versus right divide.
Saikat Chakrabarti:
But there’s actually a lot of stuff like that which aren’t partisan issues. There’s no reason they should be partisan. They’re just the obvious solution to an obvious problem. But one of the problems of our political system right now is that everything gets framed in this left versus right diagram and the media likes to talk about it that way.
Saikat Chakrabarti:
And then you guys start talking about, “Well, is universal broadband a left issue or a right issue? What’s the moderate compromise?” And it’s such a harmful way to talk about anything, because this is, as you’ve mentioned, just the answer to a whole host of problems. Why are we in search of a worse answer if we already have a good one?
Rob Johnson:
Well, you talked about that notion of what I’ll call a rent seeking or rent protecting by existing companies that would be averse to transition. We see that in the fossil fuel industry related to climate change, buying more time and keeping us relying on oil works for them, but if we play too much into their hands, we could extinguish life on earth.
Rob Johnson:
But I look at the situation and what hurts me, and I’ve worked in both Republican and democratic parties during my career, is to see people on both sides of the aisle becoming despondent about the potential for government to be effective because they see all this monkey business and the rent-seeking and what I’ll call the legalized corruption.
Rob Johnson:
They see the commodification of social design. And what I mean by that is laws, regulations, enforcement, who gets appointed and how that relates with enforcement. So you have this refraction of social design in a way that’s very, very harmful to the faith, the trust in governance expertise, whatever you want to call it.
Rob Johnson:
And I think the financial crisis of 2008 and the bailouts thereafter, how do you say, exacerbated, accelerated that loss of trust. And so this is like we talked about at the outset, a call to action.
Rob Johnson:
A very interesting time where I talk about pharmaceutical policies on one day and we talk about the financial sector on another day and the fossil fuel industry and climate on other, but I’m starting to ask myself, do we not need to change the incentive system and make votes more powerful and money less powerful in order to be able to do dynamic high quality public policy from here to the distant future?
Saikat Chakrabarti:
Yeah. The government is, at the end of the day, the people that get elected into government, right? it’s not this separate thing. The government is us and the government should be us. And so people get despondent because they see so many problems in the current system. And there’s sort of two roads you go down there when you get this far.
Saikat Chakrabarti:
And either you can choose to just give up on government, which I think means you give up on society, then you’re giving up on doing anything and you’re kind of retreating into your bubble and just waiting it out, or you can try to fix it. And I think that’s the only answer.
Saikat Chakrabarti:
The only answer is to fix it and money and politics, especially the levels of money that are in American politics has totally distorted who the current people, not all of them, but who many of the current people are in office and the major leaders parties to listen to. It’s not always outright corruption. It’s not always quid pro quo, I’m going to give you some money and you vote this way. I’ve seen that happen as well for what it’s worth, but it’s not the majority of it.
Saikat Chakrabarti:
The major problem is the culture it’s created. Who are the people writing our bills listening to, because we’ve all these [inaudible 00:46:31] they don’t have enough staff to write their own bill. So they outsource that work to lobbyists and to them, they justify to themselves that these lobbyists they used to work in this industry so they’re the experts on it. But of course those lobbyists are also working for those industries and they have very entrenched interest to promote their industries.
Saikat Chakrabarti:
And so that’s why you end up with the Wall Street bailout. I mean, that’s why, in the first place, you end up with the people who were advising President Obama, which was basically off of a list that city group made for him. And it was all Wall Street. When the recession was happening, every single person advising Obama about what to do with the economy was from Wall Street.
Saikat Chakrabarti:
There was nobody in there from industry, no one from labor, no one from all the 90% of the economy that was about to go under. Wall Street is not the economy, right? But that’s what the system of money and politics has created. Those are the people in the room, those are the people who are creating pressure on you and those are people that you end up, as a political leader, responding to first. And therefore you end up bailing out the banks and ignoring the rest of the work. Or at least making the bailout of the banks the number one priority, and then failing to get the rest of the work done.
Saikat Chakrabarti:
It’s a deep problem, but such a chicken and egg because how do you get rid of the money and politics without first selecting officials who don’t rely on that money and politics? Right? That ultimately was the original goal and drive of Justice Democrats, which is a group that I helped start and we elected Alexandria Ocasio-Cortez and there’s now 10 Justice Democrats in Congress.
Saikat Chakrabarti:
And I think that work is incredibly important to get us to a more sustainable solution. A lot of the stuff I’m talking about here are things that Biden can do right now to get us out of the current economic crisis. But alongside that, we need to actually change the political systems that have enabled us to get to this level of stagnation that we currently have.
Rob Johnson:
Yeah. I mean along with active tactics like voter suppression there is a sense in which the despondency that arises from feeling not represented by your representative, because they’ve turned their head towards money also encourages, which you might call apathy or distancing or lower turnout and I think reversing that is very important.
Rob Johnson:
When I’ve talked to people in this last couple of days of preparation who’ve read your memos and so forth. The people who I used as my test platform, who were conservatives were, I mean, the people who said, “Oh, that’s kind of romantic et cetera, et cetera. The national development council and the central bank and stuff, that’s all part of the corrupt system.”
Rob Johnson:
And so some of the ones that adhere to the pure free market system, which I think is a miss-specification of social needs, are doing so because they don’t trust government institutions however nobly envisioned to be able to execute on behalf of the people.
Rob Johnson:
There was a man named Stuart Zechman, who’s a musician. During the Obama years around to 2011, some Obama official came out on political unnamed, maintained anonymity and said, you can’t do the things like Franklin Roosevelt used to do because nobody believes in government and Zechman went to the Gallup Polls and he came onto a podcast, which I’m happy to share with you and said, “The Gallup Polls say the reason people on the progressive side don’t trust the government is they think it’s captured.
Rob Johnson:
So what you might call uncapturing the government, not only changes the policies, but changes the enthusiasm and perhaps turnout in participation and strengthens STEMocracy at the same time.” I tend to think where you went is the right design for what society needs. And then we have to, what should I call it, re-engender the trust and the enthusiasm. And the only way that’ll be done is if people realize that they’re better off because of the kind of things that you’ve requested.
Rob Johnson:
Let me shift focus here as we’re coming down the stretch. You talked about the task a little bit, then you talked a little bit about central banking, but the instrumentalities, what kind of institutions, innovative or modified institutions, do you think we need to rely on to bring up out this development transformation of America?
Saikat Chakrabarti:
Yeah. In the memo, we kind of have four major pillars, major instrumentalities that we talk about. One is this idea of a national development council which is something that Joe Biden can set up within the executive branch. The idea would be if he’d be staffed with… This would be kind of a cross agency group whose job would be to create the national economic strategy based off of Build Back Better, because Build Back Better is a good campaign plan, but not an actual with not development plan that can be executed.
Saikat Chakrabarti:
So their job would be to create that plan and that would be… In the memo we say perhaps it’s the Secretary of Commerce, Secretary of Labor, the Treasury Secretary and maybe some members from Congress, like the Speaker and Majority Leader are part of this kind of council to put this thing together. And there would be a council that, if it hasn’t been from a Congress that affords democratically accountable well.
Saikat Chakrabarti:
And so that plan that they developed will of form a blue print for the Federal Reserve to use. And one of the things we say in the memo is we should spread the Fed. This is what I was referring to earlier as essentially taking the current Federal Reserve system where mostly it’s become centralized in New York and instead allowing the other 12 regional federal development banks to be empowered to give out loans and develop their local regions.
Saikat Chakrabarti:
So you have the Dallas Fed focused on the Southwest again, instead of New York trying to figure out what businesses should be getting money in Dallas, Texas or in Phoenix, Arizona. So the Fed would start mobilizing this plan by giving money out to businesses and to local development projects based off of the Build Back Better plan. At the same time another financing arm for this whole plan would be a national development bank that we propose creating within the treasury using money that’s already allocated to the treasury.
Saikat Chakrabarti:
There’s already the FFB, which is I believe is the Federal Financing Bank within the treasury that does some of our projects, but these… We kind of imagined the national development bank would take on some of the more public intensive projects. Things like building the charging network, which could be a large infrastructure project that could be financed through the National Development Bank.
Saikat Chakrabarti:
And the final piece, which I didn’t even talk about in this interview, but I think is a major component of this is the idea of creating digital tax payer wallets. The treasury actually already has the ability for us to create digital taxpayer walls. They have a digital platform where anyone can go and create a treasury account.
Saikat Chakrabarti:
And we’re basically proposing creating one for everyone in America to solve this huge problem of bringing millions of people who currently are unbanked so they have no way to currently cash checks or do any of the normal banking operations is why loan sharks have this massive industry in America. Giving them all a federal bank account, right?
Saikat Chakrabarti:
But the other piece to solve is whenever we’ve got to do things like give people a $600 stimulus check or keep people afloat while a pandemic is happening, we have a direct way to give people money that isn’t a huge complicated mess that we currently have and we’d be able to do it immediately.
Saikat Chakrabarti:
It also would be a way, and this gets a little bit more in the weeds, for us to combat inflationary pressure more directly. Instead of just lowering or decreasing interest rates on banks and hoping those interest rates filter down to people, we could increase interest rates on digital taxpayer wallets and incentivize people to save and that would combat any inflationary pressure from the larger industrial project that we’re taking on.
Saikat Chakrabarti:
I think those are sort of the four main ideas. The bulk of the financing and this whole thing is coming out of the Fed, which is what I spend a lot of time talking about that. But the National Development Council, you can think of it as the plan making arm. The National Development Bank is the government’s banking arm. The Fed is the more private banking arm and then the digital taxpayer wallets is straight to the people direct money piece of it.
Rob Johnson:
I think that how you say that is interesting. I imagine as I was listening to a banking lobby resisting something so direct because it sort of cuts out all their exorbitant fees. Every time you go to an ATM and you get 100 bucks and you pay $2 fee, that’s more than the interest to earn for a whole year on that $100. And so that would be a much more, how would I say, potentially efficient for the consumer, but I would imagine the rent seekers would descend upon that pretty aggressively.
Saikat Chakrabarti:
Yeah. They’re [crosstalk 00:56:06]
Rob Johnson:
But I think it’s a beautiful idea. I like the idea-
Saikat Chakrabarti:
There is-
Rob Johnson:
… and I think-
Saikat Chakrabarti:
Sorry, go ahead.
Rob Johnson:
Go ahead.
Saikat Chakrabarti:
There’s two kinds of entrenched industries that sometimes oppose progress in our country and I think the fossil fuel companies versus the banks is a good example. There’s some industries that actually are providing something. Fossil fuel companies, whatever you think of them they are building the energy systems that we currently rely on.
Saikat Chakrabarti:
I think the way you approach them because there’s tons of people employed in fossil fuel companies is you actually have to figure out a way to transition them out and give those employees jobs and create the new energy future before you get rid of fossil fuel companies. You can’t just get rid of all the fossil fuel companies and hope that the electric economy gets built. You got to do that proactively.
Saikat Chakrabarti:
But then there’s this other piece, which I think is almost entirely just predatory and just sucks money out of our economy and that’s the rent seekers as you’re calling them. That’s the people discharging money, they transfer money, the loan sharks, the health insurance companies. They’re not adding any value to the economy. They’re just taking what everyone else is making. And I have no problem putting those people out of business.
Rob Johnson:
Yeah. That’s, how would I say, eliminating local monopolies and predators. It reminded me growing up in Detroit, my dad worked downtown. He had an urban medical practice and whenever I went into a grocery store with him downtown to pick up something on the way home, I was always in shock. The prices were about 30% higher than they were in the suburbs.
Saikat Chakrabarti:
Right.
Rob Johnson:
And because people didn’t have access to transportation in the urban areas, they were captured and without the mobility there wasn’t as much competition. I think in the payday lending world it becomes more ominous than that by a considerable amount. I like the notion that you brought forward with the digital wallets. As we’re coming down, what is it that you think the consequences are?
Rob Johnson:
You’ve talked about institutions transforming industry, et cetera. Do you feel that we can in a four or six year timeframe regain a lot of confidence and momentum and what I will call heal the despondency that has gripped our society?
Saikat Chakrabarti:
I don’t think we can fully solve all the major problems that we’ve created for ourselves in four years. I don’t think we can. It’s quite a bit, I mean, especially when you bring in something like climate change. It’ll be a lot of work to completely change the energy systems that our entire economy is dependent on right now in four years.
Saikat Chakrabarti:
A lot of the goal in the first four years, and especially in the first two years of Biden’s presidency is going to be to show that this stuff can work. You said that people have lost faith in government. Well, they’ve lost faith in government to some extent because of the corruption. But to a larger extent I’d say it’s because they haven’t actually seen the government work and create and build a new stuff.
Saikat Chakrabarti:
My generation, our experience with government has been the ‘08 recession, going into the Iraq war, right? Just kind of misstep after misstep and we didn’t have an Apollo program, we didn’t have a new deal, we didn’t have a mobilization to defeat the Nazis. We never saw the other side of this and what could be possible with this power.
Saikat Chakrabarti:
And so if Biden can, in his first two years, enact the parts of his Build Back Better program that create the most amount of highways jobs, and as many of the places as possible, that’s going to be very key. He can’t just make a bunch of highways jobs in New York city and San Francisco and in Chicago. He’s got to do something.
Saikat Chakrabarti:
I love that he’s building retrofitting program because every congressional district has a building to create highways jobs, retrofitting buildings, insulating them, putting solar panels on in every district. And if he can create millions of jobs that way, I think he can actually show that we’re capable of doing something. And I think Democrats would then get rewarded with a political majority in the midterm.
Saikat Chakrabarti:
There no president other than FDR in 1934 and Bush, right after 9/11 has won both the House and Senate after their first midterm election. And I think the way you do that is the FDR way is you show. FDR didn’t do the whole new deal in two years. But he got enough at the start that people knew he was acting, he was doing and he was having some success and so it was worth giving them a shot to keep it going.
Rob Johnson:
Yeah. Well, I remember years ago there was a young woman from China that worked with me at INET and her father worked in a cell phone company in Shenzhen and he went to the Consumer Electronics Las Vegas meeting, I think it’s called CES and was coming to New York. I’d met him several times.
Rob Johnson:
He asked if he could meet with me. So he took me out to lunch and the purpose of the meeting was that he thought that Joe Biden had underestimated the Chinese because he had gone to Shenzhen and spoke at a meeting where he said, “The really great phones are all going to be made by Apple in the United States, but that’s going to help your society, et cetera.”
Rob Johnson:
And his company had created a phone that had 3D graphics, so you could watch a movie in 3D on the phone. And this gentleman from China asked me to go give it to Joe Biden, to say, “We never would have been inspired to create that phone if you hadn’t told us we couldn’t.”
Rob Johnson:
So what I was thinking about as I was reading your report and you come down at the end and you talk about the transformation and the change in the bicycle, is that I’m tempted personally to go back to Joe Biden and buy him a Peloton cutting edge training bicycle if he executes your report. I think, how would I say, he inspired the Chinese to make a better phone. If he makes a better country, I’ll get him a better bike.
Saikat Chakrabarti:
I’ll join in with you on that.
Rob Johnson:
Yeah. That’d be the cheapest incentive you and I ever created. We’d be accused of being lobbyists, but that’s lobbyists for the public good. I’ll stand with that. Anyway, thank you very much. Any final thoughts? Anything you want to impart before we adjourn?
Saikat Chakrabarti:
No. I mean the only thing I’d say is it’s easy, I think, especially after the last four years to feel pessimistic and to feel like everything is lost, but I really do think that we could have the brightest days ahead of us if we choose to do it and it’s just…
Saikat Chakrabarti:
This whole interview we’ve gone into Fed policy and all this complicated stuff, but at the end of the day, the only thing that it always boils down to is do our political leaders and us, because we’re the ones who are going to have to pressure them to find their courage and find their bravery. Do we have what it takes to just take a step forward and do what needs to be done?
Rob Johnson:
Yes. Well, I understand from our past conversations that you recently became a father.
Saikat Chakrabarti:
That’s right. Yeah.
Rob Johnson:
So what I would offer to you as a father of four children is that we don’t have the option to be despondent. We got to pass the baton to them. And despondency is a capitulation to failing in that mission.
Rob Johnson:
So, I think you’re right in concluding we can’t. There is no basis for despondency and with the kind of vision that you’ve created and with the kind of energy you’ve brought to bear and the encouragement of the administration, you’re setting an excellent example for the way I hope we all can, how do we say, rise to the challenge and behave.
Rob Johnson:
Thanks for being with me. Let’s turn the corner, get into next year, see how it’s playing out. Maybe at that point we could join back together for another session and give it, how would I say, 100 A review, something like that.
Saikat Chakrabarti:
That sounds excellent. Thanks for having me on, Rob.
Rob Johnson:
Great. Thank you. Bye-Bye.
