Politicizing a Politicized Fed and the Value of Leisure
Summary
Federal Reserve Politics: The podcast discusses the ongoing political tensions involving Trump and the Federal Reserve, particularly focusing on the allegations against Lisa Cook and the implications for Fed independence.
Interest Rate Speculation: There is speculation about whether the Federal Reserve will cut interest rates in the upcoming meeting, with market expectations already pricing in a rate cut due to economic conditions.
Economic Indicators: The discussion highlights concerns about the current state of the economy, including weak job creation and declining labor force participation, which may influence Fed policy decisions.
Market Reactions: The podcast notes the paradoxical market behavior where bad economic news is perceived as good news because it increases the likelihood of Fed intervention and rate cuts.
Employment Trends: There is a focus on the challenges faced by recent college graduates in finding employment, which could have long-term economic and social implications.
GDP and Leisure: The conversation touches on the limitations of GDP as a measure of economic well-being, emphasizing that leisure and non-market activities contribute to quality of life but are not captured in GDP figures.
Conspiracy Theories: The podcast briefly explores theories suggesting a coordinated effort to increase workforce participation for economic gain, though it remains speculative without concrete evidence.
Economic Philosophy: The discussion reinforces the Austrian economic perspective that individual preferences and subjective well-being are central, rather than solely focusing on maximizing GDP.
Transcript
[Music] Welcome back to the Power and Market podcast. I'm Ryan McMin, executive editor at the Mises Institute, and this is our current event podcast where we're talking about whatever went on this week. And uh to join me on this today, I've got Connor O'Keefe uh one of our contributing editors and I've also got Jonathan Newman who is uh one of our resident scholars here, our Henry Hlet research fellow here at the Mises Institute. And we're going to talk about a few different issues today. Uh and also I should note that we're recording this on Thursday. So, the big jobs report that's coming out on Friday, we're not going to be able to talk about that today, but we'll talk a little bit about the job situation and speculate a little bit about what's going on there. So, if you're listening to this on Friday or Saturday, um where we're just going to speculate about uh the the August jobs numbers, but there's plenty to talk about in terms of the Fed and what's going on there. And I think really just to start off, we can start talking about Trump's ongoing political odyssey with uh the board of governors at the Federal Reserve. We've talked about this quite a bit in recent weeks, but there's always news, something happening. You always feel like, okay, is this going anywhere? Is this going to keep escalating? It seems that it is. Uh and so the news for this week, I'll just uh I think I'll just use the Wall Street Journal here uh to talk about this. So, uh, Lisa Cook, a member of the board of governors, accused of mortgage fraud, basically fabricating information on mortgage applications so that she can get a lower interest rate uh, by claiming that everything she's buying is a primary residence and because then you get a lower interest rate on that than if you buy it as an investment property. That's just the basic info there. And if you lie on the application, you get a lower uh, interest rate. And so Bill Py, uh, the FHFA guy, um, one of Trump's appointees, he's been on the war path against Lisa Cook and it and it seems maybe it's part of a a larger plan to get Cook off the board of governor so Trump can appoint his own person. Now, I kind of thought maybe this would just fizzle out, but it has not. And so there's new information on this today from the Wall Street Journal. And that the uh the headline here is DOJ opens criminal investigation into Fed's cook issues subpoenas. So now this is like a full-blown Justice Department investigation. Now, uh so I'll just read you a couple paragraphs from this. The investigation comes on the heels of two criminal referrals from Bill Py, the Trump appointed director of the Federal Housing Finance Agency, who has publicly alleged that Cook engaged in mortgage fraud. President Trump has cited those allegations in his bid to fire Cook and rest control of a central bank that has historically remained independent. Now, Jonathan, we'll cover that sentence. We won't let that go unanswered. U but uh there's a little bit more air I want to note. Uh Cook filed a lawsuit last month alleging that Trump's move to fire her was unlawful. She argued that Trump concocted a basis for her firing to vacate a seat on the board that he can fill to quote forward his agenda to undermine the independence of the Federal Reserve unquote. Now that's probably kind of true, right? I think that Trump was motivated to come up with some reason to fire Cook and he did. He did fire Cook in the sense that he said you're fired. The question is because he can fire a member of the board of governors for cause if they're found to have been engaged in some sort of u it's not even necessarily illegal activity but some sort of untoward activity. And so he said you're fired. The question is is she really fired? Does he have the power to fire? So there's a lawsuit now. He doesn't have the the right to fire. But yeah, her attorney's probably right. Yeah, he he came up with this as a way to get rid of her. He he wouldn't have done this obviously if the person who had committed this mortgage fraud had been an ally of Trump, right? We know this is how the system works, right? You can break the law with impunity as long as the people in power like you. Uh but having so many laws and so many regulations, if you break some of them, then that gives a way for the people in power to to come after you. And that of course can be used against regular people like you and me. Also, usually we don't even know we're breaking the law. uh and we break some federal regulation we don't even know about, but if someone in government doesn't like us, they can then come after us. And so this is sort of that type of situation. I don't want to act like I I'm a Lisa Cook fan or something like that. Like I'm I'm sure she's awful just like most members of the board of governors, but the question is, right, is is Trump um like doing anything like honest here? Is she any worse than anybody else that Trump might appoint? Does it matter? That sort of thing. So, that's the situation where we are with Lisa Trump or with Lisa Cook. She's she is according to Trump fired. The question is, is she can she attend this month's FOMC meeting after having been told that she's tired or fired? Uh, we'll find out. I guess uh probably the court will rule on whether she's fired before the FOMC meeting and then uh we'll know. she is actually fired, then that gives Trump a chance to bring in and appoint a new person who will be more dovish on policy, right? Presumably will help force down interest rates more. So before I say anything more, Jonathan, let me just get your your reading on this, right? I mean, I know you have opinions about Fed independence. We have this line here. This is this is Trump intervening to uh rest control of a central bank that has historically remained independent quote unquote. So yeah, just I mean kind of just give us the rundown of what you think about this. >> Well, one quick thing that I'll say is that uh in terms of like what what will happen at the next FOMC meeting, I did read today that the the Fed issued a statement saying that they would abide by whatever courts tell them to do. So, you're right. There there's going to be some ruling by a judge about whether um Trump's firing of Cook is is legal. Uh whether whether she's still on the board or not, and and the Fed will probably go along with what the what the court says. But but you're you're absolutely right to to bring up this whole independence question. Uh I watched I watched uh some of the hearing uh today uh of the Trump has nominated Steven Myin I think is how you pronounce it. Uh and so he he was before Senate committee uh and of course like they're they're saying all of these things about how it's so important for the Fed to remain independent and we all think that Fed independence is this great thing that needs to be protected. And of course, all the Democrats who are anti-Trump, they were they were all up in arms. Elizabeth Warren especially was saying like this is this is a terrible incursion um that you know the the president the executive branch is is intervening into the affairs of the Federal Reserve and and like of she didn't say this explicitly but like the implication is that like this is a brand new thing that has never happened before. Uh while while it is true that uh a president has I think it's true that the president has not fired a a member of the board of governors before the the executive branch influence on the uh Federal Reserve has has been around since the existence of the Federal Reserve. And this is something that I presented on at a recent uh conference here at the Mises Institute. They all point to this uh event in uh the 1950s, early 1950s saying that the Fed finally established its independence. Uh but I pointed out a bunch of plot holes in that story. Uh but even even after the fact like you can see that the executive branch uh has a lot of control over who is at the Fed and also exercises some you know outside under the radar sorts of influence on on what the Fed does. Like one of the one of the best uh examples or uh pieces of evidence for this is the so-called revolving door between uh the executive branch and uh positions at the Fed. So for example, Steven Myron, who is Trump's nominee, is the chair of the Council of Economic Adviserss for Trump. So he he's one of Trump's adviserss. And like the way that you would hear these politicians talk about is like this is some brand new thing that is has never happened before. But of but of course that's that's totally false. So like Janet Yellen was uh chair of the council of economic adviserss and after she was Fed chair she became secretary of the treasury. Ben Berneni was on the CEA. So was Alan Greenspan. Uh uh you look at um uh Paul Vulkar even he was uh he wasn't on the CE but he was in the Treasury. So all all of these guys were in the Treasury or or chairs of the CE. So in political positions as a part of the executive branch uh before uh or after they were uh fed chairs. So it just shows that there's this revolving door. So the president is is wheeling in people who he thinks that will help him accomplish his his policy goals will will help the help the government be able to sell more debt, increase the money supply, push down interest rates, help out with elections, that sort of thing. So this this is not a new thing. A lot of people are talking about this recent drama as if like it's some brand new thing that we should all be scared about. But what we have and what we've always had is a Federal Reserve that is independent in like name alone. It's just nominally independent. They they use all this independence rhetoric but truly it is dependent. They they are working hand and glove. They are working together. Uh especially the Treasury and the Federal Reserve. I have a I here's a question Jonathan I don't know if you know the answer to this it's a sort of trivia that uh maybe you might know has right all these people you've listed off like Vulkar Bernani Yellen right they're all already part of the Washington machine as they go in and out of the Fed right they're in Washington they're part of that world has anyone ever come up through the ranks at the Fed and by that I mean was there ever a Fed chairman who had been say the president of the Kansas city Federal Reserve and had worked his way up through one of the local banks or do they always come from like the Washington New York axis instead of like being like a Fed work your way up guy? I can't think of anybody. >> Yeah, I I don't know. I'd have to I'd have to do some research. Like nobody nobody comes to mind. I mean there it might it might be that earlier on in their employment history they had a position at the Fed somewhere somewhere at like a low-level position uh low lower than board of governors lower than president of a of a bank um a district bank uh but like immediately before and after their tenure as Fed chair all all of the ones in recent history uh were either at the Treasury or the on the council the chair of the council of economic adviserss Now, what I mean, what do you think his guy uh Connor? I mean, we were talking about, right, how I guess he was trying to give the impression that he was going to be sort of a hawkish guy, but that was just a scop. I don't know what what you say. >> Specifically, he was um advocating against rate cuts back before the election when it was going to be potentially beneficial for Biden or Harris. I don't remember who was running. And I don't remember the specific reasoning, but the Democrats were trying to they were trying to paint him in that test uh that hearing that he's just this naked partisan and like that certainly it he would have probably argued the same thing if he was a naked partisan. So yeah, he he may be I similarly watched I watched the whole thing and um it it made me pretty optimistic. A whole other angle to all this that we've been talking about on some of the previous episodes and I've talked uh with you about Jonathan is just the fact that this is really exposing the the nature of the Fed. And like you're saying, like that's a really important point for people to understand. This has always been the case. The Fed has never been this like amazing independent um above politics entity. But what uh was notable to me in the hearing was like of course the Democrats and the media behind them have been trying to paint what Trump is doing in this specific nominee as like this new um divergence from like the independent Fed. But what I was also pleased to see was how much the Republicans were trying to uh paint the Fed as it exists right now as this politicized entity. And it kind of it sort of made me uh want to root against Trump in terms of removing Cook. I think that like she's now become this figure that's like demonized by MAGA. And if she remains there, then you'll have, you know, the the person for them to point to and be like, look at the Democrats have completely politicized the Fed. And then if Trump can get one guy in there, then the Democrats and the media will have their person to demonize. And so, yeah, like I I don't think we're like suddenly going to have this great awakening in the country that, you know, everybody will understand that going back to the beginning of the Fed, it has not been this independent entity. But there's potential that a lot more people will think that the Fed now and going forward is not independent, that it is politicized, and therefore they'll have a much more realistic view of the Fed, which makes it easier for us to then advocate against it and talk about how damaging it is for uh for Americans. Well, it's fairly high stakes like even in the short term, right? Because it seems that uh Trump really really wants a rate cut uh for a couple of different reasons, right? He I think he's going to want it just because he thinks it'll stimulate the economy. And you can see that the jobs data, which we'll discuss in a minute, isn't looking so swell. And then the other part of it is they've got boy, I think, and I could be wrong with this, but I think I saw that they've got to refinance $10 trillion here in the next 18 months in terms of rolling over federal debt. And boy, >> that's going to be like shorter term debt. And boy, do they need lower interest rates then in in the shorter term. And they're going to need a very quote unquote cooperative Fed. Uh this is a place, of course, where the Fed has never been independent. The Fed has always happily helped the federal government to finance its debt. And so they're going to need a very cooperative Fed in order to help uh deal with all this refinancing of new federal debt. So that's another reason you need low interest rates. you need low interest rates to get down the cost of your new debt refinance. And you also just want like stimulus. And they seem to think that, okay, if we also reduce short-term rates, that'll somehow bring down the mortgage rate, we can maybe like look at that a little bit, too. Although we've we've covered that. That's just not necessarily a given that reducing federal funds rate reduces a 30-year mortgage rate. Um, but so there's all these political issues here, right? Trump wants to claim he's going to bring down the mortgage rate, which would make like home buyers happy. He wants to claim that he's stimulating the economy by bringing down interest rates. He's he forced the Fed to finally reduce interest rates after they were mean people who wouldn't reduce the interest rate more. And and then at the same time finally make it possible to uh finance more debt because we're looking at at least $ 1.9 trillion deficit for this fiscal year which ends at the end of this month. Uh so it's a huge deficit. I mean this president is just he loves his runaway fiscal spending. So you got all of that going on and and the the next big meeting is here in midepptember. So I suppose if you can get Cook out and get your guy in, you're more guaranteed to have an interest rate cut. Uh so I guess this is the part where we just speculate. Are they are they going to cut? Let's say let's say Cook is still in there um mid uh midepptember. Jonathan, are they going to cut the rate anyway with uh with the job data looking like it is and and just everything else we know or or is POW going to stay the course just a little bit longer? What do you think? >> Yeah, I I think they're going to cut at the next meeting. That's mainly informed by the the Fed really tries to avoid surprises. they they really try to avoid surprising the market and uh based on what I see in uh in reporting on this is that most uh like financial institutions have already priced in a cut uh and so like the and they calculate probabilities on this and it's like north of 90%. So like, so like the market is pricing in like a 90 over a 90% chance of a cut. And this was actually before all of the drama with Cook and the and and Trump trying to fire her and get in a new person. So, like the the way that I think about this is I I think like one thing that Trump is the master of is that he is the master of the media cycle and staying at the center of attention and uh playing the media against itself. And so, like one way that I'm thinking about this, so like a a cut was already going to happen. So, like let's suppose that a cut was going to happen no matter if Cook is on the board or not. Uh and so Trump sees it's very likely that they're going to cut. And so this if Trump is able to fire Cook and bring in his own guy, uh then that allows Trump to sort of like take this credit for see with my executive authority. I'm such a great president. I'm I'm able to influence even the the Federal Reserve and I can I've finally got the even the Federal Reserve to do what I wanted it to do. So, it's I think I this is more of a this is more of a a Trump is is will be able to take credit for something that was going to happen anyway. At least that's how I'm interpreting the news cycle with all this cook business. >> I I think it also goes the other way too. I was talking to th about this uh previous week that if well and of course him getting his guys in there would change this but so far if the Fed like the Fed not cutting too also sort of feeds into this narrative that they're purposely trying to do the opposite of whatever Trump does. If it feels like there's no real way for them to escape and I think he did this very purposely to your point but there's no real way to escape the the narrative that he's influencing monetary policy kind of regardless of whether he gets people in there or not. Yeah. Kind of the thing is the game seems to be well if the president comes in and demands a rate cut. The Fed in order to convince everyone that it's independent has to not do a rate cut even if they were inclined to do a rate cut because then it makes it look like they're just doing what Trump told them to do. It's it's like a child, right? It's like a small child. Well, they just do the opposite of whatever they whatever you tell the child to do just to show you who's in charge. And there's there's this weird relationship between the president and and the Fed in that respect as well. Uh but Jonathan, I think you're right. I think they probably will cut. I don't think that they should. um after printing five or six trillion dollars for the last 5 years, after destroying 25% of the purchasing power of the dollar since 2019, massive inflation with asset price inflation just out of control. Not CPI inflation of time. Of course, that's still way above their target, like 2.7 2.8%. Um that's a big percentage above the target. But just looking at asset price inflation, home prices, stocks just running away. Uh other assets too if you want to count gold as an asset. I mean all of these numbers are going up. There's so much liquidity still slloshing around in there. Do I think they need to cut the interest rate more? No, I don't think they need to. Uh or should. Of course, I mean my position, Serno's position, right? I'm talking about Joe Serno, our academic VP at the Mises Institute, our head economist. He's just like, they just shouldn't do anything. They should just stop buying assets, which is a key part of their process of lowering the interest rate. They should just stop just stop doing that. And so that's our position. We don't think they should pick an interest rate. We just think they should stop. Uh at which point the interest rate is almost guaranteed to go up because the only reason it's so low is because they keep flooding the market with liquidity. Uh and also however what they're going to argue is well we have to cut the rate because unemployment uh is going to go up because because there's weakness in employment and nobody has a gun to your head even if employment's soft saying you have to then lower the rate because all that's going to do is cause stagflation then this is just going to it's just going to ensure that price inflation continues and it's not going to really allow for any undoing of that malinvestment that has caused all these bubbles we're now uh living in. Um now, of course, that's a that's another more complex discussion we've had other places and can have again in the future. But the only way really to get this economy to fix itself is to allow some sort of recession, some sort of serious weakness. Some some people are going to have to lose their jobs because so much of the economy is built on inflationary garbage that was created after 2019 and and in many cases before also. Uh but they don't want to do any of that. Just get me five minutes down the road. uh to the next crisis and that's their their policy. Uh just get me to 2026 and get my party reelected. That's that's all I care about. And so that seems to be where we are right now. No regard whatsoever for the larger implications of the economy. But yeah, they're going to say, "Oh, uh employment is soft." And it is soft. Uh we saw that o in the July data where the Bureau of Labor Statistics massively revised down employment numbers because the later numbers are more accurate. They rush in this initial estimate uh and then as they get more data in they revise the numbers and a lot of the revised numbers uh have shown that the job situation is actually considerably worse than initially thought. Now that's the charitable interpretation. You could interpret that the reason they create better job estimates first is because they're trying to fool the public because the public only pays attention to the initial jobs release and doesn't pay attention to the revisions. That's possible too. But the point is is that they've been revised down and that that probably is the more accurate number. So the job situation's been pretty pretty weak. Um and that there's basically for the last three months been almost no job creation at average about 30,000 a month which is just like nothing numbers. And now today we got new Jolts data and the the story there that I saw tons of headlines on and I'll create one of our own for power and market along these lines is that look uh the number of job openings is now less than the number of unemployed persons and this is something that hasn't happened uh in the in terms of trending upward since 2019 2019 and this was also true throughout much of the original COVID period right 2020 2021 there were more unemployed persons than there were job openings. And then after all that money printing, there were huge amounts of job openings. You had this huge bubble in jobs. There's a labor shortage, quote unquote. And that's all gone now. Like everything is reverted to like a more normal situation. And you can now see and I think we can expect then, especially if we're looking at this with more unemployed people than job openings, we can also look at a decline in labor force participation. There's less of that. And also if you go in and you add in the numbers of people who are only marginally connected to the workforce that are these are people who call who say that they're not in the workforce but they would like a job now if they could get one. These are the discouraged workers and this is covered if you follow these things right this is including the U6 unemployment number that's a higher unemployment number because it includes these people who were looking for jobs would like a job but they just they they don't bother anymore because they just don't think they'll ever get a job again. So there's actually about 1.8 million of those people on top of the seven or so million people who are now unemployed and then you only have So you got 8 million of those and you only got about 7 million job openings. So where do you go from here? I think it's pretty clear then that you're going to start to see an increase in the unemployment rate because you're going to have people continuing to look for work and they're not going to be able to find it. So what do I don't know what the job date is going to say tomorrow. Uh, I'll be interested to see what the revisions are, but it's not going to be strong, right? Unless, I don't know, maybe they'll cook the numbers and I'm going to wake up tomorrow, there's be a headline, 250,000 new jobs created in uh, August. I mean, there is no anecdotal data to support that at all. Right? Anytime you look at the financial news, it's just huge new accounts of layoffs every day. And then looking at the unemployment rate for new college grads, that's no higher than the than like the median all uh worker rate, like you're now worse off as a recent college grad than just workers in general, including people with no education. So those people can't find jobs. Social media is filled with people who can't find work. And they're, well, that's just anecdotal. Yeah. Well, a lot of anecdotes taken together that adds up to stat to statistical data. I mean, just if I I'm just not seeing where there's room for much optimism about the employment situation. So, you add all that together and I think that translates into a rate cut if for nothing other than just optics uh because they've got to look like they're doing something. Now, I don't know. Do you guys have like uh opinions about the state of the economy overall? I mean, what are you hearing out there and and what are you seeing in the data? like Jonathan, how would you rate the economic situation and is does should the Fed be should be the the Fed doing is doing something in order to to somehow fix the economy even though we know that doesn't work but in the mainstream thinking right is are we at the point where they got to do something? >> Yeah, I I think you're right. Like I've I've seen a lot of these like cracks in the economy, cracks in the in the labor market, like what you're talking about. But the thing is like we've seen this for the past few years. And so like like you keep thinking like when is all of this going to come crashing down? Now what's really interesting, one thing that I was thinking about uh when you were talking about like what if tomorrow we see this like spectacular report from the is it the BLS reporting tomorrow the jobs numbers? So like what if we did see like some spectacular report? One thing I was thinking about is like that would act that would cause the stock market to crash. And the reason why is is because with with the bad reports where where we see unemployment rate higher than expected uh like the labor market is not as good as as what was expected, you actually see increases in stock prices. And what's interesting is like the reason why is because when they see that they see the Fed has more justification to cut. So like there like bad news is interpreted as good news. It's like oh bad news means that the Fed is that much closer to cutting interest rates which means more liquidity which means higher stock prices and so I'm going to go ahead and price in what I think the Fed is is going to do in the future. So like we're in this like sort of like wacko circus world where bad news is good news. And we've been we've been in this for a long time, which which I think just goes to show that the uh like equity markets that we have uh are they're not they're not based on fundamentals. It's not like we have, you know, like sound solid uh growth in production, like good solid sustainable growth. if all of the increases in in equity prices that we're seeing are are mostly or majorly based on people expecting more money being pumped into the system. >> Yeah, Connor, I mean, what's what's your reading on on the general state of things? >> I I guess similar with you guys. I don't necessarily dig into the economic data uh as much as certainly you do, Ryan. I'm a lot more interested in kind of the political response to And so an angle here that um I think it's interesting that won't affect tomorrow is if you remember last time Trump fired the commissioner of the BLS over the jobs numbers um he he then put forward this heritage economist I think who seems to be just line with him economically. He's not in yet. There's like some longtime staffer that's the acting commissioner. But it's there's a chance that the next for the next report after tomorrow is like they'll have this guy in. There's a chance that this might be um well there's a lot of things going on. There is a chance that if that guy gets in that every BLS report from then on is then kind of portrayed by like the more mainstream establishment media as this like politicized report that we uh we can't trust. Um which would be interesting. But then also like from Trump's standpoint like he has this kind of weird idea that like you know he obviously with the BLS stuff he denied the very idea that the jobs market might be weak. he of course is presenting the American economy as this really strong um you know it's the the golden age he's heralding in but then at the same time the a weak jobs market is the thing that might actually get him the rate cut that he's been really pushing for. So it'll be kind of interesting to watch how he responds to whatever happens tomorrow like if he kind of if it's somewhat negative um or just not really positive he if he pushes back against that. That would be kind of interesting given that that's probably the best uh chance for for the the Fed to actually finally come around and do what he's been, you know, saying over and over and over again they have to do. Well, it's been suggested by, you know, 4D chess playing people that if Trump really wants a rate cut, he'll ensure that the jobs numbers are terrible tomorrow and then the Fed will have to cut, you know, like massive job losses in the BLS and then the Fed comes in September 15th or uh midmon, they got to cut. Oh, look, jobs terrible. And then you revise the numbers way better uh in the the the uh the subsequent month. Oh, sorry. we were wrong. Job situation wasn't all that bad, but you already cut the rate. So, I guess, you know, no harm, no foul. Uh I I I I'm surprised that Trump hasn't really maybe kind of hinted at something like that. Instead, he seemed to be mad that the numbers were negative, even though that served what he wanted from the Fed. Bad numbers help him get what he wants from the Fed. But, I struggle to see him though like swallowing that and going along with it or because he has to have something easy to blame. It's not very obvious how he can just blame Biden or the Democrats. I mean, maybe he'd find a way, you know, I'm sure he'd come up with something and maybe we'll see tomorrow, but that's an interesting dynamic that I'm kind of watching here. >> Yeah, I it could be his ego will just prevent him from just manufacturing a terrible jobs number uh in order to get his rate cut. Uh although after the fact, he come back and then say, "Oh, look, jobs numbers are great. Now, after I got the rate cut that I demanded, after Jerome Powell finally did what I said, see, there there are many ways to for Trump to win this. Uh we'll just see uh how how he does it. Um but you're right, Jonathan, the guy's like a master of of the the news cycle. So, >> uh I I don't way to do it. >> Sorry. Well, one thing I forgot to mention is uh you were talking about like if you if you look under the hood of the the jobs numbers, like you see all of these problems. Um I I can't remember if you mentioned it, but one thing like one very important trend that people are just now starting to recognize is that recent college graduates are are really having trouble finding jobs. Like the there's this this upward trend in the unemployment rate uh for recent college graduates and like that that's very concerning that that used to be, you know, the standard line like how do you get a job? How do you get a good well-paying job? you got to go to college, get the degree, then you're you're on your way, you know, uh in your career. But it's it's looking like that's not the formula anymore. It's looking like uh there's um it's increasingly difficult for recent college graduates uh to get a job. And that's that's that's just one more thing that you could see like if you just look under the hood. Uh very concerning if you're if you're concerned about the future of the economy. It'd be interesting if if that continued for a while if that could uh potentially pop the college bubble as well if it's like literally not worth it from a monetary standpoint to go cuz like I believe the data was showing that at least for men I think there was a gendered difference but I think that mainly had to do with the fact that uh healthcare is really stable and more women are working in healthcare but I think specifically for college graduate men people men at the same age that only had a high school diploma were making more money than uh men with a bachelors. And it's like that if that goes on for a few months, like yeah, maybe we can get past that. But if you're going on for a longer period of time, then like it's obviously just a bad financial decision to go to college if you know if you want to make money, if that's your if that's your only focus. >> Well, this is an interesting topic that's been discussed before. this whole if you don't get in when you're young, this impacts you for the for the rest of your career, right? This was a big topic of discussion after uh the unemployment rates were sky-high during the Great Recession. So, we're talking 2009, 2010. So, and then the the unemployment started to come down, but there was still a very very sh soft job market up there really up until 2013, 2014. And so you had a lot of articles coming out saying, "Oh, the millennials are never going to be able to really come back from this because they're losing out on much of their 20s in terms of earning and savings, uh, power and time and all of that that takes place. And we're probably seeing that now in terms of home ownership rates and all of that. It's not just that asset price inflation is insane in terms of home prices, but also that the employment situation was very soft for people currently in their 30s and early 40s, uh, heck, mid-40s, uh, back in 2010, 2012. So that they just weren't earning as much and they weren't really getting into their professional situation where they could save for future home ownership at a rate that maybe people in earlier decades could have done. And so it will be so much worse. Then I think if you have a situation that's uh that's something like what we're looking at now where not only it's an even softer job market now for these genzers who are coming out of college and who are trying to get work. So they're looking at even less. Now I think the game now is if you're a man and you get a college degree just don't expect to see any real dividends from that for years afterward. I think in terms of like social advancement, in terms of like finding a marriageable spouse, things like that, getting a college degree is probably still worth it. Uh, in just as status just in general, it still has a lot of that. I know a lot of people listening and reading this like, "Oh, I don't care about college anymore." Well, a lot of people still do. Uh, and a lot of people teach their daughters to look for men who have college degrees and things like that. Uh, but in terms of moni quick monetary payoff, like you were saying, Jonathan, you go 90 grand into debt. Don't Yeah. You're not going to be making that back anytime soon. You're going to have to slave away for a long time after graduating. So, yeah, I I think you're just being set up for a very difficult decade after you graduate. In the long term, it's probably still worth it and you will eventually be able to come back from that, but you are foregoing a lot of wealth that you would have had in your 40s and 50s that you'll never be able to get because your 20s were so much more low earning than they were for previous generations. So, that's just a real thing we're facing now. And we're just we're not even going to feel the impact of that for a long time. And that's that's bad. >> Yeah. I I think uh um like this this relates to like what I'm seeing a lot of uh especially the younger generation or only the younger generation saying that the the uh economic situation that they're facing like they they can't get a high enough paying job. Uh they can't buy a house. Uh like they're they're looking into the future and it seems like they're never going to be able to reach those sorts of milestones. And they're using that as a reason for not getting married, not having children. Uh and and I think that does explain uh like declining marriage rates and declining birth rates as well. And so like obviously here at the Mises Institute we talk a lot about the negative consequences of monetary inflation of of fiat inflation in general um and of manipulated interest rates and but of course like in the past few years obviously like there's been sort of this resurgence or resurgence I should say uh a surge in in people talking about some of the cultural consequences of inflation. So like we have people like George Gita Hollesman talking about this. Uh Jeff Dgner as well has written his dissertation and published a book about this sort of thing. But just goes to show that like you can't you can't just like tinker with interest rates and and and manipulate the money supply and not expect these sorts of wide ranging consequences un hopefully unintended consequences um of their actions. And so like like we could see some uh like think thinking long term like thinking generationally like we could see some very serious negative consequences as a result of of of the younger generations today not being able to get a job not being able to afford a house and and therefore uh not considering it worthwhile to get married and have children and then we see like declining productivity over the long term. So like this is something that Japan has experienced over the past few decades as well. So, like this is this is something that's like really scary if you if you take like a a longer like a 50-year timeline. >> Well, it was nice of you to bring up marriage and family because that brings us to our next topic. Uh >> yeah, I was I was trying to give you a nice segue. Yeah. >> Well, I wanted to just bring this up because it touches on I think some foundational issues around Austrian economics that I just wanted to mention and I feel like sometimes we should sprinkle in a little bit of of things that make Austrian economics different. Now, folks, this is the Power Market podcast. This is like kind of the lowest level of content you're going to get out of mises.org like in terms of casualness and it's conversational and we're not like quoting stuff. It's not academicish. Uh but it we are trying to draw your attention to some of our more academic materials because the music institute is an academic organization. Uh so I want to talk a little bit about an article that came out uh yesterday in the Atlantic and just talk about some of the the economic issues that could be behind that. So this was getting a lot of commentary in social media uh today and you'll see why in a second. The the article is called the marriage effect and the subtitle is a common narrative has it that commitment and motherhood make women unhappy. New data suggests the opposite is true. And this is by a woman named uh Jean Twenge. Now, the reason she's writing this is because she was co-author on a new study that came out at the Institute for Family Studies. And this is the study she's talking about in the Atlantic article. Uh Institute for Family Studies research is called In Pursuit Marriage, Motherhood, and Women's Well-being. And so they did a lot of survey data for this, collected a lot of that uh and really just have an extensive discussion about okay uh are women getting what they're they want from being married with children and what saying is that historically we were told that the happiest women are unmarried women without children and that marriage is a prison and that it makes you unhappy and and nobody should do that. No woman should do that if she really wants uh to be happy in life. And then this article saying actually the data we're showing um says the opposite. And uh this of course then made a lot of people either very happy or very annoyed. Lots of people saying this is evidence that feminism is awful. Lots of that sort of discussion. But I mostly wanted to look at some of the issues around this whole issue of should I go get a wage job and do that for every waking moment that I can and and minimize time spent in a family context or should I spend time in a family context and forego wage work or at least forego a significant portion of wage work. And I've noticed that among conservatives, uh, there's a lot of anti- capitalist conservatives out there now, and this this was talked about quite a bit in recent lecture by Tom Woods at the Mises Institute where he he really took to task a lot of these anti- capitalist conservatives who were saying that, "Oh, you economists, you just want GDP to go up. That's all you care about." And the implication there is that what they're saying is that us free market people, us people who think who uh are in favor of uh freedom to to choose in terms of the marketplace and what you do, who think that markets are the best way uh to organize a society in terms of um what should you let people do with their resources, right? This is in contrast to say socialism. But that doesn't mean, of course, we're dictating that people should therefore try to maximize their income at all time, right? They they take this idea that we think people should be free to function in the marketplace as they wish. And then they add on all the stuff that isn't there, like you think people should work as much as possible. You don't like it when people stay at home because then they're being inefficient. They're not generating more GDP. And those sorts of critiques. And I just wanted to make it clear from the Austrian standpoint that there is nothing about being free market that says, "Oh, we think women should work in a wage job and not be at home or we think women should be at home and not work in a wage job." And I think this whole survey here I think shows how subjective this can be in terms of different people come to different conclusions and different people have different ideas about what makes them happy and different people have different idea about what they should do with their time. Should they pursue wage work? Should they pursue quote unquote leisure? Should they work in nonwage work at home? And there is no correct answer on this from a free market perspective. And I just kind of wanted to really address that that issue first before I start seeing all these critiques where like well uh if if you capitalists hadn't forced women into the mark into the workplace they'd be happier than they are. What I mean we we don't have a position on that at least from an an economist standpoint right? I have opinions about those things from positions as a human and a husband and a Christian and things like that. But as an economist, there's not a oh, you should do wage work. Um, now there is, and I just want to note this and then I'll ask you about it, Jonathan. Right. There there's there is that that theory. I don't know if I would call it a conspiracy theory, but it's a theory that both conservatives and far-left socialists often agree on. And I like I like to talk about the theory because I find it interesting. The the theory is that there was like a capitalist conspiracy of sorts to convince women to all go into the workplace because that would drive down wages and then they would get a lot more labor while paying lower wages because they have double uh the workforce now because all these women flooded the workforce. Now we have more workers. We can pay them less >> and tax revenue from the right. That's That's >> Yes. And so now we're more profitable because we're pay we're exploiting more. We have more workers to exploit. We pay them less. And and then the the government was part of this conspiracy, the capitalist controlled government in the leftwing telling because what does that mean? Cuz think about it, it means more tax revenue, right? Because a a a mother, a woman who's at home and doing like cottage industry type stuff, right? Doing laundry at home, fixing meals at home, that's not getting taxed, right? the wealth, the production she's engaging in at home isn't getting taxed there. She's not 1099ing anybody for that work she's doing, right? Instead of daycarees which can be taxed and regulated, you have all these decentralized hubs of daycare that are do that are happening informally in the quote unquote informal economy, right? It's not like the black market, but it's just like the economy that's unobserved by the regime. And so there's not there's not like official tax forms or anything that are passing through that sort of work. And so then you've got the regime and the capitalists working together to get as many women as you can into the workforce, working all the time, get as many kids as you can into daycare and in government school as possible. And now you've got your your your regime Plutoaucrat utopia where everybody is working all the time, their fingers to the bone, and the the capitalists get their cut and the government gets their tax cut. And that's the world we're in now. And it's making women miserable could be the interpretation then after if you're a traditionalist reading this uh recent report. Now, what are we to make of that? Is there really conspiracy? uh among the regime and capitalists to do that. And of course by capitalist in this case I think we're talking about uh not like real free market people, people who are like trying to use policy in some way to guide private sector behavior. Um but I I don't know. I've never really gotten beyond the theory in terms of is there empirical evidence of this theory? Has someone written a book showing the conspiracy? I don't know. Uh but Jonathan, I was hoping you could just kind of talk a little bit about how we as economists do not assume that what people should be doing is driving up GDP, right? That the goal as a human being in terms of exercising your consumer sovereignty, your producer sovereignty or whatever is to drive up GDP, right? We have other values. There's other things we can do with our time, right? Leisure is a thing, right? And it's okay to choose leisure, right? I don't know. just tell us a little bit about that as a as the most sophisticated economist in the room. >> Uh yeah, you're exactly right. So this is one of the great benefits of the the Austrian methodology, the Austrian perspective is that we have this subjectivist approach to to economics like so at the center of Austrian economics is the fact of human action. And the thing about human action is that it's it's just people choosing means to attain their ends. So there's not some there's not some overarching goal to maximize GDP or to to get you know physical or or paid production or producing output for sale. There's not there's not some goal in that regard. So, so you're exactly right like if if uh if people decided that they preferred leisure and this resulted in a decrease in GDP, Austrian economists would, you know, of course judging the historical data, judging, you know, cultural trends, that sort of thing, they they would say like this these people, this this community, this country, this economy has has succeeded like they they have they have achieved economic growth even if that economic growth is not indicated by numbers. it's not indicated by more sales of final goods and services produced within that country, right? So, uh, so, um, you know, I do podcasts with Bob Murphy every now and then and so like the first thing that I'm thinking about is like what's like a an example like what's a good thought experiment that we can run through and of course my mind goes to Cruso. So Cruso is alone on his island. we would consider his GDP to be something like the quantity of fish and berries that he's producing for his own um sustenance. And so like it's a meager existence. He's not in a division of labor, blah blah blah. Like we we go through all of this sort of thing. But imagine like uh a raft uh washes on shore and it's just loaded with all this cargo uh that's full of like mult multiple years supply of food and it's got a long shelf life. like it's a bunch of MREs or it's a bunch of you know freeze-dried fruit uh food such that he would be able to survive for a long time. So like if we look at his like what he what would he choose to do after that? Well, he would probably engage in more leisure than he was before. He he would probably, you know, spend more time, you know, relaxing and resting after, you know, trying to make a living for himself. Uh he he would decrease. So his his GDP would go down in in terms like after the fact after receiving this he would decide to work less. He would catch fewer fish and he would pick fewer berries because now he has this extra subsistence fund that he can he can rely on. U and so like if you're a if you're a like monom monomomaniacally focused on something like GDP, you would say his GDP went down. Cruso is worse off. But of course we would realize that that the opposite is the case. He's much better off now. He's he's got this much larger subsistance fund. He can now engage in more leisure. He could make more capital goods. He can do all these sorts of things. But like you made a great point. E economists can't prescribe. Like we can't say what Crusoe ought to do. Like we can't say Crusoe ought to do this. Uh like outside of economics, we could make recommendations. We could say Crusoe, you know, ought to, you know, build some capital goods. He he ought to, you know, do some things to help increase the standard of living. But that's like outside of our role as economists. So like where what's the ultimate stopping point? Like what's the ultimate given in economics? And the answer is consumer preferences. So if Cruso's preference is to spend a couple extra hours a day lounging on the beach instead of toiling away at at picking berries, then so be it. Like that's that's what he wants to do. And he would if he did that, we would say he has achieved a higher standard of living. He has he has achieved his his end. Um so I like I I totally understand a lot of people uh like when this sort of uh discussion comes up some of the more like traditionalists um um and in like Christian circles like they would say that uh labor is a good thing because it gives us purpose in life like God made us to uh to produce things, take care of his creation, provide for one another and these sorts of things. Um, and and I I think a lot of that is true, like that's going in in the right direction. It's it's good to be busy. It's good to be doing things with your hands. It's good it's but it's also good to be raising a family. It's also good to be taking care of the the people around you, even if that's not something that's contributing to GDP. And as a result of that, there's uh like some of these traditionalists, they have sort of like this um uh like negative view of leisure and like they they view it as like this sort of like the bad like you're wasting your time. Like why why would you engage in that? But like uh one way that I respond to to those people who make those sorts of arguments is that like leisure is me playing with my kids. Leisure is me, you know, sitting on the couch and and reading a book to my kids. It's going on a walk, going on a stroll around the neighborhood uh with with my wife and my kids and and it's it's doing all these sorts of things. So like there's still family formation going on. There's still like good things happening. that's it's like a part of my purpose in life, right? Uh so you're absolutely right like the end all beall is not GDP. It's not number go up. It's allowing people to choose their own ends and and seek the best means available to them to try to satisfy those ends. And and right so theoretically, of course, then you could have people you could have half the workforce decide I'm going to stay home and take my kid for a walk around the block and GDP would go down in that case then, right? Because >> yeah, >> what they're producing on the books disappeared. And this is a this is a well-known problem with GDP by the way. Like you open up any principles textbook that talks about GDP and like it'll talk through how to calculate it like C plus I plus G plus index blah blah blah and then it'll list out some of the drawbacks of GDP. And two of the ones uh that are listed every single time is leisure is not included in GDP but it's but it's valuable. It's it's valued by people but people choosing to engage in more leisure decreases GDP. So, we wouldn't say that more leisure means people are worse off, even if that's what GDP looks like. But the other thing that's that's excluded in GDP is household production. So, like when I mow my own grass or when the housewife is preparing qu uh uh food for the kids or uh anything you do around the house that's not for like direct enjoyment, but you're like maintaining the house, keeping it clean, uh uh making things available for other people in the house, that's that's production. Like you're working, that's labor, but since it's not sold on markets as a final good or service, then it's not included in GDP. So like this is a well-known issue that that even like mainstream establishment economists realize those at least those two things are excluded in GDP calculations. >> Yeah. And you even get a discussion about what counts as leisure, right? And what is it exactly? I Tate Fegley a few years ago had a good article in the quarterly journal of Austrian economics talking about Right. Really leisure is in a sense a consumer good. Uh, it's something you use something that you use up with what you kind of bought using your work. So, you're able to obtain some leisure by working and it's consumed. But is you're just sitting around. Is that covered in Right. I'm sleeping. I'm doing stuff I badly want to do. I'm just I'm playing checkers with my family. That's not in GDP. Right. And but other types of consumption would be at least the sale of um that final good or service uh in as used by someone who's who's involved in leisure right so it's just at some point I would always say right as someone who pays attention to to these sorts of numbers right clearly there's a correlation you could just look around the world right countries with higher GDP especially higher GD GDP per capita are nicer other places, right? I mean, I don't want to move to a country that has a GDP per capita half of the United States. H that just doesn't not you're probably not going to get the sort of stuff you want in a place like that. And things just simply aren't going to look as nice. Um goods and services aren't going to be as available. That's all true. But once you get up to a certain level, I I I don't know. At some point, you're just like people, especially a more prosperous society, right? people have more choices of leisure because they've they've exceeded by so far that um that that basic level you need to live. So they have more choice to just well should I work or should I engage in leisure whereas when you're at a low level and and you're at subsistence or something you can't really choose leisure very often unless you want to go hungry. But at a higher level it seems lots of people could choose leisure and as you say right they're obtaining a higher standard of living but GDP is going down as they obtain that higher standard of living. So I I think just the message I want to get out there was we don't we don't think it's necessarily a problem, right? If people are choosing to engage in this leisure, even if it means that GDP is not being maximized at all times. And so we're not I I'm not surprised at all by this report, right? That's that that was talked about in the Atlantic that oh look look some people are happier when they're doing things that that make them feel fulfilled or when they're doing things that they feel a sense of accomplishment from doing, right? None of those things you can assign dollar amounts to, but their standard of living is probably going up and they feel happier. >> So there's there's no conflict with economics here. That's just what I want to say. Yeah, one last thing that I'll add and I know I've talked a lot about this is that you're absolutely right like as you like once you achieve a certain level of wealth and income it means that the there's a higher opportunity cost to working more so like once you achieve you know some I this is going to be subjectively determined it's not like there's like one given like income level that allows you to to to quit working forever. I'm not I'm not suggesting that, but it as income increases, as wealth increases, it means that there's a higher opportunity cost to going back into the office and working more because it means that you have all these uh you know, consumption goods at home that you could be enjoying. You you have other things that you could be doing with your wealth like going on vacations or or doing things with your family that you have all these other things that you could be doing that now you can't be because you're going to the office. So, so there there's a trade-off here like the the wealthier we get as a as a society there's this higher opportunity cost and it's it's perfectly it's fine like there's there's not some like paradox that need that economics can't explain. It's like perfectly fine uh to see people decide um like this um I'm I'm going to you know choose to engage in more leisure. I'm gonna I'm going to decide to uh only get a part-time job instead of a full-time job so that I can be with my family uh for a longer amount of time each week so that I can raise my kids, so I can homeschool if you want to do that. So I can do all of these other sorts of things that aren't included in GDP. You're not selling that output for a price. So it's not taxed. It doesn't go into the numbers. Uh but it's still like what you want. It's you're still getting the the sorts of things that make you that make you better off. >> All right. Well, we better go ahead and leave it with that. We're getting close to an hour into this episode. Actually, >> wow. >> Uh I think this is just something that we're going to have to return to uh a little bit in the future because I I see a real rising tide in terms of people are figuring that kind of the old caric caricature of economics that it's really leaving a bad taste in people's mouth, right? That's not really economics that a lot of these people have in their minds. Number go up, GDP maximize at all times. That's not really economics and almost nobody I've ever seen teaches that in an economics class, but that is clearly the message a lot of people have gotten about what econ is. And I I I think we're just going to continue to see a lot of these criticisms going forward. Uh so, thank you everyone out there for listening to this this episode of Power and Market. Thank you, Connor. Thank you, Jonathan. Uh we will be back next week with more. So we'll see you next time. [Music]
Politicizing a Politicized Fed and the Value of Leisure
Summary
Transcript
[Music] Welcome back to the Power and Market podcast. I'm Ryan McMin, executive editor at the Mises Institute, and this is our current event podcast where we're talking about whatever went on this week. And uh to join me on this today, I've got Connor O'Keefe uh one of our contributing editors and I've also got Jonathan Newman who is uh one of our resident scholars here, our Henry Hlet research fellow here at the Mises Institute. And we're going to talk about a few different issues today. Uh and also I should note that we're recording this on Thursday. So, the big jobs report that's coming out on Friday, we're not going to be able to talk about that today, but we'll talk a little bit about the job situation and speculate a little bit about what's going on there. So, if you're listening to this on Friday or Saturday, um where we're just going to speculate about uh the the August jobs numbers, but there's plenty to talk about in terms of the Fed and what's going on there. And I think really just to start off, we can start talking about Trump's ongoing political odyssey with uh the board of governors at the Federal Reserve. We've talked about this quite a bit in recent weeks, but there's always news, something happening. You always feel like, okay, is this going anywhere? Is this going to keep escalating? It seems that it is. Uh and so the news for this week, I'll just uh I think I'll just use the Wall Street Journal here uh to talk about this. So, uh, Lisa Cook, a member of the board of governors, accused of mortgage fraud, basically fabricating information on mortgage applications so that she can get a lower interest rate uh, by claiming that everything she's buying is a primary residence and because then you get a lower interest rate on that than if you buy it as an investment property. That's just the basic info there. And if you lie on the application, you get a lower uh, interest rate. And so Bill Py, uh, the FHFA guy, um, one of Trump's appointees, he's been on the war path against Lisa Cook and it and it seems maybe it's part of a a larger plan to get Cook off the board of governor so Trump can appoint his own person. Now, I kind of thought maybe this would just fizzle out, but it has not. And so there's new information on this today from the Wall Street Journal. And that the uh the headline here is DOJ opens criminal investigation into Fed's cook issues subpoenas. So now this is like a full-blown Justice Department investigation. Now, uh so I'll just read you a couple paragraphs from this. The investigation comes on the heels of two criminal referrals from Bill Py, the Trump appointed director of the Federal Housing Finance Agency, who has publicly alleged that Cook engaged in mortgage fraud. President Trump has cited those allegations in his bid to fire Cook and rest control of a central bank that has historically remained independent. Now, Jonathan, we'll cover that sentence. We won't let that go unanswered. U but uh there's a little bit more air I want to note. Uh Cook filed a lawsuit last month alleging that Trump's move to fire her was unlawful. She argued that Trump concocted a basis for her firing to vacate a seat on the board that he can fill to quote forward his agenda to undermine the independence of the Federal Reserve unquote. Now that's probably kind of true, right? I think that Trump was motivated to come up with some reason to fire Cook and he did. He did fire Cook in the sense that he said you're fired. The question is because he can fire a member of the board of governors for cause if they're found to have been engaged in some sort of u it's not even necessarily illegal activity but some sort of untoward activity. And so he said you're fired. The question is is she really fired? Does he have the power to fire? So there's a lawsuit now. He doesn't have the the right to fire. But yeah, her attorney's probably right. Yeah, he he came up with this as a way to get rid of her. He he wouldn't have done this obviously if the person who had committed this mortgage fraud had been an ally of Trump, right? We know this is how the system works, right? You can break the law with impunity as long as the people in power like you. Uh but having so many laws and so many regulations, if you break some of them, then that gives a way for the people in power to to come after you. And that of course can be used against regular people like you and me. Also, usually we don't even know we're breaking the law. uh and we break some federal regulation we don't even know about, but if someone in government doesn't like us, they can then come after us. And so this is sort of that type of situation. I don't want to act like I I'm a Lisa Cook fan or something like that. Like I'm I'm sure she's awful just like most members of the board of governors, but the question is, right, is is Trump um like doing anything like honest here? Is she any worse than anybody else that Trump might appoint? Does it matter? That sort of thing. So, that's the situation where we are with Lisa Trump or with Lisa Cook. She's she is according to Trump fired. The question is, is she can she attend this month's FOMC meeting after having been told that she's tired or fired? Uh, we'll find out. I guess uh probably the court will rule on whether she's fired before the FOMC meeting and then uh we'll know. she is actually fired, then that gives Trump a chance to bring in and appoint a new person who will be more dovish on policy, right? Presumably will help force down interest rates more. So before I say anything more, Jonathan, let me just get your your reading on this, right? I mean, I know you have opinions about Fed independence. We have this line here. This is this is Trump intervening to uh rest control of a central bank that has historically remained independent quote unquote. So yeah, just I mean kind of just give us the rundown of what you think about this. >> Well, one quick thing that I'll say is that uh in terms of like what what will happen at the next FOMC meeting, I did read today that the the Fed issued a statement saying that they would abide by whatever courts tell them to do. So, you're right. There there's going to be some ruling by a judge about whether um Trump's firing of Cook is is legal. Uh whether whether she's still on the board or not, and and the Fed will probably go along with what the what the court says. But but you're you're absolutely right to to bring up this whole independence question. Uh I watched I watched uh some of the hearing uh today uh of the Trump has nominated Steven Myin I think is how you pronounce it. Uh and so he he was before Senate committee uh and of course like they're they're saying all of these things about how it's so important for the Fed to remain independent and we all think that Fed independence is this great thing that needs to be protected. And of course, all the Democrats who are anti-Trump, they were they were all up in arms. Elizabeth Warren especially was saying like this is this is a terrible incursion um that you know the the president the executive branch is is intervening into the affairs of the Federal Reserve and and like of she didn't say this explicitly but like the implication is that like this is a brand new thing that has never happened before. Uh while while it is true that uh a president has I think it's true that the president has not fired a a member of the board of governors before the the executive branch influence on the uh Federal Reserve has has been around since the existence of the Federal Reserve. And this is something that I presented on at a recent uh conference here at the Mises Institute. They all point to this uh event in uh the 1950s, early 1950s saying that the Fed finally established its independence. Uh but I pointed out a bunch of plot holes in that story. Uh but even even after the fact like you can see that the executive branch uh has a lot of control over who is at the Fed and also exercises some you know outside under the radar sorts of influence on on what the Fed does. Like one of the one of the best uh examples or uh pieces of evidence for this is the so-called revolving door between uh the executive branch and uh positions at the Fed. So for example, Steven Myron, who is Trump's nominee, is the chair of the Council of Economic Adviserss for Trump. So he he's one of Trump's adviserss. And like the way that you would hear these politicians talk about is like this is some brand new thing that is has never happened before. But of but of course that's that's totally false. So like Janet Yellen was uh chair of the council of economic adviserss and after she was Fed chair she became secretary of the treasury. Ben Berneni was on the CEA. So was Alan Greenspan. Uh uh you look at um uh Paul Vulkar even he was uh he wasn't on the CE but he was in the Treasury. So all all of these guys were in the Treasury or or chairs of the CE. So in political positions as a part of the executive branch uh before uh or after they were uh fed chairs. So it just shows that there's this revolving door. So the president is is wheeling in people who he thinks that will help him accomplish his his policy goals will will help the help the government be able to sell more debt, increase the money supply, push down interest rates, help out with elections, that sort of thing. So this this is not a new thing. A lot of people are talking about this recent drama as if like it's some brand new thing that we should all be scared about. But what we have and what we've always had is a Federal Reserve that is independent in like name alone. It's just nominally independent. They they use all this independence rhetoric but truly it is dependent. They they are working hand and glove. They are working together. Uh especially the Treasury and the Federal Reserve. I have a I here's a question Jonathan I don't know if you know the answer to this it's a sort of trivia that uh maybe you might know has right all these people you've listed off like Vulkar Bernani Yellen right they're all already part of the Washington machine as they go in and out of the Fed right they're in Washington they're part of that world has anyone ever come up through the ranks at the Fed and by that I mean was there ever a Fed chairman who had been say the president of the Kansas city Federal Reserve and had worked his way up through one of the local banks or do they always come from like the Washington New York axis instead of like being like a Fed work your way up guy? I can't think of anybody. >> Yeah, I I don't know. I'd have to I'd have to do some research. Like nobody nobody comes to mind. I mean there it might it might be that earlier on in their employment history they had a position at the Fed somewhere somewhere at like a low-level position uh low lower than board of governors lower than president of a of a bank um a district bank uh but like immediately before and after their tenure as Fed chair all all of the ones in recent history uh were either at the Treasury or the on the council the chair of the council of economic adviserss Now, what I mean, what do you think his guy uh Connor? I mean, we were talking about, right, how I guess he was trying to give the impression that he was going to be sort of a hawkish guy, but that was just a scop. I don't know what what you say. >> Specifically, he was um advocating against rate cuts back before the election when it was going to be potentially beneficial for Biden or Harris. I don't remember who was running. And I don't remember the specific reasoning, but the Democrats were trying to they were trying to paint him in that test uh that hearing that he's just this naked partisan and like that certainly it he would have probably argued the same thing if he was a naked partisan. So yeah, he he may be I similarly watched I watched the whole thing and um it it made me pretty optimistic. A whole other angle to all this that we've been talking about on some of the previous episodes and I've talked uh with you about Jonathan is just the fact that this is really exposing the the nature of the Fed. And like you're saying, like that's a really important point for people to understand. This has always been the case. The Fed has never been this like amazing independent um above politics entity. But what uh was notable to me in the hearing was like of course the Democrats and the media behind them have been trying to paint what Trump is doing in this specific nominee as like this new um divergence from like the independent Fed. But what I was also pleased to see was how much the Republicans were trying to uh paint the Fed as it exists right now as this politicized entity. And it kind of it sort of made me uh want to root against Trump in terms of removing Cook. I think that like she's now become this figure that's like demonized by MAGA. And if she remains there, then you'll have, you know, the the person for them to point to and be like, look at the Democrats have completely politicized the Fed. And then if Trump can get one guy in there, then the Democrats and the media will have their person to demonize. And so, yeah, like I I don't think we're like suddenly going to have this great awakening in the country that, you know, everybody will understand that going back to the beginning of the Fed, it has not been this independent entity. But there's potential that a lot more people will think that the Fed now and going forward is not independent, that it is politicized, and therefore they'll have a much more realistic view of the Fed, which makes it easier for us to then advocate against it and talk about how damaging it is for uh for Americans. Well, it's fairly high stakes like even in the short term, right? Because it seems that uh Trump really really wants a rate cut uh for a couple of different reasons, right? He I think he's going to want it just because he thinks it'll stimulate the economy. And you can see that the jobs data, which we'll discuss in a minute, isn't looking so swell. And then the other part of it is they've got boy, I think, and I could be wrong with this, but I think I saw that they've got to refinance $10 trillion here in the next 18 months in terms of rolling over federal debt. And boy, >> that's going to be like shorter term debt. And boy, do they need lower interest rates then in in the shorter term. And they're going to need a very quote unquote cooperative Fed. Uh this is a place, of course, where the Fed has never been independent. The Fed has always happily helped the federal government to finance its debt. And so they're going to need a very cooperative Fed in order to help uh deal with all this refinancing of new federal debt. So that's another reason you need low interest rates. you need low interest rates to get down the cost of your new debt refinance. And you also just want like stimulus. And they seem to think that, okay, if we also reduce short-term rates, that'll somehow bring down the mortgage rate, we can maybe like look at that a little bit, too. Although we've we've covered that. That's just not necessarily a given that reducing federal funds rate reduces a 30-year mortgage rate. Um, but so there's all these political issues here, right? Trump wants to claim he's going to bring down the mortgage rate, which would make like home buyers happy. He wants to claim that he's stimulating the economy by bringing down interest rates. He's he forced the Fed to finally reduce interest rates after they were mean people who wouldn't reduce the interest rate more. And and then at the same time finally make it possible to uh finance more debt because we're looking at at least $ 1.9 trillion deficit for this fiscal year which ends at the end of this month. Uh so it's a huge deficit. I mean this president is just he loves his runaway fiscal spending. So you got all of that going on and and the the next big meeting is here in midepptember. So I suppose if you can get Cook out and get your guy in, you're more guaranteed to have an interest rate cut. Uh so I guess this is the part where we just speculate. Are they are they going to cut? Let's say let's say Cook is still in there um mid uh midepptember. Jonathan, are they going to cut the rate anyway with uh with the job data looking like it is and and just everything else we know or or is POW going to stay the course just a little bit longer? What do you think? >> Yeah, I I think they're going to cut at the next meeting. That's mainly informed by the the Fed really tries to avoid surprises. they they really try to avoid surprising the market and uh based on what I see in uh in reporting on this is that most uh like financial institutions have already priced in a cut uh and so like the and they calculate probabilities on this and it's like north of 90%. So like, so like the market is pricing in like a 90 over a 90% chance of a cut. And this was actually before all of the drama with Cook and the and and Trump trying to fire her and get in a new person. So, like the the way that I think about this is I I think like one thing that Trump is the master of is that he is the master of the media cycle and staying at the center of attention and uh playing the media against itself. And so, like one way that I'm thinking about this, so like a a cut was already going to happen. So, like let's suppose that a cut was going to happen no matter if Cook is on the board or not. Uh and so Trump sees it's very likely that they're going to cut. And so this if Trump is able to fire Cook and bring in his own guy, uh then that allows Trump to sort of like take this credit for see with my executive authority. I'm such a great president. I'm I'm able to influence even the the Federal Reserve and I can I've finally got the even the Federal Reserve to do what I wanted it to do. So, it's I think I this is more of a this is more of a a Trump is is will be able to take credit for something that was going to happen anyway. At least that's how I'm interpreting the news cycle with all this cook business. >> I I think it also goes the other way too. I was talking to th about this uh previous week that if well and of course him getting his guys in there would change this but so far if the Fed like the Fed not cutting too also sort of feeds into this narrative that they're purposely trying to do the opposite of whatever Trump does. If it feels like there's no real way for them to escape and I think he did this very purposely to your point but there's no real way to escape the the narrative that he's influencing monetary policy kind of regardless of whether he gets people in there or not. Yeah. Kind of the thing is the game seems to be well if the president comes in and demands a rate cut. The Fed in order to convince everyone that it's independent has to not do a rate cut even if they were inclined to do a rate cut because then it makes it look like they're just doing what Trump told them to do. It's it's like a child, right? It's like a small child. Well, they just do the opposite of whatever they whatever you tell the child to do just to show you who's in charge. And there's there's this weird relationship between the president and and the Fed in that respect as well. Uh but Jonathan, I think you're right. I think they probably will cut. I don't think that they should. um after printing five or six trillion dollars for the last 5 years, after destroying 25% of the purchasing power of the dollar since 2019, massive inflation with asset price inflation just out of control. Not CPI inflation of time. Of course, that's still way above their target, like 2.7 2.8%. Um that's a big percentage above the target. But just looking at asset price inflation, home prices, stocks just running away. Uh other assets too if you want to count gold as an asset. I mean all of these numbers are going up. There's so much liquidity still slloshing around in there. Do I think they need to cut the interest rate more? No, I don't think they need to. Uh or should. Of course, I mean my position, Serno's position, right? I'm talking about Joe Serno, our academic VP at the Mises Institute, our head economist. He's just like, they just shouldn't do anything. They should just stop buying assets, which is a key part of their process of lowering the interest rate. They should just stop just stop doing that. And so that's our position. We don't think they should pick an interest rate. We just think they should stop. Uh at which point the interest rate is almost guaranteed to go up because the only reason it's so low is because they keep flooding the market with liquidity. Uh and also however what they're going to argue is well we have to cut the rate because unemployment uh is going to go up because because there's weakness in employment and nobody has a gun to your head even if employment's soft saying you have to then lower the rate because all that's going to do is cause stagflation then this is just going to it's just going to ensure that price inflation continues and it's not going to really allow for any undoing of that malinvestment that has caused all these bubbles we're now uh living in. Um now, of course, that's a that's another more complex discussion we've had other places and can have again in the future. But the only way really to get this economy to fix itself is to allow some sort of recession, some sort of serious weakness. Some some people are going to have to lose their jobs because so much of the economy is built on inflationary garbage that was created after 2019 and and in many cases before also. Uh but they don't want to do any of that. Just get me five minutes down the road. uh to the next crisis and that's their their policy. Uh just get me to 2026 and get my party reelected. That's that's all I care about. And so that seems to be where we are right now. No regard whatsoever for the larger implications of the economy. But yeah, they're going to say, "Oh, uh employment is soft." And it is soft. Uh we saw that o in the July data where the Bureau of Labor Statistics massively revised down employment numbers because the later numbers are more accurate. They rush in this initial estimate uh and then as they get more data in they revise the numbers and a lot of the revised numbers uh have shown that the job situation is actually considerably worse than initially thought. Now that's the charitable interpretation. You could interpret that the reason they create better job estimates first is because they're trying to fool the public because the public only pays attention to the initial jobs release and doesn't pay attention to the revisions. That's possible too. But the point is is that they've been revised down and that that probably is the more accurate number. So the job situation's been pretty pretty weak. Um and that there's basically for the last three months been almost no job creation at average about 30,000 a month which is just like nothing numbers. And now today we got new Jolts data and the the story there that I saw tons of headlines on and I'll create one of our own for power and market along these lines is that look uh the number of job openings is now less than the number of unemployed persons and this is something that hasn't happened uh in the in terms of trending upward since 2019 2019 and this was also true throughout much of the original COVID period right 2020 2021 there were more unemployed persons than there were job openings. And then after all that money printing, there were huge amounts of job openings. You had this huge bubble in jobs. There's a labor shortage, quote unquote. And that's all gone now. Like everything is reverted to like a more normal situation. And you can now see and I think we can expect then, especially if we're looking at this with more unemployed people than job openings, we can also look at a decline in labor force participation. There's less of that. And also if you go in and you add in the numbers of people who are only marginally connected to the workforce that are these are people who call who say that they're not in the workforce but they would like a job now if they could get one. These are the discouraged workers and this is covered if you follow these things right this is including the U6 unemployment number that's a higher unemployment number because it includes these people who were looking for jobs would like a job but they just they they don't bother anymore because they just don't think they'll ever get a job again. So there's actually about 1.8 million of those people on top of the seven or so million people who are now unemployed and then you only have So you got 8 million of those and you only got about 7 million job openings. So where do you go from here? I think it's pretty clear then that you're going to start to see an increase in the unemployment rate because you're going to have people continuing to look for work and they're not going to be able to find it. So what do I don't know what the job date is going to say tomorrow. Uh, I'll be interested to see what the revisions are, but it's not going to be strong, right? Unless, I don't know, maybe they'll cook the numbers and I'm going to wake up tomorrow, there's be a headline, 250,000 new jobs created in uh, August. I mean, there is no anecdotal data to support that at all. Right? Anytime you look at the financial news, it's just huge new accounts of layoffs every day. And then looking at the unemployment rate for new college grads, that's no higher than the than like the median all uh worker rate, like you're now worse off as a recent college grad than just workers in general, including people with no education. So those people can't find jobs. Social media is filled with people who can't find work. And they're, well, that's just anecdotal. Yeah. Well, a lot of anecdotes taken together that adds up to stat to statistical data. I mean, just if I I'm just not seeing where there's room for much optimism about the employment situation. So, you add all that together and I think that translates into a rate cut if for nothing other than just optics uh because they've got to look like they're doing something. Now, I don't know. Do you guys have like uh opinions about the state of the economy overall? I mean, what are you hearing out there and and what are you seeing in the data? like Jonathan, how would you rate the economic situation and is does should the Fed be should be the the Fed doing is doing something in order to to somehow fix the economy even though we know that doesn't work but in the mainstream thinking right is are we at the point where they got to do something? >> Yeah, I I think you're right. Like I've I've seen a lot of these like cracks in the economy, cracks in the in the labor market, like what you're talking about. But the thing is like we've seen this for the past few years. And so like like you keep thinking like when is all of this going to come crashing down? Now what's really interesting, one thing that I was thinking about uh when you were talking about like what if tomorrow we see this like spectacular report from the is it the BLS reporting tomorrow the jobs numbers? So like what if we did see like some spectacular report? One thing I was thinking about is like that would act that would cause the stock market to crash. And the reason why is is because with with the bad reports where where we see unemployment rate higher than expected uh like the labor market is not as good as as what was expected, you actually see increases in stock prices. And what's interesting is like the reason why is because when they see that they see the Fed has more justification to cut. So like there like bad news is interpreted as good news. It's like oh bad news means that the Fed is that much closer to cutting interest rates which means more liquidity which means higher stock prices and so I'm going to go ahead and price in what I think the Fed is is going to do in the future. So like we're in this like sort of like wacko circus world where bad news is good news. And we've been we've been in this for a long time, which which I think just goes to show that the uh like equity markets that we have uh are they're not they're not based on fundamentals. It's not like we have, you know, like sound solid uh growth in production, like good solid sustainable growth. if all of the increases in in equity prices that we're seeing are are mostly or majorly based on people expecting more money being pumped into the system. >> Yeah, Connor, I mean, what's what's your reading on on the general state of things? >> I I guess similar with you guys. I don't necessarily dig into the economic data uh as much as certainly you do, Ryan. I'm a lot more interested in kind of the political response to And so an angle here that um I think it's interesting that won't affect tomorrow is if you remember last time Trump fired the commissioner of the BLS over the jobs numbers um he he then put forward this heritage economist I think who seems to be just line with him economically. He's not in yet. There's like some longtime staffer that's the acting commissioner. But it's there's a chance that the next for the next report after tomorrow is like they'll have this guy in. There's a chance that this might be um well there's a lot of things going on. There is a chance that if that guy gets in that every BLS report from then on is then kind of portrayed by like the more mainstream establishment media as this like politicized report that we uh we can't trust. Um which would be interesting. But then also like from Trump's standpoint like he has this kind of weird idea that like you know he obviously with the BLS stuff he denied the very idea that the jobs market might be weak. he of course is presenting the American economy as this really strong um you know it's the the golden age he's heralding in but then at the same time the a weak jobs market is the thing that might actually get him the rate cut that he's been really pushing for. So it'll be kind of interesting to watch how he responds to whatever happens tomorrow like if he kind of if it's somewhat negative um or just not really positive he if he pushes back against that. That would be kind of interesting given that that's probably the best uh chance for for the the Fed to actually finally come around and do what he's been, you know, saying over and over and over again they have to do. Well, it's been suggested by, you know, 4D chess playing people that if Trump really wants a rate cut, he'll ensure that the jobs numbers are terrible tomorrow and then the Fed will have to cut, you know, like massive job losses in the BLS and then the Fed comes in September 15th or uh midmon, they got to cut. Oh, look, jobs terrible. And then you revise the numbers way better uh in the the the uh the subsequent month. Oh, sorry. we were wrong. Job situation wasn't all that bad, but you already cut the rate. So, I guess, you know, no harm, no foul. Uh I I I I'm surprised that Trump hasn't really maybe kind of hinted at something like that. Instead, he seemed to be mad that the numbers were negative, even though that served what he wanted from the Fed. Bad numbers help him get what he wants from the Fed. But, I struggle to see him though like swallowing that and going along with it or because he has to have something easy to blame. It's not very obvious how he can just blame Biden or the Democrats. I mean, maybe he'd find a way, you know, I'm sure he'd come up with something and maybe we'll see tomorrow, but that's an interesting dynamic that I'm kind of watching here. >> Yeah, I it could be his ego will just prevent him from just manufacturing a terrible jobs number uh in order to get his rate cut. Uh although after the fact, he come back and then say, "Oh, look, jobs numbers are great. Now, after I got the rate cut that I demanded, after Jerome Powell finally did what I said, see, there there are many ways to for Trump to win this. Uh we'll just see uh how how he does it. Um but you're right, Jonathan, the guy's like a master of of the the news cycle. So, >> uh I I don't way to do it. >> Sorry. Well, one thing I forgot to mention is uh you were talking about like if you if you look under the hood of the the jobs numbers, like you see all of these problems. Um I I can't remember if you mentioned it, but one thing like one very important trend that people are just now starting to recognize is that recent college graduates are are really having trouble finding jobs. Like the there's this this upward trend in the unemployment rate uh for recent college graduates and like that that's very concerning that that used to be, you know, the standard line like how do you get a job? How do you get a good well-paying job? you got to go to college, get the degree, then you're you're on your way, you know, uh in your career. But it's it's looking like that's not the formula anymore. It's looking like uh there's um it's increasingly difficult for recent college graduates uh to get a job. And that's that's that's just one more thing that you could see like if you just look under the hood. Uh very concerning if you're if you're concerned about the future of the economy. It'd be interesting if if that continued for a while if that could uh potentially pop the college bubble as well if it's like literally not worth it from a monetary standpoint to go cuz like I believe the data was showing that at least for men I think there was a gendered difference but I think that mainly had to do with the fact that uh healthcare is really stable and more women are working in healthcare but I think specifically for college graduate men people men at the same age that only had a high school diploma were making more money than uh men with a bachelors. And it's like that if that goes on for a few months, like yeah, maybe we can get past that. But if you're going on for a longer period of time, then like it's obviously just a bad financial decision to go to college if you know if you want to make money, if that's your if that's your only focus. >> Well, this is an interesting topic that's been discussed before. this whole if you don't get in when you're young, this impacts you for the for the rest of your career, right? This was a big topic of discussion after uh the unemployment rates were sky-high during the Great Recession. So, we're talking 2009, 2010. So, and then the the unemployment started to come down, but there was still a very very sh soft job market up there really up until 2013, 2014. And so you had a lot of articles coming out saying, "Oh, the millennials are never going to be able to really come back from this because they're losing out on much of their 20s in terms of earning and savings, uh, power and time and all of that that takes place. And we're probably seeing that now in terms of home ownership rates and all of that. It's not just that asset price inflation is insane in terms of home prices, but also that the employment situation was very soft for people currently in their 30s and early 40s, uh, heck, mid-40s, uh, back in 2010, 2012. So that they just weren't earning as much and they weren't really getting into their professional situation where they could save for future home ownership at a rate that maybe people in earlier decades could have done. And so it will be so much worse. Then I think if you have a situation that's uh that's something like what we're looking at now where not only it's an even softer job market now for these genzers who are coming out of college and who are trying to get work. So they're looking at even less. Now I think the game now is if you're a man and you get a college degree just don't expect to see any real dividends from that for years afterward. I think in terms of like social advancement, in terms of like finding a marriageable spouse, things like that, getting a college degree is probably still worth it. Uh, in just as status just in general, it still has a lot of that. I know a lot of people listening and reading this like, "Oh, I don't care about college anymore." Well, a lot of people still do. Uh, and a lot of people teach their daughters to look for men who have college degrees and things like that. Uh, but in terms of moni quick monetary payoff, like you were saying, Jonathan, you go 90 grand into debt. Don't Yeah. You're not going to be making that back anytime soon. You're going to have to slave away for a long time after graduating. So, yeah, I I think you're just being set up for a very difficult decade after you graduate. In the long term, it's probably still worth it and you will eventually be able to come back from that, but you are foregoing a lot of wealth that you would have had in your 40s and 50s that you'll never be able to get because your 20s were so much more low earning than they were for previous generations. So, that's just a real thing we're facing now. And we're just we're not even going to feel the impact of that for a long time. And that's that's bad. >> Yeah. I I think uh um like this this relates to like what I'm seeing a lot of uh especially the younger generation or only the younger generation saying that the the uh economic situation that they're facing like they they can't get a high enough paying job. Uh they can't buy a house. Uh like they're they're looking into the future and it seems like they're never going to be able to reach those sorts of milestones. And they're using that as a reason for not getting married, not having children. Uh and and I think that does explain uh like declining marriage rates and declining birth rates as well. And so like obviously here at the Mises Institute we talk a lot about the negative consequences of monetary inflation of of fiat inflation in general um and of manipulated interest rates and but of course like in the past few years obviously like there's been sort of this resurgence or resurgence I should say uh a surge in in people talking about some of the cultural consequences of inflation. So like we have people like George Gita Hollesman talking about this. Uh Jeff Dgner as well has written his dissertation and published a book about this sort of thing. But just goes to show that like you can't you can't just like tinker with interest rates and and and manipulate the money supply and not expect these sorts of wide ranging consequences un hopefully unintended consequences um of their actions. And so like like we could see some uh like think thinking long term like thinking generationally like we could see some very serious negative consequences as a result of of of the younger generations today not being able to get a job not being able to afford a house and and therefore uh not considering it worthwhile to get married and have children and then we see like declining productivity over the long term. So like this is something that Japan has experienced over the past few decades as well. So, like this is this is something that's like really scary if you if you take like a a longer like a 50-year timeline. >> Well, it was nice of you to bring up marriage and family because that brings us to our next topic. Uh >> yeah, I was I was trying to give you a nice segue. Yeah. >> Well, I wanted to just bring this up because it touches on I think some foundational issues around Austrian economics that I just wanted to mention and I feel like sometimes we should sprinkle in a little bit of of things that make Austrian economics different. Now, folks, this is the Power Market podcast. This is like kind of the lowest level of content you're going to get out of mises.org like in terms of casualness and it's conversational and we're not like quoting stuff. It's not academicish. Uh but it we are trying to draw your attention to some of our more academic materials because the music institute is an academic organization. Uh so I want to talk a little bit about an article that came out uh yesterday in the Atlantic and just talk about some of the the economic issues that could be behind that. So this was getting a lot of commentary in social media uh today and you'll see why in a second. The the article is called the marriage effect and the subtitle is a common narrative has it that commitment and motherhood make women unhappy. New data suggests the opposite is true. And this is by a woman named uh Jean Twenge. Now, the reason she's writing this is because she was co-author on a new study that came out at the Institute for Family Studies. And this is the study she's talking about in the Atlantic article. Uh Institute for Family Studies research is called In Pursuit Marriage, Motherhood, and Women's Well-being. And so they did a lot of survey data for this, collected a lot of that uh and really just have an extensive discussion about okay uh are women getting what they're they want from being married with children and what saying is that historically we were told that the happiest women are unmarried women without children and that marriage is a prison and that it makes you unhappy and and nobody should do that. No woman should do that if she really wants uh to be happy in life. And then this article saying actually the data we're showing um says the opposite. And uh this of course then made a lot of people either very happy or very annoyed. Lots of people saying this is evidence that feminism is awful. Lots of that sort of discussion. But I mostly wanted to look at some of the issues around this whole issue of should I go get a wage job and do that for every waking moment that I can and and minimize time spent in a family context or should I spend time in a family context and forego wage work or at least forego a significant portion of wage work. And I've noticed that among conservatives, uh, there's a lot of anti- capitalist conservatives out there now, and this this was talked about quite a bit in recent lecture by Tom Woods at the Mises Institute where he he really took to task a lot of these anti- capitalist conservatives who were saying that, "Oh, you economists, you just want GDP to go up. That's all you care about." And the implication there is that what they're saying is that us free market people, us people who think who uh are in favor of uh freedom to to choose in terms of the marketplace and what you do, who think that markets are the best way uh to organize a society in terms of um what should you let people do with their resources, right? This is in contrast to say socialism. But that doesn't mean, of course, we're dictating that people should therefore try to maximize their income at all time, right? They they take this idea that we think people should be free to function in the marketplace as they wish. And then they add on all the stuff that isn't there, like you think people should work as much as possible. You don't like it when people stay at home because then they're being inefficient. They're not generating more GDP. And those sorts of critiques. And I just wanted to make it clear from the Austrian standpoint that there is nothing about being free market that says, "Oh, we think women should work in a wage job and not be at home or we think women should be at home and not work in a wage job." And I think this whole survey here I think shows how subjective this can be in terms of different people come to different conclusions and different people have different ideas about what makes them happy and different people have different idea about what they should do with their time. Should they pursue wage work? Should they pursue quote unquote leisure? Should they work in nonwage work at home? And there is no correct answer on this from a free market perspective. And I just kind of wanted to really address that that issue first before I start seeing all these critiques where like well uh if if you capitalists hadn't forced women into the mark into the workplace they'd be happier than they are. What I mean we we don't have a position on that at least from an an economist standpoint right? I have opinions about those things from positions as a human and a husband and a Christian and things like that. But as an economist, there's not a oh, you should do wage work. Um, now there is, and I just want to note this and then I'll ask you about it, Jonathan. Right. There there's there is that that theory. I don't know if I would call it a conspiracy theory, but it's a theory that both conservatives and far-left socialists often agree on. And I like I like to talk about the theory because I find it interesting. The the theory is that there was like a capitalist conspiracy of sorts to convince women to all go into the workplace because that would drive down wages and then they would get a lot more labor while paying lower wages because they have double uh the workforce now because all these women flooded the workforce. Now we have more workers. We can pay them less >> and tax revenue from the right. That's That's >> Yes. And so now we're more profitable because we're pay we're exploiting more. We have more workers to exploit. We pay them less. And and then the the government was part of this conspiracy, the capitalist controlled government in the leftwing telling because what does that mean? Cuz think about it, it means more tax revenue, right? Because a a a mother, a woman who's at home and doing like cottage industry type stuff, right? Doing laundry at home, fixing meals at home, that's not getting taxed, right? the wealth, the production she's engaging in at home isn't getting taxed there. She's not 1099ing anybody for that work she's doing, right? Instead of daycarees which can be taxed and regulated, you have all these decentralized hubs of daycare that are do that are happening informally in the quote unquote informal economy, right? It's not like the black market, but it's just like the economy that's unobserved by the regime. And so there's not there's not like official tax forms or anything that are passing through that sort of work. And so then you've got the regime and the capitalists working together to get as many women as you can into the workforce, working all the time, get as many kids as you can into daycare and in government school as possible. And now you've got your your your regime Plutoaucrat utopia where everybody is working all the time, their fingers to the bone, and the the capitalists get their cut and the government gets their tax cut. And that's the world we're in now. And it's making women miserable could be the interpretation then after if you're a traditionalist reading this uh recent report. Now, what are we to make of that? Is there really conspiracy? uh among the regime and capitalists to do that. And of course by capitalist in this case I think we're talking about uh not like real free market people, people who are like trying to use policy in some way to guide private sector behavior. Um but I I don't know. I've never really gotten beyond the theory in terms of is there empirical evidence of this theory? Has someone written a book showing the conspiracy? I don't know. Uh but Jonathan, I was hoping you could just kind of talk a little bit about how we as economists do not assume that what people should be doing is driving up GDP, right? That the goal as a human being in terms of exercising your consumer sovereignty, your producer sovereignty or whatever is to drive up GDP, right? We have other values. There's other things we can do with our time, right? Leisure is a thing, right? And it's okay to choose leisure, right? I don't know. just tell us a little bit about that as a as the most sophisticated economist in the room. >> Uh yeah, you're exactly right. So this is one of the great benefits of the the Austrian methodology, the Austrian perspective is that we have this subjectivist approach to to economics like so at the center of Austrian economics is the fact of human action. And the thing about human action is that it's it's just people choosing means to attain their ends. So there's not some there's not some overarching goal to maximize GDP or to to get you know physical or or paid production or producing output for sale. There's not there's not some goal in that regard. So, so you're exactly right like if if uh if people decided that they preferred leisure and this resulted in a decrease in GDP, Austrian economists would, you know, of course judging the historical data, judging, you know, cultural trends, that sort of thing, they they would say like this these people, this this community, this country, this economy has has succeeded like they they have they have achieved economic growth even if that economic growth is not indicated by numbers. it's not indicated by more sales of final goods and services produced within that country, right? So, uh, so, um, you know, I do podcasts with Bob Murphy every now and then and so like the first thing that I'm thinking about is like what's like a an example like what's a good thought experiment that we can run through and of course my mind goes to Cruso. So Cruso is alone on his island. we would consider his GDP to be something like the quantity of fish and berries that he's producing for his own um sustenance. And so like it's a meager existence. He's not in a division of labor, blah blah blah. Like we we go through all of this sort of thing. But imagine like uh a raft uh washes on shore and it's just loaded with all this cargo uh that's full of like mult multiple years supply of food and it's got a long shelf life. like it's a bunch of MREs or it's a bunch of you know freeze-dried fruit uh food such that he would be able to survive for a long time. So like if we look at his like what he what would he choose to do after that? Well, he would probably engage in more leisure than he was before. He he would probably, you know, spend more time, you know, relaxing and resting after, you know, trying to make a living for himself. Uh he he would decrease. So his his GDP would go down in in terms like after the fact after receiving this he would decide to work less. He would catch fewer fish and he would pick fewer berries because now he has this extra subsistence fund that he can he can rely on. U and so like if you're a if you're a like monom monomomaniacally focused on something like GDP, you would say his GDP went down. Cruso is worse off. But of course we would realize that that the opposite is the case. He's much better off now. He's he's got this much larger subsistance fund. He can now engage in more leisure. He could make more capital goods. He can do all these sorts of things. But like you made a great point. E economists can't prescribe. Like we can't say what Crusoe ought to do. Like we can't say Crusoe ought to do this. Uh like outside of economics, we could make recommendations. We could say Crusoe, you know, ought to, you know, build some capital goods. He he ought to, you know, do some things to help increase the standard of living. But that's like outside of our role as economists. So like where what's the ultimate stopping point? Like what's the ultimate given in economics? And the answer is consumer preferences. So if Cruso's preference is to spend a couple extra hours a day lounging on the beach instead of toiling away at at picking berries, then so be it. Like that's that's what he wants to do. And he would if he did that, we would say he has achieved a higher standard of living. He has he has achieved his his end. Um so I like I I totally understand a lot of people uh like when this sort of uh discussion comes up some of the more like traditionalists um um and in like Christian circles like they would say that uh labor is a good thing because it gives us purpose in life like God made us to uh to produce things, take care of his creation, provide for one another and these sorts of things. Um, and and I I think a lot of that is true, like that's going in in the right direction. It's it's good to be busy. It's good to be doing things with your hands. It's good it's but it's also good to be raising a family. It's also good to be taking care of the the people around you, even if that's not something that's contributing to GDP. And as a result of that, there's uh like some of these traditionalists, they have sort of like this um uh like negative view of leisure and like they they view it as like this sort of like the bad like you're wasting your time. Like why why would you engage in that? But like uh one way that I respond to to those people who make those sorts of arguments is that like leisure is me playing with my kids. Leisure is me, you know, sitting on the couch and and reading a book to my kids. It's going on a walk, going on a stroll around the neighborhood uh with with my wife and my kids and and it's it's doing all these sorts of things. So like there's still family formation going on. There's still like good things happening. that's it's like a part of my purpose in life, right? Uh so you're absolutely right like the end all beall is not GDP. It's not number go up. It's allowing people to choose their own ends and and seek the best means available to them to try to satisfy those ends. And and right so theoretically, of course, then you could have people you could have half the workforce decide I'm going to stay home and take my kid for a walk around the block and GDP would go down in that case then, right? Because >> yeah, >> what they're producing on the books disappeared. And this is a this is a well-known problem with GDP by the way. Like you open up any principles textbook that talks about GDP and like it'll talk through how to calculate it like C plus I plus G plus index blah blah blah and then it'll list out some of the drawbacks of GDP. And two of the ones uh that are listed every single time is leisure is not included in GDP but it's but it's valuable. It's it's valued by people but people choosing to engage in more leisure decreases GDP. So, we wouldn't say that more leisure means people are worse off, even if that's what GDP looks like. But the other thing that's that's excluded in GDP is household production. So, like when I mow my own grass or when the housewife is preparing qu uh uh food for the kids or uh anything you do around the house that's not for like direct enjoyment, but you're like maintaining the house, keeping it clean, uh uh making things available for other people in the house, that's that's production. Like you're working, that's labor, but since it's not sold on markets as a final good or service, then it's not included in GDP. So like this is a well-known issue that that even like mainstream establishment economists realize those at least those two things are excluded in GDP calculations. >> Yeah. And you even get a discussion about what counts as leisure, right? And what is it exactly? I Tate Fegley a few years ago had a good article in the quarterly journal of Austrian economics talking about Right. Really leisure is in a sense a consumer good. Uh, it's something you use something that you use up with what you kind of bought using your work. So, you're able to obtain some leisure by working and it's consumed. But is you're just sitting around. Is that covered in Right. I'm sleeping. I'm doing stuff I badly want to do. I'm just I'm playing checkers with my family. That's not in GDP. Right. And but other types of consumption would be at least the sale of um that final good or service uh in as used by someone who's who's involved in leisure right so it's just at some point I would always say right as someone who pays attention to to these sorts of numbers right clearly there's a correlation you could just look around the world right countries with higher GDP especially higher GD GDP per capita are nicer other places, right? I mean, I don't want to move to a country that has a GDP per capita half of the United States. H that just doesn't not you're probably not going to get the sort of stuff you want in a place like that. And things just simply aren't going to look as nice. Um goods and services aren't going to be as available. That's all true. But once you get up to a certain level, I I I don't know. At some point, you're just like people, especially a more prosperous society, right? people have more choices of leisure because they've they've exceeded by so far that um that that basic level you need to live. So they have more choice to just well should I work or should I engage in leisure whereas when you're at a low level and and you're at subsistence or something you can't really choose leisure very often unless you want to go hungry. But at a higher level it seems lots of people could choose leisure and as you say right they're obtaining a higher standard of living but GDP is going down as they obtain that higher standard of living. So I I think just the message I want to get out there was we don't we don't think it's necessarily a problem, right? If people are choosing to engage in this leisure, even if it means that GDP is not being maximized at all times. And so we're not I I'm not surprised at all by this report, right? That's that that was talked about in the Atlantic that oh look look some people are happier when they're doing things that that make them feel fulfilled or when they're doing things that they feel a sense of accomplishment from doing, right? None of those things you can assign dollar amounts to, but their standard of living is probably going up and they feel happier. >> So there's there's no conflict with economics here. That's just what I want to say. Yeah, one last thing that I'll add and I know I've talked a lot about this is that you're absolutely right like as you like once you achieve a certain level of wealth and income it means that the there's a higher opportunity cost to working more so like once you achieve you know some I this is going to be subjectively determined it's not like there's like one given like income level that allows you to to to quit working forever. I'm not I'm not suggesting that, but it as income increases, as wealth increases, it means that there's a higher opportunity cost to going back into the office and working more because it means that you have all these uh you know, consumption goods at home that you could be enjoying. You you have other things that you could be doing with your wealth like going on vacations or or doing things with your family that you have all these other things that you could be doing that now you can't be because you're going to the office. So, so there there's a trade-off here like the the wealthier we get as a as a society there's this higher opportunity cost and it's it's perfectly it's fine like there's there's not some like paradox that need that economics can't explain. It's like perfectly fine uh to see people decide um like this um I'm I'm going to you know choose to engage in more leisure. I'm gonna I'm going to decide to uh only get a part-time job instead of a full-time job so that I can be with my family uh for a longer amount of time each week so that I can raise my kids, so I can homeschool if you want to do that. So I can do all of these other sorts of things that aren't included in GDP. You're not selling that output for a price. So it's not taxed. It doesn't go into the numbers. Uh but it's still like what you want. It's you're still getting the the sorts of things that make you that make you better off. >> All right. Well, we better go ahead and leave it with that. We're getting close to an hour into this episode. Actually, >> wow. >> Uh I think this is just something that we're going to have to return to uh a little bit in the future because I I see a real rising tide in terms of people are figuring that kind of the old caric caricature of economics that it's really leaving a bad taste in people's mouth, right? That's not really economics that a lot of these people have in their minds. Number go up, GDP maximize at all times. That's not really economics and almost nobody I've ever seen teaches that in an economics class, but that is clearly the message a lot of people have gotten about what econ is. And I I I think we're just going to continue to see a lot of these criticisms going forward. Uh so, thank you everyone out there for listening to this this episode of Power and Market. Thank you, Connor. Thank you, Jonathan. Uh we will be back next week with more. So we'll see you next time. [Music]