Episode 402: Free Heroin, And Other Ideas That Won't Get You Elected

Sep 14, 2012
Originally published on September 18, 2012 2:43 pm

Earlier this summer, we assembled five prominent economists from across the political spectrum and gave them a simple task: Identify major economic policies they could all stand behind.

They agreed on a broad economic platform. A platform that would sink any political candidate that supported it. (Here's the show we did on their platform; here's a blog post.)

Today, we talk to those economists again. This time, we hear a bunch of the ideas some of them liked but others shot down — including free heroin for addicts, a new tax on financial speculation, and $2 trillion in new deficit spending on infrastructure projects.

Download the Planet Money iPhone App. Music: Brian Keane's "To The Summit" and Peter Gabriel's "Solsbury Hill." Find us: Twitter/ Facebook/ Spotify/Tumblr/Secret bonus link.

Copyright 2018 NPR. To see more, visit http://www.npr.org/.

ALEX BLUMBERG, HOST:

So a couple months ago, right here on the program, we unveiled something we're really excited about - a dream presidential platform based entirely on the best ideas economics has to offer. Robert, you want to do the honors?

ROBERT SMITH, HOST:

Sure. Previously on PLANET MONEY...

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SMITH: ...Six economists from across the political spectrum...

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DEAN BAKER: Dean Baker, co-director...

RUSS ROBERTS: Russ Roberts.

LUIGI ZINGALES: I'm Luigi Zingales.

BAKER: To describe me as left of center would be fair...

ROBERTS: Hardcore free-market.

ZINGALES: Pro-market but not necessarily pro-business.

SMITH: ...Thrown together with one impossible mission - to come up with an economic plan to rescue the economy. One catch - in order to save the country, they're going to have to work together...

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SMITH: ...To restructure the tax code...

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BAKER: The corporate income tax makes no sense whatsoever.

SMITH: ...Eliminate cherished deductions...

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ROBERT FRANK: The mortgage interest deduction.

SMITH: ...To preserve the environment...

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KATHERINE BAICKER: Tax, energy use or carbon emissions.

SMITH: ...And finally, deal once and for all with the scourge of illegal drugs.

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ROBERTS: Make them legal.

(SOUNDBITE OF SONG, "SOLSBURY HILL")

PETER GABRIEL: (Singing) Climbing up on Solsbury Hill...

SMITH: And maybe - just maybe - this ragtag team can come up with a platform that every economist would love and every presidential candidate would hate - except for our fake one.

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KELLY AUCOIN: (As Fake Presidential Candidate) God bless you. And God bless the United States of America.

(SOUNDBITE OF SONG, "SOLSBURY HILL")

GABRIEL: (Singing) Grab your things. I've come to take you home.

BLUMBERG: Hello and welcome to PLANET MONEY. I'm Alex Blumberg.

SMITH: (Laughter) And I'm your announcer, Robert Smith.

BLUMBERG: That was awesome, by the way.

SMITH: Thank you.

BLUMBERG: Today on the program, we are going to shatter that carefully-constructed fiction from that previous podcast. Ladies and gentlemen, it was not all love and agreement like we made it seem. Today, we're going to take you behind the scenes, show you all of the fights, the crazy proposals - the stuff that got left out of our fake presidential platform.

SMITH: The great thing about this project is I feel like we are recreating what actually happens in the world. As we brought these economists in, I felt like I was on a real political team, you know, where you ask all of the advisers and consultants, hey, what should we do? And they come up with some of these ideas. And you're like, you can't say that stuff out loud. Like, (laughter) that is literally the craziest thing I've ever heard. We need to leave this one out.

BLUMBERG: Right. So we are going to hear the ideas that did not make it in. We're going to hear a couple of ideas that had one enthusiastic proponent and that pretty much no one else in the panel thought that was a good idea. And we're going to hear one major battle, a pretty heated argument that I think sheds light on the current political landscape that forms sort of the ideological underpinnings for a lot of what President Obama and Mitt Romney are fighting about right now on the campaign trail.

SMITH: Before we get to that major fight, let's start with some of the proposals that were just pretty strange. I mean, you think of economists as these sober-voice-of-authority types, but they all have their pet passions, their crazy ideas that they think just might work, and nobody on our panel more than Luigi Zingales. He is a conservative-leaning economist. He works at the University of Chicago.

BLUMBERG: And to give you an example of the kinds of ideas that are sort of tripping out of his brain, we were talking about U.S. drug policy. And he was with the rest of the panel in arguing that light drugs like marijuana should be legal. But when it came to heroin, he was really on his own. He thought, OK, heroin? Keep it illegal for first-time users. But once you break the law, use it and get addicted...

ZINGALES: And you get the drug free. It's better this than stealing and doing - or selling drugs to finance my drugs. And the drug dealers will find it very unprofitable to push the stuff because once you're hooked, you have an alternative.

BLUMBERG: So, again, for the - I'm just thinking about the campaign poster. Legalize marijuana. Free heroin to every junkie.

ZINGALES: Yeah.

SMITH: (Laughter) With certified junkie card. Come on (laughter).

ZINGALES: No, I - there is a reason why I don't run for office (laughter).

SMITH: And no big surprise - there is no way that we could put this on a platform endorsed by PLANET MONEY (laughter) and economists everywhere. I just picture the T-shirts - the free heroin T-shirts and buttons. And it's not going to fly.

BLUMBERG: It's a tough sell even to his fellow economists. But that wasn't the only Luigi Zingales suggestion that got left on the cutting-room floor. Luigi also has a favorite tax.

ZINGALES: My favorite tax is actually - that I proposed in my book - is a tax on lobbying. We know that lobbying is sort of excessive. Why not a progressive tax on lobbying?

SMITH: (Laughter) So the bigger the corporation, the more lobbyists they hire, the more they spend on these lavish dinners and lunches for politicians, they would have to pay more taxes based on that?

ZINGALES: Yeah. I don't think that - I'm not a lawyer, but I don't think this runs against the First Amendment. So I think even the Supreme Court might say that this is OK.

SMITH: And, you know, there is something that is perversely attractive about this for economists because, you know, the whole idea of economics is you tax the things you want less of. And nobody has much love for lobbyists, you know. I think once you start to open the door of taxing people just because you hate them, I think a lot of economists would say, well, you know, there are, first of all, ways around that. And secondly, that really does target one group of people.

BLUMBERG: Yeah, but since this is sort of a pet theory of Luigi's and it hasn't gotten a widespread airing to the rest of the economic community, we decided, like, give him some time, see if he can pitch it. But for now, we're going to leave it off the platform.

SMITH: Besides, we may have to hire a lobbyist for our candidate (laughter).

BLUMBERG: Exactly. Now, another guy who had a lot of ideas that he sort of knew everybody wasn't going to agree with was Dean Baker. And one of the ones that he threw out when we were talking to him was also an idea for a tax that he wanted to implement.

BAKER: And that's a financial speculation tax that - a modest tax on financial transactions - stock trades, bond trades, derivatives, credit defaults, swaps, whatever it might be. A very small tax on all of these transactions could raise a huge amount of money and would basically, to my mind, be all for the good because if you have a small tax on these transactions and you end up discouraging some of them, that's really just fine because if it's a case that, you know, say, a tax.

And to give you an idea of what I'm talking about - European Union - they're talking about having a tax on stock trades of a tenth of a percentage point, trades of derivatives - a hundredth of a percentage point. If that ends up discouraging a trade, it couldn't have had much productive impact in any case. So basically, you would just be eliminating waste in the financial sector and potentially raising tens of billions - in fact, quite possibly over $100 billion a year.

BLUMBERG: Again, you're not going to get unanimity on this one. I think it's a tougher sell to the sort of - the more conservative libertarian wing who is generally skeptical of new taxes and an attempt by the government to impose a price on something that it considers bad or dangerous. Like, how bad is speculation? What is the appropriate tax? I can hear all those questions coming from Russ Roberts. So we left it off the platform.

SMITH: OK. So the ones that didn't make it - free heroin, tax on lobbyists, tax on financial speculations. There was also, as we hinted at the top, one really big, meaty argument that divided these economists. And it was interesting because this argument gets to the heart of most of the fights that you see on the campaign trail between the two major candidates running for political office this year - the fight over jobs and economic growth. This was a proposal from Robert Frank. He's a professor at Cornell, describes himself as liberal-leaning.

BLUMBERG: Yeah, and he's actually so liberal-leaning that he actually thought this was one that everybody would agree to (laughter). You know, he's - he was like, you're not going to get any argument here and...

SMITH: He was so proud. He walked into our interview, and he said, the one thing I believe everyone can agree on is this idea.

BLUMBERG: Yeah. The first thing a new president should do - get into the Oval Office and say, essentially, I want to triple the size of the federal deficit, and I want to use that money for a very specific thing.

FRANK: Well, the American Society for Civil Engineers has identified $2 trillion-plus worth of desperately overdue infrastructure repair and maintenance projects.

BLUMBERG: So, if elected, I pledge to borrow $2 trillion from the world and spend it fixing America's roads and bridges today.

FRANK: Well, you can't do it in one week, but you would get to work on them right away.

SMITH: So when I hear the number $2 trillion - like, it sounds amazing. But at the same time, you're like, that is incredibly difficult to spend that much money, to pick projects that can add up to that total.

BLUMBERG: Yeah. And we tried to do this during the stimulus. Remember, the government needed to spend many hundreds of billions of dollars very quickly. They wanted to find shovel-ready projects, and those were hard to find. And then there was also a lot of debate about whether these projects were worthwhile or not or whether they were sort of sweetheart deals or whatever. So it's hard to sort of make sure that the government is spending on the right stuff.

SMITH: So Robert Frank essentially wants to take politics out of it. You know, the problem he would say with the stimulus was that it was way too divisive and political. So his plan is to get a room, appoint a commission, bring in Republicans and Democrats and have them look over the engineers' list and only do the items that they can actually agree on. And the beauty, he argues, is that this saves money in the long run because you have to do these repairs anyway. And money? Money's cheap right now. He uses the example of Interstate 80 in Nevada.

FRANK: The state of Nevada Department of Transportation estimates that if we fix a 10-mile stretch of that roadway now, we can do it for 6 million. If we wait just two years, the truck traffic that runs over that stretch, the frost that heaves the road bed out further, all of that's going to so increase the cost of the job that we'll spend $30 million on fixing that 10-mile stretch of roadway two years from now. When should we fix it? Given that we all agree we should fix it, that's not a hard question to answer. We should fix it as soon as possible.

SMITH: You may be completely right, and this could be the answer. But we can find economists who say this is not the answer.

FRANK: I think you guys aren't doing your job if you don't force the people who say this is a bad idea to explain in plain English why they think so.

ROBERTS: Where do I start?

SMITH: Entering into the ring, raring for a fight, Russ Roberts, our panel's most libertarian member. And when we told him, oh, Bob Frank has this idea that he thinks everyone will agree to, Russ Roberts sort of laughed, and he started to list off the problems.

ROBERTS: People like to say we have an infrastructure crisis. When you ask them - what's the evidence for it? - They always point to some study from the American Society of Engineers or some other group - that might not be their exact name, but the people who desperately, of course, benefit and want more spending on infrastructure. So when I - when the American Society of Engineers gives our infrastructure a D, I'm thinking, aren't they a little bit self-interested? Yeah, they are.

BLUMBERG: So it seemed like we should take these two members of our panel and set up a special session just between the two of them. Get them in a studio at the same time and have them duke it out mano-a-mano. See if Bob could convince Russ that this was a no-brainer idea.

BLUMBERG: Thank you guys - both of you - for agreeing to do this. Bob, you've talked to Russ on the podcast and...

FRANK: Yes, we've talked many times.

ROBERTS: That's right.

SMITH: So right off the bat, it was clear that there is this very deep philosophical divide, this old fight that is lurking in this new proposal a fight between Bob and Russ. And this old fight is over Keynesian stimulus, which is essentially - can the government borrow a whole bunch of money and spend it to put people to work?

BLUMBERG: Right. And it's named after John Maynard Keynes, of course, a famous economist of the 20th century. And Bob things that, yes, Keynesian stimulus works, and that is the great advantage of this plan. It is doing exactly that type of stimulus.

FRANK: We can kill two birds with one stone. We can not only fix the things that need fixing, but we can put people back to work simultaneously. And it just so happens because people are out of work and the economy is in deep recession, the capital that we would need to finance the projects is cheaper than it's ever been.

BLUMBERG: Perhaps unsurprisingly, Russ Roberts remained unpersuaded of the benefits of Keynesian stimulus and said, essentially, Keynes had his big test with that big stimulus package that we passed in 2009. And what do we have to show for that?

ROBERTS: I don't think there's any evidence that's reliable on the effects of the stimulus spending, by the way. On job creation, yes, many economists will argue that there's evidence that the stimulus helped make it be better than it otherwise would have been. That evidence is all based on models, it's not actually looking at what actually happened. There's no CBO estimate that actually looks at the data to evaluate whether the economy would have been worse. They've explicitly publicly admitted that that's too difficult. So it's based on existing Keynesian models, which we could debate about but I'm skeptical of.

SMITH: OK. So we decided to set aside this argument about whether infrastructure building really creates that many more jobs. And we looked at the other argument, though - this notion that the investment that you make now in infrastructure saves money over the long run. And this got into a pretty interesting back-and-forth over the role and the function of government.

FRANK: I agree with Russ that we don't want to take the American Society of Civil Engineers' opinion as the final word on that. They have an interest, obviously. But has anyone driven on the roads that we have in this country? We're the richest country in the world. We have trains on the most heavily-populated corridor anywhere in the world that have top speeds of 70 miles an hour. You know, we're not a third-world nation. We're a fourth-world nation in terms of our infrastructure. The whole idea of trying to economize by not doing projects that need to be done is false economy.

BLUMBERG: What do you say to that, Russ? It's better to - you know, a stitch in nine - a stitch in time saves nine, you know, that basic idea?

ROBERTS: We should be investing in new weapons systems, too because they're cheap now also.

BLUMBERG: Now, Bob would say this is not a fair comparison. Military spending, you could argue - and military people, in fact, argue this - is not something we'll need more of in the future. So you're not saving any money by spending now since we're hoping that expenditures as we wind down troops in Afghanistan will be less than they are today. Nobody says that about roads. We know we're going to need the roads in 10 years. If anything, they're going to be carrying more traffic. So you do save money if you invest now.

SMITH: To which Russ said, essentially, yeah, but I still don't buy your premise.

ROBERTS: You can't just say there's $2 trillion laying around of unpicked fruit that's going to make us better off. There's just no evidence for it. I wish there were, but there isn't.

FRANK: OK. Again, though, the proposal was aimed specifically at that concern. It was to put a - let each side pick its own trusted representatives, send them into a locked room and have them emerge from the room with an agreement on which projects are legitimate and should be done.

ROBERTS: But, Bob, if that's your bottle of politics, let's not - why limit infrastructure spending to this great process? Let's have military spending be the same way, Social Security. Let's get a - partisans of both sides in a locked room and ask them only to pass the stuff that's good and worthwhile. Well, that's hard to agree on, evidently.

SMITH: Much like our hour with these guys, you sometimes just cannot get people to agree on things. But as we went through the hour, we saw, you know, there was something we could salvage from this. There was one important point that perhaps they could agree on.

BLUMBERG: Yeah, and their disagreement comes out of a fundamental agreement that they actually have - that our political system as it's existing right now doesn't work very well, doesn't produce very good outcomes. And what Bob says is so, therefore, we have to circumvent the system. We have to trick it into doing the right thing with this special panel with special powers. But Russ Roberts is saying, why would you expect anything different from a panel of experts that's appointed by the same political system which we both agree is broken?

ROBERTS: Bob and I have an interesting difference of opinion about the efficacy of government in action. I look at it the way it is, and I don't understand why we'd need to allocate more money, given that we've already allocated more money to government. And I would suggest that to fix these crucial things, we should find other things that are not doing - being done well and do less of those. That's what families do and businesses do when they reach a budget constraint.

FRANK: You know, I agree with Russ. The government's bad in many ways. We should focus, though, not on trying to strip it down so it doesn't have the resources to do anything but rather on trying to make it more effective so it can do those things that need to be done collectively and more efficiently.

ROBERTS: And if it did those things, it would be much smaller. And that would be good. And it would do the things that it should be doing well instead of poorly. And that's where I think we also agree. The things that government does poorly...

FRANK: How big the government would be is a question to be settled by...

ROBERTS: Yeah, different argument.

FRANK: ...Public input.

SMITH: So yes, it's fair for us to say they agree to disagree or basically that, in a democracy, economists don't necessarily have to agree. They aren't the ones that make the decisions, which they probably thank the Lord every day they don't have to.

BLUMBERG: (Laughter) Right. And in some ways, that's what we're trying to fix with this project. We're trying to say if there are economic opinions out there that are valid that have the full support of everyone on this panel, let's take them to the public - to you - and see if we can persuade you.

SMITH: Yeah, and how do you take it to the public? You hire consultants. You make ads. You do focus groups. You know, I think when we did our presidential platform show a few weeks ago, people were like, oh, that's entertaining. That's a one-off. And we're like, no, no. We're going with this. We have the ideas. We have the agreement of six economists. And so we are moving forward. We've already brought in consultants to say, listen, if these ideas are good for the economy, how do we sell them? How do we make people understand the concepts behind them and get behind them?

BLUMBERG: So stay tuned as we try to get our dream platform ready for primetime dressed up to meet the American public.

(SOUNDBITE OF SONG, "SOLSBURY HILL")

GABRIEL: (Singing) When illusion spin her net. I'm never where I want to be.

BLUMBERG: As always, we welcome your questions and comments. Send them to us at planetmoney@npr.org. You can also find us on Facebook, Twitter, Spotify. I'm Alex Blumberg.

SMITH: And I'm Robert Smith. Thanks for listening.

(SOUNDBITE OF PETER GABRIEL'S "SOLSBURY HILL") Transcript provided by NPR, Copyright NPR.