Making Sense - Sam Harris - #480 — The Economics of Everything

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00:00:22.960 i'm here with noah smith noah thanks for joining me hey thanks for having me on you've got a great

00:00:29.640 Substack, which many people will have read. It's Noah Opinion, pun on your name. Noah Opinion.

00:00:35.580 Noah Opinion, but they can find you no doubt under your name as well over there on Substack.

00:00:40.800 There's a lot to cover. I mean, you touch many interesting topics, but summarize your background

00:00:45.620 first and then we'll just jump into your wheelhouse. All right. Well, background, I was

00:00:50.600 originally a physics major in college. Then I lived in Japan for a while. Then I did a PhD in

00:00:56.480 economics at the university of michigan worked for a couple years as a finance professor at

00:01:01.360 stony brook in new york and then um quit to become a uh a writer yeah and so now i just write about

00:01:07.220 economics well you're good at that and um yeah you produce these very clear articles that that

00:01:13.380 walk people through um issues of uh of great importance to our society and uh it's a pity

00:01:18.720 we don't spend more time thinking about some of these issues i want to raise the first one which

00:01:23.100 you wrote about recently, and I think you've had some change of opinion on, and that's the

00:01:28.360 national debt. I don't think I've touched the national debt at all on this podcast. I think

00:01:32.840 maybe I asked Lloyd Blankfein one question about it, and I can't even remember why he wasn't more

00:01:38.720 worried about it. But I really do kind of want to walk through this in almost an econ 101 way.

00:01:44.280 But big picture, how do you think we should think about the national debt at this point in the U.S.?

00:01:49.740 the united states is is becoming a high debt country compared to other rich countries and

00:01:53.660 this didn't used to be true it used to be that european countries were sort of more indebted

00:01:57.500 than us and japan was much more indebted than us and now after um the great recession and uh

00:02:02.540 covid and sort of the lack of of spending you know fiscal restraint that we've had in the years since

00:02:07.580 covid we are a high debt country and this carries with it dangers nobody knows exactly when debt

00:02:14.060 starts becoming a problem there's no like hard line people have tried to define that line and

00:02:18.300 nobody really knows. But at some point, the problems start creeping in. Private investors

00:02:22.700 start being unwilling to buy the government's debt. So, you know, the government borrows money

00:02:26.200 by issuing bonds, right? It sells bonds, some bonds to foreigners, but most bonds are just sold

00:02:30.700 to like banks or regular people even, but mostly banks. And then, you know, U.S. banks, like Chase,

00:02:37.500 you know, buy a bunch of U.S. bonds. And then, you know, they sell these bonds and then, you know,

00:02:42.380 they pay some interest rate on the bonds. But when these private investors or other countries

00:02:46.580 or regular people or whoever become less willing to buy the bonds, they have to offer a higher

00:02:51.160 interest rate to get people to charge, to buy the bonds. And so the interest rates go up and up and

00:02:55.800 up. But when the interest rates go up, the government has to roll over its whole stock of

00:02:59.420 debt at those new higher interest rates. And when it has to roll over this debt, you know, it has to

00:03:04.700 pay higher interest costs every month, every year out of its budget and has to pay those costs or

00:03:09.080 else it defaults. And if there's a government default, the economy crashes and very bad things

00:03:13.060 happen. So the government has to pay more and more interest each year. So it can do one of two

00:03:16.760 things. It can either raise taxes and cut spending, it can exercise fiscal austerity, or it can just

00:03:22.320 borrow more to cover the interest payments. So that's what we're doing right now. We're actually

00:03:27.160 borrowing more and more to cover the increased interest payments because our interest rates went

00:03:31.860 up, you know, partly because the Fed raised interest rates, partly because people are demanding

00:03:36.580 higher interest rates for long-term bonds. The government has to pay higher interest rates now

00:03:41.060 on its whole stock of debt as it rolls it over.

00:03:43.420 And then, so the interest costs per month, per year

00:03:46.100 are going up and up and up.

00:03:47.540 And we're just borrowing to cover that interest too.

00:03:50.800 And that's bad because eventually people realize like,

00:03:53.340 wait, they're not gonna really pay this back, are they?

00:03:55.880 And then what happens interestingly is inflation.

00:03:59.040 So people realize that what will eventually happen,

00:04:01.460 people might think there would be a default,

00:04:03.420 but more likely is that the government gets the central bank

00:04:06.600 to print money to pay off the debt.

00:04:08.440 It's a little more complicated

00:04:09.580 than printing money, quote unquote.

00:04:11.060 but it's basically that it's the central bank prints money to pay off the debt people realize

00:04:15.140 that's going to happen they realize inflation is coming and then that becomes a self-fulfilling

00:04:18.340 prophecy where inflation goes up everything everyone gets poorer you remember 2021 22 with

00:04:23.380 eight percent inflation there's some of these countries that can get a lot higher than that

00:04:26.500 and so then people get abruptly poorer people's you know bonds you know vanish like because

00:04:31.860 because inflation devalues debt and then uh you know so so basically bad things happen with that

00:04:37.060 surge of inflation everybody gets really really mad and the economy essentially gets bad i want

00:04:42.340 to go over some of that ground again i just i want people to understand how this machine is working

00:04:47.540 there's an interesting connection between interest rates as a lever and uh inflation as something

00:04:54.500 that the government can decide to control right so inflation at a certain point is a bad thing

00:04:59.540 and one thing that that's within the government's power to pull the brakes there is to raise the

00:05:05.460 the borrowing rate, right? And this cools off the economy. But as you just pointed out,

00:05:09.900 raising the rate of interest is also working against the government's ability to pay back

00:05:16.060 its own debt, which keeps rolling over. Exactly. So you have this trap where,

00:05:21.420 you know, like people won't buy your debt. So you need to raise the interest rate,

00:05:27.120 you know, to pay off the debt, but then you have to roll over the debt at the new higher interest

00:05:30.140 rate. And so then you have to pay more debt. And so you have to borrow even more. And then people

00:05:34.360 like, wait a second, I can't lend you that much. And so you have to raise interest rates again.

00:05:37.580 At some point it stops and private demand for your debt just collapses. Chase won't buy your

00:05:42.300 debt. Grandma won't buy your debt. China won't buy your debt. Nobody will buy your debt. 0.70

00:05:46.720 Is there any reason to think that the U.S. is anywhere near defaulting on anything or that

00:05:55.280 there's a perception of risk in loaning money to the U.S. government? I mean, we are the backstop

00:06:01.720 for, you know, the global financial system on some level, right?

00:06:05.700 I mean, everything is anchored to the dollar, or certainly most things are, that gives us

00:06:10.960 an unusual kind of superpower here.

00:06:13.140 What are the signs of that being more precarious than anyone would want it to be?

00:06:20.140 So what you want to look at there are interest rates on long-term bonds, and you want to

00:06:23.700 look at the strength of the dollar.

00:06:25.480 So if the strength of the dollar goes down at the same time that the interest rates on

00:06:29.880 long-term U.S. government bonds goes up, that indicates that people are pulling their money

00:06:34.520 out of America. And we have seen some of that recently. So if you want, I can explain why

00:06:39.960 those two things together show that. Yeah, no, that would be great, but still

00:06:44.720 high level. You're saying we haven't seen a kind of rush for the exits there in any way that is

00:06:52.620 scary, or you're saying we're seeing something that should be unnerving to people who are paying

00:06:58.860 attention it's a little unnerving because you know the the idea of the collapse of the u.s

00:07:03.220 centric global financial system and a you know abrupt devaluation of the dollar a potential u.s

00:07:08.220 default or inflation those are you know two forms of a similar thing the potential of that should

00:07:15.920 scare people even if it's not imminent right it's such a bad thing that could happen it's like you

00:07:21.180 know you're you're you get a blood test and like you know it shows a tiny bit over the level for

00:07:26.260 some cancer marker you should be worried about that because cancer will really screw you even

00:07:30.480 if it's only a little bit over the level and so that's where we are so is there really no

00:07:36.080 insight into when the debt to gdp ratio goes uh malignant i mean like what what is it what is the

00:07:45.860 history offers no real instruction there's nothing in the the theory of of economic systems that

00:07:52.260 provides any guidance? Is this just a kind of mysticism? Well, it's not mysticism. It's highly

00:07:57.540 specific to the country. The thing is that you can look at other time periods for our own country,

00:08:01.520 and you can look at other countries, right? They aren't necessarily comparable, right? Because

00:08:06.220 what matters is expectations. What matters is when Chase Bank and grandma and China stop buying the 0.91

00:08:12.500 debt, right? What matters is when all those people stop buying the debt. And we don't know for America

00:08:17.440 right now, when that point is going to be, we could tell you for, you know, Britain many years

00:08:22.800 ago, or Russia many years ago, or America a hundred years ago, but those aren't necessarily

00:08:27.360 comparable. Those aren't necessarily the same. There's no reason. There's no, like, there's no

00:08:31.120 law of the universe here. There's no, like, you know, gravitational constant here. There's no,

00:08:35.400 there's no law of economics. And some people tried to establish a threshold, but there's no

00:08:40.100 threshold it's it's really you can't put a number on it when people start to get scared it's when

00:08:47.720 it's when people start to get scared and there's not even an objective because expectations based

00:08:52.540 right it's based on when all these people decide to stop buying the government debt and that's

00:08:56.980 human psychology right we don't know when grandmas and chase and all these people are going to stop

00:09:01.660 are going to decide to stop buying the debt we don't know like it's human psychology based and

00:09:06.020 And so I, you know, we don't understand that.

00:09:08.380 And there can be, you know, this very rapid shift in expectations where people say, okay,

00:09:11.800 America's done, you know, like they're not going to pay their debt back.

00:09:15.000 This thing is collapsing.

00:09:16.000 Let's head for the exits.

00:09:16.740 And then there's this stampede, right?

00:09:18.700 Where some people head for the exits and then everyone's like, well, those guys are heading

00:09:21.100 for the exits.

00:09:21.600 I better head for the exits too.

00:09:22.680 And then everybody tries to stampede out all at once.

00:09:26.020 There's, you know, a million econ papers on how this happens in like poor countries,

00:09:29.160 but it rarely happens in rich countries.

00:09:31.400 But if it does happen, it's really catastrophic.

00:09:33.880 And so could it happen?

00:09:35.320 Yes.

00:09:35.580 what's the level of debt that's scary i i can't tell you like there's there's probably there's

00:09:40.440 no threshold there's no tripwire if there is we can't see it because it's it's different for every

00:09:45.520 country in every time period well how much does our status as the reserve currency for most of

00:09:52.400 the world protect us from this kind of calamity so the reserve currency means that other countries

00:09:59.580 hold dollars as their reserves. They hold a bunch of dollars in order to conduct trades on the

00:10:07.040 international trading system or, you know, buy stuff, you know, from America or things like

00:10:11.940 that, invest in America, things like that. The fact that they hold all those reserves is a big

00:10:17.700 part of the reason why this would be such a calamity. If they didn't hold those reserves,

00:10:22.460 it would be much less of a calamity were we to, for the world, for us to, you know, for the dollar

00:10:28.680 to drop in value for America to have an episode of high inflation or sovereign default, right?

00:10:33.960 But it's not itself a bulwark against a loss of confidence in U.S. debt?

00:10:41.120 It is, but then it absolutely is. But then the thing is that what that means is that it gives

00:10:47.540 us sort of this cushion that our leaders can abuse by pushing things farther than another

00:10:53.960 country would have been able to push them. And then, you know, in exchange for that cushion,

00:10:58.460 we get a more catastrophic fall if we do fall. And we being the world at this point.

00:11:06.000 We being the world, but also the United States. So the capital flight from the United States

00:11:10.140 would be a truly apocalyptic economic event. What are the contributions of modern monetary

00:11:15.860 theory to this conversation? Modern monetary theory is the most poorly named idea since the

00:11:22.400 holy roman empire which was famously neither holy nor roman nor an empire modern monetary theory is

00:11:28.660 neither modern nor monetary nor theory it is a series of pronouncements by a small circle of

00:11:34.620 people who will change their story on any given day led by again warren mosler and also stephanie

00:11:42.180 kelton and these people if you ever try to pin down exactly what the mmt people believe about

00:11:49.020 something, unless you're one of the MMT people, they will say, no, you haven't gotten it. And

00:11:54.340 the only way to get it is not to read any papers or books or something like that. You can't,

00:11:58.900 this isn't the kind of knowledge like a, like physics, you know, you can read a textbook and

00:12:02.660 then you can understand physics. Even if all the physics professors in the world died, you couldn't

00:12:06.840 go ask them questions. You could read a textbook and you could understand Newton's laws or

00:12:10.260 electromagnetism or something like that. Economics, you know, orthodox economics, you could understand

00:12:15.280 the models of supply and demand or whatever just by reading a textbook without asking a guru but

00:12:20.360 with mmt there's no independent knowledge that they allow you to have you have to go ask them

00:12:25.500 is debt too high now what will happen to interest rates and they will give you pronouncements from

00:12:29.960 their little mountaintop oddly in 2021 2022 when people started worrying about debt warren mo you

00:12:35.760 know before that they had spent years saying like you know debt's not a problem debt's not a problem

00:12:40.000 inflation's not a danger blah blah blah then inflation went up and people started laughing

00:12:43.520 at the MMT people and listening to them less. And the MMT people, then Warren Mosler, the ultimate

00:12:49.080 guru of MMT, came out and said, oh, debt's too high now. We could get inflation. He just made

00:12:53.720 this pronouncement. There was no system. There was no formula. There was no transparent process

00:12:57.960 by which he made that pronouncement. But then this accelerated the loss of intellectual currency

00:13:03.540 that MMT had in a lot of people's eyes because they realized that whether debt is good or bad

00:13:08.460 depends entirely on the pronouncements of a few gurus. But the general slant of their contributions

00:13:13.960 has been to not worry about debt to GDP ratio. That's right. They have done a lot of yelling

00:13:19.560 of people to not worry about debt. I would not listen to them if I were you or anyone.

00:13:24.420 I'm sure there's their MMT fans who are going to think I should have pushed back here, but

00:13:28.820 truth is I don't know enough to push back intelligently. And I'm worried about debt for

00:13:33.680 other reasons. I mean, so at the moment, the interest on the debt exceeds, I think, every

00:13:39.280 government expenditure except Medicare and Social Security, and it's projected to exceed

00:13:45.220 Medicare in 2028. Does that sound about right? About right, yeah.

00:13:49.220 What are the escape routes here? I have a list of, I think, five, which I might have gotten from you.

00:13:55.600 I'm not quite sure where I got them. I can tick them off and then we can discuss them. But my

00:14:00.140 list here is number one, grow out of it. Two, inflate it away. Three, austerity. Four, financial

00:14:07.340 repression. And five, default or restructuring, which does not sound good at all. So how do you

00:14:14.800 think we get out of this situation? Just what is the situation? We have close to 40 trillion in

00:14:22.000 debt. That sounds about right. And again, interest on the debt is growing and eclipsing more or less

00:14:27.740 everything, including defense now. What do you think we will do and what do you think we should

00:14:32.440 do if there's any daylight between those two things? I don't actually know what we will do

00:14:36.460 because, you know, politics is kind of unpredictable and I'm not a specialist in predicting what we'll

00:14:41.200 do. But what we should do is, number one, we need to, you know, once we start worrying about the

00:14:46.680 debt, we need to enact fiscal austerity. And we did that in 1993. We did fiscal austerity after

00:14:52.120 a few years of everybody being really worried about the debt. If you're old enough to remember

00:14:55.920 the, which I think you are, if you're old enough to remember the 1992 election, the candidates were

00:15:00.320 competing to say who could cut the debt more. And so it's not this idea that politics is this

00:15:04.760 eternal goodie bag where everybody just wants infinite goodies and no one cares about debt

00:15:08.000 is not necessarily right because I've seen the opposite. I've seen people worry about debt.

00:15:11.540 I've seen the whole nation worry about debt. I mean, I was a little kid at the time, right? But

00:15:15.000 I still remember that was sort of my first glimmer of politics. And I started, you know,

00:15:21.520 understanding that like everyone's scared about debt. So when I was, you know, 10 years old or

00:15:24.780 whatever, I thought debt was bad because I saw people on the TV talking about a lot. And so

00:15:29.140 we can do that. And so, so we'll have to. Cutting the deficit is one thing. Cutting,

00:15:33.360 actually making a meaningful cut to the debt would require, it's got to require growth,

00:15:39.220 right? I mean, we're not going to just, you know, keep the plane flying at 30,000 feet and whittle

00:15:43.480 away on this $40 trillion debt. Yeah. So growth happens. I mean, you know, growth isn't grinding

00:15:48.520 to a halt. In fact, if, if anything, I'd say that, that growth will accelerate a little bit

00:15:52.920 due to the AI boom, but that doesn't, you know, when I say accelerate, I don't mean we're going

00:15:57.000 to grow at like 20% or whatever the AI, you know, boosters say, I think, you know, maybe the

00:16:04.040 standard forecast, maybe we'll grow at two and a half percent or maybe even 3%. That would be

00:16:08.720 amazing. But like, but we will continue to grow, right? Our economy will continue to grow. There

00:16:13.480 are things we can do to make it grow more. One thing is, you know, we normally talk about growth

00:16:17.260 in terms of per capita living standards, but we can also grow the total size of the economy by

00:16:20.860 bringing in immigrants. And that's exactly the opposite, of course, of Trump's strategy,

00:16:24.520 especially high skilled immigrants that pay lots of taxes. So we can bring in like, you know,

00:16:28.160 millions of smart people from India and we can do that. And then, you know, but Trump doesn't

00:16:32.940 want to do that. So that's a sidetrack, but we can do that in terms of, so that's one thing we

00:16:37.200 can do is, is to simply lower the deficit and let growth erode the debt over time. That's one thing

00:16:43.820 that, that, that that's the most important and best thing we can do is fiscal austerity, by which

00:16:49.040 I mean, a combination of tax increases and spending cuts and then allowing growth to

00:16:54.300 take its course over time.

00:16:55.480 That will take, you know, a decade, two decades of that.

00:16:58.400 But that will that will definitely fix a lot of this problem.

00:17:01.560 And we can't inflate it away because, as we've just said, the debt rolls over and we have

00:17:07.120 to pay the consequences of inflation while paying the debt.

00:17:11.000 Well, no, we we can inflate it away.

00:17:13.540 And so, in fact, our debt to GDP ratio fell during Biden's presidency for exactly this

00:17:18.700 reason, because inflation was higher. So actually we did inflate away a little bit of the debt,

00:17:23.980 but it took, you know, despite all the lack of fiscal restraint, despite all the money we were

00:17:28.300 spending, despite all the taxes that we cut, we did inflate away a little tiny bit of the debt.

00:17:34.000 But remember how mad people were, you know, people suddenly got much poorer. They couldn't

00:17:38.640 buy gas, they couldn't buy food, they couldn't buy, you know, rent went up and all these things

00:17:42.100 went up. People were just, you know, it resulted in people electing Trump who didn't help the

00:17:46.420 problem, but it resulted, even though that inflation lasted mainly for about a year and

00:17:50.380 a half, two years, it got people really mad and in an enduring way. And people are still saying

00:17:55.100 the cost of living is way too high. They still vividly remember that experience of inflation

00:17:58.800 that we had. If you're going to meaningfully inflate the debt away, you're going to need

00:18:02.560 that sort of inflation for years and years and years. And I don't think like you're going to

00:18:07.060 have people revolting in the street. So you can inflate it away. You can do that, but it's going

00:18:11.300 to make people really, really, really, really mad, more mad than fiscal austerity.

00:18:15.120 What about the risk of hyperinflation under those conditions?

00:18:18.780 It's real. I mean, hyperinflation happens. There's a lot we don't know about hyperinflation,

00:18:22.620 but our best guess, okay, is that hyperinflation, when you get inflation, not of like 8%, but of

00:18:27.080 like 1,000% or something, you know, this hyperinflation, our best guess is that it happens

00:18:31.520 when the central bank just starts printing money to buy however much, you know, debt the government

00:18:37.080 wants to issue. So when you start issuing government essentially a blank check from

00:18:41.760 money printing, that's when hyperinflation happens. I think Trump's instinct is probably

00:18:46.220 to do something like that, to simply start the printing presses, you know, have the central

00:18:51.620 bank buy infinite government debt that he can then use for populist goodies. And by the time

00:18:55.360 it catches up with us and we screw ourselves, he'll be dead. You know, and this is what happened

00:19:00.200 with Venezuela. Hugo Chavez started this process. And then by the time it really caught up with

00:19:05.160 them and destroyed their economy, he was dead. And so Trump is an old man. You know, he's not 0.73

00:19:08.820 going to live that long. And so I think maybe this is what he would want to do, but I think

00:19:13.520 everyone else sort of understands like J.D. Vance would then be the American Maduro. He has stuck

00:19:18.700 with this, uh, you know, rapidly expanding inflation, uh, from monetary financing of the

00:19:24.400 debt. And I don't think he wants that. Is this the kind of thing that can happen to some degree

00:19:28.720 surreptitiously, or is there full transparency with respect to, uh, money printing in all its

00:19:34.260 forms? Well, so the first thing that they do is to cut interest rates. So you can see that

00:19:38.700 happening, right? So when the Fed prints money, quote unquote, it uses it first and foremost to

00:19:44.320 buy bonds. And you can see that happening and you can see interest rates go down from Fed actions.

00:19:48.300 So you can see quantitative easing. I'm sorry, quantitative easing. Qualitative easing actually

00:19:53.480 does exist, but it's another thing. So quantitative easing, QE, you see the Fed printing money to buy

00:19:58.680 longer term bonds. Usually when the Fed prints money, it just buys short term bonds like T-bills

00:20:02.560 or you know whatever but then um it can also it can and sometimes does print money to buy longer

00:20:08.820 term bonds to push down those longer term interest rates and if it does that if it does qe will

00:20:12.880 basically know that that's a that's a really good sign that this is happening so what the word

00:20:18.520 austerity is a um certainly not a pleasant word in this context and yet i'm not sure people have

00:20:25.060 intuitions about what it means in its totality what are we talking about when we talk about

00:20:29.780 austerity as being one of the levers we can get in hand here. Right. So austerity got a bad name

00:20:35.040 years ago in the Great Recession when people were like, we need to spend to stop this,

00:20:39.300 to get out of this recession. They were probably right about that, assuming we could have done

00:20:43.440 fiscal restraint and austerity during the boom that came after the Great Recession.

00:20:47.540 After the Great Recession, we had a long boom and we could have fixed the government's finances

00:20:51.640 during that long boom the way we did in the 90s. Instead, we did not because interest rates were

00:20:55.660 low. And so we just rolled over the debt and we never fixed, we never removed the debt that we

00:21:01.760 built up to fight the Great Recession. Well, was there a huge mistake there? I remember some people

00:21:06.460 advocating for when interest rates were at their lowest, you're kind of repricing U.S. debt. Did

00:21:13.420 we miss an opportunity there to lock in super long-term loans to the government? Yes, we did.

00:21:20.000 The average maturity of U.S. debt is something like 4.3 years. That's way too short. We should

00:21:25.080 have locked in 20-year debt at super low interest rates. We would have given ourselves a lot more

00:21:29.940 runway politically to solve this problem. We did not. If that was so obvious, what was the

00:21:34.660 impediment there? I don't actually know. It could have been some worries about spooking financial

00:21:38.820 markets because if you do that, maybe financial markets will take it as a signal that you intend

00:21:42.960 to do, borrow more and not stop. So maybe the short maturity that we kept it at was some sort

00:21:49.200 of credibility signal. But I'm just hand-waving here. I don't actually know. Your guess is kind

00:21:53.920 of as good as mine here. We did miss an opportunity. Okay. So I interrupted you about

00:21:57.880 austerity. Oh yeah. Austerity. So austerity just means cut spending, raise taxes, you know,

00:22:03.000 and there's lots of ways we can do both. There's a, we can reverse all the Trump tax cuts. We can

00:22:06.980 tax, you know, a higher corporate tax probably isn't going to hurt us. Uh, we can do higher

00:22:11.420 capital gains tax and we need to raise taxes, not just on the rich, but on the upper middle class,

00:22:15.720 you know, like people making, you know, $150,000 a year need to be paying more taxes. It's not just

00:22:20.520 of people making a billion dollars. Obviously we should raise taxes on people making billions of

00:22:24.200 dollars. And I'm in favor of raising taxes in a progressive manner where billionaires get their

00:22:28.000 taxes raised more than regular people, but regular people need their taxes raised to regular people

00:22:33.140 need to pay more taxes because that's how they do it in Europe. You know, there's, it's, it's

00:22:38.360 like we need, we could have a VAT, we could have higher income taxes, things like that. We need to

00:22:44.220 do it in addition to corporate taxes and capital gains taxes and, you know, higher taxes on the

00:22:48.620 very rich people. We need to raise taxes across the board. The American people have to be in this

00:22:54.780 altogether. We can't, you know, we shouldn't raise taxes on the poor because like, A, they're poor

00:22:58.920 and B, they don't have any, like, it's not going to raise much money. But on the, on the middle

00:23:02.540 class, we need to raise taxes on the middle class. And that's, Democrats are pledging not to do it.

00:23:06.600 Republicans are, of course, never going to do it. We need to raise taxes on the middle class. In 0.98

00:23:10.460 addition, I want to raise taxes on the billionaires more, but we need to raise taxes on the middle

00:23:14.200 class too. We need to, I'll pay higher taxes. We need to all be in this together. So that's the

00:23:19.220 tax side of it. We can't just do it with taxes. We need to have spending cuts. We need to restrain

00:23:24.160 the growth of spending. We need to, you know, actually cutting spending is actually less

00:23:31.020 powerful than simply restraining growth rates. If you simply say this now, instead of growing at

00:23:35.760 4% a year, we'll grow at 1% a year, that adds up to a huge amount. So all kinds of things,

00:23:40.540 especially health spending. We need to have the government buy people less health care. And I'm 1.00

00:23:46.260 sorry. Members can hear the full conversation by subscribing at SamHarris.org. Subscribers get a

00:23:52.240 private RSS feed you can use with your favorite podcast player. Phones have done three things to

00:23:58.220 break our society, three huge things, and we haven't dealt with any of those things yet.

00:24:02.420 Number one, made people unhappy by replacing in-person interactions with online interactions

00:24:08.240 that sustain human happiness less.

00:24:11.180 Number two, it has eroded our democracy 0.85

00:24:14.080 by privileging the input of the worst people in the world. 0.91

00:24:19.420 What is currently less important,

00:24:20.700 but will ultimately be the most important,

00:24:22.160 is phones are accelerating the fertility decline.

Making Sense - Sam Harris - June 12, 2026

#480 — The Economics of Everything

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