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Transcript: Ezra Klein Interviews Felicia Wong Publication info: New York Times (Online) , New York: New York Times Company. Sep 3, 2021.

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FULL TEXT Every Tuesday and Friday, Ezra Klein invites you into a conversation about something that matters, like today’s

episode with Felicia Wong. Listen wherever you get your podcasts.

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[MUSIC PLAYING]

EZRA KLEIN: I’m Ezra Klein, and this is “The Ezra Klein Show.”

[MUSIC PLAYING]

There’s been a lot in the Biden Administration’s economic agenda that has surprised me. Some of that has gotten

a fair amount of attention, the fact that his legislation is bigger, that it’s more ambitious, that the price tags he is

willing to work with are far beyond the things Joe Biden ever considered at any other point in his career. People

know about that. But to me, the really striking thing has been the personnel.

The appointments he’s made, the regulators he’s putting in key positions, they speak to a very different approach

this administration is taking to the way it governs and shapes markets. And I do want to hold on that word,

markets, for a minute. It’s really, really important.

This is not just an administration that is more liberal in terms of building new social insurance programs or

building new public options for things. It is an administration that simultaneously believes in markets but wants to

use them much more aggressively to achieve public goals. And that’s a pretty big phase shift building on a decade,

or you could argue decades, of changes in progressive economic thinking.

So to have this conversation, I wanted to bring on Felicia Wong, the C.E.O. of the Roosevelt Institute. Roosevelt is a

newish economic think tank. It’s not one of the real old players like Brookings, but it’s become very influential in

recent years.

It’s a generator of a lot of this new economic thinking. A number of people who have gone through Roosevelt are

now in the Biden Administration. And Wong, who is a trained political scientist, has a very good sense for this

interface between economics and politics and how policy change actually happens.

So this is a conversation where we dig into the details, really talking about some of the ways antitrust thinking has

changed, the way the Democratic Party’s thinking about economic power has changed, what to think about the

central banks, and Jay Powell, and whether or not he’ll be reappointed. It’s a good, wonky conversation about

something that really matters, which is how the Biden Administration will use the economic power it has as a

presidency, not just that it has through pushing legislation, to reshape, not just the country’s economy, the country.

As always, my email, [email protected].

[MUSIC PLAYING]

Felicia Wong, welcome to the show.

FELICIA WONG: Thanks, Ezra. It’s nice to be here.

EZRA KLEIN: So from what we’ve seen over the past nine months, how would you describe Joe Biden’s economic

vision?

FELICIA WONG: I think a lot of people actually misunderstand Biden’s strategy. And I think that’s because they

default to a kind of old understanding of what Democrats stand for, this idea that Democrats are tax and spend

liberals. Don’t get me wrong. I’m all for taxing. I’m all for spending.

But what Biden is trying to push is much more about actually remaking our economy, so that it does different

things, and it actually regularly produces different outcomes. Biden has a vision for leading an economic

transformation that really is high care low carbon. That is really what the Biden strategy is all about.

EZRA KLEIN: Something I see, to my surprise, when I look Biden administration is a triumph of what I’ve heard

called around Elizabeth Warren left neoliberalism. There’s this great piece by Henry Farrell, a political scientist. I’ll

put it in show notes about this. You see it with appointments like Lina Khan, the antitrust thinker, to the Federal

Trade Commission.

It’s not a shift from Democrats who like markets to Democrats who don’t like markets and just believe in

government. It’s a shift from Democrats who believe the government’s role is to step in when markets fail to

Democrats who believe the government should shape and structure and direct markets to achieve better social

outcomes. Is that fair?

FELICIA WONG: I do think that that is what a lot of people, not just Lina, but a lot of the people at the National

Economic Council, a lot of the people at the Council of Economic Advisers actually think about markets, which is

that they need to be constructed to promote more care, to promote more decarbonization. So I think Henry is right

in that sense. And I do think there is a left rulemaking that can be seen as left neoliberalism.

But when you combine it with this real expansion of childcare, and pre-K, and the child tax credit, and Medicaid

expansion, and this idea that you’re going to spend, at least at one point in the plan, it was $450 billion to increase

the pay of home health workers. Yes, that’s about remaking the market in home-based health care. So that women

are actually getting higher wages for doing work that is incredibly difficult. So yes, that’s about remaking a market.

But that’s actually about a kind of public spending that no neoliberal could ever have imagined and countenanced.

So it’s not left neoliberalism in a narrow just change the rules sense. It’s a kind of new economics, a kind of

mission economics, or purpose economics that sees that a lot of spending is what you have to do. And in fact, in

some cases, you could argue that spending is the feature not the bug here. Because spending is actually going to

push on the size of the economy and actually drive healthy growth.

But that is really at the heart of the vision. It’s not just a bunch of green-eyeshades lefties. I think it’s more than

that.

EZRA KLEIN: I want to ground this conversation in what I think is a particularly revealing example, which is

antitrust. Personnel is policy, and Biden has put basically all the key leaders of the new antitrust thinking into top

positions. We’ve mentioned Lina Khan, who’s now head of the Federal Trade Commission.

Biden’s got Tim Wu at the National Economic Council. He’s nominated Jonathan Kanter to lead the antitrust

division at the Department of Justice. This was surprising to me.

This is a new development in liberal thinking. It’s been gaining power over the last decade. And it has fully taken

over the Biden Administration quickly, really quickly. So I’d like to talk about the background of this. What has

changed in the thinking on the left around antitrust?

FELICIA WONG: The main thinking is really that the consumer welfare standard, which had been the standard

against which mergers and acquisitions had been judged, a merger could only be seen as a problem if it led to a

rise in consumer prices. People didn’t think about whether or not workers were going to be affected. They didn’t

think about whether the company itself —and this is where Lina’s Amazon article was such a revelation. People

didn’t think about whether companies themselves could actually have so much market power that they would end

up dominating a sector, like a giant company town in the middle of the internet.

So none of those other ways in which companies can end up essentially extracting from their consumers, from

consumers, extracting from the general public. None of those things were actually considered to be legitimate in

considering whether or not a company could buy or sell another company. And so antitrust law was quite brittle

and quite thin. But I would say, five years ago, led by Senator Warren and others, a number of political people and a

number of economists, like my colleague Joe Stiglitz, began really talking about market power as an enormous

problem that antitrust had to solve.

I think they saw it as a problem in economics. I frankly think they also saw it as a problem of democracy and a

problem of national security. I certainly see it in all of those ways.

And so because of that, this idea that there are a few places in government, the FTC, the antitrust division of the

Department of Justice, the White House itself. Tim Wu’s on the National Economic Council advising on technology

and competition policy. But there are very few places where you could actually lever up a different rule making

structure to take on this enormous political fight. And so that is what is compelling and exciting about thinking

about corporate power in this way or constraining corporate power in this way, thinking about antitrust in this way.

And the other thing, of course, that’s pretty exciting about it is it mostly does not require legislation. So the

agonizingly slow legislative processes that we see now, for both the infrastructure bill and for the budget, a lot of

this work can actually be done on the executive side. And that is pretty important when you think about just how

our federal government is structured and the ways in which checks and balances have become sclerotic to the

point of non-existent.

EZRA KLEIN: So I want to go back for a second to the two things you put together there, which is the economic

critique of market concentration and the political critique. And I’ve heard these described as the economic critique

and the Neo-Brandeisian critique. And they lead you in different directions. That if you’re just looking at how much

market power a firm or a couple of firms have, that’s one thing. But if you’re trying to bring in these more intangible

questions of bigness and political power, that requires a pretty different analysis.

The big tech firms are a good object case here, because a bunch of them do not operate as traditional economic

monopolies. Amazon, which is huge, it doesn’t have anything close to a monopoly in retail, nothing close to it. It

competes with Walmart and Target and Costco and a lot of others. And it’s not charging outrageous prices for its

products, but they do have a lot of power.

Or take Facebook. Facebook doesn’t look like a traditional monopoly. It competes with Twitter, and Snapchat, and

TikTok. Its product is essentially free, but they do have a tremendous effect on our democracy. They have so much

power. So can you talk about which of these approaches, the economic approach or the power approach, you think

the Biden Administration is actually taking?

FELICIA WONG: I’m interested in the way you’re thinking about this critique, because I do think that competition

policy generally can move in two different directions. I think one kind of competition policy does focus on just

making markets into better markets in ways that can —and maybe this is what some critics call left neoliberal. If

you just have markets work better, there’s no guarantee of any of those other kind of public purposes in the

economy that we’ve been talking about. But markets working better would be better than markets not working.

And so that’s one direction for competition policy. And the other direction competition policy really does lean

toward making sure that you’re not going to have dominance. And you have to define dominance, as you just said,

very, very differently than when it was about railroads and steel manufacturers. Because dominance looks very

different in the tech world than it might have when we were talking about roads, bridges, bricks and mortar. But a

focus on dominance is different than a focus on making markets work in a more elegant way.

EZRA KLEIN: I think that’s a good cut, and I might even add one more. I think that there is a way of thinking about

this it is literally about competition. But if you just think about it as competition, you’re not going to pull in a lot of

the players that people worry about. So then there’s dominance. And then I’d say, there’s influence.

This is where I talk about the neo-Brandeisian critique of Barry Lynn and others. That is really about political power.

I had a conversation with Lynn recently, who runs the Open Markets Institute, which has been incredibly influential

in driving this new thinking on competition policy. And I was struck by how much —and I don’t want to speak for

him, but this is from our interview.

I was struck by how much he was thinking about power not competition. I mean, we talked about Amazon for a

while. And his big critique of Amazon was not that it was too big and had to be made smaller. But that it had the

power to treat different people differently and that a lot of these companies in having that power to treat different

people differently, to discriminate, and then given their influence over markets, given their influence over politics

and political communication.

I would almost say, the direction some of them are going is less in a traditional antitrust frame and more thinking

about when to move a company into the status of almost a public utility subject to extremely high level of

regulation in service of a small democratically defined public good. And those are different, but they are often

merged together in the conversation. And I find that people move from one to the other a little bit quickly. And so

my question is what you think the Biden Administration is actually trying to fix in competition policy. Because

trying to make Amazon marketplaces more competitive versus trying to make democracy work better are actually

pretty different goals.

FELICIA WONG: That is such a good question, because I think the policy and the politics actually can move in some

different directions. So I think that people like Lina, and Tim, and other thinkers like Sabeel Rahman, who is now

working at OIRA, thinkers like that have been absolutely seminal in thinking about the domination question. The

analogy that some of them like to use is the innkeeper on the lonely road. Right?

You can run a two bedroom inn on a very lonely road. You don’t have to be very big to be very powerful and to be

able to charge a tremendous amount or do all kinds of other things to, essentially, get whatever you want if you’re

the small innkeeper on a lonely road. So they often think about this pincher quality that tech firms can have. And

they consider that to be dominance and power, even if it isn’t about bigness or markets working in this more

elegant or more effective way.

I absolutely think that a lot of these younger, newer thinkers, who are now in positions of power, that is the

direction they’re going. And at the same time, you can get a bigger coalition. And I think this is maybe one of the

reasons that people slip back and forth in the conversation and are a little bit sloppy, when they talk about

competition policy and market power in the same breath.

It’s because you can get some moderates. You can get some Republicans. You can get some traditional

Democrats. You maybe even can get Josh Hawley, although that’s another story. But you can get a lot of people on

board with a sort of competition policy markets should work better in the ways that the true neoliberals from the

1940s and ’50s envisioned.

You can get a much bigger political coalition than if you’re like, well, I want to take down market power. I want to

take down big tech. That’s a lot narrower path. And so I think that one of the challenges here is that the politics

and the policy, the real policy —I would consider it to be the real policy —move in different directions.

EZRA KLEIN: One critique I’ve heard of focusing on bigness in this way is that it leads to a lack of standards for

what government is actually doing, which can then lead to quite a bit of government abuse. So you mentioned

Josh Hawley, Senator Josh Hawley, a second ago. And a big critic now of big tech, but a big critic of big tech

because he feels that it discriminates against conservatives like him.

FELICIA WONG: Right.

EZRA KLEIN: And in the Trump Administration, you saw a lot of fear that Trump was going to try to use antitrust

powers to pursue his political agenda. One recurrent example was that, at least in his public statements, it was

clear that he was trying to scare Jeff Bezos into having The Washington Post cover him more positively by

threatening Amazon.

FELICIA WONG: Right.

EZRA KLEIN: Right? And try to put those together. And so the critique I’ve often heard of this approach to bigness

is that, unlike the consumer prices standard as a way of deciding when the antitrust regulators will act, focusing on

these more difficult to measure questions of political power and influence and domination gives government too

much power to define these questions alongside its own whims. So how do you think about setting the standards

around these kinds of analyses?

FELICIA WONG: So this is where you have to get back to stuff that makes neoliberals and many economists really

uncomfortable. Because it’s a lot harder to measure, but it is the most important. Because you have to get back to

values and public purpose, which I know is a lot harder to measure than a price. But you have to be able to get

back to that.

And you also have to be able to get back to the politics themselves, which means that this kind of government

power to make determinations around bigness or abuse or dominance, that really only works if we have a real

democracy in which people are able to not just have full access to the vote but actually ensure that their policy

demands and/or the politicians who represent them that they’re able to vote for them. And they’re not going to see

their policy demands either shut down by a dominant but very narrow Supreme Court. So I guess my point here is

that, for this to work, you actually have to trust in politics, democracy, and values.

So that might not be a very satisfying economic or economic policy answer. But I do think, you can’t get out of that

looking just at the economics themselves. You have to look at the democracy elements, and you have to look at

the political elements.

EZRA KLEIN: But I do wonder then if there isn’t more divergence between the values of some of the liberals in this

conversation, probably including me and the public. So I’ll use Amazon as the example here. I am very sympathetic

to critiques of Amazon. And I think they do a lot that is deeply, deeply unfair and anti-competitive. And at the same

time, I think something that needs to be reckoned with is they are insanely popular.

A 2021 Harris poll found 72% of Americans approve of Amazon, putting it just beneath the US military in terms of

popularity and way above any politician or political party you can think of. And to their credit, they’ve been able to

use their size to provide a service a lot of people really love. It is very convenient to use Amazon. So that, I think,

leads to one question, which is, is it possible that the antitrust movement on the left either underestimates the

values of bigness or is in danger of, at the least, diverging from the public in terms of what the public’s values

around companies actually are?

FELICIA WONG: Yeah, that’s possible. Because I think you are absolutely right that Amazon is popular. And they

are popular for all the reasons that you say. But I also think they are popular, because they are basically one of the

only options.

And so I think there is a real question. I mean, you might be right that some of what we want to fight for, in terms of

lack of domination, it’s a very hard thing to think about what a better set of options is, when you think about just

how dominant Amazon has become and, frankly, how good they’ve been at certain elements of what they do. I’m

not sure that that’s that satisfying. Sorry.

EZRA KLEIN: No. I think it’s an important thing to admit in these fights. I think that it is a mistake the left

sometimes make to suggest that public opinion will always be with them. And it’s, at least as a starting point,

important to say when maybe it isn’t.

FELICIA WONG: I think that’s an easy mistake though for the left to make or for progressives to make. Because

there are so many things now, over the last 10 years, so many economic policies that the public is with us on,

whether it is minimum wage, or universal pre-K, or childcare, or expanding health care, or the child tax credit. And

so I think it’s, to some degree, an understandable mistake to make to think that something else that also does

genuinely deserve critique and/or scrutiny, like Amazon.

It’s an easy mistake to make to think, well, just because we see all these reasons to critique Amazon. It’s easy to

then forget, well, this is one thing that the public likes. Because Amazon is actually quite convenient.

[MUSIC PLAYING]

EZRA KLEIN: This is a strange moment to cover the Biden Administration, where you are watching, I am watching,

their domestic agenda on the knife’s edge of succeeding way beyond my expectations or collapsing. So you have

the bipartisan infrastructure bill. There is some static around that passing around House moderates, but I expect

that will pass.

But then you have the reconciliation bill, which is really the entirety of their long-term liberal investment agenda.

And that needs every Senate Democratic vote in the Senate. Senator Sinema has already said she will not vote for

a $3.5 trillion bill. And yet, it clearly could pass in some form. I’m curious about how you see the agenda’s chances

at this moment.

FELICIA WONG: Yeah. I think we shouldn’t pretend here. I think that the politics here, as you so very well put it, and

as headlines in the newspaper every day, the politics here are incredibly tenuous. But I’d like to actually take a step

back and to think a little bit longer-term about why the politics are so tenuous.

Because I think it’s important to remember that the conservative economists, the neoliberals, they had 30 years

between the building of their ideas and their academic bastions —that was in the ’40s and ’50s —and the building

of their political movement in the ’60s and the ’70s, and then their taking of the presidency and the federal

government in the ’80s. And what is really important to understand about our politics at this moment is that

progressives, or the center left, or whatever coalition you want to talk about that is not on the right, we do not have

the luxury of time. We have to figure it all out all at once.

These ideas that we’ve been talking about are pretty new. They really have come about in the academy, in the

mainstream academy, only over the last 10 years. And the institutions, we’ve been naming people who are in these

institutions who are progressive. But these institutions are massive, and the institutions need a tremendous

amount of change in order to be able to actually hold all of these political advances, these new ideas, and to

execute on them, to make them a reality.

So we’ve been trying to figure out the ideas, the politics, the policies, the institutions all at once. We’ve imagined

this new world, but it’s pretty new. It’s pretty nascent, and we don’t know how to handle either the politics or,

frankly, the institution building.

So I think that’s the background for what is playing out right now. That’s the background for the kind of politics

that you reference, the razor thin margins that you see in both the Senate and the House. I think both Speaker

Pelosi and Leader Schumer have shown a tremendous amount of skill in navigating to this point, frankly. But it’s a

50-50 Senate. Right?

Democratic unity is incredibly fragile. And of course, mainstream Republicans are really dead set against progress.

But all the razor thin margins, the sort of political vitriol and animosity, obviously, the rules which you talk so much

about, the constraints of reconciliation, the problems with the filibuster rule, and even now, the crammed political

calendar, the fact that we have only several months to get this legislation done. And then you’ve got to also look at

the fact that the debt ceiling’s coming up.

There are so many things that are happening in this calendar. But all of these political problems, to me, they are

the result of the fact that this new thinking is so new. So we’ve got this massive change. And we’re trying to both

think about it, write it down, staff it, and act on it all at the same time. And that is just a challenge that I think the

neoliberals never had to contend with.

EZRA KLEIN: I want to identify also a policy politics interface problem, which is the dominant view among the left

is that you can build policy feedback loops. And I’ve written about this a lot, that you can build this policy feedback

loops where you give people good policy. And then if you are able to make it clear and simple, and they know it was

from you, it builds support to continue that policy, to build your political power. And that’s really been the dominant

view of the Biden Administration in particular.

And they have done some things that say, the economists in their coalition have raised their eyebrows at, like the

stimulus checks, in order to build this momentum. And one thing I would say at this juncture is you are not seeing

that momentum build. So the child tax credit has begun going out. You saw celebrations. I mean, these very

moving TikToks about people getting these checks, it really helped them and their family that they weren’t

expecting.

But if you then look at Joe Biden’s approval numbers, you don’t see anything there. It’s not like it’s led to a mass

mobilization for the expansion of the child tax credit to pass. And so I’m curious how you see that question of

policy feedback loops. Because this is all much harder if there isn’t a connection between policy that helps

people’s lives and the politics then enables the coalition that passes that policy. If this is all just abstract political

warfare, it’s much harder to see your way through it.

FELICIA WONG: Well, I think there’s two things to remember here. One is really obvious, but it’s worth repeating. We

are still in the middle of a pandemic. Right?

So what is dominating people’s day to day lives? Can I send my kid back to school in ways that are safe? Are we

going to be able to resume regular travel at any point in the near future? So I think that one of the things you see

happening there’s just a kind of exhaustion and overload that’s in part borne of Trumpist and vitriolic politics and

in part borne of this unprecedented global public health crisis.

So that’s maybe an obvious thing to say. But it’s worth saying in the context of public feedback loops and things

like the child tax credit that there is just a lot of noise in people’s lives that makes it harder for them to access

some of the things that are really going well in the economy and that Biden ought to get credit for. And at the same

time, I think you are right to point something out which is that much of our civic infrastructure, and of course, many

people have written about this for years, is just really thin.

We don’t have the kinds of labor unions or the kinds of other civic institutions that we might have imagined in the

sort of Tocquevillian America. Right? And even some of our activist organizations don’t have the kind of deep

membership that would make it much easier for people to understand and build civic power around real benefits

like the child tax credit. So I think you are absolutely right to point that out.

That being said, I do think that there is one element, perhaps the biggest and most obvious element of the Biden

economy that we haven’t really talked about that workers do really recognize and do really give this administration

credit for, which is that we have seen a kind of economic boom, especially for low income workers. The kind of

wage increases that you’re seeing, especially for workers in the lowest wage quintiles, it’s just incredible. Right?

$15 an hour, which had been an activist dream even just a few years ago, $15 an hour is now becoming the norm in

many places. Because actually, a combination of the Biden team, in terms of getting the rescue package out and

passed. The Biden team, Democrats in Congress, and also the actions of the Fed have led to a really hot high

pressure economy that is benefiting people.

So I don’t know if it’s the same kind of feedback loop that one would have expected with —and one still could see,

actually, with the child tax credit. But I do think that people recognize that the economy is a lot better than we

could have possibly anticipated a year ago. And it is better in large part because the Biden team, Democrats, and

the Fed have fought this recession in ways that are just revolutionary, especially when you compare it to the tools

that the federal government used against the Great Recession in 2008, 2009, and 2010.

EZRA KLEIN: So I see the politics of that as a conflict right now between the celebration of wage increases, of

employment increases, and the fear of inflation eating those away. And I’m curious how you look at the balance

between those. We’re talking on the day that Jerome Powell, the Fed chair, just gave a big presentation on inflation,

and it is higher than even liberal economists were projecting a couple of months ago. How do you see inflation and

the politics that surround it?

FELICIA WONG: Well, two things. One, I think that many liberal or progressive economists, including many of my

closest friends, said, it was definitely going to be bumpy over the course of the summer. And so I think some of

this we actually had anticipated. But I think the most important thing here is to look beyond the inflation averages

and to actually rethink what inflation really is and inflation as compared to wage growth.

There is a new emergent way of thinking about inflation not as too much money chasing too few goods and then

the average of all of those prices. But instead, you’ve got to think about inflation as the aggregation of many prices

in this bottom up way. And the problem that you have in certain sectors or certain segments of the economy is

that it’s not too much money, but it’s too much spending in very particular ways. So the question about inflation is

about needing to clear those bottlenecks in those very specific places.

So let’s just look at the data right now for just a second. When you think about it, the big price increases are really

in cars, airline tickets, and energy. The prices for food are more or less flat.

And so given that, there’s an argument to be made that workers, especially low income workers who are getting

those wage increases that I talked about, are doing better now, even given the price increases that we do see in

some of these sectors. And they’re definitely doing better if they do not need —if you need to buy a car, it’s pretty

difficult right now. But if you don’t need to buy a car, and if you don’t need to buy an airline ticket, it’s not as bad.

So I think that’s an important new way to actually think about inflation. But I think it’s also important to remember

that inflation actually hurts shareholders, which are mostly the upper 10% of all Americans. But at the same time, a

little bit of inflation can actually further employment and job growth. And so I think this has led to a political

psychology in which the fear of inflation has become a thing in and of itself.

EZRA KLEIN: Yeah. I definitely agree with that last point. If people want to go back and listen on this, Betsey

Stevenson, the economist, was on the show probably a few months ago now and talked a lot about the idea of

inflation as a conceptual framework. That inflation is driven by fears of inflation.

So I want to get into something you were saying there about how perhaps the policy model through which we think

about inflation is wrong. So on the one hand, I want to say that I don’t think it’s correct to be sanguine about the

inflation we’re seeing. If you’re a low wage worker and you need —your car breaks down, and you need to buy a

used car, you’re in bad shape right now. And that eats up a lot of the gains you’re getting in wages, if you are

getting gains in wages.

And energy has gone up quite a bit too. And that also hurts low wage workers quite a bit. So I think sometimes

liberals give me a little too at ease with this.

But on the other hand, we have this legacy from the Volcker period at the Fed, where we firebomb inflation, where

we think about the way of handling inflation as slowing the entire economy down all at once as opposed to really

legislating or making economic policy to try to manage specific problems. That if you’re worried that cars are not

going to bounce back quickly enough, there are things we can do there. There are targeted interventions we can

take.

The same, to some degree, is true in energy, although I think it’s actually more complicated given our carbon goals.

But it seems to me that there needs to be a bit more of a policy conversation. Because I find that the place people

feel pushed into is inflation pro or con, when you can have targeted efforts to ease inflation in various areas.

And by the way, I’d add to this long-term, a lot of the very, very dangerous inflation for people is in homes. And

there’s a lot you can do not this year, necessarily, but over the long term to ease housing prices. And so I see a

policy conversation that instead of taking inflation seriously in the ways we could change it in specific sectors just

wants to debate whether to slowdown the economy as a whole.

FELICIA WONG: That’s entirely right, Ezra. I mean, so first of all, let me be clear. I am not sanguine about inflation at

all. I think that it is very important to think about how to control prices in things especially that low income people

really need, housing, health care, transportation, energy.

So that’s incredibly important. But the conceptual problem is that inflation’s just too much money chasing too few

goods in a big picture sense. And whether or not that is what is happening in the aggregate, that’s deeply unhelpful

when you try to think about policy solutions.

So if the problem in cars is partly because a lot of rental car companies sold off their cars, when they thought that

there was going to be no travel, and so they weren’t going to be able to rent their car. If there are specific reasons

in the car sector, then those are the kinds of things you need to try to figure out how to solve. You need to try to

clear bottlenecks product category by product category rather than saying, well, just put the brakes on. It’s about

managing the boom. It’s not about boom, yes or no?

EZRA KLEIN: Is this a distinction between fighting inflation and fighting inflation expectations? Because that’s part

of what I hear there. That if what has happened is that the entire economy’s expectation of how much inflation

there is has gotten out of whack, well, then maybe you need to put the brakes on the whole thing.

But if what’s happened is you have a couple distinctive sectors out of whack, you actually have an inflation

problem not an expectations problem. Then you can have more targeted approaches. And one reason I think

perhaps that distinction would be important is if people felt, if they were convinced that we had specific inflation

problems that could be alleviated either through time or policy, and that they were being alleviated through time

and wise policy. Then that would probably keep them from developing inflation expectations that are out of

control.

FELICIA WONG: Actually, this is a huge debate right now amongst the handful of inflation macro geeks that I talk

to. How much of it is specific sector by sector policy? And how much of it is psychological? And what’s the

interplay between those two things?

I know Betsey Stevenson was making the argument that it was inflation was about inflation fear of inflation. So

she was basically making the psychological argument. I think it’s probably some of both, obviously. And I think the

most important change in the entire inflation conversation is to start to think about it in either or both of those

ways and the relationship between the two, as opposed to thinking about, well, I guess we need to raise interest

rates now.

If what you’re worried about right now is housing shortage, when we definitely should be worried about that right

now, the last thing you’d want to do is to raise interest rates. That’s going to make the prices of housing more

expensive. So anyway, it just seems like the revolution in thinking about inflation. I think there’s going to be a lot

more policy conversation on this in the coming years, and I think that’s healthy.

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EZRA KLEIN: Roosevelt has been writing about what is probably the most important personnel decision Biden has

coming up on the horizon, very related to this inflation conversation, which is whether Jay Powell, the chair of the

Federal Reserve, should be reappointed. And Powell, of course, was appointed by Trump. But I think liberals in

general believe he’s doing a good job. So how do you see that decision? Should he get another term?

FELICIA WONG: I think the first thing to remember is there are actually four seats open on the Fed. So Powell, as

chair, is obviously important. His seat is —he would be up for reappointment in February. But it’s important to think

about all of those possible appointments.

And it’s important to think about our goals for the Fed generally. Because I think, our goals are a couple of things.

First, I think it’s essential that the Fed keeps its focus —and Powell’s been excellent on this. But the Fed should

keep its focus on the labor market and on full employment. And frankly, the next Fed Chair, whether it’s Powell or

somebody else, should do everything she or he can to institutionalize those expectations.

The part of the dual mandate that we have given short shrift to over the last decades and that we need to be

paying attention to now are questions of full employment and the labor market. So that’s the first thing. But the

second goal for the Fed, the Fed in its regulatory powers can do much, much more to mitigate climate change than

it has done. And that’s a very important and under discussed power that the Fed really has.

So the Fed could regulate banks and other financial entities so that they disinvest in fossil fuels. They can require

banks to run climate stress tests. They can require higher capital requirements for banks that are more exposed to

oil and gas and other climate related risks. And this is a real economic risk.

This isn’t just left environmentalists, although some of it is promoted, of course, by environmental groups. But

climate change is a legitimate risk to the Fed’s full employment mandate. It’s a legitimate risk to economic

stability. And so the Fed can and should be doing this.

And I do think that we haven’t seen as much as, certainly, I would like from the Powell presidency to date on this

set of issues. So the question, for whomever is the next Fed Chair is, can we really promote both of these things?

And can we think of other great candidates for those other seats who have a track record in regulation and in

mitigating climate change in particular through the financial system?

EZRA KLEIN: Who would your top draft pick for a climate focused central banker —not for the chair necessarily, but

for a seat —be?

FELICIA WONG: Well, there’s lots of great people. I happen to think that Sarah Bloom Raskin is tremendous, and I

also think that Lisa Cook is tremendous. And I have to say that there’s a lot of room for better policy here under a

Chairman Powell as well.

EZRA KLEIN: We’ve talked a lot here about what the Biden Administration and liberals in general are trying to do.

But at the federal or state level, what are the biggest blind spots or points of failure in liberal governance right

now?

FELICIA WONG: I think that we do not do enough to connect the economic pieces where we’ve seen a tremendous

amount of real success or at least advance. And that’s what we’ve been talking about for this last hour. We don’t

do enough to connect that directly to both the race question and the democracy question.

And by that I mean, obviously, in 2020, we saw a tremendous amount of public support for the movement for Black

Lives and public outcry against racist police brutality and racist economic systems generally. But questions of

policy on race have begun to fade to the background. And what I see a lot is a kind of assertiveness on the

economics, which I think, obviously, is terrific and a hesitance or fear on really talking about race and really talking

about the ways in which good economic policy and good racial policy can move in the same direction.

And so I actually think that we need to bring those things together and to make better clear strategic moves that

show that the new economic thinking and new racial justice thinking move in the same direction. Instead, to be

honest with you, I think that many center left thinkers on race, not all, but if you’re running in a suburban district, or

you have to attract a large coalition of voters, people still don’t want to talk about race. Right? But we have to be

able to do that.

We have to be able to build a coalition that attracts Americans who aren’t part of the MAGA faction. And I don’t

think we are willing to do that enough. And I don’t think we’re willing to make a full throated case for some of the

ways in which racial inclusion is better for all of us. So I think it’s a real mistake.

EZRA KLEIN: You’ve talked before about how tenuous the Biden agenda is, even now. So I think the obvious

question from that is, is it possible those front line Democrats in more centrist districts, those Democrats who

have experience trying to put together these broad coalitions, and have looked at polling and looked at studies

suggesting that, when you racialize progressive economic policies, you make them less popular. Is it possible

they’re right?

I mean, the child tax credit is a great policy for racial justice. And I think the counter from that side of the

Democratic Party would be the point here is to get the outcome. And the way to get the outcome is not to frame

the child tax credit as a racial justice policy. It is to frame it as a policy for all. So when you say that that’s a

political argument, what makes you confident that these Democrats who have won in these seats and are holding

on by fingertips aren’t right?

FELICIA WONG: So I actually think that that is something that can and should become a new common sense.

Recognizing, as you definitely point out, that in some places, when you need to build a big political coalition, there

are different ways to talk about the benefits of these programs for different groups of people. I’m not trying to say

that in every sing —not everybody lives in Mondaire Jones’ district or AOC’s district.

I completely get that. But I do think that we cannot be so afraid of the overall public benefits, the overall public

welfare benefits of some of these programs. So that we don’t actually lean into making the argument that they are

good for all people.

I think that Heather McGhee, by the way, has been terrific at helping us see the other side of that coin, which is that

racism actually has hurt all of us. She talks about the drained public pool. No one can swim, because we didn’t

want the pool to be integrated. And that is actually a very, very, very powerful image.

So I think we need to be better at pushing forward on these sort of race forward policies wherever we can. And

then the other thing I’ll say is that not all of this is about electoral politics. Right? A lot of this is about changing

things at the policy design level, at the level we’ve been talking about, which includes how government agencies

actually work. And a lot of it is actually also jurisprudential.

Not all of this actually needs to be the center of a suburban Democrat’s run for office. But we actually really do

need a new kind of jurisprudence that says that sometimes it is OK for —and maybe often, it is OK for our policies

to take into account racism or racial exclusion in the past. I mean, a great example of this is the USDA attempt to

move money to Black farmers who have been discriminated against by USDA policies in the past.

This was something that was part of the early Biden Administration. Billions of dollars were on the line to actually

move to Black farmers, so that they could invest in their farms. And this policy is now being held up in the courts,

because it is considered to be facially race conscious. And that very well may be true.

That means we need a new jurisprudence in order for that set of race conscious USDA helping Black farmers

policies to actually go through. So my point is that there are many pretty creative ways to think about bringing the

new economics and the new racial justice together. Not every single one of them has to be naming race in every

single stump speech for every single suburban candidate. But there are a lot of things that we can and should be

doing to bring race, economics, and democracy together.

EZRA KLEIN: I think that’s a good place to come to a close. So always our last question, what are three books you

would recommend to the audience?

FELICIA WONG: So the first book is “Undoing the Demos” by Wendy Brown. Wendy’s a theorist at Berkeley. Let me

make a big plug, by the way, for the Berkeley school of political theory. I went to Berkeley.

I studied political theory. But I actually love it, because it embraces the political part of politics rather than looking

at politics as a giant math problem. But anyway, Brown, in “Undoing the Demos,” really unpacks neoliberalism not

just as a problem of economics but also as a problem of democracy. And she shows that our democracy itself

really cannot withstand a system of thought that remakes everything and everyone into this image of Homo

economicus.

It is a great book. I highly recommend it. And she really shows why liberal democracy doesn’t survive neoliberalism

or was going to struggle in surviving neoliberalism. It’s a great book.

The second book I’d recommend is called “The End of the Myth” by Greg Grandin. I love this book, because I’m

from the West. I know you are in the West now, in California. I really think of myself as a Californian. And Grandin

shows the way in which the West has played so strongly in our political imagination.

The United States, America, has always been defined by this Western expansiveness, boundless freedom, the

frontier until Trump and the wall. Right? The wall’s like an end, the end of the myth. But Grandin also shows the

ways in which racist subjugation —he focuses a lot on Andrew Jackson and the horror of Native American

removal.

Grandin shows the ways in which that is at the center of the American frontier myth. And so that’s really powerful.

And the other thing I love about this book is he really shows the way in which the frontier is a paradigm. And that

paradigm doesn’t have to be abstract, or complicated, or multi-syllabic.

The frontier is a paradigm that literally hundreds of movies were made about. And so we do have a national myth,

and that national myth doesn’t have to be complicated. But it does really structure how we think about ourselves

and what’s possible in our politics. So it’s a great book.

And then finally, the last book I’d recommend is called democracy without domination, and it’s by Danielle Allen

and Rohini Somanathan. And the heart of the book —it’s an edited volume —and the heart of the book is this

argument that justice, racial justice and all justice has to focus on nondomination. And this leads them away from

this kind of liberal reliance on John Rawls and a difference principle and towards a very new or different way of

thinking about democracy.

I think it has some practical implications too. For example, they argue that representation has to move away from

statistical mirroring. Like if you are 40% of the population, you have to get 40% of the political representatives. We

have to move away from that to a politics that makes sure that rules and institutions don’t allow one group to

dominate another group. So it’s a great book.

EZRA KLEIN: Felicia Wong, thank you very much.

FELICIA WONG: Thank you. Great to be here.

[MUSIC PLAYING]

EZRA KLEIN: “The Ezra Klein Show” is a production of New York Times Opinion. It is produced by Jeff Geld, Roge

Karma, and Annie Galvin. It is fact checked by Michelle Harris and original music by Isaac Jones, mixing by Jeff

Geld.

[MUSIC PLAYING] DETAILS

Subject: Antitrust; Consumers; Councils; Political parties; Legislation; Neoliberalism; New

Deal; Economics

Business indexing term: Subject: Antitrust Consumers Economics

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People: Khan, Lina M; Biden, Joseph R Jr; Klein, Ezra

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Publication title: New York Times (Online); New York

Publication year: 2021

Publication date: Sep 3, 2021

Section: podcasts

Publisher: New York Times Company

Place of publication: New York

Country of publication: United States, New York

Publication subject: General Interest Periodicals--United States

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Language of publication: English

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