Every policy objective, all the time, all at once

It's not really about bagels

Back on March 13, I wrote a column critiquing the Biden administration’s approach to industrial policy as lacking adequate focus. It didn’t make many waves in the wider world, but did seem to annoy some people on the White House staff. Then on April 2, Ezra Klein wrote a piece with similar themes in which he coined the phrase “Everything-Bagel Liberalism” to describe the phenomenon of unfocused policy. That catchphrase really did set the world on fire, generating a lot of enthusiasm from people who agree with me and Ezra, but also considerable pushback.

Here, the BlueGreen Alliance stands up for the everything bagel of industrial policy — climate action, union jobs, U.S.-made goods, and advancing racial and economic equity.

Heather Boushey from the White House Council of Economic Advisors was also at pains to note recently that she likes everything bagels.

Boushey’s reply in particular made me think that people are getting a little distracted by the metaphor here.

Washington, D.C. has enjoyed a bagel boom over the past 10 years. And one of the more recent additions, Call Your Mother, has gone from a farmer’s market popup to a regional chain that not only is very tasty but also counts White House Chief of Staff Jeff Zients as one of its lead investors. And look at Boushey’s bagel. It is, I assume, from CYM and has four toppings on it. BlueGreen’s metaphorical policy bagel also has four toppings.

Now go back and read Ezra’s column. He says “everything bagels are, of course, the best bagels. But that is because they add just enough to the bagel and no more.” This is not an argument against everything bagels! The point is that despite the name, an “everything bagel” is a harmonious blend of a relatively small number of toppings. One popular CYM choice is the za’atar bagel, which is a sort of mashup of an Ashkenazi Jewish culinary tradition (the bagel) with the Sephardic influence of za’atar, a Middle Eastern spice blend. Notably, the CYM everything bagel does not include za’atar because that would be too much stuff. The everything bagel topping is, like za’atar itself, a spice blend and not something you blend with yet more spices. In his column, Ezra is not talking about actual bagels, he is making a reference to the Academy Award-winning film “Everything Everywhere All At Once” whose plot features an “everything bagel” that includes literally all of multi-dimensional metaphysical possibility. Contemplating this totality induces paralysis and insanity and drives the plot of the movie forward.

It seems silly to be quibbling about bagels, but it’s actually important to define the terms of the debate here.

Nobody is saying that everything in real-world politics needs to be maximally fastidious technocratic policymaking designed to pursue a single goal monomaniacally. That’s not how the world works. I know that, Ezra knows that, everyone knows that. The disagreement here is not over the legitimacy of combining a few different ingredients into a harmonious blend. It’s over whether that is in fact what’s happening — are we dealing with a Call Your Mother everything bagel or the Everything Everywhere All at Once bagel of insanity?

To climb down a bit from the mount metaphor, here’s a very non-catchy way of making the point: progressives would benefit from giving more weight to dull Economics 101 considerations when making choices.

Restoring full employment is Biden’s great success

We’re living through a somewhat annoying irony of history.

Barack Obama ran what was, by the standards of real-world politics and policymaking, an extremely fussy and technocratic administration full of people like Peter Orszag and Cass Sunstein who cared a lot about efficiency and where very conventional economics types like Larry Summers and Jason Furman exerted a lot of influence. His term in office also corresponded with a period of very low interest rates, low inflation, and high unemployment. Under those conditions, the economy gets weird. You’re in the realm of what Paul Krugman calls “Depression Economics,” and the hallmark of Depression Economics is that efficiency doesn’t matter very much.

There’s a famous Keynes bit about how you can stimulate a depressed economy by paying unemployed workers to dig ditches and then pay them to fill the ditches back in again.

Keynes’ point was not that it would be a good idea to pay people to do pointless ditch-digging projects. His point was, rather, twofold:

• If, amidst a depressed economy, you have moral or ideological objections to the dole or you’re worried that free cash creates bad incentives, then you should come up with some kind of “anyone who wants money can get money by doing X” scheme.

• While ideally X should be as useful as possible, even if X is totally pointless, there is still some benefit to doing it, so you shouldn’t worry too much about the details.

These are powerful and important insights, and they help explain why poorly targeted cash handouts and somewhat wasteful public works programs are totally fine during a steep depression. If the alternative to a poorly-targeted handout is one that leaves some vulnerable people falling through the cracks, it’s better to do the poorly-targeted handout. If the alternative to waste is doing very little, then it’s better to do the wasteful program. That’s because the most wasteful thing of all is to have people languishing in unemployment.

The upshot of this is that a lot of the technocratically-minded aspects of the Obama administration had very limited short-term payoffs, some of them were harmful, and the nature of being fussy and technocratic is that you alienate and annoy some people.

Trump took over and governed in a much more loosey-goosey way:

• He did a big tax cut for the rich, which he made more appealing by stapling a middle-class tax cut onto it.

• He spent more on the military, while also increasing non-military spending.

• He made no effort to reform retirement programs or the health care system.

• He enacted tariffs to help American manufacturers, and when that blew back on American farmers, he gave them cash handouts to compensate.

If Trump had taken office at a time of full employment, these policies would have generated calamitous inflation and discredited him right away. But because he took office at a time when the labor market was still weak nine years after falling into recession, things worked out pretty well. Then came a huge pandemic, a couple of big stimulus bills, Joe Biden’s election, another giant stimulus bill that represented Democrats’ determination to err in the opposite direction from the party’s approach in 2009-2010, and — it worked! Unemployment is very low, prime-age labor force participation is high, nominal wage growth is extremely strong, and the right thing to say is “we did it! We avoided the long slump we were worried about!”

But avoiding a depression means that we don’t have Depression Economics anymore — we just have regular economics.

Life is full of inconvenient tradeoffs

There’s nothing wrong with pursuing multiple policy objectives simultaneously.

Sometimes as a practical legislative matter, you need to assemble a logroll with political logic rather than policy logic, and it’s counterproductive for policy literalists to spend too much time getting angry about that. It’s also quite normal to try to meet multiple related objectives, even when there is some tension between them. National parks are in part about preserving wildlife and habitats, but also in part about creating recreational opportunities for tourists. These are adjacent goals — they both involve nature-y stuff, and the thing the tourists are trying to see is parkland rather than a theme park. But from a strict conservation perspective, the presence of visitors is bad. Attracting visitors involves things like parking lots and visitor centers and roads and dining facilities that are contrary to the conservation objectives.

Running through the hallways of the Interior Department yelling “PICK A LANE, ASSHOLES!” would be a crazy response to the existence of those tradeoffs. But it would be very bad for the National Park Service to convince itself that there are no tradeoffs. Instead, they are trying to balance considerations and create a good outcome.

Sometimes in politics, an official says something you hope and believe is just BS for political reasons (it’s politics, it happens) and not genuine confusion. For example, here’s Gina Raimondo explaining to Ezra why CHIPS Act funding has strings related to child care attached:

“Every one of the requirements — or they’re not really requirements — nudges are for criteria or factors we think relate directly to the effectiveness of the project,” she told me. “You want to build a new fab that will require between 7,000 and 9,000 workers. The unemployment rate in the building trades is basically zero. If you don’t find a way to attract women to become builders and pipe fitters and welders, you will not be successful. So you have to be thinking about child care.”

She is correct that there is a serious question about labor supply in the building trades and that child care provisions to bring more women into the field is one way that could be addressed. But the idea that a prescriptive federal mandate makes this easier rather than harder is ridiculous. I think the best possible actual answer here is that this child care stuff is meaningless verbiage (she’s at pains to say it’s a nudge rather than a requirement) designed to let child care advocacy groups claim a win with no intended real-world effect. The next best is that they’ve just decided to try to divert some money that Congress appropriated for semiconductors into child care because they think child care is important and the tradeoff is worthwhile. What would be bad, though, is if they’ve convinced themselves that there are no tradeoffs here. Disagreement about values and priorities is inevitable in politics, but self-deception is dangerous.

Bring back the orthodox economics

This is not as catchy as saying that the Biden administration needs to avoid the temptations of everything bagel liberalism, but I think it’s probably more accurate to say that rigorous policy analysis has become underrated and that Biden in particular should listen somewhat more to orthodox economists and economics.

The basic fact that multiple objectives will dilute the efficacy of a subsidy program is one thing that might pop out of that. But the same basic issue recurs in other areas. The White House continues to fight it out in court over a student loan forgiveness program whose now-obsolete premise was that the country needed economic stimulus. There was a time when I agreed, but the situation changed and I changed my opinion. House Republicans’ plan to enact austerity by cutting poor people off their health insurance is a cruel and absurd idea, but enacting austerity by collecting student loan payments from a population that is higher income than the average American is perfectly reasonable.

You don’t need to go full libertarian by any means — I think the White House’s “junk fees” initiative has been grounded in pretty solid research — but you do need to take a hard look at rules that don’t make sense.

And you need to recognize that under present-day macroeconomic circumstances, something like wasteful spending on over-engineered mass transit projects is pure waste. If this were 2010, we might say it’s not so bad if cities are building excessively large stations for no real reason — they look nice, and it’s better than having construction workers unemployed. But as Raimondo says, right now we have essentially no unemployed construction workers. That’s bad because construction is very useful. So we shouldn’t be paying people to build stuff that’s useless. And we should be relaxing regulatory burdens on manufactured housing so we can find a less labor-intensive way of doing things when possible.

I’d ultimately like to frame this in a more positive way — I spent over 10 years banging my head against the wall because policymakers were underestimating the extent of labor market weakness and the importance of demand-side policy. Biden and the 117th Congress genuinely solved this problem and it was a huge deal. But they need to take the win and recognize that their success means we’re now in a world of much tougher constraints and tradeoffs.