Banana, Banana, Banana

A clean-shaven Michael Strain joins the perennially bearded Jonah to talk about the topic that ...

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A clean-shaven Michael Strain joins the perennially bearded Jonah to talk about the topic that always brings encouraging news: the economy. Lowering the national debt and the closing of movie theaters are two bullets in this chin-stroking chamber, complemented by banter about barbecue sauce and how to retrieve small children from the sewers.

Show Notes:

–Michael Strain’s new book, The American Dream Is Not Dead: (But Populism Could Kill It)

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  1. Avatar photo
    Patrick

    I was disappointed in Strain’s dismissal of the work by Oren Cass.

    I’ve always been a staunch free marketer, but it seems like some bad incentives borne of the market led to the 2008 collapse.

    I believe it’s short-sighted not to think that similar bad incentives could possibly be plaguing the private equity space.

    I’d like to hear an honest debate on that topic.

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    1. Kant B. Real

      Hard to blame the market, in & of itself, considering the amount of regulations imposed upon it.

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  2. DJE

    Mr. Strain commented that dentists are suffering because no one wants to go during a pandemic.
    I called today, Jul 30, to make an appointment and could not get one before Sep 30. The receptionist said they are crazy busy. My area tends to have a very high percentage of mask-wearers and adherents to distancing so I don't think it's defiance of the general guidelines for the pandemic. Might simply be taking one risk (getting the virus) over another (dental health). If your annual or semi-annual is coming up in the next 3 months- call now!

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      Tracie

      Had to cancel on my dentist in the Spring cuz there was a COVID outbreak at *my* job. They called last month to help me reschedule because they were "worried" about me. So guess their business was hit.

      I live in one of those dentist-every-two-blocks yuppie neighborhoods, so maybe not enough business for everybody. Also, my city was hit pretty hard w/ COVID, peaked in May.

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  3. Simon Michau

    I really wish someone (you?) would just push back a little bit on the huge assumptions baked into dismissing, out of hand, the theories of a guy like Oren Cass.
    Strain affirms that somehow Americans are better off than, say, 20 years ago (and have been getting materially better off through every financial crisis). Fine, but every millenial is forced to straddle themselves with huge amount of debts to avoid being locked out of the employment market - and as a result is prevented from ever getting on the real estate ladder before they turn 40 - whilst the generation of our grandparents could sustain a family (i.e. a house, public college education for their kids, a car, health insurance) on a single, non-college educated income and sailed through the real estate market on the back of huge inflation.
    Hence the work of guys like, yes, Oren Cass, who does a decent job of criticizing the imprecision and lack of precision and pertinence of wage/inflation measures AND at least has the decency to then offer a new model for understanding the evolution of material circumstances of Americans across time (the Cost of Thriving index: https://media4.manhattan-institute.org/sites/default/files/the-cost-of-thriving-index-OC.pdf).
    Perhaps the growing strengths of populist movements on the right and left would be better understood - and could thus be better fought - if economic elites spent more time studying the reality of increased financial incertainty and burdens on poor & middle-class people (not to mention the quasi-absolute lack of contribution of private equity to the real economy)

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      Tracie

      The difference in debt for people who went to college much later than ~2000 vs prior does seem significant. I have a recently married 30 year old co-worker, who's a first generation college student, has an MS (necessary to sit for her licensing exam) from a private university, and $150k in debt. Her gross annual income, in a normal year, is about $70k and unlikely to ever be much higher. She can pay it back, but she says it's definitely delayed buying property.

      These aren't just people who went to elite schools who have this kind of debt. Many of them just weren't sophisticated about cost when choosing schools, didn't have anybody to advise them. We can argue about the fairness, but it definitely limits choices, very early in adulthood.

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    Adicesa14

    These ‘in the weeds’ podcasts are wonderful. Please, continue. The only downside is I impulsively purchase the books written by your guests, and co-workers (I have yours, too!). My stack of reading material is teetering, and it is likely I will never get to the bottom, if I continue to obtain additional tomes.

    On your recommendation, I have begun listening to the “Constitutionally Speaking” podcasts. The first five have been consumed. However, it is a daunting task. There are 64, to date. If they continue to be produced, I may never get to the end of the series. I love history. So, you will not be surprised to hear I love these podcasts. A word regarding your lament: The “Constitutionally Speaking” podcasts have not kept me from every Dispatch podcast. I have and will continue to listen to all of them.

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    Kaitlin Johnson

    Good episode!
    I heard, I think on Russ Roberts’ podcast, an interesting point about how the market figures stuff out. The CDC warned against masks at first, thinking people would deplete the store of medical masks, seemingly not taking account for all the stores now selling custom lines of masks. Similarly, concerts might be gone right now, but my favorite band is hosting a drive-in concert in August (won’t be like the disgrace with The Chainsmokers, but actually distanced with strict enforcement). Not to go all market-faithful libertarian here, but I know I need to stop worrying about every change and trust that most of the time the market works it out.

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    Pastorfbt

    That "cancel" rant was actually from one of our MA reps. A member of "the squad", she of "pay us what you owe us!!"

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    Bill

    I'm sorry, but I just can't listen to Michael "you know" Strain and his perpetually stuttering oral delivery. I'll be happy with reading through the comments here to get a summary of what he discussed.

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      Tracie

      Lotsa ticks people have annoy me, but stuttering I barely notice.

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      Angie

      I have noticed quite a few people on podcasts who stutter...I wonder if they always have or if it is because they are thinking off the cuff

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  8. Scottgcurtis

    Another enjoyable listen, giving me perspectives that I may have already considered or new reasons to agree or disagree with a particular viewpoint. The "returning to the office" question is also about interference, although not government interference. My employer does not permit us to go to our office and will not likely until late fall at the earliest. Google has announced remote working until "next summer." They are likely still paying their lease, so the office/commercial real estate "crash" might be a ways off still when companies choose not to renew or choose to renew much less space.

    Most troubling in this episode, however, was the complete dismissal of Alabama white bbq sauce. Michael showed his ignorance by even hinting that one might put it on brisket. Never!! But unless you have had the sauce on smoked chicken, please move along. If you don't like mayo, that's fine and a justifiable reason. In my 10+ years of hosting bbq events, more guests ask about the white sauce than anything else. There is room in the remnant for all the bbq sauces.

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  9. Fudrock

    Great podcast. Michael is always great and insightful, although this time, his macro-view of the economic landscape was a bit difficult to stomach, since I, along with everyone else in the live events industry, are being shelled relentlessly in the trenches. My ears were already ringing before he said that our industry deserves to shrink, which includes not only the venues themselves, but the thousands upon thousands of people that put on shows that are only loosely attached to the venues (which are complex economic entities in themselves). It's not an overstatement for me to say that throughout my career, I've set foot and worked in a large majority of arenas and amphitheaters in this country (and others), so I would naturally regard them as critical infrastructure, nevermind their role in the local economy of the given municipality.

    More galling was the intimation that a local pizza place (which I also agree should not be forced to close due to COVID economic pressures) has more intrinsic value due to its implicit institutional knowledge than any of the myriad of specialized trades and (often small) businesses that congeal to make the live events industry an actual industry. Compared to other industries, there's very little consolidation or huge lumbering corporate overlords (Live Nation excepted), and most actors are small, agile (as is required in a project oriented industry), specialized, and regionally rooted. As an immediate example, we're a video production company based in Nashville that specializes in large live events, namely concerts, which constitutes about 85% of our revenue. We can swim in other pools, and do, with some of our more malleable equipment (camera systems, etc.), but in the main, most of our equipment was designed and/or purchased for one end, and most of the things we do involved mass gatherings of people. I'll avoid digging deeper into the economics of this particular industry in an effort to keep my comments brief, but it's evident that Michael has spent little time thinking about it. I'll only say this: these venues don't stay in the black just because Verizon signed a deal to put their name on the building, and millionaire artists and athletes actually don't employ that many people.

    Our business was also fine in February. We had booked all of the equipment in our warehouse to the end of the year and had made major capital expenditures at the request of present and future clients, which we could not rescind, and others that we had yet to make that were mercifully tabled in time. We had a need to hire several more people, but now we've had to furlough 90 percent of our staff, and with no real shows occurring, there's little end in sight. And for most of our people, Tennessee's max unemployment ($275) plus the $600 reinforcement was a substantial pay cut, but it was a wholly necessary lifeline, and the current proposal in the Senate, which I hope is not long for this world, is absurd and insulting (why would you front load the shock to the economy? idiots.), and seems wholly designed to push people into jobs that don't exist (lest everyone become a delivery driver).

    Again, our business was fine in February and was going to be fine in March and April and beyond, and now we are not, despite concerted (and very modestly successful) efforts to pivot. By all usual standards in a free market economy, we don't deserve to fail. Prior to the virus, demand was high, and we were not over-leveraged. We will likely limp through this crisis, a month at a time, but we can't do it with all of our people (there's little for them to do, for starters) and we have to accept for the time being that revenue will be sparse and well-below market rates, if there's any at all some months. We can find a way to live like that, but on the other side of this, I would really appreciate having some venues to return to. And I'd love it if they were staffed by qualified people who knew their building and how to integrate a show in it. And still more, I'd love it if everyone of my team members could return to these venues, as well, plying skills that they spent years honing and have contributed to the joy of millions. These losses seem at least on par with the loss of a good slice of pizza.

    There's a lot of suffering out there, and I do not wish to stand on a soapbox and say that our business and our team are more deserving of aid than others (though I will say, given the relatively low barrier in acquiring PPP, there are many who were less deserving). And it's easy to feel beleaguered by the COVID pandemic's efficiency in bludgeoning my industry, but that myopia negates the epic collateral damage it has caused. That's not my intention. What I can say with some confidence is that we were the first and likely will be the last economic losers of this crisis, and that's a very short straw to pull. It's hard for me to hear Michael's incredulity at the idea of aid for concert venues as anything but a tacit acknowledgement that my industry is expendable, and since the going is tough, should readily be expended. Forgive us, Michael, we make our money when large crowds gather (frankly, we give them reason to do so); we should have known how unsustainable that business model was. Bring on the creative destruction, I guess, but indulge me the next time you sit down to write some high-minded think-tankery or indulge in some rank punditry, and imagine that halfway through your long, glowing treatise, your editor calls and tells you that you can't use any words in your essay and that you need to come up with something else. Perhaps then you'll get a sense of how this feels.

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    JP Proper

    Hi Jonah, I'm a big fan of the Remnant and your articles. Keep up the good work!

    On the topic of who is affected most by the pandemic, I know from my mother that the fitness industry is not doing so great right now. The YMCA of the Twin Cities (St. Paul/Minneapolis) laid of ~75% of its staff recently (thankfully my mother got to keep her job).

    Thankfully as an Engineer, I can work from home and perform all job functions without issue.

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