Jason Hartman interviews Casey Mulligan, a professor of economics at the University of Chicago and former chief economist for the Council of Economic Advisers in the Trump administration. He is also the author of the best-selling book The Redistribution Recession: How Labor Market Distortions Contracted the Economy. They talk about the advantage of Twitter for Presidents, the Individual Mandate, and regulatory budget.
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Jason Hartman 1:00
It’s my pleasure to welcome Casey Mulligan. He’s a professor of economics at the University of Chicago, former chief economist for the Council of Economic Advisers in the Trump administration, and the author of the best-selling book, The Redistribution Recession: How Labor Market Distortions Contracted the Economy and the new book, You’re Hired! Untold Successes and Failures of a Populist President. Casey, welcome. How are you?
Casey Mulligan 1:27
It’s my pleasure to be here.
Jason Hartman 1:29
It’s good to have you and you are actually located in Chicago, right?
Casey Mulligan 1:32
Yes.
Jason Hartman 1:33
Fantastic. So Casey, tell us about the you, you’re hired book. Let’s start with that.
Casey Mulligan 1:38
You know, I had the honor and great fun of working in Trump’s White House for a year, a year off of my university position. And I saw so many things there that that none of nobody’s told about. And, you know, the White House belongs to the American people, I thought that they deserve to know what’s really happening there. And I had a lot of fun telling retelling those stories. So and that’s the genesis of the book. And the book has about the president and policy. You know, I was a policy analyst, economic policy analyst. So that was my contacts with him. And I go through different policy issues, different types of regulation, immigration, trade, and how, you know, how the President discuss those with us. How we dealt with them how we thought about.
Jason Hartman 2:26
Well, I think even the most left-leaning person would have to agree that the media does not like Trump. And Trump does not like the media. So they’re, they’re not giving him a fair trial. And the court of public opinion or that,
Casey Mulligan 2:39
Right, well, that’s how he got where he got by serving the the flyover country. The people normally aren’t part of those institutions. And so it is a bit of a battle from the people who are traditionally used to controlling things and, and the people in flyover country with Trump as their representative. So that’s one reason why Twitter is so important for him, because it allows him to bypass all the information middlemen, if you will.
Jason Hartman 3:05
Yeah, you know, I gotta say, regardless of who the President is, what party they’re with, I like the fact that they can talk directly to the people. Now, liberals hate that, you know, I’ve had guests on my show, who say, Oh, we should ban him from using Twitter. And it’s really unpresidential. Now Obama, of course, use Twitter, and very successfully as a campaign tool, what would be the problem of the president talking directly to the people? How could someone possibly object to that?
Casey Mulligan 3:35
Well, there’s a lot of things that aren’t supposed to be said. And that’s why I would say our one big reason our president was hired by the people. They like it that he says what’s not supposed to be said. But nonetheless, true.
Jason Hartman 3:47
Yeah, yeah. Okay. Well, you’ve got some fantastic photos, why don’t you take us through your slides a little bit. And let’s, let’s look at some of those and, and tell us about some of these meetings you were in.
Casey Mulligan 3:57
This is a photo I, I was the last guy walking in the meeting. You can see me there. This was a meeting about a health regulation. And I like to use it this introduce what it’s like to meet meet demand. Before I’ve met the presidents of major universities. I’ve met some presidents of major companies. Anytime you meet somebody like that, if you have you. You notice that that’s a talented person. You’re not shocked that they got where they got because they have some pretty impressive talents. And the President is like that, you see that he’s a talented person. The thing that really amazed me and caught me off guard is his ability to manage social network, he can say a few words, and that can put dozens of people in the line 1000s of people, millions of people, and he would do that. In this meeting for example, Kudlow was supposed to be there, but the gentleman said in the front, Brian, he came and got those spot. Brian was a very good health expert for the President. And the President just wanted to let people know that you should be coming to the meetings, that setting your subordinates. So he said to Brian, he turns to Brian and says, You’re better looking than Kudlow. And the ladies, you could see Kellyanne and can’t quite see Mercedes and Sarah Huckabee, but they immediately object and say, No, he’s not. We think Larry is really great looking. And he then he kind of leans over to see them. And he says, Can we at least agree that Brian is stronger, and we all had a good laugh, but we got the message that you know, you’re not supposed to skip your your meetings, Kudlow should have been there. That’s the type of things that nicknames and so on that,
Jason Hartman 5:32
You know, obviously, very successful business person. So he’s conducted lots of meetings over the years. And so you know, obviously has a talent for organizing a vision, getting people to rally around a vision, you know, getting things done, I mean, easily, he’s a get it done kind of guy, for sure. But take us through some of the specifics covered in your books a little bit too, and, and feel free to thumb through slides. And anecdotes are great, too. But I’ll let you control the slides. But I certainly want to ask you about redistribution. And I want to ask you about his populist outlook, and why that’s good, why cutting regulations is good. But why the left is so just so opposed to all of these things.
Casey Mulligan 6:17
It’s not an ideal log. And I call them an experimenter. That’s not the words that he would use. But I call him an experimenter. It’s not like he has an ideology, and then tries to derive from that those principles or ideology, what he needs to do. He believes in trying stuff, I think in business, they might these days, they might call it fast failure. So you try something, you monitor the feedback. So you’re not married to what you’re trying and quite the opposite, you try it. And if it doesn’t work, you get it out of there, and you go another direction. And he does a lot of that. And once you understand that, that’s how he operates. I’m showing Marconi here in this picture, because Marconi was really famous instance of that, over 100 years ago, he invented the radio, really. And he said in his Nobel Peace Prize speech, he said, I don’t know how this stuff works, I just know that it does. I tried many different combinations. And I found some work and you theoretical physicists, you figure out how these darn waves do it, but I got a machine that works. I found that by experimentation, and the President is, is very much like that. And he doesn’t want you to know that. So maybe I’m in trouble for telling you this. Because if you thought that he wasn’t serious about what he was doing, and that would kind of Ruin what he’s trying to do. So it’ll be very bombastic and act like, this is exactly what’s happening. It kind of like yesterday, when he said, we’re done, we’re not negotiating about stimulus for the election. And then today, here we are negotiating. And again, he was able to get to some quite successful policies. And the one I start with in the book is the individual mandate, which is a terrible idea. But it took a while for people to discover in Washington, at least, how terrible it is. So tell us about the individual mandate, the individual mandate was actually invented. Some people say it was invented by Republicans that got bipartisan support enough for a while there, which is to force people to buy health insurance. And the theory is, and it really is a theory, as opposed to experience, the theory is that health insurance markets can’t work. Unless people are forced to buy it. The reason being that the people who are healthy won’t buy it. And then without the people being healthy, it’s too expensive. And then nobody buys it. That’s the theory, again, emphasis on theory. And that theory was pushed very hard in the form of Obamacare, that became the law of the land, they had to buy health insurance or pay a big penalty.
Jason Hartman 8:33
Right? Well, the penalty is smaller than the cost of the insurance. So a lot of people just elected to pay the penalty. If that was even enforced.
Casey Mulligan 8:40
Right then why the penalty started out small, but it was ramping up until the President got rid of it. The President took both views on this. I mean, they experts and told him, you know, the story I’m more or less told you. He tried that for a few days in terms of a political travel loan, and he realized, no, people hate this, I would be best to be a champion of getting rid of it. And when she did, and later on, we gave it some thought and realize, you know, when somebody turns down subsidized health insurance, I guess the White House ought to send them a thank you note because they save all of us money. And the individual mandate is completely backwards in that regard. It punishes people for turning down, subsidize coverage. So by getting rid of it, you know, the people who are being forced in the insurance, they were thankful, and it was good for the budget. It’s kind of a win win policy. And he discovered it that way. And every day since he’s been bright, or let me say every other day he brags about I got rid of the individual mandate. He really did. That was a big accomplishment.
Jason Hartman 9:37
Can we even classify Trump as a conservative? Now a lot of people say he used to be a liberal, obviously, he was friends with Hillary Clinton and many other Democrats. But he’s sort of not he’s not that really that easy to pigeonhole, if you will, to try to give them a description. Now, the fact that he picked Pence is his VP you know, that obviously leans very much to the right but guy I mean, would it even be fair to classify this as a as a conservative or republican? A lot of people in the establishment obviously hate him? Where would you go with that?
Casey Mulligan 10:08
As I said, he’s not an ideal logged. So right there is a little bit hard to pin him down because he tries things. Now he has a life experience, and some taught him some lessons. And you might say those lessons kind of lean, conservative or Republican, for example, how much regulation interferes with doing business, the idea that he’s used repeatedly, including in the COVID price is the idea that, you know, big government can’t possibly know what’s going on the ground, it’s better to delegate some of these decisions to the more local level where there’s a better chance that there’s real information there. He did that a number of areas before COVID, for example, in housing, a lot of these things around health care, he delegated to the States. And then when COVID came along, that’s very natural for him, given the experiment, or hadn’t successful experiments, delegating things to states before he tried it again with COVID. And that that’s kind of a republican approach to things right that putting all the power in Washington is a mistake.
Jason Hartman 11:06
Yeah, no question about it. Talk to us a bit about trade. Everybody cries that protectionism and tariffs, terrible for the economy? Well, not everybody, half the people, I guess I should say, you know, certainly the media that’s got the loudest voice, unfortunately, you know, buddy, but it just seems like I mean, I’m, you know, I want to think of myself as a libertarian, but can’t have truly free trade without the parties being equally yoked. Now, of course, that’s a biblical concept. But if you look at the Chinese, they, you know, for example, they don’t pay the same wages, they don’t have the same regulations, environmental or occupational, they don’t have OSHA, they don’t have the EPA. So how can you trade fairly when the playing field is so uneven? I mean, free trade is fine as a concept. If each side is equally yoked, if you will,
Casey Mulligan 11:58
I appreciate the question. It’s rather theoretical. I mean, the fact is that the special interests are deeply enmeshed there and that and this is not new. I draw the comparison in the book between Reagan and Trump. They’re very different on the rhetoric Trump calls himself the tariff man, right? Whereas you look at listen to ronald reagan on YouTube talking about free trade. He says it’s so beautifully couldn’t be better said than ronald reagan says it, but the fact is, they were both had protectionist pressures on them and they succumb to those protectionist pressures. No question. There’s two differences. One is, you might say a little more cosmetic Reagan was going against, so to speak, Japan, that was the thing in the 80s. Now it’s China. Partly that’s changing the labels. Now, partly, there’s an important difference there. You know, Japan is a democracy was a democracy. Japan didn’t have a military still doesn’t. Whereas China, obviously their national security concerns with them so that there would be a reason to be tougher on China than we were on Japan. But anyway, they’ve approached them very similarly, the real substantive differences that Reagan used quoters, so where were Trump, as we all know, ad nauseum that he put tariffs on various imported products, which he might not advertise this, but it raises the prices that we pay here for those products. And where does the money go goes in the Treasury what reagan did he put quotas on imported products, for example, limit on how many cars Japanese companies could send here, and that raise prices that consumers paid in the United States, but where did that money go went to the Japanese companies. And they’re both protectionist, they were both motivated by trying to win votes in Michigan, and similar type places. But one of them was at least got money for our people on the other just gave money to the foreign company. So that’s why there’s no trade.
Jason Hartman 13:40
So really, that’s a really interesting point, a quota could have the same effect as a tariff, but the quota doesn’t bring any money into the country. It makes consumers pay higher prices, yet, the country doesn’t get the money. With a tariff, in theory, the consumer would pay a higher price, but at least the country would get paid back.
Casey Mulligan 13:59
Exactly. That was much more the America first. Even people had my job under Reagan, and told me they said, Hey, the Japanese companies came to the White House and they say please do a quota. And they get Reagan gave it to him. And that’s why Reagan didn’t have a trade war with Japan, because he was paying ineffective was paying the Japanese company so that they’re not going to want to fight back. In fact, they were asking for these things.
Jason Hartman 14:23
And by the way, I think that is the reason. You know, I may be way off on this. But I think that was the reason that really the Lexus and Acura brands were created. Because they couldn’t get more they can only get a quota of cars and under Toyota and Honda so they had to create new brands to have a new quota that they you know, this whole whole new company this you know, Lexus line and the Acura. And now if you see that happening, you see like Hyundai, they have Genesis, but that seems more of a marketing thing, which is fine. That makes sense. They’re not doing that for the quota. thing nowadays, right?
Casey Mulligan 15:01
Yeah, I mean, General Motors and Ford and Chrysler got a little burned there. They of course wanted those quotas back in the 80s.
Jason Hartman 15:07
Of course they did. Yeah.
Casey Mulligan 15:08
But and they were, quota on the number of cars. So the Japanese said, Okay, we’re living on how many cars we can send, well, we’re going to make more money. And one way we can really leverage making more money would be to whatever cars we send, they’ll be luxury cars. So they Japan got into the luxury car market in a way they’ve never done before. Yeah. And the quota has really encouraged them to do that. And, and I guess they got the last laugh because they’ve kept that foothold in the luxury market. Now, here we are, 30 40 years later.
Jason Hartman 15:34
Yeah, very interesting. Okay. What else do you want us to know?
Casey Mulligan 15:38
I think it’s good to talk about the regulatory budget. I mean, he’s done so much on regulation, we couldn’t finish it in a three hour talk about a lot
Jason Hartman 15:45
What does the graph shows, though. So we’re running the government like a business, which that’s what it is, it should be run like a business to, to an extent,
Casey Mulligan 15:54
We had never done that before. And in fact, hardly any countries in the world do it even now. To have a budget for the regulators say to them the way a CEO would say to its vice presidents, Hey, guys, you have a budget, go out there and make your company better, but stay within your budget. And if you have an idea that needs more budget, come to me hand in hand and explain why. And Trump is the first one to do that with the federal government. And each of the regulators, which are the cabinet members are given a budget on how much they can regulate. And if they think they need more room to regulate, they need to come hand in hand and ask. Ask for an exception or an expansion. And this has really helped propel a whole bunch of deregulation, hundreds of regulations have been taken out. And the one that I had a graph here is about the regulation of who can manufacture generic drugs and emphasize generic generic drugs are drugs had been around a long time that they’re off patent already. So it’s not like we’re learning about how safe the our group can take them or how effective they are. But nonetheless, that for generations, the FDA had been in the business of handing out permission to manufacturer a generic drug, and they were stingy on that permission, and it really help them. So there are a few companies, foreign companies, Chinese companies are Israeli companies who had a monopoly on a generic drug, which is like mind blowing oxymoron, but that’s what they had done and generic drugs, which most drugs we take prescription drugs are generic drugs. We were paying band nine prices for a generic product.
Jason Hartman 17:22
So the government was basically a co conspirator in a cartel. You know, they could they could charge ridiculously high prices, because they limited competition. So the existing entrance, or the existing market participants could just gain market share. And there’s no startup culture, there’s no innovation. Yeah, it’s terrible. So that’s basically how Wall Street and the banking system works to folks. There’s like zero startup culture on Wall Street. Because of all this regulation, just benefiting Goldman Sachs and all the interior entrenched interests at JP Morgan, the criminals that JP Morgan, I mean, they just got a $920 million fine or something like that. Absolutely ridiculous for manipulating the silver market.
Casey Mulligan 18:08
Yeah. I mean, you’re right on Jason. This is an example from prescription drugs. But industry after industry after industry has protections like this that come from regulations that limit competition and allow them to go to the back. And when Trump pulled out some of these restrictions on manufacturing generic drugs, mmediately saw the stock of say tobacco, which is a Israeli generic drug manufacturer, their stock crashed, and the analysts all said, Oh, no, the Trump is allowing more competition in the generic drug market to bad for our company, which was raking in the money hand over fist.
Jason Hartman 18:44
So I guess those companies will go and encourage the media because they spend so much money on the media. They’re such big advertisers. They’ll encourage the media to bash Trump. They all have their lobbyists go out and do whatever they can. You know, this is draining the swamp is no easy job.
Casey Mulligan 19:02
Well, when the data came out, which we knew, economic says, and you know, this is how this works. Jason, as you explained, we knew that drug prices were going to be coming down. And sure enough, we saw that your 2018. I remember the day I got the data January 10 2019, we got the 2018 data that said for the first time in 46 years, the average price for prescription drugs is measured by the CPI, which is the standard way we measure price changes and come down first time in 46 years.
Jason Hartman 19:30
Yeah, so in real dollars, the price dropped. And the first time in 41 years, the average American has actually had a real dollar pay increase. 41 years since 1977. It took until Trump made that happen 41 years later, adjusted for inflation, so yeah, unbelievable. But what are your thoughts for the upcoming election? All of this seems like, you know, he would be handily reelected. But that’s not the world we live in
Casey Mulligan 19:59
It would seem that he would, you know, these days, it’s really hard to know, you know, we know the response to the polls, but polls are not the same as voting. That’s why I gotta say, I really don’t know, the polls look very bad for Trump very good for Biden. But again, polls is not voting. And we know that Democrats are pretty unwilling to go out of the house to do things relative to Republicans, right now. They’re to go to a restaurant,
Jason Hartman 20:25
They go to the house to do rioting. Sorry, sorry, Joe Biden campaign rallies, writing, same thing.
Casey Mulligan 20:33
Most of them don’t. I mean, there’s disproportion of Democrat, but most of the democrats are at home, this Hold up. And that’s going to be tough on Biden. And so we’ll see if he can get as good turnout at the polls as at the ballot box as he has in these various polls, which are usually conducted by phone. It’s much easier, from a democratic point of view to answer the phone and answer some questions during COVID than it is to get out of the house, go to your polling place and cast your vote.
Jason Hartman 20:59
Also, I think a pollster has, to some degree, the same type of mentality and personality as a journalist. Right. That’s a left leaning career field. So the poll said the same thing in 2016. So we’ll see. We’ll see. We’ll see.
Casey Mulligan 21:17
What’s disappointing? Is it mean, some serious social scientists should be out there and trying to figure out how big is the bias? And now I don’t see it. Maybe they did. And they don’t want to tell us.
Jason Hartman 21:27
Social Sciences, though, isn’t a career field that attracts Republicans? That’s not that’s just not they’re more interested in business. And, you know, different kinds of things. It’s just a different brain. Right? It’s a different type of mind. Yeah, interesting. So we’re looking in here, you know, it says here, America will never be a socialist country. Chapter Three, White House analysis and marketing shifts in the 2020 campaign. Thoughts on that?
Casey Mulligan 21:56
Yeah, that was an interesting story. My little hobby, you could say I read all these laws. A lot of people in my profession, they’re too busy to read the law. So they read what the New York Times says about the law. And the New York Times calls them up. And that’s when but they think and they say what they read in the New York Times last week, I was reading, I read these different laws that are in progress. And I was reading Medicare for all Medicare for all was actually been around for 40 years, which is was the major unpassed legislation in Congress right now. And I read in there that they want to eliminate private health insurance. They think that private sector is essentially evil. And in fact, there’s parts of it that says exactly that. It’s morally wrong way of running a market, and therefore the government should monopolize it. And I was telling people in the White House this and they couldn’t believe it, because they they were just thinking like, no, if you want to win election, you don’t say that. But I said it says, it says it’s you got to look and I would show them the copy of that page. And they’re like, wow. And so eventually, after a bunch of conversations like that, we got an ns president speech. And then the president said, Medicare for All will take away private health insurance. And immediately this White House correspondent for CNN, said that was the biggest lie in presidential history. Obviously, he hadn’t read the Medicare for all either. This was in October of 2018. But the cat was out of the bag. The President got it up, got it out there. CNN never apologized. But they did start to acknowledge it. Yeah, Medicare for all does eliminate and outlaw private health insurance. And then CNN. To their credit, they asked Kamala Harris, hey, you’re a co sponsor of this bill that takes away private health insurance. Tell us about that. Tell us about why you don’t want people to have private health insurance. And she at that moment, she kissed her presidential run goodbye. She was the so called leading candidate till the moment she was asked that question and then she was one of the first to drop out?
Jason Hartman 23:54
Well, all she has to do is get Joe Biden elected. And two months later, she’ll be president because he’s probably not gonna fulfill his term. I don’t think he can. I don’t think he can do the job today, much less two months from now, three months from now. We’ll see though, we’ll see anything else you’d like people to know, just in general, you know, the workplace distortions in the labor market, whatever, just anything else you’d like people to know, as we wrap it up.
Casey Mulligan 24:21
You know, this started happening in a big way and not in the last recession with Obama. This idea that we need extra help for people who are poor and unemployed, and I emphasize extra, we already had a system for years of supporting people who are poor and unemployed. And that system kind of evolved to try to manage the different trade offs. And Obama very much shifted that trade off. And then in this academic, we very much shifted even more to the point. As a lot of people know by now, most of the unemployed can earn more by not working and working. And that’s it’s not fair, but it’s also very wasteful. Really, you’re asking people what, hey, step forward to help produce and you’re gonna have to pay for stepping forward. That is completely backward, wasteful, perverted, like what can I say is it’s an economic perversion, it has become very popular
Jason Hartman 25:15
One of the one of the greatest concepts, it just sums it up so well, is simply what gets rewarded gets repeated. You know, you’re going to get a repeat repeat behavior while your rewards. So that’s, unfortunately, how that works. So yeah, I agree. I agree. Give out your website and tell people where they can find out more. And of course, the books are available in all the usual places with great reviews.
Casey Mulligan 25:38
Yeah, I have a website here higher trump.com where you can of course, buy the book, read some of the reviews. I put some excerpts in the Wall Street Journal, and you can just link to those or watch a little video where I discuss some of these things. Occasionally. That’s me. I’ll put this video there as well. This is a good place to really hear about the things that you should have heard about, but you weren’t told about our president, what’s been going on in Washington.
Jason Hartman 26:01
Good stuff. Casey Mulligan, thanks so much for joining us.
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