Here’s What It Will Really Take To Fix America’s Economy — ft. Kathryn Anne Edwards

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As we head toward the end of the year and look ahead to 2027, we have a lot of questions about what is next for the economy and what Democrats need to do to address some of the biggest challenges facing the country. So today we are bringing in one of our favorite economists to share her policy recommendations. We'll get her take on how to tackle some of the biggest issues in America from immigration and social security to health insurance and wealth inequality. This is our conversation with Catherine Ann Edwards, PhD economist. Catherine, great to have you back on the show. I would like to start with the midterms and just your reactions because it was something of a landslide. People are calling it a blue nami, blue tsunami. And you are in Texas, which was one of the biggest surprises that we saw across the country. What was your reaction to this result? What does it mean for the economy? I've lived in a basically Republican-only state government for the majority of my life here in Texas and have lived outside of it. But it's just I think most people would have treated Texas as synonymous with Republican party control. You know, Tuesday was such a good thing for that, that, you know, government in power too long, parties in power too long, and they get too comfortable and the quality goes down because they're not really fighting anymore. They're just. They're just trying to keep power. And Texas has a pretty long history of like one party control. And the Republican surge that really took place in the 90s and it was in some ways reaction to the poor governance of Democrats in Texas in the 80s and leading up to it. There were some massive scandals that still live very prominently in the mind of a lot of Texans. You just say Sharps Town and they all know what you're talking about. And so I think what's happening now is you're starting to see that same type of, you know, lack of responsive government. You know. A government that's not really fighting for what the people want, but pushing their own agenda, some of which aren't really set by the states. You know, they're responding to that as well. And so I think it was a perfect storm of things in Texas of problems that have long been simmering, kind of crashing into an incredibly corrupt president and a bad economy. But I have read, I don't even know how many think pieces over the past few days about reckoning with Texas. And in some ways, if nothing else, if there was no other election in the U.S. last Tuesday, and it was just Texas, we would have called it a referendum on public education. Hmm. Public education. Say more about that. Well, there are certainly affordability issues in Texas. And that was a, you know, a massive impetus for voters that they need some relief and the economy is not working for them. But Texas in particular has been a little bit of the proving ground for long held conservative policies about public education. We have the most expansive voucher program, and a lot of that was passed over the objection of many members of the Republican Party. So a few legislative sessions ago, a group of Republican members of the state house put up a stalwart and successful defense to fight off vouchers, because in a rural area, a voucher means defunding public education. All of those members were targeted by Abbott in primaries, funded by out-of-state donors who were pushing voucher programs. They all lost. They were replaced with people who supported vouchers, and it was passed in the subsequent session. We've now had vouchers. In Texas, and the results are very clear, I mean, it is just bleeding money from public schools, public schools that desperately need them. And the private schools, they don't have to take kids. They don't have to, say, freeze their price increases so they don't just raise the price of private school by the price of the voucher. I mean, it was just such a poorly done effort over the objection of a lot of people. And so, yes, it was a referendum on affordability nationwide, and that rings true here. But in Texas in particular, it was also about what has been happening to our public school system, which has felt like a. just a nonstop attack. Looking beyond Texas, across the rest of America, I mean, it really depends state by state. But what do you think that this election was really a referendum on? Because there were multiple elements that seemed to jump out. But what do you think this was really all about? I mean, the AP exit poll was pretty clear. This was about one part economy, one part corruption. That the people are not able to make it in their, you know, daily economic life. And they see a government that is very far from them on that and profiting in various ways. You know, you could poll, you could look at Gallup polling. 55% of Americans say their financial situation is actively getting worse. You can look at a recent Pew report that said 75% of Americans, 70 to 75% of Americans have cut back on spending on the non-essentials. You could look at the Consumer Sentiment Index, which has showed just a cratering of people's own stability. Who, 40% of Americans think that their economic situation will be worse in a year. For most of those measures, it's the worst it's ever been. Not worst outside of a recession, not worse, you know, since the pandemic. I mean, the worst on record that Americans feel about the economy is right now. That's bewitching on the notion that our macro indicators aren't flashing red, but every other indicator is. I mean, now the question for Democrats will be, what are we going to do about all of this? Um, affordability and corruption. Our two places, maybe we should start. Let's, let's begin with affordability. Um, what do the Democrats need to do at this point to, to fix this issue? There's no quick fix. Most of the affordability issues are stemming from really longstanding issues in the economy. The, you know, if you were to look at really any one issue and trace it back of what is its origin story, you know, much like, you know, the Texas Republican Party being in power for too long. And that's crashing into an acute issue. A lot of these affordability issues have had problems for a long time, right? Take health insurance, take childcare. And so the fix has to be commiserate to the problem, which means it can't be done overnight. I had actually a column go up today for Bloomberg, where I talk about what type of fast fixes there are. And one of the things that I suggest is focusing on what so many people who have been struggling in the job search process have been saying for years, which is that they're frozen. They're frozen out. There aren't jobs for them and that there is no dignity in the job search process. So I talked about how you could, you know, in the, in the pandemic, we had a household pulse survey to really quickly monitor, you know, who's sick. Are you going to work? You know, did you get a vaccine? We, we had these measures come out in real time and they were incredibly effective at really shedding light on what was going on in people's lives as the pandemic unfolded. So I said, you should just do the same thing for job search. We have this massive gap between what the unemployment rate is. What the unemployment rate says that the labor market should look like and what it actually looks like. And all that's in between is some, you know, a handful of indicators that are showing that it's a problem. And then a lot of questions we don't have answer to. So, you know, it's, it's such a light lift to start collecting data, asking job seekers, how many jobs are you applying for today? How is AI being used in your process? Have you had an interview from an AI agent? Have you, how many, how many jobs have you applied for that were lower than you, your educational credential? Because you're applying to be a business. You're applying to be a barista, but you have a BA. We could just start collecting this data that people have, have long felt was happening, but didn't feel like they were being seen, you know, to really bring to the notion that what the Democrats need to do is reignite responsive government. You know, fixing things quickly is not a possible when the problem is big, but showing up for people doesn't just happen on the longterm. It happens in the short term too. So I, I brought up this as an example of thinking creatively about being responsive and not just looking for the, I don't know. I feel like the quick fix hit of Congress this century has been like, Ooh, let's get a tax credit. Let's just throw a tax credit at a problem. Or maybe there's a deduction there. Like that's not working. And we have, this election is proof that what we have been doing is not working. So let's just, let's just try a different approach starting with be responsive to the things that people say are hurting them. And I, I similarly proposed a set of regulations for the job search process that employers have to do things like tell people when they didn't get a job. Well, I think this is good. This is going to be one of the debates within the democratic party, which is like, how far should we go in terms of policy change? I think there is going to be a reflexive reaction, which is Trump launched an unnecessary war in Iran. It spiked oil prices, which bled into the rest of consumer prices. And also he put up these tariffs, which of course were attacks on consumers. And that's what that has been. Those two things have been the main causes of this inflation problem, which is like not wrong. If we got rid of those two things, if we got out of Iran, if we got rid of the tariffs, I could see a world where inflation. would sort of moderate back down to, you know, roughly 2%, which is the target that the Federal Reserve is after. But I think there's this other question, which is like, is that enough? Is it enough to say, okay, we have this affordability problem, let's go back to the pre-Trump 2.0 world where people, when you look at the consumer sentiment polling, were still pretty unhappy as far as consumer sentiment goes. And I expect that to be a pretty significant rift in the party, is how quote-unquote radical do we want to be? So I'll pose that question to you. How much further does Congress need to go? It would take an incredible imagination to interpret last Tuesday's results as a mandate to bring inflation down to target. You know, it was like the people have spoken. The Fed needs to be aggressive over the next three meetings. Like, they understand. No, that is not what people said at all. What they said was they can't afford their life. That is the assignment. They can't afford their life. And if I don't think 2% inflation within the next six months, which I really doubt we could get to anyway, that is not the fix. Because that is not what people see. They see the price, you know, on the product. They see the. They see the change in what they're able to afford. I put a video up on TikTok where I was talking about just how terrible consumer sentiment had gotten, actually, after our last conversation, Ed. And the most popular comment was, I have never earned so much money and had had such a hard time. So I think, you know, thinking small in terms of the mandate is wasted opportunity. This is a massive mandate. And it. You should. We should respond to people's issues because the economy is not working. Just as an example, like, we think about how do we get prices down? Okay, we can try to figure out how to get oil prices down and diesel prices down so that it doesn't bleed into fertilizer prices, which bleeds into grocery prices, etc. But maybe we got to think beyond that. Maybe we need to think about housing as an example, which is the most unaffordable it's ever been. Housing prices on average costing more than seven times average incomes. I mean, that is a place where maybe we could start housing in terms of sort of thinking bigger. I guess, what would be your recommendation on that front? Ooh, tough one. I. And I say tough one because people feel so strongly about it. And if you don't like their policy, it's because you don't think people are struggling with housing. I find it to be a really nasty policy discussion. There's no silver bullet for housing. That's the problem. Like, child care, silver bullet. The government needs to pay for it. Not that hard. Like, we. That is the only solution that we have. That is the only solution that makes a difference. It is not clear. You don't have that same type of silver bullet for housing. You have to. It's a really distributed market with lots of preferences over both owning and renting, over size and location, amenities that come with each. And so the government getting its hands dirty in the housing market requires, you know, making a lot. Taking a lot of positions about what people want and what is enough. And so people. I think it's sensitive for that reason. I mean, the first thing you should do is you should take away the massive tax bonus that people get by dying owning their homes. Because of the way we assess asset gains via the capital gains tax and the step-up basis, you know, there's estimates that it's somewhere between one and four million homeowners are holding onto their house so they don't have to pay taxes on it. So even though they don't want to live in their house anymore, if they sell it, they have a high tax bill. And so they're just going to hold onto it till they die. 40% of homes are owned by baby boomers. And a lot of them are going to die over the next 15 years. And we've basically built the tax on it. And so we're going to hold onto it until they die. And so we're going to build the tax system to keep them in their home as long as possible. Right? These are the type of like, there's no one fix for the housing market. You have to find things like this and just immediately, you know, claw it back. We spend a lot of money on the mortgage interest deduction that goes almost entirely to people in the top fifth, if not top 10% of the tax filing distribution. And we don't need it anymore. It just gets people larger loans that in order to be someone who deducts, as opposed to taking the standard deduction, but itemizes, you're really talking about the tax system. And so we're going to hold onto it. And upper class of Americans. So, you know, use that money and send it back to states and localities to start building housing at the lower income level. I think the thing that has to be clear is more is more on supply is really popular, but more is more is not going to build or get housing for people who make $15 an hour. And so I think the housing fight in some ways exposes not necessarily different Democrats, but different people that the housing crisis is most acute for people who look like me, as opposed to really the housing crisis is most acute for people who earn $7.25 an hour or for the quarter of the labor market that earns below 18. But it's, you know, you want your problem to be addressed. And so you are the most in need. And so I think this is where housing starts to get nasty because if you focus on ownership, you're ignoring renters. If you focus on the lowest income renters, you're ignoring people who are missing out on the American dream. That one takes a lot to make everyone feel seen. Do you disagree that the one solution would be to build more housing? Because when I look at part of the problem in housing, it seems like there is this incentive to keep home prices high or actually increase them, which Trump has openly admitted, in order to please existing homeowners, which seems so ridiculous because all of those existing homeowners, not all of them, but a lot of those existing homeowners are boomers who, yeah, they want to see the value of their home go up, but they're not going to sell it. I mean, we're not seeing any. Uh, uh, uh, actual sales in the housing market right now. People are just living in their home and then you say dying in their homes. So would you, would you disagree that building more is something that we should do? Or is it that you think we need to do more than just that? I think you could build more in a lot of ways. And the more effective you wanted to be, the more, uh, contingencies you have to put on that idea of more. Like just building more housing at the market rate is not going to translate down to people who can't afford the market rate. So if more will help the market and the market rate, but it won't help people who can't afford it. And so it's, I think if that's the priority, that's the priority. But I think that people, the idea, you know, we all learn supply and demand, right? It's two lines on a graph. So surely if there's more supply, we'll be able to afford it. I think the part of the conversation that is often lost in the supply side is, one of the precipitating factors in making homes expensive is having extremely wealthy people. I mean, as far as the U S economy looks, we are basically in the 1920s when it comes to income inequality, when it comes to the amount of money held by the richest corporations, and that affects our housing market. It skews prices because the distribution of income has drifted away from the distribution of those piles of bricks we want to own. And so we can try to chase the upper tail and the top of the housing market and build more homes that people with a lot of money will buy. But they, this sounds so bad. They are messing with the housing prices probably more than anything else in certain markets. It is just when wealthy people with a lot of cash want to buy housing, it's like gentrification in a small neighborhood. It's the, you know, Californication of Austin in 2021. I mean, when rich people decide to live somewhere, they jack up the price of houses and supply isn't going to do much for that problem. Like we have to think about where, where there is an actual intervention on the income side and the demand side and not just the supply side. So yes, build more. Yes, build below market. Yes, build at market. Fix these incentives that we have for keeping people in their homes. But we are going to end up in the same place so quickly if we don't do something about the absolutely gross amount of economic inequality we have. Well, I was going to work our way up to inequality, but we got there. We got there. I'm on the front foot with that one. No, exactly. Because it's, it's, it's, I believe it's the most important problem and it's the largest risk to the economy, to our society and to just the livelihood of Americans. And as you say, yes, the extent of the inequality, which has just gotten so out of control is completely distorting markets from housing to stocks to, I mean, to everything. So let's go to inequality. What do we do about it? How bad is the problem? What do Democrats, uh, need to do in terms of policy? Problem is bad. Uh, if you look at the share of income earned by the top 1% of households in the 1920s, peaking in 1929, which is never a good year. You don't want to look like that year. That's not a good year. We all know it's not a good year. That was around 22%. So one in $5 in the U S was taken home by the top 1%. Uh, we're at 21 and a half now. So just, well, more than one in $5 is going to the top 1% of the income district. And, you know, in our heyday of better economic times that got as low as 10%. So the, the ability for the top 1% to skew the economy around their needs and wishes is incredible. The other real, um, I think marker of it is the share of gross domestic income that goes to corporate profits. Prior highest year on record was, you guessed it, 1929 when it was around 8.9%. And then it crashed, you know, obviously precipitously afterwards and it hung out around. around 7 percent for most of the 20th century. And about 15 years ago, this number started to go up. And now the highest five years for corporate profits as a share of income in the U.S. are the most recent five. 21, 22, 23, 24, 25. You know, we have never had 1 percent so rich, you know, compared, you know, since 1929. And we've never had corporations so profitable, you know, since 1929. Those are not good inputs into an economy that works for all of us. And so understanding the scope of the problem, I think, is in some part making it clear to Americans, like, you are living in 1929. That is where you are. We think because we come after that it can't be as bad, but we can revert. And on this measure, we have. I will say due diligence, we don't have the same level of wealth inequality because we do have middle class homeownership. So the amount of wealth that the top 1 percent owns will never reach 1929. When they had about half of it. But income and corporate profits, those those are pretty bad. So what do you think we should do about it? Oh, we've got to just interrupt every step of the of the process in which our economy produces so much inequality. So starting with birth and going all the way to death, we need to make the generational investment in children that we should have made 50 years ago. You know, I have I've had a proposal. I'm not the only person to have proposed it, but I've had it for a long time that we need to put the estate tax at a reasonable level. Same. A million dollars. And any of the proceeds collected from the estate tax goes into a children's trust fund, which does things like pay a basic income for children, make sure that they have early childhood education after school and summer enrichment so that a good childhood is not a privilege that some people can buy, but that all American children have access to. And the thing about the estate tax is that it's coming like we want to do it now because we have such wealthy people who are getting older that like this is when we can actually. This is the moment. This is the moment. This is the moment to make an aggressive state tax. And I I tried to think so often in talking to people like what sounds fair to them. And I I kind of have in my own small focus groups have come to a million dollars. Like if you if someone dies and it makes you a millionaire, that's on you. But after that, you know, the first million dollars that you inherit is tax free. And after that, you need to start paying up. And just to clarify for our listeners, the current exemption, if you're a couple handing over wealth was increased in one big, beautiful bill. And so that's that's that's the amount of money that we think like deserves to be tax free. And by the way, the reason that they increase the that that estate tax exemption is because of quote unquote inflation because prices have risen so quickly. So we need to account for that when the kid inherits 30 million dollars. Just wanted to put that out there. 30 million doesn't buy what it used to add. Come on. Rich people. Inflation is crazy. Yeah. So so that's that's one example of it's not going to fix everything. But it's you know, we can't tax away economic inequality. We have to stop producing it. And to stop producing it, you need to invest in children and workers. So it's not that hard. We know what we need to do. We've had economies in the past where children had investment and workers had power. And now we need to do both and more. So, you know, investing in children should not be as hard of a case as it is, but it's a hard one. And then investing in workers. We need aggressive labor law. We need more access to worker power beyond closed shop, you know, collective bargaining agreements. We need to have sectoral bargaining. We need to have modern unionization movements that they are desperate to move forward. We need to get more wages and income to the bottom. And some of that is easy, like require paid sick days. And some of that is harder. Like, let's set up sectoral bargaining agreements for. Certain service sector jobs like it's there's always there's there's more than one way to skin a cat. Right. So the first the first labor market policy can be something as easy as paid sick days and raising the minimum wage. But then you keep going and pushing on it. We'll be right back after the break. And be sure to tune in today, November 13th, for a live stream with our very own research associate, Kristen O'Donoghue. She is going to be tackling a very important question, and that is, is America losing its scientific edge? You can subscribe to. Access that conversation and many others at profgmedia.com slash subscribe. Support for the show comes from zero. Numbers don't lie, but there are easier and harder ways to pass them. If you're running a small business, you already have enough hard things on your plate, like trying to decipher the napkin scribble that you circled and wrote important above. Make keeping track of your financial numbers easy. 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We're back with Prof G Markets. What are some other taxation policies that you think we should pursue? I mean, there's a state tax that clearly needs reform. I mean, one of the proposals that we saw in California, Prop 40, was this one time wealth tax, which I thought didn't actually make a lot of sense. And part of my concern was that it was. It was too. It was too crude to the point that it actually wouldn't work and people wouldn't vote on it and then or wouldn't approve it. And then that is exactly what happened. So congrats. You didn't get your redistribution mechanism that you were looking for. But it does bring up this question of, like, how far do we need to go in terms of reforming tax policy in America? I mean, you mentioned, you know, the idea that we need to put more money in the pockets of workers. Sometimes I wonder, OK, do we need to reduce payroll tax in some way? Do we need to eliminate it entirely? How do we essentially get all of that money that is being hoarded by this small handful of individuals who are sitting on trillions of dollars of wealth, which is about to be passed over to their children when they die, practically tax-free? How do we redistribute that and then get that into the pockets of American workers? I'm not exactly sure how to do that. Sometimes I think, OK, maybe we need to increase capital gains tax, but then are you punishing young people who need to be building up an asset base today? How do you think about these issues? I think this is actually the central challenge that Democrats face because they want to go shopping and buy some nice things like child care, you know, like better health insurance coverage and support, but they have to be able to pay for it. And we have a non-recession peacetime deficit of 6%. I mean, we, you know, I got asked someone by asking, you know, rather aggressively of like, oh, do you want to turn America into France? And I was like, y'all, our deficit is bigger than theirs. We're already on that trajectory. Yeah, exactly. A hundred percent. And I think that there is this myth that if you have a generous social welfare system, you must go bankrupt. When what causes countries to get into fiscal trouble is mismanagement. And you don't have to have a generous welfare system to be mismanaged. You can just look at the U.S. So we have to be better at management. It's a very hard starting hand to want to be able to meet people where they are, but then have to fix tax in the process. Given the extent of lobbying and corporate interest. So I think that's what actually is the biggest problem for Democrats is that they can't just, you know, add to the deficit like no one's watching because Republicans did that for 25 years. And so now we actually have to pay for the things we want. I think, you know, a one big, beautiful tax bill is in some ways it might help to incrementalize it to just to break off one piece of the time. Like we know the pass through deduction is being used. Almost exclusively by the top 1%. And it has been a boondoggle for them to accumulate assets. The pass through deduction, if your listeners aren't familiar, when a tax, when something in the tax code is hard to explain, it helps people stay wealthy is kind of how I put it. And so it's the way that you can claim business income in certain situations. So had a noble motivation behind it of treating small businesses like corporations in terms of what are the relative tax rates. But it's absolutely been abused by wealthy people. So things like we don't need to have sweeping tax reform that does everything at once. You could do a one off bill on a state tax and children's trust funds. You could do a one off bill that ends the pass through deduction and just starts to bring money in. I bring this up, this type of approach with Social Security. You know, Social Security is got a financing problem. And I think one of the things that has made people so hesitant to fix it is that they feel like they need to fix. All 75 years in one go. And that type of mentality isn't helpful. You we need to be able to put the program on a proper path and then maintain it as opposed to fix it once every 50 years, which is the path that we're on. And so I kind of bring up the same type of like you could. just take power in January, get rid of the payroll tax cap, and at least like forestall the trust fund depletion out until the 2050s. And this gives you some wiggle room to really be creative with the program as opposed to, you know, at some point you have to fix the 75-year problem in one go. That will be a nasty fight, a bitter fight, one that will require deep cuts that people don't want. So just, you know, you could just do the popular thing that if it raises revenue, you could do that first. And you can do that alone and you don't necessarily have to fix the entire program. What do you make of the wealth tax proposals? Because it does seem, it seems like Democrats are clear on that we need some sort of reform. But I think the question is what that reform will actually look like. And I think what people like about the wealth tax is that it's sort of simple, easy, clean. It gets at the problem. It makes, you know, it targets. It targets a very specific group of people. I mean, in California, it was literally like, if you are a billionaire, that is the criteria. That's how we're going to tax you. I mean, again, you can hear that I don't think it really makes much sense. But what do you make of it? And if you were sort of advising Democrats today, how would you sort of re-steer the conversation? You know, don't make a victim out of them. Like, they'll run with it way too far. Like, oh, poor us. You're targeting us. We have to pay for everything. And that lets them detract away from the fact that, you know, the top 1% pay so much of our taxes because they earn so much of our income. And so the, you know, don't give them a chance at a spotlight for victimization. You know, if you make the tax code about taxing them, you know, you're losing narrative ground. If you just make the tax code about raising revenue and you instead say, look, the tax code is going to be boring, you really should be able to have the IRS prepare your taxes and have a free online software. You really should not have 271 different tax coupons in our current system. I think that you can make it about fairness and about simplicity without giving, you know, these very wealthy people the chance to cry about how they're the ones carrying America. I think keeping control of the narrative about, look, the purpose of the tax system is to raise revenue and it's failing on its main job. And that is what we are going to fix. And we're going to find sources of revenue. I don't, I think the billionaire argument has salience with progressives because we don't like how much money they have. Which is fair. Yeah, it's totally fair. I just don't, this is going to sound so bad. I just don't think we actually need to talk to them to craft a solution. And when you target them in a tax there, you're giving them a voice because you're putting them at the center. And so I just don't think they should be at the center. And on some level, you know, the tax system is not going to generate economic inequality. Revenue spent well is. So like, keep your eye on the ball of what we're trying to do. We're not going to tax someone out of their billionaire-ness. But we can, you know, get some money and spend it on things like universal public health insurance. That means that people don't have to be stuck in their job because that's where they get their health insurance from. And they can go start business and generate wealth of their own. So I think I'm, it might be my more optimist bent, but I think so much more about how to generate a better income distribution as opposed to how to correct one that we don't have. So I think that's a good point. Now, there's a little bit of, there's only so much correction we'll get you. What are your views on wealth taxes in general? I think they have a bad reputation for being harder to do than I think they really are. Like, you get this sense like. It's impossible to do it. How do you. Yeah, we do it all the time with property taxes. Yes, exactly. Like, we have wealth taxes in the U.S. If you're a homeowner, you pay them because we have property taxes. But then when it comes to wealth, that's not property. People just, you know, they lose their minds and they're like, oh, Europe tried it. I'm like, y'all, no. We can, I think there are very simple ways. You know, the hardest part of a wealth tax is how you assess. And the devil's in the details there, the step-up basis is a perfect example of this. If you hold on to an asset, you know, you bought stock in, you know, 1980, and here it is 2026 and you still hold it. If you sold it the day before you died, you'd have to pay. You know, capital gains on the appreciated value, all the money you made from the stock. If you waited till you died, your heirs sell it. They only have to pay taxes on the difference between the price when they inherited it and the price when they sold it. And all of that gain that you held on to is basically allowed to accrue tax-free. And then you've given a tax-free asset to your heirs. And that's. There are so many examples of that throughout the tax code. You know, do we need a really intense wealth tax or do we need to have some type of carryover basis for long-term assets so that you tax kind of on the interim holding so that you don't have as much incentives to, say, die with it in your property? Those types of things, like there's been proposals to have a change to the step-up basis or alternative basis or use what candidate. Those have been around since the 70s. And so the idea that we don't know how to do it, I think, is very much, like, favors the people who don't want to pay it. And it's lazy. Like, I just don't buy these arguments anymore. It's going to be so difficult. Like, and this idea that it's radical to come up with some, like, you know, fundamental tax reform, to me, it's just getting so ridiculous because, to me, the thing that's far more radical is to continue down the current path that we're on, where we have inequality, the likes of which we haven't seen since 18th century France, where they actually, took seriously radical measures to deal with that. I think that this defeatist mindset is, in some ways, a function of where we have been politically for the past 25 years. If we have. I mean, this is just every Congress is the least productive Congress until the next one. And the number of laws being passed and what is going on in that building, you know, that has made us all, I think, a lot less ambitious in terms of the things we need to do. I was giving a talk recently, and they were saying, you know, can Social Security handle paid family leave being added to the program? So, you would add a small payroll tax, and you, if you want to pay universal paid family leave, you would put it into Social Security. And I was like, y'all, they started this program on index cards before there were computers, and they've never missed a payment. I feel like, in the year of our Lord, 2026, we can pay out maternity leave from Social Security. Like, we can do this. I think that people have been made so unambitious, which is why, you know, when I think about, like, the type of advice I would give Democrats would be, like, give yourself some easy wins so you can prove to people that you can do things. Because I think a lot of people are very skeptical that anything can be done. So, show them that you can do some things. Get some easy wins. Not the fix that will be everything. Not the transition to a new economy. But, I mean, get yourself on that path by putting together policy that helps and just go. So, yeah, don't wait. Just pass a minimum wage increase. Maybe he'll veto it. At least you can show that you can pass it. You know, don't wait on Social Security. You know, start adding to it and expanding it right now. You know, and that's what I think will be the biggest mind shift change for Americans, is to actually believe that a better economic policy is possible. And they know that they need it, but I don't think they see the path out. And every victory for relief policy, large and small, is illustrating the path out. And that's what they need. It certainly seems as though this sort of lack of, ambition, this inertia, this sort of doing nothing, has almost been rebranded as we're being realistic. Like, it's too crazy to do something that would actually change things. We need to live in the world of reality and, you know, reach across the aisle and do nothing about anything. And that's part of my frustration with what we're seeing. Especially when it comes to this question of, and I'd like to get your views on this, this question of corruption and the crime that the apparent, crime, not proven because we don't seem to have a functioning justice system right now. But what looks like insider trading, federal bribery, securities fraud, wire fraud, abuse of office, et cetera, et cetera. And there seems to be a question as to whether we should actually do anything about that, whether we should pursue, quote unquote, retribution or prosecution or justice. And I think Democrats are genuinely divided on this. I think on, I can understand the arguments. On the one hand, you don't want to be seen as political, pursuing some form of lawfare, just trying to put mean Donald Trump in jail. But on the other hand, if he committed a crime, he should go to jail. If he actually did something wrong, along with a whole list of other people, a lot of people in the administration, a lot of people outside the administration. So what is your view on this question? And how much does it actually matter? perspective? Like, is this a sideshow? Or is this integral to the U.S. economy? Ooh, Ed, I wonder if you know that you're talking to the daughter of a criminal judge. I did not. But I'm glad that I now know. Yeah, book him. Like, to me, there is no, there is never a reason to not apply the law when someone breaks it. I mean, yeah, I love Democrats. But like, this is this moment in time, we're gonna have to walk and chew gum at the same time. And like, I know we can do it. And we can specialize. And I mean, when you were talking, I was like, what lawyers don't do it. don't need jobs anymore. Like we can do this. I, it's so funny. I, I so often get brought into these like history questions of like, who's your favorite president, least favorite president? You know, what about, you know, what person hits your top five list of most effective policies? What have you? And I, I feel like I'm this like N of one, but my least favorite president is and always will be Gerald Ford because it takes so much to see so much crime being committed by our president and decide that what's better for the nation is not holding him accountable. And he gave, he did the easy thing in 76. And he said, you know, we're just, we're, we're just going to put this to bed. Bad things happen. And he gets to go to California and give interviews for the rest of his life about how good his foreign policy is. And we didn't have that standard when we should have. And so what I would just stress is who benefits from not pursuing the law to the fullest extent possible. It's not the people that will have to go through an ugly time and watching it be pursued. It's the people who know that they'll have something to get away with because we're too afraid to pursue rule breaking when it happens. So no, absolutely not. If someone broke a law and committed a crime, you prosecute. And if they want to plea out so much, the better, you know, like go up the chain. I, I, this is, this is like ingrained into my person that we need to absolutely prosecute white collar crime. And you, and you know, you can see those charts about, the case is being brought by the justice department. Yes. I mean, it's just, it's fallen off of a cliff and it benefits no one to let that precedence, you know, lie. And it does seem to go hand in hand with the inequality problem that we were just talking about, which has sort of the source of all of our problems economically. I mean, I don't think it's a coincidence that you have citizens United and then suddenly white collar crime prosecutions fall off a cliff. And then at the same time, the wealth of the top 1% or the top 20 households in America absolutely skyrockets. Like I don't, I don't think that is a coincidence. I think that they are probably related, right? They're absolutely related over who has power to make the economy work for them. And y'all people with power, they don't give it up. They're not like, you know, actually you probably should tax me more. I mean, they might say it in a press release and they might say, well, maybe, maybe, maybe the tax code should look different, but you don't actually have that many class trader billionaires who are out there fighting for a higher minimum wage. They just know that it's like a little bit gauche to say that they get away with how much they pay in taxes, but that doesn't mean that they're on the front lines fighting. I mean, people don't give up power, whether that's economic power, whether that's power to influence Congress, or if that's power to break the law and get away with it, they're not going to give it up. So you either are okay with them having it, or you just, you know, dust off your shoulders and shimmy a little bit and then go take it from them because that the constitution and the economy people want, it is on our side to redistribute power in our economy. And that starts, that has to be a multi-front campaign. And it has to be not just about workers, not just about consumers, not just about people who can't afford healthcare, not just about the elderly. It is going after all of them at the same time. So yes, walk, chew gum. It's tough, but you know, go for the easy wins on economic policy and do not let anyone off the hook. And I think it also involves a level of strength and resilience that we're not really acknowledging. Like if you want to actually win this battle, it is a battle you have to actually fight. You have to be actually quite aggressive. Again, that's not radical. That's not out there. That's not extremist to have a position and then take it strongly and then go out and meet the hostile enemy, which is the guy who says, no, I don't want, I don't want to do this. I mean, we're going to, we're going to confront something. And this idea that we're all just going to kind of hold hands and fix things together and that it's not going to be an argument to me, it's just completely ridiculous. I don't know. How many hours you spend on Instagram after the election as the results came in? Yeah. What was it? Like I'm, I'm on the, my phone, my screen time is 28 hours today. Yeah. You know, but I think the, the, the themes that emerged from like, this is coming from people making content. One of the themes that emerged was just how ridiculous the culture wars are. You know, you saw people who are like, I'm going to go do a line of vaccines, every seat in the house that the Democrats get, it's a new gender. And I think at the, at the end of the day, it doesn't matter if it's economics and it's about numbers, it is still competitive storytelling. That is the game that we are in. And you can do competitive storytelling about crime, about power or about the economy, but there is no one answer. It is the competitive storytelling. And so I think that that is what has to be honed of like, if you look at what people say after the election, it's making fun of how ridiculous the culture war is and just how laughable that that is what was on stake, you know, or at stake. You know, I, I, my Texas algo, my Texas algo was just filled with people being like, I guess I'm trans now. Super fun. Like, you know, it just, and it was ridiculous. Like, of course, that's not what's the problem. And of course, that's not what's at the center. And so I think keeping in mind that it's not just the policies we need to pursue, but the stories we need to tell around them and that, you know, we have the advantage in that people want a better economy. And so we have to give them the story that gets there and we have to disarm the story that's going to be presented in its way. And I think that's what's going to happen. And I think, you know, that was the culture war. And there's going to be one about how if we lose billionaires, we won't have an economy. Oh, darn. Enjoy Europe. You know, like, it's just, I think the, we have to keep on the story that they're going to tell. And it's that Hydra that every, every time you come up with a good policy, their answer is going to be a doomsday scenario story about it. And so just meet it where it is and address it head on. And that's going to be the hard part is, is not just taking on power, but taking on the stories that power wants to tell about why we're not on the same page. I no longer take the billionaire argument seriously at all. I used to, like, I used to try to acknowledge them and think about, oh, yeah, these are the issues. And then I realized that they are just protecting their interests literally at all costs. Like, there actually is no capacity to have a conversation and to make any compromise. It's literally like anything you do is treading on me and you're trying to seize my assets. And I suddenly realized, okay, this is just a fight. It's not actually much of a conversation. It's actually involves forcefulness, energy, which I think we saw a lot of that in it from some of the candidates in this election, which makes me feel better about it. What's interesting, too, is, you know, the Social Security tax cap. It's a holdover of a prior era. It's not as high in terms of the amount of revenue that, I mean, Social Security gave a big tax cut over the past 40 years is what you need to know. But a lot of the ways that people learn about the tax cap is when they earn above it. And they don't know because they've never made $185,000 that there is a tax cap. They've just always paid Social Security and all their wages. And so one of the big, like, educating moments for people about Social Security is if they earn above the cap for the first time and they're like, excuse me. Like, what do you mean I don't have to pay taxes on it anymore? And so I think that there's a, I'm with you that there's a fight, but I think there's also, this is how some people get educated as to the inequality of the world is when they start to get to the other side. And so I think that there's a, I'm with you that there's a fight, and so I was a little cavalier earlier and I said that billionaires don't fight. Some of them do. But I think that I don't see them as a protected or important class. Yeah, I think that's accurate. And the best way to pursue policy is to not give them a status that they don't deserve. We'll be right back. And for even more markets content, sign up for our newsletter at ProfGMarkets.com. This is advertiser content from Xero. Sometimes the hype cycles can make us forget that a stock represents a real business. But whether you're an investor or a business owner, if you understand how to draw insights from the financial data of the underlying business, the rest is noise. So I'm going to talk about some of the ways I evaluate a business, and I'll show you how Xero can help you apply the same criteria to your own business's finances. Xero, spelled with an X, is a platform that can help you apply the same criteria to your own business's accounting, payments, payroll, and analytics under one umbrella. Let's call this exercise Ed's Business Health Checklist. First on the list, nobody can or should know your business better than you do. 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Thank you. we're back with profg markets i just want to move on to another subject here which i want to understand more which is health care um health insurance premiums are expected to skyrocket starting next year essentially uh this has been one of the biggest debates especially after the one big beautiful bill act where we saw uh these aca subsidies expire and health insurance costs have just climbed and it's just so insane because the u.s already spends so much for for such such terrible outcomes especially compared to other developed nations so how should democrats think about health care at this point what is the right solution moving forward all right well do do some landscape not only are prices high and they're getting high for people who have you know the right type of health insurance right it's people who have employer sponsored plans are the ones they're going to see some of the biggest price increases next year that is hitting more than one class the other thing to understand is that roughly one in four americans will say that they are locked into their job because they can't lose their health insurance and that the united states has one of the lowest rates of self-employment and small business entrepreneurship and many people think it's very much tied to the fact that if you go out on your own you can't actually afford health insurance but you don't make little enough money to be on medicaid or you have too many assets to be on health insurance so i think it's a good idea to think about that and that this very much stifles entrepreneurship in our economy so the the ground rules for health care and health insurance is to remember that those are two different things health insurance is who pays health care is who provides and what i have found in talking to people is that they conflate the two and so they think that if we do something about health insurance which is where the costs are it means you lose access to health care and what's lost in this is that we are already losing access to health care and we're losing access to health care and we're losing access to health care because of insurance i mean the private health insurance industry in the u.s is bar none the most subsidized industry they cannot function without the largest government tax subsidy that we have it goes to health insurance companies if the government turned it off they'd collapse in days so we help like the public public holds all the levers here because the private industry isn't sustainable they haven't really ever been sustainable they've always needed the government to help them which means that it's really our power to decide how we want to transition away from employer-sponsored insurance but that is the answer we have to transition away from employer-sponsored insurance and i think most people's hesitation that i hear comes from but won't that hurt the big health care sector that's propping up our economy which is not a reason to not do something and also not true but i think people are more afraid about the consequences of better health insurance as opposed to not understanding that we need better health insurance so you know same thing right like you've got to find the small victories on the way to the big one the big one is we have universal public health insurance there's more than one way to get there but i think people need to know the path one popular path that's i think a little bit more of a transition would be to have a public health insurance plan that people can buy into you know this would be the public option of the affordable care act where you you basically would be able to buy into medicaid even if you were not low income and make medicaid nicer or buy into medicare without having to be 65 and that that would essentially the market would collapse on its own because people wouldn't really want the private plan that's one option the other is just to enroll everybody into a public health insurance plan they've got social security numbers and transition our current private system to a supplemental private system i think what's interesting about health care and health insurance is that there's more than one way to get to where we need to go and where we need to get to go can can look a little different but the only indefensible option is what we have now what would you say to people who say that that's going to be extremely expensive and that people who say that government is not very good uh at dealing with large difficult bureaucratic things and therefore do we really want to leave our health care in the hands of government well the alternative is not zero dollars the federal government already spends well north of two and a half trillion around two and a half trillion it's when you give a cost estimate for health there's like the current year cost and the projection over the next 10 so you kind of end up with a lot of estimates it's closer to like two four or two three now it should be over three within the decade so the the alternative isn't the government currently spends zero dollars and then we're going to ask it to stand up a system the the the reality is that the government spends two and a half trillion dollars not very well so that that is the alternative scenario is not zero dollars but the poorly spent two and a half trillion and then the idea that the government isn't efficient or isn't effective at a large bureaucracy you know privatizing social security was not popular because the government was pretty effective and efficient in how they get you checks i understand health care is different but medicare and medicaid boast much lower administrative costs than private health insurance companies i mean they just don't have that much fat so the the concern about the private health does it better is interesting because it when pressed most people would tell you that they have to wait a long time to see a doctor that they can't get an appointment that we have shortages in pediatric you know primary and obstetric care right now that are getting worse and so this efficiency from the private sector is true you know maybe in theory but not in practice and the practice is i think obvious so i always just try to redirect from how do you think the government could spend two and a half trillion dollars and do you actually think that you are getting an efficient health care system when you go in and consume it and the answers to both i think kind of get people to a different place i'm going to move on to another subject that was extremely important in this election that is ai and data centers uh 56 percent of voters said that ai and data centers were a crucial or major factor in their decision in this election uh there were more than 40 data center proposals on ballots across the nation and only one of them was passed in favor of data center construction so americans care a lot about this and it seems like it's going to be one of the most important issues over the next decade or perhaps over the next several decades um i guess what do you make of america's response to ai generally and then what do you think democrats should actually do about this yeah their response is totally valid these are monopolistic companies that are making a dangerous product that shouldn't be on the shelf and then they're getting sweetheart tax deals to build you know just a environmentally noxious data centers in their backyard with seemingly little accountability so they're totally valid and i i think that there's this this inclination to call people luddites if they oppose technology if they simply want the rollout to be done with accountability uh for either you know people's safety the environment or what have you i mean it's so rude to people's yeah it's just so disrespectful to people's intelligence it's horribly demeaning to tell to say like they just don't understand the future you don't get it you don't get it i mean i'm pretty sure i get it you know you're you're a monopoly you have no accountability and you make a product that you uh you know probably are rolling out too quickly by your own measure in order to get a lot of money and you hold up the chinese as a boogeyman every time someone brings up something like your chat bot killed another kid well the chinese are right behind us apparently they're right in bed with you so like i i guess it's these are these companies have they are run by people who could not could not have worse pr if they tried to do something like this tried i mean just could not to get up and say i'm gonna erase all jobs with my technology and the permanent unemployed will just have to live off of the wealth i create for like wasn't he like 25 when he said that i'm like man you are doing yourself no favors uh that people are just more realistic so i yeah people are completely valid and i i think adding some rules and accountability and taxes you know make them pay extra in utility bills as opposed to less this is all reasonable uh and can be done quite quickly i think is the other thing is it's that's fine that you know i think the separate question about what democrats can do i don't know i'm pretty radical about this um i don't think i have a typical opinion certainly not one that's grounded in economics but if you have a product that hurts people especially children you shouldn't be allowed to sell it and chatbots tell people to kill themselves so i don't know why anyone can walk off the street and buy one if it's harming people and to watch someone defend a chatbot that has told someone to kill themselves is it's remarkable like the moral gymnastics involved i've once heard a woman tell me you know some therapists are bad and i was like no kidding a woman that i could sue in court for negligent homicide could be bad at her job but your chatbot is to be completely free of all liability so i i think that you know new technology it has been given every favor is what i will say to ai development it has been given every favor and i just don't think they deserve any more so if you've got a consumer product that's causing harm you take it off the shelf if you if you if your product is resulting in the death of people then you need to be held liable and they should sue you for wrongful death you know there's all kinds of precedent for this there's it was like 10 years ago that the girl told her boyfriend to kill himself and she was found guilty of manslaughter i mean we we think that we have an obligation to other people's lives and yet when you bring this up i think i come off as more radical and fringe i just can't think of you know what it was So I bought this like toy for my kid for a plane ride. They're called busy toys because a one and a half year old is capable of sitting still for like two to three seconds. So if you have a two hour plane ride, like you are in for it. And so I bought them this little thing that has like little cranks and pulls and twisted knobs. And like three years later, I got an email from the company I bought it from saying that a kid had choked on it. And the kid, it was like two different choking incidents. And so they were pulling it from the shelves. The kids didn't die, but they had choked, which means it's a harmful product. And that in an abundance of caution, these products need to be taken off the shelf. And that was the day that I read about yet another negligent homicide chatbot, you know, rest easy, King. And I just thought that what people see is not some race with the Chinese to have the new technology. What they see is that some companies are allowed to harm people. And others aren't. And so why do they get the free pass if they're harming people? That is what that is like everything that comes down to for me. But I can play the economist here and say that it's a bubble. And I think Democrats are putting once again, they've been they've come to power with a really bad hand because any type of regulation that this product and technology so desperately needs risk popping the bubble that we can all see. I don't think it's speculation anymore of whether there is one. It's just what will happen when it. Pops. Well, that's terrible because it's propping up the stock market and stock market wealth is fueling the consumption of the top one percent. And so we, you know, we don't have economic policy right now. We have a hostage situation. You know, I hold all of the stock market value. I hold all of the wealth. I hold the consumption of the top one to five percent of Americans that is fueling possibly a third of our economy. You hold all of the cards. So how do we make it fair? I mean, I don't I don't think there's necessarily an easy. Way out of here without a massive correction in the stock market. And I think Democrats just have to be willing to risk it. So this is probably a good place to start to wrap up. And it gets to something that I've been thinking about, which is that in order to see the change that that clearly you and I agree we need to see and that I think millions of Americans agree with that we need to see as well. Someone's going to have to lose something. I mean, we could talk about housing as just as. An example. I mean, if you bring home prices down, then you piss people off who want to see their home prices go up and therefore their net worth go up. If you address regulation and if you come up with sensible common sense regulation for AI, then maybe the stock market gets hit and maybe stocks go down and then maybe portfolios get hit and people say, that's not fair. Look at what you did to my stock portfolio. But it's like, OK, that's a price. That we're paying for something else. And I think about this, especially when it comes to young people who have gotten seen their wealth on average decline by more than 25 percent over the past four years, while the wealth of the boomer generation has increased nearly 40 percent in that same period. And I'm like, I don't care that much if boomers portfolios are reduced by 10 percent next year. I think I'm OK with that. And I wonder if that's something. That Congress needs to accept, which is you might piss some people off. You might make billionaires upset. You might make boomers upset. You're going to annoy some people. But isn't that just how policy works? Some people win. Some people lose. Now, there's a bias to only see the cost that you will incur as opposed to the ones you are incurring, because who is losing now is most of us. You're going to have to make losers out of somebody. Losers. Losers out of the homeowners that have owned their houses for 30 years who have gained a million in equity from it. You're going to lose the people who, you know, don't want to see a stock market correction. I mean, those people are going to lose. But again, it's like health care. The alternative is not zero dollars. The alternative is not that no one is losing now. And so I think keeping in mind what you're trading and who becomes the loser and to what degree, you know, the alternative is never no harm, no cost. All policy has trade. We have been erring on the side of make sure rich people and corporations have their day for a pretty long time. And it's going to. Yeah, transitions are tough, but we are more than ready for it. We just look at what happened on Tuesday. The other thing I'll say is that, you know, it is so hard to have the degree of economic insecurity that we have in the U.S. to get people to take a step in a different direction. Right. When you're scared, when your back is up against the wall, you're going to hold on white knuckled to what you have. And what you know, because you don't want to lose anything else. So I think part of the job of economic policy for the next decade is to make sure that the alternative is clear to people. Like, look, you've been using your house as a piggy bank. And that is what was working for boomers, but it's not working anymore. So an alternative would be that every American has a government funded retirement account that actually Trump proposed, modeled after the thrift savings plan. That is set up for federal employees. Incredibly successful, incredibly popular, very low cost, very low risk. You can build wealth for people that doesn't have to be, you know, rested on a single address. So taking home equity off the table is scary for a lot of people. But you have to be there to say, like, there is a better way to get equity. And it's right here. And so I think making sure that the alternative pathway of, like, the alternative in terms of what we lose now and the alternative of other ways to get you economic security. Are always clear. It's like, yes, you're going to lose your employer and sponsored health insurance, but you'll probably have a higher wage and you won't have to pay into the second system. And, like, always expressing the alternative in terms of benefits and costs. We do have to have a new way to pick assets and wealth. I mean, it wasn't lost on me that if we did have a robust thrift savings plan that defaulted people into, say, a mix of bonds, it would make it a lot easier to spend a lot of money because it would basically be like a wartime bond drive. But instead, we're spending it on retirement investments for Gen Z. Right. Like, I think we can. Be really creative, but you have to not take away the security. If they only know one way to get there, you have to give them another way to get there. And the other way is often a lot better, but you still have to make it clear that, like, I'm not asking you to give up economic security. I'm asking you to give up the home equity part of it. If a Democrat in Congress were listening to this right now, how would you sort of summarize the overall mission that they need to follow over the next decade? Like, what should they not be doing that perhaps Democrats have done in the past? And what should they be doing? What is if there were some sort of policy North Star that they need to adhere to when they run into lots of different scenarios and they're not going to have the answers just at their disposal from Catherine Ann Edwards? They're going to need some sort of general value system or principle. What is it all about? So help me if the word tax or credit comes out of one of your eyes. Y'all, the game here is not to make a better tipped credit. I'm going to lose my mind. No, the, you know, the mission is it is going to take 10 years reasonably to put into place and have big outcomes on all of the things we need to fix. So you just need to see you just that doesn't mean we don't have victories until year 10. You need to build victories into every year and go after the small wins, the immediate wins. And more than anything, you know, what people need out of their representative government is responsibility. The policy. So respond to them. You know, it's it's and respond with not a tax credit. So find that find the wins as you go and break problems into small ones like, you know, we don't need to pass universal public health insurance in six months, but we can probably do it, you know, in three pieces in six years. So, you know, break things up and just start passing bills. Catherine Ann Edwards is a Ph.D. economist and economic policy consultant. Her research focuses on the intersection of labor markets and public policy. Including unemployment and unemployment insurance, recessions and recoveries, women's labor supply, poverty, alleviation, retirement, security and Social Security. She has testified four times in front of Congress about economic policy. She writes a weekly column on the economy for Bloomberg, and she is the host of the Optimist Economy podcast. Catherine, we really appreciate your time. Thank you for having me. This episode was produced by Claire Miller and Alison Weiss and engineered by Benjamin Spencer. Our video editor is Jorge. Our research team is Dan Shalon, Kristin O'Donoghue and Mia Silverio. Jake McPherson is our social producer. Drew Burrows is our technical director. And Catherine Dillon is our executive producer. Thank you for listening to Property Markets from Property Media. If you like what you heard, give us a follow and join us for a fresh take on markets on Monday. We'll see you next time. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. 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