Mark Blyth, political economist at Brown University's Watson Institute for International and Public Affairs, and Carrie Nordlund, political scientist and Assistant Dean for Undergraduate Programs at Brown University, share their take on the news.

On this episode:

• Grading Mark and Carrie’s Supreme Court predictions
• A disturbingly warm summer for all, and the financial repercussions of it being too hot to go outside. 
• Gender equality, austerity, and the financial time-bombs in English municipalities
• The Trump trial/campaign continuum
• Life under a gerontocracy
• Testing the West’s stamina for the War in Ukraine
• Unpacking the ‘immaculate disinflation’
• Google v US, and the “franchise-ization” of the American Economy
• Together, Mark and Carrie ‘Barbenheimered’

Learn more about the Watson Institute's other podcasts

[MUSIC PLAYING] CARRIE NORDLUND: Hello, and welcome to Mark & Carrie, brought to you by the Watson Institute for International and Public Affairs. Hello, Blyth. I haven't seen you in quite a while. How are you, Professor?

MARK BLYTHE: I'm doing quite well. I'm doing quite well. But we did actually see each other briefly during the summer.

CARRIE NORDLUND: Yes, for just a second.

MARK BLYTHE: And for everyone who's listening, we met in the summer quite unexpectedly and said, oh, we should totally do an episode. That'd be great. And we planned the whole thing out. And then it was the summer and we both kind of forgot. So that was that. Or had other things to do.

But anyway, I'm back from a bit of wandering. It was a productive summer.

CARRIE NORDLUND: Yeah.

MARK BLYTHE: It was good. I went to Europe, where it was a gajillion degrees.

CARRIE NORDLUND: Yeah.

MARK BLYTHE: But that was all right. And now we're back.

So the first thing we have to do, I think, is before we left, we had a series of predictions.

CARRIE NORDLUND: Oh yes, the Supreme Court of the United States was wrapping up their business. Yes. And we did-- and I actually have our notes from those so I can give us that in real time.

MARK BLYTHE: What did we say would happen, and then tell us what actually happened?

CARRIE NORDLUND: Well, we actually did pretty well because we're jaded and cynical and pessimist. So we did we did pretty well. Affirmative action case, we said it was going to be dismantled. Which it was. And of course, all of the policy that has now come out of higher Ed as a result.

The independent state legislature, actually, that was the one we didn't get.

MARK BLYTHE: Yeah.

CARRIE NORDLUND: We really went negative on that one. But actually, the court said no, this is bunk.

MARK BLYTHE: This is nonsense.

CARRIE NORDLUND: Three of the justices-- I believe it was three-- actually said there is something there. So it wasn't a full 9-0.

MARK BLYTHE: Right. Right. But at least it was 6-3 against.

CARRIE NORDLUND: Yes. Let's see. On 303 Creative, which was whether or not a Baker in Colorado--

MARK BLYTHE: Right. Right. The sort of the I want to discriminate against people Baker story.

CARRIE NORDLUND: Yes, you can discriminate.

MARK BLYTHE: All right.

CARRIE NORDLUND: So that's great. So you may or may not get your cake or venue or--

MARK BLYTHE: Stop for a minute on that one, right. The other two seem particularly serious. I understand why in a country like the United States, given the history of redlining, racial exclusion, et cetera, that it's such a sensitive topic, the notion you can discriminate against someone actively in your business, right. But de facto, don't people do this all the time anyway?

You know, let's say I'm a wedding planner, right. Somebody comes to me and they want to have this crazy ass sort of ridiculous wedding. And I just go, no, I can't be bothered with that, right. So how would you ever enforce this?

CARRIE NORDLUND: Well, I think-- so there's a couple of things that are weird with this case. Is that there wasn't ever an actual person that was injured. So the standing on it was really in question. So there was that part. But the point that you're making, I think, is right on. I may be busy and can't take your wedding.

MARK BLYTHE: Prove that I'm not discriminating, yeah.

CARRIE NORDLUND: All of these different-- all of these different things. So it is a bit of a weird case, and the implementation of it to prove that you are being discriminated against because of your federally protected class.

MARK BLYTHE: Right.

CARRIE NORDLUND: I guess unless they yell at you and use certain words.

MARK BLYTHE: And use those terms.

CARRIE NORDLUND: Right.

MARK BLYTHE: Right, exactly. That'd be be the only way of doing it.

CARRIE NORDLUND: Or if there was some sort of class action of always being discriminated against based on a certain sort of identity. But yeah. I mean, this is policy though. What is implementation, and what does it look like, and how do we actually go about it? Yeah.

MARK BLYTHE: Yes, speaking of that, let's switch. Phoenix, 110 degrees for 54 days. Texas literally is toast.

CARRIE NORDLUND: Yes.

MARK BLYTHE: Ironically, the only thing that's keeping the air conditioners on in Texas is all the green stuff that they've installed, the wind and solar. Which they're now actively discriminating against in public policy because you don't want anything that would actually keep the lights on and the air conditioners on. Yeah, it's a bit mad isn't it? I mean, it really does seem to have like-- because we had this last summer.

CARRIE NORDLUND: Yeah.

MARK BLYTHE: And then we've had it again. And of course all the people on Twitter are like, well, there's always been weather cycles. And it's like, it's not a cycle, it's a hockey stick. It's just like straight up.

CARRIE NORDLUND: Yeah.

MARK BLYTHE: So I don't know, what do you think of this?

CARRIE NORDLUND: But your point about Texas is-- the big exciting news was that the grid held up.

MARK BLYTHE: Right.

CARRIE NORDLUND: So the grid held up because of the stuff that they're--

MARK BLYTHE: Because of the green stuff that they're actually discriminating against. Exactly.

CARRIE NORDLUND: Yeah. Well, it was interesting. So as I was prepping for this, 50% of the world's population experienced extreme heat. 50% of the world's population. And then there is this article, you probably saw it, like we can't just turn on our air conditioners and hope it goes away. The air conditioning accounts for 4% of greenhouse gases, which is twice as much as the airline industry. Which I was totally shocked at.

So the air conditioning, which is really wonderful right now, is really actually going to put us in even worse of a spot. And then places like Phoenix are going to be even more screwed.

MARK BLYTHE: Right. So the only way you can do this is if you basically run your air conditioning off of renewables.

CARRIE NORDLUND: Yeah.

MARK BLYTHE: Which means even more investment in that space, rather than, as Texas did just back in May, if you now want planning permission for putting up either solar or wind, you have to ask everybody, I think, it's in a 25 mile radius, what they think of it.

CARRIE NORDLUND: Oh, wow.

MARK BLYTHE: So that's just a huge-- like that's not going to happen. And there's now a one-time tax that has to be paid every year if you do renewable stuff, whereas if you do carbon stuff, you don't have to pay it.

CARRIE NORDLUND: What was the scene like in Europe? Where did you go, and what was the weather? I mean, it was just 80 degrees, I think, in London. Or mid 80s.

MARK BLYTHE: Well, this is the crazy thing. So I went to London first. I did a thing at the House of Commons at the start of June. And if you ever want to be in a building that had no conception of air conditioning.

CARRIE NORDLUND: Yeah.

MARK BLYTHE: Try sort of the houses of parliament, right. There's a ridiculous Baroque structure. And it must have been about 85 degrees. And it's sort of the big room that we were using to talk about this stuff, right. And it's just-- the country is simply not built for it. And that's only 85, wait till you get to 90, et cetera.

| of course, you know, what happens is then July is pretty crappy and it rains a lot. Yeah, because you get more moisture in the air, it has to go somewhere. London's reasonable, right. It dumps down there.

Meanwhile, just 500 miles away, you cross across the channel, you go to southern France, it's 40 degrees. Remember, that Celsius. You go to Italy, it's 42 degrees. You go to Greece, it's on fire and it's 44 degrees, right.

CARRIE NORDLUND: Yeah.

MARK BLYTHE: And that just continues. That was the whole summer, basically, for these places. And one of the things I thought about with this is if you think about Southern Europe since the financial crisis, since the sovereign debt crisis, it's been told by the Germans and others in the north that spend less money and do more exports.

Well, it looks like they're doing more exports, but all they're actually doing is less imports, right, because they're poorer. And their main industry in many parts of the southern part of Europe, of course, is tourism.

CARRIE NORDLUND: Yes. Yeah.

MARK BLYTHE: Think Florence. I mean, it's insane, right. Think about all these cruise ships docking in the Med, right. Think about the Greek islands, et cetera.

Now, if you're constantly at 40 degrees, who wants to go there?

CARRIE NORDLUND: Yes. Yeah. Yep.

MARK BLYTHE: I don't.

CARRIE NORDLUND: Yep.

CARRIE NORDLUND: OK.

MARK BLYTHE: You go back, you had a snack, and then you went to sleep until about 4:00.

CARRIE NORDLUND: Yeah.

MARK BLYTHE: And then you went out at 5:30. That's the only way to survive.

CARRIE NORDLUND: Yeah. Well, there's this interesting travel article that said Italy has 1.1 million hotel rooms. Helsinki, which I strongly recommend, 65,000 hotel rooms. So just thinking about just the travel tourism industry and how can there be a shift from 42 degrees Celsius to Helsinki? I mean, it's not even built for it.

MARK BLYTHE: I'll give you an example of this. There's a little-- it's not a little, it's quite big. There's a booze shop here in Providence. Now, I can't mention its name but it's called Bottles.

CARRIE NORDLUND: Yeah.

MARK BLYTHE: And it's very good. And sign of the times, they have English champagne.

CARRIE NORDLUND: Oh, Jesus.

MARK BLYTHE: Now, you know who's making this? It's the big French producers buying up bits of Kent and buying up bits of Somerset, because France is getting too damn hot.

CARRIE NORDLUND: Hot. Oh, that's so weird.

MARK BLYTHE: I know. Imagine a world in which all of that fancy French wine is no more. It could happen in our lifetime. Like, there's literally no more Burgundy, there's no more Bordeaux.

CARRIE NORDLUND: Right. Right. Right. Right. Yeah.

MARK BLYTHE: Wine connoisseurs will be throwing themselves off the tops of buildings.

CARRIE NORDLUND: Yeah. I don't if you're wondering, did you go to Burning Man?

MARK BLYTHE: No, unfortunately I managed to skip it this year, last year, the year before, and every other year.

CARRIE NORDLUND: I wasn't sure whether your RV maybe got stuck in the mud.

MARK BLYTHE: I couldn't imagine anything less me than Burning Man. I mean, it really is. But speaking of Burning Man.

CARRIE NORDLUND: Yeah.

MARK BLYTHE: I have a story about Birmingham.

CARRIE NORDLUND: Oh, yes. Please.

MARK BLYTHE: Not Alabama. Not Alabama. The Birmingham City one. So this is a shout out to Nigel Nayumbu, one of our listeners who wrote to me. We do actually respond if you want to do this.

CARRIE NORDLUND: Yeah.

MARK BLYTHE: And he said, you should have a look at what's happening in Birmingham City council because they're bankrupt. Now, I'd seen this in the BBC News and I thought, well, you know, sign of the times broken Britain, et cetera. But it's actually way more interesting than this, right.

So local authorities can't issue, in a very restricted sense, debt. But there's no big municipal debt market like there is in the United States. They live off of grants from central government. So when those government grants get reduced, they have to be creative in the financing. And they've only got limited taxing powers et cetera, et cetera.

So here's how the news is being reported, if you just get into sort of the mainstream media in the United Kingdom. And this is not wrong, right. This is not manipulation or anything. And basically, it's about gender inequality.

CARRIE NORDLUND: OK.

MARK BLYTHE: And Axios, Felix Salmon did a good piece on this, actually. It's one of the links that I found more about this story. This is sort of happening everywhere. That basically, you're getting class action lawsuits where generations of women who were paid half as much, or 75% as much, are like enough. And they're getting these rulings. So there was a huge ruling against Birmingham City council that blew a hole in the budget and now the bankrupt. Not quite.

CARRIE NORDLUND: OK. That's not the end?

MARK BLYTHE: No. No. No. There's a thing called Lobo loans.

CARRIE NORDLUND: OK.

MARK BLYTHE: And it's as bad as it sounds.

CARRIE NORDLUND: OK.

MARK BLYTHE: So it's a lender obligation, borrower obligation loan. These are typically very, very long term loans, 40 years, 70 years.

CARRIE NORDLUND: OK.

MARK BLYTHE: And they have a fixed rate on it, but the rate adjusts periodically. And in a sense, each party gets to suggest what the rate is and you walk away. But if you walk away, you have to pay off the full loan.

CARRIE NORDLUND: OK.

MARK BLYTHE: So what de facto does is, unless you're really going to amortize over a very long period, it gives the lender enormous power. So now interest rates have gone up. Guess what happened? Birmingham and all the different councils in England, probably Scotland, I don't know. But definitely England. Basically-- and the aftermath of the financial crisis, we got austerity.

So the budgets went down by a third. There's only so much they could cut before literally people would be like orphans on the street type stuff. So along comes the city of London and says, we've got these lovely long-term loans, interest rates are really low. What could possibly go wrong?

Guess what? Interest rates are now through the roof at the same time as you're facing these massive gender equality suits. So this is a huge problem. I mean, Britain's astonishing at this point under the Tories. I mean, they call it broken Britain. There is literally nothing left to break.

CARRIE NORDLUND: Right. So, I mean, the take home point, as I understand it, would be that the bank will go under. Or the whole global-- or the whole economic structure--

MARK BLYTHE: No, it just basically means that people rely on public services from local governments in Britain and China and the United States. And these local governments are facing challenges a lot more than just one-off gender lawsuits.

CARRIE NORDLUND: OK.

MARK BLYTHE: It means that the whole sort of financing model for these things. And you see this in China as well, right.

CARRIE NORDLUND: Yeah.

MARK BLYTHE: It's because it's been based on real estate and that's all gone to hell.

CARRIE NORDLUND: Right.

MARK BLYTHE: So yeah, it's kind of interesting. But it's basically a local governance story. But to me, it's fascinating because all the attention is on the gender equality and payback story, which is totally right and totally true. But underneath that, there's an even shittier bunch of stuff going on.

CARRIE NORDLUND: Right. Yes.

MARK BLYTHE: So that's super interesting.

CARRIE NORDLUND: Yes. Speaking of broken Britain, we can go to broken United States.

MARK BLYTHE: Yay.

CARRIE NORDLUND: There we go. And lots of stuff happening with former president of the United States, Donald Trump. He now has 91 total felony counts against him in three different states and the District of Columbia.

MARK BLYTHE: Wow.

CARRIE NORDLUND: So the cascade of when these will actually start, maybe as early as October of this year in Georgia. And Fani Willis is moving really quickly. That's the one with the 19 different people. Rudy Giuliani-- all the mug shots.

MARK BLYTHE: Yeah.

CARRIE NORDLUND: It was really exciting-- really kind of hard to believe when you see all those people in their mug shots. But it is an interesting-- I mean, there's obviously the legal perspective of this, and there's the presidential. You know, a former president has never been indicted in this way.

But I think the thing that's most interesting, for me, of course, is the politics of this. And to see how the calendar unfolds in relation to the presidential primary. Presidential election is about to happen. And how exactly former president Trump is going to spin this.

And yet really astute observations, there's no spinning. This is his entire presidential campaign. He's not going to talk about climate change. There's no policy.

MARK BLYTHE: Amen.

CARRIE NORDLUND: It's just-- this is the entire thing.

MARK BLYTHE: But isn't this a rerun of what we saw last time? In a sense that the last time the Democrats said, oh, just ignore him, he's just a fool. He's like an angry old man. Nobody will take him seriously. And then they kept, basically, putting him on CNN 24/7, and that made people be attracted to him and it pumped up the rallies.

So now, irrespective of what you think of the merits of the case according to lots of DAs, he has broken the law and needs to be held to it. And this is basically writing the script for re-election.

CARRIE NORDLUND: Oh yeah.

MARK BLYTHE: He said, from day one, they were after me. They were after me with Mueller. They were after me with this, they were after me with that. And this is just an extension of the same thing. And you see this playing out in the polls.

CARRIE NORDLUND: Oh, yeah. I mean--

MARK BLYTHE: Neck in neck with Biden. How many indictments?

CARRIE NORDLUND: Well, 91.

MARK BLYTHE: How many indictments against Biden?

CARRIE NORDLUND: Well, zero right now.

MARK BLYTHE: So what's-- so what's the net effect of an indictment?

CARRIE NORDLUND: It pushes your poll numbers up. Yeah. But exactly to this point too is that it gives him more power. The more indictments, the more popular he becomes.

I mean, he will, at the Republican National Convention in Wisconsin, put his leg up if he has one of the--

MARK BLYTHE: Ankle bracelet.

CARRIE NORDLUND: Ankle bracelets on, and people will go nuts.

MARK BLYTHE: Yeah.

CARRIE NORDLUND: And his furthest-- there's so many things I want to say about this. But DeSantis is like 30 points behind him, so it's not as if someone's nipping at his heels and it's really going to be a close race. I mean, it is pretty-- I mean, Conventional Wisdom said he's going to be the nominee.

MARK BLYTHE: Well, what about Vivek? He's played a very smart game? Which is to come in and out-Trump Trump but say that I'm the biggest Trump fan of all.

CARRIE NORDLUND: Yeah.

MARK BLYTHE: So either you get picked as VP, or if Trump goes to jail, you're the front runner because DeSantis is a disaster.

CARRIE NORDLUND: Yes. That's exactly right. I mean, the Republican debate, if you watch that-- probably didn't because it was a clown show-- I mean, he really put his stamp out there as trying to out-trump Trump.

MARK BLYTHE: Yes. No, basically, climate change is just a hoax, right. The reason the entire Chinese economy is reorient itself to green production is because it's a hoax.

CARRIE NORDLUND: Yeah.

MARK BLYTHE: The reason that every other country in the world is basically busy installing green stuff it's cause it's a hoax.

CARRIE NORDLUND: Yes.

MARK BLYTHE: Holy mother of god.

CARRIE NORDLUND: Well, and Donald Trump is the best president of the 21st century, I think, was one of his lines. But he-- I think the thing that's most interesting out of that is there is so much talk among the political hacks about him and former governor, Nikki Haley. But there's been no bump in the polls.

MARK BLYTHE: Right.

CARRIE NORDLUND: Vivek got a little bit-- and not a lot of money either.

MARK BLYTHE: But he just wants to get picked up by Trump.

CARRIE NORDLUND: Yeah.

MARK BLYTHE: That's all it is. Like Nikki's broken with the party, she can't really do it. He's the one that's going to be basically the number two.

CARRIE NORDLUND: Or if he doesn't get that, he can go on to make a speaking circuit and get $50,000-- plan C for him. The other thing I wanted to point out was DeSantis, only because he's just kind of the running joke. And I don't know if-- I kind of feel bad for him, even though I probably shouldn't.

So he raised $20 million in quarter two. Has now gone on to ask donors through a Super Pac that he needs $50 million. 50 million more dollars.

He went down 14 points using the $20 million. So you're really asking donors for 50 million more to go down another 14?

MARK BLYTHE: I think we said something about this when we spoke before. But it strikes me-- irrespective of party or anything else-- if your main claim is, I'm a really angry guy and I really hate vulnerable teenagers. It's only got a certain amount of mileage.

CARRIE NORDLUND: Yeah.

MARK BLYTHE: I mean, at the end of the day, with Trump, right-- I mean someone wrote a piece. Maybe it was a New Yorker or something like that. Actually, no, it wasn't. It was a piece that's written by somebody in Europe about Trump that was very insightful. Which is, he's very much the anti-hero.

CARRIE NORDLUND: Yeah.

MARK BLYTHE: Right?

CARRIE NORDLUND: Yeah.

MARK BLYTHE: So if you think about films, like let's say-- the only thing that pops into my head just now is one of the Star Trek films, like Khan, right. So you actually root for Khan more than you root for Kirk, even though he's ruthless and dangerous. He's not flat out evil, he can actually be really funny. The anti-hero mold really kind of fits this guy, whereas DeSantis is just like a horrible person.

CARRIE NORDLUND: Yes. Yes. Well, I had to take pause because Khan actually gave me nightmares as a kid because of the earworm. I mean, I thought he was in my closet with the worm. So I had to really think about that. He's not totally evil.

MARK BLYTHE: It could be the remake, it's called Benedict Cumberbatch. And there was no earworm.

CARRIE NORDLUND: That's right. And yeah, he was much more attractive.

MARK BLYTHE: He was much more attractive.

CARRIE NORDLUND: Yeah.

MARK BLYTHE: Yeah. But very much an anti-hero.

CARRIE NORDLUND: Yes, that's true. But I think you're right. Just the line of using that, they're what stands between me and the deep state coming after me. I mean, the anti-hero, I think, is a really good point. It's just too bad that he has no personality, no managerial abilities, no ability to actually connect with other humans.

MARK BLYTHE: And then in his own public policy, he, you know, accepts climate change, does sensible things with the manatees, and the wetlands, and then denies it all.

CARRIE NORDLUND: Yes. Yeah. And then is actually anti-business, which should be like a main plank of Republicans.

MARK BLYTHE: Yeah, that's about-- yeah, the whole thing is about-- other things is-- sticking with Congress, people talk about Biden's age.

CARRIE NORDLUND: Yes.

MARK BLYTHE: Not the only one, is he?

CARRIE NORDLUND: No, he's not the only one.

MARK BLYTHE: I mean, so Feinstein is--

CARRIE NORDLUND: Yeah.

MARK BLYTHE: 90?

CARRIE NORDLUND: 90. And she-- I don't-- to be totally honest, as of yesterday, was she even-- I think she's alive still but--

MARK BLYTHE: Right.

CARRIE NORDLUND: Hanging on.

MARK BLYTHE: And then who's decided to come back after all?

CARRIE NORDLUND: Oh, Nancy Pelosi.

MARK BLYTHE: Exactly.

CARRIE NORDLUND: Yes.

MARK BLYTHE: How old is she?

CARRIE NORDLUND: I think she's in her 80s.

MARK BLYTHE: Right. OK. And then there was Mitch McConnell's second brain freeze.

CARRIE NORDLUND: He's having mini strokes.

MARK BLYTHE: Mini strokes, or at least brain freezes.

CARRIE NORDLUND: Yeah.

MARK BLYTHE: So yeah, it's-- what do you think I mean it's just a giant ocracy, isn't it?

CARRIE NORDLUND: The average age in the House is 57.9 years. I'll just round up to 58. Senate, 65 years old. The average age of world leaders is 62. And then the other thing-- this all comes from The Pew-- is that countries with less-- they have less freedoms, have much older leaders.

MARK BLYTHE: Yeah, you could see that. You could see that.

CARRIE NORDLUND: That totally makes sense.

MARK BLYTHE: But I'm not sure that really works for us because we're not done with destroying all of our freedoms yet. And these people came of age and continued to milk it for all it's worth.

CARRIE NORDLUND: Yeah.

MARK BLYTHE: I mean, I'm more fascinated by the fact-- it's a bit like professors, right?

CARRIE NORDLUND: Yeah.

MARK BLYTHE: That for many people, it's not a job, it's an identity.

CARRIE NORDLUND: Oh, yeah, that's a good point.

MARK BLYTHE: And therefore when you leave your job or you're asked to retire, it's like asking someone to not be the person that they've cultivated over years. And that's why it's this kind of existential thing.

And, I guess, with some legislators that's just it. It's like, this is who I am, this is what I do. I don't see myself going off to the golf course. I'm going to hold on until the bitter end.

CARRIE NORDLUND: Yeah. I mean, it is hard. I mean, the jaded part of me, with Mitch McConnell, is that it's just about power. And there's all the machinations that would happen with Kentucky if he stepped down and blah, blah, blah. But it is hard for me on the Dianne Feinstein, like what exactly-- how mentally--

MARK BLYTHE: Well, everybody else has to retire. If you're in a dangerous profession-- if you're in a firefighter or a cop or whatever-- if you're in there for 20 years, you're already vested in the pension. Nobody expects you to be stumping the streets when you're 70 years old.

CARRIE NORDLUND: That's right.

MARK BLYTHE: Those people retire when they hit the average age.

CARRIE NORDLUND: Yes.

MARK BLYTHE: I mean, come on. This is getting a bit much.

CARRIE NORDLUND: I know, and you just think-- I mean, politically, what's going to happen if Biden has-- he's stumbled? If he has something where he like falls actually and is on camera, I mean, it's just like-- there's just no potential to overcome--

MARK BLYTHE: Yeah, and you understand why there's a great deal of cynicism and then sort of, how to put it, support for folks like Trump. At least he can put a sentence together.

CARRIE NORDLUND: Well, I mean Biden can put a sentence together, but can he walk without stumbling?

MARK BLYTHE: Whilst putting a sentence together.

CARRIE NORDLUND: Yeah, exactly.

MARK BLYTHE: That's a good question.

CARRIE NORDLUND: And Trump's mental, you know, you're never sure about that.

MARK BLYTHE: Allegedly.

CARRIE NORDLUND: Yeah.

MARK BLYTHE: You see, your freedom of speech in this country-- half the things that we say on this podcast could be libelous.

CARRIE NORDLUND: That's actually true.

MARK BLYTHE: Exactly.

CARRIE NORDLUND: That's a good point.

MARK BLYTHE: So that's why I keep saying allegedly.

CARRIE NORDLUND: OK.

MARK BLYTHE: Covering myself. Remember, it's your favorite word.

CARRIE NORDLUND: Yes, OK.

MARK BLYTHE: So allegedly, there's a war in Ukraine. Oh, no, that one's factual. We know that there is.

CARRIE NORDLUND: Has it been declared a war?

MARK BLYTHE: Oh, that's a good question. Well, I mean, when you invade someone, I guess, the other side gets to say you're at war with me.

CARRIE NORDLUND: It's not a conflict. Yeah. OK. I'm with you.

MARK BLYTHE: The Russians call it a special military operation.

CARRIE NORDLUND: Oh, OK.

MARK BLYTHE: Which is a bit like if my basement got flooded, I'd call it kind of like a special mopping up date.

CARRIE NORDLUND: Yeah. Special project for the Blyth household, mopping things up.

MARK BLYTHE: Mopping up day.

CARRIE NORDLUND: Yeah.

MARK BLYTHE: No, I mean, it just grinds on and on, unfortunately. I mean, it's just awful. Depressing to look at. And as usual, the West is doing what the West does best, which is to go, yeah, yeah, we 100% support this. Absolutely. And then after about 12 months and they go, oh--

CARRIE NORDLUND: Yeah.

MARK BLYTHE: And then they started going, well, can't we just finish this?

CARRIE NORDLUND: Yeah.

MARK BLYTHE: And Biden's coming into the election, there was meant to be this big breakthrough this summer. They was going to push the Russians back. Good luck with that. And yeah, that was it. And then we could all declare victory and go home.

CARRIE NORDLUND: Yep.

MARK BLYTHE: I don't think it's going according to plan, if that was ever a plan.

CARRIE NORDLUND: I mean, I probably said this here before, but this is building on the gerontocracy point. What's the endgame? Putin's going to win or lose and then just go retire to DACA and the Black Sea?

MARK BLYTHE: No.

CARRIE NORDLUND: So doesn't it just grind on only because he's got-- and this is not to diminish or dismiss what's going on, it's very serious, but what else does he have going on, I guess? I mean, what's the incentive for him to stop doing this?

MARK BLYTHE: So the sanctions, they've worked, but what it's done is cause a diversion of trade rather than an end of trade.

CARRIE NORDLUND: Yeah.

MARK BLYTHE: The Russians are still selling oil through a fleet of 200 unregistered ships. India is getting a great deal on it. But they're still filling their boots with cash. They still haven't had to raise taxes.

CARRIE NORDLUND: Really? Wow.

MARK BLYTHE: The population, I believe, is still three times the size of Ukraine.

CARRIE NORDLUND: Geez.

MARK BLYTHE: And they're a much more brutal regime, so their ability to basically throw people into battle is much greater. And now they're on the defensive. , Basically they've got it. They're going to hold it. And it's up to Ukraine to come and take it. And that usually means you need 3 to 1 on the other side to make that work, and unfortunately, it's 3 to 1 the other way around.

CARRIE NORDLUND: Yeah.

MARK BLYTHE: So this is just not good. And the Ukrainians have suffered enough. And I fully understand why they don't want to quit, because they think if they quit, eventually, they will be destroyed.

CARRIE NORDLUND: Which they probably will.

MARK BLYTHE: Which is why they want the West to intervene. But the West has never truthfully wanted to intervene. So it's just a terrible, terrible-- it's the definition of bad equilibrium.

CARRIE NORDLUND: Well-- and he reasserted himself by assassinating Prigozhin this summer, or murdering him.

MARK BLYTHE: Allegedly.

CARRIE NORDLUND: Allegedly. Yes, good point. Allegedly. We don't know if Prigozhin is actually dead or not. He could show up with Biggie and JFK Jr.

And then the other point about your mixed messages, I mean, I was really shaking my head on this one. I mean, last week Blinken showed up and said, here's $1 billion more in aid. They're working on more stuff in Congress, that's going to probably blow up.

But then the G20 statement, they didn't even say anything about Russia. They're just like, oh, it seems not so great.

MARK BLYTHE: Yeah.

CARRIE NORDLUND: And so-- and the last line in the statement was, today's era must not be of war. And he was like, what? Go, you guys. Really stick your necks out there.

MARK BLYTHE: The Blithe basement must not be an era of floods. We must go past the time of floods. Oh, god, it's still wet in here. Yes.

Well, I mean, think it from the point of view of everybody who's not in the outrage developed West that shares a border or is somewhat close to Ukraine. What do they care about? They care about getting grain at the Black Sea.

CARRIE NORDLUND: Yeah.

MARK BLYTHE: They care about stabilizing their inflation rate so there's no more big oil shocks. And frankly-- and many of them say this outright, and I believe Lula said this, and some others have said this. Whenever there's like an enormous conflict somewhere in the global south and 600,000 people die, we get a couple of column inches and then we go back to filing our nails. And because this happens in a place close to home and involves the Russians, we're freaking out like it's the greatest conflict in world history.

CARRIE NORDLUND: Yeah.

MARK BLYTHE: It is only for one group, the Ukrainians.

CARRIE NORDLUND: Yeah.

MARK BLYTHE: And that's why the G20 can basically play both sides against the middle as they're good at doing.

CARRIE NORDLUND: Oh jeez. OK. All right, I guess it makes me be slightly less disappointed in their totally useless statement.

MARK BLYTHE: Well, I mean they are a talking shop rather than a policy body. And talking shops talk unless the talk gets awkward.

CARRIE NORDLUND: Yeah. That's true.

MARK BLYTHE: At which point they don't talk and then they just issue really bland statements.

CARRIE NORDLUND: That is true. On a really happy topic, what's your take on where we are with inflation, the R-word, recession?

MARK BLYTHE: It's all done.

CARRIE NORDLUND: OK, we're good?

MARK BLYTHE: We're good.

CARRIE NORDLUND: OK.

MARK BLYTHE: Yeah.

CARRIE NORDLUND: Awesome.

MARK BLYTHE: I mean, it's the immaculate disinflation.

CARRIE NORDLUND: Yeah.

MARK BLYTHE: And it's the immaculate disinflation if you think as sort of like the mainstream press does, et cetera. The mechanism goes like this. There was some kind of shock to the economy and it resulted in higher prices. The real danger is that people's inflationary expectations become unstable.

Then they start to anticipate higher prices. And in doing so, they will buy things that will push prices up even more. That validates the signal. It becomes unanchored, and then you have to really, really raise interest rates. It's a good story. Practically no evidence that people actually think this way.

And what really seems to happen is that, yeah, when you have big supply shocks, like the global pandemic and what it did to supply chains, and then basically an oil shock redone in the form of the gas shock, particularly for Europe, this thing takes a while to dissipate through the economy. And prices adjust.

CARRIE NORDLUND: Yeah.

MARK BLYTHE: Firms do take advantage of this. The term is Sellers Inflation, right. My stuff's going up so why shouldn't my stuff go up to cover the cost of my stuff going up? Oh, look, everybody's stuff's going up, this is a chance for me to increase my margins, right.

CARRIE NORDLUND: Yeah.

MARK BLYTHE: So you do get these secondary effects. Central banks spend a lot of time looking for what's called the wage price spiral. Certainly, prices going up. We haven't seen that much in terms of wages. Yes, they have increased, but they have not spiraled out of control.

And I think the combination of sort of pretty tight labor markets, pretty robust growth, all things considered. And the fact that corporations don't actually finance much out of bank loans, right. And your real estate market has ground to a halt because no one on a 3% mortgage is going to sell their house just now.

CARRIE NORDLUND: Yeah.

MARK BLYTHE: These interest rate increases really haven't had that much of an effect. The supply shocks have eventually dissipated. And now you're kind of getting back to where you were before.

CARRIE NORDLUND: Yeah. This one-- I'm going to go rogue for a second. I'm going to put you on the hot spot. So the case right now, I think it just started today with US v Google. Do you have any--

MARK BLYTHE: I have no idea about it. You have to tell me about it.

CARRIE NORDLUND: Well, I mean, I guess as it sounds, right. The Department of Justice is going after Google for monopolistic behavior. So similar to the Microsoft case. Do you think there's any chance that Google gets broken up?

MARK BLYTHE: So it's funny, I was just at a conference in D.C. And there's a really, really smart political economist called Mark Herman Schwartz. And he has this way of thinking about the world, which he calls the franchise economy.

CARRIE NORDLUND: OK.

MARK BLYTHE: So bear with me, right. Back in the day, back in the '40s and '50s, companies made most of their value internally, right. So think General Motors, right. So you made the upholstery, you made the instruments. So you had a firm that was part of the conglomerate, right.

And you had unionized labor. And it was semi-skilled and you needed them, so you actually had to pay them. Because you had to pay them real money, you had an incentive to innovate. And that meant that you kept putting new inventions in there that increased productivity, which helped you pay for the wages, right.

CARRIE NORDLUND: OK.

MARK BLYTHE: Fast forward 50 years. What's a really big company? Think Apple. Many people work for Apple. Not that many. But their share of total profits in the economy? Huge. Think about Google, think about Amazon.

Now hold the thought that all of these companies are American and they're global champions. And they're platforms. And once you have one platform, you can't displace it with another one. So they're, in a sense, kind of digital natural monopolies.

CARRIE NORDLUND: OK.

MARK BLYTHE: And they're American firms and they make obscene amounts of profit. And that's why our stock market is worth more and grows faster than everybody else's.

CARRIE NORDLUND: OK.

MARK BLYTHE: Right. Put that to part 1.

CARRIE NORDLUND: OK.

MARK BLYTHE: Right. So very few people work for Apple, but they take loads of the profit volume and they pay the people that do work there really well.

Then you get the people who make stuff for Apple that really have a lot of plant and equipment, like Corning Glass that make Gorilla Glass, right. But they don't want to expand capacity because it's all determined by how much profits Apple is making. And if all the profits are going to Apple, they're not going to Corning, and they're certainly not going to the firms that make the phone cases.

CARRIE NORDLUND: Gotcha.

MARK BLYTHE: Right? Or the little cables or anything else, right. Now generalize this model across the economy, right. And what you end up with is a franchise model whereby-- I'll give you a clear example of this with hotels, right.

Hilton doesn't really exist. Hilton owns about 20 buildings. Used to own a couple hundred. The franchise out the badge.

CARRIE NORDLUND: OK.

MARK BLYTHE: Real estate investment trusts buy buildings. Then and they get lots and lots of subcontractors to do the cooking and the cleaning and everything else. And the profit model is, I've basically set this up and have the badge. I set up W or whatever it happens to be. You get the experience and pay $50 extra. We get to split that with the franchisee. And the rest of the profit is basically squeezing the people who clean the rooms.

CARRIE NORDLUND: OK.

MARK BLYTHE: Sounds a lot like the economy in general.

CARRIE NORDLUND: Right.

MARK BLYTHE: Now, if the one profit, center of your economy, and your globally most competitive sector are exactly the firms at the top of that tree and they're all-American, do you really want to break them up?

CARRIE NORDLUND: Yeah. No incentive to. Zero. Yeah. Because they're keeping the whole thing going.

MARK BLYTHE: That's right. Now, it's a bad thing to be kept going, in a sense, if you really had the courage to do it. If you did break them up, it would be great because it would actually force other companies-- they would give other companies a chance to earn other profits.

It would diversify those profits. That would give a signal to other companies that it's worthwhile investing. Through investment, you would raise the growth rate, you would raise wages. If you did it, it would be good. But in a sense, you have to kill the bad, golden goose first.

CARRIE NORDLUND: Yeah. Yeah. Well, this really helps me understand why the Apple phone case costs like four times as much as the no name one that I can buy--

MARK BLYTHE: But the no name one, they're making no profits. They're barely getting by.

CARRIE NORDLUND: Yeah.

MARK BLYTHE: But they only exist because the big thing exists at the top.

CARRIE NORDLUND: Yeah. Wow. OK.

MARK BLYTHE: So anyway, shout out for the work of Mark Herman Schwartz. Everybody who's interested in this, just Google him on Google Scholar. Find the papers, it's really good stuff.

CARRIE NORDLUND: Yeah. Lighter stuff.

MARK BLYTHE: Lighter stuff.

CARRIE NORDLUND: Did you see Barbie or Oppenheimer?

MARK BLYTHE: I have not seen Barbie yet.

CARRIE NORDLUND: You saw Oppenheimer?

MARK BLYTHE: I saw Oppenheimer.

CARRIE NORDLUND: OK. I saw Barbie, I didn't see Oppenheimer.

MARK BLYTHE: Oh, there we go.

CARRIE NORDLUND: Yeah. So together we--

MARK BLYTHE: So we literally can't talk about it though because we haven't seen each other's films?

CARRIE NORDLUND: Would you recommend Oppenheimer?

MARK BLYTHE: I would recommend Oppenheimer.

CARRIE NORDLUND: I would recommend Barbie.

MARK BLYTHE: I've been trying to see Barbie, but I just haven't had the chance to see Barbie.

CARRIE NORDLUND: OK.

MARK BLYTHE: Because when you're in Italy and they've dubbed it into Italian, I'm not sure that's the right moment for me to go watch Barbie.

CARRIE NORDLUND: To learn your Italian. OK. So we'll have to trade notes then once we see the other movie.

And then just because I know this is really your season. The season of pumpkin spice, I just wanted to remind you, is back.

MARK BLYTHE: I didn't even know it'd gone. I mean, it's a bit like hazelnut coffee. You haven't had it for 20 years but you know it exists.

CARRIE NORDLUND: Yeah.

MARK BLYTHE: To what extent is it back? Can you define it's backness.

CARRIE NORDLUND: It's fall. It's a pumpkin spice. Fall is--

MARK BLYTHE: But this is-- so I was in Stop and Shop, which is a local supermarket chain where we are. And they had the voice over thing. And it was like, shoppers, the leaves are turning brown and fall is with us now. And I'm like, it's 92 degrees outside. What are you talking about?

CARRIE NORDLUND: Yeah.

MARK BLYTHE: Like nobody's wearing clothes at this point. So yeah, I don't think I really want pumpkin spice when it's sort of like nuclear lava temperatures.

CARRIE NORDLUND: You have a great American accent too.

MARK BLYTHE: I try. I have several American accent.

CARRIE NORDLUND: --voice over work. Yeah. I know it is hard to get in the mood. Well, this is great.

MARK BLYTHE: Yes.

CARRIE NORDLUND: Thank you. We'll see each other soon.

MARK BLYTHE: I hope so. I missed this over the summer. I missed you.

CARRIE NORDLUND: Well, I had so much to say. I have pages of notes. Yeah.

MARK BLYTHE: You had notes. I just had an admonishment, which will obviously be the episode title which is--

CARRIE NORDLUND: I can't remember now because my brain--

MARK BLYTHE: Allegedly.

CARRIE NORDLUND: Allegedly.

MARK BLYTHE: Allegedly.

CARRIE NORDLUND: See-- but this is good. If you forget stuff then be held accountable. Yeah.

MARK BLYTHE: Yeah. Yeah. Yeah. Try that one in a courtroom in England.

CARRIE NORDLUND: Allegedly.

MARK BLYTHE: Allegedly.

CARRIE NORDLUND: Thank you for listening. We'll be back soon.

MARK BLYTHE: Bye.

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