Now, as we said, in his lengthy speech here at the United Nations today, President Trump repeated again and again how strong the US economy is under his leadership. But does this reflect reality? The Federal Reserve is lowering interest rates in an effort to lift up the deteriorating US labor market. But it's the first time since December that it's taken any action. So how can the Fed become more responsive to the needs of democracy? In his latest New York Times essay, Adam Tooze is trying to answer that question by taking a deep dive into the American central banking system and exploring the challenges it faces today. He joins Walter Isaacson now to explain.
Thank you, Christian. And Adam Tooze, welcome to the show.
In a Supreme Court ruling this past May, which allowed the president to dismiss a lot of employees from independent agencies, it had a carve-out for the Federal Reserve. And it said it was a uniquely structured quasi-private entity with a distinct historic tradition. Explain that to me.
Yeah, this is an extraordinary fact that it is true that this central agency of government — I think everyone generally, when they follow the news, thinks of the Fed as a bona fide agency of the American state, of the government — does indeed have origins in 19th century banking politics. And this makes it like other central banks. Central banks are banks to bankers, and bankers are a very powerful lobby group. And from the late 19th century onwards, after years of dispute about this question, it was clear that America, as it entered the 20th century, was going to need a central bank. And this was a hugely controversial issue in Gilded Age America, with populists in the agrarian parts of the US protesting and wanting easy money, and Wall Street, which at the time was very remote from other parts of the US, anchoring itself on the global gold standard that was centered on London at the time.
So that began in 1913 with the Fed. And it's a time when William Jennings Bryan, running for president, is saying, you know, that we shouldn't be crucified on the cross of gold. They want easy money. They want, you know, they don't want that. Is that why the Fed was started, so that the bankers could have a more stable currency?
It's a compromise. So de facto, the US after the Civil War was on the gold standard, which was punishingly austere, right? To get back to the gold standard after the US Civil War, there was a severe deflation. The American federal government at the time is a tiny, tiny fraction of the American economy. So effectively it was tied to the British-based gold system. And that's what provoked the populist backlash of the 1890s. Think of this in terms of negative equity. If you've got a mortgage on a property now, if you're in the suburbs, or then if you were a farmer, and all of a sudden the price of everything starts falling, including the value of your property, you're in a pickle because you're basically going to end up in deeper and deeper negative equity. William Jennings Bryan's great run for the Democratic Party nomination and then his run for the presidency several times was all about trying to loosen that cross of gold that was being pressed down. Then, from the point of view of Wall Street, the moneyed interest there is a cause of huge panic. So what do you do? By 1913, under the stewardship of the very coolly progressive southern, you know, quite aristocratic figure of Woodrow Wilson, you end up with a compromise. And it has elements of the Wall Street banking interest. And it has elements of populism. And a struggle then ensues. And in a sense it's never stopped over the last 110 years of what the Fed's priorities are and what it should give the centrality to. Should it be monetary stability? Should it be connections to the wider world? Or should it be the interests of America's domestic political economy, as diverse as those are, right? So that's the kind of setup, and indeed we're still living in that argument, that ongoing argument.
Well, the current argument about the Fed really, it seems, begins in 1979 with Paul Volcker, where he really jacks up interest rates to fight inflation, and you have a two-pronged system. You're trying to fight inflation, but you're trying to keep unemployment from going too far up. Tell me how that defines the Fed today.
I think I might roll it back another decade to the late 60s, or indeed the 60s, and take people to the civil rights movement, because that's really where the debate about full employment takes center stage. The 60s are thought of as a period of big government, Great Society, we're all Keynesians now, we're doing the manipulation of the US economy. But America, being a society of racialized inequality, the really cutting question, the canary in the coal mine, is black male unemployment. And no one understood this better than the Martin Luther King wing of the civil rights movement. The March on Washington was a march for votes and jobs. And so from the 60s onwards, there's an argument going on on the American left about what the priorities of economic policy should be, and those are written in the 70s while the battle is still going on for the hearts and minds of American politics. The last really great struggle into the Humphrey-Hawkins Federal Reserve Act, which indeed gives it the dual mandate that you refer to, only shortly thereafter for the Carter-appointed hard money board of the Fed coming out of Wall Street with Paul Volcker at the helm. We now think of him as a lovely centrist, cuddly grandpa, but in fact he was a hard man of money to yank up interest rates, as you say, and fundamentally tilt America's political economy away from the American working class. Unemployment shoots up. There's an argument about how far Volcker himself intended this, but there are key moments in his various speeches where he makes pretty clear that he understands that breaking trade union power is key to shifting America's political economy. And just from a technocratic point of view, once you've done that, it's much easier to manage the inflation rate because you don't have the flywheels in American society that take a cost of living increase and say, 'Right, I want a wage adjustment for that reason.' Right? The big trade unions in the 70s are all about indexing. That's broken in the 70s by the Volcker shock. And so then we emerge in this new world of independent central banking with technocratic leadership. By the 90s and the 2000s, right, a PhD in economics is the minimum qualification for this incredibly political job.
In the New York Times opinion piece that you wrote recently, you said when you're talking about President Trump trying to influence or overwhelm the Fed, you said we should start by thinking, 'What type of central bank do we want to have?' Tell me what you mean by that.
Well, I'd say this is a particular instance of a more general dilemma of progressive people in the US right now in the face of the Trump onslaught, which is: is our first and primary reflex, and indeed in some senses duty and responsibility, to just simply defend the status quo against this onslaught? Or does that condemn you to passivity and a lack of imagination, and ultimately also a lack of ability to mobilize against Trump? Because one of the things that's energizing MAGA right now is they've unleashed the political imagination of their people. Like, there's nothing they don't think they can do. And the problem with the defensive position that's been adopted, I think, by many people in not just in this area of central banking, but across the board, is that it robs you of that opportunity to keep thinking. And that's what I'm appealing for us to do, but also simply, I mean, not just on kind of meta grounds, but tactically. I mean, you think it through. Say Trump actually does manage to seize control of the Fed, when the moment comes where the Democrats take back control of Congress and maybe the White House, what's the agenda going to be? Are we going to simply restore the old Fed? Say we manage to stop him, say the courts actually block his effort — the concrete issue here is whether he can fire Lisa Cook. Say they don't manage to fire her, is the next move going to be to make it even harder to fire governors of the Federal Reserve?
Well, what would your answer there? I mean, what should we be trying to do with the Fed?
What I think we should be trying to do is think about what we think a democratic Fed would look like, a properly democratic Fed.
Democratic meaning responsive to the people, not the...
Responsive to their representatives. I think the real issue here is Congress. And right now the Fed budget does not have any serious congressional oversight. There's a kind of ad hoc system which runs by the politicization of the appointment of Fed governors, but it's not actually a routine matter. And I think that Fed mandate that you alluded to, that was set in the 1970s, is something that could be periodically reviewed, so as to discuss the question of whether we're, for instance, measuring unemployment right, whether we're capturing the right things. And we know that Jerome Powell, for instance, his chairmanship and the board has been quite imaginative in doing this, but they've been doing it essentially on their own say-so, right? So they've been looking increasingly at racial inequality in the American labor market as a highly sensitive indicator of macroeconomic change. That's great, but it doesn't necessarily have any political backing. And that, I think, is a weakness. You could say, you could say we just can't trust American democracy right now, you know, heaven forbid that we allow Congress to intrude more, but that's really a logic of defeatism. And that defeatism is what animated the technocrats in the 80s and 90s to say, you know, we shouldn't really trust politicians. You can see that right now in the arguments being made. You know, they're always just after the next election. That's the only thing on their mind. So really we should take all the important things away from them. And that's a condescension, really, that I actually don't think American politics for much of the last decades has really merited and deserved. The current moment is no doubt a bad one, but a bad moment is not necessarily the right place to think strategically about our options going forward.
Well, you seem to be arguing then for a more democratic Fed. In other words, more responsive to politics. Well, then why isn't Trump right? He got elected. Why can't he do what he wants with the Fed?
Because of the way he's doing it, right? And the clear intentionality here to just cynically blow this up. The mechanisms that are being used, the assault essentially on the private finances of board members that are selected because they're vulnerable. This isn't an orderly, coherent, serious politics of money. This is the same old, same old MAGA no-holds-barred assault. Precisely, I think, so as to channel this actually very valuable and serious conversation into appropriate paths. There should be mechanisms for doing this in a more orderly fashion.
But you propose a more democratic push by the people through Trump to say, 'Hey, lower interest rates.' Is that something the Fed should resist, or should it bow to the will of the people?
I mean, I don't see there's any problem with a politics of low interest rates being pushed. One of the effects of the sort of structural change that I am inviting that we think about, inviting us to think about, is that it would force political parties to actually offer agendas on these kind of issues, right? The point is not do I approve of Trump's particular politics or not. The point I'm trying to make is that, you know, reflex against Trump's toxic politics, we end up ruling out the possibility of a more serious argument about this issue. And I don't disagree with you. Yes, a politics of money and interest rates is native to American democracy. It goes all the way back to the 19th century. Read William Jennings Bryan's speech and weep for the degenerate state of American political discourse in the 21st century, because the range of sophisticated arguments he offers is extraordinary by modern standards. We've lost a lot of that, and I don't see how entrenching technocratic exclusivity on this issue is going to make things any better. I think in principle what it probably does, as in so many other areas, is to breed a kind of irrational populism in the swamp that emerges beyond the bounds of the, you know, respectable discourse in the Fed.
All this is happening, the Fed perhaps undermining its independence, and yet the bond market doesn't seem to have done much. Why is that?
Well, I mean, it's two-sided. There's been no panic. I think that's very important, and we should give credit to the Treasury people. I mean, Bessent may appear like a total sycophant, but he appears to really know his business in doing the technical management of the Treasury market. That's important because it's a life-support type system, right? It's a thing with trillions of dollars going in every day, and you just have to keep the monitors in the emergency room ticking over, and they're doing a good job at that. If you look at interest rates over the long run, it's a slightly different story because Germany, with a low debt environment and a very independent central bank in the ECB, borrows at much lower interest rates than the United States does now. So you can see it in the yields now. Even France, which some of the listeners may have seen was a crisis case a couple of weeks ago, borrows at lower interest rates than the United States. So the United States is moving into the zone of a country with a heavy debt burden with some questions about the political management of its monetary policy. And the crucial thing to say is it's not a disaster. The sky doesn't fall. Does it shift over time the parameters of economic policymaking? Sure it does, because it makes debt more expensive, and then that will cause somebody like Trump to say, well, if only we could have lower interest rates, and who sets the rates? Well, the Fed does. So you get caught in this questioning then of how artificial or how natural those interest rates are, but it doesn't produce an immediate disaster. So if you have other priorities like the 2008 financial crisis or the COVID shock, then you do big monetary and fiscal policy, and the US did, and I don't think there's any serious argument that both of those were major and highly successful policy interventions. The question about the Trump administration is what are they doing it for? You know, all of this institutional didgeridoo pokery, and what is their positive project? It seems basically to be to give huge, you know, tax giveaways to billionaires. That's not a good use of the kind of political free space that you could have. But if you wanted to do a Green New Deal, if you wanted to do a truly transformative social and economic policy, if you wanted to actually alleviate child poverty in the US, you know, we know how to do it. It's a matter of money, and this is a mechanism through which...
Well, wait, wait, but those are political judgments, and this country has made the other political judgment from the one you just pushed.
Yes, it absolutely has. Yeah, there's no question about that. I don't, I mean, that's, I don't think anyone disputes that. It's a rigged system, of course, with a heavily conservative Senate, but absolutely within that existing structure, it expresses those priorities are there. With a lot of, you know, I mean, there's a lot of leverage being exercised, and so I don't think one wants to normalize what's happened with the big beautiful bill. You're right, they had a majority, they got it through, but, you know, that's... Yeah.
I mean, if you're going to argue for democracy, you have to be in favor of democracy, right?
I know, I'm not, I'm not, I'm not for a second disputing that, rather the contrary.
Okay. The proximate cause of this is the president's attempt to push Lisa Cook off the board. You've served on a committee with her. Tell me about her.
She's a very, very, very sensible, dedicated economist, policymaker. I was on a committee that was involved with issues to do with green finance, actually. One of those zones of creative thinking about central banking that had a moment of opportunity between the Green New Deal in 2018 and the Biden administration running out of steam in 2023 amongst the inflation panic. So that's the context in which I got to know her, and I was very gratified to see that she ultimately went through a grueling, grueling, grueling, grueling confirmation process in the Senate, where she already suffered slanderous assaults on her professional record. This is the first Black woman to be appointed to the board, it's worth saying, and as such, just rare as rare as it can possibly be, the number of Black women that choose to and are awarded economics PhDs in the United States is scandalously low. So she is, she's a precious person to have found her way or to be promoted onto the Fed board to ensure that diversity of standpoint and that expertise that's laser-focused on issues of structural inequality and just bringing macroeconomic chops to that job. And so it's, yeah, it's scandalous to see her attacked in this way.
Do you think this country, the US, is in a moment when it really could have a sensible debate about monetary policy?
I honestly don't know. But I also feel that we need to weigh the cost of not posing the question. And what I see right now, an awful lot of folks saying, you know, now's not the moment. Please don't bring that up. Now's not the moment. Now's not the moment. Don't you understand how dangerous this is? And as I say, that forces us into a defensive position, which, you know, coming from New York with the prospect of Mamdani being elected as mayor, I think there is a part of American society which is answering in different terms. And I frankly couldn't have forgiven myself if I hadn't at this moment written a piece something like this. It's not because I'm necessarily the person appointed to do it, but I've been part of a decade-long conversation about the politics of money. The question has been opened up by people I would recognize as my enemies. Do I at that moment say, 'Oh, no, no, no. We rally around the standard of technocratic independence'? That's not a policy that we can responsibly advocate. And this is a blackmail that we're going to be continuously subject to, and it's not exclusive to the United States. It happens in large parts in Europe as well, where we're also seeing the rise of the far right, which is that argument: 'Zip it. Now's not the moment. That's a difficult question. Are you sure you want to bring that up?' I find that actually quite unsettling, even now coming from the left. I don't personally subscribe to that as a viable politics. It's a self-mutilation essentially, right? For fear of the struggle and the fight over these issues.
Adam Tooze, thank you so much for joining us.
Now, as we have been discussing, President Trump's tariffs are prompting radical changes for American business owners like Debbie Weymouth, the founder of a coffee company rooted in Vietnam, and Sarah LaFleur, who owns a clothing brand which relies on overseas factories. They speak now to Michelle Martin about what this has done to them.
Thanks, Christiane. Debbie Weymouth and Sarah LaFleur, thank you both so much for joining us.
Thank you for having me, Michelle.
So the reason we called you both is that you have been affected by these promised, threatened tariffs. Both of you are entrepreneurs. Both of your businesses are established. So before we get into that, why don't you just start by telling us why you're in the business that you're in? Debbie, why don't you start?
So I started Copper Cow Coffee as the first premium Vietnamese coffee company, and it's a real homage to the way I grew up. My mom is from Vietnam, and I'm really passionate about all things Vietnamese cuisine, and think that Vietnamese coffee, which is the second largest coffee producer in the world, was really not seen in the US market, and really wanted to elevate Vietnamese coffee as a way to bring development to Vietnam.
So you had a mission. It was about the coffee, but it was also about what you could do through the coffee company.
Exactly. So before I worked at Copper Cow Coffee, I worked at the World Bank focused on international development and how to bring better economic opportunities to Vietnam.
Interesting. Sarah, what about you? You also have a story that you've shared on your website about why you started your business.
Yes, I started my business back in 2013. I myself actually don't come from the fashion world, but I was a management consultant. I found it very hard to find good, practical but fashionable clothing for professional women. Women on average spend two more weeks per year getting ready for work versus men, and I really wanted to tackle that challenge. I partnered with my co-founder Miyako Nakamura, who came from a high-end fashion background, and our goal has always been to provide, you know, luxurious fabrics, luxurious manufactured clothing to hard-working professional women.
So Debbie, coffee isn't really grown in the United States, is it? I mean, maybe in Hawaii, right? In Hawaii, but not in the continental United States.
A fraction of what the US consumes in terms of coffee consumption.
But you couldn't have the kind of coffee company you have without sourcing it from Vietnam, right?
Okay, so how did you, when you first heard that Vietnam was on the schedule of tariffs, and in fact Vietnam was one of the countries that was originally supposed to be hit with one of the highest tariffs at like 46%, do you remember what went through your mind?
Just complete shock, to be honest. As I'm sure you're aware, we've been suffering through a coffee crisis for the past year and a half, and with double coffee prices already having to adjust the business to that has been a complete whirlwind. And so I think that we were really particularly surprised, not only because it's coffee, which the US primarily doesn't grow, but also Vietnam really, really does admire Trump and has been really willing to concede to whatever demands that he wants. They are really cooperative with them, so I think that we went into the idea of tariffs being relatively a lower possibility for Vietnam and for coffee. And so I think we were really shocked to be on the high upper end of what they were.
What would this do if the 46% tariffs were to hold? What would that, how would you absorb that? I mean, what would you do?
Honestly, the direct-to-consumer business side is a little bit easier. People are coming to your website, you have real estate to really explain the dynamic. You can instantly change your prices to accommodate these changes. The hardest part is that half of our business today is actually in retailers, where it takes a minimum of six months for us to do a price change. And also, we have no idea what that's going to do with our position with the company, with these clients. And I think that's what's really hard is that Vietnam, the kind of coffee that we grow is much easier to grow. It's much easier to grow organically. There's a lot of advantages of what we're doing for the coffee space to make it more sustainable and much more affordable for organic coffee. And it's really, it's incredible how much work is being completely basically leveled from these tariffs in terms of our ability to make affordable, organic, great-tasting coffee no longer applies with these tariffs if they were to come through.
And I want to come back more to also to your mission with this. I mean, you say on your website you actually pay these farmers twice what the market rate is, and why is that? Because you want to raise their living standards.
Yeah, and it's also just because the kind of coffee that Vietnam grows is robusta coffee, which has historically not been treated as well in its processing and its cultivation. And we've proven that if you put much more care into the processing and the way that it's grown, it can create a delicious cup of coffee. And not only that, it really can make it very much more sustainable through organic farming because it's so much more pest resistant. What's been really hard is that we've done a lot of investment into the farms, into the processing, into the manufacturing to make organic and the grade of coffee that we have possible on the premise that it will be much cheaper in the long term for our customers to have organic coffee, and the tariffs erode those savings, right? And so then no longer are we going to be a competitive product with what we've been working on for the last several years.
Sarah, let's go to you. You're a New York-based company. So, you know, New York used to be, it's still a fashion capital, but a lot of the fashion, shoes, clothes are manufactured in China. Why is that?
When we started our business, we actually did manufacture in the garment district right here in New York City. And even compared to when I started the business in 2013, the garment district has shrunken dramatically. We manufactured a lot of our clothes until 2017 in New York City, and really as the business grew, which was wonderful, we had no choice actually but to leave a lot of our partners in New York City. And at the same time they were also losing business, and so they were starting to shut down. And so really I want to say since 2018 we've been mostly 100% manufacturing overseas. China has been just an amazing source of manufacturing. Their skill level is so high. The craftsmanship, you know, it takes really generations to create good sewers. You know, everyone thinks that clothing, oh, you know, some part of it must be automated, and yes, there is some machinery involved, but every single thing that you are wearing, someone sitting behind the sewing machine putting those pieces of fabric together. And that's not just a skill you can develop overnight. You know, even some of the best sewers in New York City who still remain there in their 70s, and they don't have anyone to pass it down to. And so I think China does have that craftsmanship. They have that level of skill. And honestly, when we moved some of our manufacturing out from New York City to China, we were surprised by the level of quality that we were getting.
The argument the administration is making is that the whole point of this, they say, is to reshore these industries. How long would it take, from your experience, to reshore your operations, assuming it could be done in a way that you could sustain your business?
It's obviously not impossible. It would take a ton of infrastructure from the government. Even the factory spaces that you see in the garment district are tiny compared to the tens of thousands of square footage that you have in factories in China, in Vietnam. And then you've got generations of sewers training the next generation. So of course all of this is possible. It would take enormous resources. And also, we need to think about how we actually transport those goods. And so that's infrastructure again at a different scale. Do we actually have the tanker ships to get things over from, I don't know, New York to different parts of the country, or trains? It's kind of... I'm not an economist, but to me that sounds like a lot more money.
If the tariffs hold, what do you do?
It has been total chaos with our partners both in Vietnam and China, but specifically in China, my May collection has 90% evaporated overnight because we cannot afford to bring in goods from China.
Wow. Wait, wait, wait, wait, wait, let me understand this. Do you literally have a collection that you cannot afford to bring in?
Correct. I mean, from a cash flow perspective, too, I think that's the other thing people don't quite understand when they say, 'Well, just raise prices.' Yes, of course, we could raise prices, and eventually, perhaps, the customers will cover the cost of the tariff. But if you think about the duty that is actually the tariffs that we have to pay to the government, we pay that the moment our goods hit the United States border. So from a cash perspective, that's an outlay that we are making to the US government, and without certainty that the customer is actually going to be willing to take on those price increases.
Debbie, you were saying that one of your intentions was to improve standards of living in Vietnam, but also to improve the quality of the product, and in so doing, improve people's lives. What are you saying to the farmers that you work with?
I mean, I haven't had a chance to talk to the farmers directly, but I've talked to, we coordinate with really amazing co-ops in Vietnam and talking to their leadership. I mean, I think that they're incredibly stressed out. You know, I think that this is something they see Vietnam and Vietnamese coffee becoming this really exciting space in the US, and how that's a huge opportunity for them to have access to much higher rates if they're able to cultivate their coffee a certain way. It's again a really wonderful thing for their farms to be able to eliminate chemical pesticides and fertilizers and to be able to get a premium for that effort in the US market. And I think that everybody's just really sitting on the edge of their seat wanting to see what is the number going to be. You know, is it going to be 10? Is it going to be 46? Is it going to be zero? Because coffee becomes exempt. We really have no idea what's going to happen, and know that what we're facing is not being taken into account in this trade war. And so we have to really, really be able to plan whatever happens to the businesses.
Sarah, if you can't afford to bring these goods in, what's going to happen to the company?
It's a really good question. Honestly, I've been grappling with just what the reality looks like for my business. You know, I think in times of chaos the advice that I've gotten is move slow, and I think right now things are changing so rapidly. You know, one moment it's 47%, the next moment it's 150%. I don't actually know what this means. I'm just trying to take it one step at a time. You know, we are raising prices. We know that we're doing that. I have already cut costs, and I will probably have to cut some more. I am rejiggering entire collections. I'm now trying, you know, literally in the office next door I've got Portuguese partners who I'm trying to woo because, you know, the tariffs in Portugal are going to be better than the tariffs in China. It is just like a complete upheaval. I hope my business survives. In fact, I should say I know my business will survive. You know, COVID was one of those moments where it was so devastating, and I didn't know if we would make it through, and somehow we magically did through the team's exceptionally hard work. And it is one of those moments again where I'm looking at my team and I'm saying to them, 'It's going to be another hard, gosh, two, three years. Will you fight this with me?' So that's what we're facing right now.
But just a few days ago, the administration decided to exempt certain products from these tariffs, mainly, you know, electronics. And Sarah, when you heard that, like, what went through your mind? Did you feel some kind of way about that? Like, why that and not this?
I mean, my honest reaction is I felt angry. You know, I think people with direct access to the White House and people who have the ability to lobby, they will get special privileges and advantages that small businesses like myself won't. You know, we are a small, small business in the context of the US economy. But I think it's also important to remember US small businesses make up 45% of the country's GDP. We are not the ones making electronics. We are the ones making clothing, making coffee, engaging in agriculture, you know, and we're a really, really important part of the US economy. But we are not capable of actually making our voices heard in a way that the US government will understand.
I echo everything Sarah says, and I think that additionally, you know, I work in food and beverage, and I know how much the hyperinflation that Americans have experienced has been so detrimental to their everyday life. And I think that these tariffs are going to just exacerbate that so much, whether it's for the raw goods or the packaging or so much of the stuff that the US is not prepared to be able to make everything that Americans have become accustomed to consuming. And to be doing this especially on top of the coffee crisis, I think is something that is just really hurting us, especially a lot of coffee is our small businesses. There's so many small coffee businesses out there, and how we've already been suffering so much from climate change, from a lot of the things that have been affecting our market, and that these tariffs are just going to make things so much harder for us smaller players in the market.
The president's kind of theory of the case, as it were, is that, you know, short-term pain for long-term gain. So, Debbie, in your case, there's really no way you can't reshore the coffee business from, you can't reshore Vietnamese coffee business.
I'm not going to buy farmland here and plant trees and wait for them to harvest them five years later. I don't think that that's something that the US is in a position to even do. I think that it's one of these things where it feels like it could be, like Sarah said. I think we're just trying to see what it is because there are levels of tariffs where it's just lethal to businesses, to small businesses, and whether that's cash flow because, or if that's just because your...
Customers, your grocery stores are going to drop you because you're going to say you're going to have to increase prices by 40%. I mean, I can't think of a retailer who would possibly let you do something like that, regardless of what the macro environment is. And I think that this is just something where we're just collateral damage to an argument or a strategy that, like you said, what's the long-term gain for who? And I'm really not sure who that is, when it is going to be those who have the money to lobby for protections against these tariffs. And it's just something that doesn't totally make sense from where I'm sitting today.
Mhm. And Sarah, is there any long-term gain that you can envision here?
No. Yeah. And you know, I think we will find a way. We will survive this. That I think I'm wondering at what cost. That's really the main question running through my head right now. I think one of the things that businesses, you know, any business owner will tell you that unpredictability is the enemy of business growth. And I think what we are asking for is really communication with a lot of advanced notice, and a lot of these challenges could be overcome. There are ways that we can get around it with advanced notice, but I think right now that is what feels is lacking. We don't know what to expect. Every day is something different.
Debbie Weymouth of Copper Cow Coffee and Sarah LaFleur of MM LaFleur, thank you both so much for speaking with us.
To a crisis facing public education in America. Students' reading and math scores are reaching historic lows. And according to our next guest, the cause of this decline isn't as obvious as you'd think. New York magazine's Andrew Rice joins Michelle Martin to explain.
Thanks, Biana. Andrew Rice, thank you so much for talking with us.
You open your piece with some of the latest findings from the National Assessment of Educational Progress. You know, this is considered kind of the gold standard at figuring out, you know, how kids are doing academically. And these results showed, this is over the past year, and it showed that 40% of fourth graders and a third of eighth graders scored below basic in reading. And on the most recent 12th grade math assessment, about three-quarters of high school seniors could not correctly add the cost of six lunch items and calculate a 20% tip. And I was just wondering, since you write about a lot of things, what made you take a look at this?
I mean, I think really it began with a personal question that I had, which is, you know, I have a son who's in eighth grade, he's 13 years old. He spent the pandemic, about 18 months almost during the pandemic, you know, in and out of school. His education was quite disrupted during that time period. And so afterwards, I always kind of wondered what would the long-term educational consequences of this be? There weren't a lot of precedents for it in the academic literature. And so, you know, I just kept reading these articles that described these really sobering, you know, maybe even catastrophic-sounding declines in educational achievement. I discovered that in fact the story was a lot more complicated than I imagined when I started out. That really people were studying these declines and they are really drastic and they did really accelerate during the pandemic, but they began before the pandemic and they've continued in many categories after the pandemic, which, you know, makes it obvious that there's something else deeper going on here.
One of the most alarming findings in your piece is the reversal of decades of progress. In 2015, this is according to your piece, in 2015 fourth graders performed a full grade level above their counterparts in 2000. Yet almost a decade later those students were registering all-time lows in reading in high school. So what happened here?
You know, there are a couple different theories about what happened and why, but the best clue that we have is timing. The downturn started in about the middle of the last decade and then that leads us, being the educational scholars who I talked to, I guess, it leads them to a couple different potential theories. One of them, a real obvious and maybe intuitive one to most people or most parents of a teenager like me, is screens. A lot of people just think that, well, you know, the iPad was introduced to the public in 2010 and those kids hit the education system around 2015 and that's when test scores started to go down. So maybe that's just the simple answer. But as I noted in the story, there's a lot to suggest that there's something deeper going on, something else about the system itself, because the declines are not evenly distributed. They're distributed unevenly to kids who are scoring the lowest. So the kids who were scoring the lowest for a long time were making up ground and gaining ground, and essentially, you know, the way the academics I talked to described it is like think of it as a fan. For a long time the fan was kind of getting closer together. What's happened now is the fan is spreading back out. And all of these gaps, especially the achievement gaps between white students and black students, especially have started to widen. The math achievement gap between girls and boys has started to widen again. All of these sort of old, long-standing inequities have reasserted themselves. So because it's unevenly distributed, we have to start asking questions about what the schools are doing and what they're doing differently. And that's what my story really tried to go deep into.
Some of these anecdotes that you describe in your piece are really a bummer. I mean, just tell me a couple of stories that some of the educators told you about what they're seeing in the classroom.
One of the things I thought was sort of the scariest as a parent is talking with folks about the way that grading standards have slackened. A lot of teachers told me that there's just been a softening of expectations and they just don't expect children at all sorts of different levels to be able to perform in the same way that they used to. And the reason that's scary to me as a parent of a teenager is that grades are one of the two or three pieces of metrics that you can use as an outsider to try to gauge how your child is doing. Test scores are another. But one of the things I heard was this phenomenon of what they call grade inflation, which is basically kids are just getting B's for doing less work than they used to. Similarly, just hear stories about teachers who say that they can't ask children to read books on grade level, that they should be able to read at their grade level anymore. Hearing stories about a teacher in a school for gifted students actually, in a magnet school in New Jersey, she says that she used to ask them to take 15 minutes to read a short story, now it takes 40 minutes, maybe even close to a whole period. We're hearing these reports from people inside the building. These are not interest groups that are trying to advocate a political agenda. These are actually people who are practitioners who are raising the alarm and saying, 'Something's wrong here.'
The other thing that you point out in the piece that I think a lot of people will be interested in is that the steepest academic declines are not happening in traditionally underfunded or, we'll say, conservative regions that have not traditionally invested in education equally, especially for groups that have been historically marginalized, right?
And it's true. We're talking really about Southern states here. Mississippi is one, Louisiana is another. These are states that, to put it mildly, do not have a good civil rights record. But the NAEP scores, the national assessment scores, show that today an economically disadvantaged fourth grader in Mississippi scores better than an economically disadvantaged fourth grader in Massachusetts or New Jersey, traditionally high-performing states.
Exactly. Places that publicly pride themselves on valuing education, spend a lot of money on education, and historically, at least publicly, value equity. You focused on a place that you know well, where you live, which is Montclair, New Jersey, which spends a little more than $27,000 per pupil per year, right? Achievement has dropped by a grade level in reading and by half a grade in math since 2013. What made you take a look at that? Was that kind of the logical extension of, 'Huh, like I wonder what's happening in my own backyard?'
One of the things that really inspired me to do it is that there was a, as you alluded to a second ago, our district spends in the 95th percentile in the country per pupil on education. And yet, we have not made much of any progress closing the achievement gap. The achievement gap in our town, which is actually pretty racially diverse, has gotten wider since the pandemic, especially in math. And meanwhile, we just found out over the summer that we have a gigantic budget deficit that we didn't know about. So, in fact, even as we're not getting results, we've also been spending much more money than we budgeted for education. And consequently, the whole community is having this very difficult conversation about whether we're getting the results that we're paying for from the system, and whether we've allowed the system to atrophy, and whether we've perhaps prioritized things in our spending that don't necessarily go towards learning and go towards closing achievement gaps and go towards preparing students to really thrive in college and in the rest of their lives.
