Chris Hughes with Joe Weisenthal and Tracy Alloway: Marketcrafters

Good evening, everyone. Hello. I'm Brent Reidy. I'm the Andrew W. Mellon Director of the Research Libraries here at the New York Public Library. Whether you are here in the room or watching us online, thank you so much for joining us and not staying outside on the most beautiful spring day we've had in quite some time.

It is a distinct honor, it's a pleasure to be introducing Chris Hughes this evening. Chris is an economist. He's the author of two books. He is the chair and he helped co-found the Economic Security Project, a nonprofit advocating for economic power for all Americans. He's had a storied career before that. He led digital organizing for Barack Obama's 2008 campaign. Earlier than that, he co-founded something called Facebook, which you may have heard of. Most importantly and dearest to me, Chris is a library trustee. He chairs our Finance Committee. How lucky are we? I can report from sitting in those meetings and working with him a bit, that his brilliance is only matched by his kindness and his compassion.

Speaking of brilliance, we are here tonight to talk about Chris's excellent new book, 'Marketcrafters', on display right there, and hopefully you had a chance to buy a copy on the way in. 'Marketcrafters' is a journey through the modern history of American capitalism. It's a collection of tales about the triumphs and failures of those who have tried to shape markets for a wide range of social and political goals. It is also an argument that entrepreneurial leaders in the government, and not the mythical free market invisible hand, created the most dynamic economy the world has ever known. I know Chris didn't plan this, but I cannot imagine a more interesting time for this book to be coming out. The subtitle of the book is 'The 100-Year Struggle to Shape the American Economy'. Here we are in the middle of a 100-day to reshape the American economy. Don't worry, tariffs are part of the book. But so much more is as well. It is a rich tapestry of our country's financial history that I cannot recommend any more highly.

So, again, it is available for purchase and you can buy it after the program. For those who have brought their copy or bought one tonight, Chris is very happy to sign copies. If you just line up here, he'll be signing them right on stage afterwards. All proceeds go to benefit the library. And, of course, for everyone here who has a library card, and I do hope that is all of you, you can always check out the book from us for free too. Tonight Chris is going to be in conversation with two brilliant individuals, Tracy Alloway and Joe Weisenthal. You should know them as co-hosts of Bloomberg's 'Odd Lots' podcast, which explores the most interesting topics in finance, markets, economics, and business. At the end of the talk, Chris is happy to take a few questions. You should have gotten little note cards and golf pencils. Write away while you sit. Towards the end of the program, my colleagues will circulate and grab those from you and bring them to our moderators on stage. If you are watching online, you are not left out. Just please pop the question in chat and we will put it in the mix as well. Live from NYPL is made possible through the continuing generosity of Celeste Bartos, Mahnaz Ispahani Bartos and Adam Bartos. And, of course, all of you. Thank you for your support and now please join me in welcoming Tracy, Joe, and Chris.

Well, hello, hello. I'm happy to be here. And before I answer exactly what marketcraft is and we spend the next hour talking about it, I just have to say that it is such a huge honor to be both here at the library and institution that I care immensely about. And to be a guest on this live taping of --

-- 'Odd Lots'.

'Odd Lots' is my number one favorite podcast and so I --

So, marketcraft. What is it? The basic idea is that policymakers are often harnessing and shaping -- harnessing private markets and pointing them towards public goals, like making Americans richer, safer, and more economically secure. And that -- there's actually a very long history of doing that in the United States. It's done by Republicans. It's done by Democrats. It's done to ensure energy stability, financial stability, or make semiconductors here at home. There are a ton of successes in the past. Plenty of failures. And the whole point of writing the book was to try to tease out what are the lessons for our contemporary policy environment today, because we're going to have to rebuild on the other side of the chaos that exists in the world right now.

Yeah.

Yeah. I mean, I think -- Listen, we all exist with this idea in our heads that markets exist and are almost forces of nature. And then on the other side of the balance sheet, there's government. I mean, I'm the first to say that the language that I've used for years has been around verbs like to intervene. As if markets come first and then government is just like the emergency room that happens when things go awry and you've got to bail out a bank. And the whole point of my book is to say actually, something bigger is happening. Like, if you look at the American economy between healthcare, pharmaceuticals, aviation, semiconductor and high tech, clean energy. And add up the size of these industries, you are well over half of American GDP --

-- in industries where the state not just has a heavy hand, but is actually crafting it from the beginning. And so it is about industrial policy. There's a lot in there about industrial policy. But it's actually about something bigger. Marketcraft is something that encompasses what the Fed does in financial markets, what the Strategic Petroleum Reserve does in energy markets. There's a whole set of strategies that I think we have to be wrestling with.

Let's just do it.

Indeed.

Well, I mean, it's hard not to have that image of Bezos, and Zuckerberg, and the whole crew behind Trump at the inauguration.

-- and just see that and say, what are those guys hoping for? You know? Certainly it's to make more money somewhat. But I think it's about something bigger. I think they want to have more power. They want to have more respect. And they feel like in the Biden years, there was too much focus on things like competition and fair markets. And -- But if you fast forward, I mean it's not even been a hundred days, you know, the trial against Facebook is ongoing. It --

Mark Zuckerberg was on the stand for much of last week. If you're not following it closely, the FTC filed suit against Uber two days ago, and there's -- And Google, just last week, lost its second anti-trust case with a federal -- prosecuted by the Justice Department, making clear that it's a monopoly. So we're only a few months in and you squint, and you're looking, you're like what are these guys getting out of this? It doesn't seem like very much.

Yeah.

Yeah.

No, I don't think so. No.

But, you know, anti-monopoly is a bit how I got into marketcraft in the first place. So about six years ago I wrote an article in 'The New York Times' saying that I thought Facebook should undergo structural separation or break up. That its corporate power had become too concentrated and had become a monopoly. And that started me on a journey of really wrestling with the history of anti-monopoly in the United States. And you can't think about that set of topics without seeing public actors saying, hey, we want markets to work a certain way. We don't think that they should be concentrated with a lot of power. We think they should be competitive. We think it should be easy for new entrants to come in and innovate. We think markets should keep prices low, wages up, and innovation going. And so we are going to use the tools of public policy to craft those markets to ensure that's the case. If -- Whether it's the free market going to lead to it or not, it really doesn't matter because we have this goal as a common good. And so once you sort of -- Once I began to see that in the anti-monopoly world, you quickly saw it at the Fed as an institution --

-- that, you know, most free market Bible-thumping folks would say that they appreciate. But, you know, the Fed sets the price of short-term credit and is actively in markets buffering that price through open market operations. And then if things really go awry, you bet it's going to be there to step in to stabilize. So that market is crafted and managed every single day for --

-- stability. And so I began to see all these kind of cross pollinations and similar trends in that and, you know, couple of years later, here's the fruit of that.

Let's do it.

You're not the only one.

I know.

Yeah.

Yeah, I think that's -- I think that's directionally right. I should say I try very hard to avoid social media. So --

-- I'm not on the blue app. I'm not on Instagram. I lurk on Twitter. I recently opened a Bluesky account. It doesn't have a lot of followers. It would be great if I had a couple more. But so I'm not actively using social media so it's harder for me to weigh in on that. But I am -- I do think that there is this lurking desire to partner with government, in some cases, and craft markets. And so there's a very crisp example. It's not from one of the current billionaires. But there's this guy, Robert Noyce, which some of you may have heard of. He was one of the co-founders of Intel. Grew up as a son of a congregationalist minister in a family in Iowa. Ends up going to MIT. And then invents the integrated circuit, which is a fundamental part of the semiconductor. Makes gobs of money. And after years of that, guess what happens in the mid-1980s? Japan. Japan, as an industry, starts really out-competing the American semiconductor manufacturing market. They are moving faster. They have their own industrial policy that's pushing it. And so all of a sudden Noyce who had, for his entire life, been a libertarian who didn't want anything to do with government, thought it was not a great idea, would have liked to downsize it as we're seeing other billionaires be interested in today. All of a sudden he shows up in Washington and he says, 'Wait a second. We need an industrial policy for semiconductors and for CHIPS.' And the Defense Department agrees because they're concerned for national security reasons. And Noyce and the government effectively partner, because they -- their interests at that moment are overlapping. We get something called Sematech which is created, which is about a billion dollars that's invested to enable the semiconductor companies to begin coordinating, making their vertical -- their supply chains vertically more integrated and more efficient. And a few years later, America recaptures its market share in -- globally, of semiconductors. We are back on the top. So, you know, I think that the lesson from that is complicated. Because on the one hand, you do see a private sector actor with a lot to gain from private wealth maximization. But working with the public sector, where the public sector also has a lot to gain from semiconductors being made in the United States. And in that case, it worked for both. It doesn't always work out like that. But I think that's clear historical evidence of the fact that there is this lurking desire for marketcraft on the part of a lot of these folks.

Okay.

Oh.

Good Lord. No. No, no. But, I mean, seriously, it's -- That's just tearing apart the federal government and the administrative agencies.

It's the exact inverse. So my book makes the case that when marketcraft is successful, you have administrative agencies like the CHIPS office, like the Fed, like the SPR, that have a clear mission. Onshore semiconductors keep financial markets stable, et cetera. And then they have the discretion to pursue that mission and the ability to get it done. And that it is critical to understand that institutions in America need that power in order to make markets work more effectively. That doesn't mean that they're always perfect, but we get much worse outcomes when we create these balkanized sort of hybrid setups. And that's what you see in something like healthcare markets today.

So the importance of institutions is at the center of this book and my belief. And, you know, Musk and crew are just trying to demolish all of them.

Yeah.

I think you show people where it works. And you have to be clear about where institutions actually deliver for people. So I'll give you an example that's a little bit further back in history. So the book starts with the story of the National Investment Bank that we create in the depression in 1932. Herbert Hoover, actually, a Republican, creates an institution called the Reconstruction Finance Corporation with a clear mandate. First, to reinforce capitalism that was disintegrating at the time. And then a few years later, the mandate expands to actually spur development. At the head of this thing is this larger-than-life figure named Jesse Jones. So this guy was born in Tennessee, but he moves to Texas at a young age. He invests in all kinds of local businesses. And by the time he's 30, he's a millionaire. And a few years later, he's got so much money that he's building buildings in New York City and all across the Eastern Seaboard. Then 1929 happens and he has less to do. So he does -- He is a Democratic Party activist. He's been a fundraiser for a long time. He even shares an office with Roosevelt in 1924. He convinces the Democrats to have their convention in Houston in 1928, where, oh so conveniently, balloons fall from the ceiling that say, 'Jesse Jones for President'. He's like a larger-than-life figure, but he's at the head of this bank, this institution, the National Investment Bank. And when it -- When he comes into power at the beginning, he says, you know, our first mission is going to be to reinforce all of the private commercial banks, recapitalize them, make sure that they're ready for deposit insurance. But then in the second phase at the -- on the advice of John Maynard Keynes and some other economists, Jones, in consultation with Roosevelt, says we got to really deploy public capital into the American economy, particularly in industries that are going to encourage a lot of employment. And make things cheaper for consumers. So they prioritize housing. And they build a kind of institution that's named Fannie Mae which endures, obviously, today. And they invent the 30-year mortgage. Which, at the time, mortgages had been 10 years. By expanding it to 30 years, the cost of housing comes down significantly.

And all of a sudden, you see a boom in housing. And then there's a third phase in the war years where they birth the aviation industry, and synthetic rubber, and all kinds of other things. And so my point is, is you see a man who comes in skeptical of, you know, of the far left in the New Deal period. Certainly would have -- wouldn't have identified with those folks. But who ends up believing in and building an institution of American capitalism that crafts markets toward a common good. And so that example is really inspiring. It's further back in history, but we've got all kinds of things that are closer.

It's not a pattern that I saw in the --