Modern Money and Marketcrafters

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Zachary Karabell: Chris, you’ve been talking about reshaping the economy. What’s one key idea from your book that could transform capitalism as we know it?

 

Chris Hughes: I think that we need institutions that can shape and guide markets toward public goals, making people richer, safer. More economically stable, working on climate change, building semiconductors, that there are many goals, but we need to get that institutional context right to shape and guide markets.

 

Zachary Karabell: What Could Go Right? I’m Zachary Karabell, the founder of The Progress Network, joined as always by Emma Varvaloucas, the executive director of The Progress Network. And this is What Could Go Right? our weekly podcast where we look at, yes, what could go right.

 

And we’re gonna talk to someone today who has been both deeply immersed in the tech world as one of the early forces behind the creation of Facebook.

 

As someone who has then gone on to work in media start nonprofits and now has some thoughts about what the role of government in fact should be in shaping our economy. So Emma, who are we going to talk to today?

 

Emma Varvaloucas: Ah, I think you gave it away. We’re talking to Chris Hughes. He is co-founder of Facebook and later directed Barack Obama’s digital organizing efforts. So you may know him from that life, or you might know him from his current life where he’s serving as a chair of the Economic Security Project which is a nonprofit that advocates for economic power for all Americans.

 

And today we are talking to him from his third hat as an author, an economist. Uh, we’re going to talk to him about his new book, which is called Marketcrafters: The 100-Year Struggle to Shape the American Economy. Ready for that?

 

Zachary Karabell: I am ready for that. Let us speak with Chris Hughes.

 

Chris Hughes, what a pleasure to have you on What Could Go Right?

 

Chris Hughes: Thanks for having me.

 

Zachary Karabell: So you’ve written your second book. Here is, drum roll please, the ultimate softball question. Please tell us what Marketcrafters is about, what it argues.

 

Chris Hughes: The book makes the case that policymakers have the power to guide and shape markets towards political goals. Things like making Americans richer, safer, their economic lives more stable, if they know what they’re doing. And there is this hidden history over the past hundred years of Republicans and Democrats alike guiding markets towards a variety of goals that I hope we’ll talk about.

 

And often they succeed, sometimes they fail. And out of those lessons we can forge a vision for how to make the economy work better, bring down costs, and rebuild after the chaos of this administration.

 

Emma Varvaloucas: I feel like we have to start any like government interference in the free markets conversation with what you just said, vis-a-vis if they know what they’re doing right. Like there’s always this like jump scare that starts to imagine like Venezuela type things. How do you get people over the nervousness of the government interfering in the quote unquote pre market system?

 

Chris Hughes: Well, I wrote the book to reject that framework on its pace, so it’s the framework that I’ve used for a long time until maybe, I don’t know, seven or eight years ago, and it’s the framework that most of us use is the idea, use the word interference. A lot of other folks might use the word intervention, and that language suggests that markets work just fine on their own.

 

They’re almost like natural creatures that dynamically produce abundant goods, and the state is over in the corner and sort of comes in after the fact, like an emergency room to, you know, fix things when they, when they break. That is not the history of markets in the United States over the past century.

 

Instead, it’s more akin to something like a vegetable garden. A market does have these dynamic elements, which can be very creative and, and, and do occur across time and space, but they need to be cultivated. They mean to be pushed in a direction just like a plant needs., Certain plants need sunlight, some need shade. Some need to be weeded, some need fertilizer. Some need to be planted at the right time of the year. Markets need cultivation and need management. Otherwise we just get into a kind of bailout kind of culture.

 

When you take a step back and look at American capitalism in the story of it, and just think about how many markets we all agree are structured by the state, I mean healthcare, pharmaceuticals, airlines, banking.

 

Now semiconductor manufacturer, I mean, the list goes on. It’s well over half of the, of the GDP well over half of our economy are these industries that are managed by state action. Now, each one of them has pluses and negatives for sure, but that’s the whole point of the book is to, as we have to get into this new framework of, of thinking about markets as something that are managed and dump the old interference language if we’re ever gonna figure out how to do it or how to do it right.

 

Zachary Karabell: So how might we do it right? I mean, I think the challenge of these, certainly the, the challenge of writing history and, and then also writing present tense policy is history is, well, it’s not clear, but it’s clearer because ’cause we’re able to kind of step back from it and we have a sense of how things played out.

 

We can see what policy decisions were made. We can see, we can try to see what their consequences are. All of that too is also difficult historically. Right, because you’re never a hundred percent sure or even close to it, that you’re picking the right variable to assume that that was the determinant one.

 

That’s why we keep rewriting and rewriting and rewriting and debating about what caused what. It’s really difficult in the present to try to figure out like what, what tweak works. And you’ve spent a lot of time, particularly with the economic security project, examining what those tweaks might be. I’m using tweaks as very specific policy measures, not as a pejorative that they are, you know, not meaningful. So how do you balance that kind of question of, one is causality in the past, two is what it tells you about, you know, what might work and what might not, and then how do you apply that to the present? I know that’s a really simple question.

 

Chris Hughes: It’s a broad question, but it’s a great question because at least I hear in what you’re saying. How do we, First off, how do we understand what happened in the past and then how do we pull out implications for the present given how much has changed? And yet I think we can, I, you know, I wrote the book to give us a framework to think about contemporary policy and al history in the, in the service of the moment.

 

And, you know, it’s a collection of 12 different stories of people and multiple, many moments in history where we can see marketcrafters. So that’s the title. Trying their best to guide and shape markets towards an end. And we can learn a lot from them. So why don’t, you know, we take a concrete example. I think you know, the Federal Reserve is a major institution in the United States with the responsibility of guaranteeing price stability, full employment and financial stability. It was created in 1913, reimagined in 1935, but I have a chapter on in the book in the 1950s when it developed a new mandate to create orderliness in markets. And so what that actually meant was that the Fed began to use open market operations to stabilize and really set the price of short-term credit, buffer it if it went too far up. If it went too far down by using, its its central institutional power. And then of course, when there are real crises or panics, step in, well, famously in 2008, but many times before, and that as an institution has crafted financial markets to be more stable. We had a lot more panics and a lot more chaos before that Central Bank existed.

 

And on balance, it’s done a pretty good job despite some of the clear mistakes. And that’s the kind of thing that, you know, you, you can get really into the weeds of Fed History and I love doing that, but it’s powerful just to step back and say, wait a second, if we have an institution with the mandate for financial stability and another for energy stability and another to make semiconductors, how is it that we can’t make housing cheaper in the United States?

 

Or how is it that we can’t ensure that we have the technology to mitigate climate change? These are very big challenges, but so was financial stability in the system. And there is a, you know, a pattern. It’s a rhythm in history that I think can point the way forward. And I think history isn’t gonna define the the present moment, but at least can point us in the right direction.

 

Emma Varvaloucas: What exactly is that pattern? I mean, what, like what are the general guidelines about. What a government should do and like when they should do it, and how exactly it should be done?

 

Chris Hughes: When marketcraft works best, there’s a clear mission like build advanced semiconductors in the United States. Congress then creates an institution that has the responsibility to get it done, like in this case, the CHIPS and science office. And then finally it invests it with a discretion to move with agility and meet that goal.

 

So in the case of the CHIPS Act, it empowered the Commerce Secretary, then Gina Raimondo, to make allotted decisions about how much of the 50 billion went to r and d and how much of it went to attract private capital to build semiconductor manufacturing plants, In addition to how to structure the office, how to run, the whole process of inviting companies to apply and then vetting them and then investing the money.

 

And the CHIPS and semiconductor story is one of really incredible success. I mean, just, just several years ago, we didn’t have any meaningful fabrication of, of advanced semiconductors and now we have five of the largest global companies that make these things, either producing them here in the United States now or soon to open factories that will, and that is really remarkable change in a short period of time.

 

And so that that kind of structure, I, you see it. We’ve already talked a little bit about the Fed. We could also talk about it in the context of the Strategic Petroleum Reserve, which was created in the 1970s after several oil and energy crises. We said, wait a second. We need. A buffer of oil in the United States so no country can ever create an embargo in the same way again.

 

And so now we store hundreds of millions of barrels of oil in these underground salt caverns, not only to protect us in case of geopolitical instability, but it can also buffer the price and so that we ensure it never gets too expensive. So that’s an institution that Congress created. The folks who run it were invested with the discretion and it’s endured for decades and decades, and it’s a, a big reason why energy crises haven’t recurred.

 

So that that template, that model recurs throughout history, and I think we can learn a lot from it.

 

Zachary Karabell: So you did a piece for the New York Times, which is part of the book about the Fed and the role of the Fed and the vital role of the Fed as an impartial steward, which I agree. I mean, I’ve written a lot about the Fed over the years. There is a free market, I think legit question about the Fed, which is some of the contemporary Federal Reserve approach is shaped by a perception that the Federal Reserve failed in 1929 through, you know, the early 1930s that it either misinterpreted its mandate or didn’t use it sufficiently.

 

There’s been a lot of debate about that historically as to whether or not that’s a. A fair critique or whether or not it was as central to the unraveling of the economy in a way that we now call the Great Depression. But there is the pushback of the economy. This incredibly complicated, multi-variant thing that’s largely a series of statistics that we then call one aggregate thing called the economy has so many moving parts and so many different factors that the idea that that the Federal Reserve is in and of itself the determinant is a mistake, not, not because they’re not well-intentioned and well-meaning, and that they’re not good stewards.

 

Chris Hughes: When you say the determinant, you mean?

 

Zachary Karabell: Of interest, rates of money, supply of money flow, like they are one, they’re one powerful input into a system, and we’ve seen this over the past, really 20 years of the Federal reserve’s use of short term interest rates not necessarily moving market interest rates nearly commensurate with its activities now. The Federal Reserve as an emergency source of capital and liquidity and, and backstop in times of crisis has clearly been absolutely essential. Absolutely essential in 2008, 2009, absolutely essential in 2020, but the Federal Reserve as a marketcrafter, I just wonder, what do you think about the argument that its, its ability and capacity is overstated both by itself and by its both by its detractors and its defenders.

 

Chris Hughes: I don’t think that’s right. I mean, the Fed sets the price of short-term credit and enforces it through, You know, today it uses administered rates, which are kind of open market operations. So the interest on reserve policy in the overnight reverse repo facility, which I imagine is in the weeds, but it sets those rates by the decisions of the FOMC and then enforces them.

 

And then, you know, we can use as a crisp example, when the inflation was raging in 2021 and 2022, it raised those rates precipitously. And you know, that had a clear effect on ma on cooling the, the macro economy in terms of affecting sort of medium term rates like the 10 year treasury and other things. I mean, the further you get out on the yield curve, obviously more and more of the determination of the price of credit is by market forces.

 

And even there, the Fed, you know, the 10 year is an expectation of what the next 10 years of short term interest rates will add up to, plus the risk premium. And so even there, it’s meaningfully affected by fed decisions and at moments in history when the Fed is wanting to be even more aggressive, it has changed the price of medium and even long-term credit, obviously in the pandemic years recently, but also Operation Twist back in 1960.

 

So, you know, that’s not to say that the Fed has its, has all the power. Obviously it’s there to do a dance with markets and to guide those markets towards the right price for credit. But it is a real power that is exercised on a daily basis and to the tune of trillions of dollars, and I think we could argue when policy should be tighter or should be looser, but it’s, it’s quite difficult to argue with the effectiveness of not just the Fed but the other central banks being able to tighten and loosen the money supply as they wish.

 

Zachary Karabell: That was a good answer.

 

There is a long debate of like, particularly 22, that if the Fed had done less or nothing, the, the inflation curve would’ve been remarkably the same and that, and that if attributed effect to cause mistakenly.

 

Chris Hughes: There are some strands of truth in that in 2022, and also back in the volcker shock as well, because let’s just take the most recent inflationary surge, you know, the best estimates from pretty centrist eco, economists like Olivier Blanchard and Ben Bernanke is that of the, at peak inflation of roughly 9% at most two was caused by the Biden and and Trump, the Covid era stimulus.

 

So most of that inflation was coming from supply chain bottlenecks, and we just couldn’t get stuff. Remember when the ports were all jammed and the rapid shift in consumer demand away from services and towards goods, homes, Cars. The point is, is when you have supply induced inflationary shocks, you actually wanna rely on monetary policy less.

 

You know, you don’t want the fed to hike precipitously, you just wanna untangle those knots of those supply chains or bring online more capacity. And so, you know, one of the key arguments in the book is that inflation, it comes and it goes. We will have another inflationary episode. It might be, it might be this year or next year because of the tariffs.

 

It could be 10 years from now. And if we are gonna be prepared for that moment, we should absolutely embrace the Fed’s tools on the demand side. But we could also have an institution that would have power on the supply side to think about how it could either make more expensive or make cheap the cost of goods that are driving the inflation.

 

If it’s energy markets, we were talking a little bit about the Strategic Petroleum Reserve, if it’s housing, even if it’s food. You know, to use that as an example in the 1930s. We did food stock buffering in the United States where for cotton and corn and wheat, and even grapes, the Commodity Credit Corporation, which was part of the National Investment Bank, which I detail, which I go into detail about, bought low and sold high.

 

In other words, if there was a glut of cotton on the market or a glut of grain, it would buy in order to ensure that there was a price floor, and then if it got really expensive, it would sell to make sure it was affordable to consumers. So this kind of reserve buffering strategy is one of the things that a lot of us talk about as being complimentary to the Fed’s tools to craft markets for price stability.

 

You could do, we did something similar with eggs in the 1940s and the 1950s. You could do it for coffee beans, which have seen their prices rise dramatically. We would need an institution to be invested with this, The Commodity Credit Corporation actually happens to still exist. It would need to get a big new investment and with a clearer mandate, and it would have to have the discretion to get it done.

 

But there is a recipe there for a price stability that doesn’t just rely on constricting credit by the central.

 

Emma Varvaloucas: How do you differentiate between like economic policy, something like Trump’s tariffs, right, versus marketcraft? Could you spell out the difference?

 

Chris Hughes: Marketcraft’s when you got a goal and you are shaping and guiding a market towards it, what Trump is doing is like the opposite of that. Like there is no, the tariffs, I mean tariffs are a little bit like taxes. They can be, you can have a tax policy to make it cheaper to build solar panels. Or you could just lower everybody’s tax rates.

 

The first is a marketcraft ’cause you’re trying to achieve a goal of clean energy production. The second is an economic decision that affects all markets. So the same thing goes with tariffs. You could imagine a tariff policy, which said, you know, we wanna support domestic electric vehicle production, and so we’re gonna put a tariff on EVs from China.

 

They’re dumping them in markets. Ideally, you would wanna work with foreign powers like the EU and the United Kingdom and others to coordinate similar kind of trade policy, and then you would pair that with an industrial policy to make sure that you’re actually gonna see the innovation that’s gonna make EVs cheap in the United States.

 

That would be a kind of marketcraft that would use tariffs along with other things to create more abundant and cheap electric vehicles. This is like tariffs on everything. You know, like he says, it’s sometimes he says it’s about bringing back manufacturing this vague mandate. But then, so why do we have tariffs on avocados?

 

You know, it doesn’t, it, it’s just so, not to mention the obvious impulsivity of it, that one week it’s on, one week it’s off. One week it’s 145 on China, next week, it’s, we don’t, we don’t know the, the uncertainty of it. So it’s not, it’s not a marketcraft by any means, and it’s chaos and we’re gonna have to, you know, be clear about that, I think, if we wanna do something more precise and better on the other side.

 

Zachary Karabell: Let’s pivot to the world of technology, which, you know, interestingly, one of the things buried in the chaos of what DOGE has done and kind of what is going on, if anything coherent is going on in the first a hundred plus days of the second season of the Trump show, that the belief that government could make better use of data, right?

 

That that one of the reasons that government, there’s a critique that one of the reasons government is inefficient, IE is not being an effective marketcrafter is because it doesn’t use its data effectively. This has kind of a, I think, been brought into for by the Silicon Valley group around Elon Musk and David Sachs and all these other who are saying, look, there’s all this inefficient use of data in government.

 

If we made better use of data, we would do a better job running the government. Not a dissimilar argument by the way that was made after 9-11 when people were saying there was all this information within various intelligence agencies in the government, then they weren’t sharing it with each other and the FBI didn’t know what the CIA was doing, and they didn’t know what local police is doing.

 

And they started to create a kind of a unified database of terrorism threats and activity to inoculate us against further attacks, right? That was a, an early version of that. A, is that accurate? And B, do you want government to have, you know, in, in the freedom versus control matrix, right? Do we want government to have better data systems, more integrated systems, the IRS sharing with immigration, sharing with state department sharing?

 

Right? And then what do you do about it? The dangers of control enhancement by having that data integration.

 

Chris Hughes: Let me speak for myself. I want more effective government, and I think effective government means using in a responsible fashion, all the cutting edge technologies that can help get the business of government done. In some cases, that might mean you need to hire some new folks like data scientists. In some cases it mean you, it means you could streamline government and have fewer folks doing this work.

 

The thing that I think is really important to understand is that DOGE is not doing that. It may have efficiency in the name, but that is not, its actual described activity. And I mean, a really crisp example is we had direct file this technology tool from the IRS that made it easy for Americans to file their taxes with just a few clicks online.

 

It had been worked on for years by a lot of different folks, obviously H and R Block, and companies that file your taxes didn’t like it lobbied against it. A direct file was wildly popular. You had hundreds of thousands of people this April filing their taxes, using it, new technology making, in theory, government more efficient and making a better experience for the tax.

 

They canceled it. Why would you cancel a program that makes it easier to file your taxes if you actually care about government efficiency? There’s no, it’s not like there was evidence of fraud or there were technology problems, or it went down. I mean, it’s like, could you have a clearer example of how the stated mandate and then the reality are in two separate places?

 

So I, I think we all deserve and want a government that’s more effective and more efficient, and we could get there. 

 

Zachary Karabell: In a completely inadvertent fashion, right? The inefficiency of the federal government about data does have the unintended consequence of making it harder for the government to control things. One of the things about marketcrafters is it requires an element of government coordination, capacity, capability, right, and efficiency.

 

I’m just asking about like some of these unintended consequences issues, ’cause one thing that we’ve seen certainly out of China, and I’m not saying like we’re just gonna be on the spectrum to China, I’m just saying we have seen that in a world of technology, data efficiency, centralized in an executive can be an element of profound social control.

 

Chris Hughes: Your concern is, I mean authoritarianism where they have these, the specter of having files of lots of data on each citizen of the United States. I think we’re a democracy and Congress can and should say, if the United States government’s collecting a lot of data on its citizens, the citizen should be able to see what that data is and should have the right to delete all non-essential.

 

You see what I’m saying? Something like they’ve done with GDPR and Europe, I think we’re so, given the number of problems that we’re facing, this one isn’t at the top of the list, but if it were a real, at least for me, if it were a real concern, then I think there are ways to, to mitigate it and to manage it.

 

So I’m a lot more worried about how to bring down the cost of eggs and care right now for Americans, and you know, the questions around democracy and corruption, et cetera, than some of these other questions.

 

Emma Varvaloucas: Let’s talk a little bit about antitrust or antimonopoly. It’s a great time to do so and a great time for the book to come out since the FTC case against meta just started a couple weeks ago in mid-April, and you write about in the book towards the end that this is the direct result of the kind of new markeycraft that kind of emerged post millennium. Talk about that a little bit for people that are not in the Lina Khan fan club or maybe don’t even have an idea who she is.

 

Chris Hughes: Antitrust and antimonopoly are a topic close to my heart. It seems as technical, but it has a real world impact for so many people. It may be obvious, but just to state it, you know, I came to this set of issues because of my own background, starting my career at Facebook, and then watching as Facebook became a totally different kind of company and more powerful kind of company, and then used that power to either acquire rivals or squash them.

 

And so in 2019, I wrote an op-ed arguing for structural separation or breakup of, of Facebook. And you know, as you mentioned, Emma, the FTC filed suit a year later. And now several years after that, we’re actually seeing the trial happen. And by the way, that hits the, the FTC filed suit under the first Trump administration.

 

The Biden folks effectively cleaned up the case and continued to to prosecute it, and now Trump’s nominees at the FTC are the ones prosecuting the case in the courts. But just to take a step back, I think that there has been a seismic shift in the world of anti anti-monopoly in the past 10 years that is responsive to the growing power of corporate consolidation.

 

I mean, it’s on the. If you’re a left-leaning voter or a right-leaning voter. There is a permeating sense that corporations have gotten not just too large, but have have begun to weaponize their bigness to hike prices, lower wages, slow innovation. And that we should do something about it. And so that is the long story of antitrust and anti-monopoly in the United States.

 

I mean, we had enormous corporations at the end of the 19th century. That’s when the anti-monopoly movement really began, and it was a major force in making sure markets were competitive and fair really until the late 1970s when it became increasingly constrained and very focused on like, you know, is this gonna cost a few pennies more or not if Comcast and AT&T combine, rather than these bigger questions around what are all of the harms of corporate consolidation?

 

So in the book, I talk about this as a history of marketcraft, and it’s how I got to a lot of these concepts in the first place. In other words, like there is no sort of free market that’s gonna, you know, magically lead towards a monopoly in some of these areas, like we have to structure markets to make them competitive if we, if we want innovation and lower prices and higher wages. And Lina Khan, I think the FTC did an excellent job pursuing that, that mandate. And it is a across partisan set of ideas. You know, Khan was confirmed by 12 Republicans voted for confirmation in 2021. She continued to have the support of several of the most prominent Republican senators, and now the person who runs the FTC, Andrew Ferguson, has, as we were discussing, continued to prosecute the Facebook case.

 

The FTC lawsuit filed suit against Uber. Andrew Ferguson’s kept the merger guidelines, sort of the rule book, if you will, that the Khan FTC put into place. And so let’s be clear, he also agreed with that the White House would be able to fire two of the five FTC commissioners just because they were Democrats, which is an illegal move.

 

So I’m under no illusions that he’s a particularly virtuous actor, but there is still a through line of taking antitrust and anti-monopoly policy seriously, and I think that is a generational shift.

 

Zachary Karabell: So there’s another case going on, obviously, or that’s actually had a ruling against Google.

 

News Clip: A federal judge has ruled that Google holds an illegal monopoly in multiple areas of online advertising technology. Now, this ruling, it could allow prosecutors to push to break up part of the company. It is the second antitrust case the tech titan has lost potentially being forced to sell Chrome to end its dominance in online searching.

 

Zachary Karabell: I don’t know if it’s the FTC or the Justice Department has recommended or asked that Google be forced to divest Chrome.

 

Chris Hughes: Two of them. So Google’s been declared a monopoly twice in the past eight months in August, and then just a few weeks ago once for its monopolization and abuse in the search market and later for its role in the online ads market. And so the first is, the first case is now having this conversation around remedies.

 

The second, not yet.

 

Zachary Karabell: What is accomplished by having Google divest of Chrome, so Chrome becomes its own $400 billion company, right? What then happens that moves the needle in a direction of more competition or better service when you’ve simply hived off a somewhat less large behemoth.

 

Chris Hughes: So there are all kinds of remedies that are being discussed. One is Hiving off Chrome. I don’t have a preference yet for which remedy is right. I mean, I’ve read about many of them that are being proposed, but I know they’re all as a group directionally pointed to breaking the search monopoly that Google has.

 

I mean, there’s a lot of evidence that’s just come out in recent weeks after, well after this verdict in the case that shows that when folks are using other search engines and are exposed to them, they actually have better experiences. And I think there’s a foundational belief that if we had multiple search engines competing, the quality of search would get better.

 

I think, I don’t know if I’m alone, but I feel like Google search has become less and less useful until the AI models emerged and now Gemini is half of my search results. But that kind of stasis in that market is not good for consumers. It’s not good for the product development. And so the fundamental contention is that search should be a competitive market ’cause it would be better for Americans. And, and by the way, not just that, but that Google illegally used its market power, the economic rents that it, it got from dominating search to effectively buy off Apple, paying it billions and billions of dollars a year so that Google could retain its market domination.

 

So it’s not just like, oh, you know, they’ve gotten too big. It’s like, no, no. They’re using their market power to shut down all other avenues of of competition. That’s illegal.

 

Emma Varvaloucas: Do you think it’s likely, Chris, that the outcome of this FTC trial is gonna be Meta having to spin off WhatsApp and Instagram and per Zachary’s question? Like do we think that that would create a like substantive positive difference in some of the, you know, the big questions we have around their use in kind of anti-democracy forces, misinformation, or even just plain, you know, customer consumer experience.

 

Chris Hughes: I really don’t know. You know, the trial’s ongoing, but it’s hard to tell where it’s gonna land. And I continue to think that a more competitive social media landscape would be better. And that’s one where Instagram is its own company. I mean, the Instagram co-founder was just on the stand last week saying that Facebook, after buying it had purposefully not invested in the Instagram product, which is, you know, clear evidence of the fact that if you had two competing platforms, the outcomes could have been very different for consumers. So we’ll see where that case goes, but I also think it’s important to bear in mind that, you know, competition policy and antitrust is not gonna solve all our problems with tech.

 

Like we, you know, there, as you mentioned, misinformation, there’s mental health concerns. There are privacy concerns. Each one of these things needs legislative action. And so, you know, just last year in Australia, they banned social media for folks who are under 16 and several countries in Europe are considering the same.

 

Here in New York State, you can use social media if you’re a teenager, but you have to get parental permission if you want algorithmically determined content, which is a pioneering move, and there’s really meaningful conversation about repealing the immunity. These tech companies, unlike any other industry in the United States, have immunity from, they cannot be sued for what people post on the platform. Even though they are making clear, normative decisions about boosting the most outrageous, sometimes factually incorrect content, they just say, oh, well we had no idea. Well, the algorithm knew it was interesting enough to to boost it. How is it possible that you can’t take responsibility for, you know, surfacing some content, which can often be pretty, pretty gruesome?

 

So I think there are a lot of legislative things that need to happen in addition to the competition and antitrust policy to ensure that these markets are working the way we want them to.

 

Zachary Karabell: As a final question, Chris, I wanna ask about the Economic Security Project, which you founded, and I wonder if you could reflect on what your experience has been creating a policy advocacy group.

 

Chris Hughes: So in 2016, Natalie Foster, Dorian Warren, and I created this organization Economic Security Project, and over the past 10 years, it’s grown significantly in scope. So its mandate today is to build economic power for all Americans and it focuses on what I call ideas advocacy. So thinking about things like how anti-monopoly can raise wages, lower costs spur innovation, how creating a guaranteed income or child tax credit can help the poorest Americans and working class Americans make ends meet. We think a lot about the role of public options, about government efficiency direct file.

 

The biggest learning for me has been really the importance of ideas. If legislators feel stuck, nothing happens. And so if you can say, well, we, we, we may have a housing crisis, but we don’t know what to do about it. You’d be surprised how often one hears that kind of thing from policymakers in Washington. And so the opportunities to develop ideas that are actionable, that are informed not just by history, but academic and analysis and what voters want and then to push for them, to pair those ideas with power. That’s, I think, where you can see real, real change and there’s actually not that many organizations doing that. You got a lot of ideas folks like think tanks, and then you have a lot of like advocacy folks who are less about ideas development and, and more about building power.

 

For Economic Security Project, for ESP, it’s really that sweet spot of where the ideas meet the advocacy. And so that has been something that we’ve come to in time as a unifying method for making change in the world. I think it has been very successful and hopefully will be more in the future. It’s certainly, you know, these are really bleak times, economically.

 

We’re almost certainly gonna head into a recession, whether the, you know, these tariffs are gonna raise prices for Americans, and so we need clear ideas for what we’re gonna do on the other side. So that’s where what we’re in the business of.

 

Zachary Karabell: And for those listening, we actually did a podcast with Natalie Foster at the time of when her book came out last year.

 

Chris Hughes: Yeah.

 

Zachary Karabell: So Chris, thank you so much for your time. Everyone rush out. Buy a copy of Marketcrafters either digitally, audially, or paperly, can you say paperly? Hard copy. The illustrated version will come soon enough.

 

I wanna thank you for your work. You have been a, a really inspiring case as someone who has done well personally and felt that that has been an imperative to then give back and contribute meaningfully to the society in which you are a part. I wish there was more of that, you know, meaning you have, you have taken your fortunes, I mean that more in the sense of your personal success and turn that to public good. And we kind of all need to be doing that at whatever level we’re at in whatever way that we can, if we’re gonna have a public good.

 

Chris Hughes: That’s very kind of you. Thank you.

 

Zachary Karabell: Thank you for your time today.

 

Chris Hughes: Thanks for having me.

 

Emma Varvaloucas: Thank you, Chris.

 

Zachary Karabell: Well, Emma, we’ve had a bunch of these conversations over the years and then this season as well with Matt Stoller about antitrust. Obviously Chris echoes some of what Matt said. We debated whether or not we agree with that perspective, that breaking these companies up is better than not breaking them up, and that the nature of them becoming monopolistic even if it doesn’t fit the 20th century framework that of course, didn’t anticipate 21st century tech giants that that government is necessary to restore a more healthy, competitive consumer, citizen friendly marketplace. Again, I think that’s one side of the equation. I, I still am more skeptical, I think, than many of what actions will be taken and how by government in a way that will be efficacious. I guess we’ll see.

 

It seems to be one of the, yet again, unanticipated aspects of the Trump administration that all the leaders of all these tech companies who clearly thought that it was gonna be no regulation and where they were gonna be off to the races, that would appear to have been a miscalculation. Given everything we can see going on now amongst the many miscalculations that many people have made about the Trump administration, that one may be engendering on a lot of people, a certain degree of, uh, shouting Freud like, oh, sorry. You thought you were buying a deregulatory state all, but we’ll, we’ll see how that plays out.

 

What are your thoughts on all that?

 

Emma Varvaloucas: I mean, I’m less skeptical about the antitrust stuff. I think that it’s pretty clear that after Facebook bought Instagram, that Instagram took a absolute nosedive in consumer quality. So like Chris said, like that’s not gonna solve like all, all of our issues when it comes to social media. But I certainly like can understand and viscerally appreciate that if Instagram was under its own ownership. You know, if I had never been sold to the big fish of the social media world, then it would’ve, it’s, it would’ve be a different product now.

 

And I think it’s really clear in the case, if you’re following it at all, that like it was purchased to, to crush it. It wasn’t purchased under innocent circumstances or innocent motivations.

 

So I, I feel positive about that.

 

Zachary Karabell: Look, I’m certainly sympathetic to looking at the ways in which government has been a constructive force in the economy or in the economic life of citizens in the United States and elsewhere in the world, and clearly there is, there’s both a necessity for government as guardrails. There’s a necessity of government in investing in the commons in a way that you would be hard pressed to have any individual company do, right? That there’s not really a profit incentive in the commons, which is why most of what most countries do well in terms of infrastructure and social safety nets is a government function because it simply doesn’t have an easy free market function.

 

Look, that said, I am more skeptical of the Mandarin technocratic belief that these things are as specifically micro manageable, right? So there’s a difference between saying like a guaranteed basic income or a safety net, or there are just some things that are the commons that private companies wouldn’t do air traffic control. And although Milton Freeman, you know, the famous paragon of, of free market economics did once say, if asked whether there should be a Federal Aviation Administration, I, I think he, I mean, I’m, I’m, I’m sure he did say something like, we don’t even need that because if airlines started crashing, they would then have a market incentive to develop safety protocols that would not be very different than the government safety protocols.

 

Now the problem with that is like how many planes would have to go down, right? So it may be true that the market would eventually do something. It’s not clear it would do enough and then, you know, would it do it in the regional airport? Right? So then you’d have the issues of, sure, maybe it would do it in New York and Washington airspace, but would it do it in Wichita or, I’m just picking Wichita as a, as a second tier city. Although it’s also also where Learjet was.

 

So I don’t know. I think the, I think the, the lure of technocracy and Mandarins is a powerful one.

 

Emma Varvaloucas: You’re skeptical in terms of its efficaciousness or you’re skeptical in terms of like it could be taken over by an incompetent or malign government, or where is your skepticism placed? 

 

Zachary Karabell: Both. Both. Both. I think there’s, I think there’s multiple nodes. And look, I tilt more libertarian in these things, like don’t give government power that you don’t want it to use, essentially. And I think one of the lessons of what’s happening in the Trump interpretation of executive power is a very potent, palpable, powerful and painful example of don’t give government power that you don’t want it to use.

 

Emma Varvaloucas: Well I think that if Chris were here, he would argue that. I would have to do like a very close reading of the book, but I’m pretty sure all of his examples that he uses in the book, the difference between that and what the Trump administration is doing is that all of these examples of market, marketcraft were within the legal existing system of what the government can do. And then I think he has some examples in there where some policy is discarded or because it has to be passed through Congress, like it is very, like they’re very aware that there are limitations and where limitations are in like following those guidelines.

 

I’m not sure that what he’s advocating for is the same thing as like the expansion of. Government ability, the way you’ve been critical of it, in terms of the expansion of the executive function. I’m not sure that’s a, the Venn diagram is the circle there, if that makes sense.

 

Zachary Karabell: I think they’re kind of intertwined, meaning even the CHIPS Act, you could say, is a potent use of industrial policy, but it requires government steering. Now that’s a little different. We had Jigar Shah once who was under the Biden administration in the Department of Energy responsible for the, kinda the loan guarantee program to very expensive alternate energy projects, right? That wasn’t easily gonna have risk capital coming from banks.

 

Like that’s a really interesting one where it was essentially government providing risk capital to something we’ve decided is in the greater public good, especially for the future, but, but not necessarily doing much other than that, meaning they’re not, they weren’t managing those businesses.

 

They weren’t really determining winners. I mean, a little bit probably determining winners and loses because you give capital to people you think are gonna be winners, but a lot of other stuff ends up being more micromanagey. Right? Just by, by nature of it. And the CHIPS act is somewhere in between. In order to have a, you know, real industrial policy, you have to somewhat commandeer or, or channel resources as government sees fit.

 

So I don’t see them as separate, I think as you see them. That doesn’t mean there aren’t benign uses of them. I’m just saying the bar I think should be quite high as it was in the framers, as it was in the kind of the constitutional mantra of, it’s just that basic principle. If you give institutions and people power, they will use that power unless constrained from using it in certain ways.

 

And it would be great if everybody who uses that power is responsible and diligent and kind of believes in the greater good, but in human nature terms and in structural institutional terms, it’s not clear that that’s the case.

 

Emma Varvaloucas: Yeah, I mean, to be clear, I also don’t think that, I think there is a Venn diagram, like I don’t think it’s two separate circles. I do think that there is overlap, and I do agree that there’s concern, merited concern. I, I keep on thinking about the example of Estonia doing that, like heavy digitalization process that they did, like the mid, was it 2010?

 

I don’t know when they started that. But, you know, they’re, they’re famously now like the most digitized country, blah, blah, blah. And they’re very efficient, very, very, uh, DOGE, if DOGE existed in an alternate universe. Right? And it would be so interesting to go back then and have the argument at that time about like, but if we make this government very digitalized, everyone’s information is very easy to access, to use, things are streamlined this, that, and the other thing that in the future, you know, let’s say Russia comes in again, this could be used against us and it’s like, ah.

 

But what, if not, you know, should we really like hobble the positive potentialities of the future now for like the worry about a distant future? Which I feel like is very anti Zachary Karabell, you know, in terms of like how you usually see things.

 

Zachary Karabell: No, ’cause I think, I think it is more just be mindful of the consequences of delegating power to me. That, I mean, I, I, I think I’ve been consistent about that in terms of, you know, the use and misuse of government in particular. 

 

Emma Varvaloucas: No, you’ve been consistent about that.

 

Zachary Karabell: Don’t give away your power. It’s like that’s another, I feel like that’s a, that goes into like work and relationships, but it, I think it’s also true, it’s also true about, about government and our relationship to it, but this is a longer conversation and we are, I think at the end of this particular conversation.

 

So we will maybe find a way to have this one, we should have someone on who does things more about like government, libertarian. It’d be interesting to have that debate.

 

Emma Varvaloucas: Yeah, for sure.

 

Zachary Karabell: Thank you all for listening. Once again, thank you, Emma for co-hosting, the Podglomerate for producing, the team at The Progress Network for being the team at The Progress Network. Sign up for What Could Go Right? our newsletter weekly free in your inbox. Send us your comments and we will be back with you next week.