Aug 26, 2022

A conversation with Noah Smith

The economist and columnist sits down with Tangle.

Im Isaac Saul, and this is Tangle: An independent, ad-free, non-partisan politics newsletter where we summarize the best arguments from across the political spectrum on the news of the day. Today is a subscribers only edition.

Rather listen? You can find the podcast version of this conversation here.

We are, right now, living through one of the most bizarre economic times in recent memory.

On one hand, you could paint a rosy picture: Unemployment is historically low, wages are growing, and the United States seems to be coming out of the pandemic faster than a lot of other countries. On the other hand, inflation is the highest it has been in decades, real take-home pay is falling, and we're facing issues like labor shortages and supply chain hiccups.

As the country closely watches the inflation numbers, we just had another potential jolt to the system: On Wednesday, President Biden announced he'd be forgiving hundreds of billions of dollars of student loan debt, one of the most controversial moves of his presidency thus far.

Just hours after that news broke, I sat down with Noah Smith to talk about inflation and the current state of the U.S. economy. Smith's work has been featured repeatedly in Tangle under "What the left is saying," though I regularly find him to be one of the more independent economic writers online. To my delight, despite his tendency to align more often with Democrats than Republicans, he has quickly become one of the critics of the timing of Biden’s student debt cancellation.

In this conversation, we talk about that, as well as why inflation is happening, where the economy is heading, and some of the faulty predictions he's made over the last year.

This conversation has been lightly edited for length and clarity.

Isaac Saul: There's a lot we could talk about. Obviously, we've got some breaking news with the Biden administration and student debt cancellation, which we will get into, but the big story in the economy right now is inflation and the inflation debate. This is kind of a bizarre moment in economic times. I'm not an economist, I read a lot of economic writing, and I feel like nobody knows how to describe it. How would you describe this moment? Where are we in the big macroeconomic picture right now?

Noah Smith: The easiest way to describe it is that we had an overheated economy. We had some supply disruptions from covid, and later on we had some real supply disruptions from a temporary spike in oil and food prices related to the start of the Ukraine war. But really what we're seeing is an economy that's just overheated.