"Econ 102" with Noah Smith and Erik Torenberg

This week, Noah Smith and Erik Torenberg talk about DOGE, Elon Musk's initiative to reform government spending, and explore why it might be more about ideology than efficiency. Noah talks about how he would fix the US debt beyond simply cutting waste. They also cover the future of major programs like Medicaid ($804B/year), the trade-offs between inflation and austerity, and how conservatives might reshape federal institutions despite education polarization. Plus: why comparing government efficiency to Twitter's headcount reduction isn't as straightforward as it seems.

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Highlights from the Episode:

• Noah argues that while Doge (Department of Government Efficiency) is publicly presented as a cost-cutting initiative, it's primarily an ideological project aimed at reducing "woke" initiatives in government.
• As zero-interest debt gets rolled over at higher rates (around 4%), interest costs are reaching historic highs as a percentage of GDP.
• Austerity measures will likely involve difficult choices for the middle class. Healthcare spending in the U.S. is disproportionately high compared to other wealthy nations.
• Government efficiency is harder to measure than corporate efficiency due to its multiple, often conflicting objectives, the influence of democratic processes, and congressional oversight, which complicates decision-making about program value.

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SPONSORS:

NetSuite

More than 41,000 businesses have already upgraded to NetSuite by Oracle, the #1 cloud financial system bringing accounting, financial management, inventory, HR, into ONE proven platform. Download the CFO's Guide to AI and Machine learning: https://netsuite.com/102

Found

Found provides small business owners tools to track expenses, calculate taxes, manage cashflow, send invoices and more. Open a Found account for free at https://found.com/econ102.

AdQuick

The easiest way to book out-of-home ads (like billboards, vehicle wraps, and airport displays) the same way you would order an Uber. Ready to get your brand the attention it deserves? Visit https://adquick.com/ today to start reaching your customers in the real world.

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SEND US YOUR Q's FOR NOAH TO ANSWER ON AIR: [email protected]

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FOLLOW ON X:

@noahpinion

@eriktorenberg

@turpentinemedia

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RECOMMENDED IN THIS EPISODE:

Noahpinion: https://www.noahpinion.blog/p/what-i-think-doge-is-really-up-to

In this episode, Noah Smith and Erik Torenberg discuss how Ukraine has proven surprisingly resilient throughout the war by maintaining its economy and developing significant domestic drone manufacturing capabilities. He argues that "Europe is not toothless" despite America's shifting role, detailing how Europe collectively has greater manufacturing capacity than America and identifying three key reforms Europe needs: deregulating software, building energy infrastructure, and removing internal trade barriers.

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SPONSORS:

NetSuite

More than 41,000 businesses have already upgraded to NetSuite by Oracle, the #1 cloud financial system bringing accounting, financial management, inventory, HR, into ONE proven platform. Download the CFO's Guide to AI and Machine learning: https://netsuite.com/102

AdQuick

The easiest way to book out-of-home ads (like billboards, vehicle wraps, and airport displays) the same way you would order an Uber. Ready to get your brand the attention it deserves? Visit https://adquick.com/ today to start reaching your customers in the real world.

Found

Found provides small business owners tools to track expenses, calculate taxes, manage cashflow, send invoices and more. Open a Found account for free at https://found.com/econ102

Incogni

Take your personal data back with Incogni! Use code ECON102 at the link below and get 60% off an annual plan: https://incogni.com/econ102

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SEND US YOUR Q's FOR NOAH TO ANSWER ON AIR: [email protected]

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FOLLOW ON X:

@noahpinion

@eriktorenberg

@turpentinemedia

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RECOMMENDED IN THIS EPISODE:

Noahpinion: It’s time for Europe to stand up https://www.noahpinion.blog/p/its-time-for-europe-to-stand-up

Book: Old Man’s War by John Scalzi https://www.goodreads.com/book/show/36510196-old-man-s-war

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RECOMMENDED PODCAST:

🎙️Check out Modern Relationships, where Erik Torenberg interviews tech power couples and leading thinkers to explore how ambitious people actually make partnerships work. This season's guests include: Delian Asparouhov & Nadia Asparouhova, Kristen Berman & Phil Levin, Rob Henderson, and Liv Boeree & Igor Kurganov.

Apple: https://podcasts.apple.com/us/podcast/id1786227593

Spotify: https://open.spotify.com/show/5hJzs0gDg6lRT6r10mdpVg

YouTube: https://www.youtube.com/@ModernRelationshipsPod

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TAKEAWAYS

• Ukraine has shown resilience in sustaining its war efforts.
• US aid to Ukraine is becoming less crucial over time.
• Turkey's support for Ukraine is significant.
• Europe has substantial manufacturing capacity for military needs.
• Historical patterns of expansionism are relevant to current geopolitics. Putin's expansionist ambitions can be compared to Louis XIV's.
• Europe's aging population poses challenges for military readiness.
• Russia's reliance on China complicates its geopolitical stance.
• Economic reforms are crucial for Europe's resilience, including deregulation of the software industry.
• Internal trade barriers hinder European economic integration.
• America's role as a protector of Europe is diminishing.

Noah Smith and Erik Torenberg discuss Marc Andreessen’s Techno-Optimist Manifesto (a16z), the last waves of economic innovation, energy advancement, and predict the next wave of productivity gains from private and government-enabled innovation. Daffy is offering Econ 102 listeners a free $25 for the charity of their choice when they join: https://www.daffy.org/econ102

We're hiring across the board at Turpentine and for Erik's personal team on other projects he's incubating. He's hiring a Chief of Staff, EA, Head of Special Projects, Investment Associate, and more. For a list of JDs, check out: eriktorenberg.com.

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Sponsors: GIVEWELL | DAFFY | NETSUITE

Have you ever wondered where your donation could have the most impact? GiveWell has now spent over 15 years researching charitable organizations and only directs funding to the highest impact opportunities they’ve found in global health and poverty alleviation. Make informed decisions about high-impact giving. If you’ve never donated through GiveWell before, you can have your donation matched up to $100 before the end of the year, or as long as matching funds last. To claim your match, go to givewell.org and pick “Podcast” and enter Econ 102 at checkout.

Daffy is the most modern and accessible donor-advised fund, making it easier to put money aside for charity. You can make your tax-deductible contributions all at once or set aside a little each week or month. And you don’t just have to donate cash, you can easily contribute stocks, ETFs, or crypto. Plus, you never have to track receipts from your donations again. It’s free to get started and Econ 102 listeners get $25 towards the charity of their choice. Daffy is offering Econ 102 listeners a free $25 for the charity of their choice when they join Daffy https://www.daffy.org/econ102

NetSuite has 25 years of providing financial software for all your business needs. More than 36,000 businesses have already upgraded to NetSuite by Oracle, gaining visibility and control over their financials, inventory, HR, eCommerce, and more. If you’re looking for an ERP platform head to NetSuite http://netsuite.com/102 and download your own customized KPI checklist.

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Econ 102 is a part of the Turpentine podcast network. To learn more: www.turpentine.co

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LINKS:

Noah Smith, Thoughts on Techno-Optimism https://www.noahpinion.blog/p/thoughts-on-techno-optimism

Marc Andreessen’s Techno-Optimist Manifesto https://a16z.com/the-techno-optimist-manifesto/

Robert Gordon, The Rise and Fall of Economic Growth https://en.wikipedia.org/wiki/The_Rise_and_Fall_of_American_Growth#:~:text=Gordon%20considers%20that%20the%20apparent,growth%20between%201920%20and%201970.

Miles Kimball (Econ 102’s actual Econ 102 professor) https://en.wikipedia.org/wiki/Miles_Kimball

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X / TWITTER:

@noahpinion (Noah)

@eriktorenberg (Erik)

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TIMESTAMPS:

(00:00) Episode Preview

(01:25) Reaction to Marc Andreessen’s techno-optimism manifesto

(04:22) Where Noah disagrees: technology does not always empower individuals

(08:05) How to overcome the natural incentive problem of innovation

(11:55) Economist Robert Gordon and no analog to step changes in innovation

(15:50) Sponsors: Daffy | NetSuite

(21:50) Nuclear energy and other energy advancements

(29:40) GDP is utterly unprepared for changing preferences

(33:40) Productivity boom 1987-2004

(36:58) Was the smartphone actually a step change in productivity?

(39:42) Next wave of innovation

(41:50) Where Noah disagrees with Marc Andreessen

(44:15)Government vs privatized enablement of innovation

(49:50) Real sustainability is important and possible

This show is produced by Turpentine: a network of podcasts, newsletters, and more, covering technology, business, and culture — all from the perspective of industry insiders and experts. We’re launching new shows every week, and we’re looking for industry-leading sponsors — if you think that might be you and your company, email us at [email protected].

This week Erik Torenberg and Noah Smith are joined by Itay Vinik, Co-Founder & Chief Investment Officer at Equi, to explore their different perspectives on the current state of the economy and the likelihood of a recession. Match a donation up to $100 for your favorite charity with GiveWell by going to https://givewell.org and pick “Podcast” and enter Econ 102 at checkout.

Check out Erik's new show Request for Startups featuring a rotating cast of founders and investors (including Dan) sharing their requests for startups they want to exist in the world, and also their stories of navigating the idea maze in different sectors so founders don’t have to reinvent the wheel anymore. The first episode is out now - we over better dating apps, references as a service, and WeWork for productivity

• Watch and Subscribe on Substack: https://requestforstartups.substack.com/p/receipt-based-dating-reference-checks
• Apple: https://podcasts.apple.com/us/podcast/request-for-startups-with-erik-torenberg/id1728659822
• Spotify:https://open.spotify.com/show/739L1LR32QI2XyoZlRh5nv

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RECOMMENDED PODCAST: History 102 with WhatifAltHist

Every week, creator of WhatifAltHist Rudyard Lynch and Erik Torenberg cover a major topic in history in depth -- in under an hour. This season will cover classical Greece, early America, the Vikings, medieval Islam, ancient China, the fall of the Roman Empire, and more.

Subscribe on Spotify: https://open.spotify.com/show/36Kqo3BMMUBGTDo1IEYihm

Apple: https://podcasts.apple.com/us/podcast/history-102-with-whatifalthists-rudyard-lynch-and/id1730633913

YouTube: https://www.youtube.com/@History102-qg5oj

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We're hiring across the board at Turpentine and for Erik's personal team on other projects he's incubating. He's hiring a Chief of Staff, EA, Head of Special Projects, Investment Associate, and more. For a list of JDs, check out: eriktorenberg.com.

--

Sponsors: GIVEWELL | NETSUITE

Have you ever wondered where your donation could have the most impact? GiveWell has now spent over 15 years researching charitable organizations and only directs funding to the highest impact opportunities they’ve found in global health and poverty alleviation. Make informed decisions about high-impact giving. If you’ve never donated through GiveWell before, you can have your donation matched up to $100 before the end of the year, or as long as matching funds last. To claim your match, go to https://givewell.org and pick “Podcast” and enter Econ 102 at checkout.

NetSuite has 25 years of providing financial software for all your business needs. More than 36,000 businesses have already upgraded to NetSuite by Oracle, gaining visibility and control over their financials, inventory, HR, eCommerce, and more. If you’re looking for an ERP platform head to NetSuite http://netsuite.com/102 and download your own customized KPI checklist.

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Econ 102 is a part of the Turpentine podcast network. To learn more: www.turpentine.co

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LINKS:

Noahpinion on Substack: https://www.noahpinion.blog/

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X / TWITTER:

@VinikItay (Itay)

@eriktorenberg (Erik)

@noahpinion (Noah)

@Econ102_Podcast (Econ 102)

@TurpentineMedia

TIMESTAMPS

(00:20) Intro

(01:03) The current state of U.S. economy

(03:43) Future economic trends

(08:25) Economic indicators and predictions

(15:24) SPONSOR: GIVEWELL

(16:51) Cont. economic indicators and predictions

(19:45) Potential economic risks

(21:46) Inflation and fiscal policy

(29:29) SPONSOR: NETSUITE

(32:48) Inflation and monetary policy

(35:29) Recapitalization of the banking system

(36:34) Long-term deflationary trends

(43:23) Housing’s role in wealth effect

(48:21) Risky debt

(55:22) Conclusions on the future of the economy

Today we’re publishing a debate about industrial policy between Noah and Mike Bird, the Asia business and finance editor at The Economist. Noah highlights the importance of steering the economy to ensure that industries align with national goals and priorities. Bird questions the effectiveness of industrial policy, especially in developed countries. He argues that market forces and competition should determine the allocation of resources, rather than government intervention. Where do you stand?

If you’re looking for an ERP platform, check out our sponsor, NetSuite: http://netsuite.com/turpentine

We're hiring across the board at Turpentine and for Erik's personal team on other projects he's incubating. He's hiring a Chief of Staff, EA, Head of Special Projects, Investment Associate, and more. For a list of JDs, check out: eriktorenberg.com.

--

Sponsors: GIVEWELL | DAFFY | NETSUITE

Have you ever wondered where your donation could have the most impact? GiveWell has now spent over 15 years researching charitable organizations and only directs funding to the highest impact opportunities they’ve found in global health and poverty alleviation. Make informed decisions about high-impact giving. If you’ve never donated through GiveWell before, you can have your donation matched up to $100 before the end of the year, or as long as matching funds last. To claim your match, go to givewell.org and pick “Podcast” and enter Econ 102 at checkout.

Daffy is the most modern and accessible donor-advised fund, making it easier to put money aside for charity. You can make your tax-deductible contributions all at once or set aside a little each week or month. And you don’t just have to donate cash, you can easily contribute stocks, ETFs, or crypto. Plus, you never have to track receipts from your donations again. It’s free to get started and Econ 102 listeners get $25 towards the charity of their choice. Daffy is offering Econ 102 listeners a free $25 for the charity of their choice when they join Daffy https://www.daffy.org/econ102

NetSuite has 25 years of providing financial software for all your business needs. More than 36,000 businesses have already upgraded to NetSuite by Oracle, gaining visibility and control over their financials, inventory, HR, eCommerce, and more. If you’re looking for an ERP platform head to NetSuite http://netsuite.com/102 and download your own customized KPI checklist.

--

Econ 102 is part of the Turpentine podcast network. Learn more: www.turpentine.co

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TIMESTAMPS:

(00:00) Episode Preview

(01:23) How this debate came about

(02:25) Why doesn’t The Economist have bylines?

(04:55) Chris Odendahl of The Economist’s article saying the focus on manufacturing policy is a delusion

(09:15) Is Korea the paragon of industrial policy?

(11:20) Overlooking military spending and the chip industry

(15:19) Industrial policy crucial for national security

(17:42) Sponsor: NetSuite

(18:45) Gish Gallop: https://en.wikipedia.org/wiki/Gish_gallop

(19:14) Complexity of policy implementation

(20:30) The exercise metaphor: multiple benefits

(29:34) Subsidies may not ensure resilience

(40:33) Balancing goals in geopolitics

(43:40) Carbon pricing

(51:45) Manufacturing jobs

(53:35) Leveraging local multipliers (agglomeration effects)

(1:00:56) Industrial policy can have multiple benefits

(1:03:02) Local multipliers benefit economic activity

(1:09:24) Need for rigorous economic analysis

(1:19:27) Determined optimism drives progress

(1:20:05) Friend-shoring is often highly preferable to reshoring

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TWITTER:

@birdyword (Mike)

@noahpinion (Noah)

@eriktorenberg (Erik)

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This show is produced by Turpentine: a network of podcasts, newsletters, and more, covering technology, business, and culture — all from the perspective of industry insiders and experts. We’re launching new shows every week, and we’re looking for industry-leading sponsors — if you think that might be you and your company, email us at [email protected].