Um, so now I wanted to turn to the topic of market humanism and your forthcoming book titled "Markets Built for Humans." What is market humanism, and why do you think we need it?

Yeah.

So if, if we step back to look at the, you know, the bigger picture, um, uh, e- economies are, are, you know, they're not like physical systems.

They're not governed necessarily by the, or con- by the laws of physics.

They're human constructions.

You know, they're made out of ideas.

Um, and as such, they evolve and change over time.

So Eric, how does market humanism change your thinking on policy?

So could you just go into that a bit more?

Yeah, so, you know, many people will be familiar with this idea out of economics that people are these kind of hyper individualistic, you know, rational, farsighted and perfectly kind of selfish creatures trying to maximize their what economists call, you know, utility.

And those ideas actually come not from science, but from philosophy, you know, going back into the 19th and 18th century, notably a philosopher named Jeremy Bentham.

And it actually turns out it's kind of pure speculation.

You know, he literally sort of thought, sat in an armchair and, you know, said, oh, you know, I think humans are these kind of pleasure machines that are making these calculations, you know, about pleasure and pain and trading off these things.

And, you know, the reason why economists latched on to that was because in the early days of economics, when it was getting mathematicized, it was easy to write equations to describe that because it's such a simple model.

But there was no evidence that actually people behave this way.

Now, the second revolution you talk about actually probably goes to the heart of market dominance and neoliberalism, which is this idea that markets are super efficient allocators, whereas you have a different view or the research now actually contends something else.

I mean, some of the ideas that you're talking about in this book reflect changing understandings in the economic profession itself about, you know, economists have changed their views on the minimum wage, for instance, as more evidence has come in.

Yes, exactly.

You know, in the 1990s, when the first kind of really careful, controlled analyses of impacts of the minimum wage in the real world were done, people literally couldn't believe the results.

And they were heavily criticized.

And in the Nobel Prize, economist James Buchanan even wrote a letter to The Wall Street Journal calling any economists that accepted these results, camp following whores, if you can believe it.

Yeah, that's how visceral the reaction was.

But yeah, the economists doing the empirical work kind of carried on and they addressed the questions about the studies and did more studies and more studies and more studies and they kept getting the same results that basically the minimum wage has no, real negative impact on jobs, but has significant positive impacts on the wages of low income workers, not just those on the minimum wage, but it also transfers up to other low wage workers.

Could you explain what you mean by

Eric, what led you to this intuition?

Yeah.

Yeah.

Well, I think, you know, for me, it was a collision between, uh, what I'd learned from economic theory, uh, from my studies, and then what I saw in reality, uh, both working in the, in the tech sector, in venture capital, and then at McKinsey, uh, for 18 years.You know, the theory talked about efficient markets and rational actors and, you know, I'd never met a rational actor or saw an efficient market, uh, in, in all my time, uh, uh, uh, there.

Uh, and at the same time, the theory said that, you know, by, you know, boosting productivity and keeping wages down and shoveling the difference between those back to shareholders, that that would sort of trickle down and benefit everybody in the economy.

Um, and I was pretty good at my job of raising productivity and shoveling those, uh, gains to shareholders, um, but, uh, wasn't seeing, you know, the, uh, the, the results of trickle-down.

In fact, seeing the opposite, where more and more, you know, people, just normal working people were struggling, uh, to make end, ends meet and, and have a, a, you know, a decent, uh, sustainable life.

Uh, Eric, you've already kind of alluded to this, but what are the exact mechanisms in the current economic paradigm that make it inevitable that the rich get richer and the poor get poorer, as Nick just said? Like, what are the specific, not even so much policies, but, you know, the natural forces within the current paradigm that are, you know, forcing this outcome?