Seattle venture capitalist and Democratic megadonor Nick Hanauer doesn’t fit neatly into pre-fab boxes. He’s a wildly successful tech investor who denounces tech moguls as “narcissistic sociopaths.” He’s a billionaire “class-traitor” (his term) who’s been sounding the alarm about what he sees as the dangerous obliviousness of the ultrarich to the resentment their class privilege engenders. He’s a proud capitalist who rails against neoliberalism and who developed and popularized the concept of “middle out” economics.
In short, Hanauer, a host of the popular Pitchfork Economics podcast (President Joe Biden was a recent guest), has strong opinions on lots of topics, including what ails blue cities, and why. In our wide ranging conversation with Nick for the latest BCB episode, Nick voices his frustrations with the seemingly intractable problems evident on the streets of blue cites: unsheltered homelessness, untreated mental illness, unchecked street disorder.
While he blames ideologically misguided governance in blue cities for not appropriately tackling these problems, he says the blame for their existence, and their daunting scale, lies elsewhere: with 50 years of neoliberal policies that have led to disinvestment in public priorities like institutions for the mentally ill or affordable housing. Policies he says Democratic elites – and in particular Barack Obama – and the party’s donor class have been complicit in. “That was Obama-ism to me: we’re going to put a good face on how much we care about the little people, but we’re really not going to do anything about it,” Nick tells us. “A kinder, gentler form of trickle down economics.”
Please send your feedback, guest and show ideas to bluecitypodcast@gmail.com
[00:00:11] Hello and welcome to the latest edition of Blue City Blues. I'm David Hyde with Sandeep Kaushik. Sandeep, how are you doing? I'm good, David. I'm good. It's sunny outside. It is. Our guest today, Nick Hanauer, is an entrepreneur, venture capitalist, civic activist, and a major supporter of progressive causes and author and host of the highly ranked Pitchfork Economics podcast. Nick Hanauer, thank you so much for joining us. Super happy to be with you guys.
[00:00:37] Nick, we basically launched this podcast just before President Trump's big win, and we've had a number of folks on. Timing's everything. Yeah, exactly. Yeah, it wasn't planned for him to win, that's for sure.
[00:00:52] We've had a number of folks on, all of whom are left of center, but many have had their criticisms of basically the current state of blue city governance, including Congressman Adam Smith, who says, you know, blue cities failing to get certain things right.
[00:01:09] Drug policy, homelessness policy, public safety isn't just bad for some of his constituents who live in big blue cities, but it's also bad for the Democratic Party brand and that that helps explain why Trump won. I know it's an argument that you've been following, and so one of the reasons we wanted to have you on was to just hear about it. Like, what do you think of Adam Smith's argument? Well, let's step back.
[00:01:35] It would be stupid not to acknowledge that, you know, the country is in a moment of political crisis. And, you know, it's simple and easy to blame Donald Trump for that, but I think that that's not a correct reading of the circumstance.
[00:01:55] The truth is that the political system in the United States, which includes Democrats, has profoundly let down the American people over the last 50 years. And, you know, inequality didn't get better under eight years of Obama. It got worse, right?
[00:02:15] And there is a lot for progressives to reckon with, for Democrats to reckon with, because we were the party of neoliberalism true. Like, being slightly less shitty doesn't make you good. And I just think that the soul-searching going on in the party right now is both appropriate and healthy. So that's, I think that that's important general context.
[00:02:42] The second thing I do think is true is that, you know, at the risk of probably alienating many, many left listeners, you know, I think there's a bunch of really stupid stuff about what Democrats stand for today. And one of them is making basically any identity group, you know, affirmatively worthy of support, no matter how much they damage the world and, you know, the social system.
[00:03:10] And we have managed as a society and to a certain extent as progressives, we have tied ourselves up in knots trying to protect the most vulnerable while forgetting about the other side, which is moving the society in general forward. And there's a lot of talk in the press about this stuff right now.
[00:03:34] But I also think, and I think it's very important to acknowledge, that most of the problems that we face, certainly in a blue city like Seattle, were not caused by the blue city. Like, you know, the homelessness crisis in big cities in America wasn't, you know, this homelessness crisis wasn't created by the Seattle City Council.
[00:04:03] This homelessness crisis was created by 50 years of neoliberalism, right? And many of the problems are beyond the scope and power of a group like the Seattle City Council to fix. So, Nick, it sounds like what I'm hearing you saying is, look, there are these larger societal, economic, political forces that have sort of driven, you know, the country over the last half a century, right?
[00:04:33] That neoliberalism, disinvestment, you know, the hollowing out of the social safety net, that really, that is a national problem. That is not a blue city's problem, right? Right. Okay. But that said, Nick, I know because you and I have had these conversations, you have frustrations at the sort of level of municipal governance about how we are, given that, you know, it may not be, you know,
[00:05:01] the Seattle City Council's fault that homelessness exists, but there's also, homelessness does exist and we need to try to do what we can to deal with it. And I know you have some frustrations that, you know, maybe we're not taking some of the right approaches here. And so, I'm not afraid of that. A hundred percent. A hundred percent. So, I just think it's important to be, two things can be true at once.
[00:05:25] You know, the Seattle City Council did not create the homelessness crisis in the United States and it could do a shit ton better to address the problem that we have. Those two things are both true. Yeah. Is that fair? Yeah. Yeah. You're saying we can have two thoughts in our head at the same time. I don't know. It is possible. I'm not sure we can handle that, but let's continue. Yeah.
[00:05:50] And so, you know, but by way of example that, you know, this idea that, you know, anything we do to regulate where homelessness people go is making poverty a crime. Whatever that refrain is from the far left. We're criminalizing homelessness. We're criminalizing poverty or whatever it is. Right. This is nuts.
[00:06:15] It's like, you know, that view taken to its logical extreme means you can't do anything about anything. Right. It's just not constructive. And I know the people who hold that view have in their hearts the right values and instincts. You know, they want the society to be better and to treat these people better. And they feel like a lot of the reason those people are there is because through no fault of their own.
[00:06:41] But the truth is that you can either have the kind of homelessness that we have or you can have a high-functioning city, but you can't have both. Right. Like, and I come down hard on the let's have a high-functioning city. And so that means you're going to have to make some tough choices about how you treat people and what you do with them.
[00:07:04] But, but again, when it comes to homelessness, and again, Hassan Deep, you and I have talked about this, I've become of the mind that the biggest part of the problem was the 50-year process of deinstitutionalization that the country went through.
[00:07:21] Because if we were still institutionalizing people in the way that we were in the 50s and 60s, 27,000 people in the state of Washington would be in institutions in long-term care. And, and today we have 1,500 beds.
[00:07:41] And, and so we didn't have homelessness 40 years ago because we had a place in between prison and the streets to take care of these people. And we, and we, and we abandoned that institution. Let's talk about this involuntary commitment issue because I know, as you were saying, Nick, you and I have talked about this, you're passionate about it. But this is something that we have been very interested in on the podcast.
[00:08:09] We did an episode with Freddie DeBoer, a very prominent substacker who himself has been involuntarily committed, who was, you know, and Freddie was basically saying progressives need to get real on, on the reality of untreated mental illness on the streets of big American cities. And that just saying that these people have personal autonomy and leaving them there to suffer and, and some cases to cause harm is not an answer and doesn't work.
[00:08:35] And, but, but, and, and I think as progressives, we should just accept the fact that that attitude that there are people too, and we should just leave them alone is that attitude came from us. Yeah. And that attitude has not helped. It has hurt. And that we're never going to make forward progress.
[00:08:57] And, and I would argue we are never going to secure durable political power if we maintain that attitude because the public is just not going to have it. That's right. And what was the line, David, that, that Freddie gave us that, you know, if we don't solve these problems ourselves, the, the fascists are going to do it. The strong men will do it for us. No, they, absolutely. Absolutely. They will. Absolutely. They will. And are at this point. Exactly.
[00:09:21] And with the public support and with the public support, because, you know, like having to step over some drooling, crazy person, you know, every day when you go to the office is just, it's intolerable. It's just intolerable. You know, we have to find a sane, logical, compassionate, relatively economically efficient way to solve this problem. And, and again, Cindy even have, and I have had some of these conversations.
[00:09:50] I've done some research independently, but I'm personally convinced that it wouldn't cost the state money to deal with this issue in a proactive way. We'd save half a billion dollars if we, if we, if we, if we took a more aggressive stance. Right. And we'd actually help people who are not being helped. Yes. Who are desperate to be helped, who are desperate to be helped.
[00:10:14] So anyway, I mean, I think that, I think that when we talk about progressive governance dysfunction, and there is some. Yeah. We both have to acknowledge that there's a lot that we do that's right. You know, obviously there's a, there's a reason that the richest, most dynamic, most innovative places on planet earth are now and have for a long time been governed by progressives.
[00:10:43] Right. Like it's, it's not like there's a few progressive cities. Basically every city in the country is progressive. Right. Right. And, and there has to be some connection between the fact that they're dynamic and prosperous and fast growing and they're governed by progressives. Like those two things are not disconnected.
[00:11:08] And there are some downsides to how we approach things and, and, and, and as well as the upsides. So if I, if I could get just a tiny bit technical on your podcast. Sure. To elucidate one of the tensions in this dynamic. That's what we live for. Yeah. Okay. So where does prosperity come from? Prosperity generally comes from innovation.
[00:11:37] Inventing, creating new solutions to human problems is what prosperity, and then distributing those solutions to human problems is where prosperity comes from. But innovation is the product of the combinatorial dynamics of density and diversity. That's where it comes from.
[00:11:57] Innovation comes when you have a ton of different kinds of people stuffed together in a place, interacting in a highly networked way to solve problems. And that is why cities for 3,500 years, that is why cities have been where all the action has been. Right.
[00:12:23] From, from, from, from the Sumerian civilization on everything, every innovation, every step forward for humanity has come from cities because of that mathematics of how innovation works. Diversity times density, basically. I'm oversimplifying, but you get the point.
[00:12:46] So if you want to have prosperity, you have to embrace diversity and density. And those are good things, but the opposite side of diversity is believing that we're all people, even, even, even, even drug addicted and insane homeless people are, are, are people too. And we should let them alone because they contribute. Do you see what I mean? Yes.
[00:13:10] If you flip the coin over, you end up with that view, which is sort of the logical extension of embracing diversity, of being super excited that there are restaurants from 200 different cultures that you can go to at any time of night in a place like Seattle, Washington. Right. True. Like, like, like killer that, like, if I want Somalian food, I can go get it. If I want Guatemalan food, if I can go get it.
[00:13:37] If I want, you know, like everything is available in a city because we embrace diversity and we're not like this sort of, you know, highly homogenous. Only this modality of being is okay. Kind of a place. Drug policy expert, Keith Humphreys, when we had him on, made a very similar point talking about Silicon Valley in San Francisco, basically saying that there's kind of an, interesting mixture there between progressivism and a type of libertarianism.
[00:14:06] And that some of that laissez-faire attitude is what makes that diversity possible. Kind of live and let live attitude. And that culturally, these are cities that embrace things like pot legalization or gay marriage sooner than other places. But the downside is, is that there was some confusion about, well, what do we do about folks who are living their best lives on the street with untreated mental illness or untreated drug addiction?
[00:14:34] And he's like, that's not really freedom. It's not the same kind of freedom. Okay. But it's easy to make the mistake to think that they are. Right. Yeah. Right. Isn't it? And so, so a lot of what we're dealing with is sort of the, you know, the, the, the downside of good modalities. Right. Or at least, you know, modalities of living that I, I think are good. Right.
[00:14:59] I definitely want to live in a, in a place where I can get any kind of food I want all the time. Right. I really groove on that. And I definitely want to live in a, in a city where people are really, really different. I love diversity. I, I, I welcome it. And part of the reason I do, of course, is that I'm so aware of how much that contributes to, to the dynamism and prosperity of the place I live. But you can take it too far.
[00:15:30] Right. Anything overdone can get tiresome. And I think to a certain extent, we have done that. You know, since you're, you're bringing up in some ways, the creative class tech economy argument, I know you were an early investor in Amazon. In fact, you know, Jeff Bezos personally.
[00:15:49] So we wanted to, at some point, ask you about the relationship between big tech and big blue cities that have a lot of tech jobs in them, like Seattle, San Francisco, but also New York. I mean, tons of cities, long list of cities. All the cities. Yeah. All the cities. Yeah. All the tech companies are in the cities. Yeah. Right. Why? Why? Why? Because it is impossible to have Google or Amazon in Euphreda. It's not possible.
[00:16:18] So the political question that I wanted to ask here, most tech leaders, still Democrats, became Democrats 20 years ago or whatever it is. But that relationship, as you know, has gotten pretty strained in recent years, as everybody knows who's seen what's happening in the White House. But also blue city leaders are less pro-tech than they were, say, back in the Barack Obama days. Yes. That's because Obama was such a neoliberal. He was like Reagan, but black.
[00:16:47] Let me hear about this. What's your perspective on somebody who's passionate about the problem of inequality but also understands the tech business and capitalism? Basically, why has the relationship become so strained? What should blue cities do differently, if anything? Kind of what's your relationship advice? Well, I mean, I think what's important to recognize is, again, the context. You zoom out.
[00:17:16] It's not that tech has just become a more important feature of our lives. It's that 50 years of neoliberalism have enabled, have both enabled and propelled an economic framework that has allowed tech to consolidate into these, you can't exactly call them monopolies.
[00:17:44] They're these giant hegemonic institutions that have enormous influence both politically and socially in our lives. And that's a relatively new phenomenon, right?
[00:17:58] You have to separate tech, technology, and innovation from the fact that Facebook, Apple, Amazon, Google are these giant, unstoppable, ungovernable entities, right? It didn't have to be that way. That's an artifact of neoliberal trade, not trade policy, but commerce policy, right?
[00:18:27] You didn't need to let Google buy YouTube. You didn't need to let Facebook buy Instagram. You didn't need to let Amazon dominate e-commerce. They get pissed if you don't, though. Okay. Well, but those were political choices that we made as a country because we bought the neoliberal nonsense. Well, they have a lot of economic and political power, though, and there's a cost to the Democratic Party pissing them off, right? Didn't. Yeah, right. I see what you say. They didn't. Believe me, I was there in the beginning. We had no power.
[00:18:57] Right. Right. We had no power. But it was a way of thinking about how the economy worked that led to this consolidation and the natural conflict that concentrated corporate power has with democracy, right? This is a very old story. We've been through this before, right, in the teens and 20s. Remember? Sure. Teddy Roosevelt busting up the trusts. I don't personally remember, but Sundeep, I think, does. Yeah.
[00:19:27] You have read about it. Right. Standard oil, sure. Yeah. Yeah. Yeah. Like, we've made this mistake before, and then we forgot those lessons, and now we're right back in the same boat, except they're not railroads. They're information companies. Right. Our gilded age is larded with technology. It's just the same damn thing done over again. So you have to, again, I think that it wouldn't matter. Like, today it's tech. Before, it was steel and railroads.
[00:19:56] But you have to separate tech from, again, I don't even know, from trusts. Yeah. From the structure, right? Yeah. And, you know, just like in the old days, the people that tend to run these companies are narcissistic sociopaths, right? In the way that John D. Rockefeller was, right? Yeah. Narcissistic sociopath. That sounds like Elon Musk. Yes. Oh, Elon Musk. Elon Musk. That's a whole nother.
[00:20:24] Sorry, I hate to bring it up, but did you read the story yesterday about his brides and his aspiration for his legion of children or whatever? I mean, it's just unbelievable. It's just so crazy. It's just so disgusting and crazy. But anyway, yeah. So, you know, in my opinion, one of the worst things about neoliberalism, about contemporary capitalism, is that it confers a strategic advantage on the worst people.
[00:20:54] Because the less you actually care about other people, about your customers, about the future, about your community, the more advantage you have in our system. And so you end up with the wrong kind of people at the top of most of these companies because they're the ones that absolutely, completely do not care about other people.
[00:21:15] And so you have this double whammy of incredible amounts of concentrated corporate power being helmed by people that, you know, you would not want around your children. So here we are. Yeah. And so, yes, here we are. And Nick, it sounds like what you're saying is, on the one hand, big tech needs big blue cities, right? The dynamism, the innovation, the diversity, the density. Sort of powers the intellectual, you know, ferment, right?
[00:21:45] That leads to advancement and technological change. It's the main ingredient. It's 90% of the ingredient of the innovation that they seek to do. It is impossible to do. But on the other hand, you're also saying there was a moment when we should have harnessed this new development in our economics and society and technological innovation and all that differently. But we didn't. Yes. And now these companies.
[00:22:13] Again, the point I wanted to make was that there's a difference between tech, just the technology industry writ large, and the corporate concentration shitshow that we have allowed to unfold in the tech industry. Right?
[00:22:34] That there is an alternative universe in which you have as much or more technology innovation in a society and way, way less corporate consolidation and conflict between concentrated corporate power and what's best for the society. And we, as a society, because of neoliberalism, made this terrible error of allowing these companies to consolidate. That was not necessary.
[00:23:03] It just – it was a policy choice. And it was the wrong policy choice. So what do we do about it now? Well, I mean, we are not going to do anything about it for as long as Donald Trump and the Republicans have power, I suspect. Although the Justice Department does appear to be pursuing their antitrust case against Facebook.
[00:23:27] And, you know, this has much less to do with how the Republicans feel about the society and much more about how Donald Trump feels about having other people with power in the society. But, you know, for our purpose, it probably doesn't make that much difference.
[00:23:43] But, you know, Lena Kahn and the FTC under the Biden – during the Biden administration was doing, you know, God's work in trying to deconsolidate some of our industries and certainly preventing a bad situation from getting worse. So I think that that strand of political and policy work is essential to a high-functioning society.
[00:24:08] And, by the way, if I may just get a little bit technical again, what is true at the company level is also true at the society level. The rate of innovation and prosperity is directly proportional to the number of diverse, robust competitors in a market.
[00:24:28] So if you wanted to have more prosperity and more innovation in any kind of tech industry, the less consolidated it is, the more likely the better it will be, both at generating more consumer choice, more innovation, but also more likely lower prices for consumers and higher wages for workers. So, you know, these are very, very important policy fights to have.
[00:24:57] Obviously, we're in a very odd and unfortunate political moment where you're not likely to have conversations like this. But that is the kind of thing that we need to do. I wonder if I could ask about housing policy because I'm not sure where you stand and what we've been talking about and you've been talking about. Innovation, dynamism, diversity, and another word you used is density.
[00:25:20] And as you well know, a lot of people who are progressive critics of neoliberalism, who are urbanists, say, you know what, one of the reasons why we've got such high housing costs in cities like Seattle and San Francisco and New York is that we aren't more like Houston, where they don't have, you know, I don't know exactly what their policies are, but they don't have restrictive single family zoning. They make it a lot easier to build.
[00:25:49] And so I'm just curious about this development where we have progressive urbanists who are critics of neoliberalism saying, in this instance, we should have been letting the free market do its thing, sort of econ 101, which sounds like neoliberalism to me. And honestly, I personally think that a version of sort of progressive, you could call it anti-neoliberalism is part of the reason why we created the problem that we're in right now.
[00:26:14] If we had just let free market capitalism do its thing and people build more, one aspect of the housing crisis would be better than it is now. So I'm curious what you think about that and how thorough a critic of neoliberalism you are, or are you a selective critic of neoliberalism? No, so I don't, I do not agree.
[00:26:38] So A, it is absolutely true that having an approach to housing, which excludes building it anywhere within 10 miles of where a rich person lives is not likely to lead to enough housing to house the people that you need to run the city, right?
[00:27:02] And so we have most definitely used zoning and environmental regulation to slow the rate at which we build density in places like downtown so that more people can afford to live there. So that is, that's a fact.
[00:27:24] But what's also a fact, I think, because I've seen data on it and there's a lot of emerging really interesting empirical evidence for it, is that it is not true that having no zoning automatically leads to low, you know, tons of housing and affordable housing.
[00:27:47] In fact, there's a lot of housing. That correlates to housing affordability most highly is just how many rich people there are around. And the other thing is, is that if you're in Texas where you have effectively an infinite amount of cheap land, you know, things are just easier, right? You can sprawl easier, so on and so forth.
[00:28:14] And I think that for my own part, Seattle isn't perfect, but I think the data suggests that density is growing in Seattle faster than any other major city in the country. So we are beginning to address this more effectively. But I absolutely believe that the neoliberal answer, just let the market do its magic and it all will be well, is categorically untrue.
[00:28:38] There is no living example of where you just let the market do whatever it wanted to do and housing is affordable. And in our scan, by our, I mean the team at Civic Ventures scan of housing policy globally, there is only one answer to this problem that people have tried that has worked.
[00:29:01] And it's sort of vernacularly known as the Vienna solution, which is you use public borrowed money to buy land and build huge amounts of workforce housing in good locations. And crucially, and then you rent it to people at the market rate, which is equal to whatever it costs to build and to defray that debt over a long term.
[00:29:29] But you keep it, and this is the critical part, you keep that housing in a public entity forever. In other words, it is owned by the public. It is not owned by a private developer. And you don't raise the rent any more than it costs to maintain the building and to defray that and to pay down the debt.
[00:29:51] And on day one, what you've done is you've used a, you've, you've mobilized a huge amount of capital to, but to build a lot of housing. But 20 years later, that housing is incredibly affordable because inflation has made it way, way, way cheaper. And in places like Singapore and Vienna, where they have taken this approach, they have tons of affordable housing. And, and, and where they have not taken that approach, there is, there is no affordable housing.
[00:30:19] And so the, the, the neoliberal answer is not the right answer. So as a matter of development policy, of course, we should make it easier to develop more density in our cities. And we should pay less attention to rich people who want to live in these like lovely areas where there are no poor people around and all they see is trees and other big fancy houses, right? You can't, you know, you have to have density, but it will never work to just let developers build whatever they want. However they want.
[00:30:49] That is also not the answer. Yeah. I mean, I, I, I'm not on, I'm, I don't, I don't debate on this podcast with our guests, but it seems like you're, you're creating kind of a false dichotomy here between the idea that, you know, sort of Anne Randian capitalists who believe that like the market automatically solves all problems. I mean, I, I don't know any Democrat in a blue city who, who thinks that way.
[00:31:14] Maybe there are some, but it seems like all Democrats believe in things like progressive taxation or they're not really Democrats to begin with. Yeah. So, you know, the alternatives aren't imagining the market solves all problems. It's simply like, Hey, here's the situation where the market, you know, we, we don't, there isn't enough public capital to build the amount of workforce housing we need in the greater Seattle area, the greatest San Francisco area, the greater New York area. There just isn't enough public funding to do it.
[00:31:43] And therefore, how can we unleash private money to help address the problem, you know, in the best possible way and be sort of pragmatic about it rather than kind of rigidly ideological where we say, well, look, I know I'm against neoliberalism. So therefore I have to be a thorough critic of neoliberalism in every instance. And, you know, I don't, I don't, I guess my question is, I don't also, it's both end. Yeah. That's what I'm asking. It's both end. Right. Okay.
[00:32:11] A, it's stupid to have zoning policy that doesn't allow you to build housing anywhere near the center of the city. Right. Let's, let's, let's agree with that. And that, and that we should make that available to private developers to do. True. I'm with you. Right. Is that neoliberalism? I'm not sure that's neoliberalism. That's just like how markets work. B, will that solve the problem?
[00:32:39] And I think the answer is categorically no. That will not solve the problem. I think the answer is in part, it'll help solve the problem. It will make it incrementally better, but it won't solve the problem. I think in 20 years you'll be in exactly the same boat. Because there's too much money. Yes. Yeah. And because, and because rich people bid up the price of everything. Right. I think nothing's going to solve that problem. But anyway. But, but I don't agree. I don't agree. And I also. Other than, other than better tax policies. No, but other than.
[00:33:07] I think, I think you under, underestimate how much, how much public money you can mobilize. Yeah. You can mobilize tens of billions of dollars of public money. And on a revolving basis over 20 years, a hundred billion dollars worth of public money. Because you're building assets that are collateralized by the, by the flows of rent that come from the people who, who, who rent those.
[00:33:32] So you, you can effectively build an infinite amount of social housing using, using, using these techniques. And again, on day one, does it solve the problem? No, absolutely not. 20 years later, you have a stock, you have a stock of publicly owned housing that crucially is large enough to put a huge amount of downward pressure on the private market. So that's the trick too. Right. Right.
[00:33:59] So you have 50,000 apartments that, that are being rented at half of what the private market would like to charge. The private market struggles to, to charge those, that amount. Yes. Yeah. Let's, let's be, because as I'm listening to the, the, and, and as we've been talking in this conversation, I feel like there's an issue that keeps cropping up and we're kind of dancing around it, which is the issue of, of class and inequality. Right.
[00:34:27] And I know Nick, this is one of your top concerns. You're one of the loudest voices saying the, speaking out about the dangers of rampant inequality in our society. I think, I think, I think we're at the point where I can, where we can safely say I was right. Right. Right. Right. And, and, and one of the themes that's come up on our podcast as, as we're having these conversations is, you know, where did we kind of recreate class in America? Right. Right.
[00:34:52] It wasn't out in the, you know, hinterlands that are being hollowed out by neoliberalism and, you know, their economies are sinking and their people are migrating, you know, out of these dying towns and, you know, post-industrial America or whatever. It's, it's, it's a lot of this has been happened, has been happening in blue city. A hundred percent. That's where all the rich people live. Yeah. Right. Right. So, so yeah.
[00:35:17] So talk about that, about your thinking about that a little bit and, and, and, and, and what the downstream implications of that are for us as blue city residents. Like, you know. The implications of that are a neo feudalist authoritarian regime, which, which is what we're headed towards. Yeah. That's kind of grim, but I, I, I, I, have you guys been reading the papers? I don't know. Yeah. Yeah.
[00:35:47] Yeah. If only it were neo authoritarian. Well, it's neo feudalist authoritarianism. Yeah. It, it, I mean, you know, I, I, that's blunt, but I, I pretty sure I agree with that. Right. I mean, I mean the, the whole discourse on the right about sort of progressive elitism is about class in blue cities. Of course. You know, and, and how the ruling class has sort of lost touch with the, you know, I mean, with all the problems on the democratic side tie back to that. Yeah.
[00:36:17] No, for sure. I mean, you know, like, you know, I'm in this world of like, I hang out with a lot of rich people, you know, and some of the richest people in the world. And, you know, I've been talking about this inequality thing for a really long time. And in the beginning, of course, it just made people angry. But after a while, people were like, yeah, we kind of got to do this. And I cannot tell you how many meetings I've had with rich people where they're, they're a hundred percent with me.
[00:36:46] Democrats, by the way, Democrats on like the middle class and how we have to like restore it. And then I started talking about what, what it will take to do that. And they're like, whoa, whoa, whoa, whoa, whoa, whoa, whoa. You know, pay more tax. Yeah. Pay people more. Surely you just, right. So there's this. I'm with you in theory, Nick. I don't actually. Exactly.
[00:37:11] So, you know, there's this whole class of wealthy Democrats who just circling back to one of my favorite things about living in a city, you know, most definitely want to live in a city where like every kind of food is available at all times. And there's great theater and blah, blah, blah, blah, blah, you know, and they're all for the gays and the blacks and blah, blah, blah. But, you know, they want to continue to exploit the little people too. Right. That was Obamaism to me.
[00:37:41] It was like, we're going to treat, you know, we're, we're going to put a good face on like, you know, on how much we care about the little people, but we're really not going to do anything about it. Right. Like you, you will recall that the, the most Obama would call for raising the minimum wage was $10 and 10 cents. He thought that was a stretch. And he fumbled financial reform, right. There was a window, right. When he came in. No, he could have done, he could have done these things. Right.
[00:38:07] Like he was the classic instantiation of, of, of democratic neoliberalism is yeah. We're all for marriage equality. You know, like we're all for pot legalization, but most definitely not for eliminating stock buybacks. Yeah. Cause that would be quote unquote bad for the economy. Right. Like that. And that, and, and, and as Democrats, we have to own that.
[00:38:34] That's part of the reason we're in this boat is that Obama form of democratic governance. You know, it's kinder, gentler form of trickle down economics. Well, it seems like one of the, the flip side of that, that we're seeing right now. I mean, speaking of reading the papers, the white house now talking about taxing the rich to some extent, raising the top tax bracket up to from 37 to 40% for incomes over a million bucks.
[00:39:03] It's not at all clear that that's what's going to happen, but there is a way in which this Republican party or elements within this Republican party are starting to think about seriously. How can they make a play for a multiracial working class through trade policies, possibly through different forms of unionization. Now this issue of taxing the rich.
[00:39:26] And it sort of feels like those kinds of neoliberal policies suggest the democratic party has been asleep at the wheel. And I, you know, just how worried should Democrats be that Republicans are starting to make these, well, starting to make them. I mean, you know, Trump won in making some of these moves and starting to make more of them. No, dude, don't get me started. We want to get you started.
[00:39:51] No, I mean, you know, like, look, like you have no idea how hard I tried to get the democratic party to get behind a $25 minimum wage over the last couple of years. I kid you not, Civic Ventures, my team, was the only voice pushing the labor department to raise the overtime threshold to $90,000 a year. Like, did we miss the boat? Absolutely.
[00:40:21] Absolutely. The most important socioeconomic fact of our time is this, that the median full-time worker in America today earns about $60,000 a year. If they had maintained their same share of GDP since 1975, instead of earning $60,000, they'd earn $120,000, right?
[00:40:44] If you are a median worker, 50% of your income over the last 30 or 40 years has been stolen from you. And that is the, it amounts to about $80 trillion since 1975. It's about $3.5 trillion a year incrementally that used to flow to the bottom 90% of workers and now flows to the top 1%. That is the scale of the problem.
[00:41:10] So you don't fix that problem by raising the minimum wage from $7.25 to $10.10. You fix that problem by raising the minimum wage from $7.25 to $25. And the reason that everybody in the country is so pissed and wants to burn the place down is because of that problem, even if they cannot articulate the numbers in the way that I just have. Right.
[00:41:34] And I have begged, every senator that you can name, begged the White House to start to express the problem in those terms and they just look at their shoes. Nobody, like it's too scary, right? It's too big. But that's, that's where we're at. That's why, that's why the country is burning down.
[00:41:58] You cannot expect people, people's political, social, cultural values to converge if their economic fortunes are diverging in the way that they have over the last 40 or 50 years. And so, yeah, the Democratic Party has failed. Big. Bigly. Right. And you could, and as you're saying, you're in these rooms, right? I mean, Joe Biden was on your podcast while you're president, right? You're talking to the president.
[00:42:27] You're talking, you're in the rooms with the big donors, right? Who are yourself a major, major donor. And what, it sounds like what you're telling me is there's a lot of people that on some intellectual level agree with you, right? You know, they're like, Nick, I hear you. That's right. We, we have failed the working class, but they're not willing to take the next step. Correct. And, you know, most of the big donors don't give a crap about this. Okay. Right. Right. Explain that.
[00:42:56] What is the mindset of the people? Yeah. You know, the big donors care about climate. You know, climate is a favorite for really big donors. And one of the reasons that the big donors like climate is it doesn't involve any trade-offs for them. Right. Right. Like, explain that, explain that, explain that. I mean, you don't have to raise, you don't have to double your employees' wages to deal with climate, right? Like. Yeah. You just get to be the beneficent donor. Yes. Who cares about the future and blah, blah, blah, blah, blah, blah. Right.
[00:43:26] Like, you know, if you care a lot about LBGQ, you know, like there's no trade-offs. There's no negative trade-offs for any of these other issues. But as far as I know, I'm the only big donor who cares about this stuff. You know, like it just, it just, it's too painful for people to admit that there's something that there might have to change in order for the society to get better off.
[00:43:56] And so there's not a lot of pressure from donors in the party to address this issue at the scale at which it needs to be addressed. And, you know, and then another layer, of course, is the economic orthodoxy, right?
[00:44:13] That's the other terrible thing that happened to the country is that this neoclassical economic, neoliberal intellectual framework brainwashed everybody into believing that, among other things, if you raise wages, it'll kill jobs and tax cuts for the rich create growth and all this other crap, right? But you have to remember that until 15 years ago, people, like almost everybody believed that. Like if you went and had a meeting with the Democratic Center and said, we should raise the minimum wage, they'd be like, well, we can't do that.
[00:44:42] It'll kill jobs. So, you know, if you believe, if you believe that stuff, you cannot help people. You can't. There's no, there's no, there's no, there's no room to move. And so, again, here we are. Yeah. Here we are. It's a lot easier for rich people to talk about trans rights than it is to talk about raising the minimum wage. It is. It is. It is. Because, you know, you don't have to make an adjustment if trans people get rights if you're rich.
[00:45:13] You may have to make a pretty big adjustment if the minimum wage goes up $25 an hour. So there you have it. Yeah. Nick Hanauer, thank you so much for joining us. You're welcome. It's fun to be here. That's it for another edition of Blue City Blues. I'm David Hyde with Sandeep Kaushik. Our editor is Quinn Waller. And thanks, everybody, so much for listening.