Talk Your Book: Derek Thompson Feels Like He's Taking Crazy Pills

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0:44Welcome to Animal Spirits, a show about markets, life, and investing. Join Michael Batnick and Ben Carlson as they talk about what they're reading, writing, and watching. All opinions expressed by Michael and Ben are solely their own opinion and do not reflect the opinion of Ritholtz Wealth Management. This podcast is for informational purposes only and should not be relied upon for any investment decisions. Clients of Ritholtz Wealth Management may maintain positions in the securities discussed in this podcast.

1:14Derek Thompson, welcome to Animal Spirits. Hey, great to be here. All right. For our audience who might not be as online as the average citizen and doesn't know Abundance, the book that you wrote with Ezra Klein, what is Abundance? But hold on. There's a second part of the question. Is this book now completely useless given the change in the administrative policies, or is it more important than ever? So Abundance is a book that I wrote with Ezra Klein. It's a book that we wrote between 2023 and 2024, before we knew the outcome of the 2024 elections. That begins to answer the second part of your question.

1:47But to fill out the first part, you know, I wrote this article a few years ago about what I call the abundance agenda, saying that one of the biggest problems of American politics and economics is that we weren't building enough of what we need, whether it was vaccines and masks and COVID tests during the pandemic or houses and clean energy after the pandemic or infrastructure, transit, not even finding ways to add enough doctors to the medical system. And I said, in order to solve all of these scarcities across housing and energy and medicine, we need an abundance agenda. So that was sort of my tributary leading into the Delta.

2:21And then on Ezra's part, he had written really beautifully about this concept that he called supply-side progressivism, basically saying that for the last 50 years, the Democratic Party, liberals in America have been very good at focusing on the demand side of the ledger, at raising taxes and spending that money to reduce poverty or to help people afford, you know, get vouchers for housing or for food. And that's wonderful. But demand side progressivism needed a component that he called supply side progressivism. We can't just give people vouchers to buy housing. We need to actually build housing.

2:52Because if we don't, if we just give people to buy a house and the stock of housing remains static, well, prices are just going to shoot through the roof. And in fact, not just because of housing vouchers, but for a lot of reasons, housing prices have absolutely soared in New York and Los Angeles and San Francisco and Seattle and many, many places that are governed by Democrats, in part because I think liberals have fallen out of touch with the need to build, to build, whether it's housing, energy, or other pieces of infrastructure. And so when we pulled these ideas together, Ezra's supply side progressivism and my concept of an abundance agenda, the outcome was this book, Abundance.

3:28And I would say, you know, Ezra and I had this like debate, maybe going back into the fall or summer of last year, where we were wondering, like, was there outside of the fact that we were in our own way rooting for Kamala Harris to win, in what world did this book most make sense? And I thought that this book most made sense for a world where Kamala Harris was the president, which is not a world, obviously, that we live in. I thought that this book was attempting to be agenda shaping. We're trying to take the soft clay of a new democratic administration and mold it to our purposes. And, you know, Ezra was leaving space for the possibility that, no, actually, that might be totally wrong, that if Donald Trump wins, the Democratic Party will find itself totally in the wilderness.

4:11And in fact, where are we right now? 27 % of Americans have a positive approval rating for the Democratic Party. That is a brand that polls 33 % worse than the Trump tariffs, right? I think according to the Harvard Youth Poll that came out just this week, Donald Trump's approval rating among Americans under 30 is 33%. Democrats in Congress have an approval rating of 23%. Like literally nothing in the world that you can poll, polls worse than Democratic Party. Even Nico Harris is more popular. Nico Harrison polls at 24%. So even if the margin of error is a little bit fuzzy, they did not poll Nico Harrison.

4:51But he, of course, deserves to be as underwater as anybody. The point is, there's a moment right now where there's a clearing in the forest. And people are trying to define the Democratic Party, trying to define the non-Trump movement. And there's an anti-oligarchy world, and there's a antitrust world. And there are other questions and other axes along which liberals are trying to define the future of their movement. But abundance is one of them. And it's been really, it's honestly been nothing less than a beautiful honor to see how many people have read the book and argued with it and taken it seriously and thought about how a new liberal movement can be defined around this concept of building and inventing more of what we need.

5:34So I've never been a political person. I've never had a political party or affiliation. and I feel like every time I bring up, why don't we have a third party? Someone in the political sphere looks at me like I'm an idiot saying, it's impossible, you can't have that. Like, would you care if someone in a, say, I'm not a Republican, I'm not a Democrat, I'm taking the abundance agenda. This one party is inept and they wrap you in red tape like a mummy and this other party is ignorant and just wants to beat the other team and destroy stuff. Like, I don't like either of those parties. I want this other thing that takes a little from here and a little from here and maybe some more common sense.

6:06Is it just impossible? Like, why can't we get to that? Isn't this the perfect time for something like that to happen? It certainly seems like this is the perfect time. You look at how far the institutional trust has fallen in this country in the last decade, how much people hate the establishment, how much they hate the status quo, how much even people who follow politics closely are often loathed to define themselves as belonging to either of the named brands. If you look at a graph over the last 10 years, the number of people who say they're independents, it's just grown and grown and grown.

6:39Even if many of those independents are, I will never vote for Republicans independent, or I will never vote for Democrats independent, which means in the de facto two party state, you are a Republican or you are a Democrat, right? So clearly, I would say there's all sorts of reasons to suggest that you're absolutely right, that we've never had a better time to start a successful third party in America. That said, I do not believe that a third party has a good chance of winning the 2020 election at all. Um, this is in part because of party infrastructure and it's in part because recent American history or even long American history demonstrates that it's unbelievably difficult to win 30, 40 % of the vote as an independent candidate.

7:27There's simply too much party infrastructure and too many people who identify as always voting for Democratic or Republican parties for a third party to nudge in there and say, I am so different from both parties that you have to vote for me, even considering the fact that it is so unlikely that your vote actually counts because no one running in my position has ever won before. Ross Perot is underrated. Just the fact that he – for how much vote he got, it's kind of unbelievable that it actually happened. It is. Going back to like 1991, it's like I can't, 1992, it's unbelievable how well Ross Perot did.

8:00And to be honest, I'm not even sure I properly understand the Ross Perot phenomenon well enough to explain how Perotism would thrive in 2028. But let me just say - You need Danny Carvey. It's true. I was thinking that. Yeah, you need to brush him off. I will say this, though. Like, there's a way in which we do have a third party in this country. It's MAGA. And it killed and ate the Republican Party, which no longer exists. Like, one potted history that I sometimes tell is that in 2015, there were not two parties in America. There were four. MAGA was one party. The Romney Republican wing was another party.

8:45The Obama-Biden-Clinton wing of the Democratic Party was its own party. And the Bernie wing was its own party. There were four parties. And what happened is neither party took over, successfully took over the Democratic Party. There's still a war between left and center left. War is too strong, but there's still a tug of war between left and center left. But on the right, the war is over, right? Trump killed, skinned the Romney Republican Party and is wearing it as a hat right now. It doesn't exist. And if you're a Romney Republican, you don't really have a home in many cases. And there's a way in which I've been really even surprised by how many people who I would absolutely identify as center-right who have kind of thrilled to the idea of abundance, not because we pitched it toward the center-right.

9:30We didn't. We're two liberals writing for liberals. But because I think they recognize that, oh, this is like a pro-growth agenda that believes in economic growth, that believes in science and technology. and doesn't have certifiably insane ideas about global trade, yeah, I could get down with that. And so maybe the future of the Democratic Party is to grow in that direction while trying to keep hold, I think, of the left, which is a very important part of that coalition. But maybe the answer to the question is that Donald Trump is the first third party candidate to win in American history. He just flies under the banner of the Republican Party.

10:00So I, like Ben, am not a political person in the sense that I don't know any Congress people. Like, I don't know, oh, that person in Pennsylvania. I don't know who you're talking about. I don't follow politics like that. But I think and I understand that there are challenges with the Electoral College and how our voting system works. But for a lot of people that had traditionally voted Democrat, they would say, oh, my God, I'd vote for Mitt Romney in a second. And the point that you just made about people in the moderate right, which is the majority of the country, the moderates, like most people are normal.

10:28Most people are like closer to the center. I was going to ask, like, would the abundance mindset, and I know you just answered it, resonate with a lot of the moderate right? And it sounds like the answer is yes. Why wouldn't it? Well, I think it would, and I think it does. The open question is how many of those folks are there? And I'm not sure I really know the answer. You look at Donald Trump's approval rating within the Republican Party. If there were a huge number of people voting for Donald Trump that considered themselves fundamentally Romney conservatives, you would have a relatively low approval rating for Trump within his own party.

11:02It's not crashing at all. Instead, it's like, I don't know what it is. I saw 44 % last night. Well, sorry, that's Trump's overall approval rating. I'm saying it's approval rating within the Republican Party, among people who voted for him. And I'll bet you it's something between 90 % and 100 % right now. I bet it's overwhelmingly positive. Trump has succeeded in monopolizing Republican vote in this country. And not just the vote share, but also power, right? Identity, Derek. It's more than that. It's identity. Like there are a lot of comments and emails for people that are defending indefensible policies and antics.

11:38And I don't care to engage, but it's like, I'm not mad at you for voting for Trump. I understand why you felt betrayed and allergic to the Democratic Party. You don't need to defend these actions that are indefensible, but it's become he's overtaken people's entire identities, which is wild. I totally agree with that. And I've been trying to figure out an interesting way of framing this idea that some ideologies give people a new set of thoughts and some ideologies give people an entire personality, right? Isn't it interesting how when people become MAGA, when they become Trump fans, how it's somehow like, it sometimes even seems to like change, like how they deal with certain economic realities or how they deal with news or how they deal with information that they don't agree with.

12:34they become more strident, they become more likely to call things entirely fake if they don't fit their priors. It's interesting, it's almost as if when you put on a Halloween costume, when it's Halloween, you dress up like a werewolf or a vampire or something. You start to act more like a werewolf or a vampire, you begin to allow that costume to infect your persona and the way that you behave. It is so interesting to me how successful Trumpism has become at being a persona changing ideology. Because not all ideologies are like that. I think he's an absolutely sensationally interesting figure because of the effect that he has, as you said, on people's identities and even people's personalities.

13:17It's just so interesting. And you see this really, I'd love to throw this question back at you. Don't you see this in the finance realm? Like folks who like three, four years ago were like dealing with economic reports from like the Philly or Texas manufacturing survey in a totally reasonable way. They'd be like, yeah, wow, it sounds like this policy really drove down manufacturing activity. Maybe the policy is bad for manufacturing. And they don't have the ability to see that anymore. Like what, how do you think about this? You were on CNBC and you, this is a great segue. You were like apoplectic from the Republican voters.

13:49You're like, what are you saying? What am I hearing? When did this party turn into protectionist? The tariffs are good. Like, what world are we living in? That was your crazy appeals moment too, by the way. We all watched it. I think I watched it live. And someone, one of the hedge fund managers was saying, maybe if the economy crashed and housing prices went down and stock prices went down, this would be a good thing. And you came on and you said, I can't believe what I'm hearing right now. I am curious, just what was the fallout from that or how much support did you get? Because I watched it too.

14:20And I thought the same thing. Like, what are we doing here? So let me tell you, let me walk you back I can tell you like how that whole thing happened and then tell you about the fallout. Right. So I came back from book tour, um, about two hours before that segment. And I was sitting right here. I mean, I barely dropped my suitcase off upstairs, my backpack off upstairs. I, I like, you know, ran a comb through my hair. I changed my suit. And then I came down here and I sat. And as you guys know, cause you guys do TV sometimes, like you're sitting in this like green room and the, the producer is like this virtual green room.

14:51Um, and this producer was like, Hey, move your camera a little bit to the left, move it to the right. Can you like tilt down your camera lens? And as they're telling you this, you can hear the segment that's ongoing before your segment, right? So I believe, I don't want to slander anybody. I think it was Kyle Bass. It was. As the producer is talking in my ear about how to set up my shot perfectly, I'm listening to this interview that Kelly and Sully are doing with Kyle Bass. And this dude is like, yeah, the stock market's going to fall, but like, is that so bad? You know, some folks really want to buy in at lower prices.

15:20And yeah, we're going to see, you know, a little bit of a housing correction and maybe housing prices will go down a lot, but that'll just make it easier for people to buy homes. And yeah, it looks like, you know, the economic activity might fall off a bit, but you know, we could use a reset in this country. There's all sorts of things that people understand aren't working well in the economy. And it was, it all sounded, he had like a sort of a beautiful, low, like mellifluous voice. And he was talking very calmly. And I'm not a particularly calm talker. And I, so I, I respect people who have that effect on, on others that they're, the mere sound of their voice can sort of lull them into a sense that all of this makes sense.

15:51And as the producer's talking to me, I'm like, this makes no f***ing sense. Like, how are Kelly and Sully not losing their f***ing minds? This guy is saying, the stock market's crashing and that's good. The housing market's going down and that's good. We're going to have a recession and that's good. All this is working out for 24-year-olds. And I literally was, I was having like a slow aneurysm and maybe I was just really cranky from coming back from, you know, a bunch of flights that were canceled and a long itinerary that kept me from home. You were Mugatu. You're like, I feel like I'm taking crazy pills.

16:19I literally, I was typing a note onto my computer right here. I was typing a little note. And the first sentence was, I cannot f***ing believe what I'm hearing. And then I deleted f***ing because I was like, I don't think I can say that on CNBC. And I'm not trying to go viral for sure for all the wrong reasons. But the other opening sentence that occurred to me to write down in the note that I wanted to deliver and sort of like an opening response was, I feel like I'm taking crazy pills here. I feel like I'm being punked and this is an attempt to get me to agree to the idea that a crashing stocking market and a crashing housing market and a crashing economy are all good because we really care about our 25-year-olds who need to buy a house in three years.

16:58And we just have to organize the economy around this very particular niche that isn't actually well organized for. So anyway, I lost my mind. I had a blackout moment. I was really upset. I was also like, I really like Kelly. I think we've always had a perfectly fine, I don't know her that well, but like I have nothing against her. But her follow-up question to me, I just thought was also a little strange. It was like, Derek, isn't Kyle Bass's point that we need the market to crash to reset housing values? Isn't this your argument that, you know, homes are too expensive in America and we need to make them cheaper?

17:32And it was just like, there's a huge difference between one strategy of crashing the economy to make houses in Los Angeles cheaper and saying, we need more houses in Los Angeles. So let's build more houses in Los Angeles. Like, I really felt pained by how the possible message of this book could be misinterpreted through the lens of wishing for a recession. So yeah, I had a mental breakdown right here sitting in this seat. And it turns out that there were enough people who were also having mental breakdowns that they could sort of like get on my breakdown wavelength. And we all we all broke down together.

18:05So that's the story of what happened. So the one like big overarching question I ask you is and Michael has been getting after me lately, because I've never been negative before, really. I've always been a glasses at full optimistic, positive person. I always look for the silver lining. And Michael keeps roasting me because he says I've never been so negative I have in the past like month. Because I don't know, I don't want to say that you say that. I'm sorry, don't want to burn down the system. That's, call me crazy. But I, the thing I like about your book is that it's, it's an optimistic message, right?

18:35It's not one of doom and gloom. And do you think that America is ready for an optimistic message? Cause I, I'm, my concern is that the negativity thing sells so well to people these days, especially in the social media era, that I'm concerned that an optimistic message is going to have a hard time breaking through. Do you think I'm wrong. There were a lot of things in that question that I want to tease out because I totally understand where you're coming from. Let me start by questioning this aspect of the premise. I honestly was worried as the book was coming out that one thing people were going to say was, your book is too critical.

19:15It's not optimistic enough. We open with a kind of sci-fi vignette of what the world might look like in 2050 if we get everything right. And we closed the book with a conclusion that I'll speak personally. Ezra and I absolutely co-wrote this conclusion. So these are not all my words, but I was very pleased by how sort of rousing aspects of the conclusion were, how we were talking about this idea that there are these waves in American history called political orders. And once every 50 years or so, there's a time for new political order and the time might be ripe for something like the order of abundance to define the next half century of American life.

19:53So it was bookended with optimism. But I was worried that the chapters themselves were going to be too much of a bummer. Like our housing chapter is all about the ways that rules and regulations and sometimes really nitty gritty technocratic stuff, you know, zoning laws and permitting and environmental assessments get in the way of adding the housing supply and the places where there's the most demand. And then the environmental chapter, I think there's like a bit of mourning about the fact that Ezra and I believe very deeply in climate change and think that we're utterly failing in our ability to build commensurate to the challenge.

20:24And then the governance chapter, which is the next chapter, is all about how governance fails. And the science chapter is about how so much scientific funding we think is, or scientific bureaucracy we think is wasted. And the technology chapter is then about all the ways that America sometimes invents but fails to build what we invent. I was worried that we were being too critical. So that's one way of saying that abundance wears two faces or wears two masks. That's my glass half whole thing. I chose to look at that hopefully. And I love that. And you're not alone. I've honestly been deeply as look as a pathologically agreeable person myself.

20:53I've been really gratified how many people have read the book and said, it's optimistic. It's inspiring. I want, I don't want to write books that aren't optimistic or inspiring. Why spend years of your life working on a project that makes people feel like shit. That doesn't seem like a, there's enough reasons to feel like shit. I don't want to add a cultural product that's just like, hey, feel like more shit. When you say, is abundance too optimistic to thrive in a cultural and political climate that is too demanding of negativity, I would say, we wrote a book that's plenty negative. We wrote a book that's incredibly mean and negative about the state of California and the state of liberal governance and the fact that liberals can't build the places they have the most power and the fact that in California, when the progressive share of a city rises by 10%.

21:37The number of houses they permit declined by 30%. Like on the left, a lot of people have read this book and said, you're way too mean to liberals, right? So one way I take your question is like, what role does this book serve politically in 2026 or 2028? And let me, let me, let me submit this theory. Like I said before, we live in a world that hates the establishment and hates the status quo and every institution is losing popularity. The left has always been able to run against the Democratic Party. And the MAGA right was very successful by running against the Republican Party. Trump did this beautifully, right?

22:15He literally ran against John McCain and the Bush administrations. One challenge for the center left is that sometimes we think of ourselves as the establishment. We've got all the college degrees. We're all the lawyers, right? We like, we are the institution. And so we're sometimes loath to criticize institutions. And one thing I think abundance does is it gives moderates a permission structure to run against the system, right? This is our way of allowing moderates who don't want to destroy the system to run as reformers with a clearly, with a message that is clearly antagonistic to the status quo.

22:58Shit isn't working, right? And that I think is a message that could absolutely be taken up by the right politician in 2026 and 2028. Derek, on your Plain English podcast by The Ringer Network, which occupies probably 97 % of my podcast listening, you did four episodes on the trade war and the history of the Smoot Hawley tariff and what's going to happen with China and all of this good stuff. And you've got one today that's a little bit different. An astrophysicist explains the strongest evidence yet of alien life. I don't need to comment on that. I just thought it was hilarious. I wanted to just drop that in there.