Capitalisn’t: 2026 Midterms—Promises Versus Economics

Episode Transcript

Luigi Zingales: We are, in my view, in a phase of what Gramsci called interregnum, when the old models are dead, and the new models have not been born yet.

Bethany McLean: Right now, only about one in five Americans thinks the economy is in good shape, and voters are almost evenly split over which party they trust to fix it. Every politician has a diagnosis. If you ask Democrats, the problem is tariffs, healthcare, and corporate price gouging. If you ask Republicans, we need more deregulation and tax deductions. If you ask the left, it's billionaires and monopolies. Some on the right might say that too.

Luigi Zingales: Everyone else is covering the midterms like a sport match, who is winning, who is losing, who has the most money. We wanted to ask the economic and political economy questions that can get lost in all the noise.

Bethany McLean: Look at your podcast feed right now or anything on social media, and you can find a dozen shows or a dozen posts telling you who's up by two points in Michigan or Texas, who's going to control the Senate, and which campaign ad is working. We're not going to do any of that today.

Luigi Zingales: We had our team pull the actual economic platform of candidates, mostly in the Senate races across the country, from $50,000 homebuyer tax deduction and tariffs repeal to banning Wall Street from buying houses, breaking up healthcare middlemen, and making AI data center pay for the power grid.

Bethany McLean: Today, we're putting those promises through an economic stress test. Which of these ideas would actually make your life more affordable, and which ones are just campaign slogans that will backfire? The law of unintended consequences is one thing that I think everybody can agree on.

Luigi Zingales: I am Luigi Zingales.

Bethany McLean: I'm Bethany McLean, and this is Capitalisn't Midterms Edition. Luigi, before we get to the oddities and the campaign platforms, I want to start with something of a puzzle. Democrats are largely promising to undo what Republicans did in 2025 and 2026, restore enhanced ACA credits, reverse Medicaid cuts, and repeal tariffs. Americans were already angry about the cost of living before all that. If they delivered everything they're promising, how different would it more ordinary Americans' lives actually feel?

Luigi Zingales: I think that's a very good question. I have to say that after reading the various platforms, I came out a little bit depressed. The Republicans seem to lack imagination. If you take out a little bit of populist measures, they resemble very much the platform that Ronald Reagan had almost 50 years ago. Democrats are a strange mix bag because there is a bit of a flavor of the abundance rhetoric that you should deregulate, so they start to copy the Republican on that front, and a bit of democratic socialist interventionist. I don't think there is a coherent picture. I don't think that you can easily say, this is the Republican platform and this is the Democratic platform.

Bethany McLean: I thought as I read through it that there's also a lack of clarity about what relief we could get from existing policies versus what structural cost pressures. Lower tariffs, I guess, might ease some prices, but that doesn't guarantee a return to older overall price levels. ACA subsidies might reduce household premiums, but that doesn't reduce the underlying price of medical care. Then I started to wonder as I went through this, everybody promises to bring prices down. Is that even the right objective? Shouldn't we care instead about purchasing power and the price of essentials relative to wages?

Luigi Zingales: No, that's for sure, but also the promise to bring prices down is reckless. A huge deflation is generally terrible. What you want, at least, is prices not to go up, and most importantly, as you said, you want wages to go up farther than prices. Ideally, you want price to be relatively stable and wages to go up. The promise to bring prices down, maybe with the exception of gasoline, because gasoline is a very fluctuating price where you see price actually going down, but seeing the general level of prices down, we have not seen in a while, and we're not looking forward to see it.

Bethany McLean: I guess even with fuel, whenever I've seen the, "We'll bring prices down," I always think that the number of economic variables that go into where prices are are so complicated that the idea that there's one thing you can do that could bring it down just seems insane to me. I guess you've long criticized Democrats for becoming pretty much the party of big business with some cultural positions layered on top. Looking at all the candidates, do you see any genuine change in the party's economic thinking, or anything that really qualifies as fresh thinking, or do you think it's just business as usual dressed up as populism?

Luigi Zingales: What is pretty clear, the number of people advocating for Medicare for All has gone up. Used to be a fringe position. I think it's not fringe in the Democratic Party anymore. I don't think that the Republican really have a reasonable response to that. I think there is also a bigger push for a minimum wage, sometimes a federal minimum wage, sometimes, in my view, at bit crazy levels. The Democratic senatorial candidate in Illinois, Juliana Stratton, proposes a $25 an hour at the federal level. That would be devastating to places like Arkansas. Currently, they have a $7.25 minimum wage.

That's clearly, in my view, out of the feasible set, but maybe it's a signal to try to show that she wants to change things radically. The other thing that worries me a lot, some Democrats are in favor of taxing the rich above a million or the billionaire, but except for that, nobody talks about taxes, and everybody talks about spending. We are at the level of deficit that is starting to be worrisome for the US economy. We will need to be more fiscally disciplined, and I don't see many candidates. There is actually a Democratic candidate for senator in North Carolina that seems to run on a more austerity package, which is remarkable, but in general, you don't see much wisdom here.

Bethany McLean: Isn't that Annie Andrews in South Carolina rather than North Carolina? She's got the taxpayer pledge that calls for balancing the federal budget.

Luigi Zingales: Maybe. I'm sorry. I confuse the two Carolinas.

[laughter]

Bethany McLean: Oh, good heavens. Yes, I was really struck by this in reading through all the notes that our team assembled, which is that really few candidates address the federal debt directly, and almost none offer a detailed plan for making it sustainable. I thought it was also really surprising that it was a Democrat who has the clearest example about balancing the federal budget. It's so counterintuitive that it would be a Democrat who has that plan, whereas the Republicans seem to be a little bit more spend-happy.

I guess Ken Paxton in Texas promises spending restraint, but he doesn't seem to have a detailed deficit reduction program, and there just doesn't seem to be a credible financing plan coming from anybody. Did you see anything in there that I'm missing?

Luigi Zingales: No. A couple of weeks ago, I saw an early presentation of a paper by this economist at the London School of Economics, Tim Besley, and he was showing, looking at both the United States and the United Kingdom, the way they write campaign when it's in power versus not power is very asymmetric. When they are out of power, they campaign for cutting expenditures. When they are in power, they don't campaign for cutting expenditure because they want the expenditure because they are in power, which seems to be a bit the pattern here. They talk about eliminating waste, but I'm not so sure that anybody is in favor of generating waste, and so cutting waste is a polite way to say we don't do anything.

Bethany McLean: Isn't it Churchill who famously said that America will do the right thing once it's exhausted all other alternatives? It may just be that our fiscal situation may have to actually be a crisis before we do anything to fix it.

Luigi Zingales: That's true. One interesting point that I saw in the platforms, particularly the Democrats are campaigning on an anti-corruption policy, and they are campaigning in money out of politics. Now, with different flavors, for example, the Democratic candidate in Illinois is refusing to accept corporate PACs. Now, I was reading that this is a relatively easy pledge to make these days because corporate PACs are not the major source of financing. The major source of financing are super PACs or other stuff that are more difficult to control.

Anyway, I think there is at least a desire to be seen as not taking corrupt money. I'm proud to say that Talarico in Texas is actually showing the Powell memorandum, my famous Powell memorandum, as exhibit A of corruption in his campaign. I think there is some sign of change.

Bethany McLean: That's fascinating. I didn't realize that the Powell memorandum had actually become part of the midterms. I think that's amazing. Maybe it's all due to you, Luigi. Maybe somehow you put it in the water all those years ago by beginning to talk about it. Now people are actually realizing it's important. For your point, isn't even the Powell memorandum a little bit of a diversion from the real issue because the Powell memorandum is corporate lobbying. Is that totally the issue today? I guess, look, we'll give them credit for at least attempting to address it.

Luigi Zingales: I think it is very difficult to tell a difference whether it's Musk lobbying or it's SpaceX lobbying because at this point they are one and the same. I don't know, because the Democrats are lobbying very strongly against or campaigning very much against Musk. They point out against the billionaire, but they have their own billionaires that finance their campaign. To be honest, the most honest one are the most leftist one because they don't receive any billionaire money, and they are campaigning against billionaire money. I think in that sense they are the honest one.

Bethany McLean: If all the Democrats complain that Musk is the problem and therefore pretend they don't have their own billionaire financiers, Musk might have done everybody a huge favor in that respect by making himself the villain such that we can all pretend that there aren't lots of other villains. I guess I also worry, and I'm curious if you had an answer on this, if you can tell. One of the things that worries me is that if the Democrats sweep into power that we're going to spend the next years investigating Trump. Believe me, I think he needs to be investigated. I'm not refuting that.

That also can become a fig leaf that then we're doing something, we're doing something, we're investigating the corruption of money and politics, but it actually doesn't fix anything. It just provides a sideshow, a circus spectacle. I couldn't tell in reading through this what's actually serious versus what might just become a sideshow.

Luigi Zingales: I fear that that's the most likely outcome for two simple reasons. Number one is that even if the Democrats win the Senate and the House, they will never have a veto-proof majority. Any decision they make could be vetoed by Trump. Their ability to deliver on any margin is very limited. The only margin they can deliver is congressional investigations. The second is that the Democrats, in my view, look much more divided than the Republicans.

I'm not only talking about non-economic issue, like, for example, support for Israel. Even in the economic policy issues, I see the Democrats quite divided because we go from a very extreme platform of democratic socialists. Now, the only real democratic socialist running for Senate is Angie Nixon, Florida, who is unlikely to win. If you read the democratic socialist platform, they even say that you want to nationalize some large firms versus some more moderate Democrats that look awfully like the Republicans.

Bethany McLean: Yes, that split in the Democratic Party is going to be really interesting to see how it plays out. One of the issues that we're circling around here is this idea that there can sometimes be less difference between Republicans and Democrats than you once would have expected. What can look like it should be a Democratic proposal can actually be a Republican one, and vice versa.

Let's play a little game. I'm going to read a few policies without identifying the candidate. If you're listening, you can see if you can try to guess the party. You can give yourself a point if you do so. This isn't a game of gotcha. It's rather just how hard it's becoming to identify either party's economic philosophy by its policy prescription. Let's start with this one. A candidate wants to stop out-of-state investors and hedge funds from pricing local farmers out of land. This candidate wants to strengthen anti-corporate farming laws then appoint private property warriors to fight imminent domain abuse. Republican or Democrat? Pause. Drum roll. It's Republican Zach Lahn, who is running for governor in Iowa.

Luigi Zingales: He's your favorite guy, Bethany, who is against private equity, so you must love him. [laughs]

Bethany McLean: No, but seriously, this raises a really interesting question. Is this pro-market or anti-market? Because restricting capital can protect independent ownership and competition, I guess, but it can also interfere with transactions and reduce liquidity, or it could actually be a way of just favoring established local interests.

Luigi Zingales: What I find strange, if you focus, for example, on housing, the cost of housing is one of the main reasons why we don't see, for example, more internal mobility that helps lift old boards. In the '60s, if you were a janitor in Arkansas and you moved to New York, net of your cost of living for the house, you would gain, I think, 70%. Today, if you're a janitor and you move from Arkansas to New York, net of the housing, you lose 7%.

Honestly, the biggest problem for housing is that we don't allow to build bigger building and bigger housing, where basically local costs are the biggest obstacle. If I say that to build anything you need to have-- I exaggerate, 100 acres, then only the super-rich can afford to build something, and the houses cost a fortune. On the other hand, if you can build an high-rise in every corner, cost of housing would go down. I understand that these are local issues that cannot be solved easily at the federal level. However, the federal level has a huge, huge leverage that I don't see anybody using, which is the tax deduction.

I would say that you can only deduct your property taxes if you live in a town or a city that has a certain characteristic of the building code that liberalize construction. You want to live in a gated community, sure, but you don't deduct your taxes. You want to deduct your taxes, you're going to lobby to change the building code in a more effective way because, today, at the local level, owners are very influential in trying to restrict supply in order to keep prices up. To some extent, the ultimate Stiglerian control of entry done by the homeowners rather than by the evil capitalist, but is nevertheless very problematic.

Bethany McLean: I was struck by that, that nearly everybody has a housing plan. Mike Rogers would let borrowers defer student loan payments while saving for a down payment. Ken Paxton promises a $50,000 deduction for a home down payment. Do any of these proposals really fix the fundamental issue?

Luigi Zingales: No. I would say the opposite. If you know that the supply is not elastic, so it doesn't respond very much on prices, as it is the case if you cannot build, giving subsidy to demand will only increase prices. That is the terrible idea to subsidize demand. What you need to do is make supply more elastic, but that means touching the interest of homeowners, which is a pretty big constituency, both among the Democrats and the Republicans. This is a delicate topic.

Bethany McLean: Yes. Isn't that the fundamental problem that politicians want to appease two groups who have totally contradictory aims? Homeowners want their houses to appreciate. For a lot of people, their equity in their home is one of their major financial assets. Younger Americans want, and politicians say they want housing to be affordable, but you can't have both things at the same time. If housing becomes more affordable and prices go down, that means that people's equity in their home also shrinks, and that ends up really upsetting people.

Luigi Zingales: To be honest, there is a way to have them both at the same time, which is to have much lower interest rates. When you think about affordability, it is how much your income goes toward buying a very large house. One version is you decrease the price. The other version is you decrease the cost of borrowing. Now, to do that, you need to have

more stable inflation. We saw that the Fed increased rates because of inflationary pressures. We don't see a lot of initiative in that direction. I think that that's part of the problem. The other is probably reducing the public deficit because one of the sources of long-term interest rates, especially in the long-term, is that people are worried about how in debt the United States is.

Bethany McLean: Reading through this, I also saw there seemed to be a remarkably broad agreement on stopping Wall Street from buying single-family homes. That seems, to me, as much as I don't like private equity, it seems to me that it's one of those satisfying anti-villain policies that won't really make a difference. Right?

Luigi Zingales: Maybe in the short term, we'll keep prices a little bit lower, but I think that having more people rent at reasonable prices is probably better for everybody. In spite of this myth of homeownership, rental society is, number one, more mobile, and number two, invests less of their wealth into one asset that is not destined always to go up. My concern is that if you have a decline in population, house prices will probably decline. Having private equity absorb some of that risk makes a lot of sense to me.

Bethany McLean: I still remember in my reporting after the financial crisis where this idea that renting was better first started to become popular. I remember a housing advocate said to me, "Let them eat rent." I've thought about that a lot and always thought a rental society comes with a lot of risks for America. It's different than Europe because we don't have the social supports for people as they age. One of the ways that people have transitioned into retirement is through their ownership of their home. Suddenly, if you have a bunch of people hitting retirement who don't own a home and don't have any place to go and don't have any support from the government or not meaningful support, you've got a really, really unstable situation.

On the flip side, I hear you. The threat of a population decline is enough at some point to probably make home prices start to go down, and then that's a risk that you would rather see somebody other than homeowners absorb. I guess where I'm ending up is that it's complicated. Okay, back to our little game. What about a federal 10% cap on credit card interest rates? What do you think, Republican or Democrat?

Luigi Zingales: I think these days, even Trump is campaigning on that, so I'm not surprised.

Bethany McLean: I know. [chuckles] Trump is campaigning on that, but I think Bernie Sanders and Republican Josh Hawley have also backed related legislation. I guess based on all my work on this, this does not seem like a good idea to me. It seems like one that will carry unintended consequences in terms of the availability of credit. What do you think?

Luigi Zingales: I think it will definitely have an impact on the availability of credit. The question, which is a deeper question, is whether that availability of credit is good or bad because if it favors consumption that is not particularly useful and then you have people responsible for paying back and so cutting on, for example, medicines or more important expenses in order to pay for the indulgence in consumption, I think it's not necessarily a good thing.

I don't think that this will resolve anything, let's put it this way. I'm not surprised. I think that what I see with sadness is that the current market system has disappointed so many people. Very few are willing to defend it or very few are willing to try to change things in a way that is more market compatible. I think both the left and the right are finding anti-market measures because the mood is such that the market has failed the majority of Americans, and the majority of Americans are revolting against that.

Bethany McLean: Do you ultimately think that that's dangerous, that all of these measures that look to impose limits on the market without actually correcting the fundamental problem driving it will backfire?

Luigi Zingales: I don't think that all the measures to regulate the markets are bad, but there seem to be more reactive measures to respond to popular demand rather than well-thought processes. For example, on the most important issue, which is healthcare, there is a position, Medicare for All, which is very popular on the left, but I don't think that will conquer a lot of middle-of-the-road Americans because, while they hate the system, a lot of them are much more afraid of change. Moving to something better, and I do believe we need something better, is not that easy.

Let me try. I was trying to think about what I would do if I were a candidate, which, of course, I'm not. I invented this idea, and I want to try it with you. I'm going to call it the Medic Option for All. If you look at the average expenditure between the employer and employee for the average worker, it's approaching $10,000 a year. If you look at what Medicaid spends, Medicare is for all the people, and I'm sorry to report all the people are much more expensive to take care of.

If you look at Medicaid, which is probably an overestimate because poor people suffer more of health issues, but they spend roughly $6,500 per person. We can have Medicare for All at the cost of $6,500. The problem is the transition because remember that today all the money you spend in healthcare is pre-tax. There's a huge success. My proposal is this. Why don't we give to every person employed in America the option of buying, with $6,500 of pre-tax money, a Medicaid option, and then receive tax-free the remaining $3,500 that he or she can use either to consume or to buy supplementary insurance?

One option is to do that. The other option is to remain as you are today. In this way, you fund the Medicaid because you're transferring, but you give option to people, you maintain the status quo, but you make it feasible to have a public option at the low cost that is supported by public finances because if you introduce Medicare for All, leaving the system in place as it is, it's going to bankrupt the government. What do you think about this?

Bethany McLean: Why will it bankrupt the government?

Luigi Zingales: Because it's an additional cost without funding. Today, much of the funding comes from the employer. If you transfer to the government, it's not guaranteed that the employer will increase wages. It will appropriate most of the difference. It will be a boon for companies and a disaster for federal deficit.

Bethany McLean: I like that idea. I guess the risk I see in it is that our entire medical system, or a lot of it, is built on gaming or arbitraging or capturing that difference between commercial healthcare and Medicaid. Certainly, a lot of hospitals are funded by that or make their money by figuring out how to capitalize on that gap. I worry that if that gap starts to go away, a lot of things underneath it start to break, coming back to the law of unintended consequences.

It's not clear to me that that gap between the $6,500 and the $10,000 is profit that somebody is capturing or if that money is actually a payment for something important that we all would agree we don't want to see go away if we could see where it was going. Does that make sense?

Luigi Zingales: Absolutely, but that's to some extent the core of my idea. I don't know either, but if it is a real difference, people will not have opted for Medicaid because it cuts something they really want. On the other hand, if it is profits, it's going to be squeezed out by competition. We are creating a public option that is competitive and that people choose. That creates a market pressure that is lacking in this moment.

Bethany McLean: I like your idea better than anything that any of the candidates said. I think the problem with it is that it is more multi-layered than that in the sense that there are hospitals that treat a Medicaid population that can't get by on the amount of reimbursement they're getting from Medicaid. The only reason they survive is because of that premium from whatever commercially insured people that they have. If you break that, then that hospital goes away. Then that means the care for a portion of the population also goes away. I just think it gets really complicated given how ingrained that profit gap is in our system.

Luigi Zingales: If you think that you can change, improve healthcare without hurting anybody, this is impossible.

Bethany McLean: That's fair.

Luigi Zingales: There are people who are going to be affected, but there could be compensating measures. For example, one thing I discovered, one of the bottlenecks in the production of doctors is the number of residency financed by Medicare. Actually, all the residents in the United States are financed by Medicare and are fixed in number since 1996. Actually, they were raised only 8% in 2012. Imagine that the number of doctors in the United States is fixed by law.

If you were to expand those, you will have more doctors, and the existing doctors will earn less money. I'm sorry to report, but that's exactly-- If you want to increase supply, it's similar to the houses. You need to reduce the bottleneck. One of the effects is some of the people, like some of the homeowners would be less happy, and some of the doctors would be less happy, but that's what the market is about.

Bethany McLean: Let's move on just before we run out of time. I think one of the really interesting places where there is bipartisan, I don't know if we want to call it agreement, but certainly bipartisan overlap is on constraining data centers. You've got Democrat Annie Andrews wants to propose a two-year moratorium in South Carolina. There's also Mike Rogers, who's Michigan US Senate candidate, wants a one-year moratorium on data center construction. How do we square that with this drive toward AI and this overall national goal, at least coming from the Trump administration, that we have to beat China and we have to charge forward, any dangers and costs be damned?

Luigi Zingales: It's interesting because that shows that at some level democracy works. 70% of the people are against data centers. Surprise, surprise, when 70% of the people are against something, both parties try to cater to that demand. Now, you want to understand why people are against data centers. I regarded it two reasons. One is, I think I discussed with you an interesting paper I saw last year, where when you see a windmill to produce electric energy, everybody claims they're in favor of windmills, et cetera. Do you want to have one next door? The answer is no, because they do "toomph, toomph, toomph" all night.

Surprise, surprise, the prices of houses drop 12%. If your only asset is houses, that's a big blow. Data centers run the risk of increasing the electricity cost, making water less available. I think that some of the proposals that I've seen are very reasonable. They say that, look, these guys need to be self-sufficient. They need to pay for their own energy. They need to pay for their own water. Many public utilities price energy in a cost-plus system. If you have a data center that enters and increase demand by a lot, and to increase demand, you have to build new plants that are more expensive, that cost automatically transfer to you. I think it's perfectly legitimate that people say, "I don't want that."

Bethany McLean: I do, too. I couldn't help thinking, though, as I read through these proposals, that this is going to be one of those where everybody is looking at exactly the wrong thing because the big risk, of course, is that this whole thing just blows up. You saw just last week, as we're recording this, CoreWeave, a company that is what's known as a neo-cloud, meaning they're building data centers. Their bond soared because everybody's starting to realize this thing may come with enormous risks and that the developers of these may not be able to pay their debt.

I have this feeling that we're all going to be focused on proposals to limit data centers and moratoriums when the real issue is going to be what happens if the economic boom that has been caused by AI hits the skins.

Luigi Zingales: Actually, I don't see the two in contradiction because part of the reason why there isn't a boom is because some of the costs are externalized. The moment you force them to pay for the cost, number one, there will be less of a boom. Number two, in the bust, it will be less devastating. Imagine that you build these data centers and then they go bust. Then the cost of building the capacity to support them will be borne by the communities in their electric bills. That's crazy.

Bethany McLean: I think it's too late for that. I think the scale of the spending is already such that the bust is going to be enormously painful. I don't see any proposals to address or manage that, which is that if all of this does go south, what money has already been spent and committed, and what does that mean for the overall economy? It certainly will crash our national economy, given the extent of it that is driven by the AI boom. I think it will have local impacts as well. While I agree with your ideas, I think it's too late to change that given the money that's already been committed. Maybe I'm too negative. That wouldn't be the first time.

Luigi Zingales: No. Bethany, I can see your proposal for this midterm election to say make data center bust-proof. It's not in opposition to AI. It's in opposition to externalizing the cost of AI into society. I think that we want the data centers not to devastate a community in case they are unable to pay their debt.

Bethany McLean: Yes. I have a different proposal. My proposal, which I wish a candidate had, would be that when a data center is being built, every single thing about it should be public. In other words, you should be able to see a special file for that that is on the internet for that data center, who is bearing the risks, who's paying for what happens if it goes wrong, who has which contingencies because if you dig through a company's financial statements, you actually can't really tell. It leaves the whole thing pretty unclear. I think this is a case where transparency would be enormously helpful. That's the proposal I would like to see, which I did not see in anybody's campaign platforms, not surprisingly.

Luigi Zingales: To be honest, I don't remember who, but I think that there was a candidate that was asking for more transparency on data centers. Maybe not as detailed as you make it to be, but I think that it is out there. The protests of various communities on data centers, I think that transparency is the number one issue. Without transparency, you can't understand what they're doing, and you can't even find a way to oppose them if you want. I think that part of the reason why they are so secretive is because they know that they are not loved, and they try to hide their traces.

Bethany McLean: Probably fair. I couldn't help feeling a little bit of the sense of existential dread is too strong, but just a worry that no matter what happens in this election, that nothing actually changes. I worried whether either party really believes in competition when competition threatens their own supporters. Does anybody want a more functional capitalism or do they all just want government to protect their preferred winners?

I felt a little hopeless in looking through it. We've had candidates who have come along who have promised dramatic change, and everything has looked really clear that there's going to be dramatic change, and that hasn't happened either. In this case, it feels like a bit of a mishmash, and I had trouble finding anything that would actually happen no matter which way the midterms go.

Luigi Zingales: We are, in my view, in a phase of what Gramsci called interregnum, when the old mothers are dead, and the new mothers have not been born yet. I see a beginning of a transition. For example, I think the emphasis that most democratic candidates put on anti-corruption in general, I think is a positive change. Hopefully, they apply these rules first to themselves and then to others. It is discussed in a more detailed way. In a sense, of course, Trump campaigned on draining the swamp, but there wasn't any detail.

Bethany McLean: My God. I forgot. [laughs]

Luigi Zingales: Yes, you forgot that, right? [laughs]

Bethany McLean: Sorry. That's really amusing. [laughs]

Luigi Zingales: In my view, a good capitalist system does require a good system of law, and corruption is the enemy number one for that to work. Any fight to clean it up, I think, would be a good fight.

Bethany McLean: I think that is a positive. I also am going to come back to the idea that at least there is one person who is talking about the national debt and what a problem that is because I think a lot of things that are problematic do flow from that. I've always been a bit of a debt hawk. I just understand that the national debt burden isn't like a household's debt burden, but the math major in me just has never been able to get past the idea that that's money that has to be paid back, and when the money can no longer be paid back, that we've got a problem. I'd like to see more. I think getting the budget under control and the debt under control, a lot of good things would flow from that.

Luigi Zingales: Yes. I wonder where Stephanie Kelton has gone. Modern monetary theory that this doesn't matter and all this stuff. [chuckles]

Bethany McLean: I think the proponents of modern monetary theory had a little bit of a problem once it was basically adopted by Trump because then if you're going to be a supporter of modern monetary theory, you have to support what Trump is doing. Not everything, but you have to support the Republican. If money really is free, then a lot of the Republican budget decisions that have helped to get us to this state, the Biden administration, obviously, did its part, too. Then you have to embrace some of Trump's economic policies, and maybe that's a problem.

Luigi Zingales: [chuckles] That's true.