that'll do it for us for now. thank you for being with me, i'll see you again next time. ♪ ♪ ♪ ♪ gerry: hello and welcome to the "wall street journal" at large. well, this week was another of those topsy-turvy weeks when things we thought we knew about the world turned out to be wrong after all. take interest rates. when 2019 started, markets were in a why would panic. the main source of of the fear seemed to be the federal reserve. investors were alarmed that the u.s. central bank was going to kill off the long economic expansion. jay powell, the fed chairman and his colleagues, seemed to be hell bent on raising interest rates. many powell had indicated the fed could raise short-term rates

four times over the next two years by a quarter point each time. president trump led critics in attacking the fed's hawkishness. investors agreed and markets swooned. now here we are just three months later, and the whole picture has changed. this week mr. powell hosted the fed's key policy-making meeting and promptly had a surprise for the markets. that's right, now the fed tells us they're not planning to raise rates at all this year. so what happened? well, it seems that the economy, which has been chugging along just fine, might now be at some risk. mr. powell's change of heart didn't exactly win him a round of applause from the president who told fox business' maria wart romo on -- bartiromo on friday that economic growth would have been better if the fed had listened to him sooner. >> the world is slowing but we're not slowing. and, frankly, if we didn't have somebody that would raise interest rates and do quantity with tative tightening, we would have been over 4 instead of a

3.1. >> quantitative tightening, by the way, means that the fed has eased up on its purchase of bonds in the market to put the brakes on the economy. so in the space of three short months, we've gone from a market panic that the fed might be so aggressive that it will kill off the expansion to a market panic that the fed is now so dovish that it must mean expansion is going to die anyway. it's all part of the strange new world we believe in, core beliefs no longer seem to be working. we truced to think -- used to think low unemployment produced inflation. but that no longer seems to be true. in the last ten years, unemployment has fallen to a near 50-year low, but inflation has not budged. investors who lend to the government would demand a higher return for the additional risk. but that's no longer true either. in the last ten years, the federal government has run very large deficits, but interest

rates haven't soared. in economic policy these days, it seems conventional wisdom is more conventional than wise. not so long ago we used to think socialism was an alien, un-american concept. other countries in europe, asia and latin america might like government ownership of large parts of the economy, but the u.s. with its strong culture of individualism, its anti-state origins would surely never embrace socialism. well, maybe we've got to rethink that. polls show a significant number of americans would like to give socialism a try. a majority of democrats, according to some polls, identify as socialists. and at least one of the front-runners for the democratic nomination next year are avowed socialists. this week we're going to take a deep look at socialism and ask what is it and why is it suddenly popular on the american left. is it really an improvement on the capitalism that seems to be the bedrock of american prosperity through this country's history?

joining me now to discuss all this is the editor and publisher of -- [inaudible] magazine and or author of "the socialist manifesto." also with me, ryan born, he's an economist at the cato institute, a libertarian institution, and he's an avowed capitalism. let's understand what we're talking about. what, in very simple and brief term, is your understanding of socialism? >> too much of life today is accidents of birth, and we believe that people should have at the very least the core necessities to roach their true full -- preach their true -- reach their true core potential. childcare, housing, education, basic access to nutrition and no longer held hostage to the market. guaranteed social rights. and more generally, we believe that democracy is a good thing and democracy should be, to whatever extent possible, extended from just the purely form of political realm into more social and economic spheres

as well. gerry: the definition of socialism is government control, government ownership of the means of production, distribution, exchange. it means, essentially, no real private -- very limited private property, and the government essentially runs everything. that's not quite what you're describing. >> i think there's certain natural monopolies, health insurance should be run by the government. but i think this is other areas where we should strive for worker owner ship, ownership through cooperatives and things like that. we should think about our ends, not necessarily the means of the commanding heights to have economy and all these old mantras. gerri: is there a model, a country either now in the world or has been in history that you could point to that's not a perfect mold of socialism? >> well, i think sweden in the late 1960s and the 1970s, in fact, eroded the tyranny, what i think can be the tyranny of capital to the point that if you were born a swede no matter what

part of the country you were born, no matter your parents' background, you were guaranteed a certain bedrock of rights that allowed you to reach your potential. i would go even deeper and start to ask question about why worker can't exercise more control over their work. can't there be more democratic representative bodies even beyond trade unions at work. but i think that achieves and checks most of the boxes that i have of a good society. gerry: right. sweden seems like a nice place, seems to work reason by well. it does seem to have a fairer distribution of income and wealth. why shouldn't the united states be more like sweden? >> if you look at sweden's economic history between 1975-1995, roughly the period outlined here, the swedish average growth rate was around 1.6% a year. since it's adopted a more market-friendly model after the reforms in the 1990s, its growth rate has ticked up to 2.5%. so already you're seeing that trade-off. socialism comes with very, very

lofty aspirations, but the messy reality of government playing, whether that be planning from the central state level or having kind of advisers and experts overseeing worker democratic institutions as we saw in yugoslavia, venezuela in the early stages of that revolution, the messy reality seems to be it does harm economic efficiency and ultimately then raises less in the way of revenues for governments to redistribute in the first place. gerry: that does seem to be the pattern, doesn't it? again, nice idea and fairer distribution, but there does seem to be a trade-off between reducing inequality and achieving faster growth. that does seem to be the record in europe, for example, right now. >> i don't think that's exactly true. the swedish case, in fact, having workers demand higher wages forced businesses to be more competitive, to invest in capital goods and not just, you know, in the united states we have all these low wage industries that are sustained because of the fact that workers in the u.s. don't have the

bargaining power they do in europe. so if you're actually for things like automation, for things like a more dynamic economy, if you're for this creative destruction, i think it can be done best with higher wage demands from workers and with a safety net to help people after the fact. gerry: right. well, that can happen for individual firms if you're -- you can invest in labor-saving technologies. that doesn't necessarily mean economy-wide, it'll work. if you lock back to the early 20th century, unionization rates was much more powerful in the u.k. and germany than the united states. average wages were much lower. why? because those economies were much less productive and, ultimately, it's productivity that leads to faster wage growth. gerry: we're going to take a break, and when we come back, i want to ask my guests about why socialism has become such a big eshoo and seem to be quite popular now, what's gone wrong, if anything has gone wrong, with

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♪ ♪ gerry: we're back discussing the appeal, sudden new appeal of socialism. of course, there are many members of the democratic party now who describe themselves as socialists, probably none more prominent and famous than alexandria ocasio-cortez, the congresswoman from new york. here's what she said recently about capitalism. >> capitalism isn't, to me, it's an ideology of capital. it puts capital the most important thing is the concentration of capital, and it means that we seek and prioritize profit and the accumulation of money above all else, and we seek it at any human and environmental cost. that is what that means. and to me, that ideology is not attainable and cannot be

redeemed. gerry: ryan, capitalism not sustained or cannot be redeemed. did you ever think you'd hear a prominent politician using those words? >> clearly not now, but over the last decade the u.s. economy has suffered from slower growth. we're the still level with the after-effects of the financial crisis, and i think that was always going to mean that the prevailing economic system took a hit in terms of public popularity. my generation are also of an age where we don't really remember any of the major economies being to overtly socialist in the traditional way that we've already discussed on the show. of so i think we're seeing an evolution off users -- of users partly because of a timeline effect and the economic conditions we felt. gerry: you've got a lot of subscribers, a lot of readers who read your work, a lot of interest in socialism. why, in your view, has this become in the last few years such an attractive ideology, especially with so many young people?

>> well, capitalism isn't working for many people in the united states today. and they're living in precarety, they're not sure about their jobs, they're seeing stagnated wages, they live just one happenstance away from medical debt. they are accumulating, especially young people, student debt for doing the right thing, for doing what everyone told them to do, keeping their head down, getting higher education and so on. and i think people are starting to realize this is not just their fault, they can't go take a coding class, that, in fact, there are deeper and wider problems. these problems are structural, and there are collective solutions to them, and that means to politics. even if you done want the state to get everything, i think people are starting to demand certain basic protections from the state. gerry: you say capitalism's not working for many people, but, you know, the u.s. economy's doing reasonably well right now. growth is 3%, unemployment's at a 50-year low. wages have started to rise quite

strongly in the last few years after a long period of stagnation, admittedly, and if you look at the rest of the world, especially europe -- much more socialist countries -- they don't seem to be doing so well. so surely, isn't this just kind of a spasm of dissatisfaction with the current environment? >> well, i think we run a risk if we underestimate anger, and i think we're seeing this with the rise of right populism all around the world and even the election of donald trump. you're seeing kind of this anger spew over. so you could say that people are angry, but it can be much worse. they're not waiting in lines for food, they're not dealing with hyperinflation, but people are comparing the expect takes of what they had and what they saw in their parents' generation which was the tremendous the boom and growth of the 1950s and '60s. gerry: ryan, there is, there is concern about, as you mentioned, the financial crisis. there is very, very widespread inequality in this country, particularly rich seem to be

doing extremely well, a lot of other people are not. and there's a desire for a fairer system. how can capitalism be reformed rather than replaced? >> i think we've got to show that there's market-friendly solutions to some of the issues facing people, particularly young people, actually. and i think the key area here is housing. in many areas, particularly big metropolitan cities, some of the most successful areas of the country, rent levels are incredibly high. childcare costs are incredibly high. and a lot of that is down to zoning laws, land use planning laws and the ways that the state, the local government determines where things are built -- gerry: so part of your answer is there's too much state interference. >> in those areas, yeah. i think if you look at a successful city like tokyo, much more liberal land use planning and zoning regime, and they don't seem to have these high cost pressures like places like new york and places in california. it doesn't solve the areas of what i describe as economic

despair in the midwest. but i think for young people, particularly coming out of university living in big, multicultural cities, dealing almost -- unlocking solutions using market techniques for those issues would dampen a lot of this pressure. gerry: we've got to take another break, then when we come back, we'll discuss more on capitalism and socialism and especially how it's impacting the 2020 presidential election. stay with us. ♪ ♪

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with who we are as people and making everybody feel welcome. ordering custom ink t-shirts has been a really smart decision for our business. i love the custom ink design lab because it's really easy to use. they have customer service that you can reach anytime. t-shirts help us immediately get a sense of who we are as a group. from the moment clients walk in, they're able to feel like part of the family. - [spokesman] custom ink has hundreds of products for your business and free shipping. upload your logo or start your design today gerry: welcome back. not all democrats have signed on to socialism. many of them have, but many of them are resisting it. listen, for example, to kamala harris, one of the candidates

for the democrats presidential nomination in 2020. >> in terms of where i am, i'm a progressive democrat. i am a democrat, i am a proud democrat. i'm not a socialist. gerry: there is at least one socialist running or at least one avowed running, there might be others. the party certainly does seem to be running in that direction. i suppose the fear that some people have is that while it may appeal to at lot of democratic voters, it may not appeal in the general election. >> i think bernie sanders can get elected in the united states, and part of his appeal is this anti-establishment appeal. it's very hard if you map it to other countries why is the most left-wing candidate doing better with voters in 2016 than he did with democratic primary voters? a lot of people in the united states who call themselves centrists or moderates aren't really moderates. they believe in things we've associated with the left, they just don't have that language.

they don't like liberals so they say i don't like the democratic party, so i'm not a liberal. so they just say i'm a sent tryst, but that doesn't mean they're ezra kline centrists, it means they just, i think, are fed up and discontent with the political class in this country. gerry: ryan, a lot of people might think socialism is just not possible, socialists couldn't get elected. the country that you and i come from has a labour party which is officially the opposition, but it's led by a man called jeremy corbyn who i think we'd agree is the most left-wing leader the labour party's ever had, he managed to achieve the best improvement in the labour party vote, he got more of the vote than tony blair got when he ran the party. so it does look as though it's not the kind of electoral suicide, socialism -- and, by the way, the labour party is led by somebody who's essentially a marxist -- it's not the or

electoral suicide -- >> i think a lot of people voted for jeremy corbyn because they didn't think he would win the election, so i don't think he'd do as well in an election, but who knows. i think there's a bit of a trojan horse here. when bernie sanders talks, he talks about the social democratic components of their platform. they talk about expanding the generosity of the welfare state, providing more in the way of health care. and these are things that many social democratic countries do. what they don't talk about is the more socialistic aspects, forcing companies to become worker cooperatives or mutuals. and i think those areas, if you look around the world, they're the real areas we can to some real severe economic damage to the economy. gerry: is this all a trojan horse for real general win worker soviets? >> no, i think we need to start with what works, and i think social democracy works, and it's proven. now, it does have a trojan horse

in it, it's reliant on business investment. and at any moment, businesses can say we don't like this regime, we're going to pull the plug or withhold investment until you roll back regulations, until you roll back the welfare state. now, a way around that is the creation of a sector that is based in cooperatives and worker ownership. now, that's up to people then and there to have that fight and have that debate and decide to we want to advance further down the road, or to we want to stop. gerry: just very quickly, both of you, my impression toward the republicans is they're actually licking their lips at the process pet of fighting the election against the socialist party. ryan? >> i think that's absolutely right. i think donald trump would love, love, love to run against an avowed socialist. >> bernie sanders is the most popular in the country, and we would win the election. gerry: we'll see. thank you very much, indeed, for

joining me. just ahead, it may be that the voters in 2020 will decide just how much socialism is, indeed, good for america. stay with us. ♪ ♪ all money managers might seem the same, but some give their clients cookie cutter portfolios. fisher investments tailors portfolios to your goals and needs. some only call when they have something to sell. fisher calls regularly so you stay informed. and while some advisors are happy to earn commissions whether you do well or not. fisher investments fees are structured so we do better when you do better. maybe that's why most of our clients come from other money managers. fisher investments. clearly better money management.

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♪ ♪ gerry: well, whatever you call it, if you call it socialism, social democracy or, indeed, something else, there's no doubt now that ideas that were once believed to be really well out of the mainstream of american

politics are very much under serious consideration in american political discussion. for example, a much larger role for the government, and a tax framework that much more aggressively distributes income and wealth around the population, they seem to be likely to be a core component of the democratic party's platform in the presidential election next year. whoever may be the party's candidate. in other words, the democrats these days seem to be willing to embrace ideas and policies that would make the american economy somewhat more like europe's. now, europe's wealth may be much more equally distributed than america's, that's certainly true. but for many years now, growth in europe has been much weaker than it has been in the united states. we may with -- be about to find out in next year's election whether that's a trade-off american voters willing to make. that's it for this week. for the latest updates, be sure to follow me on twitter, facebook and instagram. and i'll be back here next week when my guest will be democratic

presidential candidate and former maryland congressman john delaney. that's right here on the wall streetjournal at large. thank you very much, indeed, for joining us. have >> he makes big-screen magic... >> he was indeed a genius. he had the eye. >> ...but his heart belongs to this tiny stage. >> they're spectacular, down to the finest detail. >> this was the place where he poured all of his love. [ woman vocalizing ] >> so how did these guys inherit his life's work? >> i was a senior in high school, and i was looking for a job that i wouldn't hate. >> you feel like you might be sitting on a gold mine? >> must their show go on? >> it would be...over. >> it would be gone. everything would be dismantled and somewhere in a dumpster. >> or will the fat lady sing? [ operatic singing ] [ door creaks ] [ wind howls ] [ thunder rumbles ]