This episode is about an ambitious project to erect an entire new city in California, from scratch, about a one-hour drive north of San Francisco.

The company that wants to build this city is called California Forever. It has bought about 70,000 acres of land in Solano County, starting in 2017. That’s about the size of two San Franciscos or one-and-a-half Miamis.

What California Forever wants the city to be is two things.

First: an urbanist, walkable city of about 400,000-500,000 people; zoned for density instead of suburban sprawl, with housing to rent or buy that’s affordable to middle income families; cool amenities; and located in a place where you would not expect to find it.

Second: a tech manufacturing center, with new factories making actual physical stuff, and a big shipbuilding operation. A place that creates new jobs and businesses and tax revenues for the people that move there and the surrounding communities.

Any project like this is immensely complicated, having to figure out transportation, engineering and logistical problems, waste disposal, how to attract people and businesses to the city, navigate local politics and how city governance is gonna work.

Above all, California Forever has to figure out how to build something new and urban in California — a state with lots of wonderful stuff but also a place that’s known for its NIMBY dynamics, high taxes, zoned for suburban sprawl and single-family homes, endless regulatory or environmental reviews, water issues, union negotiations.

The country needs more experiments like this. And many states, not just California, need to discover, or rediscover, the virtues of making it easier to create new housing and businesses, build factories, attract people, and just do stuff generally. And even if this project doesn’t work out, at least the rest of us get to learn the valuable economic and social lessons of what works and what doesn’t.

Although Cardiff is rooting for the project to succeed, he also has quite a few questions about it. And it just so happens that this episode’s guest is exactly the person who can answer those questions. Jan Sramek is the Founder and CEO of California Forever. He started the company with the backing of tech investors and founders including John and Patrick Collison, Laurene Powell, Marc Andreessen, Michael Moritz, and a few others.

Related links:

• California Forever website
• California Forever project overview deck
• Clear a path for sweeping urban experiments such as California Forever (LAT)
• A City Is Broke. Can Billionaires’ Urbanist Dream Offer It a Last Chance? (NYT)

Arpit Gupta, a finance professor at NYU who has made important contributions on a startingly high number of topics, speaks with Cardiff about his latest contributions to the study of housing affordability, remote work, artificial intelligence, and finance.

Arpit is on board with the basic YIMBY project of undoing the oppressive zoning codes that limit housing construction in so many parts of the country, but he doesn’t think the housing story ends there. Other obstacles will remain even in the case of further YIMBY progress, and in the meantime he has offered a variety of reform ideas that both complement YIMBY ideas and also prepare for a future after a YIMBY victory. Among them are re-thinking property taxes, accelerating depreciation schedules, and making it easier for factory housing to get to market.

Arpit and Cardiff end with a chat about the ways that AI can help us understand housing regulations, what AI means for the future of finance, and what he is both optimistic and pessimistic about.

Related links:

• Remote Work's Impact on Productivity
• Work from Home and the Office Real Estate Apocalypse
• Office to Residential Conversions
• Unlock a Housing Boom through Depreciation Bonuses
• Three Rules for AI in Finance
• Industrial Policy for Housing Construction

Stefanie Stantcheva is an economist at Harvard and the head of the Social Economics Lab, where her team has done extraordinary work investigating how people form their opinions about economic and political topics. That work was the subject of an earlier New Bazaar episode.

In this episode, Stefanie chats with Cardiff about the findings in her paper (with co-authors Sahil Chinoy, Nathan Nunn, and Sandra Sequeira), “Zero-Sum Thinking and the Roots of US Political Differences,” which was just published in the American Economic Review.

From the paper’s abstract:

“We find that a more zero-sum mindset is strongly associated with more support for government redistribution, race- and gender-based affirmative action, and more restrictive immigration policies. Zero-sum thinking can be traced back to the experiences of both the individual and their ancestors, encompassing factors such as the degree of intergenerational upward mobility they experienced, whether they immigrated to the United States or lived in a location with more immigrants, and whether they were enslaved or lived in a location with more enslavement.”

Stefanie and Cardiff also discuss:

• Rising anger in American society
• The subtle ways that the two major political parties are similar and different when it comes to zero-sum thinking
• The economic geography of zero-sum thought
• The finding that surprised her the most
• The generational gap in zero-sum thinking between young and old
• The policy implications of her research

Finally, Stefanie previews her upcoming work on zero-sum thinking and concerns about AI.

Related links:

• “Zero-Sum Thinking and the Roots of US Political Differences”
• “To understand America today, study the zero-sum mindset” (Stefanie’s guest essay in The Economist)
• “Emotions and Policy Views” (Stefanie’s working paper with Yann Algan, Eva Davoine, and Thomas Renault)
• “Dancing with the Stars” (Stefanie’s paper with Ufuk Akcigit, Santiago Caicedo, Ernest Miguelez, and Valerio Sterzi)

EIG chief economist Adam Ozimek chats with Cardiff Garcia about Adam’s new post, AI and the Economics of the Human Touch.

An excerpt:

Either AI is so useless that we are in the middle of a bubble that’s about to burst and take the economy down with it, or AI is so powerful it’s going to replace us all and devastate the labor market.

The pessimism in speculation about the economic effects of artificial intelligence is often so overwhelming that these opposing concerns can even come from the same person. AI is evolving fast enough that we should not entirely ignore the economic doomers, though it would be nice if they could at least be consistent.

But it is essential to balance the discussion with some optimism. I can see glimmers of hope in a simple fact: There are many jobs and tasks that easily could have been automated by now — the technology to automate them has long existed — and yet we humans continue to do them. The reason is that demand will always exist for certain jobs that offer what I call “the human touch.”

The specific jobs that require the human touch may themselves change or evolve, but I suspect that such jobs will continue to exist long into the future.

Adam and Cardiff discuss the job that inspired Adam’s post, why the Olive Garden represents a hopeful future for work in an age of AI, the perils and promise of AI for caregiving jobs, and how Adam himself plans to prepare for the eventual automation of his daily tasks.

Related links:

• Adam’s post
• Agglomerations homepage (subscribe!)

Jen Doleac is an economist and the director of the Criminal Justice program at Arnold Ventures. She joins Cardiff on the show to chat about her upcoming new book, “The Science of Second Chances: A Revolution in Criminal Justice”.

From the book jacket:

Freakonomics for criminal justice, The Science of Second Chances presents a groundbreaking approach to criminal justice reform, revealing how small-scale interventions can reduce people’s chances of reoffending and break the incarceration cycle…

Drawing on cutting-edge economic research and real-world experiments, the book presents a blueprint for reform that runs all the way through the system. Doleac shows how economists like herself approach big, complicated problems as if they were scientists in a lab, carefully testing different approaches and following the data to maximize impact. She explains how shifting the incentives people face can produce dramatic changes in the decisions they make, significantly reducing the number of people cycling through the prison system.

Jen and Cardiff discuss the unique approach and contributions of economists to understanding the criminal justice system, why erring towards leniency so often leads to less reoffending, and the surprising failures of ideas that seem sensible. Along the way they examine the evidence needed to answer questions like:

• How long should prison sentences be?

• How should probation be structured?

• For people who do go to prison, what kinds of incentives should we give them for how they spend their time there, how they rehabilitate themselves?

• How should we take into account variables like age or mental health?

• And what happens when someone gets out of prison? What are the best policies to put them on the path to success?

Jen herself has spearheaded a lot of the research behind this evidence, and she also has detailed knowledge of the work done by other economists in the field. So she’s about as well positioned to evaluate it as anyone Cardiff knows.

And her work is about more than just using limited resources in the best possible way (although that’s great) and more than just making society better and safer (also great). It’s about finding ways to help individuals get their lives back on track, so that a mistake made early in life doesn’t end up defining everything that comes after.

Related links:

• Science of Second Chances pre-order links
• Jennifer Doleac’s page at Arnold Ventures

Nearly 30 million workers, or roughly one in five workers throughout the country, are required to have a professional license before they can do their jobs.

That’s more than twice the number of workers who belong to unions. And it’s almost ten times the number who earn the minimum wage. But in comparison to those other economic arrangements, curiously little attention is given to the process that governs licensing, the perverse outcomes it so often leads to, and the vulnerable workers who are affected by it.

Cardiff’s guest on this episode is Vanderbilt law professor Rebecca Haw Allensworth, author of “The Licensing Racket: How we decide who is allowed to work, and Why it goes wrong.” Among Cardiff’s picks for the economics book of the year, it is the product of not just a scholarly understanding of the topic, but of years and years of painstaking reporting, interviewing hundreds of people, and unearthing a variety of frankly shocking anecdotes.

She and Cardiff discuss:

• The legal and institutional design behind the boards that oversee licensing in each state
• How the desire to protect the already licensed leads board to impose outrageous requirements for new licenses
• The ludicrous rationalizations of so many licensing boards for erecting obstacles to new workers entering their professions
• The shocking failure of licensing boards, especially within medicine, to actually fulfill the mission they are set up to pursue: protect public safety
• How the ratcheting up of licensing requirements led to a standoff between nurses and doctors
• How licensing hurts dynamism and entrepreneurship
• The more substantive tradeoffs involved in licensing, including the pride and validation that existing practitioners feel in having a license
• Which jobs shouldn’t require a license, and for those that do, a better way forward

All throughout, Rebecca shares with Cardiff the tales of the workers, board members, and the others she interviewed.

Related links:

• The Licensing Racket, by Rebecca Haw Allensworth
• Rebecca Haw Allensworth page at Vanderbilt Law School

Mike Bird, the Wall Street editor of The Economist, joins Cardiff to discuss his new book, The Land Trap: A New History of the World’s Oldest Asset.

By one estimate, the value of land makes up roughly a third of all the wealth in the entire world. Add the houses and commercial buildings on top of the land and the total value is almost two-thirds.

And according to Mike, land “defies some of the usual laws of capitalism that apply to other goods and assets.” Its supply is fixed, it is immobile, and it neither decays nor depreciates.

These special qualities have given land its fascinating history. They’re also the reason that so many economies end up in what Mike refers to as the land trap.

Mike and Cardiff discuss:

• The definition of a land trap
• Why booming land values are a problem while they’re rising and not just because they often set the stage for a bust
• How land affects older, established companies differently than newer, innovative businesses — and why that matters for the economy
• The perverse incentives that rising land values can have on a nation’s economy
• The land histories of America, China, Hong Kong, Japan, and Singapore
• Land reform and the development of low-income countries
• The lessons of Singapore

And more!

Related links:

• The Land Trap, A New History of the World's Oldest Asset
• Housing booms, reallocation and productivity, by Sebastian Doerr, BIS

How can the United States make its economy more resilient not just to future economic shocks but the threat of such shocks from its geopolitical rivals?

Arnab Datta has spent years working on this very question. In the immediate aftermath of the recent rare earths showdown between America and China, Datta and his colleagues at the Institute for Progress and Employ America published a new analysis titled How to Implement an Operation Warp Speed for Rare Earths.

China’s global dominance in rare earths, acquired over decades, allows it to “gain leverage in trade negotiations, retaliate against American restrictions, degrade American and allied technological capabilities, and potentially even to entrench its dominance in downstream rare earth-dependent manufacturing supply chains,” write Datta, Saif Khan, Tim Hwang, and Tim Fist.

The scope of the report extends well beyond the specific threat of a shock to America’s supply of rare earths. It speaks to the very nature of the ongoing geopolitical dispute with China itself — and more broadly, to the question of how best to respond when a single country has taken steps for decades to distort the global market of a product that the entire world depends on.

Why did the United States fail to spot the emerging threat? How should it respond now — and in such a way that embraces core American economic values like competition and innovation?

Related links:

• How to Implement an Operation Warp Speed for Rare Earths
• Arnab’s work at Employ America
• Arnab’s work at the Institute for Progress