The New Bazaar

Martha Gimbel, executive director of The Budget Lab at Yale, returns to the New Bazaar to chat with Cardiff about all things debt and deficits.
Martha argues that the fiscal choices of the past decade have already led to higher costs on mortgages, car loans, and small-business debt. She and Cardiff discuss what might happen next given the frightening projections for future borrowing.
They discuss:
Is “we can’t leave this problem to our kids and grandkids” a misleading way to think about the national debt?
Why is it so hard to know exactly what level of debt could lead to a fiscal crisis? Why such precision is often the enemy of understanding
Does she take flak from the left for arguing that the crowding out effect is a real thing?
Immigration and the deficit
Which policies could actually bend the deficit curve down?
A DOGE post-mortem

And lots more.
Related links:
Lower Immigration Means Lower Productivity Growth by Abhi Gupta
2026 chart book examines spending, taxes, and deficits by Jessica Riedl
Martha’s The Atlantic piece on the national debt
The National Debt’s Unforgiving Math by Jared Bernstein
The Budget Lab at Yale website
The Budget and Economic Outlook: 2026 to 2036 | Congressional Budget Office
Where Do Our Federal Tax Dollars Go? | Center on Budget and Policy Priorities
CRS report on Foreign Holdings of Federal Debt

The China Shock of the 1990s and 2000s remains, even now, the subject of much debate. American consumers benefited from the cheaper goods that were imported from China. Some American businesses also benefited from importing cheaper equipment that was made in China. But other American businesses suffered from the competition, shuttering factories throughout the Rest Belt and South.
How bad was it? What was the overall effect on workers? How did workers and communities adjust?
Today’s episode is about the lessons of that shock for what might end up being a brand new shock: the AI Shock. Economists and many others are trying to figure out what it’s going to mean if AI itself ends up becoming a new source of competition for American businesses and American workers.
One such economist is Adam Ozimek, Chief Economist at the Economic Innovation Group. Adam is the co-author of a new analysis about the right and wrong lessons to take from the China shock for the strange world that we now find ourselves in. (You can find that post at agglomerations.eig.org, EIG’s newsletter.)
Adam speaks with Cardiff about the similarities and differences between the workers and towns affected by the two shocks, which characteristics matter most for people and places to become resilient to large shocks, how to think about automation and the collection of tasks that make up a job, and much more.
Related links:
Agglomerations
Messy Jobs, by Luis Garicano

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)