I enjoyed this interview from DW News with Philippe Aghion, winner of the 2025 Nobel in Economics. In the interview he advocates for a Danish-style social safety net as a mechanism that allow creative destruction: i.e. technological growth without leaving people behind. I made a transcript of the last four minutes, with some edits for clarity:

Interviewer: “Do you think in the age of Trump what’s happening (say in the US) is something fundamental or are these superficial changes?”

Aghion: “I think they’re fundamental. I don’t think they will disappear if Trump is no longer in power and I think a lot of that is because (the US) didn’t have a flex security system (like) Denmark. Many people suffered from the technological transformation and for globalization. Had they implemented a system like in Denmark, I think there would have been much less demand for populism more generally.”

Interviewer: “I see you have (had) this journey from being involved in the communist party to moving towards enhancing capitalism.“

Aghion: “So in fact I will tell you something when I was (young) my role model was (Enrico) Berlinguer. He was a very open communist leader and in fact he was for the historic compromise which was a compromise with the Christian democracy. They … became good social democrats. I keep having that in mind as a role model in the same way as the world has changed. I mean we now know that communism as a system doesn’t work, that it produces a lot of drama, a lot of undesirable things, but we on the other hand the communist parties in western Europe were defending workers and pushing for more social justice and more social mobility. But we know you can achieve social mobility through social democracy or social liberalism. Call it the way you want. So I still want shared prosperity and I want growth which is friendly. That’s why I like the flex security system. I want creative destruction which is socially geared. You see what I mean? I believe that the free market economy is the better system and economy. I believe very much in democracy, in a good social model, in green (policies), but the market economy so far is the system that that allowed us to achieve those. But I want a market economy which takes the social element seriously. So I am Schumpeterian but… You see what’s very interesting is that if you adopt Danish flex security you make creative destruction work better. It enhances innovation and at the same time you protect individuals. So it’s not that you have either-or. It’s not that you have to be either for innovation or for social protection and inclusion. You can do things that will make you both more innovative and more inclusive. For example more education means that you have more people who can become innovators; a good education system is good for inclusiveness and for you innovation-based growth and competition. More competition means that more entrants can come in; that boosts social mobility. So you boost innovation and you boost social mobility. So I don’t believe that you have to oppose (either) the goal of achieving social mobility and the goal of achieving more growth through creative destruction.”

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To me, this means that social programs like universal basic education, universal basic health care, and maybe even (!!) universal inclusion in the gains of capital would allow a more robust and thriving sort of capitalism.

I’ll vote for Joe Biden in the 2020 presidential election. Here are a few details

• I voted for Elizabeth Warren in the primary, and like her tax policy; Biden is more fiscally conservative than Warren yet at least he’s rational about economic (and racial) inequality.
• Biden is a safe, small-c conservative choice. He’ll be more boring than Trump. He will not troll his opponents, tear down American institutions, or tweet at 3am. He won’t make the big changes that Bernie Sanders and AOC would like to make.
• Biden is often awkward, yet I have a basic level of trust in him. His opponent is not trustworthy, and not compassionate in any way.

Biden will be dramatically better for the country; I hope you’ll vote for him as well.

Economic policy has a big impact on our lives. I believe the following changes to U.S. economic policy would have significant benefits. To start with, I give three changes to the tax structure that can be made in a revenue-neutral way, then three tax changes that would increase revenue, and finally three new programs that could be funded with the increased revenue.

• A return to the more progressive income tax rates of the 1960s with higher rates on higher incomes would reduce inequality and increase social stability.
• A more progressive capital gains tax with more brackets such that we have low tax rates on assets held for longer term (say 10-20 years) and higher taxes on assets held for shorter terms, say a week. This would encourage companies and individuals to invest for long-term gain.
• Convert the health care tax break from an employer tax break to an individual tax credit. I.e. move health care to be something that an individual manages, not an employer.
• A tax on wealth above $50M.
• Only allow a mortgage tax deduction on the first $150k of a mortgage.
• A carbon tax. Say 50% on coal and oil.
• Just like universal education, we should provide universal healthcare to our citizens. Let’s start with low-cost preventive care by nurse practitioners.
• A new federal program to pay sales tax for in zip codes with residents in the lowest income quintile.
• A universal stabilizing income that is nominally at some low level, (say $50/month/person) where the Fed or some similar quasi-independent body has authority to increase this during an economic downturn.

All of these are good ideas on their own; doing them together provides several synergies. A more progressive income tax, a wealth tax, reduced mortgage tax deduction, universal health care, and the sales tax program would all reduce economic inequality and will increase social stability.

Of course I didn’t give enough details and do not pretend to be a tax guru. This list is not a complete economic policy; merely something to talk about with me when you see me next.

_{Edited 7 Sept 2020 for grammar and readability.}