Adam Ozimek, PhD. joined the Economic Innovation Group on March 14th, 2022 as the organization’s first Chief Economist. In the following Q&A, he talks with John Lettieri about what drew him to EIG, his priorities as Chief Economist, the state of the U.S. economy, and how being a small business owner has shaped his outlook as an economist.
Q: You’re coming from the tech world, and before that forecasting and consulting. You’ve always had an interest in policy, but why make the jump to a think tank now?
A: The U.S. economy is at a turning point coming out of the pandemic. We are seeing both signs of a boom in entrepreneurship but also a worrying turn towards populism and away from dynamism on both sides of the aisle. This is occurring in the context of a long-running decline of dynamism that has been very bad for the workers, families, businesses, everyone really. Dynamism needs more defenders today, and it needs a more robust defense.
What I believe, and what I know EIG believes, is that a more dynamic economy is not a bankshot policy that maybe one day delivers better outcomes for the median household in an indirect way. Dynamism is an essential ingredient to not just aggregate growth but widespread prosperity as well.
We are looking at nearly two lost decades of slow productivity growth. The implications of that for the well-being of the typical worker or family can’t be overstated. And it’s more than that: a dynamic economy is one where there is healthy competition in both product and labor markets, which helps everyone get a fair shake as both consumers and workers.
Q: What drew you to EIG in particular?
A: I have worked with EIG in the past on Heartland Visas and small business relief, and have been on its economic advisory board since 2019. What I learned was there is no organization more committed to dynamism and more effective at both developing good policy solutions and then convincing the rest of the world that those policies make sense. In my work with them in the past I have seen what a smart, effective team can accomplish, and that is very important. I am not interested in researching and writing about economic policy simply for the intellectual pursuit; I am interested in actually having an impact. I believe this can happen at EIG, and that is a big part of what convinced me to make this change in my career.
Q: How does joining EIG tie back to your previous work?
A: My past work has focused on a variety of issues, including full-employment, immigration, and remote work. What ties it all together is my view that a dynamic and competitive economy is one of the most important ingredients to broad progress. This is not to say it is everything; obviously we need things like a safety net, transfers, national defense, environmental regulation, the list goes on. But long-run progress is impossible without dynamism. What’s more, an economy that is stagnating and stuck in the past is one where policymaking is likely to become zero sum, and we won’t end up with good policy outcomes in many other areas. I believe we are seeing some of that today. In short, dynamism is not just a key ingredient for progress, it helps create conditions that are conducive to a good society in many ways that dynamism does not itself touch directly.
Q: What policies are you most excited to work on?
A: EIG’s work centers on creating an economy that is more entrepreneurial, more competitive, more innovative, and more productive. The policies that can help us in those regards will touch on housing markets, immigration, remote work, and a lot more. For example, on immigration, getting more highly skilled immigrants to the U.S. is probably the easiest and most certain lever we have for increasing productivity and dynamism. Heartland Visas are an important way that we can do that and at the same time help spur needed regional development in struggling places.
As someone who has spent the last few years heavily focused on the rise of remote work, I’m also going to help EIG lead the charge as the go-to resource for analysis, research, and policy ideas on that increasingly relevant aspect of the labor market.
Q: Why do you think EIG’s vision of a pro-dynamism policy agenda has a chance in light of the country’s deep political polarization?
A: Nothing is easy when it comes to advancing ambitious policy ideas, but there are many ways in which an agenda to revive American dynamism can appeal to both sides. For the left, I think a more dynamic economy is one where workers are empowered with lots of outside choices. An environment where new companies are being created, and industry isn’t dominated by a handful of 100 year old firms is one where workers have relatively more bargaining power, all else equal. So that is an outcome that I think would appeal to those to my left.
Then on the right, especially with the rise of a more populist strain of conservatism, I think it’s critical to understand how a lot of left behind places have been hit not by too much dynamism but rather the disappearance thereof. It is easy to look at closed factories in rust belt towns and say that something has gone wrong here. But too often, conservatives mistakenly focus on being “pro-business”—protecting today’s jobs and industries—instead of “pro-market.” And this isn’t really a recipe for broad prosperity. What matters in a fundamental sense is not the success of any particular employer or industry, but rather that the economy continues to produce a steady flow of new firms to compete with incumbents and pull workers into increasingly productive activities. And that is the missing ingredient in too many places, leaving big buildings empty and workers without jobs.
But I think these stories have to be told and the case for dynamism has to be made. That’s what EIG does, and that’s what I want to help them do more of. I believe that we can get bipartisan support for a pro-dynamism agenda, as EIG has done with Opportunity Zones, Heartland Visas, and non-compete reform, and other issues.
Q: In addition to your day job, you’re also a small business owner in Lancaster, PA, making your day to day life and environment quite different from most of your peers in the think tank community. How does all of this shape your perspective on the economy, policy, etc.—including during the turmoil of the pandemic?
A: Owning a small business in this type of place in particular teaches you a lot. Lancaster has decent demographic trends, compared to much of Pennsylvania. Population is growing close to average for the country, while many parts of the state see persistent decline. I know that were I living in one of those parts of the state, it would be much more difficult to start my business, and in many of them I simply would not have done it. Understanding why exactly that is, and how a growing population and everything that comes with that is good for business, has been very influential on my thinking.
Q: What is your assessment of the U.S. economy right now?
A: There is good news and bad news about the state of the economy today. The good news is that we have seen a rise in entrepreneurship during the pandemic, and the arrival of remote work as an important and productivity enhancing technological force. Business formation rates remain high compared to before the pandemic, and this is not what you usually expect in the aftermath of a recession. I think this is a reason to be optimistic. It suggests that the falling rates of new business formation over the last few decades is not set in stone. It suggests there is still a significant desire to start new businesses, and that changing conditions can push people to make change.
The bad news is the economy is still in a relatively fraught position. While we avoided another Great Recession, we are not back to full-employment. I believe that one of the most important things we can do for overall welfare and for dynamism is get the economy back to the kind of strong labor market that we can call full-employment, which in reality we haven’t seen since the early 2000s. With inflation already high and new supply shocks arriving from the war in Ukraine, we are at serious risk of a policy misstep or an economic correction.
Q: What should policymakers do to ensure we don’t botch the recovery?
A: We should be doing whatever it takes to stay on the path to full-employment. The most direct threat is rising energy prices. To that end we should be asking what it will take to get the U.S. energy industry, and specifically frackers, producing more output as quickly as possible. Beyond that, we need labor supply to keep recovering quickly as it has the past few months. I believe that will help unlock some, albeit not all, supply shortages, and this too will reduce inflationary pressures.
It’s critical that the Biden administration do whatever it can, and be willing to bear political costs, to reduce inflationary pressures. Because if they do not, it is possible that the Fed will be forced to do so in a way that risks an economic correction or at the very least a significant slowdown in the recovery.
Q: What do you hope looks different about our economy (and what it offers to workers) post pandemic?
A: I hope, and believe, that remote work is here to stay. This will be good for workers, businesses, the environment, and economic growth. Then I hope that the huge economic and social changes we have seen, both good and bad, have allowed people to think bigger about what is possible and how stuck we are with the low growth trajectory we were on. To avoid going back to the low growth path, we need positive sum thinking and positive sum economic policy. We need to implement policies that will help return us to a more dynamic economy, and not try to grind progress to a halt or close us off from the global economy. Full employment plus greater levels of dynamism would be a powerful combination for long-run prosperity, and I think it is possible.