Christina Romer, Barack Obama, Stephen Dubner discussed on Radiolab
Radio. Here's your host, Stephen Dubner. Christina Romer, former top White House economist, has spent her career analyzing the causes and consequences of recessions and depressions. In light of the fact that the economy has become much more globalized. In recent decades. I asked Romer to describe how the U. S economy is unique and how that will affect our recovery from the cove it crash. Traditionally, the American economy has been What I want to say more vibrant, more dynamic. So if you want to compare us to Europe, we have more flexible labor markets. It's easier to start a business here. It's easier to close down a business here. And that has often served us very well because capitalism is good at some things, and especially at figuring out what consumers want. But it does mean that it makes an economy much harder on workers is a lot easier to lay people off. You don't have the same employment protections. It certainly has been very hard on workers in this downturn compared say to a lot of European countries with the governments have just been paying employers to keep people on the books. So what thing I could imagine is we've discussed it. Some industries may never come back. Brick and mortar retail. It may come back some, but it'll never be like it. Wass and I think the positive would be that the U. S economy may be better at Adjusting to such changes that we are a dynamic economy. And so when there's an opportunity, American firms were pretty quick to step in. But if you're going to be a dynamic economy, you also need to think about how do you protect The people that may be harmed by all of that dynamism and don't move as easily from one industry to another, and we have to have a way to protect them and make sure that they're able to keep body and soul together and retrained for whatever new jobs air coming down the line. I asked Romer to think back to the great recession and identify the mistakes that she and her fellow Obama economic advisers made or at least the ideas that didn't work out so well. They're couple. We had the making work pay tax credit. We thought rather than write people checks and have thumb arrived in their mailbox are in their account. We would just No slip it in, So it's just going to show up in lower withholding, and we thought people would just noticed they had more money in their bank account. And maybe that would have a good effect on spending. As it turned out, most people didn't seem to even know they'd got it or worse, yet they thought the Obama administration and raise their taxes. Which they hadn't We cut them by a lot. So that was one that just didn't work as we'd anticipated. And was that a communication failure, perception failure. How did that happen? I think some of it wass a communication failure. I think some of it. It turns out economic theory doesn't give us good. Insight. It's really in some sense of behavioral question. Do people respond? Maur? If they see the cheque in their hands, or do they respond? Maur if it just shows up in their paycheck a little bit every month, and I think it was partly we're just learning. There was another idea that looked good but never gained traction. We we're trying a lot, especially in 20 tend to think of another fiscal stimulus that maybe would not be terribly expensive but could have a big bang for the buck. So we were very interested in a new hiring tax credit away toe convince businesses to hire workers and You know, we really did due diligence on this one. We ran surveys and we spun the CPS tapes. CPS stands for current population Survey. Just all the research we could think of. We were just desperate to get them over the hump and ready to hire again. We ended up getting a small kind of pilot program through Congress, but nothing on a big scale. So I'm not sure that we ever learned whether this wouldn't work. But that was a policy that I was Very excited about so maybe that's still something we could have in our arsenal and try at some point. Rumor also thought that more could be done around public employment, which she thinks played a big part in the U. S recovery from the Great Depression. Because you know what Roosevelt was able to do of putting just millions of people directly on the government payroll. I think wass incredibly valuable. This is the W P A. W P, a civilian conservation court. But in a modern world trying to figure out howto higher, millions of people quickly is something that seems really hard. And I think it's something President Obama would have liked to do. And we thought about it. We tried. I remember having a conversation with some other Cabinet secretaries. I'd say if money was no object. How many people could you hire? They'd say, Oh, lots, you know, 20 30,000 like There's not going to do much when we've got millions and millions of people unemployed. Why is it so hard? I mean, I realize you're talking about the federal government hiring people versus private firms, But you have been extolling the virtues of Our nimble and robust capitalism which can, you know? Move fast break things, hire and fire lots and lots of people. Why is it so hard for the federal government to do that? Big. Partly, we have different standards for the federal government. So I think we try to do things probably more carefully Think about the civilian Conservation Corps. So that's the hiring program from the Depression that built a lot of the buildings in our national parks and things like that. It hired mainly young men. It Took them out into the woods to build roads and log cabins, and it sent 3/4 of their paychecks home to their mothers. And it was, by all accounts incredibly successful. And you know, I've met with some of these people that were on CCC projects there now in their eighties and nineties, and it was life transforming. But can you imagine proposing that today of let's you know, hire young men, send them out to the woods and send their checks home to their parents. That just I think is not in the modern American way of doing things right. But there are certainly modern equivalents. For instance, one problem with dispersing aid money has been that It needs a lot of manpower. One problem with contact tracing is it needs a lot of manpower. So is it really so hard to imagine a kind of massive shift from private to public hiring over the next couple of years? Because this is not going to go away? Unemployment is not going, I assume 345% Any time at all soon right now, I agree, And so contact tracing is a great example. That is something that we ought to be able to use lots of people and put them to use very, very fruitfully. I think even if you were to think about Reasonable numbers. I suspect that you're not going to be able to deal with millions and millions of people that we're currently unemployed. I'll give you another example of one of the ideas I was thinking about back in 2009 was so how about just a massive program of hiring people to be teacher's AIDS and I was really very taken with this because so many of our public works. Jobs tend to be fore. You know, construction workers, male often oriented jobs, and I thought this was a great way to make sure that we were getting some balance and something that might be particularly good for female employment in a tough time, and we ran into a certain amount of Opposition from, you know, think about local school districts that are laying off teachers and you say, But I have this great program. I'm going to give you all these teachers aides. They tended to say what we really need is the money so we can keep our teachers employed, so it is hard to figure out What's the right way to do this? And I came away thinking well, let's give more money to state local government, so they're not laying off teachers that maybe they could hire the teacher's AIDS..