20 Episode results for "Council Of Economic Advisers"
511 Teaser - Utopia of Scolding
"You can't change this system without a mass movement okay. Putting yard signs in affluent neighborhoods is not going to do it and having the president of harvard. University you know. The council of economic advisers is not going to do it building. A mass movement is how you do it. But you can't have a mass movement if your whole idea is to establish what what a superior individual you are than everybody else in the world. If it's all about purity and about the term that i use the utopia of scolding that's bethesda. That's where i live now. it's a utopia sculpting. It's these people who have these. These gilded lives beautiful lives. They live in these beautiful homes. They have a swimming pool there. They drive a fancy car. Have a wonderful life and their approach to politics is to scold people to shake their finger. It's like you you. you're you're wrong about this. There's something wrong with you. There's a whole class of people out here that didn't get that aren't as well educated. That don't understand things. That's their approach to politics. Well yeah of course you're not going to be able to. You're not going to be able to build a mass movement that way in fact it's the exact opposite of building a mass movement. It's the it's scolding. I mean the the math here is subtraction. Not edition which is to their benefit. Because they don't actually want to see anything chain. Yeah well the the the little things to change here and there you know they don't. They don't want any of the change. That would actually structurally alter the unjust relationships that they do claim and probably do feel subjectively to be horrified by but those things are all dependent on economic relationships that they do not want to see change. Yeah remember we started off talking about the yard signs that leave economic issues out now. I don't i don't know. And i have many examples of this in the book and i've got many more than i've come up since since since it was published. There once you guys start looking. You'll see it everywhere these kind of liberal or this kind of of democrat that is in favor of all sorts of good things things that i agree with right. I'm very liberal. I'm on the left things that i agree with. But they always leave out the economic stuff. They always leave outlet when they're talking about issues they always leave out labor. They always leave out the workplace. They always leave out you know. Well the minimum wage. I mean we also what happened with biden in the minimum wage a few weeks ago. The that's just not part of their frame of reference. They're not interested in changing those things. Well that's why they focus on the the the scolding because if you have foreclosed the possibility of mass politics which they have then the only way things can get better is if individuals start behaving better. Exactly there's no mechanism to make them change other than you. Convincing them to change differently by being smuggled them yeah or or scolding them and telling them to. Shut up yeah.
Monitor Show 12:00 03-25-2021 12:00
"Pay all there's rookie here. A lot of people ask me what inspires your music and one of the big things is a strong sense of place. That's why. I love my home state of south carolina and want to share the awesome things that has to offer from the beautiful mountains down to the sunny coast. If got an all not to mention to my personal favorite great gulf and amazing food. Come see why love this place. Visit discover south carolina dot com about to start testified on capitol hill. Something we will bring you live when the questioning begins and then president biden will hold his first formal news conference at one fifteen today eastern time. Something we will also bring you live for a preview of the ladder. We welcome now. Jared bernstein a member of the president's council of economic advisers so doctors. Thank you so much for being back. With a lot of things we could cover. The president will cover. Let's focus on bloomberg customers are really interested in and that is build back better. Tell us about that plan. How big is it going to be. When are we going to see that. The president actually has a big address coming up at the end the much in pittsburgh. We'll we'll get it then. We'll certainly learn a lot more about where the president is on building back. Better a plan for the american people which involves investing far more deeply than has heretofore occurred in key areas of the president's priorities. Things he talked about during the campaign so people should be pretty familiar with those priorities including manufacturing clean energy infrastructure racial equity and and ensuring that the tax code rewards work not wealth delivering them kind of promises. He made to the american people when he was running for president. So the things we've heard from the president.
What The White House Thinks The Economy Needs
"Hello and welcome to the fivethirtyeight politics podcast. I'm gaylon rukh as we discussed earlier this week. House democrats plan on passing a one point nine trillion dollar american rescue plan by the end of the week. Maybe they've passed it actually by the time. You're listening to this next the bill will go to the senate potentially be amended then potentially back to the house but eventually it will likely be sent to president biden's defense by mid march on monday we talked about some of the political considerations democrats and republicans are making with regards to the plan and today we want to get into the details of what is in the plan and why and to do that. We're going to go straight to the source. The white house here with me is how they're boucher member of president biden's council of economic advisers. Welcome to the show. Heather thank you galen. It's a pleasure to be here today and to explain to listeners. And exactly what your role is. According to the white house website the council of economic advisers was established by congress in nineteen forty-six and advises the president on economic policy based on data research and evidence. Those are three things we also really like here at five thirty eight so please feel free to to get wonky as you see fit to kick things off. What are the biggest challenges facing the economy right now as you see them well so the biggest challenge continues to remain the pandemic. We have to continue to wrap our arms around this. Get it under control. That means getting those vaccines out to. Everyone is fast as possible in it. Means in the meantime making sure that people have the protective gear the testing all the things they need so that businesses can open safely schools can open safely and the like so that is the first thing is we have seen over twenty twenty that if you do not have that under control then. The economy can't function as usual. And so while we are doing that the second most important thing for the economy is to make sure that all of the people and businesses in state and local governments and communities are kept whole while we get the pandemic under control. So that means making sure that you know the millions of people who can't be at work because of the pandemic have income support. It means making sure that families have some extra cushion because of this enormous tragedy across our society our economy the means making sure that states in local governments have the resources they need to cope with the pandemic and get schools open and keep You know make sure that they have all the things to have the testing facilities get those vaccines out and all the like the making sure businesses had the support they need so this is about Making sure that we are really attending to the very real crisis continues to be in front of the american people. Overall is the goal of this package to restore the economy to where we were pre pandemic or is the goal to push us in a direction and create a different economy from the one that we had before the pandemic so really what we need to do is make sure that relief is getting out there. And so that is the first most important thing now while we're doing that There's been a lot of attention in this package especially to making sure that we focus on the hardest hit but we make sure that we address economic inequalities that we do things like raise the minimum wage Make sure that were attending to differences across different communities So there's an element here where we're really trying to focus on addressing some of the inequities in the economy but that is in service of addressing this very real crisis in front of us. I want to dig into some of the details on the plan add. I'll just say up front that talked about on the podcast earlier this week. This plan is popular with the public. However of course economists on the left and the right the center progressives and so on all take issue with certain parts of the plant. And i want to really drill into some of the questions that they posed and we can get wonky along the way as i mentioned so one of the first questions here is january. Job numbers were really bad. And of course the biden administration said that we really need this plan to get the economy back on track because they were so bad. There are signs. The economy is turning a corner. Unemployment claims are falling faster than expected retail. Sales are rising and then on top of that. Americans are sitting on you. Excess savings because of pass stimulus and not being able to spend during the pandemic and essentially one of the arguments is that really. The goal should just be getting the pandemic behind us not really putting additional stimulus into the economy because we already have a lot of pent up demand once you get the pandemic behind us. There's gonna be booming economic growth even without a lot of the spending in this bill. How do you respond to that a few things. I think that argument really does ignore some of the reality on the ground. So there's about four or five facts. I wanna go through here with you so first off. Even though the reported unemployment rate has fallen six point three percent. Maybe that doesn't i mean that's high. Maybe it's not so high But here's the reality because of the unique nature of this crisis There is strong reason to believe that number vastly undercounts tree number of the unemployed. Millions of people have dropped out of the labor force. They've given up searching because quite frankly their job isn't available for them. If you or your professional waiter right now or your maybe a professional actor. Your job just isn't it's not coming back until we've dealt with the pandemic so those folks not are not being counted in the unemployment numbers among if you other sort of survey issues that are specific to the pandemic. So what we get. The council of economic advisers is the unemployment rate is actually closer to ten percent low over some nine hundred ten percent rather than six point three percent and in fact we actually think that given what we're seeing in those changes in labor force participation employment rates that actually. That discrepancy is much larger for women than for men so while the reported unemployment rates right now but even permitted women when you count in the people that have dropped out of the labor force. They actually are much higher for women than for men but almost a full percentage point higher and then similarly. They're they're extremely high. Especially for black. Americans and for hispanics so thing one that the unemployment rates that we hear about on the news really under-reporting reporting the true crisis out there in ways that are unique to the pandemic. The second point i want to make is while we did get news that the number of people filing for unemployment benefits is down. Let me be very very clear. This was the forty ninth week of record applications for unemployment benefits prior to this crisis. We have never had a week with such high benefits as we have had for forty nine weeks in a row. Just sit with that for a minute. Forty nine weeks of record high over seven hundred thousand people Apply each week. This is incredible and this cannot be understated. So yes it's great that the number came down but seriously it's still really really bad So those are a few things and so it's great. That retail sales are coming back. And it's great. That people have savings that. Here's the thing we know that the pandemic is been very unequal. That those folks there are a lot of folks who've lost their jobs and we see exceptionally high unemployment rates. Still over sixteen about about sixteen percent in the legion hospitality industry were. They've lost over four about forty percent of their jobs over the past year. That is that it remains a crisis. And so a lot of what we're trying to do here is to keep people afloat. The targeted resources are going to go to those most in need and we need to make sure that cushion is there because we don't know which families specifically are the hardest hit by the you know the the the the health effects of this pandemic so those are three reasons why this remains in urgent issue. So i think. There's a little argument from many economists. That there are urgent needs for people who are unemployed for people who've been hit hard by the pandemic but then there's this question of you know if it is all about the urgent requirements of the economy wiser so much spending that will be drawn out over the coming years for example when it comes to schools one hundred. Twenty billion dollars is going to k. Through twelve schooling the congressional budget office estimates that six and a half billion will be spent this year thirty two billion in two thousand twenty two and the remainder of that one hundred twenty eight billion would be spent through two thousand twenty eight. So is this kind of progressive priorities or is this about an urgent response to people who suffered under this pandemic. We'll so let's let's remember when low fact about the great recession right so thinking back to the the financial crisis in two thousand seventeen thousand eight and the kind of damage that left. What we saw was that employment in local education in state education. So sort of of higher. Ed and school districts that did not recover to its pre recession peak until twenty nineteen twenty twenty So he took an incredible longtime because losses were so sharp. What we are seeing now. Is this incredible challenge for school districts across the country. We've had to have an teachers take on. A whole new. Pedagogy is whole new ways of teaching their students on top of nail as they try to get back into schools. We're seeing so many teachers doing both that in person learning and the online learning schools are having to change their l. Air filtering systems. Do these these major overhauls so that you make sure that children can socially distance and all black that costs money and the way that school's budget means that you know they have had these urgent needs and We need to make sure that they have those resources. Moving forward because of this enormous expense from twenty twenty and into twenty twenty one and maybe even twenty twenty two depending on what their specific school district needs. So i don't think we can actually understate the enormous challenge that schools have been under the enormous challenge. That teachers have been under and that these resources are going to go to help them cope with that. And so the spend down You know it has to do with. How budgets are dying. How do they're planning but those those resource needs are real and and they've been ongoing for the past year. There's some debate. I think amongst Even economists on the left about how much the lessons from the two thousand and eight financial crisis apply to this situation. There's a lot of agreement that the obama administration did not enough stimulus into the economy in order to get us back to pre crisis levels fast enough and that was a long drawn out painful process for americans as a result. But a lotta people argue that this is a very different crisis because of the nature of the pandemic and to some economists are probably don't have to tell you this most notably larry summers of course former president obama's director of the national economic council has said that he is worried about creating inflation by essentially stimulating the economy beyond its ideal output beyond its ideal level of employment with this plan and essentially. Does this ultimately drive up costs for consumers and have a negative impact on everyday americans as a result and on the on the tail end once we experienced that inflation caused a recession. So how do you respond to concerns about inflation. That have been expressed well. It's it's a really important question to ask right. And i've read the pieces that larry summers put in the washington post of course and You know in. He made the case that He was concerned. That this would be a little inflationary but then he did a second piece where he really clarified his views. He's also wants to make sure that we have resources left over to make the long term investments to address the structural challenges in the economy. And so. I wanna put it into this larger context. So here's the thing. The argument that you started with galen bit okay. So we've got this pandemic. it is unique and different one hundred percent. This is a supply side recession because with the pandemic meant was that we could not go about business as usual and okay so it's a very different now. Had we been able to contain the pandemic quickly last spring and then get back to normal then maybe a small infusion or even a big infusion of cash to keep families and businesses in holding steady for a few months than getting back to normal. That might have been true. But here's the thing at this point you've seen so many small businesses close. You have so many families that have been unable to pay their rent or their mortgage for months on andrew. Their student debt now. Of course we've given them some Some relief and said okay. You don't have to pay that for a while or we're going to cover the interest in depending on the different programs bit. Those bills are gonna come to you and so we have this overhang that took part of what the american rescue plan is designed to deal with is to is to cope with some of those challenges had been left in the wake of the fact that this crisis is gone on for so long again if forty nine weeks of record breaking numbers of people applying for unemployment benefits. That's a lot of economic pain out there. That's a lot of people that haven't been able to pay their bills. And so a lot of pent up Mead so that gets to this issue of inflation. What's inflation right. That's when The economy is this full capacity and that means that all the resources all of the factories are running at full speed in. Everybody who wants a job is out there working even if you double their pay. You're not going to pull more people into the labour market. If you'd you'd have to double you'd have to really increase it. High inflation is and that's what's gonna lead prices to go up. I would say a few things. First off. employment rates did not recover to their You know we have. We have seen twenty years of the nation's employment rates sort of you know they. They go up and down but they haven't recovered to their peaks of the late nineteen nineties early. You know in two thousand before the that early two thousand and one recession so that to me is a signal that there is more capacity out there again. I look at the numbers of the millions of women who dropped out of the labor force because of the knee because without care without schools. They can't get to work well. That's unmet That's a capacity out there that we can draw on him. Pull into the economy. So i think that there is a lot of capacity out there at least on the labor market side and then i want to just point out that you know the last time we saw a series inflation in the nineteen seventies. A very different kind of economy than we had now was also connected to an oil shock. that was sort of out of control of our of our domestic government. And that's not really what we're looking at today. In fact what we're looking at is the need to address climate change so we can put ourselves on a on a more sustainable energy path bit that we have different risks and so the risk here i think is less out of control inflation in more that we allow a whole generation to flounder in the wake of this national tragedy and do not help them get back on their feet. If we don't help schools that's gonna burden this generation of schoolchildren if we don't help ensure people don't get addicted we know from research that will effects on families and children and their ability to keep their jobs and stay in their communities to the risks of inaction are enormously high and yes we need to be concerned about the risk of inflation but we have to balance all of the wrist together. And i think that this package gets that balance is good as we could do considerations about inflation mean the because so much money went into this package that there's maybe less money to spend for infrastructure down the line. I don't think so they've very very different. Needs right so this package is about relief. It's about it's about the economy it's about making sure that businesses and families are hole so we can get to that other side of an economy where we can all get back out there and engage with people Get this pandemic under control but that does not change the fact that we have these longstanding needs. We know that we need to ship the way we produce things away from fossil fuels. And that's going to require a. It's i mean it's a transformation our economy's undergoing and we need to make sure that that's managed. Well we need to make sure that were that. Were sort of shifting resources in a way. That is sensible for communities all across the country. That's going to require resources. But that is going to be resources well-spent. We also know that we have this. Long term needs to invest in infrastructure. We have you know in community. That i grew up in there was a bridge fell down a number of years ago. These things are scary and yet we live in one of the richest countries the world has ever seen. We need to make those investments. And then i'll note that in twenty twenty really showed us that. We must invest in our kerr economy. In fact it was exciting this week to to hear a chairman. Jay powell talk about that in in his remarks before congress this week about how you know if we make those investments in childcare that will improve labor force participation of women. That'll be good for our economy. Over the long term it'll increase the capacity nazi kind of investments that. We're going to need to make it to be competitive in the twenty th century and i wanted to ask you about how that specifically which is maybe one of the areas where this plan gets a little more criticism from progressives which is that. The american rescue plan dedicates one hundred ten billion dollars to a child tax credit that would provide parents with three thousand dollars for each child or the age of six and thirty six hundred dollars for each child under the age of sex but that would only last one year. If this is something that is so important for the economy. Why only provide it for one year. While i think the logic there is it this is you know as we've been talking about this the rescue plan so it's an important thing to do now. It's probably important to continue to do But we're going to leave that decision for another day but due to stress that it is that policy among a whole host of others. That is why this package will cut. Child poverty in half In the in this year and that is a remarkable achievement super important but especially in a year of a pandemic man. School children and kids have been so hard hit and especially in communities of color The cutting child poverty in half through these investments could go a long way towards undoing some of the damage that twenty twenty s rod so to to be a little blunt here. The new york times editorial board wrote a piece about this plan and they called it. Essentially a political gambit. Right saying that this plan would provide americans with a taste of these as as democrats describe important funds to help encourage child rearing and account for childcare but there would only last for a year and then democrats basically plan on running on this issue in the mid terms to say okay americans if you wanna keep this you have to reelect us as opposed to actually figuring out a way to make this a long term. Solution was that criticism fair. I mean really what is going on here but it is such an important issue. It's a great question. So i'm gonna economist i'm not The political strategist necessarily. But here's the thing we have this moment where we need to get out there and help the american people and we know that families with kids have been especially hard-hit said made sense to give them extra benefits that they needed right now and i take your point. This is probably something that we should be doing over the long term especially if it helps reduce poverty especially if it helps working families That's a decision that we have to leave for another day and You know if the american people find it compelling then. I'm sure we'll continue to talk about it. One of the other issues you've mentioned here. Is that this pandemic P-p-particularly hard americans of color and data from before the pandemic even started showed that black americans have two and a half percent of the nation's wealth and make up thirteen percent of the population. They now face. A steeper unemployment rate than white americans does the biden white house and the council of economic advisers support. Each other interventions would target black americans in particular and show. What would they be. It's a great question and it's so important. I mean this year has just so unmasked the very real racial on inequalities in our economy and our society and just focusing in on that you know the economic aspects the fact that african americans were both First in line for those tremendous job losses. They lost so many more jobs. In the beginning than white americans did and yet on the other hand also disproportionally in those essential jobs where lives wrong of i especially in those early months where There was far less attention to the protective gear issue. We didn't know that we shall be wearing masks or double masking. Now we've been told so. This has been an incredibly tough here and that is why this package focuses so much on again containing the virus. That's going to help black communities And there's certainly you know targeted efforts to make sure that the vaccine gets out there that that there is That their health centers out there every community that are that are helping to contain that virus. And make sure there there's testing and and all that available and then there's other policies like the minimum wage which disproportionately is earned you the people that would get that increase in the minimum wage of we raised if murders now up to fifteen dollars an hour disproportionate. Those fence would be most effective would be workers of color and particularly black americans so these policies that are going to go a long way to help and dow closes gaps. I mean there's so many other ones let me just add one other You know we knew that Win women owned businesses. They tend to own businesses that provide services especially to their communities so women disproportionately childcare centers and in fact it's women of color disproportionate us so we have no money. In the american west you plan that provides support to childcare centers and reopened to do the young to recover from this fires. And that too is gonna disproportionally. Help those black owned businesses. That are so important for their communities. I guess i hear the you know what you just said. We don't know if the fifteen dollar minimum wage is going to make it in the final package. That's in part up to the senate parliamentarian. It's in part up to joe manchin. Chris cinema but at the same time. That's not specifically targeted to black americans. Trying to account for the wealth gap and the increased unemployment rates. Are there things that the biden administration thinks that are appropriate to to do that. Target specifically black americans Certainly there's been a number of executive orders a number of things that the administration is ready. Put out that. That specifically target these questions around racial justice. And i mean you know. We're talking about the rescue plan today. We're talking about what's good for the economy overall. And i just want to stress as we built this plan from the ground up thinking about the racial justice pieces were front and center Because it's so core to the challenge in front of us and the only way that we're going to come together as a nation to solve it is to make sure that those folks that had been the hardest hit which are disproportionate communities of color. Get the aid and support the benefits. They need so that that has been front and this plant one more crushing here. That i think is particularly been on the minds of progressives in assessing. This package is last fall. The speaker of the house. Nancy pelosi suggested that the bill the democrats would eventually pass would retroactively give people enhanced unemployment benefits and at one point. I was six hundred dollars increase. It's currently three hundred dollar increase and in this package. It's a four hundred dollar increase. It doesn't look like in this package. There are going to be retroactive benefits for people who've been unemployed this whole time why not. It's a great question At this point as i watched the debates happening I'm certainly hoping that we get what was in the proposal. Which was the four hundred dollars bump up but let me actually also stress. Something that is so urgent and so important. You know the additional benefits That were part of the december package. They expire in mid march. So this issue that we're talking about here. Today is actually quite urgent. It's almost the in february. There is a short month. We've only got a couple more weeks before and benefits will start expiring so this issue that you're raising of people not getting those benefits could happen again You know. I think the moving forward. What's really important is we make sure that people get those extended. Meeks it's now the case forty percent of the unemployed have been out of work and searching for a job for at least six months. Which makes them what we call. Long term unemployed is extremely high and it. This package doesn't pass many those long term unemployed workers will lose access to benefits so You know really putting center that is unemployment. packages is is a number one priority. Got it so. Let's talk about you. Know paying for all of this. And i know that concerns about the debt and deficit have always oscillated based on who power in washington. Republicans under trump dramatically increase deficit spending. So let's kind of maybe ignore republican critiques for a moment and talk more from from the by administration's perspective. Forget the politics for a second. Is there a point at which the does become a problem and if there is what is that point this is. This is a question that keeps. Economists are fully employed. So here's what i would say. We have right now. An urgent economic issue that if we do not deal with it. It will lower productivity in growth for decades to come if we allow schools to suffer and You know school children to not get educated for example that's going to have a long-term effect on our economy in a short term effect. So you have to weigh the uses of funds that you're that you're trying to do with the long term 'cause now there's a lot of things that we increase the deficit for in the past like the two thousand seventeen tax cuts and jobs act That that were not uses of government resources that were gonna earn where the evidence says are increasing our long-term productivity and growth. So think we need to be very very smart about that but in this crisis in this moment the cost of action is just too high. Sierra questions will win do we need to worry about it. I mean we always need to be concerned about how we used taxpayer resources. We need to be concerned about whether or not the amount of revenues revenue bringing in matching the needs of the nation that have sensible national conversations about that but we cannot allow that the handicap us in our hour of need. And so the time to have that conversation is after we get through the pandemic after we've addressed the crisis and we're assertive. We're back in a good economy like we were pre pandemic. That is the moment to start thinking about how we get on that war that that path for the future but right now that is not the issue but at the same time raising taxes on the wealthy is it's popular and the president ran on it so why not raise taxes to pay for this package while i think that is The president did talk about that. He's got a lot of plans to relate out during the campaign to raise taxes for folks making more than four hundred thousand dollars a year and There's a robust agenda. They are and it is popular and it is really important but this package for relief is not the place to focus on. Pay fors so there'll be other things that we need to spend on coming down the pipeline. that that we can focus on that. But when you're thinking about this kind of emergency you just need to act and act quickly and with intent or it so it sounds like we can expect some tax coming down the pike at some point. I know we have to wrap up here. So i just wanna ask kind of more. Broadly when we evaluate the binding administration's handling of the economy in two thousand twenty two or twenty four. You know what metrics should we use because in many ways the by the administration is making big economic interventions here and so politically binding will now own the economy. How should we judge you in the biden administration at the end of all of this. It's a great question. So here's what i'm going to focus on and what i'm going to be watching as we execute on these plans get a look for the unemployment rate to come back down. I'm gonna look for the employment rate to go up. That is the share people with the job. Men a look at whether or not able to pull those women back into the workforce Brigham track things. Like you know. The you know the containment of the pandemic vaccines and all that. But you know making sure that we're also tracking bit. Your kids are going back to school. And that that that's an important metric as well But i think also a really critical piece to watch is what's happening with. Wages and incomes right are be continued to see inequality widen or do we or do we see folks at the bottom and the middle see. They're in their income. Stabilized goes up as we get to this. You know at get to an economy. That's back to normal The the questions that. I think we need to be asking ourselves each and every day and whether or not these economic gains are distributed Across the economy not just in terms of bringing women back in bit especially by race looking at it across different communities and across different parts of our society geographically. So i think making sure that we dig below the aggregate numbers to look at what it looks like across communities is a really important thing that i'll be watching all right. Well let's leave it there. Thank you heather. Thank you ailing. How they're boucher is a member of president biden's council of economic advisers. My name is gail and drew. Anna rothschild edited the video. Version of this podcast. You can get a touch by emailing us at podcasts. At five thirty eight dot com. You can also of course tweeted us with any questions or comments. If you're a fan of the show levers us rating or review the apple. podcasts store. More tell someone about us. Thanks for listening and us.
Monitor Show 13:00 03-05-2021 13:00
"Upgrade your view of mortgage backed securities us bloomberg core mortgage premiums. Emp to build custom data and analytic solutions used by industry professionals worldwide fully automate your analysis thousands of bonds and scenarios gained full access to the bloomberg prepay and credit models and analyze mortgage and structured finance securities from new perspectives with core mortgage premium. Learn more about your all access pass to bloomberg's advanced eight an olympic services at bloomberg dot com slash mortgages day and rumored the business app and at bloomberg victory this is bloomberg radio markets headlines and breaking news twenty four hours a day at bloomberg dot com the bloomberg business app and bloomberg quick tape. This is a bloomberg business flash bloomberg world headquarters. I'm charlie a dramatic reversal for the us. Stock market stocks higher across the board technology shares. A rebounding from an earlier selloff treasury stabilize the dollar rose right to the ten year yield there one point five five percent. We've got the snp up twenty-six higher by seven tenths of a percent. The dow was up two hundred thirty seven up by eight tenths of one percent. While nasdaq up. Now by twenty eight points higher by about two tenths of one percent should mention that stocks are at or near session highs most major groups in the s. and p. five hundred advance led by energy and consumer shares. While this morning we did get a better than expected jobs. Report reaction from the white house. Jared bernstein is a member of the president's council of economic advisers. He spoke this morning with bloomberg television and radio ninety percent.
Credit where credit is due
"The State of the Union when it comes to healthcare trade and all the borrowing to pay the government's bills. I'm David Brancaccio. During the State of the Union address US president trump emphasized what he sees as the restoration of America's place in the world is trade deal with China and the lowest unemployment rate in fifty years he also also talked about healthcare. Good life for American families also requires the most affordable innovative and high quality healthcare system on earth before I took office health insurance premium said more than doubled in just five years. I moved quickly to provide affordable alternatives. Our new plans are up to sixty sixty percent less expensive and better. He went on to say he's made a quote ironclad pledged to always protect patients with preexisting. Conditions a major concern among voters according to opinion polls critics say the president has pushed legislation regulation to erode or eliminate protections for people people with existing medical issues. The administration also supports a lawsuit that declares as unconstitutional Obamacare law that forces insurers to cover preexisting conditions for more on the economic and health care policy implications of the state of the Union speech. Let us consult economists Glenn Hubbard Dean at the Columbia Business School and chair care of the President's Council of Economic Advisers under President George W. Bush. He told me today. The president's often about the good times now was legitimate. Although there are still title economic worries there were two things I thought missing from speech. One is an issue of what we're going to do fiscally going forward with the debt that could be on the spending side or the the tax side the other is the socialism versus healthcare debate. The President mentioned the socialism word frequently Healthcare remains an important morton issue. What are some market oriented? Healthcare Reforms Administration could talk about the president. You know wisely talked about all the things he has done and taxation and regulation Asian but I think healthcare and the deficit remained in other words. If you don't like what the Democratic opponents in the twenty twenty election or saying about healthcare what what is he proposing right. There are a number of very successful potentially successful market oriented healthcare reform proposals. And I think it would help. The president went to articulate those they'd be consistent with his other economic objectives and we'd go further than just using the S. word of socialism. How much more work do you think there is to be? Don On U. S. China trade president trump didn't refer to the recent deal as a phase one he said we signed this groundbreaking agreement quote our strategy worked. Not all taken care of no but it is progress. I I have to get president trump credit for confronting China's bad trade practices But the phase one agreement is a phase one agreement. There's still big issues with China with intellectual property and also the bigger strategic question of the United States versus. This is China so I give the president credit for progress but there is much work to be done Glenn. Hubbard is an economist Dean at the Columbia Business School. He's the former chair of the Council of Economic Advisers under George W Bush. Thank you very much. My pleasure the president's headline case that these are now the good times has wait however this could be a risky strategy to pitch to people who have their own gauges of the economy. They have their own state of the Union. It may judge this impart on how their own household economy's doing Felicia Wong is president and CEO of the liberal leaning non-partisan. Think tank the Roosevelt Institute. Ms Wong thank you for joining US David so it is the lowest unemployment in fifty years people on the left enwright thought. The trading system with China was broken. And there's a phase one deal now with China wasn't the resident right to show off his the chievements. I think the real argument is how to understand what's going on under the hood of this economy First of all trump inherited a recovery. Sorry that's important to remember. He didn't mess it up which is good but it also doesn't mean that he deserves any credit for some of the things that are happening out there. That are in fact better for American workers. The question is whether the growth we see out there is either shared or lasting and we look under the hood. Growth really isn't isn't shared. Wages are barely rising even though they are better at the bottom adjusted for inflation. Wages for workers are up less than one percent rent which is worse than under president. Obama and more importantly wages are rising in part because we see minimum wage increases at the state level level. The president did refer to the fact that the lower half of incomes are improving. But you're saying yeah in part because of increases in minimum wage which the administration unlike. That's right You have not seen a federal minimum wage increase because the Republicans opposed it. But what you have seen in dozens and dozens. Thousands of states and municipalities across the country is increases in the minimum wage pushed for by labor unions and other kinds of movement actors. And and this is a lot of what's actually driving wages up at the bottom where you really see. Growth is in healthcare and other industries but a lot of those jobs are very very precarious A lot of that. A lot of healthcare jobs are actually very low wage foolish along the Roosevelt Institute the World Trade Trade Organization. I should say the World Health Organization is sharply playing down unconfirmed news reports about progress on separate drug treatments for Corona virus in in China and Britain the. WHO said today there are no known drug treatments Now the department store chain macy's just announced plans to shut down about one hundred and twenty-five stores throughout the country. The closures will happen at the weakest performing locations over three years. Marketplace's Justin Ho is with me here with details details. Yeah the company says it looked down the list of stores and factored in consumer trends in demographics and as a result about one hundred and twenty five of its stores. I need to close. We don't know exactly which stores will close but the closures will happen at what the company calls Lower Tier Malls. macy says this is part of a big structural changes going through to lower costs to set the foundation for Growth. Even if it's shrinking at the present I see the companies also streamlining its corporate structure at a company. Says it's going to move it's digital headquarters from San Francisco to New York. It will also close its headquarters in Cincinnati. Meanwhile the company says it's going to shed about two thousand corporate and support jobs macy's this is also wants to open more stores outside of malls. What's going on there? Yeah a new store format. They're branding it market. By macy's the stores will be a lot smaller and macy's he's wants to open them not in malls but in suburban shopping centres. macy's is not the first to go this way just yesterday. The beauty chains four announced. It's also going to focus on opening opening up stores outside of Malls Justin. Thank you in New York. I'm David Brancaccio. This is the marketplace morning report from A._P._M.. American public media.
How Biden's Diverse Economic Team May Impact His Policies
"This message comes from. npr sponsor. Adian the future payments platform welcome all payments beyond the cutting edge of customer experiences. And grow your business with adian. Visit a. d. y. e. n. dot com slash. Npr to learn more president elect. Joe biden introduced today. His team tasked with rebuilding this devastated economy. Four women including janet yellen his nominee for treasury secretary and three are people of color. Wally will be yellen. Deputy near attendant is his pick for budget director and cecilia. Rouse has been chosen to chair the council of economic advisers but what does the gender and race of the picks saying about what kinds of policies they may put in place. Our next guest has some thoughts on that. She is a communist. Lisa cook and she served as an adviser under president. Obama and she is a professor at michigan state university. her work is focused on the impact. Racism has had on holding back the economy. Good morning good morning so yellen ten rows of work to increase worker earnings and reduce racial and gender discrimination. The economy for example. What does that signify about the priorities of this team. It suggests that the biden team has a really good grasp of what is happening in the economy. Not just in the pandemic konomi but the broader economy and the more long standing Me and that he is made a priority he's he is prioritized The the wellbeing of all americans so interested in the aggregate but in the distribution of income and well being in the economy. That's what it suggests to me. Well you're talking about inequality essentially yes. We mentioned the diversity in these appointments. How much does that matter. It matters a great deal. One of the things Janet yellen has said and certainly said is chair of the federal reserve. The first woman to be so that the financial crisis was actually a result of not having enough Lived experience in this diversity of lived experience of the economist who were judging the data related to the crisis so it says to me that we really need people in positions of economic policymaking who have different types of lived experience you have different backgrounds who understand the data from many different perspectives. So they're maybe trained trained some little but it's group think that can That can impede us from understanding Economic and financial crises so given that she really pushed forward on diversity efforts at the federal reserve when she was a chair and before. That seems to me that this is a really important priority for economic policy-making Let me ask you a bit more about this. You've written about this extensively. That representation matters that teams with women on them for example are more productive that having diverse leadership allows for more creative solutions to problems. But isn't there some sort of magical thinking when we've seen that simply having a black or brown person in a certain job translates automatically to more equality There needs to be systemic change. So what do you see happening there to sort of change. What we've seen so far. I bet you're exactly right. It is not a panacea. It's not a magic formula. Having more representation doesn't automatically mean that however when people have different lived experience Experiences for example. They can say something like well. I remember my aunt getting exotic mortgage for example during the two thousand eight two thousand nine crisis. And what we know is that black and brown People had many of these exotic mortgages and they were canaries in the coal mine. So if you were watching these very closely he's or more high interest and and sort of not really based on solid ground to prime. That's right exactly They would be a canarian coal. My this would be a leading indicator and this would This would give us an indication of what will happen in months or years to come in the economy so different people with different lived. Experiences may be able to say more about The economy and how it's playing out. How different people are experiencing the economy. This pandemic of course is impacted communities of color disproportionately Not only when it comes to health but also economically. What do you think i needs to happen. And just in a few seconds. The thing that i needs to happen is that there has to be greater Relief that comes to state and local governments Come aid that comes to small businesses aid that is not necessarily in the form of debt but the but in the form of Also in the form of grants And i think that for closure and forbearance relief have to happen as well. There's a lot that needs to be done to address the pandemic indeed economists lisa cook as a professor at michigan state university and she is a member of the biden harris transition team. Thank you very much. Thank you this message comes from. Npr sponsor three am who continues to expand production of the respirators. Frontline workers need globally and is on track to supply two billion by the end of twenty twenty more at three dot com slash. Covid three m science applied to life.
Monitor Show 15:00 02-05-2021 15:00
"Capital of the world. Twenty four hours a day bloombergcom on the bloomberg business app ended bloomberg. Quick take this is bloomberg radio bloomberg world headquarters. I'm charlie pellett. We moved into the final hour of trading on this friday february fifth stocks higher across the board as he is on track for a big winning week stocks extending their rally after week forecast job state or bolstered the case for president biden's one point nine trillion dollar corona virus relief package. The house adopted the budget resolution. That cleared the senate early today. Paving the way to pass a stimulus bill in coming weeks with only democratic votes most major groups than the s. and p. are advancing. Snp up now by thirteen a gain of four tenths of one percents. The dow off session highs up seventy seven up by three tenths of one percent. S&p at a record nasdaq also record up seventy right now. A five tenths of one percent ten year down eight thirty seconds ten year yield one point one six percent gold up nine tenths of one percents eighteen. Ten the ounce silver of two point seven percents and We have got west. Texas intermediate crude on one point three percent fifty-six ninety-five about a senior economic advisor to president biden says disappointing growth in the labor market. Last month strengthens the argument to deliver more fiscal support to the economy. Heather bouche as a member of the white house council of economic advisers and. She was interviewed this morning on bloomberg television and radio underscores that without further aid. Our economy is going to continue to struggle. We need to get that aid out to the families and businesses. That need it. We need to make sure that we spend the resources we need to contain.
Bidens economic think tank
"This marketplace podcast to supported by eighty wine works a b. corporation dedicated to combining commerce with conscience offering ridiculously food friendly pinot noir pinot agree and chardonnay. Eighty wine works. The essence of oregon and by alarm dot com keeping millions of homes and businesses safer and smarter every day alarm dot com is redefining home and business security with smart features like voice control customized. Smart alerts alarm dot com unites your security locks doorbell camera lights video cameras and thermostat into one smart system with one single app to control it all learn how to protect your most important investment at alarm dot. Com people are policy. That's it that's the open from american public media. This is marketplace in los angeles. I'm carl rozelle. It is monday today. The very last day of november twenty twenty. Good as always to have you along everybody. There's a thing we started saying on this program maybe five six years ago before the last presidential election for sure that headlines about a strong economy or all well and good but if people aren't feeling it in their daily lives then it kind of doesn't matter and i want to stress the people thing here because that is where we start on this monday those headlines which are fundamentally about economic policies right those headlines are made by people as those policies are and we learned more today about the people who are going to be making economic policy in the biden white house former fed chair. Janet yellen as we told you is the pick for treasury secretary wally. Mo veteran of the obama administration is going to be nominated as treasurer secretary and transition team also released the names of three people who beyond the president council of economic advisers today. Marketplace's kimberly adams takes it from there. The name of the group may sound boring. I know but who's on. The council of economic advisers matters a lot in terms of the policy. Coming out of the white house says james spear who teaches economics at the university of memphis. The council of economic advisers is essentially the white house's own economic think-tank or. Maybe you could say the academic arm of the white house. The academic part of this crew coming in is cecilia. Rouse who will lead the ca. She served on the council under obama and is a dean at princeton. The other two members announced today come more from the think. Tank world jared bernstein of the center on budget and policy priorities and had their boucher of the washington center for equitable growth. The choices signal that you're gonna see maybe some more outside. The box policy ideas ideas that academics might think are a little bit out of the mainstream thinking differently about the role of wall street and big corporations. How much debt is tolerable to achieve. Social goals seem a giant. Chandran is an economics professor at western university. She says it's notable all three are labor. Economists i see this as really signaling that getting people back to work. Those improvement economic well-being for the poorest americans and racial minorities is going to be a top priority. Having this particular group at the table for economic decision making will also change which ideas are brought to. The table says former fed economist. claudia som- who also spent some time working at the c. e. a. And so you'll see that in the type of analysis that the president and the white house gets is truly believe that more diversity brings better economic policy if confirmed by the senate rouse will be the first african american woman to ever lead the ca in washington. I'm kimberly adams for marketplace of very quick entry in the what is janet yellen thinking sweepstakes day from the nominee herself in her. Very first tweet. We face great challenges as a country right now. She said to recover. We must restore the american dream a society where each person can rise to their potential and dream even bigger for their children. I mean yes obviously to all of that but that is way more than five words. I'm just saying okay to corporate news now the mergers and acquisitions desk as in p global yes that s and p five hundred index fame has agreed to buy ihs market in an all stock deal worth about forty four billion dollars. Lots of ways to talk about this story. It's a big one and we chose this that these companies are two of the biggest data providers wall street. We asked marketplace's andy. You're to explain what that's gonna mean for traders and for the computers that they've got doing most of the work trading on wall street. These days is different from what it used to be even fifteen twenty years ago. It's by computer citing pk. Jane he teaches finance and artificial intelligence trading the university of memphis. He says the task before portfolio managers is often to analyze corporate data coming from different sectors across many time zones data historian even defend lenders is has been a judge so that challenge is yes if you have fewer it over nose-to-nose love riding hewlett ramadan process and any nights he says that's the good news a more centralized data provider daniel ives at wedbush securities explains. There's also a downside. This increasing creasing knowledge jacko's system. Data's really become the gold for wall street. He says s&p knows this. They're doing it ultimately because it's going to centralize given more pricing power and some than they charge more for full disclosure. Snp is a marketplace underwriter. I've says this merger means less competition for the data wall street needs which has some wondering whether federal regulators will allow it. I think to large companies should always be interested in explaining to regulators. Not anti competitive. Michael goldstein teaches finance at babson college. He says there are other players out there though. They have a big competitor in bloomberg right. So it's not like hard other competitors for them. They all provide slightly different services. But i'm sure the regulators will look increasingly closely at that he says snp. And i just market may argue the companies or complimentary businesses. So having the services under one roof is good for efficiency. I made euler for marketplace s and p's five hundred stock index. Down a bit today. The dow down a little bit more. The nasdaq basically flat on the session. We'll have the details when we do. The numbers As this pandemic stretches on and on medicaid is becoming all the more important the federal and state program for medical costs for children and people with disabilities and low income. Americans and as medicaid enrollments rise. So too does the financial peril for a lot of states. Marketplace's eric bears explains what's going on there. As millions of people have lost their jobs in this pandemic many of also lost their health insurance. Joan occur is director of the center for children and families at georgetown university. Many gain has really been a first responder and the covid nineteen pandemic both from a health perspective and an economic perspective as of july four million more people enrolled in medicaid than were on the rolls in february and that number keeps growing with all those new enrolls added expense for most states makes up one third of the state budget with less income tax coming in less sales revenue and a slew of unexpected. Pandemic expenses. States are strapped. Robin routes with the kaiser. Family foundation governors are working on putting together budgets for the upcoming fiscal twenty twenty two which begins july first and they will have to assume. That fiscal relief is not available. The federal government typically matches state expenditures fifty fifty but for people who got medicaid through the affordable care act expansion. The government covers ninety percent states. Also got extra. Federal money for medicaid through the cares act in the spring. Sarah rosenbaum a health law and policy professor at george washington university. She says states are looking for any place. They can trim probably the number one thing states are strategizing around is cutting provider payments or deferring provider payments in order to free up money or losing health benefits like dental revision james nash. The national governor's association says if states can't make more trims and medicaid vital services could be cut. We're talking about a twelve irish kitchen. We're talking about corrections and public safety. So states are doing some hard math. America bears for marketplace. For your listening pleasure tomorrow morning. Might i recommend the marketplace morning report david brancaccio and the gang. Everything you need to know. Start your economic day. There was a study in the journal. Nature not too long ago looking at where people are most likely to be exposed to the corona virus among the conclusions that people from disadvantaged racial and socio economic groups have a hard time avoiding places where they are likely to be exposed including as marketplace's smithfield reports places where they go to buy food when crystal orange goes into one of the corner stores in her chicago neighborhood to grab some groceries. It is not easy to keep her distance from other people. they're trying to stores line. I going down to our house. So someone's shopping after continue to say. Excuse me. excuse me. Excuse me due to the fact that someone is standing in the line down the aisle but those tiny stores are her only options if she wants to get groceries without getting in the car in the neighborhood where she lives. We have nothing but gas station. Shopping on store shopping in a liquor store and all of them she says are usually pretty crowded. So we're the bigger grocery store. She drives to her shopping. That crowding is one of the main reasons. The study in nature found that people in low income neighborhoods are twice as likely to be exposed to covid at the grocery store as people in high income neighborhoods because he's grocery stores visited by lower income. Individuals have a higher number people for square feet and also visitors. Stay a bit longer. Serena chang is a phd student at stanford and the lead author on the paper and she says in the ten large metro areas. She and her colleagues studied on average. Bruce restores visited lower income. Individuals have fifty nine percent more people per square feet and their visitors stayed seventeen percent longer people who are lower income and maybe living paycheck to paycheck also tend to go food shopping. Pretty often says daniel block a professor of geography at chicago state university. The fact that just might not have much money available to them in any particular week might mean that they are too often to buy food which he says means more exposure to the virus and that in general is something people with money have been able to avoid if they choose to says steph funk of the chicago food policy action council when we look at who has the privilege to work from home when we look at who's forest travel longer distances to get food and then maybe even compare that to someone who can afford to have food delivered into their houses it becomes a little more clear why low income communities are experiencing higher rates of and grocery stores more than almost anywhere else she says are unavoidable for a lot of people on like eating out at a restaurant or going to a bar like those things are things you can remove from your life but folks are forced in a lot of cases to get food from a grocery store whether or not it's crowded in chicago. Crystal orange generally goes to the store a few times a week to shop for herself and also for her mom who's in her seventies and very worried about covid knowing she's very well. No art oranges worried to. She doesn't want pick cove it up somewhere and risk bringing it home to her mom. I'm samantha fields for marketplace coming up. I mean you always gotta have the newest and fastest right sometimes. They'll what you've got to have isn't what get but first. Let's do the numbers. Go down down. Two hundred and seventy one point nine. Tenths percent closed at twenty nine thousand six thirty eight. The nasdaq down. Seven points next to nothing percentage wise twelve thousand one ninety eight s and p five hundred down sixteen just about a half percent thirty six and twenty one cyber monday. Hey today by the way set to break all kinds of records up into the double digit. Be billions looking ahead. Though tomorrow is giving tuesday go is put the squeeze on a lot of nonprofits this year but employee matching giving programs series many causes eighty four percent donors. So there are more likely to give if there gift is matched. That's according to the nonprofit america's charities and here is some incentive for you somewhere between four and seven billion dollars in corporate matching funds goes unused every single year. That's according to the nonprofit double the donation listening to marketplace this marketplace podcast to support it by calm with com for business companies can partner with the number one mental fitness app to provide support and tools to build workplace resilience com has a library of content specifically designed to help work team stress less sleep better and build mental resilience and right now com is offering a free wellbeing guide and free demo when you go to calm dot com slash marketplace if com for business is right for your team. They're also offering a free month off your first year. Go to calm dot com slash marketplace. That's com dot com slash marketplace this marketplace podcast is supported by. We work as a business. You know today takes new ways of working. It takes new measures toward health and safety flexible terms for where when and how you work spaces designed with your purpose in mind it takes the innovation of a. We work office to take your business where you want it to be visit. We dot co slash future to learn more. This is marketplace. I'm kai ryssdal thanksgiving. Weekend is typically one of the big movie weekend last year in the before times frozen to made one hundred and twenty four million dollars box office over the five day holiday. Some of those by the way for my dollars this year of course is not last year. The crudes new age lead with just fourteen million dollars. None of which were my dollars. Stephanie silverman is one of the ten people. We are following our series. The united states at work and she has got her own box office to worry about. She's executive director of the nonprofit bellcore theater in nashville tennessee. Which this month reopened for in person. Screenings stephanie silverman. It is good to talk to you again. Get to to you guys first of all before we get to the marketplace of this how you doing i mean how you doing how you doing you know hanging in. We had a lovely thanksgiving. Although it you know we were supposed to go visit all our older kids in chicago and had cancelled that and hunker down at home but all in all okay i get. It has has the mood at the business. I mean it's your open but it's it's not easy. It's slow for sure but you know i guess. There's a certain sense of optimism that we have. We feel like we figured out how to do this safely right. We the way to open the way to keep patrons apart from each other yet together in a space watching a movie with numbers going up and still these conversations around whether or not you should wear a mask or you know it just complicates the ability to do things safely and still inspire enough confidence in audiences right. Yeah so let's talk about the logistics of this first of all. How many people does the belcourt theatre fit in normal times. What's capacity our largest seats. Three hundred and thirty two people the second space seats two hundred and fifty five supposed quite large especially for movie theaters and in both of them. The maximum number of people were seating is fifty six so that's like seventeen percent of the capacity of the largest hall and twenty two of the next one down so it's a tiny capacity but i took my son to see a movie and it still felt like you were watching a movie with people which is really right. The defining part of the theater experience being in community with people yeah I imagine you're not turning them around. You know you gotta the multiplex and as soon as you walk out there's whole crew there waiting to come in and clean and turning it around for fifteen minutes later. I'm sure that's not happening in the courtroom. That is not. We are taking a full hour between each screening to really get that hall sanitize. We're trying to really calm down right to lake to not follow all the normal movie theater operating rules and just go slow and carefully so that we really know checking off all the boxes one of the normal movie theater uprating rolls though is that you gotta make money doing this or you making money doing this. Well not not not by ticket sales alone for share like you know. We sold north of three hundred tickets over the holiday weekend. And i just looked at what we sold the year before and it was north of seventeen hundred ticket so the lucky thing for the belcore is that we're a nonprofit and so during this whole period we've had to sort of turn our model around and lean more on philanthropy than on earned income But you know we're able to do this because we have members who keep donating. We got a big gift from amazon which has helped just keep us operating. it was amazon. Yeah amazon amazon. They have you know. They're building a big distribution center here in nashville and they sort of stepped up in the corporate philanthropy world here in the city and they you know. They helped us with our safety precautions. Those kinds of things that the corporate community has stepped in to help us. Frankly where the federal government has not allowed us to have our doors open because it is not based on a popcorn and ticket sales alone. Seventy seven in nashville. She runs the belcourt theater there. Stephanie thanks a lot. I appreciate your time and best of luck through. Thanks guy much. Appreciate it the chairman of the federal communications commission pie announced today. He is going to be stepping down. Come inauguration day pies legacy is complicated. There was the whole net neutrality repeal python and the fcc ruled that market pressures not regulation ought to be the thing to force internet companies to treat all online traffic. Equaling maurice auctioned off big chunks of the airwaves trying to get the much hyped. But so far underwhelming. Next generation of wireless service known as five g off the ground. It has been years that we've been hearing about five g. It's blazing speeds and limitless possibilities. So where is it marketplace's. Sabrina shore went a looking well. I found it. It's here on that ferris's foam. I got the new iphone. Twelve pro and i have verizon with the five g service always gotta have the newest and fastest right right about that so it turns out that his five g does not feel that new or that fast seems to be consistent with what i had before the five g only comes with the more expensive unlimited data plan fares is on by the way now once in a while randomly. He'll get a signal for superfast five g. I did have some success last saturday. I was on the roof of a building in downtown. Dc got the signal and testing it out and it was. It was blazing fast like sixty times faster than normal but he couldn't really tell from his apps. It's one of those things where it's fun to know that you have. I guess not quite the revolution we were promised. A lot of people feel like kids in the back of the car asking. Are we there yet and the answer. No we're not there yet. Roger enterprise is founder of recon analytics a telecom media research and analysis firm. The reality right now. Is this super fast. Five g exists but it is rare. the signal doesn't go far so it's only close to special antennas. You might find them by stadium but not two blocks away lower speed five. G is more common but not everywhere it depends on the wireless company more coverage will come in. It'll get faster over the next few years. Different telecom companies have different types of five g and none of them cover the whole country. So what has been the hold up. One of the issues is the spectrum as in the airwaves. Five g travels on the band's that on the most suitable for it were already occupied here in the us. The military and satellite companies among others controlled the ideal airwave real estate and it has taken decades of negotiation sharing agreements and new technology to pry it out of their hands and other issue. There's a lot of physical construction involved in building. A five g network. Dan hayes with pws's strategy consulting typical mobile network operator in the united states may have anywhere from fifty to a hundred thousand cell sites today and it virtually every one of those will have to be upgraded to a in all that construction and all those cranes and all those technicians do not pay for themselves will townsend is head of networking practice for more insights and strategy verizon. At and t. Are both on record stating that. Their investment in building their five g will not arc's will be in excess of twenty billion. Us dollars those operators have to recoup that investment and here we get to the slow beating heart of five g. where is the money. 'cause how quickly and how much telecom companies spend building five g networks depends on how quickly and how much they think they'll earn. We know investors are on this point. Don't convince alex. Holt is global head of tech media and telecoms at kpmg. Maybe telecoms will start making their money back by charging more on people cell phone bills trying to extract more dollars for five g. has yet to be proven in fact surveys show. Only a minority of consumers would do that right now. Another option charge businesses. It's a slightly new path that we do believe in it. It's up in the air but functional fast five g networks are not a matter of if they are matter of when and how quickly five g is the future and that is the best part about it and the worst part about it. We don't know the future. Bill menezes director analyst with gartner. You know kinda the same way when four g. was launched a decade ago. I don't think anybody was saying oh great. This is going to let us create uber. Those are things that developers have helped make happen. Once they got a a sense of what the four g network was going to be capable of And kind of took it from there. The problem is five. G has been hyped to death for years so until we get doctors performing retina surgery in la over five g from new york and swarms of semi sentient self. driving cars. picking up the kids from school. We're just gonna have to be a little disappointed for awhile in new york. I'm sure for marketplace. Listen i mean i know. They're coming. But i'm not sure i want swarms of semi sentient self driving cars like right now right anyway. This final on the way out today. Which comes with this advisory that according to the tsa the sunday after thanksgiving last year was the busiest travel day of two thousand and nineteen two point. Eight million people spend time on an airplane that day. The sunday after thanksgiving this year. One point one seven million people took a plane ride setting aside for a minute. The relevant public health warnings which i probably ought not do that was sunday. Was the busiest travel day of this pandemic so far. Okay we're out. Here is your monday. Moment of economic context a nod to the reality that the virus is the economy. Right now the head of production and distribution for operation warp speed which is of course the trump administration's vaccine plan said today on. Msnbc is a quote. One hundred percent of americans wanted vaccine. We'll have had the vaccine by june. So light tunnel. Venture into corbin camera horse horseshoe mckenry days plus our daily production team though. We will see marmot by apm. This marketplace podcast is supported by rubric. The company that offers radically simplified data management for the cloud with instant data recovery and ransomware protection. Because when your data is available for everything you can be ready for anything for more visit. Rubric dot com.
State and Local Officials Webinar: The CARES Act: Implications for U.S. Economic Competitveness
"This event is presented by the council on foreign relations. Thank you welcome to the council on foreign relations state and local officials. Webinar irena fast gannets vice president for the national program an outreach here e afar we're delighted to have participants from forty nine states and territories with us. Thank you for taking the time for your busy schedules to join this discussion. Which is on the record as you know. See if our is an independent and nonpartisan membership organization think tank and publisher focusing on us foreign policy through our state and local officials. We serve as a resource on international issues affecting the priorities and agendas state and local governments by providing analysis on a wide range of policy topics and see. Afar is also the publisher of foreign affairs magazine. We're delighted to have with us today. Dr betsy stevenson previously shared her bio with you. So i will just give you a few highlights. Dr stevenson is a professor of public policy and economics. At the university of michigan. She is a faculty research associate at the national bureau of economic research and serves on the executive committee of the american economic association from two thousand thirteen to two thousand fifteen. She served on the council of economic advisers advised. President obama social policy the labor market and trade issues and from two thousand ten to two thousand eleven. She was a chief economist at the department of labor. A doctor evenson. Thanks very much for being with us. I thought we could begin. If you could talk about the new stimulus bill. The cares act on and what it means for state local governments on and give us your analysis of how you think it will affect. Us economic recovery and competitiveness. I'm great well. Thank you so much for having me. Ali was gonna actually Just take this step back. you mentioned thinking about us competitiveness. And obviously competitiveness is a relative term in terms of howard ferrings a to the rest of the world and i think the big picture there is just to realize how much kovin has subtracted from the potential of all countries Across the world. And so we've all sort of taken a step back so we want to think a little bit both about where we are in absolute terms as well as relative ta to other countries. And i i think that. I i want to give a little bit. I think there's so much confusion about. How covert back to. The economy was a state and local government shutdowns that caused a gdp to decline in. Research is actually been pretty clear on that that it wasn't actually state policy. It was actually the actions individuals. Were going to be taking on their own anyhow to avoid getting the virus in the impact of the virus itself for it when people are sick at your workplace when they're distracted by the illnesses of their families when your customers don't wanna come in Because they think they're going to get sick. All of these things really reduces our ability to to produce and that was that you always something that's happening around the world but there how you manage. The virus actually had an impact on on how much you actually got hurt by that If we also think about sort of potential gdp let me say you know. What do we mean by potential. Because you hear policymakers a- talk about a lot. And i think sometimes it gets lost in the weeds in terms of what it actually is and what we're thinking about. Is you know if we were all able to sort of produce at our best using all of our resources. How much could we be producing in total as a nation and You know there's obviously a limit to how much we can work. And there's a limit to the resources we have and so there's no limit to what we can do until we have actual technological change in other progress that generates economic growth. And the reason. I'm giving you this sort of very basic set of comments is just is in order to understand the stimulus bill in the potential is the stimulus bill. Too big or or not big enough. You have to sort of start to be able to figure out what. What are we trying to get to. We're trying to get to To our Potential gdp and in some ways potential has been permanently harmed because we're seeing companies having to dedicate resources to combating covert and to protect their employees from covid in research is starting to show That companies did less than rnd because it was busy thinking instead. How do we reconfigure our workplace to keep our workers safe How what kind of p do we need. We need to change our air circulation. All you think about all sorts of businesses. They've taken time and energy that they would have spent thinking about how to do what they do. Better and instead. They've spent the time in the manager's time resources on trying to protect employees themselves their customers from covid n even something where we think might shows up in. Gdp's doesn't show biz a hit to gdp. Think about developing the vaccine. The vaccine is what's gonna get us out of here but those resources that we're spending on developing a vaccine fighting covid are actually researchers that we're not spending on something else and so we can think about things in terms of the short run the medium run in the long run. so now let's the stimulus villainous and I think the big idea in the united states like why is the us we can take glass. Half empty perspective are glass. Half full perspective The glass half empty perspective is that the us has had if we think about a per million people. so let's put every country on the same basis One of the worst in terms of covid cases so the worst in terms of big countries in terms of the number of cases in pretty much near the top in terms of deaths although countries like the uk have an italy were worse on. Death's even the us was worse on the the number of cases. And so in that sense. That's the glass half empty. We we didn't do a great job in protecting our citizens from getting covid. I'm the glass. Half full was. We did a great job of getting money into the economy. Very early on I've never seen policymakers move quite as quickly as they did. Getting money out there in march. We've also seen the fed more aggressive than i've ever seen the fed in terms of trying to protect the economy. And so what that meant was we have this huge decline and a q two followed by an increasing juicery at an increase in q four. And i'm sure a lot of you on this call know that if we went back to q serie i would have been telling you how terrified i was for state and local government budgets. And some of you are still suffering with your budget shortfalls but nowhere near what we thought might happen In when we were looking at this inquiry uneven early q. for a fact some states even found that they didn't suffer much revenue loss at all So the states had suffered the most ones that really dependent a lot on taxes. Who tourism from conferences But you know householding tons didn't actually declined very much because of that. Enormous help from the stimulus. So what we've done is we've now layered a new stimulus spell one point nine trillion dollar stimulus bill on top of all of this. So let's think about where what that does in terms of of plugging the hole. So a one point nine. A trillion dollar stimulus is roughly eight and a half percent of gdp. So if we spend these dollars immediately we would have a gdp that well exceeded what we would have otherwise had in twenty twenty four That's the senate which you may have heard. Some academic economists Economists wondering whether the bills to two large of we went out and spend it all today we would be trying to produce an economy. That is much larger than than is right. So that's again a stimulus bill. Round eight and a half percentage the. Up to think about that. You need to understand the size of our whole today Show in right now. Us gdp is about two and a half percent smaller than it was pre pandemic so that means us gdp needs to grow roughly two and a half percent in inflation adjusted terms in twenty twenty one to put us back to where we were at the end of twenty nineteen but of course we would have had growth in twenty twenty and growth in twenty twenty one If we hadn't had the pandemic so we don't want to just go back to twenty nineteen we want to go back to where we would have been without the pandemic so that means thinking about needing another roughly two to three percent annual growth to make up for the growth in twenty twenty The didn't happen. Another two ish percent annual growth to make up for the growth of didn't happen in twenty twenty one And into lot of growth. That still needed a but perhaps not fully a the eight point nine percent. Now let me put that in the the state perspective for you i think. The state local component also illustrates this point estimate suggests that the total cash shortfall facing State for budget years. Twenty twenty two twenty twenty two is roughly one hundred. Fifty billion but the stimulus allocated three hundred and fifty billion for states territories tribal governments cities in counties. So if states go out and spend all three hundred fifty billion at once. Some states will be spending more than they had before the pandemic. So the concern. Is there enough resources. If we all go out there you know and spend all that money wants to actually allow that big surge in demand. I think so. It's not really likely than any of that that all these dollars are going to get spent right away. So the point of such a big stimulus. Bill that one point nine trillion is acknowledging the fact that americans have been saving more than ever because of the fact that they're cautious right now. They don't know what's going to happen so it's quite likely that people are going to save a lot of the money they get a by actually either saving or paying off debt to realize paying off debt is form of savings. Projects are gonna take a while to get going. That's going to be true at the state and local level so some of that money. That is headed your way. It's gonna take you a little bit of time to get it out of the out the door and what that means. Is that even a lot of this. Spending israeli designed in the short run. I think is actually going to provide as a spending path for the next several years. That's gonna eventually get us back to where we need to be on in you know twenty Twenty three in order to reach full recovery full employment so Just to put this in perspective. The consensus forecast is that we get five point. Six percent growth in twenty twenty one. Then we get slugged. Three point nine percent growth in twenty twenty two slowing to two point four percent in twenty twenty three so we sorta reach full employment as sometime in in twenty twenty three. Now i wanna. I've been talking a lot about gdp. Gross one of the things you might have noticed is that there's been a real emphasis not just on. How do we get economic growth back to where it was before. But how do we get back to full employment and these two things normally go hand in hand but they're not the same thing and so this shift in emphasis on full employment is going to mean that that that we. I think it's one explanation for why we have such a large stimulus. Bill trying to push as many people back to work as possible while you also have really accommodative monetary policy. I think for a state local governments at the idea that you're going to that the federal reserve is going to have very accommodating monetary policy for the next. Several years is really important. Because that means that you can expect. Interest rates are going to stay low That affects your businesses that are trying to borrow affects states that are trying to borrow and we expect interest rates to stay low because with the latest reading from the fomc said that the fed. It doesn't plan any rate rises over the next three years But one of the things we saw between twenty fifteen and the beginning of the pandemic was that that running the economy with got very hot trying to see just how many more people we can pull into the labor force Is sort of what helps us understand. What is our full potential. And we've found. We could bring a lot more workers into the labour force. So i think what you have seen is a federal government policy with lots of money coming to help state and local governments. Make sure that you're not part of the problem because you weren't part of the problem in the two thousand and eight recession. Many of you know one of the reasons why we saw such a slow recovery was because state local government employment Didn't recover to the peaks from the the last boom rights didn't recover to the to what happened before the two thousand eight recession started to decimate state local government employment until twenty nineteen. And we don't want to see that happen. We wanna see you get back to full state. Local government employment By a hopefully even earlier than twenty twenty three. Where the money coming your way. The fact that i think a lot of states local governments proactively did some early furloughs that completely stem the bleeding of state and local government jobs. And that's really important because when you lay off workers it's important you do that for your budget but you actually make your state and local economy worse because those workers spend less in your your local stores. They are less likely to spend with their low. Pay their rent They're spending less money in your connie. That has that a sort of snowball effects started. You have to do it. You don't have money. She lay people off. But you know what happens you end up with less money because you've made your economy worse and so all that money coming from the stimulus package is designed to make sure that there is no snowball effect coming out of state and local government employment. So that's sort of the big picture. Take away Just sort of end by saying i think there are stree- three questions That i think are worth thinking about And that. I am happy to talk more about this. New one is at what happened to potential. Gdp in the short run and in the long run. What are we trying to get back to. An attorney tried to touch on on a lot of that. Who wins who loses as as we recover and there you know. I think we all know that the people got hit hardest in this pandemic where people at the bottom of the income distribution and so even though what a lot of that stimulus is going straight to households in your communities. Everything's really going to shape and reshape communities in a lot of state and local areas. Where you see a lotta money. Flowing towards people at the bottom of the income distribution which will change their spending habits are quite dramatically and one hopes a catapult them back into much more stable Living and spending and working. And then i you know but the sort of big thing to realize is that we still see seven hundred thousand people week losing their jobs. There's a lotta Destruction still going on And yet we're starting to build back so we're gonna have this simultaneously building back while seeing your businesses on main streets. Continue to shut down and you're going to be dealing with these green shoots of growth while you're still seeing businesses announced that they just didn't make answer then. My third question is we should be thinking about. How does our global position change and that will change depending on how we react what we bring back to a us shores to do sort of re shoring. Which i think we're seeing a bunch of businesses doing as well as how change our import behavior and what happens to supply chains that have been very very clogged throughout the pandemic and are starting to to unclog right now The in the really big picture way. We've seen just enormous movement in adoption of technology and that is going to affect hauer economy. Plays out over the next five years and that very likely does shift us to hopefully a more dominant global position but realize that the big learning we had from technology has happened in a lot of other countries although not equally across i think the us has been particularly good at getting people to be very productive at home to learn new technology and it changed where we are on the adoption path of law of new at new technologies whether it's shopping online whether it's working and having meetings online whether it's using cloud based software on we've just had this very big surge enforcing us all to adopt much faster than human nature usually let us adopt so i brought a lotta is choose to the table. Why don't i stop there so we can turn to questions. Betsy thank you very much. That was terrific. Let's go to all of you now. to ask your question you click the radio icon on your screen. And when i call on you accept the Prompt and state your name and affiliation please that would be most helpful You can also submit a written question by the qna feature in your zoom window. At any time. I see already have a few questions coming there. But i'm gonna. I go to the raised hand patsy sullivan and if you can see yourself there you go. Hello can you hear me yeah. My my name's patsy sullivan on from middlesboro kentucky and i'm a city council Of course the pandemic hit hard here were in coal country. mock concern. I was listening to you talk and is gone. A edp both ways on the cares act and and you know anybody appreciates money from the government And and helping out my thing about it is is a. It'll help in the short term and yell leader will stimulate the economy. But i don't. I don't see how the growth will be three or four years from now because we're going to have to pay that money back somehow the tax payers or whatever i mean in in short-haul i know people's wanna go out and spend money in stimuli things like that but in the long haul it's gotta come back. I mean you know. we can't keep printing. Money is going to have to come back. So i mean that that. That's what that's what when they start talking about this and everything And like you're talking about resources and building new jobs and things like that. We have resource jobs. this win. why that's well pay. They should should've kept on track along with this for the gdp grows. See what i'm saying. So i if you wanna explain understand stimulating economy which cars stuff but it's it's it's going to hit a wall somewhere it can't just keep building scott come by If you kind of want to explain that to me yeah. So i think they let me. Let's get back to that. Because i think that's such a good example of how stimulating the economy actually does generate. I think permanent lasting benefits. Show what we saw. In march of twenty twenty was enormous decline in consumer. spending people. were terrified to go out and buy things because they didn't know what was going to happen to their household income so this isn't just about needs spending the money that it means spending the money. The government's sense to put this in perspective. Today have two trillion dollars in savings than they would have had without the pandemic so that sounds crazy right like. Oh my gosh. We had tough times. How is it that people have more savings not crazy. It's that people think times are bad but they could get worse so i better put some money aside the problem buying things And this was particularly true for the wealthiest household so of that two trillion dollars more than a trillion of it was How the sort of top ten percent or even richer households in so they didn't. They stopped traveling. That's why there wasn't money going to the airlines. They stopped going out to restaurants because of the pandemic. that's what we saw a lottery shuts. So would the stimulus. Bill did was a first of all supported industries where there was no way to get to stimulate demand. So that's why you saw money going to the airlines. The concern was while if the airlines go out of business because nobody's flying during the pandemic and they don't have the resources to sort of keep going Come out of the pandemic and we won't have any airlines if we don't have any airlines that potential. Gdp was talking about is going to be a lot lower because it's gonna be harder for us to get our stuff and our people from place to place so we want to do things like save the airlines. It's also the case that as you give people money will then. They became a little bit less nervous on. Maybe they didn't go back into restaurants but they ordered more takeout so we saw consumer spending really a rebound in may and that rebound is actually why we had Economic growth in the third quarter of twenty twenty Why we ended twenty twenty. Gdp only being two point four percent below where it had been in twenty nineteen even though it had declined by almost ten percent in the second quarter that means we made a lot of that back up in the third fourth quarter and what that did was prevented permanent damage. That meant permanent. Damage is what happens when you have a business completely shots. So it's gonna it takes a lot more time to open a brand new business so if you have permanent damage to the economy that reduces potential. Gdp that's also going to reduce tax revenue. So when you talk about having to pay back things that were the cares. Act well if we if we've kept those businesses intact then there's more income that's going to be coming in. There's going to be more revenue coming in some of it actually pays itself back naturally by having prevented the decline in the economy because people over over the next several years pay taxes on income. That wouldn't be there. Think about how slowly were coming. Out of the two thousand eight recession and how much more tax revenue. We would have raised if we had just been if we'd been say twice as fast coming out of the recession so the idea of the stimulus bill is. Can we speed up the recovery in a way that that means that we preserve potential gdp and we have a bigger economy going forward forever. Now you sort of asked another really important question which is in all of this though. There are permanent changes happening in the economy that are not really about the pandemic but that the pandemic may have pushed along a quite rapidly. So i talked about the. We've had this big infusion of technology adoption that's fantastic for some people but for others it's terrible would never gonna have as many retail sales jobs in the united states. Sue somebody working at a out counter as we had in two thousand nineteen again. That is my prediction. We will never have as many will never go back. And that's because we were already moving to more people online shopping to less storefronts being more expensive to get physical people into your store so if a that means that people who relied on working retail sales jobs to make a living have to find something else to do and transitioning them is going to be tough. And that's one of the reasons why it's going to be important for workforce development programs to be helping people make these kinds of transitions. You're not just gonna see The most vulnerable workers unable to find work. But you may see people with more work experience in higher skills that are struggling to find work and to thinking about expanding our workforce development programs in a way that caters to a wide range of people who are dealing with very rapid sectoral. Change is going to be important in a again. I think this is a one reason why it's so useful to have gotten the stimulus funding Even in realize as an economist. I'll just plain out. Not all budgets are fungible but getting this kind of relief from the federal government does give you a little bit more breathing space in programs that you might fund and therefore you can think about it as covering all sorts of things even if the bill or a helping to facilitate all sorts of spending even though the bill was very specific in terms of funding for things like k through twelve education for small businesses for restaurants for a for a very For making up for for actual state and local employment to the bill was sort of more narrow though than the impact on. Your budget should be because you know. Hopefully there's some fungibility. Although as i said i realized not complete i bet she just to follow up. Are you as an economist concerned. There's been a lot of debate. About how big our deficit. How big can or should we go. Is our deficit out of ballooning out of control or the right now. The answer to that is no and i understand particularly a lot of older folks who I might even put myself in that category so not to insult anybody who remember concerns about the devastating in the nineties. In the efforts we made to try to bring the deficit down the thing if you go back then to the nineties interest rates were higher and that meant that we can see real. It was really difficult for businesses tomorrow. businesses facing a. You know seven eight percent interest rates that in part of that was due to the fact that there just wasn't a as much savings out there for businesses to borrow ed and businesses. Were trying to do a lot of borrowing to government deficits were crowding out the ability for the private sector to borrow. We do not see that today. Interest rates are likely at zero right. The federal reserve has pinned interest rate to zero. Because they can't go any lower and interest rates prior to coming into this. We're already really low near zero. So we've had these very very low interest rates which Some economists have pointed to a secular stagnation or just not doing. We're not getting businesses are not being held back from investing based on high interest rates. So as long as the government can borrow those low rates. They're not crowding out private investors there that government borrowing isn't causing problems in the economy and does mean people's wall. Maybe you're not thinking about the kids are gonna have to pay that back. I've got young kids. They're going to be you know what's going to happen with this debt again. The the way if you go back to like world war two will racked up tons of dot to deal with the war. How did we get out of it. We got out of it by having massive economic growth so you can't ignore the impact. On economic growth. Economic growth is what helps us evaluate the debt. Thank you. there's a written question from alexander. Smith see commissioner for the city of apopka florida. And it may be too soon Since this bill just passed are there any guidelines as to how are what projects the funds the seeds received can be used for And john tauranga. Allston florida. Commissioner in florida says how the full one point nine t affect us directly If it some sent other places not quite sure that second part of that but Getting into the weeds. I can't answer that partially because nobody knows the answer yet. you might have seen that. The biden administration has appointed gene sperling to oversee a distributions. A lot of money we wanna make sure gets out there in the right ways In so you're gonna see guidelines coming out you know. Things are moving very quickly with this You know one thing. I will say is kind of a public service announcement to you guys. I found just talking to friends or posting myself to my community groups on facebook. a lot of people don't realize that the bill made ten up to ten thousand two dollars of unemployment insurance tax free and the rest of europe. Unemployment insurance of course is taxable. Unemployment insurance is usually taxable. The irs hasn't even put out the guidelines for what that means they basically told people. Just don't file yet. And that's one of the reasons why the filing day was moved to may seventeenth from april fifteenth. Because it's gonna take them a few days to start telling people what what exactly is going to mean. And how do you fill out your form now that you get to exclude you. Know ten thousand two hundred dollars about employment My public service announcement. Is you know. make sure your citizens know this The residents know this. Because i think a lot of people are are unaware great. Thank you. I'm going to go next to on sean dougherty. Who has his hand raised. High John dory trustee for the Town of firestone in northern colorado In just kind of in the same line as the last two questions talk about spending and eventually paying the piper and deficits in those types of things Just along the same line. As and it's more i mean i totally get it. I totally get the math equation that you know by by force money to the comet. Colostomy know you're gonna stimulate growth. They'll be more income taxes to to pay back. You know if you wanna look at that as jet denial you but you know just kinda philosophically like Then why wouldn't the case may that. That's the way the economy runs. We just kind of like The the the government just got checks and gives out free money and eventually the economy gets ramped up and we're paying more income taxes like why couldn't that be holistic solution in. Obviously it's a rhetorical question because at some point at some balancing point the equation doesn't quite work right and so if you could just speak to that. That'd be great yeah. I'm really glad you you asked that question and in this really comes to why did why did i start with this idea of what's the output and and that's because it doesn't work once we're at potential so if the government keeps spent trying to spend money and we're already at potential than it's crowding somebody out and so it's not going to get. We can't that's exit at some point. Growth has to come from real technological developments right we have to have innovation. We have to have new ideas that we can do things better faster. That's where economic growth comes from in developed country like the united states. I think there's a lot of confusion. People think it comes from investment in like capital. It like we get very little extra growth from that. I mean sure we don't wanna have. We don't want businesses not doing putting a new factories but our real growth comes from technological change right and we are potentially on the cost Huge economic growth coming out of Artificial intelligence in the things that we can do there but our our growth. But what has happened is when we're in a period where we've got a bunch of idle resources so we have workers who are just sitting at home doing nothing. We have machines that aren't being used. We have investments that. We've savings that aren't being used to make investments if we can take all those idle resources and make them not idle. Make them actually do something productive than we're making things better off in the government can have a role pushing us towards potential outputs. When i said there's some debate about whether one point nine trillion is too big. The debate is that if we if if we all go out and spend all that money today. We get above potential. But we don't get to operate not very long and certainly not very far above potential output. So what that means is it starts crowding out other stuff and it pushes prices up and we got higher inflation. So if you wanna think about the debate about what's the limits to government spending. At some point you have to worry about inflationary pressure at some point if we get Pressure the fed will have to counteract that fiscal policy and they'll start to raise interest rates as they raise interest rates that crowds out private investment spending. Now's exactly what i was talking about earlier. That right now. There's no crowding out of private investment spending. I'm not worried about it If the government decides that they're gonna if we start pushing out money on you know as you said what's the point where we end with a point where we end is when we have recovered the economy a to that point of potential output and let me put a very important point on it particularly for you guys do a lot of projects at a time like this where there's idle resources. It is the best time for the economy for the people in your community and for you to be out there. Doing projects like fixing roads building new schools. Whatever kind of infrastructure projects that you have on your agenda doing now. It's the cheapest time for our economy because you're not competing with the private sector. Who wants to use those resources. Those resources are sitting their idle. That's why interest rates are so low. That's why unemployment is so high so if you can get out there and used as resources you're gonna do a law to to get us back to where we should be. And then what i want you to do is when the economy's thriving pull back you don't need to be doing your investment projects anymore. That's a good time to stop. And get out of the way the private sector as uffizi just to go to the human piece of this on mir nicole chapelle who's the mayor east hampton In massachusetts on she's hopeful to see stimulus money coming But what will be. The rebound of those most affected will the rebound of those mr affected by the pandemic be sustainable. How do you best in best in those communities to empower them to pursue their best. Potentials think you've talked about the projects but if you can address shows at the lower end of the income. Yeah i i think the question is really gonna be about Wear want the is about pandemic related Sort of pain and suffering that people at the bottom of the income distribution f suffered. Some of those folks are going to be able to go back to work once the service sector starts to rebound which it will in a rebound. Like i think very sharply very quickly I i'm less optimistic. That everything's great this summer But again i think as we end twenty twenty one. We're going to see real demand for services coming back but i do think that there are some people who will find their employers gone that their jobs are gone. I think we're gonna need to help. People develop new skills find new employers. Actually just matching this is. Why is it so bad when people lose their job. We're finding a job. does not happen instantaneously right. It takes some work and it can be slow particularly if you need to change industries so if you have worked in the mall in a clothing store for most of your life on there are just fewer of those jobs around. You need to start thinking. What should i do. Instead is home. Healthcare worker in my future is a in what. What kinds of things can i do. And what kind of training do i need that. So i do. Think there's gonna be some of that reallocation. But i also think this is a really good time for a lotta these communities. Who had people have been hard to employ for before the pandemic. How can we think about a developing programs to help transition people into more stable work a lot of the growth. I mentioned this at the beginning. Mytalk our growth over the last two decades has really been in the service sector but realized that services are not just about serving coffee or you know the bottom end of the income distribution their service sectors Runs the gamut of the income distribution and actually a third of our exports are services so we accept the fact that most of the jobs are going to be in services and then try to figure out what are the skills. People need to thrive and twenty century service sector based economy. A lot of job growth in the twenty first century has been in education and health services that got really hit by the pandemic. But i expect to see wide growth. Zehr gun As we come out of the pandemic and so thinking about how to make those jobs better jobs but also how to train people to take the jobs that are there is going to be important. Thank you going next to herald young. Who is raised his hand. Please yourself. okay. I'm harold young with orangeburg county a county administrator. I just like to thank the administration for getting pushed through. 'cause we we definitely need this money at this down The quick question. That i have is. Is there an expectation of us as communities to give as county government. Give some of that money to the Nonprofits because they were listed in that in that part of the bill. So i appreciate your question. I i you know. I'm not gonna be able to enter detail on that as a senator earlier partially. I think it's because You know the a really exactly what. The rules are And how they're going to implement right to that. Guiding know guidance is not out yet. That i'm aware of And so i. I don't wanna comment on want rules. You'll have to face. We are going to put together another webinar. When there's more clarity on these specifics for the bill So keep a lookout for that on. There is I know that there is going on and how it's going to be deployed So we'll we'll keep watching that but going to a written question from derek backer who's sitting administrator for city of san borough in pennsylvania. Do you know betsy. What was the formula that was used. Decide the funding allocation from the stimulus package to local municipalities I can say is that you know there is There was money. Set aside specifically for counties which were deemed to be extremely hard hit by the pandemic. so there's a formula there that provides an extra sixty five billion that will go a based on how much damage you faced the a lot of the bills. So you've got a three hundred and fifty billion in state and local assistance. And then you've got one hundred thirty billion for k through twelve education Forty billion for higher education seven billion for restaurants seven billion for broadband to. There's a lot of money it in this bill. Some of which is very specific in terms of where it needs to go and some of which is is is sort of less specific But again i i. I don't want to I can't comment on exactly how things are going to be allocated. Great let's go next to kathy thompson. Who has raised her hand yourself. Kathy there I really appreciate the discussion. So far best cnn. I let me county board supervisor. In allegany county wisconsin and We have A number of projects that we're looking at doing but i I'm also been very active in the league of women voters. What's my mute. Can you hear me now. we can. Okay okay 'cause it's still said on you I've been very active in a climate change. Study and i would really like to see a lot of the monies that counties are getting in particular go towards infrastructure to build for more higher were storms That we are going to have and it just even in a state like wisconsin. I imagine they'll come a time within the next decade or so we may have to grow something besides corn Because the the climate is changing so much so So we need to have people preparing for that kind of thing and just the even just a just the weatherization of homes terms of solar and wind Going green and i know a lot of the power companies around here are really looking at investing into that. And i think if they can partner with homeowners That will save homeowners a lot money. Not you know not too. Distant future in wisconsin in terms of Saving money on energy but it will also provide jobs lots of jobs so i'm excited about the potential. Just hoping that people's imagination will go in that direction. Yeah thank you. I you know i think that you point to the fact that Something that is important to realize which is right now. Our problem is that we have all these unused resources when people don't have work We have commercial real estate that sitting bankin. We have equipment. That's not being used But what we do with. It is really up to our own decision about what's going to produce the longest running gains and the better. You are at coming up with projects that are gonna produce. Long run gains the better. You're going to be at leveraging. This current situation. Put your city your town your community in a better position in the teacher. Mid take a written question from sharon lay whose san francisco municipal agency board director some of the economic weaknesses that have been sped up in highlighted during the pandemic related structural underfunding of social needs housing affordability schools in transportation economic gdp growth does not necessarily alleviate these challenges If you could comment on that So yeah so i think you know. One of the obvious aspects of this particular. Bill was a desire to think about reversing some of the inequality that occurred not just during the pandemic but that has been occurring over time. I think the thing that was really shocking. In unexpected honestly truly unexpected was that the pandemic worsened inequality Just in a way that nobody fully anticipated for a couple of reasons one is then we already knew in the literature. That one of the reasons why we're seeing widening inequality is because businesses that we call can scale without mask in other words businesses. That don't need. Very many workers were at are actually becoming more dominant in our economy and that is the return to be more towards capital and away from labor so it's companies gama's on fewer of their resources go view of their revenue goes to paint workers than in sort of old school retail businesses. And what happened was those businesses that have scale without mass also tended to be the ones that were more pandemic proof. So that's why we saw the billionaires become even richer during this but it wasn't just about the billionaires also found that you're sort of you know Lor pedestrian Office worker but in the sort of top ten percent of the income distribution was better able to thrive and be more productive at home than people expected and fact one of the reasons why employers are thinking about keeping people at home at least part of the time was because we saw saw. What office workers were doing at home was they were more. Productive work somewhat offset the fact that a lot of management time was going to dealing with the pandemic which of course making the less productive sale. You you will see this widening inequality as you saw people. At the top end of the income distribution many of them feared income losses because they saw their peers income losses or they themselves have income losses in the two thousand. Eight recession. didn't actually end up having them. And that's why i told you that. We have two trillion dollars in excess savings and most of that came out of the top people the top end of the income distribution were fearful of losing their income. And they didn't but they saved to prepare for it show we. This is not this widening inequality that we saw over. The last year is actually coming. After decades of widening inequality So expanding the child tax credits so that it is more fully refundable to that. It goes to ninety two percent of kids expanding the earned income tax credit. That is bow seeing what happens if we make sure that people at the bottom have more resources. How does that end up. Shaping our overall economy And you know it that is non does not a permanent change and i think the big debate we're going to have to have is whether or not that's a permanent change that we wanna make going forward whether we redirect more money from the government towards the households at the bottom In a way that that supports them. Or whether we wanna do this. Using psych requiring is to pay workers at the bottom more or whether we want to do this by providing access to free College more education or whether we want to do this by providing access to training programs with are real structural problems that mean that wages real wages have been declining at the bottom even while they're rising a very rapid rates at at the top. Thank you on gonna go next to John gessler who has his hand raised. I wanna comment I really appreciate. Cfr providing this webinar. It was most enjoyable and most informative I have a question concerning the concept of re shoring. You anticipate that re shoring is now taking place and will continue to take place however when the administration talks about raising the corporate tax rate from twenty one to twenty eight percent. isn't that going to have a negative impact on the concept of re shoring Well i i don't know what the administration's gonna Or what congress is going to decide to do with a corporate income tax think I think the debate over the corporate income tax often gets confused by the fact that people think corporations aren't people and so of course corporations we. We can't tax non people we only tax people and so then the question is who within the corporation is getting taxed And how those people better avoid taxes into that your concern is that if we do not have a competitive corporate tax rate a lot of companies will leave so we obviously can't just raise our corporate tax rate without thinking about what's happening globally to corporate tax rates and where our position will be and i think a lot of the desire to raise the corporate tax rate comes from the fact that you know this point i was alluding to about you. Know companies are to scale without mass. What we're seeing is a lot more. Money is going to return on capital. That means a lot. More money is going to investors and less money is going to workers but we still do a lot more to tax workers than to tax those returns on capital. We have to think about how we're going to reshuffle our tax base in order to make sure that people whose income comes from returns on on capitol are also paying their fair share whether that comes from raising the corporate tax rate raising raising taxes on individuals who get the benefits from corporate profits. I think is really something that we need to be debating. Thank you and with that. We're at the end of our time. I really apologize for not being able to get to all of your questions There several in there about the specifics of of the stimulus package again. It's early days and so there's work being done on that and we will be Standing up a call to look into How it's it's being allocated to the states and how you can use it in the coming weeks. I don't know what the timeframe is for that but we will. We will keep an eye on that. So dr stevenson. Thank you very very much for being with us. We really appreciate it And you can follow her on twitter at betsy stevenson. So thank you very much thank you. I was nice talking to everyone today. For more event audio subscribe on itunes or visit us at c. f. r. dot org.
Bidens wish list for economic relief
"This marketplace podcast is supported by rapid seven a leading provider of security visibility analytics and automation in these rapidly changing times security teams have their work cut out for them. Rapid seven insight cloud security solutions. Simplify the complex and help security teams reduce risks and shutdown attacks to learn. How rapid seven can help your company securely advance visit rapid seven dot com this marketplace podcast is supported by transfer wise. A new way to send spend and receive money internationally. Get the real midmarket exchange rate. Every time you send money to eighty countries join over nine million people and businesses and transfer wise for free at transfer wise dot com slash marketplace. President-elect biden's wishlist for economic stimulus. I'm david brancaccio. Incoming president biden laid out. What he's calling his american rescue plan last night. One point nine trillion dollars a programs to get people through the pandemic marketplace's. Nancy marshall genzer joins us with some details for individuals. What's in there. Well david there are an additional direct payments of fourteen hundred dollars for most americans that adds up to two thousand dollars per person if you combine it with the six hundred dollars in the most recent and relief package and the extra federal unemployment benefit would be increased to four hundred dollars a week. President-elect biden is trying to narrow the wealth gap he says the pandemic has made it a lot worse. You won't see this pain if you score if your scorecard is how things are going on wall street but you will see it. Very clearly the examine. What the twin. Crises of a pandemic and this sinking economy have laid bare an ansi. Some goals were longer term biden. Wants a nationwide fifteen dollar an hour minimum wage but the emphasis last night really was on immediate relief. We talked to jason furman about this. He's a harvard economist. Who was chair of president obama's council of economic advisers. He says the thinking now goes like this. These households are hurting. How can we help. These states don't have enough money. What can we do to get the money. we need. Money for vaccination. Let's do that chances. Congress will go along with this democrats of course will have a razor thin majority in the senate but biden could get support from some republicans who've been urging him to top up the relief checks to two thousand dollars. Nancy thank you stock index futures. This morning down with the s&p is down five. Tenths percent some companies with frontline workers are offering incentives to encourage employees to go get vaccinated. Here's marketplace's nova safa. Regulators have ruled that companies can require most of their workers to get vaccinated but employers appear to be opting for encouraging workers. Instead instacart is giving its grocery delivery drivers a twenty five dollars. Stipend the grocer trader joe's and the variety store chain dollar general are offering the equivalent of four hours of pay. The companies. say they want to make sure workers don't have to choose between maintaining their income and getting vaccinated neither dollar general nor- trader joe's have in store pharmacies target which does says it won't offer incentives but those pharmacies will make vaccines available to staff. The government's vaccine advisory panel has set grocery workers among the second group to get immunized. I'm nova off for marketplace this marketplace podcast is supported by synchrony. Customers are spending more thoughtfully these days. If you want them to choose your business you'll have to stand out. Synchrony can help their financial and technology solutions company that partners with all types of companies and understands the challenges of running one today they're financing and payment tools can help your customers get exactly what they need. So you can move your business forward visit synchrony dot com to learn more in twenty seventeen. The value of the cryptocurrency. Bitcoin inflated like a dutch tulip bulb or a dot com version. One company and later collapsed. But since this last october the price of bitcoin has more than tripled from eleven thousand to a record high of nearly forty two thousand dollars one week ago but even though all assets that go up can come down now. Institutional investors are taking bitcoin and other digital assets. More seriously jordi. Visser is president and chief investment officer of weiss multi strategy advisers. Welcome thanks dave. Glad to be here and there was a nasty moment there where couldn't go down then. Suddenly it went down terribly about four years ago. One would be forgiven for being leary this month. New all-time highs well. This is very different to me. This is not the same as as what was going on then. I won't even call on acid back. Then i would say it was a thought him the most impressive thing and the first thing that matters now is that time kind of decides whether something was a bubble or just the early stages and that's what's changed this time and quality of the investors. But it's your sense here in two thousand and twenty one that bitcoin has reached a point in which we call it. Its maturity that big dog investors institutional players should be able to put some in their portfolios. You think yet. Why think there's four parts to this. That i think people are becoming more comfortable and remember the fiat system which is what all assets are there about trust in beliefs so bitcoin is no different and where there's a growing belief is as a store of value similar to gold. There's a growing belief of it as a future medium of exchange being used as a payment system which gold never was able to accomplish. It's definitely a future of technology but then you also have something. Which is we really printed. A lot of money last year during twenty twenty and it continues and if you can just print money out of thin air in a way that had never been done before at sizes never done before then i think. Bitcoin becomes a fiat. Acid inflation hedges. Well you just have to convince. Famed investor warren buffett. I mean last. I heard he couldn't stand this bitcoin stuff. Well i don't think you'll ever get everyone involved. I will remind everyone. There were a lot of people who doubted the iphone in two thousand seven. The demographics on who are the purchasers for the users of bitcoin is skewed dramatically towards the younger demographic and specifically below the age of fifty. The reason that's important you try to find what people will purchase going forward. Warren buffett will be the first person to admit he probably has no reason to buy bitcoin. The generational wealth transfer around the globe is approximately sixty eight trillion dollars. Which will be leaving the baby boomers. And going into the millennials jen's ears and down the food chain who are more accepting of this so as every day. There's another baby. Boomer that gives money to their children or grandchildren. Those are people that view it. As an asset already jordi visser is president and chief investment officer cio of weiss multi strategy investors. Thank you so much. Thanks david and beyond the heavyweight institutional investors rules are changing that could make it easier to ask a registered financial advisor at bitcoin portfolio marketplace dot. Org if you missed that piece on the air today. I'm david brancaccio. Marketplace morning report from apm american public media this marketplace podcast is sponsored by merrill with personalized planning tools and insights merrill edge. Self directed offers timely. investing ideas. to help you find answers like how are your investments. Doing what is the market doing put investing within reach and get started at merrill edge dot com slash within reach merrill lynch pierce fenner and smith inc. registered broker dealer member sipc.
Is $1.9 Trillion Too Much?
"Over the weekend the senate approved a one point nine trillion dollar relief package. The measure now goes back to the house where it's expected to pass along party lines as soon as tomorrow. The american rescue plan as it's being called would give some americans fourteen hundred dollar stimulus. Checks provide a tax credit for families with children and extend an extra three hundred dollars per week of unemployment benefits among other things but the bill comes after the country has already spent over three trillion dollars on covert relief in the past year. So at a time when the economy is already improving in backseat rates are growing. We talked to a top white house economist about the risk that the bill could have unintended consequences. Welcome to the journal our show about money business and power. I'm ryan knutson. It's monday march. Eighth coming up on the show. A conversation with an economist from the biden administration about the one point nine trillion dollar relief. Package this episode of the journal is brought to you by noor tech. Od t japan. Seventy five milligrams learn more about one dose tech od t at ner tech dot com This morning i spoke with jared bernstein. He's a member of president. Biden's council of economic advisers and this economic crisis isn't his first rodeo. I wanted to start by going. Back to two thousand and nine. When you were involved with the obama administration's response to the financial crisis. Were there any lessons. From the two thousand nine stimulus bill in terms of its size or its scope or ambition so i was there and i think the most important lesson is the idea that the risks of doing too little are greater than the risks of doing too much especially when you consider the extent that cova nineteen shut down the american economy. And it's still on the land. This crisis is not behind us. The idea of going big hitting back hard and finally dealing this virus in this crisis the knockout blow that it has heretofore. Alluded is top of mind of president. Biden's motivation here. And if we don't do that we fail to act with enough emphasis strength. Alacrity we won't get to the reliable robust racially-inclusive recovery that we need to finally hit on the other side of the crisis will continue to go back and forth and wait and see and up and down and a good cycle followed by a bad cycle. That kind of stop and go has been really difficult and painful. For many of the american people and the american rescue plan has the strength and the power and the variety of components to get us to that other side of the crisis so if the lesson from two thousand nine was that it's better to do too much than too little. It's like you could argue that the. Us has already been applying that lesson. We've already spent around three trillion dollars on relief packages since the pandemic. So why do you think we need another one point nine trillion dollars in less than two weeks from the moment you and i are speaking eleven million americans are gonna start losing their unemployment insurance benefits right now. There are nine point. Five million fewer jobs than there were a year ago. This is a larger jobs hole by eight hundred thousand jobs than the depth of the great recession. So we're actually in worse shape than we were there. There are four million americans who've been unemployed for at least six months the concern there. Is that if people get stuck in long term unemployment for too long what economists call scarring effects ensue and they can risk being permanently out of the job market which does long term damage to both their lives and the macro-economy last month's pace of job growth came in above expectations. Even at that pace it would take us more than two years to just get back to pre pandemic employment levels and We're looking at unemployment rates for african americans. As of last month that were just under ten percent. Nine point nine percent for blacks. Eight point five percent for hispanics. Those are recessionary unemployment rates so the urgency of the american rescue plan is in. My view is a columnist. Who's been through shocks. Many times in government just really amplified if you look at the the real conditions out there but the economy is starting to improve already. There have been slightly improved. Jobs numbers recently in the rate at which people are getting vaccinated is increasing. Do you think the economy needs that that much help at this moment. It's a totally legitimate question. But i think the thing that i hear when people say the economy is whose economy are we talking about. We know that this recovery has been k shaped. There are people i myself. I'm one of them who've never missed a paycheck and that's not to say that the crisis and the pandemic hasn't been a burden for people from all walks of lives but for those in the bottom half of the income scale. They experienced the bulk of the jobs. Lost the bulk of income less the bulk of the health crisis. Both in terms of health outcomes at in terms of being essential workers often with very low pay and many of these folks are still struggling about thirty million americans report not having enough food to eat. It is easy to look at. Gdp or jobs print stock market and conclude were out of the woods untold. You go even slightly under the hood so do you see this as more of a relief. Bill to plug a gap in the economy intel. Things start to turn around or more as a stimulus bill to try and get the economy moving again. I think of it more in terms of relief and rescue. But i think sometimes that distinction can be overplayed. There is little question in my mind that if we do relief and rescue with the intention with the competent governance with the vision that the biden administration is bringing to the table. Back gets us to a place where we can start more in terms of an economic recovery and less in terms of rescue and relief. If we don't deal with the virus in the ways that we're trying to do in the rescue plan helping states and localities safely reopen schools. Which by the way. That's a good example of what i'm talking about. If you safely reopen the schools you allow caretakers mostly moms to be able to get back into the labor market. If that's what they wanna do this connection between relief and rescue and stimulus is I think a meaningful one. You really don't get to recovery unless you effectively deal with rescue Relief and virus control the risks of doing too much as you were saying were less than the risks of doing too little but there are still risks when doing too much. So i'm gonna talk about some of those possible risks that come with a stimulus package this large i with the enhanced unemployment benefits the bill is going to extend the enhanced employment benefits and extra three hundred dollars per week until september do. Are you concerned. At all that this might create a disincentive for people to go back to work as the pandemic does start to recede throughout the year. First of all the unemployment insurance point. It's important to recognize that the three hundred is a continuation of a policy. That's already in place so whatever. Incentives are in the system. They're they're not being amped up ramp down and we've been able to look at whether there's evidence of any employment disincentives playing at we haven't seen them so not as zero risk something we have to track but thus far that's not been problematic you haven't seen a disincentive for people going back to work i mean we've we've talked to business leaders on the show. Who said that. They hear that when they're trying to get people off the sidelines. Who say to them that. There's just not enough incentive for me to go back to work because i'm essentially being made whole through the unemployment benefit. I know exactly what you're talking about. I think you have to distinguish between kind of anecdote and analysis. And i'm not dismissing anecdote. some people say the plural of of anecdote is data and That that may well be true But we haven't seen it in the data. It is very common for employers to say. I can't find the workers. I need sometimes. What they're not saying is that the wages. I'm willing to offer them. But i know what you're talking about. There are employers who've been talking about this but again it's the way an economist has to look at this by not so much with the level of anecdote but by seeing whether the kind of implied negative correlations exist and thus far they haven't coming up what adding one point nine trillion dollars could do to the economy. This episode of the journal is brought to you. By nerd tech obt from japan tw seventy five milligrams ner tech obt is a prescription medication for the acute not preventive treatment of migraine in adults. It's the only quick dissolve one dose treatment for migraine attacks that can get many people back to normal activities and lasts up to forty eight hours. Don't take of allergic to nurture tech. Od t the most. Common side. effect was now show for more information including important safety information patient information and prescribing information. Visit ner tech dot com. Talk to your doctor today. Only so in terms of the packages overall size one point nine trillion dollars being pumped into the economy in various ways. Are you concerned about the risks of inflation that this could overheat the economy that as the country does start to open up as more people get vaccinated that there's too much money sloshing around in the economy and it leads to harmful inflation. The answer to the question of any white house. Economists are you concerned about a risk is never going to be. Now we are always mindful of the non zero probability of any risk. You can imagine. But we've looked at this. Very carefully have been tracking. I myself have been tracking the indicators you know somewhat obsessively here are the reasons why we think overheating risk is considerably smaller than the risk of failing to control the virus. Get the vaccine out there and address the huge job gaps. You know ten million people unemployed eleven million americans at risk of losing enhanced benefits and a couple of weeks first of all the overheating folks argue that the output gap is smaller than many other. Economists believed to be the case in the in the gap essentially just being the whole that the economy is in from best case scenario. Exactly the gap is the difference between where gdp would be at. Its potential with the size of the economy would be if it were running on all cylinders and the actual size. It is now and so. That's the whole that you have to fill so the first thing to recognize this. Nobody knows the size of the output gap. But there's a decent chance it's larger than people. Think the second point is that while the checks and the unemployment insurance benefits get out of the door right away. The spend out of the bill is actually slower than some of the overheating. Folks are recognizing. I think in other words. Jared is saying that the government won't actually spend all the money at once. Some of the funds will be paid out over the next year or even longer so. The overheating theory is partially based on this idea. That one point nine trillion is going to get immediately plopped into the us economy and it doesn't work that way. The third point is that some people will save the resources that they get at least initially because this is a time when lots of people face lots of uncertainty for them to have a bit of a savings cushion is really important to. You've got very out there. You've got lots of uncertainty about the job market and people need that kind of cushion. Many people are accumulating mortgage and rental debt and so rent relief sometimes a saved and then spent a few months later. When it's most needed that also puts some downward pressure on overheating. The savings rate. You just mentioned that is another element here that there are estimates that one point five trillion dollars is pent up in savings that people have put away during the pandemic from not doing all the things that they normally do for those especially who have been able to continue to work. How do you factor that number into this. Yeah no it's a fair question. Rb was that we're looking more at a dinner switch than a light. Switch meeting that I don't think that on monday. Everybody saves everything on tuesday. Everybody spends everything. I think this unwinds more gradually. So there's another riskier which is sort of more of a political one. Which is that. Joe biden campaigned on an idea of bringing the country back together in bipartisanship. It was certainly a major feature of his inaugural address but this is a democratic bill. This is not a bipartisan bill. Why not try harder to come to a compromise on the stimulus with republicans. So when people say to me that this is a partisan bill. I have to scratch my head because i understand what you're talking about but i consider that to be a very washington view in the following sense. Well no no. Republicans voted for it. Yeah so i understand what you're saying. But here's the point. If you look at polling data this bill is extremely popular and not just with democrats and that makes perfect sense to me. Because i don't care if you have a deer or an are after your name. You want schools to reopen you. Want the virus to be controlled. You want people to get vaccinated. You want small businesses to get support. You'd like to see child. Poverty be significantly cut by the way. That's again. That is a bipartisan issue. If you look at republican governors and republican mayors and lots of republican economists. They are saying that. This is an extremely important measure to get out there and people regardless of their political affiliation. Recognize that getting to the other side of this crisis is essential if we're going to finally launch a reliable and robust recovery Is there a data point that you'll be tracking or looking for to know whether in six months or year whether this bill has worked. There's not one data point there's tons of data points on both sides of the issue. Obviously we're gonna be looking at the economy and the job market in particular. We're going to be looking at the unemployment rates and we're going to be looking at the labor market outcomes especially from persons who communities of color going to be looking at small businesses. Were definitely it'd be looking at the extent to which the vaccine is getting into the population and of course we're going to be carefully gauging. Inflationary risks along the way by looking at the kinds of gauge. As i talked about with an emphasis on expectations. i would say great. Well thank you so much for your time. Appreciate it my pleasure. That's all for today. Monday march eighth. The journal is a co production of gimblett and the wall street journal. Follow on spotify. Or wherever you get your podcasts route every weekday afternoon thanks for listening. See you tomorrow.
The Cost of Doing Nothing with Michael Greenstone
"Right now on your Wolf. Beverly Ginsburg is back to give you self care tips. You need on the human condition. Parenting your children and yourself available now for more follow at Your Wolf on social media happy listening. Hello everyone. Welcome to factually. I'm Adam conover and look. There's this voice that pipes up whenever the conversation turns to solving big societal problems to any policy proposal. No matter how logical no matter how necessary no matter how well-thought-through through this voice replies like it just heard an eleven year olds plan to buy a mountain bike. The voice says sounds Nice. But how you'RE GONNA pay for it. You've heard this voice. This is the cheap dad voice. Let's call it. That and the cheap dad. Voice is a permanent feature of America's political conversation. Let's try it. Let me give you an example. Say we need to transform our nation's health care system because it provides worst care at a higher cost than any other rich country and people here are dying as a result. So you come up with a plan to fix that you advance it and someone will respond mark. My words sounds Nice. But how you'RE GONNA pay for it or mentioned that you know it might be necessary to continue an expansion of unemployment benefits during an unprecedented pandemic. You know someone's going to say sounds Nice but how you're GONNA pay for it. You know it feels good to use the cheap dad voice right. It feels responsible. Feels a serious import nuts fiscal responsibility but the truth is but the cheap dad voice is just a rhetorical faint. Cheap Dad. Voice is bullshit because in focusing exclusively on how much it costs to fix a problem we avoid the question of how much it will cost to do. Nothing about that problem and as our guest today has shown in his work. The cost of doing nothing to solve. Some of our biggest problems is monumental. The fact is to any policy choice. There are costs and benefits including and especially when that choice is do nothing. So let's look at a real example if social distancing and the virtual shutdown of our economy that. We're all living through right now. Now we've all heard the argument that the cost of social distancing to our economy and our freedom is just too great. The Voice of cheap dad echoes in the rhetoric. How are we going to pay for this shutdown? Now there's no question that the economic damage of social distancing has been immense. You know I'm not GonNa comment on whether you're saying freedom has been violated just because you can't rip beers on a crowded beach That's not what this episodes about but I will agree. It is incontrovertible that unemployment numbers for instance are higher than at any point since the Great Depression in no small part because of all the non essential that are shut down right now due to stay at home orders. But the focus of the social distancing conversation has felt oddly binary like our choice is to save the economy or save lives which of course it is not because as it turns out saving lives has economic benefit. You know it's good for the economy when masses of people. Don't die so you might look at the economic benefit of the social distancing policies. We've had as well but if you want to do that. If you want to figure out how to quantify that benefit you always have to figure out what it would cost US economically to lose all those lives and this problem is complex from an economic standpoint. But it's far from impossible to solve our guest today. Crunch the numbers. And he found that moderate social distancing policies could save as much as seven point nine trillion dollars. That's more than a third of America's annual Gross Domestic Product. So in this case we clearly derive an enormous economic benefit from doing something and we have to compare that against the enormous economic costs of doing nothing. Here's another example. What about climate change? Our global economy has depended on fossil fuels since the end of the nineteenth century energy is a multi trillion dollar industry and the vast majority of it is based in fossil fuels so when we talk about transition to a green economy that cheap dad voice comes back right. It's well this is going to be too expensive to transition our entire economy. Why WE'LL LOSE MONEY? If we do this but again we have to weigh. What are the costs of doing nothing instead and is so often left out of our conversation? So how do we find out what these costs and benefits truly are and how economics clarify these policy disputes? Well to answer these questions and more our guest today. Is Michael Greenstone economics professor at the University of Chicago and former chief economist of the Council of Economic Advisers during the First Obama Administration? I found this conversation. Fascinating as the economic mindset is both intuitive but also counterintuitive to me. We poked at each other a little bit. We've got some really fascinating places. I think you're gonNA love this interview. Please welcome Michael Greenstone. Well Michael. Thanks for being here. My pleasure. Thank you for having. So there's this big question about Covid nineteen right now. Where we're all social distancing. Our economy is in lockdown. And there's this question that is the tip of everyone's minds of you know. When does the economic costs start to interfere with our desire to save lives right? Like how do we balance those two things? People are arguing about this on television on twitter. How do you see it as an economist? I understand you've done some work about this so I if you just step back from Cova Nineteen arrived. It moved into our living room and it brought with it to real big problems to features neither which would consider good. The first is. There's absolutely health crisis. Everyone understands that it's almost like it's from science fiction. It's as invisible. Disease seems to travel unbelievably easily across space and unfortunately kills a lot of people. So that's one on nasty feature the second nasty feature is that people in governments rightly respond to that by saying. Hey wait a minute. I'm not sure I really want to be around this covid. Nineteen let's do some social distancing and leads either mandatorily government or people's own actions. Say Know I don't really want to be in a big crowd right now Social distancing has unleashed what I think is probably the greatest economic crisis in modern times. The rate we're seeing the economy implode is. There's no historical precedents. This already. Outranks two thousand eight. Yeah we're crushing two thousand eight. Wow because two thousand eight I mean I was in my twenties. I remember listening to the news and you know trying to process it and this is a once in a lifetime. Event was how it felt and this has been going on for two months and we're already crushing two thousand eight Holy Shit. Yeah like I was actually took a break from academia and I was working in the White House in The two thousand nine and we couldn't believe we will go home everyday. Caring like on our shoulders. Oh my goodness economy lost seven hundred thousand jobs. This month will now. We're losing tens of millions of jobs. A month can even see seven hundred thousand from where we are. Wow and so how do we what do we? What do we do about this? I mean like how do we process Trying to evaluate how we feel about social distancing. And how we an those policies given that that is the fallout. Yes I think job one is. Let's try to get some information right and This is happening in. You know very quickly. And there's this sense of the fog of war here like what's left what's right. It's very hard to figure that out in real time and yet you know there's incredibly urgent questions that I think we need information for like who's going to be the hardest hit who's at the greatest risk healthwise What how can look policy? Do to make it better can policy do to make it worse? I recently gave a briefing to some people on the hill. Be Assume And it's incredible thirst for what's going on in my community and actually you said that you're in Los Angeles. A very close friend of mine from college has a travel business and he lives in Los Angeles his business. So there's a series of very very urgent questions And I think what is interesting? Is that if we had gone. If this had been a couple decades ago probably what economics could have contributed. was could be some pencil and paper and deriving under a bunch of assumptions. What was going on and what could be done. And there's still some of that going on but what I find so interesting. Is there due to this? Complete Revolution in computing power and access to data and all the buzzwords that people like machine learning Ai. In every other buzzword you like We can actually kind of figure out. What's you know to first approximation? What's going on in real time and You know I know I listen. To recent episode you had with the case and Angus Deaton. And that's exactly what they did They figure it out near real time. What's happening to a certain set of people in the United States Economy? And at even higher frequency. That's what we're trying to do In fact at the direct Becker Friedman Institute and We are trying to set Lots of economists on campus here after some of these really central questions and You know since we're in podcast landed would be a failure on my part not to announce that we actually do have our own. Podcast called pandemic economics. It's Co hosted by test big land for marketplace reporter from New York Times. Where economists come and talk about what they found out about. What's going on in real time? So one of the things that I know you've written about are the potential. Economic benefits is social distancing. That when we look at social distancing we see this horrible fallout that you've talked about that. I mean just my industry. I've talked about on the show before. Stand up comedy is dead. I'm worried about the half dozen Comedy clubs in Los Angeles. You're shutting down comics. I know being out of work That's clearly terrible. I might be tempted to say. Hey let's reopen the economy as soon as possible because I see that loss so vividly But you've written about how at the same time social distancing at this time could have economic benefits as well that we want to ignore. So what's absolutely true? Is this response. But people in government is imposing very large costs. I hadn't yet thought of Comedians of really the most endangered group. We weren't in your economic model. You didn't include comedian. No but you know there's lots of things that are missing from economic models and talking to people like you so I know it's not that big industry but it is it is people's Livelihoods Michael. I know Duly noted so. That's on the one hand in and on the other hand which you can see this play out. You can see it when Dr vouches testifying in Congress and then on the one hand and the other hand you got the Treasury Secretary We Gotta. Let let a rip and get the economy going. There are enormous potential benefits until I wrote a little paper. The took one of the epidemic models at face value and DAF model suggested that if we did pretty aggressive social distancing beginning kind of at the end of March for three or four months You could save about one point. Seven million lives in the United States and its relative to everything stays the same scenario. Like not just like the there would be no social distancing policy but people people continue to go to comedy clubs. Even if you know they wouldn't stop Goin- even on their own which is probably not the case. And if you take those one point seven million lives will be saved kind of Use Standard. So beware when. I kinda standard techniques to turn that into dollar value that turns out to be about a trillion dollars and it was very striking. That's like sixty thousand dollars a benefit for the typical American household and it almost impossible to think of any policy or actions that would create such value for people and I suspect. You'll want to unpack. Well where do they come from? Yeah the top line answer is take trillion so so this argument is let me rephrase it and see if I've got it even if you're a cold blooded capitalist who doesn't care about human life at all you care about is dollars that's your only moral. That's the only thing you make your judgment based on is how many dollars are saved banker in. It's a wonderful life. What's his name? Mr Mr Potter. Is that a Mr Potter on Mr Potter. We can even call Mister Burns from you Mr Burns. I like that. You're Mr Burns and all you're looking at is how much money the economy is going to gain and lose. You say we're losing way too much money by keeping everything closed. We gotta up your argument. Is that well? We open up one hundred one point. Seven million people are going to die and that isn't just bad because we don't want one point seven million people today or even one person to die we do WANNA save those lives but also the economic activity of those lives. Those people having jobs those people buying things. Those PEOPLE INVESTING MONEY. Those people being part of the economy. If you lose those one point seven million people. You're losing eight. Trillion dollars from the economy. Also is that what you're saying and but it's broader and so this is where I can see what you're trying to do is you're trying to paint me in the very near. You're trying to call me Mr Potter. Mr Saying I love this because I love it. When you can make you can use someone's own. Hey even by your logic we you know we should we in a better way. Yes okay and so sorry The reason I was being Brickley is what I was trying to say is. It's not just measured in like more sales at Popeye's new know James Sandwich. I understand that that is worth trying. People Love Chicken Sandwich. They let you can sandwich. But it's also measured in like how much people enjoy being alive like how much they enjoy spending time with their kids. Are How much in terms of friends? And so there's a walkie phrase like the value of statistical life and it turned on when we observe people economy how much they're willing to spend to reduce the risk the day face themselves and it's like a canonical way. That economists try to measure. This is to look for people who have otherwise identical jobs except one job. One of the jobs has lower fatality risk on the job job and see how much more the man or the woman in the high risk job gets paid. Think of you had identity. Suppose he had the seven eleven night clerk Where there was like armed guards all over the place And so no one could ever be hurt. And the several of a night clerk at a place where there's none of that There's greater fatality risk. In the second case and in the market you would expect people would be paid more for facing that vetoed originally so we can see that in the data and from that you can infer how much people are willing to trade off money for reduction in risk so and from that those studies. There's this sort of number for. Here's the dollar value. People put on their on their own. Line life yes. Oh Wow my yes. Economics is a weird discipline. I mean I understand what you're saying makes sense to me but it's almost like when you're talking to like a physicist about quantum physics or something and you're like. I understand the meth checks out but like this season counter intuitive stuff. No it's not you you do it on a day to day basis. Everyone doesn't on day to day basis. I love this own. Here's an example like let's just pick on you. What kind of car do you drive? I actually don't drive the listeners of this podcast know that I don't but when I before I stop driving. I drove a twenty ten Toyota Prius. Excellent okay is that to save his car not the very safest because it was a it was a little bit out of date and my my girlfriend says to me. We should buy a new car because they've got more safety features and I say the current one is fine. I don't want the extra climate emissions that come from buying a new car. Let's just stick with the one that we have which drives fine and maybe would have cost more money as well. Yes and it costs more money to buy. Yeah it's an extra thirty thousand dollars to buy a new car. The one that we already have is fine. And so the idea is from your tradeoff of money and to. Let's just for the time being set aside the climate emissions. The we can talk all about that later. But suppose like you have a less safe car that cost less or more sick. That costs more in the ideas from those choices that you're making about your life We can infer how people are willing to trade off money you know and then let me. Just add what we would like. You know if we were didn't economics. There is a great thing called the social planner and the social planner takes everyone as they are their preferences in there and tries to make society better and so what we would like. Mrs Social Planner to do is to enact policies that reflected our own trade offs. And so an example. Like how many guards should it be on the side of the highway? They they cost a lot of money but they save lives and so using atoms trade off of money and safety and his cars. That should influence. What the social planner does and I just as a cartoon example that I'd like to give you know we don't choose the superfly could end all rotate alleys instantaneously. The way I would do it is. I would build a separate road for every single person and I would put airbags all wrong beside the road and no matter what you did no matter how drunk you are no matter. How terrible driver you were. You could never kill yourself and you could certainly never kill anyone else because you'd have your road now. Why don't we do that well? That's unbelievable amount of money and it's just not worth it. We would rather have the money to buy other stuff enough to play to type. We've as economists would rather have the money to get the deluxe cable package or the faster Internet connection or to eat out more or whatever. It is that people like to do. And it's this fundamental trade off between safety in money that is did people or revealing in their actions all the time and just to bring it back to cove it. That's what we're facing as a society. How much are we willing to accept? And a versus. How much loss of economic activity? So I think if I can again rephrase what you're saying in my my dumb words is that like when we're talking about the economy if you're talking economists you're talking. You're talking to Mr Burns if to say hey part of the economy only matters. Insofar as these things have valued at people right like what economics is we're talking about value doesn't exist. If there aren't humans devalue things and one of the things humans value economically is our own lives and so you need to price that in to this decision and so if we let those people die we are de facto removing like a ton of important economic value that we need to we need to include exactly and then if you WanNa caricature like Dr Fauci has now become basically a natural heroes. Don't want character him. Let's caricature a public health person. Who Show doesn't really exist and they might only care about saving lives at no matter. The cost in our job as a society and people is to figure out how to navigate between Mr Burns and his fictional public health person. Got It but but let me. I want to challenge you on something that you said a moment ago Because this is it gets to the root of one of my. I not concerns about the field of economics but away. I find myself thinking when I because I love economics. I find it fascinating way to think but I find myself bumping up against some some of the the logic sometimes. Which is that. A lot of economics has this sort of like presumption of rationality of the status quo right. So for instance you use the example of like Oh this tradeoff with our transportation system with cars. Folks will listen to this podcast. I'm a walkabout transportation. I'm on public transportation. Person Right One of the arguments that I hear may time and again is like we. There is a better transportation system out there for US right More public transportation less driving would result in less fatalities cheaper cost of transport less climate emissions. All these things right. It's one of those things where if you look at people who study transportation they're urging us my God just make these commonsense reforms and we'll have a transportation that works better for everybody and we refuse to do it right out of inertia desire to not spend the money out of any number of human reasons right. Which if you're looking at the at the sheer numbers she irrationality should be quite obvious to do right. So my point being that there's like there's this presumption of rationality in the way. We do things but humans are not actually that that rational creatures and human societies like taken together are not actually that rational or behave in weird ways and. I wonder if you could speak to that at all. And how that applies to our decision making around cove it because you know the same problem large like are we capable of making policy decisions. That actually are rational in this way. Lives a terrific question okay. So there's a lot to unpack their. Let me I know I said a whole lot and this is what I did my experts. I unpack about five paragraphs and they're like. Oh my God that's a whole lot. Let me go through it one by one. Yeah so let's just let let let me play ECON- person for a little bit here on your transportation example. Maybe we can turn to it on your transportation example. What I would say is the problem. Is that there are a lot of conflict externalities from the way in which we travel. When I drive in my car I shoot the pollution in the air that that air pollution people die from that In addition to that it shoots the two in the air. That's changing the planet. We're warming up All kinds of damages associated with that there is a eat so rather than having what you are suggesting if I can carry you. As a Soviet style Har- big hand of government come in in re frame exactly the transportation system that more natural economic solution to that would be. Let's figure out how large those extra now these are and let's put them into the price of gasoline and then when people are making choices about how much drivers how much to take buses they will be facing the consequences of their choices which we don't currently and so that and not prejudging. What transportation system would come out the other side but taking those extra analogies or impacts of people's decisions and making them face them that's very very economics economics at the very very simple thing to do now. You might be thinking well fine. That's great that's on the blackboard Why is not? Why isn't our social planner by talked about before? Let's call them Mr Trump. Why hasn't he enacting policies like that? And you know that's a deeper question about democracy. I would say and I kind of think at the end in a Often in a kind of Squirrelly wind e way we do get the government we asked for and it and I honestly I think the biggest wandering now at the biggest issue with climate is that I think people aren't demanding governments not delivering it interesting. I mean the thing I'd say about the extra analogies I understand the principle of extra nowadays like pricing that stuff at the idea behind carbon taxes and things like that which are policies that make a lot of sense but there's also a degree to which like the transportation system is concrete. Rebar like it is built like a city says the road goes here right and then if you you know you can't descend buses demonstrate that's designed for cars or you need to build the train system is the is the point. I'm making and so like there. There is a degree to which some amount of planning from some central sources is necessary. A I totally agree and I think that should be reflected in decisions about building trump public transportation systems. I'm just you're getting a slight resistance from me. On lots of urban planners have lots of ideas about the way they would like to plan society. And you know. I don't know that that always it's a little bit like there. There are a little bit like the Public Health Professional. I was using as a character before they really care about one thing whereas people care about a bunch of things and ultimately they have to make trade offs around those things and I don't know that we want designer society to maximize the functioning of public transportation. We'd probably a bat in some other goals that we want to try to achieve. So what are the goals that my intention is not make this public transportation show right but so I understand that but a lot of times to me? It seems that the reasons that we don't choose what seemed to be better public policy programs. Better outcomes are not rooted in something. That's rational or something. That is a make sense that is again based on inertia based on politics politics is like an important interesting field but you know there can be political barriers to getting something done that. Don't make sense right. That are that are based in prejudice or based in again inertia. Are you saying that those serve like an economic purpose for the people who hold them that like the those barriers are in fact functional? In some way they're the great question there can of course. So let's again. Let's call Congress and the President The social planner. Who tried to figure out what would be best for all of America. Not and there's a bunch of competing interests there's people there's a damages are gonNA come from climate change in the real and then there's also the cost that people would have to pay today for a different form of transportation in a friction. Lewis World so you should be very careful about the first world The social planner will just implement that. And that of course we live in a world where people have vested interests and they work very hard to protect them and I think there is. There's a lot of that going on with respect to climate right now and you know the fossil fuel companies the long history. Exxon up denying climate science funding climate deniers. They're people were protecting what is theirs. And that gets in the way of a well functioning democracy for shore but I guess I wanna you know somewhat optimistically say I do think in the end we kind of get the government. We demand It is not always immediate and it can be Wendy and there's an example. I like to give if you go back. Six years ago You China and particularly Beijing. There was no sunshine There was the air. Pollution was like distortion And there was people were it was just the way it was and you couldn't imagine that there would be a different way to lift their in a really short period of time It became a political priority for the Communist Party to get rid of air pollution. That was a function of several. Things are some research some of which I contributed to on demonstrating the health effects of air pollution of China Moon. There was of course the very famous episode of the US Embassy reporting the true pollution numbers and inept very short period of time. In China. There is a a everything completely shifted. That's not a democracy and at least not in the way that we understand when hearing states and what I took away from that is when people really begin to demand something government find way to find ways to deliberate and so while I'm very passionate about climate change and I think it is an enormous risk to people in the United States and around the world. I don't think that that is at the top of the political agenda up of the majority of American people. Am I shocked? The end is rising. But yeah it's writing but my shock did. Congress doesn't feel compelled to act on it no. I'm not shocked by that and I literally. I asked myself all the time. Like how is it that we're doing such a terrible job of communicating this that it does not become a political issue? It's interesting. It's I think. The people communicating are communicating very hard and are often doing it very effectively but there are entrenched interests that are communicating in the opposite direction But I WANNA get to climbing after our break but I want to talk a little bit more about cove it Before we get there so so you'd characterize the when I was talking about. Hey what are the barriers to a more economically beneficial transportation system or a better public transportation system? Some of that friction is how you'd put it vested interests and maybe that that's it takes longer to get to that economically ideal state. That's actually benefiting everybody But if you look at say covid nineteen. You're making this argument that. Hey It's actually in our economic best interest. Perhaps to stay closed down a little bit longer or to maintain social distancing or their these benefits to it And I think we are aware right. Now there's a possible future in which everything reopens do. Quickly people stop social distancing people you know open up too fast and a lot of that is because of what you say as the there are people demanding it right Certainly the people who have the current administration's ear are are demanding. It very hard. Even though in your view it might be against their sort of our general economic self interest to do so. Because we'll actually lose all these lives. Why does that happen? And how do we make sure that it doesn't okay? So let me back up. I think what my research has shown is that they're gonna be very dreaded words carefully. There are very large gross benefits. And when I say gross grooming nasty I mean not the it's just counting the benefits. It's not saying anything about the costs. Let's let's turn to the cost for a second and a lot of the research in incredible research coming out there your scarred on the Becker Friedman Institute in the in the last few months and some of it is really quite eye-opening the the job loss numbers economy-wide we know but once you start to peel it back The bottom twenty percent of wage earners. There's been like a thirty five percent decline in employment for them. And then you take the top twenty percent. Wage earners these pre-coded there's only going to nine percent employment declined for them and what is striking to me about the APP. Is You taking cove? It is taking the people who are least equipped to handle some big economic shock. They don't have open lines of credit. They can't go. You know. Spend a lot on their credit card. They don't have lots of savings in general a lot of equity in their house and imposing his very sharp shock on them and that's real and that's affecting people's lives and if I I don't know anything about your personal finances but if I stopped getting my salary for three months I would. We would find a way to get through and win. Change our life very much. I haven't emergency. Fund is happy to say that I feel lucky to be in that position and I know a lot of people. Don't then let me add a second. There's a research a really caught my attention. It and this is a little bit what I meant about the computer. In the data revolution it was actually able to track. People who got stimulus checks from the came out of the legislation and what they found is that on average Twenty five to thirty five percent of the money that people are seeing those teams checks was spent the first ten days. So that's telling me these guys men and women who are really hard up and they're just desperate to get start spending and you know buy food and pay the rent utility. Yeah so I want so. I think what I'm tobacco up. I take that to say there are very large costs from social distancing. I also think from my own research is very large benefits and how that gets traded off. That's really like a societal decision And I suspect it looks very very different in Appalachia than it looks in Silicon Valley. And you're going to and I think that's what you're seeing very different responses around the country. The DUDE ONE CAVEAT. I want to add to that. What's if Cohen were self contained? A local communities. I think that would be totally find local communities and make their own judgments the problem is course is diseases so nasty and it spreads easily that what they do in Milwaukee matters for me here in Chicago and I think it strikes it that actually this trade off even though it's so different in Appalachia in the silicon valley the really needs to be a federal. And you know. Obviously in my estimation we're almost complete abdication at the federal level. Yeah I doubt that I mean you're absolutely right about who's being affected the most but also a lot of people at least you know here in here in La. Which is you know. Coastal and high median income for a lot of folks etc also extremely high cost of living But you know. The places are protesting the most or some of the wealthiest areas right like Etcetera is not a. that's not APPALACHIA right That's that's one of the wealthiest parts of town like you know people in You know South L. A. are not protesting in the same way as the folks who just want to go to the beach right. Yeah I mean How people make these trade offs is not only a function of their income. I don't mean to imply it is yeah. Do you know people are just going to see the problem with different way? And you know this is almost a tangent in I worry. You'LL WANNA edited out but I I did. We were talking about the value of statistical life in before and talking about what it is economy-wide which really striking is how different is different segments of the population and to like I have some ongoing research looking at people army And what the decisions that they made during the ramp up the ramp down of the Iraq and Afghanistan. Wars when the army was desperate to keep Get people to reopen after they finish the first term and this is not a look. I wasn't ever in the army and to these. I don't think they are people who are willing to be an army reflective of the average American is of. They're probably much more comfortable with risk but these days were very responsive to risk but they were even more responsive to money And to a very low values of Cisco Life for people who were in the army from the trade offs they were making between accepting bonuses to re up versus Facing increased mortality risk. So hit there's a there's a lot of heterogeneity that's like fancy word. There's lots of differences in how people make these trade offs across the population. Dairies are just so fascinating. And you're right. It is a tangent. But we're not going to edit it out because I'm really interested in it and I do have a question for you off because my only concern is and I'm sure you have research on this. How good are people at evaluating their own risk of losing their life? Because I would imagine like a lot of people I was just reading. You know from an immunologist here are all the things you should have a concern about about getting covid nineteen right. Here's the various situations. Here's how much you should worry about going to the grocery store. Here's how much you should worry about going to this place or that place And I'm looking at at that and I'm going. Wow comedy clubs. We should not be going to them because stuff aerosolize `as talking spreads it a lot small poorly ventilated places. A lot of people. That's even more dangerous than touching stuff right and so I now know okay. This is one of the most dangerous places I should go. There's a lot of comedians. Who are going to say. Yeah I'll do that fifty bucks. Yes sign me up. And they don't know the risk of going because they're not equipped to make that look some. Some communes are very smart. Some are very stupid. They're not gonNA be able to evaluate that they're not going to have an awareness of it. So so how how do you? How do you account for that so I assume I'm so sorry I'm going to try and play comedian for one second in front of a professional but so of course? You're assuming that not everyone understands that. The adjustable Clark's tablets were bad idea from the president right. Yeah exactly exactly. There's we know. There's there's the Darwin awards right. Yes so let me turn your passion. I think your question is super important for the kind of broad literature on the values disco life that is due. I actually know my mortality risk like I do make some graduate students. Upset sometimes I I hope it will never lead to my death but really i. I don't know it very well and I think it's a good question. The general economy. That's exactly why I chose to study people in the military. That is a salient feature of the job. We're not and that was a salient feature. That especially salient feature on the job during the ramp up in the ramp down Of the Iraq and Afghanistan. Where so that just a little plug for that paper? That's why I think it's an that is an existential question for that literature and I think it's important to find settings where you can have some confidence that people really do know what's going on but this is something that people who are studying values physical life. Hopefully they're they're figuring that out and they're putting that into their evaluation and we're just using the output of that to say. Hey this is what the research has shown US absolutely. I did want to just get one plug in here for You know in light of these challenging trade offs that governors mayors and maybe the federal government is doing. I think there's not gonna be a right answer. You know the governor of Illinois might think that what his people want us something different than the governor of California. The Governor Oregon the governor of Alabama or something but what I think is like a near crime is that there is a total absence of basic information. We don't actually have a legitimate plan in place to even figure out what fraction of the population has antibodies or what fraction of population is currently infected. With is mean. Even because we don't understand how the disease works in the body well enough correct but a good way to begin to understand. There's collect data on that. Yeah and the fact that we're not doing that I think is makes to your question of how is associated imposing on you but house social. You're saying that social planners supposed to make diss Detroit off. They don't really understand. What the benefits and the costs are and what I'm trying to say is like well a key ingredient into that. He's actually knowing what the antibody rate is and we are not collecting that for the general population. You know we have it for like subset of people. I guess major everyone involved a major league baseball we now. There's some new study on that until we have that. Obviously we haven't for the sick. That's not super useful to just get it for the sick like why. Don't we have the general population and the last thing? I would say that I find really interesting about American. Society is while we're sitting around waiting for the vaccine which is kind of overdoing and not just a backseat. But the cheap zine and the one that gets delivered everywhere yeah. There is something else that we could do and that is like a total Korean Taiwanese on Kong's accordion call. You want testing and contact tracing. Yeah we are not doing that. That's not people talk about it but don't really doing it any way that would resemble those countries are doing and I it's fascinating like could something like that. Actually work in the United States. Like with our cowboy culture of like individualism and privacy You'd have to give all that up and I would certainly do it I would certainly do it because to have a real context and tracing program. But you know I. I don't see any movement doing it here. I mean the to American cowboy culture has been used so many times as a reason to not even try to do things I would hope we would at least give it a shot and say hey people are dying maybe you know hey just do it for a couple of months so we can save some lives You can imagine that. Hey in World War. Two people would have done Would have done that and ten times more right. Bill would have made those sacrifices in order to save lives and and make America a better country and and We could be doing that. I wanted to end the first half of our show by asking what you would do if you were making policy given what you understand about the communist deeper way But it sounds like what you'd say is we need more testing and more data as quickly as possible for we can even make those determinations right. I think we have to have better the listeners. Things that are just like inaugural in my view I would get a representative estimate of the antibiotic era antibody rate in local communities across the country. It's not that hard to do I would make that a natural party then I would you know for up to me. I would institute a serious Testing Training Program And I think that would be a way to we. Could have a new social distancing policy that allowed economy to operate. And just you know. Isolated people who were really sick. It would actually a lot of universities to operate for that matter That's that's the path that I would be on but you know someone has to articulated. It has to bring the American people along on it and I don't see that being done yet. Neither do I will look I. I find really fascinating talking to you and I have so many more questions about economics especially about the climate. We gotta take a quick break. We'll be right back with more Michael Greenstone. 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So look they have everything you need to make steam seriously fund delivered to your doorstep and you can get your first month free on select crates Akiko Dot com slash factually. That's Kiwi Co dot com slash factually. Okay we're back with Michael Greenstone. You told me during the break that that you just wanted to add one additional point so please go for it yes cove did. I think it is you know in addition to having real testing and contact tracing my goodness. We couldn't spend enough on trying to develop a vaccine and trying to develop effective therapies. Like I. I don't like I would be shoveling money out the door. Like the Cau- economic costs of this are so enormous that there's no way you couldn't spend enough time on trying to identify these vaccines so absolutely well. So in the first half we were bumping up against each other a little bit about some of the assumptions of economic thinking general. Right and this again. This is why I really enjoy talking to economists and thinking about economics because every Internet very small group of people who are talking about is is wonderful. Mix of intuitive and counterintuitive. Right where I'm like. Oh yeah yeah that makes sense and then and then I come across another idea where I'm like wait that can that really be how we're talking about human society and That's why I enjoy it so much. I wonder if you have any ms very dumb question but if you have any version of what economics is and what it's for and what you think it's utility as more thinking about these big problems like cove in nineteen or or The climate crisis because so often people think it's totally bloodless right and they think well economics that's just about trying to figure out how rich people can get more money and that's the Lens through which they WanNa look at the world but the way that you talk about it. It starts to feel more like a sort of qualified sociology in a way or something. Like it's we're talking about you when you're talking about people's happiness and what that's worth to them. You're talking about something deeper and I'm trying to put my finger on what it. Yeah so I think at the Thanksgiving table. That's definitely true that people think that economists are outlets. Called Mr Burns from Simpson's Mr Potter from it's a wonderful life in its money. Money money money money and that is so wrong in so terrible and such a disservice to how thoughtful and fully formed. We are as people think of the world. Defend your people Michael. Some of my best runs by the way our economy and I think what we try to do that I think. Economics is very good at is trying to observe and maybe quantified socialist. Not a terrible label is to try to understand the choices. People are making that teaches us about the things that they value and those things that they value for. Sure our money because money. Let's them do lots of things but they also value other things and you can see in just returning conversation but the is really a prime example of like people are trading off risk and money and from the rates at which they trade off we might learn something about how they how they perceive the world. And you know what choices would like the social planner a government or somebody to make on their behalf that's That seems like such a powerful Lens to look at people through but it brings me back. Then we're done. Let's stop well. Brings me back to my question of of. How do you account for when people don't know what they value? I mean I've experienced in my own life time where I I made a decision. That was not didn't make sense for. I realized later that it was wrong. Because it didn't take into account what was actually important to me and it took work. You figure out what was important to me and That's that's a personal example. But there's also people do things that are not in alignment with their values and what's best for them all the time because they are stupid or they're misinformed or they're you know they're Just Human Right. They just they just a human thing to do So how how how does that? God's grace great question so the first thing which you're digging at has very important is. There's an assumption in kind of neoclassical standard economics that there's ready for this perfect information. So people know everything all the time and it can make ignore the provinces and they know all the consequences of that and they'll make choices based on that and from that then we can perfectly understand how they're willing to trade off time with their family or changes in their mortality risk with money and all that's really simple and easy of course. Perfect information is not true and So then you often see people trying to make choices based on imperfect information The whole the whole sub field of behavioral economics I think often has com from finding these instances where people seem to be acting against their interests or Making very small pieces of information or changing the default and something has a very very large consequence On on their actions and I think that they wrote an incredibly important lentil in Demonstrating exactly The limitations that People Exhibit. I think it's had a harder time articulating. A new theory that describes human behavior And kind of neoclassical people And it's not without theories but But then more neoclassical view is. We'll binder some information concord frictions. That is people don't know everything And leads we can still learn a lot from what people's choices are are there cases which you ever feel that economics where you're like. Oh man so there's a wonderful answer but do you find times where when you're looking at human behavior where you're like. Wow Economics doesn't have an explanation for this like can't help me in this case we have to go to another field to understand humanity. Xanax sense. The does Yeah I think there's a I we can be too. I think we could shove anything into the neoclassical model with You know if you introduce enough frictions yeah and rap rationalize it and you know. There's many instances where that's probably not a good idea. But you the say the field is evolving. And I think if I could turn back to you know maybe thirty minutes ago one thing you know now that we have all these computers on the data we can get much more nuanced pictures of how people behave. That'S BEEN EXTRAORDINARILY USEFUL IN HELPING US. Get Out of kind of the caricature neoclassical vision of economics. Where you have the utility maximizing man or woman who is just ruthlessly maximizing their utility with perfect information and now we're beginning to learn the world this a lot more complex and it's probably like a lot of my friends from high school who kind of always thought. Oh My god Michael has lost it. He's signing up for this kind of neoclassical view of the world. But when you look around we know that's not true and I think there's a meeting of the minds now which is economics is getting closer to reality because we actually have the data that helps us up data models. Yeah that's really cool. That's I've I've said that happening in my again as a total Lehman just reading novels. I've I've noticed more of those types of arguments and I. I just think all these different models of looking at human behavior You know we had Rachel coffer on a few weeks. Ago is a political scientist You know we've had psychologists on These are all different models for understanding humanity and They all make sense insofar as There's sort of in their spheres and then towards the edges they start bleeding into each other In this really fascinating way. And that's I hope you don't feel on prodding you too much but I'm sort of figure out where those where those edges are and exactly what it is that economics helps us to understand and where we start to feel the need to bring in other fields. There's one thing that I think is probably or most. Economists are one-sided line is Look I I know that you actually have a much more nuanced view of this. But let's just suppose you really did have the full time planners view on exactly how public transportation society should be set up and I think what economics starting point as well there's no particular the urban planners don't have a monopoly on Understanding People's preferences and they might have the preference of their own at their substituting for People and so we should put a lot of weight on people's revealed actions and I think sometimes there's a discomfort with behavioral economics discomfort again to make fun of urban planners is you can't tell are you trying to reflect. What are they trying to reflect? What People's preferences are they trying to substitute their own preferences for people And a lot of becomes get pretty anxious if once we start getting away from the choices that we see people make kind of in the wild I guess. Yeah and that's one of the. That's that's when I love economics. The most is when it is talking about what people do rather than what they should do. Or what sort of idealized model of them does. And by the way that's what good urban planning would do as well as by saying wait. How do people actually move around given their druthers right biggest so much assured by the way if I could pick on should should mix? Economists anxious like should according to who like right right but for the record some of my best friend urban planners and much more nuanced views on the economy setup than. I'm suggesting but there's also a way in which you know. Some of what we think is preferences. Actually the result of people just living under what is in fact a regime of. Hey we live under the car regime Ryan people say I love to drive my car but you know if they actually had the choice you know. They actually experienced another way of life. What would they say they prefer right? and what are the? What are the costs that it may be are being imposed on them that that they don't realize you know that that being said like? Oh good urban planning would include. Yeah this is how people actually behave So I I agree. We live in. We live in a world where a lot of decisions were made a long time ago and some of the traits a lot of choices were seen might are certainly reflect the constraints that those previous decisions have made. An people might live in you. We're starting afresh. Might WanNa live in a very different way. I I agree. But just because they might doesn't mean that they would absolutely This is really fascinating. I WANNA move to. I want to talk about climate change. Because we've we've alluded to it a bunch of times And you have this so in in a similar to weigh To which we were talking about covert In which the the price of doing nothing actually has a cost for us right now just in lives but economically I believe you'd argued. The same thing is true of climate change. Is that not true absolutely so let me start by so I guess what you're talking about. Is something called the social cost of carbon? I like to call that the most important number that no one has ever heard of And what it is is. It is a monetary value of the damages associated with the release an additional of CO two And I think it's central to setting rational policy. Because it tells you well every time I put an extra ton of this stuff in the atmosphere. These are the damages that I'm going to leave for my children and their children and society in the United States Inciting Bangaldesh everywhere and by setting at a sharp line on how much we should be willing to spend To prevent that from happening until if you can reduce and Supposedly press conference about fifty dollars a ton. There's some reason to think that if you could reduce carbon emissions for ten dollars a tonne every time you reduced ton you'd get forty dollars. Benefits of seems like a great deal and we should do it. Yeah but if it costs. One hundred dollars a tonne. Maybe we don't WanNa do it. If the benefits are only fifty dollars as aware of those costs come from like in terms of when you're looking at climate change like what what are the what are the events that could occur that would oppose. Us cost on us. What are you thinking? Yeah sure so the way. There's a podcast I can't show you the beauty of some of my graphs but I'm sure they`re. I'm sure they're gorgeous. Mike thank you for saying that you're saying I love a good graph. I soon as I just admire them. You know I just go to go to the graph and just like look at the prettiest. It's coming it's coming. Joking but a well visualized data is something to behold so. Please please tell us about that. So I don't know so the idea is we got the extra ton of CO two goes up in the atmosphere atmospheric concentrations. He'll do that changes. Temperatures and then that unleashes a set of changes in the world were used to the worldly now and that is Melting of ice and sea level rise. So that's one of the damages. The higher temperatures Make it very complicated to grow crops in ways that we have It there's lots of evidence On that higher temperatures especially in the summer caused a increase rates mortality on the cost and the benefits. I'd actually they reduce deaths associated cold. So they're just GONNA lead to a very large changes in our life. You know all of that a little abstract so one piece of work that I I'm doing right now is actually on. What's going to happen to Crop Choice in the United States What are we going to continue to grow the same crops? And what's really interesting is what we find with co-authored mind is it by the middle of the century if you're in. La's maybe they'll notice but into great expanse surrounding me the corn and soybean belt. That's going to be gone. They'll be no more coins are being grown. Climate Change because communist just didn't get too hot. Now maybe Monsanto where somebody will develop a new seed that will allow it. But they'll try technologies neither. They're going to try with. Technologies will be no change so the main thing I just want to say were were drowning experiment. It's gone up. Induce changes in our life sea level rise higher temperatures? It'll be unploughed the much more pleasant to be outside in the summer they'll be Mortality rate for mortality risk crop yields all kinds of things will change and those you know those those have costs and We should be taking account of them so it seems like Kobe. Nineteen and climate change of something in common here. Which is that in order to solve this problem. We have to bear. Enormous costs right like an energy transition is going to be expensive. I know there's a lot of debate about you know. Is it possible for our economies to grow the same at the same rate if we cut out fossil fuels the agree that we need to that you know? The degree to which fossil fuels are just a big part of the economy. Is they're going to be a hit. In that regard. These are expensive things. Same as shutting down the economy is same as distributing vaccine to everyone in America would be but there's also cost that comes with not doing the thing that is we think about less. It's like maybe a little bit more invisible to us because we don't see it as a as a choice in quite the same way. Yeah so actually I want to one. I WanNa make here which I think I'll work my way back to you. I hope you can redirect me from not is I actually my little uncomfortable talking about climate change in isolation and I like to think of it actually is the global energy challenge and the reason I do is that I think what we does. Societies around the world are trying to do is trying to find a balance between three different goals. The first is how do we get? Access to inexpensive and reliable sources of energy that are critical economic growth and the improvements living standards That basically every person on the planet watts. Now there's some of that in the United States and you were pointing to it like really like pain higher electricity rates but just bend your mind over to like India or And like I do a lot of work into state of Bihar which is a state about one hundred million people in India per capita electricity consumption. There is like two hundred kilowatt hours per person per year and so so what is in the United States. It's like thirteen thousand. Wow so now you so what? They're a primary goal for them is how do I get inexpensive reliable source of energy and there's just no getting around? Those guys are not excited about two hundred kilowatt hours per year. So that's one goal and La. I understand that totally because if you think about you can't deny people who want the enormous benefits of electricity right having you can't go say to someone in India. Hey I don't think that you should have a you know. Close wash electric clothes washing right because I have it and your life will be better if you have it and the way that we can address. Climate change is by telling other people. They can't have what we have. I totally agree but I'm going to maybe even say slightly more share point than you just said it. You can say it all you want but not going to happen you know. It's nothing that they would entertain like. Oh yeah this of change thing. Why don't I stay at two hundred kilowatt hours per year? That seemed like a good deal for me. They're working to get up no matter what anybody says. We need to account for that in our how we dress climate change. Yeah okay so that's number one. Like how are we gonNA get inexpensive and reliable energy not just in the Great State of California But a around the world. The second thing is the least expensive way to get that is primarily by using fossil fuels and that creates two problems. The first is that in unintended and undesirable part of using feels that creates this horrific air pollution particular pollution The average person based on my research on the planet is losing about two years of life expectancy. Do you do to particle listen effort? It's more than that 'cause I live in L. A. so great. No no no. That's not true like really there. Was those nine hundred. Seventy but yes. You're worse than Most of the United States but like even the level their pollution in La is great Compared to what it was and is certainly great in a global perspective perspective. True I mean. Yeah it's it's very bad in India. Speaking of which I know that yeah. Yeah so like the average person. India's losing about four years away because their evolution is not a compliance with w just enters so I would say that's the second goal. How do we manage the local environmental problems? Which is basically are pushing And then the third goal Is where we started which is climate change And to this same source of energy which is the least expensive setting aside extra Fossil fuels answer them. If you want to use it is all in involves release of particular but also also releases. Co Two and that's really increasing the of disruptive climate change and so why is pushing back talking about climate changes? I think the clearest way to think about the challenge that we're facing societies facing is. How can we navigate between these three? And and now let me just add this long answer but let me one more layer to it. Which is we were talking about a little bit about before the spectacle of it is the way that I the way that I see. The problem here finish cog in the way that you see. The problems in California is almost certainly very very different than the way that people developing see. The problem Like what are we WANNA do? Pretty Rich We want to avoid something really nasty happening. We're willing to spend some money on it. Like what people in India and China and Basel Dash and other sub-saharan Africa? What are they thinking? They're thinking like I am effectively dying today from poverty or you know very low levels of consumption And Yeah I get that there could I might be increasing climate change. That's Montana problem like right now. I gotta get out of this mess. I'm in and the what so nasty about. Climate change is a problem is that we need. The planet doesn't care emissions came from. Yeah and so you know. We need to find a solution that works for everybody not just for people in California. Not just people like you like to take buses Not just For you know people in Bihar India like it has it has to work for everybody and finding a way that society can navigate between those two regal's given there's not one society these trade offs look very different. Different places is why the promise of thorny. Wow Yeah it's extremely good description. I mean I always have that person in India taking as our prototype back of my head when I'm thinking about climate change you know that. Yeah that's that's a big part of the challenge but I rarely look at it so clearly as that. I do want to say though that there's also people out there who are dying of climate change right now like people in island nations for instance the Marshall Islands. I believe are currently. We're we're not gonNA be able to live in our homes. In a matter of few decades the water is lapping around our ankles. Help US please. You know absolutely. There's no doubt about that and you know that's just like the canary in the coal. Mine for look one day in the United States. We're going to have a conversation. Hey which parts of the Atlantic coast. Should we let go? Yeah and I don't know how you resolve that like I will let me say actually I do know a part of it. We're going to spend every last dollar protecting Manhattan and then other parts. I don't really know how our going to sort that out. And you know I should add like in the beauty and the insight and the transparency of blackboard economics. There is such an easy solution to this. Which is at the rich countries should just pay the portfolio subsidized low-carbon energy in poor countries. Right and now we can just return to your politics You know I dare you to run for Senator on a campaign of we should spend one hundred billion dollars a year subsidizing the energy of feed warm India even in California. That might be a tough sell. It's really funny because you hear this argument against one of the new lines against doing anything about climate change is oh well. China's not going to do anything and they're just going to use all this wonderful oil energy and and out compete US and win right to which my counter counterargument would be like well. This is a global problem. I mean like no one's going to win if you know. Climate change happens to the worst degree. Can like we're not. GonNa we're we're we're doing it out with another country while we slowly sink into the ocean Is is not a good course of action but also every other country in the world can make the same argument about US. They could say. Hey why should we do anything about this? When the United States reaped all the benefits of exploiting fossil fuels For the past seventy to one hundred years and now As soon as we're on the upswing now we're being told we can't. How Fair is that? The United States should be fixing this problem and I think they'd be right to have that perspective but you don't hear that often voiced in United States politics but I do want to return his question. Which on well is this. Climate change is global energy challenge problem insoluble and because of A. These guys aren't doing it. So why should we do it? I actually don't think that I think but I do think it requires a really global leadership. And that's a strange phrase Ronda Communists but I guess it stands up local sciences. An important discipline your arch enemy in the difficulty de Science right and I think what we have a lot of evidence that like when the United States has taken a lead on global climate. Change negotiations and That that has been actually pretty effective at getting other countries to do things and I really think you can. You can have America first program in still believe that climate a global leadership on climate change is important and let me explain. Why I'm what is sometimes missed. Is that when when we cut. Our emissions is providing benefits for everyone else but when those guys got emissions providing benefits for us and. I think there's a huge miss that happened. Will withdraw from those international negotiations because if we can influence what China does and what. India does Then you know they're gonNA produce enormous benefits. Russ by reducing their emissions And so that kind of dynamic reaction is I think completely absent from what I would call like the one point over Sion of America first which is will China. Not GonNa do it. So why should we do it now? That's missing if we do. Something in China does something in return. We're GONNA get benefits. I also I enjoyed talking to you because again. It deflates the normal stereotype. We have of economics which is the bloodless discipline that only cares about how many gold coin scrooge mcduck has it and his money tower. Right But you're describing. These are economic reasons economic thinking that leads us to solving the climate crisis or finding a way to solve it. That's actually more pragmatic and maybe more achievable than some of our normal approaches. It's a really. It's a really engaged version of the of the discipline which is really wonderful to hear of you. The same. I think that puts you in a small circle of people who feel economists have some social value added. And you might not. You should consider it and you might want to move out of the circle but will have you in there. Well I hope that you know again so much of these so much. The problem of climate change we need. We need American leadership we need political leadership we also need corporate leadership. We need business leadership In a real way. Not In greenwash Taylor. We put out some Nice ads with pictures of windows in a way but in a way. Stop there if I since. I don't walk through airports anymore but if I walked through one more airport and see like the the picture from BP or actually my favorite is when it's from stat oil. Which is the Norwegian company. Government owned energy company. One more picture of a windmill like you know at least with the Saudis. Like you know what you're getting. They're not messing around. They're selling the fossil fuels that like comical to me to see these advertisements you know. Oh yes point. One percent of our capital budget. This year went to Clean-air resources never mind and ninety nine point nine percent. That was. Yeah Yeah Yeah I mean but having said that I don't WanNa pick on them like it's reflection of our choices you. They're just serving. They're supplying what were demanding. But there's a degree to which you can say that you just supplying what we're demanding. They're just it's the shareholders that are making them do it right. It's it's all of that. No it's not that it's were making them do it because we're making these choices on. What kind of industry we concern. But we don't have who are coming in for a landing but I have to. I have to ask you about this because I'm sorry. I'm sitting here in La. I'm not able to choose. What kind of energy I consume right. This is a system that was built for me by people against my protests. Right am my hey more. La is currently. I believe Engaging more natural gas plants right when it shouldn't be when it should be doing solar right and I would love them to stop. I would love them to make that choice. But I don't have the ability to make that choice. It's the energy companies and the people who are leading the government who need to make those choices are not so let's go back to fundamentals here. Is there an extra analogy from are using fossil fuels? Absolutely is a do we have? We put in place policies to affect choices so that we will influence choices to make. No and that's where I come back to where we started. Like I kinda think we get the government. We want and I share your passion. That X is. You might not have used these words. But there's extra knowledge should be reflected in prices that is when you go to buy gas. He should reflect the The price should reflect the climate damage. you're about to do by run? Gar BUT WE HAVE TO DEMAND THAT FROM THE GOVERNMENT. We're not doing that. I think. Insufficient united to to to compel action. So you're you're saying that we need to make the if the broader choice of being politically engaged civically active of going out to the march. Which by the way I went to the most recent climate march and La. So I did make the choice to exert. Some pressure stood around and waved sign for a little bit and I went home. It was the most do but it's that mass movement those the individual choices of individual people to join that mass movement. That's going to make the difference That's what we need to see in your view absolutely and then I just want to remind you of. It's wonderful that the California's leading the nation. And in maybe not as much as you would like the reducing carbon emissions. But like we also should I worry sometimes about the environmental movement in the United States that we the environmental moving United States would be satisfied if the United States would just reach some sufficient level or sufficiently low level carbon emissions. But like if we don't keep our eye on the ball on how to make that an attractive choice for the other parts of the world like it's not going to make that much difference. Yeah you need to make it. You need to make it the natural thing to do to make these choices. You need to make your choice for people for these people. Who in my estimation Just like we are are trying to balance these three goals inexpensive and reliable energy that's why the L. A. Whatever it is chose natural gas that thing to them air pollution and climate change and like a got A. I feel like you have to keep all three of those goals in mind at once. You know ideally find a way to set up a system I would call that system. A carbon dioxide and attacks pollution Show that these look like these choices so that people can make fully informed choices that reflect all three of their not. Just one of them. Well man. I keep talking about this for so long because everything everything you say it gives me a new idea so first of all we can impact how by done on the Comedy Scale Register. Oh this has been a very funny conversation with an economist for version. The communists very good. I think honestly Mike I I really thank you for coming on the show to talk to us. It's been it's been a really fascinating conversation. Thank you for getting into it with me. My pleasure I'd be happy to have another one someday even off Guests well thank you once again and Michael Greenstone for coming on the show. That is it for. Does this week on factually. I WanNa thank our producer. Dana wiccans are engineers Bret Morrison Ryan Connor our researchers Sam Rodman Andrew W K for our theme song. I've been out on account over. You can find me online at atom kind of dot net or at Anaconda. You're on social media. Hey folks to please give us a rating or review wherever you subscribe. It really does help us out. I know every podcast host says that but it really is wonderful for us when you do that so please take a moment open up that podcast APP on your phone and hit the five star button if you enjoy this podcast and hey that is it for us this week. Join next time on. Factually thank you so much for listening.
Is the cure worse than the disease?
"This episode is brought to you by. Hp HP print can help your small business stand out from the crowd with the new. Officejet pro printers. You can print professional quality brochures presentations and more right from your office without ever needing a print shop and now you can save up to fifty percent on INC for your small business with. Hp Instant Inc get original HP INC delivered automatically so you never have to worry about running out of ink again visit HP DOT com slash. Get Real to learn more about the HP officejet pro printer and HP instant eight that's HP dot com slash. Get Real when we get into a discussion about whether we want to save the economy or save lives. You get the response that you can't place a price on human life so of course we have to choose lies. The problem with that claim is that we place the price on life all the time. Hello and welcome to the show. On the box of media podcast network. You're probably hearing a debate right now. About whether the cure is worse than the disease the cure here of course being social distancing and the extreme amounts of economic suffering it will force and the disease of course being Cova nineteen and the potentially millions of deaths. It could cause. This is a debate. That was coming into my inbox. Some of you when I asked last week. What would you like to hear US cover here? Somebody said this worth. It is the amount of economic pain. We're GonNa Cosworth what we are going to get. But then I began things debate on twitter on op ED pages and then of course going all the way up to president trump himself who has staked out I would say a scarily extreme position ultimately the goal is to ease the guidelines and open things up to very large sections of our country as we near the end of our historic battle with the invisible enemy. I said earlier today that I hope we can do this by Easter. I obviously have us about this but I think this is debate. We need to take seriously at the very least we need to take it seriously. Because if we can't buy people in two social distancing if we don't have real answer when people say is it worth it then they're not going to do it and as you here in here I think we have screwed up the messaging on this quite profoundly but I wanted to take this on from two different angles and try to understand the underpinnings of the question being asked here and whether or not the choice we are being presented with these actually the real choice so I have two different guests on today in an unusual structure for the show. The I is Jason Furman. He is a professor of the practice economics economic policy at Harvard's Kennedy School of Government. He was also the deputy director of the National Economic Council under Obama during the financial crisis. And then the chief economist on the Council of Economic Advisers and then after him Ruth Faden who is the founder of the Berman Institute for Bioethics at Johns Hopkins University Jason. This year of course to talk about the economy. Is it true that if we backed off on social distancing we would have a better economy is that tension being set up a real tension or are we missing something there but then economics aren't everything? So how do we think about the ethical questions? What is a reasonable moral framework to have? Let's begin here with Jason Furman Jason Furman. Welcome back to the PODCAST. It's I great back. I guess let me start with a simple question here. Given the economic costs of social distancing is the cure as the president has been saying worse than the disease. I think it is very unlikely that the cure is worse than the disease measuring the value of lives. Even if you ignore the value of lives and are just looking at maximizing GDP a year from now we need to beat the virus to have an economy that's function a year from now. Walk me through that a bit. Let's imagine we go to the extreme version. That's being proposed here that we decide to say as I've heard people say we should that to the extent possible the elderly should quarantine but really everybody else go about their lives if people die from this. That's a shame but it has happened in human history before. Do you think that it is possible to have a normally running economy as pandemic is ripping through the population? Know if first of all. I don't think it's sustainable. To just say we're going to allow the Democrat ripped through a population and not lurch back into the type of shutdown that so many places are in now. Even if people were willing to do that you would be seeing every night overwhelmed hospitals. You'd have people at your own workplaces getting sick and going our you'd have all the people around them at a bare minimum. Having to self isolate you'd have workplaces. Being closed down it would be just a a massive amount of economic uncertainty in the interim followed potentially by an even longer lockdown. One of the things that has been striking about the conversation is it seems to me to rely on a very thin idea of both independence and interdependence one of the lessons of the current virus as far as I can tell is tremendous. How unbelievably interdependent. We are right up. A lesson of contagion. Modeling is that you may not know how many people you influence in a day. You may not know how many people will catch your germs two days later even if you never came into contact with them and so this idea that we could just segregate off the vulnerable as if they don't have families they don't need to get food from groceries as if you could somehow create that kind of quarantine inside the economy. It seems to me to hearken back to theories of economics and maybe we had a long time ago or just humanity that we've had at other times but not really make sense. Given a globalized deeply service oriented Economic structure where people rely on others to get almost all goods either delivered produced. Yeah the economy is one of the best ways to organize interdependence it organizes interdependence on the scale of billions of people who are engaged in economic interactions. A lot of those interactions aren't face to face but there are global supply chains in the like with ramifications but many of those interactions are face to face and so there is just this incredible tension between what we want to be a species which is social what we need to be as an economy which is interacting in person and a variety of other ways. And what we need to stay alive which is to not do nearly nearly as much of all of that right now. One of the striking things to me is how much we have been thinking about the economy in national terms as opposed to global terms. I was talking to economic story and Adam Tuesday and he made a good point to me that if you imagine a scenario like the one being contemplated where unlike every other country America more or less back off the idea of trying to control the virus and instead somehow come to peace with an equilibrium of overwhelming infection high death rates but more economic activity that every other country in the world is trying to slow the virus would almost by necessity have to shut their borders to us and economically isolate us as a danger to them. Yeah think that's right and that's why you saw the UK pursue the strategy for a few days and then very wisely backed off of this strategy. There would be a process of global ostracism of any country trying this now. Let me be clear We shouldn't stay in lockdown until the vaccine comes. You can't do this for a year and a half but there's a lot more that we need to do to prepare ourselves for slowly and gradually coming out of the extreme social distancing. We're doing now and I don't think we're two weeks away from having the large infrastructure. We need to do that. Let me look at this from the the other side because emotionally intellectually. I'm obviously on the pro social distancing side of this argument but I do take some points people are making so I'll give an example I think people see very inconsistent definition of risk and inconsistent valuation of Human Life. `Plan Matthew Dowd tweeted. Their Forty Thousand Rhode Desi Year. We could eliminate that completely. We said people can only drive twenty miles per hour only five miles a day but doing that. With parts of our country economically and societally you see people talk about smoking or guns or even just how we react to the flu so on the one hand it seems to me. We have to do a lot here on the other hand. I do understand that people who feel that there is something about our perception of risk. Here that doesn't align with how we live our lives day today and want to somehow bring those into balance. I'm I'm curious how you rate the tension in those arguments look i. I'm an economist. And I'm gruesomely. Comfortable with putting a value on statistical life and trying to think hard you know if it costs a hundred million dollars to save a life we have a limited budget not worth. It could cost a million dollars absolutely. We should do it if you do that. Type OF FRAMEWORK HERE. You get relatively large costs. You be willing to pay under some of the Imperial College scenarios for example the difference between social distancing and not could be as much as two million lives multiply that by value of statistical life of ten million you get twenty trillion dollars or entire year's worth of GDP so there's that way of thinking about it where you're assessing a trade off of life versus the economy and asking. How much would you be willing to pay? That's worth thinking about. I think more likely the right model right now. Though isn't that your trading lives off against better economic performance. It's that if you don't save those lives you might have even worse economic performance so the cost per life saved right now might actually be a negative number for each life save or adding to GDP not subtracting from GDP. The other side of this. Is that what people are correctly? Afraid of is the level of economic suffering that is going to emerge on. We've begun to your numbers like twenty percent unemployment thirty percent employment twenty four point drop in GDP annualized in q two and these are really scary. And he's our people's lives that are going to be shattered. And as much as I know. Congress is working on stimulus bills. Nothing is quite at that level. In Denmark. To discourage mass layoffs government is going to pay employers up to ninety percent of salaries of workers who go home. And don't work. I mean that's much bigger than anything. We're considering here so I do wonder how it's part of the problem is that there is not been a proposal. Put forward that allows people to kind of imagine how we're going to economically. Get through this. If we do what the epidemiologists say it is we need to do. Yeah I think anything were doing in terms of providing relief to families and some of that might involve relief for small businesses states and localities but ultimately with families as a goal. You're lowering the cost of social. Distancing data allows us to have more social distancing and so those measures I would think of in some ways as being vital to our health and our overall health strategy. Congress is doing something quite large relative to anything has ever done but still small relative to this problem which is at least in the short term bigger than anything we've ever seen. What do you think about that? Denmark idea of paying employers ninety percent of the salaries of workers go home. And don't work my partner. Any lowry has term for what we're about to go through not a recession but an ice age and I think. There's a debate right now between do you. WanNa freeze as much of the economy in place. You can freeze workers where they are. Freeze businesses In stasis recognizing that then you'll be on the hook if some of them fail businesses fail or is there some kind of adjustment we need to go through and I don't like using the word adjustment? It's what the economists say but we need to get to an economy that is going to function in whatever the New Paradigm is like. How do you think about the tension between freezing things where they are and having the market of some kind of response to what we're about to go through? I think the Denmark model of paying three quarters of the wages is a is a pretty appealing model. I think that trying to keep things somewhat frozen is a good idea but let me give you two caveats to that one. I'm willing to do more for small businesses and the people who work for them than for large businesses. Large businesses have a process of bankruptcy process of sharing the losses with the people that lent the money people that invested in them that they're able to do in a way that small businesses can't and the second is I think there's some of these zero layoff ideas. That sound really appealing. But I think might be just too much to ask. First of all there's been a lot of layoffs second of all in a lot of these industries for two years. You'RE NOT GONNA have business returning to normal. I don't think we can subsidize payroll for two straight years and I don't think we can ask them To maintain it so I think there needs to be you know. Some ESCAPE VALVE MAY BE. It's ninety percent payroll that it might even be too stringent in certain industries but trying to reconstitute economy from scratch would be incredibly hard to do and we want to try to avoid the. There is a debate right now. Over the loan packages in the stimulus which has a lot to do with oversight and conditions and I think particularly on the left after the two thousand eight crisis in its response. There's a feeling that you can't bail these companies out and then have them go. Spend that money on buybacks or executive compensation which all seems correct to me and on the other hand something I think we did. Learn out of two thousand eight and nine and ten and eleven. Is it the more? You worry about fraud. The more oversight you put on the more conditions you put on the harder it becomes that money to go out the door because if people have to make those decisions are understaffed. This is a huge project. And they're worried about being on the hook for the one that goes wrong much more than they feel. They're going to get any credit for many go right. So how do you think about that? Tension between getting the money out the door businesses and not being blamed later for business at took the money and didn't do what we hoped it would so my own experiences put me much more in the second school of thought. I think you have to decide what you prioritize if what you prioritize is jobs and the well being of workers than putting too many conditions that are not directly related to that is going to trade off against that and we had a special investigator general for Tarp signatories. That office still exists. Today it was a massive office and frankly I think it chilling and reduced the number of financial institutions that accepted extra capital meant fewer loans. Were made more businesses failed. More people didn't get a mortgage and hurt people so I am very reluctant about giving this president this administration discretion and doing it without oversight. But I'm probably more sympathetic to at least doing a decent amount of discretion and delegation to them because anything else might make it harder to get money out the door and we really need this money to get out the door one of the things. I've been hearing what I talked to economists about. This recession is that the biggest question is if it's v-shape to or once again the Nike swoosh that whether or not we go down and then come back up quickly or whether we go down and come back very slowly over a period of years not months and a lot of that depends on the path of the virus which is one reason. I think you can't split the health conditions here from economic conditions but for those who are very worried and have not heard articulated to them a vision of how you're going to manage the economy through this. What HAS TO BE PLACE? You think for the economy to have a rapid bounceback. If you accept that we're going to have a sharp drop in the coming quarter to what will decide if we have a swift return. There are few things you would need swift return. Households need to have money that they're able to spend when they have more ability to spend businesses will need to be intact so you don't need to form a brand new business but you can take an old one and expanded and the financial system needs to be there providing loans to the families to the businesses and to keep the economy moving so I think all three of those the household balance sheets the business sector and the financial sector and the banks are just really really important because there's no v-shaped recovery after a financial crisis. Do you think there's any one of those that the current packages or proposals are really falling short on I think. The biggest lack in the current package is a two states or states and localities since they're going to be bearing a lot of the cost have You know their revenue plummeting and we want them doing a lot. So that's the thing that most frustrated me In terms of households this is a fine first installment but we may well need to continue this and do more in terms of businesses. I think for big businesses. This might be more than enough and for small businesses It might not be enough and then the other piece of this that I think is a little bit underplayed. Both in the specific conversation. We're having here and in the broader one is the international dimension on two levels. One is a possibility for states under pressure to have some kind of financial crisis Either be taken over by one or create one. If they can't get enough dollars or they become for some reason or another insolvent and then the second is something similar but coming out of geopolitical risks. Something like Iran collapsing. And then there's a set of things that happened that just make states unable to play the role they typically do in the economy in two thousand and eight. China was an important source of demand. Their economy is pretty locked down right now in a way that we haven't seen in the modern era of their the whole international system seems to be at the precipice of working very differently than we're used to. I'm curious just to get your overview of what you think. The dangers are there or what you think. People need to be considering there to make sure that there's enough global demand and functioning financial markets for recovery to happen for us and for others. Yeah I mean if we had no virus in the United States and we were a hundred percent immune we would still be having a conversation about whether the events in the rest of the. We're GONNA cause a recession in the United States and whether the geopolitical instability associated with events around the world would have even longer lasting consequences. And I don't think we know the full extent of this in the world. A lot of the extent of it is proportional to the amount of testing doing this country's no throughout Africa. That you may have a lot more of this and it may spread a lot faster than we currently understand. So I think there's another reason why one would worry about something like a v-shaped recovery. Quite narrowly is even if we get our act together. Does everyone else in the world Get THEIR ACTS together too. Because you really would need all of that to happen. I think there's been a conversation happening. That sounds like it is built on economic logic but it is striking for not having almost any economists making the arguments in it so when people feel like they're adopting this realist economic framework in which they suffer the economy from the people in it from the health of the people in it from the broad social dynamics around it as an economist. What do you think is being missed here? I think a lot is being missed here but there is a certain understanding that people are what produce economic output their understanding that the goal of an economy is not just people's income but also their health. It's also just trying to make political predictions. What are people going to behave like economically politically? If you see the type of scenes that people are seeing in Lamberti right now and so I think it just is missing some sense economics politics psychology morality and probably a couple of other fields as well to build on that for one second. It seems to me that was happening at the high levels of government right now is the trump administration is feeling the pain of what is happening. Immediately it's feeling the pain of the social distancing being imposed feeling the pain of the unemployment claims coming in. But he's having trouble doing something that I think of as a mark of what leaders have to do which is living three weeks. Three months often much more than that in the future. Feeling the pain of the things that haven't happened yet but will or things that haven't happened yet. But we're GONNA have to prevent your part of an administration that had to absorb a lot of pain of things that happened in the financial crisis but then also had to make this quite complex argument that things would have been worse if these measures have been taken. And so you're pretty usually familiar with that trade off. If you were advising ever advising the president how would you talk to them about how to balance the politics of the moment and the problems of the moment with what could be coming and the ways in which? It is hard to get credit for something that you prevented. Yeah you know we. We used to say would have been a lot worse. If it wasn't for the actions we'd taken and then we point to something like Europe and say look they didn't do nearly as much in monitoring fiscal policy and their GDP didn't recover like ours. Did and I think people's eyes glazed over when you did a whole bunch of different charts and graphs and this and that comparing the United States in Europe now you can turn on your TV screen and wash scenes from Italy. That your eyes glaze over Your Eyes. Your Eyes Tear up when you see those scenes and that seeing into the future not the far future you know seeing in two or three weeks into into our future and so in some sense I think the argument right now should be easier to make an easier to understand because we're not talking about a hypothetical We're talking about something that we can see with. Our very own is right. You know right right across the Ocean Jason firmed. Thank you very much. Thanks for having me. This is advertiser content as a journalist. I'm part of the problem. 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The project is supported by your network a global network of innovators entrepreneurs and technologists committed to addressing the most critical economic technological and societal issues of our time checkout open sourced and vox dot com slash open sourced. Find out everything you need to know about the hidden consequences of tech box dot com slash open sourced on a move now to Dr Ruth. Faden and I want to as we do emphasize something. Jason said there is more to life than economics. Anomalies are more than economics but economics is here to serve human beings. We have to not just have a growing economy. We have to have a moral society. We have to think not just about growth but about who is included in that growth. And even if we are going to do things like social distancing what does that mean not just for us as a society but for the most vulnerable in our society. These are the kinds of questions. Dr Ruth Faden spends her life thinking about so here. Is My conversation with her. Ruth Faden welcome to the PODCAST. Thank you delighted to talk with you. So there. Is this growing debate. About whether the social distancing cure with all of the economic pain it will cause is worse than just letting chronic virus ripped through the population as a bioethicist. When you hear that debate what do you hear? I hear a conversation going on at about two or three different levels at sort of ten thousand foot level. It sounds initially like debate about national moral and political priorities. It sounds like we're having a national disagreement about what to prioritize from a moral point of view and this is the to save the economy or do we save lives. That's how it's framed. So that's the first level. The next level is a is that frame really correct. Is that how we should be thinking about what these trade offs involved and then we get into a deep need to analyze the different empirical predictions that the two positions land on. But I want to get back to that. But let's stay for a while on that first. Big Tradeoff notion when we get into a discussion about whether we want to save the economy or save lives. Get the response that we have heard from governor Cuomo so eloquently. You can't place a price on human life. So of course we have to choose. Lives the problem with that claim. Is that we place the price on life all the time in lots of different contexts. So you you have to say more than that. You have to say more than we don't place a price on human life. The problem here seems to me to be not that we don't place a price on human life. We do it all the time but we do it inconsistently as if people saying well. Why endure this level of economic assocation when we don't keep the speed limit at forty miles per hour? People don't crashed their cars or ban. All all cigarettes isn't this inconsistent in a way that it's GonNa harm people much more than maybe other ways of saving lives would on that we could choose instead and there's this appeal to a form of rationality that we apply. It seems to me very inconsistently. Absolutely we applied inconsistently and we know there are lots of good reasons why we applied inconsistently and we could get into a great conversation about how risk perception and cognitive biases or very much. Altering the way in which. We're thinking this right now. But even given the fact that we do apply how we price life inconsistently. We're in a special context now. So let me see if I could draw analogy for you from the health frame. So when we talk about How much to allocate say for the health budget of the city of New York. We're thinking about standard sorts of trade-offs there difficult ones between the other services that the city of New York has to provide its citizens. But we're also thinking about it in regular order under normal times and we know that we set limits and we know that that's those Lynch have effect on people's lives that are not good in sometimes are limits that end life but it's in this sort of ordinary way in which we live and function as a society. Think about when the the classic baby is on the bottom of the well right when the baby is at the bottom of well. We Marshall oral sorts of resources to save the baby. Now you could say that same consistent you could say that's a function of misunderstanding human emotions and cognitive icies. Or You could say that there is something very special about rescuing people from the brink of death. This is classic debate in my field. Bioethics what we're facing here is a situation in which we've got hundreds of thousands potentially millions of people either in the well or about to fall in and so when we consider how we should respond in this kind of a context. The sort of moral frame changes in this context. It's really really difficult and I would argue. It's an aside morally wrong society to pull back and say you know what sorry. This is normal order an enormous order. We just can't save all these people will here. We're talking about an enormous number of people that we know are going to die or suffer grievously if we don't act that's the context in which win and that's the context in which we think about saving the economy versus saving lives. You could get the response that we got from Lieutenant Governor of Texas when he said let's get back to work. Let's get back to living. Let's be smart about it And those of us who are seventy plus what we'll take care of ourselves but don't sacrifice the country but is that really what we're facing is his way of shaping up as it. Were the moral dilemma correct. Let me interrogate that for a minute. It seems very important that we're being transparent in what our competing models are here and what seems to meet of taken hold is a choice between an extreme social distancing model which is what many places are in right now and a business as usual model. But you made some very important points in here that everything. In this no matter how we do it is going to be shaped by a fallibility inhuman risk perception. And so. It seems wrong to me. This idea that there are some world. Donald trump gets out on a stage. Says go about your lives as normal and if one million seniors have to die over the next four months so be it. Just don't worry about it too much keep going to work. That people will keep going to work that everything will operate in this business as usual way. I I worry that. In addition to there being some more problems with the choice being set up. That's actually not the choice. We're facing at all now. I would agree if we take the lieutenant governor statement and interrogate it a bit. First of all it's not just seventy year olds whose lives hang in the balance and I know we've we've sort of beaten this over and over and over and over again but it's really important to appreciate that it's not just older people right. Who WOULD DIE? That's the case not only from covered nineteen but as we all know from all of the other emergent and chronic health problems that people have across the lifespan that it would not be able to be treated at if we left. Cova to its own devices. So that's one piece of but more importantly he is making a decision for himself right. This is not a context. This is a collective action problem. We can't go around asking people. So what would you prefer? It doesn't work that way here. There has to be a decision made. That's population wide and that requires a very different way of thinking about it. We cannot have a decision here. That's a unanimous that everybody agrees with. It's in the nature of public policies and certainly in the nature of this one that there will be winners and losers. Whichever way we go and that not everybody will agree with the policy. What we need is some is leadership in this context. Who looks at the statement and says wait a minute? It's not only the seventy year olds. Who are going to lose. Be The losers if we in fact go back to business as usual stop social distance thing and I think it's not quite so stark. What's going to be proposed but also it's not really clear that the American way of life is going to change long-term it'll change short term but it changes short-term in every crisis this is effectively one of the most significant crises that the world has ever faced in terms of the numbers of lives that could be lost and the destruction to the economies globally and nationally that will result but we survive those and we go on. Maybe the world looks differently. Maybe we do lots of things differently. But it's not as if we're going to obliterate the American way of life. If we all were social isolate you'll be socially isolated to some significant degree for some significant period of time. The country will continue. What's troubling me? In in the way in which we framing this as worth way. This is being framed is. It's as if there's a world out there that if we just let everything go back to normal in fact it will be normal. But it's not gonna be people are GonNa die but let me take the other side of the argument here to be fair to it. Which is that even as there is no normal. We can get two at the same time. There is a level of abnormal. That would clearly be too much. And I think something people are reacting to in this. And I've gotten this. Email elsewhere is a sense that there is an escalating demand for an almost perfect level of social distancing which clearly unsustainable in the long run and as such. Are you just creating a lot of economic damage? And then you're GONNA have this virus rip through the population anyway and I'd say one level beneath that there's a sense that whatever decisions are being made do not feel like they are being made in a clear way with the trade offs considered and by an an an and buying achieved. And so that there's just seems to me to be a growing lack of credibility on both sides people here trump say he wants to lift all of it. It sounds ridiculous and cruel. Inhumane and irresponsible people see these things floating around and social media. Go to the grocery store once a week. Never see another human being for who knows how long. And that's not gonNa work and so there seems to be a process breakdown here as well as a scary situation motivating it. It's a process breakdown and also gist. Sadly symptomatic of of the inability for I stab a national conversation for very long that is reasonable and open to arguments on all sides would just don't seem capable of doing this for any sustained period of time. There are alternatives right. What is being proposed on the social distancing side ranges from you know following the Wuhan model and significant social distancing for eight weeks to the idea that we might be able to have success as a strategy if we could get everybody to social distance significantly nationwide for two to three weeks but not what we did not not the president's two-week guidance guidelines but significant serious nationwide social distancing for two three weeks after which if we had sufficient testing and especially if we get the serology type tests that will let us know that people have antibodies. We can get a picture of where different parts of the country are. We can get a sense of what the sort of curve is going to look like now in different locations in the country and we can start to loosen up restrictions at that point. So if everyone's everyone's in everyone can be in for two to three weeks. It buys US INCREDIBLY IMPORTANT. Time to build up our testing capacity. We hope it also means we'll figure out who at least is symptomatic. Lee Presumptively St- ill with Kobe. Nineteen and take care of those people starve. The virus of the hosted it needs for a bit right. Healthcare systems have three more weeks to catch up and we can in a very strategic smart way begin to let people return to their economic lives without this kind of ill conceived notion that if we lift restrictions. Somehow it's going to be okay that it's going to be okay economically and that it's going to be okay from the standpoint of the health of the country the lives. That are at stake. It's hard for me to envision s or maybe I'm not getting it how infact this country goes back to normal when you've got what one hundred fifty million of US already under state stay at home orders and you have healthcare systems crashing like they're crashing in New York and Mike? We're worried about where I work at. Johns Hopkins has I function exactly. I'm sort of trouble sort of trouble. Envisioning this are people just going to ignore what's happening in some parts of the world and continue. It seems an odd to me and eventually the healthcare situation get so bad that we're going to have to come up with some sort of measures the economy's not GonNa do well under those circumstances. I just don't see how it can't but I think there's a pass forward that recognizes of course were in the business of trade offs of course when the business of trade offs and we have to be strategic about this and figure out how we can best get a handle on the pandemic and still allow resumption of economic activity in a staged way as appropriate perhaps in a reasonably short period of time. How do you create a space for those traits to be made and to be discussed? Well you're providing one right now as we need much more public conversation about this but I. I'm not sure how to do this. In the current context to be honest we have at the federal level hollowed out to a significant degree. The kinds of people we need to have advising the president laying out the options. If had a you know if I had my magic wand I would take the technical experts on the economy and the technical the best technical experts on the economy the best technical experts on pandemics and the related biomedical sciences. That are required to think this through and have them lay out for us not a hundred trade offs but three or four plausible trade offs fully spinning out the implications with the model hours so that we could see at least so that our leadership could say exactly what they are going to win and lose and who the winners and losers are going to be you know from from the standpoint of how you think about this from an ethics point of view. When you know that you've got to make a choice that has really really bad consequences on both sides and usually when that happens. Those consequences are not uniformly distributed to the population. Some people are going to suffer more. Some people suffer less than sometimes that's tied to bigger background questions. About inequality and injustice. There's an obligation whichever side you choose to do. Whatever you can to mitigate those bad consequences. I haven't heard any conversation about what that would look like. So not only do we need an array of you know three or four plausible options that have really good arguments not simplified arguments but really good arguments on both sides arrayed for us with the trade-offs but also the potential for mitigating. At least in part the downsides of the different trade offs St at a full picture you really have to understand sort of all the collateral damage and the extent to which collateral damage can in any way be modulate to not put this all in trump to me one of the great political failures of this period. And it's been true at the federal level but I'm in California. Were there are very aggressive measures. I'm very impressed by how quickly the governor here. Gavin newsom is acted. But even here there is no well communicated vision for what comes after social distancing and it seems to me that one reason the choices become to feel so stark to people. Either you let people die or you destroy the economy for the foreseeable future with all the mass human suffering that will entail is because nobody has articulated in a clear consistent and trustworthy way a strategy. For what comes after social distancing. What are we going to use this two three four weeks to do such that on the other end? There's something sustainable there. I think people need to feel that somebody has a plan here and it doesn't feel like anybody as a plan. It feels like emergency measures are being slapped down and just panicking our way through them. Well look to some extent. You're absolutely we're actually to a large extent. You're right and this is. This is why I feel so strongly we need to have this laid out down to life after right so if you social distance for three weeks significantly nationwide for six weeks for eight weeks. What are we likely to trade off? When do we initiate this? And what is life like after right what would we? What would we start to open up at? What pace when might me need to retract? And so on. There's a lot of conversation of about wanting to watch especially right now that when the. Wuhan area is being opened up for the first time in any significant way today. What's going to happen in China in particular? Read over the next month or so and we'll learn more as a consequence about how to think about life after here but one of the problems azar in terms of what you you want. And what what we all want and what? We should at least have plausible scenarios for is that. It's hard to know what what's going to happen. It's hard to know the pace at which at least in this country we're going to be able to do rapid reliable population epidemiological screening not only testing. That's critical for clinical decision making and triage but epidemiological screening. That allow us to get a picture of population. How long before that happens. How long before we do have therapeutics? That will improve the prospects for people who become seriously ill and reduce the pressure on ventilators. How long before we have more ventilators? How long how long right we we? We don't have the answers to a lot of these questions. We can model out and kind of project. What life would be after best-case scenarios? We were able to screen widely. We have a partially effective therapeutic. And we have really built back up our hospital capacity and our ability to to be agile and move wherever next hotspot is and we could do a worst case scenario. We open up after three weeks or four weeks. There's unfortunately a spike again and we need to go back down for two weeks in one area or the other. It's very difficult under the best of circumstances to lay out a strategy with multiple options and clarity about the trade offs in a context in which the uncertainty about so many key questions remains. We need the answers to those questions to proceed to go back to whatever it means to say business as usual in the absence of the answers to those questions though seems really really a catastrophic. Mistake is fundamentally an ethical question and trade offer facing or is this an imperial question and trade offer facing about the likely outcomes of different scenarios. So this is like my favorite question ever really And I'll across Medi context because I always want to get back to the recognition that sometimes you have moral disagreements. That are fundamentally moral disagree. Much it no amount of empirical informations can shake anybody from their view. It doesn't really much matter. I believe the physician assisted. Suicide is never morally permissible. You can put the most extreme case in front of me. It's just wrong. Someone would hold the opposite view from a situation in which as she started to dissect what people are arguing over Lieutenant Governor of Texas saying. I'm GONNA sacrifice myself so my kids can have an American way of life when you start looking at bad claiming say how much of that position would I agree with you if I really thought that was the only way to preserve the American way of life for my kids and grandkids. If I thought that was the case then I might say. Look all run my chances. I've had you know seven decades or whatever I'll go for it but actually I don't agree with him imperiously. I don't believe right what he believes about the contingent facts of the matter. So we're not necessarily having a moral disagreement. It sounds like it right. It sounds like I'm being selfish as a seventy year old right if I disagree with him because I'm going to put my life above the welfare of my children and grandchildren but in fact it's not the case. He has a set of empirical assumptions about. What's GonNa Happen if we continue to take an enormous hit in the economy that leads to the conclusion that the United States will be so crippled that his kids will not be able to have the kind of grandkids will not be able to have anything like the life that he's had somebody else looks at the same sort of trade off and says no? Wait a minute. I don't think that's what's going to happen in the world at all if you've got very different empirical Views of how this is going to play out. And what's going to be really awful? What looks like a moral disagreement ends up being a disagreement about probabilities contingencies. Now having said that often the way we see what we believe is likely to happen. Empirically the way we frame what we believe is likely to happen. Empirically is conditioned by our moral values. And what I tend to think of as a really important way to live my life so it's complicated but the bottom line is we just have very different sets of empirical assumptions about. How just how bad it's going to be. And for whom and for. How long under these exaggerated polar opposite positions? We're going to either. The economy's GONNA come Ryan back or everybody's GonNa WanNa hold on that idea for minute of for whom because one thing? I thought when I heard Lieutenant Governor. Dan Patrick make that argument. Is that if Lieutenant? Governor OF TEXAS GETS CORONA VIRUS. As a older person. He is not going to be denied ventilator no matter what is happening in the Texas healthcare system. He's he is nod up poor senior. He's not somebody with a week attachment to the healthcare system. He's not somebody who can't get himself to the front of the line and but this goes in both directions I wanna talk about these two dimensions vulnerability here on the one hand. A lot of the people banging on most more realistically and loudly about social distancing our knowledge workers who get to stay safely at home with their same jobs going to institute card to get their groceries delivered and meanwhile they're all these people out there making the economy run for them at great risk the flip side of that is that in a world where we fled everybody back out into the economy. The people who are going to be most vulnerable to this not just seniors but people who are less attached to the healthcare system people who are insecurity house people who are in prison populations etc are going to pay a price that is being decided for them by those with a lot more privileged. And I'm curious how you think about these trade offs between the much less vulnerable people who are having this conversation loudly and making these decisions and the much more vulnerable populations will be subject to whatever they end up deciding. You may remember that. I said that however you spin this out when there are winners and losers in public policy generally but certainly in a context like this when you identify who's going to win and WHO's GonNa lose or who's going to win more and WHO's GONNA lose less in a scenario like we're facing now. There is an absolute moral obligation to mitigate the burden. That's GonNa fall on the people who are going to lose the most and it's especially problematic from the standpoint of questions about structural injustice when the people who are going to lose the most are the people who are already are the most disadvantaged with is by the way what happens every single time. There's a public health. Emergency every single time is always the people who are the least disadvantaged that suffered the most in wealthy countries at it's the people in poor countries generally who suffer more than the people in high income countries so in the context? In which you talk about social distancing now I've been saying this you know in as many contexts as I can as loudly as I can. It is absolutely unacceptable that we do not do what needs to be done to put a floor. Underneath the feet of the people who are taking the hit the hardest and that includes especially the people who have to continue as essential workers including especially within them those that are not professionals who are taking the hit but who are not in professional roles were they have at least some understanding of professional ethics that they takes them to work with honor and pride ran it includes especially the children from low income families and families of color disproportionally low income who are going to suffer the most from school closings. We can't just act as if there are no Burton's that follow from social distancing and you're right so if it's the knowledge elites who can work at home but believe me it's not just the knowledge elites in of course you know this. Ezra it's every doctrine nurse I know every respiratory therapist. I'm aware of who is not staying hall. Who can't stay home and frankly I don't know how we can face those people and what they will be confronting and what we will be asking of them. If we don't do something other than simply just say okay. That was a good three weeks. Let's go back or two weeks so I'm not disagreeing with you. I think it's more the point that you we have. We have that obligation to dig deeper and say wait a minute rate. This burden is not fallen even on all of us. I can work from home. You can work from home. Great most people who are working from home now are not working. They're just home 'cause they can't work from home and they're losing. They're losing their everything. And that's that should not immediately turn to okay. That means we have to stop and get the economy going again. That'S NOT THE ONLY OPTION. The other options. Of course the you know the nightmare that's been going on on on the hill for the past week of trying to get out some piece of coherent legislation that recognizes that we need a massive response to a massive massive crisis. Is there anything I should've asked you hear that I didn't know that you WANNA cover that? We didn't let me just say two things. One is that as we've all lived in the past few days we know past few weeks you know a week is a lifetime in the context of this pandemic globally and in the United States. I'm not sure what's going to be the case next Monday. And I'm not sure whether the apparent resolve of the administration choose get the country back to work again will still be there depending on how bad things get over the next week so I think we need to watch that the other thing I think I just want to. Emphasize again is the important of ports of not getting trapped into a false dichotomy. It's not no social isolation versus get the economy going. I don't think anybody serious is on. Either side is proposing either extreme. I don't think anybody on the side that what's not you know who wants us to get back to work is saying absolutely all over the country we should drop all restrictions in everybody should just go back to normal life nor do. I think that anybody serious on the side of a more social isolation strategies to continue for longer tactics. I would continue for longer. Is saying we have to do this for four twelve to eighteen months. We are going to have to end up finding a smart strategy that gets the most out of social isolation and other tactic that we can employ in concert together as fast as possible to the resumption of economic activity for as many of us as possible. Ruth Faden thank you very much. Thank you as her. Thank you to Dr Ruth Faden. I want to take a moment here at the end to just tell you how I'm feeling. There are a lot of moments in American politics when I'm outraged angry. When I see justice this is a moment when I'm truly scared. I think it is worth being truthful. That for many of us who saw Donald Trump in the two thousand sixteen campaign and thought about what his presidency will look like. We were on the one hand right that it has been chaotic and poorly managed and he has not always been truthful to say the least but on the other hand some of the more dire predictions were wrong The economy is more or less done. Okay we've not had huge foreign crises. There have been true. Moment of catastrophe like the hurricane in Puerto Rico but overall a lot more is held together than many of us feared. And I'm worried that's ending right now. I am worried looking at the curve of Corona Virus Infections in America which are is now beginning to take on a shape of its own. We're outpacing for the rest of the world where competitor countries for at this moment. We are looking worse than Italy. And we're looking worse than Italy at the same moment that our political leader is beginning to try to take off the pressure. When you're a leader of an organization the fundamental thing. You have to live in the future. You have to live not just five days not just five weeks but often five months five years in the future that is what. Ceo's do that's what presidents do you are being passed with imagining where things are going to be and preparing your organization be that organization country or company for it now. Donald trump is a uniquely present. Focused person he is very responsive and reactive to the moments at times that is a tremendous advantage for him and as a marketer it can be a real advantage for him. He sees things in terms of image and symbolism and. He's very good at manipulating all that. But right now what is happening? Is He is feeling the pain of social distancing because it is happening right now and he is not able to feel the pain of twenty million. Krahn virus infections of full hospitals of a world in which everything is coming to a halt because we are living in a true and dire plague and I fear for what that can create. There is not going to be a version of this at works. If the federal government is not unified in its response and if the president of the United States is telling people. This isn't that bad and his telling people that it is wrong to keep doing the very hard things we need to do to try to keep this under control. They're not going to happen. And many people of all political persuasions will suffer. They will die. Being President is always an important job but there are some times some days when it is more important than others and this is one of those times and the president is a man right now who is not up to that time and he is not the one who will suffer when some of these folks say like that. Lieutenant Governor. Why would sacrifice my life? While you're probably not going to you're not the one who won't get ventilator donald trump if he catches corona virus he'll get a ventilator but not everybody will for all that the questions. He is raising the intuitions. He has they reflect where a lot of people are and so they can't just be dealt with by shaming and yelling and condemning. They're also going to have to be dealt with by trying to understand emotionally where they're coming from not Nestle for him but for the people he speaks for. I'm an for many people he doesn't speak for but who feel the same way. And there's going to need to be an answer. I would say phase one of the messaging on this was social distancing now in this chamber ain't version of social distancing. I see things going around all the time it means. Now you can only go to the grocery once a week and you can't see anybody and you can't and you can't and you can't and at some point. It's not going to be realistic. Probably already isn't realistic for a lot of families. And how about is Ron claimed set on the show? We could go all those people who have to be out there. So you writing your memes on twitter or me writing my posts on twitter or anywhere considering our houses but still have groceries and still have power and still have water. We are going to need to have a vision of not. Just what comes after social distancing but what comes in this economy after social distancing we need vision not just for face to how control the virus but we also need a vision for rebuilding. We need something much more far reaching than most of our political leadership has been capable of offering and much more optimistic than I think. Most of us are feeling right now and that is a tremendous challenge of leadership and hopefully somewhat out there is capable of meeting it or else hopefully in some grassroots way. We're all going to be able to meet it somehow together. Thank you as always towards a Karma for researching jeopardy Geld for engineering and producing a very adverse circumstances and to you for listening our emails as we're kind. Joe Box Dot Com. Please keep telling us what conversations you want to hear. You're right now. The show as always Fox media podcast production.
Can Janet Yellen Save the Economy?
"This episode is sponsored by charles. Schwab need help managing the complexity of income in retirement. Meech wab intelligent income a simple modern way to pay yourself from your portfolio. Tell them how much you need. And how long you need it to last bill estimate how much you can spend plus you can start stop or adjust payments anytime without penalty and with schwab intelligent portfolios. You won't pay an advisory fee visit schwab dot com slash intelligent income to learn more about their modern approach to wealth management. If you pulled out the newspaper last week and looked at the headlines about president-elect nominee for treasury secretary janet yellen there was this unmistakable air of celebration to a lot of the coverage paul krugman wrote a column. He called impreza. Janet yellen a politico morning newsletter. Simply exclaimed it's yellen with an exclamation point for effect and the economist called the pig genius. I think yellen is well light right. Like she's just like kind of she is a generally likable human. being jordan. Weisman covers the economy for slate. Even her quirks are kind of adorable. Like she she shows up everywhere absurdly on time or early so you know when the wall street journal did her about her. It featured a picture of her being the only person in the room at the white house correspondents dinner. She was the first person to get there like a half hour before anyone else arrived You know like. She's just like absurdly punctual. And prepared and people like her yellen is familiar to. She's already been the chair of the white house. Council of economic advisers and chair of the fed becoming treasury secretary would be like winning the triple crown of economic civil service. She's the first person to hold all three of those jobs. Choose clearly a really talented economist. Who ran into a lot of glass ceilings and just sort of found her way around them right. I mean it's so funny. Thing about jenny allen is that she's actually part of economics power couple right so she's married to a nobel prize winner and she's probably the more powerful important economist in the couple at this point but jordan says there's something else that's notable about yellen an evolution. That's happened all around her over the last week as by named economist after economist to guide the country out of our financial crisis all these people seem to share an ethos. They also have a very vocal commitment to making sure everyone who wants a job and get a job that the united states reaches full employment that we don't go through another period of slow growth where too many people are out of work for a long period of time. We talked about joe biden as kind of wanted to have us a third obama term. But i wonder if looking at these team economic advisors. You see a little bit of a difference there where it's not just a third obama term. It's more progressive than that. Some these people are obama veterans narrow. They are sort of from the mainstream of the party. But in a lotta ways the party itself and you know the the mainstream center left economics world become more progressive. And i think that's embodied in many ways of the in janet yellen herself. Her instinct has always and her main concern has been about making sure that people can get to work. She's always been a very pro full employment economist and now yellen seat will be even closer to the head of the table. Typically the treasury secretary is sort of the big dog on the economics team right which is kind of funny because again. We're talking a very tiny very tiny woman but very very powerful one attorney who knows what she's doing in this case today on the show why you should keep your eye on janet yellen. She commands respect from both sides of the aisle. The question now is whether that's going to translate into getting things done i'm mary. Harris listening to what next stick with us in the last few days. News is leaked out about joe. Biden's pigs to run office of management and budget the council of economic advisers. So ass jordan. Why should we paying special attention to the treasury department. What's gonna make janet yellen appointment so important. There are formal reasons in their informal reasons. Right you know. The formal reasons is that the treasury department is fairly powerful. The treasury department contains the irs and so it has a lot to do with tax policy it contains the office of the comptroller of the currency which is essentially a major banking regulator. It's sort of independent of the rest of treasury but still it's housed within the treasury department as the treasury secretary. She's going to be leading the financial stability oversight committee which is sort of like the interagency committee that makes sure that the financial markets don't fall apart so she's a lot of actual power of actual power but then also just informally traditionally the treasury secretary. It just is an important member of the cabinet. Can you explain a little bit about who janet yellen is because i feel like a lot of people may know her name but they may not be sure why so. Can you just give me like janet. Yellen wanna one. How far are we going back to. Brooklyn are now. I mean you know. Janet yellen is she grew up in bay ridge you know. She was valedictorian of her high school. The she grew up like a. You know a liberal jew from new york you know. She's she's a smart girl from brooklyn. The smart girl from brooklyn was both valedictorian and editor in chief of her high school newspaper. She studied economics at brown and then went on to yale to get her phd. This was back in. Nineteen seventy one. She was the only woman in her doctoral class but she was legendary. Her notes from yell were reportedly used for years by other students because they were that thorough. Yellen taught at harvard. Initially as the only female economics professor a period she described as very lonely and discouraging. When harvard didn't offer her a path to tenure she ultimately became a full professor at the university of california at berkeley and then ventured into government. Yellen started off her career. As a professor at berkley right. She's an economist at berkeley. She was eventually nominated. Joined the federal reserve board Bill clinton and from there. She got her first really big job in washington chair of the council of economic advisers and the is sort of the outpost for his traditionally sort of been the outpost for academic economists and the white house. It's like it's the group of tweedy people who produced like do a lot of data crunching and produce reports about the direction of the economy in what's happening with it and they offered vice and it's important but again it's it's sort of like the faculty lounge in the white house right. That's been traditional role so that that was like her her first starring role in washington. She eventually became president of the federal reserve bank of san francisco from there. She went to a another big. federal reserve. Jobs became vice chair of the of the federal reserve board of governors and then in two thousand ten barack obama Nominated her to be the first female chair of the board of governors. This was a history making appointment and at the time. A lot of people said that it looked like she was going to be the most dovish fed chair in essentially postwar american history. What do you mean by that. So when we talk about monetary policy where we talk about central bankers. We we usually talk about hawks and doves and doves people who to keep interest rates low. So that employment and go. Hi and they're not very worried about inflation. And hawks are people who are very worried about inflation and tend to want to raise interest rates quicker and the the idea was that a lot of people had about. Y'all must that she was going to be the most dovish person to lead the fed Essentially sense you know marriner. Eccles the guy who. The fed chair under fdr thirties. Reality was a little bit more complicated but part of her life he was that she did keep interest rates very low for a long time and she resisted a lot of calls and a lot of pressure to raise them faster than she did but she kind of road this balanced board right because in two thousand fourteen when she first became the chair of the federal reserve. She had this press conference where she talked about. Raising interest rates and she sent the stock market into kind of a tailspin. So it was interesting back and forth. Where i don't know would you say you could see her learning on the job. I think you can see every fed chair learning on the job but she had a very difficult task. And you have to kind of bring kind of mentally transport yourself back to twenty fourteen and even the years before when the federal reserve was sort of in just terranova it was an unchartered territory trying to nurse the economy back to life after the financial crisis and the onset of the great recession and they tried all these unconventional approaches like quantitative easing. That really freaked a lot of people out at first or free some conservatives out at first and you had all this political pressure coming from capitol hill i'm from republicans who were raising the specter of hyper inflation and that never happened never happened but even also had some fed presidents and some members of the fed board who also were a bit hawkish who wanted to see interest rates high tire because they were concerned that all is unconventional monetary policy and these efforts to keep rates low in order to kind of get the economy back to health. We're going to cause inflation and there are lots of reasons that turned out to be wrong but these fears were out. There and jenny owns job in a lotta ways was to deal with the hawks on the board and deal with the doves and then deal and then deflect all this political pressure coming at her from the elected officials it was. It was a difficult job at the same time. There are a lot of questions about actually what you know. How much better could the economy even get right. There were some very smart economists at that time. Who were arguing that actually by twenty four team we were getting close to full employment because the long term unemployed probably never going to go back into the labor force their ideas that we were just facing like permanent scarring and that the job market of twenty fourteen or early. Two thousand fifteen was just as good as things were going to get pretty much And like you said gallon saw that and said no we can do better exactly and so her approach was to try and find a middle path that would allow the economy to continue healing while assuaging these concerns from the more hawkish members of the fed. And that would deflect some of these political criticism that were coming her way so with yelling at the helm the fed did to related things. It raised interest rates very slowly as a kind of compromise between the hawks and the doves this low and slow approach. It remains controversial. Some argue it might have caused a recession in manufacturing in two thousand fifteen setting the stage for president trump's election but the low and slow approach got results unemployment dropped lower than many economists thought possible with out inflation spiking and by doing that yellen managed to reposition. The fed is a whole her for years running. The fed were a very important transition point. Where the fed had traditionally been thought of as an institution that was almost modern maniacally focused on stamping out inflation at least since the eighties. Right when paul volcker made it famous for that like famously slade stagflation. She started kind of turn the ship around and saying no we have to focus more on the full employment part of our mandate and that's why she was important at the fed while she was at the fed yellen also argued that income inequality was inconsistent with american values and though her argument was a bit abstract it made her a target. She was sort of the leader. Who who began bringing these. You know these kinds of concerns that initially you were hearing like occupy wall street right like you know. You're hearing from left-wing protesters. She was bringing. She was bringing those same concerns now. Internally into the the power structure of the most important economic institution in the us government She pushed pushback for that. Like republicans on the hill said. You're speaking out of turn. Yeah why is it. The fed chair shot to be talking about inequality or you know the need for stimulus spending or fiscal policy. And you know now today. You've got jerome. Powell is sort of you know he in a lot of ways you know. She walked such our own. Powell could run now. He talks very openly about the need for congress to spend more for stimulus on stimulus to or relief in order to safeguard get the economy through covid. He had the fed undergo this entire rethink of its monetary policy making framework. The end result of that was up with a framework that put even more emphasis on full employment and less emphasis on on on worrying about inflation. And so again we can think of that as sort of a him him taking what started with yellen and extending it further. And that's that's part of her legacy to i think when you talk about. What is she going to bring to the treasury. It's like well. She has the things that get progressive animated inequality and full employment. Animate her And again you know. She does not always agree. One hundred percent with the activists class or with you know some writers or you know economics commentators. About what the exact right course of action is but in terms of values. they she she aligns with with the progressive wing of the party. Well you're also laying out that. She changes the institutions that she leads the definition of a leader really. So what kind of tools will she have at her disposal. At treasury that could address these issues of inequality you know. She could definitely press for more aggressive. Banking regulations. are you know financial market regulations at her position at the treasury. Both you know kind of through some powers through kind of a bully pulpit aspect of the job but when it comes to like policy that's really going to affect inequality and people's abilities to get jobs a lot of that going to be. Come down to the advice. She gives biden right and the legislation she works with other members the administration to craft So it's i like janet yellen alone can use her superpowers fix. American inequality is treasury secretary. Anybody should expect that. But she's just another important voice. Who's going to be pushing the administration. Probably in the right direction with janet yellen. It's like what is she going to do. Who the hell knows. Because we don't know if democrats are going to control the senate and that kind of i i personally think there's a pretty low likelihood of that but you know the entire feature the by administration hinges on what happens in georgia. What we do know is who she is. And that's why i keep coming back to kind of set of values which is sort of you know a mainstream version of progressivism where she is very concerned about the plight of the americans even when she's trying to look for middle ground or you know take a small c conservative approach to stuff. It always does seem to be with the idea of making ordinary americans lives better and so i think the important thing to keep in mind about hers. That's that's where her heart catalyze more wet next after the break. 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Back you earn the end of your first year. Automatically with no limit to how much they'll match millions of people year getting their cashback matched discovered cash back match. What you waiting for. Learn more at discover dot com slash cash back match the problem president. Trump's treasury secretary steve mnuchin was tasked with solving was the kobe related. Recession mnuchin has been the negotiator for trump with nancy. Pelosi and mcconnell on speed. Dial even if he hasn't had a lot of success as of late. So i asked jordan. Is that the role he sees. Janet yellen slotting into he said it's hard to tell part of the difficulty of talking about what any member of the trump of the administration's role will be is that we just don't know what the biden administration will have the opportunity to do right like he could be the first democratic president since grover cleveland to take office without a democratic congress right. He's just like it. This might be situation where there's very little that the administration can actually pass in which case we're gonna be talking about making policy through executive orders through regulatory action. It's not necessarily going to be you know her trying to single handedly pour money into the economy and i wonder too how much president trump can sort of tie janet. Yellen hands in this interstitial period. We're in now. We've already seen a little bit of it. Because it looks like steve mnuchin has has moved this four hundred fifty five billion dollars in aid money. That was sitting around out of yeltsin's reach. Can you explain a little bit. What happened there. Yes so this has been one of the wonky and slightly sinister plotlines. it's been unfolding since the election. When congress created the cares act it helped the federal reserve. Set up these emergency lending programs right. Some people referred to this as the corporate bail out but essentially what it did was. It helped the fed setup. These lending facilities that they lend money or that were they could buy corporate bonds right. That was what was supposed to help. Keep the kind of help make sure that large companies keep borrowing money easily As the entire world freaked out about covid It also helps set up these programs for State and local governments and for small and mid sized businesses. They called it the main street lending program and those programs you know they actually weren't used very much as why we have four hundred fifty five billion dollars. Leftover still sort of basically these programs sort of acted like a security blanket for financial markets. You know the fact that it was there calmed a lot of people down. And it helped. Market go back to functioning normal The the ones for state and local governments in small businesses didn't get used much probably because the terms just weren't very good. They weren't very appealing but they were around and technically janet yellen could restart programs once. She's confirmed she would have the power to say okay. Federal reserve let. Let's get going with these emergency lending programs again but mnuchin is essentially trying to take this money and kind of stowed away in the treasury's general fund where she can't touch it. There was some talk about. Maybe you could make these programmes more appealing and change their terms a bit so they could be used to kind of give the economy a boost rather than just being the security blanket. They had been before. He's he's sort of attempting to foreclose that possibility you yellen was head of the federal reserve. You called her the most powerful woman in america. Yeah i guess. I wonder now that it looks like she's heading treasury. Is that still true. Is it true again. And i guess what i'm getting at is is janet yellen the powerful thing or the position. She is an extremely powerful woman in america. Right like that is there is there is no question and she again is just led. One of you know she. She's led this pathbreaking career that In the comes off like a mild mannered academic who just sort of like just has somehow managed to become this person who helps run the world which is sort of amazing Have you met her. No i have not met yellen. Unlike the the the fed beat reporters. Who actually like you know. Go to the go to the press conferences and stuff and chat with the powerful people. I'm usually just behind my computer watching it all unfold if you did meet her like. I'm curious what you'd ask about what i ask about. I would ask about like what she thinks. Her biggest mistakes have been policy wise. I would also ask if she would have wanted. My big concern right now is whether she would ever advised by to accept some sort of deficit reduction deal. I think that is one question kind of hanging over her right now because she you know she has said multiple times that the the us national debt is unsustainable unsustainable And of course right now. That debt is massive because of all the stimulus that we've put forward yet. It's big but it's not necessarily. It's not really a problem because we interest rates are really low and we don't pay that much on the debt as a percentage of gdp because interest rates are so low And in turn the interest rates are low suggests that the financial markets don't really see the debt. Is that big a problem. You know thankfully what yellen has said. Is that right now. She thinks the economy needs needs. Another jolt needs more spending that we shouldn't be worried we we. We need more relief that we should not be worried about. You know adding a a few extra dollars to our national credit card. But i i would want to know from her whether or not she thinks you know info in three years and four years. If we're back at full employment should we be talking about deficit reduction. Personally i would prefer that. We not be and i but i i would want to know. If she's going to nudge the president in that direction jordan weisman. Thank you so much for joining me. It was a pleasure jordan. Weisman covers economy for slate. And that's the show. What next is by schwartz. Daniel hewitt mary wilson and starting today davis land. Welcome davis. we're also getting an assist. These days from frankie kelly. We are led by alison benedict and alicia montgomery and mary harris. You can catch me on twitter. I'm over at mary's desk all eight. Thanks for listening. I'll be back here tomorrow. A one of your something amazing discover matches all the cash back you earn at the end of your first year automatically dollar for dollar with no limit on how much you can earn amazing. It's kind of like being showered with cash from above which would also be pretty amazing. 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Biden Picks Women And People Of Color For His Economics And Communications Teams
"There is the time to capture your father's story story. Terrace is a biography. Writing service turning people's life stories into beautiful books with our professional writers. Give dad the gift of a lifetime. Story terraced dot com. Hey there before we start the show we have some news were hosting a virtual live show next thursday december third at eight pm eastern or calling it politics after dark. That means we'll talk about the news of course but will also give you a behind the scenes. Look at what. It's been like to cover this election during the pandemic and we'll quiz you on your political knowledge to we've really missed doing live shows so we hope you'll join us had to mpr presents dot org to rsvp. Hi this is the creepy and this is unreal from. Lebanon new hampshire. We are currently working from our home gym while thinking off the apple by upstairs. This podcast was recorded at two. Oh eight. pm eastern time. On monday november thirtieth things might have changed by the time you hear this including the fate of the apple pie upstairs. Here's the show. That sounds like a great way to spend thanksgiving. Sounds pretty good to me. I finished my Sunday hey there. The npr politics podcast. I must have solid. I'm covering the biden transition horsely. Npr's chief economics correspondent mara liasson national political correspondent and. I hope you all had a relaxing thanksgiving weekend. All things considered given this very strange covid age that we live in the president-elect's transition appears to be moving along despite the holiday weekend and despite the fact that the president is still not conceding. Joe biden announced several new members of his administration. We're going to focus first on key economic appointments and then look at his comms team. So let's start with the treasury department. Joe biden plans to nominate the former chair of the federal reserve. Janet yellen to head the treasury department and before we dive into exactly who she is and what her job will entail. I just wanna acknowledge that it is sort of wild to me that janet yellen would be the first woman to ever lead the treasury department in its more than two hundred year history. Yeah and women economist. I think took particular delight in that the economics profession has not always been super welcoming for women and janet. Yellen was a trailblazer has been a trailblazer there. And there was also the first fed chair right. First female fed chair. She was that's right. So she's and she was also chair of the white house council of economic advisers. So this will be a trifecta of economic policy positions. And got you you mentioned. She's held these other top tier jobs but that shows us she's clearly experienced And she's been experienced at handling the economic climate during various financial crises. Can you give us a better sense of her background in which is going to be bringing into this job will she is a. She is a trained economic specialist. She she has has has more points out. She was the first Female fed chair and she headed up the federal reserve as the. Us was sort of coming out of the great recession. And then she was there at the helm When it began what would turn out to be a record. Long period of economic growth She was known as a dove on the on the fed. That is she was somebody who pushed more On the gas pedal than the than the anti-inflation break and also wally. The yemo has been nominated to be the deputy secretary of the treasury. He would be the first. African american man nominated to that position. You know it's worth pointing out that. The treasury department will have a lot of attention and a lot of is on it because this white house is going to be tasked with bringing the economy back after the pandemic and do we have a sense of what some of these appointments might tell us about how. The biden team is thinking about approaching the recovery. Especially let's say if they don't have a lot of traction or a lot of support and cooperation from congress. Yes that's right i mean i should say. First of all is another veteran. He was served in the obama administration where he had positions of responsibility for international economics and Of course janet. Yellen also got around as as as fed chair and knows the central bankers around the world this is a global pandemic and the global economic effects have been profound so we can assume there'll be a fair amount of economic diplomacy on the world stage as as As the us tries to push for a coordinated recovery around the globe. We're already seeing For example china Well on the way to recovery After being the first country hit by the pandemic but the expiration of support on the fiscal side. That is an direct spending by the congress That that aid is kind of running running out now. More is going to run out at the end of the year. And congress has been slow about re upping for that both the president-elect and janet yellen and the current fed chair jerome powell have all been urging congress to do more to say. Look we're not out of the woods yet. In fact with the infection surging and new limits on economic activity we could be heading for a double dip in the early part of the new year. So there's there's certainly a demand for more federal aid whether whether congress come through with it and in particular whether the republican led senate comes through with it remains to be seen the other thing that strikes me about these picks is that they really do communicate a clear vision. Of course there's a lot of diversity. biden said. He wants a cabinet. That looks like america a lot of experience so he values experience and heather boucher. One of the picks for the council of economic advisers actually ran a organization called the washington center for equitable growth. So these are people who are not redistributionist. They understand that you can't have broadly shared prosperity without growth. And i think that's an important signal that he sending an in a statement announcing these picks The president-elect talked about that the the challenge here is not only to deal with the immediate Economic problems posed by the pandemic but also ensure that as we do recover that we do so in a way that that helps those in the middle of the economic ladder in the lower rungs economic ladder and mars. Right that's something that most of these picks have have spent their careers working for ross. Who's going to head up. The council of economic advisers is She's another veteran of the obama administration. And the clinton administration. She's she's currently a dean at princeton university and as an academic economist. Her focus has also been on dealing with structural barriers. That keep some people from sharing and economic prosperity. And she's another. I got she. She would be the first african american woman to head up the council of economic advisers. Isn't that right. That's right and one of only a handful of women who built that post. That's right including janet. Yellen janet yellen there. There have been there have been exactly and biden also plans to nominate near a tendon to head the office of management and budget. My understanding is she would be if confirmed the first woman of color the o. m. b. so i mean. Do your point mar the. There's certainly is this vision of selecting various people who represent historic first throughout some of the appointment nomination decisions that they've announced absolutely and speaking of near attendance. She is the first pick who has gotten any kind of strong pushback from the senate She is the head of the center for american. Progress is some kind of center. think tank. She's been a top adviser to barack obama and hillary clinton but a spokesman for republican senator. John cornyn of texas said tweeted that she has quote zero chance of being confirmed so it's possible the tendon will be the first big fight with congress if republicans retain their majority in january. What's their concern with her. She's a partisan. She's made some comments about republican senators. But i also think this is a power game and republican senators are expected to try to scuttle. At least one of biden's pigs they could block them all if they have the majority if they wanted to scorched earth policy. Kind of merrick garland times ten. They could block them all but they certainly are going to try to block one or two all right scott. Well we're going to let you go for now. Thank you as always for joining us on the pod grew to be with you and we take a quick break when we get back. We'll talk more about biden's communications team. This message comes from npr sponsor. Go fund me this holiday season go fund me. Introducing five causes to bring people charities and donors together around a central need and experience the joy of giving from social justice and cove nineteen relief to animals and education. Donations help both urgent aid and long-term relief supporters receive updates from the people and charities. They've helped and can see their impact visit. Go fund me to learn more. What do john legend jennifer lopez and celebrity chefs amino schratt all have in common. I've interviewed them. Join me sam sanders. Every week as i talk with people in the culture who deserve your attention subscribed it's been a minute from npr and we're back and we now have a new scott with us here. Scott detro- there. How's it going so on sunday. Joe biden announced several members of his white house. Communications team all the names that were announced are women. So scott run us through. Who's on that list. And maybe also the significance of of hearing that so many of these people are all women. A lot of familiar names here familiar both from the biden campaign and also from the obama white house and know that's really the theme for all of the positions being filled in the biden administration. So far just to list a few of the more high profile positions are kate. Betting field is going to be white house communications director. She was the communications director for the biden campaign Jen psaki is going to be the white house. Press secretary she was the white house. Communications director at the end of the obama administration. She was also for a while. The state department spokeswoman to me. I don't know that seems like an even harder job than white house. Press secretary doing world briefings every single day Corinne jon pierre is going to be deputy press secretary and another familiar name from the campaign trail a simone sanders who was a senior adviser to biden and was a prominent spokesperson for him throughout the campaign. She is going to be a senior adviser to vice president. Kamala harris and harris chief spokesperson. And yeah a lot is being made. The fact that that this is an all women's communication staff at least the names that have been announced so far The top level names share. I mean obviously the trump administration Every press secretary after sean spicer has been a woman but the biden campaign and now incoming administration has worked very hard to have A diverse slate of people You know the a lot of women being named to prominent positions a lot of people of color and this is just another example of that and biden biden actually said that this could have been him making appointed contrast with trump but he said communicating truthfully is one of the president's most important duties and here are the people who are going to be doing that. And i'm wondering if compared to trump whether we will see relatively more of biden spokespeople and less of by. I mean i think that's an excellent question right and you do wonder from just given how the campaign was handled as well if if there are going to be expectations that that are different. What the public wants. Because president trump has so changed the metrics of what's like normal communication. I think in you said this. Of course of many podcasts. Mara that you know in some ways. President trump was his sole spokesman He was the one who liked in charge of communicating. Whatever the message of the day was and so he was famous for doing these. Qna's with the press out on the tarmac before his plane would be taking off to somewhere and towards the end of the campaign cycle. We began to see joe biden. Do tarmac goggles. and yes you know. E- each president sets his own standard. For how much he wants to communicate with the press. Donald trump broke the mold as you said he was his own press secretary communications director. He was extremely accessible. We knew what he was thinking. Within seconds of him thinking it and he talked to the press all the time whether that makes the entire country expect that and demand that i don't think so i think what what will be interesting to me is the relationship with the press every president that i've covered uses the press as a foil but no one has elevated the antagonism between the press corps and the white house to the level that trump did. I think you're gonna see a more typical relationship where the press spokespeople tried to provide information in an accurate manner while they're also pushing the administration's message. I mean osma saw this so many times covering the campaign. I think we can expect that when the biden white house wants to deliver a message it will be a message that has been thought over written out of plotted from a to z. Before before the press is is is told it you know biden when he would When he would campaign when he would give appearances they were often relatively limited. He would talk to us getting on and off his airplane but most of those really lasted two or three minutes. At a time. I think maybe there was one On election day went over ten minutes and that was like the longest by unusual right. So i think it's going be different. And and by and large joe biden ran the the entire scope of his campaign. Was i will be different than donald trump and. I think this'll be another example of that. Being said biden did definitely do longer foreign press conferences periodically throughout the campaign. These were shorter. More sort of organized regulated affairs where you might like four or five back and forth questions from reporters to joe biden. What scott said is a really important point. This is a transition and a slate of appointments. That tells you that. Joe biden has thought things through donald trump governed from his gut and his impulse but these are picks that have been designed to send a message to advance an agenda and this is a whole different way of approaching governing. All right. well. That is a wrap for today and a reminder that we have a live event coming up this week i guess it's live over the internet not live in person but please join us. It will be december. Third at eight pm can sign up at. Npr presents dot org. I must not call it. I'm covering the transition from detroit also covering the biden transition and i'm mara liasson national political correspondent and as always thank you for listening to npr politics podcast. This message comes from npr sponsor. Three him who continues to expand production of the respirators frontline workers need globally and is on track to supply two billion by the end of twenty twenty more at three m dot com slash covid. Three m science applied to life. 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Examining the Aftermath in D.C.
"President trump yesterday Put out that video striking a different tone and may basically the first time that he is acknowledged elated phrase it as a concession but acknowledged that yes. There will be a new president on the twentieth. And we'll have a out of transition and all of that Meanwhile arrived the rabid Democrats and the congress are just we get rid of him right now we. We can't be wait until the twentieth of january mike pence. I'm not having any part of that. Elite that deal. It would take most of the twelve days just to file all the paperwork warning james. That's jim rose doing sadler. I'm gary seattle mayor and there's lucy chapman five. Kabc's morning news rolls on sounds to me like for the first time in four years. Donald trump took some sage advice from somebody around. Well i thought that's what was probably going on. He had no no interest in making that concession speech last night but somebody important got to him and said you know you now. Nobody's gonna care one wit about anything you did after what happened yesterday so you better do something to make it. Look like at least you. You didn't like what happened since you pretty much. Started it right so Anward with that and and with that What we've seen since wednesday since the chaos at the capital of course. We've seen several Primarily yesterday several high level resignations from cabinet level people and we're joined for few minutes this morning by fox. News radio's rachel sutherland. With more on. Rachel good morning. Good morning how are you well. Thank you so Who's the late betsy. Devos got elaine. Chao yesterday Mick mulvaney are we keeping account here. Yeah we are three white house. Aides who stepped down on wednesday one of them was the spokesperson for the first lady A someone in the press office as well in the social events coordinator all stepped down Matthew pottinger deputy national security adviser leaving There's also a acting chairman of the white house council of economic advisers tyler. Goodspeed mick. vania as you mentioned Said that he is no longer going to serve a special envoy northern ireland that he was also the former chief of staff. You've already mentioned. Yeah and he's been very outspoken actually In his opinion of what he says he just cannot stay even though he was already set to step down january twentieth with the new administration and You already mentioned a education secretary. Betsy especially the boss now. Transportation secretary elaine chao but leaves a lot of people still behind in the cabinet Most notably the defense secretary acting defense very christopher miller is still there You have the acting secretary of homeland security chat will saying he's going to stay on until the end of the administration had been person still there so there's a lot of folks still. They're like the director of national john. Ratcliffe i've heard speculation rachel that the reason that these cabinet folks may be jumping off. The ship is because they didn't want to be part of any twenty-fifth amendment effort. Do you have you heard any more about that. I have heard Some rumors about that. Look we don't have anything confirmed about that. There's been rampant speculation about twenty minutes and then that but it would take the majority of the cabinet. Elaine chao in betsy devos are not saying obviously but that's why they're stepping down. They are siding to capitol hill violence And and going ahead and moving on the others. The it's been it's been pretty quiet on that front from the white house. I was at the white house yesterday. It was extremely quiet until kayleigh mcenany came out and gave a brief statement on this right. It's capitol hill no questions whatsoever and then left and so the president later in the evening his twitter account is back up and running. Put out a video saying that there would be an orderly transition to the next administration. He did not use the word feet but he did. He did say that So i think that people are are regrouping. They're trying to come to terms with what happened on wednesday And we may see more resignations. But it's more likely we'll see people. Hey in there to make sure that there is a smooth transition That would be the thing. I don't know. I i think if i were in there shoes that that i would say to to me yeah. I'm not blaming anyone for leaking. But i think the. I don't know if i if i were. She's i would say. I don't imagine that that the transition the actual nuts and bolts other transition. Work happens at the at the secretary level cabinet secretary level. I mean they've got all kinds of staff and people who actually know how things work inside the office. So that i wouldn't think would be a problem. Didn't think so these large departments and there is obviously somebody under these folks. Deputy who can be communicating and have been communicating for example department homeland security communicating with incoming administration to to get them up to speed to make sure that they can start on day. One without too many hiccups. There have been some I guess it's hesitance on the part of the pentagon. I doubt that that will be the case now. and there were some meetings called off things like that into the person elected said that he been had been blocked from some information or some meetings having to do with the pentagon but other than that. I think that the rest of the cabinet excuse me. The departments and the cabinet secretaries have been working for a smooth transition And so now comes the looking back at what happened. On wednesday we know that there's an investigation underway into The capitol police. The police chief is resigning. The both sergeants at arms at the us capitol are residing and this all comes. We're hearing that capitol. Police officer unfortunately died last night after he sustained injuries responding to that situation so now we have that being investigated as a homicide rate. Rachel thank you. I appreciate the info this morning. Have a good weekend. She goes rachel sutherland. Fox news radio five forty-three newsradio eleven. Ten cave. I can't get this picture out of my head of rats leaving a ship leaving a sinking ship Well there are gonna be gone in a into anyway. Yeah so basically. They gave their two weeks notice their segment there signaling their moral superiority. Here i think rush hit on some yesterday. That's probably true. And and some of the cases it might be that. Look if you're going to do to twenty fifth amendment thing. I'm out but there also might be this and this is limbaugh arguing about if you want to be part of official washington You can't have anything to do with this guy especially in light of what happened wednesday so you have to denounce like mulvaney. Said i didn't sign up for this. I'm outta here. This is horrible and some of these other people resigning because they want to stay on in. Dc sure i mean that's part of it But you know they could have. I don't think anybody honestly takes the cabinet positions. You know the secretary of the interior okay. This guy's aided and abetted the president. He serves at the pleasure of the president. He's in charge. How gigantic agency I heard what rush said about that. And i think there's a speckled truth to that but in this case they're going to be gone anyway. I mean they're they're all out. None of these people are going to be retained. Maybe one or two intelligence officials would be retained for awhile but right but the president is new rate. They want to operate him. You know because they don't get they don't get a you know a three hundred thousand dollars a year pension you know and social security and health care and should say healthcare and and personal security like the former president former vice president. Get all most their own money They could work in radio radio. Great if you bring your own money.
The Corona Economy with John B. Taylor
"Welcome to a special corona virus edition of common knowledge with Peter Robinson. I'm Peter Robinson. We're trying something different because we have no choice. We're using a the online technology to record interviews in the other box is my friend and colleague at the Hoover Institution. John Taylor who is a just a remarkably eminent economist. John Served on the Council of Economic Advisers under President Ford as a member of the Council of Economic Advisers under President George H W Bush and during the presidency of George W Bush is Under Secretary of the Treasury for International Affairs. He has published academic papers that are endless and is the author of what is known as the Taylor rule which is a sophisticated and elegant but pretty accessible rule for when the Federal Reserve ought to expand the money supply and when it ought not to do so but John is also despite that tremendous eminence and the long list of credentials here at Stanford. He may be best known certainly best loved for Teaching. An introductory freshman course in economics called economics. One one and my notion here my requested John was if he could simply take me as a layman as particularly slow student through Corona Virus Economics. One Oh one John. Thanks for taking the time to join us you so kind beer. It's great to be with you as always. I should note that we only live two tenths of a mile apart but worst here in northern California. We're in one of the six counties. That's pretty seriously locked down from six feet of where more than six feet apart. Yes we are exactly. Don't sneeze into the microphone whatever you do all right. So president trump announces on March fifteenth. They're all kinds of questions about what he is. Legally entitled to what local officials can do but he recommends and where it's appropriate for him as president to do so he institutes effectively. A lockdown shutting down large parts of the economy. This is almost two weeks ago. What happens to the economy when people are told people in non essential businesses are told to stay home? Well it has that immediate impact because it we're not gonNA RESTAURANTS. People are not getting on planes as much as they used to. It were not getting together as much as they used to. So it has an immediate back already. Is beginning impact? In the month of March early. Economic activity is decline. It's quite understandable. Right if you're not able to buy things at stores you're not gonNA record that in. Ged Bay so that's the impact It's actually because of the corona virus of course. The action is being taken but in many respects the damages from the action itself. I see so how bad again I'm just asking layman questions here. I saw A couple things one bank estimating a twenty percent hit to GDP that the economy will contract twenty percent in one month and that in April when the unemployment numbers come out in April we may see the biggest jumping on unemployment in American history. Does that sound right to you? It's very hard to estimate It's conceivable the numbers will be that large retina. Remember the first quarter just finishing. It looks like it'll be somewhat negative because of the month of March last month that quarter and then we go into the second quarter so people were talking about these big numbers at an annual rates. And if there's if the virus continues it could it could be that way. That's why it's so important to try to find other ways to deal with the virus that don't actually end up. Closing markets is a lot of emphasis on closing markets and not enough emphasis on opening markets. And I think that emphasis could be would forward a little more clearly and the rationale is still there. You still stay within six feet or outside of six feet You just find other ways to do the transactions that are more opening alright now so this brings us to what the government ought to do. The federal government will start with the federal government at least two thousand one. I Beg your pardon in two thousand eight the Bush administration. Now you were there or at least we're still advising the administration the George W Bush administration. Correct me if I have these figures ron sure. But there's a in two thousand and eight thousand one hundred and fifty. Two billion dollars stimulus by George W Bush. In the form of tax rebate tax rebates people. Get money back one hundred and fifty two billion dollars. Just get sent out to Americans. Did that help. Well as as people look at it after the fact it didn't help really people took that money and they saved. It might have helped them individually but it didn't stimulate the economy. The word stimulants was used and still being used. So that didn't work and you can see lots of evidence for that. I did research on it myself and so we're in US ability. That happening again is very much there so I think it's important. It looks like that's what they're going to be doing. Certain amount of money to individuals The median income lower income. I think it's important to do some extra things so that this doesn't get staff to sack stashed. Away is some emphasis on spending the money and I think there isn't much emphasis on that now but as soon as the bill is passed. I can maybe later today or tomorrow some discussion. Oh Hey this is an important opportunity or you to take advantage of the extra money you have. You're getting and spent all right. Which of course brings us to the Fed in the two thousand eight crisis. Help me again. You're on the Fed. You are one of the nation's leading experts so I. I'm sure I'll get this wrong and if I'm asking the wrong question just slapped me round and correct the question before you answer but I wanted to distinguish very carefully between what the Fed did during the two thousand eight crisis and then these various rounds of quantitative easing that have taken place since the Crisis Greg in the crisis itself my memory. My impression is that there was a huge effort to flood the system with liquidity. Because the immediate concern was to keep the media of Exchange Open. Keep markets functioning. Is that correct? Yeah they did that. With these special facilities commercial paper funding facility etc and that really kept. The market's going admit meant that people could sell their securities that otherwise wouldn't be stopped so that was an important market opening measure that everything was done perfectly. But that was what that was at the time and They're they're similar activities. That are going on now. They gots center seven different facilities which all have the purpose of trying to make the markets open function. Better all right and I'm trying to remember back to my Milton. Friedman and MVP equals P Q. But we're not worried. At least in the short term about inflation as a result of this huge gusher of liquidity into the system. I think it's a right. It's important not to forget that because of the basics of economics. And you always have to worry about what's next. That's why I think there needs to be a strategy. Yes it's important to keep the markets open. Keep them running. The Fed has a role there sometimes. Outlander LAST RESORT. But it also has to make sure that doesn't just create so much of an increase in the money supply that the inflation is left under out of control and it's related to the deficit because the stimulus package is raising the deficit. And so we can't be in that mode at all times. Well all right and then the other again. I'm going back to economics one on one. I keep in trying in my own mind as I think through. I'm trying to distinguish between these. Two large categories the real economy goods and services and the financial economy. Which is money. Obviously they're related but they're not the same thing no they're not the same and I think what what the concern is. Our people will panic. They'll take their money out of banks they'll stash it away and they won't spend it and that's what happens if the markets are not working while we've seen that in the past so you. WanNa make sure that financial side doesn't make whole economy even worse than otherwise would be. I think actually I think some of the comparisons are useful. Even back to the nine eleven nine eleven was a surprise right. Actions put together very quickly to deal with it and I think they were. They were effective. We didn't have a big climate. The economy went along pretty well and one thing at that time was always an emphasis on keeping markets open. We're trying to freeze the assets of Al Qaeda and and the people do the damage at the same time. This is an open market open economy so that those went together and I think that kind of thing was helpful then and it could be helpful now as well okay. So I watched the stock market over the last week and we get over the course of ten days or so. We get a sell off of something like a third thirty percent huge. Although of course in October nineteen eighty seven. There was a one day. Sell off that was almost thirty percent but still nothing. We've seen nothing like this that kind of sell off since nineteen eighty-seven yesterday the market goes up over. Eleven points the biggest gain in eighty seven years and today. Who knows where it'll be when you and I stopped talking but as we're talking now I just checked. The market is continuing to rise. Alan Greenspan when he was fed chairman famously. Criticized Irrational. Exuberance was the sell off last week irrational pessimism. What what to. What extent is the market saying? You know we can see the economic light at the end of the tunnel onto what is the extent is the market. Just saying what be the Fed is gonNA give us money. This huge gusher of fiscal activities of this huge bill is going to come through has nothing to do with the economy. Those guys in New York are just see. A gusher of cash headed their way. I think it has a lot to do with the real economy. People are concerned about these big negative numbers. It cuts the prophets and so it's a real effect but on top of that you're quite right. There's these actions back and forth is a maybe a really positive about the Fed's move than disappointment about the Fed moves. Looks like the budgets. Moving ahead that's not moving ahead. I think yesterday there was also a lot of discussion about maybe relaxing. Some of these constraints aim out of the White House on the people and that may be a factor as well And certainly wasn't some people's minds. Okay it's just allergies John. Nothing worse than that Sephora way to worry. Let's let me take you through several of the main actors in Washington. Give me a grade. Tell me how they've done. What they what you wish they'd done. The Fed the Fed under chairman. Jerome Powell healthy done. So far. They've done. I think the initial action We're GONNA go was little Not Very well articulated. Since then it's been the initial action was cutting the interest rate by half spread very rapidly. And then they the facilities were gone fairly slowly but I would say it's good but there needs to be a better description of what the whole strategy is about. You and I are talking about strategy how to make sure it doesn't last too long and make sure there's liquidity in the system. It think about what we're doing on the real economy of Angel side of the economy. I think more of that would be useful. I mean from the Fed other central banks have been doing it. But that would be the thing that I would mention. Now I think on the healthcare side People made the right decisions. They're following it very closely. Getting the best data they can and the economic side. We've talked the budget. I I worry that some of the impacts are not going to be as strong as people hope and that's why I want to bolster them with some things that make people spend this little bit more the keep the economy. How would you do that on a matter of of it as a matter of attitude? How often have you heard statements market open other than actress oppose Parkin's but there's a lot of online stuff Amazon's hiring people that excess hiring people and that's because there's demand for mind things online and more could more of that could be done? Let's take some of the money that's people will get in and buy a an exercise bike or something like that which you can do. You can even buy a Tesla online but realistically a lot of things you can do and I would do that kind of stuff to do. You want the president for example to go out and these briefings and say look folks we have enacted this huge package please. You're doing an act to. You're doing a Patriotic Act. If you spend some of it yes I would put it that way. Do it somewhat differently. But that's that's the message and and that would make markets more open. I see what about this as you talk? I think they're holding the votes and it looks as though this package. They're calling it a stimulus package. I don't know what else to call it. It looks as though it's going to come in at around two trillion dollars and of course it's lated with all kinds of nonsense. Let latest item. I saw people. There are a few people who are actually reading the bill. Probably not many in Congress but there are few people who are reading the bill and they're tweeting about what they find this two trillion dollar bill which is supposed to address. The Corona virus crisis includes a hundred million dollars for the arts for example. Now so how. How is it so important that we have a vast stimulus package that the president ought to sign the darn thing even though it contains a lot of garbage and everybody knows it or is this so close to a repeat of what the Bush administration did two thousand eight which just really didn't work that he ought to say no shut it down? I'm not signing that darn thing. As long as the Fed provides a backstop to the markets and keeps these systems of exchange functioning. We're okay so there's some things in in the bill that are important. Unemployment compensation is increasing the size of that. Maybe they've gone too far. But there's some length dot have that very troubled industries so I think those are there. I think the questions I have are these one time payments working less. They're bolstered by other things and this other stuff you're mentioning having read every line wasn't fourteen hundred pages and We are going to be. There's going to be that. And someone saying unemployment compensation so large you get more by not working and working. That's obviously not incentives. Either so It's not going to be perfect. I think it'd be best if they go ahead and finish this. The magnitudes are mind boggling. I think when we look through the impact on the deficit it will be that large. It'll be large remember. We already had a trillion dollar deficit. Right this again. All right now. Last sort of series of questions here are the following nature. What do you say to so and so all right? Here's here's one. My wife comes home from her walk this morning. She and several ladies have gotten together to go for walks each morning to keep from going crazy. I don't know what your wife is doing. But people have to do something to keep from going crazy world going. Stir crazy and the story is as follows. There's a restaurant I'm sure you know the restaurant over an Atherton and like all the restaurants in town. It's closed because governor some told the restaurants to close down but it's still open for takeout so one of my wife's friends places an order and she goes over to pick it up the other evening and the owner comes out and puts it in her hands and burst into tears. Because it's the first order the first business he's had in three or four days and the guys running short on cash. He's this close to losing his business. That's real suffering and of course it's happening across the country. What do you say to a small business owner? Who's been shut down and is running out of cash? I think the first thing is you encourage morally actions that your wife took right now. Why can't more people do the takeout? So he's got more than one customer. So that's what I think it's really gonNA difference. There's also small business loans are possible but I don't think that's a fixing a rubber band thing is to change the attitude so people are not worried about ordering a out and they do more of that. It's still not going to make people completely whole against reassure but I would look at things that's like a market opening the restaurant but you're going to buy stuff anyway and there's lots of examples like that we could be doing so I think there's also just maybe I think there's lots of things that we should do now that we maybe should have done in the past. But there's more reason so there's a lot of occupational licensing rules out there that people can't go into certain businesses unless they take long tests courses even landscaping and things like that that that's a constraint on labor markets and constraint on people finding other things to do we could relax some of those as our. It's not it's not a partisan issue about administration wanted to take away some of those restrictions and it's good economic so that I think we should be looking for those of things too. It's it is a stimulus. It's not the usual kind of spending. Might could make a real difference and what about payroll tax cut? What about we've talked about this two trillion dollar package of money? That's going to be gushing out to the American people into businesses in one way or another but what about cutting taxes. Is this just a hope? There's no room in the budget to cut taxes. What about that? It's a very good question. I think now the the rebates the onetime payments arena cutting taxes. Because you get it no matter what. Is there a way to Reduce the the marginal tax or at least not increase it. So here's an idea. Couldn't there be an agreement. No tax increases for the next two years. Three years or something bipartisan One side won't have trouble that with the other and that would be a stimulus that would be a great thing he suddenly. Hey this talk about raising taxes. That's off the table at least for a while. I think there could be some agreement about that. And maybe some of these things. It'd be informal agreements related slashing but right both sides said that. I think it'd be. It'd be started listening to connect the difference right at. What do you think about the public health officials do you? I'll I'll I'll I'll show my own thinking on this one. All I'm doing is sitting at home trying to think this through. This is not expert opinion. I could very very well be wrong but I think back to. The early reports about President trump before the virus hit in full and the press was mocking him into riding him because he wasn't taking it seriously enough and it looks to me as those his his instincts were that there was a danger of an overreaction and now we see him today he gave an interview to Fox News. I think it was yesterday saying he would love to get the country back to work by Easter. Which is April twelfth? He's chafing under these strictures that the public health officials are placing on him. And so I am just thinking to myself if you're a public health expert and you've spent your entire life devoted to devoted your entire life to saving people's lives. There's no real reason you should be expected to know much about the way the economy works the incentives for you in in terms of your own self esteem and your reputation within the reputation within the within. Your profession is to advise the president a shut the economy down and send everybody home. Because you're trying to save individual lives and what you have in your mind is a picture of a hospital where they're all the ICU. Be Units are taken and people are starting to line up in the hallways and they're choking to death because they don't have found later. There's nothing wrong with that. But that's the human that's the human reaction whereas the president trump or any president. The president is the person who has to look at the whole picture and he sees he knows what trump now it comes specifically trump because he knows what it's like to to run a business into. Gio with contractors for whom each two week. Their salary matters to people he's used to dealing with people have to make the rent that month or make their mortgage payments. My own. My own feeling is I'm kind of would like to see the President. Push back a little bit. Maybe against the just face. Different incentives help us. Officials are bad people but they face different incentives. It can't be the case that if we shut down the economy for another two months will actually be doing. It could be the case but it doesn't look to me looks to me as though were running the risk of doing more harm than good. It's as simple as you got. You got a very good point and people are worried about that all over the place. I think the healthcare officials I mean that's sympathizer tough situation but there are workers. It's very difficult Risky So you can see why that it had that attitude but I think if you have the economics integrated more with the health decisions. It go a long way to dealing with the problems your issue. You don't you're not that you want to eliminate the restrictions you WANNA make them less confining less closing more opening and I think there's many ways that can be do that. I'd like to see in the next edition of the fifteen day message. The president put out. I think that was helpful to have more of these things. Some of the tick points. Let's use some of this money to buy things. Let's find ways that people can use online messaging or online purchases more? That's fine away Natalie. Have more task. The people can maybe go to a restaurant or do more take out. There needs to be more of these things in the message and I. I'm pretty hopeful if the net when the next one comes out for five days started fifteen days thing. You'll see more of that. So it's not that you WanNa you WanNa override these medical decrees you WanNa make them work better and I think that means economics and the health has to work together. I would go back to the nine eleven attacks. It was incredibly frightening. A stop zero pulled out. There was talk about stopping all traffic. We had all our airlines stopped member but there was all this simultaneously. That's not hurt the economy. Let's keep the economy going as much as we can. I think we need more of that now. and the and the documents in expressions in the statement should reflect that. John have any sense even any instinct. About how long it will be before we get back to something. That feels normal. Well if the if we reach a peak visible peak on the on the disease I think it will come pretty quickly. I think we'll have seen that they see the curve. Still moving up. We haven't seen any kind of slow down. I think when we see that you'll be able to see light at the end of the tunnel and somebody's is this. An incredible turbulent period the economy's slowing down does nothing permanent about it as long as we don't make permanent so we can go back again. People can start going. You've classes again. Uncommon knowledge will be in person rather than on the video. All those things will happen very quickly. We can do tomorrow if the situation Jank right. So that was that was. My final question is what is the. What is the permanent damage from this? And you're at your answer is there need be almost none. I think you should think about it. More positively there may be some positive things about this people every damn getting messages. Try this Internet. Try this idea New Products. I think it's best to be optimistic. Here Sarli sorry. We don't know for sure but People are rising this occasion and thinking of different ways to produce different ways to transact different ways to work. And it's it's been there for a long time. I think this may be an impetus if he liked to more of these things and it will be better if this occurs that way. John Taylor Hoover institution my colleague and friend. I'm happy to say and the legendary professor of Economics WanNa one. Thanks so much thank you thank you Peter.
NPR News: 11-30-2020 8PM ET
"Live from npr news. I'm jack speer. President elect joe biden is filling out his economic team. Npr's scott horsely reports biden is set to announce key members of his administration at event tomorrow in delaware plaza nominate an economic team. That's diverse experienced and in the words the transition crisis tested to serve alongside pick for treasury secretary. Janet yellen biden tap. Wally automo- deputy treasury secretary near attendant as white house budget director and cecilia rouse to lead the council of economic advisers. All three served in the obama administration biden says will help steer the country through the immediate challenges posed by the pandemic recession and help to address structural problems. Workers were already facing before that campaign adviser. Jared bernstein and heather. Boucher would also get jobs as white house economists all the nominations are subject to senate confirmation scott horsely. Npr news washington. A new study finds people in the us who received unemployment benefits. Were less likely to delay getting healthcare and have problems affording food and rent as redo chatterjee reports. They also likely to have better mental health. The new study used data collected by the us. Census bureau aimed at understanding how the pandemic has affected families around the country. The respondents said they received unemployment benefits. Were less likely to have missed the previous month's rent a worry about the next month's rent there were less likely to have trouble. Putting food on the table in dealey accessing non related healthcare the ultra had lower risks of having of anxiety and depression however only thirty six percent of respondents at the head received unemployment benefits in the past seven days the findings appear in jama internal medicine. We chatterjee npr news over european countries. Say there's suspending access to ski slopes in an effort to slow the spread of the coronavirus who owned health organizations executive director. Dr michael ryan sang today. The risk of catching covid nineteen skiing is likely minimal however the activities around skiing are a problem. It's not that they went skiing or they're going skiing. That's not the issue. The issue is any activity the that involves large numbers of people moving into a concentrated space and then using public another transport to get there and back needs to be managed carefully. There was one good of bid new big good news globally rather in the last week. Mark the first worldwide decline in covid nineteen cases even as cases in the us have been soaring. who is concerned about further spread of the virus. During the holiday season transportation safety administration says one point two million people move through. Us airports yesterday. Many millions more believed to have traveled by cars. Thanksgiving holiday came to a close highest numbers of travellers since the coronavirus pandemic began gripping the country back in march and the rise came despite warnings from public health experts stocks pulled back back a bid on the final trading day of the month down down two hundred and seventy one points. The nasdaq was down. Seven points the s. and p. fell sixteen points today. This is npr in four thousand square. Miles of the amazon rainforest were burned or cut down within the past year. That's the highest level of deforestation in twelve years in bar. Or blaming brazil's government. Here's npr's dan charles. These are brazil's official figures on deforestation from the country's national institute of space research. The institute says the amount of deforestation increased ten percent over last year. Which in turn was a big increase over the year before most of this land clearing is illegal but environmental groups. Say brazil's current government is no longer vigorously investigating and prosecuting environmental crimes. They say the government instead has cited with ranchers miners and loggers. Some scientists have warned that continued. Destruction of the tropical forest could permanently damage. It reducing rainfall across much of south america. dan charles. Npr news the navy now says it intends to decommission to ship docked off san diego after suspected arson fire caused extensive damage. Maybe officials saying the fully repairing the us s but homey. Richard would cost as much as three billion dollars. Take five to seven years in fibi. Assault ship burned from within four days in july was the navy's worst. Us ship fire outside of a combat situation in recent memory arsonists is suspected. Cause and officials say a sailor's been questioned but no one has been detained charge cornell futures prices moved lower mid continued uncertainty over whether opec members will continue with production cuts oil down to forty five thirty four a barrel in new york. I'm jack speer npr news.
425. Remembrance of Economic Crises Past
"If. You'd like to listen to freakonomics radio without ads place to do that. Is stitcher premium five dollars a month and you can get a free month trial going to stitcher premium, dot, com and use the Promo Code. Freak you'll also get access to all our bonus episodes, and you'll be supporting our show to that stitcher premium dot com. Promo Code Freak things you like podcasts right whether you listen occasionally or can't get through your day without them. There is a great app you need to try. It's called stitcher. stitcher is a free APP for. android that's really easy to use from classic favorites, too. New Hit shows from Oprah and Conan O'Brien as well as the best of true crime like cereal and my favorite murder stitcher is home to all your favorite podcasts visit stitcher dot com to download stitcher for free today. So, what's it feel like? As an economic historian to be living through a moment, that's plainly historic from an economic perspective. It is sort of mind blowing. I remember back from the two thousand and eight recession I said to myself oil. I never thought in my life I'd lived through a bank run and here were people lining up outside banks? Now. I'm living through a pandemic. It is really hard to fathom that is Christina. Romer. I'm a professor at the University of California Berkeley. She's a scholar of economic catastrophe. The Great Depression in particular. She was also chair of President Obama's Council of Economic Advisers at the start of his first term during the darkest days of the global financial crisis. She had been surprised to get that job. And several months later, I was talking to Rahm Emanuel the president's chief of staff and I said by the way. Tell me why I got this job and these head. You're an expert on the Great Depression and we thought we might need one. It. Did take several years, but the US and global economies recovered from that catastrophe recovered pretty well at least. But now the covid nineteen pandemic has produced an economic threat that borders on the. The first quarter this year the GDP shrank by four point eight percent, nearly forty six million jobless claims have been filed in the last three months. Some advisors to the president are warning of unemployment numbers straight out of the Great. Depression Great Depression is way worse than anything. We saw the Great Depression and so. With, everything going on right now. We thought it'd be good for us to consult a great depression expert if only to help us make sensible today on freakonomics radio. Christina Romer tells us the valuable lessons. We can draw from the past a still feel we should have done even more. She lists the current priorities. It is the single biggest thing that needs to be done very quickly. And whether will make it out, okay on the other side. I mean the history of this country is rising to challenges. From, stitcher and productions, this is freakonomics radio podcast that explores the hidden side of everything. Here's your host. Talk Stephen Duffner. The National Bureau of Economic Research recently declared that the US economy went into recession all the way back in February. Christina Romer sits on the committee that make such declarations. For the past few decades, she is studied the causes and consequences of Economic Downturns. Why did she choose such a cheerful topic for an economist? There's almost nothing that matters as much in people's lives as whether they have a job whether they can support their families. It probably doesn't hurt that. A high came of age. I was in graduate school during the Volcker recession of the early nineteen eighties and I think that was a series experience for me and really made it stand out in my life, rumors parents were children during the Great Depression and she saw the market made on them as they got older, my mother was. Was the most frugal person you could imagine, I can remember when my father they were buying a house that was a little bit of a stretch and I can remember finding my father sitting up one night just in a sweat over whether he should take on this mortgage if we were having this conversation at the start of twenty twenty with record low unemployment. Unemployment record high stock markets, a generally robust economy. If we were having this conversation back then, and I said professor boomer I believe that real GDP in the US will fall something on the order of five to six percent in twenty twenty. You would have said what to me. You're out of your mind. I can even remember having been on a phone. Phone call with one of the advisory boards that I'm on after the pandemic had started, but it was really early and someone said I think the unemployment rate's GonNa Coach to eleven percent, and even then I said Oh for heaven's sakes. This is not the great recession. It's GONNA be dislocation. It's GONNA cause problems. But how do you get to eleven percent? The unemployment rate actually blew past eleven percent. It is worth noting that an economist as experienced as Romer as experienced in economic catastrophes didn't see that coming. It's also worth noting that the magnitude and volatility of this labor implosion make it even harder than usual to measure the true unemployment rate. Always has be oh some problems with it. There's some particular problems because we're asking questions that we don't normally have to ask like. Are you employed? But staying home because you've been exposed to the corona virus at that's not a question that was ever on the survey before, and so there are certainly some problems just with how'd we code those things? How does this compare to her time in the White House during the great recession. You know I thought in late November of two thousand and eight while we're headed for a terrible downturn. Maybe the unemployment rate will go up three or four percentage points. And then the numbers start to come in, and it's hitting you just my heavens. How horrible! This thing is of the private forecasters those of us in government. Everybody was having to readjust in. Say Wow, this is really bad on goodness. It's worse than really bad and I'm sure that the people in the Treasury in the Council of Economic Advisers today are having those same kinds of moments of. Holy Hell I didn't know it could get this bad. So I guess the big question really is. How worried are you right now? About the near and long term future of the US economy? That's the million dollar question I'm of course deeply worried about the near-term outlook in what we're living through right now is truly wretched and there aren't. Bad enough words to describe just how much many people are suffering. We've had a added decline output fallen in employment. What worries me a lot is I think some people think. Oh, we're starting to you. Know End. The lockdowns will snap right back, and that unfortunately is not going to happen and I. People may be aren't prepared for the fact that is gonNA. Be a long hard slog, and so the pain we may have four not just a few more months, but a few more years is something that concerns me greatly. There is growing evidence that this log will indeed be long and hard cove. Nineteen diagnoses are rising fast in many places, many states, including Texas and Florida and California have paused or reverse their plans to reopen the economy. This may cause a much more permanent change in how we live, and how we do things, and so we have to shut down some industries, and there's GonNa be some new industries that grow up and then even for some of the same. Same Industries that we still want the restaurants the services if those businesses have gone out of business than somebody else has to come in figure out how to do it higher, the workers build the customer base, and that's GonNa take time. So how does Romer compared the current US economic damage to the Great Depression, so we don't have quarterly data for the Great Depression, but the numbers for the first few years of the nineteen thirties was real. GDP fell at. At about ten percent a year, and from the peak to trough of the Great Depression real GDP, declined by about thirty percent, so we lost a third of our output, and when the numbers come out for the second quarter of this year were likely to learn that it's fallen by about forty percent at an annual rate, so when we talk about a forty percent annual rate, it means if we had the same behavior in the second quarter and in the. The next three quarters GDP would be down. Forty percent, and nobody expects that to happen. I, was just looking at some numbers from the Congressional Budget Office, they think when the dust is, all said it will probably say that GDP fell about five or six percent overall of twenty twenty so again. That's horrible, but when you compare it back to the Great Depression where it was ten percent a year, and where it didn't happen just one year, but three years. It does at least help you to realize what our grandparents lived through back in the nineteen thirties. Dwarfs even what is truly a horrible time now? As for the great recession when Romer had a front row seat, real GDP fell then by about six point three percent in the fourth quarter of two thousand eight. But apart from being a useful comparison past recessions and depressions may also offer lessons on how to escape from this one. I asked Romer to describe what she considers. The most effective parts of the Obama Administration's Recovery Act the first thing to say is we still had a quite severe recession, and so at that sense, nobody should take a victory lap because it was really painful for for lots of people. The, one piece of the Recovery Act that has been now studied in hindsight is but a state and local governments for an economist. It's a great example because some of the state local fiscal relief in the recovery, act was actually given more based just kind of on historical accident, meaning the relief was almost randomized as if in an experiment, and so it gave. gave us a nice natural experiment. We can see if states that thought more fiscal relief for relatively exogenous reasons did better, and the answer was there. Did you know it was only about one hundred and thirty hundred and forty billion dollars I know only, but it seemed to have been very effective for instance one analysis of Recovery Act aid found that increasing estate. Funding helped increase long-term employment. On the flipside states and municipalities had drastic cuts were slower to recover all by years. In, roamers, own analysis of the Great Depression, she found that federal aid to states and municipalities was very effective, absolutely before Roosevelt came in the states were the main ones doing relief, and then as soon as Roosevelt started to have some of his public works and things like that one of the things we see as state saying Oh, thank heavens now we can get our fiscal. Fiscal House in order so as we were designing the Recovery Act I was one of the big proponents of we gotta make sure that state and local governments don't start laying off public workers and cutting a lot of the crucial services because that's just GonNa make this so much worse. Rumor thinks the same formula is important in the current crisis, state and local governments are. Are experiencing huge drops in revenue and huge increases in spending for public services like health, care and unemployment, state, governments, or something like seven hundred and fifty billion dollars in the red, and unlike the federal government states can't just keep borrowing and run at deficit, they have laws requiring at least the proposal of a balanced budget, and because they're not allowed to run budget deficits. Deficits. They're gonNA. Have to start cutting spending cutting social programs cutting infrastructure, and that's going to be the real test of bipartisanship, because Democrats tend to be proponents of giving money to state and local governments and Republicans often are not, and that will be the real test if we can get through because it is the single biggest thing that needs to be done very quickly. So if you are running one of these states that's on massive debt now dealing with Covid, would you try to undo this balanced budget requirement and running a deficit? That's a great question. May I think the much better? Thing is probably for states to stay the way they are, and for the federal government to use its power to borrow to help the states, simply because we are one country and especially something like doesn't affect every place the same, but it seems like the natural thing that we all share in those burdens. You don't say Oh, you're a state that happened to get unlucky. Unlucky, so you're just going to have to pay for it. A benefit of being in a large country is that we have insurance. We take care of one another. When there's a hurricane in Florida the rest of the country helps them when there is a terrible covert outbreak in New York City, I. The rest of the country should help them right, but the fact is that a lot of these states that are in real trouble. They claim that they're not getting anywhere near the federal money that they need so relying on the old model may be catastrophic. So what do you think will happen there and let me include the question? That's a matter of some discussion controversy about bankruptcy for states and weather. It should perhaps be permitted. Just as I think it's a terrible thing for anyone to talk about the federal government defaulting on its debt I think we're a country where we pay our debt, so I think letting states go bankrupt. That's just not a a sensible strategy. We ought to actually deal with the problems that we have where a rich country we can do this and we don't have to act like a country that doesn't have effective government. What should be happening to a? A STATE FIT is in real trouble. I think it would certainly be much better for them to find a way to borrow van to not serve their people to not deal with the public health crisis so I. Hope it doesn't come to that I hope that we can have sensible federal fiscal policy to help the states that are in real trouble, but barring that finding a way to allow them to borrow. I, think would be a much better strategy. Keep in mind. Rome was among the most enthusiastic proponents of federal aid to states during the recovery from the great recession while putting together the two thousand nine Recovery Act One of the major debates over the size of the federal, stimulus package. A still feel we should have done even more, but I do feel good that I argued people up by. Several hundred billion. Yes, so talk about that for minute. We've read about your participation as a member of his team, which included among others Larry Summers, whose think sometimes misunderstood in? His aggression is intellectual or personal or whatnot, but you wanted the aid to be. How much bigger than ended up being. And how much more did you get than was originally proposed? The main thing that I remember actually was a meeting where Larry turned out to be a crucial second vote for my opinion, so yeah, I think the proposals had been for numbers closer to do a fiscal stimulus of about six hundred billion, and I remember having run lots of numbers. I came in and I said this is much too small I. Think needs to be you know at least eight hundred billion and probably bigger and I almost fell off my seat when Larry said I agree with Christy. Why were you so surprised? He agreed. Because Larry doesn't agree with anyone. But. It was really important for you. Know as I said, it's not nearly as big as it needed to be, but it was a lot bigger than anyone had been saved teen. Now with your desire to have the fiscal stimulus be larger then was that a result of your understanding of the Great Depression, and the way that fiscal was used back then and that it essentially was not large enough. Absolutely there's two things that I think I learned from the Depression, one was relative to the size of the unemployment problem in the early nineteen. Thirties what Roosevelt did was much too small. It was big relative anything they'd been done in the past, but it was not nearly enough to deal with the problem it. The other thing is actually monetary policy can be very effective. Effective even when interest rates are quite low, and so you know though the Federal Reserve was doing wasn't the Bailiwick of the administration, one of the things that several of US trying to convey to the president. Is You know what the Fed is doing is a great thing. You supporting bed? Banenky what specifically was Banenky doing that you thought was positive. That needed encouragement. Things like when interest rates get two zero. What are the tools that you have is to try to affect people's expectations of inflation because that affects what the real cost of borrowing is and so I. Think Burnett Hewas taking number of steps for example at this time they started giving out something. It's close to a target for what they were for for the inflation rate and I remember trying to explain that that was probably a good thing because we were in a world where. Unemployment ten percent people might be starting to expect inflation to come down, and if the Fed is is signaling, no, we're GONNA. Keep it at least two percent that can actually be very positive, so the political costs of the recession, and and your the Obama White House response to it. We're pretty extreme whether it was the recovery plan itself or just the the depth of the recession. Dem's got crushed in those midterms two years after Obama's election. Surely the trump administration's looking back at that to judge how they want their responses to affect the next election. How do you think that will influence what they ultimately decide? I pray. It doesn't affect what they decide. What everybody should be doing is right for the country, and so this is a case where you would think that both their political interests and what the country needs would be you know. Let's deal with the public health crisis. Let's make sure there's enough support for workers that there's support for state local government, so I'm hoping that this is a time when there's no conflict between the politics, and what would be right to do? See coming up after the break, the mistakes learned from previous economic recoveries, and how even in a crisis Romer keep searching up. Yet taken that optimism out of me. Also, don't forget to check out our new spinoff podcast new stupid questions, which is sort of freakonomics for psychology. You can get it wherever you get your podcast. Let's breathe in. And breathe out. We're about to get into any money state of mind. I'm Dr You. Monte Walker I've been practicing psychiatrist for over ten years. I know that so many of y'all don't know where to start when you WanNa talk about your mental health. Only mining state of mind I'm going to have those conversations with you. Imani said of mind is out now. Subscribe now in Stitcher Apple Podcasts, spotify or wherever you listen. Christina Romer former top White House. The communist 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 US economy is unique, and how that will affect a recovery from the Cova crash. Traditionally, the American economy has been. Motto I WANNA 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 it. 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 to a lot of European countries where the governments have just been paying employers to keep on the books, so one thing I could imagine is we've discussed it? Some industries may never come back brick and mortar retail. It may come back sound, but it'll never be like it was and. I think the positive would be that. The US economy may be better at adjusting to such changes that we are dynamic economy, and so there's an opportunity American firms are 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 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 retrain them. For what do jobs are coming down the line? I S Romer 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. Fair couple we had. Had the making work pay tax credit? We thought rather than right people checks and have them arrive in their mailbox or in their account. We would just go slip it in, so it's just GONNA show up in lower withholding, and we thought people would just notice. 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 even now. They've got it or worse yet. They thought the Obama Administration raised 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 was 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 more if they see the check in their hands or do? They respond more if it just shows up in their paycheck? Every month and I think it was partly. We are just learning. There was another idea that looked good, but never gained traction. We were trying a lot. Especially in twenty ten to think of another fiscal stimulus that may be would not be terribly expensive, but could have a big bang for the buck, so we were very interested in a new hiring tax credits away to convince businesses to hire workers, and you know we really did due diligence this. When 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. That 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 baby. 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. which she thinks, play a big part in the US 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 was incredibly valuable. This is the WPA WPA the civilian conservation court, but in a modern world, trying to figure out how to her. 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 matter. How many people could you hire? They'd say oh lots. You Know Twenty thirty thousand. Is Not GonNa 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's it so hard for the federal government to do that? They partly, we have different standards for the federal government so. 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 that sent three quarters of their paychecks to their mothers, and it was by all accounts incredibly successful and I've met with some. Some of these people that were on CCC projects they're now in their eighties and nineties, and it was life transforming, but 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 disbursing aid. Money has been that. It needs a lot of manpower. One problem with contact tracing needs a lot of manpower. So is it really so hard to imagine a 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 back two three four five percent anytime at all soon right now I agree 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 vary 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 the millions and millions of people that were currently unemployed. I'll give you another example of one of the ideas. I was thinking about back in two thousand nine was. Know How just a massive program of hiring people to be teachers, aides and I was really very taken with this because so many of our public works jobs tend to be for construction workers male, often oriented jobs and I thought this was a great way to make sure that we were getting some balance 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. Districts that are laying off teachers and you say but I have this great program. I'M GONNA. Give you all these teachers aides, you know. 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, and maybe they could hire the teachers aides. Okay so if you're running some kind of economic swat team right now, let's imagine you were running. Ca Now national economic council or something to the equivalent? And you're trying to game plan. The current recession or economic doldrums do you look more to the great recession as the model whether because it's more equivalent in some ways and door, just because it's more recent or do you look more toward the Great Depression. Where are you trying to draw your best inspiration from both in terms of positive moves and mistakes to be avoided. I almost think we need to not look at either of them in both those episodes are basically any other recession. The only problem is a lack of demand, and so just any policy you take gets demand up. This is so different because it's a public health crisis and you'RE NOT GONNA. Get demand up until you solve the public health crisis, nor do you want to because you don't want every business producing at full capacity? Because then you have more workers than you can actually keep safe so i. I think we really need to throw away some of our previous experience and focused more on what's unique about a pandemic, and how do we actually deal with the public health problem? So I think I would go much less. Let's just get demand up. pledged. Just give people. Tax Cuts had much more. Let's spend so that we solved. Public. Health Crisis I may be you know. Take inspiration from other countries today that have made more progress than we have rather than looking back at previous us, recessions. Talked earlier about there's a dynamism to capitalism and. Dynamism to the way Americans do things, but there is a cost which is because we're laying off a lot of workers that firm employee. Link is being broken, and they're hard to get back at. It is hard to hire workers and get those right matches again and so. That's GonNa be costly, and that may tend to slow us down in the recovery process. There's also the issue I've heard this from several employers, mostly small and medium sized firms that even if they survived covert pretty well or are now returning to business they. They are having a really hard time rehiring their own former employees because the unemployment insurance and the other aid that people have been getting is really great, and they can literally earn as much if not more by not going to work I. Know this was an early concern. When the cares, act was being put together. It was largely dismissed saying hey, it's much better to support individuals. If this is, the downside will live with it, but now there are employees yours who are living with it. What are your thoughts on that? I think absolutely in the initial stages. It was great to get more money into the hands of people who were struggling, and we do as a country of a terrible inequality problems so giving six hundred more dollars a week and benefits to a low wage worker. That really was a great thing to do I think as the economy recovers, and you want people to go back to work. You don't want them to just lose those funds. We ought to be worse off if they go back to work. So can you give us some benefits? People have been talking about reemployment, bonuses or things like that. Could also comes back to you know we've got a long run inequality problem. We should be dealing with that at some point. You don't want to be doing it through your unemployment system. You WanNa be doing it in a more sensible way through your tax system or the earned income tax credits, or you know better benefits in the form of universal health insurance things like that. So one early and much cited paper was about fiscal policy, and you argued that fiscal policy during the depression didn't help the recovery all that much, and that finding of yours has been interpreted over the years as an argument against fiscal intervention, which as I read? Your work was not at all what you intended. Can you quickly summarize your actual finding and then describe the misinterpretation? Then we'll take it from there. So the actual finding is if you look at what it was, that helped the economy to recover from the Great Depression, the monetary actions that Roosevelt when he came in. We're much more important. That didn't have anything to do with whether fiscal policy could have been valuable. It was just the fact that we didn't do all that much fiscal stimulus in the mid nineteen thirties, and so it was not the main driver of the recovery much of my subsequent work, and all of it joint with my favorite co author, and also husband David Romer has actually been pointing out that. That fiscal policy is very effective, so we have a paper looking at the effects of tax changes. If you cut people's taxes, it does help to stimulate the economy in the short run. It helps you to increase demand. Get an increase in output. We've looked at the effect of transfer payments, and that too has a substantial positive effect on consumption, so I think we've done some very important work. Saying that fiscal policy is really valuable. It just turned out. It was not used in nearly aggressive enough way in the depression to have been a big factor accounting for that recovery. Although Roosevelt must have felt that he was using a lot of fiscal stimulus. Yes, seemed like a lot at the time relative to what had been done in the past of course. And it was even a lot in an absolute amount in the sense that the actions taken by the federal government were pretty substantial, but if you look at the total fiscal situation for the US. Because state and local governments were going in the opposite direction of hunkering down of actually raising taxes, cutting spending the net fiscal stimulus was pretty small, because the states counteracted anything Roosevelt was doing on the positive side. We should also say this is ten gentle, but I can't let it pass without saying that among your husband's most noteworthy research has to do not with depressions recessions, but with fourth-down decisions in football. True he calls that his midlife crisis paper. Even he would tell you. His most important work is on monetary and fiscal policy and financial crisis, but I gather the bill. Belichick read the paper and integrated IT INTO HIS PHILOSOPHY S. I believe he did read the paper, but you'd have to talk to David about. Whether he listened to it enough. Obviously, it is tangential to our conversation, and yet in some way it's not which is, it was an empirical finding which argued. That using the tools of economic analysis, you can determine that all most all football coaches are playing fourth-down wrong and they should punt much much much much than they do and yet it's been mostly ignored by all, but maybe a handful of coaches do you see equivalent empirical research done in the realm of fiscal or monetary policy that is demonstrably correct or at least worth considering among the tribe of economists, but is largely ignored by practitioners. One of the things that's. Been, nice is that in the lot of macro research. It actually has been the opposite of ignored that policymakers have listened so I think especially central bankers have been very interested in academic research on the effectiveness of quantitative easing or the impact of monetary policy or credit things like that so I think on the monetary side there is a lot of interest in research and learning from the research. On the fiscal side, it's been a mixed bag I feel. There's a lot of professional research that fiscal policy can be very effective when I was in the Obama Administration is certainly later in the Obama administration when we desperately needed more fiscal stimulus. That was the moment when policymakers. Republican policymakers decided that no fiscal policy didn't do anything. But then part of what's happened over the last ten years this there's just been paper after paper. Looking at what was done in the Recovery Act looking at was done across countries in terms of their fiscal response to the great recession, and those again almost uniformly find that fiscal policy is very effective, so I've taken a little bit of relief that facing this crisis Congress, said he I. Guess We'll do it again. In fact will do even more so maybe policymakers are in fact, listening than realized that these things do help I have to say when I first started paying attention to economics years ago. It was one of the things that most dispirited me because. I found that the greatest economists of the era were still debating the degree to which fiscal policy during the depression either helped end the depression, or on the other hand, exacerbated it and I thought well wait if these people can't tell us the answer to that question. Perhaps you're not very useful to us. I don't mean to indict your whole tribe, but you're saying that you feel. There has been more consensus at least on that kind of macro policy intervention in the last ten or so years. Do I. Think if you look say at the University of Chicago's their panel of experts of you say. What did the Recovery Act? Some very large faction will save. It absolutely was helpful. We should say that's a survey that you've see runs. It's not all University of Chicago economists. No, it's actually a very wide range of economists. So I think everyone wants to say. Oh economists disagree. You can always find somebody to take the other side, but it's often the case that ninety percent of economists believe one thing and ten percent believe the other, and so the vast majority would say monetary policy is very important of vast majority would say if you cut people's taxes that will indeed stimulate the economy in the short run. Okay so let's in our remaining time. Look at the future as best we can. It's obviously unpredictable I'm curious when you look at the policy that you see being considered and being made now fiscal and monetary policy, and if you try to play it out in your mind, not just a few months from now, but a few years, maybe many years from now I'm especially curious. If you think there are any lessons from the Depression in particular that we should be taking especially when the cure turns out to be, you know as dangerous as the ehlmann itself so one example I, think about this is not a perfect parallel. The war when there were controls and health insurance began to be offered as a fringe benefit and bundled with employment, which is something that most health economists say is one of the really difficult things better healthcare system now when you look at the policies, being considered were made now what you think we should watch out for what might be some sad or difficult downstream effects. The one that worries me is the budget deficit so not in the immediate term, but if you think about. How much money we're spending, it's completely appropriate. We need to be doing it, but we are better running budget deficits than we are at dealing with them when the crisis has passed, and so if we keep dealing with crises, but then not getting our fiscal house in order An- afterwards at some point. We're not even GONNA be able to deal with the crisis because we will have run our debt to GDP ratio up so high. We should have a plan to raise taxes eventually to get back in a more sustainable system. I think the pandemic may well exacerbates inequality, and that was already a terrible problems so I think we need to be. Getting through this, but also thinking about what do we do? When we're through all this to make sure that we're sharing the benefits of this amazing economy much more broadly much more fairly. I do feel compelled to point out that it's a little disorienting to speak to you a democratic or democratic associated at least economists who is urging against a certain level of deficit spending because we're used to Republicans saying that especially recently Fed Chair, Jerome, Powell, he pledged to use what he called the feds full range of tools to support the economy, and he also urged policymakers to not worry so much about raising debt. And instead to use what he called, the great fiscal power of the United States to get through this with as little damage to the longer run, productive capacity of the economy as possible, so is this just a matter of the Republicans are in office now and you respond to the crisis in front of you, or has there been some kind of switching of direction for Democrats? Democrats and Republicans or economists to support them when it comes to deficit spending I want to be clear. I am wildly in favor of doing the deficit. Spending that we're doing now. We need to do this. I agree completely with chair, Powell that we should be doing anything. We need to do to get the economy through this crisis, but that doesn't mean that you don't. Think about the deficit, even in two thousand and ten redoubt about to try to deal with the deficit right then, but we were talking about it because you need a plan for. Three years five years from now. How do we deal with this? And perhaps because I believe so firmly that fiscal stimulus is a crucially valuable tool I. WanNa make sure it's there the next time we face something like this, and so I think I've been very aware of the need to. When you make it through a hard time in your back in the good times. That's when you repair the roof on your house. Right so are we all going to come out of this? Okay, do you think? I hope so I mean there are going to be some workers whose jobs disappear forever. We're not just going to go back to the way we were. So? I think we could all come out of this. Okay, provided, we take policy actions that we need. We invest in the training. To, make sure everybody's okay. I worry that we'll get through the worst of it and then. We'll forget about some of the people that have been hurt in that remain struggling, and let's say that some of the changes that have happened thus far to travel to live entertainment to restaurants. Basically, all of them wiped down. You know close to zero. Let's say that for variety of reasons they sort of stick and that people don't return to them in large numbers. At least do you feel that the US economy and our brand of capitalism is still set up to be as vibrant and nimble to adjust, and for people to job reallocate or D. worry that a lot of people in those industries which play millions and millions and millions of people that they will. Be Adrift Perhaps for a long time unable to reallocate into commensurate James. I think many of some will be able to reallocate again. I have a lot of faith in workers, and in their ability to develop new skills and find jobs when they're available. I think they'll need a helping. Hand fell need support in the period which they are trying to learn a new skill. It also is going to be a lot easier for. Twenty, five or thirty year old worker than it's GonNa be for fifty five or sixty year old worker. I sometimes think that this moment is you know that if you were looking at this from the future like an archaeologist looking at sediment like the meteor that wiped out the dinosaurs, ultimately that this is going to have. A huge scarring. On the world, and maybe I'm totally wrong, but my sense is that this disruption has already led just about everybody to question the way they live their life the way they earn their living the way they interact with their families, the rest of society community, and so on when you look down the road. Do you think the world is fundamentally different? And if so on what levels or do you think? I'm maybe being way melodramatic here. I've perhaps not quite as dramatic issue but I agreed that this may set off a sea changed. I think you're right that we will probably trade less travel. Less work differently weather, it is a giant shift or just a moderate shift. I'm less sure, but I think it is. GonNa Change Things and the real question is. How well we manage this, do we manage it so that it changes things, but we're all still okay, or did it change things and make some of our underlying problems even worse, but I guess you know you haven't yet taken the optimism out of me I still. I'm hopeful that we can recover I mean the history of this country is rising to challenges and I desperately hope that we do it again. Coming up next time a topic that didn't come up in today's conversation with Christina Romer, but maybe should have. One of the most persistent economic problems in American history, the racial wealth gap is such that the typical black family has about ten cents on the dollar as a typical family, so our reparations the answer hear the arguments in favor the material redress. Would in a retrospective way bring about justice by affecting. The racial wealth gap that we see today and the arguments against I think you're playing with words and avoiding the hard work of trying to discover complex historical causal chains, also several other ideas to address black white wealth inequality. It's next time on freakonomics radio. FREAKONOMICS radio is produced by stitcher and W productions. This episode was produced by Daphne Chen. Our staff also includes Alison Craig Greg Rippin Matt Hickey Zach Lipinski married to Duke and Karen Wallis. Our intern is Emma Terrell. We had help this week from James Foster or theme song. Is Mr Fortune by the HITCHHIKER's? All the other music was composed by Luiz Cara. You can get freakonomics radio on any PODCAST APP. If you want the entire back catalogue, use the Stitcher. APP or go to freakonomics dot com where we also published transcripts and shown us as always. Thanks for listening. So the political cost. Is that your dog remind? You. Do not have a dog. Okay sorry. STITCHER
Cures for an Ailing Labor Market
"Covid nineteen has forced businesses and employees across the globe to rethink what. It means to go to work out. Return for some sort of new normal. How do we ensure that that return equitable stay tuned for a special branded episode of global translations presented by city january. Twenty seventh louisa. Welcome to twenty twenty one pumped. This is going to be so. I cannot believe it i just cannot believe that twenty twenty is over. If you could go back to the beginning of twenty twenty. What would you tell yourself. What would you let go of. What would you do more of. Oh my gosh. I would say just stock up on the toilet paper just by a lot of toilet paper and get a freezer and don't leave your favourite heels at the office because you don't know when you'll see them again. I'm with you on the hill. I left the office. Unfortunately and i would definitely say to lock down the parental controls on all the computers. Because you don't want your kids playing video games in the middle of remote school which is a thing. How you. I reckon i would've put more soundproofing in my apartment. I had done that renovation over good idea like it's not soundproof. Enough even now just did seriously. If we could do a redo i would be looking at us. Spending those trillions of dollars that went into fiscal stimulus and having them spending in a smarter way. Right what we've been talking a lot on this podcast about the important resources that we need and how are access to them has been completely blown up by covid we've talked about vaccines and what goes into them. And about the natural materials that we need for the green energy transition and the future of technology but obviously another important piece of this puzzle is human resources the people who are going to do the jobs and we're at a moment where labor markets have been. Totally remade both by remote work. But also by so many jobs disappearing and other jobs being put on hold indefinitely as industries transformed and so twenty twenty one is going to be all about figuring out the jobs and the people and the human resources one hundred percent few abandons more skills that would be momentum still left with the world reeling from the crises in events of twenty twenty especially the corona virus and global economic downtown a big part of our stock twenty twenty one reality revolves around jobs and how there's a broadening disconnect between the people who need them. The skills needed to do them and how hard it is to get them so in this chapter of the season for the next three episodes with focused on labor the current state of work. What's changing and where it's going from. Politico this global translations i'm ryan heath and i'm louisa. Savage there is long longstanding trend where we were talking mostly about technological change and what that was going to do to a specific set of tasks and a specific set of skills and what that meant for job disruption but also job creation. This is saudi. I think what's happened now. With the pandemic is you've got a set of double destruction going on. You're having sort of a broad-based change across the jobs. Marken where certain sectors are fully on pause or declining and unlikely to return or wholly new sectors. That are in very high demand and therefore creating a lot of additional jobs now if anyone has their finger on the global jobs outlook it's she's a managing director at the world economic forum or with for sure and my areas of responsibility. He will are the work we do. Around economic growth revival and transformation and working and wages and job creation education skills and learning and then equity inclusion and social justice sort of a new economy and society stuff. The west recently launched. Its latest future of jobs report. Saadia says they found that the overall global jobs outlook was positive. They expect that over the next five years there will be more technology driven job creation than job losses. However at the same time. What's become very worrying. Is that the rate of job. Creation has significantly slowed down and the rate of job destruction has significantly sped up compared to two years ago when we did this exercise. Which means that. The window of opportunity for any kind of proactive action just became a whole lot smaller. So we've got more jobs disappearing and fewer jobs replacing them. That's not good sodium. You've spoken on many previous occasions. About how the pandemic can be an opportunity to transform. The global workforce so. What's your latest thinking. Their various economies will require. They'll recover at various speeds. But if there's one thing that policymakers have to really do is ensure that we simply don't go back to setting only economic growth as a target. It has to be the kind of growth that delivers jobs that delivers broad based prosperity that is compatible with the planet and that is built off of good institutions and governance multiple stock economic realities have been revealed by the pandemic. I think what this pandemic has made very clear. Is that some of our previous challenges that we all knew about whether that is the lack of social safety net sword whether that is the decline in wages are the hollowing out of the middle class. We can no longer sort of continue to expect our societies to function. If we don't tackle these head on so there's an opportunity for i sort of social safety net reset. That's going to be necessary. And if i asked you to diagnose the sickest part of the global labor market could be region could be a sector. What would it be. What's your prescription to heal. We definitely found that the sectors that were the most sort of stalled our considering retail. They are travel tourism not surprising. These are sectors where basically most economies have come to a halt or. It's a stop start situation. As we going to lockdowns that come out of lockdowns that may go back into lockdowns with a second wave et cetera. So we sectors. I think what we have to watch out for. It's not just about giving them a short term life support because they simply may not come back if the situation lasts for too much longer but this poses a high level of risk to the smaller competitors the businesses. That aren't corporate. Be a maths. Saadia says that even with short term financial relief for those firms or employees. They still might not make it through and so those would probably be the sectors. Where a sort of a collective reimagine nation is needed to start thinking. Are those jobs investments of tomorrow and maybe the second part of the answer is really around this across the board you know most governments are failing to think right now smartly about the markets of tomorrow the jobs of tomorrow and building in the incentives with this massive fiscal stimulus. All around the world. This is the moment to also reserve some part of the support for the future and not just managing the crisis in the short term in the two thousand twenty rush to save whole industries from collapse. And make sure that unemployed workers had a safety net. We were less good about investing in getting workers. The skills that they need for the world of work that had just turned upside down. It's not a problem. Most workers can solve on their own later on in this chapter. We'll be getting into some examples of potential solutions. A third element is. We've known for quite some time that there is a skills mismatch and it's growing and there needs to be a much bigger focus on re-skilling in upscaling either wholly focusing on reskilling and redeployment into a new job or a new sector or upskilling within the job. You're in so the able to actually sort of continue to thrive in that particular role. Those are again things that absolutely need to happen. Reskilling is training workers for new occupations for example training a restaurant manager for supply chain management job at a big corporation. Upscaling on the other hand is more like an invigoration of a work as existing skills said it's more tailored for helping work has keep up job changes for example helping a veteran. It specialist lynn new data analysis skills to move into a better role at the same company saudia says that will re-skilling upskilling. If it's already started in many places that needs to be more work than ever to use these initiatives for recovery so yes we've had all kinds of skills related councils but we're not in that world off a sort of a ferry job full market we actually need to start thinking very consciously and proactively about those jobs of tomorrow and think about what are the structures and mechanisms needed to move. People migrate people. Over from the jugs. They're currently in or from or into those new roles. Now that's a very different approach to thinking about safety nets it's not just handouts. It's not just providing income support not just short-term furlough schemes. It's actually having that long term vision to say if this is where we need to be heading in the future. What is the path of moving from a to b to c so that people can actually land on their feet. The big challenge will be in using this next year not for more expensive. Bandaids but for building the future. The good news is it can be done online for those. That are just digitally connected for those that. Have those skills for those. That are able to re-skilling upskill themselves online and that can be done for. Frankly a very large number of middle income middle skill jobs as well. As high income high-skill jobs is it possible for lower skilled workers people who work in factories and manual labor in mines for then to be re skilled. And i think there's a lot of emerging evidence that shows yes but it requires those public sector structures that don't often exist now. There's been a tradition in the past of for example job centers for people to be able to go to but they have tended to focus on keeping people within their industries and perhaps helping expand their network. If you don't have that network digitally that a lot of middle and high income jobs do that's kind of mindset. That would have to shift and there would need to be more proactive support. In helping that person reskill and upskill themselves it comes from a pretty fixed mindset about what human beings and human capability is all about as you say give up on people whereas it has become very clear in places that haven't given up on people it should be absolutely possible to reskill an upscale and it doesn't necessarily mean from coal miner to coder right. There's a whole range of other things that one can move to. What we found already is that there is for most jobs. I think it was something like for eighty five percent of people. You could not only reskill fairly rapidly. A low skill manual job to aid slightly more higher skilled still manual job. That also paid you better right so it is possible to do this in a way. That doesn't lead to extremes. But still leads to improved lightly hoods and a sense of pride and not necessarily a loss of identity. The pandemic is reshaping. Were globally as many people are forced to switch jobs and find new careers but climate change and the green energy transition are also creating new jobs. The kinds of jobs that are just starting to come into existence with that. We might not even know about yet. One of the things we found that is problematic is that we don't yet all have a common taxonomy or a common language around what those jobs of tomorrow. Are you know we can say green recovery. But then let's translate that degree jobs and green jobs can go all the way from somebody who is repairing the bicycle to somebody who's installing solar panels to somebody who is a professional services or financial services analysts off carbon markets. So there's a whole spectrum of roles. So i think the good news is that there's a whole range of low middle and high school roles that exist within roughly speaking green jobs of focus on a green recovery provides a whole set of additional roles and future job opportunities but so do some additional sectors like care like education like digital that we could be focusing on. I think the question mark is going to be. How do you do that at scale. In more of the lower skilled workforce or in places that still have a big digital divide and don't have good internet access in various developing and emerging market countries and. that is where the job creation potential of the education and learning sector cousin. So that's a vast number of jobs that can't be supported and created an incentivized by governments in developing countries if they start thinking of education and learning as a new services sector that has to be developed again. We're also in a competitive situation. Where more and more people all of them are just going to have to retrain to keep the jobs. They'll have to stay competitive in car market. Have you got any day there or insights into how well employees are taking on that challenge. Do they need most support whether it's governments or some other entity to make sure that their employees can just tread water basically citing dancers. Mix there because we found that employers recognize or these two thirds of employers clearly. See that there is a business case for investing in re-skilling and upscaling their staff whether that's done online or in person that we don't know but they do see it here business case and they expect the return on investment within one year the difference with this crisis though is that so many of them are taking really short term decisions about layoffs and especially when they're not supported through furlough or income support schemes from governments. They're making short term decisions and they're not necessarily realizing that it would be better to keep that worker re-skilling upscale them and have that talent in history knowledge within your organization and you get that pay off a year later rather than sort of shedding that role and possibly searching for rehiring. Somebody with possibly very similar skill sets a year later two years later or as the economy recovers so there's a lot of uncertainty in the system but generally we found employers recognize the business case recognize the return on investment. But not all of them are following through on actually applying that in their own workforce saudi as a he is managing director at the world economic forum thanks saudia thanks for having me around. We'll be right back with the covid. Nineteen vaccine roll out underway. Many companies have begun to discuss how their offices will return to normal. We make sure that as we slowly carefully and in a data driven way returned the author. We cheap that individual humanity empathy and understanding of circumstance though that that return is equitable and we don't inadvertently leaves certain populations for the vine. I'm heather clancy on a special branded episode of global translations presented by city. We discussed the future of work. How the pandemic accelerated new workplace trends. And why an equitable return to work is essential tune in january twenty seventh. Wherever you listen to this podcast. I mean i think the way to characterize it is that we've had recovered from the catastrophic events of march and april said the twenty two million jobs that were lost in those months about eleven million of them have returned and the the other eleven million. We're patiently waiting on. Marianne wanamaker is a professor specializing in workforce economics at the university of tennessee in knoxville. She previously served on the white house council of economic advisers one of the big trends that marianne sees the pandemic is employers looking for alternatives to hiring while they're waiting to bring their workers back safely and some of those alternatives are just using the employees that they do have to work harder. Another alternative of course is to purchase labor saving technologies some robot or some computer program that replaces the labor that they had and the longer the pandemic rages the more likely it is that employers. Choose that ladder option. So you really heard a lot of stories at the very beginning of the pandemic about companies looking around and saying well. Gosh we've been waiting for months or years to think about this technology adoption as well go ahead and that's a sign that they anticipate that this is going to last for a long time and they won't be able to bring their workers back. I'm interested to learn what else you see as major obstacles to job creation. Job retention right. Now you'll someone who studies these issues every day. What do you see as though the hooding our ability to bounce back and get back to a full employment situation one thing is that the hiring process itself is super challenging right now so just waiting through all of the applications. We have never had this many unemployed people simultaneously in this country. Never and so you think about the role of hiring manager who post a job and presumably receiving many more applications than they. Otherwise would have. It's just a challenge to wade through them for some jobs. Not all and. I don't want to overstate this. But for some jobs they're also now is sort of release of the geographic restriction. So before i might have been advertising for an attorney in new york now. I'm really advertising for an attorney. But they can be anywhere in the country and maybe even anywhere in the world and again that sort of makes my application numbers explode. Then you add on top of the the process of sort of vetting and interviewing in an all remote situation and it's just a really big so part of the lag in the job market recovery is going to be about just getting people on hired vetted on boarded and trained and i expect that to be a huge challenge going forward. This isn't the first mega crisis. The world economy is seen. The great depression was just a century ago with feeling the effects of the two thousand and eight recession. So what are the absolutely essential lessons from past crises. That could possibly help us today. There a couple of things that pass. Crises have taught us that. At least at the moment. i don't see any reason why we shouldn't accept those lessons. One of those things is just the timing that we should expect so traditionally a labour market recovery takes a full year following an output recovery. So if you think about all right sometime next year this economy will go back to producing the amount of output that it was producing in q. Four of twenty nineteen and when that happens then. The lesson of past recessions is that it will take another twelve months to employ the same number of people we were employing in q. Four of twenty nine thousand nine and one way to think about that. Is that employers sort of run hot for a while. They wait until they know that. There's really the demand for labour in their organization before they go back to the labor market. Hire the other. Listen wanna make. It says the think we learned in. Oh eight oh nine. And that i think is still relevant. Is that the state of public finances matters a lot for the labor market and one way to think about that is for example that twenty five percent of construction spending in this country comes from state and local governments state and local governments if their budgets are hurting one of the first things that they might cut. Is this sort of elective. Construction spending of which there is a lot right and so the health of state and local budgets matters for private economic activity like the construction industry win over eight zero nine. We were slow to help. State and local budgets recover. we experienced. Many economists think and much slower labor market recovery as a result saudi as a. He told us at top of this. Show that we need to reskill to make up those jobs in marian wanamaker agrees so if this twelvemonth timelag is something we're just going to have to live. Do you think that the federal government should then becoming in and supporting re-skilling and retraining particularly for those people who don't have college degrees the ones that are most likely to be at risk of long-term unemployment in other words. Should we make sure that we don't waste these twelve months and that we're giving these people the best chance possible for when employees are ready to come back and employ them. Even if that does cost some money in the meantime yeah i mean. There are two ways of thinking about the government's role in re-skilling one is that the government is responsible for kind of juicing the finances of reskilling and the other is that the government has some role in the re-skilling process itself. I'm pretty favorable on the first and pretty unfavorable on the second one. So one thing we have learned in this pandemic is that it is impossible to predict what tomorrow skill needs are. I can't tell you how many pages of sort of the economics literature has been spent thinking about the skills gap. What skills do americans need that. They not have well whatever that was. In december of twenty nineteen it has now been turned upside down and so the idea that the federal government can somehow step in and say gosh. It looks like we're going to need a whole bunch of coders so let's train people to code. I think is pretty silly. On the other hand there are ways in which the government could spend money strategically an opportunistically to sort of grease the wheels of private market reskilling. If the solution isn't to have the government lied reskilling efforts than what is an alternative. And so something that. I've been thinking about a lot is okay. What if the government paid private industries to train new workers now. Why would the government do that while they would do that because it would help. Get those workers off of public support more quickly and there lots of public benefits to having people employed and so it's worth it to spend tax dollars on private industries private businesses who are training new workers as they come in the door and so the idea with that is that if the voucher is with the employer there's an incentive to make sure they're actually employing people rather than leaving it to the individual who might not spend it as effectively. Have i got that right. That's right the individual doesn't necessarily know what to spend it on and presumably employers know the skill that they're trying to hire for but can't find the labor market and certainly you can think about employers smaller employers banding together to train people right. It's doesn't have to be a gigantic. No business like ibm. Who's very good at training. Their workers so you wouldn't necessarily be putting small businesses at a disadvantage if you were creative about the way that you spent the money as it stands in early twenty. Twenty one the. Us labor market is still pretty flat. Industries like leisure and hospitality is suffering greatly as they are in the rest of the world but beyond specific industries and stats layoff numbers. What could becoming america's way once we get this virus under control. Then what do. We expect to be sick. And i expect that. We'll see the same sickness that we saw in late. Twenty nineteen early twenty twenty which is the lower end of the skill spectrum in the us continues to struggle to make a living wage and that is an ongoing issue. Marianne says that the enhanced unemployment payments from the summer of twenty twenty could be a model for the future. I think about that as sort of a trial balloon. Trial run of universal basic income of the idea that like there's some low subsistence level of income that americans are entitled to in the pandemic. Made it really obvious that there were so many people who weren't reaching that level. But i think even after the pandemic fades we're all going to remember that moment right where we said wait. Everybody deserves this amount of money to pay for housing and food and whatever else and so. I imagine that that conversation is going to be renewed once. We've gotten the pandemic behind us. So what is your worst case. Scenario for the jobs market in twenty twenty. I think the worst case scenario for me is not that we're going to have a bunch more layoffs actually. Don't think that's possible. I don't think that's going to happen. Because i don't think that people will tolerate it. Don't think small business owners will go along with this scheme where they close again. Just don't think it's possible. I think instead the worst case scenario here is that we don't draw a grand bargain. We don't trust washington to kind of pay people to keep them afloat while they closed their businesses. Again we're not willing to do that. And so instead what we do is we keep businesses open and we sort of hobble along and a lotta people die and that is actually what i expect to happen. Just a question of the severity of that but we don't seem to have realized that there is a way out of this which is that. We closed businesses. But we make everybody whole and then how could you complain right. I mean yes. You made me shut down but washington immediately compensated me for that paid. My people allowed me to sort of keep up to date on my lease payments. That's possible there's not really a cap on how much washington can spend the moment but there doesn't seem to be inning. Political will to go down that path. Professor thank you so much. Thanks for having me throughout this episode. We've been having conversations about the job market with the experts and decision makers and each of those compensations recovery solutions always come back to the question of job training and reskilling. The idea of reskilling workers has gained more attention over the last few years. Major corporations and even governments are investing a lot of money in giving workers options to learn skills for their current jobs or for new ones giving workers and job seekers access to programs like these can eight transitions to green energy. And to a world where you need digital skills for nearly every job because in a rapidly changing global economy millions of people want and need that step up for the first time in my life i am proud of where i am and who i am and what i have accomplished and i'm so proud to tell everybody what i do for a living in the next episode of global translations. We'll talk to some of those people and he abyss. Stories producers are anti reese and caretaker l. Senior producer is jenny. Comment and irene. Noguchi is the executive pitchers. So i'm louisa savage an i'm ryan heath thanks to saudi as eighty in marianne wanamaker talking with us at politico global translations is presented by city a leading global bank. Subscribe to the show. Wherever you get your podcasts and listened to a special branded episode from city coming january twenty seven thanks for listening and see you soon.