1 00:00:02,320 --> 00:00:06,880 Speaker 1: This is Masters in Business with Barry Ridholts on Boomberg Radio. 2 00:00:07,960 --> 00:00:11,080 Speaker 1: This week on the podcast, I have an extra special guest. 3 00:00:11,200 --> 00:00:13,680 Speaker 1: His name is Danny blanche Flower. And if you are 4 00:00:13,960 --> 00:00:19,200 Speaker 1: all interested in all manner of economic wonkery, well then 5 00:00:19,239 --> 00:00:22,599 Speaker 1: this is the podcast for you. We talk about everything 6 00:00:23,120 --> 00:00:29,680 Speaker 1: from unhappiness to unemployment, to what really constitutes full employment, 7 00:00:30,120 --> 00:00:34,120 Speaker 1: to the rise of pain complaints in the United States 8 00:00:34,400 --> 00:00:37,400 Speaker 1: and how it's related to the stresses caused by the 9 00:00:37,440 --> 00:00:42,239 Speaker 1: financial crisis, as well as the ongoing flat wages that 10 00:00:42,320 --> 00:00:44,840 Speaker 1: the United States have seen over the past thirty years. 11 00:00:45,560 --> 00:00:50,000 Speaker 1: We get into all manner of fascinating discussion of beverage 12 00:00:50,080 --> 00:00:54,920 Speaker 1: of kens of Skadewski, of why the United States is 13 00:00:54,960 --> 00:00:58,920 Speaker 1: fairly unique both in terms of our housing market and 14 00:00:58,960 --> 00:01:02,560 Speaker 1: our employment mark get and why the US is now 15 00:01:03,000 --> 00:01:09,080 Speaker 1: exporting stress and discomfort and economic anxiety to the rest 16 00:01:09,080 --> 00:01:13,160 Speaker 1: of the world. It's really an absolutely fascinating conversation. I 17 00:01:13,280 --> 00:01:16,280 Speaker 1: enjoyed it and I think you will also. With no 18 00:01:16,400 --> 00:01:23,080 Speaker 1: further ado, my conversation with Danny blanch Flower. This is 19 00:01:23,240 --> 00:01:29,240 Speaker 1: Masters in Business with Barry Ridholtz on Boomberg Radio. My 20 00:01:29,560 --> 00:01:33,400 Speaker 1: special guest this week is Danny blanch Flower. He has 21 00:01:33,440 --> 00:01:38,400 Speaker 1: a storied history in the world of monetary policy and 22 00:01:38,520 --> 00:01:41,920 Speaker 1: labor economics. He is currently a professor at Dartmouth where 23 00:01:41,959 --> 00:01:44,959 Speaker 1: he teaches economics. He is a former member of the 24 00:01:45,000 --> 00:01:48,280 Speaker 1: Monetary Policy Committee at the Bank of England. Currently he 25 00:01:48,400 --> 00:01:52,560 Speaker 1: is a research associate at the National Bureau of Economic Research, 26 00:01:53,080 --> 00:01:55,440 Speaker 1: and he is the author of a new book called 27 00:01:56,080 --> 00:01:59,920 Speaker 1: Not Working, Where Have all the Good Jobs Gone? Danny 28 00:02:00,040 --> 00:02:02,840 Speaker 1: Lane for that hour, Welcome to Blomberg. Great to see 29 00:02:02,840 --> 00:02:04,880 Speaker 1: your parents, Good to be here. Yes, it's good to 30 00:02:04,920 --> 00:02:08,200 Speaker 1: see you again. So so let's get into your background 31 00:02:08,200 --> 00:02:11,040 Speaker 1: a little bit before we start getting to the specifics 32 00:02:11,040 --> 00:02:15,440 Speaker 1: of the book. You're a labor economist. What exactly is 33 00:02:15,520 --> 00:02:17,919 Speaker 1: that and how did your way find your way into 34 00:02:18,000 --> 00:02:22,160 Speaker 1: that specialty? Um? Well, labor labor econonomics is the study 35 00:02:22,160 --> 00:02:25,799 Speaker 1: of work. It's the study of jobs. It's about why 36 00:02:25,840 --> 00:02:29,079 Speaker 1: people have got jobs, why they haven't, and it's about 37 00:02:29,400 --> 00:02:33,919 Speaker 1: the price of labor. So it's about wages, it's about compensation. Actually, 38 00:02:33,960 --> 00:02:36,960 Speaker 1: I got into it started to think about kids, starting 39 00:02:37,000 --> 00:02:39,360 Speaker 1: to think about unemployment of the young, and in the 40 00:02:39,440 --> 00:02:41,520 Speaker 1: nineties in the UK that was a really big deal. 41 00:02:41,960 --> 00:02:43,799 Speaker 1: So I started to think about that and it just 42 00:02:44,120 --> 00:02:46,120 Speaker 1: grew from there. And then then in the end I 43 00:02:46,200 --> 00:02:49,000 Speaker 1: became a monitary policy maker and the labor market turned 44 00:02:49,040 --> 00:02:51,680 Speaker 1: out to be central to everything. So started out being 45 00:02:51,680 --> 00:02:54,359 Speaker 1: a labor economists, did some macro but it turns out 46 00:02:54,400 --> 00:02:57,760 Speaker 1: now the big issues around the world in macroeconomics are 47 00:02:57,760 --> 00:03:00,840 Speaker 1: about labor economics. So it's been a long journey, but 48 00:03:00,919 --> 00:03:02,960 Speaker 1: it's been kind of a good one. So let's talk 49 00:03:03,000 --> 00:03:06,240 Speaker 1: a little bit about your time at the Monetary Policy 50 00:03:06,280 --> 00:03:09,400 Speaker 1: Committee at the Bank of England. We're recording this on 51 00:03:09,440 --> 00:03:14,440 Speaker 1: a day when Mario Monty basically is announcing that they'll 52 00:03:14,480 --> 00:03:18,600 Speaker 1: do anything to support the economy, which President Trump here 53 00:03:18,639 --> 00:03:22,639 Speaker 1: in the United States declared unfair. For listeners who may 54 00:03:22,639 --> 00:03:25,760 Speaker 1: not be familiar with you, You joined the Bank of 55 00:03:25,800 --> 00:03:30,839 Speaker 1: Englands in two thousand and six, just as the financial 56 00:03:30,880 --> 00:03:34,920 Speaker 1: crisis was starting to blossom for laugh of a better word, 57 00:03:35,360 --> 00:03:39,040 Speaker 1: what was that experience? Like, Well, I was told at 58 00:03:39,040 --> 00:03:41,040 Speaker 1: the beginning. I remember Gordon Brown told me that the 59 00:03:41,640 --> 00:03:43,800 Speaker 1: hope is for you that central bank is going to 60 00:03:43,880 --> 00:03:48,320 Speaker 1: be boring. That's not that's not exactly how it turned out, um, 61 00:03:48,360 --> 00:03:50,120 Speaker 1: And I think the big deal for me was I 62 00:03:50,160 --> 00:03:52,520 Speaker 1: was going back and forth every three weeks between the 63 00:03:52,600 --> 00:03:55,240 Speaker 1: US and the UK, and I think the big insight 64 00:03:55,320 --> 00:03:56,960 Speaker 1: for me was that the things I saw in the 65 00:03:57,040 --> 00:04:00,000 Speaker 1: US started to occur in the UK a few months later. 66 00:04:00,960 --> 00:04:03,080 Speaker 1: And the first big deal for me was the failure 67 00:04:03,120 --> 00:04:05,840 Speaker 1: of Northern Rock. There were thousands of people in the 68 00:04:05,920 --> 00:04:09,440 Speaker 1: streets standing outside the branches of that bank for the 69 00:04:09,480 --> 00:04:11,320 Speaker 1: first time in a hundred years, So that was your 70 00:04:11,360 --> 00:04:14,440 Speaker 1: sort of starter. We had bear Sterns here, not a 71 00:04:14,480 --> 00:04:17,720 Speaker 1: depository bank. The closest thing was probably washing a mutual 72 00:04:17,839 --> 00:04:21,000 Speaker 1: or there was some other bank right where there was 73 00:04:21,040 --> 00:04:24,799 Speaker 1: a run on the banks. What is the guarantee from 74 00:04:25,360 --> 00:04:28,960 Speaker 1: the UK equivalent of the federal departs an insurance company. Essentially, 75 00:04:29,000 --> 00:04:31,640 Speaker 1: that was the issue. There really wasn't one, and so 76 00:04:31,800 --> 00:04:34,520 Speaker 1: by the by the end of the week where and 77 00:04:34,520 --> 00:04:37,600 Speaker 1: when essentially the money at the Northern Rock ran out, 78 00:04:37,640 --> 00:04:40,880 Speaker 1: the website failed on the Wednesday, there was no guarantee 79 00:04:40,960 --> 00:04:43,400 Speaker 1: essentially from the government, and the only way to stop 80 00:04:43,440 --> 00:04:46,200 Speaker 1: it was to actually introduce one, and that's what stopped 81 00:04:46,200 --> 00:04:49,320 Speaker 1: the run. But that was a year before the market collapsed. 82 00:04:49,360 --> 00:04:51,760 Speaker 1: I started to think that we were really disappearing into 83 00:04:51,760 --> 00:04:54,440 Speaker 1: a whole. So I started on my own to start 84 00:04:54,480 --> 00:04:56,600 Speaker 1: to vote for rate cuts, and I voted for rate 85 00:04:56,600 --> 00:04:58,680 Speaker 1: cuts for a really long time on my own, and 86 00:04:58,720 --> 00:05:01,640 Speaker 1: I kept saying, there's a horrible session coming. Nobody else 87 00:05:01,680 --> 00:05:03,920 Speaker 1: on the committee was really along with me. And then 88 00:05:04,000 --> 00:05:07,720 Speaker 1: we got to September two thousand and eight and hell 89 00:05:07,960 --> 00:05:11,400 Speaker 1: broke loose, and I remember thinking, Um, I did not 90 00:05:11,600 --> 00:05:14,680 Speaker 1: expect to be in a position where three successive months 91 00:05:15,160 --> 00:05:18,520 Speaker 1: my committee, including me, voted for fifty one, fifty and 92 00:05:18,600 --> 00:05:20,960 Speaker 1: a hundred basis point cuts in three months. And then 93 00:05:20,960 --> 00:05:22,680 Speaker 1: we kept going and then we did queie. I mean, 94 00:05:22,720 --> 00:05:25,360 Speaker 1: this was literally like the world was just dropping off 95 00:05:25,360 --> 00:05:28,279 Speaker 1: a cliff. So it certainly was not boring. It was scary, 96 00:05:28,839 --> 00:05:31,080 Speaker 1: um And in a sense, the story I think was 97 00:05:31,120 --> 00:05:34,279 Speaker 1: that economics told us very little about what to do there. 98 00:05:34,400 --> 00:05:36,159 Speaker 1: How low could we go? Could we go to zero? 99 00:05:36,200 --> 00:05:38,760 Speaker 1: Could we go below zero? When you do quantitative easy? 100 00:05:38,839 --> 00:05:40,839 Speaker 1: How much? What sort of easy? When do you do it? 101 00:05:40,839 --> 00:05:43,080 Speaker 1: How many auctions a week do you have? So we 102 00:05:43,080 --> 00:05:44,599 Speaker 1: didn't know any of that stuff, So I think it 103 00:05:44,680 --> 00:05:48,599 Speaker 1: was really scary and exhausting. So I have a pet theory, 104 00:05:48,720 --> 00:05:53,520 Speaker 1: which I'll come back to again later, that economists always 105 00:05:53,600 --> 00:05:58,479 Speaker 1: used the normal cyclical expansion contraction cycle as a frame 106 00:05:58,520 --> 00:06:01,320 Speaker 1: of reference. And so when you see something much more 107 00:06:01,360 --> 00:06:06,679 Speaker 1: substantial coming along a credit driven crisis, financial crisis, unless 108 00:06:06,720 --> 00:06:10,039 Speaker 1: you're looking at it from the correct perspective to a 109 00:06:10,200 --> 00:06:14,760 Speaker 1: regular economic analyst, they're not seeing it very I think 110 00:06:14,760 --> 00:06:18,840 Speaker 1: that's right. And what's happened. Economists said to me you 111 00:06:18,880 --> 00:06:22,679 Speaker 1: should never expect central banks or economists to see turning points. 112 00:06:22,720 --> 00:06:24,680 Speaker 1: I think that's a complete nonsense. I think what you 113 00:06:24,720 --> 00:06:26,479 Speaker 1: have to have is you can't just look at the 114 00:06:26,520 --> 00:06:28,760 Speaker 1: mechanical things. You have to look at what I call 115 00:06:28,800 --> 00:06:31,320 Speaker 1: the economics of walking about. Exactly as you said, think 116 00:06:31,360 --> 00:06:33,720 Speaker 1: about what happened at the last great financial crisis, the 117 00:06:33,760 --> 00:06:36,479 Speaker 1: Great crash, and think about what happened. And there were 118 00:06:36,560 --> 00:06:39,760 Speaker 1: lots of indicators, the best indications actually at the bank 119 00:06:40,160 --> 00:06:43,320 Speaker 1: what's called the banks agents schools, and the agents would 120 00:06:43,320 --> 00:06:45,480 Speaker 1: go around the country and report. And when you looked 121 00:06:45,480 --> 00:06:47,720 Speaker 1: at that, the world had dropped off a cliff by 122 00:06:47,720 --> 00:06:50,160 Speaker 1: around May oh, and nobody was listening to it. The 123 00:06:50,200 --> 00:06:53,560 Speaker 1: economists weren't listening to it. So in fact, at those 124 00:06:53,600 --> 00:06:56,360 Speaker 1: big turning points, you have to look around, you look 125 00:06:56,400 --> 00:06:59,520 Speaker 1: at different measures, and it was quite clear across Europe 126 00:06:59,560 --> 00:07:01,680 Speaker 1: and in the Nited States. All these countries were going 127 00:07:01,720 --> 00:07:04,080 Speaker 1: down together and that was a really big deal. So 128 00:07:04,120 --> 00:07:06,839 Speaker 1: I agree with you completely. Let's talk about a quote 129 00:07:07,080 --> 00:07:10,000 Speaker 1: right in the beginning of the book, What's the Whole 130 00:07:10,040 --> 00:07:15,400 Speaker 1: World wants is a good job? Discuss. Yeah. I started 131 00:07:15,400 --> 00:07:19,040 Speaker 1: working on this book, UM, and I was reading some 132 00:07:19,240 --> 00:07:21,320 Speaker 1: results from Gallop and for some reason I went to 133 00:07:21,360 --> 00:07:23,440 Speaker 1: the front of their of their page and they literally 134 00:07:23,440 --> 00:07:26,320 Speaker 1: and I started out with this, They literally say, Um, 135 00:07:26,600 --> 00:07:30,280 Speaker 1: here's one of Gallup's most important discoveries. They've been doing 136 00:07:30,280 --> 00:07:33,040 Speaker 1: this since the nineties. What the whole World wants is 137 00:07:33,080 --> 00:07:35,480 Speaker 1: a good job. So that's the theme of the book. 138 00:07:36,240 --> 00:07:38,480 Speaker 1: And I think what we've seen in the last decade 139 00:07:39,080 --> 00:07:42,280 Speaker 1: is the loss of those good jobs, um, and the 140 00:07:42,360 --> 00:07:46,360 Speaker 1: result of it has been populous movements around the world, 141 00:07:46,760 --> 00:07:49,640 Speaker 1: people hurting. And the connection I make in the book 142 00:07:49,720 --> 00:07:52,520 Speaker 1: is that central banks and other policymakers in the US 143 00:07:52,640 --> 00:07:55,720 Speaker 1: especially say we're at full employment. And the theme of 144 00:07:55,720 --> 00:07:57,720 Speaker 1: the book is when if we were at full employment, 145 00:07:58,000 --> 00:08:01,200 Speaker 1: people wouldn't be hurting this way, and so I document that. 146 00:08:01,240 --> 00:08:04,360 Speaker 1: And a good example in the UK is we're eleven 147 00:08:04,440 --> 00:08:07,040 Speaker 1: years in now from the start of that Great Recession. 148 00:08:07,360 --> 00:08:10,560 Speaker 1: Real wages today in the UK a six percent below 149 00:08:10,640 --> 00:08:13,520 Speaker 1: what they were in February two thousand and eight. And 150 00:08:13,600 --> 00:08:17,400 Speaker 1: this in the UK anyway, it's the third slowest recovery ever. 151 00:08:18,000 --> 00:08:20,360 Speaker 1: The last one three hundred years ago was the South 152 00:08:20,400 --> 00:08:22,600 Speaker 1: Sea Bubble and the one before that six hundred years 153 00:08:22,640 --> 00:08:29,000 Speaker 1: ago is the Black Death, which was good for productivity. 154 00:08:29,040 --> 00:08:32,079 Speaker 1: So anyway, so the logic is that we have had 155 00:08:32,200 --> 00:08:34,920 Speaker 1: very slow recoveries and I think driven by macro errors. 156 00:08:35,240 --> 00:08:37,960 Speaker 1: And now we see economy is slowing. But after ten 157 00:08:38,040 --> 00:08:41,360 Speaker 1: years of recovery, still people are hurting. So the big 158 00:08:41,440 --> 00:08:43,840 Speaker 1: question is what's going on and why is it that 159 00:08:43,840 --> 00:08:45,960 Speaker 1: that people are hurting? And I think the story is 160 00:08:46,440 --> 00:08:49,400 Speaker 1: lack of good jobs if you like, an expectation that 161 00:08:49,440 --> 00:08:51,400 Speaker 1: things are going to be better in the future and 162 00:08:51,520 --> 00:08:54,800 Speaker 1: deton in case of documented that essentially the driving force 163 00:08:54,880 --> 00:08:58,040 Speaker 1: behind the deaths of despair. They talk about as a 164 00:08:58,080 --> 00:09:00,800 Speaker 1: failure in the labor market. So let's talk about some 165 00:09:00,840 --> 00:09:03,520 Speaker 1: of those mistakes and we'll start with the UK. Before 166 00:09:03,520 --> 00:09:06,520 Speaker 1: we moved to the US, the UK had a policy 167 00:09:06,600 --> 00:09:10,079 Speaker 1: of a misguided policy I would call it of austerity. 168 00:09:10,240 --> 00:09:12,800 Speaker 1: We've learned the lesson from Keynes in the midst of 169 00:09:12,840 --> 00:09:17,959 Speaker 1: a financial crisis. You cut taxes, increased government spending, let 170 00:09:18,120 --> 00:09:21,719 Speaker 1: the public sector step in for the private sector. That 171 00:09:21,760 --> 00:09:24,960 Speaker 1: didn't happen in the UK. When it happened, we saw 172 00:09:25,040 --> 00:09:29,400 Speaker 1: the crash, the downturn, and then the bank having and 173 00:09:29,559 --> 00:09:33,000 Speaker 1: through everything it had at its monetary policy no, but 174 00:09:33,040 --> 00:09:37,160 Speaker 1: then fiscal policy Gordon Brown through all sorts of things 175 00:09:37,160 --> 00:09:40,520 Speaker 1: at it reduced taxes, increased spending, but it was it 176 00:09:40,600 --> 00:09:43,000 Speaker 1: was not like a hey, this is a depression, can 177 00:09:43,720 --> 00:09:46,680 Speaker 1: kick out the gems. It was sort of sort of modest, 178 00:09:46,880 --> 00:09:52,319 Speaker 1: modest recovery came, a pretty reasonable recovery, and then austerity 179 00:09:52,440 --> 00:09:55,599 Speaker 1: came in two thousand ten and every data series you 180 00:09:55,640 --> 00:09:58,800 Speaker 1: can show in the UK just turned flat. So output 181 00:09:58,840 --> 00:10:01,280 Speaker 1: was growing and then auster rity, which I call reckless, 182 00:10:01,640 --> 00:10:07,120 Speaker 1: failed turned downwards. Knees precisely warned what There's an article 183 00:10:07,120 --> 00:10:10,200 Speaker 1: I talked about in the book in Kine's warned about 184 00:10:10,200 --> 00:10:13,360 Speaker 1: the long dragons of dragging, conditions of semi slump that 185 00:10:13,400 --> 00:10:16,040 Speaker 1: follow the crash, and unless you come in there and 186 00:10:16,440 --> 00:10:20,000 Speaker 1: put public spending in, then you'll see slowing. The argument 187 00:10:20,080 --> 00:10:22,480 Speaker 1: that George Osmond, who was Chancellor, made was that if 188 00:10:22,480 --> 00:10:25,600 Speaker 1: you cut public spending, the private sector will step into 189 00:10:25,640 --> 00:10:29,840 Speaker 1: the fold completely contrary to Canes also failed. It's also 190 00:10:29,960 --> 00:10:31,680 Speaker 1: not how it works. Not how it works, you have 191 00:10:31,800 --> 00:10:35,040 Speaker 1: to look at history. So didn't anybody say, dude, what 192 00:10:35,040 --> 00:10:37,720 Speaker 1: are you doing? This is not reality. You're making this 193 00:10:37,840 --> 00:10:41,880 Speaker 1: up me a lot. I called him Slasher Osborne, Lord Skidelski, 194 00:10:41,880 --> 00:10:44,120 Speaker 1: and I wrote them who was Kne's biography? We wrote 195 00:10:44,120 --> 00:10:47,559 Speaker 1: a series of articles together saying this is an absolute disaster. 196 00:10:48,000 --> 00:10:51,560 Speaker 1: So what you basically see is very weak recovery, no 197 00:10:51,800 --> 00:10:55,400 Speaker 1: growth in real wages. And I think that austerity almost 198 00:10:55,440 --> 00:10:59,120 Speaker 1: exactly leads to the vote for Brexit, precisely in the 199 00:10:59,160 --> 00:11:02,560 Speaker 1: places that hurt most, the cold towns, the towns that 200 00:11:02,600 --> 00:11:06,000 Speaker 1: have not seen much growth over the years. Brexit is 201 00:11:06,040 --> 00:11:11,559 Speaker 1: directly attributable to the failures brought about by reckless, failed austerity. 202 00:11:11,679 --> 00:11:14,600 Speaker 1: Sterity leads to breakfast. Let's bring this to the United States. 203 00:11:15,000 --> 00:11:19,760 Speaker 1: There was a whole bunch of government interventions, both on 204 00:11:19,760 --> 00:11:23,160 Speaker 1: the monetary side and the fiscal side, designed to free 205 00:11:23,280 --> 00:11:26,640 Speaker 1: up the frozen credit market. And then when we moved 206 00:11:26,679 --> 00:11:30,240 Speaker 1: to fiscal stimulus, some people have called it an eight 207 00:11:30,640 --> 00:11:33,160 Speaker 1: billion dollar stimulus, when it should have been three or 208 00:11:33,160 --> 00:11:37,240 Speaker 1: four trillion, and it was temporary tax cuts and temporary 209 00:11:37,880 --> 00:11:40,880 Speaker 1: extension of unemployment benefits. But it wasn't the sort of 210 00:11:41,840 --> 00:11:47,600 Speaker 1: large post depression policies we saw, and into that void 211 00:11:47,679 --> 00:11:51,640 Speaker 1: step the FED. I have made the argument that the 212 00:11:51,640 --> 00:11:53,839 Speaker 1: fedital let it all crash and burn, let everybody in 213 00:11:53,880 --> 00:11:57,480 Speaker 1: Congress get fired and bring in a new batch. Had 214 00:11:57,520 --> 00:12:00,320 Speaker 1: they done that, we wouldn't have had the teapot already, 215 00:12:00,320 --> 00:12:02,920 Speaker 1: we wouldn't have had the rise of populism. It would 216 00:12:02,960 --> 00:12:06,160 Speaker 1: have hurt more at the time, but the recovery would 217 00:12:06,160 --> 00:12:12,040 Speaker 1: have been faster, or tell me I'm wrong, Well, hindsight perhaps, 218 00:12:12,040 --> 00:12:14,120 Speaker 1: Well that's fine, I mean, but I think the answer 219 00:12:14,160 --> 00:12:16,439 Speaker 1: is that all the things you say about there was 220 00:12:16,480 --> 00:12:19,240 Speaker 1: not enough fiscal stimmers think about in a sense that 221 00:12:19,720 --> 00:12:22,439 Speaker 1: the impact on growth of the two trillion dollar tax 222 00:12:22,480 --> 00:12:24,880 Speaker 1: cut not that great. Perhaps would have been better earlier. 223 00:12:25,000 --> 00:12:30,160 Speaker 1: The big thing that Cain's talked about that should have happened, 224 00:12:32,960 --> 00:12:35,920 Speaker 1: and the big deal would have been an infrastructure spend 225 00:12:36,320 --> 00:12:41,079 Speaker 1: which would have put construction workers. It was this was 226 00:12:41,120 --> 00:12:43,920 Speaker 1: a housing market crash, all these construction working You to 227 00:12:43,960 --> 00:12:46,680 Speaker 1: put those folks back to work. So what's happened and 228 00:12:46,720 --> 00:12:49,720 Speaker 1: I think the best indicator. Forget the unemployment rate. We'll 229 00:12:49,760 --> 00:12:52,600 Speaker 1: get to talking about the underemployment rate now in the SEC. 230 00:12:52,920 --> 00:12:55,800 Speaker 1: But the employment rate, that's just the proportion of people 231 00:12:55,800 --> 00:12:59,080 Speaker 1: who are working today. That's two and a half percentage 232 00:12:59,120 --> 00:13:01,440 Speaker 1: points below what it was in two thousand and eight 233 00:13:01,480 --> 00:13:04,120 Speaker 1: and about three below what it was in two thousand 234 00:13:04,240 --> 00:13:07,559 Speaker 1: three four. So that says the economy hasn't recovered. It 235 00:13:07,600 --> 00:13:10,640 Speaker 1: says the labor market hasn't recovered. Um, And that's the 236 00:13:10,720 --> 00:13:12,800 Speaker 1: result of not doing what you said. But I think 237 00:13:12,840 --> 00:13:17,200 Speaker 1: you're completely right. Um. The lack of public spending was 238 00:13:17,440 --> 00:13:19,120 Speaker 1: actually the big effect. So in the book I talk 239 00:13:19,200 --> 00:13:22,439 Speaker 1: about now what's happened is we central banks say, oh, 240 00:13:22,440 --> 00:13:24,640 Speaker 1: we're at full in ploy We clearly are not. And 241 00:13:24,679 --> 00:13:27,160 Speaker 1: now you've put the brakes on. And basically what you've 242 00:13:27,200 --> 00:13:30,320 Speaker 1: done is you've you've slowed the economy down at a 243 00:13:30,360 --> 00:13:33,640 Speaker 1: time when there's a there's essentially a global slow, and 244 00:13:33,679 --> 00:13:36,240 Speaker 1: you've generated a trade war. And as I say, the 245 00:13:36,240 --> 00:13:38,480 Speaker 1: Fed raised rates and now we've got another era slow 246 00:13:38,559 --> 00:13:41,679 Speaker 1: in coming. Looks much like what happened earlier, perhaps or 247 00:13:41,679 --> 00:13:43,320 Speaker 1: a lesser degree, but it looks to me like the 248 00:13:43,320 --> 00:13:46,960 Speaker 1: economist turn. So in the book, you talk about the 249 00:13:47,120 --> 00:13:52,680 Speaker 1: rise of something fairly specific to America, not only stress 250 00:13:52,880 --> 00:13:58,520 Speaker 1: and unhappiness, but physical pain. Pain is rising in America. 251 00:13:59,720 --> 00:14:03,840 Speaker 1: It's shocking. Um. The evidence is, actually, that's exactly right. 252 00:14:04,440 --> 00:14:06,680 Speaker 1: We've done a survey we looked at in a paper's 253 00:14:07,200 --> 00:14:09,960 Speaker 1: accompanies the book out this month, where we ask people 254 00:14:10,000 --> 00:14:13,080 Speaker 1: around the world for their levels of pain, and essentially 255 00:14:13,120 --> 00:14:15,800 Speaker 1: Americans are twice as likely to say they're in pain 256 00:14:15,880 --> 00:14:19,240 Speaker 1: than other places I know. And so there's evidence from 257 00:14:19,320 --> 00:14:22,720 Speaker 1: doctor's visits. A quarter of all visits to a primary 258 00:14:22,720 --> 00:14:26,800 Speaker 1: care physician people report they're in chronic pain. So so. 259 00:14:27,240 --> 00:14:29,120 Speaker 1: And the other thing to say about it, of course, 260 00:14:29,160 --> 00:14:31,880 Speaker 1: is that at the same time as this the huge 261 00:14:32,000 --> 00:14:34,560 Speaker 1: rise in opioid to deal with the pain. So what 262 00:14:34,600 --> 00:14:36,160 Speaker 1: you see is, I mean, what you're seeing is a 263 00:14:36,240 --> 00:14:38,480 Speaker 1: rise in the opio prescriptions to deal with the pain, 264 00:14:38,520 --> 00:14:40,880 Speaker 1: and the pain keeps on rising. But the reality is 265 00:14:40,920 --> 00:14:43,920 Speaker 1: we're not exactly sure whether people really are in pain 266 00:14:44,200 --> 00:14:45,600 Speaker 1: or they say they're in pain. I mean they say 267 00:14:45,600 --> 00:14:47,480 Speaker 1: they're in pain. Maybe they are in pain very very 268 00:14:47,520 --> 00:14:50,520 Speaker 1: often when people are stressed out, what looks like a 269 00:14:50,680 --> 00:14:57,080 Speaker 1: minor ailment or pain becomes magnified exactly, so how how significant. 270 00:14:57,120 --> 00:14:59,600 Speaker 1: And I have to share a quick anecdote. In the 271 00:14:59,640 --> 00:15:02,600 Speaker 1: middle the financial crisis, I had a trip to London 272 00:15:03,320 --> 00:15:08,120 Speaker 1: or an Amsterdam, and I was shocked that, look, unemployments 273 00:15:08,160 --> 00:15:10,480 Speaker 1: over ten percent in the United States. You can walk 274 00:15:10,520 --> 00:15:13,800 Speaker 1: down the streets of New York and admittedly New York 275 00:15:13,840 --> 00:15:17,000 Speaker 1: is a finance town and and the crisis hit finance 276 00:15:17,120 --> 00:15:21,360 Speaker 1: really intensely, but you can just feel the stress levels 277 00:15:21,400 --> 00:15:25,680 Speaker 1: in Manhattan much higher. Amsterdam was like people having a 278 00:15:25,680 --> 00:15:28,480 Speaker 1: beer in the middle of the afternoon. The stress levels 279 00:15:28,560 --> 00:15:32,920 Speaker 1: even in the midst of the storm, they were moderate 280 00:15:32,960 --> 00:15:34,920 Speaker 1: compared to here. Well, you're starting to see a big 281 00:15:35,040 --> 00:15:37,560 Speaker 1: rise in the UK. So we have another paper where 282 00:15:37,600 --> 00:15:40,360 Speaker 1: we actually tracked something which is pretty interesting, which is 283 00:15:40,360 --> 00:15:43,520 Speaker 1: in the UK and since two thousand thirteen, happiness on 284 00:15:43,680 --> 00:15:48,040 Speaker 1: various measures has been rising steadily, but worryingly, so has 285 00:15:48,120 --> 00:15:51,600 Speaker 1: depression and anxiety. So you have the two things rising. 286 00:15:51,760 --> 00:15:54,440 Speaker 1: Some people are doing just fine, others aren't doing just 287 00:15:54,640 --> 00:15:57,040 Speaker 1: And obviously the problem is that the ones who aren't 288 00:15:57,040 --> 00:15:59,400 Speaker 1: doing just fine see the others who are, and so 289 00:15:59,480 --> 00:16:01,160 Speaker 1: that's a big part of the story. But around the 290 00:16:01,160 --> 00:16:05,760 Speaker 1: world we see arise in sort of isolation, loneliness, anxiety, depression. 291 00:16:06,320 --> 00:16:09,040 Speaker 1: In the US, which is a really big deal. Happiness 292 00:16:09,080 --> 00:16:12,440 Speaker 1: measures have been basically flat for college educated and for 293 00:16:12,520 --> 00:16:15,120 Speaker 1: the least educated they have been plummeting for the last 294 00:16:15,160 --> 00:16:17,680 Speaker 1: thirty years, so this is a big worry. So so 295 00:16:17,840 --> 00:16:22,480 Speaker 1: measures of unhappiness, disconnection from society, all of those things 296 00:16:22,640 --> 00:16:26,520 Speaker 1: are a worry, particularly for prime age, less educated folks, 297 00:16:26,600 --> 00:16:29,440 Speaker 1: mostly white, but there's some evidence of other groups. But 298 00:16:29,600 --> 00:16:32,840 Speaker 1: essentially amongst white less educated there's a disaster and it 299 00:16:33,000 --> 00:16:36,760 Speaker 1: relates to as well to opioid deaths, destince roces of 300 00:16:36,800 --> 00:16:39,520 Speaker 1: the liver, and suicide. So this this is all going 301 00:16:39,560 --> 00:16:42,320 Speaker 1: on at the same time we've seen recovery, but lots 302 00:16:42,320 --> 00:16:44,560 Speaker 1: of folks around the world, especially in the United States, 303 00:16:44,560 --> 00:16:47,320 Speaker 1: are hurting. So so let's see if we can find 304 00:16:47,320 --> 00:16:50,920 Speaker 1: the cause for this. Some people are blaming social networks 305 00:16:51,280 --> 00:16:54,320 Speaker 1: and that when you go on Instagram, everybody else's life 306 00:16:54,360 --> 00:16:57,240 Speaker 1: looks great and makes you feel terrible. There's a ton 307 00:16:57,280 --> 00:16:59,800 Speaker 1: of new studies on that, and don't I don't know 308 00:16:59,840 --> 00:17:03,400 Speaker 1: if that's the cause. We're at levels of income inequality 309 00:17:03,640 --> 00:17:06,919 Speaker 1: that we haven't seen for a long long time, and 310 00:17:06,960 --> 00:17:09,320 Speaker 1: if you look at the middle class or or the 311 00:17:09,960 --> 00:17:13,440 Speaker 1: paid people paid less than the middle class, they're essentially 312 00:17:13,640 --> 00:17:17,399 Speaker 1: have not seen a raise in three decades. So is 313 00:17:17,440 --> 00:17:19,640 Speaker 1: it all of these or are some of these factors 314 00:17:19,680 --> 00:17:22,159 Speaker 1: more important than others. We don't exactly know. I mean, 315 00:17:22,200 --> 00:17:24,679 Speaker 1: it's it's all of those. But I think I've been 316 00:17:24,720 --> 00:17:27,360 Speaker 1: working on happiness behavior economics for a really long time, 317 00:17:27,640 --> 00:17:29,920 Speaker 1: and I think if I would choose one thing we've 318 00:17:30,000 --> 00:17:33,760 Speaker 1: learned from it, it's that relative things matter. People compare 319 00:17:33,800 --> 00:17:36,720 Speaker 1: themselves to others. I mean a funny statistic, not funniest, 320 00:17:36,720 --> 00:17:39,600 Speaker 1: sad statistic. The three countries in the world that are 321 00:17:39,640 --> 00:17:43,440 Speaker 1: the happiest up in Denmark, Norway, Sweden, they're the happiest 322 00:17:43,440 --> 00:17:45,240 Speaker 1: countries in the world. That are also the countries in 323 00:17:45,280 --> 00:17:47,520 Speaker 1: the world that have the highest suicide rates. Really yeah, 324 00:17:47,640 --> 00:17:49,800 Speaker 1: so so exactly what you say is true. But I 325 00:17:49,840 --> 00:17:51,960 Speaker 1: think what's in a decent amount of alcoholism if I 326 00:17:52,000 --> 00:17:55,440 Speaker 1: recall right, absolutely, I mean obviously part of it is 327 00:17:55,480 --> 00:17:57,560 Speaker 1: you say, oh, it's because of the hours of daylight, 328 00:17:57,600 --> 00:17:59,440 Speaker 1: But why would you have so many people happy? You 329 00:17:59,520 --> 00:18:01,840 Speaker 1: can explain in the suicide that way. So I think 330 00:18:01,880 --> 00:18:05,000 Speaker 1: what we're seeing is people compare themselves to others. Perhaps 331 00:18:05,000 --> 00:18:08,520 Speaker 1: with social media it's easier to compare yourself to others, 332 00:18:08,520 --> 00:18:10,959 Speaker 1: so so that really matters. And that's the As the 333 00:18:10,960 --> 00:18:14,320 Speaker 1: income in equality has risen, wealth inequality has risen, the 334 00:18:14,400 --> 00:18:17,680 Speaker 1: contrast becomes greater. So I think that's what's going on. 335 00:18:18,359 --> 00:18:20,040 Speaker 1: And we've also I mean the think of that. Why 336 00:18:20,160 --> 00:18:23,320 Speaker 1: why is happiness not risen in the United States? Perhaps 337 00:18:23,359 --> 00:18:26,040 Speaker 1: it's that people compare themselves to others. So Barry Piser 338 00:18:26,200 --> 00:18:28,719 Speaker 1: a new BMW and is it going to make you happy? Well, 339 00:18:28,720 --> 00:18:30,399 Speaker 1: it's gonna make you happy as long as Danny doesn't 340 00:18:30,400 --> 00:18:33,000 Speaker 1: buy one. That's what the evidence looks like. So it's 341 00:18:33,000 --> 00:18:36,920 Speaker 1: a surprise the happiness is flat. People clearly compare themselves 342 00:18:36,920 --> 00:18:40,000 Speaker 1: to others. Let's talk about some of the really interesting 343 00:18:40,040 --> 00:18:44,560 Speaker 1: things you discovered while doing your research for this book. Yes, um, 344 00:18:44,640 --> 00:18:48,360 Speaker 1: let's talk about productivity. Do we have a productivity problem 345 00:18:48,480 --> 00:18:51,159 Speaker 1: or do we have a measurement issue? Well, a bit 346 00:18:51,200 --> 00:18:56,920 Speaker 1: of both. Um. Clearly the forecasts for productivity have been wrong, 347 00:18:56,960 --> 00:18:59,880 Speaker 1: I mean especially the greatest The greatest era was made 348 00:19:00,119 --> 00:19:02,080 Speaker 1: back to what we were talking about in two thousand 349 00:19:02,080 --> 00:19:05,320 Speaker 1: and ten, austerity was imposed and the government was forecast 350 00:19:05,400 --> 00:19:07,679 Speaker 1: with this that would have no effect on productivity, and 351 00:19:07,720 --> 00:19:10,840 Speaker 1: they've continued to forecast that productivity would rise. And we 352 00:19:10,920 --> 00:19:13,239 Speaker 1: have to think called a productivity puzzle, which is that 353 00:19:13,600 --> 00:19:17,200 Speaker 1: we don't actually seem to have had much productivity at all, 354 00:19:17,280 --> 00:19:18,880 Speaker 1: and in fact, in the UK for the last three 355 00:19:18,920 --> 00:19:22,680 Speaker 1: quarter's been falling um, which is shocking to me. And 356 00:19:22,720 --> 00:19:25,440 Speaker 1: the reason I always asked that question of like you 357 00:19:26,160 --> 00:19:29,080 Speaker 1: is that in my office we were on an asset 358 00:19:29,080 --> 00:19:32,879 Speaker 1: management firm, and what we do with the ten people 359 00:19:32,960 --> 00:19:36,400 Speaker 1: in the Manhattan office twenty years ago would have taken 360 00:19:36,400 --> 00:19:38,879 Speaker 1: a staff of a hundred and so the ability to 361 00:19:38,920 --> 00:19:43,960 Speaker 1: deploy sophomore and technology and really crank out an enormous 362 00:19:44,000 --> 00:19:48,200 Speaker 1: amount of work and content, and the ability to reach 363 00:19:48,840 --> 00:19:53,720 Speaker 1: both clients. And so whenever I see there's these productivity figures, 364 00:19:53,720 --> 00:19:55,880 Speaker 1: I'm like, I don't know where they're looking, but they're 365 00:19:55,920 --> 00:19:58,080 Speaker 1: not looking at a service. Let's go with two bits 366 00:19:58,080 --> 00:20:02,439 Speaker 1: to it. So productivity is just output divided by people 367 00:20:02,520 --> 00:20:05,359 Speaker 1: or ours or something. So you kind of argued about 368 00:20:05,400 --> 00:20:07,840 Speaker 1: output measure on the top, but I probably shouldna argue 369 00:20:07,840 --> 00:20:10,879 Speaker 1: about what you divide through by I mean, what's your hours? 370 00:20:11,000 --> 00:20:14,600 Speaker 1: What's my hours? Started around noon and by two o'clock 371 00:20:14,640 --> 00:20:18,840 Speaker 1: I'm heading home. I mean, the problems now, I started early, 372 00:20:18,920 --> 00:20:21,320 Speaker 1: I started four thirty in the morning, and I and 373 00:20:21,480 --> 00:20:23,240 Speaker 1: the last thing I do before I go to bed 374 00:20:23,359 --> 00:20:25,320 Speaker 1: is log onto Slack and look at what's going on. 375 00:20:26,200 --> 00:20:28,760 Speaker 1: But the problem, of course is that if you if 376 00:20:28,760 --> 00:20:31,679 Speaker 1: you're not I mean the days where people went to 377 00:20:31,720 --> 00:20:33,600 Speaker 1: a factory, they logged on at eight o'clock and they 378 00:20:33,600 --> 00:20:36,639 Speaker 1: went home. You got eight hours. So not only is 379 00:20:36,680 --> 00:20:39,240 Speaker 1: there a problem measuring the output, there's a problem of 380 00:20:39,320 --> 00:20:43,239 Speaker 1: measuring the labor input. That's a really big deal. I mean, 381 00:20:43,280 --> 00:20:46,240 Speaker 1: I think, however, it's it is clear that there is 382 00:20:46,240 --> 00:20:50,200 Speaker 1: a problem, and the problem is that wages haven't been rising. 383 00:20:50,560 --> 00:20:52,920 Speaker 1: I mean the sort of connection everybody makes this, if 384 00:20:52,960 --> 00:20:56,120 Speaker 1: productivity was rising, wages ought to be rising. So they 385 00:20:56,160 --> 00:20:59,280 Speaker 1: infer back that the lack of wage for it. Therefore 386 00:20:59,280 --> 00:21:01,760 Speaker 1: there must be approach ativity. Plus some of it, of course, 387 00:21:02,080 --> 00:21:05,879 Speaker 1: has to do with distribution. I mean, workers understand that 388 00:21:05,960 --> 00:21:08,440 Speaker 1: if they get gains from productivity, they get higher ways, 389 00:21:08,480 --> 00:21:11,480 Speaker 1: but perhaps not these days. Perhaps they think, Okay, there's 390 00:21:11,480 --> 00:21:13,879 Speaker 1: a big rising productivity and the bosses are going to 391 00:21:13,960 --> 00:21:15,679 Speaker 1: take all the gains, and there's an issue of that 392 00:21:15,720 --> 00:21:18,840 Speaker 1: with the rising inequality issue, Do the workers actually think 393 00:21:18,880 --> 00:21:21,680 Speaker 1: that if productivity was to rise, they would actually get 394 00:21:21,680 --> 00:21:25,000 Speaker 1: a share of the spoils and perhaps that's something that's changed, 395 00:21:25,640 --> 00:21:28,880 Speaker 1: So that's kind of interesting. They are you surprised at 396 00:21:28,880 --> 00:21:32,760 Speaker 1: how quickly the blush has come off the rose for 397 00:21:32,840 --> 00:21:37,440 Speaker 1: the gig economy, Like between Airbnb and Uber and even 398 00:21:37,480 --> 00:21:41,120 Speaker 1: selling crap on eBay. There was an expectation that hey, 399 00:21:41,200 --> 00:21:43,080 Speaker 1: there's a way for a lot of people to pick 400 00:21:43,160 --> 00:21:46,960 Speaker 1: up some money on the side. Hasn't worked out the 401 00:21:46,960 --> 00:21:49,560 Speaker 1: way people and expect It hasn't worked out, And there's 402 00:21:49,560 --> 00:21:52,720 Speaker 1: a big question about how big that gig economy is. 403 00:21:52,800 --> 00:21:54,760 Speaker 1: I mean, there's a set of studies which were suggesting 404 00:21:54,800 --> 00:21:56,800 Speaker 1: it's really really big, and then a couple of years 405 00:21:56,880 --> 00:21:58,600 Speaker 1: later had new data and they had to sort of 406 00:21:58,640 --> 00:22:02,119 Speaker 1: pull it back. But it's still it's substantial how you 407 00:22:02,160 --> 00:22:04,040 Speaker 1: look at it. But it depends how you define it. 408 00:22:04,080 --> 00:22:06,200 Speaker 1: But I mean there's an issue saying the the UK, 409 00:22:06,359 --> 00:22:08,720 Speaker 1: it gets go to there. There's been a huge rise 410 00:22:08,760 --> 00:22:11,880 Speaker 1: in the UK and the self employment rate, right, you said, 411 00:22:11,920 --> 00:22:15,080 Speaker 1: this is fantastic. Turns out that the earnings of the 412 00:22:15,119 --> 00:22:17,359 Speaker 1: self employed over the last five years have fallen in 413 00:22:17,440 --> 00:22:22,600 Speaker 1: real terms, just when people get laid off, especially in 414 00:22:22,640 --> 00:22:26,760 Speaker 1: a service or consulting world, you call yourself self employed, right, 415 00:22:26,800 --> 00:22:28,840 Speaker 1: So I think in a sense, the gig economy, this 416 00:22:28,920 --> 00:22:32,320 Speaker 1: self employed stuff, this is about fragile work. Many of 417 00:22:32,400 --> 00:22:35,000 Speaker 1: these people can't get enough hours. That's the big story 418 00:22:35,000 --> 00:22:37,359 Speaker 1: in my book. So there's there's two unn interrupt you 419 00:22:37,440 --> 00:22:40,440 Speaker 1: right here because there's two really interesting things. I want 420 00:22:40,440 --> 00:22:44,919 Speaker 1: to talk about underemployment generally, but let's start with the specific. 421 00:22:45,480 --> 00:22:48,240 Speaker 1: So I'm gonna two completely different companies, and you and 422 00:22:48,280 --> 00:22:51,760 Speaker 1: I have discussed this previously. Walmart on the low end 423 00:22:51,840 --> 00:22:55,000 Speaker 1: and then Starbucks on the high end. They are both 424 00:22:55,080 --> 00:22:59,720 Speaker 1: somewhat notorious for telling people in the beginning of the week, hey, 425 00:23:00,000 --> 00:23:04,200 Speaker 1: you were your hours. And for a while Walmart store 426 00:23:04,240 --> 00:23:08,760 Speaker 1: managers were incentivized to save money by slashing hours, which 427 00:23:08,800 --> 00:23:11,040 Speaker 1: is why the stores look like junk for a couple 428 00:23:11,040 --> 00:23:15,520 Speaker 1: of years. And workers don't have any connection to the firms. 429 00:23:15,920 --> 00:23:18,560 Speaker 1: And I think what you've talked about is an inherent 430 00:23:18,680 --> 00:23:23,879 Speaker 1: instability of work and inhering insecurity of workers. And that's 431 00:23:23,920 --> 00:23:26,680 Speaker 1: the sense that they have in some sense that explains 432 00:23:26,960 --> 00:23:30,359 Speaker 1: the lack of wage growth they're more concerned about keeping 433 00:23:30,440 --> 00:23:32,960 Speaker 1: their jobs. Just before two thousand let me tell you 434 00:23:32,960 --> 00:23:35,360 Speaker 1: a story. Just before two thousand and eight, I had 435 00:23:35,400 --> 00:23:37,840 Speaker 1: a big discussion argument with the government of the Bank 436 00:23:37,840 --> 00:23:40,440 Speaker 1: of Being. He thought there was a huge wage rise coming. 437 00:23:40,760 --> 00:23:43,600 Speaker 1: So I knew, I wait for this. I knew the chairman, 438 00:23:43,680 --> 00:23:46,160 Speaker 1: the head of the British trade union Movement. I went 439 00:23:46,200 --> 00:23:49,120 Speaker 1: to tuc House Penthouse Suite tuc House and I said, 440 00:23:49,200 --> 00:23:52,000 Speaker 1: his name is Brendan Barber. And I said, Brendan, you 441 00:23:52,000 --> 00:23:54,360 Speaker 1: have to be the rbit. I won't tell anybody. Tell me, 442 00:23:54,560 --> 00:23:56,200 Speaker 1: are you about to be able to go and get 443 00:23:56,200 --> 00:23:58,600 Speaker 1: a huge wage increase? And he said, not for love 444 00:23:58,680 --> 00:24:00,679 Speaker 1: nor money. He said, just acted what you and I 445 00:24:00,680 --> 00:24:03,240 Speaker 1: have just talked about workers, and many of the workers 446 00:24:03,560 --> 00:24:06,440 Speaker 1: representsive women. He said, they care about security, they care 447 00:24:06,480 --> 00:24:09,640 Speaker 1: about being a flexibility, being able to keep the job. 448 00:24:09,680 --> 00:24:11,520 Speaker 1: They can drop the kids off at school, and if 449 00:24:11,520 --> 00:24:13,040 Speaker 1: they need to take two hours off to go to 450 00:24:13,080 --> 00:24:15,240 Speaker 1: the doctor with the kids, they can. And he said, 451 00:24:15,280 --> 00:24:17,919 Speaker 1: there is no chance on the God's green earth that 452 00:24:17,960 --> 00:24:20,280 Speaker 1: was in pre two thousand and eight that there's big 453 00:24:20,280 --> 00:24:22,960 Speaker 1: wage increases coming. And I think that's where the world is. 454 00:24:23,400 --> 00:24:26,160 Speaker 1: The point of the story is that balance probably wouldn't 455 00:24:26,200 --> 00:24:28,680 Speaker 1: be existing if we were at full employment. As you 456 00:24:28,720 --> 00:24:31,440 Speaker 1: would move towards full employment, workers, we'll be able to 457 00:24:31,440 --> 00:24:32,960 Speaker 1: say I'm not taking that kind of job, thank you 458 00:24:33,040 --> 00:24:35,080 Speaker 1: very much. Warm up. There's lots of better jobs out there, 459 00:24:35,080 --> 00:24:36,720 Speaker 1: and I'll go there. So I think the fact that 460 00:24:36,760 --> 00:24:39,480 Speaker 1: this continues to exist says we're a long way from 461 00:24:39,520 --> 00:24:43,840 Speaker 1: full employment. So how underemployed is the labor force in 462 00:24:43,840 --> 00:24:47,240 Speaker 1: the United States, Well, let's see, and let's let me 463 00:24:47,280 --> 00:24:50,960 Speaker 1: get more specific. How many people are working multiple part 464 00:24:51,000 --> 00:24:55,280 Speaker 1: time jobs and they wish they were working one full time, 465 00:24:55,359 --> 00:24:58,560 Speaker 1: permanent position. We don't exactly know that. We do have 466 00:24:59,200 --> 00:25:01,280 Speaker 1: pretty bad men of that in the United States. That 467 00:25:01,359 --> 00:25:04,639 Speaker 1: made and I've worked on it a lot. You six, well, 468 00:25:05,240 --> 00:25:07,360 Speaker 1: you seven, I'm talking about earlist better. I mean we're 469 00:25:07,359 --> 00:25:09,480 Speaker 1: talking about I'm just looking at the latest numbers. In 470 00:25:09,600 --> 00:25:12,720 Speaker 1: terms of the unemployment numbers, it's about six million. But 471 00:25:12,760 --> 00:25:14,560 Speaker 1: if you simply want to look at this group, which 472 00:25:14,600 --> 00:25:17,000 Speaker 1: is a particularly important group, which is part time for 473 00:25:17,119 --> 00:25:19,600 Speaker 1: economic reasons, it's about four and a half millions. So 474 00:25:19,640 --> 00:25:21,840 Speaker 1: it's about three quarters of the size or two thirds 475 00:25:21,880 --> 00:25:24,760 Speaker 1: three quarters of the size of the unemployed. But what 476 00:25:24,920 --> 00:25:27,440 Speaker 1: really matters with those meaning those people want a full 477 00:25:27,440 --> 00:25:29,119 Speaker 1: time job but they can't find one of them. And 478 00:25:29,160 --> 00:25:31,560 Speaker 1: of course, the big story in the United States, which 479 00:25:31,600 --> 00:25:33,639 Speaker 1: we don't have for other countries, is there's lots of 480 00:25:33,680 --> 00:25:36,440 Speaker 1: other people, it turns out, that want more hours. To 481 00:25:36,480 --> 00:25:39,880 Speaker 1: give an example that we'll call those folks involuntary part timers. 482 00:25:39,960 --> 00:25:41,600 Speaker 1: What we know from around the world, we don't have 483 00:25:41,640 --> 00:25:43,560 Speaker 1: a measure of this in the US. You say, I'm 484 00:25:43,600 --> 00:25:46,200 Speaker 1: part time, I've got twelve hours a week, but I'd 485 00:25:46,240 --> 00:25:48,520 Speaker 1: like twenty. And that turns out to be a really 486 00:25:48,520 --> 00:25:51,520 Speaker 1: big phenomenon around the world. Yep, yep. That seems to 487 00:25:51,600 --> 00:25:53,359 Speaker 1: drive wage growth around the world. So we have a 488 00:25:53,359 --> 00:25:56,359 Speaker 1: whole series of papers on this. Now you reference a 489 00:25:56,400 --> 00:26:00,199 Speaker 1: phenomena called zero hour jobs. Explain what that is. So 490 00:26:00,240 --> 00:26:03,840 Speaker 1: this is much like you're much like the story of Walmart. 491 00:26:03,920 --> 00:26:05,920 Speaker 1: So in the UK there's a thing called zero hours 492 00:26:06,000 --> 00:26:09,080 Speaker 1: contract um and most people absolutely hate it, but they 493 00:26:09,119 --> 00:26:11,720 Speaker 1: can't get anything better. It's the following. You can only 494 00:26:11,760 --> 00:26:14,399 Speaker 1: have a contract with me. On a Sunday night, I 495 00:26:14,440 --> 00:26:16,600 Speaker 1: will tell you how many hours this week you're going 496 00:26:16,640 --> 00:26:18,560 Speaker 1: to have. I'm going to tell you which days they 497 00:26:18,560 --> 00:26:20,600 Speaker 1: are on and what time they are. So I said 498 00:26:20,640 --> 00:26:22,600 Speaker 1: you on Sunday night, You're going to work from four 499 00:26:22,680 --> 00:26:26,560 Speaker 1: pm to midnight on Thursday. That's it. Um And so 500 00:26:26,720 --> 00:26:30,159 Speaker 1: obviously these workers say, hey, this stinks mostly and b 501 00:26:30,400 --> 00:26:32,959 Speaker 1: I would like more hours than I can get. And 502 00:26:33,400 --> 00:26:35,760 Speaker 1: essentially what we see as we've moved towards full employment 503 00:26:35,760 --> 00:26:38,520 Speaker 1: a little bit, those numbers have fallen, but huge numbers 504 00:26:38,520 --> 00:26:40,520 Speaker 1: of these workers. We're talking to you about a million 505 00:26:40,520 --> 00:26:43,679 Speaker 1: workers in these and this is an exclusive contract with 506 00:26:43,720 --> 00:26:46,480 Speaker 1: anybody else, exclusive contract, So they're they're waiting to know 507 00:26:46,560 --> 00:26:48,720 Speaker 1: what it is. They can't fill another hour, they can't 508 00:26:48,720 --> 00:26:51,199 Speaker 1: fill other hours elsewhere. So and it's not just the 509 00:26:51,280 --> 00:26:53,240 Speaker 1: number of hours, it's the timing of the abster. It's 510 00:26:53,440 --> 00:26:55,760 Speaker 1: how do you do childcare or how do you organize 511 00:26:55,800 --> 00:26:58,320 Speaker 1: your life? Daddy? You do that, And that's a really 512 00:26:58,359 --> 00:27:00,840 Speaker 1: big deal. And I think if you just look at 513 00:27:00,880 --> 00:27:03,120 Speaker 1: those contracts, if you were at full employment, workers would 514 00:27:03,119 --> 00:27:05,720 Speaker 1: be able to say, I'm not taking that. The definition 515 00:27:05,760 --> 00:27:08,000 Speaker 1: of fulling I always like from Beverage, he says a 516 00:27:08,040 --> 00:27:11,639 Speaker 1: full employment work as a standing by waiting for and 517 00:27:11,680 --> 00:27:13,760 Speaker 1: I mean good the word goods in there, waiting for 518 00:27:13,880 --> 00:27:16,920 Speaker 1: good offers of jobs to come in. We're a very 519 00:27:16,960 --> 00:27:19,399 Speaker 1: long way from that. So if those contexts exists, how 520 00:27:19,400 --> 00:27:21,320 Speaker 1: can the FITS or the Bank of Benglans say we're 521 00:27:21,320 --> 00:27:24,440 Speaker 1: any clear close to full employer? Makes no sense. So 522 00:27:24,680 --> 00:27:29,600 Speaker 1: the standard description or the standard explanation for why the 523 00:27:29,840 --> 00:27:33,040 Speaker 1: labor market is where it is is a combination of 524 00:27:33,560 --> 00:27:38,080 Speaker 1: lots of people are under educated, we're under credentials, which 525 00:27:38,080 --> 00:27:41,399 Speaker 1: are two distinct issues. And you add that to the 526 00:27:41,520 --> 00:27:44,960 Speaker 1: rise of globalization where good factory jobs leave, and the 527 00:27:45,080 --> 00:27:49,600 Speaker 1: rise of technology and automation. You know, just routine repetitive 528 00:27:49,680 --> 00:27:54,920 Speaker 1: jobs are easily replaced by a robot or software changes 529 00:27:55,240 --> 00:27:58,119 Speaker 1: the skill sets that are needed in a modern economy. 530 00:27:58,600 --> 00:28:01,239 Speaker 1: How much is are those issues to blame and how 531 00:28:01,320 --> 00:28:04,480 Speaker 1: much is it something else? Well, I think those issues 532 00:28:04,480 --> 00:28:07,480 Speaker 1: are clearly to blame. So the globalization phenomenon was going 533 00:28:07,520 --> 00:28:10,000 Speaker 1: on prior to two thousand and eight, But I think 534 00:28:10,080 --> 00:28:11,879 Speaker 1: we should think of two thousand and eight is a 535 00:28:11,920 --> 00:28:14,760 Speaker 1: structural break, and a structural break in the sense that 536 00:28:14,840 --> 00:28:18,199 Speaker 1: employers are aware that their bargaining position is stronger, but 537 00:28:18,320 --> 00:28:21,600 Speaker 1: workers were scared. Workers were scared that the phrase safe 538 00:28:21,600 --> 00:28:24,400 Speaker 1: as houses, Well that's no longer true, their houses went, 539 00:28:24,560 --> 00:28:27,520 Speaker 1: their their assets went, and that and that's a really 540 00:28:27,520 --> 00:28:29,240 Speaker 1: big I would just go back into I've tried to 541 00:28:29,240 --> 00:28:32,679 Speaker 1: get people to think about the capital, how capital displaces 542 00:28:32,760 --> 00:28:35,760 Speaker 1: labor in some sense. The reason it's doing it so 543 00:28:35,800 --> 00:28:39,280 Speaker 1: strongly now is the relative prices. You can change the 544 00:28:39,360 --> 00:28:43,400 Speaker 1: capital labor mix by changing relative prices. Price of capital now, 545 00:28:43,400 --> 00:28:46,320 Speaker 1: I mean you could capital is practically free these well exactly, 546 00:28:46,360 --> 00:28:48,080 Speaker 1: so that in a sense, what you can do is 547 00:28:48,120 --> 00:28:50,479 Speaker 1: to say, well, maybe what we should do is lower 548 00:28:50,560 --> 00:28:53,920 Speaker 1: to firms the relative price of labor. We have been 549 00:28:53,960 --> 00:28:57,560 Speaker 1: speaking with Danny bland Flower. He is the author of 550 00:28:57,680 --> 00:29:01,240 Speaker 1: Not Working, Where Have all the Good Jobs Gone? If 551 00:29:01,240 --> 00:29:03,520 Speaker 1: you enjoy this conversation, we'll be sure and come back 552 00:29:03,560 --> 00:29:07,280 Speaker 1: for the podcast extras, where we keep the digital technology 553 00:29:07,400 --> 00:29:12,160 Speaker 1: rolling and continue recording our conversation about all things employment, 554 00:29:12,680 --> 00:29:21,240 Speaker 1: financial crisis, and underemployment related. You can find that at iTunes, overcast, Stitchers, Spotify, Bloomberg, 555 00:29:21,400 --> 00:29:25,640 Speaker 1: wherever finer podcasts are sold. We love your comments, feedback 556 00:29:25,720 --> 00:29:30,000 Speaker 1: and suggestions right to us at m IB podcast at 557 00:29:30,000 --> 00:29:33,120 Speaker 1: Bloomberg dot net. Be sure to check out my daily column. 558 00:29:33,200 --> 00:29:35,760 Speaker 1: You can find that at Bloomberg dot com slash Opinion. 559 00:29:36,200 --> 00:29:40,160 Speaker 1: Follow me on Twitter at rit Halts. I'm Barry rit Halts. 560 00:29:40,320 --> 00:29:46,280 Speaker 1: You're listening to Masters in Business on Bloomberg Radio. Welcome 561 00:29:46,320 --> 00:29:48,760 Speaker 1: to the podcast. So let's let's get to some of 562 00:29:48,760 --> 00:29:52,560 Speaker 1: the questions that that we didn't get to during the 563 00:29:52,560 --> 00:29:56,640 Speaker 1: broadcast portion, because so much of this is quite fascinating. 564 00:29:57,120 --> 00:30:03,720 Speaker 1: So first let's talk out optimism. The least optimistic people 565 00:30:03,720 --> 00:30:08,000 Speaker 1: in America are poor whites, not we're blacks or Hispanics. 566 00:30:08,640 --> 00:30:13,840 Speaker 1: How does this play into populism? Is it which came first? Well, 567 00:30:15,520 --> 00:30:19,280 Speaker 1: hard to know which came first? On almost every measure, 568 00:30:19,920 --> 00:30:24,200 Speaker 1: you see the least educated, particularly prime age, least educated, 569 00:30:25,680 --> 00:30:28,840 Speaker 1: I can say in a number of ways, least optimistic, 570 00:30:29,440 --> 00:30:33,800 Speaker 1: most anxious, most unhappy. I have a pretty interesting measure, 571 00:30:33,840 --> 00:30:35,600 Speaker 1: which is in one of the big surveys, they ask 572 00:30:35,680 --> 00:30:39,200 Speaker 1: people about how many bad mental health days did you 573 00:30:39,280 --> 00:30:42,800 Speaker 1: have in the last thirty meaning clinical and mental health 574 00:30:42,880 --> 00:30:46,200 Speaker 1: days or just just just popular just taking a mental 575 00:30:46,240 --> 00:30:49,280 Speaker 1: health day, just just straight asking them. They're really defined 576 00:30:49,400 --> 00:30:51,080 Speaker 1: this state, so it's it's sort of done in the 577 00:30:51,120 --> 00:30:54,240 Speaker 1: consistent way for everybody. And the number of the number 578 00:30:54,280 --> 00:30:56,840 Speaker 1: of bad mental health days for this group is when 579 00:30:56,840 --> 00:30:59,880 Speaker 1: we're talking ten twelve a month, really ten twelve of 580 00:31:00,120 --> 00:31:02,760 Speaker 1: and I can just draw you a picture by aide 581 00:31:02,840 --> 00:31:06,640 Speaker 1: which is just a huge hill shape. So these folks 582 00:31:06,680 --> 00:31:09,640 Speaker 1: have a high level anyway, and it rises maximizing out 583 00:31:09,680 --> 00:31:12,600 Speaker 1: at around forty three forty four. So this is so 584 00:31:12,720 --> 00:31:16,720 Speaker 1: it starts lower. So that's the opposite chart of what 585 00:31:16,800 --> 00:31:22,600 Speaker 1: Scott Galloway showed in his book um the Algebra of Happiness, 586 00:31:22,640 --> 00:31:25,920 Speaker 1: exactly where you're very happy when you're young, Bottom's middle age. 587 00:31:25,920 --> 00:31:27,640 Speaker 1: I've written lots of stuff on what I call the 588 00:31:27,720 --> 00:31:30,640 Speaker 1: U shaping happiness, but just flip it over the last 589 00:31:30,680 --> 00:31:33,520 Speaker 1: thing over, and what it turns out is that on 590 00:31:33,560 --> 00:31:37,200 Speaker 1: all these measures that I can use words like anxious, depressed, lonely, 591 00:31:37,560 --> 00:31:42,320 Speaker 1: not optimistic, all the isolated. So all of these things 592 00:31:42,360 --> 00:31:46,920 Speaker 1: appear to be um central to what's going on. These 593 00:31:47,120 --> 00:31:50,400 Speaker 1: are entirely consistent with these deaths of despair. These same 594 00:31:50,480 --> 00:31:54,120 Speaker 1: folks are are disproportioned of the ones that are committing suicide. 595 00:31:54,320 --> 00:31:56,880 Speaker 1: So this is a new phenomenon in America. And what 596 00:31:56,920 --> 00:32:00,560 Speaker 1: are we doing about it? I mean, these not these 597 00:32:00,560 --> 00:32:04,520 Speaker 1: are nothing. People talk about deaths of despair. I talk 598 00:32:04,640 --> 00:32:08,640 Speaker 1: about cries of helplessness cries for help. So in a sense, 599 00:32:08,840 --> 00:32:11,200 Speaker 1: the story is these are cries for help that are 600 00:32:11,200 --> 00:32:15,600 Speaker 1: remaining unanswered. So I'm curious as to the role that 601 00:32:15,720 --> 00:32:19,280 Speaker 1: healthcare plays in this on two sides of this. First, 602 00:32:19,320 --> 00:32:21,640 Speaker 1: I referenced when I was in the UK and Amsterdam 603 00:32:21,720 --> 00:32:25,120 Speaker 1: during the crisis, people were pretty blase. I think the 604 00:32:25,160 --> 00:32:28,440 Speaker 1: United States, especially if you have a family, you have kids, 605 00:32:28,760 --> 00:32:32,000 Speaker 1: and you lose your job, you lose your healthcare. That's 606 00:32:32,040 --> 00:32:34,560 Speaker 1: got to be an enormous source of stress for people 607 00:32:34,920 --> 00:32:37,440 Speaker 1: who are not working full time or in danger of 608 00:32:37,480 --> 00:32:40,800 Speaker 1: losing their jobs versus the Europeans. But I think that's 609 00:32:40,840 --> 00:32:43,480 Speaker 1: absolutely right. And I think and by the way, ps 610 00:32:43,520 --> 00:32:45,880 Speaker 1: on the other side, when they do have a mental 611 00:32:45,880 --> 00:32:49,040 Speaker 1: health issue, they can't afford to get the treatment exactly. 612 00:32:49,240 --> 00:32:52,120 Speaker 1: I think a good example is the state that I 613 00:32:52,160 --> 00:32:55,640 Speaker 1: live in, which is New Hampshire. New Hampshire is I 614 00:32:55,680 --> 00:33:01,320 Speaker 1: think ranks second third in um opioid deaths. Really absolutely so. 615 00:33:01,440 --> 00:33:05,960 Speaker 1: New Hampshire is a very straight why frere dying? There 616 00:33:06,040 --> 00:33:11,080 Speaker 1: is no basically no provisions there for drug rehabilitation. Live 617 00:33:11,160 --> 00:33:15,040 Speaker 1: free from that what you're implying, live free from the 618 00:33:15,080 --> 00:33:17,720 Speaker 1: safety net? I mean, why is New Hampshire a place 619 00:33:17,800 --> 00:33:20,160 Speaker 1: where we're having all I mean low unemployment rates, I 620 00:33:20,200 --> 00:33:23,920 Speaker 1: mean this hugely low unploy beautiful stage so obviously and 621 00:33:23,960 --> 00:33:27,360 Speaker 1: really nice people there. They're almost Canadian, almost Canadians me. 622 00:33:29,040 --> 00:33:32,400 Speaker 1: So I didn't realize New Hampshire like West Virginia. You 623 00:33:32,440 --> 00:33:36,120 Speaker 1: can understand get West Virginia, but New Hampshire. So I 624 00:33:36,160 --> 00:33:38,480 Speaker 1: think the provision of healthcare is a really big deal. 625 00:33:39,000 --> 00:33:40,840 Speaker 1: The other big deal actually if you go back to 626 00:33:41,760 --> 00:33:44,520 Speaker 1: opioid overdoses. I have friend of mine who's a psychiatrist 627 00:33:44,560 --> 00:33:46,960 Speaker 1: in the UK, and he says, what happens in America 628 00:33:47,080 --> 00:33:50,200 Speaker 1: is that dr patients can doctor shop. They can go 629 00:33:50,240 --> 00:33:52,240 Speaker 1: to Barry and say give me opios and you say no, 630 00:33:52,280 --> 00:33:55,800 Speaker 1: and they'll find keeping the more for myself. They'll find 631 00:33:55,840 --> 00:33:58,320 Speaker 1: some other doctor. This is not a phenomenon that's true 632 00:33:58,360 --> 00:34:01,080 Speaker 1: in any other country. Really not true. And my friend says, 633 00:34:01,120 --> 00:34:03,040 Speaker 1: what happens is they come to him as a sarchatrist 634 00:34:03,080 --> 00:34:05,600 Speaker 1: and he writes down in their national health record, you know, 635 00:34:05,840 --> 00:34:09,160 Speaker 1: Barry's records requested, requested. And I said, this by this 636 00:34:09,200 --> 00:34:10,880 Speaker 1: guy is not in no way I'm going to give 637 00:34:10,920 --> 00:34:12,840 Speaker 1: it to. So the next doctor goes he sees that 638 00:34:12,920 --> 00:34:16,680 Speaker 1: he sees. Dr White says, no, I'm not giving it. 639 00:34:16,880 --> 00:34:19,560 Speaker 1: So there's actually a national recor national record. We don't 640 00:34:19,560 --> 00:34:22,440 Speaker 1: have that here. So what's interesting is that presumably the 641 00:34:22,480 --> 00:34:24,640 Speaker 1: doctors around the world, I mean, I think of this, 642 00:34:24,840 --> 00:34:27,840 Speaker 1: The doctors in Germany and France and Australia and Canada 643 00:34:28,080 --> 00:34:30,640 Speaker 1: read the same academic journals. Should the doctors here do 644 00:34:30,840 --> 00:34:34,040 Speaker 1: And they don't prescribe opioids, They don't have an opioid crisis, 645 00:34:34,080 --> 00:34:39,400 Speaker 1: they don't have an entire middlewear group of salesman on 646 00:34:39,440 --> 00:34:42,359 Speaker 1: a regular basis, and they have a national health service which, 647 00:34:42,440 --> 00:34:46,160 Speaker 1: just by the records we've talked about, prevents people going 648 00:34:46,200 --> 00:34:49,360 Speaker 1: around doctor shopping. Can't happen, can't do it, doesn't happen. 649 00:34:49,400 --> 00:34:52,239 Speaker 1: So this is an American phenomenon which we have not 650 00:34:52,400 --> 00:34:54,239 Speaker 1: dealt with, and people have talked about it, and the 651 00:34:54,239 --> 00:34:56,520 Speaker 1: presidents talked about, oh we have we have to worry 652 00:34:56,520 --> 00:34:59,919 Speaker 1: about the other plan I was told he had. Christie said, 653 00:35:00,000 --> 00:35:02,200 Speaker 1: of all sorts of really sensible things. I read the plan. 654 00:35:02,400 --> 00:35:06,239 Speaker 1: Christie came out with a sense of various work for everything. No, 655 00:35:06,360 --> 00:35:09,040 Speaker 1: it's a great plan about what to do about done nothing. 656 00:35:09,280 --> 00:35:11,920 Speaker 1: So this is a terrible American phenomenon that we need 657 00:35:11,960 --> 00:35:14,520 Speaker 1: to fix, and it's within our powers and ability to 658 00:35:14,640 --> 00:35:17,760 Speaker 1: fix to help these people who are dying from despair. 659 00:35:18,440 --> 00:35:22,480 Speaker 1: That that that's just shocking. So the other thing in 660 00:35:22,480 --> 00:35:25,960 Speaker 1: the book that really, um was a little bit surprising, 661 00:35:26,880 --> 00:35:30,360 Speaker 1: the bright side to an otherwise dark story. The happiness 662 00:35:30,440 --> 00:35:34,840 Speaker 1: of Black Americans has risen strongly since the nineties seventies. 663 00:35:34,880 --> 00:35:38,319 Speaker 1: It is today almost equal to that white Americans. So 664 00:35:38,440 --> 00:35:44,000 Speaker 1: here's the question, is black happiness rising is white unhappiness falling? 665 00:35:44,200 --> 00:35:46,919 Speaker 1: But a little bit of both, Yeah, a bit of both. Um. 666 00:35:46,960 --> 00:35:48,880 Speaker 1: I mean, one of the things which is interesting, as 667 00:35:48,880 --> 00:35:51,240 Speaker 1: I say, the phenomena and I have just been talking about, 668 00:35:51,800 --> 00:35:54,680 Speaker 1: was not actually a phenomenon for any any racial group 669 00:35:54,719 --> 00:35:57,319 Speaker 1: other than whites. So the deaths of despair have not 670 00:35:57,360 --> 00:36:00,680 Speaker 1: really been happening for Asians, Hispanics, or after An Americans. 671 00:36:00,719 --> 00:36:03,640 Speaker 1: So that's an obvious thing in a way that in 672 00:36:03,680 --> 00:36:06,160 Speaker 1: a way you get happiness to rise because they haven't 673 00:36:06,200 --> 00:36:09,319 Speaker 1: had the big burst of unhappiness. By construction means that 674 00:36:09,320 --> 00:36:12,160 Speaker 1: that that that that that's happened. So yes, we've seen 675 00:36:12,320 --> 00:36:16,359 Speaker 1: some some evidence of that in some ways. The labor 676 00:36:16,400 --> 00:36:19,080 Speaker 1: economist in me learns this, and I remember my old 677 00:36:19,080 --> 00:36:21,919 Speaker 1: teacher told me it's many moons ago. The people who 678 00:36:21,960 --> 00:36:24,520 Speaker 1: do worst in the slump are the people who do 679 00:36:24,640 --> 00:36:27,960 Speaker 1: best in the boom. Is that true? That's true, because 680 00:36:28,040 --> 00:36:30,520 Speaker 1: I don't think we've seen that here in the cycle. 681 00:36:30,680 --> 00:36:32,879 Speaker 1: Well in general, that's true. But I mean that sort 682 00:36:32,920 --> 00:36:36,120 Speaker 1: of explains the question you just asked me about blacks. Um. 683 00:36:36,160 --> 00:36:38,480 Speaker 1: I mean, I always thought the good example always was 684 00:36:39,160 --> 00:36:42,640 Speaker 1: the young African Americans. The young The unemployment of young 685 00:36:42,640 --> 00:36:44,840 Speaker 1: African American used to be horrific, used to be horrific. 686 00:36:46,840 --> 00:36:49,279 Speaker 1: That's fallen more than any other. I mean, it's not 687 00:36:49,400 --> 00:36:52,879 Speaker 1: great now, it's for what it was and where it's 688 00:36:52,880 --> 00:36:54,879 Speaker 1: a third of what it was actually yea, So those 689 00:36:54,960 --> 00:36:57,399 Speaker 1: numbers tend to fo So we've seen we've seen some 690 00:36:57,520 --> 00:37:00,839 Speaker 1: improvement of the of the least of the ones who 691 00:37:00,920 --> 00:37:02,960 Speaker 1: do worst. I mean, in essence, what you're likely to 692 00:37:02,960 --> 00:37:05,960 Speaker 1: see in the downturn is though, that that turn comes 693 00:37:06,040 --> 00:37:08,879 Speaker 1: quickest for those groups. I suspect as we get into 694 00:37:08,880 --> 00:37:11,399 Speaker 1: this downturn, the story we've just been talking about will 695 00:37:11,480 --> 00:37:14,920 Speaker 1: change quickly, right, Um, So so that so that the 696 00:37:14,960 --> 00:37:19,319 Speaker 1: unemployed rate of UM college educated, middle aged white men 697 00:37:19,760 --> 00:37:21,319 Speaker 1: is not going to rise that much. If we go 698 00:37:21,360 --> 00:37:24,440 Speaker 1: into a slump, other groups will. So it's a sicklicality. 699 00:37:24,520 --> 00:37:26,520 Speaker 1: That's a big deal. But we have we have seen 700 00:37:26,640 --> 00:37:29,879 Speaker 1: some improvements over time. So when your research for the book, 701 00:37:29,920 --> 00:37:34,640 Speaker 1: what else popped out is really counterintuitive? Well, lots of things. 702 00:37:34,680 --> 00:37:36,600 Speaker 1: I've just got a more recent one which I've actually 703 00:37:36,600 --> 00:37:39,160 Speaker 1: been working on. So the one thing in the happiness 704 00:37:39,200 --> 00:37:42,200 Speaker 1: results that I was always puzzled by was that it 705 00:37:42,239 --> 00:37:46,239 Speaker 1: appears in the data that children make you unhappy. I've 706 00:37:46,320 --> 00:37:49,400 Speaker 1: I've heard that I have a nation and a new paper. 707 00:37:49,440 --> 00:37:51,440 Speaker 1: I worked really hard on this, and the story always 708 00:37:51,440 --> 00:37:53,920 Speaker 1: with me was, well, if children made you unhappy when 709 00:37:53,920 --> 00:37:55,879 Speaker 1: I had three kids, wouldn't you think after the first 710 00:37:55,880 --> 00:37:57,879 Speaker 1: one you go, I've had enough of this. Well by 711 00:37:57,880 --> 00:37:59,800 Speaker 1: the time you figure out what a pen the but 712 00:38:00,040 --> 00:38:03,560 Speaker 1: there are your three Well maybe it's not till they're teenagers, 713 00:38:03,600 --> 00:38:06,240 Speaker 1: but but that's so we've been working when it turns 714 00:38:06,280 --> 00:38:09,319 Speaker 1: out that we have a data on a million Europeans 715 00:38:09,600 --> 00:38:12,359 Speaker 1: and it turns out that once you control for the 716 00:38:12,400 --> 00:38:16,279 Speaker 1: fact that having kids is really expensive, and so we 717 00:38:16,360 --> 00:38:18,319 Speaker 1: have this data on how how much problems do you 718 00:38:18,360 --> 00:38:20,719 Speaker 1: have paying your bills. Well, it turns out what's your 719 00:38:20,719 --> 00:38:23,160 Speaker 1: control for that children make you happy? It's actually about 720 00:38:23,400 --> 00:38:25,360 Speaker 1: I mean my and I use stories of my kids. 721 00:38:25,920 --> 00:38:28,880 Speaker 1: I have two daughters with babies, and one of them says, 722 00:38:28,920 --> 00:38:32,799 Speaker 1: we buy hundred bucks a week in diapers and a 723 00:38:32,840 --> 00:38:35,319 Speaker 1: bottle a gallon of milk every day, and the cost 724 00:38:35,360 --> 00:38:38,319 Speaker 1: of childcare is so high, and it's it's just the 725 00:38:38,400 --> 00:38:40,560 Speaker 1: cost and a book I talk about when we need 726 00:38:40,560 --> 00:38:43,640 Speaker 1: to somehow rather help these fogs, help the kids, help 727 00:38:43,680 --> 00:38:48,200 Speaker 1: parents deal with the look at the high cost of children. Um. 728 00:38:48,280 --> 00:38:50,520 Speaker 1: But that's so once you do that, it turns out 729 00:38:50,560 --> 00:38:53,320 Speaker 1: the sign flips. It's a very nice result because I 730 00:38:53,560 --> 00:38:55,279 Speaker 1: think it never made any sense, right. It didn't make 731 00:38:55,280 --> 00:38:57,480 Speaker 1: sense to say that, you know, kids didn't make you happy. 732 00:38:57,560 --> 00:39:01,640 Speaker 1: You need to meet more you mean more people's other 733 00:39:01,719 --> 00:39:05,920 Speaker 1: people that make me happy. So that's pretty counterintuitive, but 734 00:39:06,080 --> 00:39:08,239 Speaker 1: it makes sense once you explain it. Give me one 735 00:39:08,280 --> 00:39:11,960 Speaker 1: more that really jumped out. Oh gosh, well I've got 736 00:39:12,000 --> 00:39:14,680 Speaker 1: another one. Here's another puzzling one. In the happiness literature, 737 00:39:15,200 --> 00:39:19,000 Speaker 1: women are always happier than men, really, but when you 738 00:39:19,040 --> 00:39:22,879 Speaker 1: go to unhappiness equations, women are also more unhappy than 739 00:39:23,400 --> 00:39:25,960 Speaker 1: Is that just a confirmation bias. If you're looking for it, 740 00:39:26,040 --> 00:39:28,040 Speaker 1: you know, I don't think so. I don't think so. 741 00:39:28,120 --> 00:39:30,360 Speaker 1: I mean, there are the great thing about being a 742 00:39:30,480 --> 00:39:32,680 Speaker 1: data person. Well you do this toime all the time. 743 00:39:32,719 --> 00:39:34,279 Speaker 1: You look at the data and there are puzzles that 744 00:39:34,400 --> 00:39:37,439 Speaker 1: jump out. I mean, I think that the obviously big 745 00:39:37,560 --> 00:39:42,080 Speaker 1: puzzle in economics is actually why, at the at the 746 00:39:42,200 --> 00:39:46,040 Speaker 1: given levels of unemployment that we have, why is wage 747 00:39:46,080 --> 00:39:49,160 Speaker 1: growth so weak? I mean, that's the big puzzle for 748 00:39:49,200 --> 00:39:52,280 Speaker 1: a labor economists today. That's the great puzzle. At unemployment 749 00:39:52,320 --> 00:39:54,840 Speaker 1: rates of four percent and lower in the past, around 750 00:39:54,880 --> 00:39:58,200 Speaker 1: the world, wage growth will be near to five than 751 00:39:58,280 --> 00:40:01,320 Speaker 1: anything else. And in this psych all that's something we 752 00:40:01,400 --> 00:40:04,520 Speaker 1: haven't seen and policymakers have not been able to grapple 753 00:40:04,600 --> 00:40:07,799 Speaker 1: with it. And the book explains it basically, So are 754 00:40:07,880 --> 00:40:11,759 Speaker 1: you and Reinhardt and Rogoff's camp that says, following a 755 00:40:11,880 --> 00:40:17,520 Speaker 1: financial crisis, we tend to get subpar GDP, subpar wage growth, 756 00:40:18,080 --> 00:40:25,120 Speaker 1: slow gradual recovery, but not like the two traditional regular 757 00:40:25,200 --> 00:40:28,640 Speaker 1: cyclical recession slash recovery. That it's a much more drawn 758 00:40:28,680 --> 00:40:32,600 Speaker 1: out and much more modest recovery. Look at Japan, look 759 00:40:32,640 --> 00:40:34,439 Speaker 1: at Sweden, look at Mexico. Couldn't have said it better. 760 00:40:34,480 --> 00:40:36,759 Speaker 1: I completely agree. But I think in a sense that's 761 00:40:36,800 --> 00:40:40,320 Speaker 1: a really big problem because I don't think policymakers got that. 762 00:40:40,640 --> 00:40:43,120 Speaker 1: I mean clearly they just didn't see it, and they 763 00:40:43,200 --> 00:40:45,080 Speaker 1: sort of and all the forecast they made and we 764 00:40:45,120 --> 00:40:46,640 Speaker 1: think about the fensays we're gonna be able to raise 765 00:40:46,719 --> 00:40:48,520 Speaker 1: rates because everything's gonna be back to normal and fine, 766 00:40:48,719 --> 00:40:51,200 Speaker 1: the bankoping that says, you know, within eighteen months will 767 00:40:51,239 --> 00:40:53,879 Speaker 1: be back and everything. So they absolutely what you said 768 00:40:54,000 --> 00:40:56,920 Speaker 1: is true. It's the biggest era that policymakers have made. 769 00:40:56,960 --> 00:40:59,520 Speaker 1: They didn't get it, and that's exactly where we are 770 00:40:59,600 --> 00:41:02,440 Speaker 1: now that there's a structural break and what it means 771 00:41:03,160 --> 00:41:06,600 Speaker 1: is actually four percent unemployment. When the book spends a 772 00:41:06,640 --> 00:41:09,520 Speaker 1: lot of time thinking about four percent unemployment is nowhere 773 00:41:09,640 --> 00:41:12,200 Speaker 1: near full employment. Mark Carney asked me the other day, 774 00:41:12,360 --> 00:41:14,600 Speaker 1: he said, I was at a meeting. He said, Danny, 775 00:41:14,640 --> 00:41:17,239 Speaker 1: how low do you think the narrow is in the UK? 776 00:41:17,440 --> 00:41:19,719 Speaker 1: That means the full employment rate of it? And I 777 00:41:19,800 --> 00:41:21,600 Speaker 1: said around two and a half. I was gonna say 778 00:41:21,640 --> 00:41:24,759 Speaker 1: two percent, two two two and a half some number 779 00:41:24,840 --> 00:41:28,680 Speaker 1: like that, and I think the reality said, yeah, gas, 780 00:41:29,280 --> 00:41:31,359 Speaker 1: and I've said, and now what you think is okay. 781 00:41:31,400 --> 00:41:33,480 Speaker 1: So now we see unemployment rates of three point six 782 00:41:33,920 --> 00:41:36,000 Speaker 1: the big deal Actually in the last six months or so, 783 00:41:36,520 --> 00:41:39,640 Speaker 1: unemployments continue to fall and the wage growth, which looked 784 00:41:39,680 --> 00:41:41,920 Speaker 1: like it was picking up, has reversed itself. It's actually 785 00:41:41,960 --> 00:41:44,520 Speaker 1: slowed back down again. And when you're around the world, 786 00:41:44,960 --> 00:41:48,240 Speaker 1: I can explain that with because I saw this coming, 787 00:41:48,719 --> 00:41:52,319 Speaker 1: because a big chunk of that wage growth came from 788 00:41:52,440 --> 00:41:56,320 Speaker 1: new minimum wage laws as the state and municipality labs 789 00:41:56,480 --> 00:41:58,640 Speaker 1: and and in the UK actually this month we've seen 790 00:41:58,640 --> 00:42:00,279 Speaker 1: in a little bit of a pickup and the reason 791 00:42:00,400 --> 00:42:02,920 Speaker 1: was exactly that you saw a big rise in the 792 00:42:03,040 --> 00:42:05,480 Speaker 1: public sector pay, which hadn't happened for a long time. 793 00:42:05,480 --> 00:42:06,960 Speaker 1: And one of the big deals around the world, I 794 00:42:07,000 --> 00:42:08,960 Speaker 1: mean the UK is that a good example. In two 795 00:42:09,040 --> 00:42:12,520 Speaker 1: thousand ten the government imposed a one pay freeze in 796 00:42:12,600 --> 00:42:16,319 Speaker 1: the public sector, which free which feeds through the rest 797 00:42:16,360 --> 00:42:19,200 Speaker 1: of the economy. So you push down on wages. What 798 00:42:19,600 --> 00:42:21,759 Speaker 1: problem last month they spend less. But what it means 799 00:42:22,040 --> 00:42:25,480 Speaker 1: is the full employment rate of unemployment has got lower lower, 800 00:42:25,600 --> 00:42:27,719 Speaker 1: and the and the FED made the FED has been 801 00:42:27,760 --> 00:42:30,640 Speaker 1: saying all along, oh the narrows four and a half 802 00:42:30,680 --> 00:42:32,960 Speaker 1: five and because unemployments at three and we have to 803 00:42:33,080 --> 00:42:36,000 Speaker 1: raise rates. Turns out they got it wrong. Raising rates 804 00:42:36,120 --> 00:42:37,759 Speaker 1: was an error. As I said, you probably not. I 805 00:42:37,840 --> 00:42:40,480 Speaker 1: said every month of the last twenty five that that 806 00:42:40,640 --> 00:42:42,640 Speaker 1: was a complete error, and it looks to be right. 807 00:42:43,000 --> 00:42:45,800 Speaker 1: So let me let me push back on on the 808 00:42:46,000 --> 00:42:49,960 Speaker 1: FED in the United States, where are we like around 809 00:42:50,040 --> 00:42:55,080 Speaker 1: two percent? There were that range to So so here's 810 00:42:55,080 --> 00:43:00,080 Speaker 1: the question that I think people like President Trump and 811 00:43:00,200 --> 00:43:04,880 Speaker 1: people who are very dovish on rates, Um, here's the 812 00:43:04,920 --> 00:43:09,680 Speaker 1: pushback to them. We took rates to an extraordinarily low 813 00:43:09,880 --> 00:43:12,000 Speaker 1: level that we were at zero for how many years 814 00:43:12,360 --> 00:43:16,640 Speaker 1: plus quee, and that now that we're a decade past 815 00:43:16,719 --> 00:43:21,280 Speaker 1: the financial crisis, these ultra low rates have rewarded capital, 816 00:43:21,680 --> 00:43:24,560 Speaker 1: but they haven't rewarded labor. And what we need to 817 00:43:24,600 --> 00:43:27,319 Speaker 1: do is normalized rates so that they're at a more 818 00:43:27,400 --> 00:43:32,400 Speaker 1: reasonable level that will force people back into a traditional 819 00:43:32,600 --> 00:43:36,800 Speaker 1: economic environment. I'm not saying I buy into that. So 820 00:43:37,040 --> 00:43:39,719 Speaker 1: that's the pushback, No, that's the pushback. Well, the first 821 00:43:39,760 --> 00:43:42,640 Speaker 1: thing I think policymakers like me, central bankers like me 822 00:43:42,719 --> 00:43:44,840 Speaker 1: who sat in two thousand and eight and saw what 823 00:43:45,000 --> 00:43:47,560 Speaker 1: was going on. I mean, remember, we watched RBS fail, 824 00:43:48,120 --> 00:43:50,520 Speaker 1: the largest bank in the world by assets. We watched 825 00:43:50,600 --> 00:43:54,360 Speaker 1: Lloyd's Bank fail. So the scale of this shock was 826 00:43:54,719 --> 00:43:57,920 Speaker 1: has been underestibate, underestimated by many, I think, And that 827 00:43:58,239 --> 00:44:00,840 Speaker 1: goes back to your well said statement about why the 828 00:44:00,920 --> 00:44:03,759 Speaker 1: recovery has taken so long. Was the scale of that 829 00:44:03,920 --> 00:44:07,360 Speaker 1: shock was so huge. And I think the argument to 830 00:44:07,480 --> 00:44:10,040 Speaker 1: say we need to normalize, well, maybe that's true. That 831 00:44:10,120 --> 00:44:13,480 Speaker 1: doesn't tell you when to normalize. You probably need to 832 00:44:13,560 --> 00:44:16,560 Speaker 1: wait and look and see. Um the problem about a 833 00:44:16,640 --> 00:44:19,840 Speaker 1: normalization if this shock is greater than you think and 834 00:44:19,880 --> 00:44:22,480 Speaker 1: you're further from the neru than you think, you say, 835 00:44:22,560 --> 00:44:24,959 Speaker 1: we need to raise rates for when the recession comes. 836 00:44:25,080 --> 00:44:27,680 Speaker 1: But by raising rates you cause the recession. I mean 837 00:44:27,719 --> 00:44:30,399 Speaker 1: an obvious and obvious twist in the place like the UK. 838 00:44:31,000 --> 00:44:33,800 Speaker 1: I mean, I was on a airplane and what happens 839 00:44:33,800 --> 00:44:35,600 Speaker 1: it I'll tell the story. So what happens in the 840 00:44:35,719 --> 00:44:38,120 Speaker 1: UK is people on variable rate mortgages at the start 841 00:44:38,200 --> 00:44:40,000 Speaker 1: of the crisis there, which, by the way, the US 842 00:44:40,080 --> 00:44:42,840 Speaker 1: fixed rate is is kind of unique. So let's go 843 00:44:42,920 --> 00:44:45,399 Speaker 1: with this story. Five and a half percent most people 844 00:44:45,440 --> 00:44:48,120 Speaker 1: are paying pay a hundred and fifty over over bank rates, 845 00:44:48,160 --> 00:44:50,120 Speaker 1: so five and a half percent interest rates. That gives 846 00:44:50,160 --> 00:44:52,480 Speaker 1: you seven. I'm on an air so rates get cut 847 00:44:52,560 --> 00:44:54,880 Speaker 1: to one. I'm on an airplane. The captain of the 848 00:44:55,320 --> 00:44:57,120 Speaker 1: British Airways plane is standing in front of me with 849 00:44:57,120 --> 00:44:59,560 Speaker 1: the bottle of champagne. I said you aren't you supposed 850 00:44:59,600 --> 00:45:01,520 Speaker 1: to be fly in the plane and he says no. 851 00:45:01,640 --> 00:45:03,160 Speaker 1: But the guys in the front sent me back to 852 00:45:03,239 --> 00:45:05,520 Speaker 1: say thank you very much for getting their mortgages down 853 00:45:05,880 --> 00:45:08,800 Speaker 1: to me. The captain hands the captain hands me the 854 00:45:08,840 --> 00:45:11,600 Speaker 1: spratler's champagne and they all the people applaud me and stuff. 855 00:45:11,640 --> 00:45:14,400 Speaker 1: But that's because you lowered them. So now in the 856 00:45:14,520 --> 00:45:18,120 Speaker 1: UK think of this. So so the mortgage price in 857 00:45:18,160 --> 00:45:20,799 Speaker 1: the UK bank rates point seven five. So let's make 858 00:45:20,840 --> 00:45:22,719 Speaker 1: it easier. People are paying two and a quarter. The 859 00:45:22,840 --> 00:45:25,680 Speaker 1: second you start to raise rates, those mortgages are going 860 00:45:25,719 --> 00:45:27,800 Speaker 1: to go up. And the people who are hurting, remember 861 00:45:28,000 --> 00:45:30,960 Speaker 1: the people who who have who are a six percent 862 00:45:31,440 --> 00:45:33,480 Speaker 1: real terms less than they have had a pick up 863 00:45:33,520 --> 00:45:35,239 Speaker 1: because of the mortgage. As soon as you do that, 864 00:45:35,640 --> 00:45:39,240 Speaker 1: take it away. So the answer is that UM clearly 865 00:45:39,320 --> 00:45:42,040 Speaker 1: looks like it was a mistake. To raise rates. I mean, 866 00:45:42,080 --> 00:45:44,759 Speaker 1: who knows by how much? And the market has now 867 00:45:45,080 --> 00:45:47,239 Speaker 1: essentially priced in what I say in the book, this 868 00:45:47,400 --> 00:45:49,480 Speaker 1: was a huge era. The markets are pricing in I 869 00:45:49,520 --> 00:45:51,360 Speaker 1: think I haven't looked in the last twenty minutes, but 870 00:45:51,680 --> 00:45:53,799 Speaker 1: last time I looked, they're pricing in three cuts by 871 00:45:54,200 --> 00:45:58,800 Speaker 1: by Christmas. We's amazing cuts in the market. Is it 872 00:45:58,920 --> 00:46:01,880 Speaker 1: safe to say the Bank of England has a greater 873 00:46:02,520 --> 00:46:05,040 Speaker 1: So let me back up a sec The argument in 874 00:46:05,080 --> 00:46:08,120 Speaker 1: the US is the FED only affects the FED funds rate, 875 00:46:08,440 --> 00:46:11,759 Speaker 1: and the bond market determines the long bond rate and 876 00:46:12,000 --> 00:46:16,640 Speaker 1: through that mortgages. However, the UK, what you're saying is 877 00:46:17,400 --> 00:46:20,080 Speaker 1: the FED the Bank of England has a much greater 878 00:46:20,160 --> 00:46:24,000 Speaker 1: impact on people's pocketbooks than in the US. A little 879 00:46:24,280 --> 00:46:26,520 Speaker 1: has to work its way through. I gotta tell you 880 00:46:26,880 --> 00:46:28,640 Speaker 1: a story. I was in the UK las k last 881 00:46:28,680 --> 00:46:31,520 Speaker 1: week and going and doing the rounds in the financial papers. 882 00:46:31,600 --> 00:46:33,520 Speaker 1: Was a guy in Denmark. So I think we're talking 883 00:46:33,560 --> 00:46:35,920 Speaker 1: this morning about drog You talking about rate because they 884 00:46:36,000 --> 00:46:39,880 Speaker 1: showed someone's new way a new mortgage contract in Denmark 885 00:46:40,040 --> 00:46:46,560 Speaker 1: with a negative interest rate. That's amazing, right, So I mean, right, yeah, 886 00:46:46,560 --> 00:46:48,480 Speaker 1: I'll let you in a little secret. I'm in my house. 887 00:46:48,560 --> 00:46:54,680 Speaker 1: September is five years. My expectation for interest rates were 888 00:46:54,760 --> 00:46:57,920 Speaker 1: such that I did the two seventy two point seven 889 00:46:58,000 --> 00:47:01,520 Speaker 1: five mortgage that was very well, thinking I get seven 890 00:47:01,600 --> 00:47:03,880 Speaker 1: years before this goes up, and seven years from now, 891 00:47:04,320 --> 00:47:05,919 Speaker 1: I don't think rates are going to be much higher. 892 00:47:05,960 --> 00:47:10,160 Speaker 1: And so far, so far I've been right. Well, we'll see, well, 893 00:47:10,239 --> 00:47:12,839 Speaker 1: we'll see how accurate that ends up being. My wife 894 00:47:12,960 --> 00:47:16,200 Speaker 1: was not happy, but it's worked out, okay. I mean, 895 00:47:16,480 --> 00:47:19,560 Speaker 1: I just having my head and people listening to this podcast. 896 00:47:20,800 --> 00:47:24,640 Speaker 1: In two thousand and eight August in the UK interest 897 00:47:24,719 --> 00:47:26,200 Speaker 1: rates for five and a half and the markets have 898 00:47:26,320 --> 00:47:28,200 Speaker 1: priced in five and a half percent for the next 899 00:47:28,239 --> 00:47:31,560 Speaker 1: three years. Right, totally wrong, totally and completely right. Markets 900 00:47:31,600 --> 00:47:33,800 Speaker 1: get it wrong, all getting wrong. But I think in 901 00:47:33,880 --> 00:47:36,799 Speaker 1: the UK, particularly on the mortgage front, there's been an 902 00:47:36,840 --> 00:47:41,439 Speaker 1: impact and the balance between savers and borrowers has really 903 00:47:41,520 --> 00:47:44,360 Speaker 1: been impact. But what it means is the ability of 904 00:47:44,480 --> 00:47:46,560 Speaker 1: the bank having that to do what you've talked about, 905 00:47:46,600 --> 00:47:48,440 Speaker 1: we need to raise rates so we can normalize things. 906 00:47:48,680 --> 00:47:50,920 Speaker 1: You wipe out the housing market if you do that. 907 00:47:51,120 --> 00:47:53,000 Speaker 1: So the ability of the bank of being almost ever 908 00:47:53,120 --> 00:47:56,640 Speaker 1: now to raise rights, say above one is basically off 909 00:47:56,680 --> 00:47:58,920 Speaker 1: the table. I don't know if you know Torsten Slack, 910 00:48:00,360 --> 00:48:02,840 Speaker 1: he has this fabulous the chart where he's where he 911 00:48:02,880 --> 00:48:04,840 Speaker 1: talks about the markets got it wrong. I saw that 912 00:48:04,960 --> 00:48:07,640 Speaker 1: last week. Always the market always gets fed up and 913 00:48:07,680 --> 00:48:10,400 Speaker 1: fed actions wrong. You would think the market would have 914 00:48:10,640 --> 00:48:13,680 Speaker 1: some insight. So much for the wisdom of crowd. Well, 915 00:48:13,760 --> 00:48:16,319 Speaker 1: it's not just that. I mean remember that in a sense, 916 00:48:16,400 --> 00:48:18,279 Speaker 1: what they plotted was what the FED said it was 917 00:48:18,320 --> 00:48:20,680 Speaker 1: going to do. I mean that the market does the 918 00:48:20,760 --> 00:48:23,640 Speaker 1: FED know what it's going to do? Honestly, Well, the 919 00:48:23,760 --> 00:48:25,920 Speaker 1: dot plots are really interesting right now, and I've been 920 00:48:25,960 --> 00:48:28,120 Speaker 1: giving presentation recently. If you look at the dot plots 921 00:48:28,120 --> 00:48:31,200 Speaker 1: from March um, it looks like half the people think 922 00:48:31,239 --> 00:48:33,759 Speaker 1: that we a rate rise in two thousand nineteen, and 923 00:48:33,840 --> 00:48:36,200 Speaker 1: the majority think there will be at least two in 924 00:48:36,280 --> 00:48:39,239 Speaker 1: two thousand and twenty, and the concreases increases, and that 925 00:48:39,320 --> 00:48:41,279 Speaker 1: if you look as to say, I'm about three hours 926 00:48:41,320 --> 00:48:44,680 Speaker 1: out of data here, But over the last week, by 927 00:48:44,800 --> 00:48:46,839 Speaker 1: April of next year, the market has been moving back 928 00:48:46,880 --> 00:48:50,320 Speaker 1: and forth between four or five cuts by April, and 929 00:48:50,440 --> 00:48:53,600 Speaker 1: the FED says, so this is a really big disconnect folks. 930 00:48:53,840 --> 00:48:55,920 Speaker 1: So the question and toss this chart is a good one. 931 00:48:56,120 --> 00:48:58,120 Speaker 1: The question is whether the markets have got it right 932 00:48:58,239 --> 00:49:01,239 Speaker 1: this time. My suspicion is they do. So let's talk 933 00:49:01,239 --> 00:49:06,000 Speaker 1: a little about Jerome Powell and his relationship with President Trump. 934 00:49:06,560 --> 00:49:13,120 Speaker 1: This is not the typical president and presidential appointee. You 935 00:49:13,160 --> 00:49:16,400 Speaker 1: would think this is an Obama deep state holdover. This 936 00:49:16,600 --> 00:49:19,719 Speaker 1: is his guy. So is Richard and Think and so 937 00:49:19,880 --> 00:49:21,960 Speaker 1: are a number of others. I mean to put it, 938 00:49:22,640 --> 00:49:25,320 Speaker 1: the chairman and the vice chairman have been appointed to 939 00:49:25,600 --> 00:49:27,840 Speaker 1: to be frank and the book. Does the book actually 940 00:49:27,920 --> 00:49:30,680 Speaker 1: site actually of the view that Trump is right? I mean, 941 00:49:30,719 --> 00:49:32,960 Speaker 1: I think Trump is right in this case that interest 942 00:49:33,040 --> 00:49:35,520 Speaker 1: rates are too high and they've made a mistake. So 943 00:49:35,640 --> 00:49:37,640 Speaker 1: let's put that on the table for different reasons, but 944 00:49:38,040 --> 00:49:41,320 Speaker 1: for reasons I lay out obviously the issue about the 945 00:49:41,400 --> 00:49:44,960 Speaker 1: independence of the of the central as a big but 946 00:49:45,040 --> 00:49:47,719 Speaker 1: I think the discussion is not quite right. I think 947 00:49:47,760 --> 00:49:50,880 Speaker 1: the question is the assumption is you allow the central 948 00:49:50,920 --> 00:49:54,560 Speaker 1: bank to be independent because disproportionately it gets things right, 949 00:49:54,880 --> 00:49:57,480 Speaker 1: more right than any any other way. The problem is 950 00:49:57,520 --> 00:49:59,600 Speaker 1: if the central banks gets it wrong, and it does 951 00:50:00,000 --> 00:50:01,880 Speaker 1: as occasion, and it's certainly got it wrong in two 952 00:50:01,920 --> 00:50:05,360 Speaker 1: thousand and eight. By September eight, they still really didn't 953 00:50:05,400 --> 00:50:07,640 Speaker 1: know that US have been in recession since the event, 954 00:50:07,719 --> 00:50:11,200 Speaker 1: since December oh seven, So obviously over the last decade, 955 00:50:11,560 --> 00:50:13,120 Speaker 1: the fact that the Fed has got it wrong so 956 00:50:13,280 --> 00:50:16,360 Speaker 1: many times does kind of bring the argument that changes 957 00:50:16,400 --> 00:50:18,640 Speaker 1: the argument a bit to say they should be independent. 958 00:50:18,920 --> 00:50:21,200 Speaker 1: So the pressure on them, obviously is really how they're 959 00:50:21,200 --> 00:50:23,160 Speaker 1: supposed to be in But in this case it's hard 960 00:50:23,200 --> 00:50:27,120 Speaker 1: to argue Trump isn't right but for the wrong reasons. Whatever, 961 00:50:27,200 --> 00:50:30,959 Speaker 1: he's right right, for the wrong reason. He's concerned about 962 00:50:30,960 --> 00:50:37,399 Speaker 1: re election. Right, forget that reason. Economically, Economically, it's clear 963 00:50:37,600 --> 00:50:40,600 Speaker 1: everything is slowing down and there's a recession eventually out there. 964 00:50:40,640 --> 00:50:42,600 Speaker 1: And I take the views of me as a person 965 00:50:42,800 --> 00:50:45,080 Speaker 1: voted on interest rates, well, for goodness sake, folks, what 966 00:50:45,160 --> 00:50:47,200 Speaker 1: we did last time, we didn't get there soon enough, 967 00:50:47,200 --> 00:50:49,800 Speaker 1: we got there late. I think there's very little downside 968 00:50:49,880 --> 00:50:52,960 Speaker 1: risk to an early rate cut. That might calm markets, 969 00:50:53,239 --> 00:50:56,480 Speaker 1: it might cause some inflation, great, we'll have a bit. 970 00:50:58,239 --> 00:51:00,440 Speaker 1: So let's let's talk about two things. They're both a 971 00:51:00,520 --> 00:51:04,760 Speaker 1: little wonky. The first is northern rock, which you mentioned 972 00:51:05,239 --> 00:51:08,200 Speaker 1: so in the US following the Great Depression, we set 973 00:51:08,320 --> 00:51:11,920 Speaker 1: up Federal Deposit, an insurance company where all the banks 974 00:51:12,320 --> 00:51:16,080 Speaker 1: pay a tiny, tiny fraction of their deposits and in 975 00:51:16,160 --> 00:51:19,879 Speaker 1: the event of a collapse there account holders are made 976 00:51:19,920 --> 00:51:23,240 Speaker 1: whole and theoretically bank runs are a thing of the past. 977 00:51:23,880 --> 00:51:28,360 Speaker 1: The UK doesn't have that identical setup, doesn't something a 978 00:51:28,400 --> 00:51:31,239 Speaker 1: little different. I actually learned something about Northern Rock last week, 979 00:51:31,760 --> 00:51:34,680 Speaker 1: which was actually, well, why is Northern Rock in the North. 980 00:51:35,280 --> 00:51:37,200 Speaker 1: It turns out it's just in the north. The reason 981 00:51:37,280 --> 00:51:39,600 Speaker 1: it was there, apparently, people tell me, was that the 982 00:51:39,640 --> 00:51:42,680 Speaker 1: other banks wouldn't lend there, and so Northern Rock went 983 00:51:42,760 --> 00:51:44,680 Speaker 1: there and could start making loans. Two people had no 984 00:51:44,800 --> 00:51:47,040 Speaker 1: incomes and no real ability to pay. One was making 985 00:51:47,280 --> 00:51:50,800 Speaker 1: pretty bad loans. So that was the reason it was there. Okay, 986 00:51:51,040 --> 00:51:53,520 Speaker 1: something else that happened. They lose a little on each loan, 987 00:51:53,600 --> 00:51:56,400 Speaker 1: but they make it up volume. And they actually didn't 988 00:51:56,440 --> 00:51:58,880 Speaker 1: have many branches. There was only at forty brands, so 989 00:51:58,960 --> 00:52:01,200 Speaker 1: when the bank failed many of there were were two 990 00:52:01,239 --> 00:52:04,480 Speaker 1: branches in London there was, and basically they were really tiny. 991 00:52:04,719 --> 00:52:07,320 Speaker 1: So when you have two desks and a thousand people 992 00:52:07,600 --> 00:52:09,600 Speaker 1: kind of outside you're in a little you're in a 993 00:52:09,640 --> 00:52:13,640 Speaker 1: little trouble, I think is something that people haven't noticed. 994 00:52:13,680 --> 00:52:16,240 Speaker 1: And actually people tried to hire me and I refused 995 00:52:16,280 --> 00:52:18,320 Speaker 1: to go. So what happened was one of them. So 996 00:52:18,400 --> 00:52:20,319 Speaker 1: here's a big deal. Many of the people who worked 997 00:52:20,320 --> 00:52:23,000 Speaker 1: at Northern Rock had their pensions and had had shares 998 00:52:23,040 --> 00:52:25,400 Speaker 1: in Northern Rockets part of their as part of so 999 00:52:25,480 --> 00:52:29,000 Speaker 1: they were wiped out. The savers were protected, but unlike 1000 00:52:29,040 --> 00:52:34,000 Speaker 1: in the US, the shareholders were wiped out, meaning the bank, 1001 00:52:34,200 --> 00:52:37,719 Speaker 1: the Bank of England valued the shares of Northern Rockets zero. Right, Well, 1002 00:52:39,840 --> 00:52:44,920 Speaker 1: holders suddenly have something, but the equity holders that's the 1003 00:52:44,960 --> 00:52:46,920 Speaker 1: same as yes. But the other thing, of course is 1004 00:52:46,960 --> 00:52:50,120 Speaker 1: I say that the employees. The employees were really hurt 1005 00:52:50,160 --> 00:52:51,840 Speaker 1: because a lot of them had share options and all 1006 00:52:51,880 --> 00:52:53,520 Speaker 1: the rest of it. And that you know, how many 1007 00:52:53,719 --> 00:52:56,520 Speaker 1: en Rons and Lehmans do we have to see before people, 1008 00:52:57,080 --> 00:52:59,319 Speaker 1: you know, look at look at General Electric, look good 1009 00:52:59,640 --> 00:53:02,880 Speaker 1: g how many this comes up over and over again 1010 00:53:02,920 --> 00:53:09,200 Speaker 1: and and unfortunately people don't learn that. Less Barry here 1011 00:53:09,280 --> 00:53:10,840 Speaker 1: was the other big less. I mean, I remember at 1012 00:53:10,880 --> 00:53:13,239 Speaker 1: the time and I was I got into trouble because 1013 00:53:13,239 --> 00:53:15,399 Speaker 1: I said, well, obviously, if you look at Northern Rock. 1014 00:53:15,560 --> 00:53:18,200 Speaker 1: There are other there are other institutions who look very 1015 00:53:18,280 --> 00:53:20,320 Speaker 1: like that. Turns out in the UK there was Bradford 1016 00:53:20,360 --> 00:53:22,640 Speaker 1: and Bingley, an Alliance and Lester who look just like 1017 00:53:22,800 --> 00:53:26,239 Speaker 1: Northern Rock. And how did they do failed? Just the 1018 00:53:26,400 --> 00:53:29,279 Speaker 1: only issue Barry was when wasn't it? If it was 1019 00:53:29,360 --> 00:53:34,799 Speaker 1: when they're gonna so who makes the account holders hall? Well, 1020 00:53:34,880 --> 00:53:39,200 Speaker 1: I I suspect we have to well unclear, maybe maybe 1021 00:53:39,239 --> 00:53:42,880 Speaker 1: these macro predential instruments maybe ways of ensuring that in 1022 00:53:42,960 --> 00:53:46,239 Speaker 1: the good times, you know, coverage is made so that 1023 00:53:46,520 --> 00:53:49,360 Speaker 1: so that in the end, in the bad times, the 1024 00:53:50,040 --> 00:53:52,640 Speaker 1: public don't have to come in and rescue those folks. 1025 00:53:52,840 --> 00:53:54,719 Speaker 1: It's a it's a big issue. But there is no 1026 00:53:55,239 --> 00:53:58,080 Speaker 1: fd I c T now there is now now After 1027 00:53:58,160 --> 00:54:00,080 Speaker 1: Northern Rock the government had to come and step in 1028 00:54:00,480 --> 00:54:04,080 Speaker 1: and say we will protect all that told. There was 1029 00:54:04,080 --> 00:54:06,759 Speaker 1: actually a funny story. The government went in in the morning. 1030 00:54:06,840 --> 00:54:09,000 Speaker 1: If I recall and said, right, we're going to protect 1031 00:54:09,040 --> 00:54:12,400 Speaker 1: everybody who's a saver in Northern Rock. Then they had 1032 00:54:12,400 --> 00:54:14,439 Speaker 1: a little problem, which is everybody had money in an 1033 00:54:14,480 --> 00:54:17,160 Speaker 1: Irish banquin. Ha ha, I can move all my money 1034 00:54:17,320 --> 00:54:19,360 Speaker 1: to Northern So on the day that they did it 1035 00:54:19,719 --> 00:54:21,960 Speaker 1: money poured into Northern Rock and then the government had 1036 00:54:22,000 --> 00:54:23,880 Speaker 1: to say, hang on, folks, we're not going to guarantee 1037 00:54:23,880 --> 00:54:26,120 Speaker 1: the world's savings. It's only going to relate to people 1038 00:54:26,160 --> 00:54:28,560 Speaker 1: who were here last week. So that but that was 1039 00:54:28,600 --> 00:54:32,759 Speaker 1: a big fundamental change and savers are now protected. But 1040 00:54:32,920 --> 00:54:34,879 Speaker 1: remember the big difference in a way in the UK, 1041 00:54:35,760 --> 00:54:37,759 Speaker 1: the big turn down in the world, crist which the 1042 00:54:37,760 --> 00:54:41,120 Speaker 1: world didn't know, was the failure of RBS. Much more 1043 00:54:41,200 --> 00:54:44,879 Speaker 1: important than much more important than Layman Brothers or anything else. 1044 00:54:45,080 --> 00:54:49,319 Speaker 1: And the reason, oh, oh the world so so let's 1045 00:54:49,360 --> 00:54:53,480 Speaker 1: so the story was Alster Darling tells the story that 1046 00:54:53,640 --> 00:54:56,160 Speaker 1: he was at the financial meeting of the European Finance 1047 00:54:56,200 --> 00:54:59,000 Speaker 1: Ministers on October the seventh, two thousand and eight, and 1048 00:54:59,080 --> 00:55:00,920 Speaker 1: he gets a call from our yes and the chairman 1049 00:55:00,960 --> 00:55:03,680 Speaker 1: says to him, I can't make a payment today, Chancellor, 1050 00:55:04,360 --> 00:55:06,200 Speaker 1: and I need I can't make a fifty billion dollar 1051 00:55:06,239 --> 00:55:08,560 Speaker 1: payment tomorrow. And they told him that if you had 1052 00:55:08,600 --> 00:55:12,359 Speaker 1: told Alistair, if you don't rescue RBS, there's a very 1053 00:55:12,560 --> 00:55:15,200 Speaker 1: good prospect that every credit card and cash machine in 1054 00:55:15,200 --> 00:55:18,560 Speaker 1: the world will fail. So six central banks together, that's 1055 00:55:18,640 --> 00:55:21,600 Speaker 1: the that's the biggest moment of the crisis, six central 1056 00:55:21,640 --> 00:55:24,759 Speaker 1: banks together cut rates. And if anybody in the world 1057 00:55:24,840 --> 00:55:28,440 Speaker 1: sees six central banks together cutting rates and led by 1058 00:55:28,520 --> 00:55:30,760 Speaker 1: the UK, you should have been told the global markets 1059 00:55:30,800 --> 00:55:33,480 Speaker 1: are collapsing, and something happening in Britain. So it was 1060 00:55:33,560 --> 00:55:37,200 Speaker 1: the fed ecb Bank of Japan, Bank of Switzerland, Bangas, 1061 00:55:37,320 --> 00:55:39,800 Speaker 1: the Reeks banking and the Bank of England. That was 1062 00:55:39,920 --> 00:55:44,200 Speaker 1: the day that everything collapsed. Quite fascinating, all right. And 1063 00:55:44,280 --> 00:55:46,480 Speaker 1: then the last wonky thing I have to ask you 1064 00:55:46,640 --> 00:55:49,880 Speaker 1: before we start our speed round has to do with 1065 00:55:50,000 --> 00:55:51,840 Speaker 1: the Phillips curve. You do a lot of work with 1066 00:55:51,960 --> 00:55:55,680 Speaker 1: that for the lay person. Explain what the Phillips curve 1067 00:55:56,040 --> 00:56:00,600 Speaker 1: is and why it's so wrong. Well, that's that's hard 1068 00:56:00,640 --> 00:56:04,120 Speaker 1: to do in simple The answer why why it's all 1069 00:56:04,160 --> 00:56:06,879 Speaker 1: wrong is that we used to think that the unemployment 1070 00:56:07,000 --> 00:56:09,920 Speaker 1: rate is what drove wages down. Turns out that's not 1071 00:56:09,960 --> 00:56:13,239 Speaker 1: true anymore. They're disconnected. They're disconnected. So what happened in 1072 00:56:13,280 --> 00:56:17,640 Speaker 1: the past firms pay was impacted by the unplayed outside 1073 00:56:17,680 --> 00:56:20,719 Speaker 1: the firm. Well, what's happened today is under employments. The 1074 00:56:20,800 --> 00:56:23,239 Speaker 1: story two thirds of the workers over here got the 1075 00:56:23,320 --> 00:56:26,279 Speaker 1: hours that they want and they've got temporary workers, all 1076 00:56:26,400 --> 00:56:29,760 Speaker 1: sorts of freelances in there, paid less, and the workers 1077 00:56:29,840 --> 00:56:31,799 Speaker 1: on the one side of the room know that they 1078 00:56:31,840 --> 00:56:33,600 Speaker 1: can be replaced by the people on the other side 1079 00:56:33,600 --> 00:56:36,000 Speaker 1: of the room. Turns out the Phillips has to be 1080 00:56:36,080 --> 00:56:40,360 Speaker 1: written in underemployment under employments the story post two thousand 1081 00:56:40,440 --> 00:56:42,400 Speaker 1: and eight. All the stuff about the unemployment rate is 1082 00:56:42,440 --> 00:56:45,440 Speaker 1: wrong because it doesn't do anything since two thousands and 1083 00:56:45,480 --> 00:56:48,320 Speaker 1: the and the big deal is the underemployment rate hasn't 1084 00:56:48,400 --> 00:56:51,239 Speaker 1: returned to its prerecession level, which makes me raise the 1085 00:56:51,600 --> 00:56:57,000 Speaker 1: final question, which is we've seen union membership plumbing in 1086 00:56:57,000 --> 00:57:02,240 Speaker 1: the US plumbing world. How important is the failure of unions, 1087 00:57:02,280 --> 00:57:07,320 Speaker 1: the death of unions to to driving both the underemployment 1088 00:57:07,440 --> 00:57:10,879 Speaker 1: and the economic insecurity of the employed. I mean, that's 1089 00:57:10,920 --> 00:57:13,160 Speaker 1: how to really be a big impact. But in some 1090 00:57:13,520 --> 00:57:15,640 Speaker 1: sense you have to step back and say, well, what 1091 00:57:15,800 --> 00:57:18,520 Speaker 1: caused the decline in unions, And the answer is pretty 1092 00:57:18,560 --> 00:57:22,640 Speaker 1: much global forces. Globalization made it very much harder for 1093 00:57:22,720 --> 00:57:24,880 Speaker 1: a union to raise the price. So I think in 1094 00:57:24,960 --> 00:57:27,400 Speaker 1: a global market with selling at ten, union comes along 1095 00:57:27,480 --> 00:57:30,320 Speaker 1: rate gives benefits to its workers. The prices eleven and 1096 00:57:30,360 --> 00:57:33,440 Speaker 1: the firm gets wiped out because there's global forces. So 1097 00:57:33,600 --> 00:57:36,080 Speaker 1: the problem for unions is that you know they've been 1098 00:57:36,120 --> 00:57:40,520 Speaker 1: wiped out by global forces. So that's that's further made 1099 00:57:40,560 --> 00:57:45,000 Speaker 1: workers more jobs, more insecure, more unstable, and less well paid. 1100 00:57:45,800 --> 00:57:48,439 Speaker 1: Good answer, All right, So let's go to our speed round. 1101 00:57:48,520 --> 00:57:51,760 Speaker 1: These are our favorite questions we ask all our guests. 1102 00:57:52,400 --> 00:57:55,880 Speaker 1: Um and I've terlored them specifically to you. Um So 1103 00:57:56,080 --> 00:57:57,920 Speaker 1: tell us what was the first car you ever owned? 1104 00:57:58,000 --> 00:58:00,960 Speaker 1: Year making model? I can't be remember. I mean I was, 1105 00:58:01,080 --> 00:58:03,200 Speaker 1: I'm an interesting person. I didn't know driving lines until 1106 00:58:03,200 --> 00:58:06,120 Speaker 1: I was twenty seven. I lived in London, so you didn't. 1107 00:58:06,360 --> 00:58:07,880 Speaker 1: I didn't need one. And I mean if you had 1108 00:58:07,920 --> 00:58:09,760 Speaker 1: a parking space in London, you could never leave the car, 1109 00:58:09,840 --> 00:58:11,400 Speaker 1: take the car away from it because you could never 1110 00:58:11,480 --> 00:58:13,200 Speaker 1: find one to get. So I had a Mini was 1111 00:58:13,320 --> 00:58:17,640 Speaker 1: my first car, and a real Mini, a real Mini 1112 00:58:17,680 --> 00:58:20,320 Speaker 1: with wooden panels on it, little doors that you break 1113 00:58:20,360 --> 00:58:22,439 Speaker 1: down all the time. They are great. What's the most 1114 00:58:22,560 --> 00:58:28,040 Speaker 1: important thing people don't know about? Danny Blanchflower. Um, Oh, 1115 00:58:28,960 --> 00:58:31,320 Speaker 1: it's a very tough one. I used to be a 1116 00:58:31,360 --> 00:58:34,840 Speaker 1: school teacher. You're still a school teacher. That maybe that 1117 00:58:34,960 --> 00:58:36,800 Speaker 1: is the best. Maybe right there you go. So you 1118 00:58:36,880 --> 00:58:40,560 Speaker 1: used to teach grammar school. I actually taught in a 1119 00:58:40,640 --> 00:58:43,680 Speaker 1: school that got I got paid danger money, the teacher, 1120 00:58:43,760 --> 00:58:45,480 Speaker 1: the school. I decided it was easier to go and 1121 00:58:45,600 --> 00:58:48,000 Speaker 1: talk to people like you, Barry and get that kind 1122 00:58:48,000 --> 00:58:51,280 Speaker 1: of aggravation, that kind of aggravation. Tell us who your 1123 00:58:51,440 --> 00:58:54,360 Speaker 1: early mentors were. Well, the big deal actually was my 1124 00:58:54,520 --> 00:58:57,040 Speaker 1: dear friend Richard Freeman. He was a darker class of 1125 00:58:57,120 --> 00:59:00,479 Speaker 1: sixty four, the famous man to always always wear hats, 1126 00:59:00,600 --> 00:59:03,240 Speaker 1: who was famously wears hats to everything. But he's a 1127 00:59:03,320 --> 00:59:06,680 Speaker 1: great empirical economist and just taught me to go and 1128 00:59:06,760 --> 00:59:10,080 Speaker 1: look at the data. And that was that was not 1129 00:59:10,240 --> 00:59:13,040 Speaker 1: something the economists did. They for a very very long time. 1130 00:59:13,120 --> 00:59:16,080 Speaker 1: The role of data was seen as, you know, second 1131 00:59:16,440 --> 00:59:19,680 Speaker 1: second to what other people do. So everybody's favorite question. 1132 00:59:20,040 --> 00:59:24,120 Speaker 1: Tell us some of your favorite books fishing, nonfishing, market related, 1133 00:59:24,200 --> 00:59:29,040 Speaker 1: economy related whatever. I always liked um Gas Gabrielle Gussie, 1134 00:59:29,360 --> 00:59:32,160 Speaker 1: Marquees is Hundred Years of Solitude. That just there's something 1135 00:59:32,160 --> 00:59:33,960 Speaker 1: I've read so many times. It just seen that man 1136 00:59:34,040 --> 00:59:36,840 Speaker 1: was a genius, and I didn't really realize that every 1137 00:59:36,920 --> 00:59:38,760 Speaker 1: other people thought he was a genius too, and gave 1138 00:59:38,800 --> 00:59:41,480 Speaker 1: him the Nobel Prize in in Literature. But I've been 1139 00:59:41,520 --> 00:59:44,880 Speaker 1: a nonfiction wonk forever. I mean, I just I mean, 1140 00:59:44,960 --> 00:59:48,360 Speaker 1: it's my wife's so bored of really economics books, So 1141 00:59:48,480 --> 00:59:50,320 Speaker 1: give us what what do you think is the most 1142 00:59:50,440 --> 00:59:55,320 Speaker 1: interesting unexpected economics book you read recently? Oh my goodness, Well, 1143 00:59:55,320 --> 00:59:59,040 Speaker 1: I actually I read this great book by Kane's written 1144 00:59:59,600 --> 01:00:02,959 Speaker 1: a pay I've been reading endlessly that nobody knows about 1145 01:00:03,000 --> 01:00:06,560 Speaker 1: written in one and the reason I really like, what's 1146 01:00:06,560 --> 01:00:08,360 Speaker 1: the name of the point? It's it's about it's about 1147 01:00:08,400 --> 01:00:10,720 Speaker 1: his theories on unemployment. But I think it's I think 1148 01:00:11,240 --> 01:00:14,160 Speaker 1: it's a great unemployment. Well, but I don't remember reading now, 1149 01:00:14,240 --> 01:00:17,040 Speaker 1: but you didn't. What you read was Kane's talking about 1150 01:00:17,080 --> 01:00:19,959 Speaker 1: unemployment rise after it had happened. This is a book, 1151 01:00:20,120 --> 01:00:22,280 Speaker 1: I mean, it's exactly what you've kind of been talking about. 1152 01:00:22,440 --> 01:00:26,560 Speaker 1: He's asked in what do you think is coming? And 1153 01:00:26,720 --> 01:00:29,480 Speaker 1: he says, it's not really about the crash, So it's 1154 01:00:29,520 --> 01:00:32,280 Speaker 1: not Reinhardt Road got it's actually Canes who has it. 1155 01:00:32,520 --> 01:00:35,360 Speaker 1: And he talks about if you don't do the things 1156 01:00:35,440 --> 01:00:37,480 Speaker 1: that we've talked about that you need to do I mean, 1157 01:00:37,520 --> 01:00:39,600 Speaker 1: this is phrase I've used many times, the long dragging 1158 01:00:39,680 --> 01:00:42,440 Speaker 1: conditions of semi slump. So I keep going back to that. 1159 01:00:42,520 --> 01:00:43,840 Speaker 1: But the other one I read, and I think it's 1160 01:00:43,840 --> 01:00:46,479 Speaker 1: a really important one, is that I read a book 1161 01:00:46,520 --> 01:00:48,720 Speaker 1: by Beverage. I think, you know, Beverage, it's a great 1162 01:00:48,760 --> 01:00:52,840 Speaker 1: story when when Churchill said, what's the world going to 1163 01:00:52,960 --> 01:00:55,760 Speaker 1: look like after I come, after we get over the war? 1164 01:00:55,920 --> 01:00:58,680 Speaker 1: Tell us what full employment would look like? And Beverage 1165 01:00:58,760 --> 01:01:00,920 Speaker 1: writes this thing, and he says, I have thought, and 1166 01:01:01,000 --> 01:01:03,400 Speaker 1: he says, I think unemployment the full employment rate of 1167 01:01:03,440 --> 01:01:06,880 Speaker 1: unemploy is three p but in the probably said Kines 1168 01:01:06,880 --> 01:01:08,480 Speaker 1: wrote to me and said, I can think it could 1169 01:01:08,480 --> 01:01:10,520 Speaker 1: be much lower. And in the UK it turns out 1170 01:01:10,840 --> 01:01:14,080 Speaker 1: unemployment average one and a half percent for that whole period. 1171 01:01:14,160 --> 01:01:16,880 Speaker 1: So that's that's about what the full employment means for 1172 01:01:17,000 --> 01:01:18,920 Speaker 1: the work for people coming back from the war. And 1173 01:01:18,960 --> 01:01:21,000 Speaker 1: I think that's a great book to read, Beverage on 1174 01:01:21,160 --> 01:01:25,280 Speaker 1: full employment. So in you know, they thought about these things, 1175 01:01:25,320 --> 01:01:28,200 Speaker 1: and in ninete they thought about and the world repeats 1176 01:01:28,520 --> 01:01:33,960 Speaker 1: and we today have the Beverage curve correctly directly from Beverage. 1177 01:01:33,960 --> 01:01:36,040 Speaker 1: But it's a great and he talks that he said, 1178 01:01:36,080 --> 01:01:37,880 Speaker 1: he talks about what the welfare state should look like. 1179 01:01:38,000 --> 01:01:39,720 Speaker 1: But I would encourage people to go and look at it, 1180 01:01:40,080 --> 01:01:44,680 Speaker 1: think about what full employment means, and it's you can 1181 01:01:44,760 --> 01:01:48,080 Speaker 1: just cross out and you can write in two thousand 1182 01:01:48,120 --> 01:01:51,000 Speaker 1: and twenty and the same thing. And so what a 1183 01:01:51,080 --> 01:01:53,400 Speaker 1: policymakers do? They didn't read that stuff. I have to 1184 01:01:53,480 --> 01:01:56,960 Speaker 1: ask you about a book that you reference the author 1185 01:01:57,160 --> 01:02:00,480 Speaker 1: of that is sitting at myself at home waiting to 1186 01:02:00,760 --> 01:02:04,440 Speaker 1: find its way into my queue, which is Lord Sadelski's 1187 01:02:04,440 --> 01:02:08,360 Speaker 1: Biography of Canes. He's a dear friend of mine. We've 1188 01:02:08,400 --> 01:02:11,320 Speaker 1: written things. I gotta tell a great story. Um. He 1189 01:02:11,440 --> 01:02:14,920 Speaker 1: has a great book called The Master right the Return 1190 01:02:15,000 --> 01:02:16,960 Speaker 1: of the Master, and he sent it to me, and 1191 01:02:17,080 --> 01:02:19,360 Speaker 1: the whole time in my life, this is there. He 1192 01:02:19,480 --> 01:02:21,000 Speaker 1: sent it to me. I got home, my dog had 1193 01:02:21,000 --> 01:02:23,400 Speaker 1: eating it. This is completely true, and I had to 1194 01:02:23,440 --> 01:02:26,080 Speaker 1: get another one. My dog had torn it to pieces. 1195 01:02:26,320 --> 01:02:32,600 Speaker 1: I've literally had that literally. Um. William Goldman's book and 1196 01:02:32,720 --> 01:02:37,040 Speaker 1: Ventures in the Screen Trade I'm reading because Goldman's position 1197 01:02:37,200 --> 01:02:40,640 Speaker 1: is nobody in Hollywood knows anything. They passed on Star Wars, 1198 01:02:40,680 --> 01:02:42,960 Speaker 1: they passed on Raiders. They're all terrible. I made the 1199 01:02:43,000 --> 01:02:45,600 Speaker 1: mistake of putting it down for two minutes. The poppy 1200 01:02:45,720 --> 01:02:49,040 Speaker 1: destroyed it. We have a Portuguese water dog, and I 1201 01:02:49,120 --> 01:02:50,760 Speaker 1: had to order a new one and keep it at 1202 01:02:50,760 --> 01:02:52,880 Speaker 1: a high So that and then there's another story to 1203 01:02:52,960 --> 01:02:57,920 Speaker 1: tell you. So Skidelski is not only the biographer of Kanes. 1204 01:02:58,320 --> 01:03:00,800 Speaker 1: There's a there's a there's a good kind of story 1205 01:03:00,800 --> 01:03:04,840 Speaker 1: about what's special about Skidelsky. He lives in Kane's house. 1206 01:03:05,480 --> 01:03:10,080 Speaker 1: Oh really, that's a coincidence. Did he seek it out? 1207 01:03:10,120 --> 01:03:12,240 Speaker 1: Seek it out? To seek it out? So there's a great, 1208 01:03:12,600 --> 01:03:16,160 Speaker 1: great story to talk about inhabiting somebody's He writes in 1209 01:03:16,200 --> 01:03:18,120 Speaker 1: the back of my book as well, Son Robert and 1210 01:03:18,160 --> 01:03:21,120 Speaker 1: I have written the Lord, the Lord's you got to 1211 01:03:21,160 --> 01:03:24,280 Speaker 1: call him the Lord. He was. I think he briefly 1212 01:03:24,440 --> 01:03:27,160 Speaker 1: met him here at Bloomberth. He came through they do 1213 01:03:27,320 --> 01:03:31,400 Speaker 1: launches for different authors and stuff, and he's somebody else 1214 01:03:31,480 --> 01:03:34,000 Speaker 1: I have to he's yes, he's great and he and 1215 01:03:34,080 --> 01:03:36,360 Speaker 1: he talks about the return of the Master. But in 1216 01:03:36,480 --> 01:03:39,200 Speaker 1: the book he talks about sadly the return of the 1217 01:03:39,280 --> 01:03:41,080 Speaker 1: Master was not as you know, it was not a 1218 01:03:41,400 --> 01:03:43,120 Speaker 1: as big a return as it ought to write it 1219 01:03:43,120 --> 01:03:47,280 Speaker 1: should it should have been a big drum roll roll um. 1220 01:03:47,560 --> 01:03:49,800 Speaker 1: So tell us about a time you failed and what 1221 01:03:49,920 --> 01:03:53,600 Speaker 1: you learned from the experience. Goodness, Well, I I think 1222 01:03:53,680 --> 01:03:56,560 Speaker 1: I failed. The biggest failure I have made was in 1223 01:03:56,640 --> 01:03:59,440 Speaker 1: August two thousand and eight, and I've been calling a 1224 01:03:59,520 --> 01:04:03,440 Speaker 1: recession and we got the first call of what output 1225 01:04:03,520 --> 01:04:06,080 Speaker 1: in Q two was going to be and it and 1226 01:04:06,200 --> 01:04:09,480 Speaker 1: it was plus point two point two plus point two. 1227 01:04:09,800 --> 01:04:12,720 Speaker 1: And I've been saying forever I and I didn't believe, 1228 01:04:12,720 --> 01:04:16,040 Speaker 1: and I'm sure the revisions eventually took it minus point seven, right, 1229 01:04:16,680 --> 01:04:18,280 Speaker 1: But that was I mean, I just I mean in 1230 01:04:18,360 --> 01:04:20,200 Speaker 1: the sense it was the biggest fail because I doubted 1231 01:04:20,240 --> 01:04:23,400 Speaker 1: myself so seriously. Oh, I really thought I've got this 1232 01:04:23,520 --> 01:04:26,080 Speaker 1: so wrong. And we did this terrible report in August 1233 01:04:26,120 --> 01:04:28,000 Speaker 1: two thousand and eight that I signed up to, which 1234 01:04:28,040 --> 01:04:31,240 Speaker 1: said no recessions coming. And I went home and I thought, well, 1235 01:04:31,280 --> 01:04:33,160 Speaker 1: I've either got to work this out. I gotta work 1236 01:04:33,240 --> 01:04:35,520 Speaker 1: out either I'm an idiot and I'm completely wrong and 1237 01:04:35,560 --> 01:04:38,000 Speaker 1: I have to quit, or I'm right. And I went 1238 01:04:38,080 --> 01:04:39,640 Speaker 1: away and I thought it's one of these. And I 1239 01:04:39,720 --> 01:04:43,400 Speaker 1: talked to everybody, and eventually I decided that I was right, 1240 01:04:43,880 --> 01:04:45,920 Speaker 1: But that was in a sense, the big fail was 1241 01:04:46,040 --> 01:04:49,080 Speaker 1: getting it wrong, doubting what I'd said before, and just 1242 01:04:49,240 --> 01:04:51,960 Speaker 1: being tortured and then eventually deciding, Okay, I'm right, and 1243 01:04:52,000 --> 01:04:53,960 Speaker 1: then I did a big interview and then I went 1244 01:04:54,080 --> 01:04:56,240 Speaker 1: a whole hog on it. But I just doubt that 1245 01:04:56,400 --> 01:04:58,720 Speaker 1: number just made me think I got this so wrong. 1246 01:04:58,960 --> 01:05:02,480 Speaker 1: So heading into the financial crisis, so I'm all about, 1247 01:05:03,000 --> 01:05:06,360 Speaker 1: what do we really know? What meta cognition? What do 1248 01:05:06,480 --> 01:05:08,240 Speaker 1: we think we know that we're wrong about? What do 1249 01:05:08,320 --> 01:05:10,720 Speaker 1: we not know that we not know? But heading into 1250 01:05:10,760 --> 01:05:15,680 Speaker 1: the financial crisis, I had no doubt that my forecast 1251 01:05:15,720 --> 01:05:18,440 Speaker 1: for a deep recession in the market crash was right. 1252 01:05:18,920 --> 01:05:21,320 Speaker 1: And the reason you have a moment of doubt, no, 1253 01:05:21,680 --> 01:05:24,480 Speaker 1: never the whole time. What what was shocking to me 1254 01:05:24,880 --> 01:05:28,480 Speaker 1: was that nobody else saw it. I couldn't understand. And 1255 01:05:28,600 --> 01:05:32,960 Speaker 1: the data point, the data point that made it wholly 1256 01:05:33,080 --> 01:05:36,840 Speaker 1: unambiguous was this chart. I want to say I first 1257 01:05:37,120 --> 01:05:39,840 Speaker 1: picked it up from ned Davis and like oh three 1258 01:05:39,960 --> 01:05:43,320 Speaker 1: or O four, and then I started looking So I 1259 01:05:43,360 --> 01:05:46,880 Speaker 1: should have been looking for disconfirming data um which I 1260 01:05:46,960 --> 01:05:49,880 Speaker 1: could not find, and I started looking for confirming data, 1261 01:05:49,920 --> 01:05:53,440 Speaker 1: which was everywhere. So it's a historical relationship in the 1262 01:05:53,520 --> 01:05:57,960 Speaker 1: United States between median home price and median income. It's 1263 01:05:58,000 --> 01:05:59,920 Speaker 1: the same. I have the same in the UK exact. 1264 01:06:00,640 --> 01:06:04,600 Speaker 1: So you look at that data series and for decades, decades, 1265 01:06:04,680 --> 01:06:08,440 Speaker 1: decades it you know, it bounces around two and three, 1266 01:06:08,520 --> 01:06:11,160 Speaker 1: two and two and suddenly goes four or five, six, 1267 01:06:11,360 --> 01:06:15,280 Speaker 1: It's like orders of magnitude. So so based on that chart, 1268 01:06:15,920 --> 01:06:19,080 Speaker 1: I tried to find other things. When you looked at 1269 01:06:19,160 --> 01:06:23,560 Speaker 1: the quest of homeownership versus the cost of renting, same things, 1270 01:06:24,000 --> 01:06:27,640 Speaker 1: you know, a longstanding relationship, and then it spikes. And 1271 01:06:27,720 --> 01:06:31,680 Speaker 1: then the third one. The third chart was the value 1272 01:06:31,840 --> 01:06:36,320 Speaker 1: of the housing stock in the United States relative to GDP, 1273 01:06:36,760 --> 01:06:39,960 Speaker 1: and that was a little more volunteer volatile, but like 1274 01:06:40,080 --> 01:06:42,160 Speaker 1: around oh two or three or four, it just spiked. 1275 01:06:42,560 --> 01:06:46,600 Speaker 1: So my takeaway was either everybody's getting a giant raise 1276 01:06:46,800 --> 01:06:51,560 Speaker 1: or housing drops. So the second one I didn't really 1277 01:06:51,640 --> 01:06:54,760 Speaker 1: know about. The first I did, but it's effectively the 1278 01:06:54,840 --> 01:06:59,160 Speaker 1: same chart of rent is lighted. Basically, is a different 1279 01:06:59,160 --> 01:07:01,080 Speaker 1: way to look at the same thing. Read is related 1280 01:07:01,120 --> 01:07:04,440 Speaker 1: to income and read to have ownership is ends up. 1281 01:07:04,720 --> 01:07:06,840 Speaker 1: If you've got in the UK exactly the same we 1282 01:07:06,880 --> 01:07:08,760 Speaker 1: call it house price to earnings ratios in the UK 1283 01:07:09,120 --> 01:07:11,680 Speaker 1: averages about three to three and a half. By two 1284 01:07:11,760 --> 01:07:13,920 Speaker 1: thousand and six seven it had got to two to 1285 01:07:14,240 --> 01:07:18,400 Speaker 1: five point nine and twelve in London twelve. So then 1286 01:07:18,520 --> 01:07:21,160 Speaker 1: what was interesting if you look back, a series of 1287 01:07:21,280 --> 01:07:23,880 Speaker 1: people on the NPC, some before me coming to it, 1288 01:07:24,320 --> 01:07:26,640 Speaker 1: spent an awful lot of time arguing why this time 1289 01:07:26,760 --> 01:07:30,479 Speaker 1: was different and why the why the ratio had permanently changed. 1290 01:07:30,520 --> 01:07:33,840 Speaker 1: It was something about demographics. There was something about I mean, 1291 01:07:34,000 --> 01:07:37,160 Speaker 1: let's go, let's go exactly, let's go with nonsense. And 1292 01:07:37,240 --> 01:07:39,160 Speaker 1: they said, you shouldn't read anything into this because this 1293 01:07:39,280 --> 01:07:44,880 Speaker 1: is all permanently changed, and they think they, um, yeah, nonsense. 1294 01:07:45,080 --> 01:07:47,760 Speaker 1: And so the justification for this rise was that, you know, 1295 01:07:48,160 --> 01:07:50,240 Speaker 1: literally the markets are so much more efficient than they 1296 01:07:50,240 --> 01:07:52,840 Speaker 1: would be. And they read Lucas who said, you know, 1297 01:07:52,960 --> 01:07:55,160 Speaker 1: in his Nobel Prize winning speech, I have shown me 1298 01:07:55,200 --> 01:07:58,360 Speaker 1: that depressions can't ever happen again. All is absolutely wonderful, 1299 01:07:58,560 --> 01:08:01,800 Speaker 1: and Barry rightly laughs, that's right. You're you're listening to 1300 01:08:01,960 --> 01:08:05,800 Speaker 1: Confirmation Bias Radio with Danny and Barry. Um. So our 1301 01:08:05,880 --> 01:08:10,080 Speaker 1: last couple of questions, Um, so what do you do 1302 01:08:10,320 --> 01:08:12,560 Speaker 1: outside of the office for fun, What do you do 1303 01:08:12,720 --> 01:08:17,040 Speaker 1: to relax or when I'm back. Yeah, I like to 1304 01:08:17,240 --> 01:08:19,639 Speaker 1: go cycling with my white wife and I go cycling, 1305 01:08:19,720 --> 01:08:21,840 Speaker 1: but I had trouble with my ankles sometime ago. I 1306 01:08:21,960 --> 01:08:23,840 Speaker 1: used to pay quite a lot of golf. So you 1307 01:08:23,960 --> 01:08:25,800 Speaker 1: and I met, I think the first time fishing. That 1308 01:08:26,960 --> 01:08:28,479 Speaker 1: So I've taken up a lot of fishing with our 1309 01:08:28,479 --> 01:08:32,200 Speaker 1: old friend David Kotoks here this morning, and I've I've 1310 01:08:32,200 --> 01:08:34,600 Speaker 1: become an avid fisherman. I'm going next week back to 1311 01:08:34,640 --> 01:08:37,759 Speaker 1: Florida to go fishing again, but a little bone fishing. No, Actually, 1312 01:08:37,760 --> 01:08:40,280 Speaker 1: I'm a snoot guy. I like, I've never gonnof fishing, 1313 01:08:40,320 --> 01:08:42,479 Speaker 1: but invited me. I have a house. I have a 1314 01:08:42,520 --> 01:08:44,200 Speaker 1: house on the water. When you come in, let's go. 1315 01:08:44,360 --> 01:08:47,519 Speaker 1: I actually like the west coast of Florida. And then 1316 01:08:47,560 --> 01:08:50,759 Speaker 1: we discussed so we've not just for fishing, but you're inviting. 1317 01:08:51,200 --> 01:08:54,960 Speaker 1: It's the Midwesterners as opposed to us New Yorkers. They're 1318 01:08:55,080 --> 01:08:57,759 Speaker 1: much nicer, and you're a catch and release fishing hashtag 1319 01:08:57,800 --> 01:09:00,080 Speaker 1: catching release. What sort of advice would you give to 1320 01:09:00,160 --> 01:09:03,759 Speaker 1: a millennial or someone beginning their career who was interested 1321 01:09:04,280 --> 01:09:07,839 Speaker 1: in either economics, or later labor economics or monetary policy. 1322 01:09:08,360 --> 01:09:12,800 Speaker 1: Um I I would go and read an article out 1323 01:09:12,920 --> 01:09:18,320 Speaker 1: yesterday by Nobel Prize winner Akoloff, who talks about the 1324 01:09:18,479 --> 01:09:23,880 Speaker 1: importance of trying to understand problems. Economics has become just math. 1325 01:09:24,320 --> 01:09:27,320 Speaker 1: People are trying very math, very mathy, and I think 1326 01:09:27,400 --> 01:09:30,360 Speaker 1: the story is focus on the patterns in the data, 1327 01:09:30,680 --> 01:09:34,080 Speaker 1: try and think, you know, what are what important question 1328 01:09:34,280 --> 01:09:37,920 Speaker 1: are you trying to answer? Focus on an important question? Okay, 1329 01:09:37,960 --> 01:09:39,720 Speaker 1: that's sort of contrary to many of the things that 1330 01:09:39,760 --> 01:09:41,639 Speaker 1: have been in Economist. And yes, you have to publish 1331 01:09:41,800 --> 01:09:44,240 Speaker 1: in the top five question of journals, and I think 1332 01:09:44,280 --> 01:09:46,000 Speaker 1: it's a really good place to come and think, well, 1333 01:09:46,080 --> 01:09:48,559 Speaker 1: what what what are people in the world actually care about? 1334 01:09:48,680 --> 01:09:51,760 Speaker 1: Tell them focus on issues where you can answer questions. 1335 01:09:51,920 --> 01:09:55,759 Speaker 1: So your I think that your approach is the right approach. 1336 01:09:56,040 --> 01:10:00,160 Speaker 1: Is that is that? No? Sorry, it's it's George Jakolov. Yes, 1337 01:10:00,240 --> 01:10:03,120 Speaker 1: in his in his paper is about hard economics, which 1338 01:10:03,160 --> 01:10:05,400 Speaker 1: is go and do the math and lose sight of 1339 01:10:07,240 --> 01:10:08,840 Speaker 1: lose sight of what the heck can we do? I mean, 1340 01:10:08,960 --> 01:10:11,280 Speaker 1: I was taught the Great Star. I was taught that's 1341 01:10:11,280 --> 01:10:16,800 Speaker 1: the walk about and walking about and my old supervisor 1342 01:10:16,840 --> 01:10:19,640 Speaker 1: said to me, Danny care about the well being of 1343 01:10:19,680 --> 01:10:22,040 Speaker 1: the man or the woman on the clapp of omnibus 1344 01:10:22,240 --> 01:10:24,560 Speaker 1: for American audience, clap was a part of London, and 1345 01:10:24,600 --> 01:10:27,240 Speaker 1: an omnibus is the bus before which was towed by 1346 01:10:27,280 --> 01:10:29,439 Speaker 1: the horse. But it's about I think about the well 1347 01:10:29,520 --> 01:10:33,320 Speaker 1: being of the ordinary person, perhaps the ordinary prime age, 1348 01:10:33,680 --> 01:10:38,240 Speaker 1: less educated person living in Pennsylvania West Virginia. Don't lose 1349 01:10:38,360 --> 01:10:41,000 Speaker 1: sight of that. And I think, if that's what you do, 1350 01:10:41,520 --> 01:10:43,080 Speaker 1: I mean, think of what Deeton in case of doing. 1351 01:10:43,120 --> 01:10:47,000 Speaker 1: They're trying to understand how to improve the well being 1352 01:10:47,200 --> 01:10:50,080 Speaker 1: of the that's an honorable estate. And hence you're focused 1353 01:10:50,200 --> 01:10:55,080 Speaker 1: on unhappiness, stress, physical pain, and under employment. And I 1354 01:10:55,160 --> 01:10:57,639 Speaker 1: say to my students, this is so much better than 1355 01:10:57,720 --> 01:11:00,439 Speaker 1: so much of economics that focuses on, you know, trying 1356 01:11:00,479 --> 01:11:07,080 Speaker 1: to add a squiggle to a diddle. When I download 1357 01:11:07,160 --> 01:11:10,160 Speaker 1: and go to read an economics paper, I will go 1358 01:11:10,320 --> 01:11:13,519 Speaker 1: through the first five, ten, twelve pages, and then I'll 1359 01:11:13,600 --> 01:11:17,080 Speaker 1: hit the page that's just a sheet of calculations and 1360 01:11:17,200 --> 01:11:20,760 Speaker 1: formulas and I tap out because I can't follow that, 1361 01:11:21,720 --> 01:11:23,920 Speaker 1: and neither kill most of the lap. And we don't 1362 01:11:23,960 --> 01:11:25,799 Speaker 1: have to because I mean go back to the greatest 1363 01:11:25,840 --> 01:11:28,160 Speaker 1: story of the Maybe we can end on this great story. 1364 01:11:28,560 --> 01:11:31,679 Speaker 1: So the Queen goes to the London School of Economics 1365 01:11:31,960 --> 01:11:34,240 Speaker 1: and opens the new Department of Economics, and the chair 1366 01:11:34,320 --> 01:11:36,800 Speaker 1: says to her, there's a hundred and fifty economists here. 1367 01:11:36,800 --> 01:11:38,880 Speaker 1: And the Queen turns to him and says, what if 1368 01:11:38,920 --> 01:11:40,760 Speaker 1: there are a hundred and fifty economists here? How come 1369 01:11:40,800 --> 01:11:43,600 Speaker 1: they missed the great recession? And they turned her and 1370 01:11:43,640 --> 01:11:47,719 Speaker 1: they said they were working on something else. That's great. 1371 01:11:47,800 --> 01:11:51,200 Speaker 1: Our final question, what do you know about the world 1372 01:11:51,320 --> 01:11:54,400 Speaker 1: of labor economics today that you wish you knew thirty 1373 01:11:54,520 --> 01:11:59,599 Speaker 1: years ago when you were first ramping up in this space? Wow? 1374 01:12:00,160 --> 01:12:03,519 Speaker 1: I mean everything everything. I mean, I didn't really understand 1375 01:12:03,600 --> 01:12:06,400 Speaker 1: that there were patterns in the data. I didn't really 1376 01:12:06,479 --> 01:12:12,519 Speaker 1: understand how related things were um and that in the 1377 01:12:12,640 --> 01:12:15,920 Speaker 1: thirty odd years that I've been looking at the labor market, 1378 01:12:16,000 --> 01:12:22,559 Speaker 1: how little improvement that I had seen for the average person. Shocking. 1379 01:12:22,920 --> 01:12:27,439 Speaker 1: That's a shocking story. You started just as the majors 1380 01:12:27,560 --> 01:12:30,639 Speaker 1: decided to phrase right. I mean, in a sense, the story, 1381 01:12:31,000 --> 01:12:34,320 Speaker 1: the story is about the spread of global forces, and 1382 01:12:34,439 --> 01:12:37,880 Speaker 1: it's just about the spread of inequality. So I mean 1383 01:12:38,240 --> 01:12:41,519 Speaker 1: we've done well. We've done very well. People people around 1384 01:12:41,600 --> 01:12:45,439 Speaker 1: us have not done so well. We have family members, 1385 01:12:45,479 --> 01:12:47,960 Speaker 1: I mean my my, I have three kids, and they're 1386 01:12:48,000 --> 01:12:50,760 Speaker 1: all struggling. They're struggling to leave home, they're struggling to 1387 01:12:51,080 --> 01:12:53,200 Speaker 1: put the kids in child at they're struggling to buy 1388 01:12:53,479 --> 01:12:57,160 Speaker 1: they're struggling to pay off their huge student debts. And 1389 01:12:57,280 --> 01:12:59,360 Speaker 1: I think that the word I used there was was 1390 01:12:59,760 --> 01:13:05,040 Speaker 1: you advisedly, it's life's a struggle. Quite quite fascinating. We 1391 01:13:05,280 --> 01:13:09,719 Speaker 1: have been speaking with Danny Blancheflower, author of not Working 1392 01:13:10,120 --> 01:13:13,559 Speaker 1: We'll have all the good jobs gone, and uh current 1393 01:13:13,720 --> 01:13:18,720 Speaker 1: economics professor at Dartmouth. UM. If you enjoy this conversation, 1394 01:13:18,800 --> 01:13:20,320 Speaker 1: we'll be sure and look up an inch or down 1395 01:13:20,360 --> 01:13:23,160 Speaker 1: an inch on Apple iTunes, where you could see any 1396 01:13:23,360 --> 01:13:27,560 Speaker 1: of the previous two hundred and fifty such conversations that 1397 01:13:27,640 --> 01:13:31,400 Speaker 1: we've had over the past five years. We love your comments, 1398 01:13:31,479 --> 01:13:35,839 Speaker 1: feedback and suggestions right to us at m IB podcast 1399 01:13:35,920 --> 01:13:38,720 Speaker 1: at Bloomberg dot net. I would be remiss if I 1400 01:13:38,840 --> 01:13:41,400 Speaker 1: did not thank the crack staff that helps us put 1401 01:13:41,479 --> 01:13:45,639 Speaker 1: these conversations together each week. Michael Batnick is my head 1402 01:13:45,880 --> 01:13:50,360 Speaker 1: of research Atika val Bron is our project manager. Michael 1403 01:13:50,400 --> 01:13:54,559 Speaker 1: Boyle is my producer. I'm Barry Ridholtz. You've been listening 1404 01:13:54,640 --> 01:13:57,240 Speaker 1: to Masters in Business on Bloomberg Radio.