Speaker 1: This is Masters in Business with Barry Ridholts on Bloomberg Radio.
Speaker 1: This week on the podcast, I have special guests. Her
Speaker 1: name is Claudia Sam and if that name sounds vaguely familiar,
Speaker 1: she is the person who invented the some rule, which
Speaker 1: essentially is a way to identify when you are in
Speaker 1: a recession in real time. Traditionally, we wait for the
Speaker 1: official n B e R proclamation. Usually it's a year
Speaker 1: or so later. They were surprisingly quick to declare recession
Speaker 1: and it was either March or April um. The some
Speaker 1: rule essentially gives you a way, by using unemployment data
Speaker 1: to figure out in real time when you're in a recession,
Speaker 1: and it's really tremendously helpful. I know Claudia from a
Speaker 1: number of economic dinners and events I've attended. I always
Speaker 1: thought she was kind of interesting and wanted to have
Speaker 1: her on the show, and I just need an excuse
Speaker 1: to get her on. And then last month she wrote
Speaker 1: this fiery blog post economics is a Disgrace. I'll link
Speaker 1: to it on the blog, and and she specifically calls
Speaker 1: out people by names, she calls out institutions, She talks
Speaker 1: about sexism, she talks about racism, She talks about misogyny,
Speaker 1: she talks about bullying, She does not hesitate to name names.
Speaker 1: And really it was just a blistering blog post. I
Speaker 1: don't say that very often, UM, for someone within an industry,
Speaker 1: within a respected institution, to say, hey, this is an
Speaker 1: utter mess. We better get our acts together soon. And
Speaker 1: you know, by the way physician heal thyself, it was
Speaker 1: really something that that caught my eye. UM. Economics isn't
Speaker 1: the only industry that has these sorts of issues. Between
Speaker 1: the Me Too movement and what we've been seeing with
Speaker 1: Black Lives Matter, it's pretty clear that that this is
Speaker 1: endemic in a lot of institutions and a lot of professions.
Speaker 1: But it's kind of rare to see somebody who's within
Speaker 1: that institution calling it out. We also talk wank out
Speaker 1: about stimulus checks and and recessions and macroeconomic policy and
Speaker 1: what's being done correctly this time and what should have
Speaker 1: been run right In O eight oh nine, it's it's
Speaker 1: good wonky fun. I save all the grievances for the
Speaker 1: last segment, So if that's not UM floating your boat,
Speaker 1: you don't have to listen to that. But she does
Speaker 1: an excellent job explaining what the profession is getting wrong
Speaker 1: and what it needs to fix. And this includes both
Speaker 1: policy and research and publication as well as hiring practices
Speaker 1: and other things. So I think you'll find this very interesting.
Speaker 1: With no further ado, my conversation with Claudia some vis
Speaker 1: is Masters in Business with Barry Ridholts on Bloomberg Radio.
Speaker 1: My special guest this week is Claudia Sam. She is
Speaker 1: the director of macroeconomic Policy at the Washington Center for
Speaker 1: Equitable Growth. She was previously a senior economist at the
Speaker 1: Council of Economic Advisors for the Obama administration. In from
Speaker 1: two thousand and seven to she was a researcher and
Speaker 1: section chief at the Board of Governors of the Federal Reserve,
Speaker 1: where she specialized in macroeconomics and household of finance. She
Speaker 1: is also the creator of the some Rule, which determines
Speaker 1: if a recession is occurring in real time. Claudia Sam,
Speaker 1: Welcome to Bloomberg. Thank you. I'm so happy to be here.
Speaker 1: Tell us about how you found your way to the
Speaker 1: Council of Economic Advisors for the Obama ministry. Yes, so,
Speaker 1: by the time I went to the Council of Economic
Speaker 1: Advisors which was in the summer off. I had been
Speaker 1: at the Board for several years, so I went as
Speaker 1: the macroeconomic senior economists. I covered at the White House
Speaker 1: all of domestic macro and housing policy. So when I arrived,
Speaker 1: I thought, oh wow, they were like a hundred economists
Speaker 1: or more at the Board that cover these two topics.
Speaker 1: And but by the time I went there, I was
Speaker 1: trained to be able to do that. I started in
Speaker 1: two thousand and seven as an expert on consumer spending.
Speaker 1: Over time I got to manage and oversee the staffs forecast.
Speaker 1: I had been able to do a lot of briefings
Speaker 1: and writing. So by the time I went to c A,
Speaker 1: and that is true of everyone that they sent over there,
Speaker 1: I had the experience to step into that role and
Speaker 1: it for me it was really refreshing because I was like, oh,
Speaker 1: I am a generalist. I said, most of my time
Speaker 1: doing business investment. As I said, no one would have
Speaker 1: asked me what I thought about business investment, and there
Speaker 1: was a really rewarding experience. Jason Furman was chair at
Speaker 1: the time. He is excellent. He worked as so hard
Speaker 1: in a good way. Jay Campbell was a member that
Speaker 1: I worked with UH really closely, and I mean really
Speaker 1: everyone that I worked with, from member to senior economists
Speaker 1: to junior economists too, in terms like they were just fabulous.
Speaker 1: My last day adds the Council of Economic Advisors was Brexit,
Speaker 1: and so uh, I'm really good at picking good times, right.
Speaker 1: My first forecast at the FED was the start of
Speaker 1: the Great Recession. My last day at the e A
Speaker 1: was Brexit. I worked all through the weekend. What was
Speaker 1: funny is when I got back to the board on Monday, no,
Speaker 1: it was crickets, Like nobody was going to come ask
Speaker 1: me what I thought about Brexit. We have a whole
Speaker 1: team of international economists. So it was a really interesting experience.
Speaker 1: Ants I'm glad I did it. It really focused my
Speaker 1: mind on what economic policy could be, frankly should be.
Speaker 1: And I'll end this piece with just a funny story
Speaker 1: and how like the journey to the CEA started back
Speaker 1: in undergraduate So I went to Dennison University, a liberal
Speaker 1: arts college, and in my intermediate macro class, Dick Lucier
Speaker 1: taught the class and part of the class was us
Speaker 1: being like we were economists at the count of Economic Advisors.
Speaker 1: We had to cut things out of the newspaper and
Speaker 1: do analysis, and then he role played being the president
Speaker 1: and we had do presentations. I got to when he
Speaker 1: um when I was at the Council of Economic Advisors,
Speaker 1: he came to visit in d C. And I got
Speaker 1: to take him on a tour of the Oval Office.
Speaker 1: So to me, it was just this really special connection
Speaker 1: from how I fell in love with economics as an
Speaker 1: undergraduate and then when I got to contribute as an
Speaker 1: economist to the policy world. Huh. Quite interesting. You were
Speaker 1: also a section chief the Division of Consumer and Community
Speaker 1: Affairs at the FED. What does that mean exactly? What
Speaker 1: is the role of a section chief? Right? So, in
Speaker 1: my last two years as a fellow Reserve, I was
Speaker 1: a section in chief for a research section and the
Speaker 1: Division of Consumer and Community Affair. There were a lot
Speaker 1: of things unique about that because I had moved at
Speaker 1: that point out of a quote unquote economics division. So
Speaker 1: the team that I managed were the only economists doing
Speaker 1: economic research in that whole division. So to me, it
Speaker 1: was very eye opening. I worked with attorneys, I worked
Speaker 1: with policy analysts, and they were all really impressive. The
Speaker 1: division focuses on low and moderate incomes families and communities.
Speaker 1: So they were from the very beginning ahead of the
Speaker 1: game in terms of thinking about diversity and inclusion and
Speaker 1: racial injustice and educational disparity in rural versus urban. So
Speaker 1: that that was a really good experience for me. Back
Speaker 1: to what it means to be a section chief. So
Speaker 1: it is widely known that the section chief is the
Speaker 1: worst job or the hardest job, and the only one
Speaker 1: that comes closed is being a division director. So right,
Speaker 1: that's the very top of the house, and the section
Speaker 1: chief is the first manager job the board. Now it
Speaker 1: didn't when I joined the board, but the board now
Speaker 1: has very intensive management training for section chiefs or anyone
Speaker 1: who starts as a group manager, which is like one
Speaker 1: level down. So anyone who's supervising goes to a manager
Speaker 1: boot camp. It was like three months, every other week,
Speaker 1: three hours, uh, and that was really good. They brought up,
Speaker 1: brought in external consultants. I learned a lot from that.
Speaker 1: I learned a lot from my team, especially the research assistant,
Speaker 1: in how to be a good manager. Now, it won't
Speaker 1: surprise anyone, and this isn't just at the board. You
Speaker 1: get promoted because you're good at doing the job you
Speaker 1: started with, like I was I've made Section chief because
Speaker 1: I'm a very good economist and I could lead my
Speaker 1: team on their economic policy work. That didn't mean I
Speaker 1: knew anything about being a manager, and they don't teach
Speaker 1: us that in the PhD doctoral programs, and often they
Speaker 1: teach us what not to do as a manager. UM
Speaker 1: So that was a really hard year. That was like
Speaker 1: my impostor syndrome year, on par with that year in
Speaker 1: two thousand and eight when I was like, oh my gosh,
Speaker 1: I'm supposed to forecast the US economy in crisis. So
Speaker 1: it was a very different time and I handled it
Speaker 1: weight better than two thousand eight. But it's a tricky job,
Speaker 1: and it's one where the board helps us do a
Speaker 1: good job now. But if you don't do a good job,
Speaker 1: you can not only have a team that's not effective
Speaker 1: at doing policy work, you can really damage people. And
Speaker 1: we don't want to do that because that doesn't help
Speaker 1: any We're going to talk more about that and how
Speaker 1: the UM field, especially the academic programs, not only do
Speaker 1: they not teach management, they really don't teach writing. They
Speaker 1: don't teach a lot of skills that would be helpful.
Speaker 1: So but we'll come back to that. What also makes
Speaker 1: you a little unusual as an economist is you are
Speaker 1: pretty active on Twitter and you maintain an active blog,
Speaker 1: as do I. Why are you uh using these platforms?
Speaker 1: Tell us what an economist gets out of participating in
Speaker 1: social media. So I joined the platforms Twitter. The blogging
Speaker 1: came later. Uh my gateway quote unquote drug to economic
Speaker 1: social media was commenting on economic blogs like marginal Revolution,
Speaker 1: money illusion. Um, that was really how I dipped my
Speaker 1: toe in the water there Twitter. I spent time on it.
Speaker 1: The reason I went to Twitter was because after I'd
Speaker 1: had some difficult periods at the board and also was
Speaker 1: trying to figure out how are all these smart, caring colleagues, Like,
Speaker 1: how are we missing it that the recovery from the
Speaker 1: Great Recession is going to be really slow? I like,
Speaker 1: our staff forecast was consistently too strong, and I and
Speaker 1: there were others were consistently saying, what are you thinking?
Speaker 1: There's no way we have families that are absolutely decimated
Speaker 1: from this recession. And so for me that moment and
Speaker 1: then reflecting back, remember I showed up in the summer
Speaker 1: of two thousand and seven reflecting back, and I was like,
Speaker 1: how did we miss this right, Like, there's all these
Speaker 1: people and that was a moment where I said, Okay,
Speaker 1: maybe it's because we don't have enough diverse voices, we're
Speaker 1: not connected enough to reality. And well Twitter has got
Speaker 1: a lot of diverse voices, right, So I went on
Speaker 1: to econ Twitter. I like to as it would be
Speaker 1: apparent to anyone who knows me, I like to talk
Speaker 1: to people. I like people. I like people that are
Speaker 1: a little prickly. I mean, I'm a macro economist, right like,
Speaker 1: so I went there to hear from people who don't
Speaker 1: they're not inside the building, and frankly, it's probably a
Speaker 1: good idea, Like some of them would be absolutely horrible
Speaker 1: macro forecasters at the board. But that was for me
Speaker 1: very important. Now that was my upside. No one at
Speaker 1: the board saw that as an upside, right, and I
Speaker 1: was a walking downside risk within a very short time
Speaker 1: of being on Twitter. It's very good about it. I
Speaker 1: don't talk about monetary policy, but I was linked to
Speaker 1: things on the board's website like Bernankee gave us speed
Speaker 1: and Da Da Da Da. So I got found out
Speaker 1: by public affairs because I was driving traffic to the
Speaker 1: board's website and yeah, and it was bad. And I
Speaker 1: got called to an off site coffee that was basically like,
Speaker 1: what is wrong with you? You were the only staff
Speaker 1: economist talking about economics on Twitter. And the reward for
Speaker 1: that is I had all of public if not all,
Speaker 1: I had Michelle Smith and several other public affairs people
Speaker 1: following me on Twitter when I would do something that
Speaker 1: they felt was a miss step. Even I've never broke
Speaker 1: like ah, I never talked about um information that wasn't
Speaker 1: public like forecast information. But I would get within a
Speaker 1: half an hour a call from my division director or
Speaker 1: via my boss saying you got you can't do that.
Speaker 1: You gotta do you know. And so there was this
Speaker 1: aspect of surveillance, which I get, Like Michelle Smith, public
Speaker 1: affairs at the Board has such a hard job, and
Speaker 1: every once in a while I stepped in their lane.
Speaker 1: I never meant to like, how how dare you promote
Speaker 1: something that we've hidden in public view on our publicly
Speaker 1: accessible website. Yeah. No. And when my last year at
Speaker 1: the FED, and I really thought, because Howell like loves Twitter,
Speaker 1: right when he was a brand a governor, I was
Speaker 1: in his office with another economist he wanted to understand
Speaker 1: like labor markets superstar effect. We went and talked to
Speaker 1: him at the end of the meeting. He looked at
Speaker 1: me and he's like, oh, yeah, you had a really
Speaker 1: big day. And I'm like, well, duh, I'm here, you know,
Speaker 1: breathing a governor and he's like, no, it's Smiths retweeted
Speaker 1: you on Twitter. I over I know no, because I
Speaker 1: was like, you're on Twitter and you followed Noah and
Speaker 1: you were on Twitter during the day, right. So I
Speaker 1: was just blown. When he became chair, I thought, oh,
Speaker 1: Twitter is gonna be okay. Yeah, that was wrong. Um.
Speaker 1: So I got in trouble two more times because Poal
Speaker 1: read one of my tweets and asked about it and
Speaker 1: he shouldn't be learning anything from my tweets, so I
Speaker 1: was told. And twice I got in trouble for linking
Speaker 1: to the distributional financial accounts on the board's website because
Speaker 1: they didn't want attention drawn to it. And I was
Speaker 1: always like, you know, the board's website is the best
Speaker 1: place to put information you don't want anyone to see. Um,
Speaker 1: but that's hilarious. I love the board. I understand much
Speaker 1: better than I did in the beginning why what I
Speaker 1: was doing could be problematic. And I never never wanted
Speaker 1: to be the person who brought down the bed right
Speaker 1: or cause immense stress. I was just having fun, and
Speaker 1: like I said, I was trying to learn from people
Speaker 1: who weren't like anybody else that was in the building.
Speaker 1: That's so funny that, by the way, bringing down the
Speaker 1: FED is Judy Shelton's job. It's not Clodius Tom's job.
Speaker 1: So we can leave that, we can leave that to home.
Speaker 1: I'm coming now, I know. That's why I'm sticking my
Speaker 1: two bits in. And by the way, my economics gateway
Speaker 1: drug was Brad DeLong, the economist from Berkeley, and he
Speaker 1: was one of the earliest academic bloggers, just musing in
Speaker 1: public on a blog and discussing economic data. And it
Speaker 1: was so refreshing compared to the sort of stayed releases
Speaker 1: from BLS and even back then the Wall Street economists
Speaker 1: were very, very tame, and to have someone come out
Speaker 1: and just like boom, here's what's wrong with the data
Speaker 1: analysis was really a refreshing change of pace. Yeah, and
Speaker 1: I will say there are two things that I really
Speaker 1: like about Brad DeLong on Twitter, Like I liked him
Speaker 1: off Twitter. I've learned a lot from him. One he
Speaker 1: is an economic history why he has a good grounding
Speaker 1: in economic history, that's not the only thing he works.
Speaker 1: And he does a lot in macro space. To his blog,
Speaker 1: I mean he was like live tweeting World War two
Speaker 1: or you know, I mean like it would have it
Speaker 1: showed a side of him that was like not like
Speaker 1: an economy that you wouldn't have seen this in an
Speaker 1: economic seminar. The other thing that Brad does on Twitter,
Speaker 1: which is very rare, is that he engages with people,
Speaker 1: like he will reply to tweets. Have I looked on
Speaker 1: from Paul Krubin's Twitter feed, and I Paul like does
Speaker 1: so much in terms of communicating economics and pushing us
Speaker 1: to think and pushing a broader audience. He never replies
Speaker 1: to tweets, like never, So I like Brad that he
Speaker 1: engages like I like to engage. So that to me
Speaker 1: is like econ Twitter can be a special place, but
Speaker 1: it's hard if it's a lecture and not a conversation. Huh.
Speaker 1: Quite fascinating. So let's talk a little bit about fiscal stimulus.
Speaker 1: You know, when we look back at the financial crisis
Speaker 1: of oh eight oh nine. The vast majority of that
Speaker 1: response seemed to be coming from the Federal Reserve and
Speaker 1: a monetary ast response, not a fiscal stimulus compared to
Speaker 1: this one, How would you do a side by side
Speaker 1: comparison between two thousand and eight and on a fiscal basis.
Speaker 1: So I have done a lot of work thinking about
Speaker 1: how compares to two thousand and eight, And the reason
Speaker 1: for that is I had a very unique experience at
Speaker 1: the Board in terms of understanding what happened in two
Speaker 1: thousand and eight and the years after that. And it
Speaker 1: may is the encounterintuitive. So I covered consumer spending at
Speaker 1: the Federal Reserve. I didn't advise on monetary policy. What
Speaker 1: my job was to do was say, Okay, what's going
Speaker 1: to happen, what is happening for families and they're spending
Speaker 1: in the economy. To do that during the crisis and
Speaker 1: during the recovery, I had to understand and have an opinion,
Speaker 1: expert opinion on what is fiscal relief doing or fiscal
Speaker 1: stimulus doing in the economy. Because then the Board in
Speaker 1: the monetary policy, they work around the edges. They need
Speaker 1: to know what we think is happening in the economy,
Speaker 1: and part of that is what is Congress doing? And
Speaker 1: so not only did I follow the data in real time,
Speaker 1: I would update my forecast as the data came in.
Speaker 1: This is a very unique UH expertise and experience for
Speaker 1: a macro economist to have. Academics do not do this
Speaker 1: right and people at the board do and I learned
Speaker 1: very well. So in addition to that, I started a
Speaker 1: research program with Matthew Shapiro, who was my advisor at Michigan,
Speaker 1: and Joel Slemrod, who's also a professor there. They had
Speaker 1: a prior research program studying the changes in tax withholding
Speaker 1: the two thousand one rebates they had me joined this product,
Speaker 1: this research program of THEIRS in two thousand eight. We
Speaker 1: did research and ran surveys on the two thousand eight
Speaker 1: tax rebates, the two thousand nine and ten Making Work
Speaker 1: pay tax credit, and the two thousand eleven and two
Speaker 1: thousand twelve payroll tax cut. Fast forward to last year,
Speaker 1: I contributed to a volume called Recession Ready that the
Speaker 1: Hamilton's Project of Brookings and Equitable Growth Right Now Work
Speaker 1: oversaw the volume. I had a chapter on individual payments
Speaker 1: that would happen automatically in a recession. I from my
Speaker 1: expertise that it's got to be big direct payments to
Speaker 1: household This little divvy debby changing with holdings. This is
Speaker 1: not a good way to find a recession. It doesn't
Speaker 1: help families fast enough, and they don't even know what
Speaker 1: happens like still stimulus, Like I don't know much about politics,
Speaker 1: but I know enough to know that probably won't help
Speaker 1: you a lot in terms of saying, you know, Congress,
Speaker 1: the President saying we help the American people. So I
Speaker 1: took my forecasting expertise, my research knowledge, and the research
Speaker 1: knowledge from a lot of other people who work in
Speaker 1: this space. One of the things that the board because
Speaker 1: you don't put your forecast together. You don't walk into
Speaker 1: the boardroom and say, I think this is the right
Speaker 1: thing to do, or this is the right way to
Speaker 1: think about the economy. And here's my research paper, right
Speaker 1: like you come in with here's my paper, here's three
Speaker 1: other papers, here's how they agree, here's how they disagree,
Speaker 1: like and so these were again skills that a lot
Speaker 1: of economists don't have. But that's what I've put into
Speaker 1: my chapter. And in addition, I said, we know the
Speaker 1: two thousand eight in particular, worked really well, like that's
Speaker 1: the way to do it. And and then the add
Speaker 1: on was me thinking about, well, how will we do
Speaker 1: that automatically? And the reason that I had it automatic
Speaker 1: and I had also my proposal in a severe recession,
Speaker 1: not every recession is severe, but in our severe recession,
Speaker 1: those payments would happen automatically on a repeated basis until
Speaker 1: the unemployment rate came down. And that was born out
Speaker 1: of a very painful experience, because I have a very
Speaker 1: emotional reaction to the macro economy. It came from a
Speaker 1: painful experience in two thousand and twelve when the payroll
Speaker 1: tax cut stopped and there wasn't anything else that went
Speaker 1: to a large number of families, and the unemployment rate
Speaker 1: was still high. So I knew from fiscal policy that
Speaker 1: they stepped away. I mean, they're the politicians. I'm not,
Speaker 1: but they made a decision that it was time to
Speaker 1: stop the fiscal relief and in fact they cut back
Speaker 1: on government spending that had a lot of damage the economy.
Speaker 1: Are last recovery was very long, but that's actually a
Speaker 1: bad sign in some ways because it took us so
Speaker 1: long to get the unemployment right down. And that was
Speaker 1: the fiscal policy stepped away, and frankly, monetary policy did
Speaker 1: not step up enough in the recovery. Like they didn't
Speaker 1: save Main Street, they saved Wall Street. There were political
Speaker 1: existential risks to the FED that are why they justified,
Speaker 1: at least internally or in my impression, the like not
Speaker 1: going all in on Main Street. But it it hurts people, right,
Speaker 1: so I knew, like the Fed really can't do this
Speaker 1: in some ways they really shouldn't. But the Congress not
Speaker 1: only can, but they have to. And that is what
Speaker 1: has been so hard right now, Like last week when
Speaker 1: the extra six d a week to the unemployed expired,
Speaker 1: that is going to hurt so many families this year.
Speaker 1: And that program should have been and could have been
Speaker 1: on autopilot, and it was. So let's talking the fallout.
Speaker 1: So let's talk about that program. When Congress passed the
Speaker 1: Cares Act, they sent a check to everybody making I
Speaker 1: think it was less than dollars if memory serves, plus
Speaker 1: five dollars per dependent and then a six hundred dollar
Speaker 1: was that a a weekly or monthly unemployment bonus? How
Speaker 1: much weekly? So? And and that's based roughly on the
Speaker 1: median income across the country. So so that's quite a
Speaker 1: substantial fiscal stimulus or or is it not. What do
Speaker 1: you think of those six hundred plus extending unemployment plus
Speaker 1: five hundred per dependent on a one time check plus
Speaker 1: twelve hundred on a one part check. How would you
Speaker 1: rate that fiscal stimulus and what was the impact in
Speaker 1: the economy in a period where the I think that
Speaker 1: at its worst the Atlanta GDP now then they're now
Speaker 1: casting tool had GDP contracting at fift not on an
Speaker 1: annual basis, but when they happen to take that snapshot
Speaker 1: at the worst part of the economic contraction, the economy
Speaker 1: was effectively cut in half. So I did not sleep
Speaker 1: the night of the vote in the Senate until they
Speaker 1: passed it, which I think men. I stayed up until
Speaker 1: like one am or something the next day. And the
Speaker 1: reason is by the time it got to the Senate,
Speaker 1: I knew this was really good for families and the unemployed.
Speaker 1: I mean, frankly, I was shocked that the six d
Speaker 1: dollars a week made it through, and it almost didn't
Speaker 1: Like the Senate Republicans, there was a group that woke
Speaker 1: up and they're like, that is a lot of money, right,
Speaker 1: and so especially given what the base benefits to the
Speaker 1: unemployed would be now as a macro economist, so setting
Speaker 1: aside how I feel about families and the unemployed as
Speaker 1: a macro economist, this was huge because they passed it
Speaker 1: in March. I mean it took later, longer than the Fed.
Speaker 1: But my goodness for Congress, they really moved right, so
Speaker 1: they moved fast. The rebates I mean, honestly, the rebates
Speaker 1: were better than what I had for a posed in
Speaker 1: my chapter because I didn't think it was possible. They
Speaker 1: are huge. They are twice and I think they should be.
Speaker 1: I'm not saying this was a bad thing. The benefits,
Speaker 1: the relief that went out in these direct payments is
Speaker 1: like twice in generosity what happened in two thousand eight.
Speaker 1: And in addition, the eligibility is expanded. Basically anybody with
Speaker 1: a SO Security number has a claim on those checks.
Speaker 1: And the Treasury did things that sped up the delivery
Speaker 1: relative to two thousand eight. And I mean they said
Speaker 1: up a website where you could go and put your
Speaker 1: payment information in if you hadn't filed taxes. Now, it
Speaker 1: was not perfect. Some people got checked that didn't need them.
Speaker 1: I mean, honestly, a over well over eight of the
Speaker 1: US population, like not even adults, but the population got
Speaker 1: some money from those rebates. That is just like wow. Anyway,
Speaker 1: And the thing is is they got it out fast,
Speaker 1: like the rebates were. In my opinion, the rebates were
Speaker 1: the best administered piece of the entire Cares Act. I'm
Speaker 1: not thinking they were the most important. Like the aid
Speaker 1: that went to the most hurt, like the unemployed, that
Speaker 1: was that's really like, we have to help the people
Speaker 1: who are hurting the most. The thing is, in March,
Speaker 1: we didn't know who was all going to get hurt,
Speaker 1: like the American people were really scared. So it helps.
Speaker 1: And one last thing about the six hundred dollars, there's
Speaker 1: been a lot of discussions that that extra money is
Speaker 1: holding people back from going back to work. I know
Speaker 1: small business owners, even in my own family, who have
Speaker 1: had a difficult time rehiring workers to do work in
Speaker 1: like service industry job because they're like, well, why should
Speaker 1: I go back. I'm getting more every week than I
Speaker 1: would doing your job, and that is legitimate, and yet
Speaker 1: for many many workers, the problem is their employers don't
Speaker 1: need them back because nobody's in the store or not enough.
Speaker 1: And so like that extra money, the unemployed are spending
Speaker 1: it right, and so it is pumping demand in the
Speaker 1: economy that needs it, and it is going away. What
Speaker 1: do you make of the Yale study that said, when
Speaker 1: we look at people who are receiving the six D
Speaker 1: dollar benefit and those who are not, they are both
Speaker 1: returning back to the workforce in the same numbers. So
Speaker 1: at this point there are various research studies and and
Speaker 1: this is this is coming from academics, this is coming
Speaker 1: from policy analysts. I've done work in this space. Also
Speaker 1: that that money that support is mattering and it is
Speaker 1: not holding back the economy. Now, there will be a point,
Speaker 1: in my expert opinion, as the unemployment rate comes down
Speaker 1: and jobs become more plentiful, that we should think hard
Speaker 1: about our were paying are not paying? Are we giving
Speaker 1: people more money than they normally would have gotten? The
Speaker 1: very important piece out of the study I saw it
Speaker 1: yesterday that I'm sorry, I'm not going to attribute it correctly,
Speaker 1: but they showed that in past recessions what enhanced benefits,
Speaker 1: and in that case it was the extended durations being
Speaker 1: able to stay on longer than twenty six weeks. It
Speaker 1: showed that it allowed people the time to go get
Speaker 1: a job again that was commensurate with their skills, and
Speaker 1: that was particularly important for people in disadvantaged groups, so
Speaker 1: people of color, the less educated, and women. So we
Speaker 1: don't want people to go back too fast because they'll
Speaker 1: get in jobs that aren't the right jobs for them.
Speaker 1: And right now, oh my goodness, a lot of these
Speaker 1: jobs are not safe. So we want to make sure
Speaker 1: that we don't kill people. Right So there's six hundred
Speaker 1: dollars right now, makes a lot of sense reasonable people.
Speaker 1: When we get five years into this and unemployment rate
Speaker 1: of six percent, then let's talked about it. And I
Speaker 1: am in the group that thinks we should phase it
Speaker 1: down automatically as the unemployment rate comes down. Oh, I
Speaker 1: like the idea of using a metric to UH to
Speaker 1: make that determination and taking it out of the political realm.
Speaker 1: Last question on unemployment and these fiscal stimulus in these checks.
Speaker 1: We're recording this in the first weekend of August. There
Speaker 1: is no deal yet for the Cares Act renewal. What
Speaker 1: do you think would be appropriate for Congress to pass
Speaker 1: relative to unemployment and another one off check or not.
Speaker 1: I want Congress to pass a new relief package that
Speaker 1: is between four and six trillion dollars. I am not
Speaker 1: expecting to get that. I truly believe, in my expert
Speaker 1: opinion that they need to go big again and they
Speaker 1: need to do what works. So I just I want
Speaker 1: Treasure to just push the button again and send out
Speaker 1: those checks we would have for people who have direct deposits.
Speaker 1: They would have that money within a week of Congress
Speaker 1: approving it because the heavy lifting of putting together a
Speaker 1: file of who gets the check, where's their bank account?
Speaker 1: That file exists. So if you do it exactly like
Speaker 1: you did last time, it goes really fat. So yeah,
Speaker 1: that is good. I want to see the unemployment benefits continue,
Speaker 1: just like I said, tie them to the economy, keep
Speaker 1: them where they are right now. Especially the six dollars
Speaker 1: is so big because when the Cares Act was past,
Speaker 1: we were in a pandemic. We did not expect to
Speaker 1: be in a pandemic now, but we are now. I
Speaker 1: know from having I've been doing a lot of work
Speaker 1: with a lot of different offices and members in Congress.
Speaker 1: That's why I left the FED. Couldn't do that when
Speaker 1: I was there. I spent Mother's Day weekend putting together
Speaker 1: a cost estimate for the unemployment insurance, the enhanced benefits
Speaker 1: time to the unemployment rate. Doing forecasters. I mean, there's
Speaker 1: something I learned how to do it defense there are
Speaker 1: not a lot of people that know how to do this,
Speaker 1: and I came out with an estimate that was about
Speaker 1: it was a little over two trillion. And the expensive
Speaker 1: part of that is Congressional Budget Office and a lot
Speaker 1: of forecasters think this is going to take a long time, right,
Speaker 1: so the phase down of those benefits is going to
Speaker 1: happen slowly, and that puts the big price tag on
Speaker 1: Now the CBO, the Congressional Budget Office, doesn't do the
Speaker 1: feedback effects. I think in the end it would really
Speaker 1: cost the cost taxpayers less than two trillions because we
Speaker 1: get the economy going faster. But at the end of
Speaker 1: the day, that's one reason it's a big ticket. One
Speaker 1: more I'll say that I think is really important. Wait
Speaker 1: before you move past that point, I just have to say,
Speaker 1: you're describing the sort of supply side unemployment benefit where
Speaker 1: it's cheaper than it looks because its own economic activity
Speaker 1: is going to help pay for itself. Is that what
Speaker 1: you're saying that's right. Well, in a wonky world, they
Speaker 1: call this dynamic scoring, where Congressional Budget Office would take
Speaker 1: into account of feedback. In this case, relief has positive
Speaker 1: feedback effects definitely now. Right now, the Congressional Budget Office
Speaker 1: can only do that kind of analysis for changes in taxes.
Speaker 1: There's just something Congress decided. So you know, we can't
Speaker 1: run this through and expect to get back a smaller score.
Speaker 1: I have to make the argument, and others have that
Speaker 1: we know it will help the economy. And if we
Speaker 1: help the economy right now, it is a down payment
Speaker 1: on the next few years being a lot better than
Speaker 1: they look like they're headed to be. So let's talk
Speaker 1: about the some rule a bit. When the three month
Speaker 1: moving average of unemployment moves above its previous low, you
Speaker 1: say we're in recession. Tell us why that is. So,
Speaker 1: it's just it's an empirical regularity, right. I spent a
Speaker 1: lot of time with a spreadsheet over weekends. Again, this
Speaker 1: was in part to do my proposal of automatic payments
Speaker 1: to people like you gotta know when to send out
Speaker 1: hundreds of billions of dollars, right, You don't particularly want
Speaker 1: to mess that up. And I knew, and this is
Speaker 1: a principle that Federal Reserve economists, no people on Wall
Speaker 1: Street know that a small increase in the unemployment rate
Speaker 1: is a bad sign. Now, I wanted to really understand
Speaker 1: when it's accurate and when it's in a recession. The
Speaker 1: Federal Reserve has a rule of thumb, which I did check.
Speaker 1: After they called this assomb rule. I asked one of
Speaker 1: my former bosses. I'm like, did I scoop the board's rule?
Speaker 1: Like I do not want to, because we'll rename it
Speaker 1: will be the FED rule, right, And he said no.
Speaker 1: The internal rules the FED was a three tents increase
Speaker 1: in the unemployment rate, and that happens ahead of recessions.
Speaker 1: And I know one time in two thousands three, because
Speaker 1: I tried everything under the sun when I came up
Speaker 1: with my rule, that it triggered and it was a
Speaker 1: false positive, right, because that small increase happened in that
Speaker 1: jobless recovery, it didn't end up being considered a recession.
Speaker 1: So three tents was the rule. It makes sense for
Speaker 1: the FED because monetary policy wants to get ahead of
Speaker 1: the game if it can, because it often is believed
Speaker 1: that it acts with the lags you know, if you're
Speaker 1: lowering interest rates, and frankly, if they cut a quarter
Speaker 1: point and it is an actually a recession, like they'll
Speaker 1: pat themselves on the back and it's not like, you know,
Speaker 1: taxpayers have just lost three hundred billion dollars of their money,
Speaker 1: quote unquote. So I had a different goal because mine
Speaker 1: was about what Congress does. And so I found a
Speaker 1: rule that always triggered within the first few months of
Speaker 1: a recession. And I also believe that the indicator I
Speaker 1: use is such a good one because it is the
Speaker 1: reason that we hate recessions and we fight back. It
Speaker 1: is people losing their jobs. Those people, especially in a recession,
Speaker 1: especially if it takes well to get a new job,
Speaker 1: they will pay for that in terms of their careers
Speaker 1: and their families will pay for it for a very
Speaker 1: long time. So to me, it's a widely followed statistic.
Speaker 1: It makes a lot of sense. It's a federal reserve.
Speaker 1: They also use things called regimes switching factor models. I
Speaker 1: am not taking that to Congress, like, this is not
Speaker 1: what you want to have, you know, money, but at
Speaker 1: a futtal reserve. I mean, you ought to use everything
Speaker 1: under the sun to understand the macro economy. You have
Speaker 1: to have a simple rule if you want to put
Speaker 1: fiscal policy on autopilot. So to me, it was a
Speaker 1: great rule in my chap her is called a recession indicator.
Speaker 1: When I showed up at the launch event for the
Speaker 1: book and they started calling the somb rule, I was
Speaker 1: very uncomfortable, and to the point that after the event,
Speaker 1: I went and talked to Christie Romer. I wanted to
Speaker 1: talk to her about some physcal stimula. She was one
Speaker 1: of the main panelists, and I said, I'm so uncomfortable
Speaker 1: with the som rule thing. And she looked at me
Speaker 1: and she's like, Claudia, you have got to own this.
Speaker 1: Any man would And I was like, okay, Christie is
Speaker 1: my hero. I would listen to Christie what I learned
Speaker 1: Since then, and I've joked a little bit about this
Speaker 1: and ribbed some people online like Bill Dudley that owning
Speaker 1: it actually meant I had to defend it, right, because again,
Speaker 1: this principle is there and it was great and it
Speaker 1: was important for me to understand like the intellectual history
Speaker 1: of it. But like I already did um anyways, but
Speaker 1: I am thrilled and I always tell the people that
Speaker 1: are like, oh, well, we knew this and that that,
Speaker 1: And I was like, but if everybody in the world
Speaker 1: new it, it wouldn't be in the Bloomberg terminals, in
Speaker 1: haveor in Fred's with my name. So maybe I wasn't
Speaker 1: like the person who thought the big thought. I think
Speaker 1: I did not think the big thoughts, and yet I
Speaker 1: got it out to the world. And to me, that's important.
Speaker 1: And I've spent a lot of time with Congress trying
Speaker 1: to help them understand why this is such a good
Speaker 1: thing to do. So let me let me push back
Speaker 1: on your um false modesty, I'll call it. There was
Speaker 1: a Wall Street Art Wall Street Journal article. I love
Speaker 1: this headline quote, are we in a recession? Experts agree?
Speaker 1: Ask Claudius some So that is quite a m accolade
Speaker 1: in the journal. I would have that on my wall
Speaker 1: in my office. What sort of pushback did you get
Speaker 1: to that that article? And I'm curious was it intellectual
Speaker 1: pushback to the idea or was it pushed back to
Speaker 1: who really owned authorship of it? So when I saw
Speaker 1: that article and I was thrilled. Kate Davidson has been
Speaker 1: such a booster of my career. So the response to
Speaker 1: that well even my response when I when I saw
Speaker 1: the headline is I was like, if you asked settle
Speaker 1: reserved staff economists, I would not be the names that
Speaker 1: they would bring out, right like, and I knew that,
Speaker 1: and I knew it because you know, months before is
Speaker 1: when the somber was born, and you know there had
Speaker 1: been some attention to it. Like I just had people
Speaker 1: that were really clear and not in a like mean way.
Speaker 1: But there's the board is a very interesting place. There
Speaker 1: are times and the summer was an example of many
Speaker 1: the things that I know about the macro economy I
Speaker 1: learned at the FED. Like it's it's the board right
Speaker 1: where this kind of brain that passes along macro. Now
Speaker 1: that meant that when I spoke out and this had
Speaker 1: happened on Twitter, so I knew this was an issue.
Speaker 1: It's like, well, it's not fair you get the credit
Speaker 1: because you're speaking out and you learned it from everybody.
Speaker 1: And I tried always be cognizant of that and give
Speaker 1: credit where credit is due. Part of where credit is
Speaker 1: due is with me, Like I'm the one that spent
Speaker 1: weekends with this spreadsheet. I had someone contact me after,
Speaker 1: you know, a friend, it's a FED contact me afterwards,
Speaker 1: and he was like, so the spreadsheet, she said, it
Speaker 1: was this massive spreadsheet. Seriously, this rule is so simple.
Speaker 1: And I looked at him and I said, well, I
Speaker 1: pulled all the real time data, which means that I
Speaker 1: looked at all the data as people saw it at
Speaker 1: that time, which is more complicated. And frankly, this man,
Speaker 1: who I truly think as an amazing economist, he works
Speaker 1: on the financial side of the FED. I work on
Speaker 1: the real side. If I had asked him to do
Speaker 1: the real time analysis, it would have taken him a
Speaker 1: long time, right, But those are the kind of like, oh,
Speaker 1: this is so simple. And it wasn't saying that I
Speaker 1: didn't deserve it so much as we all deserved it,
Speaker 1: like the whole staff, and like the staff from years before,
Speaker 1: and you know, like as with Twitter, I I take
Speaker 1: the risk of speaking out. So I don't know, but
Speaker 1: I was used to this and I wasn't surprised. And honestly,
Speaker 1: if I hadn't have been a FED forecaster, if I
Speaker 1: hadn't spent a year at c A where finally early
Speaker 1: in twenty six things were wobbly, right, so um and
Speaker 1: I actually at the event tried to give the credit
Speaker 1: off to Jason Furman, who then said, oh the fight,
Speaker 1: this is more like Doug Elmendorff. And then Christie's like,
Speaker 1: you have to stop, like this is you um anyway?
Speaker 1: So it's interesting experience. I'm not really like, is this
Speaker 1: a peculiarity of the FED? And what bothers me the
Speaker 1: most about it is we knew. It's like the FED
Speaker 1: knew for a long time. And what happened is when
Speaker 1: I heard it with the world, the world didn't know.
Speaker 1: Now that's quite that's quite interesting. If let me ask
Speaker 1: you this question as an author, and I'll get off
Speaker 1: of the some rule after this, was anyone in the
Speaker 1: FED using the rule of thumb, three month average jobless
Speaker 1: rate rising half a percent from a previous twelve month low?
Speaker 1: Was that anywhere um on any FED sheets before you
Speaker 1: publicized it in that format and with that conclusion no,
Speaker 1: So then then then you get the authorship is the
Speaker 1: principle there's no principle. There's no principle. The principle is
Speaker 1: you wrote it, you created it. I'm I'm listen, you
Speaker 1: know I'm gonna say this. I might as well say
Speaker 1: it on the record instead of saying off the record.
Speaker 1: When I first started blogging in the nineties and then
Speaker 1: in the early two thousands, I was a guest. How
Speaker 1: frequently I would write something on a blog and then
Speaker 1: weeks later or a days later, see it show up
Speaker 1: in a mainstream paper with no credit, no link, no citation,
Speaker 1: just oh you like that idea? What do you think?
Speaker 1: I'm your writing staff, I'm I'm I'm punching up your
Speaker 1: your script. You just stole this. I mean sometimes it
Speaker 1: was word for word. So I think if you create
Speaker 1: something that has not been created before, even if other
Speaker 1: people contribute to it, hey we're we're all standing on
Speaker 1: the shoulders of giants. You were entitled to the to
Speaker 1: the authorship credit not hereby deem the som rule. Officially yours.
Speaker 1: I have that authority because I'm on the radio. Let's
Speaker 1: talk about a fiery blog post you wrote a couple
Speaker 1: of weeks ago titled economics is a disgrace, And I'm
Speaker 1: going to suggest listeners go to macro mom and find
Speaker 1: that blog post and it you make a number of
Speaker 1: really interesting allegations, the first of which is economics research
Speaker 1: replicable sixty published papers from thirteen generals say usually not
Speaker 1: these various research papers were only able to replicate about
Speaker 1: a third of previous research that was published in various
Speaker 1: economic journals. What's wrong with the state of economic research today?
Speaker 1: It says a lot of things about the field of research.
Speaker 1: One that I didn't touch on in my blog post
Speaker 1: is it it shows that we don't have a culture
Speaker 1: of going back and checking each other's work, right I.
Speaker 1: And there was pushback, and I'll come back to this
Speaker 1: about the paper, because it wasn't like they went and
Speaker 1: did like a news study. You know, like I work
Speaker 1: in consumer spending. I have written so many papers showing
Speaker 1: falsification of a basic principle of consumer spending models, as
Speaker 1: as like hundreds of other people. Right, So it's not
Speaker 1: like someone's checking my work where I'm not checking Jonathan
Speaker 1: Parker's work. We're just doing different studies. What this paper
Speaker 1: by Andrew Chang and Philip Lee did is they said, Okay,
Speaker 1: let's go to the top journals and let's just see
Speaker 1: if we can get their main results. They weren't even
Speaker 1: trying to replicate all the results. They just wanted the
Speaker 1: main takeaway empirical results of the finding. And they they
Speaker 1: did this in a way Andrew Kang was a colleague
Speaker 1: of mine. For you is at the Federal Reserve. He
Speaker 1: is an absolutely industrious person, not as fire as me,
Speaker 1: like he's more soft spoken. He completely rolled up his sleeves.
Speaker 1: He had an army practically of research assistance. He was
Speaker 1: also in the macro forecasting section with me, and they
Speaker 1: spent hundreds of hours on this project. They were so careful,
Speaker 1: like there were no cutting corners, there was no playing
Speaker 1: fast and loose. They wanted to be able to replicate.
Speaker 1: They put a lot of time into it, and it
Speaker 1: should have been a finding that we as a profession
Speaker 1: took really seriously. And instead from very elite members of
Speaker 1: the profession they were they were received with derision. I
Speaker 1: mean they were outright criticized, put down in public. The
Speaker 1: paper was death rejected it. In addition, where I talked
Speaker 1: about in the blog post, Andrew shared with me a
Speaker 1: correspondence that he received from a very senior person in
Speaker 1: the profession because he knew I had had problems with
Speaker 1: this person. And I was furious, but I told Andrew,
Speaker 1: this man does it, but it is absolutely unacceptable. The
Speaker 1: paper was rejected at all the top journals. It did
Speaker 1: finally find a home and adding injury to insults in
Speaker 1: one of those top journals. Another researcher, much more prominent,
Speaker 1: published a paper later saying we should do more replication.
Speaker 1: I mean, it was just it was astounding to me
Speaker 1: on so many different levels of this elitism and the
Speaker 1: profession pushing back on uncomfortable conversations, and then like, we
Speaker 1: actually need a culture of replication, Like I know that
Speaker 1: is a policy analyst. I never took a result, a
Speaker 1: piece of advice into the boardroom that was one paper,
Speaker 1: especially if it was some paper that was like totally
Speaker 1: different than every other paper written on the topic. Academia
Speaker 1: rewards novel surprising findings. Those are the ones that we
Speaker 1: absolutely should be checking the map, right, because I'm not
Speaker 1: saying they're all wrong, but I mean Andrew and Phillips
Speaker 1: research showed yeah, you should really, we should really do
Speaker 1: more of this, and and we don't economics and frankly
Speaker 1: his paper, their paper was ignored. Let me push back
Speaker 1: a little bit against your argument with a quote from
Speaker 1: famous physicist Max Planck, basically saying, what the old guard
Speaker 1: believes doesn't go away until the old guard is dead.
Speaker 1: So how is economics any different from physics? Or other
Speaker 1: fields where you have this entrenched, calcified belief system that
Speaker 1: literally takes a generation to get past. So when I
Speaker 1: hear the quote now, and I've heard it in the past,
Speaker 1: and I agree with it, and I think the direction
Speaker 1: you're going. But a few weeks ago, Emmanuel Fari, who
Speaker 1: is a forty one year old brilliant macro economists really
Speaker 1: pushing the boundaries of the field in a very good way,
Speaker 1: and a kind man and a mentor too many he
Speaker 1: killed himself, and in the last four years Marty Weisman
Speaker 1: killed himself, and Alan Krueger and build Standholme, And these
Speaker 1: are people who are creative. They were trying to change
Speaker 1: the field, both in the way we treat people and
Speaker 1: in the things that we think and explore and the
Speaker 1: questions and the findings. And to me that that shows
Speaker 1: the opposite of progress. I mean, those were funerals that
Speaker 1: nobody should have had to go to UM So, yes,
Speaker 1: the quote, And honestly, when Emmanuel death happened, that was
Speaker 1: when I took what had been a priv reflection that
Speaker 1: I sent to Janet Yell and in Member Nankee, because
Speaker 1: they were heads of the American Economics Association, to say
Speaker 1: we have a problem. And when Emmanuel killed himself, I said,
Speaker 1: I needed to tell more people because this has to stop.
Speaker 1: So let's get into some specifics. Some of the things
Speaker 1: you mentioned in your boast involved misogyny and sexism and
Speaker 1: racism and other things. Let's let's start with the New
Speaker 1: York Times quote um from June of this year, economics
Speaker 1: dominated by white men is royaled by Black Lives Matter?
Speaker 1: So is economics dominated by men and is a mixed
Speaker 1: mostly white and what should we be doing about that? Yes,
Speaker 1: there's absolutely a domination in the sense that the elite
Speaker 1: members of the profession, the ones you see on t
Speaker 1: be the ones who are in the White House, in
Speaker 1: the top positions, many many of them are white men.
Speaker 1: I like to joke, and I've been to so many seminars,
Speaker 1: especially these online virtual seminars about COVID with macroeconomists, so
Speaker 1: many of them. It is just a sea of whiteness
Speaker 1: and maleness. And I like to joke that the diversity
Speaker 1: here is the degree of hair loss, right, Like, I mean,
Speaker 1: this is and um, you know, I'm kind of a
Speaker 1: paint and in general, but you know this is serious
Speaker 1: that you've gon joke about it. But that means that
Speaker 1: you are not bringing the lived experiences. White men do
Speaker 1: not experience misogyny like I mean, they can experience something
Speaker 1: from women that you know and being degraded by other
Speaker 1: men colleagues. But white men also just like I as
Speaker 1: a white woman, do not experience racism. Like I can
Speaker 1: be empathetic, but I will never walk in those shoes. Right,
Speaker 1: So you can as a researcher, are like I can
Speaker 1: write about race, I can think about race, but particularly
Speaker 1: during Black Lives Matter, I still figured out, you know,
Speaker 1: my voice is not what we hear need to hear
Speaker 1: right now. But I can amplify the voices, particularly of
Speaker 1: black scholars, because I can retweet. You know, I have
Speaker 1: a platform on Twitter that a lot of them don't.
Speaker 1: And to me, I wanted the world and I needed
Speaker 1: to see their voices because there are economous There are
Speaker 1: scholars who think very hard, have thought very hard for
Speaker 1: decades about structural racism and injustice in the U. S.
Speaker 1: Economy and the global economy. They exist, they have been marginalized,
Speaker 1: they are told their research is not economics. They're rejected
Speaker 1: from top journals. I saw someone talking about like they
Speaker 1: put racial injustice in a paper and a referee said
Speaker 1: that's inflammatory, and I'm like, no, that's like the real
Speaker 1: world for these people like you know, So that this
Speaker 1: culture and then in addition, we had white men jumping
Speaker 1: into the conversation of black Lives matter in a very
Speaker 1: problematic and frankly racist way. So let's talk a little
Speaker 1: bit about the research aspect of this. A month after
Speaker 1: that Time's Peace was out, there was a Wall Street
Speaker 1: journal piece vote Economic journals faulted for neglecting studies on
Speaker 1: race and discrimination. That was in July of this year,
Speaker 1: to which you responded, economics has a race problem. So
Speaker 1: how do you recognize the race problem? And what can
Speaker 1: you do to solve the race problem? Because in your
Speaker 1: blog post it's apparent it's not just at the big
Speaker 1: institutions in government or Wall Street or corporate America. It
Speaker 1: starts at at freshman academia and goes the whole whole
Speaker 1: way from when you first decided to become an economist
Speaker 1: and follows your entire career. So what can economics do
Speaker 1: about its race problem? It has to do so much
Speaker 1: like there is no magic wand there is no silver bullet.
Speaker 1: The thing that economics has fallen down on and race
Speaker 1: raises frankly a much more serious conversation that we need
Speaker 1: to have the gender right. I mean, Ray is just deplorable.
Speaker 1: And what surprised me about my blog post on many
Speaker 1: different dimensions is I didn't think it was newsworthy because
Speaker 1: everything I said we already knew. Now, the economics profession
Speaker 1: has this amazing ability to explain away its problems. I've
Speaker 1: done a lot of work speaking on gender and economics.
Speaker 1: I don't do research in this area, but again, I
Speaker 1: want to amplify the research, and I have a presentation
Speaker 1: where I go through and debunk every single one of
Speaker 1: the criticisms. One of them is women can't do maths.
Speaker 1: This is not true. Plenty of women are math majors.
Speaker 1: Another one is well, women just don't want to do economics.
Speaker 1: And it's like, well, why do you think that's the case,
Speaker 1: right Like, if they show up and you say sexually
Speaker 1: explicit jokes in class, they might not feel real comfortable,
Speaker 1: or if the curriculum doesn't even talk about it, right like.
Speaker 1: And so it just shows that a lot of economists
Speaker 1: either are completely ignorant of race, or in some cases,
Speaker 1: they are openly hostile to raise and many of these
Speaker 1: people not everyone. I don't there could people in economics, right,
Speaker 1: but too often, in too many cases, we have gatekeepers
Speaker 1: of the profession who are not being inclusive. They're doing
Speaker 1: the opposite, they're pushing people away. And if that is
Speaker 1: the case, then you have a big problem. And frankly, like,
Speaker 1: how do I know it? Because look around, like there
Speaker 1: was one black woman economists out of over four hundreds
Speaker 1: that I worked with at the Federal Reserves. Over time,
Speaker 1: there's like two other black people that I know that
Speaker 1: have worked and have since left. Like, seriously, don't you
Speaker 1: think maybe you know and so? And you can see
Speaker 1: this in top journals. Good luck, good luck finding a
Speaker 1: black person Latina Asian, Like, there's just there. There's so
Speaker 1: many layers of pushing people away that we need because
Speaker 1: they bring something in an authentic way that most of
Speaker 1: us can't. Huh. Quite interesting, And our last question on
Speaker 1: economics problems, this is a quote from your blog post
Speaker 1: quote economics hurt people outside economics with bad policy advice. Explain.
Speaker 1: So this goes back to my soul searching in the
Speaker 1: very worst time time of the recovery from the Great Recession,
Speaker 1: when I was like, how did we miss this at
Speaker 1: the Federal Reserve the crisis, the housing crisis? How did
Speaker 1: we miss it now in the Great Recession the recovery.
Speaker 1: And I got to this point of saying, it's because
Speaker 1: we do not have diversity. The diversity comes in a
Speaker 1: lot of dimensions. And the thing that really nailed it
Speaker 1: for me is I went back again. I was really
Speaker 1: trying to understand this, Like, I was so puzzled. And
Speaker 1: I'm one of those people that loves to read FED
Speaker 1: transcripts from the Federal Open Market Committee meeting. So I
Speaker 1: started pouring through the transcripts prior to the financial crisis,
Speaker 1: and I found a meeting and I go back in
Speaker 1: my like low points of being at the FED or
Speaker 1: just doing economic policy, and I reread this one transcript.
Speaker 1: It was in two thousand five. Josh Gallen, who has
Speaker 1: now a very senior economist as the board, he was
Speaker 1: a junior economist. Then he briefed off and see he
Speaker 1: argued that house prices were overvalued. This is in two
Speaker 1: thousand five. The whole I mean green space like everybody else.
Speaker 1: There's some exceptions, but basically everyone else at this meeting,
Speaker 1: especially the ones that were very prominent like Greenspan totally
Speaker 1: shut him down. Now years later, I've always told Josh
Speaker 1: I like, he's a hero. He spoke up, like I
Speaker 1: tried to speak up. You get like smothered when you
Speaker 1: try to speak up. But if you're persistent, I'm a
Speaker 1: persistent person, you can move. The needle is a very
Speaker 1: slow moving needle, but it does move. And recently I
Speaker 1: saw him and he knows, like, I sah, you're my hero,
Speaker 1: and he's like, but Claudia, I never forgave myself because
Speaker 1: he said after they came down, after they explained it away,
Speaker 1: I could have kept pushing loudly and I didn't, And
Speaker 1: I thought, to me, that was a really important lesson.
Speaker 1: And I have been not with the consensus since this
Speaker 1: crisis started. I have very loudly said we have the
Speaker 1: mother of all demand shocks, like, yes, the pandemic is,
Speaker 1: you know, causing what we you know, a supply shock,
Speaker 1: but this is a big one. And I spent a
Speaker 1: lot of time and I was told by people who
Speaker 1: I have very much respect in economic policy circle, its Claudie,
Speaker 1: you need to tone it down because you're gonna look
Speaker 1: bad at the other side of this. And I was like,
Speaker 1: I won't right, and I didn't back down on the
Speaker 1: blog post because I know people that have hurt and
Speaker 1: are continued to be hurt. Like I'm fine nine years
Speaker 1: ago when they come in my office, I'm like, yeah,
Speaker 1: go away. Uh, but I know people that have been
Speaker 1: hurt are being hurt, not just the FED but all
Speaker 1: over and the undergrads that I hear from where the
Speaker 1: people have been pushed out of the profession. I mean,
Speaker 1: they make me angry. He read the post. I found angry.
Speaker 1: I am like, this is completely unfair. And so many
Speaker 1: of them would have been great economists. I know it,
Speaker 1: some of them. I saw their research getting going. I
Speaker 1: was so excited, and they walked away and I said,
Speaker 1: you know what, we don't deserve you. We need you,
Speaker 1: but we don't deserve you. And like that has to change,
Speaker 1: because until it changes, we are going to continue to
Speaker 1: give advice that is not aware of. Well, how do
Speaker 1: people of color, how does it less educated, How do
Speaker 1: the people on the margins of the economy experience a recession?
Speaker 1: Let's talk about that. Let's do research on that. And
Speaker 1: it has been ignored, and the Federal Reserve has done
Speaker 1: so much to improve that research. But like where was
Speaker 1: it in two thousand eight? Like how is it possible?
Speaker 1: Because it was out in the world, out in academia,
Speaker 1: out in other policy circles. This conversation was happening, this
Speaker 1: research was happening, and we just totally ignored it. Wow,
Speaker 1: quite fascinating. I am almost out of time. I know
Speaker 1: we only have you for an hour, So let jumped
Speaker 1: to our speed round. These are our favorite questions we
Speaker 1: ask all our guests. There sixty seconds each and it's
Speaker 1: how we wrap up the show each week. So let's
Speaker 1: jump right into this. Tell us what you're streaming these days.
Speaker 1: Give us your favorite either Netflix or Amazon shows, or
Speaker 1: any podcasts you're listening to. So I have become an
Speaker 1: avid podcast listener, right. I didn't think I would because
Speaker 1: for a long time I like to read. I loved
Speaker 1: econ blogs, but they just they aren't what they used
Speaker 1: to be, uh in terms of just not as many voices.
Speaker 1: So I was like, Okay, I'm gonna I'm gonna listen
Speaker 1: to these podcasts. One of my coping mechanisms in this
Speaker 1: crisis has been go fred long walk every day, and
Speaker 1: podcasts made a great soundtrack to my long walk. I
Speaker 1: listened to a very wide range of podcast I listened
Speaker 1: to The Indicator, I listened to various podcasts on Bloomer.
Speaker 1: I love Joe Wisenal and Tracy ol Ways podcast. I
Speaker 1: just it's so informative and they're fun, right. And I
Speaker 1: listen to the Brunix, right, Matt and Elizabeth Brune. I mean,
Speaker 1: this is a very different perspective. I don't always agree
Speaker 1: with them, it's very interesting. And I listen to podcasts
Speaker 1: that are not about economics. A friend pointed me Caatebon
Speaker 1: pointed me to Forever thirty five. It's about facial products
Speaker 1: and like what to wear in the pandemic from these
Speaker 1: two women, and it's like, I need to take a
Speaker 1: break from economics sometimes, right. And so to me, it's
Speaker 1: been a great way just to hear people other voices.
Speaker 1: And I've been really privileged, like today to actually be
Speaker 1: part of those conversations. I can never listen to the
Speaker 1: ones that I'm on later, um, but I love the
Speaker 1: fact it's a it's a it's a difficult skill to
Speaker 1: learn to listen to yourself without cringing. Trust me, I
Speaker 1: know from where I come. Second question, who are your
Speaker 1: mentors who helped shape your career, so I have a
Speaker 1: lot of them. Sarabe Dad was my first economics professor
Speaker 1: at Dennison. He was my senior thesis advisor. I wouldn't
Speaker 1: be an economist if he hadn't like really pushed me.
Speaker 1: And I learned economic history from him, like I never
Speaker 1: saw that again, history of economic thought at the University
Speaker 1: of Michigan. Matthew Shapiro was my advisor. I continue to
Speaker 1: come to him and especially recently with advice. I do
Speaker 1: research with him. He's just really important and you have
Speaker 1: to have allies, and I need an ally that understood economics.
Speaker 1: But my parents are awesome, but they're like, listen to Matthew.
Speaker 1: He cares and he understands your world. We do not
Speaker 1: understand your world. And I will say a big mentor
Speaker 1: an ally to me. David Lebo was my first section
Speaker 1: chief at the Board, and he is someone who I
Speaker 1: always felt I could go to. He was someone I
Speaker 1: went to when I just completely melted down in two
Speaker 1: thousand eleven, and it's really special to have people who
Speaker 1: you know you can go to. They care about you
Speaker 1: and they will not judge you. Because I was a
Speaker 1: total mess and he helped me get better. He gave
Speaker 1: me the space, he made sure they didn't fire me.
Speaker 1: Um and and I try to do that as a mentor.
Speaker 1: The thing that I learned and I pushed out this
Speaker 1: post is I learned that like helping people get better
Speaker 1: and as the absolute first thing to do is important,
Speaker 1: but if you don't go back and try and figure
Speaker 1: out how to shut down the harasser, it doesn't stop.
Speaker 1: And that's a very recent lesson for me. And that's
Speaker 1: a tough lesson for all of the allies I've had
Speaker 1: because they just want to help me and I get
Speaker 1: and that's what I needed most. But I also there's
Speaker 1: a systemic problem. We've got to fix it, and it
Speaker 1: will be the allies that do it, but we we
Speaker 1: gotta we gotta do it, alright. So our favorite question,
Speaker 1: this is the one that everybody always asks about. Tell
Speaker 1: us what you're reading? What are you reading currently? And
Speaker 1: one are some of your all time favorite books? The
Speaker 1: this one is tough. Like I read a lot and frankly,
Speaker 1: I read a lot of Twitter, right like I just um,
Speaker 1: I am what Tyler Cowen refers to as an info war,
Speaker 1: Like I just love all this stuff flying by me,
Speaker 1: and that unfortunately means that, like, that's what I spend
Speaker 1: a lot of time doing, right, because I can't read
Speaker 1: two things at once. Um, and I'm going to send
Speaker 1: you a tweet showing you one book. I'm going to
Speaker 1: send you a tweet showing you my biggest fear during
Speaker 1: the pandemic is not reading any books and only reading Twitter. Yeah,
Speaker 1: and I read a lot of journal articles. I mean,
Speaker 1: economics does not have a culture of writing books. Though
Speaker 1: our paper drew up in eighty pages, so it's kind
Speaker 1: of like a little mini book. What sort of advice
Speaker 1: would you give to a recent college graduate just beginning
Speaker 1: their career in economics? It's not your fault as a
Speaker 1: new person. No, I'm serious and actually right now and
Speaker 1: imports like putting it in the context of this recession.
Speaker 1: People who are early in their career, people who are
Speaker 1: graduating college, people who are finishing up their PhDs this year,
Speaker 1: they are going to have a very rough time. And
Speaker 1: there's research that shows that you have a rough time
Speaker 1: for a whole career. Like these poor millennials. We totally
Speaker 1: slammed them because it came out in the job market
Speaker 1: in the early days of the Great Recession and its
Speaker 1: recovery and oh my gosh, they finally have enough money
Speaker 1: to buy a house, and we're doing this to them again, right,
Speaker 1: So I just it's important in like the context of
Speaker 1: the world that you're in, like it's not their fault.
Speaker 1: Matthew Shapiro reminds me that the macro economy is not
Speaker 1: my fault because you know, it's a good forecaster. I
Speaker 1: can't fix this, and so I have to like chill
Speaker 1: out a little bit um And but in terms of
Speaker 1: and it's not your fault is also porton. When you
Speaker 1: get into a this profession of economics, you're going to
Speaker 1: see things differently than the more senior people. Like we
Speaker 1: forget what it's like to be new. We forget like
Speaker 1: how problematic some of our norms are. So you have
Speaker 1: your eyes open and it's really hard to balance this.
Speaker 1: This doesn't feel okay, but I feel like I gotta
Speaker 1: do it to fit in. And and when something bad
Speaker 1: happens too often, I see young economists and I did
Speaker 1: this to blaming themselves and it's not about them. It's
Speaker 1: it's a it's not about the person who has heard,
Speaker 1: it's about the person who's hurting them. But like that's
Speaker 1: a tricky thing. And that's like, you know, pro pro
Speaker 1: tip of like working through a career. Right, this is
Speaker 1: not just economics, but if you haven't lived it, how
Speaker 1: how would you possibly know how to react to it? Huh?
Speaker 1: Quite quite interesting. And our final speed round question, what
Speaker 1: do you know about the world of economics today that
Speaker 1: you wish you knew twenty years ago? Were so when
Speaker 1: you were first getting out of school. I became an
Speaker 1: economist because I believe that economics could do good in
Speaker 1: the world, and in particular, I became a macro economist
Speaker 1: because I believed economic policy, like the big stuff, could
Speaker 1: do good. Again, it was there to do good. And
Speaker 1: something I have grappled with in my career as an
Speaker 1: economic policy advisor is we don't always do good. Now
Speaker 1: I am, I am totally a glass half full, if
Speaker 1: not overflowing. I have a lot of energy. I did
Speaker 1: not give up, and I think we can do this
Speaker 1: and we definitely do in some cases. But as like economics,
Speaker 1: we got to do more good in the world. And
Speaker 1: I think for me that was you know, I'm a
Speaker 1: naive person and I love people and I think everyone
Speaker 1: else should. But you know, like there are racist and
Speaker 1: misogynists and people were totally close minded and we'll protect
Speaker 1: their elite position, and it's like, yeah, we've got to
Speaker 1: change that, because like that is not helping us do
Speaker 1: good in the world. Thanks so much, Claudia for being
Speaker 1: so generous with your time. We have been speaking with
Speaker 1: Claudia sam She is a former senior economist in the
Speaker 1: Council of Economic Advisors for the Obama administration, as well
Speaker 1: as being a researcher and section chief for the Board
Speaker 1: of Governors for the Federal Reserve. If you enjoy this conversation, well,
Speaker 1: be sure to look up an Incher Down an Inch
Speaker 1: on Apple iTunes and you can see any of the
Speaker 1: previous three hundred plus conversations we've done over the past
Speaker 1: Wow six years. That's a long time. You can also
Speaker 1: find us at any of your favorite podcast hosts, Spotify, Overcast, Stitcher,
Speaker 1: wherever finer podcasts are sold. You can check out my
Speaker 1: weekly column on Bloomberg dot com Slash Opinion, follow me
Speaker 1: on Twitter at rit Halts, sign up for our daily
Speaker 1: reads at rit Halts dot com. I would be remiss
Speaker 1: if I did not thank the crack staff that helps
Speaker 1: put this conversation together each week. Michael Boyle is my producer.
Speaker 1: Maroufal is our audio engineer. Michael bat Nick is my
Speaker 1: head of research. Attica val Brunn is our project manager.
Speaker 1: I'm Barry Ritolts. You've been listening to Masters in Business
Speaker 1: on Bloomberg Radio.