1 00:00:11,119 --> 00:00:15,440 Speaker 1: Hello, and welcome to another episode of the Odd Lots Podcast. 2 00:00:15,640 --> 00:00:21,040 Speaker 1: I'm Joe Wisenthal, and unfortunately my co host Tracy Alloway 3 00:00:21,120 --> 00:00:25,000 Speaker 1: is out today, but nonetheless we have a great topic 4 00:00:25,160 --> 00:00:28,320 Speaker 1: to go over today. So obviously we've been talking about 5 00:00:28,440 --> 00:00:32,000 Speaker 1: NonStop the crisis that is going on all around the 6 00:00:32,040 --> 00:00:36,519 Speaker 1: world with both the virus and the economic fallout. We've 7 00:00:36,560 --> 00:00:39,640 Speaker 1: been discussing just sort of the incredible speed with which 8 00:00:39,680 --> 00:00:42,360 Speaker 1: everything has changed and shut down and what that means 9 00:00:42,400 --> 00:00:45,640 Speaker 1: for the economic system and the financial system. Today, we're 10 00:00:45,680 --> 00:00:48,800 Speaker 1: gonna try to have a conversation that looks ahead a 11 00:00:48,880 --> 00:00:52,720 Speaker 1: little bit further about sort of what's next, maybe even 12 00:00:52,920 --> 00:00:56,360 Speaker 1: potentially hopeful, I don't know, maybe it'll be a little 13 00:00:56,360 --> 00:01:01,720 Speaker 1: bit hopeful, and about things related to a potential vaccine 14 00:01:01,960 --> 00:01:05,319 Speaker 1: and reopening and how we might get there and what 15 00:01:05,440 --> 00:01:08,440 Speaker 1: lessons we might apply from the past to improve the 16 00:01:08,560 --> 00:01:13,000 Speaker 1: situation that the world is facing today. And the guest 17 00:01:13,080 --> 00:01:15,600 Speaker 1: that I'm going to be speaking with is one that 18 00:01:15,680 --> 00:01:18,480 Speaker 1: we've had on the podcast in the past. He's a 19 00:01:19,000 --> 00:01:23,240 Speaker 1: Bill Janeway. He's a partner and senior advisor Arbert Pinkis. 20 00:01:23,319 --> 00:01:27,280 Speaker 1: He's an economist, a visiting scholar at Cambridge university and 21 00:01:27,480 --> 00:01:30,720 Speaker 1: is a unique perspective as having been both on the 22 00:01:30,800 --> 00:01:35,640 Speaker 1: venture capital side so understanding innovation, as well as the 23 00:01:35,680 --> 00:01:38,680 Speaker 1: sort of academic economic side. So if he can really 24 00:01:38,720 --> 00:01:42,280 Speaker 1: speak to the types of policies and the types of 25 00:01:42,360 --> 00:01:47,440 Speaker 1: conditions that can enable innovation to flourish, and of course 26 00:01:47,480 --> 00:01:51,320 Speaker 1: that's something that we desperately need right now with the 27 00:01:51,440 --> 00:01:54,200 Speaker 1: lack of a vaccine, the lack of testing, its scale 28 00:01:54,600 --> 00:01:56,880 Speaker 1: and so forth. And of course part of this crisis 29 00:01:57,280 --> 00:02:01,320 Speaker 1: has been in part the coordination problem we've seen between 30 00:02:01,400 --> 00:02:05,280 Speaker 1: the government, which is obviously trying to move faster on 31 00:02:05,440 --> 00:02:09,800 Speaker 1: things like testing and developing therapies, and that coordination with 32 00:02:09,880 --> 00:02:14,120 Speaker 1: the private sector that needs some more organizations. So not 33 00:02:14,320 --> 00:02:17,880 Speaker 1: further ado, I want to bring in Bill Janeway. Bill, 34 00:02:17,960 --> 00:02:20,480 Speaker 1: great to have you back on the podcast. Great to 35 00:02:20,520 --> 00:02:22,960 Speaker 1: be back with you. Joe always enjoy it very much. 36 00:02:23,160 --> 00:02:28,480 Speaker 1: So there's obviously numerous aspects of this crisis that the 37 00:02:28,520 --> 00:02:33,040 Speaker 1: world overall is facing to which you can speak, but 38 00:02:33,120 --> 00:02:37,040 Speaker 1: I want to um start off with this question of 39 00:02:37,520 --> 00:02:40,920 Speaker 1: how governments, or how the US government in particular, could 40 00:02:40,919 --> 00:02:47,720 Speaker 1: conceptualize funding and accelerating the process of innovation towards a 41 00:02:47,800 --> 00:02:51,280 Speaker 1: potential vaccine or therapy. And of course in the past 42 00:02:51,600 --> 00:02:55,200 Speaker 1: you've written a lot about the role that government spending 43 00:02:55,320 --> 00:02:58,959 Speaker 1: and sort of pure government spending and research and so 44 00:02:59,000 --> 00:03:03,000 Speaker 1: on has laid in the development of our big tech 45 00:03:03,240 --> 00:03:06,600 Speaker 1: tech industries, particularly Silicon Valley, and how much of that 46 00:03:06,720 --> 00:03:11,360 Speaker 1: came out of Defense Department spending and so forth. Set 47 00:03:11,360 --> 00:03:13,919 Speaker 1: out the big picture of the role that the government 48 00:03:14,000 --> 00:03:17,880 Speaker 1: has to play here in terms of getting more work 49 00:03:17,960 --> 00:03:21,079 Speaker 1: done faster in this area. Well, in a way, this 50 00:03:21,200 --> 00:03:24,200 Speaker 1: is this is a simple one. There's a clear target, 51 00:03:24,440 --> 00:03:29,000 Speaker 1: clear set of targets. One set of targets involved reliable 52 00:03:29,240 --> 00:03:34,720 Speaker 1: and emphasize reliable tests vote for the incidents of the 53 00:03:34,760 --> 00:03:42,360 Speaker 1: disease and in particular tests for the aftermath the potential immunity. 54 00:03:42,840 --> 00:03:48,920 Speaker 1: Both of these require, as usual, multiple efforts by multiple sources, 55 00:03:48,960 --> 00:03:54,240 Speaker 1: funded across the board, with no preference to a particular 56 00:03:54,320 --> 00:03:57,800 Speaker 1: potential source. And given the global nature of this, that 57 00:03:57,800 --> 00:04:00,880 Speaker 1: would argue as well for the MAC some month of 58 00:04:00,960 --> 00:04:06,960 Speaker 1: international collaboration possible, the sort of collaboration that was available 59 00:04:07,120 --> 00:04:09,480 Speaker 1: in World War Two between the US and the UK, 60 00:04:10,120 --> 00:04:13,800 Speaker 1: which radically advanced, for example, the development of radar, and 61 00:04:13,880 --> 00:04:19,080 Speaker 1: which should be readily available today if we had leadership 62 00:04:19,200 --> 00:04:25,000 Speaker 1: that was concerned with international collaboration as a necessary effective 63 00:04:25,080 --> 00:04:31,280 Speaker 1: tool for accelerating the development of the needed tests and 64 00:04:31,320 --> 00:04:35,320 Speaker 1: then beyond that the vaccine. And it's not just lab work. 65 00:04:35,440 --> 00:04:40,040 Speaker 1: This involves clinical trials. It involves the accumulation of lots 66 00:04:40,040 --> 00:04:44,000 Speaker 1: of data from all the sources possible. This is an 67 00:04:44,160 --> 00:04:49,720 Speaker 1: ideal moment for open collaboration. Unfortunately, we seem to be 68 00:04:49,760 --> 00:04:53,400 Speaker 1: somewhat stalled, and in the meantime in a way that 69 00:04:53,720 --> 00:05:00,240 Speaker 1: there are too concerning residences, too concerning echoes about what's 70 00:05:00,279 --> 00:05:04,240 Speaker 1: going on and what's not going on. Specifically in the 71 00:05:04,360 --> 00:05:11,360 Speaker 1: US during this extremely challenging time, we've had the experience 72 00:05:11,560 --> 00:05:16,800 Speaker 1: before of closing down the civilian economy. That's exactly what 73 00:05:16,960 --> 00:05:21,920 Speaker 1: happened in nineteen two in the United States after Pearl Harbor, 74 00:05:22,520 --> 00:05:26,159 Speaker 1: when civilian production in an economy that was much more 75 00:05:26,200 --> 00:05:32,000 Speaker 1: heavily manufacturing and product oriented versus service oriented, where manufacturing 76 00:05:32,000 --> 00:05:36,400 Speaker 1: of civilian goods was radically reduced no automobiles, for example. 77 00:05:37,040 --> 00:05:40,760 Speaker 1: At the same time, there was an alternative source of demand, 78 00:05:41,480 --> 00:05:48,120 Speaker 1: namely military demand, which maintained actually reduced unemployment down. I 79 00:05:48,160 --> 00:05:51,520 Speaker 1: think the low point was reached when unemployment to the 80 00:05:51,560 --> 00:05:53,920 Speaker 1: extent that it could be measured at all was an 81 00:05:53,920 --> 00:05:57,960 Speaker 1: o point two percent. So you had a high high 82 00:05:58,120 --> 00:06:01,600 Speaker 1: driven high demand driven ECON to met after closing the 83 00:06:01,680 --> 00:06:06,359 Speaker 1: civilian economy. And the problem then was, and this is 84 00:06:06,400 --> 00:06:10,560 Speaker 1: where we have this kind of ironic curious moment. God knows, 85 00:06:10,560 --> 00:06:14,480 Speaker 1: there's not much demand on the economy. There should be 86 00:06:14,520 --> 00:06:21,240 Speaker 1: an opportunity to allocate resources to the highest priorities, which 87 00:06:21,600 --> 00:06:26,000 Speaker 1: while we are developing the tests and waiting for the vaccine, 88 00:06:26,760 --> 00:06:30,360 Speaker 1: which all serious accounts suggests as at least eighteen to 89 00:06:30,440 --> 00:06:34,400 Speaker 1: twenty four months away, we should not have any shortage 90 00:06:34,600 --> 00:06:38,359 Speaker 1: at all of the kind of protective gear and the 91 00:06:38,440 --> 00:06:44,000 Speaker 1: medical equipment necessary through this interim to make it possible 92 00:06:44,040 --> 00:06:48,680 Speaker 1: to start reopening the Sibol civilian economy sooner. And that's 93 00:06:48,720 --> 00:06:54,080 Speaker 1: where the under incoherence, as cover to Cuomo has been 94 00:06:54,120 --> 00:06:58,520 Speaker 1: putting it. Day after day of having fifty stags competing 95 00:06:58,560 --> 00:07:02,560 Speaker 1: with each other or the needed supplies with the federal 96 00:07:02,600 --> 00:07:08,080 Speaker 1: government playing no role in acquiring and allocating and distributing 97 00:07:08,839 --> 00:07:12,520 Speaker 1: is bizarre. I saw a couple of weeks ago you 98 00:07:12,600 --> 00:07:16,240 Speaker 1: tweeted out and I hadn't realized this that your father 99 00:07:16,400 --> 00:07:21,280 Speaker 1: had actually written a book about the challenges of sort 100 00:07:21,320 --> 00:07:25,480 Speaker 1: of grand scale national procurement during a time of crisis, 101 00:07:25,480 --> 00:07:27,600 Speaker 1: and I think he was talking about the war, but 102 00:07:27,720 --> 00:07:32,160 Speaker 1: sort of layout why this is a difficult problem to 103 00:07:32,280 --> 00:07:34,640 Speaker 1: solve because we do have this sort of bizarre thing 104 00:07:34,720 --> 00:07:38,080 Speaker 1: where you say, oh, states, people see states are competing 105 00:07:38,120 --> 00:07:41,720 Speaker 1: against the federal government. States are competing against each other. 106 00:07:42,320 --> 00:07:45,000 Speaker 1: And it's clear that's sort of like the traditional market 107 00:07:45,120 --> 00:07:48,960 Speaker 1: mechanism for the supply of basic medical goods, whether it's 108 00:07:49,320 --> 00:07:55,640 Speaker 1: and masks, ventilators, other protective gear, is breaking down. So 109 00:07:55,720 --> 00:07:58,280 Speaker 1: talk to me about the sort of inherent challenge of 110 00:07:58,360 --> 00:08:04,880 Speaker 1: crisis time. Uh. Him the reason for revisiting the incoherent 111 00:08:05,000 --> 00:08:08,240 Speaker 1: mess of procurement and allocation in the early days of 112 00:08:08,240 --> 00:08:12,640 Speaker 1: World War two precisely because there shouldn't be anything like 113 00:08:13,440 --> 00:08:19,800 Speaker 1: that problem today. The problem in nineteen even into forty 114 00:08:19,840 --> 00:08:22,840 Speaker 1: three was that you had the army, in the Navy 115 00:08:23,080 --> 00:08:26,440 Speaker 1: at a time, as I say, of maximum full employment 116 00:08:26,480 --> 00:08:32,880 Speaker 1: of all resources, desperately competing for steel and aluminum and copper, 117 00:08:33,960 --> 00:08:37,240 Speaker 1: with the army wanting to build tanks and aircraft in 118 00:08:37,080 --> 00:08:39,520 Speaker 1: the Air Force was part of the army in those days, 119 00:08:40,200 --> 00:08:43,880 Speaker 1: and the Navy wanting to build battleships and aircraft carriers 120 00:08:43,880 --> 00:08:49,559 Speaker 1: and landing craft, and the extreme allocation pressure produced enormous 121 00:08:49,600 --> 00:08:54,280 Speaker 1: political and administrative and bureaucratic challenges in Washington, which were 122 00:08:54,320 --> 00:09:00,640 Speaker 1: only resolved in early nineteen, by which time the supply 123 00:09:00,720 --> 00:09:04,400 Speaker 1: of those resources had been cranked up to an enormous extent. 124 00:09:04,920 --> 00:09:08,880 Speaker 1: Here today we have a much simper problem. First of all, 125 00:09:09,000 --> 00:09:12,360 Speaker 1: god those resources are not fully employed. We have a 126 00:09:12,480 --> 00:09:17,240 Speaker 1: very simple short list of needed products. It's not a 127 00:09:17,320 --> 00:09:21,319 Speaker 1: question of deciding whether we want landing craft or aircraft. 128 00:09:21,600 --> 00:09:25,559 Speaker 1: We know we want masks, we want ventilators, we want 129 00:09:26,120 --> 00:09:31,840 Speaker 1: beyond that reliable test, and it should be possible. This 130 00:09:32,080 --> 00:09:36,319 Speaker 1: is the role where the federal government would clearly, in 131 00:09:36,480 --> 00:09:41,720 Speaker 1: national emergency, have the authority to be the purchaser of 132 00:09:41,840 --> 00:09:48,760 Speaker 1: first resort and then allocate those resources by very simple, available, 133 00:09:48,920 --> 00:09:53,240 Speaker 1: obvious metrics of need, based on number of people in 134 00:09:53,320 --> 00:09:56,960 Speaker 1: the hospital, based on number of people on ventilators. That 135 00:09:57,160 --> 00:10:01,640 Speaker 1: kind of very simple message. This should not be a 136 00:10:01,840 --> 00:10:06,800 Speaker 1: hard problem. And the fact that it is a hard problem, 137 00:10:06,840 --> 00:10:10,360 Speaker 1: it's obviously a hard problem. I think Cuomo said that 138 00:10:10,400 --> 00:10:12,720 Speaker 1: the price of a ventilator had been build it up 139 00:10:12,720 --> 00:10:15,480 Speaker 1: from ten to fifty dollars in the course of a month. 140 00:10:15,720 --> 00:10:18,600 Speaker 1: This is interesting. So just in theory, what we're seeing 141 00:10:18,720 --> 00:10:22,720 Speaker 1: right now is not, in your view, something inherent to 142 00:10:22,840 --> 00:10:26,720 Speaker 1: crisis that, even though it's chaotic, even with our federal system, 143 00:10:26,960 --> 00:10:32,200 Speaker 1: even with unclear or ambiguous models about how many ventilators 144 00:10:32,280 --> 00:10:36,040 Speaker 1: states will need and so forth, this should be in 145 00:10:36,200 --> 00:10:40,800 Speaker 1: theory doable with a sort of normal, with a federal 146 00:10:40,840 --> 00:10:46,320 Speaker 1: coordinated response. When things get really incoherent, when you have 147 00:10:46,400 --> 00:10:49,880 Speaker 1: a four problem with respect to allocation, that's when you 148 00:10:49,960 --> 00:10:56,840 Speaker 1: have equally legitimate claims for scarce resources. Well, here we 149 00:10:56,880 --> 00:11:00,240 Speaker 1: have a very short list of unequivocally legit them. It 150 00:11:00,360 --> 00:11:07,120 Speaker 1: claims against a vast reservoir of resources. Not I don't 151 00:11:07,120 --> 00:11:10,480 Speaker 1: mean the resources of personnel in hospitals. I mean the 152 00:11:10,559 --> 00:11:14,840 Speaker 1: research and development resources that can be devoted and and 153 00:11:14,840 --> 00:11:17,520 Speaker 1: and those resources are and I would come back to this, 154 00:11:18,320 --> 00:11:21,120 Speaker 1: Unlike World War Two, with the exception of our unique 155 00:11:21,120 --> 00:11:25,720 Speaker 1: relationship with the UK, those resources are global. Everybody has 156 00:11:25,760 --> 00:11:31,120 Speaker 1: the same incentive to produce reliable tests for the virus 157 00:11:31,280 --> 00:11:34,360 Speaker 1: and for the antibodies that are generated in response to 158 00:11:34,400 --> 00:11:38,160 Speaker 1: the virus, and for a vaccine. And it should not 159 00:11:38,240 --> 00:11:41,000 Speaker 1: be I mean this is if I may say so, 160 00:11:41,040 --> 00:11:45,120 Speaker 1: what the World Health Organization was created to help coordinate, 161 00:11:45,760 --> 00:11:51,280 Speaker 1: it should be possible subject to focusing on the proven 162 00:11:51,520 --> 00:11:58,040 Speaker 1: ways of demonstrating efficacy and safety, efficacy for testing and 163 00:11:58,160 --> 00:12:03,160 Speaker 1: safety for metical not just vaccine, but also any kind 164 00:12:03,360 --> 00:12:07,640 Speaker 1: of anti viral medicine pharmaceutical. We know how to do that, 165 00:12:07,760 --> 00:12:10,920 Speaker 1: and we've done that. It does take time, and that's 166 00:12:10,960 --> 00:12:20,280 Speaker 1: why having this capacity for managing a gradual, graded reopening, 167 00:12:20,440 --> 00:12:23,400 Speaker 1: and and the fact that the US is somewhat certainly 168 00:12:23,440 --> 00:12:28,640 Speaker 1: behind East Asia, it's enormously useful. I have just looking 169 00:12:28,679 --> 00:12:32,559 Speaker 1: at this concern and Singapore that has been a bounce 170 00:12:32,640 --> 00:12:36,560 Speaker 1: back of the virus UH and as it's been said, 171 00:12:37,320 --> 00:12:40,320 Speaker 1: the world in its different national ways is going to 172 00:12:40,360 --> 00:12:43,360 Speaker 1: be playing whackamo. Do we need to think of this 173 00:12:43,400 --> 00:12:49,560 Speaker 1: as an annual injection like the conventional influenza virus or 174 00:12:49,800 --> 00:12:52,520 Speaker 1: is it like polio where you do get lifetime immunity. 175 00:12:52,600 --> 00:12:56,280 Speaker 1: Nobody knows the answer to that. So on the one hand, yes, 176 00:12:57,160 --> 00:13:03,520 Speaker 1: there's no question that the proper public sector government response 177 00:13:03,559 --> 00:13:06,240 Speaker 1: for this kind of challenge is read the money as 178 00:13:06,280 --> 00:13:11,440 Speaker 1: broadly as possible to with many candidates, as many flowers 179 00:13:11,960 --> 00:13:16,400 Speaker 1: take root and start to blow as possible and recognize 180 00:13:16,480 --> 00:13:22,520 Speaker 1: that hoping for shortcuts can be extremely dangerous. Right, let's 181 00:13:22,520 --> 00:13:26,040 Speaker 1: talk about this was a little bit more specificity. So 182 00:13:26,080 --> 00:13:30,360 Speaker 1: you obviously have lots of different pharmaceutical players who have 183 00:13:30,600 --> 00:13:35,880 Speaker 1: begun the race so to speak, to search for a vaccine. Whoever, 184 00:13:36,120 --> 00:13:40,079 Speaker 1: in theory finds an effective vaccine and proves it can 185 00:13:40,480 --> 00:13:45,720 Speaker 1: expect perhaps to reap a pretty big financial windfall. Most 186 00:13:45,720 --> 00:13:48,199 Speaker 1: companies will probably lose the race, maybe one maybe I 187 00:13:48,240 --> 00:13:51,040 Speaker 1: don't know, maybe too, but most companies aren't going to 188 00:13:51,120 --> 00:13:53,400 Speaker 1: make money, and so they'll have invested all of this 189 00:13:53,720 --> 00:13:58,400 Speaker 1: uh money up front for a long shot ticket that 190 00:13:58,480 --> 00:14:02,160 Speaker 1: will probably end up costing them financially in the future. 191 00:14:02,480 --> 00:14:08,680 Speaker 1: So strictly speaking, how do you go about allocating funds 192 00:14:08,760 --> 00:14:12,040 Speaker 1: in a way such that there is a prize so 193 00:14:12,120 --> 00:14:15,520 Speaker 1: to speak, to the entity that gets there first, but 194 00:14:15,640 --> 00:14:19,320 Speaker 1: that also doesn't create you know, that creates enough incentive 195 00:14:20,080 --> 00:14:22,840 Speaker 1: for lots of different players to sort of enter the 196 00:14:22,920 --> 00:14:25,280 Speaker 1: race that most of them will lo well compared to 197 00:14:25,320 --> 00:14:28,440 Speaker 1: the amount of funding that's going out to try to 198 00:14:28,600 --> 00:14:32,040 Speaker 1: keep the civilian economy as I call it, the private 199 00:14:32,080 --> 00:14:36,320 Speaker 1: sector a lot through this process. Given the fact that 200 00:14:36,360 --> 00:14:40,160 Speaker 1: there isn't the military the broad military demand to maintain 201 00:14:40,520 --> 00:14:45,720 Speaker 1: full employment. Given the scale of that funding government underwriting 202 00:14:45,920 --> 00:14:50,080 Speaker 1: of research efforts, you would expect to see the most 203 00:14:50,120 --> 00:14:55,240 Speaker 1: productive research efforts coming out of collaborations between academic research 204 00:14:55,320 --> 00:15:00,800 Speaker 1: labs and pharmaceutical companies with capacity for toxico bology and 205 00:15:00,960 --> 00:15:05,840 Speaker 1: testing and dealing with the FDA. Every major research university 206 00:15:05,920 --> 00:15:10,120 Speaker 1: with a strong biomedical base is collaborating with as many 207 00:15:10,160 --> 00:15:14,440 Speaker 1: partners as it can find. Government underwriting of that research 208 00:15:14,960 --> 00:15:18,400 Speaker 1: as a public good, regardless of who find stuff. Producing 209 00:15:18,400 --> 00:15:23,680 Speaker 1: the vaccine seems to me is a political flash economic 210 00:15:23,880 --> 00:15:28,360 Speaker 1: no brainer that the flip side is no rent seeking, 211 00:15:28,480 --> 00:15:33,400 Speaker 1: no profiteering when the output of that public good reaches 212 00:15:33,680 --> 00:15:36,880 Speaker 1: what in America we have we call the healthcare market, 213 00:15:37,320 --> 00:15:42,000 Speaker 1: rather than more generally the clinic broadly defined across the world. 214 00:15:42,560 --> 00:15:46,360 Speaker 1: This gets to an interesting question, rent seeking profiteering Should 215 00:15:46,400 --> 00:15:50,720 Speaker 1: there be some sort of windfall for the winning team, 216 00:15:50,840 --> 00:15:54,200 Speaker 1: so to speak, Well, they're almost certainly will be. I 217 00:15:54,280 --> 00:15:57,160 Speaker 1: noticed that somebody was commenting that everybody was on the 218 00:15:57,200 --> 00:16:01,040 Speaker 1: list of this American revival as a and council, except 219 00:16:01,200 --> 00:16:04,720 Speaker 1: except Martin Shrekley, who I think is still in Channel. 220 00:16:05,200 --> 00:16:08,480 Speaker 1: He is. Yeah, I've read that he petitioned for a 221 00:16:08,520 --> 00:16:11,080 Speaker 1: release so that he could get to work on the wires. Yeah, 222 00:16:11,160 --> 00:16:14,440 Speaker 1: that's just what we need. So, you know, the US 223 00:16:15,000 --> 00:16:19,360 Speaker 1: is I think it's fair to say unique in not 224 00:16:19,560 --> 00:16:26,920 Speaker 1: having effective limits on prices for pharmaceuticals. This is a 225 00:16:26,960 --> 00:16:31,200 Speaker 1: case where clearly I can't remember, be very interesting to 226 00:16:31,320 --> 00:16:34,680 Speaker 1: go back and look at how were the Stalk and 227 00:16:34,800 --> 00:16:39,880 Speaker 1: Saban vaccines brought to market? In other words, under what regime? Uh, 228 00:16:39,920 --> 00:16:43,600 Speaker 1: they were developed in academic labs, but they were produced 229 00:16:43,640 --> 00:16:49,000 Speaker 1: at scale, distributed globally, still being distributed globally. But when 230 00:16:49,080 --> 00:16:51,680 Speaker 1: I was a kid and got the vaccine, and which 231 00:16:51,800 --> 00:16:54,800 Speaker 1: was you know, I'm old enough to have remembered the 232 00:16:54,840 --> 00:16:58,520 Speaker 1: horrors of the summers of the nineteen fifties and had 233 00:16:58,600 --> 00:17:01,280 Speaker 1: friends who had polio. You know, I don't think anybody 234 00:17:01,280 --> 00:17:05,000 Speaker 1: wrote a check to pay for getting the sugar cube. 235 00:17:05,440 --> 00:17:09,119 Speaker 1: It was distributed free. But on the other hand, costs 236 00:17:09,200 --> 00:17:14,280 Speaker 1: were clearly covered by those who were producing the vaccine. 237 00:17:14,600 --> 00:17:18,560 Speaker 1: There's an awful lot of relevance of history available for 238 00:17:18,640 --> 00:17:20,320 Speaker 1: any one of these crises. You just have to have 239 00:17:20,400 --> 00:17:24,359 Speaker 1: an interest and attention. Similarly to people who produced the 240 00:17:24,400 --> 00:17:27,920 Speaker 1: anti virals that have managed to allow people to live 241 00:17:27,960 --> 00:17:29,879 Speaker 1: with age, even if not be cured of it. And 242 00:17:29,960 --> 00:17:32,560 Speaker 1: this is something Tony Faucci probably knows more about than 243 00:17:32,560 --> 00:17:36,879 Speaker 1: anybody else alive. Made decent return on their capital, but 244 00:17:37,880 --> 00:17:41,960 Speaker 1: I've seen no suggestion that they have profiteered off it. 245 00:17:41,960 --> 00:17:44,679 Speaker 1: It does mean that there's a role not just for 246 00:17:44,760 --> 00:17:48,359 Speaker 1: government funding of this kind of R and D, both 247 00:17:48,440 --> 00:17:51,520 Speaker 1: tests and vaccine for the public good, but there's a 248 00:17:51,640 --> 00:17:58,080 Speaker 1: role in ensuring that the surplus generated is properly shared 249 00:17:58,119 --> 00:18:02,720 Speaker 1: between consumers and producers. In the meantime, while we're waiting this, 250 00:18:03,400 --> 00:18:08,320 Speaker 1: your view would be anyone in the ideal scenario, anyone 251 00:18:08,400 --> 00:18:11,240 Speaker 1: who is sort of on some sort of reasonable path 252 00:18:11,440 --> 00:18:14,600 Speaker 1: or some sort of like, you know, a plausible um 253 00:18:14,800 --> 00:18:18,280 Speaker 1: player to find a vaccine should more or less get 254 00:18:18,320 --> 00:18:21,720 Speaker 1: a blank check. Yeah. I think it's well known who 255 00:18:21,760 --> 00:18:26,080 Speaker 1: has the capacity for real research in this area. But 256 00:18:26,200 --> 00:18:29,000 Speaker 1: as I say, it is international and it's global. It's 257 00:18:29,119 --> 00:18:31,640 Speaker 1: entirely possible the Chinese will come up with a vaccine 258 00:18:31,680 --> 00:18:34,760 Speaker 1: before anybody else because they were the first ones to 259 00:18:35,440 --> 00:18:40,159 Speaker 1: decode the genetics of the vices of the virus. I 260 00:18:40,200 --> 00:18:44,400 Speaker 1: think that it is hard for me to imagine the 261 00:18:44,480 --> 00:18:49,560 Speaker 1: pressure over the next twelve months for international collaboration at 262 00:18:49,720 --> 00:18:55,879 Speaker 1: least UH a minimum favoritism UH for particular potential providers 263 00:18:55,680 --> 00:19:14,000 Speaker 1: of what's desperately needed. M let's talk about the macroeconomics 264 00:19:14,040 --> 00:19:18,480 Speaker 1: for a minute. So we are seeing this extraordinary shutdown 265 00:19:18,720 --> 00:19:22,000 Speaker 1: of the civilian economy, as you put it. Part of 266 00:19:22,000 --> 00:19:25,360 Speaker 1: that was mandated. So of course, in UH most cities 267 00:19:25,520 --> 00:19:28,800 Speaker 1: and basically most cities and most states around the country 268 00:19:28,800 --> 00:19:31,800 Speaker 1: and around the world, there's been some level of government 269 00:19:31,880 --> 00:19:35,200 Speaker 1: requirement that say, Okay, we're gonna shut restaurants and bars 270 00:19:35,640 --> 00:19:39,159 Speaker 1: and schools any place where lots of people congregate, but 271 00:19:39,200 --> 00:19:41,439 Speaker 1: there was no like sort of mandate to shut the 272 00:19:41,520 --> 00:19:46,320 Speaker 1: economy overall. Nonetheless, between the shutdown of a major sector 273 00:19:46,560 --> 00:19:51,720 Speaker 1: of the economy and the spillover effects in the fear 274 00:19:51,920 --> 00:19:54,679 Speaker 1: and so forth, we've seen now a sort of de 275 00:19:54,760 --> 00:19:59,520 Speaker 1: facto shutdown the entire civilian economy, which is leading to 276 00:19:59,680 --> 00:20:04,359 Speaker 1: the first acute economic crisis since the Great Depression. And 277 00:20:04,400 --> 00:20:08,200 Speaker 1: there's hopes that maybe when the virate, when the health 278 00:20:08,280 --> 00:20:10,120 Speaker 1: crisis has slowed down, that a lot of people will 279 00:20:10,160 --> 00:20:12,399 Speaker 1: come back to work, but so far that's just hopes. 280 00:20:12,600 --> 00:20:15,520 Speaker 1: At this point furthermore, and you know there is a 281 00:20:15,560 --> 00:20:18,639 Speaker 1: consensus at least and I don't know if the policy 282 00:20:18,840 --> 00:20:21,000 Speaker 1: is actually caught up to the scale necessary. I don't 283 00:20:21,000 --> 00:20:23,800 Speaker 1: think anyone has. They were going to need um fiscal 284 00:20:23,880 --> 00:20:25,600 Speaker 1: spending and that has to be a major part of 285 00:20:25,640 --> 00:20:29,040 Speaker 1: the equation to get the economy running again. How should 286 00:20:29,080 --> 00:20:31,520 Speaker 1: governments be thinking about the challenge of what it will 287 00:20:31,560 --> 00:20:37,040 Speaker 1: take to actually return people to um sort of pre 288 00:20:37,080 --> 00:20:40,320 Speaker 1: crisis levels of activity. First of all, Joe, you've got 289 00:20:40,359 --> 00:20:44,600 Speaker 1: two very very different models available. Unfortunately, the US has 290 00:20:44,640 --> 00:20:49,520 Speaker 1: taken the least efficient approach to trying to maintain the 291 00:20:49,640 --> 00:20:54,400 Speaker 1: living standards of the life chances of people through this crisis. 292 00:20:54,520 --> 00:20:58,640 Speaker 1: The Germans, who had already proven their model in two 293 00:20:58,680 --> 00:21:01,919 Speaker 1: thousand and eight, and not and interestingly enough, the British, 294 00:21:01,920 --> 00:21:04,920 Speaker 1: who kind of you know, see themselves as sitting between 295 00:21:05,600 --> 00:21:08,680 Speaker 1: the Germans they projected as partners and the US when 296 00:21:08,680 --> 00:21:12,840 Speaker 1: they aspire to have a special relationship with have actually 297 00:21:12,840 --> 00:21:16,040 Speaker 1: followed the Germans. The Germans of what the Germans did 298 00:21:17,040 --> 00:21:21,440 Speaker 1: and what they had prepared for doing because of their 299 00:21:21,720 --> 00:21:26,840 Speaker 1: deep commitment to quote the social market economy was basically 300 00:21:27,000 --> 00:21:33,480 Speaker 1: to pay companies to keep people on the payroll not 301 00:21:33,760 --> 00:21:39,679 Speaker 1: to lay or furlough off their workforces, meaning that as 302 00:21:39,720 --> 00:21:42,639 Speaker 1: and when, whether it was the global financial crisis or 303 00:21:42,640 --> 00:21:49,040 Speaker 1: whether it's the coronavirus pandemic, when the threat retreats, they 304 00:21:49,119 --> 00:21:53,399 Speaker 1: don't have to go through an enormously inefficient process of 305 00:21:53,560 --> 00:21:57,920 Speaker 1: rehiring a workforce which undoubtedly will not be the same 306 00:21:58,000 --> 00:22:01,600 Speaker 1: workforce that they have let go. The British have done 307 00:22:01,640 --> 00:22:06,480 Speaker 1: the same thing. We have done the least efficient possible 308 00:22:07,119 --> 00:22:15,359 Speaker 1: pseudo fix of indeed effectively mandating any employer in the 309 00:22:15,400 --> 00:22:18,280 Speaker 1: private sector or for that matter, the public sector, to 310 00:22:18,359 --> 00:22:21,240 Speaker 1: lay off as many people as they want, giving those 311 00:22:21,240 --> 00:22:26,440 Speaker 1: people access to a very inefficient, as different state by 312 00:22:26,560 --> 00:22:31,800 Speaker 1: state unemployment insurance system which is overwhelmed right now, and 313 00:22:31,840 --> 00:22:35,679 Speaker 1: on the other hand, providing these law of these loans 314 00:22:35,880 --> 00:22:39,400 Speaker 1: to small business to the banking system. I mean, it's 315 00:22:39,400 --> 00:22:43,960 Speaker 1: as if we're we've we've learned nothing about how would 316 00:22:44,000 --> 00:22:47,000 Speaker 1: you have an I R S there who has everybody's 317 00:22:47,000 --> 00:22:50,640 Speaker 1: Social Security number which is their tax I d uh? 318 00:22:50,680 --> 00:22:54,280 Speaker 1: And how and and provide refunds to tens of millions 319 00:22:54,280 --> 00:22:58,720 Speaker 1: of people every year. Why that was not invoked. I 320 00:22:58,760 --> 00:23:03,840 Speaker 1: think there's probably a certain sense this is speculation. The 321 00:23:03,880 --> 00:23:06,439 Speaker 1: I R S it's have been so radically underfunded for 322 00:23:06,560 --> 00:23:09,560 Speaker 1: thirty or forty years that the notion that it actually 323 00:23:09,560 --> 00:23:15,679 Speaker 1: could play a really useful, an efficient role in keeping 324 00:23:15,680 --> 00:23:20,280 Speaker 1: this economy ticking over while it's in suspended animation was just, 325 00:23:20,480 --> 00:23:24,280 Speaker 1: I guess, an nethema to a sufficient number of people 326 00:23:24,280 --> 00:23:27,280 Speaker 1: in Washington. But it's it's, it's it's a it's a 327 00:23:27,320 --> 00:23:29,760 Speaker 1: great shame, it's a great waste in the US. Coming 328 00:23:29,800 --> 00:23:34,600 Speaker 1: back up will be less efficient as a result. I 329 00:23:34,640 --> 00:23:38,440 Speaker 1: don't think there's any concern about whether there will be demand. 330 00:23:38,920 --> 00:23:43,800 Speaker 1: The problem of reopening the economy. The problem of reopening 331 00:23:43,840 --> 00:23:46,560 Speaker 1: the economy is actually to take go back to a 332 00:23:47,240 --> 00:23:52,080 Speaker 1: different experience from World War Two. The problem of reopening 333 00:23:52,119 --> 00:23:57,280 Speaker 1: the economy is somewhat like the challenge of in nineteen 334 00:23:58,720 --> 00:24:04,080 Speaker 1: should stings from an economy driven by military demands back 335 00:24:04,119 --> 00:24:07,919 Speaker 1: to an economy driven by the ferry the radically different 336 00:24:07,960 --> 00:24:13,840 Speaker 1: patterns of civilian demands. Right, They're the crucial need that 337 00:24:14,000 --> 00:24:19,080 Speaker 1: was provided by very effective modes of financing the war 338 00:24:19,760 --> 00:24:24,520 Speaker 1: through a set of techniques that endowed both consumers and 339 00:24:24,640 --> 00:24:29,320 Speaker 1: business with the liquidity, the cash they needed to go 340 00:24:29,520 --> 00:24:33,159 Speaker 1: through the transition to shift jobs, but above all to 341 00:24:33,240 --> 00:24:37,359 Speaker 1: shift production. We shifted years into, of course, the great 342 00:24:37,560 --> 00:24:43,359 Speaker 1: post war booth. Do we have the tools for measuring 343 00:24:43,960 --> 00:24:51,879 Speaker 1: the instapable imbalances that are going to emerge as demand 344 00:24:52,520 --> 00:24:57,280 Speaker 1: sector by spector for goods and services picks up when 345 00:24:57,920 --> 00:25:02,080 Speaker 1: supply will be lagging because of the need, the unfortunate 346 00:25:02,160 --> 00:25:06,080 Speaker 1: need which leave them posed on ourselves. A business hiring 347 00:25:06,160 --> 00:25:10,720 Speaker 1: new workforces to provide the services and products that that 348 00:25:10,800 --> 00:25:14,920 Speaker 1: they exist, that they have existed to deliver it um 349 00:25:15,320 --> 00:25:23,359 Speaker 1: and he is able to be nimble about identifying pockets 350 00:25:23,640 --> 00:25:27,360 Speaker 1: hot spots if you like to use the pandemic language, 351 00:25:27,920 --> 00:25:33,520 Speaker 1: hot spots of inflationary pressure and uh and and respond 352 00:25:33,600 --> 00:25:38,000 Speaker 1: to them during a very delicate process of bringing back 353 00:25:38,080 --> 00:25:42,280 Speaker 1: online the supply that has been closed off. That's going 354 00:25:42,320 --> 00:25:44,680 Speaker 1: to be a real challenge, right, I mean, we did 355 00:25:44,720 --> 00:25:48,200 Speaker 1: this so I'm part of the Cares Act, which everyone 356 00:25:48,240 --> 00:25:52,320 Speaker 1: agrees um was completely insufficient and already some of the 357 00:25:52,320 --> 00:25:55,439 Speaker 1: funding is completely tapped out, even though it's still desperately needed. 358 00:25:56,160 --> 00:25:58,919 Speaker 1: Part of the bill that was passed at the end 359 00:25:58,960 --> 00:26:02,520 Speaker 1: of Merge was kind of premise down what Germany and 360 00:26:02,560 --> 00:26:06,919 Speaker 1: the UK are doing in terms of grants or loans 361 00:26:06,960 --> 00:26:09,479 Speaker 1: to small business that could be turned into grants if 362 00:26:09,480 --> 00:26:14,880 Speaker 1: they kept people on payroll. But in terms of maintaining 363 00:26:14,960 --> 00:26:18,240 Speaker 1: the productive capacity of the economy, in terms of being 364 00:26:18,280 --> 00:26:22,439 Speaker 1: able to go back to something that we had, it 365 00:26:22,560 --> 00:26:24,560 Speaker 1: seems like we should have just done that on a 366 00:26:24,640 --> 00:26:28,000 Speaker 1: much bigger scale, and not just limited it to small businesses, 367 00:26:28,320 --> 00:26:30,920 Speaker 1: but done everything we can, and not through the banks, 368 00:26:31,000 --> 00:26:34,520 Speaker 1: but through the I R s, so that essentially every 369 00:26:34,800 --> 00:26:38,960 Speaker 1: entity that had any employers could have massive wage subsidies 370 00:26:38,960 --> 00:26:41,880 Speaker 1: throughout the duration of the crest exactly exactly. And as 371 00:26:41,880 --> 00:26:44,200 Speaker 1: I said, we had the model, and we had the 372 00:26:44,359 --> 00:26:47,960 Speaker 1: existence proof of the model working in Germany back in 373 00:26:48,520 --> 00:26:51,880 Speaker 1: ten years ago. Okay, we've had this wave of layoffs 374 00:26:51,920 --> 00:26:55,240 Speaker 1: as of right now when we're recording this, and these days, 375 00:26:55,359 --> 00:26:59,600 Speaker 1: I'm always making a point to remind listeners when the 376 00:26:59,600 --> 00:27:02,719 Speaker 1: episod it is being recorded, because the world changes so 377 00:27:02,800 --> 00:27:05,199 Speaker 1: fast between recording and the time they listen to it. 378 00:27:05,560 --> 00:27:09,120 Speaker 1: So it's April sixteen, that's ten am East Coast time 379 00:27:09,160 --> 00:27:12,440 Speaker 1: that we're recording this. As of yet, we haven't embraced 380 00:27:12,480 --> 00:27:15,640 Speaker 1: the sort of European, UK German model of keeping all 381 00:27:15,680 --> 00:27:22,000 Speaker 1: of really trying to subsidize employment. Regardless, every country is 382 00:27:22,040 --> 00:27:25,720 Speaker 1: going to have a seriously difficult road getting back to 383 00:27:25,920 --> 00:27:31,080 Speaker 1: something resembling normal, especially because of the behavioral changes, both 384 00:27:31,080 --> 00:27:34,000 Speaker 1: in terms of people having realized that employment is so 385 00:27:34,119 --> 00:27:37,359 Speaker 1: precarious and also the health concerns that will linger for 386 00:27:37,440 --> 00:27:42,520 Speaker 1: quite some time even after reopening. Whatever that means or 387 00:27:42,560 --> 00:27:46,280 Speaker 1: whatever that entails. Almost everyone expects thori be changes and 388 00:27:46,600 --> 00:27:49,439 Speaker 1: people are going out to eat and other traveling. We 389 00:27:49,480 --> 00:27:53,280 Speaker 1: don't know exactly what the future is going to look like. 390 00:27:53,880 --> 00:27:57,280 Speaker 1: What is the role that the government can play beyond 391 00:27:57,320 --> 00:27:59,760 Speaker 1: obviously sort of spending money or maybe it is just 392 00:28:00,040 --> 00:28:06,359 Speaker 1: ending money in rebuilding private sector confidence to go out 393 00:28:06,480 --> 00:28:10,800 Speaker 1: and invest and spend and to not save every dollar possible. Well, 394 00:28:10,800 --> 00:28:14,480 Speaker 1: that's a great question, and you know it it um. 395 00:28:14,520 --> 00:28:17,800 Speaker 1: I think there are two quite different aspects to it. 396 00:28:17,880 --> 00:28:21,840 Speaker 1: And it does reflect the fact that we have this 397 00:28:22,760 --> 00:28:27,440 Speaker 1: remarkable federal system. Because we've been seeing we've been we've 398 00:28:27,440 --> 00:28:33,320 Speaker 1: been seeing across the country over the last months six weeks, UH, 399 00:28:33,400 --> 00:28:37,160 Speaker 1: this pattern playing out of certain governors. I'm in New 400 00:28:37,240 --> 00:28:40,840 Speaker 1: York City, You're in New York City. So we happen 401 00:28:40,920 --> 00:28:45,400 Speaker 1: to have more exposure to Governor Cuomo than to other governors. 402 00:28:45,400 --> 00:28:49,880 Speaker 1: But it's clear that there's a pattern of governors who 403 00:28:49,920 --> 00:28:56,480 Speaker 1: have been able to contribute um a kind of sense 404 00:28:56,720 --> 00:29:02,560 Speaker 1: of responsibility at the top. That evening of itself is 405 00:29:02,560 --> 00:29:09,360 Speaker 1: a contributor to maintaining and then potentially reviving confidence and 406 00:29:09,480 --> 00:29:14,320 Speaker 1: a sense of reasonable security. This of course was uh, 407 00:29:14,400 --> 00:29:18,719 Speaker 1: you know, the classic example in American history Franklin Roosevelt 408 00:29:18,800 --> 00:29:21,640 Speaker 1: and the fireside catched to the bottom of the depression 409 00:29:21,880 --> 00:29:26,160 Speaker 1: and then during the really dark days of THEO and 410 00:29:26,520 --> 00:29:29,800 Speaker 1: into forty three in World War Two, when as the 411 00:29:29,800 --> 00:29:33,160 Speaker 1: British say, the US was completely on the back foot. 412 00:29:33,800 --> 00:29:38,959 Speaker 1: Whether and how the messages out of Washington evolved, and 413 00:29:39,000 --> 00:29:43,000 Speaker 1: maybe it's not something that can happen in this year, 414 00:29:43,080 --> 00:29:50,680 Speaker 1: in this presidential election here that provides a green of consistency, reliability, uh, 415 00:29:50,720 --> 00:29:54,800 Speaker 1: that are indeed, in the traditional phrase, confidence inspiring. I 416 00:29:54,840 --> 00:29:57,480 Speaker 1: think we can perhaps hope for that in one but 417 00:29:57,520 --> 00:30:01,000 Speaker 1: I don't think it's on the table for the I 418 00:30:01,000 --> 00:30:03,920 Speaker 1: think it's going to be more at the state level 419 00:30:04,600 --> 00:30:09,800 Speaker 1: that we will see confidence re established state by state. 420 00:30:09,960 --> 00:30:12,480 Speaker 1: And you know, there's a there's a deep history, you know. 421 00:30:12,560 --> 00:30:15,000 Speaker 1: I I'm I'm devoted Joe is as I think you're 422 00:30:15,040 --> 00:30:19,479 Speaker 1: aware to reading lists and there's a remarkable book by 423 00:30:19,520 --> 00:30:23,360 Speaker 1: a great American history and Gary Gurthel The books called 424 00:30:23,440 --> 00:30:27,520 Speaker 1: Liberty and Coercion, and what it's about are the two 425 00:30:27,680 --> 00:30:34,400 Speaker 1: very different structures of government that the Constitution gave us. 426 00:30:34,440 --> 00:30:37,600 Speaker 1: At the at the federal government, we have a government 427 00:30:37,600 --> 00:30:41,360 Speaker 1: where the president is not endowed with total authority. It's 428 00:30:41,760 --> 00:30:48,600 Speaker 1: a government with enumerated powers. In times of crisis, those 429 00:30:48,680 --> 00:30:52,200 Speaker 1: powers have been extended, as in World War Two, as 430 00:30:52,240 --> 00:30:57,360 Speaker 1: in the Civil War, when the challenges overwhelmed the capacity 431 00:30:57,400 --> 00:31:01,680 Speaker 1: of the state. But the extension federal power under those 432 00:31:01,720 --> 00:31:06,400 Speaker 1: crisis conditions there's always been subject to challenge because the 433 00:31:06,520 --> 00:31:10,920 Speaker 1: police power, the authority that tells us when we can vote, 434 00:31:12,000 --> 00:31:15,200 Speaker 1: when we can get married, when we can drive, all 435 00:31:15,240 --> 00:31:17,960 Speaker 1: of that resides in the state government, and that clearly 436 00:31:18,040 --> 00:31:21,200 Speaker 1: includes whether or not we can keep a restaurant open 437 00:31:21,320 --> 00:31:27,720 Speaker 1: or not. This is a very interesting experiment, real time experiment, 438 00:31:28,320 --> 00:31:31,560 Speaker 1: in the functioning of American federalism. And I think the 439 00:31:31,640 --> 00:31:34,720 Speaker 1: question you rais is a very very important one, and 440 00:31:34,960 --> 00:31:39,120 Speaker 1: I expect that we will see very different patterns of 441 00:31:39,520 --> 00:31:44,760 Speaker 1: develop of demand returning for the services and products that 442 00:31:44,880 --> 00:31:47,680 Speaker 1: we need. Really under state by state basis. This is 443 00:31:47,720 --> 00:31:51,640 Speaker 1: a bigger issue, bigger issue for economists and the issue 444 00:31:51,720 --> 00:31:57,120 Speaker 1: for political leaders. We've spent the last forty years. Again, 445 00:31:57,120 --> 00:32:00,320 Speaker 1: this gets back to the question of international collaboration. Should 446 00:32:01,040 --> 00:32:05,680 Speaker 1: we spent the last fourty years mobilizing information technology in 447 00:32:05,880 --> 00:32:10,600 Speaker 1: order to optimize supply chain around the world, not just 448 00:32:10,720 --> 00:32:14,920 Speaker 1: for products, also for services. Think of call centers located 449 00:32:15,280 --> 00:32:20,400 Speaker 1: remotely as well as software development in India. We've optimized 450 00:32:20,440 --> 00:32:25,520 Speaker 1: for the most efficient supplied things for goods and services, 451 00:32:25,520 --> 00:32:29,920 Speaker 1: and the increase in efficiency comes at the cost. The 452 00:32:30,040 --> 00:32:35,520 Speaker 1: cost is robustness resilience that we've been learning the hard 453 00:32:35,600 --> 00:32:41,760 Speaker 1: way can be a truly devastating cost. So I do 454 00:32:41,960 --> 00:32:47,200 Speaker 1: expect without government intervention, but in some cases with government 455 00:32:47,520 --> 00:32:55,040 Speaker 1: leadership to see a if you like, retreat from global 456 00:32:55,640 --> 00:33:02,760 Speaker 1: emphasis on efficiency towards greater respect for resilience. In robustness, 457 00:33:03,280 --> 00:33:08,080 Speaker 1: you know, to go back to the defense departments years 458 00:33:08,200 --> 00:33:12,560 Speaker 1: of supporting and sponsoring all the technologies that combined to 459 00:33:12,600 --> 00:33:17,080 Speaker 1: make the digital revolution. The Defense Department for critical materials 460 00:33:17,120 --> 00:33:22,880 Speaker 1: always required at least two sources of supply. It required 461 00:33:22,960 --> 00:33:26,120 Speaker 1: the the inventor. UH. You might think this could be 462 00:33:26,160 --> 00:33:30,320 Speaker 1: the case with the vaccine to share the intellectual property 463 00:33:30,360 --> 00:33:36,400 Speaker 1: with a competitor, so that if the first supplier failed, 464 00:33:36,520 --> 00:33:39,600 Speaker 1: the second source, as it was called, would be available 465 00:33:39,720 --> 00:33:43,160 Speaker 1: to maintain critical supplies. I think we're gonna see a 466 00:33:43,200 --> 00:33:46,720 Speaker 1: lot of that happening more broadly and more generally, as 467 00:33:46,840 --> 00:33:51,720 Speaker 1: well as discussion how much will actually come of it 468 00:33:52,520 --> 00:33:59,040 Speaker 1: of bringing critical production capacities back to the United States. 469 00:33:59,080 --> 00:34:01,760 Speaker 1: That's going to be a very very challenging issue, the 470 00:34:01,840 --> 00:34:06,520 Speaker 1: process of learning, for example, how to make the kind 471 00:34:06,560 --> 00:34:10,759 Speaker 1: of micro process or semiconductor devices that are made in 472 00:34:10,840 --> 00:34:16,240 Speaker 1: Taiwan t SMC Taiwan Semiconductor Manufacturing Company as the world leader, 473 00:34:16,760 --> 00:34:19,480 Speaker 1: bringing that back to the US. Intel can do it 474 00:34:19,560 --> 00:34:23,759 Speaker 1: for itself, but Intel legs t SMC. So there are 475 00:34:23,800 --> 00:34:28,359 Speaker 1: all sorts of questions which in a broad sense, our 476 00:34:28,480 --> 00:34:33,160 Speaker 1: national security questions as well as questions of political economy 477 00:34:33,280 --> 00:34:39,120 Speaker 1: that this experience is forcing us to consider after almost 478 00:34:39,120 --> 00:34:42,200 Speaker 1: two generations of thinking that they were off the table 479 00:34:42,280 --> 00:34:45,239 Speaker 1: and the only thing that mattered was efficiency in the 480 00:34:45,280 --> 00:34:48,319 Speaker 1: allocation of resources real quickly. And then I'll let you 481 00:34:48,360 --> 00:34:51,600 Speaker 1: go on a sort of remind listeners. Uh, you know, 482 00:34:51,719 --> 00:34:56,080 Speaker 1: obviously you have a venture capital passed or US an economist, 483 00:34:56,400 --> 00:35:00,480 Speaker 1: you're a student of John Maynard Keynes's work, You've written 484 00:35:00,520 --> 00:35:03,400 Speaker 1: a lot about his work in sort of this idea 485 00:35:03,520 --> 00:35:06,120 Speaker 1: of and again it almost speaks to exactly what you're 486 00:35:06,160 --> 00:35:09,799 Speaker 1: talking about, the ability of the government to provide stability 487 00:35:09,840 --> 00:35:12,840 Speaker 1: at a time of like truly radical uncertainty, and radical 488 00:35:12,920 --> 00:35:17,720 Speaker 1: uncertainty is a cliche that people talk about during normal times, 489 00:35:17,719 --> 00:35:20,000 Speaker 1: but it's sort of never felt more real than now, 490 00:35:20,000 --> 00:35:21,880 Speaker 1: when there are just so many balls in the air 491 00:35:21,960 --> 00:35:25,920 Speaker 1: and questions about would the future looks like, what what 492 00:35:25,960 --> 00:35:29,279 Speaker 1: should people look at looking to Keynes's work and sort 493 00:35:29,320 --> 00:35:33,920 Speaker 1: of helping illuminate, illuminate sort of from a philosophical perspective, 494 00:35:34,040 --> 00:35:38,200 Speaker 1: perhaps what the role of government is in humeliorating some 495 00:35:38,280 --> 00:35:41,880 Speaker 1: of that uncertainty. Cains Indeed, at the core of Cains 496 00:35:41,920 --> 00:35:47,279 Speaker 1: of the Economics was his recognition that much as it 497 00:35:47,320 --> 00:35:50,880 Speaker 1: would be lovely to believe that we can know what 498 00:35:51,000 --> 00:35:54,360 Speaker 1: the return on investment will be when we decide to 499 00:35:54,400 --> 00:35:59,080 Speaker 1: build a plant or invest in research and development, we can't. 500 00:35:59,120 --> 00:36:04,880 Speaker 1: And consequently, efficiency in the allocation of resources is on 501 00:36:04,920 --> 00:36:07,800 Speaker 1: the one hand, the enemy of innovation, but it also 502 00:36:07,840 --> 00:36:11,120 Speaker 1: can be, on the other hand, the enemy of a 503 00:36:11,360 --> 00:36:16,279 Speaker 1: thriving private sector. But as I've said several times in 504 00:36:16,280 --> 00:36:22,080 Speaker 1: this conversation here, we we have great uncertainty about when, 505 00:36:22,640 --> 00:36:24,880 Speaker 1: but we don't have much uncertainty at all about what 506 00:36:25,600 --> 00:36:28,560 Speaker 1: about what we need to invest in. And and that 507 00:36:28,760 --> 00:36:32,920 Speaker 1: is you know, this array of personal protection equipment and 508 00:36:33,760 --> 00:36:38,160 Speaker 1: above all the vaccine, and they're not much intervention and 509 00:36:38,280 --> 00:36:42,000 Speaker 1: except for writing check is required. I think there'll be 510 00:36:42,040 --> 00:36:46,239 Speaker 1: a more complicated and difficult role in as as as 511 00:36:46,320 --> 00:36:50,200 Speaker 1: things reopen. The central banks of the world and the 512 00:36:50,239 --> 00:36:55,200 Speaker 1: treasuries of the world have poured money into the private 513 00:36:55,239 --> 00:36:59,680 Speaker 1: sector in more or less efficient ways. They've created enormous 514 00:37:00,040 --> 00:37:03,600 Speaker 1: to boars of liquidity. And we know that when the 515 00:37:03,680 --> 00:37:07,560 Speaker 1: economy begin to reopen, there are going to be these 516 00:37:07,600 --> 00:37:12,880 Speaker 1: imbalances and these opportunities for inflationary hotspot. How has the 517 00:37:13,080 --> 00:37:18,880 Speaker 1: process of withdrawing excelex liquidity as cash flow starts to 518 00:37:19,480 --> 00:37:24,000 Speaker 1: percolate again through the private sector. And right now the 519 00:37:24,040 --> 00:37:28,320 Speaker 1: private sectors of the world's economies are on the ventilators. 520 00:37:28,680 --> 00:37:33,160 Speaker 1: Converting them over to be able to believe under their 521 00:37:33,160 --> 00:37:38,000 Speaker 1: own scheme without artificial support, that's going to be a 522 00:37:38,080 --> 00:37:42,280 Speaker 1: big challenge. Bill Janeway is always great to get your perspective. 523 00:37:42,320 --> 00:37:45,239 Speaker 1: Really appreciate you joining us. So we need um, we 524 00:37:45,320 --> 00:37:48,919 Speaker 1: need blank checks from the government and fireside chats from 525 00:37:48,960 --> 00:37:52,440 Speaker 1: the governors is my big takeaway, and we'll see what 526 00:37:52,520 --> 00:37:54,600 Speaker 1: we get. But I really appreciate you taking the time. 527 00:37:55,000 --> 00:38:05,600 Speaker 1: Thanks so much, Joe, always enjoy Thanks Bill Well, that 528 00:38:05,760 --> 00:38:08,880 Speaker 1: was summary needed for me. That was my conversation with 529 00:38:08,920 --> 00:38:13,080 Speaker 1: Bill Janeway. I strongly recommend, though, if you haven't read it, listeners, 530 00:38:13,400 --> 00:38:17,000 Speaker 1: check out his book Doing Capitalism in the Innovation Economy 531 00:38:17,040 --> 00:38:19,640 Speaker 1: because there are not many people that I've ever read 532 00:38:20,080 --> 00:38:24,080 Speaker 1: who for balanced both the private sector experience, what actually 533 00:38:24,120 --> 00:38:27,520 Speaker 1: motivates business and how they make calculations in terms of 534 00:38:27,760 --> 00:38:31,840 Speaker 1: what's a good money making investment with academic theory, and 535 00:38:31,960 --> 00:38:35,800 Speaker 1: there's often a disconnect between the two, and I feel 536 00:38:35,800 --> 00:38:40,279 Speaker 1: like understanding that nexus is going to be extremely important 537 00:38:40,640 --> 00:38:43,640 Speaker 1: in the months and weeks ahead as governments around the 538 00:38:43,680 --> 00:38:47,560 Speaker 1: world tried to get their recovery policies correct. So that 539 00:38:47,719 --> 00:38:50,640 Speaker 1: was Bill Janeway and this has been another episode of 540 00:38:50,680 --> 00:38:53,959 Speaker 1: the Odd Lots podcast. I'm Joe Wisenthal and you could 541 00:38:53,960 --> 00:38:57,080 Speaker 1: follow me at The Stalwart. You should follow my co 542 00:38:57,200 --> 00:39:01,560 Speaker 1: host on Twitter. She's on Twitter at Tracy Alloway. Bill 543 00:39:01,760 --> 00:39:05,320 Speaker 1: is on Twitter. His his handle is at Bill Janeway. 544 00:39:05,760 --> 00:39:09,800 Speaker 1: You should follow our producer Laura Carlson. She's at Laura M. Carlson. 545 00:39:10,080 --> 00:39:12,839 Speaker 1: Followed the Bloomberg head of podcast frances Believe Me at 546 00:39:12,840 --> 00:39:16,920 Speaker 1: Francesca Today, and check out all of the Bloomberg podcasts 547 00:39:17,320 --> 00:39:20,360 Speaker 1: under the handle at podcast. Thanks for listening.