WEBVTT - 53: Why We Stopped Trusting Experts 0:00:00.160 --> 0:00:02.320 But knowledge to work and grow your business with c 0:00:02.520 --> 0:00:06.680 i T from transportation to healthcare to manufacturing. C i 0:00:06.760 --> 0:00:10.520 T offers commercial lending, leasing, and treasury management services for 0:00:10.600 --> 0:00:13.480 small and middle market businesses. Learn more at c i 0:00:13.560 --> 0:00:25.440 T dot com put Knowledge to Work. Hello, and welcome 0:00:25.480 --> 0:00:28.960 to another edition of the Odd Lots Podcast. I'm Tracy Alloway, 0:00:29.040 --> 0:00:33.199 Executive editor of Bloomberg Markets, and I'm Joe Wisntal, Managing 0:00:33.280 --> 0:00:36.400 editor at Bloomberg Markets. Joe, can I just say I'm 0:00:36.400 --> 0:00:38.960 glad to have you back because I missed you for 0:00:39.080 --> 0:00:42.400 two episodes. That is really sweet of you to say, 0:00:42.440 --> 0:00:44.920 and I am very glad to be back. Uh. I 0:00:45.000 --> 0:00:48.479 had some interesting travels around the world, but glad to 0:00:48.520 --> 0:00:50.320 be getting back in the routine. And I have to 0:00:50.360 --> 0:00:54.200 say I really enjoyed. Uh. I really enjoyed the episodes 0:00:54.520 --> 0:00:57.360 that I listened to the episodes, I really enjoyed them. 0:00:57.360 --> 0:01:01.240 So I was glad to see my substitutes did great. 0:01:01.480 --> 0:01:04.080 I'm glad we could provide you with listening material on 0:01:04.200 --> 0:01:07.119 the plane. Very I appreciate it all right. Well as 0:01:07.160 --> 0:01:09.920 a welcome back gift today, I think I have a 0:01:09.959 --> 0:01:13.000 guess that you're going to really enjoy because one of 0:01:13.040 --> 0:01:15.880 the things we've been talking about for I guess the 0:01:15.920 --> 0:01:19.080 past few months now, when we've been dealing with things 0:01:19.160 --> 0:01:25.000 like globalization, Brexit, US politics, things like that, is the 0:01:25.080 --> 0:01:29.640 idea of the world distrusting people in authority and in 0:01:29.680 --> 0:01:35.400 particular experts and technocrats. Yeah, I think this seems like 0:01:35.440 --> 0:01:39.160 such a big theme that pervades all aspects of life, 0:01:39.200 --> 0:01:42.200 from the media, which is the industry, obviously that we're 0:01:42.200 --> 0:01:47.240 directly into finance, which we cover, and obviously politics, which 0:01:47.280 --> 0:01:50.960 we have a a certain election on our plates right now. 0:01:51.120 --> 0:01:54.520 So um, yeah, I agree. This sort of whole idea 0:01:54.520 --> 0:01:59.720 of distrust of experts and the erosion of traditional structures 0:01:59.720 --> 0:02:01.920 of a worthy is about is a big of a 0:02:01.960 --> 0:02:04.280 theme as you can get right now exactly. And you 0:02:04.320 --> 0:02:07.000 and I both know that in finance and economics and 0:02:07.040 --> 0:02:11.480 markets there is an overabundance of experts, let's put it 0:02:11.520 --> 0:02:15.000 that way. And perhaps one of the I guess the 0:02:15.080 --> 0:02:18.560 most stereotypical expert in the field would have to be 0:02:18.760 --> 0:02:22.679 the central banker. You're sort of ivory tower technocrat, uh, 0:02:22.840 --> 0:02:24.800 you know at the e c B or the FED 0:02:24.960 --> 0:02:27.720 or the Bank of Japan sitting in their sort of 0:02:27.760 --> 0:02:33.920 ivory tower and guess pronouncing monetary policy. Yeah, I would 0:02:33.960 --> 0:02:37.320 say the central banker probably has a unique role in 0:02:37.360 --> 0:02:41.320 our society and it's hard to uh think of any 0:02:41.360 --> 0:02:46.320 other position quite like it because they're not really accountable 0:02:46.360 --> 0:02:50.239 to anyone. There's no obvious checks and balances except over time. 0:02:50.320 --> 0:02:55.000 With them, they can implement policy without dealing with the 0:02:55.000 --> 0:02:59.400 political ramifications, at least in the short term. There incredibly 0:02:59.480 --> 0:03:04.640 INFLUENTI choll absolutely that was well put. So our guest 0:03:04.760 --> 0:03:08.440 for today is actually the author of a new biography 0:03:08.560 --> 0:03:12.440 on Alan Greenspan, who's one of the most famous central 0:03:12.440 --> 0:03:14.760 bankers of all time. I guess you would say, uh, 0:03:14.760 --> 0:03:18.800 it's Sebastian Malaby. He's a long time journalist. He's also 0:03:18.880 --> 0:03:21.679 penned a bunch of really good books, many of them 0:03:21.680 --> 0:03:24.560 to do with the economics and finance. And we are 0:03:24.639 --> 0:03:28.520 going to be looking at this phenomenon of the world 0:03:28.560 --> 0:03:31.680 falling in and then out of love with experts with 0:03:31.720 --> 0:03:35.640 technocrafts through the prison of Alan Greenspan. So I think 0:03:35.640 --> 0:03:37.880 it'll be good. Yeah, I'm looking forward to that. I mean, 0:03:37.920 --> 0:03:41.880 I think, you know, I remember the nineties economy pretty 0:03:41.880 --> 0:03:46.480 well and the degree of reverence towards Ellen Greenspan at 0:03:46.480 --> 0:03:50.640 the time was absolutely extraordinary, and it's pretty hard to 0:03:50.680 --> 0:03:56.360 imagine in anyone quite achieving that level of love and 0:03:56.800 --> 0:03:59.680 the popular culture and the popular press ever again, or 0:03:59.680 --> 0:04:13.600 at least anytime soon. All right, let's bring Sebastian in. Hi, Sebastian, 0:04:13.600 --> 0:04:17.120 thanks for joining us today. Hi Ty, al right, so 0:04:17.200 --> 0:04:21.320 should we maybe start with green spans role as the 0:04:21.400 --> 0:04:25.120 ultimate technocrat? Can you walk us through how he got 0:04:25.200 --> 0:04:28.760 to that position and what made him different to other technocraphs. 0:04:29.680 --> 0:04:32.919 Green Span was the ultimate central banker partly because of 0:04:32.960 --> 0:04:35.840 the length of time that he survived in office. If 0:04:35.839 --> 0:04:38.799 we think of other sort of big names we associate 0:04:38.839 --> 0:04:42.040 with the Federal Reserve, this Ben Bananke, who survived there 0:04:42.080 --> 0:04:47.280 for eight years. This Paul Volka also eight years. Green Span, 0:04:47.360 --> 0:04:51.120 in contrast, survived in office for eighteen and a half years, 0:04:51.120 --> 0:04:53.479 more than twice as long. And if we add in 0:04:53.520 --> 0:04:56.160 the two and a half years he spent as the 0:04:56.240 --> 0:04:59.120 Chairman of the Council of Economic Advisors in the Ford 0:04:59.120 --> 0:05:01.520 White House, you get twenty one year. So by ship 0:05:01.640 --> 0:05:06.160 didn't of longevity. Green Span is the ultimate technocrat, the 0:05:06.240 --> 0:05:10.480 ultimate central banker. What's interesting, though, is that he actually 0:05:10.640 --> 0:05:14.360 created the reverence for central bankers. It did not exist 0:05:14.400 --> 0:05:17.800 before he got there. He was appointed at a time 0:05:17.800 --> 0:05:21.240 when it was perfectly normal for elected leaders to beat 0:05:21.320 --> 0:05:25.000 up on the technocrats, to belittle the central bank, twist 0:05:25.000 --> 0:05:27.960 its arm. And it was really by dint of green 0:05:28.000 --> 0:05:31.440 SPAN's force of character that he was able to stand 0:05:31.520 --> 0:05:34.680 up to pressure from the Bush administration. That's the first 0:05:34.839 --> 0:05:39.200 George H. W. Bush administration. And then when Bill Clinton 0:05:39.320 --> 0:05:44.200 came into office, these attacks on central banks stopped, and 0:05:44.240 --> 0:05:47.960 instead you had the deference towards the technocrats that we 0:05:48.040 --> 0:05:51.840 have come to take for granted recently. So, you know, 0:05:51.920 --> 0:05:54.799 I remember the green Span era, I think pretty well. 0:05:54.839 --> 0:05:56.240 I mean I was only in high school, but I 0:05:56.240 --> 0:06:00.400 was very interested, and I remember people referring him as 0:06:00.480 --> 0:06:03.279 like the author of the Great Economy, and that it 0:06:03.360 --> 0:06:06.640 was sort of all back to his brilliance, that unemployment 0:06:06.680 --> 0:06:09.520 was so low, and everyone was making a fortune in 0:06:09.600 --> 0:06:13.000 the stock market and all kinds. You know, everything just 0:06:13.040 --> 0:06:16.200 seemed to be going great in America. You know, when 0:06:16.240 --> 0:06:19.760 you went back and looked at his life, how much 0:06:20.440 --> 0:06:24.400 was him and how much was just lucky timing? And 0:06:24.600 --> 0:06:27.960 why were people so quick to give him all the credit? 0:06:28.760 --> 0:06:33.720 There was certainly so lucky timing. Two things happened. Globalization 0:06:34.320 --> 0:06:38.840 was rapidly progressing, and in particular, China was integrating into 0:06:38.839 --> 0:06:42.360 the world economy, and that drove down import prices in 0:06:42.400 --> 0:06:45.600 the United States and made it easier to control inflation. 0:06:46.200 --> 0:06:49.159 So that's piece of number one. Piece of lack. Number 0:06:49.160 --> 0:06:53.960 two was technological advance driving out productivity. Again, that took 0:06:54.000 --> 0:06:56.880 pressure off prices. So if you were a central banker 0:06:56.960 --> 0:07:00.920 whose mission it was to stabilize prices been fashioned down, 0:07:01.560 --> 0:07:04.200 it was easier in that period than in other periods. 0:07:04.839 --> 0:07:07.800 But I think even when you acknowledge, you know, these 0:07:07.839 --> 0:07:11.160 two pieces of good fortune, it still remains the case 0:07:11.200 --> 0:07:14.960 that green Span stood out for his skill, a particular 0:07:15.040 --> 0:07:18.640 kind of skill, which was essentially to resist politicians who 0:07:18.680 --> 0:07:21.200 were trying to push him around. If they took the 0:07:21.200 --> 0:07:23.840 fight to him, he took the fight to them, and 0:07:24.880 --> 0:07:28.080 politicians backed off from trying to bully the Federal Reserve 0:07:28.520 --> 0:07:33.040 because they were essentially scared of being bullied back. Well, 0:07:33.120 --> 0:07:35.559 Joe alluded to this earlier, but one of the things 0:07:35.560 --> 0:07:39.320 that makes central bankers different to other types of experts 0:07:39.520 --> 0:07:43.520 is the independence that they have um or are supposed 0:07:43.560 --> 0:07:47.680 to have from politicians. So how does that kind of 0:07:47.680 --> 0:07:54.000 play into greenspans rise. Yeah, well, that idea of independence 0:07:54.040 --> 0:07:57.760 of central banks from politicians is something that was really 0:07:57.880 --> 0:08:02.640 established in the nineties and did not exist much before. Um, 0:08:02.680 --> 0:08:07.240 you know, you go back to nine when Arthur Burns, 0:08:07.240 --> 0:08:08.960 who had served as FED chairman for much of the 0:08:09.040 --> 0:08:13.120 nineteen seventies, gave a kind of retrospective speech on his tenure. 0:08:13.520 --> 0:08:16.200 It was all about the fact that central banks were 0:08:16.320 --> 0:08:20.640 inevitably in a political system, in a democratic system, going 0:08:20.680 --> 0:08:23.400 to be pushed around by the elected leaders. I mean, 0:08:23.600 --> 0:08:26.000 those guys have been elected, they had a mandate, they 0:08:26.040 --> 0:08:29.120 had power, and they were going to beat up on 0:08:29.200 --> 0:08:32.720 the technocrats if the technocrats did not cut interest rates 0:08:32.720 --> 0:08:36.000 ahead of elections and deliver other things they wanted. I 0:08:36.280 --> 0:08:38.960 think it's so fastly because right now the idea that 0:08:39.080 --> 0:08:44.480 central bank independent is a really important aspect of a 0:08:44.520 --> 0:08:49.160 functioning economy and an important and functioning central bank just 0:08:49.200 --> 0:08:52.480 seems to be absolutely taken for granted, and people really 0:08:52.520 --> 0:08:56.240 bristle anytime politicians tried to muscle their way in on policy. 0:08:56.840 --> 0:08:58.840 But it's fast thing to think that that's really a 0:08:58.920 --> 0:09:05.080 fairly new concept. Absolutely. I mean even Paul Volker, who 0:09:05.120 --> 0:09:08.560 we think of as this sort of rumpled eggheaded Church 0:09:08.600 --> 0:09:12.040 Chilean Old Testament scourge that nobody could possibly mess with. 0:09:12.640 --> 0:09:16.920 I mean, the reality is that the Reagan administration appointed 0:09:16.960 --> 0:09:19.520 people to be governors of the Fed who would be 0:09:19.559 --> 0:09:23.720 loyal to the Reagan Treasury and not to Volca, and 0:09:23.800 --> 0:09:27.760 so Volca was outvoted by his own committee on interest 0:09:27.840 --> 0:09:31.840 rates once and on regulation at least twice. So you know, 0:09:31.920 --> 0:09:34.439 the Central Bank was a long way from being independent. 0:09:35.040 --> 0:09:38.720 So in retrospect, and just to play devil's advocate a 0:09:38.760 --> 0:09:41.840 bit here, is it odd that we have people who 0:09:41.840 --> 0:09:46.840 wield incredible power through monetary policy who don't really have 0:09:47.120 --> 0:09:51.800 a democratic mandate, like no one voted them into office, um, 0:09:51.880 --> 0:09:54.480 and we don't have a sort of checks and balances 0:09:54.520 --> 0:09:57.400 system like we do for the rest of US politics, 0:09:57.440 --> 0:10:02.400 at least on them. Is that odd in a transpect? Well, 0:10:02.440 --> 0:10:06.160 I think the way to avoid it being owed is 0:10:06.240 --> 0:10:11.720 for the democratically accountable elected leaders to come to a 0:10:11.760 --> 0:10:14.520 sort of settled understanding of what central banks are supposed 0:10:14.520 --> 0:10:18.920 to do, so that the goal is set democratically, but 0:10:19.040 --> 0:10:23.480 then the means of achieving that goal left to the technocrats. 0:10:24.320 --> 0:10:27.040 To figure out. All right, let's so let's move it. 0:10:27.160 --> 0:10:29.440 Let's move it forward a little bit, because I remember, 0:10:29.600 --> 0:10:33.720 obviously and then as I was saying, people called, you know, 0:10:33.760 --> 0:10:37.479 Greenspan was the maestro and the one behind the great economy, 0:10:37.600 --> 0:10:41.240 and the entire world hung on his every word. Uh. 0:10:41.280 --> 0:10:44.880 And now thinking about the kind of attacks that say, 0:10:44.960 --> 0:10:48.920 Jenny Yellen comes under, or Ben Berneggi came under during 0:10:49.040 --> 0:10:53.000 at least the post crisis era, you know, two thousand 0:10:53.040 --> 0:10:57.760 and eight on, it's just hard to imagine any central 0:10:57.800 --> 0:11:02.360 banker ever again having the being held in as high 0:11:02.640 --> 0:11:05.840 esteem as Greenspan was, even if even if the economy 0:11:05.880 --> 0:11:08.959 were doing well. Do you think, uh, we'll ever get 0:11:09.000 --> 0:11:12.800 that back. Well, I think that the inflation targeting consensus, 0:11:12.960 --> 0:11:17.760 which as I said, underpinned central bank independence um, is 0:11:17.800 --> 0:11:21.720 itself coming under attack. I mean, these days there's all 0:11:21.760 --> 0:11:25.079 this argument about whether negative interest rates are productive or 0:11:25.120 --> 0:11:28.640 kind of productive. There's some debate as to whether, you know, 0:11:28.720 --> 0:11:30.960 you should switch from an inflation target to a normal 0:11:31.040 --> 0:11:34.880 GDP target, Should there maybe even be targeting of asset 0:11:34.920 --> 0:11:38.480 prices at least, as you know, an additional thing to 0:11:38.559 --> 0:11:43.560 keep an eye on. All these debates mean that the 0:11:43.600 --> 0:11:45.840 goal of central bank because it is less clearly defined, 0:11:45.880 --> 0:11:49.000 and then for politicians are inevitably going to run away in. 0:11:49.080 --> 0:11:52.480 That's exactly what's happened in the last month. For those 0:11:52.559 --> 0:11:56.680 of our listeners who have followed the UK debate around 0:11:56.720 --> 0:11:59.760 the central bank. Mark Kearney, the governor of the Bank 0:11:59.800 --> 0:12:02.640 of England, was under a lot of political pressure because 0:12:02.720 --> 0:12:05.520 the Prime Minister, to reason May had made a comment 0:12:05.640 --> 0:12:10.960 on qualitative easing and said well, QUEI has bad distributional 0:12:11.120 --> 0:12:14.480 consequences that we should be mindful of. That was interpreted, 0:12:14.559 --> 0:12:17.520 of course as being an attack on the QUEI pursued 0:12:17.559 --> 0:12:21.360 by the Bank of England. It wouldn't have happened if 0:12:21.400 --> 0:12:24.320 there had been no experimental tools in the first place. 0:12:24.760 --> 0:12:28.680 Once you get into this you know, dangerous and sort 0:12:28.679 --> 0:12:33.000 of difficult and disputed arena of new tools, you're band 0:12:33.080 --> 0:12:36.040 to get politicians waiting in. I mean this gets back 0:12:36.080 --> 0:12:38.520 to the point that I was sort of trying to 0:12:38.559 --> 0:12:42.960 make earlier, which is how do we hold central bankers 0:12:43.000 --> 0:12:47.040 and other types of technocrats into account or to account 0:12:47.040 --> 0:12:50.600 like when they introduce new monetary policy tools, things like 0:12:50.679 --> 0:12:54.400 quantitative easing, how do we judge the success of those 0:12:54.440 --> 0:12:56.839 tools and judge the success of the people who are 0:12:56.880 --> 0:13:03.120 implementing them. I think in an ideal world, the politicians 0:13:03.240 --> 0:13:07.840 need to set the objectives and let the central bankers 0:13:07.920 --> 0:13:11.480 decide the tools. And so quantitative easing is a tool, 0:13:11.679 --> 0:13:15.360 not an objective, and so politicians ought to bite their 0:13:15.440 --> 0:13:19.640 tongues and not speak out about quantitative easing. Now that's 0:13:20.040 --> 0:13:22.640 easy for me to say and harder for a political 0:13:22.679 --> 0:13:25.880 culture to deliver. But I think, you know, we've gone 0:13:25.880 --> 0:13:28.720 through a bit of a learning experience actually in Britain 0:13:28.840 --> 0:13:32.080 just recently with the Prime Minister sort of regretting that 0:13:32.160 --> 0:13:36.480 she spoke out about quantitative easing, and um, I suspect 0:13:36.520 --> 0:13:39.400 that we'll find the same in other societies. There's a 0:13:39.440 --> 0:13:45.079 reason why politicians decided to give central banks um some independence, 0:13:45.160 --> 0:13:48.200 because the credibility of the central bank is actually good 0:13:48.200 --> 0:13:50.440 for the elected government and makes the economy work better, 0:13:50.960 --> 0:13:53.200 and it makes the politicians look better and more likely 0:13:53.240 --> 0:13:57.880 to be reelected. So UM, I think this is a 0:13:58.000 --> 0:14:01.720 lesson that has to be relearned from time of time. UM. 0:14:01.720 --> 0:14:06.800 But the basic contours of the bugging politicians just set 0:14:06.840 --> 0:14:09.560 the goal and if the goal is you know, stable 0:14:10.600 --> 0:14:15.000 inflation or it could be stable nominal GDP growth. That's 0:14:15.040 --> 0:14:18.319 I think a legitimate political debate. But then when you've 0:14:18.320 --> 0:14:21.640 had that debate, whether you use negative interest rates or 0:14:21.680 --> 0:14:27.000 quaditative easing, or the purchase of assets other than government bonds, 0:14:27.520 --> 0:14:30.520 that should be up to the central bank. We have 0:14:30.640 --> 0:14:33.480 to take a quick break for a word from our sponsor. 0:14:37.440 --> 0:14:39.600 But knowledge to work and grow your business with c 0:14:39.800 --> 0:14:43.960 i T from transportation to healthcare to manufacturing. C i 0:14:44.040 --> 0:14:47.800 T offers commercial lending, leasing, and treasury management services for 0:14:47.880 --> 0:14:50.800 small and middle market businesses. Learn more at c i 0:14:50.840 --> 0:14:58.640 T dot com put Knowledge to Work. And we're back 0:14:58.720 --> 0:15:01.680 with Sebastian mail Be. He's the author of a new 0:15:01.720 --> 0:15:05.600 book about Alan Greenspan, and we're talking about the role 0:15:05.920 --> 0:15:09.680 of experts in a modern public life and the sort 0:15:09.680 --> 0:15:14.480 of decline of prestige of the central banker. Prior to 0:15:14.520 --> 0:15:17.400 the break, you were talking about, how is the FED 0:15:17.520 --> 0:15:22.520 has undertaken new endeavors. Naturally, it invites some sort of 0:15:22.560 --> 0:15:26.800 a degree of political involvement that wasn't there before when 0:15:26.800 --> 0:15:30.400 it was just as simple as targeting inflation um. But 0:15:30.520 --> 0:15:34.000 it feels like something that this my probem there is 0:15:34.080 --> 0:15:36.320 it feels like this is a story that goes beyond 0:15:36.480 --> 0:15:39.680 central banking. So this is a clear example. The decline 0:15:39.680 --> 0:15:43.600 and prestige of the central banker is obvious, but it's 0:15:43.640 --> 0:15:47.520 being echoed elsewhere. And whether we see it in the 0:15:47.560 --> 0:15:51.760 media whose prestige is down, or politicians in general. Um, 0:15:52.480 --> 0:15:57.800 is there a sort of grand, unified explanation for why 0:15:57.840 --> 0:16:02.040 experts in any field, even beyond central banking, are just 0:16:02.240 --> 0:16:06.280 not taking as seriously as maybe they were twenty years ago. 0:16:07.120 --> 0:16:09.960 I think there's a basic rule which is that when 0:16:10.040 --> 0:16:13.680 experts appear to be delivering results, then you're happy to 0:16:13.680 --> 0:16:17.960 trust them, and when life does not seem to be improving, 0:16:18.720 --> 0:16:20.720 then you get mad at the experts and you say, 0:16:20.720 --> 0:16:24.240 wait a second, who elected those guys? UM? And I 0:16:24.240 --> 0:16:28.200 think that has happened, you know, across more areas than 0:16:28.240 --> 0:16:34.480 just central banking. And so the sense of stagnating middle 0:16:34.520 --> 0:16:39.520 class living standards UM and an uncertain future means that 0:16:39.600 --> 0:16:42.880 people are more skeptical about, for example, technological advance in 0:16:42.920 --> 0:16:48.160 the nineties. As I recall those years, UM, people had 0:16:48.200 --> 0:16:53.320 nothing but good things to say about Silicon Valley, personal computers, 0:16:53.360 --> 0:16:56.760 you know, fiber optic cable and so forth. Now, if 0:16:56.760 --> 0:17:00.000 you look at books about technology coming out. They're more 0:17:00.320 --> 0:17:03.600 to be about artificial intelligence gobbling up to a job. 0:17:04.240 --> 0:17:09.440 The negative side of the fruits of expertise is emphasized 0:17:09.480 --> 0:17:14.399 when people just feel insecure. One other factor that I 0:17:14.440 --> 0:17:16.760 think a lot about and that I think it's kind 0:17:16.800 --> 0:17:19.480 of relevant here, is just sort of the changing nature 0:17:19.560 --> 0:17:22.600 of media and the sort of horizontal peer to peer 0:17:22.640 --> 0:17:25.800 media social media, and the role that that has in 0:17:25.920 --> 0:17:30.080 sort of breaking down traditional hierarchical ways of conveying in form. 0:17:30.440 --> 0:17:33.199 We did a whole podcast about this. We did a 0:17:33.200 --> 0:17:36.480 whole podcast, and I'm thinking back to like in the nineties. 0:17:36.920 --> 0:17:40.959 I remember the one place that I saw criticism of 0:17:41.040 --> 0:17:46.080 Greenspan regularly was not on CNBC or Bloomberg and not 0:17:46.320 --> 0:17:49.800 on uh in the Wall Street Journal, but on stock 0:17:49.880 --> 0:17:54.000 message boards, uh like the Raging Bull message board, and 0:17:54.040 --> 0:17:56.280 people would rage at him when the stock market went 0:17:56.320 --> 0:17:59.320 down or whatever that they were unhappy. And now, of 0:17:59.400 --> 0:18:01.840 course that's the norm. I mean, we're all on sort 0:18:01.880 --> 0:18:06.000 of like a permanent message board. And I wonder to 0:18:06.119 --> 0:18:07.960 what extent that has something to do with it that 0:18:08.000 --> 0:18:11.160 there's just an infinite number of sources and people can 0:18:11.200 --> 0:18:14.360 construct their own realities or at least their own narratives 0:18:14.400 --> 0:18:18.440 to describe reality, and that the people that we held 0:18:18.520 --> 0:18:22.040 up as experts in the media prior to this era, 0:18:22.840 --> 0:18:25.840 they just don't have the institutional support that maybe they 0:18:25.840 --> 0:18:28.280 had before. Yeah, I mean, jo, I think that's a 0:18:28.400 --> 0:18:31.879 very smart point, and I've thought about it slightly in 0:18:31.920 --> 0:18:36.240 the context of um presidential politics in the past. It 0:18:36.240 --> 0:18:39.760 seems to me that in the roughly speaking, the first 0:18:39.800 --> 0:18:44.200 sort of seventy five or so years of the twentieth century, 0:18:44.359 --> 0:18:47.840 technology tended to build up the power of the presidency. 0:18:48.400 --> 0:18:52.080 You know, you had radio, which allowed FDR to do 0:18:52.200 --> 0:18:56.400 his fist side chats. You had television that was exploited 0:18:56.400 --> 0:18:59.920 to great effect by John F. Kennedy and his successes. 0:19:00.440 --> 0:19:02.360 But then, all of a sudden, in the second term 0:19:02.359 --> 0:19:05.280 of Ronald Reagan, he was the first president ever to 0:19:05.440 --> 0:19:08.600 request a prime time slot on TV to do an 0:19:08.600 --> 0:19:11.560 announcement and to be refused. And the reason that the 0:19:11.600 --> 0:19:14.680 network TV people refused is that they were by then 0:19:14.720 --> 0:19:19.520 competing with cable, and as cable competed, you know, there 0:19:19.560 --> 0:19:21.400 was more of a cacophony. But then, as you say, 0:19:22.560 --> 0:19:26.800 after cable came blogs, and you know, after blog comes 0:19:26.800 --> 0:19:31.440 social media, and the more you democratize the channels of communication, 0:19:32.080 --> 0:19:34.680 the more the bully pulpit of the presidency becomes the 0:19:34.720 --> 0:19:37.879 bullied pulpit. And I think the more you know, that 0:19:38.000 --> 0:19:40.760 same point can be applied more generally to experts and 0:19:41.040 --> 0:19:45.320 figures of authority overall. Well, going back to Greenspan, you 0:19:45.359 --> 0:19:47.679 write in your book that one of the reasons he 0:19:47.840 --> 0:19:52.000 enjoyed such success in Washington was the way he courted 0:19:52.560 --> 0:19:59.280 the media and maintained relationships with some prominent journalists. If 0:19:59.320 --> 0:20:02.879 you're a tech a technocrat now trying to regain the 0:20:02.920 --> 0:20:07.040 public's trust, how do you actually mount that outreach program 0:20:07.200 --> 0:20:10.920 if going to traditional media sources is no longer as 0:20:10.920 --> 0:20:14.760 powerful as it once was. I think it's incredibly difficult, Tracy. 0:20:14.840 --> 0:20:16.600 I mean, I think you know that's what we're all 0:20:16.640 --> 0:20:21.480 struggling with. And UM I was actually part of a 0:20:21.640 --> 0:20:26.359 UM start up company in London UM at the at 0:20:26.359 --> 0:20:29.440 the beginning of this year, which which put it would 0:20:29.440 --> 0:20:32.359 put together a website to sort of try to do 0:20:32.480 --> 0:20:36.199 fact checking on the Brexit referendum. And the notion was, 0:20:36.280 --> 0:20:38.080 you know, people were going to spread all kinds of 0:20:38.359 --> 0:20:42.240 fake information and we would try to correct those mistakes 0:20:42.320 --> 0:20:45.679 quickly and we did that, but the problem is, you know, 0:20:45.920 --> 0:20:48.959 people can invent their own reality. They could you know, 0:20:49.200 --> 0:20:53.639 ignore the facts, even when the facts were distributed with 0:20:53.680 --> 0:20:56.359 great energy by our team, and we used all the 0:20:56.359 --> 0:21:01.119 social media techniques that everyone else uses to distribute and 0:21:01.200 --> 0:21:04.120 make sure, you know, keep people understood what the real 0:21:04.200 --> 0:21:07.320 facts were. But you know, if somebody else is going 0:21:07.359 --> 0:21:11.480 to ignore that and persist in making stuff up, what 0:21:11.520 --> 0:21:14.320 do you do. So on that note, here's the big 0:21:14.400 --> 0:21:17.960 question for me. I guess, is this distrust and experts 0:21:17.960 --> 0:21:21.000 that we're seeing now is it a cyclical phenomenon that's 0:21:21.040 --> 0:21:23.399 going to go away at some point or has something 0:21:23.640 --> 0:21:28.399 structural happened? Um that's a permanent state, either because of 0:21:28.440 --> 0:21:32.719 new technology or because of the way the media works now. Well, 0:21:32.760 --> 0:21:35.080 I think it's a good question, precisely because there's a 0:21:35.080 --> 0:21:37.480 bit of both. The stuff that we're talking about with 0:21:37.520 --> 0:21:40.320 the media feels like a secular trend. You can never 0:21:40.320 --> 0:21:43.160 put that genie back in the bottle. On the other hand, 0:21:43.200 --> 0:21:47.240 I do think that you know, populism comes in waves. 0:21:47.560 --> 0:21:51.280 People succumbed to it, and then they elect a populist, 0:21:51.320 --> 0:21:54.680 and then the populist messes up and bad things happen, 0:21:54.760 --> 0:21:57.320 and that's what happened in Latin America, and then people 0:21:57.400 --> 0:22:00.000 learn a lesson and they actually go back to value 0:22:00.000 --> 0:22:03.800 doing experts and people who know what they're talking about. UM, 0:22:03.960 --> 0:22:07.720 So I think that bit of it is cyclical. So 0:22:07.920 --> 0:22:11.919 let's talk about the ramific, the real world ramifications of 0:22:11.960 --> 0:22:16.800 this decline in a reverence for experts. Whoever is the 0:22:16.800 --> 0:22:19.520 central bank chief now these days? Obviously right now is 0:22:19.640 --> 0:22:22.040 Janet Yell and at some point shall have a successor 0:22:22.119 --> 0:22:26.280 how much harder is their job because they don't have 0:22:26.520 --> 0:22:29.480 the level of standing and trust that someone like Ellen 0:22:29.520 --> 0:22:34.040 Greenspan had, That they have all these blogs and social 0:22:34.080 --> 0:22:36.879 media who are always going to be slamming them. What 0:22:37.080 --> 0:22:39.479 is uh, what does it turn into? How do these 0:22:39.600 --> 0:22:42.040 how does this become a practical roadblock for them to 0:22:42.240 --> 0:22:46.320 execute policy? Well? I mean, I do think that Janet 0:22:46.400 --> 0:22:50.719 Yellen faces a tougher landscape because of the cacophony of criticism, 0:22:50.760 --> 0:22:53.960 just in the nature of the cacophonists social media world. 0:22:54.520 --> 0:22:58.800 But I also think that Greenspan's model of how he 0:22:58.920 --> 0:23:03.080 ran the FED teaches some lessons that Janet Yellen could 0:23:03.119 --> 0:23:07.200 well pay attention to. For example, if you thought about 0:23:07.240 --> 0:23:09.960 the FED in the nineteen nineties, at the height of 0:23:09.960 --> 0:23:13.320 Greenspan's power, and you ask yourself the question, what proportion 0:23:13.400 --> 0:23:16.320 of sort of messages coming out of the FED are 0:23:16.359 --> 0:23:21.240 really Alan Greenspan? Like, does Alan Greenspan account for of 0:23:21.359 --> 0:23:25.960 my consciousness about what the FED thinks? Or no? The 0:23:25.960 --> 0:23:29.679 answer would have been, I mean, he dominated the institution, 0:23:30.359 --> 0:23:33.200 and he spoke for it, and when somebody else tried 0:23:33.240 --> 0:23:35.440 to speak for it, he shut them up. I mean, 0:23:35.480 --> 0:23:38.720 he was pretty ruthless about controlling other members of the 0:23:38.720 --> 0:23:42.320 Federal Open Market Committee UM and making sure they didn't 0:23:42.359 --> 0:23:45.280 speak too much and too openly and too sort of 0:23:45.359 --> 0:23:48.880 interestingly to the media. Janet Yell, on the other hand, 0:23:48.920 --> 0:23:52.120 has a kind of more democratic approach. She lets her 0:23:52.160 --> 0:23:55.840 colleagues say what they want, and the result is we just, 0:23:56.080 --> 0:23:58.400 you know, we have no ideas. Particularly, I don't think, 0:23:58.480 --> 0:24:00.840 you know. I mean, well, I would say that Janet 0:24:00.920 --> 0:24:04.400 Yellen's voice is less than fifty of what we're hearing 0:24:04.440 --> 0:24:07.320 from the FED today, And I think that's a mistake. 0:24:07.560 --> 0:24:12.400 I think, particularly because the social media landscape is cacophonists. 0:24:12.960 --> 0:24:16.720 An institution night the FED needs to speak with one 0:24:17.000 --> 0:24:21.320 powerful voice, otherwise it will just get ignored. That's really fascinating. 0:24:21.359 --> 0:24:24.080 I mean, I think there's this uh so much love 0:24:24.119 --> 0:24:28.960 for transparency and openness and so forth. But it feels 0:24:29.040 --> 0:24:31.320 like maybe we're coming to the end of that, and 0:24:31.400 --> 0:24:34.200 maybe people will realize that you can have too much 0:24:34.200 --> 0:24:36.800 of a good thing, or that we haven't really seen 0:24:36.840 --> 0:24:40.880 many tangible benefits from people always speaking and everybody having 0:24:40.880 --> 0:24:45.359 their dot and everyone having their even their own economic outlook. 0:24:45.480 --> 0:24:48.600 I think it does feel as though people are wondering 0:24:48.600 --> 0:24:51.080 what we've really got from all that. I mean, I 0:24:51.160 --> 0:24:53.680 am grew up in Britain, as you can tell from 0:24:53.680 --> 0:24:56.240 my voice, but I spent eighteen years in Washington, d C. 0:24:57.119 --> 0:24:59.159 And while I was there for a long time working 0:24:59.160 --> 0:25:01.679