WEBVTT - Surveillance: Science Is The Key To Progress, Romer Says 0:00:00.080 --> 0:00:13.040 Ye, Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane. 0:00:13.480 --> 0:00:17.560 Daily we bring you insight from the best in economics, finance, investment, 0:00:18.000 --> 0:00:23.480 and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, 0:00:23.600 --> 0:00:34.319 Bloomberg dot Com, and of course on the Bloomberg. The 0:00:34.320 --> 0:00:36.960 thing that was interesting, and you I thought were really 0:00:37.000 --> 0:00:41.520 on top of this was who will run the United Kingdom? 0:00:41.560 --> 0:00:44.559 I mean, there's this whole pregnant issue of the when 0:00:44.680 --> 0:00:47.400 of it and the who of it. I couldn't get 0:00:47.400 --> 0:00:50.680 it now, I couldn't get a straight answer. And this 0:00:50.760 --> 0:00:53.800 goes to the tension that Gideon Rose tries to find 0:00:53.800 --> 0:00:56.320 in Foreign Affairs Magazine is all of you know, I'm 0:00:56.360 --> 0:01:00.160 a huge fan of a print subscription too. Were in 0:01:00.400 --> 0:01:03.600 fairs you throw it at every smart mouth college graduate 0:01:03.640 --> 0:01:05.880 and says, shut up and read this, Gideon, who will 0:01:05.959 --> 0:01:08.600 run the world? What did you find out? Well? Uh, 0:01:08.640 --> 0:01:10.560 the it's an interesting question. And what I will say 0:01:10.680 --> 0:01:13.440 is there's a big debate going on UM and it's 0:01:13.480 --> 0:01:17.080 not just about whether China will overtake the US. It's 0:01:17.240 --> 0:01:20.360 if the US UH can get its act together to 0:01:21.440 --> 0:01:26.600 desire and reinvigorate its international leadership and there's everything there 0:01:26.840 --> 0:01:29.040 from somebody who says the fight is over, China has 0:01:29.160 --> 0:01:33.440 one to arguments saying no, the United States can reinvigorate 0:01:33.520 --> 0:01:36.720 the liberal international order post Trump and keep it going, 0:01:37.200 --> 0:01:39.600 and not all of us can be right. And the 0:01:39.680 --> 0:01:42.880 really interesting question is, like those year end summaries about 0:01:42.880 --> 0:01:44.920 what the market's gonna do, all you can do is 0:01:44.920 --> 0:01:47.440 look at the logic and try past predictions or no, 0:01:47.680 --> 0:01:50.720 and performance is no guarantee of future results. What's going 0:01:50.760 --> 0:01:53.680 to happen in the forward looking balance of power? Is 0:01:53.800 --> 0:01:56.520 anybody's game? Well, Gideon, I always think it's valuable to 0:01:56.560 --> 0:01:59.720 talk to you into a distinction between ability and willingness. 0:01:59.840 --> 0:02:02.040 The discussion that we often have about China and leading 0:02:02.040 --> 0:02:03.840 the world, it's about their ability to do so. Do 0:02:03.920 --> 0:02:06.720 they have the willingness to take a global leadership role? 0:02:07.160 --> 0:02:10.200 Um no, Yes and no. So the interest that there's 0:02:10.240 --> 0:02:14.360 a fascinating piece in the issue by um orienta mastro 0:02:14.720 --> 0:02:18.800 American China expert arguing that what China is going for 0:02:19.000 --> 0:02:23.680 and has already largely achieved, is essentially exclusive dominance in 0:02:23.680 --> 0:02:27.320 its sphere in Asia and a contestation with the US 0:02:27.400 --> 0:02:31.919 for global uh leadership and power. More there and so 0:02:32.200 --> 0:02:36.640 the uh, they're playing a regional game and a domestic 0:02:36.680 --> 0:02:40.280 economic and economic growth game as well as a global 0:02:40.320 --> 0:02:43.480 leadership game. But in something like strategic affairs, they war 0:02:43.560 --> 0:02:45.960 want to push us out of the Pacific than organize 0:02:45.960 --> 0:02:47.760 an entire Okay, it just goes in my book of 0:02:47.800 --> 0:02:50.520 the Summer, Robert Cappel and the Return of Marco Polo's World. 0:02:50.520 --> 0:02:53.360 And one of your advertisers and foreign affairs is stravits 0:02:53.440 --> 0:02:56.760 is Fletcher School as well. What's the Gideon Rose scorecard 0:02:57.120 --> 0:03:00.840 on the South China Sea? Is it China one US zero? 0:03:01.000 --> 0:03:04.480 This year? Uh, there's no question. Well, things are drifting 0:03:04.520 --> 0:03:08.359 in China's favor. Essentially the United States with Brexit and Trump, 0:03:08.560 --> 0:03:11.239 the anglosphere is taking itself out of the geopolitical game 0:03:11.440 --> 0:03:15.480 and so essentially, uh, the normal operations of global order 0:03:15.520 --> 0:03:19.480 maintenance continue, but nobody believes that anymore because the United 0:03:19.480 --> 0:03:21.480 States really doesn't have his heart in it. But China 0:03:21.600 --> 0:03:25.000 isn't actually taking advantage to make new moves forward, and 0:03:25.040 --> 0:03:28.360 they're obviously weak and have been pushed back because of 0:03:28.360 --> 0:03:30.760 the trade policies. The question is what's gonna happen next? 0:03:31.080 --> 0:03:34.960 And that's anybody's investador Hosses. In the issue, Greg Mankeew 0:03:34.960 --> 0:03:37.920 of Harvard Allen Blind to the former vice chairman at Princeton, 0:03:38.000 --> 0:03:40.120 I'm gonna go to Senate Warren. Good Morning one or 0:03:40.120 --> 0:03:44.080 six one FM Boston. Elizabeth Warren's strengthening democracy at home 0:03:44.120 --> 0:03:46.920 and abroad, and she says the urgency of the moment 0:03:47.200 --> 0:03:49.840 could not be overstated. It sounds like she's running for office. 0:03:49.840 --> 0:03:53.600 So you can't have any other candidates. We would love 0:03:53.640 --> 0:03:56.000 to feature all the major candidates in the next cycle. 0:03:56.040 --> 0:03:59.839 We've already had. We've had John kay sick in, we've 0:03:59.880 --> 0:04:03.000 had the president. What is a president written in? I 0:04:03.120 --> 0:04:06.320 say for you, the president has not um a Secretary Pompeo, 0:04:06.800 --> 0:04:08.760 where we love to have the administration and we we 0:04:08.800 --> 0:04:11.640 pride ourselves on being open to all voices. Uh. And 0:04:11.680 --> 0:04:14.960 we've had a Secretary Pompeo in last issue. So uh. 0:04:15.000 --> 0:04:17.400 And we want the Republican candidates as well as the 0:04:17.440 --> 0:04:20.840 democratic ones. Democracy is the new inWORD. You know, it's 0:04:20.880 --> 0:04:24.560 like we're taking a journey. Okay, we're doing democracy. What 0:04:24.600 --> 0:04:26.800 does democracy mean to Gideon Rose, Well, that's a great 0:04:26.839 --> 0:04:29.920 question because there's no as people have been pointing out 0:04:29.960 --> 0:04:34.760 in many respects, the populist movements are majoritarian democratic movements. 0:04:34.800 --> 0:04:37.640 There's a real sense in many of the countries we're 0:04:37.640 --> 0:04:41.679 talking about, from from Turkey and Russia all the way 0:04:41.720 --> 0:04:44.839 to Eastern Europe and elsewhere. There's no question that there's 0:04:44.880 --> 0:04:47.640 a lot of popular support for certain kinds of policies. 0:04:47.680 --> 0:04:50.760 But that doesn't necessarily mean that the liberal democracy and 0:04:50.839 --> 0:04:53.160 the rule of law and some of the things that 0:04:53.200 --> 0:04:57.320 we think beyond simple majoritarian You get to decide what happens. 0:04:57.560 --> 0:04:59.840 That stuff is under threat, and the really interesting question 0:05:00.160 --> 0:05:03.480 forward is whether not democracy will succeed, but will liberal 0:05:03.520 --> 0:05:06.960 democracy succeed? Gideon Rose, thank you so much, John Say 0:05:07.040 --> 0:05:09.279 thirties six percent. You know they've got these little things 0:05:09.320 --> 0:05:12.040 in the magazine, and the answer is for the price 0:05:12.080 --> 0:05:16.160 of one point three six beverages of your choice at 0:05:16.279 --> 0:05:21.279 Hemmingways at the in Paris, you you just get in 0:05:22.000 --> 0:05:26.520 brilliance for Christmas? Is that think you know, human well, 0:05:26.560 --> 0:05:30.280 that Bill's already got one you're going to get would 0:05:30.279 --> 0:05:31.560 be that it's a small price to pay not just 0:05:31.600 --> 0:05:34.560 for new information, but rather for the context that allows 0:05:34.560 --> 0:05:37.000 you to organize the information you actually have. You got 0:05:37.040 --> 0:05:39.200 a ton of data all the way through your terminals 0:05:39.200 --> 0:05:41.640 through everything, and what we provide is a way to 0:05:41.680 --> 0:05:45.359 contextualize that and fit all the data into some pattern 0:05:45.400 --> 0:05:52.200 that is intellectually I think, yes, Gideon, Gideon, the Foreign 0:05:52.240 --> 0:05:56.320 Affairs is thick and heavy. You throw it at the 0:05:56.360 --> 0:05:59.400 smart mouth college kid and say shut up and read this. 0:05:59.520 --> 0:06:01.440 So I actually have one of those smart math college 0:06:01.520 --> 0:06:04.760 kids myself this year, and so I wrote the lead 0:06:04.800 --> 0:06:06.800 issue because I felt like I needed to do the 0:06:06.800 --> 0:06:09.440 next generation what to think, and I wasn't sure that 0:06:09.440 --> 0:06:10.800 anybody else could do it. So I went out and 0:06:10.800 --> 0:06:13.800 did it to my college kids son in the pages 0:06:13.839 --> 0:06:16.159 of n Affairs. Gieon Roal, thank you so much. Foreign 0:06:16.160 --> 0:06:34.160 Affairs at Magazine don't leave home without it. It's not 0:06:34.320 --> 0:06:37.159 Joining us for a quick chat from London and Retail. 0:06:37.279 --> 0:06:40.799 Andrew felstaed Uh joins us. Andrew, good morning. Your article 0:06:40.880 --> 0:06:44.400 this morning is on the crushing disappointments of Brexit United 0:06:44.480 --> 0:06:48.760 Kingdom Retail. Can you take it worldwide? Well? The interesting 0:06:48.920 --> 0:06:51.880 thing was, I mean we were all expecting Christmas to 0:06:51.880 --> 0:06:54.359 be bad in the UK because of the uncertainty of 0:06:54.360 --> 0:06:59.120 a Brexit, asas also mentioned France and Germany and said, um, 0:06:59.120 --> 0:07:03.000 things were quite tough there too. Well, things are quite 0:07:03.000 --> 0:07:06.640 tough there too. I mean these are these are real drops, 0:07:06.800 --> 0:07:08.800 aren't they. I mean, there's no other way to put it, 0:07:09.760 --> 0:07:13.720 that's right. I mean we were all expecting, you know, 0:07:13.800 --> 0:07:18.560 Christmas to be taff and Germany had quite a poor 0:07:18.920 --> 0:07:22.040 autumn because it had really unseasonable weather. And I mean 0:07:22.080 --> 0:07:26.160 retailers are always blaming the weather, but actually it does matter. 0:07:26.240 --> 0:07:29.480 Because you have a hot spell in sort of September, Rocktome, 0:07:29.560 --> 0:07:31.560 then no one actually wants to buy a coat coat. 0:07:31.680 --> 0:07:35.560 So your high value items that you rely on bolstering 0:07:35.600 --> 0:07:38.080 your profits, that's not happening. It's quite bad. New the 0:07:38.120 --> 0:07:40.239 blur I saw. I mean, and I can't name Laura 0:07:40.280 --> 0:07:43.360 Ashley since time begin with the X number of stores 0:07:43.400 --> 0:07:45.560 are shutting down. I mean, come on, the one word 0:07:45.560 --> 0:07:49.440 in your report, I mean Amazon is global and it's 0:07:49.480 --> 0:07:52.320 beginning to have an effect across all retail, right, that's right. 0:07:52.320 --> 0:07:55.240 But don't forget that a sauces online too. So if 0:07:55.280 --> 0:07:59.560 anybody was supposed to be well set up to compete 0:07:59.600 --> 0:08:02.400 with ours, and it's as Nasals often been touted as 0:08:02.440 --> 0:08:06.240 an Amazon acquisition target because one thing that Amazon hasn't 0:08:06.240 --> 0:08:09.000 really got right is fashion and whatever you say about 0:08:09.000 --> 0:08:12.080 as it has got fashion right for the young shopper, 0:08:12.880 --> 0:08:14.600 well are they going to take I mean it's they're 0:08:14.680 --> 0:08:18.400 enjoying it. Our shares on sale today it reduced, I 0:08:18.400 --> 0:08:21.880 mean exactly. I mean, are you announcing the effect of 0:08:21.920 --> 0:08:27.239 this transaction? No? No, no, but but but Asace should 0:08:27.400 --> 0:08:30.760 be a challenger to Amazon, the challenger for me is 0:08:30.800 --> 0:08:33.720 your from me. He throw on, you're driving in and 0:08:33.760 --> 0:08:36.080 they're on the right side as you quietly got by 0:08:36.200 --> 0:08:39.079 his Herod's. And then there's Harvey Nichols and the rest 0:08:39.080 --> 0:08:42.240 of it. What's the state of fancy London shopping? That's 0:08:42.240 --> 0:08:46.160 so many of our listeners are aware of. Fancy London 0:08:46.200 --> 0:08:49.439 shopping is doing pretty well because the pound is still weak, 0:08:49.520 --> 0:08:52.280 We've still got lots of travelers. A fancy London shopping 0:08:52.320 --> 0:08:56.520 shouldn't have any problem, and neither really should bargain basement 0:08:56.600 --> 0:08:59.480 London shopping. You know, when we spend we all want 0:08:59.520 --> 0:09:03.040 to barking. Where there is real trouble is this mid 0:09:03.120 --> 0:09:07.640 market where they're not cheap and they're also not aspirational. 0:09:08.200 --> 0:09:10.319 That's where the real trouble is. But I think fancy 0:09:10.360 --> 0:09:12.960 London shopping no problem. Let me bring in my colleague 0:09:13.120 --> 0:09:16.640 PIMPM and it's a real retail turm wail, whether it's 0:09:17.000 --> 0:09:18.640 UK or here. Yeah. Well, I was just going to 0:09:18.760 --> 0:09:21.960 go through the list of retailers that have actually shuttered 0:09:22.000 --> 0:09:25.320 some of their operations. Debenham's, House of Phraser, Home Base, 0:09:25.720 --> 0:09:28.920 Marks and Spencer New Look, John Lewis Patissary, Valerie, and 0:09:28.960 --> 0:09:31.920 of course all the Toys r Us stores were forced 0:09:31.920 --> 0:09:34.880 to close because of that. And I'm just wondering, does 0:09:34.920 --> 0:09:37.360 this mean that there's going to be an excess of 0:09:37.440 --> 0:09:40.920 real estate coming on the market. Yes, there will be. 0:09:40.960 --> 0:09:43.040 The I mean the other thing, all those shops closing, 0:09:43.080 --> 0:09:46.120 all things being equal, they should have started to benefit 0:09:46.240 --> 0:09:48.120 the ones that are left. You get a last man 0:09:48.240 --> 0:09:51.680 standing effect. But you know, the uncertainty over Brexit has 0:09:51.720 --> 0:09:54.840 really overshadowed that, and it's also overshadowed the fact that 0:09:54.840 --> 0:09:57.520 people actually have more money in their pocket. The fundamental 0:09:57.600 --> 0:10:00.560 was a good it's just everybody's worried. You know, they 0:10:00.960 --> 0:10:03.800 stopped spending because they're worried what's going to happen in March. 0:10:04.240 --> 0:10:06.600 Do you believe also that there's gonna be a clamor 0:10:06.679 --> 0:10:09.080 for staffing because many of the people that work in 0:10:09.240 --> 0:10:11.760 retail and in many of those kinds of jobs on 0:10:11.800 --> 0:10:14.640 the high Street, and indeed in logistics and so on. 0:10:14.880 --> 0:10:20.240 They come from countries outside the United Kingdom. That is 0:10:20.320 --> 0:10:24.839 certainly a problem that that retailers and and those restaurants 0:10:24.880 --> 0:10:27.400 and coffee shops have all alluded to. So it depends 0:10:27.440 --> 0:10:30.920 what happens in March, really, and also we've learned that drivers, 0:10:30.960 --> 0:10:32.920 you know, just people that are driving the lorries the 0:10:33.000 --> 0:10:37.080 trucks throughout the the United Kingdom, that there is a 0:10:37.160 --> 0:10:43.360 shortage of over fifty thousand drivers because recruiters, well, new 0:10:43.360 --> 0:10:45.440 immigration rules are going to make it more difficult for 0:10:45.480 --> 0:10:48.360 them to get those people. And that's going to hit online. 0:10:48.440 --> 0:10:51.920 That's another challenge to online if if things can't be delivered. 0:10:52.320 --> 0:10:54.680 Do you get the sense that people are spending money 0:10:54.720 --> 0:10:57.840 in order to stock up on food and essential items? 0:10:57.840 --> 0:11:00.640 Those are reports that we've heard in the news meeting, No, 0:11:00.800 --> 0:11:05.080 not at all. I get the sense that everybody is worried. 0:11:05.160 --> 0:11:07.840 It's it's a bit like sort of two thousand and eight, 0:11:07.880 --> 0:11:11.280 really two thousand and nine, when everyone was worried about 0:11:11.280 --> 0:11:14.319 the financial crisis on what was going to happen, and 0:11:14.360 --> 0:11:18.160 they held off from spending. One retailer said to me, 0:11:18.280 --> 0:11:21.320 it's as if somebody switched the lights off in October. 0:11:21.800 --> 0:11:26.720 Everybody I talked to says October November has been very difficult. 0:11:26.760 --> 0:11:30.520 This is this isn't some excuse for portraying that this 0:11:30.640 --> 0:11:33.080 mood on the high street is real? Do you find 0:11:33.080 --> 0:11:37.439 it also that inventory levels stark scarcity has also been 0:11:37.480 --> 0:11:39.600 a factor that they just don't have enough on the 0:11:39.679 --> 0:11:43.679 shelves because of these issues. Well, no, not because of Brexit. 0:11:43.840 --> 0:11:47.440 I think some retailers have bought very tightly because you know, 0:11:47.840 --> 0:11:50.440 they knew things were going to be pretty tough, so 0:11:50.520 --> 0:11:54.199 they've bought quite tightly, and actually Marks and Spencers had 0:11:54.200 --> 0:11:57.040 the opposite effect. They've actually they've struggled with their fashion 0:11:57.160 --> 0:11:59.199 views and they had some great fashion this season and 0:11:59.280 --> 0:12:01.480 probably is it in are enough of it? So they 0:12:01.559 --> 0:12:04.600 did have some shortages of the great stuff that they had. 0:12:04.760 --> 0:12:07.880 I can tell you scientifically at the Keen household, this 0:12:07.920 --> 0:12:11.360 is a great comment. They're sold out of everything, not 0:12:11.679 --> 0:12:15.280 enough things to spend. Because you're a retailer, there aren't 0:12:15.320 --> 0:12:19.120 any prizes for overstocking. You know, these retailers kind of 0:12:19.160 --> 0:12:21.760 monitor consumers many they know things are going to be tough, 0:12:21.840 --> 0:12:24.600 so they think, you know what, I'll just order in 0:12:24.679 --> 0:12:29.960 a bit less. What's gonna be the global the global losses? 0:12:30.000 --> 0:12:33.240 I mean, can you judge yet the margin compression that 0:12:33.280 --> 0:12:36.600 we're going to see? Um, not yet. I mean one 0:12:36.679 --> 0:12:39.880 thing that we will see. I mean was saying they 0:12:39.960 --> 0:12:44.360 did off on Black Friday and that wasn't deep enough. 0:12:44.440 --> 0:12:47.559 Other people have been doing much bigger savings. So if 0:12:47.600 --> 0:12:51.440 people are discounting like crazy, that means margins will be hit. 0:12:51.520 --> 0:12:54.120 So we know that, Um, what we don't know is 0:12:54.120 --> 0:12:57.319 the extent yet. I gotta say a source shares right now, 0:12:57.360 --> 0:13:04.000 the online retail are down near to day. One thing 0:13:04.000 --> 0:13:06.200 about a SOOCE is it it's always been quite a 0:13:06.400 --> 0:13:09.480 strong It's always had quite strong growth. It's always been 0:13:09.520 --> 0:13:11.960 a bit of a market favorite. So you know, when 0:13:12.000 --> 0:13:14.600 you do have bad news from a company like that, 0:13:15.640 --> 0:13:18.719 it does become compounded because people have been used to 0:13:18.760 --> 0:13:20.960 them performing and they stopped performing, and so there's an 0:13:21.000 --> 0:13:23.920 outside effect. So it was always bound to be a 0:13:23.960 --> 0:13:26.760 big hit for them. Andrew Felster, thank you so much, 0:13:26.800 --> 0:13:29.360 greatly appreciated today. What do you see in the stock market? 0:13:29.960 --> 0:13:31.600 I see that this is going to be a pretty 0:13:31.640 --> 0:13:34.400 quiet week. One of the big issues to talk about 0:13:34.440 --> 0:13:37.440 initial public offerings and is there enough money in order 0:13:37.480 --> 0:13:40.720 to soak up all of the new issues that are 0:13:40.760 --> 0:13:43.240 either scheduled to go out between now and the end 0:13:43.240 --> 0:13:46.559 of the year and coming up a lot of money. 0:13:46.640 --> 0:13:50.080 What I find extraordinary is besides the FED meeting, we're 0:13:50.120 --> 0:13:53.040 in a holiday mode. I get that, except I'm seeing 0:13:53.040 --> 0:13:56.520 a tape deteriorates for the morning. We started out FED 0:13:56.640 --> 0:13:59.880 dead and all of a sudden negative futures through to 0:14:00.360 --> 0:14:02.559 yields you know, coming you know, we're just sort of 0:14:02.880 --> 0:14:06.360 it's a new g market into the FED meeting. Well, 0:14:06.440 --> 0:14:08.760 I mean, I think there's also the issue, as I said, 0:14:09.040 --> 0:14:11.760 of cash. Right, unless there's new cash that comes into 0:14:11.800 --> 0:14:15.320 the market, you don't see stock prices move higher. And 0:14:15.360 --> 0:14:17.680 if you take a look at the flows, particularly the 0:14:17.720 --> 0:14:21.680 equity flows, you've seen people come out out exactly where 0:14:21.720 --> 0:14:23.840 are they going? Just going to cash and people either 0:14:23.960 --> 0:14:26.440 cash maybe or people got to spend it things, you know, 0:14:26.520 --> 0:14:30.280 Despite the CPI numbers that come out on a regular basis, 0:14:30.480 --> 0:14:33.320 I find that people tell me things are more expensive. 0:14:33.320 --> 0:14:36.680 Insurance is more expensive, utilities and more expensive. Taxes are 0:14:36.720 --> 0:14:39.520 going up, and many people have not necessarily saved for 0:14:39.560 --> 0:14:41.600 the tax bill. It's going to come in twenty nine 0:14:42.440 --> 0:14:45.080 when they find out that they're not able to deduct 0:14:45.160 --> 0:14:47.480 all those property tax Well, that's a very New York 0:14:47.520 --> 0:14:50.120 City kind of thing. No, no, no, sir, This is 0:14:50.200 --> 0:14:54.120 this is California, New Jersey, Canna. This is everywhere. What 0:14:54.240 --> 0:14:58.000 I'm hearing is the mystery about taxes for this year 0:14:59.240 --> 0:15:03.520 is permanent. Throughout every accounting practice, every single customer, every 0:15:03.560 --> 0:15:07.240 walk of life is in the same panic about Okay, 0:15:07.280 --> 0:15:10.000 what what are my taxes really gonna look like? Well, 0:15:10.040 --> 0:15:12.640 and also you end up figuring out that you work 0:15:13.200 --> 0:15:16.160 more than half the year in order to pay your taxes. 0:15:16.840 --> 0:15:32.640 Very good our interview already on this Monday or interview 0:15:32.680 --> 0:15:34.360 of the week, and I would say, what a wonderful 0:15:34.360 --> 0:15:37.280 way to set up two thousand nineteen for all Americans. 0:15:37.840 --> 0:15:42.720 He is Paul Romer, He is out of Colorado. He 0:15:43.040 --> 0:15:46.240 is someone who did mathiness at Chicago and then I 0:15:46.320 --> 0:15:49.840 went on to an extinguished career in economics at a 0:15:49.920 --> 0:15:53.520 number of institutions and the Laurea Jones. I can't remember 0:15:53.560 --> 0:15:55.960 if I've spoken to you some Stockholm in the blur, 0:15:56.760 --> 0:15:59.840 I can't remember it. All, what was it like? Is 0:15:59.840 --> 0:16:02.400 it young Turk to work with George acre Love? If 0:16:02.400 --> 0:16:04.480 you wrote a paper he did a co write with 0:16:04.600 --> 0:16:08.360 acre Love, were you trembling as you did this? No, George, 0:16:08.400 --> 0:16:11.920 George is a very modest guy. And Mr Yell I 0:16:12.320 --> 0:16:14.280 I love. Yeah, Harry's married to Janet, you know, and 0:16:14.360 --> 0:16:17.240 that's right, um, and Janet's great too. But George is 0:16:17.760 --> 0:16:20.120 very easy to work with and it was just a 0:16:20.200 --> 0:16:23.760 joy to write that paper with him. You came out 0:16:23.800 --> 0:16:27.600 of Chicago already known there for just a complete ability 0:16:27.680 --> 0:16:31.800 to grab the Mathew Nous of economics, and more than 0:16:31.840 --> 0:16:35.400 anyone I know, you've somewhat stayed away from it. Are 0:16:35.440 --> 0:16:38.040 we at a better point in Matthew Nous now where 0:16:38.040 --> 0:16:41.720 we're not slaves to the model? You remember when Harry 0:16:41.760 --> 0:16:44.360 Truman was reputed to have said I wanted one armed 0:16:44.360 --> 0:16:46.560 economists because he gets sick of this. Well, on the 0:16:46.600 --> 0:16:50.200 one hand, this and the other hand that. Unfortunately, with math, 0:16:50.240 --> 0:16:54.440 that's a two handed problem. Some math can be very helpful, 0:16:54.440 --> 0:16:57.840 it can really clarify our understanding, but too much of it, 0:16:57.920 --> 0:17:01.920 or Matthews the wrong way, can confuses, can exclude. And 0:17:02.000 --> 0:17:03.440 so what we need to do is get to that 0:17:03.520 --> 0:17:06.280 Goldilocks use of just the right amount of masks to 0:17:06.400 --> 0:17:08.640 zoom in on the things we really need to understand. 0:17:08.760 --> 0:17:11.800 I want to talk about the path from nifty seven. 0:17:11.800 --> 0:17:15.200 I mean the folks on the Modern Ears seven Samuelson 0:17:15.960 --> 0:17:19.840 textbook The Clouds part for solo at M I T 0:17:20.040 --> 0:17:23.520 and N seven ish, and then the entire issue of 0:17:23.600 --> 0:17:27.720 how we grow moves forward and what you canonize is 0:17:27.880 --> 0:17:32.880 innovation and folding it into what's called indogenous growth. How 0:17:32.880 --> 0:17:36.760 are we doing? Are we growing within our system? Now? 0:17:36.800 --> 0:17:38.919 Are we making it up? But actually, let me let 0:17:38.960 --> 0:17:40.639 me tell you the story. When I tried to explain 0:17:40.680 --> 0:17:44.120 to my son what I do at work, I said, well, 0:17:44.359 --> 0:17:47.879 I'm trying to understand why it is that your grandparents, 0:17:47.920 --> 0:17:50.800 when they were your age, didn't have these great things 0:17:50.840 --> 0:17:53.639 like a video cassette recorder. He looked at me and 0:17:53.640 --> 0:17:57.760 he said, Dad, that's obvious. When nanny and granddad were kids, 0:17:58.119 --> 0:18:01.720 the VCR hadn't been invented yet. Is there anything else 0:18:01.760 --> 0:18:03.919 with your work that I can help you with? No? 0:18:04.000 --> 0:18:06.159 But but but the other place, it's sort of been 0:18:06.240 --> 0:18:10.280 obvious to everybody that innovation is really what drives standards 0:18:10.280 --> 0:18:13.479 of living, What and you know, Solo recognized this. What 0:18:13.560 --> 0:18:16.200 I did, though, was say we can understand it. We 0:18:16.200 --> 0:18:18.840 don't want to just say innovation happens. We need to 0:18:18.960 --> 0:18:22.199 understand what causes it, and then what policies can we 0:18:22.359 --> 0:18:25.679 use to increase the rate of innovation, to increase discoveries? 0:18:26.080 --> 0:18:29.720 Raise is your Paul Romer is your world? The fault 0:18:29.880 --> 0:18:33.080 of this gilded age in that we've applied the innovation 0:18:33.560 --> 0:18:37.040 to the benefit game of a gain rather of a 0:18:37.080 --> 0:18:41.080 modest or narrow segment of the American population, and everybody's 0:18:41.119 --> 0:18:45.199 flat on their back and a luddite America because it 0:18:45.240 --> 0:18:48.280 hasn't benefited that. Yeah, I think that, you know, people 0:18:48.320 --> 0:18:50.320 like me who have been advocates for innovation really need 0:18:50.400 --> 0:18:52.679 to be held to account. The first problem is it 0:18:52.760 --> 0:18:55.919 doesn't seem like everybody's getting a share of the benefits. 0:18:55.960 --> 0:18:58.560 And moreover, we're actually in a period where people have 0:18:58.720 --> 0:19:01.920 less confidence in science then they used to have twenty 0:19:02.000 --> 0:19:04.919 years ago. And that's the thing that troubles me the 0:19:04.920 --> 0:19:08.920 most because science is the is the key to progress. 0:19:09.000 --> 0:19:11.800 It's what it's the greatest thing humans have ever invented. 0:19:12.119 --> 0:19:14.560 And if we lose our faith in science, you know, 0:19:14.560 --> 0:19:17.000 where are we going to get the extensions of health 0:19:17.040 --> 0:19:20.040 and life, and pim Fox has comes to American exceptionalism 0:19:20.040 --> 0:19:22.920 and that that is is Professor Rohmer says that that 0:19:23.040 --> 0:19:26.920 loss of confidence, Well, my question would be indeed art 0:19:26.960 --> 0:19:29.560 if that loss of confidence exists, but you still have 0:19:29.680 --> 0:19:33.320 a cadre of scientists and technicians that are able to 0:19:33.359 --> 0:19:37.240 figure out what really goes on. But you have of 0:19:37.240 --> 0:19:40.679 the population basically putting on the brakes and making it 0:19:40.760 --> 0:19:44.440 more difficult for those innovations to reach the public. What 0:19:44.720 --> 0:19:48.760 do you do. You've been involved in smart cities. What 0:19:48.960 --> 0:19:51.720 can you physically do well. I think what would be 0:19:51.760 --> 0:19:54.639 a terrible mistake is for the say the scientists, to 0:19:54.680 --> 0:19:57.800 say we're smart. Just let us make all the decisions. 0:19:57.840 --> 0:20:01.600 We're in control. Just just let us do our thing. Um, 0:20:01.720 --> 0:20:04.159 people in science, people in the government. We need to 0:20:04.200 --> 0:20:07.400 be accountable to the public. If the public doesn't understand 0:20:07.480 --> 0:20:10.200 what we're doing, why we're doing it, that's on us, 0:20:10.560 --> 0:20:12.480 and we need to do a better job of explaining 0:20:12.480 --> 0:20:15.199 it and rebuilding that kind of faith in what we 0:20:15.280 --> 0:20:18.560 do and belief in the idea that facts are our friends. 0:20:19.520 --> 0:20:21.560 I think one of the mistakes that we have made 0:20:22.000 --> 0:20:25.440 is we've fed this kind of doom and gloom scenario 0:20:25.760 --> 0:20:28.960 that there's that there's no hope for the future. And 0:20:29.080 --> 0:20:32.280 you know, for example, fun climate change. We can solve 0:20:32.320 --> 0:20:34.640 climate change. We can manage that problem, just like we've 0:20:34.640 --> 0:20:36.960 managed every other problem. The only question is how do 0:20:37.000 --> 0:20:40.520 we decide to move forward. But we've got to be 0:20:40.560 --> 0:20:44.359 careful not to make everybody so pessimistic and also make 0:20:44.359 --> 0:20:47.280 sure that they see benefits in their own lives if 0:20:47.320 --> 0:20:50.959 we want to keep this consensus for more discovery, more change, 0:20:51.160 --> 0:20:54.959 more growth. Granted, but it reminds me of Daniel Patrick 0:20:55.080 --> 0:20:59.320 moyna hands comment about people are entitled to their own opinions, 0:20:59.359 --> 0:21:02.600 but they're not a title to their own facts. If not, 0:21:03.160 --> 0:21:05.359 if we're not are all looking at the same fact 0:21:05.520 --> 0:21:09.719 based situation, how do you even take that first step? 0:21:10.119 --> 0:21:12.000 But one of the things I've been talking about recently 0:21:12.080 --> 0:21:15.840 is having a sharper separation between the people who established 0:21:15.880 --> 0:21:18.200 the facts and then the people who have to make 0:21:18.240 --> 0:21:22.760 decisions based on those facts. And often those decisions involve compromise. 0:21:22.920 --> 0:21:25.400 That's just the way of the world. The people who 0:21:25.400 --> 0:21:28.800 are providing the facts should not be thinking about compromise. 0:21:29.000 --> 0:21:31.280 They should not be thinking about who wins who loses. 0:21:31.520 --> 0:21:34.200 They just need to say facts or facts here they are, 0:21:34.560 --> 0:21:37.280 you figure out what to do with it. And sometimes frankly, 0:21:37.320 --> 0:21:40.639 in the academic community we kind of pretend we're acting 0:21:40.680 --> 0:21:43.240 like the facts people. But then we started staying you 0:21:43.280 --> 0:21:45.640 should do this, you should do that, And that's that's 0:21:45.720 --> 0:21:47.760 mixing the roles in a way that I think isn't helpful. 0:21:47.880 --> 0:21:51.240 They celebrated Rome couple of years ago the and I 0:21:51.440 --> 0:21:56.000 find him phenomenal Chad Jones explaining the growthiness in English. 0:21:56.520 --> 0:21:59.240 Chad has done a great job. And he talked about 0:21:59.440 --> 0:22:03.640 rival non rival products, which is fancy economic talk, which 0:22:03.680 --> 0:22:06.879 is our thinking and our ideas are not the same 0:22:07.240 --> 0:22:11.560 as accountable item like a pencil or a bow tie. Okay, fine, 0:22:12.040 --> 0:22:16.880 help our audience with the threat that all this intellectual 0:22:16.960 --> 0:22:20.960 mumbo jumbo is only the purview of the wealthy and 0:22:21.040 --> 0:22:24.520 the haves. What do they have nots? Do ye? Well? First? 0:22:24.640 --> 0:22:26.760 Um if I mean, they'll be put in a plug 0:22:26.800 --> 0:22:30.199 for my lecture. And in Sweden, I actually avoided the 0:22:30.240 --> 0:22:32.240 use of that term non rival because it's a little 0:22:32.240 --> 0:22:34.920 too jargon e and really just try to explain what 0:22:35.080 --> 0:22:38.040