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Speaker 1: Bloomberg Audio Studios, Podcasts, radio News. This is Masters in

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Speaker 1: Business with Barry Ritholts on Bloomberg Radio.

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Speaker 2: I'm Barry Ridholts. You're listening to Masters in Business on

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Speaker 2: Bloomberg Radio. My extra special guest this week is Heather Bouche.

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Speaker 2: She is a senior research fellow at the Harvard Kennon

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Speaker 2: School working on the Reimagining the Economy project. Previously, she

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Speaker 2: co founded the Washington Center for Equable Growth in twenty thirteen.

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Speaker 2: She has been an economist for the Joint Economic Committee

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Speaker 2: of the US Congress and on the Council of Economic

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Speaker 2: Advisors for President Biden. She became Chief Economists to the

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Speaker 2: President's invest In America Cabinet. Politico twice named her one

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Speaker 2: of the top fifty thinkers Doers in Visions Transforming American Politics.

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Speaker 2: Our most recent book is Unbound, How Economic inequality constricts

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Speaker 2: our economy and what we can do about it. Heather Bouchet,

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Speaker 2: Welcome to Bloomberg.

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Speaker 1: Thank you.

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Speaker 3: It's a real pleasure to be here with you today.

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Speaker 2: It's a pleasure to have you here. Let's start a

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Speaker 2: little bit with your background. BA in economics from Hampshire College,

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Speaker 2: then a PhD from the New School, also in economics.

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Speaker 2: What was the original career plan?

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Speaker 3: Oh well, I actually wanted to be an economist and

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Speaker 3: run a thing tank someday and get to do things

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Speaker 3: like this. I grew up in the Pacific Northwest in

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Speaker 3: a place called Michael Teale.

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Speaker 2: Washington, Seattle, near Seattle, near.

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Speaker 3: Seattle, it's north, It's right next to Everett, Washington. My

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Speaker 3: dad worked at the big Everett Boeing plant where when

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Speaker 3: I was a kid they made the seven forty sevens.

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Speaker 3: When I was a kid, it was the largest land

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Speaker 3: mass building in the world, has now been overtaken by

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Speaker 3: the Tesla gigafactory. And in the early eighties, you know,

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Speaker 3: I lived in a community with a bunch of cul

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Speaker 3: de sacs. All new houses had basically been built for

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Speaker 3: the workers and for the families of Boeing. And in

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Speaker 3: the early eighties, every kid at my bus stop had

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Speaker 3: one or two parents that were pink slipped. They'd been

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Speaker 3: laid off. Is the early eighties what I know now

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Speaker 3: to be the Volca Recession, And at the time I

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Speaker 3: was really just struck by how much power this company

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Speaker 3: had over my life and the lives of my friends,

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Speaker 3: and you know, I was really good at math, and

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Speaker 3: over time I realized that economics was the field that

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Speaker 3: was supposed to have answers to questions like how is

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Speaker 3: it that you know you can have that economic security

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Speaker 3: that I as a kid wanted and wanted for my family.

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Speaker 2: So formative years as a kid watching what the company town,

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Speaker 2: how it progressed when layoffs came. Is that what led

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Speaker 2: your focus to the intersection of economic growth and inequality?

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Speaker 3: Probably? I think the question that I have asked my

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Speaker 3: entire career is what creates that opportunity for economic security

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Speaker 3: for America's middle class? How do you make America's middle

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Speaker 3: class grow and thrive? And what stands in the way?

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Speaker 3: And so I've spent a lot of time thinking about

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Speaker 3: government policy, thinking about, you know, how we can encourage

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Speaker 3: firms to create those good middle class jobs, what government

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Speaker 3: needs to do when those jobs aren't available, or when

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Speaker 3: those jobs don't provide childcare or unemployment benefits or whatever

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Speaker 3: it is that families need.

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Speaker 2: So it's such a partisan era these days. When you

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Speaker 2: were working on the as an economist for the Joint

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Speaker 2: Economic Committee of US Congress, was it that partisan or

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Speaker 2: was there some cooperation? Hey, we all have the same goals,

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Speaker 2: we just different our means of getting there. What was it,

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Speaker 2: What years were that, What was it like when you

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Speaker 2: work there?

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Speaker 3: So I was there in two thousand and eight, two

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Speaker 3: thousand and seven into two thousand and eight, and so

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Speaker 3: it was, you know, the financial crisis, and there was

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Speaker 3: not a lot of partisan happiness. You know that in

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Speaker 3: those years on the hill. I will say over my career,

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Speaker 3: I've testified over three dozen times for Congress and the

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Speaker 3: you know, early on in my career I felt like

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Speaker 3: people on both sides of the isle were much more polite,

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Speaker 3: much more cognizant of the fact that you know, as

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Speaker 3: someone who's a researcher and you show up and you've

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Speaker 3: you've spent all week preparing this testimony, and you're ready

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Speaker 3: to ask questions. But you're doing this, you're volunteering your time,

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Speaker 3: you're not being subpoened. You're just there to share information,

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Speaker 3: and people on both sides of the aisle would generally

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Speaker 3: be respectful of that. And I definitely have noted over

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Speaker 3: time that people on the other side of the aisle

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Speaker 3: now are are are less likely to be polite to

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Speaker 3: me when I'm testifying. I mean, I haven't testified a

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Speaker 3: number of years, but I've seen that over my career,

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Speaker 3: so that partisanship has really drilled down into how we

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Speaker 3: treat experts and people who are volunteering, people who are

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Speaker 3: just sharing information, and that, you know, is just one

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Speaker 3: of the many indications in our society of how partisan

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Speaker 3: it is.

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Speaker 2: So a lot of us in them, a lot of tribalism.

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Speaker 2: Let's talk about when you were on the Council of

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Speaker 2: Economic Advisors in the last administration. What sort of work

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Speaker 2: did you do? What was that like?

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Speaker 3: Well, it was very exciting. I joined Joe Biden during

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Speaker 3: his campaign in March of twenty twenty. I started advising him.

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Speaker 2: And strictly economic and policy analysis.

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Speaker 3: Strictly economic and what do we do about COVID and

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Speaker 3: what do we do about the economic recovery? And how

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Speaker 3: do we think about the economic agenda. I had advised

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Speaker 3: Hillary Clinton as an economic adviser. I was a chief

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Speaker 3: economist for her transition in twenty sixteen, so I had

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Speaker 3: some experience in that role when I started helping the

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Speaker 3: Biden campaign. But after he was elected he announced his

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Speaker 3: ECON team. It was a second group of announced hires

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Speaker 3: that he made, and you know, immediately we were announced

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Speaker 3: in early December, and the first question that we had

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Speaker 3: to deal with was what do we do about COVID,

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Speaker 3: What do we do about the recession? How do we

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Speaker 3: get people you know, back to school and work. How

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Speaker 3: do we make sure everyone is safe but can get

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Speaker 3: the economy back on track? And you know, the President

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Speaker 3: had said, you know, throughout the campaign that he didn't

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Speaker 3: want to just build back from the pandemic, but that

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Speaker 3: he wanted to build back better and had this really

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Speaker 3: robust economic agenda, and so when we started out at

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Speaker 3: the Council of Economic Advisors, we were thinking a lot

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Speaker 3: about we will there be a new variant to the virus?

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Speaker 3: What will that mean for the economy, How does that

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Speaker 3: affect global supply chains, How does school reopenings affect you know,

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Speaker 3: labor supply. So a bunch of questions we're within about there.

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Speaker 3: And then we also did a lot of work thinking about, well,

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Speaker 3: what does what do all these pieces of build back

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Speaker 3: better mean? How do we craft a set of economic

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Speaker 3: policies that can support and grow America's middle class. That's

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Speaker 3: Joe Biden's north star, It's what he wanted his economic

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Speaker 3: agenda to really focus on how how do we do that,

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Speaker 3: How do we help people understand how all the pieces

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Speaker 3: of that agenda fit together. So that's what That's a

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Speaker 3: lot of what we did, and quite frankly, a lot

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Speaker 3: of what the Council of Economic Advisors does is help

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Speaker 3: people understand the data. So anytime there's an economic data release,

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Speaker 3: we were there writing a memo for the president, you know,

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Speaker 3: getting on television, talking to the you know folks on

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Speaker 3: the radio and podcasters like this is what those numbers mean,

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Speaker 3: this is this is how to explain the economy and

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Speaker 3: what's going on around us.

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Speaker 2: So we'll hold off on the current administration for a while.

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Speaker 2: I want to talk about let's talk about COVID for

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Speaker 2: a minute. So here we are, we're recording this at

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Speaker 2: the end of the summer in twenty twenty five. You

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Speaker 2: started mapping out a plan for COVID just about five

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Speaker 2: years ago. Here we are, it's five years later. Something

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Speaker 2: seem to have worked out, Well, something's not as much.

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Speaker 2: We still see lots and lots of people not returning

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Speaker 2: to office. There are a lot of people will been dislocated.

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Speaker 2: The pandemic very much revealed a lot of stress fractures

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Speaker 2: in society, But give yourself a grade. What what did

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Speaker 2: you do well in the response to the pandemic and

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Speaker 2: where do you wish policy had been more robust or

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Speaker 2: more successful?

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Speaker 3: What a great question. So I think first off, you

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Speaker 3: have to remember that when Joe Biden took office, you know,

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Speaker 3: Americans didn't have access to the vaccine yet, and so

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Speaker 3: the very first thing that we had to do was

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Speaker 3: to get those shots in arms. The vaccine was available,

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Speaker 3: it was ready to go, but had to make sure

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Speaker 3: that it was distributed and distributed as quickly as possible,

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Speaker 3: and that people got those two rounds of shots so

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Speaker 3: that you know, we could get things, you know, start

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Speaker 3: to get people back in school and work and all

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Speaker 3: the different things. And you also have to remember that

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Speaker 3: what a what a bizarre start to a presidency. For sure,

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Speaker 3: like we were remote, right, you had all of these

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Speaker 3: workers who you know, were telecommuting, you didn't have you

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Speaker 3: didn't have any inauguration parties, there were no you know,

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Speaker 3: you didn't have any of the normal trappings of a

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Speaker 3: new administration and all these people coming in who we

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Speaker 3: had to do all of that while also dealing with

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Speaker 3: the pandemic internally and then making sure that the President,

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Speaker 3: the senior advisors, and the cabinet officials themselves didn't get sick. So,

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Speaker 3: you know, when I look back, those first few months

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Speaker 3: were so courageous and incredible, and you know, I look

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Speaker 3: at what my colleagues across the administration did to get

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Speaker 3: those shots and arms, to get schools reopened, to get

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Speaker 3: you know, all the support that folks needed, and on

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Speaker 3: top of that, to have passed this really important historical legislation,

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Speaker 3: the American Rescue Plan, that gave all of the support

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Speaker 3: to communities all across the country to make sure that

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Speaker 3: there were enough resources to weather any future variants that

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Speaker 3: we could imagine over the you know, the next couple

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Speaker 3: of years.

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Speaker 2: I vividly recall getting my first shot at the Javits

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Speaker 2: in Manhattan. Wow, which was crazy because it was set

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Speaker 2: up with military precision. I don't know if it was

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Speaker 2: the Army or the National Guard, but there were literally

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Speaker 2: military troops just running it like it was a military operation.

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Speaker 2: Incredibly effective and incredibly efficient. They must have processed tens

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Speaker 2: of thousands of people a day. That was like, oh,

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Speaker 2: so someone's on top of this. It felt like someone

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Speaker 2: really had been very proactive and had thought this.

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Speaker 3: Through well, and that is what that is what folks

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Speaker 3: were spending all of their time. You know, initially, let's

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Speaker 3: let's make that happen. But then after that you still

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Speaker 3: had all of this recovery. And I think if you

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Speaker 3: think back to before Biden took office, you know, to

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Speaker 3: twenty twenty, when the pandemic was happening, and we were

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Speaker 3: talking about what it meant to shut the economy down,

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Speaker 3: and there were some economists. I always tried to be

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Speaker 3: very careful in my language about this that you know,

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Speaker 3: what kind of recession we were having, right. You know,

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Speaker 3: you saw, you know, at the beginning of the pandemic,

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Speaker 3: things shut down, unemployed spikes, and it was like, well, bit,

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Speaker 3: unemployment was spiking because we needed people to take that

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Speaker 3: step back, right, And that's a different kind of recession,

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Speaker 3: And as you noted, it uncovered all of these fragilities.

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Speaker 3: You know, over the preceding decades, we have allowed, we

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Speaker 3: have enabled private actors to create these very complex global

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Speaker 3: supply chains really focused on just in time production and

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Speaker 3: not building in resiliency or you know, duplicity like having

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Speaker 3: you know, multiple suppliers for a single good. No, let's

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Speaker 3: make sure that it's it's the most efficient, but not

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Speaker 3: thinking about what happens when stuff goes wrong. And you know,

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Speaker 3: so our first couple of years in the White House,

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Speaker 3: we're all about, oh, there's another thing that doesn't work anymore,

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Speaker 3: there's another thing where after the pandemic, businesses could just

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Speaker 3: not get back up on their feet. And so a

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Speaker 3: lot of the resources for the American Rescue Plan were

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Speaker 3: about helping small businesses, communities, schools, all these different entities

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Speaker 3: get back up on their feet. And as we were uncovering,

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Speaker 3: and it really did feel like a not a whack

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Speaker 3: a mole because we weren't whacking things down, but like,

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Speaker 3: you know, a pop up of all of these different

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Speaker 3: challenges that emerged, you were realizing. I mean, I come

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Speaker 3: out of that experience understanding how important it is to

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Speaker 3: have competent, dedicated public servants who are getting up every

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Speaker 3: day saying that is a problem we need to solve.

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Speaker 3: That's when we maybe don't need to solve, but these

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Speaker 3: are things that can affect American lives, American communities, American

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Speaker 3: health saved the economy, and just how important that leadership is.

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Speaker 3: So in terms of lessons learned, the pandemic really showed

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Speaker 3: that you need good governance because in an emergency, that's

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Speaker 3: what's going to that is what's going to make the difference.

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Speaker 3: And so the military precision of getting shots and arms that,

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Speaker 3: you know, thinking through all the different pieces of the policy,

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Speaker 3: I think a lot about how we saved so many

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Speaker 3: small businesses in America, particularly care businesses, childcare centers, long

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Speaker 3: term care facilities. Gave them an infusion of funds to

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Speaker 3: help them keep going through the pandemic, and that meant

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Speaker 3: that other people could then get back to work. You

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Speaker 3: talk about, you know, people not necessarily all coming back

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Speaker 3: to office. We have seen that as a trend in

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Speaker 3: the labor market for some families that may be really

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Speaker 3: helpful for addressing their care challenges. But one of the

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Speaker 3: things that really helped millions of people get back to

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Speaker 3: work was the federal government stepping in and helping them

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Speaker 3: deal with their care crisis because their childcare center wasn't open,

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Speaker 3: and oh, well we can solve that problem. That helps

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Speaker 3: that employee come to know Bloomberg every day. So those

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Speaker 3: those were really big, I think, because I know you'll

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Speaker 3: ask about it next, so I just want to get

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Speaker 3: to this. Of course, you know, One of the challenges

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Speaker 3: was that that period led to the highest inflation that

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Speaker 3: we've seen in the United States since the nineteen seventies.

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Speaker 3: You inflation, anybody under the age of forty had never

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Speaker 3: seen that kind of inflation before.

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Speaker 2: We get to an inforcation because I think people don't

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Speaker 2: understand you either had to cheer use high inflation or

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Speaker 2: high persistent unemployment. And as unpleasant a choice that is,

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Speaker 2: I think most people would prefer high inflation to not

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Speaker 2: having a job. And so that was the sophie's choice

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Speaker 2: that was made. And by the way, it wasn't any

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Speaker 2: one thing. It was lots and lots of things, including

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Speaker 2: you know, the biggest fiscal stimulus since World War Two

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Speaker 2: under the previous president, the first president Trump term. But

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Speaker 2: then there were a lot of other factors, including legislation

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Speaker 2: on the Biden administration. What I want to ask about

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Speaker 2: is getting the shots out that was a huge gain.

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Speaker 2: Making sure that a lot of the economy began to

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Speaker 2: reopen was important. But with the benefit of hindsight, what

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Speaker 2: do you think were missed opportunities, What didn't get a

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Speaker 2: high score? What communication failures were there that could have

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Speaker 2: been handled better? And again, a lot of this is

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Speaker 2: twenty twenty hindsight, it's.

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Speaker 3: A lot of I think that helping people understand the

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Speaker 3: role that the fragility of supply chains played in the

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Speaker 3: challenges of getting goods to their local supermarket or their

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Speaker 3: local store that was affecting inflation, I don't think we

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Speaker 3: did a good enough job helping people understand all the

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Speaker 3: things that the pandemic had uncovered. Right, So, and I

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Speaker 3: want to step back just one because one thing that

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Speaker 3: always struck me at the beginning of the pandemic, and

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Speaker 3: we were all like, what is this going to look like?

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Speaker 3: And you know, I had heard, of course about the flu,

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Speaker 3: the Spanish flu, like sort of back in my mind,

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Speaker 3: I had never read anything about, you know what that

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Speaker 3: had happened in you know, in the teen, back in

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Speaker 3: the nineteen teen, nineteen eighteen. And you know, one thing

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Speaker 3: though that I had learned during the pandemic was that

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Speaker 3: that huge pandemic had happened, and then it was like

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Speaker 3: nobody wrote about it. You know, this the Spanish flu

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Speaker 3: was like oh, this thing, this thing happened, and then

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Speaker 3: it just it was like people wanted to forget it.

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Speaker 3: And I feel that there was a little bit as

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Speaker 3: we were going through the pandemic. People were so traumatized

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Speaker 3: that the idea that it was uncovering how our economic

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Speaker 3: system was so fragile also got a little bit. I

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Speaker 3: feel like people kind of wanted to paper over that

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Speaker 3: and just move past its. We just everyone to get

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Speaker 3: back to normal without kind of wanting to stop and say, actually,

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Speaker 3: the way that we're doing American business just isn't working.

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Speaker 3: And I think a lot about like semiconductors, for example.

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Speaker 3: You know, I think we all learned a lot about

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Speaker 3: semiconductors during the pandemic because all of a sudden we

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Speaker 3: couldn't get them right. The global semic conductor shortage affected

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Speaker 3: every you know, all of us. Right A factory closes

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Speaker 3: in Malaysia or in Taiwan, and then all of a sudden,

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Speaker 3: you can't buy something or prices are going up. So

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Speaker 3: that how we talk about and how we communicate that,

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Speaker 3: I think was something that was really hard to do

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Speaker 3: amidst the health crisis. And so if I were to,

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Speaker 3: you know, kind of wave a magic wand and go

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Speaker 3: back in time, I think I would try to. I

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Speaker 3: would want to figure out how we could spend more

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Speaker 3: time helping people understand those fragilities that we were uncovering,

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Speaker 3: which was hard because people were so wrapped up in

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Speaker 3: the consequences of it, which was high prices that they

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Speaker 3: were seeing at the store and which were being blamed

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Speaker 3: on the simplest explanation, which was all obviously government spent

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Speaker 3: too much. That kind of fits into our everyday narratives,

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Speaker 3: when yet when you uncovered it was like no, actually,

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Speaker 3: it was because of the fragility of these supply chains

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Speaker 3: and the decisions that all of these businesses have been

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Speaker 3: making for decades, and we need to hold them accountable.

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Speaker 3: We need to ask businesses to be more resilient, and

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Speaker 3: that's going to require rethinking our economy. That's a big

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Speaker 3: structural change that you know, the Biden administration really started

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Speaker 3: to push that. How people understood that, and did we

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Speaker 3: do a good enough job talking about that? I think

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Speaker 3: that's something that I wish we had done better.

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Speaker 2: Let's do it. Talk about another communication issue, which is

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Speaker 2: the pushback to vaccines. And I was always kind of

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Speaker 2: surprised by not just the Trump administration, but by Trump himself,

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Speaker 2: who deserves a lot of credit for Operation Warp Speed,

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Speaker 2: and yet of all the things he takes credit for

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Speaker 2: he kind of let that slide. Could we have communicated

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Speaker 2: better that, Hey, we didn't just create these vaccines overnight.

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Speaker 2: This has been ten years in the making, and it's safer,

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Speaker 2: especially for people at risk over pick a number, fifty

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Speaker 2: sixty seventy than not having it. I'm curious as to

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Speaker 2: your thoughts about communication around that. There have been a

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Speaker 2: lot of pushback about closing schools, and as it turns out,

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Speaker 2: kids are fairly safe relative to COVID, it doesn't seem

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Speaker 2: to have the same impact on them. Should should we

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Speaker 2: have left schools open? Should we have tried different things? Communicated?

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Speaker 2: How do you how do you look at those two

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Speaker 2: areas well?

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Speaker 3: I think fundamental to those questions are we hadn't had

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Speaker 3: a pandemic in a long time century, right, We didn't

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Speaker 3: know how bad it would get, and you had this

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Speaker 3: this we were in a moment were already America had

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Speaker 3: become a lower trust environment. Right, People had less trust

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Speaker 3: in government than they had, you know, decades before, less

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Speaker 3: trust in business, less trust and experts. So you're already

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Speaker 3: kind of walking into a situation where you're trying to

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Speaker 3: explain to people what the health risk is and you

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Speaker 3: have to really did we did, did everybody do a

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Speaker 3: good enough job thinking about what the trust, how much

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Speaker 3: trust the listener was going to have from the get go.

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Speaker 3: The problem is that you don't know how it's going

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Speaker 3: to turn out. So you want to make sure that

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Speaker 3: you are protecting people to the best of your ability,

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Speaker 3: but you don't have all the answers and so, you know,

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Speaker 3: but saying to people, well, we suggest that you do this,

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Speaker 3: but maybe we don't know if that's going to work,

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Speaker 3: that doesn't go over very well as a you know,

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Speaker 3: in a public health crisis. So part of the way

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Speaker 3: that we've seen you know, the vaccines and the school

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Speaker 3: closures and all these things play out, is that that

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Speaker 3: has further eroded the trust that people have in the

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Speaker 3: institutions around them, even as we know that it saved

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Speaker 3: you know, millions of millions of lives and millions of

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Speaker 3: dollars in healthcare costs because people didn't get sick and

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Speaker 3: you know, all the rest for people to be able

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Speaker 3: to get the vaccine, and so that was a was

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Speaker 3: that a problem we could have fixed amidst the pandemic

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Speaker 3: or is this something that we should be kind of

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Speaker 3: taking a step back and saying huh, maybe we should

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Speaker 3: have been focusing years ago on why is it that

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Speaker 3: that trust was eroding? And that leads to something that

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Speaker 3: I really want us to really focus on our conversation today.

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Speaker 3: Is that really toxic role that inequality has played in

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Speaker 3: our economy and our society, which we know is connected

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Speaker 3: to this failure of people to trust and particular to

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Speaker 3: trust experts, to trust that people are acting in their

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Speaker 3: best interest. So Operation Warp Speed. It's incredible achievement of

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Speaker 3: the Trump administration, but yet pushed aside because communities all

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Speaker 3: of a sudden became I mean, I can't speak for

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Speaker 3: how those communities felt, but they became fearful and distrustful

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Speaker 3: schools closing, and hear you still continue to hear that

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Speaker 3: debate on both sides, some people still frustrated that their

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Speaker 3: schools were open, and some people saying, oh, they closed

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Speaker 3: for two longs and there's been healthful you know, learning,

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Speaker 3: not health losses, but learning losses among children. These are

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Speaker 3: really important questions and we should spend time dissecting what

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Speaker 3: we know now. But we didn't know. We didn't have

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Speaker 3: all the answers at the beginning.

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Speaker 2: Last question before we get to wealth and income inequality.

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Speaker 2: How did in total the United States do relative to

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Speaker 2: other modern democracies, How well do we do compare it

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Speaker 2: to other countries.

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Speaker 3: We'll focus on the stats that when you ask that question,

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Speaker 3: I can see clearlyst clearlest in my head, So I

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Speaker 3: can see a couple of charts. So number one, you know,

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Speaker 3: we early on had very high death rates relative to

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Speaker 3: other countries. You know, it's a proportion of our population.

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Speaker 3: So we we were able to turn that around. When

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Speaker 3: you look at the economic data, the United States had

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Speaker 3: one of the strongest economic recoveries coming had, you know,

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Speaker 3: coming out of the pandemic, relative to our economic competitors

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Speaker 3: in the other advanced economies on virtually any metric. So, yes,

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Speaker 3: the United States saw high prices. We saw inflation go up,

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Speaker 3: but the prices didn't go up as high as they

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Speaker 3: did in some other advanced economies. And then our prices

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Speaker 3: started coming down and you know, look quite good. We

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Speaker 3: saw stronger economic growth. We've seen stronger employment. So when

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Speaker 3: you look at our ability to take this health crisis,

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Speaker 3: to be able to get it under control enough so

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Speaker 3: that people could get back to work, so businesses could

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Speaker 3: get back up on their feet. So the kids could

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Speaker 3: get back up back to school and then have your

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Speaker 3: economy get back on track. I mean, even the economist

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Speaker 3: and I can't remember exactly what the cover was, the

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Speaker 3: exact words were, but it was one of those you know,

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Speaker 3: like wow, even the economist has said, you know, we

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Speaker 3: really knocked it out of the park in terms of

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Speaker 3: the economic performance of the United States coming out of

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Speaker 3: what could have been a very deep and long recession,

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Speaker 3: kind of like what we saw after the global financial crisis.

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Speaker 2: And you know, we difference being huge amount of fiscal

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Speaker 2: stimulus versus almost no.

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Speaker 3: Physically well and operation warp speed and getting shots and

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Speaker 3: arms and all the things that we did to contain

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Speaker 3: the pandemic.

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Speaker 2: So you talk about the mortality rate, and I've seen

436
00:23:58,200 --> 00:24:04,879
Speaker 2: other people point to a lower vaccination rate. I'm curious

437
00:24:05,200 --> 00:24:09,560
Speaker 2: if some of the European criticism of the United States

438
00:24:09,640 --> 00:24:13,680
Speaker 2: response was, and I've heard some of this from other

439
00:24:13,760 --> 00:24:20,600
Speaker 2: corners of various partisan arguments, a lot of pre existing conditions.

440
00:24:20,640 --> 00:24:24,840
Speaker 2: The United States entered the pandemic with not an especially

441
00:24:24,960 --> 00:24:30,240
Speaker 2: healthy population. How much truth is in that claim.

442
00:24:30,280 --> 00:24:34,760
Speaker 3: Well, I'm not a health expert, but certainly we know

443
00:24:35,000 --> 00:24:41,040
Speaker 3: that the United States population does have higher death rates

444
00:24:41,040 --> 00:24:41,760
Speaker 3: from a lot of.

445
00:24:41,680 --> 00:24:44,200
Speaker 2: You know, preventab.

446
00:24:45,560 --> 00:24:48,160
Speaker 3: So certainly that it doesn't surprise me that people are

447
00:24:48,160 --> 00:24:52,040
Speaker 3: saying that about how we entered the pandemic. And then

448
00:24:52,080 --> 00:24:54,399
Speaker 3: we know, of course that you know, some of the

449
00:24:54,480 --> 00:24:57,119
Speaker 3: after effects of you know, long COVID, and you know

450
00:24:57,200 --> 00:25:00,600
Speaker 3: how that affects people, particularly around some of these how

451
00:25:00,680 --> 00:25:01,920
Speaker 3: this is is important.

452
00:25:02,840 --> 00:25:07,439
Speaker 2: Coming up, we continue our conversation with Heather Bouche, senior

453
00:25:07,480 --> 00:25:12,000
Speaker 2: research fellow at the Harvard Kennedy School, discussing the impact

454
00:25:12,240 --> 00:25:17,640
Speaker 2: of wealth and economic inequality on growth. I'm Barry Ritolts.

455
00:25:17,680 --> 00:25:31,920
Speaker 2: You're listening to Masters of Business on Bloomberg Radio. I'm

456
00:25:31,960 --> 00:25:35,720
Speaker 2: Barry Dults. You're listening to Masters in Business on Bloomberg Radio.

457
00:25:36,160 --> 00:25:39,160
Speaker 2: My extra special guest this week is Heather Bouche.

458
00:25:39,520 --> 00:25:40,000
Speaker 1: She is a.

459
00:25:39,960 --> 00:25:43,080
Speaker 2: Senior fellow at the Harvard Kennedy School. Previously, she was

460
00:25:43,119 --> 00:25:46,520
Speaker 2: an economist for the Joint Economic Committee of US Congress

461
00:25:47,040 --> 00:25:52,119
Speaker 2: and Chief Economists to the Presidents of invest in America's Cabinet.

462
00:25:52,600 --> 00:25:57,080
Speaker 2: So let's talk a little bit about wealth and income inequality.

463
00:25:57,119 --> 00:26:01,000
Speaker 2: And the first question is what is the impact of

464
00:26:01,040 --> 00:26:06,320
Speaker 2: this on sustainable growth? Does wealth and income inequality create

465
00:26:06,359 --> 00:26:10,360
Speaker 2: a drag to faster, more widespread growth.

466
00:26:10,800 --> 00:26:14,040
Speaker 3: That is such a fantastic question, and I feel like

467
00:26:14,080 --> 00:26:16,560
Speaker 3: it's a little bit of a leading question because, as

468
00:26:16,600 --> 00:26:19,680
Speaker 3: you know, I wrote a book on how economic inequality

469
00:26:19,760 --> 00:26:22,640
Speaker 3: constricts our economy and what we can do about it,

470
00:26:22,760 --> 00:26:26,000
Speaker 3: and a number of the scholars that I've looked to

471
00:26:26,000 --> 00:26:28,920
Speaker 3: over time actually just got the Nobel Prize last year

472
00:26:28,960 --> 00:26:32,080
Speaker 3: in twenty twenty four Durana Simoglu and Simon Johnson and

473
00:26:32,840 --> 00:26:37,520
Speaker 3: James Robinson for their work looking at how institutions affect

474
00:26:37,600 --> 00:26:41,639
Speaker 3: long term growth. And I start there because part of

475
00:26:41,680 --> 00:26:45,160
Speaker 3: what economic inequality does, part of what wealth concentration does,

476
00:26:45,240 --> 00:26:49,119
Speaker 3: is it destroys the institutions that foster broadly shared growth.

477
00:26:49,280 --> 00:26:51,880
Speaker 2: Explain what you mean by that, because you know, we've

478
00:26:51,920 --> 00:26:56,920
Speaker 2: had wealth inequality during the Gilded Age, we have certainly

479
00:26:56,960 --> 00:27:01,359
Speaker 2: in the nineties, two thousands and beyond, increasing inequality, primarily

480
00:27:01,480 --> 00:27:06,840
Speaker 2: due to publicly traded equity and a lot of concentrated ownership.

481
00:27:07,200 --> 00:27:08,919
Speaker 2: How does that destroy institutions?

482
00:27:09,280 --> 00:27:12,679
Speaker 3: Well, think of it this way. So one of the

483
00:27:12,680 --> 00:27:15,199
Speaker 3: things that the United States was an early leader in

484
00:27:15,960 --> 00:27:20,040
Speaker 3: was making sure that kids had access to free public education.

485
00:27:21,160 --> 00:27:23,919
Speaker 3: Something that US communities started to do early on. They

486
00:27:24,080 --> 00:27:27,800
Speaker 3: used they raised taxes to do this, and we were

487
00:27:27,920 --> 00:27:32,320
Speaker 3: a global leader in the early primary school movement. And

488
00:27:32,640 --> 00:27:38,880
Speaker 3: that's a really important foundational institution for economic growth because

489
00:27:38,920 --> 00:27:43,399
Speaker 3: we know that talent and entrepreneurship and skill not you know,

490
00:27:43,480 --> 00:27:47,440
Speaker 3: skills can be learned. But all of these things are

491
00:27:47,480 --> 00:27:52,000
Speaker 3: they're normally distributed, they affected, They're distributed across the population. Right.

492
00:27:52,040 --> 00:27:55,080
Speaker 3: It isn't just rich children who have access to the

493
00:27:55,119 --> 00:27:58,040
Speaker 3: best schools that have the best ideas or are the

494
00:27:58,080 --> 00:28:01,280
Speaker 3: most talented in everything. Right, And so if you have

495
00:28:01,280 --> 00:28:06,160
Speaker 3: a society where you are making sure that children across

496
00:28:06,200 --> 00:28:09,359
Speaker 3: different income groups, across different racial groups, and you know,

497
00:28:09,400 --> 00:28:13,280
Speaker 3: both girls and boys have access to learning and skill building,

498
00:28:13,640 --> 00:28:16,080
Speaker 3: then your society is going to benefit from them being

499
00:28:16,119 --> 00:28:18,800
Speaker 3: able to find the right fit as they go through life,

500
00:28:18,800 --> 00:28:20,720
Speaker 3: they're going to find the right role. Oh I'm really

501
00:28:20,720 --> 00:28:23,080
Speaker 3: good at this, or I'm really good at that. They'll

502
00:28:23,119 --> 00:28:26,800
Speaker 3: have those opportunities and our economy, our society will benefit

503
00:28:27,160 --> 00:28:32,320
Speaker 3: from those productivity gains. Very famous economic study by Raj

504
00:28:32,359 --> 00:28:35,359
Speaker 3: Shetty and his colleagues many years ago now, but they

505
00:28:36,000 --> 00:28:39,480
Speaker 3: had data on third graders. You're in New York City

506
00:28:40,000 --> 00:28:43,760
Speaker 3: and they were able to match this data on the

507
00:28:43,800 --> 00:28:47,320
Speaker 3: third graders and their test scores on math and English,

508
00:28:47,360 --> 00:28:49,720
Speaker 3: but we're just going to focus on math, and they

509
00:28:49,720 --> 00:28:53,120
Speaker 3: were able to then match those third graders to their parents'

510
00:28:53,120 --> 00:28:56,880
Speaker 3: income and to their future income and whether or not

511
00:28:57,000 --> 00:28:59,920
Speaker 3: they ever applied for a patent. It's just one measure

512
00:29:00,160 --> 00:29:02,560
Speaker 3: of it's not the end all bit, but just one

513
00:29:02,600 --> 00:29:05,160
Speaker 3: measure of some kind of you know, success in the world.

514
00:29:06,000 --> 00:29:09,480
Speaker 3: And what they found was that the children who did

515
00:29:09,520 --> 00:29:13,440
Speaker 3: the best in third grade on these standardized math tests,

516
00:29:14,360 --> 00:29:16,280
Speaker 3: those kids were more likely to grow up and get

517
00:29:16,280 --> 00:29:20,400
Speaker 3: a patent. Totally makes sense. But when you looked at

518
00:29:20,400 --> 00:29:23,400
Speaker 3: those children by the income group that their parents were in,

519
00:29:23,880 --> 00:29:27,200
Speaker 3: by their race, by their gender, you saw something very

520
00:29:27,240 --> 00:29:30,400
Speaker 3: strange happen when you just looked at the top kids

521
00:29:30,480 --> 00:29:32,840
Speaker 3: in terms of the mass scores. So this group that

522
00:29:32,920 --> 00:29:34,640
Speaker 3: was most likely to go on and get a patent,

523
00:29:36,440 --> 00:29:39,560
Speaker 3: the children in that group who came from the richest families,

524
00:29:40,200 --> 00:29:44,360
Speaker 3: who were boys or were white were far more likely

525
00:29:44,480 --> 00:29:48,120
Speaker 3: than the children from lower income families than girls or

526
00:29:48,600 --> 00:29:51,360
Speaker 3: were black children to grow up and get a patent.

527
00:29:51,880 --> 00:29:54,520
Speaker 3: So what that tells you is that our economy, our

528
00:29:54,520 --> 00:29:57,880
Speaker 3: society has been denied all of this, these new ideas,

529
00:29:57,920 --> 00:30:00,280
Speaker 3: these new things we could be buying, or new ways

530
00:30:00,280 --> 00:30:03,480
Speaker 3: that our world could be changing, because those children who

531
00:30:03,480 --> 00:30:06,120
Speaker 3: are highly talented didn't have that opportunity across their life.

532
00:30:06,760 --> 00:30:11,400
Speaker 3: So what helps a low income child get that education

533
00:30:11,640 --> 00:30:14,040
Speaker 3: that gives them that opportunity? Well, it is it's having

534
00:30:14,120 --> 00:30:17,280
Speaker 3: a good public school system and good public universities and

535
00:30:17,400 --> 00:30:20,400
Speaker 3: that are affordable that give that kid an opportunity, having

536
00:30:20,880 --> 00:30:24,400
Speaker 3: equal opportunity laws that allow you know, girls and people

537
00:30:24,400 --> 00:30:27,600
Speaker 3: of color to have those opportunities. That hinges on having

538
00:30:27,720 --> 00:30:32,240
Speaker 3: institutions that are fair and that are enforcing anti discrimination laws.

539
00:30:33,040 --> 00:30:35,960
Speaker 3: And so that is just one. That's just one pathway

540
00:30:36,320 --> 00:30:41,760
Speaker 3: through which inequality or you know, equity or lack thereof

541
00:30:41,960 --> 00:30:46,080
Speaker 3: effects are our potential for economic growth effects the kind

542
00:30:46,120 --> 00:30:46,720
Speaker 3: of growth that we have.

543
00:30:47,720 --> 00:30:49,400
Speaker 2: Yeah, I want to I want to push back on

544
00:30:49,440 --> 00:30:54,960
Speaker 2: that slightly in that So, is this an inequality issue

545
00:30:55,240 --> 00:30:59,560
Speaker 2: or is this a Hey, we have pretty mediocre public schools,

546
00:30:59,640 --> 00:31:06,760
Speaker 2: especially in cities, and that leads to exaggerating or amplifying

547
00:31:07,800 --> 00:31:12,440
Speaker 2: some inequalities that are already in existence, Like is this

548
00:31:12,520 --> 00:31:16,760
Speaker 2: a tax issue? Is this a competency and expertise issue? Like,

549
00:31:16,960 --> 00:31:24,400
Speaker 2: why are suburban schools in wealthy suburbs so much better

550
00:31:24,600 --> 00:31:29,520
Speaker 2: reputations and higher acceptance rates at Ivy's and all the

551
00:31:29,600 --> 00:31:34,200
Speaker 2: other usual measures of success. Is it strictly money or

552
00:31:34,320 --> 00:31:37,160
Speaker 2: is it some of it was just a flight of

553
00:31:37,200 --> 00:31:40,360
Speaker 2: experts to hire pay I guess which comes back to mind,

554
00:31:40,760 --> 00:31:43,680
Speaker 2: how do we explain, Hey, the kids are in school,

555
00:31:43,800 --> 00:31:45,640
Speaker 2: they're just not really learning a whole lot.

556
00:31:46,320 --> 00:31:49,040
Speaker 3: Well, I mean, there's so many there's so many directions

557
00:31:49,040 --> 00:31:54,040
Speaker 3: we could take that question that whether or not you

558
00:31:54,120 --> 00:31:58,840
Speaker 3: are funding those public institutions that enable a wide range

559
00:31:58,840 --> 00:32:01,520
Speaker 3: of people to have access to opportunity. That's that's sort

560
00:32:01,520 --> 00:32:04,160
Speaker 3: of the first part of that answer, Right, are they

561
00:32:04,200 --> 00:32:07,320
Speaker 3: properly resourced? Well, the answer, of course we know is

562
00:32:07,360 --> 00:32:10,040
Speaker 3: that they haven't been. And there's a lot of things happening.

563
00:32:10,040 --> 00:32:12,920
Speaker 3: But two that are really fundamental. Number One, in the

564
00:32:13,040 --> 00:32:18,760
Speaker 3: United States, public schools are primarily financed by local property taxes,

565
00:32:19,200 --> 00:32:21,320
Speaker 3: which is inherently unequal.

566
00:32:21,680 --> 00:32:21,840
Speaker 1: Right.

567
00:32:21,960 --> 00:32:25,200
Speaker 3: That means that people that are living communities with wealthier

568
00:32:25,200 --> 00:32:28,080
Speaker 3: homes have higher tax bass, and so those those school

569
00:32:28,080 --> 00:32:30,760
Speaker 3: districts have more resources, which is exactly the opposite of

570
00:32:30,800 --> 00:32:34,160
Speaker 3: what you should be doing to create more equity, more

571
00:32:34,160 --> 00:32:34,760
Speaker 3: opportunities is.

572
00:32:34,840 --> 00:32:37,520
Speaker 2: In there're a chicken and egg situation there in that.

573
00:32:38,160 --> 00:32:40,840
Speaker 2: Like I'm just thinking of all the bedroom communities thirty

574
00:32:40,880 --> 00:32:51,280
Speaker 2: minutes outside of Manhattan. They became destination suburbia because hey,

575
00:32:51,360 --> 00:32:54,080
Speaker 2: it was it was quieter, it was cleaner, it was neater,

576
00:32:54,280 --> 00:32:59,800
Speaker 2: and as it became more and more desirable, the schools

577
00:33:00,080 --> 00:33:05,800
Speaker 2: are doing better. Like you've created, We've created a situation where,

578
00:33:06,240 --> 00:33:09,720
Speaker 2: of course these wealthy suburban school districts are going to

579
00:33:09,760 --> 00:33:13,120
Speaker 2: do better. That's why people pay higher home prices and

580
00:33:13,200 --> 00:33:16,560
Speaker 2: higher taxes in those districts because they want a higher

581
00:33:16,640 --> 00:33:23,120
Speaker 2: quality public school. How do you how do you deal

582
00:33:23,200 --> 00:33:28,560
Speaker 2: with underfunded urban schools when people are voting with their

583
00:33:28,560 --> 00:33:29,840
Speaker 2: feet and their tax dops.

584
00:33:30,120 --> 00:33:34,320
Speaker 3: Well, I mean, so that the obvious answers we should

585
00:33:34,320 --> 00:33:38,000
Speaker 3: be thinking about how we are financing public schools, right,

586
00:33:38,040 --> 00:33:40,600
Speaker 3: should we be? Should it all be about local? I

587
00:33:40,600 --> 00:33:43,000
Speaker 3: mean this and this is a local issue. Obviously it's

588
00:33:43,000 --> 00:33:46,360
Speaker 3: different in different places. That's that is an answer. But

589
00:33:46,440 --> 00:33:49,479
Speaker 3: when you then zoom up to the federal level and

590
00:33:49,520 --> 00:33:51,440
Speaker 3: you think about the question of whether or not we

591
00:33:51,480 --> 00:33:55,440
Speaker 3: are properly resourcing the institutions that we need, the answers.

592
00:33:55,440 --> 00:33:59,200
Speaker 3: Of course, we've seen a half century now of primarily

593
00:33:59,240 --> 00:34:03,280
Speaker 3: Republicans selling the American people on the idea that if

594
00:34:03,320 --> 00:34:06,760
Speaker 3: we lower taxes, particularly on the rich, that's going to

595
00:34:06,800 --> 00:34:09,160
Speaker 3: benefit them and their communities. And of course that's not

596
00:34:09,200 --> 00:34:13,160
Speaker 3: what we've seen. Trickle down economics hasn't worked, it hasn't

597
00:34:13,200 --> 00:34:17,160
Speaker 3: delivered stronger growth overall. And what it's done is starved

598
00:34:17,160 --> 00:34:20,040
Speaker 3: our government of the resources that it needs to then

599
00:34:20,480 --> 00:34:23,640
Speaker 3: address some of these inequities, you know, at the federal level,

600
00:34:23,800 --> 00:34:26,959
Speaker 3: or you know, or you know, potentially at the state level,

601
00:34:26,960 --> 00:34:30,840
Speaker 3: depending on the multiple tax question of and it's a

602
00:34:30,960 --> 00:34:34,520
Speaker 3: question though, of why have we decided to starve government

603
00:34:34,719 --> 00:34:37,840
Speaker 3: in order to give money back to the richest in

604
00:34:37,880 --> 00:34:40,640
Speaker 3: our society. So you can see, you know, time and

605
00:34:40,680 --> 00:34:45,480
Speaker 3: again these massive tax packages, the most egregious, of course,

606
00:34:45,520 --> 00:34:48,400
Speaker 3: being the one that passed this year that Donald Trump signed.

607
00:34:48,800 --> 00:34:51,960
Speaker 2: Is this one really more egregious than the twenty seventeen

608
00:34:52,080 --> 00:34:54,520
Speaker 2: tax and jobs? Actually it is different. So I hear

609
00:34:54,560 --> 00:34:58,000
Speaker 2: the exact same complaints and it's you know, what is

610
00:34:58,040 --> 00:34:59,680
Speaker 2: it it's eight years later?

611
00:35:00,520 --> 00:35:06,279
Speaker 3: It is there is no justification for the kinds of

612
00:35:06,360 --> 00:35:09,400
Speaker 3: tax cuts that we've just given to the richest people

613
00:35:09,440 --> 00:35:15,880
Speaker 3: in our society while gutting Medicaid, denying families and children

614
00:35:16,239 --> 00:35:19,680
Speaker 3: and new parents access to healthcare, which will make it

615
00:35:19,760 --> 00:35:23,160
Speaker 3: that much harder for our society to thrive. You know,

616
00:35:23,200 --> 00:35:25,560
Speaker 3: for decades to come, people are going to be sicker,

617
00:35:25,640 --> 00:35:27,200
Speaker 3: They're not going to have access to healthcare, They're going

618
00:35:27,239 --> 00:35:29,319
Speaker 3: to go into bankruptcy. All of the hospitals are going

619
00:35:29,400 --> 00:35:32,759
Speaker 3: to close. So the damage that we are doing to

620
00:35:33,000 --> 00:35:37,400
Speaker 3: communities because of that tax legislation is truly phenomenally.

621
00:35:38,320 --> 00:35:41,319
Speaker 2: Let's explore that in a minute, because you talked about

622
00:35:41,480 --> 00:35:45,239
Speaker 2: trickle down, and I think that's so long ago. I

623
00:35:45,280 --> 00:35:49,040
Speaker 2: don't know if people voted for that. The thing that's

624
00:35:49,080 --> 00:35:50,600
Speaker 2: been well he did say.

625
00:35:50,840 --> 00:35:53,720
Speaker 3: I mean, let's be clear. President Trump did tell people

626
00:35:53,800 --> 00:35:56,520
Speaker 3: during his campaign that he would not cut medicaid.

627
00:35:56,640 --> 00:35:57,080
Speaker 2: That's true.

628
00:35:57,120 --> 00:35:59,279
Speaker 3: So he did tell people he would raise tariffs, but

629
00:35:59,360 --> 00:36:01,240
Speaker 3: he did not. He said he would not cut medicaid,

630
00:36:01,320 --> 00:36:03,520
Speaker 3: and he did that. That was one of the first

631
00:36:03,560 --> 00:36:04,239
Speaker 3: things that he did.

632
00:36:04,320 --> 00:36:07,359
Speaker 2: Here's the thing that is the big surprise to me

633
00:36:07,600 --> 00:36:12,880
Speaker 2: is that we're seeing the impact of the tax package

634
00:36:14,000 --> 00:36:17,279
Speaker 2: falling in a surprising way on a lot of Red

635
00:36:17,320 --> 00:36:20,960
Speaker 2: States farmers rural communities. There have been number of stories

636
00:36:21,000 --> 00:36:24,239
Speaker 2: about rural hospitals are closing left and right. There are

637
00:36:24,280 --> 00:36:25,480
Speaker 2: going to be people that are going to have to

638
00:36:25,560 --> 00:36:28,279
Speaker 2: drive three, four or five hours if to have a

639
00:36:28,320 --> 00:36:31,040
Speaker 2: baby delivered, and if there's a heart attack, I got

640
00:36:31,040 --> 00:36:33,120
Speaker 2: some bad news. You ain't gonna make that well.

641
00:36:33,160 --> 00:36:34,680
Speaker 3: The baby may not make it well.

642
00:36:34,719 --> 00:36:36,919
Speaker 2: I mean to the hospital, to the hospital for sure.

643
00:36:36,960 --> 00:36:41,080
Speaker 2: So the question is, and I don't have an answer

644
00:36:41,080 --> 00:36:45,520
Speaker 2: for this, are people just voting tribally? They're voting for

645
00:36:45,800 --> 00:36:49,920
Speaker 2: what their party affiliation is, because it doesn't seem like

646
00:36:50,160 --> 00:36:53,799
Speaker 2: a lot of people realize. And it's drue on both

647
00:36:53,840 --> 00:36:58,359
Speaker 2: sides of the aisle, but it's especially true given what

648
00:36:58,400 --> 00:37:02,000
Speaker 2: we've seen in some of the redder parts of the country.

649
00:37:02,040 --> 00:37:06,240
Speaker 2: And I keep coming back to all these rural hospitals closing.

650
00:37:08,080 --> 00:37:11,759
Speaker 2: Are people just not voting in their own interest? Are

651
00:37:11,760 --> 00:37:14,400
Speaker 2: there other factors driving this? And I know you're not

652
00:37:14,440 --> 00:37:17,239
Speaker 2: a political economist, now it's not your focus, but.

653
00:37:18,040 --> 00:37:22,000
Speaker 3: I think that people is my personal view, that people

654
00:37:22,000 --> 00:37:24,520
Speaker 3: are voting for somebody that they believe is on their side.

655
00:37:25,120 --> 00:37:27,839
Speaker 3: And when you take the long view and you look

656
00:37:27,880 --> 00:37:32,000
Speaker 3: at the US economy, what you see is a half

657
00:37:32,080 --> 00:37:35,839
Speaker 3: century of rising economic inequality, the top pulling further and

658
00:37:35,880 --> 00:37:38,719
Speaker 3: further apart from the rest, the middle class being squeezed

659
00:37:39,080 --> 00:37:42,160
Speaker 3: harder to go from being low income into that secure

660
00:37:42,200 --> 00:37:46,440
Speaker 3: economic middle arise in economic concentration, and by that meaning

661
00:37:47,040 --> 00:37:50,240
Speaker 3: in across industries in the United States, there are fewer

662
00:37:50,280 --> 00:37:54,480
Speaker 3: and fewer businesses. You talk of hospitals, there's been massive

663
00:37:54,880 --> 00:37:59,080
Speaker 3: consolidation in the hospital sector, right, So in many communities

664
00:37:59,120 --> 00:38:01,960
Speaker 3: already there might have been a number of hospitals, but

665
00:38:01,960 --> 00:38:05,040
Speaker 3: they're all owned by the same company, right, which creates

666
00:38:06,160 --> 00:38:09,000
Speaker 3: lower wages for the workers, the nurses and the doctors

667
00:38:09,000 --> 00:38:11,440
Speaker 3: that work and the janitors that work at those hospitals,

668
00:38:11,480 --> 00:38:13,840
Speaker 3: creates that what we as economists we call them knopsity

669
00:38:13,920 --> 00:38:18,520
Speaker 3: labor market, and we know that they're less likely to

670
00:38:18,520 --> 00:38:23,040
Speaker 3: be resilient in situations like this. So these are long standing,

671
00:38:24,000 --> 00:38:28,440
Speaker 3: brewing crises that this most recent legislation has then just

672
00:38:28,480 --> 00:38:31,279
Speaker 3: sort of lit the match under and said, well, we're

673
00:38:31,280 --> 00:38:34,000
Speaker 3: not gonna We're not going to give those communities the

674
00:38:34,000 --> 00:38:36,920
Speaker 3: money they need for these hospitals. But it is on

675
00:38:37,040 --> 00:38:40,440
Speaker 3: top of this rising economic inequality that I think has

676
00:38:40,440 --> 00:38:45,000
Speaker 3: made so many people unclear of who's on their side,

677
00:38:45,120 --> 00:38:48,319
Speaker 3: And for some reason they believed that Trump was. He

678
00:38:48,400 --> 00:38:50,640
Speaker 3: goes out there and he says he's on your side,

679
00:38:50,760 --> 00:38:53,879
Speaker 3: but his actions really haven't been. And I think that's

680
00:38:53,920 --> 00:38:56,759
Speaker 3: what's it's so hard and frustrating to watch. But I

681
00:38:56,800 --> 00:38:58,920
Speaker 3: think the truth of that, the truth in there that

682
00:38:58,960 --> 00:39:02,400
Speaker 3: we need to be very thoughtful about, is if you

683
00:39:02,480 --> 00:39:05,560
Speaker 3: want people to vote for you, if you want people

684
00:39:05,600 --> 00:39:08,520
Speaker 3: to vote for people that are actually going to support

685
00:39:08,560 --> 00:39:11,560
Speaker 3: and grow America's middle class, how are we showing that.

686
00:39:11,600 --> 00:39:15,120
Speaker 3: How are we demonstrating that actually our goal isn't just

687
00:39:15,280 --> 00:39:18,479
Speaker 3: more elites making more money, but is actually making sure

688
00:39:18,520 --> 00:39:21,080
Speaker 3: that communities thrive, that there are good jobs, that there

689
00:39:21,160 --> 00:39:25,120
Speaker 3: is the kinds of institution, you know, good schools and

690
00:39:25,440 --> 00:39:27,719
Speaker 3: healthcare and all the things that communities need. Are we

691
00:39:27,920 --> 00:39:29,040
Speaker 3: actually delivering that.

692
00:39:30,000 --> 00:39:32,279
Speaker 2: So if we look at the twenty tens, the post

693
00:39:32,360 --> 00:39:36,920
Speaker 2: financial crisis era, not a lot of fiscal stimulus, almost

694
00:39:37,000 --> 00:39:42,400
Speaker 2: all monetary policy quantitative easing, zero interest rate policy rates

695
00:39:42,440 --> 00:39:47,919
Speaker 2: were super low, inflation was under two percent. We look

696
00:39:47,960 --> 00:39:52,839
Speaker 2: at the post pandemic era, the twenty twenties, they've been

697
00:39:52,840 --> 00:39:56,640
Speaker 2: pretty much all fiscally driven. We had Cares Act one

698
00:39:56,640 --> 00:40:01,760
Speaker 2: and two under President Trump, Cares Act three under President Biden,

699
00:40:02,239 --> 00:40:07,240
Speaker 2: the Infrastructure Bill, the Semiconductor Bill, the Build Back Better Bill,

700
00:40:07,320 --> 00:40:10,520
Speaker 2: the most recent Big Beautiful Bill, and all the tax

701
00:40:10,560 --> 00:40:16,880
Speaker 2: cuts there. The twenty twenties really feels like it's fiscally driven,

702
00:40:16,960 --> 00:40:21,759
Speaker 2: whereas the previous fifteen twenty years was all monetary. What

703
00:40:21,840 --> 00:40:26,680
Speaker 2: does that do to the issue of wealth and income inequality?

704
00:40:27,200 --> 00:40:32,800
Speaker 2: In the entire twenty tens and twenty twenties, stocks, bonds,

705
00:40:32,880 --> 00:40:36,720
Speaker 2: real estate, businesses all seem to have done pretty well.

706
00:40:37,280 --> 00:40:41,879
Speaker 2: Doesn't matter if it's monetary or fiscal. If you own

707
00:40:42,040 --> 00:40:46,640
Speaker 2: capital based assets, any sort of stimulus seems to work well.

708
00:40:46,680 --> 00:40:50,040
Speaker 3: It's a really interesting question, I think it. To my mind,

709
00:40:50,080 --> 00:40:52,520
Speaker 3: the answer goes back a little bit to something I

710
00:40:52,520 --> 00:40:58,960
Speaker 3: said earlier about the importance of having good leadership. Fiscal

711
00:40:59,040 --> 00:41:02,120
Speaker 3: policy require buyers that you actually have people that are

712
00:41:02,120 --> 00:41:04,319
Speaker 3: thinking about what is it that you want government to do,

713
00:41:04,640 --> 00:41:07,040
Speaker 3: What is government spending money on. How are we thinking

714
00:41:07,040 --> 00:41:11,319
Speaker 3: about setting rules of the road for businesses so that

715
00:41:11,360 --> 00:41:13,600
Speaker 3: they are encouraged to behave in ways it's going to

716
00:41:13,640 --> 00:41:18,000
Speaker 3: benefit communities, not strip them of their value, or you know,

717
00:41:18,040 --> 00:41:20,680
Speaker 3: create bad jobs, or you know, create negative implications for

718
00:41:20,719 --> 00:41:24,640
Speaker 3: the environment. And monetary policy, on the other hand, is

719
00:41:24,760 --> 00:41:27,399
Speaker 3: very hands off. It's you know, we set the interest rate.

720
00:41:27,760 --> 00:41:30,520
Speaker 3: There there is financial regulation, of course, and that's a

721
00:41:30,520 --> 00:41:32,760
Speaker 3: big piece of it. Bit often when we're talking about

722
00:41:33,600 --> 00:41:36,160
Speaker 3: addressing the business cycle, it is about the you know,

723
00:41:36,280 --> 00:41:40,200
Speaker 3: the interest rate policy. And I think what you've seen,

724
00:41:40,480 --> 00:41:44,439
Speaker 3: especially post global financial crisis, has been a sense that

725
00:41:44,440 --> 00:41:46,440
Speaker 3: that hands off policy. And again I would kind of

726
00:41:46,440 --> 00:41:47,839
Speaker 3: put that a little bit in my brain that goes

727
00:41:47,840 --> 00:41:51,440
Speaker 3: into the trickle down mentality that markets were kind of

728
00:41:51,480 --> 00:41:52,960
Speaker 3: going to take our hands off because we believe that

729
00:41:53,000 --> 00:41:54,839
Speaker 3: markets are perfect, so if we get out of the way,

730
00:41:54,880 --> 00:41:57,680
Speaker 3: then everything will just work out honky dory, and that't

731
00:41:57,719 --> 00:41:59,879
Speaker 3: that hasn't worked out. It certainly did not work out.

732
00:42:00,080 --> 00:42:03,719
Speaker 3: The recovery post global financial crisis, which you know, left

733
00:42:03,760 --> 00:42:07,680
Speaker 3: Americans languishing and high unemployment, you know, massive labor market

734
00:42:07,719 --> 00:42:10,160
Speaker 3: scarring for so many young people that never really found

735
00:42:10,160 --> 00:42:14,279
Speaker 3: that good start, you know, the loss of wealth for

736
00:42:14,360 --> 00:42:16,960
Speaker 3: millions of Americans, and it took so long for us

737
00:42:17,040 --> 00:42:20,800
Speaker 3: to work work its way through the system. The fiscal

738
00:42:20,840 --> 00:42:24,359
Speaker 3: policy option allows policymakers to step in and be more

739
00:42:24,400 --> 00:42:27,000
Speaker 3: active and to say, actually this is what we this

740
00:42:27,040 --> 00:42:29,680
Speaker 3: is the direction we need to go. So the bipart

741
00:42:29,760 --> 00:42:33,839
Speaker 3: is an infrastructure law that you invested money and communities

742
00:42:34,000 --> 00:42:37,480
Speaker 3: in every part of America in creating roads and bridges

743
00:42:37,520 --> 00:42:41,560
Speaker 3: at standard infrastructure, but also you know, taking steps to

744
00:42:41,640 --> 00:42:45,680
Speaker 3: bring broadband to every family, taking steps to make sure

745
00:42:45,719 --> 00:42:49,120
Speaker 3: that schools that wanted to put in electric school buses

746
00:42:49,160 --> 00:42:51,960
Speaker 3: to reduce the pollution and the noise for kids riding

747
00:42:51,960 --> 00:42:54,360
Speaker 3: that school bus every day, that they had resources to

748
00:42:54,440 --> 00:42:57,640
Speaker 3: do that. So infrastructure as we traditionally thought about it,

749
00:42:57,680 --> 00:43:00,680
Speaker 3: and you know these new forms of structure that are

750
00:43:00,680 --> 00:43:04,440
Speaker 3: really important. Government really stepping in and saying, hey, there

751
00:43:04,440 --> 00:43:08,160
Speaker 3: are certain sectors that we need as a country to

752
00:43:08,160 --> 00:43:13,279
Speaker 3: be investing in high technology like semiconductors, clean energy, that

753
00:43:13,360 --> 00:43:15,840
Speaker 3: these are the industries of the future that we want

754
00:43:15,880 --> 00:43:19,080
Speaker 3: America to be and we need American businesses to be

755
00:43:19,120 --> 00:43:22,839
Speaker 3: competitive in That was why we were making those investments.

756
00:43:22,920 --> 00:43:25,880
Speaker 3: And we believe that if we encourage businesses in the

757
00:43:25,960 --> 00:43:29,160
Speaker 3: right way, that can create good jobs and economic security

758
00:43:29,160 --> 00:43:32,360
Speaker 3: for communities all across the country. So that active policy

759
00:43:32,760 --> 00:43:35,839
Speaker 3: that is saying here's what really matters to us as

760
00:43:35,840 --> 00:43:39,160
Speaker 3: a society, I think is a part of this trend

761
00:43:39,239 --> 00:43:41,759
Speaker 3: because we can all see with our own eyes that

762
00:43:41,920 --> 00:43:45,799
Speaker 3: fifty years of saying we'll let markets take it, that

763
00:43:45,880 --> 00:43:49,520
Speaker 3: we don't really need to intervene, has left too many

764
00:43:49,560 --> 00:43:53,759
Speaker 3: main streets devastated, has left too many families without economic security,

765
00:43:53,920 --> 00:43:57,840
Speaker 3: and hasn't delivered the kind of economy that Americans want,

766
00:43:58,120 --> 00:43:59,040
Speaker 3: need and deserve.

767
00:44:00,239 --> 00:44:04,440
Speaker 2: We continue our conversation with Heather Bouche, Senior Research Fellow

768
00:44:04,440 --> 00:44:07,839
Speaker 2: at the Harvard Kennedy School, discussing what we can do

769
00:44:08,000 --> 00:44:10,799
Speaker 2: to help narrow the gap between the haves and the

770
00:44:10,840 --> 00:44:14,480
Speaker 2: have nots. I'm Barry Ritults. You're listening to Masters in

771
00:44:14,560 --> 00:44:27,680
Speaker 2: Business on Bloomberg Radio. I'm Barry Ridults. You're listening to

772
00:44:27,760 --> 00:44:31,399
Speaker 2: Masters in Business on Bloomberg Radio. My extra special guest

773
00:44:31,400 --> 00:44:34,520
Speaker 2: today is Heather Bouschet. She was the economist for the

774
00:44:34,600 --> 00:44:39,120
Speaker 2: Joint Economic Committee of US Congress as well as a

775
00:44:39,239 --> 00:44:43,000
Speaker 2: member of the Council of Economic Advisors under President Biden.

776
00:44:43,320 --> 00:44:47,040
Speaker 2: She's currently Senior Research Fellow at the Harvard Kennedy School.

777
00:44:47,719 --> 00:44:51,480
Speaker 2: So we've been talking about how the past forty or

778
00:44:51,480 --> 00:44:58,240
Speaker 2: fifty years has seen both wealth inequality expand and income inequality,

779
00:45:00,000 --> 00:45:04,719
Speaker 2: which dates back to the eighties and nineties, which so

780
00:45:04,920 --> 00:45:07,560
Speaker 2: younger folks may not really remember. I want to I

781
00:45:07,600 --> 00:45:12,120
Speaker 2: want to start by asking you about unintended consequences. And

782
00:45:12,360 --> 00:45:18,600
Speaker 2: I have a recollection of legislation passed under the Clinton

783
00:45:18,640 --> 00:45:24,080
Speaker 2: administration that said, Hey, you can't pay your CEOs tens

784
00:45:24,120 --> 00:45:27,879
Speaker 2: of millions of dollars. It just seems ridiculous. Instead, we're

785
00:45:27,880 --> 00:45:31,360
Speaker 2: going to cap the pay and allow you to pay

786
00:45:31,440 --> 00:45:36,280
Speaker 2: them in stock and stock options. And as the stock

787
00:45:36,360 --> 00:45:39,200
Speaker 2: market has gone higher and higher over the past you know,

788
00:45:39,400 --> 00:45:43,960
Speaker 2: thirty years, it seems like a well intentioned attempt to

789
00:45:44,080 --> 00:45:49,560
Speaker 2: reduce wealth inequality helped create more. How can we respond

790
00:45:49,600 --> 00:45:54,320
Speaker 2: to those sorts of things when it seems the private

791
00:45:54,320 --> 00:45:57,000
Speaker 2: sector is clever enough to kind of figure its way

792
00:45:57,680 --> 00:46:03,600
Speaker 2: around whatever slative challenges are putting their their way.

793
00:46:04,360 --> 00:46:09,160
Speaker 3: Always vigilant, right, I mean I think that it starts

794
00:46:09,400 --> 00:46:15,520
Speaker 3: by I mean, it starts with taxation. Right. So what

795
00:46:15,560 --> 00:46:19,040
Speaker 3: we have done over decades is lower tax rates at

796
00:46:19,040 --> 00:46:19,359
Speaker 3: the top.

797
00:46:19,800 --> 00:46:23,280
Speaker 2: We've made it for corporate corporations, are for individuals, because

798
00:46:23,560 --> 00:46:26,799
Speaker 2: both corporations, as a percentage of total tax paid and

799
00:46:26,840 --> 00:46:29,799
Speaker 2: the actual corporate tax rate, they both seem to have

800
00:46:29,880 --> 00:46:31,200
Speaker 2: drifted down over the past.

801
00:46:31,040 --> 00:46:34,720
Speaker 3: Few All of the above, and we've done that while

802
00:46:34,760 --> 00:46:38,880
Speaker 3: not doing the things that we need to do to fix, uh,

803
00:46:39,120 --> 00:46:42,520
Speaker 3: the transfer of wealth across generations. So we haven't imposed

804
00:46:42,560 --> 00:46:44,840
Speaker 3: the kinds of inheritance taxes that I think would be

805
00:46:44,880 --> 00:46:48,839
Speaker 3: really important to make sure that that wealth isn't calcified

806
00:46:49,440 --> 00:46:54,239
Speaker 3: over time in families. And and that has been that

807
00:46:54,320 --> 00:46:58,439
Speaker 3: has really made it so much easier for those who

808
00:46:58,440 --> 00:47:01,879
Speaker 3: were who you know, worked really hard, did good not

809
00:47:01,920 --> 00:47:03,880
Speaker 3: having to give back through you know, not having to

810
00:47:03,920 --> 00:47:06,880
Speaker 3: pay those taxes on their highest income. But it also

811
00:47:06,920 --> 00:47:09,399
Speaker 3: has allowed wealth to calcify. You know, there's this really

812
00:47:09,440 --> 00:47:11,279
Speaker 3: important book that came out a number of years ago

813
00:47:11,320 --> 00:47:13,600
Speaker 3: that I feel like we don't talk about anymore by

814
00:47:13,840 --> 00:47:17,080
Speaker 3: Thomas Picketty, on Capital in the twenty first Century, and

815
00:47:17,120 --> 00:47:17,760
Speaker 3: they were huge.

816
00:47:17,880 --> 00:47:20,320
Speaker 2: That book was headlines for weeks.

817
00:47:20,400 --> 00:47:24,279
Speaker 3: It was for weeks for weeks, and you know, one

818
00:47:24,280 --> 00:47:28,440
Speaker 3: of the things that really was so important about that

819
00:47:28,480 --> 00:47:30,440
Speaker 3: book was the way that he showed through all of

820
00:47:30,480 --> 00:47:33,680
Speaker 3: this data the way that income high income and equality

821
00:47:34,000 --> 00:47:38,160
Speaker 3: quality calcifies into high wealth inequality, and that once wealth

822
00:47:38,280 --> 00:47:43,200
Speaker 3: becomes congealed, right, once a smaller and smaller number of

823
00:47:43,200 --> 00:47:45,560
Speaker 3: people have access to that it becomes very difficult to

824
00:47:45,680 --> 00:47:48,640
Speaker 3: unpack that, to share that, and for society as a

825
00:47:48,640 --> 00:47:49,680
Speaker 3: whole to benefit from it.

826
00:47:49,920 --> 00:47:52,480
Speaker 2: So let me push back a little bit and say, hey,

827
00:47:52,520 --> 00:47:56,680
Speaker 2: we have fifty percent a state tax and the way

828
00:47:56,719 --> 00:47:59,000
Speaker 2: you could get around that is by donating it to

829
00:47:59,040 --> 00:48:01,799
Speaker 2: a philanthropy of ACA Foundation, what have you. Yeah, there

830
00:48:01,840 --> 00:48:04,719
Speaker 2: are various trusts and things you could set up to

831
00:48:04,840 --> 00:48:08,960
Speaker 2: avoid paying some of the taxes, but the tax man

832
00:48:09,080 --> 00:48:13,920
Speaker 2: gets his due eventually. We're not like the UK that

833
00:48:14,000 --> 00:48:21,040
Speaker 2: has this esconce gentrified nobility. Still the upper class there is,

834
00:48:21,560 --> 00:48:26,560
Speaker 2: you know, just generations of landowners or is in the

835
00:48:26,680 --> 00:48:31,080
Speaker 2: United States different from other countries or seen we have

836
00:48:31,239 --> 00:48:33,800
Speaker 2: landed gentry here the way the UK.

837
00:48:33,760 --> 00:48:35,960
Speaker 3: Does, I would argue. I mean, so first off on

838
00:48:36,040 --> 00:48:41,359
Speaker 3: the data, we have so much higher economic inequality than

839
00:48:41,360 --> 00:48:46,200
Speaker 3: our European other European countries, and we don't see the

840
00:48:46,320 --> 00:48:49,920
Speaker 3: kind of movement across income groups they used to.

841
00:48:50,000 --> 00:48:51,719
Speaker 2: We used to have pretty good post World War two

842
00:48:51,840 --> 00:48:54,200
Speaker 2: economic mobility was pretty high in the United States.

843
00:48:54,280 --> 00:48:57,120
Speaker 3: Right, So if you were born in the nineteen forties,

844
00:48:57,360 --> 00:49:01,440
Speaker 3: your chance about earning your parents with about ninety percent. Right,

845
00:49:01,680 --> 00:49:04,520
Speaker 3: But if you're born in the nineteen eighties, only one

846
00:49:04,520 --> 00:49:07,520
Speaker 3: in two of us it's grown up to out earn

847
00:49:08,719 --> 00:49:12,440
Speaker 3: their parents. So that's that is a remarkable shift, a

848
00:49:12,480 --> 00:49:15,520
Speaker 3: remarkable constraint on upper mobility over time. And it is

849
00:49:15,600 --> 00:49:19,000
Speaker 3: because you've seen this high these high incomes calcify into

850
00:49:19,360 --> 00:49:22,399
Speaker 3: wealth and equality. That's sticky, right. You talked, we talked

851
00:49:22,440 --> 00:49:27,759
Speaker 3: earlier about people moving into you know, wealthier enclaves, you know,

852
00:49:27,840 --> 00:49:29,839
Speaker 3: with you know, better schools. Well, that is a way

853
00:49:30,000 --> 00:49:33,080
Speaker 3: of you know, it's one way that it works its

854
00:49:33,080 --> 00:49:36,080
Speaker 3: way through society that those kids will have more opportunities.

855
00:49:36,640 --> 00:49:40,440
Speaker 3: You are able to keep that wealth in that family,

856
00:49:41,320 --> 00:49:43,520
Speaker 3: and then you don't see those economic benefits kind of

857
00:49:43,520 --> 00:49:46,240
Speaker 3: flowing throughout your society, and you don't see that economic

858
00:49:46,400 --> 00:49:47,960
Speaker 3: opportunity flowing through.

859
00:49:47,920 --> 00:49:52,239
Speaker 2: So we talked a little bit about what the pandemic

860
00:49:52,320 --> 00:49:58,640
Speaker 2: revealed with fragile supply chains and how many crucial things

861
00:49:58,800 --> 00:50:03,479
Speaker 2: like just the masks and gowns and gloves that aren't

862
00:50:03,520 --> 00:50:07,920
Speaker 2: made in the United States. What's the genesis of this,

863
00:50:08,040 --> 00:50:11,759
Speaker 2: How much of this can we blame on Walmart, and

864
00:50:11,760 --> 00:50:14,640
Speaker 2: how much of this can we blame on just Hey,

865
00:50:15,600 --> 00:50:20,360
Speaker 2: technology and transportation allowed manufacturing to go to the lowest

866
00:50:20,400 --> 00:50:21,280
Speaker 2: cost provider.

867
00:50:22,800 --> 00:50:24,719
Speaker 3: That's a big question with a lot of answers, but

868
00:50:24,800 --> 00:50:28,680
Speaker 3: I think there's a few really important points there. Right, So,

869
00:50:29,160 --> 00:50:34,520
Speaker 3: once you had the capacity for an idea to happen

870
00:50:34,560 --> 00:50:39,360
Speaker 3: in one place, the innovation, the engineers, the plants happened

871
00:50:39,360 --> 00:50:42,040
Speaker 3: in one place, and the production of something to happen

872
00:50:42,200 --> 00:50:46,080
Speaker 3: someplace else because you know, you could send those plans

873
00:50:46,200 --> 00:50:48,720
Speaker 3: via the Internet or you know, to a different place.

874
00:50:50,120 --> 00:50:53,120
Speaker 3: It made it possible for us for companies all across

875
00:50:53,120 --> 00:50:55,320
Speaker 3: the United States around the world to outsource that production.

876
00:50:56,200 --> 00:50:58,200
Speaker 3: And we did that at a time when we were

877
00:50:58,200 --> 00:51:03,640
Speaker 3: making those rules easier. Right, we had decades of trade

878
00:51:03,640 --> 00:51:08,520
Speaker 3: agreements that made it easier for firms to have overseas production,

879
00:51:08,600 --> 00:51:12,200
Speaker 3: to become multinational companies. We wanted to trade. We wanted

880
00:51:12,200 --> 00:51:14,640
Speaker 3: to have more trade. We believe that would make it safer,

881
00:51:14,680 --> 00:51:16,960
Speaker 3: it would you know, you're not going to go to

882
00:51:17,000 --> 00:51:19,520
Speaker 3: war with somebody if you're trading with them, right, You're

883
00:51:19,840 --> 00:51:24,440
Speaker 3: you're going to create these positive benefits for our geopolitics.

884
00:51:25,239 --> 00:51:28,759
Speaker 3: And yet what we've seen is that what that's done

885
00:51:28,920 --> 00:51:33,680
Speaker 3: is it's really stripped production from the ideas and the innovation.

886
00:51:34,280 --> 00:51:37,239
Speaker 3: And so I have left the United States with kind

887
00:51:37,280 --> 00:51:39,759
Speaker 3: of assuming that we could be the ideas people, but

888
00:51:39,880 --> 00:51:43,319
Speaker 3: that the production of things could happen in places where

889
00:51:43,360 --> 00:51:45,239
Speaker 3: wages were lower and where we didn't have to worry

890
00:51:45,239 --> 00:51:48,959
Speaker 3: about messy things like the environmental consequences. So you took

891
00:51:49,000 --> 00:51:51,319
Speaker 3: the hard stuff out of all the things that we

892
00:51:51,520 --> 00:51:54,960
Speaker 3: make and use, and yet you outsource that, and that's

893
00:51:55,040 --> 00:51:58,359
Speaker 3: left our economy very fragile because, as it turns out,

894
00:51:58,400 --> 00:52:01,759
Speaker 3: when things get rough, when there's a panda, and you know,

895
00:52:01,960 --> 00:52:04,239
Speaker 3: I'm spending a lot of time these days thinking about, well,

896
00:52:04,880 --> 00:52:09,000
Speaker 3: one of the crises coming down down the pipeline at

897
00:52:09,040 --> 00:52:11,799
Speaker 3: US is climate change and the energy transition that that

898
00:52:11,840 --> 00:52:16,040
Speaker 3: will require. That's going to create these ongoing challenges for

899
00:52:16,040 --> 00:52:19,720
Speaker 3: our economies in our societies. If you have this global production,

900
00:52:20,880 --> 00:52:23,680
Speaker 3: where's the resiliency? What is that going to do? Are

901
00:52:23,719 --> 00:52:25,200
Speaker 3: you going to be Are we literally going to be

902
00:52:25,239 --> 00:52:28,840
Speaker 3: safe as a nation, let alone the economic consequences that

903
00:52:28,840 --> 00:52:31,840
Speaker 3: we've seen for decades. It's that that kind of global

904
00:52:31,840 --> 00:52:36,239
Speaker 3: production system is hollowed out American communities. And I'm not

905
00:52:36,239 --> 00:52:39,320
Speaker 3: saying that it was caused by policy, but it was facilitated.

906
00:52:39,880 --> 00:52:42,080
Speaker 3: There was this very important role for technology, but we

907
00:52:42,120 --> 00:52:45,280
Speaker 3: didn't step in and sort of say not enough policy

908
00:52:45,320 --> 00:52:48,560
Speaker 3: makers stepped in and said, hey, this might not be

909
00:52:48,800 --> 00:52:50,959
Speaker 3: this might not be good for us. We may want

910
00:52:51,000 --> 00:52:52,960
Speaker 3: to make sure that we have the capacity to make

911
00:52:53,040 --> 00:52:55,879
Speaker 3: the most important things, because if you can't make them,

912
00:52:56,000 --> 00:52:58,680
Speaker 3: then you're going to be vulnerable in a geopolitical sense.

913
00:52:58,719 --> 00:53:01,359
Speaker 3: And now we're kind of frankly stuck behind the eight

914
00:53:01,360 --> 00:53:03,960
Speaker 3: ball a little bit, where some of the most important

915
00:53:04,000 --> 00:53:06,359
Speaker 3: things we don't have the capacity to make. And again

916
00:53:06,400 --> 00:53:08,239
Speaker 3: we saw that in the pandemic with the simple things

917
00:53:08,239 --> 00:53:10,600
Speaker 3: with the mass We also saw that with the ventilators,

918
00:53:10,960 --> 00:53:13,920
Speaker 3: we couldn't get enough of those, and we saw that

919
00:53:15,000 --> 00:53:17,960
Speaker 3: Another example that I've thought a lot about recently. I

920
00:53:18,000 --> 00:53:19,440
Speaker 3: talked to a lot of people when I was in

921
00:53:19,480 --> 00:53:24,040
Speaker 3: Cambridge this year. Drones, which you know, the all of

922
00:53:24,160 --> 00:53:25,959
Speaker 3: you know, virtually all of those are made in China.

923
00:53:26,120 --> 00:53:29,080
Speaker 3: So when China started partnering with Russia, that made it

924
00:53:29,120 --> 00:53:31,560
Speaker 3: hard for the Ukrainians to get the drone parts and

925
00:53:31,680 --> 00:53:33,560
Speaker 3: to get the drones they need to fight their war.

926
00:53:34,040 --> 00:53:38,000
Speaker 3: That's a that was a technology problem that very quickly

927
00:53:38,040 --> 00:53:41,799
Speaker 3: became a very important national security issue. And are we

928
00:53:42,080 --> 00:53:44,200
Speaker 3: are we getting ahead of those kinds of questions.

929
00:53:44,600 --> 00:53:48,960
Speaker 2: So on the siem Teleb wrote a book called Anti Fragile,

930
00:53:49,480 --> 00:53:54,680
Speaker 2: all about resiliency and how to make sure that you're

931
00:53:55,160 --> 00:54:00,000
Speaker 2: not merely relying on just one element, that you're diversifying

932
00:54:00,120 --> 00:54:08,400
Speaker 2: and broadly exposed. How can government policy drive that? If

933
00:54:09,080 --> 00:54:12,719
Speaker 2: if it's in the shareholder's interest to reduce costs a

934
00:54:12,760 --> 00:54:18,920
Speaker 2: maximum amount, increased profits maximum amount, who's responsible for creating

935
00:54:19,000 --> 00:54:25,960
Speaker 2: this anti fragility? How does government build resilience into the economy.

936
00:54:26,800 --> 00:54:30,360
Speaker 3: Well, there's it's a tough question, but there are some tools.

937
00:54:30,440 --> 00:54:32,040
Speaker 3: I mean, so first off, you have to define it.

938
00:54:32,320 --> 00:54:35,080
Speaker 3: And what do you mean by resiliency is that you

939
00:54:35,160 --> 00:54:39,239
Speaker 3: want to have domestic production, production with you know, in

940
00:54:39,280 --> 00:54:41,480
Speaker 3: the during the Biden years we called it friend shoring

941
00:54:41,760 --> 00:54:44,080
Speaker 3: or you know, production within allies that you feel really

942
00:54:44,080 --> 00:54:47,120
Speaker 3: comfortable with. But fundamentally it comes down to do you

943
00:54:47,200 --> 00:54:51,160
Speaker 3: have various options if there's a if something happens with

944
00:54:51,200 --> 00:54:53,440
Speaker 3: this part of your supply chain, are there other ways

945
00:54:53,440 --> 00:54:55,719
Speaker 3: that you can get what you need. We live in

946
00:54:55,760 --> 00:54:59,160
Speaker 3: a continent spanning economy and you know, with you know,

947
00:54:59,200 --> 00:55:01,440
Speaker 3: three hundred and thirty three hundred and forty million people,

948
00:55:01,920 --> 00:55:05,799
Speaker 3: there is a lot of opportunity to create resiliency domestically,

949
00:55:06,080 --> 00:55:08,120
Speaker 3: but also there's a lot of benefits to global trade,

950
00:55:08,160 --> 00:55:10,680
Speaker 3: So how do we think about making rules that encourage that.

951
00:55:11,239 --> 00:55:12,799
Speaker 3: And the thing in the nut of this is is

952
00:55:12,840 --> 00:55:15,960
Speaker 3: that that's going to be a little bit costlier in

953
00:55:16,000 --> 00:55:18,239
Speaker 3: the short term, but what are the costs over the

954
00:55:18,239 --> 00:55:20,319
Speaker 3: long term? What are the cost during a crisis? How

955
00:55:20,400 --> 00:55:23,480
Speaker 3: much money did the federal government had to spend during

956
00:55:23,520 --> 00:55:28,520
Speaker 3: the pandemic to help companies get over their supply chain challenges.

957
00:55:28,600 --> 00:55:31,960
Speaker 3: How much extra money did Americans pay because firms were

958
00:55:32,000 --> 00:55:34,920
Speaker 3: able to charge higher prices than even perhaps they needed

959
00:55:34,960 --> 00:55:40,400
Speaker 3: to because of the crisis. So there are and we

960
00:55:40,520 --> 00:55:43,319
Speaker 3: know that there will be future crises coming. So it's

961
00:55:43,520 --> 00:55:47,200
Speaker 3: government's job to make sure that we're protecting the welfare

962
00:55:47,200 --> 00:55:49,160
Speaker 3: of the nation. This certainly needs to be a part

963
00:55:49,200 --> 00:55:51,719
Speaker 3: of the question. So what are all the tools in

964
00:55:51,719 --> 00:55:54,239
Speaker 3: our toolbox? So maybe some of those tools are about

965
00:55:54,280 --> 00:55:56,799
Speaker 3: how we think about our trade policy, how we think

966
00:55:56,800 --> 00:56:00,680
Speaker 3: about our anti trust policy. Maybe we're using procurement policy.

967
00:56:00,840 --> 00:56:03,640
Speaker 3: But there's a wider range of tools that government should

968
00:56:03,640 --> 00:56:05,880
Speaker 3: be using. So I wouldn't get too wrapped up in

969
00:56:05,920 --> 00:56:08,840
Speaker 3: the one solution, but that this is the question that

970
00:56:08,880 --> 00:56:10,239
Speaker 3: we need to be asking ourselves.

971
00:56:10,520 --> 00:56:14,480
Speaker 2: So I was fascinated by some research you did. At

972
00:56:14,520 --> 00:56:18,680
Speaker 2: the time, there was this concept that highly educated women

973
00:56:18,760 --> 00:56:23,160
Speaker 2: were dropping out of labor force because of the motherhood movement.

974
00:56:23,280 --> 00:56:26,719
Speaker 2: I think the news media picked that up and ran

975
00:56:26,800 --> 00:56:30,200
Speaker 2: with it. Turns out the data really didn't support it.

976
00:56:30,360 --> 00:56:34,279
Speaker 2: Tell us about your research into what was going on

977
00:56:34,400 --> 00:56:39,040
Speaker 2: with the she session that people had been talking about.

978
00:56:38,800 --> 00:56:41,160
Speaker 3: Well, this comes up time and again where you see

979
00:56:41,280 --> 00:56:43,880
Speaker 3: and it's happening now actually, and it happened in the

980
00:56:46,040 --> 00:56:50,319
Speaker 3: early two thousands. They'll see these moments where women their

981
00:56:50,360 --> 00:56:53,200
Speaker 3: labor supply goes down or they don't recover from a recession,

982
00:56:53,520 --> 00:56:56,120
Speaker 3: and people start saying, oh, well, it's definitely because she,

983
00:56:56,520 --> 00:56:58,480
Speaker 3: because women don't want to be in the labor market,

984
00:56:58,480 --> 00:57:01,080
Speaker 3: they'd prefer to not be working, and so this is

985
00:57:01,239 --> 00:57:04,360
Speaker 3: good or this is women's preferences. And then when you

986
00:57:04,400 --> 00:57:07,040
Speaker 3: start scratching the surface and you look at the data,

987
00:57:07,680 --> 00:57:11,640
Speaker 3: you see that actually it tends to be more about

988
00:57:11,640 --> 00:57:14,759
Speaker 3: demand side issues, that those jobs weren't available or they

989
00:57:14,760 --> 00:57:20,160
Speaker 3: weren't providing the supports that families need to deal with

990
00:57:20,200 --> 00:57:23,400
Speaker 3: care issues. So that was the research that I did

991
00:57:23,480 --> 00:57:26,080
Speaker 3: on opting out in the early two thousands, and I've

992
00:57:26,120 --> 00:57:29,840
Speaker 3: been hearing a lot about this more recently with what's

993
00:57:29,840 --> 00:57:32,520
Speaker 3: happened post pandemic, and is a lot of businesses are

994
00:57:32,520 --> 00:57:36,520
Speaker 3: demanding return to office. But with the pairing back of

995
00:57:36,560 --> 00:57:39,640
Speaker 3: the American Rescue Plan and the inability of the Biden

996
00:57:39,680 --> 00:57:42,680
Speaker 3: administration to get all of the care pieces of our

997
00:57:42,840 --> 00:57:47,080
Speaker 3: agenda across the finish line, Senator Mansion stopped the investments

998
00:57:47,120 --> 00:57:51,120
Speaker 3: in home health care for the aged. He stopped those

999
00:57:51,160 --> 00:57:54,080
Speaker 3: investments that we wanted to do for childcare. So a

1000
00:57:54,080 --> 00:57:58,440
Speaker 3: lot of those businesses have really struggled in the past

1001
00:57:58,440 --> 00:58:01,400
Speaker 3: couple of years. You're now seeing that have an effect

1002
00:58:01,440 --> 00:58:04,760
Speaker 3: on women's labor force participation, and people are again talking

1003
00:58:04,760 --> 00:58:06,720
Speaker 3: about this as voluntary, when I think we need to

1004
00:58:06,760 --> 00:58:08,959
Speaker 3: really be looking what kinds of supports are we making

1005
00:58:08,960 --> 00:58:12,480
Speaker 3: sure that families can address their care issues and still

1006
00:58:12,520 --> 00:58:13,760
Speaker 3: participate in the labor market.

1007
00:58:14,160 --> 00:58:16,560
Speaker 2: Thank you, Heather for being so generous with your time.

1008
00:58:16,920 --> 00:58:20,720
Speaker 2: We have been speaking with Heather Bouchet, Senior Research Fellow

1009
00:58:20,760 --> 00:58:24,960
Speaker 2: at the Harvard Kennedy School and her most recent book, Unbound,

1010
00:58:25,480 --> 00:58:29,640
Speaker 2: How economic inequality constricts our economy and what we can

1011
00:58:29,720 --> 00:58:33,480
Speaker 2: do about that? If you enjoy this conversation, well, be

1012
00:58:33,520 --> 00:58:36,480
Speaker 2: sure and check out any of the previous five hundred

1013
00:58:36,480 --> 00:58:40,000
Speaker 2: and fifty we've done over the past eleven years. You

1014
00:58:40,040 --> 00:58:44,480
Speaker 2: can find those at iTunes, Spotify, Bloomberg YouTube, or wherever

1015
00:58:44,560 --> 00:58:47,960
Speaker 2: you find your favorite podcast. Check out my new book

1016
00:58:48,120 --> 00:58:51,880
Speaker 2: How Not to Invest The ideas, numbers, and behavior that

1017
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Speaker 2: destroy wealth and how to avoid them How Not to

1018
00:58:54,840 --> 00:58:58,720
Speaker 2: Invest at your favorite bookstore. I would be remiss if

1019
00:58:58,720 --> 00:59:01,120
Speaker 2: I did not thank our crack team that helps put

1020
00:59:01,160 --> 00:59:06,600
Speaker 2: these conversations together each week. Alexis Noriega and Anna Luke

1021
00:59:06,720 --> 00:59:12,160
Speaker 2: are my producers. Seawan Russo is my researcher. Justin Milner

1022
00:59:12,400 --> 00:59:15,280
Speaker 2: is my audio engineer. Sage Bauman is the head of

1023
00:59:15,320 --> 00:59:19,400
Speaker 2: podcasts at Bloomberg. I'm Barry Ritolts. You're listening to Masters

1024
00:59:19,400 --> 00:59:25,560
Speaker 2: in Business on Bloomberg Radio.