 Welcome to the Ford School Policy Talk today with Dr. Lisa Cook, Professor of Economics in International Relations at Michigan State University. She was the first Marshall scholar from Spellman College and received a second VA in Philosophy, Politics, and Economics from Oxford University. She earned her Ph.D. in Economics from Berkeley with Economics and International Economics. In 2011-2012, she served as a Senior Economist at the Council of Economic Advisors. She is currently a Research Associate at the National Bureau of Economic Research, a member of the Council of Foreign Affairs. She's on the advisory board of the Opportunity and Inclusive Growth Institute of the Reserve Bank of Minneapolis, the advisory board of the Hamilton Center for the Study of Innovation and Invention at the Smithsonian Institute and the Board of Directors at the Roosevelt Institute. And it's been my pleasure to serve with her on the Executive Committee of the American Economic Association. Our event today is co-sponsored by the students of color and public policy. And the goal is for the two of us to have a discussion about her research on innovation and diversity and then open it up to questions, your questions, which you can send in the chat box. So, Lisa, thank you so much for being here today. I've really been looking forward to having this conversation with you. The pleasure is all mine, Betsy. So I was going to start with something that is sort of, I think maybe an unusual place, but I wanted to talk about your favorite inventor who is an African American or a person of color that you think the world doesn't pay enough attention to. I think that anybody who has seen me give this seminar in person knows who this is. This is Lonnie Johnson, both the inventor of the Super Soaker, and apologies to my friends who have small children. But I think that his story is just incredible. He works on both nuclear energy, battery power, and on improving the Super Soaker. And I think that invention is living. It's not just dead. Our history of invention is one that is living and not just in the past. So I would say Lonnie, Lonnie Johnson. That is such an amazing and excellent answer. And I am going to share that with my kids. My youngest aspires to be an inventor. And when I tell him about the inventor of the Super Soaker, I think that's going to really inspire him. One of the reasons I wanted to start there, I was going to tell you a funny backstory, although I say funny. It's not funny at all. It's actually super disturbing to me. But I was doing research on representation and principles of economics textbooks. So thinking about where women show up and where men show up and where people of color show up. And there's a very well known textbook, one of the most commonly used. And it had a page, an entire page in the book, which listed inventors and what they invented. There were 24 inventors on that list. Two women, zero people of color. And so I was like, wait a minute, there's only 24 inventors. You're telling me you couldn't come up with a more diverse group of people to list on your page. And that sent me down a rabbit hole of trying to look for who are inventors who are people of color or women that I would want to see on that page. And I was telling you, Lisa, by email that one of my favorites is the guy who invented the shoe lasting machine. And that sounds very like whatever. So the thing that was amazing was he was working on shoes during the day and coming home at night and trying to invent a machine that would replace him. And in fact, his machine went the very best, most skilled shoemaker, could make up to make around 50 shoes a day. And when he invented his machine, his machine could do 700 shoes a day. Think about that productivity increase. And then I think about the story they're trying to tell in the principles of economics textbook. And I'm thinking, why don't they want this guy who invented his way out of his job and took productivity from 50 to 700, right? Shouldn't he be like at the top of the list? So let's start by talking about that. What's going on with people like that getting forgotten in things like our textbooks? What do you think is driving that? I think that that's a really good example. There's so many like that in history. And it may be that economists and historians are not needing the textbook writers. I don't have a really good answer. But we can look to the cotton gen. The cotton gen was invented by an African-American enslaved person. It just happened to be that Eli Whitney was visiting that plantation that day and got to the patent office first. It's one of the most litigated patents in American history. And it's not because the enslaved person was suing Eli Whitney. It's because plantation owners who use the technology and improved it were contesting it with Eli Whitney. That's one story. Same true with someone who is local to us, to Michigan, to Ypsilanti, Michigan, the real McCoy, Elijah, the real McCoy. And that's where the term comes from. He made an oil dispenser that was just so precise. He did a degree in engineering in Edinburgh and came back, settled in the Detroit Ypsilanti area. And this was so precise that it cut down the number of engine fires by about 67%. And this was an amazing, and a very simple technology, very simple technology. And it was able to save lives and to save cargo and to increase the amount of transportation we were able to do. That was a very critical point. I don't know, frankly, why these stories are left out. And one thing that I find often in textbooks is that this kind of invention stops in the early 1900s. People refer to George Washington Carver or Madame C.J. Walker. They don't talk about James West, one of the most famous inventors at Bell Wads, who was still living. It is on the advisory board of the Lemelson Center with me. I think that this is part of the problem that we don't look deep enough. We look past people. And often, their stories aren't told just like a number of women's stories aren't told with respect to invention. Their names are sometimes left off. I've been in a number of USPTO meetings in the past, whereby women have told me that they discovered that their work had been patented and the men on the team were listed and the women on the team were not. So I find that to be an increasingly common story. And I certainly hope that these inventors, women and African Americans, can become better known or of all ethnicities and all races can become better known and reflected in our textbooks and elsewhere. Well, so one reason I like to start there is because one of the criticisms when I did this work that showed that the vast majority of almost all the examples and principles of economics textbooks are men and almost all white men was some people hit back and said, well, you know, what do you want me to do? Change Paul Voker and Pauline Voker. That is literally a comment made by an economist. And I think that the obviously the implication is that they're just in history. There were, you know, they're not important women and not important people of color, and I think that's wrong. So, you know, one point is that they're, that's just wrong. They're definitely there. But you've also done work on the disincentives that have been created, that actually have held back people of color. And so I wanted to start with a glass half full part look there there. And we need to tell those stories. But there's also you also have told the glass half empty story, which is that there are things that have inhibited that. And so I wanted to turn to that a little bit. And your work on violence and the role that that has played and in fact, in impacting, you know, invention and incentives in the African American community. So before we pivot to that, I just would like to once again address the other textbook writers or editors. This isn't the only place where we have central bank governors, right? Russia had one when I was living there in the in the 1990s in 1995, and other countries have had or had central bank governors or then chairs as we have much before. So we don't necessarily need to just refer to our history. Our history is imperfect and late in that regard. But we can find some other examples in a number of different places. And anyway, you've written your textbook, I'll leave them alone for right now. Moving on to this incentives. I let me start with the backstory with respect to my research on violence and economic activity that includes a measure of economic activity, which is innovation and venture innovation. So I'm happily doing my dissertation research in Moscow. I'm asking about the banking system and a banking system that allocates credit on a market basis can arise in the ashes of the socialist system that used to be the case in Russia. And, you know, I'm interviewing entrepreneurs, I'm interviewing bankers, trying to figure out if this market has already arrived. And if so, if it's truly allocating credit on a market basis. And it turned out, yes, that price signals were being used. And there was a small market for credit. But it was being intermediated by something else by trade credit. So this bank lending was being helped. I discovered this new that was the this new intermediary that was trade credit. So that was sort of my dissertation. So in the process of talking to entrepreneurs and bankers, they pose questions to me. And sometimes that was helping my Russian and sometimes it wasn't. But they posed questions to me nonetheless, they were asking me so if we have intellectual property laws on the books, and we have everything that the economics literature says we need to have in order for invention and innovation to happen, why isn't it happening? And, you know, I didn't have a good answer for them. And I was saying, you know, first of all, I need to get out of here and write my own dissertation, like, you know, I don't need a new dissertation topic. But it bugged me, I put it on the back burner, came back, finished up my dissertation. But I kept thinking about that question, why was it that intellectual property rights protection on the books wasn't enough? Well, I thought maybe there's a historical experiment that could be helpful and explaining to the Russians why this wasn't evolving. And I look to the economic history of the United States. So we have, if we're going to have an historical experiment, we need for there to be a treated group and a control group. And in this case, African American inventors would have been the treated group, they were subjected to different types of violence, major riots, lynching, segregation laws, and a control group that wouldn't have been as subject to those types of violence. And what I found was that lynching in particular had a negative effect on invention and innovation on patenting. And I also found that it had a segregation laws had especially a bad effect, a negative effect on the most valuable patents, on electrical patents. And when you talk about disincentives, disincentive is the lack of rule of law. And that's what transcends this time period and also transcends space. So this informed how the Russians could think about their own environment. It's not just the protection of intellectual property rights. They needed, they needed the protection of the rule of law, which included personal security, included contract enforcement. So it wasn't just a narrow slice of property rights protection. It was a full complement of property rights protection that they needed. So I think that economics is really flexible in that way that we can take an experience of a group of people in economic history and extrapolate that to the current environment. You know, that is such a great explanation of how as economists, we try to focus on something that seems like a narrow question, but actually use it to draw really big implications about the world. And I think those are some pretty big implications. How do you take that and think about what you think is for the long run implications of discrimination and violence in terms of innovation? I think there are two really staggering statistics. Well, actually, let me let me give you one. I'll save the other one for later. There's one staggering statistic in this data set that I put together that stretches from 1870 to 2010. It is that 1899 is still until 2010 at least. And I would say that that 20, 21 isn't that different from 2010 with respect to the statistic. It's still the peak year, 1899 is still the peak year for per capita patenting for African Americans. The average size of a patenting, the median size of a patenting for African Americans is still what it was in 1899. That's outrageous. That is just so shocking. And I think that is a result of Plessy versus Ferguson. In the first instance, a lot of the networks, the infrastructure that you need for invention and innovation was taken away. So that's public libraries. You go and check the patent digest to see what new inventions there are. You couldn't go to a patent attorney because those became segregated, the commercial districts became segregated. So I think this was a real blow to African American invention. And it's had persistent effects. And as a macroeconomist, this is a kind of shock that I am most interested in. One that is persistent, lost a long time. And we have to think about interventions to bring that up to at least the peak period to do better than that. So I was thinking about asking you sort of where are we today, but it sounds like where we are today is not in a great place. That statistic where the patent rate 120 years later is the same. So let me actually have you think about this in a different way. Something as a historian you probably thought about. There's Robert Gordon and some of the other sort of macroeconomists who basically said the problem for the world is that we've run out of good ideas. And we'll never have inventions and innovation as good as what we had a hundred years ago. And that's why we're never going to have really fast economic growth again. What do you say to that? How do you think about it? I don't think that's quite right. I and my co-author Yanya and Yang have calculated that GDP per capita could be 0.6% to 4.4% higher if there were greater participation of women and African Americans. So it's not that we run out of ideas. If you rely on the same old people, you're going to get the same old ideas. And as a macroeconomist, I would say that's true whether we're talking about innovation or we're talking about stemming financial crises or preventing financial crises. If you rely on the same old people, they're going to ask the same questions and you're not going to get that much innovation. But if you are embracing diversity and the diverse way people answer questions and come up with solutions, I think that we would have a higher GDP and that's what we calculated and therefore a higher living standards. We're not just calculated GDP for GDP sake, but to achieve higher living standards. You're putting some concrete numbers on the cost of discrimination on innovation today. What are the solutions that you're thinking about? What are the ways in which we can actually achieve those higher growth rates and get those innovation gains that you're talking about? Well, I'm so glad to ask because in a recent Brookings paper, I focus on the end of the process, the commercialization process, what we might be able to do to enhance commercialization, get more diversity in commercialization of invention. The end of the process and with a new working paper, a new paper published through the Washington Center for Equitable Growth, I focus on the beginning of that process. So let's take the latter first. I think with respect to the beginning of the process, I think about this in three stages. I think about innovation in three stages in education typically, but not exclusively in STEM education. Secondly, in the practice of invention, say in labs, in graduate school labs or labs outside of graduate school, for example. And then I think about the commercialization phase where the invention is commercialized and this involves IPOs. This involves founders getting VC investment, for example. So I think about those three. So I concentrated on the two end points for these two papers. For the Washington Center for Equitable Growth paper, what I focused on was exposure to invention. How do we increase the number of kids, the share of kids who are interested in invention? And I'm not the only one concerned about this. Raj Chetty and his co-authors have a paper that has similar conclusions to mind that the more exposure a child has to an inventor, the higher one's life outcomes. So I would say early exposure to invention and innovation. The Lemelson Center has a place called Spark Lab where school kids come every day in normal times. They come every day and they have seven or eight steps to follow while they walk through the Spark Lab and they create their own inventions and they figure out what's useful about that invention and how they might be able to sell that invention. So I think it's actually a really good exercise and they are just so delighted to walk out of the Spark Lab with their own invention. You just see children's eyes light up. So I think that's one thing to do. Of course there's mentoring that can be done, mentoring of young inventors through NSF, through NASA, through other means. So there's that but it's not just mentoring on the commercialization end. One thing that has to be addressed is workplace climate. This is something that I wrote about but it's become even more urgent as unions begin to form at tech firms, for example, not to necessarily raise pay but to address issues related to sexual harassment, racial harassment, etc. So I think that there are some ways to address worker climate and that's true. It's not just for workers, it's for founders that would be the subject of this part of the innovation phase and those who are receiving VC funding. Only 1% of all founders who receive venture capital funding are African-American. 2% are African-American women. Only 5% are women. That's got to change because that represents an entire network and that means that we're leaving a lot of ideas on the table. That's where this calculation of up to 4.4% of GDP per capita comes from. We're leaving a lot of ideas on the table and that means that CEOs of a lot of the tech firms within the innovation economy are not being the best stewards of the talent they have and if I were a shareholder I would ask that the CEOs be more responsible for augmenting the talent they have than finding the talent they don't have. Yeah, this issue to me is so important and at least I know I've told you this before that my eight-year-old son wants to be an inventor. I got something home from school a year ago so when he was seven, every kid in the school had to make a picture about what they want to be when they grow up and then they took a big class picture with them all holding the signs and his says inventor and I don't know where that came from but it's obviously coming from the fact that he sees that as something he could be. When I looked at his whole class there were gender stereotypes around what the girls were holding up in terms of what they wanted to be and what the boys were. There were no girls holding up inventor signs. Oh yeah, sure. I have a story like that. Can I tell my story that similar? So I took a Girl Scout troop from Ypsilanti to see hidden figures and when I was looking for so the there was a party afterwards and a party before a party before to kind of introduce them to the topic and we had rockets that we had toy rockets we had all kinds of books about rockets and and so on so you know it was meant to be fun play space. When I went looking for those all of the rockets were in the boys section. The women's section the girls section rather was and this is in several toy stores the girls section was all pink and all bellerina type stuff. I was so angry I could not have been angrier that there was this bifurcation everything having to do with space astronauts with exploration or science had to do with boys and I was just I was livid so I bought all those things from the boys section and we went and played with them before and after we saw hidden figures so I think that there's something really wrong with the programming that we instill in girls and boys at very very early ages that should not be cut off with girls. Well I think this really comes to thinking about implicit bias and you know implicit bias seems to be the hardest thing for us to get past right. What's implicit about that Betsy? What's implicit about that? I am telling you there was nothing that had to do with space and science for girls that that is not implicit. Somebody is explicitly making a decision to to not give women interesting things to do not give girls interesting things to do. I beg to do this. That is not implicit and I but I was thinking of the fact that my daughter actually complained in preschool because she said the girls bathroom has butterflies and the boys bathroom has space and I like space better than butterflies and it was like the boys bathroom was all decorated in my rockets and planets and the girls went butterflies and that's what I think that's you're right is that implicit or explicit but it's people not thinking. It's criminal. Are they not thinking? Are they not thinking? Are they not thinking? And that I think that's that is a possibility that they're not thinking or maybe they're they're they're thinking and they're not they're not thinking broadly about what girls can be and what girls can do or what boys can be and what they they can do because it's putting both of them in in these boxes. So Lisa I just have and one thing that you know about that is that my work suggests that there should be the free flow of ideas and one thing that inhibits the free flow of ideas is racism and sexism and if you can't have on your patent team the people who help to augment invention who have different lived experiences and different ideas then you can't have the best ideas and you can't be the most productive in these outcomes so we should mitigate these these barriers in any way we can and I think that making sure that there are are spaceships on the walls of the girls bathrooms and women in space women astronauts or women doing experiments I think that's what we have to do to make sure that we overcome the racism and sexism that can inhibit and other barriers not just racism and sexism other barriers to participating in a diverse innovation economy. So Lisa I am sorry that I was having internet problems it seems like I've got like the world's fastest internet speed until it's time for me to actually do a live event and then the internet got down on me and steal my internet but I switched to my cell phone so we'll see if you know the cellular network saves the day but I appreciate you just going forward with that. Let's turn to some audience questions and you know one question we got was how can principals of economics instructors incorporate more diversity into their classroom as they help students see economics in their daily lives so yes you can probably imagine that's a question that's near and dear to my heart but I'd love to hear your thoughts on that. I think the first way to do it is to look at the textbooks yours the Krugman and Wells textbooks that have diverse examples in them the last time I talked to Paul Krugman and Robin Wells about their textbooks they were negotiating with the publisher to use gender neutral pronouns so I think that there are some that are much more progressive and inclusive than others that's one thing the other thing is with respect to topics we have a core econ for example that looks at examples broadly related to economics and I've recorded one section on innovation as well as on violence and the rule of law so I think that there are creative ways that we're thinking about economists are thinking about and creating materials for to be able to see themselves as economists or see themselves as inventors as it were. So I will at least I just have to tell you that Paul and Robin's textbook publisher is my textbook publisher we were the very first textbook they ever published using gender neutral pronouns third person pronouns and it was funny because we did it very purposefully and then it went to the copy editor and she corrected it all and turned all our singular use days into he or she and I undergrad who was an RA for me and he wrote me a long impassioned email about how much it was that I rejects the copy editors. Sure. That's great. Oh that's fantastic that's fantastic and you know I think it's I mean I think that's critical but what they've been doing for the 20 or so years that I've been using their textbooks I don't think it's been 20 years it's probably been about 15 years or a decade is that they've had many more people of color and many more people from other places of other national origins than most textbooks so that's why I have relied heavily on their textbooks for my classes just because of their their race and ethnicity representation and gender representation. Yeah well I the let's let's turn to to some questions that have come in around patterns so you've talked a lot about your patent research patents often have a lag time from the data filing until they are issued often years do the current trends suggest that the gap observed is going to narrow as women hold increasingly numbers of positions and some scientific disciplines and health professions are you at all optimistic that we're starting to see a turn of the tide. The UST PTO has been the US Patent Office Patent and Trademark Office has been following this more closely than I have and what they see as an increase over a short period of time in the 2000s of women participating in invention and innovation so I'm visiting at the US PTO as an Edison scholar right now and I'm hoping to extend their research to race and ethnicity not just to women and I think that I really don't think that we're going to have fewer women patenting as they move into positions of responsibility they're already moving into positions of responsibility remember there's there's there's a bottleneck so think about let me give you an example that one of the inventors gave me when they are an inventor in a tech firm in Silicon Valley when they are meeting at 7 p.m. on a project you know the women on the project have gone home and you know while they're having their fruit loops and playing soccer you know and then showing up for a project meeting that really disadvantages women who have familial responsibilities or they have other responsibilities at home or you know they simply aren't interested in working 24 hours a day and that disadvantages the the women who are on their team so I think we can think about ways to to be more inclusive with respect to women on site child care for example I think that would address some of these some of these issues or subsidies if we're talking about Silicon Valley subsidies to make sure that women can live closer to to work especially if they have to live farther away but anyway I think there are many interventions that we could see to augment women's participation and that of African-Americans without worrying about them going into higher positions the the fear is the opposite I think if you if you look on Twitter today to see how you know the problems associated with being a woman or being being a racial or ethnic minority is and many of these tech firms that I don't think that there is a worry about too many of them going into positions I think if we kept the status quo I think we should worry about having a declining uh rate of arrival of ideas so um things like you know if you look at the Obama administration it was historically diverse and I think the Biden administration has just you know uh taken that even further how important do you think these uh you know these efforts and these movements to create diversity at higher levels of government like that how important are they for an acting change I think they're fundamental I think that I'll refer to Janet Yellen with respect to her reflections on the financial crisis the lack of lived experience among many of those who lived experience in the economy a different lived experience in the economy likely led to group think among those who were supposed to be monitoring the data monitoring the analysis and I really think that we uh women come to the economy in a different way African-Americans come to the economy in a different way and African-Americans are often the canary and the coal mine they certainly were in the 2008 recession whereby African-Americans were receiving these exotic mortgages when they actually deserved prime mortgages and this was happening early on in California and Georgia and other states where they had a mortgage crisis early on so if someone had been paying attention to African-American uh mortgages and lending practices or ones that were pitched to African-Americans I think we would have caught this uh much earlier so I think that having people in positions of responsibility now Janet started taking advantage of the these data when she was president of san francisco fund so you know in that sense leadership matters uh in terms of the kind of data you collect the kind of analyses you do and the kind of policy decisions you make so I think this is this is good for the economy and I think it's good for the country so I actually pivot from that to a sort of nitty gritty economics question for you which is you know you you mentioned in the 2008 recession African-Americans where the canary and the coal mine they were getting these exotic mortgages there's a lot of credit being extended in many cases I think we'd say too much credit in a way that led to the subprime mortgage crisis we actually see the opposite happening right now lenders are really tightening credit and they're tightening it based on things like FICO scores and as a result the people are getting squeezed out of being able to borrow our African-Americans so what I just wanted to think about like how do we balance like access to credit it's actually really important for uh thinking about improving living standards so um you know have we gone too far and then what do we do about the fact that when you know lending standards tighten it that disproportionately hurts African-Americans I think there are a couple of answers to that question the first answer is remember what I was saying about the mortgages often African-Americans were were offered some prime mortgages when they actually should have had prime mortgages so we need to stop the racism that incurs in uh in London and so that's so that's one answer to the problem so that's in mortgage lending that's just related to mortgage lending with lending more broadly what we saw in the first rollout of the CARES Act with the PPP was that African-American businesses and Hispanic businesses uh couldn't get access to PPP loans and when they got access they got a small share of what they were actually asking for unlike their white counterparts well why is that because the program relied just like the SBA does in general on large financial institutions and historically there has been a problem associated with uh lending borrowing and lending with these large lenders uh with respect to African-Americans now of course there are CDFIs and minority deposit institutions who try to address these issues but if you just stop the racist practices you won't have to have all of these different institutions and different forms of of institutions to be able to address the problem address discrimination in lending and I think that that is the fundamental issue so I don't think that we've gone too far I don't think we've gone far enough why aren't we why are we still talking about discrimination in lending that shouldn't that shouldn't still be happening and we have all of these audit studies you are as aware aware of them as I am Betsy I I relied upon a car service a car buying service because what I knew from these audit studies was that black women did the worst when it came to negotiating a car and I don't I don't have time for all that you know I just don't don't have time for the discrimination just would like a fair price for the for the vehicle and I still had to wind up negotiating something and until I got what I wanted I sat sat there for like six hours definite waste of my time but I wasn't leaving until I got another plan for my car that was fair that I thought was fair um I mean that you know as you said without a doubt like the research is clear that there's discrimination in lending uh there's discrimination uh you know across the board but the um I what I was just trying to say is that um you know right now what we're seeing is that peeling back of lending that credit tightening and that I think exacerbates both what you might think of as just you know as uh the statistical discrimination so African Americans have uh uh on average uh slightly worse psycho scores then uh and as a result it just on paper that would contribute to them getting less access to credit um it's also the case that there's this is relationships so lend when you rely on the big banks they tend to go with the people they have relationships with and not you get you know pure discreet you get that discrimination as well not just on paper but now you're dealing with they know the person and they're putting the thumb on the scale for their mate um so right but I don't you know for for the the company that they have like many black economists I reject the notion of statistical discrimination just because what it says is that on average X is the case well why is it the case why is it the case I mean what we know about psycho scores is that often they they inject um residential segregation into the calculation so you just pay more um because you're living in a a certain area and the same is true for you know auto auto insurance I mean these credit scores uh affect a whole range of credit products and I think that we have to be more aggressive in making sure that these are not uh or that discrimination is taken out at every uh at every juncture uh so so it can be you know if it happens with regularity we need to address where that regularity is coming from and like I say that a lot of it has to do with residential segregation that is um getting worse and not better um we have to address things like occupational segregation so occupational segregation may lead to the kinds of statistical discrimination that you're talking about and if we didn't have um discrimination in occupation we wouldn't probably have as many african-americans whose psycho scores are very low uh if we if they weren't stuck in some of these uh some of these jobs in in this pandemic that has made a big difference absolutely and that's what I was trying to get to talk a little bit about is like how do we deal with these entrenched things like differences in psycho scores because um it seems like you you do have to dig into like that you have to keep digging no you do no that's that's you know one person in the you have to keep digging I mean one of the things that we um looked at when I was that uh when I was at CEA when I was at the White House was having having firms incorporate things like utility bills into uh psycho scores and I think that this and other credit records right and I think that this has been done in some cases and I think that helps everybody because this is something that everyone typically pays but through no fault of their own uh many americans uh had much lower psycho scores had much lower credit scores than you would uh you would anticipate so anyway I think we we have to keep digging because there's a there's a lot there there's a lot that is contained in our race variable and economics so we have to keep digging to address every facet of uh discrimination so um somebody in the audience said you know there there's been legislation passed to try to combat racism and sexism in the workplace um but it seems like these are largely social issues without clear government solutions so I'm going to reject that premise I bet you are too but how do we think about what sounds to some people as social issues how why why how do we explain why there's a policy uh why there needs to be a policy solution well I would say that there needs to be a policy solution because all americans suffer from the effects of racism as I wrote in my New York Times column in November racism just doesn't hurt the intended target but the economy is uh trillions of dollars smaller than it should be because of racism so we could do a lot whether it's in lending or it's in an employment we can do a lot more to have a more inclusive economy and a larger economy so that's why I would reject that these aren't just uh social issues and go ahead go ahead somebody asked specifically about um SB 979 in California I don't know if you're aware of this policy I wouldn't have known it by the name but it requires publicly held court it requires publicly held corporations in California to achieve diversity on their board of directors by January 2023 that's right I've written about this yes so and so I think I think it's a good thing I think if if Europe that firms in Europe have had this requirement for some time and what we see um what we typically see is higher returns for those firms and we also see more inclusion of of women in those experiments the only uh I applaud the adoption of this by the state of California and the increase in the number of women who should be on the board I you know you want to avoid group fake bringing in different lived experiences but I would say it needs to be extended to racial and ethnic minorities not just to women but I think it's a good thing I think it's a good um the uh you know I I uh it's you know looking at all the research it feels like it's very hard um you know you know we need to be thinking about both the short run and the long run implications of that kind of diversity uh you know in terms of managing companies and I I think for sure we're at a point where we're realizing that in order to continue to be innovative and to adapt if you don't have diversity of thought you're just not going to be able to do it and I think we are moving to a new to an era where you know we we without out getting that without getting that kind of diversity of thought we're going to struggle to continue to to innovate and grow which is where we started this conversation um let's let me ask one last question I can just say if I can just say it's it's not just diversity of thought it's diversity of lived experience so certainly you can get uh diversity of thought from as a derivative of uh lived experience but I think it's also uh diversity of of lived experience I think that's a really really important point and I I you know I honestly I think I think that diversity of thought so much comes out of diversity of lived experience that I I think about it and the diversity of thought they're absolutely right that it is about your lived experience and you know I I served in government as a mom with young kids and I know that I saw the world differently I saw policies differently than I than I had seen it before I had those young kids and now that my kids are getting older I'm also seeing the world slightly differently right I'm now thinking about things uh differently and I you really do see you know and this come back to like part of our earlier conversation you know why is it that I think we see so much uh of one way of looking at the world in so many economics textbooks it's because there's not much diversity in the authors and they not so you don't have a lot of diversity of lived experience and the people developing the material so I I love that and I'm gonna make sure that I I'm gonna use your language I hope you're okay with that going forward I'm gonna talk about it. That's quite all right. So let me end by asking you um you know in a lot of ways the CARES Act I thought was incredibly successful at helping the economy but it didn't miss a lot of people you mentioned the PPP and the discrimination and the loans um how does the new stimulus bill address the kinds of disparities that you've seen so far and how policymakers have responded to our current crisis? Well I think that one big element one big change is uh that for the new PPP they're allowing they allowed uh those who are in disadvantaged circumstances to get to the window first and I I see those not only as being African-American and um Latino business owners given uh sort of uh first dibs at the PPP having been disadvantaged before but also the smallest firms you know a lot of firms for the SBA program you have to have two years of of financial records and if you don't have two years of financial records you're just shut out but CDFIs and other institutions can help address that. Now why is that important? A lot of our innovation comes from the smallest firms. They are new firms because they have new ideas and what I worry about is long-term growth if they don't have access then we can't take advantage of the new ideas they bring to the economy. So I I hope that that is one of the corrections and certainly a big correction I hope this coming in the new stimulus bill is aid to state and local governments because as we know you and I both know from the previous recession this is where a lot of the unemployment comes from and we've got you know 90 to a million people defined jobs for once this thing is over or at the current state of course that might change but still we've got to we we've got to make sure that the economy is up and running and every way it can be and is greased to be able to absorb the talent that we have in the economy. Well with that let me thank you so much for taking the time to talk with me today. It's always a real pleasure to hear from you to learn from you and I really enjoyed our conversation today. I enjoyed it too the pleasure is all mine Betsy take care