 Welcome to economics and beyond. I'm Rob Johnson, president of the Institute for New Economic Thinking. I'm here today with William Spriggs, a professor of economics at Howard University and the chief economist of the AFL-CIO. Bill, thanks for joining me today. Thanks for having me. So here we are near the end of June 2020. World turned upside down. All kinds of things being unmasked, all kinds of comfortable assumptions devastated. What are you seeing as an economist, as a citizen, and as a black man that gives you cause for concern? What do you see that people are doing well? What do you see people doing poorly? And what would you like to see that you haven't seen? In addressing these challenges and putting our society on a more healthy trajectory? Well, the first challenge I see is that we're experiencing two recessions in one and one is caused by the disruptive nature of a virus we don't have a treatment for, don't have a cure for, don't have a vaccine for and that is preventing people from taking advantage of demand and a large set of industries, but most specifically in the United States restaurants because as a single industry, the restaurant industry employs 12.6 million people, or it did before all this happened, and so that workforce was essentially equivalent to the entire manufacturing workforce of the United States. That's how big the industry is. Then with the disruption to restaurants, to movie theaters, to large social gatherings, to travel, more broadly, hotels, the uncertainty has creeped into a collapse and aggregate demand. And so now we have a full-blown regular old recession from the normal cyclical factors we think about, a collapse in autos and most durable goods, and then a collapse in new home construction or new home buying, and and so those are the typical sectors that have so many linkages and that they bring down the economy and going out of this, we have because this is global, the same sorts of forces that make it difficult to rebound, we have virtually no global trade, so this isn't something that we will have an easy way out of. They're going to be global imbalances. There are global imbalances in the auto sector already because of this, and the reaction in the emerging economies to all of this uncertainty has been a flood of capital fleeing their countries, coming to the dollar. So you got a strong dollar, weak global markets, trade virtually collapsed. An important element of U.S. trade on the positive side for the United States is tourism, which has collapsed globally, and huge uncertainty for foreign students, which is another huge positive for the United States, the number of foreign students we get at our universities. So you got everything that makes for a regular recession, plus this uncertainty. I call it recession squared because both of them interact with each other and they have given us depression level unemployment with the difficulty that the normal course of action to just make aggregate demand increase isn't going to work very well because of this uncertainty around the virus. So even in April, when Americans got those huge checks signed by the president, what I call the you know, give me a vote because I paid you money. Because that's what it was. It wasn't very well-targeted, and to me it wasn't thought out. Well, because it didn't really go where it really needed to go, and the result was most of it went to the bank. Most people saved it. They understood it wasn't a change to their permanent income. Instead, the big benefit so far has been from the $600 supplement to the unemployment check, which because it's maintaining people's weekly earnings, they are treating as part of their permanent income, and at least for low-income families, we're seeing that expenditures bounce right back up once the $600 kicked in. So high-income families have continued to consume at a lower rate, while the low-income families have sort of gone back to being able to buy groceries, and this has helped stabilize the economy. So those sectors that have been most affected have had a little breathing room to come back. But the problem is the distortion. So if you just increase aggregate demand, you risk permanent scarring that may make the long-term recovery worse. If everyone spins more right now, the way things are structured, you're going to make Amazon and Walmart the biggest corporations in the universe. You're going to wipe out the retailers who have been reeling for some time, and they won't be able to come back, and because of the data advantage that Amazon, Walmart, and others have, it's virtually impossible to understand how they would ever get competition, because someone would have to amass that amount of data, and it's the data that gives the functioning wealth and market advantage to an Amazon. So even if you gave me the money and said, okay, Sears, JCPenney, Macy's are all in trouble, I'm going to give you money, you buy them up, and that's three big companies you go after them. I'd say that's a bad bet, because if you're not going to give me the data, I don't see how I could be competitive. So there are some serious issues around how we can recover, and you have to think about the way in which people have done workarounds to the downturn. So a number of people are out exercising. You cannot buy a bicycle right now. If you go to a bicycle store, they will tell you we don't have any, because they're almost all made in China, and so they can't get you one. But people who do finally figure out how to get one, if they make that investment, if they do one of these new online exercise things like peloton serves or some of the others have come up with, you know, it's just unlikely that households are going to say after I spend all this money on this bike or this expensive way of doing exercise that I'm going to come back to the gym. They're not going to do it very likely. Then you have the issue of company workarounds. People use Zoom meetings now, WebEx, BlueJeans, they have their different platforms that they're using, Google Meets, Microsoft has it, but in the end after companies make the technological investment to make those platforms work efficiently, better, seamlessly, you got to wonder will they ever approve travel in the same way, or will they say we're going to fly you for a four-hour meeting and we're going to spend $2,000? I don't think so. They're going to say we spent $3,000 to get you a better camera and video and you're going to stay put. So it is really a difficult position to be in because of this disruption and trying to prevent permanent scarring that will make the economy emerge from this in a position to be as competitive. And my fear is that coming out of this, that is going to be so difficult to achieve. And I don't know what kind of tools we have because it means implicitly we encouraged the distortion because of safety reasons. We said people could not gather so they couldn't go to the restaurants, they couldn't travel, they couldn't go to the gyms. So there's a deep problem in that we normally don't like to think about picking winners and losers but in some ways we did. And so coming out of this to be reticent, to have policies that can try and remove the scarring is going to be a problem because it's not in the training of economists to do that. Even when they know good and well, the history of the policies they put in place, even though they know everything that we did to create this imbalance, there's that unwillingness to say you got to have an industrial policy response in this environment. And so I think it's going to be a huge challenge. And Bill, you're based in Washington. I see a lot of very intense critiques of the composition of these bailouts. And you were playing in how I say in that water in your first comment, but I remember Jesse Isinger at ProPublica did a webinar with Inet recently about a paper where he said the bailout is working well for the rich was the title of the paper. And he talked about how many small businesses were going out of business while many highly leveraged private equity firms stock prices were up 50 and 80%. And I'm just like I said, because you live in Washington, there are a whole lot of people in America that think, if you will, as Donald Trump once said, the system is rigged. And the people who get the money are the people who are politically powerful donors, not the people who need the money to make the economy function. And I'm just curious how you see all of that unfolding. Well, in the United States, we chose a very weird path. And this is because we have made a fetish of the market. And even when we disrupt the market, we expect the market to correct itself despite our disruption. So in the US, we just said shut it down. Now we're used to doing that. And please do not interpret this as I think we should open everything up and let's just all get the virus and die. That would be equally stupid. But in the past when we said shut things down because we knew a hurricane was coming. And a lot of local politicians are used to there's a flood or there's a hurricane. And so you do shut things down so people will be safe. It's because the hurricane will be over in, you know, two days or three days. We saw the horror of Katrina. And so we should have been used to the idea that maybe things could be worse than a two or three day event. But I think that was our mentality. But more to your point, I was astounded when we were going through and shutting down restaurants and no one raised their hand and said, I got you. I understand you're going to shut it down. But what's the plan? Because if someone had said we are going to stop all activity on Wall Street, all activity on Wall Street must come to an end because some hackers in Russia have put a virus, a set of viruses. We don't know where all the viruses are. They've hidden it very well. And we are afraid that they're going to take all the money in the United States, scatter it around the world. We'll never be able to put our bank accounts back together. And so you have to shut it down. You know good and well that if someone had said that someone would raise their hand and said, fine, good, we get it, that would be really important. But what's your plan? Because we're not going to stop Wall Street for weeks. And in Europe, on the other hand, because they are used to tripartite negotiations and they are used to bring workers and management together so we can figure out how we're going to do this, they all opt it for okay, we need to shut down workers. What do we have to do management? What do we have to do? And they hit on, we're going to pump money into the companies, we're going to pay the workers. The workers in some countries had to give up some of their vacation days. But essentially, they came together, not making a fetish of the market, they came together and said, how do we hibernate? I am convinced Europe is going to come out of this far better than the United States because they don't have this fetish. And the result is, I mean Germany right now is thinking that they're going to come out of this and their unemployment rate may be 6% or 7% as they open up. Because there's still going to be some dislocations and there are going to be some companies that are going to have a hard time making it without people being able to do everything they used to be able to do. We would love to have a 7% unemployment rate. I mean real projections for the United States is we're going to be in double digits for the rest of this year. So this failure to plan to me is frightening, but it highlights this fetish. And so the result is, rather than the money being targeted and going to the small businesses that were directly affected so that people could have a sense, yes, that restaurant on the corner or that stationary store that no one is visiting because it was next to the restaurant, they were going to get bailed out. Instead of that, we just threw money and hope that the market would allocate it correctly, including the Paycheck Protection Program, which we just threw at all small businesses. We didn't target the small businesses that actually got the shutdown orders. And so yes, there's going to be this sense that if you're just going to throw literally almost a trillion dollars and then let the market figure it out, that would only work if the market was designed to be efficient in that way and it's not. And those people who don't have access continue to not have access and not understanding the institutional barriers to credit access that so many people have and so many small businesses have and the near monopoly that some people do have over access to this money. And so when you just put it out there thinking that it's going to make its way through the market differently than it makes its way through the market now, I can see where people can see the huge inequities and can believe that, yeah, well, you just made the rich happy because those powerful corporations that have access to liquidity, you just threw them a lifeboat. And the rest of us, you gave us a mint coat or something and you said, the water's cold, we hope you make it. What? I guess, how would I say this? There's a lot about trust or faith in the market and there's a lot about ideas that the market produces what I'll call economic justice that I find quite troubling. The use of marginal productivity theory creates a notion that economic justice is when you get paid your marginal product. If you get paid more than that, you're subsidized. If you get paid less than that, you're exploited. But if you look at the marginal product notion as embedded as legitimacy and at the same time, what you see is that people don't make enough money to have an adequate livelihood for themselves, their family, their future, their retirement, their health, then I think you have to go back to that marginal product and recognize that it's not solely about the individual, that the context of health and education and experience and relationships that help you become professionally vital is actually the product of a system design. It's a collective system that creates or doesn't create what we call the productivity and therefore we are all responsible jointly for that systemic failure, not just the individual being an under performer. And I've chafed for years at this notion that the individual deserves that faith. And that marginal productivity theory is a justification. Yeah, the deep problem is the one you mentioned, which is it's a belief in a system that as justice to it, there's an ethics to it. I accuse economists of actually practicing a religion because beyond just the justice, there's a kind of virtue to it. And there's a belief that the market delivers this as a kind of impartial judge picking out the virtuous from the not virtuous and therefore in the American context, there's the element of punishment. So, those who don't do well have in a way sinned against the system and therefore we get to punish them because the odd thing in this debate around the $600 that was added to the weekly unemployment check, Congress was confronted with the difficulty that our state unemployment systems are so antiquated, you can't just go in and say, change the replacement rate, put in a different formula. They couldn't do that. And the simplest thing was to say, look, in most states, the average maximum benefit is close to $400. And the average earnings of an American worker are close to $1,000 a week. So we're just going to add $600 to the $400 and that will mean the average maximum benefit will be about what the average American makes. And then you have these people complaining because they're saying, but if you give $600 a week to many of the workers in the restaurant industry, that's more than they make in a week. So they won't want to work. So we need to punish them so they will work. If we don't pull out the whip and beat them, they won't work. And so you're going, huh? If the $600 is the problem, then it's not the $600. It's what you pay them. That's what the problem is. It should not be the case. Let me give you $600 makes you better off than working. It means that you haven't figured out how to make work. But more to the point, when economists apply this to try and explain racial inequality, it's a buy-in to a belief that the market would not discriminate and therefore that it must be the case there's something deficient about Black workers because if they're being paid less, their marginal product must be less. And that part of the distortion in economics is almost inevitable given that the first modern economists, the ones who set up the American Economic Association at the end of the 19th, beginning of the 20th century, were the brains behind eugenics in the United States. And they believed that you could scientifically identify the races. They believed that these were scientific categories, even though they were living in the moment in which America was actively defining race as a legal term. So it's the end of the 19th, beginning of the 20th century, when you see Jim Crow come into being and states had to legally define what they meant by race. The Plessy v. Ferguson case that everybody kind of knows involving segregation on the streetcars in New Orleans, they understand the basic outcome of the case was the court said you can have separate but equal. What they don't understand is the fine point or the case. The plaintiff argued in Mississippi because that person only had one black great-grandparent that they were white and in New Orleans any drop of black blood meant you were black. And so what the original argument was was I'm white in Mississippi so therefore since you have a segregated trolley car I get to sit with white people and the court said no you don't get to define your race. Louisiana is where you are riding the streetcar therefore Louisiana gets to define race and according to their definition you're black and therefore you must sit in the colored car the colored section of the street car. So you know when you understand the detail of what was going on at the time and clearly understanding this is a legal definition a state gets to say there are a group of people that we have marked that we can deny benefits or access or anything else we want to we get to do that that's legal. And so when you understand the fine points I mean you know it goes I mean people are familiar with the case of Chinese immigrants in Mississippi really interesting history about them being there but but who brought suits against the state of Mississippi because Mississippi tried to put the Chinese students in the segregated black schools and the cases were about but were Chinese were not black so you can't put us in the black schools and then you know Mississippi has this whole argument about what was the intent was the intent to have white only schools or was the intent to have schools that you would only put black people in the United States Army same thing if you look at World War II blacks were segregated the other units would include Native Americans Hispanics Asian Americans blacks were segregated so so this is a legal definition it means do you belong to a group that I can designate as getting something different than everyone else and as an economist you understand this is collusion this is one group saying can I define the group against which we can collude one form of collusion is I do laws because that makes it easier it's clear it's codified and I have the power of the state behind me in enforcing it but even in that you know we had the schizophrenia because when the modern city began to develop the streetcar made suburbs possible they allowed cities to spread in different ways and that gave us the first modern housing tracks linked together with the streetcar lines meant you could suddenly have new open space to build homes and land developers that were used to now came into being throughout the south many of them put race covenants on the land in Norfolk Virginia as a weird little example because blacks owned the farmland around the city of Norfolk and they were truck farmers for the vegetables and blacks were the hucksters who were bringing in those vegetables um some land developers bought land from these black farmers the streetcar line comes out to that land and even though black people had owned the land the developers put race covenants to make sure that black people would never own the land again because part of what they were understanding at that time period was that if you let the market do it blacks could hopscotch all around the place by land and then you couldn't get the segregation you wanted these developers wanted to make sure the land was segregated so they put it into the covenants on the land now other landowners saw what an advantage that was if you could assure segregated housing and they went to the city and said we want residential zoning that segregates the city because why why should you only give these developers the ability to create segregated tracks well the supreme court in the weirdest decisions ever looked at some of the peculiar cases that were involved because in the case of richmond virginia or ashland virginia which is right outside of richmond they they they had this weird case where they had declared a block as segregated and therefore a black person couldn't move into the block if the block was majority white but what had happened was a black person had owned the land and had rented their house to a white person and as the neighborhood became white they actually profited from that but then they ran into some difficulties and they wanted to come back to their own house and the city said you can't occupy your own house because this is now segregated and black people can't live here and the court decided well yeah you know what you can't really pass the covenant like you can't pass a a a zoning ordinance like that because you really can't limit the rights of the property owner in that way so so the courts held a city cannot do that but if a land owner does it they can do it so you could have racial covenants but you couldn't have city ordinances it took until the 1940s and a case involving st louis that thurgood marshall was able to finally argue if the courts and the state are brought to bear to enforce this private action of segregating the neighborhood that owner is relying on state action and if the state itself couldn't do it then how is it that the individual owner could do it because the state should not be able to enforce an action that the state itself could not do so he won that case but that was like 1945 1946 so it took all that long time to finally establish that this ability to categorize people could be used differently than on housing so so you you you look at this you look at the segregation of occupations for many years unions had segregated unions clear intent to collude to change the market outcome to give better benefits to whites that's the whole point of the collusion and and the economics profession looks at that entire history looks at all those mechanisms and then sees the persistence of occupational segregation of residential segregation of disparities and unemployment and marvels at it and says oh well it must be differences in productivity and you go wait time out don't you know this history don't you know that the groups were defined don't you know the history of what those definitions were trying to achieve and you come out with i'm looking at differences in marginal productivity honestly uh the the the weird way in which economists then twist so that they can continue to conform to the original view that economists had that race was some scientific design thing that it was naturally occurring that it was exogenous to the system not endogenous to the system and and so economists have worked their way into this whole it makes it impossible for economists to explain some things because of that and so at the end of the day because lower value must mean lower marginal productivity you have to come up with some way in which black people are inferior the polite way of doing that is to say well the way that systemic racism works is blacks are restricted in housing which then restricts their schooling opportunities which then makes them less productive and therefore the employers are being objective and i always scratch my hand and said so so you're willing to accept that there are actors who act with animus to create segregated housing and you're willing to accept that there are people act with animus to design school and how we function schools so that those schools will be inferior so we have these actors who act with animus but then when somebody goes to get a job another set of people come in and these are objective honest people who don't look at race where did they come from where did these honest objective people come from because they didn't say anything about the housing they didn't say anything about the schooling but suddenly they're objective like how does that happen um and and so and so you know you kind of left with and my favorite one is on everybody knows uh because they've heard it enough times that black unemployment rate is twice the white unemployment rate i mean it's really 2.1 but we won't quibble about that 2 to 1 is a nice ratio since 1972 if you draw a graph on the monthly monthly unemployment difference between black men and white men you get 2 to 1 it there's a little tiny variation uh when you point that out to a lot of economists they they they want to fall back on well you know it's it's it's differences in skills and ability and you go but okay in 1972 the majority of black workers attended segregated schools many of them lived in counties that would not have had high schools for black people so you had a lot of people who didn't finish high school people only went to segregated schools and only a small number went to college fast forward to today or even go over the whole time period and you see the change in the makeup of the black workforce much higher share than went to integrated schools much higher share that um went to high school and finished high school much higher share that go to college and that unemployment rate stays 2 to 1 every month then you get the well mystically magically every month as the relative position of blacks in terms of skills and uh abilities closes relative to whites the job requirements are changing at that exact same rate so for the last 50 years the skill attainment of blacks has only been sufficient to match this unknown technological change which doesn't show up anywhere else except to equilibrate this 2 to 1 ratio and you go really that's fantastic i want to know where this variable is because you need to put it out there because somehow or another it's you know quite bizarre that it only affects one constant in the economic universe but no other thing shows that same metric of change you know so it's it's it's it's astounding what economists do to make all that work and the problem is it reduces economists to deal only with the margins they only deal with yes but if black people get more education don't they do better yes they do better than a black person with less education this is absolutely true but if someone has designed a system that we're going to allocate jobs according to race then then from the perspective of looking at that system understanding that 2 to 1 unemployment ratio none of that is going to disrupt that's the way that that system works so you can give blacks more education but that system is designed to get you the 2 to 1 unemployment rate the astounding other number which blows my mind all the time is if you look at the unemployment rate for white high school dropouts you're looking at what the black unemployment rate is the unemployment rate for a white high school dropouts almost every month is the black unemployment rate so so so the way that the the system works it in terms of how do we allocate jobs and who gets a job the system works out so that the least qualified white person ends up being what the unemployment rate is for black people after we've cleared the market for white people then we work about you know clearing it for blacks and they'll end up at the same spot that's you know a remarkable constant and um what what happens is when the economy does really well then the unemployment rate for better educated blacks will approximate the unemployment rate for only slightly less educated whites so when we run the economy really hot a black person with an associate associate's degree can get the unemployment rate for a white high school graduate if you run it super hot then black associate degree holders can get an unemployment rate a little lower than a white high school graduate and and so you're not closing the racial gap when you do these marginal things um and you're missing the bigger picture but this is only one instance in which economists do that this is equally true when it comes to gender and the way we think about how do we get to gender equality but it's also equally true when institutions matter and the way that workers get their wage in the first place when union density was declining beginning you know say around the end of the 1970s beginning of the 1980s economists thought nothing of it doesn't mean anything and now uh that union density is a very small number economists seem perplexed why do we have productivity games without wage gains and you look back and you go well when we used to have unions and we have productivity gains you pretty much had wage gains so if you thought that it's just you get more productive you get the wages without the unions that doesn't seem to happen oh but that's just correlation that's not causation we can't do that you know you and so when we have systemic changes we've stripped ourselves of the tools to look at system change and the result is overwhelmingly the neoliberal answer to everything becomes job training well the workers you know have more training we'd have more productivity and that's how we get wages up and you go okay but we've had the productivity and we didn't get the wages yes but this is how you get it it becomes a broken record you you can't knock them off of that answer and when you point out well you know we gave blacks more training relative to whites they made huge improvements and you know even what blacks major in when black people go to get associate's degrees disproportionately they get them in computer science okay but the relative position of black people still doesn't change unemployment earnings gaps that doesn't change it had a fatal flaw when people looked at housing black house home ownership much lower than white home ownership and then people wanted to say well you know maybe it's savings behavior maybe it's because they don't want to buy homes we have to encourage them to buy homes nobody said maybe the banks are discriminating maybe we should figure out how to make sure that the banks don't discriminate and lo and behold the banks did discriminate they understood that there was a pent up demand and they understood we can get away with discriminating and we can push instruments that will get us huge profits or so they thought very honorous instruments that will get us even huge profits then it came back to bite them because it caused the biggest collapse in financial history so there are real consequences to the way in which economists blithely ignore these institutions and these disruptions and they have real consequences on the macroeconomy and or not and the types of policies that that that we have in place so you're looking at a what I will call a stubborn false consciousness and a profession that's almost kind of defining and defending a framework because they're looking how do I say they're looking through their maintained assumptions at the outcomes they want to espouse which is not really science it's more like psychological projection but we're now in a place not only in the united states but all around the world in the aftermath of the death of george floyd and I can't breathe where the resonance the intensity of the notion which in america was called black lives matter is uh how do I say it's it's like what I'll call metaphorically storming the gate how is society and how is the economics profession going to respond to the depth and breadth of outrage around the world and this is where in one word hope there would be a teachable moment there's so few sports that are being broadcast i'm assuming that a much higher share of americans than before are watching premier league soccer from the uk and you see on the back of the jerseys of the players in the uk black lives matter and you saw them take knees when they reopened the season they took a knee a la colin copernick not the police officer a la colin copernick they took the knee and they took it as a symbol of the knee that killed mr floyd but it resonated deeply in the uk and you know you look at the premier league and you see how this parallels the u.s when you look at the athletes they rely heavily on the talents of african descendant athletes in the uk to play this very high level of what we americans call soccer but their protest while it was in solidarity with the u.s was really about the uk they were protesting in the uk they use a different acronym than we do over here so they use black and minority ethnic ethnics or bane that's their terminology but as in the u.s they have had incidents of police misconduct they have discrimination against people who are bane gladeshi because they're muslim and discrimination against blacks and they it's clear from their colonial history have in their minds decided there were countries that were populated by people who didn't look like they were british that britain was superior to as a people and therefore could restrict and limit the rights of those people as a colonial power now that well immediately after world war two they desperately needed those people the world was devastating on the population of the uk and they desperately needed workers to come in and rebuild the uk and mine the ports and run the trains and all of that and they are left with this population which is the subject of those same colonial lines those same demarcations of who can we discriminate against but they aren't they aren't the same lines it's not exactly the same context as the united states they eerily have similar outcomes though when you look at the coronavirus outbreak in the uk and in the u.s you see the death rates are twice as high proportionately for blacks in the u.s as they are in the uk but you look at who does what in the uk and who does what in the u.s and you see these similarities the people who drive the trains in the tube in london look like the people who drive the trains in new york they look the same and so the same frontline workers if you go to the health care system in the uk the same racial makeup of the frontline workers who are the doctors who are the nurses disproportionately people of color as is the case here in the u.s blacks are disproportionately in the health care sector many of these frontline public facing occupations repeat themselves and even though they define race differently than in the u.s it's still the same concept of colluding against the group that we formerly had designated we could deny things to and you get the same outcome and so the disappointing thing is that the the the american domination of the economics profession is that americans think that the the the concept of race has the same meaning everywhere or that the color line is drawn at the same point everywhere but once you understand that no the color line is drawn at different places and sometimes not even on color some countries it's on language some countries it's on religion but there is a dominant group that gets to write the rules against the subordinate group and they have some line that they have figured out and it gets repeated this would be a moment when economists would go huh so our models really are missing the point because we just think that this group this naturally occurring group is inferior but it turns out no not really and and you can get the two-to-one unemployment rate in the uk it's not quite two-to-one for the black unemployment rate but it's pretty close to two-to-one and you know even though all the any even though many of the other sort of things aren't the same even though they didn't have a hundred years of well i point out to to people who are british you understand that from 1619 to 1776 slavery was in the uk because we we were held as slaves under the british american slavery from 1776 to 1863 was much shorter than the british slavery from 1619 to 1776 but in in any event um but you know they they like to pretend because they did the emancipation of slavery in the in the united kingdoms extended realm the british empire in the 1830s were all ahead of the united states um they they they like to pretend that somehow or nothing they they don't have the slave um legacy that the united states does but but but you know even with all of that um these these institutions are different but society's still an accurate model would be groups can collude and across most countries we see evidence of collusion of the sort that we see in the u.s maybe that's what we should be modeling and maybe if we had models that understood that uh as economists we know how to attack collusion we know that there are policies that can make it more difficult to collude there are conditions under which the collusion doesn't work um even in the u.s this this is what took place because in the u.s we had to confront that white anglo-saxon protestants were going to be too much of a minority somewhere you know around the 1920s and and unless you made italian's white unless you made irish people white then the numbers don't work out for the kind of model that that's the economy still function and be profitable for most people um unless you you've been where you're doing the collusion the groups have to be the right size so um uh all of this is to say that um this this is a moment when you see the black lives matter movement sweep throughout europe and resonate not just because they're appalled to the united states but they're having an internal conversation well bill you've talked a lot about the nature of the recession and what you called recession squared we took a very very detailed tour of how things happen in the economics profession that impedes our capacity to address the questions of race and then we went through the global phenomena in the aftermath of george floyd's death and what you referred to as global black lives matter but as we turn to the future as we turn to being stewards for our children and their children what what kind of remedies what kind of things do you think are essential to put us on to a trajectory of a future that is both humane nourishing and hopeful well i think a big clue was in the way you phrased the question and that is in economics we have handed over to the market everything including the discount rate and this is a huge mistake because if you make decisions thinking of your children your grandchildren your great-grandchildren and the great great-grandchildren you'll never meet you need a different discount rate and we've stripped from our government the ability to act on that behalf on the behalf of the generations we're never going to meet and this shows in everything right it shows in thinking through global warming i mean that's the most direct way in which we can understand it and having put this off for so long we're now the generation that the generation's never met because we're facing that head on if we don't correct ourselves now then it's actually going to be generations we do know because it'll be our grandchildren we're going to face catastrophe and it's this fetish that particularly americans have in the american economy has with the market the sense that the market is virtuous as if the market embodies some sense of ethic values and it it is truly a religion and so therefore we don't want our government to regulate it so i think maybe the moment has come uh i think this is a younger generation that does not want to accept the old excuses anymore they want a true democracy and it'll be a test whether americans believe democracy is greater than the market what is it that we truly believe in and if we truly believe in a democracy then then we understand that the government has to serve people and as you phrase the question the government has to be thinking because hopefully we're planning a government that's not going to go away we're we're thinking of a government that plans for the generations we haven't seen and won't live to see and under the idea that this government and this democracy embodies all of us and and our legacy and that that we don't plan plan to to to leave some future generation something less than what we were able to enjoy and so i'm hopeful because this moment with the black lives matter movement has been encouraging i was with the national urban league in the nineties and had to confront police misconduct then so those of us who are older will remember amadoo diallo in new york city who was brutally murdered by the police because they thought his cell phone was a gun and well his wallet he had a wallet with his id he was trying to identify himself um we we we were alone really i mean there was there were some well-meaning people who said some things but no one protested with the black community at that time and and even you know back not that long ago when erik gunner was murdered and we had a videotape and he said i can't breathe uh no one was with us but this time people are with us everybody is protesting it everybody i mean in red states blue states and in places where there are no black people are protesting because they want to defend american democracy so i'm i'm hoping that this generation has got the message that we can't excuse the older generation and its blind faith in things and and will be more aggressive about defending democracy because it really is democracy that is on the line here are are we going to be uh a people who have a belief and are willing to stand up that the government must deliver or are we going to just be slaves to the market or slaves to whatever else not not letting our government do what what we needed to do yeah yeah i think here bill there's very important uh insight in psychology which is whenever you are in a system even if you are the favored group that calls itself a democracy but treats a segment of humanity as as less than people in your imagination in your dreams you can be haunted because when you once you've crossed that place which we have in this country you can imagine that the rules change or who's in and out change and it's not random but you can imagine yourself becoming the oppressed victim and it's very important to restore faith in the entire system by treating all of the people in the system with the same care that you how we say aspire to in your founding principles yes i think that's exactly right and this is one of those moments uh that the the nation spirit is being tested and for a while it looked pretty gloomy but maybe maybe this is the light at the end of the tunnel and we're on the right side of history and we're doing that correction yes yes the straw that broke the camel's back exactly can be albeit a horrific and painful experience but a gift if it ignites the commitment the participation the activism and the insight to create genuine and healthy reform yes and and it comes from there always comes from tragedy i mean think about what lincoln said at the gettysburg address when he's dedicating the cemetery he's he's saying you know we don't want these deaths to have been in vain and i think that's what people responded to they don't want that death to have been in vain they don't want to just erase george floyd from history they wanted to ignite in them that same rededication to a democracy so bill i just want to thank you for being my guest today and you how do i say shed light on so many different dimensions your i knew because i've known you for years that you're a fine economist and i hope somewhere down the road you'll come back and join me and we'll do another episode of this podcast well that'll be that'll be great and and we certainly appreciate the support that i net has given in the past to the freedom and justice conference which the national economic association which are the black professional economist and ash the american society for hispanic economists have done together so we can explore models not captured within the more narrow confines of marginal productivity theory and a belief that all gaps are just gaps in productivity and and let us explore those models it's important to have safe spaces in which economists can hone their arguments and develop the evidence and provide us with different ways of looking at things and those conferences have been very useful and the scholars that have come to the conference definitely benefit from from having that conference supported great well we're glad to be behind you and i know the audience today will agree with me after what you presented over most of the last hour thanks for being with me today thank you for having me and i look forward to when it'll be on a better set of topics very good okay bye and check out more from the institute for new economic thinking at i net economics dot org