 This is Rob Johnson, president of the Institute for New Economic Thinking. I'm here today with a brilliant young man named Tiger Gao. He's a senior at Princeton. We met a couple of years ago when I was at the board meeting of the Jewelless Rabinowitz Center at Princeton University, which where I went to graduate school. And he gave an interesting presentation about something called a podcast, which I had that time not done. He runs Policy Punchline out of Princeton and explores all kinds of dimensions from the vantage point of young people who know that this world is still out in front of them. And how would I say given how Rome appears to be burning right now, he's trying to figure out what the next fire department's going to look like. Tiger, thanks for joining me today. And Mr. Johnson, thank you so much for having me. It's obviously a huge honor for me. So when I look at the formation of INET, one of the things we embarked on was engaging the debate with senior scholars and so forth. But we also commissioned a man named Perry Merling and Robert Skidelski to analyze curriculum, analyze what people are being taught. And this matters very, very deeply because we're not just talking about convincing the experts about what the right models and truth are. We're talking about how the general public that just takes economics 101 or maybe two or three courses come to act as citizens based on their understanding of the role of these market institutions and that. So it's a much the education realm, what I'll call part of the outside game, and we'll talk about inside and outside games over and over today. But the outside game of broad awareness of the role of markets and what goals we've set for society and so forth is just as important as what the insiders believe. And particularly in this world in the aftermath of Donald Trump, where expertise and authority and governance in all the surveys, the trust and the faith in them has disintegrated. And part of what we've got to do is figure out what's wrong. And there's no better place to start than with a creative man like yourself that's right in the belly of the beast, right now at Princeton. And what are you seeing? You had mentioned to me in the prelude that you'd gone to St. Paul's High School in New England. Yes. I went to a boarding school. Yeah. And then you came to Princeton and you're, how would I say, engaged in lots of worlds with your own podcast and that. What does it feel like? What does economics feel like? Where is your curiosity at this juncture? What do you wish was in the curriculum that's not there? And what is it that you rejoice that you have learned? Yes. Very big questions, Mr. Johnson, to start us off with. I think as you sort of mentioned, I went to a private boarding school and now I'm at Princeton. So the past seven, eight years of my life, I've just been very fortunate to kind of be at the center of world's knowledge, getting the best education. But I think part of me also realized in that process that titles don't really matter. It's in some way almost feels like hollowing success. I mean, these are very traditionally defined, elitist quality education path is, but I didn't find the kind of exciting intellectual fulfillment that I had been looking for. I've obviously done very well for myself. But I think in this typical path, I didn't find the intellectual conversation that I wanted. So I had to largely forge my own path and I needed a kind of entrepreneurial spirit to find and build my own ecosystems rather than rely on others. And that's how policy punchline, which is my podcast, came to being. I was a sophomore at Princeton two and a half years ago, and I was very dissatisfied with the kind of the extracurricular activities that are being presented here. You either join a business club or a consulting club or an investment club or entrepreneurship club. But my biggest passion back then was to go to talks, afternoon talks, lunch talks given by economists, scientists, philosophers. And I realized that very few students go to those talks and very few students go up to those professors or scholars or visitors afterwards to ask them questions and engage with them. So that's when the idea popped into my head, why not start a podcast? And back then it was also kind of a new thing. And podcasts as a medium, which we can go into later, has this wonderful quality of allowing one to have long form dialogues, long form conversations during which you really get to develop a connection with your interviewee. And I've just been so fortunate to have received so many yeses from the cold emails I sent to. So by this point over the past two years, we've done more than 120 interviews, and ranging from economics to policy to politics to fundamental sciences, energy, all kinds of topics. And I guess just to name drop a little bit, maybe in economic policy, we had Austin Gulsby, who was the former White House chair of council of economic advisors, we had Bill Dudley, former New York Fed president. In politics, we had Trey Gowdy, who was recently, we had him very recently for our elections coverage, and he was seen as the head of the Tea Party and chair of the House Overset Benghazi Committees. Dave Wasserman, who is a very famous election forecaster, ranked top one or two alongside with Nate Silver. Jim Vandahai, who is the CEO of the media company Axios. In sciences, we had Robert Langer very recently, who was an MIT professor and also the co-founder of Moderna and the most cited engineer in human history. So I won't go on with the list, but as you can see, we've just been very fortunate that people are willing to sit down for an hour, two hours with us to talk. And it's just been such an intellectually fulfilling experience to be able to engage in those types of conversations. And I think it's been life transforming for myself and for a lot of our team members to be able to engage in those dialogues in addition to the classes that we're taking at Princeton. Now that curious listener can go to your website, is it policypunchline.org? Yes, so you may find us on policypunchline.com and we are on iTunes, Spotify, Stitcher, YouTube. If you Google us, you'll find us and you can find us on any platform you usually go to. Excellent. Well, I always think about people like yourself, bright people at a place like Princeton. How would I say? Because of your own vitality and intellect, what you've already proven, what you're in the process of creating, there's a lot to be optimistic about. But at this point in time, I'll make a silly metaphor, but it's like being the guy that could do the most push-ups on the deck of the Titanic. We got to save this ship. And the question is, are we experiencing too much comfort inside the cocoon of elite institutions? You talked about the kind of clubs everybody's joining. Are we experiencing what you might call brand development in the narrow contours of a highly unequal society to stay in that top tier? Or are we exploring the unsustainability in relation to social issues, climate, etc., in a way that allows you to navigate as a leader with a, you might call, heart-filled perspective that might heal this very wounded beast called the United States of America? I guess, Mr. Johnson, part of your question is really asking me whether you think the quote-unquote elite education today in a place like Princeton, or any other Ivy League institutions, whether it's doing its job cultivating the next generation of leaders and what those students are thinking about on a day-to-day basis. And whenever I talk to professors, they always say, I have hope for our society and I'm very optimistic whenever I talk to young people, because the young people seem to be doing so many exciting things, and the cynical part of me and pessimistic part of me kind of sees the other part. I would say that a lot of Princeton students around me are dissatisfied with the kind of culture or discourse that is happening on campus. Everybody seems to be believing that we are in a somewhat dangerous intellectual thought bubble. And not saying there's anything wrong with it, it's just that obviously there's a tendency that most of us are liberal, most of us are progressive, most of us came from a certain background and because people are mimetic, because people are under certain social pressures where they all take the same kind of classes and read the same news sources, obviously it is much, you have a tendency for people's opinions to to converge, and not just opinions, but also ideologies and the way they look at the system. So whenever I talk to Princeton students and then I go talk to, I guess, a Silicon Valley banker or an investor, I feel like they're in completely different roles, and if you go talk to a Midwest farmer, someone in the working class, you feel like you're also in a completely different shared reality because the Silicon Valley people are thinking about techno-optimism, they have their own set of bubbles per se, and likewise with other people. So we seem to be in very different pockets of shared realities these days, and we can obviously dive in into the kinds of thought bubbles in elite circles or education, but I do recognize, I think, there is some kind of mindset opportunity cause because people, people, the direct incentives for young people today a lot of times is to pursue what is seen to be sexy by other peers, right? You want to start some startup as an entrepreneur, be on the list of Forbes 30 under 30, get a great paying job, and you're incentivized to do so because if you hyper-optimize your time at Princeton to find a good comforting job, you will be able to really achieve that. And part of my worry is whether students are actually incentivized to work on the hard problems and tackle complex issues and struggle through a lot of things. I mean, it's largely a much difficult path for someone to, for example, apply to PhD programs and pursue the academic route or carve out their own path to do something else. So I think there is a sense of naivete and lack of understanding of the kind of complexities of our world's problems. I do see how young people have a tendency to say it's all the boomers fault and we just have to do this, this, this, and then, you know, elect Bernie or whatever and then the world's problems would be would be solved. And I think I'm kind of going off all kinds of tangents that we can gradually converge here. But I guess the last thing I would say. Build the mosaic and then we'll organize it after. This is great. This is great. I think the last thing I would say is I probably do see a slight decline in quote unquote elite education in general. And I haven't lived through history for a very long time. So maybe this is maybe I'm idealizing people in the back in the old days, but I still remember people telling me back in the 1940s or something, the entire class of my high school, St. Paul School, the entire class enlisted in the military to fight the World War II. I mean, this kind of endeavor is very unthinkable today. It seems that the students today in those elite institutions are increasingly disconnected from the rest of the society because of many secular trends, inequality, wealth inequality, technological transformation, not of their own faults per se, not that they don't want to get to understand the real world, but it seems that the disconnect has widened on one hand. On the other hand, it seems that people's critique from people like Nassim Nicholas Taleb and many other intellectuals, they say that elites don't have skin the game anymore, right? So if you think about a typical Ivy League graduate who ended up going to the State Department or work at the Federal Reserve, a lot of times they don't actually have the skin the game to craft the best kind of policies and you end up crafting very disastrous policies that you think are good for society. And sometimes I recognize that because we as Princeton students are very good at justifying whatever we believe in. And sometimes it is very easy for us to think that we are in the right because we're more knowledgeable, we are the most educated. And we see on the other side as not worthy to be engaged in or that they're simply wrong, where we are morally better. So if you deny climate change, I just won't engage with you. If you don't agree with this movement or this kind of perspective, it must be that you're ignorant, that you read misinformation. And I certainly don't do that because I am at Princeton. That seems to be a somewhat prevalent case, but you see a great cognitive dissonance in some way because people say those things, sue and say those things. But again, as I previously said, the immediate incentive is not for them to actually work on hard problems. So they end up really thinking about big issues and trying to tackle complex issues, but they don't actually end up doing so. Not of their fault of their own per se, but I do think there is some kind of sense that the elite education isn't declined today for many reasons. But I've really rambled on a while. Well, no, this is important because you know I've done a lot of work with Michael Sandel in his most recent book, The Tyranny of Merit, gets at some of these issues, the issues between what you might call education versus credentializing, and what is going on inside the schools. Secondly, the despair of those other people who don't have the elite pedigree and their trust in elites, their view, which I might call the healthy romantic view was one gets an education, develops great gifts or skills, cultivate your gifts in latter pattern recognition, become aware of more facets and aspects of society. And then in an elite role in governments, one can be more sensitive and help the design evolve. And that's a noble calling. On the other side is viewed like after the Vietnam War, David Halberstam, the best and the brightest. These guys made a huge mistake with Vietnam, and they justified it and justified it, spent billions and billions of dollars at that time, which would be trillions now, did a lot of harm to people psychologically and everything else killed a lot of people. I mean, Martin Luther King towards the end of his life, one year to the day before he died, gave a speech at Riverside Church called Beyond Vietnam, the time to break the silence. And so you have different phases and different periods, but I think we're in one right now as you I don't know whether it's the decline of education or the divine outward in the faith in elites, that that education is being used for public purpose, as opposed to what I'll call private credentialization, material gain and other things. But it's a very, very challenging time. And, you know, I'm a white male who went to MIT in Princeton, worked in the financial sector. I can be accused by people on the outside frequently of being part of that elite circle. I try to hear that criticism. But if it hurts, kind of a natural, what I'll call brain science reaction to be self protective. When people try to shame you, you become more self protective. It's hard to open up when people are throwing flames at you. And you're in an earlier phase, but just what you might call those credentials in one corner of the room are celebrated. And down the street, they're burning a scarecrow with your name on it. And it's just a hard, it's a very hard time. And I guess the question is, what got you to reach outside of your academic realm? Explore the podcast, explore other forms of media. You've talked to me about sub stack. You've talked to me about this new one clubhouse. Yes, various ways of augmenting your awareness and your insights and what and defining what matters. Tell me, tell me a little bit. When did you, what was the seed of your decision to form a podcast and then explore these other realms? Yes, perhaps one detail I didn't mention at the beginning when I was talking about, it seemed like I was just going on a rant about my peers, but I wasn't trying to. But I guess one issue I have found and I'm quite skeptical myself about my own learning is that it's very hard for me to know whether the beliefs I have are the quote unquote rights set of beliefs. So for example, during all the terminals that has happened over the past year, a lot of my friends took actions, they want to do something good and they post Instagram stories or they forward articles and then try to spread positive causes. And I think that's all good. But in some way, these are also simple statistics. A lot of times naive empiricisms, a lot of these sources of information that we have are not conducive to actually understanding the matter in a primary source based original way. In other words, it's very hard to read New York Times and really explore the truth. It's kind of a survey of the kinds of opinions out there. But a lot of those articles or reports are certainly narrative driven. They have all kinds of their own biases. Maybe they're not written by experts. So part of my own dissatisfaction was that I wasn't sure whether the beliefs I held with the sources of information I had were correct. And I think podcasting was the best way that I could think about. And I would even say probably the last line of defense in today's media landscape to really explore that. I mean, I guess maybe we can talk a little bit more about what attracts me so much about podcasts. Technically, from a technical aspect, it's open protocol. It's like an email or a blog. You just put the podcast on the RSS feed. Any app can receive that feed. So it's not really published onto a specific platform or system. It's not censored or controlled by any aggregator like Instagram. So the platforms can't really censor it. And you have this flourishment of ideas. That's why we have podcasts about anything. And it's very easy to set up. Anybody can do this. And it's such a huge contrast to the common information delivery system these days, because the common information delivery systems these days are all short and sweet, the mainstream news, social media, Twitter. And these are very easy to paint disingenuous representations of people's arguments, right? When you are trying to reduce Dr. Fauci's arguments into a two minute clip, of course, people are going to find conflicting clips of two minutes and then contract dictum. But a lot of times it's not what he's saying. The nuanced arguments are much more complex. So it made me realize that it's very easy to package narratives into something short and sweet. But in long form discussions, you can really sniff out the BS, right? So by prodding it, by questioning it, but by challenging our guests, I can actually explore the issue. And it allows me to see their logical processes and fallacies, because it's much easier to BS for five minutes than for three hours. And if I can have a two hour conversation with someone, I can really explore the issue. And I think that goes back to my journey doing policy punchdown. And what our mission is, we're not narrative driven, where at least we try not to be. We don't have a predefined view. I mean, we're not liberal or conservative. We're not partisan. We don't try to interview people of a certain political spectrum. We actually, I mean, just to give you an example, during this election season, we interviewed someone like David Pakman, who is a very famous, you know, leftist YouTube influencer. And we also interviewed someone like Robert Barnes, who proclaims themselves to be a constitutional populist and is the lawyer for Alex Jones and the Covington kids. So we try to explore those issues very broadly and widely. And we don't have a predefined narrative. And hopefully, I mean, by the way, I would say a lot of podcasts out there do have a predefined narrative that they're trying to propagandize or spread to people. And we try to be as true seeking as possible. And I guess my concluding thought is our cultural, social, and political discourse these days seem to be very fragile. And we can talk about this fragility later. It seems to me that because you have dramatically reduced people's attention spans, because social media has made the profit structure to be fundamentally about click baiting or reducing them to sound bites, likewise with legacy media. The fundamental business model of the traditional information delivery infrastructure was not aligned with what is in the best interest of people's knowledge formation. And I think podcasting is in some way the last line of defense. I mean, usually books would do that in terms of giving you some long form content. But books don't comment on day to day news activities and current events. So the kind of the best way for me to learn these days is just to listen to podcasts. And I think hopefully you and I can also experience this today, which is podcasting is not really about me preaching a certain ideal, but rather we can come to a mutual understanding of truth or some approximation of what we see to be truth. And that is what I see as the beauty of podcasts and what incentivize me to really do is this inner questioning of whether the stuff I am believing in, the stuff that so many people around me believe in or whether they're actually correct. And perhaps I will eventually reach the same conclusion. But I think the process of you reaching that same conclusion should be much more complex than reading it off of an Instagram post or a Facebook article. Well, you had mentioned to me in our preparatory conversations that you had been very influenced by a group that they refer to as the intellectual dark web. And obviously one of the maesteros in the podcasting role, Joe Rogan, has also been a big influence. But describe how did they get under your skin? What did you learn from exploring the terrain that they cover? Sam Harris, Eric Weinstein, whose wife Milani works with me at iNet running our San Francisco operation in various others, Jordan Peterson and others. What did that bring to the table for you? Yes, I would say if there's any quote-unquote narrative that the policy punchline where myself is really trying to convey sometimes is that we are counter narrative, is that we see what is happening in the media landscape these days. And then we ask the question, why is this happening? Why are people talking about this? Why do people suddenly all believe in this? And how can I refine my understanding about that and examine that from a somewhat external perspective? And I think that's what you know the quote-unquote intellectual dark web has done in the past couple of years, which is that they saw the legacy media, they saw the political discourse and debates between the dichotomy of democrats versus republicans, they saw all of this and they really don't like it. And they're not right-wing, per se, even though some of them might have a slightly conservative bent or libertarian bent, but it seems that there's this kind of reactionary sort of we don't like what is currently being preached to us type of underlying current in this movement. And so I've been following a lot of those long-form podcasting and these people are sort of the best long-form podcasters out there as you mentioned, Joe Rogan, Eric Weinstein, Sam Harris, I would probably even add Lex Friedman who probably does something more science related but he is also engaging more in the cultural discourse these days. And these people, it's very interesting, I don't agree with everything they say and I think it's been, my thoughts on a lot of those issues shift back and forth but because they do those podcasts the last four hours every time, like what Eric Weinstein does, it's just been a very interesting experience to listen through their logical and thought processes and see this cultural phenomenon in today's media landscape, I would say. Well, I in recent days had listened to a Sam Harris podcast, it's called The Divided Mind and it's about a writer and a book named Ion McGilchrist and his book is called The Master in the Emissary and it's about left versus right brain process and in many ways the master is the right brain in his way of seeing things. Canadian broadcasting company CBC made a beautiful documentary about it and Ion and Sam explored for a couple hours and I had read McGilchrist's book maybe two years ago, a gentleman named Lawrence Freeman who's a Benedictine monk and teaches meditation told me he thought I would be interested. I thought the book was fascinating but to see it on that podcast it sort of validates your perspective about what you might call some of the deep dives and curiosity that that group is able to bring to the table in this new format we call the podcast and I enjoyed it tremendously. And by the way, I was listening to Sam Harris, it was really interesting that he was saying please stop calling me that I'm part of the Intellectual Dark Web. I think at one point because he was saying that he is himself and he does not like to be sort of grouped under one big structure and be critiqued under one big structure and he was not happy to see some members of the Intellectual Dark Web taking Trump's election lawsuits more seriously than they deserve to be and he was quite unhappy. So I think Sam Harris probably also stands in this part which is he doesn't like the political correctness he doesn't like what he's seeing with their times or the legacy media or the Democratic Party but he's saying but wait a second it's not like I I'm pro-Trump or pro-Republican party I mean they're probably even worse things on the right side. Yeah he's not an advocate he's an explorer and that's quite healthy I think and I watched or I'd listened to his podcast after the January 6th episode in the capital and he had lots of criticisms for all sides about what was happening and who was using it for other agendas that he didn't think was accurate it was really quite a quite an extraordinary episode and a courageous episode. I admired how what you might call he stepped out in front of the speeding truck on both left and right sides of those arguments and I found it refreshing and what what other things do you find as inspiration some people are interested in poetry others are interested in you know deep dives in psychology people like Jonathan Hyde yeah and his most recent book The Coddling of the American Mind about the influence of some of these coercive tactics Tristan Harris and others made a film about what I would call it the social dilemma on on how the electronic technology is affecting us and as was said towards the end how it's fomenting a civil war because to keep their advertising budget everybody's getting positive reinforcement for their priors and it's bifurcating society into two vehement teams so there's a lot of stimulus out there and I'm just curious what have been some of the the high points what would you put in your your hall of fame of the things that changed your perception here in the last two to three years I would say podcasting is probably the most significant because that's also where I derive a lot of my day-to-day information from all those thinkers so honestly some of the people we've listed before along with other podcasters sort of more traditional like Ezra Klein a lot of those people influence my thinking many ways outside of podcasting I would say which we can go into a little bit later is my only experience interaction with economics I'm fascinated by the subject I'm an economics major I loved the field in economic debates I read dozens of economics books every year that I really love the kind of debates that are happening in financial markets in economics academia and I personally struggled a lot in the past year or two thinking whether I should apply for economics phd programs and last fall I went through a very long process applying to research positions and grad school and I ended up coming out of it deciding not to do it and which which is a big formative experience on that end and I think on the other hand I think my interactions with my peers really shaped me a lot I mean especially given all the social turmoil a covid black lives matter and then election season I mean the past year in 2020 shaped me in such a profound way because you see how thoughts start to diverge students have become more politically activated and and their thoughts diverge and as you clash with people and debate with people you also become more mature you also derive a lot of intellectual fulfillment out of those connections and debates and and it's fascinating to see how how Princeton students and my friends from other institutions come out of those processes critiquing the world critiquing things and I think that that gave me a huge boost as well and also I guess the last thing I would touch on which is something we talked about last time we saw each other in person is meditation and and yoga and that side of things I mean I spent three years three three months three weeks actually I keep screwing up the scale I spent three weeks in India last winter the winter before covid hit and and I was on this yoga meditation trip that Princeton took us on and I had a sort of a great philosophical and spiritual experience interacting with some of the monks there and learning stuff about hinduism and also practicing meditation myself so so I think that that part of component also shaped me a decent amount so these were probably the some of the major influences that would come to my mind yes that's fascinating that's that's amazing the people in India all of the Sri Ramana Marishi and there's a gentleman he wrote a book he's a french thinker he wrote a book called Satchit Ananda and he was trying to reconcile the monotheism of his training as a french catholic clergyman with the polytheistic vision of gods and try to understand how to how to how they say fuse them so there wasn't one was right the other was wrong there's a lot of a lot of a lot to explore there and a lot to explore I remember when the uh I read a book recently called the gospel according to the Beatles and it was about how the Beatles were kids like working class kids in Liverpool and as they started to catch fire what they refer to as Beatlemania was almost like religious devotion like they were witch doctors or shamans or something and the fascinating thing was that the Beatles didn't understand where this was coming from so they went exploring George Harrison and John Lennon were more at the vanguard of that Ringo went along because he was a good fellow and Paul McCartney was a bit the anchor but they ended up all four in India for an extended period of time they explored the use of psychedelic drugs and other things to try to understand where did all this energy come from and it's it's really it's fascinating to see how those eastern philosophical disciplines have influenced the culture of the United States there was an Englishman named Alan Watts who was a uh London born I think or English born London based for a while who moved to northern California dealt with all the beat poets and became an interpreter of Eastern philosophy and Zen Buddhism and what have you and was very influential in particularly northern California when you had that that counterculture 60s before it became called what I'll call new age and seemingly uh engaged in political reform it was at the time people like Jack Kerouac were writing and others and it's it's fascinating to me to hear that you had the what you might call inclination the intuition to go exploring that realm at this juncture I find that encouraging I would say it's probably because I consume too much media I'm very deeply ingrained in the in the discourse today there's so much information and and stuff flowing through my brain every day as as we talked about right before the interview people are going crazy these days and they're trying to put out the fire in their brain so we're seeing this rise of meditation and so on and and obviously I think being a Princeton that was has always been a very high-stressed environment I'm always doing research taking classes running the podcast you know just it's just so much going on and then there's constantly more more stimulants coming in from all sides in terms of my political ideologies where new economic ideas and sometimes I do find myself feeling the need to calm down so yeah well when we started iNet back in 2010 April there was a gentleman who had been a friend of mine who'd been an italian economic and finance minister named Tomasso Padiosciopa and he gave the last talk at the first conference in cambridge england and he said i think that iNet has to focus on three things financial sustainability and that's what this crisis has brought to a head meaning the great financial crisis of 2008-09 second resource sustainability and it relates to climate issues and rapport with the environment and with mother nature and then the third was what he called social sustainability and then he finished his speech and he sat down by the way he later wrote it up as one of the pair Jacobson lectures that you can find online but just before he passed away but about two months after he gave the speech at iNet he he put it in writing so that our listeners and your friends can can i'll send you a copy but he was talking about how the breakdown in finance given the prestige of finance was going to rattle people was going to take people to a place of great discord and the trust between government and markets would come under pressure and then he's when he sat down he said i didn't say this on stage robert but all of this is going to feed back into social unsustainability and when i listened to you just moments ago talking about your trip to india what i could sense was a prescience like you were a seer because you went there before the pandemic it wasn't after we're all in isolation and like you said our brains were burning yeah you could see it come you could sense it coming i won't say see it but sense it and i think that's fascinating i think i i i admire your humility and your curiosity at the same time i think that's a really nice combination that so we're we're i guess i we could kind of you run a podcast how can i yes share with you like you share with me what would you like to explore i i guess the the first topic i would i would love to to ask you about is uh how i net is changing we're trying to challenge some of the orthodoxy of economics economics academia economics policy making financial markets what do you see as some of the main problems and challenges in these fields and how do you think i net is trying to push through to change it okay well i guess there's different categories embedded within your question one is where are the places that affect society where economics may be misleading and doing the most damage in other words where are the fights worth having secondly is if you're engaged in persuasion or reform how do you approach that and how has that changed in recent years and so i guess where we started with i net with the great financial crisis and i had worked with the senate banking committee and i had worked with uh soros fund management more capital and both in hedge fund world was the sense that the deregulated finance where government got in the way and the markets could take care of themselves until they didn't blew themselves up created a crisis a crisis of legitimacy of governance of expertise of academic finance and as you know george soros had written a book going back 1987 called the alchemy of finance he was a student of carl popper he believed in radical uncertainty that night right here he's talked about yes and myself i had become an economist under the tutelage of a man named charles kindleberger who wrote a book in the years when i was his student at his research assistant called mania's panics and crashes so i guess i was well seated to someday meet george soros because there was a sympathetic psychological you know vision of the financial market process but i think that great financial crisis many people thought it was going to be just uh like okay you guys are going to go put that back together and then we'll be back on the tracks and everything will be fine but as we saw after the bailouts and the rise of the occupy movement on the left the tea party on the right that loss of faith in government loss in faith or notion of corruption as joe stiglitz said the polluters got paid the people who made the mess are the people who got bailed out you could start to see pressure even people wise former princeton uh prince and graduate paul valker would say to me in private conversations we are not in a place where central bank independence is going to continue to be tolerated because wall street created a crisis we bailed them out probably the right thing to do is supposed to go in over the cliff into a depression for sure but we're not buying state and municipal bonds so that schools and infrastructure and hospitals and localities can function when they're in a depression that was caused by a wall street recklessness and people are going to start you know like ron paul and others protesting feds independence is that allows them to be taking care of the financial sector and not society as a whole so you could see all of this evolving around that time the work that tony atkinson tom pickety did upon top income and wealth databases part of which i net helped to fund joe stiglitz book the price of inequality the questions of social sustainability is tomasso party of skilford predicted started to raise there and then the very very long-term concerns about political economy related to climate change the fossil fuel industry why we weren't evolving in a constructive environmental direction when the science was so strong what scholars like neomir eskis wrote about the merchants of doubt the people who tried to sow the seeds of the notion using the same playbook that the pr men for the makers of cigarettes did about health or not from tobacco they used that vis-a-vis climate to try to pretend climate was a hoax it was a left-wing conspiracy or whatever and you could see all of these things kind of just rushing up onto the stage together and my own view was that the election of donald trump in 2016 was a symptom of the despair the symptom of the awareness that things were starting to rage out of control on a lot of different frontiers what what's happened with inet in that context is that in the beginning we spent a lot of time at harvard princeton berkeley oxford cambridge and i'll say this my father had an old saying he said if you let people think you're a dragon then you're a dragon but if they think you're a dragon go meet them and they'll realize you're a human my dad was a physician but he was involved in medical politics and he used to use that attitude all the time so i thought i don't have any animus towards economists at prestigious institutions but if we go there and we we foment critical discourse and try to help open the debate with them with their participation maybe being slightly more inclusive of people like post games and others we can start to evolve to a less rigid consensus than the world of rational expectations and free market ideology that seemed to be in the way of thinking about things like climate change and social sustainability but i think what happened is the pace of disintegration and fear went much faster than many people expected or or hoped would be the case and so the influence of elite brand name institutions was demonized by the people like marie lapin the afd in germany the pro brexit crowd and donald trump in his cohort and so you sense that uh and then i guess in parallel with that was going from traditional media where the influencers the op-ed pages the network television the leading cable television were the conduits to people and out into the world of social media i remember once the famous new york times reporter tom freedman and i had been in a working group and he said the only way i can keep my sanity is to not look at all the comments on twitter about my column i have to go inward yeah and not be bombarded by hate mail and shaken to my roots and i thought that was a beautiful in a humble way of of expressing it but the but the idea that walter crown kite the new york times and three ivy league professors at harvard deal and princeton decide what america's going to do just wasn't the model anymore and so i guess what i would say now is at inet we want to foment critical discourse not saying we have a policy but saying let's debate the full spectrum of the policy so that people learn they enlarge their imagination one of the mentors of my undergraduate career was a international policy rudy doran bush from he's no longer alive but rudy once said to me when he was consulting for the hedge fund industry he said you were my student why do you guys get paid so much and we don't get paid and i said rudy your job and you do it beautifully is to expand the imagination and our job is to pick the right model and i don't know why they pay one more than the other because both are valuable but he he got a good laugh out of that so did i was but but but the expansion of the imagination multi-disciplinary activity and so i think is people like the macArthur foundation when i was starting inet put together multi-disciplinary research groups and everybody economists sociologists anthropologists political sciences historians all felt they learned more because of the respect of the people that weren't in their tribe that they developed because their quality minds in all of these disciplines but as the outside game of social media as you might call the signal to noise ratio deterioration took place as the loss of trust in elite institutions i think that inet has moved in directions which have to respect that change in the channels of influence but it's also moved in the direction of thinking what is important is not just influencing the research leaders or the peer review journals which we've done a lot of work in analyzing how they constrict issue space or have crony cabals etc but people like james heckman and angus deaton and george ackerlof have done really serious work about these these challenges of the the tear review journals and you know they influence tenure they influence research assessment exercises in many countries they'll pick a guy who's widely published before they'll pick a guy who this proposal is interesting because some people are like in a tenure decision if you say no to tenure and you're a dean you you might get sued how do you defend yourself if you're a research allocator for the government and you fund a controversial project how do you defend yourself and they were using the scorecard of peer review journal as a what might call indicator or litmus test of who is deserving of research funding so it's a very powerful mechanism but i think to come back to it at at this juncture moving upstream towards the realm where we started this conversation what's in the curriculum what's the education what's the difference between tests and credentials in your major and the broad array of things how can inet create what i will call a repository of alternative thinking that's not just taking a bite out of an ivy league agenda it's fomenting a broader critical discourse and making it free then a student like yourself put it in a metaphor your head is not in a cage you don't have to pay for it there are things to explore that you may disagree with but they tweak your imagination and i think moving towards that realm also is doing something which is not playing an inside game with experts but recognizing the outside game of the broad political participation of citizens at elite schools and other schools who can become more sensitive more sophisticated more curious and more vital as citizens in contributing to a democracy in which market capitalism is embedded and at times may need to be constrained so there are a lot of facets to it it's it's a very fluid thing and i think it requires a lot of humility in the sense that it's not i think you could get depressed about not being persuasive in many instances i think it's a glacial process rather than an aha kind of thing but but there are many fronts associated with the challenge and there's a changing structure of society and what's viewed as legitimacy and they all they all influence strategy on the fly mr johnson that i guess to very quickly recap i mean all it was very dense your your answer and and uh you first brought up some of the large macro financial trends that that we witnessed and and i have to bring up my own ceases ceases advisor professor atif mian yeah i know him well he's of the brilliant guy house of death that he and uh house of death exactly Chicago there's a wonderful book he's one of the one of the foremost financial economists of our age and he was obviously explaining to us uh he was trying to link inequality credit um the the fall of interest rates asset prices productivity growth all of those things together and and analyzing those secular trends and and so that was one part the macro financial issues and and how a lot of the experts and market participants before 2008 were unable to to imagine the unknowns as you were saying so so that was the second part the bailouts instead of mortgage reductions and recapitalization of the banks and right down with their bondholders had huge distributional and fiscal implications yes but but the world the world didn't have that all on deck and in a consciousness of like these are on the menu ex post yes he and sufi explored and articulated beautifully what might have happened but wasn't necessarily in the middle of a crisis where anybody had the competence to do those things right and the second part that that you were bringing up i i guess is what i would say the fragility of the expert class in today's age somehow because there are many explanations of this some people say it's because the experts weren't so good and there are people who say it's because the media landscape has you know shortened everybody's attention span and the experts feel obligated to adjust to today's media landscape which inherently reduces the quality of their arguments right you have to reduce uh my current professor christopher sims who is a Nobel laureate many years ago and when i take his class i mean his way of thinking as as a bayesian how he thinks about probability how he updates his beliefs under uncertainty in today's age how he thinks about hypothesis testing for for covid and why vaccines should should work and and i mean it's brilliant but but the common people do not hear this if you look at twitter you look at all the shouting matches between academics and if you go on cnn you feel like the economists do not know what they're talking about and so so i guess the the fragility of the expert class because of all those societal forces another thing that you mentioned and the third thing is something very quite close to my heart which is the tyranny of the big journals i have personally not gone through the publishing process myself i'm just an undergrad but but around me so many graduate students tell me horror stories and and we see twitter threads very recently there was a very famous twitter thread just a couple days ago accusing some mit nobel laureates for for abusing their power uh and for threatening people and it seems that everybody outside of the top schools have some horror story to tell about the bad culture in top schools and how people in top schools abuse them and uh yeah so so which is which is let's you think about the irreality of academia and how uh academics might be even more political than the corporate sector and they might be fighting each other for for they might be incentivized to to really fight for uh rewards reputations and prestige in a different way in a different battle but one one has to be what you might call an institutional economist to study this context because at one level the idealized or romantic notion of the intellectual professor is someone who is independent curious has a brilliant sensitivity and skills to render whether writing or mathematics or what have you and so they are producing for the public good there is another sense which is beautifully articulated in a 1922 article by the muck graker and gadfly H. L. Menken the name of the article is the dismal science where he says the only people I trust less than theologians are economists because they understand the structure of power they understand what promotion they understand what angers the trustees or the development department they understand what would stop them from getting a government position of prestige like a member of the federal reserve board or federal trade commission or something like that they understand what the media won't publish because their advertisers would be furious if they carried so that in essence and this is a beautiful comment i got from one of my board members jillian tet who works she's a cultural anthropologist she works at the ft i asked her over a lunch at the onset of inet i said jillian give me some advice she said robert study the silences because what not said will tell you where the power is in society and i thought that was a fascinating notion was but so in some level like i said the romantic open discourse where everything is these free fair-minded brilliant people exploring is overlaid with all the incentives and the forces which amount called the sociology and anthropology of the profession and that surrounds the profession the context in which it's embedded and that makes for a very different interpretation and the cynic on the outside says the expert is a tool what john ralston saw the famous canadian philosopher in his book bolter's bastards calls the rational courtism they're in the king's court they're serving power they're not describing truth or the spectrum of possibilities and so i i think there there are lots of uh people who might be which i might say too paranoid or too suspicious but when the social system isn't working right it fuels through the emotion of fear those suspicions and expertise goes on trial mr johnson i guess just to quickly follow up and perhaps this is something i'd love to hear a thought on which is that people outside of academia are sometimes very skeptical of what people in academia are studying uh they think a lot of the times academia is ultimately not impact driven that they're ultimately incentivized by their own intellectual gratification you need your research to convince three people around you or the referees at journals in order to publish and you make whether marginal or non-marginal improvements of certain literatures but but you are incentivized to make theoretical you're you're turned on by the theoretical challenges rather than seeing whether your your research impacts people and a lot of practitioners whether in financial markets certainly in financial markets they're very skeptical of financial economists but even in even in policy making because i recently uh spoke with a former indian high-level a policymaker who was on our show and he was advising modi and he was saying how a lot of the research done by uh Esther Duflo and Abhijit Banerjee you know the the Nobel very recent Nobel laureates from 2020 randomized control trials J-PAL poverty reduction he said it almost had no impact on economic policy i mean because you're you're doing highly controlled idealistic experiments right you just need a couple million dollars you find two villages and you run randomized control trials but what happens many years after the intervention you don't really know it is the impact sustainable you don't really know and even if you can prove that there is some kind of improvement uh it seems that so much of academia is about identification finding some causality publishing papers and whether this really relates to the political economy of the country whether whether it suits the political purposes or agenda or whether it is realistic to adopt that policy it is not of the economist concerns they're there to make theoretical improvement so i'd love to hear your thoughts on that but i guess the other side would be saying what do you mean i mean that's what economists are supposed to do they're supposed to push for theoretical arguments and think about these things and not have to worry about normative questions and whether their policies can be adopted by this current regime and so on so i i i wanted to hear thoughts on this debate yeah i've got a number of thoughts one of which reminds me when i was a graduate student at princeton the institute for advanced studies at princeton was run by an economist named elbert hershman and uh i would encourage people to read his biography by the princeton historian jeremy adleman because hershman was the kind of guy that when he talked to me i was a young guy wondering if i wanted to stay and do all this formalism and he said well you know you've got a lot of training in math you ought to stick it out pass your generals and you can take history courses and stuff but he said i've always felt that an economist every five years should go out into the world to reconfigure what is important in other words what should be studied what matters you don't get from the inward rituals and the fashion shows and the preferences of the peer review journals you get that from talking to business people policy makers understanding where suffering is and trying to understand with your toolkit how to address those real challenges so i think i think that adleman's book gives you that sense of hershman what i'll call the inductive inspiration as to what your research agenda should be that makes a meaningful contribution to society and that staying inside metaphorically the monastery dealing with your peers being completely obsessed with the technique the elegance the beauty of a mathematical representation and there's nothing wrong with being a great mathematician it's like mastering a language but it it uh if it's done at the expense of using the tools for some purpose it invites that skepticism early on i well before the pandemic i travel around the world a lot inet is not an american institution in many ways we've got outposts in india relationships in china all over europe and what have you and i remember being in china one time at chingwan university for a lunch during a conference and some of the scholars said to me you know the most frustrating thing about our profession i said what's that they said when we go to the top five peer review journals which everybody tells us we have to do to get tenure here in china we put out a paper that's an empirical paper based on what's happening in china because we think the world's interested in china and i was well it is he said yes but they say that the referees are all in roughly north america or london and the referees don't have confidence that they understand chinese data so they want us to take the paper with the same concept concept and apply it to american data and then they'll publish it and these guys these guys were they were tearing their hair out they were wait a minute no people are interested in china china it's like this big new mystery coming on stage in the world economy that should be published and uh but so there were lots of interesting stories as i explored uh we might call the basis for inet and then the how does inet help or make an impact early on and i don't know how you match elegance rigor and relevance to satisfy everybody all three have a dimension of luster but if you leave out relevance then as you'd say the practitioners the policy makers and the citizens are going to wonder what you're doing in giving this profession any kind of prestige or license over the governance or the system structure of society i guess one other thing i would uh quickly add on to that uh speaking of the economics profession perhaps you're a little bit more distant from from this but at my age when students think about getting a phd everybody is talking about this new trend called predoctoral fellowships predoctoral research assistants predoc you do two years of r.a research for a professor and then they'll write you a recommendation letter so that you can get into a phd program which means nowadays you would do two years of that plus six years of phd which is eight years it's a very very long commitment oh you know you didn't mean doing it like like i did riding shotgun i worked for morris adleman and kindleburger while i was taking classes you're talking about as a full time no it's a full time job wow wow i i don't know if you know that i mean i mean it started with rochety i mean he he's the guy who kind of made this very quickly because it was really funny i was telling my friends they were saying that rochety is like showing up at the all the conferences with like three five publications every year and everybody is like what is what is he doing i mean obviously rochety is like the the best applied microeconomist of our time yeah but but also he has 12 pre-docs yeah he has a big lab he's built a machine wow yeah and people say these labs are almost like investment banks i mean not literally but in some sense is that you you go in there for for two years they train you into doing data work and you crunch data every day for two years and eventually you'll come out getting into a much better phd program than you otherwise would because you are you have a recommendation letter from a famous professor and and and these days it has almost become somewhat of a prerequisite and there are european students who would do their masters in europe and then come to the us to do another pre-doc before applying to phd program so you see all those 25-year-olds 26-year-olds you know starting their phd because they did like two masters and two pre-docs yeah and the when i was a graduate student what a lot of folks did was they went to london they went to places like lsc and ucl and they did a masters and then they came in and it was almost like for the first year or so they were on cruise control because they'd already taken the equivalent of general exams and they would make money as teaching and research assistants and then be ready to go in year three some of them finished in the third year with their dissertation because they they were on the how do you say skill development ahead of the curve where they could do that but i hadn't i hadn't heard about the this this is kind of the the the new big buzz that everybody every school every professor is is hiring this thing and and i was talking to professor bill jane way who is a co-founder of of and i had forgotten to mention that he was one of the first people i interviewed for my own podcast two years ago so yeah i'm very very dedicated to him yes i've been watching his his videos on venture capitalism and public private partnership but yeah so so he was telling me i said you had a phd but then you're a phd and then you went to uh investment banking and private equity and to be to do finance how is that and he said i got my phd in three years and i said if i were to get a phd this year i would need eight eight years basically of my life and now i i think that basically delays the profession i mean this is a huge huge debate within the economics professions these days whether it is fair to treat these uh undergrads uh and and whether doing this pre-doc thing is good for them because the pro side is saying you gain two years of skills you think about research questions and you get to work with a professor very closely for two years the downside side is um especially the theorists who don't use a lot of those pre-docs they really hate this because they say you push your back for two years and you're grinding those data if you get your phd in eight years is that really worth it so so i guess my question to you would be um what would you see as the as the necessity of of an economics phd because you got the economics phd but you ended up going you did not end up going to academia so did you no no i mean these days it's it's not worth it to to do this well i think um different people in why are different ways and i just got to the place where i i had a lovely experience alan blinder bill branson joe stiglitz avinosh dixon all kinds of very interesting people uh lots of lester chandler bill william balmore uh but i just didn't sense and i had a lot of confidence in mathematics having gone to mit and studied a lot of aspects related to sailing and naval architecture and whatever prior to that but i just i didn't feel like my sense of purpose was going to be fulfilled and in academia in academia i really i just didn't push in that direction uh and i guess uh maybe maybe i was a little bit influenced by my father he had been a all american swimmer at university michigan kind of a superstar went to their medical school was a professor publishing everywhere and he followed in the footsteps of his father and he left academia he became what's called a clinical professor of urology in detroit and wane state university not at michigan which was like you know in the hall of fame of medical schools and built a private practice and i asked him why did julie's beacon academia dad when i was in the middle of my phd program he said the smaller the stakes the bigger the fight it's just not a sociology you want to live in and i yes you know you can laugh that's a funny kind of thing but his yes his sensibility was that there's all kinds of competition and petty infighting what are you would enduring emotionally and what are you trying to do and i think combination of that and uh there was a professor at princeton in those days who's no longer with us uh peter kennan he and i used to talk at great length about issues and international finance he and i and poll valker went fishing together and valker inspired me to come to the fed and do my dissertation fellowship there and then helped me get a job on capitol hill where i had to do things like learn how to write speeches uh you know different techniques and i just was captivated by learning the learning process of understanding the institutions of politics and markets and what have you and uh so maybe to use the albert hershman analogy the inductive inspiration and curiosity captured my attention and uh i i didn't probably think i had the imaginative gifts of someone like joe stiglitz who's very few people do but at the time he was my teacher i knew him and sanford grossman and the handful of people that were just putting out theoretical papers over and over and over that were always at the cutting edge in the frontier and i admired them greatly but i didn't think that was my calling if you will it's more an intuitive thing mr johnson you were saying how uh the the incentive i mean sorry the pie was so small so that's such that the the fight was really big and i wanted to ask you if you think academia would really need to reform dramatically in order to change the culture will retain more talents because in some way you could say finance is not really a zero sum game because it's not sure some people gets burned in the trades but overall if you're good you can make money you generating alpha does not really prevent another fund manager from generating alpha but in academia there's only a certain limited amount of job posts uh journal entries uh and you know every top school hires three people a year so so it seems that the pie you cannot actually grow the pie and almost in some way it's like it's like bitcoin we're gold limited in supply well you're right the uh well the demand for scholars is limited where you can grow the pies in the quality of what you do and if you think you can make a market difference and be rewarded for it and be satisfied by it uh and that has to do with the tastes of the profession what they uh would ask you to do what they would honor is truly creative when i was in graduate school not man who's a professor at Princeton Dilip Abu was a brilliant game theorist he and david pierce were both graduate students my year or the year ahead of me and their their gifts in expressing game theoretic puzzles or or problems in the different ways of resolving was was extraordinary and they were quickly picked up by elite institutions Princeton had a reputation in the realm of game theory and high theory and they were they were in their element and so uh i guess for me coming out of that kindleburger realm he was a man who'd worked at the new york fed worked with the marshal plan the intelligence community had an institutionally inspired sense of economics and what was important engaged in economic history and i think you know economic history is fascinating because what it really is is multidisciplinary open season around particular episodes hopefully with things like data and economic tools you can shed light on things but it's much less constrained than working in the theoretical framework and you know modern people who've got a historical background people like adam twos at columbia and others are able to express a great deal uh that germane to now by using historical analogies and uh you're right when we've talked in the past about being wary of how people use history to justify what they want you to believe now that how good a fit is the historical precedent for the challenge before us is always an open question but i in my own sensibility which has got a lot more humanities and music and what i'll call right brain element i didn't think i was in my element by trying to be a stellar economic theorist and i didn't think i had the gifts that dilip or david pierce or others had in that in that realm which was what you might call at the core of the fashion of the time i guess how do you see as some of the uh urge either urgent challenges of academia but also what they're generating these days because we know that uh setting aside economics and social sciences just just in general in society a lot of people especially if you are wondering what what students like to talk about these days students really like to use the word postmodernism everybody's using this word these days which is saying in a postmodern society truths don't matter as much values are not seen as important uh rules and norms used to be more set in stone and now everything is existentialism everybody have to create their own narratives and and it's all relative yeah exactly and and and one of the the thoughts i wanted to bring up and also ask your thoughts on this that whether you think academia today i guess not just limited to economics but also other humanities and philosophy and so on whether academia is more destructive than generative today because there are intellectual historians who are saying that pre-modernism was about creating all those blocks on top of each other whereas postmodern is more like melting away all the blocks and that's why many feel that the second order consequences of all kinds of movements these days are not very well understood and they're very destructive because it makes people feel victimhood and so on and and other even people like tomasow in economics have made these arguments and people are unsatisfied with the kind of research that we're seeing so rather than imagining new ways of economic policy or whatever it seemed to be a lot of questioning of previous maybe maybe not economics per se but but it seems that in other disciplines a lot of people are saying that so i wanted to hear your thoughts on whether you see us being in a in a cultural slash social slash uh academic recession in in some way where people wake up in the morning and they're more interested in in owning the libs or or something rather than creating and something they're creating consuming culture but but but we're not really doing that we're not creating yeah well i do think that all of the breakdowns associated with postmodernism at one level has been constructive in that false confidence gets replaced by a certain humility when the arbitrariness what i will call the presuppositions are exposed as being that and not science you know you can create a nice array of things with normative implications and call it science unless the presuppositions which are building blocks arbitrary sometimes making it quote mathematically tractable have a huge influence on your result in which case you're not proving anything you're asserting something so i think some of the postmodern challenges restored some humility on the other side and we've talked about a little bit about the commodification of social design when what people assert is truth is essentially marketing for power and the power system is creating a tremendous amount of suffering and in the case of climate change a tremendous amount of danger then the people who are engaged in these rituals these intellectual jousts are fiddling while roam birds and that there is an enormous need for courageous people who understand what's going wrong and there's an even deeper need for understanding the psychology of healing the book i most often cite in podcasts now was written by a man named john w gardener who was a republican secretary of health education and welfare in the 1960s in the linden johnson which is a democratic administration who presided during the time of the riots in watts in detroit and newark and other places he presided at the time when martin luther king was murdered he presided and observed as a former cabinet official as the black panthers rose up as the 68 conventions particularly in chicago exhibited violence and as people were terrified of a disintegration and i would encourage everyone to read his book called the recovery of confidence because it's about needing dissent and needing purpose at the same time and when you talk about the questions of uh postmodern rivalries and debates and so forth it feels like the dissent is present but the purpose hasn't been defined technique knowledge and wisdom are different parts of the human spirit and i think that many of the people screaming at these academic food fights metaphorically are saying you're not focused on the important questions and you're not exercising wisdom and you're not healing society and perhaps you're not free to do so i know people who study universities jerry heron at wane state in detroit uh wrote a book in the 1980s called the university and the myth of cultural decline which was the power reaction against what i'll call left-wing humanit humanitarian or humanist liberal arts educators there was a famous document called the paul memo by a man named louis paul he wrote it as a memo for the chamber of commerce and he later became a supreme court justice saying why are we letting the anti-war movement and people like ralph nadir and the hippies and these left-wing intellectuals have so much influence over the design and structure of our society in this chaotic period we need to exercise the strength and the power of corporations in the sense of purpose and the and the not demonization but the actual affirmation of the importance of business and he he created a rallying cry for a profound change in the incentives around the university and i don't know if perhaps now 40 years after that time maybe a little bit long 50 years after i think it's 49 50 years since the paul memo was written whether the pendulum has gone too far in the other direction there are a whole lot of people that jousts to demonstrate their intellectual acumen and they only pick fights that won't offend powerful people because they don't want to get caught in the crossfire so i don't know how we deal with important questions that do affect concentrations of power an exercise wisdom and a recovery of confidence unless courage is is part of it but clearly the kind of wrestling matches that you're talking about are not sufficient for intellectuals to play a wholesome and important role yeah mr joseph it really fascinates me that you didn't use the word truth in what you were saying you were talking about return to this kind of dialogue or whatever and a lot of thought leaders these days and public intellectuals they often cite misinformation as a big threat to our society and they cite the deviation from facts and truth as a huge reason why we're in the shape we're today because i mean going back to your very first question about rome being on fire and i wanted to hear your thoughts on truth because it seemed to me okay that the truth i'm not sure if truth matter as much as we make them to be in the sense that humans are not naturally truth seeking we were we're more driven by our narratives and narratives is a word that you used in our previous discussion and it's not just the stock markets and bitcoins that are being driven by narratives right now rather than fundamentals but rather you know you all know a harari wrote wrote this in sapiens and his whole theory is that humans are fundamentally organized by narratives so i wanted to ask your thoughts on this statement because it seems that there's no point to try to get back to the truth because truths don't really exist per se but but it should be that we need to get better to get back to better narratives meaning yeah back in back in the post world war two period it used to be patriotism that that was the main narrative and today it was nationalism today's tribalism that that's the main narrative that's that's driving the division so it seems that it seems that we just need to create a better set of narratives right well i think the yearning for that notion called truth is a reflection of what my friend Vincent Kendrick in denmark wrote about in his book info wars and it's about the inability of people to experience credible guidance trust in the people who are making the arguments etc and that and that yearning is understandable on the other hand i can take from the turbulence between two world wars of the author e h car who wrote a wonderful book called the 20 years crisis but the book i'm quoting from is called what is history and he said facts are like sacks if you don't put something in them they don't stand up and the idea that truth is something that is there as opposed to something that is there in conjunction with the interpretation is i think uh a false innocence i think that the facts you collect there's a poet that i quote frequently named by in queue is his stage name in queue for in question and he's got a poem called evidence and in the poem he says people will find evidence to support what they want to believe so is that truth is that the whole truth is that a subset of the truth even if the subset of that evidence is accurate if it's not associated with the evidence you didn't cultivate it may be misleading so trying to understand what truth means is a very subtle and difficult thing and i understand the yearning for the ideal given the chaos that's before us but i don't think it's like i said i don't think it's achievable without the role of interpretation and that brings you back to narrative and everything else as the partner with truth at some level what we want our high integrity trustworthy scholars who martial evidence and paint pictures for us of what the challenge appears to be and how they would resolve it but the techniques of partial truth of what Vincent Kendrick calls info wars are quite effective and at some level we need to i think deepen our awareness of mind science to understand the regions of the brain and what affects your perception of truth how you might be given comfort rather than truth by a certain stimulant and that the comfort that you experience overrides your ability to discriminate between truth and falsehood but but i this are very very interesting questions that you're asking but the truth truth is not quite so easy i remember john lennon singing the song just give me some truth and i remember one of my friends who used to uh know and work around the Beatles and some of the Beatles he said he used to say give me some truth he'd sing it on stage and then after the concert he'd mutter things like i just wish i knew what truth was and i guess i guess that's where i i think i think john lennon seemed tuition it's pretty close to where i sit yes wow um do you do you think we have made progress as humans i think we've made digress in the last 10 years i think we're going backwards and i think some of the uh end of things with the media had there was a law called the fairness doctrine the polarization in politics and other things the knowledge of how repetition and in an online sense you're not dealing with someone you know face to face that you've got to deal with day after day you're being bombarded by hundreds of people who you only know electronically how you process that signal to noise ratio and discern what you believe is true it's a very different process now when you're with a human being there's all kinds of elements of nonverbal communication what poker players call a tell you're watching the body language of the individual to try to discern when you're playing poker whether they're bluffing or whether they're holding a strong hand of cards and they study each other there's a psychologist woman from russia who went to harvard named maria kanakova she writes for the new yorker who's written a lot about this subject and i think i think her nuance she's someone i would go to with that that question that you asked me she'd do a better job of answering it than i can i see i see um another thing that i wanted to hear thoughts on is uh you worked with george soros and we at the beginning of our interview we talked about uncertainty yes no not knowing the unknowns of the unknowns basically yes and and uh i wanted to hear thoughts on all the recent trends in finance that we're seeing i mean not just the gamestop saga not just the rise of bitcoin not just that stock market has become more detached from fundamentals but also the fact that we seem to be in another irrational exuberance huge boom that a lot of people say there is no way we don't crash eventually because it is simply supported by federal reserve policies liquidity easy money cheap capital low interest rate none of this is sustainable but on the other hand it also seems that people have such a doubt on the expert class for getting us out of this horrible situation this it seems that this has to be the new normal and this new normal has to continue for a long time so you would be a fool to think that this will crash stock markets only go up yeah i would encourage people to look at george's book the alchemy of finance because there's no sense in which you can say everything follows some kind of deterministic equilibrium but you have to have a hypothesis about what's going to change that brings the market down and the timing of when you know i had a lot of friends who were short sellers when i worked in the hedge fund business that worked with other firms but they were my acquaintances jim chanos who's quite famous and was involved in the enron episode of unmasking enron's fraudulent positions through some of their special purpose vehicles and people like jim and others in that realm used to say to me it's really dangerous to short a technological innovation that has no earnings because there's no way you can disprove that hypothesis and as long as people have that subjective psychological conviction the price isn't going to come down you take something like the steel industry then you say we can look at a hundred years of data on the steel industry and the pe ratio goes from five to 23 and if it's at 28 now you think the pendulum's rocked way over to one side it'll probably mean revert and it's dangerous to be there well looking at the circumstance right now and i'm not an active speculator so i don't want to pretend from my past that i know i have any particular insights but i don't see interest rates coming back up until the real economy comes back up and the real economy will either come back up through fiscal spending on real projects like energy transformation and a rise in wages and perhaps a rise in wages in the lower two-thirds of society where the propensity to consume out of every dollar earn is much higher so therefore potentially a redistribution of wealth and income to a more level place would create a more resilient and stronger aggregate demand which would allow interest rates to go back up and so then you might say interest sensitive sectors are going to get hurt other sectors are going to do well and the Fed will follow that because there won't be an inflation danger until that aggregate demand strength is there and so we might wallow continue to wallow in this low interest rate environment for a very long time but i to go back to the Soros question what's the catalyst robusting what people are calling a bubble if you say to me they're going to they're going to stay with accommodative monetary finance for the next day next decade excuse me then you're not going to want to get off the train especially when bond yields are like one and a half percent yes which is already seen as too high these days so i don't know i i your question is a good one i'm not in the cockpit you do much better to get my former colleague stanley drunken miller yeah who is making her others to be on your podcast and explore these issues but uh yes but i but i do think that notion that soros has we don't know the future and you got to tell me what you know that the rest of the world doesn't and when they're going to find out so it will catalyze the change in their perceptions would send the market down and i don't have that hypothesis and i'm not studying it closely enough to to give you but that's the process i would have followed had i still been in the business it's very hard to do hypothesis testing especially when when the distribution underlying distribution is shifting as you said yeah when you do not know what the actual probability distribution is per se so yeah this is the radical uncertainty you can be right about the outcome but you can be wrong what is the old saying john maynard kane said the market can stay wrong longer than you can stay so you can solve it exactly um which is why short sellers get burned all the time because they may be right eventually but they couldn't stay solvent yeah yeah so so so that okay um i i don't have too too many concluding question i i still have questions on my mind i don't know where where you hope to to take this mr johnson i mean we can uh we can talk a little bit more i mean i would love to sure whatever it would say whatever is on your mind i'm happy to talk about and i was also wondering if you have more questions for me so i saw i was uh i think i i kind of i covered most of the basis that i had to i mean i'll have thoughts in conclusion after exploring with you but but for the moment uh i'm how would i say i'm i'm curious what you think your audience would be interested in about inet in yes the world um there is um i mean it seems that i net is somewhat connected with silica malli in some way i mean you you mentioned pia manani is is uh leading operation san francisco you guys certainly do uh very interesting research related to tech innovations and productivity and so on so i i guess there's a very general question about whether you see silica malli like what values you see silica malli is contributing to society right now what whether we are in a great technological stagnation that some people would say whereas eric weinstein would say we we are we've been innovating so much in bits and not the quantum or whatever yeah well well i think first of all there's a i see a tide raising uh i'll quote my friend and professional colleague rohinton madora who runs the center for international governance innovation has been a partner with inet uh through his founder jim balcili being one of our founding donors and rohinton asked a question we were at a meeting at the vatican last just before the pandemic last february with pope frances and his team and rohinton on paraphrasing said essentially why do we have a food and drug administration where you trial the drugs you make sure they're safe before you put them out there but with large-scale social transformation of technology they go out there and they can do good or they can do damage but we don't test them evaluate them or pre-authorize them i think there are a lot of people who are frightened right now of the what am i call natural monopoly the increasing return structure which creates tremendous concentrations of power in the governance of information and perceptions by people like google and facebook and so there is a lot of movement afoot inet has produced some research reports on antitrust enforcement there's a lot of concern about the relationship between the service they provide say facebook connecting you with all your high school friends and the data they collect which can be used for marketing or intelligence and espionage without you knowing and i think that we we're in the middle right now of exploring what i what rohinton might have called the social ramifications of these successful market structures and are they doing good or harm we mentioned earlier in this conversation the social dilemma the quality of the information environment the quality of democracy the ability to separate commerce from cybersecurity in the multilateral relationship between the united states and china the ability to monitor hacking all of these things have very very profound social implications and i think we're still at the infancy of trying to understand how to harness them for social purpose in a place like the united states where the what i'll call fetish of individual rights and freedom meaning the freedom to do what you want but doesn't include the freedom from it being done to you by others we have to re-envision what is the balance and what are the ramifications i think the displacement of work associated with automation and machine learning has productive potential but the history of the united states say since 1970 is not inspiring in what you might call the adjustment assistance for people and regions and professions who are being displaced by innovations and some of the social despair and discord that we've talked about in this conversation are now on us a scale and a breath that is quite daunting it is part of the rage and the despair that we are grappling with so i do think that the what you might call deeper questions of what is the purpose of a society and how can technology be channeled shaped governed to be aligned with that sense of purpose is a very important mission in the coming decades and the capacity of governance to actually understand when i go to the seminars that we hold in the presidio it piaz gatherings for inet it's fascinating for me to learn how much these people from silicon valley around the table understand about the structures and what they're doing relative to the people in washington so to govern something in other words you don't want to throw the baby out with the bathwater you got to be able to understand what the good of it is and what the bad of it is that needs to be restrained that involves understanding the technology and understanding having a vision or a metric of what social purpose is so you can align the technology with social purpose and i don't think that at this juncture we have matured in ways that allow that and to say whatever a tech entrepreneur wants to do they can do because of individual freedom is an anrandian kind of fantasy which i guess yeah at the other end of the pendulum is authoritarian control of everything and stifling of innovation that could be helpful or people fighting over intellectual property rights and so the better thing can't be discovered using litigation to intimidate people so that you can take them over at half the price of what their innovation is worth if you've got deep pockets there are all kinds of things happening in that realm that are very very profound potentially on the quality of life and i think we have to we we have to understand that on the plus side i'm very curious about removing what you might call the barriers to education i went to MIT i understand that the electrical engineering curriculum that i experienced is available online for certification all throughout india that may have some very powerful equilibrating uh alleviation of poverty creating knowledge intensive human capital in places that couldn't afford to pay the tuition so i think there i think there's it's not all good or all evil but to me it feels like as a society we have to redefine what we want what we want and it's almost childish to just focus on individual rights life of the lessons we're learning and we have to understand the ramifications of these innovations and we need to channel them in constructive direction it's really interesting that you brought up the people can learn how to code example because uh right right now you can just certified by google by going through the courses and you can get a job there or something that is equivalent as a college degree in computer science or data science sorry yeah and so i guess does that mean this is kind of going back to the very beginning of our conversation which is the discussion on michael sandel and the tyranny of meritocracy in some way so uh does that mean credentialism will be increasingly more obsolete as we democratize this thing so in other words what is the point of having another prince it seems that the only solution out of this current elite thought bubble of Princeton or whatever is that you either a significant reformer where you simply democratize this to such an extent that the elites no longer exist mm-hmm well as you know both steve jobs and bill gates did not finish college and they did okay i think if you're talking about what you might call vocational tools that's a different thing than what you might call building the soul of society there is what i would refer to as a humanities arts civics meaning understanding the institutions of society and their ramification philosophy and other things that should nurture the curiosity of most every citizen probably should start in high school or junior high school i have a daughter right now in sixth grade who's reading the iliad in the odyssey and writing poetry about it and she's a very gifted student but the uh i think those parts of what i'll call soul development are very important i think the vocational skills which are related to the credentials and the career development and the economic security that one might achieve are a different category and i don't know quite how to organize education so that all of these things are are what you might call at improper levels brought to bear for the young people of tomorrow mr dr there's simply too many other themes we can dive into but perhaps i should consciously gradually wrap up with with one last big big theme i wanted to hear your thoughts on which is the future of capitalism in some way because there you mentioned this iranian view of silicon valley which a lot of people say is the you know this uh shrumpeter strumpeterian creative destruction uh view of silicon valley you leave them alone let them create values and if they can sell a software that's adding money to society that kind of view you don't seem to think that that's the future of capital certainly not the future of well i i think there's a balance here uh i do not think that silicon valley sprung up out of the imagination of a handful of entrepreneurs i think it was guided by DARPA and the NSA and the military industrial complex just and has many side effects that weren't related to the initial agenda that those gifted entrepreneurs and so forth imagined and are now developing and implementing i think the space program had many side effects so i guess what i'm saying is i think there's a role for the state as a catalyst it's not a pure free market individual phenomena that's a fantasy watch adam kurtis's documentary was it all all wrapped up or all caught up in machines of loving grace and it's about the libertarian fantasy that kind of took 60s counterculture and whole earth catalog marketing materials to this notion of freedom of technology but i think that the uh the the sense of the future of capitalism is will whatever the structure the state the private sector how assets and other things are taxed or not whether the nation state can protect you or whether in a global system there's enough sensitivity at the level of global governance to take care of concerns i think these are all very very stressful dilemmas to consider they're stressful because i don't see any easy answers i do think that there's a lot of which might call unintended benefit in some creative destruction but i think if it's unbridled and facilitates a tremendous concentration of wealth income and therefore political power it can times do more harm than good i think we will see if we succeed the state playing a very substantial role in energy transformation so that we meet the climate change before an ungodly emergency overwhelm society i think the state will have to play a role just as but uh being silly if the martians attacked us we would have to have a war preparation vis-a-vis the ufo's in world war two we had war preparation led by administrations seth climb the only climbs older brother has written a book called the good war about the analogy between war preparation by the canadiens who joined world war two before the united states a couple years before and the need for the country of canada to organize itself for energy transformation because they are a big fossil fuel producer so they have both demand and supply side challenges so i i think uh people like mariana matzokato and bill jane way are contemplating these interactions and that has something to do with the viability of the system and the potential for what we might call a mixed capitalism to succeed but i think at the end of the day though the one thing i would say and this comes from my work at the union theological seminary markets and capitalism are a tool not a deity they are means to an end in service of society when used appropriately and to deify them allows their abuses to unfurl to a degree that should never be tolerated but to allow an ideologue to stifle them you know authoritarian control is also dangerous we will need very sophisticated leaders to strike the balance between those two pressures which is saying that the market is not the society and and market value is often very different from societal and social value and we have to be mindful of that and and when markets and capitalism are embedded within a functioning political system and society and democracy it would do a lot of good and if broken it could do a lot of harm i would encourage you to have your listeners and my listeners go to the vbc website and listen to my friend mark carney the former governor of the bank of england's reef lectures of this year and the first of there's one on uh covid there's one on climate he's working with the un as a special emissary on climate uh and there's but the first one is i think the title is market economy versus market society the market economy works as a tool embedded in something that has values that govern it a market society is where market values become the value structure and it's an inversion between means and ends but mark mark is very deeply studied going back to adam smith david hum and others through you know ricardo and john steward mill and up to the present in that 55 minutes you can learn a lot and i'd encourage you to to explore his thinking right now to kind of conclude what would be one contrarian thought that you hold that uh many people around you even at inet or many of your intellectual peers do not agree with i think at inet there's a great deal of focus on this question of the inseparability between politics and economics and what i've said in this conversation is the commodification of social design the moral legitimacy of capitalism is being embedded in a democracy and when it captures governance and can buy policies for instance when the financial sector through its campaign contributions can have itself deregulated maintain budget austerity so that when you need a bailout you have contingent fiscal capacity at your disposal you're allowing that sector to subsidize itself at the expense of the public that's just a hypothetical that it's not i don't think it's entirely hypothetical but i'm saying it's just an example this pertains to many different sectors if the fossil fuel industry is not brought to the social challenge then we're in real trouble terms of life on earth and maybe a few people with a billion dollars of stranded assets can use that money to get on a spaceship with Elon musk and go to mars but the rest of us experience hell so i think uh it's that relationship between defining a moral social vision debating it so that it's not dogmatic or authoritarian and having the institutions that can guide society in that direction i think about things often like how much civil servants get paid in america compared to singapore their paid appendix they sometimes have to go to work for the people they regulated so their kids can go to college that's not serving the american people so i live in america but i mean the concerns are worldwide but i think i think the if you said to me where are my concerns identifying social unsustainability identifying financial fragility identifying environmental challenges is one dimension but that political economic nexus is where they will be solved or not solved and uh i think that's where a lot of despair arises now because they don't see the system of governance and direction and formation of priorities as being wholesome broad-based or sustainable so for the purpose of of my show which is policy punchline we always ask our guests at the end what their punchline is so i guess this this will also go on your show but yeah okay that's fine let's go with your punchlines yeah well i'll tell you i'll give you a punchline for your show first and then my show yes my my punchline is that the situation is daunting it has to be diagnosed but we can't afford despondency and despair and hatred doesn't help my punchline for you is that i'm inspired and more hopeful when i meet someone like you who has humility and curiosity and vitality a bunch of people like you are the kind of thing and i'm not saying they all have to go to princeton we've talked about that but people with your spirit and your unyielding curiosity and your humility and your sense that something's gotta happen is a blessing for us all thank you so much for those kind words mr mr johnson you're way too kind to to invite me on the on the show i mean this is uh it's very fortunate that we got to meet each other a couple years ago i mean i remember uh i i still remember first getting your email from uh jeffrey schaefer who who came on my show and he's also on the on the board for julie frappinowitz center and he was the deputy secretary for treasury for many years and and under bob rubin and larry summers i believe that's great and uh he uh he was on my show and i remember running into him and he said uh rob johnson was looking for you but but he had to go back to new york and he gave me his your your your email and and uh it's nice how how things can and then we had the the very long chat uh last year last march at our in-person annual conference when you uh really talk to me for for 30 minutes at the reception about um people skepticism of academia and a lot of those issues which i think back then i was still very naive to uh more naive than that i'm still very naive today but more naive than to comprehend a lot of your words but right now i'm getting more out of out of this uh every time we talk so uh thank you so much for for for having me obviously yeah thank you we'll have to do this again we will have to exactly