 Welcome to economics and beyond. I'm Rob Johnson president of the Institute for New Economic Thinking. I'm here today with Dr. Brian Barnier who is a guest professor at the Collins Hall School of the City University in New York and he's the head of analytics at Value Bridge Advisors. Brian thanks for joining me. Hey, delighted to be here. I know it's doing such great things in the world and teaching new economic thinking so looking forward to the conversation. Yeah, I always enjoy talking to people from Detroit anyway so but we'll get into the relationship between Ernie Harwell and economics and various other things before we know it. Anyway, we're talking here on the 13th of May 2020. The pandemic is all around us. There seems to have been a very, very profound unmasking. People sensed a lot of unsustainability particularly as it pertained to social unsustainability inequality and they were very concerned about climate and the trajectory we were on but the pandemic brings everything forward and like I said it kind of unmasks the false security or false specifications of many of the ways we've approached the structure and the analysis of society. You've done some fantastic and innovative work in a lot of realms and particularly want to talk with you about things related to financial bubbles and psychology and so forth as we go on but how do you see the world and how it's changed in light of the pandemic's arrival and the call to action that it entails? Yeah, I try to think I'm just sort of following the footsteps of the greats of the past. When you look at the history of economics people were actually trying to explain things. Whether it was Smith trying to explain the transition out of mercantilism or Irving Fisher using mechanical diagrams or more recently Bill Powell with his water machine to try to model the flows of the economy. That's sort of the world that I live in. You've already said that we're kids from Detroit. We grew up on our driveways, fixing cars and stuff like that and so how does it work? Avoiding abstractions, avoiding going things in the clouds and far away and how it works. That's why I'm very intense in data and at the Colm Powell School of Cooney, a teacher graduate seminar on data analytics in financial economics and drill down into stuff because when you get to the data, when you get to the mechanics and all of a sudden you realize it's not so clean, it's messy and you've got to be interdisciplinary. You can't fix your car if all you're doing is saying I turn wrenches and I use no screwdrivers. That's not going to get you very far. You need to have a full toolkit. You need to be robust and this gives you a sense of context and that's important because it gets economics out of a bunch of theoretical specialists to practical systematizers and dot connectors and that's why I was thrilled to have the folks from your team come into my class and share what the Young Scholars Initiative is doing to give them that sense of context and then when they've got that context, now they've got a sense of causality that they can use whether it's for economics or when we're talking in financial markets, trading bubbles, asset management, whatever it is but you need that piece in order to avoid these surprises so it comes back to data and it comes back to these these core pieces. Well, Ryan, in the nature of your work which has been very disciplined about searching for data and also in which you might call interpretation of data for what it is. I guess what is shown by the pandemic is that we've been off course but there's a process of being off course. Why did people derive so much false confidence in an era where you have as you call it global tech trade and transformation and everybody knows things are in transition. Everybody's anxious, whether you call it diseases or despair or you know fear of transformation, fear of transition. We were not in a period of structural stability and yet acting like we were. Why do people do that? Well, to your point earlier, Rob, I mean that's a great question and it brings in psychology. So, you know, those of us that have been in the risk management strates in financial markets or business, anyplace else, you realize that people's brains are sort of blind. Now, I'm no psychologist but of course I love talking to them and getting educated by them and they talk about a notion of structural blindness and cognitive bias. And structural blindness is when we can't see what's around us because something about our structures are preventing it. It's the way we organize data. It's the data sources we pull. Sometimes it's the software we use. Sometimes it's the organizational silos of companies that are there. The silo effect is heavily discussed in this space and so we don't even see what's moving around us. Then the other piece is cognitive bias where we see the information but we don't perceive it correctly because we are proceeding forward with some kind of lens that causes us to not see what's going on. And there's a lot of literature around those two and PhDs and tenure has been gained by futzing with those terms and organizing pieces underneath it. But here in economics what happens or the markets more broadly is that when you are cutting out the types of data you use, for example using only the headline releases from the Bureau of Economic Analysis or the Bureau of Labor Statistics or the Fed's financial accounts and you don't look at the wealth of data that our statistical agencies publish for us. It gets down to state and local data that breaks things out by product types. That's a structural error and then we move over to how do we process that error and there if we are looking at it through the lens of theory that hasn't existed since say the 60s or the 70s which is the case for many things then that causes to misinterpret what we're seeing. You know the notion of inflation is one of those where there's a theoretical assumption that inflation is mostly caused famously by too much money chasing too few goods. But I go to conferences just like you and I ask the question show me a filter that demonstrates that in our world of today where are the mechanics that show me that aggregate average price level change is mostly due to monetary factors being interest rates and money supply and more recently large-scale asset purchases popularly called QE. It's really difficult to find. I think if some of it's there I can point to certain amounts of it around like foreign exchange rates but I've come up with nobody that's given me a model or a filter as we say in econ speak to parse that out and if there's somebody listening to this I'd love to get an email from you showing me your model that parses out all the causes for the price change in every price published by the BLS or even the more summary set published by the Bureau of Economic Analysis. Well I've seen from our earlier conversations and some of the papers you shared with me also a lot of what you might call very severe criticism of Japan that did not bear out and you heighten my awareness as their economy on the supply side was under profound transformation and I was at the World Economic Forum and I was in a meeting towards the end where Corona started talking about your toolkit for macro the notion of a stable Phillips could these just are not the experience we're having and it seems now more and more of the world could benefit from what you might call the example of his perception or teachings but I but I still find it mysterious why people want to cling to these frameworks that how would I say don't explain the evidence they explain what you want to believe not what's happening it is just absolutely stunning Rob you're absolutely right I mean I have my students graph out the Phillips curve and I have them take you know first of all annual data and plot out the curve you know because you only have one point per year and if you plot it through about 1971 it looks okay but as soon as you then switch to quarterly data and you take it beyond then it completely blows up and all these attempts to inflation adjust or you know ex-flation expectations adjust or whatever it doesn't doesn't come together now your point on Japan is very you know contemporary because it seems like you can't go more than a couple days where somebody's talking about the Japanification the Japanification the sky is falling and the issue with Japan is nothing whatsoever to do in terms of the price level with with lower demand per shopper the situation that you've got in Japan when you actually look back the numbers and they're equivalent of the Bureau of Economic Analysis is the Economic and Social Research Institute when you pull the numbers apart what you find out are several things first of all that their demand for durables has actually been very good on a per shopper basis you know per capital basis per population basis and in many cases over the last couple of decades has been stronger than the U.S. so durables isn't a problem then we look at non-durables and non-durables has been stagnant but on a whole but on per person basis it's hanging in there and then we look at services and there the services trends is growing somewhat and then we sort take that apart and we look at what are the demographics and I have to give kudos to a research at U.S. Bureau of Labor Statistics that pointed me to a data set and when you actually break down the things that are falling off a lot of it is like traditional Japanese clothing baby clothing it is stuff like this it's it's a reflection of the demographics that's happening there and then you look at energy well there's a big energy conservation thing going on at Japan and so that's pulling it down and so you don't see this notion of falling demand and falling prices if anything you see durables especially because it's the most tangible thing it doesn't have the measurement areas of services you see that expanding out very nicely and prices are falling and as any shopper today in the midst of covid going to a casco or bj's or walmart or whatever it is prices fall shoppers buy more and there's no problem with that but there's this theoretical stuff the long run aggregate supply curve the L-RAS which everybody thinks is upward sloping that is on a where the vertical axis is price in the horizontal is quantity to say that if price is falling then you must have a collapse in in your quantity but go pull the data from the Bureau of Economic Analysis go pull the data from the Economic and Social Research Institute that's just not the case and yet policies being made as though that is the case they've got an issue of demographics absolutely that's going on over there population first and then the specifics of the demographics second they've got a fear factor that's going on which has been stoked by a lot of policy statements so that makes people be more apprehensive and then third they piled up a mountain of debt and they've been trying to pay down that debt so it's smart not to spend money and pay down debt when you've got an aging population so that's a very rational explanation for and then lastly there's some other measurement issues especially around housing and healthcare and higher education where the way the index is constructed varies significantly between countries so you can't compare these things very easily well at the center of this macroeconomic management and interpretation or false interpretation of data set an institution called a central bank and there are many many facets you know we went through a whole era of central bank independence my dear late friend William Grider wrote the book Secrets of the Temple and a book which cost a little bit of heartburn for Paul Volcker but late in his life he told me might be the best darn book ever written about central banks but these institutions which are said to be most helpful to society when they're quote independent they're said to be most valuable because they have high quality very well educated staff that is independent of a political process it feels like what they are is changing and what they can do is subject to that humility of this unstable structural system that how would I say can't be easily bracketed and put in a put in a file so the recipe book is a little out of balance historically central banks were founded for war finance somewhat later the central bank became important in making liquidity services particularly lender last resort services related to crop cycles and periods of financial instability and finally was the macro stabilization where in the modern term independence meant the central bank didn't need to goose the economy for the incumbent politicians just before an election but when i look at i look at this world now and you've said it to me in many ways central banks are fiscal agents in many ways by controlling very very large elements of what i'll call contingent fiscal capacity they may be a stabilizing force in the middle of a crisis when you're going over the waterfall and that's helpful but they may be also be what you might call the symphony conductor of the mother of all moral hazards and building bubbles and building aggressive reckless behavior among those who feel like they have political access to a one-sided bet how do you how do you see central banks today you know we talked implicitly about the macro instability so that their framework is a bit ajar but i i sense a deeper hostility now particularly after 2009 and beyond towards central banks as though they are what you might part the the fulcrum of a crony capitalism yeah i mean as they change their missions all they open themselves up to a variety of issues so let's just take as a departure the point that you mentioned before when you're so nicely going through the history so when you had this view that the philips curve was operating and the l rassus operating and all this other stuff that all right they had a set of policy objectives in the u.s the federal reserve website list three right you know interest rates stable inflation and unemployment or employment other countries they got different objectives but generally something around price level what happens is that when money supply is not a big driver and interest rates are not a big driver of of aggregate average price level right inflation is a theoretical concept deposits most of that generalized or average is coming from monetary factors when that doesn't happen right because durables have been falling since about 1995 in the u.s right non-durables have been flat for the last decade prices or for services have been going up but when you tear those apart what are you seeing it's like housing right which is controlled by a lot of government policy or the central bank's purchases of mortgage asset bass securities um you've got health care which is Janet Yellen pointed out in her october 27 speech to uh the national association of the economist you know that's a big factor of play and if the obama care thing hadn't worked the price level had gone up and that would have triggered them to be more aggressive in their monetary policy and then there's other things like you know higher education and stuff but as governor carney says those are policy inflation things right nothing to do with the central bank so the notion that the two big central bank lovers or three in the age of lsaps large-scale asset purchases can affect price level is sort of out the window and the notion that it can affect the unemployment rate uh unless you're into these liquidity issues as you just mentioned we haven't seen a lot of that over the last couple of decades so those big pieces are gone what does that leave a central bank as being well it's sort of a back to the future notion of liquidity as a service as you just mentioned or as you also mentioned being a fiscal agent for treasuries and of course remember when you go read the essays where they take it country by country a lot of those central banks are not as independent as one would think they are and then that comes into the issue of they're searching for a mission right it's like you're a hammer in search of a nail we got to do something right and they do have the ability to act fast faster than a deliberative elective legislative body so they do have the capability to act fast to walk into an fomc meaning is a bunch of non-elected people and walk out with a decision that financial markets are paused for but then what can they do with that right because you throw out all that cash and where does that cash go and this opens a discussion that you've had with some you know of your colleagues and on it for a while about is the central bank have any role in redistributive effects or not they're using blood instruments so while they're not specifically social or regulatory policy other than when they're working on the bank regulation side they are blunt instruments and so therefore they will affect people in different ways there will be discontinuities there will be distortions there will be inequities because of how these things hit people and that's the fact of life and the issue is in how do you manage that yeah well i remember uh during the 2008-09 crisis a lot of people as their economy went into recession felt like their municipalities had to balance their budget unless somebody bought issues of municipal bonds so it would allow their police departments and their schools and their local infrastructure to be invigorated and sustained at the same time while the fed didn't choose to buy those things they did buy a lot of the complex mortgage derivatives off of the balance sheets of many financial institutions and they could say and there is a logic to it that what they were doing was uh fortifying the financial system so that it didn't through negative externalities take down the real economy with it but just at face value it felt to people like the fed was picking winners and the winners were not the population they were the people who had made the mess and i think i remember Paul Volcker in the last years of his life was very very concerned about the integrity of central banking as he set up his Volcker alliance and i think i remember there was a group of 30 report which he had a lot of heartburn over because the authors were advocating for fortifying the credibility of bailouts ex ante by giving uh extra powers to the central bank and this felt like uh how would i say to some people that the fed goes in and they intervene when things are in distress and they actually make money by buying the distress alleviating it and then putting things back in the market later others said well you won that round but what happens when you lose and why should you have the right to use that fiscal capacity that might be devoted to paying municipal workers pensions like in the city of Detroit new infrastructure tuition a green new deal so the the kind of mythology of scarcity was blown open by the snapping fingers and two weeks later a tarp bill of over 700 billion dollars was materialized after the Lehman crisis and now in this pandemic crisis you have the snap of the fingers and trillions of dollars are being passed around by the central bank with the cooperation of the treasury department i i wonder how long we can continue like this before which you might call the eruption of distrust starts to overwhelm our politics yeah and that's a great question and um since you tossed out Detroit i'll have to you know bite at the head first but i mean what you've really got here is the ability of these funds we don't fear inflation you know monetary inflation intangible products goods and services that you know is out the window maybe it's going to find a way to come back but you know we haven't seen it in you know decades and the the causes we look for aren't there either so what can it do it can bubble asset prices so i did a piece several years ago at the end of the LSAPs and it also ran on yahoo getting getting hundreds of thousands of hits but it was basically with some you know not too difficult visual calculus to say that 93 percent of the gains in the market you know over the time of LSAPs were from LSAPs and that everything else was just the end and when you talk about the pension funds this created an enormous difficulty for people trying to pay pensions for you know municipal workers you know teachers for the whole state my mom's a retired teacher in michigan because a lot of them using their asset allocation models wrongly under and risk management models wrongly understood risk and so they entirely missed out on the rise of the public equities markets during that period and that then drives back to these issues about where we get money to pay people and this drives back into the issue of of the moral hazard that you mentioned in terms of how we pick in winners and losers in this of course the desire is not to pick winners and losers the desire is to say let's freeze everything and then you know try to basically reset to where we were and then let things play out as they naturally would but this stuff you know is trillions of dollars in activity and it's going some place other than than others so how does that come out and it screws things up for institutional investors because pension funds endowments trusts family offices that kind of thing because they can't just sit back and say we're going to look at market risk they're now tied to real business operating risk and that's something they haven't done in a long long time really since the 1970s are there about certainly since the late 1980s with the beginning of the derivatives they just looked at market risk and it was really you know trading spread risk like when you were in the hedge fund and fees that was making things work out for asset managers and then passing stuff on and the bottom piece that just chugged along because of the expanding credit bubble whether it was consumer credit cards home mortgages LSAPs whatever that's what was driving this big underlying gain in asset prices but that of course worked out for some people better than others and today because people fundamentally don't understand how the economics works that's where they get thrown off when it comes time to make risk management and asset allocation decisions in things like the pension fund for Detroit and many others and that's where people end up getting hurt because we have so many disconnects in the economy and that's added to by these trust issues you just mentioned because now you're trading based on a jury expectation about what the next FMMC pronouncement will be or ECB or whatever it is instead of how are companies producing widgets what's happening at the Ford Rouge plant or any place else that's growing the economy well there's a writer named Ian Welsh who has a very very interesting website and he about a week ago wrote an article on how he thinks neoliberalism is destroyed capitalism and he talked about how this which my call ability to apply broadly the anesthetic that we might attribute to central bank injections of liquidity services has kind of devastated the economy and he's talking about how the stock markets are doing pretty well the big banks are doing pretty well but in the midst of it all about 40% of Americans small businesses are threatened with closing permanently so the stock markets are doing fine but the small businesses aren't I think how would I say I don't know that people will attribute that so much to the central bank as a conduit but to the system and the the priorities of the bailout that we've seen how do you how do you react to that notion that Welsh suggests may be upon us yeah so it's certainly a valid point I peel it back a layer because I'm a data guy and the stock market you know is you know 10% 15% off of all time highs depending on what you're looking at but when you look at these broad indices we got a peel them back right so you've got you know five companies that are 20% of the market cap 21 last I think I checked of the S&P 500 right so they're having this huge outside outsized impact and they're all tech companies so and you've got you know Uber going after buying Grubhub now you know M&A and alive and well in that space so first of all it's an issue of aggregating rather than looking at the the details but then because you've got a lot of companies that are ailing in the S&P 500 as well but then second of all you look at where is the money coming from to fund this stuff the money has got to come from somewhere and that's back to this issue that happened during LSAPs the money is coming out of the central bank whether directly or as a fiscal agency and as making itself available in the markets and that finds some place to go so it's not to dare ourselves too much but you know Detective Colombo and follow the money and if you follow the money you can and you can use the federal financial accounts for this or if you're an investor and you've got access to a bit of database you can do that too but you can follow the money through and find out where it's going from coming out of the central bank coming we've got a lot of money coming in from overseas that you know varies but this is flowing into the US private or public equity markets and allowing that to happen so that's what the mechanics are of how does that work you've got this other issue that then is one of the mechanics of these small businesses that aren't getting money what are the industries they're engaged in what are what's shuttered because they're a restaurant or a service business what's shut down because of the supply chain that's in and then some of these are like going great guns because they are in areas of high demand and and then you've got those when you walk through the whole supply chain piece you know that they have dependencies on overseas that was shut off on them or you're in the meat industry that's had troubles so we've got a whole bunch of stories there and this gets back to your earlier point you can't look at the blood instrument of the central bank you've got to get more granular with figuring out what's going on and where you've got these disruptions going on in the economy and the stuff that's coming out so far is having a very difficult time targeting does that make sense yep oh yeah now I guess I guess see the question I'd ask is if you're a small business or if you're an emerging market country how would you advise them on a survival and resilience strategy in light of what you see before you yeah you know again very insightful uh and it'll take those in two pieces so first let's look at the the small businesses if we go back to being mechanics with wrenches in detroit how do these things work the good news is a lot of these small businesses have a good sense of how things work they're not like you know stratospheric CEOs on top of huge companies that barely understand how the things are made in their companies these people are much closer to stuff when you look back into the supply chain and for them it's an exercise of will what I need to make and will where I need to sell it be there and how far back will that that come some businesses were teetering and this goes back to sort of moral hazard point they may never come back because they had uncertain futures anyway others like for example we read a lot in the news recently about these businesses that are you know attracting people because they're in low density areas and they're marketing like crazy to get people to go do summer tourism who are all penned and cooped up under lockdown you know they're going to do well or people that are doing you know various kinds of things in the restauranting industry you know all the stuff you see in the newspaper you've got opportunities there the thing that's really a killer in the small business space is the short-term carry financing and then the other pieces people that are trying to pivot and that are really struggling to pivot because they don't know how to connect with buyers of what they see is are these scarce products and there's a lot of inefficiency in the market right now and that's where I look at some things that chambers of commerce or industry associations and others are doing say for example a caller was on recently that was trying to connect women farmers that normally fed the hospitality industry with truckers and the grocery supply chain to get them connected and get their their food into the grocery store so it is not you know these tragic pictures we see on tv of you know vegetables rotting and eggs and milk being broken and destroyed and everything else so those kinds of things have caused you know great amount of of damage that was completely unnecessary but it's in an area where again people don't understand how it works anymore the details so all the big program planners had no clue how these pieces work so those two pieces are the sort of the tragedy of the small business that I'm most focused on and when I reach out and talk with those folks is where I'm at from you know my world of data and mechanics does that make sense yeah well one of the features that people are talking about in our segment of the INET Commission on Global Economic Transformation that Joe Stiglitz and Danny Roderick co-chair pertains to the notion of what you might call the the structure of globalization what is the pandemic going to do to the notion of a global supply chain so this is one of those really great questions where in some cases you could say oh yeah there's me all this but people that are making that statement are not realizing what's already happening in the global supply chain for other reasons good and bad right you've got the ascendancy of India and Vietnam and that are trying to pull stuff away from China already going back years you can see it in the data and their activities Prime Minister Modi with his made in indian initiative and his incentives Japan incenting people in their bailout packages to help Japanese companies take china-based stuff and move it to some other country all these pieces are out there and that are already happening previously and now they've been accelerated by this another big trend that's been out there for years and this goes to your earlier question on emerging markets is that the traditional path and development of economics for a country has been starting the extractive industries agriculture and mining then build up a little bit like do more processing for your mines more food processing before you ship it off and then let's get into manufacturing climb up the manufacturing scale ever more sophisticated manufacturing that demands higher skill workers and you make tons of middle-aged wages and tons of exports and the world will be a good thing and reduce your dependency on imports the problem is that's been blown up by this global tech and trade transformation really by automation and it's been going on for centuries i mean real hat tip of book is Sir Harold Evans they made America two centuries of innovation from the steam engine to the search engine that's just about the US but now that's gravitating around the rest of the world as well and so the traditional path out of difficulty has been removed and the big you know sort of macro type economic programs to get them out of this that are focused on you know multipliers and money and rescue packages and all this they're not addressing these decades of underlying change and saying how do we take people in those countries who have domain knowledge about how to get something done how do we marry them up with people with tech skills better how do we give them the tech skills so that they can then improve those environments and then grow i mean a real poster child these days for example is Armenia where i've been several times and you've got the opportunity to grow in some of these spaces so that's this opportunity that people are overlooking because they're thinking it's just covid or it's just trade wars and not understanding there's decades of stuff that's been going on that is first of all been killing the path economic growth and second of all all these other country activities each trying to figure out how they can be a sourcing base and grow their exports and do it in a way where the automation that they're achieving to do it does not kill off their own jobs opportunity because every time some country prime minister gives a speech and says we're going to have more robots in the next country that means we've got fewer ways to employ people so these are these big issues that need to be focused on and there's good ways to do it but they're being overlooked as we're just sort of glossing over this and in the theory of economics or you know the geopolitical response does that help yeah well let's focus on what I'll call advice to the young scholars you'd mentioned they had come and visited you at the Colin Powell school and that they're almost 12,000 strong now with them in mind what are you what guidance would you give them I think this opportunity a lot of the what you might call stale traditions or paradigms that were misleading have been brought back into question I guess I'm asking about career development I run the organization what kind of courses lectures processes should be put in place to invigorate those young scholars and set them off on a course towards a healthy leadership and a reinvigoration of trust and faith in the integrity of and the value of expertise yeah I mean that's awesome and you're doing so much it's great already Rob it's all I can do is sort of emphasize put frosting on the cake I mean my way of thinking this is sort of back to the future as I said earlier because remembering that early economists were appreciative and trying to figure out how do things actually work I mean they were in factories they were looking at transportation looking at ships and stuff like this and then you also understand the context this came out of you know with mercantilism and the wars at ravaged Europe there's a great sensitivity to reading sort of the they are our geopolitical analysts of the past right Plutarch and Thucydides Plutarch's lives and Thucydides histories from the eastern signs Sun Wu or Sun Tzu as it's preferred and then you know just clear thinking it's new economic thinking we'll put a capital T in both letters around thinking read your Aristotle read epistemology understand how to put an argument together and what evidence is so that you know what you believe and why you you believe it and and that from your point about courses rather than blowing off all those cognates you know take you know cognates that help you build this I mean I had some in political science I did survey research at Michigan which is awesome right because that's where the Michigan survey of inflation expectations comes out of but there's other stuff right and that stuff is that survey is not stratified to this day the way you would if you were marketing orange juice and you know doing representative samples for you know market research or for politics and so we don't appreciate the the gradations when we look at at that survey so that helps I took my sciences and and astrophysics and it was great right because they were talking about how to understand and filter out data in astronomical observations you know way outside of our solar system and way in the galaxy looking at distant objects a lot of that you can bring it to economics so and then of course business right so where I teach the Coal and Powell School we've got an integrated economics and business department and many other schools do too I came out of that the University of Michigan starting in liberal arts and going into the Ross Business School you have to take operations management you've got to take financial management you've got to take financial markets you've got to take organizational behavior right so all these things that would otherwise be a shock to economists you get as part of your required core courses before you then go on and do your specialty so that's an opportunity for the scholars all over the world and then there's this explosion of data analytics but I emphasize in my class decision science decision science was really formalized in the some of the 1930s here in New York by a guy by the name of Walter Shwart at Bell Labs and looking at how systems work and all the system thinking stuff and cause and effect and trying to say can we connect a telephone call right became very important details to make work and then one of his great students and disciples was the famed Edward stemming who took systems and then who rebirthed Japan and who did so much to drive down their costs of their export industries and improve innovation and quality and and I guess I'm hung up on the back to the future movie today but when Marty McFly tells the shows the camcorder to Doc Brown he says how could it be from Japan because he's in 1955 and Marty McFly and speaking in 84 says well all the best stuff comes from Japan right and even you know the James Bond movies in the 60s right you know one of them showcased Japan and all the high tech stuff that was coming out of it that was all of this playing out and so the scholars need this kind of sense of history and where to put things in and they need hard data and then that allows you to get to these issues like understanding why behavioral yeah of course and when people look at externalities yeah of course how could you not do that when people look at utility functions in a very antiseptic kind of isolated way of course you need to understand the behavioral issues of all the things that people are thinking and it's not just some kind of you know numerical trade-off and then you bring in the interactions be human beings and it's now you're in a market right people picking over different oranges are buying different things but that's the power of what I see and you know I encourage listeners if they haven't seen your YSI videos to go on your website and look at them and see the energy that's coming out through them so it's all of that and and more to help people think differently one of the areas that you and I've discussed in relation to W. Edward stemming is the notion of how education is structured in America and Andrea Gabor who wrote the book The Man Who Discovered Quality and how he brought how Deming brought the quality revolution to America and then to Japan was recently applied to people by people in Texas to the governance and invigoration of a local public school system and we'd been used to large foundations you know the Walton family Gates Foundation Mark Zuckerberg and others who were well meaning trying to effect change in education in a way that would put people on a better trajectory but the people who adopted Deming instead of a top-down kind of vision from on high pledged faith in the next phase in that down in the grit down in the texture of the process and to let those people be at the the core of that innovation and according to Andrea Gabor in her recent book After the Education Wars America should have a very very deep look at the lessons of this positive experience that has arisen in Texas with the help of the insights of Deming and it's my it's my hope that people looking at central banks like you will be brought into central banks because they're a bit untethered right now they're a little out over their skis and you can help them rather than embarrass them and i know that's your your intent and people like Andrea Gabor can help people understand that these kind of dehumanized mechanical approaches to analysis of things like education systems are are full of danger of being false certain and misleading so when you tell me Aristotle or Thucydides or Plutarch or Sun Tzu or Sherward or Deming or Andrea Gabor i just i feel like it's it reminds me of the song by Natalie Merchant called These Are Days These Are Days You'll Remember but she gets into the middle of it she says see the signs and know their meaning and the signs we can see now are that our frameworks have been found lacking in yet in our midst our examples in beacons like yourself for moving things forward and being a better service to society and being of service to reinvigorating the faith and the trust and expertise Ryan thanks for being with me today this has been a delightful discussion absolutely delighted to be here and i just wish you all the best and and what you're doing with INED and with the young scholars and just really want to thank you for all that young scholars and issues doing for the students we've got at Colm Powell School in Harlem in New York City so thank you so much we'll talk again before too long i'm sure there will be plenty to discuss in another episode of this podcast thanks again right oh bye bye and check out more from the Institute for New Economic Thinking at InetEconomics.org