 This is Rob Johnson. I'm here today, and I must say glad to be here today, with Alan Blinder, a professor at Princeton University, former vice chairman of the Federal Reserve Board. He's written many books, Illuminating Finance. The one I resonate with right now is after the music stopped about the great financial crisis. I might also say that Alan was a tremendous mentor to me. I worked as a research assistant with him, a teaching assistant with him. He was the head of my dissertation committee. And I will say without any conflicted feelings whatsoever, he is the economist on this planet that I think has the best sense of humor and an improvisational sense of humor at that. He's got an extraordinary family. It's been a great gift to me to know you, Alan. And thank you for joining me here today. Thank you. That thing about the sense of humor is not that high of R, but thank you. Well, I don't know. I think you're, how would I say, some people can script it. You improvise, and I like that. I got a jazz music father, so I think improvisation is an extraordinary talent. Anyway, so we're at the, just past the anniversary of the Lehman crisis. And I think, how would I say, looking back on what happened, what we've learned, we've experienced a great deal of decline in the trust of governance and the trust of expertise, according to all the surveys, whether it's Gallup or Richard Edelman, who works with the World Economic Forum. And I think there are a lot of people, I know Martin Wolf, who I've done a podcast with, has written a book on the crisis of capitalist democracy, and he is concerned about the temptation towards authoritarian alternatives. And this mistrust, this fear, this sense that it's not working for me is, I think, very dangerous. So I want to see what you think has happened, is happening, what have we learned, what have we not learned? Well, on that theme, if we go back to 2008, we could talk, and we probably will come back to it, to the plethora of errors that led to this financial calamity. But I think what you're pointing us to right now, Rob, is more about the aftermath, the backlash. It's a great irony, I used to be Vice-Chair of the Fed, as you know, it's a great irony to me that the Fed, in my view, after Lehman Brothers, after, not before, after Lehman Brothers did almost everything right. I wouldn't say they were perfect, but who in the world knew what was perfect in real time? But their performance after Lehman Brothers was very good. And yet, it led to a tremendous backlash. And to your point about governance, the broad public, unlike you and I, and probably the listeners to this podcast, don't draw a big distinction between the treasury, which is part of the political government and the Federal Reserve. It's all the elites, the government, et cetera, et cetera. We draw a tremendous line between those two. One's in the political world and one is out. And it really is out of the political world. Doesn't mean it can't make mistakes, but the mistakes are not driven by politics when it makes a mistake. But the broad public doesn't. So I, to this day, I'm not, I don't think people draw distinction between the TARP coming out of the political world, out of the Congress, and the president. The TARP was very, very unpopular. And many of the things the Fed did, the alphabet soup of Federal Reserve rescue operations, or by the way, non-rescue operations, which was Lehman. And just as an aside that we'll know how to come back to, I think the biggest single mistake in this was the tremendous asymmetry in the treatment of Bear Stearns six months earlier and Lehman Brothers six months later. And that was on, that was mainly on the Fed. I mean, it was on the treasury too. But the, and the other thing that I think most of the broad public doesn't draw a distinction between by the way, not by accident, you hear Jay Powell say this about 18 times a week, is between lending and spending. Everything the Federal Reserve does is lending. Many of the things the Congress does is spending. They do some lending too, but mostly it's spending. We draw huge distinction there, but I don't think the public does. So when they hear about lending under TARP or under many other, many of the Federal Reserve programs, they're reading it as spending, spending taxpayer money. And you know, you can ask yourself, I think you know the answer roughly, how many people realize that the banking part of TARP, now there was some losses in autos, but the banking part of TARP turned to profit for a taxpayer. That was not its purpose, it wasn't designed for that. But in fact, it turned to profit. I'm pretty sure if you went out in the broad public, those that could still remember TARP, they don't remember it finally and they think it cost a huge amount of money. Yeah, I think the, how would I see? They saw the outlays, but they didn't see the net return, and at some level it was not advertised by the policy makers and the political leaders adequately so that they would understand what you just shared with us. Yeah, not enough, not enough for sure. I guess the other question that people would ask to give their eggs a little bit of validity is had I gone to the window, would I have gotten help? Like the banking system could because of its political power. So they don't feel like that's an option for them but it is for the too big to fail banks. Absolutely, one of my pet peeves about this, the way the government handled this crisis and the aftermath is the insufficient attention to mitigating foreclosures. This is exactly to your point. That is, the public could see and detest that the bailouts, quote unquote, of many of these financial institutions. Now, not all the more bailouts, Lehman is a prominent example, not a bailout, but there were things that could be called bailouts. And the Congress, when it legislated the TARP, wrote in about four or five or six places. They're in my book, I looked them up. When I wrote the book, I don't quite remember how many there were, that some of the money was supposed to be used for foreclosure mitigation. And in fact, first under Paulson and then under Geithner, hardly anything was used for foreclosure mitigation. So if you were a homeowner that got stuck with an unpayable mortgage, you were not gonna go to the quote, window, the TARP window and get your mortgage taken care of. You may remember this, Rob, this goes back a long time. I wrote in 2008 sometime, I don't remember the month early, I think, an op-ed reminding people of the homeowner's loan corporation from the New Deal. And that's what that was all about. That was about bailing out homeowners that were gonna lose their homes. And there just wasn't nearly enough of that in the response to the 2008 crisis. I remember in the aftermath of 2008, a couple of very intense experiences that I had where people brought me out to conferences. First in the Las Vegas area, Nevada had been crushed by the mortgage decline. And second was in San Bernardino, California. My late friend, Stephen Guckstern, was working with a bunch of people on how to restructure things because San Bernardino was way underwater. Their banks had been bailed out, but they got no write-downs or even restructuring. That was a problem, you know. And it's not like people had a misapprehension about that. They were right that the government did not do enough to bail out the homeowners who, you know, you could say, and conservatives do say, they were foolish to enter into these contracts and a contract is a contract. But there was an element of this where it's only slightly unfair to say they were duped into them. It is slightly unfair, but only slightly unfair. They were duped into them. And, you know, the part that's slightly unfair is they succumbed, as did Wall Street, to the euphoria of the day, right? And the euphoria of the day was that house prices are just gonna keep going up 10, 12% a year forever. Really, forever? Do the math. Put your calculator on that. And so, you know, you could say they duped themselves. They never should have believed that. But a lot of people believed that. And a lot of what was the nonsense that went on on Wall Street was predicated on that. So it wasn't only the dumb people, it was the so-called smart people too. So I guess the question, I feel there's a great deal of confusion. And I'd like you to help me and our viewers and listeners untangle this. There's a lot of discussion that says markets provide proper incentives and governments intervene and they make a mess of things. On the other hand, there is this enormous crisis right before our eyes at the time of the Lehman crisis. And it may have been triggered by the lack of activity in supporting Lehman like you did Bear Stearns, as you mentioned earlier. But not doing something and watching the system crash seems to me to be a horrendous error. And then to justify the criticism by saying we should have just left it alone and watched it crash doesn't make sense to me. No, I mean, it would have been much worse. I mean, we had what looked like at the time to be a terribly deep recession. Now then the pandemic came and nothing looks deep compared to that. But at the time it was the worst recession we had had in the post-war period. And it would have been a lot worse were it not for the amelioration it was done in a variety of dimensions, not all good. But there was, we were talking about the monetary side there was also a fiscal stimulus as you remember at the beginning of the Obama administration with a lot of screaming it was too large in retrospect it was too small. When I say that by the way, I don't mean to criticize Obama, I think that he got through the Congress the most he could get through. Yeah, people say it should have been a trillion dollars. It wouldn't have passed. I was gonna say the Gingrich and Trent Laugh coalitions could block it at that size. Yeah, it wasn't gonna pass. But anyway, so that helped. But it had these things not happened had there been no tarp had there been no stimulus and so on this economic calamity would have been much worse. Yes. Then it was done. To the point you were asking about before my metaphor, you were talking about sense of humor. My metaphor for the whole episode is that Alfred E. Newman on the cover of Mad Magazine saying, what, me worry? There were a lot of people that should have been worrying about a lot of things and it was what, me worry. This includes bankers, boards of directors of banks that weren't doing anything close to due diligence or watching what management was doing. Excessive reliance on self-regulation. I don't wanna quite say that's an oxymoron. I don't know that there's an English language word for a semi oxymoron but it's a half oxymoron anyway. The rating agencies did a terrible job and by the way, that bad incentive, you're talking about incentives, that very poor incentive is still in place with a borrower pays for the rating and then there was also one of my pet peeves was the compensation schemes that traders and executives were getting paid under, getting paid. Never mind the munificent amounts. That's a never mind to me and you but not to the public. That gets the public really mad. But the way it was structured, so that if a trader on behalf of a company made a huge bet and lost, he got a slap on the wrist. He looked at his bonus was taken away or maybe he lost his job and he had to go across the street to get another job but the shareholders and sometimes the taxpayers got a very big bill. Yep, yep and I remember some concern being expressed and there was a paper that I remember by Sandy Grossman and Oliver Hart about the need for what I'll call board members and large stockholders to discipline management. But the management's were creating what I'll call one-sided bet amplification of their compensation and what I thought Grossman and Hart showed was if you're a shareholder particularly if you're a small shareholder the amount of effort to bring it under control is a public good for all shareholders and exceeds the incentives of the individual. So the only people who could take that on were highly concentrated owners, large proportional owners of the company but to count on the board to regulate the incentive structure and then the actions taken in what looked like a one-sided bet was difficult to implement and sustain. Yeah, very difficult and most of these boards fell flat on their faces and didn't do what, just picking on what you just said. The boards are supposed to represent the interests of the shareholders, not of the managers and they didn't do that. But I also am somewhat worried about what you might call the confidence that executives have of their ability to influence politics and what you might call shape the design of crisis management in a way that transfers the burden away from themselves through their ability to with fundraising and high net worth capacity to influence politicians who themselves have to raise very large amounts of money to be reelected. They need a war chest and it's not, they're risking their own survival if they don't accept the contributions but the contributions come with an obligation. I have a friend who I won't mention who retire, I won't mention by name but who retired from the United States Senate. And I said, why did you leave? And he said, because I couldn't any longer take spending 70% of my time raising money from people who wanted me to hurt my constituents that I represented. Even without the latter, these people spend a lot most of their time raising money even if it's not about hurting their constituents. Right. But this comes back to a very deep and insoluble in our system question of financing of campaigns. It's one of the tremendous ironies is that if we would only do public financing of campaigns, period, no private donations at all, this would cost a pittance. The bill would be paid by the taxpayers. It's a pittance compared to what the current system is costing us in terms of bad policies. But you can't get Americans to go, first of all, you can't get Americans to go along with that. The idea that they should pay for these campaigns through their taxes is repugnant to quite a few people. And then we have this old, people talk about Citizens United. We have this much older case. Is it Buckley versus Vallejo? Not sure I'm remembering the name right, but it's the one that identified money with speech. Money and politics is the same as free speech. It's not the same. It really is not the same. But we have this now in our law. And as long as that stands, and boy, you can be sure this Supreme Court's not gonna change it, as long as that stands, we have an insoluble problem because as soon as you get anything you try to do to regulate it, oh, that's a violation of free speech. Yeah. Well, I'm laughing, because when I started my career on Capitol Hill, Paul Volcker was the chairman of the Fed and I was placed working with Pete Domenici on the Senate Budget Committee. And then the first few weeks that I was there, the Senate Majority Leader, the Republicans were in control of the House and at the time I went 84. And Pete Domenici introduced me to Bob Dole and at a quiet period, kind of an adjournment, Dole said to me, I'm very concerned about deficits and you're trained as an economist. What would you do if you could do one passage of law to make sure that we had proper budget discipline? And I said, just as you did, I've echoed now, I would have, number one, made everybody who has the license for radio, television or whatever to put public service announcement time for free on the list. So whether it's CNN or WWE and radio in Detroit where I grew up or where, all of them have to do something so you're not paying like you're selling soap or advertising. I said, the second thing is I would have the public pay for everything so that all this pork that you see politicians selling to get donations wouldn't happen. And I think your discipline will go up. And Bob Dole looked at me grinning and started laughing and he said, that's a great answer, except for one thing. If I put a bill like that on the docket, I couldn't get 15 votes out of 100 senators because the advantage that incumbents have is that they can sell policy. And so he was saying, yes, it would work just as you offered, but I can't get it implemented. Yeah, no, these are, you know, we're just talking the two of us. These are pie in the sky ideas. Yeah, yeah. There are some more realistic ideas, but this, which would be a real solution is a pie in the sky idea, it's not gonna happen. Yes, but I'm coming back to the financial sector in the context of this money politics. Do you think there are things that we didn't do at the time of Dodd-Frank? I mean, there's two dimensions. Tarp in the structure of the bailouts. And then the second is in Dodd-Frank for the ongoing future. Are there missing ingredients in your mind? Yes, now I'm not gonna come up with all of them because I didn't anticipate that question, but a few things. I mentioned a few minutes ago, the rating agencies. Dodd-Frank asked for some studies by the SEC and for something else that I'm forgetting right now, but it didn't even strongly suggest that would have been a minimal idea that the borrower pays system of compensating the rating agencies for their work should be abolished. Congress would have had a hard time writing in legislation exactly how to do it, but could have made a stronger requirement on the regulators to figure out how to get this done. Secondly, I don't think it's been such a big problem. You may correctly, if you think I'm wrong, I think more could have been done and should have been done about standardizing derivatives and having them exchange traded with all the greater safety that that entails. Things were done. I don't wanna say they didn't do anything. And that part of the financial system has looked better since than it did before the crisis. So there was some progress on that. You mentioned Rob off balance sheet. I think maybe more could have been done. Again, Congress wouldn't have been able to draft the legislation, but could have instructed the SEC and the financial regulators to do whatever they could to get almost everything on balance sheet. That's kind of vague and that has to be vague. I mean, first of all, I'm not an accountant and I couldn't do this myself. But if I could, it would take me a week and a half to finish the sentence about what you would have to do. But I think more of that should have been done. And then the other thing I'm trying to remember now, it's that was 2010. I don't remember if they did anything at all about strengthening the fiduciary responsibility of boards of directors to the shareholders. I don't recall what that happened, yeah. But that was a weakness that was, I mean, it's not like it was unknown. I could have asked you about that 12 years before the crisis and you would have said something sensible about it. But the crisis really brought it to the floor and the Dodd-Frank, as I said, I'm trying to remember, I don't remember Dodd-Frank doing anything about that. I don't either, but I think what I call the Emron problem of allowing things to be affecting the net worth and stability of an institution, but not be on balance sheet, be hot hidden in special purpose vehicles. I thought it would contribute a great deal to the shock and surprise of the Lehman crisis and that hasn't been eliminated. Yes, I can look, I can tell you without naming names that I heard from one or more CEOs at the time that this was all breaking, that they were only just now learning about the off balance sheet sieves that their companies had. They didn't even know. Sieves stands for special investment vehicle. Yeah, sorry. Yeah, no problem. But I think, so the question at some level, this is really getting into the muddiness of the interaction between politics and markets. People are told that government can make a mess of things, but it can't do things right. Yeah. And when you see the idea, that's right. But I'd say that, but people are told that regardless, my ears are there regardless of who the spokesperson is. But when you experience an inadequate response, it verifies that somehow government didn't do right. On the other hand, government monitoring, regulating, supervising, examining, deterring certain activities is essential to the integrity of the structure of financial markets. And as the financial markets have gotten so large, their ability to, which you might call, transmit shocks into basically every household is enormous. So we need governance at a time we don't trust governance. How do we get more governance and make sure it's the quality that will rebuild confidence and faith in our nation at a time when the anxiety associated with loss of confidence and expertise in governance is playing an enormous role in the dynamics of politics and elections and other forms of social hostility. Yeah, that was a question. Can you get Fox News to change their ways? I think it's pretty hard. I mean, as you were saying this, I was nodding in agreement, but also thinking of non-economic examples. Look at the damage that, let me just call it the right-wing media, but has centered on Fox did about vaccinations. I mean, Anthony Fauci is portrayed as a villain. And this for urging people to get vaccinated. That detriment, some day I'm gonna see, won't be me, somebody with much more knowledge, give an estimate of how many people died that shouldn't have died because of how badly we handled that. Now people are dying in that case. In the financial world, people aren't dying. They're losing money, they're getting duped. My answer to your question, sort of, and it's not really an answer, is when, excuse me, when a crisis occurs, that often gives the political impetus to do something on the regulatory front that with normal politics, which is what you were talking about, Rob, is constantly getting eroded. One company after another is petitioning the government and getting, or company or trade association, whatever, getting regulations eased. When a crisis comes, that's an opportunity to get regulations tightened. I wrote a paper about this years ago and I argued, and you'll, I think, resonate to the argument, is when those opportunities come, we should go overboard and over-regulate. So, you know, let me be metaphorical. If the right amount of regulation is 10, you wanna go to 12, because before you know it, it's gonna be at eight. The normal politics is just eroding the regulation. Now, can I ever tell that to the Republican party? No. Yeah, yeah. But I would also, I wanna be a little bit careful. There may be a lesser of two evils, but I have a lot of friends who felt abandoned. I grew up in Michigan. They felt abandoned by the Democratic party, NAFTA, the support in the great financial crisis for the auto industry, which allowed money to be used to continue to build plants outside the United States. There, and you can see this, even within Democratic primaries, where Bernie Sanders won the primary in 2016 in Michigan, they talk about the net worth of United States senators or members of the House and so forth, and they don't see why someone should be worth tens of millions of dollars after spending a career many people in the Democratic party have argued against being prohibited to work on legislation that affects companies where they own stock. In other words, there's suspicion of both parties that's quite profound. And while there may be a lesser of two evils, it's not all on one side. Yes. No, that's correct. I mean, again, if I rule the world column, I would not allow any member of Congress to own stock in any company or group of companies other than broadly, own the whole S&P 500 or the Russell or whatever you want, but not a particular company that would give you a financial conflict, potential conflict of interest. Well, somebody that's sufficiently principled will not be swayed by the conflict of interest, but we're not gonna be able to legislate that Mr. 2, 7, 19, and 42, they're so honest, that's fine, the rest we worry about. So you just need to make a blanket. Again, this is pie in the sky, it's not gonna happen. A blanket rule that you don't own individual stocks. Well, you may say it's fine, that's kind of not gonna happen, but understanding the ideals of what is the correct destination may still be helpful, even if it's not achievable. Yeah, I mean, you want the legislators to have a stake in how well the whole national economy goes, not how well any particular firm goes. And if you don't have things to strive for, it exacerbates despondency. People don't feel good right now. If they don't know where to go, what to be, what I call, activists to support, then their despondency is enhanced. And I think that that's the degree of despondency and disappointment right now is very profound. Very high. The other thing that I'm very concerned about is that I really want to get your sense of this. We had a thing that used to be called the Treaty of Westphalia, that there was a nation state and it governed the entire climate, but in the advent of globalization, in the advent of digital capacity to redeploy financial capital in nanoseconds, how do we govern for the common good which my call offshore escape is almost instantly available? And how can we stop what you might call bargaining between countries as to where to locate your capital? Because I sense there's a lot of good. What the old free trade can make everybody better off but nobody worse off. But that involved some transfer payments to make sure that everybody was better off and it doesn't feel like we're implementing that either. I watched the Trump administration demonizing China and Mexico gaining a lot of traction for people who feared globalization. Yeah, you're putting your finger on a blind spot for the economics profession and I don't claim immunity from this blind spot. We all believe in free trade. We've all studied comparative advantage in David Ricardo and some of us, not me, but some in our profession, forget about that proviso that's very important that you made which is to get to a position where everybody is better off, there'll need to be a lot of transfer payments from the winners to the losers. And that tends almost never to happen and really never to happen in the United States. Some countries do it better than we do but by and large it's not nearly enough. And therefore there are tremendous, there are losers from tree trade. What I would say to that, to put my economist hat back on, well, first let me keep it all for a second then I'll put it back on. We need to do a much better job of compensating the losers than we do. Now that's not so easy to do. You may have heard members of organized labor talking about TAA, trade adjustment assistance as burial assistance or funeral subsidies or something like that. So even labor is not always keen on that but I think we need to try to do a better job on that than we have. Now to take my economist hat back off, I'll put my economist hat back on. The case that has not been made and I get, I don't know if it's just too subtle to be made but we ought to keep trying is that change, this winners, losers thing has to do a change not so much with trade. And most of the change is domestic driven by technology, demographics and things like that. And because of the change, you brought up twice that you came from Detroit. Detroit was upon a time one of the richest cities in America, one of the richest in the world and now Detroit doesn't look so good. That's an example of change. And by the way, you could blame that on Japanese cars but it was happening before that. But maybe I was an inept example but there are changes going on all the time. Some industries flourish, some shrink and technology is driving that much more than trade. Trade is. It's an irony to a lot of us economists but not to the broad public that people get open arms about change that's driven by trade and they don't get open arms so much about trade that's driven by technology. Even to this day, the Luddites don't have a big following in the United States or other advanced countries. But the protectionists do. I often cite a paper that was written by a New York Times reporter, Peter Goodman. It was released on, I believe, New Year's Eve of 2017 and meaning the end of 2017. And he wrote something, I think the title or subtitle was Sweden Loves the Robots. And I attended the Swedish gathering here in New York City where he said there is a tremendous danger to America because in Sweden, when somebody shows what robots can do, we're all pretty happy because we're all gonna have our children's education and our healthcare and our pensions and adjustment assistance for retraining and the possibilities are going up. And he said, now I have a question for you people from the United States. You used to always denigrate Europe saying it was sclerotic and the supply side flexibility of America made it the dynamo. He said, but with Donald Trump as president, are we really going to see a politics which facilitates and implements innovation that makes us all better off because you could break down in our Swedish model with the transfers might continue to become more and more dynamic. And so in other words, facilitating change with assistance may be the new pathway. And as he said with the digital, a change owned by one or two or a small group of people can have enormous impact on many, many people. And so I think this, what I'll call adaptation dynamics is a very important challenge for us to think about. I agree, absolutely. I mean, I've been there for a very long time, but it's very, if you're an American that's a very frustrating case to try to make in the political arena because you have at least one party and probably more than one party, pretty much adamantly against most anything you can put under that transfers umbrella. We do, you know, you just pick it, pick childcare, income support, free education, free healthcare, daycare, you know, go right down the list. We do less than Sweden and not just Sweden. It's not like Sweden is the big outlier and they're the only ones that do this. You got Sweden and the other Scandinavians and the Netherlands and Germany and so on. Japan, yeah, yeah. And we're more of the outlier among the rich countries. But, you know, it's not easy to get Americans, let me rephrase the question. It's next to impossible to get American, the American body politic onto that side of the debate. One of the concerns that many people are raising to me right now is because of demographics with the baby boom aging out. And as they look at healthcare, the World Health Organization ranks the United States 37th best in the world. And the OECD, what I'll call advanced economies, measures suggest that elder care in America costs twice per person, what it costs in the OECD average. So we're paying twice as much for lower quality at a time when the tax base, the younger population is gonna have the burden of providing elder care for the baby boom that's aging out. And I think to me, this looks like a tremendous governance challenge on the horizon. Yeah, it is. I mean, I have to remind you about the huge political hurdles that had to be jumped and were finally jumped just to get Obamacare. Oh, yeah. Back then, and going further, what you're talking about Rob, is the need to go further than that. Yeah. And I mean, this sounds silly. We just had a big political brouhaha and it took a long time to get Congress to allow Medicare to bargain for drug prices. Really? I remember talking about that. It didn't wind up in the Clinton healthcare policy when I was in the Clinton administration. And it wasn't a new idea then. So these movements away from the unusual private and partly for profit medicine that we have in the United States, it's very difficult to get done politically. I mean, it's easy to see how this boosts costs. I just named just one little example. Well, it's not that little actually. But you look at the, if you think of the health insurance industry, how much money goes into that? How much money just goes into that? I can't, I admit that I do watch TV at night. Usually it's MSNBC, but it doesn't matter what you watch, you're gonna see insurance companies advertising. I think if I turn the TV on in England where they have the national health system, I don't see that. Yeah. I was once at a birthday party for a gentleman you probably know, Adair Turner, who was a member of the House of Lords. And many of the other members of the House of Lords were at this birthday party. And I started asking them what did they do in addition to the House of Lords? And several of them said they had joined the board of directors of British health companies. And I said, well, what are you building? What's your strategy? What, you know, why is this exciting? And they said, most of us want to create a foreign base in the United States because we make more money in the United States than any place else in the world selling drugs. We can use those profits and proceeds to increase our market share in the rest of the world with a cross subsidy. They were just in shock about how high drug prices were in America. And they talked about how much of the R&D that's done by the National Institute of Health and so forth is paid for by the taxpayers but we don't have an equity stake in those drugs when they succeed. Yep, just one big example of the tremendous of what you started with, why it costs so much to get so little healthcare. Yeah, well, coming back to globalization for a moment, one of the very market experiences I had was while Trump was berating Mexico and China, I had been at a conference of the International Economics Association in Mexico City and I listened to a lot. And then I went to Beijing and I met with a Chinese leader, not Xi Jinping, but one of his deputies. And he said to me, well, I can understand the demonization of China because we have four times the population of America. And when we started to integrate our economies together, our per capita income was one 40th of the US per capita income. So there was gonna be pressure. But the problem with demonizing us is that we have no capacity to make the transformation assistance that free trade theory says to make everybody better off and an American political economy isn't doing that. And the question is who to blame? The Chinese, who are often demonized for predatory practices or what have you, or the Americans. And he said, for instance, your country talks about the manipulation of the exchange rate, but the chief lobbyists to keep the renminbi from having to appreciate, meaning stopping the Americans from putting sanctions on are people like Walmart and Nike. They're not Chinese lobbyists. And just sitting and listening to all of that about the ramifications of globalization, I was at this series of meetings with a gentleman I know from India. And he said to me, Rob, do you think 21st century Asia is going to want to emulate the United States given your politics? It's a little bit haunting. And you and I both have children and grandchildren. What's the old song by the animals? We gotta get out of this place if it's the last thing we ever do. It's not looking very good for that, right? Now, the last few years, most of these things, just about all these things, they're talking about it getting worse. Yeah, well, so what do you wish for? What, we can explore the bloom, but how do you see us or the next generation digging out from under some of these challenges? Well, I'm gonna start with a political remark, which I wouldn't normally do, but these are not normal times. That's fine. This country needs to reelect Joe Biden because if we don't, I really worry about democracy continuing in America. And that takes precedence over everything that you and I have been talking about and many, many, many, many other things. That said, I would like to as you would like to, but it's very difficult. We started on this before, reduce the influence of money on politics. Reduce, we're not gonna end it, but just push it in the right direction. The Supreme Court has been pushing away from that for years now. And that's a very, very big problem. Third, or whatever I'm up to, I would like to see, but it's grudging and slow, more resources into what I like to call compensatory education. So I'm not talking about the kids that grow up to go to Princeton. I'm talking about the kids that grow up to go to no college at all. And barely get an education worth the name. You know, I'm sure, about the work of my colleagues, Ann Case and Angus Deaton and other people. It's becoming more and more clear because of their research and others that the gap, the real big gap is between in health outcomes and many other things is between the minority with a college degree and the majority without. Yes. Jim Heckman and Stephen Derloff at University of Chicago or INET grantees who do a lot of work in this regard. And I just saw a presentation at a conference in honor of Ned Phelps 90th birthday where Jim Heckman did a comparative study of Denmark and the United States and what you might call the equity within education that does not exist in America relative to Denmark. No. No. So these are some, these are a few of the big, big, big things that you and I would think would make our country better, but I'm not sure the majority of our country may go along with it. Yeah. Yeah. And like I've mentioned periodically through this conversation, when the government fails, the distrust increases and to act as the government's the solution appears to contradict the feelings that people have. We've got to move beyond that. I'm from the federal government and I'm here to help. Yeah. Well, I once had a, I was working on a movie on the problems of torture with Alex Gibney called Taxi the Dark Side. And I went to West Point and a guy pulled me aside and he said, we see that you used to work in finance. And I said, yeah. And he said, we had some reluctance to meet with you. And I asked him why we're working on this movie and your JAG officers and others were telling us about the, we're working on this. You guys inspired it. And he said, but all the people from finance that go into government hijack the government for themselves, they don't provide for the public. He said, I risk my life when I go into military battle for the American people, for the American system. It feels like you financiers are not of that spirit. How would I say, my resume indicted me. Yeah, I don't think that's quite, I mean, it's not comparable to putting your life on the line. Right. But I've seen and you've seen a number of people cross the line from finance into government service and do very good work. Oh, I agree. Sometimes understanding the playing field helps you do better work. Yeah, yeah. The guy named Alan Blinder demonstrated that for me when he was at the Fed. I came from the academy. That's a different transition. Yeah, but your sophistication in the realm of macroeconomics and finance was a tremendous asset in the time that you started. Thank you. But I also would say there's something, how would I say, there's an integrity that didn't come from your economics training that you carried with you into those challenges and you used your insights properly. Thank you, but I've often said that it's easy to have high integrity when you're in academia because you don't have to worry about your people. People's living depending on what you do and things like that. Yeah. Well, Alan, I will say when I picked up your book, when the music stopped and reviewed that, and we'd had many discussions over the years, I started thinking that right now is what we might call in the heat of the night. And Robert Goulet appeared with when the music stopped in that episode. As an apparition, huh? And it reminded me of your book, but it's the heat of the night right now. And I want to thank you for joining me and exploring you because I think we need people with the quality of experience training that you have who help us form a pathway forward. These are very honorable times. I could turn the same remark back on you. Keep up the good work. Thank you. Well, you get some, you own some equity on that because you were my mentor. Anyway, thanks again. Maybe we'll do another chapter in the future as issues arise, but thank you for today. Okay, bye now. Thanks. Bye-bye.