 Hello, and welcome to the New America Book Club. It is that intimate. Thank you all for bringing this to know. I really appreciate it. Heck of a day. And the cold. I'm Foss Hogan, filling in for Andres Martinez, who is stuck in an airport somewhere in a warmer climate. Unable to get back, he sends his apologies. I am the managing editor here at New America, which requires me to make a plug for our weekly digital magazine, the WeeklyWonk. WeeklyWonk.org. Please check it out. Great works by people. Some tastes like Megan. We're talking to Megan McCartle about her new book, The Upside of Down, while failing is the key to success. If you're live streaming this event, feel free to tweet at us at New America, or at Megan's Handle, asymmetric info. And I'm going to hit just a few points, and then I'm going to treat it probably like a book club and let you all ask a lot of questions. We'll keep it. We'll end at our regular time. But I had a pithy opening question from Megan, and then she told me she had a really good story relating to why she was late and how it relates to the thesis of the book. So I'm going to let her do that. Yeah, so I hate driving into downtown DC. I live about a mile and a quarter due north of the capital, which doesn't have sort of great transportation options. But I hate driving into downtown DC, because it's so hard to park here. Luckily, my mother is retired and does not mind faring me around. She lives just a few blocks from me over in Trinidad. At 11.30, I got a phone call from my mother explaining somewhat agitatedly that her garage door opener is broken, and neither she nor the tenant who lives in her basement can get out. Luckily, I had a backup plan. We have this great service in DC called Uber. Uber's wonderful. You just go on your smartphone. You ask for a car. A car shows up. So at 11.42, I punch in, bring me an Uber. It tells me a car is eight minutes away. I have plenty of time to get here. So at 11.52, I check the Uber app because he hasn't arrived yet. And I see that he has somehow left Noma near my house and is now in Southeast DC. And I try to call him and no one answers. And then finally, he calls and says, yeah, I'm in Southeast DC. I didn't even get to why. And there's traffic congestion. So I frantically go run to my husband and say, you have to drive me to New America right now. And he says, OK, OK, he has to be put the shoes on. And we go out. And of course, it is snowed. So we need to clear the car off. We need to de-ice it. And we start driving. But it's only it's 12 o'clock. It's only like a 12 minute cab ride from my house to here. I've done it before when I was a Bernard Schwarz fellow here. Unfortunately, the snow has caused everyone in DC to act like complete maniacs, or actually like the opposite of complete maniacs, right? They're now driving two miles an hour down the road. At 12 o'clock 7, I called New America and explained that there was no way I was actually going to arrive on time. Because we were following a Pontiac that seemed to think that the main property of snow was that your car could actually only go one mile an hour in it. And the reason this is interesting is it's actually a really interesting example of something that James Reeson calls a normal accident theory. So he actually illustrates it with a similar example of needing to get out of your house and your car isn't working. So you go to your neighbor. But your neighbor can't lend you his car today. So you call a taxi. So you're going to take the bus. But there's a bus strike. And then you try to call a taxi. But because there's a bus strike, all the taxes, right? These things cascade. And they cascade because in a complicated world, you have all of these layers of what I come to think of as spell check factor, right? You have all of these things that are backup. Antibiotics are a great example of spell check factor. So we can kill bacteria. Things are no longer nearly as fatal as they were. And that's great. That is great news. For example, pneumonia, basically if you got pneumonia over the age of 60, it used to be fatal. They used to call it actually the old man's friend because it was a comparatively nice way to die compared to whatever else could carry you off. However, now that doesn't happen. And so people, when you see cancer statistics rising and so forth, that's because we no longer dive pneumonia. And that's great news. But because people no longer dive pneumonia, people aren't as careful about washing their hands when they touch sick people. So we introduce more infections. Similarly, with the spell check factor, right? I was basically set to leave the house half an hour before, which was plenty of time. But had I not had all of these backups, all of which then cascadingly fell, I might have made it an hour. You change your behavior when you have spell check factor. We like to think that we can engineer failure completely out of the system. That when failures happen, it's because someone hasn't planned well enough. But in fact, in normal operation, you're not going to leave an hour buffer if it's supposed to take you 15 minutes. And if you have seven backups, as one of my professors used to say, if you have never missed a flight, you're spending too much time sitting in airports. I'm not sure I actually agree with that specific example, because I've never missed a flight. But in general, buffer has cost. And so we tend to try to minimize it over time. And the more things that we engineer away, the more we actually can introduce other issues. So Sam Peltzman famously proposed that if we really wanted to get rid of car accidents, we should just mount a spear in the middle of the steering wheel point to directly at your heart, and everyone would drive really, really carefully. Because we do see that with seat belts and anti-lock brakes or so forth, drivers actually compensate. Then you have anti-lock brakes, and so you drive faster. And you get yourself into more risky situations, and you lose some of the safety benefit of that spell check factor to failures. So this is one of the many reasons that as I write in the book, failure is inevitable. It's not something that merely happens when you don't plan well enough. It's something that happens because it is inherent in a complicated world where you cannot predict every eventuality that sometimes things are gonna fail. And you may not want to miss flights, but in general, if you've never failed, you've spent too much time sitting on the sidelines. And so I will close with that. Yeah, it's about mass transit. I always often say with mass transit, you're gonna be on time every time. You're gonna end up being very early most of the time because you have to fork all that risk. So that's great, that's a thesis. The other moment I was gonna first set up is the moment when you knew you had a book, right? But keep it in Facebook post length. So there were two real contributors to the book. And the first was that I felt my way into journalism completely, I was supposed to be a management consultant. And when that didn't work out, I... Makes us journalists feel great. They wear the down bucket. No, actually it's sort of the opposite. Journalism is so risky, it's so hard to get ahead and it doesn't pay that well, but mostly it's so... I would have business school classmates who would come up and say, you know, I'm having trouble. I'm thinking about getting to journalism. I was like, okay, just be prepared. It's way more competitive than banking or consulting and they would freak out. But I really wanted to do it. I really loved writing about economics and public policy. And after two years of not finding a safe job, I wanted to be a writer since I was eight. I decided to be a writer at the age of eight and then gave it up to be safe. I finally was just like, well, clearly safe isn't working out, let's try risky. And risky has worked out a lot better for me, actually. So it's your own personal story. Yeah. Last bit of setup, then I'll go to some basic points here. What's the weirdest piece of feedback you've gotten so far on this? I don't know if it's weird. You never know what book you've written until someone else reads it. There were a couple of things where people had just clearly misremembered something that I'd written and I was like, I was totally puzzled in looking it up and then I sort of found it. But I think the thing that has surprised me maybe the most was that there were a number of people who were like, I was expecting 12 easy steps to fix my life and this is not that book. And I was like, I don't think I said this was that book. I thought of it. I mean, there is actually a fair amount of 12 easy steps to fix your life, but it's a mixture of research and sort of reporting and memoir and it's a meditation on failure in part because the surprising thing to me about writing this was actually how effective just stating that failure is not only an option, but definitely gonna happen. It's almost like a marketing treatise for failure. Like failure's okay, folks. Well, but just how changing the way you think about it and like not with some series of really advanced exercises, but merely just saying, oh right, yeah, no, of course I'm gonna fail. That's gonna happen. Actually really, really does change both your willingness to take risks and how well you're able to handle them after they happen. All right, so a few big points. One, how do we distinguish mistakes, like garden-riding mistakes from failure? How do I know if I've made a heroic failure I should learn from or I'm just a screw up? So the difference between a mistake and a failure is the outcome and I think that we often, we should focus more on mistakes and less on failure. We should look more at the process and less on the outcome and washing your hands is a really good example. You know, sometimes in a hospital, a doctor can do everything right and the patient will die just because they're really sick, right, and we're not, I hate to tell you this, but no one here is gonna live forever, apologies. So sometimes a doctor can do everything right and someone will die and sometimes they can do everything wrong and the patient will live. And actually, so in the book, I actually chronicle watching series of mistakes after a mistake being made on my mother whose appendix had burst, which is not a big deal when you're 20, but is really a big deal when you're 70. And it didn't matter because the antibiotics that they pumped into her saved her. But the mistakes still mattered a lot because one in some number of times that's gonna kill a patient. And unfortunately the way that we handle medical error is much more likely, often, to think about the liability system, right? When do you see when something has gone wrong? Not when someone did something wrong, but when they had a bad outcome. And so you get with liability two kinds of bad outcomes. Sometimes people who didn't do anything wrong have to pay a lot of money and then sometimes a lot of times people who had something terrible happen don't get reimbursed. It's an execution error versus a system error. It's a system where you don't need to fix a system which can be better at working with a system. What we wanna look at is are we doing it right? Are we following a good process not to get a good outcome? Because outcomes are not in a complex system a very good measurement of whether you actually did the right thing. Last question on the point is could the response to your book thesis, if I had a thin understanding of your book I want you to respond to this thing. I keep not winning the lottery. Should I just keep trying and trying again? If you're failing to win the lottery. So how do you know when you're just a bonehead? Right. So you wanna take calculated risks and not just put everything on red. This is not about betting the farm on things that are very, very unlikely to pay off. And with the lottery especially like it's math you know that the expected value is negative. So how do you take calculated risks? I mean one of the really important things I think there's a great analogy G-cake Chesterton wrote a great thing on social reformers. It goes, it talks about a fence. A guy comes to a fence in the middle of the road and says this fence is stupid we should take it down. There's no reason for it to be here. And he says that person should never be allowed to touch the fence because the fence didn't just grow there, right? Someone put it there for a reason. And if you can tell me what that reason was then you're in a position to say okay well that reason doesn't apply anymore or we can do something better to serve that purpose. But if you just think that it's stupid then probably what it is is that you don't, you're stupid and you don't understand the purpose. And so similarly with failure, if you can't explain why you failed you should not do that thing again. Because you need to be able to explain why it didn't work this time and why it's more likely to work next time. And so, you know it's- Okay, so it's an understanding of the failure. Yeah, if you can tell me that something is, so with a business- I can explain my lottery ticket purchase it's just a dumb purchase start to finish. Yeah, I can explain why it didn't work which is that you had a very, very, very low chance of winning and so you shouldn't do that. But if you could explain to me like I was one number off and I know what the next number is and like okay yeah, if you know what the next number is then go. Similarly, how do you know, it's a second big point that comes across in the book is how do you know when you're just part of a broad end set, right? And that this is just the episodic failure that the system is still right. Or how do you know when you're suddenly broken out that the example I think of is general managers of a sports team. How do they know when the kid, they spend a lot of money on, or not, right? Is it having a bad April or is he a bad player? Like how do you- That's always, I mean that is always gonna be art as well as science. I wish there were like one way to say it, but I mean the, my general answer to this is that we tend to focus on people and specific people way too much. We tend to focus on less on systemic outcomes. You know, there's something psychologists called the fundamental attribution error. Where when someone comes up to you, when the checkout lady at the supermarket is rude to you, you think oh wow, she must be a rude, horrible person. Not like, you know, I bet her mother died three weeks ago and she's just feeling rotten. Or she had or something happened. You tend to attribute it to the characteristics of the person rather than to the situation that they're in. And we do this more broadly. You know, when something goes wrong, there's something called, I did not coin this, but blame storming, which is just like brainstorming, except we all get together and try to figure out who did this to us. And the reason, you know, sometimes it's true, right? Like Birdie Madoff actually did completely hose the people who invested with him and it was all his fault, except for the other people who helped him do it, right? It was their fault. And the credulity of the investors also was sort of argued there's some share. Yeah, I actually would argue that. Really 12% every single year. I do argue that actually with the investors, one of the issues was it wasn't exactly that they were greedy because what they were getting was not particularly high returns, but they were perfectly safe returns. Every year you got 12%. The market was up, you got 12%, the market was down, the market did nothing, you got 12%. You should be suspicious he's taking a big, even if he's getting 18 and I want somebody that's just 6%, right? Yeah, you should be suspicious when it's that even, right? But people thought of themselves as being prudent. And so a lot of people kind of weadled their way in to these funds, which is really sad and destroyed themselves. But so even there, yes, there's always, it does take, you have to help a con man con you. It is very unusual that you're the, there's a reason that con men tend to rely on people trying to get something for nothing. Sorry, back to the situation. But in a lot of cases, you know, we look for, when you look at the financial crisis, how much of it focused on banksters, right? And not that they didn't richly deserve to be yelled at and so forth. But when I talk to these guys, I did not hear people say before the financial crisis, this is great because the Fed's just gonna bail us out and we don't care if we lose a bunch of money for everyone else. What you heard was actually the same thing you heard from homeowners and the same thing that I heard from regulators, which is we are so much smarter than we used to be, that this isn't even risky. Oh, Michael Lewis posit there was some of that thing that you just said didn't happen, right? There was some of the notion that they're not gonna let, they're really not gonna come on. There was some fundamental value. Yes, on the bedrock, the bedrock support. After 2008, there was, absolutely. After the bailouts, there started to be that and I think you, but it's marginal. I mean, the real problem is that everyone took these huge bets that were really dumb. And even there, it's more, as one guy put it to me, if you discussed these scenarios, people would say, well, if that happens, the entire US economy melts down and who cares, right? Like that the scenario was so bad that it's sort of like trying to hedge against an asteroid hitting the earth and destroying all human life. I mean, that would be very bad for my portfolio, but I'm not spending a lot of time trying to insure against that. And there's actually a lot of talk about this in financial markets is if the US goes down, it's sort of buying reinsurances pointless because all of the financial companies will go down too. And that was the scenario. In some ways they imagined it to be too bad. They didn't insure against it because they kind of imagined that everything would blow up so thoroughly that we would just all be like, yeah, exactly. Can guns, can goods and ammunition would be there? No, it's not that there wasn't some of that, but the core problem was not that. The core problem was total stupidity, total stupidity on the part of the Fed and the SEC and all these other guys who, not because they were misled by deregulators, because they really thought they were geniuses. There was a whole theory called the Great Moderation that whole academic careers were built on and this was the theory that it was not possible to have a financial crisis anymore of any note, that inflation was low, that recessions were very, compared to earlier ones, were very moderate, and that this reflected genius on the part of the regulators that our economic theory and our computers and the regulations were so much better that it wasn't. So you would talk to bankers about the housing bubble and they would say, yes, this could go bad, but that would take a sustained nationwide decline in housing prices and that hasn't happened since the Great Depression and behind that was kind of this implicit assumption that the Great Depression was off the table and that was something that I heard from homeowners who all thought that they had found a sure thing, right? Like by the biggest house you can afford because that's how you retire and we can put in granite countertops in a swimming pool and we're both consuming the granite countertops in the swimming pool and we're saving for retirement at the same time, right? It's like the best sort of, as if you could go out to Lutess and have that be part of your 401k. So to learn from that failure is a systemic. Yeah, it's to think of it as systemic. We could blame the bankers as well like it was really important. Yeah, it's not blaming the bankers. It's saying that the actual big problems were systemic, that the problem was in the market. It was not in the individual banks or in the bankers and the way that we know that is so much failed at once. We've had banks that went down before. We've had Drexel, we've had, right? If it had only been one, then you would blame the bankers. But it was like everyone in the, and also in the rest of the world. I mean, people who talk about, well, it was USD regulation. Well, then how did Spain have a housing bubble and all of these bank crashes? How are German banks in trouble? How are like, it's much bigger than any of this. And so it isn't that you weren't gonna find individual villains, but if you make that the focus, if we think this is primarily about individual people who did things that they knew they shouldn't have done, then you don't look to the systemic risk. You don't look to the systemic cognitive biases. You don't look to all of these issues that they're still there, right? You don't fix them because we found the villains and we took care of them and they're bad. Or we didn't and all we need to do is take care of them and they're bad. Some trophy villains, like I'll get the trophy. Yeah. Trophy kids here in a second. Let's go, let's talk about the children. All right, so you go there. You go there. You do the red meat of book sales of like let's just do the next person saying that the younger generation sucks, right? No, I'm not actually. They talk to me about the Whipple, parenting and trophy kids. As the parent of teenagers. I think the metaphor for parenting now is the disappearance of the high monkey bars from playgrounds. Like when I was a kid, monkey bars were at least seven feet tall, which I know because they're above my dad's head and my dad is six foot seven. And there was concrete under them. And I'm not saying that we should like take the mats away. I'm all for, I'm all for mats for kids. But we take the monkey bars away, right? We cut them down until they're like three feet high so that no one can possibly fall. And we've done this in all sorts of, we're trying to make it so that there's no possibility of our kids falling. And this is really, I'm not saying that I blame parents because I don't. Parents are tremendously worried about me, especially upper middle class parents, tremendously worried about making sure that their kids have a guaranteed slot in the upper middle class where they are. They don't want their kids to go below their income and that's totally understandable. But the way that we're doing that is by basically everyone's supposed to go to a selective elite college. And the number of slots at those selective elite colleges has not increased since 1990 when I went there. Demand for them has expanded a lot. Which is a good story, because the middle class and other countries are coming to our schools. So there's part of it, yeah, people are moving around more. It used to like, my mother who was super smart and got recruited by Radcliffe but knew nothing about college, went to Bucknell because it was near where she grew up and it looked like, it was rolling hills, right, she didn't know anything. She was just a 17 year olds, right? Well, my grandparents didn't know, my grandfather owned a gas station, right? That was, and so now there's much more of knowledge about it, you don't just tend to go somewhere that's near your house, you tend to go to somewhere that is suited to your needs and so forth. But the end result is that you have more and more kids trying to be crammed through the same size funnel. And so in order to keep their kids from falling out, parents are hovering more and more and more and what you're hearing is, and I really thought that this was lies, frankly. I thought that people were just making these urban legends but I've actually spoken to people who have been in interviews for the police force when a parents showed up, a mother showed up with her son and wanted to be there at the interview. I have spoken to managers, to people at business schools who say that parents are showing up to the grad school admissions interviews and wanting to sit in now. I don't even- Sit in? Sit in, yeah, no, they want to sit in on the interview to make sure their kid doesn't. I heard that on the, I thought they were in a waiting room. Right now. Sit in? No, I thought this was an urban legend but now I talk to a business school professor who said that- Yeah, I definitely, as a parent and a teenager, I definitely see that there's a, the way my parents approach, and this is anecdotal, right? With the way my parents approach, apparently I have eight kids versus two, right? But it's like a supply problem. But my parents had two and they didn't do this. I got into trouble with it. So how do we fix that? What's the right solution? Because the other thing I thought about when I was reading it is like, yes it is definitely parents, right? But it's also, you could argue, education system, which also has a lot of incentives to simply not fail. And the teachers will say, and you're getting grade compression so that everyone gets a B or an A and now it's inching towards everyone gets an A. Actually, I tell you, there's no F at my kids' high school. It's an E. Right, because if we rename it, no one will know. Yes, maybe there are. Kids always know. And that's the, so what do you do about that? I mean, I think it has to start with employers and with the admissions officers because they're the ones who really perpetuate this. Kids starts fake charity and admissions officers do not simply say, that is a hilarious lie. I'm throwing your application out because you didn't start a charity. I don't believe you. Your parents did it, right? Yeah, you look at an essay and they're clearly coached. And it's just, I had people reading my essays and handing them back and saying, you should do that. I didn't have anyone writing my essays. There's still level of just doing the work for kids and doesn't serve them well in the long run. The problem is that no one feels like they can think about the long run. Yeah, and so to that end, right. But when is the right time to fail sort of like back to the baseball player, right? In that I've got a junior in high school, right? She fails this year. It really is a significant fork in the road to her. When is the right time to let a kid fail? As early as possible. And as, part of it is challenging kids with work. If you have a kid who's gifted, the thing to do is not tell them how smart they are. The thing to do is give them stuff that they're bad at and let them go ahead and struggle with things. Cause the thing that I certainly didn't learn at a public school where I was, I was like nine grades above in the, literally I was reading and like the high school reader when I was in fifth grade. So what do you learn? You learn that it's about finding work easy. Well that message to you is like, this is kush. Right, and cruise from here. But this is the problem, right? I said it's not. When you get to the real world, when you get to the big leagues, it's not, no one finds it easy. You're competing with everyone else who found it easy too. And so, you know, the thing that you, I had a kid come up to me, he's 15, and she said, you know, this is all great about failing, but I'm in an IB program and only 5% of us are gonna get 4.0s. I just can't afford to take a class, I won't get an A in. Yeah. And I thought, that's insane. That is insane. Yeah, how do we reward an adventure? If you can't take risks when you're 15, when is the right time gonna be? Yeah, we splashed out on an edgy assisted living facility, like what, I'm just totally crazy. And again, like she has, I understand what her incentives are, we need to change system. As a parent, what you need to do is make sure that your child has the opportunity to take challenges. And I do think that things like, something you saw with the Harvard cheating scandal, which I write about in the book, and which had just shocked me, because when I was in high school, stuff like this happened, I was in college, but our parents were on the side of the school. There was no question that your parent was gonna come into the school and be like, well, you should forgive my child for cheating, right? That just did not happen. I had got into trouble with a teacher when I was a senior, and it was, she was in the wrong. And I asked you this, kept this on faith, because the administration eventually intervened on my side. But my parents refused. They were like, you know, get along with authorities, an important skill that you're gonna need to learn later in life, so this would be a good time. And they were right. But it's inconceivable now, because the stakes are so high. And as long as the stakes are that high, parents are not, you see them in New York, in the private schools, hiring tutors to do the work for the kids. And I'm sure they would love to give their kids values. They just don't, they don't feel that their kids can afford to have values now. Maybe they can acquire them later at Harvard. Yeah, it's gonna be too late. Two other big points, there's two conversations about failure in the economy, right? A certain level of folks can afford to go to Silicon Valley, fail and fail and fail again. But a lot of folks in the economy simply can't. To some degree, it's a one failure opportunity. There are now credit checks for job publications, right? If you make the wrong call and move and it's a failure, you are just on the economic margins for a long time, right? Talk about how the book applies to that community of folks. So I actually think when you, we just want to talk about the college admissions process. This is a good example of, on the one hand, you have elite kids who are herded into college. And then on the other hand, four kids who are basically like, naughty accompanies, right? They will win if they get a perfect 10. If they don't make one mistake, they will get through college. But if they make any mistakes, there's no one there to catch them. And this is a little less true at some of the elite schools, which are really, really- Although Jason DeParle's piece about the kids from- Right. Right, the kid made one mistake. She made one sort of a good one. She was a little scared about something. Didn't want to talk about her parents. And poof, she was gone for the memory. Yeah, or- Which was trying to help her. Or they have a relative and needs help and they don't understand what it's gonna mean if they drop out and all of these things. There's no one there to tell them. There's no one there giving them all this pushing and social capital the middle class kids just have. Even if your parents don't have money, even if they have problems, you just know because of the environment you're in, your friends' parents. What's the message here for them? I think that the message, the first message is we have to change the system. It really is, this has become completely insane. The ways in which, and I think that it is generally more true for poor kids, poor workers, than it has been in a long time. I actually don't think the credit checks are as big a problem as people think, because employers do tend to understand, like what they're looking for is, are you having current ongoing money problems that are gonna incent you to steal from the tail? But if you lost your house to a short sale, they actually are, it's less dire than people think on that front, but it's more dire just in that what we're really doing is eliminating the latter. This credentialism is making it, my grandfather worked as a grocery boy until he was 26 and became a successful small business man. When I was in IT, we had some of the best people who were IT consultants were just random. The best guy I knew was a religious studies major. Yeah, Google has pulled out. It used to be just like eight years ago if you had to have, they were looking for your high school transcript, your GPA, your SAT scores, your total, I looked at your college transcripts. Whereas one guy who was one of our best guys on Cisco routers and that sort of equipment, he'd been a porter at one of the buildings that my company consulted in and they had eventually hired him to run cable because as one of my bosses said, if you wanna run cable for the first six months, all you need to do is breathe and carry a tool bag. And he worked his way up and those things, even in IT, which was very, when I was in the 90s was very much like that. Just all these random people who had been like the air conditioning repair guide in office and had somehow ended up running their network. There was a ton of that around and a lot of those people were great and we're closing in industry after industry, you see this closing down, closing down because the computer sorting of resumes is just easier to select for degrees. So that's so my libertarian friend, right? That's the- I don't have a regulatory solution for this because the government's also even worse about- Right, I would talk about- Right, exactly, go there. But on this one point, right? The risk of that, you could argue that this credentialing is a natural reaction of the elite to make sure that they don't leave the elite because they're the only ones who can afford the credential. I think that that is definitely part of it. I do, I mean, I think that the, like, I think it may work from the other end is like if everyone now has a BA and you look around the job market, your kid's having trouble advancing, you encourage them to go to grad school, maybe help finance their grad to grad school and then suddenly all the elite kids have grad degrees. Right, the inflation of degrees, right? It's the degree inflation. But you pushed that not elite kid even farther and farther. Yeah, exactly. College degree is farther and up a way, heck, I can't get a master's degree, there's no way. Yeah, and I think that this, I think that the system's completely insane. How do you handle it? But I don't think that there's no opportunity at the bottom. There are amazing stories of people who start with very little and just hustle. It's just harder and it's getting harder, the capital requirements are getting higher and so forth. So how do you do it? I mean, the first thing, I talk about this in the labor market chapter. How you do job search matters, but it doesn't matter as much as just doing it and just being out there and it's terrible because when you do job search, you're basically saying, hey, do you wanna reject me? And people are like, yes, I would love to reject you. Most people say no. Most people stop with the first stop. That's the end set. That's a positive end set future, right? You just keep putting yourself out there sooner or later or something. Sooner or later, it's a numbers game. It's like dating. You look at people who are dating kind of out of their league and all of them are basically the same way, which is they just ask so many people out that eventually someone who's kind of above the average says yes and then they stick with that person. It really is like, a lot of this stuff really is a numbers game. The problem is that it's really, really difficult. I mean, like, I wanna meet that kid who's got the hoods on, like just keeps going. I'm, this is anecdotal. I've not actually, I don't think there is any actual research on this. This is my observation is in the rare cases where I meet someone who's just clearly like, dating someone who is way more attractive than they are. It is usually because that is someone who just, and is not fantastically wealthy and flying them around. And the inverse, the person of other league just hasn't put themselves out there and so on. Right. Like a lot of it really is just being willing to consistently risk rejection and try something even at the risk of failure. And that is true at the bottom at the top. Then the thing you have to do then is plan so that it's not an unrecoverable failure, right? Like, crime is not a good risk. It's, you may get very wealthy, but the downside is large and it's almost impossible to recover from. Two more tough points on that is the story of Tyson, which is sort of big here in New America because Chris Lunges wrote his big book, The Meat Racket, about how Tyson's has vertically irrigated itself as essentially a monopoly behaving like that and has insulated itself from risk of failure at the expense of the farmer, right? The pain that's on us as eaters sort of he argues is higher prices, but it's a little more diluted than it is clear to the person who owns a chicken farm that the risk of failure is now on them and how do you solve that problem? And how do you message to the farmer that this is somehow part of the game, part of the game? Well, I mean, you see farmer solving that problem by going outside of the Tyson system, right? I mean, I buy my meat from, or a lot of my meat and all of my meat that we subscribe to and meat CSA. Right. And it is a little pricier, but the meat's way better. And the farmers who are in it are much more, I mean, farming has always been really risky. I come from a long line of farmers, almost all of whom are out of it now, because they can't use, the capital investment is huge and the risk is always on the farmer because it's about weather and all of that sort of thing. But the big food processors have made it tougher in a lot of ways. And they've taken a lot of the joy out of farming as well. It's like it's much more like being a cog in an industrial machine than it is about. And how do you respond? Exit is usually, and I think- And all of us exiting too from the- Yeah, and all of us exiting on the other side, because I believe very strongly in, I'm not against eating meat, but I don't think that you should unnecessarily make the animal suffer to save a small amount of money on the amount. Like I would rather eat a little bit less meat. Or make a farmer suffer. Right, exactly. And know that the farmer and the, and obviously this is personal because I'm not telling a welfare mother who's trying to string along what she has, but for me, we make enough money that I would rather pay extra for my meat and eggs, eat a little less of it, and know that the farmer and the animals were treated well in the process, which is not the case in most industrialized. I do want to talk about mechanics and maybe we'll get to it, but I want to get to audience questions, so I have one more question for me. Is the having seen failure coming in my life, right? It's March of year X and I know December is the precipice, the funding for this project will run out. My decision making for that nine months was clouded by the adrenaline, right? Overflow of my brain, like holy crap. You, and then the immediate plan B, like I'm distracted by the safety net, but the life's, how do you, if you encourage folks to fail, and either for whatever reasons, their ego or their financial precipice that they're on, how do they behave in those later stages of failure? How do they keep going at it? Part of it is having a plan B and so the story I tell at the end of the book is when my husband and I, both my husband and I are journalists, which is, as I believe I mentioned at the beginning, not the most stable or uncompetitive. Never was and definitely isn't now. Yeah. I remember talking to a guy at the LA Times who was saying when he finally got a job there, I think in the early 90s, he remembered calling his brother and saying, and the best part is I will never have to look for another job again, yeah. But the, so what we did when we were about our house was we looked at, and we were a little bit lucky because we were buying in 2010 when house prices in D.C. were a lot lower than they are now. But we went into a neighborhood that all of our friends thought was way too far east and there were no services there. Our grocery store opened up like, I don't know, five months after we bought the house. But before that, there was no grocery store within even reasonable, like even arguable walking distance and so forth. And we said to ourselves, what if we lost our jobs? What if we both lost our jobs and we both had to take jobs if we had half of what we pay now, how much mortgage could be forward? And that was as much house as we were willing to buy. And it meant that our house is smaller and it was in various states of disrepair and so forth. We've slowly rectified that. We rectified that with cash, like our fixed expenses we keep low because that makes for less panic. But that's a risk aversion, like you're not, and that's a different kind of failure. You don't want to fail that, but in terms of career or product. What you want to do is think about those things like the fixed consumption decisions that allow you to take more risks in your career. And so these are like, taking a big risk on buying a house, what's the upside to that? Well, I have a nice big house, but I can lose it. Minimizing my house so that I have more career options. And I'm more comfortable and I'm not freaking out all the time. I'm not freaking out all the time. I mean, really like I sleep so well in it because our mortgage is less than 20% of our take home and just like, and I pay it down extra every month and just like the warm cozies that that gives me is we can envision a day where we'll have no mortgage and we'll have paid off our mortgage within 10 or 15 years. And, you know, at that point, your monthly not goes really, really low. That's a great feeling. And so it isn't that you just, you want to fail at everything. You want to fill out the stuff where there's real growth and opportunity. And so you minimize the stuff, you try to minimize things like your financial run rate, in order to burn rate rather, in order to maximize the flexibility that you have to take on other sorts of challenges and other sorts of risks. Don't risk this much though. Yeah. But we tend to do the opposite, right? Like everyone, everyone says you buy as much house as you can afford. I think that lesson has dialed back a little bit, but I'm still, when we bought our house, I remember I got on the phone with the bank, we didn't even use my husband's income because we had just gotten married and we're like, it'll probably just be simpler if we just, you know, as it turned out, we had to give them all our marriage documents anyway, but so I'm on the phone and I'm walking around and I'm pacing and finally she's like, well, you know, I think all you're gonna be able to borrow is, and she named a figure that was like, five times my annual income. I was like, oh my God. And so I finally hung up and my husband was like, we're not gonna get the house. I was like, no, we could buy two. Is it really, and that was my, my stayed little conservative headache. I hate that moment because they, it's almost like the built in to make you go for, I can do all this. Yeah, exactly. I can do all this and put myself at great risk. But then I think about having that actual house payment. It makes me want to vomit. And so, but like all of the incentives and the way that people tend to think about it is they buy as much house as they can possibly for. They do as much of that and then they can't switch jobs because they're locked into this very, very high fix. You want to minimize the fixed thing risk that you're taking where you really can't get out of them and maximize the things that you can recover from. Well, go audience questions and I'm not looking at my phone because I'm bored of your questions. I'm seeing if anybody's, I think on Twitter but let's go to the audience questions first and take a second from the microphone to come to you. Thank you. Hi, my name's Dan Khan. I'm actually a management consultant at the moment. You talked a lot about issues affecting kind of policy and big picture things but I'm actually interested in hearing about how it affects management because those resume screeners, I don't see it at all having to do with the elites. I have it, I see it as having to do with the incentives for any HR manager if they hire somebody who has a BA from Maryland and they can't do the job, nothing bad's gonna happen to them. If they hire the guy off the street who seems really smart and like he could be a good IT guy and he steals money or just doesn't work out, they are potentially putting their job on the line. So how do you think about the stuff that you write about in your book and how it translates into American management style? I think that this is part of a broader process and you've seen it in all countries but America in a lot of ways is somewhat less of it and is doing a lot more of it and I do think that the way that we apply for jobs has actually changed a lot with these resume screeners and so forth is that a good way to think about this is the government. We've taken all the discretion away from government bureaucrats because we don't want them to ever make a mistake. We can't fire them. So since we have no way to punish them for doing anything wrong, instead we just make sure they can't do anything wrong and we hamstring them so thoroughly that when I was talking to a guy who went to be a state official in the South and he had been a banker before. So his first day, he's pretty senior and he says, okay, well, he tells the secretary, okay, get some sandwiches, we're gonna sit down in the lunchroom and talk to the team. She's like, oh no, we can't do that. Can't buy sandwiches on the government dime unless they're having overtime. Like that's insane, right? The odds that government employees are to get away with surplus sandwiches, we spend more time pursuing this. It would be cheaper just to buy the damn sandwiches even if they were profligately eating sandwiches all the time. And there's a similar thing in companies now as they've gotten bigger and for a lot of legal reasons because it isn't just about the incentive for the manager, it's about legal, a lot of legal safe harbor. They've gotten more and more rigid about rules and processes because when you can document a process you have safe harbor from lawsuit. And so you see this, for example, with anti-discrimination stuff, right? And I'm not in any way saying I'm pro-discrimination or against anti-discrimination laws but the way that this has worked out in the American legal system is a little bit crazy in that what people do is spend an enormous amount of time documenting that they have a process that is not designed to discriminate and then they still may have no underrepresented minorities but as long as they've got a good process, right? We can... They're preventing it's a huge failure at the expense of the ability to fail all the time. Yeah, they prevent the lawsuit but it doesn't actually fix the problem and also what it does is lock in this giant HR apparatus which then does things like throwing out all of the resumes from people who don't have a BA and what group is most likely to come in with a BA from Maryland is the same group that was there before, right? We haven't actually rectified the discrimination. What we've done is document that we're not the liberally discriminating and that's... So, but it's not just that. I mean, it's every kind of lawsuit. It's unfair, unfair firings and so forth and again, it's not that any of these things are necessarily bad. It's that the way that the American legal system handles them in particular has caused this enormous pressure to bureaucratize and to document and to document. So in large companies, the ability to do what even IBM and those big companies would have done 50 years ago which is take a chance on a kid from the assembly line or whatever and move them up. Managers had a lot more discretion and they're losing that discretion. We're running it through these systems that are capable of documenting them for the legal system. I think it's a big problem. I don't know what individuals can do. I think that the hope is in small companies which do a lot less of this and which still do have a lot more room to rely more on personal evaluations than what the computer thinks about your resume. Thank you. Abraham Avedore, retired foreign service. To cope with as many failures in life, business, social politics, President Lincoln coined the expression I'm too old to cry but it hurts too much to laugh. What do you think about it from the standpoint of being humoristic and living above it in coping with failures? It's hugely necessary. So I talk about some of my personal best slash worst moments. And the funny thing is when I tell them as stories, I tell these stories fairly frequently about how for example when I was 33, the man that I was living with indicated on Wednesday that he was ready to get married and then on Saturday he told me he'd made a huge mistake and I should move out. And that was really traumatic and I responded to that trauma by my other things just watching television nonstop and I couldn't watch anything happy because that made me sad and I also couldn't watch anything sad because that made me sad so I just watched the science channel for like months on end. And I can tell this story and be funny about it but when I went back and started writing this out and I had to really describe it and not just be funny, it still hurt. It still hurt a lot. Like all of this stuff that happened, it really does hurt but when you can see the funniest side of it, when you see the funniest side of the fact that there was this commercial for daisy sour cream that I still hear as like the saddest and most mournful sound, this jingle because I heard it over and over again when I was in like the worst sadness of my life, it's phenomenally necessary to look at, Robert Heinlein is a science fiction writer, says that ultimately laughter and jokes are a way of sharing pain. And then we think of them as a way of sharing joy but when you think of it the source of a joke, it's always something bad happening with someone who didn't think it was funny. And being able to see that, being able to laugh about it is a way of sharing your pain with other people and making it okay. I'll project myself and admit a little problem. Like how will I feel about 10 years I'm sitting over and talking about it, will it still be painful or will it be something that I think I can learn from? Well I also find, and I know a lot of people have already heard this, but you know when you're really worried about something bad happening, because writing a book about failure does not mean that you just stuff like, oh okay, well great, I'll lose my job, I'll be homeless. You don't, you still worry about stuff. You just worry less and maybe more constructively. And one of the things that's really helpful is just to think okay, what's the absolute worst thing that can happen? Because it's usual that your dread is of some unnamed thing that is far worse than any reasonable thing that can come right. The sign of probability. Yeah, you start thinking well, obviously this is gonna go wrong and then I'll get fired and then you're like, do companies really fire people for forgetting to like, check out the proper office supply procedure when ordering pens or whatever it is right now? You go and you're like, I don't know, I didn't do this right, fix it. And they're like oh, and they sort of give you a bad luck and that's the end. You tend to worry more than things warrant. And like in some ways that's good, right, because you prevent failures, but it's also like you then spend so much. I used to think that doing that would like prophylactically make it hurt less when it happened. And then with that relationship, I found that this is completely untrue. I was so miserable and like all of the worrying I had done for 18 months or two years before that made it hurt not one way less. So like my grandmother used to say I never borrow trouble, the interest rate's too high. Any other questions on the audience, yeah. I worked for many years in one of the top independent schools here. And when I came in the 70s, the parents wanted their kids to be well adjusted and happy. When I left a few years ago, in the last 20 years, they had been desperate for their children to get into Ivy League schools and they couldn't bear their child getting anything less than an A. They would confront teachers, they would, the whole thing, you know. You come in, my question is, can these children, how are they gonna deal with risk-taking when they go out in the real world? Or how are they dealing with risk-taking? Well, I'll answer your question. I have a theory about that dynamic. Yeah, I do think, I was really skeptical when people started talking about trophy kids because in general, right, like people in my age have been complaining about how the kids these days are no good. And they did, but the boomers they did again and again, they have always been cool. And in fact, I think my observation, my personal observation of millennials, they work a lot harder than my generation did. We were properly known as the slacker generation. That's the thing, to that point, I have this sad experience of watching my daughter work about as hard as I did and her opportunity for the elite schools is not there. Just email my teacher. I nearly flunked out of high school and then got into an Ivy League school and nearly flunked out of that. I mean, I did eventually get my life together. But then I got into, I got into Chicago with a 2.93 GPA from Penn, which would have just been inconceivable now. And it would have been inconceivable at a B-minus average in high school. And the idea of Penn admitting anyone like that now is just ridiculous. Which goes to the why the parents are freaking out. Right. That back in the 70s, you could go for a well just a kid and they could walk into Northwestern or Harvard. They just can't now. I understand. Yeah, sorry. So what employers say, and so there was an entrepreneur at the New America event in New York who was great. He said that, like, he basically said the same thing. Because I've heard from people who, like you, who've watched multiple generations, who have actually seen, who've managed, not just the millennials, but generation acts and even people older. And they do say, they're so risk-averse. They expect this incredible amount of structure. Everything is supposed to be like school. Every six months you get a review and a promotion, right? And the- Well, it's then also the helicopter parenting too. Right. The anxiety disorders are up because once you take away the parent who has solved every problem that ever came up. Yeah. When they're thrust into a workplace where there's a phenomenal amount of ambiguity. And this is why one of the reasons I think that consulting and finance are so popular, right? They replicate the kind of structure of school where you're on a team. Everyone is a super smart person. He went to a school like yours. You're doing almost all kind of analytic, cognitive load work. And every two years it's up or out, right? There's these very well-defined, at least when I got out of business school, this was how it worked. It has been a while. But that's really appealing if you're someone who's really good at school and who has been really good at going through this system. It's very appealing to just keep- It's an easy process. And this is why all the MBAs go into consulting or finance, right? They come on campus. You don't have to go out and figure out where to go and who to send a resume to and all of that. Just that as time has gone on even the entrepreneur was saying is that the tolerance for ambiguity and you figure it out is dropping. They work really, really, really hard. Way harder than my generation did. And they have a lot of tolerance for doing what authority tells them. They have very little tolerance for when authority is like, I don't know, figure it out, do something. We don't know what's gonna work, go do it, go sell this, go like. And it's not just elite kids, by the way. I also heard this from car rental manager in the Midwest who said the kids who are five years younger than the kids, there's like someone flipped a switch somewhere in that time between 23 and 28. It would now be- Well, to the point of your book, is that because the risk of failure is greater or the perception of risk of failure is greater? It's because what we're looking for is a guarantee. And having gone, why? Because there is more variance in the, it's true, the premium to a degree has gone up. And that, but that in turn is because HR managers are looking for a guarantee, right? They want, we're all looking, we're all trying to find these guarantees. And what that is doing is forcing large numbers of people onto the economic sidelines. I have one more question. Yeah, oh, we have two, so we'll go ahead and do two. All right, my name is Rolf, I work at Swedish Embassy. Could you just tell us a few words about your thoughts about how I regard my risk-taking or an individual's risk-taking? I'm thinking specifically about sort of entrepreneurship and innovation and if you're in the position, for example, of a venture capitalist about to possibly fund a innovative product development or something like that. Are there situations when you can actually say that you have taken large risks and possibly have failed, but nevertheless you can make that convincing argument to such a venture capitalist, for example. Well, I mean, what venture capitalists do is really smart, which is that they diversify. You take big risks, but you take enough of them that if 30% of them pay off, they fund the ones that failed, right? It's a high-risk, high-reward strategy. And from an entrepreneurial standpoint, this is why, I think not wrongly, you tend to see entrepreneurs being under 50, right? At some point, the risk-award, if you're 57 and you say, well, this can make me really, really rich in 30 years, okay, I'm gonna have the best upholstered nursing home room. Although I will say, I've noticed that people my age, I'm in my late 40s, right? It's because of life expectancy now. Then my age can now go, they can go for the 2.0 because there's more opportunity to sort of let that play out in the out years. No, no, there is, that definitely helps. But yeah, I mean, you just see in older societies and in older people, risk tolerance drops pretty much rationally. The payoff matrix just changes. So part of it, I mean, part of the thing I really worry about for all of Europe, America somewhat less, but still a big issue. China and so forth, is just that as society ages, your tolerance for risk-taking just naturally falls. And that is gonna make, I think, a big difference in how entrepreneurial our societies are going forward and something not a lot of people have been talking about. You know, how do they assess it? It's always a little bit more of an art than a science. You talk to VCs and they're like, well, I mean, there's a threshold effect, right? Stuff that's just obviously stupid gets thrown out. But after that, they know they're gonna have a high failure rate, no matter what they do. Maybe Klein or Perkins can just guarantee that anyone they find is gonna. But in general, they know that they're gonna have a lot of misses. It's kind of like a baseball player here, right? A good baseball player is a guy who strikes out seven out of 10 times, you get that up to the bat. It's the other three that make him a great, the other three times that make him a great baseball player. One last question. What implications does this have for policymakers? Are there circumstances where you could see government even promoting or encouraging risk to the point of failure or the implications on the safety net? What do you recommend? I talk a lot about that, because I'm fundamentally a policy writer. So one thing I think America is really good at and really undervalued is bankruptcy is that we have a little, need a little natural experiment in America, which is that bankruptcy law is federal, but the exemptions, you can shield them creditors or it's the state level. And so more generous, states with more generous exemptions have more entrepreneurship. And it makes sense for two reasons. First of all, there's the perspective, it's easier to take a risk if you know that your wife and children are still gonna be housed. I'm speaking in a gender, there are lots of female entrepreneurs, but most of the people that you're dealing with. Well, most of the men will be divided to keep going. And similar, but also like the recovery. So one of the things that I talk about in my book, Europeans think our bankruptcy laws are crazy. It's really funny, because you would think that like mean America, which has no safety net, would also have mean bankruptcy laws, but it's the opposite. Indeed, I was interviewing an expert on a completely different topic. And just in the middle of this interview was interviewing about Russia. You just started making fun of our bankruptcy laws. She was like, you can just walk into a judge and be like, I can't pay. And the judge is like, okay, don't. And you just thought that was totally insane. And this guy was Scandinavia. And he was like, you know, it's not. But I actually looked at a Danish entrepreneur who has been stuck with debt that he incurred in 2001, because during the recession and after 9-11, he'd to lay a bunch of people off. And in Denmark, it was a very generous layoff terms. Meant that he had to pay everyone severance, which meant he had to take on a lot of debts to do that. And because he couldn't, with all of his debt hanging over him, couldn't get back on his feet. Now in America, this guy would have declared bankruptcy five, 10 years ago. And just reorganized it, gotten on a payment plan that he could afford, and started growing his business again. He can't do it, because he cannot declare bankruptcy. He can't access the protection unless his creditors sign off. And that actually turns out to be really important. So that's, I mean, that's one's, why is bankruptcy a good safety net though? Because I actually think this is really instructive and it speaks to a lot of different kinds of safety nets. A safety net can be really powerful in helping people fail well, but it can also be really terrible and cause them to get stuck in their failure. So bankruptcy encourages people to move on, for one thing. In America, the structure, it's called the fresh start. So, the idea is that unlike other places where bankruptcy is mostly about the creditors, and this is changing. People have looked at our very debtor-friendly laws and are moving in that direction in both corporate reorganization and personal bankruptcy, which I think is a great sign. Sadly, we have decided, we in 2005 decided to move in the other direction for reasons that I'm still. So, the fresh start's really important. It's about helping someone say, okay, that happened, it didn't work, that chapter is now closed and we are all going to move forward. Second thing, it hurts. Bankruptcy is not fun. It's not, it doesn't hurt for any reason, right? Like, I thought when I went to bankruptcy court, actually I spent a week in Memphis and I thought when I went down there that it would just be sobbing mothers and so forth. You can't even believe how much nothing bankruptcy court is. It's like traffic court. Like, you go in and you just, you're like, I can't pay and the judge's like, okay, go see, like, stamp, move on. It's really, really, a lot of times the creditors aren't even, the debtors aren't even there. It's just two lawyers arguing. For a big bankruptcy, it's just two lawyers that they're not arguing about, like, exactly who's gonna get what. But it's really boring. I'd been really totally expecting like LA Law and all this drama, no drama. But people are ashamed of it. And I actually don't think that's a bad balance. Our bankruptcy law is really easy in part because most people who could benefit don't abuse it. You could just run up a bunch of debt and then bankrupt it and get away with that, right? I mean, you have a mark on your credit record, but you could have a lot of fun before you did that. Almost no one does that. I'm not saying no one because there's always some jerk who will do any stupid thing you can imagine than any government program you can imagine. But most people don't. Most people get into bankruptcy trouble. People who did basically reasonable things. Maybe they spent too much money. But you know what? I know a lot of people who are one bad job loss away from where a lot of the people I saw in the bankruptcy court were. Like the problem is not, a lot of Americans live up to their income. And the statistics back that up. So there's shame on it and people will struggle to pay their debt. And when they really can't, I'm just like, okay, done. I think it's a really good compromise that we found. And I really don't wanna mess with it on either side. I don't want people, I was against the kind of, oh, just mail your keys to the bank. But I was also against the 2005 bankruptcy reform using the cultural weight to support this important institution is really good. So it hurts, but the pain is a very specific kind. It is not crippling. What happened to that Danish entrepreneur that I interviewed is crippling. It is I cannot move on. I could lose my house. I'm constantly in fear of this. What happens to someone who declares bankruptcy in America is it's short, it's sharp, and then it's over. And yes, you'll always know you declared bankruptcy. You're never gonna feel good about it, but it's over, you can move on. So Dave Ramsey is a great example. Evangelical personal finance guru, one of the most successful talk radio programs in the country declared bankruptcy. And now makes his living telling people how not to do this by minimizing their debt and so forth. And he paid all that money back and he tells people to stay at a bankruptcy and I think he's right about that. You shouldn't declare unless you have to. But also bankruptcy was what enabled him to get enough breathing room, right? So he was also against the 2005 bankruptcy reform. It's the balance of on the personal side, try to stay out of it, but on the institutional side, once it's happened, we say, okay, move on. Because the payment plans don't work that often. So Memphis is the bankruptcy capital of the world, which we know because the U.S. is the bankruptcy capital of the world and Memphis is our bankruptcy capital. Like 1% of people in Memphis declare bankruptcy every year. But a lot of the reason for that is they're on payment plans. And the payment plans just keep failing and they keep refiling. And the creditors are happy with that actually, by the way. So I asked about that because they were supposed to have been banned in 2005 and the judge was like, no one's complaining. Creditors are very happy to have them in a payment plan and not have to be chasing them down and garnishing their wages. But the payment plans just tend to fail. They're very hard to stay on. Whereas when you've got it over and you can move on, you have clarity. And predictability and clarity are really good places to be when you're starting over. And so I think about this with like, I know it's been really long. But think about this with unemployment. So bad unemployment policy, something like you used to see in a lot of European countries, seeing some still. You were a steel worker, your steel plant closed, okay, I'm gonna pay 90% of your wages while you just look for another job as a steel worker. Now, having been a long-term unemployed, I'm very sympathetic with that steel worker. He's probably facing a reduction in wages. He's accumulated a lot of human capital doing what he did. He might have to take a job and didn't like as much, et cetera, et cetera. Also, job search is really painful, but you're enabling that person to make a rational short-term decision that is a very bad long-term decision because what we know from studies, again, of Europe with high replacement rates is that unemployed people are not happy. They're socially disconnected. They're disconnected from the labor market. It's a permit. You are unhappy as long as you don't have a job. So by helping someone to not look for work and they call labor scarring, which is the longer you've been out of work, the harder it is to get someone to employ you to anything, you're helping them to make a bad decision. So you shouldn't have a policy like that. On the other hand, look at something like Denmark which says, okay, we're gonna have a high replacement rate, but you have to be training for something else. We're not gonna have a high replacement rate while you try to be a steel worker. That's one way you could go is, you know, in America, there are things that we certainly could have had something like the WPA where you employ people on a short-term basis. You could peg the program to the unemployment rate. So long-term unemployment benefits that are just simply that seem to have a bad impact, but there are things you can do, have people do a WPA-style program where there's work involved, it's reciprocal, which sort of bolsters your political support. We get something out of it and also there's no incentive to stay on it and not go find a regular job if you can. We could have had a payroll tax rebate. One month, we'll rebate the whole payroll tax one month for every month this person's been out of work. We could have been basically offering a wage subsidy to hire the long-term unemployed. What we should think about is not just making unemployment not hurt, but making the pain not catastrophic and making it about, okay, how do we move on as quickly as possible? How do we get back into the labor market, stay connected to labor market instead of paying people to stay out of it? And we tend to cast it instead of this moral hazard play of either people are these helpless victims who we need to make whole or people are terrible abusers who are just gonna stay on unemployment because they love not working. And again, there are people like that. I have met them, but they're not the majority. The majority are people who are struggling with something really difficult. We should be focusing on how do we help them to make better decisions, to keep them focused on the future and connected to the labor market. And we didn't do that and I think it was a big missed opportunity. One last one, does Obamacare help people take more risks by leaving jobs they shouldn't be in because they're worried about insurance? I know how you feel about the ACI, so I'll make sure I get it. The job like, I'm really interested in this. I can't wait to see it because this year we're gonna get data. If job block is a big problem that in 2014, we should see a massive, massive noticeable increase in entrepreneurship. We don't know, like there's a little bit the economies are improving so it's gonna be a little hard to tease out but I think that we should see that. There's a few reasons to be skeptical. The first is that if you have a real problem that makes it hard to get health insurance that also tends to make you not wanna leave your job. So if you have a special needs kid, right? I'm thinking more about, I don't wanna leave insurance period without, yeah. But if you have a special needs kid, right? I'm worried about being an entrepreneur because, right. Well, if you have a special needs kid, probably also needs a lot of money for ancillary stuff that insurance doesn't cover. Can I really afford to leave my job? Can I afford to leave my job where they understand that sometimes I just gotta leave work in the middle of the day? Like all of that stuff, entrepreneurs work 18 hours a day. So it tends to be what social scientists call over-determined is that the problem of job lock with people who have trouble getting insurance, trouble getting health insurance, there are so many other things going on there that would also make them reluctant to leave their jobs that I don't know. We will see this year. I would love to find out that that's the case but we don't see it. One thing that makes me skeptical is that countries with more generous social safety nets in general do not have higher rates of entrepreneurship in the US which is what I would expect to see if that were a real factor. Thank you, MacArthur, thank you very much. I'll put it down.