Mary Daly rose from high-school dropout to president of the Federal Reserve Bank of San Francisco. She thinks the central bank needs an upgrade too. It starts with recognizing that the economy is made up of actual humans.
This is an unofficial transcript meant for reference. Accuracy is not guaranteed.
This podcast dynamically inserts audio advertisements of varying lengths for each download. As a result, the transcription time indexes may be inaccurate.
Fr Economics, radio, sponsored by progressive insurance were customers, save an average of more than seven hundred fifty dollars when they switch and save visit, progressive dot com to get your car insurance quote. It only takes about seven national annual average auto insurance savings by new customers surveyed in twenty nineteen potential savings will very, if you'd like to listen to for economics, radio without ads the place to do that is sticker premium five dollars, and you can get a free month trial by going to stick your premium dot com and use a promo code freak. You also get access to all our bonus. Episodes and you'll be supporting our show to that sticker premium: dot, com, promo code, Freak, banks are you so you once said this. I'm forfeit eleven and a half on a very soon. One day, I'm openly gay female and I come from a lower socio economic status, so I don't think I've ever felt like I was
the majority, how D you think those non majority attributes help? You look for things that haven't been looked for before when considering good economic policy, I'm comfortable being uncomfortable I've only ever swam upstream. So it gives me a son the freedom to just look, and I don't think that I'm more courageous so that I'm more her for or anything I'm just simply more experienced and the skill that we all grow is to just be a little more comfortable being uncomfortable Mary dailies. Convert has served her well and is present, and ceo of the Federal Reserve Bank of San Francisco. She in a position to have it certain millions of other people well to the San Francisco Bank is the largest of the feds twelve branches.
where's, nine, western states and when the twenty percent of the EU s population these days, it's run by someone who dropped out of high school today on for economics, radio, the American Dreams promise and problems yes, it is absolutely true that get a college degree. You can become someone like me, but we haven't brought me to scale also the feds imperfect history of turning high level economic theory into level, economic success will I'm undaunted by unsuccessful, pass and what it's like to be fed president, when the? U S, president, is attacking you on Twitter, every five minutes let me first say that we ve always have disharmony. I am
from stature and dubner productions? This is Freakonomics. Radio broadcasts explores the inside of everything. Here's your Stephen governor when the Federal Reserve Bank is in the news he stays. It's usually related to its most public policy tool, the setting of interest rates as the global financial melt down and great recession set in the FED under two. Then Chairman Ben Bernanke dropped rates to zero. This was in two thousand eight and they stayed there for seven years. The idea was its euro rates were necessary to prevent a depression and help. The economy rebound Bernanke ease successor, JANET Yellin, fine began to raise rates. Confident the recovery was secure in toothache
eighteen yellin was succeeded by Jerome Powell who'd been installed under the newly elected president. Donald Trump Powell also can You did not the feds rates higher, encouraged by a robust economy, an record stock market eyes. Most monetary policy veterans felt the Powell was play it just right in this environment. You didn't need to make money. Too cheap and also didn't want to speak inflation, but not everyone agreed with power and is most vocal critic almost right from the start. I happened to be the president of the United States that the FED is out of control. I think what they're doing is wrong. The FED is technically and historically an independent operation. The president is not its boss, but Trump has very publicly encouraged Powell to drop interest rates, despite the relative strength
of the US economy why there are any number of reasons. Other countries, central banks, have kept their rates low. The European Central Bank's rates are currently set below who's your there is also the ongoing. U S: tariff war with China, Trump Macy low rates as a useful counterweight in that battle, as well as a means to avoid a self inflicted. U S. Economic slowdown should the tariff for ethically, furthermore, the guy the economy is showing serious signs of slowing down. In any case, president tromp his leaned hard on the FED to cut rates and in the last few months, Jerome Powell and FED have done just that twice first in July, we decided today to lower the target for the federal funds rate by a quarter of a percentage point. It isn't and the to insure against downside risks from weak global growth and aid policy, uncertainty and again just last week,
And the Federal Reserve cuts the bench re mark a quarter of a percentage point. The federal funds rate is now one point seven five percent to two percent. The feds policy setting committee is uncharacteristically divided as to the future direction of interest rates. Jerome Powell did say there may well be further cuts. Trump, for his part, is not remotely satisfied. After the most recent cut, he tweeted that Powell and the FED have quote no guts, no sense, no vision. He said he wants rates brought down to zero or less a few months ago we had Garrick on our show he's a former head of president trumps National Economic Council I'd ask cone whether Powell was thinking out interest rates purely on the merits or as a capitulation to trumps. Twitter demands, I'm gonna hope it will I surely hope- and I almost pray that what the FED did was.
in reaction to what they were seeing in the data that they felt that there was an actual slowing of the economy. and they were in the wrong place. So we thought it might be interesting time to hear from someone at the Federal Reserve to learn what they are seeing in the data and what they're doing about it. Mary daily took over the Federal Reserve Bank of San Francisco just A year ago she started working there in nineteen. Ninety six, one of her mentors was JANET Yellin, who, before coming chair of the Federal Reserve, ran the San Francisco FED from two thousand four to two thousand ten and for those who don't fully understand what the Heck D Reserve Bank is or does, and I honestly kind of include myself there. Why? Don't you tell us what it is and does Let me start by telling you the banner we put on the front Bobby of our bank in San Francisco
and it says right as you walk in the door, our work sir every american and countless global citizens, and in practical terms, that includes three things we were on supporting a healthy economy through monetary policy. Given it to a mandate that Congress gave us. We are working to achieve full employment and price stability. But the real thing, the underpinning of that is a healthy economy so that everybody has an opportunity to participate to their full abilities. The second we do. Is we work on financial intermediation, so were in charge of regulation and supervision to many of us, banks and financial institutions in the economy and the real well. There is to ensure that there's interconnectedness among people say that again, everybody has access to savings and wealth accumulation and investment to allow them to fully participate in the economy and in the third thing is the payment system and we are responsive,
or for the safety and soundness of the payment system in the peace that everybody knows really intimately is cash the dollar coins and in dollars in her pocket. So this sounds like if the FED worded magically are tragic, disappear tomorrow. The way that some people on some fringes occasionally wish for a whole lot of things would happen. Yes, yes, it when people are asking questions about well. why is the FED getting in the way here? Why is it doing this thing that I dont understand or agree with its largely non about? They want the FED gone It's really about. They wanted to work more effectively and are Our mission is to continuously listen to people so that we can take that in we do know if we would disappear, then the risks that word
present when we were created, nineteen thirteen, would once again urge- and that was a much worse situation than any of us want to repeat those risks were soon. Is a financial, panics and bank failures. This lead Congress to pass the Federal Reserve ACT and the establishment of the central bank the goals then, and now were to stabilize the banking sector, ensure the free flow of capital and keep unemployment an inflation low? So, yes, the FED has the reach to affect just about every American every day and billions of other people, but it seems to approach this mission at serious remove the FED doesnt seem very interested in explaining why, for example, a country reach. Ours has so many people, just one step away from financial ruin as Mary dailies own family was or why we ve built an economy that so good at provide
cheap food and clothing and tvs, while the cost of health care and higher education and real estate have spiked beyond the reach of many Mary Daily a seem interested in wrestling with these dilemmas. She hosts the podcast called zip code economies where she travels around her regions. Find out what's happening on the ground. There was an earlier podcast to called twice around talking to my nephew just started his first semester in college in Missouri and one of the state schools and he went in wanting to be a math teacher and she was asking me, is amount. Teacher good career is where they really want to do, but I know doesn't pay very much many times by so well. It depends on what you want out of your life. If you really want to teach math You have to realise that you could probably going to have a smaller home than people who want to work in the stock market and that's ok. If those things that matter to you or teaching math and actually care about having to be
Tom and around the block or that sort daily gets into a lot of topics that you wouldn't expect a FED president to get into gratitude the nature of facts: how a person should know what they quote deserve. We have Now the people we serve. If you don't, engage in these deep questions of what makes people do the things they do, our people missing out on opportunities because they don't actually count that benefits of summit, actions? You don't think I'm mentorship. We often think what we discount. The benefits of a future creations of our government is because we see them. These are all things that go deeply two issues like gratitude and are you getting what you deserve? It had even think about that. Those are things that are integral to doing our best work as policymakers. We sets how I see it. You ve said the people missing.
Your stand, economics as the study of data or finances, and you define it seems is the study of humans kind of of psychology writ large. Now personally, I would like to think that your definition is legit, because I think it's really important for economists to take human behavior into account, but I would argue that most economists are not very concerned, or maybe just not very good at describing in predicting and maybe influencing human behaviour and, furthermore, I would say most public Indication from your own organization, the Federal Reserve Bank, certainly doesn't sound as if it's about or intended for actual humans, Tell me why I'm wrong in your right that economists, like you even the FED really is about, understanding people, humans, social interaction, etc, etc. I guess the question I ask myself is wired.
perceptions of wood economics is even among economists, so very different than the reality of what we do one reason: is it's real hard to be vulnerable? It's really difficult. Day. We dont. Now I'm trying to be quantitative. My whole ecosystem quantitative measurement, trying to figure things out, but You do that and I think there are many economists to reach this point in their career. If you do that, eventually run into the wall. That is the data. Are the answers their part of the answer, but they're not the complete picture, and you too the fad. I I think that's a reasonable. criticism of us as an institution that We haven't always men forthcoming about the people part of our job, but we recognise that when, J power took over as chair. The very first thing he did is we have to go out and do this program called FED listens and it was
just about. We want to hold ten research conferences were super good at research conferences, but so we want to talk to community people about monetary policy. We are not very practised at that, so the or can dream? Is a famous and beloved concept as a concept that to my I certainly describes your life, your accomplishment, but more and more people argue that the dream is, if not dead, at least greatly So let me ask you, in a nutshell, is the american dream dead or alive maybe better on which dimensions is the american dream? most alive and on which dimensions most in trouble. So here's the thing I've learned over my life. The american dream has always been mostly emotional and then over periods of our history, The facts have correlated more nicely with that aspiration, and sometimes they failed us, but it hasn't been that our beginning of our history. It was great, and now, in the later
for history is less great. It's gone back and forth. All you go back to the great. Russian and see that it wasn't always glorious. So what C, is opportunity is to leverage and amplify things at work and fix and boost the things that don't so few. add the chances that someone born in the lowest income quince I'll can rise up to the Middle EAST, have mobility beyond the first or second quintal. They rise to about average. chances that anyone can move anywhere if those kids get a college education and she think, while the american dream is alive well fantastic and then you look at how many kids born into the lowest quintal The income distribution actually get a college degree and is less than ten percent. Is there then you think? Well, that's not so great. that's where the american dream gets complicated. Yes, Absolutely true that get a college degree
become someone like me, but we haven't brought me to stay We'll have so many examples that I become the norm in. Nobody asked me about my story anymore, because they see so many people around them. Who have lived that exact story. And that's where I think the american dream, the duration doesn't fit the data daily was. in nineteen sixty two we are growing in Missouri and my father was a postmen. My mom stayed at home and win We know that we were lower middle class. We just need that we had to buy things that those big stores that sell the day old things and if you go two days later, you can even cheaper, but then but you don't know as a kid- is that you're super close to falling thrill. You're, just one little hiccup away and my family, a number of hiccups, health shocks, job shocks,
marital shocks and as a consequence, we fell through and then falling through, looks completely different. Then I thought so it becomes a shaming event as well. I know that you're siblings went to live with your grandparents bitten, you dropped at a high school and started working in an you lived with a friend. Yes, yes, right exactly now a different series of of people I connected with the first people. lived with where my substitute teacher in seventh grade and they you stay and erratic, and I worked, and I sent money to my family and I helped myself, I paid them a little bit of money, even though, of course, when you think of it, it was Third, the money I gave them Prodi was meaningless, but it was important to me. it did not have to feel like. I was begging and not able to take myself and they they help me build those little bits of confidence. I think that was essential. Looking back on it in really transformational
daily had planned to become a bus driver. It was a union job with benefits, but she had a mentor who suggested that she get her dvd and go to college daily accepted the ice along with alone of two hundred and sixteen dollars for tuition at the University of Missouri, Saint Louis. She started off studying psychology, but switch to economics He became particularly interested in labour economics and public policy in nineteen. Ninety four she got her Phd from Syracuse University, but you get the sense but Mary Daily never forgets, even for a minute, the very long odds she beat to become president of the San Francisco, FED after starting out as a high school dropout. So even in that bad fortune, you had the good fortune having a kind of safety net arise up around you that you wouldn't have anticipated. You couldn't have foreseen by
You know, I'm sure that for many people- and they have such a misfortune- that safety net doesn't rise up some curious. How that specific period of your life informs the way the approach to your economic research. It made me realize relieving so much talent, the table? Think about full employment if we have so many people, sidelined and weed who take advantage of them? There were restricting them for sure, but are also restricting our economy. So becomes a key theme you think I do in it. It goes on way back to the time I fell through, if not by good luck and good fortune. Would have been one of those people and I never would have been married daily on for economics. What did Europe siblings end up doing my sister is a medical receptionist and both my brothers have mad episodic employment in constant, Shan or other things and veto just leave.
On the boom and bust of whatever the economic cycle brings them and either there not in line to be the first people employed because they all dropped out of high school. We all dropped out of high school in the end and why we we're going to go back and get a JD. Eventually it isn't. Some That's easy! If you dont go beyond and yet an additional education, I know, there's a lot of research showing that shocks to the system as a child, and it sounds like you're fat I had a lot of different shocks to the system, are really influential downstream in employment, education, outcomes and so on it sound does, though your family is. I guess a median example of that in a lot of ways. Asia shocks you experience when your young, they affect your parents and they affect Jew and they ultimately affect your children and case they affect my nieces nephews, who are raised by my siblings and so Shelley, and I my partner Ben you trying to
Jack, but these are strong inertial. Panes essentially, and it takes escaped. City at every generation, even my nieces nephews, to lift the mouth and so you ll see more people in my extended family continue not to go to college and who go to college are solid, stroll down a little bit on educate as a driver of economic success? Obviously the fellow Parliament is not in charge of education, although it does have a hand on it in a number of channels, such as take a couple of examples that are dramatic one is U S educational standards compared to other, which countries its relatively quite quite poor,
and then you know, higher education college is problematic from a financial perspective, a from no others. We seen massive massive called to wishing debt skyrocketing. So if you're pointing to education is a big driver of success, it's very easy to point to those touch points as not failures outright, but real problem points. It would seem as though things not moving in the right direction, so make your best case that you and your colleagues at the FED Reserve have some sense of what to do because otherwise, if you'll? like you know, you're saying nice words in thinking nice thoughts, but that the evidence for successful outcomes isn't there. Well, I'm undaunted by unsuccessful pasts, I just met, may be work harder for the future. So it's more than nice words, though,
Now the jury's out about whether we move the needle, but we would quickly put the ones we ve tried and didn't move the needle aside and start on something new, but go to the income communities and not a single person, in those communities, says that a college degree isn't worth it So then, you ass low income communities. What do we need to help your students, Gatt College, ready? They can teach them the reading in writing and arithmetic part of it would they need the social fabric that supports those kids and allows them to see themselves in the future, and so here in San Francisco, we have a variety of educational programmes, but one that were really excited about right now is the first ten programme. And were building a virtual bridge for people between high school and college, and in that were very influenced by the research. Of course, you wouldn't be surprised that
slightly raising its kids drop out in the first semester. Isn't the funding its fitting in it, feeling like they belong, and so we have over a hundred and fifty first Jen employs and were building this basically virtual posse coming up the break. We asked Mary daily to name her favorite fed share of recent history and we find out why it so hard to read even the near future of the. U S, economy, big question and I've been wrestling with this. What's going to win the data or the mood that's coming up right after this. Fr Economics, radio sponsored by capital, one with no he's or minimums on checking and savings accounts, banking with capital One is the easiest decision in the history of decisions. like choosing to listen to another episode of your favorite podcast and with their top rated app. You can deposit
transfer money anytime anywhere making capital one. And even easier decision. That's banking, re! Imagine What's in your wallet terms, apply cap but one and a member of the icy FR radio sponsored by Petsmart Petsmart makes it safe and easy for you to care for your pet at Petsmart. The health and safety of employees, pet parents and pets are its most important, which is why they require face coverings. Social, distancing and. stop plexiglas shields and enhanced cleaning to follow CDC recommendations for contact list thing just order online at Petsmart, not com or on the Petsmart APP joy, easy curbside, pick up for same day, delivery powered by door dash free through January thirty. First, two thousand twenty one check out: Petsmart dot com for more details.
Hey, let me ask you this: who, in your view, is the most successful FED chair in region history and why my gosh, I can't even take a favorite movie. I really struggle with big favorites. It doesn't have to be a favorite. Maybe just you know describe some either actions or temperament or handling of a term of a FED, in my view, no medium. Recent history, less four five six decades, whatever that you just particularly admired, but tell me why? Ok, ok, let me talk about JANET yelling, because I worked so closely with her. So were Janis present San Francisco FED before she becomes vice chair and were in the financial crisis and she's got all the Connie all over the system. Working on these issues studying thing calibrating models and giving her all the research and we feel like we ve done our jobs imply
because we ve, given her all the research and at one point, and I won't use the the phrasing she use, but at one point, she had just frankly had enough and she puts both hands down on the table like and she said There are people. There was a word in between these people's lives, and it was this emphatic call too. We are not making widgets here. like what. If this is your mom and dad out of work, would if you lost your home, would you not stuff people losing how's, what, if you're losing homes- and it was that level of violence facility and humanness that I I said. Ok, that's a leader that I get And so then she used to be the vice chair, and I saw her do that in her vice chair work and when she was the chair, I saw her now the gay, very rough waters on, should we age earlier than we did
institution would is full employment really look like, and I again saw her stay steadfast and actually say you know on my watch, I'm gonna balanced. Both sides of the dual mandate and think about financial stability all at the same time? So you know asked earlier. It do cannabis really, but eve that economics is about people and will JANET yelling does so current FED chairman J Powell has had an interesting tenure to say the least term. Given the, I guess, iconoclastic nature of the Trump administration, there's never been accident, as far as I know, in recent history at least, has been so outspokenly about the FED in it, moves? Here's a couple recent tweets, the president tweeted. We have the greatest companies in the world.
Nobody even close, but unfortunately the same cannot be said about our federal reserve. They have called it wrong at every step of the way and other tweet the FED has got to do something. The FED is the Central Bank of United States, not the central Bank of the world. So can you describe? what it's like to be a central banker. In a time when the president is so willing to publicly rebuke the central bank's work will at least first say We all live in a much more open world than we used to that. We ve always disharmony there have been times when people think the feds not doing something right This group is doing something right, another government institutions and doing something right. The thing that different now- and I would say it's globally different- is that things are just more so simple, twitter has made all the debates that used to be behind closed doors, We learn about them. Long after people had departed, their positions have been to live, but there's always been that unspent
this rule that the FED, because of its political independence, the president was not supposed to be in conversation with the FED. Certainly in the public arena said, that's changed. I don't mean I'm not a historian I am a casual student of history and when I go I can read periods of history, things look as content, Jason debatable it's just very public now and when I when I say about the chair is that I admire the fact that the chair Federal reserve has not got caught up in conversations about. Are we were about our independence and instead has is restated the principles that made us independent in nineteen thirteen, and has continued to do the best work. So let's just talk about the economy generally, it seems to me like it's a really interesting and sort of strange place,
Unemployment is very low. Wage growth is small, but it is positive. Stock markets heard all time highs. You recently told the Wall Street Journal. We have good solid domestic momentum. Consumer confidence is high. Consumer spending is solid. We see a strong labour market, so the fundamentals that keep the economy going our present, and yet there is a great deal of anxiety over the economy. Some of it may be sickle. It's been a long time since session. But what do you think of the sources of that anxiety over the economy and you think they are legitimate? Will I think, there is something to the idea that people get nervous when expansions last a long time. We have this holes group of literature that says engines don't die of old age, and yet everybody thinks they do so. I see there general nervousness that when you hit your tenure mark the longest expansion in history, the natural- men tendency is to think a cat last forever. Then you look at it in the data and there's been a lot of us
certainty. There's trade uncertainty, there's breaks it uncertainty, there's GEO, political geopolitical uncertainty, there's just the gin Our financial volatility that comes from just mark is trying to figure things out that creates uncertainty, so this just creates a level of anxious that makes people even more cautious than they would be if they were simply just thinking, the expansion would run out of gas because its old, so all those factors are once that create mood issues, and you know that the big con, should that I've been wrestling with the last nine months is what's going to win the data or the mood. If you look at the data, the data are good. Apart from business, invite cement, the really isn't any weak indicator in the? U S, economy and the business investment is unpredictable because of the certainty largely around trade. Would you argue the? No? I don't think just that. I think that's a part of it for sure, but one of my ways I spend a lot My time is to go out and talk to business leaders and community leader
When I talk to business leaders- and this has been going on since November October of twenty eighteen, so I start talking to them about this uncertainty, peace back when uncertainty starts to spike and they were talking. trade. They thought that would be resolved. They were talking about the expansions getting long in aid and so we might just simply lose our footing. So then that written certainty got replaced by breaks it then it became trade. Did it was the dead ceiling now its trade again. So I think for businesses they ve been on the cautious footing for a long time, but mostly people talk to her still executing on what they call their play, an aim which means and investing enough to continue growing, but I'm not going to fast in these marginal projects. There you gonna take me to the next level. Until I see how the land land shapes up, you know it's easy to focus the problems or the fault lines or what not. But let me ask you something that the strength of the? U S economy. So if we were talking at the
of the great recession, and you said that you know the: U S, economy, which was a primary driver of the great recession and was hit particularly hard. That the? U S economy would be one of the world's strongest an steadiest economies. Ten years later Would you have believed it I mean I wouldn't have so I guess what I'm really asking is. What does that indicate? Does it some intrinsic strengths of the? U S, economy that are typically overlooked in the daily commentary? Well, guess I disagree on that. For me, I thought we were well position to get ourselves to a better position in and out of the situation we had, but it's a good. I should about. Why did I have any of that optimism? we were really hit hard early on, so we were in the emergency room, and so when you're in the emergency room you bring in all hands on deck approach. You know it's easier to throw everything. Have it something when you know it's a really bad problem, we were among the more severe effective early on, but that meant we put
everything we had to it and we worked hard to to stimulate the economy. We had fiscal packages, we had monetary policy packages. We dig your variety of moves outside of even the interest rate to try to him. the economy, so that was where we were we recognised at the time this was a long hard slog. It wasn't lower the interest rate and then so, as you saw any green shoot, you go back to normal, it was you gotta be lower for longer on interest rates you gotta be stimulative. On the fiscal side, you ve gotta be helpful on the real, location, retraining side, you basically once in a lifetime, you hope shock and you a lot of work to do to get you out of it. There is a sort of rising sentiment among some economists, Raj Teddy comes to mind. And also among the occasional presidential candidate Andrew Yang, comes to mind the idea there expressing
That is automation and a I and other technologies advance. The very nature of work will continue to change, as will the relationship between humans and work in that we aren't really well equipped to. and all these changes structurally and were not that nimble. So what's your or in the feds position on that complicated problem. So here's the deal. Of course we need to think about it, she'll changed the economy is changing at a rate of speed. That looks like something that I'm sure people who d never electrification he got electricity, and then we had assembly lines felt, but his hat and so we need to think about what is our future look like. There should be a high bar for change because changes difficult, and we don't want to tear down things just to say we did it, but there should be this considerable thought:
then too. How do we not solve the problems of fifty years ago, but Heather resolve the problems of twenty years from now? Well, can you give me some specifics? What kind of structural changes specifically? Would you advocate For then the question I have, as we haven't revised our social safety net in forty fifty years should be taken now look and see. If that's the right thing to have at this point in time, in the modern workforce, are the system. Of retraining unemployment insurance divisions between what fair programmes, verses entitlement programmes, insurance programmes, verses programmes? Are those the right definitions? Is that really being a family when they have an economic shock, find their footing again. I'd love to hear your thoughts, on a universal basic income knew this. Was
then the Knicks administration tried to get through and we ended up with supplemental security income instead and the reasons they couldn't get Republicans and Democrats to agree, and they can get lots of people to agree because the concern about universal basic income. Word that you'd be a work disincentive. So like the principle of Let's think about what the social safety net should look like the future unless make sure that were taking care of people who really a fallen on hard times and can't take care of themselves. I think we over simplified the problems to make them easy to understand, but the actually then end up not being very effective, and maybe it's time in our future complicated world just recognised policies are complicated. Think about tat. Aid. The idea that trade is good for everyone is still true, but it's only true that it may everyone better off in real time if we redistribute the proceeds from the trade more evenly against the people who got displaced by it
Oh that's an obvious thing. We could tackle. That's a part of this safety now that we ve only wave that honestly, what you just described, that disequilibrium is a kind of consequence of the globalization and shifting workforce it alot of economists twenty thirty years ago, told us was it worked out better Larry CATS, you know one of the most well regarded labour economies in the world has admitted recently that you know we didn't get it very right. We miss underestimated the cost for people who would be misplaced so to people who have lived, that what do you say to them when you is labour economist working at the FED now says: hey this time we get at this time. We understand it, this time we're going to make a better plan so thirty years ago, Economists writing about various problems. Or using what we now call partially embryo models we.
Looking at the narrow slice and some of the US since embedded in trade dislocations were that people would retrain, they gets Subsidy from the government for retraining and then they would easily re, enter the workforce with a different scale, so there would be a painful transition cost, but there wouldn't be this very large. Friction that vented them from ever re entering or displaced them forever. So we completely underestimated the costs because we were looking in this very partial equilibrium world. So the answer to people isn't trust us. This time will be. but we got it right. The answer is the public should be asking these questions. Ok, I get it. Trade is good if you redistributed seeds powers that redistribution going to happen. How am I going to retrained, not economists, they got it wrong and we should trust them again. I think it's of revisiting the social contract what do we mean when we have
of a programme that has winners and losers, do we simply accept that cost or do we say you know one as policymakers have to find a way to mitigate that difference and my work as a public policy, person or public servant is always Ben, is our job to serve the whole public, so we help mitigate that FR intricate, always do it, but certainly when generation from the time it happens? We should be able to do it. That should be our goal tell me something that you believed for a long time to be true until you found out that you had been wrong or if It is not a word that resonates nicely. You know tell me something substantial that you change your mind about, and why did the data tell us the whole story? I was a true believe in the profession of my training that I could look at the data studied it and I did natural experiments and used aggregate data, and I read everything I could possibly reed.
they have a real good line of sight into what EL? The of a situation was- and I was totally wrong- and I had this hit me right in the face by going to EAST Palo Alto so you spell out, there is a place to serious you go out and ask economists what they think about EPA and I'll tell you it's it's terrible. They have to listen podcast, obviously, but if you wish palm you find out in that package, was a real life experience. For me, the podcast Castillo Referring to is her own show, zip code economies and a couple recent episodes called resiliency is a mindset. And can you love yourself when the world's against you in this episode, so could economies we return to spell out to organise sit down with a pastor, earning a homeless shelter, be the principle their students and media police chief,
there are going to talk about something that I was surprised about going to talk about love, I have to say little skeptical oftentimes, when I hear people talk about love in these, thanks. I think what is it really mean? Is it just a decorative word, but there it's not. I went to EPA and I found out that the data told a picture that was more of how we feel about it. Then how they feel about it and as soon as I saw that a thought marry, you just been wrong for a long time about a lot of things. Probably so did the beginning of interview. You asked me about the data and the study of people on that's how I came away with just the strong conviction. that ultimately economics and it's going to be really good, has to be about people, because we simply study things as data points from a satellite, for
active. We will lose some of the contacts, so I was totally wrong about that and the context matters that was Mary Daily CEO president of the Federal Reserve Bank of San Francisco, I'm Stephen donor commitment. time, Steve Levitt, my freedoms, friend and co author is on a crusade. I really think that we would do incredible service to society if we re thought Highschool math and turned it into some. In those actually useful, the new new mass, that's next time and for economics, radio becomes radios produced by sticker and W productions. This episode was produced by Sakhalinsk. Our staff also includes Allison, Craig low. Daphne chant
Dickie Harry Huggins. Gregg ribbon encourage Wallace. Our theme song is MR fortune by the hikers all the other music was composed by Louis Scare. You can subscribe to for economics, radio and given nature reading if you'd like on any podcast app, our entire archive We found exclusively on the stitched up or at freak that com, where we are publish, show, notes transcripts if you like, to hear our entire archived without plus lots of bonus. Episodes go to stick your premium dot com, slash reconnects! We also every week on medium short text version of our new episode go to medium dotcom, slash for economics. Radio we can also be found you're a facebook and linked in orbit email at radio. At for economics outcome for economics. Radio also plays on many NPR stations, so check your local station for details. Thanks for listening.
Transcript generated on 2021-01-19.