Author: Freakonomics Radio

  • How to Stop Worrying and Love the Robot Apocalypse (Update)

    AI transcript
    0:00:02 (upbeat music)
    0:00:05 – Hey there, it’s Stephen Dubner,
    0:00:08 and this is a bonus episode of Freakonomics Radio.
    0:00:10 In 2021, we put out an episode
    0:00:13 about the future of robots in the workforce.
    0:00:15 It featured a couple of economists
    0:00:18 who had been studying how robots or co-bots
    0:00:20 for collaborative robots were being used
    0:00:23 in Japanese nursing homes.
    0:00:26 Those same economists recently put out a follow-up paper,
    0:00:28 so we thought we’d replay the original episode
    0:00:31 with updated facts and figures,
    0:00:34 and then hear about the new research findings.
    0:00:35 We’ve also got some robot news
    0:00:38 from an American nursing home.
    0:00:40 So here is the updated episode.
    0:00:42 It’s called How to Stop Worrying
    0:00:45 and Love the Robot Apocalypse.
    0:00:54 We might as well start with an economist.
    0:00:58 – No, no, I’m not even a real economist.
    0:01:00 I just play one at MIT.
    0:01:01 – That’s David Otter.
    0:01:03 He is a real economist.
    0:01:05 He’s been on the show a few times before.
    0:01:10 His path to economics professor was indirect.
    0:01:12 – I started as an undergraduate at Columbia.
    0:01:14 I dropped out after three semesters.
    0:01:16 I worked, I rode a motorcycle.
    0:01:19 I went back and completed my undergraduate degree at Tufts
    0:01:20 a couple of years later.
    0:01:22 I studied psychology with a concentration
    0:01:23 in computer science,
    0:01:25 and I really didn’t know what to do with myself.
    0:01:28 So he did some temping, he did construction.
    0:01:30 He worked at McDonald’s.
    0:01:32 Then he went back to school again
    0:01:35 and got a PhD in public policy.
    0:01:40 So not the typical path for a labor economist at MIT.
    0:01:42 And that real world experience is reflected
    0:01:44 in David Otter’s work.
    0:01:45 – My work is very concrete.
    0:01:46 I’m not a high theorist.
    0:01:49 I’m very much driven by practical problems.
    0:01:51 A lot of the questions I studied
    0:01:54 are related to the things I worked on and saw firsthand,
    0:01:56 working in poor communities,
    0:01:59 working in places undergoing political upheaval,
    0:02:04 watching the Gulf of Inequality expand in the information age.
    0:02:06 – Watching the Gulf of Inequality expand
    0:02:08 in the information age.
    0:02:12 Yes, that does sound like a transformative idea.
    0:02:14 And it leads to a large question.
    0:02:18 Will new technologies make that inequality Gulf bigger
    0:02:19 or smaller?
    0:02:22 You could see it going either way, right?
    0:02:25 On the one hand, technology democratizes.
    0:02:27 Many of us are now rich enough
    0:02:30 to afford what is essentially a butler.
    0:02:31 Amazon.com, for instance,
    0:02:34 will bring you whatever you’d like quite quickly
    0:02:36 at the push of a button.
    0:02:39 On the other hand, much of the wealth produced
    0:02:42 by this kind of technology flows way up
    0:02:45 to the tippity top of the income ladder.
    0:02:48 So who are the winners and who are the losers
    0:02:51 when there is such a transformative shift
    0:02:53 in the global economy?
    0:02:55 Think about one of the last big shifts we lived through,
    0:02:58 the massive expansion of global trade,
    0:03:01 during which the US intentionally sent
    0:03:04 millions of jobs to China.
    0:03:07 We actually had David Otter on the show a few years back
    0:03:08 to talk about that.
    0:03:10 Episode number 274, if you wanna listen,
    0:03:13 it’s called Did China Eat America’s Jobs?
    0:03:17 So Otter has done a lot of thinking about these issues.
    0:03:19 – No country has experienced the extremes
    0:03:22 of rising inequality that the United States has.
    0:03:25 And there’s no evidence that the US has gained much from it.
    0:03:27 We haven’t grown faster than other countries.
    0:03:29 We don’t have higher labor force participation rates.
    0:03:31 We don’t have higher social mobility of people
    0:03:33 going from rags to riches.
    0:03:36 – If you wanted a spark notes version of the US economy
    0:03:38 over the past few decades, it would be this,
    0:03:42 rising productivity, though not as fast rise
    0:03:46 as the post-war era and stagnant median wages
    0:03:49 with the productivity gains largely benefiting
    0:03:51 the top of the income distribution.
    0:03:53 – Yeah, it’s just incredibly skewed.
    0:03:55 And so as far as we can measure it,
    0:03:57 the median is barely budging.
    0:03:59 – And now, after all that,
    0:04:02 it’s time to consider another very, very large disruption
    0:04:07 because you know that robot future you’ve been hearing about?
    0:04:09 – Open the pod bay doors, Hal.
    0:04:10 – I’m sorry, Dave.
    0:04:13 I’m afraid I can’t do that.
    0:04:16 – Yeah, well, the future got here yesterday.
    0:04:19 – Good to see you again.
    0:04:21 I like your shirt.
    0:04:22 – Thank you.
    0:04:26 – So tell me, how are you feeling today?
    0:04:27 – I’m feeling pretty good.
    0:04:28 – You’re welcome.
    0:04:31 (upbeat music)
    0:04:40 – This is Freakonomics Radio,
    0:04:44 the podcast that explores the hidden side of everything
    0:04:46 with your host, Stephen Dubner.
    0:04:49 (upbeat music)
    0:04:56 In the spring of 2018,
    0:05:00 David Otter was asked to co-chair an MIT task force
    0:05:02 called The Work of the Future.
    0:05:05 It included researchers from a variety of disciplines,
    0:05:08 economics, engineering, political science,
    0:05:09 anthropology even.
    0:05:12 The mission was to explore how new technologies
    0:05:16 like robotics and automation will affect labor markets,
    0:05:19 especially whether certain groups of workers
    0:05:20 would be left behind.
    0:05:24 Keep in mind that this sort of prediction is really hard,
    0:05:27 as evidenced by the predictions that economists
    0:05:29 made about globalization.
    0:05:31 They predicted that when the U.S.
    0:05:33 offshore manufacturing jobs to China,
    0:05:36 that Americans who worked in manufacturing
    0:05:37 would be made better off,
    0:05:41 since they’d theoretically be reallocated into better jobs.
    0:05:44 But as David Otter told us in that earlier episode,
    0:05:46 this didn’t happen.
    0:05:47 Some people are leaving the labor market,
    0:05:49 some people are going into unemployment,
    0:05:51 some people are going on to disability.
    0:05:55 And so the reallocation process seems to be slow,
    0:05:58 frictional and scarring.
    0:06:02 The real differentiator is the skill level of the worker.
    0:06:05 So higher paid and more highly educated workers,
    0:06:07 they seem to reallocate successfully
    0:06:09 out of manufacturing into other jobs.
    0:06:12 – So the HR person at a big textile firm
    0:06:14 gets an HR job elsewhere
    0:06:16 and the manufacturers on the line are probably not.
    0:06:19 – And the line workers are much less likely to do so exactly.
    0:06:22 – So considering the difficulty of making predictions
    0:06:25 about the future of work,
    0:06:27 the MIT task force started with one thing
    0:06:29 they were pretty sure about.
    0:06:31 – The one thing we were confident in
    0:06:32 was that the U.S.
    0:06:35 would keep generating lots of low wage jobs.
    0:06:36 – Too many even, yes.
    0:06:39 – Well, actually, too many is better than too few.
    0:06:40 When there’s too many,
    0:06:42 at least they’re competing hard for workers.
    0:06:45 When they’re too few, workers are competing for them
    0:06:47 and that means those jobs will get worse.
    0:06:49 And so the one positive thing you could say
    0:06:50 about the U.S. workforce,
    0:06:52 well, we had a lot of crappy jobs.
    0:06:55 – When we spoke with Otter for this episode originally,
    0:06:59 the U.S. was still recovering from the COVID-19 recession.
    0:07:02 And what kind of damage did that recession do?
    0:07:04 – In the short run, it’s just done enormous damage
    0:07:06 to most of the in-person service jobs,
    0:07:08 the ones that were absolutely necessary,
    0:07:10 like in grocery stores and healthcare have persisted,
    0:07:12 but many of the jobs in retail and restaurants
    0:07:14 and hospitality have not.
    0:07:16 – A lot of those jobs paid only the minimum wage
    0:07:19 and they did come back after the recession,
    0:07:22 but other changes were more permanent.
    0:07:25 – I actually think the biggest change,
    0:07:27 most obvious is telepresence,
    0:07:29 that we are just doing more things remotely.
    0:07:31 We’ve kind of broken the space-time barrier
    0:07:33 in that we can’t be in two places at once,
    0:07:35 but we can get to any two places instantly.
    0:07:38 – But with lockdowns and COVID precautions,
    0:07:41 some jobs simply couldn’t be done remotely.
    0:07:45 During the pandemic, business travel dropped massively
    0:07:49 and that had all kinds of downstream labor effects.
    0:07:51 – It’s not just airplanes, right?
    0:07:54 It’s Ubers and limos, it’s expensive hotels
    0:07:57 that people pay full freight on weeknights
    0:07:59 and then go out to marquee restaurants
    0:08:02 and then go have their shoes shine and dry cleaners.
    0:08:05 And so I think that’s the real challenge.
    0:08:06 – The work of the future task force
    0:08:10 took the pandemic into account as best as they could.
    0:08:13 They published their report in December, 2021.
    0:08:16 It tried to answer three main questions.
    0:08:19 The first one, how are emerging technologies
    0:08:22 transforming the nature of human work
    0:08:24 and the set of skills that enable humans
    0:08:27 to thrive in the digital economy?
    0:08:30 – Technology is always eliminating work
    0:08:32 and creating work simultaneously.
    0:08:35 We tend to focus on what is automated away
    0:08:36 and that’s completely reasonable.
    0:08:39 Simultaneously, new areas of expertise,
    0:08:42 new luxuries, new services,
    0:08:43 new demands are constantly being created
    0:08:46 and that process, that kind of turnover
    0:08:48 is highly productive.
    0:08:48 – Consider, for instance,
    0:08:51 how medicine is practiced these days.
    0:08:53 – There’s hundreds of medical specialties,
    0:08:54 way, way more than there used to be.
    0:08:57 And it’s not because doctors have become
    0:08:59 narrower and narrower and they know less and less.
    0:09:01 It’s that they know more and more in depth
    0:09:02 rather than breadth, right?
    0:09:05 The extent of expertise required
    0:09:08 is just extraordinary and humans have finite capacity.
    0:09:10 Where did all of that need for expertise come from?
    0:09:13 Well, it came from research and technology and so on.
    0:09:15 So often we’re broadening expertise,
    0:09:18 but it’s not just in the high-tech professions.
    0:09:22 You will find patents emerging for new ways
    0:09:25 of pardoning nails, fingernails, I mean,
    0:09:27 not the nails you wound into wood.
    0:09:31 Patents for solovoltaic electricians,
    0:09:32 people who install solar cells.
    0:09:34 You know, there’s a lot of skilled work
    0:09:36 that’s done hands-on, being an electrician,
    0:09:39 being a plumber, building a home or preparing an engine.
    0:09:42 And much of that work requires a combination
    0:09:45 of dexterity and flexibility and problem solving
    0:09:47 and also knowledge, knowledge on demand.
    0:09:49 A lot of people today consult you two
    0:09:52 when they wanna learn how to sweat a pipe.
    0:09:56 We can augment people’s capability to do that work
    0:10:00 by giving them VR tools, giving them information on men.
    0:10:02 People could be much more effective in that work
    0:10:04 and more productive and therefore paid more
    0:10:06 if they were augmented in these ways.
    0:10:09 And so you can see in those examples
    0:10:10 how you could use the technology
    0:10:12 to not make people less necessary,
    0:10:14 but to make them more effective.
    0:10:16 That said, not every profession benefits
    0:10:19 from this kind of tech augmentation.
    0:10:20 If you were doing one of those things
    0:10:22 that all of a sudden a machine can do better than you,
    0:10:24 your opportunity set contracts.
    0:10:27 And usually the people who are on the one end of that,
    0:10:28 seeing their work disappear,
    0:10:31 are not the same people who are getting new opportunities.
    0:10:35 We saw this vividly when the US offshore manufacturing jobs
    0:10:38 and we’re seeing it now in other sectors.
    0:10:41 – For the people who have been working in clerical jobs
    0:10:42 or many production jobs,
    0:10:47 what automation has done is made their work unnecessary.
    0:10:49 – It’s tempting to think that automation will replace
    0:10:52 only the simpler jobs that don’t require
    0:10:55 heavy cognitive input, but that’s not the case.
    0:10:57 Otter has seen this for himself
    0:10:59 at some of the firms he’s visited.
    0:11:02 One of them was a big insurance company
    0:11:05 and they do an enormous amount of claims adjudication,
    0:11:09 claims assessment and they have these floors of,
    0:11:11 I guess you’d call them forensic accounts
    0:11:12 and they go through a lot of material,
    0:11:15 looking for anomalies, looking for fraud,
    0:11:16 looking for overpayment and so on.
    0:11:19 – It is true that forensic accounting
    0:11:21 requires a high level of expertise,
    0:11:25 but combing through these files in search of anomalies
    0:11:28 is also a tedious task.
    0:11:31 And the automation has really accelerated
    0:11:32 that discovery work.
    0:11:34 Machines can actually do reasonably well with this
    0:11:38 and simultaneously they never run out of attention.
    0:11:39 They never run out of energy.
    0:11:42 – Let’s say machine learning and artificial intelligence
    0:11:44 can be used to find these anomalies.
    0:11:47 Does that mean that the people who used to find the anomalies
    0:11:50 are out of work or they have a different style of work,
    0:11:51 a different amount of work?
    0:11:54 – So definitely the total head count of people
    0:11:55 who need to do this work is shrinking.
    0:11:57 Now they’re mostly not firing people
    0:11:58 but they slow down hiring.
    0:12:01 The work, I think that remains is quite interesting.
    0:12:04 There’s less tedium and more action,
    0:12:06 but it does ultimately mean, I think,
    0:12:08 reduction in the number of people doing that work.
    0:12:09 (upbeat music)
    0:12:13 – The automating of work is itself big business
    0:12:14 and it’s something we’ve heard a lot about
    0:12:18 since we first made this episode in 2021.
    0:12:21 To give you an example of how big NVIDIA,
    0:12:23 the leading supplier of hardware and software
    0:12:27 for artificial intelligence is now the most valuable
    0:12:30 publicly traded company in the world.
    0:12:32 If you are the kind of person who hears this
    0:12:36 and shudders at the thought that technology
    0:12:39 is destroying our way of life,
    0:12:43 well, there is a long history of such thought.
    0:12:48 Aristotle had the same concern and in ancient Rome,
    0:12:50 some technologies were outlawed
    0:12:53 because of the expected job loss.
    0:12:56 In the most recent century, if you’ve ever watched a movie,
    0:13:00 you have likely come across at least one fever dream
    0:13:02 of technology running up.
    0:13:07 ♪ It’s alive, it’s alive, it’s alive ♪
    0:13:11 And fears of a robot apocalypse.
    0:13:14 – Skynet begins to learn at a geometric rate.
    0:13:19 It becomes self-aware at 2.14 a.m. Eastern time, August 29th.
    0:13:22 – We don’t know who struck first, us or them.
    0:13:25 But if the overall goal is to make good policy
    0:13:28 and economic decisions about our collective future,
    0:13:31 we probably shouldn’t base that policy on movie plots.
    0:13:35 As history has shown again and again and again,
    0:13:39 the fear of new technologies tends to be overstated
    0:13:43 and the gains from technology make most people better off.
    0:13:47 But maybe you’re thinking maybe this time is different.
    0:13:50 In the old days, when the automobile replaced
    0:13:52 the horse and carriage, if you lost your job
    0:13:55 as a carriage maker or a stable hand,
    0:13:58 you could probably find work in an auto plant.
    0:14:00 What about today?
    0:14:02 A 2020 paper by the economists,
    0:14:05 Daron Asamoglu and Pasquale Restrepo
    0:14:08 found that a single industrial robot
    0:14:09 will typically reduce employment
    0:14:12 by as many as six human workers.
    0:14:13 Here’s David Otter again.
    0:14:16 – And I can understand why companies would do that.
    0:14:17 Makes a lot of sense, labor is a cost.
    0:14:19 No one hires workers for the fun of hiring workers.
    0:14:21 They hire workers ’cause they need things done.
    0:14:22 If they could have machines that did it
    0:14:23 without complaining and cost less,
    0:14:25 that’s what they would do.
    0:14:28 But we have a public interest in something more than that.
    0:14:29 We’re gonna have lots of people.
    0:14:31 The machines ultimately work for the people.
    0:14:33 We want to augment the people.
    0:14:37 And there are many highly valuable social problems
    0:14:40 that could use automation, could use investment,
    0:14:41 and we underinvest it.
    0:14:43 For example, healthcare.
    0:14:48 – Consider this healthcare checkup.
    0:14:50 Hi, so I have Drs. Tamalusi.
    0:14:53 He’s gonna be evaluating you today, okay?
    0:14:55 – Okay.
    0:14:56 – Hello, my dear, how are you?
    0:14:58 – Hi, I’m okay.
    0:14:59 How are you?
    0:15:01 – Good to see you again.
    0:15:03 I like your shirt.
    0:15:05 So tell me, how are you feeling today?
    0:15:07 – Yeah, I’m feeling pretty good.
    0:15:09 No complaints today, really.
    0:15:12 – Abiola Tamalusi is a doctor who works
    0:15:14 with a nursing home in Westchester County,
    0:15:16 just outside of New York City.
    0:15:18 It is called Andress on Hudson.
    0:15:20 – Can you open your mouth for me?
    0:15:21 Say, ah.
    0:15:25 Okay, good.
    0:15:27 Can you lift your hands up for me?
    0:15:28 Lift your hands up for me.
    0:15:29 Go for that.
    0:15:31 Excellent.
    0:15:32 – But here’s the thing.
    0:15:35 Dr. Tamalusi isn’t at the nursing home today.
    0:15:37 He is examining the patient remotely.
    0:15:39 – Yeah, we are in our infancy
    0:15:42 of adopting certain robots.
    0:15:43 – That is James Rosenman.
    0:15:46 He’s the CEO of Andress on Hudson.
    0:15:51 We have two robots, one for the purposes of telemedicine
    0:15:56 so that physicians can go into patient rooms
    0:15:58 with the assistance of a nurse
    0:16:02 when they can’t be physically available on site.
    0:16:05 – This telemedicine robot doesn’t look like much,
    0:16:06 or at least not like what you might think
    0:16:08 a robot should look like.
    0:16:11 – Yeah, like an iPad that is on a base
    0:16:14 that has wheels that can move to various areas.
    0:16:18 And we also have another robot that is a social robot
    0:16:21 to visit certain residents that may be less able
    0:16:24 to get up and walk around.
    0:16:26 – I understand you had eight robotic dogs
    0:16:27 and 11 robotic cats.
    0:16:30 Did you have to pull them then because of COVID concerns?
    0:16:33 – They’ve been put in the kennel for a little while.
    0:16:35 The problem with the robots in the environment
    0:16:37 we’re in right now is that you can’t have them
    0:16:38 just roaming about.
    0:16:41 So infection controls added this other layer
    0:16:43 of complexity to robotics.
    0:16:47 So the pandemic is the reason the robotic dogs
    0:16:49 and cats had to be sidelined,
    0:16:51 but the pandemic was also the reason
    0:16:54 that Andris got the telemedicine robot.
    0:16:58 Nursing homes were a hot zone for COVID transmission,
    0:17:01 so Rosenman wanted to minimize face-to-face contact.
    0:17:06 Are you pretty typical as far as a nursing facility
    0:17:08 with the amount of robots you have?
    0:17:11 Are you at the leading edge or are you lagging?
    0:17:13 – It’s hard to know where we stand
    0:17:15 in comparison to other providers
    0:17:20 because this isn’t a topic that comes up very often,
    0:17:23 but we do know that a lot of the people that we talk to
    0:17:25 don’t utilize those in their facilities.
    0:17:30 – Also, James Rosenman is a self-proclaimed robot nerd.
    0:17:33 – I think I watched Short Circuit when I was little.
    0:17:34 The movie.
    0:17:36 – Oh, I get it.
    0:17:39 (laughing)
    0:17:42 – Johnny Five is a big inspiration for me.
    0:17:44 – But there are other non-pandemic reasons
    0:17:48 that a nursing home or hospital might wanna use robots.
    0:17:50 – Yeah, we work very hard on staff retention
    0:17:52 and we do have a good retention rate,
    0:17:54 but we also have people, you know, they retire.
    0:17:56 We would love for them to work there forever and ever
    0:17:59 and I’d love to clone people, but we can’t, you know,
    0:18:01 and maybe that’s for another show,
    0:18:05 but we have a labor shortage in the market of nurses
    0:18:07 and of CNAs.
    0:18:10 A CNA is a certified nursing assistant.
    0:18:14 In the US today, there are roughly four million RNs
    0:18:15 or registered nurses.
    0:18:18 A study in the American Journal of Medical Quality
    0:18:21 found that by 2030, there will be a shortage
    0:18:23 of half a million RNs.
    0:18:26 Subsequent study by the National Center
    0:18:29 for Health Workforce Analysis projects a smaller gap,
    0:18:31 but still a gap.
    0:18:34 This gap is driven by both demand.
    0:18:37 We have a large population of elderly and sick people
    0:18:38 and supply.
    0:18:42 There are more nurses aging out of the workforce
    0:18:43 than entering it.
    0:18:46 – I’ve continued to see this labor shortage
    0:18:47 get worse and worse.
    0:18:50 – How hard is it for you to hire already?
    0:18:52 – It’s incredibly difficult.
    0:18:55 It is a very difficult and demanding job.
    0:18:58 There is a critical shortage of those individuals.
    0:19:01 – Andress has about 190 residents
    0:19:05 and nearly 250 employees not counting the robots.
    0:19:07 The typical resident is over 70
    0:19:10 and has a variety of conditions.
    0:19:13 – Respiratory conditions, COPD,
    0:19:15 general chronic respiratory failure,
    0:19:18 congestive heart failure, cancer.
    0:19:20 – The nursing assistants manage
    0:19:22 a lot of the moment-by-moment care.
    0:19:25 Their wages start at $23 an hour.
    0:19:29 Registered nurses at Andress earn around $40 to $50 an hour.
    0:19:34 $50 an hour works out to around $100,000 a year.
    0:19:36 And what did these robots cost?
    0:19:39 – It was $4,000 for one of the robots
    0:19:41 that we are using for socialization.
    0:19:45 And then for the medical robot, we lease that.
    0:19:47 We pay about $2,000 a month
    0:19:49 because it has all of the equipment.
    0:19:52 – Equipment meaning like EKG possibility?
    0:19:53 – Exactly.
    0:19:55 With the telemedicine robot,
    0:19:58 one of the key components is not just
    0:20:02 that the clinician can look at the patient and assess them,
    0:20:05 but it has an array of tools connected with it.
    0:20:08 So you have what they call smart stethoscope.
    0:20:11 So that directly feeds into what the physician
    0:20:14 can see on there and, you know, an EKG on site.
    0:20:16 And an ultrasound is something
    0:20:19 that we’re looking on adding.
    0:20:20 – Your pulse rate is very good.
    0:20:25 – Good, yeah, oxygen saturation is 98%.
    0:20:29 – James Rosenman says the robots have increased productivity
    0:20:31 at the nursing home and better yet,
    0:20:34 they’ve helped improve patient outcomes.
    0:20:38 – You know, one area that is always of concern,
    0:20:42 individuals who come to us for short-term rehabilitation,
    0:20:45 and then something happens medically with them,
    0:20:47 then we have to send them back out to the hospital.
    0:20:49 It’s called a readmission.
    0:20:52 And so we realized that by adding the robot
    0:20:55 and having faster access to clinicians
    0:20:59 to be able to view something in real time, assess it,
    0:21:02 we were able to fairly significantly reduce
    0:21:06 readmission rates to the hospital, just through that alone.
    0:21:09 – For David Otter, the MIT labor economist,
    0:21:13 these nursing home robots can help answer the second question
    0:21:16 that his work of the future task force asked.
    0:21:19 How can we shape and catalyze technological innovation
    0:21:23 to complement and augment human potential?
    0:21:26 You could introduce so much technology and healthcare
    0:21:30 without reducing employment and yet expanding
    0:21:33 the quality of care and the quantity of care.
    0:21:34 And of course, you’ll need tons and tons of people
    0:21:37 to actually do the hands-on care work.
    0:21:41 – But is that reading of the situation too optimistic?
    0:21:43 Coming up after the break,
    0:21:47 a fascinating new study about Japanese nursing homes.
    0:21:48 – What we’re really worried about
    0:21:51 are the lower-skilled workers
    0:21:54 that might be completely replaced.
    0:21:57 – And why is the Andrus nursing home an outlier?
    0:22:02 Why is the US a laggard when it comes to healthcare robots?
    0:22:04 – Sort of hard to understand.
    0:22:05 – And if you like what you’re hearing
    0:22:06 on Freakin’omics Radio today,
    0:22:09 why don’t you give us a rating or a read review
    0:22:10 on your podcast app?
    0:22:14 We’ll be right back with robots and co-bots.
    0:22:17 (gentle music)
    0:22:26 – Welcome back.
    0:22:29 Today, we are playing an update of an episode
    0:22:31 we originally recorded in 2021.
    0:22:35 The MIT labor economist, David Otter,
    0:22:39 was co-chair of a task force on the future of work,
    0:22:42 specifically how the US workforce is integrating
    0:22:45 and adapting to new technologies.
    0:22:49 The task force found that the US is not nearly as adept
    0:22:51 as one might hope in this regard.
    0:22:53 Here’s what they wrote in their final report.
    0:22:57 Institutional changes and policy choices failed to blunt,
    0:22:59 and in some cases, magnified,
    0:23:02 the consequences of these pressures on the US labor market.
    0:23:07 So, David, of all the rich countries in the world,
    0:23:11 how would you rank the US in terms of successfully adapting
    0:23:13 to the future of work?
    0:23:15 And assuming that we are not in, let’s say,
    0:23:20 the 90th percentile or above, why are we trailing?
    0:23:23 – I would put the US maybe at the bottom of the top dozen.
    0:23:25 On the plus side, let’s give the US a little bit of credit.
    0:23:28 It’s incredibly creative and entrepreneurial.
    0:23:30 A lot of the technologies originate here, right?
    0:23:32 But in terms of dealing with the consequences,
    0:23:34 as opposed to the opportunities,
    0:23:36 that’s where we have been extremely poor.
    0:23:40 Low-wage workers in Canada make 25% more per hour
    0:23:42 than low-wage workers in the United States.
    0:23:44 It’s hard to believe that Canadian workers
    0:23:46 are actually 25% more productive per hour McDonald’s
    0:23:47 than US workers.
    0:23:49 That seems very unlikely.
    0:23:51 – How are those wages so much higher in Canada?
    0:23:52 – There are minimum wages,
    0:23:55 and then there are just norms about what is acceptable.
    0:23:58 And the US has kind of thrown away those norms.
    0:24:00 To a substantial extent, we’ve convinced ourselves
    0:24:03 that those norms are the problem, not the solution.
    0:24:08 – Aside from those norms, there’s also the fear
    0:24:11 that new technologies will destroy more good jobs
    0:24:15 than they create, or at least that the productivity trade-off
    0:24:16 won’t be worth it.
    0:24:18 But not all countries feel that way,
    0:24:21 especially when it comes to robots.
    0:24:23 – I think a lot of people just weren’t aware
    0:24:28 that Japan’s been subsidizing robot adoption since 2015.
    0:24:31 – Karen Eggleston is an economist at Stanford.
    0:24:34 – It’s beautiful, you can hear the birds chirping.
    0:24:36 – A lot of Eggleston’s research looks at healthcare
    0:24:38 and technology in Asia.
    0:24:40 Why that focus?
    0:24:42 – Well, Asia is a very important part of the world
    0:24:44 and a part of the global economy.
    0:24:47 I also have family connections to Asia.
    0:24:49 – When you look at the countries with the highest
    0:24:52 per capita share of robots in the workforce,
    0:24:54 Asia is well represented.
    0:24:57 Number one, by a long shot, is South Korea.
    0:25:01 Singapore is number two, and Japan is number four.
    0:25:02 Germany is third.
    0:25:05 Most of these are industrial robots
    0:25:08 used in the production of electronics and automobiles.
    0:25:10 The countries with a lot of robots
    0:25:12 tend to be high-wage countries,
    0:25:15 which makes sense since higher wages
    0:25:18 create more incentives to replace human workers.
    0:25:21 The exception is China, which is now at number five,
    0:25:24 even though labor there is relatively cheap,
    0:25:25 at least for now.
    0:25:28 When it comes to Japan, Karen Eggleston says
    0:25:32 that robots have been embraced for several reasons.
    0:25:35 First of all, we know Japan is a very developed economy
    0:25:38 and invests a lot in many kinds of new technologies,
    0:25:42 from so-so technologies to brilliant technologies.
    0:25:46 So investing in robots was natural in that context.
    0:25:49 – A so-so technology is economists speak
    0:25:51 for something that just doesn’t perform very well,
    0:25:53 especially when it’s new.
    0:25:55 Think of automated phone services
    0:25:58 and self-checkouts in grocery stores.
    0:26:01 – Second, and more related to what I usually study,
    0:26:04 is that the population age structure in Japan
    0:26:06 is such that it’s leading the world
    0:26:08 in the demographic transition.
    0:26:13 And so therefore has an overall declining population
    0:26:16 and a declining working age population.
    0:26:20 – Japan, in fact, has the oldest population in the world.
    0:26:24 – So you have an increasing demand for long-term care
    0:26:27 and a declining supply of workers
    0:26:30 to staff that long-term care.
    0:26:32 This is the same dynamic that James Rosenman
    0:26:35 of the Andrus Nursing Home told us about,
    0:26:37 but it’s even more pronounced in Japan.
    0:26:39 A lot of countries ease the burden
    0:26:43 of an aging population by importing labor.
    0:26:45 – But as many people know,
    0:26:48 Japan is less welcoming of immigrant labor
    0:26:50 than many other countries in the world
    0:26:55 and has actually had a long-standing acceptance of robots.
    0:26:58 – I feel like I read that a few years ago,
    0:27:01 Japan had finally started to loosen up
    0:27:03 some of the immigration, is that right?
    0:27:05 – Japan does continue to loosen immigration,
    0:27:08 so it’s certainly not a black or white thing,
    0:27:10 but it’s just relative to many other countries
    0:27:14 where the labor market conditions might be different.
    0:27:16 – In other words, Japan might have opted
    0:27:18 for more immigrant labor to help care
    0:27:19 for its aging population,
    0:27:23 but instead it invested heavily in robots.
    0:27:26 – So they don’t all look like R2D2 or C3PO,
    0:27:29 but they have functionality that enables them
    0:27:33 to take actions based on what they’re monitoring.
    0:27:35 And a cobot is a term that’s developed
    0:27:38 for robots that work alongside humans.
    0:27:41 – Cobot as in a collaborative robot.
    0:27:43 It is a very different machine
    0:27:44 than the kind of robots used
    0:27:46 in something like auto manufacturing.
    0:27:49 – Correct, yeah, those robots can kind of swing their arms
    0:27:52 without worrying that they’re gonna knock over a human
    0:27:54 and damage them.
    0:27:56 – And then a cobot is defined
    0:28:00 as necessarily working alongside humans, is that right?
    0:28:04 – That’s the idea is that they can work alongside,
    0:28:06 they’re not only aware physically of the human’s presence,
    0:28:10 but they can productively interact with the human.
    0:28:11 – In Japanese nursing homes,
    0:28:14 there are a variety of cobots designed
    0:28:16 to accomplish a variety of tasks.
    0:28:20 One type, for instance, is designed to monitor patients.
    0:28:24 So these can help both the caregivers
    0:28:28 and the people themselves to avoid falls,
    0:28:30 particularly if they roll out of bed at night
    0:28:33 or they get up and then trip on something.
    0:28:35 – There are also cobots to help
    0:28:38 the nursing home staff move their patients.
    0:28:41 – They have these big robots with big arms
    0:28:42 that help to pick people up.
    0:28:47 Others that actually are worn by the caregiver
    0:28:49 really need to strap onto the body
    0:28:51 when they’re trying to move someone
    0:28:54 from the bed to a chair or back again.
    0:28:55 So they’re not shaped like a human,
    0:28:58 but to fit onto a human body.
    0:29:03 And these robots are trying to address the issue of back pain
    0:29:06 that caregivers often experience
    0:29:10 and leads to turnover and therefore poor outcomes
    0:29:11 for long-term care.
    0:29:15 Other robots help with other activities of the individual,
    0:29:18 such as being able to move directly themselves
    0:29:20 and to function independently,
    0:29:23 to help with taking a bath or walking around.
    0:29:25 – So unlike the typical robot,
    0:29:28 a cobot is designed to compliment human labor
    0:29:30 rather than replace it.
    0:29:33 That at least is the theory.
    0:29:35 Karen Eggleston, being an economist,
    0:29:36 wanted to test this theory.
    0:29:38 She and two colleagues,
    0:29:41 Young Lee and Toshiyaki Izuka,
    0:29:44 set out to gather and analyze data
    0:29:47 from 860 nursing homes in Japan.
    0:29:48 We focused on nursing homes partly
    0:29:52 because that’s where this population aging question
    0:29:53 is really most manifest.
    0:29:58 And also because the huge debate about technologies
    0:30:00 is yes, we know that surgeon’s jobs
    0:30:02 will be affected by technology,
    0:30:04 but what we’re really worried about
    0:30:07 are the lower-skilled workers
    0:30:09 that might be completely replaced.
    0:30:12 A lot of the research in manufacturing
    0:30:15 has shown that to be certainly a worry
    0:30:17 that has foundation.
    0:30:19 – Eggleston and her coauthors
    0:30:22 were able to collect a variety of data for this study.
    0:30:27 First, wage and employment data from these nursing homes.
    0:30:29 This included whether a given employee
    0:30:31 was a so-called regular worker,
    0:30:33 which was usually a full-time position
    0:30:35 and paid fairly well,
    0:30:37 or a lower-paid non-regular,
    0:30:40 meaning a part-time or flex worker.
    0:30:42 The researchers also measured the degree
    0:30:45 of cobot adoption in a given nursing home,
    0:30:48 but they needed to introduce a random variable
    0:30:52 to prove causality between the adoption of robots
    0:30:54 and the effects on staffing.
    0:30:58 Luckily for them, different prefectures across Japan
    0:31:00 subsidize cobots at different rates,
    0:31:02 some as high as 50%.
    0:31:04 This variation in subsidies
    0:31:07 gave the researchers a nice natural experiment.
    0:31:10 – And we use the variation in those subsidies
    0:31:15 to help figure out which way the causality arrow goes.
    0:31:17 – Eggleston and her colleagues have written a working paper
    0:31:21 called Robots and Labor in the Service Sector,
    0:31:23 Evidence from Nursing Homes.
    0:31:24 Would they find?
    0:31:28 – What we find is that robot adoption
    0:31:33 is strongly correlated with having a much larger nursing home,
    0:31:36 and it appears to be a causal impact
    0:31:39 that adopting robots is associated
    0:31:43 with more care workers rather than fewer,
    0:31:44 but these additional care workers
    0:31:49 are the non-regular type on more flexible contracts.
    0:31:52 – So that sounds as if it could mean
    0:31:57 that robots are bad for the upper end
    0:31:59 of that employment spectrum,
    0:32:02 considering that this is relatively low paid work anyway.
    0:32:06 It sounds like it would promote more human workers,
    0:32:08 but at a lower wage.
    0:32:10 Is that about right?
    0:32:12 – Well, yes, it is possible,
    0:32:16 although we also know that the most commonly adopted robot
    0:32:20 is the monitoring robots we were talking about,
    0:32:24 and they are helping to reduce the long night shifts
    0:32:27 that nurses and care workers have to do.
    0:32:29 So we think that part of the effect
    0:32:33 is that the workers have a reduced burden of care.
    0:32:37 And yes, we do find a lower wage of a modest amount
    0:32:39 for the regular nurses,
    0:32:43 but if the case is that they have shorter work days,
    0:32:47 then it’s not clear that that’s actually a welfare loss.
    0:32:50 – When I first read your paper,
    0:32:55 the sort of sunny headline that I wrote in my head was,
    0:32:58 we thought robots were the enemy of workers,
    0:33:01 and now it looks like they are best friends.
    0:33:03 That’s a little bit too sunny, isn’t it?
    0:33:05 – Yeah, I think it is a little sunny,
    0:33:08 although it is a little bit surprising.
    0:33:11 And depending on how they’re adapted this automation,
    0:33:15 yes, it will replace some of the tasks that care workers do,
    0:33:18 but the ones that do end up staying in this profession,
    0:33:22 maybe they will have more support, less back pain,
    0:33:26 have the education to work alongside robots,
    0:33:29 and may find that a more enjoyable experience
    0:33:32 as well as better for the people they serve.
    0:33:35 A lot of the workforce feels burned out,
    0:33:38 not necessarily ’cause they don’t like doing what they do,
    0:33:41 but they don’t like doing all that paperwork
    0:33:42 and all that other stuff,
    0:33:44 and they wanna interact one-on-one
    0:33:46 with the people they care for,
    0:33:50 and co-bots, if they work properly, will enable that.
    0:33:54 Humans have these qualities of being very dexterous
    0:33:57 and being able to care directly to the patient
    0:33:59 and communicate and have compassion with them.
    0:34:04 – And what’s next for our relationship with the robots?
    0:34:05 – That’s coming up.
    0:34:06 I’m Stephen Dubner.
    0:34:08 You are listening to Freakonomics Radio.
    0:34:09 We’ll be right back.
    0:34:11 (gentle music)
    0:34:28 You could argue that healthcare is the ideal scenario
    0:34:32 for the blending of human and robot labor.
    0:34:35 There are countless tasks and procedures
    0:34:37 where technology can plainly be helpful,
    0:34:42 but the human appetite for compassion also seems boundless,
    0:34:46 and for now at least, humans are better at compassion.
    0:34:48 You could see co-bots helping mightily,
    0:34:50 not just in hospitals and nursing homes,
    0:34:52 but in at-home care as well.
    0:34:53 A recent study from the Journal
    0:34:55 of the American Medical Association
    0:34:59 found that some five million older adults in the U.S.
    0:35:03 need help with bathing or using the bathroom.
    0:35:07 In Japan and elsewhere in Asia and also in Europe,
    0:35:09 it is increasingly possible for a robot
    0:35:12 to assist with such tasks.
    0:35:15 That’s not just because robots have been subsidized.
    0:35:18 They’ve also been deregulated.
    0:35:19 – In the United States,
    0:35:24 we don’t have access to a lot of these types of robots.
    0:35:26 – That again is James Rosenman,
    0:35:29 CEO of the Andrus on Hudson Nursing Home,
    0:35:33 and why don’t we have more access to these types of robots?
    0:35:35 – It’s a good question.
    0:35:36 When I look at a lot of these things,
    0:35:38 I’ll find something in my eyes will get huge.
    0:35:40 I’ll do some research late at night,
    0:35:44 and then I find out it’s only available in Japan
    0:35:47 or in the EU, actually in many, many markets,
    0:35:49 and the glimmer goes out of my eye
    0:35:52 because I know that we can’t legally import that
    0:35:54 to the United States.
    0:35:55 The other day I was just looking at,
    0:35:58 for example, to reduce the incidence
    0:36:01 of individuals developing pressure ulcers
    0:36:03 for people who are more bed-bound.
    0:36:05 The current thinking is that you rotate people
    0:36:07 so that you can increase blood flow
    0:36:10 and reduce pressure on one given part of the body.
    0:36:13 So the idea that I was thinking about was,
    0:36:15 maybe there are beds beyond just the mattresses
    0:36:18 that are pressure-relieving by robotic bed
    0:36:19 that literally move people.
    0:36:21 Right now, that’s being done by humans.
    0:36:23 It’s not available in the United States.
    0:36:28 So is it regulation that’s preventing this right now?
    0:36:30 And if so, what kind of regulation is it?
    0:36:31 Technical regulation?
    0:36:33 Is it medical regulation, et cetera?
    0:36:35 Sort of hard to understand.
    0:36:38 I think that some of it is like a pie chart,
    0:36:39 if you will, of different reasons.
    0:36:42 I don’t think there’s one sort of smoking gun
    0:36:44 or people in the back room that are saying,
    0:36:46 “All right, it’s not that these things rolled out
    0:36:48 because it goes against our interests.”
    0:36:50 It’s just very fragmented.
    0:36:53 And so you have these different regulatory authorities.
    0:36:55 You have who’s going to pay for it?
    0:36:57 How’s it going to be used?
    0:36:59 You can have it approved, but then you have,
    0:37:02 how is it used in practical terms on-site?
    0:37:04 I think that first and foremost,
    0:37:09 there need to be more pilots, studies, models.
    0:37:11 There are pilots going on every day.
    0:37:12 Medicare funds those,
    0:37:14 or they’re funded by other agencies
    0:37:15 of the federal government.
    0:37:19 But there haven’t been a lot of pilots
    0:37:21 that include robotics in our settings.
    0:37:24 (gentle music)
    0:37:28 So if you’re thinking big picture about the future of work,
    0:37:30 one of the most compelling questions
    0:37:32 is the degree to which robotics
    0:37:35 will complement human labor versus replace it.
    0:37:38 One example that I’ve encountered
    0:37:41 is in a construction company.
    0:37:44 That is Yang Li, one of Karen Eggleston’s co-authors
    0:37:46 on the Japanese nursing home paper.
    0:37:49 He is an economist at Notre Dame.
    0:37:50 They initially created robots
    0:37:52 so that they could replace workers,
    0:37:56 for instance, digging out certain parts of the land
    0:37:57 to lay the foundation.
    0:38:01 But they needed people who had years of experience,
    0:38:04 more than 10 or 20 years of experience.
    0:38:07 And it was just difficult to find that labor anymore.
    0:38:11 So what they decided to do is to create a robot
    0:38:14 where an individual with maybe only one year of experience
    0:38:19 could operate a machine that could perform the task
    0:38:22 that a skilled laborer with 20 years of experience
    0:38:23 could perform.
    0:38:26 So in this sense, they were designing a robot
    0:38:28 not to replace the skilled individual,
    0:38:32 but actually to augment an individual with less skill.
    0:38:34 In another study, Li looked at robots
    0:38:36 in the manufacturing sector,
    0:38:39 a study that covered 11 years.
    0:38:41 There too, he found that robots at first
    0:38:43 were replacing workers,
    0:38:46 but later as the technology matured,
    0:38:48 the robots became more collaborative.
    0:38:51 Robots 10 years ago that did welding,
    0:38:54 and robots 10 years later, it will likely be different.
    0:38:58 – So how do economists see this relationship unfolding
    0:39:01 between human workers and smart machines?
    0:39:04 How can that relationship be optimized?
    0:39:06 Karen Eggleston again.
    0:39:10 – Won’t surprise you to know as an educator and a researcher
    0:39:12 that I believe that investment in human capital
    0:39:14 is really, really important.
    0:39:16 And we need to be investing in young people
    0:39:18 and everyone else to enable them
    0:39:21 to be lifelong learners and to be adaptable.
    0:39:26 If we give support to people to be adaptable
    0:39:28 to changes in the labor markets,
    0:39:31 there really is a possibility that it will work
    0:39:35 on behalf of a very broad spectrum of society.
    0:39:38 – In other words, every piece of technology in a way
    0:39:41 could become a co-bot if we humans
    0:39:44 are skilled enough to collaborate with them.
    0:39:45 – Yes, yes.
    0:39:48 I think there really is a potential for technology
    0:39:51 to make our lives better.
    0:39:54 But I’m not of that opinion
    0:39:56 that it’s gonna automatically happen.
    0:40:00 I think it comes down to the choices that we make,
    0:40:02 particularly in policy on behalf
    0:40:04 of the most vulnerable in our society.
    0:40:08 – We have time to adapt.
    0:40:10 Our institutions, our educational systems
    0:40:12 and the way we work.
    0:40:15 And that again is the MIT economist, David Otter.
    0:40:18 The third and final question from his task force
    0:40:21 on the future of work was this.
    0:40:24 How can our civic institutions ensure
    0:40:26 that the gains from these emerging innovations
    0:40:29 contribute to equality of opportunity,
    0:40:32 social inclusion and shared prosperity?
    0:40:38 The problem strikes me as a layperson
    0:40:41 is maybe a gigantic coordination problem
    0:40:43 because we look to our governments
    0:40:47 to coordinate the way jobs and the economy will flow
    0:40:48 and take care of everybody.
    0:40:51 But in fact, governments aren’t really very equipped
    0:40:54 to do that, whereas firms have a different set of incentives.
    0:40:58 So can you just describe how that will unfold
    0:41:00 in a way that leaves people not either out of work
    0:41:04 or grotesquely underpaid or working in an economy
    0:41:06 where the gap between the high and low
    0:41:08 just gets bigger and bigger?
    0:41:10 – So first I wanna argue that the government
    0:41:11 actually can do a lot.
    0:41:15 And that we in America tend to deride our government
    0:41:17 and assume it can’t be effective.
    0:41:20 But in many ways, history demonstrates just the opposite.
    0:41:21 And you don’t have to look very far back in history,
    0:41:24 just look back when the government passed the CARES Act.
    0:41:28 And overnight essentially took 10% of GDP and said,
    0:41:31 hey, we’re gonna send this to households,
    0:41:33 to businesses and to the unemployed
    0:41:35 to keep this pandemic from turning
    0:41:37 into an economic catastrophe.
    0:41:38 And it was highly effective.
    0:41:40 And the government similarly has been effective
    0:41:44 in shaping technology over many generations, right?
    0:41:46 The US had a leading patent system,
    0:41:47 it’s in our constitution,
    0:41:50 but the US has also invested in R&D
    0:41:53 through our universities in health development and so on.
    0:41:54 So it actually plays a big role
    0:41:56 and even setting the rules of the road.
    0:42:00 – To that end, the MIT work of the future task force
    0:42:02 had some concrete recommendations.
    0:42:06 They include heavy investment in education and job training,
    0:42:09 both in schools and through private firms,
    0:42:11 improving the quality of existing jobs
    0:42:14 via policies like a higher minimum wage
    0:42:16 and labor organizing protections,
    0:42:19 and reforming the tax incentives
    0:42:22 that privilege capital investments over labor.
    0:42:24 If you think all that sounds a lot
    0:42:26 like the recommendations we’ve been hearing about
    0:42:29 for a few decades now, I agree.
    0:42:31 So you might be forgiven for thinking
    0:42:33 these adjustments won’t happen,
    0:42:37 at least not in time to deal with the robotic revolution.
    0:42:40 – But David Otter isn’t panicking.
    0:42:42 The revolution may be inevitable,
    0:42:44 but it’s not instantaneous.
    0:42:46 – The technology is spectacular
    0:42:48 and it’s going to have momentous impacts,
    0:42:50 but they’re unfolding gradually.
    0:42:52 They often take years to decades.
    0:42:53 You know, think about the gap
    0:42:55 between the hype about driverless cars
    0:42:58 and the number that you don’t yet see on the roads.
    0:43:00 And many of the things are still a ways off.
    0:43:03 I mean, these things will happen, but they take time.
    0:43:05 – Let me ask you to cast your mind forward,
    0:43:08 let’s say between 10 and 20 years,
    0:43:10 it’s pretty easy to foresee
    0:43:13 that a lot of low-skill jobs will be replaced
    0:43:15 or very much amended.
    0:43:17 But let’s say even a lot of medium and high-skill ones,
    0:43:20 let’s say economists and writers and podcasters
    0:43:22 and forensic insurance agents,
    0:43:25 let’s say that many, many, many of those jobs
    0:43:28 get essentially wiped out by some combination
    0:43:32 of robots and co-bots and artificial intelligence
    0:43:33 and machine learning.
    0:43:37 Wouldn’t that mostly be a wonderful thing?
    0:43:40 – So it’s wonderful in one sense.
    0:43:41 It means we are now much richer.
    0:43:43 We can do everything we were doing
    0:43:44 and yet not use any labor to do it.
    0:43:46 So we have incredible leisure opportunities,
    0:43:48 therefore we have incredible productivity,
    0:43:49 incredible wealth.
    0:43:51 The problem that creates is twofold.
    0:43:54 One is a huge distributional challenge.
    0:43:57 Our main method of income distribution in this country
    0:43:58 and in most industrialized economies
    0:44:00 is ownership of labor, right?
    0:44:02 You have some labor, you invest in your skills,
    0:44:04 and then you sell those skills and labor to the market
    0:44:07 for 30, 35 years, you save up some money, you retire.
    0:44:09 If labor is no longer scarce,
    0:44:12 what claim do you have on the assets of that society?
    0:44:14 So I worry about that problem,
    0:44:16 the problem of abundance actually,
    0:44:18 the problem of lack of labor scarcity.
    0:44:24 The other is I do think work, one can oversell it,
    0:44:26 but work should be venerated to some degree.
    0:44:29 It gives people identity, it gives them structure,
    0:44:31 it gives them purpose.
    0:44:33 I mean, this is what the Calvinists have always told us,
    0:44:35 but how do we know this is true?
    0:44:37 Well, we know when people lose work, they are miserable.
    0:44:39 So if we’re gonna have less work,
    0:44:42 I’d like to see everybody have a little bit less
    0:44:44 rather than many people not working at all.
    0:44:50 David Otter is a lot smarter than me.
    0:44:53 So I am inclined to believe him when he says
    0:44:56 that people are miserable when they lose work.
    0:44:59 On the other hand, could it be that people
    0:45:03 who’ve lost work in the past have been miserable
    0:45:06 because our civilization is built around work
    0:45:11 as the primary means to satisfy your basic needs?
    0:45:14 If the assets of society, as Otter puts it,
    0:45:17 are so bountiful at some point in the future,
    0:45:19 shouldn’t there be a way to share in those assets
    0:45:24 while our robot and cobot friends do most of the work?
    0:45:28 Some people are lucky enough to love their work.
    0:45:30 I’ll be honest, that describes me most days at least,
    0:45:33 and I’m guessing it describes David Otter too,
    0:45:38 but many, many, many people have jobs they do not love
    0:45:40 and which keep them from what they do love.
    0:45:44 Economists are pretty good at measuring utility,
    0:45:48 but they’re not very good yet at measuring things like love.
    0:45:54 Maybe if the robots and cobots are really smart,
    0:45:56 they can teach the economists how to do that.
    0:45:59 (soft music)
    0:46:02 Since we originally published this episode,
    0:46:05 Yong Li and Karen Eggleston have come out with a new paper
    0:46:08 about robots and labor in nursing homes in Japan.
    0:46:10 They found that introducing cobots
    0:46:14 did not reduce the number of human workers,
    0:46:18 but it did reduce employee turnover, which is a good thing,
    0:46:22 and it also improved patient outcomes, also a good thing.
    0:46:25 Here’s what Eggleston told us by email.
    0:46:28 These patterns suggest that robots have the potential
    0:46:32 to enhance quality of care while augmenting care workers
    0:46:36 so they can focus more on human touch care
    0:46:40 and less on the back pain-inducing physical tasks
    0:46:42 that contribute to making care work
    0:46:44 such a high turnover job.
    0:46:46 We also reached out to James Rosenman
    0:46:48 of the Andrus on Hudson Nursing Home
    0:46:50 to ask how his cobots are doing.
    0:46:52 He told us that since 2021,
    0:46:56 the facility has expanded its telehealth robot program
    0:46:58 and added some new devices,
    0:47:00 including a semi-robotic system
    0:47:04 that helps nursing assistants rotate bedbound patients
    0:47:07 and a robotic exoskeleton
    0:47:10 that can help stroke patients stand up and walk.
    0:47:13 I hope you enjoyed this bonus episode.
    0:47:15 We will be back very soon with a brand new episode
    0:47:17 of Freakonomics Radio.
    0:47:19 Until then, take care of yourself.
    0:47:21 And if you can, someone else too,
    0:47:24 although maybe a cobot is taking care of them.
    0:47:28 Freakonomics Radio is produced by Stitcher and Renbud Radio.
    0:47:31 You can find our entire archive on any podcast app,
    0:47:33 also at Freakonomics.com,
    0:47:36 where we publish transcripts and show notes.
    0:47:39 This episode was produced by Zach Lipinski
    0:47:41 and updated by Augusta Chapman.
    0:47:43 Our staff also includes Alina Cullman,
    0:47:46 Dalvin Abouaji, Eleanor Osborn, Ellen Frankman,
    0:47:49 Elsa Hernandez, Gabriel Roth, Greg Rippin,
    0:47:52 Jasmine Klinger, Jason Gambrale, Jeremy Johnston,
    0:47:55 John Snarr’s Lyric Bowditch, Morgan Levy, Neil Carruth,
    0:47:58 Rebecca Lee Douglas, Sara Lilly, and Teo Jacobs.
    0:48:02 Our theme song is “Mr. Fortune” by the Hitchhikers.
    0:48:04 Our composer is Luis Guerra.
    0:48:06 As always, thank you for listening.
    0:48:11 What do you call these two robots?
    0:48:13 Do they have names?
    0:48:15 Right now, the Stephen, you know,
    0:48:18 “Dubnait Robot,” and that’s what now we’re going to, after this.
    0:48:25 The Freakonomics Radio Network,
    0:48:27 the hidden side of everything.
    0:48:32 Stitcher.
    0:48:34 you
    0:48:36 you

    It’s true that robots (and other smart technologies) will kill many jobs. It may also be true that newer collaborative robots (“cobots”) will totally reinvigorate how work gets done. That, at least, is what the economists are telling us. Should we believe them?

     

    • SOURCES:
      • David Autor, professor of economics at the Massachusetts Institute of Technology.
      • James Rosenman, C.E.O. of Andrus on Hudson senior care community.
      • Karen Eggleston, economist at Stanford University.
      • Yong Suk Lee, professor of technology, economy, and global affairs at the University of Notre Dame.

     

     

  • 611. Fareed Zakaria on What Just Happened, and What Comes Next

    AI transcript
    0:00:08 Hey there, it’s Stephen Dubner, and I would like to invite you to come see Freakonomics
    0:00:16 Radio live in San Francisco on January 3rd and in Los Angeles on February 13th.
    0:00:20 For tickets, go to Freakonomics.com/LiveShows.
    0:00:21 One word.
    0:00:25 I’m told that tickets are going fast, so you might want to do this soon.
    0:00:28 I’m also told that these tickets make an excellent holiday gift.
    0:00:36 Again, that’s Freakonomics.com/LiveShows, January 3rd in San Francisco, February 13th
    0:00:37 in LA.
    0:00:44 I’ll be there, and I hope you will too.
    0:00:51 On January 6th of 2025, Vice President Kamala Harris will certify this year’s election results
    0:00:55 and officially named Donald Trump as the nation’s 47th president.
    0:01:01 She will do this in her role as outgoing Senate president, but also, of course, as the presidential
    0:01:03 candidate that Trump just beat.
    0:01:09 He is only the second president in U.S. history to lose the White House but win it back later.
    0:01:12 The other was Grover Cleveland in the 19th century.
    0:01:18 This is one of many ways in which the 2024 election was a historic one and a dramatic
    0:01:23 one, the kind that generates a lot of bloviating from a lot of people.
    0:01:26 So you may have had your fill of that.
    0:01:30 I was thinking you might want to hear a different kind of conversation about the election with
    0:01:37 someone who isn’t a bloviator, someone very smart and thoughtful with a wide perspective,
    0:01:43 someone who maybe has a PhD in political science and is maybe an immigrant.
    0:01:47 All of that describes our guest today, Fareed Zakaria.
    0:01:52 We had him on the show earlier this year to talk about his book The Age of Revolutions,
    0:01:56 Progress and Backlash, from 1600 to the present.
    0:02:01 Zakaria is host of a weekly CNN show called GPS or Global Public Square, and he writes
    0:02:04 a column for the Washington Post.
    0:02:09 In the conversation you are about to hear, we will talk about the election results.
    0:02:11 Trump is not a spasm.
    0:02:12 It’s not a one-shot thing.
    0:02:15 This is a deep, enduring change.
    0:02:18 And what that deep, enduring change may look like.
    0:02:24 I worry that we’re in a situation where this whole world order can unravel very quickly.
    0:02:28 But if you were someone who didn’t vote for Trump, and you’re thinking about leaving
    0:02:32 the country, Zakaria has something to say to you too.
    0:02:37 If everybody who loses an election abandons the watchtowers, that’s not going to help
    0:02:38 democracy.
    0:02:42 And you don’t want to hurt democracy, do you?
    0:02:49 We once ran a contest on Freakonomics.com soliciting new six-word mottos for the United
    0:02:50 States.
    0:02:52 Here is the one that got the most votes.
    0:02:56 Our worst critics prefer to stay.
    0:02:58 That was a while ago.
    0:03:00 Does that motto still hold true today?
    0:03:19 This is Freakonomics Radio, the podcast that explores the hidden side of everything with
    0:03:31 your host, Stephen Dovner.
    0:03:36 I spoke with Fareed Zakaria on the 8th of November, just a couple days after Donald
    0:03:41 Trump won a second term in the White House, bracketing his four years of exile.
    0:03:46 The Republicans also won firm control of the Senate, while the outcome for the House of
    0:03:48 Representatives was still up in the air.
    0:03:53 And this was before Trump had made any significant appointments in his administration other than
    0:03:56 choosing Suzy Wiles as his chief of staff.
    0:04:00 But as we publish this episode, the appointments are coming thick and fast.
    0:04:05 Tom Homan, Elise Stefanik, Marco Rubio, Lee Zeldin, probably quite a few more by the time
    0:04:06 you hear this.
    0:04:12 I asked Zakaria for his first impressions of the election.
    0:04:17 What I’ve been struck by is the degree to which the kind of things that I talked about
    0:04:21 in my book, Age of Revolutions, have been borne out.
    0:04:28 That is, that we’re in the midst of a huge backlash to all the economic change, the technological
    0:04:34 change, the cultural change that has been roiling Western societies and really societies
    0:04:37 everywhere for the last few decades.
    0:04:42 We thought that these changes get digested, or maybe there’s a spasm of a backlash.
    0:04:49 But we’re in a long period of reaction to these forces, and we’re developing almost
    0:04:53 a kind of new politics around it.
    0:04:59 What you’re seeing is a major realignment of politics around the idea that we’ve gone
    0:05:00 too far.
    0:05:08 We have to rethink the entire way in which we have been approaching these massive forces
    0:05:15 of structural change, economics, globalization, information revolution, cultural change.
    0:05:20 I’m not saying that I agree with that bad reaction and backlash in every case, but it’s
    0:05:22 deep and it’s not a spasm.
    0:05:23 It’s plainly not just here.
    0:05:28 If you look at the incumbent party getting tossed out, it’s example after example after
    0:05:29 example, right?
    0:05:34 Austria, Japan, probably Canada next year, do you see that as further proof that we’re
    0:05:40 living through, as you put it in the book of yours, the most revolutionary period in
    0:05:41 recent history?
    0:05:48 This is the first year in which every major country that has held an election has seen
    0:05:52 the incumbent party tossed out or substantially weakened.
    0:05:57 In some cases like France, Macron is still president, but his party was decimated.
    0:06:03 So we’re clearly at a moment of enormous backlash and reaction.
    0:06:05 Now sometimes it takes on a weird form.
    0:06:10 In Britain, it became a backlash to the Tories because the Tories were seen as the incumbents
    0:06:14 who had presided over the period of turmoil and inflation.
    0:06:22 But for the most part, it is a backlash against what I call the policy of openness, open trade,
    0:06:28 open information, open migration, even open politics in the sense of people doubting very
    0:06:31 much where the democracy can deliver.
    0:06:33 Let’s press a little bit further on what constitutes openness.
    0:06:37 I want to read you a couple of things I’ve read this past week.
    0:06:42 One is from Newt Gingrich, former House Speaker and an informal advisor to Trump said, “The
    0:06:48 elites cannot come to grips with how alienated they are from the country.”
    0:06:52 There’s a professor of communications and journalism at Stony Brook University named
    0:06:59 Musa Algarbi who wrote, “The rise of populism, tensions over identity politics and the crisis
    0:07:05 of expertise are all facets of a deeper struggle between knowledge economy professionals and
    0:07:10 the growing number of Americans who feel alienated from the social order we, those professionals,
    0:07:12 preside over.”
    0:07:17 So that’s a bit of an indictment of you, me, a lot of people you and I both know.
    0:07:19 What’s your feeling about that?
    0:07:21 I think it’s broadly correct.
    0:07:24 Now how you solve it is the bigger problem.
    0:07:31 The post-industrial nature of modern economies, the move from first of all a manufacturing
    0:07:36 sector to a service sector which is happening in every advanced industrial country and the
    0:07:44 further effect of the information revolution has been to privilege knowledge workers, to
    0:07:51 privilege people whom Robert Reich once described as symbolic analysts, meaning if you manipulate
    0:07:57 symbols, code, images, language for a living and think of every profession we get, you
    0:08:00 know, lawyers, accountants, software programmers.
    0:08:02 You’ve just described our entire audience by the way.
    0:08:03 Right.
    0:08:05 You’re going to be doing well in that economy.
    0:08:10 You’re going to be rewarded and you have pricing power over your labor.
    0:08:17 If you manipulate physical things for a living, you do not have pricing power and that reality
    0:08:22 has become more and more intense and it’s been an easy sort basically people who are
    0:08:27 college educated versus people who are non-college educated, people who live in urban city centers
    0:08:29 versus people who don’t.
    0:08:32 And so these divides stack upon each other.
    0:08:40 So you end up really with two countries, one urban educated, secular, multicultural and
    0:08:47 the other one rural, less educated, more white, more religious.
    0:08:51 And that creates a much greater chasm than we have ever had.
    0:08:57 If you go back 50 years, what you notice is the steel worker made more than the accountant
    0:08:59 or even sometimes the junior lawyer.
    0:09:03 There were lots of blue collar professions and lots of blue collar towns which were
    0:09:07 thriving and Detroit was one of the richest cities in America.
    0:09:09 That world has gone away.
    0:09:14 That’s the fundamental structural push which is creating this alienation.
    0:09:19 I very much dispute the idea that the elites are looking down on this great unwashed.
    0:09:21 I think that’s a nice way to indict them.
    0:09:23 But look at Joe Biden.
    0:09:29 Joe Biden as president has done more for blue collar workers, for manufacturing, for rural
    0:09:32 counties than any president really in history.
    0:09:38 I mean you could say it Lyndon Johnson, but the attempt to target the infrastructure bill,
    0:09:45 the CHIPS Act, the IRA all towards what were really red counties was extraordinary.
    0:09:50 It didn’t help them politically at all because the issues causing this divide are as much
    0:09:52 cultural as they are economic.
    0:09:55 I’m curious to know how surprised you were by the outcomes.
    0:09:59 Did you predict a Trump landslide in a red wave?
    0:10:04 Because other than some of the betting markets, I haven’t heard from many people who did.
    0:10:05 I thought he would win.
    0:10:09 I didn’t say anything publicly about it because I’ve always thought it was close enough that
    0:10:11 it was almost a guessing game.
    0:10:16 I would have preferred if Kamala Harris had won, but I thought Trump would win, but it’s
    0:10:22 not as much of a landslide as people are making it out to be, you know, 175,000 votes in those
    0:10:27 three blue wall states and the electoral college would have flipped and Kamala Harris would
    0:10:28 be president.
    0:10:30 She would have won like Trump did in 2016.
    0:10:34 He would have won the popular vote, but she would have won the electoral college.
    0:10:42 The striking feature of it is how you saw movement toward him among pretty much every
    0:10:43 group.
    0:10:48 The most significant ones were Hispanics, but everywhere you saw some movement.
    0:10:52 And I tend to think that is part of this larger realignment that I’m talking about.
    0:10:59 The country is coalescing into two groups, the party of that wants more openness at some
    0:11:04 level and the party that wants more closed borders, closed trade, closed technology.
    0:11:10 You know, it’s a big divide and you’re seeing these new alignments where Hispanic working
    0:11:14 class people are voting more like working class people than like Hispanics.
    0:11:19 So ethnicity is giving way to social and economic class.
    0:11:24 Mali Hemingway, who’s a conservative pundit, writes for the Federalist said, “This is the
    0:11:27 absolute end of the old Republican Party.
    0:11:32 New GOP is more durable, more working class with a brighter future.”
    0:11:34 Your thoughts on that?
    0:11:35 I think she’s dead right.
    0:11:41 I think that the old Republican Party, the party of the Chamber of Commerce, of the
    0:11:48 upper class, of the affluent white professionals, that party is gone, the party of Paul Ryan
    0:11:49 and Mitt Romney.
    0:11:53 What Trump figured out was that that party was a minority party.
    0:11:59 It had not been able to win the popular vote for 25 years almost with one exception.
    0:12:05 What he has found his way to is a new coalition, which is almost the inverse.
    0:12:08 The base of the party is working class.
    0:12:13 It is a more durable majority or at least a larger coalition.
    0:12:19 For the Democrats, the challenge is that if the great dividing line is college education,
    0:12:26 you’ve got 40% versus their 60% because college educated people only make up about 40%.
    0:12:28 So you have to supplement it with something.
    0:12:33 The Democrats’ old answer was, “We’re going to supplement it with minorities.”
    0:12:37 And blacks are still very reliably voting Democratic.
    0:12:40 Jews, actually, interestingly, are still very reliably voting Democratic.
    0:12:41 Right.
    0:12:45 The exit polls, which aren’t totally reliable, showed that Harris won a bigger share of the
    0:12:49 Jewish vote than any Democrat in 24 years.
    0:12:50 Correct.
    0:12:53 Again, what that tells you is that they’re a socially economic class by which I mean
    0:12:57 college education, Trumped religion and ethnicity.
    0:13:02 There is an old Democratic party itch, which is that we’ve got to be a working class party
    0:13:03 as well.
    0:13:05 You hear that in Bernie Sanders.
    0:13:10 The problem is, no matter what policies they pursue, and as I say, Biden has been the most
    0:13:15 pro-working class president in decades, the working class is abandoning them.
    0:13:19 They don’t see the Democrats as part of their world.
    0:13:24 They see the Democrats as this affluent, elite, urban cosmopolitan world.
    0:13:31 Tony Blair said this to me, “When people feel deeply insecure, they don’t move left economically.
    0:13:34 They move right culturally.”
    0:13:37 Because your instinct is not to say, “Oh my goodness, I feel like my world is being
    0:13:38 upended.
    0:13:40 I need this government program.”
    0:13:45 No, their impulse is to say, “I need a return to the world I knew.”
    0:13:48 That’s why the politics of nostalgia are so powerful.
    0:13:50 It’s a return to something comfortable.
    0:13:53 That feeling trumps economics.
    0:13:59 If you think about gender issues, you’re seeing on the one side a lot of women feeling like
    0:14:04 they need to have their rights protected, but you’re also seeing a lot of men who feel
    0:14:11 like politics has gotten too feminized, that they are being forgotten, and that in a post-industrial
    0:14:13 world, women do better than men.
    0:14:16 There is a kind of male backlash.
    0:14:18 Just take me back to before all this was happening.
    0:14:24 Take me back to that world where a man was able to be a man and was the dominant player
    0:14:26 in the family and in society.
    0:14:32 I find that whenever working-class people do this, liberals get so frustrated and they
    0:14:37 say, “I can’t believe these people are voting against their interests,” meaning they’re
    0:14:40 voting for a party that isn’t going to do something for them economically.
    0:14:46 And yet, these same upper-class liberal professionals are voting against their interests.
    0:14:51 They are voting against the party that is going to give them tax cuts, and they are voting
    0:14:53 for the party that is going to tax them more.
    0:14:54 Why?
    0:15:00 Because even for upper-class liberals, it turns out that culture and social issues can often
    0:15:02 trump economics.
    0:15:04 Although their argument would be, “Well, I’ve got mine.
    0:15:08 I’m comfortable, and therefore, I’m looking out for people who don’t,” right?
    0:15:13 They would say that, but I would argue that what’s going on is that in their world, it
    0:15:19 would be seen as so offensive to be voting for Trump, and what makes it so offensive?
    0:15:21 It’s all these cultural issues.
    0:15:28 It’s not that people in our world think it’s massively offensive to give a 3% cut in taxes.
    0:15:31 No, it’s about abortion, and it’s about deportation.
    0:15:32 It’s about all those issues.
    0:15:39 So the main story being told now is pretty simple, that the Harris campaign focused primarily
    0:15:42 on Trump as a villain.
    0:15:47 Voters, however, were primarily focused on two things, inflation and immigration, which,
    0:15:53 by the way, were two major Trump talking points, and that resounded much more, apparently,
    0:15:55 than the Trump-the-villain story.
    0:15:58 Does that narrative sit about right with you, or do you think it’s more complicated than
    0:15:59 that?
    0:16:00 I think that’s about right.
    0:16:06 You can’t do that much about global inflation, because it was global, and secondly, it had
    0:16:09 already come down, but people were living with the effects of it.
    0:16:16 I think part of what’s going on is that there is a lagging indicator, and that people feel
    0:16:22 the pain of inflation more than they feel the benefits of these very powerful positive
    0:16:27 indicators that the U.S. has, by far the best large economy in the world.
    0:16:31 One variable that you could do something about was immigration.
    0:16:37 Immigration is the rocket fuel that is feeding right-wing populism, because, in a way, it
    0:16:44 is the visible manifestation of all these revolutionary changes that are upending society.
    0:16:51 How do you see or perceive or feel massive movements of capital around the world?
    0:16:52 You don’t.
    0:16:54 Even trade is an abstraction.
    0:16:55 Information revolution.
    0:17:00 They’re all abstractions, but what’s real is that you see these people on TV, and they
    0:17:05 look different, and they sound different, and they’re changing the visual character
    0:17:10 of your country, the sense you have of what it means to be an American.
    0:17:16 All your anxieties get latched onto immigration, and so not realizing that this is a seismic
    0:17:18 issue was a big mistake.
    0:17:23 One element that the Trump campaign seemed to be incredibly successful with was getting
    0:17:31 even first generation Americans and immigrants to also turn against, especially illegal
    0:17:32 immigration.
    0:17:39 Can you just talk about how the campaign did in organizing its real collage of constituencies?
    0:17:43 The main issue was the reality on the ground, and they understood it better.
    0:17:50 Look, I’m an immigrant, and I have very, very mixed feelings about all this crisis at the
    0:17:52 border, the breakdown of asylum.
    0:17:59 It took me 10 years of very patient, legal steps to become an American citizen.
    0:18:04 To see people come to the border and essentially game the system by saying the magic words,
    0:18:09 “I have a credible fear of persecution,” which then gets you in, gets you to court hearings,
    0:18:15 gets you to stay for seven years, you disappear into the system, and you can work illegally.
    0:18:18 All of that offends people at two levels.
    0:18:22 One, it’s the sense of this is a violation of rule of law.
    0:18:23 This is not what a country should be.
    0:18:28 But the other is, I waited my turn, I stood in line, I did all these things, I jumped
    0:18:34 through all these hoops, or my parents did, and you guys are getting in for free.
    0:18:41 So I think that they understood that the breakdown in immigration, particularly around asylum,
    0:18:43 was a very different thing.
    0:18:46 They’ve realized that there was a real collapse at the border.
    0:18:50 The Democrats will say, “Well, we had this legislation teed up ready to go bipartisan
    0:18:56 and supported,” and then Trump spiked it by persuading sitting Republicans to not move
    0:18:59 forward on it so that he could come in and fix it.
    0:19:03 That seems to be not a very disputed story, even those on the Trump side seem to admit
    0:19:07 that he’s the one that’s ready to come in and march with it.
    0:19:09 Is that unfair to the Democrats?
    0:19:12 Did they propose a proper solution and it was scotched, or should they have found a
    0:19:14 different way to do that?
    0:19:17 It is the correct solution for the Democrats politically.
    0:19:20 The problem is it’s not completely true substantively.
    0:19:25 What really happened is Biden comes in, he reverses everything Trump did on immigration.
    0:19:26 Some of those things were terrible.
    0:19:30 He was making it more difficult for legal immigration, he was making it more difficult
    0:19:36 for even business visitors, but they also overturned all the asylum stuff.
    0:19:41 They then get an inflow, part of it was post-COVID, and they don’t do anything about it.
    0:19:45 And it’s only three years later that they do what you were describing.
    0:19:49 So it’s disingenuous for them to claim that their solution was timely?
    0:19:53 It’s disingenuous because they do it three years later, they’re doing it after they see
    0:19:57 that the problem is spiraled totally out of control and that they’re paying a political
    0:19:58 price for it.
    0:20:03 But politically, even then they should have been making that case that look, we were waiting
    0:20:07 for a bipartisan congressional solution and then from vetoed it.
    0:20:12 So let’s say that you are sitting around a table this morning with a bunch of Democratic
    0:20:18 Party leaders and you look at your standard bears of the past bunch of years and they’re
    0:20:22 really, really old, they’re not a little old, they’re really old.
    0:20:25 And then you’ve got Kamala Harris who just lost an election.
    0:20:29 How do you think about the next couple of years if you’re the Democratic Party?
    0:20:34 I think that it would be a mistake to over interpret some of these things.
    0:20:40 The Democratic Party did reasonably well in a year that was profoundly anti-incumbency.
    0:20:42 Kamala Harris ran a reasonable campaign.
    0:20:47 There are a few lessons that should be taken that are not about this larger political realignment.
    0:20:54 For example, the media environment has completely changed and you have to have candidates who
    0:20:57 are very comfortable in the new media environment.
    0:21:00 Kamala Harris in some ways is a very old school candidate.
    0:21:05 She’s very good at the stuff that works on network TV, the teleprompter.
    0:21:12 Clearly we are in an age where people want long form podcasts, they want authenticity.
    0:21:17 So somebody like Pete Buttigieg works really well in this new format.
    0:21:22 He could go for three hours, he could go for five hours with Joe Rogan or you.
    0:21:25 Because what people are trying to get a sense of is who is the real person.
    0:21:29 And I think what they love about Trump is he is authentic.
    0:21:32 You can tell when he’s up there, he actually hates the teleprompters.
    0:21:35 He can’t wait to get off them.
    0:21:40 Even that moment when he starts to play his Spotify playlist, I think what people loved
    0:21:41 about it is it was authentic.
    0:21:43 He was tired, he was bored.
    0:21:47 He said, guys, let’s just take a break and hear some music.
    0:21:52 Democrats are still a little too form bound by an older world.
    0:21:56 When somebody asks you a question which involves an awkward reality, you don’t answer it.
    0:21:59 So that became her word salad.
    0:22:03 And instead of that, you need a real answer on something like would you do something different
    0:22:08 than Joe Biden would be, look, in retrospect, we should have shut down the border much faster,
    0:22:09 much sooner.
    0:22:11 And I’ll tell you what was going on.
    0:22:15 It didn’t want to be as cruel as we thought Donald Trump had been.
    0:22:20 And we were trying to solve it in a bipartisan way because really legislation is the only
    0:22:24 way that you can durably solve this, but we probably waited too late.
    0:22:27 And in retrospect, I would have shut it down fast and hard.
    0:22:28 It was a mistake.
    0:22:32 Now, in conventional political terms, that’s seen as the wrong answer because you just
    0:22:33 said you made a mistake.
    0:22:35 You said something bad about Biden.
    0:22:40 I think it would have actually worked because what people are looking for is, look, we all
    0:22:44 know that this ended up spiraling out of control.
    0:22:46 Why can’t you just be a human being and admit it?
    0:22:50 Do you think Joe Biden in his heart of hearts thinks it was a mistake to step aside?
    0:22:52 Do you think he thinks he could have won?
    0:22:56 Of course, every person is a hero in his own movie.
    0:23:00 For better or worse, I happen to know a lot of people in their 80s who are very rich,
    0:23:02 billionaires who run companies.
    0:23:07 I’ve not noticed any one of them thinking I’m too old to be doing this.
    0:23:11 Warren Buffett doesn’t think he’s too old to be running Berkshire Hathaway.
    0:23:13 Rupert Murdoch doesn’t think he’s too old.
    0:23:18 So it isn’t that surprising that a politician who is at the top of his game, holding the
    0:23:23 most powerful job in the world, one he’s wanted since he’s been in his 20s, thinks he could
    0:23:25 keep doing it.
    0:23:29 Almost certainly Biden is looking at this and thinking, I should never have stepped down.
    0:23:30 I could have made it happen.
    0:23:32 I don’t think that’s true.
    0:23:36 The problem for Biden was he looked and felt and sounded old.
    0:23:40 In the world of politics, that all matters.
    0:23:45 After the break, Donald Trump is going to the White House this time with more experience
    0:23:47 and more leverage.
    0:23:50 Fareed Zakaria tells us what that may look like.
    0:23:51 I’m Stephen Dubner.
    0:23:52 This is Freakin’omics Radio.
    0:24:04 We will be right back.
    0:24:09 One of Trump’s biggest victories in his first term was appointing three conservative
    0:24:14 justices to the Supreme Court, which led to the overturning of Roe v. Wade.
    0:24:19 In this election, voters chose to protect abortion access in seven of the 10 states
    0:24:21 where it was on the ballot.
    0:24:26 But on many other ballot measures, progressive causes failed.
    0:24:32 California voters rejected rent control measures and minimum wage increases, and they voted
    0:24:36 in favor of harsher penalties for theft and drug offenses.
    0:24:40 Marijuana legalization failed in all three states where it was on the ballot.
    0:24:44 And in Massachusetts, a ballot measure to allow the legalization of some psychedelic
    0:24:47 drugs was defeated.
    0:24:50 Another big loser was ranked choice voting.
    0:24:55 Even though many Americans expressed frustration with the two-party system, ballot initiatives
    0:25:01 on ranked choice voting and/or open primaries failed in seven states, although they did
    0:25:05 pass in Washington, D.C. and in some other cities.
    0:25:13 I asked Fareed Zakaria what he thinks about this rejection of ranked choice voting.
    0:25:17 I think our bitterly divided parties agree on one thing, which is to maintain the two-party
    0:25:23 duopoly and to do everything they can to avoid any challenges to it.
    0:25:24 Rank choice voting makes a lot of sense.
    0:25:30 It just translates voters’ preferences more efficiently and intelligently into the political
    0:25:31 system.
    0:25:37 But until you get one of the parties to see an advantage to doing it and having one of
    0:25:42 the charismatic politicians explain it, you’re not going to get there.
    0:25:48 So besides Donald Trump himself, who do you see as the biggest winners in this election,
    0:25:53 whether it’s individuals, constituencies, industries, countries, ideas?
    0:25:55 Who comes out winning?
    0:26:04 The biggest winner in a sense is the idea of a new ideology focused on the closed agenda.
    0:26:08 Because it becomes clear that Trump is not a spasm, it’s not a one-shot thing, that this
    0:26:14 is a deep enduring change, that Republican Party is now completely remade.
    0:26:19 In personal terms, JD Vance comes out of this the best, because while a lot of politicians
    0:26:25 went along with Trump because of his success, Vance is one of the very small number who
    0:26:32 is genuinely ideologically a believer in this kind of closed agenda.
    0:26:35 Now he has a slightly different version of it than Trump.
    0:26:40 Vance in some ways represents the ideological underpinnings of MAGA.
    0:26:47 And so I suspect that Vance will take this opportunity to really lay out that idea and
    0:26:54 to push the Republican Party off the remaining libertarian elements.
    0:26:59 People look at him and say, well, he worked at a hedge fund, so he must be pro-market.
    0:27:04 He’s certainly a capitalist, but I think he’s a very particular kind of capitalist.
    0:27:07 He really is in favor of massive industrial policy.
    0:27:11 He’s in favor of much less trade and much more targeted trade.
    0:27:17 He’s in favor of Lena Kahn, the Biden administration official, who is basically anti-big tech,
    0:27:18 anti-mergers.
    0:27:23 The second Trump term looks like it will be quite different from the first Trump term
    0:27:27 in a number of ways, including probably a much quicker and smoother transition.
    0:27:29 He’s used to the way things work.
    0:27:34 He’s also laid down more of a wish list that might be more concrete this time around.
    0:27:38 So how do you see the Republicans planning their legislative priorities for the first
    0:27:39 year?
    0:27:41 There’s plainly too much to take on all at once.
    0:27:46 So if you look at the broader menu, tax cuts, immigration reform, perhaps repealing the
    0:27:51 Inflation Reduction Act or the CHIP’s Act, what do you see as the first moves?
    0:27:56 There’s one whole basket of things which is about reducing the power of the deep state.
    0:28:02 There’s a much deeper anti-establishment impulse that these last few elections have shown that
    0:28:05 I think they understand and they’re going to act on.
    0:28:09 If you think about it over the last 20 years, the politics of the era has been dominated
    0:28:13 by two outsiders, Donald Trump and Barack Obama.
    0:28:14 That’s not an accident.
    0:28:17 I think that’s all a legacy of ’08 and the Iraq war.
    0:28:21 Then you get to the core promises that were made.
    0:28:27 The economic agenda is really the most difficult because Trump has said he’s going to extend
    0:28:29 his tax cuts.
    0:28:34 He’s got a bunch of new promises, the central one of which is no taxation of social security
    0:28:35 income.
    0:28:39 Now, if you take the first one, the extension of the Trump tax cut, that’s $2.5 trillion.
    0:28:43 When you say extension, this is a 2017, it would just remove the sun setting.
    0:28:46 That would continue it, not necessarily amplify.
    0:28:47 Correct?
    0:28:48 Correct.
    0:28:53 But in budgetary terms, the assumption has been that it sunsets, so if you think about
    0:28:59 budget projections, that is an additional $2.5 trillion of lost revenue.
    0:29:04 Then you have no taxing of social security, which is an additional $2.5 trillion of lost
    0:29:05 revenue.
    0:29:08 You’re adding $5 trillion to the debt.
    0:29:14 Those two things alone are just so big in budgetary terms that the question will be,
    0:29:17 will Senate Republicans go along with that?
    0:29:21 How would the markets react if they were to do something like that?
    0:29:26 You haven’t even brought up tariffs yet, which most economic-minded people think will not
    0:29:28 accomplish what it’s meant to accomplish.
    0:29:29 I agree though.
    0:29:30 I don’t think it produces a short-term crisis.
    0:29:32 Look, I’m very much a free trader.
    0:29:35 I think it’s a bad idea and I think it takes the world out.
    0:29:41 A bad path of mercantilism and protectionism, but it’s not going to produce a huge crisis.
    0:29:45 Look, 85% of the American economy is a domestic economy.
    0:29:50 We are one of the countries in the world that could survive a higher tariff world.
    0:29:51 Europe gets really screwed.
    0:29:56 Ironically, US and China probably can survive this kind of a world.
    0:30:02 A lot of people, although they’re mostly academics and good government watchdogs, they’ve been
    0:30:05 concerned for years about what they call government capture.
    0:30:10 Industries and firms and lobbyists having too much leverage over government, even the regulatory
    0:30:11 bodies of government.
    0:30:15 I mean, if you look at private equity, the government’s rules have essentially been
    0:30:20 written by the industry thanks to the revolving door between industry and government.
    0:30:26 Now we’ve got Elon Musk, who helped Trump win the election and plainly has his ear and
    0:30:31 Musk has a whole lot of business that could benefit from looser regulations with Tesla,
    0:30:34 SpaceX, even ex, the former Twitter.
    0:30:39 How do you see the relationship between government and commerce in this upcoming Trump administration?
    0:30:46 You can see it in what happened a day after the election results became clear.
    0:30:53 You got a flurry of tweets from every major CEO in America, every major tech CEO, every
    0:30:59 bank CEO, phoning over Trump, congratulating him and telling him how much they wanted to
    0:31:00 work well with him.
    0:31:03 I think that this is a very sad development that’s happened.
    0:31:10 It’s not entirely because of Trump, but we have politicized the economy in America.
    0:31:14 All this industrial policy, these tariffs, these bans, what that does is it suddenly
    0:31:20 makes Washington a very crucial arbiter to the success of business.
    0:31:27 You add to it Trump, who personally loves the idea of finding Caterpillar for doing this
    0:31:33 and Harley Davidson for doing that and Chase for doing he views it as his job as president
    0:31:39 to literally dole out rewards and punishments to companies depending on whether they do
    0:31:44 what he regards as the right thing or the wrong thing is deeply saddening to me as somebody
    0:31:47 who grew up in India where this is business as usual.
    0:31:53 Every business had to slavishly pander to whoever the prime minister at the time was.
    0:31:59 You see it in Musk, Tesla’s stock in the two days after Trump won was up 20% or something
    0:32:04 like that, adding tens of billions of dollars to Elon Musk’s net worth.
    0:32:08 Nothing fundamental in the economics had changed for Tesla.
    0:32:12 There was just an expectation now that he was a friend of Trump’s that he was going
    0:32:15 to somehow be showered with federal largesse.
    0:32:21 There’s a guy in India called Adani who’s Modi’s best friend and his stocks trade at
    0:32:26 multiples 10 times that of every other Indian company because everyone assumes that at the
    0:32:32 end of the day, being Modi’s best friend is worth $100 billion or something like that.
    0:32:34 It’s probably a pretty safe assumption.
    0:32:36 It’s a safe assumption in India.
    0:32:41 What’s tragic is it might even be a safe assumption in America, but it’s not what the American
    0:32:42 economy was supposed to be about.
    0:32:45 And I think it’s a very sad trend.
    0:32:49 What do you think immigration itself and immigration policy looks like in the next year or two?
    0:32:53 I think you’re going to see a very severe crackdown on immigration in every form.
    0:32:56 I think you’re going to see a shutdown of the asylum policy.
    0:33:01 I think Trump might even invoke national security so that it gets through the courts and they’ll
    0:33:03 just shut the border.
    0:33:08 Some kind of massive immigration reform I think is unlikely.
    0:33:15 It’s a very complicated issue in which everybody has different objections to different problems.
    0:33:19 Trump doesn’t seem to enjoy doing big compromise legislation.
    0:33:21 It’s politically unsatisfying.
    0:33:25 So what he’s going to end up just trying to do is the border stuff and shut it down.
    0:33:29 The deportations are the most interesting issues.
    0:33:34 His people like Vance and Vivek Ramaswamy have even said we are going to deport 24 million
    0:33:36 people.
    0:33:40 If you start to try to do that, the scale of it is so breathtaking.
    0:33:44 The use of police power you would need is so large and the economic effects would be
    0:33:50 so negative that you wonder whether Trump will do it because he doesn’t like bad headlines.
    0:33:55 All his Wall Street friends whom he still talks to and admires are going to tell him
    0:33:57 this is bad.
    0:34:00 This is one of the tightest labor markets in 50 years.
    0:34:05 Even deporting two or three million people would probably spike inflation.
    0:34:08 It would probably cause enormous economic dislocation.
    0:34:11 To me, that’s going to be the bright line.
    0:34:12 He has promised.
    0:34:13 This is not Vance.
    0:34:14 This is not Ramaswamy.
    0:34:17 He has promised the largest deportation in American history.
    0:34:20 He’s going to have to do something big.
    0:34:24 One could imagine that he could pick a place, let’s say it’s New York or California, places
    0:34:29 that voted against him and say, okay, let’s start New York City and let’s send in the
    0:34:33 military and let’s deport everyone that’s not here legally.
    0:34:35 How would you see that playing out?
    0:34:38 Let’s say that armed forces are sent to New York City.
    0:34:40 What options would the mayor have?
    0:34:42 What options would the governor have?
    0:34:47 We haven’t been in this situation since the late ’50s and the early ’60s when governors
    0:34:53 like George Wallace would talk about interposition and nullification, essentially saying that
    0:34:58 the states had the ability or the authority to resist federal police power.
    0:35:01 I think it would be very hard to resist federal authority on this.
    0:35:03 The civil rights era settled that issue.
    0:35:06 The federal government does trump the states.
    0:35:07 The challenge remains.
    0:35:10 It is hugely economically disruptive.
    0:35:15 So even if you pick New York and California, remember these are the two most vibrant economic
    0:35:20 centers of the country and it’s going to have a spillover economically.
    0:35:24 Tell me what you think the second Trump administration looks like.
    0:35:29 It strikes me that there is a totally different vibe around the incoming administration than
    0:35:30 there was in 2016.
    0:35:33 The shock was much greater back then.
    0:35:36 One of the biggest complaints was that the administration was just not professionally
    0:35:41 run, that Trump didn’t act like a president, which maybe some of his supporters like, but
    0:35:43 most of his staff did not like.
    0:35:47 It was just chaotic and there was all kinds of infighting and firings and just a lack
    0:35:50 of ability to move the machinery in Washington.
    0:35:53 I wonder if you think it’ll be substantially different this time.
    0:35:58 The first term was unusual in that first he didn’t expect to win.
    0:36:02 They come to it very quickly without a lot of planning.
    0:36:03 He makes two or three decisions.
    0:36:07 One is to go along with the Republican establishment in many ways.
    0:36:12 So the legislative priorities were largely those that were outlined by Mitch McConnell
    0:36:13 and Paul Ryan.
    0:36:14 And what were those?
    0:36:20 That was to prioritize tax cuts and repeal of Armacare over things like infrastructure,
    0:36:23 which Trump had been more in favor of.
    0:36:28 The second is to use the Republican establishment to staff the administration.
    0:36:33 If you remember, his first chief of staff was Rens Priebus, the chairman of the RNC,
    0:36:35 who he barely knew.
    0:36:39 Then finally, you notice he loved generals and so he appointed lots of generals.
    0:36:43 So I suspect all three of those things are not going to happen anymore.
    0:36:48 The priorities are going to be determined by Trump and his hardcore group of advisors.
    0:36:53 They are not going to rely on the Republican establishment very much and he doesn’t like
    0:36:58 generals anymore because he realized that the generals push came to shove were more loyal
    0:37:03 to the Constitution than to him personally and for Trump, nothing is worse than disloyalty.
    0:37:10 So I think what you’re going to see is a much more intense ideological vetting and personal
    0:37:12 loyalty test.
    0:37:18 You see this being in some ways a more typical administration or do you see Trump believing
    0:37:24 he has a mandate to do exactly what Trump wants to do will be even more unorthodox?
    0:37:26 I suspect it’ll run better.
    0:37:31 A lot of the tension came from Trump giving orders that people would try to undermine
    0:37:33 because they disagreed with them.
    0:37:38 My guess is he’s going to have people around him who agree with him more, who will willingly
    0:37:39 carry out those orders.
    0:37:45 I mean, he’s always run a small mom and pop real estate operation and he approaches everything
    0:37:50 like that so that he can change his mind and he can go off script.
    0:37:55 I don’t think that’s going to change that much.
    0:38:00 Donald Trump, especially when he’s campaigning, says a lot of things that he later says he
    0:38:01 didn’t really mean.
    0:38:08 This is part of what he calls his weave, part insult comedy, part braggadocio, part old-fashioned
    0:38:10 sloganeering.
    0:38:14 It all adds up to a highly unpredictable mode of communication.
    0:38:20 So how will this kind of communication go over on the global stage in Donald Trump’s
    0:38:21 second term?
    0:38:28 If the U.S. walks away and disengages from the world, we will quite possibly return to
    0:38:31 a world of realpolitik and the law of the jungle.
    0:38:32 I’m Stephen Dubner.
    0:38:34 This is Freakonomics Radio.
    0:38:44 We’re speaking with Fareed Zakaria and we’ll be right back.
    0:38:50 So far, we’ve been speaking with Fareed Zakaria mostly about the election outcomes and what
    0:38:53 a second Trump term might mean domestically.
    0:38:57 But Zakaria’s deepest expertise is geopolitics.
    0:39:02 In a recent Washington Post column, he argued that the world is facing “the most dangerous
    0:39:05 moment since the Cold War.”
    0:39:10 As tensions spiral in the Middle East, he writes, “Keep in mind that this is only one
    0:39:16 of three arenas in the world where revisionists are trying to upend the international order.
    0:39:23 In Europe, a war continues to rage and in Asia, a perilous new dynamic is at work.”
    0:39:30 So I asked Zakaria why he sees so much danger in this moment and how Donald Trump may intersect
    0:39:32 with that danger.
    0:39:38 If you step back, the world we’ve lived in for the last 75 years is a world system that
    0:39:43 was largely created by the United States after 1945.
    0:39:48 And it has, as the institutional architecture of it, the UN and the World Bank and the IMF.
    0:39:55 But what it really is, is a kind of open world economy, rules-based system, some concern
    0:40:00 to norms like no acquisition of territory by force.
    0:40:03 And largely speaking, these norms have helped.
    0:40:07 There aren’t a lot of cases of aggression in which land was acquired, absorbed into a
    0:40:12 new country, and it was ratified by international law.
    0:40:15 If you look before 1945, that happened every year.
    0:40:20 So it’s a world that is distinctly different from the one we’ve lived in for many, many
    0:40:21 centuries.
    0:40:24 It’s largely the creation of the United States.
    0:40:30 It’s one that has produced peace and prosperity on a scale unimaginable, I think.
    0:40:35 And it is now threatened because of, in some sense, waning American power and waning American
    0:40:39 willingness to be the underwriter of this world.
    0:40:44 And so you see Russia mounting a classic military aggression in Europe.
    0:40:50 You see Iran in its own way trying through asymmetrical means using all these militia
    0:40:56 groups to upend the security system there that is largely American-created with the
    0:41:00 moderate Arabs and Israel playing the role of regional policemen.
    0:41:05 And in Asia, China slowly but steadily trying to replace the United States as the dominant
    0:41:06 power.
    0:41:11 Now, Trump will react to each one of them in an ad hoc manner in some ways perfectly
    0:41:13 fine and other ways probably not.
    0:41:18 But what I worry about is that he doesn’t understand the larger picture, which is that
    0:41:24 the United States really has created a new world, that that world has been largely beneficial
    0:41:28 to the United States and enormously beneficial to the rest of the world, and that there are
    0:41:33 huge stakes here that if the US walks away and disengages from the world and retreats
    0:41:39 to isolationism, nobody can fill that role and that this world is not natural and self-sustaining
    0:41:45 and that we will quite possibly return to a kind of 19th century world of realpolitik
    0:41:47 and the law of the jungle.
    0:41:50 That’s not in America’s interest and that’s not in the world’s interest.
    0:41:56 I don’t think Trump hears the music on that because from his first full-page ad in the
    0:42:02 New York Times when he was a real estate developer, he was just berating the Japanese for taking
    0:42:08 advantages economically, berating the Europeans for free riding on American security.
    0:42:14 He’s always looked at that world and said, “All our allies are ripping us off.”
    0:42:20 So if he brings to it that mentality, I worry that we’re in a situation where this whole
    0:42:23 world order can unravel very quickly.
    0:42:25 Let’s go through some countries one at a time.
    0:42:32 Let’s start with Russia, a big one, a problematic one, one in a war right now with Ukraine.
    0:42:38 We’ve learned about Trump having several private phone calls with Putin since leaving office.
    0:42:41 It’s also been reported in the Wall Street Journal that Elon Musk, a Trump ally, has
    0:42:44 also been in regular contact with Putin.
    0:42:49 How do you see the shape of the U.S.-Russia relationship moving in the next year or two?
    0:42:52 Clearly Trump has a soft spot for Putin.
    0:42:57 I think it’s probably just he likes strong men, he admires what Putin has done and what
    0:43:02 worries me about that is not that he’ll try to do a deal on the Ukraine war.
    0:43:03 I think there’s a deal to be had.
    0:43:07 I think it is time to find a way to end the hostilities.
    0:43:13 The problem is the easiest way to do that would be to force Ukraine to accept Russia’s
    0:43:18 terms and therefore effectively lose its independence.
    0:43:23 So Trump could easily go to Zelensky and say, “Look, here are my terms, which are not that
    0:43:28 different from Putin’s terms, you accept these or we stop sending you weapons.”
    0:43:34 It’s very difficult to see how Zelensky can resist American pressure.
    0:43:40 What you end up with then is a morally bankrupt piece, which is really just a Ukrainian and
    0:43:42 Western surrender to Russia.
    0:43:48 Putin is able to be victorious, that norm of no aggression is destroyed.
    0:43:53 But more importantly, it still leaves Europe deeply unstable because all the countries
    0:43:57 around Ukraine are going to be scared and nervous and insecure and Ukraine itself will
    0:44:03 largely implode because unless you have a security guarantee that comes along with the
    0:44:09 end of the war, the Russians are just going to wait and even if they don’t come back in,
    0:44:13 they will be able to exercise leverage by wielding that threat.
    0:44:17 So Ukraine becomes a basket case, Eastern Europe becomes insecure.
    0:44:19 It’s a terrible idea.
    0:44:24 And the most worrying part about it is JD Vance outlined a version of a peace deal and was
    0:44:26 essentially Putin’s peace deal.
    0:44:30 It was in fact a version of the deal Putin has put on the table in quote unquote peace
    0:44:33 negotiations in Turkey.
    0:44:35 Let’s move to the side of a couple other wars.
    0:44:40 Israel is still fighting a war in Gaza, fighting kind of a war in southern Lebanon.
    0:44:45 How does the Trump election change those wars, but especially the relationship with Bibi
    0:44:48 Netanyahu and Israel generally?
    0:44:54 The truth is the Biden administration has been so supportive of Israel and so supportive
    0:45:00 broadly speaking of Bibi Netanyahu that there isn’t going to be that much difference.
    0:45:03 There isn’t that much more that Trump could do.
    0:45:09 The Biden people tried to restrain Netanyahu in the manner in which he conducted the war
    0:45:14 in Gaza, you know, don’t go into certain civilian areas, make sure you have provided
    0:45:19 for humanitarian assistance and tents when you displace people.
    0:45:23 But those were things, you know, kind of on the margins of the fundamental issues.
    0:45:26 People say Trump will give a green light, but what would that mean?
    0:45:31 Well, Trump has said he wants to make rescuing the Israeli hostage is a priority, for instance.
    0:45:35 So theoretically that could lead to a different phase of the war in Gaza.
    0:45:39 Ironically, the big obstacle to that has been Bibi Netanyahu.
    0:45:42 All the people I’ve talked to who have been involved in these negotiations, including
    0:45:48 the Qataris who have been brokering them, say that the big obstacle initially was Hamas,
    0:45:52 but then Hamas came to agree to certain terms and then Bibi Netanyahu didn’t want to agree
    0:45:58 to those terms because those terms would have probably enraged the two members of his government
    0:46:01 who are on the far right and his government might have had to collapse.
    0:46:07 And everything I read is that Netanyahu is prosecuting the war in this direction, mostly
    0:46:08 out of self-preservation.
    0:46:09 Do you buy that?
    0:46:11 I think I bought it initially.
    0:46:16 I think he has maneuvered so well and gotten lucky in Lebanon, but at this point his poll
    0:46:18 numbers look very good.
    0:46:23 He’s probably in a situation where he could actually even go to the polls and win.
    0:46:28 Donald Trump will certainly give Bibi Netanyahu a green light to do whatever he wants to do
    0:46:32 in Gaza, but honestly, there isn’t that much more to do.
    0:46:38 75% of Gaza has been destroyed, Hamas’ leaders have been killed, Hamas’ infrastructure has
    0:46:39 been decimated.
    0:46:44 The interesting continuity you’re going to see, which I think is one that Biden and
    0:46:49 Trump have both been comfortable with, is what Israel is doing in the north, the war
    0:46:52 against Hezbollah and the attacks on Iran.
    0:46:58 And there, I think the Israelis have very shrewdly and effectively re-established deterrence.
    0:47:03 They were in a circumstance where Hezbollah was launching rockets at them, Israeli citizens
    0:47:09 had to flee northern Israel, they worried about Iran unleashing its missiles.
    0:47:14 And what the Israelis decided to do was to take this moment and really push back.
    0:47:20 And what they found was Hezbollah was a paper tiger, Iran was a paper tiger, that Israel
    0:47:23 is much, much more powerful than both of them.
    0:47:26 I think it’s actually been a force for stability.
    0:47:30 The Biden administration has supported it, the Trump administration will support it.
    0:47:35 So I think what’s going on in the north is very different from the issue of Gaza, which
    0:47:38 is more about what Israel does with the occupied territories.
    0:47:42 Is there any possibility Palestinians get political rights?
    0:47:46 That’s almost a separate issue, but in the north, just from a regional stability point
    0:47:51 of view, I actually think what Israel has done has been remarkably effective.
    0:47:54 Last time we spoke, I remember you talking about Iran, maybe not necessarily as a paper
    0:48:00 tiger per se, but it’s certainly less wealthy, less influential than it likes to present
    0:48:01 itself as.
    0:48:05 On the other hand, the last few months I’ve been reading about how much money Iran has
    0:48:09 been making by selling oil to China, for instance, in other ways.
    0:48:15 So it seems like they are at least very well dug in to sustain the status quo for a long
    0:48:20 time unless there’s unrest from within or from outside.
    0:48:26 So Trump says that he’d like to exert what he calls maximum pressure on Iran.
    0:48:32 I also have read that Iranian agents reportedly tried to assassinate Trump and given how any
    0:48:37 of us might respond to that, you can imagine there’s a little bit of personal thinking going
    0:48:38 on there.
    0:48:43 So how aggressive do you think Trump is willing to be with both Iran as a potential nuclear
    0:48:48 power itself, Iran as a spreader of terrorism through all these proxy groups that you’ve
    0:48:52 been naming and some others, militias in Syria and Iraq and so on?
    0:48:57 So Trump talks about a maximum pressure campaign on Iran, but the truth is the United States
    0:49:02 has had a maximum pressure campaign on Iran for 35 years.
    0:49:04 Iran is under crippling sanctions.
    0:49:09 You can tell how badly Iran is doing when you notice that a year ago, the president
    0:49:14 of Iran and the foreign minister died in a helicopter crash because they were flying
    0:49:20 in a 1979 American Bell helicopter for which they didn’t have spare parts or maintenance.
    0:49:24 That is the military hardware being used by the president of the country.
    0:49:26 Imagine what the average soldier has.
    0:49:31 Iran’s formal budget, which I believe is inflated because they want to buff their chests up.
    0:49:35 I think the Israeli defense budget is three times the size of Iran’s budget.
    0:49:40 Yes, Iran is an oil exporting country and as we learned with Russia, they’re never going
    0:49:46 to go bankrupt because the world needs oil, but they are massively dysfunctional, corrupt.
    0:49:51 If you look at their armed forces, they’ve been unable to achieve anything of any significance.
    0:49:56 So I think that Iran is very much on the defensive and these latest Israeli strikes have rendered
    0:50:01 them completely defenseless, literally, because what Israel did was they took out all their
    0:50:03 air defenses.
    0:50:04 Iran’s in a very weak position.
    0:50:09 The question that Trump will face, I think, if we were to think about this seriously is,
    0:50:11 do you want regime change in Iran?
    0:50:16 Do you want to push for some kind of internal revolt and revolution?
    0:50:18 We’ve tried that before.
    0:50:19 We’ve tried that before.
    0:50:23 We also know that regime change in the Middle East does not end well.
    0:50:26 Think of Iraq, think of Libya, think of Syria.
    0:50:32 These things are massively disruptive, chaotic, bloody, and often end up with results that
    0:50:34 are worse than what you started with.
    0:50:39 So I would caution against trying to do something like that partly because Iran is an oil-rich
    0:50:40 country.
    0:50:44 The regime has plenty of means of repression to stay in power.
    0:50:48 If you don’t want to do that, to me, the intelligent way to think about Iran is keep the pressure
    0:50:56 on, but also think about what incentives are you giving them for changes in behavior?
    0:51:01 If you put a country in a box where the four walls are so tight and there’s no door out,
    0:51:03 it has no incentive to change its behavior.
    0:51:08 I’m not saying Iran would, but I’m saying any serious strategy has to have lots of sticks,
    0:51:10 but also a few carrots.
    0:51:15 And at this point, I don’t see where Iran is supposed to go.
    0:51:16 Let’s move to China.
    0:51:22 What should we expect now with Trump as president, especially given the pretty interesting relationship
    0:51:25 he had with Xi in his first term?
    0:51:27 Trump will almost certainly try to do something with China on tariffs.
    0:51:32 He’s always viewed it as an economic predator state that takes advantage of America.
    0:51:34 Some of what he says is true.
    0:51:37 China would probably be more than happy to work out some deal.
    0:51:42 He and Xi were able to have those kind of conversations, but Chinese like managed trade.
    0:51:46 They like the idea that they can cut some kind of bilateral deal in which they reduce
    0:51:49 some of their obstacles and return.
    0:51:55 It’s difficult to tell with Trump how ideologically committed he is to a tough stance on China.
    0:52:01 I suspect that you’re going to see a more workable relationship with China than people
    0:52:05 imagine just listening to his ideology.
    0:52:10 It’s because he’s practical, he listens to businessmen, and don’t forget the central
    0:52:12 role of Elon Musk here.
    0:52:18 Musk has really become such a central figure in the Trump world, and Elon Musk needs the
    0:52:24 Chinese market for Tesla to succeed in becoming the most important car company in the world.
    0:52:30 The way things stand now, there are all kinds of restrictions on what Tesla can do in China.
    0:52:36 My guess is Musk is going to try to be a kind of intermediary between the U.S. and China,
    0:52:38 and who knows, he might succeed.
    0:52:44 With Trump, these things are so transactional, there’s so much personality involved.
    0:52:50 It is possible to imagine that U.S.-China relations under Trump are actually less hostile
    0:52:53 than they were under Joe Biden.
    0:52:58 So let me ask you, there are a lot of people who voted Democrat this time around and are
    0:53:02 very frustrated, some of them are frightened, a lot bitter.
    0:53:08 I’ve read reports about how many people are planning or hoping to leave the U.S. for Canada
    0:53:09 and other places.
    0:53:13 Of course, you read that same story every time there is an election, especially when there’s
    0:53:15 a conservative Republican elected.
    0:53:21 If you could take a step back for people who didn’t vote for Trump, who don’t like Republican
    0:53:25 consensus in Washington, what do you say to that population?
    0:53:27 How do you see the next few years playing out?
    0:53:32 I think when you have a high-stakes election where you have somebody who’s very much out
    0:53:38 of the traditional mainstream getting elected, it’s understandable that there is a kind of
    0:53:39 reaction.
    0:53:41 It’s almost like a flight from reality.
    0:53:47 It’s a desire to just avoid all that, to watch an old movie, to get away from it all, to
    0:53:50 seek solace in your private life.
    0:53:52 And I understand that reaction.
    0:53:57 I think, first of all, it’s not going to be as bad as people think, in the sense that
    0:54:00 this is a country with a lot of checks and balances.
    0:54:02 You have three branches of government.
    0:54:07 I understand they’re all under Republican control, but Mitch McConnell is not the same
    0:54:09 as Donald Trump.
    0:54:15 Secondly, you have institutions, you have bureaucracies, you have laws, you have rules.
    0:54:19 These can’t all just be willy-nilly dispensed with.
    0:54:24 You have courts, you have states, many of them Democratic states, and by the way, even
    0:54:28 some Republican states that are not going to easily accept everything and anything.
    0:54:32 And most of the things that you live with on a day-to-day basis are determined at the
    0:54:33 state level.
    0:54:39 So, Robert Kennedy might advise states to get rid of the fluoride in their water systems.
    0:54:43 He can’t force New York City to take the fluoride out of its water system.
    0:54:48 There are many, many more layers and checks and balances, and there will be a back and
    0:54:49 forth.
    0:54:53 But the biggest thing is you can’t take the attitude that you’re going to abandon the
    0:54:56 country every time things don’t go your way.
    0:54:59 Like Biden said, you can’t love your country only when you win.
    0:55:01 But it’s more than that.
    0:55:06 You have to be willing to stay and participate and engage in civic terms and fight the good
    0:55:11 fight for the things you believe in and oppose the things you don’t believe in, because that’s
    0:55:13 what makes democracy work.
    0:55:17 In a sense, loving your country and believing in it and wanting all these good things for
    0:55:22 it, mean that even more so when things haven’t gone your way in one election.
    0:55:27 You have to stay to try to help keep the things you believe in alive.
    0:55:28 I certainly have never…
    0:55:30 You’re not moving to Canada.
    0:55:33 I’ve never entertained those kind of fantasies.
    0:55:34 First of all, I’m an immigrant.
    0:55:35 I made my choice.
    0:55:40 Secondly, with all its flaws, with all the problems, the United States is the most amazing
    0:55:41 country in the world.
    0:55:44 I mean, it’s economically the most dynamic.
    0:55:47 It’s socially the most open.
    0:55:49 It’s an amazing place.
    0:55:54 You’re not going to keep it amazing and you’re not going to allow it to continue to maintain
    0:55:56 this kind of exceptional quality it has.
    0:56:05 If you leave or even if you retreat into private life, you have to stay engaged.
    0:56:07 That was Fareed Zakaria.
    0:56:08 You can find him on CNN.
    0:56:10 The show is called GPS.
    0:56:17 His most recent book is The Age of Revolutions and I’d like to thank him for this conversation.
    0:56:21 It’s hard to think of any topic that’s gotten more coverage than this year’s election,
    0:56:25 but I still walked away having learned a lot from Fareed.
    0:56:30 If you feel the same way or if you didn’t, let us know.
    0:56:34 Our email is radio@freakonomics.com and we love feedback.
    0:56:41 Also, a reminder to come see Freakonomics Radio live in San Francisco on January 3rd
    0:56:44 and in Los Angeles on February 13th.
    0:56:48 For tickets, go to Freakonomics.com/LiveShows.
    0:56:55 Meanwhile, coming up next time here on Freakonomics Radio, there is an annual event that is deeply
    0:57:03 beloved that is witnessed in person by 3 million people and by many millions more on TV.
    0:57:06 It’s an event that has become part of the fabric of America.
    0:57:13 I’m talking about the Macy’s Thanksgiving Day Parade and we got to wondering how much
    0:57:15 it costs.
    0:57:19 Why do I need to know how much lying can cost to produce?
    0:57:22 We don’t really get into the cost.
    0:57:24 I can’t tell you that, that’s…
    0:57:31 Oh, I can’t say how much they pay, could try.
    0:57:32 We tried to answer the question anyway.
    0:57:39 The cost of the parade and how much it earns from that massive TV viewership.
    0:57:45 We also got to wondering if, with traditional retail continuing to shrink, if maybe the
    0:57:49 Macy’s Parade is more valuable than Macy’s.
    0:57:52 Unfortunately, Macy’s doesn’t stand for anything today.
    0:57:57 It’s the first in a two-part series called Can the Macy’s Parade Save Macy’s that’s
    0:57:59 next time on the show.
    0:58:06 Until then, take care of yourself, and if you can, someone else too.
    0:58:08 Freakonomics Radio is produced by Stitcher and Renbud Radio.
    0:58:14 You can find our entire archive on any podcast app also at Freakonomics.com where we publish
    0:58:16 transcripts and show notes.
    0:58:19 This episode was produced by Teo Jacobs.
    0:58:23 Our staff also includes Alina Cullman, Augusta Chapman, Dalvin Abelagi, Eleanor Osborn,
    0:58:28 Ellen Frankman, Elsa Hernandez, Gabriel Roth, Greg Rippen, Jasmine Klinger, Jason Gambrell,
    0:58:33 Jeremy Johnston, John Schnarr’s Lyric Bowditch, Morgan Levy, Neil Carruth, Rebecca Lee Douglas,
    0:58:36 Sarah Lilly, and Zach Lipinski.
    0:58:39 Our theme song is Mr. Fortune by the Hitchhikers.
    0:58:41 Our composer is Luis Guerra.
    0:58:45 As always, thanks for listening.
    0:58:50 Lindsey Graham’s switch from being a Reagan Republican to a Trump Republican, it was
    0:58:51 no sweat.
    0:59:08 Lindsey Graham’s core belief is Lindsey Graham should be a senator.
    0:59:12 [MUSIC PLAYING]
    0:59:20 [BLANK_AUDIO]

    After a dramatic election, Donald Trump has returned from exile. We hear what to expect at home and abroad — and what to do if you didn’t vote for Trump.

     

    SOURCE:

     

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    EXTRAS:

  • 610. Who Wins and Who Loses Once the U.S. Legalizes Weed?

    AI transcript
    0:00:02 (dramatic music)
    0:00:06 In the recent election,
    0:00:08 it seemed as though the two parties disagreed
    0:00:10 on just about everything.
    0:00:13 Economic policies and tax policies,
    0:00:15 immigration and abortion,
    0:00:19 the wars in Russia and the Middle East, even garbage.
    0:00:23 If this left you feeling exhausted and dispirited
    0:00:27 and looking for even one sliver of unity,
    0:00:29 we are here to help.
    0:00:31 I think what’s fascinating is that Americans,
    0:00:34 Democrat, Republican, independent
    0:00:36 are all supportive of seeing major cannabis change.
    0:00:42 – And why does everyone support major cannabis change?
    0:00:44 – You know, cannabis is quite popular.
    0:00:46 It’s pulling at 64%.
    0:00:49 Politicians typically don’t take strong positions
    0:00:51 on things that are so popular.
    0:00:54 – The popularity of cannabis these days is significant
    0:00:57 in terms of public support for legalization,
    0:00:59 in terms of the number of daily users.
    0:01:03 Cannabis is even popular among some public health officials
    0:01:06 who see it as a way to reduce the harms of alcohol.
    0:01:09 But as we’ve been exploring in this series,
    0:01:11 there are a lot of problems.
    0:01:14 The cannabis economy is a mess.
    0:01:16 We are way behind with research
    0:01:18 into the drug’s potential risks,
    0:01:21 especially the risks of the most concentrated forms
    0:01:22 of the drug.
    0:01:25 And there are inconsistencies and contradictions
    0:01:28 in how individual states have rolled out legalization.
    0:01:31 All these problems can be traced back
    0:01:33 to two central facts.
    0:01:35 Number one, cannabis is still illegal
    0:01:37 on the federal level.
    0:01:39 And number two, it is still listed
    0:01:41 under the controlled substances act
    0:01:43 as a schedule one drug,
    0:01:46 meaning it has no accepted medical use
    0:01:50 and it has a high potential for abuse and addiction.
    0:01:52 But according to the people we’ve been speaking with,
    0:01:55 both of these facts are going to change.
    0:01:57 And what will happen then?
    0:01:59 – There’s going to be big winners and losers.
    0:02:01 – So today on Freakonomics Radio,
    0:02:04 in the fourth and final part of this series,
    0:02:07 we will try to sort out the cannabis winners and losers
    0:02:09 and we will get crystal clear answers
    0:02:13 to all of our questions, or at least we’ll try.
    0:02:14 – Gal, I don’t know.
    0:02:17 (upbeat music)
    0:02:20 (upbeat music)
    0:02:29 – This is Freakonomics Radio,
    0:02:32 the podcast that explores the hidden side of everything
    0:02:34 with your host, Stephen Dubner.
    0:02:37 (upbeat music)
    0:02:45 – The modern American cannabis revolution
    0:02:49 started in California, where in 1996,
    0:02:51 it became legal to buy it for medical use.
    0:02:55 The revolution began to mature in Colorado in 2014,
    0:02:58 which was the first time since the 1930s
    0:03:01 that you could legally buy cannabis for recreational use.
    0:03:05 That is now the case in roughly half the states.
    0:03:08 And how has legalization been working out?
    0:03:11 Three economists at the Federal Reserve Bank of Kansas City
    0:03:13 recently published a paper called,
    0:03:16 Economic Benefits and Social Costs
    0:03:18 of Legalizing Recreational Marijuana.
    0:03:21 After a state legalizes cannabis, they found,
    0:03:24 economic indicators tend to rise,
    0:03:28 per capita income, housing prices, and population.
    0:03:31 But they also found significant social costs,
    0:03:33 more arrests, more homelessness,
    0:03:36 and more substance use disorders.
    0:03:38 And the economic benefits diminish
    0:03:40 for states that are later to legalize,
    0:03:42 which the researchers attribute to a decline
    0:03:44 in cannabis tourism.
    0:03:46 To break down these costs and benefits,
    0:03:50 we thought it made sense to speak with this man.
    0:03:52 – Jared Polis, Governor of Colorado.
    0:03:54 – I’ve seen you described as America’s
    0:03:57 most pot-friendly politician.
    0:03:59 Is that a title you accept?
    0:04:01 – Well, I don’t know who they’re comparing me to,
    0:04:03 but here in Colorado, we value freedom.
    0:04:07 If you wanna have a beer, if you wanna smoke pot,
    0:04:08 that’s none of the government’s business.
    0:04:10 – Before getting into politics,
    0:04:12 Jared Polis was an entrepreneur.
    0:04:14 He was a founder of the E-Greeting Card Company,
    0:04:18 BlueMountainArts.com, of the Delivery Service Pro Flowers,
    0:04:21 and the venture capital firm, Techstars.
    0:04:24 In 2008, he was elected to Congress,
    0:04:27 and in 2018, he was elected governor of Colorado.
    0:04:30 All along the way, he has been in favor
    0:04:32 of loosening cannabis restrictions.
    0:04:34 – I’ve never used marijuana myself.
    0:04:36 I might have like one glass of wine a year,
    0:04:38 and maybe one beer, but I don’t really drink.
    0:04:41 But I’ve always had friends that smoke pot recreational,
    0:04:42 and I have friends that drink recreationally.
    0:04:43 I could care less, right?
    0:04:45 I mean, I might not wanna be around them
    0:04:46 when they’re drunk or high,
    0:04:48 but I don’t care what they do in their spare time.
    0:04:51 Colorado is really a place where you can be who you wanna be,
    0:04:53 and live life the way you wanna live it.
    0:04:55 We’re pioneers in legalizing cannabis,
    0:04:57 most recently, psilocybin mushrooms.
    0:04:58 We voters voted to legalize,
    0:05:00 we’re working on implementing that.
    0:05:01 Again, as long as it doesn’t interfere
    0:05:03 with anybody else’s business,
    0:05:04 as long as you’re not bothering your neighbor,
    0:05:06 it shouldn’t be any of the government’s business
    0:05:08 to tell you how to live your life.
    0:05:11 – So you’ve had legal recreational marijuana sales
    0:05:13 in Colorado for 10 years now,
    0:05:15 legislation passed a couple of years before that.
    0:05:17 Could you just summarize it for me,
    0:05:20 the surprises, the disappointments,
    0:05:23 the positive effects and negative effects?
    0:05:25 – There’s been over $16 billion in revenue.
    0:05:28 That’s revenue that would have gone to drug dealers,
    0:05:30 criminal enterprises, the underground market,
    0:05:31 if we weren’t doing it illegally,
    0:05:33 ’cause it’s not like it states where it’s illegal.
    0:05:34 People aren’t buying it, they are.
    0:05:35 They’re just buying it from criminals.
    0:05:38 So $16 billion that went to legitimate business people
    0:05:40 rather than criminals.
    0:05:42 That about $2.6 billion in state tax revenue,
    0:05:45 funded everything from college scholarships
    0:05:49 for kids in Pueblo to a great new youth recreation center
    0:05:50 in Aurora, all kinds of great projects,
    0:05:53 ongoing funding for capital construction.
    0:05:55 And then of course the 31,000 people
    0:05:56 who work in the industry,
    0:05:59 whether it’s retail, whether it’s growing,
    0:06:00 it’s been good for safety,
    0:06:02 for people who enjoy recreational marijuana, right?
    0:06:04 Especially with the dangers of fentanyl
    0:06:06 and other drugs, well-regulated supply chain,
    0:06:08 just like there is for alcohol or food.
    0:06:09 You don’t have to worry about,
    0:06:11 if you’re buying it through official channels,
    0:06:13 bad or tainted marijuana.
    0:06:17 – I understand that your marijuana industry in Colorado
    0:06:20 has softened a bit the past few years.
    0:06:24 In 2020, the market was a little over $2 billion,
    0:06:26 but sales are down to about one and a half billion.
    0:06:28 There’ve been some layoffs, some closures,
    0:06:30 some downsizing, and that means less tax revenues
    0:06:32 for the state as well.
    0:06:35 Down 30%, I’ve read from a couple years early.
    0:06:36 Can you talk to me about that?
    0:06:38 What’s going on with the market there?
    0:06:40 – From the early days, I always said as a American,
    0:06:44 I hope that every state legalizes marijuana as a Colorado,
    0:06:45 and I hope that we are the only state that does.
    0:06:48 So we were more unique for a long time, absolutely.
    0:06:50 So people would come from New Mexico
    0:06:51 where it’s now legal, our neighboring states
    0:06:53 that fly from other places.
    0:06:55 That tourism and visitor piece,
    0:06:56 we’re not as novel anymore.
    0:06:57 And while it’s good for the country,
    0:06:59 that’s of course gonna cut into Colorado’s business.
    0:07:00 The other thing is,
    0:07:03 they overbuilt the capacity a little bit,
    0:07:05 and now there’s a normalization to meet the demand.
    0:07:08 – Considering that your tax revenues
    0:07:10 from marijuana have fallen the past couple years,
    0:07:12 are you doing anything about that?
    0:07:15 Are you trying to induce demand perhaps in your state?
    0:07:16 – No, no, I mean, of course not.
    0:07:18 People are spending their money on something else,
    0:07:19 and maybe that’s a net benefit
    0:07:21 from a public health perspective.
    0:07:22 I hope it’s not alcohol.
    0:07:25 I hope it’s sporting events or restaurants or concerts.
    0:07:28 I mean, it’s a free market, it’s an economy.
    0:07:30 – For some people, marijuana may be replacing alcohol.
    0:07:32 For some people, it’s new.
    0:07:33 Some people are concerned that marijuana
    0:07:35 is a gateway drug to others,
    0:07:38 including two alcohol actually is one concern we’ve heard.
    0:07:42 So how do you think about the public health impact generally?
    0:07:45 – We don’t show any demonstrable negative public health impact.
    0:07:47 One of the things we watch is underage uses.
    0:07:49 There’s dangers in cannabis to developing brains,
    0:07:51 you know, 14, 15, 16, 17 year olds.
    0:07:54 Underage use has gone down since legalization.
    0:07:54 It’s gone down nationally,
    0:07:56 but it’s also gone down here in Colorado.
    0:07:58 I think part of the reason is,
    0:08:01 it is harder to buy cannabis in the illegal underground market,
    0:08:02 meaning if you’re 15 years old,
    0:08:05 it’s harder to get today in Colorado than it was 15 years ago.
    0:08:06 ‘Cause guess what?
    0:08:09 Your corner drug dealer is not carding you a dispensary is.
    0:08:11 Of course, it didn’t drive every corner marijuana dealer
    0:08:13 out of business, but there’s way less.
    0:08:16 So it’s much harder for a kid to get marijuana in Colorado.
    0:08:17 That’s a good thing.
    0:08:18 The way most people use marijuana,
    0:08:21 it’s far less negative to public health
    0:08:23 than smoking cigarettes or alcohol.
    0:08:25 I mean, most people might just smoke a joint a week
    0:08:26 or whatever it is.
    0:08:28 It’s not like something they drink every day
    0:08:30 that ruins their liver or they smoke a pack a day
    0:08:31 and it ruins their lungs.
    0:08:33 I mean, if you’re using marijuana at that level,
    0:08:35 that’s a problem user, right?
    0:08:37 If you’re using it every day all the time,
    0:08:38 you’re probably not able to function very well.
    0:08:40 Most people just use it periodically
    0:08:42 and there’s very little health impact to that.
    0:08:47 But the most recent data tell a different story
    0:08:48 about cannabis use.
    0:08:52 We heard about this in part one of our series.
    0:08:55 If we do a pie chart of who’s using cannabis,
    0:08:59 it’s absolutely dominated by daily and near daily users.
    0:09:01 That’s John Colkins.
    0:09:03 He is a drug policy researcher
    0:09:04 at Carnegie Mellon University.
    0:09:07 For many years, Colkins has been tracking survey data
    0:09:11 that asks people about daily or near daily use
    0:09:13 of cannabis and alcohol.
    0:09:17 Back in 1992, there were 10 times as many Americans
    0:09:21 who self-reported daily or near daily drinking
    0:09:23 as daily or near daily cannabis use.
    0:09:28 But after the 2022 survey data became available,
    0:09:32 that was the first year in which the cannabis line
    0:09:34 crossed the alcohol line.
    0:09:37 So if more people are using cannabis more routinely
    0:09:40 than Colorado Governor Jared Polis says,
    0:09:44 how about his claim that there is very little health impact?
    0:09:45 Here’s how Colkins sees it.
    0:09:48 Of those daily and near daily users,
    0:09:51 about half report some evidence
    0:09:53 of having a substance use disorder.
    0:09:57 I went back to Governor Polis to get his thoughts
    0:09:59 on the main theme of our series.
    0:10:03 Alcohol has been around for a long time,
    0:10:06 used by billions of people for all kinds of reasons,
    0:10:08 but also the evidence is clear
    0:10:11 that there are big societal costs to alcohol use.
    0:10:13 Cannabis has also been around a long time,
    0:10:15 but for the past century in the US at least,
    0:10:17 it’s been illegal and now a partial reversal,
    0:10:20 maybe heading toward a total reversal.
    0:10:22 So the thesis of the series we’re working on,
    0:10:25 we’re calling it the cannabis replacement theory
    0:10:28 that if you could swap out cannabis for alcohol
    0:10:32 whenever possible, if it could satisfy the desires
    0:10:35 that alcohol is satisfying that societally,
    0:10:36 it would be a big gain.
    0:10:39 Now, I’m not saying we’re gonna actually do that
    0:10:40 or we have the power to do that,
    0:10:41 but what do you think of that idea?
    0:10:43 – It sounds, it’s obvious, like yes, of course.
    0:10:47 I mean, first of all, marijuana is not chemically addictive,
    0:10:49 alcohol is, so is nicotine.
    0:10:53 Secondly, alcohol, chronic use is very destructive
    0:10:58 to the body, and marijuana use is not healthy by any means,
    0:11:00 but not nearly as destructive to the body over time
    0:11:02 as alcohol is.
    0:11:04 Number three, domestic violence and many other crimes
    0:11:06 are related to alcohol.
    0:11:09 You don’t see that kind of correlation with marijuana.
    0:11:09 We know this anecdotally,
    0:11:11 I’d love to see more statistics about this,
    0:11:14 but basically you’re gonna eat corn chips in your basement
    0:11:16 and watch a movie when you’re on marijuana.
    0:11:17 You’re not gonna go on a spree,
    0:11:19 throwing rocks into windows.
    0:11:21 Everything you take can, you know,
    0:11:22 obviously have a negative health impact,
    0:11:24 especially if you use it in excess.
    0:11:27 But I think your thesis is very sound in general,
    0:11:29 and I’m not for banning alcohol to be clear.
    0:11:30 I think that’s a choice people make too,
    0:11:32 and they’re entitled to do that.
    0:11:33 But if suddenly you flip the two,
    0:11:35 and marijuana was the more popular
    0:11:37 and alcohol was less popular,
    0:11:39 I think there would be a net societal benefit to that.
    0:11:45 – I hate to keep picking on Governor Polis’ assessments.
    0:11:48 He’s plainly thought deeply about the issue,
    0:11:50 but many public health researchers
    0:11:53 say that cannabis can be addictive,
    0:11:54 although some people do make a distinction
    0:11:56 between chemical addiction,
    0:11:58 which may not apply to cannabis,
    0:12:01 and psychological addiction, which may.
    0:12:05 So one reason I was really excited to speak with you,
    0:12:07 Governor Polis, is because I see that
    0:12:08 while you were in Congress,
    0:12:09 you introduced a couple bills,
    0:12:13 including the Regulate Marijuana Like Alcohol Act.
    0:12:14 This was 2017.
    0:12:17 Can you just walk me through the planks of that,
    0:12:18 what you were hoping to accomplish?
    0:12:20 And I know it didn’t get through,
    0:12:21 but I’m curious to know how much of that
    0:12:23 has happened on its own.
    0:12:24 – Well, sure.
    0:12:26 I’m not arguing that marijuana
    0:12:27 should not be a controlled substance.
    0:12:29 It should be, 12-year-olds shouldn’t be able to get it.
    0:12:31 It should be regulated to make sure it’s safe
    0:12:32 and not tainted.
    0:12:34 So the way that we do that federally,
    0:12:36 we have the Bureau of Alcohol, Tobacco, and Firearms.
    0:12:38 So I said we should rename that,
    0:12:41 the Bureau of Alcohol, Tobacco, Firearms, and Cannabis.
    0:12:42 And it should basically have
    0:12:45 that similar kind of regulatory authority federally
    0:12:47 that they have over things like alcohol
    0:12:49 over something like marijuana.
    0:12:52 – This act would have regulated marijuana like alcohol
    0:12:54 by inserting it into the section of the US Code
    0:12:56 that governs intoxicating liquors.
    0:12:57 What would that entail?
    0:13:00 – Just as with alcohol, we have a age limit.
    0:13:01 It’s sort of nominally up to the States,
    0:13:03 but of course the federal government
    0:13:05 would hold highway funds if you don’t make it at least 21.
    0:13:07 And I think there’d be a similar age
    0:13:08 for recreational marijuana,
    0:13:11 probably some allowance for medicinal
    0:13:14 under the supervision of a physician for younger.
    0:13:15 But in terms of recreational,
    0:13:18 I would be on board with the same age as alcohol.
    0:13:20 – Now, another of your objectives was to remove marijuana
    0:13:22 as a schedule one drug.
    0:13:23 That is happening, yes?
    0:13:26 – It’s close, it’s getting close.
    0:13:28 It’s not full legalization, but it’s a good step.
    0:13:29 I’m for it.
    0:13:30 I’ve rounded up a number of governors
    0:13:32 that have specifically asked for this,
    0:13:34 both sides, Republicans and Democrats.
    0:13:37 And we’re hoping that that will occur in the final days
    0:13:38 here of the Biden administration,
    0:13:40 and it’s getting very, very close.
    0:13:44 – That timeline no longer seems likely.
    0:13:46 The Drug Enforcement Agency had planned
    0:13:48 a public hearing for early December
    0:13:50 to address the rescheduling of cannabis,
    0:13:53 but the key judge just delayed the hearing
    0:13:56 until at least early 2025.
    0:13:59 You can see why it might make sense to push this decision
    0:14:02 until the start of a new presidential administration.
    0:14:04 That said, President-elect Donald Trump
    0:14:07 has expressed support for the rescheduling of cannabis
    0:14:10 and easing restrictions at the federal level.
    0:14:14 Here, for instance, is what he posted in September.
    0:14:16 We will continue to focus on research
    0:14:18 to unlock the medical uses of marijuana
    0:14:20 to a schedule three drug,
    0:14:23 and work with Congress to pass common sense laws,
    0:14:27 including safe banking for state authorized companies.
    0:14:28 So coming up after the break,
    0:14:31 what would these legal changes mean
    0:14:33 for the cannabis economy?
    0:14:35 – This company tries to bill itself
    0:14:38 as the Amazon of weed or the Starbucks of weed.
    0:14:39 – I’m Stephen Dubner.
    0:14:41 This is Freakonomics Radio.
    0:14:42 We will be right back.
    0:14:58 Adam Gores is an executive with the Cannabis Company,
    0:15:00 which operates in several states.
    0:15:03 He is also a Democratic political consultant.
    0:15:06 These two roles often dovetail.
    0:15:07 – Yeah, I founded and I lead
    0:15:10 the Coalition for Cannabis Scheduling Reform
    0:15:13 that’s been working with the Biden administration,
    0:15:16 you know, political research stakeholders, doctors,
    0:15:21 organizations that are supportive of reclassifying cannabis.
    0:15:24 We’ve put out a number of reports to the FDA,
    0:15:28 to the DEA, worked with dozens of members of Congress
    0:15:30 and governors and attorneys general,
    0:15:33 showing that cannabis is actually a winning issue.
    0:15:35 For either Democrats or Republicans.
    0:15:38 – This type of effort seems to have paid off.
    0:15:41 In 2022, President Biden announced plans
    0:15:44 to rethink federal cannabis policy
    0:15:46 and to shift it from a Schedule I
    0:15:50 to a Schedule III drug under the Controlled Substances Act.
    0:15:53 Many Republicans have signaled a similar interest.
    0:15:56 – And there’s some really important benefits from that.
    0:15:58 One, the lessening of stigma
    0:16:01 that cannabis is no longer classified next to heroin.
    0:16:03 It’s also for cannabis companies,
    0:16:06 big and small, social equity and otherwise,
    0:16:08 that are currently, because they’re classified
    0:16:11 under Schedule I, unable to deduct
    0:16:13 their common and ordinary business expenses,
    0:16:15 makes it really hard for them to operate.
    0:16:20 Businesses can face a effective tax rate of 80 to 90%.
    0:16:22 Once this reclassification is done,
    0:16:24 that just will not apply anymore.
    0:16:25 – But it’s worth pointing out
    0:16:27 that a federal rescheduling of cannabis
    0:16:29 under the Controlled Substances Act
    0:16:32 is not the same as declaring the drug legal.
    0:16:36 Here again is John Culkins from Carnegie Mellon.
    0:16:39 – The dysfunction of having the inconsistency
    0:16:42 between states legalizing and the federal government
    0:16:44 still having cannabis under the Controlled Substances Act,
    0:16:46 that’s a big problem.
    0:16:49 And moving cannabis from Schedule I to Schedule III
    0:16:52 does not fundamentally solve that problem.
    0:16:55 – Still, you can imagine that rescheduling
    0:16:58 and changing the legality of the drug
    0:17:00 may wind up going hand in hand.
    0:17:04 The benefits to the cannabis industry would be large.
    0:17:08 Adam Gores says there’s another big potential benefit.
    0:17:11 – I’ll just say it very bluntly, no pun intended.
    0:17:16 The research for cannabis is nowhere near where it needs to be.
    0:17:20 – In this regard, rescheduling alone would be important.
    0:17:22 – It’s going to open up new research pathways
    0:17:24 as well as providing a whole bunch
    0:17:26 of public health and safety benefits.
    0:17:28 – The regulatory aspect
    0:17:30 does make it more challenging for research.
    0:17:33 – And that is Yasmin Herd, an addiction researcher
    0:17:36 at the Mount Sinai Health System in New York.
    0:17:40 – I remember when we did our first clinical studies with CBD,
    0:17:43 our clinical research coordinator had to be escorted
    0:17:45 by the guard, you know, crazy.
    0:17:48 – We also spoke with Herd earlier in this series.
    0:17:51 She thinks that the legalization of cannabis
    0:17:53 has outpaced the scientific research,
    0:17:55 and she would like to see what she can do
    0:17:58 to see what she calls an army of researchers
    0:18:03 studying the drug’s effects and its potential for addiction.
    0:18:05 But that hasn’t been easy.
    0:18:08 – In order to do this research with a schedule one drug,
    0:18:10 there are a lot of regulatory hurdles
    0:18:11 that you have to jump through.
    0:18:16 Cannabis being changed from a schedule one to a schedule three,
    0:18:19 that will help in some ways for research, but not all,
    0:18:21 because the regulatory hurdles are still there
    0:18:24 in terms of just the administrative bureaucracy
    0:18:27 of working with a scheduled drug.
    0:18:30 – What are some of the most important things
    0:18:33 that you and other researchers need to find out about cannabis?
    0:18:35 – What we need to know right now
    0:18:40 are the aspects of the high concentrated products,
    0:18:43 because that’s what is out there in the public.
    0:18:46 The ratios of some of the cannabinoids
    0:18:48 that are being put into these products
    0:18:51 are really important to understand,
    0:18:54 and understand in regard to the developing brain.
    0:18:58 – Developing brain going up to about age 25 or so?
    0:18:59 – Yeah, absolutely.
    0:19:01 We know the increase in cannabis use
    0:19:04 has been higher in recent years in that population.
    0:19:06 So what does that mean?
    0:19:08 To me, the research needs to be done.
    0:19:10 What are the flavorings?
    0:19:13 What is the impact of all the chemicals that they use
    0:19:18 in converting hemp to these THC intoxicating-like products?
    0:19:22 We also see that more seniors are using cannabis,
    0:19:25 so that’s another age group to really understand the impact
    0:19:28 on whether or not it may indeed improve
    0:19:30 cognitive function in that age group
    0:19:33 while we see the opposite in early development,
    0:19:35 but also what may be the negative health impact.
    0:19:38 – So that was a really interesting list.
    0:19:40 One thing you didn’t mention, there was addiction.
    0:19:44 – So for me, the high dose, I include addiction in that.
    0:19:47 We know that for every addictive substance,
    0:19:51 the higher the concentration of that particular chemical,
    0:19:53 the greater the addiction risk.
    0:19:56 The NIH, they’re trying to really support
    0:19:58 more research on cannabis,
    0:20:03 but when we have so many people playing chemists,
    0:20:06 it is very, very difficult.
    0:20:10 And to ask scientists to figure out what percentage of THC,
    0:20:13 percent to CBD and to other terpenes,
    0:20:18 may be beneficial as medicine or may cause harm,
    0:20:20 that does take a huge army.
    0:20:26 – So the benefits from rescheduling alone,
    0:20:29 the research benefits, would be substantial.
    0:20:31 And after that?
    0:20:34 – I think that reclassifying cannabis
    0:20:38 is a really pragmatic first step in the path to legalization.
    0:20:40 – That’s Adam Gores again.
    0:20:42 – When legalization happens,
    0:20:43 a whole lot of constituents,
    0:20:45 they’re gonna have a lot to say about it.
    0:20:47 Traditional alcohol and tobacco companies
    0:20:51 are very anxious to get into this marketplace.
    0:20:53 Thus far, we’ve seen very little entry
    0:20:56 from alcohol and tobacco companies into it.
    0:20:58 And in the process,
    0:21:03 we’ve seen a growth of these broad cannabis market ecosystems
    0:21:06 with hundreds and hundreds of businesses operating
    0:21:08 in sometimes small states.
    0:21:11 That’s in contrast to the large amounts of consolidation
    0:21:13 that happened in the alcohol and tobacco space.
    0:21:15 So I think as public policy,
    0:21:17 leaders are making a choice eventually
    0:21:20 in how they legalize, that’s gonna be one.
    0:21:22 A lot of politicians talk about growing economy
    0:21:24 from the bottom up and the middle out.
    0:21:27 And then I think there’s a large movement in this of,
    0:21:30 maybe tobacco shouldn’t be involved
    0:21:32 in the cannabis industry.
    0:21:34 Cannabis is a health and wellness measure.
    0:21:36 Physicians and researchers are involved in this
    0:21:39 as promising treatment for Americans
    0:21:40 that are suffering in many cases,
    0:21:41 debilitating life conditions.
    0:21:46 And for a lot, that’s inconsistent with having tobacco
    0:21:48 be involved in the industry going forward.
    0:21:50 So I think that’s gonna be a very interesting piece
    0:21:53 to watch is how and if they’re able
    0:21:55 to enter the marketplace eventually.
    0:21:58 When federal legalization comes,
    0:22:00 ’cause it’s not an if, it’s a when.
    0:22:04 It’s gonna be its own new transformational moment,
    0:22:06 but there’s gonna be big winners and losers
    0:22:08 in that transition just like there have been winners
    0:22:12 and losers in this state-by-state siloed marketplace
    0:22:13 that exists now.
    0:22:16 – Coming up after the break,
    0:22:20 not everyone wants to break down those silos.
    0:22:22 – I like the idea of spreading the benefits
    0:22:25 of legalization as widely as we can.
    0:22:26 – I’m Stephen Dubner.
    0:22:27 This is Freakonomics Radio.
    0:22:28 We’ll be right back.
    0:22:40 In recent decades, many sectors of the U.S. economy
    0:22:42 have become much more concentrated,
    0:22:46 often driven by private equity investors.
    0:22:48 On this show alone, we have looked at consolidation
    0:22:52 in the pet care industry, the dialysis industry,
    0:22:53 and the eyeglass industry.
    0:22:56 Many sectors of our economy are dominated
    0:22:59 by a few big and powerful players,
    0:23:02 but that is not true of the cannabis market.
    0:23:04 Even the biggest companies have only a few percent
    0:23:06 of national market share.
    0:23:07 Why?
    0:23:09 Most states cap the number of licenses
    0:23:11 that any one firm can have.
    0:23:14 Companies have a hard time expanding from state to state
    0:23:17 because of restrictions created by the federal
    0:23:19 illegality of cannabis.
    0:23:22 So there have been a lot of consolidation headwinds,
    0:23:24 but that hasn’t stopped some companies
    0:23:26 from trying to expand.
    0:23:29 – I’ve seen so many headlines where this company
    0:23:32 tries to bill itself as the Amazon of weed
    0:23:35 or the Starbucks of weed or the Apple store of weed.
    0:23:37 That is Ryan Stoa, a law professor
    0:23:39 at Louisiana State University.
    0:23:42 – Everybody wants to be that company.
    0:23:44 And eventually someone might be.
    0:23:46 – We heard from Stoa earlier in the series too.
    0:23:50 He is the author of a book called “Craft Weed,
    0:23:53 Family Farming and the Future of the Marijuana Industry.”
    0:23:55 As you can tell from the title,
    0:23:58 he is against consolidation in the cannabis industry.
    0:24:03 He sees the beer industry as something of a success story.
    0:24:05 Not long ago, just two companies
    0:24:07 controlled 90% of the US market,
    0:24:10 but as the craft beer industry grew,
    0:24:13 that duopoly lost a big share.
    0:24:15 – I think that that model could make a lot of sense.
    0:24:19 I’m not saying that there won’t be big marijuana companies
    0:24:21 that dominate the marketplace.
    0:24:24 My argument is let’s create some conditions
    0:24:26 that allow other businesses, small businesses,
    0:24:30 to survive and thrive alongside that model.
    0:24:33 – So imagine that you could wind back the clock
    0:24:35 to legalization of recreational cannabis.
    0:24:40 And further, Ryan, imagine that you were appointed
    0:24:43 something like secretary of the new cannabis economy.
    0:24:46 What are some basic things you would do
    0:24:48 very differently than what we’re actually done?
    0:24:51 – I want at least a part of the cannabis economy
    0:24:54 to support essentially family farms, local producers.
    0:24:56 I want it to be environmentally sustainable.
    0:25:00 I want it to be socially equitable and just.
    0:25:03 And then lay out regulations that get us there.
    0:25:06 That might mean that producers on small plots
    0:25:09 or small farms may have different regulatory requirements
    0:25:13 than someone who’s trying to be the Amazon of weed,
    0:25:14 for example.
    0:25:16 – What would you loosen for the small ones?
    0:25:19 – I think initially what we saw in California in 2016,
    0:25:21 when they legalized, for example,
    0:25:23 certain acreage limitations.
    0:25:25 If you had less than an acre of plant canopy,
    0:25:27 regulations were X.
    0:25:29 And if you were up to five, it was Y.
    0:25:31 They’ve since sort of abandoned that now.
    0:25:33 Of course, you can grow on more than five acres.
    0:25:36 But I think that sort of tiered system makes sense
    0:25:38 all the way down to the bottom level,
    0:25:41 which is non-commercial at home cultivation,
    0:25:45 which is one policy that I think states should maintain
    0:25:47 and most have some have not.
    0:25:51 But I think at home cultivation remains kind of a safety valve
    0:25:53 as long as people can cultivate at home.
    0:25:55 So they sort of say, well, all right,
    0:25:56 if the market isn’t meeting my needs,
    0:25:58 I’ll just do it myself.
    0:25:59 And I think that was one of the factors
    0:26:02 that really spurred the craft beer movement too,
    0:26:05 where loosened laws with respect to at-home brewing
    0:26:07 that really inspired people and said,
    0:26:09 you know, I can do this, this is cool, this is fun.
    0:26:12 Maybe I’ll do this on a commercial scale.
    0:26:14 – Was it really illegal to home brew beer
    0:26:16 until like the 1970s in this country?
    0:26:17 – You could brew at home,
    0:26:19 but there were certain restrictions
    0:26:21 and those restrictions have been loosened.
    0:26:26 – So what industry or other agricultural crop
    0:26:29 would you most like cannabis to resemble?
    0:26:32 – I think cannabis is its own unique crop,
    0:26:34 but there’s industries that come to mind.
    0:26:37 One is the wine industry from a cultivation point of view.
    0:26:39 One of the things that I think the wine industry
    0:26:44 does really well is it harnesses the power of appellations.
    0:26:49 Appellations are an agricultural regulatory system
    0:26:53 that certifies the origin of an agricultural product.
    0:26:54 – Champagne, for instance.
    0:26:56 – Exactly, champagne.
    0:26:57 When a bottle says champagne,
    0:27:00 you know it really came from the Champagne region of France
    0:27:02 and not the Burgundy region of France
    0:27:05 because French authorities ensure that that is the case.
    0:27:07 – Although you can buy a bottle
    0:27:09 of what tastes very much like champagne,
    0:27:11 but it’s made in Spain and it’s called Cava.
    0:27:13 – Or Italy and it’s called Prosecco.
    0:27:14 I think the advantage to that
    0:27:16 is that it creates different products.
    0:27:18 So it’s not just sparkling wine
    0:27:22 as a sort of generic commodity, it’s champagne.
    0:27:24 This is something I’ve advocated for
    0:27:26 and we’ve seen some progress towards in California
    0:27:29 is adopting cannabis appellations
    0:27:31 in which authorities would certify
    0:27:32 that if a cannabis says it comes
    0:27:35 from Humboldt County, California, it really did.
    0:27:37 And I think that does a couple of different things.
    0:27:39 Number one, it creates more transparency
    0:27:40 in an industry that historically
    0:27:42 there really hasn’t been transparency.
    0:27:44 If you’ve been consuming cannabis for a long time,
    0:27:46 you probably remember the days
    0:27:49 when you had no idea where your cannabis came from.
    0:27:52 Number two, it creates more choice for consumers.
    0:27:55 It creates more products in the marketplace.
    0:27:58 It lends the cannabis industry a more sophisticated air,
    0:27:59 if you will.
    0:28:02 And then third, I think it helps protect small businesses.
    0:28:04 There might be some farm somewhere
    0:28:07 that’s growing 10,000 acres of marijuana
    0:28:10 trying to flood the market with this more generic strain.
    0:28:13 That’s fine, you’re growing a different thing.
    0:28:16 You’re growing Humboldt County certified cannabis,
    0:28:19 and so you’re not exactly competing in the same space.
    0:28:20 So I think the wine industry,
    0:28:23 the way that they harness appellations
    0:28:24 and designations of origin,
    0:28:26 I think that would be really powerful
    0:28:27 for the cannabis industry as well.
    0:28:33 – What do you think of Ryan Stowe’s vision
    0:28:35 for the future cannabis market?
    0:28:38 And what do the experts think?
    0:28:41 – I do know Ryan’s arguments well and respect them,
    0:28:43 and I love that he puts them out there.
    0:28:47 – That again is the drug policy researcher, John Colkins.
    0:28:52 – I kind of wish Ryan’s predictions came true.
    0:28:56 I just believe that in reality,
    0:28:59 the center of the market is people
    0:29:02 who just want a lot of THC.
    0:29:06 I think that the educated elite approach the cannabis product
    0:29:11 in a way that reflects only a minority of the market.
    0:29:15 I also think that Ryan underestimates
    0:29:18 the economies of scale in production,
    0:29:22 but also in brand management and marketing.
    0:29:25 There are a lot of people cheering for Ryan’s vision.
    0:29:29 There are a lot of people who really wish for cannabis
    0:29:31 to be this opportunity
    0:29:35 for a large number of small family businesses.
    0:29:37 It would be grand in many respects
    0:29:39 if it turned out to be so.
    0:29:43 But my best guess, and it is only a guess,
    0:29:47 is that it’s gonna look more like the great majority
    0:29:51 of it produced by a smaller number of larger firms.
    0:29:52 – Colkins has a different vision
    0:29:55 for how the cannabis industry should be structured.
    0:29:57 Rather than a decentralized economy
    0:29:59 with many small and medium players
    0:30:01 competing against one another,
    0:30:04 he would like to see a monopoly.
    0:30:06 But a particular sort of monopoly,
    0:30:09 the kind that is run by a government.
    0:30:13 – There are around the world a variety of countries
    0:30:15 that have products that are provided
    0:30:18 only by a government monopoly.
    0:30:20 – It’s pretty easy to come up with examples
    0:30:21 of what Colkins is talking about.
    0:30:24 There’s the transportation and telecommunications
    0:30:27 and energy industries in some countries.
    0:30:29 And perhaps most relevant to this conversation,
    0:30:31 there’s alcohol.
    0:30:33 That’s how it’s done today in most of Canada,
    0:30:36 in the Nordic countries.
    0:30:38 In fact, roughly a third of US states
    0:30:40 have some level of government monopoly
    0:30:41 involved in liquor sales.
    0:30:43 So how would Colkins envision
    0:30:46 a government run cannabis market?
    0:30:49 – The basic concept here is
    0:30:52 you could allow for-profit production,
    0:30:55 i.e. farmers to produce it,
    0:30:58 but you don’t allow any for-profit entity
    0:31:01 to attach its brand to the product.
    0:31:04 And that takes away all of the incentive for marketing,
    0:31:07 which is particularly important in the United States
    0:31:09 because our First Amendment prevents us
    0:31:13 from just passing a law against a company marketing
    0:31:14 its product.
    0:31:17 One of the other big advantages is
    0:31:19 the price that consumers are willing to pay
    0:31:22 is much, much higher than the production cost.
    0:31:25 In that sense, cannabis is like bottled water.
    0:31:29 But if the government had a monopoly on the selling,
    0:31:33 then the public could much more easily
    0:31:37 capture that big gap between the value to the consumer
    0:31:39 and the production cost.
    0:31:42 And I absolutely support a non-profit model
    0:31:45 over a for-profit commercial model.
    0:31:47 The fundamental reason is because I do believe
    0:31:48 cannabis is a temptation good,
    0:31:51 that there is some proportion of people
    0:31:53 who will end up using at levels
    0:31:55 that they subsequently regret.
    0:31:59 So I would like the suppliers of that good
    0:32:01 to have as their mission,
    0:32:03 displacing the illegal market,
    0:32:05 providing a quality product,
    0:32:08 but not pushing people to use more.
    0:32:12 A commercial for-profit industry has as its mission,
    0:32:14 maximizing consumption,
    0:32:17 and in fact, even pioneering new markets
    0:32:20 and modalities of use the way that the tobacco industry
    0:32:23 in 1920 said, “Hey, we’ve got men smoking,
    0:32:25 “but not women, let’s change that.”
    0:32:27 – If you had to make an over-underbed on the year
    0:32:31 of national legalization, what would it be?
    0:32:33 – Carl, I don’t know.
    0:32:37 One of my favorite quotes was a colleague I respect
    0:32:38 saying it was gonna happen
    0:32:41 in the second Hillary Clinton administration.
    0:32:45 That just goes to underscore it’s dangerous
    0:32:46 to make predictions.
    0:32:48 I’m gonna try to duck that one.
    0:32:50 – It seems that in the cannabis industry,
    0:32:53 because it’s been legalized by states
    0:32:57 and because there is not typically interstate transportation
    0:32:59 or sales or whatnot,
    0:33:01 that the current situation is acting as a sort of
    0:33:05 unintentional break on the for-profit industry
    0:33:08 becoming bigger, more powerful, more leveraged.
    0:33:09 – You are 100% correct
    0:33:12 and you’re correct in even more ways than you realize.
    0:33:15 So absolutely this dysfunctional state-by-state system
    0:33:20 has been a break and slowed the spread.
    0:33:22 The key scale economy beyond production
    0:33:26 is scale economy in marketing and brand management.
    0:33:29 And there are many opportunities for marketing
    0:33:32 that are foreclosed at present
    0:33:34 because the First Amendment commercial free speech
    0:33:37 protections do not apply to something
    0:33:39 that is illegal under federal law.
    0:33:42 As soon as cannabis is truly legalized at the federal level,
    0:33:45 the marketing restrictions of the states
    0:33:46 become unconstitutional.
    0:33:50 So I absolutely think that even though there’s consolidation
    0:33:52 happening in the industry today,
    0:33:56 that process of consolidation and larger companies emerging
    0:34:00 will be greatly accelerated with national legalization.
    0:34:01 In part because at present,
    0:34:03 the alcohol and tobacco companies
    0:34:05 are sitting on the sidelines.
    0:34:06 The alcohol and tobacco companies
    0:34:10 have invested in Canadian companies because that’s legal,
    0:34:15 but they’re not yet investing in US cannabis companies.
    0:34:17 It’s not that hard to grow cannabis.
    0:34:21 So post-national legalization, the secret sauce
    0:34:25 that’s gonna allow some company to emerge as the best
    0:34:27 is marketing skill.
    0:34:30 And I think after national legalization,
    0:34:33 you’ll see marketing savvy entities
    0:34:37 being the winners in the cannabis space.
    0:34:41 – What do you see as the significant intersections
    0:34:46 of an increasingly large legal cannabis market
    0:34:48 and the pharmaceutical industry?
    0:34:51 – My lay brain thinks, well,
    0:34:52 there’s a lot of anti-anxiety drugs
    0:34:53 and anti-depressants sold.
    0:34:55 There are a lot of pain drugs being sold
    0:34:59 by these really big firms with big R&D, with big marketing,
    0:35:01 and they’re obviously a very regulated industry.
    0:35:04 How do you see cannabis intersecting with that industry?
    0:35:09 – My best guess is that at least in the short and medium terms
    0:35:14 the FDA approved true pharmaceutical applications
    0:35:19 of cannabinoids will be modest.
    0:35:22 I do say that with a fair amount of uncertainty.
    0:35:27 The largest market might be in pain management
    0:35:30 because opioids are so horrible.
    0:35:35 It’s tricky to get anything through trials.
    0:35:40 It’s tricky to figure out exactly what you would patent.
    0:35:44 The last point that I’ll make here is some people imagine
    0:35:47 that, oh, we would have instantly found
    0:35:50 a million wonderful health applications of cannabis
    0:35:53 if only it weren’t for this stupid US federal law.
    0:35:57 But the US federal law does not hamper research
    0:36:00 in Germany or France or Israel or anywhere else.
    0:36:03 If there were these fantastic medicines
    0:36:05 just waiting to be picked up,
    0:36:08 that would have happened in other countries too.
    0:36:11 – What other countries do you look to as a model
    0:36:14 for US cannabis policy and how close or far
    0:36:16 is the US from that now?
    0:36:18 – US cannabis policy at present
    0:36:20 is a dysfunctional basket case.
    0:36:25 Canada has a cannabis legalization regime
    0:36:29 which is a coherent well thought out approach
    0:36:31 that’s broadly modeled on alcohol
    0:36:35 but is more public health oriented.
    0:36:37 – Are producers non-profits there though?
    0:36:38 – No, no, no, I’m sorry.
    0:36:39 They are also for profit.
    0:36:43 So in that sense, the Canadian cannabis regime
    0:36:46 starts out looking a lot like the alcohol regime
    0:36:48 that we’re familiar with.
    0:36:51 And there’s a lot of interest in other places
    0:36:54 in trying to find something more moderate,
    0:36:56 something like cannabis clubs.
    0:36:58 They’re fairly common in Spain and Belgium
    0:36:59 if I could describe it briefly.
    0:37:00 – Please, yeah.
    0:37:03 – So the most cautious version of legal supply
    0:37:05 is just you can grow your own.
    0:37:07 You can’t sell it, you can’t give it to anybody else.
    0:37:08 You can only grow your own.
    0:37:10 But not everybody’s a good farmer.
    0:37:12 And the nature of the cannabis plant
    0:37:15 is one cannabis plant produces a lot of cannabis.
    0:37:18 So another approach is you allow some modest number,
    0:37:22 20, 30 people to pool their own growing privileges
    0:37:25 and to say, “Hey Sam, you actually are good with plants.
    0:37:29 So we’ll let you grow for all 20 or 30 of us
    0:37:34 and we’ll even allow you to charge us what it costs you
    0:37:37 so we can reimburse you for your costs.”
    0:37:39 But Sam’s not allowed to make money.
    0:37:41 – Does that include my hourly work or no?
    0:37:42 – I think that’s a good question.
    0:37:47 But the spirit of it is Sam’s not gonna quit Sam’s day job.
    0:37:49 It’s not gonna be a professional activity.
    0:37:50 It’s gonna be a hobby.
    0:37:53 And the distribution is only within the 20 or 30 of us.
    0:37:56 That model has the potential to undercut
    0:37:59 a substantial portion of the illegal market.
    0:38:04 But it’s much less likely to lead to this proliferation
    0:38:09 of blueberry-flavored vapes and child-appealing gummies
    0:38:11 and dabs.
    0:38:15 It’s much more likely to just undercut the existing market
    0:38:19 and provide the traditional consumption patterns
    0:38:21 with a legal alternative.
    0:38:24 So there are countries that are looking at the United States
    0:38:26 and saying, “Thank you for showing us
    0:38:27 what we don’t wanna do.”
    0:38:32 – I don’t know how you feel about predicting
    0:38:34 the future of policies and so on,
    0:38:38 but if you’re game, I’m curious to know
    0:38:40 what kind of downstream effects,
    0:38:45 and these could range from law enforcement and prisons
    0:38:49 to traffic safety, to physiological and mental health,
    0:38:50 et cetera, et cetera.
    0:38:53 But what do you see as being the long-term effects
    0:38:55 on U.S. society, let’s say,
    0:38:58 from the increasing legalization and use of cannabis?
    0:39:01 – Let me carve out a couple of pieces, which are pretty easy.
    0:39:03 It’s not gonna have a big effect on prisons.
    0:39:05 People with a controlling offense related to cannabis
    0:39:09 were never any appreciable share of people in prison.
    0:39:13 That was a myth told by advocates of legalization.
    0:39:15 Cannabis generated a lot of arrests.
    0:39:18 It never generated a lot of imprisonment.
    0:39:23 Likewise, the mental health effects are real and severe
    0:39:27 for the people that they strike,
    0:39:32 but my best understanding is that the numbers involved
    0:39:36 are not going to be of a scale
    0:39:39 that trumps potential or indirect effects
    0:39:41 of smoking and alcohol.
    0:39:43 I do think it remains a temptation good
    0:39:45 in that 30 years from now,
    0:39:48 there will be some number of people who say,
    0:39:50 “Boy, I really messed up.”
    0:39:52 And there will be many more people
    0:39:57 who manage to incorporate it into their life
    0:40:01 the way we navigate many risks.
    0:40:06 I don’t in that sense think that cannabis is a game changer.
    0:40:10 I have real trepidations about anybody who says,
    0:40:12 “Hey, let’s legalize crack and methamphetamine.”
    0:40:15 – Just because the harms are plainly so much worse.
    0:40:18 – There are extraordinarily compelling substances
    0:40:21 that can truly take over people’s lives very easily.
    0:40:24 Cannabis is just a totally different substance
    0:40:26 than crack or fentanyl or meth.
    0:40:28 I think the good news,
    0:40:32 there’s some American wisdom in our American dysfunction.
    0:40:34 This legalization thing,
    0:40:37 people refer to it like it’s a light switch, it’s not.
    0:40:42 The first step really in the modern year was 1996.
    0:40:44 We are a full generation in
    0:40:47 and we still haven’t even legalized at the national level.
    0:40:49 We are taking our time.
    0:40:54 I am kind of optimistic about just the resilience
    0:40:59 of people in society to adjust to a new or newish thing,
    0:41:04 not denying that it’s a temptation good,
    0:41:06 not denying that some people will mess up,
    0:41:09 but we’ll adapt, we’ll roll with it.
    0:41:16 – Do you share John Colkins’ optimism about our resilience
    0:41:19 and our ability to adjust to new things?
    0:41:21 Do you share Jared Polis’ view
    0:41:25 that cannabis is fundamentally healthier than alcohol?
    0:41:29 Do you share Yasmin Herd’s fear that the risks of cannabis
    0:41:30 may be greater than we know?
    0:41:34 I’d love to know what you think about these questions
    0:41:37 and everything else we covered in this series.
    0:41:42 Our email is radio@freakonomics.com.
    0:41:44 I’d also like to thank all the researchers
    0:41:46 and entrepreneurs and regulators
    0:41:48 who shared their insights.
    0:41:50 I learned an awful lot about this big story
    0:41:54 that we are plainly just a few chapters into.
    0:41:56 As always, thanks for listening
    0:42:00 and please spread the word about this series and our show
    0:42:04 that is the single best way to support the podcasts you love.
    0:42:05 We will be back next week.
    0:42:07 Until then, take care of yourself
    0:42:10 and if you can, someone else too.
    0:42:13 Freakonomics Radio is produced by Stitcher and Renbud Radio.
    0:42:17 You can find our entire archive on any podcast app
    0:42:19 also at freakonomics.com
    0:42:21 where we publish transcripts and show notes.
    0:42:24 This series was produced by Dalvin Abouajie
    0:42:27 and Zac Lipinski, special thanks to George Hicks
    0:42:28 for his field recording.
    0:42:31 Our staff also includes Alina Kullman, Augusta Chapman,
    0:42:34 Eleanor Osborne, Ellen Frankman, Elsa Hernandez,
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    0:42:57 Thank you so much for joining.
    0:42:58 I know you’ve got a busy,
    0:43:00 I guess you’re busy, right, your governor?
    0:43:01 Oh, you know how it is.
    0:43:02 State Fair is on.
    0:43:03 We’re excited.
    0:43:10 The Freakonomics Radio Network,
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    0:43:16 Stitcher.
    0:43:18 you
    0:43:20 you

    Some people want the new cannabis economy to look like the craft-beer movement. Others are hoping to build the Amazon of pot. And one expert would prefer a government-run monopoly. We listen in as they fight it out. (Part four of a four-part series.)

     

    • SOURCES:
      • Jon Caulkins, professor of operations research and public policy at Carnegie Mellon University.
      • Adam Goers, senior vice president of The Cannabist Company and chairperson of the Coalition for Cannabis Scheduling Reform.
      • Yasmin Hurd, director of the Addiction Institute at Mount Sinai.
      • Jared Polis, governor of Colorado.
      • Ryan Stoa, associate professor of law at Louisiana State University.

     

     

  • 609. What Does It Take to Run a Cannabis Farm?

    AI transcript
    0:00:02 (dramatic music)
    0:00:04 – Hey there, it’s Stephen Dubner.
    0:00:06 Before we start today’s episode,
    0:00:07 I have something to tell you.
    0:00:11 We are doing two live Freakonomics Radio shows
    0:00:13 on January 3rd in San Francisco
    0:00:16 and on February 13th in Los Angeles.
    0:00:18 If you have never seen Freakonomics Radio Live,
    0:00:20 it’s a lot like this show,
    0:00:23 but, you know, live with great guests
    0:00:25 and it’s usually a lot of fun.
    0:00:28 So I would love you to join us in San Francisco
    0:00:31 and/or Los Angeles early next year.
    0:00:35 Get your tickets now at freakonomics.com/liveshows.
    0:00:36 That’s one word.
    0:00:38 For the LA show, there’s a special promo code
    0:00:40 you can use to buy tickets early,
    0:00:41 but you have to move very fast.
    0:00:46 The promo code is freakradio, one word, all caps.
    0:00:49 Okay, so Freakonomics Radio Live in San Francisco
    0:00:53 on Friday, January 3rd and in Los Angeles
    0:00:55 on Thursday, February 13th.
    0:00:58 Tickets at freakonomics.com/liveshows.
    0:01:00 I hope to see you there.
    0:01:02 And here now is today’s episode.
    0:01:09 – So I was asked to be part of a panel
    0:01:13 that went to a retirement center to talk about cannabis
    0:01:16 because a lot of those people are what we call canna curious.
    0:01:19 My discussion was sort of how it works,
    0:01:22 generally what it does to the body,
    0:01:24 some of the claims that are made around cannabis
    0:01:28 in medicine and then how to dose low and slow.
    0:01:32 I said, “Listen, it’s been, what, 80 years
    0:01:33 “you haven’t tried it before?
    0:01:35 “Don’t try one gummy the first night.
    0:01:36 “Do a quarter of a gummy.
    0:01:39 “You can afford to take a week to find out if it works.”
    0:01:41 – That is Chris Weld.
    0:01:44 He is a cannabis farmer in Western Massachusetts.
    0:01:47 In case you hadn’t noticed, cannabis is in a very different
    0:01:50 place than it was even just a decade ago.
    0:01:53 This is our third episode in a four-part series
    0:01:57 called Is America Switching from Booze to Weed?
    0:01:59 If you missed the first two, here’s a recap.
    0:02:04 In part one, we compared the harms of cannabis and alcohol.
    0:02:06 – If somebody came up to me today and said,
    0:02:08 “We’ll make a deal with you,
    0:02:13 “you can replace all alcohol use with cannabis use.”
    0:02:16 I would immediately agree to that deal.
    0:02:18 – To be fair, there’s been much more research
    0:02:21 into the harms of alcohol than the harms of cannabis.
    0:02:24 That’s partly because cannabis, even though it is now legal
    0:02:28 in most U.S. states, is still illegal on the federal level.
    0:02:31 And this creates a lot of knock-on effects.
    0:02:34 That’s what we looked at in part two of this series.
    0:02:37 – The entirety of the cannabis market is filled
    0:02:41 with an amazing number of contradictions.
    0:02:43 – Everyone we talked to for that episode,
    0:02:46 researchers and regulators and industry insiders,
    0:02:48 they all described a cannabis economy
    0:02:50 that’s in a state of chaos.
    0:02:54 Three-quarters of all licensed operators are losing money.
    0:02:57 So today on Freakin’omics Radio, in part three,
    0:03:00 what does it take to navigate that chaos?
    0:03:03 We go on a field trip to Chris Weld’s farm
    0:03:08 to see if being a cannabis business man is worth the hassle.
    0:03:09 – I’m a very stubborn person,
    0:03:11 so I’ve not given up on cannabis.
    0:03:13 It’s just been a wild ride.
    0:03:15 – Let’s take that ride together.
    0:03:20 (upbeat music)
    0:03:29 – This is Freakin’omics Radio,
    0:03:33 the podcast that explores the hidden side of everything
    0:03:35 with your host, Stephen Dubner.
    0:03:46 – Chris Weld lives and works in Sheffield, Massachusetts
    0:03:48 in the Berkshire Mountains.
    0:03:50 He grew up one state over in New York,
    0:03:52 about 50 miles north of Manhattan.
    0:03:54 – I grew up on a great piece of property
    0:03:55 with an apple orchard.
    0:03:58 My father was a big environmentalist,
    0:04:00 biologist and wonderful outdoorsman.
    0:04:03 So I got exposed to gardening at an early age
    0:04:05 and spent a lot of time outside.
    0:04:07 – Weld was not a great student,
    0:04:09 but he did have what you might call moxie.
    0:04:13 – In eighth grade, I decided that it would become very cool
    0:04:16 if my science project was to make a still.
    0:04:18 When my mother, who was gay and for most things,
    0:04:21 was on board and then somehow found out
    0:04:24 that it was a federal offense to distill alcohol.
    0:04:25 – What were you gonna make?
    0:04:26 – Probably bourbon.
    0:04:28 My mother was a bourbon drinker.
    0:04:30 – Okay, so you did not get to make the still
    0:04:31 for your science project?
    0:04:32 – I did not.
    0:04:35 I made a volcano, which was a huge disappointment.
    0:04:37 – After a while, Weld started volunteering
    0:04:40 on the local ambulance squad and he loved it.
    0:04:44 – So I went to a PA program at Albany Med
    0:04:46 and then got a master’s in emergency medicine
    0:04:50 and worked in inner city ERs, mostly California.
    0:04:54 Lived with my wife out there and kids.
    0:04:55 She’s an architect.
    0:04:56 We had a design build company
    0:04:59 and love working with my hands.
    0:05:02 And then moved to the Berkshires 20 years ago.
    0:05:06 We found this great property, derelict orchard,
    0:05:07 few hundred trees.
    0:05:09 It had a historic spring on it.
    0:05:12 They’d built a hotel there in the 1880s.
    0:05:13 The spring waters were touted
    0:05:16 as being the finest in the country.
    0:05:20 So a great historic spring and a bunch of apples.
    0:05:22 And I was tired of working in the ER.
    0:05:25 – And you said there’s no way I’m gonna pass up a chance
    0:05:27 to finally build my still.
    0:05:29 – You gotta jump in feet first.
    0:05:30 – And what were you making at first?
    0:05:33 Were you making apple-based alcoholic beverages?
    0:05:36 – Correct, brandies, Calvados if you’re in Europe.
    0:05:38 And then very quickly learned
    0:05:40 I would never make a living selling Calvados.
    0:05:43 So I had an incredible consultant come up,
    0:05:47 a Jamaican guy helped me make rum and gin and vodka.
    0:05:50 So those are the three we launched with.
    0:05:52 – Weld’s company is called Berkshire Mountain Distillers.
    0:05:55 And today they make more than a dozen spirits.
    0:05:57 Some of them have won awards.
    0:06:01 When cannabis was legalized in Massachusetts in 2016,
    0:06:04 Weld decided to jump into that too, feet first.
    0:06:07 And now he runs a vertically integrated cannabis farm
    0:06:09 and dispensary called The Pass.
    0:06:11 I asked where the name comes from.
    0:06:12 – A bunch of different things.
    0:06:15 Mountain pass since we’re in the hills, the mountains.
    0:06:18 The hall pass of now cannabis is legal,
    0:06:22 passing from one state of mind to another, past the joint.
    0:06:24 – In part one of this series,
    0:06:26 we heard from some customers at The Pass.
    0:06:30 It was a Monday morning and there were a lot of customers.
    0:06:33 I asked Weld which of his businesses is bigger,
    0:06:34 cannabis or alcohol?
    0:06:36 – Cannabis is bigger.
    0:06:38 Yeah, and the cannabis was bigger from the get-go.
    0:06:42 – Do a quick walkthrough.
    0:06:43 – Yeah, let’s do it.
    0:06:47 – The farm has three separate growing areas,
    0:06:50 an outdoor field, a greenhouse and a warehouse
    0:06:54 where all the elements, temperature, light and moisture
    0:06:55 are precisely controlled.
    0:06:57 That’s our first stop.
    0:06:59 – So this is our grow building.
    0:07:02 This is Luca, who’s our head grower here.
    0:07:03 – Nice to meet you guys.
    0:07:04 – Nice to meet you.
    0:07:04 What do you do?
    0:07:05 What’s your job?
    0:07:06 – I’m the head of cultivation here at The Pass.
    0:07:09 – What’s your background training-wise and whatnot?
    0:07:12 – Just was been cultivating cannabis a long time,
    0:07:13 about 15 years now.
    0:07:15 – How does it compare to other crops?
    0:07:16 – I don’t know.
    0:07:18 I don’t have a ton of experience cultivating other crops.
    0:07:22 I have a feeling we take more care when cultivating cannabis
    0:07:24 because it fetches a higher price per pound.
    0:07:26 So we can put a little bit more technology
    0:07:28 and a little bit more care into it.
    0:07:30 – What kind of technology and effort?
    0:07:33 – We use more light than in other crops.
    0:07:34 You can really tell the difference
    0:07:37 between indoor grown cannabis, greenhouse and outdoor.
    0:07:39 – So indoor grown is more quality control.
    0:07:41 I assume it’s much more expensive?
    0:07:42 – More expensive.
    0:07:44 It’s definitely gonna be more consistent
    0:07:46 ’cause you can keep temperature and humidity
    0:07:48 exactly how you want it.
    0:07:50 All the processes can be repeated.
    0:07:51 Whereas in the greenhouse and outdoor,
    0:07:53 you’re a bit beholden to the weather.
    0:07:54 There’s more environmental stress,
    0:07:56 which can be a good thing,
    0:07:58 but indoors we tend to control the stress consciously
    0:08:01 rather than we happen to not be
    0:08:04 in the right temperature or humidity range today.
    0:08:06 The indoor grow house has two big rooms
    0:08:08 and we head into one of them.
    0:08:09 As you open the door,
    0:08:13 you’re hit with a bright warm wave of amber light
    0:08:15 and a very fragrant aroma.
    0:08:19 It reminds me of something I once grew just for fun, hops.
    0:08:21 – Very closely related to hops.
    0:08:23 – It is. – Cannabis and yeah.
    0:08:26 They’re the closest plants, yep.
    0:08:29 – The plants in the grow house are about four feet tall
    0:08:31 and raised up on rolling benches.
    0:08:33 There’s a step ladder there,
    0:08:37 so I climb up to look down over the top of the plants.
    0:08:40 It is like looking down on a scale model of a forest,
    0:08:42 bathed in golden light.
    0:08:46 – So if you look at these different plants,
    0:08:50 you can see the fan leaves, the bigger leaves,
    0:08:55 chlorophyll, then these little ones are called sugar leaves.
    0:08:57 And then you can see all these little trichomes,
    0:09:02 the little pedunculated dew drops, little tiny things on stalks.
    0:09:04 That’s where most of the THC is kept
    0:09:06 in those little glistening things there.
    0:09:08 – This is how many square feet?
    0:09:12 – It’s 656 of canopy.
    0:09:14 The way we measure canopy is just the benches
    0:09:15 that the plants are on.
    0:09:17 – Irrigation is coming in how and where?
    0:09:19 – We hand water this room.
    0:09:20 – Oh really? – Yep.
    0:09:21 – Why? – Yep.
    0:09:22 More attention to detail,
    0:09:25 things dry back unevenly when you dripper them
    0:09:27 and this way we can water everything uniquely.
    0:09:30 – And how many different strains or varieties
    0:09:31 are in this room?
    0:09:32 – Three in this room.
    0:09:35 – Are you at all concerned about cross pollination
    0:09:37 or is that not happen?
    0:09:40 – Every plant in this facility is a female plant.
    0:09:42 The male plants have no THC
    0:09:44 and they will pollinate a female plant.
    0:09:47 And then instead of spending that energy
    0:09:50 developing bigger buds and those buds are associated
    0:09:53 with THC, the female plant would spend
    0:09:56 that energy making seeds.
    0:09:59 So you end up with the dirtweed of the 80s
    0:10:00 that isn’t that strong
    0:10:03 because a lot of the energy went into seed production.
    0:10:06 – What do you call a male cultivar?
    0:10:08 Just a male, a rooster?
    0:10:10 – Bad luck is what you call it.
    0:10:14 – Down the hall from the grow house is the greenhouse.
    0:10:16 – So the greenhouse, New England’s tough
    0:10:18 to control humidity.
    0:10:20 We don’t really control temperature
    0:10:22 except with fans and venting.
    0:10:24 But we get natural light.
    0:10:28 So maybe our cost is 55 to 60%
    0:10:31 of what it is indoor growing versus outdoors
    0:10:34 which is a third to a quarter of indoor growing.
    0:10:36 – And what do you do here in the winter?
    0:10:38 – Typically we’ve been growing year round and heating it.
    0:10:41 This year there’s a glut on the market.
    0:10:44 People have been pulling up stakes and moving out of town.
    0:10:45 There’s too much canopy.
    0:10:48 So people are selling cannabis at cost
    0:10:50 or at times below cost.
    0:10:51 – Now can you buy it?
    0:10:54 – We can but we’d rather sell our own cannabis.
    0:10:56 – But if you could get it for a sense on the dollar,
    0:10:57 would it be worth it?
    0:11:00 – It’s not always the best cannabis
    0:11:01 but it is still flooding the market.
    0:11:03 So there’s got to be a shakeout.
    0:11:05 There’s just too much canopy right now.
    0:11:07 So we’re at the point where we’re going to let this sit fallow
    0:11:10 for a couple months, sell through what we have
    0:11:11 and then replant.
    0:11:13 – What’s it cost you to heat it in the winter?
    0:11:15 – It’s probably a couple grand a month.
    0:11:18 – So what’s your typical monthly electricity bill all in?
    0:11:23 – Everything all totals, 15K maybe.
    0:11:28 – One criticism of the cannabis industry
    0:11:31 is that it uses a lot of electricity.
    0:11:33 To be fair, many things use a lot of electricity,
    0:11:35 hospitals for instance,
    0:11:38 but we tend to hear more about energy consumption
    0:11:40 when a new industry emerges,
    0:11:43 particularly a controversial one like cannabis
    0:11:45 or crypto or AI.
    0:11:47 Some researchers have suggested
    0:11:50 that moving weed production from indoor facilities
    0:11:52 to greenhouses and the great outdoors
    0:11:54 would help shrink the carbon footprint
    0:11:55 of the cannabis industry.
    0:11:59 But the great outdoors isn’t always so great.
    0:12:01 Chris Weld walks us out of the greenhouse
    0:12:04 and over to his outdoor grow field.
    0:12:06 – So this is outdoor flower.
    0:12:08 These fan leaves are starting to turn yellow
    0:12:11 so they’re not really doing anything for the plant.
    0:12:14 We’ll come through soon and defoliate a bunch of this
    0:12:16 that’ll help with the airflow through the plant,
    0:12:19 help with powdery mildew or botrytis or anything.
    0:12:20 – And is that an indicator of a problem
    0:12:21 when they yellow?
    0:12:22 – No, they all do that.
    0:12:23 They’re just getting older.
    0:12:25 But if you look at these plants,
    0:12:27 this one, the bud structure is beautiful.
    0:12:28 It’s stacking up.
    0:12:31 This will form a very nice top cola on this
    0:12:33 and all these side colas are actually looking pretty good.
    0:12:35 And then you look at this one here,
    0:12:37 we don’t have that many of.
    0:12:38 – Meaning it’s way behind the brothers.
    0:12:39 – Way behind.
    0:12:40 – Yeah, why is that?
    0:12:41 – Just a different cultivar.
    0:12:42 I’m not sure which one this is,
    0:12:45 but it’s not one I would probably grow again outside
    0:12:47 because I’m not sure it’s gonna finish in time.
    0:12:50 – In a perfect cannabis world,
    0:12:52 you might not even try to grow cannabis
    0:12:54 in a place like Massachusetts.
    0:12:57 You might just import it from the parts of California
    0:12:58 where it grows so well.
    0:13:02 That’s what we do with almonds and lettuce and blackberries.
    0:13:05 But remember, cannabis is still illegal
    0:13:06 in the eyes of the federal government,
    0:13:09 which means it can’t be sold across state lines.
    0:13:13 So if Chris Weld wants to sell cannabis in Massachusetts,
    0:13:16 he has to grow his cannabis in Massachusetts.
    0:13:19 Until or unless federal law changes,
    0:13:22 each state is responsible for its own supply.
    0:13:25 This kind of forced commercial self-sufficiency
    0:13:28 is an example of what economists call autarky
    0:13:30 and they don’t like autarky.
    0:13:33 It is the very opposite of free trade.
    0:13:35 They say autarky slows growth
    0:13:39 and reduces options for consumers and raises prices.
    0:13:44 But for now, this is the system that Chris Weld operates in,
    0:13:47 which means he not only cultivates his own raw material,
    0:13:51 but also readies it for sale and then sells it.
    0:13:53 That readying for sale can be simple,
    0:13:57 like operating a big joint rolling machine,
    0:13:59 or as we will hear after the break,
    0:14:01 it can be a bit more involved.
    0:14:07 Whoa, okay, now I feel like we’re in Breaking Bad.
    0:14:11 I’m Stephen Dubner, this is Freakonomics Radio.
    0:14:12 We’ll be right back.
    0:14:24 Chris Weld has been showing us around his cannabis farm
    0:14:25 in Sheffield, Massachusetts.
    0:14:29 The farm is attached to his retail store, The Pass.
    0:14:31 He sells products from his farm
    0:14:33 as well as other farms and processors.
    0:14:37 I asked him which formats are most popular.
    0:14:40 So close to half the consumption is still flour,
    0:14:45 whether it’s by a pipe, a bong, a joint,
    0:14:47 it’s mostly flour consumption.
    0:14:49 It’s 50, 51% plus or minus.
    0:14:51 Edibles are super popular.
    0:14:55 Drinks, beverages are pretty significant.
    0:14:57 What’s in the refrigerated case there?
    0:14:58 That’s your lunch.
    0:15:00 Those are all concentrates.
    0:15:04 It’s wax, it’s butter, it’s shattered, it’s diamonds and sauce.
    0:15:05 Sorry, I don’t follow.
    0:15:09 Okay, here’s my sophomore analogy.
    0:15:13 So you understand how maple syrup’s made, right?
    0:15:15 You tap a tree, you get sap out,
    0:15:20 you boil it down 43-ish to one and you get syrup.
    0:15:21 And you can take that syrup
    0:15:23 and you continue to boil that down.
    0:15:24 And if you boil it down enough,
    0:15:27 you get into like a sugar, right?
    0:15:28 So soft maple candy.
    0:15:33 And if you boil it, you can get very hard maple candy, right?
    0:15:37 So with weed, the flour’s kind of the sap out of the tree to me.
    0:15:40 You can boil it down and end up with a concentrate
    0:15:42 that will go into a vape pen.
    0:15:46 You can clean that up and concentrate it even more
    0:15:48 and you get into these concentrate forms
    0:15:51 like shatter and wax and they’re different stages,
    0:15:54 but they may be in the low 90% THC.
    0:15:59 Cannabis today is much stronger than it used to be
    0:16:00 for a couple of reasons.
    0:16:02 Better breeding and cultivating techniques
    0:16:06 have increased the amount of THC in a given plant.
    0:16:08 And like Chris Weld said,
    0:16:10 some cannabis products are processed
    0:16:13 in a way that greatly intensifies the dose.
    0:16:15 Even in the legal cannabis world,
    0:16:18 the dose information on a package is rarely as clear
    0:16:20 as what you’d expect to see on something
    0:16:23 like a bottle of aspirin, and it’s not always accurate.
    0:16:25 When Weld talks to customers
    0:16:27 who aren’t familiar with modern cannabis,
    0:16:30 he advises them to start with low doses.
    0:16:33 When the store first opened, people would come in
    0:16:35 and they’d talk to our bud tenders
    0:16:38 and the bud tender would get the response,
    0:16:41 listen, whip or snap or I was smoking that (beep)
    0:16:42 since before you were born.
    0:16:45 But cannabis today is different
    0:16:46 and this is deeply concerning
    0:16:50 to some public health officials and researchers,
    0:16:52 including Yasmin Herd.
    0:16:55 She is a neuroscientist and addiction specialist
    0:16:57 at the Mount Sinai Health System in New York.
    0:17:00 The majority of products that are out there today,
    0:17:01 no one has studied.
    0:17:04 You have wax and dabbing and shatter
    0:17:06 that gives nearly 90% THC.
    0:17:11 There is no cannabis plant that had 90% THC.
    0:17:14 The modification of cannabis, the hundreds of products
    0:17:17 that the people who are making them have no clue about.
    0:17:21 If people wanna consume recreationally, fine,
    0:17:24 but they don’t even realize that they’re being manipulated
    0:17:27 with very high concentrations of THC.
    0:17:29 – Herd argues that cannabis legalization
    0:17:32 has happened too fast and that scientists
    0:17:34 and state health regulators haven’t had the time
    0:17:38 or the resources to assess long-term harms
    0:17:41 or to prohibit certain formats of the drug.
    0:17:42 There are also big questions
    0:17:45 about the addictive nature of cannabis.
    0:17:47 And some physicians are reporting patients
    0:17:50 with serious physical and mental health effects,
    0:17:52 especially younger users.
    0:17:54 Here’s Chris Weld again.
    0:17:56 – There’s some evidence that if you start consuming
    0:17:59 at a younger age, it can actually rewire
    0:18:00 how your brain works.
    0:18:02 There’s some literature that shows
    0:18:03 that if you’re younger and you smoke a lot of weed,
    0:18:05 you may be more prone to depression.
    0:18:07 Whereas if you’re older and smoke weed,
    0:18:09 it may help with depression.
    0:18:10 And so it’s everything in moderation.
    0:18:12 But if you’re young, cannabis probably
    0:18:14 isn’t the best thing to smoke.
    0:18:17 – Weld’s overall view of cannabis was informed
    0:18:20 by his experience as a physician’s assistant
    0:18:22 in hospital emergency rooms.
    0:18:23 – It is interesting.
    0:18:26 You know, I spent 17 years working in inner city ERs
    0:18:30 and every day, there’s a large percentage of cases
    0:18:32 that were alcohol related.
    0:18:33 So people get drunk, they shoot people.
    0:18:35 They get run over by a drunk driver.
    0:18:38 They shoot themselves all day, every day.
    0:18:40 I don’t think I ever had somebody say,
    0:18:42 “Hey dude, I got so stoned and gotten a fight.
    0:18:43 “Can you sew me up?”
    0:18:45 It just didn’t happen.
    0:18:47 And when you look at toxicity,
    0:18:48 do you know the term LD50?
    0:18:49 Have you ever heard that?
    0:18:50 – No.
    0:18:52 – It’s lethal dose 50.
    0:18:55 So it’s 50% of the people who take that dose will die.
    0:18:57 And so if you’re comparing cannabis and alcohol,
    0:19:00 for instance, it’s very easy to kill mice with alcohol,
    0:19:03 but not so easy with cannabis.
    0:19:06 And the LD50 for a 130-ish pound person
    0:19:08 is 10 to 15 drinks an hour,
    0:19:12 which if you were to chug a frat hazing,
    0:19:16 chug a pine abuse, 50% of the time you might die from that.
    0:19:19 Versus joints, it’s about 20,000 joints.
    0:19:23 – But joints are just made from the flour
    0:19:25 straight off the cannabis plant.
    0:19:27 The concern from a public health perspective
    0:19:30 is the scarcity of research on concentrates.
    0:19:32 From a business perspective,
    0:19:34 the concentrates make a lot of sense.
    0:19:37 They fetch a high price because of their potency,
    0:19:41 they’re cheaper to store, and they take up less space.
    0:19:44 Weld offered to show us his processing plant
    0:19:46 where they turn raw cannabis into finished products.
    0:19:49 So we took a drive just a couple of miles
    0:19:53 and we parked outside a low-slung cinderblock building.
    0:19:55 It used to be a plastic extrusion plant.
    0:20:00 – So we have a gummy room, a cure room for the gummies.
    0:20:02 – How long do gummies need to cure for?
    0:20:04 – Just a few days after they’re made.
    0:20:10 This area here is set aside for a beverage thing
    0:20:11 at some point.
    0:20:13 – What do you mean at some point you’re not making?
    0:20:15 – We don’t have a beverage right now.
    0:20:20 – Ooh, big bags of weed.
    0:20:24 – Smells good, doesn’t it?
    0:20:25 – Wow.
    0:20:28 Yeah, why did we wait so long to come to this room?
    0:20:29 This is all your grow, correct?
    0:20:31 – This is all our grow.
    0:20:34 So this is a bin of, good morning.
    0:20:35 – Good morning.
    0:20:37 – How many pre-rolls are in this bin?
    0:20:39 – About 2,000.
    0:20:40 – About 2,000.
    0:20:43 We just finished up making a batch of pre-rolls in here,
    0:20:46 and then now they’re gonna bag up some flour into eights.
    0:20:47 – I have to say, Chris,
    0:20:49 this does not feel at all like a criminal enterprise.
    0:20:53 This feels like so blessedly boring.
    0:20:55 – We had a wish list for a gear here,
    0:20:58 and one of them was a big pre-roll machine,
    0:21:02 and it made enough to sell $70 million
    0:21:05 with the pre-rolls in a year, and like, you know.
    0:21:07 – Just no demand.
    0:21:08 – Yeah, maybe we were $4 million
    0:21:10 with the pre-rolls in a year.
    0:21:11 We couldn’t justify it.
    0:21:13 – I’ve never been in a cigarette factory.
    0:21:15 How are they made?
    0:21:18 – There were some cannabis companies that started
    0:21:20 with the cigarette machine rollers
    0:21:23 to make joints that look like cigarettes,
    0:21:24 and I haven’t, Chris, have you seen them
    0:21:25 on the market anymore?
    0:21:26 – Yes.
    0:21:28 – That’s Chris Bennett.
    0:21:29 He is an operations manager
    0:21:32 who’s been with Weld since the beginning.
    0:21:34 – Do you want to talk about your tolerance?
    0:21:35 – I can eat 1,000 milligrams.
    0:21:36 – Seriously?
    0:21:39 – Yeah, yeah, but then there’s people like,
    0:21:40 and it doesn’t go by size or anything.
    0:21:42 It’s just how your liver processes it.
    0:21:44 So you can have so many 350 pounds
    0:21:46 that eats like a half of what, two gram, you know,
    0:21:48 and they’re on their butt.
    0:21:49 So what’s the effect on you then?
    0:21:51 – A thousand, I’m on the couch.
    0:21:53 – What’s the effect of a hundred?
    0:21:55 What’s the effect of a hundred?
    0:21:57 – A hundred, I don’t really feel it.
    0:21:59 – Oh my God, how do you get high?
    0:21:59 – It’s expensive.
    0:22:04 – Now we get swiped through a heavy locked door.
    0:22:09 Whoa, okay, now I feel like we’re in Breaking Bad.
    0:22:11 And what’s this room called?
    0:22:12 – Extraction Lab.
    0:22:14 – This is where they make those high THC
    0:22:16 concentrates and rosins.
    0:22:19 So when we get the flour from cultivation, it’s not trimmed.
    0:22:21 We’ll run it through these two machines
    0:22:23 and it’ll trim it up nice so our trimmers
    0:22:25 don’t have to really do a lot of work.
    0:22:28 – Next to the trimmer is a machine that makes the rosin
    0:22:32 by applying heat and pressure to the cannabis clippings.
    0:22:34 And next to that is a big jar
    0:22:38 of syrupy looking cannabis rosin.
    0:22:39 Weld opens the jar.
    0:22:44 It’s a little potent.
    0:22:45 – It’s chirpy.
    0:22:47 – Oh, wow.
    0:22:49 So what does this become?
    0:22:53 – It’s going to carts, live rosin carts.
    0:22:56 So these are the carts that, for the distillate pens
    0:22:59 or the rosin pens, they have a reservoir.
    0:23:02 You heat the solution, the oil, the rosin,
    0:23:05 and then you just have an injector and it fills each one
    0:23:07 and then they get capped and they go in a box.
    0:23:09 – And they get consumed, how?
    0:23:09 – Smoke.
    0:23:12 – What’s happening now with cannabis
    0:23:14 several years into legalization
    0:23:17 is a lot like what happened with alcohol over time.
    0:23:21 As new technologies arrived, it got more potent.
    0:23:26 We started with beer, which was just soupy fermented grains.
    0:23:28 The invention of pottery allowed for the creation
    0:23:30 and transport of wine.
    0:23:33 And the invention of distillation led to the creation
    0:23:35 of whiskies and other spirits,
    0:23:40 each time with a higher concentration of alcohol.
    0:23:41 If you are alarmed by the fact
    0:23:45 that highly concentrated THC products are legal,
    0:23:47 you should probably also be alarmed at how easy it is
    0:23:50 to buy a highly concentrated bottle of alcohol
    0:23:52 like vodka or whiskey or rum.
    0:23:56 I asked Chris Weld how he thinks about the addictive nature
    0:23:58 of cannabis versus alcohol.
    0:24:01 – Yeah, I would say probably a little bit worse
    0:24:03 on the alcohol side.
    0:24:03 – Got it.
    0:24:05 But here’s what I’m trying to get at
    0:24:07 and there may be no good answer or any answer for this at all
    0:24:10 but like the whole idea of this series
    0:24:12 is that alcohol has been around forever
    0:24:14 and the harms are known and they’re substantial.
    0:24:19 Weed might be a replacement for a lot of the uses of alcohol
    0:24:24 for mood, for creativity, et cetera, et cetera,
    0:24:28 but the downsides of weed seem to be less.
    0:24:31 On the other hand, if it’s continued to be treated
    0:24:34 as this kind of separate and more dangerous
    0:24:37 and scarier substance, that’ll probably never happen.
    0:24:39 – Except if you look at the last five years,
    0:24:42 it’s changed the stigmas going,
    0:24:46 the data on how catastrophic everyone thought it would be.
    0:24:49 It hasn’t really come to show that it has been.
    0:24:53 So I think that the societal acceptance of cannabis
    0:24:55 is still growing.
    0:24:58 – Coming up after the break,
    0:25:01 is societal acceptance growing fast enough
    0:25:03 to fix the economics?
    0:25:06 – It’s been tough and it’s been tough across the board.
    0:25:07 – I’m Stephen Dubner.
    0:25:08 This is Freakonomics Radio.
    0:25:09 We’ll be right back.
    0:25:19 (dramatic music)
    0:25:22 The state of Massachusetts legalized
    0:25:25 recreational marijuana in 2016
    0:25:28 with the first retail sales in 2018.
    0:25:31 Chris Weld got into the business early on.
    0:25:34 – It was Gold Rush Day’s mentality.
    0:25:37 This is gonna be the best thing since sliced bread.
    0:25:39 Jumping in at that point made sense
    0:25:41 and it made sense to a ton of people.
    0:25:45 So you look at these people that ran MSOs,
    0:25:49 multi-state operators that threw a lot of cash into it.
    0:25:52 We had an incredibly great first couple of years,
    0:25:55 wonderful trajectory, things are looking fantastic
    0:25:57 and the wheels kind of fell off
    0:25:59 in the whole Massachusetts market, I would say.
    0:26:03 What’s happened recently is that there’s a glut.
    0:26:05 There’s just too much cannabis out there.
    0:26:08 And so all these people who have spent
    0:26:12 a lot of money growing cannabis are sitting on it.
    0:26:13 – Are you profitable yet?
    0:26:16 – We’ve been profitable, we’ve vacillated,
    0:26:18 we had some issues last year
    0:26:23 with a cultivation mishap that was not our fault.
    0:26:24 – What was that?
    0:26:25 Was it like God’s fault, like weather?
    0:26:29 – Oh, I wouldn’t say, yeah, that’s a big topic, God’s fault.
    0:26:34 So it was drift from neighbors spraying for mosquitoes.
    0:26:36 – Oh boy.
    0:26:37 – Wiped out a whole crop.
    0:26:42 – Holy cow, how did you learn/discover/determine
    0:26:45 that your crop had been contaminated?
    0:26:48 – So this is a great argument for legal
    0:26:50 versus black market cannabis.
    0:26:53 I was at the gas station a couple of months ago
    0:26:57 and these two young men were in an Audi pumping gas
    0:26:59 and I was pumping gas and I looked over
    0:27:01 and the guy in the front passenger seat
    0:27:04 had a big bag of weed, little buds.
    0:27:08 And I looked at him and I said, “Hey, just to be cool,
    0:27:10 “you probably want to keep that in the trunk.”
    0:27:11 And he said, “Thank you, sir,”
    0:27:14 which I took offense to the sir bit.
    0:27:16 And I said, “And by the way,
    0:27:17 “you can buy much better looking weed
    0:27:18 “than that down at the pass,”
    0:27:21 which is the cannabis shop I have down the road.
    0:27:24 And he said, “Yeah, man, but the taxes kill us.”
    0:27:29 So we spent $287,000 last year on testing.
    0:27:29 – Wow.
    0:27:31 – So to answer your question,
    0:27:36 we send off cannabis to one of several state-sanctioned labs
    0:27:39 and they test for heavy metals,
    0:27:42 they test for yeast and mold, they test for pesticides.
    0:27:45 It’s a pretty in-depth panel that they do.
    0:27:48 – We mentioned earlier in this series
    0:27:51 that the cannabis plant is what’s called a bioaccumulator.
    0:27:54 That means it’s especially good at absorbing minerals
    0:27:56 from the soil and air and water.
    0:27:58 In fact, cannabis has been used
    0:28:01 to remediate contaminated sites.
    0:28:03 But if you are growing cannabis for human consumption,
    0:28:06 that absorbency can be a problem.
    0:28:09 One recent medical study found that cannabis users
    0:28:12 have higher levels of lead and cadmium in their blood
    0:28:13 than non-users.
    0:28:17 Here again, is Yasmin Herd from Mount Sinai.
    0:28:19 – People don’t realize that cannabis is a plant
    0:28:22 that actually holds onto metals.
    0:28:25 It’s like hyper sucking of metals.
    0:28:28 States, for safety, they should look at metal content,
    0:28:30 the same thing with pesticides and mold.
    0:28:33 So when they have looked at products and some research done
    0:28:35 where they’ve taken products randomly,
    0:28:38 they see, for example, that even the content
    0:28:40 of what’s supposed to be in those products
    0:28:42 do not match what’s on the label.
    0:28:45 – When you look at these state bodies that regulate
    0:28:48 and approve, whether it’s a state health department
    0:28:50 or some other regulatory body,
    0:28:53 are there typically scientists on those bodies?
    0:28:56 – I can’t answer that, unfortunately, for every state.
    0:28:57 I think that there are states
    0:29:00 that really do try to have scientists,
    0:29:03 but you will have these third party companies
    0:29:07 that are supposed to verify whether or not
    0:29:09 they meet all these safety standards.
    0:29:12 And some of these companies, they will sign anything.
    0:29:14 So these are the things that the states
    0:29:16 really need to clamp down on.
    0:29:20 Everyone wants to make money, but this is a huge issue.
    0:29:22 – And Chris Weld again.
    0:29:24 – Some of the stuff in Massachusetts
    0:29:27 is egregiously strict, I would say.
    0:29:29 I think there needs to be control, certainly.
    0:29:33 And I think everyone was so worried
    0:29:36 that there were going to be dire consequences
    0:29:41 with legalization that it got over-regulated.
    0:29:43 When I talked to my local chief of police,
    0:29:44 which I do quarterly and say,
    0:29:46 “Hey, how’s it going?
    0:29:46 “Any problems?”
    0:29:48 He’s like, “I don’t hear anything.”
    0:29:49 We’re not coming into arrest people
    0:29:53 who are like drunk people in a fight.
    0:29:57 In general, I think it’s a fairly benign drug.
    0:30:01 Massachusetts tends to be fairly strict
    0:30:03 on a lot of consumer-based things
    0:30:08 and protective of individuals, which I think is great.
    0:30:12 And I think Massachusetts rolled out cannabis legalization
    0:30:16 in a little bit more of a controlled way than New York did.
    0:30:19 When we would go look at Groves in New York,
    0:30:23 their security system often would be a trail cam.
    0:30:27 We had $160,000 security system
    0:30:29 with a million cameras that you can’t hide your big toe
    0:30:31 in the corner of the room.
    0:30:33 You can trust when you go to a legal canvas store,
    0:30:35 especially in Massachusetts,
    0:30:37 that you’re not going to find stuff on it
    0:30:40 that you would if you go to some bodega in New York City.
    0:30:45 – We talked about that New York situation
    0:30:46 earlier in the series.
    0:30:48 As Weld says, the legalized rollout
    0:30:51 in New York City especially has been chaotic
    0:30:53 with thousands of illegal shops
    0:30:57 that the city for a variety of reasons wouldn’t shut down.
    0:31:01 That is starting to change, but there’s a long way to go.
    0:31:03 – I went into one of those stores last time in the city
    0:31:06 and I was just talking to the young woman at the counter.
    0:31:07 I said, “I’m not a fed.
    0:31:10 Do you guys have issues with the law coming in here?”
    0:31:12 And she said, “Yeah, we do.
    0:31:14 This is my first week and two days ago,
    0:31:19 a team of 17 people came in and they took everything
    0:31:21 that was cannabis related, left nicotine.
    0:31:23 They asked for the keys to the vault.
    0:31:25 They went in the vault and they slapped
    0:31:27 a big illegal sales in the store.
    0:31:30 Do not visit whatever sticker on the door.”
    0:31:31 And that night, the owner came in,
    0:31:33 pulled the sticker off and restocked the shelves.
    0:31:36 – Okay, you run an alcohol distillery
    0:31:38 as well as the cannabis farm.
    0:31:41 How do the regulations compare in Massachusetts?
    0:31:44 You’ve talked about how much tracking and testing
    0:31:46 and record keeping there is in cannabis.
    0:31:48 How about the alcohol operation?
    0:31:51 – I have five sheets I fill out every month.
    0:31:52 It’s all revenue driven, right?
    0:31:54 So it’s all tax basis.
    0:31:56 They want to know how much you made,
    0:31:59 how much got wasted in the process of bottling,
    0:32:00 how much you bottled, how much you sold,
    0:32:02 how many proof gallons you sold
    0:32:04 so that the estate gets their carve out
    0:32:08 for tax on proof gallons as does the feds.
    0:32:10 But the cannabis thing is a bit over the top.
    0:32:12 So there’s a system called metric that we use in mass.
    0:32:14 Other states use it as well.
    0:32:16 It’s a seed to sale tracking program.
    0:32:21 And that tag follows that plant through harvest
    0:32:24 when it’s dried and bucked and pulled off the plant
    0:32:25 and put into a bin.
    0:32:26 – For every plant.
    0:32:27 – Every plant.
    0:32:32 So when you get a visit from the Cannabis Control Commission,
    0:32:34 they’ll go into your greenhouse
    0:32:36 and they’ll pull up the metric file on the greenhouse
    0:32:41 and they’ll say, you have 873 plants, let’s go find them.
    0:32:44 And then you go in there and they have an RFID scanner
    0:32:47 and they scan every plant and they say,
    0:32:51 you’re short two plants or you have one plant extra.
    0:32:52 And then what do you do?
    0:32:53 Get find.
    0:32:54 – Jump through hoops.
    0:32:56 Normally you say like it got wasted, it died
    0:32:59 and it wasn’t entered in from the waste log.
    0:33:02 So we may have thousands and thousands of things
    0:33:07 and they’ll say, hey, you’re short three joints, find them.
    0:33:08 – So if you were to take a step back
    0:33:12 and look at the business as an industry in Massachusetts
    0:33:14 and then across the country,
    0:33:16 how would you describe to somebody
    0:33:17 who really doesn’t know at all
    0:33:20 the state of the industry right now?
    0:33:23 – Yeah, it’s been tough and it’s been tough across the board.
    0:33:26 You look at Canadian stocks and some of those big ones,
    0:33:28 if you bought into them five years ago,
    0:33:31 you’ve got about 2% of your money left.
    0:33:33 A lot of them crashed and burned.
    0:33:36 A lot of the West Coast states did the same thing
    0:33:37 that we’re doing.
    0:33:40 There was over licensing, over production,
    0:33:44 race to the bottom, it’s not a stable market environment.
    0:33:47 And I think in those states, it’s starting to stabilize.
    0:33:49 Massachusetts hopefully has hit the floor
    0:33:51 and we will start to stabilize
    0:33:53 and people who are growing really good weed will do well
    0:33:55 and people who have great branding
    0:33:56 and good products will do well.
    0:34:02 – After we toured Chris Weld’s cannabis farm
    0:34:05 and retail store and processing plant,
    0:34:07 he offered to show us his original business,
    0:34:10 which is still going strong, Berkshire Mountain Distillers.
    0:34:13 Up front, there is a retail shop with tasting tables
    0:34:15 set atop whiskey barrels.
    0:34:18 In the back is the distilling operation,
    0:34:21 big stainless steel tanks, many more barrels,
    0:34:24 copper tubing running high along the walls,
    0:34:26 you can smell the floral botanicals
    0:34:28 hanging from pipes overhead.
    0:34:29 – So we just did Greylock Gin,
    0:34:32 which is our flagship gin.
    0:34:36 So it’s booze as a base and then Juniper Coriander,
    0:34:39 Angelica, Oris, Orange, Cinnamon and Licorice.
    0:34:41 – By now it’s late afternoon on a Monday
    0:34:44 and we are the only people in the place.
    0:34:47 The cannabis store was much busier.
    0:34:50 On the other hand, here we didn’t have to show ID
    0:34:52 like you do in legal cannabis shops.
    0:34:56 There aren’t dozens of cameras tracking everyone’s every move
    0:34:59 as required by state cannabis regulators.
    0:35:02 The bottles of gin and bourbon are just sitting there
    0:35:06 on the shelves, not stored in a vault the way cannabis is.
    0:35:11 And what’s the economic picture from your distillery here?
    0:35:14 Is it an easy, healthy business without a lot of variables?
    0:35:17 You kind of make money and you know you’re gonna make money
    0:35:18 versus the cannabis business
    0:35:21 where there’s so many variables and changes and regs.
    0:35:24 – The cannabis business is definitely more fluid
    0:35:27 and just hard to guess what’s gonna happen.
    0:35:30 And I would say that in the 16 years
    0:35:31 I’ve been in operation here,
    0:35:34 the distillery’s been pretty steady state.
    0:35:38 However, there’s definitely been a shakeup
    0:35:40 in the way that spirits are distributed,
    0:35:43 especially for smaller producers like myself.
    0:35:45 – Shakeup meaning there’s more consolidation
    0:35:47 and it makes it harder for smaller distributors?
    0:35:48 – Correct.
    0:35:52 So the bigger suppliers, distributors have coalesced.
    0:35:54 I think the top 10 do 80% of the business
    0:35:56 in the country or something.
    0:35:59 So the bigger volume suppliers dictate
    0:36:02 what gets sold and to who for the most part.
    0:36:03 – If you had it to do over again,
    0:36:05 if you go back to four or five years ago
    0:36:07 when you started the cannabis company,
    0:36:11 if you had instead decided to let’s say,
    0:36:13 maybe even get the outside investors
    0:36:15 that you used for the cannabis company
    0:36:19 and instead just tried to expand this distillery,
    0:36:20 you know, 5X or 10X,
    0:36:22 do you think that would have been a better move?
    0:36:24 – From a financial standpoint,
    0:36:26 I think if I didn’t get the outside investors
    0:36:27 and I spent the time on the distillery
    0:36:29 that I spent in the cannabis world,
    0:36:30 it would have been a better move.
    0:36:32 – So do you regret getting into the cannabis industry?
    0:36:35 – No, ’cause I’m a half full kind of guy.
    0:36:36 And by the way, I’ve not given up,
    0:36:38 I’m a very stubborn person.
    0:36:39 So I’ve not given up on the cannabis.
    0:36:41 It’s just been a wild ride.
    0:36:45 I mean, it’s a wild, wild West gold rush mentality.
    0:36:47 And it’s been super fun too.
    0:36:48 I’ve learned a lot.
    0:36:50 I’ve worked with a bunch of great,
    0:36:53 interesting entrepreneurial type people.
    0:36:56 The science behind the plants, pretty cool.
    0:36:57 I’m a huge gardener.
    0:36:59 I love growing stuff.
    0:37:03 Just to be part of an industry in its early days
    0:37:06 with something that was made illegal for the wrong reasons
    0:37:09 was, you know, I think looking back on that,
    0:37:11 it’ll be something that’d be nice to have in your rear view.
    0:37:17 – By the way, Chris Weld says he doesn’t use cannabis.
    0:37:18 – Yeah, it’s just never my,
    0:37:20 I love the smell of the plant.
    0:37:21 I love growing the plant.
    0:37:23 I’m just not a huge consumer.
    0:37:25 – But he does drink.
    0:37:27 – I drink my booze all the time.
    0:37:30 I’m also 59, so it’s not as much fun as it used to be.
    0:37:32 – Before we leave the distillery,
    0:37:34 Weld encourages me and our crew
    0:37:37 to each take home a bottle, whatever we’d like.
    0:37:39 He is a very generous host.
    0:37:42 So we each walk out with a bottle, put them in the car,
    0:37:46 and then Weld says we should stop back at the pass,
    0:37:47 his cannabis shop.
    0:37:49 He tells us to wait outside.
    0:37:51 He goes in, comes out five minutes later
    0:37:53 with a brown paper bag.
    0:37:56 There’s something about being handed a brown paper bag
    0:37:58 full of weed in a parking lot.
    0:38:00 I know cannabis is legit now,
    0:38:03 but it doesn’t really feel quite legit,
    0:38:05 at least compared to the distillery.
    0:38:10 If cannabis is ever going to substantially replace alcohol,
    0:38:12 that will have to change.
    0:38:16 I drove back to New York with my free weed in the paper bag.
    0:38:18 I still haven’t cracked it open.
    0:38:20 Let me know if you want to drop by.
    0:38:21 Maybe we’ll try it together.
    0:38:24 That’s probably not a great idea.
    0:38:28 But coming up next time on the show,
    0:38:30 in the final episode of this series,
    0:38:32 we will take a look at what it would take
    0:38:36 to change the reputation of legal cannabis.
    0:38:38 – A president Harris
    0:38:41 is going to sign a federal legalization bill.
    0:38:42 And what would happen then?
    0:38:44 – That process of consolidation
    0:38:46 and larger companies emerging
    0:38:50 will be greatly accelerated with national legalization.
    0:38:52 – Or is there another model?
    0:38:54 – Producers on small farms
    0:38:57 maybe have different regulatory requirements
    0:39:01 than someone who’s trying to be the Amazon of weed.
    0:39:03 – The future of the cannabis industry,
    0:39:04 that’s next time.
    0:39:06 Until then, take care of yourself.
    0:39:08 And if you can, someone else do.
    0:39:12 Freakonomics Radio is produced by Stitcher and Renbud Radio.
    0:39:15 You can find our entire archive on any podcast app
    0:39:17 also at freakonomics.com,
    0:39:20 where we publish transcripts and show notes.
    0:39:22 This episode was produced by Dalvin Abouaji
    0:39:24 and Zach Lipinski.
    0:39:27 George Hicks was our field recordist in Massachusetts.
    0:39:28 Thanks, George.
    0:39:31 Our staff also includes Alina Cullman, Augusta Chapman,
    0:39:34 Eleanor Osborne, Ellen Frankman, Elsa Hernandez,
    0:39:37 Gabriel Roth, Greg Rippon, Jasmine Klinger, Jeremy Johnson,
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    0:40:16 you

    Chris Weld worked for years in emergency rooms, then ditched that career and bought an old farm in Massachusetts. He set up a distillery and started making prize-winning spirits. When cannabis was legalized, he jumped into that too — and the first few years were lucrative. But now? It turns out that growing, processing, and selling weed is more complicated than it looks. He gave us the grand tour.  (Part three of a four-part series.)

     

    • SOURCES:
      • Chris Bennett, operations manager at Berkshire Mountain Distillers.
      • Luca Boldrini, head of cultivation at The Pass.
      • Yasmin Hurd, director of the Addiction Institute at Mount Sinai.
      • Chris Weld, founder and owner of Berkshire Mountain Distillers.

     

     

  • Abortion and Crime, Revisited (Update)

    AI transcript
    0:00:04 Hey there, it’s Stephen Dubner.
    0:00:10 Two years ago, the U.S. Supreme Court struck down Roe v. Wade, the court’s 1973 ruling
    0:00:16 that made abortion legal throughout the U.S. With this new ruling, the legality of abortion
    0:00:18 was kicked back to the states.
    0:00:23 Since then, 13 states have banned abortion and eight others have imposed more limited
    0:00:24 restrictions.
    0:00:29 This election day, November 5th, voters everywhere will be choosing a president and the voters
    0:00:35 in 10 states will also be considering ballot measures that aim to protect abortion access.
    0:00:39 Kamala Harris has said that if she becomes president, she would sign a bill to once again
    0:00:41 make abortion legal nationwide.
    0:00:44 Donald Trump’s position is less clear.
    0:00:49 Harris says that Trump would sign a national abortion ban, but Trump has denied this and
    0:00:52 said the issue should be left to the states.
    0:00:57 Whatever the outcomes on election day, the fact is that abortion laws in the U.S. are
    0:01:01 in the middle of a big shift with consequences that are hard to predict.
    0:01:07 The law of unintended consequences isn’t really a law, but it is at least a principle
    0:01:09 that we talk about a lot on this show.
    0:01:15 And there was one particularly noteworthy unintended consequence of Roe v. Wade that
    0:01:20 Steve Levitt and I wrote about in Freakonomics way back in 2005.
    0:01:25 We revisited this topic in 2019 in an episode of Freakonomics Radio.
    0:01:29 At that time, a lot of state legislatures, especially in the South and Midwest, were
    0:01:33 already moving to restrict abortions.
    0:01:37 Considering the state of play today, I thought it might be worth hearing that 2019 episode
    0:01:38 again.
    0:01:41 It’s called Abortion and Crime Revisited.
    0:01:45 We have updated facts and figures throughout.
    0:01:48 As always, thanks for listening.
    0:01:52 When you think about unintended consequences, when you think about two stories that would
    0:01:56 seem to have nothing to do with each other, it is hard to beat the stories we are telling
    0:01:57 today.
    0:02:02 The first one, if you follow the news even a little bit, should be familiar to you.
    0:02:06 It concerns one of the most contentious issues of the day.
    0:02:09 New developments in the escalating battle over abortion.
    0:02:12 The last clinic in Missouri on the verge of closing today.
    0:02:17 The battle goes back at least to 1973, when the U.S. Supreme Court took up a case called
    0:02:19 Roe v. Wade.
    0:02:23 The Supreme Court today ruled that abortion is completely a private matter to be decided
    0:02:27 by mother and doctor in the first three months of pregnancy.
    0:02:32 A few years before Roe v. Wade, abortion had been legalized in five states, including New
    0:02:34 York and California.
    0:02:39 The Supreme Court made it legal in all 50 states, but lately, several states have been
    0:02:41 pushing back, hard.
    0:02:46 The Ohio governor signing today would critics condemn as the most restrictive abortion law
    0:02:47 in the country.
    0:02:50 Nearly a dozen states are now imposing new restrictions this year.
    0:02:56 Meanwhile, if you go back 30 or 35 years, there was a totally different story dominating
    0:02:59 media coverage and the political conversation.
    0:03:06 Let us roll up our sleeves to roll back this awful tide of violence and reduce crime in
    0:03:07 our country.
    0:03:10 We must take back the streets.
    0:03:15 If you weren’t around then, it’s hard to remember just how bleak the outlook was.
    0:03:22 Crime had begun to rise in the 1960s, continued on through the ’70s and ’80s, and by 1990,
    0:03:26 it seemed that everyone was scared everywhere, all the time.
    0:03:32 Robberies, assaults, and even murder have replaced shoplifting, vandalism, and truancy.
    0:03:35 Crime became a top priority among Democrats.
    0:03:39 It doesn’t matter whether or not they were deprived as a youth.
    0:03:40 And Republicans, too.
    0:03:44 There are no violent offenses that are juvenile.
    0:03:45 You rape somebody, you’re an adult.
    0:03:47 You shoot somebody, you’re an adult.
    0:03:50 Experts call them super predators.
    0:03:55 Everyone agreed that violent crime was out of hand, that the criminals were getting younger,
    0:03:58 and that the problem was only going to get worse.
    0:04:03 There’s a tidal wave of juvenile violent crime right over the horizon.
    0:04:05 But the problem didn’t get worse.
    0:04:12 In the early 1990s, violent crime began to fall, and then it fell and fell and fell some
    0:04:13 more.
    0:04:18 After New York City, in 1990, there were more than 2,200 homicides.
    0:04:22 In 2023, there were fewer than 400.
    0:04:24 But it wasn’t just New York.
    0:04:29 With a few exceptions, crime across the U.S. has plunged.
    0:04:30 Why?
    0:04:36 What led to this unprecedented and wildly unexpected turnaround?
    0:04:41 Everyone had their theory, better policing, the reintroduction of capital punishment,
    0:04:45 longer economy, the demise of the crack epidemic.
    0:04:50 Meanwhile, a pair of academic researchers came up with another theory.
    0:04:56 It was surprising, it was jarring, but it seemed to hold great explanatory power.
    0:05:01 And he said, “Well, I think maybe legalized abortion might have reduced crime.”
    0:05:07 If you’ve ever read Freakonomics, the namesake book of this show, you may recall this controversial
    0:05:10 link between legalized abortion and the fall of crime.
    0:05:15 Today on Freakonomics Radio, the story behind the research and evidence for the theory,
    0:05:21 the challenges to its legitimacy, and the results of a new follow-up analysis.
    0:05:27 It was completely obvious to us that a sensible thing to do 20 years later would be to look
    0:05:31 and see how the predictions had turned out.
    0:05:32 How did they turn out?
    0:05:35 What does this mean for abortion policy?
    0:05:36 What’s it mean for crime policy?
    0:05:51 We’ll get to all that right after this.
    0:05:57 This is Freakonomics Radio, the podcast that explores the hidden side of everything, with
    0:06:09 your host, Stephen Dubner.
    0:06:15 From 1991 to 2001, violent crime in the U.S. fell more than 30 percent, a decline not seen
    0:06:17 since the end of prohibition.
    0:06:22 I was spending most of my waking hours trying to figure out this puzzle about why was it
    0:06:28 that crime, after rising for 30 years from 1906 to 1990, had suddenly reversed.
    0:06:33 But Steve Levitt, my Freakonomics friend and co-author, he is an economist at the University
    0:06:34 of Chicago.
    0:06:37 He’s always had an intense interest in crime.
    0:06:45 I had looked into all of the usual suspects, the policing and imprisonment, the crack epidemic,
    0:06:52 but really you could not and you cannot effectively explain the patterns of crime, looking at the
    0:06:58 kinds of components that people typically talk about when they try to understand why crime
    0:06:59 goes up and down.
    0:07:05 Levitt eventually wrote a paper called “Understanding Why Crime Fell in the 1990s, Four Factors
    0:07:08 that Explain the Decline and Six that Do Not.”
    0:07:13 The six factors that, according to his analysis, did not contribute to the crime drop, a strengthening
    0:07:19 economy, the aging of the population, innovative policing strategies, gun control laws, right
    0:07:24 to carry laws, and the increased use of capital punishment.
    0:07:29 While each of these, in theory, might seem to have some explanatory power, Levitt found
    0:07:30 they didn’t.
    0:07:35 The relationship between violent crime and the greater economy, for instance, is very
    0:07:37 weak.
    0:07:41 Capital punishment, he found, at least is currently practiced in the US, simply didn’t act as
    0:07:44 a deterrent against future crimes.
    0:07:47 Then there were the factors he found did contribute.
    0:07:53 The increase in the number of police, an increase in the number of criminals imprisoned, and
    0:07:58 the decline of the crack cocaine trade, which had been unusually violent.
    0:08:03 But these three factors could explain only a portion of the massive drop in crime, perhaps
    0:08:05 only half.
    0:08:11 It was as if there was some mysterious force that all the politicians and criminologists
    0:08:14 and journalists weren’t thinking about at all.
    0:08:20 I had the idea that maybe legalized abortion in the 1970s might possibly have affected
    0:08:22 crime in the 1990s.
    0:08:27 One day, paging through the statistical abstract of the United States, which is a kind of thing
    0:08:31 that economists like Levitt do for fun, he saw a number that shocked him.
    0:08:39 At the peak of US abortion, there were 1.5 million abortions every year.
    0:08:41 That was compared to roughly 4 million live births.
    0:08:47 The sheer magnitude of abortion surprised Levitt and he wondered what sort of secondary
    0:08:48 effects it might have.
    0:08:54 He wondered, for instance, if it might somehow be connected to the huge drop in crime.
    0:08:59 And I had actually gotten obsessed with the idea and had spent maybe three weeks working
    0:09:01 around the clock.
    0:09:05 And I had decided that the idea wasn’t a very good one, that it didn’t make sense.
    0:09:09 And I had a huge file of papers that I had put away and had moved on to another project.
    0:09:15 Levitt, like a lot of researchers, was juggling a lot of projects with a lot of collaborators.
    0:09:18 One of his collaborators was named John Donahue.
    0:09:23 Yeah, and I’m a professor of law at Stanford Law School.
    0:09:29 Donahue also had a PhD in economics, so he and Levitt spoke the same language.
    0:09:34 Donahue was particularly interested in criminal justice issues, gun policy, sentencing guidelines,
    0:09:35 things like that.
    0:09:40 For instance, he found that minorities who kill whites received disproportionately harsher
    0:09:42 sentences in Connecticut.
    0:09:45 This research ultimately led to changes in that state.
    0:09:52 Yeah, it clearly played a role in the initial legislative decision to curtail the death
    0:09:58 penalty in Connecticut, as well as in the final Connecticut Supreme Court decision abolishing
    0:09:59 the death penalty.
    0:10:05 Donahue had been doing a lot of thinking about the rise in crime, starting in the 1960s.
    0:10:08 He thought the drug trade was one big factor.
    0:10:17 Yeah, it does seem that large illegal markets are important contributing factors to crime.
    0:10:24 It was also a time of great flux around the Vietnam War, and of course, the Vietnam War
    0:10:30 had multiple influences that contributed to social unrest.
    0:10:36 At the same time, there was pressure going in the opposite direction to try to reduce
    0:10:43 the harshness of punishment and perhaps pull back a little bit on elements of policing.
    0:10:48 The combination of those factors, I think, exacerbated the crime rate.
    0:10:54 One day, John Donahue and Steve Levitt were sitting in Levitt’s office.
    0:10:58 I remember it like yesterday, John says, “You know, I have the craziest idea.
    0:11:00 I mean, it’s like totally absurd.”
    0:11:01 I said, “Oh, what is it?”
    0:11:06 He said, “Well, I think maybe legalized abortion might have reduced crime in the 1990s.”
    0:11:07 I said, “That’s so funny.”
    0:11:11 I reached into my filing cabinet, pulled up this huge thick thing, and I slammed it down
    0:11:12 on the desk.
    0:11:13 Yeah, that’s right.
    0:11:19 When I talked to Steve about it as is often the case, since he is such a creative mind,
    0:11:22 he said, “Oh, yeah, I wondered about that.”
    0:11:25 I said, “I had that same idea, but it’s not right.”
    0:11:26 He said, “Well, what do you mean?”
    0:11:30 And I walked him through my logic, and I hadn’t thought deeply enough about it, and I had
    0:11:36 been focusing on the fact that when abortion became legal, there was a reduction in the
    0:11:38 number of children born.
    0:11:40 And John said, “Yeah, but what about unwantedness?”
    0:11:43 And I’m like, “What do you mean, unwantedness?”
    0:11:46 What did Donahue mean by unwantedness?
    0:11:51 He was referring to the expansive social sciences literature, which showed that children born
    0:11:56 to parents who didn’t truly want that child or weren’t ready for that child, those children
    0:12:02 were more likely to have worse outcomes as they grew up, health and education outcomes.
    0:12:06 But also, these so-called “unwanted kids” would ultimately be more likely to engage
    0:12:08 in criminal behaviors.
    0:12:13 Donahue had begun to put the puzzle together when he attended a conference.
    0:12:19 And I heard a paper being presented at the American Bar Foundation by Rebecca Blank,
    0:12:22 who’s a distinguished economist.
    0:12:26 Blank spent nine years as Chancellor of the University of Wisconsin-Madison.
    0:12:32 When we were making this original episode back in 2019, she declined our request for
    0:12:33 an interview.
    0:12:37 Blank died at age 67 in 2023.
    0:12:42 And she was talking about who gets abortion in the United States.
    0:12:47 That is, after Roe v. Wade, what were the characteristics of the women most likely to
    0:12:49 get an abortion?
    0:12:56 And she was highlighting that it was poor, young, unmarried, inner-city, minority women.
    0:13:04 And as I was looking at the elements of crime in the U.S., there was quite an overlap between
    0:13:10 the populations that were involved in this increase in crime with the group that she was
    0:13:18 identifying as a group of women who were most likely to be experiencing higher rates of abortion.
    0:13:24 And so that got me thinking about, could abortion actually influence crime rates?
    0:13:28 Did that initial thought even make you a little uncomfortable?
    0:13:33 Because it’s pretty obvious to just about anyone that that’s sort of a third-rail idea,
    0:13:34 yes?
    0:13:41 I knew that this would be very, you know, electric to some individuals.
    0:13:48 But for me, I was really interested in, you know, studying the impact on crime that we
    0:13:51 were observing at that particular moment.
    0:13:58 And so it didn’t inhibit me at all because I thought there is an issue here, and it’s
    0:14:02 sort of useful to be able to figure out what the truth is.
    0:14:09 How did the population of women who were having abortions change from before Roe v. Wade or
    0:14:14 really from before abortion was legalized state-by-state to afterwards?
    0:14:16 Yeah, that’s a great question.
    0:14:21 And of course, there’s much that we don’t know about what was happening before because
    0:14:26 of the illegal nature of abortion in most states.
    0:14:30 But we can sort of infer from the changes that did occur and the fact that, you know,
    0:14:39 some states legalized in 1970 and became avenues for travel to have abortions done.
    0:14:44 We can sort of piece together who was traveling to have abortions and see how things changed
    0:14:47 when then abortion became legal everywhere.
    0:14:55 And so one thing that we did see is that affluent women did travel to have abortions in the
    0:15:04 period between 1970 when New York legalized and 1973 when Roe v. Wade was decided.
    0:15:12 But it involved travel and expense, and therefore it was too much of an impediment for the group
    0:15:18 of women that we are most interested in, which are the ones who are usually at the lower
    0:15:24 end of the socioeconomic scale and did not have the opportunity and resources that would
    0:15:26 permit them to travel.
    0:15:30 So then John and I just spent a little bit of time making back of the envelope calculations
    0:15:34 of how important this unwantedness effect could be.
    0:15:36 And it was really shocking.
    0:15:39 Remember, the magnitude of abortion was huge.
    0:15:44 At its peak, there were 345 abortions for every 1,000 live births.
    0:15:50 And so when you took the magnitude and you interacted with this very powerful unwantedness
    0:15:55 effect that’s been documented elsewhere, it actually suggests to us that abortion could
    0:16:00 be really, really important for reducing crime 15 or 20 years later.
    0:16:02 The mechanism was pretty simple.
    0:16:07 Unwanted children were more likely than average to engage in crime as they got older.
    0:16:12 But an unwanted child who was never born would never have the opportunity to enter his criminal
    0:16:14 prime 15 or 20 years later.
    0:16:19 Donahue and Levitt created a tidy syllogism.
    0:16:21 Unwantedness leads to high crime.
    0:16:24 Legalized abortion led to less unwantedness.
    0:16:28 Therefore abortion led to lower crime.
    0:16:30 But syllogisms are easy.
    0:16:31 What about evidence?
    0:16:37 So it’s not that easy to convince people that there’s a causal impact of legalized abortion
    0:16:41 on crime because this is certainly not a setting in which I’m never going to be allowed to
    0:16:47 say run a randomized experiment in which I decide who does or doesn’t get abortions.
    0:16:53 And so instead, what we have to do by necessity is to look at a collage of evidence.
    0:16:58 So a bunch of different, all quite imperfect sources of variation that allow us to get some
    0:17:04 sense of whether there might be some causality between legalized abortion and crime.
    0:17:09 So Levitt and Donahue set out to assemble this collage of evidence.
    0:17:16 The first one we look at relates to the fact that before Roe vs. Wade, there were five states
    0:17:21 who had already legalized abortion in some way, shape, or form.
    0:17:26 And these were New York, California, Washington, state, Alaska, and Hawaii.
    0:17:32 So unfortunately, not the states you would want to say are a representative set of states.
    0:17:33 Because why?
    0:17:34 Well, they’re all liberal.
    0:17:36 I mean, so Alaska and Hawaii is weird.
    0:17:37 They’re not very helpful at all.
    0:17:40 New York and California are on the cutting edge.
    0:17:44 Now one thing that’s really important to stress is that the states that legalized abortion
    0:17:49 earlier didn’t just get a five-year head start on the legalization of abortion before Roe
    0:17:50 v. Wade.
    0:17:55 They actually were states that had many, many more abortions, a much higher abortion rate
    0:17:56 than the other states.
    0:18:03 So if you look at the data now, these states even today have abortion rates that are almost
    0:18:07 double the abortion rates of the rest of the U.S., which again, I think points out how
    0:18:10 poor it is as a natural experiment.
    0:18:14 Given that limitation, it wouldn’t be enough to just measure the crime rate in the early
    0:18:17 legalizing states and compare them to the rest of the states.
    0:18:19 You’d want a more precise measurement.
    0:18:23 So we divide states into three equal-sized groups, the highest abortion rate states,
    0:18:26 the medium abortion rate states, and the lowest abortion rate states.
    0:18:30 And then we just look at those three groups and we track them over time.
    0:18:32 What happened to crime?
    0:18:36 And so we’re able to look and see, well, is it really true that the highest abortion
    0:18:41 states and the lowest abortion states had similar crime trends when you expected them
    0:18:43 to have similar crime trends?
    0:18:46 And it turns out in the data that that’s exactly right.
    0:18:52 We found that there was roughly a 30% difference in what had happened to crime between the
    0:18:58 highest abortion states and the lowest abortion states by 1997.
    0:19:02 That seemed to be firm evidence in support of the thesis.
    0:19:07 Now Donahue and Levitt looked at crime data state by state by age of offender.
    0:19:14 So the nice thing in the data that we had available was we could look at arrest rates
    0:19:18 by single age of individual.
    0:19:24 So if I’m born in 1972 in Minnesota, well, I’d probably live a pretty similar life to
    0:19:31 someone who’s born in 1974 in Minnesota in terms of other things like policing or drugs
    0:19:34 or other things in the environment.
    0:19:39 But the difference is that those who were born in 1974 were exposed to legalized abortion.
    0:19:41 Those who were born in 1972 weren’t.
    0:19:46 And we find numbers there that are completely consistent with the rest of our analysis,
    0:19:52 that those who were born just a few years apart do much less crime than those who were
    0:19:54 born in the earlier years.
    0:20:00 Because the abortion rates were rising so sharply in the 70s, these cohorts were coming
    0:20:04 into their crime ages in a stacked fashion.
    0:20:11 And we could identify which abortion rates were associated with each particular age.
    0:20:16 And the higher the abortion rate was for each age, the greater the crime drop occurring.
    0:20:21 So as you’re putting together this collage of evidence, what did it feel like to see
    0:20:26 the strength of this evidence of the link between legalized abortion and crime?
    0:20:33 Did it immediately suggest policy or political or health care follow-ups?
    0:20:39 Steve and I I think both had this sense of something really unusual has suddenly happened
    0:20:42 in crime in the United States.
    0:20:45 And we really just want to understand what that is.
    0:20:50 I really wasn’t thinking very much about the way in which this would be received.
    0:20:55 I really just want to understand is this a factor that has altered the path of crime
    0:20:59 in the United States?
    0:21:03 David and Donahue would go on to publish their paper, “The Impact of Legalized Abortion
    0:21:09 on Crime” in the May 2001 issue of the Quarterly Journal of Economics.
    0:21:10 What happened next?
    0:21:20 That’s coming up after the break.
    0:21:26 Legalized abortion appears to account for as much as 50% of the recent drop in crime.
    0:21:32 That was the stark finding of a study published in 2001 by Steve Levitt and John Donahue.
    0:21:36 But even before the paper was published, their findings hit the news.
    0:21:44 It was a whirlwind of reaction and some of it was a little unnerving because people were
    0:21:50 reading into the study things that we certainly did not intend.
    0:22:00 People who are in favor of right to life were upset because our argument seemed to be endorsing
    0:22:04 the idea that legalized abortion had positive effects.
    0:22:10 But many people who believed in the right to choose, they were also upset because we were
    0:22:16 kind of saying, “Well, you’re killing these fetuses, so they never get a chance to grow
    0:22:17 up to be criminals.”
    0:22:21 The number of death threats that I got from the left was actually greater than the number
    0:22:23 of death threats I got from the right.
    0:22:28 Because the other thing that emerged out of the media coverage is that it very quickly
    0:22:33 became a question of race, even though really our paper wasn’t about race at all.
    0:22:40 Some people started to say that we were trying to go back to the times where people were
    0:22:48 pushing for control of the fertility of certain groups and maybe even racial groups.
    0:22:51 That was certainly not anything that we even considered.
    0:22:57 We were just trying to figure out when public policy had changed in this profound way, did
    0:23:00 it alter the path of crime.
    0:23:05 We certainly weren’t eugenicists, as some people initially argued.
    0:23:09 Initially, perhaps, but recently too.
    0:23:15 In 2019, the U.S. Supreme Court turned down an abortion-related appeal from Indiana, but
    0:23:21 Justice Clarence Thomas, in an accompanying opinion, wrote, “Some believe that the United
    0:23:26 States is already experiencing the eugenic effects of abortion.”
    0:23:28 His citation?
    0:23:29 Freakonomics.
    0:23:34 “Whether accurate or not,” he continued, “these observations echo the views articulated
    0:23:40 by the eugenicists and by Planned Parenthood founder Margaret Sanger decades earlier.”
    0:23:48 I actually think that our paper makes really clear why this has nothing to do with eugenics.
    0:23:53 In our hypothesis, what happens is that abortion becomes legal, women are given the right to
    0:23:59 choose, and what our data suggests is that women are pretty good at choosing when they
    0:24:03 can bring kids into the world who they can provide good environments for.
    0:24:08 The mechanism by which any effects on crime have to be happening here are the women making
    0:24:10 good choices.
    0:24:15 I think that’s such a fundamental difference between women making good choices and eugenics,
    0:24:21 which is about the state, say, or some other entity forcing choices upon people, almost
    0:24:22 couldn’t be more different.
    0:24:29 Still, the Donahue-Levitt argument linking abortion and crime was disputed on moral grounds,
    0:24:33 on political grounds, and on methodological grounds.
    0:24:39 I assume there was a torrent of critiques and other academics trying to publish papers
    0:24:41 saying we were wrong.
    0:24:46 One critique came from Christopher Foot and Christopher Getz, two economists who were
    0:24:49 then with the Federal Reserve Bank of Boston.
    0:24:56 They argued that Donahue and Levitt’s paper contained a coding error, which, when corrected,
    0:24:58 blunted their findings.
    0:25:04 So in general, I don’t mind challenges to my work, but I hate it when the challenges
    0:25:10 take the form of mistakes, and that is an awful, awful feeling to have made a mistake,
    0:25:12 which we did in this case.
    0:25:15 What exactly was this error, and how did that happen?
    0:25:22 So John Donahue and I started working on this paper probably in, I don’t know, 1996, and
    0:25:27 it finally came out in 2001, and when you write an academic paper, you go through a
    0:25:31 refereeing process, and the refereeing process we went through was especially brutal.
    0:25:34 So an enormous effort of time.
    0:25:38 Look, we were tired and we were burned out, and one of the last things in those referee
    0:25:45 reports said you should add a table to your paper that looks very specifically by single
    0:25:47 year of age.
    0:25:52 So we initially, when we submitted our paper, had six tables in the paper, and we had thought
    0:25:56 of doing something that looked very specifically by single year of age, but we hadn’t done
    0:25:57 it.
    0:26:00 We suggested we do it, and it was actually a really good, sensible suggestion.
    0:26:07 And so what we did was, in a very tired, quick way, we added table seven to our paper, which
    0:26:11 turns out supported our paper, but we didn’t try very hard.
    0:26:13 We didn’t really do it right.
    0:26:18 We just threw something together, and it worked, and so it turned out what Foot and Gets then
    0:26:24 were responding to was that what we said we did in table seven wasn’t actually exactly
    0:26:25 what we did.
    0:26:29 So we had included a particular set of interactions.
    0:26:31 We had actually run those regressions.
    0:26:36 Just when the numbers got translated into the table, a different set of columns got put
    0:26:37 into the table.
    0:26:44 The error was almost more in the description of the paper rather than an actual mathematical
    0:26:45 error.
    0:26:52 So we had said that we had controlled for state year effects in our paper, which is sort
    0:26:59 of an econometric point of terminology when it was only a state effect that we had controlled
    0:27:00 for.
    0:27:07 And so it did weaken the result, although it did not fundamentally alter the conclusion.
    0:27:11 I didn’t feel like the Foot and Gets critique was very damaging to the hypothesis.
    0:27:18 It was certainly damaging to me and my reputation, because I had made those mistakes.
    0:27:21 But the hypothesis, I think, comes through in flying colors.
    0:27:25 And by the time Donahue and Levitt corrected their work and found that the correction did
    0:27:30 not weaken their hypothesis, the headlines had already been written.
    0:27:35 And so people made a lot of, oh, there’s a mathematical error here, which wasn’t quite
    0:27:36 right.
    0:27:41 We really in some ways lost the media battle because we looked stupid, because we had made
    0:27:42 the mistake.
    0:27:46 The headline in The Economist, Oopsonomics.
    0:27:51 In The Wall Street Journal, Freakonomics’s abortion research is faulted by a pair of
    0:27:52 economists.
    0:27:56 It was fun for people to jump on the bandwagon of attacking just because nobody really liked
    0:27:57 the hypothesis in the first place.
    0:28:02 And so the silver lining on Foot and Gets pointing out the mistake, it then actually
    0:28:06 gave us the opportunity to go back and take care of the measurement error that was in
    0:28:09 the data and to actually think sensibly about it.
    0:28:14 And so when we did table seven the right way, even correcting for that mistake we made in
    0:28:20 the initial paper, the results are actually stronger than ever.
    0:28:26 To be fair, you can understand why the Levitt and Donahue argument is an uncomfortable argument,
    0:28:29 no matter where you stand on abortion or a crime.
    0:28:35 It attaches a positive outcome to an inherently unhappy input.
    0:28:43 It creates an awkward pairing of an intimate, private decision with a public utilitarianism.
    0:28:49 So even while their argument was empirically strong and their cause and effect mechanism
    0:28:55 plainly logical, it might be discomforting to fully embrace it, especially when other
    0:28:59 more comforting theories present themselves.
    0:29:03 My name is Jessica Walpole-Reyes and I am a professor of economics at Amherst College
    0:29:09 and I study the effects of environmental toxicance on social behavior.
    0:29:12 One toxicant Reyes focused on was lead pollution.
    0:29:18 There is a huge literature on how lead is toxic to humans.
    0:29:23 Lead has cognitive health and behavioral effects.
    0:29:30 So lead is associated with reductions in IQ, it’s associated with increased behavior problems
    0:29:31 in children.
    0:29:38 It also has health effects, cardiovascular effects, renal effects, and it’s just really,
    0:29:39 really bad.
    0:29:45 So bad that lead could be a causal factor in criminality, in other words, exposure to
    0:29:50 lead in childhood could lead to criminality in adulthood.
    0:29:55 Two big sources of environmental lead in the old days were gasoline and paint.
    0:29:59 And the reason I was thinking about lead was I was pregnant with my son and we lived in
    0:30:03 this really old house and we needed to move, right?
    0:30:09 I knew that lead was bad, but I started thinking about, huh?
    0:30:14 As with the abortion thesis, which used Roe v. Wade as a natural experiment, Reyes’s
    0:30:17 lead idea had a similar fulcrum point.
    0:30:22 So yeah, lead was taken out of gasoline under the authority of the EPA under the Clean Air
    0:30:25 Act in the early 1970s.
    0:30:28 The EPA mandated a timetable.
    0:30:34 That timetable was changed a little and delayed, but it ended up that lead was phased out of
    0:30:37 gasoline from 1975 to 1985.
    0:30:42 There are some important kind of corporate political dynamics.
    0:30:45 So the different companies did this differently.
    0:30:49 It wasn’t driven by state policy, and that’s really important that it wasn’t driven by
    0:30:54 state policy because that helps provide a valid natural experiment so that you have
    0:30:59 different states experiencing different time patterns of lead exposure.
    0:31:04 Like Donahue and Levitt, Reyes was able to assemble a collage of evidence linking the
    0:31:11 removal of lead in different places and different times with the decline of crime in each place.
    0:31:15 She published her findings in 2009, arguing that the removal of lead under the Clean Air
    0:31:23 Act was “an additional important factor in explaining the decline in crime in the 1990s.”
    0:31:28 Did her paper refute the Donahue-Levitt conclusions about abortion and crime?
    0:31:31 My paper does not refute their conclusions.
    0:31:34 To the contrary, it actually reaffirms them.
    0:31:41 I include their abortion measure in my analysis, and I find that the abortion effect is pretty
    0:31:47 much unchanged when one includes the lead effect, that the two effects are operating
    0:31:53 relatively independently and that each one is of similar magnitude when you do or don’t
    0:31:55 account for the other.
    0:32:00 So what that means is that from my perspective, I think both stories are true, and we can
    0:32:04 hold both of them side by side.
    0:32:08 It doesn’t make sense to look for a single explanation for a decline in crime.
    0:32:10 There are lots of explanations.
    0:32:15 So Jessica wrote a really interesting and careful paper that tries to look at patterns
    0:32:18 in leaded gasoline and relate them to crime.
    0:32:19 Steve Levitt again.
    0:32:24 And I’d actually distinguish between the very thoughtful, careful work that she did from
    0:32:27 some of the other work on lead, which I think is not nearly so good.
    0:32:33 It’s funny that people argue, oh, there can only be one cause to why crime went down.
    0:32:35 And if lead’s true, then there can’t be abortion.
    0:32:39 But look, the world is complex, and there could be many things going on.
    0:32:45 Indeed, this is how many academic researchers and lots of other scientists generally think
    0:32:46 about the world.
    0:32:49 It’s called multivariate causality.
    0:32:56 That is, almost no effect has only a single cause all the time, which is why percentages
    0:32:57 and probabilities are useful.
    0:33:01 They express the magnitude of various causes.
    0:33:02 But here’s the thing.
    0:33:09 A lot of people who drive the public conversation these days, especially politicians and journalists,
    0:33:14 they don’t seem very comfortable with the notion of multivariate causality.
    0:33:16 Why not?
    0:33:23 It may simply be that this versus that stories make for better headlines and campaign slogans.
    0:33:28 Maybe it’s because a lot of people who wind up in journalism and politics are not, shall
    0:33:34 we say, numerically inclined to the point where percentages and probabilities are a
    0:33:36 bit intimidating.
    0:33:41 In any case, what’s a layperson to do if you’re trying to make sense of a debate over complex
    0:33:43 issues like this?
    0:33:44 I think it’s really hard.
    0:33:51 I think it’s really hard for a layperson to be able to watch a scientific debate or social
    0:33:57 scientific debate, especially one that’s being mediated through newspapers and magazines
    0:34:02 and blogs, so much being lost in translation, and figure out what’s really true.
    0:34:05 It’s not even easy for me as an academic.
    0:34:10 I think there’s a much more intelligent way to discuss social scientific research than
    0:34:11 is done now.
    0:34:19 Right now, maybe the most interesting way to portray an idea is to talk about the hypothesis,
    0:34:24 and then, almost absent a lot of discussion of data, ask people to make a judgment about
    0:34:26 whether the hypothesis is true.
    0:34:30 I actually think we should flip that discussion on its head.
    0:34:35 If we want intelligently people to be able to make good choices about what they believe
    0:34:42 and don’t believe, then the basic premise has to start not necessarily from the hypothesis,
    0:34:43 but from the data.
    0:34:49 If the way that social science was reported was to say, “Here are the five facts that
    0:34:53 are true about the world,” and then what those mean are up to people to agree upon.
    0:34:57 That’s never the way that discussions happen, maybe because it’s not interesting, maybe
    0:35:02 because it’s a little too complicated, maybe it takes too much time, but I think there’s
    0:35:09 actually a lot less disagreement about facts than about the interpretation of the facts.
    0:35:15 I believe that for an educated layperson, given a set of facts, they can make a better judgment
    0:35:20 about how to interpret those facts than the current way the media treats things, which
    0:35:24 is to often not talk about the facts, but just to talk about the interpretations and
    0:35:32 often to focus on really extreme emphasis on minor differences.
    0:35:37 With that in mind, Steve Leavitt and John Donahue have added a new set of facts to the
    0:35:39 abortion conversation.
    0:35:44 They went back to their original abortion crime analysis from roughly 20 years ago and
    0:35:47 plugged in the updated data.
    0:35:51 Coming up in a minute, we’ll hear what they found and what sort of policy recommendations
    0:35:52 it may suggest.
    0:36:05 We’ll be right back.
    0:36:11 In 2001, the economist Steve Leavitt and the economist/legal scholar John Donahue
    0:36:16 published a paper arguing that the legalization of abortion in the U.S. in 1973 accounted
    0:36:22 for as much as half of the nationwide reduction in crime a generation later.
    0:36:23 Here’s Leavitt.
    0:36:30 The abortion hypothesis is quite unusual among typical economic ideas in that it makes really
    0:36:35 strong and quite straightforward predictions about what should happen in the future.
    0:36:40 The reason it has a characteristic is because we knew already when we published our paper
    0:36:47 in 2001 how many abortions had been performed and because there’s a 15 to 20 year lag between
    0:36:52 performing the abortion and the impact on crime, we could already make strong predictions
    0:36:57 about what would happen to crime 15 to 20 years later.
    0:37:04 It was completely obvious to us that a sensible thing to do 20 years later would be to look
    0:37:08 and see how the predictions had turned out.
    0:37:11 You and John Donahue did revisit this study.
    0:37:13 You just released an update to that 2001 paper.
    0:37:18 This one’s called the impact of legalized abortion on crime over the last two decades.
    0:37:22 Did your prediction turn out to be true, false, somewhere in the middle?
    0:37:30 When we revisit the exact same specifications, but looking from 1997 to 2014, it turns out
    0:37:33 that a very similar pattern emerges.
    0:37:39 The states that had high abortion rates over that period, that 30 year period, have crime
    0:37:45 rates that have fallen about 60% more than the states that had lowest abortion rates.
    0:37:49 These are really massive changes.
    0:37:57 Go and behold, the results were substantially stronger than they were in the 2001 paper.
    0:38:01 That was an interesting and noteworthy finding.
    0:38:09 The amazing thing and the thing that really almost gives me pause is how enormous our
    0:38:14 new paper claims the impact of legalized abortion is because the cumulative effect over the
    0:38:19 last 30 years, if you just look at our numbers, suggests that abortion might explain something
    0:38:24 like 80% or 90% of the entire decline in crime.
    0:38:29 The effects implied by our data are so big that I actually think it will make people
    0:38:35 more rather than less skeptical about what’s going on because it’s almost mind boggling
    0:38:40 that a factor that’s so removed from the usual set of things that we think about influencing
    0:38:43 crime may have been such an enormous factor.
    0:38:47 What would have happened if you’d found the opposite that the impact of abortion on crime
    0:38:50 20 years later had disappeared?
    0:38:52 This is your most famous research.
    0:38:54 What do you think you would have done?
    0:38:55 I don’t know.
    0:38:59 Human nature says maybe we would have tried to hide that, like people make bad predictions
    0:39:03 try to hide it, but I would hope that we would have published the paper anyway because the
    0:39:07 thing is if we didn’t publish it, someone else would have published it.
    0:39:10 One of my first rules of doing research is when you find out you’re wrong, it’s much
    0:39:15 better to kill your own theory than have someone kill your theory.
    0:39:22 A lot has changed since 1973 beyond abortion policy and abortion laws, access to birth
    0:39:29 control and many other factors that may intersect or not with crime causal factors.
    0:39:34 I am curious whether you feel in your new paper, you do make clear that the effect is
    0:39:38 larger now, turned out to be larger than you had predicted.
    0:39:44 Do you think it will continue to hold forth or is the world, this complex world we live
    0:39:51 in changing enough so that the effect of abortion on crime will diminish over time?
    0:39:54 There are lots of moving parts to this story.
    0:40:02 One moving part is that there are other technologies for terminating pregnancies other than therapeutic
    0:40:05 abortions that may play a bigger role.
    0:40:13 For example, you can actually go online and buy pills that can induce miscarriages.
    0:40:21 You might be seeing some movement in those directions and presumably the greatest thing
    0:40:26 that could happen in this domain is if you would eliminate unwanted pregnancies in the
    0:40:35 first place, but American policy has not been nearly as effective in achieving that goal.
    0:40:42 A country like the Netherlands which has really tried to reduce unwanted pregnancies has probably
    0:40:49 had the right approach in dealing with the issues that our research at least raised.
    0:40:54 They have much, much lower rates of abortion even though abortion is completely legal in
    0:40:59 the Netherlands, but they want to stop the unwanted pregnancies on the front end.
    0:41:07 I think almost everyone should be able to agree that that is the preferable way to focus
    0:41:09 policy if one can.
    0:41:14 It’s worth noting that the term “unwanted pregnancy” is probably way too imprecise
    0:41:18 to describe the individual choices made by individual people.
    0:41:24 There are, of course, many reasons why a given woman may decide to have or not have a baby.
    0:41:28 So if you’re thinking about policy ideas, probably makes sense to consider all these
    0:41:31 reasons and the nuances attached to each.
    0:41:37 That said, so-called “unwanted pregnancies” have been falling in the US.
    0:41:43 Consider teenage pregnancies, the vast majority of which are unplanned if not necessarily unwanted.
    0:41:49 The teen pregnancy rate has declined by more than 75% in the past 30 years.
    0:41:52 The abortion rate has also fallen significantly.
    0:41:57 The peak, you will recall, there were around one and a half million abortions a year compared
    0:41:59 to four million live births.
    0:42:01 That was in 1990.
    0:42:06 As we noted earlier, some states have banned abortion lately and some states have upcoming
    0:42:10 votes on whether to keep abortion legal.
    0:42:15 Back in 2019, when I spoke with Steve Levitt and John Donahue, I asked them to talk about
    0:42:19 the link between abortion laws and crime.
    0:42:27 So if indeed these states are making abortions much harder to get than our study, our hypothesis
    0:42:33 unambiguously suggests that there will be an impact on crime in the future.
    0:42:41 You can imagine that if a state were to really clamp down on abortions, but neighboring states
    0:42:47 permitted abortion, you would get some of this traveling to an abortion provider.
    0:42:55 But since that would tend to have a disproportionate effect on lower socioeconomic status, you might
    0:43:03 see exactly the problem that we have identified, that the children that are most at risk because
    0:43:09 their unwanted pregnancies would be the ones most likely to be born once these restrictions
    0:43:10 are imposed.
    0:43:18 On the other hand, I don’t think anyone who is sensible should use our hypothesis to change
    0:43:22 their mind about how they feel about legalized abortion.
    0:43:24 So it really isn’t very policy relevant.
    0:43:30 If you’re pro-life and you believe that the fetus is equivalent in moral value to a person,
    0:43:33 well, then the trade-off is awful.
    0:43:35 What does he mean by an awful trade-off?
    0:43:40 Remember, there are still around a million abortions a year in the US.
    0:43:45 And John Donnelly and I estimate maybe that there are 5,000 or 10,000 fewer homicides
    0:43:46 because of it.
    0:43:51 But if you think that a fetus is like a person, then that’s a horrible trade-off.
    0:43:58 So ultimately, I think our study is interesting because it helps us understand why crime has
    0:43:59 gone down.
    0:44:04 But in terms of policy towards abortion, I think you really misguided if you use our
    0:44:08 study to base your opinion about what the right policy is towards abortion.
    0:44:09 So let me ask you this.
    0:44:16 If someone wants to use this research to consider policy, you’re implying that the policy that
    0:44:21 they should think about is not abortion policy, but some kind of child welfare policy.
    0:44:22 What would that be?
    0:44:27 I mean, that’s obviously a much less binary and much harder question, but what kind of
    0:44:28 policy would be suggested?
    0:44:34 So I think there are two policy domains for which this research is important.
    0:44:36 Let me start actually with the obvious one, which is crime.
    0:44:41 We spend enormous amounts of money on police and prisons and other programs.
    0:44:47 We incarcerate millions of people, and much of the justification for that comes from the
    0:44:51 idea that those are effective policies for reducing crime.
    0:44:56 So I think that’s actually the most obvious implication of our paper, that if it’s really
    0:45:02 true that most of the decline in crime is due to legalized abortion, then it brings real
    0:45:09 caution to the idea that a super aggressive kind of policing and incarceration policy
    0:45:12 is necessarily the right one to pursue.
    0:45:17 But the second one really does relate to the idea that if unwantedness is such a powerful
    0:45:23 influencer on people’s lives, then we should try to do things to make sure that children
    0:45:24 are wanted.
    0:45:30 You could at least begin to think about how you would create a world in which kids grow
    0:45:36 up more loved and more appreciated and with brighter futures.
    0:45:38 And is that better early education?
    0:45:44 Is that permits for parents or training for parents or minimum incomes?
    0:45:46 Who knows what the answer really would be.
    0:45:51 But there’s a whole set of topics, I think, which are not even on the table.
    0:45:56 Leavitt, how do you work generally or most often?
    0:46:00 Do you have a thesis and go looking for data to support or dispute the thesis?
    0:46:05 Or do you look for interesting data and see what hypothesis emerges?
    0:46:10 It turns out in this particular case, John Donoghue and I had a hypothesis and then
    0:46:12 we went to the data.
    0:46:15 But that’s pretty rare in economics and social sciences.
    0:46:20 Often either you start with the data or a set of patterns and then you build a theory
    0:46:21 back from that.
    0:46:25 Or often what happens is you have a theory, you have a hypothesis and you go to the data
    0:46:26 and then you’re wrong.
    0:46:28 But you’ve still looked at the data.
    0:46:32 You still have a lot of interesting patterns in the data and then you go back and you reconstruct
    0:46:34 a new hypothesis based on what you’ve seen.
    0:46:40 And actually one of the things that troubles me most about the way that academic economics
    0:46:45 happens is that there’s this complete fiction in the way we write our papers and that economists
    0:46:51 write up our research as if we rigorously follow the scientific method, that we have
    0:46:56 a hypothesis and then we come up with a set of predictions and then we test those predictions.
    0:47:00 And then the role must always come true by the time we write the paper because you only
    0:47:04 include as your hypothesis the one that is supported.
    0:47:08 Even if it turns out it’s your seventh hypothesis and your first six got rejected.
    0:47:12 When you’re doing research, you’re somewhat attached to your hypothesis, but you need
    0:47:15 to try to keep it at arm’s length.
    0:47:20 That again is Jessica Walpole-Reyes who wrote about the link between crime and lead pollution.
    0:47:22 You should be trying to figure out what is true.
    0:47:29 So I think that the complexity of what we do, the fact that we use all of these econometric
    0:47:35 techniques to figure out these complex situations, makes it suspicious to people.
    0:47:38 It’s sort of like this magic thing we’re doing and then we come out with results.
    0:47:44 So I completely understand that and the number of times people have said, “Well, correlation
    0:47:45 isn’t causation.”
    0:47:46 Yes, we know.
    0:47:48 That’s what we do.
    0:47:52 We take things, we start with the correlation, we’re like, “Huh, I wonder if that’s causal.
    0:47:54 How can I figure out is that causal?
    0:48:00 Where can I find some variation in something that drives the thing that I want to see if
    0:48:01 it affects?”
    0:48:08 I still find it really difficult to explain fully what we are doing when we are separating
    0:48:10 correlation from causation.
    0:48:13 And I even find it like my family, I can’t convince them.
    0:48:15 They’re like, “Yeah, well, you know, whatever.”
    0:48:20 I mean, they sort of buy it after a while, but it takes a long time and I think it’s
    0:48:23 reasonable for people to say, “I don’t know what you’re doing.
    0:48:26 You’re doing something complicated and fancy.”
    0:48:30 And then you’re saying you’ve done something that seems implausible.
    0:48:34 What we should do, I think, is first just settle on the facts.
    0:48:38 I think a great approach is not to say, “Here’s my hypothesis.”
    0:48:40 A great approach is to say, “Here’s what we know about the world.
    0:48:41 Here are the seven facts.”
    0:48:45 I wonder if we take it away from this abortion crime issue specifically, though, and think
    0:48:50 about any other really contentious issue, climate change, income inequality, gun control,
    0:48:51 et cetera.
    0:48:58 And you see how people make very, very strident arguments often, as you said, not really using
    0:49:00 a fully considered set of the data.
    0:49:04 I wonder if it has to do with the fact that the issues themselves and the causal mechanisms
    0:49:09 underneath them are actually kind of less important to people than the tribal affiliation
    0:49:11 with a position.
    0:49:13 I think there’s a lot of validity to that argument.
    0:49:20 I think that many of these contentious issues you noted, they’re ultimately not so much
    0:49:23 about utilitarian arguments.
    0:49:25 And I think that’s fair.
    0:49:29 Obviously, it matters a lot to know whether humans are actually responsible for climate
    0:49:34 change because it’s silly to radically change everyone’s behavior if we’re not responsible
    0:49:35 for it.
    0:49:40 So there’s an enormously important role for science in understanding those causal mechanisms.
    0:49:45 But in terms of the public debate and what people believe, I think you’re absolutely
    0:49:52 right that oftentimes what we believe is driven not by the exact facts, but by our conception
    0:49:58 of what kind of person we are or how we want the world to be to discussion about right
    0:49:59 or wrong.
    0:50:03 And it would be useful if people remembered and were able to put, “Okay, I’m putting my
    0:50:08 right and wrong hat on as I talk about this,” or “I’m putting my scientific hat on as I
    0:50:11 talk about exactly how much the world is warming.”
    0:50:17 And those are both very important conversations to have where I think we get lost is when
    0:50:24 we are having a conversation which confounds scientific and right and wrong issues or confuses
    0:50:27 them or mixes them.
    0:50:30 And it’s hard for people to make that distinction.
    0:50:35 I know that you pride yourself, Levitt, on not being a right or wrong guy.
    0:50:42 But I am curious how being the author of this theory and paper has informed, if not changed,
    0:50:48 the way you think about the issue, particularly of children, of wantedness and unwantedness.
    0:50:50 And for the record, we should say that you have six kids.
    0:50:54 So plainly, you’re in the pro-kid camp and you want them.
    0:51:03 Has this entire arc of the story, the early paper, the dispute, your re-litigation of it,
    0:51:08 has this changed at all your thinking about the nature of why people have children and
    0:51:11 what we do with them after we have them?
    0:51:13 So that’s a pretty profound question.
    0:51:16 Let me answer a very narrow aspect of that question.
    0:51:22 So if there’s one thing that comes out of our research, it is the idea that unwantedness
    0:51:25 is super powerful.
    0:51:31 And it’s affected me as a father in the sense that I think when I first was having kids,
    0:51:35 I didn’t feel maybe so obligated to make children feel loved.
    0:51:41 And it’s interesting that now as I go through a second round of kids, I am not trying to
    0:51:43 teach my kids very much.
    0:51:46 I’m just trying to make them feel incredibly loved.
    0:51:51 And it seems to me that that’s a pretty good premise for young kids.
    0:51:52 And look, I don’t know.
    0:51:54 Is that because I wrote this paper on abortion and crime?
    0:51:55 Maybe partly.
    0:51:56 Maybe partly not.
    0:51:59 It does seem to me a very powerful force.
    0:52:05 And there is something so incredibly tragic to me about the idea that there are kids out
    0:52:08 there who aren’t loved and who suffer.
    0:52:13 And look, it’s backed up, I think, by our data that that feeds them to tough things in life.
    0:52:17 I really think I’ve gotten very mellow in old age.
    0:52:19 I was, it was funny.
    0:52:25 I was, I was like a super rational, calculating kind of person.
    0:52:31 And as I’ve gotten older, I’ve just gotten very soft and friendly and nice.
    0:52:38 And I never would have imagined that I would be so accepting of my teenagers and their
    0:52:44 various foibles, but it’s funny, you know, I, I’m a really different person than I used
    0:52:45 to be.
    0:52:50 Um, is this a product of just aging or something else?
    0:52:51 I don’t think so.
    0:52:55 I think sometimes when people get older, they get mean and sometimes they get nice.
    0:52:59 And I’m not sure why I got nice instead of mean, but I somehow became more human.
    0:53:00 Yeah.
    0:53:01 You know me.
    0:53:03 And like, I’m not exactly a complete human.
    0:53:07 Like I’m lacking some of the basic things that many humans have.
    0:53:11 But I think somehow I’m growing more human traits over time, don’t you think?
    0:53:12 I do.
    0:53:13 I do.
    0:53:14 I definitely do.
    0:53:17 I guess what’s the causal mechanism, honestly?
    0:53:18 Maybe it’s you, Dubner.
    0:53:24 Maybe it’s hanging around with you and your great humanity has set it to rub off on me.
    0:53:29 I doubt it, but I’ll take credit for it.
    0:53:33 That was our 2019 episode abortion and crime revisited.
    0:53:37 We will be back very soon with a new episode of Freakonomics Radio.
    0:53:39 Until then, take care of yourself.
    0:53:44 And if you can, someone else to Freakonomics Radio is produced by Stitcher and Renbud Radio.
    0:53:50 You can find our entire archive on any podcast app, also at Freakonomics.com, where we publish
    0:53:52 transcripts and show notes.
    0:53:57 This episode was produced by Zach Lipinski and updated by Teo Jacobs.
    0:54:02 Our staff also includes Dalvin Aboulagi, Alina Kulman, Augusta Chapman, Eleanor Osborne,
    0:54:07 Ellen Frankman, Elsa Hernandez, Gabriel Roth, Greg Rippen, Jasmine Klinger, Jeremy Johnston,
    0:54:12 John Schnars, Lyric Bowditch, Morgan Levy, Neal Karuth, Rebecca Lee Douglas, and Sarah
    0:54:13 Lilly.
    0:54:16 The theme song is “Mr. Fortune” by the Hitchhikers.
    0:54:19 Our composer is Luis Guerra.
    0:54:25 As always, thank you for listening.
    0:54:27 I’m frenetic from the morning, so I have to slow myself down.
    0:54:31 I’m on something like other planets.
    0:54:41 The Freakonomics Radio Network, the hidden side of everything.
    0:54:44 [MUSIC PLAYING]
    0:54:54 [BLANK_AUDIO]

    With abortion on the Nov. 5 ballot, we look back at Steve Levitt’s controversial research about an unintended consequence of Roe v. Wade.

     

    • SOURCES:
      • John Donohue, professor of law at Stanford Law School.
      • Steve Levitt, professor emeritus of economics at the University of Chicago and host of People I (Mostly) Admire.
      • Jessica Wolpaw Reyes, professor of economics at Amherst College.

     

     

  • 608. Cannabis Is Booming, So Why Isn’t Anyone Getting Rich?

    AI transcript
    0:00:07 So how quickly did the U.S. change its mind on cannabis?
    0:00:11 Here is Ronald Reagan when he was running for president in 1980.
    0:00:17 Marijuana, pot, grass, whatever you want to call it, is probably the most dangerous drug
    0:00:22 in the United States and we haven’t begun to find out all of the ill effects.
    0:00:26 Cannabis was illegal back then and remained so for years.
    0:00:27 How about today?
    0:00:33 The vast majority of Americans support some form of legalization and cannabis is fully
    0:00:35 legal in 24 states.
    0:00:41 It’s sold in 14 more for medical use, although to be honest, the medical tag is often a very
    0:00:43 small fig leaf.
    0:00:49 Oklahoma for instance leads the U.S. in per capita cannabis dispensaries and it is one
    0:00:52 of those 14 states that allows only medical use.
    0:00:58 In other words, when it comes to cannabis, it’s pretty easy to get a note from your doctor.
    0:01:02 So how widespread is cannabis use today?
    0:01:06 Last week in part one of this series, we heard that the U.S. just reached a milestone.
    0:01:12 There are more daily or near daily users of cannabis than there are daily or near daily
    0:01:14 users of alcohol.
    0:01:20 The cannabis industry today employs half a million people, includes 12,000 licensed retail
    0:01:25 locations and takes in $30 billion in annual sales.
    0:01:30 So today in part two of our series, we started out with a simple question.
    0:01:33 Who is making all that money in the cannabis economy?
    0:01:37 But we learned there might be a better question.
    0:01:39 Is anybody making any money?
    0:01:44 Everybody believed that this would be like Silicon Valley, this giant growth industry.
    0:01:48 The cannabis industry is a bit of a mess and we explore the reasons.
    0:01:50 There are a lot of reasons.
    0:01:54 I sunk my life savings and raised over $2 million to get into the game.
    0:02:01 It’s hard to articulate the regulatory complexity of every single thing you have to do.
    0:02:04 Taxes are high and there’s a lot of product in the market.
    0:02:06 There’s illicit product in the market.
    0:02:10 We had this myth that with legalization, we could stop all enforcement.
    0:02:13 That was totally wrong.
    0:02:18 In fact of the day, there are more weed stores in Los Angeles than there are Starbucks and
    0:02:23 more than 70% of those LA weed stores are illegal.
    0:02:28 This may explain why one of California’s biggest legal cannabis companies once valued
    0:02:32 at $3 billion recently filed for bankruptcy.
    0:02:55 Is the great social critic Kermit the Frog once observed?
    0:03:01 This is Freakonomics Radio, the podcast that explores the hidden side of everything with
    0:03:12 your host, Steven Dovner.
    0:03:17 California has a history of helping to create industries that turn into juggernauts.
    0:03:22 Think about Hollywood, think about Silicon Valley, both the tech and venture capital
    0:03:23 industries.
    0:03:25 You’ve also got aerospace and biotech.
    0:03:28 You can go all the way back to the gold rush in the mid 19th century.
    0:03:33 And for a while, it looked like there would be a new 21st century juggernaut.
    0:03:36 The green rush, legal weed.
    0:03:41 California was already an agricultural powerhouse with a long history of growing cannabis.
    0:03:46 Up north, the Emerald Triangle, Humboldt, Mendocino, and Trinity counties was known for
    0:03:52 producing some of the planet’s best weed during many decades when it was illegal.
    0:03:58 In 1996, California voters approved the Compassionate Use Act, making it the first state to allow
    0:04:00 the sale of cannabis for medical use.
    0:04:06 And then in 2016, California became the sixth state to fully legalize cannabis.
    0:04:12 By 2021, sales in California reached nearly $6 billion, but that number has been falling
    0:04:19 ever since, even though the demand for cannabis across the country continues to rise.
    0:04:22 So why has the green rush slowed down?
    0:04:25 Let’s start with one California entrepreneur.
    0:04:32 My name is Nikesh Patel, and I run a cannabis house of brands called Mammoth Distribution.
    0:04:34 We are based in Los Angeles.
    0:04:35 Okay.
    0:04:41 So house of brands, distribution in the name, I assume that means that you don’t cultivate
    0:04:44 that you market and sell, but tell me if I’m wrong.
    0:04:45 Yeah, correct.
    0:04:46 We do product development.
    0:04:50 We manufacture our products, but we do not cultivate.
    0:04:53 There’s over 10,000 licensed cultivators in California.
    0:05:00 And so we have deep relationships with key suppliers who the ecosystem is pretty complicated
    0:05:05 because there’s indoor farms, there’s outdoor farms, there’s greenhouse farms, lots of different
    0:05:08 genetics in this industry.
    0:05:09 Just name for me some of your products.
    0:05:12 I mean, how many different formats are there?
    0:05:16 There’s pre-rolls, there’s edibles, there’s vapes, there’s pills, there’s capsules, there’s
    0:05:17 bombs.
    0:05:22 There’s tons of different formats in which the plant manifests itself now.
    0:05:23 What about beverages?
    0:05:28 A beverage is one of the fastest growing segments in the industry, which is relatively
    0:05:29 new.
    0:05:35 We also happen to run and own the largest cannabis beverage manufacturer in probably
    0:05:36 the world.
    0:05:37 We do the most in California.
    0:05:40 It’s called Space Station.
    0:05:43 Patel got into the cannabis industry in 2017.
    0:05:47 Before that, he helped start a company that sold barware, cocktail glasses, shakers, things
    0:05:49 like that.
    0:05:54 And before that, I studied business at Berkeley and public policy, and I wanted to go be a
    0:05:56 public policy professor.
    0:06:00 My first job out of college was a research associate at the Public Policy Institute of
    0:06:06 California, where I learned more about, like, oh, interesting how the government kind of
    0:06:07 boost certain industries.
    0:06:12 My first research was on Silicon Valley and some of the things that helped California become
    0:06:14 the leader in tech.
    0:06:19 One reason Patel moved into cannabis is because he thought it might be in a similar position.
    0:06:21 To be boosted.
    0:06:25 Everybody believed that this would be this giant growth industry.
    0:06:30 And so a lot of investment dollars went into building an insane amount of infrastructure.
    0:06:35 And here in California, where people thought this would be the epicenter of it all, because
    0:06:39 if federal legalization happened, just like most agricultural products, California, especially
    0:06:44 with its history of cannabis, would be the leading exporter.
    0:06:47 If federal legalization happened.
    0:06:51 If you’re looking for the main reason why the cannabis industry has not lived up to
    0:06:56 its hype and why much of the industry is in a state of chaos, this would be a good place
    0:06:57 to start.
    0:07:02 Even though cannabis is legally sold in most states, it is still illegal at the federal
    0:07:03 level.
    0:07:06 In fact, it’s still classified under the controlled substances act as a schedule one
    0:07:13 drug, along with heroin and LSD, that is drugs with no legitimate medical use and high potential
    0:07:14 for abuse.
    0:07:16 That may soon change for cannabis.
    0:07:19 We’ll hear more about that in the final episode of the series.
    0:07:24 But for the time being, the federal government still sees cannabis as an illegal drug.
    0:07:27 And that has many downstream effects.
    0:07:33 For starters, a cannabis entrepreneur won’t have access to traditional financing or investing,
    0:07:37 since most financial institutions don’t want to partner with an industry that Washington
    0:07:39 considers illegitimate.
    0:07:42 You will not have access to any of the big banks.
    0:07:48 There’s been a few credit unions that have been starting to bank the cannabis industry.
    0:07:52 When I started five, six years ago, it was 100% cash.
    0:08:00 Now pretty much every cannabis operator of size has a bank account with a local credit
    0:08:02 union that you’ve probably never heard of.
    0:08:07 So if you are banking with a credit union or something equivalent to that, maybe a small
    0:08:12 local bank decides to do it, does that mean you can accept credit cards?
    0:08:15 Well, it’s basic banking functions.
    0:08:21 I’m talking like storage of cash, being able to wire money, and you pay exorbitant fees.
    0:08:26 Another result of the federal illegality is that you can’t sell your product across state
    0:08:32 lines or open a shop in another state without going through that state’s licensing process.
    0:08:35 And when it comes to state licensing, there is no standard playbook.
    0:08:40 Some states license at the local level as well as the state level.
    0:08:45 Some put a tight cap on the number of retail licenses, Arkansas and Alabama, for instance,
    0:08:50 while others are more laissez-faire like California and Michigan.
    0:08:52 Some charge a lot for license.
    0:08:57 In California, there are many types of license and some cost nearly a quarter million dollars.
    0:09:03 In some states, they’re cheap like Oklahoma, where license costs only $2,500.
    0:09:08 That may explain why Oklahoma has the most dispensaries per capita of any state.
    0:09:14 Their entirety of the cannabis market is filled with an amazing number of contradictions and
    0:09:21 confusion when it comes to policy and government and states versus federal and whatnot.
    0:09:26 All these complications make it hard for a cannabis entrepreneur to achieve any kind of
    0:09:27 scale.
    0:09:29 And then there are the regulations.
    0:09:35 It’s hard to articulate the regulatory complexity of every single thing you have to do.
    0:09:39 You have to have live cameras everywhere.
    0:09:44 You have to have locking ID mechanisms everywhere an employee goes.
    0:09:48 You have to have a plan for everything that you have to submit and get approval before
    0:09:50 you can move things around or change things.
    0:09:53 It feels like you have a microscope on you.
    0:09:56 There are also testing requirements.
    0:09:59 The cannabis plant is what’s known as a bio accumulator.
    0:10:04 It can absorb many substances in the air, water and soil where it grows.
    0:10:08 In some places, that could include pesticides and heavy metals.
    0:10:13 The amount of lab testing through the entire process is insane.
    0:10:16 No agricultural product has this.
    0:10:21 Every single part of the plan has to be tested for final sale.
    0:10:25 The idea is to make sure that the cannabis sold in licensed stores is safe.
    0:10:31 And many states monitor all cannabis with a tracking system called METRIC or Marijuana
    0:10:34 Enforcement Tracking Reporting Compliance.
    0:10:38 METRIC is the software that the government in California decided to use to do what’s
    0:10:40 called seed-to-sale.
    0:10:45 The moment a cannabis seed is planted, it has to be tagged.
    0:10:49 Every part of it and every- Wait, every single plant is tagged?
    0:10:50 Every single plant is tagged.
    0:10:54 So if you’re a cultivator, you are tagging and putting into the government database.
    0:10:55 I planted this product.
    0:10:57 This is the tag number.
    0:11:03 And then as you harvest it, every single product that comes from it has to be tagged
    0:11:09 all the way across the system so that if you bought a pre-roll at a dispensary, they can
    0:11:16 track that all the way back to every single plant or multiple plants that made that product.
    0:11:21 And there’s one more big wrinkle that comes from cannabis being illegal on the federal
    0:11:25 level and still being a Schedule I drug.
    0:11:31 This has to do with taxes, specifically a section of the IRS tax code known as 280E.
    0:11:37 This came about in 1981 during the Reagan administration when a convicted cocaine trafficker
    0:11:42 argued in court that he should be allowed to deduct his legitimate business expenses
    0:11:45 even though his business was illegitimate.
    0:11:51 Congress responded by creating Rule 280E, which prevents anyone trafficking in controlled
    0:11:54 substances from deducting their business expenses.
    0:11:59 For someone like Nick Patel, this means that other than the cost of the cannabis itself
    0:12:04 for expenses like storage and transportation, banking and franchise fees, packaging and
    0:12:09 marketing, none of that is tax deductible as it is for other industries, which means
    0:12:16 that a legal cannabis operator might pay an effective federal tax rate of around 70%.
    0:12:18 That’s in addition to state and local taxes.
    0:12:22 Los Angeles, for instance, has a 5% cannabis excise tax.
    0:12:27 So what do you do if you’re an entrepreneur with that kind of tax burden?
    0:12:31 You might consider just not paying your taxes.
    0:12:33 That is certainly what’s been happening on the state level.
    0:12:39 A recent report from Green Wave Advisors found that in California alone, cannabis businesses
    0:12:44 owe more than $700 million in unpaid taxes.
    0:12:47 But it’s unlikely the state will ever see that money.
    0:12:52 More than 70% of those companies are no longer in business.
    0:12:57 Coming up after the break, there’s one more huge problem for the legal cannabis industry,
    0:13:00 the illegal cannabis industry.
    0:13:01 I’m Stephen Dubner.
    0:13:13 This is Freakonomics Radio, we’ll be right back.
    0:13:19 Because cannabis is still illegal on the federal level, even a legitimate cannabis business
    0:13:22 faces many hurdles as we’ve been hearing today.
    0:13:25 You have limited access to banking and financing.
    0:13:28 You face intense and expensive state regulations.
    0:13:30 You pay very high taxes.
    0:13:34 And in order to expand to a new state, you have to get a new license and navigate an
    0:13:38 entirely different set of regulations.
    0:13:43 Despite all these unkind business conditions, some firms have managed to scale up.
    0:13:46 They are called MSOs, multi-state operators.
    0:13:51 And they tend to be vertically integrated, cultivating and processing cannabis, creating
    0:13:55 their own brands, and operating retail shops.
    0:14:00 One of the biggest is Cureleaf, which is headquartered in New York City and has roughly 150 stores
    0:14:02 in 17 states.
    0:14:08 There’s also Green Thumb Industries based in Chicago with 95 stores in 14 states.
    0:14:11 Another big one is Trueleave, which is based in Florida.
    0:14:16 As of this recording, Florida allows only medical cannabis, and Trueleave dominates
    0:14:17 that market.
    0:14:22 On November 5th, Florida voters will have the chance to allow recreational use, in which
    0:14:27 case Trueleave would be in a strong position to satisfy what will likely be a lot of new
    0:14:29 demand.
    0:14:32 This is a common strategy for some MSOs.
    0:14:38 Set up shop in places with medical licensing so that you’re ready if that state adds recreational
    0:14:39 use.
    0:14:45 This may remind you of how two of the biggest sports gambling platforms, FanDuel and DraftKings,
    0:14:49 set up their operations years ago around fantasy sports.
    0:14:54 Back then, sports gambling was legal in only a few places, but in 2018, the Supreme Court
    0:15:00 lifted the ban on national sports gambling, leaving FanDuel and DraftKings in a perfect
    0:15:03 position to start taking in real money.
    0:15:06 Anyway, back to these cannabis MSOs.
    0:15:10 Even the biggest ones just aren’t that big.
    0:15:15 This isn’t industry where scaling up is, at least for now, very hard.
    0:15:19 Even Pureleave, the biggest American cannabis company by revenue, is thought to have only
    0:15:22 about 4% of the entire legal market.
    0:15:25 Some of this has to do with state licensing.
    0:15:31 Most states have limited the number of licenses any one company can own, and in many cases
    0:15:32 that’s not a lot.
    0:15:37 The maximum number of licenses that you can have in New Jersey is three dispensaries.
    0:15:42 Three dispensaries in a state of 12 million people is an exactly market domination.
    0:15:43 That is Adam Gores.
    0:15:48 I’m a senior vice president with the cannabis company, as well as the chairperson of the
    0:15:50 Coalition for Cannabis Scheduling Reform.
    0:15:54 The cannabis is a multi-state operator based in New York.
    0:15:58 I got involved in the cannabis space about seven or eight years ago.
    0:16:04 After a career in politics, I was a senior advisor to a number of Democratic governors.
    0:16:10 After business school, I was looking for an opportunity that was both mission-driven,
    0:16:13 but also a growing economic sector.
    0:16:15 The cannabis started out with medical cannabis.
    0:16:20 They were originally called Columbia Care, and they’ve been trying to ride the wave
    0:16:22 of recreational legalization.
    0:16:27 The problem is that every state has its own way of setting up their licensing process,
    0:16:31 and the result is often confusion and controversy.
    0:16:37 To be fair, this often happens when a longstanding ban is lifted, when something goes from illegal
    0:16:38 to legal.
    0:16:43 It happened with alcohol, it happened with fireworks, it happened with gay marriage.
    0:16:48 But Adam Gores argues that with cannabis, some states have done a particularly bad job.
    0:16:52 I’ll point out one that’s done it probably the worst.
    0:16:58 It’s New York state that delayed the rollout of their marketplace by not allowing their
    0:17:03 medical businesses to get started and waiting to let new businesses join in first, which
    0:17:04 took years.
    0:17:09 And in that vacuum, the illicit market just dominated.
    0:17:13 And so, headlines everywhere that there’s thousands and thousands of illicit shops in
    0:17:16 New York that have been very difficult to shut down.
    0:17:19 As a New Yorker, I can vouch for those headlines.
    0:17:25 There are now a few dozen licensed cannabis shops in New York City, but since legalization
    0:17:29 in 2021, there have been 3,000 illegal shops.
    0:17:34 The average customer would have no idea those illegal shops are illegal.
    0:17:38 They have real neon signs, real employees, and real weed.
    0:17:43 Their products might be properly labeled, and they might have been tested for contaminants,
    0:17:45 but also maybe not.
    0:17:50 So why has it been so hard to shut down illegal shops?
    0:17:54 The economist Coleman Strumpf has been studying legal and illegal cannabis markets in the
    0:17:55 US.
    0:18:00 He’s the one who found that fun fact I shared earlier, that 70% of the weed shops in L.A.
    0:18:01 are illegal.
    0:18:06 Here’s what he told me in an email, “It is rare for police to permanently shut down
    0:18:07 a store.”
    0:18:13 In short, this comes back to jurisdictional confusion, demoralization of police, essentially
    0:18:17 they were told they were villains in the war on crime and now they have to figure out not
    0:18:23 if a drug is legal, but if the seller is legal, and perseverance by illegal stores.
    0:18:29 They’re an arrest, they often reopen a store right near where their old store was.
    0:18:34 If you happen to walk into a weed store and you aren’t sure if it’s legit, one fun thing
    0:18:37 to do is ask to see their license.
    0:18:40 That usually turns into an interesting conversation.
    0:18:42 You can also check the prices.
    0:18:46 If the store is unlicensed, they’re going to be cheaper, maybe half the price you’d
    0:18:48 find in a legal store.
    0:18:53 This makes sense, running an illegal operation is a lot cheaper.
    0:18:57 No licensing fees, no testing fees, no taxes to pay.
    0:19:02 According to one estimate of California’s cannabis market, annual sales of the legal
    0:19:07 product are at $5 billion with illegal sales at $8 billion.
    0:19:12 It’s hard to think of another industry where the legal version gets so badly beaten by
    0:19:13 the illegal version.
    0:19:16 If you can think of one, let me know.
    0:19:21 In most heavily regulated industries, think of pharmaceuticals, the manufacturer can pass
    0:19:25 along all those regulatory costs to the customer.
    0:19:31 When cannabis firms do that, they make the illegal version even cheaper by comparison.
    0:19:36 So legal firms try to keep their prices down, which makes it harder to make money.
    0:19:43 A recent survey by Whitney Economics, a big cannabis research firm, found that only 24%
    0:19:47 of licensed operators in the US are turning a profit.
    0:19:51 There’s a lot of unrealistic expectations.
    0:19:52 That is John Calkins.
    0:19:56 He is a drug policy researcher at Carnegie Mellon University.
    0:19:57 We heard from him last week, too.
    0:20:03 This time, I asked Calkins why the legal cannabis market isn’t working so well.
    0:20:07 He says there are at least three major reasons.
    0:20:13 One is just legalization is like a radical technological innovation creating a brand
    0:20:14 new market.
    0:20:19 Cannabis has been used for thousands of years, but the kinds of production methods you can
    0:20:22 use after legalization are entirely different.
    0:20:24 So it’s like a brand new market.
    0:20:28 And it is actually normal when there’s a brand new market for thousands of people to
    0:20:31 jump in trying to get rich and 80% of them to go bankrupt.
    0:20:36 So some of it is actually just a normal, healthy shakeout of a market.
    0:20:42 A second issue is the thousands of people jumping in didn’t all clue in to the fact
    0:20:44 that prices were going to collapse.
    0:20:50 They didn’t all clue into this reality that it is way, way, way less expensive to produce
    0:20:56 cannabis when it’s legal than when you’re trying to do it while hiding from law enforcement.
    0:21:00 But the third issue is the one that’s really an important policy question, which is how
    0:21:05 do legal companies compete against illegal companies?
    0:21:11 The misinformation story here is the legal industry says, “Oh, it’s all the taxes.
    0:21:13 You just got to repeal the taxes.
    0:21:14 That’s what’s killing us.”
    0:21:20 That’s not the right way to think about it because the costs of operating within the
    0:21:25 legal regulated market go way beyond cannabis specific excise taxes.
    0:21:31 They include things like social security and income taxes, things like having a workplace
    0:21:37 that meets workplace safety standards, all of those things collectively drive up the
    0:21:43 cost of business much above people who just get to totally ignore the rules.
    0:21:47 Let me tell you a story that I love because it makes the point.
    0:21:53 Way back in 2013, I happened to be interacting with, call them a gray market entity.
    0:21:54 They were not like an organized criminal group.
    0:21:57 They were trying to operate like a business.
    0:22:00 And the guy said, “The regulations are killing me.
    0:22:06 They’re asking me to put wheelchair ramps into my greenhouses to make them ADA compliant.”
    0:22:10 Having the whole set of rules that legal companies are supposed to follow does put them at a
    0:22:16 big cost disadvantage compared to the companies just get to not follow the rules.
    0:22:18 So the answer to that is not repeal the cannabis taxes.
    0:22:23 The answer to that is don’t let the people who are flouting the rules flout the rules.
    0:22:28 As Culkin sees it, the cannabis economy has entered a vicious cycle of non-enforcement,
    0:22:34 which is bad news for pretty much everybody except a handful of illegal entrepreneurs.
    0:22:39 We had this myth that with legalization, we could stop all enforcement.
    0:22:42 That was totally wrong.
    0:22:46 After legalization, you still need to enforce the regulations.
    0:22:50 The good news is you can do that without filling up prisons.
    0:22:53 You’re going to do things like seize their assets.
    0:22:57 But the complete hands off, I’m not going to mess with the people who aren’t following
    0:23:04 the rules, is directly harming the people who are trying to follow the rules and incur
    0:23:06 all the costs of following the rules.
    0:23:10 And California came to that realization late, they got a slow start, and they’re in a bit
    0:23:13 of a hole trying to get out of that.
    0:23:18 There’s one more feature of cannabis legalization that has made some state rollouts confusing
    0:23:19 and controversial.
    0:23:25 In the past, a disproportionate share of the people arrested for using cannabis were black.
    0:23:30 So a lot of states and cities are trying to right that wrong by building a social equity
    0:23:33 component into their licensing procedures.
    0:23:38 After the break, we will hear how that’s working out in San Francisco.
    0:23:43 And it turns out you can’t talk about cannabis without talking about Minnesota.
    0:23:44 That’s coming up.
    0:23:56 I’m Stephen Dubner and you were listening to Freakonomics Radio.
    0:24:02 We heard earlier from Nikesh Patel, the CEO of a cannabis firm in Los Angeles called Mammoth.
    0:24:05 Here now is our next guest.
    0:24:10 My name is Nikesh Patel and I’m the Director of the San Francisco Office of Cannabis.
    0:24:11 That’s right.
    0:24:17 Two Nikesh Patels, both in the California cannabis industry, one a producer down south, the other
    0:24:19 a regulator up north.
    0:24:24 That’s a little surprising, but honestly, we’ve had a lot of surprises ever since we
    0:24:28 started reporting out this cannabis series.
    0:24:32 So Nikesh, I see you have an undergraduate degree from Stanford, a graduate degree in
    0:24:37 migration policy from Oxford, and a law degree from Berkeley.
    0:24:40 Did you think when you were getting all that education that you would end up running the
    0:24:42 San Francisco weed office?
    0:24:47 If you ask my high school friends whether they saw this coming, they might laugh you
    0:24:48 out of the room.
    0:24:53 But if you ask the people I grew up with in the tenderloin, they would say, yeah, you
    0:24:57 know what, it was always a part of your makeup because every time we came to where you lived,
    0:25:00 we could smell it everywhere around you.
    0:25:04 I grew up on Eddie and Polk, the hotel that I grew up in is still there.
    0:25:07 My parents were running a single room occupancy hotel.
    0:25:13 About 90 individuals were saying they’re apart from us, but I was going to school in Pacific
    0:25:14 Heights.
    0:25:20 So there was this daily juxtaposition between extreme have-nots and then a more affluent
    0:25:21 part of the city.
    0:25:26 It’s the reason why I do a lot of the work I do now because I recognize that there are
    0:25:31 a lot of people who have the ability but not necessarily the means to get ahead in life.
    0:25:35 And that’s why the equity program and the work we do at the Office of Cannabis in the
    0:25:40 city as a whole is so inspiring because it’s designed to bridge those opportunity gaps and
    0:25:46 give people who may not have a seat at a table an opportunity to say, look, I’m willing
    0:25:51 and ready to try if you’re willing to give an opportunity.
    0:25:56 San Francisco’s legal cannabis system doesn’t just include a social equity component.
    0:25:58 The way many cities and states do.
    0:26:00 It is built around this idea.
    0:26:04 It’s supposed to be this program that gives people that have been disproportionately impacted
    0:26:08 by cannabis enforcement in this country an opportunity to own business.
    0:26:13 Cannabis also has the added difficulty of having a rich history that’s rooted in criminalization
    0:26:19 in a way that also applied to alcohol, but feels different and it feels like it extended
    0:26:24 for longer and was more specific against the types of communities that it was exacted
    0:26:27 against black and brown people in particular.
    0:26:32 Imagine walking into a store, a cannabis store that’s in any one of San Francisco’s neighborhoods.
    0:26:39 You might learn that the owner of the store is actually someone who grew up in San Francisco.
    0:26:42 They may have experienced some housing insecurity in the city.
    0:26:47 And Nikesh, what are the odds that the person running that store or maybe owning the store
    0:26:51 was arrested for selling cannabis when it was illicit in the state?
    0:26:52 Pretty high.
    0:26:54 I don’t know what makes these stores really unique.
    0:26:59 So how many legal retail shops are there in the city of San Francisco right now?
    0:27:05 In terms of our equity businesses, there are 54 that we’ve issued permits to.
    0:27:11 And then when you factor in the medical cannabis dispensaries, that’s about another 30.
    0:27:14 So all told, it’s in the vicinity around 80.
    0:27:17 And then how many illicit shops are there?
    0:27:18 Really good question.
    0:27:23 I almost don’t want to answer it because I’d rather not jinx the way things are right
    0:27:24 now.
    0:27:29 But in San Francisco, there are far fewer illicit retail businesses.
    0:27:32 Far fewer than the legal ones, you’re saying?
    0:27:33 That’s right.
    0:27:37 It’s a reflection of the relationship between the Department of Cannabis Control, the Office
    0:27:41 of Cannabis, the San Francisco Police Department, the Fire Department.
    0:27:45 We’re working on becoming even more integrated than we currently are to step into the world
    0:27:50 and say, look, this is what’s going to happen when you’re operating illicitly in the retail
    0:27:52 space.
    0:27:57 We went back to the economist Coleman Strumpf and asked him to share his data on legal versus
    0:27:58 illegal stores.
    0:28:04 He told us that as of the end of 2019, there were around 100 licensed retailers in San
    0:28:07 Francisco and just 21 unlicensed.
    0:28:13 That is the opposite of LA and New York City, where the vast majority of the shops are illegal.
    0:28:18 So does this mean that the legal weed shops in San Francisco are making a lot of money
    0:28:21 since they don’t face much competition from illegal shops?
    0:28:22 It does not.
    0:28:28 Even with all the support from Nikesh Patel’s office, revenues have been falling significantly.
    0:28:32 It’s an economically challenging time for anyone in the cannabis space.
    0:28:35 Part of that is because there are a lot of regulations.
    0:28:37 Part of it is because there are high taxes.
    0:28:42 Part of it is because there’s still federal uncertainty around the legal status of cannabis.
    0:28:44 You don’t get to claim the same tax exemptions.
    0:28:48 When you’re applying for an insurance policy, the premiums are going to be really high.
    0:28:53 When you are looking for financing, you’re going to be paying more than other small business
    0:28:54 entrepreneurs.
    0:28:58 So there are some economic challenges that come with being in cannabis.
    0:29:02 Right now, they are exacerbated by local conditions in San Francisco.
    0:29:04 We’re still recovering from the pandemic.
    0:29:09 There’s a lot of product in the market, so that also makes it harder to compete.
    0:29:11 There’s illicit product in the market.
    0:29:12 I will say this much.
    0:29:17 I have a lot of respect for anyone who’s in the cannabis space because it’s a very challenging
    0:29:22 time and I take great pride in the operators in San Francisco being able to endure these
    0:29:24 challenging times.
    0:29:25 It’s a resilient bunch.
    0:29:31 I’ve read one report that says only about a quarter of cannabis operators are profitable.
    0:29:35 It sounds like San Francisco, you’re having similar challenges that everybody’s having
    0:29:38 in terms of supply and demand and tax and regulation and so on.
    0:29:43 But in San Francisco in particular, does this mean that the city or some institution, some
    0:29:47 office is subsidizing these stores in particular?
    0:29:48 Interesting question.
    0:29:53 We refer to the dollars that come through the state and then through the city as grant
    0:29:54 relief.
    0:30:00 And so there are grant dollars that the Office of Cannabis is working very hard to make directly
    0:30:04 available to our equity operators and equity applicants.
    0:30:10 To date, the office has dispersed around $12.3 million and that’s since 2021.
    0:30:16 That means that if you are an eligible business or an operator/applicant, your business may
    0:30:21 have realized anywhere between $50,000 to $250,000 over the last couple of years alone.
    0:30:25 And that’s only on the retail side that’s on the cultivating side or manufacturing side?
    0:30:26 Is that right?
    0:30:29 No, that’s inclusive of both retail and supply side.
    0:30:30 I see.
    0:30:31 Okay.
    0:30:37 So, I mean, if I take a step back, especially if I’m a person who’s really anti-cannabis,
    0:30:39 I take a step back and I say, “Wait a minute, wait a minute.
    0:30:44 The city of San Francisco and the state of California are paying weed store operators
    0:30:45 to operate.
    0:30:51 They’re making these pretty substantial grants into a market that was supposed to be robust
    0:30:54 and was supposed to support itself but is not.
    0:30:57 So how would you respond to that concern?
    0:31:04 I would say that cannabis is heavily taxed and the dollars that are coming through the
    0:31:09 grant relief to these programs are actually a portion of the taxes that cannabis businesses
    0:31:10 are paying.
    0:31:15 The broader picture is that only a portion of the taxes that cannabis businesses are
    0:31:17 paying are going back into those businesses.
    0:31:23 The other portion of the taxes are going into other services that are beyond just cannabis.
    0:31:24 Like what?
    0:31:29 A lot of money that’s going into doing research around cannabis itself that wasn’t previously
    0:31:31 available, that’s tremendously important.
    0:31:36 There hasn’t been much academic study that’s gone into the effects of cannabis, what they
    0:31:38 are long term versus short term.
    0:31:43 Now the funding is becoming available to actually do that work.
    0:31:49 San Francisco may be the friendliest jurisdiction imaginable for a minority cannabis entrepreneur.
    0:31:56 One report from 2021 found that nationwide fewer than 2% of owners in the cannabis industry
    0:31:57 are black.
    0:32:03 Even in the places that do profess a strong interest in social equity, the policies and
    0:32:06 politics can be tricky.
    0:32:08 New Jersey, for instance.
    0:32:14 My name is Precious Osigarosa and I am the founder and CEO of Precious Cana Company.
    0:32:18 Precious Cana Company is the first black woman owned pre-roll brand to launch in the state
    0:32:19 of New Jersey.
    0:32:22 A pre-roll in case you have forgotten.
    0:32:27 A pre-roll is cannabis that’s already been rolled for you in a joint-like form so you
    0:32:31 don’t have to do nothing but pull it out, light it up, and enjoy yourself.
    0:32:36 New Jersey began to roll out its recreational cannabis program in 2022.
    0:32:39 We’re in about 20 dispensaries and growing.
    0:32:44 That’s a pretty small footprint to be honest, especially when you hear what Osigarosa was
    0:32:47 hoping for when she got started in the cannabis business.
    0:32:51 Listen, I went up for licensee and I tried to open my own dispensary.
    0:32:55 I sunk my life savings and raised over $2 million to get into the game.
    0:32:57 I was not able to get that dispensary.
    0:33:00 Okay, so let’s back up.
    0:33:01 I never thought I’d be in cannabis, okay?
    0:33:07 If you would have asked me, my parents, I am the Nigerian-born African-American woman.
    0:33:10 When I sat my parents down and told them I was entering the cannabis industry, they
    0:33:14 asked for a PowerPoint presentation as to how this makes sense for my life.
    0:33:16 Before cannabis, I was an aspiring journalist.
    0:33:19 I interned at CNN with Will Blitzer.
    0:33:26 At one point, I just really enjoyed news and the news of the day, New Jersey was weed.
    0:33:29 I remember our governor running on weed and wages.
    0:33:30 That was the news of the day.
    0:33:37 So in 2019, she and a business partner started a CBD delivery company called Roll Up Life.
    0:33:42 CBD is one of the non-intoxicating components of the cannabis plant.
    0:33:45 A lot of people like it for pain and stress relief.
    0:33:50 CBD was already legal in New Jersey, as it was in most states, and Osage Eressay saw
    0:33:56 it as a good entry point, a way to get the feel for the industry while awaiting full
    0:33:58 legalization in New Jersey.
    0:34:03 She and her partner got exposure to the supply chain logistics, the financial regulations,
    0:34:06 and other wrinkles of the cannabis industry.
    0:34:12 The goal was obvious, to be in position to win a license when the time came.
    0:34:13 Everyone wants to have this license.
    0:34:18 This license gives you the green light to cultivate, manufacture, dispense, distribute,
    0:34:20 wholesale, or deliver.
    0:34:23 But the number of licenses are limited, and there was a lot of competition.
    0:34:31 Osage Eressay thought she had a good chance for two reasons, her experience with CBD and
    0:34:35 the fact that as a Nigerian born African-American, she would score high on the social equity
    0:34:39 portion of the New Jersey application.
    0:34:41 So what happened?
    0:34:43 She thinks politics got in the way.
    0:34:45 I’ll give you the short of it.
    0:34:50 Our property was located near another property that was being backed by very high political
    0:34:54 figures within the New Jersey Democratic Party and within the East Orange Democratic Party.
    0:34:59 I even got a call from a council person who said, “Hey, if you move your property, we’ll
    0:35:00 give you your license.”
    0:35:03 I’m like, this is not how it’s supposed to work.
    0:35:10 If we are on a merit-based system and my application proved to meet those merits, why do I have
    0:35:12 to move my property?
    0:35:14 There was a big city hall meeting.
    0:35:19 As they were calling out the names of the winners for the dispensary licenses, Rollup
    0:35:24 Life Inc. was not called, and that was very hard for us.
    0:35:31 I can’t even begin to tell you how much it stretched me as a founder, stretched my family
    0:35:34 when we weren’t able to really overcome that.
    0:35:35 That’s her understanding, at least.
    0:35:39 Here is a statement from a spokesperson for one of the political figures that she says
    0:35:40 received this favor.
    0:35:46 There has been no undue political influence on behalf of the cannabis firm in question
    0:35:50 as they have been treated the same as the other applicant every step of the way and
    0:35:53 have presented a strong application for consideration.
    0:35:59 In any case, without a license to cultivate and manufacture and distribute, Precious Osige
    0:36:03 Arese didn’t have a lot of options.
    0:36:08 She came up with a new company name, Precious Canna, and she partnered with a firm that
    0:36:11 does have a license to cultivate and manufacture.
    0:36:14 All she does is the packaging and marketing.
    0:36:19 So her brand is just one of the many that compete for shelf space in New Jersey cannabis
    0:36:24 shops and even when she succeeds, there isn’t much money to be made.
    0:36:26 Those numbers can be pretty small when you’re in a licensing deal.
    0:36:31 Between 9 and 15 percent is usually the average negotiation you can get as a licensee.
    0:36:36 In order to grow, she would have to expand Precious into other states, but that would
    0:36:41 mean finding a cultivating and manufacturing partner who’s got a license in those places.
    0:36:45 You have to look at where some of these new states are coming online because that provides
    0:36:46 new opportunity.
    0:36:50 When you look at Florida coming online in November, it’s very exciting and you watch
    0:36:55 how larger corporations have already put their stake in the ground for states.
    0:36:59 Florida is really habitated by true leaf.
    0:37:04 They have dispensaries already there on the medical side in Florida.
    0:37:14 So imagine when that flip switch to recreational, be cool to be a true leaf company right now.
    0:37:20 When Osige Eressa mentioned legal cannabis coming online in Florida in November, that
    0:37:21 is still a maybe.
    0:37:24 It’s up to the voters in Florida.
    0:37:28 But there is one more wrinkle in the cannabis economy, more of a loophole than a wrinkle
    0:37:33 actually, which means that even if you are in a state where recreational cannabis is
    0:37:41 not legal, there is still a legal way to buy products with THC, the intoxicating component
    0:37:43 in cannabis.
    0:37:44 Let me explain.
    0:37:50 In 2018, Congress passed a new farm bill as it does every five or six years in order to
    0:37:53 keep the country’s agricultural policy up to date.
    0:37:59 The 2018 version allowed the cultivation of hemp, which are cannabis plants with low THC
    0:38:00 content.
    0:38:03 There again is John Culkins, the drug policy researcher.
    0:38:09 The intent of the farm bill was to allow farmers to grow the cannabis plant for shirts and
    0:38:13 rope and seed and so on.
    0:38:21 And the clause in the bill said a product with less than 0.3% THC will be called hemp
    0:38:22 and will be outside.
    0:38:30 Well, that created three layers of loophole exploitation that’s dysfunctional.
    0:38:38 One is people put the THC in a gummy or a candy bar and said hey, it’s less than 0.3% by weight
    0:38:44 THC, but that doesn’t mean that it’s a negligible quantity of THC, it just means that the weight
    0:38:48 of THC is divided by the weight of the food product.
    0:38:55 And then there was a whole bunch of producing plants with CBD but not THC and then converting
    0:39:03 the CBD into THC or sometimes converting into THC8 because the farm bill specifically was
    0:39:04 THC9.
    0:39:11 THC9, also known as Delta 9 THC, is the most abundant cannabinoid in traditional cannabis.
    0:39:13 It is the one that gets you high.
    0:39:18 But entrepreneurs taking advantage of the farm bill hemp loophole began making a new
    0:39:25 class of intoxicating hemp products which isolate other cannabinoids like Delta 8 THC
    0:39:28 and Delta 10 THC and CBD.
    0:39:34 There’s been a lot of research by now on CBD which doesn’t get you high and is generally
    0:39:38 considered a safe medical treatment for a variety of conditions.
    0:39:45 But cannabinoids like THC8 and THC10 are much less well understood and their psychoactive
    0:39:49 effects can vary from person to person.
    0:39:53 The licensed cannabis industry through the tracking and testing we heard about earlier
    0:39:55 is heavily regulated.
    0:40:00 This signals to consumers that their products are consistent and not dangerous.
    0:40:05 But new players who come into the industry through the hemp loophole may not have the
    0:40:06 same standards.
    0:40:11 And then the most recent loophole is people say, “Hey, wait, wait.
    0:40:13 I grew regular old cannabis.
    0:40:16 It’s just like the stuff that you mean to regulate.”
    0:40:25 But technically, until it’s heated, it’s not THC9, it’s THCA that hasn’t been de-carboxylated
    0:40:27 by the heating process.
    0:40:34 None of that was intended when the Congress tried to let farmers make rope and shirts.
    0:40:42 So all of that stuff is happening totally outside of any regulation.
    0:40:44 And there’s nasty stuff that happens.
    0:40:51 Some of the byproducts of the conversion of the CBD into THC, you can get some unnatural
    0:40:54 cannabinoids that are really not well understood.
    0:40:56 There’s horrible labeling.
    0:41:08 So there’s a lot of ways in which the current situation is much more of a Wild West.
    0:41:15 So even in many states where cannabis is illegal, you can buy intoxicating hemp-based products
    0:41:19 in gas stations, corner stores, online retailers.
    0:41:23 You can even use a credit card, since those sellers are not locked out of the banking
    0:41:29 system the way that licensed cannabis sellers are in states where cannabis is legal.
    0:41:35 One research group puts the U.S. market for hemp-derived cannabinoids at nearly $3 billion
    0:41:39 up from just $200 million a few years ago.
    0:41:44 If you are the kind of person who likes to take note of the unintended consequences of
    0:41:49 well-meaning legislation, well, this was a pretty big one.
    0:41:54 Some lawmakers in Congress are trying to close the hemp loophole in the next farm bill.
    0:41:58 Until then, some states are happy to take advantage.
    0:42:01 Minnesota, for instance.
    0:42:05 Minnesota did recently vote to legalize recreational cannabis, but the infrastructure to start
    0:42:09 selling won’t be ready until at least 2025.
    0:42:16 Until then, hemp-derived products are the only legal recreational THC in Minnesota.
    0:42:20 And there is one product that has proven especially popular.
    0:42:25 If you remember Part 1 of this series, we heard from the author Tom Standage about the history
    0:42:27 of alcohol.
    0:42:31 Here’s another question I asked Standage during that interview.
    0:42:36 Given what you know about alcohol and other drugs, and given what you know about human
    0:42:42 history and civilization and all the connections, technological, economic, political, and so
    0:42:48 on with alcohol, could you imagine a world in which cannabis, perhaps in many different
    0:42:54 varieties and formats and strengths like alcohol, had been the dominant social drug of the past
    0:42:56 few millennia rather than alcohol?
    0:42:58 Yeah, that’s a good question.
    0:43:01 The thing about liquids is that they’re very easy to divide.
    0:43:03 So you can share them very easily.
    0:43:06 There’s a huge amount of flexibility and versatility.
    0:43:09 There are reasons why they’re so embedded into our culture in a way that something that you
    0:43:12 smoke can’t be quite as much.
    0:43:18 So Tom Standage sees the social component of alcohol as unbeatable.
    0:43:24 It is true that for many of us, there is nothing more enjoyable than holding a glass of something
    0:43:27 you love while hanging out with the people you love.
    0:43:29 We’ve been doing this for millennia.
    0:43:35 If cannabis is ever to replace alcohol to any significant degree, it would need to perform
    0:43:36 that function.
    0:43:39 In Minnesota, it does.
    0:43:47 Thanks to the hemp loophole, bars there have begun serving THC drinks alongside booze.
    0:43:51 So when we learned that one of our producers, Augusta Chapman, was going to be in Minneapolis
    0:43:56 this summer, we asked her to show up thirsty at one of these bars with a microphone.
    0:43:59 She went to a place called the Iron Door Pub.
    0:44:01 Can you tell me your name and what you do?
    0:44:02 I’m Rick.
    0:44:03 I’m a bartender.
    0:44:06 How long have you been doing THC here?
    0:44:08 We’ve done it ever since it was legal in the state.
    0:44:11 We have everything from seltzers to more of a soda pop kind of deal.
    0:44:15 We also sell edibles, like puffed popcorn, cookies, gummies.
    0:44:17 And is it popular?
    0:44:18 Very popular, yes.
    0:44:24 A lot of people, when they switch from alcohol over to THC, we can actually go out, socialize
    0:44:28 still, still grab a meal and not feel obligated to sit there and drink water kind of deal.
    0:44:29 Can I try one?
    0:44:30 Which one would you recommend?
    0:44:31 Personally, I really like the flying cloud.
    0:44:33 It kind of tastes like an orange dreamcicle.
    0:44:36 Otherwise, the modest melts are one of our best sellers here.
    0:44:38 The blood orange vanilla raspberry is quite delicious.
    0:44:39 I’ll try the melt.
    0:44:40 That looks great.
    0:44:41 The blood orange.
    0:44:42 Cool.
    0:44:43 Thank you so much.
    0:44:47 All right, we’re going to try it.
    0:44:53 Honestly, if I didn’t know that this had THC in it, I’m not sure that I would be able
    0:44:58 to tell you that it does.
    0:45:01 And I caught up with Augusta when she got back to New York.
    0:45:04 I asked how she enjoyed her visit to the iron door.
    0:45:06 Yeah, I was so high when I got home from that.
    0:45:08 It was not good.
    0:45:09 What did the drinks taste like?
    0:45:12 Were they weedy or boozy or more like soda?
    0:45:15 Yeah, they’re like sodas and they were delicious.
    0:45:18 That’s why I got high because I was like, oh, I’m just going to try it and then I kept
    0:45:19 sipping them.
    0:45:20 How many did you have?
    0:45:26 I had like a quarter of three different ones and they were each 10 milligrams.
    0:45:29 So I got through all the reporting and then I got in the car with my girlfriend and she
    0:45:30 was driving us home.
    0:45:36 And I was like, whoa, don’t let me talk to your mom when we get back.
    0:45:43 I think what’s happening in the Minnesota THC adult beverage market is really very important
    0:45:49 and very innovative and could interact with alcohol consumption in ways very differently
    0:45:53 than other cannabis products do.
    0:45:55 That again is John Culkins.
    0:46:02 What I mean is THC adult beverages might substitute for alcohol even if smoked, vaped, dabbed
    0:46:04 cannabis does not.
    0:46:11 The other thing that’s really interesting in Minnesota is the degree of responsibility
    0:46:16 that the retailers are demonstrating in this space.
    0:46:24 So I think what’s going on is that the sellers, the restaurants and bars are alcohol licensees
    0:46:28 and they care a lot about holding onto that alcohol license.
    0:46:34 So they’re trying very hard not to get in trouble, not to serve someone who ends up
    0:46:37 being an impaired driver, for instance.
    0:46:46 And I think that is potentially creating a much healthier industry than the aggressive
    0:46:52 Wild West culture that is common in a large number of the cannabis firms.
    0:46:59 So I think we should be watching what’s happening in Minnesota with great interest.
    0:47:01 And I went back to Nikesh Patel.
    0:47:07 The first Nikesh Patel we spoke with today, the CEO of Mammoth Distribution, the LA cannabis
    0:47:11 company that’s one of the biggest cannabis beverage manufacturers out there.
    0:47:15 I mean, for me personally, it’s way better than alcohol.
    0:47:18 It feels better, like there’s this whole Cali sober thing.
    0:47:21 Cali sober meaning I don’t drink alcohol, but I consume cannabis, correct?
    0:47:22 Yeah, exactly.
    0:47:28 I think it’s like a mix of calories and just like the negative effects that you’ve learned
    0:47:33 about, you know, drunk driving and aggression and all that kind of stuff.
    0:47:34 Let me ask you to just take a step back for a minute.
    0:47:38 Try to pull yourself back from the momentary chaos.
    0:47:44 I’m curious to know where you see the industry being in five or 10 years.
    0:47:52 And what I really want to know is, how much do you think that cannabis might replace alcohol?
    0:47:59 So I think in five years, I see the ability to recreationally consume THC and derivatives
    0:48:03 of it is going to be way more accessible.
    0:48:05 The impact on alcohol, you’re already kind of seeing it, right?
    0:48:10 This is the first time that there’s more daily cannabis users and daily alcohol users.
    0:48:16 I do see a variety of tie-ups of various sorts, Green Thumb Industries, GTI.
    0:48:20 I read very recently, “Expressed interest in merging with Boston Beer, maker of Sam
    0:48:21 Adams beer.”
    0:48:25 I see that Tilray, the cannabis company, announced an expanded strategic partnership
    0:48:31 with Novartis, the pharmaceutical firm to work on medical products in legal markets.
    0:48:36 Do you think the most likely outcome for your company, Mammoth, will be some kind of tie-up
    0:48:39 with some more established firm like that?
    0:48:41 Yeah, I think that’s the hope, right?
    0:48:46 Whether it’s alcohol or even cigarette companies have said they need to move their money away
    0:48:48 from cigarette sales.
    0:48:54 I hope that also the non-sin businesses might be interested.
    0:48:57 Coca-Cola might be interested in an average that does XYZ.
    0:48:59 I mean, Coca-Cola started with cocaine.
    0:49:00 Yeah.
    0:49:01 No, you’re right.
    0:49:02 You’re right.
    0:49:07 But I also think if the landscape becomes more clear, they’ll just be more general investment.
    0:49:10 So I think cannabis will stand on its own legs, too.
    0:49:17 I think it will be as big, if not bigger, than alcohol in total market size.
    0:49:21 If the cannabis market is going to get that much bigger, they’re going to need a lot
    0:49:23 of cannabis.
    0:49:25 We grow killer weed.
    0:49:31 Coming up next time in part three of our series, what does it take to be a successful
    0:49:33 cannabis business person?
    0:49:34 This is outdoor flower.
    0:49:38 These fan leaves are starting to turn yellow, so they’re not really doing anything for
    0:49:39 the plant.
    0:49:44 We spend the day on a cannabis farm, watching everything from seed to sale.
    0:49:45 That’s next time on the show.
    0:49:47 Until then, take care of yourself.
    0:49:50 And if you can, someone else too.
    0:49:52 Freakonomics Radio is produced by Stitcher and Renbud Radio.
    0:49:58 You can find our entire archive on any podcast app, also at Freakonomics.com, where we publish
    0:50:00 transcripts and show notes.
    0:50:04 This episode was produced by Dalvin Abelagi and Zac Lipinski.
    0:50:08 All thanks this week to Coleman Strump for his weed store data and analysis.
    0:50:12 Our staff also includes Alina Coleman, Augusta Chapman, Eleanor Osborn, Ellen Frankman, Elsa
    0:50:17 Hernandez, Gabriel Roth, Reg Rippon, Jasmine Klinger, Jeremy Johnston, John Schnarrs, Lyric
    0:50:22 Bowditch, Morgan Levy, Neil Coruth, Rebecca Lee Douglas, Sarah Lilly, and Theo Jacobs.
    0:50:25 Our theme song is Mr. Fortune by the Hitchhikers.
    0:50:27 Our composer is Luis Guerra.
    0:50:31 As always, thank you for listening.
    0:50:37 Are we done recording?
    0:50:45 The Freakonomics Radio Network, the hidden side of everything.
    0:50:45 Stitcher.
    0:50:49 [MUSIC PLAYING]

    There are a lot of reasons, including heavy regulations, high taxes, and competition from illegal weed shops. Most operators are losing money and waiting for Washington to get out of the way. In the meantime, it’s not that easy being green. (Part two of a four-part series.)

     

    • SOURCES:
      • Jon Caulkins, professor of operations research and public policy at Carnegie Mellon University.
      • Adam Goers, senior vice president of The Cannabist Company and chairperson of the Coalition for Cannabis Scheduling Reform.
      • Precious Osagie-Erese, founder and C.E.O. of Precious Canna Co.
      • Nikesh Patel, C.E.O. of Mammoth Distribution.
      • Nikesh Patel, director of the San Francisco Office of Cannabis.
      • Tom Standage, deputy editor of The Economist.

     

     

  • 607. Is America Switching From Booze to Weed?

    AI transcript
    0:00:04 [MUSIC]
    0:00:08 On a recent Monday morning, we found ourselves up in the Berkshire Mountains in the town of Sheffield,
    0:00:14 Massachusetts. There is a dark gray building with a big front porch right on Route 7.
    0:00:21 It is home to a retail shop called The Pass. It was pretty busy, especially for Monday morning,
    0:00:25 and the customers were happy to tell us why they were buying what they were buying.
    0:00:31 It helps me with pretty much everything. Get through the day, wake up, eat, my anxiety.
    0:00:37 This is pretty much the only way to get my brain to shut off, to actually fall asleep.
    0:00:42 There’s so many different ways you can use it. This is my relaxation. It just takes the edge off.
    0:00:47 For me, it just makes everything a little bit better. Everyone could benefit off of it in their
    0:00:55 own way. It’s, you know, medicine without medicine. What is this alleged elixir? This medicine without
    0:01:03 medicine? I got some weed. It’s all cannabis. I absolutely love it. It’s just nice to know that
    0:01:13 it’s legal now. You may know it as weed or marijuana or hemp or pot or, if you’re old enough, maybe
    0:01:22 know it as grass or reefer or herb. It has gone by many names in many places and many times.
    0:01:30 Mary Jane, sticky icky, chronic, devil’s lettuce, gas, ganja, 420 dope, green goddess,
    0:01:37 flower, zaza, bud, shape, skunk, greenery, kush. We are just going to call it cannabis. That’s
    0:01:45 the name of the actual plant. The most famous component of the plant is THC or tetrahydrocannabinol.
    0:01:51 That’s the one that gets you high. The second best known component is CBD or cannabidiol,
    0:01:55 which is not intoxicating and tends to be used for things like pain relief.
    0:02:01 But there are more than 140 cannabinoids found in different strains of the plant.
    0:02:07 You probably already know that cannabis is now legal in many states, even though it remains
    0:02:13 illegal federally. And you may know that it comes in many forms. Flower, which is just the dried
    0:02:19 plant for people who smoke, but also edibles, tinctures, beverages, chewing gum, chocolate,
    0:02:24 nasal spray, quite a few more. But here’s something I bet you don’t know. In the U.S.
    0:02:31 today, there are more DND users of cannabis that stands for daily or near daily than there are
    0:02:38 daily or near daily users of alcohol. Let that sink in for a minute. Here’s what we heard
    0:02:44 up at the pass. It’s better if you’re going to use it every day, you know, you can drink every day
    0:02:49 and be okay. If I’m in like a social situation, I’m not going to grab a drink. I’m going to
    0:02:55 grab some weed. I was a teenage alcoholic, but now I’ve been smoking weed for 60 years and I’m
    0:03:01 still alive. Alcohol is still overall much more popular in the U.S. But for a significant group
    0:03:08 of people, cannabis has become the drug of choice. In a recent Gallup survey, 17% of Americans reported
    0:03:16 using cannabis that’s up from 7% just 10 years earlier. How did this happen? And what does it mean?
    0:03:22 That’s what we want to find out in this special four-part series on cannabis.
    0:03:29 I think if everyone who was using alcohol was instead using cannabis, it would be a much safer,
    0:03:35 healthier world. In today’s episode, part one, the harms of alcohol are well-established. How about
    0:03:43 cannabis? You’re talking about needing a whole army to study the effects of cannabis from these
    0:03:49 new products that we still do not know anything about. In part two, we will get into the bizarre
    0:03:55 economics of this industry, which haven’t worked out the way anyone predicted. It’s hard to articulate
    0:04:02 the regulatory complexity of every single thing you have to do. In part three, we will visit the farm.
    0:04:11 Smells good, doesn’t it? And in part four, we will try to sort out a future. Americans, Democrat,
    0:04:16 Republican, independent are all supportive of seeing major cannabis change. Along the way,
    0:04:22 we will hear from cannabis industry insiders, medical doctors and legal scholars, regulators and
    0:04:32 politicians, and a few happy customers. It tastes good. I’m really energized. I thought I would be
    0:04:37 asleep. Oh, I’m enthralled. I’m so excited. I’m excited too. We’ll see you after the…
    0:04:54 This is Freakonomics Radio, the podcast that explores the hidden side of everything with your
    0:05:08 host, Stephen Dubner. So let me tell you how this series began. It did not begin as a series about
    0:05:14 cannabis. We thought we were going to make a series about the economics of the alcohol industry.
    0:05:19 Well, we say cheers and we raise our glasses. We’re doing something extremely ancient.
    0:05:24 Our first interview was with Tom Standage. He’s an editor at The Economist in London.
    0:05:29 And I’m also the author of a book called A History of the World in Six Glasses.
    0:05:34 A History of the World in Six Glasses is a very good book. And the interview with Standage
    0:05:40 was interesting for sure. He told us that beer is probably the oldest alcoholic beverage and
    0:05:46 that it was discovered accidentally. People would have made a sort of barley or wheat rich soup,
    0:05:50 and then they might have left it out and it would have naturally fermented with wild yeasts.
    0:05:54 There are these pictures of people drinking beer in Mesopotamia from 5,000 years ago,
    0:05:57 and they’re all drinking through straws from the same vessel.
    0:06:00 Standage told us that beer was central to ancient economies.
    0:06:05 We know that the workers who built the pyramids as long thought that they were enslaved.
    0:06:09 Actually, they weren’t. They were paid. And they were paid partly in beer.
    0:06:15 And he told us about the beer theory of civilization. That’s the idea that the human embrace of alcohol
    0:06:21 predated the age of agriculture. The beer theory of civilization is that people settled down
    0:06:26 close to wild stands of things like barley in order to be sure that they would have a reliable
    0:06:32 supply and therefore a reliable supply of beer. But growing barley and wheat on purpose, cultivating
    0:06:39 them as crops, that would produce even more raw material for more beer, as well as food for eating,
    0:06:44 of course. Man does not live on booze alone, although I have known a few people who tried.
    0:06:50 But the reality is that many people have really liked alcohol for a really long time.
    0:06:56 You have to look at alcohol as a source of intellectual stimulation, as a source of joy,
    0:06:58 a source of calories to keep people alive.
    0:07:03 How important historically was alcohol just to plain human survival in terms of delivering
    0:07:08 water that didn’t make people sick and delivering calories that were substantial and affordable
    0:07:13 and portable? Yes, alcohol does both of those things. If you’re worried about safe water supply,
    0:07:17 it does work as a purification technology. For example, the Greeks mixed water and wine.
    0:07:22 They thought that this was to make the wine safe, that if you drank undiluted wine,
    0:07:27 you’d go nuts. But actually, the wine was making the water safe because the tannins were antibacterial.
    0:07:32 So alcohol has played a key role in human civilization since the early days,
    0:07:38 and in many places, it still does. We drink to celebrate. We drink to sanctify. We drink to mourn.
    0:07:43 We drink with old friends and with people we’re just getting to know. We drink when we want to
    0:07:48 shift a mental gear. Tom Standage, for instance, plays drums in a band.
    0:07:53 I play the drums better after a pint of Guinness. I’m more relaxed, but also I’m not
    0:07:57 overthinking things too much. I’m probably prepared to take a few more risks and
    0:08:01 try a few more creative things. I do think there is a sort of useful
    0:08:05 blurriness that can come from drinking the right amount of alcohol.
    0:08:11 The pursuit of that useful blurriness is, in some places, a national pastime.
    0:08:17 In the US, more than 60% of us drink, at least sometimes, and that has been true for over 150
    0:08:22 years, and COVID produced a 5.5% rise in per capita alcohol consumption.
    0:08:28 But how much you drink has a lot to do with how old you are and not in the way you might expect.
    0:08:32 The main thing that we’ve observed on both sides of the Atlantic is that younger people
    0:08:37 are drinking less, or not at all, in many cases. And certainly my generation, so I’m in my 50s,
    0:08:44 we seem to be drinking a lot more. Indeed, 85% of Americans aged 35 to 50 now drink a much
    0:08:50 higher number than in the past. And binge drinking among this group, defined as four drinks within
    0:08:56 two hours for a woman and five drinks for a man, that is now at 30%, the highest ever recorded.
    0:09:03 So yeah, we’re talking to Tom Standage about alcohol, and it’s super interesting. I’m thinking
    0:09:09 about that Mesopotamian history. I’m thinking about alcohol as a social lubricant. I’m thinking
    0:09:16 about its antibacterial benefits. But then I start digging into the data about the harms of alcohol,
    0:09:24 and I am just blown away. According to the CDC, the Centers for Disease Control, roughly 180,000
    0:09:29 Americans die every year from excessive alcohol use. And that number has been rising lately,
    0:09:36 driven by an increase in women dying from alcohol use. Around 15,000 of these alcohol-related
    0:09:41 deaths come in motor vehicle crashes. And NHTSA, the National Highway Traffic Safety Administration,
    0:09:48 reports that alcohol use is up in their data too. But let’s put aside death. The CDC estimates that
    0:09:55 alcohol use costs the US about a quarter of a trillion dollars annually. Most of that in lost
    0:10:03 workplace productivity, but there’s $28 billion in healthcare costs, $25 billion in criminal justice
    0:10:10 costs, on and on. And so I got to thinking. I know that alcohol has been around for a long time,
    0:10:17 and I know it serves many purposes for many people, and I personally like it. But if you take all the
    0:10:23 advantages of alcohol and weigh them against the harms, alcohol does not come out looking very good.
    0:10:29 Now, you may be thinking, what about the health benefits of alcohol? You’ve seen all those TV news
    0:10:35 pieces about red wine, preventing cancer, that kind of thing. I started wondering about that too,
    0:10:40 so I called up Michael Siegel, a public health researcher at Tufts. He said you have to follow
    0:10:47 the funding. Most of the research which has been funded by alcohol companies has reported
    0:10:53 that there is a benefit to drinking moderate amounts of alcohol. On the other hand, most of
    0:10:59 the research that has not been funded by the industry has found that there actually is not
    0:11:07 a benefit and that overall mortality is higher. Maybe we shouldn’t be surprised by this news.
    0:11:13 The same thing happened with cigarettes and sugar. An industry will commission researchers
    0:11:18 from a top university to produce a study that winds up miraculously highlighting only the
    0:11:24 benefits of their product. Some public health experts still say that moderate alcohol use
    0:11:30 isn’t a big deal, but others say that alcohol is essentially toxic. We are not going to be able
    0:11:35 to settle that argument today. We are making a different argument. Here’s what we were saying.
    0:11:42 Given that the societal costs of alcohol are so large and that any health benefits are probably
    0:11:51 overhyped and given that cannabis use is soaring, is it possible that we have entered the era of
    0:11:58 cannabis replacement? And if so, what will be the effects of that? Those seem like interesting
    0:12:03 questions to me. I hope they seem interesting to you too, because that’s the series we wound up
    0:12:09 making. Next step, now we need a little cannabis history. That’s coming up after the break.
    0:12:12 I’m Stephen Dubner and this is Freakonomics Radio.
    0:12:28 Okay, for some history on cannabis, we are going to rely on two people. The first is Ryan Stoa.
    0:12:33 I’m an associate professor of law at the Louisiana State University Law Center.
    0:12:39 Stoa has written a book called “Craft Weed – Family Farming and the Future of the Marijuana
    0:12:44 Industry.” He also published a fascinating article in the MIT Press Reader called “A Brief Global
    0:12:50 History of the War on Cannabis.” So you can see where he’s coming from. We’ve had a lot of attention
    0:12:56 in the last several decades on the legalization question, should we legalize? And that feels
    0:13:01 like it’s been answered. The next question is, how should we regulate it? And maybe the bigger
    0:13:07 picture question is, what do we want the cannabis industry to be? The second person we’ll hear from
    0:13:13 is John Culkins. I’m a professor of operations research and public policy at Carnegie Mellon
    0:13:19 University’s Heinz College. And what does operations research mean? Operations research these days may
    0:13:25 be better known as analytics. The name comes from World War II when it was analyzing military
    0:13:30 operations. The best way to think about it is engineering and applied mathematics applied
    0:13:36 to solving practical decision problems. And what does that have to do with cannabis or other drugs?
    0:13:41 When I was in grad school, I wanted to study something that would help make the world a better
    0:13:48 place. I assumed that was going to be energy, environment, telecommunications. But I recognized
    0:13:53 that at that time, if you surveyed the American public, they said the number one problem facing
    0:14:00 the nation was illegal drugs. And so I decided I would focus on that. Can I just ask, what’s your
    0:14:08 personal view of drugs? And let’s use drugs to include, you know, nicotine, caffeine, marijuana,
    0:14:15 etc. etc. etc. What do you like and not like? You can ask, I won’t answer. I’m highly committed
    0:14:21 to the idea that science should be observer independent, dispassionate and objective.
    0:14:29 Okay, let’s go with dispassionate and objective. By the way, Culkins is the researcher who put
    0:14:36 together the data I cited earlier about the massive rise in daily or near daily use of cannabis
    0:14:42 and how it has eclipsed alcohol. He pulled that data from the U.S. National Survey on Drug Use and
    0:14:48 Health. For 15 years, I’ve been drawing this graph and every single year I’ve watched it
    0:14:55 increase. Back in 1992, there were 10 times as many Americans who self-reported daily or
    0:15:02 near daily drinking as self-reported daily or near daily cannabis use. But cannabis use has
    0:15:12 grown enormously since that nadir in 1992. And finally, after the 2022 survey data became available,
    0:15:17 that was the first year in which the cannabis line crossed the alcohol line.
    0:15:22 Okay, so how did we get here? Let’s start the cannabis story at the beginning.
    0:15:26 Cannabis has a long, long history going back thousands of years.
    0:15:28 And Ryan Stoa again.
    0:15:32 There are some people that believe cannabis may have been one of the original crops that
    0:15:37 brought about the Neolithic Revolution when humans transitioned from being hunter-gatherers
    0:15:44 to being a more fixed agricultural species. The plant is so versatile and can be used for food,
    0:15:48 it can be used for fiber, it can be used for religious or spiritual or just recreational
    0:15:57 purposes. Did it tend to be more popular among elites or no? It was probably consumed by all
    0:16:02 classes of people. But when we saw prohibition measures take place around the world, it was
    0:16:08 generally aimed at the lower classes. Drug prohibition historically has been used as a tool
    0:16:15 of oppression. So that’s not necessarily the drug itself that the ruling classes are concerned about,
    0:16:20 but rather using drug prohibition as a tool to make sure that there isn’t a religious or
    0:16:25 economic changing of the guard, so to speak. The Catholic Church hasn’t been terribly fond
    0:16:32 of cannabis over the years. Pope Innocent VIII issued a Papal ban on cannabis in the first
    0:16:39 year of his papacy. This was in 1484. So clearly a huge priority for him, really wanted to promote
    0:16:45 this idea that fulfillment comes in the afterlife and we want to reject these momentary pleasures
    0:16:51 that we feel in this body that we have now. What is the typical prohibitionist’s playbook?
    0:16:57 Associate the plant with violence. Associate cannabis with depravity. Associate with other
    0:17:04 dangerous drugs. Portrait cannabis users as religious extremists or dangerous minorities
    0:17:09 and help turn the tide against that population and towards prohibition.
    0:17:12 Those are all tried and true strategies that we’ve seen over the years.
    0:17:18 Okay, and how about a brief history of cannabis in the U.S.?
    0:17:22 John Adams writes this two-page to-do list on his way to the Continental Congress.
    0:17:29 On page one of the to-do list is “hemp to be encouraged.” On page two was the Declaration
    0:17:35 of Independence. So higher up on his priority list, perhaps. I mean, American farmers were
    0:17:40 growing hemp for quite a long time, even into the 20th century and were a dominant force.
    0:17:45 It’s absolutely true that in say the 19th century Americans were growing the cannabis plant, but
    0:17:53 they were growing it to make rope and shirts and so on. The use of cannabis as an intoxicant
    0:18:00 really did not become a major issue until the 20th century. And honestly, even in the first half
    0:18:07 of the 20th century, it was pretty darn uncommon. Early 20th century, we saw psychoactive marijuana
    0:18:14 strains coming up from Mexico or Latin America popularized in the U.S. South and of course,
    0:18:20 went northward, embraced by proponents and fans and musicians of the jazz era.
    0:18:26 And so as jazz spread around the United States, so too did marijuana use.
    0:18:33 Our original federal law, the Harrison Narcotics Act of 1914, was passed primarily because
    0:18:40 do-gooder Americans wanted to push back against the British opium trade in China
    0:18:48 and didn’t want to be over there without a U.S. law saying that the opioids are problematic.
    0:18:53 But the Harrison Narcotics Act of 1914 didn’t say anything about cannabis, which was still
    0:18:56 technically legal. That was about to change.
    0:19:03 So it was first prohibited by states, the federal government came to the party late?
    0:19:07 In 1915, California became the first state to criminalize cannabis.
    0:19:12 By 1931, a majority of states had done the same and in 1937,
    0:19:18 Congress completed the ban by passing the Marijuana Tax Act, marijuana being the term used
    0:19:24 in Mexico. The regulators were hoping to give the drug a dangerous south of the border vibe.
    0:19:31 Throughout the 20th century, the United States passed a variety of drug-specific federal laws
    0:19:38 in 1970 that somewhat incoherent assemblage of laws were brought together into an integrated
    0:19:44 framework called the Controlled Substances Act. It’s a myth that that was the beginning of the
    0:19:50 quote-unquote war on drugs. The laws had been passed long before. It was just a reorganization.
    0:19:58 It was President Nixon who signed the Controlled Substances Act. He called drug use public enemy
    0:20:01 number one. And what did Nixon think about cannabis?
    0:20:07 Here’s what he told some White House aides as captured by his own secret tape recording system.
    0:20:12 I know that it’s not particularly dangerous.
    0:20:17 I know most of the kids are for legalizing it.
    0:20:25 But on the other hand, it’s the wrong signal at this time.
    0:20:31 Over the next few decades, the signals began to change. Many millions of people were using
    0:20:37 cannabis, which propped up a massive black market. Millions of people were arrested for
    0:20:42 selling and using cannabis. And that struck many people as absurd, especially for a drug that
    0:20:49 even Nixon didn’t think was particularly dangerous. Public sentiment shifted. And in 1996, California
    0:20:56 approved cannabis for medicinal use. Physicians prescribed it for chronic pain, multiple sclerosis,
    0:21:01 bowel disease, glaucoma, epilepsy, and other conditions. Several states followed California’s
    0:21:09 lead. And then in 2012, Colorado and Washington became the first states to fully legalize cannabis
    0:21:16 for recreational use. Back in the Nixon era, only 15% of Americans said they supported legalization
    0:21:24 for everybody over 21. Today, that number is 70%. Cannabis is fully legal in 24 states as well as
    0:21:30 Washington, D.C. And it’s approved for medical use in another 14 states. And as we’ve been hearing,
    0:21:35 consumption is way up. So who’s doing the consuming?
    0:21:42 If we do a pie chart of who’s using cannabis, it’s absolutely dominated by daily, near daily
    0:21:46 users. The people who only use once or twice a week are an unimportant footnote from the
    0:21:52 perspective of industry. At one time, people thought marijuana was a young person’s drug.
    0:22:01 It is not that 1960s association cannabis and college that stopped being true long ago.
    0:22:09 The median age of the user of the median day of use is 35. It’s not a young person’s substance
    0:22:16 anymore. Of those daily and near daily users, about half report some evidence of having a
    0:22:25 substance use disorder. So an important segment of the market is consumption by people who are
    0:22:29 providing evidence that they don’t have full control over their substance and it’s harming them.
    0:22:35 But are they going to commit violent acts? No. Are they going to dive in overdose? No.
    0:22:42 It’s just a very different and far less scary profile of problems.
    0:22:52 Cannabis advocates insist that it is not addictive. John Colkins’ data suggests that at the very
    0:22:58 least it is habit forming. So I wanted to hear from someone who knows more about addiction.
    0:23:03 I’m Yasmin Herd. I’m the director of the Addiction Institute at the Icon School of Medicine at
    0:23:09 Mount Sinai in New York. I am a neuroscientist who studies the neurobiology of substance use
    0:23:14 disorders. Herd is one of the few researchers who studies the addictive potential of cannabis.
    0:23:18 People are like, Yasmin, why are you studying cannabis? This is not an addictive drug. You
    0:23:25 should be studying cocaine. However, the number of investigators has increased as the problem of
    0:23:33 cannabis has risen and as the legalization has risen. She thinks the US has rushed into legalization.
    0:23:38 There was this dramatic switch where cannabis was considered the evil devil and then it was
    0:23:44 switched like, okay, let’s start making money. Let’s put a dispensary on every block. I asked
    0:23:50 Herd how she got started as an addiction researcher. When I told my really close friends that I was
    0:23:56 going to focus on studying addiction, they all laughed or didn’t believe me because
    0:24:00 they were like, Yasmin, you don’t use drugs. How can you go into a field that you actually
    0:24:07 have not done anything? They were like, Yasmin, you’re from Jamaica and you still don’t use cannabis.
    0:24:11 But with all the stress that occurs in my life, I may actually start using CBD though.
    0:24:21 No, I have not imbibed in terms of smoking cannabis. I think I’m just a chicken because I would need to
    0:24:29 know every single component of the product. But really my path down to this science of addiction
    0:24:36 really came with looking at neurodegenerative disorders like Parkinson’s disease. Parkinson’s
    0:24:42 disease is the lesion of these dopamine cells in the brain. But these dopamine cells are also
    0:24:50 critical for reward, motivation, gold-directed behavior. When you study these Parkinson’s
    0:24:56 animal models, you can pharmacologically tease that system with dopamine drugs like cocaine and
    0:25:02 amphetamine. I was fascinated by how these drugs completely changed behavior. That was how I got
    0:25:09 started. How much variance is there among the human species in the way that they will process a given
    0:25:13 drug or the way that the dopamine response will happen? If you were to take 100 people
    0:25:18 observationally equivalent in terms of weight and makeup and so on and give them the same amount of
    0:25:22 drug, let’s say it’s cannabis just for the sake of this conversation, how much variance is there
    0:25:28 in both the short and long-term effects? There’s a lot of variance when individuals take drugs,
    0:25:32 even if you give them, like you said, the same amount and their same body weight and so on.
    0:25:40 Part of that is driven by genetics, environment. Early life events, for example, can modulate
    0:25:47 the amount of particular transmitters that you have, and even your stress response can then
    0:25:53 cause downstream effects in terms of how the drug may have a bigger effect than it would in another
    0:26:01 person. The variability between individuals is enormous. What’s the difference between how cannabis
    0:26:05 and alcohol act on the brain? When we talk about cannabis, we’re talking about
    0:26:12 THC, the main psychoactive component of cannabis. That binds to cannabinoid receptors in our
    0:26:18 brain and body, and these cannabinoid receptors are on cells that indirectly regulate dopamine.
    0:26:22 Alcohol is a little bit more complex. I thought you were going to say sloppy.
    0:26:27 Actually, yes, that’s a good word. It’s a little bit more sloppy.
    0:26:34 Tell me what you can about the addictive qualities or magnitude of using cannabis. Just give me a
    0:26:38 kind of overview, and then we’ll figure out how to drill down into that.
    0:26:40 Okay. That may take a couple of hours.
    0:26:42 That’s fine. I’ve got time.
    0:26:51 So THC, that’s associated with reward, the reinforcement. THC binds to the cannabinoid
    0:26:58 receptors in the brain. The cannabinoid receptors are there not for THC. They’re there for our
    0:27:04 endogenous cannabinoid ligands. Okay. Did you say that we have endogenous cannabinoid ligands?
    0:27:06 Correct. We have endogenous cannabinoid ligands.
    0:27:09 Okay. I don’t know what really any of those words mean.
    0:27:14 So if you would, tell me more about that.
    0:27:22 These endogenous cannabinoid ligands are there mediating the actions of multiple biological
    0:27:27 processes. In fact, cannabinoid receptors are expressed throughout practically every organ
    0:27:36 in the body, and they modulate aspects of cell development, homeostasis in the brain. They are
    0:27:43 important for regulating every single aspect from mood, motor function, every single thing.
    0:27:47 It sounds like there’s nothing they’re not potentially connected to.
    0:27:53 Exactly. Exactly. They’re there from very early in utero because our endogenous cannabinoid systems
    0:28:00 are critical for hard wiring of the brain in the sense of laying down the blueprint on which
    0:28:08 the cells are formed and the pathways that they make. So when people consume cannabis, THC will
    0:28:16 bind to the receptor, the endogenous cannabinoid receptors. It’s binding at a much higher concentration
    0:28:25 than the endogenous ligands. So you already have THC binding at supra physiological levels.
    0:28:32 The original plant on the planet that was like two to four percent THC. Today, you have concentrations
    0:28:41 of THC depending on the product that can go from 10 to 90 percent THC. So that becomes a huge issue.
    0:28:47 We know that for every addictive substance, the higher the concentration of that particular
    0:28:53 chemical, the greater the addiction risk. I’ve seen you and others argue that the legalization
    0:28:59 of cannabis in the US has really outpaced the research and the science. If I had to guess,
    0:29:04 I would say that it’s simply not known how cannabis at that potency will react
    0:29:08 or will affect people short-term and especially long-term. Is that about right?
    0:29:13 That’s completely correct. No one has studied the majority of products that are out there today.
    0:29:20 You have hundreds of products. So scientists were still studying these low concentrations of THC
    0:29:25 on so many different biological processes because it is complex. There’s so many things
    0:29:32 that we need to know about cannabis effects on health. What’s cannabis effects on cognition?
    0:29:38 What’s cannabis effects on reward addiction? What’s cannabis effects on motor function?
    0:29:45 So you’re talking about needing a whole army to study the effects of cannabis from a scientific
    0:29:50 perspective on these new products that we still do not know anything about.
    0:29:57 Cannabis was considered a schedule one drug by the DEA, meaning that it was highly addictive
    0:30:05 with no medicinal purpose. And that drove a lot of challenges for researchers because I don’t
    0:30:09 think people realize in order to do this research with a schedule one drug, there are a lot of
    0:30:15 regulatory hurdles that you have to jump through. Even being able to give a small dose of THC to
    0:30:23 our rat, it’s a thousand page things. So millions of people are using a drug whose risks, according
    0:30:29 to Yasmin Heard, are not fully understood. We will hear more later in this series about how
    0:30:35 cannabis may soon be removed from that schedule one drug listing. Coming up after the break,
    0:30:41 how do the risks of cannabis compare to the risks of alcohol? I’m Steven Dubner. This is
    0:30:55 Freakinomics Radio. We’ll be right back. In the past, we have made not one but two series about
    0:31:02 the ongoing opioid crisis in the US. That crisis had its roots in legal drugs that were prescribed
    0:31:08 by physicians. As we move ahead with widespread cannabis legalization, some people like Mount
    0:31:15 Sinai addiction researcher Yasmin Heard may see the opioid crisis as a warning. Be careful when
    0:31:21 you introduce new drugs into the national blood stream. But there is another public health crisis
    0:31:28 that is so widespread, so baked into our culture that we rarely think about it. Here again is Michael
    0:31:34 Siegel, the public health researcher at Tufts we heard from earlier. The effects of alcohol in our
    0:31:40 society are overwhelming. At least 100,000 deaths a year are attributable to alcohol. Tremendous
    0:31:47 amount of violence is related to alcohol, sexual abuse, sexual assault. Have there been studies
    0:31:54 between populations that drink and don’t drink for non-health reasons, certain religious groups
    0:31:58 that just don’t consume alcohol? I would think that’s a pretty nice study cohort. There’s no
    0:32:04 question that when you look at populations that don’t drink alcohol, that there’s a massive
    0:32:11 decline in morbidity and mortality. The classic studies were done with a group called Seventh
    0:32:17 Day Adventists who for religious reasons do not drink. One could say there are different
    0:32:22 characteristics among that population that may not relate to alcohol consumption at all that may
    0:32:27 be accounting for the different outcomes, yes? Yeah, absolutely. But if you look at these studies
    0:32:33 they’ve done a lot of work to control for those variables. They’re really well done studies and
    0:32:39 even controlling for some of those other lifestyle factors, they’re still finding an effect. I want
    0:32:45 to make it clear that in no way am I arguing that we should be prohibiting alcohol use. We tried that,
    0:32:52 didn’t work. How pervasive would you say has been the problem of the alcohol industry influencing
    0:32:59 academic research into alcohol? It’s been a huge problem. It continues to be a huge problem.
    0:33:06 The biggest problem is not necessarily that there is research being done that is funded
    0:33:13 by alcohol companies. The real problem is that researchers who are conflicted because of accepting
    0:33:20 that funding have either accepted or put themselves into positions where they are making policy
    0:33:26 recommendations. There are some very specific things that trouble me about what we’re not doing
    0:33:34 about alcohol that I think need to be changed. One is the whole issue of regulation of advertising.
    0:33:39 I think that we are just completely letting the alcohol companies get away with murder essentially.
    0:33:45 They can do anything they want. They can target youth. They can have very attractive images of
    0:33:50 alcohol use that appeal to youth. We don’t allow that with tobacco. I don’t see any reason why we
    0:33:55 should allow it with alcohol. There are very few organizations that are talking about alcohol as a
    0:34:01 carcinogen. It is a carcinogen and everyone should know that. When we were talking earlier about
    0:34:08 industry funding of research for alcohol or tobacco or sugar, etc., I’m curious what you
    0:34:15 can tell us about cannabis. Is that an issue yet? I think cannabis is a little bit different in that
    0:34:23 the health effects are very different. The issue with cannabis is much more behaviors, for example,
    0:34:29 driving under the influence of cannabis than long-term effects of cannabis use on chronic disease.
    0:34:36 There is some evidence that cannabis, when smoked, does have long irritants,
    0:34:44 but for the most part we’re not dealing with the same magnitude of chronic disease as when we’re
    0:34:51 talking about something like tobacco or alcohol. What if I say, well, that may be the case now,
    0:34:56 based on the known science about alcohol versus cannabis, but there’s less known science about
    0:35:03 cannabis. Until quite recently, there’s been much, much, much less use of cannabis than alcohol.
    0:35:08 Maybe we just don’t know yet. Alcohol is the devil you know, at least. What would you say to
    0:35:14 that argument? I think that there’s enough that we do know about cannabis that we can definitively
    0:35:19 say that it’s not going to create the kind of health effects that we see with alcohol. What we
    0:35:26 don’t know is really if there are long-term risks of long-term use of cannabis. The concerns are more
    0:35:33 in terms of the way that cannabis use might interfere with someone’s life, especially youth,
    0:35:38 than necessarily that we’re going to see hundreds of thousands of people dying from it.
    0:35:44 I think that’s unlikely. I think it’s really important for us to understand, for policymakers
    0:35:52 especially, to understand that a regulated market where a product is legal is very often much safer
    0:36:00 than an unregulated product. Potentially, if it’s not well-regulated, contaminants or toxins
    0:36:06 getting into these products. We saw that with THC vaping products where we had this outbreak of
    0:36:10 lung disease where I think at least 50 or 60 people died.
    0:36:17 What’s known so far about the addictive nature of cannabis? I’ve read reports all over the map on
    0:36:24 that. There’s no question that cannabis qualifies as an addictive drug, but the major concern with
    0:36:33 cannabis use is not simply addiction to cannabis, but that cannabis use seems to be associated with
    0:36:40 experimentation with other drugs as well. When somebody is using cannabis, it’s not just that
    0:36:46 they’re using cannabis, it’s that there’s a risk that they may become addicted to other
    0:36:52 products. That’s an argument I remember hearing when I was a teenager, the gateway drug argument.
    0:36:56 How true does that argument turn out to be? Do we know that habitual users of cannabis
    0:37:03 are more likely to “move on” to other harder drugs? That is where there is a lot of strong
    0:37:08 evidence. A lot of people have been saying that vaping is a gateway to smoking and what they’re
    0:37:14 doing is basically taking the cannabis model and applying it to vaping without there actually being
    0:37:19 research. There really is not research showing that vaping is a gateway to smoking. In other
    0:37:25 words, vaping may be a substitute for smoking instead of… Exactly. There’s a lot more evidence
    0:37:32 that vaping is actually a substitute for smoking. With cannabis, there is evidence that cannabis
    0:37:38 use can be a gateway to the use of other drugs. What are the other drugs and how likely is the
    0:37:44 gateway effect? I think the biggest concern is alcohol use. The concern about cannabis use is
    0:37:49 that it leads to more alcohol use. That’s the big concern. Yeah. I mean, there’s very strong
    0:37:57 evidence that youth who use cannabis are also more likely to drink more alcohol. Now, what’s not
    0:38:03 clear is this a direct causal relationship. In other words, is it the cannabis use that somehow
    0:38:08 is having effects on the brain that make it more susceptible to addiction? Or is it simply that
    0:38:13 people who are more risk-taking, if they’re experimenting with one substance, they’re also
    0:38:18 more likely to experiment with another substance? If I were to ask you what seems like a simple
    0:38:24 question, I’m curious to know how you’d answer it. Is cannabis a substitute or a compliment
    0:38:32 for alcohol in general? All of the evidence that I’ve seen shows that cannabis is a compliment to
    0:38:41 other drugs. It doesn’t appear that people are switching from one form of drug use and then
    0:38:47 going to cannabis use as a form of harm reduction. It’s very different than vaping,
    0:38:53 where there’s strong evidence that vaping is literally an alternative competing product with
    0:39:01 tobacco. What about cannabis as a potential replacement for pharmaceutical drugs? Are there
    0:39:06 examples you can point to where cannabis might be a much better option for some conditions,
    0:39:11 some people, some situations? It’s interesting because there hasn’t been a tremendous amount
    0:39:17 of research in this area by researchers, but there’s been a lot of research by the general public
    0:39:24 in terms of just trying it. A lot of what we know about the usefulness of cannabis for
    0:39:31 different diseases or ailments or pain comes from people trying it and reporting, hey, this
    0:39:38 is really working for me and I can avoid taking opiates or worse things. There are medical uses
    0:39:45 for cannabis and there are many situations in which you can reduce harm by allowing people
    0:39:51 to use cannabis for medical reasons. Here’s my big question, Michael. Alcohol has been around
    0:39:59 forever. It’s widely used in many cultures and many settings. It’s often used responsibly and
    0:40:04 often gives a lot of people a lot of pleasure, a lot of benefit, but there are, as we’ve been
    0:40:09 talking about today, really significant downsides as well, from physiological to the user, him or
    0:40:16 herself to the downstream effects like drunk driving and violence too. At the moment, it seems
    0:40:22 like there’s this gigantic experiment going on in America with many states legalizing cannabis
    0:40:29 after many years of it being illegal. I could envision an argument that it might be a fantastic
    0:40:34 thing if more people were to switch over to cannabis from alcohol and even maybe that if they were
    0:40:40 going to start using something that it might be better to use cannabis than alcohol, what would
    0:40:47 you make of that theory? Somebody came up to me today and said, “We will make a deal with you.
    0:40:56 You can replace all alcohol use with cannabis use. Would you take it? I would take it in a moment.
    0:41:03 I would immediately agree to that deal. I think that if everyone who was using alcohol was instead
    0:41:09 using cannabis, it would be a much safer, healthier world.” Now, I’m not suggesting
    0:41:13 that we should be encouraging everyone to go out and use cannabis.
    0:41:15 It sounds kind of like you are, Michael.
    0:41:22 I’m saying in this hypothetical situation where someone is offering me a deal, I would take that
    0:41:27 immediately and then work on trying to reduce cannabis use because the effects of alcohol
    0:41:33 in our society are overwhelming. I mean, it’s just it’s wreaking a havoc on our society.
    0:41:41 So that’s one view of our cannabis replacement theory. We went back to the addiction researcher
    0:41:47 Yasmin Herd to ask whether she would prefer that alcohol users were using cannabis instead.
    0:41:52 That’s a really challenging question. I would say if we knew then what we know now,
    0:41:58 neither alcohol or tobacco would be approved because they contribute to huge health impact
    0:42:06 in our society. And alcohol leads to more deaths every year. But would I want to get rid of alcohol,
    0:42:12 even though I like my sauvignon blanc? You know, perhaps, but the fact is that we know more about
    0:42:19 alcohol. We still don’t know about cannabis. So it’s difficult for me to truly answer that question.
    0:42:26 How long is it going to take to know what should be known about a substance that’s
    0:42:31 widely legalized and available? That’s an excellent question. And I’m going to be honest
    0:42:38 and say, I don’t know. Near daily and daily use of cannabis is much higher than it is for alcohol.
    0:42:45 That’s where our society is gone. So does frequency matter? What we need to know right now
    0:42:52 are the aspects of the high concentrated products, because that’s what is out there in the public.
    0:42:59 Even these aspects of the pattern of cannabis use that relates to addiction and psychiatric risk,
    0:43:07 we do not know much about. And Michael Siegel again. One of the philosophies of public health is the
    0:43:15 theory of harm reduction. We’re not going to stop people from using substances completely. So why
    0:43:22 don’t we focus on trying to find ways that will cause the least health harm? I think a combination
    0:43:32 of legalizing recreational marijuana use combined with strict regulation and incentives to direct
    0:43:39 people towards the lesser harm is really the best strategy to go with. So that’s what the public
    0:43:45 health experts have to say, that we need to know more, that we need a well-regulated market with
    0:43:51 incentives to direct people toward the lesser harm. But, and I certainly mean no offense to Michael
    0:43:58 Siegel or Yasmin Heard, but it isn’t academic public health experts like them who make the markets.
    0:44:04 In the case of cannabis, we are talking about freewheeling entrepreneurs, government regulators,
    0:44:11 and professional loophole finders. So coming up next time in part two of our series,
    0:44:17 how does this market work or not work? The entirety of the cannabis market
    0:44:23 is filled with an amazing number of contradictions. Cannabis also has the added difficulty of having
    0:44:31 a rich history that’s rooted in criminalization. Oh, it’s been a doozy. That’s next time. Until
    0:44:36 then, take care of yourself. And if you can, someone else do. Freakonomics Radio is produced
    0:44:41 by Stitcher and Renbud Radio. You can find our entire archive on any podcast app, also at
    0:44:47 Freakonomics.com, where we publish transcripts and show notes. Also, big congratulations to the three
    0:44:53 winners of this year’s Nobel Prize in Economics. Daron Asamoglu, Simon Johnson, and James Robinson.
    0:44:58 They have each appeared on Freakonomics Radio in the past. If you search their names on
    0:45:04 Freakonomics.com, you will find their episodes. And you can hear a full interview with Asamoglu
    0:45:09 on people I mostly admire. That’s one of the other podcasts we make, hosted by Steve Levin.
    0:45:13 He interviewed Asamoglu not long ago, and we are republishing that episode soon.
    0:45:19 This episode of Freakonomics Radio was produced by Dalvin Abouwaji and Zach Lipinski, and we
    0:45:25 had help this week from George Hicks. Our staff also includes Alina Kulman, Augusta Chapman, Eleanor
    0:45:30 Osborne, Ellen Frankman, Elsa Hernandez, Gabriel Roth, Greg Rippen, Jasmine Klinger, Jeremy Johnston,
    0:45:35 John Schnarr’s Lyric Bowditch, Morgan Levy, Neal Coruth, Rebecca Lee Douglas, Sarah Lilly,
    0:45:41 and Theo Jacobs. Our theme song is Mr. Fortune by the Hitchhikers. Our composer is Louise Guerra.
    0:45:47 As always, thank you for listening. I’m very grateful for you being here.
    0:45:49 Thank you. Let’s see if you have the same opinion at the end of this.
    0:45:59 The Freakonomics Radio Network. The hidden side of everything.
    0:46:04 Stitcher.
    0:46:06 you
    0:46:08 you

    We have always been a nation of drinkers — but now there are more daily users of cannabis than alcohol. Considering alcohol’s harms, maybe that’s a good thing. But some people worry that the legalization of cannabis has outpaced the research. (Part one of a four-part series.)

     

    • SOURCES:
      • Jon Caulkins, professor of operations research and public policy at Carnegie Mellon University.
      • Yasmin Hurd, director of the Addiction Institute at Mount Sinai.
      • Michael Siegel, professor of public health and community medicine at Tufts University.
      • Tom Standage, deputy editor of The Economist.
      • Ryan Stoa, associate professor of law at Louisiana State University.

     

     

  • 606. How to Predict the Presidency

    AI transcript
    0:00:04 [MUSIC PLAYING]
    0:00:07 In our previous episode, we had a wide-ranging conversation
    0:00:10 about presidential history and presidential power
    0:00:13 with the University of Chicago legal scholar, Eric Posner.
    0:00:16 The founders could not possibly have imagined
    0:00:19 that the president would become as powerful as he has.
    0:00:22 And we wondered, is the US presidency
    0:00:25 turning into something like a dictatorship?
    0:00:26 Yes, I think that is happening.
    0:00:30 Although, you know, dictatorship is such a freighted term.
    0:00:32 But that conversation with Posner
    0:00:34 was recorded in 2016, a couple months
    0:00:37 before Donald Trump was elected president.
    0:00:39 Trump is, of course, now running again
    0:00:41 against Vice President Kamala Harris.
    0:00:43 So today on Freakin’omics Radio,
    0:00:45 we go back to Eric Posner to talk about what’s
    0:00:47 happened over the past eight years
    0:00:49 and what the future may bring.
    0:00:51 I think it’s actually pretty hard to be a dictator.
    0:00:53 You have to be kind of smart.
    0:00:55 You have to be tough.
    0:00:57 You have to be brave.
    0:01:00 Also, have you lost faith in election polls?
    0:01:04 If so, how would you feel about an election betting market?
    0:01:07 A market doesn’t delay information.
    0:01:09 A market doesn’t spin numbers.
    0:01:11 A market just gives you numbers.
    0:01:15 This is our election special, not what you are likely
    0:01:16 to hear elsewhere.
    0:01:17 And it starts now.
    0:01:21 [MUSIC PLAYING]
    0:01:31 This is Freakin’omics Radio, the podcast
    0:01:34 that explores the hidden side of everything
    0:01:36 with your host, Stephen Dubner.
    0:01:39 [MUSIC PLAYING]
    0:01:47 The University of Chicago law professor
    0:01:49 Eric Posner has written more than a dozen books
    0:01:52 on topics ranging from antitrust regulation
    0:01:55 to human rights to the US Constitution.
    0:01:58 As I mentioned earlier, we interviewed him eight years ago,
    0:02:01 eight long years ago, about the evolution
    0:02:03 of presidential power.
    0:02:06 I listened to the interview this morning,
    0:02:10 and I will say that I have changed my views about the presidency
    0:02:14 to some extent because I do think Trump was a shock
    0:02:17 and not the sort of person I expected
    0:02:19 to become a president at the time
    0:02:22 that I did a lot of my earlier writing on presidential powers,
    0:02:26 which tended to be more optimistic about the powerful
    0:02:27 presidency.
    0:02:30 What surprised you about your assessment of Trump
    0:02:32 and the presidency back then?
    0:02:35 I think I was a little glib about the rise
    0:02:37 of presidential power.
    0:02:40 You could think that the risk of a too strong president
    0:02:43 is dictatorship, but another risk of a too strong president
    0:02:46 is just really bad governance and chaos,
    0:02:49 and I don’t think I was expecting that.
    0:02:51 So if I didn’t know anything about you
    0:02:56 and I heard your quick musings here on presidential power,
    0:02:58 I might think, oh, well, Posner sounds
    0:03:02 like he is aligned with the Democrats pretty strongly.
    0:03:06 Persuade me that that’s not the case, or if it is the case,
    0:03:09 persuade me that your research and writing
    0:03:11 is as objective as it can be for legal scholar.
    0:03:13 – Trump is really sui generis.
    0:03:16 When we talked about him eight years ago,
    0:03:18 it was during the campaign, and I think–
    0:03:20 – And we should remind people that it was during a campaign
    0:03:21 in which he was not expected to win
    0:03:23 by the vast majority of people.
    0:03:26 – Right, so we talked about him in a kind of casual way,
    0:03:29 and I didn’t expect him to win the presidency.
    0:03:32 I do think he was a bad president.
    0:03:35 Trump had certain goals, most of which he didn’t achieve,
    0:03:38 and then Biden has been a very different president.
    0:03:41 He had a number of goals which he achieved
    0:03:44 by using the instruments of power at his disposal.
    0:03:49 So I think in that sense, he’s been very competent.
    0:03:51 Biden’s particular policy choices,
    0:03:53 I don’t have as strong views about
    0:03:57 whether the Inflation Reduction Act was a good idea
    0:03:59 or the stimulus bill was.
    0:04:01 As I said to you eight years ago
    0:04:03 when you asked me about Obamacare,
    0:04:07 these are complex areas, and I hesitate
    0:04:10 to come down hard in favor of one perspective
    0:04:11 or the other.
    0:04:14 – The last time we spoke, you said
    0:04:16 that the US presidency had been turned
    0:04:18 into something of a dictatorship,
    0:04:19 although you didn’t like that word.
    0:04:23 You said presidential primacy was more to your liking.
    0:04:26 So I’d like to hear your current views.
    0:04:28 – There are two ways to look at this,
    0:04:31 one just in terms of the empirical reality
    0:04:34 of the president’s role in our political system
    0:04:36 and the others, whether it’s good or bad.
    0:04:37 Let me start with the first.
    0:04:39 I’m gonna avoid the term dictator.
    0:04:40 People think of Hitler.
    0:04:42 I don’t think that’s a helpful lens
    0:04:46 to look at Donald Trump or any American president.
    0:04:49 I hardly need to say that Trump tested
    0:04:51 the limits of presidential power.
    0:04:54 What’s ironic is that Trump for all of his bluster,
    0:04:57 he wasn’t able to use these tools very well
    0:04:59 and accomplished very little.
    0:05:01 A lot of it was just his temperament.
    0:05:05 If you read memoirs written by his former aides,
    0:05:09 this is a guy who couldn’t focus, was easily flattered
    0:05:12 and swayed, couldn’t control his subordinates.
    0:05:15 So it’s not surprising that he wasn’t able
    0:05:19 to maintain a strong and consistent vision.
    0:05:21 When he had a Republican House and Senate,
    0:05:24 he was able to obtain a tax cut.
    0:05:26 That seems to have been about the extent
    0:05:28 of his accomplishments.
    0:05:31 During the pandemic, he didn’t really do a whole lot,
    0:05:35 but I think it’s fair to say that by authorizing operation
    0:05:38 warp speed, which resulted in the vaccine,
    0:05:40 he accomplished something of value.
    0:05:42 But if you take something else,
    0:05:46 one of his policies was to reduce illegal immigration
    0:05:47 into the United States.
    0:05:50 And his main instrument for doing that was to build a wall
    0:05:51 along the border.
    0:05:54 I think a more competent president
    0:05:56 could have taken stronger actions.
    0:05:57 Probably–
    0:06:00 – Something perhaps less concrete, something–
    0:06:01 – So to speak.
    0:06:02 – Something that a construction executive
    0:06:03 might not have come up with.
    0:06:05 In other words, a policy, in fact.
    0:06:08 – As I understand it, the reason why Trump
    0:06:11 hit upon the wall as his major goal
    0:06:13 was that it just came to mind
    0:06:15 and it worked well with the crowds.
    0:06:17 And so he repeated it and eventually,
    0:06:19 he probably felt he had to do it,
    0:06:21 whether it made sense or not.
    0:06:23 But nobody ever thought it was a good way
    0:06:25 to stop illegal immigration.
    0:06:28 Illegal immigration is one of these incredibly complicated
    0:06:31 problems that one can address in a variety of ways.
    0:06:34 And I don’t think he had the patience and discipline
    0:06:38 to figure that stuff out and put it into effect.
    0:06:41 I think he had power that he could have used
    0:06:44 to accomplish more that he wanted to achieve,
    0:06:47 but simply lacked not just the temperament,
    0:06:48 but experience.
    0:06:49 He was new to the government.
    0:06:51 He didn’t know how it works.
    0:06:55 And certainly he faced a lot of resistance in the bureaucracy.
    0:06:58 Biden has been a more successful president
    0:07:01 in terms of achieving his policy goals,
    0:07:05 but has been less reliant on the inherent powers
    0:07:07 of the presidency to accomplish them.
    0:07:11 – And is that because Biden had more of a connection
    0:07:14 and facility with the existing infrastructure in DC?
    0:07:16 – I think that’s part of the answer.
    0:07:19 A lot of this has to do with Trump’s character
    0:07:20 and temperament and–
    0:07:22 – Meaning Biden is a little bit more,
    0:07:25 let’s say respectful of norms than Trump?
    0:07:27 – Well, Biden, even in his advanced age,
    0:07:29 has a longer attention span.
    0:07:32 More self-discipline shows greater loyalty
    0:07:37 to his subordinates, appoints higher quality people.
    0:07:39 He’s been a much more careful,
    0:07:42 and I suppose more conventional type of president,
    0:07:43 and that has helped him.
    0:07:46 – Toward the end of Donald Trump’s first term,
    0:07:49 maybe only term, but for now, first term,
    0:07:52 you published a book called “The Demagogue’s Playbook,
    0:07:54 “The Battle for American Democracy
    0:07:56 “from the Founders to Trump.”
    0:07:57 So let’s talk about that a bit.
    0:07:59 Can we start by defining some terms?
    0:08:02 How do you define a demagogue, first of all?
    0:08:05 – A demagogue is a politician
    0:08:10 who tries to obtain and keep power
    0:08:13 by dividing the population,
    0:08:15 usually by choosing an enemy.
    0:08:18 The enemy could be foreigners,
    0:08:20 it could be a minority group in the country,
    0:08:23 or it could be, in the case of a left-wing demagogue,
    0:08:26 the rich or the people with property.
    0:08:27 – When you look around the world today,
    0:08:30 who are some of your favorite practicing demagogues?
    0:08:32 – Like everything else, it’s a spectrum.
    0:08:34 Trump was a true demagogue.
    0:08:37 Bolsonaro was a demagogue.
    0:08:38 – Orban?
    0:08:39 – Orban is a demagogue.
    0:08:40 – Putin?
    0:08:44 – I think applying the term to an autocrat is a little odd.
    0:08:48 I tend to think of demagoguery as a problem for democracies.
    0:08:51 – And what are the circumstances within a democracy
    0:08:54 that tend to produce an appetite for
    0:08:57 and or an opportunity for a demagogue?
    0:08:59 – It’s a Greek word and it was a term used
    0:09:00 by the ancient Greeks,
    0:09:04 typically by people who were suspicious of democracy.
    0:09:06 A lot of these Greek city-states had democracies
    0:09:10 or basic political systems that resemble democracies.
    0:09:13 It was very common for a person,
    0:09:16 usually a person from the upper class.
    0:09:18 And this person would like power,
    0:09:23 but he’s not really part of the elites who are in power
    0:09:25 and he doesn’t have any means
    0:09:28 for getting the elites on his side.
    0:09:32 So what the demagogue does is he appeals to the people
    0:09:36 and he appeals to the people by basically making up stuff,
    0:09:39 often lying, propounding conspiracy theories
    0:09:42 just like today, riling people up
    0:09:44 and trying to persuade them
    0:09:49 that the people in power are conspiring to harm the people.
    0:09:51 Now, when does this arise?
    0:09:52 I think it can always arise,
    0:09:55 but it’s more likely to arise when people are miserable.
    0:09:58 So it could be during an economic downturn
    0:10:02 or it could be during a war or some kind of natural disaster.
    0:10:06 But once it gets started, it can just occur in cycles.
    0:10:09 And this is really what the Greeks were worried about
    0:10:11 was that you might have a demagogue
    0:10:14 who successfully comes to power, becomes an autocrat
    0:10:15 and controls the people.
    0:10:19 And then somebody else tries to get power back
    0:10:23 by becoming a demagogue and getting the people on his side.
    0:10:24 And this leads to civil war.
    0:10:26 Civil war is a terrible thing.
    0:10:29 And this is why a lot of Greek thinkers
    0:10:30 were quite skeptical of democracy.
    0:10:34 They thought it tended to collapse in this way.
    0:10:37 And the founders were very concerned about demagoguery.
    0:10:40 They knew all about ancient Greece and ancient Rome.
    0:10:44 And so the constitution was designed in large part
    0:10:46 to limit the power of the people
    0:10:49 so that demagogues wouldn’t be able to achieve power.
    0:10:51 In early demagogue was Andrew Jackson
    0:10:54 who actually introduced the party system.
    0:10:59 But the party system after Jackson became somewhat hierarchical
    0:11:02 in the sense that each party was controlled
    0:11:04 by professional politicians.
    0:11:08 What Jackson really did was transfer power
    0:11:11 from the national elites to local elites.
    0:11:14 But the local elites were hierarchical superiors
    0:11:15 to ordinary people.
    0:11:18 And so they made sure that the type of people
    0:11:20 who were candidates for elections
    0:11:22 were professional politicians
    0:11:24 or at least a respectable former general
    0:11:26 or something like that.
    0:11:29 In the 20th century, though,
    0:11:31 this way that the parties were organized
    0:11:35 increasingly was in tension with people’s sense
    0:11:38 of what a democracy requires.
    0:11:39 I think this was happening in part
    0:11:42 because in the national government,
    0:11:43 the bureaucracy was growing
    0:11:47 and you had this distant seeming administrative state
    0:11:50 that was controlled by these parties
    0:11:53 that ordinary people couldn’t really influence
    0:11:56 except maybe once every few years or so.
    0:11:58 One of the solutions to this problem
    0:12:00 was to introduce primaries
    0:12:05 where ordinary people would have a more direct impact
    0:12:07 on the choice of the leader of their party
    0:12:09 who would then be pitted against the leader
    0:12:12 of the other party in the presidential election.
    0:12:15 I do think American democracy is different
    0:12:18 from what the founders thought they were creating.
    0:12:21 The founders, they didn’t use the term democracy.
    0:12:24 They thought of democracy as chaotic and horrible.
    0:12:26 And if they could look into the future,
    0:12:28 they might’ve said, yeah, Trump, that’s democracy
    0:12:30 and we don’t want that to happen.
    0:12:33 – Let me run past you another characterization of Trump
    0:12:35 from your book, “The Demagogues Playbook.”
    0:12:37 We need to see Trump, you write,
    0:12:39 as a political monstrosity
    0:12:41 who should be repudiated by the body politic
    0:12:45 so that politicians who eye the presidency in the future
    0:12:49 will be deterred from using Trump’s ascendance as a model.
    0:12:53 Now, it does appear that roughly half of U.S. voters
    0:12:55 don’t see him as a political monstrosity.
    0:12:58 So what’s your explanation for that?
    0:12:59 – I think he’s a monstrosity
    0:13:02 in a kind of constitutional sense.
    0:13:03 The founders are quite explicit
    0:13:07 that the checks and balances weren’t going to be sufficient
    0:13:10 unless virtuous people became office holders.
    0:13:12 They were quite worried about this,
    0:13:14 virtuous and competent people.
    0:13:17 And in that sense, they were real elitists.
    0:13:20 Whatever you think of the various presidents we’ve had,
    0:13:22 some of them were truly bad,
    0:13:24 but most of them were basically competent people
    0:13:28 who became president because they rose through the ranks
    0:13:30 and earned the trust of people and so on and so forth.
    0:13:34 Trump is a monstrosity compared to that baseline.
    0:13:36 He persuaded a lot of people
    0:13:39 that the mysterious, powerful elites in government
    0:13:42 and elsewhere are arrayed against him.
    0:13:45 In some ways, he’s acted like previous demagogues
    0:13:48 all the way back to ancient Greece,
    0:13:51 but like the old demagogues, he wasn’t good at governance.
    0:13:54 And it’s a shame that people support him,
    0:13:57 but this is always what happens in this setting.
    0:13:59 They support him, they say, okay, he lies
    0:14:01 and he’s awful in many ways,
    0:14:04 but at least he’s not as bad as the people on the other side.
    0:14:07 – Republicans do seem to dislike Kamala Harris
    0:14:10 about as much as the Democrats dislike Donald Trump.
    0:14:13 And a big part of the argument
    0:14:16 is that her ascendance to the presidential ticket
    0:14:17 was undemocratic.
    0:14:19 She didn’t win any of the primaries.
    0:14:21 So what is your view of that
    0:14:24 in light of constitutional history especially?
    0:14:26 Does that make you uncomfortable?
    0:14:29 – No, I think the small D democratic primaries
    0:14:32 have perhaps not worked out the way one hoped.
    0:14:33 – What do you mean by that?
    0:14:37 – Well, because the primary system led to people like Trump,
    0:14:41 whereas before primaries were so heavily relied on,
    0:14:43 it was much more likely that you would get
    0:14:45 a seasoned professional politician
    0:14:49 or an accomplished general like Eisenhower.
    0:14:51 So I think the primary system
    0:14:54 probably is to the advantage of demagogues.
    0:14:59 Look, our system is not a pure democracy, no system is.
    0:15:03 There are lots of ways in which people’s votes are constrained.
    0:15:05 We have the whole electoral college system.
    0:15:08 People are inattentive to politics most of the time.
    0:15:12 So elected officials have a lot of authority.
    0:15:16 The way that Kamala Harris obtained the Democratic candidacy
    0:15:20 is pretty small beings relative to all the rest of the stuff.
    0:15:22 – After the break,
    0:15:25 what would a second Trump term look like?
    0:15:26 I’m Stephen Dovner.
    0:15:27 This is Free Economics Radio.
    0:15:29 We will be right back.
    0:15:31 (upbeat music)
    0:15:40 – The legal scholar Eric Posner argues
    0:15:42 that Donald Trump didn’t accomplish much
    0:15:44 during his first term as president.
    0:15:46 Does he see Trump accomplishing more
    0:15:47 if he were to win a second term?
    0:15:50 – I don’t think he’s going to productively
    0:15:53 navigate the system if he has a second term.
    0:15:54 I really don’t.
    0:15:57 I think the people around him,
    0:15:59 they’re trying as hard as they can
    0:16:02 to prepare a body of people he can appoint
    0:16:04 who will enforce his vision.
    0:16:07 So you know about project 2025,
    0:16:09 produced by the Heritage Foundation.
    0:16:13 There’s this 900 page manual that’s supposed to guide Trump
    0:16:17 so that he achieves what these guys think his objectives are.
    0:16:19 – Even though this project is supported by
    0:16:23 and drawn up by many former Trump allies and colleagues,
    0:16:26 he has claimed to know nothing of it
    0:16:27 and to not support it at all.
    0:16:29 Do you know anything further about that?
    0:16:32 – He said he never read it and I really believe that.
    0:16:34 I mean, Trump is not a big reader,
    0:16:36 but really no one could read this document.
    0:16:37 I’ve read parts of it.
    0:16:40 It’s just, it’s boring and it goes
    0:16:42 into all kinds of munition.
    0:16:43 It has this weird paranoid tone.
    0:16:45 It’s just an awful document.
    0:16:48 Not really because it’s trying to establish
    0:16:49 a Trumpian dictatorship.
    0:16:53 It actually is in many ways conventional Republican thinking
    0:16:55 going back decades in some ways
    0:16:58 that reflects Trump’s particular concerns
    0:17:01 about illegal immigration and tariffs and so forth.
    0:17:03 But remember, Trump doesn’t like the idea
    0:17:05 that other people are telling him what to do.
    0:17:08 And now I suspect he’ll feel constrained
    0:17:12 not to rely on project 2025 if he’s elected
    0:17:14 because that’ll make him look weak
    0:17:16 and like he’s being manipulated.
    0:17:18 Anyway, it’s just a dumb document.
    0:17:20 So he’ll just start from scratch.
    0:17:24 – Let’s imagine for a minute that Trump is elected again.
    0:17:26 Let’s take three major areas.
    0:17:30 Let’s talk about the judiciary, federal agencies,
    0:17:33 and let’s talk about dealings with foreign counterparts.
    0:17:36 Can you walk me through your expectations in those areas?
    0:17:39 – Okay, with the proviso that Trump
    0:17:41 is an inherently unpredictable person.
    0:17:42 – Sure.
    0:17:43 – Let’s start with the judiciary.
    0:17:46 So you might think one of his biggest accomplishments
    0:17:50 was appointing judges who are on the right
    0:17:53 and the Supreme Court got rid of Roe versus Wade and so forth.
    0:17:55 But Trump doesn’t like these judges
    0:17:57 because his appointees on the Supreme Court
    0:18:01 ruled against him in his January 6 lawsuits.
    0:18:03 This seems to be how Trump thinks.
    0:18:04 So what went wrong?
    0:18:08 What went wrong was that these judges were affiliated
    0:18:10 with the federal society.
    0:18:13 So maybe he shouldn’t appoint people
    0:18:15 who are affiliated with the federal society.
    0:18:18 And then the question is, well, who does he appoint?
    0:18:20 Legal conservatives realized a long time ago
    0:18:21 that if they wanted to be judges,
    0:18:24 they should affiliate themselves with the federal society.
    0:18:27 So that means there’s a very shallow talent pool
    0:18:29 outside of the federal society.
    0:18:31 And Trump might end up appointing
    0:18:33 a bunch of incompetent judges
    0:18:36 who may or may not be able to achieve his goals.
    0:18:39 – Okay, how about federal agencies?
    0:18:40 – This was a huge problem for Trump
    0:18:42 and this was extremely predictable.
    0:18:45 He becomes president in 2017.
    0:18:47 There’s this huge bureaucracy.
    0:18:50 These people are supposed to do what he wants them to do.
    0:18:52 He issues orders, nobody pays attention to them
    0:18:55 or they slow walk his projects.
    0:18:57 So what do you do about this?
    0:19:00 Well, you make sure that the bureaucracy
    0:19:03 is somehow replaced with Trumpian loyalists.
    0:19:07 Again, there’s this problem of the shallow talent pool.
    0:19:08 There’s also the problem
    0:19:10 of getting rid of civil servants.
    0:19:13 So there is this theory that Trump’s supporters
    0:19:15 have advanced that he can, you know,
    0:19:18 reclassify a lot of these people and fire them.
    0:19:21 He actually tried to do this at the end of his first term.
    0:19:22 It didn’t work.
    0:19:24 So I don’t think he’s gonna be able
    0:19:28 to convert the bureaucracy into a usable
    0:19:32 and loyal bureaucracy in his next term.
    0:19:34 – And then foreign counterparts.
    0:19:35 – Foreign counterparts.
    0:19:38 – Many of whom have expressed almost publicly.
    0:19:41 I mean, it’s leaked that they really saw him as a joker.
    0:19:42 Some of them he forgives and forgets.
    0:19:43 Some of them he doesn’t.
    0:19:46 So how do you see that playing out?
    0:19:48 – I think he’ll treat them the way he treated them
    0:19:50 during his first term.
    0:19:53 If you read the memoirs and the journalistic histories,
    0:19:57 it sounds like maybe he had rapport with some of them,
    0:19:59 but that he was easily manipulated.
    0:20:04 He’s a vain person who was swayed by charming foreigners.
    0:20:07 He might be a little bit more sophisticated now than he was,
    0:20:09 but he seems to be so impulsive
    0:20:12 and so hard to control by his aides
    0:20:14 and so unwilling to let them guide him,
    0:20:16 even though they’re the people who really know
    0:20:17 what’s going on.
    0:20:20 I just imagine it’ll be another chaotic term.
    0:20:22 – And how much does that matter?
    0:20:24 You and I first spoke years and years ago
    0:20:26 for an episode called something like,
    0:20:29 “How much does the president actually matter?”
    0:20:31 The underlying argument was that most Americans
    0:20:35 tend to attribute too much weight to the US presidency.
    0:20:38 In the case of foreign affairs, however,
    0:20:40 there are some unilateral powers
    0:20:44 and the figurehead status alone is pretty significant.
    0:20:46 So if Trump were to be reelected
    0:20:50 and were to not, let’s say, put the best face forward,
    0:20:51 how much do you think it matters?
    0:20:53 – I think it matters a lot.
    0:20:56 And maybe to clarify a bit what’s at stake,
    0:20:58 I agree with you that a lot of ordinary people
    0:21:00 think the president has more power than he does,
    0:21:02 that if there’s inflation or an economic downturn
    0:21:06 or a war in the Middle East, it’s the president’s fault.
    0:21:07 And often there’s just nothing
    0:21:09 that presidents can do about that.
    0:21:11 But I think a lot of, for example,
    0:21:15 commentators, professors, journalists,
    0:21:18 think the president has less power than he really does.
    0:21:21 He has all of these ways of influencing policy
    0:21:24 through the bureaucracy that are often invisible.
    0:21:26 Now with respect to foreign affairs,
    0:21:29 I think if there’s a real crisis,
    0:21:31 it could be a big problem.
    0:21:34 The foreign policy machine is very big
    0:21:37 and kind of hard to control.
    0:21:40 But Trump really did have this effect
    0:21:42 in the sense that he moved the country
    0:21:45 more toward isolationism.
    0:21:48 Now, interestingly, Biden has to some extent
    0:21:51 followed Trump’s lead, which makes you think
    0:21:55 that Trump was in fact reflecting something fundamental
    0:21:57 about how the public was thinking.
    0:22:00 – With China, especially Biden following the lead, right?
    0:22:01 – Yes, with China especially.
    0:22:05 Maybe Trump was ahead of the foreign policy establishment.
    0:22:06 I don’t know.
    0:22:09 (gentle music)
    0:22:11 It’s easy to forget that not so long ago,
    0:22:13 there was a question of whether Donald Trump
    0:22:16 would even be allowed to run for a second term.
    0:22:17 Multiple lawsuits were filed
    0:22:19 trying to keep Trump off the ballot,
    0:22:22 arguing that his support of the January 6th riot
    0:22:26 at the Capitol constituted an illegal insurrection.
    0:22:28 The U.S. Supreme Court ultimately ruled
    0:22:29 in a unanimous decision
    0:22:32 that Trump could not be removed from state ballots.
    0:22:35 There have been many other lawsuits filed against Trump,
    0:22:37 Manhattan District Attorney Alvin Bragg
    0:22:39 won a conviction against Trump
    0:22:41 on charges of falsifying business records
    0:22:45 in order to conceal hush money payments to a porn star.
    0:22:47 There are also outstanding federal charges
    0:22:49 related to election interference
    0:22:52 and Trump’s mishandling of classified documents.
    0:22:54 I asked Eric Posner what he thinks
    0:22:58 about these attempts to stymie Trump legally.
    0:23:00 – There’s always been this worry
    0:23:03 that one way that a democracy will collapse
    0:23:07 is that the people in power will use the legal system
    0:23:10 to harass their political opponents.
    0:23:12 There’s a lot of reason to think that’s a real danger.
    0:23:16 There’s a ton of historical examples of that.
    0:23:18 In the United States,
    0:23:22 there’s been relatively little of that kind of behavior.
    0:23:24 I think that’s been a good thing.
    0:23:27 It’s definitely better for the people in power
    0:23:31 to try to avoid using the legal system against their opponents.
    0:23:35 Even if their opponents are maybe breaking the law a little bit.
    0:23:37 Now, if their opponents start murdering people
    0:23:39 by all means, the police should arrest them,
    0:23:40 they should be tried.
    0:23:42 The Justice Department has always had this view
    0:23:46 that you’re not going to try to prosecute political opponents,
    0:23:50 especially at sensitive times like during a campaign,
    0:23:52 unless you absolutely have to.
    0:23:55 So among the various indictments of Trump,
    0:23:58 I do think the New York indictment,
    0:24:02 the Alvin Bragg indictment, was definitely the weakest.
    0:24:06 This was basically a very minor kind of fraud
    0:24:09 that Trump committed in New York.
    0:24:11 And because it was connected to a federal election,
    0:24:12 that was the loophole, yes?
    0:24:14 Well, it wasn’t even clear.
    0:24:15 It was connected to the federal election.
    0:24:19 They also said it was connected to violation of the tax laws.
    0:24:22 They also said it was connected to state election laws.
    0:24:24 And a lot of that stuff wasn’t really resolved
    0:24:26 because the jury doesn’t have to tell us
    0:24:28 the basis of its decision.
    0:24:31 I just think that all of these attempts
    0:24:34 to prosecute Trump have backfired terribly.
    0:24:35 There’s an interesting lesson here,
    0:24:37 which is that there’s a tendency,
    0:24:41 especially among people like me, law professors,
    0:24:44 to think that the reason why American democracy
    0:24:45 has lasted as long as it has,
    0:24:47 is that every time we have a president,
    0:24:51 that president respects democratic norms.
    0:24:53 I think the causation might be a little backwards.
    0:24:55 Presidents respect these norms
    0:24:58 because if they don’t, it backfires.
    0:24:59 People don’t like it
    0:25:02 when the government prosecutes its political opponents.
    0:25:06 And the government may be hurt because of public opinion,
    0:25:09 or I think what we’ve really seen is it’s hurt
    0:25:13 because judges are skeptical, they’re nervous,
    0:25:15 and there’s a lot more scrutiny of these trials.
    0:25:19 I think probably the lesson that’s going to be drawn from this
    0:25:20 was that it’s not smart,
    0:25:24 let alone consistent with whatever your political theory is
    0:25:26 to go after your political opponents
    0:25:28 using your legal powers.
    0:25:29 – Is it even less smart knowing
    0:25:30 that all the way at the top of the chain,
    0:25:33 you’ve got a US Supreme Court whose key voters
    0:25:36 have been appointed by the person you’re prosecuting?
    0:25:39 – I wouldn’t put it in quite that narrow sense.
    0:25:41 I think the Supreme Court,
    0:25:45 maybe more than any other body in our political system,
    0:25:49 is concerned about this kind of political retaliation.
    0:25:52 And I think they’re concerned for self-interested reasons,
    0:25:54 but not in the way that you mean.
    0:25:58 When the judiciary is involved in these types of trials
    0:26:02 that are politically tinged, the judiciary is damaged,
    0:26:05 just as much as the political actors
    0:26:08 who are responsible for the prosecution
    0:26:09 on one side or the other.
    0:26:11 The lower court judges and the appellate court judges,
    0:26:14 they’re all understandably nervous.
    0:26:16 They want to be extremely careful.
    0:26:19 And the Supreme Court above all wants to make sure
    0:26:22 that these prosecutions don’t happen
    0:26:24 unless they absolutely have to.
    0:26:26 I mean, the judges who ordered the execution
    0:26:29 of trials the first were hunted down
    0:26:32 and executed after the restoration.
    0:26:33 – So in your view, Eric,
    0:26:37 as a legal and constitutional scholar,
    0:26:40 should Trump have been forbidden by the courts
    0:26:42 from running again?
    0:26:44 – No, as bad as Trump has been,
    0:26:48 it would be worse if the judiciary were to intervene
    0:26:52 and remove from the ballot the leader of one of the parties
    0:26:55 based on this theory of the Constitution
    0:26:59 that it has some narrow legal attractiveness,
    0:27:01 but is just a totally unrealistic thing
    0:27:03 to expect the courts to do.
    0:27:05 I think the Supreme Court was wise
    0:27:06 in not disqualifying Trump.
    0:27:10 – In July of 2024,
    0:27:13 the Supreme Court ruled in a six to three decision
    0:27:15 that former presidents have absolute immunity
    0:27:19 for actions related to the core powers of their office
    0:27:21 and that there is at least a presumption of immunity
    0:27:22 for official acts.
    0:27:25 Here’s what the three dissenting justices,
    0:27:27 the Democratic appointees had to say.
    0:27:29 The relationship between the president
    0:27:32 and the people he serves has shifted irrevocably.
    0:27:34 In every use of official power,
    0:27:37 the president is now a king above the law.
    0:27:39 I asked Eric Posner what he thought
    0:27:43 about the immunity decision and that dissenting view.
    0:27:46 The immunity decision was not as outrageous as people say.
    0:27:49 Lots of government officials have immunity
    0:27:51 and this idea of the president having immunity
    0:27:53 with respect to his core powers,
    0:27:56 I don’t think that comes as much of a surprise,
    0:27:58 but it may have a political effect.
    0:28:01 It might encourage Trump to do bad things.
    0:28:03 And the paradox is the judiciary,
    0:28:06 the Republican majority on the Supreme Court
    0:28:08 is kind of making the government weaker,
    0:28:11 but the president stronger within the government.
    0:28:14 – In December of 2023,
    0:28:17 when Trump was set to run against Joe Biden,
    0:28:21 this was several months before Biden ended up dropping out,
    0:28:22 you published a piece called,
    0:28:24 “A Trump Dictatorship Won’t Happen.”
    0:28:26 I guess this was presupposing
    0:28:28 that Trump might win a second election.
    0:28:30 You wrote that, “Although Donald Trump
    0:28:32 “is many things, most of them bad,
    0:28:34 “he was not a fascist when he was president
    0:28:37 “and he would not become a dictator if elected again.”
    0:28:40 Okay, walk me through that, why not?
    0:28:41 – He won’t become a dictator.
    0:28:42 I think there are a number of reasons.
    0:28:45 First of all, I think it’s actually
    0:28:46 pretty hard to be a dictator.
    0:28:50 You have to be kind of smart, true at least.
    0:28:53 You have to be tough, you have to be brave.
    0:28:56 – You’re saying Trump is none of those, even brave, yeah?
    0:28:57 – From what I know about him,
    0:29:01 it’s just hard to imagine him having this ambition
    0:29:02 to be a dictator.
    0:29:06 I know he wants power and he wants to hold on to power,
    0:29:09 but I think he does it in an ad hoc way
    0:29:12 rather than in the kind of shrewd, planned way
    0:29:15 that real dictators do to obtain power.
    0:29:17 And then the other thing is just that I do think
    0:29:21 that the other institutions, the press, Congress,
    0:29:23 the courts, they’re not gonna let him be a dictator.
    0:29:26 – You write further, “The power of constitutional
    0:29:29 “and bureaucratic hurdles combined with a dearth
    0:29:31 “of sympathetic right-wing radicals
    0:29:34 “ensure that anarchy is more likely than tyranny.”
    0:29:36 You’re chuckling at anarchy,
    0:29:38 but I mean, anarchy’s not very good either, is it?
    0:29:39 – No, definitely.
    0:29:42 Look, that was not a defense of Trump’s candidacy,
    0:29:43 but people have been complaining
    0:29:46 that the president is gonna become a dictator,
    0:29:47 and they mean in the Hitler sense,
    0:29:50 not in the sense of having the ability
    0:29:53 to order certain types of environmental regulations.
    0:29:55 They’ve been saying that for so long,
    0:29:58 they’ve been accusing so many presidents of this,
    0:30:00 or presidential candidates,
    0:30:02 and I just think it’s become a substitute
    0:30:07 for a more careful diagnosis of the problems that we face.
    0:30:09 I think the real problem with Trump
    0:30:12 is that he makes bad decisions and he’s corrupt,
    0:30:14 and he appoints corrupt people,
    0:30:17 and he doesn’t know how to manage people,
    0:30:19 and so, yes, anarchy might result
    0:30:23 because the presidency is such an important role,
    0:30:25 but dictatorship is the other end of the spectrum.
    0:30:29 It’s extreme order, and we don’t recall extreme order
    0:30:32 from Trump’s term, it was the opposite.
    0:30:35 – I know some people feel that we are approaching
    0:30:37 the end of democracy in the US.
    0:30:40 My sense is that you feel we’re perhaps
    0:30:44 approaching the end of American-style democracy.
    0:30:45 Is that accurate?
    0:30:47 – No, I don’t think we’re approaching
    0:30:49 an end to any kind of democracy.
    0:30:53 I think things will just sputter on as they have.
    0:30:55 I mean, what’s really unique about Trump
    0:31:00 was just how uninterested he was in understanding policy,
    0:31:02 leading the country in a competent way,
    0:31:04 or maybe he was unable,
    0:31:06 and the fact that people elected him anyway.
    0:31:10 That I just don’t know how to fit into my understanding.
    0:31:13 – So if we were looking back on this period of time
    0:31:16 from 20 or 50 years hence,
    0:31:19 you think this would look more like a rocky patch
    0:31:21 than the beginning of the end?
    0:31:23 – If you talk about, let’s say, the last eight to 10 years,
    0:31:25 I’d say it looks like a combination
    0:31:29 of maybe the 1930s and the 1960s,
    0:31:32 and not as bad as the 1930s,
    0:31:34 or as chaotic as the 1960s.
    0:31:37 – So why is there the sense that it’s so much worse?
    0:31:39 – People always think the political system
    0:31:41 is about to collapse.
    0:31:44 Look, we have to think about maybe Trump’s successors.
    0:31:47 If Vance or Holly or Ted Cruz or Ruby
    0:31:50 or any of those guys eventually become president,
    0:31:51 they’re not gonna be like Trump.
    0:31:53 Whether we like their goals or not,
    0:31:57 they’re just going to look like other presidents,
    0:32:01 Bush or Reagan or Hoover or Calvin Coolidge, whoever.
    0:32:04 I just don’t think that they look at Trump
    0:32:06 and say to themselves, I want to be like this guy.
    0:32:09 They say to themselves, I want to be loved
    0:32:10 and I want to be president,
    0:32:12 but I don’t want to be like this guy.
    0:32:15 Trump has not provided a recipe for other people to follow.
    0:32:17 And then Biden over the last four years,
    0:32:20 in many ways, he’s a bit of a throwback.
    0:32:23 Most of what he’s done has been through legislation.
    0:32:25 He’s done a few aggressive things,
    0:32:27 like the student debt cancellation,
    0:32:30 which was struck down by the Supreme Court.
    0:32:32 But he seems quite continuous with Obama
    0:32:35 and for that matter, Reagan and both Bushes.
    0:32:38 I mean, just a modern kind of president
    0:32:41 who uses both legislation and executive power
    0:32:43 to accomplish his goals
    0:32:46 and then loses power at the midterm
    0:32:48 because people get annoyed with him.
    0:32:50 Biden could very well have lost the election
    0:32:52 if he hadn’t agreed to step down.
    0:32:54 So it seems like a return to normalcy,
    0:32:56 except of course that Trump could be reelected.
    0:32:59 And if he is, I think we’ll have another four years
    0:33:02 that are a lot like Trump’s previous term,
    0:33:05 but are not going to spell the end of democracy.
    0:33:07 If all of our presidents are like him,
    0:33:10 I think eventually we’d be in big trouble.
    0:33:13 But a huge institution like the US government,
    0:33:15 if you read about the history of the Ottoman Empire
    0:33:17 or the Roman Empire, for that matter,
    0:33:21 they had a lot of really terrible leaders for a long time.
    0:33:24 And they would last a few more centuries.
    0:33:26 I think it takes more than a bad president
    0:33:28 to destroy an empire.
    0:33:31 Coming up.
    0:33:34 Will Donald Trump be elected again?
    0:33:37 We look for some answers in the betting markets.
    0:33:38 I’m Stephen Dubner.
    0:33:39 This is Freakonomics Radio.
    0:33:40 We’ll be right back.
    0:33:54 So who is going to win the upcoming presidential election?
    0:33:56 Kamala Harris or Donald Trump?
    0:33:57 As we have all come to realize,
    0:34:00 political polling is an imperfect science.
    0:34:03 It often overpromises and underdelivers,
    0:34:05 which leaves a lot of people frustrated.
    0:34:08 So is there perhaps a better tool
    0:34:10 to predict election outcomes?
    0:34:13 Whenever you can find elections, you can find betting.
    0:34:15 That is Coleman Strumpf.
    0:34:19 I’m an economics professor at Wake Forest University.
    0:34:22 Strumpf does research on topics like illegal file sharing
    0:34:25 and tax evasion, as well as what economists
    0:34:27 call prediction markets, which are essentially
    0:34:31 betting markets, like betting on elections.
    0:34:33 The work that I’ve done on this subject
    0:34:37 is with a tremendous economic historian named Paul Rody.
    0:34:40 And I was very interested in the modern version
    0:34:41 of these markets.
    0:34:43 This would be about 1999.
    0:34:46 I said, look, there are this new thing that came around
    0:34:49 with the internet, and it’s the wave of the future.
    0:34:53 And Paul said, no, I was just reading the Brooklyn Eagle
    0:34:55 in 1896.
    0:34:57 And there was a very large market
    0:35:00 of people betting on elections in New York City
    0:35:05 that led to a four, five, six-year odyssey of learning
    0:35:08 about these markets and their history.
    0:35:12 It turns out the history goes back well before 1896.
    0:35:15 In the 16th century, you can find people betting on
    0:35:17 who gets elected as a pope.
    0:35:20 Now, the Catholic Church was not exactly
    0:35:21 a very big fan of this.
    0:35:24 If you bet on cardinal selections of popes,
    0:35:26 you could get excommunicated.
    0:35:28 In the United States, you can find not so organized,
    0:35:32 but versions of betting going back to George Washington.
    0:35:36 These markets existed basically in any city
    0:35:37 in the United States.
    0:35:40 The biggest markets existed in New York
    0:35:43 outside the stock exchange, almost all the attention
    0:35:45 focused on who would get elected to president,
    0:35:48 governor, even mayor of New York.
    0:35:52 And these markets were really popular.
    0:35:56 In this period, there were no scientific polls.
    0:35:58 You did not have a New York Times, Seattle poll.
    0:36:01 These things grew and grew in popularity.
    0:36:05 Then starting in the 1930s, they started to disappear.
    0:36:07 The newspapers were never comfortable
    0:36:09 talking about these markets.
    0:36:13 It was both morally and legally in a gray zone.
    0:36:16 – In 1935, the statistician George Gallup
    0:36:18 founded the American Institute of Public Opinion,
    0:36:20 which a couple of decades later,
    0:36:23 morphed into the Gallup polling organization.
    0:36:25 By using modern survey sampling techniques,
    0:36:28 Gallup made it safe for media outlets
    0:36:31 to rely on polling data instead of gamblers.
    0:36:34 The betting markets went underground.
    0:36:36 But in the US, they started coming back
    0:36:39 in the late 1980s, thanks to the internet.
    0:36:42 Things were now a bit less carefree than in the old days.
    0:36:46 If you want to run one of these markets
    0:36:48 and have people invest real money in it,
    0:36:49 it’s considered a futures market.
    0:36:51 And in the United States,
    0:36:53 the Commodities Futures Trading Commission
    0:36:56 has jurisdiction over these markets.
    0:36:58 – But the CFTC’s guidance on these markets,
    0:37:03 according to Coleman Strumpf, is extremely opaque and unclear.
    0:37:08 The CFTC has actually never formally recognized
    0:37:10 any political prediction market,
    0:37:12 but they’ve allowed two of these markets,
    0:37:16 the Iowa Electronic Market and a site called Predictit,
    0:37:19 which is located in New York and Washington DC.
    0:37:22 They’ve allowed them to run these markets
    0:37:24 under what’s called a no action letter,
    0:37:26 which is essentially saying,
    0:37:28 we’re not going to prosecute you for betting
    0:37:29 or in participating on the site,
    0:37:32 but it’s not a fully recognized exchange.
    0:37:35 – Okay, let’s begin with the Iowa Electronic Market.
    0:37:37 – This was started in 1988.
    0:37:39 It’s run out of the business school
    0:37:41 at the University of Iowa.
    0:37:45 And it was always intended as a academic exercise.
    0:37:47 The people who run the site were mainly interested
    0:37:50 in testing theories about how markets work.
    0:37:52 It was very small scale.
    0:37:54 So there’s, I think a limit of $500
    0:37:57 that you can put in every market that they have.
    0:38:00 And then partly because the stakes were so small,
    0:38:03 and for reasons I can’t fully understand,
    0:38:05 people’s attention moved elsewhere.
    0:38:07 – Elsewhere included the UK,
    0:38:09 where gambling was more mainstream generally.
    0:38:11 Sports gambling sites like Betfair
    0:38:15 carried bets for elections in the UK and the US.
    0:38:17 And then came a market called Intrade.
    0:38:19 – Intrade was an Irish site.
    0:38:22 They did not really go down the route
    0:38:25 of trying to get approval from US regulators.
    0:38:27 Despite the fact that almost everybody
    0:38:29 on the site was American.
    0:38:31 This was the biggest show in town
    0:38:34 from around 2004 to 2012.
    0:38:38 The CFDC was very, very upset with them.
    0:38:41 The CEO of Intrade basically couldn’t come to the United States
    0:38:43 for fear of getting arrested.
    0:38:48 Intrade collapsed around 2013 for old fashioned reasons,
    0:38:52 misconduct by the people running the company.
    0:38:56 After Intrade disappeared, Predictit came online.
    0:38:58 That started to really catch fire
    0:39:01 between 2016 and 2020.
    0:39:03 – Predictit came out of
    0:39:06 Victoria University of Wellington in New Zealand.
    0:39:08 In order to operate in the US,
    0:39:10 it accepted limitations that would satisfy
    0:39:12 the American regulators.
    0:39:17 – Predictit as part of the CFDC no action letter
    0:39:19 had to say, we’re gonna have limited stakes.
    0:39:24 So you could invest up to $850 in one of these markets.
    0:39:27 If you’re a financial person,
    0:39:29 that’s not even pocket change.
    0:39:32 – But even that limit didn’t satisfy the CFTC,
    0:39:36 which in 2022 withdrew its no action letter
    0:39:38 and tried to ban Predictit.
    0:39:40 That standoff has been in court ever since.
    0:39:42 But new players continue to emerge,
    0:39:46 despite or maybe because of the CFTC’s
    0:39:48 opaque and uncertain guidelines.
    0:39:50 Two of the most prominent markets right now
    0:39:53 are Colchee and Polymarket.
    0:39:56 – Polymarket is a crypto based site.
    0:39:59 They are set up at least in principle
    0:40:03 to not allow any American batters on their site.
    0:40:06 But if you quickly Google Polymarket,
    0:40:08 you’ll find many people explaining
    0:40:11 that there are ways to send money to the site.
    0:40:14 So Polymarket has had its day in the sun
    0:40:16 in the last several months.
    0:40:18 They’re the biggest of any of these markets.
    0:40:21 Their biggest market, which is on who gets elected president
    0:40:24 has taken about a billion dollars a bet.
    0:40:26 – A billion dollars, at least in a cryptocurrency
    0:40:30 called USD coin, which is pegged to the US dollar.
    0:40:32 And then there’s a market named Colchee,
    0:40:35 which is an Arabic word meaning everything.
    0:40:39 – Colchee is a site that allows people to bet on events,
    0:40:42 weather outcomes, movies, things like that.
    0:40:45 The one thing that they really want to have markets on
    0:40:46 are elections.
    0:40:51 So they starting about two years back went to the CFTC
    0:40:54 and said, look, we are relatively experienced
    0:40:56 running these event contracts.
    0:40:57 We’re regulated by you guys.
    0:40:59 We want to run an election market.
    0:41:04 The CFTC basically ignored their request and let it sit
    0:41:08 and Colchee then turned around and sued the CFTC
    0:41:10 and said, we need a decision.
    0:41:11 This was sitting in the courts.
    0:41:13 And then a few weeks back,
    0:41:16 the judge made her initial decision
    0:41:17 and ruled in Colchee’s favor.
    0:41:20 This happened on a Thursday at noon
    0:41:22 by one or two o’clock in the afternoon,
    0:41:24 Colchee had set these markets up.
    0:41:27 And these were markets on which party
    0:41:28 would control Congress.
    0:41:31 They had a lot of money flowing into this.
    0:41:34 By the next day, the CFTC appealed
    0:41:37 and we’re kind of in this gray zone again.
    0:41:40 – But that gray zone has shifted even since we spoke
    0:41:42 with Coleman Strumpf.
    0:41:45 A panel of three judges for the DC Circuit Court of Appeals
    0:41:48 voted unanimously to lift the ban
    0:41:50 while the CFTC’s appeal is ongoing
    0:41:54 and Colchee reopened their election markets.
    0:41:56 So what is Colchee’s pitch?
    0:41:59 – Their biggest pitch is saying,
    0:42:02 look, we’re gonna have very deep liquid markets,
    0:42:05 which is just financial jargon for allowing people
    0:42:07 to put a lot of money into these markets.
    0:42:11 The reason why this could potentially be a good thing
    0:42:14 is there are lots of people
    0:42:16 who have what we call political risk
    0:42:18 or political uncertainty.
    0:42:23 Imagine you’re a investor in green energy companies.
    0:42:26 Well, based on which party wins the presidency,
    0:42:30 your financial future is gonna be very different.
    0:42:31 Maybe you really wanted something
    0:42:35 that was associated with the Democrats winning the election.
    0:42:37 You would actually bet on the Republicans
    0:42:39 to win in this market.
    0:42:41 This is what a financial person would call hedging.
    0:42:43 – You can imagine that some people
    0:42:45 might not appreciate the idea
    0:42:49 of using electoral outcomes for financial hedging
    0:42:50 or they might not appreciate the idea
    0:42:53 of betting on elections period.
    0:42:54 One such person is Jeff Merkley,
    0:42:56 a Democratic Senator from Oregon.
    0:43:00 He recently introduced the Ban Gambling on Elections Act.
    0:43:02 Here’s what Merkley said in a statement.
    0:43:04 “When big bets are cast on elections
    0:43:07 and dark money can smear candidates,
    0:43:09 you have the perfect combination of factors
    0:43:12 that can undermine trust in our democracy.”
    0:43:14 The CFTC has the same concern.
    0:43:17 – Their concern is that this would lead
    0:43:21 to both manipulation of the markets
    0:43:24 and challenges to election integrity.
    0:43:26 In terms of manipulation of a market,
    0:43:29 what they’re concerned about is that somebody
    0:43:32 tries to move prices in the market
    0:43:35 for reasons that aren’t related to fundamental information.
    0:43:38 They’re just trying to trick a bunch of people
    0:43:41 into, for example, saying that Vice President Harris
    0:43:44 is much stronger candidate than we think she is
    0:43:46 and to financially profit from it.
    0:43:47 So that’s the first thing.
    0:43:52 The second thing that is probably the more fundamental concern
    0:43:56 is that if we have these markets, the CFTC claims,
    0:43:58 people will now have incentives
    0:44:02 to either try to change election outcomes
    0:44:06 or a related point is that if people watch these markets,
    0:44:09 just regular folks who aren’t even participating
    0:44:11 in these markets and they see that there’s something
    0:44:15 going on in these markets, it might change how they vote.
    0:44:19 The head of the CFTC put all this up into a succinct phrase
    0:44:22 as he doesn’t want to become an election cop.
    0:44:25 – You could, of course, argue that election polls
    0:44:27 can also influence how people vote.
    0:44:31 In any case, here’s how strump sees the CFTC’s position.
    0:44:35 – The CFTC does not have it in their powers
    0:44:36 to get rid of these markets.
    0:44:39 If the CFTC tomorrow said, look,
    0:44:42 we will not allow Cauchy to have a market,
    0:44:44 we’re gonna shut down predicted, okay?
    0:44:46 Does that mean election betting disappears tomorrow?
    0:44:47 Absolutely not.
    0:44:51 Exactly the same way that prior to 2018,
    0:44:53 if you went to almost any city in the United States
    0:44:55 and you wanted to make a sports bet,
    0:44:56 even if it wasn’t legal,
    0:44:58 you wouldn’t have too much trouble
    0:45:00 finding somebody to take your bet.
    0:45:03 The analogy that I think most people would understand
    0:45:04 would be prohibition.
    0:45:06 Even if you totally oppose alcohol,
    0:45:09 you’re a T-totaler, you have religious reasons, whatever,
    0:45:12 having it legal and regulated as a country,
    0:45:14 we’ve decided is a much better approach
    0:45:16 from a social perspective.
    0:45:19 A truism of economics is when there is
    0:45:21 a tremendous demand for an activity,
    0:45:23 supply will arise to meet it.
    0:45:26 And when it is a supply that’s arising
    0:45:31 in an unregulated, wild west environment, bad things happen.
    0:45:33 – This is one reason strump thinks it might be wise
    0:45:36 to have legal, regulated election markets.
    0:45:38 There is another reason too,
    0:45:40 even for all the regular people
    0:45:41 who would never place a bet.
    0:45:44 For regular people, the amount of information
    0:45:47 you can get out of these markets is vast.
    0:45:48 It’s the best.
    0:45:50 – Consider one research paper strump wrote
    0:45:53 with the economic historian Paul Rodey.
    0:45:56 It’s called historical presidential betting markets
    0:45:59 and it contains this tantalizing conclusion.
    0:46:02 We show that the market did a remarkable job
    0:46:05 forecasting elections in an era before scientific polling.
    0:46:08 In only one case did the candidate clearly favored
    0:46:11 in the betting a month before election day lose.
    0:46:15 And even state specific forecasts were quite accurate.
    0:46:18 Strump also argues that betting markets
    0:46:20 can give us a better view of reality
    0:46:22 than most media coverage.
    0:46:24 – I’ll give an example which is in North Carolina
    0:46:27 where I’m located right now, but it’s a national story.
    0:46:30 We have a very contentious governor’s race
    0:46:31 going on in the state.
    0:46:34 And in the recent period,
    0:46:37 the Republican candidate for governor,
    0:46:39 there was a big news story in CNN that said
    0:46:43 that the candidate had written some very offensive things
    0:46:46 on a not very nice website.
    0:46:47 If we don’t have these markets,
    0:46:50 I have to rely on news media to think about,
    0:46:52 is this a big story?
    0:46:54 Even if you’re not in North Carolina,
    0:46:56 you’d say, wow, this is going to really hurt
    0:46:59 a Republican candidate in North Carolina.
    0:47:02 And that probably will have a spillover effect
    0:47:05 on whether Donald Trump will win North Carolina
    0:47:06 in the electoral college
    0:47:08 and this could change who gets elected president.
    0:47:11 So this is a gigantic story.
    0:47:13 Okay, that’s what the New York Times says.
    0:47:16 – Okay, and what do the betting markets say?
    0:47:18 – A bunch of people who put hard money down collectively
    0:47:21 said both those two things are incorrect.
    0:47:24 First, it turned out this candidate
    0:47:26 had very little chance of getting elected governor
    0:47:28 before all this stuff came out.
    0:47:30 The second thing is Trump’s election chances
    0:47:33 in these markets barely moved.
    0:47:36 So I could understand as a citizen,
    0:47:39 what’s the effect of this big news story?
    0:47:43 I could go to a new site and have their spin on things,
    0:47:45 which sometimes is right and sometimes is wrong.
    0:47:46 Or I could go to one of these markets
    0:47:47 that cuts right to the chase
    0:47:51 and tells me the information that I’d like to know.
    0:47:54 – But what about the traditional election polls
    0:47:55 we’ve been relying on for decades?
    0:47:58 Don’t they provide this information?
    0:48:00 Nate Silver, for instance, has gained fame
    0:48:03 by aggregating a variety of polls,
    0:48:06 waiting them according to a variety of criteria,
    0:48:09 and then creating a probabilistic forecast.
    0:48:12 So what can these markets do that Silver can’t?
    0:48:14 – One of the things that he cannot do
    0:48:18 is he can’t generate a real-time forecast.
    0:48:20 Like, okay, there’s a news story
    0:48:23 that comes out at one in the morning.
    0:48:25 Nate’s gonna have to go collect a bunch of poll numbers
    0:48:27 that usually takes a day for a poll to happen
    0:48:29 and then run through his statistical model.
    0:48:33 And if this is a Monday, he’ll tell me Wednesday.
    0:48:34 And that’s sometimes not so bad,
    0:48:37 but these markets tell me Monday.
    0:48:39 One minute after the event happens,
    0:48:42 I can understand what’s exactly going on.
    0:48:44 The other thing to point out is that
    0:48:46 if you go look on these sites,
    0:48:49 we can have markets on anything under the sun.
    0:48:51 Nate Silver is one person.
    0:48:54 He can give us forecasts on the big stuff
    0:48:56 who gets elected president,
    0:49:00 who wins Pennsylvania in the electoral college,
    0:49:02 but suppose I’m interested in what’s going on
    0:49:04 with the mayor in New York City.
    0:49:05 – In case you haven’t heard,
    0:49:07 New York City Mayor Eric Adams
    0:49:08 is under federal indictment
    0:49:11 for a bunch of fraud and bribery charges.
    0:49:13 – I don’t think Nate has a model for that.
    0:49:14 And if he has a model for that,
    0:49:17 he doesn’t have one for every city you could ever think of.
    0:49:18 He doesn’t scale very well.
    0:49:21 He can do one thing, he can do 10 things.
    0:49:23 Maybe he can do a hundred things,
    0:49:25 but there’s thousands of these prediction markets
    0:49:28 on anything you’d ever be interested in.
    0:49:30 – As it turns out, Nate Silver recently joined
    0:49:33 the advisory board of Polymarket,
    0:49:35 the biggest prediction market out there.
    0:49:38 So what happens if sites like Polymarket
    0:49:40 and Colchee grow and grow,
    0:49:41 and if you really can make a bet
    0:49:44 on anything you would ever be interested in,
    0:49:46 like Coleman Strumpf says,
    0:49:48 wouldn’t that create even stronger incentives
    0:49:51 for political bribery and fraud?
    0:49:55 – My claim is that those incentives all exist right now.
    0:49:57 I don’t, like the alarmist views of things
    0:49:59 that the CFTC would say.
    0:50:03 I don’t see a basis for this in history,
    0:50:06 in our modern experience, in anything.
    0:50:09 As somebody who studied centuries of data
    0:50:12 from these markets, I can’t give you one piece of evidence.
    0:50:14 We’ve had a lot of very contentious things
    0:50:16 in our political system in the last 10 years.
    0:50:19 That had nothing to do with political prediction markets.
    0:50:24 I think the burden is on the people who make this claim,
    0:50:26 to give an example, to give hard evidence
    0:50:29 that this thing is gonna happen,
    0:50:31 we just don’t see examples of this.
    0:50:32 – So Strumpf isn’t alarmed,
    0:50:35 but he does think there is one industry that ought to be.
    0:50:38 – I’m pretty interested in politics,
    0:50:40 but what I’m definitely not interested in
    0:50:43 is watching cable shows of people opining
    0:50:45 about what’s going on.
    0:50:49 CNN, Fox News is not in any broad sense different from ESPN.
    0:50:52 They want you to watch their show.
    0:50:56 So if they know something, they could tell you that,
    0:50:59 or they could string it out and tell you in 30 minutes,
    0:51:01 that’s the benign part.
    0:51:03 The last benign part is you might even think
    0:51:07 that they’re going to spin actual data or information
    0:51:11 in a way that’s consistent with their worldview.
    0:51:14 A market doesn’t delay information,
    0:51:16 a market doesn’t spin numbers,
    0:51:18 a market just gives you numbers.
    0:51:20 That’s a better way of learning information.
    0:51:23 The people who are probably most threatened
    0:51:26 by these markets are the media sites,
    0:51:30 because the media sites right now are intermediary
    0:51:31 to learning about polls,
    0:51:33 to learning about candidates,
    0:51:35 what they think about things.
    0:51:38 Newspapers and TV shows do great analysis,
    0:51:41 but if at the end of the day I just want numbers,
    0:51:43 these markets cut through that
    0:51:46 and give me a direct line into what’s going on.
    0:51:47 That’s what I want.
    0:51:49 That’s what a lot of people want.
    0:51:51 I think the big question is,
    0:51:54 will people understand what these markets are saying
    0:51:56 if they become more prominent?
    0:51:59 I would say first that you probably need
    0:52:03 some level of education explaining what these markets are,
    0:52:05 but let’s just turn that same spotlight
    0:52:06 in the other direction.
    0:52:08 I actually would argue
    0:52:10 that most people don’t understand
    0:52:11 what polls are telling us.
    0:52:16 If I look at a poll and it says right now
    0:52:20 that the expected national voting numbers
    0:52:23 are say 50/50, well, what does that mean?
    0:52:26 It doesn’t tell us very much
    0:52:28 about who’s going to get elected president,
    0:52:32 because A, that’s based on the state-by-state contest,
    0:52:35 and B, it’s just a guess of the total vote.
    0:52:36 We’re pretty sure that the Democrats
    0:52:39 are going to get more votes than the Republicans,
    0:52:41 but the Republicans could still win the electoral college.
    0:52:44 Now, if you asked a typical reader of a poll,
    0:52:46 what do you take away from this number?
    0:52:50 You’d say, oh, this poll means that everything’s tied right now,
    0:52:52 and I don’t think that’s the actual lesson.
    0:52:56 So what do the betting markets say
    0:52:59 about the election between Trump and Harris?
    0:53:00 According to Polymarket,
    0:53:04 the race is essentially a dead heat,
    0:53:06 and the betting volume is rising fast,
    0:53:08 including some betting that could be
    0:53:12 the kind of manipulation that the CFTC is worried about.
    0:53:14 Because this is such a contentious election,
    0:53:17 I expect to see many billions of dollars
    0:53:19 bet on these markets.
    0:53:22 Feel free to keep an eye on the Polymarket betting
    0:53:24 as the election approaches.
    0:53:25 Also, feel free to let us know
    0:53:28 what you thought of this episode.
    0:53:31 Our email is radio@freakonomics.com.
    0:53:34 Thanks to Coleman Strumpf and Eric Posner
    0:53:36 for a pair of excellent conversations,
    0:53:38 and thanks to you, as always, for listening.
    0:53:41 Coming up next time on the show,
    0:53:43 if somebody came up to me today and said,
    0:53:45 we’ll make a deal with you,
    0:53:49 you can replace all alcohol use with cannabis use,
    0:53:51 I would immediately agree to that deal.
    0:53:53 Here is a startling fact.
    0:53:55 There are now more people in the U.S.
    0:53:58 who use cannabis every day
    0:54:00 than those who use alcohol every day.
    0:54:03 You’re talking about needing a whole army
    0:54:06 to study the effects of cannabis
    0:54:08 from these new products
    0:54:10 that we still do not know anything about.
    0:54:13 And how are the economics working?
    0:54:15 The entirety of the cannabis market
    0:54:19 is filled with an amazing number of contradictions.
    0:54:22 And we will engage in some political predictions.
    0:54:23 A president, Harris,
    0:54:26 is going to sign a federal legalization bill.
    0:54:28 A special series on the state of cannabis
    0:54:31 that starts next time on the show.
    0:54:32 Until then, take care of yourself.
    0:54:35 And if you can, someone else too.
    0:54:38 Freakonomics Radio is produced by Stitcher and Renbud Radio.
    0:54:41 You can find our entire archive on any podcast app,
    0:54:43 also at Freakonomics.com,
    0:54:45 where we publish transcripts and show notes.
    0:54:48 This episode was produced by Theo Jacobs.
    0:54:49 Our staff also includes
    0:54:52 Alina Coleman, Augusta Chapman, Dalvin Abouwajie,
    0:54:54 Eleanor Osborne, Ellen Frankman, Elsa Hernandez,
    0:54:56 Gabriel Roth, Greg Rippin,
    0:54:58 Jasmine Klinger, Jeremy Johnston, John Schnars,
    0:55:00 Lyric Bowditch, Morgan Levy,
    0:55:02 Neil Carruth, Rebecca Lee Douglas,
    0:55:04 Sarah Lilly, and Zach Lipinski.
    0:55:06 Our theme song is “Mr. Fortune” by the Hitchhikers.
    0:55:09 Our composer is Luis Guerra.
    0:55:14 I have a long-standing interest in presidential power,
    0:55:16 but I’m also interested in antitrust law.
    0:55:18 For both of those subjects,
    0:55:20 you’re living in boom times, are you not?
    0:55:21 Couldn’t be better.
    0:55:28 The Freakonomics Radio Network,
    0:55:30 the hidden side of everything.
    0:55:34 Stitcher.
    0:55:36 you
    0:55:38 you

    Are betting markets more accurate than polls? What kind of chaos would a second Trump term bring? And is U.S. democracy really in danger, or just “sputtering on”? (Part two of a two-part series.)

     

    • SOURCES:
      • Eric Posner, professor of law at the University of Chicago Law School.
      • Koleman Strumpf, professor of economics at Wake Forest University.

     

     

  • Has the U.S. Presidency Become a Dictatorship? (Update)

    AI transcript
    0:00:06 Hey there, it’s Stephen Dubner, and you are about to hear the first episode in a two-part
    0:00:09 series on presidential power.
    0:00:11 We figured the timing made sense.
    0:00:16 This first episode is an update of a fascinating conversation we had back in 2016, even more
    0:00:22 fascinating in retrospect, with the University of Chicago legal scholar Eric Posner.
    0:00:26 This conversation took place in the autumn of 2016 toward the end of President Obama’s
    0:00:32 second term and a couple months before Donald Trump beat Hillary Clinton in a big upset.
    0:00:35 Part two of this series will be released very soon because we want you to hear them
    0:00:36 close together.
    0:00:42 Part two includes a new conversation with Posner about the past eight years of the presidency,
    0:00:46 and we also try to figure out if election betting markets might be better than election
    0:00:47 polls.
    0:00:49 Okay, here’s part one.
    0:00:56 As always, thanks for listening.
    0:01:01 So basically, all my ranting on this topic in the past arguing that the president matters
    0:01:07 much less than people think, you’re saying that I’m pretty much entirely wrong.
    0:01:10 No, partly wrong, not entirely wrong.
    0:01:12 It depends what you mean.
    0:01:18 If what you’re saying is, “Oh, don’t worry, it’s Congress and the courts that decide things,”
    0:01:22 and the president doesn’t really decide that much, then I would say you are wrong.
    0:01:27 But if what you’re saying is Donald Trump will not be able to refuse to enforce the
    0:01:30 corporate tax, I think you’re right.
    0:01:34 You may have heard that there’s a presidential election going on.
    0:01:38 In the past, we have argued on this program that the president of the United States is
    0:01:42 much less powerful than people generally think.
    0:01:47 Today, the legal scholar Eric Posner tells us why we’re wrong.
    0:01:52 But when it comes to presidential power, we’re not the only ones who are wrong.
    0:01:54 Yes, the Democrats are wrong.
    0:01:56 So how’d this happen?
    0:01:59 How did presidents keep grabbing more and more power?
    0:02:03 With the benefit of hindsight, the whole constitutional system seems pretty nutty.
    0:02:06 But come on, is it really such a huge deal?
    0:02:08 Yeah, it’s a huge deal.
    0:02:12 And interestingly, it’s one that people often don’t really understand.
    0:02:16 Today on Freakonomics Radio, help us understand, Professor Posner.
    0:02:34 This is Freakonomics Radio, the podcast that explores the hidden side of everything with
    0:02:44 your host, Stephen Dubner.
    0:02:50 What were the founding fathers really aiming for when they sat down in 1787 to write the
    0:02:52 American Constitution?
    0:02:57 It boiled down to one thing, which is we want a powerful government that will protect us
    0:03:01 and allow commerce to flourish, but we don’t want a government that becomes so powerful
    0:03:05 that it would abuse its power and interfere with our liberties.
    0:03:11 Eric Posner is a legal scholar and a professor at the University of Chicago Law School.
    0:03:16 Do you care much about politics on a personal level?
    0:03:19 I don’t really care that much.
    0:03:25 I mean, like everybody, I have instinctive political reactions, but I try to maintain
    0:03:28 a distance and try to be objective about things.
    0:03:34 And often when I think about politics today, I try to think about how someone a hundred
    0:03:39 years from now might think about politics, a historian looking back.
    0:03:44 And when we look back 100 years or 200 years, we often find it very difficult to understand
    0:03:49 why people seem to get upset about little things that in the end didn’t matter much.
    0:03:54 And I think it’s important to take that view when thinking about politics today.
    0:03:55 Right.
    0:03:56 Do you vote, for instance?
    0:03:57 I’m curious.
    0:03:58 I vote.
    0:03:59 Okay.
    0:04:02 Settle that.
    0:04:08 One of Posner’s books co-authored with Adrian Vermeule is called The Executive Unbound after
    0:04:10 the Madisonian Republic.
    0:04:16 James Madison, the fourth president and so-called father of the Constitution, was passionate
    0:04:20 about the division of the federal government into three branches, the legislative, the
    0:04:24 judicial, and the president’s branch, the executive.
    0:04:31 The Madisonian checks and balances view is that we don’t want a single person or a small
    0:04:35 group of people to have all the power.
    0:04:38 How would you say that the role of the president and the power of the presidency of the United
    0:04:43 States has turned out compared to how the founders intended the role?
    0:04:49 Oh, the founders could not possibly have imagined that the president would become as powerful
    0:04:50 as he has.
    0:04:54 I mean, our presidency is completely transformed.
    0:05:20 So, I wanted to speak with you today about a new essay that you’ve written that was
    0:05:23 published in the American Academy of Arts and Sciences Journal Daedalus.
    0:05:28 Your essay was called Presidential Leadership and the Separation of Powers.
    0:05:33 So you argue that the presidents who are generally judged as great, Abraham Lincoln, Woodrow
    0:05:38 Wilson, Franklin Roosevelt, and Ronald Reagan, you name, are generally, quote, “the presidents
    0:05:42 who most frequently tread on constitutional norms.”
    0:05:48 And you ask, how can our top presidential leaders also be major lawbreakers?
    0:05:49 Okay.
    0:05:50 So how can they?
    0:05:54 The law actually prevents presidents from doing great things.
    0:05:56 That in a nutshell is the problem.
    0:06:02 The law, constitutional law in particular, but also the laws passed by Congress, sat down
    0:06:07 a long time ago and people are imagining that the president should do one thing, but not
    0:06:09 necessarily other things.
    0:06:14 And then, you know, there’s a huge convulsion, times change, there’s a war, there’s a depression.
    0:06:20 These old laws are in place and a very sort of modest president might obey them and not
    0:06:26 solve the problems, but the great presidents are the ones who basically push it aside so
    0:06:30 that they can do something great.
    0:06:35 Something great in their eyes at least, but also something unilateral.
    0:06:40 Indeed, if you didn’t know any better, you’d think that most presidents, and especially
    0:06:46 the two main candidates running for the position this year, can make just about anything happen
    0:06:48 just by willing it so.
    0:06:55 I will build a great, great wall on our southern border and I will have Mexico pay for that
    0:06:56 wall.
    0:06:57 Mark my words.
    0:07:03 The super wealthy corporations, Wall Street, they’re going to have to invest in education,
    0:07:05 in skills training, in infrastructure.
    0:07:09 We’re going to have Apple computers start making their computers here.
    0:07:15 And if Congress continues to refuse to act as president, I would do everything possible
    0:07:18 under the law to go even further.
    0:07:22 I alone can fix it.
    0:07:29 Eric Posner is not an alarmist, but he definitely thinks the U.S. government has strayed very
    0:07:32 far from the founders’ intentions.
    0:07:38 The founders knew a great deal about classical history, much more than any politician today
    0:07:39 does.
    0:07:47 And the great lesson of Roman history was that for quite a long time, the Roman Republic
    0:07:49 had a limited government.
    0:07:53 It was not run by kings or emperors.
    0:07:54 And it was also highly successful.
    0:07:59 I mean, by the standards of the time, it was wealthy, they conquered lots of places.
    0:08:04 It was a fantastic role model for the founders who were very ambitious for the United States
    0:08:07 but didn’t want a king.
    0:08:11 But then the Roman Republic collapsed and was replaced by an emperor.
    0:08:16 So the founders looking back at Roman history said, “We’d like to be powerful like the
    0:08:23 Roman Republic, and we’d like to imitate the constitutional structure of the Roman Republic
    0:08:28 to the extent that it was able to maintain liberty while creating this powerful country.
    0:08:33 But we want to avoid the errors that they made, which paved the way for an emperor.”
    0:08:38 You write that this system was supposed to, quote, “allowed decisive action by the executive
    0:08:42 while blocking it or any other part of government from acquiring excessive power.”
    0:08:46 But it has never been clear how this system could work.
    0:08:50 You further write that checks and balances simply make it difficult for the national
    0:08:54 government to act whether for good or bad.
    0:08:59 So if I understand you correctly, the Constitution, which we love, I guess, and talk about an
    0:09:07 awful lot and is held up as a model around the world, gives a very loose and murky blueprint
    0:09:10 for the role of the president.
    0:09:15 And then, again, if I understand you correctly, presidents went on to define the role in
    0:09:21 their image much more concretely than the Constitution did.
    0:09:26 So tell me if I’m reading you right, first of all.
    0:09:30 And second of all, talk about the ways in which presidents over time did shape the
    0:09:32 Madisonian system to suit their needs.
    0:09:38 Well, with the benefit of hindsight, the whole constitutional system seems pretty nutty.
    0:09:43 And we actually know this because some other countries imitated it, which was a big mistake,
    0:09:48 especially in Latin America, a bunch of countries imitated our system.
    0:09:52 And what happened was the three branches of government in those countries just became
    0:09:53 gridlocked.
    0:09:57 Everything could be accomplished, and eventually the president would just effectively declare
    0:10:03 himself the only ruler, and he would rule by diktat.
    0:10:04 And these countries were very unstable.
    0:10:08 Now, it’s not really clear whether we should blame separation of powers or these countries
    0:10:10 had other problems.
    0:10:14 But most political scientists, I believe, think that parliamentary systems are a lot
    0:10:16 more sensible.
    0:10:23 It’s a system that gives the government a great deal of power, but not too much.
    0:10:24 Okay.
    0:10:30 So the U.S. wasn’t set up as a parliamentary system, but it was set up to prevent the president
    0:10:32 from accruing too much power.
    0:10:34 So what happened?
    0:10:39 Something special happened, which was that for a long time, Congress was basically the
    0:10:41 leading government authority.
    0:10:44 The courts were pretty passive.
    0:10:48 The president, with some important exceptions, basically did what Congress wanted him to
    0:10:49 do.
    0:10:54 And this was able to work maybe up until the Civil War or so, because basically the country
    0:11:00 was vast, people were anxious to make money and move westward and so forth.
    0:11:04 But in the 20th century, things got way too complicated.
    0:11:09 And I think what was very fortunate was that Congress and the courts eventually realized
    0:11:15 that the only way to get the system to work was to allow the president to have a primary
    0:11:21 role to be the first among equals, which they did by creating what we call an administrative
    0:11:27 state, which basically means a very big bureaucracy headed by the president, which makes most
    0:11:29 of the important rules.
    0:11:33 So in your view, a lot of presidents ran roughshod, or your words, over the Madisonian
    0:11:36 system in countless ways.
    0:11:38 Let’s have some quick examples, please.
    0:11:41 Let’s start briefly in the beginning with Washington.
    0:11:47 Washington’s a little hard because people sort of expected that he would set some precedents.
    0:11:51 The Constitution says very little about the role of the president.
    0:11:55 It says that the executive power is vested in the president, but it doesn’t explain what
    0:11:57 executive power means.
    0:12:02 And then it has a few trivial things like he has the power to receive ambassadors and
    0:12:07 a few more significant things like he’s the commander in chief of the army.
    0:12:11 So it’s possible that the founders or some of the founders thought of the president as
    0:12:17 basically kind of a limited office who just does whatever Congress tells him to do.
    0:12:22 It’s also possible that many of them thought of the president as something like a king
    0:12:25 except a king who had to survive elections.
    0:12:26 We really don’t know.
    0:12:32 My guess is there was a lot of disagreement and people didn’t really know what the presidency
    0:12:33 was going to look like.
    0:12:38 They did expect George Washington to be the first president and they trusted him.
    0:12:43 And I think partly because of that, they were able to agree to a constitution that was not
    0:12:46 very specific about what the president’s powers would be.
    0:12:47 Okay.
    0:12:49 How about Thomas Jefferson?
    0:12:55 The Louisiana Purchase by Jefferson was widely regarded as unconstitutional even by Jefferson
    0:12:57 himself, but it was just irresistible.
    0:13:02 It just seemed like such a great deal that he went ahead and did it anyway and then hoped
    0:13:04 Congress would later ratify it.
    0:13:05 Abraham Lincoln.
    0:13:11 Well, he suspended habeas corpus even though the constitution pretty clearly says only
    0:13:13 Congress can suspend habeas corpus.
    0:13:17 So the practical effect of that was that the president could arrest people or have the
    0:13:21 military arrest people and they would not be able to go to court.
    0:13:23 So that was pretty dramatic.
    0:13:24 But he did other things as well.
    0:13:26 He impounded funds.
    0:13:30 In other words, he used money that Congress had appropriated in ways that he wasn’t supposed
    0:13:31 to.
    0:13:36 A lot of the country was just ruled by martial law, meaning that the military made the rules,
    0:13:38 Congress did not make the rules.
    0:13:41 But what you can say about Lincoln is that a civil war was going on.
    0:13:46 So he could make a reasonable argument, I think that in the middle of a civil war, a
    0:13:51 lot of these constitutional rules can be suspended or weakened.
    0:13:56 And what is true is that after the civil war, in the following decades, nobody tried to
    0:13:57 act like Lincoln.
    0:14:01 Skipping ahead quite a bit, Theodore Roosevelt.
    0:14:08 So before him, it was generally understood that Congress would make policy, debate policy,
    0:14:10 pass the laws and so forth.
    0:14:15 Roosevelt took the view that the president should lead using the bully pulpit as he called
    0:14:19 to appeal to the public, which of course we’re used to this now, but that was new when he
    0:14:20 did it.
    0:14:26 And so the president began to be the primary figure for determining domestic policy as
    0:14:27 well.
    0:14:32 He said he would pass laws by himself, but he would set the agenda and he became a much
    0:14:36 more important figure than he had been in the past.
    0:14:39 Talk for a moment about Woodrow Wilson.
    0:14:45 Woodrow Wilson was a professor and he had these professorial ideas, one of which is that parliamentary
    0:14:48 systems are better than presidential systems.
    0:14:50 And he sort of thought of himself in that way.
    0:14:57 And what that meant was that he as the president would be the primary person for determining
    0:14:59 domestic as well as foreign policy.
    0:15:06 So he was building on Roosevelt and he also helped initiate the modern administrative
    0:15:07 state.
    0:15:13 He was one of the first presidents who really put a lot of force behind the idea that a
    0:15:18 lot of the rules should be made and enforced by bureaucracies in Washington, which would
    0:15:19 be headed by the president.
    0:15:20 Okay.
    0:15:23 And take a deep breath for the next one, Franklin Roosevelt.
    0:15:26 Well, yeah, we could be here all day.
    0:15:27 He did so much.
    0:15:31 One thing he did, of course, was stay in office for more than two terms.
    0:15:36 That was not unconstitutional, but it violated a longstanding precedent which had been set
    0:15:38 by Washington of all people.
    0:15:42 And a lot of people did accuse him of being a dictator, not just for that, but because
    0:15:49 of course in the New Deal, he vastly expanded the power of the federal bureaucracy and he
    0:15:55 got Congress to pass laws, which were what lawyers call delegations of power rather than
    0:15:59 passing a law that says you have to do this or that to ordinary people.
    0:16:02 The laws say to the president, you figure out what people should do.
    0:16:08 To use an anachronistic example, but an easy one to understand, when environmental law
    0:16:14 was eventually enacted in the 1970s, Congress didn’t really say here are all the pollutants
    0:16:17 and this is what you should do about them.
    0:16:21 Congress said to the executive branch, do something about air pollution and do something
    0:16:23 about water pollution.
    0:16:28 The Supreme Court initially struck down these laws, but eventually acquiesced in them and
    0:16:34 then it was up to the bureaucracy and the executive branch, ultimately the EPA, to figure
    0:16:36 out what the rules were.
    0:16:39 And then the final thing, of course, is World War II.
    0:16:44 For all intents and purposes during the war, Roosevelt was a dictator who basically decided
    0:16:50 how things would go both in terms of how the war was prosecuted and in terms of domestic
    0:16:51 policy.
    0:16:56 But again, in extreme times, we give more leeway, yes?
    0:17:03 We do, but what’s striking here is that in both settings, things were permanently changed.
    0:17:08 Once the administrative state was put in place and strengthened under Roosevelt, it just
    0:17:13 remained there and ever since has become more and more powerful.
    0:17:19 There was a very brief and weak effort to roll it back in the mid to late ’40s.
    0:17:23 And then from time to time, people like Ronald Reagan say, “We should deregulate.”
    0:17:29 But basically, this system of administrative governance is fully entrenched.
    0:17:34 And then on the foreign policy side, the president basically is the commander-in-chief
    0:17:40 and as leader of foreign policy, his decisions just had much more importance than they had
    0:17:43 before World War II, and that would never change.
    0:17:47 That would become permanent.
    0:17:54 So the accumulation of power by U.S. presidents has not only been substantial but cumulative.
    0:17:58 After the break, what does constrain the modern president?
    0:18:01 So he can say, “Well, I think it’s in the national interest not to allow Muslims into
    0:18:05 the country,” and he’s acting consistently with the statute.
    0:18:06 I’m Stephen Dubner.
    0:18:07 This is Freakonomics Radio.
    0:18:08 We’ll be right back.
    0:18:22 Eric Posner, a law professor at the University of Chicago, has been telling us how the power
    0:18:27 of the U.S. presidency has expanded, especially since the growth of what is called the administrative
    0:18:28 state.
    0:18:33 The executive branch went from basically a post office at the founding to it now has
    0:18:35 three million people or so.
    0:18:40 Our Constitution says that Congress should be the center of lawmaking, but Congress has
    0:18:46 ceded or perhaps delegated much of that authority to the president and the many agencies under
    0:18:50 his or potentially her control.
    0:18:57 Congress is a small body with relatively small staff, and it’s a multi-headed body consisting
    0:19:00 of people who disagree with each other about all kinds of things.
    0:19:07 It simply cannot exert consistent, powerful influence over the agencies and the executive
    0:19:08 branch.
    0:19:10 It just can’t.
    0:19:15 And then there’s the expansion of power in the foreign and military arenas.
    0:19:20 During the Cold War, presidents were given broad powers that included unilateral authority
    0:19:27 over the CIA, which was behind coups in countries like Iran, Guatemala, the Congo, Dominican
    0:19:30 Republic, South Vietnam, and Chile.
    0:19:35 Presidents have also led the U.S. into many wars, every one since World War II, in fact,
    0:19:40 without having an official declaration of war from Congress, although Congress did formally
    0:19:42 authorize some of them.
    0:19:45 The president has always had quite extensive war powers.
    0:19:51 Even before World War II, presidents would send troops off to do things without congressional
    0:19:55 authority, although they were usually relatively minor sorts of things.
    0:19:58 But after World War II, this power expanded.
    0:20:02 There was something of a backlash in the 1970s, but I think the backlash was, to a large
    0:20:05 extent, a backlash against Nixon.
    0:20:08 People have got to know whether or not their president is a crook.
    0:20:10 Well, I’m not a crook.
    0:20:14 And to some extent, a backlash against the Vietnam War.
    0:20:20 In 1973, Congress passed the War Powers Act over President Nixon’s veto, we should say.
    0:20:24 It stipulates, among other things, that the president should consult with Congress over
    0:20:30 matters of war and peace, and it requires congressional authorization for conflicts that last more
    0:20:32 than 60 days.
    0:20:36 I don’t think the War Powers Act really had much of an effect.
    0:20:42 The presidency in the ’70s was weak because of the backlash against Nixon.
    0:20:49 But by the time we have Reagan, Reagan sent troops abroad in Grenada and Lebanon without
    0:20:51 congressional authorization.
    0:20:57 George H.W. Bush would do it in Panama and Somalia.
    0:21:00 Clinton would do it in Serbia and Somalia and Afghanistan.
    0:21:04 I mean, there are all these examples of presidents using military force without congressional
    0:21:08 authorization, and then most recently, Obama in Libya.
    0:21:15 Every president, since the War Powers Act, has said that it is an unconstitutional abridgment
    0:21:18 of their prerogatives as commander-in-chief.
    0:21:24 For now, it’s an unsettled constitutional question, but functionally, Posner says, when
    0:21:30 it comes to war-making, Congress generally bows to the might of the president.
    0:21:36 And we’re basically back to where we were before the War Powers Act was passed.
    0:21:43 So it’s clear that on many dimensions, the president isn’t nearly as constrained as the
    0:21:44 founder’s plant.
    0:21:50 Does that mean, however, that the president is all powerful?
    0:21:56 So I’ve been arguing for a few years, to little or no effect, I should say, that the
    0:22:02 president of the United States essentially matters much less than is commonly thought.
    0:22:07 And yet, many Americans think that the president has vast powers over everything, from the
    0:22:11 economy to geopolitics of countries halfway around the world.
    0:22:19 So tell me in a nutshell, how do you characterize the breadth and depth of presidential power?
    0:22:24 I think the president is enormously powerful, certainly the most powerful person in the
    0:22:29 United States and really in the world by a large amount.
    0:22:31 But I also don’t disagree with you.
    0:22:37 What people usually say about the president is that his power is constrained by the Constitution.
    0:22:41 And in particular, this idea of separation of powers where the government is divided
    0:22:47 into the executive branch led by the president, Congress, and the courts.
    0:22:51 And the old idea, which I think we all learn in junior high school, is that this separation
    0:22:54 of powers is what constrains the president.
    0:23:00 But I think most people, political scientists, historians, and me as well, think that that
    0:23:05 system doesn’t really operate the way people imagine it does.
    0:23:08 And in fact, these constraints are much more limited.
    0:23:11 So what does constrain the president?
    0:23:15 What really constrains him is the difficulty of leading.
    0:23:19 And in particular, this institutional environment that has evolved, which has made him the leader
    0:23:22 of three different groups.
    0:23:25 He’s understood to be the leader of the country.
    0:23:28 He’s also the leader of the party.
    0:23:33 And he’s leader of the executive branch, trying to be the leader of these different groups
    0:23:38 with different interests and values turns out to be an extremely difficult task.
    0:23:40 An extremely difficult task.
    0:23:47 And you would argue a more significant constraining factor on the power of the president than
    0:23:49 the Constitution itself, yes?
    0:23:50 Yes.
    0:23:54 The major constraints on the president in the Constitution are Congress and the courts.
    0:23:59 And Congress has to a large extent acquiesced to presidential power, has given the president
    0:24:01 more and more power.
    0:24:07 And the courts also tend to be highly deferential, at least for important issues.
    0:24:12 But if the president wants to accomplish something, he does need his subordinates in the executive
    0:24:15 branch to carry out his orders.
    0:24:19 And he does need popular support within the country as a whole.
    0:24:25 And he also needs cooperation from his party because the party is a very important institution
    0:24:30 through which the president also maintains his support and accomplishes the things that
    0:24:31 he wants to get done.
    0:24:37 Give me an example of an issue that a president might care about a lot.
    0:24:40 And as leader of the country, he or she has, let’s say, a clear path.
    0:24:44 But as leader of his or her political party, there is obstruction.
    0:24:48 I think Guantanamo Bay is a pretty good example, actually in multiple ways.
    0:24:54 So George Bush at some point decided he wanted to basically shut down Guantanamo Bay.
    0:24:57 And his party was definitely opposed to that.
    0:25:02 You know, I don’t think Bush cared that much, but Obama cares a great deal.
    0:25:06 And I think both the Democratic Party and the Republican Party have gotten in his way.
    0:25:09 I’m not exactly sure what the country as a whole thinks about Guantanamo.
    0:25:12 I think people have pretty mixed feelings about that.
    0:25:16 But that’s an example of conflict.
    0:25:17 We will close Guantanamo prison.
    0:25:20 Guantanamo will be closed one year from now.
    0:25:26 And I ordered the prison at Guantanamo Bay closed by early next year.
    0:25:33 22 years after it was opened, the US military’s detention camp at Guantanamo Bay remains open.
    0:25:37 Like President Obama before him, President Biden has tried to shut it down.
    0:25:42 But as of this recording, there are still 30 prisoners at the site.
    0:25:47 Coming up after the break, is the US presidency turning into – I’m not sure I even want to
    0:25:50 say this word – is it turning into a dictatorship?
    0:25:53 Yes, I think that is happening.
    0:25:56 Although, you know, dictatorship is such a frayed term.
    0:25:57 I’m Stephen Dovner.
    0:25:58 This is Freakonomics Radio.
    0:26:01 We will be right back.
    0:26:12 Hey there, just a reminder that you were listening to an episode we made in 2016, shortly before
    0:26:17 the election between Donald Trump and Hillary Clinton, which means that Barack Obama was
    0:26:19 nearing the end of his second term.
    0:26:24 After much of his presidency, Obama faced a Republican-controlled Congress that countered
    0:26:26 many of his policy goals.
    0:26:31 This led Obama to bypass Congress by issuing many executive orders.
    0:26:37 Saturday Night Live took note of this maneuvering in a parody of the old schoolhouse rock song
    0:27:05 about how a bill becomes a law.
    0:27:32 Obama issued an average of 140 executive orders per 4-year term, which may sound like a lot,
    0:27:37 but it is slightly less than George W. Bush, and considerably less than Bill Clinton, who
    0:27:39 averaged around 180 per term.
    0:27:45 Joe Biden has so far issued 142 executive orders during what will be a single term.
    0:27:49 And how about Donald Trump during his single term?
    0:27:50 220.
    0:27:55 When we spoke with the legal scholar Eric Posner back in 2016, Trump hadn’t been elected
    0:27:56 yet.
    0:28:01 I asked him how Obama had used executive orders differently from his predecessors.
    0:28:08 The most distinctive and interesting innovation by President Obama has been to use a power
    0:28:13 that people don’t talk about much, sometimes called prosecutorial discretion, sometimes
    0:28:15 called enforcement power.
    0:28:20 The idea in the original Constitution was that Congress passes the law and the president
    0:28:22 enforces them.
    0:28:25 But what does it mean for the president to enforce the laws?
    0:28:26 Maybe he doesn’t.
    0:28:27 Then what happens?
    0:28:30 And there’s a clause in the Constitution called the Take Care Clause, which says, “Well, you’ve
    0:28:32 got to enforce the laws.”
    0:28:37 But there’s also the executive power clause, which seems to say, “Well, you have discretion.”
    0:28:42 And this whole idea of the executive as being an independent branch suggests that the president
    0:28:44 has discretion.
    0:28:48 The discretion, for instance, to provide legal status to nearly 5 million immigrants who’d
    0:28:54 illegally entered the U.S. That’s what Obama tried to do in 2014.
    0:28:58 Our immigration law says that if you come into our country without papers, you’re here illegally
    0:29:01 and you’re going to get kicked out.
    0:29:05 President Obama has made it clear in a way that these earlier presidents haven’t, that
    0:29:11 as a matter of policy, he doesn’t think he should kick out certain classes of people,
    0:29:15 children who came here when they were very young and a few other classes of people.
    0:29:20 And what he’s doing in some ways is continuous with our understanding of presidential power.
    0:29:25 He’s using discretion to enforce the law and presidents are allowed to do that.
    0:29:30 But I think it also troubles a lot of people because he’s doing it on such a huge scale
    0:29:35 and in an area where we would normally expect Congress to act by issuing an amnesty or providing
    0:29:37 a path to citizenship.
    0:29:43 And so I do think this is a major advance in presidential power.
    0:29:46 Obama’s immigration move was blocked by a Texas court.
    0:29:49 The decision was later upheld by the U.S. Supreme Court.
    0:29:54 On the day of the Supreme Court’s ruling, the Texas Attorney General issued a statement
    0:29:59 that said, “Today’s decision keeps in place what we have maintained from the very start.
    0:30:04 One person, even a president, cannot unilaterally change the law.
    0:30:10 This is a major setback to President Obama’s attempts to expand executive power and a victory
    0:30:17 for those who believe in the separation of powers and the rule of law.”
    0:30:22 So President Obama came to office making a number of promises of reform in a number
    0:30:23 of different areas.
    0:30:26 I’d like to go through them with you one by one.
    0:30:30 I’d like you to tell me how far he got, if at all, and whether that happened according
    0:30:35 to what we think of as normal constitutional channels or other channels.
    0:30:42 So number one, let’s call it that we’ll combine these economic stimulus and financial regulation.
    0:30:46 Talk about his promise and the outcome and the methodology.
    0:30:54 He obtained laws from Congress both for stimulus and for financial regulation.
    0:30:59 So in that sense, he used normal congressional procedures.
    0:31:04 On the other hand, the response to the financial crisis, which of course started with Bush,
    0:31:12 but continued while Obama was in office, involved tremendous use of administrative powers, many
    0:31:15 of which were of questionable legality.
    0:31:20 And so at least with respect to the response to the financial crisis, I think some of it
    0:31:23 was outside of the traditional constitutional sense.
    0:31:28 Talk about President Obama’s policy initiative on universal healthcare.
    0:31:31 So here in one sense, he followed constitutional norms.
    0:31:38 He obtained a statute that we call Obamacare, the Affordable Care Act.
    0:31:44 But once the statute was in place and Congress turned hostile, he had to aggressively use
    0:31:47 administrative powers to implement it.
    0:31:54 And so famously, he has in several instances delayed the administrative rollout of the
    0:32:01 statute for both practical and political reasons in ways that many people think are constitutionally
    0:32:05 questionable, although people argue back and forth about that.
    0:32:07 Carbon emission regulation.
    0:32:11 President Obama tried to obtain a statute and failed.
    0:32:16 So then he used his administrative powers under existing statutes like the Clean Air
    0:32:19 Act to issue regulations.
    0:32:22 This is a good illustration of how our system works.
    0:32:25 He wanted Congress to pass a statute.
    0:32:30 Having failed to do so, he was still able to accomplish much of what he wanted to do through
    0:32:31 regulation.
    0:32:34 His preferred reforms to counterterrorism.
    0:32:39 Interestingly, George Bush was much more successful than Obama here.
    0:32:45 George Bush wanted to do some aggressive things and basically persuaded Congress, of course,
    0:32:50 a mostly Republican Congress, to pass statutes like the Patriot Act that allowed him to do
    0:32:51 that.
    0:32:52 Of course, he broke some rules as well.
    0:32:57 Obama hasn’t been as successful in obtaining the statutes that he’s wanted, but on the
    0:33:02 other hand, he’s been able to use the powers that Congress gave to Bush.
    0:33:08 And he’s also pushed on the envelope a little bit using drone strikes to kill people, including
    0:33:14 American citizens is, you might argue, constitutionally questionable.
    0:33:19 You write that when it comes to the Affordable Care Act in Dodd-Frank, that not only did Congress
    0:33:23 acquiesce and the President’s legislative agenda vastly expanded his authority and the
    0:33:28 authority of his successors to regulate, that is to make policy decisions in the financial
    0:33:31 and health sectors of the economy.
    0:33:35 So considering, Professor Posner, that the health and financial sectors of our economy
    0:33:40 are gigantic, that sounds like a huge deal that President Obama expanded his authority
    0:33:44 and that of his successors to make policy decisions there.
    0:33:48 What do you make of that and what would James Madison make of that?
    0:33:54 Yeah, it’s a huge deal and interestingly, it’s one that people often don’t really understand.
    0:33:56 The President didn’t break any laws.
    0:33:57 He wasn’t like Nixon.
    0:34:01 He went to Congress and he got a statute, which is what the President is supposed to
    0:34:03 do under Madison’s vision.
    0:34:09 But what these statutes do is they give the President enormous discretionary authority.
    0:34:14 So that means that going into the future, when we’re trying to figure out what’s good
    0:34:18 financial policy and what’s good health policy, what we should do is talk to the President
    0:34:23 and persuade him to pass the regulations that we think are important rather than going to
    0:34:24 Congress.
    0:34:27 Now, Madison wouldn’t have recognized this.
    0:34:31 He just didn’t imagine that this is what would happen and partly in those days, these
    0:34:36 sorts of things would have been dealt with by state governments, not the national government,
    0:34:41 but basically the founders were not creating a system of administrative government.
    0:34:43 They knew about administrative government.
    0:34:50 A lot of countries had big bureaucracies with a king at the top, places like France.
    0:34:54 These sorts of systems did not appeal to them and they tried to create a different type
    0:34:59 of system, but that system is gone and we have an administrative state today.
    0:35:03 So I’m trying to square two conflicting narratives here.
    0:35:09 One is the Obama and Democratic narrative that a Republican-dominated Congress stymied
    0:35:14 everything that President Obama and the Democrats wanted to do with your narrative that President
    0:35:21 Obama got almost everything he wanted by expanding or kind of maximizing presidential power.
    0:35:24 So can you put those two narratives together for me?
    0:35:26 Yes, the Democrats are wrong.
    0:35:32 Obama has accomplished a huge amount both by obtaining statutes and through his administrative
    0:35:33 powers.
    0:35:37 What is true is he hasn’t accomplished as much as he’d have liked to have accomplished
    0:35:41 and as much as many Democrats would have liked him to have accomplished.
    0:35:46 There could have been a health law that was much more ambitious with a public option.
    0:35:48 Dodd-Frank could have been stronger.
    0:35:53 The President has been disappointed that he hasn’t been able to close Guantanamo Bay
    0:35:56 and there he certainly was stymied by Congress.
    0:36:00 But you’ve got to be realistic about what can be accomplished.
    0:36:06 If the public doesn’t want something and the President wants to remain influential and popular,
    0:36:09 he just can’t do as much as his party might want him to do.
    0:36:13 Now, you sound a little bit like a Democrat when you describe how much he accomplished.
    0:36:18 I don’t know if you are or aren’t, or if you care to say whether you are or aren’t.
    0:36:20 I vote both ways.
    0:36:24 Are you or were you friends and/or colleagues with President Obama when he was at the University
    0:36:25 of Chicago Law School?
    0:36:26 Yeah, I knew him.
    0:36:30 I actually knew him in law school when we were in law school.
    0:36:31 I knew him a bit.
    0:36:36 He lived in Hyde Park as I do and I occasionally saw him around the law school.
    0:36:37 I wouldn’t call him a friend, though.
    0:36:40 I mean, I probably should, but he’s not really a friend.
    0:36:42 I didn’t know him that well.
    0:36:47 In terms of the big policies that we’ve been talking about, do you generally find yourself
    0:36:51 on the side of President Obama and seeking out the kind of, let’s say, financial reforms
    0:36:53 and health care reform?
    0:36:59 I think Dodd-Frank was a good idea, although a lot of the details one could quarrel with.
    0:37:03 I think he basically was right that we needed health care reform.
    0:37:09 I don’t know whether the Affordable Care Act was a good statute or not, but mainly because
    0:37:13 this is an area of policy about which I know very little, so I don’t have strong views
    0:37:15 about this.
    0:37:19 I think historians in the future will look back at Obama and say, “Yeah, he did a pretty
    0:37:20 good job.”
    0:37:25 He accomplished many of the things that he wanted to accomplish in difficult circumstances.
    0:37:30 I don’t think he’ll be regarded as a fantastic president like Lincoln or Jefferson or any
    0:37:31 of those people.
    0:37:34 I guess for my part, I’m kind of ambivalent.
    0:37:39 I think it’s very hard to evaluate presidents until long after they’ve left office and the
    0:37:43 archives have opened up, and you can really see what sorts of choices they faced.
    0:37:48 But considering your argument that all the presidents who are categorized as great by
    0:37:55 political scientists and historians make a lot of end runs around the Constitution, then
    0:37:59 by that logic, President Obama will be close to great, no?
    0:38:05 Well, that’s a necessary but not sufficient condition, I think, so a president could be
    0:38:08 a dictator who destroys the country.
    0:38:12 If you compared someone like Obama to Carter, Carter’s never going to be considered a great
    0:38:18 president maybe because he was too scrupulous about the law and about the Constitution.
    0:38:23 In the case of Obama, it’s possible he’ll be considered a great president, and partly
    0:38:25 because he was very aggressive.
    0:38:29 Law professors have already written thousands of articles talking about how many laws he’s
    0:38:34 broken and they will continue to do so, but in the end, I don’t think that’s how people
    0:38:39 are going to evaluate him as a president.
    0:38:44 At least according to his public statements, which I find no reason to think are not how
    0:38:51 he really feels, President Obama is not enthusiastic about a Donald Trump presidency at all.
    0:38:58 How would you characterize the calculus of a president in office creating new leverage
    0:39:02 for the presidency so that he or she can take advantage of that leverage while potentially
    0:39:06 handing off said leverage to a successor with very different views?
    0:39:10 I think this is a real problem that Obama has thought about.
    0:39:16 If you read the various memoirs and so forth, he’s said to his subordinates and his lawyers
    0:39:22 that he doesn’t want to expand presidential power because he’s worried about future presidents
    0:39:29 relying on these precedents to do bad things, but he’s done it anyway, and he’s done it
    0:39:35 because he felt that the immediate objectives were sufficiently important.
    0:39:41 The nature of how precedents influence future behavior is very complicated.
    0:39:47 People have made the argument that because he refused to enforce the immigration law,
    0:39:54 if Trump becomes president, Trump could refuse to enforce corporate taxes, for example.
    0:39:55 But I just don’t believe that.
    0:40:01 I think if Trump refused to enforce corporate taxes, there’d be an enormous political backlash.
    0:40:06 I just think they’re different settings, but it is a risk that Obama has taken.
    0:40:10 Given what Donald Trump has said about his plans overall for the presidency, including
    0:40:15 immigration, ban on Muslims, et cetera, et cetera, et cetera, how would you see a President
    0:40:20 Trump being able to carry out his various plans if he were elected and even if the Democrats
    0:40:21 were to control Congress?
    0:40:28 He can probably ban Muslims from coming into this country, at least in the short term.
    0:40:33 The immigration statute already gives the president enormous power to block anyone from
    0:40:38 entering the country if the president thinks it’s in the national interest.
    0:40:43 He can say, “Well, I think it’s in the national interest not to allow Muslims into the country,”
    0:40:46 and he’s acting consistently with the statute.
    0:40:53 It’s possible that a court could block this type of order on constitutional grounds.
    0:40:56 It’s hard to know whether that would happen, because there’s really no direct precedent
    0:40:57 for that.
    0:41:03 In terms of trade, the president can tear up treaties, he can tear up NATO, and because
    0:41:09 he controls American forces abroad, he could just not use them.
    0:41:14 Like if Russia invades Germany, there’s no way to force the president to use troops to
    0:41:16 defend Germany.
    0:41:20 So he has a lot of power over these alliances and treaties as well.
    0:41:24 Let’s say Donald Trump, a president Trump, were to decide that a new alliance was in
    0:41:26 the benefit of America.
    0:41:30 He does profess quite a fondness for Vladimir Putin as a leader.
    0:41:35 Let’s say that Trump decides rather than being these neocold war antagonists, why don’t we
    0:41:40 join forces and that we should essentially form an alliance, maybe even a merger?
    0:41:46 How far could Donald Trump go in not only tearing up existing alliances, but maybe creating
    0:41:47 new ones?
    0:41:48 He can do what he wants.
    0:41:55 He and Putin could agree that henceforth the United States and Russia are military allies.
    0:41:59 Let’s suppose they entered into an agreement that if one country were invaded, then the
    0:42:04 other country will come to its aid, and then subsequently Russia’s invaded, I don’t know,
    0:42:09 by China, he would have the power to bring the military to Russia’s aid.
    0:42:13 If he can do those sorts of things, there are possible ways to constrain him.
    0:42:18 But just looking at the tradition of presidential power, presidents make agreements all the
    0:42:19 time.
    0:42:25 Obama himself made the Iran agreement and the Paris agreement on climate change without
    0:42:28 the involvement of the Senate, even though the Constitution says the Senate’s supposed
    0:42:31 to be involved in treaties.
    0:42:37 But in many ways, his power is limited because he can’t use a treaty to affect the rights
    0:42:41 and obligations of Americans on American soil.
    0:42:48 So he couldn’t, for example, order every American to send a check of $100 to the Russian Treasury.
    0:42:52 That wouldn’t work, even if he promised Putin that he would do that.
    0:42:54 So it’s kind of a complicated thing.
    0:42:56 But if he wants to destroy the world, he can do it.
    0:42:57 That’s our system.
    0:43:03 If he wants to enter into crazy alliances or tear up good alliances, he can do that up
    0:43:09 until he’s impeached or until he leaves office and is replaced by another president who puts
    0:43:11 everything back in order.
    0:43:14 But that’s what presidents have been doing for quite a long time.
    0:43:20 Hearing you talk, I have to think that if someone is even a little bit of a constitutionalist,
    0:43:25 then they have to be worried that the presidency is turning or seems to be turning into a
    0:43:27 form of dictatorship.
    0:43:28 Is that happening?
    0:43:29 Yes.
    0:43:33 I think that is happening, although dictatorship is such a freighted term.
    0:43:34 That’s a better word.
    0:43:40 I like the term presidential primacy, but that’s a kind of vague, weasly way of putting
    0:43:41 it, isn’t it?
    0:43:43 Well, you are a legal scholar.
    0:43:45 We expect vague and weasly from you people.
    0:43:46 Yes, it’s true.
    0:43:51 I mean, the Romans, for example, they had an office called the dictator, the temporary
    0:43:56 office, sort of like a commander-in-chief who would lead the forces for six months or
    0:43:59 a year, but would also have dictatorial power.
    0:44:03 People thought this was unfortunate, but necessary in certain emergency situations.
    0:44:08 But nowadays, when we think of dictator, we think of Hitler and people like that, and
    0:44:11 I don’t think the presidency is headed in that direction.
    0:44:17 I think what we’re getting is an administrative state headed by the president, but the reason
    0:44:23 why the president isn’t going to be Hitler or anybody like him in the foreseeable future
    0:44:28 is that he continues to need political support and the support of his subordinates in the
    0:44:32 executive branch, who he needs to carry out his orders.
    0:44:37 And it’s support in the press, and the country is just very complicated.
    0:44:41 There’s a kind of a technical sense in which the president has more dictatorial power than
    0:44:44 the founders’ imagined he would.
    0:44:49 I think the practical implications aren’t nearly as terrifying as that word suggests
    0:44:54 because there continues to be all these constraints, political and others, that prevent him from
    0:44:58 acting in an arbitrary fashion.
    0:45:03 You would be forgiven for thinking this conversation with Eric Posner happened after the 2016
    0:45:08 election of Donald Trump, but it was actually published a couple months beforehand.
    0:45:13 As we all know, Trump’s single term was quite eventful, and now Joe Biden is finishing up
    0:45:15 his single term.
    0:45:20 So with another election coming soon, we thought it might be a good idea to go back to Eric
    0:45:24 Posner to talk about everything that’s happened since 2016.
    0:45:30 I will say that I have changed my views about the presidency to some extent.
    0:45:34 That’s coming up in our very next episode very soon, so I’m glad you finished with
    0:45:38 this one because that one will be waiting for you if it isn’t already.
    0:45:46 In part two, we will also ask if betting on elections is a terrible idea or a great idea.
    0:45:53 Because betting on elections led to the demise of democracy or terrible scandals, I don’t
    0:45:54 see it.
    0:45:55 That’s next time.
    0:45:57 Until then, take care of yourself.
    0:46:00 And if you can, someone else do.
    0:46:02 Freakonomics Radio is produced by Stitcher and Renbud Radio.
    0:46:08 You can find our entire archive on any podcast app also at Freakonomics.com, where we publish
    0:46:10 transcripts and show notes.
    0:46:13 This episode was produced by Greg Rizalski.
    0:46:17 Our staff includes Alina Cullman, Augusta Chapman, Dalvin Abouaji, Eleanor Osborne,
    0:46:21 Ellen Franckman, Elsa Hernandez, Gabriel Roth, Greg Rippin, Jasmine Klinger, Jeremy
    0:46:26 Johnston, John Schnarrs, Lyric Bowditch, Morgan Levy, Neil Caruth, Rebecca Lee Douglas, Sarah
    0:46:28 Lilly, Teo Jacobs, and Zach Lipinski.
    0:46:33 Our theme song is Mr. Fortune by the Hitchhikers, and our composer is Luis Guerra.
    0:46:37 As always, thank you for listening.
    0:46:40 Good.
    0:46:42 You don’t sound excited.
    0:46:47 Takes a lot to excite me.
    0:46:56 The Freakonomics Radio Network, the hidden side of everything.
    0:46:59 [MUSIC PLAYING]

    Sure, we all pay lip service to the Madisonian system of checks and balances. But presidents have been steadily expanding the reach of the job. With an election around the corner, we updated our 2016 conversation with the legal scholar Eric Posner — who has some good news and some not-so-good news about the power of the presidency. (Part one of a two-part series.)

     

    • SOURCE:
      • Eric Posner, professor of law at the University of Chicago Law School.  

     

     

  • 605. What Do People Do All Day?

    AI transcript
    0:00:03 [MUSIC PLAYING]
    0:00:05 If you drive north northeast out of New York City,
    0:00:06 you hit Connecticut.
    0:00:09 And if you keep going north on Route 8 for a while,
    0:00:11 you get to the little town of Winstead.
    0:00:15 Stay right at the fork, and you will come upon an old brick
    0:00:16 warehouse.
    0:00:19 It used to be part of a factory that made woolens and knitwear,
    0:00:22 including, as the legend has it, the long baseball
    0:00:26 socks worn by the New York Yankees and the Boston Red Socks.
    0:00:28 But the factory closed many years ago,
    0:00:30 and the warehouse today is a museum
    0:00:33 called the American Mural Project.
    0:00:35 It is a tribute to the American worker,
    0:00:38 and it took more than 20 years to build.
    0:00:41 It was a collaboration between artists, school kids,
    0:00:44 a few celebrities, and all kinds of workers.
    0:00:48 At the museum, they will tell you that 15,000 people helped
    0:00:50 create this project.
    0:00:52 But really, it’s the work of one woman.
    0:00:57 My name is Ellen Grizadik, and what do I do?
    0:00:59 I’m an artist, and people tell me
    0:01:03 I’m the president of this organization now.
    0:01:05 Full disclosure, Ellen is an old friend of mine.
    0:01:08 She lives near here, along with her husband Sam Posey,
    0:01:11 an architect and former race car driver.
    0:01:15 They are two of the nicest and most interesting people I know.
    0:01:19 Ellen is a painter who started out as a sports photographer.
    0:01:22 She shot NASCAR races and 24 Hours of Le Mans.
    0:01:26 She shot Bjorn Borg and Billie Jean King and many others.
    0:01:30 She was famous for spending a lot of time with her subjects,
    0:01:32 for really getting her nose in things.
    0:01:36 And sometimes, they put their nose in her things,
    0:01:39 like that time she was with Muhammad Ali
    0:01:42 at his training camp in rural Pennsylvania.
    0:01:44 I stayed a couple of weeks at Deer Lake.
    0:01:47 Muhammad’s talking to me, and between sparring,
    0:01:49 we were out at a wood pile, and it was still dark.
    0:01:51 We had the run, and he said, what are you
    0:01:54 going to do with all these photos and paintings and stuff?
    0:01:55 And I said, I don’t know.
    0:01:58 He says, you’ve got to think hard about how
    0:02:03 to do something with this that really can affect kids,
    0:02:06 can make a difference to how kids grow up
    0:02:08 and think about what they want to do.
    0:02:12 And I thought that was like, whoa, OK, that’s a big assignment.
    0:02:15 She ended up taking the big assignment.
    0:02:16 I’m interested in people.
    0:02:19 As an artist, I’m not going to say, oh, god,
    0:02:20 look at that lovely sunset.
    0:02:22 I want to do something about that.
    0:02:27 I’m going to see Bob on the Westside Highway up on a beam,
    0:02:30 see what he’s doing, and go, oh, I got to paint this.
    0:02:34 And she kept painting people, people in their workplace.
    0:02:36 It helped that she is able to talk herself into places
    0:02:40 that most of us can’t, like the Boeing airplane factory
    0:02:41 in Everett, Washington.
    0:02:44 The first thing that happens when you walk into this space
    0:02:46 is it’s so enormous.
    0:02:51 If you think the 747 is amazing as an airplane, take it apart.
    0:02:54 And you have all these little guys running around.
    0:02:57 People ride to their workstations on bikes.
    0:02:58 It is outrageous.
    0:03:01 One Boeing worker in particular caught her eye.
    0:03:07 He is the only guy who puts engines on 747s with his team.
    0:03:08 I said, what happens if you’re sick?
    0:03:11 And he said, they don’t put engines on.
    0:03:13 And when you see him up there with his team,
    0:03:17 which is about 22 minutes to put an engine on a 747,
    0:03:18 it’s something almost religious.
    0:03:20 You’re looking up 30 feet, and you see this thing
    0:03:22 come across the room.
    0:03:23 And you see it’s on chains and all this stuff.
    0:03:25 And these six guys hit it.
    0:03:28 And what do you mean by six guys hit it?
    0:03:30 Land on it with lifts and everything.
    0:03:32 And they secure it.
    0:03:34 I was like, I can’t believe what I just saw.
    0:03:35 How am I going to paint that?
    0:03:36 What am I going to do?
    0:03:41 Because I want other people to have the experience I’m having.
    0:03:44 Over time, she decided she would build a place where
    0:03:46 that experience could be had.
    0:03:49 After a couple of decades of work and planning,
    0:03:53 the American Mural Project opened to the public in 2022.
    0:03:55 Muhammad Ali would be happy to know
    0:03:57 that there are a lot of school field trips
    0:03:59 and after-school programs.
    0:04:02 The mural itself is a sprawling storyboard,
    0:04:06 oversized depictions of workers at work.
    0:04:07 Ellen walked us around.
    0:04:08 Let me just show you.
    0:04:09 Sure.
    0:04:10 Here’s where we are.
    0:04:12 So this is the mural.
    0:04:14 Sir Upper Left, that guy.
    0:04:15 That’s Bob.
    0:04:17 He’s an iron worker.
    0:04:18 I’ve been up on that beam with him.
    0:04:20 Next to him?
    0:04:23 Those two women are in charge of doing all the wiring
    0:04:28 in the 747 in the upper fourth quadrant.
    0:04:31 Look at the crap of wires that you have to somehow
    0:04:33 know where they go, what they do.
    0:04:34 Who’s this guy?
    0:04:37 He’s a foundry worker at River Rouge Ford.
    0:04:39 They’re making mustangs over there.
    0:04:41 These guys, that was so much fun.
    0:04:43 Those mustangs are going down the assembly line
    0:04:45 and it runs on a track.
    0:04:46 OK, then these three guys–
    0:04:52 These guys are mechanics on the biggest land-moving tractors
    0:04:53 you’ve ever seen.
    0:04:55 That’s in New Mexico.
    0:04:56 Who’s the farmer?
    0:04:59 Scott is the farmer and Nina is milking the cow.
    0:05:02 They work together on a dairy farm
    0:05:06 that is right opposite our house.
    0:05:09 Most of the jobs in this mural have two things in common.
    0:05:11 They require a lot of physical labor
    0:05:14 and they are the kind of jobs that
    0:05:16 have been disappearing in recent decades.
    0:05:19 And that is the reason for our visit today.
    0:05:22 I recently came across an interesting paper
    0:05:23 in the quarterly Journal of Economics.
    0:05:28 It’s called New Frontiers, the Origins and Content of New Work,
    0:05:31 1940 to 2018.
    0:05:33 The paper shows that around 60% of the jobs
    0:05:37 that people do today in the US didn’t exist in 1940.
    0:05:40 David Otter, an economist at MIT,
    0:05:42 is one of the authors of that paper.
    0:05:45 Does that mean we have 40% fewer types of work?
    0:05:48 Yes or no, because we have all these people in software,
    0:05:52 in pediatric oncology, and flight,
    0:05:54 geriatric services, things that we didn’t even
    0:05:55 think about 100 years ago.
    0:05:59 We used to have 40% of all employment
    0:06:01 in agriculture at the turn of the 20th century.
    0:06:03 Now we have under 2%.
    0:06:05 That was a technological phenomenon.
    0:06:08 You can find many, many cases of where we automated ourselves
    0:06:09 out of work.
    0:06:12 But we’re constantly thinking of new things to desire,
    0:06:15 new services to offer, new goods and products.
    0:06:18 And a lot of that is stuff we couldn’t previously do.
    0:06:24 Today on Freakonomics Radio, what do people today do all day?
    0:06:28 I mean that literally, if you are a sustainability consultant
    0:06:32 or a chief listening officer or scrum master,
    0:06:33 what do you actually do?
    0:06:36 It’s kind of nerve-wracking, I will be honest.
    0:06:38 We also ask what happens as work becomes
    0:06:41 more digital and less physical.
    0:06:45 Modern efficiency has robbed us of that profound satisfaction
    0:06:47 that comes from baking a loaf of bread,
    0:06:50 digging a hole in the garden, going fishing.
    0:06:53 And when we think about work, are we really just
    0:06:56 thinking about busy town?
    0:06:59 Stitches bought an egg beater so that his family could
    0:07:00 make fudge.
    0:07:03 [SNORING]
    0:07:05 Try not to get any on your new clothes, kids.
    0:07:09 [MUSIC PLAYING]
    0:07:18 This is Freakonomics Radio, the podcast
    0:07:22 that explores the hidden side of everything with your host,
    0:07:23 Stephen Dubner.
    0:07:26 [MUSIC PLAYING]
    0:07:35 OK, let’s get back to David Otter at MIT.
    0:07:37 I’m a labor economist, and I work on things
    0:07:40 that affect earnings, wages, skill demands, opportunities.
    0:07:42 We’ve had Otter on the show a couple times
    0:07:45 before in an episode about automation,
    0:07:49 called How to Stop Worrying and Love the Robot Apocalypse.
    0:07:53 In an episode called Did China Eat America’s Jobs?
    0:07:56 Otter himself has had more jobs than most academics
    0:07:58 and different jobs.
    0:08:00 I did a lot of work in fast food.
    0:08:02 I spent a month working at McDonald’s and half a year
    0:08:05 working at Papa Geno’s, which is a pizza franchise
    0:08:06 in the Boston area.
    0:08:08 I did a lot of blue collar work.
    0:08:09 I also worked as a temp.
    0:08:13 I did light construction and cleaning.
    0:08:15 I did software development for a while,
    0:08:18 and I also spent several years directing a nonprofit in San
    0:08:20 Francisco that did computer education for the poor.
    0:08:23 I also fixed cars and motorcycles and electronics.
    0:08:26 It would surprise none of his peers
    0:08:28 if David Otter were to win a Nobel Prize.
    0:08:30 His research is very well regarded,
    0:08:32 and he is considered an honest broker,
    0:08:34 not the kind of academic researcher
    0:08:37 whose work can feel like advocacy.
    0:08:40 He recently co-chaired an MIT task force
    0:08:43 on the future of work, and the Economist magazine
    0:08:47 has called him the academic voice of the American worker.
    0:08:49 I wanted to speak with Otter about that recent paper
    0:08:52 of his, which found that 60% of today’s jobs
    0:08:54 didn’t exist in 1940.
    0:08:57 His co-authors were the economists Caroline Chin,
    0:09:00 Anna Salamans, and Brian Sigmiller.
    0:09:03 So we’re actually building on work by Jeff Lynn,
    0:09:05 who’s an economist at the Philadelphia Federal Reserve
    0:09:08 Bank, and what he noticed is that the Census Bureau,
    0:09:10 every decade, they collect the census,
    0:09:12 they ask you what your industry and occupation is,
    0:09:14 and that’s not a bubble form.
    0:09:16 You just write it in, and if you write it in,
    0:09:20 that means that someone has to classify it into a category.
    0:09:22 But people can write in all kinds of crazy stuff,
    0:09:26 and so they create these volumes, these classified indices,
    0:09:29 where you might say, well, I’m a surgical brace technician,
    0:09:30 and they’d say, oh, healthcare specialists,
    0:09:32 not elsewhere, classified.
    0:09:35 But over time, those unclassified subcategories
    0:09:37 can get classified.
    0:09:39 And as they see in more and more entries,
    0:09:40 they start filling out this volume,
    0:09:43 so different subspecialties are added every decade.
    0:09:45 Now, it’s a lot messier than it sounds,
    0:09:48 but we got an enumeration of new work,
    0:09:49 and that’s how we measured it.
    0:09:51 So your team here, can you just give me
    0:09:53 a sense of how long this took?
    0:09:55 What was the scope of work?
    0:09:57 This project took five years.
    0:09:58 It was a huge measurement project,
    0:10:01 ’cause it wasn’t actually just measuring the new titles,
    0:10:04 but also measuring the innovations that affected them.
    0:10:06 We wanted to distinguish between innovations
    0:10:10 that automate, that basically execute the tasks
    0:10:13 that are inputs into a job versus innovations
    0:10:16 that augment, meaning they increase the quality
    0:10:19 or variety of specialized work
    0:10:21 that people can produce in their occupations.
    0:10:24 And so we used a big machine learning system
    0:10:27 to try to distinguish those categories.
    0:10:28 And what we wanted to show was that,
    0:10:31 or at least hoped to be able to establish,
    0:10:33 was that innovation had multiple faces,
    0:10:34 and there were certainly innovations
    0:10:37 that were just displacing work,
    0:10:39 reducing the number of workers and simplifying jobs.
    0:10:40 And there were other innovations
    0:10:43 that seemed to be creating new demands
    0:10:44 for complementary expertise
    0:10:47 that were leading to employment growth and wage growth,
    0:10:49 and these are often happening in the same place.
    0:10:51 Can you give an example of each of those, please?
    0:10:55 So a good example is we found patents
    0:10:59 that essentially created permanent press clothing,
    0:11:01 and they were negative for dry cleaners.
    0:11:05 And then we saw other patents
    0:11:08 that enabled people to do more efficient typesetting
    0:11:11 and editing, and that had multiple faces.
    0:11:12 On the one hand, it speeds up the work,
    0:11:14 so maybe you need fewer people.
    0:11:16 On the other hand, it demands more specialized knowledge.
    0:11:21 Specialized knowledge comes in many forms.
    0:11:22 Just look at the new job titles,
    0:11:26 Otter and his team came across in the census data.
    0:11:29 In 1950, Tetuwer.
    0:11:31 In 1980, Hypnotherapist.
    0:11:34 In 1990, Conference Planner.
    0:11:36 – Some of it’s, you know, bullshit titles, right?
    0:11:39 You go from greeter to customer relations manager.
    0:11:40 But some of that specialization
    0:11:42 is not because jobs are getting narrower,
    0:11:44 but because they’re getting deeper.
    0:11:44 You have oncologists,
    0:11:47 and all of a sudden you have a pediatric oncologist.
    0:11:49 That’s not just because as a favor
    0:11:50 they gave someone a new title.
    0:11:53 It’s because someone specialized in pediatric oncology.
    0:11:54 Medicine is a great example
    0:11:56 because the frontier of medical knowledge
    0:11:58 is so deep and so wide
    0:11:59 that no one can be the master of all of it.
    0:12:02 And hence we have to specialize.
    0:12:04 – Talking about specialization in medicine,
    0:12:05 it just makes me wonder
    0:12:07 when you look at this whole universe of data
    0:12:10 that you’re starting to describe now,
    0:12:13 we read often that healthcare comprises
    0:12:17 about 18% of GDP in the US.
    0:12:20 Do we see a relatively tight relationship
    0:12:23 between the share of GDP of a general sector
    0:12:26 and the growth or fall of jobs?
    0:12:29 – Yes, generally sectors that have a larger share of GDP
    0:12:31 are growing and healthcare is a very large employer
    0:12:32 at this point.
    0:12:34 It’s also the case that the growing sectors
    0:12:36 have more types of new work.
    0:12:38 For example, when manufacturing declines
    0:12:40 as a result of the China trade shock,
    0:12:42 not only do we see a decline in the number of workers,
    0:12:45 but we also see a slowdown in the creation
    0:12:47 of new types of work, of new specialty.
    0:12:49 And conversely, when we all of a sudden start
    0:12:51 making investments in the electrical grid,
    0:12:52 all of a sudden you find new occupations
    0:12:54 like solar plumbers and solar electricians.
    0:12:56 Those are people, they’re plumbers and electricians
    0:12:58 who started specializing in solar installations.
    0:12:59 And that’s a real skill.
    0:13:01 They made up the title for themselves initially,
    0:13:03 but eventually it becomes a specialty.
    0:13:06 – In the census data they examined,
    0:13:08 Otter and his colleagues found that many of the new jobs
    0:13:12 in the 1940s were in mechanical work and office work,
    0:13:16 jobs like carburetor man and speedometer repair man,
    0:13:18 jobs like letter opener operator
    0:13:21 and check writing machine operator.
    0:13:24 And these jobs tended to pay relatively well.
    0:13:27 But around 1980, there was a shift in the new kinds of jobs
    0:13:29 and there was a beginning of a split.
    0:13:32 – A lot of these things in the last 50 years
    0:13:34 have become rather bifurcated.
    0:13:36 Many of them are in the professional, technical
    0:13:38 and managerial, highly educated occupations.
    0:13:40 And then many of them are in personal services,
    0:13:42 caring for the elderly and manicuring
    0:13:46 or entertainment activities or even like mall gardener.
    0:13:51 And those unfortunately tend not to be as highly paid.
    0:13:53 Although the new work may be somewhat better paid
    0:13:56 than the other work within that same occupation,
    0:13:59 the growth of personal services has not been
    0:14:01 an altogether positive thing for the labor market,
    0:14:03 better than it not growing, but it’s growing in place
    0:14:06 of a lot of the manufacturing and office work
    0:14:07 that was around earlier.
    0:14:10 That work was more specialized, required more expertise
    0:14:12 and therefore tended to pay somewhat better.
    0:14:13 And we find some evidence,
    0:14:15 although I think it’s much more tentative
    0:14:19 that this pace of automation has accelerated
    0:14:22 relative to the pace of new work creation.
    0:14:25 – If you look at it overall with all those components,
    0:14:30 how would you describe this change in the last 800 years
    0:14:35 comparing with, I guess, any other point in history?
    0:14:39 – These last 80 years have been the most extraordinary
    0:14:41 in human history for innovation.
    0:14:43 Our standards of living have risen so fast,
    0:14:45 it’s almost impossible to have an adequate perspective.
    0:14:51 – To be fair, we might not expect a modern labor economist
    0:14:53 to have an adequate perspective
    0:14:56 on something as complicated as the history of work.
    0:14:59 So who might have that perspective?
    0:15:02 – Work has always in some ways defined what people do,
    0:15:05 certainly since the agricultural revolution.
    0:15:06 – That is James Suzman.
    0:15:09 He is an anthropologist who spent time in academia
    0:15:11 and now writes books.
    0:15:14 He also once held a very unlikely corporate job,
    0:15:16 which we’ll hear about later.
    0:15:18 Today, he splits time between Cambridge, England,
    0:15:21 a farmhouse in France and the Kalahari Desert
    0:15:23 in Southern Africa,
    0:15:25 where he’s been doing field work for years.
    0:15:30 – I’ve been working with Bushman since the early 1990s.
    0:15:32 The principal reason I went there
    0:15:36 was I was a student in St Andrews in Scotland.
    0:15:40 And we had the opportunity to undertake field work
    0:15:42 as part of our undergraduate degrees.
    0:15:46 And Scotland is bloody miserable and cold.
    0:15:48 And so I thought,
    0:15:51 what is the hottest possible place I could go to?
    0:15:54 The Kalahari Desert came to mind.
    0:15:57 And when I got there, I discovered I got on
    0:15:58 well with the Bushman.
    0:16:00 But there was also another motivation behind it,
    0:16:03 which was that I grew up as a South African.
    0:16:06 Southern Africa was in a period of great transition
    0:16:09 at the time, apartheid was ending,
    0:16:11 lives were changing fast,
    0:16:15 and I wished very much to be part of that.
    0:16:18 The Bushman were highly marginalized community
    0:16:19 within that process.
    0:16:23 So I became very focused on working with them.
    0:16:25 – I’ve heard that phrase forever, Bushman of the Kalahari,
    0:16:27 but I have no idea who they are,
    0:16:28 where they are, what they do.
    0:16:30 Can you give us a quick description?
    0:16:33 – The Bushman of the Kalahari are the direct descendants
    0:16:36 of the original Homo sapiens
    0:16:37 that lived in Southern Africa
    0:16:40 from around 300,000 years ago.
    0:16:42 It’s a very dry area.
    0:16:45 And it was largely unattractive to farmers
    0:16:47 because it’s a desert.
    0:16:50 So the Bushman are often regarded or were regarded
    0:16:52 as the sort of sine qua non
    0:16:55 of a contemporary hunting and gathering society
    0:16:57 that offered potential insights
    0:16:59 into the way Stone Age ancestors lived.
    0:17:02 – And how much of that culture is still extant?
    0:17:05 – Look, cultures are continuously dynamic
    0:17:07 and changing things.
    0:17:10 And the world has changed dramatically
    0:17:13 for pretty much everybody, everywhere.
    0:17:17 In places like the Kalahari over the last 50 years,
    0:17:20 hunting and gathering as a primary way
    0:17:23 of making a living has effectively disappeared.
    0:17:25 – So when you started going there,
    0:17:26 what kind of work were they doing?
    0:17:28 – When I started working with them,
    0:17:32 they’d been forcibly evicted from most of their land,
    0:17:35 which had been stolen by big cattle ranchers.
    0:17:39 They were then forced to work on at the time.
    0:17:42 It was mainly Africana owned farms
    0:17:46 where they’d be living in fairly miserable circumstances.
    0:17:49 They work incredibly long hard hours
    0:17:52 for very little reward indeed.
    0:17:54 They had a series of obvious questions
    0:17:56 about this, why do we work so hard?
    0:18:00 When the rewards are so slim, if this is progress,
    0:18:01 if this is what coming part
    0:18:04 of the great dominant economy is,
    0:18:07 then why are we so much worse off than we were before?
    0:18:09 Why do we have so much less leisure time?
    0:18:13 Why are we so much worse nourished than we were?
    0:18:14 – And did you have any answers for them?
    0:18:16 – I didn’t have answers for them.
    0:18:18 That’s what shaped many of the questions
    0:18:20 I’ve pursued in my working life.
    0:18:25 – Sussman’s most recent book is called Work,
    0:18:28 A Deep History from the Stone Age to the Age of Robots.
    0:18:30 Let’s start with the Stone Age
    0:18:33 and the hunter-gatherer economy.
    0:18:35 – Hunter-gatherers organize their economies
    0:18:37 in fundamentally different ways.
    0:18:39 The most fundamental of those was that
    0:18:42 they did not accept the principle of scarcity.
    0:18:44 They did not assume that all resources
    0:18:47 were inherently scarce.
    0:18:50 Rather, they assumed that the world
    0:18:53 was an inherently generous place,
    0:18:57 that the environment was inherently provident,
    0:19:00 and that effectively, they didn’t have to go out
    0:19:02 and, you know, as a hunter-gatherer,
    0:19:06 the approach to securing the food that you need to eat.
    0:19:09 The food is already produced, in effect, by the environment,
    0:19:13 and so it’s a process of going out and harvesting it.
    0:19:15 Even in a place like the Kalahari Desert,
    0:19:21 which looks utterly barren and bereft of anything edible
    0:19:23 to a skilled forager, it’s full of stuff,
    0:19:25 and a really good wet season.
    0:19:28 It’s like living in a massive warm-out.
    0:19:31 You simply just go and pick up whatever you want
    0:19:32 when you feel like it.
    0:19:35 They did not think far into the future
    0:19:36 because they didn’t need to.
    0:19:39 When you went and hunted, you didn’t hunt for six weeks.
    0:19:42 If you could kill six elephants and try and store the meat,
    0:19:44 actually, all the meat would waste.
    0:19:47 So people tended to feed themselves spontaneously,
    0:19:48 and they had what anthropologists
    0:19:51 would call an immediate return economy,
    0:19:55 where short-term needs were easily and quickly satisfied.
    0:19:57 Based on actual evidence,
    0:20:01 and I have no idea what evidence would be going that far back,
    0:20:05 how satisfied was someone living that life
    0:20:09 and how did their work contribute to that satisfaction?
    0:20:12 My sense of it, based on recent and contemporary
    0:20:14 hunting and gathering societies,
    0:20:19 was that life had a very high level of satisfaction.
    0:20:22 There was not a kind of existential angst,
    0:20:25 which I think is a source of great dissatisfaction.
    0:20:28 These societies also, it’s worth pointing out,
    0:20:31 were on the whole extremely egalitarian.
    0:20:35 So, for example, Genoasi absolutely refused
    0:20:37 to accept anybody’s leadership.
    0:20:39 And a whole series of social rules
    0:20:43 about sharing responsibilities and sharing resources
    0:20:47 kept the society on a very even keel,
    0:20:49 even to the extent that productive hunters tend to,
    0:20:51 you know, if you showed up back at the camp
    0:20:52 having killed a massive giraffe,
    0:20:56 you would basically be insulted for having brought in the meat.
    0:20:58 And the idea was, as old men would say,
    0:20:59 we do it to cool young men’s hearts,
    0:21:01 so they don’t get ahead of themselves.
    0:21:04 It creates this kind of levelling mechanism.
    0:21:06 There were all sorts of tricks and games
    0:21:09 that they used to be able to effectively share resources.
    0:21:13 So nobody wasted time on the politics of getting ahead.
    0:21:17 – So what changes as the hunter-gatherer lifestyle fades away
    0:21:20 and we move into the agricultural period
    0:21:22 and the peasant lifestyle?
    0:21:25 – So I talked about this immediate return economy.
    0:21:28 Everything was focused on satisfying their immediate needs.
    0:21:31 Farming, by other hand, is a delayed return economy.
    0:21:35 Every job you do is focused on an uncertain future.
    0:21:37 So you build surpluses for the future,
    0:21:38 but also all the work you do.
    0:21:41 When you plant or when you plough your field,
    0:21:42 or till it or weed it,
    0:21:44 everything is in the hope that maybe six months down the line,
    0:21:46 you’ll get a harvest that you can then process
    0:21:49 if it’s wheat and eventually thresh and turn into flour
    0:21:51 and eventually you might get a loaf of bread.
    0:21:52 So if you plant in spring,
    0:21:56 you might get a loaf of bread by wintertime if you’re lucky.
    0:21:57 So everything was really hard work
    0:22:00 and the risks were extremely high of not doing that work.
    0:22:03 There was always more work to do.
    0:22:04 Once you’ve planted the wheat,
    0:22:06 you have to continuously maintain it.
    0:22:09 Now you might be lucky and there might be no pests,
    0:22:10 there might be a year with fewer weeds,
    0:22:12 there might be a year with perfect rainfall.
    0:22:13 But on the whole note,
    0:22:16 so to be a successful farmer would require
    0:22:17 taking a huge number of steps
    0:22:20 to mitigate risks that may well not happen.
    0:22:23 Putting the fence around the field to protect it from birds,
    0:22:25 even if you might not have a year with birds,
    0:22:26 doing the steps to make sure
    0:22:29 that you could have the capability to irrigate that field,
    0:22:32 even if it happened to be a year where the rainfall was good.
    0:22:34 There was always more work that could be done
    0:22:38 in order to create that basic level of security.
    0:22:41 The archeological history of agricultural peoples,
    0:22:44 heasant peoples, when we dig up their bones,
    0:22:46 we see work-worn bodies.
    0:22:49 You worked long and hard,
    0:22:51 you probably died young and died miserable,
    0:22:54 and also probably your teeth were falling out
    0:22:59 and you were relatively anemic and life was tough.
    0:23:01 – Let’s talk about the notion of scarcity a bit,
    0:23:04 but let’s bring it into at least the 19th
    0:23:08 and 20th and 21st centuries in chapter 12 of your book,
    0:23:10 which is called, it’s a good title,
    0:23:12 “Mality of Infinite Aspiration.”
    0:23:14 You write, “For as long as people have congregated
    0:23:17 “in cities, their ambitions have been molded
    0:23:19 “by a different kind of scarcity from that
    0:23:21 “which shapes those of subsistence farmers,
    0:23:24 “a form of scarcity articulated in the language
    0:23:26 “of aspiration, jealousy, and desire
    0:23:29 “rather than of absolute need.”
    0:23:30 And for the most part,
    0:23:31 you write, “This kind of relative scarcity
    0:23:33 “is the spur to work long hours,
    0:23:37 “to climb the social ladder and to keep up with the Joneses.”
    0:23:40 When I read that, I was very struck by it.
    0:23:43 It’s one of those big observations
    0:23:45 that for me at least is obvious in retrospect,
    0:23:47 but I don’t think it’s the first thing
    0:23:48 that a lot of people think about
    0:23:50 when they think about the modern economy
    0:23:52 and why we work so hard.
    0:23:53 We think we work so hard to make money
    0:23:55 to get the things that we want and so on.
    0:23:58 Can you talk about the pros and cons
    0:24:03 of this close relationship between work and status,
    0:24:05 especially in modern cities?
    0:24:07 – I suppose the way to make sense of it
    0:24:10 is to get a sense of what came before it
    0:24:13 or the difference between cities and country side,
    0:24:14 first of all.
    0:24:16 Everybody in rural areas was involved
    0:24:19 in effectively creating, generating,
    0:24:22 and acquiring the energy we needed to live, grow,
    0:24:23 and reproduce.
    0:24:26 That was what they spend their working lives on
    0:24:28 within cities, by contrast.
    0:24:31 People spent their energy and time
    0:24:35 using that energy provided by people in the countryside.
    0:24:38 The move to cities was this massive act
    0:24:40 of liberation in a sense.
    0:24:43 People were suddenly no longer tied to the process
    0:24:47 of securing the energy they needed to feed themselves
    0:24:49 to reproduce, and it resulted
    0:24:53 in this extraordinary proliferation of jobs.
    0:24:58 It also transformed the way people constituted value
    0:25:02 and saw themselves in relation to other people.
    0:25:03 When we moved into the era
    0:25:07 where we developed professions or casts,
    0:25:10 these became great identifiers in and of themselves
    0:25:13 because people tended to form communities
    0:25:16 based around common practice and common experience.
    0:25:20 A chef in ancient Rome will have a great deal more in common
    0:25:22 with other chefs in ancient Rome.
    0:25:24 Then, for example, the people that they served their meals to,
    0:25:27 even if they may live in the same great house.
    0:25:30 There was very little connection between them.
    0:25:32 Same thing, of course, happens now.
    0:25:34 If you take a coder from Laos
    0:25:39 and a coder from San Francisco and a coder from Zurich,
    0:25:41 they’re probably likely to have a great deal more in common
    0:25:42 with one another.
    0:25:44 They’ll be able to strike up an effective conversation
    0:25:46 and share a whole series of symbols
    0:25:49 around which they build their day-to-day identity
    0:25:52 that they wouldn’t be able to do similarly with a builder
    0:25:55 or one of the farmers in the fields outside my house
    0:25:57 in France on that tractors.
    0:26:03 I think people enjoy work more than they enjoy their jobs
    0:26:04 at some sense.
    0:26:07 That, again, is the economist David Otter.
    0:26:10 It’s not just like I’m so happy to be in the office at this hour.
    0:26:13 It’s more like my job is part of my identity.
    0:26:14 It’s part of my group of friends.
    0:26:15 It’s what I tell people about.
    0:26:16 It keeps me engaged.
    0:26:18 So I may not love every hour I’m working,
    0:26:21 but I like that more than the unstructured life
    0:26:23 that doesn’t have that sense of service.
    0:26:26 Now, of course, there’s a huge variety in the quality of jobs.
    0:26:29 And by the way, the best predictor of job satisfaction is pay,
    0:26:30 but that’s not the only thing.
    0:26:33 People care about dignity and they care about security.
    0:26:35 And how much do they care about productivity?
    0:26:39 After all, that is the yardstick that economists use.
    0:26:42 The anthropologist James Sussman in his book, Work,
    0:26:45 tells a story about Kellogg’s, the cereal company.
    0:26:46 During the Great Depression,
    0:26:48 the company cut their workers’ hours
    0:26:50 to create an additional shift,
    0:26:52 which let them hire more people.
    0:26:55 The work day went from eight hours to six.
    0:26:58 Within a couple of years, they came to the realization
    0:27:01 that their workers were producing in their six-hour shifts,
    0:27:03 the same amount of value as they’d been doing
    0:27:04 in their eight-hour shifts.
    0:27:07 And they kept their 30-hour week on the books
    0:27:09 for a very long time.
    0:27:10 It was only in the 1950s
    0:27:14 when you had this era of great aspiration coming,
    0:27:17 the birth of the great consumerist America.
    0:27:18 And in the case of Kellogg’s,
    0:27:22 the workers voted to increase their working week
    0:27:26 to 40 hours because they wanted more money
    0:27:27 and they wanted more money
    0:27:30 to be able to consume more things.
    0:27:34 They wanted more money to consume more things.
    0:27:37 Lest you think that Sussman is being judgmental
    0:27:39 when he says that, keep in mind
    0:27:42 that he has faced the same kind of choice.
    0:27:45 A while back, he stopped working as an anthropologist
    0:27:49 to take a job with De Beers, the huge diamond cartel.
    0:27:53 He worked in public affairs and corporate social responsibility.
    0:27:56 I was surprised to learn this about Sussman,
    0:27:58 especially since De Beers has been known
    0:28:00 for a variety of questionable behaviors
    0:28:02 from exploiting their workers
    0:28:06 to marketing diamonds as a rare and expensive commodity
    0:28:09 when in fact they are a relatively common mineral.
    0:28:13 So how did this anthropologist wind up working at De Beers?
    0:28:17 – By 2007, I had a pregnant partner
    0:28:20 from my whatever first 15 years of work
    0:28:22 with my PhD and my masters
    0:28:26 and having worked frontline in difficult places.
    0:28:30 All I had to my name was a four by four battered rifle
    0:28:33 and my camping kit in Botswana.
    0:28:34 And suddenly I had a baby.
    0:28:36 Had there been universal basic income,
    0:28:39 I may well have been able to stick with that
    0:28:42 process of actually doing some really worthwhile work.
    0:28:45 – It’s such an interesting side gig for you,
    0:28:48 especially in light of what we were talking about earlier
    0:28:49 about scarcity.
    0:28:50 You know, there was a passage in your book
    0:28:51 that really caught my attention.
    0:28:53 You write that the principal purpose
    0:28:54 of your undertaking with this book
    0:28:58 is to “loosen the claw-like grasp
    0:29:01 that scarcity economics has held over our lives
    0:29:03 and thereby diminish our corresponding
    0:29:06 and unsustainable preoccupation with economic growth.”
    0:29:08 But when I think about scarcity,
    0:29:11 especially false scarcity, I think of De Beers.
    0:29:14 – Absolutely, the absolute masters of it.
    0:29:16 Admittedly, by the time I joined them,
    0:29:18 that business model had gone.
    0:29:20 – It lasted a while though, didn’t it?
    0:29:24 – It lasted a while and they did an absolutely brilliant job
    0:29:25 of creating scarcity,
    0:29:28 while simultaneously manufacturing desire.
    0:29:29 – James, how much were you paid at De Beers?
    0:29:32 I assume it was quite a bit more than college professor
    0:29:33 or author, yes?
    0:29:37 – Yes, I was paid, I suppose.
    0:29:39 Well, actually, I also discovered
    0:29:40 that I was crap at business.
    0:29:41 I didn’t know how to negotiate.
    0:29:44 So when it came to things like negotiating salaries
    0:29:47 and so on, I discovered after I’d left
    0:29:50 and I did very, very poorly a deed,
    0:29:51 one of the reasons I left was actually
    0:29:54 I’d paid off my house after seven years.
    0:29:56 And I thought, well, I don’t really need
    0:29:57 a great deal more stuff.
    0:30:01 For me, my issue with the question of scarcity
    0:30:03 is this idea that we all have infinite desires.
    0:30:06 I absolutely do not have infinite desires.
    0:30:09 I have really quite limited desires.
    0:30:12 Like 2013, after seven years at De Beers,
    0:30:14 I’d satisfied that I paid off my house
    0:30:17 and I immediately went back to working with Bushman again
    0:30:21 and writing books for really measly advances.
    0:30:22 But because I didn’t have the burden
    0:30:25 of having to pay a massive mortgage,
    0:30:27 I could afford to do that.
    0:30:29 – So how selfish is it for someone to want a job
    0:30:31 that satisfies them?
    0:30:34 – I mean, this for me is the fundamental question.
    0:30:36 My sense is that much of the work that we do now
    0:30:38 is simply there.
    0:30:40 We create jobs because our social contract
    0:30:43 of our modern economy is based on the fact
    0:30:46 that everybody has to contribute labor.
    0:30:49 I think it is no longer necessary for everybody
    0:30:51 to have to contribute that kind of labor.
    0:30:53 And so what we do is we become very imaginative
    0:30:57 about creating really crap low-paid jobs for people to do
    0:31:00 in order that they can simply get that license
    0:31:03 to participate in our society.
    0:31:04 – What you’re describing now,
    0:31:05 you’re talking about what David Graber described
    0:31:07 as bullshit jobs, right?
    0:31:09 All these jobs that aren’t that important,
    0:31:12 aren’t that meaningful, people hate them and so on.
    0:31:13 And, you know, there’s been some dispute
    0:31:16 about how many jobs really are like that.
    0:31:18 But let’s assume that there’s some significant fraction
    0:31:21 of that when you describe that scenario,
    0:31:23 who is the villain in your telling of the story?
    0:31:25 Because it’s not like we have a command
    0:31:28 and control economy like some countries have had.
    0:31:30 – Look, I’m a good anthropologist.
    0:31:31 There is no villain.
    0:31:33 We build these structures,
    0:31:36 conceptual structures like an economy,
    0:31:38 like our agreements amongst all of us
    0:31:41 that we prepare to accept pieces of paper
    0:31:43 and our dabs of plastic,
    0:31:46 a sort of medium of accepted exchange.
    0:31:49 We build these institutions that exist above and beyond us
    0:31:51 and they, in a sense, develop a life of their own.
    0:31:54 So they become very, very difficult to change.
    0:32:01 – As evidence of just how hard that kind of change can be,
    0:32:03 consider the famous prediction made in 1930
    0:32:05 by the economist John Maynard Keynes.
    0:32:08 He said that productivity increases
    0:32:11 and technological advances would lead to a 21st century
    0:32:15 that would be an age of leisure and of abundance
    0:32:19 and that we would work just 15 hours a week.
    0:32:20 That hasn’t happened,
    0:32:23 but we have been moving in that direction.
    0:32:24 Here’s David Otter again.
    0:32:28 – We work a lot less than we used to in many dimensions.
    0:32:29 At the turn of the 20th century,
    0:32:33 Americans worked about 3,000 hours per year on average.
    0:32:35 At present, it’s under 2,000.
    0:32:38 Additionally, we have weekends,
    0:32:40 which are relatively modern invention,
    0:32:42 overtime pay for some.
    0:32:45 We enter labor force in early adulthood
    0:32:46 instead of in childhood.
    0:32:48 We don’t start on the farm at age 10.
    0:32:50 We’re not put out for indenture at 14
    0:32:53 and we retire when we have decades of healthy years
    0:32:55 of life remaining.
    0:32:59 So in fact, our leisure as a share of lifetime,
    0:33:01 if you’re willing to count education as leisure,
    0:33:03 which some will, some won’t, has risen extraordinarily.
    0:33:04 So I actually think we’ve handled
    0:33:07 the so-called problem of leisure pretty well.
    0:33:09 The problem of work that we have
    0:33:12 is that many highly paid people in our economy are overworked.
    0:33:15 They work more hours than they wish they had to.
    0:33:17 And many lower paid people can’t get enough hours
    0:33:19 and they have unstable jobs.
    0:33:21 They have involuntary part-time work.
    0:33:22 They can’t get a regular schedule.
    0:33:25 And so we have plenty of work,
    0:33:27 but it’s not very evenly distributed.
    0:33:30 (upbeat music)
    0:33:31 Coming up after the break,
    0:33:34 how much can AI and other technologies
    0:33:37 even out that distribution?
    0:33:40 And we go to a party where friends tell each other
    0:33:42 what they actually do all day.
    0:33:44 – I don’t even know what she does.
    0:33:46 So this is why we do the event.
    0:33:47 – I’m Stephen Dubner.
    0:33:48 This is Freakonomics Radio.
    0:33:49 We’ll be right back.
    0:33:59 (dramatic music)
    0:34:04 50 years ago, the Chicago writer and radio host
    0:34:07 Studs Terkel published a book called “Working.”
    0:34:09 People talk about what they do all day
    0:34:11 and how they feel about what they do.
    0:34:14 Terkel interviewed dozens of people about their jobs.
    0:34:17 A cab driver, waitress, a book binder,
    0:34:19 a factory owner, an industrial designer,
    0:34:22 a grave digger, a carpenter.
    0:34:23 The book became a classic.
    0:34:25 It was even turned into a musical
    0:34:29 and it inspired a Netflix show hosted by Barack Obama.
    0:34:31 It seems there is something deeply compelling
    0:34:33 about hearing people explain
    0:34:35 what they actually do in their jobs.
    0:34:38 So we went looking for a modern version of this
    0:34:39 and we found it.
    0:34:41 – Hi, everybody.
    0:34:44 – In an apartment on the Lower East Side of Manhattan
    0:34:48 where Adina Lichtman and Avi Popak host a monthly party
    0:34:50 called “Our Friends Are Smart.”
    0:34:52 – So as many of you know, me and Avi love to host
    0:34:55 whether it’s Shabbat dinners, wine and cheese nights,
    0:34:56 just all these different things.
    0:34:57 We have so many friends who,
    0:35:01 whether they’re a physical therapist, TV show writer,
    0:35:03 a data scientist, we don’t know what their day-to-day looks
    0:35:06 like and we’re like, let’s open it up and actually learn
    0:35:09 about what our friends, our very smart friends do.
    0:35:12 And we are so happy to have you here.
    0:35:14 Pala’s one of my best friends in the whole world
    0:35:16 and she’s either a data analyst or data scientist.
    0:35:19 I don’t even know what she does.
    0:35:20 So this is why we do the event.
    0:35:22 Pala, take it away.
    0:35:22 – Thank you guys.
    0:35:27 – So hi everyone, for whoever doesn’t know me, I’m Paula.
    0:35:32 I actually live in London and I work for the New York Times.
    0:35:35 I am a data analyst, a data scientist at the Times.
    0:35:37 – To explain what a data scientist
    0:35:39 at the New York Times actually does,
    0:35:43 Pala Bar-Maman gives a presentation about a project
    0:35:45 that she and her team worked on for several years.
    0:35:47 – The first thing that happens as an analyst,
    0:35:51 you get a question from your manager, leadership or whoever.
    0:35:52 It’s usually very vague.
    0:35:56 We wanna understand how folks are reading our coverage.
    0:35:57 How long are they staying on it?
    0:35:59 Are they reading till the end?
    0:36:01 And the first thing that we do for this question
    0:36:03 is like do we even have data for this?
    0:36:06 And it turns out we had very, very messy data out.
    0:36:09 So we need to transform it, put some business rules to it.
    0:36:10 That whole process of cleaning
    0:36:11 and just deciding on this business logic
    0:36:15 and what the metric is gonna be took quite a few months.
    0:36:18 And once we have the metric, what can we do with the metric?
    0:36:20 We can start to look at insights.
    0:36:22 Is it different if people come from different platforms?
    0:36:24 If you come across the same article on search,
    0:36:27 versus if you come to the homepage and you click on it,
    0:36:28 do we see the same behavior?
    0:36:29 So now that we have a metric,
    0:36:31 we can actually dissect our data
    0:36:34 and see what trends we find and where we see opportunities.
    0:36:36 – Is there a lot of pushback?
    0:36:40 I’d imagine like, especially in a newsroom,
    0:36:42 people are probably like, get off my back here.
    0:36:44 You know, writing is subjective.
    0:36:46 And you’re like, no, it’s fact.
    0:36:48 I know that no one’s reading your article.
    0:36:50 – Yeah, that’s a great question.
    0:36:52 It is different in different companies,
    0:36:56 but at the times, data is in service of the newsroom,
    0:37:01 not vice versa, which means nothing we recommend or say goes.
    0:37:04 It’s really just surfacing insights.
    0:37:07 If an article is an important investigative piece,
    0:37:10 and it has to be 10,000, 20,000 words, whatever it is,
    0:37:11 so be it.
    0:37:13 But sometimes it doesn’t need to be.
    0:37:14 Sometimes it could be shorter.
    0:37:16 Sometimes it could have a different format.
    0:37:18 At the end of the day,
    0:37:19 newsroom leadership decides.
    0:37:22 The next presenter has a job where success
    0:37:24 is measured very differently.
    0:37:26 He is a hospital chaplain.
    0:37:27 (audience applauding)
    0:37:28 – My name is Ben.
    0:37:29 I’m a rabbi.
    0:37:32 I graduated rabbinical school two years ago
    0:37:34 from the Jewish Theological Seminary.
    0:37:36 My job as a chaplain is to provide emotional
    0:37:39 and spiritual support to patients, their families,
    0:37:42 and to staff in the hospital.
    0:37:45 90% of the people that I work with are not Jewish.
    0:37:47 I love my job because it allows me to work
    0:37:49 with people of all faiths and backgrounds.
    0:37:50 I walk into a room.
    0:37:53 I say, hi, my name is Ben.
    0:37:55 I’m one of the chaplains here at the hospital.
    0:37:57 If that is something that I think will
    0:38:00 get them to respond back, great.
    0:38:01 Then maybe I’ll add,
    0:38:03 we provide emotional and spiritual support
    0:38:06 and then see how that lands and see if they catch.
    0:38:11 There are many times where that is just enough.
    0:38:14 I can tell that they want me to be there.
    0:38:15 And then there’s the middle ground
    0:38:19 of just continuing what brought you into the hospital.
    0:38:23 I just want to be wherever they want and need me to be.
    0:38:26 If that is the religious side,
    0:38:27 they want to talk about their faith,
    0:38:28 they want to talk about why this is happening to them,
    0:38:30 they’re questioning God, they want prayer.
    0:38:31 Great, we’ll do that.
    0:38:34 If they want more of the emotional support,
    0:38:35 then we’ll do that.
    0:38:39 I really try to go in without any direction
    0:38:42 of where they might want to take it.
    0:38:43 And I just love people.
    0:38:44 I love being with people.
    0:38:47 And I don’t think there’s any other job
    0:38:49 that would allow me to be with people
    0:38:51 as much as I am right now.
    0:38:55 (audience applauding)
    0:38:58 For people who love people, who love being with people,
    0:39:01 what will the future of work bring?
    0:39:03 The fear is that artificial intelligence
    0:39:06 and other technologies will subtract
    0:39:08 a lot of people from the workforce.
    0:39:10 How true is that?
    0:39:13 We went back to the economist David Otter.
    0:39:15 – Let me say broadly, what my hope for AI,
    0:39:17 what it can be used for well,
    0:39:21 is to expand the reach of expertise.
    0:39:23 Like you know how to do skilled repair,
    0:39:26 now using this tool,
    0:39:27 you’ll be able to repair an engine
    0:39:28 you haven’t worked on before.
    0:39:30 Or you know how the human body works,
    0:39:31 you know the basics of the plumbing
    0:39:32 and taking care of people.
    0:39:35 Now you can perform a procedure safely
    0:39:37 that you couldn’t have done without this tool.
    0:39:38 Or you’re a contractor,
    0:39:41 now you can do some home remodeling and engineering.
    0:39:43 It’s not a substitute for knowing something.
    0:39:44 Those tools in the hands of the wrong people
    0:39:45 be quite dangerous, right?
    0:39:48 You don’t want a novice doing medical procedures
    0:39:49 or flying a plane.
    0:39:52 But with the right foundation of expertise,
    0:39:55 it can extend the power of that knowledge.
    0:39:57 And that’s where it can be complementary.
    0:40:01 So I would like to see AI use to enable more people
    0:40:03 who aren’t from elite institutions
    0:40:04 who don’t have a four year college degree
    0:40:07 to be able to move more into software development,
    0:40:08 into paralegal work,
    0:40:12 into healthcare delivery, into design.
    0:40:14 That would be great for the quality of work
    0:40:15 and for opportunity,
    0:40:18 but also lower the cost of a lot of super expensive services
    0:40:21 that overpay people like me
    0:40:25 and don’t employ as many people who don’t have PhDs.
    0:40:28 – You sound pretty optimistic about AI
    0:40:31 and the potential to make certain kinds of work
    0:40:32 more efficient.
    0:40:34 You’ve talked about reinvigorating the middle class
    0:40:36 by giving low education workers.
    0:40:37 The tool is to do better work,
    0:40:39 but most of your solutions, if not all of them,
    0:40:42 sound as if they rely on institutions,
    0:40:44 governments, firms, and so on,
    0:40:49 making good choices, adopting the right policies.
    0:40:51 What’s your level of optimism that this will happen,
    0:40:54 that AI can be the kind of boon that you’re describing?
    0:40:55 – I think it can be,
    0:40:58 but I’m not as optimistic that it will be.
    0:41:01 There’s different ways to go about the same task with AI.
    0:41:04 Kaiser nurses in California complain that the AI is basically
    0:41:06 something that sits on your shoulder,
    0:41:07 overrides your judgment and reports you
    0:41:09 if you deviate from protocol.
    0:41:10 And of course, in medicine,
    0:41:12 you want people deviating from protocol
    0:41:14 because they have additional information
    0:41:15 right in front of them about what they should do,
    0:41:17 and it may not always be the standard thing.
    0:41:19 But you could use that same tool
    0:41:21 to facilitate better decision-making,
    0:41:24 and so we need to push that frontier.
    0:41:27 – So a lot of the prescriptions that you’re talking about
    0:41:31 sound to me as if they require an awful lot of coordination.
    0:41:33 You say, you know, we need this to happen
    0:41:34 and people need to do that,
    0:41:37 or we need to find a better way to do this.
    0:41:39 My concern here in you is that
    0:41:41 I don’t know who’s doing the coordinating,
    0:41:42 and I’m not sure what incentives there are
    0:41:44 for coordination to happen so well.
    0:41:47 – Yeah, I think this is very significant,
    0:41:49 and I agree with your point.
    0:41:50 I am appealing to a coordination,
    0:41:53 and it’s not clear who the coordinator is.
    0:41:56 This is actually a role that labor unions want to play.
    0:41:57 They want to play a role in the training
    0:41:59 and even design of the tools.
    0:42:01 I think it’s a role that universities can play
    0:42:03 in terms of where they invest.
    0:42:05 Are we trying to make machines that just replace people
    0:42:08 versus machines that make people more effective?
    0:42:11 I think the government plays a role both through tax policy,
    0:42:13 how much they incentivize investment in skills
    0:42:15 versus investments in machines,
    0:42:17 but also in trying to choose sectors.
    0:42:19 I mean, I know that’s unpopular,
    0:42:22 but say, look, we really want to maintain an auto sector,
    0:42:23 even though that’s not going to be cheap,
    0:42:24 even though we’re actually going to have to forego
    0:42:26 some cheap cars from China, and we certainly will
    0:42:27 if we want to do that,
    0:42:29 because that creates a type of work
    0:42:31 that we want people to have.
    0:42:33 – So I know that you’re an economist, David,
    0:42:38 but do you ever feel that the mainstream economic embrace
    0:42:44 of a growth-centered economy has too many downsides
    0:42:46 and too many losers,
    0:42:49 and that it’s time to consider how to make the economy
    0:42:51 a little bit more human-centered?
    0:42:53 – Let me rephrase that in economic terms.
    0:42:55 – I thought I was using economic terms.
    0:42:56 – Even more technical terms.
    0:42:58 So in economics, there is what are called
    0:43:00 the first and second welfare theorems.
    0:43:03 The first welfare theorem says that any efficient allocation
    0:43:06 of resources can be a competitive equilibrium.
    0:43:09 The other says that the problem of distribution
    0:43:11 and production are separable,
    0:43:13 so you can first maximize the pie
    0:43:15 and then divide the slices.
    0:43:16 And the problem with the second welfare theorem
    0:43:18 is it’s not true.
    0:43:21 It’s fundamentally not true at any relevant human level.
    0:43:23 You cannot do that.
    0:43:25 You cannot just have one person make all the money
    0:43:26 and then we’ll just tax and transfer
    0:43:27 and we’ll all be happy.
    0:43:29 That just doesn’t work at a political level.
    0:43:31 Incidentally, there is an inseparability
    0:43:33 between what you produce and what you get.
    0:43:37 So I think where economists have really let us astray
    0:43:38 at times say, well, you know,
    0:43:41 let’s just focus on taxing the rich.
    0:43:43 We’ll just make the rich richer and then we’ll just tax them
    0:43:44 and everybody else, if your job gets crappier,
    0:43:46 we’ll send you a check, no worries.
    0:43:48 And that is undignified.
    0:43:50 It’s politically not viable.
    0:43:53 And people want to feel that they’re living
    0:43:55 by the sweat of their own brow,
    0:43:56 their own hard work and that it’s valued,
    0:43:58 not that they’re being compensated
    0:44:01 for being the loser in this game.
    0:44:04 Once economists realize that you can’t just redistribute
    0:44:07 to solve the problems you create in the process of growth,
    0:44:10 it changes what trade-offs you’re willing to make for growth.
    0:44:11 So the China trade shock,
    0:44:13 you know, we did get a lot of growth out of that.
    0:44:15 And China got an awful lot of growth out of it.
    0:44:17 China got a lot of growth out of it and fine, you know,
    0:44:18 it can be win-win, nothing wrong with that.
    0:44:19 That’s the idea of trade.
    0:44:22 But a lot of people lost jobs and livelihoods
    0:44:23 and they were displaced.
    0:44:25 We don’t have fewer jobs than we did
    0:44:26 as we did with the China shock.
    0:44:29 But we have a lot of people who lost careers permanently
    0:44:30 and lost manufacturing work.
    0:44:32 And moreover, manufacturing intensive communities
    0:44:34 basically went out of business.
    0:44:36 I don’t think that was a wise way to do that.
    0:44:39 I don’t think we needed that kind of shock therapy.
    0:44:41 If you had done that same transition over 20 years,
    0:44:43 it would have worked much better
    0:44:44 because people retire eventually
    0:44:47 and people don’t go into sectors that are contracting.
    0:44:50 So we can make those types of adjustments over time.
    0:44:53 We just can’t make them between 2001 and 2007.
    0:44:54 I mentioned at the top of the show
    0:44:55 that I’m a labor economist.
    0:44:58 And so I deeply believe that the labor market
    0:45:00 is the most important social institution.
    0:45:01 And I think the solution
    0:45:05 to a lot of socioeconomic problems starts with jobs.
    0:45:08 And I don’t mean the quantity again, but good jobs,
    0:45:10 jobs that actually provide dignity,
    0:45:12 economic security and opportunity.
    0:45:13 The period we’re in right now
    0:45:16 where we have tight labor markets rising wages at the bottom
    0:45:18 and people being satisfied with their work
    0:45:19 and incomes growing,
    0:45:20 that’s a lot more effective
    0:45:22 than an equivalent transfer program
    0:45:24 that would somehow compensate people
    0:45:27 for not having that type of work.
    0:45:29 – Like a guaranteed income.
    0:45:30 – Exactly.
    0:45:31 But that means we have a stake,
    0:45:32 not just in the number of jobs,
    0:45:35 but in the types of jobs that we have.
    0:45:36 And so it does make sense to distinguish
    0:45:39 between jobs in food service,
    0:45:42 jobs in manufacturing, jobs in healthcare.
    0:45:45 The commerce secretary under Ronald Reagan famously said,
    0:45:49 “Computer chips, potato chips, I don’t care which we make.
    0:45:51 We’re in the chips business.”
    0:45:52 We should care.
    0:45:53 We actually should care.
    0:45:56 I don’t think it’s possible to have a well-functioning
    0:45:59 democracy that doesn’t have a solid middle class
    0:46:01 making its living from work.
    0:46:05 – As far as we can tell,
    0:46:07 that quote about the chips was actually said
    0:46:09 by Michael Boskin,
    0:46:11 who was not commerce secretary under Reagan,
    0:46:13 but was chair of the White House Council
    0:46:17 of Economic Advisers under George H. W. Bush.
    0:46:20 If you’d like to learn more about the current chips act
    0:46:23 that stands for creating helpful incentives
    0:46:24 to produce semiconductors,
    0:46:27 we did an episode about that with Gina Ramondo,
    0:46:30 who is commerce secretary in the Biden administration.
    0:46:32 It’s episode 533,
    0:46:37 and it’s called, “Will the Democrats Make America Great Again?”
    0:46:38 Coming up after the break,
    0:46:42 how can all work be made more satisfying?
    0:46:43 I’m Stephen Dovner.
    0:46:45 This is Freakonomics Radio.
    0:46:46 We’ll be right back.
    0:46:48 (upbeat music)
    0:46:59 – When we first started thinking about this episode,
    0:47:02 we immediately came up with a working title.
    0:47:04 What do people do all day?
    0:47:07 This title was stolen from a children’s book
    0:47:11 by the beloved author and illustrator, Richard Scarry.
    0:47:13 Here is his son, Huck Scarry.
    0:47:16 When I was growing up, my father worked at home.
    0:47:19 There were some dads who took the train into New York,
    0:47:20 and then there were other dads who stayed at home
    0:47:22 and made their children’s books.
    0:47:27 So it seemed to me like a very, very normal occupation to do.
    0:47:29 – Huck Scarry grew up in Connecticut,
    0:47:30 but when he was a teenager,
    0:47:32 the family moved to Switzerland.
    0:47:36 He still lives there in the family’s chalet in Gestod.
    0:47:37 He also spends time in Vienna.
    0:47:40 That’s where he was when we spoke.
    0:47:42 Richard Scarry died in 1994.
    0:47:44 Huck used to collaborate with his father
    0:47:47 and is now the keeper of his legacy.
    0:47:51 – These books are now celebrating 50 years, 60 years,
    0:47:53 haven’t gone out of print,
    0:47:56 are known by grandparents who read them
    0:47:58 to their children when they were little,
    0:48:01 and their children read them to their children now,
    0:48:03 and it will go on and on.
    0:48:06 – Richard Scarry wrote more than 300 books,
    0:48:09 which have sold more than 150 million copies,
    0:48:11 and were adapted into an animated TV series.
    0:48:13 ♪ Come visit Busytown ♪
    0:48:15 – Most of these books are set
    0:48:17 in a vibrant and colorful place called Busytown,
    0:48:20 where animals do the work of humans.
    0:48:25 There’s Postman Pig, Dr. Lion, Rudolf Van Vlugel,
    0:48:28 an Austrian fox who flies an airplane.
    0:48:30 The book, “What Do People Do All Day?”
    0:48:33 was published in 1968.
    0:48:35 It’s a bit like Stud’s Turtles working,
    0:48:37 but for preschoolers,
    0:48:38 and it’s threaded through
    0:48:41 with the everyday economics of its time.
    0:48:44 – The way people work today was unimaginable
    0:48:46 when my father did this book.
    0:48:48 – I understand you have a copy
    0:48:49 of “What Do People Do All Day?”
    0:48:51 and you’re willing to read a bit, is that true?
    0:48:53 – I am certainly very willing to read.
    0:48:54 It’s going to lose an awful lot
    0:48:56 because you can’t see what I’m reading about.
    0:48:58 We don’t have the pictures,
    0:48:59 but I’m willing to give it a go.
    0:49:01 – Okay, let’s give Huck a hand.
    0:49:05 Close your eyes and try to draw the pictures in your mind.
    0:49:09 – Everyone is a worker.
    0:49:12 Here we have farmer alfalfa,
    0:49:15 blacksmith fox, stitches the tailor,
    0:49:20 grocer cat, mommy cat, and huckle cat.
    0:49:23 How many workers are there here?
    0:49:28 One, two, three, four, five, six.
    0:49:31 And what do these workers do?
    0:49:35 Farmer alfalfa grows all kinds of food.
    0:49:39 He keeps some of it for his family.
    0:49:43 And then he sells the rest to grocer cat
    0:49:44 in exchange for money.
    0:49:49 Grocer cat will sell the food
    0:49:51 to other people in busy town.
    0:49:56 Today, alfalfa bought a new suit
    0:49:59 with some of the money he got from grocer cat.
    0:50:04 Stitches the tailor makes the clothes.
    0:50:08 Alfalfa bought his new suit from stitches.
    0:50:13 Then alfalfa went to blacksmith fox’s shop.
    0:50:18 He had saved up enough money to buy a new tractor.
    0:50:24 The new tractor will make his farm work easier.
    0:50:27 And with it, he’ll be able to grow more food
    0:50:29 than he could grow before.
    0:50:34 I’m curious what you think
    0:50:37 or maybe what your father would have thought of the idea
    0:50:40 that much of the work that’s described
    0:50:42 in the passages you just read,
    0:50:46 not all of it, but much of it is now almost non-existent
    0:50:48 or at least not very common on the level
    0:50:51 that you described in that so much
    0:50:56 of the labor ecosystem has been rolled up
    0:51:01 into fairly mechanized and anonymous corporations,
    0:51:06 conglomerates often controlled by private equity investors
    0:51:09 who may live thousands of miles away
    0:51:11 from where the work is done.
    0:51:14 And I’m curious what effect you think it might have
    0:51:17 on a child in 2024 reading about the work
    0:51:19 that your father described in that way
    0:51:22 when the world is on some dimensions so different.
    0:51:26 I don’t think children worry about anything at all.
    0:51:29 I think that they accept the illustrations
    0:51:31 and stories at face value.
    0:51:35 And understand this little world of busy town
    0:51:38 where people are blacksmiths and tailors
    0:51:42 and farmers and masons and whatever.
    0:51:44 Those jobs do still exist today.
    0:51:47 I mean, before coming here, I was at a bakery shop
    0:51:48 and there has to be a baker.
    0:51:50 Of course, the bakery is a chain
    0:51:54 and so the bread is baked in a larger breadmaking factory
    0:51:56 in Vienna or near Vienna,
    0:51:59 but it’s still something that’s made by somebody.
    0:52:04 I don’t think that children think too much about investors
    0:52:08 or conglomerates or huge corporations.
    0:52:10 Those things do exist, of course,
    0:52:15 but there are nonetheless a lot of people also doing these,
    0:52:17 I don’t know what you would call them,
    0:52:18 not nuts and bolts jobs,
    0:52:21 but things that you’d make with your hands or do.
    0:52:24 You see people working in the street, repairing the roads.
    0:52:27 There’s still a lot of work that’s done by people
    0:52:29 and you can see them out there working.
    0:52:31 (upbeat music)
    0:52:33 Huckscary is right, of course.
    0:52:35 There are still plenty of people out there
    0:52:36 working with their hands,
    0:52:39 but there are many fewer than there used to be.
    0:52:41 I wonder if that’s why so many of us love to do
    0:52:43 what I call menial leisure,
    0:52:47 things like gardening, knitting, pickling.
    0:52:49 Some of today’s most popular hobbies
    0:52:51 are things our parents and grandparents
    0:52:53 had to do to get by,
    0:52:55 but I don’t think it’s about nostalgia.
    0:52:59 I think it’s about the satisfaction of a physical thing done well.
    0:53:02 James Sussman, our anthropologist friend,
    0:53:04 has another example.
    0:53:05 – Well, I work.
    0:53:08 We have in particular Americans and Europeans
    0:53:13 coming forking out $50,000, $60,000 to blow away an elephant.
    0:53:14 The money goes to the community
    0:53:16 and the community rightfully asks,
    0:53:19 why on earth do they spend unimaginably large sums of money
    0:53:22 to come and do what is in effect, hard work?
    0:53:26 And you might see do have an answer for this themselves.
    0:53:28 They say after a hunt, my legs are heavy,
    0:53:32 my stomach is full and my heart is happy.
    0:53:37 Very little contemporary work provides that sense of satisfaction.
    0:53:40 Modern efficiency has robbed most of us
    0:53:42 of that satisfaction that comes
    0:53:46 from baking a loaf of bread, digging a hole in the garden,
    0:53:48 and going on a hunt, going fishing.
    0:53:52 So many of us work long hours doing our day-to-day jobs,
    0:53:54 which do not provide that sense of satisfaction,
    0:53:55 that sense of completeness.
    0:53:58 In fact, they tend to leave this kind of void
    0:54:01 that there’s something I still have to do,
    0:54:03 this concept of the Sunday scaries.
    0:54:05 It’s like chasing a carrot on a stick in front of us.
    0:54:08 We never get that sense of satisfaction.
    0:54:10 – You’re describing inbox zero,
    0:54:13 which nobody ever gets to.
    0:54:13 – Exactly.
    0:54:15 And if we got inbox zero,
    0:54:17 most of us wouldn’t know what to do.
    0:54:20 Yet there are activities that do provide that satisfaction.
    0:54:22 They also do provide that fundamental ability
    0:54:26 to lose oneself completely in your work.
    0:54:28 And that is what you get when you are fishing
    0:54:30 on a trout stream.
    0:54:31 You are lost in that space.
    0:54:35 You feel the sense of timelessness, the sense of being.
    0:54:37 And that is what we are robbed of
    0:54:38 in the modern working economy.
    0:54:41 Or most of us, I should say, are robbed of.
    0:54:42 Interestingly, in the last,
    0:54:44 certainly it’s been the case in the UK,
    0:54:47 there’s been this real shift back
    0:54:50 towards artisanal production as a means of doing things.
    0:54:53 So Britain, which is famously appalling food,
    0:54:55 or historically famously appalling food,
    0:54:58 now is actually a whole new generation of artisan,
    0:55:01 butchers and bakers who actually love their work,
    0:55:04 produce great food and get this real sense
    0:55:06 of satisfaction and completion from what they’ve done,
    0:55:09 rather than simply going and getting their law degree
    0:55:12 or so on and so forth.
    0:55:16 – If you spent all your day outside,
    0:55:18 picking on a farm or doing backbreaking work,
    0:55:21 damn right, you’d wanna come in and watch TV.
    0:55:24 But if your work is a lot like watching TV,
    0:55:26 maybe you wanna go out and garden.
    0:55:28 – That, again, is David Otter, the economist.
    0:55:32 And he has some good news about job satisfaction today.
    0:55:34 – Reason data suggests that job satisfaction
    0:55:35 in the United States is higher
    0:55:37 than it’s been a very, very long time.
    0:55:39 But it suggests, by the way, that a lot of that
    0:55:40 is because we have a tight labor market
    0:55:43 where wages are rising and employers are working hard
    0:55:44 to win workers’ favors.
    0:55:45 So that’s a good thing.
    0:55:47 We see not only pay rising,
    0:55:50 but people are getting more predictable shifts.
    0:55:51 They’re getting more benefits.
    0:55:53 They’re getting education benefits.
    0:55:54 But we can do better than that.
    0:55:56 It doesn’t just have to be labor market pressures.
    0:55:58 My colleague at MIT Sloan, Zaynip Tan,
    0:56:00 who runs the Good Jobs Institute,
    0:56:04 her work is on helping firms do better by low-age workers.
    0:56:06 But by do better, she doesn’t mean just pay them more,
    0:56:07 which is easy.
    0:56:09 She means make them more productive
    0:56:10 so you can pay them more.
    0:56:12 She, for example, worked with Sam’s Club,
    0:56:14 which is kind of the Walmart Costco,
    0:56:16 to help them redesign the way they work.
    0:56:19 They reduce the number of job roles they had
    0:56:22 from approximately 60 to approximately a dozen
    0:56:23 through cross-training.
    0:56:24 And not only does that mean
    0:56:27 that workers have more flexibility, more portability,
    0:56:29 more headroom from moving up and doing more things,
    0:56:32 it changes the way you use workers.
    0:56:35 And so we see in the U.S. economy and elsewhere,
    0:56:36 different firms in the same business
    0:56:38 treating workers very differently
    0:56:40 because some use them less well than others.
    0:56:42 Some view them as disposable as basically
    0:56:44 what do you expect to get from in on wage
    0:56:47 and others think, well, we can actually take these people
    0:56:48 and turn this into a career.
    0:56:50 You see that at Costco, but even Walmart managers now,
    0:56:52 often who are not college graduates,
    0:56:54 can make a quarter million dollars and on up.
    0:56:55 I mean, it’s a super hard job,
    0:56:57 but Walmart is giving them the opportunity
    0:56:59 to don’t just bring in suits to do that job.
    0:57:04 And what does the future of work look like
    0:57:08 at the American Mural Project in Winstead, Connecticut?
    0:57:10 They’ve been thinking about that a lot.
    0:57:13 Ellen Griesedek’s team runs a variety of programs
    0:57:15 and camps for young people.
    0:57:18 During our tour, we ran into one of those young people
    0:57:19 with her dad.
    0:57:21 Hi, Emily, nice to see you.
    0:57:22 – I’m Jeff.
    0:57:24 – Hi, Jeff, nice to see you.
    0:57:26 So Emily is an actual camper.
    0:57:27 What does that mean exactly?
    0:57:30 – That means I went to a bunch of camps here.
    0:57:32 I did the steam camp here.
    0:57:35 We made a bunch of robotic things
    0:57:38 and we did a bunch of art.
    0:57:39 It was a lot of fun.
    0:57:40 – Jeff, can I ask what kind of work you do?
    0:57:42 – I do computer work, I do IT work.
    0:57:44 When you look at this mural, both of you,
    0:57:47 what do you think of these kinds of jobs?
    0:57:48 Some of them have already gone away.
    0:57:50 Some of them are kind of on the way out.
    0:57:51 None of them are like what you do, Jeff.
    0:57:56 – No, no IT jobs on the wall, but even the jobs we do.
    0:57:57 Computers replace computer people.
    0:58:00 I mean, that’s just a part of reality with AI and things.
    0:58:04 But I mean, these are the jobs that created America, right?
    0:58:05 And there’ll be new jobs
    0:58:07 that can create the future of America.
    0:58:10 They’ll eventually be represented on this mural, I’m sure.
    0:58:13 The whole country works together to do better things.
    0:58:18 – Thanks to Jeff and Emily for speaking with us,
    0:58:21 as well as Ellen Grizadik, Huck Scarey, James Swisman,
    0:58:25 David Otter and everyone at the Our Friends Are Smart Party.
    0:58:27 If you’d like to hear more from David Otter,
    0:58:30 make sure you follow one of the other podcasts we make,
    0:58:34 People I Mostly Admire, which is hosted by Steve Levitt.
    0:58:35 In an upcoming episode,
    0:58:37 you will hear Levitt’s interview with David Otter
    0:58:39 and it is an excellent conversation
    0:58:41 between two economists.
    0:58:45 – One thing that’s interesting about you right now
    0:58:48 is that there’s a lot of attention being given
    0:58:50 to predictions that you’re making
    0:58:51 when the nature of academic research
    0:58:54 is almost always backwards looking.
    0:58:56 Does that unsettle you at all?
    0:58:57 – Yeah, yeah. (laughs)
    0:59:00 It takes a leap of faith and you know you can be wrong.
    0:59:03 – And coming up next time here on Freakonomics Radio
    0:59:08 is the American presidency becoming a dictatorship.
    0:59:11 – You could think that the risk of a too strong president
    0:59:14 is dictatorship, but another risk of a too strong president
    0:59:18 is just really bad governance and chaos.
    0:59:20 – And if you like chaos.
    0:59:22 – Because this is such a contentious election,
    0:59:26 I expect to see many billions of dollars
    0:59:27 bet on these markets.
    0:59:29 – Betting on elections and more.
    0:59:31 That’s next time on the show.
    0:59:33 Until then, take care of yourself.
    0:59:35 And if you can, someone else too.
    0:59:40 Freakonomics Radio is produced by Stitcher and Renbud Radio.
    0:59:43 You can find our entire archive on any podcast app,
    0:59:46 also at Freakonomics.com where we publish transcripts
    0:59:47 and show notes.
    0:59:50 This episode was produced by Alina Cullman.
    0:59:52 We had recording help from George Hicks.
    0:59:55 Our staff also includes Augusta Chapman, Dalvin Aboaji,
    0:59:58 Eleanor Osborn, Ellen Frankman, Elsa Hernandez,
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    1:00:11 Our theme song is “Mr. Fortune” by the Hitchhikers.
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    1:00:15 As always, thank you for listening.
    1:00:23 Winston Churchill’s hobby was laying bricks.
    1:00:27 Now, I wouldn’t consider laying bricks much fun,
    1:00:30 but he seemed to find that very, very satisfying.
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    1:00:37 The Freakonomics Radio Network,
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    1:00:45 you
    1:00:47 you

    Sixty percent of the jobs that Americans do today didn’t exist in 1940. What happens as our labor becomes more technical and less physical? And what kinds of jobs will exist in the future? 

     

    • SOURCES:
      • David Autor, professor of economics at the Massachusetts Institute of Technology.
      • Paula Barmaimon, manager of coverage and audience analytics at The New York Times.
      • Ellen Griesedieck, artist and president of the American Mural Project.
      • Adina Lichtman, co-host of the Our Friends Are Smart party.
      • Avi Popack, co-host of the Our Friends Are Smart party.
      • Huck Scarry, author and illustrator.
      • James Suzman, anthropologist and author.
      • Ben Varon, rabbi and chaplain at NYU Langone Hospital—Brooklyn .