Author: Freakonomics Radio

  • Your Brain Doesn’t Work the Way You Think

    AI transcript
    0:00:02 (dramatic music)
    0:00:05 – Hey there, it’s Stephen Dubner.
    0:00:08 Today, a holiday treat, a bonus episode
    0:00:10 from people I mostly admire.
    0:00:12 One of the other shows we make here
    0:00:13 at the Freakonomics Radio Network.
    0:00:16 It is an interview show hosted by Steve Levitt,
    0:00:18 my Freakonomics friend and co-author,
    0:00:21 who is an economics professor emeritus now
    0:00:23 at the University of Chicago.
    0:00:26 On this episode, Levitt interviews David Eagleman,
    0:00:28 a neuroscientist, entrepreneur,
    0:00:31 and author of several books, including LiveWired,
    0:00:34 the inside story of the ever-changing brain.
    0:00:36 It is a fascinating conversation.
    0:00:37 You are going to love it.
    0:00:40 To hear more conversations like this,
    0:00:44 follow people I mostly admire in your podcast app.
    0:00:45 Okay, that’s it for me.
    0:00:47 Here is Steve Levitt.
    0:00:49 (dramatic music)
    0:01:01 – I love podcast guests who change the way
    0:01:04 I think about some important aspect of the world.
    0:01:07 A great example is my guest today, David Eagleman.
    0:01:09 He’s a Stanford neuroscientist whose work
    0:01:13 on brain plasticity has completely transformed
    0:01:18 my understanding of the human brain and its possibilities.
    0:01:20 The human brain is about three pounds.
    0:01:22 It’s locked in silence and darkness.
    0:01:25 It has no idea where the information is coming from
    0:01:28 because everything is just electrical spikes
    0:01:30 and also chemical releases as a result of those spikes.
    0:01:34 And so what you have in there is this giant symphony
    0:01:36 of electrical activity going on
    0:01:40 and its job is to create a model of the outside world.
    0:01:47 – Welcome to people I mostly admire with Steve Levitt.
    0:01:50 – According to Eagleman,
    0:01:52 the brain is constantly trying
    0:01:54 to predict the world around it.
    0:01:56 But of course, the world is unpredictable and surprising.
    0:02:00 So the brain is constantly updating its model.
    0:02:02 The capacity of our brains to be ever-changing
    0:02:05 is usually referred to as plasticity,
    0:02:08 but Eagleman offers another term, live wired.
    0:02:10 That’s where conversation begins.
    0:02:18 Plasticity is the term used in the field
    0:02:21 because the great neuroscientist
    0:02:24 or psychologist actually, William James,
    0:02:25 coined the term because he was impressed
    0:02:28 with the way that plastic gets manufactured,
    0:02:31 where you mold it into a shape and it holds onto that shape.
    0:02:34 And he thought that’s kind of like what the brain does.
    0:02:37 The great trick that mother nature figured out
    0:02:39 was to drop us into the world half-baked.
    0:02:42 If you look at the way an alligator drops into the world,
    0:02:44 it essentially is pre-programmed.
    0:02:47 It eats, mates, sleeps, does whatever it’s doing.
    0:02:49 But we spent our first several years
    0:02:52 absorbing the world around us based on our neighborhood
    0:02:54 and our moment in time and our culture
    0:02:56 and our friends and our universities.
    0:03:00 We absorb all of that such that we can then springboard
    0:03:03 off of that and create our own things.
    0:03:05 There are many things that are essentially
    0:03:09 pre-programmed in us, but we are incredibly flexible
    0:03:11 and that is the key about live wiring.
    0:03:13 When I ask you to think of the name
    0:03:14 of your fifth grade teacher,
    0:03:16 you might be able to pull it up,
    0:03:18 even though it’s been years since you saw
    0:03:19 that fifth grade teacher,
    0:03:23 but somehow there was a change made in your brain
    0:03:25 and that stayed in place.
    0:03:27 You’ve got 86 billion neurons.
    0:03:30 Each neuron is as complicated as a city.
    0:03:33 This entire forest of neurons,
    0:03:35 every moment of your life is changing.
    0:03:38 It’s reconfiguring, it’s strengthening connections
    0:03:41 here and there, it’s actually unplugging over here
    0:03:42 and replugging over there.
    0:03:45 And so that’s why I’ve started to feel
    0:03:48 that the term plasticity is maybe underreporting
    0:03:49 what’s going on.
    0:03:51 And so that’s why I made up the term live wiring.
    0:03:53 When I went to school, I feel like they taught me
    0:03:56 the brain was organized around things like senses
    0:03:58 and emotions, that there were these different parts
    0:04:01 of the brain that were good for those things.
    0:04:04 But you make the case that there’s a very different
    0:04:06 organization of the brain.
    0:04:08 – It is organized around the senses,
    0:04:10 but the interesting thing is that the cortex,
    0:04:13 this wrinkly outer bit, is actually a one-trick pony.
    0:04:14 It doesn’t matter what you plug in.
    0:04:17 It’ll say, okay, got it, I’ll just wrap myself
    0:04:21 around that data and figure out what to do with that data.
    0:04:25 It turns out that in almost everybody you have functioning
    0:04:27 eyeballs that plug into the back of the head.
    0:04:29 And so we end up calling the back part of the brain
    0:04:30 the visual cortex.
    0:04:32 We call this part the auditory cortex.
    0:04:35 And this is the somatosensory cortex that takes
    0:04:37 in information from the body and so on.
    0:04:40 So what you learned back in high school or college
    0:04:42 is correct most of the time.
    0:04:45 But what it overlooks is the fact that the brain
    0:04:46 is so flexible.
    0:04:49 If a person goes blind or is born blind,
    0:04:51 that part of the brain that we’re calling
    0:04:53 the visual cortex, that gets taken over by hearing,
    0:04:54 by touch, by other things.
    0:04:56 And so it’s no longer visual cortex.
    0:04:59 The same neurons that are there are now doing
    0:05:01 a totally different job.
    0:05:04 – So let me pose a question to listeners.
    0:05:08 Imagine you have a newborn baby and he or she looks
    0:05:10 absolutely flawless on the outside.
    0:05:14 But then upon examination, the doctors discover
    0:05:17 that half of his or her brain is just missing.
    0:05:20 A complete hemisphere of the brain, it’s never developed.
    0:05:22 It’s just empty space.
    0:05:24 I would expect that would be a fatal defect
    0:05:28 or best the child would be growing up profoundly
    0:05:30 mentally disabled.
    0:05:32 – Turns out the kid will be just fine.
    0:05:34 You can be born without half the brain
    0:05:36 or you can do what’s called a hemispherectomy,
    0:05:39 which happens to children who have something called
    0:05:42 rasmusans encephalitis, which is a form of epilepsy
    0:05:45 that spreads from one hemisphere to the other.
    0:05:47 The surgical intervention for that is to remove
    0:05:49 half the brain.
    0:05:51 You can just imagine as a parent, the horror you would feel
    0:05:53 if your child had to go in for something like that.
    0:05:55 But you know what, kid’s just fine.
    0:05:59 I can’t take my laptop and rip out half the motherboard
    0:06:01 and expect it to still function.
    0:06:04 But with the brain, with a live wired system, it’ll work.
    0:06:07 – So I first came to work because I was so blown away
    0:06:10 by the idea of human echolocation.
    0:06:13 Only to discover that echolocation is only
    0:06:14 the tip of the iceberg.
    0:06:17 But could you talk just a bit about echolocation,
    0:06:19 how quickly with training it can start
    0:06:21 to substitute for sight?
    0:06:23 – So it turns out that blind people can make
    0:06:27 all kinds of sounds either with their mouth like clicking
    0:06:29 or the tip of their cane or snapping their fingers,
    0:06:30 anything like this.
    0:06:33 And they can get really good at determining
    0:06:36 what is coming back as echoes and figure out,
    0:06:38 oh, okay, this is an open space in front of me.
    0:06:39 Here, there’s something in front of me.
    0:06:41 It’s probably a parked car.
    0:06:43 And oh, there’s a little gap between two parked cars here.
    0:06:44 So I can go in here.
    0:06:48 The key is the visual part of the brain is no longer
    0:06:50 being used because for whatever reason,
    0:06:52 there’s no information coming down those pipelines anymore.
    0:06:55 So that part of the brain is taken over by audition,
    0:06:58 by hearing and by touch and other things.
    0:07:01 What happens is that the blind person becomes really good
    0:07:04 at these other things because they’ve just devoted
    0:07:06 more real estate to it.
    0:07:09 And as a result, they can pick up on all kinds of cues
    0:07:11 that would be very difficult for me and you
    0:07:14 because our hearing just isn’t that good.
    0:07:16 – And then in these studies,
    0:07:20 you put a blindfold on a person for two or three days
    0:07:22 and you try to teach them echolocation.
    0:07:25 If I understand correctly, even over that timescale,
    0:07:28 the echolocation starts taking over
    0:07:29 the visual part of the brain.
    0:07:31 Is that a fair assessment?
    0:07:32 – That is exactly right.
    0:07:34 This was my colleagues at Harvard.
    0:07:36 They did this over the course of five days.
    0:07:39 They demonstrated that people could get really good at,
    0:07:41 they’re actually a number of studies like this.
    0:07:42 They can get really good at reading Braille.
    0:07:44 They can do things like echolocation.
    0:07:48 And the speed of it was sort of the surprise.
    0:07:50 But the real surprise for me came along
    0:07:52 when they blindfolded people tightly
    0:07:54 and put them in the brain scanner
    0:07:59 and they were making sounds or touching the hand.
    0:08:01 And they were starting to see activity
    0:08:06 in the visual cortex after 60 minutes of being blind.
    0:08:09 – So in your book, you talk about REM sleep.
    0:08:11 And honestly, if I had sat down
    0:08:14 and tried to come up with an explanation of REM sleep,
    0:08:17 I could have listened to a thousand ideas.
    0:08:20 Your pet theory would not be one of them.
    0:08:22 So explain what REM sleep is
    0:08:24 and then tell me why you think we do it.
    0:08:26 – REM sleep is rapid eye movement sleep.
    0:08:28 We have this every night, about every 90 minutes.
    0:08:30 And that’s when you dream.
    0:08:31 So if you wake someone up
    0:08:33 when their eyes are moving rapidly
    0:08:34 and you say, “Hey, what are you thinking about?”
    0:08:37 they’ll say, “Whoa, I was just riding a camel across a meadow.”
    0:08:39 But if you wake them up at other parts of their sleep,
    0:08:42 they typically won’t have anything going on.
    0:08:44 So that’s how we know we dream during REM sleep.
    0:08:45 But here’s the key.
    0:08:48 My student and I realized that at nighttime,
    0:08:50 when the planet rotates,
    0:08:52 we spend half our time in darkness.
    0:08:55 And obviously we’re very used to this electricity blessed world.
    0:08:57 But think about this in historical time
    0:08:59 over the course of hundreds of millions of years.
    0:09:00 It’s really dark.
    0:09:03 I mean, half the time you are in blackness.
    0:09:05 Now you can still hear and touch and taste
    0:09:07 and smell in the dark.
    0:09:10 But the visual system is at a disadvantage
    0:09:12 whenever the planet rotates into darkness.
    0:09:16 And so given the rapidity with which other systems
    0:09:18 can encroach on that,
    0:09:21 what we realized is it needs a way of defending itself
    0:09:23 against takeover every single night.
    0:09:25 And that’s what dreams are about.
    0:09:28 So what happens is you have these midbrain mechanisms
    0:09:31 that simply blast random activity
    0:09:34 into the visual cortex every 90 minutes during the night.
    0:09:37 And when you get activity in the visual cortex,
    0:09:39 you say, “Oh, I’m seeing things.”
    0:09:41 And because the brain is a storyteller,
    0:09:43 you can’t activate all the stuff
    0:09:47 without feeling like there’s a whole story going on there.
    0:09:48 But the fascinating thing is when you look
    0:09:51 at the circuitry carefully, it’s super specific,
    0:09:53 much more specific than almost anything else in the brain.
    0:09:57 It’s only hitting the primary visual cortex and nothing else.
    0:10:02 And so that led us to a completely new theory about dreams.
    0:10:05 We studied 25 different species of primates
    0:10:07 and we looked at the amount of REM sleep
    0:10:08 they have every night.
    0:10:12 And we also looked at how plastic they are as a species.
    0:10:14 It turns out that the amount of dream sleep
    0:10:18 that a creature has exactly correlates
    0:10:20 with how plastic they are, which is to say,
    0:10:23 if your visual system is in danger of getting taken over
    0:10:25 because your brain is very flexible,
    0:10:27 then you have to have more dream sleep.
    0:10:29 And by the way, when you look at human infants,
    0:10:32 they have tons of dream sleep at the beginning
    0:10:34 when their brains are very plastic.
    0:10:37 And as they age, the amount of dream sleep goes down.
    0:10:40 – Have you convinced the sleep scientists this is true
    0:10:43 or is this just you believing it right now?
    0:10:44 – At the moment, there are 19 papers
    0:10:46 that have cited this and discussed this.
    0:10:48 And I think it’s right.
    0:10:49 I mean, look, everything can be wrong.
    0:10:50 Everything is provisional,
    0:10:54 but it’s the single theory that is quantitative.
    0:10:56 It’s the single theory about dreams
    0:11:00 that says not only here is a idea for why we dream,
    0:11:01 but we can compare across species
    0:11:04 and the predictions match exactly.
    0:11:07 No one would have suspected that you’d see a relationship
    0:11:11 between how long it takes you to walk or reach adolescence
    0:11:12 and how much dream sleep you have.
    0:11:14 But it turns out that is spun on.
    0:11:23 – So we talked about echolocation,
    0:11:26 which uses sound to accomplish tests
    0:11:29 that are usually done by vision.
    0:11:31 And you’ve started a company called NeoSensory,
    0:11:35 which uses touch to accomplish tasks
    0:11:37 that are usually done with hearing.
    0:11:38 Can you explain the science behind that?
    0:11:41 Given that all the data running around in the brain
    0:11:44 is just data and the brain doesn’t know where it came from.
    0:11:47 All it knows is, oh, here are electrical spikes
    0:11:48 and it tries to figure out what to do with it.
    0:11:51 I got really interested in this idea of sensory substitution,
    0:11:53 which is can you push information into the brain
    0:11:56 via an unusual channel?
    0:11:58 Originally we built a vest
    0:12:00 that was covered with vibratory motors
    0:12:03 and we captured sound for people who are deaf.
    0:12:05 So the vest captures sound,
    0:12:07 breaks it up from high to low frequency
    0:12:10 and you’re feeling the sound on your torso.
    0:12:12 By the way, this is exactly what the inner ear does.
    0:12:14 It breaks up sound from high to low frequency
    0:12:16 and ships that off to the brain.
    0:12:18 So we’re just transferring the inner ear
    0:12:20 to the skin of the torso.
    0:12:22 And it worked, people who are deaf
    0:12:25 could come to hear the world that way.
    0:12:28 So I spun this out of my lab as a company, Neosensory,
    0:12:32 and we shrunk the vest down to a wristband
    0:12:34 and we’re on wrist of deaf people all over the world.
    0:12:37 The other alternative for somebody who’s deaf
    0:12:39 is a cochlear implant, an invasive surgery.
    0:12:44 This is much cheaper and does as good a job.
    0:12:45 Just to make sure I understand it.
    0:12:50 Sounds happen and this wristband hears the sounds
    0:12:54 and then shoots electrical impulses into your wrist
    0:12:56 that correspond to the high and low frequency.
    0:12:58 It’s actually just vibratory motors.
    0:13:00 So it’s just like the buzzer on your cell phone
    0:13:03 but we have a string of these buzzers all along your wrist
    0:13:06 and we’re actually taking advantage of an illusion
    0:13:09 which is if I have two motors next to each other
    0:13:11 and I stimulate them both,
    0:13:14 you will feel one virtual point right in between.
    0:13:16 And as I change the strength of those two motors
    0:13:20 relative to each other, I can move that point around.
    0:13:23 So we’re actually stimulating 128 virtual points
    0:13:24 along the wrist.
    0:13:27 – Do people train you give them very direct feedback
    0:13:29 or is it more organic?
    0:13:30 – Great question.
    0:13:32 It started off where we were doing a lot of training
    0:13:35 on people and what we realized is it’s all the same
    0:13:36 if we just let it be organic.
    0:13:39 The key is we just encourage people be in the world
    0:13:40 and that’s it.
    0:13:42 You see the dog’s mouth moving
    0:13:45 and you feel the barking on your wrist
    0:13:47 or you close the door and you feel that on your wrist
    0:13:49 or you say something, you know,
    0:13:50 most deaf people can speak
    0:13:53 and they know what their motor output is
    0:13:55 and they’re feeling the input.
    0:13:58 – Okay, so hearing their own voice for the first time
    0:13:59 through this. – Exactly.
    0:14:01 – Oh God, yeah, that’s interesting.
    0:14:01 – And by the way,
    0:14:03 that’s how you learned how to use your ears too.
    0:14:05 You know, when you’re a baby,
    0:14:06 you’re watching your mother’s mouth move
    0:14:08 and you’re hearing data coming in your ears
    0:14:10 and you clapped your hands together
    0:14:12 and you hear something in your ears.
    0:14:13 It’s the same idea.
    0:14:15 You’re just training up correlations in the brain
    0:14:18 about, oh, this visual thing seems to always go
    0:14:20 with that auditory stimulus.
    0:14:23 – So then it seems like if I’m deaf
    0:14:25 and I see the dog’s mouth moving
    0:14:27 and I now associate that with the sound,
    0:14:31 do the people say that they hear the sound where the dog is
    0:14:33 or is the sound coming from the wrist?
    0:14:34 – For the first few months,
    0:14:36 you’re hearing it on your wrist,
    0:14:38 you can get pretty good at these correlations
    0:14:40 but then after about six months,
    0:14:43 if I ask somebody when the dog barks,
    0:14:44 do you feel something on your wrist?
    0:14:45 And you think, okay, what was that on?
    0:14:46 That must have been a dog bark
    0:14:47 and then you look for the dog.
    0:14:51 And they say, no, I just hear the dog out there.
    0:14:52 – Hmm.
    0:14:53 – And that sounds so crazy.
    0:14:55 But remember, that’s what your ears are doing.
    0:14:58 Your ears are capturing vibrations at the eardrum
    0:15:00 that moves through the middle ear to the inner ear,
    0:15:01 breaks up to different frequencies,
    0:15:04 goes off to your brain, goes to your auditory cord.
    0:15:06 It’s this giant pathway of things.
    0:15:09 And yet, even though you’re hearing my voice right now
    0:15:13 inside your head, you think I’m somewhere else.
    0:15:14 And that’s exactly what happens,
    0:15:18 irrespective of how you feed the data in.
    0:15:22 So you also have a product that helps with tinnitus.
    0:15:23 Could you explain both what that is
    0:15:25 and how your product helps?
    0:15:27 So tinnitus is a ringing in the ears.
    0:15:31 It’s like beep and about 15% of the population has this.
    0:15:33 And for some people, it’s really, really bad.
    0:15:38 It turns out there is a mechanism for helping with tinnitus
    0:15:41 which has to do with playing tones
    0:15:45 and then matching that with stimulation on the skin.
    0:15:47 People wear the wristband, it’s exactly the same wristband,
    0:15:51 but we have the phone play tones, boop, boop, boop, boop, boop.
    0:15:53 And you’re feeling that all over your wrist.
    0:15:54 And you just do that for 10 minutes a day.
    0:15:56 And it drives down the tinnitus.
    0:15:58 Now, why does that work?
    0:16:00 There are various theories on this,
    0:16:02 but I think the simplest version
    0:16:05 is that your brain is figuring out,
    0:16:09 okay, real sounds always cause this
    0:16:11 correlating vibration on my wrist,
    0:16:15 but a fake sound, beep, you know, this thing in my head,
    0:16:17 that doesn’t have any verification on the wrist.
    0:16:20 And so that must not be a real sound.
    0:16:23 So because of issues of brain plasticity,
    0:16:26 the brain just reduces the strength of the tinnitus
    0:16:28 because it learns that it’s not getting any confirmation
    0:16:30 that that’s a real world sound.
    0:16:32 Now, how did you figure out
    0:16:34 that this bracelet could be used for this?
    0:16:36 This was discovered by a woman named Susan Shore,
    0:16:39 who’s a researcher who discovered this about a decade ago.
    0:16:42 She was using electrical shocks on the tongue.
    0:16:43 And there’s actually another company
    0:16:44 that’s spun out called Lanier
    0:16:46 that does this with sounds in the ear
    0:16:47 and shocks on the tongue.
    0:16:49 They had an argument that they think
    0:16:52 it had to be touched from the head and the neck.
    0:16:53 And I didn’t buy that at all.
    0:16:54 And that’s why I tried that with the wristband.
    0:16:57 So this was not an original idea for us
    0:17:01 except to try this on the wrist and it works equally as well.
    0:17:06 So what we’re talking about is substituting between senses.
    0:17:08 Are there other forms of this products
    0:17:10 that are currently available to consumers
    0:17:13 or likely to become available soon in the space?
    0:17:16 For people who are blind, for example,
    0:17:19 there are a few different approaches to this.
    0:17:21 One is called the brain port and that’s where,
    0:17:24 for a blind person, they have a little camera on their glasses
    0:17:29 and that gets turned into little electrical stimulation
    0:17:30 on the tongue.
    0:17:33 So you’re wearing this little electro-tactile grid
    0:17:36 on your tongue and it tastes like pop rocks
    0:17:37 sort of in your mouth.
    0:17:39 Blind people can get pretty good at this.
    0:17:42 They can navigate complex obstacle courses
    0:17:45 or throw a ball into a basket at a distance
    0:17:48 because they can come to see the world through their tongue,
    0:17:50 which if that sounds crazy,
    0:17:52 it’s the same thing as seeing it through these two spheres
    0:17:54 that are embedded in your skull.
    0:17:57 It’s just capturing photons and information about them,
    0:17:58 figuring out where the edges are
    0:17:59 and then shipping that back to the brain.
    0:18:01 And the brain can figure that out.
    0:18:03 There’s also a colleague of mine
    0:18:05 that makes an app called Voice.
    0:18:07 It uses the phone’s camera
    0:18:10 and it turns that into soundscape.
    0:18:13 So if you’re moving the camera around,
    0:18:15 you’re hearing (mimics sounds)
    0:18:18 you know, it sounds like a strange cacophony,
    0:18:19 but it doesn’t take long,
    0:18:21 even for you as a sighted person,
    0:18:23 to get used to this and say,
    0:18:27 oh, okay, I’m turning the visual world into sound
    0:18:28 and it’s starting to make sense.
    0:18:30 When I pass over an edge
    0:18:32 or when I zoom into something,
    0:18:34 the pitch changes, the volume changes,
    0:18:37 there’s all kinds of changes in the sound quality
    0:18:39 that tells you, oh, yeah, now I’m getting close to something,
    0:18:40 now I’m getting far,
    0:18:43 and here’s what the world looks like in sound.
    0:18:48 – Coming up after the break,
    0:18:51 there’s really no shortage of theoretical ideas
    0:18:52 in neuroscience,
    0:18:56 but fundamentally, we don’t have enough data.
    0:18:59 More of Steve Leavitt’s conversation with David Eagleman
    0:19:02 in this special episode of “People I Mostly Admire.”
    0:19:18 Okay, back now to this special episode of “People I Mostly Admire.”
    0:19:20 This is my Freakonomics friend and co-author Steve Leavitt
    0:19:24 in conversation with the neuroscientist David Eagleman.
    0:19:27 (eerie music)
    0:19:30 – Elon Musk’s company, Neuralink,
    0:19:32 has gotten a ton of attention lately.
    0:19:33 Could you explain what they’re trying to do
    0:19:37 and whether you think that’s a promising avenue to explore?
    0:19:38 – What they’re doing is they’re putting electrodes
    0:19:43 into the brain to read from and talk to the neurons there.
    0:19:45 So what we’ve been talking about so far
    0:19:47 has been sending signals to the brain,
    0:19:48 but what Neuralink is trying to do
    0:19:51 is take signals out of the brain, is that right?
    0:19:51 – That is correct.
    0:19:53 Everything we’ve been talking about so far
    0:19:54 with sensory substitution,
    0:19:57 that’s a way of pushing information in and non-invasive.
    0:20:00 And what Neuralink is, you have to drill a hole in the head
    0:20:02 to get to the brain itself,
    0:20:04 but then you can do reading and writing invasively.
    0:20:09 That actually has been going on for 60 years.
    0:20:11 The language of the brain is electrical stimulation.
    0:20:14 And so with a little tiny wire, essentially,
    0:20:17 you can zap a neuron and make it pop off
    0:20:21 or you can listen to when it’s chattering along,
    0:20:23 going pa-pa-pa-pa-pa-pa-pa-pa.
    0:20:25 There’s nothing actually new about what Neuralink is doing,
    0:20:28 except that they’re making a one ton robot
    0:20:32 that sews the electrodes into the brain
    0:20:34 so it can do it smaller and tighter and faster
    0:20:36 than a neurosurgeon can.
    0:20:38 And by the way, there are a lot of great companies
    0:20:41 doing this sort of thing with electrodes.
    0:20:44 As people get access to the brain,
    0:20:46 we’re finally getting to a point, we’re not there yet,
    0:20:48 but we’re getting to a point
    0:20:52 where we’ll finally be able to push theory forward.
    0:20:55 There’s really no shortage of theoretical ideas
    0:20:58 in neuroscience, but fundamentally,
    0:21:01 we don’t have enough data because, as I mentioned,
    0:21:04 you’ve got these 86 billion neurons all doing their thing,
    0:21:09 and we have never measured what all these things
    0:21:10 are doing at the same time.
    0:21:11 So we have technologies
    0:21:15 like functional magnetic resonance imaging, FMRI,
    0:21:19 which measures big blobby volumes of,
    0:21:21 oh, there was some activity there and some activity there,
    0:21:22 but that doesn’t tell us what’s happening
    0:21:24 at the level of individual neurons.
    0:21:26 We can currently measure some individual neurons,
    0:21:28 but not many of them.
    0:21:32 Be like if an alien asked one person in New York City,
    0:21:33 hey, what’s going on here?
    0:21:36 And then tried to extrapolate to understand
    0:21:37 the entire economy of New York City
    0:21:38 and how that’s all working.
    0:21:43 So I think we’re finally getting closer to the point
    0:21:45 where we’ll have real data about,
    0:21:47 wow, this is what thousands or eventually hundreds
    0:21:49 of thousands or millions of neurons
    0:21:52 are actually doing in real time at the same moment,
    0:21:55 and then we’ll be able to really get progress.
    0:21:57 I actually think the future is not in things like Neuralink,
    0:22:02 but the next level past that, which is nanorobotics.
    0:22:04 This is all theoretical right now,
    0:22:07 but I don’t think this is more than 20, 30 years off,
    0:22:10 where you do three-dimensional printing,
    0:22:14 atomically precise, you make molecular robots,
    0:22:15 hundreds of millions of these,
    0:22:17 and then you put them in a capsule
    0:22:18 and you swallow the capsule,
    0:22:19 and these little robots swim around
    0:22:23 and they go into your neurons, these cells in your brain.
    0:22:27 And from there, they can send out little signals saying,
    0:22:29 hey, this neuron just fired.
    0:22:30 And once we have that sort of thing,
    0:22:32 then we can say non-invasively,
    0:22:35 here’s what all these neurons are doing at the same time,
    0:22:38 and then we’ll really understand the brain.
    0:22:41 – I’ve worn a continuous glucose monitor a few times,
    0:22:43 so you stick this thing in your arm
    0:22:44 and you leave it there for 10 days,
    0:22:46 and every five minutes,
    0:22:49 it gives you a reading of your blood glucose level.
    0:22:51 It gives you direct feedback
    0:22:53 on how your body responds to the foods you eat,
    0:22:55 also to stress or lack of sleep,
    0:22:57 that you simply don’t get otherwise.
    0:23:01 I learned more about my metabolism in 10 days
    0:23:04 than I had over the entire rest of my life combined.
    0:23:06 What you’re talking about with these nanorobots
    0:23:07 is obviously in the future,
    0:23:12 but is there anything now that I can buy
    0:23:13 and I can strap on my head?
    0:23:15 And I know it’s not gonna be individual neurons,
    0:23:17 but that would allow me to get feedback
    0:23:21 about my brainwaves and be able to learn
    0:23:23 in that same way I do with the glucose monitor?
    0:23:27 – What we have now is EEG, Electroencephalography,
    0:23:30 and there are several really good companies
    0:23:34 like MUSE and Emotive that have come out with at-home methods.
    0:23:36 You just strap this thing on your head
    0:23:39 and you can measure what’s going on with your brainwaves.
    0:23:43 The problem is that brainwaves are still pretty distant
    0:23:46 from the activity of 86 billion chattering neurons.
    0:23:49 An analogy would be if you went
    0:23:50 to your favorite baseball stadium
    0:23:53 and you attached a few microphones
    0:23:55 to the outside of the stadium
    0:23:58 and you listened to a baseball game,
    0:24:00 but all you could hear with these microphones
    0:24:02 is occasionally the crack of the bat
    0:24:03 and the roar of the crowd.
    0:24:07 And then your job is to reconstruct what baseball is
    0:24:10 just some of these few little signals you’re getting.
    0:24:14 So I’m afraid it’s still a pretty crude technology.
    0:24:17 – I could imagine that I would put one of these EEGs on
    0:24:20 and I would just find some feeling I liked,
    0:24:23 bliss or peace or maybe it’s a feeling
    0:24:26 induced by drugs and alcohol.
    0:24:30 And I would be able to see what my brain patterns
    0:24:32 looked like in those states.
    0:24:35 Then I could sit around and try to work towards
    0:24:37 reproducing those same patterns.
    0:24:39 – No, it might not actually lead to anything good.
    0:24:41 But in your professional opinion,
    0:24:44 total waste of time, you trying to do that?
    0:24:47 – The fact is if you felt good at some moment in your life
    0:24:49 and you sat around and tried to reproduce that,
    0:24:52 I think you’d do just as well thinking about that moment,
    0:24:55 trying to put yourself in that state,
    0:24:57 rather than try to match a squiggly line.
    0:24:59 – You know, I’m a big believer in data though
    0:25:03 and it seems like somebody should be building AI systems
    0:25:06 that are able to look at those squiggles
    0:25:07 and give me feedback.
    0:25:10 The thing that I’d so hard about the brain
    0:25:14 is that we don’t get direct feedback about what’s going on,
    0:25:17 which is how the brain is so good at what it does.
    0:25:18 If the brain didn’t get feedback from the world
    0:25:20 about what it was doing,
    0:25:21 it wouldn’t be any good at predicting things.
    0:25:24 So I’m trying to find a way that I can get feedback,
    0:25:25 but it sounds like you’re saying I gotta live
    0:25:28 for 20 more years if I wanna hope to do that.
    0:25:29 – I think that’s right.
    0:25:31 I mean, there’s also this very deep question about
    0:25:34 what kind of feedback is useful for you.
    0:25:37 Most of the action in your brain is happening unconsciously.
    0:25:39 It’s happening well below the surface of your awareness
    0:25:41 or your ability to access it.
    0:25:45 And the fact is that your brain works much better that way.
    0:25:47 Do you play tennis, for example?
    0:25:47 – Not well.
    0:25:48 – Or golf?
    0:25:49 – Golf I play.
    0:25:50 – Okay, good.
    0:25:51 So if I ask you, hey Stephen,
    0:25:54 tell me exactly how you swing that golf club.
    0:25:55 The more you start thinking about it,
    0:25:56 the worse you’re gonna be at it.
    0:25:59 Because consciousness, when it starts poking around
    0:26:00 in areas that it doesn’t belong,
    0:26:02 it’s only gonna make things worse.
    0:26:04 And so it is an interesting question
    0:26:06 about the kind of things
    0:26:07 that we want to be more conscious of.
    0:26:09 I’m trying some of these experiments now,
    0:26:11 actually using my wristband,
    0:26:16 wearing EEG and getting a summarized feedback on the wrist.
    0:26:17 So I don’t have to stare at a screen,
    0:26:19 but as I’m walking around during the day,
    0:26:22 I have a sense of what’s going on with this.
    0:26:23 Or with the smart watch,
    0:26:26 having a sense of what’s going on with my physiology.
    0:26:28 I’m not sure yet whether it’s useful
    0:26:30 or whether those things are unconscious
    0:26:33 because mother nature figured out a long time ago
    0:26:36 that it’s just as well if it remains unconscious.
    0:26:37 One thing I’m doing,
    0:26:40 which is just a wacky experiment is to try it.
    0:26:42 The smart watch is measuring all these things.
    0:26:43 We have that data going out,
    0:26:47 but the key is you have someone else wear the wristband.
    0:26:48 Like your spouse wear the smart watch
    0:26:51 and you’re feeling her physiology.
    0:26:52 And I’m trying to figure out,
    0:26:55 is this useful to be tapped into someone else’s physiology?
    0:26:57 I don’t know if this is good or bad for marriages,
    0:26:58 but what a nightmare.
    0:27:01 But I’m just trying to really get at this question
    0:27:03 of these unconscious signals that we experience.
    0:27:05 Is it better if they’re exposed
    0:27:07 or better to not expose them?
    0:27:09 – What have you found empirically?
    0:27:10 – Empirically what I found is that married couples
    0:27:11 don’t want to wear it.
    0:27:13 (laughs)
    0:27:21 – So in my lived experience,
    0:27:26 I walk around and there’s almost nonstop chatter in my head.
    0:27:29 It’s like there’s a narrator who’s commenting
    0:27:31 on what I’m observing in the world.
    0:27:34 My particular voice does a lot of rehearsing
    0:27:36 of what I’m gonna say out loud in the future
    0:27:39 and a lot of rehashing of past social interactions.
    0:27:40 Other people have voices in their head
    0:27:44 that are constantly criticizing and belittling them.
    0:27:47 But either way, there’s both a voice that’s talking
    0:27:50 and there’s also some other entity in my head
    0:27:52 that’s listening to that voice and reacting.
    0:27:56 Does neuroscience have an explanation for this sort of thing?
    0:27:59 On my book Incognito, the way I cast the whole thing
    0:28:01 is that the right way to think about the brain
    0:28:04 is like a team of rivals.
    0:28:06 Lincoln, when he set up his presidential cabinet,
    0:28:08 he set up several rivals in it
    0:28:10 and they were all functioning as a team.
    0:28:13 That’s really what’s going on under the hood in your head
    0:28:15 is you’ve got all these drives
    0:28:16 that want different things all the time.
    0:28:19 So if I put a slice of chocolate cake in front of you,
    0:28:21 Steven, part of your brain says,
    0:28:23 “Ooh, that’s a good energy source, let’s eat it.”
    0:28:25 Part of your brain says, “No, don’t eat it.
    0:28:26 It’ll make me overweight.”
    0:28:27 Part of your brain says, “Okay, I’ll eat it,
    0:28:29 but I’ll go to the gym tonight.”
    0:28:31 And the question is, who is talking with whom here?
    0:28:35 It’s all you, but it’s different parts of you.
    0:28:38 All these drives are constantly arguing it out.
    0:28:40 It’s by the way, generating activity
    0:28:43 in the same parts of the brain as listening and speaking
    0:28:44 that you would normally do.
    0:28:48 It’s just internal before anything comes out.
    0:28:53 – Language is such an effective form of communicating
    0:28:55 and of summarizing information
    0:28:57 that at least my impression inside my head
    0:29:02 is that a lot of this is being mediated through language.
    0:29:03 But I also have this impression
    0:29:06 that there are parts of my brain
    0:29:07 that are not very good with language.
    0:29:11 Maybe I’m crazy, but I have this working theory
    0:29:13 that the language parts of my brain
    0:29:16 have really co-opted power.
    0:29:18 The non-speaking parts of my brain,
    0:29:20 they actually feel to me like the good parts of me,
    0:29:22 the interesting parts of me,
    0:29:24 but I feel like they’re essentially held hostage
    0:29:26 by the language parts.
    0:29:27 Does that make any sense?
    0:29:28 – Well, this might be a good reason
    0:29:31 for you to keep pursuing possible ways
    0:29:33 to tap into your brain data.
    0:29:37 And by the way, it turns out that the internal voice
    0:29:39 is on a big spectrum across the population,
    0:29:41 which is to say some people like you
    0:29:43 have a very loud internal radio.
    0:29:45 I happen to be at the other end of the spectrum
    0:29:48 where I have no internal radio at all.
    0:29:49 I never hear anything in my head.
    0:29:51 That’s called an endophagia.
    0:29:55 But everyone is somewhere along this spectrum.
    0:29:58 One of the points that I’ve always really concentrated
    0:30:00 on neuroscience is what are the actual differences
    0:30:03 between people traditionally that’s been looked at
    0:30:05 in terms of disease states.
    0:30:07 But the question is from person to person
    0:30:09 who are in the normal part of the distribution,
    0:30:10 what are the differences between us?
    0:30:12 In terms of those are manifold.
    0:30:15 So take something like how clearly you visualize
    0:30:16 when you imagine something.
    0:30:20 So if I ask you to imagine a dog running across
    0:30:24 the flowery meadow towards a cat,
    0:30:26 you might have something like a movie in your head.
    0:30:28 Other people have no image at all.
    0:30:29 They understand it conceptually,
    0:30:31 but they don’t have any image in their head.
    0:30:34 And it turns out when you carefully study this,
    0:30:37 the whole population is smeared across the spectrum.
    0:30:39 So our internal lives from person to person
    0:30:40 can be quite different.
    0:30:42 – So when you talk about the spectrum,
    0:30:46 it makes me think of synesthesia.
    0:30:49 Could you explain what that is and how that works?
    0:30:52 – So I’ve spent about 25 years now studying synesthesia
    0:30:55 and that has to do with some percentage of the population
    0:30:57 has a mixture of the senses.
    0:30:59 They might look at letters on a page
    0:31:01 and that triggers a color experience for them
    0:31:05 where they hear music and that causes them to see some visual
    0:31:07 or they put some taste in their mouth
    0:31:10 and it causes them to have a feeling on their fingertips.
    0:31:13 There are dozens and dozens of forms of synesthesia,
    0:31:16 but what they all have to do with is a cross blending
    0:31:18 of things that are normally separate
    0:31:20 in the rest of the population.
    0:31:23 – And what share of the population has these patterns?
    0:31:27 – So it’s about 3% of the population that has colored letters
    0:31:29 or colored weekdays or months or numbers.
    0:31:31 – It was big, it’s interesting.
    0:31:32 I wouldn’t have thought it was so big.
    0:31:35 – The crazy part is that if you have synesthesia,
    0:31:37 it probably has never struck you
    0:31:40 that 97% of the population does not see the world
    0:31:41 the way that you see it.
    0:31:44 Everyone’s got their own story going on inside
    0:31:48 and it’s rare that we stop to consider the possibility
    0:31:52 that other people do not have the same reality that we do.
    0:31:54 – And what’s going on in the brain?
    0:31:55 – In the case of synesthesia,
    0:31:58 it’s just a little bit of crosstalk between two areas
    0:32:01 that in the rest of the population tend to be separate
    0:32:02 but neighboring.
    0:32:04 So it’s like porous borders between two countries.
    0:32:06 They just get a little bit of data leakage
    0:32:10 and that causes them to have a joint sensation of something.
    0:32:11 – People make a big deal out of it
    0:32:15 when they talk about musicians having this
    0:32:17 and they imply that it’s helpful,
    0:32:19 that it makes them better musicians.
    0:32:20 Do you think there’s truth to that
    0:32:23 or is it just that if 3% of the population has this,
    0:32:25 then they’re gonna be some great musicians among them?
    0:32:26 – I suspect it’s the latter,
    0:32:28 which is to say everyone loves
    0:32:30 pointing out synesthetic musicians
    0:32:34 but no one has done a study on how many deep sea divers
    0:32:37 have synesthesia or how many accountants have synesthesia.
    0:32:38 And so we don’t really know
    0:32:41 if it’s disproportionate among musicians.
    0:32:43 So you’ve created this database of people
    0:32:47 who have the condition and you find a pattern
    0:32:50 that is completely and totally bizarre.
    0:32:53 And that’s that there’s a big bunch of people
    0:32:57 who associate the letter A with red, B with orange,
    0:32:59 C with yellow, it goes on and on
    0:33:01 and then they start repeating it G.
    0:33:03 In general though, you don’t see any patterns at all.
    0:33:07 Like people can connect these colors and letters in any way.
    0:33:09 Do you remember when you first found this pattern
    0:33:10 and what your thought was?
    0:33:13 So typically, as he said, it’s totally idiosyncratic.
    0:33:17 Each synesthete has his or her own colors for letters.
    0:33:20 So my A might be yellow, your A is purple and so on.
    0:33:22 And then what happened is
    0:33:24 with two colleagues of mine at Stanford,
    0:33:27 we found in this database of tens of thousands of synesthetes
    0:33:28 that I’ve collected over the years,
    0:33:31 we found that starting in the late 60s,
    0:33:33 there was some percentage of synesthetes
    0:33:36 who happened to share exactly the same colors.
    0:33:38 These synesthetes were in different locations
    0:33:39 but they all had the same thing.
    0:33:44 And then that percentage rose to about 15% in the mid 70s.
    0:33:45 – So when you saw this,
    0:33:47 you must’ve been thinking, my God, this is important, right?
    0:33:48 – Exactly right.
    0:33:49 The question is,
    0:33:51 how could these people be sharing the same pattern?
    0:33:53 What we had always suspected is that
    0:33:56 maybe there was some imprinting that happens,
    0:33:58 which is to say there’s a quilt in your grandmother’s house
    0:34:03 that has a red A and a yellow B and a purple C and so on.
    0:34:05 But everyone has different things
    0:34:07 that they grew up with as little kids.
    0:34:11 And so it was strange that this was going on.
    0:34:13 The punchline is that we realized
    0:34:16 that this is the colors of the Fisher Price Magnet set
    0:34:19 on the refrigerators that were popular
    0:34:22 during the 70s and 80s and then essentially died out.
    0:34:23 And so it turns out that when I look across
    0:34:25 all these tens of thousands of synesthetes,
    0:34:28 it’s just those people who were kids
    0:34:30 in the late 60s and 70s and 80s
    0:34:32 that imprinted on the Fisher Price Magnet set.
    0:34:34 And that’s their synesthesia.
    0:34:36 And then as its popularity died out,
    0:34:39 there aren’t anymore who have that particular pattern.
    0:34:49 – Now I have to imagine that the way we teach
    0:34:52 in traditional classrooms with a teacher or professor
    0:34:54 at a Blackboard lecturing to a huge group
    0:34:57 of passive students, as a neuroscientist,
    0:34:59 that must make a cringe, right?
    0:35:01 – It does, increasingly, yes.
    0:35:02 – How should we teach?
    0:35:04 I think the next generation is going to be smarter
    0:35:07 than we are simply because of the broadness
    0:35:09 of the diet that they can consume.
    0:35:10 Whenever they’re curious about something,
    0:35:13 they jump on the internet, they get the answer straight away
    0:35:16 or from Alexa or from ChatGPT, they just get the answers
    0:35:20 and that is massively useful for a few reasons.
    0:35:23 One is that when you are curious about something,
    0:35:26 you have the right cocktail of neurotransmitters present
    0:35:28 to make that information stick.
    0:35:31 So if you get the answer to something
    0:35:32 in the context of your curiosity,
    0:35:34 then it’s going to stay with you.
    0:35:36 Whereas you and I grew up in an era
    0:35:39 where we had lots of just-in-case information.
    0:35:40 – What do you mean by that?
    0:35:42 – Oh, you know, like just in case you ever need to know
    0:35:45 that the Battle of Hastings happened in 1066, here you go.
    0:35:46 – And you want to contrast that
    0:35:47 with just-in-time information.
    0:35:48 – Exactly.
    0:35:51 – I need to know how to fix my car
    0:35:52 and so the internet tells me
    0:35:55 and then I can really remember it ’cause I need it.
    0:35:56 – That’s exactly it.
    0:35:58 And so, look, you know, for all of us with kids,
    0:36:00 I know you’ve got kids, I’ve got kids and we feel like,
    0:36:03 oh, my kid’s on YouTube and wasting time.
    0:36:06 There’s a lot of amazing resources
    0:36:08 and things that they learn on YouTube
    0:36:10 or even on TikTok, anywhere.
    0:36:12 There’s lots of garbage, of course,
    0:36:14 but it’s better than what we grew up with.
    0:36:16 When you and I wanted to know something,
    0:36:20 we would ask our mothers to drive us down to the library
    0:36:22 and we would thumb through the card catalog
    0:36:23 and hope there was something on it there
    0:36:25 that wasn’t too outdated.
    0:36:27 – You were more ambitious than me.
    0:36:28 I would just ask my mother
    0:36:30 and I have since learned that every single thing
    0:36:33 my mother taught me was completely wrong,
    0:36:34 but I still believe them.
    0:36:36 Because of this part of the brain
    0:36:38 that locks in things that you learn long ago,
    0:36:40 I still have to fight every day
    0:36:42 against the false sorts my mother taught me.
    0:36:45 I wish I had told her to take me to the library.
    0:36:47 – My mother was a biology teacher
    0:36:48 and my father was a psychiatrist
    0:36:51 and so they had all kinds of good information.
    0:36:55 I’m just super optimistic about the next generation of kids.
    0:36:57 Now, as far as how we teach,
    0:37:00 things got complicated with the advent of Google
    0:37:03 and now it’s twice as complicated with chat GPT.
    0:37:06 Happily, we already learned these lessons 20 years ago.
    0:37:08 What we need to do is just change the way
    0:37:10 that we ask questions of students.
    0:37:13 We can no longer just assume that fill in the blank
    0:37:15 or even just writing a paper on something
    0:37:18 is the optimal way to have them learn something,
    0:37:20 but instead they need to do interactive projects
    0:37:22 like run little experiments with each other
    0:37:26 and the kind of thing that you and I both love to do
    0:37:29 in our careers which is, okay, go out and find this data
    0:37:32 and run this experiment and see what happens here.
    0:37:35 That’s the kind of opportunities that kids will have now.
    0:37:40 – You were listening to a special bonus episode
    0:37:43 of People I Mostly Admire with Steve Levitt
    0:37:45 and the neuroscientist David Eagleman.
    0:37:49 After the break, what are large language models missing?
    0:37:51 – It has no theory of mind.
    0:37:55 It has no physical model of the world the way that we do.
    0:37:56 That’s coming up after the break.
    0:38:08 (gentle music)
    0:38:13 – David Eagleman is a professor, a CEO,
    0:38:16 leader of a nonprofit called the Center for Science and Law,
    0:38:19 host of TV shows on PBS and Netflix
    0:38:21 and the founder of Possibillionism.
    0:38:27 Like every curious person trying to figure out
    0:38:29 what we’re doing here, what’s going on,
    0:38:32 it just feels like there are two stories.
    0:38:35 Either there’s some religion story
    0:38:38 or there’s the story of strict atheism,
    0:38:39 which I tend to agree with,
    0:38:41 but it tends to come with this thing of,
    0:38:42 look, we’ve got it all figured out,
    0:38:44 there’s nothing more to ask here.
    0:38:45 There is a middle position
    0:38:46 which people call agnosticism,
    0:38:48 but usually that means, I don’t know,
    0:38:50 I’m not committing to one thing or the other.
    0:38:52 I got interested in defining this new thing
    0:38:54 that I call Possibillionism,
    0:38:56 which is to try to go out there
    0:38:58 and do what a scientist does,
    0:39:01 which is an active exploration of the possibility space.
    0:39:03 What the heck is going on here?
    0:39:06 We live in such a big and mysterious cosmos.
    0:39:09 Everything about our existence is sort of weird.
    0:39:11 Obviously the whole Judeo-Christian tradition,
    0:39:14 that’s one little point in that possibility space
    0:39:17 or the possibility that there’s absolutely nothing
    0:39:18 or we’re just atoms when we die,
    0:39:20 but there’s lots of other possibilities.
    0:39:24 And so I’m not willing to commit to one team or the other
    0:39:26 without having sufficient evidence.
    0:39:28 So that’s why I call myself a Possibillion.
    0:39:32 – And so in support of Possibillionism,
    0:39:34 maybe a better name could be in order,
    0:39:37 you wrote a book called SUM, that’s S-U-M.
    0:39:41 So it’s SUM, 40 Tales from the Afterlives.
    0:39:44 How do you describe the book to people?
    0:39:45 – I call it literary fiction.
    0:39:48 It’s 40 short stories that are all mutually exclusive.
    0:39:51 They’re all pretty funny, I would like to think,
    0:39:53 but they’re also kind of gut-wrenching.
    0:39:55 And what I’m doing is shining the flashlight
    0:39:57 around the possibility space.
    0:39:59 None of them are meant to be taken seriously.
    0:40:02 But what the exercise of having 40
    0:40:07 completely different stories gives us is a sense of,
    0:40:10 wow, actually there’s a lot that we don’t know here.
    0:40:12 In some of the stories, God is a female.
    0:40:14 In some stories, God is a married couple.
    0:40:19 In some stories, God is a species of dim-witted creatures.
    0:40:22 In one story, God is actually the size of a bacterium
    0:40:24 and doesn’t know that we exist.
    0:40:27 And in lots of stories, there’s no God at all.
    0:40:29 That book is something I wrote over the course of seven years
    0:40:32 and became an international bestseller.
    0:40:34 It’s really had a life to it
    0:40:36 that I wouldn’t have ever guessed.
    0:40:38 – When I heard about the book,
    0:40:40 I saw the subtitle and I thought,
    0:40:44 I have zero interest in reading a book about the afterlife.
    0:40:47 I totally misunderstood what the book was about.
    0:40:51 And then I certainly didn’t understand that some was Latin.
    0:40:54 – Some actually I chose because among other things,
    0:40:56 that’s the title story.
    0:40:58 In the afterlife, you relive your life,
    0:41:02 but all the moments that share a quality are grouped together.
    0:41:05 So you spend three months waiting in line
    0:41:08 and you spend 900 hours sitting on the toilet
    0:41:10 and you spend 30 years sleeping.
    0:41:11 – All in a row.
    0:41:13 – Exactly, and this amount of time looking for lost items
    0:41:14 in this amount of time,
    0:41:16 realizing you’ve forgotten someone’s name
    0:41:19 and this amount of time falling and so on.
    0:41:20 Part of why I used the title sum
    0:41:24 is because of the sum of events in your life like that.
    0:41:26 Part of it was because Kojito or Gosume.
    0:41:29 So it ended up just being the perfect title for me,
    0:41:31 even if it did lose a couple of readers there.
    0:41:41 – People are super excited right now
    0:41:44 about these generative AI models,
    0:41:45 the large language models.
    0:41:47 What’s your take on it?
    0:41:49 – Essentially these artificial neural networks
    0:41:53 took off from a very simplified version of the brain,
    0:41:55 which is, hey, look, you’ve got units and they’re connected
    0:41:56 and what if we can change the strength
    0:41:58 between these connections?
    0:42:00 And in a very short time,
    0:42:02 that has now become this thing
    0:42:05 that has read everything ever written on the planet
    0:42:07 and can give extraordinary answers.
    0:42:10 But it’s not yet the brain or anything like it.
    0:42:12 It’s just taking the very first idea
    0:42:14 about the brain and running with it.
    0:42:16 What a large language model does not have
    0:42:19 is an internal model of the world.
    0:42:21 It’s just acting as a statistical parrot.
    0:42:23 It’s saying, okay, given these words,
    0:42:25 what is the next word most likely to be
    0:42:27 given everything that I’ve ever read on the planet?
    0:42:29 And so it’s really good at that,
    0:42:33 but it has no model of the world, no physical model.
    0:42:38 And so things that a six-year-old can answer, it is stuck on.
    0:42:39 Now, this is not a criticism of it
    0:42:42 in the sense that it can do all kinds of amazing stuff
    0:42:43 and it’s gonna change the world,
    0:42:45 but it’s not the brain yet
    0:42:46 and there’s still plenty of work to be done
    0:42:49 to get something that actually acts like the brain.
    0:42:52 – Do you think that it is a solvable problem
    0:42:55 to give these models a theory of mind, a model of the world?
    0:42:58 – I suspect so because there are 8.2 billion of us
    0:43:00 who have this functioning in our brains
    0:43:04 and as far as we can tell, we’re just made of physical stuff.
    0:43:06 We’re just very sophisticated algorithms
    0:43:09 and it’s just a matter of cracking what that algorithm is.
    0:43:12 – If we were to come back in 100 years,
    0:43:13 what do you think would be most different?
    0:43:14 I know that’s a hard prediction to make,
    0:43:17 but what do you see is transforming most
    0:43:19 in the areas you work in?
    0:43:21 – The big textbook that we have in our field
    0:43:22 is called Principles of Neuroscience
    0:43:27 and it’s about 900 pages and it’s not actually principles,
    0:43:30 it’s just a data dump of all this crazy stuff we know.
    0:43:34 And in 100 years, I expect it’ll be like 90 pages.
    0:43:37 We’ll have things where we put big theoretical frameworks
    0:43:39 together and we say, ah, okay, look, all this other stuff,
    0:43:42 these are just expressions of this basic principle
    0:43:43 that we have now figured out.
    0:43:46 – Do you pay much attention to behavioral economics?
    0:43:46 – Yes, I do.
    0:43:48 – And what do you think of it?
    0:43:49 – Oh, it’s great and that’s probably the direction
    0:43:52 that a lot of fields will go is,
    0:43:54 how do humans actually behave?
    0:43:56 One of the big things that I find most interesting
    0:43:59 about behavioral economics comes back to this issue
    0:44:01 about the team of rivals.
    0:44:04 When people measure in the brain
    0:44:06 how we actually make decisions about whatever,
    0:44:09 there are totally separable networks going on.
    0:44:12 Some networks care about the valuation of something,
    0:44:13 the price point.
    0:44:14 You have totally other networks
    0:44:17 that care about the anticipated emotional experience
    0:44:18 about something.
    0:44:22 You have other networks that care about the social context.
    0:44:25 Like, what do my friends think about this?
    0:44:28 You have mechanisms that care about short-term gratification.
    0:44:29 You have other mechanisms that are thinking about
    0:44:32 the long-term, what kind of person do I want to be?
    0:44:34 All these things are battling it out under the hood.
    0:44:37 It’s like the three stooches sticking each other in the eye
    0:44:39 and wrestling each other’s arms and stuff.
    0:44:41 But what’s fascinating is when you’re standing
    0:44:44 in the grocery store aisle trying to decide
    0:44:47 which flavor of ice cream you’re gonna buy,
    0:44:48 you don’t know about these raging battles
    0:44:50 happening under the hood.
    0:44:52 You just stand there for a while and then you say,
    0:44:54 “Okay, I’ll grab this one over here.”
    0:44:56 – There was a point in time among economists
    0:44:57 that there was a lot of optimism
    0:45:00 that we could really nail macroeconomics,
    0:45:04 inflation and interest rates and whatnot.
    0:45:06 And we could really understand how the system worked.
    0:45:10 And I think there’s been a real step back from that.
    0:45:12 The view now is, look, it’s enormous complex system.
    0:45:16 And we’ve really, I guess, given up in the short run.
    0:45:18 Are you at all worried that’s where we’re going
    0:45:19 with the brain?
    0:45:20 – Oh gosh, no.
    0:45:23 And the reason is because we’ve got
    0:45:24 all these billions of brains running around.
    0:45:27 What that tells us is it has to be pretty simple
    0:45:28 and principal.
    0:45:30 You got 19,000 genes, that’s all you’ve got.
    0:45:32 Something about it has to be as simple
    0:45:37 as falling off a log for it to work out very well
    0:45:39 so often, billions of times.
    0:45:44 – They say as you get older,
    0:45:46 it’s important to keep challenging your brain
    0:45:49 by learning new things like a foreign language.
    0:45:51 I can’t say I found learning German
    0:45:52 to be all that much fun.
    0:45:55 And I definitely have not turned out to be very good at it.
    0:45:57 So I’ve been looking for a new brain challenge
    0:46:02 and I have to say, I find echolocation very intriguing.
    0:46:06 How cool would it be to be able to see via sound?
    0:46:09 I suspect though that my aptitude for echolocation
    0:46:12 will be on power with my aptitude for German.
    0:46:15 So if you see me covered in bruises, you’ll know why.
    0:46:18 If you wanna learn more about David Egelman’s ideas,
    0:46:20 I really enjoyed a couple of his mini books
    0:46:23 like LiveWired, which talks about his brain research,
    0:46:26 and some four details from the afterlife,
    0:46:28 his book of speculative fiction.
    0:46:32 – Hey there, it’s Stephen Dubner.
    0:46:34 Again, I hope you enjoyed this special episode
    0:46:36 of People I Mostly Admire.
    0:46:37 I loved it.
    0:46:41 And I would suggest you go right now to your podcast app
    0:46:43 and follow the show, People I Mostly Admire.
    0:46:46 We will be back very soon with more Freakonomics Radio.
    0:46:49 Until then, take care of yourself.
    0:46:51 And if you can, someone else too.
    0:46:55 Freakonomics Radio and People I Mostly Admire
    0:46:58 are produced by Stitcher and Renbud Radio.
    0:47:00 This episode was produced by Morgan Levy
    0:47:02 with help from Lyric Boutich and Daniel Moritz-Rabson.
    0:47:04 It was mixed by Jasmine Klinger.
    0:47:07 Our staff also includes Alina Kulman, Augusta Chapman,
    0:47:09 Dalvin Abouaji, Eleanor Osborne,
    0:47:12 Ellen Frankman, Elsa Hernandez, Gabriel Roth, Greg Rippen,
    0:47:15 Jason Gambrell, Jeremy Johnston, John Schnars,
    0:47:17 Neil Coruth, Rebecca Lee Douglas,
    0:47:20 Sarah Lilly, Theo Jacobs, and Zach Lipinski.
    0:47:22 Our composer is Luis Guerra.
    0:47:24 As always, thank you for listening.
    0:47:33 – David, you got your quick time going?
    0:47:35 – I do now.
    0:47:42 – The Freakonomics Radio Network,
    0:47:44 the hidden side of everything.
    0:47:49 – Stitcher.
    0:47:51 (upbeat music)
    0:47:53 you

    David Eagleman upends myths and describes the vast possibilities of a brainscape that even neuroscientists are only beginning to understand. Steve Levitt interviews him in this special episode of People I (Mostly) Admire.

     

    • SOURCES:
      • David Eagleman, professor of cognitive neuroscience at Stanford University and C.E.O. of Neosensory.

     

     

  • 616. How to Make Something from Nothing

    AI transcript
    0:00:08 Hey there, it’s Steven Dubner, and I would like to remind you about two live shows that
    0:00:09 we are putting on soon.
    0:00:12 The first one is on January 3rd in San Francisco.
    0:00:15 The second is in Los Angeles on February 13th.
    0:00:20 We have got some excellent guests for both shows, so please come hang out with us.
    0:00:27 Tickets are at Freakonomics.com/LiveShows, one word, again January 3rd and February 14th,
    0:00:28 San Francisco and LA.
    0:00:34 Meanwhile, today on the show, a conversation with someone I know quite well, or at least
    0:00:41 used to, someone who is smart, shrewd, very good at his work, and someone who taught me
    0:00:47 a lot, even if not always on purpose.
    0:00:49 Why don’t you just say your name and what you do?
    0:00:50 My name is Adam Moss.
    0:00:51 That’s easy enough.
    0:01:00 I am an editor by lifelong profession and recently an author and sometimes a painter.
    0:01:05 For a long time, Adam Moss was widely considered the best magazine editor around.
    0:01:11 He was the founding editor of Seven Days Magazine, a clever and slightly transgressive
    0:01:12 arts and culture weekly.
    0:01:17 From there, he went to the New York Times Magazine, and after many years there, he took
    0:01:21 over New York Magazine, which he radically remade for the digital era.
    0:01:25 He won all the awards an editor can win.
    0:01:29 He directly shaped the careers of hundreds of writers and editors.
    0:01:32 Indirectly, he did the same for millions of readers.
    0:01:38 He left New York Magazine in 2019, still on top but feeling a bit too old for the game,
    0:01:42 a bit burned out and ready for something new.
    0:01:49 The something new eventually took the form of a book called The Work of Art, How Something
    0:01:51 Comes from Nothing.
    0:01:58 The book is 43 cases of building something from first notion to finished product with
    0:02:00 all that kind of toward firm between.
    0:02:04 Many people who know Adam Moss were surprised that he wrote a book.
    0:02:08 He was one of the few magazine editors who didn’t either start out as a writer or want
    0:02:12 to be a writer or think of themselves as a writer.
    0:02:14 He was a full-fledged editor.
    0:02:17 An editor is mostly backstage.
    0:02:20 There’s a lot of power and a bit of risk.
    0:02:25 A writer, meanwhile, is out front, directly in the line of fire.
    0:02:29 You work on a thing for months or years, and then it goes out into the world with your
    0:02:33 name on it, so if people hate it, they know where to find you.
    0:02:37 That’s why it was so intriguing that Adam Moss would write a book.
    0:02:40 So we will talk about that today, but some other things too.
    0:02:46 Mostly his tenure at the New York Times Magazine, where he happened to be my boss.
    0:02:47 This was in the late 1990s.
    0:02:52 I was what’s called a story editor, which meant I came up with ideas, assigned them
    0:02:58 to writers, and then shepherded those pieces through the editorial and publishing processes.
    0:03:03 The Times Magazine was considered a great magazine during this era, and it was a thrill
    0:03:04 to be inside of that.
    0:03:11 So terrifying sometimes, but mostly a thrill, and mostly because our boss was really good
    0:03:15 at his job, and we all got to watch and learn.
    0:03:18 That said, I quit The Times after about five years.
    0:03:23 It used to be that when someone left that place voluntarily and was relatively young,
    0:03:27 I was in my thirties, that people would think you’re crazy.
    0:03:30 I was doing well as an editor and an occasional writer.
    0:03:34 The boss has told me I might be a boss before long.
    0:03:35 That was the last straw.
    0:03:38 I didn’t want to be an editor or a boss.
    0:03:44 I just wanted to be a writer, and I wanted to work on my own, not within a hierarchy.
    0:03:50 So I quit and I went off to write books, which is how I ended up here, talking to you.
    0:03:55 When Adam Moss’s book came out in early 2024, I read it right away.
    0:04:00 For me and many others who worked for him, it was a bit like discovering his journal.
    0:04:05 Something that made him tick as an editor, as a boss, was right there on the page.
    0:04:09 At the time, I was trying to make a podcast series about mentorship.
    0:04:15 The idea was that mentorship is this standard and successful practice in many realms, in
    0:04:21 education and sports, the military, in the medical and legal professions, and yet in
    0:04:24 other realms, there’s no standard mentorship at all.
    0:04:29 I wanted to know why not and whether something should be done about that.
    0:04:31 But the mentorship series just never came together.
    0:04:35 We couldn’t find a center of gravity, and eventually we gave up, which is fine.
    0:04:38 That happens all the time in this kind of work.
    0:04:44 But there was one interview we did for the series that I was not willing to ditch.
    0:04:47 This one, the one with Adam Moss.
    0:04:53 Was he in fact a mentor to me, or maybe more like the master who teaches an apprentice,
    0:04:58 or was he just an old-fashioned boss trying to extract labor?
    0:05:00 That’s what today’s conversation is about.
    0:05:05 It’s the latest in our series of one-on-one conversations to end the year, even if you
    0:05:08 are not a big fan of magazines.
    0:05:13 Even if you have never held a paper magazine in your hands, I suspect that you will benefit
    0:05:20 from hearing Adam Moss’s perspective, because all of us at some point try to make something
    0:05:21 from nothing.
    0:05:36 So you might as well learn from a good teacher, like I did.
    0:05:42 This is Freakonomics Radio, the podcast that explores the hidden side of everything with
    0:05:52 your host, Stephen Dubner.
    0:05:57 The title of Adam Moss’s book, The Work of Art, is of course a double entendre.
    0:06:02 He is the kind of person for whom entendres rarely come singly.
    0:06:07 There is a layer, and then another layer, and usually a few more.
    0:06:12 This book is ostensibly a set of interviews with a variety of makers.
    0:06:19 Stephen Sondheim, Twyla Tharp, David Simon, Samin Nasrat, Will Shortz, and their stories
    0:06:25 unfold on pages that are packed with sketches and graphics, sidebars, footnotes.
    0:06:31 It is very much a magazine in book form, which makes sense considering that Adam spent nearly
    0:06:35 40 years making magazines, and this is his first book.
    0:06:39 Some people end up in magazines by accident, like me.
    0:06:42 I just wanted to write, and that’s where the writing jobs were.
    0:06:43 Adam was different.
    0:06:46 He was in love with the magazine form.
    0:06:50 So I asked what first drew him in?
    0:06:51 So many things.
    0:06:55 First of all, when I came to love magazines, it was the late 60s, early 70s.
    0:07:01 It was a heyday of the magazine form, but also it was a really interesting time.
    0:07:07 The world was blowing up in some ways that to a young kid, which is very attractive.
    0:07:12 The magazines that I loved, like The New Yorks and S-Wars, etc., they’re a little smart
    0:07:13 ass.
    0:07:14 They were funny.
    0:07:16 I mean, my first magazine I read was Mad Magazine.
    0:07:21 So it had this kind of fabulous, fractured idea of what the world was that really appealed
    0:07:22 to my adolescent brain.
    0:07:28 And there was the feeling that the whole thing was created by someone or something that felt
    0:07:30 very distinct.
    0:07:32 It had a personality.
    0:07:37 And that personality, if it appealed to you, it was very powerful.
    0:07:38 It felt very personal.
    0:07:42 So this was the medium that you loved, and then you sought it out?
    0:07:43 Yes.
    0:07:44 And then who?
    0:07:45 Okay.
    0:07:47 So I had all of this stuff in my head, but it was unformed.
    0:07:49 And I went to work at Esquire, and I was very young.
    0:07:52 I was a very unformed person at that point.
    0:07:54 What were you good at?
    0:07:57 I was probably fairly intuitive.
    0:08:02 I certainly was eager, and I’d read a lot of magazines.
    0:08:07 I had a lot of data in my head based on my own fan taste.
    0:08:12 And this guy named Lee Eisenberg, he just, for whatever reason, took an interest in me.
    0:08:15 It could have been that he just wanted me to do his work for him, because he recognized
    0:08:21 that my enthusiasm was potentially valuable to him.
    0:08:25 But he also saw that my brain worked a certain way, and he wanted to encourage it.
    0:08:27 It was an act of kindness.
    0:08:30 Name some things that you would do there on a given day?
    0:08:33 We started a section on the entertainment industry.
    0:08:39 And one of Lee’s ideas was that he would put a movie star with a big literary person.
    0:08:43 I remember William Styron and Candace Bergen.
    0:08:49 My job was to go to the thing and set up the tape recorder, and then make sure everybody
    0:08:51 was happy.
    0:08:54 But then he would give me the transcript, and he would say, “What do you find interesting
    0:08:55 in this?”
    0:09:00 Slowly, but surely, I would see what he thought was interesting in it, and then I would watch
    0:09:05 him as he constructed this thing into an exciting little bit of conversation that worked in
    0:09:07 a printed form.
    0:09:09 He was extremely good.
    0:09:15 So just being able to watch him took all of that data in my head and started to organize
    0:09:16 it.
    0:09:17 That was invaluable.
    0:09:22 One of the things that I hear a lot from younger editors is that they really resent doing the
    0:09:28 older editor’s job for them because they feel it’s exploitive, and it is.
    0:09:31 However, it’s an incredible way to learn.
    0:09:32 I mean, it’s apprenticeship.
    0:09:33 Yes.
    0:09:41 And you talk it through, and in there is sharing of ideas, but also a kind of teaching.
    0:09:42 And sometimes the teaching goes both ways.
    0:09:45 This is really, I think, actually crucial.
    0:09:50 In almost every case where there is a mentor, mentee kind of thing, it goes both ways.
    0:09:55 Give an example of you as a young editor, as a mentee, let’s call it.
    0:09:58 What do you think Lee Eisenberg got from you?
    0:10:02 There was a generational difference, not a huge one, but I brought a bunch of generational
    0:10:05 assumptions to the table that he didn’t have.
    0:10:08 I think there is that element of- New eyes, fresh eyes.
    0:10:09 Yes, fresh eyes.
    0:10:14 And as you get older, you begin to dismiss certain things that aren’t fully dismissible.
    0:10:18 So you were the editor of a few different magazines for a long time.
    0:10:22 Can you explain the role, just briefly, of what it means to be the editor and chief of
    0:10:23 the magazine?
    0:10:27 I think a lot of people who aren’t writers or editors don’t really understand that.
    0:10:31 It’s chiefly the person who decides where the magazine is going to go, what the magazine
    0:10:37 covers and doesn’t, shaping the magazine’s identity and its relationship to its readers.
    0:10:39 It’s a manager job.
    0:10:41 The magazine is very, very much a group enterprise.
    0:10:44 That’s one of the most wonderful things about it.
    0:10:51 And it involves getting a whole bunch of people, story editors like you were, visual people,
    0:10:56 copy editors, production people, all sorts of different kinds of people to work together
    0:10:57 as one.
    0:10:59 So in that sense, it’s like a conductor of an orchestra.
    0:11:05 It’s very rarely what people think of as editors, which is the person who fixes sentences.
    0:11:06 Although you did your share of that.
    0:11:09 I did my share of that, but that’s not the chief job description.
    0:11:14 The chief job description is the overall direction of the thing.
    0:11:17 So you as a magazine editor are renowned.
    0:11:21 In the field of magazine making, Adam Moss is considered a great editor.
    0:11:23 And I certainly agree.
    0:11:27 And one of the many things that I and a lot of people think you did well was that you
    0:11:32 were very, the word that people like to use is exacting.
    0:11:37 There’s a standard that is extremely high, but also a little bit elusive and ethereal.
    0:11:38 You don’t quite know what it is.
    0:11:40 But you know, you want to get there.
    0:11:42 Let’s say you agree that you’re exacting.
    0:11:43 I agree that I’m exacting.
    0:11:48 I would like to think that I was a little bit more clear about what it was that I was
    0:11:49 looking for.
    0:11:52 But I recognize that that’s probably completely not true.
    0:11:55 And what I was doing was a kind of maddening mind control.
    0:11:58 It’s a spectrum, but let’s agree that you’re exacting.
    0:12:02 My question would be when you are an exacting person.
    0:12:07 And I’m sure many people listening to this conversation either are or want to be that.
    0:12:10 But you also can’t control every single thing.
    0:12:14 In fact, the process is set up so that you’re not controlled.
    0:12:15 You’re not writing the articles.
    0:12:17 You’re not editing the articles heavily.
    0:12:20 So how do you live with that paradox?
    0:12:25 Being an editor, it’s both an act of grandiosity and humility at the same time.
    0:12:30 So it’s like, you have to think big, but you have to understand that it really is a group
    0:12:32 project.
    0:12:38 And for any group project to work, everybody has to feel like there’s some of them in it
    0:12:41 and they have to feel invested in it and they have to feel proud of it.
    0:12:45 They have to want to make it just as badly as you want to make it.
    0:12:52 And so part of the exacting hood was not just getting people to a certain standard that
    0:13:00 I thought was appropriate, but also getting people to care as much as I did.
    0:13:02 How much of that was in the hiring though?
    0:13:06 A lot of it’s in the hiring, but a lot of it’s also in the sort of day to day way that
    0:13:09 you all get together as a group.
    0:13:16 A lot of it is just familial as opposed to directed towards a particular task.
    0:13:21 A lot of it is helping people find their own independence as thinkers, but also obviously
    0:13:26 think the way you want them to for the purposes of this project.
    0:13:33 Like a parent, I suppose, I would always relish the first moment that a story editor was willing
    0:13:37 to fight with me because I just felt okay, they’ve got it now.
    0:13:43 They have their strong point of view, getting people to feel independent within an environment
    0:13:45 that they weren’t entirely independent.
    0:13:49 It’s a kind of weird little equilibrium, but that was what I was after.
    0:13:55 I was very happy that you landed on the parenting analogy because as you were speaking, that’s
    0:13:58 what it sounded like for sure.
    0:14:01 So parentish, I think, applies.
    0:14:03 What about mentor?
    0:14:06 Do you think of yourself as a mentor or is that not a word that fits?
    0:14:09 I recognize that there’s mentorship going on.
    0:14:14 It sounds pretentious to call yourself a mentor unless it’s like an actual title.
    0:14:19 One’s a little bit squeamish about using language like that, but the act of teaching someone
    0:14:26 I do recognize is crucial to being, definitely to leading, but also just you’re learning
    0:14:27 all the time.
    0:14:31 There’s a kind of mentor and mentorship that happens in every dimension of life.
    0:14:33 How do you choose, though, as a teacher?
    0:14:36 How do you choose who to spend time with?
    0:14:41 Because you were supervising a lot of people at a place like The Times Magazine.
    0:14:45 I don’t know how many story editors there were, maybe 8, 10, 12.
    0:14:47 You had very different relationships with each one.
    0:14:49 How does that work for you?
    0:14:50 Is it a choice?
    0:14:52 I don’t think it’s a choice exactly.
    0:14:56 You hope that everybody feels that they are the favorite child.
    0:14:57 That’s what you’re trying to do.
    0:15:04 But everybody responds to different kinds of help, prodding, embracing, all the various
    0:15:06 things that make for mentorships.
    0:15:11 Just back to the family thing, you have a different relationship with each of your children.
    0:15:16 That’s not to say that somewhere in there, you don’t have people that you think have
    0:15:17 more potential.
    0:15:21 Generally, they’re people who show that they’re eager to learn.
    0:15:27 They kind of put their hand up and say, “Teach me,” and there’s no teacher who isn’t moved
    0:15:28 by that.
    0:15:34 Do you have advice for people who are not naturally … I do believe there’s an astonishing
    0:15:41 amount of human capital in the world that is untapped because the possessor of it doesn’t
    0:15:45 know how to export it, and others don’t know how to import it.
    0:15:46 Import it.
    0:15:47 Yeah, that’s nice.
    0:15:52 I don’t have advice except to recognize that it’s an essential part of learning, to be
    0:15:56 open to learning and to teach, then maybe you have to make a slightly more active effort
    0:15:57 at it.
    0:15:58 You certainly have to be open to it.
    0:16:06 You certainly have to know what you don’t know and find ways to ask, maybe not out loud,
    0:16:10 but to signal your openness to being taught.
    0:16:15 I mean, it’s an interesting period because what I witness in younger people these days
    0:16:18 is that they love their parents, and they have their very …
    0:16:21 And very different relationships with their parents.
    0:16:25 Yes, very, very different, and also they’re very comfortable with adults in a way that
    0:16:27 was different from when I was young.
    0:16:32 But there are certain things they resent, and there’s a kind of parenting as it exists
    0:16:37 in a workplace that they would bristle at, which I found very valuable growing up.
    0:16:41 It’s a sort of famous thing at Esquire when I was there, there would be these story meetings,
    0:16:46 and people would cry at the end of the meeting.
    0:16:54 They would leave and cry because the editors in charge were kind of unstinting in their
    0:16:55 withering comments.
    0:17:00 Now, you say this as if people didn’t leave and cry at the end of a New York Times magazine
    0:17:01 meeting when you were …
    0:17:02 Well, I …
    0:17:03 You just didn’t see it.
    0:17:08 The point is that I learned from my own mentors that this was the way you conducted a meeting.
    0:17:12 It was much more efficient to be brutally honest.
    0:17:15 That’s an idea that doesn’t work because blah, blah, blah, blah.
    0:17:17 One thought of that as teaching.
    0:17:21 I tried to bring some of that stricter method, and people were gassed.
    0:17:26 And I would say, “Look, when I was growing up, you used to cry at the end of these meetings.”
    0:17:30 And they said, “I don’t want to cry at the end of the meetings, and it’s not going to
    0:17:31 work.”
    0:17:32 And they were right.
    0:17:36 It was necessarily the better way to do it, but because it was the way that I learned
    0:17:42 how to sharpen my mind as an editor, I had an expectation that I should do the same with
    0:17:46 those people I was trying to get to do the work a certain way.
    0:17:47 In that case, yeah.
    0:17:48 They taught me.
    0:17:50 Meaning, the younger people taught you, like, “This doesn’t feel good.”
    0:17:51 This doesn’t feel good.
    0:17:52 But did you stop?
    0:17:53 And this doesn’t …
    0:17:54 Well, I found workarounds.
    0:17:57 I found other ways to try to accomplish the same thing.
    0:18:00 For instance, just different language.
    0:18:04 Basically I learned to praise and then to withhold.
    0:18:05 So that was a strategy?
    0:18:06 Come over.
    0:18:09 It wasn’t a conscious strategy, but I realized that’s what I was doing.
    0:18:13 I was certainly told at enough times that I came to realize that, “Oh, yeah, this is
    0:18:14 what I do.”
    0:18:21 I did speak with five, six, seven former employees of yours, some of whom I overlapped with at
    0:18:24 The Times Magazine, some of whom I didn’t.
    0:18:29 If we were making a word cloud, I think withholding was probably the big word.
    0:18:36 But let me just say that on balance, the overall experience was overwhelmingly positive because
    0:18:43 what I got from working with you and what they all got was just a deep, deep satisfaction
    0:18:50 of accomplishment and a recognition that you don’t get that satisfaction without having
    0:18:54 a lot of failure and bumps along the way.
    0:18:58 Not humiliation, and you didn’t humiliate people ever, as far as I know, I don’t know.
    0:19:01 I don’t think so, I hope not.
    0:19:05 So when I left The Times Magazine working for you, I left because I just wanted to be
    0:19:06 a writer.
    0:19:08 I loved being an editor.
    0:19:13 Editing was the best training for me to be a writer, in part because I saw how many big-time
    0:19:19 writers when they would turn in their manuscripts, they were terrible, and I thought, “Holy cow.”
    0:19:22 If they can turn in stuff like that, I can do this.
    0:19:23 Yes, Pulitzer Prize winners.
    0:19:27 I was shocked, but it was also just amazing experience and fun.
    0:19:33 It’s really fun to do the work, but then you gave me a six-month leave to go start working
    0:19:37 on my first book, and I remember coming back and saying, “This is the life I want.
    0:19:39 I like alone.”
    0:19:44 And then I remember, at least my recollection is that I said, “I’m really appreciative of
    0:19:48 the leave you gave me, and I love this place, I love this work,” but that’s what I want
    0:19:54 to do long-term, and so I’d like to stay here for another year, that’s the deal that I remember
    0:19:55 crafting.
    0:19:59 And then I remember our relationship changed because I was a lame duck.
    0:20:00 So what?
    0:20:06 Did I just not care about you anymore because you were not going to be a long-term asset
    0:20:07 for me?
    0:20:08 Was I that calculated?
    0:20:09 I wouldn’t say it was that.
    0:20:12 I think it was more like plow horse idea.
    0:20:14 Get as much out of you as I could.
    0:20:15 It wasn’t bad.
    0:20:20 The work was still really exciting, but another reason I left was that I recognized when you
    0:20:27 succeed in a place like that, this happens in many occupations, when you succeed in some
    0:20:32 kind of maker role, you end up getting promoted into a manager role, a boss, and I did not
    0:20:37 want to be a boss, so leaving the times to write meant I would never have to be a boss
    0:20:43 of anyone other than myself, but then I wrote books, and then the books turned into this
    0:20:46 thing that we’re doing now at your company.
    0:20:52 We have 20 people, and I think the boss that I became is very much like the boss that you
    0:20:53 were.
    0:20:54 Oh, really?
    0:20:55 Oh, my God.
    0:21:00 Now, is that just natural, or do you think that you learned certain attributes of a boss
    0:21:02 person from me?
    0:21:03 Not natural.
    0:21:04 I’ll learn.
    0:21:05 That’s what I’m saying.
    0:21:08 That’s why I would call you a mentor, even if an unintentional or accidental mentor.
    0:21:09 Oh, how interesting.
    0:21:11 God, that’s scary.
    0:21:12 I’m a writer.
    0:21:14 You know, writers are writers.
    0:21:18 You have a way of seeing the world, you have a way of, and a lot of this is what I learned
    0:21:19 from you.
    0:21:22 You have a way of assessing, is this idea worth doing?
    0:21:23 Definitely.
    0:21:25 That’s a big part of it.
    0:21:28 Execution is important, but I always think of it a little bit like pro athletes.
    0:21:32 You wouldn’t be here if you didn’t have the talent, and then you realize that what you’re
    0:21:40 really after is developing your taste or your sense of what’s interesting, what’s important,
    0:21:43 what’s fun, what’s new.
    0:21:45 Those are all things I learned from you.
    0:21:49 You may have learned some methods from me, but your taste and sensibility was not something
    0:21:53 I had much influence over at all, because it’s just who you are.
    0:21:59 Maybe to some degree, but I think anybody who’s learning, who takes their thing seriously,
    0:22:04 it’s thrilling when you encounter someone who sets a standard high.
    0:22:10 But the problem is, when you go from being a writer to then being a boss, my first producing
    0:22:16 partners, the word that got attached to me was like, “Dubbner’s too exacting.”
    0:22:19 And I was pissed because I thought, “What’s wrong with that?
    0:22:22 I learned from Adam Moss.”
    0:22:24 Even hearing it back to me, I don’t think that’s a bad thing.
    0:22:28 I think that’s something that you should wear proudly.
    0:22:34 I’m very glad to hear that what you felt as a person working with me, for me, whatever.
    0:22:35 You can say “for you.”
    0:22:36 It’s okay.
    0:22:40 Because that you found delight in making something great.
    0:22:43 That’s the main thing that I was trying to teach.
    0:22:49 Even though it’s painful in the moment, you’re going to feel so good at having made something
    0:22:53 that you put everything into and that you can be proud of at the end.
    0:22:58 I hope that I conveyed that and that I worked with the kind of people who would feel that
    0:23:02 and who would be willing to work pretty hard because they wanted to make something they
    0:23:03 felt really, really good about.
    0:23:08 It’s not everybody, but that is a certain kind of person and you’re that kind of person
    0:23:12 and I’m that kind of person and there’s a reason we ended up in the same place.
    0:23:18 I think the thing that’s most important or attractive about what you just said, but also
    0:23:23 very much animates your book, is that it’s not just a thrill of accomplishing because
    0:23:25 something is good.
    0:23:26 It’s doing something different.
    0:23:27 Yeah.
    0:23:32 One other aspect of this whole business is that artists or any of when we’re talking
    0:23:35 creative people, they need to not be bored.
    0:23:39 It is incredibly difficult to make something and you have to have reasons to go on and
    0:23:42 one of those reasons is simple interest.
    0:23:47 You have to feel stimulated and if you do the same thing over and over and over and over
    0:23:51 again, you’re just going to bore yourself to tears.
    0:23:55 The artistic person, creative person, I don’t know what you want to call them, person who
    0:24:01 wants to make something will constantly find new ways to do it because they’re trying to
    0:24:04 keep themselves engaged.
    0:24:09 In my book, I mean everybody remembers their childhood as lonely of course, but it is definitely
    0:24:18 true that one after another, they describe childhoods of isolation and of need and then
    0:24:21 something came along to fill that need.
    0:24:24 Among other things, they learn to talk to themselves.
    0:24:25 This is a big theme of my book.
    0:24:31 I think of all of this as ways of talking to yourself, as ways of translating what your
    0:24:33 imagination produces.
    0:24:38 And what happened when Adam Moss’s imagination started producing something new?
    0:24:44 Whatever lessons I might have gotten from my own magazine life that might apply to my
    0:24:46 painting life, I didn’t.
    0:24:47 I’m Stephen Dubner.
    0:24:49 This is Freakonomics Radio, we’ll be right back.
    0:25:06 In 2019, Adam Moss stepped down as Editor-in-Chief of New York Magazine.
    0:25:11 Here’s what he said at the time, “I’ve been going full throttle for 40 years.
    0:25:14 I want to see what my life is like with less ambition.
    0:25:16 I’m older than the staff.
    0:25:17 I’m older than the readers.
    0:25:20 I just want to do something new.”
    0:25:23 That new thing, at least for a while, was painting.
    0:25:28 When I thought I wanted to paint, I was up in Cape Cod where I have a place and without
    0:25:34 any schooling whatsoever, I didn’t know how to do a thing.
    0:25:40 My schooling was really when I went to buy paints, I’d talk to the salesperson and ask
    0:25:45 them to have this work, like I didn’t understand what a medium was, I didn’t understand anything.
    0:25:50 Nevertheless, I had this idea that I would do a painting a day, and that’s what I did.
    0:25:54 One day I’d do a flower and then the other day I’d do some crazy stupid abstract and
    0:25:58 then I would just make an effort at doing a person or something.
    0:26:02 The whole idea was that at the end of the day, painting would be finished and thrown
    0:26:05 away and start it over, it was fun.
    0:26:09 Came back and I thought that was the end of it, I thought it was just a sort of fun little
    0:26:14 summer thing, and a friend of mine said, “Well, you really seem to have liked it.
    0:26:16 You really should get some training.”
    0:26:24 She then connected me up with the head of painting, I think, at the Yale School of Art.
    0:26:28 I can hear many listeners’ heads exploding, first teacher, head of painting at Yale School
    0:26:29 of Art.
    0:26:30 Well, no, she wasn’t my teacher.
    0:26:35 She had a student who had just graduated who she thought was really good.
    0:26:38 Her name was Maria De La Sandalus and she’s in the book.
    0:26:42 She is a beautiful artist, but also a really lovely person.
    0:26:44 She would just come over my house.
    0:26:49 She taught me how to draw and she taught me how to paint at the beginning.
    0:26:54 It wasn’t a particularly structured learning process, but she was my friend, my painting
    0:26:55 friend.
    0:26:59 Was it built around ideas or mostly execution technique, et cetera?
    0:27:01 There was a certain amount of technique.
    0:27:08 There was a lot of just helping me find my confidence as a painter and there was just
    0:27:14 a certain kindness that I found empowering and a sense that she had that I had something
    0:27:16 to make.
    0:27:21 Was kindness in a mentor/teacher important to you?
    0:27:22 It’s important to me.
    0:27:23 It may not be important to other people.
    0:27:28 If you look through history at creators of all types and people of all types, people
    0:27:35 who have mentors, if you had to guess, would you say that on average, kindness is a benefit
    0:27:41 or an attribute at least because when I think of a lot of what people claim at least to
    0:27:45 be successful mentorships, there’s often, I don’t know about an absence of kindness,
    0:27:49 but a presence of something else.
    0:27:54 Certainly there is an expectation that this person can do better and I guess that can
    0:27:59 be experienced in a lot of ways as being stern and forbidding and all of that kind of thing
    0:28:03 and I’ve had mentor types like that, but I personally respond to kindness.
    0:28:06 I need to feel a little loved.
    0:28:12 If you were to generalize what a successful mentor is, would you use that as a template
    0:28:13 or do you think that’s just for you?
    0:28:20 I think there has to be a bedrock of they have a belief in you and you have to feel
    0:28:21 it.
    0:28:23 Otherwise the mentorship doesn’t work.
    0:28:27 You have to believe that they are rooting for you.
    0:28:30 I have never seen one of Adam Moss’s paintings.
    0:28:32 That’s quite on purpose, yes.
    0:28:35 He insists that he is just not a very good painter.
    0:28:37 I’m more mediocre than Ben.
    0:28:39 I’m okay, but that’s not good enough for me.
    0:28:44 When someone is exacting, which we have already established Adam Moss is, then mediocrity
    0:28:46 can feel worse than death.
    0:28:50 So he needed to find something else to make, something that he would be good at and that’s
    0:28:56 how he came to write The Work of Art, a book about how other creative people make something
    0:28:58 from nothing.
    0:29:01 It’s a book about the process of making.
    0:29:07 I’ve always loved process because essentially I love narrative and the act of how something
    0:29:12 comes to be is just a perfect story.
    0:29:14 Starts with nothing and then ends up something.
    0:29:18 But there’s a whole other part of this book that’s trying to understand the personality
    0:29:22 attributes that make someone successful as an artist.
    0:29:27 It’s about half visual and it works almost like a giant diagram where the text itself
    0:29:29 winds around the images.
    0:29:31 Some mucic, but also magazines.
    0:29:35 And then it has all this footnote material, which is the me in the book for the most part.
    0:29:36 Although you’re in the…
    0:29:37 I’m in the introductions too.
    0:29:42 Yeah, but also chapters differ because in some chapters they’re through written by you
    0:29:43 with quotes.
    0:29:44 Right.
    0:29:45 In other chapters it’s more oral history.
    0:29:46 Yes.
    0:29:47 Right.
    0:29:49 And in that way it’s very much like a big, big, big magazine.
    0:29:50 Absolutely.
    0:29:51 But it was a new pursuit.
    0:29:56 It was new and yet I hope it had the benefit of a lifetime’s experience as a magazine maker.
    0:30:00 I had never written a book before and I was really scared of writing.
    0:30:01 It’s harder than it looks.
    0:30:03 It’s so hard.
    0:30:04 Unlike you, I never wanted to be a writer.
    0:30:08 I would never have left magazines for writing, but I did leave magazines at a certain point
    0:30:13 because I just felt that I didn’t want to be a boss anymore.
    0:30:18 I started to write this book and I was just a terrible, terrible, terrible writer, really.
    0:30:19 And I had to teach myself.
    0:30:24 I had to use my editor head and at first my editor had recognized that it was terrible,
    0:30:28 but didn’t have any solutions in mind.
    0:30:35 And then over time I just began to strip it of its ridiculous ornamentation.
    0:30:37 Was that all by yourself though or did you go to people for it?
    0:30:39 No, I did that most of myself.
    0:30:45 And then eventually, okay, I got to a place where I was happier as a writer and also the
    0:30:46 work itself was better.
    0:30:51 Let me just point out the difference between being an editor and being a writer might seem
    0:30:52 not that large.
    0:30:54 It’s huge.
    0:30:56 It’s like marathon versus sprint.
    0:31:01 They’re both running, but I wouldn’t think it could have felt so similar to what you’d
    0:31:02 spent your life doing.
    0:31:03 Well, okay, let me…
    0:31:09 I created the book in the way that I created the book in order to assemble a community.
    0:31:15 I wanted the group thing, which I always loved in magazines, and I wanted a sense of a lot
    0:31:17 of people doing something together.
    0:31:24 And so I kind of invented one, and that invention was a whole part one, which was to engage
    0:31:26 all these artists in my project.
    0:31:32 Okay, Amy Silman, show me how you made a painting, and we’ll go from beginning to end.
    0:31:37 Okay, George Saunders, let’s talk about how you wrote “Lincoln and the Bardo,” and
    0:31:41 David Mandel, how you wrote “A Joke,” or Kara Walker, how you built this magnificent
    0:31:45 sculpture, or Stephen Sondheim, how you wrote a song.
    0:31:53 And that process was essentially me recreating a context of group creation, because I thought
    0:31:55 of them as my collaborators, not as my subjects.
    0:31:57 So that was part one.
    0:32:00 Part two was writing, I described already what a hell that was.
    0:32:03 And was it hell because the collaborator was no longer there?
    0:32:05 I’m just alone in the room again.
    0:32:09 It’s the aloneness, it’s the dialogue in your head that was driving me completely crazy,
    0:32:11 and it’s why I never was a writer in the first place.
    0:32:16 I just found it unbearably lonely, and also I didn’t know how to act all the parts in
    0:32:21 my head, where I could talk to myself and make myself better, which I didn’t know how
    0:32:25 to do when it’s different people, but I didn’t know how to do in my own head.
    0:32:30 So for some of the creators in your book, the people who influenced them were often people
    0:32:32 that they never interacted with.
    0:32:37 Yeah, possibly never met, you know, Gregory Crudson, who talked about his work as almost
    0:32:44 a mathematical formula from like William Eggleston to Ray Carver short stories to David Lynch
    0:32:50 and Blue Velvet, some combination of people with sensibility that in his own mind came
    0:32:51 together.
    0:32:53 Describe what a Crudson photo looks like.
    0:33:02 A Crudson photo is a gigantic photograph that resembles a movie still, lit like a movie,
    0:33:08 with enough narrative portent, but with no before or after.
    0:33:15 So the viewer is meant to supply the narrative by looking at this picture and putting it
    0:33:18 into a context of his or her own imagination.
    0:33:22 So Eggleston and David Lynch and all those make a lot of sense.
    0:33:26 Yeah, I in general don’t much care about the strict definitions of anything.
    0:33:31 This book is a book about artists, but really I’ve bent the term “artist” pretty much
    0:33:32 as far as it can go.
    0:33:36 But I also believe that about mentorship, which in the end it doesn’t matter.
    0:33:41 I guess the big distinguishing factor for me would be an influence can be distant and
    0:33:47 unaware of you, whereas a mentor, there’s necessarily some kind of estuarial exchange.
    0:33:48 Yeah.
    0:33:53 Well, one interesting thing about the book was I kept looking for who is the person who
    0:33:55 encouraged you when you were young.
    0:34:01 There weren’t necessarily the person who was by your side when you were an adult, but
    0:34:06 there had to be somebody, could be a parent, could be an art teacher, could be anybody
    0:34:09 who basically saw something in them.
    0:34:16 And that seeing was crucial to the development of their confidence that they could make the
    0:34:20 thing, which of course confidence and what I in the book call faith, the faith that they
    0:34:25 are actually able to make the thing that’s in their head, which they can’t, but you have
    0:34:28 to believe you can in order to go forward.
    0:34:33 I think the book is a bit of a, not a smoke and mirror, but a bit of sleight of hand in
    0:34:36 that it’s called the work of art.
    0:34:41 And it’s plainly about the process of making creative things.
    0:34:46 And it’s plainly about what it took for those creators to even get to the point where they
    0:34:47 were able to create something.
    0:34:49 I know you love process.
    0:34:52 That was a word that you said probably 30 times a day.
    0:34:54 And it’s a word that I just have come to despise.
    0:34:55 Oh, seriously?
    0:34:57 Well, just the words sound so ugly.
    0:35:02 It’s so beautiful, the thing that it’s describing and the word itself is so crude really.
    0:35:08 I feel like as a magazine editor, some of your favorite stories or at least my conception
    0:35:12 of some of your favorite stories were when there was a process of something being described
    0:35:13 over time.
    0:35:14 Absolutely.
    0:35:18 And written texts, not that documentary film can’t do a lot of things can do it, but text
    0:35:24 is great at that because it can move in and out of time and it can magnify and shrink.
    0:35:29 So as much as you say that this book is about process and artifacts and so on, it was a
    0:35:32 thrill to read because I love your work and I loved working with you.
    0:35:35 But you never talked that much.
    0:35:38 You dropped hints about what made something great or not.
    0:35:41 We all learned the language of Adam Moss.
    0:35:45 But it was often fragments, rarely sentences, never paragraphs.
    0:35:48 I sound maddening from your description.
    0:35:52 I sound like I must have been just a horrible person to work for, but okay.
    0:35:53 Maddening maybe a little bit.
    0:35:54 Well, definitely not.
    0:35:55 Definitely not.
    0:35:57 But maddening among nine other things.
    0:36:01 But what struck me the book was really about was something separate than the process of
    0:36:08 creation, really more about what it takes to become the kind of person who can create
    0:36:10 things from whole cloth.
    0:36:13 That’s really hard to do and I don’t think people understand the bravery it takes to
    0:36:14 do that.
    0:36:15 Yeah.
    0:36:16 The book is not self-help.
    0:36:20 So I’m not sure a lot of these things can be learned.
    0:36:24 I mean, you can get better at everything, but you’re either a person who can focus or you
    0:36:25 can’t.
    0:36:28 You’re either obsessional or you’re not.
    0:36:31 You have a high tolerance for tedium, which you need to to be an artist.
    0:36:32 Or you don’t.
    0:36:35 You have drive or you don’t.
    0:36:36 What about taste?
    0:36:38 You have taste or you don’t.
    0:36:41 Or you have a certain sensibility or you have a certain sense of humor.
    0:36:46 These are all things that you acquire for all sorts of mysterious reasons that you and
    0:36:47 I don’t understand.
    0:36:50 No one has ever understood how personality is formed.
    0:36:56 And that all said, the book is, I hope, very encouraging to artists because I think most
    0:37:02 people who are trying to make things don’t need to be James Joyce or Pablo Picasso or
    0:37:04 Louise Glock even.
    0:37:10 They can be themselves and they can find immense joy and satisfaction in making art.
    0:37:13 They improve their ability to focus.
    0:37:18 They improve their ability to persevere, to not give up when things get hard.
    0:37:24 A lot of art making comes down to something as rudimentary as being able to learn to
    0:37:25 fail.
    0:37:33 Again, like parenting, it’s a little bit like a child learns to walk because they understand
    0:37:34 how they can get up from falling.
    0:37:36 They have to fall.
    0:37:39 Your book nods at failure.
    0:37:41 I think it’s a lot about failure.
    0:37:42 Okay.
    0:37:43 But ultimately.
    0:37:44 Everybody succeeds.
    0:37:45 Everybody succeeds.
    0:37:46 Yeah.
    0:37:53 And I’m thinking, yeah, this failure is instructive and real and useful to hear about, but it’s
    0:37:56 an exercise in what some people call survivorship bias, right?
    0:37:58 We read about the winners.
    0:37:59 Sure, of course.
    0:38:03 And I was very well aware of that, that this is a retrospective history of success.
    0:38:06 And so everything has to be viewed through that lens.
    0:38:10 I’ve always had this theory that I think is wrong, but as a writer or if you’re a creative
    0:38:16 person of any type, an editor or an entrepreneur or whatever, I think it’s natural to try
    0:38:17 to mimic success.
    0:38:18 Yeah.
    0:38:21 But I think that most successes are pretty singular.
    0:38:23 I completely agree with you.
    0:38:27 And so I felt that learning from failure was really the way to go.
    0:38:33 I wanted very much to give people permission to fail because failure is, if you go through
    0:38:36 the narratives in the book, there’s just failure right and left.
    0:38:40 When you’re trying to create something, your brain is trying to subvert you in so many ways.
    0:38:45 There are so many obstacles, and there is this kind of animus you need to have in order
    0:38:47 to barrel ahead.
    0:38:49 An animus toward what?
    0:38:50 Animus is the wrong word.
    0:38:54 You have to have a fighting spirit, I guess I would say, where you’re just not going
    0:38:59 to be daunted, which as I was going through this, I found very reassuring because of course
    0:39:05 the reason I did the book was because I had recently taken a painting and felt enormous
    0:39:13 frustration and a sense of failure in that and truly what I didn’t understand is in
    0:39:18 a group, there is a conversation that happens that’s external.
    0:39:22 You and I, if we’re working together making a magazine, we talk about something, there’s
    0:39:26 a phrase that came up in the David Simon chapter called The Bounce.
    0:39:29 Our method of making something better is by bouncing.
    0:39:34 I say something to you, you say something to me, bang, bang, bang, in the end something
    0:39:37 happens which is better than it was when we started.
    0:39:43 In most artists’ lives, that conversation has to happen in their own head.
    0:39:47 I became very confused, how does someone have this kind of inner dialogue, and that’s what
    0:39:50 I was trying to understand.
    0:39:54 David Simon was a police reporter for the Baltimore Sun before he started writing books
    0:39:56 and making TV shows.
    0:40:00 One of those shows was The Wire, which many people consider one of the best TV shows ever
    0:40:01 made.
    0:40:05 If you would like to hear an interview with him, check out the People I Mostly Admire
    0:40:09 podcast, another show in the Freakonomics Radio network.
    0:40:13 It’s episode 109 called David Simon is on strike.
    0:40:14 Here’s why.
    0:40:17 We’ll hear more from Adam Moss in a minute.
    0:40:37 I am Stephen Dubner and this is Freakonomics Radio.
    0:40:41 So would this book exist had you been a better painter?
    0:40:42 Probably not.
    0:40:46 I would not have had The Drive, which was born of my own frustration.
    0:40:51 So I would have been satisfied painting all day because I would, I hope, have taken a
    0:40:55 certain kind of satisfaction from the painting itself that, you know, why do you want to
    0:40:56 do anything else?
    0:41:01 I just want to do this all day long, which now I feel actually not because I’ve gotten
    0:41:05 to be a better painter, but because I understand something about my relationship to painting
    0:41:06 that I learned from the book.
    0:41:08 Which is what?
    0:41:12 When you say this in this context, it sounds so banal, but here I’ll say it’s a hobby.
    0:41:15 Now, well, there’s a way in which that’s a description.
    0:41:19 But what I would really say is that I was trying to create narratives and so for the
    0:41:21 narrative to work, I wanted happy ending.
    0:41:23 I wanted an exaltation.
    0:41:28 I wanted that moment in the rom-com with the big kiss at the end where everyone lives happily
    0:41:30 ever after.
    0:41:36 And the artists themselves, when they would get to that point in their own storytelling
    0:41:39 of their own work, refused to give me that.
    0:41:45 They would express a certain amount of relief that the thing was over.
    0:41:47 Maybe they would say, “Yeah, it was nice.
    0:41:51 I was glad other people got to see it and I heard some nice things about it.”
    0:41:54 But you’d never got the big firework.
    0:42:00 And I found that as a writer of the book, somewhat frustrating, I kind of needed it for closure.
    0:42:05 I needed it for my own purposes, but I also needed to feel that they made something great.
    0:42:06 I was rooting for them.
    0:42:12 There was a great deal of transference involved in this book, and I fell in love with all
    0:42:19 of my subjects, so I wanted something spectacular for them in the end, and it never came.
    0:42:22 When I would talk to them about that, I said, “Well, you don’t sound like that.
    0:42:24 That was very important.”
    0:42:27 And they said, “It’s not about the thing I’m making, it is really about the work.
    0:42:33 I just get up every day because I like or I need more than I like to work in this way.”
    0:42:37 And the endpoint is not that relevant to me.
    0:42:42 And I just thought this was bullshit, and I thought it was bullshit over a long period
    0:42:43 of time.
    0:42:48 And then I was just worn down, and I came to kind of grok the truth of it.
    0:42:52 I absorbed that, and suddenly my relationship to my own work changed.
    0:42:53 How so?
    0:42:58 I got enormous pleasure from what I like to think of as the verb of it rather than the
    0:43:04 noun of it making one mark as a painter, just like one little chew that pleased me for whatever
    0:43:11 reason released me from this incredibly punishing attitude I had toward the work itself.
    0:43:15 I do care about the work itself, I really still want to be a good painter, but I can
    0:43:17 get pleasure out of the making.
    0:43:22 It’s interesting as you’re describing you coming to accept what these people were telling
    0:43:27 you about their perpetual dissatisfaction because you make it sound so foreign.
    0:43:33 But that’s exactly the way that I and everybody else who ever worked with you described you.
    0:43:39 When you were happy with the work that I or anyone else did, everyone described it as
    0:43:42 this like great thrill, it was like a high.
    0:43:46 Getting your approval or praise was incredibly powerful.
    0:43:51 Then there’s the corollary, getting your dissatisfaction could be demoralizing for many people.
    0:43:52 You had to kind of fight through that.
    0:43:59 But the steady state was more like, yeah, it was a really good issue this week.
    0:44:00 That was it.
    0:44:01 That implies many other things.
    0:44:07 It wasn’t a great issue and more important, there’s next week also.
    0:44:09 That’s one of the things that’s fantastic about magazines.
    0:44:14 You always have next week or in a digital world, you always have five minutes from now.
    0:44:19 That’s why I was particularly suited to magazines, but none of us know ourselves very well.
    0:44:25 Over lessons I might have gotten from my own magazine life that might apply to my painting
    0:44:27 life, I didn’t.
    0:44:33 To the degree that it’s hard to know oneself, let’s call it the internal versus the external
    0:44:37 on a scale of zero to five, how bad or good do you think you are?
    0:44:39 Well certainly not zero and certainly not five.
    0:44:42 So somewhere in that two to four range.
    0:44:45 Did you become more self-aware over time and experience as an editor?
    0:44:47 Yeah, I think so.
    0:44:48 Maybe to a fault.
    0:44:49 What do you mean by that?
    0:44:52 Sometimes experience can be a hindrance.
    0:44:55 You stop yourself from making something.
    0:45:00 The Simeon chapter, the Simeon Nosrat chapter, the title of the chapter is With Beginner’s
    0:45:08 Eyes because she makes this observation about Sulfat acid heat that when she, very excitedly
    0:45:12 at the beginning of her cooking life, tells a fellow chef, the fellow chef says well everybody
    0:45:13 knows that.
    0:45:15 She says no they don’t.
    0:45:16 They don’t know that.
    0:45:22 In any way I’ve never seen that anywhere and I think people need to hear this, that this
    0:45:24 is really how you should think about cooking.
    0:45:29 And she goes on and builds this fabulous book and then a little empire off of it.
    0:45:33 Sometimes experience stops you from doing something because you know it has failed too
    0:45:38 often and you don’t want to go through that failure again.
    0:45:41 You have to believe you can in order to go forward.
    0:45:52 That was Adam Moss, the most influential boss I ever had by a mile, who did me the great
    0:45:57 favor of showing me that I didn’t want to be boss, that I just wanted to make things,
    0:46:01 but who also taught me how to be better at making things.
    0:46:02 So thanks, Adam.
    0:46:07 His book is called The Work of Art, although it might just as easily have been called The
    0:46:09 Art of Work.
    0:46:14 And the other book he just mentioned, Salt, Fat, Acid, Heat, is also well worth reading
    0:46:19 and you can hear its author, Samin Nasrat on a couple of Freakonomics Radio episodes
    0:46:20 from 2023.
    0:46:25 One is called What’s Wrong with Being a One Hit Wonder and the other is Samin Nasrat
    0:46:27 Always Wanted to Be Famous.
    0:46:34 Coming up next time on the show, we ask why is there so much fraud in academia?
    0:46:38 If you were just a rational agent acting in the most self-interested way possible as
    0:46:40 a researcher in academia, I think you would cheat.
    0:46:46 The most likely career path for anyone who has committed misconduct is a long and fruitful
    0:46:51 career because most people, if they’re caught at all, they skate.
    0:46:58 She was at the center of everything, being a prestigious faculty member at Harvard and
    0:47:01 all of her public speaking and her books.
    0:47:02 That’s next time.
    0:47:06 Until then, take care of yourself and if you can, someone else too.
    0:47:09 Freakonomics Radio is produced by Stitcher and Renbud Radio.
    0:47:15 You can find our entire archive on any podcast app also at Freakonomics.com where we publish
    0:47:17 transcripts and show notes.
    0:47:21 This episode was produced by Morgan Levy and Zach Lipinski.
    0:47:25 The Freakonomics Radio network staff also includes Alina Kullman, Augusta Chapman, Dalvin
    0:47:31 Abouaji, Eleanor Osborn, Ellen Frankman, Elsa Hernandez, Gabriel Roth, Greg Rippin, Jasmine
    0:47:35 Klinger, Jason Gambrell, Jeremy Johnson, John Schnars, Lyric Bowditch, Neil Coruth,
    0:47:38 Rebecca Lee Douglas, Sarah Lilly, and Theo Jacobs.
    0:47:41 Our theme song is Mr. Fortune by the Hitchhikers.
    0:47:44 Our composer is Luis Guerra.
    0:47:50 As always, thank you for listening.
    0:47:51 I’m going to shut up.
    0:47:52 Can you just say that again?
    0:47:53 Gigantic.
    0:47:54 No, say it the way you did.
    0:47:55 Gigantic.
    0:48:07 The Freakonomics Radio network, the hidden side of everything.
    0:48:08 Stitcher.
    0:48:11 [MUSIC PLAYING]
    translate-vi content
    translate-zh content

    Adam Moss was the best magazine editor of his generation. When he retired, he took up painting. But he wasn’t very good, and that made him sad. So he wrote a book about how creative people work— and, in the process, he made himself happy again.

     

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  • 615. Is Ozempic as Magical as It Sounds?

    AI transcript
    0:00:07 The United States is one of just two countries that allow pharmaceutical firms to freely
    0:00:11 advertise their products directly to consumers.
    0:00:12 The other is New Zealand.
    0:00:19 So if you ever watch TV in the US, you have likely seen many ads for prescription drugs.
    0:00:22 But advertising doesn’t guarantee success.
    0:00:26 The research and development of these drugs is very expensive, and most of them never
    0:00:28 earn back their investment.
    0:00:34 The pharmaceutical industry, therefore, relies on the occasional blockbuster drug.
    0:00:38 A blockbuster defined as doing more than a billion dollars a year in sales.
    0:00:44 If I asked you to name a blockbuster drug from the past, you might say Lipitor, a statin
    0:00:51 originally from Park Davis, or Humera, an anti-inflammatory now sold by ABV, and can
    0:00:54 you name a current blockbuster?
    0:01:01 The first drug that comes to mind might be this one.
    0:01:05 If you watch even a tiny bit of TV, you have probably seen an ad for Osempic.
    0:01:11 Their jingle is sung to the tune of the 1974 pop hit Magic by a band called Pilot, which
    0:01:16 had exactly one US hit.
    0:01:22 Osempic, which is sold by the Danish multinational Novo Nordisk, is not a one-hit wonder.
    0:01:29 It is one of a group of drugs known as GLP-1s, and many Americans would agree that they are
    0:01:31 magic.
    0:01:39 GLP stands for glucagon-like peptide, which is a hormone produced in the human gut, and
    0:01:42 these drugs mimic the activity of that hormone.
    0:01:48 Osempic was developed to treat type 2 diabetes, which used to be called adult onset diabetes
    0:01:52 to distinguish it from the more serious type 1 diabetes, which most often occurs in young
    0:01:54 people.
    0:01:58 But those lines have blurred, as many more people around the world, including a lot of
    0:02:02 young people, are now getting type 2 diabetes.
    0:02:06 Diabetes is a condition whereby the pancreas can’t produce enough insulin to modulate
    0:02:09 your level of glucose, or blood sugar.
    0:02:15 Over the long term, high blood sugar can lead to all kinds of problems, so any drug that
    0:02:20 could help the body produce more insulin would be a blockbuster.
    0:02:22 Enter osempic.
    0:02:24 But wait, there’s more.
    0:02:28 Osempic and other GLP-1s don’t just lower blood sugar.
    0:02:36 They also help patients lose weight, primarily by slowing digestion and decreasing appetite.
    0:02:42 This secondary discovery, weight loss, was a big deal, especially in the US, where more
    0:02:47 than 40% of the adult population is obese.
    0:02:52 Even though researchers don’t know much about the long-term effects of GLPs, whether they
    0:02:58 remain effective over time, whether they have serious side effects, the take-up has been
    0:03:00 enthusiastic.
    0:03:05 Osempic and Wagovie, another GLP drug made by Novo Nordisk, and which is authorized to
    0:03:12 treat obesity, will do a combined $65 billion in global sales this year.
    0:03:17 Novo Nordisk is now worth more than the GDP of Denmark.
    0:03:21 And Novo Nordisk isn’t the only company making blockbuster GLPs.
    0:03:27 Another big one is Moundjaro, which was brought to market in 2022 by the American pharmaceutical
    0:03:28 firm Eli Lilly.
    0:03:35 Moundjaro works by mimicking two digestive proteins, GLP-1 and GIP.
    0:03:40 Most of these new drugs are, for now, injectables, although that will change and some are already
    0:03:42 in pill form.
    0:03:45 And these drugs aren’t cheap, at least not yet.
    0:03:50 In the US, they can cost more than $1,000 a month, and as we will hear today, insurance
    0:03:52 coverage varies widely.
    0:04:01 Still, more than 15 million Americans are already using these drugs, so is the magic real or
    0:04:03 maybe too good to be true?
    0:04:08 I think your skepticism is well-placed, and that’s why we do trials to find out.
    0:04:14 Today, on Freakin’omics Radio, we continue our December of one-on-one conversations with
    0:04:20 Ezekiel Emanuel, who is pretty excited about these GLP-1 drugs.
    0:04:25 This is why people do science, because you discover something and then lots of unexpected
    0:04:26 effects happen.
    0:04:33 Emanuel is an oncologist, a medical ethicist, a professor, and a healthcare policymaker.
    0:04:36 He helped design the Affordable Care Act, better known as Obamacare.
    0:04:40 He also worked on healthcare policy in the Trump White House.
    0:04:46 In today’s conversation, we talk about why many insurers don’t want to cover the GLP
    0:04:47 drugs.
    0:04:53 We’ve created a system that perfectly disincentivizes long-term investments.
    0:05:00 We talk about progress in cancer treatment, mysteries in the gut microbiome, and flaws
    0:05:02 in the US healthcare system.
    0:05:03 Don’t get me started.
    0:05:06 We got to have a whole ‘nother conversation about that issue.
    0:05:11 And we talk about what healthcare policy looks like in a second Trump term.
    0:05:14 Even Republicans want everyone to have health insurance.
    0:05:16 We’re not repealing the Affordable Care Act.
    0:05:32 All that and quite a bit more with Ezekiel Emanuel starting now.
    0:05:38 This is Freakonomics Radio, the podcast that explores the hidden side of everything with
    0:05:49 your host Stephen Dubner.
    0:05:54 If the last name Emanuel sounds familiar, it may be because Zeke Emanuel has a couple
    0:05:59 of brothers who, over the years, have also appeared on this show.
    0:06:04 There’s Ram Emanuel, former Obama Chief of Staff in Chicago Mayor, who was serving as
    0:06:09 US Ambassador to Japan when we spoke with him in 2023.
    0:06:18 Ram is known to be smart, tough, and reliably combative.
    0:06:23 That episode was called the Suddenly Diplomatic Ram Emanuel.
    0:06:28 When there is Arielle Emanuel, who runs the entertainment and sports firms Endeavor and
    0:06:34 TKO, his business is high profile, but for himself he tends to keep a lower profile.
    0:06:40 This may date back to his childhood as the youngest brother in a very competitive household.
    0:06:43 Ari thought of himself as the dumb one.
    0:06:47 You know, the grades would come up with poor cards on the fridge.
    0:06:49 I was competing with Zeke.
    0:06:50 There was no chance.
    0:06:54 He was the debater, shut up.
    0:06:58 That episode was called Ari Emanuel is Never Indifferent.
    0:07:03 Zeke Emanuel is the oldest brother, the one who took the trouble to write a family memoir
    0:07:05 called The Brothers Emanuel.
    0:07:09 He leans more toward collaborative than combative.
    0:07:14 He has also been on Freakonomics Radio before, most recently in an episode called Who Gets
    0:07:18 the Ventilator, which we published early in the COVID pandemic, when ventilators were
    0:07:22 thought to be an effective frontline treatment.
    0:07:23 Here’s a clip from that episode.
    0:07:29 If it sounds like it was recorded in a closet because of COVID, it probably was.
    0:07:36 First comfort serve is the absolute worst principle you can think of in this situation.
    0:07:41 That was a really interesting conversation about how medical resources should be allocated
    0:07:42 in times of scarcity.
    0:07:48 In the case of ventilators, scarcity was caused by lack of physical supply.
    0:07:53 In the case of this new generation of GLP-1 drugs, there has been some supply shortage,
    0:07:59 but the scarcity for many would-be patients is caused by their high prices.
    0:08:04 High prices and inadequate coverage in the healthcare industry are always a topic of
    0:08:10 great concern as we’ve seen lately in the fallout from the murder of Brian Thompson,
    0:08:15 the CEO of the insurance firm United Healthcare.
    0:08:22 I knew that Zeke Emanuel could give us a 360-degree view of the GLP revolution, so I began by
    0:08:28 asking him when he first became aware of these drugs, maybe in medical school?
    0:08:29 No.
    0:08:32 I did not come across him in medical school, even though I went to Harvard Medical School
    0:08:37 and a lot of the early work was done at the Massachusetts General Hospital.
    0:08:39 Which is a Harvard-affiliated hospital?
    0:08:40 Exactly.
    0:08:42 Just down the block.
    0:08:48 One of the groups at the Mass General Hospital was taking pancreases out of fish and then
    0:08:53 testing how they affect glucose in other models.
    0:08:58 And they ran across what’s called the proglucogon, a very long protein that makes glucagon, but
    0:09:07 it also makes the GLP-1 agent that affects the glucose levels in the blood.
    0:09:12 It was the 1990s when they showed that GLP-1s normalized blood sugars.
    0:09:14 That was really important.
    0:09:23 And then in 1996, researchers in Britain identified that the GLP-1s caused a loss of appetite.
    0:09:29 Jens Holst in Copenhagen worked with Novo Nordisk, which is one of the big pharma companies
    0:09:37 that has produced insulin and was very active in the diabetes field, to make the first GLP-1
    0:09:40 drug for diabetes.
    0:09:43 That was done by a woman named Latti Knudsen.
    0:09:47 In 2010, they created that first drug.
    0:09:53 And then in 2014, the indication was expanded to obesity because they saw that, you know,
    0:09:56 diabetics also lost weight.
    0:10:04 The GLP-1s from Novo Nordisk, Wagovia or Osempic, they are really impactful both in terms of
    0:10:05 decreasing weight.
    0:10:11 With Wagovia, you get about 15%, 16% weight reduction, but also very good at bringing
    0:10:14 down blood sugars for diabetics.
    0:10:20 And then when you add the other component, the GIP, Monjero, that’s the lily drug, you
    0:10:24 get even more weight drop, 21%.
    0:10:29 And we know that Wagovia, the GLP-1, has a lot of other effects.
    0:10:30 It protects the heart.
    0:10:37 A 20% drop in severe cardiac death from heart attacks, number of heart attacks, strokes,
    0:10:40 goes down 20%, which is pretty amazing.
    0:10:43 It protects from severe kidney disease.
    0:10:45 It protects from cirrhosis.
    0:10:49 And we’ve got hints that there are lots of other effects, psychiatric effects.
    0:10:51 Addiction, you’ve mentioned.
    0:10:55 Depression, I was going to say addiction, you beat me to it.
    0:11:00 Or even because obesity and diabetes are associated with increased risk of cancer.
    0:11:06 Honestly, as you described that, Zeke, it sounds like this class of drugs is too good
    0:11:07 to be true.
    0:11:13 You’ve called them a miraculous set of drugs before we get further into the upsides.
    0:11:16 What about downsides and/or side effects?
    0:11:19 As I like to say, even a blood test has side effects.
    0:11:24 The major side effects tend to be with the gastrointestinal tract, as you might expect.
    0:11:30 As he tends to be at the top of the list, diarrhea, constipation, some fullness because
    0:11:34 it slows emptying of the stomach.
    0:11:40 About a quarter of people have these side effects and it’s variable in how much people
    0:11:41 experience it.
    0:11:44 I’ve talked to people on these drugs and they have it minimal.
    0:11:49 I’ve talked to other people and they have quit the drugs because they really found it
    0:11:50 intolerable.
    0:11:56 As you’re describing the multiple uses, treatment, but also prophylactic for all these different
    0:12:01 conditions, it sounds almost as if you would recommend that these drugs go in the water
    0:12:02 supply.
    0:12:08 No, I am very enthusiastic, but there are some more serious side effects.
    0:12:10 One of the most serious is pancreatitis.
    0:12:17 That is inflammation of the pancreas can cause severe abdominal pain and other problems.
    0:12:20 It’s pretty rare, but it’s not unheard of.
    0:12:24 There’s also some cosmetic side effects when you lose the fat out of your face.
    0:12:29 You can get this hollow cheek look and a lot of wrinkles.
    0:12:35 I do think these could be more widely used, especially for people with obesity, but unlike
    0:12:39 some other drugs that I do think probably need to be in the water supply, these need
    0:12:41 to be used a little more selectively.
    0:12:47 I’m curious how you and others foresaw how useful they’d be, not only for weight loss
    0:12:50 and diabetes, but potentially all these other treatments.
    0:12:55 I’m curious what your view of them was like, what the skepticism was like, and who’s skeptical
    0:12:56 now maybe.
    0:13:01 First of all, I was not fully focused on how beneficial they could be.
    0:13:07 I have to give credit to Novo Nordisk and Lilly for doing trials that didn’t just look
    0:13:12 at diabetes or didn’t just look at obesity, but looked at more outcomes.
    0:13:17 For the clinicians who identified, “Wow, we’re seeing these other positive effects.”
    0:13:21 People eating less, the addictions to alcohol and drugs going down.
    0:13:25 I’m sorry to interrupt, Zeke, but on something like that, when you’re talking about clinical
    0:13:29 treatment, doctor treatments, and they’re saying they’re observing that their patients
    0:13:35 are having fewer problems in these other realms, whether drinking, eating, I mean, how empirical
    0:13:36 is that?
    0:13:40 Because I could imagine that someone who feels like they are improving on one dimension of
    0:13:46 their life maybe changes their behavior in response to positive feeling, a kind of not
    0:13:51 quite placebo, but something that was spurred on by one positive effect that has these other
    0:13:56 positive knock-on effects as opposed to actually treating addiction and so on.
    0:14:01 I think your skepticism is well-placed, and that’s why we do trials, to find out we’re
    0:14:03 in a huge number of trials.
    0:14:07 On the other hand, there are some things like looking at livers.
    0:14:10 How does the liver change with these drugs?
    0:14:12 That’s not going to be a placebo effect.
    0:14:14 That is actually going to be a drug effect.
    0:14:18 And something like addiction, especially things like alcohol and drugs, where we know it’s
    0:14:25 so hard to stop, when you do see lots of people on these drugs stopping and reporting that
    0:14:28 they don’t have the craving, you have to take that seriously.
    0:14:33 That doesn’t mean it can’t be a placebo effect, but it affects the gut, it affects the pancreas
    0:14:38 to increase insulin, and it obviously has to affect the brain if it’s going to affect
    0:14:41 these addictions and psychiatric situations.
    0:14:48 And that’s what is probably the most remarkable and unexpected finding here, that this big
    0:14:53 protein somehow is getting across the blood-brain barrier or somehow is being released there,
    0:14:58 and being able to affect people’s mental situation.
    0:15:01 On all the reading I did on this, and I have to admit a lot of the science is really hard
    0:15:06 for me, at least, and maybe many lay people to understand, but it sounds as though there
    0:15:12 are a couple different mechanisms, or maybe different drug classes work in different mechanisms,
    0:15:18 but it sounds as though there is a body effect, a kind of cellular body effect, and a brain
    0:15:19 effect.
    0:15:23 Is one drug causing both of those, or are they different drugs that do that?
    0:15:31 Well, we don’t know for sure, but probably the same drug or some way that it’s causing
    0:15:33 a pathway effect.
    0:15:36 But that’s not understood yet, you’re saying, fully.
    0:15:38 Probably the brain effect.
    0:15:42 Sometimes great things happen that have multiple applications.
    0:15:47 Since the end of the genome project in roughly 2000, we’ve had five big breakthroughs in
    0:15:49 healthcare.
    0:15:51 We’ve had CRISPR, where you can edit genes.
    0:15:57 We’ve had gene therapy, where I use this term, the researchers are a little more cautious.
    0:15:58 Really cure blindness.
    0:16:03 We’ve had CAR T therapy, where again the researchers are a little more cautious, but you cure people
    0:16:06 of cancer who are on their death bed.
    0:16:12 We’ve had the mRNAs, and now we’re multiple uses for mRNA items, not just vaccines, but
    0:16:14 in many, many other ways.
    0:16:16 And you’ve had these GLP ones.
    0:16:21 Each of these have way more ramifications than we ever thought possible.
    0:16:26 Let’s take a step back on that front and talk about where research funding and research
    0:16:28 incentives are coming from these days.
    0:16:34 The five treatments that you’ve just named are evidence of how things are working in
    0:16:36 medical science.
    0:16:38 As we all know, a lot of these routes are very meandering.
    0:16:39 They take a long time.
    0:16:44 There are all kinds of failures and dead ends when you’re doing this kind of research.
    0:16:49 How do you feel about the current state of moonshot medical advances?
    0:16:54 And I’m especially curious to know how you would assess the private public collaboration
    0:16:55 there.
    0:17:00 Well, let me say we need public and private collaboration, because each part does different
    0:17:01 things.
    0:17:08 Mainly, the government invests a lot in basic research and tries to create understanding
    0:17:10 of how these pathways work.
    0:17:15 And let’s be honest, deciding what you’re going to fund is based upon judgment of the
    0:17:19 community, and the community, like any community, has prejudices.
    0:17:24 It’s pursuing one avenue rather than all the avenues.
    0:17:30 And we know that sometimes has been an inhibition to good and high-risk research.
    0:17:34 The government often doesn’t like to have failures on research.
    0:17:40 One of the criticisms I have is the government has more or less ceded most of the clinical
    0:17:42 research to drug companies.
    0:17:48 Now, drug companies obviously have a big investment, but they have a particular kind of investment
    0:17:55 comparing different drugs in the same class or comparing one drug, like GLP-1s, with another
    0:18:01 drug like the SGLT-2s that might be used for diabetes.
    0:18:05 That’s not so much in their interest unless they think they’re going to easily win that
    0:18:06 race.
    0:18:09 But the government should be doing a lot of that comparative assessment.
    0:18:14 And yet the NIH has gotten — it’s not out of clinical research, but it’s reduced its
    0:18:17 footprint in clinical research a lot.
    0:18:20 And that, I think, is a bad thing.
    0:18:22 You know, we need drug companies.
    0:18:27 They can fund these big trials, but we have to recognize they have their own interests
    0:18:33 at heart, which don’t necessarily correspond to the national public health interest.
    0:18:37 We’ve got to have them because they know how to scale, they know how to market the drugs,
    0:18:43 they know how to chemically adjust the drugs to increase how long they last in the body.
    0:18:48 We can’t underestimate convenience is really important because for a chronic illness you
    0:18:51 have to stay on the drug often forever.
    0:18:57 I’ve heard you say that one big problem with medicine today is that 86% of all spending
    0:18:59 goes to chronic conditions.
    0:19:05 In the case of the GLP-1 drugs, widespread adoption would, I assume, over time bring
    0:19:07 down those costs dramatically.
    0:19:11 I know we’re talking about high costs in the short term, but I assume in the long term
    0:19:13 the costs would fall a lot.
    0:19:16 First of all, tell me if that’s indeed the case.
    0:19:21 And second, if you look really big picture, how you think about all that money potentially
    0:19:27 being reallocated to research, treatment, prevention, cure, et cetera.
    0:19:32 Well, Stephen, let’s be clear with the listener.
    0:19:36 We have to separate out something that is cost-saving.
    0:19:41 We pay for it now, but it’ll save money over time from something that is cost-effective,
    0:19:47 which means the total amount we pay is still worth it, but it doesn’t save money.
    0:19:52 So far on the GLP-1, the cost analysis does not show us saving money.
    0:19:54 But I think you’re right.
    0:20:01 We’ve got 42% of the adult population obese, 20% of U.S. children obese, 10% of the U.S.
    0:20:04 adult population has type 2 diabetes.
    0:20:10 If we can treat those illnesses, reduce things like hospital admissions, hypertension, cardiac
    0:20:14 disease, kidney disease, the liver disease that goes with them, maybe we will be able
    0:20:16 to save money.
    0:20:17 Here’s the problem.
    0:20:22 Even if we could show that over a 10-year time horizon, they were cost-saving, that society
    0:20:29 would get back more money than we paid for the drug by saving other medical costs, hospitalizations,
    0:20:34 other drugs, replacement of hips and things like that, we’ve created a healthcare system
    0:20:38 where it’s not in the system’s interest to make those long-term cost-savings.
    0:20:39 What do you mean by that?
    0:20:42 Are you talking about the incentives of the insurance companies?
    0:20:47 Say you’re sitting at United or Humana or a Blue Cross and Blue Shield.
    0:20:53 You have a person called them 30 years old who you’re insuring, you’re going to spend
    0:20:58 money today for them, and the payoffs going to dribble out in five, six, seven years when
    0:21:03 they’ve gone for a long time with their diabetes under control or they’ve gone for a long time
    0:21:05 ceasing to be obese.
    0:21:11 The problem is, by the time those positive benefits come and the cost-savings come, they’re
    0:21:13 no longer being insured by you.
    0:21:17 We call this in the medical health policy world churn.
    0:21:24 The churn is so much in the insurance market that that investment horizon for companies
    0:21:27 is not five, six, seven years.
    0:21:30 It tends to be one year and maximum two years.
    0:21:34 Is that primarily because health insurance is tied to employment in this country?
    0:21:36 It’s a large reason for it.
    0:21:40 People change jobs, lose jobs, move.
    0:21:45 They get married and they switch from their insurance to their spouse’s insurance.
    0:21:51 We’ve created a system that perfectly disincentivizes long-term investments, and that’s bad when
    0:21:55 chronic illness is the main source of costs.
    0:22:01 So we’re going to have to change how we structure the insurance marketplace, and no one’s talking
    0:22:04 about that at the moment.
    0:22:07 Okay, let’s us talk about it.
    0:22:10 My conversation with Zeke Emanuel continues after the break.
    0:22:15 I’m Stephen Dubner, and I’d like to thank you for listening to Freakonomics Radio, not
    0:22:17 just today, but always.
    0:22:27 We’ll be right back.
    0:22:32 We’ve been talking with the oncologist and healthcare policymaker, Zeke Emanuel, about
    0:22:38 the large and sudden uptake of GLP-1 drugs, which were designed to treat diabetes, but
    0:22:41 have also been found to have other effects.
    0:22:46 They help people lose weight, drink less, even have more sex drive.
    0:22:53 This GLP revolution will no doubt produce a variety of downstream effects, not just physiological
    0:22:56 and psychological, but political and economic effects.
    0:23:00 There will be behavior change and social change.
    0:23:03 What will all these changes look like?
    0:23:04 I have no idea.
    0:23:06 And no one else does, either.
    0:23:09 If they say they do, you should start walking in the other direction.
    0:23:16 Predicting the future is hard, uncertainty is real, and as we often preach on this show,
    0:23:19 unintended consequences can be powerful.
    0:23:24 So let’s plan on following those long-term effects as they unspool, but for now, let’s
    0:23:28 get back to the near-term effects of these drugs.
    0:23:32 One big problem with GLP-1s is that they are expensive.
    0:23:35 So a big question is, who pays for them?
    0:23:41 What is the responsibility of health insurers, whether we’re talking private firms or government
    0:23:42 plans?
    0:23:46 How much should any government directly subsidize these drugs?
    0:23:50 And how much are these drugs worth to society?
    0:23:54 These are some of the questions that Zeke Emanuel and several colleagues tried to answer
    0:23:59 in a recent article published in The Lancet, a prominent English medical journal.
    0:24:06 They offer, as their subtitle says, “a review and ethical analysis of discordant approaches.”
    0:24:10 I asked Emanuel why he took on this project.
    0:24:14 The prior article we published in the New England Journal was about how to ethically
    0:24:21 allocate the resources of the GLP-1 drugs, and we establish a framework that puts younger
    0:24:26 obese patients at the top, along with diabetic patients who aren’t responding to other treatments.
    0:24:30 And so we had the natural question, what are other countries doing?
    0:24:34 We always look to other countries who think they’ve got to have a better system.
    0:24:38 And one of the things you learn is, well, the Germans, they got the same allocation
    0:24:40 as we do in Medicare.
    0:24:43 They don’t cover any of these weight loss drugs.
    0:24:47 Then you stumble upon other countries, like Australia and Denmark, and they say, oh, these
    0:24:52 drugs aren’t cost-effective, but in fact, they use long outdated cost-effectiveness before
    0:24:55 all the benefits for heart disease and liver disease.
    0:24:59 Long outdated, you mean just like 2022, two years ago.
    0:25:00 Exactly.
    0:25:05 But in a rapidly changing field, you have to be nimble, and you have to use the absolute
    0:25:06 latest data.
    0:25:11 And then we see a whole series of countries where they’re worried about the total cost,
    0:25:15 and they’re just saying we’re not covering it, which is the wrong policy.
    0:25:19 Drug prices might be high, but there are some people who need the drugs more than other
    0:25:21 people where the benefits are going to be greater.
    0:25:24 You should cover it for those people.
    0:25:28 And let’s remember, these aren’t the only expensive drugs in the marketplace.
    0:25:29 I’m an oncologist.
    0:25:34 Every oncology drug is super expensive, none are cheap unless they’re generic.
    0:25:40 We cover those, and their benefits are probably way less than Osempic or Wagovia or Mungero.
    0:25:44 Because with cancer drugs, you’re sometimes talking about a life extension of just weeks
    0:25:48 or months versus potentially many years with these GLP-1s.
    0:26:00 The life extension for a severely obese patient could be five to ten years, and that’s real.
    0:26:03 Here are some key statistics from the Lancet paper.
    0:26:09 Emanuel and his colleagues analyzed GLP-1 policy in 13 high-income countries, including
    0:26:15 the U.S. and the U.K. All 13 of them cover the cost of GLP-1s for at least some people
    0:26:21 with type 2 diabetes, but nine of the 13 countries deny reimbursement for weight management.
    0:26:27 The U.S. is perhaps the most hodgepodgey of these 13 countries, given its mix of federal,
    0:26:29 state, and private health care coverage.
    0:26:34 I asked Emanuel to start from the beginning and describe just how much variance there is
    0:26:36 from place to place.
    0:26:43 Well, almost every country covers it for diabetes, but we’ve got a lot of countries that don’t
    0:26:45 cover it at all for weight loss.
    0:26:53 Australia, Belgium, Denmark, Finland, Germany, Italy, Israel, okay?
    0:26:54 Don’t cover it.
    0:26:59 Canada also doesn’t have a national policy, so it’s a little more variable.
    0:27:09 The 13 countries for France, Iceland, Japan, and then the U.K. under some conditions cover
    0:27:13 ozempic, wagovi, manjaro, and the conditions vary.
    0:27:19 So France, you have to have a high BMI or if a slightly lower BMI and severe comorbidities
    0:27:21 from obesity.
    0:27:25 The U.K., you also have to change your diet and exercise.
    0:27:30 And then there’s Iceland which says, “Look, we’ll cover it, but you’re going to have to
    0:27:33 have serious weight loss if you’re not actually losing weight.
    0:27:34 We’re going to not cover it.”
    0:27:38 So you can get started on it, but if you haven’t lost weight within a certain time, your coverage
    0:27:40 will be pulled, essentially?
    0:27:41 Exactly.
    0:27:46 And, you know, if I had to pick one, I would say I like what France is doing and I like
    0:27:52 what the U.K. does in terms of it’s not just about drugs, it’s about a whole lifestyle,
    0:27:54 change, and give people help with doing that.
    0:27:57 I think those are the right directions to go.
    0:28:01 Since you and I and much of our audience are American and since Americans are particularly
    0:28:07 solipsistic, let’s talk about the American circumstance with coverage, but also price.
    0:28:12 So one thing I learned from your papers that the price is charged for GLPs in different
    0:28:14 countries very massively.
    0:28:21 I believe it’s around 280 some dollars in Japan to $1350 in the U.S.
    0:28:25 Most of all, it shows you that there’s price flexibility, that these drug companies are
    0:28:29 willing to change the price depending upon what governments or others require.
    0:28:33 Was that your brother who negotiated the 283 in Japan, you think?
    0:28:34 He is a good negotiator.
    0:28:35 I’ll say that.
    0:28:36 He’s also a cheapskate.
    0:28:38 I’ll say that too.
    0:28:41 So I think that’s actually a positive.
    0:28:43 That makes me optimistic.
    0:28:49 And if I were in charge, if I were the health czar in the United States, I would go to these
    0:28:53 drug companies and I would say, “Listen, let’s get a subscription model.
    0:28:56 We’re going to give you a flat fee so you make money and you’re going to give us an
    0:29:01 unlimited amount of these drugs because actually to produce these drugs is not that expensive.
    0:29:07 And we’re going to try to get everyone we can who qualifies on these drugs.”
    0:29:10 That’s a deal I think everyone could be happy with.
    0:29:15 The drug company will make a lot of money and the country will be able to treat more
    0:29:18 people and will be better off.
    0:29:23 It won’t also be just to first come, first serve if you’ve got a lot of money.
    0:29:27 What is a budget that would be reasonable to spend on people with obesity and diabetes?
    0:29:32 That’s our limit for spending and it’s probably going to be pretty good given, I think it’s
    0:29:39 less, I looked, $173 billion we spend on obesity-related healthcare.
    0:29:42 So we have tens of billions, you might say we could spend.
    0:29:47 So we could make it enticing for a drug company but also good for public health.
    0:29:51 Economists, as I’m sure you know, like to talk about what they call moral hazard, which
    0:29:59 is if you make some behavior less costly by ensuring it or protecting against it somehow,
    0:30:01 then people are freer to do it.
    0:30:10 So I’m thinking, “Well, if I can now have my GLP-1 that is going to keep my weight down,
    0:30:16 prevent diabetes and prevent all these other potential complications, heck, I can eat whatever
    0:30:19 I want whenever I want because medicine has helped me out.”
    0:30:24 But there’s also the idea that food is medicine, right, that nutrition is important well beyond
    0:30:25 the weight component.
    0:30:32 So having permission to eat garbage calories would be at best a partial victory.
    0:30:34 So how do you think about that balance?
    0:30:36 Here’s a positive.
    0:30:43 We have focused more on obesity and we’ve also understood better that it is not simply
    0:30:45 a lifestyle choice.
    0:30:50 It has to do both with the body and therefore it’s very biologic and it has to do with
    0:30:52 our social environment, the food.
    0:30:58 You know, today we have 20% of our children are defined as obese and 16% is overweight
    0:31:03 and within that obese category, 6% are severely obese.
    0:31:05 That is a terrible place to be.
    0:31:08 We’ve got type 2 diabetes in young kids, hypertension in young kids.
    0:31:14 We have to reverse that and that isn’t going to be a Monjiro or Wadovi or Ozempic solution.
    0:31:19 That has to be a solution of changing their diets and getting them more exercise.
    0:31:22 There’s just no alternative to that.
    0:31:28 We need to invest more in the public health of our children and encouraging their parents
    0:31:35 to change their diet and maybe more than encouraging using things like taxes and other mechanisms,
    0:31:38 school lunches, school breakfast to change that behavior.
    0:31:44 I mean, this is a song I’ve been hearing for probably 20 or 30 years now.
    0:31:45 Absolutely.
    0:31:49 But, Steve, because so much attention has been focused on obesity now because of these
    0:31:54 drugs and because we can realize, “Oh, you can change that by giving a drug that must
    0:31:56 be a biological thing.
    0:31:59 It’s not simply a weakness of will that you’re eating more.”
    0:32:03 I’m hoping that changes our culture around obesity.
    0:32:08 And look, when I started thinking, “Well, we’ve got a limited amount of these GLP drugs.
    0:32:10 Who should get the GLP drugs?”
    0:32:15 When I started doing that research, my thinking was, “It’s got to be the diabetic patients.
    0:32:16 They’re going to benefit the most.”
    0:32:19 And then I get into this and I begin thinking, “All right.
    0:32:20 What are we trying to do?
    0:32:22 We’re trying to save the most lives.”
    0:32:25 And then I said, “Well, who loses the most years of life?”
    0:32:28 It turns out it’s the people with obesity.
    0:32:34 My own analysis changed my ethical judgment here when you look at these data.
    0:32:38 The people who are really suffering are people with obesity.
    0:32:41 They’re the people who are going to benefit the most from these drugs.
    0:32:45 Most insurance companies don’t want to cover it because it’s a big expense.
    0:32:46 Medicaid is all over the place.
    0:32:47 Some states are covering it.
    0:32:49 Most states are not.
    0:32:52 The consequence is, you know, who’s getting GLP ones?
    0:32:53 Rich people.
    0:32:59 That is the totally unethical, unjust way of allocating these very important pathbreaking
    0:33:00 drugs.
    0:33:08 We have to change our system so that we actually do the ethical thing, and that so far is not
    0:33:11 where we’re headed.
    0:33:15 We recorded this conversation with Zeke Emanuel back in September before the presidential
    0:33:16 election.
    0:33:22 Since we spoke, the Biden administration proposed a new plan to have Medicare and Medicaid
    0:33:26 cover GLP-1 drugs like Osempic and Mound jarrow.
    0:33:31 As of now, Medicaid coverage varies from state to state, as we just heard.
    0:33:36 And Medicare doesn’t reimburse for these drugs at all because of a law prohibiting the coverage
    0:33:38 of weight loss products.
    0:33:45 This proposed new coverage would cost an estimated $35 billion over a decade, or $3.5 billion
    0:33:50 a year, which sounds like a lot until you put it up against what Emanuel told us the
    0:33:58 U.S. spends each year on obesity-related healthcare, around $175 billion.
    0:34:03 It’s too early to say what will happen to the Biden administration’s GLP-1 proposal
    0:34:05 under the Trump administration.
    0:34:10 Trump’s pick for director of health and human services, Robert F. Kennedy Jr., has criticized
    0:34:16 GLP-1s, but Mehmet Oz, Trump’s pick to run the Centers for Medicare and Medicaid Services,
    0:34:18 has expressed support.
    0:34:24 I did ask Zika Manuel during our interview how big of a shift he would envision in U.S.
    0:34:27 healthcare policy if Trump won the election.
    0:34:34 If I were a betting man, having worked with Donald Trump, this isn’t going to be a priority
    0:34:35 of his.
    0:34:40 He may make another run at repealing the Affordable Care Act, but that’s a joke.
    0:34:41 It’s not going to happen.
    0:34:43 It’s a joke because it’s ensconced.
    0:34:45 It’s just not going to happen.
    0:34:49 John Republicans in Congress, I talked to him right after John McCain did his thumbs
    0:34:53 down and killed the repeal, and he said, “Oh, I’m very close.
    0:34:54 I’m going to do it again.
    0:34:55 We’re going to get it this time.”
    0:35:01 I said, “Mr. President, what you don’t realize is that behind John McCain, if he hadn’t
    0:35:06 done that, there were 10 other senators who would have rejected it because it would have
    0:35:09 upset things too much in their state.
    0:35:14 Every single state that has tried to expand Medicaid where the voters had to say, the
    0:35:19 voters said, “Expand Medicaid,” and we’re talking about deep, deep red states, places
    0:35:23 like Oklahoma, places like South Dakota.
    0:35:26 Even Republicans want everyone to have health insurance.
    0:35:28 We’re not repealing the Affordable Care Act.
    0:35:32 You’re well-known for your involvement in the Affordable Care Act.
    0:35:35 You’re also well-known for having written several books.
    0:35:40 One of them published, I believe it was 2014, was called Reinventing American Health Care,
    0:35:46 how the Affordable Care Act will improve our terribly complex, blatantly unjust, outrageously
    0:35:50 expensive, grossly inefficient, error-prone system.
    0:35:52 That’s a lot of promise for one subtitle.
    0:35:55 How well do you think that promise has been met?
    0:35:59 So far, I think it’s been met reasonably well.
    0:36:01 Here’s how I would put it.
    0:36:04 It’s dramatically increased coverage.
    0:36:08 Tens of millions of people have gotten health insurance and gotten the benefits of health
    0:36:13 insurance, including less mortality, less stress, less anxiety.
    0:36:20 Secondly, it’s actually led to a plateau in healthcare spending as a percentage of GDP.
    0:36:26 We were at 17.5% of GDP spent on healthcare when we started with the Affordable Care Act,
    0:36:27 and guess what?
    0:36:29 We’re at the exact same place.
    0:36:31 That’s trillions of dollars of savings.
    0:36:36 To be fair, that’s a larger share of GDP than any other country in the world by a long shot.
    0:36:37 Don’t get me started.
    0:36:39 You’ve got to have a whole nother conversation about that issue.
    0:36:44 I could go on and on about it, but yes, we spend — I think Switzerland’s the next highest
    0:36:47 country in terms of spending about 8,000 per person.
    0:36:51 We’re close to 13,000 or maybe even over 13,000 per person.
    0:36:54 So yes, we’re burning lots of money that we shouldn’t be burning.
    0:36:59 In any case, those are two big accomplishments of the Affordable Care Act.
    0:37:03 It’s also, by getting more people insured, led to some cost savings.
    0:37:10 On the quality side, I would say much more uneven, not consistently beneficial.
    0:37:12 And for me, it’s been a disappointment.
    0:37:16 We still have high levels of hypertension, high levels of diabetes, worsening mental
    0:37:18 health crises.
    0:37:23 On the issue of equity, lots of people are concerned about minorities and others not
    0:37:24 getting as much.
    0:37:29 The fact is, we have narrowed the uninsured rate between minorities and whites.
    0:37:32 So we’ve done okay there, I would say.
    0:37:36 We haven’t evened everything out, but I think we’ve done okay.
    0:37:42 I’d say the one big place where it’s gone awry is the dissatisfaction with the health
    0:37:49 care system is higher, a lot more barriers and hurdles, more prior authorization, both
    0:37:55 for patients and doctors, harder to find doctors for your particular condition.
    0:38:00 And also, even though we have the same GDP spending, the out-of-pocket spending’s gone
    0:38:05 up, employers are shifting more costs to individuals through higher deductibles and
    0:38:08 things like that, that leads to frustration and stress.
    0:38:13 So I do think the Affordable Care Act has achieved a lot, but the underlying defects
    0:38:20 of the system prevent us from achieving all the goals we need to achieve with health care.
    0:38:23 And how can those goals be achieved?
    0:38:25 This is a problem in our country.
    0:38:27 We have to move with the times.
    0:38:29 We have to be more innovative.
    0:38:33 Next coming up, after the break, I’m Stephen Dovner, speaking with Ezekiel Emanuel on
    0:38:34 Freakonomics Radio.
    0:38:43 We will be right back.
    0:38:47 Let’s talk about the future of medicine generally, but especially I’m curious to know what you
    0:38:53 think AI and machine learning and so on will do to, you know, accelerate discovery, treatment,
    0:38:54 et cetera, et cetera.
    0:38:59 I want to frame this with an observation I heard from Mustafa Suleiman, who’s an AI
    0:39:02 entrepreneur, I guess you’d call him now at Microsoft.
    0:39:09 I heard him say that if AI proceeds as he sees it, that the cost of medical diagnosis
    0:39:11 will eventually drop to zero.
    0:39:14 Now let’s say he’s only 30% right.
    0:39:19 There’s a 30% cost savings on diagnosis, but that’s massive.
    0:39:25 I’m curious how you think in a world where that’s true, how that money gets reallocated?
    0:39:31 Well, first of all, Stephen, I was just at a meeting that my brother put on and every
    0:39:34 panel talked about AI and the promise of AI.
    0:39:36 And I do think there’s a lot of promise there.
    0:39:38 Don’t get me wrong.
    0:39:44 But I also think that it’s going to take longer to make it into the healthcare system, because
    0:39:49 first of all, you got to spread it out over 330 million people, which means not that it’s
    0:39:55 hard to scale AI, but you have to make sure it doesn’t bias you against certain populations
    0:39:58 or ignore problems in certain populations.
    0:40:02 And to some extent, the training systems are not good at that.
    0:40:06 I also think there’s some hesitation in using it.
    0:40:09 I do think the biggest advantage is going to be in access.
    0:40:14 People who can’t get to the doctor, that’s actually going to turn out to be a huge benefit.
    0:40:15 I should say conflict adventures.
    0:40:18 I’m involved in several companies looking at that.
    0:40:21 There are other huge advantages.
    0:40:25 One of them is diagnoses, identifying people who are likely to have complications.
    0:40:29 So you can intervene now and prevent a hospitalization and save money.
    0:40:34 So I am optimistic over a slightly longer time horizon.
    0:40:39 If I were reallocating that 30%, here’s my top priorities.
    0:40:45 Priority number one, invest in children and as early as possible.
    0:40:48 Even before they’re out of the womb, you got to invest in them.
    0:40:53 We know early interventions produce the biggest social benefit.
    0:41:00 So right when they’re born, have nurse family partnerships so that families are supported.
    0:41:01 We have to have daycare.
    0:41:04 That’s cheaper so people can afford it.
    0:41:07 Mandatory, pre-K, open to everyone.
    0:41:10 I would also bring down the total healthcare costs for people.
    0:41:15 One of the major things is we need to put a cap on out-of-pocket expenditures, deductibles
    0:41:19 and copays so people don’t go bankrupt and aren’t stressed by the cost.
    0:41:27 I think a maximum of $1,000 for a family is probably a place I would like to get to.
    0:41:29 You also need to spend that money and other things.
    0:41:30 It’s not just healthcare.
    0:41:35 We need to spend it on infrastructure so that we can have housing and people can commute
    0:41:38 without having to drive hours and hours.
    0:41:44 So the COVID pandemic taught pretty much everyone how to use Zoom or some equivalent.
    0:41:49 And this was plainly vital for medicine at the time, what we now call telemed or telehealth.
    0:41:56 I’m curious what you see as the lasting effects of that telehealth surge during COVID, pros
    0:42:00 and cons of, let’s say, continuing to lean on virtual medicine.
    0:42:03 I think in general, it’s positive.
    0:42:08 We had a big blip up almost half of the physician engagement’s got to telemedicine and then
    0:42:12 it’s come way down, not to pre-COVID levels, but way down.
    0:42:17 A lot of this goes to how we pay for it and the fact that a lot of systems, doctors who
    0:42:22 do it get paid half as opposed to seeing the patient in their office.
    0:42:26 But we’ve also realized that we can do a lot of things out of the hospital.
    0:42:29 So you’re seeing a lot of surgeries migrate out of the hospital.
    0:42:34 You’re seeing more home care out of the hospital.
    0:42:37 At the University of Pennsylvania, one of the things we ended up doing during COVID was
    0:42:41 to go to patients’ houses and administer chemotherapy.
    0:42:46 When I was training low these many years ago in the early 1990s, if you had told me, “We’re
    0:42:50 going to give this chemotherapy that caused a lot of nausea and vomiting, we’re going
    0:42:53 to give it at the patient’s home,” I would have said, “The psychiatric hospital, that’s
    0:42:54 not far away.
    0:42:56 Let’s take you over there.”
    0:42:57 But that’s what we’ve been able to do.
    0:43:02 Now, partly that’s because we have better drugs for nausea and vomiting, partially it’s because
    0:43:08 we really understand how to do this and that’s a big, big advance.
    0:43:12 Here’s why I’m really positive about telemedicine.
    0:43:16 Twenty percent of our population lives in rural areas.
    0:43:18 We’ve seen hospitals close there.
    0:43:23 We’re going to have to get them access, not just to a primary care doc, but to specialists
    0:43:26 that aren’t living nearby.
    0:43:28 And telemedicine is going to be important.
    0:43:34 Here again is another legacy of history that people don’t pay attention to.
    0:43:38 Medical licensure and regulation is state-based.
    0:43:41 That makes no sense in the modern era.
    0:43:47 With Zoom, if you’re in South Dakota and you can get your treatment from Chicago or Pennsylvania
    0:43:51 or New York, why should we have the licensure only in South Dakota?
    0:43:56 We really need to get to the next level national licensure.
    0:43:58 But states are jealous of their prerogatives.
    0:44:01 They’re not going to give it up easily.
    0:44:02 This is a problem in our country.
    0:44:05 We have to move with the times.
    0:44:06 We have to be more innovative.
    0:44:12 Let me go back to administering chemo at home during COVID, which is really interesting.
    0:44:16 Let me hear you speak a little bit about how cancer care and especially chemo have changed
    0:44:18 over the past couple of decades.
    0:44:23 But I want to frame that within a bigger question or maybe it’s just an observation, which is
    0:44:24 the following.
    0:44:26 There was an economics paper years ago.
    0:44:29 I don’t know if you ever read it, and I’m curious to know what you think of the idea,
    0:44:35 which is that the so-called war on cancer, which was begun, gosh, over 50 years ago now.
    0:44:39 Some people claim it’s been nowhere near as successful as one might hope.
    0:44:46 The paper argued that that argument is masking a big different trend, which is cardiovascular
    0:44:53 care has become so much better that many, many, many people are not dying of the cardiovascular
    0:44:57 diseases that would have killed them in an earlier generation and are living long enough
    0:44:58 to get cancer.
    0:45:01 I’m curious to know what you think of that framework, but I’d love you to just give us
    0:45:05 the state of cancer care and especially chemo now.
    0:45:09 Well, at one time, I might have been skeptical.
    0:45:15 Yes, we began this under Richard Nixon in the early 1970s, and it’s now more than 50
    0:45:16 years.
    0:45:22 All of the progress we’ve made over the last decade or two really go back to the research
    0:45:28 that was started of the war on cancer and accelerated by the human genome project and
    0:45:35 figuring out where the defects are in the DNA that lead to cancer, being able now to
    0:45:38 target those specific defects.
    0:45:41 All of that took a long time.
    0:45:45 We’ve done a marvelous job at cutting cancer death rate.
    0:45:50 That means that for everyone who gets cancer, fewer people die, but I do think we’ve had
    0:45:58 a huge improvement in cardiac disease, multiple factors, a lot of lifestyle factors, humongous
    0:46:05 drop in smoking, changes in diet, so we are more aware of cholesterol, people on statins,
    0:46:11 incredible breakthrough, drug, not to mention all the other intervention stents and things
    0:46:12 like that.
    0:46:16 So, we have had huge progress in cardiovascular disease.
    0:46:22 Now, having said all of that, we’re seeing a big increase in younger people getting cancers
    0:46:25 which we thought they never should get, like colon cancer.
    0:46:32 I had a very dear friend die in her early 40s from a humongous colon cancer.
    0:46:38 When I was training in the 1990s, we never would have seen that, never.
    0:46:39 What do you think is going on?
    0:46:40 No one knows for sure.
    0:46:42 Here are some possibilities.
    0:46:49 We’ve changed the human microbiome in the gut, the bacteria by eating the wrong things.
    0:46:56 For processed foods that causes obesity, it also causes a decrease in the variety of bacteria
    0:47:00 we have and a decrease in the good bacteria.
    0:47:05 That micro environment that affects cells created by the bacteria in our gut is probably
    0:47:07 critically important.
    0:47:15 If you don’t eat fermented foods like yogurt, kimchi, if you don’t eat a lot of fiber that
    0:47:21 comes with fruits and vegetables, you’re dramatically changing that micro-biome.
    0:47:22 That’s a hypothesis.
    0:47:26 Let’s be clear with your audience, it’s a hypothesis.
    0:47:33 So, Zeke, I understand you had a birthday recently, yes, 67 years old, is that true?
    0:47:34 Oh boy.
    0:47:39 Your spies, you worked for the CIA recently?
    0:47:41 Can you confirm, though, you’re 67 years old.
    0:47:44 I can confirm I’m 67 years old.
    0:47:50 I know that every year you set for yourself something new, radically new to do.
    0:47:54 You’ve become a chocolate maker, you’ve become a serious cyclist.
    0:47:57 Tell me one thing that’s on your list for the future.
    0:47:58 I’ll tell you a trivial thing.
    0:47:59 I want to make honey.
    0:48:01 I thought bees did that.
    0:48:03 We’ve just planted a lot of trees.
    0:48:06 We have a lot of bees that love our lavender plants.
    0:48:07 So that’s a sort of hobby.
    0:48:12 But I would say, seriously, one of my life goals is, I’m a first-born and I think one
    0:48:20 of my deficits, if I had to put it this way, is I can be slightly not sufficiently empathetic.
    0:48:22 I can be a little too dismissive.
    0:48:25 And I would like to improve those.
    0:48:30 I’d like to be more empathetic to the people around me and decrease the sarcasm in my
    0:48:31 responses.
    0:48:35 Now, why do you care about that at this stage in life?
    0:48:37 I think it makes a difference to people.
    0:48:43 I’ve become more interested in how people get to where they are and also more interested
    0:48:48 in what changes they’ve made, what challenges they’ve confronted, how they’ve overcome
    0:48:49 their challenges.
    0:48:51 And I’d like to do more of that.
    0:48:57 My father-in-law makes me bookmarks, the most recent bookmark for my 67th birthday he wrote
    0:49:00 on the bookmark, allergic to idiots.
    0:49:05 I am allergic to idiots, but I had in the past confused that with not taking an interest
    0:49:10 in people and that was probably a result of being first-born, having my brothers constantly
    0:49:11 attack me, whatever.
    0:49:15 Can I say all of you brothers complain about each other in exactly the same way as if birth
    0:49:18 order was irrelevant?
    0:49:23 But I would say being curious about the lives of other people, it’s led me to read a lot
    0:49:27 of biographies and understand the challenges people have overcome.
    0:49:32 I’ve read a recent biography of Hubert Humphrey and the kinds of challenges he confronted,
    0:49:34 but the fact that everyone liked him.
    0:49:39 That’s an interesting and very important quality, that you could be open to people, you could
    0:49:44 be empathetic of people, even people who you disagreed with so much that they actually
    0:49:47 liked you, we don’t have enough of that in our society.
    0:49:52 And so one of the things you ask me, you know, I’m Jewish and the new year is coming up,
    0:49:58 that I’m committing myself to is more empathy and less sarcasm in my voice, but also making
    0:50:02 honey, making life sweet.
    0:50:04 The late in life empathist, I love it.
    0:50:07 And now I’m sure you get asked about this all the time and I’m sorry if it’s a pain
    0:50:12 in the neck, but you did publish a piece in the Atlantic back in 2014, which got a lot
    0:50:13 of attention.
    0:50:17 Headline was why I hope to die at 75.
    0:50:19 First of all, just rehearse the argument.
    0:50:21 What was the point you were trying to make?
    0:50:22 I believe it was a bit misunderstood.
    0:50:25 Yeah, it’s not like I’m going to die at 75.
    0:50:32 It’s that I would not take life prolonging treatments at 75, like cancer chemotherapies
    0:50:34 or renal dialysis if my kidneys fail.
    0:50:37 But you also said no more flu shots, for instance.
    0:50:38 Right.
    0:50:40 There are two things that have gotten under people’s skin.
    0:50:47 One is vaccinations and the other is antibiotics that would readily cure a condition.
    0:50:55 Now on the vaccines, I think COVID has somewhat changed my attitude on that because, you know,
    0:50:59 you can get a shot and it would make a very big difference.
    0:51:02 Why did you need the COVID vaccine to persuade you of that?
    0:51:06 Wouldn’t what you just said describe just about all the vaccines that are commonly used?
    0:51:10 Well, measles is not my big problem, you know, and diphtheria is not my big problem.
    0:51:12 Thank you very much, Stephen.
    0:51:16 If I somehow broke my hip, I would get that repaired.
    0:51:18 I’m not force-wearing all medical care.
    0:51:23 It was really about life saving, you know, people, oh, the golden years, all the advertisements
    0:51:29 out there for Medicare Advantage health plans make the golden years look like I’m hiking
    0:51:32 in Montana and beautiful vistas and all that.
    0:51:33 That’s not what they’re like.
    0:51:37 What happens for most people is they end up watching a lot more TV.
    0:51:39 They tend to be homebound.
    0:51:43 They get a lot of disabilities over time.
    0:51:49 They’re not filled with the joys that everyone imagines if they’re going to get 10 more years.
    0:51:53 The other thing is they’re also filled with a lot of cognitive decline.
    0:51:55 Yes, it is true.
    0:51:59 The rate of Alzheimer’s disease has actually gone down, but the total number of people
    0:52:03 with Alzheimer’s gone up, I think the number is, and I haven’t checked this recently, by
    0:52:07 80 years old, about 30% of people have some cognitive decline.
    0:52:09 That’s a huge number.
    0:52:10 So you want to get out while the getting’s good?
    0:52:18 I see no reason in prolonging that if I’m not being creative, I’m not interacting.
    0:52:23 I don’t watch TV, so I wouldn’t want to be spending my time watching TV, even good movies.
    0:52:25 That seems like a very passive life.
    0:52:29 I’m not a passive person, and I don’t think anyone wants or should want to be a passive
    0:52:30 person.
    0:52:36 But for all your optimism about intellect and technology generally, whether it’s AI, machine
    0:52:42 learning, or just the way the brain can come up with things, who’s to say that all the
    0:52:48 downsides that you see of aging won’t be mitigated to some degree by various technologies
    0:52:52 and that maybe, heck, you could at 100 be doing things.
    0:52:57 Now maybe you’d be doing them quasi-virtually, but do you entertain those kind of thoughts?
    0:53:02 I entertain those thoughts, but I haven’t seen that actually be a reality.
    0:53:09 I think people are delusional when they imagine, “I’ll be like I am now when I’m 90,” probably
    0:53:10 not.
    0:53:14 Maybe AI, regenerative medicine, maybe those things will happen, then I’ll reassess.
    0:53:15 But they’re not happening now.
    0:53:20 We’re seeing greater disabilities and people having a lot of cognitive decline.
    0:53:23 I am not wild about that kind of life.
    0:53:26 You have to ask yourself, “What is the purpose of my life?
    0:53:27 Why am I living?
    0:53:29 And how does that relate to age?”
    0:53:33 Most people will say, if you just ask them, “Oh, I want quality over quantity,” but then
    0:53:38 when they actually behave, they are taking quantity even when the quality of their life
    0:53:40 is not what they actually want.
    0:53:42 Of course I think my view is the right view.
    0:53:45 I’ve spent a lot of time thinking about this, but I will tell you, Stephen, it’s a decade
    0:53:48 of people writing to me.
    0:53:51 About a third of people say, “Dr. Emmanuel, you’re 100 percent right.”
    0:53:54 A third of people say, “Well, you’ve made me rethink.”
    0:53:56 They don’t necessarily endorse my view.
    0:54:01 If I’ve just made you rethink how you’re going to live your life and examine what you’re
    0:54:03 living for, that’s a really good thing.
    0:54:06 And a third of people think, “I’m off my rocker,” and maybe I am.
    0:54:10 It’s quite a legacy, though, that you’ve made so many people rethink something as fundamental
    0:54:11 as the end of their life.
    0:54:16 I don’t want to pat myself on the back, but I don’t mind being what Socrates called
    0:54:17 the Gadfly.
    0:54:22 Part of what I do as a professor is challenge people about their views, and I want them
    0:54:24 to rethink their views.
    0:54:27 They might embrace their views wholeheartedly.
    0:54:28 That’s fine.
    0:54:30 As long as it’s, as Socrates says, an examined life.
    0:54:35 As long as you can defend and justify where you’ve come down, that’s the place people
    0:54:36 need to be.
    0:54:38 And I hope everyone gets there.
    0:54:40 I hope they think through, “What am I living for?
    0:54:42 What good am I doing in this world?
    0:54:45 Whose lives am I making better?”
    0:54:49 In the end, that’s why we’re here.
    0:54:54 My thanks to Zika Manual for a conversation that I found informative, challenging, occasionally
    0:54:55 inspiring.
    0:54:58 I’m curious to know how you felt.
    0:54:59 Let me know.
    0:55:02 Our email is radio@freakonomics.com.
    0:55:08 Coming up next time on the show, another one-on-one conversation, this one with Adam Moss, who
    0:55:12 is widely considered the best magazine editor of his generation.
    0:55:17 He also happens to be my former editor and boss.
    0:55:22 I learned a lot from Adam, especially how to be direct.
    0:55:28 I just thought this was bullshit, and I thought it was bullshit over a long period of time.
    0:55:30 That’s next time on the show.
    0:55:35 Until then, take care of yourself and, if you can, someone else too.
    0:55:37 Freakonomics Radio is produced by Stitcher and Renbud Radio.
    0:55:43 You can find our entire archive on any podcast app also at Freakonomics.com, where we publish
    0:55:46 transcripts and show notes.
    0:55:48 This episode was produced by Zach Lipinski.
    0:55:53 The Freakonomics Radio network staff also includes Alina Kulman, Augusta Chapman, Dalvin
    0:55:58 Abouaji, Eleanor Osborne, Ellen Frankman, Elsa Hernandez, Gabriel Roth, Greg Rippen,
    0:56:03 Jasmine Klinger, Jason Gambrell, Jeremy Johnston, John Schnarrs, Lyric Bowditch, Morgan Levy,
    0:56:07 Neil Coruth, Rebecca Lee Douglas, Sarah Lilly, and Theo Jacobs.
    0:56:13 Our theme song is Mr. Fortune by the Hitchhikers, and our composer is Luis Guerra.
    0:56:14 As always, thank you for listening.
    0:56:25 I know we have approximately 75 minutes I want to use every day on one of them, so we’ll
    0:56:26 just get going.
    0:56:29 Oh my god, I’m not sure I can talk that long.
    0:56:31 Yeah, you can.
    0:56:32 You caught me.
    0:56:33 Alright.
    0:56:45 The Freakonomics Radio network, the hidden side of everything.
    0:56:48 (bright music)
    0:56:50 you

    In a wide-ranging conversation with Ezekiel Emanuel, the policymaking physician and medical gadfly, we discuss the massive effects of GLP-1 drugs like Ozempic, Wegovy, and Mounjaro. We also talk about the state of cancer care, mysteries in the gut microbiome, flaws in the U.S. healthcare system — and what a second Trump term means for healthcare policy.

     

    • SOURCES:
      • Ezekiel Emanuel, vice provost for Global Initiatives, co-director of the Health Transformation Institute, and professor at the University of Pennsylvania Perelman School of Medicine.

     

     

  • How the Supermarket Helped America Win the Cold War (Update)

    AI transcript
    0:00:08 Hey there, it’s Stephen Dubner with a bonus episode of Free Economics Radio.
    0:00:13 Our most recent regular episode was an interview with John Sullivan, former U.S. Ambassador
    0:00:14 to Russia.
    0:00:18 We didn’t really talk about the Cold War, but as a result of that conversation, I’ve
    0:00:21 been thinking a lot about the Cold War.
    0:00:26 And that got me thinking about an episode we made some years ago called How the Supermarket
    0:00:28 Helped America Win the Cold War.
    0:00:33 So I went back and listened to it, I really liked it, if I do say so myself, and I thought
    0:00:35 you might like to hear it again too.
    0:00:39 So here it is, we have updated facts and figures as necessary.
    0:00:45 As always, thanks for listening.
    0:00:49 When you think about propaganda campaigns, I am guessing you don’t think of this.
    0:01:07 After World War I and World War II came the Cold War between the U.S. and the USSR.
    0:01:13 It featured a space race, an arms race, and a farms race.
    0:01:18 Things like chicken breeding and hybrid corn took an outsize and somewhat surprising role
    0:01:21 in U.S. propaganda in the early 1950s.
    0:01:24 The farms race had an obvious winner.
    0:01:27 We clearly won the abundance war.
    0:01:33 But the American victory was, to some degree, a puric victory, whose after effects are still
    0:01:35 being felt.
    0:01:43 Economists who don’t do U.S. agricultural policy are horrified by what they see in terms
    0:01:45 of distorting markets.
    0:01:51 Today on Freakinomics Radio, how a sprawling system of agriculture technology, economic
    0:01:56 policy, and political will came to life in the supermarket.
    0:02:00 Tell me who could possibly afford to buy food in a place such as this?
    0:02:02 Well, this is just an ordinary food market.
    0:02:24 This is Freakinomics Radio, the podcast that explores the hidden side of everything with
    0:02:49 your host Stephen Dovner.
    0:02:50 That’s Shane Hamilton.
    0:02:54 He’s an American historian who teaches at the University of York in England.
    0:03:00 I’m the author of Supermarket USA, Food and Power in the Cold War Farms Race.
    0:03:04 Was the supermarket a purely American invention?
    0:03:06 I argue yes.
    0:03:12 The easy answer is that the first declared supermarket was built in the United States.
    0:03:19 I think the broader answer is that what makes a supermarket a supermarket is the industrial
    0:03:25 agriculture system that enables the affordability of mass-produced foods.
    0:03:29 The predecessor of the supermarket was the dry goods store.
    0:03:31 So they didn’t have fresh produce.
    0:03:36 They didn’t necessarily have milk or meat or a bakery in-house.
    0:03:40 That’s what a supermarket did, is it put all those food items and often many other things.
    0:03:42 You could get auto parts.
    0:03:44 You could get your shoes shined in the early supermarkets.
    0:03:49 It was a kind of one-stop shopping and service emporium.
    0:03:52 Another big difference, supermarkets were self-serve.
    0:03:57 In a dry goods shop, you’d ask a clerk for something and they’d fetch it in a supermarket.
    0:04:03 You could ogle the meat and produce yourself, even handle it, and then put it in your basket.
    0:04:08 The supermarket chain Pigley Wiggly is credited with having pioneered the self-service retail
    0:04:09 model.
    0:04:13 It is still operating today in 18 states.
    0:04:17 The biggest supermarket chain for much of the 20th century was A&P, the great Atlantic
    0:04:19 and Pacific Tea Company.
    0:04:27 A&P, as of the 1940s, was the world’s largest retailer by any measure, by sales volume,
    0:04:29 by number of outlets and so forth.
    0:04:36 Between 1946 and 1954 in the U.S., the share of food bought in supermarkets rose from 28
    0:04:39 percent to 48 percent.
    0:04:43 By 1963, that number risen to nearly 70 percent.
    0:04:49 A&P had so much market power that the Department of Justice went after it for anti-competitive
    0:04:51 practices.
    0:04:56 This was an interesting development, considering that the U.S. government played such a significant
    0:04:59 role in the creation of supermarkets in the first place.
    0:05:06 The original goal had been to use the supermarkets to drive down the cost of food for urban consumers.
    0:05:12 The U.S. becomes a majority urban nation by, I think, 1920.
    0:05:17 And there’s a lot of anxiety among leaders, political leaders, thought leaders about whether
    0:05:24 or not U.S. agriculture is going to be productive enough to feed this growing urban population.
    0:05:28 That is Ann Effland, a former senior economist at the USDA.
    0:05:34 The U.S. Department of Agriculture, established in 1862, had a long history of funding and
    0:05:36 conducting scientific research.
    0:05:42 You know, a lot of the seed development and livestock breeding, one good example would
    0:05:49 be the research done in the 1890s on animal disease, on bovine tuberculosis, for example,
    0:05:55 to identify the causes of those diseases and then to develop ways to treat that.
    0:06:00 There was also research on developing new kinds of machinery that would be less heavy
    0:06:04 on the ground or less damaging to crops.
    0:06:08 The USDA’s promotion of agriculture went even further than farm machinery and animal
    0:06:09 breeding.
    0:06:14 There was a need for better transportation from the farms to the cities.
    0:06:21 So USDA had a unit that did engineering research on the best road materials and road construction
    0:06:22 methods.
    0:06:27 The Rural Electrification Administration was part of the New Deal USDA.
    0:06:33 The private electrical companies didn’t see a profit in expanding out into rural areas
    0:06:36 and so that was taken on by USDA.
    0:06:42 But perhaps the biggest changes to American agriculture were mechanization and automation.
    0:06:49 If I may say so, I lived through the structural transformation of the agricultural economy.
    0:06:52 That’s Peter Timmer, an economist who used to teach at Harvard.
    0:07:00 I’m a retired professor, have worked on agriculture and food policy, poverty reduction, economic
    0:07:04 development for well over 50 years now.
    0:07:08 And before that, Timmer was a farm boy in Ohio.
    0:07:13 He worked for the Tip Top Canning Factory, which was founded by his great-grandfather,
    0:07:14 and the Factory’s Tomato Farm.
    0:07:21 I’m old enough to remember when we handpicked all of our tomatoes and we hand peeled all of
    0:07:22 our tomatoes.
    0:07:24 But that, of course, changed.
    0:07:31 When I was in grade school or junior high school, if we could pack 40 or 50,000 cases
    0:07:37 of canned tomatoes and product in a year, that was a pretty successful year.
    0:07:43 By the time I had graduated from graduate school, the company was putting out a million
    0:07:45 cases a year.
    0:07:50 This was thanks in large part to a mechanical tomato harvester, which came out of the engineering
    0:07:56 school at the University of California, Davis, with the help of federal research money.
    0:08:00 It had taken years to get the harvester right, mostly because they first had to get the tomato
    0:08:06 right, breeding a new variety that could withstand the rough treatment of the mechanical harvester.
    0:08:12 I remember when we bought our first one, it was a huge expense, and it just revolutionized
    0:08:13 our operation.
    0:08:20 I was just in a microcosm of what turned out to be very general trends in the entire US
    0:08:26 food system at the time.
    0:08:33 The general trends could best be characterized as high volume and standardized agriculture.
    0:08:38 If you would describe US agriculture policy as aggressive in earlier decades, then in
    0:08:42 the Cold War era, it was pretty much on steroids.
    0:08:47 This wasn’t just about feeding a growing US population.
    0:08:52 This had a political thrust, meant to show the Soviet Union and the rest of the world
    0:08:55 just how mighty the US was.
    0:08:56 Shane Hamilton again.
    0:09:02 I don’t mean to deny the power and the might of these weapons systems that were deployed
    0:09:08 in the space race and all that, but fundamentally, this was a contest to demonstrate that either
    0:09:13 communism or capitalism was a superior political economic system.
    0:09:17 After Sputnik, when the United States was trying to understand why it was falling behind
    0:09:21 in the space race, or why it thought it was falling behind in the space race, many of
    0:09:27 the commentators said, “The problem is we’re not funding basic research.”
    0:09:32 After 1957, the budgets of not only organizations like the National Science Foundation, but
    0:09:37 also specific government departments like the Department of Agriculture, their budgets
    0:09:41 for research increased dramatically on the theory that this is how the United States
    0:09:45 would win the Cold War by doing the best science.
    0:09:46 That is Audra Wolf.
    0:09:49 I’m a writer, editor, and historian.
    0:09:55 Wolf’s latest book is called Freedom’s Laboratory, The Cold War’s Struggle for the Soul of Science.
    0:10:01 And it really looks at the ways that science as an idea became a tool for propaganda in
    0:10:04 the Cold War, especially on the American side.
    0:10:08 There’s this idea that you can change hearts and minds, and you can establish a climate
    0:10:13 of opinion that makes people more willing to accept the American way of life as the
    0:10:14 better choice.
    0:10:19 And one of the things that made America so great, it’s agricultural system.
    0:10:25 Things like chicken breeding and hybrid corn took a outsize and somewhat surprising role
    0:10:28 in U.S. propaganda in the early 1950s.
    0:10:29 But there was a tension.
    0:10:35 The United States wanted to promote personal exchanges, scientific and technical exchanges
    0:10:37 as a way to promote American values.
    0:10:41 But at the same time, it was very, very nervous that by doing so, it would lose the advantages
    0:10:44 that it had, particularly in grain production.
    0:10:48 In 1955, the U.S. government unexpectedly had its hand forced.
    0:10:54 A newspaper editor in Iowa named Lauren Soth invited Khrushchev to the United States to
    0:10:56 see the wonders of American agriculture.
    0:11:00 That’s Nikita Khrushchev, then leader of the Soviet Union.
    0:11:03 And somewhat to everyone’s shock, Khrushchev said yes.
    0:11:07 Now, Khrushchev didn’t come himself until 1959.
    0:11:13 But in 1955, a group of 12 Soviet agricultural experts came to the United States to see the
    0:11:15 wonders of American agriculture.
    0:11:17 They saw how contour farming worked.
    0:11:19 They saw the wonders of hybrid corn.
    0:11:20 They saw the chicken breeders.
    0:11:26 And what were those chicken breeders working on?
    0:11:27 The chicken of tomorrow.
    0:11:28 That’s coming up.
    0:11:29 I’m Stephen Dubner.
    0:11:31 This is Freakonomics Radio.
    0:11:44 We’ll be right back.
    0:11:48 Chicken in the 1920s was pound for pound as expensive as lobster.
    0:11:54 By the 1960s, it was so cheap that it was quickly becoming America’s most popular meat.
    0:12:00 That again is Shane Hamilton, a historian and the author of Supermarket USA, Food and
    0:12:03 Power in the Cold War Farms Race.
    0:12:07 In the book, he tells the story of a project called the chicken of tomorrow.
    0:12:13 Really, the chicken of tomorrow is the chicken of today in that we’re all eating the kind
    0:12:17 of genetic progeny of the original chicken of tomorrow.
    0:12:23 What it was was a contest to produce the most efficient chicken using genetic techniques,
    0:12:24 basically.
    0:12:30 And it not only had to be an efficient chicken, but very heavy breasts, very light colored
    0:12:34 feathers so that when it’s plucked, it would look good under cellophane and then later
    0:12:36 plastic packaging.
    0:12:42 And the birds had to be relatively disease resistant so that they could be put in intensive
    0:12:47 rearing operations without dying too quickly.
    0:12:54 This agricultural bounty, those heavy breasted cheap chickens, those millions of cases of
    0:12:59 tomatoes, all this was a good candidate for the U.S. propaganda machine.
    0:13:01 The U.S. Information Agency.
    0:13:08 We’re searching for concrete forms of propaganda to display America’s wealth.
    0:13:13 After one of the most concrete forms of display imaginable, the supermarket.
    0:13:19 The supermarket is not just a retail box, but actually the endpoint of an industrial agriculture
    0:13:21 supply chain.
    0:13:26 A supermarket can’t exist without the inputs of mass produced foods.
    0:13:31 The Farms Race was about how do you get the food from industrially productive, technologically
    0:13:38 sophisticated farms to, you know, this display of abundance and the display was really crucial.
    0:13:43 Since the average citizen living under communism wouldn’t have access to a piggly wiggly or
    0:13:48 an A&P, the U.S. government brought the supermarket to the communists.
    0:13:54 The 1957 supermarket USA exhibit in Zagreb, Yugoslavia, which was then a communist country.
    0:13:59 It was a fully operational 10,000 square foot American supermarket filled with frozen
    0:14:02 foods and breakfast cereals and everything else.
    0:14:06 They airlifted in fresh produce from the U.S. because they didn’t think Yugoslavian produce
    0:14:08 was attractive enough.
    0:14:13 It was about this display of affordable abundance available to American consumers.
    0:14:18 For anyone who didn’t get the message, there was also a sign touting, quote, “The knowledge
    0:14:21 of science and technology available to this age.”
    0:14:26 In other words, if you like our breakfast cereal, just think how much you like the rest
    0:14:27 of our capitalism.
    0:14:31 There were quite a few people who thought that if you showed that American consumers
    0:14:38 could access affordable food, you know, strawberries in December without having to wait in line,
    0:14:41 that that might actually cause the whole communist system to collapse.
    0:14:45 The supermarket USA exhibit proved tremendously popular.
    0:14:48 More than one million Yugoslavs visited.
    0:14:51 Some received free bags of American food.
    0:14:55 Immediately after seeing it, Marshall Tito, the leader of the country at the time, ordered
    0:14:57 the whole thing to be purchased.
    0:15:01 And it was bought wholesale from the United States exhibitors and used as a model.
    0:15:06 They hired a consultant from an Atlanta supermarket firm to come over and teach them how to build
    0:15:10 their own chain of socialist supermarkets.
    0:15:15 So Yugoslavia, along with other European countries, started building American style supermarkets,
    0:15:20 which created new buyers for processed and frozen foods from America.
    0:15:26 This did not, however, lead to a wider embrace of American culture, much less the downfall
    0:15:28 of communism.
    0:15:32 But just a couple years later, the Americans took another shot this time in Moscow at the
    0:15:35 American National Exhibition.
    0:15:41 They built a split level ranch style American house, its kitchen stocked with food and the
    0:15:44 latest labor saving appliances.
    0:15:45 The message was clear.
    0:15:51 The American economy, based in free market capitalism, was capable of producing things
    0:15:56 that the Soviets command and control economy simply couldn’t.
    0:16:02 The exhibition opening was attended by Nikita Khrushchev and then U.S. Vice President Richard
    0:16:03 Nixon.
    0:16:06 They engaged in what came to be known as the kitchen debate.
    0:16:08 You must not be afraid of ideas.
    0:16:27 Richard Nixon and Nikita Khrushchev are two of the most explicit users of this Cold War
    0:16:29 Farms Race language.
    0:16:34 Khrushchev declared that by outproducing the U.S. in per capita meat and milk production
    0:16:40 that would be the Soviet equivalent of hitting American capitalism with a torpedo.
    0:16:43 Nixon retorted that if there was going to be a torpedo fired, it was going to be by America’s
    0:16:48 farmers and ranchers to which the farmers and ranchers listening to his speech applauded
    0:16:49 very mightily.
    0:16:54 A few months afterward, Khrushchev finally visited the U.S. and he got to see for himself
    0:16:57 the sprawling cornfields of Iowa.
    0:17:01 But this was of little help to the Soviet farmers back home.
    0:17:10 The fact is they were unable to modernize Soviet agriculture with the economic structure
    0:17:12 and strategy that they were following.
    0:17:15 The economist Peter Timmer again.
    0:17:18 It was not a technological problem.
    0:17:21 It was a management and marketing problem.
    0:17:27 There was a total divorce between what consumers wanted and what the managers of the big state
    0:17:29 farms were told to produce.
    0:17:34 Before it was part of a World Bank team that visited the Soviet Union, he saw for himself
    0:17:37 their agricultural system and supermarkets.
    0:17:38 Oh gosh.
    0:17:40 I mean, the shelves were empty.
    0:17:42 It was just weird.
    0:17:48 We stayed at a government hotel and there was hardly anything to eat to talk with the
    0:17:54 staff of the research agencies in places like that who would struggle just to come up with
    0:17:56 basic foods.
    0:17:58 They knew it could be better than that.
    0:18:05 Khrushchev, despite his bravado, was ultimately forced to buy imported grain from the US.
    0:18:09 Some historians would argue that this was one of the crucial factors that led to his downfall,
    0:18:14 that it was just embarrassing on the world stage for the Soviet Union, this vast country
    0:18:20 with enormous agricultural resources having to turn to its arch enemy for grain.
    0:18:25 Khrushchev’s successor, Leonid Brezhnev, continued the policy of importing food from
    0:18:28 the US to cover domestic shortfalls.
    0:18:32 If the two countries had been normal trading partners, this wouldn’t have been a big deal,
    0:18:35 but they weren’t normal trading partners.
    0:18:41 They were Cold War adversaries, the global icons of capitalism and communism.
    0:18:45 And it was becoming clear which system would prevail, at least on the food front.
    0:18:48 Peter Timmer’s final analysis.
    0:18:54 It was a fundamentally failed strategy for agriculture that brought down the Soviet Union.
    0:18:56 They didn’t grow enough and they didn’t grow the right things.
    0:19:01 And there were no price signals telling you what’s expensive and what’s cheap.
    0:19:08 They wasted a lot of what they were producing on the land and never got into the supermarkets.
    0:19:12 Timmer was actually in Moscow when the Soviet Union collapsed.
    0:19:18 The neat thing is I have a passport going in stamped Soviet Union, but my passport coming
    0:19:21 out, the exit stamp, is Russia.
    0:19:27 People were so optimistic about what was going to happen.
    0:19:32 They knew that American supermarkets were a miracle.
    0:19:36 They had seen it on television.
    0:19:42 That point had clearly gotten through at least to everybody that I talked to.
    0:19:47 And so it seems as though the mighty supermarket may indeed have played a role in America’s
    0:19:48 Cold War victory.
    0:19:49 Yeah.
    0:19:55 I mean, this is, it’s central to the kind of lie really of the supermarket as a weapon.
    0:19:57 The historian Shane Hamilton again.
    0:20:03 So when the supermarket is upheld as this, you know, effectively missile this concrete
    0:20:10 consumer weapon against the claims of communism, it’s built on this idea that supermarkets
    0:20:14 are producing this affordability just through the workings of supply and demand.
    0:20:19 But you know, it’s unfettered markets that are somehow making food so affordable for
    0:20:26 American consumers where the reality is for everything from milk to beef to grain to processed
    0:20:33 foods of all kinds, there’s massive government investment in the science and technology that
    0:20:39 enables the productivity of American farms from fertilizers to frozen food processes
    0:20:42 to distribution and so forth.
    0:20:44 And that’s all erased.
    0:20:48 The image is that it’s just the supermarket itself that is the source of abundance.
    0:20:52 So when you describe it like that, it’s certainly, I mean, you use the word lie and you talk
    0:20:56 about the hidden components and you make it certainly sound nefarious.
    0:21:01 But couldn’t you argue that, you know, the role of a government is to invest in science
    0:21:06 and technology that’ll benefit private industry and ultimately the citizenry?
    0:21:07 Yeah.
    0:21:10 I actually don’t have a problem with the U.S. government investment in science and
    0:21:14 technology and encouraging, you know, more productivity.
    0:21:20 The concern is with, you know, that being disguised as a free market when it’s not
    0:21:21 particularly free.
    0:21:25 I mean, taking that to a propaganda level and attacking another country for not having
    0:21:31 free markets, it’s just duplicitous, right?
    0:21:36 You may or may not be as disturbed as Shane Hamilton is by what he calls the duplicity
    0:21:41 of the U.S. government for promoting the supermarket as an emblem of free market capitalism.
    0:21:48 To me, the big question is this, what was the ultimate cost of this supermarket victory?
    0:21:53 What are the economic and political and health consequences of more than a hundred years
    0:22:00 of agriculture policy that encouraged industrialization, standardization and low prices?
    0:22:14 It’s coming up right after this.
    0:22:19 So the U.S. won the so-called farms race with an industrial approach to agriculture
    0:22:23 that was heavily influenced by government policy and funding.
    0:22:27 What were the long-term results of that victory?
    0:22:31 We need to go back about a hundred years to figure that out.
    0:22:35 That is on the advice of Ann Effland, the former USDA economist we’ve been hearing
    0:22:36 from.
    0:22:42 Effland thinks there’s one key event that really drove U.S. food policy.
    0:22:46 That is, production increases around World War I.
    0:22:49 Farmers expanded their production to meet wartime goals.
    0:22:53 And there were some price supports during that time that provided incentives for increased,
    0:22:57 especially wheat and pork and some of these other staple commodities.
    0:23:03 But there was no real planning for the aftermath after the increased demand and the price supports
    0:23:06 that are set up for war go away.
    0:23:11 And it left a number of farmers who had, in good faith, developed larger farms and more
    0:23:14 productive farms with very low prices.
    0:23:18 So after the war, farmers were producing more food than was necessary.
    0:23:22 Then came the Great Depression, the economist Peter Timmer.
    0:23:29 I mean, demand collapsed, but agricultural productivity did not.
    0:23:32 And what that meant was prices just collapsed.
    0:23:42 And so that so totally set the mind frame for U.S. agricultural policy.
    0:23:47 That’s when we see the beginning of real price policies for agriculture.
    0:23:52 Price policies for agriculture would take many forms over the ensuing decades, from
    0:23:55 crop insurance to loans and direct payments and many more.
    0:23:59 Now, you can understand why the government would want to make agriculture financially
    0:24:02 viable and remove some of the uncertainty.
    0:24:06 A national food supply is a pretty important thing.
    0:24:11 One key policy tool the government used was a price support system, guaranteeing farmers
    0:24:16 a certain minimum price for a specific crop at a specific time.
    0:24:20 There was an idea of something called parity, which was that the price should be such that
    0:24:25 it would give farmers the same purchasing power in comparison to workers and others
    0:24:29 in the economy that they had had before World War One.
    0:24:33 And that was the guideline for what those price support levels ought to be.
    0:24:38 But if you increase the price being paid without limiting the amount being produced,
    0:24:40 well…
    0:24:45 One of the problems with this is that it leads to a large surplus.
    0:24:50 This would leave the federal government to buy and store excess produce.
    0:24:55 In the early 1930s, when the U.S. government guaranteed farmers 80 cents per bushel of
    0:25:01 wheat, the government wound up buying and storing more than 250 million bushels.
    0:25:05 These things all take place in the context of their own times.
    0:25:10 Having policies that found a way to increase farm incomes in the 1930s, I think would be
    0:25:16 seen as a good thing, but there are also consequences of that over time as they get embedded.
    0:25:22 If you ever wonder why the USDA’s old food pyramid, the diagram of recommended servings
    0:25:28 of different foods, why the biggest category at the bottom of the pyramid was bread, cereal,
    0:25:34 rice, and pasta, well, the U.S. had an awful lot of all those foods.
    0:25:41 And if you, as the USDA instructed, there’s a good chance you put on a few pounds.
    0:25:45 You can’t think about nutrition without thinking about agriculture policy.
    0:25:50 And U.S. agriculture came to be driven by financial incentives.
    0:25:56 Incentives that, given how government funding often works, weren’t always entirely sensible.
    0:26:06 You know, economists who don’t do U.S. agricultural policy are usually horrified by what they
    0:26:15 see in terms of distorting markets, picking, okay, corn, soybeans, wheat, you guys get
    0:26:23 big subsidies, apples, grapes, fresh fruits and vegetables, you’re on your own.
    0:26:29 We incredibly regulated both federally and at the state level just a mess, just an awful
    0:26:30 mess.
    0:26:36 With price guarantees for certain crops and the resultant glut of supply, the government
    0:26:41 sometimes paid farmers to plant fewer crops, but even this wasn’t fully successful.
    0:26:46 So we have controls on how much can you plant on an acre, but not on how much your yield
    0:26:49 is on the acres you are planting.
    0:26:50 There’s a huge boom.
    0:26:55 Lots of new chemicals, fertilizers, machinery that make farms more productive.
    0:27:00 So even though we’re trying to control by reducing the acreage, there continues to be
    0:27:04 increasing production and surpluses don’t go down.
    0:27:11 But Anne Eflin says this was a problem the USDA wasn’t all that unhappy about.
    0:27:16 Problem solving on the scientific and technical and engineering side tends to run on its own
    0:27:19 track and be seen as a positive outcome.
    0:27:25 I don’t think there’s ever a point at which the policy side is saying, “Oh, stop providing
    0:27:30 good science and better agricultural practices so we don’t have these surpluses,” because
    0:27:35 when you do that, what you’re saying is then stop this economic development.
    0:27:43 Solving problems and making farming more efficient are still seen as good projects to continue.
    0:27:49 The fact that they also create these surpluses is sort of a different track of problems that
    0:27:53 the farm policy then is trying to figure out solutions to.
    0:27:59 One solution was to use surplus grain for animal feed.
    0:28:00 Shane Hamilton again.
    0:28:06 This massive surpluses of cheap corn and later soybeans encourages the rise of industrial
    0:28:14 meat production, concentrated animal production, livestock feeding operations that’s enabled
    0:28:16 by cheap grain production.
    0:28:21 Industrial meat production fueled by cheap grain meant cheap meat too, and helps explain
    0:28:26 how the U.S. became one of the world’s biggest consumers of meat per capita.
    0:28:34 Today, more than 30% of corn, more than 50% of soybeans grown in the U.S. goes toward
    0:28:36 feeding cattle and other livestock.
    0:28:39 But even that left a lot of surplus production.
    0:28:41 So, what happened?
    0:28:49 High fructose corn syrup, yep, you’ve got surplus corn and you’ve got a demand for easy
    0:28:55 convenient sweetener in the food sector, and that was just a perfect storm.
    0:29:01 That syrup revolutionizes food processing because instead of a powdery sweet thing,
    0:29:06 it’s a liquid, and liquids are way easier to handle in food processing.
    0:29:12 If I had only one thing to say about the impact of our agricultural programs on what you see
    0:29:18 in the supermarket and subsequent health issues out of the diet, I would have said the fact
    0:29:24 that we use so much high fructose corn syrup, that’s the example of how things can go badly
    0:29:26 wrong even if well intended.
    0:29:33 I mean, don’t get me started on ethanol, because that’s the next step in reducing
    0:29:39 the surplus, but I don’t want to go there.
    0:29:45 The rise in agricultural productivity tended to favor larger, more industrial farms.
    0:29:50 It didn’t hurt that they often received the government price supports designed for smaller
    0:29:51 family farms.
    0:29:56 As you can imagine, this began to put a lot of small farms out of business.
    0:30:04 We didn’t manage that process very well, but I think just basic economic forces would
    0:30:06 have pushed us in that direction.
    0:30:08 It just wouldn’t have pushed us as far.
    0:30:13 Peter Timmer, you will recall, grew up working on the tomato farm and cannery founded by
    0:30:15 his great-grandfather.
    0:30:19 You’ll also recall when the Tip Top Canning Company got their first mechanical tomato
    0:30:21 harvester.
    0:30:24 It just revolutionized our operation.
    0:30:29 When the mechanical harvester was introduced, there were around 5,000 tomato growers in
    0:30:30 the US.
    0:30:35 Within five years, 4,400 had gone out of business.
    0:30:40 The Timmer family farm and canning factory made the cut, and they lasted for decades.
    0:30:49 But between 1940 and 1969, 3.4 million American farmers and their families stopped farming.
    0:30:56 Right a few historians suggest that this all-out push to productivity killed the family farm,
    0:30:57 effectively.
    0:30:59 Shane Hamilton again.
    0:31:01 It’s hard to deny that.
    0:31:07 On the other hand, we don’t apply the same kind of metrics to industrial manufacturing,
    0:31:11 where similarly there’s been massive US government investment in science and technology to support
    0:31:14 economic growth and productivity.
    0:31:19 I’m sympathetic to those who see it as overall in that positive gain.
    0:31:23 However, the pain is real.
    0:31:28 Peter Timmer says this massive consolidation on the production side was driven by what
    0:31:34 was happening on the consumption side, the growth of supermarket chains.
    0:31:39 Supermarkets were able to manage the supply chains all the way back to farmers, but they
    0:31:41 didn’t want little tiny farmers.
    0:31:43 Just one supplier please.
    0:31:47 It’s just way too complicated to contract with 50 or 100.
    0:31:54 That has changed then the nature of production, right down at the level of Tip Top Canning
    0:32:02 Company and how we would be able to provide the kind of regular quality and supply and
    0:32:07 low price that a Walmart or a Kroger or a Publix would need.
    0:32:12 I mean, Walmart really came in and looked at the landscape of American supermarkets and
    0:32:15 saw inefficiencies everywhere.
    0:32:21 What Walmart did was build on its successful model of general merchandise sales with hyper-efficient
    0:32:26 logistics and distribution, brought that into the supermarket industry and really shook
    0:32:27 things up.
    0:32:34 I used to ask my class, I’m talking 1985, where is the world’s largest supercomputer?
    0:32:37 And the correct answer was, it’s at the Pentagon.
    0:32:42 Okay, where is the world’s second largest supercomputer?
    0:32:51 Bentonville, Arkansas, home of Walmart, they used that computer to track every single item
    0:32:55 on every single Walmart shelf.
    0:33:04 That information technology is what revolutionized food marketing and it was pretty much invented
    0:33:06 by Walmart.
    0:33:12 This technology would spread across the world, affecting not just the demand side, supermarkets,
    0:33:14 but the agriculture supply side.
    0:33:21 So the U.S. experience is formative and it’s formative for two reasons.
    0:33:31 One, U.S. universities train so many ag economists, food scientists, food policy people to go back
    0:33:37 to other countries that the U.S. model is pretty well ingrained intellectually.
    0:33:47 But the other thing, of course, is the biological and mechanical technologies mostly came out
    0:33:49 of the United States.
    0:33:53 Another consequence of the scaling up of American agriculture?
    0:33:55 More standardization and less variety.
    0:34:01 So apples, in the early 20th century, consumers in say New York state would have access to
    0:34:05 literally hundreds of varieties.
    0:34:10 Even in mass retail markets, by the mid 20th century, it’s down to just a handful and red
    0:34:13 delicious really dominates the whole market.
    0:34:18 And apples became remarkably tasteless by the mid 20th century.
    0:34:24 So certain qualities were given up in order to gain that advantage of price and abundance.
    0:34:31 We clearly won the food wars in terms of supply and abundance.
    0:34:34 We won the abundance war.
    0:34:44 What we may be in the process of losing is the health and quality dimensions going forward.
    0:34:50 I think today we’re certainly witnessing, perhaps especially among millennials, an attempt
    0:34:54 to kind of reconfigure values.
    0:34:58 What are you actually looking for when you go to a supermarket?
    0:34:59 It’s not just price.
    0:35:06 Price does not contain all relevant information for many shoppers in a contemporary supermarket.
    0:35:12 So the costs of pollution, of degraded animal welfare that are currently not being borne
    0:35:17 by either producers or consumers of food would have to be borne.
    0:35:25 If we had worried much, much more about the quality of farmland, of sustainability, about
    0:35:31 environmental side effects from heavy fertilization on corn, we got a dead zone in the Gulf of
    0:35:37 Mexico that is directly attributable to putting fertilizer on corn up in the Midwest.
    0:35:42 I accused my brothers of poisoning the Gulf of Mexico, and they said, “Well, what are
    0:35:43 we going to do?
    0:35:45 We have to get high yields.”
    0:35:52 There was this sense of everybody being trapped in an old paradigm, and now how do we break
    0:35:53 out of that?
    0:35:57 I hate to say it, but the current government seems to be trying to take us back to the
    0:36:03 old paradigm rather than a more sustainable, environmentally friendly, let’s make agriculture
    0:36:05 do more on organic and natural processes.
    0:36:10 That doesn’t seem to be the political driver right now, but it has to come back.
    0:36:20 We have to make agriculture green, which is a strange thing to say.
    0:36:25 Peter Timmer has seen a lot of change in the farming business over his lifetime, and who
    0:36:29 knows, maybe he’ll see the change he’s hoping for now.
    0:36:34 But it’s going to be hard to break the status quo, at least in terms of how financial incentives
    0:36:36 drive food production.
    0:36:40 For instance, when the first Trump administration placed billions of dollars of tariffs on
    0:36:46 Chinese imports starting in 2018, China responded with their own tariffs on imported American
    0:36:50 crops like soybeans, alfalfa, and hay.
    0:36:56 American crop exports to China fell dramatically, as did, of course, farmers’ revenues.
    0:37:02 In response, the U.S. government announced a $16 billion welfare package to U.S. farmers.
    0:37:07 That was followed by more farm aid tied to the COVID-19 pandemic.
    0:37:13 Together, the Trump and Biden administrations have authorized over $157 billion in direct
    0:37:16 government payments to farmers and ranchers.
    0:37:21 And now Trump is promising more tariffs in his second term, which means the cycle may
    0:37:29 start again.
    0:37:30 And that’s it for this bonus episode.
    0:37:34 From our archive, we will be back shortly with a new episode.
    0:37:36 Until then, take care of yourself.
    0:37:40 And if you can, someone else too.
    0:37:42 Freakonomics Radio is produced by Stitcher and Renbud Radio.
    0:37:46 You can find our entire archive on any podcast app.
    0:37:51 It’s also at Freakonomics.com, where we publish transcripts and show notes.
    0:37:55 This episode was produced by Matt Hickey and updated by Theo Jacobs.
    0:38:00 Freakonomics Radio network staff also includes Dalvin Aboulagi, Alina Cullman, Augusta Chapman,
    0:38:05 Eleanor Osborne, Ellen Frankman, Elsa Hernandez, Gabriel Roth, Greg Rippon, Jasmine Klinger,
    0:38:10 Jason Gambrel, Jeremy Johnston, John Snars, Muirak Bowditch, Morgan Levy, Neil Carruth,
    0:38:14 Rebecca Lee Douglas, Sarah Lilly, and Zach Lipinski.
    0:38:20 Our theme song is “Mr. Fortune” by the Hitchhikers, and our composer is Luis Guerra.
    0:38:23 As always, thank you for listening.
    0:38:28 When I was a Fulbright scholar and had to explain myself to the cohort when we got to
    0:38:32 London, I said, “Well, my background is tomatoes,” and everybody just laughed.
    0:38:48 I hadn’t realized that it was not such a normal background.
    0:38:49 Stitcher.
    0:38:52 (upbeat music)
    0:39:02 [BLANK_AUDIO]

    Last week, we heard a former U.S. ambassador describe Russia’s escalating conflict with the U.S. Today, we revisit a 2019 episode about an overlooked front in the Cold War — a “farms race” that, decades later, still influences what Americans eat.

     

    • SOURCES:
      • Anne Effland, former Senior Economist for the Office of Chief Economist in the U.S.D.A.
      • Shane Hamilton, historian at the University of York.
      • Peter Timmer, economist and former professor at Harvard University.
      • Audra Wolfe, writer, editor, and historian.

     

     

  • 614. Is the U.S. Sleeping on Threats from Russia and China?

    AI transcript
    0:00:08 Hey there, it’s Stephen Dubner. Before we get to our episode, I’d like to invite you
    0:00:14 to come see Freakonomics Radio Live. I will be in San Francisco on January 3rd and in
    0:00:20 Los Angeles on February 13th. For tickets, go to Freakonomics.com/LiveShows. They are
    0:00:29 selling riskily, I believe is the word, so hustle up. Again, that is Freakonomics.com/LiveShows.
    0:00:34 One more thing, the episode you’re about to hear is what audio people call a two-way,
    0:00:40 what normal people call a one-on-one conversation. Most Freakonomics Radio episodes aren’t like
    0:00:46 this. We typically feature multiple voices, multiple angles, sometimes even multiple stories,
    0:00:52 but there is a real opportunity to be had by going deep with one person. So, for the month
    0:00:56 of December, we are featuring some one-on-one conversations. You will be hearing about the
    0:01:01 revolution in the GLP-1 weight-loss drugs. You’ll hear from one of the best magazine
    0:01:08 editors of this generation. And in a special episode of the podcast “People I Mostly Admire,”
    0:01:12 you’ll hear a mind-blowing conversation between Steve Levitt and an astonishingly creative
    0:01:19 neuroscientist. In today’s episode, a conversation with a political figure who, several times
    0:01:25 over his career, has been in the room where it happened with Donald Trump, with Joe Biden,
    0:01:31 and with Vladimir Putin. And one last reminder about our upcoming live shows with very special
    0:01:42 guests. San Francisco, January 3rd, Los Angeles, February 13th. You can get tickets at Freakonomics.com/LiveShows.
    0:01:50 As always, thanks for listening.
    0:01:55 We begin this story on June 16th of 2021.
    0:02:01 This is a one-on-one meeting in Geneva, nothing else going on. Both presidents fly in just
    0:02:02 for this meeting.
    0:02:06 The two presidents are Joe Biden and Vladimir Putin.
    0:02:13 So let me set the scene for you. For Biden, he has, I think, five days of meetings before
    0:02:20 this in London and Brussels, G7, NATO leaders, etc. Biden looks great, he flies in. Putin
    0:02:30 flies in. He’s coming from Moscow. He lands. He looks great, physically. Was relaxed. Cracking
    0:02:34 jokes. Some of them at our expense.
    0:02:38 The one-on-one meeting isn’t truly a one-on-one. It’s what State Department folks call a one-plus
    0:02:46 one. It’s Biden, with Secretary Blinken sitting next to him, but not speaking. Putin and his
    0:02:50 foreign minister, Lavrov, sitting next to him.
    0:02:52 The timing was significant.
    0:02:58 It’s been a rocky spring between the United States and Russia. We expel some Russian diplomats.
    0:03:05 They expel some of my colleagues from embassy Moscow. Biden calls Putin a killer. Navalny
    0:03:06 is imprisoned.
    0:03:10 The one-plus one would be followed by a second meeting.
    0:03:15 They have what’s called an expanded bilat, an expanded bilateral meeting. Those of us
    0:03:20 who were going into the expanded bilat, there was a break. Secretary Blinken told us what
    0:03:24 the two leaders had talked about in the one-on-one meeting.
    0:03:26 What did they talk about?
    0:03:31 Biden gave a reassurance to Putin, look, I’m not looking for regime change in Russia. We’re
    0:03:37 looking for the phrase that was used at the time was guardrails for our relationship with
    0:03:38 Russia.
    0:03:42 And what did Biden and Putin talk about in that second meeting?
    0:03:49 The headline is, what did they not talk about? Ukraine. I look back now and I say, the way
    0:03:57 Putin conducted himself, he had decided he was going to invade Ukraine. He was going
    0:03:59 to take what he thought was his.
    0:04:06 As we all know, Putin did invade Ukraine several months after that sit-down. Today, on Freakinomics
    0:04:11 Radio, a conversation with John J. Sullivan, a lifelong Republican who has served under
    0:04:16 five U.S. presidents, including Donald Trump and Joe Biden, Sullivan happened to be on
    0:04:23 duty in Moscow as U.S. ambassador during the 2022 invasion of Ukraine. He’s just published
    0:04:29 a book called Midnight in Moscow, a memoir from the front lines of Russia’s war against
    0:04:37 the West. It reads a bit like a thriller, spies and subterfuge threats and bluffs enormously
    0:04:44 high stakes. The bulk of the book explains from inside the house the Russian Federation’s
    0:04:49 decision to escalate its war in Ukraine. It is a train wreck that you can’t look away
    0:04:56 from. And it left John Sullivan thinking that U.S. foreign policy these days is a bit of
    0:04:57 a mess.
    0:05:01 Our politicians aren’t leading Republicans or Democrats.
    0:05:09 He sees frequent miscalculations. If you think cutting off Ukraine is going to assist your
    0:05:16 pressure campaign on Iran, you’re crazy. And he sees multiple flashpoints. These are
    0:05:24 countries governed by leaders and governments that are immensely hostile to the United States.
    0:05:31 In the book, Sullivan isn’t quite an alarmist, but in conversation, different story.
    0:05:37 There may not be a Pearl Harbor-like incident, but my fear is that it’s going to come and
    0:05:39 we’re not prepared.
    0:05:43 I learned a great deal from this conversation with John Sullivan, and I suspect you will
    0:05:56 too. Let’s get it started.
    0:06:02 This is Freakonomics Radio, the podcast that explores the hidden side of everything with
    0:06:12 your host, Stephen Dubner.
    0:06:16 John Sullivan now splits his time between Washington, D.C. and Connecticut. He grew
    0:06:22 up in Boston, attended Brown University, and then Columbia Law School, and launched a
    0:06:29 perfectly respectable, but if we’re being honest, slightly dull career as a corporate
    0:06:35 lawyer. There were already a lot of lawyers in his family, even a family law firm in Providence.
    0:06:41 But there was also an uncle, Bill. He was a combat naval officer during World War II,
    0:06:44 and afterward he joined the Foreign Service.
    0:06:49 He was a three-time ambassador. He served in Saigon during the early part of the Vietnam
    0:06:55 War, ambassador of the Philippines, and then the last U.S. ambassador to Iran.
    0:06:58 This had made an impression on his nephew.
    0:07:05 He’s a young kid. I remember just being hooked on this conception of public service. Don’t
    0:07:11 get me wrong. It’s not an easy life. It’s hard on family life, but boy, the rewards
    0:07:17 are fantastic. Serving the United States abroad and standing for the United States
    0:07:23 and all that we aspire to stand for and seeing the American flag flying over a mission in
    0:07:26 a country like Russia, it’s really gratifying.
    0:07:30 Sullivan has spent the past several decades toggling between corporate law and government
    0:07:35 service. He worked in the Justice Department under the First President Bush, and in commerce
    0:07:41 and defense under the Second Bush. In 2016, he was back in private practice when Trump
    0:07:47 was elected. I was as surprised as many were, he writes in his book. I was not an active
    0:07:51 Trump supporter, but I did still believe in Ronald Reagan’s famous 11th commandment,
    0:07:56 “Thou shalt not speak ill of any fellow Republican.”
    0:08:01 Sullivan had voted for Trump with no thought that I would ever be invited to work in his
    0:08:06 administration, he writes. He adds that his wife, Grace, also a high-powered lawyer who
    0:08:11 has since died, had not voted for Trump and would not have been supportive if I were going
    0:08:17 to work for him at the White House. But it wasn’t the White House that called, it was
    0:08:22 the Defense Department. Secretary Jim Mattis wanted Sullivan as his general counsel, and
    0:08:29 that’s where Sullivan was heading until he got a better offer. Deputy Secretary of State
    0:08:36 under Rex Tillerson. That job he took, and when Tillerson was fired by Tweet after barely
    0:08:41 a year on the job, Sullivan became acting secretary. He reverted to deputy when Mike
    0:08:47 Pompeo took over as secretary. Sullivan liked Pompeo, and they worked well together. But
    0:08:55 that first Trump administration was an exercise in chaos. Nothing like its Republican predecessors,
    0:09:02 Sullivan writes, undisciplined and unconventional. So, when he learned that the U.S. Ambassador
    0:09:08 to Russia was resigning, Sullivan put himself up for the post. It’s hard to emphasize how
    0:09:14 unusual this was, trading in a high-status job in Foggy Bottom for a diplomatic post
    0:09:19 in Moscow. What did President Trump think of this move?
    0:09:24 He thought Secretary Pompeo wanted to get rid of me, and the look on his face said, “If
    0:09:28 that’s not the reason, then why would anybody in their right mind want to do that?”
    0:09:33 But Sullivan made it clear to Trump that no, he wasn’t getting fired by Pompeo. He was
    0:09:35 just ready for a new challenge.
    0:09:43 So that was my last conversation with him in August of 2019. Never spoke to him as ambassador.
    0:09:49 The last time I spoke to him was, he asked me if I really wanted to go to Russia. Did
    0:09:53 have a lot of interactions with him, though, as deputy secretary.
    0:09:56 And what were Sullivan’s impressions then?
    0:10:04 President Trump looks at our overseas relationships, entanglements, whatever you want to call it,
    0:10:10 looks at it purely from a transactional economic standpoint. If it makes sense for the United
    0:10:17 States economically, and he defines economically narrowly, and a lot of economists disagree
    0:10:21 with that, but Putin’s got a very similar outlook if you think about it.
    0:10:27 And so it was that John Sullivan gave up the chaos of Washington, D.C. for a new chaos
    0:10:32 in Moscow. Here’s how he puts it in his book, “I believed the Russian government did not
    0:10:37 want any physical harm to come to me while I was in Russia. On the other hand, the Russian
    0:10:43 government devoted a huge number of personnel and resources to try to annoy, provoke, criticize,
    0:10:46 frustrate, embarrass, and compromise me.”
    0:10:51 I mean, I knew what the Russians were about because I’d been deputy secretary of state
    0:10:58 for three years. What I saw when I went there, it was a government different from any other
    0:11:07 government I dealt with before. Their characterization of us as an enemy, they are at war with us.
    0:11:12 And we in the United States, and particularly in Washington, it’s hard to get people to
    0:11:20 really believe it, including at the State Department. We in Moscow at Embassy Moscow would be looking
    0:11:27 for support for reciprocity. If the Russians did something to our mission, we’d be looking
    0:11:33 for Washington to give a little payback to the Russian side. The response, well, geez,
    0:11:40 that’s really kind of nasty. We’d never do, I’m like, you have no idea what we’re dealing
    0:11:49 with here. That’s my message. We don’t understand how different these governments in Moscow
    0:11:58 and Beijing are from us with leaders that are willing to use military force.
    0:12:04 When Donald Trump was first elected in 2016, he spoke warmly of Vladimir Putin. If Putin
    0:12:11 likes Donald Trump, I consider that an asset, not a liability. By the time John Sullivan
    0:12:17 got to Moscow in early 2020, things had changed. The Trump administration had imposed a variety
    0:12:23 of sanctions on prominent Russians and on Russia itself. One sanction came after a Russian
    0:12:29 malware attack on US financial institutions, another after attempted Russian interference
    0:12:36 in the 2018 US elections. Trump included more sanctions in a 2019 executive order in response
    0:12:42 to a Russian assassination attempt in Salisbury, England. The target was a former Russian spy
    0:12:47 who was exposed to a nerve agent that had been applied to his front door. He survived,
    0:12:52 but a British civilian died when she reportedly sprayed herself with perfume containing the
    0:12:58 same nerve agent. Her boyfriend had found it in a collection bin. In addition to imposing
    0:13:04 these sanctions on Russia, the Trump administration had been backing Ukraine as it faced increasing
    0:13:10 Russian aggression. This was a few years after Russia annexed Crimea and started backing
    0:13:16 Russian separatists in the Donbass region of Ukraine, but it was a couple years before
    0:13:22 Russia’s full-scale invasion of Ukraine. Then, in 2020, Trump lost the election to
    0:13:29 Joe Biden. John Sullivan was asked by the Biden administration to stay on as their man
    0:13:35 in Moscow. Biden announced that the US would be pulling out of Afghanistan.
    0:13:42 Biden, always skeptical, going back to his days as vice president in the Obama administration,
    0:13:49 skeptical of the US being a presence in Afghanistan, he decides in the spring we’re getting out.
    0:13:56 He’s following through on the plan that had been negotiated in the Trump administration.
    0:14:03 He says, “We’re out by September 11th. 20 years from the attack on September 11th, 2001,
    0:14:08 we’re out of Afghanistan.” And this brings us back to that meeting in Geneva between
    0:14:15 Biden and Putin. It’s the summer of 2021. It’s been a rocky spring between the United
    0:14:20 States and Russia. This was only the second time that Putin and Biden had met face-to-face.
    0:14:26 The first was in 2011, when Biden was vice president under Barack Obama. After that meeting,
    0:14:32 Biden had said that Putin had no soul. And now recently, as president, Biden had called
    0:14:38 Putin a killer. Like John Sullivan said, it had been a rocky spring.
    0:14:43 By the way, the Russians are increasing their troop presence in Southwestern Russia, threatening
    0:14:54 an invasion of Ukraine. And out of it all, Biden suggests a meeting with Putin in Geneva.
    0:15:03 Good note, in April, after Biden called Putin a killer, Putin withdrew his ambassador from
    0:15:10 the United States. And the Russian government said to me, “You need to go home too.” I
    0:15:16 said, “Are you declaring me persona non grata? Are you expelling the U.S. ambassador?” And
    0:15:20 they said, “Oh, God, no. But you do need to go home because no one is going to talk
    0:15:26 to you.” Putin said this at one of his phone calls during this period with Biden. He said,
    0:15:29 “You should bring your ambassador home because he’s going to have nothing to do because no
    0:15:33 one will talk to him.” Biden says, “Let’s meet.” Putin agrees.
    0:15:38 So they meet in Geneva at an 18th-century villa. People asked me, you know, what was
    0:15:44 Biden like? Was he healthy? Was he with it? Biden shows up in Geneva and he looked great.
    0:15:51 I mean, he looked like a healthy man in his late 70s. I did not see any of the decline
    0:15:58 which was then obvious a few years later. So the meetings, there were two meetings.
    0:16:04 We heard about this earlier, the one-plus-one and then the expanded bilateral meeting. John
    0:16:09 Sullivan was in that second meeting. And what did the U.S. want out of this meeting?
    0:16:16 I got the sense both under the Trump and Biden administrations, we want to pivot to Asia,
    0:16:22 make this Russia problem go away, tell them to put a sock in it, put this guy, Progosian,
    0:16:30 in a cage. Just calm down, calm, right? We and you can move on to bigger and better things.
    0:16:35 And what was your impression of that message? Well, with the benefit of 2020 hindsight, let
    0:16:41 me tell you what I saw. In the expanded bilateral meeting, they spent more time talking about
    0:16:48 Afghanistan than they did Ukraine. Biden’s asking for the Russians not to oppose the
    0:16:54 U.S. having a counterterrorism presence in Afghanistan. This will help Russia. We’re
    0:17:01 going to keep al-Qaeda, the Taliban, we want to keep them under wraps. And that helps Russia.
    0:17:06 We will cooperate with you. That sounds like a pretty smart ploy, right? Let’s create a common
    0:17:11 enemy team up on this. We’ll get over our differences and move on. If you were dealing
    0:17:16 with a normal country and a normal leader and you’re not, so what does Putin do? Putin says,
    0:17:24 “Okay, well, we’re not a big fan of that, but just spitballing here. Maybe we’ll let you share
    0:17:32 our 201st base in Tajikistan, which is right on the border with Afghanistan.” That is a huge
    0:17:40 Russian military base in Central Asia, one of their key military installations. This is not
    0:17:47 some little counterterrorism intel monitoring. This is a big, important Russian military facility.
    0:17:55 Putin says it. I’m sitting directly across from Colonel General Gerasimov, who is not KGB-trained.
    0:18:04 His eyes widened and he sort of gasped a little bit like, “Whoa.” And it’s clearly a joke. Putin
    0:18:09 starts to chuckle. Did Biden take it as a joke? So Biden is, we’re all on our side like, “What the
    0:18:16 heck?” And then his foreign minister Lavrov is talking about something else. Putin interrupts him,
    0:18:23 puts his hand over Lavrov’s mouth and looks at Biden and says, “Be careful negotiating with this
    0:18:30 guy. He’s Armenian.” It’s an ethnic joke, right? It’s like he’s going to fleece you. He’ll pick your
    0:18:40 pocket. He’s Armenian. He chuckled and how loose he was. This is not a man who sat down and said,
    0:18:48 “I’ve got a serious problem in Ukraine that’s threatening the existence of my country.
    0:18:54 Let’s talk, buddy.” But fast forward, in November, that was his position.
    0:18:59 So listening between the lines to you now, John, and please correct me if I’m wrong,
    0:19:04 at that meeting in Geneva, the US was getting ready to pull out of Afghanistan. That ended up
    0:19:12 happening in August of 2021. And then Russia ends up going into Ukraine about six months after in
    0:19:18 February of 2022, correct? Correct. So listening between the lines, what I hear is that Putin is
    0:19:23 sizing up Biden here and saying, “Well, he’s not very substantial. He doesn’t seem to have much
    0:19:31 of a plan or a spine. And therefore, I’m going to take this meeting. We’ll joke a bit. I’ll tease
    0:19:35 him a bit. I’ll see how he pushes back. Sounds like he doesn’t push back very much.” And it
    0:19:40 sounds as though you’re saying that even though Putin had decided long ago that he would be going
    0:19:46 into Ukraine hard with force, that this meeting, if nothing else, assured him that he wasn’t going
    0:19:51 to get a lot of trouble from the US. Is that right? I would quibble. I think it’s unfair to Biden.
    0:19:56 I think Biden, and he said this in his press conference after the meeting in Geneva, he said,
    0:20:03 “Look, I’m giving this guy one last chance. Can we stabilize this relationship?”
    0:20:06 But isn’t that a little bit like telling your seven-year-old, “Listen, you’ve got one more
    0:20:12 chance to put down the paint?” After the meeting, they did back-to-back press conferences.
    0:20:18 The first question that’s asked by Russian state media, so this is Putin asking himself the question,
    0:20:24 “What did you talk about the most important issue for all of Russia is Ukraine? What did
    0:20:28 you discuss with Biden about Ukraine?” And Putin says, “Well, really didn’t come up that much.”
    0:20:33 Biden said he wants Ukraine to enforce the Minsk agreements, and if that’s his view,
    0:20:37 that’s productive, but we really didn’t talk about it. But let’s talk about Afghanistan and
    0:20:42 how that factors in, because some people make the claim once Putin saw Afghanistan—
    0:20:44 But that was the green light.
    0:20:50 No, no, no, no, no. He decided to do this long ago. What I will say is, in criticism,
    0:20:59 I clued myself in this. As I look back, maybe he had decided, but he hadn’t yet pulled the trigger.
    0:21:06 Could we have stopped him? I think Afghanistan was the nail in the coffin. The withdrawal
    0:21:16 is underway while we’re meeting in June. What really has an impact is the calamity that starts
    0:21:25 in July and then into August. The culmination is the terrorist attack on the 26th of August,
    0:21:30 and then the missile strike that killed 10 innocent Afghans.
    0:21:31 The US missile strike.
    0:21:37 The missile strike. One of Putin’s most senior and important advisors, a guy named
    0:21:42 Nikolai Patreshov, he gives an interview, again, to Russian state media in Russian,
    0:21:52 directed to Ukraine. He says, “I have no idea why you people think it’s in your interest to
    0:22:00 associate with the United States and its vassals. Look what they’re doing to their major non-NATO
    0:22:07 ally in Kabul. Do you think they’re going to defend you? Absolutely not. You’re crazy. We’re
    0:22:15 your Slavic sisters and brothers. Why are you shunning us looking for protection from this
    0:22:23 feckless North American giant who goes around the world and creates wars and problems and then
    0:22:28 leaves disasters in its wake? Look what they’re doing in Afghanistan.”
    0:22:34 Donald Trump said during this campaign, the 2024 campaign, he said Russia would not have
    0:22:39 invaded Ukraine if he had been president. I’m curious what you make of that claim generally.
    0:22:47 That’s just as wrong as it can be. Putin is going to achieve his aims in Ukraine,
    0:22:54 which he and everyone who speaks for his government have said consistently since the day the special
    0:23:02 military operation began. February 24th, 2022, we’re going to denazify and demilitarize Ukraine.
    0:23:11 He was going to achieve those means either by Ukrainian capitulation or by what the Russians
    0:23:19 call military technical means, which is an invasion. Maybe if Trump had been reelected
    0:23:27 instead of Biden winning in November 2020, if he had changed course, stopped supporting Ukraine,
    0:23:32 maybe Ukraine would have had a capitulate. Putin was going to accomplish his war aims
    0:23:38 by hook or by crook, by capitulation or by invasion. So what I say particularly to my
    0:23:44 Republican friends, okay, you don’t support Ukraine. What’s your Russia policy? If your
    0:23:51 Russia policy starts with cutting off Ukraine, not only is your Russia policy going to fail,
    0:23:59 but if you think cutting off Ukraine is going to assist your pressure campaign
    0:24:07 on Iran, you’re crazy. And oh, by the way, how is this going to influence President Trump’s friend
    0:24:13 Little Rocket Man and Pyongyang and Xi in Beijing? And how would you say Trump’s winning the 2024
    0:24:19 election will affect Putin’s thinking and at least the short-term future for Putin and Russia?
    0:24:26 They’re celebrating Trump’s victory, but there are a fair number of people around Putin
    0:24:32 who say, wait a minute, let’s not get carried away. We remember what the first Trump administration
    0:24:37 was like. He wanted to have conversations in a relationship with Putin, but they imposed
    0:24:42 all these sanctions. The other thing they’re concerned about is Trump’s energy policy.
    0:24:48 What if it reduces dramatically the price of oil? That could have a bigger effect
    0:24:53 on the Russian economy than all the sanctions and export controls, which I support that the
    0:24:58 Biden administration has imposed. Could reduce the price of oil by producing much more in the US?
    0:25:05 Exactly, exactly. From the Russian perspective, it’s all about the price of oil. If that price of
    0:25:12 oil dips significantly, that affects their ability to continue to fund the war. There’s a political
    0:25:17 scientist at the University of Chicago, Robert Pape, who argues that these economic sanctions
    0:25:23 at the US levy is against Russia. Trump used sanctions, as did Obama before him and Biden
    0:25:29 after him. Pape argues that sanctions essentially don’t work, that they’re a nice fallback for
    0:25:35 folks like you, people in state, for ambassadors, et cetera, to feel like you’re doing something.
    0:25:41 What’s your view on that? That’s a great question. The obvious answer, and anyone who says anything
    0:25:48 different is just blinking at reality. Sanctions did not and will not, unless they’re much more
    0:25:57 vigorously enforced, influence Russia’s policies with respect to, you name it, Ukraine, Iran,
    0:26:04 North Korea, et cetera. A couple of things, though, they are necessary but not sufficient.
    0:26:10 It’s not as though, okay, well, then we should just continue to do business with Russia and forget
    0:26:15 that they committed a murder in Salisbury, England, an innocent woman, Don Sturgis.
    0:26:23 They sent an FSB colonel who committed a cold-blooded murder on the streets of Berlin, shot a person
    0:26:30 to death, a Chechen opposition leader, election interference, cyber. Are we then just supposed
    0:26:38 to ignore it? I think sanctions have had a significant impact on the Russian economy.
    0:26:45 The current prime lending rate in Russia is 21%. It reminds me a little bit of the United States
    0:26:52 in the ’60s and ’70s with the great society spending on Vietnam and the price the US economy
    0:26:58 pays in the ’70s and into the early ’80s is rampant inflation. That’s what Putin’s doing now.
    0:27:03 They’re pumping money into their defense industrial base. They’re paying off their own people,
    0:27:09 those who are being killed, their families, average Russians seeing pensions, salaries,
    0:27:14 et cetera, increasing because he doesn’t want to lose popular support. The Russian people
    0:27:18 in their economy, they’re going to pay a price for it. So he’s gritting his teeth
    0:27:23 and he’s going to accomplish his goals in the special military operation,
    0:27:28 but the Russian economy five, 10 years from now is going to pay the price.
    0:27:36 Coming up after the break, how does Vladimir Putin sell this story to the Russian public?
    0:27:45 I may be a peasant, but boy, I’m part of a special country with a special mission in the world.
    0:27:50 More from John J. Sullivan coming up. I’m Stephen Dubner and you are listening to Freakonomics Radio.
    0:28:06 John Sullivan was US ambassador to Russia from February 2020 until September 2022.
    0:28:12 So he was on duty when Russia launched what it called a special military operation in Ukraine.
    0:28:18 The rest of the world calls it a war. The war has lasted nearly three years and has killed tens of
    0:28:25 thousands on both sides. The US has invested in the Ukrainian cause significantly, but also
    0:28:32 cautiously. When it comes to poking a bear, the Russian bear is perhaps the worst bear to poke.
    0:28:37 Embassy Moscow was John Sullivan’s last government posting and he has since retired
    0:28:42 from the Foreign Service. I asked if he would accept a role in the new Trump administration.
    0:28:49 I can assure you that I will not be taking a role in the Trump administration as evidenced by the
    0:28:54 fact that two people I remain close with have been ruled out as potential candidates for a new
    0:28:59 administration, Mike Pompeo and Nikki Haley. I’m on that list, I’m afraid.
    0:29:05 For anyone old enough to remember or anyone who’s read some Russian history or literature,
    0:29:12 there is this deep sense of loss. This was a country and a culture full of brilliant writers,
    0:29:19 thinkers, artists, scientists, philosophers, a lot of dissidents too, of course, but it seems
    0:29:25 from the outside at least as though that history has been paved over entirely, that the Russian
    0:29:32 Federation of today bears no resemblance. It’s tragic. I went to Russia as an amateur Russell
    0:29:39 file for all the reasons you said. All live accomplished in science, technology, engineering,
    0:29:45 medicine, etc. During the pandemic, instead of working for the betterment of humankind,
    0:29:53 they’re falsely promoting their Sputnik V vaccine, which was never properly tested.
    0:29:59 It was seized by the Kremlin as an instrument to promote Russian nationalism. Look, we’re the
    0:30:06 best. That’s the Kremlin hijacking the strengths of the Russian people, whether it’s in science,
    0:30:13 technology, their religion, the Russian Orthodox Church is now an instrument, I’m sorry to say,
    0:30:23 of the Kremlin, of Putin. He has turned all of those strengths to his purpose of recreating this
    0:30:28 Russian Empire. There are a lot of Russian people who agree with him who are saying, “Ada boy,
    0:30:34 you go and do that for us.” You write about the famous idea that Putin really has three advisors,
    0:30:37 Ivan the Terrible, Peter the Great, and Catherine the Great.
    0:30:43 Correct. Other than his nostalgia for the Russian Empire, what are his goals, would you say?
    0:30:52 It’s not nostalgia. He is looking to recreate. There are a lot of ordinary Russians who lament
    0:30:59 the weakened state of their Russia. Just as hope is a powerful tool in the United States,
    0:31:08 that vision of empire, yeah, I may be a kulak, I may be a peasant here in Russia, but boy,
    0:31:15 I’m part of something big. I’m part of a special country with a special mission in the world.
    0:31:19 I don’t know if you’re a betting man, but given his position at this moment, given his
    0:31:25 accomplishments at this moment, and given the lack of ability of the US, the UN, and others to
    0:31:28 fight back, what do you think are his chances of achieving that goal?
    0:31:34 Well, he thinks he’s in, and it’s probably true in the short term, a better position than he was,
    0:31:43 say, in early 2023, roughly a year after the war had started, the Russian military had not just
    0:31:52 failed but been embarrassed. So things were really looking bad for him. In September of ’22,
    0:31:59 he had to order mobilization. It included some conscription, which was very unpopular.
    0:32:04 It’s a different world now, and it’s not just the election of Trump. It’s what’s happened in
    0:32:10 Berlin with the breakdown in the current coalition, Chancellor Schultz going to have to stand for
    0:32:17 reelection, and the Germans themselves, the German government, announcing that it’s not going to be
    0:32:23 providing as much support for Ukraine as it had earlier in the war. So from Putin’s point of view,
    0:32:29 things are a lot better now than they were a year or a year and a half ago.
    0:32:34 So John, I can imagine some Americans who didn’t vote for Trump listening to this and saying,
    0:32:37 you know, I don’t see much daylight between Trump and Putin.
    0:32:44 That’s a misunderstanding of who Putin is and what Putin does. It’s not rhetoric. It’s reality.
    0:32:54 Look, Donald Trump, when he gets confirmed on January 20th, 2025, at 12.01 p.m., he’s a lame duck.
    0:32:59 Now, he’ll have lots of influence. He’s got coattails, but he’s never running again,
    0:33:05 and the jockeying for who succeeds him is going to start. And, you know, he’s going to be limited
    0:33:14 by Republicans in the Senate. There are Republicans in the Senate, even with the 53-vote majority,
    0:33:20 who are, and I don’t know what the Secretary of Defense nominee would say if asked about,
    0:33:28 for example, the importance of our NATO alliance. But I guarantee you that any nominee who said
    0:33:34 we should withdraw from NATO would never get confirmed by a wide margin. The Putin-Trump
    0:33:42 analogy, I mean, that’s a vast overstatement. And that type of political rhetoric, in fact,
    0:33:49 undermines marshaling the American people and leading the American people to oppose Putin.
    0:33:53 But if Trump just wants to cut Ukraine loose, what’s to stop him?
    0:34:00 There are things he can do as Commander-in-Chief that Congress wouldn’t be able to stop. The
    0:34:07 military cooperation, the intelligence cooperation can all be cut off. If that happens, and more
    0:34:12 importantly, the American leadership that’s influenced the Europeans, if that goes away,
    0:34:20 how long can the Ukrainians hold out, then maybe this Russian special military operation after,
    0:34:25 you know, three years of failure, they accomplish what they originally set out to do
    0:34:30 on February 24, 2022. That’s certainly possible.
    0:34:37 But it sounds as though you have a substantial amount of hope that the constitutional separation
    0:34:38 of powers remains intact.
    0:34:44 Oh, absolutely. I guess the right way to characterize me as an institutionalist,
    0:34:50 and particularly the federal judiciary. I never traveled to the PRC when I was
    0:34:56 Deputy Secretary of State. I traveled there a lot 10, 12 years before when I was Deputy
    0:35:03 Secretary of Commerce. And what the Chinese government could not understand was they would
    0:35:10 never accept the concept of an independent judiciary. The idea that a single federal judge
    0:35:16 or a court of appeals or even nine justices on the Supreme Court could issue an order
    0:35:23 in, for example, a matter of national security that a court could order the president to do
    0:35:28 something and that he would have to do it. They could not believe that that would happen.
    0:35:34 So I do have faith. You know, people ask me all the time, you know, he’s going to stay
    0:35:37 after his term. He’s not going to stay after his term.
    0:35:41 This is Trump you’re talking about. But what makes you say that? Because he certainly
    0:35:42 tried last time.
    0:35:48 Well, he certainly tried last time, but he has, by the terms of the amended constitution,
    0:35:53 is limited to two terms. He says things off the top of his head. I’ve seen it in person
    0:35:59 that he knows can’t happen like that big beautiful wall on the southwestern border of
    0:36:05 the United States that was going to be paid for by Mexico. Trust me, he’s got one term left
    0:36:12 and that’s it. He’s 78 years old. What condition is he going to be in at the end of his term?
    0:36:13 Think about what happened to Biden.
    0:36:19 After the break, we hear about some worst case scenarios.
    0:36:22 I am not Winston Churchill and I hope I’m wrong.
    0:36:29 And some mildly encouraging news. I’m Steven Dubner. This is Freakonomics Radio. We will be right back.
    0:36:46 John Jay Sullivan, former State Department official and U.S. Ambassador to Russia,
    0:36:52 still has a lot to say about American foreign policy, especially when it comes to China or
    0:36:57 what he calls the PRC, the People’s Republic of China and, of course, Russia.
    0:37:04 There are no opposition leaders left in Russia. There literally is no independent media left.
    0:37:09 It is a police state just as the Soviet Union was, even more so.
    0:37:13 Let’s say that for whatever reason, Putin vanished tomorrow.
    0:37:17 What would happen? Who would be running the Russian Federation? What would that look like?
    0:37:21 Because you do make the argument that Putin has kept a lid on certain kinds of things.
    0:37:30 There are some, I believe, who have been urging him to use a tactical nuclear weapon in Ukraine,
    0:37:36 or maybe an unconventional weapon. I thought they might use a chemical weapon in Mariupol,
    0:37:42 the last holdout in southern Ukraine. So my answer to that question is,
    0:37:48 if Putin doesn’t wake up tomorrow, the war continues. The war is not unpopular.
    0:37:52 Once the war starts, the average Russian
    0:38:00 doesn’t want to see, as they call it, their boys slaughtered or lose in Ukraine.
    0:38:03 Given the state of Russian media, how much information do people get?
    0:38:08 Very little. And you have to work hard to get anything other than the state media.
    0:38:12 What they do see, though, is bodies coming back.
    0:38:17 How surprised would you be if you woke up tomorrow and Russia did use nuclear weapons against Ukraine?
    0:38:18 I’d be shocked.
    0:38:19 Because why?
    0:38:26 Well, first, as I understand it from military experts, there isn’t a real practical use for a
    0:38:33 tactical nuclear weapon. So it’s strictly a political use of the weapon. And if it’s a political
    0:38:42 use, if Putin were, for example, to decide, all right, my mission to denazify Ukraine hasn’t
    0:38:48 proceeded quickly enough, I’m just going to nuke Kiev. What is his dear friend in Beijing going
    0:38:56 to think? I come back to the PRC as a key. Putin meets with Xi at the start of the Olympics in
    0:39:04 2022. They issued this extraordinary document, lengthy statement, page after page, declaring how
    0:39:11 they’ve got this, it’s stronger than an alliance. Dear friends, the Russians have since used that
    0:39:19 phrase frequently. My recollection is that Xi and his government haven’t used that phrase since.
    0:39:29 And what happened since? It started the day of the invasion. Putin’s threats to use a nuclear
    0:39:37 weapon. Xi has said more than once the use of nuclear weapons in this conflict, the PRC would
    0:39:46 not support. If a portion of Kiev disappears under a mushroom cloud, that’s heat, and Putin doesn’t
    0:39:55 want that. That’s the type of shock that’s going to wake up the American people. We spend, if you
    0:40:04 include the Department of Defense and the budgets for the intelligence community, we spend a trillion
    0:40:12 dollars a year to defend our country. The two principal threats to the United States,
    0:40:22 1A, the PRC, 1B, the Russian Federation. The amount of money we already spend to defend ourselves
    0:40:29 against Russia is astronomical. My ultimate point is we need to oppose Russian aggression
    0:40:37 that is now exhibiting itself in brutal form in Ukraine. We need to recognize that the Russian
    0:40:44 Federation is as aggressive, maybe more aggressive than the Soviet Union. Anybody who’s got a heart
    0:40:52 or a brain wants this violence to stop, but it’s not going to stop because the Russians aren’t going
    0:40:59 to quit until they accomplish their war aims. Their war aims, I guarantee, are broader than
    0:41:05 just Ukraine. You know, there’s a history here. There are 15 Soviet republics that Putin thinks
    0:41:10 are his. That’s what he’s looking to reestablish. Let’s pretend for a minute that you’re not on
    0:41:14 the outs with the Trump crowd and that you were invited back. Let’s say you were invited back
    0:41:20 as Secretary of Defense or Secretary of State. Put three things on the table that we can do
    0:41:24 to turn the heat down or to change the leverage that Russia is pursuing.
    0:41:32 Yeah, it’s a little difficult to do that without also engaging the PRC. The North
    0:41:40 Korean sending troops to fight with the Russians in Europe not only has unnerved and infuriated
    0:41:44 the South Koreans, but Beijing isn’t happy about this.
    0:41:48 And you think there’s an avenue there for Trump and Xi to discuss?
    0:41:49 Possibly.
    0:41:52 If you were advising Trump, what would you offer as an incentive?
    0:41:54 An incentive for the Chinese?
    0:41:54 Yes.
    0:42:02 Well, you know, there are a lot of things on the table. My fear is we can’t offer Taiwan.
    0:42:08 You know, they’re worried about would he really come and defend us and not just the Taiwanese,
    0:42:13 the South Koreans too. So what I would say to the incoming Trump administration,
    0:42:21 we have to let them know that the war that they’re supporting and perpetuating in Europe
    0:42:27 has now become globalized in ways that adversely impact them because you see quotes from the South
    0:42:34 Koreans now saying, you know, can Trump be trusted? Can the Americans be trusted, not just Trump?
    0:42:37 And do we need a nuclear weapon to protect ourselves?
    0:42:41 What kind of deal do you think Trump will pursue with Putin over Ukraine?
    0:42:46 Because he seems to see it as a mess on his desk that he just wants to get rid of.
    0:42:53 Right. So that’s been the attitude going back to the Obama administration,
    0:43:02 maybe even the Bush 43 administration. My charge as ambassador was make the Russia problem go away.
    0:43:10 We want guardrails. Now there’s been this horrific war in Ukraine. We got to make it stop.
    0:43:16 Why? Because we got to pivot to Asia. So here’s my problem with the political discussion in the
    0:43:23 United States. Our leaders, Republicans and Democrats, don’t talk about these types of issues.
    0:43:32 Rewind 44 years. The Carter administration has started to rebuild, reinvest post-Vietnam in
    0:43:38 the Defense Department, right? We don’t go to the Summer Olympics in Moscow. Our leaders,
    0:43:44 our presidents, talk to the American people about these issues, whether it was Reagan with
    0:43:50 the Evil Empire, the Strategic Defense Initiative, putting intermediate-range nuclear missiles in
    0:43:57 West Germany. Presidents used to talk in detail about security issues, and the American people
    0:44:06 knew about them. We don’t have that discussion. It’s childish. It’s not serious. President Biden
    0:44:12 himself, I’ve not heard him say this, but it’s been reported that he has, since the war started
    0:44:22 in Ukraine, said we in the Obama administration, we sort of blew it in 2014. We let this guy get
    0:44:27 away with it. Crimea you’re talking about. Crimea and in the Donbas. Remember, there’s real conflict
    0:44:34 in the Donbas with Russian military units involved shooting down a commercial airliner
    0:44:42 that kills a couple hundred people. We have not taken seriously this threat that an aggressive
    0:44:48 nationalist Russia opposes a country that’s the largest landmass in the world with the largest
    0:44:55 stockpile of nuclear weapons with a seat as a permanent member of the UN Security Council.
    0:45:00 Russia is one of just five permanent members of the UN Security Council, but that certainly didn’t
    0:45:07 keep them from invading Ukraine. What does that say about the UN? Should we consider it as toothless,
    0:45:12 as obsolete as critics say? Yeah, I’m as big a critic. I haven’t gone so far as my friend John
    0:45:18 Bolton and say we can cut off the top half of the headquarters and save the money. My State
    0:45:24 Department colleagues, particularly those who have worked on international organizations issues for
    0:45:33 decades, devoted their careers to it, wince when I say this, but it’s just completely ineffective.
    0:45:44 We now have had the UN Secretary General go to the BRICS summit in Russia, shake hands with Putin,
    0:45:56 imagine if there were such a thing, if the League of Nations still existed, and in January of 1940,
    0:46:01 the Secretary of the League went to Berlin and shook hands with Hitler.
    0:46:07 So John, it strikes me that most Americans, probably most people everywhere, are primarily
    0:46:13 concerned with short-term problems, right? We get very distraught if the price of gas goes
    0:46:19 up 50 cents a gallon, but in terms of elections or policy decisions halfway around the world
    0:46:25 that may affect things five or ten years later, we don’t have much patience for that.
    0:46:30 And I’m curious if you’re calling for a significant reassessment, realignment of how
    0:46:35 we think about foreign policy and downstream effects. You know, I go back to Syria,
    0:46:41 the Obama administration’s red line in Syria, which it then essentially ignored later, triggered
    0:46:46 this massive outflow of refugees from Syria into Europe, which further destabilized those
    0:46:51 countries that were already turning against immigrants. The list goes on and on. So I’m
    0:46:56 curious what kind of decisions you see on the near horizon that we should pay attention to now,
    0:47:03 because they will reverberate. It’s coming. Something is coming that is going to shake
    0:47:10 the establishment and the American people. If there is a greater global conflict,
    0:47:16 for example, between Israel and Iran that closes the Persian Gulf, that makes the
    0:47:21 Houthi violence in the strait that leads into the Red Sea, you know, increases that,
    0:47:28 and God forbid, with Taiwan, the effect on the global economy, you talk about supply chain
    0:47:37 disruption. Oh my God. The analogy I draw to where we are today is the late 1930s. If you
    0:47:43 look at the old movie tone newsreels, and you got, you know, the man on the street in the United
    0:47:50 States being interviewed, you know, the chancellor, yeah, he’s rough around the edges. What he’s
    0:47:56 doing with the Jews, that’s really bad. But look, Germany was in tough straits after the war and,
    0:48:02 you know, the peace treaty and, you know, once Germany gets back on its feet, it’ll soften.
    0:48:10 At the same time, Churchill, much more closely observing. And in harm’s way, let’s say. And in
    0:48:20 harm’s way, Churchill gives these speeches warning about what’s coming. And they’re combined into a
    0:48:25 book that’s published in the United States, and the title of it is “While England Slept.”
    0:48:29 So you’re saying we’re asleep now? We’re asleep. And our politicians aren’t leading
    0:48:36 Republicans or Democrats. Now, I don’t know, I may be completely wrong, there may not be a
    0:48:42 Pearl Harbor-like incident. But my fear is that it’s going to come. And we’re not prepared. And
    0:48:50 the American people haven’t been told how serious these risks are. Putin calls the United States
    0:48:56 Russia’s enemy. J.D. Vance was asked recently, would he call Russia an enemy? And he said no.
    0:49:02 Well, Putin calls you an enemy. So you’re trying to shake us all by the shoulders and wake us up?
    0:49:07 I am not Winston Churchill. And I hope I’m wrong. But it’s more dangerous than you think.
    0:49:15 The only place befitting an honest man in Russia at the present time is a prison.
    0:49:23 That’s a line written in the late 19th century by Leo Tolstoy. I have a feeling John Sullivan can
    0:49:29 identify. My thanks to him for this conversation. Again, his book is called Midnight in Moscow.
    0:49:36 The last time we had a U.S. Ambassador on the show, it was Rom Emanuel, who had been posted in
    0:49:42 Japan. You can hear that episode number 553 wherever you get our show. It’s called
    0:49:49 The Suddenly Diplomatic Rom Emanuel. Meanwhile, next week on the show, we go one-on-one with
    0:49:56 Rom’s big brother, Zeke Emanuel, to talk about one of the biggest medical advances in recent history.
    0:50:03 You know, this is why people do science. What does the GLP-1 revolution mean for you
    0:50:08 and for the U.S. healthcare system? Don’t get me started. We’ve got to have a whole
    0:50:12 another conversation about that issue. That’s next time on the show. Until then,
    0:50:18 take care of yourself and if you can, someone else too. Freakonomics Radio is produced by Stitcher
    0:50:25 and Renbud Radio. You can find our entire archive on any podcast app, also at Freakonomics.com,
    0:50:30 where we publish transcripts and show notes. This episode was produced by Zach Lipinski,
    0:50:35 with help from Dalvin Abouaji. Our staff also includes Alina Cullman, Augusta Chapman,
    0:50:40 Eleanor Osborn, Ellen Frankman, Elsa Hernandez, Gabriel Roth, Greg Rippin, Jasmine Klinger,
    0:50:45 Jason Gambrel, Jeremy Johnston, John Schnars, Lyric Bowditch, Morgan Levy, Neil Caruth,
    0:50:50 Rebecca Lee Douglas, Sarah Lilly, and Theo Jacobs. Our theme song is “Mr. Fortune”
    0:50:55 by the Hitchhikers. Our composer is Luis Guerra. As always, thanks for listening.
    0:51:07 I don’t know what got me off on this rant, but pardon me, I’ve kissed the Blarney Stone twice.
    0:51:16 The Freakonomics Radio Network. The hidden side of everything.
    0:51:24 Stitcher.

    John J. Sullivan, a former State Department official and U.S. ambassador, says yes: “Our politicians aren’t leading — Republicans or Democrats.” He gives a firsthand account of a fateful Biden-Putin encounter, talks about his new book Midnight in Moscow, and predicts what a second Trump term means for Russia, Ukraine, China — and the U.S.

     

    • SOURCES:
      • John Sullivan, former U.S. Deputy Secretary of State and former U.S. Ambassador to Russia. 

     

     

  • 613. Dying Is Easy. Retail Is Hard.

    AI transcript
    0:00:02 (dramatic music)
    0:00:05 On Thanksgiving morning,
    0:00:08 roughly 30 million people will catch at least
    0:00:11 some of the Macy’s Thanksgiving Day Parade on TV.
    0:00:13 For a lot of them, it wouldn’t feel like
    0:00:15 Thanksgiving without the parade.
    0:00:18 Last week, we spoke with the parade’s executive producer,
    0:00:19 Will Kos.
    0:00:22 I asked him why it’s so popular.
    0:00:25 His answer was pure tevia.
    0:00:28 I’d say tradition.
    0:00:32 Tradition, tradition, tradition is at the core.
    0:00:34 It’s really about having this thing,
    0:00:37 this giant thing that shows up for you.
    0:00:39 Everything’s giving morning
    0:00:41 and it’s gonna be a little bit of spectacle,
    0:00:43 a little bit of kitsch, a little bit of art.
    0:00:46 It’s become a moment in time for all of us
    0:00:47 to drive back to.
    0:00:51 But even our favorite traditions
    0:00:54 are not guaranteed their place in the future.
    0:00:58 The Macy’s department store has been around for 166 years
    0:01:01 and they’ve put on a parade for the past 100.
    0:01:03 We spent last week trying to figure out
    0:01:06 how much money Macy spends to make the parade
    0:01:11 and how much they earn from sponsorships and TV ad sales.
    0:01:14 That was one part of this story that interested us.
    0:01:17 The other part is the future of retail itself
    0:01:21 or at least the kind of retailing represented by Macy’s.
    0:01:23 They like to call the parade their annual gift
    0:01:26 to the nation, which is a nice sentiment.
    0:01:29 But there are two things you should know about that.
    0:01:34 This gift is likely quite profitable for the giver,
    0:01:35 which is unusual.
    0:01:38 Also, the Macy’s parade may be
    0:01:42 one of the most valuable assets that Macy still has.
    0:01:44 For most of the 20th century,
    0:01:46 Macy’s was a retailing giant,
    0:01:49 but it’s been in trouble for years.
    0:01:51 And if it were to disappear
    0:01:54 the way that Sears and Montgomery Ward
    0:01:57 and Lord and Taylor and many other department stores
    0:02:01 have disappeared, the parade would likely disappear as well.
    0:02:05 How likely is it that Macy’s disappears?
    0:02:08 That’s one of the questions we’re asking in this episode.
    0:02:11 Macy’s is a publicly traded company
    0:02:14 worth a bit more than $4 billion.
    0:02:16 That is not very much.
    0:02:20 The target chain is worth about $60 billion.
    0:02:24 Walmart, 720 billion.
    0:02:27 Macy’s real estate is thought to be worth roughly double
    0:02:30 its $4 billion stock market value.
    0:02:32 You could take that to mean
    0:02:34 that Macy’s simply is no longer very good
    0:02:35 at being a department store
    0:02:39 or that department stores in general are doomed.
    0:02:41 Over the years on this show,
    0:02:43 we’ve interviewed quite a few CEOs
    0:02:46 and most of them were in thriving industries,
    0:02:50 biotech and software, energy and entertainment.
    0:02:53 We haven’t talked much about the retail industry,
    0:02:55 but the fact is that a huge share
    0:02:58 of the global economy is a retail economy.
    0:03:03 So we thought this was a conversation worth having.
    0:03:05 Today on Freakinomics Radio,
    0:03:09 Macy’s CEO Tony Spring makes his case.
    0:03:11 – We are not just a retailer.
    0:03:13 We are not just a physical store.
    0:03:17 We are a celebrator of life’s moments.
    0:03:19 We also hear a dissenting voice.
    0:03:22 – Until it’s successful, keep your mouth shut
    0:03:24 because you create expectations
    0:03:25 that may not be realistic.
    0:03:27 – And we look at another retailer
    0:03:29 who is swimming against the tide.
    0:03:32 – I drove by the bookstore and I could see in the window
    0:03:35 that people were really enjoying themselves
    0:03:36 and I thought that’s what I want.
    0:03:40 – But is wanting something enough to make it happen?
    0:03:42 (upbeat music)
    0:03:53 – This is Freakinomics Radio,
    0:03:56 the podcast that explores the hidden side of everything
    0:03:59 with your host, Stephen Dubner.
    0:04:01 (upbeat music)
    0:04:09 – Tony Spring became CEO of Macy’s
    0:04:11 in February of 2024
    0:04:12 and he was appointed chairman of the board
    0:04:14 a couple months later.
    0:04:16 He is proud of his parade,
    0:04:19 but he recognizes that a parade isn’t enough.
    0:04:22 – I want to be perceived as giving this gift
    0:04:23 to the city and to the nation.
    0:04:25 I also want to do a lot of business.
    0:04:27 I’ll give you an adage that one of my former colleagues
    0:04:28 at Bloomingdale said to me,
    0:04:30 we want to win an Oscar.
    0:04:32 We also want to win at the box office.
    0:04:34 – So you grew up just north of New York City
    0:04:35 in Westchester County.
    0:04:36 – I did.
    0:04:41 – How much did you know about or go to Macy’s as a kid?
    0:04:43 – I certainly went to Macy’s Herald Square
    0:04:45 and it felt like an adventure.
    0:04:47 Everything was overwhelming.
    0:04:51 The oversized ceilings, the environments, the storytelling.
    0:04:52 I love this.
    0:04:54 – Those old wooden escalators.
    0:04:57 – And they are still there functioning to this day.
    0:04:59 But I actually fell in love with retail
    0:05:01 working in hospitality.
    0:05:03 I worked in a Burger King restaurant
    0:05:05 when I was in high school.
    0:05:07 I remember starting that job
    0:05:09 and feeling like working with the customer
    0:05:12 was the most exciting thing, hearing the cash register ring,
    0:05:14 being able to serve consumers.
    0:05:16 But that first week on the job,
    0:05:18 all I was doing was cleaning the parking lot.
    0:05:20 After about a week, the manager pulled me aside.
    0:05:21 He said, do you know why you were working
    0:05:23 in the parking lot for a week?
    0:05:24 I said, I have no idea.
    0:05:27 He said, because that’s the first impression
    0:05:28 that people have.
    0:05:29 And if the parking lot is dirty,
    0:05:31 they think the restaurant is dirty.
    0:05:32 They don’t think the food is fresh.
    0:05:35 And that first impression mentality stuck with me
    0:05:37 all throughout my retail career.
    0:05:40 – Spring went to Cornell University
    0:05:43 and studied in its world famous hospitality school.
    0:05:46 There he met a recruiter from Bloomingdale’s,
    0:05:50 a beloved old luxury retailer in New York City.
    0:05:52 They were looking to place Cornell graduates
    0:05:54 in their executive training program.
    0:05:56 Maybe you remember the Seinfeld episode
    0:06:00 where Jerry’s parents want him to quit comedy
    0:06:03 and join the Bloomingdale’s executive training program?
    0:06:05 Jerry wasn’t interested,
    0:06:08 but Tony Spring was and he loved it.
    0:06:10 This was in 1987.
    0:06:15 – The company was well known for of the moment ideas.
    0:06:17 If you remember back in the late ’80s,
    0:06:19 there were these rocking flowers
    0:06:22 that came out of Asia that moved to music.
    0:06:25 Bloomingdale’s, they were the ones who sold the mood rings.
    0:06:28 They sold a piece of the Berlin Wall when it came down.
    0:06:30 They had merchandise out of India
    0:06:32 and out of China before anyone else.
    0:06:33 – Bloomingdale’s had by then
    0:06:36 long been part of a retail conglomerate called Federated.
    0:06:40 Macy’s tried to acquire Federated, but failed.
    0:06:44 Soon after, Federated entered bankruptcy.
    0:06:47 Couple years later, Macy’s entered bankruptcy,
    0:06:50 at which point Federated came out of bankruptcy
    0:06:53 and acquired Macy’s, got that.
    0:06:56 Federated became the biggest department store company
    0:07:00 in the US, but they also knew the power of the Macy’s brand.
    0:07:04 So they changed the company name to Macy’s, Inc.
    0:07:08 and rebranded many of their other stores as Macy’s.
    0:07:09 Although not Bloomingdale’s,
    0:07:12 that brand was strong enough to stand on its own.
    0:07:15 In 2015, Macy’s, Inc.
    0:07:18 acquired the high-end beauty retailer, Blue Mercury.
    0:07:20 So those are the three main brands
    0:07:22 that today make up Macy’s, Inc.
    0:07:26 Blue Mercury, Bloomingdale’s, and Macy’s.
    0:07:29 For now, Tony Springs says they will remain separate,
    0:07:34 but the mix will change as Macy’s itself continues to shrink.
    0:07:38 Back in 2007, there were more than 800 Macy’s stores.
    0:07:39 Now there are fewer than 500,
    0:07:43 and that number is due to fall again soon by quite a lot.
    0:07:47 So Tony Springs’ job is to at least stop the bleeding.
    0:07:50 He does have a positive attitude.
    0:07:54 Even though a lot of America needs to re-embrace Macy’s,
    0:07:57 there’s still plenty of people who are shopping at Macy’s.
    0:07:59 41 million active consumers,
    0:08:03 five different generations shopping at Macy’s.
    0:08:06 – Earlier this year, Tony, you faced a takeover challenge
    0:08:08 from the investment firm, Arc House,
    0:08:10 and the asset manager, Brigade.
    0:08:11 And this was not the first time
    0:08:14 that activist investors have come after Macy’s.
    0:08:16 The current market capitalization of your firm
    0:08:19 is only around 4.2 billion as we speak,
    0:08:23 and Arc House offered 6 billion, I believe.
    0:08:26 I’ve read that your real estate portfolio
    0:08:30 is worth between $7 billion and $11 billion.
    0:08:32 First of all, does that estimate seem about right?
    0:08:33 Do you or no?
    0:08:36 – I’ll leave that to the real estate experts.
    0:08:39 – All right, so what’s your best case to shareholders
    0:08:41 for why they should be happy
    0:08:44 that you turned down that offer?
    0:08:45 – Let’s put it in context.
    0:08:48 It was a proposal, not an offer.
    0:08:49 It wasn’t fully financed.
    0:08:52 After seven months of due diligence,
    0:08:55 the board unanimously voted to move on
    0:08:58 and focus on creating value for our shareholders.
    0:09:01 We remain open to a valuation that is higher
    0:09:04 than we are today, but the most important thing
    0:09:06 we can do as a leadership team
    0:09:08 is get to work on delivering a better experience
    0:09:09 for the consumer.
    0:09:11 – Okay, so the market cap is real.
    0:09:12 That’s verifiable.
    0:09:14 Let’s call it 4.2 billion.
    0:09:16 Let’s say that that real estate estimate
    0:09:18 between $7 and $11 billion.
    0:09:21 Let’s assume that that’s accurate-ish.
    0:09:23 What does it say that your market cap
    0:09:27 is roughly half of the real estate value?
    0:09:29 – Now is the time to buy Macy’s.
    0:09:31 (laughs)
    0:09:32 – Okay, anything more on that though?
    0:09:34 Because, you know, if I’m in…
    0:09:35 – Well, I mean, I look at it as being
    0:09:38 an absolutely attractive stock to buy.
    0:09:40 The multiple is low.
    0:09:42 The company has made a commitment
    0:09:44 to turn itself around
    0:09:46 and deliver a better experience for the customer.
    0:09:49 It’s a portfolio company, so it’s not just Macy’s.
    0:09:52 You get Bloomingdale’s and Blue Mercury.
    0:09:54 And you’re at a moment in time
    0:09:56 where there’s been so much disruption at retail.
    0:09:59 If I could get in at an inexpensive price,
    0:10:02 why wouldn’t I wanna capitalize on the future
    0:10:03 of what this company is?
    0:10:06 And then by the way, the real estate has value.
    0:10:08 The company’s also proven over the last seven years
    0:10:11 we’ve monetized over $2.5 billion worth of real estate.
    0:10:13 – Monetized meaning sold?
    0:10:14 – Sold.
    0:10:16 So to your point, how can the sum of the parts
    0:10:18 not be worth more?
    0:10:20 Look, I don’t get to value the company.
    0:10:23 I can only comment on how the company’s been valued.
    0:10:25 We are a retail company first.
    0:10:29 We enjoy and benefit from a great portfolio of real estate.
    0:10:31 And we’ll continue to look at opportunities
    0:10:36 to both acquire assets as well as divestive assets.
    0:10:39 – When we’re talking about the value
    0:10:41 of Macy’s Inc. real estate,
    0:10:43 we’re really talking about the bigger Macy’s
    0:10:45 and Bloomingdale’s locations
    0:10:47 where the company owns the building.
    0:10:49 They rent most of their smaller stores
    0:10:52 as well as their Blue Mercury locations.
    0:10:55 Tony Spring is planning to close and sell
    0:10:58 around 150 of the bigger Macy’s stores.
    0:11:01 This should raise roughly half a billion dollars.
    0:11:05 At the same time, he plans to open some smaller Macy’s stores
    0:11:08 and to expand Bloomingdale’s and Blue Mercury.
    0:11:10 – We are ambitious, we are hungry,
    0:11:13 we are interested in being better in the future.
    0:11:16 You essentially have a healthy company
    0:11:19 that has you throw in the parade, the fireworks,
    0:11:22 the flower show, a relevancy gap
    0:11:25 that will be addressed by this leadership team.
    0:11:27 – I’m glad you brought up the parade, Tony.
    0:11:29 No one we’ve spoken with at Macy’s
    0:11:33 wants to talk about the economics of the parade.
    0:11:35 It’s plainly expensive to produce,
    0:11:39 but based on a rough calculation of sponsorship dollars
    0:11:41 and TV ad sales,
    0:11:44 it’s obviously quite valuable to you as well.
    0:11:49 Is it possible that the parade is the most valuable asset
    0:11:51 in the Macy’s portfolio?
    0:11:53 – I would say the most valuable,
    0:11:55 but I would say it’s a valuable asset
    0:11:57 in the Macy’s portfolio.
    0:11:59 The same way I would say Harold Square
    0:12:01 is a valuable asset in our portfolio.
    0:12:03 This is the advantage I think we have.
    0:12:05 We are not just a retailer.
    0:12:08 We are not just a physical store.
    0:12:11 We are a celebrator of life’s moments.
    0:12:13 I use the ordinary to the extraordinary.
    0:12:16 The ordinary of I just need to run in and get a pair of socks.
    0:12:20 I just need to get a new pair of jeans to the extraordinary,
    0:12:21 the parade, the fireworks,
    0:12:23 and how about your 50th birthday party?
    0:12:26 How about you’re, hopefully you’re one marriage
    0:12:27 to the person you love.
    0:12:28 How about the birth of your son?
    0:12:32 I mean, these are the moments that I think Macy’s
    0:12:35 can be and should be and is known for.
    0:12:37 (gentle music)
    0:12:45 – And here’s someone who is not quite as confident
    0:12:47 about the future of Macy’s.
    0:12:50 – Macy’s has a hell of a challenge over the next few years
    0:12:51 to remain upright,
    0:12:54 let alone become successful as they once were.
    0:12:56 – That is Mark Cohen.
    0:12:58 – M-A-R-K-C-O-H-E-N.
    0:13:00 – Cohen recently retired as a professor
    0:13:04 and director of retail studies at Columbia Business School.
    0:13:07 Before that, he worked for 30 years in the retail business.
    0:13:10 His first job was at Abraham and Strauss,
    0:13:12 which no longer exists.
    0:13:16 His final job was as CEO of Sears Canada,
    0:13:18 which also no longer exists.
    0:13:21 I asked Cohen why the Columbia Business School
    0:13:23 even teaches retail studies.
    0:13:26 – It’s not the sexiest industry.
    0:13:29 It is arguably the largest.
    0:13:33 Retailing is 70 to 80% of the world’s economy.
    0:13:37 There’s been an enormous resurgence in interest in retailing,
    0:13:40 largely on the side of entrepreneurship.
    0:13:41 I would also point out
    0:13:45 that some of the world’s largest individual fortunes
    0:13:48 have been made coming out of retail,
    0:13:50 obviously the Walton family.
    0:13:54 Then there’s the ubiquitous Jeff Bezos experience at Amazon.
    0:13:57 – Zara is a big one into techs, right?
    0:13:57 – You bet.
    0:14:00 – LVMH, a different kind of retail, I guess,
    0:14:01 but still retail.
    0:14:02 – That’s right.
    0:14:04 – So some retailers are obviously thriving.
    0:14:08 And I’ve seen data suggesting that the e-commerce apocalypse
    0:14:11 just hasn’t happened, that good brick and mortar has a future.
    0:14:14 But let’s take a case study of failure.
    0:14:16 Let’s talk about Sears.
    0:14:19 They were massive, and now they’re pretty much dead.
    0:14:23 You were a senior executive at Sears before its demise.
    0:14:26 I assume it wasn’t your fault, but…
    0:14:29 – No, it wasn’t my fault.
    0:14:30 The underlying issue in retailing
    0:14:33 is the customer has never disappeared.
    0:14:35 The customer has never gone away.
    0:14:38 The customer, worldwide, is hard-coded
    0:14:40 to want to shop for things,
    0:14:44 the only self-limiting issues being their economic capability
    0:14:47 and their proximity to a marketplace.
    0:14:49 At the turn of the 20th century,
    0:14:52 customers in the United States were able to shop
    0:14:55 by coming downtown to shop
    0:14:59 in an emerging department store emporium.
    0:15:01 They also began to be able to shop
    0:15:04 in the early 20th century through catalogs
    0:15:06 like Sears Robux.
    0:15:09 If you couldn’t find it in a Sears catalog,
    0:15:10 you didn’t need it.
    0:15:13 You could buy everything from a barrel to a,
    0:15:15 you build it, house.
    0:15:17 And they built out the facility
    0:15:20 with which to fulfill customer demand,
    0:15:22 literally throughout the United States.
    0:15:25 In the aftermath of World War II,
    0:15:29 millions of servicemen began to return from overseas
    0:15:33 and were eager on catching up on their lives
    0:15:35 and forming households.
    0:15:38 They began to migrate from urban centers
    0:15:42 and rural communities into newly formed suburbs.
    0:15:46 Dwight Eisenhower, the US president in the ’50s,
    0:15:48 has a lot to do with the emergence
    0:15:51 of mid-20th century retail
    0:15:55 when he caused the interstate highway system to be built,
    0:15:57 having come out of World War II
    0:16:02 and witnessing the efficacy of the German Autobahn.
    0:16:04 His rationale was we have to have a way
    0:16:08 to move men and material north, south, east and west
    0:16:11 efficiently as opposed to a cross two-lane black top,
    0:16:15 which is what connected the United States at that time.
    0:16:16 Of course, we were never invaded.
    0:16:19 There was no reason for the interstate highway system
    0:16:22 to be an adjunct of the defense department.
    0:16:27 What it did was it spawned an enormous amount of migration
    0:16:29 into newly formed suburbs,
    0:16:32 which were being built in close proximity
    0:16:34 to these interstate highways.
    0:16:39 So there was this emergence of suburban-based mall retailing
    0:16:43 which hollowed out traditional downtown-based retailing
    0:16:45 in hundreds of US cities.
    0:16:47 Sears was one of those department stores
    0:16:50 that migrated to the suburban malls.
    0:16:54 And they became the largest retailer in the world
    0:16:56 through the 1960s.
    0:16:58 So what happened to Sears?
    0:17:03 Success, in many cases, brings complacency, hubris.
    0:17:09 Success seeds failure in many enterprises
    0:17:11 as they become larger and larger
    0:17:14 and become convinced that they are the last word.
    0:17:18 It was a very insular, inwardly-facing business.
    0:17:21 In fact, when the two founders of Home Depot
    0:17:24 came to visit Sears Robuck some years ago,
    0:17:26 looking to get some financial support
    0:17:29 to launch their business,
    0:17:32 they basically got laughed out of the meeting
    0:17:35 by senior executives at Sears who looked at them
    0:17:39 as upstarts who had nothing to offer.
    0:17:42 Okay, that’s Mark Cohen on the rise and fall of Sears.
    0:17:45 How about Macy’s at its peak?
    0:17:48 Macy’s was a brilliantly constructed
    0:17:50 general merchandise emporium,
    0:17:54 servicing customers from low-middle income
    0:17:57 all the way up into near luxury.
    0:17:59 They were very good-looking stores
    0:18:02 that were very powerfully merchandised,
    0:18:05 topical and current,
    0:18:07 and they did it very consistently.
    0:18:10 When you say it was powerfully merchandised,
    0:18:11 I’ve read you write before about
    0:18:13 what makes a good store good and a bad store bad.
    0:18:15 What are some things that Macy’s did
    0:18:16 when they were very good?
    0:18:19 One of the most important things they did
    0:18:22 was they created a over-large business
    0:18:26 consisting of housewares products
    0:18:28 by creating on the lower level
    0:18:29 of their Herald Square store
    0:18:31 something they called the seller.
    0:18:33 Good use of underground real estate too.
    0:18:36 Yes, so they took a whole variety of categories
    0:18:38 that were not up until that point
    0:18:41 viewed as particularly sexy or fashionable.
    0:18:43 They gave them a home,
    0:18:45 amped up their presentation,
    0:18:48 and built a business that customers
    0:18:51 would previously have seen as a place
    0:18:53 to buy utility products.
    0:18:55 We need another frying pan
    0:18:58 to a place to buy an entire suite of cookware.
    0:19:00 And they did it brilliantly.
    0:19:02 It was putting the puzzle pieces together
    0:19:04 in a way that hadn’t been done before.
    0:19:07 Which decades were the strongest decades for Macy’s?
    0:19:11 Probably the ’60s and ’70s.
    0:19:13 How profitable was Macy’s in its heyday?
    0:19:14 It was very profitable.
    0:19:16 I don’t have a specific number to say,
    0:19:19 but they were viewed as good as it gets.
    0:19:21 How fashionable were the clothes
    0:19:23 at Macy’s during its heyday?
    0:19:24 Very fashionable.
    0:19:28 They were purveyors of the best brands of the day.
    0:19:32 And Macy’s also invested in a whole portfolio
    0:19:34 of private label brands
    0:19:37 in both apparel and accessories and in home.
    0:19:39 So you’re telling us all these things that Macy’s did,
    0:19:41 basically what Macy’s stood for
    0:19:43 for these several decades.
    0:19:45 When you look at Macy’s today,
    0:19:47 what does it stand for?
    0:19:49 Well, unfortunately, and in my view,
    0:19:51 Macy’s doesn’t stand for anything today.
    0:19:54 A consumer facing enterprise,
    0:19:58 a brand, a store, a website has to stand for something.
    0:20:00 It has to have a point of view
    0:20:03 that not only is recognized by customers
    0:20:06 as something they want to associate with,
    0:20:09 but differentiates itself from competition
    0:20:12 and is able to defend itself from competition.
    0:20:15 So what’d they do wrong in these last several decades?
    0:20:20 Well, Macy’s began to prop up their lagging productivity
    0:20:25 and they began to play the last man standing game.
    0:20:26 You know, buy your competition
    0:20:28 and decide that’s the secret to life
    0:20:30 because now you don’t have to compete
    0:20:32 with someone head to head.
    0:20:36 They also consolidated all of their regional banners
    0:20:38 under the heading Macy’s.
    0:20:43 They did this in an attempt to retain their relevance,
    0:20:45 which was under tremendous pressure
    0:20:48 because of all of these specialty store chains.
    0:20:52 And then the big box off mall retailers
    0:20:55 started to do an enormous amount of volume.
    0:20:59 And then of course, there’s Jeff Bezos, Amazon.
    0:21:02 I’m curious as Macy’s business and reputation
    0:21:04 founded for all these decades,
    0:21:07 what kind of brands would no longer sell to them
    0:21:09 because they don’t want their stuff in a Macy’s?
    0:21:13 Well, Macy’s has historically abused their vendor community.
    0:21:17 And I’ve used that word and some former CEOs
    0:21:19 at Federated Macy’s have objected to it,
    0:21:21 but they can’t object very loudly
    0:21:24 because they know damn well that I’m telling the truth.
    0:21:29 They have been historically tremendously one-sided
    0:21:31 in their behavior.
    0:21:35 Many brands grudgingly supported their merchandise
    0:21:35 being sold at Macy’s
    0:21:38 ’cause they did not have an alternative.
    0:21:40 They now have alternatives.
    0:21:43 What specifically did Macy’s do to their vendors
    0:21:45 that you’re calling abusive, paying late,
    0:21:47 not marketing well, what was it?
    0:21:52 They would be pounded for best price upfront.
    0:21:55 And then there would be demands made for advertising
    0:21:57 and presentation allowances,
    0:22:00 demands made for gross margin guarantees,
    0:22:05 markdown protection, exclusives.
    0:22:06 In other words, if you sell us,
    0:22:08 you can’t sell anybody else.
    0:22:12 Macy’s played the, we want it all our way game
    0:22:13 for many, many years.
    0:22:16 And many brands basically took a deep breath
    0:22:18 and did business with them
    0:22:21 because that was the only game in town for their merchandise.
    0:22:24 So if we were talking 10 years from now,
    0:22:26 do you think Macy’s still exists?
    0:22:27 It’s problematic.
    0:22:30 They have survived several attempts by activists
    0:22:35 to move into the stock, to monetize their assets,
    0:22:37 which is principally their real estate.
    0:22:39 And they’ve all failed because frankly,
    0:22:41 there’s no they’re there,
    0:22:43 even though you could argue that Harold Square
    0:22:45 in New York Union Square in San Francisco
    0:22:48 are worth an enormous amount of money.
    0:22:51 Is there a buyer who’s going to pay billions of dollars
    0:22:54 to put an office tower on top of Harold Square?
    0:22:56 Answer is no.
    0:22:59 – So Mark, I am not a business analyst of any sort,
    0:23:01 but when I look at Macy’s,
    0:23:03 I see a company whose market cap is a bit
    0:23:07 over $4 billion with a real estate portfolio,
    0:23:09 estimated at roughly double that.
    0:23:12 And when I look at their other assets,
    0:23:15 their Thanksgiving Day Parade is massive,
    0:23:18 not only as marketing for the brand itself,
    0:23:19 but as a profit center.
    0:23:22 They’re selling sponsorships for the balloons and floats
    0:23:23 and who knows what else.
    0:23:26 And they’re getting a share of the ad sales
    0:23:28 for one of the biggest TV events of the year.
    0:23:32 So am I crazy, Mark,
    0:23:34 for thinking that the Macy’s Parade
    0:23:37 is maybe the single most valuable asset
    0:23:39 that Macy still has?
    0:23:40 – Well, you’re not crazy,
    0:23:42 but you have to reflect on the fact
    0:23:43 that for anything to have value,
    0:23:46 there has to be someone who holds the value
    0:23:49 and someone who has an interest in possessing the value.
    0:23:54 Would the Super Bowl ad madness have any firmament
    0:23:59 if there was no Super Bowl supporting that three hour window?
    0:24:04 So the Parade has been forever attached to Macy’s
    0:24:06 as a name and over the years,
    0:24:10 it became a commercial issue unto itself.
    0:24:13 They don’t tell you how much it costs to put on the Parade
    0:24:16 and they won’t tell you how much they receive in return.
    0:24:19 They will never reveal it unless it was required by law.
    0:24:23 It is likely to be a substantial profit generator.
    0:24:26 Nothing gets presented during the Parade
    0:24:29 that doesn’t have a price tag attached.
    0:24:33 But of course, it doesn’t translate these days
    0:24:36 into footsteps to doing business inside the store.
    0:24:39 – After the break,
    0:24:41 Tony Spring thinks he knows how to get the footsteps
    0:24:43 inside the store.
    0:24:44 I’m Steven Dubner.
    0:24:45 This is Freakonomics Radio.
    0:24:46 We’ll be right back.
    0:24:57 We’ve been talking about the fate of Macy’s
    0:24:59 with Mark Cohen,
    0:25:02 a former retail executive and business school professor
    0:25:06 and Tony Spring, the CEO of Macy’s.
    0:25:09 Spring spent nine years as CEO of Bloomingdale’s,
    0:25:12 a more upscale store within the Macy’s portfolio.
    0:25:16 And in early 2024, he took over the mother ship.
    0:25:20 Spring knows, as does the entire retail industry,
    0:25:23 that Macy’s ink is not in great shape.
    0:25:26 So he has been asked to engineer a turnaround.
    0:25:30 He came up with a strategy called a bold new chapter.
    0:25:32 – The strategy is made up of really strengthening
    0:25:34 the Macy’s brand.
    0:25:37 And that includes divesting about 150 stores
    0:25:39 that are no longer relevant.
    0:25:41 – When Spring says divesting,
    0:25:43 that means shutting down the failing stores
    0:25:45 and selling the real estate.
    0:25:49 What else is in the bold new chapter strategy?
    0:25:51 – It’s investing into the improvements
    0:25:53 within our merchandise assortment.
    0:25:56 We’ve revamped the entire private brand portfolio,
    0:25:58 exiting brands that were no longer relevant,
    0:26:00 introducing new brands that resonate
    0:26:03 with multi-generations of consumers.
    0:26:05 – I asked for an example of this.
    0:26:08 – Right now you have this trend on young kids,
    0:26:10 boys wearing perfume, you know, cologne.
    0:26:12 They’ve seen it on social media, on TikTok.
    0:26:14 And so we got to lean into that.
    0:26:15 We got to have the best assortment
    0:26:17 of perfumes and colognes for kids
    0:26:20 so that they think of Macy’s as being a great destination
    0:26:22 to buy their fragrances.
    0:26:25 – Okay, what else is Tony Spring working on?
    0:26:27 – Improving the condition of our stores,
    0:26:30 more staffing, better visual presentation,
    0:26:32 embracing different store formats.
    0:26:35 And then at the Bloomingdale’s and Blue Mercury brands,
    0:26:38 it’s leaning into the affluent and luxury consumer.
    0:26:41 And surrounding it is this desire to take cost
    0:26:44 that is not visible to the consumer through automation,
    0:26:47 through reducing complexity out of the business
    0:26:50 so that we can give the customer just a better experience
    0:26:51 no matter how they shop.
    0:26:53 – So here’s something you’ve said in the past.
    0:26:56 I love stores, I’m a store guy,
    0:26:58 but bad stores are bad stores.
    0:27:00 You just told me that you are planning
    0:27:03 to close a lot of stores that are no longer relevant.
    0:27:05 What makes a bad store bad?
    0:27:08 What makes an irrelevant store irrelevant?
    0:27:10 – You’re the last store open in the mall.
    0:27:15 The store was built in 1965 for a different time period.
    0:27:18 The store has a roof that’s about 37 years old
    0:27:20 on a 30-year lifeline.
    0:27:21 The elevator doesn’t work,
    0:27:23 the escalator breaks five times a year.
    0:27:25 The brands don’t wanna sell us,
    0:27:27 so it’s made up of private brands
    0:27:30 and brands that don’t care about their points of distribution.
    0:27:32 – I’m looking at something here, Tony.
    0:27:36 It’s a consumer survey with 1,200 respondents.
    0:27:41 It shows that awareness of Macy’s is incredibly high, 88%.
    0:27:44 But then when you look at the other categories,
    0:27:49 Macy’s popularity, usage, loyalty, Macy’s buzz,
    0:27:52 those are all in the 20 to 30% range.
    0:27:55 That is an unbelievable gap.
    0:27:58 So what makes you think you can recover from that?
    0:28:01 – I’m a big believer in self-awareness and ambition.
    0:28:02 You need to know who you are
    0:28:04 before you can get to what you want to be.
    0:28:07 We spent a greater part of 18 months
    0:28:09 basically saying we’re not good at this,
    0:28:12 we need to work on that, this needs to be stronger.
    0:28:14 We did our own version of that same survey
    0:28:16 which said high level of awareness,
    0:28:18 not a strong enough level of conversion.
    0:28:20 The issue remains with us.
    0:28:23 How well do we execute our strategy?
    0:28:25 How fast do we move?
    0:28:27 How well do we communicate those changes?
    0:28:30 – So there is a practice among some businesses
    0:28:32 called a pre-mortem.
    0:28:33 I don’t know if you’ve ever heard of this.
    0:28:35 – I am very fond of it.
    0:28:39 – So you imagine that things have failed
    0:28:41 and then before it has a chance to fail,
    0:28:43 you sit and think, well, why would it have failed?
    0:28:45 And let’s fix that now.
    0:28:48 So if you were to pre-mortem Macy’s Inc. right now,
    0:28:52 what do you think are the biggest existential threats
    0:28:54 to its continued longevity?
    0:28:55 Is it online shopping?
    0:28:57 Is it discount retailers?
    0:29:00 Is it maybe people just deciding to buy less stuff,
    0:29:01 et cetera, et cetera?
    0:29:03 – I think disintermediation,
    0:29:06 the brands being able to go directly to the consumer,
    0:29:08 the brands deciding that you are not as important
    0:29:10 a point of distribution.
    0:29:13 And this comes down to being a people business.
    0:29:15 The people that are attentive,
    0:29:18 return your phone calls, texts or emails,
    0:29:21 pay you on time, treat your brand with respect.
    0:29:23 Those are the people that are gonna continue to sell you
    0:29:25 or wanna sell you in the future.
    0:29:28 – Name a brand partner or two that’s pulled out of Macy’s
    0:29:30 over the last five or 10 years.
    0:29:31 – Nike would be one.
    0:29:34 They took an 18 month break and then decided
    0:29:36 that they needed more points of distribution
    0:29:39 and we’ve built a nice business back together again.
    0:29:41 – Name a couple brands that you’d like to have
    0:29:42 that you don’t have yet.
    0:29:45 – We’d love to have Tory Burch at Macy’s.
    0:29:47 We have a nice business at Bloomingdale’s.
    0:29:50 We would love to have On Running,
    0:29:52 which is a great sneaker brand that we have
    0:29:55 at Bloomingdale’s that we don’t have at Macy’s.
    0:29:56 – So what is that kind of conversation like
    0:29:58 with a brand like let’s say Tory Burch
    0:30:01 of trying to convert them or include them in Macy’s
    0:30:03 since they’re already in Bloomingdale’s?
    0:30:05 – Yeah, you have to talk about, again,
    0:30:08 the benefit of a multi brand retail environment
    0:30:11 where you’re talking to 41 million active customers
    0:30:14 at Macy’s versus 4 million active customers
    0:30:15 at Bloomingdale’s.
    0:30:16 Based on the scale of Macy’s,
    0:30:18 you have more affluent customers shopping at Macy’s
    0:30:20 than shopping at Bloomingdale’s.
    0:30:23 You have a more diverse customer shopping at Macy’s.
    0:30:25 Bloomingdale’s is a great business.
    0:30:27 I love that brand having grown up there,
    0:30:28 but that’s a slice of America.
    0:30:31 Macy’s is America and if you really want to understand
    0:30:34 how fashion works across the country,
    0:30:36 you need a partner like Macy’s
    0:30:38 that can help give you that feedback.
    0:30:41 – Describe for me what a good Macy’s store looks like
    0:30:41 in the near future.
    0:30:45 What specifically is changing and improving?
    0:30:47 – You hopefully will go to Macy’s
    0:30:50 and find a wide variety of assortment,
    0:30:53 but not the endless aisle you’ve been hearing about.
    0:30:55 I don’t want to wander down some place that never ends.
    0:30:56 I want to go to the best aisle
    0:30:59 where I have actual variety, not redundancy.
    0:31:01 So you’re going to show me a handful of items
    0:31:03 in a category ’cause I want to buy a polo shirt
    0:31:05 and you’re going to give me good, better best.
    0:31:07 You’re going to be in stock in my size.
    0:31:10 I’m going to be greeted by somebody who’s pleasant.
    0:31:12 I’m going to be rung up efficiently and effectively.
    0:31:16 I also might go and meet my boyfriends, girlfriends,
    0:31:19 whoever it is, and me enter through the store
    0:31:20 and actually discover some things
    0:31:22 that I haven’t heard of or seen before.
    0:31:25 I might stop into the cafe or to the restaurant
    0:31:28 or Starbucks and grab a latte.
    0:31:30 And I’ll remember the experiences being,
    0:31:33 Macy’s is there for me when I need them.
    0:31:36 – We spoke with one retail analyst who,
    0:31:37 by the way, as a fan of yours,
    0:31:40 he thinks the turnaround is really promising.
    0:31:43 He said that your parade, quote, generates magic,
    0:31:45 but that’s not always the experience
    0:31:46 of shopping at Macy’s.
    0:31:49 He said, you guys run this fantastic parade,
    0:31:52 but you can’t put any magic into your shop floor.
    0:31:54 I’m curious to hear your response to that.
    0:31:57 And I’m also curious to know whether you think about
    0:31:59 integrating the parade designers
    0:32:02 into your customer experience team somehow.
    0:32:05 – Yeah, I think a challenge given, challenge taken.
    0:32:09 How do I recreate a once a year phenomenon
    0:32:11 that has, let’s just say, a few dollars thrown at it
    0:32:14 to make it extremely magical?
    0:32:16 I think it should inspire us to step up
    0:32:19 and to deliver something far better.
    0:32:21 But I think we also can’t hold the mirror
    0:32:23 on the parade to the store experience
    0:32:26 and say, that’s what every day is going to be.
    0:32:29 – Given that you want to grow your luxury business
    0:32:32 and given your Bloomingdale’s background,
    0:32:35 I’m curious if you’re thinking about trying to use the parade
    0:32:37 to move things in that direction.
    0:32:40 Should we look for a Tory Burch float, for instance,
    0:32:42 or anything in that direction?
    0:32:44 – If Tory Burch had something to say in the parade,
    0:32:46 I’d love for them to be in the parade.
    0:32:50 You will see more integration in the future
    0:32:52 of the things that we do in the parade
    0:32:54 to the things that we do in the store.
    0:32:55 Think about it this way.
    0:32:58 Black Friday is the kickoff to the final parts
    0:33:00 of the holiday season.
    0:33:03 And we own America in conveying that message.
    0:33:06 Thanksgiving is a family celebration
    0:33:08 that begins not on the day of Thanksgiving,
    0:33:10 begins several weeks before.
    0:33:12 Do you have enough chairs?
    0:33:13 Do you have enough plates?
    0:33:14 How do I keep people active?
    0:33:16 Do I have games for them to play?
    0:33:20 So we have this opportunity to be a part of America’s Day
    0:33:22 in a very meaningful way before
    0:33:25 and the kickoff to America’s celebration
    0:33:27 of the gifting time of the year
    0:33:31 with the 28 and a half or 29 million people watching.
    0:33:33 (upbeat music)
    0:33:37 (upbeat music)
    0:33:39 By the way, Macy’s does already sell
    0:33:41 some Tory Burch merchandise,
    0:33:44 like watches, fragrances and sunglasses,
    0:33:47 but not the more expensive items like bags or shoes,
    0:33:50 which they would like to sell.
    0:33:52 So we just heard Tony Springs’ plan
    0:33:55 for a bold new chapter.
    0:33:56 Will it work?
    0:33:58 I have no idea.
    0:34:01 The bad news coming out of Macy’s doesn’t seem to stop.
    0:34:04 Just recently, Macy’s revealed that an employee
    0:34:08 had intentionally hidden around $150 million
    0:34:11 in delivery expenses over the past few years.
    0:34:13 This news forced a delay
    0:34:15 of the company’s quarterly earnings report.
    0:34:18 That is bad.
    0:34:21 While the retail industry may not be as technically complicated
    0:34:24 as a lot of the industries we’re used to talking about
    0:34:27 on this show, like healthcare or artificial intelligence,
    0:34:30 it is plenty complicated in its own way.
    0:34:33 This makes it hard for any outsider to predict
    0:34:36 whether Tony Spring will be successful.
    0:34:40 So we went back to an insider, Mark Cohen,
    0:34:43 the former retail executive and business school professor,
    0:34:48 to ask what he thinks of the bold new chapter strategy.
    0:34:51 Well, I’m generally speaking hostile to sloganeering.
    0:34:54 And Macy’s has been guilty of sloganeering
    0:34:56 for well over a decade.
    0:34:59 They were invested in the magic of Macy’s,
    0:35:03 which basically there was no magic to Macy’s.
    0:35:07 The most recent CEO was all invested
    0:35:10 in something called a Polaris strategy,
    0:35:13 which not to be crude was more bulls*** than real.
    0:35:18 There’s no there, there behind what Tony Spring
    0:35:21 has been able or willing to describe.
    0:35:25 His general description of improvements
    0:35:27 in terms of making the assortments
    0:35:30 more relevant to consumers.
    0:35:32 That’s kind of like motherhood and apple pie.
    0:35:34 I don’t decry him for saying those words,
    0:35:37 but at the end of the day, I’m from the school that says,
    0:35:41 come up with the idea, put the idea in place,
    0:35:43 measure its success via failure.
    0:35:46 And once it’s successful, start talking about it.
    0:35:49 But until it’s successful, keep your mouth shut
    0:35:52 because you create expectations that may not be realistic.
    0:35:55 When’s the last time you were in a Macy’s?
    0:35:58 A few months ago, I passed through Harold Square
    0:36:01 whenever I’m in Midtown and some time before that,
    0:36:06 I hit a bunch of their suburban branches in Metro New York.
    0:36:10 When I’m asked to comment about someone’s success or failure,
    0:36:13 I try to be at least up to date
    0:36:15 in the observations that I make.
    0:36:18 So what did those Macy’s stories look like to you?
    0:36:19 They looked terrible.
    0:36:23 I’m told that Tony Spring has begun a process
    0:36:25 of cleaning up their act.
    0:36:28 I don’t know him, but I know him by way of background.
    0:36:32 He did a marvelous job of ensuring that Bloomingdale’s
    0:36:36 was a pristine, up-to-date, well-presented store.
    0:36:40 And so I’m told there has begun a process
    0:36:42 of improvement that’s visible.
    0:36:45 This literally means turning the stores
    0:36:49 into something far more clean, neat, and friendly
    0:36:52 than they had become under prior regimes.
    0:36:54 Okay, so the clean, neat, and friendly I get,
    0:36:56 but you’re also talking about the lack of good assortment,
    0:36:58 the lack of stuff that people want.
    0:37:00 What do they need to do there?
    0:37:02 Well, you have to start with clean, neat, and friendly,
    0:37:04 and then you have to fill the store
    0:37:09 with merchandise customers really want to buy.
    0:37:11 How hard can that be to figure out?
    0:37:13 That is the codex of retailing
    0:37:16 that is enormously difficult to do.
    0:37:19 It takes years and years and years
    0:37:23 to build a team of people who can create assortments,
    0:37:26 which, by the way, have to be created, recreated,
    0:37:30 represented almost every day,
    0:37:33 especially today when the customer’s loyalty
    0:37:35 can’t be counted upon.
    0:37:38 If you please a customer today, they may very well come back.
    0:37:41 If you piss them off today, they may never come back.
    0:37:43 (upbeat music)
    0:37:46 After the break, we talk to a very different kind
    0:37:50 of retailer who seems to have the loyal customer thing
    0:37:50 all worked out.
    0:37:52 (audience applauding)
    0:37:53 – It’s gorgeous inside.
    0:37:55 The building itself is so cool.
    0:37:58 – I hate change, but I think some of the stuff
    0:37:59 he’s doing is good.
    0:38:02 (audience cheering)
    0:38:05 – I’m Steven Dovner.
    0:38:07 This is Free Kinomics Radio.
    0:38:08 We’ll be right back.
    0:38:10 (upbeat music)
    0:38:13 (upbeat music)
    0:38:18 (upbeat music)
    0:38:24 How do you design a store where people are dying to shop?
    0:38:26 Macy’s is trying to figure that out.
    0:38:29 Again, having been largely unsuccessful
    0:38:31 for the past few decades after building
    0:38:35 one of the biggest department store chains in history.
    0:38:37 At the very least, Macy’s does know how
    0:38:40 to throw a killer parade.
    0:38:43 Last week in part one of this series,
    0:38:44 we heard from Jeff Kinney,
    0:38:47 author of the Diary of a Wimpy Kid books,
    0:38:50 which has sold nearly 300 million copies.
    0:38:52 For the past 14 years,
    0:38:55 Kinney has had a giant balloon in the Macy’s Parade,
    0:38:58 a balloon of Greg Hefley, the Wimpy Kid himself.
    0:39:02 Jeff Kinney lives with his family in Plainville, Massachusetts,
    0:39:07 and he has built a mid-sized media empire around Wimpy Kid.
    0:39:11 Spin-off book series, films, a musical, board games,
    0:39:12 quite a bit more.
    0:39:16 And he’s got one more project that is related-ish,
    0:39:17 but not quite.
    0:39:20 – We have a bookstore in the center of town,
    0:39:21 which is called An Unlikely Story,
    0:39:24 which has been in business for about nine years.
    0:39:27 – If I were to come visit your bookstore,
    0:39:29 how much Wimpy Kid do I see there?
    0:39:32 – You’d see very little Wimpy Kid at the bookstore.
    0:39:35 We’ve got a statue of Greg on the main floor,
    0:39:38 but mostly it’s a general bookstore.
    0:39:45 – You’ve probably never heard of Plainville.
    0:39:47 Only about 10,000 people live there.
    0:39:51 – I moved up to Massachusetts in 1995.
    0:39:54 My wife and I picked Plainville
    0:39:57 by creating a Venn diagram of three locations,
    0:40:01 Boston Logan Airport, TF Green Airport in Providence,
    0:40:04 and then my wife’s parents live in Worcester,
    0:40:07 and right at the intersection of those three places
    0:40:09 is this little town called Plainville.
    0:40:12 – Plainville is about an hour’s drive to Boston,
    0:40:15 half an hour to Providence, Rhode Island,
    0:40:17 and 15 minutes to Foxboro Mass,
    0:40:19 where the New England Patriots of the NFL
    0:40:21 play their home games.
    0:40:24 So what led Jeff Kinney to build this big bookstore here?
    0:40:27 – We started creating it about 12 years ago
    0:40:31 on the site of an old market called Fox Market,
    0:40:34 which had been built in, I think, 1853
    0:40:36 before Lincoln became president.
    0:40:39 It was a beloved market that everyone had
    0:40:42 at the center of their lives for decades and decades.
    0:40:45 It had been abandoned for about 17 years.
    0:40:48 So once Wimpy Kid took off, we bought the building,
    0:40:50 took it down, and created a bookstore.
    0:40:52 – Why did you wanna do that?
    0:40:56 You already had a very going concern with your property
    0:40:57 that had all these other tentacles.
    0:41:01 Why did you wanna commit to a big physical property
    0:41:02 like a bookstore?
    0:41:04 You were probably doing this at the time
    0:41:07 when independent bookstores were closing at the rate of,
    0:41:08 I don’t know, one a week or something.
    0:41:10 So what gave you this impulse?
    0:41:13 – A lot of people were really embarrassed
    0:41:16 by the derelict building in the middle of our town.
    0:41:19 We just wanted to build a building
    0:41:21 that the town could feel proud of.
    0:41:24 So my goal was just to create a nice building
    0:41:26 and put the word Plainville on the side.
    0:41:30 We didn’t give any thought to what was going to be inside.
    0:41:33 At a certain point, I was really legitimately thinking
    0:41:36 about just making it a basketball court inside
    0:41:39 because I figured we could save a lot of money
    0:41:40 if it was just hollow.
    0:41:43 – It’s been described to me from other people
    0:41:46 who are not you that your bookstore is
    0:41:50 an absurdly successful stop on the book tour circuit
    0:41:54 that every author worth anything wants to come
    0:41:55 to your bookstore and do an event
    0:41:58 and does in fact, how did that happen?
    0:42:00 – Well, that’s music to my ears.
    0:42:02 First of all, we created a really
    0:42:05 architecturally special place.
    0:42:07 As a touring author, I’ve seen hundreds of bookstores
    0:42:08 all over the world.
    0:42:11 So we really tried to capture the essence
    0:42:14 of what makes a bookstore feel homey
    0:42:16 and special and magical.
    0:42:19 We use lots of old materials to make it feel
    0:42:20 like it was really lived in.
    0:42:23 It doesn’t hurt that we’re on the route
    0:42:25 between Providence and Boston.
    0:42:27 If we’re in the middle of Iowa or something like that,
    0:42:30 it would be a lot harder for authors to reach us.
    0:42:32 – Is the bookstore profitable?
    0:42:34 – The bookstore is not profitable.
    0:42:38 We lose quite a bit of money each year in the six figures.
    0:42:41 There are lots of different reasons for that.
    0:42:44 We do try to pay fairly, but we also, you know,
    0:42:47 we give a lot of our employees healthcare, things like that.
    0:42:51 – So you moved to this town, you’re raising your kids there.
    0:42:54 You’ve got your wimpy kid property growing
    0:42:56 and developing and it sounds like a very happy
    0:42:58 productive place for you to live.
    0:43:01 Then you decide to open a bookstore,
    0:43:03 which I don’t know if you have a financial advisor.
    0:43:06 I’m guessing they would have advised you against that.
    0:43:07 – Yes, I think so.
    0:43:08 – But you did it.
    0:43:09 – Yes.
    0:43:11 – And you still have it, even though, as you said,
    0:43:12 you’re losing quite a bit of money.
    0:43:16 And then you decide rather than pulling back
    0:43:19 what sounds to me like you’re instead doubling down,
    0:43:21 if not more, so describe that.
    0:43:25 – Yes, we are redeveloping the whole downtown center,
    0:43:28 which is about four city blocks.
    0:43:31 This is an ambitious plan, maybe a foolish plan,
    0:43:34 but also really an exciting plan.
    0:43:37 Downtown Plainville has been depressed for years.
    0:43:39 – Tell me a little bit about the history of the town,
    0:43:43 like a lot of the Northeast and New England.
    0:43:46 I’m guessing there was a kind of industrial
    0:43:48 or manufacturing or commercial heyday
    0:43:51 that is long in the rear view mirror.
    0:43:52 All these towns and small cities
    0:43:55 are trying to either hang on or reinvent themselves.
    0:43:57 Where does Plainville fall in that?
    0:44:01 – Plainville was built around a jewelry industry.
    0:44:04 One of the companies was called Whiting and Davis,
    0:44:06 employed thousands of people.
    0:44:07 And what they’re most known for
    0:44:10 was creating the chain mail dress
    0:44:15 that Tina Turner wore in Mad Max Thunderdome.
    0:44:18 But yeah, now the center of town is sort of hollowed out.
    0:44:21 And in fact, a factory building that stood there
    0:44:25 for at least 80 years were about to take it down
    0:44:28 in about two days and create something new.
    0:44:36 – We decided to take a drive up from New York
    0:44:38 to see Plainville for ourselves.
    0:44:40 It took about three and a half hours.
    0:44:43 Getting close to town, we pass some outlet shops,
    0:44:46 some nice houses and some not so nice houses.
    0:44:49 We keep going and they are on Route 1A.
    0:44:52 We instantly see that Jeff Kinney was right.
    0:44:56 Depressing downtown, really nice bookstore.
    0:44:58 The contrast is stark.
    0:45:01 I could imagine an author driving into town
    0:45:03 on a book tour thinking,
    0:45:07 I’m going to kill the publicist who sent me here.
    0:45:08 There aren’t a lot of buildings.
    0:45:11 Most of them are rundown, tired.
    0:45:14 And then you come upon an unlikely story.
    0:45:16 I finally get the name.
    0:45:20 And it looks more like the ideal of a New England bookstore,
    0:45:22 like something that only Hollywood writers
    0:45:24 would dare imagine.
    0:45:28 The building is, like Kinney said, architecturally special.
    0:45:32 It’s three stories built in a style he calls federal wharf,
    0:45:34 muscular and proud, like something you’d see
    0:45:38 in a wealthy port town like Boston or Portland.
    0:45:40 It’s late Saturday morning when we arrive
    0:45:42 and inside the store is already crowded.
    0:45:47 All ages, busy cash registers, a humming cafe.
    0:45:49 The walls are hung with old wooden signs
    0:45:52 from old Plainville, but the tech is modern.
    0:45:55 Nice lighting, helpful employees everywhere,
    0:45:57 even nice bathrooms.
    0:45:59 If it weren’t for the books,
    0:46:01 you’d be surprised it’s a bookstore.
    0:46:04 On the day we visited,
    0:46:06 Kinney was hosting a presentation
    0:46:09 called Plainville Center Past and Present.
    0:46:13 He wanted to show his renovation plan to the community.
    0:46:16 Thank you so much for coming today.
    0:46:18 He was nervous beforehand.
    0:46:21 Kinney knows he is a very big fish in this small pond,
    0:46:25 and because he is an unusually considerate person,
    0:46:26 he’s worried that his plan
    0:46:28 will upset some of the old timers.
    0:46:30 I asked him if he had had to buy out
    0:46:32 the other business operators in town
    0:46:34 and how complicated that was.
    0:46:39 We did buy out the other operators,
    0:46:40 but I wouldn’t put it that way
    0:46:43 because it sounds like a little bit of a hostile action.
    0:46:45 We floated the balloon with each of these property holders
    0:46:49 and said, “Hey, tell us if you’re ever ready to move on.”
    0:46:52 And in fact, the owner operators of the tool factory
    0:46:53 that was across the street,
    0:46:55 they were just ready to retire.
    0:46:59 So how many people here actually shop at Fox Market?
    0:47:01 Okay, great.
    0:47:02 As soon as people started walking in,
    0:47:05 I said, “Okay, everybody here knows much more
    0:47:08 “about Plainville’s history than I do.”
    0:47:11 As it turned out, Kenny didn’t need to worry.
    0:47:13 The presentation was well attended
    0:47:15 and it went over well too.
    0:47:17 Kenny showed some images
    0:47:20 of what a new Plainville Square would look like
    0:47:23 and the town historian, Christine Moore,
    0:47:27 showed some images of the before times, the better times.
    0:47:30 The crowd was older, not surprisingly.
    0:47:33 There was very little descent and a lot of reminiscing
    0:47:35 and trying to refresh the memory.
    0:47:38 Whose grandfather ran which hardware store
    0:47:40 and which factory closed down when?
    0:47:42 And you remember that milkshake?
    0:47:44 You could only get it, such and such drugstore.
    0:47:47 (audience applauding)
    0:47:52 Afterward, Kenny invites us outside
    0:47:54 to see what will be where,
    0:47:56 if everything goes according to his plan.
    0:48:01 – We are at the intersection of Bacon Street in 1A
    0:48:03 in Plainville, Massachusetts.
    0:48:05 And this is where Plainville Square
    0:48:07 is going to come to life.
    0:48:12 So far we have a bookstore and a parking lot.
    0:48:15 But this is going to become an anchor restaurant,
    0:48:18 a beer garden, hopefully an Airbnb,
    0:48:21 and maybe a few other buildings as well.
    0:48:25 But right now you’re here on a day when this is ash and dust.
    0:48:27 We just took down seven buildings.
    0:48:30 So if you had been out of town for the weekend,
    0:48:33 you might feel like the town you grew up in
    0:48:35 has been flattened by a hurricane.
    0:48:38 But this is the pallet that we have to work with
    0:48:40 and we’re going to start building up.
    0:48:42 – What’s your budget?
    0:48:44 – Our budget, we don’t know yet,
    0:48:45 but I think that this is going to cost somewhere
    0:48:48 between 17 million and about $35 million.
    0:48:49 – Yeah.
    0:48:52 Do you ever have conversations with friends and family
    0:48:55 about what you might have done instead with that money?
    0:48:58 – No, I don’t often do that.
    0:49:01 I think people respect what we do with our money.
    0:49:02 We’re doing something a little bit unusual,
    0:49:05 investing in the town and infrastructure of the town.
    0:49:08 The thing that really gets me excited
    0:49:10 is the idea of changing this town,
    0:49:14 not for just our generation, but for generations to come.
    0:49:17 Motivation is that famous Greek proverb
    0:49:19 that a society doesn’t become great
    0:49:21 until old men plant trees
    0:49:23 that they’ll never enjoy the shade of.
    0:49:27 – The only place in Plainville
    0:49:28 where you can see the future
    0:49:30 is back at Jeff Kinney’s bookstore.
    0:49:33 A crowd is already starting to gather.
    0:49:35 By evening, there will be hundreds of people
    0:49:38 lined up around the block for a visiting author.
    0:49:41 (audience cheering)
    0:49:47 The author is a local hero, Jason Tatum,
    0:49:48 of the Boston Celtics.
    0:49:50 He is one of the best, richest,
    0:49:52 and most famous athletes in the world,
    0:49:55 fresh off a Celtics championship
    0:49:57 and an Olympic gold medal.
    0:49:59 He has come to the big bookstore
    0:50:01 in the little town of Plainville
    0:50:03 to talk about a children’s book he just published.
    0:50:05 It’s called “Baby Dunks a Lot.”
    0:50:08 For authors of this magnitude,
    0:50:11 Jeff Kinney himself runs the Q&A.
    0:50:12 – All right, Jason, thank you so much
    0:50:14 for coming to an unlikely story.
    0:50:15 We’re so honored to have you here.
    0:50:16 It’s really cool.
    0:50:18 So let’s everybody give up one more time for Jason.
    0:50:21 (audience cheering)
    0:50:26 So you’ve done lots of different events
    0:50:28 before Q&As and things like that,
    0:50:31 but have you ever done something like this as an author?
    0:50:33 – This is a first for me.
    0:50:36 I played basketball in front of a thousand people,
    0:50:39 but I’m honestly a little nervous to be up here.
    0:50:41 – Wait a second, you also play basketball?
    0:50:42 (audience laughing)
    0:50:43 Did not know.
    0:50:44 All right, this is cool.
    0:50:46 We’re off to a good start.
    0:50:46 But I was–
    0:50:49 – The Q&A was a big success.
    0:50:51 Tatum had pre-signed hundreds of books,
    0:50:54 so he didn’t stick around long afterward,
    0:50:56 but the store stayed open late
    0:50:58 and the crowd kept shopping.
    0:51:00 We wanted to know what they thought
    0:51:03 of Jason Tatum, of the store,
    0:51:06 and of their other local hero, Jeff Kinney.
    0:51:08 We spoke with Benjamin McCuchy.
    0:51:11 – Jason Tatum is my basketball hero.
    0:51:15 I wanna be in the NBA and be just like him
    0:51:20 and getting to see him and Jeff Kinney at the same time.
    0:51:21 And Jeff Kinney’s my favorite author.
    0:51:23 It’s just amazing for me.
    0:51:26 We heard from Izzy Gaudet.
    0:51:28 – We just did a loop through the bottom
    0:51:32 and it’s got so much, like from books to non-books.
    0:51:34 I’m definitely gonna have to come back.
    0:51:36 – And here’s Chris Alba.
    0:51:38 – Growing up here in North Attleboro,
    0:51:40 this corner was always like,
    0:51:43 it was a very dilapidated building, very old
    0:51:44 and it didn’t look great.
    0:51:47 He’s totally redone the way this entire area looks.
    0:51:50 It’s really popular and it looks awesome.
    0:51:51 So I love it.
    0:51:57 – I think that there is a chance for so much improvement.
    0:51:59 Like if we lived in Beverly Hills,
    0:52:02 we would have no interest in doing this kind of a thing.
    0:52:06 But Plainville can be changed in a really outsized way.
    0:52:09 – I assume it felt like you were rowing against the tide
    0:52:11 by opening an independent bookstore
    0:52:12 in a relatively small place,
    0:52:15 but it does seem like independent bookstores
    0:52:17 are back on the rise.
    0:52:22 They’ve done fairly well through COVID and then post COVID.
    0:52:24 It strikes me, and I may be wrong,
    0:52:27 that as the world continues to get bigger and faster
    0:52:31 and more consolidated and more digital and more connected,
    0:52:35 that there’s a counter push for a return to the handmade
    0:52:37 and the homemade and for community.
    0:52:38 What’s your view on that?
    0:52:39 – I think there is.
    0:52:42 I think that people are craving
    0:52:44 this feeling of connectedness.
    0:52:47 I’m really surprised that the effects of COVID
    0:52:50 have had such a long tail.
    0:52:51 I think we’re seeing the effects of COVID
    0:52:54 on these 20-something year old people
    0:52:57 who didn’t have a high school graduation,
    0:52:59 who now want to go into jobs
    0:53:02 where they work with peers physically in person.
    0:53:06 I think that a bookstore is part of that experience.
    0:53:08 But I also think that there’s a practical aspect to it,
    0:53:11 is that you really can’t replicate
    0:53:14 the book buying experience online.
    0:53:17 It’s similar to the record buying experience.
    0:53:19 We grew up in a time where you went to the record store
    0:53:22 and you flipped through the big albums
    0:53:25 and looked at the artwork and heard the music overhead.
    0:53:27 It was just better.
    0:53:31 – So, Macy’s is undergoing its own rehab
    0:53:32 or renovation at the moment.
    0:53:36 They’re trying to figure out how this very old-fashioned,
    0:53:40 still prominent brand can persevere
    0:53:42 and succeed in the 21st century.
    0:53:44 And it strikes me as their challenges
    0:53:45 are similar to what you’re trying to do now,
    0:53:49 which is build a place or create a space
    0:53:52 where people want to be with other people doing stuff
    0:53:55 that a lot of people stop doing during our digital revolution.
    0:53:58 Do you see any connection between yourself
    0:54:01 and someone like them, some big corporate entity
    0:54:03 that’s trying to reinvent their future?
    0:54:06 – One of the things that’s been really surprising to me
    0:54:09 is that a major beer operator,
    0:54:10 and I can’t name names right now
    0:54:11 because we haven’t signed papers,
    0:54:15 but they’re interested in being in downtown Plainville.
    0:54:18 And I said, “Why are you interested in being here?”
    0:54:21 And they said, “Because if you’re here,
    0:54:22 you’re the thing that people do.
    0:54:25 If we go into Boston or a big town like that,
    0:54:29 you’re competing with 30 or 40 other restaurants.
    0:54:31 But in a place like this,
    0:54:34 you’ve got a shot at becoming the show.”
    0:54:39 So it’s possible that if we set the table just so
    0:54:42 that we will get partners that we weren’t expecting to get.
    0:54:46 And maybe Macy’s could be a part of something like this.
    0:54:48 – I’m very curious about what’s going to happen
    0:54:52 because we’re asking this really big question,
    0:54:55 which is if you invest in your downtown,
    0:54:57 can you change the fate of a town?
    0:55:00 Can you change the way that people feel about the town?
    0:55:03 Can you make the town a model for other towns?
    0:55:05 I don’t know the answer to that.
    0:55:07 And I think that’s gonna be my life’s work
    0:55:10 is figuring out if this kind of thing can work.
    0:55:16 – This made me think of the slogan that Macy’s
    0:55:20 has adopted for its turnaround, a bold new chapter.
    0:55:23 That could have also been the name of Jeff Kinney’s bookstore,
    0:55:26 but an unlikely story is better.
    0:55:29 In fact, an unlikely story might not be a bad slogan
    0:55:32 for Macy’s considering what it is up against.
    0:55:35 So I went back to CEO Tony Spring
    0:55:38 and I asked him what he thought of Jeff Kinney’s
    0:55:40 new and improving Plainville
    0:55:43 and whether Macy’s might consider opening up
    0:55:44 some kind of store there.
    0:55:46 – We are always open to evaluating
    0:55:50 different real estate opportunities for retail.
    0:55:52 I applaud what he’s doing.
    0:55:55 I want vibrant towns across this country.
    0:55:57 – Spring still lives in Westchester County,
    0:55:59 where he grew up.
    0:56:01 Westchester has some of the nicest,
    0:56:03 leafiest suburbs in America
    0:56:08 with small town main streets and high median incomes.
    0:56:11 – My town, we probably have more banks and restaurants
    0:56:13 than anything else, nail salons.
    0:56:15 I miss the candy store, I miss the bookstore,
    0:56:17 I miss the record store.
    0:56:20 Retail is that mix of variety
    0:56:22 that creates the reason for the stroll
    0:56:24 and the reason to spend locally.
    0:56:27 So we want Macy’s to be a part of that experience.
    0:56:30 You know, I wish Jeff the best, I would say,
    0:56:32 follow the adage from Cheers,
    0:56:34 make sure you know everybody’s name.
    0:56:36 Those little touches make the absolute difference
    0:56:38 in where you choose to shop again.
    0:56:41 (gentle music)
    0:56:45 It’s hard to predict the future of Macy’s
    0:56:48 or the future of Plainville, Massachusetts.
    0:56:52 Tony Spring and Jeff Kinney are both investing a lot
    0:56:53 in their respective turnarounds
    0:56:56 and it’s natural to wish them well.
    0:56:59 On the other hand, people are fickle,
    0:57:02 markets are fickle and generally speaking,
    0:57:04 you don’t succeed in the future
    0:57:06 by trying to mimic the past.
    0:57:11 But for now, those concerns will have to wait.
    0:57:14 It is Thanksgiving Eve, Spring and Kinney
    0:57:16 both have a parade to get to.
    0:57:18 (upbeat music)
    0:57:23 – I’ll be with my wife.
    0:57:24 I don’t think my kids will come
    0:57:27 because they’ll probably be cooking Thanksgiving
    0:57:30 and maybe a brother-in-law or sister-in-law too.
    0:57:32 And the Macy’s leadership family
    0:57:35 and hopefully some customers and colleagues
    0:57:38 will sit in the grandstand like many others
    0:57:40 and will enjoy the parade as it hits 34th Street.
    0:57:42 – There’s something really hypnotic
    0:57:46 about seeing one of those giant helium balloons
    0:57:48 move between the buildings.
    0:57:51 It’s the outsizedness which is so exciting.
    0:57:54 It’s really cool when you see a giant Papa Smurf
    0:57:58 go by somebody’s window or Clifford the Big Red Dog
    0:58:01 and you see the scale of the thing.
    0:58:04 – What do you think the parade represents?
    0:58:09 It’s this weirdly old-fashioned traditional event
    0:58:13 that in a world of much more dazzling modes
    0:58:18 of entertainment draws 30 million people a year on TV
    0:58:19 which is astonishing to me.
    0:58:20 So what does it feel like
    0:58:22 to be an essential component of that?
    0:58:24 – It feels like legitimacy to me.
    0:58:27 It feels like you’re making a statement about your brand
    0:58:30 that you’re not just wishing and hoping
    0:58:31 that you’re a part of this.
    0:58:34 It’s like a theory or a thesis that you’re saying,
    0:58:36 I think we belong here.
    0:58:39 And then after a certain amount of time, you say,
    0:58:41 you know what, we do belong here.
    0:58:42 This is right.
    0:58:46 – Do you interact with other property creators
    0:58:48 or representatives at the parade?
    0:58:51 – I’ve become friends with Jeanne Schultz,
    0:58:53 the widow of Charles Schultz.
    0:58:54 And it’s a small club.
    0:58:57 So it’s pretty cool to be a part of that club.
    0:59:00 – In a battle of balloons,
    0:59:04 would Greg or Snoopy win?
    0:59:07 – I’m gonna switch the question to be the Muppets.
    0:59:10 The first year, Diary of a Wimpy Kid,
    0:59:13 Greg Heffley was right behind Kermit the Frog.
    0:59:15 – You think he could have taken him?
    0:59:19 – Well, I was staring down the backside of a frog
    0:59:22 and I said, that feels about right to me, you know?
    0:59:28 – My thanks to Jeff Kinney and the Plainville crew
    0:59:30 for spending time with us.
    0:59:33 Ditto Tony Spring and the Macy’s crew.
    0:59:37 Also to Mark Cohen for his sober retail insights
    0:59:40 and thanks especially to you for listening.
    0:59:43 I hope you have a great holiday season.
    0:59:46 Meanwhile, coming up next time on the show,
    0:59:49 the real world remains challenging.
    0:59:54 – Putin looked great physically, was relaxed,
    0:59:58 cracking jokes, some of them at our expense.
    1:00:02 We hear an insider’s view of Russian ambition,
    1:00:06 Ukrainian desperation and the American response.
    1:00:10 – Our politicians aren’t leading Republicans or Democrats.
    1:00:12 – We speak with John J. Sullivan,
    1:00:16 former Deputy Secretary of State and US Ambassador to Russia.
    1:00:18 That’s next time on the show.
    1:00:20 Until then, take care of yourself
    1:00:23 and if you can, someone else too.
    1:00:26 Freakonomics Radio is produced by Stitcher and Renbud Radio.
    1:00:29 You can find our entire archive on any podcast app
    1:00:32 also at Freakonomics.com,
    1:00:34 where we publish transcripts and show notes.
    1:00:37 This series was produced by Alina Cullman
    1:00:40 and we had recording help from George Hicks
    1:00:42 and research help from Daniel Moritz-Rabson.
    1:00:44 Our staff also includes Augusta Chapman,
    1:00:46 Dalvin Abouaji, Eleanor Osborne,
    1:00:49 Ellen Frankman, Elsa Hernandez, Gabriel Roth,
    1:00:52 Greg Rippon, Jasmine Klinger, Jason Gambrale,
    1:00:54 Jeremy Johnston, John Schnars,
    1:00:56 Lyric Bowditch, Morgan Levy, Neil Carruth,
    1:00:58 Rebecca Lee Douglas, Sarah Lilly,
    1:01:00 Teo Jacobs, and Zac Lipinski.
    1:01:03 Our theme song is “Mr. Fortune” by the Hitchhikers
    1:01:05 and our composer is Luis Guerra.
    1:01:13 – We used to be slacksville for a time, I think unofficially
    1:01:17 and so, Plainville seemed like a giant upgrade.
    1:01:18 (camera clicking)
    1:01:20 (alarm beeping)
    1:01:22 (alarm beeping)
    1:01:24 – The Freakonomics Radio Network,
    1:01:26 the hidden side of everything.
    1:01:29 (upbeat music)
    1:01:30 Stitcher.
    1:01:32 you
    1:01:34 you

    Macy’s wants to recapture its glorious past. The author of the Wimpy Kid books wants to rebuild his dilapidated hometown. We just want to listen in. (Part two of a two-part series.)

     

    • SOURCES:
      • Mark Cohen, former professor and director of retail studies at Columbia Business School.
      • Will Coss, vice president and executive producer of Macy’s Studios.
      • Jeff Kinney, author, cartoonist, and owner of An Unlikely Story Bookstore and Café.
      • Tony Spring, chairman and C.E.O. of Macy’s Inc.

     

     

  • 612. Is Macy’s Thanksgiving Parade Its Most Valuable Asset?

    AI transcript
    0:00:08 Hey there, it’s Stephen Dubner with a quick word before today’s episode.
    0:00:12 We have a new listener survey that I would love you to take if you have the time and
    0:00:13 the interest.
    0:00:19 We are always trying to get better around here and feedback helps, so please go to Freakonomics.com/survey.
    0:00:32 It’ll only take a few minutes.
    0:00:36 I really only started paying attention to the Macy’s Thanksgiving Day parade about 10
    0:00:41 years ago, when my family and I moved into the neighborhood where the parade starts and
    0:00:44 where the night before they stage everything.
    0:00:47 This is on the Upper West Side of Manhattan.
    0:00:52 We take over two extra-wide streets to lay out the giant balloons.
    0:00:57 Each balloon arrives folded up flat in its own small rolling cart.
    0:01:02 It gets unpacked, unfolded, laid out on the pavement, and then comes the helium.
    0:01:07 There’s a truck nearby with big helium canisters stacked horizontally on a rack.
    0:01:11 Up close, the balloons are really big.
    0:01:16 You see this as soon as they start drinking up some helium and puff up to full size.
    0:01:22 Tonight is Wednesday, the night before the parade, Inflation Night, they call it.
    0:01:26 So the balloons aren’t allowed to rise to parade height.
    0:01:31 Each one has a net thrown across the top and the net is held down by sandbags.
    0:01:36 If you happen to be passing by on foot, this can provide an unusual view of your favorite
    0:01:44 balloon character, a bulging eyeball, a massive derriere, some very chubby fingers.
    0:01:48 Many thousands of people come see the balloons on Inflation Night.
    0:01:54 It is an unusual and joyful scene for the visitors and the locals.
    0:01:59 For many people, myself included, it is the best New York night of the year.
    0:02:04 A lot of people who live on these blocks throw Inflation Parties up in their apartments.
    0:02:09 And when you look straight down out of your window, you get another unusual and wonderful
    0:02:11 view of the balloons.
    0:02:16 I’ve watched this whole operation for several years now, and every year, I’m a little
    0:02:18 bit more impressed.
    0:02:24 The parade people execute the mission with a blend of military efficiency and childlike
    0:02:25 glee.
    0:02:29 You can’t help but marvel at how much planning must go into it.
    0:02:32 Also, how good the execution has to be.
    0:02:39 Not just from the parade side of things, but from the city side and the broadcasting side.
    0:02:42 And it’s not like they have weeks or even days to set up.
    0:02:49 On Wednesday morning, the streets are normal, full of cars, trucks, jaywalkers, dogs, bikes,
    0:02:54 and then the balloon people come and you get to see the real, up-close version of the thing
    0:02:59 that everybody else has to watch on TV, in miniature.
    0:03:04 The cleanup begins as soon as the last balloon enters the parade on Central Park West, and
    0:03:10 by the time they reach the Macy’s flagship store down in Harold Square, our streets
    0:03:14 are back to cars and trucks again, although not so many since it’s still Thanksgiving
    0:03:15 morning.
    0:03:19 Like I said, it’s only recently that I began paying attention to the parade.
    0:03:25 I do remember it being on TV when I was a kid, but I don’t know, I guess I just wasn’t
    0:03:27 a parade person.
    0:03:32 Seeing it up close made me curious, and after last year’s parade, I took a look at the TV
    0:03:33 ratings.
    0:03:43 Holy, nearly 30 million viewers, another 3 million plus watch in person from the sidewalks
    0:03:48 and grandstands, but the TV numbers blew me away.
    0:03:52 As you may know, the television juggernaut these days is the National Football League.
    0:03:58 Of the 100 most watched broadcasts last year, 93 were NFL games.
    0:04:03 The Macy’s parade was one of the remaining 7, beaten out only by the State of the Union
    0:04:04 address.
    0:04:10 A TV audience of 30 million must generate a lot of ad revenue, and then I got to wondering
    0:04:16 how much, and then I got to wondering how much it costs to produce the parade.
    0:04:18 Simple questions, right?
    0:04:21 As it turns out, not so simple.
    0:04:27 Macy’s is one of the oldest department stores in the US, and it has a lot of traditions.
    0:04:33 One of those traditions is not talking about the economics of its Thanksgiving parade.
    0:04:38 They like to call it their annual gift to the nation, and we all know it’s not polite
    0:04:45 to ask how much a gift costs, but today, on Freakonomics Radio, we ask anyway.
    0:04:58 Why?
    0:05:01 This is the first of a two-part series.
    0:05:04 We will look into the cost of the raw materials.
    0:05:06 We do have our finger on the pulse of helium.
    0:05:09 We’ll look at how New York City pitches in.
    0:05:13 I don’t know how you guys found me, by the way.
    0:05:15 Because most people don’t know I exist.
    0:05:21 We will hear from the CEO of Macy’s, who’s trying to keep an old store alive when so
    0:05:23 much retail is dying.
    0:05:26 I want to be perceived as giving this gift to the city and to the nation.
    0:05:28 I also want to do a lot of business.
    0:05:33 And we ask an industry expert what Macy’s stands for today.
    0:05:35 Macy’s doesn’t stand for anything today.
    0:05:41 So come along as we drink the helium and wonder if the Macy’s parade may be the most valuable
    0:05:55 lesson Macy’s has.
    0:06:01 This is Freakonomics Radio, the podcast that explores the hidden side of everything with
    0:06:12 your host Stephen Dubner.
    0:06:17 We are hardly the first people to wonder how much it costs to stage the Macy’s Thanksgiving
    0:06:18 Day Parade.
    0:06:24 There are published estimates ranging from around $10 to $15 million, but they’re just
    0:06:29 estimates and it’s unclear where those numbers come from, which makes sense.
    0:06:33 Macy’s doesn’t like to talk about it, and therefore it’s hard to even identify all
    0:06:34 the costs.
    0:06:38 It’s also hard to quantify the benefits.
    0:06:43 Keep in mind that most of the balloons and floats in the parade are sponsored by big brands
    0:06:48 that are presumably paying big money for the millions of eyeballs that will see them.
    0:06:52 And the parade itself is one big ad for Macy’s.
    0:06:56 But let’s start by focusing on the costs.
    0:07:01 There is, of course, the expense of building and maintaining the balloons and floats.
    0:07:05 There is the casting and wrangling of the marching bands and other performers.
    0:07:10 And there are all sorts of city services, police and sanitation and counter-terrorism
    0:07:13 that somebody’s paying for.
    0:07:18 And then there are all the personnel costs for the Macy’s parade unit, which is a year-round
    0:07:19 operation.
    0:07:23 So we figured we might as well start at the source.
    0:07:27 Will Koss, and I’m the executive producer of Macy’s Thanksgiving Day parade.
    0:07:29 And what does Will Koss actually do?
    0:07:35 The executive producer oversees the entire production of the parade from our balloon and
    0:07:41 float design, construction fabrication, and delivery to New York City on parade day to
    0:07:47 all of the logistics as it relates to shutting down three and a half miles of New York City
    0:07:49 on the busiest travel day in New York.
    0:07:54 Koss grew up in New York in the Bronx and he went to college nearby on Long Island.
    0:07:57 I traveled really far.
    0:08:00 Have you ever lived outside of the New York City area then?
    0:08:02 I’ve not.
    0:08:04 Koss now lives on the Upper West Side with his wife and daughter.
    0:08:06 He’s 44 years old.
    0:08:13 He started out as a producer for MTV, Nickelodeon, YouTube, and he got the Macy’s job in 2021.
    0:08:16 But he sounds like a lifer.
    0:08:21 They’re part of the tradition of Thanksgiving morning for millions of people.
    0:08:22 If you love marching bands, we’ve got that.
    0:08:24 If you love giant balloons, we’ve got that.
    0:08:25 We’ve got floats.
    0:08:27 We’ve got celebrity.
    0:08:28 We’ve been a staple.
    0:08:32 Whether you’re sat in front of the television or have it on in the background just using
    0:08:37 us as a soundtrack to your Thanksgiving morning, we’re there.
    0:08:44 Macy’s itself was founded in 1858 by Roland Hussie Macy, a former whaler from Nantucket.
    0:08:51 He ran dry goods stores in Massachusetts and California before settling in New York City.
    0:08:55 They sold everything from clothing and furniture to groceries and books.
    0:09:02 By 1902, according to one history of the store, the human wants were few indeed that the Macy’s
    0:09:04 store could not meet.
    0:09:09 By 1924, the Macy’s flagship store in Herald Square was the world’s largest store with
    0:09:13 over one and a half million square feet.
    0:09:18 That year, Macy’s sponsored its first parade, a six-mile march through Manhattan.
    0:09:25 It featured three horse-drawn floats, four professional bands, and camels, elephants,
    0:09:28 and bears borrowed from the Central Park Zoo.
    0:09:34 In these early days, Macy’s released big helium balloons into the sky after the parade and
    0:09:37 offered a $100 reward for the return.
    0:09:44 That tradition ended in 1932 when a novice pilot, going for the reward, crashed into
    0:09:46 a balloon in the sky.
    0:09:51 It has now been 100 years since the first parade, although this year’s addition is only the
    0:09:55 98th since they took three years off during World War II.
    0:09:58 The parade today looks a lot different than it used to.
    0:10:03 When there are 30 million people watching on TV, appearances matter.
    0:10:06 We are the largest televised variety show of the year.
    0:10:10 There’s something about the work that we do that connects multi-generational.
    0:10:15 It’s a responsibility that we don’t take lightly, knowing that we have that impact on
    0:10:18 so many folks.
    0:10:25 The demographics are far and wide and are representative of everyone that’s in New York City and America.
    0:10:26 That is Jen Neal.
    0:10:33 And I oversee the strategy, the creative development, and the operations for all of our live events
    0:10:36 and specials across NBCU.
    0:10:41 NBCUniversal is the network that has carried the Macy’s parade for 71 years.
    0:10:45 Neal’s team produces roughly three dozen big live events a year.
    0:10:51 Christmas at Rockefeller Center, New Year’s Eve, the People’s Choice Awards, red carpets
    0:10:56 around Hollywood’s biggest nights like the Grammys, the Oscars.
    0:10:58 My role focuses on the entertainment side.
    0:11:03 But we have incredible teams on the sports side that do the Super Bowl and the Olympics.
    0:11:09 Can you compare the production and coverage of the parade to the Super Bowl?
    0:11:13 Obviously, with the Super Bowl, there are many, many, many elements and features and
    0:11:14 so on.
    0:11:21 But it is, in the end, a self-contained athletic competition on one big patch of turf, whereas
    0:11:28 the parade is this roving, multi-mile extravaganza through New York City.
    0:11:33 There’s incredible complexity in terms of the production.
    0:11:41 Each year, there are a number of elements that stay the same and each year we are evaluating
    0:11:43 what we want to evolve and change.
    0:11:46 Do the Broadway shows kick off the show?
    0:11:49 Is it better to have them in the second or third hour?
    0:11:54 A Super Bowl is incredible and there’s many dynamics that go into that, but you’re still
    0:11:59 covering a football game which has the same rules and the same field of play each year.
    0:12:01 What is the timeline from your end?
    0:12:04 When do you start working on a given year’s parade?
    0:12:09 We start looking at it right after the parade ends, truly, the week or two after.
    0:12:14 In fact, this year is the 98th year of the parade and we are already talking about the
    0:12:18 99th and the 100th anniversary.
    0:12:23 The parade is an 18-month pre-production to execution process.
    0:12:25 That’s will cost again.
    0:12:31 My full Macy Studios team is over 65 full-time folks that range from our partnership team
    0:12:36 to our creative team to our studio production team, logistics, project management, production
    0:12:37 management.
    0:12:40 The 65 number is our full-time.
    0:12:43 As we get closer, we expand considerably.
    0:12:47 The week before, they paint the star on 34th Street.
    0:12:51 The Monday and Tuesday nights, we shut down 34th Street in front of Macy’s, we’re rehearsing
    0:12:53 with all the performers.
    0:13:00 Wednesday night, we’ve introduced in the last two years a countdown show to bring to life
    0:13:05 the inflation of the balloons that happen magically on the Upper West Side.
    0:13:10 Then Thursday, we have a call time, the day of Thanksgiving, 2 a.m.
    0:13:13 And Jen, where do you spend parade day?
    0:13:14 I’m in the truck.
    0:13:16 I’m in the truck on parade day.
    0:13:17 Which is where?
    0:13:19 On 34th Street or Jason to 34th Street.
    0:13:21 What’s that day like for you?
    0:13:24 There’s a lot of energy, a lot of adrenaline.
    0:13:28 We go live at 8.30 through noon, so it’s three and a half hours of that coverage.
    0:13:33 We have preparation and contingencies and plans for every single thing that can happen
    0:13:34 along the way.
    0:13:42 And then I do, once every parade, take 30 seconds during a commercial break and jump out into
    0:13:49 the streets and see the scale of Snoopy or the Minion or the Doughboy adjacent to the
    0:13:50 buildings in New York.
    0:13:51 And it’s magic.
    0:13:55 It also sounds incredibly expensive to produce from your side.
    0:14:01 Not just the coverage part, but the coordination and the run of show and talent and so on.
    0:14:03 Can you just talk about how extensive that is?
    0:14:09 We don’t really get into the cost of everything, but what I can say is we know that this is
    0:14:14 incredibly valuable to our advertising partners.
    0:14:19 And we know that advertising messages that are in the parade deliver stronger memorability
    0:14:20 and likability.
    0:14:29 I did see on the NBC Universal site a report about the power of the parade from a consumer
    0:14:30 perspective.
    0:14:35 It said that the year-over-year growth demonstrates that NBC Universal is moving consumers down
    0:14:37 the purchase funnel.
    0:14:40 What does that mean, moving consumers down the purchase funnel?
    0:14:44 First, our job is we got to make sure that this is incredibly entertaining and relevant
    0:14:46 and great TV.
    0:14:52 And second, brands want to be associated with this because their messaging is woven in and
    0:14:55 each brand takes a different strategy to do that.
    0:14:57 Can you give me an example?
    0:15:03 When you are a Genio turkey and you want to have a turkey float, they’re going to want
    0:15:07 to talk about the number of years of the big turkey spectacular and what Genio brings to
    0:15:08 you.
    0:15:14 Well, the star of the Thanksgiving meal has arrived on a green and gold platter.
    0:15:16 The signature colors of its gracious host, Genio.
    0:15:22 If you’re the jolly green giant, you’re going to talk about Holly traditions and some of
    0:15:23 those products.
    0:15:30 Well, there in the valley on the farm, the green giant oversees the fall harvest, ensuring
    0:15:36 that each vegetable for your Thanksgiving table is picked at the peak of perfection.
    0:15:42 In other words, yes, the Macy’s Thanksgiving Day parade is a parade, but unlike a memorial
    0:15:49 parade or a victory parade or a pride parade, this one is plainly a commercial venture,
    0:15:50 a marketing venture.
    0:15:54 If you have a Minions float, you’re definitely going to talk about Stuart the Minions and
    0:15:55 the frantic bananas.
    0:16:00 Ronald McDonald, Smokey the Bear, all of these are traditions and floats that have their
    0:16:06 own unique messaging from forest fires to fundraising for children’s hospitals to the
    0:16:32 wonder ship float.
    0:16:48 We did later find an estimate from Vivex, a company that tracks commercial ad spending.
    0:16:54 They report that brands spent $76 million to advertise on NBC during last year’s parade
    0:16:55 broadcast.
    0:17:00 Macy’s would, as the saying goes, neither confirm nor deny.
    0:17:06 And that TV revenue presumably wouldn’t include money the brands pay Macy’s directly for
    0:17:09 the rights to sponsor a balloon or a float.
    0:17:13 Although we should say not every balloon or float is bringing in sponsor money because
    0:17:16 some of them are promoting Macy’s itself.
    0:17:18 Here’s Will Kos again.
    0:17:25 Tom Turkey and Santa are Macy’s owned and are the iconic elements that open and close
    0:17:26 the parade.
    0:17:30 Okay, so there’s no royalties being paid to the Santa Claus Foundation or anything like
    0:17:32 that, I assume.
    0:17:36 So I want to ask you about the relationships with the brands and whatever you’re willing
    0:17:39 or able to tell me about the financial relationship.
    0:17:44 My wife’s favorite balloon when she was a kid, she grew up in New York, was the Pillsbury
    0:17:50 Doughboy and the first year we lived on this block, when we woke up the next morning at
    0:17:58 like 6 a.m. and we looked down it’s just this magical site with the sunrise off the balloons
    0:18:03 and there was the Doughboy and we could see like the patches his butt was taped a little
    0:18:06 bit and it was just so beautiful and endearing.
    0:18:11 And I thought, wait a minute, is that still the Pillsbury Doughboy, does Pillsbury still
    0:18:12 even exist?
    0:18:16 Then I started to think about Snoopy and I thought about Snoopy I knew was the emblem
    0:18:20 of MetLife for a while and I thought, oh, does that mean it’s a MetLife balloon?
    0:18:26 So let me just make it an open thread for you to tell me what you can about why the
    0:18:32 balloons that are in the parade are in the parade and how that relationship works.
    0:18:39 Pillsbury Doughboy, Snoopy, our peanut characters, SpongeBob SquarePants, the goal with all of
    0:18:45 our balloons is to create a moment that’s instantly recognizable in the sky as it relates
    0:18:48 to selection of balloon.
    0:18:53 The most important goal is to ensure that each of the characters resonates with our audiences
    0:18:55 and our audiences 1 to 100.
    0:19:01 So we have some of those we’ll call them legacy characters and then we have new characters
    0:19:04 that are appealing to a much younger audience.
    0:19:09 And Will, what if someone like me came to you and I said, hey, Will, I’ve got this brand
    0:19:11 Freakonomics Radio.
    0:19:15 In some ways it’s a pretty big brand, but you know, it’s kind of like a big niche brand.
    0:19:17 It’s not Teenage Mutant Ninja Turtles.
    0:19:19 It’s not, you know, Spider-Man.
    0:19:20 I recognize that.
    0:19:25 But I’ve also got a pretty beautiful visual image, what we call an orple, right?
    0:19:28 It’s an apple that you cut open and it’s an orange in the middle and it’s, you know, it’s
    0:19:29 fruit.
    0:19:30 Who doesn’t like fruit?
    0:19:36 And I think it would be worth my while to try to figure out how to get my brand in front
    0:19:37 of the world.
    0:19:41 These 30 million people are watching on TV, these 3 million that are there.
    0:19:44 Would you even take a meeting with me?
    0:19:46 You’re taking the meeting right now.
    0:19:49 You’re underselling the brand, my friend.
    0:19:52 We’re open to taking every meeting and every conversation.
    0:19:57 This is not an exclusive members only type of event.
    0:20:02 Well, maybe not quite members only, but it is a small club.
    0:20:06 This year there are 17 giant balloons in the parade.
    0:20:12 Sadly, the Freakonomics Orple is not one of them, but this guy has one.
    0:20:16 I pinch myself when I see the balloon fly down the main avenue there.
    0:20:23 That is Jeff Kinney, an owner of an unlikely storybook store in Plainville, Massachusetts,
    0:20:26 and I am the author of the Diary of a Wimpy Kid series.
    0:20:32 Now for those who are children or have children who have read those books, you are somewhere
    0:20:39 between, I don’t know, Jesus Christ and pick your favorite cult hero ever.
    0:20:42 What’s it been like to be you these last 15, 18 years?
    0:20:47 The ride for me has been a lot like the Truman Show.
    0:20:52 I feel like I created this character who’s a stick figure and somehow that has propelled
    0:20:56 me into the most unusual situations you could ever imagine.
    0:21:01 How many books have there been now and how many copies sold globally?
    0:21:04 There are 19 books in the main series.
    0:21:11 I have four or five spin-off books and there have been about 295 million sold.
    0:21:14 For people who don’t know the series or don’t know the character, just talk to me for a
    0:21:15 minute about Greg Heffley.
    0:21:16 Who is he?
    0:21:20 What is his interior and exterior life like?
    0:21:23 Greg Heffley is a complicated character.
    0:21:25 He’s a bit of a mess.
    0:21:27 He doesn’t always do the right thing.
    0:21:32 At the time that I was writing Wimpy Kid, I was reading Harry Potter, which is about
    0:21:34 a boy who’s an aspirational character.
    0:21:35 He’s heroic.
    0:21:37 Greg isn’t heroic.
    0:21:41 He doesn’t really want to hear about his best friend Raleigh’s vacation and their awesome
    0:21:42 adventures.
    0:21:46 He’s like a Larry David type in a way.
    0:21:49 He’s very flawed, but hopefully still lovable.
    0:21:54 Give me a little bit of the origin story of Wimpy Kid itself and Greg Heffley himself
    0:21:58 and how you brought them to life, how long it took, etc.
    0:22:01 My big dream was to become a newspaper cartoonist.
    0:22:05 When I was growing up, we got the Washington Post every morning.
    0:22:07 My father opened the paper to the comics page.
    0:22:14 When I got up, it was already open to the far side and Bloom County and Calvin and Hobbes.
    0:22:16 You had good taste in comics.
    0:22:17 Yes.
    0:22:19 I was like, “Well, I know where I want to be.
    0:22:23 I want to be at the top of that page.”
    0:22:27 In college, I created a comic strip that got the attention of the Washington Post.
    0:22:33 They did a big, full-page article on the style section and said, “Hey, this is the next
    0:22:37 big thing, this comic by this guy,” and I believed it.
    0:22:44 Then I hit the reality of shrinking newspapers and the limits of my own talent and I couldn’t
    0:22:46 break into the comics.
    0:22:50 After about three years of flunking my head into the wall, I realized that it wasn’t going
    0:22:52 to happen for me.
    0:23:00 At the time I was keeping a journal, the journal was an organic mix of text and cartoon illustrations
    0:23:04 that showed what was happening in my life at the time.
    0:23:07 I looked at it and I said, “Hey, maybe I’ve got something here.
    0:23:10 I can’t be in newspapers, but maybe I can be in books.”
    0:23:13 I thought, “I’ll fictionalize this.
    0:23:17 First, I’ll write down every funny thing that happened to me in my life as a kid.”
    0:23:21 I thought I could do that in about two months.
    0:23:23 Instead it took four years.
    0:23:29 It was a 77-page sketch journal, but I filled it with enough ideas for five books.
    0:23:34 Then, as I understand, but correct me if I’m wrong, you’re working as a game developer
    0:23:40 for Pearson Education and you begin to publish some of this work online on a Pearson site
    0:23:41 called FunBrain.com.
    0:23:42 Is that right?
    0:23:43 That’s right.
    0:23:47 Thomas was looking for something to keep traffic up over the summer months.
    0:23:50 He said, “Hey, I’m working on this thing.
    0:23:51 It’s not really for kids.
    0:23:56 It’s more like the wonder years where an adult is looking back on their childhood, but it
    0:23:57 could work.”
    0:24:00 I started publishing online.
    0:24:06 After about a year, we had 12 million readers and a guy, a lot of encouragement from adult
    0:24:11 readers who were following my almost blog-like entries.
    0:24:13 Okay, and then that leads to a book contract.
    0:24:15 Just walk me quickly through the mechanics.
    0:24:16 What came first?
    0:24:17 Was there an agent?
    0:24:20 Was there a reach-out from a publisher or editor?
    0:24:22 I went to New York Comic-Con.
    0:24:24 I walked around with a sample packet.
    0:24:29 I heard about a guy who published a webcomic called “Mom’s Cancer.”
    0:24:32 I talked to the editor at a booth.
    0:24:36 He said, “This is exactly what we’re looking for,” and I was off to the races.
    0:24:40 You wind up publishing with Harry N. Abrams, correct?
    0:24:41 Yes.
    0:24:45 At the time, Harry N. Abrams would be known as an art book publisher, so those gorgeous
    0:24:51 picture books that you have on your coffee table, primarily, they weren’t doing a lot
    0:24:53 of this kind of thing.
    0:24:58 What I really liked was that they treated books as an object to be valued.
    0:25:03 They put a lot of craftsmanship into their publishing, and I thought, “If I sign with
    0:25:09 Harry N. Abrams, that might elevate the work itself,” and that’s the way it’s been with
    0:25:10 Wimpy Kid.
    0:25:16 About two weeks after the book was published, it got on the New York Times bestseller list,
    0:25:18 which was just an absolute shock.
    0:25:23 I remember my wife and I were jumping up and down on our kid’s bed.
    0:25:24 We just couldn’t believe it.
    0:25:30 Now it’s been on the list a combined total of something like 900 weeks.
    0:25:36 Let’s now talk about how you came to intersect with the Macy’s Parade.
    0:25:44 In about 2010, Diary of Wimpy Kid was doing pretty well, and we had an ambitious publicist
    0:25:50 named Jason Wells who said, “Hey, I think we could get a balloon in the Macy’s Parade.”
    0:25:54 He approached Macy’s and said, “Hey, how about a balloon?”
    0:25:59 They said, “It might not be ready for a balloon, but how about a float?”
    0:26:06 The idea I remember was that there was going to be a standing Greg Hefley, and at the base
    0:26:11 of the float would be a bunch of kids reading, so it would be a float to promote reading
    0:26:13 and literacy.
    0:26:17 That sounds a little, what’s the word I’m looking for, more reverent perhaps than the
    0:26:20 Wimpy Kid brand is.
    0:26:21 That’s right.
    0:26:26 We said we’re going to hold out a little bit and see if we get into balloon territory.
    0:26:27 Then what happens next?
    0:26:34 The next year, I think I got named to Time Magazine’s Most Influential People list.
    0:26:35 Congratulations in that.
    0:26:37 It theoretically makes you balloon worthy.
    0:26:38 Yeah.
    0:26:39 Right.
    0:26:40 Macy said, “Yes, please.
    0:26:44 We’d like to do a giant helium balloon.”
    0:26:49 My publisher was kind enough to sign on for the terms.
    0:26:53 Tell me what you know about that negotiation and the terms of the deal.
    0:26:58 As you can probably imagine, the terms are proprietary, so I can’t talk about that, but
    0:27:01 it was a multi-year situation.
    0:27:05 You pay a certain amount to get the balloon made, and then a certain amount to have it
    0:27:07 flown every year.
    0:27:13 That first balloon flew for three years, and then we re-upped and flew it for another three.
    0:27:18 That’s really the pattern we’ve been in for now a good long time.
    0:27:24 I have no idea what Macy’s deals look like with other creators if we’re standard, if
    0:27:27 we have our own separate thing.
    0:27:33 Has Harry and Abrams continued to basically pay for or subsidize the participation?
    0:27:37 To their great credit, Abrams has continued to support the balloon.
    0:27:41 This past balloon, I chipped in because, of course, I have a big stake in this as well.
    0:27:44 Any idea what it costs to make it?
    0:27:49 I don’t know what the actual costs are to make a balloon, but I would guess it’s somewhere
    0:27:52 around a low $100,000 range.
    0:27:58 I guess the big question is, how do you and your publisher think about ROI?
    0:28:04 All that that implies, not just whether it extends and grows the brand and sells more
    0:28:09 books and so on, but if it creates a different sort of awareness around the brand?
    0:28:10 That’s a really good question.
    0:28:12 We think about it a lot.
    0:28:17 It’s possible that the balloon is one of the legs of a chair.
    0:28:22 If you kicked out that leg, maybe the whole thing collapses.
    0:28:28 The fact that Wimpy Kid is still going strong suggests that the balloon is a part of that
    0:28:29 equation.
    0:28:34 But there’s also some real pride that’s associated with the balloon.
    0:28:38 Everybody gets to hold the string and walk down the streets of New York City.
    0:28:39 What’s that like?
    0:28:43 It’s nerve-wracking in a way because you’re sort of presenting yourself to the world.
    0:28:47 You’re saying, “Hey, my property is worthy of being here.”
    0:28:52 I remember the first few years, we would walk the balloon down the main avenue and I think
    0:28:55 people were sort of scratching their heads.
    0:28:56 What’s this?
    0:28:57 Is this Charlie Brown?
    0:28:59 Who is this?
    0:29:05 Over time, one of the rewards of this has been that Wimpy Kid is sort of seeped into the
    0:29:07 cultural consciousness.
    0:29:11 Now, most people know what the cheese touch is.
    0:29:13 Explain the cheese touch for those who aren’t familiar.
    0:29:18 There’s a piece of cheese in the first book that sits under a basketball hoop and it becomes
    0:29:23 an existential threat to Greg and to all of the middle schoolers.
    0:29:28 Everybody’s worried about getting the cheese touch because it means certain death in the
    0:29:33 middle school popularity ranking.
    0:29:37 This year will be Wimpy Kid’s 14th consecutive Macy’s Parade.
    0:29:43 That puts him on the all-time leaderboard, but he’s still way behind Snoopy with 43
    0:29:46 differences and Pikachu with 24.
    0:29:50 Kenny told me that a balloon typically lasts three to five years.
    0:29:53 He is now on the third version.
    0:29:57 I think we’ve gotten better and better at it and now Greg really looks exactly like
    0:29:59 I’d like him to look.
    0:30:00 Describe the current balloon.
    0:30:08 The current balloon has Greg sort of hunched over getting ready to touch the piece of cheese.
    0:30:11 So I said to Macy’s, “We really need to do something special.
    0:30:13 What can we do?”
    0:30:18 And they came up with an idea that the cheese itself could be in a cart or a car.
    0:30:24 That’s like a motorized vehicle that could spin and sort of spew green smoke into the
    0:30:28 air to make the cheese look like it’s emitting smells.
    0:30:29 Let’s go back for a sec.
    0:30:33 Describe the design process and how involved you are.
    0:30:34 It’s really exciting.
    0:30:39 It starts with a sketch and then it moves to kind of a pen and ink drawing.
    0:30:45 And then Macy’s has to turn that into a 3D model, which is not so easy with my character.
    0:30:47 My characters are two-dimensional purposefully.
    0:30:51 I don’t have any sense of 3D space at all.
    0:30:56 And so the first time we saw a wimpy kid balloon was the first time we saw Greg Hefley articulated
    0:30:58 in three dimensions.
    0:31:00 He has a butt.
    0:31:05 In the early days with Macy’s, I’d go down to Hoboken, New Jersey, and there would be
    0:31:08 a clay model waiting for me.
    0:31:10 The clay was still pliable.
    0:31:14 And then we would make changes on the fly with a really skilled artist.
    0:31:19 It would spin around on a pole so we could see it from every angle and really imagine
    0:31:23 what it would look like from the street level.
    0:31:28 Since Jeff Kinney’s first wimpy kid balloon, the Macy’s Parade Studio has moved from Hoboken
    0:31:31 to nearby Monarchy, New Jersey.
    0:31:36 And rather than clay, balloon modeling now is done with 3D printers.
    0:31:39 Coming up after the break, let’s go to Monarchy.
    0:31:42 Welcome to Macy’s Studios.
    0:31:43 I’m Stephen Dovner.
    0:31:45 This is Freakonomics Radio.
    0:31:57 We’ll be right back.
    0:32:03 Will Koss, the parade’s executive producer, met us at the Macy’s Parade Studios in Monarchy,
    0:32:07 New Jersey, just a few miles across the Hudson River from Manhattan.
    0:32:09 This is our 3D printing room.
    0:32:12 So this is Diary of a Wimpy Kid.
    0:32:16 We’re looking at a three-foot plastic model of Greg Hefley.
    0:32:20 We’ve got our character here actually laying on the table at the moment.
    0:32:27 But if he was sitting in flight position, he’d be pointing at the stinky cheese, which will
    0:32:30 be preceding him down the line of March.
    0:32:34 We are inside a sprawling brick and glass building that from the outside looks like
    0:32:41 an office building, but inside it’s a 72,000 square foot warehouse with 44-foot ceilings
    0:32:44 and a variety of workshop stations.
    0:32:48 It’s also a little bit noisy.
    0:32:53 The floor that we’re standing on right now is our fabrication floor.
    0:32:58 As we walk through, Koss points out some floats under construction, including a new float
    0:33:00 representing the Bronx Zoo.
    0:33:07 So we’ll have giraffes, we’ll have tigers, we’ll have gorillas, birds.
    0:33:12 These giraffes and tigers are not real the way they would have been back in the beginning.
    0:33:19 Every element that you see here being sculpted by our very, very talented artists start as
    0:33:20 a block of foam.
    0:33:26 We’re going to walk over to meet the legend himself, Mr. John Cheney.
    0:33:29 Good to see you.
    0:33:31 I brought some friends to talk to you.
    0:33:36 John Cheney is a carpenter who has worked on nearly 50 Macy’s parades.
    0:33:42 I came to New York and I wanted to be an artist, so I went to the Art Students League and in
    0:33:47 a few months I started running out of money, but my dad used to always have the parade on
    0:33:52 and I met some girl who wanted to work in the costume shop, so I said, “I’ll just walk
    0:33:56 over to Macy’s and see what’s happening.”
    0:34:02 Fifty years ago it was a lot different than all the paperwork now.
    0:34:08 They had this hiring rail, we got up to the rail, and there were all these kids around
    0:34:14 with very nice suits and everything, and I got ripped up jeans and a t-shirt on.
    0:34:18 I said, “I want to work the parade,” and that’s how I got hired.
    0:34:22 And how does it feel for Cheney to work year round on something that will be seen for just
    0:34:23 one day?
    0:34:30 Well, millions of people see it, so the exposure is really great, but there is something mind
    0:34:36 boggling about doing all this work for one night and setting it all up to one day and
    0:34:38 now taking it down.
    0:34:40 I guess that’s part of the pressure.
    0:34:46 You have this incredible deadline, and we work all night in the beautiful weather because
    0:34:50 we don’t even dare say that out of the words.
    0:34:53 The week before is maybe the hardest time.
    0:34:57 It’s like getting into the water, you know, once you’re in there, damn it, we’re doing
    0:34:58 it.
    0:35:00 I don’t care what’s going wrong, let’s go.
    0:35:06 Cheney is one of a couple dozen members of a team of carpenters, sculptors, welders,
    0:35:11 electricians, costume designers, and what are called balloon technicians.
    0:35:12 Here’s Will Koss again.
    0:35:16 Right now we’re on the balloon studio floor.
    0:35:24 This hour, balloons are flattened, they make their way over to our heat sealing tables,
    0:35:32 and this is essentially a sewing machine, but instead of a needle and string, it’s actually
    0:35:39 melting the two pieces together, and we actually have a balloon in process right now.
    0:35:43 This is Marshall, our Paw Patrol pup.
    0:35:48 Marshall is a Firehouse Dalmatian from the animated kids show Paw Patrol.
    0:35:53 So Marshall is presently rigged to one of our rigging points in the ceiling.
    0:36:00 At this point, he just looks like a big white round blob with no distinguishable limbs.
    0:36:03 That’s because of how these giant balloons are built.
    0:36:07 The head right now is the chamber that’s inflated.
    0:36:13 The rest of the balloon is deflated because we’re working specifically on the head unit,
    0:36:15 and that’s how all of our balloons are fabricated.
    0:36:19 They’re fabricated into chambers, which gives us some flexibility.
    0:36:26 We do run into a situation on parade day to quickly try to remedy that one specific area
    0:36:29 without compromising the integrity of the entire balloon.
    0:36:34 Jeff Kinney had told us earlier about a mishap with the Wimpy Kid balloon.
    0:36:40 Yeah, I think Greg’s hand popped this last year, and it looked a little bit sad, but
    0:36:41 these things happen.
    0:36:47 Marshall, the Dalmatian, is a new balloon in this year’s parade, one of six.
    0:36:52 All the new balloons will need to have a dry run outdoors before the parade.
    0:36:56 Our volunteers, our balloon handlers, and our flight management team have an opportunity
    0:37:02 to see the balloons working in real time and reacting in wind conditions and take notes
    0:37:04 and prepare for Thanksgiving Day.
    0:37:07 This dry run is called Balloon Fest.
    0:37:11 It happens in the parking lot of MetLife Stadium in East Rutherford, New Jersey, about four
    0:37:15 miles from the Macy’s Studio in Monarchy.
    0:37:19 Balloon Fest is always held on the first Saturday of November.
    0:37:21 Good morning, everyone!
    0:37:25 Welcome to the Balloon Fest!
    0:37:29 There are several hundred volunteers to handle the balloons.
    0:37:33 On parade day, there will be five thousand parade volunteers.
    0:37:37 Okay, I need twenty handlers!
    0:37:43 The six new balloons, including Marshall and Minnie Mouse and the new Spider-Man, they
    0:37:48 are already inflated and held down under a net with sandbags.
    0:37:55 When the time comes, the sandbags are taken away, the nets are pulled off, and the volunteers
    0:38:00 slowly unroll the thin ropes that are attached to what they call the handling bones, which
    0:38:14 are plastic X-shaped grips.
    0:38:18 Once the balloons are up in the air, the volunteers walk them around the parking lot.
    0:38:23 Will Koss is paying close attention, everything looks good.
    0:38:34 Hereby is the helium truck.
    0:38:36 Here is the helium guy.
    0:38:38 The trailer is about forty feet long.
    0:38:42 There are twelve high-pressure steel tubes in there.
    0:38:47 If you could get all the helium out of each one of those tubes, you could fill about six
    0:38:49 to eight of these balloons with a single trailer.
    0:38:50 His name is Kevin Lynch.
    0:38:53 I’m the Vice President of Global Helium for Messer.
    0:38:57 Messer is one of the big players in the helium market.
    0:39:02 It and the companies it has acquired have been providing helium to the Macy’s Parade
    0:39:03 for decades.
    0:39:07 The helium that’s here today started in an underground helium reservoir in Amarillo,
    0:39:11 Texas, and here we are filling balloons.
    0:39:16 But if you put too much helium in it, that whole crew of people would be, you know, rising
    0:39:17 up into the sky.
    0:39:23 Lynch tells us that each giant balloon takes around 15,000 cubic feet of helium.
    0:39:25 So, how much does that cost Macy’s?
    0:39:31 I can’t tell you that, that’s, we can’t talk about sensitive commercial topics out
    0:39:34 here.
    0:39:38 The price of helium itself is not a particularly sensitive topic.
    0:39:42 Helium is used widely in medical settings and elsewhere, and there’s a strong global
    0:39:44 market for it.
    0:39:49 Believe it or not, giant balloons consume only a tiny share of the helium market.
    0:39:54 We did a rough calculation of what it would cost to fill the 17 balloons in this year’s
    0:39:56 parade if you paid market price.
    0:39:59 It was around $425,000.
    0:40:04 I asked Will Koss if this sounded about right, but he wouldn’t take the bait.
    0:40:10 I also asked him what Macy’s does about the occasional helium shortage.
    0:40:13 We do have our finger on the pulse of helium.
    0:40:18 It’s a market that adjusts over time, but we plan for it and have good relationships with
    0:40:23 our vendors across our helium supply teams.
    0:40:29 What’s your biggest concern or anxiety or, you know, the thing on your to-do list that
    0:40:31 keeps you up the night before?
    0:40:33 I guess I would assume the weather, but maybe I’m wrong.
    0:40:36 The weather is definitely a concern for us.
    0:40:43 We are a rain or shine event, so unless there’s significant weather that would impact the
    0:40:45 flight of the balloons.
    0:40:47 Wind, particularly, yeah.
    0:40:48 Yeah.
    0:40:53 Wind is one of the most potential risks on our overall parade.
    0:40:55 We’ve had some snow in our history.
    0:40:56 I don’t wish that on us.
    0:40:59 I’ve been fortunate enough to have relatively good weather.
    0:41:01 I know my time is coming at some point.
    0:41:04 It’s probably good for the broadcast, though, isn’t it, snow?
    0:41:11 It would look beautiful, but we do still have to get 5,000 people and 27 floats and 17 large
    0:41:19 balloons down the parade route, so I’d love it to snow at 12.01 or 11.59.
    0:41:25 So far, we’ve heard from the key people who create and broadcast the Macy’s parade, but
    0:41:31 there’s one more partner, sort of a silent partner, without whom it could not happen.
    0:41:34 If there were no permits, it would be a free-for-all.
    0:41:35 I’m Stephen Dubner.
    0:41:36 This is Free Economics Radio.
    0:41:38 We’ll be right back.
    0:41:48 Yes, there are giant character balloons drifting through the sky, and yes, there are floats
    0:41:54 and marching bands, Broadway performers, but the real star of the Macy’s Thanksgiving Day
    0:41:59 parade, if we’re being honest, come on, you know who it is.
    0:42:00 It’s New York City.
    0:42:05 My name is Dawn Tolson, and I’m the Executive Director of Citywide Event Coordination and
    0:42:09 Management and the Street Activity Permit Office, and those are a lot of words.
    0:42:12 Tolson has worked in New York City government for a decade.
    0:42:19 Her office issues permits for many types of events, street fairs and farmers markets,
    0:42:22 festivals, and of course, the Macy’s parade.
    0:42:26 We told her we were trying to put together the costs of the parade, and she did give
    0:42:29 us a little bit of pricing information.
    0:42:34 An application fee is non-refundable, and that’s $25, and then it ranges from zero,
    0:42:40 no cost whatsoever, up to something that could be 66K per block, depending on the use of
    0:42:42 space and the impact.
    0:42:49 The Macy’s parade uses 40 plus blocks, and it is undeniably high-impact.
    0:42:56 Does that mean that Macy’s pays the city something like $3 million, 40-some blocks times 66K
    0:42:57 per block?
    0:42:59 Oh, I can’t say how much they pay.
    0:43:01 Could try.
    0:43:03 Macy’s is a partner with the city.
    0:43:11 They put onto very iconic events in New York City that are birthdays and holiday events
    0:43:13 for America.
    0:43:17 The other one she’s talking about is the Macy’s 4th of July fireworks, which no offense to
    0:43:21 fireworks is nowhere near as big a deal as the parade.
    0:43:25 And so we know the importance of that, and we work with them, but I can say that they
    0:43:31 do work really hard with us to make sure that we are very cognizant of the amount of resources
    0:43:36 that we’re using, that we’re not overextending, that we’re also being fair to the employees
    0:43:37 and the workers.
    0:43:43 When Toulson talks about the resources the city is using, these are serious resources,
    0:43:46 including law enforcement and emergency crews.
    0:43:49 Here is Will Kos again from Macy’s.
    0:43:54 The security plan is a quite detailed plan.
    0:43:58 You could imagine if you were throwing a parade for three and a half million people on the
    0:44:04 sidewalks and 30 million people watching a live broadcast that you would invest a lot
    0:44:07 in security planning and execution.
    0:44:12 There’s a variety of personnel that are visible on the parade route and other layers of security
    0:44:14 that are less visible.
    0:44:16 Hats off to the NYPD.
    0:44:20 There are people out there that were there since 1 a.m. in the morning putting barricades
    0:44:25 in place and moving vehicles around so you don’t even hear a car honking.
    0:44:30 Then you’ve got counterterrorism, working with the FBI on any kind of threats.
    0:44:34 You’ve got Tarrou, their technical assistance unit, who are doing the counter drone stuff
    0:44:40 with the FBI, and then you’ve got the DCPI, their press group, doing press conferences
    0:44:43 with their chief of departments and chief of patrols.
    0:44:46 Basically you’re enacting the entire NYPD.
    0:44:50 What does it cost to enact the entire NYPD?
    0:44:52 How much of that comes from Macy’s?
    0:44:58 The parade for all its goodwill and vibes is a commercial event, so you could imagine
    0:45:02 Macy’s contributing heavily to the city services.
    0:45:07 On the other hand, even if you don’t buy my argument that New York City is the real
    0:45:12 star of the show, the city does get a lot out of the parade.
    0:45:17 When I was a kid and saw the parade on TV, I barely noticed the floats and balloons I
    0:45:20 was staring at Central Park West.
    0:45:27 To a farm boy, which is what I was, the balloons and floats were cute, but the fantasy was
    0:45:29 New York.
    0:45:34 So does New York City kick in all those resources for free for the Macy’s parade?
    0:45:39 Does the cost of the permit itself cover all these services?
    0:45:44 Those are questions that no one would directly answer on either the city side or the Macy’s
    0:45:50 side, and there are other city resources to talk about, other city agencies that get
    0:45:51 involved.
    0:45:55 We have four walkthroughs with all of those agencies, because then we’re walking the
    0:45:57 route four times.
    0:46:00 In New York City, the city of scaffolding.
    0:46:05 There’s a lot of obstructions along the path, and so we have to walk that path to see what
    0:46:10 construction is going on, what potholes are in the street, what is up above.
    0:46:12 Light lamps, for instance.
    0:46:16 In 1997, the parade was held on a very windy day.
    0:46:21 At Central Park West and 72nd Street, the six-story tall cat in the hat balloon hit
    0:46:24 a lamp post and knocked off part of it.
    0:46:29 Several people were injured, including one woman who was in a coma for 24 days.
    0:46:33 Macy’s and the city now work together to prevent that kind of thing.
    0:46:34 Will costs again.
    0:46:41 All of our balloons and floats starting up at 77th Street and all the way through 34th
    0:46:42 Street.
    0:46:46 That entire parade route has to be cleared of any aerial obstruction.
    0:46:51 This clearing process includes what costs calls light swings.
    0:46:59 We have a team to physically move all of the light poles out of the way, so they’re loosening
    0:47:03 them and then we’re actually swinging all of the poles.
    0:47:05 It’s done under the dark of night.
    0:47:06 And Don Tolson again.
    0:47:07 Sanitation.
    0:47:09 We haven’t even talked about sanitation.
    0:47:13 I didn’t know this until a couple years ago that there’s a special unit that deals
    0:47:14 with the horse refuse.
    0:47:20 This horse refuse comes from the NYPD and Parks Department mounted units that march
    0:47:21 in the parade.
    0:47:25 So we forgot to call them one year, it was not pretty.
    0:47:30 One of our responsibilities is to clean up the horse poop.
    0:47:31 That is Jessica Tisch.
    0:47:35 When we spoke with her, she was New York’s sanitation commissioner.
    0:47:42 We have one to two sanitation workers for every four to five horses.
    0:47:45 Tisch has just been named commissioner of the NYPD.
    0:47:51 As sanitation commissioner, her job was to make the parade route as photogenic as possible
    0:47:56 on Thanksgiving Day from 8.30 a.m. Eastern time until noon.
    0:48:01 Those streets, about 42 blocks, they need to sparkle because New Yorkers and people
    0:48:08 from around the world all converge on that part of the city and we want those streets
    0:48:10 to look really good.
    0:48:14 After the parade is obviously a huge effort.
    0:48:20 We have about 150 sanitation workers who are involved in the post parade cleanup.
    0:48:27 They are doing manual cleaning with brooms and baskets, but also our mechanical brooms
    0:48:34 which can sweep 1,500 pounds of litter are out in full force.
    0:48:41 About 71,000 pounds of trash is collected by the Department of Sanitation as part of
    0:48:46 the cleanup of the Thanksgiving Day parade.
    0:48:52 Once again, we couldn’t learn anything significant about how these costs are allocated or perhaps
    0:48:53 shared.
    0:48:56 New York City plainly derives value from the parade.
    0:49:02 There’s the marketing value of the broadcast, but also three and a half million in-person
    0:49:06 spectators generate a lot of economic activity.
    0:49:08 How much?
    0:49:13 Those numbers too are shock of shocks, hard to come by.
    0:49:18 If we began this episode hoping to run even a rough cost-benefit analysis of the Macy’s
    0:49:22 Thanksgiving Day parade, we have failed.
    0:49:25 Too many of the costs are privately held.
    0:49:30 We can guesstimate the overall TV ad revenues, but we don’t know how that money is split
    0:49:37 between Macy’s and NBC and whatever agencies or other middlemen are involved.
    0:49:39 So we took one more shot.
    0:49:42 We asked to speak to the man at the top.
    0:49:45 Tony Spring, Chairman and CEO of Macy’s Inc.
    0:49:49 So Macy’s refers to the parade as, quote, “a privately sponsored and privately funded
    0:49:54 event and is regarded by Macy’s as its annual gift to the nation.”
    0:50:00 I understand that as with most gifts, you don’t tell people how much the gift costs
    0:50:05 when you’re giving it to them, but why is it so important that no one knows how much
    0:50:06 the parade costs?
    0:50:09 Because we’ve been trying to figure it out and really failing.
    0:50:10 Why?
    0:50:12 We want to know how much lying can cost to produce.
    0:50:14 But I can figure that out.
    0:50:16 Okay, go to the Hayden Planetarium and what did it cost?
    0:50:18 I can figure that one out too, Tony.
    0:50:20 I can’t figure out the parade.
    0:50:23 I guarantee you, you’re bright enough, much brighter than me.
    0:50:24 You can figure this out.
    0:50:30 But I would like to focus more on the fact that 100 years later, 98 parades later, this
    0:50:36 thing is still relevant and is a great example of if we were still marching animals up and
    0:50:38 down the street, it wouldn’t be as relevant today.
    0:50:43 But the fact that it evolved over time and includes a level of modernity, includes a
    0:50:48 level of history, floats that have been there over the years, floats that are new this year,
    0:50:51 balloons that are new this year, that is just like the fireworks.
    0:50:55 I think what makes it such an amazing spectacular.
    0:51:00 Okay, so the Macy’s parade is still relevant.
    0:51:04 Here’s a bigger question, especially for Tony Spring.
    0:51:07 Is Macy’s still relevant?
    0:51:13 Coming up next time in part two of our series, Brick and Mortar Retail has been declining
    0:51:18 for years and Macy’s is planning to close 150 of their stores.
    0:51:23 Tony Spring took over less than a year ago and he is pushing for a renaissance.
    0:51:25 At least he’s optimistic.
    0:51:27 Now is the time to buy Macy’s.
    0:51:34 Next time we go deep with Tony Spring and we get another view too.
    0:51:39 Macy’s has a hell of a challenge over the next few years to remain upright, let alone
    0:51:41 become successful as they once were.
    0:51:46 We also visit Wimpy Kid author Jeff Kinney up in Massachusetts, where he is trying to
    0:51:49 launch his own retail renaissance.
    0:51:51 You invest in your downtown.
    0:51:53 Can you change the fate of a town?
    0:51:56 And I don’t know the answer to that.
    0:51:58 That’s next time on the show.
    0:52:00 Until then, take care of yourself.
    0:52:03 And if you can, someone else too.
    0:52:09 So if you’d like to learn more about Helium, be sure to follow another podcast we make,
    0:52:12 the economics of everyday things.
    0:52:17 Host Zachary Crockett went deep on Helium’s supply and demand in an episode that will
    0:52:19 be out very soon.
    0:52:22 Freakonomics Radio is produced by Stitcher and Renbud Radio.
    0:52:28 You can find our entire archive on any podcast app, also at Freakonomics.com, where we publish
    0:52:30 transcripts and show notes.
    0:52:33 This episode was produced by Alina Coleman.
    0:52:36 We also had recording help from Alexander Overington.
    0:52:42 And special thanks this week to Thomas Recupero for the research paper, and to Harlan Cobin.
    0:52:47 Our staff also includes Augusta Chapman, Dalvin Abouaji, Eleanor Osborne, Ellen Frankman,
    0:52:52 Elsa Hernandez, Gabriel Roth, Greg Rippen, Jasmine Klinger, Jason Gambrell, Jeremy Johnston,
    0:52:57 John Schnarrs, Lyric Bowditch, Morgan Levy, Neil Caruth, Rebecca Lee Douglas, Sarah Lilly,
    0:53:03 Theo Jacobs, and Zach Lipinski. Our theme song is “Mr. Fortune” by the Hitchhikers.
    0:53:05 Our composer is Luis Guerra.
    0:53:08 As always, thank you for listening.
    0:53:16 When I see a crowd, I’m thinking to myself, “Wait a minute, did I issue a permit for
    0:53:30 that?”
    0:53:33 [MUSIC PLAYING]

    The 166-year-old chain, which is fighting extinction, calls the parade its “gift to the nation.” With 30 million TV viewers, it’s also a big moneymaker. At least we think it is — Macy’s is famously tight-lipped about parade economics. We try to loosen them up. (Part one of a two-part series.)

    Please take our audience survey at freakonomics.com/survey.

     

    • SOURCES:
      • John Cheney, carpenter at Macy’s Studios.
      • Will Coss, vice president and executive producer of Macy’s Studios.
      • Jeff Kinney, author, cartoonist, and owner of An Unlikely Story Bookstore and Café.
      • Kevin Lynch, vice president of global helium at Messer.
      • Jen Neal, executive vice president of live events and specials for NBCUniversal Media Group.
      • Tony Spring, chairman and C.E.O. of Macy’s Inc.
      • Jessica Tisch, commissioner of the New York City Department of Sanitation; incoming commissioner of the New York City Police Department.
      • Dawn Tolson, executive director of Citywide Event Coordination and Management and the Street Activity Permit Office for the City of New York.

     

     

  • 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.
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    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.
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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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    0:43:18 you
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    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.