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

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]

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

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