Conversations with Tyler - Jason Furman on Productivity, Competition, and Growth

Note: This conversation was recorded in January 2020. Tyler credits Jason Furman’s intellectual breadth, real-world experience, and emphasis on policy for making him the best economist in the world. Furman, despite not initially being interested in public policy, ultimately served as the chair of the Council of Economic Advisors under President Obama thanks to a call from Joe Stiglitz while still in grad school. His perspective is as idiosyncratic as his career trajectory, seeing the world of ec

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Hi everyone. This is Jeff producer of conversations with Tyler. I wanted to let you all know that today's episode featuring Jason Furman was recorded in January of this year. It was originally scheduled to release in March going covid hit we held the episode and now we find ourselves in August and it's as good a time as any to release it. So, please enjoy this somewhat long-lost episode of cwt with Jason Furman.

Conversations with Tyler is produced by the mercatus center at George Mason University Bridging. The Gap between academic ideas and real-world problems arcadis. Org and some more conversations including videos transcript and upcoming dates visit conversations with Tyler. Com.

Hello. Today. We are here with Jason Furman. Who is the professor at Harvard Kennedy School and former chair of the Council of economic advisers under President Obama Jason. Welcome. Thanks for having me. First question. Why has us investment Behavior been so sluggish for so long start with the easy ones cuz I just know there's no warm up here Tyler. I think there's a lot of reasons some of it isn't the problem. It's that you don't need as much investment from businesses in the type of intangible economy that we have today relative to the type of heavy industry we used to have but I think part of the investment shortfall does reflect problems and failures in economic policy and in particular the increase in concentration in certain industries has led to Greater Monopoly power and has reduce some of the incentives and need to make investments in those Industries my let's party

Investment shortfall we can and should do something about but if I take a sector like say hospitals where there's quite a bit of Monopoly power to send plenty of investments into Healthcare. Is there a correlation between sectors with a lot of Market power and sluggish investment there is to see this in research by Tomas Villa Paul, you see it in research that generally has done both of them have shown that the predictions you'd get by looking at increasing concentration are pretty similar to the predictions you'd get in terms of where you see the investment shortfalls. I know generally did look at the hospital industry. I thought that was one of the shortfalls but I'm not completely positive about that of course Health has 18 different issues and I'm going on in at all at once but there's a lot of investment in Tech and while there may be market dominance to stop market power. They are in the sense of high prices and restrict it outfit, right?

Should we take Market power is actually the problem here. I didn't work at Powers a problem in some sectors. I think that I could have the health sector is an example of where it is. The problem that has been very well measured and we're very well-documented is higher prices as a result of Market power. So I'm quite confident in the health sector Market power leads to higher prices if higher prices higher prices are for something like drugs then I think it's stuff. I think you do have a trade-off between are you getting more Innovation on the one hand and higher prices on the other hand? I don't quite know the exact thing to do there when it comes to hospitals and there's very few efficiencies that come out of these murderers only efficiency. That might come out of the message. You can pay nurses Less on the new used to and I'm not sure how thrilled we should be about that. What do you think of the Rossi hansburg paper that if you look at the US economy sector-by-sector rather than

Spell concentration indices that there's no apparent increase in Market power. I think that you can't these macro measures of Market power or limited and problematic and that's something we always knew we knew that the first time we publish them at the Council of economic advisers. A lot of the researchers that have published them if known that the question is like anything else in economics. Does it have predictive power does it explain something does it work and it does seem associated with things like profitability with things like markups at an aggregate level in some of the aggregate model it matches features of the data like their rise in the return to Capital relative to the safe rate of return on treasuries. So all we know is this going to work for every sector no retail for example more concentration and part that's more competition at the local level and part that's more Innovation. So in retail the national

Numbers I think are really misleading. I'm in other sectors. I think they're not non balance. I think they're not if investment is important. Does that make you an economic pessimist given the apparent the end of the savings Club from Asia? I'm an economic realist.

You look at Robert Gordon and he's been turned into this big bassinest this bowl of prediction. That's you know, this negative we've run out of ideas as nothing ever is going to happen turns out if you just look at average productivity growth of the last 50 years and assumed that's what you're going to get over the next 50 years. We're going to have a GDP growth rate that is around 2% Maybe a little bit below it and that's just from continuing the last 50 years. So the average of last 50 years is better than the average of the last 15 years. So in some ways, I'm an optimist. I think we'll get back to our historical productivity growth. But the idea that we're going to get Way Beyond that certainly could happen but I don't think is a reasonable forecast of what's going to happen referring to Gordon. Here's another soft ball question, why did productivity fall so much after either 1973 or inside the last 15 years?

The easy podcast. Yep, you know, there's something you know, the blessing for structure investment less R&D. There are some major projects in terms of highways in the 1950s the lunar Landing in the 1960s Etc. I'd like to think that was the answer to your question. I need the truth is when you go and quantify that type of public investment server couple tenths of a percent of the answer. I'm in the recent. I do think the increase concentration we're talking about might be a 10th or two percentage-point of The Slowdown that we've seen some of it may be that you need to invert your question and ask not why did productivity slowdown but why was productivity so fast was a lot of very special things, you know about the 1950s and the 1960s. I'm just coming off of World War II and in terms of the 95 to two.

5 well to relatively short. Of time stuff fluctuates, you have a period of faster growth, but broadly speaking nowhere in a world of one and a half percent productivity growth if we're lucky. Unfortunately. It's been more like one lately and that's just what it is. What is your take on the degree of unmeasured benefits from the internet high low intermediate intermediate but most of them were in the base.

5 10 15 years ago Google online travel online shopping Wikipedia. It's not like adding these are going to add to your measure productivity growth in the year 2019 or the year 2018. They might add to the level of productivity, but they were in the level they were in the base a while ago now and they've just continued up so I certainly think there's some things were not measuring a bunch of it though is about the use of our time and YouTube may be better than TV, but it's only a bit better than TV. So you can't just take the gross benefits of YouTube. You have to do the net benefits relative to the other activity. And then if you're being a paternalist you could ask is it any of this a good use of our time, but without even going there I think you get sort of decent size impact on the level of well-being a small impact on the growth of Welby.

Now that the last decade let's say your productivity Czar and you can make two or three key changes to boost productivity. What would they be our number? One two, and three would be more immigration or emigration a talented people that will add to Innovation here in the United States that would bring their ideas with them that would start businesses. Now if I had to go to four five and six much increased Federal r-and-d, it's falling as a share of GDP. I'm consistently since the 1960s a business tax reform that included more incentives for investment like expensing and an expanded R&D credit to encourage businesses to internalize more the benefits that their research has for others and then finally investing in American higher education. I'm all for more immigration, but don't you find it strange 2

Relatively High productivity 50s and 60s have a fairly limited number of immigrants know some of them contribute a great DL Einstein write simple example shortfall comes right after we increase immigration a lot. So maybe it's not a number one factor. Is it the number one factor in the Slowdown? Probably not but we have a lot of micro evidence that you have papers to take a look at what happens when immigrants, not only do they patent but I'm trying to Franz found that the Americans end up patenting more when they're in the presence of those immigrants II. This is something we did. We have a good enough set of Micro Data you don't need to use certain macro decades to try to make inferences. What about UMD is a way of raising productivity growth that everyone move to Oakland or maybe even San Francisco, but that helped a great deal. That would be on my list too. If we keep going probably will discover that a large fraction of the thoughts I have about Economic Policy would would fall under on the heading of enhancing productivity.

I'm absolutely I think is a real you mismatch of people globally people that would be more productive if they were in the United States than they were in the country that they were in and then there's a mismatch not not nearly as large, but I still sizeable one within the United States itself on the places where people can most productively add to the economy places like the Bay Area the Boston area the Washington area are I'm ridiculously and unnecessarily expensive to live in because of artificial constraints on building that drive drunk people out keep people from coming in the u.s. Is losing some of its manufacturing capacity and certainly a lot of it's manufacturing Workforce.

Are there external benefits to keeping those activities more in the US?

Significant benefits. I don't think that manufacturing itself should be an important objective of US policy. I it's one type of job. It's been a good type of job, but there's other good types of jobs as well. So I wouldn't focus on you know where physical things are being made as supposed to wear services are being made ineffective anything. I think the error and policies probably to do little bit too much emphasis on manufacturing and a little bit less on Services. What do you think of the National Security argument that say when building a ship we might be dependent on South Korean components if there were at war in Asia, those might be for some reason unreliable. We depend for China on for rare Earths. We depend on Taiwan to some extent for high-quality chips, even though we make our own it's the supply chain extended too long and it was a kind of economic fantasy and it doesn't make

National Security since I don't consider myself an expert in any of those national security questions, so I would be open to thinking about the National Security concerns associated with the supply chain.

I have an awful lot in specific cases both when I was in government and just in the world more generally heard people make National Security argument that I found tendentious and pretty unfair suasive. So I thought there may be some that are persuasive and that are true. There's an awful lot that aren't our Administration towards the n-word a bit about semiconductors. When I've looked at that there's enough of a diversified World supply enough of an ability to scale up if necessary in the United States that I don't think on semiconductors. I think there it was protectionism under the guise of national security. So, you know, I think we should accept the possibility of National Security take it seriously, but the really really worried that a lot of protectionist arguments use that trappings as the China shock literature.

Change your view of what is an optimal policy adjustment to foreign trade the first economics class. I took as a freshman in college. We were told to trade had winners and losers. We were told that the winners were defeats and tended to have smaller games in the losers were concentrated intended to have large losses that seems to be exactly what the China shock literature has found. I think I turned out to be bigger loser than we had thought right opioid deaths were not predicted say at their current magnitude. I think the China shock literature is a fantastic contribution to labor economics and is less important thinking about trade. I think we've learned about weaknesses and deficiencies in the structure of our labor markets the ability to connect people with jobs ability people to move Aftershock happens to get themselves retrained to have some form of insurance that could help them in the event that their neck.

Job has a lower pay so yes that literature together with other observations about what's been going on with for example prime age men in the workforce has affected the way I think about the dynamism inefficient allocation of Labor in the American Workforce much more than it's affected the way I think about trade why did labor markets recover so slowly from the 2008 crash you think the world is the internet? Everyone has all this information matching markets are better but the labor market recovers quite slowly why?

I remember in 2009 Alan Krueger was assistant secretary for economic policy at the treasury and he looked at every single oecd country in the last knocking at any of these numbers exactly, right? But what's it say in the last 50 years would seen an unemployment rate rise rapidly in a short. Of time by a couple percentage points and he asked the question how quickly does it come down what he found was the fastest that any oecd country achieved was seven tenths of a percentage Point per year.

Not just United States is not just the present for the last 50 years a couple dozen countries. Unemployment rates can go up very quickly unemployment rate skin not I'm come down very quickly. The piece that the unemployment rate declined in this recovery with about the same or slightly faster than the pace of did the 1980s in the only area were for the economy probably consistently outperform forecast after the reception was the unemployment rate was consistently lower than What was forecast now the employment rate was not higher than was forecast GDP growth was weaker, but the unemployment rate itself. I don't think it was abnormally slow and its recovery after three or four years. Once the nominal shocked as work its way through the system. What is the most important rigidity in preventing a more rapid adjustment?

Is it the people are unwilling to move locations or somehow matching markets are not working what what needs to be fixed? I mean you certainly saw both the 2001 recession and the two thousand seven through nine receptions. You saw disproportionately long periods of long-term unemployment of people working part time for economic reasons to involuntarily part-time and people leaving the workforce and the participation rate falling. So something about both of those shocks led to very prolonged all three of these negative consequences. You take a crappy job. You don't get a job at all or you give up entirely both of those shocks. I think it's related to the fact that both of us hit at the same time the labor market fluidity in labor market dynamism was lower than it had been people were moving from job to job last businesses were creating and destroying

Do our jobs and so yes, I think if you have a less fluid labor market then a shock will have all of these bad consequences that begs the question of why we have a less fluid. I'm labor market. I think some of it is land use and the expense of moving to place has some of it is occupational licensing. Some of it is the cost of Healthcare in a lock-in to be interesting to see whether that's gotten better after the Affordable Care Act, but I think that question you know, how do we have a more fluid labor market means the match models will work better the next shock hits. What do you think are the best place based policies for America's lagging regions or do you maybe not even the ice baseball is not sure I can think of any place based policies that I'm particularly enthusiastic about. I don't mind algorithmic play Space policies, you know, this place has a bigger deeper recession. So it gets a larger Federal allocation of Medicaid.

Or it gets longer unemployment insurance benefit. So there's that type of place base that's based on a formula about State unemployment rates are state income that I think hen make sense the regional development. We're going to go into this area create this new cluster create this new industry. I think that's littered with a history of failure. If I don't even know that we know what we're doing when it comes to play Space policy, even if academics knew what they were doing when it came to play Space policy and when the political system implemented only any area policy where Congress has less interested in expert input than the area of which locations in the country should get resources that how that region-specific these is so you let people moving to the US you give them a path toward a green card. They're supposed to start off in Maine or West Virginia or Idaho. They won't all stay there.

But you know, maybe half of them would for 5 years. Should we do that tell her you are just so much more creative and imaginative than I am. So my my rather prosaic mine, here's an idea like that and thinks the idea that we're going to have internal check points within the country. Even if it's for one type of people and doesn't apply to others and quite know how we do that it seemed but no checkpoint to the IRS. So you're sent to Idaho. If you leave Idaho in less than 4 years, you pay another 20% of your income and tax to the federal government has no strong enforcement. But also a lot of people if they show up in Idaho, they will stay I think I do good faith, maybe half of them on but it happened then do that seems like a big achievement and you're for more immigration anyway, right? You don't mind if they trickled down into Nebraska. The only way for me to get more immigrants as they have to be in one part of the country. I would probably settle for that and come from

Nights with you on this plan beyond that I don't.

Again, I let you know maybe that's not where they're can make the biggest contribution to the American economy to the American Fisk to their own families. So I guess I'd rather let people choose. Then make the choices about where they want to live including immigrants make those choices. As you know, Brian Kaplan has a book out about open borders coming from the left Mathias Iglesias has a forthcoming book arguing. We should Target in America of 1 billion people. Do you think right now? We're just thinking too small about numbers in this country 320 million. It's not very much China and India the geopolitical rivals. Why shouldn't we have a plan to get to in America of say 700 million people.

And they can't all go to Manhattan. Not even Staten Island Forest. I think within any conceivable range that I can imagine for Public Policy. I'd rather have more immigration than less immigration when you decide on the amount you have I didn't do believe in enforcement. I think it is perfectly reasonable for the United States to decide who can be here certainly reason off the United States decide who can vote in the United States. I'd like those rules to be much more permissive and then to enforce the much more permissive place that we set those rules. I guess. I can only imagine 700 million a billion. I certainly think economically we could support that number of people in the land that we have. I'm in this country. If that happened you'd end up with an awful lot of people moving to Idaho without having to tell them to move to Idaho because prices in New York and San Francisco would go up. I'm even more than they have.

Ready? I do think Brian Kaplan book, which I loved.

Didn't take completely seriously some of the transition issues and some of the transition cost the speed with which these changes happened politically culturally and economically think that is is relevant. What about having the US government change policy to induce or encourage a higher rate of savings. Is there anything we should do?

Where's the savings right just fine? I'm not that worried about the savings rate. I don't think it's the constraint on business investment right now because the cost of capital is very low I think in terms of retirement security the first place I would go for retirement security be to expand Social Security rather than to raise I'm savings and so I think the main issue with low savings is just an intertemporal consumption one that we are borrowing from farnaz today will need to repay those foreigners. I'm in the future and with a current account deficit of around 3% of GDP think we're on the edge of where we need to be worried, but not really that far past the edge of where we need to worry. We wanted to increase savings though. Certainly you could do it on the pro.

What side but you could also decide you're going to reduce the budget deficit but since we're borrowing at real rates pretty close to zero, right depending on the term structure and what day you're talking about in the growth rate of the economy is positive why shouldn't the u.s. Actually borrow much more either cut taxes Phantom or some combination of those two changes. What's the constraint? So you said 3% of GDP itsjustanumber right as a percentage of wealth. It's below 1% Why not too much more. So we have interest rates that are lower than our growth rate. That means we can on a sustained basis run a primary deficit we can spend excluding interest in excess of what we collect in taxes right now though. Our primary deficit is set to be about 4% of GDP. That means our debt under that plan with asymptotes to about 400% of GDP.

And perfectly possible that we'd be fine at 400% of GDP. I'd like to sort of Explorer how far we could get a whole lot more slowly than committing ourselves to our current fiscal trajectory to the four hundred percent of GDP steady-state down debt or something even higher than that. If borrowing rates stay loud you think borrowing more than is an actual free lunch and we need only worry about rates going back up or is it simply pushing around resources? And we have a resource constraint that we have in terms of what the potential of the economy is and

You can relax that resource constraint at the level of the planet with the United States borrowing financing consumption from other regions in the world and paying those regions of the world back in the future. But by the way, if what if we're doing with the rest of the world is financing consumption financing investment that will come out of our well-being in the future. So no, I don't think we have a free lunch there. What's the best way to think about the risk that borrowing rates in real terms rise above the growth rate of the u.s. Economy?

Look my I think the risk is symmetric. If you look at the last hundred and forty years that 25% of the time interest rates have been real interest rates have been lower than where they are. Now 75% of the time they've been higher you look around the advanced economies today. I'm going in most all of the events economy's real interest rates are lower than they are in the United States. So I think there's a certain amount of symmetry rates could go down rates could go up.

Epic streams does not symmetry rates can't go down by 10 percentage points rates could go up by 10 percentage points. So I think there is some tail risk their I don't know that it's so large that I would make a big effort to deal with it. If you want to deal with it, you don't even need to reduce the deficit. You can just borrow more long-term and lock in the low interest rates you have now, but I wouldn't want to go hog-wild and assume it'll never happen either. There's a new paper from the bank of England. Probably you seen it and in any case, you know, Larry Summers, but it suggests there's a long-term secular to find over centuries that real rates basically get lower. What should we infer from that anyting? I think so much damage was done to economic forecasting by the experience of the 1980s we had this

Brief relatively brief. Of unusually, very high interest rates and people built that into their forecast and for the next 20 or 30 years or something almost felt normal about the 1980s and then the decline from the 1980s felt strange. When a lot of what we've seen it interest rates in recent years is going back to the types of interest rate and the type of trend we were on before them in terms of a longer-term decline of interest rates. Be careful about are you thinking of what's happened to risk associated with interest rates bonds used to be more risky than they are right now bonds might be negatively correlated with what your consumption is, the marginal utility of your consumption. So maybe that she acts in the lower interest rate now than the pure safe rate of returns. I think is a couple other different factors go

Down there. What is the right way to think about the economic losses from brexit 2 to 3% of GDP want to off it's bad, but they'll get over it. What's your take?

I put brexit primarily in a medium to long-term cost of the set of macroeconomic efficiencies associated with somewhat worse Supply chains. Somewhat worse piano composition of imports and exports and yes putting that in the couple percent of GDP pour over the long run seems about right, you know is that too is at 5. I don't know. I think it's a negative number and it's not a large upfront negative number a few questions about tech what you've been working on lately in the United Kingdom you once wrote a piece called Walmart at Progressive success story. Can we today? Say the same about Amazon?

It does lower price is right. I have a lot of fun this ramazan. I order a lot from Amazon. I personally benefited a lot from Amazon think an awful lot of American customers do Amazon's online retail platform also is to some degree competing with brick and mortar retail in once you place it in that market is a relatively small player in all of it. So personally actually think Amazon would probably be lowest on my list of concerns, but that doesn't mean I have no concerns about Amazon and don't think it needs to be

Monitored and I think some of the proposals that I made in the context of report the United Kingdom. I don't think would constrain an awful lot of what's good about Amazon's business model. What's your biggest concern? My biggest concern is more the online search social media social networking in the bags on Amazon for say I think those are sectors where Force what is a whole set of social concerns and Democratic concerns apply much more important than anything in terms of competition, but those are areas where you can see Google and Facebook didn't get to where they are today through organic growth Walmart was largely organic growth. It was efficient. It opened up a new store then it opened another store. Then it opened another store in each. One of the stores was better than the other things in the neighborhood, so it's exceeded.

Amazon a lot of organic growth of a certain key in Port and Acquisitions along the way Facebook has three major social media companies all in one because it bought two of those three almost every component of Google was that the search algorithm was purchased at some point along the way. So those are a little bit more like merger the monopolies and when you have that I less of a presumption of efficiency if you grew. I think you're probably efficient. We probably shouldn't do anything about you if you bought a bunch of things I get more worried, but if you take Facebook, is there consumer harm, so the what's that page? It's totally clean and pure it's beautiful there in that way at Sonic during because it's part of Facebook the bigger company.

So when customers better off with Facebook's a company owning site WhatsApp Instagram and Facebook the page, I would much rather have competition. I think what benefits consumers is choices lower prices more in price. They are all right. I can recruit people for my blog. I can email you I can text you on my cell phone. So many ways to network many people advertising companies something drives up the price of steel. Am I going to say? Well, I don't have to pay any more for steel cuz I don't buy any steel wool. I buy a lot of products that have Steel in them and I'm paying more for those products. I am paying more for any product that has to pay more and advertising fees to Google and Facebook which dominate the online at but they don't dominate advertising and it's a much lower price for advertising than before.

Facebook and Google came along the right question is that counterfactual of what would the price of online advertising be? If there were five online advertisers and companies instead of 2 online advertising companies? I think it would be lower. I think the price of this product. We also pay separate from that, of course in another form of privacy in the form of giving up our data and then in all sorts of ways of less Innovation that we don't even see because something doesn't exist because it was too hard to enter the market. What do you think of gdpr is privacy legislation? I have mixed feelings about it. I think privacy legislation is important. I think it's something that people care about I personally for myself don't care that much about it and tend not to do lots of privacy settings on things even when I have a choice and and know what I'm doing, so don't personally relate to it as much but something that people care about

I'd like the World War. I thought people were informed. I would think competition and choice would fully solve the problem. I think it contributes to solving the problem but probably isn't enough GPR also that was cumbersome and in some ways has been an impediment to competition because the big companies can navigate it much more is laser and small ones can will that be true of any effective privacy legislation that will make worse the dominance of the larger companies because any law that bigger companies have better legal staff PR so dependent on the recommendations that I made my UK report were a code of conduct for the largest players that wouldn't apply to the medium or small ones that's easy to do if the code of conduct is around anti-competitive Behavior. That's much harder to do if the code of conduct is about something is considered a human right? You know, it's not like we would say

Industrial safety rules shouldn't apply to a small business and only should apply to a big business. If you think that a business shouldn't be killing people its workers. You think that you should think that regardless of the size of the business. So privacy has been approached from Human Rights frame rather than from a competition and economic frame into something there at though to that that human rights approach does the European Union treat the big tech companies fairly if we're Economist. We think about this in terms of incentives there American companies. They just want to tax them won't be the case. We were thinking of public Choice model that the European Union would treat them not well enough.

I think I maybe I'm not as immersed in public Choice as you are Tyler, but you have given where we're sitting. I think that the Europeans have a pretty fair and impartial antitrust system that is largely blind to nationality. Look at what they did in Siemens and I'll stomp you had a merger of two major European companies one from France won from Germany. The commission said they couldn't merge both of us countries were infuriated and they take a tougher approach to antitrust do they take that across-the-board with their own companies and with American companies. I think they do it in a pretty even-handed manner. You say the proposed digital tax of what 3% Would that be so popular is Facebook where friends company? I am less sympathetic to the specifics. You asked me an antitrust enforcement the antitrust enforcement.

A policy toward the antitrust the cases against Google we're brought through a very technocratic relatively independent. I think honest process the tax proposals are coming from politicians. And yes, absolutely or public Choice models. I think apply a lot more to those politicians as politicians are right that they're missing out on a bunch of taxes. They should be getting I think they're wrong to have sex or specific levies and proposals in some cases jury-rigged. I'm just to get it American company. So yes antitrust in Europe. I think it's fair taxes I think is a bit so anti-American if you want to call it that and privacy.

Unless sure of the answer to my guess is it's more that's what Europeans believed as a belief about the world and not a form of protectionism but seems they don't mind Huawei for their 5G networks write this a big emphasis on privacy and I feel trapped pressured them. Germany was fine. We'll have Huawei in to do or 5G network. Doesn't that seem discordant to you now that you say it to some degree does I said, I'm not I'm not sure if immersed in how the policy making in Europe gets done on the issues of privacy. I think Huawei is easier to understand that somebody is tracking you or somebody's keeping data on you or someone else deciding what the search results about you are and that's transparent and you can see that happening and you can decide if you think that's fine or if you think that's not find them cases Europe decided. It wasn't fine. Huawei was an awful lot of information that I don't have access to and that you don't have access to either. Do you worry that?

Data portability for social networks could stifle Innovation a new Social Network? It's based on virtual reality. And then the regulator's asked me will how do we support your data into Facebook are the incumbents and I said wow, that can't be done and they say well then you don't satisfy data portability and The Innovation is stifled. You lock in the current way of doing things with data portability. I worry about that and that's why you want to apply at for example more or make it mandatory to large companies and not for Tyler Collins new virtual reality company. So I think there's a better cost and benefits and I have the right way to get that mix of cost and benefit is with the large companies the lack of portability create a barrier to entry in trenches them and reduces competition. So I'd turn the dial one way for them and for smaller companies, I turn the dial the other way or not even have a dial but doesn't it have to be symmetric. So if they

Books cannot export to the new virtual reality social network in essence people coordinate on portability into what we have and having any kind of certified dominant standard, even if you regulate it more heavily and Essence. I'm sure is that standard keeps on dominating the market.

Cuz you have to export from Facebook into which providers write the government has to make a list and that worries me.

I think I should wear you and so I can see if the UK moves forward establish an additional markets unit. I recommended as they have been moving forward would love to have you on it asking that set of questions. I don't think that something has downsides and concerns is in this case. At least a reason not to do what I think in some spaces like messaging. They're reasonably mature. Could the iPhone have introduced an emojis in a world of required interoperability. We could have figured out a way to do that. And by the way of the world lost and emojis probably would still have have have turned. I think we should ban most uses of facial surveillance. Do you agree?

In the US, I don't think I agree with your life have a police officer on the street looking at somebody you're allowed to software. They wanted poster for somebody and then if somebody with their eyes recognizes that face no call in a tip line and have the person arrested. I don't know why we would want to give up on read about privacy and cameras always know where you are and they track your face. They track your gate private sector the government can subpoena them. I care enough a lot about you. No violations of someone's right to life like murdering them or theft and sexual assault breaking and entering all of these things. I think these are problems too and all of our law enforcement violate some prints, but we take people and lock them.

We take people's rights away in all sorts of ways and there's a process for deciding whether you're allowed to have a search warrant whether you're allowed to put someone in prison. And so I think we need to put

Prophecies around this that respect balances of right but I would hate to give up a quote tool that could keep us safer. What's the most likely legitimate future use for blockchain?

Dark grey markets not black markets. I know a lot of people playing around.

I'm really bearish on blockchain. It's you don't intend maybe I know less than everyone that's excited about it. But everyone is excited about it also has a stake in it and a reason to be excited about it to me very little of it seems like something that couldn't be done more cheaply and efficiently with the types of systems. We had in the past. I mean that they couldn't do anything resembling what visa and MasterCard the number for transactions. They process II today which can't do that with blockchain technology. Okay, are you up for a round of overrated versus underrated? Sure. I saw something out growing up in New York City overrated or underrated underrated why?

It's just it's amazing City and you can walk right outside children have a lot of autonomy in New York. They can ride the subway. They can take the bus then get so many different types of food have so many different types of experience says I think it's I think it's an amazing Place juggling overrated or underrated.

Maybe correctly rated am I allowed to say that you're allowed to say that? Okay your jugular, correct? Still I juggle at my own children's birthday parties would be probably is my where I where I make appearances. Now other than just practice what makes for a good juggler. I spent ridiculous amounts of time and in high school and to some degree Middle School on juggling. So that's probably the project practices party. You must think it's underrated in a way right three body problem science fiction novel underrated what's important about it?

It's so good. It's everything in it is so plausible and real in a way that you can only have in hard sci-fi.

It operates on sort of every time left on the time span of years specially in the first book and it's time span of billions or maybe with trillions of years by the time you get to the third book and it just the way you think about computers is different when you hear about it, when you learn about the human computers that they have their the Fermi Paradox is something that I worried about from time to time. Now. I'm almost scared of an alien civilization discovering we exist and wanting to destroy us and make sure they don't find out about us who is an underrated figure from free 20th century world history.

I guess Abraham Lincoln isn't a reasonable answer. He's probably correctly rated certainly important certainly highly rated. I don't have a great answer for you. What's your favorite movie? I be something conventional like Blade Runner, but I've really partial to a romantic comedy called kiss me stupid that I once thought the Brattle had never heard of it walked in there and found it just so delightfully Pleasant fun and I watched it probably twice since then, it's made me happy every time I've seen it which is the best Matt Damon movie.

He was your college roommate correctly while he was my he was my college roommate. I was when I saw him in the John Grisham one that he's in The Rainmaker. I think it was that was his first super successful one. He the day I met him in college when he showed up at College told me he wanted to be a movie star told me he was going to be a movie star. He was completely confident of it and I cried at the end of that movie when I saw that he had achieved, you know, his dream and his plan if you're recommending and Africa trip for someone. Where do you tell them to go? I did a 6-week honeymoon in Africa started in Cape Town ended up on a island off the coast of Tanzania and climb Mount Kilimanjaro off the coast of Zanzibar actually. Well, I love to go to the end of our and climb Mount Kilimanjaro in between those two. So I think that's what anyone should do. That's the trip to do are you up for a few questions about money and finance sure. These are again easy ones.

Should we allow Banking and commerce to mix in the US as is done in many other countries. I don't see any large benefit to allowing the and on the precautionary principle. I don't see any particular problem would be solving by allowing a greater mixture than we do. Why do you think it involves and so many other place is so China now has it right to a major extent. I'm not sure what this efficiencies are some of the maybe rent capture but we see it so many times including in the us when we allow it. I why isn't the presumption to allow it thanks will be bigger and more Diversified safer lower cost of capital. Yep. I don't have connection on this. I'd be open to changing my mind. Which macro indicators do you think are now not so meaningful anymore?

GDP could be more meaningful if we measured it.


the inflation rate

gets harder and harder to measure of overtimes. I think the one that probably has deteriorated in meaningfulness is the measure of inflation. Number one. We don't measure it well and number to sort of a low enough that it's hard to get that excited about it. And is that a quality of goods problem or how we do changing over time or where are we going wrong and measuring display for more if the economy is in areas that are harder to measure the quality of like healthcare being the most notorious how productive is Healthcare. So, you know the old Rand study from the 1970s that's enough study. But you give people more Healthcare only the poorest people end up being healthier Christian Scientists Amish who don't use my child care at least their life expectancy is still quite High.

Could 1% capacity. Do you think our Healthcare sectors operating at certain if you look at differences in mortality differences in health outcomes Behavior genetic social environment? I think all matter a lot more than Healthcare much easier to know how to change Healthcare though. Then it is to know how to change all of those are there. So I think at the margin we might have more games that were able to make in healthcare, even if I agree with you, I don't think that's the number one factor and health. What do you think is the promising future direction for fintech. I think that's a great place. We're more competition and more choices. I'm fine with the big tech companies entering it. I think that would be a good thing. But as long as we put some of the rules in place up front, I'd love to see some smaller ones and just

Factor payments aren't simple and free for anyone anywhere in the world between anyone else and anyone else in the world to me seems like the lowest hanging fruit for billions of people and something that we should fully be able to solve in the near future. Our last conversation was with Reid Hoffman and he suggested the fire at in the US now is operating maybe it's 30% of possible capacity or Effectiveness. And I think you meant the good schools. The Community College got a wrong or something. What's your response to that? And what Improvement do you think we should make if any

The hard thing is that there's so little that we have evidence on I coat at the introductory economics course at Harvard this with daylight, but they would like them this past semester Ridgid micro next semester. We're doing macro of over 600 students. We put a huge amount of effort into rethinking the course how we taught the course what we were teaching in the chorus how we did assignments how we assess people what we expected them to know.

And we did all of that with frankly left side of randomized trial rigorous evidence than I would do on most of the public policy questions and I work on cuz it's simply not there. We used an awful lot of judgment. I talk to different people ask you your opinion of this question. I think what we did was was good. But that there is some other thing we could have done in terms of changing how we do the lecture Is How We Do the assignments that would be even better that it's right next to us and that I don't realize it because the evidence is there I'm painfully open to that possibility myself and would love to know so the observations are operating at 30% capacity of probably true, but that's only useful. If you can tell me what I need to do to get to 50 or a hundred and I don't know where to find out information but just taking that one classic 10 now that you've taught it what don't other people teaching at 5.

In that class one thing that I think David laibson and I I hope did very well and certainly tried very hard to do and it seemed to be selling the students appreciated was convey our enthusiasm and excitement for economics. David laibson case conveyed that enthusiasm for how many different things in your own life. It helps you to think about decision making under uncertainty. If you enter an auction, if you're dealing with splitting a bill with your roommate deciding whether to do your homework my case. I think I brought more excitement to the questions about public policy. We talked about tax policy Health policy. I'm at and the like so I think one thing we did hopefully was teach students. But another thing is tell them here's the total area of knowledge that can help you in so many different ways that you might not have realized you may want to not to pay attention in our class, but maybe even keep learning about it in one of the many different ways. You can learn about economics what what should instructors try to do to ensure that.

Students remember the content they've been taught and in some way however Godly apply it use it vote on it I did read There is a little Shrine economic pedagogy and the scariest paper. I read in that literature. I can't remember who it was by compared performance on a test a year after an economics class people have taken the class to people who hadn't asking them questions like, you know, what's the opportunity cost and the two groups performed quite similar away. So that is certainly my biggest objective is to have students who in my class. Most of them are going to take another economics class so that when they are dealing with an issue 15-20 years from now, they're thinking to some of the ideas we talked to them. That's my highest and most important objective and that's the hardest one to be sure you've accomplished or even know how to evaluate whether or not you accomplished your co-author to paper on corporate income tax with Robert De barro and une disagree with in the context of the paper should morphine.

Do this more than one voice in a paper? Absolutely. What did you learn from that experience? We're so we started that paper. The goal was a largely to estimate the economic effects of the 2017 tax law and we had a number of conversations. We agreed on the general modeling approach and we said, you know we're going to do we may reach two different sets of Point estimates. And if we have to set the point estimates were going to put them together in a table and there's going to be a crosswalk so you can see what assumptions I used. What assumptions Robert used in the course of writing that paper we convert and we ended up having quite similar views on the causal question of what the impact of this law would be. We then evaluated the law quite differently. So the body of the paper

We intended text we have different voices, but we end up having a pretty unified voice when it came to the conclusion and what inferences we drew from all of this time. We had very different voices, but I would love to see more people tear duct. Can I take in a quality and of course people who have two different sets of numbers to write a paper together so we can have something that we can reliably understand is the truth on the issue or alternatively understand know what that what the difference is. Alright. Yeah. I'd love to see more of them. I will close with a few questions about what I call the Jason Furman production function.

Who is your first Mentor ever?

Tempthing remember that far past high school, but we had a geometry teacher at my high school and mr. Sturm who just the level of rigor he brought to approve some thinking was something that I learned a huge amount from and what was special about you and high school intellectually. Obviously you were smart. But what's that you apart? What did you do? That was different. I mostly did what I wanted to do and not what I was told to do. So if I wasn't interested in the subject, I take that very very little on it. And if I like something I would read enough 12 other books that no one told us to read on the top back on. My remember when Harvard application they had a you list all the books. You should read in the last year.

I wrote down that list and I was so terrified. They would think that I was a liar that I have developed that I ended up cutting that list in half less. They would think I was I was making things up to this day a prolific book reviewer on Goodreads. Why do those out of habit or why choose good reads for your reviews. If you could read this the third platform I've been on more people are on that platform than other so that's why I'm there. I actually don't even particularly love the platform but it's where other people are I started the reviews for myself just to remember what I thought about a book and why I thought it and now there's a few people that are reading my Goodreads reviews, but I still rarely spend more than half an hour on any one of them and for me, I'm always trying to discover. I think a little bit like you Tyler elope presumably much lesser version of you really I'm there for us and read in a lot of different genres with infection.

Nonfiction always trying to find new things and I'm in a Goodreads. I've gotten to know if it's your young adult fantasy. It needs to have at least a 4.5 or above or you shouldn't read it but it's not like I did not read Madame Bovary because it got 3.7 because a bunch of college students were mad. They were assigned it. Let me try a very embarrassing question on you. I sometimes tell people I think that along a particular Dimension which I can't quite myself Define but I think you are the greatest Economist in the world that particular kind of policy Economist I guess but if you had to describe what you think is the dimension of Economist where you are the best how would you put it, Miss who have been chair of the Council of economic advisers and read everything that Charles dickens's ever written, but I'm yeah, I think you're Kinder about me than I would be friendly, but there's some kind of mix of bread and being analytical and knowing fact and

Series about different areas and having real world experience but being focused on policy not writing a column not I mean you found a lot of published academic research, but it's not the focus of your life the way it is been forced by Joe stiglitz in his earlier years and a long not to mention who's better than you seriously right now. I'm embarrassing you. Yeah, I think you're honest. I think you are embarrassing me. I think this isn't the way I'd think about myself but it is certainly can a human being that if you draw the criteria early enough, you can have a set of people that includes just one and they can be the very best in that set. And is it harder to produce Jason Furman today through the academic process? And is that something we should regret? I have grad students to come to me and say they love my career trajectory. How do they have it? And I don't know what to answer them because what I've done is been pretty

Idiosyncradeck. I don't know that it would work out for you know, even one out of 10 other people that tried it and presumably a bunch lock circumstances. It said I think it's always been hard to have. This may be a little bit harder now because the think tanks tend to be more tribal more partisan. And so there may be a bit less of a space for just wanting to think what you want to think as opposed to being useful in the short-term. And what's that key idiosyncratic move you made or was done to you that enabled it to work for you. I mean, I didn't intend to go into public policy. I ended up almost accidentally at the Council of economic advisers the middle of grad school. I discovered I liked it and ended up staying and government longer than I expected, but they're probably been a dozen things from Jost.

It's calling and asking me to come to the Council of economic advisers to something that happened yesterday last question. If you've read all the Dickens novels, which one is your favorite and why Bleak House for sure. I love that. You have a woman's voice in it. Esther summerson. I love the huge number of every dick and thing you can imagine is in that book, you know Dylan's heroines Scoundrels right in the middle of a Police Inspector find that book contains everything on this. We fully agree Jason Furman. Thank you very much. Thank you.

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