Transcription
We're going into a world in which INF, as long as these supply constraints are as binding as they are, that inflation will be a persistent threat. And by that, I mean any demand surge is going to produce inflationary pressure. It's going to be a world with higher interest rates, higher costs of capital, lower valuations, and a difficult transition from a relatively highly indebted world, including sovereign [Music] debt.
Welcome, welcome to Thoughtful Money. I'm its founder and your host, Adam Tager. This is the first video to launch on this new YouTube channel where I, now operating independently, am continuing my work of interviewing the top minds in money and the markets to help regular investors like you better build wealth to fund your life goals. And I'm so pleased and privileged that the first guest expert to appear on this channel is Nobel Prize-winning Economist Michael Spence. He was also the dean of Stanford Business School when I got my MBA there, a million years ago, and I've got fond memories of his inspiration and leadership during that very formative time for me.
Today, we'll talk about the interconnected tangle of challenges the global economy, as well as society at large, currently faces. A predicament that Spence refers to as the Perma Crisis. Dean Spence, thank you so much for joining us today.
Thank you, and it's a pleasure. I'm delighted to be with you. Thank you.
Well, it's so wonderful to see you, um, after so many years. You look great. I look a lot older, a lot more white in this beard. You, you look great. Um, I'd love at some point, at the end of this discussion, to to get a chance to delve into some of the great advice you gave us at Stanford, uh, and the fact that, you know, you've had a successful career but helped launch a lot of successful careers. Uh, I know you have a lot of sort of, you know, best practice advice for, you know, personal success in life, and I, I hope we have some time to delve into that. But, but let's start, uh, talking about your book, The Perma Crisis. But even before that, um, since I last saw you, as I said in the intro, you won the Nobel Prize in Economics. Congratulations. That's some phenomenal achievement. Can you just give us a brief sense of the work that you were recognized for?
Absolutely. So, it was a big surprise. I mean, I was, uh, before I came to Stanford and got to know you, um, I was the dean of the Faculty of Arts and Sciences at Harvard. And my predecessor said, "Well, you know, if you take that job," meaning the one at Harvard, "you'll never receive a Nobel Prize." And I thought to myself, "Well, yeah, but to use economist language, that's a non-binding constraint. I probably won't receive one anyway." Um, so it, you know, so I launched into academic administration, which I just loved, U, and learned a lot from, from all of you and all my colleagues.
So the work, you know, there were three of us: Joe Stiglitz, George Akerlof, and me. All of us, in one way or another, were focused on, um, what are called informational gaps and asymmetries in markets. But, you know, to, to a first approximation, there are just many, many situations in which buyers and sellers have, uh, different levels of knowledge about what, what the products or services are, their characteristics, and so on. That's true of job markets. It's true in lots of financial markets. You know, we have financial disclosure laws that are designed to close those gaps. And markets perform astonishingly poorly if those gaps are big and remain. Uh, so George talked about the, they kind of illuminated a phenomenon called adverse selection, which is what happens in markets when you basically can't distinguish between different products that have different levels of quality in them. And in this extreme case, you know, that, that kind of structure can lead to the complete destruction of a market. That's, that's the phenomenon of adverse selection, that sort of high-quality people facing that price that reflects average quality, essentially pull out of the market. Uh, and then that cascades down, uh, and eventually, you can destroy the whole market.
And then Joe and I, in different ways, were trying to figure out, well, what markets are pretty creative entities? What happens in those markets, uh, that, you know, that endogenously, you know, not by regulation, uh, that that tends to close these gaps? In my case, it was signaling. And there are activities that people can undertake that have differential costs with respect to, with, you know, that are negatively correlated with the underlying quality, uh, characteristics that buyers want to know. And those signals turn out to be pretty important, not just in economics, but, you know, more broadly in society. So that's what I was after, um, and that then took root, uh, not, you know, again, not just me, but all three of us took root in economics. It's affected contract theory and mechanism design and all kinds of things. So I guess that's what they were recognizing back then.
Yeah, that's super interesting. Hey, can you just give a quick example of, of signaling in terms of how that actually helps people close these gaps?
Yeah, so, I mean, people work hard. And, you know, the example I used was, you know, the job market, right? So people have very different characteristics, you know, coming into the job market, capabilities, and so on. Um, and, and so, you know, basically employers don't know that, and it takes quite a long time to know it. But they do receive signals. And one of the most powerful signals is the educational one. So it makes a huge difference if you graduated from MIT in engineering or the Stanford Business School or, you know, not to pick on just two institutions, but I mean, these institutions, you know, basically because of the screening, the process of getting into them, the hard work people have to do, the fact that they, not everybody can do it, they, they carry powerful signals.
So, I mean, I got, when I, after, after I wrote my thesis and published a couple of papers, I was called out to the University of Chicago, where they were quite unhappy with me, um, because they basically said, you know, "You're saying the return to higher education is just the signaling effect, and human capital doesn't matter." Which was a kind of ridiculous, extreme form. And I said, "No, no, no, wait a minute. I wasn't saying there's no human capital acquisition in higher education. I was saying that in addition, at least for the, uh, for the top institutions, there's a pretty powerful signaling effect as well. And the return to education is a combination of those two things."
Got it. Fascinating. So there are, there are behaviors that part market participants can undertake, or perhaps credentials they can get, or whatnot, that basically send a signal that, you know, help people assess their true value, right? It helps with price discovery.
Yeah. I mean, to take another example, you, I used to talk to Merton Miller about this. You know, if a, a company is not expected, you know, they know a lot about their, you know, present and future, um, earnings potential, not everything. I mean, there's always surprises. And they're not supposed to cut the dividends, right? So if they cut the dividend, it issues a very powerful signal, uh, about what they think, you know, their future cash flows are going to be.
So, great example. Or I imagine if, if management is buying stock, that's another signal.
Or management is buying stock, um, you know, selling large amounts of stock, etcetera. Yeah.
It, I mean, this, this, the presence of informational s, of asymmetries is pretty, uh, kind of almost universal. I mean, it's not true of every market, but it's more common than people normally think, especially when you, you know, we don't talk about them in the first course in microeconomics and price theory. So, and that's probably the right way to teach it. But nevertheless, you know, there, there.
Well, it's interesting because in the first course of microeconomics, we talk about how efficient markets are, right? Yeah. So you're actually layering on the nuances of how the world actually works there. And this topic of information asymmetry, Dean Spence, is is dearer to my heart than perhaps you even realized, because it's a main reason why I founded this channel and why I've been doing the work I've been doing over the past two and a half years is because right there, there has been historically a big information asymmetry between the, sort of the Wall Street power players and just the regular investor. And one of the things that I've been trying to do with this channel is to, you know, reduce that asymmetry, to sort of democratize, in many ways, a lot of the knowledge and information and expertise that the top experts have, which really Wall Street's kind of had the corner on for a long time. But now the internet is allowing us to make that information much more freely available. So even in my own little corner of the world, I am, I am working very hard on information asymmetry and hopefully to reduce it for societal benefit.
No, I, I think it's tremendous what you're doing. And, and more generally, um, the, the presence of the internet and the fact that you can access very large amounts of information at essentially negligible cost does transform the informational structure of markets and does democratize it in many ways. I mean, there's some, you know, issues having to do with, well, what's believable and what's not. And so people have to sort that out. And maybe there's a role for signaling in, in that context. But, but, but the overall impact is just, just enormous.
All right. Well, I can, talking about overall impact, um, I want to now move to your book, um, because it's about a really big issue. Um, it is, uh, close to a lot of the issues that that we talk about in this channel generally. Um, but clearly, you're concerned, um, kind of about the, uh, the global macro situation, as are your co-authors of this book. Um, you had some pretty credentialed partners in writing it. Um, Mohamed El-Erian, chief economic adviser of Allianz, and he, you know, took over the torch from Bill Gross at Pimco. Many folks are familiar with him. Honestly, he's one of the guys I'd love to get on this channel as well. Um, and then Gordon Brown, former UK prime minister. I mean, these, these are big hitters that you, you joined forces with here. Clearly, they're concerned as well, concerned enough to write this book with you. Um, look, the, the book is called "The Perma Crisis: A Plan to Fix a Fractured World." Can you maybe just define for us what you all meant by "Perma Crisis," and what its key components are?
Yeah, so I think that the title captures part of what we're after, which is, you know, a cascading sequence of, you know, crises. So we go back to the, you know, the Asian financial crisis, uh, at the, you know, in the late 1990s, then then the Great Financial Crisis and the pandemic, um, then wars, now two of them, uh, and, and climate shocks that are, you know, devastating various parts of the world and coming with increasing frequency and severity. And, you know, so we sort of thought, and I think the idea was, this is a pretty confusing environment. And so maybe we can sort of make some sense of it, um, a little bit. Not, you know, completely. Nobody's arrogant enough to kind of be able to see through all this, um, and then help people sort of navigate, um, whether they're companies or individuals or policymakers in various parts of the world.
Um, but, you know, when we looked at it carefully, I mean, it's a pretty daunting set of conditions that we face on the supply side of economies, on, uh, kind of regime change in the global economy. You know, a problem of mindsets that were conditioned by three decades of pretty benign conditions, no inflation, very low interest rates, and costs of capital, and so on. You know, and so, and we think it's sort of changing pretty fast, and there's lots of, you know, problems, accidents, and so on that that go along with that.
We don't really have a plan to kind of fix a fractured world, but we thought if you start with a, an understanding of what we're dealing with, there's a lot of serious people, you know, some committed to climate change, some committed to sort of increasing equity, um, some committed to trying to reverse the kind of fragmentation and the global economy, some very concerned with kind of polarization and governance issues in our society. And so we, we thought we can probably at least help people by identifying what I call mini-steps in that direction.
But on the authors, I mean, it's hilarious, you know, that we have Gordon Brown, former prime minister of Britain, and the longest-serving, um, Chancellor of the Exchequer in the British government, at least for a long time. And Mohamed El-Erian is one of the most visible and knowledgeable commentators on, sort of, macroeconomics, financial markets, and, and monetary, uh, policy. And then that other guy, that's me. Not at all. Other guy who happens to be a Nobel Prize in Economics.
Well, look, I, I'd love to dive into at least a few of these problem areas first. And first off, let me commend you as well. Uh, there's a lot of, of talk on the internet and on YouTube, and I've done a lot of it with a lot of other experts, on what's wrong. There's not a lot of talk about what to do about it. And the fact that you guys did what you could to start laying down, you know, the seeds for betterment, I, I, I commend you for that. And I do want to talk to those micro-steps that you talked about in a moment. Um, before we, we get into the problems, and I guess we'll start with the economic ones because I'm guessing those are the ones that are, you know, the ones that you understand best. Um, let me just ask you this, um, because you, you sit at a really interesting intersection. I will say that there's sort of a, a skepticism that I think a lot of people in the public have about, kind of, our, our sovereign and corporate leaders these days, and that they're, they're out of touch. They're driving their own interests or the interests of corporations. They don't really care that much about the general public. And that, uh, they see these problems, necessarily, sometimes they maybe don't, they don't think these people really see them or appreciate them that much, or they see them as opportunities to continue advancing their own agendas or enriching themselves. I think you live in a really interesting world where you spend a lot of time looking at the data and, you know, understanding the world through the data, but you, you do interact with a lot of these power players at different points of, of time. What's the reality like? Are, are these people genuinely more engaged in trying to solve these problems and whatnot, or is it more either a Game of Thrones or a "let them eat cake" you know, type of, type of world out there?
Well, I think historically, you know, it's not a pretty picture. You know, including, you know, for a long time, my profession took the, the view that globalization and trade were, was a basically a good thing because, in the aggregate, you know, there were benefits. And if somebody said, "Yeah, but not everybody benefits, and some people probably get hurt pretty badly," um, then, you know, somebody would say, "You can compensate the losers." The problem with that is that there's no practical way to get that job done. So I think one of the more, you know, attractive trends in the economics profession in the last 10 to 15 years is much, much more serious attention, and I think it is serious, not just, you know, sort of words, um, to distributional issues. And they're incredibly important, part in part because we've come to understand, and this is really political economy, you can't implement stuff, um, in terms of governance and policies that drive change, you know, if everybody's decided that, you know, to get off the train. Uh, and that, in some ways, is a pretty good description of, kind of, where we are. There's this, you know, a massive loss of trust in institutions of various kinds, in various groups of people, exactly as you just said, Adam. And so, um, and that then makes it harder to kind of move forward and do, do something that, you know, is designed to kind of help everybody and their children and grandchildren. I mean, we wrote this book because we thought if we stay on the same course that we're on now, in multiple dimensions, we're not going to be proud of the world that, uh, that, you know, our children and grandchildren inherit. Um, and so, yeah, I think that's right.
I, I, now, let me go beyond my profession. Is there more serious, you know, interest now? Um, you know, as you go around the world and talk to people who are, you know, arguably in positions of power, I think the answer is yes. Is it universal? Uh, no, I don't think so. I think there's still people who think, you know, the world that we lived in before was terrific, uh, and, and, uh, and don't really internalize, you know, the sort of pain that was caused by, by some aspects of those growth patterns. So it's a mixed picture, I guess, but the trend seems to me in the right direction.
Okay, so it sounds like you said, this skepticism has been earned, but we have a, at least a slow awakening or changing happening, but it's a, it's a slow process, and and not everybody's, you know, on, on, on the same train yet. But we'll, we'll try to be optimistic. I'm curious, did you, did you write the book? Sorry, go ahead.
No, I was just saying, I mean, you know, the, the amount of attention that, you know, there's a group of economists now, very influential, Thomas Piketty, Emmanuel Saez, and others, talking basically about distributional issues. So they're, they're just getting a lot of attention. And I don't think it's just in economics. So, and this is really serious, sort of long-term, data-intensive work that's designed to convince people that, you know, we really need to think about these things. So it, I don't think it's just words.
Okay. Um, sorry, I've got so many questions here for you. I'm going to try to flight them in an intelligent order, but, um, do you feel, and don't let me put words in your mouth, but do you feel like we are hurtling towards, I guess, crisis is the right word, of course, you wrote your book, "Perma Crisis," may have already answered the question. But you feel like we're sort of on a trajectory to, you know, um, mounting crisis unless we proactively find a better way to start doing things?
I mean, in some dimensions, yes, and in some dimensions, no. I mean, so the one where I think, you know, we're hurtling towards something pretty bad, unless we change direction pretty quickly, is climate change. Uh, you know, we're, we're, and the scientists are, you know, using increasingly alarmist language and talking about it. I, I think the, the one they've landed on most recently is probably the most effective, which is, if you, if you think of there being a carbon budget associated with holding, uh, temperature increases on average to 1.5 degrees Celsius, that carbon budget, on our current trajectory, will be used up, I think, before the end of this decade. Uh, and so, uh, and that's pretty, kind of daunting task, because it's hard to imagine changing course on a global basis fast enough to prevent, you know, some overshoot of that carbon budget. That one, I think, has existential, uh, sort of issues.
Many of the other things we talk about, you know, it's, it's the question is basically underperformance. Right? The global economy is fragmented. Uh, some of that's inevitable, uh, because we have, you know, strategic competition, an override that has to, uh, has to do with national security, economic security, energy security, food security, all kinds of things are modifying the way the global economy runs, you know, as compared with before, where basically the only considerations were economic efficiency and comparative advantage. Right, right. So that's not, we've left that world behind, but that doesn't mean we have to kind of give up on everything and, and the benefits. We just have a more complicated architecture to construct collaboratively, you know, on a global basis to kind of try to get it done. So that would be an example where, you know, the failure is not perhaps catastrophic, unless you're talking about the low-income countries that might just get cut off at the pass. Uh, but if you're talking about to ordinary citizens in the wide range of middle-income countries and the and the developed countries, this is just, you know, underperformance.
And same thing goes for macroeconomic policy. You know, if you, if your mindset is conditioned on the previous three decades with very little inflation and so on, um, then there's a lot of accidents and mistakes. There's an awful lot of debt out there, sovereign debt, etcetera. You know, we're living in a rising interest rate environment, unless you think after the inflation fight, all the interest rates are going to com- plummeting back down to where we were before, close to zero, um, you know, there's, there's a kind of difficult, uh, few years of transitions here to deal with. And, and we're just trying to kind of increase awareness of that. But they're not, um, they're not, you know, total collapse scenario.
Yeah, it's not like existential to the species that, perhaps, if, you know, climate-wise, we lose our food systems, you know, it could be. Um, you're taking it right where I want to take it on the economic side of things. Real quick, I just want to shoehorn one question in to get it out of my mind, which is, who did you write this book for? More, was it more for the policymakers and the decision-makers, or was it more for the average person?
It was really a combination. Right? So we, I mean, we, uh, I personally, I think I would say the same for the co-authors. We recognize not everybody's going to want to pick up this book, but we wanted to to write it in such a way that that a wide range of, you know, people who are kind of interested, um, and concerned about what's going on, had access to it. So that, that it's not for people who are, in some sense, kind of involved in these issues in that technical sense. Um, and by the way, that's why we had a fourth co-author, who's very important, a very smart guy named Reed Hallout, um, who's worked with Gordon Brown before. And, you know, and that was our serious attempt to do two things: one is to make it accessible, because he's a really good writer and he's really smart about understanding, you know, what the issues are as well. Um, so, so that was part of it. And the other part is, if three people, you know, wrote three papers, and that was the whole story, and, you know, the book would look like three papers glued together, as opposed to a book that was written collaboratively by three people. So Reed's in a pretty important part of that. So I, I would say, I mean, in summary, you know, we did not want to write this for, you know, a highly specialized audience.
Okay, great. So, you know, obviously the implications of all these things appeal to everybody, but it's a book that the average person can become better educated about what's going on, hopefully take some preemptive steps today that might improve their, reduce their vulnerability going forward, and obviously hopefully influence some of the people that are in positions to actually help with the decision-making on some of these issues.
Okay. Now, to the economy. You, you mentioned the, the one word that I was going to get to with you if you hadn't brought it up, which was debt, right? So, um, I think one of the, the big questions that's out there is, you know, do, does our current economic model, um, have sort of a, you know, I don't know, a, a reckoning moment kind of built into it on the debt side of things? If we keep amassing debts at the way that we currently are, at least in the major Western economies right now, um, does that get to a point where the system can't operate as intended? And as a, you know, a good example of that, which we seem to be approaching at a faster and faster rate right now, is when the debt service cost on your national debt starts eating up all of your tax revenues, that begins to become a really big problem.
Absolutely. No, I don't, I don't have any, I mean, I, so the question is, how are we going to get from here to there? So let's backtrack a minute. You know, if you think all this stuff was transitory, which is what the central banks thought for a while as we came out of the pandemic, um, then you don't worry about it too much, because it's kind of annoying right now, but, you know, but these, uh, these impacts like declining fiscal space, which is what you were just talking about, are going to go away. So, you know, part of our purpose in writing the book was to say, you know, nobody knows, you know, with great certainty what's going to happen, um, over the rest of the decade. But, but I often ask people the following question. So we lived in a world after the Great Financial Crisis with which had the following characteristics: one, very low, approaching zero interest rates; two, massive injections of liquidity into the system designed to try to, you know, uh, relax the demand constraints on growth, um, that resulted from the balance sheet damage in the Great Financial Crisis; and three, all of that in the presence of essentially no sign of inflation and inflation lurking below targets, right? So I say to people, you know, after I describe some of the supply-side constraints that are secular and new and non-transitory, and then say, you know, "Do you want to bet your kids' savings that we're going to go back to the world that we, you know, lived in up to the pandemic?" Most people kind of snap to attention and say, "Well, maybe not."
So my version of that, and I'm not, you know, people, there's a range of opinions on this, is that we're going into a world in which INF, as long as these supply constraints are as binding as they are, that inflation will be a persistent threat. And by that, I mean any demand surge is going to produce inflationary pressure. It's going to be a world with higher interest rates, higher costs of capital, lower valuations, and a difficult transition from a relatively highly indebted world, including sovereign debt.
Okay. Um, so just to underscore, I think you just said it well, but, but you really do see sort of a, a pre-pandemic era trend and a post-pandemic era trend where we had, I mean, depending on how you look at it, you know, sort of almost 40 years of disinflation and lowering cost of capital, uh, and increasing liquidity intervention, you know, by the central banks, uh, to now, at least, it sounds like you see secular inflation from here, secular higher cost of capital from here, and, and maybe, maybe sort of spotty or, or episodic, um, central bank intervention. And we're certainly in an intervention off moment at the moment, right now, at least in the major, uh, economies. Um, if we start getting into trouble with the markets again, or something breaks under these higher interest rates, presumably a lot of people think the central banks may intervene again. But if they do, and they restore inflation like you're talking about, we may be in the sort of stop-start world going forward. Did I summarize your outlook correctly?
Yeah, yeah. Except you said four years. I would have said more like three decades.
Oh, I'm sorry. I meant, I meant four years, like for years, not four years. Oh, four, four years. Yes. Four years. We lived in that world. And a lot of, you know, generation and a half people think that's normal, right? That's, that's when, you know, all's said and done, you take the shocks away, right? That's, I'm sorry, 40 years is what I meant. 40, which is, which was the, the decline from the, the interest rate highs in the '80s, right? So like four decades, basically, people getting, getting attenuated to that world, right?
Exactly, right. Yeah. So it's that transition and the mindsets, you know, changes that have to go with it. Um, if we're right, I mean, and we, we just, we call what you just described "regime change." It's a fairly big change in the, the way the global economy operates. And at least from my perspective, it's because for the first time, we have serious supply-side constraints. The elasticity, both the cost and the elasticity on the supply side, you know, have changed in a way that makes, uh, you know, makes for a different world.
Okay. Um, so in that world, if it's, if it's characterized by those factors, those all pretty much weigh on economic growth. And we've had declining, you know, we've had declining economic growth compared to previous eras in the 20th century, even during that 40-year kind of Goldilocks period, I just talked about, right? So we've had not great growth, and we're probably going to have even worse growth going forward, given, given these headwinds that you mentioned. So I imagine that manifests in just being able to, you know, grow less, and therefore, you use the term lower valuations going forward. Are, are investors going to have to kind of prepare for a world where they're, they're not going to get this steady "yay, just buy the dip, the market goes up year after year after year"? Will, will they need to readjust their expectations about what returns are possible in the markets?
I think so. I mean, I don't, I don't, you know, as they, so when I'm, I'm not suggesting that there won't be, you know, sort of growth spurts. There won't be sectors that have high growth potential. At least I try to invest in those, you know, through people I trust who know what they're doing. So, and I don't mean to paint with an excessively broad brush. Um, but are we going to live in a world in which valuations are driven by very low discount rates, you know, in the indefinite future? I don't think so. Uh, so it, it feels to me like a very different environment. And, you know, people in the private equity world are feeling this. This transition to a new set of valuations is not a fun process. I mean, we've done this before. You know, we did it in the internet bubble, and we're, and we're doing it again. And the, and the private equity markets respond more slowly than the public ones. So the public ones, you know, kind of, this is a new reality, you know, we're adjusting to it, uh, maybe not instantly, but relatively quickly. That happens more slowly on the private equity side, um, and is, and is a difficult process, right?
Okay. So here's where I'm going with this. Um, we have had, um, a pretty violent regime change in, well, both inflation and, and cost of capital, right? Um, when, when you look at how far and violently, you know, in a short period of time, um, interest rates have risen and risen, and now yields on debt have risen, it, it's almost unprecedented, right? And yet, we haven't gone into recession. The markets had a bad year last year, but, but, you know, it wasn't, wasn't like a market crash or anything like that, and they're up this year, right? So I know you're not a market strategist. You, you, you, you sit way back, operate at a much higher level on what's going on in the economy. But, um, are you surprised that we have not kind of lurched into some sort of recession, given this shock to the system? And, and do you think one is avoidable? Because this year, we heard a lot of talk about, seemed like everybody thought we'd be in recession starting 2023, but then the narrative changed to soft landing, and then no landing. Do you think the odds are good that we can escape having to avoid some sort of, um, you know, blow or injury from this violent, uh, change in interest rates?
Yeah, I think so. I mean, I mean, the, the economy, to, I think everybody's surprised. The American economy has turned out to be stunningly resilient. I, I attribute that to a couple of things. One, one is, uh, the fundamental kind of dynamism is still there. And secondly, you know, in the pandemic, the government took a huge amount of balance sheet damage in the, in the, in the corporate sector, including small businesses, and the household sector, and transferred it to the sovereign balance sheet, which left the balance sheets, you know, as compared with the GFC, in, in critical sectors. I mean, in the household sector, if you wreck the balance sheets, it won't take long before you've wrecked consumption. Consumption is holding up fine. And I think, you know, that's partly a result of some pretty smart policies. I mean, they have consequences, you know, sovereign debt that's 100% of GDP is different from sovereign debt at 60% of GDP in a rising interest rate environment. But, you know, and so we got to deal with that, right? And inflation was a, was a, a consequence as well, right? I mean, sending direct stimulus to households increased the velocity of money, and therefore, we got inflation. Yeah. So you combine, you know, supply-side constraints, you know, from all kinds of sources, you know, aging, you know, diversification of supply chains, which is an expensive proposition, declining productivity, and all that, and then, you know, produce a, a demand surge, which is partly just pent-up demand coming out of the, the pandemic, but turbocharged by relief of balance sheet damage in the household sector. And sure, you know, you, you're set up, uh, for, for on both sides of that equation, equation, right? The supply side isn't going to respond very quickly anymore, unlike the past, and the demand side is surging at a tremendous rate. And, and you get inflation. And, and the bet, and remember the bet the central banks made, and the reason why the interest rates went up so fast, is because they got started late, was that the supply-side constraints were transitory, would be transitory. Yeah. We were transitory. And so all of a sudden, this demand surge would be accommodated by, at, you know, adjustments. And some of them were transitory. I mean, let's be honest, right? Ocean shipping costs aren't $110,000 per container anymore, right? Uh, across the Pacific, they're back down to $2,000. China wasn't going to stay in zero-COVID mode, although the bounceback has been less dramatic than most people thought. The semiconductor industry is more, more or less sorted out, uh, in terms of, kind of, blockages and supply shortages. And since they are pretty much intermediate products in every sector in the economy, practically, um, that's a pretty dramatic change. Some of it was transitory. But what was missed was the non-transitory part, right?
And which non-transitory elements do you think are, are most important going forward? Is, is it the redrawing of supply chains and reshoring more of the labor, or where else are, which ones have you sort of most convinced that inflation is going to be secularly higher as a result?
So I think there's several. One is the fading of the emerging economy growth story, right? You know, you had massive amounts of productive capacity introduced into the global economy. That's still going on to some extent, but it's, there isn't another China out there, okay? We're just not going to do that again. And that produced dramatic inflation-deflationary forces. I mean, if you look at the 20 years coming up to the crisis, at, at the components of the Consumer Price Index, everything that was imported, you know, went, declined in nominal terms. That's even before you subtract, you know, the, the overall rate of inflation to get the real effect. I mean, these, I mean, no, that it's just dramatic. I mean, if you took that away, we would have had an inflationary environment. So that's one. Two is this aging. I mean, we really are aging. Three, and, and, and it varies from place to place, but, you know, a lot of the Baby Boomers have decided enough is enough, and they've stopped working, but they haven't stopped consuming. MH, right? So you get an instantaneous, nearly instantaneous, kind of break. There's huge changes in labor market behavior. We have shortages in all the major labor, you know, I mean, big labor markets in the United States, pick anyone: government, healthcare, you know, traditional retail, hospitality, construction, right, right. I mean, people have changed their behavior. They don't want to work, whether it's inflexible, or dangerous, or stressful, or low-paid, you know, right? And that also combines with your demographic number two there, which is, we just have 10,000 Boomers basically taking themselves out of the workforce every day, right?
Yeah, exactly, right. And then, then you've got, then you've got this, you know, that, I mean, I think the other than the declining productivity trend, which I'm hoping will be reversed with, you know, the application of technology, but we'll get to that later, um, is, is in the global supply chains are being constructed on a completely different basis, you know, in pursuit of resilience, um, and, uh, uh, and security. There's a cost being an important part of that, right? Going from low, low cost to higher cost in most cases.
Yeah. I mean, here in Europe, we're diversifying it very at light speed away from dependence on Russian fuels. It's a very expensive process, right? Americans don't feel this. I mean, they feel the energy prices going up, and they're about to go up again, I'm afraid, because of the most recent conflict. But, but, yeah, I mean, that that's a good example, but it's going on really for the first time all over the world, right? Uh, we, we're just not building supply chains by going to the low-cost source anymore. We may stay with the low-cost source, but we're going to diversify. And companies are doing it. And for the first time, economic policy is kind of right behind them, you know, essentially pushing in the same direction.
Okay. So, um, I, I've got like five hours worth of material with you, Dean Spence. Don't worry, we're going to keep it all within the hour here. But, um, right now, in the US, at least, the, the Federal Reserve is largely pumping the brakes. Right? It's, it's been raising interest rates. It's been doing QT. It's trying to get inflation down, you know, back under its 2% target here, right? But on the fiscal side, government spending is been at one of the highest, certainly percentages of GDP we've ever seen, and never seen this high outside of like a wartime situation. So in many ways, the, the administration and Congress are kind of hitting the gas at the same time that the, the Federal Reserve, the central banks, are trying to hit the brakes. Obviously, that's got to not help with getting inflation under control. Do we, kind of, have a mismatch of policies going on right now? Could we be, could we be more effectively joining our policies than we are right now?
Yeah, I think so. I mean, that's something Mohamed writes about a lot. Uh, so, you know, we lived in a world, I mean, he wrote a book called "The Only Game in Town," and he meant the central banks, right? So in a world, you know, where there's a kind of demand problem, and the supply side isn't really an issue, or people think it's not an issue, um, then basically the central banks are sitting there. They, you know, you can debate how, nobody questions that they can cut off demand with interest rates, eventually, you know, working hard at it. Um, there's a different question, which is whether they can generate demand by lowering interest rates, you know, given the, the, you know, zero lower bound and, you know, limits on the amount of liquidity they can pump in and whatnot. But, but yeah, that, I mean, I think we, we need, we do need supply-side policies. So it's not a question of just saying, well, you know, the government shouldn't be sort of stimulating the economy at the same time that the, that the central bank is fighting inflation, um, but a real conversation about, kind of, getting the balance right. I mean, a lot of the government spending, not all, is associated with a, a big set of expenditures associated with pandemic recovery. And then you had, um, the so-called Inflation Reduction Act, which is our kind of re-entry into the, kind of, sustainability agenda. And you have the CHIPS and Science Act, which has multiple objectives. I won't bore your listeners with. I mean, part of it is just plain long-term growth and in investment in technology. Part of it is, uh, is, you know, national security, bringing enough stuff home so that if we have to expand it, we, we'll be able to do it. Yeah. And there's not just one Taiwan Semiconductor Manufacturing Association in the world. Exactly. This is the resilience you were talking about. Yep. This is the resilience. And then part of it's just holding China down, what everyone thinks about whether that's a good idea or possible or whatever. Um, so it's a kind of complicated mix of a whole bunch of different, of, of at least three different things. Um, but anyway, pretty big expenditure items. And, uh, I don't think, I mean, some people think they're just a waste of money, so there's a range of opinions on that. I don't, I think you need to invest in a sort of long-term human capital, technology, and so on, if you want to drive long-term growth in the economy. So that's not the first thing I would consider cutting. But then you, then you have a real, kind of, coordination problem between fiscal and monetary policy. I mean, some people think, I think it's a growing number, that the central banks can't talk about changing the inflation target because, you know, as you start moving the goalposts, then, uh, you lose your credibility.
Lose your credibility. Yeah. But lots of people think, you know, they may sort of settle down at 3% eventually. And in a world that's changing structurally and where relative prices are changing fairly fast, maybe 3% isn't crazy, if it's credible and stable.
Okay, got it. Um, so I'd love to keep diving into that, but I want to get to the solutions part, real quick. Before I do, I'm just going to chew on this bone one last time. Um, you talked about the US economy being more resilient than than most folks expected. And of course, there is stimulus going in. We, we just talked about some of that. But you, you sort of talked about how the, the ripple effect of the lag effect, or maybe the lag effect ripples across different markets at different speeds, right? And you talked about how private equity is slower, and clearly the housing market is moving slowly right now, right? It has frozen, but prices haven't come down. But, you know, the general inverse relationship between cost of a mortgage and price of a house, we've seen mortgage rates more than double. We've seen prices of housing go down by like a percent nationally, right? So my question is, is do you expect to see more of the lag effect express itself as time goes on here? And maybe, maybe more defaults begin to ripple through the system as these slower markets begin to feel the brunt of that? And over, you know, the longer we remain "higher for longer," to use Powell's words, the more balance sheets across America, both corporate and, and domestic or personal, household, um, begin to re-rate at higher rates, and in some cases, much higher rates, you know, for a lot of companies that that are sitting on a current capital structure that has 3% debt, when those come up for for maturity, they're going to be re-rating at something over 2x that.
Yeah, no, that's right. Look, you know, I don't think of myself as an expert on the, kind of, exact timing in these markets. And there are people who kind of, you know, make their living, um, understanding and, and communicating about that. But in general, I mean, you know, we've seen this before. When, when you have a big change in housing prices, there's a lag. I mean, what happens first is the transactions dry up, right? Why? Because the sellers don't believe it. Uh, and so after it takes a few months before they decided, actually, the value of the thing fundamentally changed. I know I saw this here in Italy, you know, when trouble hit, you know, in the sovereign debt crisis, and, and, you know, which followed the Great Financial Crisis over here, you know, things got pretty ugly, including in the banking sector. People had trouble getting mortgages.
at all, regardless of the price. Uh, and, and the housing market froze up. People just didn't believe that, you know, their two2 million euro apartment wasn't worth 2 million euros anymore. And it takes quite a while before, you know, those adjustments occur. So, yes, there's, the bottom line is, well, I'm not an expert, there's clearly lags. There's lags in the refinancing, there's lags in kind of, you know, believing the new market conditions and so on. Okay.
So I would, I think, I think down the road, we could have some damage, you know, in terms of people's balance sheets and whatnot, that that we haven't seen so far. Okay, great. That's exactly where I was going, just to get your opinion on that. Okay, thank you for sharing. Um, all right, so now to the more fun stuff. So, um, we, we've talked about, you know, some of the big challenges we face. What are some of those micro steps, at least, that that you and your co-authors, um, advise that that we either as a grand populace or just as individuals, uh, should consider embracing to help mitigate what may lie ahead?
So, the, the, the, the overlay in my mind, anyway, when we went into this, and in general, is, you know, notwithstanding the kind of turbulence, the crisis, the headwinds, and so on, that we've already talked about, we're living in a world in which there's three enormously, uh, powerful scientific and technological revolutions underway. Now, one is the digital transformation. It's multi-decade, and it looks to be getting more and more powerful as we go along. We were writing this book when the, you know, generative AI kind of hit the public awareness, and it's stunning. Um, we'll come back to that. But there's a revolution in biomed science and life sciences going on. Um, and then there's this fair amount of technology that's pretty impressive in the energy transition, that's part, that is the essence of the, um, sustainability agenda. So I thought, and, and what when I went and looked, you know, what I thought, found was not only was there sort of stunning breakthroughs, um, but that you had really powerful technologies that were widely accessible and declining in cost, uh, and so therefore, you know, available to people. And I thought, well, you know, with P tools this powerful, we ought to be able to engineer something that looks a little bit different from what we're, what's going on now. And that's, that's part of, I think, the answer.
I, I'm not sure they're min steps, but they're, because they won't happen overnight. Geni is probably going to transform a, the whole range of economies, but it won't happen tomorrow or even next year. We're in a, in a period of intense exploration and experimentation because it's so new. Um, but, but, you know, if we're right, uh, that has the potential really across the economy to change the kind of the business models and, and ultimately produce an enormous productivity surge. Um, it's transformative, right? So, so the, the kind of flip side of the, you know, it's a pretty tough world. We got geopolitical tensions, we've got polarization, we've got supply side constraints and so on, is we've also got these incredibly powerful tools. Let me give, I mean, I'll give you two examples. Solar is costs about somewhere between a fifth and a tenth of what it did 10 years ago. I mean, it's amazing. Uh, you know, in the proper kind of environment, it, it's, um, uh, competitive with, uh, traditional fossil fuel-based, you know, electricity generation.
The one that I don't think most people know about, except in the tech world, is, you know, DeepMind, which is now, was bought by Alphabet Google, uh, has done a lot of stunning things. The one most people, you know, may have heard of was we kind of winning the game of Go in two rounds on the second round by playing by the AI playing against themselves. Um, but the, the one that I think is very striking is is called AlphaFold. And basically, they, they set themselves the task of predicting the three-dimensional structure of proteins from the amino acid sequence that defines it. Sounds technical, but the three-dimensional structure is absolutely crucial because that determines what, you know, what molecules bind to. So it's for pharmaceutical, you know, vaccines, etcetera, it's just crucial. And it, and it can be done in a lab, but it takes, you know, somewhere between months and years, um, to figure it out. And so they said, well, maybe AI can help. And we'll see if we can predict this, the three-dimensional structure of these things. And basically, it worked. I mean, the predictions aren't perfect, but they're pretty good. And, and once they realized they'd done it, then they took the 200 million known proteins in the world, predicted the three-dimensional structure, and published it as open source for anybody in the world to go look it up. And so while that's not going to intersect anybody's lives directly, it may intersect them when, you know, they, when, you know, immunotherapy, kind of, you know, gets advanced and they don't die. Um, but, but in the world of biomedical science, it's a productivity enhancing shock of enormous magnitude, a seismic event. Yeah.
Um, so, okay, so, uh, what I hear you saying here is, is, you know, sort of from a humanity prosperity stake, um, we should really be leaning into these technologies, um, that have the benefit of, I think, increasing at exponential rates in terms of their, their ability to progress, right? And they also oftentimes can drive down costs exponentially too, right? So there's two exponential curves that are helping you out there. Yeah.
And, and that's fascinating. We don't have time to go through, you know, the individual examples in the book. I, I recommend that folks go to the book and do that. Let, let me ask just a question here that that sticks in my mind about this, and I'm curious if you share this issue or not. Um, I believe it was Keynes who talked about technological displacement, yeah, where he basically said, look, if you can, if you can displace human labor, um, by, you know, uh, transitioning to some sort of, you know, alternative solution, and in the old days, it was, you know, cars over horse and carriages, right, that that type of thing. Said you should, you should always do that. That makes economic sense. But you have to be careful at the rate at which you do it. In other words, if you displace the labor so fast, if you displace the labor faster than your ability to repurpose it to, you know, higher productive, yep, you know, use, you end up creating a societal problem that may be more costly than the economic gains that you are creating. And I, I do wonder in this era of automation and AI and whatnot, that that we are quickly hollowing out the job market, maybe even at a faster rate than we expect, because AI is really going to be able to go up the the stack of of skills, right, and start displacing a lot more white-collar workers than folks even imagine too. Um, where, just the question is, what are we going to do with all these people, especially if we start making them live a lot longer through all these biomedical advances as well? Do you, do you ever think about that?
Oh, yeah. No, I mean, so this is a lively kind of discussion that's going on, and it's not the first time it's occurred. I mean, it's been going on since the start of the Industrial Revolution, right? But, you know, digital is different. So, you know, we can't just rely on kind of historical experience. So, I mean, I think there's two things to say about it. One, there, you know, there is an issue of pace. So that part's right, right? You can do some stuff so fast that the, that kind of structural adaptation that's essentially inherently limited in any economy, you know, people don't change their behavior, they don't change their skills, organizations don't change their business models, you know, overnight. Um, so there's natural things that slow things down, but you can imagine some serious imbalances, you know, that and that are disruptive of people's lives on the way through. True. So that's point one. Point two is, everybody thinks that digital is, when it comes to jobs, is automation. Just automatically. If a, if a senior hospital administrator starts talking about using AI, there's panic. And the panic is, they're coming for our jobs, right? Right. And it, and it, and it's not necessarily an accurate description of what's going to happen. Uh, so part of the reasons for writing about this, just wrote something with James Mana on this in Foreign Affairs, is, you know, to kind of help people understand that that's not necessarily where we're going.
Eric Berelson at Stanford wrote an influential paper in a Daedalus volume that James edited, or really put together. It's an extraordinarily useful volume, by the way. It's on AI. It's and it's got everything in it. It's not just economics, it's the AI people, it's t, you know, it's, you know, artificial general intelligence and when it's going to happen and all kinds of things. But he said, there's a, there's a, there's a thing called the Turing Trap. It's his term. And the idea is I think important, which is Alan Turing is a genius, developer of the computer, basically. Yeah. Basically, yeah. Would propose that we evaluate progress in the digital domain, where what became the digital domain, by imagining asking the question, you know, can we produce a machine that interacts with a human in such a way that the human thinks that he or she is interacting with another human? Um, so that's the Turing test, right? Most AI is evaluated, when you just read the literature, um, based on how it performs relative to humans, right? So in image recognition, which is a kind of revolutionary development in the last decade, the, you know, all the attention is focused on when we cross, you know, and and they ident, and the AI identifies the images better than the average human. Or, you know, Geni takes the LSAT test and performs better than the average test taker. This is a law school aptitude test, right? That's okay. Nothing's gone wrong so far because it's probably a pretty good way to benchmark progress. But it's a very short step from there to say, well, okay, so now the AI performs better than the human in this test, so we'll just replace the humans. And that's where the automation bias comes from, right? But remember, these AIs are prediction machines. They're not perfect, right? There's a, you know, a well-known story that was written up in the press of a doctor who prep used ChatGPT to prepare a brief and didn't check it, right, and handed it in to the court. Well, it turns out, you know, that we know that these things have hallucinations, is the term that tech people use. They make stuff up, right? This one made up all the legal precedents, uh, that were handed in, right? So that guy heard that story, but it doesn't surprise me. Yeah. Yeah.
No, I mean, so that, that probably won't happen too many more times once people get the hang of it. Um, you know, and, and so, yeah, I mean, I'll give another example. These an AI is going to write the first draft of a report that a doctor writes. Doctors spend an incredible amount of time writing up reports because they have to, right? We need that information in the system. The AI will write the first draft. That probably reduces, you know, 80% of the doctor's time, right? So if you define the task as the first draft, that's automation. But no doctor in their right mind is going to hand in the first draft, right? They're going to check it. That's the other 20%. And if you define the task as producing the report that's needed, it's human machine collaboration, right? It's augmentation. You have a powerful digital assistant that does something that uses up a lot of your time, uh, that we didn't have before. I mean, it's an incredible achievement. And, you know, will a doctor spend more time on medicine? Probably. Maybe they'll even spend a little more time on the golf course. That's okay. Or just more time with their patients, which would be wonderful. We're all familiar with, you know, the, what I really want to say is, when you go looking carefully across a wide range of potential applications of this, you get, you get the same story with slight variations over and over and over again, right? That dominant, the dominant impact is likely to be once people learn how to use this powerful digital assistance and machine, you know, human or even machine systems, uh, collaboration. I mean, they're starting to use AIs to try to increase the transparency of these incredibly complex things called global supply chains. They're completely opaque. No human being can kind of figure out all because they're too complicated. Yeah, they're just too complicated. And, and, yeah, exactly right. I mean, there's a little bit of fragmentation of the data, but they're just too complicated. Okay.
Um, that, that's likely. I'll stop. But I mean, there, but, you know, I mean, people who studied the Stanford Business School, remember what the bullwhip effect is, right? You know, there's a, people out at the end of supply chains reacting to the latest thing that somebody on the next part of the supply chain does. You, you'll be pleased to hear, Dean Spence, that I have created videos dedicated to explaining the bullwhip effect from what I learned at Stanford. That's great. Okay, then I don't have to explain it anymore. But anyway, so that could materially transform that. Anyway, bottom line is, I think there's real potential for this to be dominantly augmentation. When you stand back from it far enough, and, but, but the last thing I'll mention, because it's your question is really important, is implementation is going to be critical. You know, you can't stand up and say, geez, we found this wonderful technology, we're going to introduce it, and have people sitting there thinking, you know, they're coming for my job. Um, so the soft skills, the implementation of major structural change or business model change, is going to be just as important as the technology itself.
Okay, so what I'm, what I'm taking from this is, um, I imagine, correct me if any of this is wrong, your advice to the average viewer here would be, you know, skill up on AI. Like a lot of us just have heard about it, we think, oh, it's, it sounds sciency, and I've got my life to focus on here. I'm just not going to really pay all that much attention to it until it's right in front of my face. My guess is you would say, be a little more proactive than that. Lean into it. Look for ways in which it can help you do what you do better, and be at the forefront of this wave. From a policy standpoint, I hear you saying, we can't just let the free market ride this thing. There's going to have to be a partnership with policy that says, you know, how do we let this thing get out into the world in a way that doesn't necessarily create the societal issues that that Keynes, you know, warned about with technological displacement? You're sort of nodding as I'm saying all this.
Yep. No, I think the policy thing has has two sides to it. Um, one is, there's a lot of potential damage and, you know, downside risk associated with the inappropriate use of these technologies. So, you know, policy, you know, has to deal with that. And that's multi-dimensional. I mean, you know, is the AI read your book and integrated it into the way it thinks about the world? Is there some intellectual property issue there? Probably yes, and we don't know how to handle it yet. The, the other part is positive, right? I mean, you know, we could have this, you know, tech and finance going full speed ahead with AI, and a whole bunch of sectors lagging behind. We've done this before in earlier rounds of digital transformation, um, and we're not going to get the productivity surge, and we'll get, you know, highly unequal results across sectors, you know, if we get that kind of divergence again. And government has a role in, you know, accelerating and increasing the footprint of the adoption and diffusion options for small and medium-sized businesses. You know, JP Morgan can spend a ton of money, you know, experimenting with AI in the way they do business. You know, a smaller business doesn't have the resources. So, yeah, there's a, there's a role for government on both the, you know, the positive side of the use of the technology and preventing, you know, some of these downside risks. I would say, I think James agrees with this, that the policy agenda at the moment is heavily biased toward the downside, right? And we, and we're kind of, this, the paper is a little bit of a plea, you know, not to ignore that because it's important, but, uh, pay attention to the upside potential as well.
All right, um, Dean Spence, this has been a fantastic discussion. Uh, I, in our last couple minutes, I, I want to get to one more topic real quickly. Before I do, where can people buy this book? Just anywhere books are sold. Yeah, in America now. It's, it was published in the UK but distributed in the United States, and I believe it's, it's widely available now, and you can certainly find it on Amazon or any of the, uh, the online book sellers. Um, so we'd love it if people take a look and give us some feedback. Okay, great. And again, folks, it's "Permacrisis: A Plan to Fix a Fractured World." Dean Spence.
And just in the last couple minutes we have here, um, I, I do want to squeeze in this question for you, um, because as I said earlier, you, you gave us some wonderful advice throughout our tenure at Stanford. And I remember sitting, people have heard me tell this on on previous videos, but I remember sitting in a room with you and a bunch of other, uh, of my my classmates as we were getting ready to graduate, and you were kind of just taking Q&A from folks. And one person said, Hey, Dean Spence, I've got a job offer, you know, doing what I did before, that's pretty lucrative, and I'm, I'm kind of lukewarm on it. I could do it. The one that really excites me is this other one, but it's in a field that I've never worked in before, and it would require me moving out, you know, with my wife, uh, to this new place that we've never lived before, and we're in the process of starting a family. And your advice was, as I recall, was, hey, you get ahead in life by taking risks, and that you're a fan of risk-taking, but calculated risk-taking. And your, your warning was, don't take on too many risks in parallel, um, because if you do, you risk not being able to do any of them well, uh, and you're sort of, you know, sacrificing your odds for success. Uh, I've really taken that to heart in my career, and it actually was a factor in, um, my recent decision to go independent. I had a lot of things going on this year that were unexpected, and I was able to sort of flight them in serial versus parallel, so that when I took this big leap, uh, I wasn't burdened with undue other risks at the time. So I'm, I'm just curious, do you have any other bits of advice like that, um, for just sort of general success in the world, given the fact that you've had such a successful career, but you've helped so many other people, you know, birth some phenomenal careers?
Well, you know, I was, when I was writing my thesis, a lot of thesis advisors would have said, you know, that's kind of risky. Nobody's heard of that. Why don't you do something else? And then, you know, you can go back to that later, you know, after you have a job and have taught or gotten tenure and stuff. And they didn't, my thesis advisors didn't tell me that. Um, so, and I've always been grateful to them. You know, I, I mean, I think when you're young, you're at your most creative, for sure. There's just too many examples of this, you know, because you're not trapped by conventional wisdom, you know, a whole bunch of conceptual apparatus that you can't kind of get rid of. I mean, there's advantages to being a little older and having experience, but, but I think, unbalance, in most lines of, you know, human endeavor, uh, there's a big, there's a big advantage to youth. And so, there, it's the time to take risks, you know, and, and look for something that's truly rewarding, you know, where you make a big difference or do something important. Um, but that then the calculated part comes in, you know, you can't do that on every friend at the same moment. I mean, you, you were, I, I think it was, uh, one of the investment banking types, you know, came along, and I've seen this over and over again, and said, look, you know, if you're going to take a shot at like being an entrepreneur or something, then, you know, don't get yourself a big mortgage at the same time, and, you know, do all those other things. Um, I remember being in Singapore, which is a pretty dynamic place now, but they, and, and they were trying to build the kind of, you know, innovative side of that economy, and they, and I said, well, you know, what are the obstacles? And they said, well, you know, everybody's supposed to get married and have a house and whatnot, and pretty soon, you know, they're in a position where, you know, taking that kind of risk doesn't, doesn't make a whole lot, whole lot of sense. So I don't, I, I can't think of anything that this more important, especially for younger folks, is is what you talked about. Um, but I, I, on the, on the these technology sides, I think there's some, not everybody's going to be interested in in everything, but this is a really bad time to sit on the sidelines, right, and sort of say, well, that's kind of in somebody else's world. I don't really understand it. I, I think, I, we get asked this question a lot by business people. I, I don't think one should rush into adopting various kinds of fancy new technology, you know, too quickly, but sort of just waiting on the sidelines and not paying attention breaks me as an even more, a more dangerous thing. So what I've tried to do all along is just, you know, go talk to people who know what they're talking about in various fields and, and try to get an education. I guess I learned that as being a dean, you know, I was talking to colleagues who were doing this, that, and the other thing, behavioral economics, you know, molecular biology, this, that, and the other thing. And I thought, it's fun to learn about what they're doing, even if you don't get to the depth they're at. Um, but it, but it's also, you know, a way of kind of keeping up, I think, is the way I would say it, keeping up. And then making choices that are based on reasonably current understanding of what's going on in there.
Great, super well said. Thank you for being my dean one more time and coming on here and sharing your deep expertise with us, uh, and helping our viewers here make more informed decisions about what's coming, what's coming. And to underline your your point there for folks, this is not a good time in history to be sitting on the sidelines. So take Dean Spence's advice, uh, and start getting educated about what's going on there in the AI world. Dean Spence, I can't thank you enough. This has been wonderful. Thank you so much for joining us today. Enjoyed it thoroughly. Good. Thanks for having me, Adam. Well, folks, winding things up here. First, I want to thank you for watching the very first video on this new Thoughtful Money channel. As the new independent proprietor, I very much appreciate your commitment to the content here, uh, and it's not every day that you get to talk to a Nobel Prize-winning economist. I hope you found the discussion useful. Uh, to help this channel succeed from here, please do me a favor and hit that like button. But very importantly, click on the red subscribe button below, as well as that little bell icon right next to it. We want to get the subscriber count up here as fast as possible, and clicking that little bell will alert you when we have new future interviews lined up. And actually, we've got a bunch coming in the pipeline. Um, especially the next one coming after this one is going to be with Dr. Mark Faber. And if you've seen my previous interviews with him, you know that that is not to be missed. Um, if you'd like to see who the remaining 20 plus or so experts that we have lined up over the next two months are going to be, head over to my Substack at AdamTager.substack.com. That's where I'll be putting out, uh, important updates about this channel in the future. So go subscribe to that for free when you have a moment. Um, I'd like to say thank you so much for, uh, joining me, coming over from my old channel, watching this video, supporting this new channel, and, uh, thank you so much for your time and commitment and support. And thank you so much for watching today.