Ted Audio Collective.
HBR presents. Hello everyone.
You're listening to After Hours.
I'm Felix. I'm Raui.
I'm Rebecca. I'm me here.
Hi guys. How's everyone?
You know, things are starting to feel a little more optimistic.
Yeah, there's light at the end of the tunnel for sure.
And sometimes there's sun outside.
Yes, absolutely. So I'm curious actually, once you can go outside, meet people, meet your friends, what are some of the first things that you're going to do?
I want to go dancing.
I want to go dancing in the worst way.
I want to be in a big room full of people, loud music, and just letting rip, and partner dancing, and line dancing, and rock dancing.
I don't care what kind of dancing.
I just want to be dancing.
And pass line dancing.
Now that, I wasn't expecting, Rebecca.
How about you, Ravi?
You know, I'm thinking hugs.
Yeah. Basically hugs.
How about you and me here?
So yeah, I mean, I think I'm with Rebecca a little bit, which is like live music and concerts.
I think I realize now how much I underused those things pre -COVID, but I've been missing it and would love to go back to going to a show and seeing an artist in a club or any kind of a place.
Just live music would be fantastic.
And if, you know, dancing and hugs broke out, that would be just fine with me, I think.
Right, yeah. Concerts are definitely at the top of my list as well.
I've tried some of these on Zoom, mostly to support the venues, and it's just, it feels too much like watching YouTube.
Not really. All that different.
So yes, live music would be great.
And we brought topics.
Ravi, I think you had something for us.
I was reading this article this week about Best Buy.
The thing that really caught my attention was Best Buy is giving eight hours of paid time off to any full -time worker who gets vaccinated.
And four hours paid time off for any part -time worker who gets vaccinated.
And then I thought, how should companies be thinking about encouraging or not, or requiring or not?
Right. So I thought we could talk about that.
Super interesting. Yeah.
And I brought a topic too.
I am curious to know how you're thinking about the disaster in Texas.
Right. Millions of people without power, millions of people without water.
I'm curious to know what's the diagnosis, and then even more important, what can we do about it?
Sounds great. Yeah, absolutely.
So Ravi, vaccinations.
I heard from a public health expert that we might be surprised at how quickly we move from a situation of vaccine scarcity to one of vaccine indifference or resistance for a wide variety of reasons.
And the combination of that possibility with this Best Buy story got me thinking, if you're managing a workforce, if you're employing lots of people, should you have a point of view about whether your workforce gets vaccinated?
And in fact, Ravi, hospitals and healthcare establishments have required flu vaccines, for example, in the past.
So in a way, this is an extension of that kind of an idea to a much broader setting.
One of the interesting uncertainties that I would think about if I had to make that decision whether or not to require a vaccine, we're very sure the vaccine helps that you yourself don't get terribly sick.
So they're very effective.
We know much less at this point how effective they are at inhibiting or making impossible transmission.
And I think I will pay close attention to that difference.
I love what Best Buy is doing.
I think that's sort of like paid sick leave.
That's in the interest of the employee, in the interest of the business.
That to me feels like a no -brainer.
The requirement to be vaccinated in order to be able to show up at work, I think makes most sense for me if you have much less transmission.
But if it turns out that these vaccines are really great at preventing us from getting sick, but they don't do much to inhibit transmission, then it feels more like a personal choice.
It just affects you and your health.
Rebecca, how about you?
You know, Ravi, I'm really torn.
I mean, suppose I'm running a restaurant and I have strangers coming in all the time.
I think I want my waitstaff to be vaccinated.
To protect your employees.
To protect my employees, to protect my guests.
I might be worried about legal liability.
Yeah. As I was thinking about this, I was kind of surprised with myself because I'm more open to the idea of employers mandating this.
And that's not usually a place I end up.
At a minimum, it seems like you'd want the C -suite to be modeling the kind of behavior we'd want to see more generally, which is getting the vaccine, talking about the vaccine, talking about how it was okay, modeling behavior for everybody.
But I'm more interested in the mandate than I thought I would be, in part because I think we expect a lot out of firms and we expect a lot out of the employment relationship.
And by the way, there will be exemptions for disability, exemptions for religion.
But I think getting employers to be part of this solution is something that I'm quite open to.
There's a bad outcome here where enough falsity spreads about vaccines where we undercut our efforts to get past this.
So this is a very serious thing for us as a society.
And so why wouldn't we want employers conceivably to be putting thumbs on the scale towards helping this eventuality happen.
Now, mandating is a lot more than thumbs on the scale, but with exemptions, I could find myself there.
I guess, let me put it differently, what's the reason not to?
Are you more skeptical, Ravi?
Of the mandate? Yes, uh -huh.
Well, I really don't like being told what to do.
And I'm not skeptical of the vaccine at all.
You know, I'm signing me up and I get my flu shot every year.
But I do admit that if I had to get my flu shot every year in order to come on campus, or if I had to get my COVID shot every year to come on campus, I would bristle at that and say, like, who are you to tell me what I should be doing?
Well, we are the place where you work and where you interact with lots of other people and you can potentially endanger them.
That's fair. But we're also an institution that values independent thought and radical independence.
Felix, what do you think?
If it reduces transmission, it's a complete no -brainer.
I would require everyone to get it.
So what you're doing is by showing up, in particular for COVID, which many people have no symptoms.
You don't know that you're spreading it.
We don't know that you're spreading it.
And you're spreading it with potentially devastating consequences for everyone else.
And I don't want to be the place where this happens.
I think it's irresponsible of those who don't get vaccinated.
You know, this is why the transmission matters so much for me.
If you make a choice and you say, I'm leading a more risky life, you're my hero.
Go lead that risky life.
Totally okay. If you make a choice how you negatively affect others, that's not okay.
Which is why we mandate vaccinations in elementary school and schools and sometimes post -secondary places.
We do that. So what's the case against it?
Rebecca, I'm curious.
Yeah, Felix. Yeah, baby.
We got him, man. We got him on the ropes, Felix.
So try this. I'm the CEO of a major multinational with offices all over the U .S., red states and blue states.
And in the red states, I'm generalizing horribly, but people are super angry about elites and elites forcing their views down the throats of everyone else.
And really riding roughshod over regular people.
And I'm going to show up and I'm going to say I insist that everyone is vaccinated when half the people in my plant think that COVID is not happening or the vaccine doesn't work or that it's a personal infringement of liberty.
And maybe in some places, people say, you guys have been experimenting on people like me forever.
And now you forcibly want to put what inside me?
And, you know, why should I believe you this time?
So I could see enormous pushback from employees.
So I'm not so sure.
Let me address that.
And of course, you're absolutely right about especially how blacks have been treated with medical testing.
Of course, you'd have to model the behavior yourself and the C -suite would have to do it themselves.
But Rebecca, by that logic, why should we say we want clean energy in all our plants?
Why should we say any of a variety of things where we live in red and blue states and many people disagree with the underlying premise?
I mean, by that logic, we are imposing some values of the elites on lots of people in lots of places.
Because it feels to me different that it's an invasion of my body.
Right. That seems to be somehow a different line.
You know, do I really hurt you if the plant is powered by solar energy versus coal?
Right, fair enough.
And I take, Rebecca, your point that this is going to exacerbate some anti -elitism feeling that might be happening by people who don't believe in this underlying science.
But we have safety procedures in plants.
How distinct is this from mandating safety procedures in plants that are uniform around the country and around the world at a very high level?
That can be a wonderful thing.
And is this that different from that, Rebecca?
Oh, me, yeah. I really resonate with what you guys are saying.
I mean, I want to work in a workplace where everyone's been vaccinated.
I mean, I get that.
But I'm afraid I think it's really different.
Because they're invading the body, right?
There's not a huge partisan divide in whether to have safety procedures in plants or not.
There just isn't. But, you know, a very large fraction of Republicans say they don't want to get vaccinated.
Do I want to force them?
And maybe I'm more hopeful about the power of the company.
I think have it on site.
Celebrate people who've had it.
Absolutely. Give people time off.
Talk about how important it is.
Talk about the benefits.
Talk about the risks.
I would just, I think, I would educate and shame and encourage and do everything I could.
And I think in many workplaces, people will get the message pretty clearly that this is something that, you know, you just do.
All right. Well, this will be really, really interesting to watch how it plays out.
So let's talk about the dramatic events in Texas a couple of weeks back.
Millions of people who don't have access to power in freezing temperatures and then a similar disaster when people don't have access to safe water.
I wanted to get the conversation started by just asking you, what happened?
What's your diagnosis?
What went wrong in Texas?
At the most basic level, the power sector simply wasn't prepared.
I mean, it's come out that they took as their baseline a cold snap in 2011, which was the coldest thing in 10 years or something.
But apparently when insurance companies say, you know, what's the worst possible thing that can happen?
They look at not a one in 10 event.
They look at a one in 100 or one in 500.
And indeed, back in 1989, it had been much colder in Texas.
So they just picked a kind of set up your system so that it will work if it gets as cold as it was in 2011, kind of setting themselves up to have a problem like this.
The larger backdrop is the energy market in Texas, which is unique for maybe at least two reasons.
One is because it is delinked from the national grid.
They consciously chose to delink it from the national grid, which basically allows states to share power and Texas had to go it alone strategy.
Now, you might say, Texas is big, Texas produces a lot of energy.
Why shouldn't they go it alone?
And the answer is, well, moments like this.
That alone is not sufficient, I think, to explain it, because then you have to really go into the innards of the Texas electricity market, which has, as you pointed out, has a couple of features.
The one that I think is easily debunked is the idea that this had to do with their dependence on relatively green or renewable sources.
And I just don't think that really passes muster, although it's been bandied about.
The deeper question is first, the absence of requirements to do things like winterize, which were just not there.
And then the even deeper reason is the absence of what are kind of called capacity buffers or capacity markets, where people are paid to have redundancies for moments like this.
And the quest for lower prices, which is a potentially a good thing when it happens, led them to basically say, any of those redundancies are expensive and firms will do it because they'll be rewarded with prices that will be high.
In these moments, and they'll know themselves that they need to do it.
But in fact, all of that kind of fell apart.
So that's, I think, a way to understand what happened.
One of the issues is that if you design a system that could be optimized on uneventful weather days for low prices, then it could be a very fragile system as well, which is to say you don't have the redundancies built in.
You get these scenarios where it's exactly when supply is short, that demand is going up.
And so we've seen these madness kinds of stories of people with $15 ,000 energy bills over the course of days or weeks.
And I think that the regulatory design gives us the outcome.
This design gave us a fragile system, but one that could in general deliver relatively low prices if there were no big important events.
As we have more events of this type as climate change becomes real and storms and unusual weather conditions become more frequent.
There is, of course, a big role for markets.
So the basic idea that whenever we're in an unusual situation, prices will spike.
And then if you are the one utility that can still provide energy, water, whatever it is, that's a big incentive.
And in a way, this might be special to this moment because, at least in Texas when it comes to cold weather, we don't live yet in a world where apparently businesses thought this is going to be so common that any investment that we make in weatherization will pay for itself within a reasonably short
period of time. So the inability of the market to create the right incentives is twofold.
On the one hand, if market participants correctly or incorrectly think that these events are super rare, then the return on investment calculations don't look very favorable and I'm not going to do it.
The second problem is that the capacity was sold at just enormous prices because few utilities then collecting the price that you should be able to collect also becomes a problem because now everybody's up in arms.
And we allowed consumers to say, I like to choose a plan that has variable rates, except we don't want them to live with the variable rates.
The rates are really variable, which is, of course, completely understandable.
So in a way, it's a double whammy against a design that tries to use market forces to get it right.
Because if it's rare, it doesn't work.
And then if it works, it sort of doesn't work because it can't really make people pay.
I want to raise another point, which is, are we so sure that regulation would do a better job?
Because this problem of under -investing in weather -proofing infrastructure, not making long -term investments in the water systems, I mean, this isn't unique to Texas.
We've seen major infrastructure failures right across the US when these kinds of big shocks hit the system.
And there's a lot of evidence to suggest that people just under -invest in maintenance and they under -invest in preparing for small probability events.
That just humans are just not very good at small probability events.
This is the very problem with taking low prices as a sign of success or failure.
So we're now looking at Texas and we say, well, actually, they privatized, but prices were not very low.
Well, it depends on why prices were not very low.
If prices were not very low because there was no competition, that is obviously a failure of the market design.
But if prices are not very low, because in fact, in an era with climate change, there's a lot of additional investment in infrastructure investment that is needed, then prices ought to be high.
And it's a good sign that prices are high.
One of the interesting interactions in the Texas market is because they have been relatively successful at building out renewables.
And as you know, these renewables are now super competitive in prices.
So if I'm an old -fashioned coal -fired plant, my scope for creating the kind of cash that I need in order to weatherize has drastically been reduced by the success of solar and wind.
So it's not the case that everything melted down because we invested in solar and wind.
But as we shift the mix of fuels and some are more successful and others are less successful, the ones that are less successful, they will, I think I would expect them to invest less in the kinds of resilience that we think we will need going forward.
But it feels like this is a story of two different things, which is one, unfettered marketism and belief in that is problematic for the reasons that we saw in Texas.
And quote -unquote smart regulations would have helped.
But to your point, Rebecca, it doesn't always show up that way.
And then you really have to go to the deeper question, which is I think of regulatory capture and of regulators who were captured by firms to not implement the kinds of regulations that you might see.
Which I think Rebecca's the answer to your broader question, which is would regulators do it better?
And the answer is, well, they could have, they didn't.
Even in Texas, they had regulators.
They had something, you know, that was a regulatory body, but they were just very lax.
And so it seems like in addition to this idea of an unfettered marketism, which I think is problematic, it also feels like there's just a failure of regulators to do some minimal kinds of things that make sense.
And I guess my reaction to all this is this is going to lead to some knee jerk reactions against markets for electricity, which is terrible because prices are so important in this market.
It's fundamental to the way these markets work.
And so I worry that in this age, we're going to view Texas as some kind of a shot across the bow against all forms of markets in electricity and in power.
And that would seem like such a loss.
You know, the more moderate review I think is right, which is markets are enormously powerful.
We need some strong regulation for some basic minimal things.
And that could have averted what was a very problematic situation.
And on this point, Meher, it's such an interesting way of thinking about it.
There's also the question of the kinds of contracts we either allow people to write and sign on both sides.
Or condone without consumer protections of various kinds.
You're talking about these variable price contracts.
Yeah, exactly. You know, variable rate mortgages.
These days, at least, though during the great housing boom of the 2000s, we didn't as much.
But these days at least, we give people lots of advice about what the costs and benefits are.
There are regulations, indeed, about how these contracts can be written so that the consumers feel protected.
And so I wonder whether that element of the story that's also about what kinds of contracts are okay in these electricity markets, just as we asked that question about financial markets.
And in a way, I guess the question, Rahi, that is so fascinating to me is it's about risk and who bears the risk.
I think where you're going is, should a consumer be expected to understand the risk of variable pricing and energy markets and be prepared for thousands and thousands of dollar bill at some points and then very low bills otherwise.
And I think that's the kind of typical question because in a way, in many settings, we want consumers to be aware of risk.
And we want them to be thinking about risk and we want them to be thinking about the risk of price changes.
And that's all very positive.
But to shift this risk to consumers in the limit where they're literally fluctuating their prices with what is going on on the national electricity market feels very problematic.
Like they're not well equipped to gauge that risk.
They're not well equipped to manage that risk.
I think there's a deep question about whether it's appropriate to think differently about something that could be considered a vital good.
Right. These issues get even more sticky when we talk about markets for water.
Many of the problems of water shortage we face could really be addressed through the use of market mechanisms.
But people are super resistant to the idea of pricing something that's seen as a basic human right.
Somehow you should be able to get access to water.
So how does that play into this conversation?
Because power is close to that, right?
I mean, when it's really cold outside and you don't have power, it feels like something absolutely fundamental.
Yeah. What do you make of these capacity markets?
So they're different from what Texas had in two senses.
One is, as a utility, I can promise that I will always deliver a particular amount of energy and I'm getting paid for supplying that energy.
But I'm also getting punished when I don't supply, which is one of the really big differences to Texas.
If you don't supply in the Texas system, there's just nothing.
You didn't supply. You didn't earn anything, but there's no punishment in the capacity markets.
There is punishment.
Is that the right way to combine resilience, safety of supply with market forces that give us innovation and all the other goodies that we like for markets?
I love this idea of capacity markets and I think it's a part of the solution, Felix, and it wasn't present in Texas.
I guess the only thing I would say about this is I still think there is a role for minimal levels of protection on, for example, winterization.
We're just going to mandate that at a certain level.
And by the way, we will let you to some degree pass those prices on conceivably in different ways.
But I think in a way to be a little belt and suspenders about this is okay, although I rely on capacity markets more.
But I think a little bit of belt and suspenders might be okay.
Just to agree with me here, Felix, you know, how do we know what's the right punishment level to set in the capacity market?
I mean, there's a risk here of socializing the risks, but privatizing the profits, right?
And yes, if you could get the right price in the capacity market that when capacity failed, it really did compensate the society for the enormous loss suffered.
Well, maybe that'd be okay.
But I mean, in Texas, at least 80 people died.
And are we sure the market will work well enough to prevent that?
I just, I feel obliged to make a comment about the fact that like belt and suspenders together is never actually a good look.
And so I understand it's just a metaphor, me here, but I don't think we want to endorse that in a general way.
It's also a highly gendered analogy.
So altogether a fail, a big fail on my part.
Hooray, we have some sort of agreement, at least in one domain that seems absolutely critical.
So one thing I take away from the conversation is your point, Ravi, about thoughtful design and probably also the designer's incentives to learn about changes in climate, changes in competition, changes in what's technologically possible.
Finding that right mix in a way needs to be reflected in the smart design of markets.
And much of the quick response, markets work, markets don't work.
I think Texas, in a way, is a beautiful example of how that doesn't really tell you all that much.
What you learn in dramatic instances such as these is there's a particular design that hasn't performed very well.
And you brought pics.
So, you know, usually I have a book or a movie or something, but this time I just read a little passage of a book and I just wanted to share the little passage as advice.
And so I think many people have struggled with sleeping at night and I've actually had different experiences.
I've been sleeping well at times and then recently I've had some trouble and I've been waking up at night.
And I saw this piece of a story by Jeffrey Eugenides and I just thought I would just share this quote, which is advice if you are having trouble sleeping at night.
Oh great. So my recommendation is just this advice.
Okay, I'm all ears.
You don't have to read the whole thing.
It comes out of fresh complaint by Jeffrey Eugenides, but here's the advice.
And he concerns a character whose name is Kathy.
So it says, a friend of Kathy's in Detroit, a woman who has seen a therapist regularly for the past 30 years, recently passed on advice the therapist had given her.
Pay no attention to the terrors that visit you in the night.
The psyche is at its lowest ebb then, unable to defend itself.
The desolation that envelops you feels like truth, but isn't.
It's just mental fatigue masquerading as insight.
And the reason I like that quote a lot is the things that occur to you at night, sometimes you privilege as being really who you are.
And I thought what this quote made me think about is maybe that's just totally wrong.
Maybe the things that visit you at night are kind of your worst kinds of fears and self, and you shouldn't think of them as being something true.
And so if you're having trouble sleeping at night, I thought that might help you.
It's also interesting because usually, at least for me, when you then wake up the next day, you feel so different, right?
You feel like you're not really that person that you got to hang out with at three in the morning.
Right. But for me, at least I've often think to myself, because I always privileged like dreams, oh, that tells you something about who you are.
But these moments when you wake up and you are kind of just there at 4am by yourself and your mind goes in crazy places, sometimes your mind is just going in crazy places.
Yeah, that's a great one.
It's great. What did you bring, Rebecca?
I bought a musician that I've just discovered that my brother pointed me towards.
His name is Anuwa Brahem, and he's a Tunisian player who plays a kind of fusion between traditional Arab music and jazz.
Wow. And I don't know if this ever happens to you, but I've discovered him.
I'm just playing him all the time.
Yeah. It's complex in the way that jazz is complex, but it's incredibly beautiful in the way that Arab music can be.
And the harmonies and the instruments are just different.
Maybe this is telling you my listening is too limited, but I am just over the moon about this guy right now.
So that's Anuwa Brahem.
That sounds lovely.
That's great. I have one episode of Radiolab that I would like to recommend.
It's called Facebook Supreme Court, but really what they're talking about is the Facebook decision to create this content oversight board, I think in late 2018.
So it's basically a global board that needs to make this really tough decision what content is okay to publish, and what does not belong on Facebook, which of course is really complicated, really depends on circumstances.
And one of the many things that I loved about the episode is that they have a very specific example that comes across as completely innocent.
And then they describe how Facebook started to organize the oversight board, and they had conferences in different places.
And you learn a little bit about what was the local response to something that seems innocuous, funny.
You understand it in a particular type of context, and then once that context is stripped from the context in which it was published, it gets hairy and complicated.
So they do a beautiful job, just using a simple example and intuitive sense of just how difficult that job is.
And in particular, because it's such a global phenomenon, 80 % of Facebook users are outside the United States.
So it's something I would highly recommend.
It's called Facebook Supreme Court, and it's on Radiolab.
Nice, nice, very nice.
I've got one. Good.
So it is a game. Have you ever played a game called code names?
No. It's a board game.
And it's super, super fun.
It's very easy to play.
It doesn't require much concentration.
It's hard to get mad at the people with whom you are playing.
I once lost a friendship over diplomacy.
Yeah, no, right. It's not going to be that kind of game.
Is this the one with the little cards?
Yes, the one with the little cards.
I know this game. It's a lovely game.
It's so fun. And you're like on two teams, and each team has a person who's giving clues, and the people on that team are supposed to guess which words go with which clues.
Yeah, exactly. And one kind of fun thing about it is it's like a wavelength game.
Like, are you on the same wavelength as the person giving the clues?
Okay. And so then you're thinking, like, does the person who gave this clue know that I don't know the thing that they said?
And so that's why they gave that clue, because they know that I don't know.
And it's very fun to see, like, who's on the same wavelength.
Kids especially always surprise me when they're playing, because they'll say, like, something random that's wrong.
Like, it doesn't actually connect to the words.
But they'll all guess the same thing, and they'll get it right.
I've had exactly that experience, Robert.
That is fantastic. Yeah, but that's not true, but they're on the same wavelength.
But here's the real pick, which is that there's an online version of code names, which is really great.
And so this is a game that my family would play with our family out in California when we get together.
We haven't seen each other for a long time.
And my sister discovered that you could play code names online, and it was basically just as good.
That's a really good one.
That's a brilliant one, Raul.
That's just great. I'm going to play with our son.
Fantastic. So this is it for today.
Thank you everyone for listening.
This is After Hours from the HBR Podcast Network.
Thank you.
