Ted Audio Collective.
HBR presents. Hi everyone, you're listening to After Hours.
I'm Yung Nee. I'm Mee here.
And Felix, unfortunately, couldn't be with us tonight, but he will be back next week.
As you can imagine, all of our schedules have been scrambled across multiple time zones, so we weren't able to find a time that three of us could intersect.
But Mee here, you and I will just have to do our best.
We'll do our best. Let's give it a shot.
So the last time we sat down to tape, it was just one week ago, but it already feels like a lifetime, doesn't it?
Several lifetimes. So here's the plan.
We're gonna try to do two things in this podcast.
One is, we're gonna try to unpack some of the latest economic news from the past few days.
And then two, we're gonna share some of our own personal reflections from the week.
And what we're not gonna do is talk about the public health dimensions of this.
Because we are not the best source of that.
That's obviously the most important angle on all of this.
But there are many better sources for that.
So we're gonna focus on economics and business of this.
Okay, great. Okay, so before we begin, a caveat.
This is a fast -moving story.
So there's a good chance that by the time you're listening to this, some of the things we talk about will have changed a bit.
But still, over the past few days, the economic news has been coming at us fast and furious.
Over the weekend, the Fed cut interest rates by a full percentage point to near zero.
And also promised to buy at least $700 billion in government debt.
On the fiscal policy side, Congress is working on a bill that would provide some modest relief.
A bill that could be passed by the time you're listening to this.
But meanwhile, the market has been on an absolutely stomach -churning roller coaster ride.
So Mihir, what would you say to the hundreds of thousands of people who listen to this podcast and are trying to figure out how to process this deluge of news?
So it is really tough, and it is really tough because we are dealing with just such a wide potential range of outcomes and with a changing sense of what the risk of these outcomes is.
And I think when we talked last, we talked about what markets do.
And if you think about markets as looking forward into the future, that future is getting more and more complex and more and more uncertain.
So there's just been an incredible amount of volatility.
And I think we should expect that and we should expect it to continue for a little while.
The big movements downwards reflect what is now a clear sense of a recession and what is a clear sense of there's going to be a big shock to the economy.
What's less clear is how long does it last?
What are the long -term consequences of it?
And that's why things are going to continue to kind of be oscillating all around the place.
If it's quick, things could rebound quick.
And if it's a prolonged one, things could get worse.
And if you are a saver out there, this is not a time to think about timing markets.
There's a great phrase.
It's called trying to catch a falling knife.
Really, really hard to do.
And so you want to stay true to this underlying idea of are you comfortable with where your assets are allocated and how they're allocated.
And if you are, that's great.
And try not to pay too much attention to it.
You know, having said that, as you know, young me, it's been a tough month or two.
If you started January with a retirement savings account, it's going to be one third less by now.
And that is really shocking and hard to process.
But that doesn't mean the right answer is I'm jumping in even more or I'm taking things off the table.
You really want to just stay cool and try not to do anything at all.
Yeah. You know, what I would add to that is that it's the uncertainty around this that's making everyone absolutely crazy.
So everyone's really waiting for two things that would really help clarify some of that uncertainty.
And number one you mentioned is the public health response.
Because once we get on top of the public health aspect of this, once we have a public health plan of action that people have confidence in, you will see the market respond to that clarity.
The second thing, of course, that everyone is waiting for is the big fiscal response.
Right. So the monetary response matters.
But what everybody is really waiting for, I think, is the big fiscal response.
And the monetary policy response has been huge.
And it's straight out of the playbook from the financial crisis, which is cut interest rates close to zero and start buying a lot of assets to make sure that those rates stay down and then provide a lot of liquidity to banks and to banks around the world.
And that's great. The fiscal policy part is more interesting and more important over the long run.
And so the key to thinking about this crisis is to understand that it's different than other crises.
And specifically, it's tempting to think about people as consumers and to think, oh, we need to get people to consume more during this crisis.
Right. But of course, that's not right in this crisis.
Actually, economic activity has to slow down to cure the public health problem.
And so what does that mean?
The first and most important thing has got to be to get all the resources to the health sector that they need.
And then from there, you don't want to think about people as consumers.
You want to think about them as workers.
And if they can't work, then there's a loss of income.
And so what we need is more of a frame of social insurance as opposed to get people to spend more.
We really want to think about how do we protect people from the lost income that they are suffering from because the whole supply part of the economy has fallen down.
And so that gives rise to things like paid leave.
That gives rise to things like we need firms to be protected and to be insured when they decide to kind of give their workers temporary layoffs that we're going to continue to pay their wages.
The government's got to refund them for those wages.
We need all the kinds of things on the supply side as opposed to the demand side.
And that is a really different way to think about the world, right?
Here, I think this is such an important point.
Usually, we expect government to step in and ward off a recession.
Right. This is a very different case.
In this case, we almost need all economic activity to slow down, which means we almost need a recession.
Right. In which case the role of government becomes very, very different.
The role of government is to make sure we're able to ride this thing out.
Right. Now, having said that, one of the big questions, I think, is how big a recession is this going to be?
There are a number of economists that are now arguing that the crisis is potentially more fast moving and more alarming than the financial crisis of 2008.
And to address it, we need to be thinking about fiscal stimulus of a size and scope that is much bigger than, for example, the bill Congress is currently working on.
Do you agree with that?
And if so, what should we be doing that has that kind of size and scope?
So I do think we need to do something major.
Now, the first thing to say about this is that is fundamentally a public health question as much as it is an economic question.
Right. Because if this keeps going for six months or 12 months, then this is going to be terrible.
And if this is something that gets controlled in a month or two months, it's still going to be bad, but it's not the worst.
So fundamentally, the uncertainty is about how quickly can we contain this?
How quickly can we rebound?
So that's the first thing to say.
It's a public health question.
The second thing to say is, so what do we want to do?
We want to do all the things that alleviate the workers and firms who have to shut down activity in some way over the next two months.
One of those big ideas is mailing checks.
What do you make of that?
Well, we did this in 2008, right?
And we are now at a point that the arguments in favor of sending checks to people is coming from both conservatives.
For example, the American Enterprise Institute, as well as really prominent liberals like Obama's former chief economist.
The idea is very similar to Andrew Yang's universal basic income, but on a temporary basis.
So maybe a thousand dollars per adult, maybe an additional five hundred dollars per child to every single person with a Social Security number.
And I have to tell you, I think it's a really intriguing idea for several reasons.
Number one, it is immediate.
It's tangible. It's simple to understand.
And if you wanted to do something very quickly, you could put this in place, send it to everyone.
And if you're worried about money going to people who don't need it, you could commit to clawing it back from the wealthy in the form of a one time tax when the crisis is over.
I don't think it's the only answer.
I think we also have to prop up businesses to make sure they don't lay people off.
The costs associated with becoming unemployed and then having to somehow reenter the workplace is really huge.
And so that's why I think we need to think about stimulus on both sides of that employer worker relationship.
Yeah. I mean, I guess, you know, it's so funny because so many people love this idea now.
You know, I don't want to be uncreative, but it still sticks in my craw a little.
And I think the reason for that is I kind of think to myself, God, if I could take $1 ,000 or $1 ,500 away from me and from you, young me and get it into the hands of unemployment insurance or get it into the hands of workers who are actually out of work because of this supply shock.
It would be so much better.
Now, I think your answer to that.
And a lot of people's answer to that is, yeah, but you can't.
So like, don't let the perfect be the enemy of the good.
But, you know, I just kind of think to myself, I'd rather spend $50 billion into unemployment insurance.
I'd rather, for example, no tax filing this year.
We're all going to file our taxes one year late.
We can do a lot of borrowing to fund all that, but God, I really, I'm still holding on to this idea in me and I know it's not rational, but I feel like I'm holding on to targeting in a way that is irrational, but I'm still holding on to it.
But let me just say one more thing.
And that is, and I understand that it is not the most efficient use of funds.
I completely agree with you.
But here's the thing, the economic literacy in this country is not great.
And there is a narrative that still persists after the last crisis that we emerged from that having done a bunch of bailouts for people who were at the top of the income ladder and we didn't do anything for people at the bottom.
That's interesting.
And that has a little bit of truth to it, but it's not completely right either.
But in part, that's because, again, the economic literacy in this country is not great, even among media pundits, by the way.
So one of the things I don't want is for us to somehow try to address this situation in a way that creates even further polarization in our country.
And so one of the things I like about the solution is that everybody understands it.
Everybody gets it. You get a check.
The government's helping everyone, and it just feels fair.
I agree with you. It is not the most economically elegant solution.
Right. But it is fast and it is very, very tangible.
So you're convincing me on this in the following sense, which is, listen, this is all going to be debt financed.
And we are at a time where we should not be worrying so much about debt financing because rates are low.
So, you know, I'm kind of making an argument about how it could be better used in maybe in different ways.
But the answer is, well, no, look, rates are low.
Let's borrow. Let's def finance it.
Let's try to do it now.
And it's immediate and it can be fast.
A lot of it is going to go into people's bank accounts because they can't spend it because that's the whole stimulus problem, right.
Because you can't actually go out and do stuff, but that's okay.
Maybe. Oh, but for a lot of people, it would be the difference between making rent and not making rent.
And that's the social insurance piece.
I love that piece. Right.
Like the reason to do the thousand dollars is not to stimulate demand.
The reason to do the thousand dollars is for social insurance.
And maybe that makes it all just fine.
One final question on this piece.
So the other side of this, of course, is the industry side.
So the airlines are already signaling that they're going to need at least $50 billion in emergency support.
Other industries are likely to follow.
Should Americans support these industry specific bailouts because the requests are going to start to come.
The airlines, casinos, hotels are going to be next, hospitality, and on and on and on.
How should we think about the idea of providing bailouts to specific industries?
So, look, in a perfect world, that would be okay.
It's got two big problems.
One is it leads to this kind of political economy problem that you mentioned, which is some industry gets bailouts, some don't, and it looks like favoritism.
What would you want to do ideally?
You'd want to do this, ideally, you'd say, look, anybody who lost economic activity, any firm that lost economic activity, if it's a restaurant or if it's a cruise line or if it's an airline, it doesn't matter what you call it.
What you want to do is say those people are people who get funds.
In a world where we can't maybe actually see what the lost economic activity is, we're going to have to rely on these tags.
Okay, you're an airline, so you must have lost a lot.
I'd preferred if there was a way that we could say, tell us about relative to your economic activity last year, we will kind of make you whole relative to that amount of economic activity.
That's what you really want to do.
That's much better than saying airlines get something, cruise lines get something, but restaurants don't, because that's a really sloppy way of doing it.
Now, again, young me, this is like the perfect as enemy.
They're good, but I worry about kind of the favoritism of all this stuff.
What do you think? I agree with you.
I think it's going to be really difficult to sort out.
I don't think that the bifurcation should be between big and small.
Right. But I also don't think it necessarily has to fall by industry either, because there are a lot of industries that don't have the lobbying power that could definitely fall through the cracks.
And so we're going to have to make some decisions as a country, because every one of those industries represents hundreds of thousands of employees, people who work there.
The tricky part here is there are companies who are going to be in trouble because they took on a huge amount of debt in the last decade.
And a lot of that debt is, by the way, in hospitality, travel, in these industries.
And so the really tricky part here, and this is something we've touched on before, is this is coming at the end of a decade where people have been doing a lot of kind of irresponsible borrowing and lending, and we are now going to in some sense make that all okay.
And we're going to kick the kind of can down the road for that reckoning.
But that's okay. That's kind of what we need to do.
But there is that other problem out there that we are going to have to kind of struggle with at some point.
Okay, let's take a break, and we will be back.
We have a lot more to talk about.
Okay, me here. So you thought we should spend a little time reflecting.
Well, yeah, I just think it is such a crazy time.
And as you mentioned at the beginning, young me, every day seems like a lifetime, that it's also worth just pausing to reflect on things that we've learned and things that we've kind of been working on.
We've become aware of in a way that we never did before in this crazy new world.
So when you step back and you look at this whole situation, what do you think about?
So one of the things I've been thinking about is I have been thinking a lot about the role of government.
And I have been thinking about how one of the markers of good government is that when things are going well, when times are normal, government should be something you don't have to think about that often.
It should be something that recedes into the background, providing the kind of reliability and predictability that almost liberates us to take it for granted.
However, when a crisis hits, the role of government changes completely.
That's when government has to become foreground.
It has to take center stage.
I think this moment in time is such a sober reminder of why effective government really matters.
It matters who is in charge of our country.
It matters what our nation's leadership team looks like.
It matters who runs health and human services.
It matters how big the CDC's budget is.
Details that seem unimportant when all is well become absolutely critical when things start to become unhinged.
And in moments like this, the tone, the signaling from the top is everything.
And not just for psychological reasons, not just because we all need to be emotionally reassured, but also because people and businesses make decisions based on messaging they're getting from the top.
And if there isn't confidence in that leadership, that can make the difference between a business deciding that it is screwed and it needs to fire a bunch of its employees versus that business having the confidence that we're going to be able to ride this thing out.
So if you have ever wondered what a leadership vacuum feels like, this is what it feels like.
It feels like disorganization.
It feels like a lack of preparedness.
It feels like mixed messages.
And the consequences of that will be more people will suffer than would have had to otherwise.
Now, on the other hand, thankfully, one of the things that makes our nation strong, I think, is we have so many levels of leadership.
And so whether it be corporate leadership, local leadership, community leadership, there are governors and there are mayors, for example, both Republican and Democrat who have stepped into the void and really taken decisive action.
And that has been really, really great to see.
So I've been thinking a lot about government.
That is fantastic for many reasons.
One is it goes to the stuff that we talked about earlier, which is about social insurance and the ties that bind, right?
Which is ultimately about being in it together.
And that is what a government is supposed to do, is to remind us about how we are in it together and how we need to help the folks who are the least fortunate and the means by which we do that.
You know, philanthropy is great, but at these moments, it's when the government's really kick in.
I think the other interesting thing about what you said is on this leadership piece, which is so critical.
You know, it's like a Petri dish, right?
Which is we're observing Boris Johnson is doing something so different than Angela Merkel is doing, so different than Donald Trump is doing, then so different than Mike Dewine in Ohio is doing.
Everybody's doing things differently and people are almost revealing themselves to be who they are, which I think these moments of crisis.
It's kind of what you said, not just about governments, but about leaders.
You know, when everything's going fine, they should be in a way slipping in the background and letting other people lead.
Right. But in the moment of crisis, they have to step forward.
Absolutely. You know, at every organizational level in our little world, Young Me, you know, we get emails from our dean every day like that updates us about what's going on.
It's been so impressive.
Our own institution has been so impressive.
It's been so great.
Right. And like today's had a little picture of the activity on campus and all the things that are happening in the background to make sure that things work.
But that is a little microcosm of what's being played out everywhere.
The importance of leadership.
I think it's one of the huge lessons here.
Okay. You go. What have you been reflecting on here?
Well, you know, I've I've been reflecting a little bit on obviously, this is a virus that affects us physically, but I've just been reflecting on the mental health angle on this and thinking about the amount of stress and anxiety in people's lives and the toll that that takes, which is part of the consequences
of all this is first, one doesn't know what to do.
Day to day. Second, people who are vulnerable, especially the elderly, are so afraid of what the physical consequences of this are.
If you're immunosuppressed, you're so worried about what is going to happen to you.
These incredible stories, you know, just one story that I heard of a woman in a parking lot who was approached by an elderly couple in a car.
I heard that story.
And the elderly couple didn't want to go into the store and asked this woman to basically buy a bunch of things and gave her a hundred dollar bill.
And they were waiting till they found somebody who they thought they could trust to give the hundred dollar bill to.
It was so poignant.
It was so poignant.
But underneath that all is this huge amount of anxiety.
And then on top of that, the solitude of this exercise compounds a lot of mental health issues.
And we are at the beginning of what may be a long period of that.
And so just trying to think through all the mental health consequences of that and trying to think through who in your life may be vulnerable, not just physically, but, you know, from a mental health perspective.
Because that's the other toll here.
That it's kind of a hidden toll behind everything.
You know, this connects with my next reflection I was going to talk about and maybe we can talk about them together.
Yeah. But my next reflection was going to be that I think we've run the risk of having the concept of social distance become the defining metaphor of our generation if we are not careful.
And I really mean this.
And this term social distance has become something that we are now using in the context of this virus.
Yeah. But it's something that we have actually been practicing and getting better and better at over the years.
That's really interesting.
So we get our food delivered to us instead of congregating in restaurants.
We watch Netflix instead of going to the theater.
We don't know our neighbors anymore.
We avoid eye contact on the street.
We surround ourselves with so much technology and this technology has enabled us to become so comfortable in our atomization, so comfortable in our isolation.
And so I think to your point about mental health and mental wellness, I think it is so important for us now more than ever to make the effort to create social connections, even in the context of having to maintain this kind of physical distance.
So have you seen those images in Italy of people going out on the balcony at the same time and singing together or doing exercise class together?
Yeah. They're just stunning and they're so heartwarming and you just feel the need to connect, right?
People feel the need to connect with each other.
So this last weekend, my extended family and by that, I mean myself and my family and my sisters, their families, their kids were all spread across the country.
And we decided we were going to have brunch together.
And so we did and we planned it and we all sat in front of Zoom.
Yeah. And we all ate and we chatted.
And it was really fantastic.
That is great. And as a result of that, we committed that we were going to do this once a week.
And what's interesting is before this happened, we had never done that.
We could have. It just never occurred to us.
Right. So, you know, I do think it's just so important for us now more than ever to just make an effort to create intimacy despite the necessity of creating physical distance.
Well, the brilliant thing about that to me is your first point, which is this is coming on the top of a long period of social distancing.
You know, that's what technology has been doing for us, right?
And so this is kind of the ultimate leg of it.
You know, one thing I've been trying to do is, you know, phone calls are things that now seem like something from a distant past.
Like when you call somebody up just to talk, right?
Because everyone is like, no, why do that when you can have asynchronous communication with an email, blah, blah, blah.
And I have found that this has just been such a powerful reminder of the power of phone calls to old friends to just chit chat, you know, and something that we don't do in our hurried lives.
But now in this crazy period of reduced activity, I think the phone call is ready for like a huge comeback where you don't rely on asynchronous text and email.
You try to remember the art of conversation.
Well, you know, I did call you earlier today, so.
Oh, my God. You're doing great.
You're doing great.
Okay. Did you have another one?
You know, the last thing I was going to say was, and this relates to some of our market conversations, which is everyone gets hurt by what happens in the stock market.
But it's really important to think through who is going to get hurt.
In particular, if you're a young person and you're like 25 years old and you like just set up your Robinhood account and you're like all bummed out because you lost some money.
You're not the person who we should be thinking about.
You really want to be thinking about the 62, 63 year old who was approaching retirement and they saw their retirement savings go from X to .6 X in matter of four weeks.
And they were planning on retiring and there are going to be a bunch of people who are going to wake up in a couple weeks and they're going to say, I don't know if I can retire anymore.
And, you know, markets are, you know, sometimes we forget that there are people behind all these things, right?
And there are savers and there are people who are relying on the ability to retire.
And so those are the people I really think a lot about.
Yeah. You know, they're kind of like, have been really ramping up their savings.
They are getting ready in the last couple years, they've been contributing more and more and more.
And a whole chunk of it just got wiped out.
And those are the people we should be thinking about emotionally because that is a very hard situation to be in.
This is why we all need to be rooting for a rebound.
And if I can end on a slightly more positive note, if you look at countries like China and Korea, what you see is there is some indication that they've gotten a little bit ahead of this thing.
And so the more aggressively we try to address the situation now, the greater the likelihood that we, too, will be in a position two months, three months from now to begin to bring back some normalcy.
That's what we all need to be rooting for.
Absolutely. Absolutely right.
OK, picks. I'm thinking we should rename our recommendations section during this time period to silver linings.
We should focus on recommendations and picks or anything that's a silver lining.
Are you down for that?
That's a great idea.
OK, so can I start with a silver lining?
Yes, please do. OK, so one of the things that has happened, I mean, you and I were just talking about the importance of maintaining social connection during this time.
Yeah. Is that there are a lot of folks out there that are really being amazing in how they're doing this and a lot of prominent organizations and institutions that are doing this.
And one result of that is that you can now go online and you have access to things you've never had access to before.
So let me give you an example.
New York's metropolitan opera has decided that every day they are going to stream a live performance.
Oh, wow. And in fact, today their Web site crashed because so many people were trying to watch this thing.
Oh, that is so, so cool.
Here's another example.
Folks like Chris Martin from Coldplay, John Legend, Keith Urban, they have been doing little mini concerts on Instagram from their home.
There are these wonderful artists that are doing drawing classes for children.
And they'll say tomorrow, if you want to plop your kid down at 10 a .m.
in front of the screen, I will be doing a drawing class.
So the silver lining in all of this is you have all of these people putting stuff out into the world and performing and sharing little acts of creativity that are so deeply inspiring.
So my recommendation is to check it out and take advantage.
That is a great recommendation and a real silver lining.
And it dovetails with a little bit of my recommendation, which is last week, I was really into this idea of being purposeful and structured about your time.
And, you know, in particular, I think now schools have closed in many parts of the world and children at home is easy to kind of think of as, oh, God, what a tax and like what a what a hassle and what are we going to do?
And I have kind of tried to change my thinking about this and really structure their time and structure our time because, you know, young me in 10 years, if I complain today about the fact that my children are home and I got to think about what to do for them, you know that in 10 years, you're going
to remind me about what a precious time that was.
And we should be super conscious of that.
So I'll give two quick examples that we've done over the weekend, which is, first, the girls came up with this fantastic idea of doing their own escape the room.
So it turns out, yeah, so we're big consumers of escape the room, but it turns out, you know, the barriers to entry are pretty low to this industry, which is three girls can come up with their own escape the room.
And it was spectacular.
Oh, it took me like 20 minutes and they gave me a lot of hints and it took them like an hour to devise.
So we now have, look, we're gonna have movie nights.
We're going to do these like escape the room things, but just cherish the time with these children at home, structure it, try to make it as positive as possible and really think about it as a purposeful time where you can get to know them and spend time with them in a way that you will never possibly
have again. Oh, that's my beautiful recommendation.
So on Twitter the other day, I saw someone tweet out.
I am now in our number two of homeschooling my six year old and I now believe that all teachers should be paid a million dollars a year.
Exactly. Oh my God.
I have bought that because when it's frustrating, it's so bad.
I know. But as someone whose kids are older, I can tell you that I would teach your kids.
I would. That's how much I miss it.
Okay, good. Because then I'm going to book you tomorrow between 10 and 12.
I'll do math, I'll do a little writing, I'll have a little curriculum.
I'll be so excited to do that.
There we go. Okay, that's it for this week.
We will be back next week with Felix because we miss Felix.
We miss Felix so much.
I think we should let him back in.
What do you think? Absolutely.
We should let him back into the podcast.
Absolutely. Most importantly, stay safe.
Keep your social distance, but don't stop connecting with all the people in your life.
That's good advice.
This is After Hours from the HBR Podcast Network.
We'll see you next week.
