Subscribe and Listen on: Apple Podcasts | Spotify | Stitcher | Google Podcasts | YouTube
Transcript
Rob Johnson:
Welcome to Economics & Beyond. I'm Rob Johnson, president of the Institute for New Economic Thinking.
I'm here today with Rana Foroohar from the Financial Times, a good friend of INET, a teacher, an illuminator. She stirs the drink. And today we're here to celebrate Homecoming, the Path to Prosperity in a Post Global World. Not surprisingly, written by Rana Foroohar.
Rana Foroohar:
Thank you for that plug.
Rob Johnson:
I also would say at the outset, I really, really enjoyed watching the first of what would be three films that I saw on YouTube in the last couple of days about the food systems of the world and how, I guess what I would say, just as a prelude. In economics, we act like everything channels through the markets and externalities and public goods are rare exceptions. They might be in chapter 36 of the textbook, but in fact they're pervasive in something like the food system. And we're learning through climate change. But this book is a healthy, constructive, enthusiastic tour through some of the things that matter most in your life. Rana, thanks for joining me.
Rana Foroohar:
Thank you for having me, Rob. It's a pleasure as always to be with you.
Rob Johnson:
So inspiration, you've got a whole lot going on, you and Ed [inaudible 00:01:56], FT, and I see you at all kinds of ... I try to enlist you in all kinds of panels that we do and everything else. In your quiet thinking, et cetera, what was that little inner voice that came to you and said, "You got to write this book,"? Where did this book's inspiration come from?
Rana Foroohar:
Well, what comes to mind is a term that you used once with me felt experience. You said to me once, nothing really resonates in the real world unless it matches people's felt experience at some point. And as I have moved through the world for over three decades reporting in three different continents on economics and business, there have been so many times where the market orthodoxy and what we were being told by policy makers, experts, business people, was not matching my own felt experience. And my felt experience comes from being born and raised in Indiana. I had immigrant parents, but I grew up in farm country in the Rust Belt. My dad ran manufacturing plants. And so I really saw the fallout through the '80s and the '90s of both the Reagan, Thatcher Revolution and the unleashing of sort of animal spirits with capital. But then later, the changes in trade policy, the sort of neoliberal trade policies that were adopted by the Clinton administration and how those affected my community.
And just to stop and say I work for the world's biggest business newspaper. I'm well aware that the last 40 years have seen the creation of more global wealth than ever before. But as we all know too well, there have been huge pockets of inequality that have grown in almost every country, but particularly in developed countries in the industrial base. And so that experience of seeing we're being told one thing, but I'm seeing and feeling another thing on the ground was really an inspiration for this book. I've always had a sense that the global economy had moved a little too far ahead of national politics, and that those two things needed to be remoored just as wealth and place needed to be remoored That wealth was traveling and locating in too few places, geographic and institutional. And that there needed to be a greater dispersion.
Rob Johnson:
I sense there were a number of people who had that felt awakening. I remember Raghuram Rajan writing a book saying, "There's something missing here." And a book that I read right after Donald Trump was elected. I come from Detroit, not too far away from Indiana. And I remember being in Detroit where the enthusiasm that Donald Trump could create. Now obviously the Clintons had been behind NAFTA, welfare reform and criminal justice reform, and various things. In a 73% Black city, you'd understand their unhappiness.
But I watched the Trumpian kind of energy take hold and I watched how, which you might call people thought the system was rigged and it wasn't sustainable. And there's an old Chinese adage, I can't quote it exactly, which is people do not engage in revolution for their own wellbeing. They do it for their children's wellbeing. And when people started feeling in this country that things were happening, they were being justified. I know you're coming up on a very, very interesting seminar series on the neoliberal order in the next week or so, I guess.
This sense that what you might call what's being projected on top of us might satisfy certain elite power centers, but it's not being felt. And I'll tell you, one of your predecessors in journalism was no longer alive. William Greider sensed that when he wrote with David Stockman about what was happening with the Reagan revolution, or when he wrote about the Federal Reserve. And his question was, independent from whom? And I think you're, how I say, won't say you're following their footsteps, but I think you're resonating with very similar concern.
Rana Foroohar:
Well, I appreciate that. I mean, I try to blend real data and analysis and big picture with the felt experience. And I'll just share one of the anecdotes in the book. And I put it up front because I thought it really encapsulated what I was trying to get at was a conversation I had with Richard Trumka, who was the former AFL-CIO-
Rob Johnson:
I was on the board of EPI, he was the chair of. Yeah, I knew Rich for many years.
Rana Foroohar:
Lovely, lovely man. Really a lion of the American labor movement. He's passed now. But I had a conversation with him a few years back because I was trying to understand what was the conversation being had between labor and policy makers at the time of NAFTA at the time of the movement of China into the WTO, which eventually happened in 2001. And I said, "What did folks tell you?"
And he said he remembered a policymaker from the Clinton administration coming to him and saying, "Look, we know this is going to kill you guys, but it's going to get better after time. The wages are going to level out," leveling up, the whole notion of equalization of wages over time globally. And he said to the policy maker, "Well, okay, but how long's that going to take?" And the policymaker said, "Three to five generations." That's the kind of thing that really, it's hard for people to not think, "Wow, I'm not a human being to you. I'm part of an algorithm that you're running." And we haven't had a national conversation about how this is going to go.
Rob Johnson:
And well, there's an old adage that free trade was good because you could make everybody better off and nobody worse off. But the asterisk, which Chinese leaders often shared with me is, you've got to do transformational assistance for that to be true. And Donald Trump has got everybody mad at China right now as though we did it. But what was missing was the transformational assistance, particularly in the Rust Belt in the United States. And so it doesn't require three generations. It's three generations, if you don't do transformational assistance. It can be not at all ... it's a displacement, but with assistance in moving schools, reorienting businesses. There were a lot of movie theaters and restaurants in Detroit that shut down. If they'd been assisted in moving to other places, their vitality would've been maintained.
Rana Foroohar:
We all know this. And I would add that there was something else that was left out of the equation. I grew up on factory floors, as I said, my dad ran businesses all over the Midwest and I had another felt experience which was shared by interestingly, a lot of people in engineering, a lot of people that, real business practitioners that ... put aside ricardian economics, maybe it's okay for Portugal to make wine and Britain to make cloth, but I don't think Ricardo thought about the entire industrial supply chain of whole industries being outsourced.
And what that would mean not only for a community, but for competitiveness and innovation. Because some, particularly at I would argue the period we're moving into right now where the innovations of the consumer internet are beginning to come into the business space, which is going to be profound. The internet of things, the industrial internet, I see that and we can go into it, just some of the incredible innovations that are coming, it's mind blowing.
In order to really reap the rewards of those things, you do need to have a certain level of hubbing, I believe, of production and consumption, iteration between scientists, researchers, machinists, manufacturers. And this goes to something else which countries like Germany and Japan never really forgot, which is the respect and the knowledge of labor and how you bring labor and management and business together to everyone's benefit. That's kind of a micro part of this, but it's a very important part of it. China never forgot that. I think that's what dual circulation is actually partially about.
Rob Johnson:
I remember the old book, Detroit, I Do Mind Dying and it's about [inaudible 00:11:27] even within the UAW. One of the things I want add just to this dimension is a lot of people are very concerned now about racial polarity. So one side's talking about wokeness, others are saying, "Well, you guys abused us for 400 years," and they're right. But one of the things that's not being said frequently though, the scholar Peter Timon in his book on the declining middle class that he did, he emphasized that when in regions the economy turns down, people become afraid.
And in the survey data, their fears about their future go up. Those fears are in lockstep correlated with rises in racial animosity. And other people like Shannon [inaudible 00:12:22], who is a fabulous, what I'll call social scientist related to health, we talk about Angus Deaton and case diseases of despair. She did a study for INET on the geography of where austere local budgets, machine learning and automation or globalization or financial crisis impinged and created fear. That's where the diseases of despair are located. And you can locate the diseases of despair with-
Rana Foroohar:
100%.
Rob Johnson:
Where Donald Trump outperformed his Republican predecessors against Hillary Clinton. And then you take it internationally. The AFD in Germany, the Brexit vote, Marie Le Pen, all of these things correlate with the diseases of despair and the economic, what you might call shocks or disturbances. And so our social cohesion, in this case I'm talking about Black and white or white and Asian, is in the balance. It is-
Rana Foroohar:
Oh, 100%.
Rob Johnson:
Endogenously provoked by the fear that's engendered by the economy.
Rana Foroohar:
Yeah, there's something else that's interesting in that too. For starters, you're absolutely right. Any place where there was prosperity, Biden either took that area or did better any place there wasn't, Trump took it. My county that I grew up in went 76% Trump. I actually remember, it's funny, just as a side note, when the Republican primaries were happening in 2016, I was at our mutual friend Gillian Tett's house and there was a group of big Republican donors. Paul Singer was there amongst other people. And the Indiana primary was going on the back, on the TV in back.
At that point, nobody thought Trump was going to win. No conservative thought Trump was going to win. They were all sort of figuring out what's the strategy. And I kind of piped up and said, "I think he's going to take Indiana." And everybody was like, "No, no, no."
And I said, "What do you all have to offer these people? What is your message? What is your message?" You don't have ... trickle down? But the problem of course, as you and I know, was that the left had not connected yet the issues of race and class in a way that they needed to. And they had not redeemed themselves, I would say, amongst some of the working population as I believe they are now doing. And I would look at people, even someone like a Ro Khanna who's speaking up and saying, "We can't have a diverse democracy unless we get the economy right." I mean, that connection of class issues and race issues I think are very important to getting back onto the right track.
Rob Johnson:
Yeah, I think you're right. It's very, very haunting in the sense that these distributional issues and tensions have arisen. The polarity has arisen, which makes politics of consensus harder to achieve. At the same time, all these daunting challenges, like the pandemic and climate change have descended upon us. And I don't know if there's a higher spirit or not, but if there is, they're really raising stakes by bringing these things to the table all at the same time.
Rana Foroohar:
I mean they're raising the stakes, but they're also in a way providing the solution. I mean, one of the things I talk about in the book, I quote Bill Janeway, who's an INET, another friend of INET.
Rob Johnson:
Co-founder and board member.
Rana Foroohar:
Yeah, co-founder and board member. And he has the wonderful theory he's iterated about productive bubbles. In fact, I think I saw him first at an INET conference with you years and years ago talking about his book. And I remember my mind was kind of blown at that point. But his take, which as I've done more research I totally agree with, is that the times that you get shared, sustainable, productive growth across all levels of society are when there is a big transformative technology that can be underwritten by the public sector, put some floor under it and then it's privatized and people are brought along.
This happened with railroads, it happened with the internet. It is so clearly clean tech today. And we have the pieces in place to get this right. I'll give you an example from the book that I think connects a lot of the dots that we've been talking about here. In addition to looking at agriculture, I looked at the textile supply chain quite closely and I picked textiles because of all the industries in the US that were hollowed out when China joined the WTO, textiles and furniture were the top two for obvious reasons, low margin industries, they went abroad right away.
But I wanted to see, okay, what was left and what could we learn from that? So what was left of this textile supply chain in the Carolinas is almost like a Darwinian case study of how you want to run a good business. And interestingly, they tend to be mid-sized, family-owned, private. They're not having to deal with the pressure from the street. They are investing and really investing for the future because these are 4, 5, 6 generation family businesses and they're very rooted in the community and in almost Stuttgartian kind of way, the head of the business knows that if he doesn't treat somebody right, he's going to go down the street and get called on it.
Rob Johnson:
My grandmother is smiling at you right now because my descendants on my mother's side are from Stuttgart.
Rana Foroohar:
Very good, very good. So these folks know how to work together as competitor collaborators. And during COVID, it was interesting, they came together at t-shirt sales and cheap underwear sales fall off a cliff. So they think, "Well, we got some people to keep on the payroll, what can we do? Let's try and make some masks." Well it was interesting because they called up, for all Peter Navarro's bluster, they call up the Trump White House and he has no plan, he had no idea, no coordination, no understanding of what these people could do for them.
So they kind of got together and they did it themselves and they made a plan and they made a bunch of masks and some of them trucked them up to the north themselves. And there is an example right there. Okay, how about since these folks have learned how in this 16 month period how to take the price of an American made mask from 30 cents to 10 cents and a Chinese mask is 3 cents.
So when you factor in labor and environmental, there's not too much air in between those. Let's have the federal government or the state government set a floor under that. Let's give them that market and help them to continue to move into other product areas like perhaps connecting with EV manufacturers in South Carolina that are getting federal subsidies because that's a more strategic industry.
These are just basic bits of dot connection. But we have had such a mindset, I mean it's such low hanging fruit. I feel like you and I could go down there in a truck and get this done in a week. But we have had such a mindset about, oh you can't touch anything, you can't nudge anything. Public policy has no role in business. It's just so atypical. The rest of the world just doesn't think that way. But I think things are changing now.And I think what we've seen with semiconductors, for example, which I also talk about in the book, this is not about China. I mean even from China's perspective, I think the idea that we had a neoliberal system where it was all about driving down prices and efficiency to the extent that 92% of high end semiconductor chips end up being made on one very contentious island. That's not good for anybody. That's just kind of basic. We need a little more resiliency in the system here. And so I feel like in some ways, and also the war in Ukraine, which kind of awakened us to the idea that maybe getting your energy supply from an autocrat is not such a good idea. It's been a bit like a scrim that's been pulled back on some of these fragilities in the system that we're beginning to see now.
Rob Johnson:
Yeah, it's interesting when you talk about that, which you might call hiding in plain sight or all these collaborative weaves that could be done. I'm reminded in 2017 the writer Peter Goodman, who I know you know-
Rana Foroohar:
Yes.
Rob Johnson:
We used to sit together at Davos and talk in the cafeteria area and-
Rana Foroohar:
None of us will be invited back.
Rob Johnson:
He has obviously gone on and written a book about his experience. But I remember him coming to see [inaudible 00:21:52] who was the Swedish attache in New York and he had an article about the robots are coming and Sweden is fine. And I reason I underscore this today is that I think you're traveling in a terrain now that's very important. The terrain is in America, we were viewed as having the flexible supply side and so you could reallocate things efficiently and transform the economy. And Europe was sclerotic and stagnant.
And what Peter was alleging in this article was, and this is December of 2017, was his article. I talked to him in the first quarter 2018. But what he was saying was, with Donald Trump having fomented the legitimacy of all this despair, the system is rigged and what have you, we're now at a place in America where the resistance to technological transformation is going to grow out of suspicion that we'll lose. Like West Virginia's losing on climate change because nobody takes care of them, like they didn't take care of Cleveland or Detroit.
So then you're in a place where in Sweden they say the possibility frontier of incorporating robots is great. We'll all keep our healthcare, our pension, our children stay in school and we'll get some transformational training. Let's do it. Because they still feel like they're part of the society. In the United States that dynamism was part of what we advertise, but there's now what I might call a cloud over it that may be resistant to the progress that we could make. And some of that may be that you might call a little bit of what you're experiencing. People aren't reaching out to each other to the extent that they could.
Rana Foroohar:
Oh well I think that there is something to that. And one of the things I'm very curious about, I touched on it a little bit in the book, but I'm watching it play out in real time is some of the technological displacement of workers that's happened in the blue collar space. In part because in this country we have not trained them as well as say Germans have or Japanese have. Is that going to come to the white collar space now?
And I had a very interesting conversation actually in Davos this past year where there was a round table of CEOs and we were talking about work from home and it was really interesting who was into it and loved it and who didn't want any part of it. And it kind of spoke to different corporate cultures. A lot of women were thought this was the greatest thing ever and they were so happy and this was a way to keep talent and awesome.
A lot of the Silicon Valley bros were just like, "No, you can't run a business like this. You've got to go back." But some of the larger tech companies like Google, et cetera, Facebook were saying, "Okay, you can work anywhere." Well one of the CEOs turned to me and said, "I actually think it's kind of diabolical the tech folks what they're doing, letting people work everywhere because they've figured out if you can do it in Tahoe, you can do it in Bangalore and they're going to just send everything away." And that's interesting to me, and this is very much a live conversation right now in trade policy circles and labor circles as you know, as we start to think about what is America's trade path in Asia going to be the IPATH stuff, are we going to see a race to the bottom with data and with digital services and with privacy that we saw in a manufacturing sphere in an earlier generation? We cannot get this wrong.
Rob, I'm thinking about something else you shared with me a couple years ago. We were talking about the talent war, competitiveness war, different economic models, China V US, and you said, which I have come to totally agree with, that the country that wins is going to be the country that curbs the elites best. And that's true because if you feel that the system is rigged ... and it is rigged in certain ways, let's face it. I mean I see that every day around me. I get to play in both sandboxes and we've got to fix that or otherwise, yeah, we're going to have a major social catastrophe on our hands, I think.
Rob Johnson:
Yeah, Evan Osnos, who writes for the New Yorker, and I once had a conversation about the haunting feeling that with the system rigged, we can't un-rig it. And the evidence that he cited was the number of billionaires that are building getaway, whether in Pacific Islands or New Zealand or what have you. And you're saying instead of feeling powerful and then working for the public good to transform things, they are so frustrated about systemic dysfunction even though they have billions of dollars in their pockets. That's a daunting, how would I say, smoke signal about the kind of systemic reform that we need and we can't do.
Rana Foroohar:
Well it's also, it's so panglossian because I mean who's going to smelt their steel eventually and who's going to fix their utility grids in New Zealand? But you're putting me in mind of a conversation that I had recently with a labor advocate and a friend of mine that is a little tangential to this. So I had done a column, I spent a little time in the Hamptons this summer, a couple weeks with my family on vacation, and I do not own property there, but I can afford to go and spend two weeks there. And I wrote a column about how there was this hyper spot inflation there that I had noticed in other very wealthy places like Jackson Hole or certain parts of the West where what was already happening in the inflation environment was just on steroids.
So I had an anecdote about walking into the IGA to do my shopping and filling up a cart and having it cost $800, at the IGA, not at the fancy boutique. Well I wrote that because to me that was, I was thinking about it in just a very data oriented way. I thought it said something interesting about monetary policy, about how the wealthy we're spending, about how long it might take for the Fed to get ahead of inflation if there had been enough asset creation that people could just keep spending like that indefinitely.
But my friend called me and said, "You have to stop writing about buying $800 carts of groceries." And I was like, "Oh, okay. Why?" "Well if you ever want to be a progressive politician or if you ever want to be confirmed, people don't want to hear that." And I thought, "Well golly, that's interesting because is it my job now to pretend to be someone I'm not in order to be accepted amongst my tribe?"
Rob Johnson:
Yes. And that pressure with the concentration of wealth and power vis-a-vis universities, expertise like we talked about earlier, the commercial media among politicians, if you want appointments, consulting contracts, all those kind of things, maybe it's not even conscious, but there's this little echo. Like, are you becoming self destructive if you are illuminating what's hiding in plain sight?
Rana Foroohar:
Right? And I thought, "Gosh, I don't actually want to be the kind of person that pulls a punch because I'm worried about getting appointed to something. So I think that's the path that you go down and your journalism just starts to fall apart. But it was interesting, I mean I think it spoke to the polarization that you're talking about.
Rob Johnson:
But it is an interesting thing. I experienced this in the economics profession. There is, according to my Young Scholars Initiative, which has studied this among graduate students and assistant professors there are increasing mental health issues. Because what I would say, maybe not entirely consciously strategy like you and I are talking about, but the awareness if you will, that Rome is burning and we're just fiddling is very, very intense. It's how would I say? I've had beautiful seminars with Nobel laureates who are instructing the young scholars on how to maintain your integrity and keep going forward towards a successful career. And it's not a simple pathway. These people are not wearing rose colored glasses.
Rana Foroohar:
Well, I'm curious, just on the economics profession for a minute, I'd be curious what you would say to this because your business for the last decade plus has been to try and change the economics profession both at the level of academia but also within the media. And I've watched you and you've made some important changes. I feel like we are at a bit of a tipping point finally, because you're hearing words like neoliberal in the mainstream media. You're starting to see all kinds of organizations jump into this conversation from big universities, the Hewlett Foundation's funding a bunch of stuff. You've got open-minded economists saying, "Hey, we need help here. We need inductive thinking. We need other practitioners coming in." So are we at a change point and what will it look like on the other side to you?
Rob Johnson:
I can't give you a definitive answer, but I'll paint a picture of the scenario that I perceive. When we started INET, the vision was the financial sector had engaged in extreme, excess financial theory with its pretend knowledge of the future. We were just doing what they call backward induction from the mathematics of a known future was a false consciousness. And we thought to restore expertise's credibility and confidence in governance we'd go to work. People like George Soros, and to a great degree myself being involved in both senate, banking, governance, that we would address this challenge.
Andy [inaudible 00:33:28], all kinds of people from all over the world came in and helped us address the queen's question. But what's happened subsequently, and some people would say the bailouts where they, as Joe Stiglitz said, "They paid the polluters," created a disintegration in faith in governance and a disintegration in faith in expertise. And so the early INET was involved in ... if we do some things with Harvard, Princeton, Yale, Cambridge, Stanford, Oxford, whatever, and those guys realize we're not hostile toward them, but we want to evolve things that could work. What's happened now is whether it's INET or whether it's the elite universities, expertise has been kind of thrown in the garbage can. And so we're in a place now where the situation is wide open because nobody's deferential to the profession. But in a tumult, and this is why I don't have a clear answer for you, in a tumultuous emotional climate all kinds of different unconscious cautions raise their head. And trying to maintain, as I said about you in the opening of this conversation, a constructive agenda or a pathway forward is a necessary condition to healing rather than deepening the void that we're all experiencing. So it is an opportunity, but it's a dangerous time at the same time. And we really have to fill that void, not deepen it.
Rana Foroohar:
Well, I'm always struck when we talk about these things, and I love this about talking to you, that you use very psychological terms and it is a very psychological moment. I mean what we need is empathy, real empathy, real listening. I'm thinking about another anecdote I had in reporting my book. I was walking down the street just the other day, in fact in my extremely progressive blue neighborhood of Park Slope, Brooklyn. And I heard a little girl ask her mother, "Are there still really racists in the world?" And the mother said, which was kind of a amazing, I thought that was profound because she was thinking about it really in a kind of deep way you could see from her voice. And the mother said, "Yes, in the South."
And I thought, "Oh boy, we're in Park Slope, Brooklyn here." And that put me in mind of a reporting anecdote when I was down in the Carolinas doing this work on textiles and manufacturing, I visited a ginning facility. There was a older working class white woman who was of managing the facility and on her team were four Latino men and they were working with their hands side by side all day long.
And I watched them to, at the end of the day, in loud noisy conditions to produce a block of ginned cotton that she then took and they carried together onto a little scale and weighed. And she then used a handheld calculator to calculate the value of it. It's like $458. And I had watched them do that over the course of two hours. And I thought, "Wow, this is something that people don't understand that are writing about these places." A, that people don't want to be told how they behave. They have a felt experience of their own working in this diverse community that they want to be able to articulate in their own way and not be labeled in a certain way.
And it's funny, she even reminded me so much of some of the women I grew up with, the guy who was running this, it's the textile company who was taking me around, comes up to her and says, "Oh, I want to get you and your whole team some hoodies, I'll send them up over for free." And she sort of nods and I turned at her and I caught her eye and she sort of smiled at me and she goes, "He knows I'm not going to do that. I'm not going to take that." And I thought, so this quiet pride that was just very present and that people, I think I find it a great privilege to experience that in my reporting. And I think that people who are making policy would do very well to spend more time in places like this.
Rob Johnson:
Yeah, there's a wonderful scholar who's looked at both history and contemporary racial animosity. He's at Stanford University, I believe. He's Gavin Wright, spelled with a W, W-R-I-G-H-T, and he has contributed to some INET conferences and work. And I would encourage our listeners as well as you too ... I'll send you the links.
Rana Foroohar:
Love to see it-
Rob Johnson:
Some of his work. But he's very much understood all kinds of the different cross currents. Another person who I greatly admire and I'm glad to say is on the INET board, is John Paul at Berkeley University who runs something called the Othering & Belonging Institute, who's really gotten into what you might call a foreshadowing of the kind of social design that we need for the common good with race, gender and other dimensions of polarity.
Rana Foroohar:
I'm hopeful, just to add one hopeful note too. I know we're almost out of time, but I'm hopeful that the shift that we're going to see demographically and structurally towards the care economy is going to be an opportunity to bridge some of these gaps because we're talking about to David Goodheart, right? Head, heart, hands. It's about bringing it all together and the care economy, which is going to be very local, how there's an opportunity to really elevate and enrich those jobs and to bring along women, to bring along people of color, to connect services and manufacturing. I mean, you could imagine, if I wanted to be really optimistic, which I'm feeling like right now, you could imagine a real win-win, not just economically, but in terms of our culture there.
Rob Johnson:
A cultural economic example that would be, how do they say exportable to other dimensions and sectors. But I am also concerned because the scale that I observe of lobbying both at the state and local level and the federal level related to pharmaceuticals, related to nursing homes versus in-home care and all kinds of dimensions is very, very daunting. And all you have to do is look at the OECD data where America is spending nearly double what the OECD average is per capita on healthcare. Not double in dollars or euros, but double per capita, twice as much per person. And we rank 38th in the world, which is way below-
Rana Foroohar:
It's stunning-
Rob Johnson:
All kinds of the OECD countries, not to mention Costa Rica and some of the others. And so I think we have, because of the baby boom generation aging out, the scale of retirees to workforce is going to create some dilemmas that are enormous. What I mean by this is, yes, there's more retirees relative to your tax base. Secondly, they're getting half the quality at twice the price right now. So the fiscal burdens or the neglect are big.
But the other thing is most people care about their parents. And so the idea that, oh my God, I got to raise my kids, but I got to take care of them because the system's not working right. And it is a dangerous catalyst to further despondency about the health the republic. So I see the yin and yang, I see the positive of a proper care economy. It would be surprisingly wonderful. It is within the vision of the possible, but it's a very dangerous environment in the trajectory we've been on in recent years.
Rana Foroohar:
Well, it is true. And one of the things I've been saying that's worried me a lot in the papers recently is that private equity is getting into care businesses. They're buying up nursing homes, hospices. I mean, can you imagine what private equity is going to do to get money out of a hospice? They're going to fire the people who have years or decades of experience working with families, grieving families, and they're going to get in people who were basically going to do your laundry and help you with that. And that's it.
And it's happening in industry too. I mean, this is another thing, just to go back to kind of US competitiveness and regionalization and supply chains. Midsize manufacturing firms in the US are kind of a hidden gem. They've stayed under the radar and not been subject to the pressures of Wall Street and they're now in private equity target range, basically. They're going to be acquired, and it could be that there'll be some good examples of scale, but I'm worried that we're going to just see that splicing and dicing and stripping down that we saw through the '80s and '90s.
Rob Johnson:
I'll tell you just a simple anecdote in honor of my father who was a physician and a jazz pianist. When my mother passed away, he had Alzheimer's disease and it reached a point where in-home care could not work because he needed three shifts of people to be with him over the course of a day. So we moved to a nursing home and he was still reasonably lucid. And every night he used to play the piano for 75 to 90 minutes for everyone.
And at one point he called me and he said, "I see in this nursing home that a lot of people are treated very rudely, but I give the staff a 90 minute break every night and they treat me very well. But as I deteriorate mentally I will lose the ability to play the piano, and I want you to promise you'll move me out here once I stop being able to be their pianist." I just thought that was a haunting thing. I eventually did move him out. It was a Detroit nursing home and I moved him out to Oregon where my sisters and brothers-in-law, some of his grandchildren were based.
But that sensitivity to the environment and his sensitivity from his medical awareness really, really stung me. Any rate, I think there was a lot in the balance right now. It makes the work that you're doing and the courage that you manifest very important. I always am inspired is I listen to people, and there was a song that came to my mind that [inaudible 00:45:37]-
Rana Foroohar:
Always, I love it. You and your songs.
Rob Johnson:
There's an artist named Todd Rundgren, and he had a famous song, It was a little more in the romantic flavor than what I'm referring to here. But when I read your book, I heard this song a few times and I heard it today and it's called, I Saw the Light. The lyrics start, "It was late last night. I was feeling something wasn't right. There was not another soul in sight, only you. So we walked along, though I knew there was something wrong and a feeling hit me, oh so strong. And then you gazed up at me and the answer was plain to see, because I saw the light in your eyes."
I think you are illuminating many things, and from the platform that you've created in Newsweek, Time Magazine and now the FT, the films you're making and so forth. I think dissemination with courage is just as important as insight and you embody both of them. So thank you for your work.
Rana Foroohar:
Rob, I can't tell you how much that means to me. You have been a huge inspiration and support to me always. And you are a humble giant in a world where there's not too many of those. So I appreciate your time. I'm so glad to be here with your listeners and onward, we're going to do good things.
Rob Johnson:
Well, we'll do a couple more episodes. You got two more movies coming out, I understand-
Rana Foroohar:
Yeah, absolutely.
Rob Johnson:
There's more to cover in this book, but I believe the book comes out on the 18th of October. So you can preorder it right now. And once again, it's called Homecoming, the Path to Prosperity in a Post Global World. And Rana, you ... how would I say? You inspire me and if you say I've helped you along, I made a pretty good bet, didn't I?
Rana Foroohar:
All right. I owe you a drink and another podcast. I'll see you soon. Okay, bye.
Rob Johnson:
Very good, thanks. Bye-bye.
Rana Foroohar:
Bye.
Rob Johnson:
And check out more from the Institute for New Economic thinking at INETeconomics.org.