John Cochrane, the Hoover Institution’s Rose-Marie and Jack Anderson Senior Fellow and the author of The Fiscal Theory of Price Level (2023), discusses misconceptions around how the Federal Reserve goes about its business; why economic policy factors into the great-power competition with China; his fascination with Calvin Coolidge; plus why (in John’s opinion) Portuguese Water Dogs are the kings of all canines.
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>> Milton Friedman (00:00):
Because Germany was then occupied by the Americans,
the British, and the French, they wereable to enforce price control much more
effectively than a domesticgovernment could have enforced it.
And they had price control,widespread price control.
As a result you didn't have inflation,you just simply had money not being used,
you had barter.
>> Speaker 1 (00:21):
Exactly.
>> Milton Friedman (00:22):
And it's funny, they used cigarettes as money,
they used liquor as money, cognac.
I've always said it's the mostliquid money you ever had.
>> Speaker 1 (00:37):
[LAUGH].
[MUSIC]
>> Bill Whalen (00:40):
Hi, I'm Bill Whalen,
I'm a distinguished policy fellowhere at the Hoover Institution.
I'd like to welcome you back toGoodFellows, a Hoover institution
broadcast examining social, economic,political, and geopolitical concerns.
Now, you may have noticed this is a littlebit of an introduction because this is
a very different GoodFellows.
Rather than our usualtroika of senior fellows,
we have just one good fellow on today.
And the honor goes to myfriend John Cochrane.
(01:02):
John isthe Hoover Institution's Rose-Marie and
Jack Anderson senior fellow.
He's an economist specializing infinancial economics and macroeconomics.
He's also the author of the GrumpyEconomist blog, which provides news,
views and commentary from a humorousfree market point of view.
But wait, there's more,
John Cochrane is the author ofthe Fiscal Theory of Price Level,
a comprehensive account of how governmentdeficits and debt drive inflation.
(01:23):
John, deserve an award for good timing.
Indeed, the same year the Fiscal Theoryof Price Level came out,
John was honored with somethingfar better than a pat on the back.
In 2023,he was awarded the Bradley Prize for
his work in making sense of economics andhis writing and his analysis.
John, great to have you on the show.
And after four years of having a contendwith Neil Ferguson and H.R McMaster,
the stage is yours, my friend.
>> John Cochrane (01:43):
It's great to be here and I can get a word at edgewise, [LAUGH].
>> Bill Whalen (01:47):
Edgewise, John.
Back in the day of the Beatles, GeorgeHarrison was known as the silent Beatle
because he wasn't as forthcoming withthe media as Harrison and as McCartney and
Lennon.
I wouldn't call you the silent GoodBellowbecause you always get a word edgewise.
I would have, before the showcalled you the healthy good fellow.
Because why?
You adhere to a very healthy lifestyle.
(02:07):
You eat right, you exercise.
I don't think you smoke,I don't think you drink.
I don't know if you swear, well,maybe you swear a little bit.
Anyway, you're the healthyGoodFellow until today.
John, tell us what currently ails you.
>> John Cochrane (02:19):
I will.
>> Bill Whalen (02:20):
Because of the voice.
>> John Cochrane (02:21):
Finally, after four years, I did get COVID my first time.
I think I'm the last personin the country, second last.
Beth still hasn't gotten it,which we're working [LAUGH] on yet, but
it's only turned into a little cold now.
So I'm in my basement,quarantined for a little bit, but
feeling fine, and this will be over soon.
>> Bill Whalen (02:41):
What do you find different about having COVID in 2024,
John versus your having seen other peopleexperience it four years ago when we began
GoodFellas?
Is it just more run of a mill?
I have COVID, I have a cold,
don't panic or you find differentmentality now surrounding it?
>> John Cochrane (02:55):
Well, yeah, what I read is consistent with what I'm having.
It's just a little chest cold, in fact,
I would not have identified this as COVIDexcept that Beth had about 100 tests
sitting around the house that need toget used, [LAUGH], so we took one.
And the social part of it ispeople aren't treating it,
(03:16):
they're just treating it like a cold.
All my friends say, yeah, I had itfive times, it'll go away in a week.
[LAUGH] It's hard to believe we shutthe country down over this, but of course,
it is a much milder diseasenow than it used to be.
>> Bill Whalen (03:28):
I like the deeper voice, I think you might have a future on,
like late night FM radio ordoing voiceovers.
>> John Cochrane (03:33):
Yeah, that would be great, [LAUGH].
>> Bill Whalen (03:38):
Let's talk a bit about how John Cochrane came to be John Cochrane.
And something that's always kind ofpiqued my curiosity, John puzzled me,
is your academic art.
You went to MIT undergrad andyou majored in physics.
I was fully expecting economics,but no, you're a physics major and
then somehow you make your way to Berkeleyto get advanced degrees in Economics.
Can you explain a bit about that march?
(03:59):
Because is it normal for
economists like yourself to havevery different degrees like Physics?
Or am I wrong here to the two dovetail?
>> John Cochrane (04:06):
No, it's quite common, actually.
Economics is full of fallen physicists,it turns out that economics
uses the tools of about sophomorephysics to describe social problems.
And that's what made it attractive to me.
I've always changed what I did,actually, on a fairly regular basis.
I went to college thinking I'd be anaerodynamical engineer, turned to Physics,
(04:30):
which I absolutely loved, for four years.
Recognized that there wasn't gonnabe many jobs in physics for me.
I wasn't smart enough to be a theorist,and I'm a terrible lab manager.
And I loved Economics,
[LAUGH] I took economics at MIT as myhumanities distribution requirement.
[LAUGH] I thought that would abuse you,
the two courses I tookwere very interesting.
(04:52):
And so I just on a long after senior year,
I called up the places thatactually I wrote letters.
We used to do that back then, wroteletters to the places that had let me
into graduate school and physics, andsaid, how about I change my major?
I did this in August, and most ofthem said, apply like everyone else,
but Berkeley and Chicago let me in.
(05:13):
And then I knew it snowed in Chicago anddidn't snow in Berkeley, so off I went.
And I say, I mention this in part becauseit's the sort of thing it's much harder to
do in our much more credentialist age, getinto graduate school like that on a lark.
I was just a physicist from MIT, twoclasses in economics, pretty good grades.
They let me in, and the rest was history.
(05:34):
But it's just the right move for me,the physics training was spectacular.
On economics isn't about math,and math's not that hard.
It's about seeing a situation,creating a simple model of that situation.
And that's what physics teachesyou to do really well and
economics is a place that sort oflike physics in the early 1800s.
(05:57):
You didn't need a big lab andan army of research assistants.
You just need some time andsome simple modeling skills, and
you could think about reallyimportant problems that way.
So it was a natural move.
>> Bill Whalen (06:10):
But you do end up at the University of Chicago eventually, and
you end up studying finance.
Why finance, John?
>> John Cochrane (06:17):
[LAUGH] Yeah, boy, there's a long story there.
I did do Berkeley in Chicago,starting at Berkeley and
then going to Chicago turnedout to be very formative.
I mean,who knows what would happen otherwise, but
I certainly would not be who I am today.
Berkeley gave me a grounding in generalequilibrium theory, which is wonderful.
(06:41):
They tried to make a Keynesian out of me,which failed.
But it did convince me that monetarism,which reigned true in Chicago,
had some holes in it.
And so I went to Chicago as Iwas doing sort of time series,
econometric statistics stuff.
But I was able to tell a good story andgot the job there, which is, of course,
(07:01):
a dream job for
a young assistant professor tobe at the University of Chicago.
I've always done very simple things.
My forte is not doing really,really complicated fancy models,
but thinking deeply, I hope,about things in very simple terms.
(07:21):
And finance in the late 1980s wasreally exploding with the new but
very simple tools of time series,econometrics,
dynamic general equilibrium theory.
And so it was a natural place to go.
I fell in with Lars Hansen andEugene Fama,
who were great heroes of mine andslightly senior colleagues, but
(07:44):
treated me as a friend andjust became very interested.
Part of it was, of course, my wife tookthe finance classes at Booth, and so
we started talking about it.
So worked on the problem setsa little bit together and that,
[LAUGH] going in finance as well.
And it's a place wherea couple simple principles,
price is present value of dividends.
(08:05):
There's only about three things I'veever learned in life, and prices,
present value, dividends is one of them.
But then taking that andmaking it useful and
figuring out how it applies to the world,that's what I do.
Take something really simple like that.
But then, we got a puzzle,it looks like a bubble, how do you squash,
how do you make that work?
And that's what I'm doing withfiscal theory at the price level.
>> Bill Whalen (08:25):
Right, you mentioned Eugene Fama was a Nobel laureate and
the father of modern empirical finance.
Who was Eugene,the farmer of John Cochrane?
>> John Cochrane (08:32):
[LAUGH] Well, he's, yes, incidentally, my father in law,
I did move to Chicago andmarry the boss's daughter, [LAUGH].
Traditional path in life, and we did.
>> Bill Whalen (08:44):
Was that simple,
the love of your life was inthe room next door waiting for you?
>> John Cochrane (08:48):
Well, actually, I met her first,
I met Beth the night I came back toChicago, and it was love at first sight.
And only then did I realizethat she was his daughter.
[LAUGH] But we worked all that out, andGene and I became great colleagues during
the morning, windsurfing buddies inthe afternoon, and family in the evening.
(09:10):
And that was a wonderful, wonderful time.
>> Bill Whalen (09:13):
We're gonna pick up with you and
Beth a little later in the podcast, John,because I've got an issue with your
Portuguese water dog,which we'll get to a little later.
But let's turn to policy, John andI wanna talk about the Federal Reserve.
We've been talking about the Fed offline,and
you suggested there's something ofa disconnect with the Federal Reserve in
terms of what people actually knowthat it does, can you explain that?
>> John Cochrane (09:32):
Well, boy,
now you want me to condense like 30years of thinking about monetary policy.
[LAUGH]>> Bill Whalen: 30 seconds or less.
[LAUGH] This is something I've been writing about lately,
my latest article,
which I think is fantastic expectations,neutrality of interest rates, and
nobody else is paying any attention to,[LAUGH] so I'll start advertising it.
(09:54):
There is an interestingdisconnect that in the Fed and
in the public policy commentary,
there's a sort of a doctrineabout how the Fed works.
The Fed raises interest rates thatsoftens demand in the economy,
and then that softens the economy andsomehow that lowers inflation.
And we just say this, a fascinatingfact is that there is no halfway
(10:19):
respectable economic model in the last30 years that works that way.
And that hasn't stopped academics,our journals are full of fancy,
very complicated modelsof monetary policy.
But none of them actually workthe way people say they work.
And similarly, the empirical evidence,
(10:41):
when you look at it carefully forthis supposed fact, is extremely weak.
So here we are, it's kind of funny,there's this presumption of
huge technocratic competence, and the Fedand the ECB and all the central banks spin
the transmission mechanism of monetarypolicy, which we're carefully monitoring.
But there's a very deep,nobody knows how it works.
(11:03):
Now, maybe the doctrine and the wisdomof the ages is right, [LAUGH] and
the theory just hasn't caught up.
Maybe the theory is right and it worksa whole lot differently than we think.
I suspect the Fed is in fact much lesspowerful than everybody thinks it is,
in part because fiscal theory,the price level,
I think fiscal policy underlyingis a very important thing.
(11:24):
But it's a very striking fact,
this is what I know from40 years of academic study.
I don't know how the world works, butI know all the theories in detail.
I've read the equations andI've read the words,
which often don't have anythingto do with the equations.
And I can tell you what's not in them.
And what's not in them isa technical backing for
(11:46):
the stories that are commonly told.
I think that's a fascinating thing, and
that's what makes monetarypolicy interesting.
Anyone young listening?
Hey, it's not something that's all wellworked out, and it's just time to add
more twiddles and complicationsthis with the basic questions.
Does raising interestrates lower inflation?
(12:07):
When and how?
That basic question isacademically unanswered.
And that leaves to what extent isthe doctrine that pervades policy circles?
Does that not hold or not hold anymore?
>> Bill Whalen (12:21):
So what is your takeaway, John, from how the Fed handled inflation?
It seems we went through chapters,one chapter of denial,
chapter of grudging acceptance, and nowcurrent handling, how do you process this?
>> John Cochrane (12:32):
[LAUGH] That's interesting.
So obviously, why did we get inflation?
To me it's absolutely clear the governmentbasically printed up $5 trillion of cash
and handed it out and crucially,did not have a plan in place for
how are we gonna payback all this new debt.
That is the message, the fiscal theoryof the price level, as you said, I'm
(12:55):
the luckiest economist in the world, cuzI sent a draft of a book with that that
I've been working on for 30 years to thePrinceton University press in March 2021.
It said, by the way, dont print up$5 trillion of money, hit it out.
They did exactly what the book said andgot exactly the kind of inflation.
And so that's certainlywhere inflation came from.
(13:19):
But the Fed could havereacted a lot quicker.
I think, both in models andthe judgment of history,
that the Fed should react quickly toinflation by raising interest rates.
The Fed did not,all central banks sat around for
a full year before doinganything about it.
I dont think that couldhave stopped the inflation.
But it certainly couldhave slowed it down and
smoothed it out a lot better than it did.
(13:40):
And everybody else thinks that the Fed ismuch more powerful, and the Fed could have
really stopped the inflation in itstracks with higher interest rates.
So it is remarkable that all thisinformation, not just the Fed, sat for
a year before doinganything about inflation.
And that's an interesting reflection,we have this image of huge
(14:02):
technocratic competence, butour institutions, they're not terrible.
They're just people like us doingthe absolute best that they can.
And the best that they canis kind of limited, and
we ought to, I'm not criticizing the Fed.
We ought to think about,
get the basics right before wetry to do very fancy things.
(14:25):
And that's,there was a pretty basic failing,
not seeing, not seeing inflation anddoing something about it.
And the Fed is still kind of in the dogate my homework mode rather than how could
we have missed something so basic?
The same thing happenedwith Silicon Valley bank.
We have hundreds of thousands ofpages of Dodd frank regulations and
(14:47):
regulators and so forth.
And the Fed just completely misseda bank that was taking in huge
amounts of deposits,putting them in long term treasuries.
And if interest rates went up, becauseeverybody knew interest rates would go up,
the bank would be underwater, and the hugeregulatory apparatus just missed it.
(15:07):
Now, again, that's not a criticism ofpeople, it's just I think we have way over
complicated what we think theseinstitutions are capable of.
And they need to reform andget back to just basic competence.
>> Bill Whalen (15:20):
What is it about Washington, John,
that tends to have the press deifyheads of the Federal Reserve?
I'm old enough to remember when AlanGreenspan was just treated like a God in
Washington in the 1980s,Paul Volcker was treated as a God.
Trompel is not treated as a God, butwhen he speaks, just everybody stops and
listens.
It's like the end of the movie,trading places where they're waiting for
the prices to come out in frozen,concentrated orange juice futures.
(15:43):
But Powell knows all, he'll tell all,he'll lead us through.
Why does the press elevatethe Fed to this high level?
>> John Cochrane (15:48):
That's an interesting question.
Well, why does the fed want tobe elevated to the high level is
an interesting question.
The Fed didn't used to be nobody thoughtit was particularly powerful back in
the old days.
And Milton Friedman kindof won the discussion,
I think a little too much by thinkingthe Fed is very, very powerful.
And then Fed chairs institutionslike to be thought of as powerful.
(16:11):
So they certainly did not do anythingto dissuade this high priest mentality.
It raises the image of the Fed.
As an example, in the 2010s,
when the Fed undertook quantitativeeasing and all this stuff,
another approach might have been saying,we've done what we can with money.
(16:33):
It's up to you guys, we'll be on vacation,crisis is over, cost up when you need us.
But now it was just monthly speeches andwhat we're doing and
providing more stimulus and so on and soforth, which tends to aggrandize the Fed.
But I think on the other hand,we're guilty too, people want it.
I'm listening to a greatRoman history podcast.
And people always life's uncertain andyou wanna think that there's some
(16:57):
high priest out there divining,listening to the augurs and
divining what the flight of the birdssays about the next season and
listening to the Fed chair is about thesame psychologically for the rest of us.
I have listened to the augursat the Temple of Jupiter, and
I think that core inflation will besoftening in the next few quarters.
(17:20):
It fills that sort ofpsychological need for
somebody in charge ofsomething around here.
[LAUGH]>> Bill Whalen: Let's shift into
current events John.
In case you haven't noticed, there isan election underway in the United States.
I thought we had a great episodeof Goodfellows on this recently.
Question for you John as we discusseconomic matters in this election,
I wanna throw three items at you andget your thoughts.
(17:41):
One is tariffs, the second is taxes,cut them or increase them,
and then thirdly, national rent control,so let's start with tariffs.
Yeah, well,
your calling card as an economist isthat tariffs are a terrible idea.
[LAUGH] Let's just, that's a fact.
And it is a little unsettlingthat us economists
(18:03):
like to go into all sorts of fancy stuff,but
policy is stuck atfallacies from the 1600s.
Like tariffs are a good idea orlike inflation.
I'm listening to the roman historypodcast, and what I hear about inflation
now from our politicians soundsa whole lot like emperor Diocletian.
(18:26):
It's the middlemen, it's the Pringles,it's the price gougers,
it's the money lenders,got back to the usual stuff.
So, it is kind sad that wecan't get basics right now.
On the other hand,there is a relative amount of damage here.
A 10% tariff on everythingis not a great idea, but
(18:48):
how much damage will it do compared tonationwide rent control for example?
That sounds actually much worse.
I'll actually make Trump an offer.
Put me in charge ofthe treasury secretary and
I could impose 10% tariffs withno damage really quickly, how?
Well, I'd let you take a deduction off forall your exports, and
(19:10):
then of course, crucial nationalimportant industries will get a waiver.
So 10% on everything it's not a good idea,but it's not as disastrous as many
other economic policiesthe aforementioned national rent control.
What's the name of that historypodcast you're listening to, John?
>> Bill Whalen (19:28):
We're going to get flat on that next.
>> John Cochrane (19:30):
Yeah, it's called the history of Rome, it's a wonderful podcast.
It's not very deep history, Niall willcertainly be very snooty about it.
But if you wanna start with the republicand get your way all the way through
the emperors, andyou have a really long car drive.
I started listening to this driving fromHobbes, New Mexico back to California.
(19:50):
I didn't get a third of the waythrough but boy did it pass the time.
It's a great, great new podcast.
>> Bill Whalen (19:55):
Okay John, taxation, let's talk taxes now.
>> John Cochrane (19:58):
Yeah, tariffs are a tax by the way.
So let's put everything in context here.
So taxes, I don't like to use the word cuttaxes, I like to use the word tax rates.
Economists should alwaysbe about incentives and
avoid the temptation to wade intoredistribution about which we have
(20:22):
no more real expertise than anybody else.
So taxes,the game of the economist view of taxes,
we can actually square this circle.
You need revenue for the government andyou wanna minimize economic damage.
So that means you want moretax revenue and less tax rate.
And that's why it's really importantto distinguish taxes from tax rates.
(20:46):
And so, ask an economist how to do this.
And if you just state the question,maximize revenue for
the government while doing the leastpossible economic damage, you
want the broadest possible rate base andsimplicity and the smallest possible rate.
Now we do just about the opposite.
(21:08):
We have a swiss cheese of deductions andexemptions and
then very high marginal rates.
The important thing is,remember all taxes add together.
So what counts for the economy is youproduce an extra dollar for your employer,
how much do you get toactually benefit from that?
So you gotta take off federal taxes,state taxes, local taxes,
(21:29):
sales taxes, excise taxes, your shareof corporate taxes and so forth.
We're already at the high earners and
California my guess is about70% marginal tax rate.
So there's not much room to squeeze moreout of that without everybody saying,
I'll work like Europeans.
And Europeans have actually not thatmuch higher tax rates but 40% lower GDP.
(21:55):
So I think I won't get too deepinto the John tax reform proposal.
But the answer if you ask an economist for
the answer is you wanna broad based salestax on just about everything at whatever
rate it takes to pay whatthe government wants.
And then you get low rates andhigh revenue, that's the answer for taxes.
>> Bill Whalen (22:15):
Okay I'm just saying.
>> John Cochrane (22:17):
You probably want it do you want Trump's tax plan or Biden's tax
plan, I can always try to squarethe circle with what's the right answer.
[LAUGH]>> Bill Whalen: I assume John a listener
reviewer could go to the grumpy economistblog and do a search on taxes and
they'll probably getthe John Cochran phone book, right?
Absolutely, absolutely.
>> Bill Whalen (22:34):
All right, thirdly John,
let's talk briefly about nationalrent control, what says you?
And do you just kind of lump this inthe same basket as say student loans?
>> John Cochrane (22:43):
It's actually I think more damaging than student loans.
And here Jason Furman,who's an out Democrat and
Biden supporter just said thisis the dumbest idea ever.
It's funny it used, what are the callingcards for being an economist?
You understand that tariffs, minimum wagesand rent controls are terrible ideas.
(23:05):
And at least tariffs a lot of mybuddies on the right are giving
in to their desire to be seenwell by the new Republicans and
sort of making excuses for tariffs andnational security and so forth.
A lot on the left have made excuses forminimum wages, but we all seem to still
(23:26):
agree that rent control is I think asGunner middle, I forget what Swedish
economist said, it's the best way knownto destroy a city short of bombing.
That is exactly right, it's tempting,now let's try to understand things.
Always a temptation,economics is about incentives and
politics is about redistribution.
(23:47):
Politics is about taking from a andgetting to b in return for
b's political support.
Economics is really silentabout if that a good idea,
but squeaks up and says, wait a minute.
Now there's a disincentive.
And so when you pass rent control,existing renters say, hallelujah,
I don't have to pay as much rent,they love you.
(24:08):
And it takes time forthe damage to sink in.
And the damage is to people unseen.
The damage is to poor people,people who need to move,
immigrants, people who want to moveto a city and take a better job.
The damage, of course,is the construction,
(24:28):
we don't have building of new apartments.
So there's a reason it's appealing.
It's an immediate shot in the arm toone politically popular group, renters,
at the expense of a politicallyunpopular group, existing landlords.
And with long-term damage,that only takes time to sit in.
(24:49):
So a supremely bad idea thatwe've known is a bad idea for
centuries, andit's a goodie back to economic policy.
And I'm a little annoyed at my economistfriends who wanna construct very
complicated things when our politicalsystem cannot get straight.
[LAUGH] Tariffs, taxes, rent control,
minimum wages, just things we'veknown about for centuries.
>> Bill Whalen (25:12):
John, I started the show by calling you the healthy GoodFellow.
I probably should also mention that you'reat times the outnumbered GoodFellow when
it comes to conversations about China,in particular,
strategic economic competition with China.
So the two hawks aren't here, Niall's nothere, HR is not here to shoot you down.
So, John, take a moment ortwo and just run with it,
just enjoy talking about this topic,which you always get shouted down on.
(25:34):
[LAUGH]>> John Cochrane: Well, let me not so
much my esteemed colleagues havenuanced views on this topic.
And I must plug our show,one of the things I love so
much about our show is the interaction.
And I learn from them andI listen to them and
I modify my views basedon what they're saying.
(25:55):
Right.But in general, there is a tendency,
mercantilism, which as a theorygot thrown out in [LAUGH]
the 1700s,reigns supreme still in politics.
The idea that what we need to do isexport more and import less, and
that's the key to national health, andit cloaks itself in all sorts of things.
(26:19):
So a lot of the motivation is whenyou say win the strategic economic
competition with China,what are people really talking about here?
Yeah, we don't wanna sell brand newF-35 to China, that might be a bad idea.
On the other hand, it might be a good ideabecause if they had to rely on us for some
(26:39):
spare parts for their air force, maybewe'd be in a better situation than if we
got them to build their own air force andbe independent of us, but that aside.
[LAUGH] There's an idea that what weneed to do is put in tariffs protection,
build stuff at greater expense inthe US than buying it from China and
selling in return to themstuff that we do better.
(27:03):
And that this is a great idea forus economically and
a great idea for us as a countrythat our purpose is to make
Americans better off by makingChinese people worse off.
If it even worked, which it doesn't.
What it does at best is makeAmericans a little bit worse off and
(27:24):
try to make Chinese even more worse off.
But overall, we're not here towin an economic competition.
Economics is different from war,
trade is mutually beneficial,we all end up better off.
If you wanna do better than China,
(27:45):
the way to do better than Chinais not to try to put up barriers.
In the past when we were a great exportpowerhouse, it's not cuz we had big trade
barriers, we were in fact the freetraders, it's cuz we were better.
Right. >> John Cochrane
was better, our regulations were easier,you could get stuff done.
So the vision that we'regonna keep a regulatory,
(28:07):
slurotic economy with huge subsidies andbehind tariff walls.
And somehow that is going to make usbetter off and do anything about China,
we'll just go ahead and do what they want.
It's not good economics,it's not our place in the world, and
it's not really good national security.
(28:27):
Nobody ever won a great powercompetition by putting up trade
barriers against somebody elsewho was more innovative and
better able to do thingslike manufacturing.
So I'll cut that here.
But I do think that there'sa fundamental bleeding of the narrow
(28:47):
defensible national security grounds toworrying about China and what they do.
Into this idea that the way to winthe great power competition with China,
if that's what we're about,is to put up huge tariff barriers and
make electric drills in the USat five times the cost of what
(29:10):
we can buy them from China,I think that's a huge mistake.
I'm glad you referenced this show, John,
because by the end of this year we willhave done about 150 of these episodes,
four plus years of taping this.
And I assume the three of you must likeeach other because you keep doing this.
But what's special is when you fellows dodisagree, it's polite, it's civilized.
(29:30):
There's nobody throwing down theirmicrophone and stomping off,
nobody's insulting anybody.
It's a good spirited debate, the likes ofwhich is very scarce in this day and age.
>> John Cochrane (29:39):
Well, I do like these guys, and more than like them,
I respect them, they know a lot.
And one of my greatest pleasures in lifeis being proved wrong about something,
[LAUGH] and this show gives methat pleasure on a regular basis.
The only thing I would ask is,
our moderator needs more oftenwhen I say something, Tom, and
(30:00):
then Niall says, John, you bloody idiot,here's how it really works.
Give me a little more chance toapologize and say, Niall, you're right,
sorry, I didn't think about that,[LAUGH] cuz that is really.
And I'll tell you, one of the thingsI love about this show is it's
a chance once every week or so, to naildown my incredibly busy colleagues.
(30:26):
And force them to have a structuredconversation with Bill,
forcing us to shut up every now andthen, and move on.
I love these guys, I would seethem around the water cooler, but
we wouldn't have such a goodstructured conversation, and
I wouldn't learn as much withoutthe format of the GoodFellows.
So it's just great fun for me.
>> Bill Whalen (30:46):
Somebody who didn't have a problem shutting up, John, was the late,
great Calvin Coolidge.
And I mentioned that because you happento be a member of the board of trustees
of the Calvin CoolidgePresidential Foundation.
I didn't know this, John,
until I went stumbling on that websiteside to look at Coolidge speeches one day,
and there was John Cochrane onthe board of trustees, holy smokes.
But I mentioned Coolidge, John,because this is the 100th anniversary of
the centennial Coolidge running forre-election.
(31:09):
Keep cool andkeep Coolidge is some variation of that.
I don't know if we're gonna see keep cooland keep Kamala on this election or not,
but I wanna read to you a quotethat he said in 1924 and
get your thoughts on this.
Here's what Coolidge said, it's a speechcalled Responsibility of America.
Quote, I civilization cannot stand still,
the institutions under which itdevelops cannot remain unchanged.
(31:30):
Change is inevitable, and
there must be intelligent capacity todirect that change in the right way.
The key phrase there, John,
intelligent capacity to directthat change in the right way.
Now, it seems to me, John, that we don'tlack in this country intelligent capacity
in business, and public sector,and academia, and so forth.
But, John, there is a challenge to channelit the right way, wouldn't you agree?
>> John Cochrane (31:51):
Absolutely, and let me riff a little bit on what you just said.
Yes, I've enjoyed my time withthe Coolidge Foundation part I
got there because Amity Schlaes,who runs it, is a dear friend and
a wonderful person anda great author by the way.
We do often our book recommendations and
anything by Amity Schleseis a good thing to do.
(32:15):
The Calvin Coolidge sloganthat I like most is
return to normalcy afterthe progressive erade.
Boy, wouldn't it be nice if ourcandidates just said return to normalcy,
which I think is important.
You mentioned institutions, andcertainly one of my biggest
(32:36):
worries is the fraying ofamerican norms and institutions.
We do not elect a king every four years.
We have this wonderfulinstitutional framework,
which is fraying at the edges, buttalent at the top is really important.
Back to the history I'm learning a lot.
I'm reminded of a lot of lessonsfrom a history of the Rome podcast.
(32:58):
And there's times when there's talentedemperors and times when there's not so
talented emperors.
It makes a huge difference.
And you are right.
George Schultz kept saying this,too, we are not recruiting talent.
Whatever one must say about ourcurrent presidential candidates,
they are clearly not the mosttalented people in the country
(33:19):
right now with sort of abilityto govern and get things run.
And that's in the broad sweep of history.
It would be nice to have really good,
talented people putting thoseinstitutions back together.
And one last thing peoplemay not know about Coolidge.
He, together withTreasury Secretary Millen,
(33:40):
lowered the marginal tax rate fromfederal tax rate from 70% to in the 20s.
It was long, hard work, and
it was the first greatsupply side tax cut.
Mellon knew exactly what he was doing andgot Coolidge to do it.
Coolidge also patiently slashedaway at the federal budget.
(34:03):
And the 1920s were an economic boom,plus a boom in revenue for
the federal government,and no small part to that.
So that Reagan did not invent all that,Coolidge did, and
it worked pretty darn well for him.
>> Bill Whalen (34:17):
One thing I failed to do in preparation for this, John?
I was gonna look up what kind ofdogs at Calvin Coolidge owned,
because I imagine presidents,almost all presidents own dogs.
I don't think Trump had a dog inthe White house, but most presidents do.
And this leads us to the topicof the portuguese water dog.
Your Portuguese water dog's name is?
>> John Cochrane (34:34):
We have Bia, our second portuguese water dog.
Our beloved Angie was the firstportuguese water dog, and
they have been great, great companions.
It started, my daughter Sally wentthrough the I want a dog phase, and
my daughter Sally is unbelievablydogged and persuasive.
(34:56):
Two years of campaigning fordog, but she was also allergic.
So we were looking for a hypoallergenicdog and found portuguese water dogs.
So Angie was the first, Bea is the second.
They are wonderful,tremendously loving dogs.
I called ours, both are Beth'sshadow because they follow Beth
(35:18):
around like a shadow, warning,they are loving, but also very energetic.
So if you can't take the dog out runningor walking for several miles a day,
you're gonna have a fur ball running,bouncing around your walls.
>> Bill Whalen (35:37):
All right, let me good naturedly tease you in two regards, John,
and feel free to push back very hard.
Number one, the Cochran's from Chicagowere just imitating the Obamas,
who had a portuguese water dog.
>> John Cochrane (35:47):
No, we got there first.
[LAUGH] In fact, we think there'sa line from our portuguese water dog to
the Obamas via the Obama'sdecorator who met our dog.
And then the Obamas gota portuguese water dog.
So we'll claim to have the idea.
So this is back when we were all in Hydepark and our kids going to lab school.
(36:08):
But what the Obamas don't know is that allportuguese water dogs are libertarians.
They believe in property rights, andnow they don't always get it right.
Our dog, Bia,thinks that my socks are her property, but
nonetheless, [LAUGH] there we go.
>> Bill Whalen (36:24):
Okay, my second shot at you, John.
John Cochrane,champion of the free market.
You want a dog, is championed by BarackObama, and before that, Ted Kennedy.
Hardly champions of the free market,have a frou frou liberal dog, John?
>> John Cochrane (36:36):
[LAUGH] No, no, just got to meet Bia and
you'll find out they havesecretly libertarian dogs.
>> Bill Whalen (36:42):
Okay, well,
the reason why we're doing this is becauseyou have suggested to Niall Ferguson he
needs a Portuguese water dog.
I suggested he get a Labrador retriever.
Everybody has an opinion on a dog, butwhat do you think Niall will end up with?
>> John Cochrane (36:53):
No, Niall will end up with whatever Ayan
thinks Niall should endup with if he's smart.
>> Bill Whalen (37:00):
I think that's the answer.
I can't tell you how many times I've seenfamilies bring in a dog for the kids,
ostensibly, and it becomes the mother'sex child because just the kids
quickly don't wanna take care of it, thefather is not around to take care of it.
The wife takes control of the dog.
>> John Cochrane (37:13):
And that is, we went into this knowing that.
And so Beth also found a dogthat she absolutely has loved,
which is why we got a second one.
>> Bill Whalen (37:22):
Okay, John, we're getting short on time here, so
I wanna wrap up with two thingsyou're working on, books.
First of all, you're working ona book on the Euro, of all things.
The title Reforming the Euro,Lessons From Four Crises.
That's two crises less than Nixon, butwhat were the crises around the Euro?
>> John Cochrane (37:37):
Boy, boy, this is great fun.
And we are turning the manuscriptin today as I speak.
So those of you who watch the look forthe grumpy economists and
wonder where I've been.
Sorry, I've been on deadlinewith getting this book finished.
I'm working with two co authors,Klaus Mazuc, who is at the ECB, and
Luis Garicano, an economist who was alsoonce a member of the European Parliament.
(38:01):
And it sort of started as appliedfiscal theory to the Euro, or
at least that's how I was brought along.
But the Euro, a currency union,faces this fiscal question quite squarely,
which is if you have a currency union,but you don't have a fiscal union,
every country has an incentive toborrow a ton of money, get in trouble,
(38:24):
and then say, ECB, we're in trouble,bail me out, bail me out, right?
That's a problem.
Now, the initial architects of the Euroreally understood this, and as we dug in,
they really set up a structure thatwas going to protect against this.
But not every founding structureis completely finished.
(38:47):
And nobody imagined that there wouldbe sovereign debt crises and so forth.
So what happened to the Euro?
They have this beautiful structure,and then a series of crisis,
the financial crisis, the sovereigndebt crisis, the zero bound era,
the inflation, the war and whatever.
And each time nobody thought this wouldhappen when they set up the Euro.
But the ECB found itself the only game intown and had to start bailing out Greece.
(39:11):
And Greece's bondholders,they felt they had to, and
let's give them the benefitof the doubt of that.
And that's fine,every institution evolves,
but the problem is now the systemof incentives that they had set up
initially to say to countries,look, if you borrow money and
get in trouble, we're not gonna bail youout, so you better get your act in order.
That system of incentives is broken downso you do what you have to in a crisis,
(39:37):
but then you should patchit up afterwards and
get the incentives back together again.
So our book is about the story about howthe ACB did what it felt needed to do,
how there was the beginning ofa reform effort to put the incentives
back in place that kind of failed,and now here we are.
(39:57):
Everybody now expects the, The ECB tocome riding to the rescue in any crisis,
which means all the incentivesto reform are gone.
And so how do we put that back?
And it's not really critical of the ECBthey did what they felt they had to do,
and we don't really argue with that.
But it's about,let's get that structure back in place so
(40:18):
that you're not everybodyrelying on the ECB.
And then if everybody expects a bailout,of course, the next crisis,
the ECB has to bail out.
And we're at the point now where the nextcrisis might be so big the ECB can't,
Europe really needs to do this reform.
So that's the brief synopsis of the book,and look for
it on my website this afternoonafter I get [LAUGH] almost.
>> Bill Whalen (40:40):
[LAUGH] And then finally,
John, you're working ona book on past grumpy work.
>> John Cochrane (40:45):
Yeah, that's my next long term project,
the grumpy economist has been going on forten years now.
I've got answers to all the interestingout of the box answers to all
the interesting economic questions.
I guess I'll pitch the taxone we talked about,
rather than raise taxes,cut taxes, tax the rich.
(41:06):
No, here's a way to square the circle andget what everybody wants,
more tax revenue if you need that,but less damage to the economy.
So I got answers for that on healthcare,on banking regulation,
trade tariffs,social programs, you name it.
And the hard part here is, of course,
distilling down all of my blah,blah, blah, blah, blah for
(41:28):
ten years into something that youcan read on an airplane flight.
[LAUGH] Sothat's a project coming up, yeah.
>> Bill Whalen (41:38):
That sounds like a fun project.
And the final thing, John, you recentlydid a podcast with John Hartley.
Can you tell us a little bit about that?
>> John Cochrane (41:44):
This was just an interview back and forth of me.
John Hartley has started a podcastcalled the Capitalism and
Freedom in the 21st Century.
He did a lot of interviews ofeconomists and that then we're
moving that podcast to a officialhome at the Hoover institution.
(42:08):
It'll become the official podcast ofthe economic policy working group.
So it'll broaden its scope a littlebit to what's going on in economic
policy as Hoover.
And we did an inaugural onewhere he interviewed me and
we talked about policies more generally.
>> Bill Whalen (42:26):
Okay, well, save time for Goodfellows, John, please,
GoodFellows first.
>> John Cochrane (42:31):
Of course.
>> Hey, John, I think that'sgonna wrap up this conversation.
>> Bill Whalen (42:35):
She's not in the room, but I'd like to apologize for your dog,
it was nothing personal.
I just thought we'd have a little fun withthat, and we don't have an official mascot
for GoodFellows,maybe she can be our official mascot.
>> John Cochrane (42:44):
Bea would make a great mascot for the show.
>> Bill Whalen (42:48):
Okay. >> John Cochrane
enthusiasm, although not quiteas much intelligence as at
least the two other membersof our team [LAUGH].
And you said nothing about the moderator [LAUGH],
I'll take that a note.
>> John Cochrane (43:01):
[LAUGH].
>> Bill Whalen (43:03):
John, thanks for doing this today, I think the voice sounds good,
but get better, my friend.
Heal up and we look forward to doingregular GoodFellows very soon.
>> John Cochrane (43:11):
Thanks.
>> Bill Whalen (43:12):
So that's it for this mini episode of GoodFellows,
we hope you enjoyed the conversation.
And keep in mind we're doing thisnot just with John, but also
with Niall Ferguson and HR McMaster alongwith our regular GoodFellows episode.
And the best way to keep track of whatyou're up to is subscribe to our show on
YouTube, andrecommend it to people and like it.
Send us up that chart on YouTube ifyou wouldn't mind, we like algorithms,
if you will.
On behalf of John Cochrane, our missingin action GoodFellows, Niall Ferguson,
(43:35):
HR McMaster, the very talentedpeople behind the scenes here at
the Hoover Institution haveput these shows together.
We hope you enjoyed today's conversationand we'll be back soon with a new one.
Till then, take care, thanks for watching.
[MUSIC]
>> Presenter (43:50):
If you enjoyed this show and are interested in watching more content
featuring HR McMaster, watch Battlegroundsalso available at hoover.org.
Because Germany was then occupied by the Americans,
the British, and the French, they wereable to enforce price control much more
effectively than a domesticgovernment could have enforced it.
And they had price control,widespread price control.
As a result you didn't have inflation,you just simply had money not being used,
you had barter.
>> Speaker 1 (00:21):
Exactly.
>> Milton Friedman (00:22):
And it's funny, they used cigarettes as money,
they used liquor as money, cognac.
I've always said it's the mostliquid money you ever had.
>> Speaker 1 (00:37):
[LAUGH].
[MUSIC]
>> Bill Whalen (00:40):
Hi, I'm Bill Whalen,
I'm a distinguished policy fellowhere at the Hoover Institution.
I'd like to welcome you back toGoodFellows, a Hoover institution
broadcast examining social, economic,political, and geopolitical concerns.
Now, you may have noticed this is a littlebit of an introduction because this is
a very different GoodFellows.
Rather than our usualtroika of senior fellows,
we have just one good fellow on today.
And the honor goes to myfriend John Cochrane.
(01:02):
John isthe Hoover Institution's Rose-Marie and
Jack Anderson senior fellow.
He's an economist specializing infinancial economics and macroeconomics.
He's also the author of the GrumpyEconomist blog, which provides news,
views and commentary from a humorousfree market point of view.
But wait, there's more,
John Cochrane is the author ofthe Fiscal Theory of Price Level,
a comprehensive account of how governmentdeficits and debt drive inflation.
(01:23):
John, deserve an award for good timing.
Indeed, the same year the Fiscal Theoryof Price Level came out,
John was honored with somethingfar better than a pat on the back.
In 2023,he was awarded the Bradley Prize for
his work in making sense of economics andhis writing and his analysis.
John, great to have you on the show.
And after four years of having a contendwith Neil Ferguson and H.R McMaster,
the stage is yours, my friend.
>> John Cochrane (01:43):
It's great to be here and I can get a word at edgewise, [LAUGH].
>> Bill Whalen (01:47):
Edgewise, John.
Back in the day of the Beatles, GeorgeHarrison was known as the silent Beatle
because he wasn't as forthcoming withthe media as Harrison and as McCartney and
Lennon.
I wouldn't call you the silent GoodBellowbecause you always get a word edgewise.
I would have, before the showcalled you the healthy good fellow.
Because why?
You adhere to a very healthy lifestyle.
(02:07):
You eat right, you exercise.
I don't think you smoke,I don't think you drink.
I don't know if you swear, well,maybe you swear a little bit.
Anyway, you're the healthyGoodFellow until today.
John, tell us what currently ails you.
>> John Cochrane (02:19):
I will.
>> Bill Whalen (02:20):
Because of the voice.
>> John Cochrane (02:21):
Finally, after four years, I did get COVID my first time.
I think I'm the last personin the country, second last.
Beth still hasn't gotten it,which we're working [LAUGH] on yet, but
it's only turned into a little cold now.
So I'm in my basement,quarantined for a little bit, but
feeling fine, and this will be over soon.
>> Bill Whalen (02:41):
What do you find different about having COVID in 2024,
John versus your having seen other peopleexperience it four years ago when we began
GoodFellas?
Is it just more run of a mill?
I have COVID, I have a cold,
don't panic or you find differentmentality now surrounding it?
>> John Cochrane (02:55):
Well, yeah, what I read is consistent with what I'm having.
It's just a little chest cold, in fact,
I would not have identified this as COVIDexcept that Beth had about 100 tests
sitting around the house that need toget used, [LAUGH], so we took one.
And the social part of it ispeople aren't treating it,
(03:16):
they're just treating it like a cold.
All my friends say, yeah, I had itfive times, it'll go away in a week.
[LAUGH] It's hard to believe we shutthe country down over this, but of course,
it is a much milder diseasenow than it used to be.
>> Bill Whalen (03:28):
I like the deeper voice, I think you might have a future on,
like late night FM radio ordoing voiceovers.
>> John Cochrane (03:33):
Yeah, that would be great, [LAUGH].
>> Bill Whalen (03:38):
Let's talk a bit about how John Cochrane came to be John Cochrane.
And something that's always kind ofpiqued my curiosity, John puzzled me,
is your academic art.
You went to MIT undergrad andyou majored in physics.
I was fully expecting economics,but no, you're a physics major and
then somehow you make your way to Berkeleyto get advanced degrees in Economics.
Can you explain a bit about that march?
(03:59):
Because is it normal for
economists like yourself to havevery different degrees like Physics?
Or am I wrong here to the two dovetail?
>> John Cochrane (04:06):
No, it's quite common, actually.
Economics is full of fallen physicists,it turns out that economics
uses the tools of about sophomorephysics to describe social problems.
And that's what made it attractive to me.
I've always changed what I did,actually, on a fairly regular basis.
I went to college thinking I'd be anaerodynamical engineer, turned to Physics,
(04:30):
which I absolutely loved, for four years.
Recognized that there wasn't gonnabe many jobs in physics for me.
I wasn't smart enough to be a theorist,and I'm a terrible lab manager.
And I loved Economics,
[LAUGH] I took economics at MIT as myhumanities distribution requirement.
[LAUGH] I thought that would abuse you,
the two courses I tookwere very interesting.
(04:52):
And so I just on a long after senior year,
I called up the places thatactually I wrote letters.
We used to do that back then, wroteletters to the places that had let me
into graduate school and physics, andsaid, how about I change my major?
I did this in August, and most ofthem said, apply like everyone else,
but Berkeley and Chicago let me in.
(05:13):
And then I knew it snowed in Chicago anddidn't snow in Berkeley, so off I went.
And I say, I mention this in part becauseit's the sort of thing it's much harder to
do in our much more credentialist age, getinto graduate school like that on a lark.
I was just a physicist from MIT, twoclasses in economics, pretty good grades.
They let me in, and the rest was history.
(05:34):
But it's just the right move for me,the physics training was spectacular.
On economics isn't about math,and math's not that hard.
It's about seeing a situation,creating a simple model of that situation.
And that's what physics teachesyou to do really well and
economics is a place that sort oflike physics in the early 1800s.
(05:57):
You didn't need a big lab andan army of research assistants.
You just need some time andsome simple modeling skills, and
you could think about reallyimportant problems that way.
So it was a natural move.
>> Bill Whalen (06:10):
But you do end up at the University of Chicago eventually, and
you end up studying finance.
Why finance, John?
>> John Cochrane (06:17):
[LAUGH] Yeah, boy, there's a long story there.
I did do Berkeley in Chicago,starting at Berkeley and
then going to Chicago turnedout to be very formative.
I mean,who knows what would happen otherwise, but
I certainly would not be who I am today.
Berkeley gave me a grounding in generalequilibrium theory, which is wonderful.
(06:41):
They tried to make a Keynesian out of me,which failed.
But it did convince me that monetarism,which reigned true in Chicago,
had some holes in it.
And so I went to Chicago as Iwas doing sort of time series,
econometric statistics stuff.
But I was able to tell a good story andgot the job there, which is, of course,
(07:01):
a dream job for
a young assistant professor tobe at the University of Chicago.
I've always done very simple things.
My forte is not doing really,really complicated fancy models,
but thinking deeply, I hope,about things in very simple terms.
(07:21):
And finance in the late 1980s wasreally exploding with the new but
very simple tools of time series,econometrics,
dynamic general equilibrium theory.
And so it was a natural place to go.
I fell in with Lars Hansen andEugene Fama,
who were great heroes of mine andslightly senior colleagues, but
(07:44):
treated me as a friend andjust became very interested.
Part of it was, of course, my wife tookthe finance classes at Booth, and so
we started talking about it.
So worked on the problem setsa little bit together and that,
[LAUGH] going in finance as well.
And it's a place wherea couple simple principles,
price is present value of dividends.
(08:05):
There's only about three things I'veever learned in life, and prices,
present value, dividends is one of them.
But then taking that andmaking it useful and
figuring out how it applies to the world,that's what I do.
Take something really simple like that.
But then, we got a puzzle,it looks like a bubble, how do you squash,
how do you make that work?
And that's what I'm doing withfiscal theory at the price level.
>> Bill Whalen (08:25):
Right, you mentioned Eugene Fama was a Nobel laureate and
the father of modern empirical finance.
Who was Eugene,the farmer of John Cochrane?
>> John Cochrane (08:32):
[LAUGH] Well, he's, yes, incidentally, my father in law,
I did move to Chicago andmarry the boss's daughter, [LAUGH].
Traditional path in life, and we did.
>> Bill Whalen (08:44):
Was that simple,
the love of your life was inthe room next door waiting for you?
>> John Cochrane (08:48):
Well, actually, I met her first,
I met Beth the night I came back toChicago, and it was love at first sight.
And only then did I realizethat she was his daughter.
[LAUGH] But we worked all that out, andGene and I became great colleagues during
the morning, windsurfing buddies inthe afternoon, and family in the evening.
(09:10):
And that was a wonderful, wonderful time.
>> Bill Whalen (09:13):
We're gonna pick up with you and
Beth a little later in the podcast, John,because I've got an issue with your
Portuguese water dog,which we'll get to a little later.
But let's turn to policy, John andI wanna talk about the Federal Reserve.
We've been talking about the Fed offline,and
you suggested there's something ofa disconnect with the Federal Reserve in
terms of what people actually knowthat it does, can you explain that?
>> John Cochrane (09:32):
Well, boy,
now you want me to condense like 30years of thinking about monetary policy.
[LAUGH]>> Bill Whalen: 30 seconds or less.
[LAUGH] This is something I've been writing about lately,
my latest article,
which I think is fantastic expectations,neutrality of interest rates, and
nobody else is paying any attention to,[LAUGH] so I'll start advertising it.
(09:54):
There is an interestingdisconnect that in the Fed and
in the public policy commentary,
there's a sort of a doctrineabout how the Fed works.
The Fed raises interest rates thatsoftens demand in the economy,
and then that softens the economy andsomehow that lowers inflation.
And we just say this, a fascinatingfact is that there is no halfway
(10:19):
respectable economic model in the last30 years that works that way.
And that hasn't stopped academics,our journals are full of fancy,
very complicated modelsof monetary policy.
But none of them actually workthe way people say they work.
And similarly, the empirical evidence,
(10:41):
when you look at it carefully forthis supposed fact, is extremely weak.
So here we are, it's kind of funny,there's this presumption of
huge technocratic competence, and the Fedand the ECB and all the central banks spin
the transmission mechanism of monetarypolicy, which we're carefully monitoring.
But there's a very deep,nobody knows how it works.
(11:03):
Now, maybe the doctrine and the wisdomof the ages is right, [LAUGH] and
the theory just hasn't caught up.
Maybe the theory is right and it worksa whole lot differently than we think.
I suspect the Fed is in fact much lesspowerful than everybody thinks it is,
in part because fiscal theory,the price level,
I think fiscal policy underlyingis a very important thing.
(11:24):
But it's a very striking fact,
this is what I know from40 years of academic study.
I don't know how the world works, butI know all the theories in detail.
I've read the equations andI've read the words,
which often don't have anythingto do with the equations.
And I can tell you what's not in them.
And what's not in them isa technical backing for
(11:46):
the stories that are commonly told.
I think that's a fascinating thing, and
that's what makes monetarypolicy interesting.
Anyone young listening?
Hey, it's not something that's all wellworked out, and it's just time to add
more twiddles and complicationsthis with the basic questions.
Does raising interestrates lower inflation?
(12:07):
When and how?
That basic question isacademically unanswered.
And that leaves to what extent isthe doctrine that pervades policy circles?
Does that not hold or not hold anymore?
>> Bill Whalen (12:21):
So what is your takeaway, John, from how the Fed handled inflation?
It seems we went through chapters,one chapter of denial,
chapter of grudging acceptance, and nowcurrent handling, how do you process this?
>> John Cochrane (12:32):
[LAUGH] That's interesting.
So obviously, why did we get inflation?
To me it's absolutely clear the governmentbasically printed up $5 trillion of cash
and handed it out and crucially,did not have a plan in place for
how are we gonna payback all this new debt.
That is the message, the fiscal theoryof the price level, as you said, I'm
(12:55):
the luckiest economist in the world, cuzI sent a draft of a book with that that
I've been working on for 30 years to thePrinceton University press in March 2021.
It said, by the way, dont print up$5 trillion of money, hit it out.
They did exactly what the book said andgot exactly the kind of inflation.
And so that's certainlywhere inflation came from.
(13:19):
But the Fed could havereacted a lot quicker.
I think, both in models andthe judgment of history,
that the Fed should react quickly toinflation by raising interest rates.
The Fed did not,all central banks sat around for
a full year before doinganything about it.
I dont think that couldhave stopped the inflation.
But it certainly couldhave slowed it down and
smoothed it out a lot better than it did.
(13:40):
And everybody else thinks that the Fed ismuch more powerful, and the Fed could have
really stopped the inflation in itstracks with higher interest rates.
So it is remarkable that all thisinformation, not just the Fed, sat for
a year before doinganything about inflation.
And that's an interesting reflection,we have this image of huge
(14:02):
technocratic competence, butour institutions, they're not terrible.
They're just people like us doingthe absolute best that they can.
And the best that they canis kind of limited, and
we ought to, I'm not criticizing the Fed.
We ought to think about,
get the basics right before wetry to do very fancy things.
(14:25):
And that's,there was a pretty basic failing,
not seeing, not seeing inflation anddoing something about it.
And the Fed is still kind of in the dogate my homework mode rather than how could
we have missed something so basic?
The same thing happenedwith Silicon Valley bank.
We have hundreds of thousands ofpages of Dodd frank regulations and
(14:47):
regulators and so forth.
And the Fed just completely misseda bank that was taking in huge
amounts of deposits,putting them in long term treasuries.
And if interest rates went up, becauseeverybody knew interest rates would go up,
the bank would be underwater, and the hugeregulatory apparatus just missed it.
(15:07):
Now, again, that's not a criticism ofpeople, it's just I think we have way over
complicated what we think theseinstitutions are capable of.
And they need to reform andget back to just basic competence.
>> Bill Whalen (15:20):
What is it about Washington, John,
that tends to have the press deifyheads of the Federal Reserve?
I'm old enough to remember when AlanGreenspan was just treated like a God in
Washington in the 1980s,Paul Volcker was treated as a God.
Trompel is not treated as a God, butwhen he speaks, just everybody stops and
listens.
It's like the end of the movie,trading places where they're waiting for
the prices to come out in frozen,concentrated orange juice futures.
(15:43):
But Powell knows all, he'll tell all,he'll lead us through.
Why does the press elevatethe Fed to this high level?
>> John Cochrane (15:48):
That's an interesting question.
Well, why does the fed want tobe elevated to the high level is
an interesting question.
The Fed didn't used to be nobody thoughtit was particularly powerful back in
the old days.
And Milton Friedman kindof won the discussion,
I think a little too much by thinkingthe Fed is very, very powerful.
And then Fed chairs institutionslike to be thought of as powerful.
(16:11):
So they certainly did not do anythingto dissuade this high priest mentality.
It raises the image of the Fed.
As an example, in the 2010s,
when the Fed undertook quantitativeeasing and all this stuff,
another approach might have been saying,we've done what we can with money.
(16:33):
It's up to you guys, we'll be on vacation,crisis is over, cost up when you need us.
But now it was just monthly speeches andwhat we're doing and
providing more stimulus and so on and soforth, which tends to aggrandize the Fed.
But I think on the other hand,we're guilty too, people want it.
I'm listening to a greatRoman history podcast.
And people always life's uncertain andyou wanna think that there's some
(16:57):
high priest out there divining,listening to the augurs and
divining what the flight of the birdssays about the next season and
listening to the Fed chair is about thesame psychologically for the rest of us.
I have listened to the augursat the Temple of Jupiter, and
I think that core inflation will besoftening in the next few quarters.
(17:20):
It fills that sort ofpsychological need for
somebody in charge ofsomething around here.
[LAUGH]>> Bill Whalen: Let's shift into
current events John.
In case you haven't noticed, there isan election underway in the United States.
I thought we had a great episodeof Goodfellows on this recently.
Question for you John as we discusseconomic matters in this election,
I wanna throw three items at you andget your thoughts.
(17:41):
One is tariffs, the second is taxes,cut them or increase them,
and then thirdly, national rent control,so let's start with tariffs.
Yeah, well,
your calling card as an economist isthat tariffs are a terrible idea.
[LAUGH] Let's just, that's a fact.
And it is a little unsettlingthat us economists
(18:03):
like to go into all sorts of fancy stuff,but
policy is stuck atfallacies from the 1600s.
Like tariffs are a good idea orlike inflation.
I'm listening to the roman historypodcast, and what I hear about inflation
now from our politicians soundsa whole lot like emperor Diocletian.
(18:26):
It's the middlemen, it's the Pringles,it's the price gougers,
it's the money lenders,got back to the usual stuff.
So, it is kind sad that wecan't get basics right now.
On the other hand,there is a relative amount of damage here.
A 10% tariff on everythingis not a great idea, but
(18:48):
how much damage will it do compared tonationwide rent control for example?
That sounds actually much worse.
I'll actually make Trump an offer.
Put me in charge ofthe treasury secretary and
I could impose 10% tariffs withno damage really quickly, how?
Well, I'd let you take a deduction off forall your exports, and
(19:10):
then of course, crucial nationalimportant industries will get a waiver.
So 10% on everything it's not a good idea,but it's not as disastrous as many
other economic policiesthe aforementioned national rent control.
What's the name of that historypodcast you're listening to, John?
>> Bill Whalen (19:28):
We're going to get flat on that next.
>> John Cochrane (19:30):
Yeah, it's called the history of Rome, it's a wonderful podcast.
It's not very deep history, Niall willcertainly be very snooty about it.
But if you wanna start with the republicand get your way all the way through
the emperors, andyou have a really long car drive.
I started listening to this driving fromHobbes, New Mexico back to California.
(19:50):
I didn't get a third of the waythrough but boy did it pass the time.
It's a great, great new podcast.
>> Bill Whalen (19:55):
Okay John, taxation, let's talk taxes now.
>> John Cochrane (19:58):
Yeah, tariffs are a tax by the way.
So let's put everything in context here.
So taxes, I don't like to use the word cuttaxes, I like to use the word tax rates.
Economists should alwaysbe about incentives and
avoid the temptation to wade intoredistribution about which we have
(20:22):
no more real expertise than anybody else.
So taxes,the game of the economist view of taxes,
we can actually square this circle.
You need revenue for the government andyou wanna minimize economic damage.
So that means you want moretax revenue and less tax rate.
And that's why it's really importantto distinguish taxes from tax rates.
(20:46):
And so, ask an economist how to do this.
And if you just state the question,maximize revenue for
the government while doing the leastpossible economic damage, you
want the broadest possible rate base andsimplicity and the smallest possible rate.
Now we do just about the opposite.
(21:08):
We have a swiss cheese of deductions andexemptions and
then very high marginal rates.
The important thing is,remember all taxes add together.
So what counts for the economy is youproduce an extra dollar for your employer,
how much do you get toactually benefit from that?
So you gotta take off federal taxes,state taxes, local taxes,
(21:29):
sales taxes, excise taxes, your shareof corporate taxes and so forth.
We're already at the high earners and
California my guess is about70% marginal tax rate.
So there's not much room to squeeze moreout of that without everybody saying,
I'll work like Europeans.
And Europeans have actually not thatmuch higher tax rates but 40% lower GDP.
(21:55):
So I think I won't get too deepinto the John tax reform proposal.
But the answer if you ask an economist for
the answer is you wanna broad based salestax on just about everything at whatever
rate it takes to pay whatthe government wants.
And then you get low rates andhigh revenue, that's the answer for taxes.
>> Bill Whalen (22:15):
Okay I'm just saying.
>> John Cochrane (22:17):
You probably want it do you want Trump's tax plan or Biden's tax
plan, I can always try to squarethe circle with what's the right answer.
[LAUGH]>> Bill Whalen: I assume John a listener
reviewer could go to the grumpy economistblog and do a search on taxes and
they'll probably getthe John Cochran phone book, right?
Absolutely, absolutely.
>> Bill Whalen (22:34):
All right, thirdly John,
let's talk briefly about nationalrent control, what says you?
And do you just kind of lump this inthe same basket as say student loans?
>> John Cochrane (22:43):
It's actually I think more damaging than student loans.
And here Jason Furman,who's an out Democrat and
Biden supporter just said thisis the dumbest idea ever.
It's funny it used, what are the callingcards for being an economist?
You understand that tariffs, minimum wagesand rent controls are terrible ideas.
(23:05):
And at least tariffs a lot of mybuddies on the right are giving
in to their desire to be seenwell by the new Republicans and
sort of making excuses for tariffs andnational security and so forth.
A lot on the left have made excuses forminimum wages, but we all seem to still
(23:26):
agree that rent control is I think asGunner middle, I forget what Swedish
economist said, it's the best way knownto destroy a city short of bombing.
That is exactly right, it's tempting,now let's try to understand things.
Always a temptation,economics is about incentives and
politics is about redistribution.
(23:47):
Politics is about taking from a andgetting to b in return for
b's political support.
Economics is really silentabout if that a good idea,
but squeaks up and says, wait a minute.
Now there's a disincentive.
And so when you pass rent control,existing renters say, hallelujah,
I don't have to pay as much rent,they love you.
(24:08):
And it takes time forthe damage to sink in.
And the damage is to people unseen.
The damage is to poor people,people who need to move,
immigrants, people who want to moveto a city and take a better job.
The damage, of course,is the construction,
(24:28):
we don't have building of new apartments.
So there's a reason it's appealing.
It's an immediate shot in the arm toone politically popular group, renters,
at the expense of a politicallyunpopular group, existing landlords.
And with long-term damage,that only takes time to sit in.
(24:49):
So a supremely bad idea thatwe've known is a bad idea for
centuries, andit's a goodie back to economic policy.
And I'm a little annoyed at my economistfriends who wanna construct very
complicated things when our politicalsystem cannot get straight.
[LAUGH] Tariffs, taxes, rent control,
minimum wages, just things we'veknown about for centuries.
>> Bill Whalen (25:12):
John, I started the show by calling you the healthy GoodFellow.
I probably should also mention that you'reat times the outnumbered GoodFellow when
it comes to conversations about China,in particular,
strategic economic competition with China.
So the two hawks aren't here, Niall's nothere, HR is not here to shoot you down.
So, John, take a moment ortwo and just run with it,
just enjoy talking about this topic,which you always get shouted down on.
(25:34):
[LAUGH]>> John Cochrane: Well, let me not so
much my esteemed colleagues havenuanced views on this topic.
And I must plug our show,one of the things I love so
much about our show is the interaction.
And I learn from them andI listen to them and
I modify my views basedon what they're saying.
(25:55):
Right.But in general, there is a tendency,
mercantilism, which as a theorygot thrown out in [LAUGH]
the 1700s,reigns supreme still in politics.
The idea that what we need to do isexport more and import less, and
that's the key to national health, andit cloaks itself in all sorts of things.
(26:19):
So a lot of the motivation is whenyou say win the strategic economic
competition with China,what are people really talking about here?
Yeah, we don't wanna sell brand newF-35 to China, that might be a bad idea.
On the other hand, it might be a good ideabecause if they had to rely on us for some
(26:39):
spare parts for their air force, maybewe'd be in a better situation than if we
got them to build their own air force andbe independent of us, but that aside.
[LAUGH] There's an idea that what weneed to do is put in tariffs protection,
build stuff at greater expense inthe US than buying it from China and
selling in return to themstuff that we do better.
(27:03):
And that this is a great idea forus economically and
a great idea for us as a countrythat our purpose is to make
Americans better off by makingChinese people worse off.
If it even worked, which it doesn't.
What it does at best is makeAmericans a little bit worse off and
(27:24):
try to make Chinese even more worse off.
But overall, we're not here towin an economic competition.
Economics is different from war,
trade is mutually beneficial,we all end up better off.
If you wanna do better than China,
(27:45):
the way to do better than Chinais not to try to put up barriers.
In the past when we were a great exportpowerhouse, it's not cuz we had big trade
barriers, we were in fact the freetraders, it's cuz we were better.
Right. >> John Cochrane
was better, our regulations were easier,you could get stuff done.
So the vision that we'regonna keep a regulatory,
(28:07):
slurotic economy with huge subsidies andbehind tariff walls.
And somehow that is going to make usbetter off and do anything about China,
we'll just go ahead and do what they want.
It's not good economics,it's not our place in the world, and
it's not really good national security.
(28:27):
Nobody ever won a great powercompetition by putting up trade
barriers against somebody elsewho was more innovative and
better able to do thingslike manufacturing.
So I'll cut that here.
But I do think that there'sa fundamental bleeding of the narrow
(28:47):
defensible national security grounds toworrying about China and what they do.
Into this idea that the way to winthe great power competition with China,
if that's what we're about,is to put up huge tariff barriers and
make electric drills in the USat five times the cost of what
(29:10):
we can buy them from China,I think that's a huge mistake.
I'm glad you referenced this show, John,
because by the end of this year we willhave done about 150 of these episodes,
four plus years of taping this.
And I assume the three of you must likeeach other because you keep doing this.
But what's special is when you fellows dodisagree, it's polite, it's civilized.
(29:30):
There's nobody throwing down theirmicrophone and stomping off,
nobody's insulting anybody.
It's a good spirited debate, the likes ofwhich is very scarce in this day and age.
>> John Cochrane (29:39):
Well, I do like these guys, and more than like them,
I respect them, they know a lot.
And one of my greatest pleasures in lifeis being proved wrong about something,
[LAUGH] and this show gives methat pleasure on a regular basis.
The only thing I would ask is,
our moderator needs more oftenwhen I say something, Tom, and
(30:00):
then Niall says, John, you bloody idiot,here's how it really works.
Give me a little more chance toapologize and say, Niall, you're right,
sorry, I didn't think about that,[LAUGH] cuz that is really.
And I'll tell you, one of the thingsI love about this show is it's
a chance once every week or so, to naildown my incredibly busy colleagues.
(30:26):
And force them to have a structuredconversation with Bill,
forcing us to shut up every now andthen, and move on.
I love these guys, I would seethem around the water cooler, but
we wouldn't have such a goodstructured conversation, and
I wouldn't learn as much withoutthe format of the GoodFellows.
So it's just great fun for me.
>> Bill Whalen (30:46):
Somebody who didn't have a problem shutting up, John, was the late,
great Calvin Coolidge.
And I mentioned that because you happento be a member of the board of trustees
of the Calvin CoolidgePresidential Foundation.
I didn't know this, John,
until I went stumbling on that websiteside to look at Coolidge speeches one day,
and there was John Cochrane onthe board of trustees, holy smokes.
But I mentioned Coolidge, John,because this is the 100th anniversary of
the centennial Coolidge running forre-election.
(31:09):
Keep cool andkeep Coolidge is some variation of that.
I don't know if we're gonna see keep cooland keep Kamala on this election or not,
but I wanna read to you a quotethat he said in 1924 and
get your thoughts on this.
Here's what Coolidge said, it's a speechcalled Responsibility of America.
Quote, I civilization cannot stand still,
the institutions under which itdevelops cannot remain unchanged.
(31:30):
Change is inevitable, and
there must be intelligent capacity todirect that change in the right way.
The key phrase there, John,
intelligent capacity to directthat change in the right way.
Now, it seems to me, John, that we don'tlack in this country intelligent capacity
in business, and public sector,and academia, and so forth.
But, John, there is a challenge to channelit the right way, wouldn't you agree?
>> John Cochrane (31:51):
Absolutely, and let me riff a little bit on what you just said.
Yes, I've enjoyed my time withthe Coolidge Foundation part I
got there because Amity Schlaes,who runs it, is a dear friend and
a wonderful person anda great author by the way.
We do often our book recommendations and
anything by Amity Schleseis a good thing to do.
(32:15):
The Calvin Coolidge sloganthat I like most is
return to normalcy afterthe progressive erade.
Boy, wouldn't it be nice if ourcandidates just said return to normalcy,
which I think is important.
You mentioned institutions, andcertainly one of my biggest
(32:36):
worries is the fraying ofamerican norms and institutions.
We do not elect a king every four years.
We have this wonderfulinstitutional framework,
which is fraying at the edges, buttalent at the top is really important.
Back to the history I'm learning a lot.
I'm reminded of a lot of lessonsfrom a history of the Rome podcast.
(32:58):
And there's times when there's talentedemperors and times when there's not so
talented emperors.
It makes a huge difference.
And you are right.
George Schultz kept saying this,too, we are not recruiting talent.
Whatever one must say about ourcurrent presidential candidates,
they are clearly not the mosttalented people in the country
(33:19):
right now with sort of abilityto govern and get things run.
And that's in the broad sweep of history.
It would be nice to have really good,
talented people putting thoseinstitutions back together.
And one last thing peoplemay not know about Coolidge.
He, together withTreasury Secretary Millen,
(33:40):
lowered the marginal tax rate fromfederal tax rate from 70% to in the 20s.
It was long, hard work, and
it was the first greatsupply side tax cut.
Mellon knew exactly what he was doing andgot Coolidge to do it.
Coolidge also patiently slashedaway at the federal budget.
(34:03):
And the 1920s were an economic boom,plus a boom in revenue for
the federal government,and no small part to that.
So that Reagan did not invent all that,Coolidge did, and
it worked pretty darn well for him.
>> Bill Whalen (34:17):
One thing I failed to do in preparation for this, John?
I was gonna look up what kind ofdogs at Calvin Coolidge owned,
because I imagine presidents,almost all presidents own dogs.
I don't think Trump had a dog inthe White house, but most presidents do.
And this leads us to the topicof the portuguese water dog.
Your Portuguese water dog's name is?
>> John Cochrane (34:34):
We have Bia, our second portuguese water dog.
Our beloved Angie was the firstportuguese water dog, and
they have been great, great companions.
It started, my daughter Sally wentthrough the I want a dog phase, and
my daughter Sally is unbelievablydogged and persuasive.
(34:56):
Two years of campaigning fordog, but she was also allergic.
So we were looking for a hypoallergenicdog and found portuguese water dogs.
So Angie was the first, Bea is the second.
They are wonderful,tremendously loving dogs.
I called ours, both are Beth'sshadow because they follow Beth
(35:18):
around like a shadow, warning,they are loving, but also very energetic.
So if you can't take the dog out runningor walking for several miles a day,
you're gonna have a fur ball running,bouncing around your walls.
>> Bill Whalen (35:37):
All right, let me good naturedly tease you in two regards, John,
and feel free to push back very hard.
Number one, the Cochran's from Chicagowere just imitating the Obamas,
who had a portuguese water dog.
>> John Cochrane (35:47):
No, we got there first.
[LAUGH] In fact, we think there'sa line from our portuguese water dog to
the Obamas via the Obama'sdecorator who met our dog.
And then the Obamas gota portuguese water dog.
So we'll claim to have the idea.
So this is back when we were all in Hydepark and our kids going to lab school.
(36:08):
But what the Obamas don't know is that allportuguese water dogs are libertarians.
They believe in property rights, andnow they don't always get it right.
Our dog, Bia,thinks that my socks are her property, but
nonetheless, [LAUGH] there we go.
>> Bill Whalen (36:24):
Okay, my second shot at you, John.
John Cochrane,champion of the free market.
You want a dog, is championed by BarackObama, and before that, Ted Kennedy.
Hardly champions of the free market,have a frou frou liberal dog, John?
>> John Cochrane (36:36):
[LAUGH] No, no, just got to meet Bia and
you'll find out they havesecretly libertarian dogs.
>> Bill Whalen (36:42):
Okay, well,
the reason why we're doing this is becauseyou have suggested to Niall Ferguson he
needs a Portuguese water dog.
I suggested he get a Labrador retriever.
Everybody has an opinion on a dog, butwhat do you think Niall will end up with?
>> John Cochrane (36:53):
No, Niall will end up with whatever Ayan
thinks Niall should endup with if he's smart.
>> Bill Whalen (37:00):
I think that's the answer.
I can't tell you how many times I've seenfamilies bring in a dog for the kids,
ostensibly, and it becomes the mother'sex child because just the kids
quickly don't wanna take care of it, thefather is not around to take care of it.
The wife takes control of the dog.
>> John Cochrane (37:13):
And that is, we went into this knowing that.
And so Beth also found a dogthat she absolutely has loved,
which is why we got a second one.
>> Bill Whalen (37:22):
Okay, John, we're getting short on time here, so
I wanna wrap up with two thingsyou're working on, books.
First of all, you're working ona book on the Euro, of all things.
The title Reforming the Euro,Lessons From Four Crises.
That's two crises less than Nixon, butwhat were the crises around the Euro?
>> John Cochrane (37:37):
Boy, boy, this is great fun.
And we are turning the manuscriptin today as I speak.
So those of you who watch the look forthe grumpy economists and
wonder where I've been.
Sorry, I've been on deadlinewith getting this book finished.
I'm working with two co authors,Klaus Mazuc, who is at the ECB, and
Luis Garicano, an economist who was alsoonce a member of the European Parliament.
(38:01):
And it sort of started as appliedfiscal theory to the Euro, or
at least that's how I was brought along.
But the Euro, a currency union,faces this fiscal question quite squarely,
which is if you have a currency union,but you don't have a fiscal union,
every country has an incentive toborrow a ton of money, get in trouble,
(38:24):
and then say, ECB, we're in trouble,bail me out, bail me out, right?
That's a problem.
Now, the initial architects of the Euroreally understood this, and as we dug in,
they really set up a structure thatwas going to protect against this.
But not every founding structureis completely finished.
(38:47):
And nobody imagined that there wouldbe sovereign debt crises and so forth.
So what happened to the Euro?
They have this beautiful structure,and then a series of crisis,
the financial crisis, the sovereigndebt crisis, the zero bound era,
the inflation, the war and whatever.
And each time nobody thought this wouldhappen when they set up the Euro.
But the ECB found itself the only game intown and had to start bailing out Greece.
(39:11):
And Greece's bondholders,they felt they had to, and
let's give them the benefitof the doubt of that.
And that's fine,every institution evolves,
but the problem is now the systemof incentives that they had set up
initially to say to countries,look, if you borrow money and
get in trouble, we're not gonna bail youout, so you better get your act in order.
That system of incentives is broken downso you do what you have to in a crisis,
(39:37):
but then you should patchit up afterwards and
get the incentives back together again.
So our book is about the story about howthe ACB did what it felt needed to do,
how there was the beginning ofa reform effort to put the incentives
back in place that kind of failed,and now here we are.
(39:57):
Everybody now expects the, The ECB tocome riding to the rescue in any crisis,
which means all the incentivesto reform are gone.
And so how do we put that back?
And it's not really critical of the ECBthey did what they felt they had to do,
and we don't really argue with that.
But it's about,let's get that structure back in place so
(40:18):
that you're not everybodyrelying on the ECB.
And then if everybody expects a bailout,of course, the next crisis,
the ECB has to bail out.
And we're at the point now where the nextcrisis might be so big the ECB can't,
Europe really needs to do this reform.
So that's the brief synopsis of the book,and look for
it on my website this afternoonafter I get [LAUGH] almost.
>> Bill Whalen (40:40):
[LAUGH] And then finally,
John, you're working ona book on past grumpy work.
>> John Cochrane (40:45):
Yeah, that's my next long term project,
the grumpy economist has been going on forten years now.
I've got answers to all the interestingout of the box answers to all
the interesting economic questions.
I guess I'll pitch the taxone we talked about,
rather than raise taxes,cut taxes, tax the rich.
(41:06):
No, here's a way to square the circle andget what everybody wants,
more tax revenue if you need that,but less damage to the economy.
So I got answers for that on healthcare,on banking regulation,
trade tariffs,social programs, you name it.
And the hard part here is, of course,
distilling down all of my blah,blah, blah, blah, blah for
(41:28):
ten years into something that youcan read on an airplane flight.
[LAUGH] Sothat's a project coming up, yeah.
>> Bill Whalen (41:38):
That sounds like a fun project.
And the final thing, John, you recentlydid a podcast with John Hartley.
Can you tell us a little bit about that?
>> John Cochrane (41:44):
This was just an interview back and forth of me.
John Hartley has started a podcastcalled the Capitalism and
Freedom in the 21st Century.
He did a lot of interviews ofeconomists and that then we're
moving that podcast to a officialhome at the Hoover institution.
(42:08):
It'll become the official podcast ofthe economic policy working group.
So it'll broaden its scope a littlebit to what's going on in economic
policy as Hoover.
And we did an inaugural onewhere he interviewed me and
we talked about policies more generally.
>> Bill Whalen (42:26):
Okay, well, save time for Goodfellows, John, please,
GoodFellows first.
>> John Cochrane (42:31):
Of course.
>> Hey, John, I think that'sgonna wrap up this conversation.
>> Bill Whalen (42:35):
She's not in the room, but I'd like to apologize for your dog,
it was nothing personal.
I just thought we'd have a little fun withthat, and we don't have an official mascot
for GoodFellows,maybe she can be our official mascot.
>> John Cochrane (42:44):
Bea would make a great mascot for the show.
>> Bill Whalen (42:48):
Okay. >> John Cochrane
enthusiasm, although not quiteas much intelligence as at
least the two other membersof our team [LAUGH].
And you said nothing about the moderator [LAUGH],
I'll take that a note.
>> John Cochrane (43:01):
[LAUGH].
>> Bill Whalen (43:03):
John, thanks for doing this today, I think the voice sounds good,
but get better, my friend.
Heal up and we look forward to doingregular GoodFellows very soon.
>> John Cochrane (43:11):
Thanks.
>> Bill Whalen (43:12):
So that's it for this mini episode of GoodFellows,
we hope you enjoyed the conversation.
And keep in mind we're doing thisnot just with John, but also
with Niall Ferguson and HR McMaster alongwith our regular GoodFellows episode.
And the best way to keep track of whatyou're up to is subscribe to our show on
YouTube, andrecommend it to people and like it.
Send us up that chart on YouTube ifyou wouldn't mind, we like algorithms,
if you will.
On behalf of John Cochrane, our missingin action GoodFellows, Niall Ferguson,
(43:35):
HR McMaster, the very talentedpeople behind the scenes here at
the Hoover Institution haveput these shows together.
We hope you enjoyed today's conversationand we'll be back soon with a new one.
Till then, take care, thanks for watching.
[MUSIC]
>> Presenter (43:50):
If you enjoyed this show and are interested in watching more content
featuring HR McMaster, watch Battlegroundsalso available at hoover.org.
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