Behavioral economist Richard Thaler talks to bestselling author Malcolm Gladwell on the implications of behavioral economics on how we think about the world, from our personal lives to business to society. They will have you retooling your grocery list and retirement strategies, and lead managers to rethink every aspect of their business.
60:30this is an important point someone whohas always been the the A+ student thisthe court feel are the obvious smartestkid in the room right golden boy issomeone who is who is not powerfullymotivated to disrupt the status quoright right right is rare going I seewhere you’re goinglook no I think it’s an obvious pointthat if I were if I had been really goodat doing economics I wouldn’t have hadto do this you know all rightI mean I sure when Rosen my advisor Iquote him in the in in an article in TheNew York Times he told the reporter whoasked about my career as a grad studentquote we didn’t expect much of him yeahand you it’s always good to have youI think it’s been purestupidity that we haven’t been buildingroads bridges and so forthfor the last seven years when we wecould we can borrow at a negativeinterest rate and use otherwise idleresources I mean it’s just mind bogglingthat we haven’t done that and and youdon’t have to be a Keynesian to thinkthat so whether or not this wouldstimulate the economy let’s just supposewe do just cost-benefit analysis we havebridges that are all going to fall downall around the country we could bebuilding them with construction crewsthat have nothing to do and borrowing atzero interest rate and we’re going tohave to do start doing it as soon as theeconomy picks up when it will cost a lotmore so complete stupidity
The Economist talks to the President of the United States about economic policy
No. I want people to come in legally. But I want people to come in on merit. I want to go to a merit-based system. Actually two countries that have very strong systems are Australia and Canada. And I like those systems very much, they’re very strong, they’re very good, I like them very much. We’re going to a much more merit-based system. But I absolutely want talented people coming in ..
.. We want a provision at the right time, we want people that are coming in and will commit to not getting…not receiving any form of subsidy to live in our country for at least a five-year period.
.. We also want farm workers to be able to come in. You know, we’re going to have work visas for the farm workers. If you look, you know we have a lot of people coming through the border, they’re great people and they work on the farms and then they go back home.
.. But beyond that it’s OK if the tax plan increases the deficit?
It is OK, because it won’t increase it for long. You may have two years where you’ll…you understand the expression “prime the pump”?
We have to prime the pump.
It’s very Keynesian.
We’re the highest-taxed nation in the world. Have you heard that expression before, for this particular type of an event?
Priming the pump?
Yeah, have you heard it?
Have you heard that expression used before? Because I haven’t heard it. I mean, I just…I came up with it a couple of days ago and I thought it was good. It’s what you have to do.
.. they open a plant someplace else and then they send the air conditioner or the car into our country with no tax, that’s not going to happen anymore. They’re going to have a very large tax to pay, in the vicinity of 35%.
.. So we’re not leaving. I don’t know if you saw what’s happening. Ford has announced massive expansions in the United States. General Motors cancelled a big plant in Mexico and a big plant in Europe. They’re all cancelling plans because I told them, I said…I get along with them great. But I said, “Look, we don’t mind if you leave the country. You can build all you want out of country, I hope you enjoy your plant. But when you build your car, you’re going to have a 35% tax when you bring it back in. And if your numbers work, we wish you well. But that’s what you’re going to have. You’re going to have a 35% tax.”
.. I haven’t been given massive credit for it yet, but I have been given some because I just see polls out in Michigan and different places
.. But that’s not a tax increase, that’s no tax. In other words, all you have to do is don’t leave and you won’t have a
.. We need infrastructure in our country. This country has wasted $6trn in the Middle East. Wasted. Like taking it and throwing it right out that window.
.. If you do need Democratic support for your tax plan, your ideal tax plan, and the price of that the Democrats say is for you to release your tax returns, would you do that?
I don’t know. That’s a very interesting question. I doubt it. I doubt it. Because they’re not going to…nobody cares about my tax return except for the reporters. Oh, at some point I’ll release them. Maybe I’ll release them after I’m finished because I’m very proud of them actually. I did a good job.
Hope Hicks [White House director of strategic communication]: Once the audit is over.
President Trump: I might release them after I’m out of office.
President Trump: By the way, so as you know I’m under routine audit, so they’re not going to be done. But you know, at a certain point, that’s something I will consider. But I would never consider it as part of a deal.Right, got that.
I would never do it. That would be…I think that would be unfair to the deal. It would be disrespectful of the importance of this deal. Because the only people that find that important are the reporters.
Well, the Democrats say it’s important.
Well, don’t forget I got elected without it. Somebody said, “Oh but you have to do it,” I said, “Look where I am”. I was, you know, I was out front, I was asked that question, every debate, I said, you know, I’m under routine audit.
Mr Mnuchin: And the president’s financial disclosure has been longer than any…
President Trump: Plus my financial disclosure is 104 pages.
Ms Hicks: I think when people say that that makes it about the president and the politics versus the people, which is what we’re focused on.
.. Can I ask you about the focus of the tax cut because you’ve spoken about a massive tax cut for ordinary workers…
Right, this would be the biggest tax cut in the history of the country.
But the biggest winners from this tax cut, right now, look as though they will be the very wealthiest Americans.
Well, I don’t believe that. Because they’re losing all of their deductions, I can tell you.
But something like eliminating the estate tax.
I get more deductions, I mean I can tell you this, I get more deductions, they have deductions for birds flying across America, they have deductions for everything.
.. Would you consider a VAT for the United States?
Well the concept of VAT I really like. But let me give you the bad news. I don’t think it can be sold in this country because we’re used to an income tax, we’re used to a…people are used to this tax, whether they like it or don’t like, they’re used to this tax.
.. But the VAT is…I like it, I like it a lot, in a lot of ways. I don’t mean because of, you know, getting it back, you don’t get all of it back, but you get a lot of it back. But I like a VAT. I don’t think it can be sold in this country, I think it’s too much of a shock to this system. I can tell you if we had a VAT it would make dealing with Mexico very much easier.
.. Are you still considering a border-adjustment tax?
We are dealing with Congress…because it’s not really what I’m considering. I mean look, on health care, I think we have a great bill and there’s still a little bit further to go because we’re also dealing with the Senate, but the Senate I believe really wants to get something done because Obamacare is dead, just so we understand. Obamacare is absolutely dead. The insurance companies are leaving. Yesterday Aetna just announced they’re pulling out. You have states that aren’t going to have any insurance companies. You know when people say, “Oh, Obamacare is so wonderful,” there is no Obamacare, it’s dead. Plus we’re subsidising it and we don’t have to subsidise it. You know if I ever stop wanting to pay the subsidies, which I will.
.. One of the things that was so different about your campaign message compared to other Republicans was, you said things like “I want everyone to be covered”.
We’re not going to let people die on the streets.
But some people will look at this bill and say, hang on, a lot of people are going to lose their coverage.
OK. So we have a pool for people that are having difficulty. We have got a pool. It’s a high-risk pool. And this pool we just funded yesterday, we’re putting in $8bn, into the pool. So depending on what states do…because I would like to see states taking over health care, I think they could do a better job than the federal government.
.. So, the problem with Obamacare? He rushed it through
.. You look at Ireland. I own great property in Ireland that I bought during their downturn. And I give the Irish a lot, a lot of credit. They never raised their taxes. You know you would have thought when they were going through that really…they would’ve double and tripled their taxes. They never raised it a penny. And they got through it and they are thriving now. Ireland’s done an amazing job. A lot of companies have moved to Ireland and they like it.
.. I’ve had people tell me that the cutting of those regulations is more important to them than bringing it down from 35% to 15%.
.. The enthusiasm levels for manufacturers went up 27 points in two months. If it goes up a quarter of point it’s like a massive…it went up 27% in two months, up to 93%, they’ve never been even close. The enthusiasm for business is the highest it’s ever been.
Blanchard Cerutti and I look at a sample of over 100 recessions from industrial countries over the last 50 years and examine their impact on long run output levels in an effort to understand what Blanchard and I had earlier called hysteresis effects. We find that in the vast majority of cases output never returns to previous trends.
US output is now about 10 percent below a trend estimated through 2007. If one attributes even half of this figure to the effects of recession and assumes no catch up on this component until 2030 the cost of the financial crisis in the USA is about 1 year’s GDP.
In Europe, by contrast, policy makers were ready and eager to throw textbook economics out the window in favor of new approaches. The European Commission, headquartered here in Brussels, eagerly seized upon supposed evidence for “expansionary austerity,” rejecting the conventional case for deficit spending in favor of the claim that slashing spending in a depressed economy actually creates jobs, because it boosts confidence. Meanwhile, the European Central Bank took inflation warnings to heart and raised interest rates in 2011 even though unemployment was still very high.
.. If you want to feel really depressed about Europe’s future, read the Op-Ed article by Wolfgang Schäuble, the German finance minister, that was published Wednesday by The Times. It’s a flat-out rejection of everything we know about macroeconomics, of all the insights that European experience these past five years confirms. In Mr. Schäuble’s world, austerity leads to confidence, confidence creates growth, and, if it’s not working for your country, it’s because you’re not doing it right.