Good Economics: The Power of Putting People First with Noah Smith and Betsey Stevenson

Published
Jul 19, 2021

This week on the World Reimagined podcast, host Gautam Mukunda discusses labor markets, the future of the American economy, and more with Bloomberg opinion columnist Noah Smith and University of Michigan professor Betsey Stevenson.

Today’s shifting economic and political landscape is reshaping the American labor market. But amid all of the change is an opportunity to create a better workforce for the future. What are the forces at play in our current labor market? How will these changes impact employees in the long term? What role should leaders play in creating a workforce that puts its people first?

This week, Host Gautam Mukunda speaks with two experts about the new administration’s economic policy agenda. Noah Smith has a Ph.D. in economics from the University of Michigan, taught finance at Stony Brook University, writes a column on economics for Bloomberg, and a substack newsletter, Noahpinion. Dr. Betsey Stevenson is a Professor of Public Policy and Economics at the University of Michigan, was a member of President Obama’s Economic Advisors, and hosts the think tank podcast Think Like an Economist.

Necessity is the mother of invention, to say that, you know what, we've had so many bad shocks by this point that we're just going to have to be bold and go for broke... We're going to have to go into the foreign markets and compete in the international stage. We're going to have to train people as if there's a future. We're going to have to take big risks, because our backs are to the wall after this two decades of disasters.
Noah Smith
We look for the good in everyone in our family when we pull together. We need to do the same thing in our country. We need to be loyal to everyone in our country. We need to look for the good in everyone in our country, and we need to pull together.
Betsey Stevenson

Follow @GMukunda on Twitter or email us at WorldReimagined@nasdaq.com

Books Referenced on World Reimagined Season 2, Episode 6:

The Human Side of Enterprise, by Douglas McGregor

The Blueprint: 6 Practical Steps to Lift Your Leadership to New Heights, by Douglas Conant

Guest Information for Good Economics:

Noah Smith is a writer for Bloomberg Opinion and writes a Substack newsletter called Noahpinion. He did his economics Ph.D. at the University of Michigan and worked as a finance professor at SUNY Stony Brook. He has also lived in Japan for several years. He has two very chubby, fluffy rabbits.

Dr. Betsey Stevenson is a professor of public policy and economics at the University of Michigan. She is also a faculty research associate at the National Bureau of Economic Research, a visiting associate professor of economics at the University of Sydney, a research fellow of the Centre for Economic Policy Research, a fellow of the Ifo Institute for Economic Research in Munich, and serves on the executive committee of the American Economic Association.

She served as a member of the Council of Economic Advisers from 2013 to 2015 where she advised President Obama on social policy, labor market, and trade issues. She served as the chief economist of the U.S. Department of Labor from 2010 to 2011, advising the Secretary of Labor on labor policy and participating as the secretary’s deputy to the White House economic team.

Episode Transcript:

Gautam Mukunda:

After two tumultuous decades, a lot of Americans are afraid of what's coming next. But even if things go well and we do get a fairer, more equitable economy, one of the most surprising and important outcomes might be the rise of a new and old model of leadership.

Speaker 2:

I think of it as trying to create a new world. The kind of world that we perhaps have always wanted to live in.

Speaker 3:

Climate change is a systemic risk to the entire economy. You cannot diversify away from it.

Speaker 4:

To intervene when your country, your company, your family needs you to do so, that's leadership character.

Speaker 5:

World Reimagined with Gautam Mukunda, a leadership podcast for a changing world. An original podcast from NASDAQ.

Speaker 6:

Why do leaders fail? Unwillingness to learn, a fear of showing their vulnerability, and a fear of being themselves. A lack of authenticity.

Speaker 7:

The character of a corporation is not the personality. Character of corporation is the integrity and the morality of the company.

Speaker 8:

Without truth and trust, there is no democracy.

Gautam Mukunda:

It's morning. It's New York or Austin or Seattle or Omaha. There were places just like this in every city, in America, in every city in the world for that matter. It could be a Monday or a Tuesday, even a Friday if these people are lucky. But whatever day it was, wherever it was, this is how it used to sound when people got ready for work. And then, very abruptly last spring, it all stopped. The COVID-19 pandemic was a sucker punch to just about every sector of the global economy. But as devastating as it was, and as hard as it's been and will still be to climb back up from it, in a way it didn't so much create new problems with our society as reveal ones that had been building for decades. Since the dawn of the 21st century, median incomes have stagnated, inequality has skyrocketed, and America's life expectancy has even gone down. While trying to rebound from this crisis, the current administration is attempting the largest transformation of the American economy since the New Deal. We got two economists to tell us what it all means. Well, sort of.

Betsy Stevenson:

Actually, sir, I'm going to just have to take a moment and say no, you don't identify as an economist.

Noah Smith:

No. I mean, so the world is full of people who are not practicing economists in any way, or have never even studied economics who personally identify as economists, such as the columnist Ben Stein, who identified as an economist for reasons no one could ever figure out. I've decided to buck the trend. Even though I got a Ph.D. in economics and worked as an economist for a couple of years, I have decided to not identify as an economist to sort of push back.

Gautam Mukunda:

I like that. Ben Stein went to my high school, which is my random Ben Stein fact.

Betsy Stevenson:

I see. I actually really do resent the people who identify as economists who have no training. I'm not sure that your strategy is the best way to deceive us.

Noah Smith:

I'm gatekeeping myself out. I've met much of a stickler.

Gautam Mukunda:

Even though he has a Ph.D. in economics from the University of Michigan, has taught finance at Stony Brook University and writes a column on economics for Bloomberg, Noah does not identify as an economist. But he is the columnist whose work most makes me say, "I wish I had written that," particularly on his Substack Noahpinion.

Gautam Mukunda:

Betsy Stevenson on the other hand, wears the economist label with pride. She's a professor of Public Policy and Economics at the University of Michigan, was a member of President Obama's Council of Economic Advisors and even hosts a great podcast called Think Like an Economist. We wanted to talk to these two experts because we were eager to discuss the new administration's economic policy agenda, something a number of people, including Noah have been calling Bidenomics.

Noah Smith:

Basically, when I took a look at Biden's proposals, I saw that there were kind of three things that really tied them all together. One of these things was cash benefits. I think, the child allowance would absolutely remake our welfare state in kind of the direction of simpler and more universal and a lot of the things we've been thinking about doing since we realized the limitations of the New Deal, but haven't really done yet. That was the first kind of pillar.

Noah Smith:

The second pillar was government investment. You saw calls for big investment in infrastructure, big investment in science. That kind of goes along with the fact that government investment has been falling as a share of GDP for years and the government just doesn't invest as much as it used to, and the idea that, "Hey, maybe that's one reason that productivity growth is slow and stuff's falling apart, and perhaps we could boost growth with government investment.

Noah Smith:

I think the third pillar was care jobs. The idea of, well, the robots are coming to take our jobs in some generalized sense. There's QR code, ordering at restaurants are going to put all the waiters out of jobs. We just have a technological era of labor saving innovation that's going to cause lots of churn in the job market and the question is what can people still do? I think the one obvious answer that people came up with was, "Oh, well, they can take care of each other." So, care jobs are kind of the future of work.

Noah Smith:

I think those three ideas came together and altogether, I think that these three ideas represent a dual track economy. I did not coin that term. That term was coined originally to describe Japan's economy in the seventies and eighties when you had some extremely productive manufacturing exporters, the Sonys and the Panasonics and the Toyotas of Japan. Then, you had 80% of the people were employed by these very low productivity, domestic-focused kind of companies. That was not the optimal arrangement for the Japanese economy, but I think Biden is trying to make a different kind of two track economy than that. I think he's essentially trying to pump up high-value, high-tech export oriented industries, using investment. Then, he's trying to use care jobs and cash benefits to take the wealth that's generated and spread it around more equally than wealth has been spread around in the past.

Betsy Stevenson:

Noah, I love this whole explanation, but I was just going to interject when you said the sort of two-track economy, that in some sense what Biden's trying to do is minimize that because what is going to cause the U.S. to have a really substantial two track economy is for the capital to be concentrated in the hands of a few. In other words, if the robots are taking our jobs, it's not an income problem, it's a distribution problem. If only a few people own the robots, then they're going to have these huge incomes and everyone else is going to be suffering. If we can address the income distribution right now, then we can also address the distribution of the ownership of the robots. If we address that, then we don't necessarily have to have a two-track economy.

Speaker 5:

What you're saying doesn't really contradict what I'm saying. I think that I'm not describing the two-track economy as an economy where one group of people succeeds and another fails, and one group of people gets all the money and another does not. That's not at all what I'm talking about. What I'm talking about for the two-track economy is a differentiation between high-tech high value and probably export-oriented industries and ways to make wealth more evenly distributed. Because if all you do is you focus on the next Tesla, the next Google, who knows, right? If all you do is focus on those top companies, you get a very unequal distribution. That's exactly the opposite of what I'm calling the two-track economy because I think that you need part of the economy that acts as a redistribution mechanism and takes the wealth generated by those high-value, high-tech industries and spreads it around so that you have a more equitable economy.

Gautam Mukunda:

The Biden administration's plan is going to change many aspects of the American economy. Maybe one of the most important is what might happen to the labor market. For 40 years, the Federal Reserve has responded to any signs of inflation by raising interest rates and slowing the economy. As a consequence, most Americans today have never experienced a truly tight labor market and what that means. This is particularly true for workers with only a high school education. From 1974 to 2018 real wages for men with only a high school diploma dropped 7%. For those without even that, they dropped 18%. And I don't need to tell you what happened to wealth and income for people in the top 1%. We've had a loose labor market for a long time. So long, most of us have forgotten what a tight one even looks like. Today, however, in the waning days of COVID, we're starting to find out.

Noah Smith:

You see business leaders all across the country are quoted saying complaining about a labor shortage. You even see signs up in the windows of restaurants complaining about those. I mean, are we actually experiencing a "labor shortage" and it is a world in which labor has the kind of power that they can turn down these jobs if they don't want to do it, the world business leaders should be preparing for?

Betsy Stevenson:

First of all, let's address the labor shortage. We are 10 million jobs short of where we would have been without the pandemic. I do not think 10 million people have decided that they're sitting on their couch and not going to get up and go to work. I don't think there's any kind of labor shortage. If you go back to the 2008 recession, 2009 recession, when most of the unemployed were not actually getting unemployment insurance benefits and there were certainly no extra top off, we still heard employers all the time complaining that they couldn't hire the workers they wanted to hire at the low wages they wanted to pay. I think that you are hearing where employers today who are struggling to hire people at the low wages that they would prefer to pay, I do think that it's not just unemployment insurance.

Betsy Stevenson:

Unemployment insurance might be giving workers a little bit of power, but the real thing that's different in this recession than any other recession is we've told all these workers, "You know what? You think jobs are plentiful today? They're going to be even more plentiful next month and the month after, and by the end of 2021, this economy is going to be going gangbusters?" They don't see the job offer they get today as being their last potential call on a job anytime soon. That idea that jobs are going to continue to become increasingly more plentiful over time is giving workers, particularly at the bottom, particularly in the kind of jobs where people tend to leave them, the types of jobs with a lot of turnover, it is giving workers an enormous amount of power. I do think we might see that push up wages at the very bottom.

Betsy Stevenson:

We're talking about the workers who have been arguing and fighting for a rise in the minimum wage and it seems like they might just be in the kind of circumstances right now that they might just get that rise in the minimum wage from their own bargaining power.

Gautam Mukunda:

The striking thing about discussion of a labor shortage is, well, there's another term for it. Wages aren't high enough. For most things, if demand outstrips supply, the price goes up. That's how markets are supposed to work. For example, a few summers ago, one political unrest led to a severe shortage of limes in the United States. You could find a single piece of fruit for sale for $2. People didn't like it, but they understood why it was happening. So, well, labor shortage means that wages need to increase. If most of us hear wages are rising, we think that's a good thing, not a bad one. But that can be really tough on employers who are used to paying much less and who might even have entire business models built around assumptions that wages will stay as low as they have for generations.

Noah Smith:

I wonder if I'd actually push on this because I think if you were to poll the American public, most people would like most people to get good jobs and jobs they like. I'm actually not certain that that's an outcome that's desired by the most powerful elements of American society.

Betsy Stevenson:

When people get paid more for house cleaning, they don't like it. No, they like it. The people paying for it don't. We like the poor working for nothing because that means cheap stuff for us as the people who buy from low-income labor. It does change your mindset when you have to start thinking about people's time is expensive. It undoubtedly does change how you think about people's time and what you buy. I will even say you could put minimum wages certainly high enough that we would see an increase in unemployment, but all the people who work at those minimum wages would be earning a living wage, a solid wage.

Betsy Stevenson:

And so, the question then is a trade off. Should we have most people who work get compensated an amount that allows them to put a roof over their head and food on the table? Or should we use the risk of starvation as the stick that we need to motivate all people to work? I think that's where Biden has said, "No, wait. Hey, working is fine, but being threatened with poverty every day of your life if you're not working just a little bit harder, it's too much."

Noah Smith:

Right. To build on that, I would say that I think we're in the middle of this great change. Everyone has to put great in front of everything but I think we're in the middle of a great realization that poverty doesn't work the way we used to think it worked or the way that many people used to think it worked. The old way is the idea that poverty is about incentives. If you're incentivized to sit on your butt, you'll sit on your butt and be poor. It's about laziness. It's about culture. It's about moral turpitude. It's about government dependency and blah, blah, blah. Of course, this is right out of the Reagan era and a bit it's also behind EITC phase and in the child tax credit phase and work requirements for SNAP, and it's behind a lot of the policies we have that assume that if you don't provide the right incentives, people just won't work because not wanting to work is why people are poor in the first place.

Noah Smith:

But I think that we're in the middle of this great realization that poverty is more about poverty traps. That it's about being so hassled by the annoyances of daily life that you can't plan for the future. It's about precocity and calamities like medical bankruptcies. We're having to bail family member out of jail or getting big parking tickets or speeding tickets or being arrested for smoking weed because you were trying to cope with the stress of all the other stuff about getting your hours canceled at your store where you work, or blah, blah, blah. All this procaryotic and uncertainty and hassle and cost, I think, and the stress that comes with that. I think the new understanding of poverty is that's where poverty really comes from from.

Gautam Mukunda:

This isn't just a question of policy. It goes to one of the fundamental divides and how people view the world and perhaps the most important single one, in how leaders think about motivating their followers. I'm just going to put my management professor hat on for a second. Have either of you guys read Douglas McGregor's the Human Side of Enterprise?

Noah Smith:

No.

Betsy Stevenson:

No.

Gautam Mukunda:

If you ever get a chance, it's an old book, it's from the sixties or seventies, but it talks about management as there being two views of management, Theory X and Theory Y. His Theory X is people are fundamentally lazy and it's your job as a boss to force them to work. He says Theory Y is people fundamentally want to work, they want to have dignity, they want to be useful, and it's your job as a boss to put them into places where that desire becomes productive. It just struck me that what you're describing is a social level debate between Theory X and Theory Y.

Betsy Stevenson:

Oh, I think that's exactly right. I also think that it describes the divisions between the political parties. The Republicans believe that people are fundamentally lazy and Democrats believe that people fundamentally want to work and we just need to put them in the right situation. I personally think maybe it's hard to put all people into one or the other category. The problem is that there are some people who are fundamentally lazy and there are some people who are really intrinsically motivated. Then, there's a whole fuzzy middle. There's some people who are really deeply lazy and there's some people who are deeply intrinsically motivated, and then there's a whole fuzzy middle of people who under the right circumstances will work really hard. I think what's been unfortunate is we have failed to create the right circumstances for a lot of people because we don't treat workers with the kind of loyalty that inspires that reciprocity and exchange mindset.

Gautam Mukunda:

A lot of the way we deal with poverty and unemployment comes from a Theory X view of the world. The Welfare Reform act of 1996 that was proudly signed by bill Clinton, for example, had as one of its key planks, putting people on welfare on a time limit. The idea was that too many people were lazy and preferred government support to having a job so we had to force them to work by taking away government assistance. That belief, of course, is given added strength by the fact that long-running structural discrimination in the United States means that many minority groups are far likely to be unemployed than white Americans and are subject to stereotypes around work ethic that are both pernicious and pervasive.

Gautam Mukunda:

But as Betsy said, our vision of poverty is starting to change. We're starting to realize that poverty has far less to do with laziness than it does with poverty traps. For example, the Federal Reserve has found that 40% of Americans would struggle to meet an unanticipated $400 expense. That means that if their car breaks down, they might not be able to repair it so they might find it hard to get to work and lose their job. That'll throw them from the lower middle-class into poverty and potentially trap them there forever. If we think about poverty that way, if we adopt a Theory Y view of the world, then our view of how to get people out of it changes completely. Instead of denying people support so that they are forced to work, we might try to give them enough support to break the trap. Then they won't just never need help again, they'll be contributing to help everyone else too.

Gautam Mukunda:

That story isn't just a nice theory. It's personal to me. When my father first came to America from India, he was incredibly well-educated. He already had a master's degree in engineering and he got a second one here. But times were tough. Really tough, especially for a new immigrant with no connections and no savings. He couldn't find a job. He even went on unemployment for a while. If he hadn't had that option, maybe he would have gone back to India or maybe he would have been forced to take something that didn't use his skills and been trapped in a dead end job on the edges of the middle-class. Instead, he had the time to find a position as an engineer. Then, he worked for the federal government; first, for the Navy, than the Department of Energy. When he finally retired, he had done so much for the country that his colleagues presented him with a flag that had flown over the Capitol building as a tribute. That's a pretty good return on America's investment of a few months of unemployment insurance. Don't you think?

Gautam Mukunda:

I wonder then, if the beneficial circle here that you described, if this idea that if we're shifting to an economy where people are not forced to work by the threat of poverty, or at least that's the goal of what we're trying to do, that that will enable an economy in which people are actually moving into higher value added industries, one that looks something more like the German economy, I guess, is the way I would put it. Where there's a lot of manufacturing, but it's such high value-added manufacturing that they still export and they still pay extremely well.

Noah Smith:

I think that America has developed a fear of automation that is sort of a piece with our fear of everything. Americans are afraid of new houses going up in their neighborhoods. Americans are afraid of foreign trade. Americans are just terrified of everything and I think that this comes from a couple of decades of calamities. We had 9/11 and the tech bubble crash and the housing bubble crash and the great recession and the Iraq war and the disputed election of 2000. Then, we had Trump. Oh, and of course, COVID obviously. I think Americans are shell- shocked and think that anything that happens to them is going to be bad, especially because that came on the heels of things like the Rust Belt and increasing inequality and wage stagnation that had been building up for a long time. I think Americans have lived with negative change for so long.

Noah Smith:

We had a lot of positive things were happening in the 90s and I think we temporarily recovered our optimism, but I think that when the 2000s began, such a two decade long string of bad rolls of the dice and self-imposed mistakes, obviously, it's not just luck, but that I think that Americans are scared and we are turning to the sort of scarcity mindset or survival values or whatever you want to call it, and people are guarding anything they have, whether it's their job as a waiter or whatever, like a little piece of cheese. Or their nice quiet neighborhood or whatever they have, the value of their house, they're guarding it like a little scared mouse with a piece of cheese. We have to get away from that.

Noah Smith:

If we're going to progress and we're going to grow and we're going to make this country work better, be more prosperous, we're going to have to develop a mindset of abundance where we think, "Okay, if we install robots, yes, it's going to cause job churn. You're not going to have as many people working on assembly lines. But it's going to allow us to stay competitive in manufacturing with countries like China and we will find something for the people to do." I think that AI or whatever technology people are scared of this week, or [inaudible 00:22:26], building houses in people's backyards, building duplexes and four-plexes and low rise apartment buildings and 800-use and what not. We need to do that and we need to build transit and trains and people are scared of, "Oh my God, who's going to ride the train in my nice little neighborhood." No. Build the dang train. We need to move this country forward and people are just scared because I think they're shell-shocked from too many disasters.

Gautam Mukunda:

Theory X is about fear and we've made it work by structuring society so that fear is very real and justified. For a lot of Americans, the penalty for losing their job was being thrown permanently into poverty so fearing change made sense. But fearing change also means fearing progress. If nothing changes, then things can't get worse. But they also can't get better. A Theory Y company and a Theory Y world is usually a lot more open to change and innovation because it's filled with people who aren't afraid. Take Google's 20% time. The idea that every person working there has a fifth of their time free to work on anything they find interesting or potentialy useful. That's a perfect example of a Theory Y idea. It assumes that people given freedom will use it to be productive, not lazy. And 20% time pays off. Do you use Gmail? That came from 20% time.

Gautam Mukunda:

And a world with high wages can help businesses in another way, too. The U.S. Bureau of Labor Statistics reported that U.S. labor productivity surged by 5.4% in the first quarter of this year. As wages go up, businesses have an incentive to invest more in labor saving technologies, which will increase productivity still further. For the last two generations, for the first time in American history, increases in productivity have not been reflected in higher wages. Thanks to those loose labor markets again. But if they stay tight, we might start to get a cycle where higher wages lead to higher productivity, which results in still higher wages. That's the world we want to be in, but to get there, we have to move past our fear of everything from automation to labor power. Getting people to move past their fear, that's the quintessential test of leadership.

Gautam Mukunda:

We say this is a podcast about leadership, the transition of people from a scarcity mindset to an abundance of mindset, making people brave enough to try new things again, is almost the quintessential leadership challenge at any level. If you were advising president Biden, if you were advising, not just President Biden but corporate leaders who will also, I suspect, be trying to transition their companies to function in this new way, how would you tell them as leaders to get people to think it's time for good things to start happening again?

Noah Smith:

That's an interesting question because I don't have much leadership experience myself and so I don't really know how to motivate people that well. My instinct would be to say that necessity is the mother of invention. To say that, you know what, we've had so many bad shocks by this point, that we're just going to have to be bold and go for broke. We don't have any little crumbs of cheese to protect anymore. We're just going to have to break on through to the other side. We're just going to have to, to quote The Doors, we're going to have to install the new machines. We're going to have to go into the foreign markets and compete in the international stage. We're going to have to train people as if there's a future. We're going to have to take big risks because our back is over the wall after this two decades of disasters.

Noah Smith:

We're facing dramatic competition from China that's threatening to turn us back into an economic backwater instead of one of the production centers of the world. We are facing social divisions. We are facing crumbling infrastructure. We're facing all these threats and we need to be bold to meet these threats. I think if you look back in America's history, we have a history of being bold and meeting threats. I think that obviously the New Deal and World War II are the most dramatic and often cited example of this, not the only example, but the best example of when everything was going wrong. I mean, the economy was just incomparably worse at that time than it is now and the international situation was even more dire than it is now.

Noah Smith:

People thought that this was the end of America. America is going to come part and that the world was going to descend in the darkness. I think that we got serious. We got serious and we didn't get everything right. The New Deal didn't get everything right. We didn't get everything right in World War II. But we did a lot of the stuff that we had to do when we did stuff. We had this FDR attitude of the only thing to fear is fear itself. I think we need that attitude now.

Gautam Mukunda:

The legendary former CEO of Campbell soup, Douglas Conant wrote in his book, The Blueprint, that one of the key components of successful leadership was transitioning from a scarcity mindset to one of abundance. To transform fear into hope. It's one of the most profound things a great leader can do, but it's not easy.

Gautam Mukunda:

Betsy, I very much want your take on this. How do they use their power and their influence, the leaders of the American business community, to sort of steer us in the hopeful direction?

Betsy Stevenson:

What's funny to me is America has been stuck in a really bad equilibrium for a little while, where we have a lot of really shitty jobs that pay very little. There's not a lot of dignity in those jobs. People quit those jobs all the time because they're paid so little and then are forced to come back to them or come back to some version of them because they need the income. They're not particularly polite to their customers or their coworkers because they're paid so little, and therefore, you get this bifurcation where people ignore and almost treat people who are working in the coffee shop as a non-human. They're not seeing that person as somebody who could be just like them.

Betsy Stevenson:

In contrast, in a country like Australia where their minimum wage is really twice what the U.S. is, and in fact it's a misnomer to say their minimum wage because they have an entire prevailing wage system which means there's a minimum wage per occupation, people are really paid well and there's more of a sense of workers' humanities, and that actually affects how people engage with their customers and how customers engage with them. It just is a real difference. It's a different way of operating a labor market with much less animosity. I think that that reduction in animosity spills over through the whole society.

Betsy Stevenson:

I think that what we have to do is have some wins to try to build a society that can feel more cohesive. Those wins mean we need that higher minimum wage. We need this cash redistribution. We need people feel like the government can help. I think that that's when we can start to work harder on achieving unity. We have to be reminded of the value of pulling together. He could take this at a really personal level. A family going through a crisis that turns on each other usually handles that crisis much worse, and at the end comes through it very fractured and very damaged. A family that pulls together and is loyal and supportive to each other through a crisis can actually come through it much stronger.

Betsy Stevenson:

The United States has gone through a crisis and we have really fractured, been terrible to each other, have pulled apart and we really risk coming out the other end much weaker. We still, I think, have an opportunity to try to pull together, but just like you don't like everybody in your family, you don't have to like everybody in your country. But we are loyal to everyone in our family when we pull together. We look for the good in everyone in our family when we pull together. We need to do the same thing in our country. We need to be loyal to everyone in our country. We need to look for the good in everyone in our country and we need to pull together.

Gautam Mukunda:

Betsy and Noah presented us with an incredibly hopeful vision of what the next American economy might be. One where the average American is paid better. He is not afraid of falling into poverty. Where whether they happen to be a lawyer, a barista, or even an economist, they actually really like their job because they feel valued and because they know they're adding value. In that world, everyday life gets better for all of us because we're all in it together. We can see the good in each other because we're not living in fear. Given that aspiration, it's not surprising that making the conscious decision to see the good in people and the world came up when I asked Noah and Betsy our final question.

Gautam Mukunda:

In the course of your career, you've gotten the chance to meet a large number of extraordinary people. Who would you describe as the most impressive person and why?

Betsy Stevenson:

The very first time I met president Biden, I was completely blown away. It was that he has this uncanny ability to make everyone in the room from the smallest child to the oldest person feel like he's looking right at you and he believes in you. He really brings out the best people and that he makes you want to be the best version of yourself. I'd never seen anyone do that before.

Betsy Stevenson:

I've sort of heard about the mythical politician who sort of can bring that kind of attention to everyone in the room, but I'd never actually seen it in action before. When I worked for president Obama, when I was giving family members a tour, I was always trying to get them to meet Vice-president Biden and be like, "Look!" Because he would look you in the eye and you would feel like, it's like that teacher that makes you want to be the best version of yourself. I hope he can bring that to the nation. It's not a hundred percent clear that everyone can see that, but I think the first time I ever saw it in a room, I just was completely blown away by that set of skills. Because I think it really is, it comes from a deep, deep empathy that most human beings, myself included, struggle to have.

Gautam Mukunda:

Wow! Noah?

Noah Smith:

Well, I've met a lot of very impressive people in my life, but for some reason, the person I'm impressed the most by is my friend Jessica. She's a graduate student, probably going to be a professor soon. She studies humanities and stuff like that. She's not president person or whatever, but she was born with a neuromuscular degenerative disease called Charcot-Marie-Tooth disease. For some reason, it made her family get really mad at her and sort of not pay for her college. I know that doesn't make sense. But also she was bullied in her small Western Michigan town. Not only did she overcome all this and had a great life. Now, she's about to get a job as a prof and she's having a kid very soon and just had a normal, successful life. But she's also managed to be one of the sweetest, most emotionally well-adjusted people I've ever met.

Noah Smith:

She's the person who impresses me most. That might sound cheesy to the listeners, but I think that what's really impressive is it's not just being able to succeed in the face of adversity, but being able to be an emotionally healthy person through all of it and take all the nasty stuff life throws at you and still maintain emotional equanimity and empathy, and be a good person and not be bitter and upset or pessimistic, et cetera. I think that that is an example of resilience and of the kind of resilience that every normal person in America can have.

Noah Smith:

When you look at the biggest successes that we've had in America at the end of this pandemic, the vaccine rollout was very successful, I think you see a whole lot of contributions by a lot of regular hardworking people who were very resilient in the face of the pandemic. I think that it's amazing to have leaders like Biden who do great stuff, but everybody has a chance to exercise leadership in some small way in their daily lives. I hope that that example provides a compliment to the one that Betsy said, not a substitute.

Gautam Mukunda:

Hope and fear are the two poles of leadership going all the way back to Machiavelli. For the last year and a half, we've been afraid of a disease that's still sweeping through the world so this might seem a strange time to talk about hope. But that's a leader's job, to transform fear into hope and find us a way forward. What we've heard from Betsy and Noah is, I think, has hopeful vision of the future as we can imagine. It's one where people are secure in their jobs and in their lives. And because of that, we're all a little bit better to each other. That's a world where most of us want to live.

Gautam Mukunda:

But it won't be an easy world to get to. It will take a lot of skill and a lot of luck. If that's where we're heading though, every business leader has to ask him or herself a question because how you need to lead might be changing and there are two paths forward. Theory X might have worked for you in the past, but it might not anymore. What do you really believe? Do you think that people are lazy or that they want to contribute. That it's your job to force them to work or enable them to do so? Do you think people need to be driven or want to be led?

Speaker 4:

World Reimagined with Gautam Mukunda, a leadership podcast for a changing world. An original podcast from NASDAQ. Visit the World Reimagined website at nasdaq.com/world-reimagined-podcast.

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