Transcript: Lisa Cook




The transcript from this week’s, MiB: Lisa Cook, is below.

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This is Masters in Business with Barry Ritholtz on Bloomberg Radio.

BARRY RITHOLTZ, HOST, MASTERS IN BUSINESS: Hey, this week on the podcast, I have a special guest. Her name is Lisa Cook and she is an economist who has done some absolutely fascinating research on all sorts of really interesting things, patents, innovation, gender, race and equality, just really, really fascinating. Normally when I prep for an interview, I go and kind of knowing a lot about the person and maybe I’ll find one or two little interesting tidbits to ask them.

But as I’m doing the research and working off of some of the questions that Batnick got to me, we ended up finding these really amazing research papers that she put together. Some stuff that just the data is shocking and it’s amazing that nobody thought to even look at this before.

She found out that the number of African-American women who were earning their PhD was under one percent of the total PhDs. That’s a pretty shocking statistic. And her research on patents and the impact of racism and what she called extrajudicial executions or lynchings has a huge impact on what patents are awarded and subsequent innovation in an economy.

Some of the stories she told about taking what she found to various Nobel laureate economists expecting them to trash her research and they’re all like this is amazing, you got to go publish this. Milton Friedman, the champion of free markets, said, hey, this is interfering with the free market, you have to publish this, this is absolutely fascinating.

It’s a really incredible tale. She’s got a really fascinating background. If you’re at all paying attention to the news these days and you’re interested in institutional racism or sexism or why the economy works better for some people than others, you’re going to find this to be really a fascinating discussion. Databased objective and really, really intriguing.

So, with no further ado, my conversation with Michigan State University’s Lisa Cook.

VOICEOVER This is Masters in Business with Barry Ritholtz on Bloomberg Radio.

RITHOLTZ: My special guest this week is Lisa Cook. She is the Professor of Economics and International Relations at Michigan State University. She is a Marshall scholar who got her PhD in Economics at Berkeley. She was a researcher for the Council of Economic advisers under President Obama. Lisa Cook, welcome to Bloomberg.


RITHOLTZ: So, Lisa, I have to ask, what drove you towards a career in economics?

COOK: Barry, that’s a good question and I have a couple of answers. One is that as I have looked back on it over the last year or so, I think one of the important trips that we took every year was to a place called Soul city in North Carolina.

My cousin Floyd McKissick was starting this city from scratch. He was a protester along with Martin Luther King and marched with him. He was in the class of 1948 at Morehouse College, integrated the University of North Carolina, just really active on many different fronts but he was building a city from scratch and this is something we thought every summer from one trailer to two trailers to three trailers to a building that housed IBM to more buildings.

And what he had to do was to essentially plan an economy and I think that notion is something that really started turning the wheel for me. How do you plan an economy and how do you try to close the racial wealth gap? This was a multicultural effort.

But the impetus was I’m trying to create some good jobs so that the racial wealth gap would be closed. Now, this was in the ’60s and ’70s. So, that’s one answer. That’s upon a lot of reflection recently.

But I would say that at Oxford when I was trying to decide on one of three topics I was to study within Philosophy, Politics and Economics, I took this mathematical economics tutorial. It was so much fun, I was a grad student teaching it, and I kept telling myself, there cannot be a field that this much fun, it can’t be, can’t be.

So, I kept putting it off. I climbed Kilimanjaro with this Cambridge trained economist and he convinced me that, no, I should not go off to LSC (ph) and do PhD in mathematical logic, which is what I was planning. I should do PhD in Economics.

So, in five hours, he convinced me that this is what I should do. So, I think that’s the answer to your question.

RITHOLTZ: Did you know you are always heading towards academia? And I have to point out, your doctoral advisers were Barry Eichengreen and David Romer. That’s some pretty big firepower.

COOK: That’s right. I am not certain that I was always headed to academia. I thought I was going to be a lawyer certainly because so many people in my family and around me were involved in the civil rights movement. One of the things that I thought about all the time was making sure that voting rights were protected and the way to do that was through the law.

And it wasn’t until much later during the spirit of climbing, for example, and trying to figure out whether I was going to do economics or not that I rejected the law. But I didn’t think I was going into academia if I did the law.

I think there’s a lot of hysteresis among economists and among academics in general. So, most of my relatives were in some form of academia. So, I certainly got a lot of exposure to it. But I wasn’t convinced that that’s what I wanted to do.

My advisers whether they were formal or informal at Spelman and at Berkeley were just off the chart amazing. One of them was Donald Mitchell Stewart who was President of Spelman College at that time and at one point at the college board and absolute mentor and helped to either encourage me to apply for the Marshall and for the Rhodes and other — take advantage of other opportunities.

Marjorie Gans, who was our study abroad coordinator, also a deep mentor. And then at Berkeley, it was Paul Romer in addition to the people on my committee. George Akerlof, one of my top two all the time especially about Russian and the thing about choosing the topic that I did to study the Russian banking system, now, this is in the early ’90s, right?

So, we were trying to figure out what are the best model to analyze the Russian economy with. Is this banking system like another? Is it forming like others? Can it form like others? How do one allocate credit on a market basis when it hasn’t been before or recently?

So, I was looking for anybody who could elucidate this and I was just grateful that people talked to me and were willing to serve on my committee to help me hone these questions. So, yes, very, very fantastic person on my committee, David Romer. Clearly, I like macro, right? I like international topics and I just had a wonderful time at Berkeley with all of them.

RITHOLTZ: You’ve done some really fascinating research and we’re going to talk in a few minutes about your research into patents and innovation. But I have to ask about what led to the op-ed you wrote a couple of years ago in the “New York Times” where you pointed out that just 0.6 percent of economics PhDs were awarded to black women. What was the piece’s genesis and what sort of feedback did it create?

COOK: There were two sources of that article, that op-ed. The first was that the AEA, American Economic Association, had done a climate survey and I was on the committee to write up the results and it was astonishing. The kind of comment especially that we got from people in the profession, we learned a lot from that as you can recall.

We learned a lot about how widespread sexual harassment was. We learned that people were not feeling included in economics for various reasons. We knew that — we suspected that promotion and pay were problem with respect to minority women but we didn’t know the extent to which that was the case.

And certainly, we didn’t know that African-American women were the ones who had to take more steps to avoid discrimination and that they were the ones reporting the most discrimination. So, that was worrisome in and of itself. So, definitely one of the motivations for writing the op-ed to talk more about that and, again, the comments were terrified.

One of them led the article, if I were to advise my son, I would tell him not to go into economics and I regret having gone into it. This person implied that she was a black woman.

There was another comment that really hit home, why is it that all these prizes are given and no African-Americans ever win these prizes like Nobel, I mean, on the day that Nobel was being awarded, like the Nobel. How can that be welcoming? How can that be serious? Our researches aren’t being taken seriously. Our careers aren’t being taken seriously.

And the other motivation — so, one motivation was the climate study. The other one was as director of the American Economic Association summer program, I noticed that there were too many black women and I thought, OK, I know that black women outnumber black men in the STEM fields and undergraduate. So, what is going on here?

So, I certainly put it at the top of my list to try to recruit more black women to apply to the AEA summer program and to get them to think more seriously about doing a PhD in economics and this was the way to do it. So, I had those two sources that led to that op-ed.

And with respect to the reaction, the reaction has largely, I would say, been good in the sense that it got a conversation started. It doesn’t even feel like it’s just been a year ago. So much has happened in a year.

So, even if people were talking about it in the last year before, say the work-from-home period before the pandemic, before George Floyd, people were embracing this notion that this wasn’t just one person and I think that that in economics many of us were often told that, well, that’s idiosyncratic and you’re overreacting.

But when you see the results from the climate survey, from 9,000 respondents, we see a pattern and we see a pattern with respect to pay, promotion and the climate in economics. So, I would say that in hindsight, it was well received because of the kinds of conversation it started.

The Sadie Collective has taken off. It was — it got started as the — well, I wouldn’t say as a result of but certainly, the founders are my former students in the AEA summer program but a lot has happened in just that short year. And I think I’m just grateful to see the movement and hope it is sustained within the economic field.

There’s a lot more going on not just what I’m saying, renaming lectures and making the place more welcoming for all kinds of people, being more open about mental health, again, about being inclusive in so many different ways. I think this is just historic. This is an historic change for the American Economic Association.

RITHOLTZ: Quite fascinating. Let’s talk a little bit about another piece of your research that I find absolutely fascinating. You’ve documented some pretty dramatic differences in patent rates based on race and gender. Tell us a little bit about that.

COOK: This research came from my dissertation. It emerged from my dissertation being written in Moscow and on the Russian banking system. I interviewed both bankers and entrepreneurs trying to figure out if a Russian banking system could emerge in this post-Soviet period.

So, this is the early ’90s. It was a rough and tumble time. One major banker on average was being killed per month. It was a time when structures were being figured out as long as — as well as the personalities who would engage in banking and in Russia.

One thing they pose — the questions they pose to me had a couple of features. One common one was why can’t innovation come to Russia and I thought it was fascinating because it had nothing to do with the Russian banking system really and that they wanted to know for me, you’re American, you’re an economist, tell us why this is he case and I told them I have no answer, really don’t have any answer.

But I kind of looked around and I’m like, OK, well, if I were an inventor I’m not sure I feel mature here I’m not sure I thought that my ideas would be protected but anyway I put it put a placeholder and I thought after I finish my dissertation maybe I’ll come back to it and it kept weighing on me this question I thought was a really good one because at that time, the conventional wisdom was not if you protected, if a country protected intellectual property rights, that was sufficient for innovation to come, for invention and innovation to come, and I thought the Russians deserve a better answer than this.

So, I wondered if there were an historical experiment that could inform what the Russians were going through and I thought, well, maybe this period of the late 1800s, early 1900s could be elucidated. And I just decided that maybe — yes, maybe I’ll look at patents to see what’s going on there.

Of course, I thought it was going to be easy to find African-American patents. Of course, it wasn’t because racism is recorded on patents data. So, that was a big undertaking to match names to people in the patent dataset.

RITHOLTZ: So, tell us a little bit how you were able to figure out the race of people replying for patents protection 150 years ago, how are you able to get through what was a pretty bare-bones database within the government to find out who actually were applying for these patents?

COOK: That was a — that’s a good question. I tried everything. I tried everything. So, the first thing that I did was to try to do what Mullainathan and Bertrand — Bertrand and Mullainathan did and others who study black names in the contemporary period. I tried to do what they did and I tried to take data from the census and find the most popular names, ones that were distinctively African-American.

And I did it for this period but those don’t apply. The names they used were (inaudible) names. They weren’t historical. So, I decided that I needed to do that for the historical period and that’s how I came up with the first recording of systematic names, black names historically for African-Americans and I did that by using the census again.

Luckily, later on, my co-authors, Trevon Logan and John Parman, helped to externally validate that with. But that was the first time that such a list existed. So, that was the first thing that I had to do.

But after I did that, only a few people that patterned. There were only a few patentees who had these black names. So, I was able to capture some but not many.

Then I resorted to a common myth about African-Americans names related to naming people especially men after presidents. So, I started looking for presidents, OK. So, what happens is that all men in America have names that are those of presidents.

So, this is — this wasn’t unique to African-Americans so that didn’t help. So, I just started looking for all of the scientists, potential inventors I could to try to capture the universe of inventors some way, say with directories, with articles. I found this old survey of patent agents and patent attorneys that was carried out in 1900 and the 1913 by the patent office trying to identify African-American patentees.

Now, that was good for that period up to roughly 1913. But there were some flaws, it didn’t accurately identify the first African-American patentees. So, there were a few holes. I had to fill those.

But I started looking for everything and I wanted to not be biased towards famous people because the patent dataset itself is not biased towards famous people.


COOK: I looked at obituaries, for example, just because people would talk about their family members as inventors and they may not have described themselves that way and say the census. I mean, Edison identified himself as a machinist and many of these inventors describe themselves as a machinist in the census data. But if you got family members to talk about them, they would describe themselves as inventors.

So, anyway, I tried everything I could and eventually I was able to fill this in but it took a lot of work. This is pre-Google patent. This is before — this is — all of this was digitized. This is ancient history now but things were changing rapidly at the time. But that’s how I came up with this list of African-American inventors.

RITHOLTZ: And now, let’s put a little meat on the bones, the piece you wrote, “Violence and Economic Activity Evidence from African-American Patents, 1870 to 1940,” the numbers are pretty astonishing. Patent output in the U.S. per million so on a per capita basis, it’s six patents per million African-Americans, 40 patents per million women, and 235 patents per million for all others. that’s really a stark difference.

COOK: That’s right and that’s for the modern period. That includes data up to 2010. So, after the 1940 data. But certainly, it is still the case. The reason why it’s still salient is because 1899 is still the peak year for African-American patenting per capita.

That’s what — one of the start things that we learned in this paper that white patenting is two orders of magnitude higher, patenting by women is one order of magnitude higher, and the size of the patenting in 1899 for African-American is the same size today if we’re using 2010 data.

That is astonishing because for the rest of patentees, this patenting has exploded especially if we’re talking say chemical patency. It wouldn’t be unusual to find 20 or 30 people on patents for some chemical products.

So, this is one of the astonishing things about this number that is really start. And one thing that I found in doing deep dives to biographies of some of these inventors, say Garrett Morgan, they’re like completely different lives from their counterparts like Edison for Garrett Morgan. It would have been Charles Brush in Cleveland. They just had to work so many panels, many back panels, for example, to be able to sell their wares.

He had to dress up like a Native American to be able to display his gas mask because once it was found out that he was African-American and this gas mask was being used by fire departments all across the south, they started cancelling their orders. And fire departments all across the country but the ones in the South started cancelling their orders. He used to hire white man to pretend like they were him and go around the country to sell his gas mask.

So, he was really adept at overcoming this increasing consumer side discrimination in America at that time.

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RITHOLTZ: So, how do we explain why patents peaked for African-Americans in 1899? What was so significant about what happened right afterwards?

COOK: I think that it was largely Plessy versus Ferguson. So, that was in 1896. And this was culmination of a long period of repealing pieces of the Civil Rights Act of 1875 and this was — this is — the southern states were challenging it bit by bit, chipping away at it bit by bit.

And when Plessy happened, it was a big blow, separate but equal. So, this is a ruling on separate but equal that this is a big blow because inventors at that time were doing what everybody else was doing, right? They were going to library to find Patent Digest to find out what the latest inventions were.

They were running in to each other at their patent attorneys’ office or in the downtowns of all of these places where they were working. But all of a sudden, that wasn’t possible anymore. These commercial districts became all white.

They weren’t able to manufacture and sell their inventions. They had to often become middleman and become wholesalers so that they weren’t facing the public. Some of them went out of business altogether and stopped inventing altogether. We have a number of stories like that.

So, I think it was largely this growing violence and especially Plessy versus Ferguson and with respect to the date, what my friends who are constitutional law scholars tell me is that this takes a period of time, say two or three years, for rulemaking. And when it became clear that they couldn’t engage in this, I think that they rushed everything they could to the patent office and hoped for the best and it just never happened.

Now, it started recovering after some of the violence stopped. But it never got back to the 1899 peak. And that’s really astonishing because there’s — there are a lot more people, a lot more PhDs in the natural sciences, for example, a lot more PhDs in engineering. But we don’t see this showing up in the patent data.

RITHOLTZ: So, early this year, the Tulsa race massacre was in the news, the President was going to hold a rally on the anniversary of that. What was the impact of that event on subsequent patents and innovations in the African-American community?

COOK: So, Barry, that’s a really interesting question. This is one of the things where you see the data and you have no idea what going on. Like I was thinking, OK, 1921, why is this showing up in the data, what — like what happened on a national scale. I’ll say, OK, so, World War I is over, yes, I could not put my finger on it. And then I was like, aha, that’s not good.

This is the largest racial massacre in U.S. history and it had an impact on everybody. John Hope Franklin wrote about it, the famous historian wrote about it. He was actually a child in that massacre and his family business was torn up just like many others and destroyed, lots of people died.

And he was saying that there was this fear that culminated all African-Americans because as the commission that investigated this said, no one was safe, there was failure at every level of government, at the local level, at the state level. And the president at that time refused to end the violence that was happening there and the NAACP president went to see him to try and to negotiate an end to this. But it was really serious and that it showed up in the data and I couldn’t make it go away. It was just that serious. There was no other year like that besides 1900.

RITHOLTZ: Quite fascinating. Let’s talk a little bit about what’s going on in the profession of economics. You’ve attended fairly traditional economics program. You’ve taught at traditional schools. What do you think are some of the bigger changes that’s taking place today versus back when you were a student?

COOK: There was no conversation about why African-Americans are missing in economics when I was in college or even in graduate school. There was no conversation like that. Even though there was a long-standing program, the AEA summer program, which I now direct and which I did at Stanford, there was no broad conversation about that.

There was no broad conversation about what was wrong with the economics profession. I wish that I’d heard the “Planet Money” series that was done about my paper, both the topic and my paper, because I think that there would have been more realization by many people and by those who were trying to get into the feel that what they were facing, they weren’t facing alone.

So, I think that that’s the biggest change. There was no letter that many people have read say by Bill Sprague that was widely circulated. You didn’t have a president of a Federal Reserve Bank at all, number one, you certainly didn’t see anybody in that leadership position.

There were members of the FOMC who were African-American. Certainly, Emmett Rice was one of the first ones and I knew about them but it didn’t seem tangible especially for black women. And I think that this open conversation is not something that anybody could have anticipated that has moved very far in a very short period of time that we would even try to count how many African-American economists there are at the Federal Reserve. I never heard such questions posed.

And certainly, never thought that I would hear Nobel laureate telling me, you’ve got to publish this, this is groundbreaking work. You’ve got to publish this. I had no idea that this would be the case or that they would be as interested as they were and proved to be. I’m certainly grateful for it but didn’t think of it at all when I was coming through the educational system.

RITHOLTZ: So, over the summer, a former federal reserve researcher, Claudia Sahm, she also was a researcher at the CEA, posted a fiery blog post, quote, “economics is a disgrace” and lays out a lot of the specifics that you’re discussing. What are your thoughts on her criticism of the profession and what are the role of politics in economics?

COOK: That’s a good question. Now, I have to tell you that I didn’t read the actual blog post because I understand that I am in it and I really, at that time, didn’t want to — this could not deal with it emotionally because been talking about this a lot, talking about economics, the economics profession a lot.

But Claudia, I think, is, and has been, a catalyst for a lot of frank discussions in economics and because she’s been in this special rarefied place of being at the Federal Reserve, of having this Sahm rule, there are very few rules named after a macro, named after women, having been at CEA, she has been at the top of the field in so many different ways.

So, she has a special place from which she sits and can see the profession, the broad profession. And she’s also not afraid because she has interacted with the current and former presidents of the AEA, Janet Yellen and Ben Bernanke. So, she could address them as colleagues, as peers and I think it has been — she fostered this very necessary conversation and she’s been an advocate for graduate students, for people who have felt sexually harassed or racially harassed in the economics profession.

And the ombudsperson has been quite engaged. We finally hired an ombudsperson at the American Economic Association. We needed somebody — if we were going to say these problems exist, we needed somebody to do something about them. It’s not perfect yet. That mechanism is not perfect yet.

But I appreciate people who are as engaged as Claudia is and she does a lot of mentor to next generation of economists and not just women and not just African-Americans, not just African-American women. She spent time during this season preparing — helping people to prepare for the job market. She reads their paper. She is providing many different public goods for the profession.

And I just think that she’s just a gem in the profession that we need more people like her who will hold our leaders accountable, point to the issues but also try to figure out ways to address those issues. And she’s a problem solver. I mean, the Sahm rule was created as a mechanism to solve a problem. She talks about automatic stabilizers and writes about those.

So, she’s problem solver in every dimension. So, I appreciate her being in the profession.

RITHOLTZ: Quite interesting. Let’s talk a little bit about what’s going on today with the recession, what is this doing to income and wealth inequality?

COOK: I’m not sure it could do more. I’m not sure this pandemic could do more. It is really driving a serious wedge between those who have income and wealth and those who don’t. Whether we’re talking about those who hold stocks and those who don’t and just under 50 percent of Americans do not hold any stock, they’re not seeing the gains.

The stock market has largely recovered from the beginning of the pandemic. So, we did see this in the great recession, too. So, that’s not so unusual that stocks recover before employment does.

But income inequality is taking a beating. How is that? Because let’s say if we had a racial dimension to it, African-Americans are subject to occupational segregation. So, there — and a lot of these anything occupation to which they would be disproportionately exposed to COVID-19.

So, that’s one way in which they’re deciding between a job and eating or a job and rent, a job and their health. So, this is one of the ways in which income inequality has come to. For wealth inequality, it’s even more stark.

So, as I was mentioning, certainly, the stock market is recovering. Not as many people among African-Americans are in the stock market. Certainly, wealth is orders of magnitude lower for African-American households compared to white households.

But there’s one thing that I follow that really troubles me and that is small businesses. There are 50 white entrepreneurs for every black entrepreneur and as we know, this is a tried-and-true path to the middle class and to wealth accumulation in America.

And what we know about black businesses is that a disproportionate number are reporting closing permanently as a result of the recession, the pandemic and recession, and they didn’t receive PPP funds. We’re not recording — SBA is not recording the applicants and we don’t have good demographic data.

But from the surveys that have been done, we know that when they applied, they were rejected. This is due to the big banks being relied upon to fill (ph) out these months. But also, for the amount they were requesting, they got disproportionately less.

So, I worry about is this fissure growing significantly not just now but in the future because certainly, income now lays the groundwork for wealth in the future.

RITHOLTZ: So, given the sort of work-from-home pandemic economy that we’re living in, some people have been calling this a, quote, “she-session,” unquote, because so much of it is falling disproportionately on the shoulders of women. How accurate is that phrases? Is this overstating it or is there really a deep gender fissure as well as a racial fissure?

COOK: Absolutely, there’s a gender fissure that is also there with the racial fissure. And we could see this in American Time Use Survey in the census. What we know about women is that regardless of occupation regardless of income, they spend a disproportionate amount of time on care of other individuals in the household that might be children, that might be the elderly. But they spend more time taking care of those people. And that happened before — that was happening before the pandemic.

And women are the ones who are having to drop out of the workforce while these students are stuck at home, small children especially are stuck at home trying to do their homework or trying to make sure that they have their snacks on time and get through their school work.

So, this is a she-session. Women are back at their participation rate from 1987. That is shocking and for it to happen in such a short period of time is absolutely shocking. And this is going to have lasting scars on the labor market because one thing we know is that when women are out of the labor force, they slow down with respect to pay, with respect to promotion, and I am just hoping that we will get some kind of support for child care to make sure that some of these women can recover and recover more quickly.

RITHOLTZ: Quite interesting.

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RITHOLTZ: So, the CARES Act was passed at the end of the first quarter. It was about $3 trillion. If you would ask me over the summer, will we see a followup, another couple $1 trillion, I would have given you 10 to 1 odds that absolutely, the politicians in election here, of course, they’re going to pass the second stimulus.

COOK: Right. Right.

RITHOLTZ: But here we are, middle of October, no such stimulus passed yet. Did we go far enough with the first CARES Act and are you at all surprised that there hasn’t been a followup? What do you think is going to happen and how much stimulus is needed given the way the economy is starting to plateau and attenuate from that big bounce back we saw over the summer?

COOK: Barry, you and I were in the same position, that’s exactly what I thought, too. And what I knew was that we — if we had a national coordinated strategy, we could possibly be seeing our way back to normalcy by this time if we had a national mask mandate, for example.


COOK: But that didn’t happen and what I find shocking is this, $3 trillion was a good start but we are repeating the lessons of 2008, 2009. I cannot believe this. I was on the Obama transition team at that time and what I was watching was austerity being put into place and I was also there in 2011 and 2012, austerity being put into place when the last thing you needed was austerity.

You need to throw money at people so that, yes, they will stay afloat whether it’s businesses or households or the unemployed. They just need to stay afloat while we figure this pandemic out, and that is what is still needed. But we’re repeating the mistakes of 2008, 2009.

What we see is state and local government letting off people and firing people and this is what we saw before. And that’s why the recovery has stalled. I can’t believe that we’re doing exactly the same thing. And that’s why Claudia, I believe, in automatic stabilizers, we’ve got to have more so that this is not JPow begging Congress and the administration to do something and all of the other set of officials, too.

And it is clear that fiscal policies, what is needed, the limits are the Federal Reserve are there. It’s not as if they are boundless in what they can do, any kinds of resources they can provide. They’ve been fast. They’ve been quick. But they can’t do everything.

So, I am just shocked that we haven’t — that the administration and Congress, the Senate Republicans have blocked aid to American people households and businesses. I think it’s absolutely unconscionable. There’s definitely an eviction and rental crisis that is right at our feet, it’s right in front of us, and we’re not doing anything about it.

These hospitals …

RITHOLTZ: So, let me …

COOK: … are closing and we’re not doing anything about it. I’m just in shock.

RITHOLTZ: So, let me step back and ask you the 30,000-foot view question which is, we saw a very miserly stimulus right at the beginning of ’09. It was, I know this sounds ridiculous to say, about $800 billion, which proved to be way too small.

COOK: Right.

RITHOLTZ: We saw the rise of austerity not just here but also in the UK. and then in 2017, we saw a massive pro-cyclical tax cut and stimulus. I thought the rulebook was, hey, in a deep recession, you want to see countercyclical fiscal stimulus not late cycle pro-cyclical fiscal stimulus. What’s the lesson to be taken away from this?

COOK: That somebody is not telling the truth about budget deficits and about growth because what we know is that the short-run deviations like 2008, 2009, in order for them to remain short-run deviations of output, you have to go big and you have to assure the American people that something is on the way and that they won’t be out there on their own.

And the same is true for businesses. It is absolutely unconscionable that businesses, that through no fault of their own, are laying off tens of thousands of people. The airlines are laying off tens of thousands of people and that’s not going to affect just them. Of course, their dollar supports many other jobs and not just in the cities where there are hubs. This is true in general.

So, I’m still in shock that we are not doing more and that lessons of the Great Recession have not been learned. It’s almost as if some folks were awake for the first two days of econ 101 and just slept through the rest of the semester.

RITHOLTZ: They missed the chapter on Keen’s. So, here the pushback, hey, listen we don’t have access to infinite money, $3 trillion is a lot, and at a certain point, we have to start being concerned about the deficit. How do you respond to that sort of pushback?

COOK: We do have to become concerned about the deficit but that time is not now. Absolutely not now. That would be misplaced. How do you sustain growth? How do you keep people afloat? How do you keep businesses afloat? That’s the question we should be asking.

And this is a common view of economists. Many economists, as you know, of all stripes are saying the same thing I’m saying that we worry about deficits in in the future. Let’s — when the economy gets back on its feet, let’s start worrying about these deficits

Until then, it’s abstract. It’s — why do you starve a person who’s already hungry. That is ridiculous. And if you hobble the economy now, let’s say for example, we could be using PPP to give to our smallest newest businesses. If those smallest newest businesses don’t stay alive, we’re going to permanently hit long-run growth because these are some of the businesses that give us innovations. This is where innovation comes from often.

It’s from the smallest newest businesses and if we don’t help them, what we are doing is saying, we’re not going to contribute innovation to long-run growth anymore and that is really unconscionable. We shouldn’t do that. We shouldn’t penalize the economy that way.

RITHOLTZ: Quite interesting. I know I only have you for a few minutes. So, let me jump to my favorite questions that I ask all my guests.

COOK: Sure.

RITHOLTZ: Tell us what are you streaming, what are you watching or listening to these days now that we’re all working from home?

COOK: The first thing that I’ve been streaming has been dreaming has been Nollywood movies and TV series from Nigeria and the TV series that I find really interesting is “Fifty.” And then there’s this movie called, “Chief Daddy.”

I’m also watching “Chernobyl” and I — “Chernobyl” I find fascinating. It was well done. I used to live in Russia. So, I certainly know the story very well and studied the former Soviet Union quite a bit. But I can’t watch it sometimes because it’s so close to home and I think it was an excellent series.

I’m watching “Schitt’s Creek.” So, that’s the — I’m not finished yet. I’m keeping it as a miniseries for myself. And certainly, I listened to “Planet Money” and “Serial.” So, there are things that I stream a lot. So, those are big (ph).

RITHOLTZ: You mentioned some of your early mentors previously. Tell us who helped shape your career.

COOK: I will say from a distance, I told you some who were close to home but Barbara Jordan was one. I was forced to watch by my grandmother her leading the impeachment hearings against Richard Nixon, had no idea who she was but my grandmother was saying, this is how democracy works, you got to watch this. This is how democracy works.

So, there is something that I found incredibly inspiring about Barbara Jordan and Shirley Chisholm and I tried to understand how they got to know what they knew and started taking myself a lot more seriously as a person who was interested, at some level, in public service.

RITHOLTZ: Quite interesting. Tell us some of your favorite books, what are you reading now and what have — what ends up on your all-time favorite lists?

COOK: Well, one book that is my favorite book of the summer is book that is nonfiction but it reads like fiction, it is so good. It is “The World According to Fannie Davis” by Bridgett Davis and it is about the underground economy, the numbers runners in Detroit. It’s going to be turned into a movie and it’s been the subject of a number of NPR interviews.

But I’m also reading books like Mehrsa Baradaran’s “The Color of Money.” I’m reading, of course, Sandy (sic) Darity’s “”From Here to Equality.” I’m just trying to learn as much as I can about the moment. I’m reading “The Deficit Myth” so that I can understand more about how we think about deficits. That’s one way to think about deficit.

But I am also rereading things like “Moneyball.” I used to teach the economics of baseball and I look forward to teaching it again. But that’s just from, that’s just from, that’s this economics are from.

RITHOLTZ: So, what sort of advice would you give to a recent college graduate who was considering a career in economics?

COOK: I would say to get as prepared as you can and when I say prepared, I don’t mean doing five or six pre-doc programs, maybe do one or an RAship but get to know your professors or contact your professors if you’ve already graduated and read as much about the economy as you can.

I think being anchored in podcast like yours or interviews like yours, reading Bloomberg and FT and “The New York Times” business and economics section. I think having a point of reference is critical because I find that many students don’t. So, I think that it’s critical to have some frame of reference and I think it would be inspiring and interesting once you do.

RITHOLTZ: Quite interesting. And our final question, what do you know about the world of economics today that you wish you knew 25 years ago when you were really first getting started?

COOK: I wish I knew more about how policymakers think about — policymakers who were not economists and who aren’t at the fed or treasury, think about how to help people. So, I’m thinking about Congress now and I wish I knew more about how they thought about the economy because if I understood that then and frankly, if I understood that now, maybe we could affect the way they’re thinking so that we don’t run into this other prolonged recession.

And the danger here, Barry, is that inflation is a real worry. That can actually happen. We haven’t met our inflation targets for almost a decade. Only a handful of times in a decade. That could be a real serious problem.

So, I would like to understand better how people who make fiscal policy think and I wish I could influence it more because the American people, American households, businesses need — the state and local governments, the art need a lot of help right now.

RITHOLTZ: Quite interesting. Thank you, Lisa Cook, for being so generous with your time. We have been speaking with Professor Lisa Cook. She teaches Economics and International Relations at the James Madison College at Michigan State University.

If you enjoy this conversation, be sure and check out any of the other 350 or so previous interviews we’ve had. You can find that at iTunes, Spotify, Stitcher, Acast, wherever finer podcasts are sold.

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I would be remiss if I did not thank the crack staff that helps us put these conversations together each week. My audio engineer is Maruful (ph), Michael Batnick is my head of research, Atika Valbrun is our project manager, Michael Boyle is our producer, and I’m Barry Ritholtz, you’ve been listening to Masters in Business on Bloomberg Radio.



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