← People I (Mostly) Admire
People I (Mostly) Admire
Ninety-Eight Years of Economic Wisdom (Replay)
00:49:09
The late Robert Solow was a giant among economists. When he was 98 years old he told Steve about cracking German codes in World War II, why it’s so hard to reduce inequality, and how his field lost its way.
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- [00:00]
Steve Levitt
Guys, thanks for helping me carry my Christmas tree.
- [00:03]
Robert Solow
Zoe, this thing weighs a ton. Drew Ski, live with your legs, man.
- [00:06]
Steve Levitt
Santa.
- [00:06]
Robert Solow
Santa, did you get my letter? He's talking to you britches. I'm not.
- [00:10]
Steve Levitt
Of course he did.
- [00:11]
Robert Solow
Right, Santa, you know my elf Drew Ski here. He handles the nice list. And elf, I'm six' three.
- [00:17]
Steve Levitt
What everyone wants is iPhone 17 and.
- [00:19]
Robert Solow
At T Mobile, you can get it on them. That center stage front camera is amazing for group selfies, right, Mrs. Claus? I'm Mrs. Claus Claus much younger sister.
- [00:28]
Steve Levitt
And AT T Mobile, there's no trade in needed when you switch.
- [00:30]
Robert Solow
So you can keep your old phone or give it as a gift.
- [00:33]
Steve Levitt
And the best part, you can make the switch to T Mobile from your.
- [00:35]
Robert Solow
Phone in just 15 minutes. Nice. My side of the tree is slipping. Kimber, the holidays are better.
- [00:41]
Steve Levitt
AT T Mobile switch in just 15.
- [00:43]
Robert Solow
Minutes and get iPhone 17 on us.
- [00:45]
Steve Levitt
With no trade in needed.
- [00:46]
Robert Solow
And now T Mobile is available in US cellular stores with 34 monthly bill.
- [00:50]
Steve Levitt
Credits for well qualified customers plus tax and $35 vice connection charge credit sentinel balance due to payout earlier. Cancel finance agreement. 256 gigs $830 eligible Ford in a new line, $100 plus a month plan with auto fees required. Check out 15 minutes or less per line. Visit t mobile.com A Rich Life isn't a straight line to a destination on the horizon. Sometimes it takes an unexpected turn with detours, new possibilities, and even another passenger or three. And with 100 years of navigating ups and downs, you can count on Edward Jones to help guide you through it all. Because life is a winding path made rich by the people you walk it with. Let's find your rich together. Edward Jones Member. Sometimes I make good choices. Like a few years back when I decided to reach out to economist Robert Solow. I didn't really expect to get a Reply how many 98 year olds are still checking email? But he wrote me back right away and we had this wonderful conversation which first aired in June of 2023. My guest today, Robert Solow, is an absolute giant in the field of economics. He received the Nobel Prize in 1987 for his pioneering work on the topic of economic growth.
- [02:16]
Robert Solow
When I first got interested in economic questions, the whole point was that the system appeared to be broken and it was necessary to find ways to patch it together.
- [02:32]
Steve Levitt
Welcome to people I mostly admire with Steve Levitt. But Robert Solow is more than just a great researcher. He was one of the most inspiring teachers I ever had and he's been A legendary mentor to generations of students at mit, four of whom have themselves gone on to win Nobel Prizes. And at the age of 98, still as sharp as ever. He's a model for growing old gracefully. So you taught me Macroeconomics almost 30 years ago. You know, I'm no macroeconomist, but your class was the best class that I took at mit. I remember I would read these macro papers ahead of class. I mean, I would spend hours and I would understand nothing about the paper. It was pure math to me, math I didn't understand. And then you would roll into class and you would describe these papers in the simplest terms. You would strip away all the math and you would show what was going on with a few words, with a few equations. And I really stood in awe of you being able to do that.
- [03:45]
Robert Solow
That's the only way I can understand anything, is to break it down into simplicities. And I'm glad you liked it.
- [03:54]
Steve Levitt
Not only I liked it, but that is actually something that I carried with me. You gave me the belief that no matter how complex an author or a creator says something is, that deep down it's really simple. You just have to find the simplicity.
- [04:16]
Robert Solow
You have to find the basic thing that's happening. God may understand the rest of it, but it's not given to us to do that. All we can do is figure out, you punch it here, it reacts there, why? There's some chain of connections that's going on. And by the way, there's an element of illusion there. Steve, if I couldn't do that, I wouldn't try teaching it.
- [04:44]
Steve Levitt
So you've spent a good part of your career studying economic growth, and to economists, economic growth is one of the most fundamental measures of an economy's health. But it seems more and more driven heavily by climate change. There's a rising chorus of voices arguing that economic growth shouldn't be an objective, even that economic growth is the enemy. What do you think of those arguments?
- [05:12]
Robert Solow
First of all, the fact that I've spent much of my life studying the way growth occurs in modern industrial capitalist economies does not mean I'm an enthusiast for it. I could have spent my life studying the bacteria that cause tuberculosis. That doesn't mean I'm in favor of them. So I perfectly agree. I do not think that growth itself is or should be a particular objective for a modern economy. There are, however, a lot of people in the profession and outside the profession who think that a modern industrial capitalist economy cannot exist without growing. And I would like to start by talking about that question. Okay, great. So I want to imagine an economy like ours and think about what it would be like if it were stationary, if it were not growing and not shrinking, but just fixed at whatever size we're talking about. The first thing that would have to be true is that the population is constant. Okay, now I want to make another assumption. Imagine that there's no innovation going on. There are no new products, no new industries, nothing like that. The economy is just stationary. It just repeats itself. Okay?
- [06:57]
Steve Levitt
Okay.
- [06:58]
Robert Solow
I think the important thing to realize is that there is no law of economics, no principles of economics that say that such an economy could not exist and be healthy. It's not written anywhere that for a capitalist economy it's grow or die. That's just not true. The one glitch that could occur in this stationary state is that the population wants to increase its wealth by saving, even though the economy is stationary. But we can't let that saving get into investment. Because if the saving goes into building new factories, building new buildings, whatever, that moves us out of the stationary state into growth. But there's an easy solution to that. The government satisfies the public's wish to accumulate by running a deficit and selling them bonds and using the proceeds not to build new roads or build new anything, but to put on beautiful fireworks displays, wonderful concerts, maybe annual dramatic festivals like the ancient Athenians. That situation could simply go on forever. Now I come to the rub that I don't think most people think about. This non growing economy has, as I said, no new industries, no new products, nothing like that. That can't be good for social mobility. What I'm afraid of is that in such an economy, the same good jobs and high status occupations would repeat themselves year after year and the people who have those jobs would groom their children to follow in their footsteps. And that kind of society would tend to be a hereditary oligarchy. And that's not good. So if I were trying to bring about, for the sake of warding off climate change, for the sake of preserving the environment, a non growth economy, what I would be thinking about is how you provide for social mobility, how you provide for the children of relatively poor parents to become relatively better off, while some of the children of relatively well off parents fall in the income distribution. That's the hard part. There's nothing in my background to make me a specialist in how to do that. But I can see that it would be a really serious problem. But it's not a narrowly economic problem. It's a matter of Organizing the society. If you didn't let the children of Yale graduates go to Yale, that would help. But in fact, everything we know about life says that Yale would make it easy for the children of Yale graduates to go to Yale. Now, in a nutshell, that's my attitude toward. That's a hell of a big nutshell. But that's what I think about that question.
- [10:53]
Steve Levitt
I'm surprised by your answer because I thought you would say, well, there are two ways for an economy to grow. One way is to use more inputs, to use more capital and more labor, and the other is to use the existing inputs more efficiently. And I thought you'd say historically most of our growth comes from using inputs more efficiently and nobody should worry about using inputs more efficiently. That's just great. Even if you're afraid of climate change, what could be better than using inputs more efficiently? What's wrong with that answer?
- [11:35]
Robert Solow
That's perfectly compatible with what I've been saying. I'm for using all the natural resources that we can efficiently. But when you use up a natural resource, you use up a natural resource. When try to draw this picture of a stationary economy. This is an idea that goes back to John Stuart Mill. That economy can be run efficiently or inefficiently. And I'm for efficiency, which does not imply growth. It simply implies a higher level than an inefficient economy. I'm for the efficient economy, provided the efficiency we're talking about includes the things that are normally not priced in the market, the environmental things that tend to get overexploited in a market economy.
- [12:38]
Steve Levitt
So let me ask you an empirical question. When we try to measure growth and the reasons why our economy has grown over the last 50 years, much of it seems to be because we've been more efficient. But do you think that much of that is just mismeasurement? Much of that has been degrading our natural resources. And because we aren't measuring that well, we are mistakenly thinking we're getting better.
- [13:05]
Robert Solow
Of course there must be mismeasurement. That's never going to come out perfectly. But the fact that the increases in real output per person over the last 50 years or 100 years has come mainly from higher productivity rather than from extensive growth. That's a fact. We also have very good reason to believe that the way we have done that is full not of mismeasurements, but full of unpaid for damages to the planet, to the natural world. We still, for instance, when we measure our output, we don't charge ourselves for the depletion of natural resources. But of course, there are also good stories along this line. Over the last 50 years, the air quality in this country at least has improved, not deteriorated. So the gains in efficiency include some gains in environmental amenity. I want to avoid the word mismeasurement, Steve, because to mismeasure something suggests that you're actually measuring a different thing from what you think you're measuring. In our case, what we have done is decided not to measure certain things. The UN has a whole system of national accounts that will pay much fuller attention to the effects of human economic activity on the natural environment. And the UN has always wanted all the major countries to adopt this. I have always laughed at myself in this respect. I believe that this full system of national accounts that the UN has produced would be superior to what we have now. But I am so terribly worried that if we went over to it, we would lose the possibility of having long time series to study. So I would want the lousy measurements along with the good measurements.
- [15:33]
Steve Levitt
Wait, so you're telling me that you're in favor of. Of our bad system of accounting so you can keep doing your research even at the cost of humanity's good outcomes?
- [15:44]
Robert Solow
That's what I laugh at myself about. Yes, I'm desperately worried. We have national accounts in the US of reasonable quality going back to 1929. That is a century of national accounts. I would hate to end that. So I would be for keeping the bad numbers. Have one office in the Department of Commerce keeping the bad numbers at another department keeping the good numbers.
- [16:14]
Steve Levitt
I thought you were saying you wanted to stand in the way of progress. You just want duplication of effort. Yes, that seems more reasonable.
- [16:21]
Robert Solow
Yes.
- [16:22]
Steve Levitt
As long as I've been an economist, we economists have well recognized that our system of accounting leaves out a lot of important things. Is it surprising to you that there hasn't been the political will to make these changes?
- [16:40]
Robert Solow
There just isn't much interest outside of a narrow group of people that includes you and me and is therefore not terribly influential. There's conversation about the GDP all the time in the press, on TV and all that. And most of the people who use the phrase think that the GDP is intended as a measure of economic well being. And it is not intended as a measure of economic well being. It's intended as. As a measure of economic activity, not whether it is directed to the right goals, the right benchmarks.
- [17:41]
Steve Levitt
I know you're deeply troubled by the high and rising inequality in the United States.
- [17:47]
Robert Solow
Yes.
- [17:47]
Steve Levitt
So what do you think is driving the inequality?
- [17:50]
Robert Solow
From the beginning of the second World War until some years after, the country was generally getting more equal. The distribution of income, and as far as we know, the distribution of wealth were becoming more equal. Sometime in the 1970s or early 80s, that changed and inequality began to worsen. Inequality of income, inequality of wealth. I think that's pretty awful. I don't care about absolute equality. I don't care if you make more money than I do. But the coexistence of extreme wealth and extreme poverty strikes me as immoral, to use an old fashioned word. It's immoral because it's unnecessary and it has bad consequences beyond itself. The great wealth attracts great political power and a society which tolerates extremes. Inequality of wealth also tolerates extreme differences in political activity and political power. I deplore that. I think it's a blot on our society. And I have not seen any evidence or any reason to believe that we profit at all from that. So why does it happen? First of all, Steve, the answer to a question like that is almost never one thing. I think a lot of it actually is what I was already talking about. It's the interplay between economic inequality and political inequality. You start with some economic inequality, it generates political inequality. Well, the holders of political power, the beneficiaries of that political inequality, are going to pass laws and cultivate customs that help themselves. I couldn't put numbers on this. I couldn't quantify it in any way. But it's almost certainly true that, that some of the worsening inequality in the past 40 years or so comes from deregulation. The willingness of the political process to allow unregulated activity that once it regulated, we know where the juice behind the movement for deregulation came from. You know, the obvious example of this is the concentration of wealth in the financial services industries. And the financial services have been in the process of deregulation ever since Ronald Reagan was president. The interplay between them operating through legislation and administration is bound to be part of it.
- [21:23]
Steve Levitt
Economists know how to undo inequality. It's not hard economic problem. It's really a political problem.
- [21:30]
Robert Solow
I agree with that. But what I was trying to focus on is that there's an interplay between them. It is a political problem. And the political forces then push the economy in the direction of greater inequality. And that in turn reinforces the political inequality. You're absolutely right to describe it as fundamentally a political problem in the sense that there would not be any substantial loss of economic efficiency if there were much less inequality.
- [22:11]
Steve Levitt
We'll be right back with more of my conversation with economist Robert Solow after this short break. People I Most Admire is sponsored by NetSuite Every business is asking the same question. How do we make AI work for us? The possibilities are endless and guessing is too risky. But sitting on the sidelines is not an option because one thing is almost certain. Your competitors are already making their move. No more waiting with NetSuite by Oracle. You can put AI to work today with NetSuite, you get a unified suite that brings your financials, inventory, commerce, HR and CRM into a single source of truth. That connected data is what makes your AI smarter so it doesn't just guess. It knows intelligently, automate routine tasks, deliver actionable insights, and make fast AI powered decisions with confidence. NetSuite isn't another bolted on tool. It's AI built into the system that runs your business right now. Get the business guide demystifying AI for free at netsuite.com admire the guide is free to you at netsuite.com admire netsuite.com admire people I mostly Admire is sponsored by El Mayor Tequila, a clean premium tequila that proves less is really more. Here's the deal. El Mayor is made with just three ingredients, 100% blue Weber agave water and heirloom yeast. That's it. No gimmicks, no extras, just tequila made the right way with an award winning difference. You can taste what's even better. You can often find it at half the price of other premium tequilas, which leaves plenty of room for holiday shopping. You keep it stocked and share it proudly because it's clean, smooth and always worth the pour. Think of it as your house tequila. The latest release, El Mayor Cafe Reposado, takes that same clean tequila and rests it in coffee seasoned bourbon barrels, adding a natural coffee kissed flavor. Whether you're mixing up espresso martinis for the holidays or sipping at Fireside, it's perfect for this time of year. Discover more@el mayor.com and find El Mayor at a retailer near you. Please enjoy responsibly. People I Mostly Admire is sponsored by Rula. Telehealth has made mental health care accessible for millions of people, but finding a suitable therapist, scheduling appointments and expensive out of pocket costs can still feel like a huge barrier. Thankfully, Rula has you covered. Rula partners with a network of over 15,000 therapists and psychiatrists, enabling you to find the right things therapist for your needs and preferences. And get this, the average copay is as little as $15 per session. Rula sticks with you throughout every step from therapy to medication management. Simply answer a few questions and get started as soon as the next day. Thousands have already trusted Rula to support them on their journey toward improved mental health and overall well being. Head over to rula.com admire to get started today. After you sign up and they ask where you heard about them, please tell them our show sent you. Go to r ula.com admire and take the first step towards better mental health. Today. You deserve quality care from someone who cares. So you grew up in the Great Depression?
- [25:43]
Robert Solow
Yes, I was 6 years old in 1930 and I was 16 years old in 1940. So I grew up during the whole of the Depression. Now, we were not an impoverished family. My father always had work, although he had to take jobs he didn't like. On the other hand, from listening to my parents conversation, it was clear to me that the general feeling of not knowing where the next dollar is coming from, the general feeling of insecurity, was the dominant thing in their conversation. That's mostly what they talked about. One of their friends was a high school teacher of math, Mr. Ginsburg. Before the Depression, they all pitied Lou Ginsburg because he didn't earn very much money. By the 1930s. They envied him because he had a safe and secure job. So one of the things I got out of being a Depression child was the importance of economic security. And it has made a difference because I've always balked at notions about the efficiency of the labor market which amount to imposing uncertainty on workers. I think any understanding of the labor market has to take account of the fact that people really care. It's really important to them to have a feeling of safety, of security. I still think that it doesn't fit so easily into standard economics textbooks, but it's one of the things I learned from growing up in the Depression.
- [27:50]
Steve Levitt
Was there a feeling in the depths of the Great Depression that this was it, that the market economy had failed and that this was a new normal?
- [28:00]
Robert Solow
Oh, come on. Absolutely. I come from a generation of people whose fundamental view was that the society had failed. My experience, say until I was 21, was of depression and war. The economy had failed the people and the society had failed the people.
- [28:24]
Steve Levitt
When the Great recession happened in 2007-2009, I was struck by how fatalistic and demoralized people were. I mean, the mainstream media was fundamentally questioning whether the market economy was still a viable way to structure society. But knowing the facts that we'd had 60 or 70 years of GDP growth and that in the Great Recession, GDP fell by maybe 4% and unemployment peaked at 10%. It hardly seemed to me at the time like a justification to abandon capitalism. In the Great depression, what? GDP must have fell by 30%. I don't think people today can even imagine what the Great Depression must have been like.
- [29:16]
Robert Solow
I don't recall going back to 2007, 2009, that kind of fatalism or feeling that the system had broken down. There was much more of that in the 1930s. My whole contemporary generation, kids I knew in Brooklyn in school, an awful lot of them ended up as communists or fellow travelers or Trotskyites. And that was because they really were driven to believe that the system had broken down.
- [29:57]
Steve Levitt
I'm curious, Were you attracted to communism, to Trotskyism? Were you ever close to following that path?
- [30:04]
Robert Solow
No, but that's purely accident. The most important person in my life in the 1930s was a schoolteacher, an English teacher. She got hold of me and taught me to read novels, serious novels, and to listen to music and to think about things. She and her husband kind of took me in and converted me into the intellectual, you see now. But now, the interesting thing is that in her youth, Mrs. Towster had been the secretary to Emma Goldman, the leading American anarchist. And she thought of herself as a philosophical anarchist, not a bomb thrower. But she believed that organized political power was a bad thing. And I acquired those ideas. And I had absolutely no interest in communism at all. To me, communism was a manifestation of organized political power and therefore a bad thing. So I went through that period of my life as a person definitely on the left, but never having the slightest inclination toward communism. I thought Trotskyites were as bad as Stalinists. Lenin was already the problem, not the solution.
- [31:50]
Steve Levitt
So I've long had a theory that the generation of economists who grew up during the Depression was the greatest generation of economists. Because the most talented young people, they looked around, people like you, and they could have done anything. But economic issues were the most pressing problem. And so the most talented people chose to be economists. Whereas in other times, the most talented minds maybe gravitated towards physics at its heyday, or engineering in the 1960s, or maybe computer science later on. Do you think there's any truth to that theory?
- [32:30]
Robert Solow
I do think that young people choosing occupations, choosing what to think about or to devote their energy to do, respond to what they see as the important problems. My contemporaries are no smarter than any other generation, but they were certainly more focused on the failures of the system. And the importance of learning how to deal with the mechanics of the thing. So if the generation of economists had grew up in the depression of the 30s, was especially good. It wasn't that they were especially good. It's that they were driven by. By their experience to think about the right things, to worry about the right things. People like Jim Tobin and Paul Samuelson and Franco Modigliani in Europe, they're certainly no smarter intrinsically than people today or yesterday. But their experience had focused them.
- [33:44]
Steve Levitt
No. One of the things that struck me is that your interests and your way of thinking, they're much broader than most eminent economists.
- [33:54]
Robert Solow
What do you mean by broader?
- [33:56]
Steve Levitt
Milton Friedman and Gary Becker. They seem to me to be destined from birth to be economists. Every single thing they said or did was pervaded by an economic mindset. But your worldview seems more anchored in common sense than in economics per se. It almost seems to me like it's an accident that you're an economist, that you easily could have ended up being something very different. Is there any truth to that?
- [34:29]
Robert Solow
I think that's probably true. People keep talking about, you should learn to think like an economist. I'm not so sure that's a good idea. You should learn to think Sometimes the question is economic, and the answer may be economics, but I agree with you. The Gary Becker frame of mind that children are durable goods after all, that everything can be cast in economic terms has just never appealed to me. It doesn't seem right. It doesn't seem an accurate description of the way we actually think. So if, in fact, I've managed to stay away from that, I'm glad.
- [35:14]
Steve Levitt
Did you know from an early age that you wanted to be an economist?
- [35:18]
Robert Solow
Oh, hell, no. I'll tell you how I got to be an economist. I came home from the army in 1945.
- [35:27]
Steve Levitt
Wait, how did you end up in the Army?
- [35:29]
Robert Solow
I volunteered. You want that story, too?
- [35:33]
Steve Levitt
Yeah, absolutely.
- [35:33]
Robert Solow
I want all your stories that goes back to 1942. I turned 18 in 1942, and I went back to Harvard College to start my junior year. I started at age 16. So there I am in September, maybe early October 1942, sitting in a course on the psychology of personality. It wasn't a bad course. I was taking it because my advisor, whom I respected a lot, told me to take it. So I'm taking this course, and like the good little boy that I am, I'm busy taking notes. And all of a sudden it hit me. I can't sit here three days a week taking notes on The Psychology of Personality. When probably the most important event of my lifetime is taking place 3,000 miles away in Europe. I just can't do that. So I waited till the class ended. Still busily taking notes. I packed up my ballpoint pen and my notebook, and I walked out the door. I walked one block to Harvard Square. I paid my nickel and got into the subway. Got out at park street, where I knew there was an army recruiting office, and I joined the Army. I thought it was much more important to beat Hitler than to take notes in courses. So three years later, we've beaten Hitler. And in 1945, I've got to tell Harvard College I'm going to be back in September as a junior to finish up. So I called the college office on a telephone. And they said, the thing to do is to get a transcript of your freshman and sophomore year. And take it to the headquarters of your major department. So I said to my wife, I don't have a major department. I just been screwing around, taking courses mostly in the social sciences. And I said to her, you majored in economics, didn't you? And she said, yes, I did. I said, was it interesting? And she said, yes, it was. I said, oh, what the hell, let's give it a try.
- [38:16]
Steve Levitt
And you never looked back. Right. You've been on that trail ever since.
- [38:19]
Robert Solow
That was 1945 and that was 78 years ago. Yes.
- [38:28]
Steve Levitt
So you volunteered for the Army. What was your assignment?
- [38:32]
Robert Solow
The army has a worldwide reputation for putting square pegs in round holes and vice versa. But in my case, they lit on two accidental capacities that I had. I had fairly fluent German, and I knew Morse code.
- [38:55]
Steve Levitt
Wait, how did you learn fluent German growing up in Brooklyn?
- [38:58]
Robert Solow
When I came to Harvard College in 1940, I was assigned as a roommate a German refugee, Gerhardnell House. And we became fast friends throughout his life. And I was just smart enough to say, hey, this is an opportunity. I'm going to take German, and I'm going to be back here in the room at night, and I'm going to talk German with Gerhardt, and I'm going to learn German. And so before I joined up, I had the two German courses, and I talked to Gerhardt. So after those two years, I was practically fluent in German.
- [39:42]
Steve Levitt
That's pretty good, Bob. My wife is German, and I've been trying to learn German for the last 10 years. And I'm living in Germany for a year, and I can't even understand children's TV shows.
- [39:54]
Robert Solow
You're too old. Probably the problem. But anyhow, so the army assigned me to Signal Intelligence.
- [40:04]
Steve Levitt
Wait, why'd you know Morse code?
- [40:06]
Robert Solow
Harvard College had a contract with the army to find ways of teaching Morse code. And so they offered you could come in two or three evenings a week and learn Morse code. And what the hell, I thought that might be a useful skill. So I learned Morse code and I ended up in this unit which intercepted German radio traffic. But not big time radio traffic, not like at Bletchley or touring and all that. We intercepted low level combat units. We hardly ever heard any unit larger than a battalion. And some of these messages were in code. And we had to learn to break those codes in real time. But they were fairly simple codes because remember, the poor devils who were sending the messages were having problems too.
- [41:09]
Steve Levitt
What would be an example of the simple code you had to break in real time?
- [41:13]
Robert Solow
Well, the simplest things were just ciphers. Each letter of the Alphabet stands for a different letter of the Alphabet. But more than that, the Germans had, for these low level combat units they had a table of 600 different three letter groups. And they would assign a different meaning to these three letter groups and transmit the three letter groups. And we had to look at a lot of traffic, occasionally find a blunder somewhere and eventually be able to read the messages. And we did good work. We did very good work.
- [41:55]
Steve Levitt
Were you right by the front lines?
- [41:57]
Robert Solow
Yes. Because these radio transmissions were very weak and if you were any distance away you couldn't hear them. We worked out of two and a half ton trucks. We had to hide them because if we were seen, we could have been pulverized. And so part of our trick was to get as close to the front, to the transmitter that we're listening to as we could get, but not be visible. And we succeeded.
- [42:32]
Steve Levitt
Were you worried about dying when you were in the war?
- [42:36]
Robert Solow
From time to time, yes. But you can't do nothing but worry. Like anybody else. I was scared sometimes. But it worked out. Here I am.
- [42:49]
Steve Levitt
You're listening to people I mostly admire. I'm Steve Levitt, and after this short break, economist Robert Zolow and I return to talk about how macroeconomics has lost its way. JJBL wireless earbuds are packed with innovation. Touchscreen smart charging case for one touch control, instant EQ customization, true adaptive noise cancellation. And a one of a kind audio transmitter to plug and play from almost any source. Plus spatial 360 sound on anything. The new JBL wireless earbuds. Hey, it's Chris K from Target wishing you and yours a very merry Christmas. Hit it. Dasher, give me some Jingle Bells. Dancer, Prancer, let's hear a beat and mouse chorus. Oh, it's a beautiful job, everybody. All right now, bring it home. Happy holidays, everybody. Clorox Toilet Wand it's all in one.
- [44:14]
Robert Solow
Clorox Toilet Wand it's all in one.
- [44:18]
Steve Levitt
Hey, what does all in one mean? The Caddy, the Bond, the preloaded Pad. There's a cleaner in there inside the bag. So Clorox toilet Wand is all I need to clean a toilet. You don't need a bottle of solution to get into this toilet revolution. Clorox Clean feels good Use as directed. The way economists model the macroeconomy has changed dramatically over the years that Robert Solow's been studying the topic. I'm curious to hear how he feels about those changes and also to see if he's got any advice about growing old. How do you like where macroeconomics has gotten to?
- [45:07]
Robert Solow
Well, I have to be careful here, Steve, because remember that I'm out of date. My eyesight is such that I can't read very much anymore. So I really don't know what the last four or five years of Chicago economics has become, but I found the advent of DSGE dynamic stochastic general equilibrium models to be not so much as a step backwards, but as a step out of economics. In fact, I've been criticized, probably justly, for making jokes about it, but it struck me as funny as not something you could take seriously. There were times when you start reading an article in that vein and it would start by saying, well, we are going to write down a quote, micro founded model, end quote. It meant an economy with one person in it and organized so that the economy carried out the wishes of that person. Well, when I was growing up and getting interested in economics, the essence of economics was that there were people and groups of people in the economy who had conflicting interests. Not only did they want different things, opposing things, they believed different things. And there's no place for that in what passes or what was passing a dozen years ago for a micro founded model. And I come back to one of the symptoms of this is that the devotees of that kind of economics don't play a role in discussion of what to do. If I were to ask you what was the Chicago position on dealing with the COVID pandemic? I don't think you could find anything written about that. It's an economics that is clearly not designed to take account of the difference between people who get the disease, people who don't get the disease People who normally sell things that people who get the disease would have bought if they didn't have the disease, or all those things that make up the nitty gritty, they don't pronounce on that they have built what they think of as a brand of economics that simply has nothing to say.
- [48:08]
Steve Levitt
I'll tell you a story, Bob. After the financial crisis in 2007, there was so much criticism of economists for not predicting it. So I asked one of my senior colleagues, one of my macro colleagues, what he thought of that criticism and he said more or less. Well, I think it's stupid. It's not our job to describe the economy. What we write down are mathematical models that try to answer difficult mathematical questions. It was really what you're saying, but he said it even more clearly.
- [48:43]
Robert Solow
Yes, well, if that had been the way economics was done when I was studying the subject and learning it, I wouldn't have done it. I would have found something else to do. When I first got interested in economic questions, the whole point was that the system appeared to be broken and it was necessary to find ways to patch it together. If I wanted to classify myself in schools of economics, I would like to call myself an eclectic American Keynesian. The real economy, the functioning economy out there is full of mechanisms. There are operating characteristics that it has. You touch it here and it reacts there. You touch it there, it reacts there. And the essence was not so much to build a mathematical micro founded model of the economy. The object was to find a couple of these mechanisms and try to understand how they operated in the imperfect world we live in. God, I do sound like an old fogey, don't I?
- [50:15]
Steve Levitt
You're not exactly a young man. You're 98 years old as we speak. And I really. I use you as a model of how I'd like to grow old. It seems like you haven't lost a step mentally. Do you think that's just luck or because you've been so intellectually active?
- [50:39]
Robert Solow
That's not quite right. You don't know the reality. I'm aware of the fact that I have deteriorated physically much more than I've deteriorated mentally. But I was certainly sharper when I was younger than I am now. I am lucky in that I can still think. Not as well and God knows, not as quickly. God, it takes me forever to get to the bottom of anything, but I can still think, whereas I can't see and I can't hear but that it's just the luck of the draw. I don't think there's any good habit I had Somewhere there is someone, not an economist, of course, who's saying the various faculties deteriorate at different speeds. And would it be interesting to know what controls that? Maybe some enzyme, maybe some this, maybe some that. That would be a good example of the kind of research I would have always liked to do.
- [51:53]
Steve Levitt
My father is 88 years old, so a decade younger than you. He mentioned to me the other day that every friend he had growing up has died, but he didn't seem too troubled by that fact. I think for him outliving my sister, his daughter, that was far more difficult. What's it been like for you to outlive so many of the people you've known?
- [52:21]
Robert Solow
I miss my friends. I miss the people in my department. We were good colleagues. I miss Paul Samuelson a tremendous amount. I miss Carrie Brown and others. It's a lonely thing to get very old. But I'm not giving it up.
- [52:43]
Steve Levitt
Are you still enjoying life?
- [52:46]
Robert Solow
On a good day, certainly. Or in the good parts of every day, yes. A lot of it is sort of neutral. Most days are pretty dead level. What do you expect?
- [52:58]
Steve Levitt
What's your attitude towards death? Are you afraid?
- [53:01]
Robert Solow
My attitude toward death is that an awful lot of people have managed to do it. So I guess I will too. I'm not happy at the idea. A friend of mine said, I don't mind dying, I just don't want to be there when it happens.
- [53:22]
Steve Levitt
Robert Solow passed away six months after we had this conversation at the age of 99. If you were listening last week, you know that next week will be the final episode of People I Mostly Admire. If you weren't listening last week, well, I apologize for not delivering that message more gently. So next week we will end things with Stephen Dubner, my Freakonomics friend and co author, interviewing me. We'll look back at the five year run of the podcast. We'll play a few voice memos from listeners at the end of that last episode. So if you'd like to tell us about a moment from a Pima episode or an idea that impacted your life, send us a voice memo you can record on your phone in a quiet space. And please keep it short. Our email is pimafreconomics.com that's P I M aqanomics.com as always, thanks for listening and we'll see you back soon. People I Mostly Admire is part of the Freakonomics Radio Network, which also includes Freakonomics Radio and the Economics of Everyday Things. All our shows are produced by Stitcher and Renbud Radio. This episode was produced by Morgan Levy with help from Lyric Bowditch and mixed by Jasmine Klinger. Our theme music was composed by Luis Guerra. We can be reached@pimareakonomics.com that's P I M A@freakonomics.com thanks for listening.
- [54:55]
Robert Solow
You're speeding up. Remember, you're talking to someone who's going to be 99 in four months. The brain works slowly.
- [55:04]
Steve Levitt
Okay. The Freakonomics Radio Network the Hidden side of Everything. Stitcher. Sponsored by Novo Nordisk Hola. Hey, you speak Spanish, but do you speak liver?
- [55:28]
Robert Solow
Okay.
- [55:28]
Steve Levitt
People with conditions like obesity, type 2 diabetes or high blood pressure could be at risk for a potentially life threatening liver disease called mash or Metabolic Dysfunction Associated Steatohepatitis.
- [55:40]
Robert Solow
Whoa. I could be at risk?
- [55:41]
Steve Levitt
I'll ask my doctor. You're bilingual? No, I speak liver now.
- [55:45]
Robert Solow
Now I'm trilingual.
- [55:47]
Steve Levitt
Ask your doctor about your risk and if you should be screened for MASH. Learn more at speakliver.com JBL Wireless earbuds are packed with innovation. Touchscreen smart charging case for one touch control, instant EQ customization, true adaptive noise cancellation and a one of a kind audio transmitter to plug and play from a almost any source. Plus spatial 360 sound on anything. The new JBL wireless earbuds.
- [56:24]
Robert Solow
Before the.
- [56:25]
Steve Levitt
Trophy and bragging rights are rightfully yours.
- [56:27]
Robert Solow
Before your sleeper turns In a season.
- [56:29]
Steve Levitt
No one saw coming, before stats and projections turn into points on the board.
- [56:34]
Robert Solow
And your lineup falls perfectly into place, you flip the lid on a can.
- [56:38]
Steve Levitt
Of on nicotine pouches.
- [56:39]
Robert Solow
And as you make your first pick.
- [56:41]
Steve Levitt
You know this is the season where.
- [56:43]
Robert Solow
Fantasy'S going to surpass reality.
- [56:45]
Steve Levitt
It's on products for tobacco consumers 21 years of age or older.
- [56:50]
Robert Solow
Warning.
- [56:50]
Steve Levitt
This product contains nicotine. Nicotine is an addictive chemical.