How do we encourage economic growth and progress across the country? The United States was once revered as one of the most successful economies in the world—but today, it struggles to generate the job opportunities and market stability necessary for its citizens to ensure their quality of life.
This is the question that Jonathan Gruber and Simon Johnson explore in their book, entitled Jump-Starting America: How Breakthrough Science Can Revive Economic Growth and the American Dream. In this episode, Alexander McCaig sits down with Jonathan Gruber to have a meaningful dialogue on what the government’s missing out on by decreasing funding in research and development.
According to Jonathan Gruber, public investment in research and development played a pivotal role in the economic progress of the United States. All the technological advancements we have the privilege of experiencing today—such as our smartphones and laptops—were, in part, fueled by the amount of funding that was poured into the pursuit of science.
However, the level of public investment decreased drastically, from about two percent of GDP in 1962 to just under half of that today. In his book, Jonathan Gruber explains that the nation’s renewed support in science and technology would play a significant part in generating economic growth. This is especially important in an era where plenty of citizens are facing job instability, outright unemployment, and health concerns brought about by the COVID-19 pandemic.
Ushering in a new era for research and development would not just benefit certain industries. Jonathan Gruber posits further that aside from overall growth, it would create better jobs across the economy. This would naturally occur as the market adjusts to accommodate an influx of tech professionals across the country, because they would need these goods and services to support their work as well as their quality of life.
While the US does have certain cities where tech-based growth is made possible, they are not enough to power the economy. In fact, concentrating opportunities in “superstar” cities such as San Francisco, New York, Seattle, and the Silicon Valley can be counterproductive.
This is because the demand for professionals will incentivize people to relocate from one city to another. As a result, these cities experienced increased congestion and housing prices—and those who do not have the experience necessary to become a valuable asset to the area will be forced to leave.
At this point, Jonathan Gruber emphasizes the importance of government involvement in encouraging basic research. Setting aside funding for research and development that is carried out in other areas would help incentivize private investors, or venture capitalists, to take that risk as well.
One salient point of discussion in the episode was when Alexander McCaig asked Jonathan Gruber about the impact of robotics on the future of work. Alexander pointed out that there may be some routine jobs that may phase out completely because they would be delegated to robots, who would be more efficient at performing such activities.
Jonathan Gruber believes that the outlook for robotics is optimistic, and that people should focus on the capabilities that can be developed when there is enough funding for the country to get a leg up on the tech race. Being able to scout the future of artificial intelligence and machine learning would give researchers a head start on the careers that it would affect, in both a positive and negative manner.
“The bottom line is, you can wring your hands about the fact that some low-level jobs are going to be taken by robots, or you can get to work making the robots,” Jonathan Gruber explained.
To illustrate his perspective, Jonathan Gruber explained how the invention of the wheel raised concerns about the viability of horse-drawn carriages back in the day. Fast forward to modern times, it is clear that refining the wheel has led to a plethora of different jobs across transportation, engineering, and construction as people and cities work to make their locations friendlier to vehicles.
Planning ahead for new job roles could help the labor market adjust and accommodate accordingly.
When asked about his parting words, Jonathan Gruber encourages people to take an “if you build it, they will come” mentality. People living in communities tend to go for an incredibly narrow or vague focus, but what they need is an actionable plan that can be carried out step by step.
When people have a concrete and tangible action to look back on, they have a source of inspiration that pushes them forward—even if they do not secure the funding needed to make it happen just yet.
The future is bright and full of possibilities. It’s time to take the pivot back towards science, technology, and data.
What’s your data worth?
Alexander McCaig (00:09):
Hey, Jonathan. Thank you for coming on to TARTLEcast. I really appreciate it. It's always a pleasure, and I feel extremely fortunate having the ability to speak to some of the world's brightest minds, especially those experts that focus on things that have a massive impact on a great collective of human beings. And if anyone knows your past, I mean, they would know that your work in economics, just from where you are up in Massachusetts, has a mass impact on healthcare and innovation within America itself. And so I... That's... It's tough being out in the public eye. And then the hardest part for an economist, from the way I look at these things, and this is just me from my perspective, is that if you output a number or a theory and one little sliver of it goes wrong, the public hammers you on it. It's a tough spot for you to be on.
Alexander McCaig (01:01):
I got to say, there's a lot of muster you got to hold yourself up to and be like, "You know what? I just got to take it, but I'm going to continue pushing forward because I want to evolve these things for the better. I want to see these things succeed." And you put together this... a very wonderful collective work on jump-starting America, right? And it's funny how you use the jumper cables on both sides of America for the cover art. Really gets me because I've broken down so many times. You really do need that jolt, but the question is, where's the thing that's going to send the charge? And that's the beauty of what you talked about here in this book with the work you've done, is that here's the charge, and this is why this charge, this voltage going to work. And I think that's the really interesting aspect of this. So thank you very much for coming on.
Jonathan Gruber (01:48):
Well, it's my pleasure to be here. Thanks for having me. Of course, it's important to point out the book was co-written with Simon Johnson.
Alexander McCaig (01:54):
Jonathan Gruber (01:55):
My co-author, [inaudible 00:01:56] economist, who was formerly chief economist at the IMF. And we really enjoyed doing the book and we're pleased with the reception it's been getting.
Alexander McCaig (02:04):
Yeah. And listen, I mean, and it's duly noted where the work is duly required for the respect because this is quite substantial. And I want to ask first, before we even get into some of these points in here that I was sort of hyperfocusing on, what is it about economics that is the draw for you? What is it about your research and what you're doing? Why is it that you do it? Did you fall into it and then become an expert in it? Or you're like, I see the value in this line of reasoning and understanding and then delivering my expertise to the public? What was that for you in your own journey?
Jonathan Gruber (02:42):
Yeah, I mean, I think I got into economics because I'm interested in public policy and the generic making the world a better place term.
Alexander McCaig (02:50):
Jonathan Gruber (02:50):
And spent the beginning of my career as a typical academic, really doing sort of high-falutin, ivory-tower research that largely was read by other people like me but didn't really move the needle. And then I was fortunate enough to serve in the Clinton administration in the treasury department and really saw how economics could actually impact the policy process. And when I came back in 1998, from that, I decided to really devote a lot of my career to not just doing this high-level or research, but actually figuring out a way to translate it into terms that policy makers could use and understand.
Alexander McCaig (03:24):
Right. You know that's the hardest thing is like, you have a concept, right, you've gone through it, but it's like, how do I take that, simplify it enough so that somebody can tangibly grab onto it, and then make it actionable for the rest of the public? That's a very difficult thing to do.
Jonathan Gruber (03:39):
It is. It is. It's not something, unfortunately, that's very rewarding in academic economics. In academic economics, really the rewards are for sort of impressing your colleagues, not for impressing policy makers.
Alexander McCaig (03:53):
Like that [crosstalk 00:03:53].
Jonathan Gruber (03:53):
So I think it's really been... It's been valuable, and I think we need more of it in the world.
Alexander McCaig (04:00):
Well, so then how do you continue to evolve that structure that you've seen the value in? Is it through this written material? How do you continue to show that that model, what you're speaking about, is working, it's actually creating that impact? How do you reinforce that over and over?
Jonathan Gruber (04:17):
Well, I mean, I think that's the fundamental thing, is in some sense you can can't. I mean, the thing about making policy is ultimately, it's a shared enterprise. And ultimately, you can't say I did X because X came from 100, 200, 500 people working together. And you have to... I am most closely associated with the Affordable Care Act, and I did a lot of the work that sort of was the intellectual backbone for that. But with the actual law, I wrote none of the law. I mean, none of the actual stuff in the law did I write. So I think at the end of the day, you just have to...
Jonathan Gruber (04:55):
This is why I think it's hard for academics. Academia is very much a field where you do your research, you get your article published, you see feedback. Policy is not that way. Policy is you work really hard on stuff, and 99% of it ends up in the garbage bin, and 1% might change the world. And you'll never really know. You've just got to take the satisfaction that you're part of a process. With this book, we know that the book was read by a lot of people on the policy side, and it was very influential in the development of a current bill before Congress called the US Innovation and Competitive act, or USICA, which passed the Senate and they're debating it in the House. And we've been told by a number of people that our book was influential in the development of that legislation, and that's all you can hope for.
Alexander McCaig (05:39):
All right. Well, then right... Here we go. So then let's get into this then. So we can use USICA as our little foundational piece. In my total concept of this whole thing is that you have to spark innovation through knowledge, right? And you have to make sure that R&D expenditure is appropriately allocated so that individuals can take the appropriate risks, and then from that risk, create those new technologies or services that actually generate more jobs and then have a larger, more macroeconomic effect on the nation itself or other nations in total. Is that what I'm understanding here?
Jonathan Gruber (06:21):
Yeah. I mean, basically, innovation starts with knowledge, but it's also taking that knowledge and turning it... It's really, as they say, taking it from the bench, from the lab bench, to the shelf of the store. It's taking that knowledge and turning it into products that people want to buy and make their lives better. And so it involves a lot of basic research but also a lot of applied research, in terms of not just come up with the cool ideas but actually thinking how you turn them into real goods, too.
Alexander McCaig (06:48):
You talked about this, and this is a very good point, is that there's a lot of very brilliant people out there that create these very innovative things, but they are horrible business people. They are bad at actually turning that thing into something that can generate some sort of profit, some sort of return, right?
Jonathan Gruber (07:05):
Alexander McCaig (07:05):
They're actually not good business leaders. They can't take this thing and bring it to market appropriately. And [crosstalk 00:07:12]
Jonathan Gruber (07:12):
It doesn't mean that they're not brilliant people or good people.
Alexander McCaig (07:15):
No, no. Not at all.
Jonathan Gruber (07:16):
It's just a different skill set. It's just a different skill set.
Alexander McCaig (07:18):
[inaudible 00:07:18] operator.
Jonathan Gruber (07:19):
Right. And the problem with our current system in entrepreneurship is that really, the piece that takes ideas to the market is the piece that's going to inspire venture capital industry, the famous venture capital industry in the US. And that industry recognizing that the inventors aren't necessarily people who can turn it into a product has two implications. One is they make those inventors bear a lot of risk in terms of bringing it to the market. And two is the venture capitalists are very hands on. Now, it's a model that works, but it's a model that has a couple of fundamental limitations.
Alexander McCaig (07:57):
Well, let's go t... Please, I need you to publicly talk about these limitations [crosstalk 00:08:01]
Jonathan Gruber (08:01):
Yeah, no, this is something I really learned a lot about writing the book, around... We all hear the hero stories of venture capital industry. 60% of the US market cap is companies started with venture capital, et cetera, et cetera. But the truth is venture capital is an excellent model for investing in software development. It's an excellent model when you have a relatively quick turnaround, relatively low capital investment idea. Because what venture capitalists do is it's called the spray and pray model. They put a little bit of money, a lot to you and I, but a little bit to them, two, five, 10 million dollars in a bunch of ideas and hope one becomes a unicorn, right?
Alexander McCaig (08:41):
I know, it's [crosstalk 00:08:42]. They took...~ It's the same model they took from hedge funds. It's like, listen, I can put it in a bunch of things, but one of them will outweigh the losses of the rest.
Jonathan Gruber (08:49):
Exactly. Exactly. But what that means is if you come to them and say, look, I have... So the example in the book of Boston-Power. Boston-Power was a Boston-based company, making lithium ion batteries, obviously a critical technology for climate change. Doing very well. They had early customers including Hewlett-Packard and Saab, and they went to venture capital and said, look, we want to expand. We want to build a $200 million plant in Western Mass, which will employ 500 people. And the venture capital said, no, that's too much money. It's going to take too long to build it. That's not our sweet spot.
Alexander McCaig (09:20):
Doesn't [crosstalk 00:09:20].
Jonathan Gruber (09:20):
Well, the US venture capitalists said no.
Alexander McCaig (09:22):
Jonathan Gruber (09:22):
The Chinese venture capitalist said, yes. They were happy to finance it with one small wrinkle. You just had to build the plant in China.
Alexander McCaig (09:28):
Yeah. Chinese [crosstalk 00:09:29].
Jonathan Gruber (09:29):
So these jobs went to China. And basically the company is very successful, and I can't blame the venture capitalists. They're not bad guys. It's just their model is small, quick hits and hope one blows up. They're not interested in very big, long-run investments. And that's why that's where the market sort of fails. And that's where you need more government help.
Alexander McCaig (09:48):
Right. And so that's interesting. So let's talk about this here. If you don't want innovation to leave this localized economy, right, how do you then redirect the focus of these people that are venture capitalists, private operators within this ecosystem coming in and saying, well, "This is how we want to do it. This is our model."? How is it then you find a way to incentivize them to take that risk to keep things here? To say that I know it doesn't look like a benefit now because it's outside of your typical spray and pray model, but let me show you that research. How is it that you reinforce that with a proper incentive for them?
Jonathan Gruber (10:21):
Yeah. I think there's two ways to do it. So one is you recognize that some things they're never going to want to do it, and the government needs to step in.
Alexander McCaig (10:28):
Jonathan Gruber (10:29):
So the government is a program called the Small Business Innovation Research program SBIR.
Alexander McCaig (10:34):
Jonathan Gruber (10:35):
Yeah. I'm not sure if I got the name right, but I know the initials.
Alexander McCaig (10:38):
You're doing a good job. Yeah, acronyms always-
Jonathan Gruber (10:40):
And they are... They invest in much riskier, much earlier-level companies than even venture capitalists do. And they have a terrific track record.
Alexander McCaig (10:48):
Jonathan Gruber (10:49):
So we need... That program should be doubled, tripled, quadrupled. Indeed, this is the bipartisan... even Marco Rubio has proposed doubling the program. So this is a bipartisan idea, we need more government risk taking. But we also need to thicken the market of our venture capital. What do I mean by that? While venture capital is such as hero in the US economic story, it's actually a tiny, tiny bit of the US capital sector. It's like one-eighth of 1% of all capital in the US. It's tiny. When venture capitalists have more resources, they do take more chances. It's just given their limited resources, they don't want to. So we need to thicken that market. We need to not compete with the private sector because they'll win. We need to partner with the private sector, taking risks.
Jonathan Gruber (11:34):
So here's a great example. There's an organization in Singapore. Singapore's a very small country state, obviously, and they have this... It's a public organization. It has very good relationships with the university there. And when there's good ideas that might be products, they become a lead investor. And then they go out to the private sector and say, "Okay, anyone who comes in, you can be an investor. And the quicker you come in, the better terms, we'll give you." And we sort of send a signal, this is a product that we think is valuable, and we've got a good track record. And they have spent about $50 million, and there's been about $500 million of private capital that's followed them on. So I think it's about the government cannot go out there and compete with private venture capitalists. The private sector pays more. They're smarter. They're going to leave the government with the dogs. The government needs to partner with the private sector venture capital, and I think they can.
Alexander McCaig (12:24):
I've seen that here, and I've spoken with a lot of investors. They're always more comfortable being the second person to come in and do the investment-
Jonathan Gruber (12:31):
Alexander McCaig (12:31):
They need... They always want someone else to vet it first, right? And just being here in New Mexico, I know for a fact, the University of New Mexico SBIR grants, everything of the sort, and also working with individuals at the national labs is saying, how do we take that sort of intellect, that technology, how do we bring those things to monetization? How do we take the brains in the university, and how do we really right out of the get-go, put some money into this so that when another venture capital company comes in and they see it, they're like, oh, well, they've already taken the risk. The government's not going to vet it. The university [crosstalk 00:13:04]
Jonathan Gruber (13:04):
It's not even so much the risk, it's just... It's really... I think it's a little bit of CYA on the venture capitalist front, which is like, well, the government... [inaudible 00:13:12] first. If it goes bad, it's not my fault. I was just following someone else.
Alexander McCaig (13:15):
And it doesn't look bad for their track record too, because, "Oh, they said, blah, blah, blah. I got caught up..." Okay. All right. Got it.
Jonathan Gruber (13:19):
Yeah. So I think we need more of that. And... But, so we need more government. That's on that stage, but we also need to recognize we need more of the basic research stage too. And that's really... That has to be all government. I mean, basically the private sector has walked away from basic research. If you look at... We talk about R&D in the private sector. The R part used to be two-thirds of R&D. It's now about a fifth of R&D. Or it used to be one-third of R&D. Now it's about a fifth. And private companies aren't doing publicly-facing research anymore. Indeed, if you look at articles published by corporate scientists, so that's how private companies share what they're finding, they're down by about 60% over the last several decades. And companies like IBM used to reward their corporate scientists for publishing articles. Now they don't reward them for that. They only reward them for internal work that leads to patents. So private companies have walked back from doing sort of the basic research, but [crosstalk 00:14:16] to fill that gap.
Alexander McCaig (14:17):
You know that... If you step back from understanding the public, right, you're actually doing more harm to you in the long run.
Jonathan Gruber (14:25):
Alexander McCaig (14:26):
[inaudible 00:14:26] like let's lock an IP. That's going to be our R&D. Well, that actually isn't helping you because you lack understanding of how those things will be used and how you can go into solve and where I should actually put money towards for that innovation. [crosstalk 00:14:38] You have to understand the public.
Jonathan Gruber (14:40):
I think that's right. I think once again, it's a hard argument because a lot of people think, well, R&D, that's a private endeavor. But what they don't realize... And the first third of our book is history, and it's really the history of how public R&D is what made America great. That really it was... Public R&D was nothing going to World War II. It then rose rapidly over several decades, spurred by World War II, spurred by Sputnik, spurred by sending a man to the moon. We rose to 2% of the entire US economy. One in every $50 was government sponsored science, and it created the modern economy.
Jonathan Gruber (15:14):
Everything, everything in front of you, everything on your phone comes from inventions made during that era. Satellites, modern computing, software development, pharmaceuticals, everything came out of that public investment. But then what happened was we went away from it. And now, where we used to be by far the world leader at 2% of GDP, we're now 14th in the world at 0.6% of GDP on public R&D. And we're suffering. We're not the innovation leaders anymore. And we need to get back on that frontier.
Alexander McCaig (15:44):
That's funny. That's... I'm glad you said that because I was just recently in North Cascades National Park up in Washington. They rely on 161 citizen scientists to come in and do the research.
Jonathan Gruber (16:00):
Alexander McCaig (16:01):
Yeah. There's there's public funding that people will go in to do this so that they can go and do the research. But the thing is, it has a direct impact on innovation, understanding the ecosystems, and all those other things for the preservation, right, of those very beautiful areas. You have-
Jonathan Gruber (16:15):
Right? I mean-
Alexander McCaig (16:16):
You got to fund... You have to open up the opportunity for people to go out there and be like, if somebody can help me take the time to go learn about something that is really a priority and then we can find other ways to innovate into it, you need to go focus on it. You have to support those individuals.
Jonathan Gruber (16:34):
Right. And I think... Look, you have to do so in a way that is peer-reviewed and [inaudible 00:16:41] good science. We don't want this to become political boondoggle. I mean that. I want to respect the problems with that, but the point is, look, the rate... Just take one example. Take NIH, the National Institute of Health, $37 billion year investment. The rate of return to NIH is phenomenal. Every $1 investment in NIH yields $3 in stock market capitalization.
Alexander McCaig (17:00):
Jonathan Gruber (17:01):
And we can... We just... 37 billion, we should double it. I mean, boom. We should absolutely be investing more [crosstalk 00:17:09].
Alexander McCaig (17:08):
You know what? I'm going to agree with you on that.
Jonathan Gruber (17:10):
... in these sorts of things. And look what we get out of it. Here's... One of my favorite examples in the book is what happened with mapping the human genome, where-
Alexander McCaig (17:18):
I know you talked about that. $3 billion in investment in the '90s went into this specific project, and look at the benefits that have come from it.
Jonathan Gruber (17:25):
280,000 jobs and 6 billion a year in tax revenues. A year.
Alexander McCaig (17:29):
I know. Oh, yeah.
Jonathan Gruber (17:30):
So this is a high rate of return. We just need to be doing more of it.
Alexander McCaig (17:34):
Jonathan, you get me so jacked up. I have recently been trying to have conversations with the National Institute of Health. They have written a couple research papers on social determinants of health, understanding how specific health outcomes right happen with individuals in large populations, right? And they've had no decent way to study it. So they wrote this paper on social determines of health, how they picture it being collected, the information they want to come together. Well, guess what I reached out to all 36 of these leading people that have come together to write this paper asking for a solution. I created the solution. I put together all the social determinants of health, and not one of them responded. They have asked for the help. I have innovated something for them, right, with everybody here at TARTLE, and they won't pay... they're not paying attention to it.
Alexander McCaig (18:15):
And I'm saying, if you've seen the benefit of saying National Institute of Health, we put money into it, this is the human genome project, well guess what? Give them a couple billion more dollars and put it right into TARTLE for doing that research and understanding social determinants of health. Have them use that as that tool, right? That's that sort of future. There are great benefits. We just can't ignore that sort of public research. The tools are there. It's about bringing the innovation, right, and the public together to have that collaborative understanding that really ignites, or as you would say, jump-starts America to that next phase. If we want that same sort of gain we got from human genome mapping, well, let's do it for understanding social populations. I mean, that's just my riff. I'm just upset with NIH, with me personally, because they're completely unresponsive when they've been given a solution. That's just me. Side to the point. I know there's been great tax benefits from all the other investment.
Jonathan Gruber (19:04):
Alexander McCaig (19:05):
I just... I want to say that there has to be some attention brought to this. And like you were saying, if an individual can innovate at these smaller scales, whether it be at universities and the government backs at first, and then that can increase that awareness to say that, okay, somebody else is already in it and VCs can come in and actually help them catalyze that further, fantastic. I think that sort of thing is a decent approach for actually bringing back those economic benefits that we need to see. But what I'm also curious about is what do you do with the flyover states, Jonathan? You and I both know that even in Boston, venture capital is very specific, it's very incestual. How do you get them to start to pay attention to great innovations that happen in the crop fields of Indiana, right, or the Dakotas, right, or Idaho.
Jonathan Gruber (19:58):
Yeah, this is the other major point of our book. I mean, our book really has two themes, neither of which are new, but I think we're sort of the first to bring them together. One theme is more public spending and innovation. The other theme is more place-based... we call place-based policies, more focus on spreading the wealth around our country. We are really dividing as a country. It's... And you don't just see it in political maps. It's on every map. And basically what's happening is we're dividing into a country with a small set of what we call superstar cities, where all the innovation's happening, Seattle, San Francisco, LA, New York, DC, Boston, and the rest of the country. 90% of all jobs and innovation sectors have been created in just five cities over the last 15 years. 75% of venture capital is in just five cities.
Jonathan Gruber (20:43):
We need to figure out a way to bring the... In a country as big as ours, we need to figure out a way to bring the rest of the country into this innovation economy. We're creating a generation we call a generation of lost Einsteins, of children, of people who have the ability and the talent, but the VC's not there, the money's not there for them to take that talent and exploit it. So our proposal, and we're pleased to see this as part of the current draft of USICA, is to have a tech hub competition, to actually the federal government hold a competition, much like Amazon hold their HQ2 competition.
Alexander McCaig (21:16):
Jonathan Gruber (21:17):
But Amazon's HQ2 competition is what we call a race to the bottom. Cities won by showing they give Amazon the biggest tax breaks. We want race to the top, which is cities compete to show that they have the preconditions to be the next tech hub. And then the federal government gives them a massive investment that allows them to do so.
Alexander McCaig (21:35):
Well, I think they should-
Jonathan Gruber (21:36):
So we're not talking about playing... taking somewhere in the middle of nowhere and giving them money. That's a separate issue. We're talking about taking places like Rochester, New York, Columbus, Ohio, Tucson, Arizona, Baton Rouge, Louisiana, places with excellent universities, [crosstalk 00:21:51] large cities, well-educated population in New Mexico, et cetera, and affordable living and actually affordable living costs and actually helping make them become the next Seattle. I mean, great story about New Mexico. Not many people know is that's where my Microsoft started.
Alexander McCaig (22:09):
Damn str... I'm glad... You know your stuff. You are awesome.
Jonathan Gruber (22:12):
So actually Bill Gates and the other... [inaudible 00:22:16] went out to Albuquerque. And why? Because it was a great place in 1980-whatever, to start a company. It was great weather, obviously, Sandia National Labs were there, and actually, Seattle was a dump compared to New Mexico at that time. Seattle, there was a sign at the airport saying, "Will the last one out please turn off the lights?" The murder rate was twice as high. It was terrible.
Alexander McCaig (22:38):
Jonathan Gruber (22:38):
But Bill Gates decided to move back to Seattle because that's where was he was from. Flash forward to 1994, Jeff Bezos gets in his car in New York to head west. Does Jeff Bezos head to his birthsite of Albuquerque, New Mexico? No, he goes to Seattle. Okay? So just [inaudible 00:22:54]... I mean, if Bill Gates decides to say in Albuquerque, Walter White could have been cooking meth in Seattle.
Alexander McCaig (22:59):
That exactly right. It would've been totally reverse, right?
Jonathan Gruber (23:02):
It's... So that's the point, great places... New York's always been New York. There are some places that are always going to be... And DC's the national capital, [inaudible 00:23:10] national advantage. But other places, it's just accents of history and we can make those accents happen through smart policy interventions.
Alexander McCaig (23:18):
Well, listen, I hope this new smart policy intervention makes Albuquerque boom because it is one of the most beautiful places I've ever lived. I've been all over the United States, fortunately. I've made those choices to do that. I've met a lot of brilliant people, and there's just a plethora of brilliant people here and completely ripe opportunity, fantastic quality of life, and people just don't want to pay attention. I think we... What you're talking about brings that sort of awareness. It brings that attention.
Alexander McCaig (23:43):
And this naturally brings me to my next question then. And I don't know if this falls under your gamut. Does it truly improve the life of people in the area, citizens, whatever it might be, when this sort of investment occurs in sort of unfounded places that become found? So for instance, did it really benefit Seattle? Did it really benefit Boulder, Colorado, right? When these things happen, does it really... do we really see improvements in the overall wellbeing of people in that area? I'm asking you. I am not a professional in this [crosstalk 00:24:19] I want to know.
Jonathan Gruber (24:20):
Yeah. No, no. This is... And there's a lot of work on this. Enrico Moretti is a professor at Berkeley. He's sort of the leading expert in this area. And the answer is, yes, it benefits everyone, even people who don't have the high tech degrees because somebody's got to cut their hair. Somebody's got to wash the car. Somebody's got to work at low-level jobs. So actually everyone benefits from these sorts of things. Now, at some point... It's not going to last forever. At some point it may become so expensive... So it's clear if you look circa 10 or 15 years ago, that in these cities like Seattle, San Francisco, everyone was benefiting. It's not as clear now because at some point it might become so expensive that people can't afford to live there and can't benefit.
Alexander McCaig (25:00):
Becomes prohibitive, right?
Jonathan Gruber (25:01):
Right, becomes prohibitive. So in some sense then, what you really... That's why in some sense, you want to say, we got to stop trying to shove everything into Seattle and San Francisco and find some new places that are affordable that people can afford to live, but where they can get the benefits of becoming a new tech hub.
Alexander McCaig (25:14):
Jonathan Gruber (25:15):
So I think the answer is everyone can benefit to a point. At some point it might get too crowded, and you need to move on.
Alexander McCaig (25:19):
Yeah. Listen, I was in San Francisco yesterday. Nobody can pay $30 for a meal every single pop. You can't do it.
Jonathan Gruber (25:25):
Well, no middle-class person can. The rich people can.
Alexander McCaig (25:28):
Yeah. [crosstalk 00:25:29] of course the rich, but it's that small, but what about everybody else? So then this begs another question then, and you did talk about this, so I'd love for you to elaborate. People think robots, right, think innovation, right, and they see Amazon, things happening automatically in the warehouse like well, that gets rid of jobs. That's a fallacy. And I would love for you to talk about how that is a fallacy that robotics is going to replace everybody else when innovation happens. They see that there'll be a couple key workers and then everything else is completely automatic. That's just not how that works. And I was wondering if you could just elaborate on that further.
Jonathan Gruber (26:04):
Yeah. I think that robots are coming, whether we like it or not. Robots are going to replace some jobs, but they're going to make other jobs better and need more... and improve the productivity of other jobs, and it's going to require more workers.
Alexander McCaig (26:20):
Jonathan Gruber (26:20):
But the bottom line is, you can sit around and wring your hands about the fact that some low-level jobs might be done by robots or you can get to work making the robots.
Alexander McCaig (26:29):
Jonathan Gruber (26:30):
Basically, if you have robots replace some cashiers, that you could be sad about the $10 an hour jobs that are lost or happy about the $50 an hour jobs that are created making the robots if they're made here.
Alexander McCaig (26:44):
Jonathan Gruber (26:44):
So the thing is, the robots are coming. We just got to make them. And overall the history of innovation, when the car came, everybody worried, oh my God, it's destroying jobs. People have horse-drawn carriages, et cetera. History of innovation is the innovation makes newer, better jobs. So that's just historically the fact, and it'll be true with this revolution as well. In some sense, ultimately, it would be a great world if we all could just check out more easily, if people didn't have to work at jobs they didn't like at grocery stores, but instead those people had better jobs in the value chain, building the robots that work at the grocery stores.
Alexander McCaig (27:17):
We'll just have to do like an Uber of robots. You got rideshare. Well, you got robotshare.
Jonathan Gruber (27:21):
Maybe [crosstalk 00:27:21]. Maybe that's where it heads.
Alexander McCaig (27:26):
And I think that's... I really do think this is... it's really sharp. And so then let's talk about this thing. You're very forward-looking. I mean, you're an economist for God's sake. Jonathan, how do you see the future then? Does it look positive? And what do you think the catalyst will be required to really open up that truly innovative future, one that will absolutely jumpstart America like you're talking about?
Jonathan Gruber (27:52):
Well, I mean, I think... Look, I think the future's largely positive. I mean, I think obviously we've got the... The climate change problem is sort of hanging over all of us, and that's going to be an issue. But I think overall, it's... the future's positive. I'm more optimistic about the future because I see public figures recognizing the need, A, to tackle global warming, which can create jobs by the way, by investing in renewable energy sectors. But also, this legislation, USICA, would put about $100 billion into net new R&D over the next decade, which is a big investment. They put about $10 billion into creating new tech hubs, which is a big investment. And that makes me optimistic that we're going to sort of reverse this horrible trend we've seen in the last 50 years of a shrinking investment in R&D and start moving the other way.
Alexander McCaig (28:39):
I love that. Yeah. The R&D, that's the future. When I bought your book, I'm doing personal R&D. I mean, that's how I view it, right?
Jonathan Gruber (28:51):
Alexander McCaig (28:52):
Why'd you write it? Because you want people to do the research like you did. That's-
Jonathan Gruber (28:55):
Alexander McCaig (28:55):
... what spurs the ideas. Does it not? And that's why you and I are on here talking.
Jonathan Gruber (28:59):
Alexander McCaig (29:01):
That's the stuff that we want to understand, and if we can just get the National Institute of Health to pay attention to the solution TARTLE gave them, I think everybody's going to be great. We want people to live longer. So where then... Where would people... The common person, Jonathan, where do they start? Where do they begin to like... Okay. Part... Is it just buying a book? What can they do daily to start to put themselves on that sort of path that helps jumpstart their local communities? What is it they need to talk about? How do they get into the policy? What is it?
Jonathan Gruber (29:37):
I think it is taking on if you build, that they will come mentality. By that, I mean, if you look at people in their communities, they tend to do two things when they're doing sort of business development planning. One is focus very narrow, which is like, how do I get the next plant to locate here? Or focus very vague and broad like what's my plan to transform my city in some vague... it's of a bunch of business school jargon. What they need is, hey, if the federal government gave us $100 million, what would we do with it tomorrow? What we do with the next five years? USICA is going to say, hopefully, 10 or a dozen cities will win something like 100 million a year, 50 million a year for 10 years. What do you can do with that?
Jonathan Gruber (30:22):
And if you have a plan which is visionary, and it's big big dollars, but realistic and [inaudible 00:30:27] you're actually going to spend it, then even if the city doesn't win some new competition, it will motivate the city to try to keep trying to work on putting those plans in place and motivate policy makers say, wow, look at these great plans my city has. We should pass more legislation like this, that creates innovation economies in those cities. I think it's really about local figures trying to fill that gap where it's a plan that's forward-looking, it's five years not six months, but it's also detailed. Here's how much we'd invest in schools. Here's how much... Here's where we build the buildings and how much it would cost, et cetera. So I think right now there's no incentive to do that because why bother? The cities don't have the money to do it. But if you realized that by doing it, you might generate the federal dollars to support you doing it, then there's a reason to put that kind of plan together.
Alexander McCaig (31:13):
It's all about getting the right incentive, correct?
Jonathan Gruber (31:14):
Alexander McCaig (31:15):
So then, after the incentive of people listening to this, I would incentivize them to pick up your book. Where's the best possible place for them to go do that?
Jonathan Gruber (31:23):
Oh, Amazon of course.
Alexander McCaig (31:25):
Jonathan Gruber (31:28):
That's an easy answer.
Alexander McCaig (31:29):
No, I love that. I love that. That's phenomenal. And where would they find out more information about you specifically?
Jonathan Gruber (31:34):
Oh, they can just go to my... I have an MIT website. They can just Google me. It's the first thing that pops up, and you can look at my MIT website.
Alexander McCaig (31:42):
Yeah. No, listen, I got to tell you, that's phenomenal. And Jonathan, I am much more enlightened than I was 30 minutes ago. And I appreciate you helping me talk about these items in here. And they're larger pictures, and I'd be more than happy to continue the conversation on each of these points independently. But just the generic overview of what's going on here and what our focus needs to be, you articulated it well. So thank you very much.
Jonathan Gruber (32:06):
Alexander McCaig (32:07):
Jonathan Gruber (32:08):
Take it easy.
Speaker 3 (32:16):
Thank you for listening to TARTLEcast with your hosts Alexander McCaig and Jason Rigby, where humanity steps into the future and source data defines the past. What's your data worth?