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Why Does Europe Struggle with Innovation? With Luis Garicano | Hoover Institution · The Capitalism and Freedom in the Twenty-First Century Podcast

0:09
- This is the Capitalism and Freedom
0:10
in the 21st Century Podcast, an official podcast
0:13
of the Hoover Institution Economic Policy Working group,
0:15
where we talk about economics, markets, and public policy.
0:18
I'm Jon Hartley, your host today.
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My guest is Luis Garicano, who is a Spanish economist,
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a professor of public policy at the London School
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of Economics, and a former European member
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of Parliament from Spain.
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Thanks for Dr. Thanking you so much, Louis, for joining us
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and coming on the podcast.
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It's a real honor to have you on.
0:33
- Hi. It's my honor, I'm a big fan of the, of the program
0:36
and having, having you and treating some episodes,
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and I, I remember liking a lot, the Levitt,
0:42
the Levitt interview, which I, I learned a lot from.
0:45
- Yeah. Well, well, thank you so much for, for,
0:47
for commenting on on past,
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on talking about past episodes really, Aaron, have you on
0:53
and, and all your experience, you know, both in, in academia
0:58
and, and in policy.
1:00
It's very rare to have someone
1:02
who is both saying these things as an academic economist
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and also serving in government, working on regulation,
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particularly a place like Europe where, you know,
1:15
Europe's I think certainly fallen behind and,
1:17
and has had to deal with overbearing regulation,
1:20
certainly in the past couple of decades or so.
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I think that's shown, shown up a lot in, in Europe's growth.
1:26
I wanna start with your personal origin.
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So you grew up in Spain and,
1:30
and you came to the University of Chicago
1:31
for graduate school where you say under Sure wind rose
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and I mean, tell us about your formative years, you know,
1:36
how you first got interested in economics
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and how you went from Spain to Chicago.
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- So I I I, I was, you know,
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I grew up in Spain when there was 22% employment was the
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norm when I was a kid, and that was a big economic crisis.
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So like many people who, who study economics,
1:55
I was fascinated by why could this happen?
1:58
Why couldn't an economy not generate
1:59
employment and what was going on?
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We had many years of very, very high employment.
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Even now we are highest unemployment in Europe.
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And so I studied economics.
2:07
The teaching was kind of mediocre at the University
2:09
of a Elite where I was studying except
2:11
for one Professor SA Minero, who was, who was great
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and he inspired me to,
2:15
to really enjoy it and really like it.
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He was doing, among others a history
2:19
of economic thought class, which I think now is missing.
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He taught from a Mark blog book.
2:23
I don't know if you know it, John, no.
2:25
Economic Theory in Retrospect.
2:27
It's a book that explains it with supply and demand
2:30
and current economics.
2:31
It explains you the, the what the fear of Ricardo means.
2:35
How is the demand curve, how is the supply curve?
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What, what does Mark's theory and the what assumptions.
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It was really interesting. And so I learned
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that and I enjoyed it.
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I still went the policy side at the time I went
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to the College of Europe in Bruce, which was the kind
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of the training school for, for European bureaucrats.
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I went to the commission to work as a
2:55
civil servant working on the, on eurostat,
2:58
on the consumer price index
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to harmonize all the price indexes for the Euro.
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I left pretty bored and disappointed
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after that year in, in the statistical office, I was,
3:09
I was amused and sudden that that's the,
3:11
that job is still going on.
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They haven't still harmonized that bit.
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So I'm happy I left those 30 years could have been much less
3:18
productive and, and, and,
3:21
and I, I had been left with this idea that I wanted
3:23
to do economics and I applied to Chicago.
3:26
It was a, an application that,
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that I I'm not really proud of in the sense
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that it was just like, it was the year of the Euro
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and I said I wanted to use monetary policy in Central Bank
3:39
independence, which, I mean, it's a big topic, but,
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but it was not a topic that really, I think was,
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I guess you could have given it the rules
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for some discretion treatment,
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but it wasn't really a research from TA topic.
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And I was accepted.
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I was, I was a TA of, it was, it was the Great years
3:57
of Chicago, you, you remember those, those years
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where Chicago was, was all the eight ideas
4:02
were coming out of there.
4:03
Chicago was getting over award prices every year.
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Lucas Becker, Heckman Hanson,
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Fogel Miller, all those people.
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I didn't get classes for me and Fog Fogal,
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but everybody else was teaching in the core.
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Our core was, was amazing.
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I remember was Becker Rosen Shaman for the first,
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for the micro, for the micro.
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It was like Coran Luas
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Hanson for the Econom metrics.
4:29
Heman, I mean second year
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- Royal High at the Chicago school.
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Really right there in that yeah,
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that period in the nineties.
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Yeah. It, it's, it's amazing.
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I mean, and to have been there, I mean, I, I came only,
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I mean maybe about 10, 15 years later,
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and even then it was still, there was quite a bit of that
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that that left and I mean sure.
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Warren Rosen's just amazing. Right.
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And for those I think that aren't familiar with the work
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of Sherwin Rosen, you know, he's done so,
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so much in the area of organizational economics firms
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and the whole concept of spatial equilibrium, you know,
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the really the, the Rosen robot model is,
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or the canonical model of spatial equilibrium, you know,
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we think about, you know, why is it that, you know,
5:12
certain coastal housing prices are more expensive.
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You know, the, the Rosero back model can sort
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of explain why, why housing is
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so expensive in some places versus others, you know, places
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that have amenities or, or higher wages.
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- And, and the superstar, the superstar are more like,
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I think, I think a lot about that this 1981 paper
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for listeners who don't, don't remember, basically argues
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that there are two key issues in superstar markets like
5:38
football, like opera, like music, which are,
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there's joint consumption on the demand side,
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there's a public good aspect that everybody can listen to.
5:46
The Taylor Taylor Swift record, nobody needs to listen
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to the second, and there is imperfect
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substitution the supply side.
5:53
You cannot substitute seven musicians for Taylor Swift
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or seven football players for messy, or 10
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or 25, it doesn't matter.
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There is the, the substitution doesn't exist.
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None of those conditions.
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The rewards were very concentrated on the, on the very top.
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And so when you have elements in markets that give you
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super, like give you this joint consumption possibility,
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like now with ai, where a big engineer can, can kind
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of change the, the AI that we all use,
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you get these superstar effects.
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I think it's still very relevant.
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So Rosen was fantastic, Becker was fantastic.
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They were teaching me price theory,
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which I think is still the most important thing I
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learned in economics.
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And, and one contrary to what Levi said in that interview,
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one essential input to to, to,
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to everything from macro to trade, to, I mean,
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all this justice restitution, all of these derived demands,
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all of these things where people actually care about in, in,
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in, in, in estimating in applied micro,
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nobody's using maquel kind of
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discontinuity and, and discontinuity.
7:05
I, I, I lost, I lost the, I lost the thread.
7:08
Nobody's using complex real analysis
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or real analysis for, for, for, for that.
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So I would say if you,
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if you want to, to apply to work,
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Chicago was the right way to do it.
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The right place to do it.
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And the, the, the presence of Becker and,
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and Rosen and Kevin Murphy, who were my, my main supervisors
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was, was essential to my training.
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I, I loved learning from them.
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I loved being the TA of all three of them.
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I was his, the rt, I was the RA of both Becker
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and, and Kevin Murphy.
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And that was the best training one person could dream.
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I can't just not imagine the better, better team.
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Also Canice Perga,
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who was a very good organizational
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economist, was in my committee.
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- That's amazing. And, and you were hired at Chicago Booth
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as assistant professor.
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You know, it's really amazing, you know, all the work
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that you've done on, you know, firm dynamics,
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organizational economics, you know, really the study
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of the firm and, and you know, firms are so important
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for economic growth, you know, innovation and,
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and you know, obviously, you know, regulation interacts
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with, with these things as well.
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I'm curious, a lot of your work has been done in,
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in on, on certain topics.
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Some of these topics are, are somewhat theoretical,
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but you know, this topic, this idea of knowledge,
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you know, of hierarchies.
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Can you explain how you know exactly why
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that's important, why it matters?
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I understand, you know, ideas are, are central to growth,
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but explain to me sort of how,
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how hierarchies and these things work
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- Happy.
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I'll be very happy to.
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So, so I think the idea, the general idea
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of organizational economics is that macro
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has always been kind of, and growth has always been about K
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and l and a aggregate capital, aggregate labor,
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aggregate productivity.
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There is always a, a sense that
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you add more staff, it's more output end of the story.
9:00
And you want to, you want to estimate how much
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organizational economists try to open
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that black box in order to understand productivity, in order
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to understand economic growth as, as you were saying.
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And my work has done that.
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And my, my main contribution,
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I think is my knowledge hierarchy's work, which is in,
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was my dissertation work is in a JP paper in 2000, which is
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pretty highly cited
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and has maybe 1800 Google scholar sites by now.
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And, and a couple of qj pieces with St.
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Ross Hanberg Po Andrus and,
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and some other work with Stefan as well.
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Stephan Ross Hanberg, who is now a Chicago and,
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and po andrus at Harvard of course.
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And the basic idea is, is the following.
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Suppose you have a lot of workers
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and they have different pieces of knowledge
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and they have to communicate to each other.
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So workers can use knowledge in production
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and in order to produce,
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you basically have to solve a problem.
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If you don't know the solution, you have
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to ask somebody else if you don't know who to ask.
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So when matching problems
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and solutions is hard a priority,
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you only know that you don't know.
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And I show that the optimal organization of the firm is
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what I call the knowledge hierarchy.
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And knowledge hierarchy is basically one where the work,
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the knowledge is organized,
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where the routine problems are solved near the production
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floor and the graph is kind of going up
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and people ask for help
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or for directions from specialized problem solvers
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or managers who specialize in the exceptions.
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So that way you minimize communication costs
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by asking about exceptional problems.
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And the higher up are specialized in, in more exceptional
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or equivalently more valuable problems.
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And you are basically organizing the knowledge in, in,
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in that hierarchical way in order to solve the, the,
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the optimal utilization of knowledge.
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Now we,
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I have done several kind of things
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to, to consider this idea.
11:07
Harold Beset used to talk about
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trading off the hierarchy trades of asking
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for directions versus training, right?
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So the knowledge, the, the worker could be superstar
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and know everything and then doesn't need directions.
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Or you could have workers, which are not great,
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but then you have the manager who knows
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and give them direction, solve the, the harder problems.
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That's the basic trade off.
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And we've applied it
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to thinking about inequality with sorting.
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So managers and workers sort with each other.
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You get a convex wage kettle with multiple layers where
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that was a work with, with Stephan
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where if you're really smart,
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you're solving your knowledge is really very, you know,
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a lot and you, your knowledge has
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to be protected from dumb problems.
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So you get a longer hierarchy with more better managers
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who can solve more things.
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Think of an RA just to, to,
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to fix our ideas in the mind of an example.
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They, our listeners can understand.
12:01
So think of you have a TA and you have a professor.
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The professor is very good, the TA should be very good.
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So that can protect it from the dumb questions.
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Okay, there is an integral anybody can solve an you
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shouldn't go to the professor.
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If the students are not very good
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and the professor's not very good,
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then maybe you don't need a TA
12:17
and you can just directly ask.
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So, so basically the knowledge organization,
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the positive sorting
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that the very good consultant should have good associates
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and good analysts so that he's specialized,
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he can really use his knowledge about the unusual problem.
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So I had work on inequality
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and on this, this heterogeneity in, in in labor
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and how communication, the key comparative statics is how
12:41
communication information technology change this
12:43
organization information technology allows the,
12:47
the lower levels to solve more problems.
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So you get flatter firms eventually,
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if information technology was such
12:53
that you could do everything
12:54
yourself, you would need to ask.
12:56
So you would like have your your one person unicorn
12:59
and communication technology, which would be
13:02
centralizing if you can easily communicate
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and don't have the workers learn anything,
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just have them ask all the time.
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That's cheap. So, so communication
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and information technology are very distinct.
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And work with John Van
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and Nick Bloom also from Stanford, like you and,
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and Rafael sat from Harvard.
13:19
We, we showed
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that indeed information communication technology have
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different impacts on the organization of firms.
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I also had worked with Stephen Hanberg on growth showing
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that firms can kind of deepen the hierarchy
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and go into, get the knowledge, be
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go deeper and deeper into the knowledge so
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that they are kind
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of getting the more unusual problems about the, the, the,
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the structure they, they are currently in
13:49
or explore, kind of go around searching
13:52
and then throw away their current hierarchy
13:54
and move to a new knowledge field.
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Of course, in that case,
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all the structure they built is, is wasted.
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So we show under what conditions firms will kind
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of get stuck in the old technology and not explore
14:06
because the hierarchy is so powerful
14:08
and we know so much about the current technology that kind
14:11
of, it would have to be amazing
14:13
what we discover elsewhere in order to change.
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So, so the communication technology here can have the
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reversal of making you go too deep and not explore enough.
14:22
So fascinating. Yeah,
14:26
- I mean, it, it just, yeah, I mean the knowledge,
14:28
innovation, ideas, human capital, you know,
14:31
all these things are, are so, so essential for growth
14:34
and, you know, allowing them to, to flourish is,
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I think a keep part of that.
14:39
And understanding how it's, or how knowledge is organized,
14:41
I think is also really,
14:43
really critical for, for understanding that.
14:45
I, I wanna talk just a little bit about, you know, you,
14:48
you went back to Europe, you, you know, you became a,
14:51
a member of European Parliament, you know, I'm curious,
14:54
you know, what motivated you, you know,
14:56
as an academic economist to, to run as a member
15:00
of European Parliament?
15:01
And I mean, can you explain, you know,
15:03
what you learned there during that time as an economist
15:05
inside you, the, the, the belly of the beast of, of the,
15:08
the, the European Commission, if you will.
15:11
- Yeah, the start, the start of the, of the career has to do
15:15
with the, the, the switch has to be do with after,
15:18
after finishing at Chicago
15:20
and being tenure at Booth, I, I stayed there
15:24
and for, for 10 years I decided to move
15:27
to the London School of Economics.
15:28
And, and the crisis came and which,
15:32
- Which crisis? This is the SAR
15:33
- Crisis 2008 financial crisis.
15:35
First the queen asked me about it, by the way,
15:37
the famous queen question that I had to answer.
15:39
And, and,
15:41
and I started a block now ti with Tanana Santo birthday,
15:45
- The, the, the title, the, the blog is, is,
15:48
is and nothing is free,
15:50
- Right?
15:51
- It's sort of a no such thing as free lunch kind
15:53
of a title.
15:54
- Exactly. No, no, free
15:55
- Lunch.
15:56
And this is in a Spanish newspaper?
15:58
- Yeah, it was a Spanish blog. We, we, we did it on our own.
16:00
We, we were, we were on our own. Oh, very good.
16:03
We, we got a website
16:04
and we started to put it, it was the time, the golden time
16:07
of the blocks, and now it's
16:09
- This Fernandez Verde at Penn and,
16:12
and a few other co-authors
16:14
- Tan Santos at, at at Columbia.
16:16
Both co-authors and co and colleagues and close friends.
16:20
I mean, at the very start there were a few other
16:22
people, but they all dropped out.
16:23
And then eventually we, we left it.
16:24
So other people have continued of course,
16:26
but that block was very influential
16:28
because we were able to write about the crisis.
16:31
I mean, that's something I would tell
16:32
economists to do, right?
16:33
I mean, I think there's always this advice people are given
16:36
like, oh, don't do side projects.
16:38
I think side projects are useful
16:39
because they, they, you learn stuff.
16:42
You, you learn about the world and you have impact and, and,
16:46
and sometimes, you know, you have more impact writing an
16:48
interesting blog that gets the IMF to rethink
16:50
how they're thinking of your country than,
16:52
than than writing a long paper that gets 35 sites, right?
16:56
So, which doesn't, is not so unusual papers to have
17:00
that, that number of sites.
17:01
So we did that blog, I wrote a book about Spain, which was
17:06
in the basis of the block,
17:07
which was El Espan was a bestseller.
17:09
I got involved in politics through that book.
17:11
I was asked to write a program of this party,
17:13
and then I, I, they asked me to run
17:17
for the European Parliament and I said, yeah, sure.
17:19
I I, I'll, I'll be, I'll be, I'll be running
17:20
because the Parliament is a good place for an economist.
17:22
There's more policy. I thought it was a good fit.
17:26
And I I I, I was the head of the list.
17:30
I we got, we got a lot of votes. We did very well.
17:32
And, and I, I got to be vice president of the, of the group.
17:36
So it was, it was very interesting. What did I learn?
17:39
- Yeah, I I it's like, you know, the,
17:40
the European Commission, I just think, you know,
17:42
it's obviously both, you know, they've got this,
17:44
the European Union, the promise of it, I guess is,
17:46
it would be a single, single market, I guess, you know,
17:48
free, free movement of capital, you know, of both capital
17:52
and, and labor and goods.
17:55
And so you, you have I guess free trade within,
17:57
within union.
17:58
We, we'll talk about the euro in,
17:59
in a little bit a about the monetary union side of things.
18:02
But, but I mean, the other side of it too is, you know, the,
18:06
that, you know, the European Commission acts as a, you know,
18:09
massive regulatory body as well.
18:11
So you, Europe also, you know, regulates trade.
18:14
I mean, outside of, I mean, to some degree they, they act
18:17
as their own trade block, but,
18:18
but also, yeah, they're regulating things.
18:21
They're preventing, you know, tech firms from, you know,
18:24
think GDPR, you know, the regulating technology, tech firms,
18:29
all sorts of things.
18:30
And and what, what did you learn and,
18:32
and you were there sort of at the, at the,
18:34
I think the height of a lot of this,
18:36
and I mean, it still goes on.
18:38
I'm curious, what, what did you see?
18:40
- So I I, I learned a lot.
18:42
I mean, one, one thing, one general thing I learned is an
18:44
economist is useful during the crisis.
18:46
I mean, they don't necessarily wanna pay a lot of attention
18:48
to our ideas politicians,
18:50
because they, they know they wanna get votes
18:52
and they wanna not see what they paying the votes.
18:54
But during the crisis with the Ukraine sanctions
18:57
and with the COVID, I, I, I felt I had a lot of ability
19:00
to impact because people needed ideas.
19:02
So that was, that was a good time for, to be an economist,
19:05
like my friends who are neurosurgeons
19:07
and love when somebody has, has a brain tumor
19:11
and they all talk up to each other
19:12
and you are like, oh, no guys, this,
19:14
but they think it's really cool
19:15
that they're operating these things.
19:17
So for an economist, the crisis is always interesting
19:20
and it's an opportunity to contribute.
19:22
So I-I-I-I-I, I learned that on the, on the question of,
19:27
of a regulation you pose,
19:28
I think it's essential to our future.
19:31
I learned that there was an ideology, ideas mattered,
19:34
and the ideology in Brussels had two elements
19:36
that were very harmful, harmful.
19:38
One is the Brussels effect, the idea
19:41
that we would be the regulators to the world,
19:42
that we could just set up a set of rules.
19:46
And we are such a big market everybody will have to follow.
19:50
I think that was big mistake.
19:52
I don't think that's that's correct.
19:54
I think you set up a lot of rules
19:55
and then your firms are screwed,
19:57
and then the rest of the world just looks at you like
19:59
you are just crazy.
20:00
And the second was the opposite of my block title.
20:03
Instead of no free lunch, all lunches are free.
20:06
So I remember the first speech
20:08
of the commission president in parliament when we,
20:09
we had to ratify her.
20:11
And the first speech she gave was like, well, the green deal
20:15
for jobs is the future of Europe.
20:18
We're going to fight the climate change
20:20
and there's going to be so many more jobs
20:22
because of this green deal.
20:23
And it's like, look, you can be against climate change
20:28
and wanting to do a good climate policy.
20:31
What you cannot claim is that that's just for free.
20:33
I mean, that's like, you know, you're going
20:35
to raise the price of electricity and gasoline and gas,
20:39
and you're going to make it difficult for people to build
20:42
and also for the things.
20:43
And that's gonna cost. And you have to tell people and,
20:45
and politics everywhere.
20:47
But in Europe in particular, has become, had become,
20:49
at the time very much freelance politics.
20:52
So ideas matter a lot.
20:54
And this is how, this is how many
20:56
of these things were discussed.
20:57
People felt that the digital regulation, oh, that's great
21:00
because we will be regulators to the world.
21:02
And that has generated GDPR, which was
21:05
before me, AI Act, which was happily after I left.
21:08
So I'm, I'm not responsible any of the two big mistakes
21:11
of Europe, but a lot of the Green deal legislation,
21:14
I was there when, when it was proceeding, for example,
21:17
the parliament voted to stock production
21:20
of internal combustion engine in 2035 without really a good
21:25
cost benefit analysis without really any
21:27
understanding of what that meant.
21:28
I mean, if you do prices, at least people can adapt
21:31
and some people can continue.
21:32
They don't have chargers. This was a crazy volunteeristic
21:35
policy that has just been reversed last week.
21:38
And so a lot of kind of regulation
21:41
that was based on this idea that, oh, we make a move
21:43
to electrical and then we will be richer and better
21:46
and cleaner and nothing will cost anything.
21:47
And it's like, you know, the free lunch is not,
21:51
is not a smart, it's not smart way to, to, to,
21:53
to do, to do policy.
21:55
So on those years, I think there was a lot of
22:02
voluntaristic policy making I think happened in the
22:06
US as well, and the Biden administration
22:10
and a lot of unawareness of
22:12
how we were really putting Europe in a pretty
22:15
tricky, tricky situation.
22:16
I mean, Europe, to be fair, has missed the,
22:20
we were converging until 1980
22:23
to the US in 1980.
22:25
We stopped converging. You could think it's Ronald Reagan,
22:28
you could think something else.
22:30
And since the mid eighties, we have not,
22:33
we have actually gone back relative to us GDP per capita
22:38
and basically comes down to we missed the it revolution.
22:42
Europe was in the frontier of technology in 1980.
22:45
Nuclear trains, planes, cars, everything,
22:50
fridges, all the kind of the technologies
22:53
of the last industrial revolution that were,
22:55
had been growing during the century.
22:58
But when it came, when radical change was needed,
23:01
all our kind of firing calls,
23:03
which dis discouraged firms from, from, you know,
23:08
making mistakes from, okay, you start in one direction,
23:11
you make a mistake, you fire the people,
23:13
you start in another direction.
23:14
All that was very difficult to, to, to, to, to do in Europe.
23:18
And that meant the two radical revolutions
23:22
innovation revolution have happened.
23:23
The IT and AI currently basically missed.
23:27
And I think it has to do a lot with, with
23:32
with the regulatory luxury regulation
23:35
to make it equivalent to luxury beliefs.
23:37
A phrase that we used in our blog.
23:40
I have a blog with my son Peter
23:42
that's called Silicon Continent.
23:43
We have 7,000 subscribers, a substack. Now
23:46
- It's a great substack, Silicon Conant, highly recommended.
23:50
Yeah, I mean, I, I so I,
23:52
- And we talked about these luxury rules.
23:55
Luxury rules are rules that you set up just so rich,
23:59
you know, everything has to be perfect or, or not exist.
24:03
- So, so I, I guess like, you know, the, you know, you,
24:05
you mentioned, you know, there's this idea, you know,
24:07
that the process of fact, I mean, it's pretty unbelievable.
24:09
I mean, the idea that I, I guess maybe the, the lack
24:13
of humility that certain European regulators have
24:17
with thinking that they're setting the world standard,
24:19
you know, with things like GDPR regulating tech.
24:24
And when I think at, at this point, a lot of this seems
24:27
to be, you know, I think clearly, you know, backfiring
24:30
and you know, there, there is no real, you know,
24:32
I'd say vibrant tech, you know, industry in Europe to,
24:36
to speak of, at least compared to the us.
24:39
But I, I guess like one, one re you know, re reaction to
24:43
that regulatory state is, I mean, you look at like,
24:45
for example, you know Nigel Farage
24:48
and you look at, you know, the past 10 years of, you know,
24:51
Brexit, I mean, part of the complaint that,
24:56
you know, certain people in the UK like Nigel Farage had,
24:59
you know, the, the party at that time was that,
25:02
that there was this regulatory BMF that was, you know, the,
25:07
the European Union and that they wanted to leave.
25:09
And, and hence they, you know, they went through with,
25:12
you know, the Brexit vote and,
25:13
and you know, by, you know, certain slim majority
25:18
that the Britain decided to leave.
25:21
And, you know, part of that means, you know,
25:23
they obviously have to, you know,
25:25
they leave the single market
25:26
and they have to reestablish, you know, the,
25:30
their trade ties and,
25:31
and figure out what, what to do in terms of immigration
25:35
and so forth between, you know, the UK and the eu.
25:38
And, and then, you know, the,
25:40
they never joined the Euro to begin with.
25:42
So they didn't have the monetary union sort of challenge.
25:44
But, but, but I mean, some people would say that, you know,
25:48
that the positive part of Brexit was that, you know,
25:50
now the UK doesn't have to deal
25:52
with this thing called, you know, the European
25:54
- Yeah, I mean it's, it's, it's,
25:56
let me make a a broad intellectual point first and then,
25:59
and then address the, the Brexit and,
26:00
and the overall regulation.
26:02
The broad intellectual point,
26:03
which is a very Stanford Chicago point is, is, is from
26:07
so well about the constraint of cons.
26:11
Yeah. The constraint versus the unconstrained were to think,
26:14
and, and, and how you have to think of incentives and, and,
26:18
and, and constraints when you are thinking about,
26:21
about policy and, and, and, and the de sets point at UCLA,
26:25
but, but also Chicago in some sense
26:28
point about the nirvana fallacy.
26:30
The nirvana fallacy is like, oh, well, you know,
26:33
we have this problem, this other world is solved,
26:36
like the state will solve it.
26:37
It's like, okay, you wanna think about constraints
26:40
and incentives in state A
26:41
and you want to think of incentives
26:43
and constraints in state b in the market and state.
26:46
In both of those cases.
26:47
And in in this excessive regulation,
26:50
there is this sense like, oh,
26:51
we have a market failure less intervene.
26:52
And there is very little thinking about
26:54
what will this intervention lead to as
26:57
to the Brexit specifically.
27:00
And, and, and the, and the as asset cause of, of, of due
27:03
to the overregulation, I'm in the UK right now.
27:05
I'm in the London School of Economics
27:07
and it's very depressing.
27:10
I mean, look, Europe has two problems,
27:13
has a problem overregulation, it has a problem
27:15
of a single market, which is far for complete.
27:18
And the UK gave up the single market, which is big thing
27:23
to weave up in order to eliminate the over regulation.
27:27
They didn't, they've given up the single market
27:30
and you will just not believe.
27:32
I mean there is this story everywhere in the press about a
27:34
hundred million dollars pounds spent in a bad tunnel.
27:39
The HS two, the high speed lane that was going to be trend
27:42
that I was going between non Edinburg was budgeted
27:45
for like 24 billion is gone up to 110 billion.
27:49
And it's basically 'cause it has become a tube
27:51
because it goes under everything
27:52
because there is some biodiversity, this
27:55
or some biodiversity data,
27:56
or there is some rule that the UK is hobbled
28:00
by rules more than ever, it's unable
28:03
to build electricity, nuclear plant, I don't know
28:06
how many hundreds of millions they,
28:09
they spent billions, if I don't remember wrong.
28:11
I, we wrote a block about my,
28:15
my son wrote a block about how the salmon in the,
28:18
in silicon continent, that,
28:20
that there was like an enormous number
28:23
of millions un seing number of pounds, millions of pounds
28:26
to save each sum in the ley pint in the nuclear
28:30
plant that was built in the UK with the enormous delay.
28:33
So the UK has been really wasting the chance they've
28:37
incurred the cost, which is given out the single market
28:40
in order to obtain that benefit potential, which is
28:43
to become Singapore on tha to be, to be a, a power in,
28:48
in, in, in, in doing all this technology innovation
28:50
Europe cannot do.
28:52
And instead they've just done nothing with it.
28:55
I mean, they can't build a tunnel,
28:56
they cannot build a terminal in Heathrow,
28:58
they can't allow housing to be built in London.
29:01
It's very depressing. And I don't think Nigeria Farage will
29:04
be any better
29:05
because he's basically not interested in
29:10
policy and because the voters he has are not interested in,
29:13
you know, the problem of Europe largely is the problem
29:17
of an aging electorate.
29:18
The aging electorate doesn't really care that
29:22
the young people don't have housing.
29:24
They don't care that we're not building stock,
29:26
we're not investing in the future.
29:27
They want their pensions. They, when the healthcare
29:30
and the politicians say whatever they wanna say,
29:32
but at the end of the day, look at France,
29:35
they increase pensions and they increase health spending
29:38
and they cut everything else
29:40
and increase taxes to pay
29:42
for those pension, the health spending.
29:44
So at the end of the day,
29:45
there's a political economy problem
29:46
that is affecting the UK as well.
29:49
- Yeah, absolutely.
29:51
So, you know, i i I guess I,
29:53
I just wanna a little bit about, you know,
29:55
the the monetary union side of things
29:56
because you, you, you also recently wrote a book titled
29:59
Crisis Cycle Challenges, evolution in the Future of the Euro
30:03
with John Cochran.
30:04
And, and Klaus message in, I'm just curious, you know,
30:08
obviously the, the euro, you know, it
30:10
is had a a very interesting, you know, trajectory where you,
30:15
one, we had sort of the ascent of the euro in the, the, the,
30:18
the late nineties in, in the formation.
30:20
You had the first Europe, the European exchange mechanism
30:24
and exchange rate mechanism.
30:25
Then you had the formation of the euro at the, at the dawn
30:29
of the millennium.
30:30
And then, and then, you know, we had this, you know,
30:33
in the early 2010s you had the European reign debt crisis.
30:36
There were questions about whether
30:37
or not Greece would exit the Euro
30:40
or maybe other countries,
30:43
other indebted countries like Portugal, Italy, you know,
30:46
I mentioned Greece, but also Spain, that that, you know,
30:49
potentially could, could exit or,
30:51
or that there would need to be some, some rethinking to deal
30:54
with the fact that you had this sort
30:55
of like fiscal free riding thing that that was sort
30:57
of contingent, you know, on, on this big monetary union
31:01
that this, the rest of the monetary union had
31:03
to subsidize in some way.
31:05
And then you had the, the sort
31:06
of draggy whatever it takes moment.
31:08
And, and that seemed to, to make things sort of go away,
31:12
at least the volatility in the markets disappear.
31:15
And then, you know, sort of 10, 10 years following
31:18
that you end, I mean you also, you've got countries
31:21
that are joining wanting to join the Euro again.
31:23
I mean you had the Baltics in the, in the mid 2010s
31:26
that joined or followed through with joining the, the Euro.
31:30
And, and even more recently you've had, you know,
31:32
countries like Croatia
31:33
and others that, that are, that, that are joining it.
31:36
I, I'm just curious, I mean, what are the challenges
31:39
with the euro that the remain, as you see?
31:41
I mean there is this, I guess, concept that, you know,
31:43
you can, you can't have a a a a,
31:47
a monetary union without having a fiscal union.
31:49
There's pushes to have more euro wide debt
31:53
and it's, I something
31:54
that I think some European countries might not like.
31:57
And I'm just curious what, what your thoughts are.
32:00
- It was just agreed last Friday.
32:02
Last Friday was a, there was a meeting
32:05
where more European debt for, for Ukraine was,
32:08
was decided to issue.
32:09
So the book comes from a lot of the work
32:13
and the policy work I did over those years from Klaus
32:17
experience on the, on the, on the European Central Bank.
32:21
He was one of the earliest employees.
32:23
And from John Coran, who is a Hoover fellow,
32:27
as Australia listeners well know,
32:29
who is a fantastic micro economist and a wonderful writer.
32:33
And what we argued is that
32:37
the European Central Bank, the institution
32:39
of the Monte Union without fiscal union is
32:41
perfectly feasible.
32:43
We think that it was established with clear rules
32:48
and with clear eye view of what the, what the risks were.
32:52
But as the crisis, the different crisis came, we had four,
32:57
one in a hundred years crisis, one
33:00
after the other, the French crisis, the Euro crisis,
33:05
the pandemic and the war.
33:09
In initial of this crisis, they, they should be jumped
33:12
or destroyed some of the, some of the rules
33:15
that were established there, probably with good reason,
33:19
probably it was necessary at the time,
33:21
but at the same time, not coming back
33:25
to VR rules afterwards.
33:27
It's true, after the first travel, the 2012,
33:32
Mario demanded conditionality in order to,
33:35
to do this whatever it takes.
33:36
And there was a, a clear conditionality for his
33:39
outright monetary transactions.
33:40
If he was going to rescue a country, that country had
33:43
to be on a program like think of an IMF program.
33:46
But, and there was a, a banking union effort at that time.
33:50
So some of the problems that were left un un unthought
33:54
during the, the big thing, sorry,
33:56
lemme just go back to one important thing.
33:58
The big thing that was left unsolved in the design was,
34:02
okay, we have fiscal rules in order to have this
34:05
common credit card, but people have their own income
34:08
and their own expenses.
34:10
How are we going to do it? We're going to put fiscal rules.
34:12
Okay, good. The problem is
34:14
what happens if people don't follow the fiscal rules?
34:15
Exactly. Oh, okay. And what happens if they're bankrupt?
34:20
They won't be, we didn't have any European IMF didn't have a
34:23
banking rules that would allow banks
34:25
and states to be separated
34:26
and banks not to drag states or vice versa.
34:29
We didn't have a sovereign bankruptcy procedure.
34:31
So when all these things started,
34:33
it was all improvised a solution.
34:35
And so during 12, with druggie
34:37
and with the conditionality in the rescues, 13, 14
34:40
with the banking union, we were putting in place those
34:43
institutions, but eventually QE came,
34:47
the states discovered that, you know, money was cheap,
34:50
debt was cheap, there was not much reason
34:53
to put their house in order, neither fiscally
34:55
nor in terms of growth,
34:56
nor in terms very importantly
34:58
of finishing these institutions.
34:59
And they abandoned all these efforts to strengthen the union
35:03
because you had the European Central Bank
35:05
behind why would you need a fiscal authority if the monetary
35:07
authority can give you the money for free?
35:09
Right. Much better, much better.
35:11
So they were, they were kind
35:15
of abandoning all these reform efforts.
35:17
And our book is basically a plea to say, look,
35:22
the fiscal monetary union with a fiscal union can work,
35:25
but you need to accept those constraints.
35:27
And countries like France have basically jumped over those
35:31
constraints every time since the start of the Euro.
35:35
And as Ker said in a phrase that we have at the start
35:39
of a book, he said,
35:41
because it's France, I mean, why do you sanction France?
35:43
The president of the commission said, because it's France.
35:46
So France basically hasn't had to fulfill these rules
35:49
and they don't have the fiscal discipline from the union,
35:51
which is fine, then they should have the market discipline.
35:53
But the market discipline disappears
35:55
because the European Central Bank says, we will intervene
35:58
and has a program which is called TPI,
36:00
the transmission protection Instrument,
36:02
which is there to do that.
36:03
So in a way, you have neither one or the other.
36:06
And the result is that you have a situation
36:10
where the welfare states
36:11
that keep growing the pension define demands,
36:14
which are politically imminent,
36:16
are more powerful than the efforts
36:18
to establish growth enhancing reforms.
36:20
I mean, Germany has decided we don't want debt break
36:22
because we're in, in a defense trouble.
36:25
And in fact they take out the debt break
36:28
and what do they spend the money on welfare,
36:30
because that's at the end what the politics is pushing.
36:34
So basically what we say in the book is, look,
36:38
we understand dear ECB, why you did these things.
36:42
We don't think these are good presence to keep in place.
36:45
These were exceptional moves.
36:47
We need to go back to a system like the initial one
36:49
where those boundaries between monetary
36:51
and fiscal policy are very clear
36:53
and where the institutions that require are required
36:57
for a banking union including a
36:58
bankruptcy sovereign procedure.
37:00
If Illinois, you know, goes down
37:04
or Chicago goes down,
37:06
then the US government is not in the Federal Reserve.
37:09
Nobody thinks the Federal Reserve will rescue
37:10
Chicago or Illinois.
37:12
And the example certainly are not totally unrealistic.
37:17
- Well, I guess part of it, you know, I think a lot
37:18
of these states are supposed to have balanced budget
37:20
amendments, and that's kind of, I guess how, how a lot of
37:24
that, you know, it's supposed to work,
37:25
but I mean, of course there's, you know, there's exceptions
37:29
to that and it's a very similar thing, I suppose in the US
37:32
to, to Europe, as you know, there's fiscal rules that that
37:36
that aren't being followed by, by member states.
37:40
Yeah, I mean it's fascinating.
37:41
I, me, yeah, you know, I, I forget exactly
37:42
what the fiscal rules were, you know, something about 60%
37:45
of GDPI dunno if there's the mash
37:47
- That is 60% deficit is 3%. That's correct.
37:51
- Wow. And, and then, you know,
37:52
obviously many countries just totally blew, blew
37:55
- Path.
37:56
Yeah, France basically, my memory is
37:58
that I just from memory,
37:59
but I think only two times, only
38:01
by mistake fulfilled the deficit.
38:03
Of course, that rule, France has been increasing the debt
38:06
as a share of GDP every year since the start of the euro
38:11
until today, every year.
38:13
- Wow. - Maybe not in 2018, maybe that, that year not, but
38:18
- I mean, do you, do you see Europe
38:19
as maybe being in a place where it's sort
38:21
of entering this period of fiscal dominance,
38:24
where now obviously you do have many very indebted
38:26
countries, Germany's starting to take on more debt.
38:29
I mean there's, you know, a big shift in, in sort
38:32
of developing their own, you know, defense now and,
38:35
and funding that Germany is playing a role in funding that,
38:39
you know, amidst the Russia invasion of Ukraine.
38:42
Yeah, but you, you see what happened in Japan, you know,
38:44
Japan's trying to raise interest rates.
38:45
Now their, their currency's actually falling,
38:49
and there's some suggestion, I mean,
38:50
Japan has even more debt, you know, compared to, to Europe
38:54
as a fraction of GDP.
38:55
But now, now they're running into these issues
38:56
where they're, you know, by even raising interest rates
38:59
that there's expectations that there'll be, you know,
39:02
for further problems, more, you know,
39:04
higher interest costs on the debt
39:06
and potentially future inflation problems.
39:08
And that'll just make that,
39:10
that makes the currency sell off.
39:11
I, I don't think Europe's quite reached that,
39:13
but there are some concerns that there are these sort
39:16
of issues that there's now such a big fiscal
39:19
debt load that that that,
39:21
- I mean, the aggregate,
39:23
the aggregate fiscal position is not, is not terrible
39:26
the problem of distribution, right?
39:28
You, you have, I mean, the problem
39:30
of fiscal dominance doesn't necessarily come from the,
39:33
from defense side, I don't think
39:34
that's going to be our problem.
39:36
I think it comes from the, again, from the pensioners,
39:38
from the welfare states.
39:39
I mean, I think we had very, very, very powerful
39:43
welfare states, very aging electorates
39:46
with very low fertility.
39:49
For the politicians, it's always going to be preferred
39:51
to satisfy this constituency.
39:55
And the France, you know, both bar
39:58
and the, the, the, the, the, the popular, the the
40:01
front national, the, the right wing populist
40:04
and the left wing populist national have noticed
40:07
that the European Central bank is there.
40:09
And they both proposed that it should be, you know,
40:12
France should be basically bailed out by Europe
40:14
and by the European Central Bank,
40:16
and that it should cancel the debt
40:17
or well by the has said we should talk to the A CB
40:20
and they should do things differently.
40:21
Even McComb has recently said it.
40:24
So the risk is more that
40:27
people play the Samsung game.
40:29
Like, if you don't save me, I'm going
40:30
to just take the temple down with me.
40:33
And that it's going to be hard for the a CB in front
40:36
of countries like France or potentially Italy.
40:38
Although Italy is, is behaving well now, it's going
40:41
to be difficult to resist.
40:42
So it's more the welfare states, their growth.
40:45
We ta France doesn't have scope for more taxing and,
40:48
and they're just lowering the,
40:50
the pension age from 64 to 62.
40:52
Imagine after having done the effort from to raise it,
40:56
I don't think, let's imagine the alternative,
40:58
France has the French Franc.
41:00
Can anybody imagine
41:01
that they will be lowering the retirement to 62?
41:04
I mean, there would be a big crisis,
41:06
a frank would be falling people,
41:07
the markets would be scared, but they are in the Euro and,
41:11
and they're protected by the whole,
41:12
by the Europeans in Japan and by the whole.
41:14
And so they can kind of hide their trouble.
41:18
And of course, if it starts to get bad,
41:22
like in 2000 10, 11, 12, for,
41:26
for some Australian proliferate countries at the time,
41:28
if it starts getting bad France, what is this going to do?
41:33
Is it going to let you know France fall?
41:35
Are we going to go see a bankruptcy?
41:36
Are we going to see the politicians really be serious and,
41:39
and, and, and do a pension reform?
41:41
I mean, all those things are very, very uncertain.
41:44
So in what sense?
41:46
You're protected against fiscal dominance
41:47
because you have a board that has to vote
41:49
and the majority of the states are not prote
41:53
and the average state is not bad.
41:54
But on the other hand, you have this risk of gaming
41:57
of some member states kind of trying to figure out
42:00
how committed is really the a
42:01
ccb to price stability and price stability.
42:03
And ACB might have to choose to price stability
42:06
and then in some country fall and have some default
42:09
or fiscal governance
42:11
and letting the price, the price objective
42:14
inflation objective called, called called out of control.
42:19
So I, I think that,
42:21
that the design still needs the elements that John
42:25
and Klaus and me are arguing.
42:26
And you need to make sure that countries know
42:29
that they play games, they're going to go on bankruptcy
42:31
and nobody's going to worry the, the banks are not going
42:34
to fall when the country falls
42:36
and the country's gonna have to restructure the debt.
42:37
And that's not a big deal, like a big corporation
42:40
or like, you know, at least they need to know it
42:42
and then they will do these things.
42:44
Right now we're in bit of a situation
42:46
where we don't have the commission enforcing the rules,
42:49
the fiscal rules you were talking about,
42:50
and we don't have the market enforcing the rules,
42:53
and that's a bit scary.
42:55
- Absolutely. I wanna talk a little bit more about
42:57
innovation and I guess, you know,
42:59
the lack thereof in Europe.
43:00
Getting back to a little bit more about regulation,
43:02
you know, you recently were a document, you know,
43:05
it's titled The Constitution of Innovation
43:08
with Benton Hol from Nobel Prize winner and,
43:12
and Nicholas Petit.
43:14
Can you tell us a little bit more about
43:16
what you think the key ingredients for innovation are
43:18
and what's holding it back,
43:20
particularly in places like Europe?
43:21
- Yes. So it's, the title of our, of our document is, is
43:26
after the, the Constitution of freedom of
43:31
Hyatt Liberty in the Constitution of Liberty.
43:36
And we are kind of echoing this, this, this is his way
43:40
of thinking about, about, about that.
43:44
We are looking into why is Europe kind of
43:48
since 1980 behind.
43:50
We think that the single market
43:53
and the lack of innovation are sense are are the,
43:57
the single market and the regular excessive regulation are,
44:00
are essential that Europe is doing luxury rules,
44:04
is setting up all sorts of rules that the Brussels affect.
44:07
This idea that Europe is de regulated
44:09
to the world is insane.
44:10
That that costs
44:12
and there's no free lunch that we have to understand cost
44:15
and that Europe should put prosperity as their main
44:19
and only guide the European Union.
44:21
We should drop all the other things
44:23
that Europe has been trying to do,
44:24
focus on the single market, focus on letting firms scale up,
44:28
eliminating regulations.
44:29
And unfortunately, the single market,
44:30
we inspire ourselves a lot from the US interstate
44:34
commerce clause.
44:35
We say like you shouldn't,
44:37
I mean basically mutual recognition in every case.
44:39
So if you can sell in one country,
44:42
you should be able to sell in all the others.
44:44
There shouldn't need be a need.
44:45
In other words, for harmonization, the legislation,
44:49
which is always a mess
44:50
and always kind of at the end of the day,
44:53
harmonizes nothing,
44:54
because then each country implements the
44:55
rules in different ways.
44:57
Instead, we just let the countries have their rules compete
45:00
and everybody can sell products everywhere else.
45:03
We talk about a federal commercial court where firms
45:07
that are not allowed to sell from one country into the next
45:10
should be able to get a ruling in English in 180 days
45:14
and not have to go to the commission, which never enforces
45:17
or to a local court which don't know European rules.
45:20
So it's really about getting a true single market
45:22
and eliminating regulation.
45:23
And instead of like other reports
45:25
that have been talking about this,
45:27
but having talked about what are the constitutional aspects
45:29
of this, we propose this set of reforms along the lines of
45:33
what I was telling you that actually will result in Europe
45:38
working in a different way
45:39
and pro producing a completely
45:43
different regulatory outcome.
45:45
So we, we believe that Europe is a good idea.
45:47
We also, like Klaus
45:49
and John, me, believe that the euro is a good idea,
45:51
but we believe that we are kind of badly
45:55
abandoning our initial purpose, which is in the case
45:58
of the Euro low inflation full stop.
46:02
And in the case of the stable currency
46:05
and in the case of of, of this, of the European Union,
46:09
it's a single market that allows firms to compete
46:12
and to scale everywhere Europe.
46:15
- Well, I I wanna just, I guess my last question here, I,
46:17
I'm curious about your thoughts on, on the current state
46:21
of Spain, you, you know, the Spanish Prime minister,
46:26
you know, Sanchez, you know,
46:27
socialist prime minister's been in, you know, since 2018,
46:31
you know, certainly been, I'd say one of the most both,
46:35
you know, pivotal and controversial politicians in Spain,
46:40
you know, probably since, you know, since Franco.
46:44
And, and I'm just curious in terms of a lot of
46:51
his, the changes that he's tried to put in place.
46:55
I'm just curious, what do you think about the,
46:57
the trajectory of Spain in the past 10 years, 10, 15 years?
47:01
Obviously there's a lot of dynamics between, you know,
47:04
Catalonia and, you know, certain regions and,
47:08
and my understanding is that, you know, the essentially to
47:12
continue and to stay in Power Sanchez
47:17
and the socialists have in, in part allied themselves
47:20
with the catalonians, you know, which, which obviously,
47:22
you know, independence has been something
47:24
that certain sections of catalonians of, of, of soft war
47:29
obviously, or either independence or autonomy.
47:32
Yeah. I'm just curious, what, what's your take on on all
47:34
of this and all these changes?
47:35
- Yeah, no, I, I think, I think the trajectory
47:37
of Spain's extremely worrying.
47:39
The markets look at our growth and they say it's great,
47:42
but the reason it's great is we're getting 500,000
47:45
immigrants per year.
47:47
That's like, if the US was getting over 3 million,
47:51
that would be, that would be a problem
47:53
for the US It was a big crisis
47:55
with i in the US with 1 million.
47:58
So we're getting extensive growth.
47:59
We are not getting any increase in per capita income since
48:02
basically 2008.
48:04
All the GDP per capita that increased has gone
48:06
to higher pensions.
48:08
So the pension is, have increased their average earnings,
48:11
but the people between 18 and 65 have not.
48:16
So it's been a, a since 2008, Spain was converging to Europe
48:20
and 2008, but since 2008 we basically stagnating over
48:25
and the government of Sanchez has been extremely
48:27
negative for Spain.
48:28
Yes. And he allied with the
48:31
separatists in the bus country and in Catalonia.
48:34
And, and in, in, in both places he even allied with,
48:39
with the supporters of the terrorist groups
48:40
who never repented hei with the people
48:43
who did a esta the tag against, against Spain
48:49
try to over overthrow the constitution.
48:52
So, but, but most importantly,
48:54
and also of course he allied with the Communist party
48:57
and extreme left, he has basically now
49:02
discovering under a huge set of corruption scandals,
49:07
two number twos, his personal choices
49:11
to run the party while he was in government are in jail
49:14
or have been in jail
49:16
and are probably going to spend a huge amount
49:17
of time in jail because they've been
49:20
basically scandals related to Venezuela and to construction.
49:23
There, there's been a big set of connections with Venezuela
49:26
that we will find out if Maduro goes, a lot
49:29
of people in Spain are going to be panicking
49:32
because the paperwork, the paper that will come out will,
49:34
will be, will be very incriminating.
49:36
So there's a big set
49:38
of corruption scandals he's destroyed the institution's
49:41
taken over the public, the telephone company,
49:45
which was privatized in the nineties,
49:46
he's put on the state control the main defense company
49:49
that was in telecom and, and
49:51
and intelligence, no, the, sorry, the first the main, main
49:55
defense and technology company, which is,
49:57
has been put under his direct control.
49:59
He put socialist ICS everywhere.
50:02
He's destroyed basically the, the independence
50:06
of all the regulators.
50:08
So basically he's trying
50:09
of the Denmark versus Venezuela dilemma
50:12
that I had in my dilemma, the Spain in the book I,
50:14
I wrote in, in 2014.
50:16
And that served as the inspiration for the program of the,
50:20
of the party that, that I was with he anos
50:25
that I ran for, he basically has
50:28
chosen the road of Venezuela.
50:29
He wants to turn Spain into some sort of banana republic.
50:31
Happily. I think his time is over part thanks
50:34
to his corruption scandals.
50:36
So I, I've been very sad with Spain.
50:39
I thought I,
50:40
the socialist part in Spain traditionally has been
50:43
pretty market oriented and pretty sensible.
50:46
During the eighties they had a, a set of pretty good.
50:50
I mean, there were socialists,
50:51
but they were social democratic and non-European way
50:55
and they, they were not necessarily,
50:59
they were not many of them Muslim,
51:01
were not corrupt and so on.
51:03
But these new socialist party has proven like
51:06
to be another thing.
51:08
He was basically voted out by the party, he came back
51:13
with support from the grassroots
51:14
and basically eliminated everybody on the party who was
51:18
sensible in any way
51:20
and has govern with, with a very extremist
51:23
and not clean clique of, of people.
51:27
- Wow. Wow.
51:28
Well, hope, hope, hoping that, you know, Spain turns,
51:32
turns the corner and,
51:33
and is able to recover from, from all this.
51:36
And, and it's now near near decade of, of,
51:40
of socialist rule and really want to thank you
51:43
for coming on those, this is amazing hearing your
51:45
perspective and your experiences, you know, working not only
51:49
as an academic economist,
51:51
but also your time in, in Brussels.
51:56
It's a member of European parliament. It's really,
51:58
- I'd like academia do tell your,
52:00
your business that I'm back to academia.
52:01
I mean LSC I'm working a lot on doing research
52:04
and present work
52:05
- And I'm sure your students, you know, really benefit from,
52:08
you know, hearing from someone who's, you know, not just,
52:11
not just someone who's doing research,
52:12
but someone who's actually,
52:15
but worked in palsy, you know, actually, you know, ran and,
52:18
and and, and seen a lot and and done a lot.
52:22
And it's so important. I think
52:23
understanding how Brussels works.
52:25
I mean, I think and understanding
52:27
that the European regulatory state is so critical.
52:31
If, if it's going to be the case that innovation and
52:35
and growth are gonna be revived in,
52:36
in Europe in, in some way.
52:38
So really thank you so much Lewis for, for all you're doing
52:41
and thank you so much for coming on.
52:42
This has been a real honor to talk to you.
52:45
- Thank you. My pleasure.
52:47
- This is the Capitalism and Freedom
52:48
in the 21st Century podcast, an official podcast
52:50
of the Hoover Institution Economic Policy working group
52:52
where we talk about economics, markets, and public policy.
52:55
I'm Jon Hartley, your host. Thanks so much for joining us.