Insight on Environmental and Global Health from an Economist—Clair Brown, PhD—Department of Economics at the University of California, Berkeley

Richard: Hello, this is Richard Jacobs with the Finding Genius podcast. I started a series of interviewing people and professors and professionals in the field of economics. It’s an area I ignored for a long time, but it’s very pertinent, especially now at the time of the virus and what’s happening, what’s going to happen. So we may or may not talk about that in full. But fortunately, today I have Professor Claire Brown. She’s at UC Berkeley. She’s a professor of economics and we can talk about her work and her book. So, Claire, thanks for coming.

Clair: It’s good to be here to talk about economics with you.

Richard: Yeah. I may have my own opinion, but what do you study in economics and why is it important to you and important to everyone?

Clair: Most people go into economics because they want to change the way the world works. We most people really do care about economic performance and how well people are living. They care about quality and now they’re caring about the climate crisis and the health emergency in racial justice. But economists tend to think that all of those things are interdependent and economic systems and that how the economy works can make a difference in all of those areas, not all by itself, but at least make a contribution so that we get better outcomes in terms of racial discrimination and in terms of how do you treat pandemics and get people back to work and how do you reduce inequality and certainly, of course, now how do you lower greenhouse gas emissions and move to an economy that’s not addicted to fossil fuel. So that’s why I’m in economics, but that’s also why my colleagues and the people I know and work with there in economics and also that’s why students take economics.

Richard: I don’t know. It’s probably, I think for a minute that someone that would be in economics because they like money and they want to require money and be wealthy. Is that ever a motivator amongst your colleagues or is that folks that will go into business may or may be more interested in that? What do you think is the I guess you said the underlying drivers, they want to make a societal change, right?

Clair: Well, certainly some students start off taking economics because they think, oh, I want to be rich, I want to get wealthy. But what they quickly understand is actually that’s not what economics is about, that it’s sort of an urban legend even that economics is about how to get an income and become wealthy and so forth. But actually, economics is about how does an economy come together and produce the things that they need? How do they provide public services and health care and education? How do we take the resources we have and work with them to provide what people need to have a meaningful, healthy life? And so it’s not really about how to get rich if you want to learn how to get rich. I tell my students, you really ought to go to business school, go get an MBA, go figure out how to be an entrepreneur. But that’s not really what economists do.

Richard: That’s good to know. So what facet of the economics you work on because you mentioned a whole bunch of them.

Clair: Well, personally, I have been working on what you mentioned in my book teaching it and so forth. But what that really is, is thinking in every economist has to do this. We have to say, oh, OK, what’s our world view of how the economy functions? And then that gives us our set of assumptions. So you have to start off saying, oh, are people selfish or are they altruistic? And in fact, people are both. But the old fashioned economics model started off with people are selfish. But then we, fortunately, learned from psychologists and cognitive scientists that people are also altruistic. They care for themselves, but they care about other people, too, and then you also have to say, oh, well, basically, are people independent and do they each operate by themselves or are people interdependent with each other and with the planetary systems? And you wouldn’t believe it. But economists still, many of them think that, oh, humans function independently and they don’t have to care about each other. They can be selfish and they don’t have to care about the environment. They can dominate.

Richard: What about it? About people being the rationale for irrational?

Clair: that too. But let’s continue just a minute with interdependence because it’s so critical. As you know, it’s one of the four laws of ecology. That commentary in his book, it is said everything’s connected to everything else. There’s one ecosphere for all living organisms and what affects one affects all and of course, but also said this is taught this over two centuries ago. So once you’re interdependent with people and with nature, that really changes the whole way that one thinks about how does the economy function and. So then a rational person who’s both self-caring and altruistic, who realize that their well-being depends upon the well-being of others and upon nature, then actually behaves very differently and in a rational way. They actually then care about what’s happening to other people. They care a lot about what their daily action does to the environment. They care about they’re polluting the air or throwing things in the landfill and so even though the old fashion model sees people as rational, but in this very selfish way, and then they couldn’t understand why are people being kind to each other or why do people go out and help people with getting nothing in return? And that was considered irrational. So it was just assumed not to happen. But now that we know it happens and now the different fields of science validated rationality takes on caring about the common good and how to do it in a way that actually is a win for the person and for the community and for the world. So economics has really changed a lot over the last few decades and all for the better in terms of understanding. We’re all interdependent, we’re all interrelated and on top of that, nothing’s permanent. It’s like everything is in a dynamic mode is always changing and so we can’t think about, oh, what’s the final stage of my economic model? What’s the equilibrium? Well, actually, there is not an equilibrium. So it makes studied economics really interesting, but also much more powerful.

Richard: Do you think that economics must be cyclical? There’s no way to have is an equilibrium that’s ongoing forever. What are some of the truths that you’ve learned about how it must act, whether I guess we like it or not?

Clair: Well, I think one of the problems is that economists simultaneously understand everything is dynamic. The economy globally and domestically, it’s always changing and that we, in fact, have where we can’t get you know, we really don’t know what the outcome is going to be from a quarter to quarter, although we can make some predictions. We also know often we’ll get it wrong. So the problem is we understand it’s all dynamic, and yet we still want to act like we can predict it. So we continually getting egg on our faces. So I actually don’t do macroeconomics where we predict outcomes over time, but I do study the policies that perform better in some ways and other policies. So it’s like I really understand that we know good policies and we can differentiate good policies from not very good policies, both in inequality, both in sustainability, also in providing, well, you know, human rights or a life of well-being for most people. So I can talk about the policies and how they all come together systemically, but I cannot tell you how to sort of predict changes in how these things occur.

Richard: What were your thoughts surrounding the coronaviruses pandemic and when it started and now and going forward, any predictions or is the whole thing just messing with you and you have no clue what to expect to grasp or like what are your thoughts on?

Clair: Well, my first thought is we have a lot to learn from our public health specialist and from our scientists and the scientists are quickly teaching us a lot about the viruses they learn. But one thing is, an economist that can tell you with absolute certainty was we knew that we absolutely and could test and test and test and then trace and isolate so that was the best approach to take and so it’s like, oh, what should we be doing right now? Oh, we should follow, for example, what Korea did, where they tested everyone they traced and they isolated those who tested positive so that they wouldn’t spread to others and instead of doing that, the United States, without national leadership, ended up our main treatment. Our main response to this pandemic was to do a lockdown and it’s like what? That’s this widespread treatment is like taking a sledgehammer. When you just want to nail down a little tap is like, oh, just a second. So the US really took an extraordinarily expensive and painful treatment, which is, oh, we have to do a lockdown instead of testing and isolating and really trying to focus on. Knowing who was getting the virus and making sure they didn’t spread it and then really understanding that you can’t let the virus enter, say, a nursing home where there are a lot of elders who quickly get it, many will die. So we knew how to take a pretty focused approach, but we didn’t. So to an economist, the idea that we’re going to shut down the economy because that’s the only treatment we have just really makes no sense. I mean, I’m glad we did it because it was much better than not doing anything. But we could have had much more focused and effective approaches than what we’ve done in the US.

Richard: It wasn’t just us. It was most countries around the world locked down if you didn’t. But Korea probably looks like they did a great job and unfortunately, it wasn’t just us. I mean, tons of countries did. They’re still doing it to varying degrees and I guess just focusing on the U.S., one dynamic I’m seeing now is certain states have opened earlier than others. So I wonder how it’s going to shift the economics of the US-based on, you know, availability of jobs, commerce, any thoughts there?

Clair: The problem, though, once again, is they’re reopening, but without taking precautions. We already know if you’re going to reopen, you can’t have any large indoor gatherings that everyone should socially distance and wear a mask. So we know how to reopen in a safe way. But we can also see in many areas they are ignoring what the scientists tell us, that you need to distance, you need to be outdoors. If you’re going to be around people, you need to wear a mask. I mean, those aren’t difficult things to do and it’s actually a pretty costless way to reopen and have the economy revive without especially since we aren’t we still aren’t doing enough testing and tracking and isolating. So we can reopen that. We have to do it following the science and right now, we actually, in very few places are following the science.

Richard: OK, so based on economics, what do you think economically is going to happen, let’s say, in the US and maybe worldwide, if that’s your views, what do you think should happen for me over the next year in terms of the coronavirus or I mean, the problem right now in terms of the again, the economic side? Do you think that there’ll be a big recovery, it’ll be slow. It’s going to change our economics and our behavior as we would, what comes to your mind from that perspective?

Clair: It’s already the coronaviruses already changed the way the economy’s working and I think some of the changes will actually be incorporated in the way we companies to operate. For example, I think companies have realized that more remote working from home or working in other places work fine and they’ll continue to do that to the extent that it makes sense and workers like it so that they don’t want to totally work away from the office, but they don’t want to be at the office every day for long days. So I think we’ll see a mixture of that happening. But we will also hopefully understand that we need to use this time to rethink how we’re actually living. I think one of the problems for me is that with our materialistic focus and our economy, people were actually overworking and people didn’t have enough family life balance that people didn’t really have enough time to even step back and say, oh, what makes my life meaningful? It’s actually not more consumption and now we’re also paying more heed because of this to the climate emergency. We realize, oh, my gosh, did you see how nice the year was when we weren’t all-out driving our cars? So I think hopefully with the combination of the pandemic, with the racial injustice rallies that we’re now seeing and with people understanding, we can create change really quickly and a lot of this will actually help the climate emergency. I’m really hoping that we can come together and change the social consciousness on the way that we’re behaving individually, but even more importantly, around the way that we think about what do we want from our economy? What’s the role of the government? So I think the pandemic taught us that we need in the US a robust safety net. We realized, oh, my gosh, people got thrown out of work in the US and the US system wasn’t adequate. Oh, my gosh. They were losing their health care. Oh, my gosh. The public health systems weren’t really up and running adequately. So we were all of a sudden seeing all the ways that the social safety net in. The US had really been torn to shreds and that we needed to rebuild it, that there was a really important role, the government, for ensuring public health and safety, and that we needed to go back to rethink how to do that in a way that made people’s lives better and that we could continue to think about sort of equity and we could think about public health and we could think about caring for the environment and reducing air pollution and we could think about racial justice, about how a lot of the problems in our society, such as air pollution, not adequate health care, that they fall on people of color especially and so we it’s a time, I think, that we’ve been able to step back and hopefully rethink about social justice and climate emergency and to be honest, we don’t have a lot of time, which we got to deal with these things, because at least on the climate emergency, we have to dramatically reduce greenhouse gas emissions over the next decade and the US hasn’t started doing its part in this compared to Europe. European countries are way ahead of us in many of these things. Actually, that’s one of the reasons we know policies that work is because of Europe and so we have a lot to learn and then we have to not only learn but then we have to actually move ahead. I have a research team that created a national policy index of policies that work on sustainability, on sharing prosperity, on making the economy work for the public good and what we did, we covered 50 countries with this policy index is called the Sustainable Shared Prosperity Policy Index and as you might guess, the European countries did well. The candidate did well, Australia did well compared to the United States. So that we came in like number thirty-four out of 50 whereas France and Germany and the Scandinavian countries and Canada, Australia, they all came in in the top 12. The UK is like, well, yes.

Richard: What were your rating systems based on? Like what metrics do you look before that showed someone was highly rated?

Clair: Well, we had about 60 policies that we measured and this is a performance. This is not an outcome. This is just policies. But then we also artistically related the policies, which were these it was 60 indicators approximately put into three pillars with the pillars being sustainability, structuring markets and government goods and services and so across a wide array of different kinds of policies. But interestingly enough, this policy index tracks a lot of holistic metrics that have been used and are being used for how do you measure economic performance in various ways, the Sustainable Development Goals, the Prosperity Index, there are quite a few of them and so the policy index tracks these more holistic outcomes of public wellbeing. What’s really interesting is it doesn’t track just with GDP. So in none of these holistic performance metrics just track with GDP either in GDP, gross domestic product, which is market outcomes. It’s how we measure economic growth. But every economist will tell you economic growth is not a measure of social welfare that’s much larger, much broader, and includes many aspects of life. So don’t use GDP for major economic performance. But of course, we do. So this policy index says, we do know the policies to reach the goals we want. If we care about sustainability, we care about inequality, if we care about human rights and people’s health and welfare and education and we can measure that and it can track well with a lot of measures we have of the way we want the economy. So it’s like we know how to do these things, but we aren’t doing them yet in the United States compared to most other what we call rich countries or industrialized countries.

Richard: Well, the policies being in place is one step, and then the outcome of the policies, I guess, is another. What are some of the policies you’re seeing over in Europe that were in place? And then the outcomes are good, too and what’s a good outcome? And it was an example of one in terms of climate, let’s say.

Clair: Let me just tell you, since you brought that up, let me just tell you, no matter how good you are and how well you rank on policies, every single country is weak. The weakest is in sustainability. So countries are doing. Much better in providing health care and education and human rights, you’re much better at structuring markets. So they work well in the things that we always put. We want to put through the marketplace. So they’re pretty good at structuring markets and setting up government programs for basic needs, such as health care and education, public safety. But we’re all weak. All countries are weak in sustainability. Every country has too many greenhouse gas emissions. We need to bring those down. Every country has too much wasteful consumption, consumption that basically ends up overproducing in a lot of areas and way too much going into the landfills. So we also just have problems now with protecting actually our water, our clean water underground, our groundwater that we’re going to rely upon. So those are three key areas where countries really need to improve their policies. Their policies are weak and also their performance is weak. So we can see where we can do things well, but we also can see that it’s not adequate, especially in the problem of sustainability, and so, for example, in Europe, in fact, they’ve done much better on racial progress and the differences in sort of the health care and the education in the outcomes for different ethnic groups compared to the states. But they still have a ways to go on consumption.

Richard: So I guess if you had a great deal of principle, like what are the greatest levers for improving the lot of a given people, what would it be as paying attention to climate, or is it income inequality? Like what are the top few things that you think, if addressed, would really be a dramatic, positive change?

Clair: Well, it depends upon actually what country you’re talking about, especially what region are you talking about, say, rich European countries? Are you talking about the United States? Are you talking about South Asia like India and Indonesia, or are you talking about sub-Saharan Africa?

Richard: Maybe, yeah my one example of the before like one is U.S. one in Europe and East Asia and West Africa, I’m sure the prescriptions are different. So what would they be?

Clair: So as I mentioned already, pretty much the European problem is basically overconsumption, over pollution and they need to work on that and they’re trying to, but they aren’t going fast enough and their policies are still too weak. But when you go down to southern Africa, you have, first of all, you have the problem with not adequate health care. You have a problem with wars and refugees and without adequate health care and without adequate education, especially of women and girls, you have overpopulation, and with South Africa, you have terrible problems with the impact of global warming. So they have droughts and many there much of their land and many of the small farming villages can’t grow the food they need and so you have a really different situation thereof needing to simultaneously educate, provide health care, bring down the population growth, and really improve knowledge about farming and subsistence farming while you simultaneously improve human rights. Because one of the reasons you have refugees is because of problems of civil war, land rights. So you have a lot of challenges there. Whereas if you move over to Indonesia and India, your challenges there are they do want to have shared prosperity, but their resources are really, really limited and so they’re simultaneously trying to figure out how to continue to reduce suffering with extreme poverty in one of their biggest issues is adequate food and also clean water. So there you are a situation of subsistence again. But the that the problems are quite a bit different and to be honest with global warming, everything’s becoming much, much more complicated in the pandemic will only cause even more complications because they don’t have adequate health care. So as we learned from Paris 2015 that it was really up to the rich countries to really help the developing world, especially India, Indonesia, places like that, with green technology, we really needed to help them improve their consumption by using renewable energy and using regenerative agriculture so that they don’t continue, so they don’t add to the air pollution in the carbon emissions that was already the responsibility of the rich countries. It’s like we developed with cheap fossil fuel energy, but these countries can’t. So the way you look at if you look at the policy index is like, oh, so that one of the reasons they need to reduce consumption in the rich countries, in the European countries and the US is so that we reduce our level of greenhouse gas emissions. So India and Sri Lanka and Indonesia, those countries can continue to grow, can actually improve their level of consumption with more food, more shelter, more clean water, because they need to increase their consumption. But the developed world really needs to reduce their consumption so that globally we don’t continue. We really need to bring down our greenhouse gas emissions so that we can stop increasing global warming. But it’s a global problem and it has to be done systemically. But that was one of the reasons the U.N. agreement was so important in Paris and we need to return to the table. A work on that, but we do need to transfer green technology from rich countries to poor countries.

Richard: There are other countries in terms of green technology that you see real leaders and it’s supposedly China has been pretty active in the greening of their economy. But I don’t know. Yes or no. Are there any countries that are really putting forth technology that would really help other nations adopt renewables?

Clair: Yes. Actually, their roadmaps in every single country have technology. The rich countries, they all have the technology. They already have wind, solar, small hydrothermal heating, and so forth. We know we have all of that. So both Stanford and the U.N. have roadmaps for each country to go from where they are now to complete completely clean energy and also develop and so we know how to do it. The problem is actually putting the resources into it. So, for example, we already know from Germany and France how to bring in and get rid of how to bring in hydro and solar and wind and get rid of any coal or natural gas use. But the problem is, to be honest, the fossil fuel industry is a big obstacle. They really fight hard and they’ve really been fighting hard to keep it from happening, even in countries like Germany and France. So in Sweden has also been terrific at helping to export green technology. So it’s not that we don’t know how to do it, it’s the politics of it. Get in the way and it’s not even the economics of it. Every road map that shows us what to do shows that you can actually save over time billions of dollars in making the transition. But it’s not easy to do when you’re fighting an enormous industry of big oil and gas and in Texas, you probably are aware of all of that. It’s like in California, I work a lot on clean energy legislation and I just will tell you that time and time again, our biggest obstacle is the oil and gas industry. They have a lot of money, they make a lot of contributions and they fight hard, even though we keep telling them, hey, you can move over to renewable energy. It’s like that’s not what they do or know or think about. It’s a problem for me.

Richard: As an economist, do you think there’s an opportunity with as well shock we had with demand was so low that, you know, oil went negative. Do you think that’s going to make the oil industry shudder or so? OK, well, maybe we should change our focus. Or do you think it’ll just be shrugged off?

Clair: What I think the only thing that will make them change is public demand and the role of the government saying we’re going to quit. We we’re still subsidizing fossil fuels and even though there was a moment when the price went negative, that was just a quirk of the way the market set up with it, the way it’s rolled over every three months. Right now, the price of oil today just went back up to forty dollars a barrel, which isn’t high enough for fracking companies that need a higher return on oil per barrel than forty dollars. They need it closer to be sixty. But big oil companies who do a lot of drilling worldwide. Forty dollars is perfectly fine. They’d like more, but they won’t go bankrupt. So I think the only thing that a company like the oil and gas industry will respond to is government regulation, saying, sorry, we absolutely can, we’ve got to keep it in the ground. We already know how much oil and gas we have to keep in the ground and we’re going to have regulations that make that happen because otherwise there’s not going to be a chance that we’re going to pass along an economy and a world that our grandchildren and great-grandchildren can actually inhabit and that’s pretty frightening.

Richard: Yeah, that’s true. I have children that are right about the teenage age, and I don’t want them to have a crappy world where they can do the things that people have done for generations.

Clair: I have been driving an electric car that at least for now, I’ve been through two models. They’re great. They’re wonderful. I have one hundred percent clean electricity because I can do that in California. I live and I don’t even have to go very far to not far from me. There’s a Chevron oil refinery and within that same property, there is one of the biggest solar panel farms because the oil refinery had a lot of lands that was so polluted it couldn’t be used for anything else and so they leased the land to a clean energy company that set up a giant solar. It’s like I’m thinking that’s the future. That’s what we that’s where we’re going and, yeah, I love it. It’s a great example of moving from fossil fuels to renewable clean energy.

Richard: So how long have you been thinking about economics and working in the field, by the way? And I want to ask you what you have a different set of eyes than a lot of other people because of what you thought about for solar and wind. What are some of the benefits to you as you think back on all this knowledge you’ve had?

Clair: Well, I have to tell you, I started off studying as a graduate student discrimination, and we made a lot of progress with the Civil Rights Act and women really have been able to move ahead. We made some changes by race, but not nearly enough. But the problem is, even as we were helping reduce discrimination in the labor market, we weren’t doing enough to actually change the way we thought about our economic system. So we brought in this whole idea of deregulation, all based upon this idea of free markets. I’ll tell you, one of the biggest public misconceptions of economics is that free markets, there’s no such thing as a free market or any market has to be structured. You have to protect private property. You have to have a financial system. You have to have a rule of law. You’re going to structure the market. The big question is who’s going to be in charge of the rules? And so deregulation basically means, oh, the government won’t be in charge of the rules. We’ll get rid of any regulations. But that just means you’re handing rulemaking over to big industry. So then you have big companies making the rules and they’re very clever about it. They know how to make the rules so that, in fact, as we were deregulating, markets just became more and more concentrated. The pay of CEOs and executives skyrocketed. Workers pay bill and we ended up with enormous growing inequality. So my biggest disappointment as an economist is while I was working on an equality with my colleagues at Harvard and MIT and Berkeley, inequality was Zoom and a lot of it was because of this deregulation where we were putting the business in and it really we now know that neoliberalism and free markets weren’t the way to go, but it took economists a long time to figure that out, even though some of us kept saying, this isn’t what you want to do. Let’s look at other countries and see what they’re doing in Europe especially. But now things have really changed and I’m feeling if it weren’t for the need to reduce greenhouse gas emissions so rapidly, I feel real positive in terms of using the pandemic, using the racial justice KRI to actually move ahead and improve equity and improve health care and improve things that we know we can improve. I’m just concerned a lot about Richard. How are we going to deal with the climate emergency? We’ve got to move fast. We got to change quickly and we know we can. We got a taste of it, but how can we really make lasting change quickly? And it’s going to take a lot of courage. It’s going to take political will and political courage. So I’m afraid that’s not really economics. But the lesson comes from economics.

Richard: I mean, economics can be used to push and steer people in various directions, systems that are set up. Obviously, you know, all those people’s behavior somewhat altered. But one is definitely thinking along those lines.

Clair: I think that’s really important. The problem is setting up incentives. So as I said, we’re still subsidizing fossil fuels. For example, I got to tell you, as an economist, I work a lot with political scientists and with engineers and so forth at Berkeley and I look at the political scientists. I said you all have all the power. Politics trumps economics every. So we’ll go in and say, here is a policy. If you want to reduce greenhouse gas emissions, here are some policies or if you want to trim and reduce inequality here. Here’s another set of policies and we have a hard time getting these policies. Listen to and except maybe by a few other OECD academics. But the politicians seem to think that is that will they listen to politics, of course, because they have to get re-elected. So I find that our biggest obstacle is really the politics of the policy and not necessarily the economics because economics can be strong, can be powerful, but it may not have the political muscle it needs.

Richard: So I’m glad you said. I picture a bumper sticker that politics trumps economics because, yeah, you’re right, it does. So I think out of all the things you said, that that’s at least one of the takeaways from it. I don’t know how it helps me, but at least that’s what I am understanding. Which is good, right?

Clair: Well, also, just remember interdependence. If you were going to have a takeaway about how does the economy work, that we really understand now and that the pandemic reinforces it, climate crisis reinforces it, that the well-being of people is interdependent in nature and in people’s well-being is also interdependent, that if nature is suffering, then we’re going to suffer, and that if people care for each other and really respect each other, then we would all be wearing masks. We would all be social distancing, but we’d be able to go out and about. We’d be willing to get tested and be treated or isolated if necessary, and we would certainly be taking much better care of the Earth. So I think for me, the real lesson of economics today is interdependence so that people understand we need to care for each other, we need to care for the planet, and that makes us all better off.

Richard: Very good, Claire, thanks for coming. What’s the best way for people to follow up and find out more about the issues you’re working on and get your book?

Clair: Well, that’ll be great. I actually have a Web site.

Richard: All right. You can get your book there. Any other way for them to follow up with you and find out more?

Clair: All right. Yeah. It was really nice talking with you. Thanks for all you’re doing.

Richard: No problem. If you like this podcast, please click the link in the description to subscribe and review us on iTunes.