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[00:00:09]

Episode two Dog Strikes Back. OK, so great sequel is better than the first aliens.

[00:00:28]

Fantastic, Sigourney Weaver comes back that was speaking of viruses or alien invasions. And also I would argue that the Empire Strikes Back was better than the original Star Wars broke new ground. But I thought the Empire Strikes Back was probably the seminal work in the franchise. So are we. Are we the Empire Strikes Back? This is Episode two. We're off to a great start, according to Westwood One. And this is totally inside baseball. Last week was the most successful launch of a podcast in the history of Westwood One.

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I don't know if that means we're the tallest midget or more politically correct. If we're the biggest little person.

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By the way, by the way, the only thing I would change about my are not change. The only thing I would not change about my physical appearance is my height. Everything else. I would like to start over. I would like to start over my feet, my face, my hair, everything pretty much everything about me from my ears to my back fat. I could take a pen and probably do a better job. My height money. I am six, two and a quarter.

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I used to be six three. I've actually shrunk which is a which is a nice thing. When people ask me how old I am, I say, well, I don't want to give you a number. Let me just tell you, I've actually physically shrunk. I used to be six three. I'm six two and a quarter, but I think that is the perfect height. So I got that going for me. OK, week two are week seventeen of this thing called the coronavirus.

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And we now have the lieutenant governor of Texas suggesting that senior people similar to a call to action of war, need to return to work even if it puts their health, the such that we can ensure a great economy is waiting for our kids. Take a listen to Lt. Gov. Dan Patrick.

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My message is that let's get back to work. Let's get back to living. Let's be smart about it. And those of us who are 70 plus, we'll take care of ourselves, but don't sacrifice the country.

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OK, so that's Lieutenant Governor suggesting that Nana and Pop Pop returned to work, risking their own health such that little Jimmy and Johnny can buy that Hyundai they have their eye on, regardless of the morality or the logic here, which, by the way, this guy has his head up his fucking ass economically. It makes no sense if you have a breakout of the most vulnerable are amongst the most vulnerable population in America, that's not going to be good for the economy.

[00:02:45]

That's going to tax our resources. It's going to spread panic. And you're going to have incredible taxation and misery and stress on young people as they realize their grandparents are coming home from work or haven't listened to Dr. Fauci or any other representative from the CDC or anyone who has ever read anything, anything from an epidemiologist have any credibility, this notion that somehow we've gone into on into a war footing and that rather than personal freedoms are turning back fascism or turning back an invading army, that the real enemy here is a lack of economic growth.

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It's just this is so wrong on so many levels. So let's hope that logic wins out here. The best thing for the economy, the best thing for our collective humanity is to flatten this curve. And that is about social distancing. Remember, again, fourteen days, six feet from one another and boom, this virus ends. You heard it. That's right. The virus goes away. If we can distance six feet from each other for fourteen days, Nanna and Pop Pop grabbed the couch, sit down, stare at pictures of your kids, figure out Zoom.

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But for God's sakes, don't go back to work. As a matter of fact, Lieutenant Governor Patrick, here's my offer. And it's a sincere offer. I will give I will donate fifty thousand dollars to you after this thing is over, because the terrible thing about crisis is they always have and the wonderful thing about them, as they always and in this will and I will donate fifty thousand dollars to your re-election campaign if you agree to go on a ventilator for just an hour.

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So you can see what kind of sacrifice would be required here, what kind of idiocy would be involved in older people, our most vulnerable population, deciding to return to work such that Johnny and Jimmy's 401k would start to recover faster. What the fuck are you thinking?

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So, Jonathan, David Wright is an American social psychologist, a professor of ethical leadership at New York University's Stern School of Business and a colleague.

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And last week we had another colleague, Ayesha Damodaran, who I believe is probably the best teacher in graduate education right now. Professor Height is probably the most influential academic at all of NYU and I would argue probably one of the 10 most influential scholars in the world right now. And the thing I admire most about Jonathan is that he's courageous. A Professor Height is one of the few people who has the courage to consistently see the other side. And I don't know what his political viewpoints are.

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I would describe him probably as a raging moderate, but his data has heft. His clarity of thought is able to bring both sides together to really think about science and truth. So I'm excited to introduce our interview with Professor Jonathan. Give us the state of play. What is happening to us?

[00:05:49]

OK, well, you know, everybody's giving a state of play. I guess the only way I can justify my presence on the show is to say why somebody should think that they're going to hear something different from me. So I'm a social psychologist. I study morality, politics. I take an evolutionary view, you know, what's human nature? And then I also look at culture. Why are we so different in different cultures? And so if we look at what's going on with the coronavirus from a social psych point of view or moral point of view, I would start by saying there are three major psychological systems that are these really interesting adaptations.

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It's like we have all kinds of stuff. We have this big toolbox in our heads that we inherited from hundreds of thousands of years ago. And so I'll just go through three of the really important ones. We have one toolbox which says in case of foreign attack, you break glass and, you know, here's a bunch of tools for you. And so and that's because everyone on Earth today is a descendant, not just of individuals who survived, but of the groups that wiped out other groups or at least that resisted efforts by other groups to wipe them out.

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So human beings, I believe, evolved by a process of multilevel selection, including a little bit of group selection. And that means that we have this tribal instinct if if another group of Texas boy, do we come together quickly. And so we had that at 9/11. We don't have that now. And we said, why don't we have that now? Well, because this wasn't a foreign attack after 9/11 was perfect.

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So this is the Reagan and Gorbachev of aliens landed. We'd all get along fine. Exactly.

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That's right. And there's that cheesy movie, Independence Day. Right. And yeah, that's exactly what they did there.

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If by cheesey, you mean genius. I agree. Well, OK, anyway, go ahead. Sorry. Sorry. So so then the second system is the pathogen avoidance system. And, you know, as far as I know, pathogens killed a lot more of our ancestors or the people who failed to become our ancestors then did foreign attacks or murder or violence. So we have a really elaborate system of disgust and contagion sensitivity. Maybe we'll get into this later.

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It's worth talking about discussed here. But the psychologist Mark Shalah calls it the behavioral immune system. So just as we have this immune system in our body that fights off viruses and bacteria, our brains make us engage in behaviors that minimize the risk of of contagion. So this pulls us apart. This makes us stay away from people. This makes us treat people as contaminated. And so this is causing some of the some of the racism or anti Asian attacks or insults that we're hearing.

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So this pulls us apart. And the third system is, let's call it the starvation system, which is reflects the fact that when you look at accounts of Hunter-Gatherer life, sometimes they're swimming in food. And then for a month or two, there's nothing. And we evolved to live in times of feast and famine. And when there's a shortage, we get pretty selfish. At least we see others as competitors we're very good at. Yeah, that's right.

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We're good at hoarding and lying. So if you look at these three systems, after 9/11, we had the first one which pulled us together. That was the foreign attack and not the other two. But this time around, we don't have the foreign attack, but we do have the other two, the pathogen threat and the starvation threat, the shortages. So I think we're starting off at a real disadvantage here. That is, things are kind of set up to be ugly.

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But so far they're actually not that ugly or rather there's a mix. And that, I think, is because we have this general tendency, this general longstanding evolutionary selection force that shaped us for cooperation. We're really, really good at cooperating. And we're not blind cooperators. We don't cooperate naively, but. Actually, when we go through adversity together or we have a sense of overarching identity, we're actually very good at cooperating. So as a species, isn't it?

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It's yeah, it's true throughout human beings, much better than any other primate or any any other mammal except for the naked mole rat, which is better than us because they are like bees. But leaving aside the naked mole rats, we are the world champion mammals at cooperation. I'm really interested in the evolution of cooperation. You know, a lot of people who have a superficial understanding of Darwin think that it's survival of the fittest and, you know, the war of all against all.

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But that's not really right. And species that are able to find ways to cooperate are amazingly successful. So the bees and wasps and termites, those are the main the super you know, the super social. Are you social organisms? Those are incredibly successful species. And same with humans. When a species figures out a way or evolves away to cooperate at a very high level, it tends to spread across the planet and it's very hard to wipe out.

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And that's probably going to be true of us. So let's unpack that a little bit. It's interesting to you, I understand the kind of foreign adversary or enemy being a catalyst for us rallying together. Right. It's the scene from Gladiator. The only way we're going to survive is if we work as a team right now. Why? But why don't we see a pathogen as the same sort of uniting threat as we would an invading army or aliens?

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Hmm.

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So, yes. So it's possible to see it that way, but it doesn't come easily. You have to do some some framing work to do that. And so a pathogen, if you look at plague or any other time in history, that it's wiped out a third of the population. There was certainly no sense of humanity is in this together. I mean, back then, they didn't even know who was suffering from it. So a plague is pretty well set to drive us apart and make us fear each other and treat each other as a as a threat.

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Now, today, what we're what we're what we're seeing is for the first time, we are seeing hints of of the play of the virus as as as bringing together team humanity. So there was a wonderful tweet someone had where they said, you know, look at this amazing timeline. The virus was first discovered in China in December, something or other. It's first sequenced by the Chinese in December or January. The first virus, the first the first vaccine is tested in February or March.

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And then it ended with something like Go Team Humanity. And so unlike previous disease outbreaks, which always happened over there, you know, we had REM's and so we had SARS and various other murres. Those always happened over there. And they threatened us maybe, but they didn't really come here. And this is the first time in modern history that it's been truly global and we know it. I guess the I guess the, you know, the flu epidemic in 1917, people knew that it was global.

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But here there really is a sense that team humanity can fight it. And so I think we are seeing some stirrings. I mean, it's an incredibly interesting time because this this ancient threat of a pandemic is hitting us at a time. And we have new technological tools and social arrangements that have never been tried before. So it's working out in interesting ways.

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The other thing you talked about in terms of so a pathogen have actually been a greater threat or have taken more lives and more violence. And it just that struck me is is I mean, if you were to take that one step further, it feels as if I shouldn't the CDC have a five hundred and eighty billion dollar budget and the our defense budget should be, you know, several billion dollars. It feels as if we got our priorities screwed up here, that the pathogens are, in fact, a greater threat.

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It feels as if our priorities are mixed up. And is that is this one of the reasons the pathogens have been so effective is that we don't have this collective team response, if you will.

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Well, so let's unpack that. Yes. If we were logical and rational and if our budget priorities were set by, you know, people who calculated probabilities, yes, they would put an awful lot into the CDC. And this is one of the known defects of democracy. Democracies are terrible at planning ahead. Democracies tend to you know, it literally means rule by the people. The demos and the people en masse are not generally very good at probability.

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They tend to want lower taxes and more more benefits. So democracies tend to only get active after a crisis. They tend to be driven the reactive, whereas the Chinese government is an authoritarian government. You know, they have all kinds of leadership centers and they, you know, the Communist Party is responsible, was held responsible. So, you know, they might have more of a structural ability to plan ahead than than we do in the United States.

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Now, given that, you know, democracies then have a kind of a flexibility and creativity. So when we do react, we can be quite creative. And one of the silver linings that I'm finding here is that this this may turn out this coronavirus, the covid epidemic may turn out to be the best thing that happens to us in the 21st century. And the reason the reason is because this is this greatly reduces the chance of a planet wide catastrophe.

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So if you look at the list, was that well, if you look at the lists of things that could end humanity, if you just Google, you know, things that will end humanity. Mm hmm. They all have things like like basically a plague. You know, there is some sort of plague that could kill you or at least, you know, a quarter or half of all people or conceivably all people. And so a natural plague could come our way.

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And if it does, suppose such a plague, suppose a really deadly plague does come our way in ten years.

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Well, if this hadn't happened, it would have a big jump on us and we would not be prepared. But because of this boy, are we going to. Be prepared, I mean, the things we're learning, working together on international cooperation, the virus research, the businesses that are going to be started. So this is really preparing us for the big one. And then the other one related to that is bioterrorism. There was a talk that the there was talk at the TED conference last year by a guy.

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I've forgotten his name, but it was absolutely terrifying. He he went through the cases, the several dozen cases where where men had tried to kill as many people as they could like. Their goal was not just to kill themselves. It was to kill as many people as they could. And, you know, and then, like just just before that talk, we had to talk on, you know, on, you know, digital biology and the ways that soon anyone will be able to type out a DNA sequence and make whatever bacteria they want.

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And so, you know, in 10, 20 years, if if they the knowledge of how to create, you know, a superbug is widespread and available to anybody with an undergrad degree in biology, we really could face, you know, people who try to kill as many people as they could. And all that we're learning now is really going to make us respond to those future threats more effectively.

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I mean, that's a very interesting way of looking at it, that this the corona might be seen in history. Looking back, is a vaccination. And that is when you're. When you vaccinate somebody, a very small percentage of the people receiving the vaccination, something goes goes wrong, but you develop immunities. And I think the probably the most positive way we can look at this is, as you said, this is this is giving us a sense or a call to arms.

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And there's going to be a tremendous amount of investment such that we can vaccinate ourselves against something that is beautiful.

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I hadn't thought it, but you're right. The vaccine metaphor is exactly what I'm saying. That's beautiful.

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Yeah. It's it's the other thing that's less or less optimistic. And I've been thinking about this a lot because I'm definitely a glass half empty kind of guy. Is that if if people in addition to just mixing something up in your bathtub. My understanding is that typically the good news about bioterrorism or germ warfare is it's my understanding is it's harder than most people think. But if you found 50 people who heard about this immediately traveled to Rouen and then purposely became super spreaders around the world.

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That, to me, seems like a more pretty effective way to wreak havoc across our across our our global economy.

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Do you think I mean, when we look at this and one of the things I've been thinking about is that we're kind of in a post-Katrina world. And you talked about democracy being sometimes ineffective or it's good. Good in some ways and bad in others. What I I think we're going to I think we're going to really look at systems after this.

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And that is. Yes. Kind of collective versus capitalism. And if you think about democracies versus liberal democracies, where the Liberal Party's supposed to be institutions and assert themselves to make sure that we're all just not voting for lower taxes and more transfer payments, and that to a certain extent, a lot of those institutions have failed, that we have regressed to where Marx was saying we're collapsing on our own weight of greed and self-interest, that we're defunding the government, we're defunding these institutions that are supposed to step in and make us think long term.

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Does this help restore our long term thinking?

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Yes, it does. But I would I would I would trace it out in a different way. So the simplest and most direct and most optimistic way to think about this is, hey, we're realizing the importance of thinking systemically and thinking systemically about epidemics and funding the institutions that will study them. And so we learned our lesson and we fix the problems. Maybe that'll work, but I wouldn't put my money on it. I'm really intrigued these days with the work of a of a of a scholar named Peter Turchin t u r c h i n.

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I met him at a conference about 10 or 15 years ago and I read a little bit of his work. And and just very, very briefly, what Turchin studies is the cycles of history. He's he's creating this field that he calls client dynamics. It's the study of history from an almost mathematical point of view. And in his in his in his various books, he talks about his book, like Ages of Discord. And he has a book called War and Peace and War.

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And it takes off from this. What I remember of it is takes off from a 14th century Muslim scholar named Ibn Khaldun who wrote about this repeated cycle where these, you know, a tribe would come out of the desert. They're tough, they're warriors. They'd easily kill the king and his soft his you know, his soft people, and then they take over. But by the third or fourth generation, you know, their grandchildren got pretty soft and then they would be taken over by the next wave.

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And so the various historians throughout the millennia have noticed this pattern. And Turchin traces it out mathematically. And he says that there are these sort of 300 year long mega cycles and then within that, there are these 50 or 60 year long sub cycles. And and he said this is really this is so-called this is this is really kind of eerie. In 2010, he wrote a letter to Nature magazine. Nature had just done a series of predictions about how great science will be in 2020.

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And in 2010. Peter writes writes a letter to the editor saying, I beg to disagree. He says, we're kind of due for a cycle and there's going to be, he predicts, in 2010 is going be a lot of political instability here. Here's a quote actually. He says. The next decade is likely to be a period of growing instability in the United States and Western Europe, which could undermine the sort of scientific progress you describe and that, he says, very long secular cycles interact with shorter term processes in the United States, 50 or instability spikes occurred around 1870, 1920 and 1970.

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So another could be due around 2020. He says we are entering a dip in the so-called Kondratiev wave. I have no idea what that is, which traces 40 to 60 year economic growth cycles. This could mean that future recessions will be severe. So, you know, it's it's easy to find prophecies made a while ago. But at least here, he's not just going by a dream he had one night. He did go on record in 2010 based on his research as a mathematician, saying we're due for a big change around 20, 20.

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So to come back to your question, I don't think we're just going to learn our answer and fix things. But what what might happen and this is actually kind of optimistic, even though it's a little scary, what might happen is that this shakes things up, especially if there's a huge recession, especially if there's huge dislocation, it shakes things up. We've been stuck on a downward path, certainly for the 2010s, but it goes back longer. Our political system has been a mess.

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It's been getting worse. It's been hopeless. I've been very pessimistic about our future as a country in the last five or five or six years. And it could be that the coronavirus, and especially if its effects are prolonged and the economic dislocation is severe, this could shake things up, force a reckoning, force a real deep, deep rethink. And it could be you know, it's not going to be the end of the world, but it could be the end of a cycle and that could be a very good thing.

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And make some predictions here or put forward some theses around what happens to systems, you know, kind of our collective self, our approach to each other. Kind of post Korona. Have you thought about do you have any thoughts about how we and how our systems might or our political constructs might change or be different once we're kind of 12, 24, 36 months past us? Mm hmm.

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I have some thoughts. I'm always wary of making predictions. I'm a friend of Phil Tetlock who has written about how difficult it is to make predictions as an individual. But actually what Tetlock recommends is that you actually need to put people together with a viewpoint, diversity and mechanisms to challenge their thoughts. And if you do that, actually groups can actually predict. So I'm not quite at that stage, but I'll just share a few thoughts. One thing that we can say with some confidence is that the way the world looks to people between the ages of about 14 and 22 tends to imprint on them, and that stays with them for life.

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So the easy, cheap way to make predictions is just do demographics. And if we look at Gen Z, we can make a few predictions about what they'll be like as they as they become the more the dominant political class where they reach their 30s, let's say. So GenZE is people born in 1996 and later and until now, I've been kind of pessimistic about about how they're coming along, not blaming them in any way. But, you know, in my book, The Codling The American Mind, Greg enough and I note that they were denied the chance to play independently.

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We overprotected them. They got on social media when they were in middle school where the millennials didn't get it till college. And they have very high rates of anxiety and depression. So I've been very concerned that as Gen Z is entering the corporate world, we're seeing them map there, as they did in the universities since 2015, in which there's talk about safe spaces, microaggression bias response teams, call-out culture that is coming into the corporate world. Maybe we'll return to that later.

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It's coming to the corporate world and I think it's going to come into our democracy. So in general, I thought that because of the things we did to Gen Z, in a sense denied them the ability to develop the skills of democracy, or least we've reduced we do some of those skills. So that's the that's the the pessimistic take. Now, on the optimistic side, though, in a sense, they are pre adapted or prepared for this new remote world.

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They're very, very good at having relationships online and and before before the virus.

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Um, I think social media was almost entirely about amplifying your brand as an individual, which is a terrible thing to do to teenagers, especially in preteens. It's very informative. Exactly.

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Exactly. So social media had, I think, a really damning effect of really crippling effect, especially on in middle school. That's where I think it's most important to get get it out of middle school. But by the same token, if we. We are now entering more an age of we rather than I, if we are all in this together, or at least most of us, if there is a small sense of sociality, a sense of needing to reach out and connect and support people, this could really change GenZE for the good and they will be particularly skilled at some of the new ways of relating.

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So I think, you know, we've just begun to pay attention to GenZE. And I think in the next couple of years we will see that possibly in a new light or will we'll understand both their strengths and weaknesses better. So that's that's one set of predictions.

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Let's see. Well, let me ask you this, Jonathan. Have you so you're you're a husband and a father.

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How old is your daughter? My daughter is 10. My son is 13. That's right.

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So 10 and 13 year olds, they're kind of they're just over nine and a 12 year old. That 13 year old is sort of old enough to know what's going on, but not really understand it. The nine year old, I find is really kind of know or understand or care much about it, although maybe more is registering than I would imagine.

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Have you found how is your being in New York? I left there two weeks ago. My sense is that really is the epicenter right now.

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And have you made any have you any observations around your own personal behavior or thoughts around the impact it's having on you and your family?

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Yeah, I mean, we're very fortunate in that, you know, I have tenure, so we don't have to worry about losing our job. We don't have the financial threats and fears that a lot of families have. We also have a nice view out over Washington Square Park, and we feel perfectly safe going out to the park and and walking around and jogging. You know, it seems that the virus doesn't really spread from that sort of just passing.

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People, even if they have it, just passing them doesn't seem to pass it on. So we're not feeling too claustrophobic yet. Of course, it's only been like nine days, so who knows? And my kids are not alarmed that my son is an introvert. And he actually says he prefers this to going to school. And I think God kids are, if not entirely me, it doesn't really threaten kids, somebody you know.

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Can you imagine if this had been reversed like some of the previous pandemics and it was preying on our children?

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I think you'd have chaos and you just have chaos. You're right. People would be much more, I think, more selfish in the sense of doing it to protect their own kids. I think you're right about that. So, you know, in my family, the disruption hasn't been actually too great. We can get groceries delivered. There is a funny thing where even though. Yes, you know, this is the epicenter now in the country because we're all locked away.

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My sense of what's happening in New York is not that different from your sense. That is, you know, most of what I know is what I see on the news now when I've gone out a few times, it's quite amazing to look up, say, Sixth Avenue or Fifth Avenue. And you see just as far as the eye can see, you see a couple of cars here and there and you see some delivery bicycles and people walking. It's like North Korea.

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I mean, it's like the street scenes we see from Pyongyang, you know, a couple of cars and a vanilla sky.

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Yeah, it's. Yeah, yeah. Um, but I think where we are now is we kind of know that this tidal wave is coming. And I just heard from I just spoke to somebody yesterday whose wife is an emergency room doctor, and she said yesterday the surge is beginning like we're not over capacity yet, but we're getting close. And that was just yesterday. And of course, it's going to get a lot worse in the coming weeks. So I think we're all bracing for the tsunami, but I think our eyes are really much more on the hospitals than on ourselves.

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I'm not sure about that, but that's the way it feels to me. So, Jonathan Haidt, I like so yours is the most optimistic view I've received so far and it's nice and it's reinforcing this notion that this might be. In retrospect, an expensive vaccination for our society where we decide we're in this together and that hopefully we'll look back on this and having seen this as an inspiration for what was one of the greatest collective efforts, both forming new alliances and innovations such that we could flatten this curve, get past it, and hopefully a new generation of leaders and activists and very socially minded people that realize that obviously we're much stronger together in that institutions matter and that we get through this and are much more prepared that the muscles damaged here.

[00:30:45]

But it's only damage such that it grows back stronger, more able to face these things with much greater vigor and resilience. Professor Jonathan Haidt is an American social psychologist, professor of ethical leadership at New York University's Stern School of Business and an author. Jonathan, thank you so much for doing this. This is our second podcast. And I said this the beginning of the show in the intro. I find you courageous. I just love hearing from you and I find you one of the few academics that is willing to take a what?

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I don't want to call you a conservative, but I think of you as a raging moderate and be totally unafraid to kind of kind of call it as you see it. Stay well and I'll see you back on campus hopefully soon rather than later.

[00:31:26]

Well, thank you, Scott. Let me just say that that summation you gave of what I said was better than what I said. That was amazing. If you can summarize things like that. Well, thank you.

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Because I've been drinking it. So it's cocktail hour somewhere. All right, Professor, I take care also.

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Thanks, Scott. Bye bye. OK, it's time for office hours and part of the show where you ask us questions on things, we have no domain expertise or credibility or license to respond to think of us as Oprah and Dr. Phil, minus the empathy, the talent and the degrees. Griffin, first question. Hi, Scott.

[00:32:08]

My name is Millie. I am 18, just about to go to college and I have recently become interested in investing. I was wondering what suggestions you have for someone who is just about to enter the finance world and any suggestions you have for being successful in it. Thank you, Millie.

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Thanks so much for the question and congratulations. What a wonderful time to be heading to college. And also, you're blessed to have some idea around what interests you. So the business of money is less frictionless than any other business. And what I mean by that is it has more scale such that if you go into the business of helping other people invest their money, it's not ten times harder to help manage or help people invest 100 million versus ten million.

[00:32:52]

It's not 100 times harder to manage. A hedge fund of 100 million versus a million to the business of money has tremendous scale because money flows are pretty are pretty frictionless. Anyway, it's a great business and that's exciting that at such a young age you have a passion for it. So it's a sport and we want to start on our fitness first. Fit is arguably a liberal arts education, not only math, finance, economics, but biology, and I also think anthropology is super interesting in terms of correlating or understanding what moves markets.

[00:33:21]

And again, markets are just a reflection of who we are. So to understand the human condition is to understand the markets. You need to be fascinated by the markets. You want to start reading The Wall Street Journal, you want to start reading Barron's, you want to start, if you can, watching CNBC a few minutes a day, and then you need to get in the game and practice.

[00:33:38]

Now that we're fit, let's practice. How do we practice? I want you to start investing, get a Robinhood app, and I want you to find some stocks in companies that you like and understand. The best way to really understand a company at your age is to buy stock in a company that you enjoy and you like. There's also some great kind of iconic investment books, just type in iconic investment books that you should read. And I want you to start playing the game.

[00:34:02]

I want you to start investing, even if it's if there's a way you can figure out while in college to invest a hundred dollars a month, a hundred dollars a month and start buying stocks, don't trade a lot, do research, buy a few stocks, maybe take if you can invest one hundred dollars a month, that's two hundred dollars a year, do it across two or three stocks to understand those companies don't trade stocks trading can eat up, eat up or just take too much time.

[00:34:27]

You don't want to be in the business of trading, but buy stocks you think you would like to hold for a long time, at least initially, and write down notes as to why you bought those stocks.

[00:34:37]

And I'll tell you what, if you buy if you can show me if you send me your statement showing that you have been disciplined enough, which I was not at your age, to buy one hundred dollars worth of stock every month for a year and 12 months, send me that statement and I will match it. I'll give you I will Venmo you or whatever it is, eight year olds do twelve hundred bucks and then in twenty or thirty years, when you're the next Warren Buffett, you can look me up and do something nice for me anyways.

[00:35:02]

I think it's fantastic. It's great to be you. You're blessed to be eighteen and have a sense of something you're passionate about. Got to be passionate about the markets. Get get in great shape here. A finance, economics, biology, anthropology. Start investing to understand these companies and please keep in touch. What a great time to be. Meely next question.

[00:35:23]

Hey Professor Galloway, my name's Spheeris. I've enjoyed listening to your podcast and hearing your thoughts on what's going on with existing companies in the market due to the coronavirus crisis. My question to you is what should entrepreneurs be doing during this time? So I recently launched the Data Analytics Software Company on March 18th called NA, and when our team picked that launched eight months ago, this wasn't exactly the climate that we were expecting or hoping to be releasing into. So do you have any advice for folks like us who are trying to get a small business off the ground during this time?

[00:35:54]

Thanks.

[00:35:55]

So I had a friend named Spiros, who is an entrepreneur who opened restaurants, lied to his investors and ended up in jail.

[00:36:01]

Don't be like that, Spyro Spiro's. Don't be like that, Spiro's. Anyways, so the first thing entrepreneurs should be doing is freaking the fuck out. This is an incredibly strange time. It is a difficult time to be an entrepreneur. The silver lining here, we are going through a correction. And not only are stocks getting cheaper, everything will get cheaper. And as I look back on the nine companies I've started, people think of me as an academic.

[00:36:27]

I'm actually an entrepreneur. The majority of the financial security that I've been able to garner for me and my family has been a function of the companies I've started. And if you think about or if you look at the nine companies I've started, the only thing that discerns the winners from the losers is when I started them, and that is when I started companies during a recession or time of economic turmoil, those had a tendency to succeed. And when I started companies in a frothy time, i.e just more than three weeks ago, they tended to fail.

[00:36:55]

Why is that, Spiro's? And about two weeks, two months, six months, everything is about to get a lot less expensive for an entrepreneur. That is, you'll find good people that are less expensive to hire. You'll find office space. And then as we come out of this and we will come out of this current economic crisis or what looks like is unfolding to be an economic crisis, the wind will be at your back. So I would argue in the next four, eight, 12 weeks is a great time to start a business.

[00:37:18]

Now, if you already have a business, you need to do a couple of things. One, you need to recognize that companies are small businesses are not the Hallmark Channel, they're the Hunger Games. And that is you have to be pretty ruthless and pretty Darwinian. You have to look at every cost. Rookie entrepreneurs make the mistake of believing that expenses make a business. They don't. Revenues make a business. You need to get to revenues as quickly as possible.

[00:37:42]

And you need to throw around nickels like a goddamn manhole covers and be ridiculously cheap. And every day looking at how you could cut costs and get to revenues faster, you need to find fantastic partners. And when things aren't working out with people, you need to cut them loose. And I know that sounds harsh, but there's this notion that somehow small businesses survive on kombucha coffee and aspirational idea deals and giving everyone paternity leave. That is total bullshit.

[00:38:08]

This is where the sausage gets. The reason why the rewards are so outsized for successful entrepreneurs is the initial the initial portion or the initial stages of a company are really full body contact, hand-to-hand combat in Vietnam. You're not old enough to understand that reference, but one, what should you be doing now? Look at your costs, rightsize your business, get to revenues as quickly as possible. If you have investors, have an open and honest conversation with them about the state of the business as quickly as possible, make sure you have the right team and then, you know, every day trying to make a little bit of progress, one foot in front of the other.

[00:38:43]

But if you this is a great time, I think, over the next six months to start a business, be ruthless, be hungry, be all over everything all the time. There is no balance when you're an entrepreneur. This is this is The Hunger Games. That didn't sound very good anyway. Good luck. Reach out to me, let me know how it's going. Next question. Hi, Scott, it's Colby Morgan, one of your property strategies, sprinter's.

[00:39:07]

OK, I'll be quick. First of all, the two of us definitely agree that the education industry is ripe for disruption right now, especially I just heard you refer to your kids likely not returning to school, you know, through the summertime into next year. Right. The education industry right now is in crisis. So Section four is doing outstanding work in the states and absolutely must be a part of the solution. But my prediction is this. Two major players will come together to elevate education in the US.

[00:39:37]

It will likely be, one, a powerful institution of higher ed and to a partner business or a financial firm that can build or scale a large scale online platform. So the question one, do you agree with me? Do you agree with the prediction? And if so, what will be that institution and what will be the firm moving this disruption forward? Thanks, Scott. Thank you, Colby. And thanks for being one of our inaugural students around our Strategy Session at Section four.

[00:40:05]

We're doing online education, our first online course with 600 people in our Strategy Session. So thanks, Colby, and thanks for the kind words. So education and disruption, the way you evaluate if an industry is disruptive is you look at the underlying prices across this category, the price increases relative to inflation. So the cable industry raised prices twice as fast as inflation start their chin out, boom, and come these fists of stone called Facebook and Google.

[00:40:33]

And they have totally disrupted the 60 billion dollar TV advertising market, the two industries that are most ripe for disruption, that have raised their prices faster than inflation with no underlying increase in innovation or productivity. Very simple health care is number one. Number two is yours truly education. And you've identified what is arguably the most untouched or most opportune environment for education. It's a two or three trillion dollar global market. Think about my industry. I charge kids or NYU charges kids seven thousand dollars to listen to me do this.

[00:41:05]

Twelve nights, three hours. It comes out to about one hundred grand a night. I'm good at what I do. I'm not that good. And it's about ninety five points of gross margin because they pay me about two or three percent of that. So there are very few companies or very few products. You get a ninety two percent gross margin that aren't kind of ripe to be disrupted. They don't have really any artisanship. And what the majority of academics are teaching is in the same format, the same facility, the same the same methodology.

[00:41:33]

It just really hasn't innovated. So we have stuck the mother of all chins being stuck, stuck out is, as you have identified, as education. Now, who disrupts it? I would argue it's not going to be a financial services firm like everything else. And this is what's so dangerous. So much power is aggregating to a small number of companies, I think a world class institution. You have identified that one of the barriers or moats, if you will, for universities is really two things.

[00:41:57]

Their brand, their brands are built over generations, if not centuries. You just can't replicate at MIT. Those three letters mean so much to people. I mean technology. It means integrity. It means incredible love of the pursuit of truth. So you just can't replicate that overnight. These these brands really are some of the best brands in the world. The second is geography or physical space, and that is at NYU. Our strategy has been to buy up everything in Soho and stick our elbows out because the campus was sort of the hub.

[00:42:25]

I wonder if Corona is distributing education and making education. Both the people who deliver it and the people who receive it much more comfortable with digital dissemination of accredited education, which might make the barriers of entry to education or distribute education much more powerful. What does that mean? It means the best brands become more powerful because people in Singapore and St. Petersburg will want to take courses from MIT, not from Fordham or USC, which are both kind of what I call second, not second tier, but not the best school in the city.

[00:42:57]

As I said that, of course, as a as a brand from UCLA. So you're going to see a great brand. You're right. You've identified that where I think you might have missed it as a partner. I don't think it's a financial services company. I think the companies that probably have the best opportunity to disrupt education and although they haven't really made any signals here and they made signals in health care is unfortunately big tax. So imagine a liberal arts design, a marketing industrial design, a university sponsored by Apple and Berkeley.

[00:43:28]

I just think that combination, that peanut butter and chocolate, it would be extraordinary. And Apple is in charge of the technology, the user interface, and Berkeley is in charge of the curriculum. But these companies have such strong brands, have such unbelievable ability to distribute that they could, in fact, I think, disrupt education. I think the model needs to change. I think it needs to be flipped on its head. And my vision for education has always been that we're charging the wrong people, that the people that garner the greatest value from this sort of.

[00:43:57]

In the end, employer and what I would like to see is the model flipped where kids go to universities for free and then the organization's recruiting of these universities pay. And based on how much they pay, they get kind of first access to what is the mother's milk of corporate America. And that is talented young people coming out of those universities. And I think a lot of the bigger organizations in the world, whether it's PG and McKinsey, Google or 3M, would pay universities a lot of money to recruit at their universities.

[00:44:26]

So I think we have decided, like everything we do to tax young people such that old people can stay rich. But I think the opportunity is for Apple, Google or Amazon to partner with a world university, flip the model and start charging recruiters for access to these students and let the greatest human capital come to these universities for free. But hands down. Education, as you've identified, is now the most disruptive, ripe opportunity in the world because the other one, health care.

[00:44:52]

It's clear that Amazon and Apple are making moves into that long winded way of saying my industry is about to feel fists of stone come after the chin, which has been sticking out. And it is about time, office hours, another one down. Let us deliver. Seeing tons of Spanish here. How exciting. All I gotta say is don't ask Stila Bibliotheque out because we love your questions. Please remember, take time to submit them at office hours at Section four dotcom.

[00:45:31]

So for our Algebra of Happiness segment notes on the pursuit of success, love and meaning, we're going to return to our interview with Professor Jonathan Haidt as he discusses happiness.

[00:45:42]

So, Professor, talk a little bit about happiness and this this crisis impact on our general well-being and the sensation if you have happiness. Sure.

[00:45:50]

So my first book was called The Happiness Hypothesis, and it was an analysis of 10 ancient ideas about about happiness and flourishing and whether or not they're true and the theme uniting all of them. I didn't realize this when I started the book with a theme, uniting all of them is relatedness. It's the most important single thing for happiness is the sense of relationships, of relatedness. So in this age of social distancing, of course, this is a big risk for relatedness goes way down our happiness, we go way down.

[00:46:22]

And so I think the most important thing people should remember is the importance of relationships. So first, don't talk about social distancing. That's not what we're doing. What we're doing is physical distancing. And if we're doing physical distancing, then we should make extra efforts to do social connection. So so really think about this as a time of increased social connection. And one of the pleasures I've found is that now it just makes sense. And I'm doing a bit more reaching out to old friends that that I haven't seen in a while.

[00:46:53]

So there are opportunities here to reach out, to reconnect 100 percent.

[00:46:57]

Last night I was on a Zoome call with 50 of my fraternity brothers that I hadn't talked to in 30 years yet. And it was a total food fight. It was ridiculous. But we all got on Zoome and it was hilarious to see everybody 30 years later.

[00:47:09]

That's beautiful. That's a great example. So at the end of the book, the conclusion that I came to once was once the publishers had changed the title to the happiness hypothesis. And I had a kind of say, well, what is the happiness hypothesis? So the conclusion I came to in the book is that happiness comes from between, that it doesn't come from getting what you want. It doesn't come from within. It comes from getting the right relationships between yourself and others, between yourself and your work or something that makes you feel productive and between yourself and something larger than yourself, you have to have a sense that your life, your struggles, your work has some effect or some meaning.

[00:47:49]

And if you get those three betweens right, then you'll be about as happy as you can be. So I would urge everybody to do a kind of an audit if you're if you're sitting there in quarantine or just think about how are your relationships coming along? And the more you reach out, I think by video especially, I'm hopeful that people will do a lot more, a lot more relating by video where you can see the person you can respond in real time than by texting or social media of other forms.

[00:48:16]

So if you work on your relationships, if you think about how to be productive, those many of us can work from home, but many can't. And people would need to think about what they can do that still productive. And I think even just cleaning up your apartment or house and organizing your life, having some sense of doing something where you see progress, we we are more affected by whether we can make progress than we are by whether we reach a destination and then a relationship that I like.

[00:48:44]

That's I think that's good advice. Yeah, that's that. Our taxes have been delayed for six months to relationship audit. Yeah. Yeah, that's basically it. Our producers, our Griffin Karlberg, Andrew Burrows, thanks so much to Melanie, Spiros and Colbie, who called him with office hours questions. And to our contributor this week, I interviewed Professor Jonathan Head, professor of ethical leadership and colleague at NYU Stern. If you like what you heard, please follow download.

[00:49:11]

And if you wouldn't mind right now, subscribe. We're off to a good start here. We put a lot of work into this and we appreciate your support. Thanks for listening. We'll catch you next week for another episode of the property show from Section four and the Westwood One podcast network.