Odd Lots - Why The World Is Getting Angrier, And What Says About The Economy

Episode Date: July 6, 2020

The world has gotten angrier in recent years, and the coronavirus crisis seems likely to have accelerated the trend. So what does this say about the economy, and what does it mean for policy going forward? On this episode, we speak with Eric Lonergan, a macro hedge fund manager, and the co-author of the new book “Angrynomics" about his study of the emotion of anger -- why it exists, what purpose it serves, and what it can tell us about the future of economic policy. See omnystudio.com/listener for privacy information.

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And I'm Joe Weizenthal. So Joe, do you think it's fair to say that people are angry? Yes. For many reasons, I would say that as a fair characterization of how a lot of people feel these days. Yeah. And obviously, people are angry about a wide variety of different things. But I got to say, both you and I live a lot of our lives. on social media. And I always feel like you can sense public anger by some of the replies on

platforms like Twitter. People just get, I don't know, much more responsive and much more outspoken and angrier. That's the only word for it. Yeah, I mean, there's a lot of very legitimate reasons to be angry. I would just say, and it's not going to take care of, you know, it's not going to eliminate anger, but I just keep thinking, boy, be really good for people if we could get a vaccine for this virus and people can get it outside and a chance to return to something resembling normal life because I think the combination of everything that's going on these days, the economic destruction, angered police violence, the frustration that people have of being inside, people need a break. And it's clearly not a good

not a good moment right now for a lot of people. Yeah, I think a lot of people are sitting at home with nothing else to do except sort of see with anger. And a lot of that is coming out now. But even before the coronavirus crisis, I think it's fair to say that people were getting angrier, or at least, you know, whenever we had a populist politician suddenly voted into office, people would explain that through anger. Well, everyone's angry. So, of course, this is going to happen. the 2008 financial crisis, lots of people were angry at the financial system and the bankers. So it feels like this general trend of public anger has been building up for a long time. And maybe 2020 is sort of the year when it tipped over into, well, when it tipped into the public in a very obvious way.

I think that's fair. I mean, I think like post-grade financial crisis and maybe you could arguably, trace it to the aftermath of the Iraq war in the U.S. Those two things, the slow recovery, weak wage growth, polarizing impacts of media. It's been a, it feels like that's a trend that has been with us for a while, and it feels like, if anything, the only real effect on that from the current crisis, it's just been an accelerant. Exactly. But, you know, people get angry about different things, but rarely do.

Do you hear people sort of take a step back to consider why that anger exists or what are the overarching trends that are driving that anger? So we know people are upset about inequality. They're upset about racism. They're upset about corruption, things like that. Those are sort of individual things to be upset about. But what are the trends driving those overall dynamics? Right.

And what are the consequences of them? long term because, you know, one of the things that we've been talking about on some recent episodes is could this crisis create a policy shift, like meaningful changes from the way economic policy was conducted pre-crisis to post-crisis. And a lot of that, look, politicians, they are responsive to the public mood. And one of the interesting questions to my mind is whether the changing public mood means that it's hard to go back to the status quo. or do we just find a way to just sort of return to normal? I think it's a huge question.

And again, one that has a lot of implications for the economy and asset prices and markets. So I think even something as nebulous as public anger is a pretty important thing to wrap our head around, even if you're just sort of looking at this from a pure sort of dollars and cent standpoint. Yeah, I think that's exactly right. And I'm glad you brought up the policy angle because I think weirdly people seem to forget that the whole point of economics, aside from explaining the way the economy works, is actually

to boost prosperity and well-being of people. And funnily enough, you don't often see that said explicitly in economics. So today we are going to be talking about what economics can teach us about why people are so angry at the moment. And, well, there's your clue for our guest. We're going to bring on Eric Lonergan. he's the co-author of a book appropriately titled Angry Nomics. So Eric, thanks so much for coming on the podcast again.

It's a real pleasure. Great to talk about you. I'm just listening here intently. I mean, I should just interview you guys on anger because I think you guys are going to work that out. Great. Okay. Well, it was nice talking to you. We're doing us.

No. Tell us about your new book. What's the deal? Cool. Well, as you know, Mark and I are economists. You know, he's a professor of Brown University in political economy. Mark Blythe is your co-author. That's right. Yeah, Mark Blythe co-author.

And we got to know each other. I think we met at a hedge fund conference 10 years ago or something. And we just really hit it off. We had a lot in common. We used to enjoy arguing and debating amongst ourselves. And we thought we had a kind of explanation for what was going on in the world. And we thought we'd write a book as a series of dialogues. And at one point, Mark, we were about a third of the way through, to be honest.

And he said, what about anger? And it was just one of those moments where we just sort of paused. And suddenly the kind of intellectual juices got flowing because we suddenly realized, God, we don't really know anything about anger. It's just something that we all assume we know, because at one level, we're all familiar with it. even children know what anger is. And yet we found ourselves completely inarticulate on the subject. And that is really interesting.

When you get something that's so commonplace, and yet I couldn't tell you, you know, I suddenly sort of think, well, why do people get angry? You know, why anger rather than some other reaction? What types of anger are there? Is anger a good thing or a bad thing?

Suddenly I realized how ignorant I was. And then we started, we decided to go off and research it, and it became a sort of fascinating pursuit. And that was really, and the result of that pursuit is the book. So before we talk about why people get angry, I'm curious, like, you know, Tracy mentioned, you know, look, Tracy and I have jobs that basically consist of sitting at our computers all day and, you know, reading the news and writing emails and looking at Twitter, etc., perhaps not the best way to view the world or view something like anger. It certainly feels like people are

angrier than they have in the past, and there are certainly pretty compelling reasons why that anger is legitimate. But is our perception of the world accurate? Like, are people getting angrier, and how do you go about quantifying or actually answering that question? Yeah. So I think I say yes and no answer. I mean, I think anger is something that has existed as long as there have been human beings. And that in of itself is an interesting question, which maybe we'll get to touch upon, but that it must clearly serve some kind of function. And then there's another issue, which is why is anger so prevalent currently? Is it particularly prevalent? And I think we wouldn't say this is the angriest of times. We've observed really when things go significantly wrong

economically. We described the economy in the book as kind of hardware and software, and that the capitalist system in a sense is your hardware. And we've written new software every time it's had a major crash. And every time you have a major crash, because it affects people's lives, you get a kind of angry reaction. And to some extent, what's interesting about, you know, you referred in the introduction to 2008 in the great financial crisis, as we would say there hasn't been a rewriting of the code. So in a sense, the anger has just continued to bubble away under the surface and still hasn't been really addressed. But I think the most, in some ways, the most interesting aspect of the book, which people might find enlightening is the different types of anger.

And if you read the literature on anger, the original ideas about anger date all the way back to Aristotle. To be honest, they're still the main view of anger, even if you look at neuroscience today. And this is the idea of moral outrage. And this is kind of what Tracy was alluding to with Black Lives and Matter or, you know, extinction rebellion, even if you think of, you know, the views post-financial crisis about the financial system. So these are, this is a kind of ethical reaction to a perceived injustice or wrongdoing. But that's really only one type of anger, maybe the one that, people are sort of most obviously familiar with or could reference. Eric, you mentioned this,

and I'm going to bite, but what's the, why do people get angry? What's the sort of evolutionary benefit of getting angry about something? Okay, well, so there seemed to us to be broadly, the typology of anger that we came up with. So we kind of then, once we got to this point where we said, right, let's try and understand this thing, we realized we had to do a whole lot of reading. So we kind of went away for six months and just read truckloads of research on anger, which is fascinating, but there's no unifying typology. So nowhere could we find a clear distinction of the different types. So to cut a long story short, we observed really the following typology.

First of all, there's public and private anger, and they appear to be opposites. And we can come back to that distinction. But the interesting one is between the types of public anger. So there appear to be two types of public anger. One is moral outrage, which we've just described. And the other one which we came to in the most is both obvious and kind of mysterious. So we did a big data search of news stories categorized by anger. And the second most frequent type of news story, which cites anger, refers to angry sports fans.

Now, as soon as you say that, I mean, anybody who goes to any sporting event in immediately goes, of course, did you really have to do a data search? It's blindingly obvious. When Martian arrived and said, show me this strange human emotion at work, you know, I just go down and take them to watch a football match. And that was the really interesting moment. It was when we suddenly discovered these two types of public anger. Now, when you start to look into the research, there isn't really specific research on

angry football fans as a kind of anger phenomenon. There's lots of research on football fans. but we started to look at it and work out what function are they serving and I started to go to football matches and watch how fans were behaving all the time and I was less interested in the football and what was really interesting is they regulate their own team as much as they attack the opposition so I don't know if you're familiar with this but certainly you'll see them shouting at their own players because they're not they're not loyal enough or committed enough or saying I've been a season ticket holder for you

or you should be singing. So there's this whole loyalty identity regulation. And so we realize that there's this kind of, there's an anger of angels, which is, regulates our norms and our values and our sense of injustice. And then there's the anger of devils, which is tribal energy. And they are literally opposites because one requires us to be ethical. And the other one requires us to be completely amoral and destroy the other. That is the functional role of kind of tribal energy. And if you put it in kind of, as an economist, I'm immediately thinking, well, what function is this serving? And I realized it solves a collective action problem. I've done a lot of studying of moral philosophy. Moral philosophy is kind of always a collective action problem because you can

free right. In a sense, you want other people to obey the norms and then reach them yourself. It's a bit like paying taxes, as long as everybody else pays your tax. You know, the individual is incentivized to evade taxation. So ethical questions are collective action ones. And what's really interesting is this idea of loss of temper is that we're threatening you with violence. So if you break our norm, don't keep doing that. If you ignore us and carry out this injustice,

there's going to be a consequence. And you absolutely see that with something like Black Lives Matter. There was a great reference to this by Cornell West, where he was on CNN. I don't know if you've seen the YouTube video. It's well worth watching. And he says, what would it say about our society of people weren't out in the streets enraged and protesting when they've witnessed this level of police brutality?

And that is actually Aristotle's view of anger. It's an appropriate response and a measure of our sense of ethics and values. So that's the one function. Now, the other one, why the hell do we go all tribal? And I think that's because for most of the human evolution, we existed under conditions of scarcity. And this is really interesting when you map it onto politics, because how did the tribalists manipulate you is they give you a false sense of scarcity? You know, immigrants are taking your jobs, immigrants are affecting your wages. It almost boils down to land rights.

So I think that the reason from an evolutionary perspective we form these kind of tribal groups is because periodically we did actually have to go to war because there was a scarcity of resource. And we still have that highly, that instinct, which is we're on the verge of triggering so easily, which is this kind of tribal identity. You can get the news whenever you want it with Bloomberg News Now. I'm Amy Morris. And I'm Karen Moscow here to tell you about our new on-demand news report delivered right to your podcast feed. Bloomberg News Now is a short five-minute audio report on the day's top stories. episodes are published throughout the day

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So the title of the book is Angrenomics, and you've broken down anger into these sort of two types of categories. There's the tribal instinct, keeping people in line a sort of solution to the collective action problem, and then moral anger about anger directed at injustice. But talk to us further. I mean, obviously, you just mentioned the sort of the history that all humans have with scarcity, but why angry nomics? How else does it sort of apply to our understanding of the economy, particularly today's economy?

Yeah. Well, so the other really interesting kind of discovery when we went on this journey is you have these two faces, this angelic and devilish face of, of, of public anger, which I think plays a role in our political economy, which is very important. But then you also have private anger, which occurs in our personal lives, which again seems to be qualitatively different to public anger. So in other words, if you stop somebody on an extinction rebellion protest and you say, why are you angry?

They're just as likely to say, well, why aren't you angry? Because look at the environmental degradation that's occurring. You know, there's no concern for future generations. Look at the destruction, the damage, the human cause, the suffering, right? So they give you reasons. And there's almost a pride associated with the moral righteousness. Now, if you can imagine, if you have a colleague who comes in to work, if we ever come into work again, or just suddenly starts appearing on Twitter, ranting and raving at everybody, you might take

them to one side and say, listen, is everything okay? Right? So in our private lives, anger is usually indicative of something that's going wrong internally. That's not uniformly the case, but very often. So we've kind of now got a macro and a micro. And we were then interested in how does this public and private anger interact with the economy? And so we've got a kind of macro political economy story. And then we've got a microeconomic consequences, which we think may be some of the change. in our micro economies have actually had consequences for stress levels, anxiety, the epidemic that's occurring if you look in mental health in the developed world. There may be, economics might have contributed to those phenomena. So one of the things I always wonder, particularly with reference to US politics, is why so many people get really angry about policies that would seemingly actually benefit them as a social group. So, you know, for instance, Republican voters have traditionally been told

that big government is very, very bad, even though they would arguably benefit from additional government spending. What does your study of anger tell you about that dynamic? I mean, that is a great question. And actually, nobody has asked me that quite. I've been doing a lot of stuff on the book, and nobody has asked me that. And that is a really interesting question. Maybe a couple of observations, because I don't have a complete answer to that, but I have some thoughts. I'd be interested to know what you guys think, because that's a really interesting question. One is that I think part of the reason we are seeing so much anger in our politics at the moment is what Mark and I have thought of as a kind of identity vacuum, which is if you

go back 20 or 30 years ago, people were very motivated by intellectual ideas in their politics. The right and the left really meant something where you pro the state or pro the market. Did you want to privatize industries or nationalized industries? And you felt that your political representatives were really making, A, they represented you in a real sense, but also they would make a difference if they got into power. And we think one of the things that happen is when the move towards the center, for once a better term, were just kind of this liberal consensus in the economic sense. of the world liberal meant that we lost our motivation. So people, and you can see this empirically in terms of voter turnout.

Now the political class, the political elite, are still incentivized to get elected. So they have to find the means to motivate us. And someone like Trump is really phenomenal at this, if you look at it through the lens of angrenomics. Because angry people are more likely to vote and elections are won by minorities. And he only needs to motivate 80,000 people

to win the presidential election, which is what he did. If he can trigger that 80,000 angry people, he can win. And he will effortlessly switch between moral outrage and tribal rage. So he'll go to the Rust Belt and actually use ethical arguments. I mean, I am your voice. I'm your representative.

I am listening to you. And then, you know, talking about the industrialization, the decline of the, American manufacturing, the fact that the elites in Washington aren't listening to you, aren't paying any attention to you. These are all effectively ethical arguments. And then he will effortlessly switch to talking about marauding Mexicans and building walls in a constituency where there is tension associated with ethnicity or where these issues

are relevant. So I think that's where there's no doubt that in that sense we are being manipulated. However, even though there is a clear distinction, analytically between moral outrage and tribal energy. As we all know, when you get involved in politics, and I think this is particularly insightful in America, what start off as sort of disagreements over policies very quickly become about partisan tribal identity. So that's something that does intrigue me is how our propensity to take sides is so strong that even when it comes to issues of ethics, we almost want to be on a side.

Right. And so politics can very quickly decide. And I think that's one of the ways you actually get people to support things that are against their interests is by giving them the impression that you're on their side. So one of the, I mean, one of the interesting things about the Trump phenomenon is that despite his ability to appeal to different types of anger, which is a political, he's extremely good at and arguably channeling a lot of people's anger. Nothing much like has really changed from a sort of like economic policy perspective during his administration.

I mean, like, yes, the trade tension with China has been ratcheted up, but mostly it entails China buying more soybeans and nothing fundamental about our trading relationship with the world, nothing major changing on the taxation front, except that wealthy people who, you know, are not the people that he's going, talking about immigrants to, they got a tax break and so forth. What does it take for anger, the anger that we're all talking about to actually channel into, wow, this is a very different set of policies than the status quo, because right now, for all the rising anger in America, there's been a certain, certain, especially on the economic front, sort of established status quo of democratic and Republican administrations,

that just hasn't changed very much, despite all kinds of changes to the world. Well, this is another great question. And in a sense, the final third of the book tries to say, okay, what are we going to do about this? You know, are we just, you know, we can't accept ultimately that populism and tribalism reigns. And also because tribalism is a precursor ultimately to some form of violence, the function it serves. And I think the challenge to politics now is actually to tap into the moral outrage, but convert it into ideas that are tangible, cut a cross-partisan device, and will actually change people's daily lives. So you can really motivate people to care

about elections. And in a sense, I would say the challenge that Trump has posed to his opponents is where is your bravery? Because we need politicians who are willing to take risks and be brave. And I think there's a great opportunity to do this because I think there are three questions around which there is a huge consensus. One is about sustainable economic growth and sustaining the planet for future generations. I think there is an overwhelming global consensus that we need to do something about it. There's an overwhelming, global consensus that the levels of inequality have reached a point that they are dysfunctional. It cannot be an optimally functioning society where 90% of assets are held by 1% of the population.

That makes no sense. And the other area of complete agreement is that nobody thinks recessions are a good idea, apart from a few nutters. So there are three huge issues. The problem is that no political party has got three policies that everybody understands, which are going to change all of those really quickly. And I would blame, I blame my own profession, I blame the politicians, I blame the intellectuals,

I blame the economists, because we're all complaining, we can all identify what the problems are, but nobody's really put enough thinking into simple, cut across partisan lines, big changes to those. Mark has a great line here, which is he hates the word policy, because, you know, policy,

you come up with 30 different policies to tweak this, and nudge this and do the other. And he says what we need to do, we need to be furniture makers. We need to rearrange the furniture because it's furniture that determines the relationships between people and the conversations that they have

and really changes things. And I think we need a major change in how we've fixed our furniture, right? We need to rearrange the furniture in society so that people care enough to get out and vote for, ultimately what are ethical questions. So the onus, I mean the onus on solving this anger problem is clearly on policymakers, but at the same time, it feels like people are

angry at the policymakers themselves. How do we rectify that tension? And is there room, I guess, for more like direct participation or populism in these policy solutions? And, you know, I say that having observed that one of the things that Trump is very good at is disparaging. experts disparaging public officials, casting doubt on those exact policymakers. He's been really, really good at that. So I don't know. How do you get policymakers to solve the anger problem when they are the targets of anger themselves? Well, I mean, this probably reflects my bias, but I think we need, I think there's been a vacuum of ideas. So I think it's been far too easy to criticize the politicians. But I just ask myself, you know, if I say,

Most of the mainstream politicians over the last 20 years, they have not had an answer to the environmental problem. They haven't had an answer to the problem of recessions. We're just in another one with catastrophic human costs associated with it. And they've done nothing about inequality. So they should not be surprised. To me, it's a failing of ideas and the mind. And Joe has been a big promoter of the ideas of MMT.

And I would say other than MMT, where are the ideas? And I have huge, you know, I've had a to and fro relationship with them, but, you know, I'm a huge fan of Stephanie Kelton. I think she's one of the few economists who's done an extraordinary job at making these ideas accessible to people. And they've got real ideas to, which I think are broadly correct, which I agree on the most important features with them, which could make a real difference. And I think there's a group of people coming out of Europe who do as well. You know, I think people like Philip Lane at the ECB, people are even, I think the ideas of Mark, Simon Ren Lewis, there's a whole series of, I think we've got three or four ideas, Roger Farmer, you know, on national wealth funds, on changing the way central banks operate, on dual interest rates. These are really simple ideas that would have a dramatic impact on our economies and societies. But they're very, they're currently the domain of a tiny minority of thinkers. They are spreading. but we need to kind of wake up more generally and realize how urgent it is.

Tracy always trolls me for bringing up MMT, but this is the second episode in a row where I didn't bring it up, but the guest did, like, sort of like, preempted. So I just want to, you know, it's not always me who brings it up. But you, you, I think you're colluding ahead of the episodes. I'll show you the text later.

I'm not sending DMs with Eric while we have this. But I want to ask, you said something really interesting. And MMT aside, I do think you hit on something really, I think, hit on something really interesting, which is that I think you compared the quality of the economic discussion this time around, you know, this crisis versus 2008, 2009. It is so much better. There are so many, like, in the sort of like editorial pages, in even politicians, central bankers, it just feels like there's a higher quality of understanding, and maybe it's because of, we just went

through the last crisis, maybe it's because of some sort of more heterodox thinkers having made headway in the mainstream debate. It just feels, though, that like there is less crankery and a more sophisticated understanding of how these various policy tools work than we had 10 years ago. And I'm curious, you feel the same way. Absolutely. It's a great observation. One of the hilarious things about human progress is, you know, we can turn disaster to our advantage. I mean, I think things would be an awful lot worse now if we hadn't had 2008, ironically, because we've done an awful lot of thinking since then. Not nearly enough, you know.

I still think, you know, the whole monetary policy is absurd, which is why the hell we're trying to intervene on a vast scale in asset markets to solve a really simple problem, which is trying to stabilize household corporate incomes, which we should just do directly. And why we've wasted a decade not putting in place the infrastructure. How many articles do we have to write on this for somebody to go,

yeah, it might be good idea to prepare for a recession. It's ridiculous when you think about it. And then we end up saying, we're going to do massive intervention in the corporate bond market and the equity market. Do vast amount of balance sheet expansion because we're hoping that a tiny amount of it trickles over into the real economy.

But that's on the negative side. But on the positive side, you're absolutely, absolutely right. The debate has come forward considerably. Just on that note, and going back to your hardware versus software analogy, what are the chances that after this crisis we get some sort of hardware upgrade or, you know, a real dramatic shift in the economic system versus, you know, another short-term software patch. I'm hopeful because I think, and again, this is one of just the random arbitrary facts of life, is, so it's interesting, we go through the kind of history of capitalism

and the hardware crashes and the kind of capitalism 1.0 pre-war, 2.0 post-war where you have the welfare state and a kind of mixed economy, and then 3.0, which was kind of the year of neoliberalism and a kind of rolling back of the involvement of the state. And we're really saying we need a 4.0. And I think what's odd in a sense is why didn't we get a 4.0 after the financial crisis? And for me, the reason for that is we didn't have one to take off the shelf. I mean, we had Keynes post-war, and then we had Friedman in the 80s and 90s. So there actually was a new operating system you could take off the shelf.

I think the operating system is being constructed now. and it's part of the MNT debate, it's part of the debate about sovereign wealth funds, national wealth funds, these changes to monetary policy, whether it's helicopter money in various sorts, and absolutely the challenge of sustainable growth. So I think we're getting there. And the other thing that makes me optimistic about this, and this is always the way humans operate, is one good thing about reverting to kind of nation-level decision-making is we have of tens, if not hundreds of nations experimenting with the same problems, as soon as one

of them takes a leave and embarks on one of these policies and it's shown to succeed, everybody else will copy because the risk for politicians shifts. At the moment, politicians are risk-averse. You know, I'm trying to get the Irish to set up a national wealth fund. It's so clear to me, the politicians want to wait until somebody else does it, so they'll see how it works and then they'll do it. But if somebody does it and it works, the psychology completely, the psychology completely completely changes because suddenly then you're an idiot for not doing it.

It's a bit like investing. So I think we got half a chance now. There are some genuinely interesting ideas out there that are relatively simple, would be very, very effective. And once somebody does them, there could easily be a kind of domino and they become conventional wisdom. To me, and this is, you know, I've got obsessed with this question, which is, does the post-crisis period actually changed. You know, I think, you know, from the perspective of markets, which is what we

talk about most of the time, we've sort of been in this world in which sort of conventional central bank policy is primarily what we use. And as you mentioned, historically, it's a very blunt tool. It's either interest rates or sort of propping up financial assets more broadly. It's not great for real economic growth. It doesn't do that much for actually stabilizing household income. incomes or business incomes, which is the key. And so to me, the big question is, do we get policies post-crisis that are sustained that really look different from the sort of like central bank rate policy-dominated status quo?

And it sounds like, you know, you think there's a real chance of that. I do because I think the difference rather than to a decade ago is those policies are now out there. So the code has been written. and it's just a question of you taking it off the shelf and upgrading because I think now we've had enough time and there's been enough debate and there's a building consensus. I mean, you know, you know this joke because you followed some of my left field ideas

but, you know, when I first started writing by the idea of transferring cash to households, it was a completely fringe idea for central banks. You know, now I've got Stanley Fisher, Philip Hillibrand, writing a piece for Black Rock saying, the European Central Bank should think about doing perpetual telros. that, you know, you've got, those two are probably about as conservative mainstream representation of the economic policy as you can get. Still hasn't been done, but that's a huge shift.

I mean, if you look at the debate about MNT, I mean, when I first came across MNT, you know, maybe 10, 13 years ago, it was complete fringe. Now, most people go, it's like Kane said, you know, first of all, they dismiss you, then they say that's what they always, they thought all along. A lot of what Stephanie's been arguing people now about, but I always believe that. Yeah, now you have U.S. basketball players talking about MMT. Oh, yeah, we got to get, we got to get Dinwiddie on the program. But, you know, I would like, I'd like them to embrace some bigger ideas, though, as well.

You know, I think they need to have a look at what's happening in Europe, too, because I think there are, you know, and again, so to me, like, one thing that's really fascinating there is, if I can. Yeah, like, Stephanie, to me, and again, this is testimony to her insight, focusing on institutional functions. was fought on about Europe. Now, I wasn't aware of her work at the time, but kind of independently, a number of us have come to a similar conclusion in Europe, because the problem in Europe is that Italy can't print money.

It's as simple as that. So the reason Italy has a public debt problem in Japan doesn't is because Italy can't create bank reserves. So Italy is almost dependent on the kindness of strangers, the stranger being the central bank sitting in Frankfurt, in order to stabilize its market. But it does mean, in a sense, that a lot of the recommendations and framework then and clear advocating are contingent on the

fact that you can create bank reserves. And that really, to me, just doesn't work in Europe. We have to accept that, you know, we're not going to change. You're not going to reown the ECB at a national level. So that as a result, we've had to think about different ways of approaching these problems. I have a more philosophical question, which is, you know, your study of anger basically shows that there's a reason it exists. So, assume, that we do get some sort of major shift in policy that is supposed to make people more happy, do you think people are just going to move on to the next thing to be outraged about? Absolutely.

You know, I mean, this is what you do realize. I guess one of the reasons humans keep on, keep going ahead is that we do focus on what's wrong. The bit that really worries me, I have to say, is if you read the social psychology literature on there's a theory called the minimal groups paradigm, which was studies done in the 1960s, and they're completely convincing about the little difference it takes to get people to form tribes. So they did studies of children in classrooms.

And literally you can go, put up two paintings of two abstract artists and say, which painting do you like and split the room into two groups? So it's a totally arbitrary distinction, and they will then make decisions to punish the other group. And unfortunately, this is a real challenge, I think, that we have as a society is that we are, it's such an instinct to form little tribes and little groups. Which is why I think the only thing that we can do is make people aware of that.

I mean, I think that that exercise should be taught in all schools. So be very wary of politicians telling you and people pushing you into a little group or a tribe. Because it's the antithesis of thought. We need independence of thought and critical thought. And it's ultimately the antithesis of ethical behavior because it's actually a precursor for violence. And that's the bit that does worry. And that's where I think, you know, the book is trying to tackle multiple levels. And part of it are practical solutions.

But also part of it is about awareness. And I think if you do study anger and you look into how groups form, you know, you just realize the extent to which you yourself are vulnerable to tribalism, but also the extent to which people are being manipulated all of the time. Eric, that's been an absolutely fascinating conversation. Thank you so much. And again, the book is Angry Comics. Thank you, Eric.

That was great. Well, thank you both very much. I really, really enjoyed it. And I love your podcast. I love everything that you guys do. So keep up the good work. Too kind. Appreciate that.

So, Joe, I thought that was a really good discussion. And what I really like about Eric's book is that he goes into that psychology of anger and goes, you know, all the way back to the early days of human beings to sort of trace the evolutionary meaning and purpose of anger. You don't get that in an economics book that often. No, you don't. But I think his, I think his taxonomy of anger is sort of the difference between moral, righteous anger, anger at injustice versus anger designed to keep people in line is really interesting and useful. Because I think like anger, it kind of has a negative connotation or it's a bad emotion.

I mean, it feels bad, but it's seen as something that you should avoid it. But think about what its purpose is. It's purposed in making the world better in many cases is useful. And again, you know, just bringing it back to our context, like what it means for policy is going to be a huge question. Yeah, an instrument of change. And it's also interesting that Eric thinks there is, after the coronavirus, crisis, a real possibility of getting something substantial amended in the economic system. That's pretty interesting.

Yeah, I'm hopeful for that. Because like I said, and I does feel like there's progress since the conference. I remember, you know, 2008, like that I think about like the stuff I listened to back then or the articles I've read. It's like, it is terrible. This sort of economic discussion has come so far in the last 10 years that, you know, eventually I do think there's a possibility. that that feeds through to real action.

That's not just a sort of tripling down on the status quo. So that could be good. Well, to be fair, I think after the financial crisis, because it sprung from the banking system, there was so much focus on bank policy after that. And, you know, people wanted to dismantle the banks and jail the bankers and all of that. Whereas what's really unique about what we're seeing right now

is that the issues are stemming from the real economy. So we're sort of seeing a debate forced about how the real economy works, which is fascinating and possibly unprecedented. Great. Okay. Well, this has been another episode of the All Thoughts podcast. I'm Tracy Allaway. You can follow me on Twitter at Tracy Allaway. I'm Joe Wisenthal.

You can follow me at the stalwart. And you can follow our guest on Twitter, Eric Lonnergan. He's at Eric Lonner, with two ends. Follow our producer on Twitter, Laura Carlson, at Laura M. Carlson, the Bloomberg head of podcast, Francesca Levy, at Francesca Today. And check out all of our podcasts under the handle at podcast. Thanks for listening.