We Will Not Be Returning to the World We Left

Matt Mitchell talks to Bruce Yandle about the impact of COVID-19 on the economy

Every three months, Dr. Bruce Yandle provides regular updates on the state of the economy. Not surprisingly, his most recent report, released on June 1, focuses on the economic fallout from COVID-19. Yandle is a distinguished adjunct fellow at the Mercatus Center, dean emeritus at Clemson University, and author of the now-famous “Bootleggers and Baptists” model for understanding unlikely political alliances. Recently, he sat down with Mercatus senior research fellow Matt Mitchell to discuss his latest report. This transcript, as well as the audio of their conversation, has been slightly edited for clarity. 

MITCHELL: Hello, my name is Matthew Mitchell. I’m a senior research fellow at the Mercatus Center at George Mason University, where I direct the Equity Initiative. I am today’s host at the Mercatus Policy Download, where I am delighted to have as a guest Bruce Yandle. Bruce is a distinguished adjunct fellow at the Mercatus Center at George Mason University. And he is also a dean emeritus at the Clemson College of Business. And he was an executive director of the Federal Trade Commission.

Welcome, Bruce. It’s great to have you on the show.

YANDLE: Glad to have the opportunity to talk with you, Matt.

MITCHELL: Great. Well, boy, what a difference a few weeks makes. We spoke at the end of the year last year, and most of our conversation then was about, boy, what roaring times we’re having. I don’t think either of us had an idea that there was a global pandemic, a deep recession, and a bunch of civil unrest right around the corner. Really strange times, right?

YANDLE: I would say Amen to that. Yes, we had no idea. No one had any idea what was out there. We had that amazing 3½ percent unemployment rate. The economy was not pacing at its very best clip, but it was moving along at a healthy pace with a lot of optimism. And then it hit. The world changed.

MITCHELL: That’s right. And now we’re sort of in this interesting point where part of the reason for our conversation today is your backgrounder. And yet, you wrote that, I presume, within the last week or two, and already some of the data there have changed. So, the story there is about the collapse in consumer spending, collapse in employment. And just in the last 24 hours, some of that data has already changed, actually in a better direction, is that right?

YANDLE: Exactly right. There is certainly reason for optimism relative to what I was saying in that report. Retail sales for last month’s, for May, up 17.7% after having collapsed better than 13% in the previous month. And so, the consumers are out there spending. And it’s sort of interesting, Matt, to look at the finer detail on the report to see what they were most anxious to buy as demonstrated by what they did. Clothing sales jumped over a hundred percent. Furniture, I think it was in the 80s. Sports goods.

So, it’s sort of interesting: People have sort of been in captivity and now they’re set free, and they do have some limited choices where they can spend money. So, that’s a pretty good piece of news, and we can layer that on top of a very strong employment report, which came out the first Friday in June. Two and a half million workers—highest number in recorded Bureau of Labor Statistics history. So, for those people who are betting on a V-shaped recovery, it seems that their side may be winning right now—but it’s not over.

MITCHELL: Yeah and it’s interesting to think about changes in consumer consumption habits. My family has gone from spending quite a bit of money on gas every week to spending just about nothing. I mean, to the point where I’m worried about the gas going bad in our tank. You hear stories—I don’t know if this is true, but I’d like to think that it is—that people are spending on, you mentioned clothing, spending money on shirts but perhaps not on pants for all these Zoom videos. But on a serious note, a lot of these things are going to be— It’s possible that this is going to accelerate some structural changes in the economy.

I can’t help but imagine that a whole lot of workforces, workplaces, are rethinking their position on work from home. And if it’s managed to work, and we’re keeping people from long commutes and allowing them to spend more time with their families, and it’s not as disruptive with work as we thought, then that may change those habits. And that means all sorts of new and different ways to spend money—less money perhaps on gas, but more money on telecommunications equipment, more money on home delivery, more money on encryption and Zoom and all those types of ancillary products and services that help companies and employers navigate that new world.

YANDLE: Right. No, we will not be returning to the world we left, I would say, by any stretch of the imagination, and I think we both would interject here: we are talking about, even right now, a very brief period. I mean, the coronavirus has only been with us for about 21 weeks, and massive changes have occurred at a very high pace. And I think we could attribute that partly to the fact that this is the first shock of this kind that has occurred in a world chock-full of wonderful social media, rapid communication across the entire world.

But along the lines of the point you were making and the conversations that I have with people in industry and so forth, it’s very clear from what I hear from those discussions that they have learned a good bit about how to run their enterprises by Zoom, how to use other devices for monitoring and measuring levels of activity. A number that I hear from say, “We’ve learned that we really don’t need to be traveling that much. I get to stay home more.” And some are saying, “And believe it or not, I’m getting more done.” There are some things that are not happening, but it appears that what we’re hearing is that there’s some pretty good positive stuff that may be giving us a net gain in productivity.

I have relatives who run a restaurant in Charleston, and they’ve got shut down like everybody else. But after they got shut down, they went into the food truck business and the takeout business. And now they are seriously debating as to whether or not they will ever open again. That is, that the new business they discovered turned out to be better than the one they had. And I think that kind of thing is taking place as we look about us.

MITCHELL: Yeah, I think that’s fascinating. And there’s all sorts of industries that are doing well that you wouldn’t have thought about, and then in retrospect to say, yeah, okay, that makes sense. I’ve got a friend who is in the business of— It’s environmentally friendly household cleaning products, and within the first quarter they met their annual revenue hopes for the entire year.


MITCHELL: Part of this has me thinking about different types of recessions. You alluded to the fact that this is such an unusual type of recession. We can look back at Keynesian-style recessions, where it’s really a problem of flagging aggregate demand. The animal spirits in human nature are keeping us from spending or businesses from investing as perhaps we might want. And we’ve got plenty of examples of those. There’s recessions that are caused by supply shocks. Perhaps the most famous of these were the 1970s supply shocks, oil shocks. This probably has some element of both of those.

There’s other kinds of recessions that are caused by a misallocation of resources, where resources are drawn into an industry, perhaps through government signals. And you get too much labor and capital in one type of sector, and it needs to be reallocated. But this is a very different one. This is a recession that’s sort of government-mandated, but it’s also got a mix, of course. I think a lot of consumers would not be going to restaurants even if the lockdowns weren’t imposed, right?

YANDLE: That’s right. What we have developed, what we have had develop, is a command economy by choice. In a way, it’s like a World War economy, where because of the necessity of winning that war, that meant command and control, rationing, controlling all kinds of activities, and some activities just ended. Consumers no longer had the products on the shelf to purchase, and in the World War II period, savings increased massively because there wasn’t anything to buy. And then those savings got transformed into United States government savings bonds, which then were used in a meaningful way in that project.

But as you point out, there are different shocks that hit an economy. This is an odd one. It’s more like a natural disaster that hit the entire economy. And then the decision gets made, okay, we’re going to take over. And we have learned a lot, I think.

One thing we’ve learned is it’s a whole lot easier to stop an economy than it is to restart it. Particularly if you think you have to deliberately restart it with a lot of management from the top instead of just saying, “Okay, we’re going to look the other way now, and we may grit our teeth, but good luck. And we’ll be providing a lot of public health support and the kinds of things that government traditionally does. But from now on, guys, if you want to open your restaurant, it’s up to you. If you can get people to come in, good luck.” And we’re in that phase now.

Matt, one of the things I look at every day is a website called OpenTable data. A lot of people know about it. OpenTable tracks 60,000 restaurants worldwide, and they’ll help you make reservations in one of those. But every day they give you data on the extent to which there are tables available by country and by cities and so forth. And so, as the economy shut down, OpenTable says 100% of the tables are no longer available in the good old United States. It moved up to 90% as some states began to open up. Then it got almost to 60% last week.

But when these 10 states reported an increase in the virus, it appears that the clientele for restaurants took note of it, and the restaurants are closing again. When you look at yesterday’s data, a marked change. And so, ultimately the market is going to determine what happens here, even given our best intentions to do it other ways.

MITCHELL: Yeah, that’s interesting. You have this line in your report that I think is very insightful, which is that we might consider really thinking about the economy, not in terms of the normal ways that we think about an economy, but instead really being mostly a function of the coronavirus. Perhaps it means that economists such as you and I have less to say about this. And epidemiologists, to the extent that they can understand this complex system, they have more to say about it.

YANDLE: Yeah, there are a number of, let’s just call them “races,” that are ongoing right now. There’s a race to get a vaccine. And relative to past experiences like this one, that race is running at high speed. A lot of progress has been made in a short time relative to experiences like this in the past. And so, in a sense, the economy is waiting for that vaccine. Then there’s some actions that have been taken—fiscal policy and so forth—but there are dates of expiration for those actions.

The Paycheck Protection Plan expires the last day in July, for example. I beg your pardon, the supplement on unemployment insurance expires the last day of July. That’s 600 bucks a week for people who are enjoying that benefit, getting that benefit. And so then on August 1st, there’s a shock that’s going to come. A lot of people will probably have to go back to work who have been postponing it.

But then there is the lending that was made through the Small Business Administration for the Paycheck Protection Plan. That money has to be spent by the end of December. And so in a sense, we’ve got some phased-in actions. And when we hit those dates, in a sense we are betting that maybe the vaccine will show up, maybe the virus will get quieter, and we will keep operating an open economy again. But it is a race that we’re engaged with, and it appears the virus is a very active player in that race.

So, it’s almost on a day-to-day basis as we look at the data. But, just as you say, we’re not real good at making forecasts to begin with, let’s admit that. Forecasting is a treacherous art and science. So we’re not real good because we’re trying to forecast the behavior of a few billion free people out there making decisions. We start with that. But now we’re trying to figure out what the virus is going to do. Is it going to get worse? Is it going to get lighter?

And so, then we have to say, now we’ve got to predict, what will be the public sector response to it at the county level, city level, state level, and national level? And then when we swallow that load, we say, “Okay, now we’re going to talk about the economy. What’s going to happen to interest rates, those things that we traditionally look at?” So, it’s an overly complex problem. But, fortunately, people jump in and say, “Well, let’s do the best we can.” And by looking at forecasts, looking at analyses, it does help us to get a picture of where we may be headed.

MITCHELL: Yeah, I think that’s right. I think that one of the things that’s happened—of course, it’s unfortunate—is a lot of this has become politicized, the government response. And some of that is framed around just the perceptions of science. So, you hear people say, cast it in terms of, if you are in favor of opening up the economy or ending the lockdowns, then somehow you are anti-science. And my view of science is, probably the first and most important aspect of a philosophy of science is just always be modest in what you can know and what you can claim to know.

And not unlike macroeconomic models, these epidemiological models are based on—as you say, it’s a vast and extremely complex system—interactions of millions of people and their individual decisions: everything from how close they choose to stand next to each other, how tired they get and fatigued they get of isolation, how willing they are to isolate and make sort of targeted decisions about avoiding being around loved ones who are particularly vulnerable. All these decisions. And they interact in a very complex system. It just occurs to me that just as we do with macroeconomics, we’re going to get a lot of this wrong.

There’s just going to be an enormous amount of noise in this. It’s very, very difficult to assess at what time and in what place the virus is going to pick up, and at what time and what place it’s going to start to abate. It makes life very difficult, and then adding the element to it that we sort of perceive these things through our emotional lens and our political lenses and assume that anybody that disagrees with us is somehow anti-science. I think it adds an unnecessary layer of difficulty to the whole problem.

YANDLE: That is for sure. And, again, I think because of those complexities, we can be thankful that we have 50 states and potentially 50 different experiments. And then we get within those states, and you have lots of cities that are running with their rules, which may differ. And so, there will be a lot of knowledge gained. And out of those experiments, we will begin to see some that seem to work better than others, and there’ll be adjustments that get made.

Compare that with a nation that says, “Oh, we’ve got to bring the brightest and best all to the state, to the national capital. And then we’re going to write down rules, we’re going to get the right suit, and everybody gets to wear the same color until this thing is over.” So, there are some, I think, bright spots with respect to the institutions that we’re dealing with. But for people who like certainty sometimes, they don’t like what I’ve just said. They say, “Well, gee whiz, how do you know what’s going to happen?” And the answer is, we don’t.

But we do have to rely on the intelligence of human beings. Just as it appears there are a lot of people who decided not to go to restaurants when they heard about the increase in the frequency of the virus. They did that using common sense. There wasn’t a policeman out front. And so, I think ultimately, we always have to depend on the common sense of good people to care for themselves and their families and people they love.

MITCHELL: Yeah, I think that makes a lot of sense. And it kind of highlights the fact that it’s often cast as the stark choice between completely going back to the way things were in January versus shelter in place orders still in effect in 50 states in urban, rural communities and everywhere in between. There is room for something that’s somewhere in between, where we’re partially opening up. You can go to restaurants, but you have to sit outside. People are modifying their behavior.

Also, there’s a lot of mitigation strategies that are being already of course implemented. And I think we can probably expect them to be implemented in new and different ways going forward. People can expect to perhaps be zapped by a temperature-taking scanner when they walk into the office, whenever they do that next. And other kinds of reforms.

One of the things I’m eager to ask you about, you’re talking about these experiments. And one of the things that I find pretty fascinating here is that we have experiments that are moving in very opposite directions in terms of the government’s involvement in the economy. So, you’ve already mentioned the Paycheck Protection Program, the unemployment insurance extensions. We haven’t mentioned, but there’s all sorts of new credit facilities that the Federal Reserve has rolled out. So, on the one hand, on fiscal and monetary policy, the government is moving at full speed in the direction of intervention.

On the other hand, we have this pretty extraordinary phenomenon where literally hundreds, about 600, regulations have been suspended or eased or somehow modified at the federal, state, and local level to help people deal with the crisis. So, this is everything from rules that previously made it more difficult for physicians to offer their services via teleconference, like this, to rules limiting nurse practitioners, to rules limiting the introduction of new hospitals or new facilities, to more mundane types of rules that have been suspended to help people psychologically get through the crisis—things like home delivery of alcohol has been eased in a lot of states. What do you make of all this?

YANDLE: Well, that is almost an invisible side of what is going on. By that I mean, it doesn’t get a lot of attention. It doesn’t get the attention it deserves, I would suggest, in the news media in terms of a kind of in-depth story about what’s going on. There’s something really neat about it, just as you pointed out. Out of necessity sometimes, some really creative things happen, and sometimes they stick.

Before the Boston Tea Party, Americans were tea-drinking people. After that, they became coffee-drinking people, and it stuck. But the Trump administration already had a major initiative underway to reduce regulation. They had their famous, we will pull up two old ones for every new rule we plant. And they maintained that ratio, at least 2-for-1 until the most recent year, and I think the number is 1.7-to-1. That’s still a lot of rule removal. The number of pages in the Federal Register has fallen dramatically during this administration.

And so you had some momentum there, momentum that I think having spent a little bit of time in the bureaucracy, momentum that’s important in the bureaucracy. If you’re a part of the bureaucracy and you realize, well, there are a lot of things that are being revised around here, it’s not the same old day with respect to we regulate when we get ready to—there’s some new tests.

Then you get another initiative where the president or somebody says, “Hey guys, we need to get a vaccine on the market, pronto. We’ve got to find a short circuit. To get the test done, we don’t want to compromise human health, but we want to get this done.” And so suddenly you get serious and major revisions in FDA approval of drugs and vaccines.

Warren Buffett has a great expression. He says, “You don’t know who’s swimming naked until the tide goes out.” You don’t know what’s really a binding constraint until tough times come and you’re trying to figure out how you’re going to get out of the mess you find yourself in.

When New York City was struggling to meet the incredible increase in demand for hospital services for people stricken with the virus, it was against state rules for doctors and other medical practitioners to move from their state and say, “Hey, I’m catching a plane or I’m going to drive over, and I’ll be at the hospital tomorrow.” The regulators would say, “Oh no, you won’t. You don’t have New York credentials.”

And so then we got an initiative to, well, let’s just relax some of this a little bit. If these doctors are good enough to practice in Connecticut, maybe they’d be safe in New York too or in Rhode Island or in South Carolina. So, I’m hoping that some of the relaxations that have been introduced will become permanent and that we will have discovered who was really naked when the tide went out. And we’re going to fix ’em up with a new bath suit.

MITCHELL: I like that, yeah. I think that’s an excellent quote. And it does sort of show you some of these strange paradoxes. There’s some research to suggest if you look at the course of the 20th century, that probably the most innovative decade in which there were more technological changes, more patents filed, more changes even just in the practices of business was the 1930s. When things are really, really difficult is sometimes when humans come up with pretty exciting and innovative changes.

Another aspect of this, you earlier mentioned the races that are going on. There’s a race between the virus and our vaccine development. Another race that has sort of been rolling around in my head is this race between two theories. There’s the Robert Higgs idea of when presented with a crisis, government ratchets up and it grows. And it’s a ratchet effect in the sense that it typically grows and then goes back down but never quite to the level that it was before. And he’s got this excellent book, Crisis and Leviathan, which documents that over time.


MITCHELL: It appears to me that that theory is in some ways racing against another theory. Mancur Olson, whom I think we talked about last time. I think last time we probably talked about his 1967 book, The Logic of Collective Action.

I’ve been thinking a lot about his 1982 book, that’s The Rise and Decline of Nations, in which he talks about really a very, very different vision from Higgs, where when presented with a crisis, sometimes governments use that as an opportunity to sweep away special interest privilege. Essentially it upends the political power of special interests so much that whole swaths of regulations and rules are suspended, and you end up with a more dynamic and healthy and competitive economy on the other end. And I wonder if perhaps Higgs is winning in terms of predicting fiscal and monetary policy, but perhaps Olson is winning in predicting regulatory policy.

YANDLE: That’s really an interesting comparison, Matt. And Olson is a favorite of mine. He got his idea for The Rise and Decline of Nations as a young man. He’d just graduated from college. His parents were enough well-to-do for him to get the famous trip to Europe. And World War II has just recently ended, and so he ends up in England and then he travels to other countries in Europe. It’s been several years since the war ended, and he observes that, “Gee whiz, England, I thought they were on the winning side, but their economy is in shambles. Everybody seems to be in trouble here. I’ll go over to Germany. Hey, I thought they were the losers, and they’re booming.”

And so, he thinks some more and then, as you indicated, writes this wonderful book that sometimes it’s the losers who really win in the longer run, partly because they have to. And then, as you indicate, he elaborates, the good old boys get drummed out, the hardening of the arteries that was there before—from saying this is the way we’ve always done it—the hardening of the arteries goes away, creativity runs rampant. And if you allow people to be free, relatively speaking, then this process can really go.

And so that begins to put a little bit of a positive spin on what we are dealing with now. It doesn’t say, “Oh, you’re so lucky you had the coronavirus.” But it does say, there’s a— I guess my grandmother said, “It’s an evil wind that blows no good.” Even the most evil wind can blow a little good. And I think you’re putting your finger on a good part of this evil wind that we call the coronavirus.

MITCHELL: The other interesting aspect of that is if you think about the aspects of policy that are the most sticky. In my view, spending and taxing policy can come and go. We’ve got in the history books lots of examples of new programs that were later eased or modified. But regulations are very, very sticky. Once a regulation is on the books, it’s extraordinarily rare for it to be reevaluated. So, if to the extent that Olson’s theory is proving true on regulation, maybe we’re seeing this moment where some of the most difficult and intractable parts of policy that just, when they’re not working, are actually being reevaluated. It might be this nice historical moment here.

YANDLE: There’s going to be plenty to dig into for scholars of the immediate future, looking at this period. Intriguing, really intriguing, Matt.

MITCHELL: That’s interesting. Another area where I see that relevant is in regulations of nursing homes, which of course are pretty important right now in COVID. There’s a book by Philip K. Howard called The Death of Common Sense, in which he contrasts the command-and-control approach of regulation in the United States with more outcome-based approaches to regulation. Again, as you put it, here’s the goal, we don’t care how you get there, but just here’s the goal that prevails in other countries.

So, if I recall, he contrasts US regulation of nursing homes with regulation in the nursing homes in New Zealand. And in New Zealand, they have rules that say something like, patients need to be sure that they have access to social interaction when they want it, that they have access to food on a regular basis when they want it.

But in the United States, it’s much more prescriptive. It says, every three hours a patient must have social interaction or food. So, this results in really perverse outcomes, where people are just following a checklist but not following common sense. So, they’ll wheel a sleeping patient out into the common area, where they sit and they sleep, because they need to be out there interacting with people.

I will be interested in seeing as a country, as we take a much more careful look at how nursing homes have responded to the crisis, if we’re going to be rethinking a lot of these regulations. I hope they don’t move in the direction of more prescriptive, command-and-control regulations that are totally divorced from common sense. Hopefully, we take a look and say, “Geez, this was an enormous cost that this very small segment of the population is bearing in terms of COVID, in part just because of biology, but what can we do to make better rules going forward?”

YANDLE: Good point. And you mentioned that sometimes there’s an innovation in technology that comes along that very quickly and suddenly makes obsolete an old institutional arrangement for addressing a problem. On the command-and-control environmental stuff, one can argue that command-and-control was used because of the high cost of monitoring the performance of the polluter. And if you have figured out what kind of machinery cleans up and you require him to use it and you require there be records that it has been running, then you can say, “Okay, we’ve addressed the problem. And now, I don’t have to stand out at the end of that pipe and look to see what’s going on.”

Once there were big innovations in monitoring technology, metering technology, then you could put end pipe meters and monitors anywhere you wanted to, give continuous run out, sound the alarm if something is wrong, and essentially have an environmental policeman who is there. And so, the availability of low-cost monitoring can bring big changes.

In the construction industry now, they’re using drones to monitor daily construction on large projects, where formerly people had to go out every day and walk around, maybe take pictures. Couldn’t catch everything, but now they have drones. The data from the drone comes into the management meeting, where they’re meeting using Zoom. The drones’ photography comes into the Zoom, and now we can look every day to measure the progress. And then the drones’ data is shipped, transmitted immediately to the bond issuer in Switzerland who has sold a performance bond to the construction company.

And now you know that the performance is taking place—just because of the existence of cheap drones that can see and take pictures. And now you weave it back into Zoom, and folks don’t have to travel as much, going out and looking at the construction sites. So, we’ve got a lot going on, more than we can ever predict. And in a way, that’s kind of wonderful too, that this world is going to be full of surprises. Perhaps even the most serious pessimist will occasionally have something to smile about, will say, “Well, I can’t believe that that happened.” But unbelievable things do happen in a market economy.

MITCHELL: That’s right, that’s right. It’s important to also keep in mind our biases. We humans walk around with brains that were not really evolved to deal with this world of vast and personal trade. And so, one of the biases that we carry around with us—our vestigial baggage, you might put it—is this pessimism bias. It’s this idea that if I hear a rustle in the trees, I should just assume that it’s something bad and it’s going to get me.

And that’s proved very helpful in the Pleistocene. It helped our ancestors be skittish and therefore avoid a whole lot of predators, even though it also helped them many times falsely categorize wind in the trees as a predator. But it can be pretty debilitating today when there are fewer predators and when it makes people overreact sometimes in terms of policy and overreact in their own behavior in overestimating the probability of dangers.

YANDLE: Right, right. And that tendency in the vein of [Daniel] Kahneman’s Thinking, Fast and Slow, that part of our brain that we are told that developed in a very primitive stage thinks fast—and all snakes are poisonous. If I see a snake, get out of its way or kill it. “Sorry, snake, they’re all poisonous.” That’s thinking fast. Thinking slow says, “Hmmm, let me look at that a little closer. And I think I can distinguish the bad ones from the good ones.” But if you never want to be bitten by a snake, then they’re all bad, you act fast, you wipe them out and take away part of the biological system of which we are part.

But we are human and that’s something else that comes back to play with respect to the coronavirus, and these months now of being shut down or shut in. People have a desire to be with other people, just strangers. No one wants to eat in a restaurant alone. You want to have a room full of people eating; you want to hear the chatter. You may not hear the conversation so that you can understand it, but you want to be around other people. And when that gets lost, then something serious begins to affect human beings about their quality of life.

It’s hard to find a substitute for interaction with people on a random basis or on a selective basis. Even the joy that you might get from going to the 7-Eleven in the morning to pick up a daily paper and saying hello to the clerk and chatting for a minute or two. That’s taken away from you.

MITCHELL: That’s right. And you know, it’s interesting, there’s actually a significant effect on people’s moods and well-being and perceptions of the world. They’ve done interventions and experiments where they’ve had people make an effort to— They’ll take graduate students or undergrads and they’ll say, “You’re tasked with starting a conversation with somebody on your next commute.” And even that example, most people assume ahead of time that they will— They dread it. They assume it’s not going to be a pleasant experience, that it would be much more enjoyable to spend the commute locked in on their phone.

And it turns out those that are put in that treatment effect have much better self-reported happiness levels, lower levels of depression, lower levels of anxiety. They seem to do much better than those who are allowed to just sit and stare at their phone. So, we’ve got this experiment that’s been going on for about eight weeks now where we’re all isolated and we’re depriving ourselves of that needed human interaction that’s a part of who we are as humans.

YANDLE: We were talking about discoveries that had been generated, things that we’re doing now, and we raised the question, will that be a permanent imprint or is it temporary? But one of those things is home cooking. Home cooking has, you might say of necessity, come back into style. It was about three years ago that food-consumed-away-from-home expenditures began to exceed expenditures on food to be consumed at home. That more people, you might say, were eating out than eating at home. That’s been reversed.

Obviously, you can’t get to a restaurant. Then if you’re going to be eating something, it might be takeout. Ingredients for meals, for menus and so forth, are taking off in grocery store sales. A lot of people apparently are cooking again, and I kind of think some of that will stick. Probably not all of it, but some of that will stick. And some people will find out, “Well, gee whiz, I was a gourmet cook just waiting to be born, and I didn’t know it.”

MITCHELL: That’s right. Yeah, I can say my family has started up one of those subscription food delivery services, where it’s a great middle ground between completely starting from scratch versus buying prepared food. They send you all the ingredients in exactly the specific quantities, and they walk you, in very easy-to-read recipes— They walk you through the process of making really superb meals. It’s been a fun aspect.

YANDLE: You’re one of those gourmets in the making then.

MITCHELL: Not me, not me. Well, we’re getting close to our time here, and I wanted to just end with one final question. What have you been reading, Bruce?

YANDLE: Whoa. The book that I have just finished is Amity Shlaes’ Great Society. The thing that really surprised me was the major role played by the United Auto Workers in the development of the idea of a Great Society, as well as in implementing that idea and promoting it, not just in the United States, but in the world.

MITCHELL: I’ve got a couple. Well, one of them is— I went back and have been starting to reread, Nassim Taleb’s The Black Swan. This came out about 13 years ago. It seems as relevant now as ever. It’s basically about how humans think and approach risk, and what’s the effect of highly improbable but extremely impactful events. And then how we think about them, how we prepare for them, and also our tendency, once these events have happened, to look in the rearview mirror and think as if, yeah, yeah, that’s the way history was going to happen all along—it was very obvious.

Of course, we all know the powder keg analogy with World War I, and how it was a logical progression, where something was bound to get it going. Well, that’s not at all the way people experienced it at the time. Certainly, traders and those whose livelihood was based on events happening in Europe, they seemed to be caught completely by surprise. And we have that tendency. It’s part of our human nature. It’s difficult to overcome it. But it’s been a really fascinating read that I’ve been reading lately.


MITCHELL: Well, excellent. My guest today has been Bruce Yandle. He has been teaching economists for decades. I always learn something when I talk to him and when I read from him. You can read more of Bruce’s work at mercatus.org. You could check out his latest economic situation report.

Thank you so much for joining me today, Bruce. It’s been a pleasure chatting with you.

YANDLE: Thank you. Always fun talking with you.