Economy | Open Source with Christopher Lydon

Podcast • March 28, 2012

Mark Blyth (8): How Germany gets to eat our lunch

Click to listen to Chris’ conversation with Mark Blyth (32 min, 15 meg) Mark Blyth is back in the pub, just in time, with the economic script for 2012. You remember the Sean Connery version ...

Click to listen to Chris’ conversation with Mark Blyth (32 min, 15 meg)

Mark Blyth is back in the pub, just in time, with the economic script for 2012. You remember the Sean Connery version of a trans-Atlantic political economist at Brown? As usual, he’s talking faster through that Glasgow brogue than I can listen or think. But when I transcribe him, I begin to get his big picture: of Europe still strangling itself with debt born of Euro-nomics, while Germany (despite everything) takes care of industrial business. The US, meanwhile, looks to be tip-toeing away from financial meltdown but neglecting its old productive core.

Nobody’s noticed this. Two years ago the Germans decided they were phasing out nuclear power, completely. Nuclear power is around 20 percent of their electricity generating capacity. If you spend any time in Germany in the winter, you will know one thing: it faces Russia, and it’s cold. This is not something you screw around with. So what are these guys going to do? Well, when you think about Germany, you think about — apart from austerity and madness in the Eurozone — you think of really good engineers, right? You think about people that still have serious apprenticeships, serious skills, an entire engineering culture… (I’m sure I’m talking into a German microphone; that means it isn’t going to break.) The point is: what they’ve basically decided to do is go all-out into alternative energy. They’re going to put about 300-billion Euros into it just to get started over the next ten years. They’re bringing together all the top guys and top firms in collaborative research. They’re not competing; they’re trying to develop the best technologies — wind, solar, everything. Why? Because they know something we’re in denial about. Oil is running out. That’s a fact. The planet’s warming up. That’s a fact. You can call it Climate Change Chicanery if you want; but you’re not paying attention. The Germans don’t believe any of that stuff, and they know we’ve got one shot, and one shot only. Whoever figures out how to make sustainable green tech in the next 30 years gets to sell it to everybody else for the next 1000. That’s what they’ve figured out. What are we doing? We’re shutting down our engineering. We’re hollowing out our skills. We’re closing down our options. The Germans are going to have our lunch. The Chinese will be in for the appetizers, but the Germans are going to take the main.

On the Occupy movement which Mark Blyth says could be back any minute because the streams of discontent are o’errunning their banks — sky-high college costs and 20-percent youth unemployment feeding the flood: You heard it here first that it wasn’t the scruffy kids who started Occupy. It was their parents.

A lot of this is an inter-generational problem. My colleague Sven Steinmo — a Norwegian-American who teaches now in Florence — finds himself telling his kids when they ask what he wants for Christmas or his birthday: ‘I want nothing! I have everything! My generation has absolutely everything.’ He came of age in the 1960s when it was perfectly possible to go to Berkeley for $400, and he did. And then grad school, and then a job in a higher-ed system that was expanding. And then he lived through the 1980s and 90s when investments were booming. And now he’s the guy who’s coming up for a pension, and he’s got two houses and lives in Italy. And all the people coming after him, including his kids between them, can’t afford a mortgage. So there’s an interesting problem. The people who vote in the US, and the people the politicians pander to, tend to be old, and gray. They have the money. They have the pensions. They have it all, and they’re not giving it up for anyone. So you have an inter-generational conflict that hasn’t yet spoken its name. Maybe that’s the way Occupy comes back.

Mark Blyth with Chris Lydon in Boston, March 26, 2012

Hang in for the Blyth case — listen three times if you must, as I do — that there’s no plausible alternative out there to an “American-dominated global order.” It has everything to do with the point that China’s assets are still, in the end, our paper.

Podcast • November 17, 2011

Mark Blyth (7): “We can’t all export to Mars”

Click to listen to Chris’ conversation with Mark Blyth (20 minutes, 8 mb mp3) Mark Blyth is flying us over the embattled Eurozone — populations aging, economies flagging, and now democracy shrinking as technocrats in ...

Click to listen to Chris’ conversation with Mark Blyth (20 minutes, 8 mb mp3)

Mark Blyth is flying us over the embattled Eurozone — populations aging, economies flagging, and now democracy shrinking as technocrats in bankers’ gray stand in this week for the elected political chiefs in Greece and Italy. The New York Times is in an editorial panic this morning about “Europe’s Contagion” — even “financial catastrophe.” Which sounds like what Professor Blyth, the political economist and excitable Scot on our Watson Institute corridor, was warning us about when Ireland’s crisis was the proverbial cloud no bigger than a man’s hand. It’s a year now of the Blyth color-commentaries on a rock slide — in which over-leveraged banks foisted their debts on their “sovereigns,” and a banking crisis fused a chain of political and national crises — and from there a crisis of European unity, maybe the Decline of the West. Somewhere near the core of the problem, in the Blyth narrative, is the fashionable fixation on public-sector austerity, choking the growth that might refloat the European economy and our own. Part of what’s thwarting a rescue of the Euro this week is the illusion that Europe’s single-currency zone is a single economy. I am wondering what it would take for Europe to go the last kilometer to an economic union, with a single central bank as powerful as our Federal Reserve. What would we learn from a popular referendum on the United States of Europe? If you can’t listen as fast as Mark Blyth talks, by all means listen twice.

Usually you do referenda in Europe to stop things happening. The Greeks were a classic example of this: would you like to have ten years of deflation and most of the smart people leaving the country and to be left with no tax base? No, thanks. It was a bargaining chip. If you want to say at this point, let’s sign up to what Merkel wants, “more Europe,” well what does that mean? … It assumes that the whole world can work as Germany, which is basically a giant exporter that runs a permanent surplus against the rest of the world. This is madness. You can’t run a permanent surplus. Somebody has to be importing for somebody to be exporting. Who’s going to buy all those BMWs? We can’t all export to Mars. CL: China does … China does precisely because America gives it the credit to. Germany was able to sell all that stuff to Southern Europe precisely because it gave it credit. Now they’ve stopped the credit lines. That’s the problem. What they should be doing is turning on the taps to provide credit, not to continue to buy things they can’t afford, but to allow enough liquidity in the economy to stop the banks seizing up. What’s happening is just that: the banks are seizing up…

Mark Blyth with Chris Lydon at the Watson Institute, November 17, 2011.

It’s still a banking crisis pretending to be an economic crisis, Mark Blyth would tell you. But couldn’t it still become a civilizational crisis unless the rest of us, non-bankers, wake up?

Podcast • October 26, 2011

Jeff Sachs: the economy doctor is worried… about us

Click to listen to Chris’ conversation with Jeff Sachs (32 minutes, 16 mb mp3) What Jeffrey Sachs didn’t much want to talk about was the double biography I want to read someday… of the semi-science ...

Click to listen to Chris’ conversation with Jeff Sachs (32 minutes, 16 mb mp3)

What Jeffrey Sachs didn’t much want to talk about was the double biography I want to read someday… of the semi-science and fumbling art of economics in our times, in the lives of two powerful players born 25 days apart in November 1954. One the son of a Detroit labor lawyer, the other with the blood of two Nobel Prize economists in his veins. Both Harvard Ph.D.s, both tenured on the Harvard faculty in their twenties. Lawrence Summers went on to play Wall Street’s brain inside the Clinton White House, masterminding the deregulation of the US economy; and then he got to bounce the wreckage around in the Obama White House. Jeffrey Sachs became a world-traveling “clinical economist.” I always picture this earnest listener and charmer in a white coat, carrying black bag and stethoscope, confronting hyper-inflation in Bolivia in the mid-80s (when I first started interviewing him), attempting shock-therapy on Poland and Russia on the way out of Communism, checking the fever pulse of growth in China, controversially advocating The End of Poverty (2005) in Africa through direct aid that wasn’t very available, or fashionable, by then. Oh, yes, along the way Larry Summers became president of Harvard, which was Jeff Sachs’ cue to leave for Columbia and build the Earth Institute.

What Jeffrey Sachs is venting — with more passion and dismay, I think, than he’s written in The Price of Civilization — is how “unnerved” he feels at the shrinking of the “commons” over his professional lifetime, at the scary decline of American confidence and what used to seem the standard civic virtues in a great republic. The defining promise of Sachs’ boyhood in Oak Park, Michigan was JFK’s goal, “before this decade is out, of landing a man on the Moon and returning him safely to the Earth.” He is doubting in our conversation that we could find our way back to space today, unless the project was “shovel-ready” and we could get there with a quick-stimulus “surge to the moon.” It was a turning point this past summer when he realized he’d made 22 major conference stops and policy summits abroad without once seeing an American official. The clinical economist has come home to find out where his country went.

I decided, it was a conscious decision of course, that I would work in poorer countries. I would work on the challenges abroad where I thought the needs were greatest. I felt so confident, happy and secure that this wonderful home base of mine was on its way; democracy was secure, and our economy and prosperity were secure, and our fairness as a society would grow over time. We were an adventure, it seemed, in ever-increasing inclusiveness, more expansive definitions of equality. In other words, I believed that America was just a wonderful place to live, to teach, to raise a family and that in terms of my skills as an economist, I could apply them elsewhere.

I watched the decline first of international US leadership, probably with more of a front row seat than perhaps almost anyone else in this country. I’ve seen a lot. But what I’ve seen over time is this gradual retreat of American will, leadership, morals, guidance in the world. Watching what was happening abroad, where it was war all the time, but where, when it came to issues like hunger or poverty or climate or environment, the US was increasingly scarce and finally nowhere to be seen. Then, in the last ten years the economics became even more of a sense of worry. So for me this grew, first watching the international retreat from leadership, and bemoaning that, because I believe we can solve problems. That’s my basic view of life, which is that good thinking, good spirit, good ethics, good institutions can solve real problems. And we stopped doing that abroad, and then increasingly it became clear we stopped doing that at home…

Jeffrey Sachs with Chris Lydon, in Boston, October 21, 2011.

There’s no question whom I’m rooting for in that double biography. I’m reminded that Mary McGrath, who produced our show The Connection, used to say after every Jeff Sachs appearance, “for my money, he can run the world!” Jeff Sachs takes his hits especially in the arguments about aid and trade as remedies for a starving world. But I’ve always taken him straight as a man of passion and the best of American good sense, ever a work in progress, comprehensively observant, fundamentally enthusiastic. And I take it seriously that he’s so worried about us.

Podcast • October 17, 2011

Mark Blyth (6): Going to school on “Occupy Wall St.”

Click to listen to Chris’ conversation with Mark Blyth (20 minutes, 8 mb mp3) I arrived in the States twenty years ago, to the month. When I look at the wealth and income distribution in ...

Click to listen to Chris’ conversation with Mark Blyth (20 minutes, 8 mb mp3)

I arrived in the States twenty years ago, to the month. When I look at the wealth and income distribution in the United States today, I’m looking at Mexico in the 1970s and Brazil in the 1960s. This is not America. This is not a land of opportunity. You can’t talk about opportunity when 60 percent of the population can’t afford to go to college, where the costs of basically a middle-class education far outstrip the resources of the average family; when you have 54-million people living, in a family of four, on less than $22,314 a year; and meanwhile, the top one percent have trebled their share of income…

Mark Blyth with Chris Lydon at the Watson Institute

Mark Blyth, political economist and ever the argumentative Scot, has gone humble before the Wall Street protest. He and we should be learning from the crowd in Zuccotti Park — and in Boston’s Dewey Square — just what people have discovered from their own experience, their own anxiety.

There’s a crisis of income growth in this country that’s papered over by credit. That’s why there’s $56-billion in student loan debt. That’s why there’s $14-trillion in mortgage debt. That’s why there’s more than $1-trillion in home equity lines of credit outstanding. Because people have been borrowing against an uncertain future to finance an ever more expensive present. At the same time income has stagnated. Let’s be clear. When you adjust wages for prices, when you look at the real wage, it’s stagnant for 40 percent of the population; and for the next 20 percent of the population it’s barely edged up over 25 years. Meanwhile the top one percent has increased its share from the late 1970s, from 9 percent of national income to 24 percent just now. You can’t say these things are not causally related… Economically, inequality is a bad thing. You don’t even need to make a moral argument. You don’t have to mention the word justice once. More equal societies grow faster. They’re better…”

It turns out that Americans have more reverence for “fairness” than for equality. We’re not Sweden, and perhaps just as well, Mark Blyth allows. “But we get out of shape when we realize that the risks are being socialized and the profits are being privatized. And that’s what’s happening on Wall Street… “

Podcast • September 6, 2011

Mark Blyth (5): Sovereigns, Citizens and Suckers

Click to listen to Chris’ conversation with Mark Blyth (28 minutes, 14 mb mp3) Mark Blyth is back in the pub, just in time, talking trash again and taking some credit. He’s the political economist ...

Click to listen to Chris’ conversation with Mark Blyth (28 minutes, 14 mb mp3)

Mark Blyth is back in the pub, just in time, talking trash again and taking some credit. He’s the political economist who doesn’t mince words, even when he’s writing for fellow professionals. At Triple Crisis, for example, the other day: “The European sovereign debt crisis is little more than a huge ‘bait and switch,’ perpetrated on the publics of Europe, by their governments, on behalf of their banks…”

In the Scots vernacular, he is reminding us (and the Tea Party) not just that our humongous public debt is a gift of the private sector and the bailed-out banks, since 2008, but also that much the bigger piece of the general debt crisis today is the household debt that’s nearly doubled in the US in the last decade: i.e. underwater mortgages and credit card debt. So are we looking at a “Japan decade” of de-leveraging (paying down debt) and very slow growth?

Hold on. Have you been to Japan lately? It’s a pretty nice place. That decade of ‘helpless stagnation’ is actually okay: Japan’s got more modern infrastructure than we have by a factor of twelve. It’s got better educational outcomes, people live longer. So let’s put this into perspective: it means that you don’t have absurd growth and a housing bubble, it means that you don’t go back to people betting their entire fortune on an internet stock. We stop the casino, we chill out for a while, we pay back some debt. It’s probably a good idea. But we’re not going to do that if we slash the government budgets at the same time that we’re all trying to save the private. You can’t do both.

Mark Blyth with Chris Lydon at the Watson Institute, Brown University

Podcast • May 26, 2011

Mark Blyth (4): Why they call it “going for broke”

Click to listen to Chris’ conversation with Mark Blyth (20 minutes, 10 mb mp3) Photo from Mark Blyth’s Austerity video Mark Blyth confirms the the sneaking suspicion that the meltdown is still melting down — ...

Click to listen to Chris’ conversation with Mark Blyth (20 minutes, 10 mb mp3)

Photo from Mark Blyth’s Austerity video

Mark Blyth confirms the the sneaking suspicion that the meltdown is still melting down — and that you get sharper economic news in from the noisy guy in a Glasgow pub than from the newspapers covering the IMF sex scandal.

“It’s like watching Fukushima — it literally is.” First: how could this happen? Then: ah, they didn’t build the wall high enough, whatever. An institutional design problem! World catastrophe averted, but then another crisis, and another. Then a kind of creeping meltdown. Not on page one any more. The problem isn’t fixed, but people are used to it. “In the Eurozone, it’s ‘Oh, yawn, another European crisis. Uh, tell me something I don’t know.’ You know what? Eventually this thing gets to a tipping point. You don’t know where it is, and then bad things happen.”

We haven’t learned a damned thing from the banking crisis. Dodd-Frank will basically put a little bit of a speed bump into the road and some airbags into the car. Other than that the model remains unchanged. And because of that, we are now more exposed and more at risk than ever. There’s no reason that this model won’t go bang again, and the next time they do that, they won’t be landing on public balance sheets with a 40 percent debt to GDP ration, they’ll be doing it with 80 percent. And that means there’s no money to bail them next time. So when they go down next time they really go down.

Now if you’re a banker at the top of the game you know that. So what’s your incentive? Is it to play nice, to reduce your profitability, to downsize your business? Or is it to go for broke before the whole thing goes up? We’re not going to bankrupt ourselves because of the so-called profligacy of the state. This is all politics by other means. What’s going to get us once again is a credit cycle: a super-boom followed by a super-bust. Only this time we’re doing it on really highly-levered state and public balance sheets. That’s the real problem. We’re kicking the state and the state is the thing that will save you. We’re kicking away the foundations of the building that we’re relying on to protect us from the hurricane as the hurricane approaches. It’s beyond stupid.

Political economist Mark Blyth with Chris Lydon at the Watson Institute, Brown University, May 25, 2011.

Podcast • March 24, 2011

Mark Blyth (3): The Black Swan of Cairo

Mark Blyth, the know-it-all professor with the Sean Connery delivery, is back in the pub tonight, and not a moment to soon. When the political economy of energy is screaming red-alert, from Japan melting to Libya’s oilfield civil war, cheerful chatter from a certified political economist can sound like music. Let’s just forget that Mark Blyth, on our last round, told us that austerity would be our nightmare in 2011. And let’s remember it was Mark Blyth’s friend Nassim Nicholas Taleb who cautioned us almost a year ago that we seem to have entered the Age of the Black Swan — a black swan (think: BP oil blowout in the Gulf of Mexico) being an unimaginable event with big consequences and its own impervious mythology of cause and effect. The social service of black swans is to remind us that fragility is a main mark of global systems. In conversation at the Watson Institute, Mark Blyth is generously scooping himself from an article he and Mr. Taleb have co-authored for the magazine Foreign Affairs.

Let’s not get too bent out of shape about it, because complex systems, when they’re tightly coupled, are Black-Swan prone. And if all the volatility in the mix gets packed and shoved under the carpet, so to speak, then they become prone to these explosions. We also have a remarkable capacity to bounce back. Let’s think about what happened with Japan. You had the Trifecta from hell: first you have an earthquake at 9.0, so let’s follow up with a tsunami, and then a nuclear accident. What happens? Global stock markets fall off a cliff. A week later, they’re back. And the Japanese look like they might actually just pull this off. Why? Because they are a very technologically advanced society. Because they’ve got more experience with nuclear energy than anyone else. And because we got lucky. Let’s face facts, it could have been a lot worse. Now what is the lesson that we’re going to take from that? Being humans we’ll probably learn too much, which is to say, “Well, that shows that nuclear power is safe.” No it’s not. We got a sixty year track record. We’ve been lucky so far, but that doesn’t mean we’re not turkeys looking for Thanksgiving once again.

So we become more tightly coupled, there will be more Black Swan events, but our capacity to bounce back is always there… But you don’t want to get in a position whereby what you’re saying is don’t touch anything ever, don’t try anything ever, because it will end up creating some kind of downstream consequence you can’t calculate. Some of those consequences might be good.

Let me give you an example of this. A long time ago, back in the nineteenth century–before they had a fully formed notion of how diseases were transmitted through bacteria and viruses, etc.–there was a theory of disease that said it traveled on the wind, it was smell. And it was the stench that really made you sick. Hence why the Victorians were always running out to get “good air” and go out into the countryside and all that sort of stuff. Now, they were completely wrong. But one of the things that they did, because they were obsessed with smell, was to build sewers. Now that was exactly the right thing to do, had you had the proper theory of disease. So on the wrong theory, they got the smell and literally got the shit off the streets and put it all underground. And in doing so, they made the biggest advance in public health ever, for all the wrong reasons. Sometimes, nonlinearities work out in a really good way.

Mark Blyth in conversation with Chris Lydon at Brown University, March 22, 2011.

Podcast • March 1, 2011

Parag Khanna: Why Nobody Runs the World

Click to listen to Chris’ conversation with Parag Khanna. (21 minutes, 10 mb mp3) Parag Khanna — the young freelance adventurer, noticer and scorekeeper in geo-politics — broke the news in the mainstream press three ...

Click to listen to Chris’ conversation with Parag Khanna. (21 minutes, 10 mb mp3)

Parag Khanna — the young freelance adventurer, noticer and scorekeeper in geo-politics — broke the news in the mainstream press three years ago that the United States’ “unipolar moment” had expired in the ruins of Iraq. Who Shrank the Superpower? was the cover headline on Khanna’s debut in the New York Times Sunday Magazine — counting on top of military costs the loss of American moral and economic “soft power” in the era of George W. Bush’s unilateralism. Globalization, as Parag Khanna argued in his first book, The Second World, had become a three-way street, meaning that aspiring peoples between the “first” and “third” world (think: Venezuela, Turkey, Kazakhstan) had the choice now of modernizing with the financial and technical help of (1) the U.S. (2) China or (3) Europe– and that the American route was looking less and less attractive.

The title of Khanna’s new book, How to Run the World was slapped on with deepest irony, or perhaps cynically for the airport racks, because it suggests the opposite of his essential point: that power in the world has devolved into a possibly benign anarchy as in the Middle Ages — that what looked like a “unipolar” world at the end of the Cold War has become not so much a “multipolar” as a “heteropolar” system today. The power of states (and the United States) continues to ebb, and the non-state actors include a mismatching multitude of impulses and institutions, public and private — including the stateless statesman George Soros, the Arab money pool known as Dubai, Cameron Sinclair and his Architects for Humanity, the Catholic Church and Al Qaeda. Nobody runs a networked world, and nobody is about to:

We still accord this privileged status, intellectually or otherwise, to the nation, the state, the territorial, that bounded geographic unit, as if, if and when a terrorist group or a company really does become as important as a state it would become a state. That’s not true at all. We are in a trans-national, trans-territorial sort of space globally, in which Royal Dutch Shell is perfectly happy not being a state as such. It has a global footprint and global operations. The Gates Foundation does not have to be a state to influence policies of hundreds of countries when it comes to public health. George Soros calls himself very proudly a stateless statesman, because of the diplomacy that he conducts everywhere on behalf of the causes that he holds dear.

So to me the idea that something is becoming like a state is a linear projection, a teleological assumption that more power means becoming more like a state. That’s not what the new Middle Ages, as I’m calling it, is really going to look like. Religious groups and religious actors, even those in the world of Islam who want a global caliphate, are really thinking much more about spreading that geography and community of belief, more than they’re thinking about what straight-line borders are they going to put down on a map. So I think we have to be very imaginative about what forms about identity and power are going to shape the 21st Century and focus ever less on just who is a state and who is not a state. …

Parag Khanna in conversation with Chris Lydon.

Podcast • September 27, 2010

Robert Reich: Soak the rich for their own good

Robert Reich is the point man in economics of the “Democratic wing of the Democratic Party,” as Howard Dean used to say. That is, he’s been the burr under the saddle of the Wall Street ...

Robert Reich is the point man in economics of the “Democratic wing of the Democratic Party,” as Howard Dean used to say. That is, he’s been the burr under the saddle of the Wall Street wing that chased Reich, as Secretary of Labor, out of Bill Clinton’s Cabinet after the first term. Robert Rubin, imported from Goldman Sachs to reshape Clinton’s thinking and de-regulate finance, used to threaten to quit if Secretary Reich kept railing about “corporate welfare.” But it was Reich who left, and Rubin who stayed in the saddle, burr or no — who became Treasury Secretary and sponsored Larry Summers as his successor; the same Rubin who made Summers president of Harvard and then, after the meltdown, put his own and Wall Street’s stamp on the Obama era, too.

Reich’s new tract Aftershock, neatly coincidental with Larry Summer’s retirement from the White House, is a polite populist’s effort to seize a teachable moment in this season of anger. The disease in the economy and the public mood, he’s arguing, is not debt; it’s not even that we’re living beyond our means. It’s the 30-year trend to an obscene concentration of wealth — one percent of the population reaping more than 20 percent of the income — that has so diminished the means, so drained the purchasing power of the average American. Few politicians and policy wonks are as clear as Reich about the remedy to rebalance and build the whole economy: boost all incomes under $50,000 with direct supplements; and restore real taxes on the biggest earners with a marginal rate of, say, 55 percent. Today’s pattern of concentration, speculation, bust and stagnation recapitulates the crisis of the Great Depression, he’s saying. And it calls again for a Great Teacher:

What Obama needs to do is connect the dots. Americans don’t see the big picture. They don’t see the narrative. They don’t hear the story. They don’t understand that we’ve had three decades of flat wages, that almost a quarter of all income is now going to the top one percent. They don’t understand the connections between all of these issues and problems. They don’t see that there is a large tapestry here. A leader needs to weave that tapestry, show how one thing is related to another. We’ve not had a president who did that since Ronald Reagan. The tapestry he wove was the wrong tapestry; it bore no relation to reality. But at least he explained. He showed how “a” relates to “b” relates to “c”. He did connect the dots…

Robert Reich with Chris Lydon in Cambridge, September 24, 2010

Podcast • June 25, 2009

Juan Enriquez: The Next Boom, by Zipcode

There is no rescuing this economy from our debt, denial and epic implosions like General Motors and the city of Detroit. The only hope is that our unfinished season of disaster will be inundated (and ...

Juan Enriquez‘s vision makes you want pray for a rain-out, bet on the flood. Especially if you live in one of the research and teaching centers of the world — best of all in MIT’s zipcode: 02139. Recovery, jobs and money are all fuctions, in the Enriquez brief, of zipcode concentrations of brain cells and emerging new “life science” industries.

Juan Enriquez is an investor, teacher, writer and sometime politician who’s famous now on YouTube and the conference circuit for riffs like this one. We’re picking up on, first, a TED talk he gave this Spring in California, and then a grand Boston boast that the Red Sox playing field is the epicenter of the next economy. At TED, he pictured a race underway between the crashing of car companies and newspapers and other branded industries and the simultaneous blooming of super-tech invention: the Big Dog carry-all robots, implantable organs and shoe leather man-made without cows. I asked Juan Enriquez in his Boston office tower for a sort of scorecard as of late spring in year one of the Age of Obama. The bad news is that we’re in real danger of sinking ourselves (not our kids — us!) with debt we cannot pay. We’ve been through some tentative confession of our sins, but atonement is still to come. Here’s the good news:

I’ve never seen a better time to invest: things are cheap, there’s a lot of smart people around, there’s a lot of technology we’ve been investing in for 15, 20 years in life sciences that is incredibly exciting right now. And Boston is the center of the universe for that stuff. Per capita, there isn’t a smarter place than Boston right now…

Half facetiously, I claim that the center of the universe is the pitcher’s mound at Fenway. And the reason for that is because you’ve got Boston University sitting on one axis, Harvard on another, MIT on another, then Boston College and Harvard Medical School… Within a three to five mile radius of that pitcher’s mound you have an awful lot of what the new economy looks like.

Of the known universe, at this point, the corner of Vassar St. and Main St. may be the single most interesting corner anywhere and the reason why is because you’re sitting in the middle of a zipcode, 02139, that has generated one the largest economies on the planet in terms of the companies that the faculty and students that graduated MIT have done. The second reason is that you have a huge concentration of life-science powerbases that around the Whitehead and the Broad Institutes and the Human Genome Project. You have a new neuro-cognitive center, the Picower Institute where they’re bringing together in one building everybody who’s thinking about the brain. So if you’re a psychologist or a psychiatrist, if you’re a neurosurgeon or a brain imager, if you’re a computer scientist, anybody who’s thinking about brain circuitry or how this thing works, you’re all talking to one another in a building, which is highly unusual for academia.

And then right across the street from that you’ve got a Frank Gehry building that has possibly the next generation of computing, the next generation of artificial intelligence, and the next generation of robotics. And you bring those three things together — and you think of single professors’ labs — a lab the size of your house — generating market caps of five or 10 billion or 20 billion dollars in the students that are graduating and the companies they found…

When I want to show somebody why the US is still a really important power despite the debt, despite a certain sabbatical from governance, I drive them through the area… As you go past the Stop & Shop, you’ll see the old NECCO candy factory, which has now become the global research headquarters for Novartis. In three other huge buildings next to it they’ve taken the three big Swiss Pharma companies – Ciba, Geigy, Sandoz – merged them and offshored almost all of the R and D to Cambridge, MA, which is a big deal! That’s offshoring probably five percent of the future of the Swiss GDP. That’s what the bet is… And then you hit the Charles River, which is lovely, right?

Juan Enriquez in conversation with Chris Lydon, Boston, June, 2009.